Managing Lesson 1 Managing in the New Landscape Factors shaping the competitive landscape of businesses today: 1.

Globalization Affects how we deal and what customers expect from us; Internet 2. Technological Change 3. Knowledge Management Practices aimed at discovering and harnessing an organizations intellectual resources 4. Collaboration Across Boundaries Managing for Competitive Advantage What is a competitive advantage? Your companys advantage over competitors and one that distinguishes you from others. To survive and win, you have to gain a competitive advantage over your competitors and earn a profit What are some competitive advantages of Filipino companies? Managing for Competitive Advantage To succeed, managers must deliver (fundamental success drivers): 1. Innovation Introduction of new goods and services 2. Quality Excellence of your products (goods or services) 3. Service Speed and dependability with which an organization delivers what customers want Managing for Competitive Advantage To succeed, managers must deliver (fundamental success drivers): 1. Speed Fast and timely execution, response, and delivery of results; how fast can you respond to market changes? 2. Cost competitiveness Keeping costs low to achieve profits and be able to offer prices that are attractive to consumers Managing for Competitive Advantage To succeed, managers must deliver (fundamental success drivers): Which one to deliver? Dont focus on one aspect of performance and neglect the others. You might be better at or more interested in one than the others, but you should strive for all five. Functions of Management Management is the process of working with people and resources to effectively and efficiently accomplish organizational goals. Effectiveness vs Efficiency Changing functions but basic ones remain Functions of Management Planning: Delivering Strategic Value Systematically making decisions about the goals and activities that an individual, group, work unit or overall organization will pursue Set the stage for action and major achievements Must deliver strategic value Value is the monetary amount associated with how well a job, task, good, or service meets users needs Functions of Management Organizing: Building a Dynamic Organization Assembling and coordinating human, financial, physical, informational, and other resources needed to achieve goals Building a dynamic organization means putting the right people/things in their right places Includes staffing

Functions of Management Leading: Mobilizing People Managers efforts to stimulate high performance by employees Includes motivating and communicating with others Day-to-day contact with people, helping to guide and inspire them toward achieving team and organizational goals Is in all levels of organizations Functions of Management Controlling Learning and Changing Monitoring performance and making needed changes Asks the questions: Are outcomes consistent with our goals? Controlling makes sure goals are met When things dont work out as planned, monitor and correct! Management Levels and Skills Top-Level Managers s enior executives responsible for overall management and effectiveness of organization Middle-Level Managers M anagers located in middle layers of the organizational hierarchy reporting to top-level executives Frontline Managers Lower-level managers who supervise the operational activities of the organization Management Skills Essential skills: 1. Technical Ability to perform a specialized task involving a particular method or process 2. Interpersonal and Communication Ability to lead, motivate and communicate effectively with others 3. Conceptual and Decision Making Ability to identify and resolve problems for benefit of organization and members Managerial Roles Managerial Career Managers must: have EQ be both a specialist and a generalist be self reliant be connected actively manage relationship with organization Evolution of Management

Fayols 14 Principles of Management

Open Systems Theory

The External Environment and Organizational Culture Lesson 2 Systems Theory of the Organization

1. Open systems organizations that are affected by and that affect their environment 2. Inputs goods and services organizations take in and use to create products or services (raw materials, services, equipment, capital, information) 3. Outputs products and services organizations create (products, services) 4. External environment all relevant forces outside a firms boundaries such as competitors, customers, government and the economy 1. Competitive environment immediate environment surrounding a firm (suppliers, customers, rivals) 2. Macroenvironment general environment (governments, economic conditions, fundamental factors that affect generally ALL organizations)

The Macroenvironment MACROENV IRONMENT 1. Law s and regulations - regulators such as DENR, DFA, SEC, BIR 2. Eco nomy unemploym ent, fluctuation of stock market, increased competition from domestic and foreign firms 3. Technology technological advances create new products, advanced production techniques and better ways of managing and communicating 4. Demographics refers to measures of various characteristics of the people who make up groups or other social units; work groups, organizations, countries, markets and societies can be described statistically by referring to demographic measures such as members age, gender, family size, income, education, occupation 5. Social issues and natural environment examples are gender and religion issues, environmental issues COMPETITIVE ENVIRONMENT 1. Competitors small domestic firms, strong regional competitors, big new domestic companies, overseas firms, newer entries 2. New entrants barriers to entry are conditions that prevent the companies from entering an industry 3. Substitutes and complements 1. Substitutes potential threat, customers use it as an alternative, buying less of one kind of product but more of a another 2. Ex: cotton-polyester, coffee-energy drinks, music CDs-MP3s 3. Complements potential opportunity because customers buy more of a given product if they also demand more of the complementary product 4. Ex: computer printer- ink cartridges, apartment-furniture 4. Suppliers providers of goods and services, not necessarily tangible 1. Danger exists when over-depending on supplier 2. Switching costs fixed costs buyers face when they change suppliers 3. Supply chain management managing of the network of facilities and people that obtain materials from outside the organizations, transform them into products and distribute them to customers 5. Customers 1. Final consumers purchase products in their finished form 2. Intermediate customer - customer who purchases raw materials or wholesale products before selling them to final customers Environmental Analysis Needed in making managerial decisions especially if little to no information is available Environmental uncertainty lack of information needed to understand or predict the future Environmental scanning searching for and sorting through information about the environment Environmental Analysis Competitive intelligence information that helps managers determine how to compete better Scenario development narrative that describes a particular set of future conditions; breaks down environmental factors into unattractive and attractive points Forecasting method for predicting how variables will change the future

Benchmarking process of comparing organizations practices and technologies with those of other companies; Used to identify best-in-class performance and compares it against own firm Responding to the Environment A. Adapting to the environment: Changing yourself Empowerment sharing power with employees, thereby enhancing their confidence in their ability to perform their jobs and their belief that they are influential contributors to the organization Buffering creating supplies of excess resources in case of unpredictable needs Smoothing leveling normal fluctuations at the boundaries of the environment Flexible processes methods for adapting the technical core to changes in the environment; ex: one size/design fits all B. Influencing your environment Independent strategies strategies that an organization acting on its own uses to change some aspect of its current environment; example: aggressive strategies Comparative strategies strategies used by two or more organizations working together to manage the external environment Responding to the Environment C. Changing the environment you are in Domain selection is the entrance by a company into another suitable market or industry Diversification firm invests in different types of business or products or when it expands geographically to reduce its dependence on a single market or technology Merger two or more firms combine Acquisition one firm buying another Divestiture firm selling one or more businesses Prospectors companies that continually change the boundaries for their task environments by seeking new products and merging or acquiring new enterprises Defenders companies that stay within a stable product domain as a strategic maneuver Responding to the Environment D. Choosing a Response Approach 1. Change appropriate elements of the environment 2. Choose responses that focus on pertinent elements of the environment 3. Choose responses that offer the most benefits at the lowest cost Culture and the Internal Environment of Organizations Organizational culture set of important assumptions about the organization and its goals and practices that members of a company share Cultures can be weak or strong, can influence peoples behaviors, way of thinking Diagnosing culture Managing culture

