MGMT Exam 2

Integration

the concept of coordination which are procedures that link the parts of the organization to achieve the organizations overall mission

Differentiation

The organization distinguishes and separates jobs and jobholders from one another through the division of labor and job specialization.

Division of labor

the work of the organization is subdivided into smaller tasks

Specialization

Different people or groups perform those smaller parts of the organization's overall work.

Authority

the legitimate right to make decisions and to tell other people what to do

• Board of Directors.

• Chief Executive.

• Top Management Team.

Hierarchy

The authority levels of the organizational pyramid. agers the right to tell their direct reports what to do.

Corporate governance

Role of a corporation’s executive staff and board of directors in ensuring that the firm’s activities meet the goals of the firm’s stakeholders

Span of control

Number of subordinates who report directly to a supervisor.

Narrow span

tall organization with many reporting levels.

Wide span

flat organization with fewer reporting levels

Delegation

Assignment of new or additional responsibilities to a subordinate.

Responsibility

Assignment of a task that an employee is supposed to carry out.

Accountability

Expectation that employees will perform a job, take corrective action when necessary, and report upward on the status and quality of their performance.

Advantages of Delegation

• Leverages managers’ energy and talent

• Helps train and develop effective subordinates

• Promotes a sense of being a contributing member of the organization

The Steps in Effective Delegation

1. Define the goal succinctly

2. select the person for the task

3. ask for subordinate’s views about suggested approaches

4. give the subordinate the authority, time, and resources to perform the assignment

5. review progress at appropriate intervals

The high-involvement organization

Top leaders ensure consensus about the direction in which the business is heading by seeking input from their team, middle managers, and sometimes from lower levels.

Participative management

• Involving employees in decision making.

• Task forces, study groups, and other techniques are used to foster participation in decisions.

Line departments

Units that deal directly with the organization’s primary goods and services. Example: sales.

Staff departments

Units that support line departments. Example: human resources.

The functional organization

structured around specialized activities such as production, marketing, and human resources.

Advantages of Functional Departmentalization

• Economies of scale can be realized.

• People have greater opportunity for specialized training and in-depth skill development.

• Performance standards are better maintained.

• Technical specialists are relatively free of administrative work.

• Environmental monitoring is more effective.

• Decision making and lines of communication are simple and clearly understood.

Divisional Structure

A form of departmentalization that groups units around products, customers, or geographic regions. When functional departments struggle to manage a diverse array of products, customers, and geographic regions they can restructure such that every division houses all functions.

Examples of Functional Organization

• Chain of restaurants with departments for purchasing, food safety, transportation, human resources, operations, and finance responsible for all locations

• Automotive manufacturer with departments for research and development, engineering, purchasing, production, and sales, managing all automotive products

• One legal department serving the needs of all the domestic and international subsidiaries of a multinational company, reporting to corporate leadership

Examples of Divisional Organization

• Chain of restaurants with one division for each region (for example., Northeast, Midwest, and Southeast) of the country managing all functions in that region

• Automotive manufacturer with product groups (for example, SUV or truck), each staffed with employees to manage that automobile’s development, engineering, purchasing, production, and sales

• A legal department at the offices of each subsidiary in which the multinational firm operates, reporting to the leadership in charge of that subsidiary’s operations

Matrix Organization Structure

Composed of dual reporting relationships in which some employees report to two superiors

Matrix Survival Skills

• Ability to collaborate effectively is essential.

• Top executive must balance product and functional requirements.

• Employees must learn to be responsible to two superiors

Matrix Advantages

• Linkage of employees to company’s goals and strategy.

• More information sharing across functions.

• Communication is fostered.

• Greater responsiveness to customers.

• Creative ideas from cross-functional work.

• Loyalty to the organization as a whole.

Matrix Disadvantages

• Unclear responsibilities and competing priorities.

• Violation of the unity-of-command principle.

• Accountability difficult to define.

• Lower employee engagement.

• Conflict and stress for employees who must manage a dual reporting role.

• Additional time required for meetings and other communications to coordinate work.

• Extensive collaboration needed but not always easy to reward.

Standardization

Establishing common routines and procedures that apply uniformly to everyone.

Formalization

The presence of rules and regulations governing how people in the organization interact.

Coordination by Plan

Interdependent units are required to meet deadlines and objectives that contribute to a common goal.

Coordination by Mutual Adjustment

Units interact with one another to make accommodations to achieve flexible coordination.

Creating slack resources

Extra resources on which organizations can rely in a pinch so that if they get caught off guard, they can still adjust.

Creating self-contained tasks

Changing from a functional organization to a product or project organization and giving each unit the resources it needs to perform its task.

It is generally accepted that having fewer hierarchical levels creates greater operating efficiency.

True

Authority typically is associated with a particular

position rather than a particular person

Dante, an operations manager at Therma-Pro Insulation, has been put on a big project with a tight deadline. He distributes half the work to two other supervisors, taking care of the bigger aspects of the project himself. This is an example of

Delegation

The three basic approaches to departmentalization are

functional, divisional, and matrix.

