MNO Study Notes 2 Chapter 14: Leadership, Power and Influence

Leadership: Ability to influence others to voluntarily pursue organizational skills. It must be present at all levels of management. Managers and Leaders: Complementary systems of actions. Managers cope with complexity, leaders cope with changes. Managers; Three ways to cope with complexity A. Determine what needs to be done - Planning, budgeting (Allocating resources) B. Creating arrangements of people to accomplish agenda - Staffing and organizing (Hiring) C. Ensure people do their job - Controlling and problem solving (Monitoring results) Leaders; Three ways to cope with change A. Determine what needs to be done - Setting direction (Vision and strategies) B. Creating arrangements of people to accomplish agenda - Aligning people (Communicating direction) C. Ensure people do their job - Motivating and inspiring (Appeal to untapped human value and need) Five Sources of Power 1) Legitimate Power Power that results from ones formal position in organization. 2) Reward Power Power that results from ones authority to reward subordinates 3) Coercive Power Power that results from ones authority to punish subordinates (Fines and Suspensions) 4) Expert Power Power that results from specialized knowledge and expertise 5) Referent Power Power that results from ones personal attraction. Persuades followers by dint of personality, attitude and background Nine Influence Tactics 1) Rational Persuasion Convince others by use of logic, reason and facts 2) Inspirational Appeal Try to build confidence and enthusiasm by appealing to human emotions, values and ideals 3) Consultation Get them to participate in discussion and change 4) Ingratiating tactic Act humble or friendly or make someone feel good or important before making request 5) Personal Appeal Referring to friendship or loyalty when making request 6) Exchange Tactic Reminding of past favors or offering to trade favors 7) Coalition Tactic Getting others to support you to persuade someone 8) Pressure Tactic Using demands, intimidation and threats to force compliance 9) Legitimate Tactic Basing request on ones authority or right, organizational rules or policies, or express and implied superiors from superiors Three responses: Enthusiastic commitment, grudging compliance, outright resistance Consultation, Rational Persuasion and Inspirational appeal are the most apt to gain commitment

Trait approach: Attempt to identify distinctive characteristics that makes leader effective
Ralph Stogdill: Dominance, task competency, self-confidence, high energy level, and intelligence General traits:

1) Traits of characteristics: Integrity, honesty, moral reasoning, discipline, conscientiousness 2) Biophysical Traits: Fitness, hardiness, energy level 3) Intuition 4) Interpersonal traits: ability to communicate and demonstrate care and empathy 5) Personal traits: Self confidence, self efficacy, self regulating, extraversion, self monitoring, sociability Apply trait theory by using personality and trait assessment and management development programs Kouzes and Posner: Forward-looking, inspiring, intelligent, competent, honest Gender Studies: Women produce high quality work, better at motivating and mentoring. More collaborative, seek less personal glory, less turf conscious, teamwork, partnering, participative and democratic Glass ceiling because: A. Women lack significant general management experience B. Women not in executive talent pool long enough to get selected C. Male stereotype D. Exclusion from important informal sessions E. Dont want to work harder/sacrifice more F. Undermine opportunities by giving credits to others, overly modest G. Lack of access to mentors GLOBE project (Global Leadership & Organizational Behavior Effectiveness) To describe, understand and predict the impact of specific cultural values on leadership and organizational processes and the effectiveness of these processes. Universally undesirable attributes: Loner, asocial, irritable, dictatorial, egocentric, ruthless, nonexplicit, non-cooperative

Full range approach: Leadership behavior varies along a full range of leadership styles, from
take-no-responsibility (laissez-faire), through transactional leadership, to transformational leadership Transactional Leadership: Clarify employees roles and tasks requirements and providing rewards and punishment contingent on performance Encompasses fundamental managerial activities of setting goals and monitoring progress toward achievement Needed in stable environment Transformational Leadership: transforms employees to pursue organizational goals over selfinterests Engenders trust, seek to develop leadership in others, exhibits self sacrifice, act as moral agents, focusing themselves and followers on objectives that transcend the more immediate needs of the work group Encourages people to do extraordinary things Influenced by individual characteristics (extroverted, agreeable, proactive) and organizational values (adaptive, flexible, foster transformational leadership) Inspirational Approach, individualized consideration, idealized influence and intellectual stimulation.

