Principles of Management 2 Per Page

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Principles of Management
Module 1: Introduction to Management
Module Learning Outcomes
Describe the primary functions of management and the roles of managers.
1.1: Describe what management is

1.2: Explain the primary functions of management
1.3: Describe the primary types of managers and the roles they play
1.4: Explain the advantages that arise from managing people well
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Management
Learning Outcomes: Management
1.1: Describe what management is

1.1.1: Describe what management is
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Why does learning about management matter?
• Who makes the difficult decisions that result in the success or failure of the
organization?
• How do organizations survive in world where conditions are constantly changing?
• Do you think making good business choices is an art or a science?
What is Management?
• The Definition of Management

• Process of planning, organizing,
leading, and controlling people in
organization- effectively use resources
to meet goals
• The Two Aspects of Management

• People
• The people with the responsibility and
authority to determine the overall direction
of the organization
• Process
• Decide what goals should be and defines
them for the organization
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Practice Question 1
In most cases, the management function includes which of the following?
a) applying and distributing organizational resources effectively

b) acquiring new resources when necessary
c) analyzing and adapting to the ever-changing environment in which the organization
operates
d) complying with legal, ethical, and social responsibilities of the community
e) developing relationships with and among people to execute the strategies and plans
f) all of the above
Primary Functions of Management
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Learning Outcomes: Primary Functions of

Management
1.2.1: Explain the primary functions of management
1.2.1: Explain the primary functions of management
1.2.2: Differentiate between the planning, organizing, leading, and controlling functions
of management
Introduction to Functions of Management
• Processes
• ongoing activities ongoing and
interrelated
• Ongoing
• activities not done in a linear, step-by-
step fashion
• will continue while others begin
• Interrelated
• results of tasks influence each other
• must be done efficiently
Important to note that processes do

not always go in order!
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First Factor of Management: Planning
• Defining goals and tackling them

• Defines future of organization- long-
term plans
• Develops strategic plans
• Long-term and effects entire
organization
• Bridges gap between what
organization is and what it wants to be
• Tactical plans
• Translate strategic plans into specific
actions- who, what, where, etc.
Second Factor of Management: Organizing
• Decides how to best implement the

plans
• Decides how an organization is
structured
• Assigns authority and responsibility
• Works to acquire resources
• Decides coordination
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Third Factor of Management: Leading
• Uses knowledge, character, and

charisma- inspire achievement of
goals
• Leads by communication, building
commitment, creating shared
values, and encouraging high
performance
• Uses the power of granting rewards
and punishments
Fourth Factor of Management: Controlling
• Unexpected issues will arise

• Controlling
• process of monitoring activities,
measuring performance, comparing
results, making corrections
• Observing and responding to what
happens
• The feedback loop
• most important aspect of controlling is
that managers must be keep
informed.
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Who Directs Each Function of Management?
• Leaders often step up in times of

crisis that needs immediate action.
• All managers perform each at
different times and the position
depends on how much.
• Different activities may happening
at once in an organization.
Class Discussion: Functions of Management
Now that we’ve discussed the four functions of management, let’s take a
minute to reflect on why it can be hard to motivate employees when big
changes come into play.
What are some factors that cause employees to become resistant to change?
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Types of Managers and Their Roles
Learning Outcomes: Types of Managers and Their

Roles
1.3: Describe the primary types of managers and the roles they play
1.3.1: Differentiate between the functions of top managers, middle managers,first-line
managers, and team leaders
1.3.2: Differentiate between leadership, informational, and decision-making roles
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Vertical Management
• Various levels of management

within organization
• Different levels = different aspects of
business
• Thinking
• Communicating
• Highly structured
• Workers in labor-intensive industries
• Disadvantage- limits information
from lower levels to upper
Top-Level
• What do these acronyms represent on a management team?

• CEO, COO, CMO, CTO, CFO, CCO
• Vice Presidents or division heads sometimes part of top management team
• Responsible for long-term success
• Set goals and pay careful attention to external environment
• Economy, law proposals, consumer/public relations
• Make financial investments
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Middle Managers
• Department heads, directors, chief

supervisors
• Links between top and first-line
managers
• Receives broad strategic plans with
specific objectives
• Encourages, supports, and fosters
employees
• Provides leadership
First-Line Managers
• Entry level- “on the line”

• close contact with workers
• Responsible for organizational
objectives and plans
• Assistant managers, shift managers,
foremen, section chiefs, office
managers
• Focuses on internal issues- must
communicate
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Team Leaders
• Reports to first-line or middle

manager
• Develops timelines, specific work
assignments, provides training to
team, communicates clear
instructions
• Makes sure team is operating
efficiently
• Positions may be eliminated when
new team must be formed
Types of Management Roles
• Leadership and Interpersonal Roles

• Top Managers
• Middle managers
• focus more on interpersonal skills
• Decisional Roles
• All managers required to make
decisions
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Leadership and Interpersonal Roles
• Top Managers
• Voice of organization
• Hard to separate personal aspects from corporate positions
• Middle Managers
• Determines what information can be shared
• Weighs informational value to decide what to send to top management
• First-Line Managers
• Evaluates work and helping employees contribute
Decisional Roles
• Entrepreneur- top-level managers

• Economic opportunities, lead change initiative
• Disturbance handler- top and middle managers

• React to problems in organization (internal/external)- decide what actions should be
taken
• Resource allocator
• Depending on whether decisions affect whole company or not
• Negotiator- top and middle-level managers

• Top- negotiations about whole company (contracts or agreements)
• Middle- negotiate salary and hiring
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Class Discussion: Managers and Leadership
Which type of manager spends more time in leadership activities?
The Advantages of Managing People Well
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Learning Outcomes: The Advantages of Managing

People Well
1.4: Explain the advantages that arise from managing people well
1.4.1: Explain the advantages that arise from managing people well
Class Discussion: The Advantages of Managing

People Well
“People are definitely a company’s greatest asset. It doesn’t make

any difference whether the company’s product is cars or
cosmetics. A company is only as good as the people it keeps.” –
Mary Kay Ash
How can managers leverage their employees to achieve a true competitive

advantage?
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What Makes a Good Manager?
• What makes a good manager?

• Effectiveness
• Efficiency
• Sustainable practices
• Competitive advantage
• business outperforms rivals due to
employees
• Depends on a stable and reliable
workforce
Quick Review
• Describe what management is in your own words.

• Explain the primary functions of management
• Differentiate between the planning, organizing, leading, and controlling
functions of management
• Differentiate between the functions of top managers, middle managers, first-
line managers, and team leaders
• Differentiate between leadership, informational, and decision-making roles
• Explain the advantages that arise from managing people well
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Module 2: History of Management
Describe the work of major contributors to the field of management
2.1: Describe the contributions of Frederick W. Taylor, Frank and Lillian Gilbreth, and Henry
Gantt to the field of scientific management
2.2: Describe the contributions of Max Weber and Henri Fayol to the field of bureaucratic
management
2.3: Describe the contributions of Mary Parker Follett and Elton Mayo (Hawthorne studies) to the
field of humanistic management
2.4: Describe current developments in management practices
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Scientific Management
Learning Outcomes: Scientific Management
2.1: Describe the contributions of Frederick W. Taylor, Frank and Lillian Gilbreth,
and Henry Gantt to the field of scientific management
2.1.1: Explain the concept of scientific management
2.1.2: Summarize the work of Frederick W. Taylor
2.1.3: Summarize the work of Frank and Lillian Gilbreth
2.1.4: Summarize the work of Henry Gantt
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Basics of Scientific Management
• Frederick Winslow Taylor

• Known as the father of management
• Examined ways to run a business efficiently and productively
• Revolutionary ideas
• Emphasized employee training
• Implemented standardized practices to improve productivity
• His method is seen as scientific management

• Borrowed techniques from botanists and chemists
• Employed scientific techniques such as analysis, observation, synthesis, rationality, and
logic
Frederick W. Taylor
• Was a mechanical engineer

• Interested in the type of work done in factories and
mechanical shops
• In 1909, he published the Principles of Scientific
Management
• Believed the work system could be improved

• Searched for employees incentives
• Everyone should get “a fair day’s pay for a fair day’s work”
(no more, no less)
• Employees must meet goals
• Productivity would increase if jobs were simplified
• Jobs should be broken down by job component and timed
to check efficiency
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Frederick W. Taylor Theories
• Concerned about worker output more than worker

satisfaction/motivation
• Introduced idea of systematic training and selection-
encouraged owners to interact with worker
• Created a “First-class worker” concept
• detailed what worker should be able to accomplish
• Digital Taylorism is maximizing efficiency
• Updated version used by FedEx and Amazon
Scientific Management Core Principles
• Look at each task to determine

“best way” to perform job
• Hire right workers for each job and
train to work at maximum efficiency
• Monitor worker performance and
provide instruction and training
• Divide work between management
and labor so workers can be more
efficient
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Classical School of Management
• The Gilbreths focused on worker welfare and motivation.

• They believed that by reducing the amount of motions associated with a
particular task, they could also increase the worker’s well-being.
• Their research, along with Taylor’s, provided many important principles later
incorporated into quality assurance and quality control programs begun in
the 1920s and 1930s.
• Eventually, their work led to the science of ergonomics and industrial
psychology.
Benefits of Gantt’s Project Management:
The Gantt chart has multiple benefits for project management:
• aids in the breakdown of tasks into specific elements

• allows for the monitoring of projected timelines
• identifies which tasks are dependent upon a prior task or element
• identifies which tasks are which are independent and can be completed at
any time
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Class Discussion: Maximizing Efficiency
Taylor suggested that productivity would increase if jobs were optimized and
simplified. He also proposed matching a worker to a particular job that suited
the person’s skill level and then training the worker to do that job in a specific
way.
If Digital Taylorism focuses on maximizing efficiency, then how does that

influence the work of a modern day employee? What are some examples of
this theory that you know from experience?
Bureaucratic Management
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Learning Outcomes: Bureaucratic Management
2.2: Describe the contributions of Max Weber and Henri Fayol to the field of
bureaucratic management
2.2.1: Explain the concept of bureaucratic management
2.2.2: Summarize the work of Max Weber
2.2.3: Summarize the work of Henri Fayol
Understanding Bureaucratic Management
• Looks at how government

departments and large
businesses operate
• Examines how to manage
more effectively
• Influential theorists
• Max Weber
• Henry Fayol
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Max Weber and Bureaucratic Theory
• Born in Germany during time when industrialization was

transforming most aspects of society and government
• Interested in industrial capitalism
• Industry is privately controlled and operated for profit
• Visited United States to study U.S. economy (1904)
• Authority wasn’t function of experience but of social status
• Based on rational authority- most authority given to most
competent
• Thought bureaucratic theory would result in highest level
of efficiency—however negative aspects
• Excessive procedures, boredom, unresponsiveness
Characteristics of Bureaucracy
Identified six characteristics of

bureaucracy
1. Hierarchical Management
2. Division of Labor
3. Formal Selection Process
4. Career Orientation
5. Formal Rules and Regulations
6. Impersonality
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Henri Fayol and Administrative Theory
• Born in Turkey 1841

• Experimented with different management
structures
• Incorporated some of Weber’s ideas in his
theories
• Concerned instead with how workers were
managed and how they contributed
• Created the 5 duties of management
Five Duties of Management
• Foresight: create plan of action for future

• Organization: provide resources to implement plan
• Command: select and lead best workers through clear orders
• Coordinate: make sure diverse efforts fit together through communication
• Control: verify whether things are going according to plan and correct as
needed
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Set of Management Theories and Practices
• Fayol thought management principles needed to be flexible and adaptable

and that they would be expanded through experience and
experimentation.
• Guiding principles:
• Scalar chain: unbroken chain of command extends from top to bottom
• Unity of command: employees receive orders from only one superior
• Unity of direction: activities that are similar should be the responsibility of one person
• Division of work: workers specialize in a few tasks to become more proficient
Class Discussion: Fayol and Weber
In small groups, discuss the two most significant contributions to management

practice and theory created by Fayol and Weber? What are the characteristics
of each?
How are these contributions still at work today in management theory?
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Humanistic Management
Learning Outcomes: Humanistic Management
2.3: Describe the contributions of Mary Parker Follett and Elton Mayo
(Hawthorne studies) to the field of humanistic management
2.3.1: Explain the concept of humanistic management
2.3.2: Summarize the work of Mary Parker Follett
2.3.3: Explain the significance of Elton Mayo's work (Hawthorne studies)
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Basics of Humanistic Management
• Places emphasis on interpersonal

relationships
• Highlights concerns about lower
standards of workmanship and
lower wages
• Labor unions began addressing
growing fear of the workers
• the US government called Frederick
Taylor to testify about aims of his
proposals
Mary Parker Follett
• Considered to be the ”Mother of Modern

Management”
• Developed concepts applied to business and

management
• created a better understanding of lateral processes
• noted the Importance of informal processes within
organizations
• applied principles of noncoercive power sharing she
called integration
• examined empowerment and facilitation instead of
control
• promoted conflict resolution in group based on
constructive consultation
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Follett: “Mother of Modern Management”
• Follett devoted her life’s work to the idea that social cooperation is better
than individual competition.
• In her 1924 book Creative Experience, Follett wrote:
“Labor and [management] can never be reconciled as long as labor persists in thinking
that there is a [management] point of view and [management] thinks there is a labor
point of view. These are imaginary wholes which must be broken up before
[management] and labor can cooperate.”
Elton Mayo and the Hawthorne Experiments
• Completed a series of studies designed to isolate

factors in workplace that affected productivity
• If positive change was implemented, productivity
increased
• If negative change was implemented, productivity still
increased
• Employed nondirective interview method
• Benefits- feeling of group cohesion, friendlier attitude
of researchers, attention brought to individuals
• Published findings in “The Human Problems of an
Industrialized Civilization” in 1933
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Current Developments in Management Practices
Learning Outcomes: Current Developments in

Management Practices
2.4: Describe current developments in management practices
2.4.1: Explain the concept of operations management
2.4.2: Explain the concept of systems management
2.4.3: Explain the concept of information management
2.4.4: Explain the concept of contingency management
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Introduction to Current Developments in

Management Practices
• Many argue classical practices and theories are no longer valid
• Most of what we do requires us to interact with large-scale institutions
• Government agencies, banks, health-care providers, insurance companies, etc.
Forces Shaping Management and Current

Developments
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Forces Shaping Management and Current

Developments (cont.)
• Pace of Change Rate of progress x2 every decade
• Technology. Primary factor driving change
• Globalization. Increasing ease of flow between countries
• Diversity. Tremendous resource to organizations- different perceptions,
experiences, and strengths
• Social Expectations. Would provide goods and services society required
Current Developments in Management
• Becoming more specific with formation of disciplines

• Also becoming more general
• managers are given a toolbox, not step-by-step procedure
• Operations Management. Concerned with physical processes involved

• Initial product design to incorporate features
• Manage supply chain
• Work with marketing and sales
• Information Management. Depends on accuracy to make decisions

• Concerned with collection, preservation, storage, etc. of information
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Systems Approach to Management
• Gets feedback from from the market in two

ways
• Receives revenue
• Receives information on how well organization is
doing: direct information from surveys
• Focuses on whole production process; usually
split by specialties within company
• Companies are open to environmental
influence
• Political instability, economic conditions, consumer
tastes, etc
• Must be able to detect change and respond
effectively
Contingency Management
• Not specific function—general

approach
• Every situation recognized as
unique; managers must adapt to
match situation
• Might include industry in which
company operates
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Class Activity: Amazon and Management
• Why learn about the history of management?

• Principles developed during Industrial Revolution are still practiced today
• Relatable concepts to modern experiences
• Helps with the studies of successful businesses today
• Let’s take a minute to review Amazon, as an example of modern day
cutting- edge business practices. Amazon Prime Air: Automated Drone
Delivery System
• Do you see any similarities between managing a modern technology
company like Amazon and managing the large industrial steel companies
that dominated U.S. industry in the late 1800s and into the turn of the
twentieth century?
• Which of the classical management theories are the most relevant today?
Which are the most non-relevant?
Present: Amazon and Management
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Class Activity: Google and Management
• Why learn about the history of management?

