Review for Examination Three

Chapters 12-14 and 16-18

Human Resource ManagementChapter 12

Human Resources’ objective is to build a system of rewards and punishments that will enable management to enhance organizational unity, efficiency, effectiveness, quality, innovation and responsiveness to customers – all of which builds competitive advantage.

HRM Elements

Find the best (search), hire them (recruit), keep them (retain), train them for their current job, develop them for their next job, monitor their performance, provide feedback, pay them well (a performance incentive) and give them benefits (a membership reward).

HRM Tools and Techniques• HR planning (Enough available to meet our needs?)• Job analysis (What skills, knowledge and abilities does this job

require?)• Benefits and drawbacks of inside versus outside recruiting• Selection process (background check, references, interviews, tests)• Types of appraisals and how to do them (formal, informal, behavior,

results, objective, subjective, self, peer, 360-degree); praise publicly/critique privately, be specific and as positive as possible, express confidence in their capability, agree on timetable for improvement, always show respect

• Training (classroom and OJT)• Incentivizing through pay (base, merit, bonus, stock options, etc.)• In-kind rewards and other perks

Motivation and PerformanceChapter 13

Motivation: the psychological forces that determine how hard and persistently someone will work

• Intrinsically motivated: driven by need for achievement at work (urgent)

• Extrinsically motivated: driven by potential consequences (reward or punishment)

Expectancy theory

• Workers will be highly motivated if they believe high effort will yield high performance will yield desired rewards. You must link these three elements.

• Customize if possible: find out what each wants and give it to them to motivate good performance

• You get the behavior you reward!

Needs Theories

• Maslow’s hierarchy of needs: self-actualization at the top (Theory Y)

• Alderfer’s ERG theory (Existence lowest, Relatedness in the middle, Growth at the top)

• McClelland’s needs for achievement, affiliation and power

• All say the same thing in slightly different ways; Maslow states it best.

Equity Theory

• If employees perceive they are not being treated in an even-handed manner, they will get angry, won’t work as hard, may sue you and the company or leave.

• So treat them fairly and hope their faulty perceptions don’t get in the way!

Goal-setting Theory

• Focus on goals important to the firm

• Provide specific direction

• Make the goals difficult, but not impossible

(i.e., “stretch” goals)

• Achieve agreement (worker buy-in)

• Include a feedback feature (KPIs and performance appraisal); PDCA at work

Operant Conditioning

• Positive reinforcement: praise, pay, perks, promotion

• Negative reinforcement: reprimand, demote, cut pay, terminate

• Negative reinforcement works, but can be perceived as brutal and unethical; it also is uncomfortable to administer and can generate lawsuits.

• Use much more positive reinforcement (standard practice) than negative (last resort).

Pay for Performance

• It’s called a merit increase for good reason; make the linkage between pay and performance obvious.

• Complementary forms of remuneration – bonus, commission, stock options – can further underline the link between high performance and reward.

• Examples: Toyota’s double-bonus approach; Welch’s 10-70-20 rule

LeadershipChapter 14

• Leadership is using position, power, personality and persuasion to influence, inspire, motivate and direct others to achieve goals. Generally, whatever makes people do what you want.

• All leaders have a personal style: for example, some delegate, empower and support; others command and demand (pushing versus pulling)

• A leader’s manner and methods can vary with circumstances and culture (both national and corporate). The situation can define the style most likely to succeed.

What is Leadership?

“Getting the other fellow to do what you want him to do when you want him to do it.”

President Dwight Eisenhower

Leadership Traits • Credits success to team not self• Has strong conceptual skills; able to link cause and effect• Visionary; able to see what can be and inspire people to create it• Flexible, adjusting to circumstances and people• Good listener; able to accept suggestions and criticism• Persuasive communicator; dynamic, enthusiastic, energetic; able to pump

others up• Organized, focused, competent and knowledgeable; able to set an expert

example (able to do the right thing the right way)• Good at judging others’ capabilities and fitting the right person to the task• Curious; thirsty for information and knowledge• Courageous; willing to take risk and accept responsibility• Decisive, determined; persistent; has stamina – can work hard and long• Able to respond rather than react; calm while others are not• Ethical, honest and trustworthy

Leadership

Leaders have five types of power: 1. Legitimate power comes from his or her

position in the organization. The power of position

2. Reward power is based on a manager’s ability to give or withhold tangible (pay raises) or intangible (praise) rewards. The power of recognition

3. Coercive is the power of punishment (verbal reprimand, pay cut, dismissal).

Leadership

4. Expert power comes from the example you set because you know more about the subject or are able to do it better than anyone else. The power of example

5. Referent power results from the admiration and respect people feel for you. The most effective form of leadership; usually gained by likeable, admirable managers. The power of respect and admiration

Leadership

• Strongest leaders are inspirational, charismatic and transformational; able to lead in troubled times when corporate change is required.

