Principles of Business Management

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🧭 Introduction (March 7, 2023)

• Management is a the process of supervising, supporting, and activating work efforts to achieve performance goals
• A manager is a person who supervises, supports, and helps activate work efforts to achieve the performance goals of individuals, teams, or even an organization as a whole.

Types and levels of management

• First line managers they are supervisors and team leaders
• Middle managers are division managers, regional
• Top managers keep the organizations mission and strategies clear
• Company boards define company missions and set goals

Effective management

• Effective managers successfully help other achieve both high performance and satisfaction in their work
• If a manager does this correctly, they also help the organization achieve their goals
  • If you want your customers to be treated well, you must treat your employees well
  • Failure to treat your employees well will result in them getting even

Key Resources to a business

It’s important to note that all resources are finite, regardless of type

• Human resources are key to acting on material and informational resources
  • Human resources are the most important to getting work done, however they are also the hardest to manage.
• Material resources are objects which can be used to achieve a goal
• Informational resources are given to people to help aid in achieving a goal or task
• Financial resources allow for resources to be utilized

The management process

• Planning
  • The process of setting objectives and determining what actions should be taken to complete them
• Organizing
  • The process of allocating finite resources as effectively as possible
• Leading
  • Inspiring people to work hard and fulfil their objectives
• Controlling
  • The process of measuring work performance and taking action if needed

Emotional intelligence is key to success

• Self-awareness, social awareness, and relationship awareness help you gauge how others are perceiving your actions and how you should address them. Unlike IQ which is mostly set as of later teenage years, EQ adapts and grows over time as you age.
• To have self-management and control, you first need effective self awareness

⛔ Things to avoid as a manager

1. Insensitive to others
2. Cold, aloof, arrogant
3. Betrays trust
4. Overly ambitious, thinking of next job, playing politics
5. Specific performance problems with the business
6. Overmanaging: unable to delegate to a team
7. Unable to staff effectively
8. Unable to think strategically
9. Unable to adapt to boss with different style
10. Overdependent on advocate or mentor

Hire slowly, yet fire quickly

• You want to vet out your candidates properly, make sure notes are taken, and ensure employees do not discuss the hiring process until a verdict is met. Also, ensure you DO NOT hire candidates just because you share a lot in common with them, and try to ask specific questions if possible to ensure you gauge how they would perform in a work environment, not as a person.
• If your gut tells you someone is a bad hire, DO NOT hire them.
• If someone isn’t working well, it’s good to let them know quickly, and let them go early in the week if possible

Stick to company procedures

• If you are ever unsure about something, stick to company procedures., or create one if one doesn’t exist and propose it

Globalization

• Globalization is the worldwide independence of resource flows, product markets, and business competition
• Job migration is the shifting of jobs from one country to another
• The world is mostly borderless for businesses since trade is mostly unrestricted

Diversity

• Workforce diversity is the differences among the members of the workforce, having a diverse workforce is key to representing different cultures
  • Start with similarities, then add more focus on diversity to celebrate different cultures instead of separating th`m
• The glass celling is an invisible barrier limiting career advancement among women and minorities
• Discrimination is acting on a negative or irrational fear or attitude
• Prejudice is the display of negative irrational attitudes towards minorities

Intellectual Capital and Talent

• Free agents and On-Demand Economies have people change jobs more often and work on-demand as contractors, moving to fill positions as needed
• Knowledge workers use their mind and intellect as a critical asset to employers making them less replaceable
• Self management is the ability to understand oneself, exercise initiative, and accept responsibility allowing one to learn from experience
• Personal brand is your reputation in the eyes of others and your talents as evidenced by unique and timely skills and capabilities

Conflict negation

• Conflict can be effectively negated through transparency and setting clear expectations

Every organization is an open system

• Resource inputs go in (People, money, materials, technology, and information)
• Transformation process alters resources (Work)
• Outputs are submitted to customers (Finished goods and services)
• Customers give feedback, allowing the process to be modified.

Theory X vs Theory Y managers

• Theory X managers believe employees generally dislike work, lack ambition, act irresponsibly, resist change, and prefer to follow stricter management styles such as “command and control”
• Theory Y managers believe employees are willing to work, capable of self control, direction, managing responsibility, and creative works. These managers tend to use more “participative” styles

Behavioral / Human resource approaches

Human resource approaches assume people are social and self-actualizing

• Mary Parker Follett
  • Respect for worker’s experience & knowledge
  • Organizations as communities
  • Saw groups as a way for individuals to combined their talents for a greater good
  • Believed the manager’s job was to help worker cooperate and integrate their goals/interests
  • Emphasized groups and her commitment to human cooperation
• Hawthorn Studies 1924-1931
  • Lead by Elton Mayo of Harvard
  • Studies tried to determines how economic incentives and workplace conditions affected worker productivity
  • Concluded that human needs were an important factor in increasing productivity
  • This led to the creation of the Human Relations Movement
• Abraham Maslow
  • Described human needs and how we should try to satisfy them
  • Lowest needs are needed for survival
  • Progression principle - When one need is satisficed, we proceed to a higher level need
  • Deficit principle - Satisficed needs don’t motivate behavior, only unsatisfied ones.
• Douglass McGregor
  • Employees react to manager expectations
  • Managers are separated into two beliefs / styles / attitudes, Theory X and Theory Y
• Chris Argyris
  • Believes employees want to be treated as adults
  • Work better with less restrictive / defined tasks
  • Will behave better with less supervision, which is counter to Scientific and administrative theories that argue for close supervision

📋Homework & Out of class sources (Chapters 1-3 & Videos) (March 7, 2023)

🎬 Videos (See week 1 on Compass)

The three major roles managers fill - Henry Mintzberg

1. Spokesperson - Share information outside the organization
2. Informational
   1. Monitor- stay informed with public information which may be relevant
   2. Disseminator - Share information inside the organization
   3. Spokesperson - Transmit information to people outside the organization
3. Interpersonal Roles
   1. Figurehead - Handle events and ceremonial activities on behalf of the company
   2. Leader - Communicate and coordinate subordinates
   3. Liasson - Handle the development of information sources, usually both inside and outside the organization
4. Decisional
   1. Entrepreneur - Initiating change to achieve a future goal or vision
   2. Disturbance handler - Resolving conflicts
   3. Resource allocator - Decides how to assign people and equipment to complete tasks
   4. Negotiator - Represent a team, department, or organization regarding contracts, union negotiaions, etc.

Managerial skills at different levels

• Technical - Low Level ⬇️
  • Mastery of your specific field, such as engineering, manufacturing, or finance
  • Specialized skills are also needed to handle problem solving
  • Technical skills are mainly used by lower level managers
• Interpersonal - Mid Level ↔️
  • Interpersonal skills are needed to interact with others, and are typically used to motivate, facilitate, coordinate, lead, communicate, and resolve conflicts
  • Interpersonal skills are mainly used in mid level managers for coordination
• Conceptual - Top level 🔺
  • Conceptual skills include the ability to see the big picture of the organization itself, and also include the ability to think strategically. They know where each key fits in the organization , and how the organization fits into the industry
  • Conceptual skills are usually used by top level managers to better run the company
• Motivational - All
  • An assessment of how a given manager interacts with, competes with, and directs others.
  • This also includes the ability to tell others what to do, reward good behavior, and punish bad behavior.
• Other - All
  • Diagnostic skills, communication skills, time management skills, and decision making skills are key to managers at any level

Classical history of management

• Scientific management is a theory that believes materials + labor = product
  • The goal of scientific management is to improve the efficiency of the worker
  • Because employees were paid for their productivity, their wages grew with the company
• Max Weber created Bureaucratic management, and layers of reporting levels including boss, managers, and workers. This structure is defined by it’s pyramid shape
• Henri Fayol created administrative management, which believes it’s important to consider the worker as part of the whole company; it focuses on the organization running as a whole
  • He believed managers had 5 roles:
    • Planning
    • Organizing
    • Commanding
    • Coordinating
    • Controlling

Classical management theory

• Max Weber created bureaucracy, he believed organizations would look like the government and the legal system. He wanted to take a legal-rational approach, where each person’s authority should be tied to your position. He believed standard guidelines should determine hiring and firing, and was against favoritism.
• Fredric Taylor created Scientific management, where science is applied to work. He believed the customized approach was very inefficient, and as a result a standard set of steps were created. First tasks were broken down into small steps, standardized , then executed the “one right way”
• Henri Fayol took a mid level approach and focused on how people could be managed, this was later known as administrative science or classical management. He noticed a lack of management theory and wanted to create a systematic list of principles for training managers. He focused on starting a general discussion, and shared a survey to better understand management. He then created a list of management activities
  • Planning: Look ahead, chart a course
  • Organization: Select and arrange people
  • Command: oversee, lead, drive
  • Coordinate: Harmonize and facilitate
  • Control: Ensure compliance
• All three of them believed in a set of management qualities
  • Hierarchy
  • Division of labor
  • Standardized approach to work
  • Centralization of authority
  • Separation of personal and world life
  • Wanted to select the best employees
  • Wanted people paid fairly, in theory

📋Chapter 1 response questions

1. What do managers do to help organizations achieve top performance?

   1. Connect and coordinate different parts of a given organization, Mintzberg observed CEOs on the job and found they spent a lot of time dealing with distinct issues, with most of their time being spent handling issues. Kotter found that successful managers spent most of their time with others, including subordinates, their bosses, and numerous people from outside the organization. TLDR; they switch frequently from task to task, and focus their attention to respond to issues as they arise.

2. What are the roles that managers play in organizations?

   1. Interpersonal roles, such as figureheads, leaders, and liaisons
   2. Informational roles, such as monitors, disseminators, and spokespersons
   3. Decisional roles, such as entrepreneurs, disturbance handler, resource allocator, and negotiator.

3. What are the characteristics that effective managers display?

   1. Technical skills, human relations skills, and conceptual skills. Managers also need to be flexable to changing areas which may require different levels of management require different sets of skills. If you do chose to become a manager, make sure you focus on mastering the job of first-line supervisor, you will not have the experience needed to be a CEO off the bat.

• The 9 key jobs managers perform
  1. Long-range planning. Managers occupying executive positions are frequently involved in strategic
     planning and development.
  2. Controlling. Managers evaluate and take corrective action concerning the allocation and use of human,
     financial, and material resources.
  3. Environmental scanning. Managers must continually watch for changes in the business environment and
     monitor business indicators such as returns on equity or investment, economic indicators, business
     cycles, and so forth.
  4. Supervision. Managers continually oversee the work of their subordinates.
  5. Coordinating. Managers often must coordinate the work of others both inside the work unit and out.
  6. Customer relations and marketing. Certain managers are involved in direct contact with customers and
     potential customers.
  7. Community relations. Contact must be maintained and nurtured with representatives from various
     constituencies outside the company, including state and federal agencies, local civic groups, and
     suppliers.
  8. Internal consulting. Some managers make use of their technical expertise to solve internal problems,
     acting as inside consultants for organizational change and development.
  9. Monitoring products and services. Managers get involved in planning, scheduling, and monitoring the
     design, development, production, and delivery of the organization’s products and services.

📋Chapter 2 response questions

1. What are the basic characteristics of managerial decision-making?

   1. Stakeholders are the individuals / groups affected by an organization, and by extension, your decisions. While upper managers have general power, front-line managers are crucial to the efficient operations of an organization.
   2. Bad decisions at lower levels lead to:
      1. 🔻 Reduced productivity due to insufficient workers or supplies
      2. 🔺 Increased expenses if there are too many workers or supplies, particularly if said supplies have a limited shelf-life or are costly to store
      3. ⁉️ and confusion among employees, reduced morale, and increased turnover (which can be quite expensive)
   3. The basics of decision making include:
      1. Gathering information, it’s important to note how much information is needed to make a good decision, since making choices without sufficient information leads to low quality choices, while spending too much time gathering information leads to indecision and delayed responses, costing the company time and money.
      2. If a manager makes a bad decision, it’s always better to put ego aside and to focus on admitting the mistake earlier to reduce it’s impact by recognizing and correcting it.
      3. There is rarely one correct answer, so when making a managerial decision it’s important to reduce harms, regardless of what plan you end up implementing.
   4. What is the right (ethical) answer?
      1. Managers are sometimes asked to make decisions which could bring harm to some, creating complex moral situations.
      2. It’s almost never a good idea to sacrifice the needs of others to create shareholder value, because it often results in bad publicity, boycotting, and other issues from short-term decision making hurting the long term viability of the company.