• Principles developed during Industrial Revolution are still practiced today
• Relatable concepts to modern experiences
• Helps with the studies of successful businesses today
• Review the article about Google by the International Journal of Corporate
Social Responsibility which discusses the Harvard Business Review case study
“Project Oxygen”.
• Which of the management theories discussed in this module are the most
relevant today in a organization like Google?
Present: Google and Management
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Quick Review
• Explain the concept of scientific management

• Summarize the work of Frederick W. Taylor, Frank and Lillian Gilbreth, and
Henry Gantt
• Explain the concept of bureaucratic management
• Summarize the work of Max Weber and Henri Fayol
• Explain the concept of humanistic management
• Summarize the work of Mary Parker Follett and Elton Mayo
• Explain the concepts of operations, systems, information, and contingency
managements
Module 3: Planning and Mission
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Explain how managers align the planning process with company mission, vision,
and values
3.1: Distinguish between mission, vision, and values

3.2: Explain the pros and cons of planning
3.3: Explain the stages of the planning cycle
3.4: List and describe the types of plans and common planning tools
Mission, Vision, and Values
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Learning Outcomes: Mission, Vision, and Values
3.1: Distinguish between mission, vision, and values

3.1.1: Distinguish between mission and vision in business
3.1.2: Explain how a values statement can support the goals of an organization
Understanding Mission
• Mission Statement
• describes what organization needs to
do to achieve vision
• will be more specific than vision
statement
• conveys to stakeholders why the
organization exists
• explains how it creates value for the
market or the larger community
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Understanding Vision
• Vision Statement
• is a statement of organization’s
overarching aspirations of what it
hopes to achieve
• should inspire people
• motivate people to want to be part of
and contribute to the organization.
• should be clear and concise, usually
not longer than a short paragraph
Understanding Values
• Values Statement
• defines what organization believes in
• describes how people should
behave
• must be reinforced at all levels of
organization
• called the “code of ethics”
• provides a standard for employees to
judge violations.
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Practice Question 1
In his groundbreaking book, “The Lean Startup”, Eric Ries discusses the concept
of “true north” as it relates to planning. The true north concept is an attempt to
define an organization’s ultimate destination.
True north would be an example of which of these:
- Mission
- Vision
- Values
Class Activity: Mission, Vision, and Values
Compare and contrast the definitions of mission, vision, and values statements.
List similarities and differences of the three statements.
In addition, find examples from the same industry, such as sports clothing,
music, or another type product, using the definitions in the text. What do the
businesses have in common with their statements? How do they differ?
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Present: Mission, Vision, and Values
Pros and Cons of Planning
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Learning Outcomes: Pros and Cons of Planning
3.2: Explain the pros and cons of planning

3.2.1: Explain benefits of planning
3.2.2: Explain the drawbacks of planning
Understanding Pros and Cons of Planning
Pros of Planning Cons of Planning
• Provides a guide for action • Prevents action

• Improves resource utilization • Leads to complacency
• Provides motivation and • Prevents flexibility
commitment • Inhibits creativity
• Sets performance standards
• Allows flexibility
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Class Discussion: Planning
If having a good plan can lead managers to believe they know where the
organization is going and how it will get there, then how may this mindset
cause them to fail to monitor the progress of the plan or to detect changes in
the environment?
The Planning Cycle
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Learning Outcomes: The Planning Cycle
3.3: Explain the stages of the planning cycle

3.3.1: Explain the stages of the planning cycle
3.3.2: Explain why the planning cycle is an essential part of running a business
Six Stages of the Planning Cycle
• Define objectives
• Develop premises
• Evaluate alternatives
• Identify resources
• Plan and implement tasks
• Determine tracking and evaluation
methods
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Essential Aspects of the Planning Cycle
• Maintaining organizational focus

• Defining specific goals to consider the vision, mission, and values of the organization
• Encouraging diverse participation
• Provides opportunity for input
• Establish planning committees that intentionally include people from diverse
backgrounds
• Empowering and motivating employees
• Empowers people to contribute
• Motivates them to support outcomes
Class Activity: What is an Iterative Process?
Organizations have goals they want to achieve, so they must consider the best
way of reaching their goals and must decide the specific steps to be taken.
However, this is not a linear, step-by-step process. It is an iterative process with
each step reconsidered as more information is gathered. As organizations go
through the planning, they may realize that a different approach is better and
go back to start again.
What does the phrase “iterative process” mean? In your own words, explain
how this phrase connects to the six stages of the planning cycle.
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Present: What is an Iterative Process?
Types of Plans and Common Planning Tools
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Learning Outcomes: Types of Plans and Common

Planning Tools
3.4: List and describe the types of plans and common planning tools
3.4.1: Differentiate between the uses of long-term plans, short-term plans, and
operational plans
3.4.2: Differentiate between standing plans and single-use plans
3.4.3: Explain how policies, procedures, and regulations impact operational
plans
3.4.4: Explain the role budgets in the planning process
3.4.5: Differentiate between forecasting, scenario planning, and contingency
planning
3.4.6: Explain the use of "management by objectives" (MBO), SMART goals, and
benchmarking in planning
Types of Plans
• Long term
• Crucial to ultimate success
• Top management responsible for these plans
• Short term
• Allocate resources for a year or less
• must be monitored and updated
• Standing Plans
• Policies, procedures, and regulations
• Single-use
• One-time project or event (budgets, project schedules)
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Policies, Procedures, and Regulations
• Policies: broad guidelines for smooth

operation- hiring and firing,
promotions, etc.
• Procedures: steps to be followed in
established operations- reflect
company policies and support long-
term goals
• Regulations: what is allowed and
what is strictly prohibited= state and
federal governments issue
regulations often
Long-term and short-term goals
• Watch the short animated video for a brief overview of the importance of
long-term and short-term planning.
• Long Term and Short Term Planning Animated
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Role of Budgets in Planning Process
• Single-use and short-term
• Different budget types

• Financial: balance sheets/expense
statements
• Operating: project revenue against
expenditures
• Nonmonetary: allocate resources such
as labor and workspace
• Fixed: do not change: sales revenue
• Flexible: vary with level of activity
Role of Budgets in Planning Process (cont)
• Important planning tool: going “over budget” is sign of poor planning.

• In some cases, to routinely come in under budget is also viewed negatively,
because with more accurate budgeting those committed resources could
have been allocated to other projects.
• Often, projects compete for limited resources so the best budget is the one
that most closely projects actual expenses and revenue.
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Forecasting, Scenario Planning, and Contingency

Planning
• Forecasting
• Makes a prediction about future
• Scientific forecasting is using mathematical models, historical data, and statistical
analysis
• Long-range forecasting requires both quantitative numerical data and qualitative
data based on experts
• Contingency plans
• Describes what will happen in a possible—but not expected--situation
• Used to handle emergency situations
Management By Objective and

SMART Goals
• Management By Objective (MBO)
• Jointly set goals and objectives, plan tasks for employees, agree on standards for
evaluating performance, meet to review progress often
• SMART Goals
• Provides incentives to employees, empowering them to set own objectives, honestly
communication with workers
• Specific, Measurable, Achievable, Relevant, Time-bound
• Benchmarking: looing for performance levels outside organization

• Industry, geography, organization, processes, innovation
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Benchmarking
• looks for performance levels outside your organization, and sometimes across
departments
• Industry
• consider your competitors
• Geography
• Consider the regional economy
• Organization
• Consider the economic climate
• Processes
• May also be called “strategic benchmarking”
• Innovation
• Considers processes used by partners or competitors
Practice Question 2
Which of these benchmarking metrics would be most valuable to an

organization:
• Your competitors can produce their competing products for 25% less than your
manufacturing costs.
• Public corporations in your state are seeing growth rates of 15% year over year.
• Analysts are forecasting a 10% degradation of consumer purchasing next year.
• A review of annual reports reveals that the market leader has added a CRO (Chief
Revenue Officer) to their stable of executives.
• Industry consultants brief you that two new startups have entered the market and
have streamlined their testing processes to half the normal time required.
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Quick Review
• Distinguish between a mission, a vision, and values

• Explain the benefits and drawbacks of planning
• Explain the stages of the planning cycle
• List and describe the types of plans and common planning tools
• Define MBOs, SMART GOALs, and Benchmarking
Module 4: Environments and Strategic Management
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Explain the components and considerations of strategic management
4.1: Explain the role of strategy in management

4.2: Describe common frameworks used to evaluate the business environment
4.3: Describe common frameworks used for situational analysis
4.4: Explain the stages of strategy, and describe the common types of business strategies
4.5: Explain the key aspects of the environment that can affect strategy
The Role of Strategy in Management
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Learning Outcomes: The Role of Strategy in

Management
4.1: Explain the role of strategy in management
4.1.1: Explain the concept of competitive advantage
4.1.2: Explain the concept of value proposition
4.1.3: Explain how strategy relates to the overall management of a business
Understanding The Role of Strategy in Management
A company strategy
• is a comprehensive plan to achieve a
goal
• keeps company aligned with customer’s
needs
• involves a significant commitment of
resources
Competitors are firms that provide similar

products or services.
Companies must “beat” competitors by

striving to improve offerings to customers
and be better than alternatives.
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Competitive Advantage
When customers perceive the

distinction as being valuable, they will
prefer to purchase the business’s
product over a competitor’s.
Companies strive to provide a product

or service that is distinct,
or differentiated, in some way from
their competitors.
The best businesses provide a

combination of unique attributes that
competitors cannot match.
Creating Competitive Advantage
It may seem that the best way to create competitive advantage is to

do everything well. Unfortunately, this is not possible.
Businesses create competitive advantage by doing some things better than

their competitors.
Businesses that try to do too many things well often don’t succeed at doing
anything extremely well and don’t produce distinction. This is referred to as
being “stuck in the middle.”
The goal of companies is to create competitive advantage in ways that are

difficult or costly for competitors to copy. This is called a sustainable
competitive advantage.
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The Value Proposition
• Statement a company uses to

convince customers that its product
or service provides more value than
a competitor’s
• Communicates to customer main

reason a product/service is the best
• Communicated through webpage,

advertising, or social media- must
grab attention
Strategic Management
• Process of integrating all functions in an organization into a whole
• Allows organization to develop synergy
• Has Two main functions:

• Determine how company will create competitive advantage
• Make sure people in organization support the strategy
• Instils a culture of excellence
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Industry Analysis
• a method for a company to assess its market position relative to its

competitors.
• helps a company review various market and financial factors in its industry
that affect the business, including evaluating the competition.
• helps managers understand the important factors of the marketplace and
how these factors may be used to gain a competitive advantage.
• are an important tool for companies to assess their strategy in a shorter time
frame.
Class Discussions: Car Company Differentiation
Consider the following car companies. Is there a particular characteristic or

quality that you associate with each of them?
• Porsche
• Volvo
• Hyundai
• Toyota
• Ford
What is their competitive advantage? Summarize in your own words for they
differentiate from their competitors.
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Common Frameworks for Evaluating the

Business Environment
Learning Outcomes: Environments and Strategic

Management
4.2: Describe common frameworks used to evaluate the business environment
4.2.1: Explain environmental scanning and the PESTEL checklist for a company's
general environment
4.2.2: Explain the impact of Porter's "five forces" on industry profits
4.2.3: Explain competitor analysis
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Common Frameworks for

Evaluating the Business Environment
• Environmental scanning
• high-level, broad-based process of gathering, analyzing, and dispensing information
for new strategies
• helps managers avoid being taken by surprise
• Entails getting both factual data and qualitative opinions
• PESTEL
• organizing framework that allows decision makers to understand and make
connections with a mass of information
• key macro-environmental factors in order to understand interactions
PESTEL Factors
• Political: function of how much government intrudes or is involved in

organization’s operations- taxation/tariffs, regulations, elections, etc.
• Economic: growth, employment, inflation, and interest rates- foreign
operations will worry about exchange rates
• Social: demographics such as population growth, age distribution, and
attitudes toward safety and health- rising rates of obesity as example
• Technological: research and development, automation, and incentives
• Environmental: weather, climate change, air quality, natural disasters- risks
with manufacturing, agriculture, tourism, and sports entertainment
• Legal: discrimination laws, consumer protection laws, and employment
health and safety policies- antitrust, piracy, and copyright laws affect how
organizations operate
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Porter’s Five Forces
Michael Porter, a well-known business consultant and professor at Harvard

University, identified five critical external factors that affect strategies being
developed by organizations in any industry.
This system, known as Porter’s Five Forces, has become an important

management strategy tool.
It measures the competitiveness of an industry and thus its attractiveness or

potential profitability. An unattractive industry is one in which the combination
of these five forces acts to drive down overall profitability.
Porter’s Five Forces

Five critical external factors that affect strategies being developed by
organizations in any industry
• Threat of new entrants:
• threat that new competitors pose to existing business in industry
• Threat of substitute products or services:
• different product or service but performs the same purpose in the mind of the
consumer
• Competitive rivalry within industry:
• intensity of competition is main force to determine profitability
• Bargaining power of buyers:
• amount of pressure customers can put on a seller
• Bargaining power of suppliers:
• limits ability of the seller to make a profit- can pressure buyers by raising prices, lowering
quality
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Competitor Analysis
• A robust competitive analysis will allow you to focus on those companies that
will compete for customers in your target market.
• A company’s analysis looks at a competitor and inquires about:
• General Background information
• Financial inquiries
• Products that they sell
• Customers that they serve
• Advertising and Sales distribution channels
• Personnel and their plans for hiring
Practice Question 1
What resources would be valuable to a researcher to conduct a competitive

analysis?
1. Competitor's annual report and quarterly filings.
2. Independant industry analysts reports.
3. Consumer focus groups.
4. Search engine analysis.
5. Observations from ex-employees (Glassdoor, etc.).
6. Social media.
7. Competitor press releases and public statements.
8. Secret shoppers.
9. Interviews with common vendors.
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Class Activity: PESTLE vs Porter’s Five Forces
Compare and contrast the value of using the PESTLE process and Porter’s Five
Forces for completing an environmental scan for a business. What are the
negative and positive aspects of both approaches?
Use examples of businesses to discuss your answers.
Present: PESTLE vs Porter’s Five Forces
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Common Frameworks for Situational Analysis
Learning Outcomes: Common Frameworks for

Situational Analysis
4.3: Describe common frameworks used for situational analysis
4.3.1: Differentiate among five components of industry environment: customers,
competitors, suppliers, regulations, and advocacy groups
4.3.2: Explain SWOT
4.3.3: Explain the resource-based view of strategy
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Understanding Common Frameworks for Situational

Analysis
Situational Analysis
• Looks more closely at external and internal conditions that affect particular
organization
• Considers what impact these factors may have on a specific organization
Five Key Components for Situational Analysis

• Customers
• Competitors
• Suppliers
• Government
• Legal issues (regulations and advocacy)
Situational Analysis Components
• Customers: identify target customer, understand specific customer needs,

show how product or service meets those needs
• Competitors: must be able to identify specific competitors and assess
potential for taking market share
• Suppliers: supply chain is a system comprised of organizations, information,
resources, etc. that brings products to consumer
• Regulations: affects investment and spending, corporate image, and risk
management- greater burden on small companies unless exempted due to
size
• Advocacy Groups: aim is to influence public opinion, public policy, and
company behavior- represent political, economic, and social interests
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What Does a Situational Analysis Provide?
A Customer Analysis :
• Identifies the target customer.
• Is this customer base growing or is it decreasing?
• What are your customer demographics (age, income, location, gender, politics, etc.)?
What is the revenue of these customers?
• How much discretionary income do they have?
• Builds understanding of the specific customer needs

• Why do they buy certain brands?
• How do make their purchasing decisions?
• Do they purchase in person or online?
• Shows if and how your product or service meets those needs.
Competitors, Suppliers, and Regulations

• identify an organization’s specific competitors and assess their potential for
taking market share.
• be aware of future initiatives of the competition (as much as is possible)
• examine the competitors’ financial and marketing performances.
• The supply chain is a system comprised of organizations, information,

resources, people, technology, and activities that bring products or services
from a supplier to a consumer.
• Complying with regulations often involves a trade-off between short-term

profits and long-term public relations and social responsibility.
• Advocacy groups are also known as special interest groups, public interest
groups, environmental groups, or political support groups.
• influence public opinion, public policy, and company behavior.
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SWOT: A Situational Analysis Summary
• Method that examines internal

strengths and weaknesses of an
organization and external
opportunities/threats
• SWOT
• Strengths- particular skills and resources
to pursue goals effectively
• Weaknesses- where it is lacking resources
and prevented from pursing goals
• Opportunities- conditions favorable to
organization
• Threats- conditions that prevent
organization from achieving its goals
Practice Question 2
To which quadrant of a SWOT analysis would this example belong?
“-Vertical Integration: competitors have control of supply and distribution

channels to control the market.
-Price fluctuations: prices of ingredients are elastic and fluctuate without
warning.
-Marketing costs: competitive marketing campaigns need to be extensive and
are quite expensive.”
1. Strengths
2. Weaknesses
3. Opportunities
4. Threats
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Resource-based View Strategic Approach (RBV)
The resource-based view (RBV) argues that focusing on an organization’s

strengths is essential to achieve a sustained competitive advantage.
• Tangible assets are physical things such as land, equipment and machines,
and real estate. Although they are necessary, they aren’t unique and
competitors can fairly easily acquire these kinds of assets.
• Intangible assets are anything an organization can own that is not physical.
Examples include brand names, intellectual property, and the organization’s
reputation and goodwill. These kinds of assets are not easily acquired and
usually contribute heavily toward a sustained competitive advantage.
VRIO Framework
VRIO stands for the four key characteristics that a resource must have if it is to
produce sustained competitive advantage.
• Valuable. A resource is valuable if it enables the company to take

advantage of opportunities or defend against threats.
• Rare. If only one or two companies can acquire a resource it is considered
rare.
• Inimitable. If another organization can’t copy, buy, or find a replacement for
the resource, it is inimitable.
• Organized to capture value. The three characteristics listed earlier are
“necessary but not sufficient conditions” to achieve a sustained competitive
advantage.
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Stages and Types of Strategy
Learning Outcomes: Stages and Types of Strategy
4.4: Explain the stages of strategy, and describe the common types of business
strategies
4.4.1: Explain the stages of strategy
4.4.2: Explain Porter's general types of competitive strategies
4.4.3: Explain e-commerce strategy
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Strategic Management Process
• Strategic Objectives and Analysis:

• defines vision, mission, and values combined with PESTEL and SWOT
• Strategic Formulation:
• PESTEL
• SWOT
• Strategic Implementation
• Sometimes referred to as strategic execution
• Strategic Evaluation and Control
Porter’s Competitive Strategies
• Low Price Leadership

• Reduces buyer bargaining, forces out
less efficient rivals, makes it hard for
new entrants to compete
• Differentiation Leadership Strategy

• Buyers are less price-sensitive, rivalry is
reduced, difficult for new entrants to
copy product/service, uniqueness
makes it hard to substitute
• Integrated
• Provides values to two types of
customers, forces out less efficient
rivals
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E-Business and E-Commerce
E-Business is business that takes place over digital processes using computer
network rather than in physical location
• Relates to decreasing production costs and increasing efficiency
• Creates a customer focus
• Addresses internal management
E-Commerce refers to exchanges or transactions that occur electronically.

