FOURTH EDITION. BUSINESS REVIEW BOOKS Management. Patrick J. Montana. Bruce H. Charnov BARRON'S

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1 BUSINESS REVIEW BOOKS Management FOURTH EDITION Patrick J. Montana Professor of Management Fordham University Schools of Business Bruce H. Charnov Associate Professor of Management Frank G. Zarb School of Business Hofstra University BARRON'S

2 CONTENTS Preface xv 1 WHAT IS MANAGEMENT: DEFINITION AND OVERVIEW 7 Definition of Management 1 The Managerial Role 2 Management Activities vs. Technical Activities 2 Case Study: Talking with George 3 Introduction to the Management Process 6 Management Skills and Competencies 8 Personal Competencies for Managerial Success MANAGEMENT: HISTORY AND CONCEPTS 12 Classical Schools of Management Theory 15 The'Management of Work 15 The Management of Organizations 19 Evaluation of the Classical Schools 23 The Behavioral School of Management Theory 23 Evaluation of the Behavioral Approach 28 Production Operations Management (POM) Approach 28 Evaluation of Production Operations Management Approach 30 The Contingency Approach 30 Step-by-Step Methodology 31 Evaluation of the Contingency Approach 33 Theory Z: The Techniques of Japanese Management 34 Basic Techniques 34 Evaluation of the Theory Z/QWL Approach to Management MANAGEMENT: SOCIAL RESPONSIBILITY 40 Arguments Against Social Responsibility for Business 41 Arguments for Social Responsibility for Business 42 Degrees of Corporate Social Responsibility Involvement 44 The Social Obligation Approach 44 The Social Responsibility Approach 47 The Social Responsiveness Approach 48 The Social Actions Management Process 51 The Action Phase 51 The Evaluation Phase 54

3 iv CONTENTS Areas of Social Concern in Current Management Practice 56 Air Pollution 56 Water Pollution 57 Hazardous and Solid Waste Pollution 58 Noise and Aesthetic Pollution 59 The Human Areas of Social Concern MANAGEMENT AND THE ENVIRONMENTS OF BUSINESS 64 Open Systems Model 67 The External Environments of Business 68 Sociological Factors 68 Political Factors 72 Economic Factors 73 Technological Factors 76 The Internal Environments of Business 80 Financial Resources 80 Physical Resources t 81 Human Resources 82 Technological Resources 82 Corporate Culture: Business Climate and Management Ethics MANAGEMENT DECISION-MAKING: TYPES AND STYLES 88 Ways of Thinking About Business Decision-Making 89 Linear Thinking 89 Systems Thinking 90 Types of Managerial Decisions 91 Programmed Decisions 91 Nonprogrammed Decisions 92 Levels of Decision-Making in an Organization 94 Strategic Decision-Making 94 Tactical Decision-Making 94 Operational Decision-Making 95 Styles of Decision-Making 96 The "Smoother" or Problem Avoider 96 The Problem Solver 96 The Problem Seeker 97 Decision-Making Under Different Conditions 98 Conditions of Certainty 98 Conditions of Risk 99 Conditions of Uncertainty 100 Steps in the Decision-Making Process 101

4 CONTENTS v Situational Analysis 101 Setting Performance Standards 102 Generation of Alternatives 103 Consequences Evaluation 103 Pilot-Testing and Full Implementation AN OVERVIEW OF THE FUNCTIONS OF MANAGEMENT 708 The Management Process 108 Planning 110 Controlling 111 Evaluation and Feedback 112 A System for Managing for Results 112 The Psychological Contract 115 The Expectations Contract PLANNING 7 79 Importance of Planning. 119 The Planning Framework 120 Strategic Planning 120 Long-Range Planning, 122 Operational Planning 124 The Planning Function 126 On the Corporate Level 126 On Each Manager's Level 126 The Plan for Planning 128 The Planning Process and Results 128 A Continuum PLANNING: STRATEGY FORMULATION 736 Gap Analysis An Approach to Provisional Planning. 139 Identifying a Planning Gap 139 Filling the Planning Gap 139 SWOT Analysis An Approach to Assessing Organizational Preparedness 141 Interview Executives 141 Gather Information 142 Use the Provisional Planning Issue Form 142 Organize Data 143 Provide Feedback " 144 Criteria for Evaluating Management Strategy 147