2. What are the two systems of decision-making in the brain?

   1. The reflective system is logical, analytical, deliberate, and methodical
      1. When faced with more novel and complex situations, it’s better to focus on gather information and making a high quality decision, rather than making a quick one. This also involves the regulation of emotions, both positive and negative, to help avoid impulse decisions.
   2. The reactive system is quick, impulsive, and intuitive, relying on emotions or habits to provide cues for what to do next
      1. Gut reaction is not always necessarily bad, fast decisions from managers with lots of experience which has taught them how to react can lead to quick decisions of high quality, this kind of thinking can also be lifesaving, however for newer cases with less urgent requirements it’s good to focus on making sure you have enough information to make a good choice, this especially applies to larger decisions, where impulse moves should always be avoided.
   3. Emotional awareness is key to making good decisions, effective decision making relies on both logic, and emotions, emotional intelligence is the ability to recognize, understand, pay attention to, and manage your own emotions and the emotions of others. It requires self-awareness and regulation. In other words, your using both emotions and logic to understand how your emotions work, and to manage them appropriately based on the situation.
   4. Emotional intelligence also includes the ability to understand and adapt to the emotions of others as needed. Overall emotional intelligence is crucial to effective management and requires four factors
      1. Emotional intelligence requires:
         1. Self-Awareness 🔍
         2. Self-Regulation 🚫
         3. Empathy 🤝
         4. Social skills ✨

3. What is the difference between programmed and nonprogrammed decisions?

   1. Programmed decisions are those that are repeated multiple times with a specific set of rules. These are also sometimes referred to as low involvement choices
      1. Heuristics are mental shortcuts to help reach a decision, for example a grocery store operator could increase staff by 30% during sales. Although they save time, they don’t necessarily yield an optimal solution, but they do offer a good enough outcome. They are often used in programmed decisions, as the rules and criteria can be clearly laid out. Programmed decisions are also better for training because of their consistency and simplicity.
   2. ⬆️High involvement decisions are more complex and costly, or require high time investments, such as buying a house
   3. 🔻Low involvement decisions are less complex and costly, like buying a pack of gum
   4. Non-programmed decisions are novel, unstructured choices often based on criteria which aren’t well defined. Information is more likely to be ambiguous, and more thoughtful judgement and creative thinking is required to make a good choice. These are usually referred to as nonroutine choices, or high involvement choices.
   5. The decision making process:
      1. Recognize that a choice needs to be made
      2. Generate possible alternative solutions
      3. Analyze said alternative solutions
      4. Choose one of your solutions
      5. Implement it
      6. Evaluate the effectiveness of your solution

   While these steps seem simple enough, individuals often skip steps or spend too little time on specific steps. Sometimes people refuse to acknowledge problems they aren’t sure how to address

   Programmed decisions tend to be more reactive while nonprogrammed decisions tend to be reflective.

4. What barriers exist that make effective decision-making difficult?

   1. Bounded rationality is the idea that complex issues cannot be completely rationally addressed because we cannot fully grasp them, or all the possible alternatives, and the implications of said alternatives
   2. Escalation of commitment is the tendency of decision makers to escalate n already poor decision once it’s made, kind of like the sunken ship fallacy.
   3. Uncertainty over outcomes makes it hard to pick an optimal solution, since in some cases you don’t know what will happen until you try it
   4. People are more comfortable with ideas and concepts they already know or agree with, while people are less likely to agree with things they don’t agree with. These can be both in terms of similar demographics, or interests and experiences causing preference for some people over others.
   5. Explain the concept of confirmation bias.
      1. When you pay more attention to situations which show your ideas work well, you tend to reinforce your belief even if it’s not the cause of the success, causing a bias for sometimes suboptimal solutions or beliefs. The same goes for negative emotions, which can also be reinforced. Bias towards or against specific people can lead to over or under investigating and investment of trust, so it’s important to be aware of your biases.
   6. When is conflict beneficial, and when is it harmful? Why?
      1. Conflict can be beneficial when used to resolve harmful behavior, for example when an employee is showing up late, talking with them to work on correcting their behavior creates a conflict, but it’s one that usually results in a better overall outcome. If bad behavior is not corrected, things can get out of hand resulting in employees looking for a new place to work.
      2. Process conflict is about the best way to do something, usually an idea, and can lead to improved performance by working on improving. This type of conflict can be beneficial
      3. Relationship conflict happens between individuals and tends to involve attacks on the other person, rather than an idea. This type of conflict is usually harmful
   7. Managers should be aware of the possibility of relationship conflict when giving feedback and should keep feedback focused on behaviors and activities, rather than the individual.

5. How can a manager improve the quality of her individual decision-making?

   Type of decision	Technique	Benefit
   Programmed decisions	Heuristics (mental shortcuts)	Saves time
   	Satisficing (choosing first acceptable decision)	Saves time
   Non-programmed decisions	Systematically going through the decision-making process	Improves quality
   	Talk to other people	Improves quality, more options, less bias
   	Be creative	Improves quality: more options
   	Conduct research	Improves quality
   	Engage in critical thinking	Improves quality
   	Think about long term implications	Improves quality
   	Consider ethical implications	Improves quality
   Group decisions	Have diverse members in the group	Improves quality, more options and reduced bias
   	Assign a devil’s advocate	Improves quality; reduces group-think
   	Encourage everyone to speak up	Improves quality, more options, prevents suppression of dissent
   	Help group members find common ground	Improves quality, reduces personality conflict

   1. Experience - The more experience a given manager has, the better their decisions become
   2. When taking mental shortcuts, satisficing is an appealing option because it greatly reduces the mental effort needed to arrive at a solution, and for more common or shorter term decisions (see earlier part of this chapter’s entry for more detail)
   3. When making a non-programmed decision, it’s best to approach the problem systematically and follow the decision making process.
   4. Remember to consider evidence, stakeholders, contextual factors of the issue, potential costs and benefits, long term implications, ethical implications and any other related information.
   5. Use critical thinking and avoid logical fallacies listed here:
      • Logical fallacies 💭 Non sequitur - The conclusion presented isn’t a logical conclusion, or isn’t the only logical conclusion based on the arguments provided False cause - Coloration is not causation Ad hominem - Attack on character Genetic fallacy - You can’t trust something because of it’s origins Appeal to tradition - Status quo solves best because it’s the way it’s always been done Bandwagon approach - Majority always rules Appeal to emotion - Redirects from logic to emotion
   6. Ensure your solution is ethical, or the more ethical option given the situation

6. James Rest’s ethical decision-making model identifies four main components to ethical decision making:

   1. Moral sensitivity - recognizing an issue that has a moral component
   2. Moral judgement - determining which actions are right vs wrong
   3. Moral motivation / intention - deciding to do the right thing
   4. Moral character / action - actually doing what is right
      1. If you would feel guilty or ashamed about a news article discussing your decision, don’t do it.

7. What are the advantages and disadvantages of group decision-making, and how can a manager improve the quality of group decision-making?

   1. Group decision making can greatly improve the quality of managerial decisions and outcomes, however it can also create conflict and generate other challenges.
      1. ✅ Advantages of group decisions - Group decisions reduce the bias in a decision, and allow for viewpoints to be negotiated resulting in fewer problematic decisions as well, additionally having more people at the decision-making table helps bring in more individuals with unique knowledge, and different perspectives. Brainstorming is also more efficient when coming up with many solutions, so the extra time and work investment into group decisions can be well worth it.
      2. ❌ Downsides of group decisions - Group-think occurs when specific group members chose not to voice their concerns or opinions because it’s easier to keep the peace. This results in less information being presented, and results in some people having more influence than others discouraging different opinions from speaking up. This is called suppression of dissent.
      3. 🗣️ Forming a quality group is key - The best start is to find a diverse group of members, and to encourage them to speak up and share their opinions and ideas. If most people achieve consensus, it might be a good idea to appoint a “devil’s advocate”, ie someone who challenges the group’s evaluations of various alternatives and to identify weaknesses in proposed solutions, to reduce group think and encourage deeper thinking.
      4. 🎯 Common ground is a key tool for helping others connect, especially when conflict arises. Starting with areas where most people can agree, or situations where people have common interests, values, beliefs, experiences, or goals, can help keep a group focused rather than working against one another.

📋Chapter 3 response questions

Notes:

• There are five forces of competition in an industry
  • Competition in the industry
  • Potential of new entrants into the industry
  • Power of suppliers
  • Power of customers
  • Threat of substitute products

To remedy this competitive situation, a given company can choose one of three strategies:

• Success focus: Do it better
• Differentiation: Do it different
• Cost leadership: Do it cheaper

Fayol’s system of management

• Authority must have responsibility attached to it
• Management needs to maintain unity, “one voice” to avoid confusion

Fayol’s 14 Principles of Management:

1. Division of Work
2. Authority
3. Discipline
4. Unity of Command
5. Unity of Direction
6. Subordination of Individual Interest
7. Remuneration
8. Centralization
9. Scalar Chain
10. Order
11. Equity
12. Stability of Tenure of Personnel
13. Initiative—Employees should be given the necessary level of freedom to create and carry out plans.
14. Esprit de Corps (the cohesion of workers in the face of adversity, and the pride that one feels by being part of an organization)
    In addition to the 14 principles, Fayol identified

the five functions of management:

1. Planning

2. Organizing

3. Staffing

4. Controlling

5. Directing

6. Describe management in the ancient world.

   1. Early management was developed out of either necessity, or efficiency. Sumerians were the first to use coins in trade, which made exchange much easier, however coordination was needed to connect customers and workers who provided goods and services, creating some of the first management positions. Most management positions at this time were low level and not interconnected, ie, you don’t have high level, midlevel, and low level managers working together on one project like you do today, you have tradesmen managing transactions, legislators managing laws via the bigger picture of the early economy, and mid level managers were much less common. Managers mainly focused on resources, money, and people, while information was a less common trade. It took many early contributors over the course of a few thousand years to develop modern management, from writing and trade, to division of labor and coordination, to the development of bureaucracy in the Han dynasty
   2. Sumerians created currency and managers to connect merchants and customers
   3. Babylonians created written laws with managers to write them
   4. Egyptians had managers coordinate the construction of the pyramids
   5. The Chinese created Bureaucracy
   6. The Greeks developed the idea of division of labor and managerial skills
   7. The romans created standardized rule sets, and saw the birth of the first cooperation where companies could sell stock to the public

7. How did the Italian Renaissance affect the progression of management theory?

   1. The Italian Renaissance was a golden period of learning and assimilation of knowledge, much of which had “economic and business implications.” This, combined with the printing press allowed for ideas and knowledge to spread throughout Europe, this was where cooperation's took off, and became international causing new ideas about commerce to spread, leading to a rise of business managers for coordination and direction, along with bookkeepers and other new managerial roles.

8. How did the Industrial Revolution affect the progression of management theory?

   1. Adam smith developed the concept of specialization and coordination in the context of corporations, instead of just having corporations specialize in their products, individual people could also be specialized to produce products more efficiently, however because individuals would not be able to create the final product on their own, managers would step in to help coordinate and refine the production process. However, while employees were now able to produce more, they also need more motivation and regulation as they can destroy equipment, and because production couldn’t be tracked it was hard to collect feedback, making management haphazardly. This period saw a massive boom in technology and economic activity, but lacked the managerial progress needed to oversee it properly.

9. How did Frederick Winslow Taylor influence management theory, and how did efficiency in management affect current management theory?

