Ch 1 The Exceptional Manager

1. Attend every class 2. Don't postpone 3. Read or review lectures and readings more than once 4. Learn how to use this book

More formally, management is defined as (1) the pursuit of organizational goals efficiently and effectively by (2) integrating the work of people through (3) planning, organizing, leading, and controlling the organization's resources. Management, said one pioneer of management ideas, is "the art of getting things done through people."

Agroup of people who work together to achieve some specific purpose.

Efficiency—the means. Efficiency is the means of attaining the organization's goals. To be efficient means to use resources—people, money, raw materials, and the like—wisely and cost-effectively.

Effectiveness—the ends. Effectiveness is the organization's ends, the goals. To be effective means to achieve results, to make the right decisions, and to successfully carry them out so that they achieve the organization's goals.

Good managers create value. The reason is that in being a manager you have a multiplier effect: Your influence on the organization is multiplied far beyond the results that can be achieved by just one person acting alone.

How well compensated are managers? According to the U.S. Bureau of Labor Statistics, the median weekly wage in 2011 for American workers of all sorts was $758, or $39,416 a year.14 Education pays: The median 2011 yearly income for full-time workers with at least a bachelor's degree was $59,904, compared to $33,072 for high-school graduates.

According to recent research, the beginning median salary for a small business chief executive was $233,500. (A small business was classified as a company with up to 500 full-time employees.)

The beginning median salary for a CEO with 500 to 5,000 employees was $500,000.

In 2007, CEOs earned a median of $849,375 at companies with more than 5,000 employees.

Here are just a few of the payoffs of studying management as a discipline: -You will understand how to deal with organizations from the outside. Since we all are in constant interaction with all kinds of organizations, it helps to understand how they work and how the people in them make decisions. Such knowledge may give you some defensive skills that you can use in dealing with organizations from the outside, as a customer or investor, for example. -You will understand how to relate to your supervisors. Since most of us work in organizations and most of us have bosses, studying management will enable you to understand the pressures managers deal with and how they will best respond to you. -You will understand how to interact with coworkers. The kinds of management policies in place can affect how your coworkers behave. Studying management can give you the understanding of teams and teamwork, cultural differences, conflict and stress, and negotiation and communication skills that will help you get along with fellow employees. -You will understand how to manage yourself in the workplace. Management courses in general, and this book in particular, give you the opportunity to realize insights about yourself—your personality, emotions, values, perceptions, needs, and goals. We help you build your skills in areas such as self-management, listening, handling change, managing stress, avoiding groupthink, and coping with organizational politics.

-You and your employees can experience a sense of accomplishment. Every successful goal accomplished provides you not only with personal satisfaction but also with the satisfaction of all those employees you directed who helped you accomplish it. -You can stretch your abilities and magnify your range. Every promotion up the hierarchy of an organization stretches your abilities, challenges your talents and skills, and magnifies the range of your accomplishments. -You can build a catalog of successful products or services. Every product or service you provide—the personal Eiffel Tower or Empire State Building you build, as it were—becomes a monument to your accomplishments. Indeed, studying management may well help you in running your own business. Finally, productivity-improvement expert Odette Pollar of Oakland, California, concludes that "This is an opportunity to counsel, motivate, advise, guide, empower, and influence large groups of people. These important skills can be used in business as well as in personal and volunteer activities. If you truly like people and enjoy mentoring and helping others to grow and thrive, management is a great job."

-Managing for Competitive Advantage -Managing for Diversity -Managing for Globalization -Managing for Information Technology -Managing for Ethical Standards -Managing for Sustainability -Managing Your Own Happiness & Life Goals