Mechanistic organization

• A form of organization that seeks to maximize internal efficiency.

• A formal, rigid structure with clear reporting relationships between bosses and subordinates plus rules and regulations ensuring that employees do basic work activities in standard ways

Organic structure

An organizational form that emphasizes flexibility.

Core capability

The knowledge, expertise, or skill that underlies a company’s ability to be a leader in providing a range of goods or services.

Ordinary capabilities

Basic administrative and operational functions needed.

Dynamic capabilities

• "Higher-level" strategic capabilities that aid rapid adaptation.

• Ordinary capabilities are doing basic things right, dynamic capabilities are about doing the right things at the right time

Strategic Alliances

Formal relationship created among independent organizations with the purpose of joint pursuit of mutual goals

The best alliances are true partnerships that meet these criteria

1. Relationship: Both partners work hard on developing a positive working relationship.

2. Metrics: The partners measure how they are going to succeed, not just the end result.

3. Differences: The partners embrace differences in one another.

4. Control: Both partners encourage collaborative behavior with less emphasis on formal systems and structures.

5. Management: The partners manage their internal stakeholders who are involved in the alliance.

Centralized organizations

where high-level executives make most decisions and pass them down to lower levels for implementation

Decentralized organizations

where lower-level managers make important decisions

Big Organizations

• Larger size helps create economies of scale.

• Larger size helps develop economies of scope.

Economies of scope

Economies in which materials and processes employed in one product can be used to make other, related products

Small Organizations

• Large organizations can have difficulty managing relationships.

• Large organizations are more difficult to coordinate and control.

• Nimble small firms may outmaneuver big bureaucracies.

Downsizing

• The planned elimination of positions or jobs

  • Eliminate functions, hierarchical levels, or entire units.

  • Replace full-time employees with part-time or temporary workers.

Managers must stay focused on at least three core players known as the strategic triangle

• The company itself.

• The competition.

• The customer.

An organization’s strategy and size influence ______________.

its agility, adaptability, and structure

The point of designing structuring a responsive, agile organization is to enable it to _____________________—the people who purchase its good or services and whose continued patronage helps drive sustained success.

meet and exceed the expectations of its customers

Customer relationship management (CRM)

A multifaceted process focusing on creating two-way exchanges with customers to foster intimate knowledge of their needs, wants, and buying patterns.

Value chain

The sequence of activities that flow from raw materials to the delivery of a good or service, with additional value created at each step.

Total quality management (TQM)

An integrative approach to management that supports the attainment of customer satisfaction through a wide variety of tools and techniques that result in high-quality goods and services.

Six sigma quality

Systematically analyzing work processes to identify and eliminate virtually all causes of defects, standardizing the processes to reach the lowest practicable level of any cause of customer dissatisfaction.

At six sigma, a product or process is defect-free 99.99966 percent of the time—fewer than 3.4 defects or mistakes per million.

ISO 9001

A series of quality standards developed by the International Organization for Standardization to improve total quality in all businesses for the benefit of producers and consumers

Seven principles of ISO 9001

1. Customer focus.

2. Leadership.

3. Involvement of people.

4. Process approach.

5. Improvement.

6. Evidence-based decision making.

7. Relationship management.

Small batch

Technologies that produce goods and services in low volume.

Large batch

Technologies that produce goods and services in high volume.

Continuous process

A process that is highly automated and has a continuous production flow.

Computer-integrated manufacturing (CIM)

The use of computer-aided design and computer-aided manufacturing to sequence and optimize multiple production processes.

Flexible factories

Manufacturing plants that have short production runs, are organized around products, and use decentralized scheduling.

Lean manufacturing

Operations that eliminate unnecessary steps in the production process and continually striving for improvement.

Logistics

The movement of resources into the organization (inbound) and products from the organization (outbound).

Just-in-time (JIT)

Manufactures in very small lots and delivers to the next stage of the production process just as they are needed.

Concurrent engineering

A design approach in which all relevant functions cooperate jointly in a maximum effort aimed at producing high-quality products that meet customers’ needs.

The mechanistic organization emphasizes flexibility and is less rigid than the organic structure.

False

A ________ organization can often create scale economies and economies of scope, which leads to advantages such as lower operating costs, greater purchasing power, and easier access to capital.

Large

Franz wants to balance the strategic triangle for his company. To do this, he must consider the company, the customer, and the

competition.

Ricardo is the owner of Mex Magic, a chain of restaurants serving reasonably priced Mexican food with fresh, healthy ingredients. He has discovered that the rising price of avocados and some of the other fresh produce the restaurants use has been driving down profits. Customers have come to expect high-quality ingredients for a low price, and Mex Magic’s marketing research has shown that the upscale interior of the stores, along with its great customer service, are a big draw. The feedback has also shown that a large percentage of the customers come with children. If Mex Magic is to be truly responsive to its market environment while maximizing profits, Ricardo should:

add child-friendly entrees that include fries or chips instead of guacamole.