   1. Taylor developed scientific management, and attempted to optimize production by providing incentives to employees, breaking down the steps needed to produce goods and then optimizing and assembling a “best possible method” which would then be shared to all employees. By reducing friction between employees and managers through incentive based rewards instead of consequences, he hoped to decrease sabotage and employee to employee disputes, which managers did not concern themselves with. Other notable figures built on Taylor’s work, sometimes in collaboration with Taylor, Carl G. Barth pioneered research in employee fatigue, and improved steel cutting by introducing standard measurements, while Henry Gantt developed a new time scheduling system which allows managers to set and track production timeline goals. Lastly, Frank and Lillian Gilbreth recorded and studied how different tasks were performed to find imperfections and improve efficiency, leader leading to progress in worker welfares and psychology by introducing a human element into management. These optimization's and delegations of labor paved the way for modern management and team structures often seen today.
   2. By turning the management of employees into a science and creating a baseline model, it became possible to start building out larger organizations and recognizing both employee needs and wants; increasing productivity. It’s just important to note that taylor did not create a theory of management, but rather an individual system of management.

10. How do bureaucratic and administrative management complement scientific management?

    1. Fayol mostly focused on top level management and how the rest of the company could stay coordinated based on the domain of the top management. In other words Fayol focused on the direction and coordination of the business. Fayol stressed unity of command, believing that a company's management should speak with only one voice to avoid confusion. The second main contribution of Fayol was the recognition of social aspects in the work place, Taylor believed that Esprit de corps, the cohesion of workers in a given unit or department, was key to encouraging collaboration, as those who take pride in the organization they work at are more willing to contribute to it. Lastly, Fayol had an emphasis on the notion of justice within an organization, that ideas should be decided on fairly, and manager bias reduced. These beliefs became known as Fayol’s 14 Principles of Management: and the the five functions of management:
       In general, administrative management addresses company structure and coherency, while scientific management addresses front line managers and the actual workers of a company
    2. Max Weber, a German sociologist, built on Taylor’s management system, as well as general economics and sociology.
       He started by identifying the three types of leadership,
       1. Charismatic domination 🤝(familial and religious)
       2. Traditional domination 📕 (patriarchs, patrimonialism , and feudalism)
       3. Legal domination 💼 (modern law, state, and bureaucracy)

       Weber’s contribution to management is the development of the legal rationalism model model of leadership which stressed decision-making based on law, rather than whim. Weber created modern bureaucracy, with principles being knowledge over birth circumstances, and wider knowledge.
       The principles of an ideal Bureaucracy:
       
       Specialized roles
       Recruitment based on merit
       Uniform principles of placement, promotion, and transfer
       Careerism with systematic salary structure
       Hierarchy, responsibility, and accountability
       Subjection of official conduct to strict rules of discipline and control
       Supremacy of abstract rules
       Impersonal authority
       
       However, there was a notable downside to this system, a Bureaucracy could limit the responsibility and initiative of bureaucrats, and make them willing participants in criminal activities; thus an effective bureaucracy demands reliability and strict devotion to regulation, however this can lead to the rules being symbolic and unchanged, since people cling to them, rather than updating with the times as needed or when off-cases arise.
       > An effective bureaucracy demands reliability of response and strict devotion to regulations. (2) Such 70 Chapter 3 The History of Management devotion to the rules leads to their transformation into absolutes; they are no longer conceived as relative to a set of purposes. (3) This interferes with ready adaptation under special conditions not
       clearly envisaged by those who drew up the general rules. (4) Thus, the very elements which conduce toward efficiency in general produce inefficiency in specific instances. Full realization of the inadequacy is seldom attained by members of the group who have not divorced themselves from the meanings which the rules have for them. These rules in time become symbolic in cast, rather than strictly utilitarian.47
       >
       

    3. Line of authority and structure is the idea that higher up managers have more authority, which direct middle managers, which direct front-line managers, this seen in all three ideas (between Taylor, Fayol, and Weber) who’s findings in different fields of management all create one coherent image

11. How did Elton Mayo influence management theory, and how did the human relations movement affect current management theory?

    1. The hawthorn studies found that changing variables in work environments lead to increased productivity, however researches couldn’t place why. Mayo was called in to analyse the situation, and found that because the Women in the experiment were treated better, and paid more, they worked harder believing that good work would reward them more, compared to normal workers who were usually ignored. Additionally, the workers involved in the study ended up becoming close, driving them to work harder due to their increased satisfaction with being at work. Another study called the bank wiring room study, which took place between 1931 and 1932, focused on a group of employees known to exhibit problematic behavior. This study found that workers would intentionally sabotage their work due to peer pressure, and managers worked with individual employees breaking down management. Overall, the hawthorn studies have been disregarded for being a scientific disaster, as they tested too many variables and didn’t control for wages, which were found to be a substantial factor in productivity.
    2. Chester Barnard argued that an executive should ensure cooperation exists between various groups, and to hire, train, and retain talented employees. He believed that executives best exerted authority through communication and use of incentives, and that communication should be clear, direct, and honest. Bernard also found that in addition to monetary incentives, non-monetary incentives should be offered as well, such as recognition, while desirable working conditions should also be ensured. The fourth and final incentive was that workers should be proud of the work they do / organization they work at.
       1. The zone of indifferent is that workers will comply with orders if they are indifferent to them. This does not mean that they support the order, merely that they will follow authority. It’s important that the demand is understood, and their interests be aligned. Lastly, the order must not violate an individual’s personal beliefs.
    3. Mary Parker Follett focused more on humanistic management, and believed that individual behavior is affected by, and affects others in the group, thus cooperation is needed along with integration between management and employees, as when both parties understand each other's view points it’s easier to work together, and power should be shared between workers and managers instead of hoarded in one side or another. Additionally, instead of using dominance to resolve an issue, or compromise which leaves both parties partly dissatisfied, it’s best to opt for integration, where the problem is re-framed to allow for a plausible solution to be found.

12. How did Elton Mayo influence management theory, and how did the human relations movement affect current management theory?

    1. The hawthorn studies found that changing variables in work environments lead to increased productivity, however researches couldn’t place why. Mayo was called in to analyse the situation, and found that because the Women in the experiment were treated better, and paid more, they worked harder believing that good work would reward them more, compared to normal workers who were usually ignored. Additionally, the workers involved in the study ended up becoming close, driving them to work harder due to their increased satisfaction with being at work. Another study called the bank wiring room study, which took place between 1931 and 1932, focused on a group of employees known to exhibit problematic behavior. This study found that workers would intentionally sabotage their work due to peer pressure, and managers worked with individual employees breaking down management. Overall, the hawthorn studies have been disregarded for being a scientific disaster, as they tested too many variables and didn’t control for wages, which were found to be a substantial factor in productivity.
    2. Chester Barnard argued that an executive should ensure cooperation exists between various groups, and to hire, train, and retain talented employees. He believed that executives best exerted authority through communication and use of incentives, and that communication should be clear, direct, and honest. Bernard also found that in addition to monetary incentives, non-monetary incentives should be offered as well, such as recognition, while desirable working conditions should also be ensured. The fourth and final incentive was that workers should be proud of the work they do / organization they work at.
       1. The zone of indifferent is that workers will comply with orders if they are indifferent to them. This does not mean that they support the order, merely that they will follow authority. It’s important that the demand is understood, and their interests be aligned. Lastly, the order must not violate an individual’s personal beliefs.
    3. Mary Parker Follett focused more on humanistic management, and believed that individual behavior is affected by, and affects others in the group, thus cooperation is needed along with integration between management and employees, as when both parties understand each other's view points it’s easier to work together, and power should be shared between workers and managers instead of hoarded in one side or another. Additionally, instead of using dominance to resolve an issue, or compromise which leaves both parties partly dissatisfied, it’s best to opt for integration, where the problem is re-framed to allow for a plausible solution to be found.

13. How did contingency and systems management transform management thought?

    1. Some of the leaders of the systems school were Kenneth Boulding, Daniel Katz, Robert Kahn, and Ludwig von Bertalanffy.
    2. A firm set out to explain external conditions that organizations face and how they handled, this led to the theory that firms are an open system, ie, it interacts with it’s environment by providing resources for the firm, and then receiving product as output. Competition has a big impact on this, in that competitors can set standards like wages, creating a competitive job market where higher wages attract better workers. The contingency school also had a substantial impact, by proposing that there is no one best way to manage, and rather than being a direct science more flexible approaches should be taken to complex situations. The key statement of a contingency school is “it depends.” Joan Woodward argued employees should be educated as needed depending on the complexity of heir job, instead of it being a necessity across the board. Evidence based management uses evidence to determine effective management practices instead of leaving it to chance. Modern management is based on theory.

🧭Managerial decision-making (March 14, 2023)

Using information to solve problems

• Managers are hired to do two main things
  • Solving problems
  • Making decisions
• Effective decisions are related to:
  • Higher individual performance 📈
  • Organizational productivity 🗃️
  • Solid financial performance 💸
• Decision quality often depends on the quality of information available

Problem Solving

• Problem solving is the process of identifying a discrepancy between the actual and desired state of affairs, then taking action to resolve it.
  • Performance threat situations where something is wrong, or likely to be wrong. This is the most obvious problem-solving situation for managers.
  • Performance opportunities are situations that offer a possibility for a better feature, if the right steps are taken, think of best practices as an example of this.
• Information is used to solve problems, as managers are the information nerve centers of companies, they store and transmit information between individuals and departments of a company

Problem solving approaches

• Problem avoiders prefer not to make decisions, and ignore problems and information that indicate that a problem / opportunity exists
• Problem solvers react to problems as they occur
• Problem seekers are proactive in anticipating threats and opportunities.

Types of decisions

• A decision is a choice among alternative courses of action
  • 🔁 Programmed decisions apply a solution from past experience to a routine problem, think inductive reasoning.
  • ➡️ Non programmed decisions apply to a specific solution crafted to a unique problem.\

Systematic vs Intuitive thinking

• Personality greatly influences how decisions are made, which will be covered in the next few weeks.
  • Systematic thinking approaches problems in a rational and orderly fashion
  • Intuitive thinking approaches problems in a flexible and spontaneous fashion.

Types of environments

• Certain environments
  • Offer complete information on possible action alternatives and their consequences. Think of a fixed-rate loan
• Risk environments
  • Lack complete information but offer probabilities of the likely outcomes for possible action alternatives. Think of a variable-rate loan.
• Uncertain environments
  • Lack so much information that it is difficult to assign probabilities to the likely outcome of alternatives, group decisions are often used here

Decision making styles

• The reflexive style 🚀
  • Likes to make quick decisions without taking the time to get all information needed and considering alternatives
  • Pro: it’s good at avoiding procrastination
  • Con: Quick decisions can lead to waste and duplicate solutions
• The reflective style 🐢
  • A reflective decision maker likes to take plenty of time to make decisions, taking into account considerable information and an analysis of several alternatives
  • Pro: Does not make snap decisions
  • Con: Procrastination can be a waste of time and other resources; analysis paralysis
• Consistent style ✈️
  • A consistent decision maker makes decisions without rushing or wasting time
  • They know when they have enough information and alternatives to make a sound decision

The decision making process

1. 💡Identify and design the problem, this is the most important step

   • Gather information and decide what should be accomplished
   • Common mistakes include:
     • Identifying the problem too broadly or narrowly
     • Dealing with symptoms instead of problems
     • Choosing the wrong problem

2. 💭Generate and evaluate alternatives solutions

   • Stakeholders are people have vested interest in the company and are affected by a problem
     • Stakeholders include employees, investors, customers, etc.
     • Some solutions may make some parties unhappy, or cause a dispute between them.
   • The best approach is to brainstorm with stakeholders, and be sure to suspend all judgement to let others come to their own conclusions.
     • Intervening others by commenting on ideas shuts down the creative process, if someone is told their idea is dumb they will not keep working on it
     • Even if an idea is really bad, others can piggy-back off of it to come up with one which is really good.
   • Criteria for evaluating alternative ideas
     • Cost-benefit analysis
     • Timeliness
     • Acceptability
     • Ethical soundness

3. 📝Decide on a preferred course of action

   • There are two different outcomes
     • The classical model allows you to chose the absolute best among alternatives, and assumes you have complete knowledge regarding the situation. This leads to better results.
     • The behavioral model leads to satisficing decisions, which chose the first satisfactory alternative which manages the problem, but isn’t the optimal decision. This leads to faster results

4. 🛠️Implement the decision, this is the hardest step

   • Take action on the selected alternative to fully implement the solution decided on
   • Make sure parties are satisficed, otherwise they may work against you or not implement the solution

5. 📋Evaluate results, this step is often forgotten

   • Don’t be afraid to restart if your solution doesn’t solve the problem

Ethics in the decision-making process

1. Is it legal?
2. Does it maximize shareholder value?
3. Is it ethical? Or, would not taking action be ethical?
   1. If it’s ethical, do it
   2. It’s not ethical to avoid doing it, but the solution isn’t fully ethical, disclose actions to shareholders

Spotlight questions

• How would my family feel about this decision?
• How would I feel if this decision was published publicly?
• Do I want this to reflect on me, or am I willing to take the fall for it?

