Sun Hye Lee, Michael J. Mol, and Kamel Mellahi wrote this case solely to provide material for class discussion. The authors do not intend to illustrate either effective or ineffective handling of a managerial situation. The authors may have disguised certain names and other identifying information to protect confidentiality. This publication may not be transmitted, photocopied, digitized, or otherwise reproduced in any form or by any means without the permission of the copyright holder. Reproduction of this material is not covered under authorization by any reproduction rights organization. To order copies or request permission to reproduce materials, contact Ivey Publishing, Ivey Business School, Western University, London, Ontario, Canada, N6G 0N1; (t) 519.661.3208; (e) [email protected]; www.iveycases.com. Copyright © 2016, Richard Ivey School of Business Foundation Version: 2016-03-22

Will it ever be good enough? That was the key question facing Apple Inc., (Apple) the California-based multinational technology company that was known for its innovative hardware, software, and online services. Apple had been accused of having allowed labour rights violations in China at Foxconn, a major supplier of its products in 2009, but the company had worked hard to overcome these issues to avoid any negative ramifications for its corporate image. Yet on December 18, 2014, new evidence was presented in a British Broadcasting Corporation (BBC) documentary that showed that labour rights violations continued to occur in China, this time at Pegatron, another large Apple supplier that specialized in the assembly of Apple’s iPhones 1 This documentary questioned Apple’s repeated statement in its 2014 supplier responsibility progress report that “Each of those workers has the right to safe and ethical working conditions.”2 Jeff Williams had been promoted to the role of senior vice president for Operations only 15 days earlier, when he was put in charge of what Apple called “end-to-end supply chain management . . . dedicated to ensuring that Apple products meet the highest standards of quality.”3 Given the huge progress that Apple had achieved, was the company simply being singled out unfairly because of its size, visibility, and earlier problems? Indeed, Apple now had an excellent reputation in terms of corporate social responsibility (CSR) and, in 2014, had been ranked fifth on Forbes’ “best CSR reputations” list.4 As Apple’s stock market value moved ever closer to US$1 trillion,5 did outside observers hold Apple, the most valuable company ever, to a higher level of corporate social responsibility? Alternatively, had the company still not fully come to terms with the nature and magnitude of its CSR challenges? It had indeed proven to be difficult to maintain control over Apple’s vast operations, particularly when most activities were undertaken through outsourcing to independent suppliers that were mostly situated in offshore locations, such as China, far from Apple’s base in California. Perhaps the most important question of all was what Williams and Apple could do to tackle the allegations. Would it suffice to adopt a defensive strategy, by simply denying that the problem was structural in nature and pointing to Apple’s many and costly efforts? Or should Apple’s management instead engage with the issue and instigate further CSR changes in its sourcing strategy? If so, what changes should be implemented? In short, how should Apple and Williams respond?

In 2014, more than 1.2 billion smartphone devices were sold worldwide, for combined revenues of more than $380 billion.6 The competition among the major players — Samsung, Huawei, HTC, Nokia, and Apple — had started to take a toll on the industry’s profitability, which led industry experts to suggest that the smartphone industry was reaching its maturity stage, with year-on-year growth set to gradually decline. Apple was the largest player in the industry, accounting for more than 90 per cent of profits in the fourth quarter of 2014 and the first quarter of 2015.7 Samsung dominated the low end of the smartphone market, while Apple dominated the more lucrative high end. The low-cost players, Lenovo and Xiaomi, which were introduced to the smartphone market in 20128 and in 20119 respectively, broadened the reach of the smartphone market to lower-income countries and intensified competition among the key players in the market.10 The smartphone market had reached a saturation point in western markets, but was still expanding in emerging and low-income countries, providing new emerging-market multinationals such as Xiaomi with a potential competitive edge over traditional players such as Samsung, Apple, and LG.11 Besides its superior aesthetic design and cutting-edge features, Apple’s products were differentiated from those of its competitors by its use of a proprietary operating system (iOS) and its connection to Apple’s successful iTunes website that offered multimedia content for the iPhone and other Apple products. Because of its differentiated position, Apple’s iPhone commanded a premium price, which drove up Apple’s profitability and market value.12

Apple was not only the world’s most valuable company but also a hallmark of how information technology could change lives. The company was founded in 1976 and started to encroach into the personal computer market from the late 1980s and early 1990s onward. After the company nearly experienced a total collapse, it convinced co-founder Steve Jobs to return in 1997 to revive the company. Jobs and his team succeeded with great verve, launching such innovative products as the iPod and the iPad.13 However, Apple’s greatest success (as of the writing of this case) came from its debut in the smartphone market.14 Ever since the introduction of the first-generation iPhone in 2007, Apple was recognized as the market leader of the smartphone industry with its cutting-edge technology and design, enabling it to charge a premium price and obtain a very high profit margin. In 2013, Apple’s sales revenue reached $170 billion and its net income was more than $37 billion. In 2014, Apple’s revenue rose to nearly $183 billion, with net income reaching $39.51 billion. Apple experienced exponential growth since 2008 (see Exhibit 1), and the iPhone was the biggest contributor to its success (see Exhibit 2) Apple customers were extremely loyal to Apple products, often also buying its computers and tablets alongside the iPhone. For example, a survey conducted by Simonlycontracts.co.uk found that nearly 60 per cent of 3,000 iPhone owners declared that they had “blind loyalty” to their iPhones, and 78 per cent said they couldn’t “imagine having a different type of phone.”15