CHAPTER 3: MANAGERIAL DECISION MAKING I. Characteristics of Managerial Decisions A. Lack of Structure- the usual state of affairs in managerial decision making 2 Types of Decisions: a. Programmed Decisions- decisions encountered and made before, having objectively correct answers, and solvable by using simple rules, policies, or numerical computations b. Nonprogrammed Decisions- new, novel, complex decisions having no proven answers; decision maker must create or impose a method for making the decision B. Uncertainty and Risk a. Certainty- the state that exists when decision makers have accurate and comprehensive information b. Uncertainty- the state that exists when decision makers have insufficient information c. Risk- the state that exists when the probability of success is less than 100 percent and losses may occur

C. Conflict- opposing pressures from different sources, occurring on the level of psychological conflict between individuals or groups 2 Levels of Conflict: a. Psychological Conflict- happens within the individual decision makers when several options are attractive, or when none of the options is attractive b. Interpersonal Conflict- may occur between individuals or groups II. The Stages of Decision Making 1. Identifying and Diagnosing the Problem- recognizing that a problem exists and must be solved; realizing the discrepancies between the current state and the desired state. Discrepancies in organizational or unit performance may be detected by comparing current performance against (1) past performance, (2) the current performance of other organizations or units, or (3) future expected performance as determined by plans and forecasts. 2. Generating Alternative Solutions- developing alternative courses of action aimed at solving the problem a. Ready- made solutions- ideas that have been seen or tried before; may follow the advice of others who have faced similar problems b. Custom- made solutions- new, creative solutions designed specifically for the problem 3. Evaluating Alternatives- determining the value or adequacy of the alternatives; predicting the consequences that will occur if the various options are put into effect Contingency plans- alternative courses of action that can be implemented based on how the future unfolds 4. Making the Choice 3 important concepts: a. Maximizing- a decision realizing the best possible outcome; maximizing results at the greatest benefit at the lowest cost, with the largest total expected return b. Satisficing- choosing an option that is acceptable, although not necessarily the best or perfect; choosing the first option that is minimally acceptable or adequate -sometimes a product of laziness c. Optimizing- achieving the best possible balance among several goals 5. Implementing the Decision- chosen alternative is implemented Steps: 1) Determine how things will look when the decision is fully operational. 2) Chronologically order, perhaps with a flow diagram, the steps necessary to achieve a fully operational decision. 3) List the resources and activities required to implement each step. 4) Estimate the time needed for each step. 5) Assign responsibility for each step to specific individuals. 6. Evaluating the Decision - Final stage in the decision-making process. Involves collecting information on how well the decision is working. Decision evaluation is useful whether the conclusion is positive or negative. Positive feedback suggests the decision should be continued and perhaps applied elsewhere in the organization. Negative feedback means either (1) Implementation will require more time, resources, effort, or thought. (2) The decision was a bad one Inappropriate decision cycles back to the first stage. The Best Decision

 Vigilance - occurs when the decision makers carefully and conscientiously execute all six stages of decision making, including making provisions for implementation and evaluation Managers should improve the processes they use: Learn to manage stress Get enough rest Put distractions aside Define the consequences you are trying to achieve and make sure the data you gather match the goals for your decision. Envision how your decision can play out when you implement it. Develop the strength of character to take responsibility for the consequences of your decision. Encourage debate so that you can see alternatives. If you are the decision maker, you must eventually end the debate, exercise courage, and act on your responsibility as decision maker. Barriers to Effective Decision Making 1) Psychological Biases a) Illusion of control - is a belief that one can influence events when one has no control over what will happen b) Framing effects - a decision bias w/c refers to how problems or decision alternatives are phrased or presented and how these subjective influences can override objective facts c) Discounting the future - a bias weighing short-term costs and benefits more heavily than longer-term costs and benefits. 2) Time Pressure - Acting quickly and keeping in pace. - Skimp on analysis (not be too vigilant), suppress conflict, and make decisions on ones own without consulting other managers. - May speed up decision making but they reduce decision quality. Speed Trap Syndrome 3) Social Realities - many decisions are the result of intensive social interactions, bargaining, and politicking. Decision Making in Groups Potential Advantages 1) More information is available when several people are making the decision. 2) A greater number of perspectives on the issues, or different approaches to solving the problem, are available. 3) Group discussion provides an opportunity for intellectual stimulation. These three potential advantages of using a group improve the odds that a more fully informed, higher-quality decision will result. Managers should involve people with different backgrounds, perspectives, and access to information. 4) People who participate in a group discussion are more likely to understand why the decision was made. 5) Group discussion typically leads to a higher level of commitment to the decision. The last 2 improve chances that the decision will be implemented successfully. Managers should involve people who will be responsible for implementing. Potential Disadvantages 1) One person dominates. 2) Satisficing is more likely with groups. 3) Pressure to avoid disagreement can lead to a phenomenon called GROUPTHINK. Groupthink a phenomenon that occurs in decision making when group members avoid disagreement as they strive for consensus.

4) Goal displacement a condition that occurs when a decision-making group loses sight of its original goal and a new, less important goal emerges. MANAGING GROUP DECISION MAKING I. Leadership Style Leader must attempt to minimize process-related problems. a) Avoid domination leader should avoid dominating the discussion or allowing another individual to dominate. b) Encourage input less vocal members should be encouraged to air their opinions and suggestions, and all members should be asked for dissenting viewpoints. c) Avoid groupthink and satisficing the leader should be alert to the dangers of groupthink to pressure people into conforming. d) Remember goals 1) Dont lose sight of the problem. 2) Keep moving: slow-moving organizations whose group members cant come to an agreement will be standing still while their competitors move ahead. II. Constructive Conflict - Needed in group decision-making so that the group will not lead to groupthink, uncreative solutions, and a waste of knowledge and diverse viewpoints that individuals bring to the group. 1) Cognitive conflict - Most constructive type of conflict; issues-based differences in perspectives or judgments about an issue 2) Affective conflict - emotional disagreement directed towards other people 3) Stay task-related 4) Be impersonal 5) Play devils advocate - Assign someone with the job of criticizing ideas to ensure that their downsides are fully explored 6) Dialectic method - structured debate comparing two conflicting courses of action III. Encouraging Creativity You are being creative if you: - Bring a new thing into being (creation) - Join two previously unrelated things (synthesis) - Improve something or give it a new application (modification) Brainstorming - process in which group members generate as many ideas about a problem as they can. a) Avoid criticizing b) Exhaust ideas c) Combine ideas

ORGANIZTIONAL DECISION MAKING I. Constraints on Decision Makers Financial capital or product markets may make an expensive new venture impossible. Legal restrictions may constrain the kinds of international business activities in which a firm can participate. Human labor unions may defeat a contract proposed by management, and managers and investors may block a takeover attempt. II. Models of Organizational Decision Processes 1. Bounded Rationality - proposed by Hebert Simon; decision makers cannot be perfectly rational

- decision makers cannot be completely rational because of (1) incomplete info (2) complexity of the problem (3) human limitations (4) time constraint (5) conflicting goals 2. Incremental Model - major solutions arise through a series of smaller decisions 3. Coalitional Model - groups with differing preferences use power and negotiation to influence decisions 4. Garbage Can Model - depicts a chaotic process and seemingly random decisions III. Decision Making in a Crisis In crises, managers must make decisions under a great deal of pressure History has shown that crisis breeds opportunity: Carnegie Steel Hewlett-Packard IT-related crisis Effective Plan for Crisis Management (CM): Strategic Actions integrating CM into strategic planning and official policies. Evaluation and Diagnostic Actions conducting audits of threats and liabilities Technical and Structural Actions creating a CM team and dedicating a budget to CM Communication Actions providing training for dealing with the media, local communities, and police and government officials Psychological and Cultural Actions showing a strong top management commitment to CM
CHAPTER 4: PLANNING and STRATEGIC MANAGEMENT PLANNING Conscious, systematic process of making decisions about goals and activities that an individual, group, work unit, or organization will pursue in the future. Directed and controlled by managers and often draws on the knowledge and experience of employees throughout the organization. BASIC PLANNING PROCESS

1. 2. 3. 4. 5.