Personal creative characteristics

• Ability to work with high energy
• Ability to hold one’s ground in the face of criticism
• Ability to be resourceful even in difficult situations
• Ability to think outside the box
• Ability to use “lateral thinking”, which looks at diverse ways to solve problems
• Ability to transfer learning from one setting to others
• Ability to “step back” and be objective, questioning assumptions.

Decision making errors

Heuristics simplify decision making when time, information, or energy are scarce.

Availability heuristic 🍭

• Occurs when people use information “readily available” as a bias of assessing a current event or situation, for example you decide not to buy a pair of running shoes if your previous pair didn’t last long

Representative heuristic 🪞

• Occurs when people access the likelihood of something occurring based on its similarity to a stereotyped set of occurrences

Adjustment heuristic 🎛️

• Where you make a decision based on a previously existing value or starting point, and adjust from there

Framing error 🏔️

• Solving a problem in the context perceived as either positive or negative, in politics this is called “spin”

Confirmation error ✅

• Only paying attention to information that confirms the decision that has been made

Escalating commitment 🪜

• Adding resources to a course of action even if it’s not working

Decision making in a Crisis

• A crisis is an unexpected situation that can quickly lead to disaster if not handled quickly
• Crisis management programs train managers in decision making and establish plans to handle emergencies

🚨 The six rules of crisis management 🚨

1. Figure out what is going on
2. Remember that speed matters
3. Remember that slow counts too
4. Respect the danger of the unfamiliar
5. Value the skeptic
   1. You want people to be skeptical, and appoint them to help think differently.
6. Be ready to “fight fire with fire”

📋Textbook reading (March 15, 2023) (Chapter 5)

1. What are ethics and business ethics?

   1. Normative ethics refers to the field of ethics concerned with asking how we should live, while business ethics applies to real-world situations based on context and environment
   2. Ethics are no longer seen as a luxury, and have been increasingly important, all the way up to a societal level.
   3. Ethics as a whole investigate what is right and wrong.
   4. Bad ethical choices can result in problems that require stakeholder as well as stockholder action

2. What are the types of values that motivate ethics at the individual level?

   1. Organizational ethics have a profound influence on individual choices and promote ethical action, or unethical action and irresponsible behavior
   2. Top cooperate managers are under scrutiny from the public not seen before, as 22% of global workers responded to pressure to compromise their standards
   3. Individuals have a variety of issues with ethics, the most common being that people do not consciously or subconsciously know their values.
      1. Ethical dilemmas are situations where there is no optimal or desirable choice
      2. Terminal values are desired goals, objectives, or end states one may want to peruse, such as wisdom, freedom, equality, etc
      3. Instrumental values are preferred means of behavior used to obtain their goals, ie courage, independence, etc.
   4. If the terminal value (end) creates undue pressures or is unrealistic, the instrumental value will likely create tension and unethical behavior as well.
   5. Five things in particular create an environment for unethical choices:

   (1) People feel psychologically unsafe to speak up.

   (2) Excessive pressure to reach unrealistic
   performance targets compromises people’s choices.

   (3) When individuals face conflicting goals, they feel a sense of unfairness and compromise their reasoning.

   (4) Only talking about ethics when there is a scandal. (

   5)When there is no positive example available, individuals react instead of choose ethical decisions.

3. What are major ethical principles that can guide individuals and organizations?

   1. Utilitarianism believes an action is right if it creates the greatest good for the most people, ie benefit outweighs cost
   2. Universalism believes that human welfare should be optimized and individual risks considered when considering policy, however
   3. Rights are both a moral and legal term, legal rights are entitlements limited to a given jurisdiction, while moral (human) rights are based on norms in every society
   4. Justice is served when all persons have equal opportunities and advantages, and believes in equality, fair decision practices, and punishment served to someone who has inflicted harm on another
   5. Virtue ethics is based on character traits such as being truthful, and have a root in having a good moral character. These include being trustworthy, and working to be the type of person we ought to be, not on specific actions.
   6. Common good is defined as the sum of those conditions of social life which allow social groups and their individual members relatively thorough and ready access to their own fulfillment, and takes into consideration the intent and effects of actions and choices on broader society.
   7. Ethical relativism is not a principle, but rather an orientation that believes people set their own moral standards for judging actions, ie, “When in Rome, do as the Romans do.” There are some downsides to this, such as justifying self-interests and or dehumanizing ideals

4. Why is ethical leadership important in organizations?

   1. Organizational leadership is important to work on identifying and enacting ethical values throughout the company.
      1. What business are we in?
      2. Who is our customer?
      3. What is our product or service?
      4. What are our core competencies?
      5. It’s important to know your vision, mission, and values to run a company with purpose and set standards.
   2. Leadership is defined as the ability to influence followers to achieve common goals through shared purposes, because a company leader sets the tone for their company, their influence is often referred to as “the tone at the top”
   3. Leadership is the most important element in forming and directing an organization’s strategy, culture, and governance system, however it’s often a shared responsibility among other officers as ideas cascade throughout the organization.
   4. Ethisphere is a private firm that evaluates company ethics and returns an EQ, or ethics quotient, based on 5 components.
      1. A company ethics and compliance program
      2. How much ethics is embedded in the company’s culture
      3. Corporate citizenship and responsibility, including environmental impact
      4. Corporate governance, the diversity of the board and leaders.
      5. Leadership, innovation, and reputation.
   5. For ethical leaders, authenticity and integrity are key, along with treating all stakeholders fairly, and working towards a common good while building community and remaining honest.
   6. Ethical leaders strive to further social or institutional goals that are greater than the goals of the individual.
   7. Following an ethical goal or philosophy encourages others to follow suit, and support the cause
   8. Transparency and honest help establish trust with stakeholders, and importantly, consumers
   9. “Stewardship is concerned with empowering followers to make decisions and gain control over their work. Servant leadership involves selflessly working with followers to achieve shared goals that improve collective, rather than individual, welfare.”
   10. Robert K. Greenleaf believed leadership is a natural corollary of service, and set 5 key aspects to it
       1. Place service above self-interest
       2. Listen to others
       3. Inspire through trust
       4. Work toward feasible goals
       5. Help others whenever possible
   11. There is a dark side to organizational leadership though, where leaders do not value ethics leading an entire organization to cause damage
       1. Ethical blindness: No perception of ethical issues
       2. Ethical muteness: No ethical language or principles, ie, they talk the talk but do not act on it
       3. Ethical incoherence: They do not see inconsistencies between actions and ethics
       4. Ethical paralysis: No action due to lack of knowledge or fear from the consequences
       5. Ethical hypocrisy Not committed to values, or they delegate responsibility they are unwilling to do to other parties
       6. Ethical schizophrenia: No set of coherent values, they act one way at work and another at home
       7. Ethical complacency: They believe they can do no wrong because of who they are

5. What are differences between values-based ethics and compliance in organizations?

   1. 💼 Corporate culture is defined as a pattern of shared tactic assumptions learned or developed by a group as it solves its problems of external adaptation and internal integration that have worked well enough to be considered valid and, therefore, are to be taught to new members as the correct way to perceive, think, and feel in relation to thews problems
   2. Culture acts like a glue that holds an organization together
   3. Both values based leadership where employees are led by ideals and compliance where policy is set and enforced are needed to run an effective company
   4. Ethics is described as a carrot, or doing the right thing, while compliance is referred to as influence behaviors based on the threat of law or consequences, sometimes called the stick approach.

6. What purpose can CSR (corporate social responsibility) offer to organizations and society?

   1. CSR is encompassed by three key principles, known as the triple bottom line, or 3-Ps which includes social, environmental, and financial benefits to allow for a greater good. CSR can benefit both local and global communities, from monetary donations to charities and aid groups, to pollution reduction and improved transparency. In exchange, consumers are more motivated to support the company, and workers feel better about their work due to increased ethics.
   2. Compliance and CSR are very different practices, as CSR is more akin to values based ethical decisions, while compliance is more legal.

7. What ethical issues do organizations and individuals encounter in the global environment?

   1. MNEs are multinational enterprises that need to manage business across country borders
   2. International companies (MNEs) need to handle an additional layer of ethical troubles, they need to please more common stakeholders locally while addressing international ethical concerns inherited from both the home and host countries.
      1. Stakeholders of Economic and environmental issues, such as exchange rates, wages, income distribution,, etc
      2. Stakeholders of political environmental issues, such as government, media, local laws, antitrust laws, military, foreign policy, and local competition
      3. Stakeholders of technological environmental issues, such as intellectual property conflicts, licencing, alliances, and sharing of technology
      4. Stakeholders of social and labor environmental issues, such as values, attitudes, customs, political ideals, social classes, labor unions, and expatriate requirements (people who live outside their native country), and workplace safety
      5. Stakeholders of ecological environmental issues, such as air, land pollution, toxic waste dumping, industrial accidents, and misuse of natural resources.
   3. MNEs need to take into account the local ethical policies when doing business abroad, for example in some countries child labor is seen as beneficial because it allows kids to afford to go to school where it’s not normally offered for free, or helps support their family when they would otherwise be starving
   4. Hannah identified 5 key questions that relate to organizational culture sensitivities
      1. What do customers and stakeholders from our home country expect?
      2. What is our strategy to be successful in a new competitive marketplace
      3. What are the governing values that define how we will work with stakeholders and each other?
      4. What organizational capabilities do we need in order to achieve these results?
      5. What do our work processes, roles, and systems need to do so that we are consistent with all of the above?
   5. Specific countries outside the US and EU have been taking their own actions to improve, the Dutch based Royal DSM took steps to gender balance their leadership team

8. What future near-term forecasts will affect ethical and corporate conduct of organizations? (and emerging national and global issues and trends in ethics and business ethics)

   1. A shift in ‘power of voice’ in the story of harassment giving victims the ability to speak up with the # MeToo movement
   2. The “Glassdoor” effect where people trust online reviews more than what the companies communicate
   3. Assisting national disasters that suddenly occur causes havoc for both unprepared populations, and organizations
   4. The acceleration of the need for compliance and ethics programs as economies grow
   5. Creating a “culture of compliance” in corporations (a culture of integrity and ethics) over one of “vicious compliance” (an overreliance on laws and regulations)
   6. An increasing need for compliance’s role in prevention and mitigation as cybersecurity evolves
   7. Giving a voice to whistle-blowers, companies need to listen or else they will go to the media
   8. Managing culture and free speech during “polarizing times”, continues about race, gender, etc
   9. Data privacy is becoming a larger concern
   10. The role of compliance professionals evolve and innovate as old networking models are giving way to online networks that provide new and unprecedented opportunities to share ideas and collaborate
   11. Strong cultures have two elements:
       1. A high level of a agreement about what is valued
       2. and a high level of intensity with regard to those values
   12. People who are exposed to moral entrepreneurs are more likely to become a moral entrepreneur themselves because they have experienced the potential of putting ideals first, and experienced how it’s done
   13. According to Kapteyn, someone who creates a new ethical norm is called a moral entrepreneur
   14. While companies are not individuals, people work and relate in corporate and work settings. That is why organizational leaders and cultures play such important roles in setting the tone and boundaries for what is acceptable, both ethically and legally

🧭 Ethics and social responsibility (March 21, 2023)

Ethical behavior

• Ethics are a code of moral principles that set standards of good and bad, or right or wrong, in our conduct.