• Many organizations have sales and marketing teams dedicated to devising
strategies for capturing their share of the growing online market.
Class Discussion: Differentiation
A strategy based on differentiation (distinction) calls for goods and services that
offer unique features and that have high value for the target customer. The
features must be perceived by the customer to be so much better than what
the competition offers that they are worth an additional cost.
What are some of the advantages and disadvantages of a differentiation

strategy?
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How Environment Affects Strategy
Learning Outcomes: How Environment Affects

Strategy
4.5 Explain the key aspects of the environment that can affect strategy
4.5.1 Explain the key aspects of the environment that can affect strategy (e.g.
stability, complexity, resource scarcity, and uncertainty)
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Understanding How Environment Affects Strategy
• Stability
• The rate at which change occurs- in a stable environment, change is slow
• A dynamic environment is rapidly changing
• Complexity
• Number of elements in organization’s environment and their connections—variables
hard to identify and measure and often to understand
• Resource scarcity
• Availability of critical resources or those in high command
• Uncertainty
• How predictable environmental conditions are
Class Activity: Strategy and the Business

Environment
Conditions of instability, complexity, resource scarcity, and uncertainty make it
impossible for managers to anticipate change and make rational decisions.
Instead, they must operate with incomplete data and base decisions on
assumptions and best guesses.
Choose a product that you use in everyday life to discuss in small groups. Using
the four factors that influence the business environment, discuss ways in which
you would need to consider each in your management role.
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Present: Strategy and the Business

Environment
Quick Review
• Explain the concept of competitive advantage and value proposition and

how they relate to the overall business management
• Explain environment scanning and the PESTEL checklist for a company’s
general environment
• Describe the impact of Porter’s “five forces” on industry profits and explain
competitor analysis
• Differentiate among five components of industry environment and explain
SWOT/resource-based view of strategy
• Explain the stages of strategy, Porter’s types of strategies, and e-commerce
strategy
• Explain the key aspects of the environment that can affect strategy
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Module 5: Decision Making
Explain the process and techniques of individual and group decision-making
5.1: Describe the barriers to individual decision-making and common styles of decision-
making
5.2: Explain the concept of “rational decision making” and contrast it with prospect
theory, bounded rationality, heuristics, and robust decisions
5.3: Explain evidence-based decision making and its tools
5.4: Describe the components and use of a decision tree
5.5: Explain common techniques used to manage group decision making
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Barriers to Individual Decision Making and

Styles of Decision Making
Learning Outcomes: Barriers to Individual Decision

Making and Styles of Decision Making
5.1: Describe the barriers to individual decision-making and common styles of
decision-making
5.1.1: Describe the barriers to decision making
5.1.2: Identify common styles of decision making
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The Decision Making Process: Information-Related

Barriers
• When information is either incorrect or
incomplete
• Uncertainty is introduced and any decision
made can be misguided
• When too much information is available

• Difficult to grasp big picture and recognize
important information
• Creates an inability to process everything
to decision maker’s satisfaction
The Decision Making Process: Circumstance and

Time Related Barriers
• Stress from personal life
• May be less objective or disciplined in following
decision-making process
• Provides an opportunity to intentionally protect
against those tendencies
• Time
• When decision makers feel rushed, their
judgement often suffers
• It is important to commit to taking enough time
for decisions.
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The Decision Making Process: Cognitive Biases
• Confirmation Bias: information that we believe will confirm our own judgement
• Framing Bias: influenced by the way that a situation or problem is presented
• Hindsight Bias: believe falsely we would have accurately predicted the outcome
of an event after it is actually known
• Anchoring: focus on initial information and then failing to adjust to later
information
• Halo Effect: initial attitude that we have toward certain individuals/ organizations
• Overconfidence Bias: individual decision maker trusts own judgement and allows
it to override judgement of others
• Status-Quo Bias: prefer to avoid change and maintain status-quo
• Pro-Innovation Bias: giving preference to any new and innovative ideas simply
because it presents something new
Rational Decision Making vs. Other Types of

Decision Making
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Learning Outcomes: Rational Decision Making vs.

Other Types of Decision Making
5.2: Explain the concept of “rational decision making” and contrast it with
prospect theory, bounded rationality, heuristics, and robust decisions
5.2.1: Summarize the steps in the rational decision-making process
5.2.2: Differentiate between prospect theory, bounded rationality, heuristics, and robust
decisions
Common Styles of Decision Making

Satisficing
• a combination of the words “satisfy” and “suffice”
• means settling for a less-than-perfect solution when working with limited information
Optimizing
• involves collecting as much data as possible and trying to find the optimal choice
Intuitive
• subconscious mind is automatic, rapidly consolidating data and producing a decision
almost immediately
• Rational
• conscious mind requires more effort using logic and reason
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Combinatorial vs. Positional Decision Making
• Combinatorial decision-making
approach
• has a final outcome in mind, making a
series of moves that try to link the initial
position with the final outcome in a firm,
narrow, and more certain way.
• Positional decision-making approach
• is “looser”
• sets up strong positions on the board and
preparing to react to the opponent.
• using this strategy increases flexibility,
creating options as opposed to forcing a
single sequence.
Rational Decision Making
• Step 1: Identify Problem

• Step 2: Establish Decision Criteria
• Step 3: Weigh Decision Criteria
• Step 4: Generate Alternatives
• Step 5: Evaluate Alternatives
• Step 6: Select the Best Alternative
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Data, Logic, and Facts
Rational decision making is defined not only by adherence to a careful

process, but also by a logical, data-driven manner of following the steps of that
process.
In the evaluation stage, the process usually requires numeric values.
If they are not fully weighted, the final analysis will lean toward whatever is
easiest to measure.
In a company, the final decision usually belongs to an executive, who takes the
analysis as a guide but makes his own decision.
Rational Decision Making (cont.)
• Prospect Theory
• from field of behavioral economics
• is a complex analysis of how individuals
make decisions when there is risk
involved
• is a description of how people made
actual decisions in experiments.
• It doesn’t say whether this is right or
wrong. It is in the hands of decision
makers to determine whether these
tendencies are justifiable or if they
should be overridden by a rational
approach.
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Bounded Reality
A recognition that human knowledge and capabilities are limited and

imperfect
Decision makers
• do not have access to all possible information relevant to the decision, and
the information they do have is often flawed and imperfect.
• have limited analytical and computational abilities.
• are not capable of judging their information and alternatives perfectly.
inevitably make misjudgments in the evaluation process.
• have unlimited time to make decisions.
• real-life situations provide time constraints in which decisions must be made.
Heuristics and Robust Decisions
Heuristics:
• One of the approaches that might stem from a recognition of bounded rationality is
the use of heuristics.
• These are analytical and decision-making tools that help simplify the analysis process
by relying on tried and tested rules of thumb.
• A heuristic simplifies a complex situation and allows the decision maker to focus only
on the most important pieces of information.
Robust Decisions:
• revolve around the inability to predict the future with certainty. Rather than rely on an
imperfect analysis to determine the “best” decision, a robust decision provides a plan
that will work in light of numerous uncertainties.
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Class Discussion: Why Decision Making Theories?
Why is it important to learn the theories behind decision making? Why does it
matter to you as a future leader?
Evidence-Based Decision Making
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Learning Outcomes: Evidence-Based Decision

Making
5.3: Explain evidence-based decision making and its tools
5.3.1: Explain evidence-based decision making
5.3.2: Explain the uses of descriptive and predictive analytics
Evidence Based Decision Making
• An evidence-based approach asks a

key question: Has such a course of
action been proven to be effective for
others in similar situations?
• Even if the data itself is reliable, how
that data is used remains a key
consideration.
• Proof of Success: relying on actual
experimentation to demonstrate
likelihood of success
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Descriptive and Predictive Analysis
• Descriptive
• Goal is to understand and describe
what has taken place as revealed by
data sets
• Attempts to explain what data reveals
about events that have occurred
• Daunting task to accomplish
• Predictive
• Projecting future trends
• Subjected to discipline of evidence-
based principles
Practice Question 1
In 2015, Walmart’s revenue fell for the first time in Walmart’s 45-year run as a
public company. Shoppers were fed up. They complained of dirty bathrooms,
empty shelves, endless checkout lines, and impossible-to-find employees. Only
16 percent of stores were meeting the company’s customer service goals.
Walmart decided to conduct an experiment. with heresy! They would raised
wages, increased training, and provided employees with give more consistent
regular schedules. Early tests showed a strong positive response from customers.
By early 2016, the proportion of stores hitting their targeted customer-service
ratings had rebounded to 75 percent. Sales were rising again! Walmart
executives switched from the norm—cutting costs—to
a. evidence-based decision making

b. Rational decision making
c. Heuristics
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Using a Decision Tree
Learning Outcomes: Using a Decision Tree
5.4: Describe the components and use of a decision tree

5.4.1: Describe the components and use of a decision tree
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The Decision Tree
• Useful tools for situations where financial data and probability of outcomes
are relatively reliable
• Tree starts with decision node, which decision should be made
• A branch is created for each choice and along branch there are decision
pathways
• Uncertainty node is sometimes added, but eventually each pathway
reaches final outcome
• Each division involves costs, probability of each outcome, and calculations
about return value
Figure: Using a Decision Tree
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Practice Question 2
Happy Socks sells high-quality socks online. Potential customers go through a

three-step process online to complete a sale. First, they find Happy Socks,
usually through advertising—a Google ad, for example. Customers decide to
click on the ad or not. Second, they search for socks they may like and decide
to put something in their “cart” or not. Finally, they decide to complete the
transaction or not. Happy Socks can invest more in advertising, or in its online
store, or in speeding up its checkout process. If Happy Socks wanted to use a
decision tree to help them decide where to invest, each of these steps in the
customer’s journey would be?
a. an outcomes
b. a pathway
c. a decision mode
Managing Group Decision Making
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Learning Outcomes: Managing Group Decision

Making
5.5: Explain common techniques used to manage group decision making
5.5.1: Identify the advantages of group decision making
5.5.2: Identify the disadvantages of group decision making
5.5.3: Describe techniques managers can use to guide and reach consensus in groups
Understanding Managing Group Decision Making
• Advantages
• Sum of knowledge, skills, and creativity in group setting
will always be greater than that of individuals
• Increased understanding of the issue and decision
amongst team members
• Disadvantages
• Slower process and more expensive
• Tendency for group members to support a proposed
group position
• Decisions may move toward extremes
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Ways to Facilitate Group Decision Making
• Brainstorming: builds group’s

cohesiveness due to
encouragement to contribute
• Group techniques:
• Write ideas on how to solve problem
• Each member presents ideas
• Group engages in discussion
• Members rank-order ideas
• Alleviates fear of criticism
• Devil’s advocacy or Delphi
technique
Group Decision Making Wrap Up
• Decisions decided through

consensus
• Balance strengths and weaknesses
• Must keep discussion on topic
• Effective group leader will find
system that works best for each
particular group and setting
• Must be prepared to diffuse any issues
and bring group back on track
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Class Activity: Group Decision Making
• An effective group leader will find the system that works best for each
particular group and setting. If at any point interpersonal conflict or tension
arises, the group leader must be prepared with a plan to diffuse the situation
and bring the group back to productive cooperation.
• Break into groups and create a simulation of one of the group decision-
making techniques. Create a problem to be solved with as much detail as
time permits. Each group must select a different technique. Exchange the
simulations created between groups and have each group appoint a
facilitator to run the simulation. Take notes of the number of ideas generated
and the quality of those ideas, and present a retrospective to the class of
your experience.
Present: Group Decision Making
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Quick Review
• Describe the barriers to decision making

• Summarize the steps in the rational decision-making process
• Differentiate between prospect theory, bounded rationality, heuristics, and
robust decisions
• Explain evidence-based decision making
• Explain the uses of descriptive and predictive analysis
• Describe the components and use of a decision tree
• Identify the advantages/disadvantages of group decision making
• Describe the techniques used to guide and reach consensus
Module 6: Organizational Structures
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Identify common organizational structures and the advantages and

disadvantages of each.
6.1: Explain the purpose of organization

6.2: Describe common organizational structures and their advantages and
disadvantages
6.3: Identify important factors for consideration in organizational design
6.4: Describe current trends in organization and job design
The Purpose of Organization
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Learning Outcomes: The Purpose of Organization
6.1: Explain the purpose of organization

6.1.1: Explain the efficiencies created by specialization and the division of labor
6.1.2: Describe characteristics of organizational structures
6.1.3: List Edgar Schein's four common elements of an organization
Common Elements
• Common Purpose. Unifies

employees and helps them
understand organization’s direction
• Coordinated Effort. Maximizes
resources with the common purpose
in mind- managers need to
leverage employee skills and
experiences
• Specialization and the Division of
Labor
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Common Elements Continued
• Hierarchy of Authority: Determines formal, position-based reporting lines and

expresses who reports to whom
• CEO, business sales, office staff, customer service
• Centralization and Decentralization: Degree to that decision making is
concentrated to the top of the organization (key decisions made by
executive team)
• Formalization: Extent to which jobs within an organization are standardized
Common Organizational Structures
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Learning Outcomes: Common Organizational

Structures
6.2: Describe common organizational structures and their

advantages and disadvantages
6.2.1: Differentiate between the four basic types of departmentalization
(function, product, customer, and geography) Types of Departmentalization
6.2.2: Distinguish matrix organizations from traditional departments
6.2.3: Differentiate between team-based structures, networks, and modular
organizations
Departmentalization
• Functional Structure
• Groups employees based on their expertise (e.g., operations and finance)
• Generally used to allow for a higher degree of specialization
• Product Structure
• Groups employees based on product lines (e.g., aviation and transportation)
• Generally used in organizations with multiple products
• Customer Structure
• Groups employees based on which customers they do their work for (e.g., outpatient
and urgent care)
• Generally used in organizations that have products or services unique to specific
market segments
• Geography Structure
• Groups employees based on their physical location
• Generally used in large organizations that span multiple regions
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Matrix Organizations
• Organized by two dimensions

(e.g., product and geography)
• Each employee will have two
“bosses”
• Combines the localization
benefits of the geography
structure with those of the
functional structure.
• Advantage: Provides both
flexibility and more balanced
decision making
• Disadvantage: Complexity
which can lead to confusion
Practice Question 1
Nike has a complex organization structure. It is broken down to divisions for

Manufacturing, Sourcing, IT, Procurement, and Operations/Technology. There
are also divisions that specialize in Running, Men’s Training, Women’s Fitness,
Soccer, Basketball, and Digital Sports.
Nike’s organization could be classified as this type of structure:
1. Functional
2. Product
3. Geography
4. Matrix
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Team-based Structures, Networks, and Modular

Organizations
• Team-based Structure. Focused on a few objectives and usually disbanded
at project’s end
• Team. Made up of people with complementary skills who are working toward
a common purpose- created by grouping employees in a way that
generates a variety of expertise
• Network Structure. Little bureaucracy and features decentralized decision
making- holacracy which attempts to achieve control and coordination by
distributing power
• Modular Organizations. Business that has areas that can be easily separated
from company without jeopardizing it
Factors Impacting Organizational Design
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Learning Outcomes: Factors Impacting

Organizational Design
6.3: Identify important factors for consideration in organizational

design
6.3.1: Identify aspects of the external environment that influence the design of
an organization's structure
6.3.2: Identify aspects of the internal environment that influence the design of an
organization's structure
6.3.3: Explain how business growth cycle affects organizational choices
External and Internal Environment
• External • Internal
• Greater external forces, greater • Skill variety: degree to which job
complexity of external environment requires use of high-level skills
• Task identity: degree to which person
is in charge of completing work
• Task significance: degree to which
person’s job affects customers
• Autonomy: degree to which person
has freedom to perform their tasks
• Feedback: degree to which people
learn how effective they are being
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Growth Cycle
1. Creativity. Marked by early growth of company due to emphasis on

product creation
2. Direction. Installs functional organizational structure with formal
communication
3. Delegation. Marked by application of decentralized organizational
structure
4. Coordination. Merging of local units into product groups and establish
formal planning procedures
5. Collaboration. Takes collaboration with key leaders, managers, and
employees to create better structure
Class Activity: Organization Design
• Design an organizational structure for the following hypothetical businesses:

• A mature manufacturing company with a narrow product line and customers world-
wide.
• A startup software company.
• An apparel company with five brand businesses distributed internationally,
• A media company composed of several acquisitions with business focused on TV, film,
internet and a streaming service.
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Current Trends in Organization and Job

Design
Learning Outcomes: Current Trends in

Organization and Job Design
6.4: Describe current trends in organization and job design

6.4.1: Explain the advantages of flatter organizational structures
6.4.2: Explain the benefits of employee empowerment
6.4.3: Explain the trend toward flexible work schedules
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Understanding Current Trends in Organization and

Job Design
• Flatter Organizational Structures: focuses on horizontal growth, digging
deeper, expanding knowledge, and getting better at core competencies
• Employee Empowerment: trust employee’s ability and give them the
authority to make decisions
• Flexible work arrangements- reduced workload, compressed work weeks, and remote
work
Practice Question 2
Studies have shown the recent trend of self-organizing teams, flexible work
hours, employee empowerment, and flatter organizations fosters which of the
following benefits?
1. Enhanced employee job satisfaction.