Step 1: Situational Analysis A process planners use within time and resource constraints, to gather, interpret, and summarize all information relevant to the planning issue under consideration Studies past events, examines current conditions, and attempts to forecast future trends. Focuses on the internal forces at work in the organization and, consistent with open-systems approach, examines influences from the external environment. Step 2: Alternative Goals and Plans

GOALS Targets or ends the manger wants to reach. It has to be SMART to be effective: o Specific precise, describing particular behaviours and outcomes o Measurable should qualify the desired results. o Attainable (but challenging) - attain goals they are responsible for but be challenged to work hard and be creative. o Relevant - contribute to the organizations overall mission, with consistency in its values and ethical standards o Time-bound specify a target date for completion. Planning Actions or means the manager intends to use to achieve goals. Contingency Plans Referred as what if plans. Sets of actions to be taken when a companys initial plans havent worked well or if events in the external environment require sudden change. Step 3: Goals and Plan Evaluation Evaluate the advantage, disadvantages, and potential effects of each alternative goal and plan. Prioritization and elimination of some. Consideration of implications of alternative plans for meeting high priority goals. Step 4: Goals and Plan Selection Assessment and Selection of the most appropriate and feasible. Process: identify the priorities and trade-offs among the goals ad plans. Scenario - a narrative that describes a particular set of future conditions. Step 5: Implementation Employees usually better informed, more committed, and more highly motivated when a goal or plan is one that they helped develop. A plan should be linked in the organization, particularly the budget and reward system. Commissions, salaries, promotions, bonuses COST - Tying plans to a firms financials is the key element of success. Step 6: Monitor and Control Essential Continuous monitoring of actual performance of their work unit against the units goal and plans. Develop control systems to measure the performance and allow to take corrective actions. LEVELS of PLANNING Strategic Planning Involves making decisions about the organizations long term goals and strategies. Senior Executives responsible for the development and execution of the strategic plans. Strategic Goals Major targets or end results that relate to the long-term survival, value, and growth of the organization. Reflects effectiveness (provide appropriate outputs) and efficiency (a high ratio of outputs to inputs) Strategic Goals Examples: Increasing Market Share Improving Profitability Booting return of investment Fostering both quantity and quality outputs Increasing productivity Improving customer service Contributing to society Strategy Pattern of actions and resource allocations designed to achieve the goals of the organization. 5 Broad Questions 1. Where will be active?

2. How will we get there? 3. How will we win the marketplace? 4. How fast will we move and in what sequence will we make changes? 5. How will you obtain financial returns? Tactical Planning Translates broad strategic goals and plans into specific goals and plans that are relevant to a definite portion of the organization. Focus on major actions a unit must take to fulfill its part of the strategic plan. Operational Planning Identifies specific procedures and processes required at lower levels of the organization. Frontline managers usually focus on routine task such as production runs, delivery schedules.

ALIGNING TACTICAL, OPERATIONAL, and STRATEGIC PLANNING Strategic Map Provides a tool manager can use to communicate their strategic goals and enable members of the organization at every level to understand the part they will play in helping to achieve them. Four Key Drivers (Balanced Scorecard) a. Skills of its people and their ability to grow and learn b. Effectiveness of its internal processes c. Ability to deliver value to customers d. Grow its financial assets.

Strategic Planning Innovation New ideas from managers throughout the organization can contribute to a plans effectiveness. Strategic Management Involves manager from all parts of the organization in the formulation and implementation of strategic goals and strategies.

Integrates strategic planning and management into single process.

Strategic Management Process Step 1. Establishment of Mission, Vision and Goals Mission A clear and concise expression of the basic purpose of the organization. It describes what the organization does, who it does it for, its basic good or service, and its values. Strategic Vision It provides a perspective on where the organization is headed and what it can become. The long-term direction of the company and its strategic intent Strategic Goals Evolv e from the mission and vision of the organization. Step 2. Analysis of External Opportunitie s and Threats Environment al Analysis: Other forces: Orga nizational Stakeholders Econ omic conditions Tech nological factors Step 3. Analysis of Internal

Strengths and Weaknesses Resources Inputs to production that can be accumulated over time to enhance the performance of a firm tangible assets intangible assets Resources as source of competitive advantage: 1. If the resource is instrumental for creating customer value 2. If resources are rare and not equally available to all competitors 3. If resources are difficult to imitate 4. When they are well-organized Benchmarking The process of assessing how well one companys basic function and skills compare with those of another company or set of companies. Internal Benchmarking Benchmarking their different internal operations and departments against one another to disseminate the companys best practices throughout the organization and thereby gain a competitive advantage. Step 4. SWOT Analysis and Strategy Formulation SWOT Analysis Helps managers summarize the relevant, important facts from their external and internal analyses. Then helps the organization formulate strategies that would take advantage of available opportunities by capitalizing on the organizations strengths, neutralizing its weaknesses, and countering potential threats. Analysis of the firms internal strengths and weaknesses and its external opportunities and threats. o Strengths refers to internal resources, might include a skilled management, positive cash flow or a strong brand name o Weaknesses might be a lack of spare production capacity or a weak brand name o Opportunities as well as threats arise in the macro environment and competitive environment. It could be a new technology. o Threats threat of new entrants in an underserved niche Aides managers in summarizing relevant, important facts from their internal and external analyses. Microsoft Strengths size, earnings, dominant OS Weaknesses losing markets, share in internet search engines. Threat Google Opportunity acquire DoubleClick Contingency planning requires evolving the plans to mitigate uncertainties SWOT Analysis can also be used by individuals, this process is also known as self-SWOT analysis. Strategy Formulation (1 )Corporate strategy identifies the set of businesses, markets, or industries in which the organization competes and the distribution of resources among those businesses. It has 4 basic alternatives ranging from very specialized to highly diverse. These are the following: 1. Concentration strategy 2. Vertical integration 3. Concentric diversification 4. Conglomerate diversification Concentration strategy focuses on a single business competing in a single industry. Vertical integration strategy involves expanding the domain of the organization into supply channels or to distributors. Example: Ford. Concentric diversification a strategy used to add new businesses that produce related products or are involved in related markets and activities. It allows the firm to take advantage of their strength in one business and gain advantage in another.