Values

• Values are broad beliefs about what is appropriate
  • Terminal values focus on desired ends
  • Instrumental values focus on the means to accomplish those ends

The Values Pyramid

• Values shape Beliefs, which shape Attitudes and Behavior, which yield Results.
  • When looking for a place to work, people typically try to find an organization with similar beliefs.

Common Unethical Acts 🛑

• Verbal abuse
• Sexual harassment
• Racial harassment
• Workplace bullying
• Misuse of company property
• Giving preferential treatment
• Conflicts of interest

The four categories of ethical issues

• Fairness and honesty
  • Business people are expected to refrain from knowingly deceiving, misrepresenting, or intimidating others
• Organizational relationships
  • A business person must put the welfare of others and that of the organization above his or her own personal welfare
• Conflict of interest
  • Issues arise when a business person takes advantage of a situation for personal gain rather than for the employer’s interest

Factors Affecting Ethical Behavior

• Three general sets of factors appear to influence the standards of behavior in an organization
  • Individual factors
    • Individual knowledge of an issue
    • Personal values
    • Personal Goals
  • Social factors
    • Cultural norms
    • Coworkers
    • Significant others
    • Use of the internet
  • Opportunity
    • Presence of opportunity
    • Ethical codes
    • Enforcement (rewards/punishment)

Encouraging Ethical Behavior

• External to a specific organization
  • Governmental legislation and regulations
    • Sabarnes-Ocley act of 2002
  • Trade association guidelines
• Within an organization
  • Code of ethics
  • Organizational management
    • Management direction
      • Model ethical behavior
      • Organizational culture
      • Communication
  • Employee training
  • Ethics officer

The situation effecting ethical behavior

• Highly competitive and unsupervised situations increase the odds of unethical behavior
• Unethical behavior occurs more often when there is no formal ethics policy and when unethical behavior is not punished.
• Unethical behavior is especially prevalent when it is rewarded (Ex: order stealing)

Ethical dilemmas

• Ethical dilemmas are situations that offer potential benefits despite being unethical
• One of the most common ethical dilemmas occurs when a company’s culture conflicts with an employee’s personal ethics.

Dealing with ethical dilemmas

1. Recognize the ethical dilemma
2. Get the facts
3. Identify your options
4. Test each option: Is it legal? Is it right? Is it beneficial?
5. Decide which option to follow
6. Ask “spotlight questions”, how would you feel if your family found out? How about your local newspaper?
7. Take action

Rationalizing unethical behavior

• Moral justification
  • The purpose of reinterpreting immoral behavior in terms of a higher purpose
    • Example: 9/11 hijackers, suicide bombers
    • People sometimes believe their behavior is for the good of the organization or it’s employees
• Displacement of responsibility
  • The process of blaming one’s unethical behavior on others
    • Example: “I was only following orders, my boss told me to inflate the figures”
• Diffusion of responsibility
  • The process of a group engaging in unethical behavior, with no one person being responsible
• Advantageous comparison
  • The process of comparing oneself to others who are worse
• Disregard or distortion of consequences
  • The process of minimizing the harm caused by unethical behavior
• Attribution of blame
  • The process of claiming the victim deserved whatever happened, or the unethical behavior was caused by someone else’s behavior's
• Euphemistic labeling
  • The process of using “cosmetic” words to make behavior sound acceptable.
    • Ex: “Lying” sounds bad, but “misleading” sounds better

Influence on moral development

• Ethical frameworks are personal rules and strategies for making ethical decisions
• Lawrence Kohlberg created the three levels of moral development
  • The preconventional level - self centered behavior
    • Stage 1 - Avoid harm or punishment
    • Stage 2 - Make deals for personal gain
  • The conventional level - social-centered behavior
    • Stage 3 - Act consistently with peers, others
    • Stage 4 - Follow rules, meet obligations
  • The postconventional level - Principle centered behavior
    • Stage 5 - Live up to societal expectations
    • Stage 6 - Act according to internal principles
• Depending on where you are, ethics training may be required. It’s also helpful to trade ethics with peers to understand others

Whistleblowers

• Persons who expose organizational misdeeds in order to preserve ethical standards and protect against wasteful, harmful, or illegal acts.
• Many whistleblowers were / are fired for their actions
• State and federal laws now offer some protection

Stakeholders

Stakeholders are the groups that have a direct interest in the success or failure of an organization.

Cooperate social responsibility: Socioeconomic view vs classical view

| - Social responsibility increases long run profits

• Improves public image
• Helps avoid government regulation
• Businesses have resources and ethical obligations to act responsibly | - CSR reduces businesses profit and creates higher business costs
• Dilutes business purpose
• Gives too much social power over business |
• The tipple bottom line is how well an organization performs when measured not only on financial criteria, but also social and environmental ones
  • Is the decision economically sound?
  • Is the decision socially responsible?
  • Is the decision environmentally sound?

Social responsibility is serving society

• The three Ps are
  • People
  • Planet
  • Profit

Social responsibility and ESG

• ESG is a framework to help stakeholders understand how an organization manages risk and opportunities around sustainability
• It’s changing how investment and capital allocation decisions are made
• Companies receive an ESG score; investment funds recommend companies based on this score
• It’s been turning into a political issue more recently

Building a social responsibility program

• When developing the plan:
  • Secure commitment from top executives
  • Plan the program
  • Appoint a top-level executives as director to implement the plan
  • Prepare a social audit
• Funding the program
  • Pass program costs on to consumers as higher prices
  • OR absorb the program costs as a business expense
  • OR seek tax reductions or other incentives

  ---

📋Textbook reading (March 21, 2023) (Chapter 7)

🖌️ Summary

1. Why do people become entrepreneurs, and what are the different types of entrepreneurs?
   Entrepreneurs are innovators who take the risk of starting and managing a business to make a profit. Most want to develop a company that will grow into a major corporation. People become entrepreneurs for four main reasons: the opportunity for profit, independence, personal satisfaction, and lifestyle. Classic entrepreneurs may be micropreneurs, who plan to keep their businesses small, or growth-oriented entrepreneurs. Multipreneurs start multiple companies, while intrapreneurs work within large corporations.
   7.2 Characteristics of Successful Entrepreneurs
2. What characteristics do successful entrepreneurs share?
   Successful entrepreneurs are ambitious, independent, self-confident, creative, energetic, passionate, and committed. They have a high need for achievement and a willingness to take moderate risks. Good managerial, interpersonal, and communication skills, as well as technical knowledge are important for entrepreneurial success.
   7.3 Small Business
3. How do small businesses contribute to the U.S. economy?
   Chapter 7 Entrepreneurship 241
   Small businesses play an important role in the economy. They account for over 99 percent of all employer firms and produce about half of U.S. economic output. Most new private-sector jobs created in the United States over the past decade were in small firms. The Small Business Administration defines a small business as independently owned and operated, with a local base of operations, and not dominant in its field. It also defines small business by size, according to its industry. Small businesses are found in every field, but they dominate the service, construction, wholesale, and retail categories.
   7.4 Start Your Own Business
4. What are the first steps to take if you are starting your own business?
   After finding an idea that satisfies a market need, the small-business owner should choose a form of business organization. Preparing a formal business plan helps the business owner analyze the feasibility of his or her idea. The written plan describes in detail the idea for the business and how it will be implemented and operated. The plan also helps the owner obtain both debt and equity financing for the new business.
   7.5 Managing a Small Business
5. Why does managing a small business present special challenges for the owner?
   At first, small-business owners are involved in all aspects of the firm’s operations. Hiring and retaining key employees and the wise use of outside consultants can free up an owner’s time to focus on planning, strategizing, and monitoring market conditions, in addition to overseeing day-to-day operations. Expanding into global markets can be a profitable growth strategy for a small business.
   7.6 The Large Impact of Small Business
6. What are the advantages and disadvantages facing owners of small businesses?
   Because of their streamlined staffing and structure, small businesses can be efficiently operated. They have the flexibility to respond to changing market conditions. Small firms can serve specialized markets more profitably than large firms, and they provide a higher level of personal service. Disadvantages include limited managerial skill, difficulty in raising capital needed for start-up or expansion, the burden of complying with increasing levels of government regulation, and the major personal commitment that is required by the owner.
   7.7 The Small Business Administration
7. How does the Small Business Administration help small businesses?
   The Small Business Administration is the main federal agency serving small businesses. It provides guarantees of private-lender loans for small businesses. The SBA also offers a wide range of management assistance services, including courses, publications, and consulting. It has special programs for women, minorities, and veterans.
   7.8 Trends in Entrepreneurship and Small-Business Ownership
8. What trends are shaping entrepreneurship and small-business ownership?
   Changes in demographics, society, and technology are shaping the future of entrepreneurship and small business in America. More than ever, opportunities exist for entrepreneurs of all ages and backgrounds. The numbers of women and minority business owners continues to rise, and older entrepreneurs are changing the small-business landscape. Catering to the needs of an older population and a surge in web-based companies fuel continues technology growth. Entrepreneurs typically follow the money and set up shop in places where there is venture capital money easily available.

💡 Notes

• 80% (~23.8 million) businesses have no employees
• Companies with 500 employees pay more than 41% of America’s payroll

📝 Prepare to test…

1. What are the differences between classic, multipreneurs, and intrapreneurs?

   1. Classic entrepreneurs can start wither smaller or larger businesses and are generally normal. Can be small business oriented, or growth oriented.
   2. Multipreneurs start and manage multiple businesses.
   3. Intrapreneurs work within already established companies.

2. What differentiates an entrepreneur from a small-business owner?

   1. Entrepreneurship involves taking a risk to either make a new business, or change the scope and direction for an existing one. Entrepreneurship involves innovation, and while some may be small business owners, not all small business owners are entrepreneurs.

3. What are some major factors that motivate entrepreneurs to start businesses?

   1. The challenge of starting a business, desire to control your own destiny, financial independence, frustration of working for someone else, or finding a lifestyle / satisfaction with work which is satisfying.

4. How can potential business owners find new business ideas?

   1. Working in a given industry, personal experiences as a customer, hobbies and interests, suggestions from customers, family or friends, industry conferences, college courses and other education, or entrepreneurship magazines

5. Why is it important to develop a business plan? What should such a plan include?

   1. Business plans can help with loan financing, minimizing risks, and let you run what if scenarios to iron out the risks of your business.
   2. Business plans should include the description of the company, qualifications of the owner, description of the products or services, an analysis of the market, sales and distribution channels, and financial plan.

   Key elements of a business plan

6. What financing options do small-business owners have? What risks do they face?

   1. Personal funds
   2. Family and friends
   3. Financial institutions
      1. 💸 Debt based funds which must be repaired
      2. ✨ Equity based funds raised through the sale of stock
   4. 🕯️ Angle investors will give their own money, however they are more careful than others because they have a personal stake.
   5. 📈 Venture capitalists go for small, high growth potential companies and typically invest later than angel investors

7. How do the small-business owner’s and entrepreneur’s roles change over time?

   1. Small business owners often start out working on day-to-day decisions and running the actual business, and over time as more people are hired they become more managerial with a focus on long term success and growth, they may also hire contractors to handle tasks they aren’t as suited to handle.

8. What are the benefits to small firms of doing business internationally, and what steps can small businesses take to explore their options?

   1. Customers aboard may buy US products because they are cheaper, which can be a great way to expand the market of a small business and increase revenue.
   2. Small businesses can use Exporting Trade companies, which sell their goods abroad, or Export management companies, which act on a company’s behalf

9. Describe the financial and management assistance programs offered by the SBA.

   1. If a business cannot receive funding through normal channels, the SBA can offer guarantees on loans through private lenders, by connecting small businesses to small business investment companies.

10. What significant trends are occurring in the small-business arena?

    1. Demographics, society, and technology, the dot-com boom is a good example of this.
       1. A major demographic group is moving into a different stage in life, and minorities are increasing their business ownership in remarkable numbers

11. How is entrepreneurial diversity impacting small business and the economy?

    1. Boomers have been starting companies at a higher rate than other groups creating a disproportionate representation of their needs and interests in the market, however minority groups and women have also been moving into the market at a high rate increasing the rate of minority owned businesses to 38%

12. How do ethics impact decision-making with small-business owners?

    1. Good ethics and practices can improve the attraction and retention for new employees, and drive decisions to align more with values instead of speed or profit. An example of this is child care offered by companies.