Chapter 8: Organizational Culture. Structure and Design

Organization: System of consciously coordinated activities or forces of two or more people Three types of organization 1) For-profit organization: To make money 2) Nonprofit organization: To offer services 3) Mutual-benefit organization: Voluntary collectives to advance members interests Organization Chart: Box-and-lines illustration showing the formal lines of the authority and the organizations official positions or work specializations. - Vertical Hierarchy of authority: Who reports to whom Official communication network - Horizontal specialization: Who specializes in what work peers and partners Common Elements of Organization by Edgar Schein 1) Common purpose - Means of unifying members - Gives everyone an understanding of the organizations reasons for being 2) Coordinated Effort - Common purpose is realized through coordinated effort - Coordination of individual efforts into a group or organization-wide effort 3) Division of labor - Known as work specialization: arrangement of having discrete pats of the task done by different people - Specialists perform complex tasks, greater efficiency 4) Hierarchy of Authority - Chain of command, control mechanism for making sure the right people of the right things at the right time - Unity of command: Employee should report to no more than one manager in order to avoid conflicting priorities and demand More Common Elements of Organization authorities agree on 5) Span of control - Narrow/Tall vs Wide/Flat - Refers to number of people reporting directly to a given manager - Narrow Span of control: Limited number of people reporting (Many levels with narrow span of control Tall) - Wide Span of control: Several people reporting (Few levels with wide span of control Flat) - Recent emphasis on lean management means spans of control need to be as wide as possible while still providing adequate supervision. (Allows greater autonomy also) 6) Authority, Responsibility, and Delegation - Authority: Rights in a managerial position to make decisions, give orders and utilize resources - Authority means accountability: Must report and justify work result to the managers above them - Responsibility: Obligation you have to perform the task assigned to you - Delegation: Process of assigning managerial authority and responsibility to managers ad employees lower in the hierarchy - Line Position: Line managers have authority to make decisions and usually have people reporting to them - Staff position: Staff personnel have authority functions: Provide advice, recommendations, and research to line managers 7) Centralization versus Decentralization authority - Centralized authority: Important decisions are made by higher level managers - Less duplication of work, procedures are uniformed, easier to control - Decentralized authority: Important decisions are made by middle-level and supervisory level managers

Managers are encouraged to solve own problems rather than to buck decision to higher level Quicker decision-making, increases flexibility and efficiency

Seven types of Organizational Structure A. The Simple Structure (For small firm) - Authority centralized in a single person, a flat hierarchy, few rules and low work specialization B. Functional Structure (Grouping by similar work specialties) - People with similar occupational specialties are put together in formal groups C. Divisional Structure (Grouping by similarity of Purpose) - People with diverse occupational specialties are put together in formal groups by similar products or service, customer or clients or geographic regions - Product Divisions: Grouping by similar products or service) - E.g. Time warner: Movies, magazines, cable tv - Customer Divisions: Grouping by common customers or clients - E.g. Ford Motor, separate divisions for passenger-car dealers, farm products customers - Geographic Division: Grouping by Regional location - Usually for government agencies D. The Matrix Structure (Grid of functional & divisional for two chains of command) - Organization combines functional and divisional chains of command in a grid so there are two command structures: Vertical and horizontal - Functional structure columns - Divisional Structure rows - Report to both E. Team-based structure (Eliminating functional barrier to solve problems) - Teams or work groups are used to improve horizontal relations and solve problem throughout the organization - Cross-functional teams: Barriers between divisions breaks down F. The Network Structure (Connecting to a central core to outside firms by computer connections) - Linked to outside independent firms by computer connections, which are used to operate as if all were a single organization - Virtual corporations - Hollow Corporations: Retains important core processes critical to performance and outsources most other processes - Organization becomes a boundaryless organization. Information technology holds everything together G. The Modular Structure (Outsourcing pieces of products to outside firms) - Outsource product and not process Contingency design: Process of fitting the organization to its environment Must consider following factors to design best kind of structure 1) Environment: Mechanistic v Organic - Mechanistic: Authority is centralized, tasks and rules specified and employees closely supervised - Rigidity and uniformity works best - Organic: Authority is decentralized, fewer rules, employees encouraged to cooperate and respond quickly to unexpected tasks - Looseness and flexibility works best - Sometimes called adhocracies 2) Environment: Differentiation v Integration - Differentiation: Tendency of the parts of an organization to disperse and fragment - More units the organization breaks down, the more differentiated - Technical specialization and division of labor - Integration: Tendency of the parts of an organization to draw together to achieve a common purpose - Specialists work together: Use of cross-functional teams and computer networks