• I believe the most important leadership characteristics are stamina, intelligence, imagination (“what-if” skill), confidence, practicality, ethicality, a voracious appetite for information and persuasive communication capability.

• It also helps to be able to laugh at yourself.

Gender, Nationality and Leadership

• Although gender may affect leadership style, I believe there is no connection between gender and leadership capability

• Although national culture may have some effect on leadership style (people versus task orientation, group versus individual orientation, short versus long-term viewpoint, etc.), always be cautious in assuming such a connection.

• Corporate culture can and should affect leadership style.

Toyota LeadershipFind the path, Show the way

• Analyze, plan, inform, energize, organize, empower, check results, improve the process, do it again (PDCA).

• Preserve/improve corporate culture -- the root of success. • Be hands-on (genchi-genbutsu).• Find the problem’s root cause (the five why’s); build the “burning

platform” for change; show the way and generate organizational ownership (nemawashi); embed discipline and continuous improvement (kaizen).

• Harvest cost-savings to re-invest in improvement so you can run your competitors to death.

• Discipline, discipline, discipline!• Run scared.

My Personal Leadership Style

• Look for trends – opportunities and threats; seize the opportunity and (usually) attack the threat.

• Learn to write and speak persuasively.• Give credit, take blame, demand results• Listen to your people and they will make you smart; ask

them how, don’t tell them how.• Always be ethical (the “red-face” test); no trust-no follow• Try to correct your biggest fault, leave the others alone.• Pay attention to both the envelope and the letter.• Never confuse your ass with the chair it’s sitting in – the

job is important, you aren’t.

CommunicationChapter 16

• Communication: sharing information to forge mutual understanding that enables coordinated action

• The oil lubricating the cogs of commerce; the foundation of creativity, innovation, teamwork, problem-solving, decision-making and customer satisfaction

• In short, important!

The Communication Process

• A sender encodes a message, transmits it over a medium to a receiver, who decodes it and provides feedback to the sender. If this circular process (the communication loop) is effective, shared understanding will be achieved.

• The choice of medium (face-to-face, video conference, e-mail, phone, fax, memo, letter, etc.) is important because each medium has its strengths and weaknesses and may be more or less appropriate for any particular content.

Communication Media

• Face-to-face is the “richest” medium because it includes body (posture and gestures), facial (expressions) and verbal (tone of voice) content as well as words.

• Video conference is the next richest.• A general memorandum to many people is least

rich and least persuasive.• Richer media can convey more content more

quickly, effectively and persuasively• Select the medium with the appropriate

“richness” for your message.

The Role of Perception in Communication

• Perception: the process by which people gather, sort, organize and interpret sensory input to distill meaning, form opinions, and make decisions.

• Your experience creates internal “filters” that affect how you perceive input, sometimes skewing the message a sender intends.

• Become aware and wary of your filters and their potential effects; try to set them aside when making important decisions; be skeptical of yourself during the decision process

Barriers to Effective Communication

• Incomplete, difficult-to-understand messages• Messages sent over an inappropriate medium• No provision for feedback to confirm shared

understanding• Messages sent over automated media that can

anger or frustrate receivers because they lack a human element

• Messages not received or ignored

Communication Skills for Senders

• Send clear, complete, accurate messages; talk in a circle – (1) headline what you intend to tell them, (2) tell them, (3) summarize what you told them.

• Encode the message in symbols the receiver will understand (example, avoid American slang when talking to foreigners).

• Select an appropriate medium monitored by the intended receiver.

• Include a feedback mechanism to complete the loop and confirm shared understanding.

Communication Skills for Receivers

• Be an active listener; your ears and eyes are far more useful than your mouth.

• Understand different linguistic styles; this is particularly important across national cultures.

• Pay attention to non-verbal (body language) as well as verbal messages.

• Ask questions to clarify your interpretation.• Provide final feedback to confirm that you

understand.