    ---

🧭 Entrepreneurship and small businesses (March 28, 2023)

Entrepreneurs and small businesses create more jobs than larger companies, do as such this lesson will cover the important role they fill and how they work.

• Small businesses are defined as businesses that are independently owned and operated for a profit, but not dominant in their field
• The SBA put together a grid for company size to determine a small vs not small business

What defines a small business?

Small businesses employ a lot of people and fill a key role

Demographics

• In 2020, 19.9% of businesses were minority owned
  • 6.5% Hispanics
  • 3% black/African-Americans
  • 33% will survive at least 10 years

Business survival rates

• 80% of new businesses survive at least 1 year
• About 50% survive at least 5 years
• 44% survive at least 10 years

Attractive small-business industry characteristics

• Industries that require only a low initial investment and some special skills or knowledge tend to attract new businesses
• Knowledgeable entrepreneurs chose areas with which they are familiar, and these are most often the most established industries
• High growth and profit potential

Small businesses typically fall into three categories of industry

1. Distribution (33%)
   1. Includes retailing, wholesaling, transportation, and communications- industries concerned with the movement of goods from producers to consumers
2. Service (48%)
   1. Includes both nonfinancial (medial and dental care, TV repair, hair styling) and financial services (accounting, insurance, real estate)
3. Production (19%)
   1. Includes the construction, mining, and manufacturing industries

Characteristics and other personnel factors

• The “entrepreneurial spirit”
• The desire for independence
• The desire to determine one’s own destiny
• The willingness to find and accept a challenge
• Personal / family background
• Age

Motivation

• “Had enough” of working for someone else
• Losing a job and deciding to start a business
• An idea for a new product
• An opportunity presents itself

How old is the average entrepreneur?

Competition

Market advantages

Small businesses typically start off as one person, then they try to bring in more people to start expanding, however smaller businesses have a much harder time starting.

The secret to keeping a small business running

• Keep cash coming in, and spend money slowly only as it is needed.
• Cash flow
• Cash flow
• Cash flow (it’s really important)
• Profitability is important, but cash flow is the key detail. Spending too much will annoy investors
• Lack of management skills
• Overexpansion - Growing too quickly makes it hard to serve customers, as managers need to think about office space, hiring, and other issues in addition to running the business

📋Textbook reading (March 28, 2023) (Chapter 4 & Chapter 10)

Chapter 4

📤 External environments

• External environmental factors, such as the advancement of AI, force companies to compete
• Different types of organizations / businesses include not-for-profit, for-profit, public, private, government, voluntary, family owned and operated, and publicly traded on stock exchanges
• Organizations are commonly refereed to as companies, firms corporations, institutions, agencies, associations, groups, consortium, and conglomerates
• The external environment of a company involves all outside factors and influences that affect the company, which can be sociocultural,
  technological, economic, government and political, natural disasters, and human-induced problems that affect industries and organizations

• Globalization combines external forces creating an integrated economy
• Global economies are reliant on each other for stability, meaning conflict would result in high losses for all parties involved
• Globalization also decreases the income of individual households as labor is spread out across the globe to reduce expenses

💸 Economic forces

• Technological forces quickly change and influence speed, price, service, and quality. Adaptation and data are needed to keep up
• Government also unsurprisingly influences companies

🗣️ Sociocultural influences

Sociocultural influences include different groups values, beliefs, attitudes, customs, traditions, habits, and lifestyles, which affect consumer spending and perception of companies. Other forces include education, language, law, politics, and social organizations, at a broader level.

• Millennial are estimated to be the largest adult generation in the United States, as of 2019

Sociocultural trends

• Sexual harassment awareness as the # MeToo movement campaigns for transparency
• Increased workplace diversity
• Young adults are living at home longer due to economic trends

🍃 Natural disasters / Human related problems

• High impact hurricanes
• Extereme tempertures
• CO2 emissions
• Water and food crises
• Biodiversity loss
• Ecosystem collapse
• Involuntary migration
• Rising sea levels will greatly impact economic activity in the coming decades

🔀 Certainty and Stability (quantifying the effects of external forces pressuring organizations)

Economic complexity is the number of elements that influence companies, simple and low uncertainty companies are generally stable and only need to worry about global external factors such as economic downturn, or international turmoil, while more complex companies are less stable and tend to fluctuate more.

Simple + Stable (1)

• Few external elements, which are similar to each other
• Elements remain the same, or change slowly
  • Think soft drink bottlers, container manufacturers, and food processors

Complex + Stable (2)

• Large number of external elements, which are not similar
• Elements remain the same or change slowly
  • Think of universities, appliance manufacturers, chemical companies, or insurance companies

Simple + Unstable (3)

• Small number of external elements that are similar
• Elements change frequently and unpredictably
  • Think e-commerce, fashion and clothing, the music industry, or toy manufacturers

Complex + Unstable (4)

• Large number of external elements, which are not similar
• Elements change frequently and unpredictably
  • Think computer firms, aerospace, telecommunications, or airlines

External environments can be limited and controlled, or nurtured and expanded, depending on your companies needs. It’s typically recommended to control environments locally and grow them internationally.

Some companies also opt to build their own management systems to such as open networks or value sharing to limit complexity

🪜 Organizational Design and Structures

Mechanistic design structures (for stable, low uncertainty environments where consistency is key) vs Organic design structures (which adapt quickly to environmental stimuli)

• ↔️ Horizontal organization design has flatter company structures and tend to be more organic and open

• ↕️ Vertical organizations have more hierarchy and less connection, and tend to be more rigid

• Organizations started out as pyramids with rigid structures which optimized converting materials into products

• 👥 Over time organizations started grouping people into departments and functions, and moving into the 1980s international trade started creating more complex organizational designs and structures

• 🌐 Moving into the modern age, with increased communication and growing organic businesses, six main structures, divisional, matrix, global geographic, modular, team-based, and virtual were created

  
  

• 📐 Pyramid structures are common amongst smaller organizations and setups as they offer a high degree of specialization and scaling is easy as a result of direct reporting structure

• 🪣 However, because departments are separated they tend to form “silos” which cause lack of communication and coordination resulting in competition for power and resources

• 🧱 Divisional structures are many functional departments grouped under a single head, which each have their own marketing, sales, accounting, manufacturing, and production teams, which is helpful for managing multiple products

Matrix structures

Act closer to organic systems in an attempt to respond to environmental uncertainty, complexity, and instability

• Matrix structures involve multiple reporting groups, which are often used in government and company collaborations to establish consistent oversight, as in US aerospace firms for example
• This structure has since adapted to provide flexibility and integrated decision making

Networked team structures

• Networked team structures work entirely off of grapevines, or soft structures within companies.
• People group each other together by clustering allowing people to communicate throughout the organization.
• Teams are assigned to jumpstart the process and then things build out organically

❌ Keep in mind some line of communication may be difficult to establish, and depending on the technology, internet connections and phone lines may be necessary to connect further parts of the company

Virtual structures and organizations, aka, formal committee structures

Virtual structures relate modular and digital organizations and are dependent on information technology to function

• Virtual structures outsource labor and tasks to a variety of other organizations while keeping different teams virtual instead of physical
• Virtual structures keep teams close via technology and still involve standard management structures
• Usually a home base for the company is still used for central management, without this the company would be a boundaryless organization
• The home base is also sometimes referred to as “the committee”
  • Advantages include:
    • Cost savings
    • Dedicated response time to customers
    • Greater access to a diverse labor force
    • Not limited by 8 hour work days
    • Less harmful effects on the environment

The internal organization and external environments

• Open systems, created by Katz and Kahn, explain that companies have inputs, raw materials, ideas, people, etc, throughputs, organizational subsystems and processes to transform the input through manufacturing, education, etc, and outputs, results from the throughputs, final products, degreed professionals, etc

  • Open systems are sensitive to environmental influences

• Closed systems are not open to outside change and do not take the environment in as an input, while this leads to more stability it can also leave companies blind to change

• Domains are the sector or technology, products, and services used to compete in and serve

• External cultures include Economic forces, technological forces, political-legal forces, and sociocultural forces

• Internal cultures include the formal subsystem, such as leadership, strategy, management, goals, etc, and informal systems like culture, norms, relationships, politics, leadership, etc

The McKinsey 7-S Model illistrates the integration of internal organizational systems and the external environment

The international organization and external environment chart by Are Lewin and Caroll Stephenes ( the unifying framework)

Cooperate Cultures

• Corporate culture is one of the most important internal dimensions of an organization’s effectiveness.
• Corporate culture is more influential than strategy in terms of motivating employees.
• Internal dimensions of organizations are also important, but organizational cultures serve two purposes:
  • To help with adaptation.
  • And to bring unity.
• Corporate culture is more influential than strategy in terms of motivating employees.
• Culture helps an organization adapt to its external environment and creates internal unity.
• Organizational cultures are generally framed and influenced by the top-level leader or founder.
• The Competing Values Framework is a model for diagnosing an organization’s cultural effectiveness and examining its fit with its environment.

The competing values framework

• The Competing Values Framework has two axes: external focus vs. internal focus and flexibility vs. stability and control.
• Combining the axes offers four cultural types: Adhocracy Culture, Clan Culture, Hierarchy Culture, and Market Culture.
• Adhocracy Culture emphasizes creating, innovating, and managing change.
• Clan Culture focuses on relationships, team building, and human development.
• Hierarchy Culture is process-oriented and structured with an internal focus and a stability/control orientation.
• Market Culture is results-oriented and competitive with an external focus and a stability/control orientation.
• The Adhocracy Culture profile of an organization emphasizes creating, innovating, visioning the future, managing change, risk-taking, rulebreaking, experimentation, entrepreneurship, and uncertainty.

Organizing for change in the 21st century

• The Annual global risks perception survey (GRPS) predicts trends about external environments
  • Persistent inequality and unfairness
  • Domestic and international political tensions
  • Environmental dangers
  • Cyber vulnerabilities
• The report suggests that complex organizations approach their futures with the “nine resilience lens”.
• The nine lenses are grouped into three categories: structural resilience, integrative resilience, and transformative resilience.
• Structural resilience considers the systemic dynamics within the organization itself and calls for “system modularity”.
• Integrative resilience underlines complex interconnections with the external context and suggests that organizations must be part of and aware of their contexts.
• Transformative resilience requires that mitigating some risks requires transformation.
• System modularity, the idea that structures and designs are “loosely coupled”, allows organizations to adapt while rigid hierarchies may not function as well
• Integrative resilience suggests that organizations must be aware of their contexts, such as the health of individuals, families ,neighborhoods, cities, provinces, and countries that are affected
• Organizations are no longer judged for only their financial performance and product quality, but also their impact on society at large

Chapter 10

What are mechanistic versus organic organizational structures?
What are the fundamental dimensions of change?
How do managers deal with change?

• Organizational structure is a system for accomplishing and connecting the activities that occur within a work organization.
• Organizational design is the process of setting up organizational structures to address the needs of an organization.
• Organizational change refers to the constant shifts that occur within an organizational system.
• Organizational development (OD) is a field that specializes in change management.
• An understanding of these concepts can help managers create and direct organizations that are positioned to successfully accomplish strategic goals and objectives.

Formal vs informal structures

• There are two fundamental forms of structure to remember when designing an organization: the formal organization and the informal organization.
• The formal organization is an officially defined set of relationships, responsibilities, and connections that exist across an organization.
• The informal organization is the invisible network of interpersonal relationships that shape how people actually connect with one another to carry out their activities.
  • It is usually complex, impossible to control, and has the potential to significantly influence an organization’s success.

Types of formal organization structures

• Bureaucracy was developed by Max Weber and divides labor allowing people to specialize and creates a hierarchy of responsibility. The five elements are specialization, commandand-control, span of control, centralization, and formalization.
• Specialization refers to the degree to which people are organized into subunits according to their expertise.
• Command-and-control refers to the reporting and oversight structure of the organization.
• Span of control refers to the scope of work that any one person in the organization is accountable for.
• Centralization refers to how resources and information are managed in an organization.
• Formalization refers to the degree of definition in the roles that exist throughout an organization.