Competitive advantage is the ability of an organization to produce goods or services more effectively than competitors do, thereby outperforming them. This means an organization must stay ahead in four areas: (1) being responsive to customers, (2) innovation, (3) quality, and (4) efficiency. 1. Being Responsive to Customers The first law of business is Take care of the customer. Without customers—buyers, clients, consumers, shoppers, users, patrons, guests, investors, or whatever they're called—sooner or later there will be no organization. Nonprofit organizations are well advised to be responsive to their "customers," too, whether they're called citizens, members, students, patients, voters, rate-payers, or whatever, since they are the justification for the organizations' existence. 2. Innovation Finding ways to deliver new or better goods or services is called innovation. No organization, for-profit or nonprofit, can allow itself to become complacent—especially when rivals are coming up with creative ideas. "Innovate or die" is an important adage for any manager. We discuss innovation in Chapter 3. 3. Quality If your organization is the only one of its kind, customers may put up with products or services that are less than stellar (as they have with some airlines whose hub systems give them a near monopoly on flights out of certain cities), but only because they have no choice. But if another organization comes along and offers a better-quality travel experience, TV program, cut of meat, computer software, or whatever, you may find your company falling behind. Making improvements in quality has become an important management idea in recent times, as we shall discuss. 4. Efficiency A generation ago, organizations rewarded employees for their length of service. Today, however, the emphasis is on efficiency: Companies strive to produce goods or services as quickly as possible using as few employees (and raw materials) as possible. Although a strategy that downgrades the value of employees might ultimately backfire—resulting in the loss of essential experience and skills and even customers—an organization that is overstaffed may not be able to compete with leaner, meaner rivals. This is the reason why, for instance, today many companies rely so much on temp (temporary) workers.

Clearly, however, the challenge to the manager of the near future is to maximize the contributions of employees Today nearly one in six American workers is foreign-born, the highest proportion since the 1920s.26 But greater changes are yet to come. By mid-century, the mix of American racial or ethnic groups will change considerably, with the United States becoming half (54%) racial or ethnic minority. Non-Hispanic whites are projected to decrease from 66% of the population in 2008 to 46% in 2050. African Americans will increase from 14% to 15%, Asians and Pacific Islanders from 5.1% to 9.2%, and Hispanics (who may be of any race) from 15% to 30%. In addition, in the coming years there will be a different mix of women, immigrants, and older people in the general population, as well as in the workforce. For instance, in 2030, nearly one in five U.S. residents is expected to be 65 and older. This age group is projected to increase to 88.5 million in 2050, more than doubling the number in 2010 (40.3 million).

"In Japan it is considered rude to look directly in the eye for more than a few seconds," says a report about teaching Americans how to behave abroad, "and in Greece the hand-waving gesture commonly used in America for good-bye is considered an insult." The point: Gestures and symbols don't have the same meaning to everyone throughout the world. Not understanding such differences can affect how well organizations manage globally. American firms have been going out into the world in a major way, even as the world has been coming to us—leading to what New York Times columnist Thomas Friedman has called, in The World Is Flat, a phenomenon in which globalization has leveled (made "flat") the competitive playing fields between industrial and emerging-market countries.

The challenge of managing for information technology, not to mention other technologies affecting your business, will require your unflagging attention. Most important is the Internet, the global network of independently operating but interconnected computers, linking hundreds of thousands of smaller networks around the world.

The global network of independently operating but interconnected computers, linking hundreds of thousands of smaller networks around the world.

This kind of e-commerce, or electronic commerce—the buying and selling of goods or services over computer networks—is reshaping entire industries and revamping the very otion of what a company is. More important than e-commerce, information technology has facilitated e-business, using the Internet to facilitate every aspect of running a business. As one article puts it, "[A]t bottom, the Internet is a tool that dramatically lowers the cost of communication. That means it can radically alter any industry or activity that depends heavily on the flow of information.

Far-ranging e-management and e-communication. Using wired and wireless telephones, fax machines, electronic mail, or e-mail—text messages and documents transmitted over a computer network—as well as project management software—programs for planning and scheduling the people, costs, and resources to complete a project on time—21st-century managers will find themselves responsible for creating, motivating, and leading teams of specialists all over the world. This will require them to be masters of organizational communication, able to create concise, powerful e-mail and voice-mail messages.

The Internet not only speeds everything up, it also, with its huge, interconnected databases—computerized collections of interrelated files—can overwhelm us with information, much of it useful, much of it not. For example, studies show that employees lose valuable time and productivity when dealing with excessive and unimportant e-mail volume and increasing amounts of cellphone spam (junk messages). Among the unfortunate by-products are loss of privacy and increased conflict and stress.