5 vi CONTENTS A Framework for Evaluating Managerial Effectiveness 9 PLANNING: STRATEGY IMPLEMENTATION Types of Objectives Criteria for Evaluating Objectives Writing Objectives Practice Potential Exception to the "Result Rather Than Activity" Criterion for Writing Objectives Performance Contract Statement of Responsibilities Standards of Performance Negotiating the Performance Contract Techniques of Negotiating The Appraisal Process 10 BASIC CONCEPTS OF ORGANIZING Why Organize? Basic Concepts Guidelines for Organizing 11 ORGANIZATIONAL STRUCTURES: CONCEPTS AND FORMATS Departmentalization Functional Structure Divisional Structure Process Product Market Customer Geographic Area Matrix (Project Organization) Combination Approach Other Developments in Organizational Structures Team Organization Virtual Organization (Boundaryless) Delegation The Art of Managing Delegation Process, Authority, and Accountability Risks in Delegation Techniques of Delegation Parity of Authority and Responsibility

6 CONTENTS vii Scalar Principle 194 Centralization Versus Decentralization 195 Organizational Structures 197 Major Types of Organizational Structure 197 Organizational Structure and Environment and Technology 198 Contingency Approach 199 Investigating Competitive Advantage: The Value Chain STAFFING: HUMAN RESOURCES MANAGEMENT 204 History of Human Resources Function 206 Emergence of an Industrial Economy 206 Beginnings of Labor Organizations 207 Proliferation of Laws Influencing the Workplace 207 Functions of Human Resources Management 210 Planning 210 Recruitment 213 Selection 214 Compensation 219 Training and Development Labor Relations 226 Research and Audit 229 Separations, MOTIVATION: THEORY AND PRACTICE 235 Maslow's Hierarchy of Needs Theory 238 Two-Factor, or Motivation-Hygiene, Theory 239 Motivating Factors: The Same and Different 241 Other Theories of Motivation 246 McClelland's Theory of Human Motives 246 Reinforcement Theory 247 Expectancy Theory of Motivation 248 Equity Theory 249 McGregor's Theory X and Theory Y LEADERSHIP: THEORY AND PRACTICE 253 Varieties of Individual Power Within the Organizational Setting 254 Legitimate Power 255 Reward Power 255 Coercive Power 256

7 viii CONTENTS Expert Power 257 Charisma Power 257 Referent Power 257 Information Power 258 Theories of Leadership 258 Genetic Theory 259 Trait Theory 260 The Behavioral Approach 261 Situational Approaches 264 The Managerial Grid 269 Emotional Intelligence and Transformational Leadership 271 Afterword on Leadership MANAGEMENT: THE CONTROL FUNCTION 276 The Control Process 277 Setting Performance Standards 277 Measuring Performance 282 Evaluating Performance 284 Using Feedback 285 Phases of Control 285 Input Controls 285 Process Controls, 286 Output Controls 286 Financial Controls: Budgets and Audits 287 Definition and Purpose of Budgets 287 The Budgeting Process 288 Types of Budgets 290 Audits / WORK GROUP DYNAMICS AND CREATIVITY 298 Groups: Basic Characteristics 299 Formal Groups 259 Informal Groups 300 Span of Control 302 Groups: Basic Forms 304 Functional Groups 304 Task Groups 304 Interest Groups 305 Peer Groups 305 Committees 306

8 CONTENTS ix 17 Formation and Development Stages of Groups Formation and First Phase Group Decision-Making Group Maturity Control Phase Specific Characteristics of Groups Group Behavior Norms Group Size Group Status Groups: Managerial Implications Quality Circles Groups and Creativity Brainstorming Nominal Group Technique Delphi Technique COMMUNICATION SKILLS AND MANAGEMENT EFFECTIVENESS Communication Process Model: An Interpersonal Perspective The Message Encoding and Sending Filtering Noise Decoding Feedback Barriers to Successful Communication Message Overload Message Complexity Personal Distortion Mechanisms Psychological Distortion Mechanisms Improving Interpersonal Communication Communication Process Model: An Organizational Perspective Downward Communication Upward Communication Lateral and Diagonal Communication Afterword