Conglomerate diversification involves expansion into unrelated businesses. Example: General Electrics ownership of NBC. Business portfolio is the diversified businesses of an organization. The BCG matrix is one of the most popular techniques in analyzing a firms strategy in managing its portfolio. Summary of Corporate Strategies

The BCG Matrix

The business is represented by a circle whose size depends on the businesss contribution to corporate revenues. Question marks high-growth, weak-competitive-position businesses. They require substantial investment to improve their position; otherwise divestiture is recommended. Stars high-growth, strong-competitive-position businesses. They require heavy investment, but their strong position allows them to generate needed revenues. Cash cows low-growth, strong-competitive-position businesses. They generate revenues in excess of their investment needs and therefore fund other businesses. Dogs low-growth, weak-competitive-position businesses. The remaining revenues from these businesses are realized, and then the business is divested. Trends in corporate strategy Most observers agree that organizations usually perform better if they implement a more concentric diversification strategy, in which businesses are related somehow or similar to one another. (2) Business Strategy defines the major actions by which an organization builds and strengthens its competitive position in the marketplace. 2 generic business strategies: 1. Low-cost strategies 2. Differentiation strategies Low-cost strategies a strategy an organization uses to build competitive advantage by being efficient and offering a standard, no-frills product. This strategy helps with operational planning. Differentiation strategy the companys attempt to be unique in its industry or market segment along some dimensions that customers value. This includes high quality, excellent marketing or superior service. High-quality strategy is often more difficult for competitors to imitate. (3) Functional strategy implemented by each functional area (production, human resource, marketing, R&D, finance, and distribution) to support the business strategy.

Step 5: Strategy Implementation 2 major trends in strategy implementation: 1. Organizations are adopting a more comprehensive view of implementation. 2. Many organizations are extending the more participative strategic management process to implementation. 4 related steps in strategy implementation 1. Define strategic tasks. Articulate in simple language what a particular business must do to create or sustain a competitive advantage. 2. Assess organization capabilities. Evaluate the organizations ability to implement strategic tasks. 3. Develop an implementation idea. A philosophy statement, communicated in terms of value, is the outcome of this process. 4. Create an implementation plan. The top management team, the employee task force, and others develop the implementation plan. The employee task force continues its work by providing feedback about how others in the organization are responding to the changes. Six different barriers to strategy implementation and provides a description of some key principles for overcoming these silent killers:

Step 6: Strategic Control Strategic control system designed to support managers in the organizations progress with its strategy and, when discrepancies exist, taking corrective action. Most strategic control system includes a budget to monitor and control major financial expenditures. Budget establishes spending limits 2 types of budgets 1. Strategic budget used to create and maintain long-term effectiveness 2. Operational budget tightly monitored to achieve short term efficiency. Chapter 7 Fundamentals of Organizing Authority in Organizations inside directors 3 Major Sets of Duties

1) Selecting, assessing, rewarding and replacing the CEO 2) Determining the firms strategic direction and reviewing financial statements 3) Ensuring ethical, socially responsible and legal conduct Top Management Team - typically composed of the CEO, President, COO, CFO and other key executives Hierarchical Levels Span of Control 1. Narrow enough to permit managers to maintain control over subordinates, BUT 2. Not so narrow that it leads to overcontrol and an excessive number of managers who oversee a small number of subordinates Delegation Advantages of Delegation Decentralization Horizontal Structure As the tasks of organizations become increasingly complex, the organization inevitably must be subdivided - that is, departmentalized into smaller units or departments. 1. Line Departments 2. Staff Departments Line Department those that have responsibility for the principal activities of the firm units that directly deal with the organizations primary goods or services Staff Department those that provide specialized or professional skills that support the line departments includes research, legal, accounting, public relations and human resources departments Basic Approaches to Departmentalization Functional Organization Divisional Organization Matrix Organization Network Organization Functional Organization jobs are specialized and grouped according to business functions and the skills they require production, marketing, human resources, research and development, finance, accounting etc. Advantages Performance standards are better maintained. Monitoring of the environment is more effective. People have greater opportunity for specialized training and in-depth skill development. Decision making and lines of communication are simple and clearly understood. Economies of scale Divisional Organization In this structure, separate divisions may act almost as separate businesses or profit centers and work autonomously to accomplish the goals of the entire enterprise. Departmentalization that groups units around products, customers or geographic regions. Product Divisions All functions that contribute to a given product are organized under one manager. In the product organization, managers in charge of functions for a particular product report to a product manager. Advantages Information needs are managed more easily. People have a full time commitment to a particular product line. Task responsibilities are clear. People receive broader training. Customer and Geographic Divisions The primary advantage of both product and customer/regional approaches to departmentalization is the ability to focus on customer needs and provide faster, better service.

Functional vs Divisional Matrix Organization Hybrid form of organization in which functional and divisional forms overlap. Managers and staff personnel report to two bosses- a functional manager and a divisional manager. Have a dual rather than a single line of command. Advantages Disadvantages Matrix Diamond Network Organization Collection of independent, mostly single-function firms that collaborate to produce good or service. Dynamic of Network- composed of temporary arrangements among members that can be assembled and reassembled to meet a changing competitive environment. Organizational Integration Fundamentals of Organization There are two fundamental concepts around which organizations are structured Differentiation Integration Coordination by Standardization When organizations coordinate activities by establishing routines and standard operating procedures that remain in place over time, we say that work has been standardized To improve coordination, organizations may also use formalization Presence of rules and regulations governing how people in the organization interact Coordination by Plan Interdependent units are required to meet deadlines and objectives that contribute to a common goal They are free to modify and adapt their actions. Coordination by Mutual Adjustment The simplest and most flexible approach to coordination Units interact with one another to make accommodations in order to achieve flexible coordination This approach may take more time than other coordination models Chapter 5 ETHICS AND CORPORATE SOCIAL RESPONSIBILITY Ethics - The system of rules that governs the ordering of values. - Its aim is to identify both the rules that should govern peoples behaviour and the goods that are worth seeking. - Guided by Values which are principles of conduct such as honesty, loyalty, being fair, etc. Ethical Issue A situation, problem, or opportunity in which an individual must choose among several actions that must be evaluated as morally right or wrong. Business Ethics Comprises the moral principles and standards that guide behaviour in the world of business. Ethical Systems A. Universalism States that all people should uphold certain values, such as honesty, that society needs to function. Universal values are principles so fundamental to human existence that they are imporatant in all societies ex, rules against murder, deceit, torture, and oppression. Caux Principles Kyosei living and working together for the common good, allowing cooperation and mutual prosperity to coexist with healthy and fair competition. Human Dignity value of each person as an end, not a means to the fulfilment of others purposes.

B. Egoism and Utilitarianism Egoism Defines acceptable behaviour as that which maximizes consequences for the individual. Doing the right thing is defined by egoism as do the act that promotes the greatest good for oneself. Utilitarianism The greatest good for the greatest number should be the overriding concern of decision makers. C. Relativism Philosophy that bases ethical behaviour on the opinions and behaviours of relevant other people. Acknowledges the existence of different ethical viewpoints. D. Virtue Ethics Classification of people based on their level of moral judgement. Societys rules provide a moral minimum, and then moral individuals can transcend rules by applying their personal virtues. Kohlbergs model of cognitive moral development classifies people based on their level of moral judgement: Preconventional Stage decisions are based on concrete awards and punishments and immediate selfinterest. Conventional Stage conform to the exectations of ethical behaviour held by groups or institutions Principled Stage sees beyond authority, laws, and norms and following their self-chosen ethical principles.