3) Life Cycle: Four stages in life of organization - Stage 1: Birth Stage - Creation of organization, non-bureaucratic - Stage 2: Youth Stage - Stage of growth and expansion, pre-bureaucratic - Stage 3: Midlife Stage - Growth evolve into stability, bureaucratic - Stage 4: Maturity Stage - Organization becomes large and mechanistic, very bureaucratic - Danger is lack of flexibility and innovation

Chapter 9: Human Resource Management

Human resource management: Consists of the activities managers perform to plan for, attract, develop and retain an effective workforce Human resource has become part of strategic planning Establish mission and vision Establish grand strategy Formulate strategic plans Plan human resources needed Recruit and select people Orient, train and develop Perform appraisals of people Two important concepts: 1) Human Capital - Economic or productive potential of employee knowledge and actions - Right knowledge, skill and motivation to excel Give organization competitive advantage 2) Social Capital - Economic or productive potential of strong, trusting and cooperative relationships Strategic human resource planning consists of developing a systematic, comprehensive strategy for understanding current employee needs and predicting future employee needs Understanding current employee needs 1) Job analysis: Determine, by observation and analysis, the basic elements of a job 2) Job description: Summarizes what the holder of the job does and how/why he does it 3) Job specification: Describes minimum qualifications a person must have to perform the job successfully Predicting Future employee needs 1) Staffing organization might need - Can hire people to meet future strategies and work 2) The likely sources for staffing - Human resource inventory: a report listing organizations employees by name, education, training, languages and other important information Four important laws A. Labor Relations - National Labor Relations Board: Enforces procedures whereby employees may vote to have a union and for collective bargaining - Collective bargaining: consists of negotiations between management and employees about disputes over compensation, benefits, working conditions and job security B. Compensation and Benefits - Fair Labor Standards Act established minimum living standards for workers engaged in interstate commerce, including provision of a federal minimum wage, maximum work week and banning products from child labor C. Health and Safety - Occupational Safety and Health Act: Provide employees with nonhazardous working conditions D. Equal Employment Opportunity - Reduce discrimination: Equal Employment Opportunity Commission, whose job is to enforce anti-discrimination and other employment- related laws. - Three important concepts: Discrimination, affirmative action and sexual harassment Discrimination: Occurs when people are hired or promoted or denied hiring or promotion for reasons not relevant to the job - Gender, skin, religion, national origin Affirmative Action: Focuses on achieving equality of opportunity within an organization - Tries to make up for past discrimination - Actively finding, hiring and developing the talents of people traditionally discriminated against

Created tremendous opportunities for women and minorities, but white males resisted it Women and minorities hired of the basis of affirmative action felt stigmatized as unqualified and incompetent and have lower job satisfaction and more stress than those selected on merit

Sexual Harassment: Consists of unwanted sexual attention that creates an adverse work environment - Obscene gestures, sex-stereotyped jokes, sexually oriented posters, unwanted touching etc. - Quid Pro quo Tangible economic injury: Victim has to jeopardize being hired for a job or obtaining job benefits unless he/she implicitly or explicitly acquiesces - Hostile Environment Offensive work environment: Victim experiences offensive or intimidating work environment Recruiting: Process of locating and attracting qualified applicants for jobs open in the organization 1) Internal recruiting: Making people already employed by the organization aware of job openings - Job posting: Placing information about job vacancies and qualifications on notice boards, newsletters, and on intranet - Advantages: Employees tend to be inspired to greater effort and loyalty, morale is enhanced, advertising/interviewing is cheaper, fewer risks - Disadvantages: Restricts competition, limit fresh talent and viewpoints, encourage employees to think seniority would automatically result in promotion, creates vacancy elsewhere in organization 2) External recruiting: Attracting job applicants from outside the organization - Through newspapers, employment agencies, technical training schools - Many doing it through the Internet - Advantages: Specialized knowledge, fresh viewpoints - Disadvantages: Recruitment process more expensive and longer, risks are higher as person is less well known Most effective sources are employee referrals, because they want to protect own reputation Must present a realistic job preview: Gives candidate a picture of both positive and negative features of the job and the organization before he/she is hired Selection Process: Screening of job applicants to hire the best candidate Three types of selection tools 1) Background information - Application forms, Resumes and Reference Checks - Employees also dont give honest assessments in referrals: Fear of being sued by employee or new employer 2) Interviewing - Unstructured interview: Probing questions to find out about applicant - Structured Interview: Asking each applicant same questions and comparing their responses to a standardize set of answers - Situational: Focuses on hypothetical situations - Try to find out if applicant can handle difficult situations - Behavioral-Description interview: explores what applicants have actually done in the past - Assess applicants ability to influence others 3) Employment test - Personality, ability, performance - Employment tests are legally considered to consist of any procedure used in the employment selection decision process - Ability tests: Measure physical abilities, strength and stamina, mechanical ability, mental ability, clerical ability