Foxconn, headquartered in Taiwan, was one of Apple’s biggest and oldest suppliers. In 2014, Apple contributed more than 40 per cent of Foxconn’s revenue. It was the biggest privately owned company in Taiwan with $131.8 billion sales revenue in 2013, and operations that stretched around the globe. Despite

its large size, Foxconn, as an original design manufacturer (ODM) had long been an unfamiliar name in the public eye, chiefly because it did not produce its own branded goods. In 2009, however, the Foxconn name suddenly came to prominence when a factory worker reportedly committed suicide after losing a prototype of the iPhone 4. It was later alleged that the employee’s treatment during questioning came close to being torture. One year later, another 18 Foxconn workers attempted to kill themselves, and 14 died at the manufacturing company’s facilities.16 Various explanations were offered for these deaths. Poor labour practices and working conditions were considered to be the main motivations for the employee attempting to commit suicide. Ever since the 2010 incidents, the company had been under increased scrutiny and pressure to improve its working conditions from various stakeholders, including non- governmental organizations (NGOs), the media, and customers such as Apple.

After the Foxconn scandal, Apple and its suppliers were under more scrutiny than ever before. Apple made various promises to improve its practices. One of Apple’s responses was to move some of its business away from Foxconn to Pegatron, a Taiwanese electronics manufacturing company that mainly assembled the iPhone 4, 4s, 5, and 5c, along with Apple’s iPad. The company’s factories were located in Taiwan, mainland China, the Czech Republic, and Mexico, while its customer service centres operated in the United States and Japan. Since it started producing Apple products in 2011, Pegatron showed remarkable increases in revenue that mirrored those of Apple itself, from TW$599.9 billion in 201117 to TW$881.2 billion in 201218 to TW$949.8 billion in 2013.19 In 2013, China Labor Watch (CLW), a U.S.-based NGO, whose mission was to increase the transparency of factory labour conditions in China, published Apple’s Unkept Promises, a report based on an undercover investigation into working conditions at Pegatron factories. The situation was even more serious than at Foxconn. According to the report, three Pegatron factories in China had violated 86 Chinese regulations, including 36 legal and 50 ethical violations, ranging from use of a juvenile workforce, to violations of women’s rights, excessive working hours, and environmental pollution. 20 In response to the public disclosure of the report, Apple again promised its full dedication to addressing those issues.21 Jason Cheng, Pegatron’s chief executive officer (CEO), also stated, “We will investigate the allegations fully and take immediate actions to correct any violations to Chinese labour laws and our own code of conduct.”22 Nonetheless, on December 19, 2014, the global news media again accused Apple and Pegatron, alleging that Apple had “broken its promises.” The previous day, the influential BBC Panorama program had broadcast a documentary based on an undercover investigation of the actual practices and working conditions at a Shanghai factory owned by Pegatron. The factory specialized in producing Apple products, including the iPhone. A variety of poor practices were exposed. For example, workers had to hand in their identification cards before entering the factory, were given no basic health and safety training, and had to work excessive hours — up to 16 hours a day, which would sometimes continue for 18 consecutive days. According to the documentary, workers’ requests for a day off were routinely ignored. Another scene in the documentary showed workers who could not help but fall asleep in the middle of a busy production line. The quality of life outside the factory was also criticized. Dormitories were overcrowded, and consisted of nothing but 12 tiny beds placed end to end.23 Apple did not comment on camera for the BBC documentary, but the next day, Jeff Williams clearly expressed what he and Apple CEO, Tim Cook, felt about the documentary. Their “deeply offended” feelings were delivered to the 5,000 U.K. Apple employees in the form of a letter, which became public when it was published by the Daily Telegraph.24 In the letter, Williams said, “We know of no other company

doing as much as Apple does to ensure fair and safe working conditions, to discover and investigate problems, to fix and follow through when issues arise, and to provide transparency into the operations of our suppliers.”