Mechanistic and organic structures

• Mechanistic bureaucratic structure is a strongly hierarchical form of organizing designed to generate a high degree of standardization and control.
• Organic bureaucratic structure relies on the ability of people to self-organize and make decisions without much direction to adapt quickly to changing circumstances.
• The principles of bureaucracy can be applied in different ways to create structures that have features of either mechanistic or organic structures.
• The degree of specialization required in an organization depends on its complexity and scale.
• An organization’s overall objectives drive how specialization should be viewed.
• Centralization addresses assumptions about how an organization can best achieve efficiencies in its operations.
• In a mechanistic structure, efficiencies are assumed to occur through centralized resource and decision flows.
• In an organic system, greater efficiencies are assumed to be achieved by distributing resources and decision-making.
• Managers have discretion in how tightly they choose to define formal roles and responsibilities within an organization.
• When a bureaucratic structure works well, an organization achieves an appropriate balance across all of these considerations.

Functional Structures

• Product structures organize employees according to product lines or lines of business.
• Geographic structures organize employees according to a geographic area or region.
• One common weakness of a bureaucratic structure is that people can become too focused on their own part of the organization and fail to understand or connect with broader organizational activities.

🧭 Organizational Culture, Environment, Structure & Change (April 11, 2023)

Culture always starts at the top and works its way down.

Structure

• A system of tasks, reporting relationships, and communication that links people and positions within an organization

Organization charts

• Diagrams of positions, job titles, reporting relationships, ie the hierarchy of authority within a team or organization

Organization charts highlight a variety of factors

• Division of work
• Supervisory relationships
• Span of control
• Communication channels
• Major subunits
• Levels of management

Structures can be formal, or informal

• Informal structures are the unofficial but important working relationships between members
  • They tend to result in things getting done, social relationships like friendships being built, etc. Gatekeepers, or Admins gatekeep access to higherups and help manage the work done by the VP
  • Be extra carful when hiring a secretary or face of the company
  • Informal structures fill in the gaps of formal structures and make management more efficient, however it can lead to inaccurate information, resistance to change, rumors, and distraction.
  • This is sometimes referred to as the grapevine, there can be a lot of valuable information in it so it’s good to pay attention, but always avoid gossip
  • Informal structures are necessary for organizational success, don’t try to shut them down.

Divisional structures

• Divisional structures group people together who work on a similar product, work in the same geographical region, or serve a similar role / purpose

There are four types of divisions

• Product
• Geography
• Customer
• Process

Downsides to divisional structures

• They are costly
• Duplication of resources and efforts across divisions is a lot of extra work
• Unhealthy rivalries when divisions compete for scarce resources, prestige, and senior management attention.

Balancing functional and divisional structures creates a best of both scenarios

Matrix structures

• Matrix structures have a major issue, which is when conflicting information is shared

Culture is the personality of an organization

• Culture is shared beliefs and values that guide the behavior of organization members
• Helps to set values, shape attitudes, reinforce beliefs, direct behavior, and establish performance expectations
• Strong cultures are well defined

Levels of organizational culture

• Artifacts are visible organizational structures and processes that are easy to see, hear, and feel, but hard to decipher
• Espoused beliefs and values are strategies, goals, and philosophies
• Underlying assumptions are unconscious, taken for granted beliefs, perceptions, thoughts, and feelings

Characteristics of organizational culture

• Distinctive / unique
• Deep & broad
• Stable and slow to change
• Implicit / taken for granted
• symbolic
• integrated & consistent
• accepted by employees
• A reflection of top management
• Includes subcultures
• Has varying strength

How to read an organization’s culture

• How tight or loose is the structure?
• Are decisions change oriented or driven by the status quo?
• What outcomes or results are most highly valued?
• What is the climate for risk taking and innovation?
• How widespread is empowerment
• What is the competitive style, internal and external?

maintaining organizational culture

• Think of organizations like a bus, you want to get the right people on the bus (culture attracts people who like the culture), then you select candidates. If the wrong person gets on the bus, you can remove them.

Organizational culture warning signs

• High turnover - people don’t stay
• High absenteeism - People don’t come to work
• Turf-battles and competition - resources are scarce
• Self-interest
• Lack of initiative and volunteerism for new challenges
• “lone ranger” mentality, ie, people who only want to work alone
• Low morale
• Low energy

Spans of control

Span of control is how many employees a given manager has reporting to them

Centralization vs decentralization

Delegation

• Giving others the right to make decisions and take action
• Steps:
  1. Assign responsibility - Explain the task and expectation to others
  2. Grant authority - allow others to act as needed to complete the task
  3. Create accountability - Require others to report back and complete the task

Horizontal and adaptive organizations

• Mechanistic designs (bureaucratic) vs organic designs (adaptive organizations)

Alternative work schedules

Increase flexibility, increase satisfaction for employers and employees, and can improve efficiency

• Compressed work weeks run 4 days a week with longer hours
• Flextime is where your hours are flexable
• Job sharing is where multiple people share the same job and switch off to avoid burnout
• Telecommuting is where you work from home

Types of organizational change

Unfreezing, changing, and freezing

• Unfreezing culture allows it to change, once it changes it is solidified in the organization again.

Why people resist change

Free food are the two best four letter f words

📋Textbook Reading (March 28, 2023) (Chapter 11)

Human resource management includes the leadership and facilitation of the following key life cycle process areas:

• Human resources compliance
• Employee selection, hiring, and onboarding
• Performance management
• Compensation rewards and benefits
• Talent development and succession planning

1. What are the four "waves" of the human resource management evolution?

   1. First wave focused on administrative work of HR personnel, such as working conditions and regulatory compliance.
   2. Second wave focused on the design of HR practices, such as compensation, learning, communication, and sourcing.
   3. Third wave focused on integration of HR strategy and business strategy.
   4. In wave 4, HR continues to partner with business, but also responds to external business conditions such as customers, investors, communities, and tries to define success.

2. What are some of the key regulations that human resources must manage compliance with?

   1. The Age Discrimination in Employment Act (ADEA) which protects those 40 and up from discrimination, both for current employees and applicants.
   2. The Americans with Disabilities Act (ADA) prevents discrimination against qualified individuals with disabilities, who 1) have a mental or physical impairment that substantially limits one or more major life activities 2) has a record of such impairment or 3) is regarded as having such impairment. Employers are required to make reasonable accommodations if it would not impose undue hardship on business operations.
   3. The Fair Labor Standards Act (FLSA) establishes minimum wage, overtime pay, recordkeeping, and youth employment standards.
   4. The Family and Medical Leave Act (FMLA) entitles employees to take up to 12 weeks of unpaid job-protected leave in a 12-month period for specified family and medical reasons. This applies to all public agencies, and private-sector employers who employed 50 or more employees in 20 or more workweeks.
   5. The National Labor Relations Act (NLRA) protects unions and protects workers from union misconduct.
   6. The Worker Adjustment and Retraining Notification Act (WARN) covers employers with 100 or more employees not counting those who worked less than 6 of the last 12 months or those who worked less than 20 hours a week. WARN protects workers, families, and communities by requiring employers to provide 60 calendar days of plant closings and mass layoffs.

3. What are some of the unintended consequences of a forced ranking system?

   1. Fosters internal conflict.
   2. Undermines collaboration and teamwork.
   3. Forces individuals to compete for promotions.

4. What are some of the performance management challenges that must be addressed, no matter what the system?

   1. Aligning individual and company goals.
   2. Rewarding performance.
   3. Identification of poor performers.
   4. Avoiding legal troubles.
   5. Managing feedback to keep conversations, documentation, and feedback in a place where it can be tracked and utilized.

5. Why are many companies interested in moving to a pay-for-performance strategy?

   1. Pay-for-performance models encourage productivity, moving away from entitlement culture so people work for their reward, and increases the likelihood of achieving corporate goals.
   2. This strategy is also used by many top-performing companies, making it appealing to smaller businesses.

6. What are the main process steps for implementing pay for performance?

   1. Define the organization's pay philosophy (how should reward be determined?).
   2. Review the financial impacts and benefits resulting from PFP.
   3. Identify gaps that exist and potential conflicts with current policies.
   4. Update compensation processes and implement merit matrices, which tie employee annual pay increases to performance, as well as short-term bonuses.
   5. Communicate and train managers and employees on the new policy.

7. What are some best practices for recruiting new leadership candidates?

   1. Anticipate
      1. Conduct ongoing analysis of future needs.
      2. Evaluate the pool of potential talent.
   2. Specify the job
      1. Continue defining specific demands of the job.
      2. Specify specific skills and experience requirements.
   3. Develop a pool
      1. Develop a large pool.
      2. Include all inside and outside potential candidates.
   4. Assess candidates
      1. Use a small pool of your best interviewers.
      2. Conduct robust background checks.
   5. Hire the choice
      1. Show active support of the candidate's interests.
      2. Realistically describe the job.
      3. Ensure they are offered compensation that is fair to other employees.
   6. Integrate the new hire
      1. Use a top performer as a mentor.
      2. Check in often and early to ensure no problems show up.
   7. Review the process
      1. Remove bad hires early.
      2. Review recruiting practices.
      3. Reward your best interviewers.

8. Describe the steps of a talent review session.

   1. Talent review often follows a company's performance management process, which often involves using the 9-box template, to show which employees have a lot of potential, and which employees have a lot of performance.
   2. HR should use the talent review calibration process, where each team member presents a performance and potential grid to discuss how each other person is rated. Thus, team members can contribute their experiences and thoughts about co-workers. Next, key steps for development are outlined and distributed by leadership to help each employee improve. Lastly, HR should go through the development outcomes for each employee, and document them to show growth and determine future actions if needed.
   3. Succession planning is the process of discussing and planning potential successors for critical roles and leadership positions which can't afford to be vacant. HR and the business leader should define the risk for each key person, and name short-term, mid-term, and long-term successors.

9. What is the difference between performance and potential?

   1. Potential equates to the potential for advancement within the organization, however, it does not equate to the value of an individual within an organization. Strong performers may prefer to stay in their current roles, instead of looking to advance.

10. How can you tell if a candidate has potential?

    1. Potential is defined as an employee's ability to demonstrate the behaviors necessary to be successful at the next highest level within the company. These include business acumen, strategic thinking, leadership skills, people skills, learning agility, technology skills, and other indicators include top performance in their current position, success in other positions, education, accomplishments, and a willingness to advance.