2. Increased employee engagement.
3. Improved customer service.
4. Increased productivity.
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Quick Review
• Can you correctly explain the efficiencies created by specialization and

division of labor?
• Are you now able to describe characteristics of organizational structures?
• Please list Edgar Schein’s four common elements of an organization
• Can you differentiate between four basic types of departmentalization?
• Are you able to differentiate between team-based structures?
• Please distinguish matrix organizations from traditional departments
More Quick Review
• Can you correctly identify aspects of the external/internal environment that

influence the design of an organization’s structure?
• Please explain how business growth cycle affects organization
• Can you explain the advantages of flatter organizational structures?
• Please explain the benefits of employee empowerment
• Are you able to explain the trend toward flexible work schedules?
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Module 7: Human Resource Management
Discuss the purpose of HR management and its legal constraints
7.1: Explain the purpose of human resource management for both the organization and
individuals
7.2: Summarize the key laws affecting human resource practices
7.3: Describe effective strategies for recruiting and selecting qualified job applicants
7.4: Describe employee orientation and training approaches
7.5: Describe employee development and performance evaluations
7.6: Describe common employee compensation, incentive, and benefits strategies
7.7: Describe the options for employee separation/termination
7.8: Describe current trends and challenges in HR management
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Purpose of Human Resource Management
Learning Outcomes: Purpose of Human Resource

Management
7.1: Explain the purpose of human resource management for both the
organization and individuals
7.1.1: List the functions of human resource management
7.1.2: Explain how HR decision reflect the corporate strategy
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Main Functions and Examples
• Recruitment and Selection

• Training and Development
• Compensation
• Safety and Health
• Employee and Labor Relations
• Terminate employee contracts when necessary
Role of Human Resources Management
• Planning to hire or transfer employees

• Training new employees as company makes changes
• Developing incentive programs to help company compete with others
• Researching laws and policies related to employees in other states/countries
• Setting up employee transportation and other logistics
• Involves a great many legal details- mistakes in benefits or passing over

ethics policies can lead to trouble
Day in the Life – Human Resources
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Laws Affecting Human Resource Practices
Learning Outcomes: Laws Affecting Human

Resource Practices
7.2: Summarize the key laws affecting human resource practices
7.2.1: List the protected employee classes in the United States
7.2.2: Summarize the key laws related to employee discrimination
7.2.3: Explain what HR managers can do to protect the company against discrimination
lawsuits
7.2.4: Explain HR's role in workplace safety
7.2.5: Explain collective bargaining and the law that governs it
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Protected Classes of Employees
• Certain groups are legally protected

from discrimination
• Can’t discriminate against race or
color, national origin, sex, or religion
• HR managers can protect company
against discrimination lawsuits by
understanding law and putting
policies into place to avoid- can
work with upper management to
address issues
Employment Laws
• Children’s Act 1998 (Act 560)

• Constitution of the fourth Republic of Ghana, 1992
• Employment Rights Act 1996 (ERA)
• Labour Act, 2003 (Act651)
• Labour (Amendment ) bill, 2012
• Labour Regulations, 2006 (L.I. 1822)
• Labour Regulations, 2007 (L.I. 1833)
• Persons with Disability Act, 2006 (Act 715)
• Workman’s Compensation Act.1987 (PNDCL 187)
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Practice Question 1
The EEOC’s decision in “Baldwin” bars discrimination in this “seventh” protected

category:
1. Age.
2. Race,
3. Religion.
4. Sexual Orientation.
5. Country of Origin
Workplace Safety and Collective Bargaining
• Workplace Safety: require employers to provide safe

workplace
• Can lower risk by substituting less dangerous procedures,
isolating dangerous materials/machines, ensuring proper
safety equipment, putting policies to decrease risk by
taking safety precautions, and requiring appropriate
equipment such as googles or gloves
• Collective Bargaining: process by which employers
work with union representatives to decide on
policies, wages, and benefits
• Labor unions gained power- legal for workers to
organize/join unions
• NLRB oversees rules and policies
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Recruiting and Selecting Qualified Job

Applicants
Learning Outcomes: Recruiting and Selecting

Qualified Job Applicants
7.3: Describe effective strategies for recruiting and selecting qualified

job applicants
7.3.1: Describe effective strategies for recruiting and selecting qualified job
applicants
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Basics of Recruiting and Selecting Qualified Job

Applicants
• Steps for recruitment and selection: advertising for candidates, reviewing
applications, candidate screening, conducting interviews, & making offers
• Job analysis: ask questions, observe workers, conduct surveys, and determine
what job is required to do well
• First step toward creating job description and specification
• HR department takes over: must reach out to qualified candidates by
• Advertising in newspapers and trade publications
• Online sources such as Monster and CareerBuilder
• Social sites such as LinkedIn or even Facebook
Screening Applicants
• Look carefully at resumes, skills, and

level of experience
• Background checks on those who
appear promising
• Phone interviews
• Face-to-Face Interview
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The Job Offer
• Once hiring manager decides who

they’d like to hire, HR makes an offer
• Includes information about salary
and benefits as well as details about
job requirements
• If candidate is interested, they will
need to sign contract
• Must have concrete reasons for
choosing one candidate over
another
Employee Orientation and Training
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Learning Outcomes: Employee Orientation and

Training
7.4: Describe employee orientation and training approaches

7.4.1: Describe employee orientation approaches
7.4.2: Describe employee training approaches
Basics of Employee Orientation and Training
• When employee first arrives, they more than likely have preconceived
notions about what is expected
• Serve many positive purposes:
• Lower costs by helping employee get up to speed
• Help employee gain confidence and feel valued
• Improve employee’s performance by helping them build skills and relationships quickly
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How HR Onboard Employees and Managers
• HR professionals are usually in charge of ensuring new hires have completed

all paperwork, signed up for benefits, reviewed ethics policies, and received
tour of workplace
• Also set up and implement training
• Managers will: send welcome letters, meet with HR to discuss hiring, meet
with team members, assign individuals to mentor, plan new hire’s schedule,
plan for training the new hire, set up lunch plans to get to know each other,
etc.
Employee Training
• Self-paced online training

• Hands-on training with equipment
• Leader-led group training for “soft”
skills (coaching, team-building)
• Formal business courses
• Shadowing skilled employee
• Mentoring to review work
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Employee Development and Performance

Evaluations
Learning Outcomes: Employee Development and

Performance Evaluations
7.5: Describe employee development and performance evaluation

7.5.1: Describe employee development approaches
7.5.2: Describe performance evaluation approaches
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Understanding Employee Development and

• Best employees often started near
bottom and worked their way up to
top
• Help, support, and encouragement
part of employee development
• Managers must ensure their
employees develop their fullest
potential
• Delegating responsibility
• Being aware of development
opportunities
• Offering opportunities to employees
• Providing meaningful feedback
• Including rising employees in meetings
Formal Employee Development Strategies
• Training in areas such as leadership,

management, negotiation, and
other areas useful to new manager
• Often planned and implemented by
HR or consultants
• Skills such as interpersonal
communication, public speaking,
negotiation, leadership skills, etc. as
well as coding, accounting, etc.
• Workshops
• Online programs
Certification programs
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Informal Employee Development Strategies
• On the job training: Newer employee watches and imitates more

experienced worker
• Shadowing: Follows experienced worker to watch and learn from them
• Mentorship and Coaching: Offered by managers
Practice Question 2
What is the best method of reducing the high cost of employee turnover?
1. Preparing a detailed job description to screen out unqualified employee

candidates.
2. Creating a strong onbarding plan for new hires.
3. Implementing a series of training activities for each employee.
4. Designing a employee development plan to expand both hard and soft
skills.
5. Offering competitive compensation, benefits and incentives to employees.
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• Profound influence on employee’s

career
• Popular approaches
• Checklists
• Rating Scales
• Comparative Techniques
• Narrative Techniques
• 360 Feedback
• Cost Accounting
• Management by Objectives
Employee Compensation, Incentive, and

Benefits Strategies
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Learning Outcomes: Employee Compensation,

Incentive, and Benefits Strategies
7.6: Describe common employee compensation, incentive, and

benefits strategies
7.6.1: Describe common employee compensation and incentive strategies
7.6.2: Describe common benefits strategies
Compensation and Payroll Management
• Compensation
• Competitive analysis, cost of living,
labor negotiations, personal
qualifications, supply and demand
• Payroll Management
• Involves collecting employee
information, tracking work hours for
overtime pay, benefit and bonus
records, management of taxes
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Incentives
• Rewards for good work and consequences for poor performance

• How to encourage- depends on culture of business, needs of individuals, and
options available
• Examples:
• Low-cost, fun perks (catered lunches, free snacks)
• Family events
• Significant incentives such as points towards World Series tickets
• Trips to conferences or inclusion in upper-level meetings
Benefits
• Part of compensation package: highly

valuable to employees
• Different forms of benefits
• Healthcare
• Paid vacations
• Retirement
• Stock and Stock options
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Employee Separation and Termination
Learning Outcomes: Employee Separation and

Termination
7.7: Describe the options for employee separation/termination

7.7.1: Describe the options for employee separation/termination
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Voluntary Separation
• When employee leaves their job

for:
• Better opportunities
• A family move
• Illness or disability
• Job dissatisfaction
• Changing circumstances
• Process usually handled by HR
• Retirees often honored depending
on length of job duration
Involuntary Termination
• When employee is asked to leave the job

• Layoffs: unfortunate outcome of changes in industries or problems with individual
corporations- often when project has ended
• Firing: when someone breaks company rules or laws, are unable or unwilling to do their
jobs, or created problems for the company due to behavior
• Manager usually decides: should address problems directly with employee, work with
human resources, get HR involved if necessary, and then fire or lay-off
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Class Discussion: Rights and Termination
One of the most controversial HR issues involves the First Amendment and the
workplace. The First Amendment states that “Congress shall make no
law...infringing on freedom of speech”. Recently a Google employee was
terminated for disseminating an internal memo that implied women are inferior
to men as engineers. This employee was fired by Google.
Does Google have the right to fire an employee thus restricting his freedom of
speech.
Current Trends and Challenges in HR

Management
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Learning Outcomes: Current Trends and

Challenges in HR Management
7.8: Describe current trends and challenges in HR management

7.8.1: Describe common effects of instant communication on motivation
and work-life balance
7.8.2: Describe the advantages of part-time employees
7.8.3: Describe the disadvantages of part-time employees
7.8.4: Explain the decline in union membership and the impact on labor
relations
Part-Time Employees
• Benefits: flexible, budget-friendly,

brought on for specific
projects/jobs
• Downsides: difficult to manage,
onboarding, training, and
shadowing are expensive
• Largest downside is they can learn
insider information or business secrets
and use what they’ve learned to start
own business or sell to competitors
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Pros and Cons of Social Media

and Instant Communication
• Pros:
• Able to reach clients and manage
business transactions
• Creation of technology policies-
limiting access to smartphones or
tablets
• Cons:
• Invades time between work and
leisure- difficult to leave work at work
and home at home
• Draining time and energy away from
productivity
Labor Relations
• Effort to get rid of unions and reduce labor costs since 1980- fairly successful
• Unionization means higher wages
• Fewer unions means more ability to hire contingent and part-time workers,
pay lower wages, ship jobs overseas, and increase profits
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Quick Review
• Please list the functions of human resource management and explain how
HR decisions reflect the corporate strategy
• Can you list the protected employee classes in the U.S.?
• Are you able to summarize key laws related to discrimination and how the
company can protect against lawsuits
• Explain HR’s role in workplace safety
• Explain collective bargaining and the law the governs it
• Can you describe effective strategies for recruiting and selecting job
applicants?
• Are you able to describe employee orientation and training approaches?
Module 8: Groups, Teams, and Teamwork
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Explain group and team dynamics within organizations
8.1: Describe common group behaviors that can help or hurt organization goals
8.2: Describe the types of teams found in business organizations
8.3: Describe common techniques used to build effective teams
8.4: Describe the five stages of team development
8.5: Describe common types and causes of conflict that arise within teams
Common Group Behaviors
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Learning Outcomes: Common Group Behaviors
8.1: Describe common group behaviors that can help or hurt

organization goals
8.1.1: Discuss social cohesion, social loafing, and collective efficacy
Understanding Common Group Behaviors
• Team: Involves two or more people, people on team share goal, and they
hold each other mutually accountable for performance of team
• Common behaviors: If team is successful, individuals may not be recognized
• Social Cohesion: Willingness of members of a society to cooperate with each
other to survive and prosper—social and emotional bonds
• Social Loafing: When one or more group members fail to do their fair share of
work within the group
• Collective Efficacy: Belief that it is capable of organizing and working
together to reach goals
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Practice Question 1
The major difference between a group and a team is:
1. A group involves over 25+ members while a team usually has less than 10
persons.
2. A team is a more motivated collection of individuals than a group.
3. A team has both a common purpose and shared accountability.
4. A group is more diverse in culture and skill set.
Types of Teams
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Learning Outcomes: Types of Teams
8.2: Describe the types of teams found in business organizations

8.2.1: Describe the advantages of teams
8.2.2: Describe the disadvantages of teams
8.2.3: Differentiate between task forces and cross-functional teams
8.2.4: Differentiate between virtual teams and self-managing teams
Advantages and Disadvantages of a Team
• Advantages:
• Teams can be trained to deal with specific customer needs
• Improve product and service quality
• Efficiency in product development
• Develop relationships to people from other business areas
• Disadvantages:
• When companies don’t make efforts to build and support strong teams, employees
may become discouraged and leave firm
• Ineffective when they lack leadership, members don’t feel accountable
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Different Types of Teams
• Cross-functional
• Task force
• Virtual
• Working with other cultures can be
challenging due to different leadership
styles
• Self-Managing
• Responsible for all or most aspects of
producing a product or delivering a
service
Practice Question 2
The difference between a virtual team and a cross-functional team is:
1. A virtual team is not really a team with dedicated team members.

2. A cross-functional team is comprised of only co-located members.
3. A virtual team can be cross-functional and a cross-functional team can be
virtual.
4. A virtual team is more like a group than a cross-functional team.
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Class Activity: Which Type of Team?
Given the four team type—cross-functional, virtual, task force, and self-
managing—which one would potentially be the best fit for these projects and
why?:
1. Political campaign
2. Non-profit effort to feed low-income children
3. New supply chain/logistics software application
4. New real estate and development project.
Building Effective Teams
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Learning Outcomes: Building Effective Teams
8.3: Describe common techniques used to build effective teams

8.3.1: Explain the importance of communication in teams
8.3.2: Explain how team goals and accountability differ from individual goals
and accountability
8.3.3: Summarize common techniques for team building
8.3.4: Evaluate the advantages and disadvantages of large and small teams
Characteristics of Effective Teams
• Clarity of Purpose
• Good Communication
• Positive Role for Conflict
• Accountability and Commitment
• Shared Leadership
• Positive Group Dynamics
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Common Techniques for Team Building
• Set team goals and priorities

• Team selection process
• With determination, anyone can
learn to function on a team
• Experience and ability levels of
members should be balanced
• Team diversity represents mix of skills
and experiences but also different
cultures, ethnicity, race, or gender
• Optimal team size: no correct size
(ideal is 5–9 people)
The Five Stages of Team Development
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Learning Outcomes: The Five Stages of Team

Development
8.4: Describe the five stages of team development

8.4.1: Describe the five stages of team development
8.4.2: Explain how team norms and cohesiveness affect performance
Understanding the Five Stages of Team

Development
• Forming stage: Period of orientation and getting acquainted
• Storming stage: Most difficult and critical stage to pass- period marked by
conflict and competition as individual personalities emerge
• Norming stage: If team gets through storming stage, conflict is resolved and
unity emerges- consensus develops around who leaders are and roles
• Performing stage: Consensus and cooperation are well-established and
team is mature, organized, and well-functioning
• Adjourning stage: Most of team’s goals have been accomplished
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Team Norms and Cohesiveness
• Norms result from interaction of team

members during development
process
• Set standard for behavior, attitude, and
performance
• Team members implicitly understand
them
• Norms are only effective in
controlling behaviors when they are
accepted by team members
• Cohesiveness level determines whether
team members accept and conform to
norms
Conflict Within Teams
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Learning Outcomes: Conflict Within Teams
8.5: Describe common types and causes of conflict that arise within
teams
8.5.1: Describe common types and causes of conflict that arise within teams
8.5.2: Describe common causes of conflict that arise within teams
8.5.3: Explain how conflict can be beneficial to teamwork
8.5.4: Describe common approaches to conflict resolution
Common Types of Conflict Within Teams
• Substantive (task):
• Conflicts that arise over things such as goals, tasks, and allocation of resources- Will
arise if neither party is willing to compromise
• Emotional (relationship):
• Are over things such as jealousy, insecurity, annoyance, envy, or personality conflict-
When two people always find themselves with opposing views
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Benefits of Conflict
• Eustress is positive reaction to stress that generates desire to achieve and

overcome challenges
• Conflicts spark new ideas and generate creativity
• If there is too much cooperation, best ideas may never get shared and team
effectiveness is sacrificed for sake of efficiency
Common Causes of Conflict
• Arises when team members focus on

personal issues rather than work
issues
• Competition over resources such as
information, money, supplies, or
access to technology
• Communication breakdowns and
misunderstandings
• External work conditions such as
downsizing rumors or fears of
competition
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Common Approaches to Conflict Resolution
• Each approach combines degree of

cooperation and some might not be
effective
• Avoiding Approach (no way) - ignore
conflict
• Dominating (my way)- take charge of
conflict
• Compromising (half way) - when
arguments are equally rationale, when
people are equal in status, when both
sides or willing, factor of time
• Accommodating (your way) - when you
agree team member is, in fact, right
• Collaborating (our way) - negotiation
and mediation
Quick Review
• Please describe common group behaviors that can help or hurt organization
goals.
• Can you describe the types of teams found in business organizations?
• Are you able to describe common techniques used to build effective teams?
• What are the five stages of team development?
• Please describe common types and causes of conflict that arise within teams
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Module 9: Culture and Diversity
Discuss organizational culture and the benefits of diversity.
9.1: Describe organizational culture, and explain how culture can be a competitive
advantage
9.2: Identify key dimensions of organizational culture
9.3: Identify the main influences on organizational culture, and explain how culture is
maintained
9.4: Describe the key techniques for initiating and fostering cultural change
9.5: Identify the advantages and challenges of employee diversity within organizations
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Organizational Culture
Learning Outcomes: Organizational Culture
9.1: Describe organizational culture, and explain how culture can be

a competitive advantage
9.1.1: Define culture for a business
9.1.2: Explain how culture can be a competitive advantage for a business
9.1.3: List the levels of culture
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What Is Organizational Culture?
• Term that can relate to any organization at all, from a church to a university
• Corporate Culture: shared values, attitudes, standards, and beliefs that
characterize members of an organization and define its nature
• When not intentionally created, can be disjointed or antagonistic
• Developed from knowledge of national, regional, and family cultures
What Do Corporate Cultures Look Like?
• IBM
• Google
• Apple
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IBM
• Founder Thomas Watson was one of the great developers of corporate

culture- encouraged morality, temperance, and consistency.
• Men were expected to dress in certain style (dark suits, white shirt) and
behave conservatively.
• “IBM Spirit” was represented in corporate songs that employees were
required to sing at conventions.
Google
• Endless perks for valued employees- coffee bars, free meals, breaks, option
to bring pet to work
• List of core values:
• We want to work with great people.
• Technology innovation is our lifeblood.
• Working at Google is fun.
• Be actively involved; you are Google.
• Don’t take success for granted.
• Do the right thing; don’t be evil.
• Earn customer and user loyalty and respect every day.
• Sustainable long-term growth and profitability are key to our success.
• Google cares about and supports the communities where we work and live.
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Apple
• More focused on outcomes and excellence

• Core values:
• Believing that they’re on the face of the Earth to make great products
• Believing in the simple, not the complex
• Believing they need to own and control primary technology behind products We
participate only in markets where we can make a significant contribution.
• Believing in saying no to projects to focus on most important ones
• Believing in deep collaboration and cross-pollination of groups
• Not settling for anything less than excellence in every group of company and having
honesty to admit when they’re wrong/willing to change
Corporate Culture as a Competitive Advantage
• Strong culture helps employees,

customers, and general public to
identify corporate values
• Companies with strong, coherent
cultures attract high-quality
employees who believe in same
values as corporation- begin to feel
on board and like they belong
• Strong corporate culture can help
corporation to build its brand
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Levels of Corporate Culture
• E.H. Schein- theorist who studies

corporate culture- wrote book
titled Organizational Culture and
Leadership- three levels of
corporate culture
• At core- basic assumptions about
human behavior
• Surrounding core- values drawn
from assumptions- standards, rules
• Surface level- ”artifacts”- outcome
of assumptions and values (actions,
policies, physical environment,
office jokes, etc.
Practice Question 1
What is meant by “Assumptions” in the

levels of corporate cultures?
1. Beliefs regarding basic traits of

employees.
2. Beliefs regarding work ethic of
employees.
3. Beliefs regarding the honesty of
employees.
4. Beliefs regarding appropriate
work/life balance of employees.
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Key Dimensions of Organizational Culture
Learning Outcomes: Key Dimensions of