In its 2014 progress report, Apple confidently remarked, “At Apple, we believe in making complex things simple.”25 This statement was an apt description of its products’ appeal to consumers and in the area of product design. Apple retained firm control to ensure it could deliver on this promise, but when it came to supply chain management, an approach of simplification could have its limitations. Given the global nature of Apple’s supply chain, the various products it produced, and the technological complexity of these products, Apple needed to work with a wide array of suppliers. To fulfill its “promise,” Apple needed to be aware of and appropriately manage all these relationships. Doing so raised various challenges. Some of these challenges related to the various formal and informal national institutional regimes that applied to various offshore locations. Apple and its suppliers operated in very different cultural, legal, political, social, and economic environments. For example, its two key suppliers, Foxconn and Pegatron, conducted their manufacturing operations mostly in mainland China. The top 200 suppliers on Apple’s supplier list were scattered around the world, ranging from Korea, Japan, and Taiwan, through to Ireland and the Czech Republic.26 As much as Apple may have wanted to make complex things simple, it could not single-handedly change these diverse national environments to suit its own purposes. Apple and its suppliers faced completely different stakeholders with different expectations. Apple needed to deal with high expectations from consumers, employees, investors, NGOs, and governments in the United States and other developed countries, while most of the suppliers were located in emerging countries that had much lower expectations and different social values and norms. Forbes, for instance, commented on the Panorama documentary:

While these issues are faced by every manufacturer, only Apple was specifically named in the programme. More than any other company, Apple has been the leading target for campaigners on working conditions, but it seems unfair to single out one manufacturer for the alleged sins of an industry.27 No solitary manufacturer can walk into the supply chain and demand working conditions far in advance of the prevalent conditions of the country. Change will be gradual, and measured over years, if not decades.28

A second set of challenges related to maintaining close buyer-supplier relationships. Apple was notorious for its price policy, squeezing suppliers to produce products at lower and lower costs.29 An executive from one of Apple’s iPad producers stated that “the only way you make money working for Apple is figuring out how to do things more efficiently or cheaper . . . and then they’ll come back the next year, and force a 10 per cent price cut.”30 Companies such as Foxconn dealt with conflicting demands: meeting higher working standards, which included paying higher wages, reducing working hours, investing in safety programs, and providing training, while also accepting lower and lower prices from Apple. Foxconn appeared to have made an effort to improve working conditions and meet the required labour standards. This effort was recognized by the Fair Labour Organization, which announced improvements in labour practices in Foxconn factories. Ironically, however, Foxconn started losing orders from Apple around the same time that it had improved its labour practices, perhaps due to the increased per unit costs.31 Apple began to give more and more volume to rival supplier Pegatron. Apple argued that Tim Cook, himself a supply

chain management expert, realized the need for supply chain diversity to reduce the dependence on a single supplier and to spread risks.32 Furthermore, some had hinted that the close relationship between Apple and Foxconn was partly built on the personal relationship between Steve Jobs and the president of Foxconn; when Jobs passed away, so did some of the inter-organizational relationship.33 However, the reason for the switch from Foxconn to Pegatron might have been less straightforward. It was suggested that Pegatron was willing to accept thinner margins than Foxconn,34 which in turn allowed Apple to produce a cheaper version of the iPhone 5 series, the iPhone 5c, while not undermining its profitability. According to the Wall Street Journal, Pegatron accepted a margin of 0.8 per cent, while Foxconn had been seeking 1.7 per cent.35 Interestingly Apple’s own gross margin was 38.6 per cent as of 2014 and 37.6 per cent in 2013.36 Some observers argued that with such small margins it was little wonder that suppliers breached costly regulations in the area of labour rights.37 A third set of challenges arose from differences in the companies’ objectives, particularly their objectives in terms of CSR. However, because of Apple’s huge size, stock market value, visibility, and (partly self- created) image, it faced more scrutiny than perhaps any company in the world. Writing in alphr, Barry Collins argued:

Apple doesn’t outright deny any of those allegations. Yet, it does pose the question: why pick on us? . . . It’s not the only tech company using cheap labour in Asian factories: in fact, show me one that isn’t. Panorama could equally have substituted Apple for Microsoft, Samsung, Sony, or even a British firm such as Tesco, which has its Hudl38 tablets made in the same factories as Apple does. Picking on Apple because it’s the only company that’s made a public commitment to improving worker welfare seems a little perverse.39

Simon Rockman of The Register commented, “while Apple may well be right . . . the difference lies in the gap between what the richest company in the world has said it would do, and what it has achieved in reaching the standards it set for itself.”40 According to Brad Reed:

The point of all this isn’t to say that Apple is an “evil” company or that anyone should feel guilty buying an iPhone or a Mac. I’m also not calling on Apple to pull manufacturing operations out of China since I know how important these jobs are to people who work at them. However, there’s nothing wrong with insisting that our favourite companies — whether we’re talking Apple, Samsung or Google — do better on issues of worker treatment, especially when they’ve repeatedly vowed to do so. Apple makes insane profit margins on its iPhones and it can certainly afford to commit more resources for ensuring that the people who manufacture them aren’t forced to work 18 days in a row.41

Reed’s comments in fact seemed to resonate with the company itself because even Williams mentioned in his letter that Apple “can still do better.”42 Finally, it was important to acknowledge that individuals differed in their assessment of how much attention should be paid to these labour rights issues and what constituted an acceptable level of working conditions. According to a New York Times article, Richard Locke, a professor at Brown University, “had studied working conditions for many companies, and Apple has gone beyond standard practices.”43 But at the same time, Li Qiang, the executive director of CLW, said, “Apple is always finding excuses for its unrealized commitments. We are focused on what Apple does, not what it says.” 44 Such differences in perception were almost

impossible to avoid in cases like this, but they did pose a fourth set of challenges faced by Apple: Did it want to satisfy its harshest critics, or was it enough to please a mainstream Apple consumer?