Managing Conflict and PoliticsChapter 17

• Organizational conflict is discord arising when different individuals or groups hold different values, pursue conflicting goals, or try to block one another’s progress.

• Inevitable and necessary in business, useful if controlled; you will have to learn to deal with it.

Sources of Conflict

• Conflicting goals and timetables

• Overlapping authority (two dogs/one fireplug)

• Scarce resources (zero-sum mentality)

• Status inconsistencies that create perceptions of unfairness, causing envy

Conflict Management Strategies

• Resolution through compromise (share the pain) or collaboration (share the gain)

Compromise: Distributive bargaining

Collaboration: Integrative bargaining• Accommodation (one party plays door mat)• Avoidance (letting the problem fester – not good)• Competition (survivor wins -- stupid)

Conflict Minimization Strategies

• Increase awareness of potential conflict sources• Increase tolerance (empathy, respect for others) • Practice job rotation (walk in each other’s shoes)• Transfer or dismiss (move or fire the problem)• Make unproductive conflict unacceptable in the

corporate culture.

Negotiation

Conflict resolution in which two parties of equal power try to find an acceptable solution by considering various ways to allocate resources to each other

Third-Party Negotiators

• Mediator: a facilitator with no authority to impose a solution

• Arbitrator: a facilitator with the power to create and impose a fair solution

Organizational Politics

Activities managers pursue to increase their power to overcome opposition and achieve goals

• Negative when used to pursue self-interest.

• Positive when used to achieve organizational goals or improve performance.

• Leaders learn to use politics effectively.

Some Political Strategies

• Become central to the organization’s mission.

• Become irreplaceable.• Build both internal and external alliances.• Rely on objective, fact-based information.• Control the agenda.• Bring in an outside “expert” for support.• Make everyone a winner.

Advanced Information TechnologyChapter 18

Scientia est Potestas

KNOWLEDGE IS POWER

(and the genie is out of the bottle)

How does Information differ from Data?

• Data: raw, unsummarized, unanalyzed information that is mostly useless

• Information: data analyzed to discover patterns and correlation and organized to make it useful for decision-making

Information Technology

A set of techniques for:

1. Acquiring

2. Organizing

3. Storing

4. Manipulating

5. And transmitting

INFORMATION

Information and Managerial Control

Managers exert control by:1. Establishing measurable goals2. Monitoring performance against the goals3. Measuring the final results4. Correcting the process5. Doing it again6. And rewarding effective performance

This is PDCA and cannot be accomplished without timely, accurate, complete, relevant and reliable

information from both inside and outside the company. Global sourcing and competition are

making it ever more complex and rapid.

IT’s RoleEfficient, cutting-edge IT facilitates management and can enhance competitive advantage (example: Wal-Mart’s supply chain management)

But beware of over-reliance on IT – particularly when dealing with customers or making decisions that require a human “gut” (computers are fast and persistent, but not intuitive).

And beware of the decentralization IT unleashes (Knowledge Is Power). Establish information controls and strengthen training and corporate culture as you decentralize; inform and empower employees in order to assure unity of purpose, plan and execution but assure that each employee knows how to properly use the actionable knowledge you give them.

Implementing a new IT System

• Audit the current system to verify that information collected is accurate, complete, reliable, relevant and timely

• Benchmark leading companies• Decide what needs to be improved• List major goals and new types of information required• Establish ways to measure implementation progress• Make certain the new tool fits the business need• Build employee buy-in and support• Train, train, train!• Implement

Make Certain IT is…

• Cost-effective

• Cutting-edge

• Coherent

IT and Product Development

• IT can greatly facilitate product development, cutting cost and speeding the product cycle.

Product Life Cycle

Four Stages

1. Embryonic: new with minimal demand

2. Growth: demand increases

3. Maturity: demand peaks and flattens

4. Decline: demand decreases

Products – like life -- follow a bell curve.

Factors Affecting Life Cycle

• Fad

• Fashion

• Competitors’ actions

• Pace of technology change

• Evolving needs and circumstances

Product-development Goals

Accelerate development pace to reduce cost and be first to market, capturing longer life cycle and initial price premium.

• Maximize manufacturability.• Maximize differentiation.• Maximize quality.• Minimize cost.• All of which will maximize customer

satisfaction

Product-development Techniques

• Cross-functional teams

• Concurrent – not sequential – engineering

- Reduces development time and cost

- Enhances manufacturability

- Enhances quality

• Customer involvement

• Supplier involvement