With computers and telecommunications technology, organizations and teams become "virtual"; they are no longer as bound by time zones and locations. Employees, for instance, may telecommute, or work from home or remote locations using a variety of information technologies. Meetings may be conducted via videoconferencing, using video and audio links along with computers to let people in different locations see, hear, and talk with one another. In addition, collaborative computing, using state-of-the-art computer software and hardware, will help people work better together. Goal setting and feedback will be conducted via Web-based software programs such as eWorkbench, which enables managers to create and track employee goals. All such forms of interaction will require managers and employees to be more flexible, and there will be an increased emphasis on knowledge management—the implementing of systems and practices to increase the sharing of knowledge and information throughout an organization.

With the pressure to meet sales, production, and other targets, managers can find themselves confronting ethical dilemmas. What do you do when you learn an employee dropped a gyroscope but put it in the helicopter anyway in order to hold the product's delivery date? How much should you allow your sales reps to knock the competition? How much leeway do you have in giving gifts to prospective clients in a foreign country to try to land a contract? In an era of global warming and rising sea levels, what is your responsibility to "act green"—avoid company policies that are damaging to the environment? Ethical behavior is not just a nicety; it is a very important part of doing business. This was certainly made clear in December 2008, when financier Bernard Madoff confessed that his investments were all "one big lie"—not investments at all, but rather a $50 billion scheme (Ponzi scheme), using cash from newer investors to pay off older ones. Not since sociologist Edwin Sutherland invented the term "white-collar crime" in the 1930s have so many top-level executives been hauled into court.

Sustainability is defined as economic development that meets the needs of the present without compromising the ability of future generations to meet their own needs. An apparently changing climate, bringing increased damage from hurricanes, floods, and fires throughout the United States and the world, has brought the issue of "being green" to increased prominence. Former U.S. Vice President Al Gore's documentary film An Inconvenient Truth, along with his book by the same name, further popularized the concepts of global climate change and the idea of sustainability as a business model. Our economic system has brought prosperity, but it has also led to unsustainable business practices because it has assumed that natural resources are limitless, which they are not. Pacific Gas & Electric, PNM Resources, and Mohawk Fine Papers—resigned from the Chamber in protest. Perhaps, then, business can begin to take the lead. After years of being slow to address climate change, major corporations—including industrial giants that make products ranging from electricity to chemicals to bulldozers—have begun to call for limits on global warming emissions.

Some employment experts counsel that the lesson of today is that you're working for yourself—that employees should identify themselves with the job, not the company. Regardless of how well paid you are, then, you have to consider whether in meeting the organization's challenges you are also meeting the challenge of realizing your own happiness. Many people simply don't find being a manager fulfilling. They may complain that they have to go to too many meetings, that they can't do enough for their employees, that they are caught in the middle between bosses and subordinates. They may feel, at a time when Dilbert cartoons have created such an unflattering portrayal of managers, that they lack respect. They may decide that, despite the greater income, money cannot buy happiness, as the adage goes. Some feel the Great Recession forced them to miss the economic lifestyle they had hoped for. (But most are happier anyway.) In the end, however, recall what Odette Pollar said: "If you truly like people and enjoy mentoring and helping others to grow and thrive, management is a great job." And it helps to know, as she points out, that "one's experience in management is greatly affected by the company's culture."

What do you as a manager do to "get things done"—that is, achieve the stated goals of the organization you work for? You perform what is known as the management process, also called the four management functions: planning, organizing, leading, and controlling. (The acronym "POLC" may help you to remember them.)

You set goals & decide how to achieve them

You arrange tasks, people, and other resources to accomplish the work

You motivate, direct and otherwise influence people to work hard to achieve the organizations goals

You monitor performance, compare it with goals, and take corrective actions as needed

Not everyone who works in an organization is a manager, of course, but those who are may be classified into three levels—top, middle, and first-line.

Top managers make long-term decisions about the overall direction of the organization and establish the objectives, policies, and strategies for it. They need to pay a lot of attention to the environment outside the organization, being alert for long-run opportunities and problems and devising strategies for dealing with them. Thus, executives at this level must be future oriented, dealing with uncertain, highly competitive conditions. These people stand at the summit of the management pyramid. But the nature of a pyramid is that the farther you climb, the less space remains at the top. Thus, most pyramid climbers never get to the apex. However, that doesn't mean that you shouldn't try. Indeed, you might end up atop a much smaller pyramid of some other organization than the one you started out in—and happier with the result.