“Designed by Apple in California” and “Assembled in China,” read a statement imprinted on the back of Apple’s iPhones and iPads and on the bottom of its Mac products, neatly capturing Apple’s strategy of offshore outsourcing. As of 2004, with the closure of its very last U.S. manufacturing line, Apple was outsourcing all of its production and assembly lines to global suppliers, mainly in China.45 Prior to that, Apple was rather proud of its products being produced in America. But like other western companies, Apple found it difficult to resist the lure of offshore outsourcing. It was estimated that around 90 per cent of the iPhone’s parts were manufactured overseas. German and Taiwanese contractors provided advanced semiconductors, while Korean suppliers provided memory and display panels. Those components, coupled with chipsets supplied from Europe and elsewhere, were ultimately assembled in China.46 Apple’s sophisticated supply chain offered the needed flexibility to meet fluctuating demand. Just before the debut of the first iPhone in 2007, Steve Jobs realized that the screen material needed be changed from plastic to glass so it would not get scratched. He was quoted as saying, “I want a glass screen. . . . I want it perfect in six weeks.”47 While no American company could produce the glass screens in a month, a Chinese company was able to make them. To meet Apple’s last-minute changes and orders, thousands more workers were needed overnight, leading to work shifts being increased at short notice.48 As put by Jennifer Rigoni, Apple’s former worldwide supply demand manager, “They [the suppliers] could hire 3,000 people overnight. . . . What U.S. plant can find 3,000 people overnight and convince them to live in dorms?”49 It also helped that wages in the Chinese factories were very low. According to CLW’s 2013 report, the base wage of Pegatron factory workers in Shanghai was the equivalent of approximately $1.50 per hour.50 The same report disclosed that most workers wanted to leave the factory after having experienced such harsh working conditions. In one of the Pegatron factories, AVY in Suzhou, more than a quarter of the new workers left within a two-week period.51 Offshoring, however, was not looked upon favourably in the United States because it was considered to amount to a loss of job opportunities. In February 2011, when the president of the United States, Barrack Obama, asked Jobs, “Why can’t that work come home?” Jobs answered conclusively, “Those jobs aren’t coming back.”52 An anonymous executive of Apple gave a sullen response saying, “We shouldn’t be criticized for using Chinese workers. . . . The United States has stopped producing people with the skills we need.”53 The company overtly announced that moving work overseas was an inevitable choice and the continuing relocation of jobs was driven not only by lower costs.54 Despite the public controversy about Apple’s choices and the loss of domestic job opportunities in the United States, the relocation seemed to make perfect sense. Offshore suppliers in China, India, and elsewhere had a proven ability to produce what was needed, whereas the United States did not have enough capable and skilled workers.55 To some extent, it was simply a numbers game. But Apple also argued that it could produce more jobs in the United States through offshoring because American workers could then focus on higher value-added activities such as research and design.56 Offshore outsourcing might have significantly reduced Apple’s operating costs. At the same time, however, it also decreased Apple’s level of control and monitoring over manufacturing processes and practices.

Although Apple prepared codes of conduct and enforced its suppliers to comply with those standards, in the absence of day-to-day monitoring, compliance was difficult to ensure. Of course, this problem was faced not only by Apple; Samsung and other smartphone producers often sourced from these same factories. But doing so represented a fundamental trade-off that any such firm would need to deal with.

The CSR failures did not seem to affect Apple’s business performance. In 2015, it topped the Forbes list of “The World’s Most Valuable Brands,”57 and ranked 12th in the “Global 2000” list,58 and 55th among America’s Best Employers.59 Furthermore, it still had unshakable customer loyalty that did not seem to have been negatively affected by the alleged socially irresponsible actions of its key suppliers. This situation invited the question: How much should Apple really care about socially irresponsible actions of its suppliers?