Performance test: Some have assessment center in which management candidates participate in activities for a few days while being assessed by evaluators - Personality test: Measure traits such as adjustment, energy, sociability, independence, need for achievement 4) Other Tests - Drug testing, genetic screening, handwriting analysis Means for helping employees perform jobs 1) Orientation - Helping newcomer fit smoothly into the job and organization - First 6 months are critical - Need information about job routine, organizations missions and operations, organizations work rules and employee benefits 2) Training and development - Employee involvement offers the highest returns, followed by downsizing and then total quality management - Five steps of training: AssessmentObjectivesSelectionImplementationEvaluation - Training: Upgrading skills of technical and operational employees - Developing: upgrading skills of professionals and managers for future Different types of training or development Effectiveness depends on whether what is being taught are facts or skills On the job training method: Takes place in the work setting while employees are preforming work related tasks (Coaching, training positions, job rotation and planned work activities) Off the job training method: Classroom programs, computer-assisted instruction where computers are used to provide additional help or to reduce instructional time Performance appraisal: Assessing an employees performance at work and providing him with feedback Two kinds of performance appraisal: Fair and accurate performance appraisals are essential to effective performance management: the continuous cycle of improving job performance through goal setting, feedback and coaching, and rewards and positive reinforcement 1) Objective Appraisals - Called results appraisals - Based on facts and are often numerical - They measure results - Harder to challenge legally: not subject to personal bias - Management by objectives (MBO): Managers and employees jointly set objectives, managers develop action plan, periodically review performance, and make performance appraisals 2) Subjective Appraisals - Based on a managers perception of an employees traits or behaviors - Trait Appraisals: Rating of subjective attributes like attitude, initiative, leadership - Validity is questionable because of bias - Behavioral Appraisals: Measures specific, observable aspect of performance like punctuality - Behaviorally Anchored Rating Scale (BARS): Rates employee gradations in performance according to scales of specific behavior Who should make performance appraisals? 1) Peers, Subordinates, Customers, and Self - Self-appraisals help employees become involved in the whole evaluation process and may make them more receptive to feedback about areas needing improvement 2) 360-Degree Assessment: Appraisal by everyone - Employees are appraised not only by managerial superiors but also by peers, subordinates, and sometimes clients

Can use programs like Facebook and Twitter to solicit evaluations Matter of trust: use for developmental purposes and not to trigger pay and personnel decisions 3) Forced Ranking: Grading on a curve - All employees within business unit are ranked against one another and grades are distributed along bell curve - Encourages managers to find and remove poor performers - By pitting employees against each other, it can produce shock to morale, productivity, and loyalty Effective Performance Feedback 1) Formal Appraisal - Conducted at specific times throughout the year and are based on performance measures that have been established in advance - Give feedback, example - Advised to keep diaries about specific incidents 2) Informal Appraisal - Conducted on an unscheduled basis and consists of less rigorous indications of employee performance Forms of Compensation A. Wages or Salaries - Base pay consists of the basic wage or salary paid employees in exchange for doing their jobs B. Incentives - To induce employees to be more productive/attract and retain top performers - Need good plan design, communication and oversight C. Benefits - Additional nonmonetary forms of compensation - Designed to enrich the lives of all employees - Insurance, vacation days Three concerns of promotion: 1) Fairness 2) Nondiscrimination 3) Other resentments Transfer: Movement of employee to a different job with similar responsibility To solve organizational problems by using skills at another location, to broaden experience in being assigned to a different position, to retain their interest and motivation by being presented with a new challenge, or to solve some employee problems Dismissals: 1) Layoffs: Dismissed temporarily 2) Downsizings: permanent dismissal, no rehiring later 3) Firings: Termination for cause like absenteeism, sloppy work habits