Middle managers implement the policies and plans of the top managers above them and supervise and coordinate the activities of the first-line managers below them. Titles might include "plant manager," "district manager," and "regional manager," among others. In the nonprofit world, middle managers may have titles such as "clinic director," "dean of student services," and the like. Their salaries may range from under $45,000 up to $120,000 a year. Middle managers are critical for organizational success because they implement the strategic plans created by CEOs and top managers. (Strategic planning is discussed in Chapter 6.) In other words, these managers have the type of "high-touch" jobs that can directly affect employees, customers, and suppliers.

The job titles at the bottom of the managerial pyramid tend to be on the order of "department head," "foreman" or "forewoman," "team leader," or "supervisor"—clerical supervisor, production supervisor, research supervisor, and so on. Indeed, supervisor is the name often given to first-line managers as a whole. Their salaries may run from $35,000 to $65,000 a year. Following the plans of middle and top managers, first-line managers make short-term operating decisions, directing the daily tasks of nonmanagerial personnel, who are, of course, all those people who work directly at their jobs but don't oversee the work of others. No doubt the job of first-line manager will be the place where you would start your managerial career. This can be a valuable experience because it will be the training and testing ground for your management ideas.

A functional manager is responsible for just one organizational activity.

A general manager is responsible for several organizational activities.

For-Profit Non-Profit Mutual Benefit

For-profit, or business, organizations are formed to make money, or profits, by offering products or services. When most people think of "management," they think of business organizations, ranging from Allstate to Zenith, from Amway to Zagat.

Managers in nonprofit organizations are often known as "administrators." Nonprofit organizations may be either in the public sector, such as the University of California, or in the private sector, such as Stanford University. Either way, their purpose is to offer services to some clients, not to make a profit. Examples of such organizations are hospitals, colleges, and social-welfare agencies (the Salvation Army, the Red Cross). One particular type of nonprofit organization is called the commonweal organization. Unlike nonprofit service organizations, which offer services to some clients, commonweal organizations offer services to all clients within their jurisdictions. Examples are the military services, the U.S. Postal Service, and your local fire and police departments.

Mutual-benefit organizations are voluntary collections of members—political parties, farm cooperatives, labor unions, trade associations, and clubs—whose purpose is to advance members' interests.

If you become a manager, would you be doing the same types of things regardless of the type of organization? Generally you would be; that is, you would be performing the four management functions—planning, organizing, leading, and controlling The single biggest difference, however, is that in a for-profit organization, the measure of its success is how much profit (or loss) it generates. In the other two types of organization, although income and expenditures are very important concerns, the measure of success is usually the effectiveness of the services delivered—how many students were graduated, if you're a college administrator, or how many crimes were prevented or solved, if you're a police chief.

1. A Manager Relies More on Verbal Than on Written Communication Writing letters, memos, and reports takes time. Most managers in Mintzberg's research tended to get and transmit information through telephone conversations and meetings. No doubt this is still true, although the technologies of e-mail, texting, and Twitter now makes it possible to communicate almost as rapidly in writing as with the spoken word. 2. A Manager Works Long Hours at an Intense Pace "A true break seldom occurred," wrote Mintzberg about his subjects. "Coffee was taken during meetings, and lunchtime was almost always devoted to formal or informal meetings." Long hours at work are standard, he found, with 50 hours being typical and up to 90 hours not unheard of. A 1999 survey by John P. Kotter of the Harvard Business School found that the general managers he studied worked just under 60 hours per week. Are such hours really necessary? Three decades following the Mintzberg research, Linda Stroh, Director of Workplace Studies at Loyola University Chicago, did a study that found that people who work more also earn more. "Those managers who worked 61 hours or more per week had earned, on average, about two promotions over the past five years," she reported.61 Prior to the 2007-2009 Great Recession, researchers at Purdue and McGill universities found that more companies were allowing managers to reduce their working hours and spend more time with their families yet still advance their high-powered careers. However, during economic hard times, top managers may be more apt to see subordinates' work-life flexibility as a luxury they can no longer afford. 3. A Manager's Work Is Characterized by Fragmentation, Brevity, & Variety Only about a tenth of the managerial activities observed by Mintzberg took more than an hour; about half were completed in under 9 minutes. Phone calls averaged 6 minutes, informal meetings 10 minutes, and desk-work sessions 15 minutes. "When free time appeared," wrote Mintzberg, "ever-present subordinates quickly usurped it." No wonder the executive's work time has been characterized as "the interrupt-driven day" and that many managers—such as the late Mary Kay Ash, head of the Mary Kay Cosmetics company—get up as early as 5 a.m. so that they will have a quiet period in which to work undisturbed. No wonder that finding balance between work and family lives is an ongoing concern. No wonder that many managers—such as Dawn Lepore, executive vice president of discount broker Charles Schwab & Co.—have become "much less tolerant of activities that aren't a good use of my time" and so have become better delegators. It is clear from Mintzberg's work that time and task management are major challenges for every manager. The Practical Action box, "Executive Functioning: How Good Are You at Focusing Your Thoughts, Controlling Your Impulses, & Avoiding Distractions?" examines this challenge further. The box "Getting Control of Your Time: Dealing with the Information Deluge in College & in Your Career" at the end of this chapter also offers some important suggestions.