Given the circumstances, Apple and Williams still had several options available. But what option would give Apple the best outcomes? Should Apple continue as it was and take for granted the occasional bit of negative publicity? The company had perhaps already done more than its fair share to tackle CSR problems in its supply chain.60 On the other hand, maybe Apple could, and should, do more to tackle what had turned out to be a complex issue. Should Apple seek to work more to improve working conditions, such as by working with NGOs and transnational organizations? Should it engage in even more monitoring? Perhaps it could even go so far as to bring production in-house, in an attempt to regain control. A more radical solution would be to bring manufacturing back to the United States, which might become possible in the future, given increased levels of automation and robotization. But how would such changes affect Apple’s profit margins — and perhaps even more importantly, would Apple’s many customers in China respond negatively to such a move? ASSIGNMENT QUESTIONS1. Identify the multiple levels of analysis at play for Apple as it addresses the CSR challenges in its supply chain.2. Is Apple responsible for the alleged human rights violations that occurred?3. Would onshoring, insourcing, or a combination of the two represent a suitable response to Apple’s problem?4. If Apple continues on the current path, what should it do differently?5. Is it reasonable for Apple to apply different ethical standards to different countries?6. Should firms such as Apple maximize their profits, or should they sacrifice some profits to do good?7. Have these CSR problems at Apple had a meaningful impact on the bottom line?8. What is the role of media, including social media, in shaping CSR expectations?9. Does Apple face an industry-specific issue, or do the same issues appear in other industries?10. If you were in the position of Jeff Williams, what, if anything, would you do differently?

Source: Apple Inc., “Form 10-K: For the Fiscal Year Ended September 27, 2014,” EDGAR Online, accessed December 17, 2015.

Source: Apple Inc., “Form 10-K: For the Fiscal Year Ended September 27, 2014,” EDGAR Online, accessed December 17, 2015.

2008 2009 2010 2011 2012 2013 2014 Net sales 37,491 42,905 65,225 108,249 156,508 170,910 182,795 Net income 6,119 8,235 14,013 25,992 41,733 37,037 39,510