The Ethics Environment Ethical Climate In an organization, the processes by which decisions are evaluated and made on the basis of right and wrong. Ethics may also be influenced by the companys work environment. Unethical corporate behaviour may be the responsibility of an unethical individual, but it often reveals a company culture that is ethically lax. Danger Signs What are some of the danger signs that an organization may be allowing or even encouraging unethical behaviour? 1. Excessive emphasis on short-term revenues over longer-term considerations. 2. Failure to establish a written code of ethics. 3. A desire for simple, quick fix solutions to ethical problems. 4. An unwillingness to take an ethical stand that may impose financial costs. 5. Consideration of ethics solely as a legal issue or a public relations tool. 6. Lack of clear procedures for handling ethical problems. 7. Responding to the demands of shareholders at the expense of other constituents. Ethical Leader Set a goal for yourself to be seen by others as a moral person and also as a moral manager, someone who influences others to behave ethically. Ethics Codes Must be carefully written and tailored to individual company philosophies. Most ethics codes address subjects such as employee conduct, community and environment, shareholders, customers, suppliers and contractors, political activity, and technology. To make an ethics code effective: 1. Involve those who have to live with it in writing the statement; 2. Focus on real-life situations that employees can relate to; 3. Keep it short and simple, so it is easy to understand and remember; 4. Write about values and shared beliefs that are important and that people can really believe in; 5. Set the tone at the top, having executives talk about and live up to the statement.

Ethics Program Common Ethics Program: Formal Ethics Code- articulates the companys expectations regarding ethics Ethics Committees- develop policies, evaluate actions, and investigate violations Ethics Communication Systems- give employees a means of reporting problems or getting guidance Ethics Officers or Ombudspersons- investigate allegations and provide education Ethics Training Program and disciplinary processes for addressing unethical behavior A. Compliance-based ethics program Designed by corporate counsel to prevent, detect, and punish legal violations Increase surveillance and controls on people and impose punishments on wrongdoers Ex: Yahoo! B. Integrity-based ethics program Concerned with the law but also with instilling in people a personal responsibility for ethical behavior Companies and people govern themselves through a set of guiding principles that they embrace Ex: American Disabilities Act ETHICAL DECISION MAKING Making ethical decisions takes moral awareness (realizing the issue has ethical implications), moral judgment (knowing what actions are morally defensible), and moral character (the strength and persistence to act in accordance with your ethics despite the challenges). Ex: American International Group (AIG)

COURAGE Courage plays a role in the moral awareness involved in identifying an act as unethical, the moral judgment to fully consider the repercussions, and the moral character to take the ethical action. Whistle blowing- telling others, inside or outside the organization, of wrongdoing. Ex: PepsiCo and Coca-cola

CORPORATE SOCIAL RESPONSIBILITY Corporate Social Responsibility- the obligation toward the society assumed by business Economic Responsibilities- to produce goods and services that society wants at a price that perpetuates the business and satisfies its obligations to investors Legal Responsibilities- to obey local, state, federal, and relevant international laws Ethical Responsibilities- include meeting other societal expectations, not written as law. Philanthropic Responsibilities- additional behaviors and activities that society finds desirable and that the values of the business support

Transcendent Education- an education with 5 higher goals that balance self-interest with responsibility to others a) Empathyb) Generativity c) Mutuality d) Civil Aspiration e) Intolerance of Ineffective Humanity Contrasting Views Goals of the Corporation Stockholder Wealth Maximization

 The primary goal for management decisions; considers the risk and timing associated with expected earnings per share in order to maximize the price of the firms common stock. Social Responsibility? He generally, indeed, neither promotes the public interest, nor knows how much is he promoting it. By directing that industry in such a manner as its produce may be of the greatest value, he intends only his own gain, and he is in this led by an invisible hand to promote an end which was no part of his intention. Nor is it always the worse for society that it was no part of it. By pursuing his own interest he frequently promotes that of the society more effectually than when he really intends to promote it.-Adam Smith It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but it is from their regard to their own self-interest.-Adam Smith The business of business is business.-Milton Friedman

Do Corporations have Social Responsibility? Managers are agents of shareholders and thus are employed to make money Managers are not trained for public policy decisions You may or may not agree but we can CONCLUDE: that the primary goal of a firm should be to make enough profit to cover the costs because if a firm fails, no other social responsibility can be met Reconciliation: A Paradigm Shift Profit maximization and social responsibility used to be regarded as antagonistic, leading to opposing policies. But the two views can converge. Examples: Sustainability as a competitive advantage (Hewlett-Packard) Sustainability efforts improve corporate image Profit maximization and social responsibility used to be regarded as antagonistic, leading to opposing policies. But the two views can converge. Examples: Sustainability as a competitive advantage (Hewlett-Packard) Sustainability efforts improve corporate image Reconciliation Consumer demand for environmentally safe products and packages is high. Public opinion demanding that firms conduct business in ways that preserve the natural environment is strong. Many consumers, suppliers, distributors, and investors shun doing business with environmentally weak firms. Liability suits and fines against firms having environmental problems are on the rise Good ethics is just good business! Techniques in Achieving Sustainability Costbenefit analysis is a process for calculating and comparing benefits and costs of a project or decision (aka capital budgeting) Ecocentric management has as its goal the creation of sustainable economic development and improvement of quality of life worldwide for all organizational stakeholders Stakeholders - a party that has an interest in an enterprise which includes investors, employees, customers and suppliers, community, and government.

Life-cycle analysis is a process of analyzing all inputs and outputs, through the entire "cradle-tograve" life of a product, to determined the total environmental impact of the production and use of a product What Managers Can Do: 1. Develop a mission statement and strong values supporting environmental advocacy. 2. Establish a framework for managing environmental initiatives.

3. Engage in "green" process and product design. 4. Establish environmentally focused stakeholder relationships 5. Provide internal and external education. International Management Chapter 6 Global Environment Global economy is becoming more integrated than ever Different economic and political associations that gather countries and regions World economy is affected by 4 types of economic classifications: industrialized; oil-exporting; middle-income; and less developed Global Environment Some economic groups and clusters are: 1. EU Group of wealthy and less wealthy European countries Euro currency 2. China and the Pacific Rim Japan, China, South Korea, India are some of Asias aggressive economies 3. The Americas and NAFTA NAFTA or North America Free Trade Association is an economic pact that combines the economies of United States, Canada, Mexico Consequences of Global Economy 1. International trade expansion 2. Increase in Foreign Direct Investment (FDI) 3. Imports are penetrating deeper in worlds largest economies 4. Stronger and more aggressive foreign competition for local companies 5. Outsouring Contracting with an outside provider to produce one or more of an organizations goods or services 6. Offshoring Moving work to other countries typically where wages are lower Global Strategy Pressures for Global Integration Universal needs Pressures to reduce costs Global strategic coordination Pressures for Local Responsiveness Emerge when: Consumer tastes and preferences differ significantly Differences exist in traditional practices Differences exist in distribution and sales practices Economic and political demands of host country

Choosing a Global Strategy

Choosing a Global Strategy There are 4 organizational models to approach international competition: 1. International 2. Multinational 3. Global 4. Transnational These models depend on the firms position on the integration-responsiveness grid Choosing a Global Strategy 1. International Model Composed of companys overseas subsidiaries Parent company has great control over core functions like R&D, marketing strategies Useful when few pressures for local responsiveness Example: Pfizer; company doesnt compete on cost and its drugs dont need to be tailored for local tastes Choosing a Global Strategy 2. Multinational Model Aka multidomestic, uses subsidiaries in each country but provides discretion to those subsidiaries to respond to local conditions Each subsidiary is a self-contained unit with all functions required for operating in the host market Example: Heineken offers global brands as well as regional and local ones Choosing a Global Strategy 3. Global Model Adopted by companies that view world as one market and assume that no significant differences exist among countries with regard to consumer tastes and preferences Company markets a standardized product in global marketplace Example: Shell, Petron Choosing a Global Strategy 4. Transnational Model Thinking globally but acting locally