Chapter 12: Motivating Employees

Motivation: Defined as the psychological processes that arouse and direct goal-directed behavior Must be inferred from ones behavior People have certain needs that motivate them to perform specific behaviors for which they receive rewards that feed back and satisfy the original need Types of Rewards 1) Extrinsic Reward - Satisfaction in the payoff from others e.g. money for performing a task 2) Intrinsic Reward - Satisfaction in performing the task itself e.g. feeling of accomplishment Why is motivation important? 1) Join organization 2) Stay with organization 3) Show up for work in organization 4) Be engaged while at your organization 5) Do extra for your organization What motivates people? Four perspectives: content, process, job design, and reinforcement Content Perspective/Need-based perspective: Theories that emphasizes the need that motivates people Needs: Physiological or psychological deficiencies that arouse behavior Maslows Hierarchy of Needs Theory - Proposes that people are motivated by physiological, safety, love, esteem and selfactualization - Physiological: Basic human needs like food, clothing, shelter and comfort - Safety: Physical safety and emotional security - Love: Friendship and affection - Esteem: Self-respect, status, reputation, and self-confidence - Self-actualization: Self-fulfillment, develop ones fullest potential, become the best one is capable of being - Company should try to meet employees level 1 and 2 needs first Alderfers ERG Theory: Assumes three basic needs influence behavior (Existence, relatedness, growth) - Existence: Material well-being and physiological - Relatedness: Meaningful relationships - Growth needs: Desire to grow as human beings and use abilities to fullest potential - Frustration-regression component: If higher-level needs are frustrated, then we will seek more intensely to fulfill our lower-level needs - Managers should customize their reward and recognition programs to meet employees varying needs McClellands Acquired Needs Theory: Three needs (Achievement, affiliation and power) are major motives determining peoples behavior in the workplace - Need for achievement: Desire to excel or do something better - Need for affiliation: Desire for friendly and warm relations - Need for power: Desire to be responsible for others, to influence behavior and control them - Negative kind of power: Personal Power: Desire to dominate and manipulate - Positive kind of power: Institutional Power: Solve problems that further goals Herzbergs Two Factor Theory: Work satisfaction and dissatisfaction arise from two different factors Work satisfaction from motivating factors and work dissatisfaction from hygiene factors - Hygiene factors are the lower-level needs, and motivating factors are higher-level - Separated by a zone in which employees are neither dissatisfied or satisfied

Hygiene factor: Associated with job dissatisfaction Such as salary, working conditions, interpersonal relationship and company policy (all affect job context) Motivating Factors: Associated with job satisfaction Such as achievement, recognition, responsibility (all affect job content) First eliminate dissatisfaction (ensure good working conditions) Then concentrate on spurring motivation (Provide opportunities for growth, achievement, recognition)

Process Perspectives: Concerned with the thought processes by which people decide how to act How people choose behavior to meet their needs Equity Theory: Focuses on employee perceptions as to how fairly they think they are being treated as compared with others - Employees are motivated to see fairness and resolve feelings of injustice - Key elements: Compare inputs and output and ratio - Ways employees try to reduce inequity: Reduce inputs, change output, distort inequity, change object of comparison, leave situation - Three lessons learnt: Employee perceptions are what counts (Most important), employee participation helps, having an appeal process helps Expectancy Theory: People are motivated by two things: How much they want something and how likely they think they will get it - Make the choice that promises them the greatest reward if they think they can get it - Motivation involves relationship between effort, performance and desirability of outcome - 1) Expectancy: belief that a particular level of effort will lead to a particular level of performance (Effort-to-performance expectancy) 2) Instrumentality: Expectation that successful performance of the task will lead to the outcome desired (Performance-to-reward expectancy) 3) Valence: Value, the importance a worker assigns to the possible outcome or reward - For motivation to be high, need all three elements to be high - If anyone is low, you will not be motivated - Managers should know what rewards employees value, the job objectives and performance level you desire, link rewards to performances, and employees must believe that you have the power and the will to give them the rewards promised Goal-setting Theory: Employees can be motivated by goals that are specific and challenging but achievable - Natural for people to set and strive for goals but it is only useful if people understand and accept the goals - Four elements to goal-setting theory: o Goal must be specific: Usually quantitative o Goal must be Challenging o Goal should be achievable o Goal should be linked to action plans - Need to use SMART goals also, and give feedback - Reward Job Design Perspective: Division of an organizations work among its employees and the application of motivational theories to jobs to increase satisfaction and performance - Fit people to jobs (Traditional way) or fit jobs to people (modern way) - Fitting people to jobs o Job Simplification: Reducing the number of tasks a worker performs o People will gradually adapt to any work situation Fitting jobs to people - Job enlargement: Increasing number of tasks in a job to increase variety and motivation - Can increase employee satisfaction, motivation and quality of production - But wont have significant and lasing effect on job performance