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1 BBC News, “Apple Accused of Failing to Protect Workers,” YouTube video, 3:03, December 18, 2014, accessed December 17, 2015, www.youtube.com/watch?v=kSvT02q4h40. 2 Supplier Responsibility 2014 Progress Report, Apple Inc., January 2014, 4, accessed December 17, 2015, www.apple.com/supplier-responsibility/pdf/Apple_SR_2014_Progress_Report.pdf. 3 Supplier Responsibility 2015 Progress Report, Apple Inc., January 2015, 5, accessed December 17, 2015, www.apple.com/supplier-responsibility/pdf/Apple_Progress_Report_2015.pdf. 4 Kathryn Dill, “The Companies with the Best CSR Reputations,” Forbes, December 8, 2014, accessed January 10, 2016, www.forbes.com/sites/kathryndill/2014/12/08/the-companies-with-the-best-csr-reputations/. 5 All figures are in US$ unless otherwise specified; Graham Ruddick, “Apple Could be Worth $1 Trillion, Says Wall Street,” Telegraph, March 23, 2015, accessed October 16, 2015, www.telegraph.co.uk/technology/apple/11490367/Apple-could-be- worth-1-trillion-says-Wall-Street.html. 6 Adeyemi Adepetum, “Smartphone Industry Earns $380b Revenue 2014,” The Guardian, June 3, 2015, accessed October 16, 2015, www.ngrguardiannews.com/2015/06/smartphone-industry-earns-380b-revenue-in-2014/. 7 Rob Price, “Apple Is Taking 92% of Profits in the Entire Smartphone Industry,” Business Insider UK, July 13, 2015, accessed October 16, 2015, http://uk.businessinsider.com/apple-92-percent-profits-entire-smartphone-industry-q1-samsung-2015-7. 8 Simon Sharwood, “Lenovo Tops China’s Smartphone Market in Just Six Months,” The Register, October 30, 2012, accessed February 26, 2016, www.theregister.co.uk/2012/10/30/lenovo_chinas_number_one_smartphone_maker/. 9 T. Florin, “This Is Xiaomi’s Impressive Army of Smartphones,” phoneArena, January 31, 2015, accessed January 10, 2016, www.phonearena.com/news/This-is-Xiaomis-impressive-army-of-smartphones_id65427. 10 David Gilbert, “Chinese Brands, Huawei, Lenovo, Xiaomi and More Dominate Global Smartphone Industry,” International Business Times, February 9, 2015, accessed January 7, 2016, www.ibtimes.com/chinese-brands-huawei-lenovo-xiaomi- more-dominate-global-smartphone-industry-2078834. 11 Eva Dou, “Xiaomi, China’s New Phone Giant, Takes Aim at World,” The Wall Street Journal, June 7, 2015, accessed January 7, 2016, www.wsj.com/articles/xiaomi-chinas-new-phone-giant-takes-aim-at-world-1433731461. 12 Lior Ronen, “Xiaomi a Threat to Apple, Samsung Smartphone Dominance,” Amigobulls, November 12, 2014, accessed February 20, 2016, http://amigobulls.com/articles/xiaomi-a-threat-to-apple-samsung-smartphone-dominance. 13 Owen W. Linzmayer, “30 Pivotal Moments in Apple’s History,” Macworld, March 30, 2006, accessed January 7, 2016, www.macworld.com/article/1050112/30moments.html. 14 Henry Blodget, “In Case You Had Any Doubts about Where Apple’s Profit Comes From,” Business Insider, August 2, 2012, accessed 7 January, 2016, www.businessinsider.com/iphone-profit-2012-8?IR=T. 15 Matthew Sparkes, “iPhone Owners Admit Having ‘Blind Loyalty’ to Apple,” The Telegraph, February 12, 2014, accessed December 17, 2015, www.telegraph.co.uk/technology/apple/10632787/iPhone-owners-admit-having-blind-loyalty-to-Apple.html. 16 Malcolm Moore, “‘Mass Suicide’ Protest at Apple Manufacturer Foxconn Factory,” The Guardian, January 11, 2012, accessed December 17, 2015, www.telegraph.co.uk/news/worldnews/asia/china/9006988/Mass-suicide-protest-at-Apple- manufacturer-Foxconn-factory.html. 17 TWD = Taiwanese dollar; US$1 = TW$30.29 on December 30, 2011. 18 TWD = Taiwanese dollar; US$1 = TW$29.03 on December 31, 2012. 19 TWD = Taiwanese dollar; US$1 = TW$29.83 on December 31, 2013. 20 China Labor Watch, Apple’s Unkept Promises: Investigation of Three Pegatron Group Factories Supplying to Apple, July 29, 2013, accessed December 17, 2015, www.chinalaborwatch.org/report/68. 21 Paul Mozur, “Apple’s Response to Latest Supplier Labor Abuse Allegations,” The Wall Street Journal, July 29, 2013, accessed January 7, 2016, http://blogs.wsj.com/chinarealtime/2013/07/29/apples-response-to-pegatron-worker-allegations/. 22 Associated Press reporter, “Chinese Workers’ Group Accuses Apple of Ignoring Pledges to Protect Staff and Continuing to Use Sweatshops to Make iPhones,” Daily Mail, July 29, 2013, accessed February 3, 2015, www.dailymail.co.uk/news/article- 2380881/Chinese-workers-group-accuse-Apple-ignoring-pledges-protect-staff-continuing-use-sweatshops-make- iPhones.html. 23 Richard Bilton, “Apple ‘Failing to Protect Chinese Factory Workers’,” BBC News, December 18, 2014, accessed January 7, 2016, www.bbc.co.uk/news/business-30532463. 24 Rhiannon Williams, “Read: Apple’s Letter to UK Staff over Chinese Factory Conditions,” The Telegraph, December 19, 2014, accessed December 20, 2014, www.telegraph.co.uk/technology/apple/11303406/Read-Apples-letter-to-UK-staff-over- Chinese-factory-conditions.html. 25 Supplier Responsibility 2014 Progress Report, op. cit. 26 Apple Inc., “Supplier List 2015,” 2015, accessed January 7, 2016, www.apple.com/supplier- responsibility/pdf/Apple_Supplier_List_2015.pdf. 27 Ewan Spence, “BBC Attacks Apple over Familiar Allegations in Panorama Investigation Over Working Conditions,” Forbes, December 18, 2014, accessed December 17, 2015, www.forbes.com/sites/ewanspence/2014/12/18/bbc-attacks-apple-with- familiar-allegations-in-panorama-investigation-over-working-conditions/. 28 Ewan Spence, “Apple Loop: iOS 8.2 Details, Apple’s Working Conditions Attacked, Ignore Apple Watch,” Forbes, December 18, 2014, accessed December 17, 2015, www.forbes.com/sites/ewanspence/2014/12/19/apple-news-digest-ios-8-2-preview/. 29 Noel Randewich and Reiji Murai, “GT Advanced Bankruptcy Offers Warning to Apple Suppliers,” Reuters, October 8, 2014, accessed January 7, 2016, www.reuters.com/article/us-apple-gt-advanced-tech-idUSKCN0HX0XV20141008.