11. What has been the evolution of human resource management over the years, and what is the current
    value it provides to an organization?
    Human resource management began in its first “wave” as a primarily compliance-type function, with the HR
    staff charged with enforcing compliance of employees and running the ongoing administrative processes. In
    the second wave, HR became focused on the design of HR practice areas, which could be built upon bestpractice models. Wave 3 of HR brought with it the concept that HR should be a true partner to the business
    and should support the business strategy through its programs and services. Finally, in the fourth wave, HR is
    still a partner to the business, but it looks outside of the business to customers, investors, and communities to
    see how it can be competitive in terms of customer share, investor confidence, and community reputation.
    Some key areas that HR supports within the employee life cycle process include: human resources compliance,
    employee selection and hiring, performance management, compensation rewards, and talent development
    and succession planning.
    11.2 Human Resource Management and Compliance

12. How does the human resources compliance role of HR provide value to a company?
    Human resources helps protect the company and its employees to ensure that they are adhering to the
    numerous regulations and laws that govern the employment relationship. The impact of noncompliance can
    be very costly and can be in the form of financial, legal, or reputational cost. Some of the key legislation that
    HR manages compliance around includes the Fair Labor Standards Act (FLSA), the Age Discrimination in
    Employment Act (ADEA), the Americans with Disabilities Act (ADA), and the Family and Medical Leave Act
    (FMLA), among others.
    Some of the best practices for informing and holding employees accountable are to provide education and
    training to explain the regulations, to provide reference documentation for guidance with the regulations, and
    to schedule regular compliance audits to ensure that processes are being followed. Scheduling regular
    internal HR audits help the organization plan and feel comfortable with its level of preparedness and
    illustrates the value that a strong HR group can bring to the organization.
    11.3 Performance Management

13. How do performance management practices impact company performance?
    Performance management is a critical business process that the human resources group manages for the
    business. Performance management aligns the work of individual groups with the overall business objectives
    and enables the business to work toward its goals. Performance management should also help the company
    differentiate between different levels of employee performance through the management of feedback and a
    rewards structure.
    Performance management also allows a company to identify its poor performers and provides a consistent
    process for tracking and managing poor performance in a manner that is fair and consistent with the law.
    There has been much discussion of best practices for a performance management process beyond a formal,
    annual process that often feels cumbersome to the business. However formal or informal, human resource
    management needs to ensure that the process helps to differentiate different levels of performance, manages
    the flow of feedback, and is consistent and fair for all employees.
    Chapter 11 Human Resource Management 363
    11.4 Influencing Employee Performance and Motivation

14. How do companies use rewards strategies to influence employee performance and motivation?
    Companies use rewards strategies to influence employee performance and motivation by differentiating between the various levels of performance. This strategy is called pay for performance, and it ties the employee’s performance level to a consistent framework of rewards at each level. Research indicates that the primary reason that companies implement pay for performance is to be able to recognize and reward their high performers. To implement a pay-for-performance structure, HR and the organization first need to define a compensation philosophy, then perform a review of the financial implications of such a system. Gaps in the current system must be identified, and compensation practices should be updated in accordance with the determined pay-forperformance design. Finally, communication and training are key to help employees understand the context and philosophy, as well as the specific methodology.
    11.5 Building an Organization for the Future

15. What is talent acquisition, and how can it create a competitive advantage for a company?
    Human resource management plays the important role of managing the talent processes for an organization, and it is critical in the process of acquiring talent from the outside. Talent acquisition is the process of determining what roles are still needed in the organization, where to find people, and whom to hire. Hiring top talent is a key source of competitive advantage for a company, and not all organizations are good at doing it. The impact of hiring is especially magnified when you talk about top leadership talent. The right leadership candidate can make all the difference in an organization’s growth, performance, and trajectory over the years. HR should work with the business to assess need and specifics of the job, develop a pool of candidates, and then assess candidates for the right person to bring into the organization.
    11.6 Talent Development and Succession Planning

16. What are the benefits of talent development and succession planning?
    Talent development and succession planning processes provide organizations with the systems needed to assess and develop employees and to make the appropriate decisions on their internal movement and development. One important talent development process involves a talent review, in which leadership discusses the employees in its groups in terms of their performance and potential. Performance is based on current performance management evaluations on the current role. Potential is based on behavioral indications that would predict future high performance and promotability in an organization. There is then a discussion on the follow-up actions and development plans for the employees, based on where they fall in the performance/potential matrix. The benefit of this process is that the organization gains a better understanding of where the top talent is within the organization and can make plans to manage the development of that talent. Another key process for managing talent is succession planning. In this process, leadership and HR meet to identify leadership roles and other critical roles in the organization, and then they discuss a potential pipeline of internal and external successor candidates at different levels of readiness for the role. The output of succession planning is that an organization gets to understand the depth of its talent bench and knows the gap areas where it may need to focus on developing or acquiring additional candidates

🧭 Human resource management (April 18, 2023)

HR is responsible for three main roles:

• ✉️ Attract a quality workforce
  • Human resource planning
    • Determines the organization’s HR needs
  • Job analysis
    • Determining the exact nature of the positions
  • Recruiting
    • Attracting the right people to apply for positions
  • Selection
    • Choosing the most qualified and best fit applicants
  • Orientation
    • Acquainting new employees with the organization
• 🛠️ Develop a quality workforce
  • Training & Development
    • Training is short term focused while development is focused on long term development
• ⬆️ Maintain a quality workforce
  • Employee relations
    • Increasing employee job satisfaction through satisfaction surveys, exit interviews, and fair treatment
  • Compensation
    • Rewarding employee efforts through monetary payments
  • Benefits
    • Providing rewards to ensure employee well-being
  • Feedback
    • Collect and implement feedback from employees

Discrimination Laws prevent job discrimination, which is where employment choices are made for reasons not relevant to the job

• Equal employment opportunities (EEO) guarantee the right to employment without race, religion, color, national origin, or gender.

There are however Bona fide occupational qualifications where specific demographics are needed, for example, women’s locker rooms should have women as staff, or male models can be requested for men’s clothing.

If a customer has a service animal, you are not allowed to ask for documentation or any personal information, however you can ask what the animal is trained to do.

• Only small dogs and horses can be service animals.
• If a service animal gets aggressive towards another customer, you can ask them to leave

👁️ Workplace privacy

• Right to privacy on the job
  • Technology creates issues with employer and employee rights, social media, e-mail, and internet use
  • Experian logs all keystrokes across all company devices to prevent employees from changing their own credit scores, or credit scores of their family members

⚖️ Pay discrimination and comparable worth

• People with similar jobs should receive similar pay
  • The Ledbetter Fair Pay act lengthened the time to file claims of pay discrimination

🚪 Pregnancy discrimination

• Any choice that penalizes women as applicants or employees for being pregnant is illegal

⏳ Age discrimination

• Age discrimination penalizes employees 40 and over as applicants or employees
  • The average age in the workforce is increasing, and so are claims of discrimination, however it is hard to prove.

📲 Recruiting

• Attracting a pool of qualified applicants to an organization
  • 15-25 qualified applicants for each open position is generally optimal
• Giving a realistic job interview is very beneficial
  • Sharing the rewards and challenges with prospective candidates
• Keep interviews consistent and always stick to a script

Types of interviews

• Structured (consistent)
• Semi-Structured (organic)
• Panel (
• Group

✅ Selection

• Chose applicants with the greatest potential from the pool

Employment tests

Employment tests focus on the skills, abilities, and knowledge relevant to the job

• For a test to be non-discriminatory, it must be job-related and validated as an accurate of job performance
  • Reliability
    • Employment test or selection device provides consistent measurement of applicant skills, time after time
  • Validity
    • Employment test or selection device is a good predictor of future job performance

Performance appraisal

Performance appraisals are the process of measuring performance, it’s really important to keep it consistent within the company and to be clear on the policies outlining it to avoid rating performance incorrectly.

Behaviorally Anchored rating Scale (BARS)

Describe the actual behaviors that indicate various levels of performance

360 degree feedback

Receives input from those who work with the employee

• Direct report employees
• Direct supervisors
• Peers
• External constituents

Merit and bonus pay

• Merit pay increases for good job performance, usually nothing more than a cola
• Bonus pay is a one time payment for performance or accomplishments

Other types of compensation

• Profit sharing distributes portions of profits to employees
• Gain sharing distributes portions of cost savings to employees
• Stock options give a right to purchase stock at a fixed price in the future
• Fringe benifits include
  • non-monetary compensation such as health insurance, retirement plans and paid time off
  • Family friendly benefits, such as helping employes balance work, personal, and family life
  • Flexible benefits (cafeteria style) personalize benefits within a set allowance
  • Employee assistance programs help employees cope with personal stress and problems

• Specialization refers to the degree to which people are organized into subunits according to their expertise.

• Command-and-control refers to the reporting and oversight structure of the organization.

📋Textbook Reading (April 11, 2023) (Chapter 8 & Chapter 9)

Chapter 8

• Companies need to understand their external environments to operate consistently and avoid potential issues, strategic analysis is a the process firms used to study and understand aspects of their competitive environment, for example consultants may engage in environmental scanning to analyze their internal and external threats and advantages.
  • Externally this includes factors like interests rates, unemployment, or natural disasters
  • Internally this includes business plans, and resources available for utilization to achieve said plans
• SWOT stands for strengths, weaknesses, opportunities, and threats. See pages 250 and 251
  • SWOT is limited by the person using it, so it’s only as effective as the person using it is detailed
• The micro environment is the environment close to, but outside the company, such as customers, competitors, suppliers, while the macro environment is everything outside the company’s scope, such as the government, sociocultural trends, or technology.
• Materials requirement planning technology predicts how many resources will be needed at a given time based on consumption rates to ensure companies are never overstocked or understocked.
• PETSEL - Political, economic, sociocultural, technological, environmental, and legal (page 252-254)
• SWOT would categorize changes as opportunities or threats, while PETSEL simply identifies them
• Suppliers of specialized products have supplier power, they can negotiate higher prices for rare materials, while commodity suppliers typically have lower power.
• Companies need to add value to the products or services they provide to turn a profit
• Other companies competing using a similar strategy are in the same “strategic group”

Chapter 9

• Visions are abstract ideas while mission statements are specific and focused to explain how the company will reach its goal. Objectives on the other hand are actionable goals for the company to hit, ie, release a project this year
• Do it better, do it cheaper, do it different. The three ways to compete.
• CEOs need to continue to scale their businesses to maintain investment, and focus on growth, stability, or defense
• The three levels of business strategy are business, corporate, and international
• Goal setting and planning are crucial to long term success
• Top managers ask why, middle managers ask what, frontline managers ask how
• ALWAYS MEASURE PERFORMANCE

🧭 Cooperate strategy (April 25, 2023)

Strategy & Competitive advantage ⚔️

• Strategy - A Comprehensive plan guiding resource allocation to achieve long term organization goals
• Strategic Intent - Focuses organizational energies on achieving a unifying and compelling goal, for example Coca-Cola wants to put a Coke within arm’s reach of every consumer in the world
• Competitive advantage - Operating in successful ways that are difficult to duplicate

Three levels of strategy

Cooperate strategy **- Directions and guidelines for use of resources, and what markets should be targeted - “In what industries should we compete?

Business strategy - Identifies how a strategic business unit, division, or product line will compete in its product or service domain, “How will we compete for customers in this market?”

Functional Strategy - Guides activities within one specific area of operations, “How can we best utilize the resources to support the business strategy?

Growth and diversification strategies

Growth Strategy - Expansion through current operations

Concentration - Expansion within an existing business area (opening new stores)
Diversification - Expansion occurs by entering new business areas (related or unrelated)

Vertical integration - Expansion by acquiring existing suppliers (backwards) or distributors (forwards)

Restructuring and divestiture

Retrenchment - Changes operations (sometimes radically) to correct for weakness

• Liquidation is an extreme form of retrenchment wherein the business closes and sells off its assets
• Restructuring reduces the scale or mix of operations, such as Chapter 11 bankruptcy which reorganizes the businesses to restore solvency

E-Business

C2C Business strategies - Use the web and mobile applications to link consumers together in online marketplaces, Ebay is a good example

P2P - Uses the web and mobile apps to provide people needing services to people willing to provide those services

DTC - Businesses sell directly to the consumer over the web

BTB - Businesses sell directly to other businesses

Social media strategy

The use of Facebook, Instagram, Twitter or other social media platforms to engage with customers

Social media may be used for funding or sourcing new projects

• Coursourcing
  • An interactive social media strategy that uses the internet to engage customers to make suggestions and express opinions on products and their designs
• Crowdfunding
  • Provides start up funding, think kickstarter or GoFundMe

Strategic management process

• Reviews a current situation
• Analyzes organization and external environments
• Develops new strategies
• Implement strategies
• Evaluate results

📋Textbook Reading (April 25, 2023) (Chapter 12 & Chapter 13)

• Business strategy - Identifies how a strategic business unit, division, or product line will compete in its product or service domain
• left off in 12.5

Internal attribution vs external attribution

May 2, 2023 - Types of power in leadership

There are different types of power in management, including:

• Legitimate power, which comes from a person's position or title**12**
• Referent power, which comes from being well-liked or having charisma**34**
• Connection power, which comes from networking and being a resource to others5
• Expert power, which comes from having specialized knowledge or skills1
• Reward power, which comes from the ability to give rewards4
• Coercive power, which comes from the ability to punish or withhold rewards4
• Informational power, which comes from having access to valuable information1

• Individualized consideration
• Intellectual stimulation
• Inspirational motivation
• Idealized influence

ALWAYS ROUND UP WHEN DOING UNIT CALCULATIONS (you cannot sell a partial unit)