In order to meet six sigma standards, the maximum defect per million is

3.4.

Human Resource Management (HRM)

• The formal systems for the management of people within an organization

  • HR executives now make vital contributions to high-level decisions and strategic efforts to deal with ever-changing circumstances and challenges.

  • A pervasive aspect of organizational and managerial life.

  • It has historically been known as personnel management.

Strategic Human Resource Management

• Human resource management becomes strategic and creates competitive advantage when it:

  1. Creates value.

  2. Is rare.

  3. Is difficult to imitate.

  4. Is organized.

• Human capital is the knowledge, skills, and abilities of employees that have economic value.

HR managers need to know the organization’s business plans

where the company is headed, the mix of businesses and the industries they will compete in, expected future growth, and so forth

The three components of the HR planning process

1. Planning.

2. Programming.

3. Evaluating.

Job Analysis

A tool for determining what is done on a given job and what should be done on that job.

HR planning also has a detailed micro side called job analysis with two components:

1. Job description: identifies each job’s specific and essential tasks, duties, and responsibilities.

2. Job specification: describes the knowledge, skills, abilities, and other characteristics (KSAOs) needed to perform the job.

Recruitment

The development of a pool of applicants for jobs in an organization. Internal and external.

Selection

Choosing from among qualified applicants to hire.

Selection Practices

• Applications and résumés.

• Interviews.

• Reference checks.

• Background checks.

• Personality tests.

• Drug testing.

• Performance tests.

• Integrity tests: Reliability & Validity

Liana and Rosario are entrepreneurs who started Deliverables, an online company that curates,  assembles and delivers “unique, customized gift baskets for busy people.” The company has   so successful that Liana and Rosario recently opened a brick-and-mortar shop in their large city,  which they need to fully staff within the next month. Along with Yiannis, their HR Manager, they have determined how many people they need and what skills those people need to have.  They have also looked at workforce trends and the information they have regarding available workers already with the company, and have determined that they need to hire additional employees from outside the company to meet their needs. Liana and Rosario are ready to start accepting applications and interviewing candidates, but Yiannis tells them there is one last step to complete before they are ready to start the recruitment process. Which of the following remains to be done?

Rosario and Liana need to conduct job analyses and write descriptions for each position.

Structured interview:

Selection technique that involves asking all applicants the same questions and comparing their responses to a standardized set of answers.

• Situational: uses hypothetical situations.

• Behavioral description: explores what candidates have done in the past.

Reference Checks:

Virtually all organizations contact listed references or former employers and educational institutions to verify information about applicants.

Background Checks:

These checks include Social Security verification, prior employment and education verification, driving record and criminal history.

Personality Tests:

Many companies use these tests which can be associated with job satisfaction and engagement. However, they can be discriminatory, creating legal challenges.

Drug Testing:

Many companies use drug testing for illegal drugs as a pre-hire screening instrument.

Performance Tests:

In a performance test, the test taker performs a sample of the job. The classic example is the typing test.

• Assessment Centers: An offshoot of performance testing, a typical assessment center consists of several candidates participating in a variety of exercises or situations.

Integrity Tests:

Many companies use paper-and-pencil or online integrity tests to assess candidates’ honesty. The Employee Polygraph Protection Act (EPPA) bans the use of lie detectors for most employment purposes.

Recruitment activities increase the

pool of candidates who can be hired.

Layoffs:

The process of separating with an employee for a reason other than cause. Victims of layoffs face all the difficulties of being fired—loss of self-esteem, demoralizing job searches, and the stigma of being out of work.

Termination:

People sometimes get fired for poor performance. Employment-at-will or termination-at-will means that an employee may be fired for any reason.

Outplacement:

The process of helping people who have been dismissed from the company regain employment elsewhere.

Employment-at-will:

The legal concept that an employee may be terminated for any reason.

A termination interview is a

discussion between a manager and an employee about the employee’s dismissal.

Termination Do’s

• Make termination the last step in a clear and fair process, being certain you have the facts.

• Be sure the person terminating the employee is the employee’s direct supervisor.

• Be prepared with answers to basic questions such as the official end date and any severance benefits.

• Consult with the human resource department to identify any benefits available; give the employee a written list of information about benefits and policies.

• Invite a trained HR representative to attend the meeting.

• Listen respectfully.

Termination Don’ts

• Don’t spring a termination on an employee as a total surprise.

• Don’t start a meeting unprepared, causing the terminated employee to wait awkwardly while you find answers or call in an HR representative.

• Don’t beat around the bush; state the termination simply and briefly.

• Don’t get caught up in responding to the employee’s emotions or views about fairness; focus on practical realities including the need to move on.

• Don’t argue with the employee or apologize.

• Don’t offer to help the employee find another job, if you cannot honestly give a good reference.

Training:

Teaching lower-level employees how to perform their present jobs.