30 Charles Duhigg and David Barboza, “In China, Human Costs Are Built into an iPad,” The New York Times, January 25, 2012, accessed December 17, 2015, www.nytimes.com/2012/01/26/business/ieconomy-apples-ipad-and-the-human-costs- for-workers-in-china.html. 31 Eva Dou, “Apple Shifts Supply Chain Away From Foxconn to Pegatron,” The Wall Street Journal, May 29, 2013, accessed March 7, 2016, www.theinquirer.net/inquirer/news/2271769/apple-shifts-production-from-foxconn-to-pegatron 32 Mikey Campbell, “Apple Reportedly Looking to Pegatron in Supply Chain Diversification Away From Foxconn,” Apple Insider, May 29, 2013, accessed January 7, 2016, http://appleinsider.com/articles/13/05/29/apple-reportedly-looking-to-pegatron-in- supply-chain-shift-away-from-foxconn. 33 Dou, “Apple Shifts Supply Chain Way from Foxconn to Pegatron,” op. cit. 34 Neil McAllister, “Apple Says ‘Zai Jian’ to Foxconn, Taps Pegatron for New iPhones,” The Register, May 30, 2013, accessed January 7, 2016, www.theregister.co.uk/2013/05/30/apple_taps_pegatron_for_cheaper_iphones/. 35 Dou, “Apple Shifts Supply Chain Away From Foxconn to Pegatron,” op. cit. 36 Apple Inc., “Form 10-K for the Fiscal Year Ended September 27, 2014,” accessed March 7, 2016, http://investor.apple.com/secfiling.cfm?filingid=1193125-14-383437. 37 Aditya Chakrabortty, “The Woman Who Nearly Died Making Your iPad,” The Guardian, August 5, 2013, accessed January 7, 2016, www.theguardian.com/commentisfree/2013/aug/05/woman-nearly-died-making-ipad; Sarah Mishkin, “Overtime Work at Foxconn Still Beyond China’s Legal Limits,” Financial Times, December 12, 2013, accessed January 7, 2016, www.ft.com/cms/s/0/af799a06-6334-11e3-a87d-00144feabdc0.html#axzz3wZbqcdNt. 38 The Hudl was a tablet computer produced by Pegatron for the British supermarket chain Tesco. 39 Barry Collins, “Bad Apple or the Best of a Bad Bunch? The Sad Reality about Apple’s Broken Promises From BBC Panorama,” Alphr, December 19, 2014, accessed December 17, 2015, www.alphr.com/smartphones/1000196/bad-apple-or- the-best-of-a-bad-bunch-the-sad-reality-about-apples-broken. 40 Simon Rockman, “Apple v BBC: Fruity Firm Hits Back over Panorama Drama,” The Register, December 19, 2014, accessed December 17, 2015, www.theregister.co.uk/2014/12/19/apple_vs_beeb_fruitier_hits_back_on_worker_rights_wrongs_issue/. 41 Brad Reed, “Apple’s Response to the BBC’s Sweatshop Labor Report Is Completely Tone Deaf,” BGR, December 19, 2014, accessed December 17, 2015, http://bgr.com/2014/12/19/apple-china-factory-conditions-response/. 42 Williams, op. cit. 43 Brian X. Chen, “BBC Documentary Shows Harsh Conditions for Workers in iPhone Factories,” The New York Times, December 19, 2014, accessed December 17, 2015, http://bits.blogs.nytimes.com/2014/12/19/bbc-documentary-shows-harsh- conditions-for-workers-in-iphone-factories/. 44 China Labor Watch, “Apple’s Unkept Promises on Working Conditions Continue,” press release, December 19, 2014, accessed December 17, 2015, www.chinalaborwatch.org/newscast/421. 45 Marcelo Prince and Willa Plank. “A Short History of Apple’s Manufacturing in the U.S,” The Wall Street Journal, December 6, 2012, accessed January 7, 2016, http://blogs.wsj.com/digits/2012/12/06/a-short-history-of-apples-manufacturing-in-the-u-s/. 46 Charles Duhigg and Keith Bradsher, “How the U.S. Lost out on iPhone Work,” The New York Times, January 21, 2012, accessed February 21, 2016, www.nytimes.com/2012/01/22/business/apple-america-and-a-squeezed-middle-class.html?_r=0. 47 Henry Blodget, “Steve Jobs Freaked out a Month Before First iPhone was Released and Demanded a New Screen,” Business Insider, January 22, 2012, accessed February 20, 2016, www.businessinsider.com/steve-jobs-new-iphone-screen- 2012-1?IR=T. 48 Ibid. 49 Duhigg and Bradsher, op. cit. 50 China Labor Watch, “Apple’s Unkept Promises: Investigation of Three Pegatron Group Factories Supplying to Apple,” op. cit. 51 Ibid. 52 Duhigg and Bradsher, op. cit. 53 Ibid. 54 Josh Ong, “Apple’s Overseas Manufacturing Operations Offer Flexibility, Not Just Savings — Report,” Appleinsider, January 22, 2012, accessed October 16, 2015, http://appleinsider.com/articles/12/01/22/apples_overseas_manufacturing_ operations_offer_much_needed_flexibility_not_just_savings. 55 Drake Baer, “Steve Jobs and President Obama Had a Dinner Together in 2011 That May Have Changed the Course of US History,” Business Insider, January 8, 2015, accessed February 20, 2016, http://uk.businessinsider.com/when-steves-jobs- and-barack-obama-dined-2015-1?r=US&IR=T. 56 Ryan Avent, “Apple and the American Economy,” The Economist, January 23, 2012, accessed February 20, 2016, www.economist.com/blogs/freeexchange/2012/01/supply-chains. 57 “The World’s Most Valuable Brands,” Forbes, 2015, accessed January 7, 2016, www.forbes.com/powerful-brands/list/. 58 “The World’s Biggest Public Companies,” Forbes, 2015, accessed January 7, 2016, www.forbes.com/global2000/list/#tab:overall. 59 “America’s Best Employers,” Forbes, 2015, accessed March 7, 2016, www.forbes.com/sites/clareoconnor/2015/03/25/ americas-best-employers-2015/#157418596ceb. 60 Richard Welford, “Media Misreporting and Apple’s CSR,” CSR Asia, accessed February 20, 2016, www.csr- asia.com/test/home/csr-asia-weekly-news-detail.php?id=11962.