From his observations and other research, Mintzberg concluded that managers play three broad types of roles or "organized sets of behavior": interpersonal, informational, and decisional.

Interpersonal Roles—Figurehead, Leader, and Liaison In their interpersonal roles, managers interact with people inside and outside their work units. The three interpersonal roles include figurehead, leader, and liaison activities.

Informational Roles—Monitor, Disseminator, and Spokesperson The most important part of a manager's job, Mintzberg believed, is information handling, because accurate information is vital for making intelligent decisions. In their three informational roles—as monitor, disseminator, and spokesperson—managers receive and communicate information with other people inside and outside the organization.

Decisional Roles—Entrepreneur, Disturbance Handler, Resource Allocator, and Negotiator In their decisional roles, managers use information to make decisions to solve problems or take advantage of opportunities. The four decision-making roles are entrepreneur, disturbance handler, resource allocator, and negotiator.

Yelp is the 2004 brainchild of Jeremy Stoppelman and Russel Simmons, two engineers in their twenties working for PayPal, the online payments firm in California's Silicon Valley, who wanted to make it easier for consumers to find good businesses and avoid bad ones. "What they created," says one account, "was an online yellow pages with attitude. Yelp lets anyone critique any business and grade it, with ratings from one star to five stars." All kinds of businesses are rated, from restaurants to mechanics to dentists. While the idea of rating businesses is not new, Yelp uses a special algorithm (step-by-step problem-solving procedure) that determines which reviews are deleted, which featured prominently, and which displayed inconspicuously. And the company keeps the algorithm a closely guarded secret. The idea for Yelp came to Stoppelman and Simmons over lunch one fall, when they talked about building a website for people to e-mail friends questions such as "Who knows a good auto mechanic in San Francisco?" and then posting the results online. But, as sometimes happens with new enterprises, the core idea—allowing people to publish reviews without being prompted—was an afterthought. Nevertheless, after lunch the pair went back to the office and successfully pitched their boss (who had made tens of millions on PayPal) to invest $1 million. With this initial help, the Yelp founders were hoping to build momentum and launch a national company, but the idea failed to catch fire. After a few months, without any additional funding, the two decided they had to stay local. "If we just create a cool city guide to San Francisco and it's worth $10 or $20 million, that would be a win," Stoppelman said. To focus on making Yelp famous locally, they selected a few dozen of the most active reviewers on the site and invited them to an open-bar party; 100 people showed up. Yelp threw more parties for prolific reviewers, which gave casual users a reason to use the site more. By mid-2005, Yelp had 12,000 reviewers. With additional funding, it hired more party planners in New York, Chicago, and Boston. As the Yelp influence grew, bars and restaurants became more willing to host (for free) the parties in the hopes that crowds would come back and write favorable reviews. The company also began setting up call centers to sell advertising to businesses that had been reviewed. Yelp is not without controversy. By encouraging consumers to be unsparing in their critiques, it helps good businesses to thrive, but it also empowers users to be unnecessarily cruel and to hurt small mom-and-pop businesses already struggling with economic hard times and strong competition. Still, the company seems to have achieved success, earning $27.4 million in the first three months of 2012, reflecting 66% growth from a year earlier.

Entrepreneurship is the process of taking risks to try to create a new enterprise. There are two types of entrepreneurship.