 Entry Modes

Centralizes certain functions in locations that best achieve cost economies but basing other functions in subsidiaries to facilitate local responsiveness Example: Caterpillar must adopt to local construction practices and government regulations despite its centralized functions

Basic ways to expand overseas: 1. Exporting Friends TV show 2. Licensing RCA corporation 3. Franchising Hilton International 4. Joint Ventures Hersheys 5. Wholly owned subsidiaries 3M Entry Modes Managing Across Borders Expatriates Parent-company nationals who are sent to work at a foreign subsidiary Host-country nationals Natives of the country where an overseas subsidiary is located Third-country nationals Natives of a country other than the home or host country of an overseas subsidiary Managing Across Borders

Managing Across Borders

Skills of a Global Manager Failure rate Number of expatriate managers of an overseas operation who come home early typically because of technical capability, personal and social issues Companies such as Levi Strauss, Bechtel, Monsanto have identified characteristics of individuals that will predict their success abroad Inpatriate Foreign national brought in to work at the parent company Skills of a Global Manager Skills of a Global Manager Understanding Cultural Issues

Ethnocentrism Judging others by standards of ones group/culture which are seen as superior Culture shock Disorientation and stress associated with being in a foreign environment Understanding Cultural Issues Dimensions of cultural differences: 1. Power distance Extent to which society accepts fact that power in organization is distributed unequally 2. Individualism/Collectivism Extent to which people act on their own or as a part of a group 3. Uncertainty avoidance Extent to which people feel threatened by uncertain situations 4. Masculinity/Femininity Extent to which society values quantity (e.g. money) over quality (e.g. beauty) of life Understanding Cultural Issues Organizational Agility Chapter 9 CHAPTER OUTLINE The Responsive Organization Strategy and Organizational Agility Organizing around Core Competencies Strategic Alliances The Learning Organization The High-Involvement Organization Organizational Size and Agility The Responsive Organization The formal structure is put in place to control people, decisions, and actions. But in todays fast-changing business environment, responsiveness is more vital than ever to firms survival. The Responsive Organization Mechanistic Organization A form of organization that seeks to maximize internal efficiency. Organic Structure An organizational form that emphasizes flexibility. The Responsive Organization 1. Jobholders have broader responsibilities that change as the need arises. 2. Communication occurs through advice and information rather than through orders and instructions. 3. Decision making and influence are more decentralized and informal. 4. Employees depend more on one another and relate more informally and personally. 5. Jobholders rely more heavily on judgment than on rules. 6. Obedience to authority is less important than commitment to the organizations goals. 7. Expertise is highly valued. Strategy and Organizational Agility Organizing around Core Competencies Strategic Alliances The Learning Organization The High-Involvement Organization Organizing around Core Competencies

Core Competence is the capability - knowledge, expertise, skill that underlies a companys ability to be a leader in providing a range of specific goods or services. Managers who want to strengthen their firms competitiveness via core competencies need to focus on several related issues: Identify existing core competencies. Acquire or build core competencies that will be important for the future. Keep investing in competencies so that the firm remains world class and better than competitors. Extend competencies to find new applications and opportunities for the markets of tomorrow. Strategic Alliances A formal relationship created among independent organizations with the purpose of joint pursuit of mutual goals. They occur between companies and their competitors, governments, and universities. Companies form strategic alliances to develop new technologies, enter new markets, and reduce manufacturing costs. Strategic Alliances Individual excellence Importance Interdependence Investment Information Integration Institutionalization Integrity The Learning Organization An organization skilled at creating, acquiring, and transferring knowledge, and at modifying its behaviour to reflect new knowledge and insights. 5 key ingredients to a learning organization 1. Their people engage in disciplined thinking and attention to details, making decisions based on data and evidence rather than guesswork and assumptions. 2. They search constantly for new knowledge and ways to apply it, looking for expanding horizons and opportunities rather than quick fixes to current problems. The organization values and rewards individuals who expand their knowledge and skill in areas that benefit the organization. The Learning Organization 5 key ingredients to a learning organization 3. They carefully review both successes and failures, looking for lessons and deeper understanding. 4. Learning organizations benchmark they identify and implement the best business practices of other organizations, stealing ideas shamelessly. 5. They share ideas throughout the organization via reports, information systems, informal discussions, site visits, education and training. Employees work with and are mentored by more-experienced employees. The High-Involvement Organization A type of organization in which top management ensures that there is a consensus about the direction in which the business is heading. The leader seeks input from his or her top management team and from lower levels of the company. Task forces, study groups, and other techniques are used to foster participation in decisions that affect the entire organization.

Organizational Size and Agility One of the most important characteristics of an organization and one of the most important factors influencing its ability to respond effectively to its environment is its size. Large organizations are more specialized. are more complex. are more bureaucratic. The Case for Big Size creates scale economies, that is, lower costs per unit of production. It can offer specific advantages such as lower operating costs, greater purchasing power, and easier access to capital. Size creates economies of scale; materials and processes employed in one product can be used to make other, related products. The bottom line COST Large size often leads to scale economics The Case for Small Smaller companies can move fast. provide quality goods and services to targeted market niches. inspire greater involvement from their people. The premium now is on flexibility and responsiveness the unique potential strengths of the small firm. The bottom line Speed Small size may improve speed. Being Big and Small Organization Size: Is Bigger Better? Pressures for Growth Companies in all industries strive for growth to acquire the size and resources needed to compete globally Size enables companies to take risks Dilemmas of Large Size Large organizations are able to get back to business more quickly following a disaster Large companies are standardized, mechanistic, and complex Small companies are flexible and can be responsive Many companies aim to have a big company/small-company hybrid Reasons for Downsizing Merging of two or more firms Acquisition Change in management Economic crisis Strategy changes Excessive workforce Increase in efficient work flow and computerized services Outsourcing practice RIGHTSIZING A successful effort to achieve an appropriate size at which the company performs most effectively. Types of Technology Configurations

Small Batch Technologies technologies that produce goods and services in low volume Large Batch Technologies technologies that produce goods and services in high volume Continuous Process Technologies a process that is highly automated and has a continuous production flow Small Batch Technologies job shop structure tends to be very organic not a lot rules and formal procedures decision making tends to be decentralized emphasis on mutual adjustment among people e.g. PMF Industries, doctors office, restaurants Large Batch Technologies mass production technologies structure tends to be more mechanistic more rules and formal procedures decision making tends to be centralized communication tends to be more formal General Motors, Ford, Chrysler, McDonalds, Burger King Continuous Process Technologies structure can return to a more organic form fewer rules & regulations are established communication tends to be more informal e.g. Domino Sugar, Shell Chemical Mass customization The production of varied, individually customized products at the low cost of standardized, mass-produced products Module is a specific process or task performed by independent operating units The ultimate goal of mass customization is a never-ending campaign to expand the number of ways a company can satisfy customers. Computer-integrated Manufacturing Flexible Factories Lean Manufacturing Computer-integrated Manufacturing - the use of computer-aided design and computer-aided manufacturing to sequence and optimize a number of production processes Flexible Factories Manufacturing plants that have short production runs, are organized around products, and used decentralized scheduling To result an effective Lean Manufacturing, the following conditions must be met: People are broadly trained rather than specialized. Communication is informal and horizontal among line workers. Equipment is general purpose. Work is organized in teams, or cells, that produce a group of similar products. Supplier relationships are long-term and cooperative. Product development is concurrent, not sequential, and is done by cross-functional teams. Time-based competition (TBC) refers to strategies aimed at reducing the total time needed to deliver a good or service Logistics