Organizational Culture
9.2: Identify key dimensions of organizational culture

9.2.1: Discuss seven dimensions of culture in the Organizational Culture Profile
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Exploring Key Dimensions of Organizational Culture
• Detail-oriented- meticulous • Stable- knowing who is charge,

attention to details who to report to, and what to
• Ritz Carlton hotels accomplish
• Innovative- individuals who want • Kraft Foods
opportunities to invent new • People-oriented- expect the
products company to care about you- value
• GORE-TEX or Google of fairness
• Aggressive- value of competition • Starbucks
• Microsoft • Team-oriented- employees who like
• Outcome-oriented- all about results to collaborate & cooperate with
• Best Buy
team
• Southwest Airlines
Influences on Organizational Culture
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Learning Outcomes: Influences on Organizational

Culture
9.3: Identify the main influences on organizational culture, and

explain how culture is maintained
9.3.1: Discuss the sources of culture in an organization
9.3.2: Explain the methods for maintaining a culture
9.3.3: List the visible signs of culture
Influences on Organizational Culture

Sources of Culture
• Founders
• Have a vision for their new company
which helps form corporate culture
• Some founders have strong personalities
and values that company reflects goals
upon
• Examples: Walt Disney, Ben and Jerry’s
Ice Cream
• Industry
• Industries that are built around
regulations and policies that can’t be
changed and industries that are
creative, innovative, and fun
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Methods for Maintaining Corporate Culture
• Recruiting- finding employees who will fit into corporate culture

• Hiring- assessing candidate’s assumptions and values
• Onboarding- new employee orientation process- teach company policies
• Training- formal and informal (technology or changes, depending on job)
Practice Question 2
Which of the following are NOT a method for maintaining corporate culture:
1. Onboarding.
2. Hiring.
3. Training.
4. Incenting.
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Visible Signs of Culture
• When you walk into a business

setting, you should be able to see
visible signs of business’s
organizational culture
• Few things to watch out for:
• How employees dress
• Snack areas/candy jars
• Plaques and awards
• Mission statement
• Events and rituals
• Physical layout and décor
Cultural Change
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Learning Outcomes: Cultural Change
9.4: Describe the key techniques for initiating and fostering cultural
change
9.4.1: Describe key techniques for initiating cultural change (sense of urgency,
role modeling, changing leaders)
9.4.2: Describe key techniques for fostering cultural change (training, reward
systems, and new stories and symbols)
Initiating and Managing Cultural Change
• Initiating
• Create sense of urgency
• Role modeling
• Changing leaders
• Managing
• Excellent communication
• Changing leaders who present barriers
to change
• Training programs
• Changing reward systems and
corporate symbols
• Changing look and feel of the
workplace
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Class Activity: Initiating and Managing Cultural

Change
Break into small groups. Review the corporate culture attributes of Google and
Apple from slides 7-9.
Which of these corporate cultures would you prefer to be a part of?
If you were the CEO of a startup, and wanted to develop a corporate culture
similar to your choice, what steps would you follow to do so?
Employee Diversity
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Learning Outcomes: Employee Diversity
9.5: Identify the advantages and challenges of employee diversity

within organizations
9.5.1: Explain the concept of diversity within organizations
9.5.2: Explain the advantages of employee diversity within organizations
9.5.3: Explain the challenges of employee diversity within organizations
Employee Diversity: What Is It?
• Diversity is now required by law and is a recommended strategy

• Long-term strategy- broader meaning which adds personality, cognitive
style, education, background, and more
• Diversity in workplace isn’t easy to achieve
• Explosive growth in global trade means large companies grew in diversity
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Advantages and Challenges of Employee

Diversity
Advantages Challenges
• Builds resilience • Differences in culture
• Permits system to evolve and learn • Work styles can vary from culture to
from experience culture
• Enhances creativity • Management: top leadership
• Enhances image technically white and male and
lower level is usually female and
• Improves outreach nonwhite
• Improves morale
Quick Review
• Can you define culture for a business?

• How can culture be a competitive advantage for a business?
• What are the levels of culture?
• Can you effectively discuss the seven dimensions of culture in the
Organizational Culture Profile?
• What are some key techniques for initiating cultural change? For fostering
cultural change?
• What is the concept of diversity within organizations?
• What are the advantages of employee diversity within organizations?
• Can you explain the challenges of employee diversity within organizations?
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Module 10: Leadership
Recognize good and poor leadership and the varieties of leadership
10.1: Differentiate between leadership and management

10.2: Identify the traits, dimensions, and styles of effective leaders
10.3: Compare examples of effective and poor leadership
10.4: Summarize the situational theories of leadership
10.5: Summarize transformational and transactional theories of leadership
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Leadership
Learning Outcomes: Leadership
10.1: Differentiate between leadership and management

10.1.1: Differentiate between leadership and management
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What Is Leadership?
• Leadership is about establishing a direction and influencing others to follow

• Management is successfully administering the many complex details
involved in business’s operation
• Both are necessary skills that often overlap
• Some differences include:
• Leadership: influencing, change, direction, vision, creating, etc.
• Management: planning, organizing, controlling, stability, etc.
Formal vs. Informal Leadership
• Not all leadership based on official position

• Individuals who are assigned titles and positions of authority are expected to
provide leadership- formal leadership
• Plenty of people who have formal leadership positions but don’t provide strong
leadership (can leave organization lacking direction/purpose)
• Individuals who don’t have official positions of leadership but exhibit
leadership qualities and help create vision of company- informal
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What Makes an Effective Leader
Learning Outcomes: What Makes an Effective

Leader
10.2: Identify the traits, dimensions, and styles of effective leaders

10.2.1: Identify the traits of effective leaders
10.2.2: Differentiate between task-centered and employee-centered
leadership behavior
10.2.3: Differentiate between autocratic, democratic, and laissez-faire styles of
leadership
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Leadership Traits
• Drive: highly motivated individuals

• Desire to Lead: want to have leadership roles and functions
• Honesty/Integrity: essential to inspiring confidence and trust from followers
• Self Esteem/Self-Confidence: lack of these creates doubts and insecurities
• Open-Mindedness: recognize innovation is valuable and are open to other
ideas
• Intelligence: cognitive ability as well as relational and emotional intelligence
• Extraversion: outgoing and social in personalities
• Not all good leaders have to be extraverts (Bill Gates, Mark Zuckerberg)
Knowledge of the Business and Styles of

Leadership
• Lack of knowledge and experience
is almost impossible to overcome
• Trait-based analysis of leaders is
common approach and analyzing
leadership styles
• Task-Centered or Employee-
Centered
• Task: focus on giving instructions to
group members to reach achievement
• Employee: focus less on objective
actions and more on building
relationships between followers
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Autocratic, Democratic, or Laissez-faire
• Autocratic: makes decisions without employee involvement- authoritarian

• Democratic: involves employee team in decision-making
• Laissez-faire: hands-off approach to leadership- employees make own
decisions
“A good leader inspires people to have confidence in the leader. A great

leader inspires people to have confidence in themselves.”
—Eleanor Roosevelt
Practice Question 2
Which style of leadership lends itself best with a task-centered style?
1. Autocratic.
2. Democratic.
3. Laissez-faire.
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Effective vs. Poor Leadership
Learning Outcomes: Effective vs. Poor Leadership
10.3: Compare examples of effective and poor leadership

10.3.1: Compare examples of effective and poor leadership
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Understanding Effective vs. Poor Leadership
• Compare examples of effective

and poor leadership
• What do these traits and styles look
like in practice?
• Will be looking at real-world
examples of good and bad
leadership to help deepen
understanding
• Looking at individuals with positive
and negative leadership qualities in
next slides
Warren Buffett, Berkshire Hathaway
• One of the wealthiest men in the

world through leadership of
investment company
• Thousands travel to hear his
meetings and has become very
successful
• Work is to identify companies for
purchase he believes are well-
managed for success
• Presents a vision, stands firmly
behind it, and inspires others
• Always truthful and an optimist
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Rosalind Brewer, Starbucks
• Current COO at Starbucks, the first woman and

the first African-American in this role
• Former CEO of Sam’s Club
• Forward-thinking initiatives at Sam's Clubs,
doubling the amount of organic products
offered and advancing online ordering
• Emphasis on diversity of hiring and
implementation of racial bias training
• Navigated Starbucks through negative public
opinion after racially charged arrests at one of
their locations
Ginni Rometty, IBM
• IBM is successful tech company for over 100

years
• Much of its legacy is in field of computer
hardware systems
• Overseen significant shift of focus for company
• Democratic, soft-spoken leadership style
enabled her to be successful
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Situational Theories of Leadership
Learning Outcomes: Situational Theories of

Leadership
10.4: Summarize the situational theories of leadership

10.4.1: Summarize the situational theories of leadership
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Understanding Situational Theories of Leadership
• Work on the assumption that the most effective style of leadership changes
from situation to situation
• Leader must be able to adapt his style and approach to different
circumstances
• Example: some employees function better under leader who is more
autocratic while others prefer leader to step back and give others chance
• Not all industries require same skills and leadership traits- many theories
developed
Hersey and Blanchard’s

Situational Leadership Theory
• Suggests need to match two key elements
correctly: leadership style of the leader and
maturity/preparedness of the followers
• Main leadership approaches- telling, selling,
participating, delegating
• Four levels of follower maturity- low
competence and commitment (M1), low
competence and high commitment (M2),
high competence and low commitment
(M3), and high competence and
commitment (M4)
• Key to successful leadership is matching
proper leadership style to maturity level
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Goleman’s Model of Situational Leadership
• Theory incorporates development of the concept of

“emotional intelligence”
• Pacesetting: sets aggressive goals and standards for each
employee
• Authoritative: provides direction and goals and expects
team to follow lead
• Affiliative: praises and encourages employees refraining
from criticism
• Coaching: focuses on helping individuals build skills and
develop talents
• Democratic: involves followers in process by seeking their
opinion
• Coercive: ultimate authority and demands immediate
compliance
Normative Decision Theory
• Guide in determining optimum amount of time and group input that should
be committed to a decision
• Number of options for leader
• Key Questions: is decision quality important? Does the leader have enough
information to make a decision? Is the problem structured and easily
analyzed? Do members have high levels of competence in working as a
group?
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Practice Question 3
What do all of the leadership theories we have just reviewed have in common?
1. They reflect the democratic style of leadership.

2. They require industry knowledge.
3. They match leadership style with the environment.
4. They incorporate the concept of emotional intelligence.
Transformational and Transactional Theories

of Leadership
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Learning Outcomes: Transformational and

Transactional Theories of Leadership
10.5: Summarize transformational and transactional theories of

leadership
10.5.1: Summarize transformational theories of leadership
10.5.2: Summarize transactional theories of leadership
Transformational and Transactional

Theories of Leadership
Transactional Leadership Transformational Leadership

• Motivation is derived from an • Assume that the desires of the leader
arrangement whereby employees are and the follower are not the same-
rewarded for accomplishing goals set must provide motivation
for them • Four categories:
• When sales representatives are paid • idealized influence
on commission or given bonuses • inspirational motivation
• intellectual stimulation
• individualized consideration
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Class Discussion: What makes a leader?
Are leaders born and not made? Review the list of leadership traits and discuss
which of them you think can be learned versus those that are inherent in one’s
personality make-up. What about management traits/duties? Are these
learned versus inherent?
Quick Review
• How does one differentiate between leadership and management?

• Can you identify the traits of effective leaders?
• Are you able to differentiate between task-centered and employee-
centered leadership and behavior? Between autocratic, democratic, laissez-
faire, relationship-oriented, task-oriented, and people-oriented styles of
leadership?
• Are you able to compare examples of effective and poor leadership?
• Please summarize the situational theories of leadership.
• Can you summarize transformational and transactional leadership theories?
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Module 11: Motivation
Recognize the importance of employee motivation and how to promote it
11.1: Explain the importance of employee motivation in an organization

11.2: Explain needs-based theories of motivation
11.3: Explain process-based theories of motivation
11.4: Describe the job characteristics that affect motivation
11.5: Explain goal-setting theory
11.6: Explain reinforcement theory
11.7: Explain the manager’s role in promoting motivation
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The Importance of Employee Motivation
Learning Outcomes: The Importance of Employee

Motivation
11.1: Explain the importance of employee motivation in an

organization
11.1.1: Explain the importance of employee motivation in an organization
11.1.2: Distinguish between internal and external motivation
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Understanding the Importance of Employee

Motivation
• Employee motivation is of great concern to any organization
• Recent surveys show “the ratio of disengaged to actively engaged
employees is roughly 2-to-1, meaning that the vast majority of U.S. workers
(70%) are not reaching their full potential”
• Manager’s ability to motivate employees requires gaining understanding of
different types of motivation
Types of Motivation
• Motivation is collection of factors that affect what

people choose to do, and how much time and
effort they put into doing it
• Intrinsic: internal sources of motivation
• Interests, beliefs, personal pride, skill development and
competency
• Personal enjoyment, sense of accomplishment, power,
social status
• Extrinsic: motivation from outside individual
• Tangible rewards (commissions, bonuses, raises,
promotions, additional time off work)
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Needs-Based Theories of Motivation
Learning Outcomes: Needs-Based Theories of

Motivation
11.2: Explain needs-based theories of motivation

11.2.1: Differentiate between Maslow's hierarchy of needs and Herzberger's
two-factor theory of needs
11.2.2: Explain Alderfer's existence-relatedness-growth theory
11.2.3: Explain McClelland's acquired-needs theory
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Maslow’s Hierarchy of Needs
• Based on premise that human beings are motivated by needs ranked in

order hierarchically
• Physiological needs: Air, food, water, etc.
• Safety: Physical safety and security and employment security
• Social: Need to bond with other humans (love, friendship, family)
• Esteem: Desire to be respected by one’s peers & feel important
• Self-actualization: “becoming all you are capable of becoming”
Two-Factor Theory
• Frederick Herzberg asked employees what was satisfying and dissatisfying

• Found that certain factors had to be met and didn’t raise satisfaction
• However, if these factors weren’t met- strong dissatisfaction
• Company policies, supervision, working conditions, salary, safety, and security on the
job
• Strongest motivators are interesting work, responsibility, achievement,
recognition, growth, and advancement.
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Practice Question 1
Why is Maslow’s theory organized as a hierarchy?
1. Maslow believed that some needs were more important than others.
2. Maslow believed that all needs must be met in order to achieve motivation.
3. Maslow believed that ranking the needs made his theory easier to
understand.
4. Maslow believed that the needs lower in the hierarchy had to be met
before the higher needs could be attained.
ERG Theory
• Modified Maslow’s hierarchy of

needs- existence, relatedness,
and growth
• Doesn’t force order of needs
fulfillment and supports pursuit
of different levels
simultaneously
• Theory suggests managers will
need to help regressing
employees see importance of
pursuit of higher needs to
personal growth
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Acquired Needs Theory
• People who have strong need to be successful have high need for
achievement
• People with high need for affiliation value building relationships
• Managers with high need for affiliation may find it difficult to deliver
unpleasant news and critical feedback- will need to see value of providing
feedback
• People with high need for power are motivated to influence others and
control their environment- focus on larger strategy
Process-Based Theories of Motivation
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Learning Outcomes: Process-Based Theories of

Motivation
11.3: Explain process-based theories of motivation

11.3.1: Explain equity theory
11.3.2: Differentiate between procedural justice and interactional justice
11.3.3: Explain expectancy theory
Equity Theory
• About perceived fairness- motivation

depends on comparison to others
(referent)
• Employee compares input and output
to colleagues
• If employee feels he is putting more into
job then what he gets out, he will
become de-motivated, disgruntled, and
even disruptive
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Procedural and Interactional Justice
• Procedural Justice- degree to which fair decision-making procedures are

used
• Interactional Justice- focuses on employees’ perceptions of quality of
interpersonal treatment received during organizational procedures
Expectancy Theory
• Focuses on cognitive process- argues that motivation depends on strength of

expectation that activity will result in consistent and favorable outcome for
an individual
• Three components
• Expectancy: belief that employee can accomplish goal
• Instrumentality: asks if management will honor bargain
• Valence: degree to which employee values rewards
• Explains why workers may be motivated to work hard in job or provide
minimal effort to simply get by
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Practice Question 2
What is the common denominator of needs and process-based theories of

motivation?
1. Companies need to address the 70/30 ratio of unmotivated to motivated

employees to be successful.
2. Managers are responsible for the motivation of their direct reports.
3. Motivation is a product of the human psyche.
4. Incentives are the best method of employee motivation.
Job Characteristics that Affect Motivation
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Learning Outcomes: Job Characteristics that

Affect Motivation
11.4: Describe the job characteristics that affect motivation

11.4.1: Describe the job characteristics that affect motivation
Job Rotation
• Involves periodically shifting

employee from one task or job to
another in effort to decrease
boredom
• By cross-training, companies have
found reductions in repetitive
motion injuries and turnover
• Used by Lincoln Electric as well as
McDonald’s
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Job Enlargement
• Expanding jobs by increasing number and variety of tasks individual performs

• Seeks to motivate workers through reversing specialization
• Mixed results in 1993 study- looked at job enlargement efforts among staff
and managers in financial services industry
• Extra work resulted in less satisfaction and efficiency
• Created stressful overload and lead to errors
Job Enrichment
• Refers to vertical expansion of jobs

• Increases degree to which employee also controls planning and evaluation
of work they execute
• Enriched jobs increase employee’s independence and responsibility
• Also provides feedback so employee can evaluate and improve own
performance
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Goal-Setting Theory
Learning Outcomes: Goal-Setting Theory
11.5: Explain goal-setting theory

11.5.1: Explain goal-setting theory
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Understanding Goal-Setting Theory
• Goals must be specific enough to answer who, what, when, where, why,
and how- employees perform better when given specific goals
• Goal commitment is degree of determination person uses to achieve
accepted goal
• Goal must present challenge to individual but still be attainable- must be
specific to each individual person to increase their motivation
• Feedback is ongoing requirement to be aware of progression or regression-
receive feedback on how well they are progressing towards goals
Reinforcement Theory
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Learning Outcomes: Reinforcement Theory

11.6.1: Explain reinforcement theory
Understanding Reinforcement Theory
• Focuses on what happens to an individual when they perform some task or

action
• See behavior as being environmentally controlled- theories are controlled by
reinforces which increases probability behavior will be repeated
• Can be useful if you put with combination of other theories (goal-setting)
• Manager who uses this risks offending employees
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Class Discussion: Motivation Theories
Break into small groups. You are a manager of a group of 10 employees.