Job Enrichment: Building into a job such motivating factors such as responsibility, achievement, recognition, stimulating work and advancement - Known as vertical loading: Take on chores usually performed by managers The Job Characteristics Model: Consists of five core job characteristics that affect three critical psychological states of an employee that in turn affect work outcomes- the employee motivation, performance and satisfaction - Five Core Characteristic o Skill Variety: Skills and ability the job requires o Task Identity: All the tasks the job requires o Task significance: Whether job affects others o Autonomy: How much employee makes own decision o Feedback: Whether there is clear, direct information about performance - Characteristics affect three psychological states: Meaningfulness of work, responsibility for results and knowledge of results - These states fuel high motivation, performance, satisfaction, low absenteeism and turnover rate - Contingency Factors: whether person wants personal and psychological development - Job design works when employees are motivatedTo be motivated: Need necessary knowledge and skill, desire for personal growth, and context satisfaction - Job design works: Positively associated with employee performance, job satisfaction, organizational commitment and physical and psychological well-being - Apply: Diagnose work environment, determine if job redesign is appropriate, consider how to redesign the job Reinforcement Perspectives: Attempts to explain behavior change by suggesting that behavior with positive consequences tends to be repeated, whereas behavior with negative consequences tend s not to be repeated Use of reinforcement theory is to change human behavior: Behavior modification Four Types of Reinforcement 1) Positive: Use of positive consequences to encourage desirable behavior - Strengthen behavior 2) Negative: Removal of unpleasant consequences following a desired behavior - Maintain Behavior 3) Extinction: Withholding or withdrawal of positive rewards for desirable behavior, so that the behavior is less likely to occur in the future - Weaken behavior 4) Punishment: Application of negative consequences to stop or change undesirable behavior - Inhibit behavior Use Reinforcement to motivate employees Positive: Reward only desirable behavior, give rewards as soon as possible, be clear about what behavior is desired, have different rewards and recognize individual differences Punishment: Punish only undesirable behavior, give reprimands or disciplinary actions as soon as possible, be clear about what behavior is undesirable, administer punishment in private, combine punishment and positive reinforcement Characteristics of the Best Compensation plans: - Rewards must be linked to performance and be measurable - Rewards must satisfy individual needs - Rewards must be agreed on by manager and employees - Rewards must be believable and achievable Popular Incentive Compensation plans: - Pay-for-performance: Base pay on ones results o Piece rate: Paid according to how much they output produced o Sales commission: Percentage of earnings the company made from their sales

Bonuses: Cash rewards given to employees who achieve specific performance objectives Profit Sharing: Distribution to employees of a percentage of companys profits Gainsharing: Distribution of savings to groups of employees who reduced costs and increased measureable productivity Stock Options: Certain employees given the right to buy stock at a future date for a discounted price (They will want to work hard to make stocks rise) Pay-for-knowledge: Ties employees pay to the number of job-relevant skills or academic degrees they earn

Non-monetary ways of motivating employees; Employees will leave if needs arent fulfilled - Work-life balance - The need to expand skills - The need to matter Need to have flexible workspace Work-life benefits: Employer increase productivity and commitment by removing certain barriers that make it hard for people to strike a balance between their work and personal lives Surroundings: Cubicles may stifle creativity and morale of many workers Skill Building and educational opportunities: Allow workers to be matched with co-workers for shawdowing Sabbaticals: Give time off to recharge and also cement loyalty to organization