the movement of the right goods in the right amount to the right place at the right time JIT represents a number of key production and organizational concepts, including the ff: Elimination of waste Perfect quality Reduced cycle times Employee involvement Value-added manufacturing Discovery of problems and prevention of recurrence HUMAN RESOURCE MANAGEMENT (HRM) -Historically known as Personnel Management. -Formal systems for the management of people within an organization. Strategic impact of Human Resource (HR): It creates value employees are being valued for what they contribute to the company. Is rare HR as a competitive advantage, are people with abilities, knowledge and skills not at all equally available to all competitors. Is difficult to imitate People having capabilities and contributions cannot be easily copied. Is organized Peoples talent can be combined, organized and deployed to various assignments. HRM in relation to Strategic Management -Study made by Deloitte and Touche shows that effective HR practices results to higher valuation of a company in the stock market. -Because of the competitive edge it brings, organizations now highly value their human capital. -Human Capital/ Intellectual Capital Often used today to describe the strategic value of employee knowledge and abilities THE HR PLANNING PROCESS 3 HR PLANNING STAGES

DEMAND FORECASTS

-Determining how many and what type of people are needed. -Basis of information is the demand of the product in the market. o The demand of iPhone in the market is used by Apple to know how many workers and engineers needed to produce enough iPhone to cover the demand, as well as how many people in their sales force needed in marketing the product.

LABOR SUPPLY FORECASTS -Determining the Supply of Labor; how many and what type of employees the organization actually will have. -The type of workers available in such location is used to determine the supply of labor. RECONCILING SUPPLY AND DEMAND -Reconciling the supply of and the demand for various types of employees -How HR managers addresses such cases: o Organization finds that they need more people than what they have (labor deficit). o Organization finds that they have more people than they need (labor surplus). for. 1st it tells the HR about the job itself (job description). 2nd it tells the skills, knowledge, abilities and other characteristics needed to perform the job (job Specification). STAFFING THE ORGANIZATION Recruitment Selection Outplacement RECRUITMENT -Increases the pool of candidates that might be selected for a job. -May be internal or external. -Uses job-posting system. o A mechanism for advertising open positions, typically on a bulletin board or the companys intranet INTERNAL RECRUITING -candidates for filling up a vacant position are the employees of the company. ADVANTAGES o Employers know their employees and employees know their organization. o Encourage employees to remain with company, work hard and succeed. DISADVANTAGE o Limited applicant pool, leading to poor selection decisions. EXTERNAL RECRUITING -Brings in new blood to a company. ADVANTAGE o Inspires innovation brings new ideas and skills to the organization. o Best for expanding organizations JOB ANALYSIS -Method of telling the prospective employees of what kind of job they are applying

DISADVANTAGES o Disenchantment of current employees who were expecting promotion. o Hired candidates who are unfamiliar with the organization may feel indifference among its co-workers.

-Frequently used mediums of recruitment: -Internet job boards, company websites, employee referrals, newspaper advertisements and college campus recruiting. -Survey shows that most companies use employee referrals and websites for external recruitment. -Employee referral is the most inexpensive and effective method among the others. This method is also one of the reasons why most jobs are filled immediately. Which recruitment method is the best? -Most companies uses combination of both method. -Internal recruiting for existing jobs that need replacements and external when the firm is expanding or needs to acquire new skill. SELECTION -Builds on recruiting and involves about whom to hire.

Selection Tools: APPLICATION AND RESUME -Provide basic information to prospective employees. -Tend not to be extremely useful for making final selection decisions. INTERVIEW -Most popular tool and every company use some types of interview. -Can be structured or unstructured. o Unstructured interview -Interviewer asks different interviewees different questions. -May also use some probes (follow-up questions) to learn more about the candidate. o Structured interview -The same interview with each applicant. -Two basic types: Situational and Behavioural Description Interviews.

Situational interview A customer comes into the store to pick up a watch he had left for repair. The watch is not back yet from the repair shop and the customer becomes angry. How would you handle the situation? Behavioral Description Interview Explores what candidates have actually done in the past. Which method is better? -Unstructured o Helps establish support and provide sense of applicants personality. o They may not provide the manager with specific information about the candidates ability. -Structured

o Reliable predictors of job performance o Free of bias and stereotypes o Comparable responses across different candidates -Interviewer uses more than one technique during the same interview REFERENCE CHECK -Organization contact references or former employers and educational institutions listed by candidates. -Provide useful information, particularly if specific job-related questions are asked. BACKGROUND CHECK -Social security verification, past employment and education verification and a criminal records check. -Checks pertaining to the job being hired for. Ex. Credit check for money-handling jobs. hard? DRUG TESTING -Now a frequently used screening instrument. -Includes genetic testing to identify the likelihood of contracting a disease. COGNITIVE ABILITY TESTS -Measure a range of intellectual abilities, including verbal comprehension and numerical aptitude. PERFORMANCE TESTS -Test taker performs a sample of the job. -Assessment centers are the notable offshoot of the managerial performance test. o Assessment centers a managerial performance test in which candidates participate in a variety of exercises and situations. PERSONALITY TESTS -Regaining popularity since its fall from the past decade due to issues. -Questions like: Do you like to socialize with people? or Do you enjoy working

INTEGRITY TOOLS -Assesses job candidates honesty. -Polygraphs and paper-and-pencil honesty tests. In U.S., polygraph tests are prohibited to be used as a selection tool. -The accuracy of these tests is still debatable. RELIABILITY AND VALIDITY -regardless of the method used to select employees, these two crucial issues need to be addressed. - RELIABILITY refers to consistency of test scores over time and across alternative measurements. VALIDITY moves beyond reliability to assess the accuracy of the selection test. Common form of validity: o Criterion-related validity refers to the degree to which s test actually predicts or correlates with the job performance. o Content validity concerns the degree to which selection tests measure a representative sample of the knowledge, skills, and abilities required for the job.

WORKFORCE REDUCTIONS -Termination of employees LAYOFFS -Downsizing as a result of massive restructuring of industry brought by merger and acquisitions, divestiture and increased competition. -Eventually, victims not only those who lost the job but also the remaining ones face difficulties which might affect organizations operations. -Those who remain suffers Survivors Syndrome o Disenchantment, distrust and lethargy which overshadow the comfort of still having a job. -A well thought-out dismissal process eases tensions and helps remaining employees adjust to new work situations. What employers could do? -Outplacement is the process of helping people who have been dismissed from the company regains employment elsewhere. TERMINATION -Firing of employee due to poor performance or other reasons. -Also employment-at-will or termination-at-will. What employers could do? -Can be avoided by developing progressive and positive disciplinary procedures. - conduct a TERMINATION INTERVIEW. o Manager discusses the companys position with the employee. o Best to be delivered by an immediate superior. o Wise precaution to have a 3rd party such as an HR manager. o Manger should be truthful but respectful. How to avoid LAWSUIT when terminating an employee?