9 x CONTENTS 18 MANAGING ORGANIZATIONAL CHANGE 348 Change: An Introduction 348 Organizational Climate for Change 349 External Forces 349 Internal Forces 350 Change: A Continuum and a Process 351 Stimuli to Change 352 Determine the Scope of the Problem 353 Develop Alternatives 353 Analyze Alternatives in the Context of Their Constraints 354 Select an Alternative 355 Implement the Change 356 A Change Model 357 Evaluate the Results 358 International Telephone and Telecommunications Supply Corporation 359 International Telephone and Telecommunications Supply Corporation Case: Summary 362, ~j CONFLICT: ORGANIZATIONAL AND PERSONAL DIMENSIONS 365 Types of Conflict 366 Single-Party Conflicts «366 Conflict Between Individuals 368 Conflicts Between Individuals and Groups 368 Conflict Between Groups 369 Conflict Between Total Organizations, 369 Sources of Conflict 370 Differences in Goals ' 370 Resource Competition 372 Communication Failure and Misperception of Information 372 Disagreement over Performance Standards 373 Organizational Structure Incongruities 374 Strategies for Managing Group Conflicts 375 Avoidance 375 Smoothing 378 Dominance or Power Intervention 379 Compromise 380 Confrontation 381 Organizational Change as a Source of Conflict 382 Organizational Development 382 Alternative Dispute Resolution 383

10 CONTENTS xi Afterword on Organizational Conflict 20 PRODUCTION OPERATIONS MANAGEMENT (POM) Break-Even Analysis Costs Associated with Production Determining Break-Even Quantity Calculating Projected Profit Payoff Matrix or Decision Table Economic Order Quantity (Simple) PERT/CPM MRP-CRP Simulation Modeling Afterword 21 TIME MANAGEMENT You Need More Time: What Kind? Apportioning Managerial Time Using Time Better Record Your Time Consolidate and Manage.Your Time 22 PLANNING THE MANAGERIAL CAREER The Resume General.Rules for Resume Writing Resume Format Resume Don'ts The Cover Letter The Interview How to Have a Winning Interview Structure of the Interview After the Interview: The Thank-You Note

11 xii CONTENTS 23 MANAGEMENT INFORMATION SYSTEMS The Value of Information The Information Needs of Managers Information Requirements MIS Subsystems and the Uses of Information Transaction Processing System Management Reporting System Decision Support System How Information Technology Works Hardware Software Local Area Network New Trends in Management Information Systems Health Concerns Linked Networks and Data Processing Service Organizations User-Friendly Programs Security Managerial Implications of IT Trends 24 INTERNATIONAL MANAGEMENT International Business: Why? Absolute Advantage Comparative Advantage Specific Reasons for Entering the International Arena Desire to Expand Markets Search for Natural Resources Global Marketing Proximity to Consumer Labor Savings International Business: How? Exporting Foreign Licensing Foreign Assembly Foreign Production Subsidiaries International Business: The Problems Communication Cultural Differences Protectionism and Trade Barriers Control and Accounting Standards Human Resources: Acquisition and Training Piracy

12 CONTENTS xiii International Business: Managerial Concerns 486 International Business Success: An Example CHANGING TRENDS IN MANAGEMENT 497 Changing Nature of Work 493 The Rise of the Information Economy 493 Shift to Higher Skilled Jobs 495 Changing Nature of the Worker 496 Increasing Numbers of Older Workers 496 Women in the Workforce 497 More Young People in the Workforce 499 Worker Education 500 Changing Nature of the Work Environment: Growth of the Computer 502 Changing Nature of the Manager: Need for Managerial and Interpersonal Skills 503 APPENDICES 505 Appendix 1 Bibliography. 505 Appendix 2 Life Planning 517 Appendix 3 Careers for General Managers and Top Executives 523 Appendix 4 Firms Offering Employment Services 529 Appendix 5 Sources of Useful Data on Organizations and Occupations 530 INDEX 531

DETAILED CONTENTS. Preface...xv Acknowledgments...xix

DETAILED CONTENTS. Preface...xv Acknowledgments...xix DETAILED CONTENTS Preface...xv Acknowledgments...xix Chapter 1 Health, Healthcare, and Healthcare Organizations... 1 Health and What Determines It... 2 The Force Field Model of Health... 3 Health Services...