Reflect on Needs, Process , Goal-setting, and Reinforcement theories of
motivation.
Develop a six-point agenda for individual employee meetings that you would
use to gather information to develop your employee motivation strategy.
A Manager's Role in Motivating Employees
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Learning Outcomes: A Manager's Role in

Motivating Employees

11.7.1: Explain how companies address basic needs
11.7.2: Explain how managers can individualize motivation strategies
Addressing Basic Needs
• All needs and process-based theories

of motivation can be addressed
• Companies start by paying appropriate
wage
• Must be enough so employee’s aren’t
distracted by mortgage
• Sense of belonging fulfilled by having jobs
aligned to clear common purpose
• Social interactions (formal and informal)
• Clearly apply rewards and recognition
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Managers Are Motivators
• Managers have greatest influence on employee’s motivation

• Even though someone’s manager can’t entirely affect company’s structure,
culture, and reward system, manager can link performance to recognition,
bonuses, and good work assignments
• Manager who most directly promotes and implements any policies
• Best managers are able to meet each employee’s most important needs
• All employees will have different needs for autonomy and areas they’d like
to focus on
• All employees need to see work is tied to common purpose of team and
company
Practice Question 3
What is the most important factor of reinforcement and goal-setting theory?
1. The size of the bonus.

2. The attainability of the goal.
3. The fairness of the wage.
4. The skill of the manager.
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Quick Review
• What is the importance of employee motivation in an organization?

• Can you distinguish between internal and external motivation?
• Can you differentiate between Maslow’s hierarchy of needs and
Herzberger’s two-factor theory of needs?
• Can you accurately explain Alderfer’s existence-relatedness-growth theory?
• Can you easily explain McClelland’s acquired-needs theory?
• What is equity theory? The expectancy theory?
• Can you differentiate between procedural justice and interactional justice?
• What are some of the job characteristics that affect motivation?
• What is the goal-setting theory? What is the reinforcement theory?
• Can you explain how companies address basic needs and how managers
can individualize motivation strategies?
Module 12: The Individual and the Organization
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Recognize how employee personality and attitude affect organizational fit
12.1: Recognize the role of personal values and personality at work

12.2: Explain common biases that can affect a manager’s perception of employees
12.3: Explain the major attitudes that affect job performance
12.4: List and explain common factors that influence job fitness and performance
Personal Values and Personality at Work
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Learning Outcomes: Personal Values and

Personality at Work
12.1: Recognize the role of personal values and personality at work

12.1.1: Describe Goldberg's "Big Five" personality traits
12.1.2: Evaluate whether personality tests can predict performance
12.1.3: Explain how work expresses individual values
Role of Personal Values and Personality
• Employees are unique individuals

• Several approaches to defining personality
• Most common approach is known as the “Big Five” personality traits
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Goldberg’s “Big Five”
• OCEAN
• Openness- how willing and eager individual
is to try new experiences
• Conscientiousness- how concerned an
individual is to be organized/reliable
• Extraversion- how eager individual is to be
outgoing and have social interaction
• Agreeableness- how desirous an individual
is to please others and be friendly, sensitive
and kind
• Neuroticism- how negative, moody, and
emotionally unstable an individual is
Openness
• Advantages
• Excel when flexibility is required
• Do well in training
• Adapt well to unexpected changes
• Disadvantages
• Can become bored with routine jobs
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Conscientiousness
• Advantages
• High levels of effort and motivation
• Low levels of absenteeism and turnover
• Only personality trait that is consistently linked to career success over time
• Disadvantage
• Can become consumed with details and miss the big picture
Extraversion
• Advantages
• Can be successful managers who
motivate employees
• Often successful in jobs involving sales
• Disadvantage
• Can be poor fit for jobs that do not
provide sufficient social interaction
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Agreeableness
• Advantages
• Often display high willingness to help others at work and display good organizational
citizenship behaviors
• Create fair environments when in management positions
• Work well in team settings
• Disadvantage
• Might be hesitant to engage in constructive criticism and encourage change, even
when it is needed
Neuroticism
• Advantages
• Might be hesitant to engage in constructive criticism and encourage change, even
when it is needed
• Tendency to analyze self and world more realistically
• High tendencies towards job dissatisfaction and intention to leave their jobs
• Disadvantage
• Tend to create unfair environments when in leadership positions
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Myers-Briggs Type Indicator (MBTI)
• Common tool designed for use in

identifying an individual’s personality
type- relies on psychological theories of
Carl Jung
• Basic assumption that individuals fall into
fairly distinct classes or types
• Individuals characterized by:
• Extraversion (E) or Introversion (I)
• Sensing (S) or Intuition (N)
• Thinking (T) or Feeling (F)
• Judging (J) or Perceiving (P)
MBTI: Disadvantages
• Lack of scientific evidence

• Divides individuals into different classes for each category, not indicating
how strong an individual’s preference is towards that end of the spectrum
• Reliability and stability- as much as 50% of individual’s MBTI classification will
change from test to test
• Warn strongly against use for purposes of hiring or promoting employees-
intended as a learning tool and to help better understand oneself
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Values
• Terminal values: End goals that

people hope to reach in life
• Instrumental values: Modes of
conduct considered appropriate
and right (honesty, integrity,
ambition)
• Businesses use attributes to identify
the best fit for employees and
potential future employees
• Wise business practice: To try to
match individuals with optimum
role in light of their personality and
values
Values and Role Application
Value Example of Role Application

Universalism Cultural analyst and advisor for a company
expanding its activities into new and foreign
markets.
Benevolence Focused on organizing activities giving back to
company’s local community
Security Risk analysis and contingency planning
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Common Management Biases
Learning Outcomes: Common Management

Biases
12.2: Explain common biases that can affect a manager’s perception

of employees
12.2.1: Explain some of the biases that affect a manager's perception of
employees
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Perception and Attribution
• Perception: Process through which we take in and process information from

our surroundings: what we see, hear, feel, etc.
• Example: studies have shown that people who are afraid of spiders tend to
exaggerate their size- allow our minds to alter objective stimuli we perceive with our
senses
• Attribution: We look for the unseen cause behind what we see
• Example: if a co-worker is late, we might make an assumption to why they are late
(poor character or lack of responsibility) when really something unavoidable and
unexpected delayed him
Common Biases Affecting Manager’s Perception
• Stereotypes
• Selective Perception and Confirmation Bias
• First Impression Bias
• Recency Bias
• Spillover Bias
• Negativity Bias
• Ingroup Bias
• Similarity Bias
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Stereotypes
• General opinion or assumption about a class of individuals that share a

particular trait
• General feelings or ideas based on gender, ethnic background, or age- from
that we form opinions or make judgements about people
• Women have been negatively impacted- workplace is not an exception
• Age is another stereotype- believing potential employee isn’t good enough
because they are too young or old
• Studies show more attractive people tend to receive better grades in school,
have higher likelihood of being hired for a job, and earn more $$
Selective Perception and Confirmation Bias
• Bias by unknowingly paying attention to only a portion of the information

available to them
• Reinforces other types of biases often; if manager has negative opinion of an
individual, they might be prone to pay more attention to negative behaviors
or actions
• When it is employed to confirm existing opinions, known as confirmation bias
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First Impressions Bias
• Giving too much prominence to first impression of an

employee
• Initial judgements the manager makes about the
employee, often with very limited information, shape
and control how they interpret evidence
• Even when future information would seem to
contradict initial picture, manager might be unwilling
to change perspective
Recency Bias
• Manager’s focus is unduly balanced in favor of employee’s most recent

activities
• Often happens in cases of annual performance reviews
• Difficult to keep entire year’s activities in full view, and often employee’s most recent
activities are over-weighted
• If recent activities are negative, they can easily overshadow many months’
worth of strong previous performance
• Poor performance might be mostly forgotten if employee has recently
excelled
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Spillover Bias
• Can skew manager’s perspective by paying too much attention to past

information
• Usually relates to prominent episode in employee’s past activities
• Example- employee played starring role in successful project and manager
always thinks of employee in terms of success
• Even if employee consistently underperforms after success
• Inversely- if employee is unfortunate to be guilty of major failure, might be
difficult to change manager’s opinion even if they do excellent work after
Negativity Bias
• When we are presented with positive and

negative information, we are prone to give
more attention to negative information
• Negative information predominates thoughts
and moves us to form imbalanced
conclusions on negative side
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Ingroup Bias
• Managers might tend to show favoritism in judgement

• Those in manager’s “in” circle receive special positive judgements while
those not in do not
• Strength of this influence can dramatically vary and it may more may not be
true actual negative perspective is displayed to those not in group
Similarity Bias
• Reflects human tendency to focus on ourselves and prefer those who are like
we are
• Leads managers to give special, positive attention, and judgements to those
who remind manager of themselves- hobby, same hometown/college
• Manager might recognize similar personality traits in employee- can lead to
preferential treatment
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Consequences of Biases
• Employees who forced to work extra hard to overcome bias can become to
resentment
• Studies have shown that employees who labor under negative biases tend to
underperform as a result
• Even positive biases can have negative impact; a manager might overlook
faults and dangerous behaviors that need to be addressed
• If employee realizes they will be given special evaluations, it can lead to give
less effort and show less commitment
Practice Question 1
Jeffrie is a project manager at a large software development company. She

has risen through the ranks through hard work and self-training. When it comes
time to select the team for her project, Jeffrie selects engineers with limited
formal training, preferring those who have learned their skills by doing. Jeffrie is
displaying what common bias?
1. Ingroup bias.
2. Similarity bias.
3. Negativity bias.
4. Spillover bias.
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Class Activity: Bias in the Workplace
Break into small groups. You are leading a team of interviewers to screen
candidates for upcoming openings for manufacturing jobs at your company.
List the factors from the “Big Five” factors that you would be looking for from the
candidate pool that would be most important for your search. What questions
would you ask to ascertain if those factors are present in a candidate?
Attitudes that Affect Job Performance
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Learning Outcomes: Attitudes that Affect Job

Performance
12.3: Explain the major attitudes that affect job performance

12.3.1: Differentiate job satisfaction and organizational commitment
12.3.2: Explain the use of employee attitude surveys
12.3.3: Explain employees' perceptions of organizational justice
Attitudes Affecting Job Performance
• When you think of effective

employee- intelligence, skill, training,
and others
• Perhaps an even greater and more
influential factor: attitude
• Even most skilled employee might be
prone to severe underperformance if
attitude is lacking
• Employees whose positive attitude of
dedication/commitment leads to
high levels of effort
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Job Satisfaction and Organizational Commitment
• Focus on optimizing job satisfaction will influence organization’s priorities from

earliest stage in interaction with employees
• Employee-to-job fit is important- those with excellent knowledge of industry
but prefers to work in research and development shouldn’t be hired for role
in marketing
• Careful management practices will keep an eye on the changing
developments of employee interests
• Job satisfaction is primary factor in employee attitude- when high job
satisfaction is matched with high organizational commitment, employees are
very likely to have positive work attitude
Negative Job Satisfaction and Organizational

Commitment
• Employees who are very satisfied with job
but not committed to organization are still
likely to provide good effort
• Committed to organization but has low job
satisfaction- common that employees are
willing to struggle through low job
satisfaction which will likely wear on
attitude
• Can tie employee rewards to success of
organization or seek to develop
commitment by emphasizing to align
employee perspectives with vision of
organization
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Organizational Justice
• Usually, employees want workplace to be fair and where everyone is treated

with equal respect
• Employees tend to focus on pay equality and advancement opportunity-
divisions between employees can arise
• Highly important to provide fair workplace, no matter how difficult it may be
• Difficult because employees exhibit bias in evaluations- might think to highly of
themselves
Employee Attitude Surveys
• Importance has led to increased use of employee attitude surveys- used to

identify areas of concern that employees have
• Wise to keep them confidential to give opportunity to share concerns without fear of
being punished for voicing negative thoughts
• Leaders should want to hear criticisms and be aware of concerns employees
have- if problems, knowing about them gives them opportunity to fix them
• Generally beneficial
• Exit interviews prove to be successful as well
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Practice Question 2
Jack is a knowledge worker for a business analyst firm. Jack loves his research
job, but is concerned about advancement opportunities within the
organization and how that will affect his career path. What can be expected
about Jack’s job performance?
1. Jack will not stay with the organization very long.

2. Jack will not do a good job due to poor job-fit.
3. Jack will put in a good effort overall.
4. Jack will not have a good attitude.
Job Fitness and Performance
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Learning Outcomes: Job Fitness and Performance
12.4: List and explain common factors that influence job fitness and
performance
12.4.1: Explain the concept of "fitness" within an organization
12.4.2: Explain the influence of common factors (such as work-life balance,
stress, interpersonal relationships, attitudes, work ethic) on job performance
Organizations Have Their Own Culture
• Every organization promotes particular culture

• May be healthy or unhealthy- strong influence
on performance and productivity of members
• Organizations that actively embrace concept
of organizational culture have opportunity to
intentionally shape culture into productive
force
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Healthy Environment, Productive Employees
• Benefits of healthy culture within organization is significant

• Basic idea summarized- concept that healthy environment results in
productive employees
• Unhealthy organizational culture leads to lower job satisfaction, worse
attitudes, less productivity, increased levels of absenteeism, etc.
Managing Employee Stress Levels
• Stress levels can become helpful overall indicator of how healthy

organizational environment is
• Attempting to remove all stress, however, wouldn’t be realistic or healthy-
appropriate level may actually be essential part of healthy environment
• One approach is teaching employee’s to manage stress- programs and
resources but also changes to basic system
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Work-Life Balance
• Not possible to completely separate

the two areas, as problems in one
strongly affects the other
• Two areas often compete with one
another for individuals’ time, energy,
and attention- causes lower
performance levels
• Not a beneficial situation—many
things they can do to support such as
limit expectations to reasonable levels
of commitment
• Providing enough vacation time is also
wise to prevent employee burnout
Interpersonal Relationships
• Because members of an organization spend a lot of time together and must

collaborate with each other, how relationships function is important
• Negative side- interpersonal conflict can become obstacle to productivity
• Ideally, goal is deeper than avoiding major conflict- if employees develop
strong relationships, organization is likely to reap benefits
• Employees will work together better, enjoy time together more, and be less
likely to leave
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Health, Relaxation, and Entertainment
• Physically healthy employees are

more productive- more energy and
miss fewer days for sickness
• Companies often offer health-
related incentives and create
programs
• Companies find it beneficial to
provide certain types of
extracurricular facilities such as
fitness rooms, nap rooms, and
entertainment rooms
Personal and Professional Development
• Makes sense for business to invest time

and resources into developing
employee skills
• Increasing these skills strengthens
business
• Many companies help fund
employees’ education who want to
pursue advanced degrees
• Investing in personal development of
employees also benefits organization
• Still be related to professional functions-
programs that help develop leadership
skills
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Quick Review
• Can you describe Goldberg’s “big five” personality traits?

• Can you evaluate whether personality tests can predict performance?
• How does work express individual values?
• What are some of the biases that affect a manager’s perception of
employees?
• Are you able to differentiate job satisfaction and organizational
commitment?
• Why are there employee attitude surveys?
• What are employees’ perceptions of organizational justice?
• Can you explain the concept of “fitness” within an organization?
• Can you explain the influence of common factors (such as work-life balance,
relationships, attitudes, work ethic) on job performance?
Module 13: Ethics in Business
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Describe the methods of encouraging ethical behavior and the laws

encouraging good corporate practices
13.1: Explain the need for ethics in the workplace

13.2: Explain the US Sentencing Guidelines for Organizations and how the compliance
steps encourage ethical behavior
13.3: Describe the influences on an employee’s ethical choices
13.4: Describe practical steps that managers should take to model ethical behavior and
encourage ethical choices
13.5: Explain corporate social responsibility (CSR) and its relationship to economic
performance
The Need for Ethics in the Workplace
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Learning Outcomes: The Need for Ethics in the

Workplace
13.1: Explain the need for ethics in the workplace

13.1.1: Explain the need for ethics in the workplace
13.1.2: Describe the costs to a company's health of unethical behavior
Understanding the Need for Ethics in the

Workplace
• Unethical behavior can cost a business
billions of dollars
• Association of Certified Fraud Examiners
estimates fraud costs U.S. companies about 5% of
revenues
• In 2016, $900 billion was lost
• Business ethics- ethics as it relates to conduct
of members of an organization
• Good business ethics involves adhering to
laws, regulations, and standards
• Good reputation creates a buffer where
customers, suppliers, and regulators are
slower to judge a company
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Costs of Unethical Behavior
• Varied and numerous:

• Reduced customer loyalty and subsequent revenue loss
• Heavy fines
• Probation
• Criminal or civil prosecution
• Loss of needed employee talent
• As a result of unethical behavior of executives and employees, there has
been strong drive to improve business ethics
• Congress passed Sarbanes-Oxley Act in 2002 to impose sanctions on
executives who commit unethical acts in financial reporting and to protect
employees who report fraud
Practice Question 1
A biotech company, Theranos, raised over $700 million and a peak valuation of
$10B with claims that it could perform multiple medical tests with just a single
drop of blood. Then in 2015, it was revealed that Theranos technology was a
hoax. The most significant impact of this ethical transgression is:
1. Loss of market share.