LEGAL ISSUES AND EQUAL EMPLOYMENT OPPORTUNITY -Protect job candidates and employees against discrimination or sexual harrasment

-U.S. and the Philippines Law create 2 employee categories: Excempt employees exempted from overtime pay if they have considerable discretion in how they carry out their jobs and if their jobs require them to exercise their independent judgement. Ex. Managers Nonexempt employees usually paid by the hour and must be paid overtimeif they work more than 40 hours a week. -CIVIL CODE of the Philippines prohibits discrimination: In employment based on race, sex, color, national origin and religion. In employment practices (recruitment, hiring, discharge rate). In employment against people with disabilities and differently-abled people. In employment against recovering alcoholics and drug abusers, cancer patients in remission and AIDS patients. Against people age 40 or over. -One common reason employers are sued for is adverse impact when a seemingly neutral employment practice has a disproportionately negative effect on a protected group.

Developing the Workforce

Training and Development -Training usually refers to teaching lower-level employees how to perform their present jobs. -Development involves teaching managers and professional employees broader skills needed for their present and future jobs. Phases of training Phase one starts with a need assessment . Managers conduct an analysis to identify the jobs, people, and departments for which training is necessary. Phase two - involves the design of training programs. Phase three - Involves decisions about the training methods to be used and whether the training will be provided on-the-job or off -the-job. Examples of training methods include lectures, role-playing, business stimulation, behavior modeling, conferences, vestibule training and apprenticeships. Phase four -evaluate the programs effectiveness.

Types of Training 1.) Team training - training that provides employees with the skills and perspectives they need to collaborate with others. 2.) Orientation training - Training designed to introduce new employees to the company and familiarize them with policies, procedures, culture and the like 3.) Diversity training - programs that focus on identifying and reducing hidden biases against people with differences and developing the skills needed to manage a diversified workforce. Performance Appraisal (PA) Administrative purpose

provides managers with the information they need to make salary, promotion and dismissal decisions; helps employees understand and accept the basis of those decisions; and if necessary provides documentation that can justify those decisions in court. Developmental purpose - The information gathered in the appraisal can be used to identify and plan the additional training, learning, experience or other improvement employees require. What do you praise? Performance appraisals can assess three basic categories of employee performance: 1.) Trait appraisals - Involve subjective judgments about employee characteristics related to performance. 2.) Behavioral appraisals - Focus more on observable aspects of performance. These scales focus on specific, prescribed behaviors that can help ensure that all parties understand what the ratings are really measuring. -Critical incident technique. In this technique the manager keeps a regular log and records each significant behavior by the subordinate that reflects the quality of his or her performance. 3.) Results appraisal - tend to be more objective and can focus on production data such as sales volume (for a salesperson), units produced (for a line worker), or profits (for a manager). One approach to results appraisals called management by objectives (MBO) - involves a subordinate and a supervisor agreeing in advance on specific performance and a supervisor agreeing in advance on specific performance goals (objectives) Who should do the Appraisal? Persons subordinate - Appraisal by subordinate Internal and external customers also are used as sources of performance appraisal information, particularly for companies. Such as ford and Honda, that are focused on total quality management. 360 degree appraisal - Process of using multiple sources of appraisal to gain a comprehensive perspectives on ones performance. -Feedback is obtained from subordinates, peers, and superiors-every level involved with the employee. How do you give Employees feedback? PA interview format to use when an employee is performing below acceptable standards: 1. Summarize the employees specific performance. 2. Describe the expectations and standards and be specific. 3. Determine the causes for the low performance 4. Discuss solutions to the problem 5. Agree to a solution 6.Agree to a timetable for improvement. 7. Document the meeting

Designing Reward System

Reward System- is the strategic purposes of attracting, motivating and retaining people

Figure 10.6 Factors Affecting the Wage Mix Designing an effective Pay Plan Pay Level -the choice to be high-,average-,low-paying company Pay structure -the choice how to price different jobs within the organization Individual Pay Decision -concern different pay rates for jobs of similar worth within the same family Incentive Systems and Variable Pay Individual Incentive Plans Most common type ; consists of an objective standard against which a workers performance is compared Group Incentive Plans Pay is based on group performance ; the idea is to give employees a sense of share participation and even ownership in the performance of the firm Gainsharing plans Profit-sharing plans Merit Pay System When objective performance measures are not available but the company still wants to base pay on performance Employee Benefits Basic Required Benefits Workers Compensation Provides financial support to employees suffering a workrelated illness Social Security Social Security Act of 1935, provides financial support to retirees ; in subsequent amendments, the act was expanded to cover disabled employees Unemployment Insurance Provides financial support to employees who are laid off for reasons they cannot control

Pension plans, Medical and Hospital Insurance

Executive Pay and Stock Option The gap between the pay of the executives and the average pay of employees The sheer size and the growth CEO compensation contributed to criticism by shareholders and the general public Stock Option Gives the holder the right to purchase shares of stock at a specified price Legal Issues in Compensation and Benefits Equal Pay Act (EPA) of 1963,now enforced by EEOC Prohibits unequal pay for men and women who perform equal work Equal work -jobs that require equal skill,effort and responsibility and are performed under similar working conditions Comparable Worth A doctrine that implies that women who perform different jobs of equal worth as those performed by men should be paid the same wage Pregnancy Discrimination Act of 1978 States that pregnancy is a disability and qualifies a woman to receive the same benefits that she would with any other disability Employee Retirement Income Security Act (ERISA) of 1974 Protect private pension programs for mismanagement Requires that retirement benefits be paid to those who vest or earn a right to draw benefits and ensures retirement benefits for employees whose companies go bankrupt or who otherwise cannot meet their pension obligation

Health and Safety Occupational Safety and Health Act (OSHA) of 1970 Requires employers to pursue workplace safety

Labor Relation
Labor Relation Is a system of relations between workers and management Two Processes are involved when workers organize for the purpose of negotiating with management to improve their wages ,hours or working conditions Unionization Collective Bargaining

Labor Laws National Labor Relations Act (Wagner Act) Ushered in an era of rapid unionization by Declaring labor organizations legal Establishing five unfair employer labor practices Creating the National Labor Relations Board (NLRB) Labor-Management Relations Act (Taft-Hartley Act) Protected employers free-speech rights, defined unfair labor practices by unions and permitted workers to decertify (reject) a union as representative Labor-Management Reporting and Disclosure Act (Landrumm-Griffin Act)

Designed to curb abuses by union leadership and rid unions of corruption by declaring a bill of rights for union members, establishing control over union dues increases, and imposing reporting requirements for unions

Unionization
How do workers join unions? Workers learn what benefits they may receive by joining unionization through a union organizer or local union representative Union Representative distributes authorization cards that permit worker to indicate whether they want an election to be held to certify the union to represent them NLRB will conduct a certification if atleast 30% of the employees signed authorization card If election is warranted, NLRB representative will conduct the election by secret ballot How do workers vote for a union?

Figure 10.8 Determinants of Union Voting Behavior

Collective Bargaining
Arbitration The use of neutral third party, to resolve the dispute

What does collective bargaining agreement contain? Union Shop An organization with a union and a union security clause specifying that workers must join the union after a set period of time Right-to-Work A legislation that allows employees to work without having to join in a union