The entrepreneur. An entrepreneur is someone who sees a new opportunity for a product or service and launches a business to try to realize it. Most entrepreneurs run small businesses with fewer than 100 employees.

The intrapreneur. An intrapreneur is someone who works inside an existing organization who sees an opportunity for a product or service and mobilizes the organization's resources to try to realize it. This person might be a researcher or a scientist but could also be a manager who sees an opportunity to create a new venture that could be profitable.

While the entrepreneur is not necessarily an inventor, he or she "always searches for change, responds to it, and exploits it as an opportunity," Peter Drucker pointed out. How does this differ from being a manager? Being an entrepreneur is what it takes to start a business; being a manager is what it takes to grow or maintain a business. As an entrepreneur/intrapreneur, you initiate new goods or services; as a manager you coordinate the resources to produce the goods or services. Entrepreneurial companies have been called "gazelles" for the two attributes that make the African antelope successful: speed and agility. "Gazelles have mastered the art of the quick," says Alan Webber, founding editor of Fast Company magazine. "They have internal approaches and fast decision-making approaches that let them move with maximum agility in a fast-changing business environment."

Characteristic of both—high need for achievement. Both entrepreneurs and managers have a high need for achievement. However, entrepreneurs certainly seem to be motivated to pursue moderately difficult goals through their own efforts in order to realize their ideas and, they hope, financial rewards. Managers, by contrast, are more motivated by promotions and organizational rewards of power and perks. Also characteristic of both—belief in personal control of destiny. If you believe "I am the captain of my fate, the master of my soul," you have what is known as internal locus of control, the belief that you control your own destiny, that external forces will have little influence. (External locus of control means the reverse—you believe you don't control your destiny, that external forces do.) Both entrepreneurs and managers like to think they have personal control over their lives. Characteristic of both, but especially of entrepreneurs—high energy level and action orientation. Rising to the top in an organization probably requires that a manager put in long hours. For entrepreneurs, however, creating a new enterprise may require an extraordinary investment of time and energy. In addition, while some managers may feel a sense of urgency, entrepreneurs are especially apt to be impatient and to want to get things done as quickly as possible, making them particularly action oriented. Characteristic of both, but especially of entrepreneurs—high tolerance for ambiguity. Every manager needs to be able to make decisions based on ambiguous—that is, unclear or incomplete—information. However, entrepreneurs must have more tolerance for ambiguity because they are trying to do things they haven't done before. More characteristic of entrepreneurs than managers—self-confidence and tolerance for risk. Managers must believe in themselves and be willing to make decisions; however, this statement applies even more to entrepreneurs. Precisely because they are willing to take risks in the pursuit of new opportunities—indeed, even risk personal financial failure—entrepreneurs need the confidence to act decisively. Of course, not all entrepreneurs have this kind of faith in themselves. So-called necessity entrepreneurs are people such as laid-off corporate workers, discharged military people, immigrants, and divorced homemakers who suddenly must earn a living and are simply trying to replace lost income and are hoping a job comes along. In the United States, these make up about 28% of entrepreneurs. However, 51% are so-called opportunity entrepreneurs—those who start their own business out of a burning desire rather than because they lost a job. Unlike necessity types, they tend to be more ambitious and to start firms that can lead to high-growth businesses.

Technical skills consist of the job-specific knowledge needed to perform well in a specialized field. Having the requisite technical skills seems to be most important at the lower levels of management—that is, among employees in their first professional job and first-line managers.

Conceptual skills consist of the ability to think analytically, to visualize an organization as a whole and understand how the parts work together. Conceptual skills are particularly important for top managers, who must deal with problems that are ambiguous but that could have far-reaching consequences.

This may well be the most difficult set of skills to master. Human skills consist of the ability to work well in cooperation with other people to get things done—especially with people in teams, an important part of today's organizations. Often these are thought of as "soft skills." These skills—the ability to motivate, to inspire trust, to communicate with others—are necessary for managers of all levels. But because of the range of people, tasks, and problems in an organization, developing your human-interacting skills may turn out to be an ongoing, lifelong effort.

Among the chief skills companies seek in top managers are the following: -The ability to motivate and engage others. -The ability to communicate. -Work experience outside the United States. -High energy levels to meet the demands of global travel and a 24/7 world.