2. Dissatisfied customers.
3. The CEO is subject to tens of millions of dollar in fines and up to 20 years in
prison.
4. An audit of test results.
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US Sentencing Guidelines for Organizations
Learning Outcomes: US Sentencing Guidelines for

Organizations
13.2: Explain the US Sentencing Guidelines for Organizations and how

the compliance steps encourage ethical behavior
13.2.1: Explain the US Sentencing Guidelines for Organizations
13.2.2: List the compliance steps from the U.S. Sentencing Commission
Guidelines
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U.S. Sentencing Guidelines for Organizations
• Even when employee’s actions go against company policy, the company

can be held legally responsible despite its best efforts to prevent unethical
behavior- applies when employee acts within the scope of employ
• Applies only when employee acts within scope of employment
• Most common offenses include fraud, hazardous waste discharge, tax
evasion, antitrust offenses, food and drug violations, etc.
• Punishment is in chapter 8 of Federal Sentencing Guidelines for Organizations
Guideline Compliance Steps
• Establish standards and procedures to prevent and detect criminal conduct

• Senior management must be knowledgeable about compliance ethics
program
• Make reasonable efforts to exclude any individual who has committed illegal
act
• Communicate aspects of program to members by conducting training
• Ensure program is followed by monitoring/auditing activities, evaluating
effectiveness, and employing systems that allow for confidentiality
• Promote and enforce program by offering incentives for performance
• Respond to criminal conduct and take steps to prevent future offences
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Influences on Ethical Choices
Learning Outcomes: Influences on Ethical Choices
13.3: Describe the influences on an employee’s ethical choices

13.3.1: Explain the concept of "ethical intensity”
13.3.2: Identify seven common principles of ethical decision-making
13.3.3: Explain why managers can disagree about what is ethical
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Ethical Intensity
• Significance of consequences
• Number of people affected
• Proximity of the decision maker to victim
or beneficiary of decision
• Probability that decision implemented will
lead to predicted consequence
• Social consensus that a proposed decision
is negative or positive
• Elapsed length of time between when
decision is made and when
consequences occur
• Refers to total harm or benefit that follows
decision
Principles of Ethical Decision Making
• Long-term self-interest- pursuit of outcomes that will benefit long-term

• Personal virtue- conformity to standard of righteousness
• Utilitarianism- greatest benefit for maximum number of people
• Individual rights related to freedom to act and think without punishment
• Distributive justice- fairness of outcomes
• Religious injunction- main moral and ethical guide for many
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Disagreements Among Managers During the

Decision-Making Process
• Achieving ethical outcome while being guided by these principles isn’t
always simple- each individual has different perceptions, moral codes,
interests, religious beliefs, convictions, and motives
• UTP is an example- company experienced growth spurt 10 years ago and
senior executives decided to have larger building to provide more spacious
work environment
• Customer demand required company to hire more mid-level managers
How Managers Can Encourage Ethical

Behavior
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Learning Outcomes: How Managers Can

Encourage Ethical Behavior
13.4: Explain the concept of business ethics

13.4.1: Explain the purpose of a code of conduct
13.4.2: Explain the benefits of ethics training
13.4.3: Describe the methods of selecting and hiring ethical employees
13.4.4: Explain whistleblower protection
13.4.5: Explain senior management's role in fostering ethical decisions and
behavior
Code of Ethics
• Policy statement of a company’s

values, responsibilities, and conduct
expectations
Purpose is to guide employees in
handling ethical dilemmas- moral
compass
• Vary in content, length, and
complexity
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Ethics Training
• Having codes and policies in place that address ethics isn’t enough
• Employees must be taught how to respond in situations involving ethics
• Many managers enroll employees in ethics training program- involve
activities that encourage ethical behavior and enforce company code
• Ethics activity: employees match scenarios on one set of cards with
responses on another; each scenario will have correct and incorrect answers
that members need to correct
Selecting and Hiring Ethical Employees
• Better to hire someone naturally inclined to behave in an ethical manner

than to rely on company code of ethics to encourage unethical employee
to make ethical choices
• One method- use of personality tests or situation-specific questionnaires
• Personality tests- determine temperament, outlook, and mood
• Questionnaires- used to uncover how candidate would react when faced with ethical
dilemma
• Calling personal references may also help
• Best practices involve including company’s most ethical employees in
interview process
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Whistleblower Protection
• Individual such as an employee who reports the misconduct of someone in a

position of authority in his or her own organization
• No protection from retaliation by those they reported- often required
• Anyone who reports corporate wrongdoing and believes they should be
penalized for it can request OHSA investigate
• If whistleblower is employee who was fired and termination was found to be
improper, company can be ordered to rehire them or give back pay
Fostering Ethical Decisions
• Planning, implementing, and communicating specifics of ethics program

• Responsibilities
• Act ethically and be seen to act ethically
• Be active in ethics program
• Encourage employees to raise issues
• Address ethics issues
• Enforce the ethics program by punishing violators
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Practice Question 2
Why was the Sarbanes-Oxley Act (SOX) voted into law in 2002?
1. To prevent obstacles to interstate commerce.

2. To educate corporations on ethical behavior.
3. To require the establishment and enforcement of a corporate code
conduct.
4. To foster corporate lobbying practices with the consumer in mind.
Corporate Social Responsibility
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Learning Outcomes: Corporate Social

Responsibility
13.5: Explain corporate social responsibility (CSR) and its relationship

to economic performance
13.5.1: Explain the concept of corporate social responsibility
13.5.2: Explain the relationship between CSR and a company's various
stakeholders
13.5.3: Describe the relationship between CSR and economic performance
Expectations of Corporate Social Responsibility
• 9/10 consumers expect companies to operate responsibly

• CSR—social and environmental concerns are integrated into a company’s
operations
• Environmental efforts: primary focus of many companies
• Philanthropy: donating to charities and offering scholarships
• Ethical labor practices
• Volunteerism: incorporating into policies and establishing programs
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The Stakeholder-CSR Relationship
• Stakeholders are interested in well-being

of that company- employees, board
members, stockholders, suppliers, the
community, etc.
• Communities benefit when citizens are
employed and when local companies
are good stewards of the environment
• Suppliers benefit from having steady,
profitable outlet for products
• Consumers and stakeholders expect
profit, people, and planet
• Consulting companies offer ethical
compliance systems for clients
Practice Question 3
What is the advantage of businesses establishing CSR programs?
1. Employee engagement.
2. Environmental responsibility.
3. Reputation enhancement.
4. Stakeholder value.
5. Customer loyalty.
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Class Discussion: Corporate Code of Conduct
You are a senior management work group tasked with creating a 5-point
corporate code of conduct for your financial services company.
1. Create a brief 5-point statement outlining your ethical code.

2. Design a training situational scenario that illustrates both ethical (right) and
unethical (wrong) behavior.
Quick Review
• Why is there a need for ethics in the workplace

• Are you able to describe the costs to a company’s health of unethical
behavior?
• Can you correctly explain the U.S. Sentencing Guidelines for Organizations
and list the compliance steps?
• Are you able to explain the concept of corporate social responsibility?
• Can you explain the relationship between CSR and a company’s various
stakeholders?
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Module 14: Communication
Describe typical business communication, and explain barriers to effective

communication
14.1: Recognize the role of communication in the management function

14.2: Differentiate between typical communication flows within an organization
14.3: Explain barriers to effective communication
14.4: Differentiate between typical channels of business communication
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Communication and Management
Learning Outcomes: Communication and

Management
14.1: Recognize the role of communication in the management

function
14.1.1: Describe the components of the communication-process model
14.1.2: Recognize common missteps in communication
14.1.3: Differentiate between formal and informal communication networks
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Communication and Management Introduction
• Communication and management

are closely linked
• Communication: process by which
information is exchanged between
two or more people
• Management roles depends on
effective communication
• Managers must be able to receive
accurate information to determine
plans
The Role of Communication in Management
• Role is to accomplish the goals of an organization- managers create plan

that defines what needs to be done, when, and how
• Benefits:
• Provides clarity- confusion makes people uncooperative
• Builds relationships- reduces tension between hierarchical levels
• Creates commitment- everyone feels like they are valued
• Defines expectations- people who are uncertain don’t perform jobs well
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Practice Question 1
The five defined roles of management in business are: planning, organizing,

staffing, leading, and controlling. What important role is left off of this list?
1. Communicating.
2. Hiring/firing.
3. Authorizing checks.
4. Selecting vendors.
The Communication Process Model and Missteps
• Alt text: graphic that lists process of Sender to Encoding to Channel to

Decoding to Receiver with Feedback running between Sender and Receiver
• Caption: communication-process model shows how information is received
and sent
• Easiest to understand when one person is communicating with another
• Receiver receives encoded message and decodes it- converts
• When information to be communicated isn’t encoded correctly
• When the receiver interprets message differently than sender intended
• All problems can occur during feedback- often not needed or wanted
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Formal and Informal Communication Systems
Formal Informal
• Methods used to convey • Connect almost anyone in

information necessary for organization to anyone else
conducting business of • Skip over hierarchical levels and
organization between departments
• Conform to rules and regulations • Not necessarily disruptive
given by profession or law
• Social Network- system of personal
relationships
• Grapevine- how gossip is spread
through organization
Typical Communication Flows
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Learning Outcomes: Typical Communication Flows
14.2: Differentiate between typical communication flows within an

organization
14.2.1: Differentiate between downward, upward, horizontal, diagonal, and
external communication flows
Organizational Communication Flows
• Four directions:
• Downward
• Upward
• Horizontally
• Diagonally
• In established and traditional organizations, communication flows in vertical
direction
• In informal firms such as tech start-ups information flows horizontally and
diagonally
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Upward vs Downward Communication
Upward Communication Downward Communication
• Information from lower-level to • Company leaders and managers share

high-level employees information with lower-level employees
• when workers report to supervisor or • Senders don’t usually expect to get a
team leaders
response
• Examples: progress reports, proposals
for projects, budget estimates, etc. • Forms include speeches, blogs,
• Important goal of many managers podcasts, and videos
is to encourage spontaneous or • Most common types are everyday
voluntary upward communication directives of department managers
• Must trust that management will • Delivers information that helps to
recognize their contributions understand workforce about key
changes, new goals, or strategies, etc.
Horizontal and Diagonal Communication
Horizontal Communication Diagonal Communication
• Exchange of information across • Cross-functional communication

departments at same level between employees at different
• Purpose is to request support and levels of the organization
coordinate activities
• Can work together to solve problems
• Advantages:
or issues • Building relationships between senior-
level and lower-level employees
• Problems can arise if one manager is
• Encouraging informal flow of
unwilling to share information
information in organization
• Reducing chance of a message being
distorted by going through additional
filters
• Reducing workloads of senior-level
managers
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External Communication Flows
• Focuses on audiences outside

organization
• Senior management almost always
controls communications that relate
to public image
• First-level and middle-level
management generally handle
operational business
communications such as purchasing,
hiring, and marketing
• Important for employees to behave
professionally
Practice Question 2
What communication flow do you think is most effective in developing

meaningful feedback?
1. Downward.
2. Upward.
3. Sideways.
4. Diagonal.
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Barriers to Effective Communication
Learning Outcomes: Barriers to Effective

Communication
14.3: Explain barriers to effective communication

14.3.1: Differentiate between filtering, selective perception, and information
overload
14.3.2: Differentiate between emotional disconnects, lack of source credibility,
and semantics
14.3.3: Explain active listening
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Understanding Barriers to Effective

Communication
1. Physical Conditions
2. Filtering
3. Selective Perception
4. Information Overload
5. Semantics
6. Denotation and Connotation
7. Emotional Disconnects
8. Credibility
Practice Question 3
This excerpt from an internal memo confused several employees:
“The salary we are offering is commensurate with remuneration for other managers.”
Which barrier to communication would account for the confusion?
1. Physical conditions.
2. Credibility.
3. Semantics.
4. Information overload.
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Active Listening
• Communication technique that has

been around for many years
• Important in parenting classes,
marital relationships, public schools,
counseling, and tutoring
• Focus on listening rather than talking
• Takes practice—look at speaker in
the eye, note body language, don’t
interrupt, ask questions
• Able to convey that you care about
speaker and their opinions
Channels of Business Communication
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Learning Outcomes: Channels of Business

Communication
14.4: Differentiate between typical channels of business

communication
14.4.1: Differentiate between face-to-face, written oral, web-based, and other
typical channels of business communication
14.4.2: Explain the importance of tailoring the message to the audience
Understanding Channels of Business

Communication
• Medium, mean, manner, or
method through which message is
sent to receiver
• Basic channels are written,
oral/spoken, and
electronic/multimedia
• Can be informal, formal, or
unofficial
• Can be rich or lean - refers to
amount of information transmitted
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Oral Communications
• Depend on spoken word - richest

mediums and are face-to-face, in-
person, phone conferences, lectures
etc.
• Deliver low-distortion messages
because body language and voice
provides meaning
• Most labor intensive channels
• Used when high likelihood of
creating confusion or anxiety
• Useful when organization wants to
introduce key official followed by
detailed explanation
Written Communications
• E-mails, texts, memos, letters, reports,

spreadsheets, etc.
• Leaner business communications-
writer must provide enough context
for message to make sense
• Receiver should be alert of confusion
and ask for clarification if needed
• Effective in transmitting large
messages and can be studied
overtime
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Electronic (Multimedia) Communications
• TV broadcasts, social media,

interactive blogs, public internet
company pages, Facebook,
Twitter, etc.
• Allow messages to be sent
immediately and globally
• Can also be risky- private
communications of large
corporations have been hacked
and their data stolen
Putting Together the Types of Communications
Type of Channel Advantages Disadvantages

Oral Communications Build relationships and To spontaneous- may lead to unwise
trust; accelerate decision statements; people are unable to
making refer back to information
Written Communications Message can be revised Message is static; sender doesn’t
and studied; perfect for receive immediate feedback; hard
legal and formal business for sender to maker sure message is
functions understood
Multimedia Instant, global, and Technical difficulties and hack attacks
adaptable to multiple threaten security of organizations and
targets customers
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Which Channel is Best?
• Best channel is one that most

effectively delivers the message so
that it is understood as sender
wanted
• Nuanced or emotional messages
require rich medium while simple
messages don’t
• The more emotional the context,
the richer the medium should be
Tailoring a Message to an Audience
• Which channel suits the content best?

• What do you want to achieve by sending the message?
• Does the message require interaction from the audience or is it more of
throwing out information?
• Will visual aids help the message or distract from it?
• Do you have to establish your credibility?
• Ask yourself why the audience should care about topic
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Know the Audience
• Can’t tailor information to sender if

you don’t know the audience
• Must know:
• How big is audience?
• What is the status of the audience?
• Can you establish empathy with the
audience?
Class Discussion: The Right Channel
A good rule of thumb regarding communication channel is to select the richest

channel available for the job. Which channel would you choose to send the
following communication?
1. You are an event planner and need to let management know the site of
the celebrity tennis tournament you have selected.
2. You are a sales manager and need to know if you field reps are available
for a quick conference call.
3. You need to convince your manager to give you a raise.
4. You need to know if Jolene in the mail room can add additional copies for
the end-of-week stand up.
5. You are the CEO who needs to respond to the IRS for an underpayment
penalty.
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Practice Question 4
What is the most important factor leading to effective communication?
1. Selecting the right channel.

2. Crafting the message.
3. Listening for feedback.
4. Tailoring to the audience.
Quick Review
• Can you describe the components of the communication-process model?

• Can you recognize common missteps in communication?
• Are you able to differentiate between formal and informal communication
networks?
• Are you able to differentiate between downward, upward, horizontal,
diagonal, and external communication flows?
• Can you differentiate between face-to-face, written, oral, web-based, and
other typical channels of business communication
• Please explain the importance of tailoring the message to the audience
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Module 15: Control
Explain the methods and need for control within an organization
15.1: Explain what control means in a business setting and why it is needed
15.2: Explain the basic control process and monitoring points
15.3: Describe the different levels and types of control
15.4: Explain the need for a balanced scorecard
15.5: Explain the use of financial and nonfinancial controls in business
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Control in the Business Setting
Learning Outcomes: Control in the Business Setting
15.1: Explain what control means in a business setting and why it is

needed
15.1.1: Explain what control means in a business setting
15.1.2: Describe the benefits and costs of organizational control
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What Does Control Mean in the Business Setting?
• Control is device or mechanism used

to regulate or guide operation of a
machine, apparatus, or system
• Control is in a business setting and
involves the processes that regulate,
guide, and protect an organization
• One type of control- set of financial
policies
• Most common style is top-down
control- decisions are made by high-
level executives and passed down
Implementing Organizational Control
• Organizational control means developing

rules, procedures, or other protocols for
directing the work of employees and
processes
• Important because it helps identify errors
and deviation from standards
• Benefits: improved communication,
financial stability, increased productivity,
help in meeting goals, etc.
• Employee morale may be higher when
workers see that management is paying
attention and knows what it is doing
• Example: Toyota
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Disadvantages
• Some systems can be very expensive so management must weigh the cost
versus the benefit for each control
• Control mentality can lead to overstaffing and unsustainable costs for some
businesses
• Maintaining controls is also an expense
• Controls can become blind spot for management
• Rigid implementation may lead to a slowdown in the operation of the
business
The Control Process
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Learning Outcomes: The Control Process
15.2: Explain the basic control process and monitoring points

15.2.1: Explain the basic control process
15.2.2: Differentiate between feedback, proactive, and concurrent controls
Understanding The Control Process
• Setting performance standards

• Measuring actual performance
• Comparing actual performance with
standards or goals
• Analyzing deviations
• Taking corrective action
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Timing of Controls
• Controls categorized according to

time in which process or activity
occurs
• Controls related to time include:
• Feedback
• Proactive
• Concurrent
• Advantages and Disadvantages of
each
Feedback
• Occurs after an activity or process is completed

• Example: Evaluating team’s progress by comparing production standard to actual
production output
• Example: When a sales goal is set, sales team works to reach goal for next three
months, followed by review period
• Disadvantage- modifications can be made only after a process has already
been completed or an action has taken place
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Proactive Control
• Involves anticipating trouble rather than waiting for a poor outcome and
reacting afterward
• About prevention or intervention
• Example: When an engineer performs tests on braking system of prototype vehicle
before it is moved on to be mass produced
• Looks forward to problems that could reasonably occur and devises
methods to prevent problems
• Disadvantage: Can’t control unforeseen and unlikely incident
Concurrent Control
• Monitoring takes place during process or activity

• May be based on standards, rules, codes, and polices
• Example: Fleet tracking by GPS to allow managers to monitor company vehicles
• Example: Keen Media tries to reduce employee inefficiency by monitoring Internet
activity
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Practice Question 1
In the Lean/Agile management process, a workflow staple is the “Daily

Standup” where each team member quickly outlines what they are working on.
This would be an example of:
1. Feedback control.
2. Proactive control.
3. Concurrent control.
Practice Question 2
Also from the Lean/Agile handbook is the process called “post-mortem” where
the team evaluates their 2-week progress. This would be an example of:
1. Feedback control.
2. Proactive control.
3. Concurrent control.
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Figure 1: The Control Process
Levels and Types of Control
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Learning Outcomes: Levels and Types of Control
15.3: Describe the different levels and types of control

15.3.1: Differentiate between strategic, operational, and tactical controls
15.3.2: Differentiate between top-down, objective, and normative control
Strategic Control
• Involves monitoring a strategy as it is

being implemented, evaluating
deviations, and making necessary
adjustments
• May involve reassessment of strategy
due to unforeseen event
• Implementing strategy often involves
series of activities that occur
• Also involves monitoring internal and
external events
• Errors are major- failing to anticipate
customers’ reaction to competitor’s
new product
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Operational Control
• Involves control over intermediate term operations and processes but not
business strategies
• Ensure that activities are consistent with established plans
• Mid-level management uses operational controls for intermediate-term
decisions
• When performance doesn’t meet standards, managers enforce actions such
as training, discipline, motivation, or termination
• Focuses more on internal sources of information and affects smaller units or
aspects of organization
• Errors may mean failing to complete project on time
Tactical Control
• Tactic is a method that meets specific objective of an overall plan

• Emphasizes current operations of an organization
• Managers determine what various parts of organization must do for
organization to be successful in the near future
• Strategic control always comes first, followed by operations, and then tactics
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Top-Down Controls
• Means use of rules, regulations, and formal authority

• Includes budgets, statistical reports, and performance appraisals
• Advantages: Employees can spend their time performing their job duties
instead of discussing direction of the company and offering input into
development of new policies
• Disadvantages: lower levels are in touch with customers and recognize new
trends or new competition earlier than senior management- may discourage
employees from sharing information or ideas up chain of command
Objective and Normative Control
• Objective control—based on facts

that can be measured and tested-
measures observable behavior
• Output control is another form of
objective control
• Normative control—govern
behavior through accepted
patterns of action rather than
written policies and procedures
• Uses values and beliefs
• Reflects organization’s culture
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The Need for a Balanced Scorecard
Learning Outcomes: The Need for a Balanced

Scorecard
15.4: Explain the need for a balanced scorecard

15.4.1: Identify the four typical components of the balanced scorecard
15.4.2: Explain the need for a balanced scorecard
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The Balanced Scorecard
• More than 50% of large U.S. firms use the balanced scorecard- many large
firms over the world use the balanced scorecard in business operations
• Reaction to earlier mistakes driven by narrow focus on financial results
• Adds goals for company’s customers, internal quality, and learning and
growth
Balanced Scorecard Components
• Communicate goals, align daily tasks with strategies, prioritize projects,

measure performance, monitor progress
• 4 different perspectives:
• Learning and growth: involves culture of a company
• Internal business processes: focuses on how well company is running
• Customers’ perspective: often measured by surveying existing customers
• Financials: company must succeed financially to continue operating
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Why a BSC Is Needed?
• Without balanced scorecard, executives focus on only one or a few aspects

of the organization
• Company may be doing well financially but performing poorly in another
area
• For example, company may exceed customer expectations related to
product quality, corporate social responsibility, and customer service
• Forces managers to look at company as a whole to measure performance
and more accurately determine company’s overall state
Financial and Nonfinancial Controls
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Learning Outcomes: Financial and Nonfinancial

Controls
15.5: Explain the use of financial and nonfinancial controls in business

15.5.1: Explain the use of budgets to both control and delegate authority
15.5.2: Explain the use of financial ratios (comparisons) as a control method
15.5.3: Explain the benefits of quality management
15.5.4: Explain the costs of quality management
Budgetary Control
• Standard financial reports are

statement of cash flows, balance
sheet, income statement, financial
ratios, and budgets
• Budget sets limit on spending and is
a method of control used to help
organizations achieve goals
• Following a budget requires
discipline
• Budgets can also be used to
delegate authority
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Financial Ratios
• Managers use ratios to analyze elements such as debt, equity, efficiency,

and activity
• Debt ratios compares organization’s debt to its assets- higher the ratio, the
more leveraged the company is
• Key to understanding ratios is comparing them to relevant benchmarks- debt
ratio for manufacturing company is around 50% but in bank is 92%
• Analyzing financial ratios helps managers determine financial health
company
Practice Question 3
The following ratios would be helpful for which of the following industries?
DIO = 365 / (Inventory Turnover: cost of sales during period /average inventory balance during the same period)
DSO = 365 / (credit sales during period /average accounts receivable balance during the same period)
DPO = 365 / (cost of sales during period /average accounts payable balance during the same period)
1. Retail
2. Manufacturing
3. Banking
4. Hospitality
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Quality Management
• Involves controlling, monitoring, and modifying tasks to maintain desired level

of quality
• Benefits—helps companies please customers so company can maintain
good reputation, gain competitive edge, and ultimately make a profit
• Company also saves both time and money by reducing defects
• Costs—regulations are type of control that society puts on companies
• Drives managers great lengths to please customers which can become quite
expensive
• Purchase new software/equipment, hire employees, conduct studies, and consult with
experts
Quick Review
• What does control mean in a business setting?

• What are the benefits and costs of organizational control?
• What is the basic control process?
• Can you differentiate between feedback, proactive, and concurrent
controls?
• Can you differentiate between strategic, operational, and tactical controls?
Between top-down, objective, and normative control
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More Quick Review
• Are you able to identify the four typical components of the balanced
scorecard?
• Are you able to correctly explain the need for a balanced scorecard?
• What is the use of budgets to both control and delegate authority?
• What is the use of financial ratios as a control method?
• What are the benefits of quality management?
• What are the costs of quality management?
Class Discussion
You are one of the founders of a startup in the logistics industry. What would be
the first control mechanisms that you would put in place to get your business
started successfully?
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Module 16: Globalization and Business
Describe current trends and challenges in global business management
16.1: Describe current trends in global business

16.2: Explain the risk tradeoffs in typical forms of global business
16.3: Explain the dimensions of cultural difference and their effect on global business
16.4: Explain the strategies managers can use to respond to cultural differences
16.5: Explain how managers can effectively train employees for international assignments
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Current Trends in Global Business
Learning Outcomes: Current Trends in Global

Business
16.1: Describe current trends in global business

16.1.1: Describe key characteristics of business globalization
16.1.2: Explain global competition
16.1.3: Explain global supply chains
16.1.4: Give examples of the global nature of innovation
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What Is Globalization?
• Globalization is the process by which the exchange of goods, services,

capital, technology, and knowledge across international borders becomes
increasingly interconnected
• Creates new opportunities for businesses to increase profits by expanding
markets and by allowing wider access to resources
• Domestic markets to new competitors, decreased demand for products
Important Global Trade Agreements and

Organizations?
• After World War II (1941–1945) many countries wanted to expand global
cooperation politically, economically, and socially
• Nations agreed to work together to promote free trade and increase global
cooperation
• Also created regional custom and trade agreements and unions to facilitate
economic interdependence
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The World Trade Organization
• Formed in 1995 and grew out of General Agreement on Tariffs and Trade
• Oversees implementation and administration of agreements between
member nations
• Provides forum for negotiations and for settling disputes among nations
• Also helps developing nations get experience and technical expertise
needed to deal with comprehensive trade agreements
• Accounts for 97% of global trade and 98% of global gross domestic product
The World Bank
• International financial institution that provides loans for capital programs to

developing countries
• Part of World Bank Group which is part of United Nations system
• Two goals:
• End extreme poverty by decreasing percentage of world’s population that live on less
than U.S. $1.90 per day to no more than 3%
• Promote shared prosperity by fostering the income growth of bottom 40% in every
country
• Previous projects include building and maintaining safe water supplies and
sanitary sewer systems in Africa and Asia
• Come under fire in past for budget overruns and poor project oversight
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The International Monetary Fund
• Works to foster global growth and economic stability by providing policy,

advice, and financing to members
• Works with developing nations to help reduce poverty and achieve
macroeconomic stability
• Also plays role in management of balance-of-payments difficulties
• Primary functions were to provide short-term capital to aid balance of
payments
Global Trade Policies
• Regional trade agreements establish reciprocal treaties addressing tariffs

and trade barriers with member countries (NAFTA, ASEAN)
• Customs unions are arrangements in which countries agree to allow free
trade on products within the customs union (CET)
• Common markets eliminate internal barriers between members and adopt
common external barriers against nonmembers (ECOWAS)
• Economic unions eliminate internal barriers, adopt common external barriers,
and permit free movement of resources (EU)
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Key Characteristics of Globalization
• Political: UN and WTO exist because

of increasing need for political
cooperation at global level.
Impossible for country to remain
isolated from events around the
world
• Economic: nations with limited
resources can access goods and
knowledge that help to raise their
standards of living- NAFTA and EU
• Culture: globalization has
heightened awareness of many
languages, religions, cuisines, arts,
literature, and dress
Global Competition
• Competing organizations that serve international customers through

enhanced communications, improved shipping channels, reduction of trade
barriers, and centralized financial institutions
• Increased profits- wider market means opportunity to sell more goods
• Greater access to suppliers for materials and at lower costs
• Reduced manufacturing costs through access to cheaper labor
• Social and environmental concerns- businesspeople are committed to
improving lives of people around world
• World Economic Forum has developed Global Competitiveness Report- ranks
countries on global competitiveness
• Ease of Doing Business Index- lists “friendliest” countries- Singapore, United
States, and United Kingdom appear in top ten of both lists
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Global Supply Chains
• Network of suppliers and

contractors that provide needed
materials and services to a business
• Includes all of businesses involved
with taking product from raw
material to manufacturing to
transporting and storage of
merchandise
• Sometimes include delivery to
consumer
• Requires dealing with trade and
tariff controls, quality regulations,
and international relationships
The Global Nature of Innovation
• Developing idea or invention that increases efficiency, raises productivity, or

creates value for which customers will pay
• Applies information to further goals of organization
• Technology can be used to leverage and produce new innovations
• Nestle is largest food and beverage company in world—developing “shared
economy” technologies that rely on crowdsourcing to alert company to
potential problems
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Tradeoffs in Global Business
Learning Outcomes: Tradeoffs in Global Business
16.2: Explain the risk tradeoffs in typical forms of global business

16.2.1: Differentiate among the risk tradeoffs for exporting, licensing, alliances,
wholly owned affiliates, and global ventures
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Franchising, Licensing,
and Export/Import Businesses
• Export/Import Business
• Licensing
• Franchising
• Strategic Alliances
• Joint Venture
• Wholly Owned Foreign Affiliates
• Greenfield Venture
Practice Question 1
Nike markets its sports apparel products world-wide. This would be an example
of:
1. Franchising.
2. Exporting.
3. Licensing.
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Practice Question 2
Subway is the largest fast-food company in the world. Its global business utilizes:
1. Franchising.
2. Exporting.
3. Joint Venture.
Dimensions of Cultural Difference
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Learning Outcomes: Dimensions of Cultural

Difference
16.3: Explain the dimensions of cultural difference and their effect on

global business
16.3.1: Explain the dimensions of cultural differences
16.3.2: Identify effects of cultural differences on global business
Cultural Differences and Global Business
• Power Distance
• Uncertainty Avoidance
• Performance Orientation
• Assertiveness
• Future Orientation
• Humane Orientation
• Institutional Collectivism
• In-Group Collectivism
• Gender Egalitarianism
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Effects of Cultural Differences on Global Business
• Managers must consider different

communication practices
• Different cultures have different
ideas about time
• Planning
• Organizing
• Leading
• Controlling
Practice Question 3
A country with both high Institutional Collectivism and high Uncertainty

Avoidance would have the following cultural characteristics:
1. Group loyalty and resistance to change.

2. Aggressiveness and high standards.
3. Short-term gain oriented and generosity.
4. Male/female equality and family orientation.
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Responding to Cultural Differences
Learning Outcomes: Responding to Cultural

Differences
16.4: Explain the strategies managers can use to respond to cultural

differences
16.4.1: Explain export strategies for global management
16.4.2: Explain standardization strategies for global management
16.4.3: Explain multi-domestic strategies for global management
16.4.4: Explain transnational strategies for global management
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Global Business Strategies
• Major concern for managers deciding on global business strategy- tradeoff

between global integration and local responsiveness
• Global Integration: Degree to which the company is able to use the same products
and methods in other countries
• Local Responsiveness: Degree to which the company must customize their products
and methods to meet conditions in other countries
• Four basic global business strategies: export, standardization, multidomestic,
and transnational
Export Strategy
• Used when company is primarily focused on domestic operations

• Doesn’t intend to expand globally but does export some products to take
advantage of international opportunities
• Doesn’t attempt to customize products for international markets
• Isn’t interested in responding to unique conditions in other countries or in
creating integrated global strategy
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Standardization Strategy
• Used when company treats whole world as one market with little meaningful
variation
• Assumption is that one product can meet needs of people everywhere
• Produces efficiencies by centralizing many common activities such as
product design, gaining scale economies in manufacturing, simplifying
supply chain, and reducing market costs
Multidomestic Strategy
• Customizes products or processes to specific conditions in each country

• Overall management of company with this strategy is centralized in home
country but country managers are given latitude to make adaptions
• Companies benefit because country managers understand local laws,
customs, and tastes and can decide how to best meet them
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Transnational Strategy
• Combines standardization strategy

and multidomestic strategy
• Used when company faces
significant cost pressure from
international competitors but must
also offer products that meet local
customer needs
• Very difficult to maintain because
company needs to achieve
economies of scale through
standardization but also be flexible
to respond to local conditions
• Ford Motor Company is example
Class Activity: Multidomestic Strategy
A multidomestic strategy could be applied to management, marketing, or

product.
From a product perspective, the strategy would dictate designing different

products for different markets. For instance, Heinz Tomato Ketchup produced
for India does not include garlic or onion as those ingredients are not popular in
that county.
From a management perspective, the strategy would give local control to a

subsidiary to run their business locally with great autonomy.
Discuss the advantages and disadvantages of how the multidomestic strategy

is applied to both areas.
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Effective Training for International

Assignments
Learning Outcomes: Effective Training for

International Assignments
16.5: Explain how managers can effectively train employees for

international assignments16.5.1: Differentiate between documentary training,
cultural simulations, and field simulation training
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Types of Training for Global Workers
• Sometimes done for development of manager or so company can exert

more control over subsidiary
• Effective training program- depends on “rigor” or how thorough and
challenging it is
• If moving for year or more with intent of living in host country, high-rigor is
required
• Training can include watching videos on culture, going to lectures, and
attending briefings
• Longer assignments- extensive experimental learning, interactions with
nationals, and language training
• More effective when families are included
Documentary Training
• Textbook and classroom learning:

focuses on looking at culture
differences
• Differences are examined because
they are potential friction points
that create misunderstandings
• Cultural differences involve human
interactions
• Perception of sickness and disease
differs greatly in different cultures
even among closely related
ethnicities
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Cultural Simulation Training
• Where employees will role play various situations and practice responding in
culturally sensitive ways
• Most effective when training takes place in host country
• Goal is to duplicate possible scenarios that employee may face
Field Simulation Training
• After “survival training”

• Employee and family visits
neighborhood of same ethnic
background as destination
• Drop individuals into rural area with
limited resources and told to get
back to office
• Family also may be moved to
temporary housing to explore area
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Benefits of Rigorous Training Programs
• Providing practical assistance for relocation efforts

• Giving employee information that will allow her to make an informed
decision about the assignment
• Providing emotional security about the change
• Increasing cultural sensitivity of employee
• Only disadvantage is cost of training and out-of-office time- outweighed by
benefits
• Company should also offer readjustment counselling for when employee is
back
Quick Review
• What are the key characteristics of business globalization?

• Can you explain global competition? How about global supply chains?
• What are some examples of the global nature of innovation?
• Are you able to correctly explain export, standardization, multidomestic, and
transnational strategies for global management?
282

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Module Learning Outcomes

Describe the primary functions of management and the roles of managers.

1.1: Describe what management is

Learning Outcomes: Management

1.1: Describe what management is

Why does learning about management matter?

• The Definition of Management

• The Two Aspects of Management

In most cases, the management function includes which of the following?

a) applying and distributing organizational resources effectively

Primary Functions of Management

Learning Outcomes: Primary Functions of

Introduction to Functions of Management

Important to note that processes do

First Factor of Management: Planning

• Defining goals and tackling them

Second Factor of Management: Organizing

• Decides how to best implement the

Third Factor of Management: Leading

• Uses knowledge, character, and

Fourth Factor of Management: Controlling

• Unexpected issues will arise

Who Directs Each Function of Management?

• Leaders often step up in times of

Class Discussion: Functions of Management

Types of Managers and Their Roles

Learning Outcomes: Types of Managers and Their

• Various levels of management

• What do these acronyms represent on a management team?

• Department heads, directors, chief

• Entry level- “on the line”

• Reports to first-line or middle

Types of Management Roles

• Leadership and Interpersonal Roles

Leadership and Interpersonal Roles

• Entrepreneur- top-level managers

• Disturbance handler- top and middle managers

• Negotiator- top and middle-level managers

Class Discussion: Managers and Leadership

Which type of manager spends more time in leadership activities?

The Advantages of Managing People Well

Learning Outcomes: The Advantages of Managing

Class Discussion: The Advantages of Managing

“People are definitely a company’s greatest asset. It doesn’t make

How can managers leverage their employees to achieve a true competitive

What Makes a Good Manager?

• What makes a good manager?

• Describe what management is in your own words.

Module Learning Outcomes

Describe the work of major contributors to the field of management

Learning Outcomes: Scientific Management

Basics of Scientific Management

• Frederick Winslow Taylor

• His method is seen as scientific management

• Was a mechanical engineer

• Believed the work system could be improved

Frederick W. Taylor Theories

• Concerned about worker output more than worker

Scientific Management Core Principles

• Look at each task to determine

Classical School of Management