MANAGEMENT 14E

GE

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MANAGEMENT Stephen P. Robbins

San Diego State University

Mary Coulter Missouri State University

With contributions by

Joseph J. Martocchio University of Illinois

Lori K. Long Baldwin Wallace University

14E

GE

Harlow, England • London • New York • Boston • San Francisco • Toronto • Sydney • Dubai • Singapore • Hong Kong Tokyo • Seoul • Taipei • New Delhi • Cape Town • Sao Paulo • Mexico City • Madrid • Amsterdam • Munich • Paris • Milan

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Vice President, Business Publishing: Donna Battista Director of Portfolio Management: Stephanie Wall Portfolio Manager: Kris Ellis-Levy Associate Acquisitions Editor, Global Edition: Ishita Sinha Associate Project Editor, Global Edition: Paromita Banerjee Assistant Editor, Global Edition: Tahnee Wager Editorial Assistant: Hannah Lamarre Vice President, Product Marketing: Roxanne McCarley Director of Strategic Marketing: Brad Parkins Strategic Marketing Manager: Deborah Strickland Product Marketer: Becky Brown Field Marketing Manager: Lenny Ann Kucenski Product Marketing Assistant: Jessica Quazza Vice President, Production and Digital Studio, Arts and Business: Etain O’Dea Director of Production, Business: Jeff Holcomb

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© Pearson Education Limited 2018

The rights of Stephen P. Robbins and Mary A. Coulter to be identified as the authors of this work have been asserted by them in accordance with the Copyright, Designs and Patents Act 1988.

Authorized adaptation from the United States edition, entitled Management, 14th Edition, ISBN 978-0-13-452760-4 by Stephen P. Robbins and Mary Coulter, published by Pearson Education © 2018.

All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without either the prior written permission of the publisher or a license permitting restricted copying in the United Kingdom issued by the Copyright Licensing Agency Ltd, Saffron House, 6–10 Kirby Street, London EC1N 8TS.

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To my wife, Laura Steve

To my husband, Ron Mary

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STEPHEN P. ROBBINS received his Ph.D. from the University of Arizona. He previously worked for the Shell Oil Company and Reynolds Metals Company and has taught at the University of Nebraska at Omaha, Concordia University in Montreal, the University of Baltimore, Southern Illinois University at Edwardsville, and San Diego State University. He is currently professor emeritus in management at San Diego State.

Dr. Robbins’s research interests have focused on conflict, power, and politics in organizations, behavioral decision making, and the development of effective interpersonal skills. His articles on these and other topics have appeared in such journals as Business Horizons, the California Management Review, Business and Economic Perspectives, International Management, Management Review, Canadian Personnel and Industrial Relations, and The Journal of Management Education.

Dr. Robbins is the world’s best-selling textbook author in the areas of management and organizational behavior. His books have sold more than 7 million copies and have been translated into 20 languages. His books are currently used at more than 1,500 U.S. colleges and universities, as well as hundreds of schools throughout Canada, Latin America, Australia, New Zealand, Asia, Europe, and the Arab World.

Dr. Robbins also participates in masters track competition. Since turning 50 in 1993, he’s won 23 national championships and 14 world titles. He was inducted into the U.S. Masters Track & Field Hall of Fame in 2005.

MARY COULTER received her Ph.D. from the University of Arkansas. She held different jobs including high school teacher, legal assistant, and city government program planner before completing her graduate work. She has taught at Drury University, the University of Arkansas, Trinity University, and Missouri State University. She is currently professor emeritus of management at Missouri State University. In addition to Management, Dr. Coulter has published other books with Pearson including Fundamentals of Management (with Stephen P. Robbins), Strategic Management in Action, and Entrepreneurship in Action.

When she’s not busy writing, Dr. Coulter enjoys puttering around in her flower gardens, trying new recipes, reading all different types of books, and enjoying many different activities with husband Ron, daughters and sons-in-law Sarah and James, and Katie and Matt, and most especially with her two grandkids, Brooklynn and Blake, who are the delights of her life!

About the Authors

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Preface 29 Acknowledgments 37

Brief Contents

Part 1 Introduction to Management

Chapter 1: Managers and You in the Workplace 38

Management History Module 66 Chapter 2: Decision Making 80

Part 1 Management Practice 110

Chapter 3: Global Management 114

Chapter 4: Valuing a Diverse Workforce 144

Chapter 5: Socially-Conscious

Management 178

Chapter 6: Managing Change 212

Chapter 7: Constraints on Managers 252

Part 2 Management Practice 282

Part 2 Basics of Managing in Today’s Workplace

Part 3 Planning

Chapter 8: Planning and Goal-Setting 288

Chapter 9: Strategic Planning 312

Chapter 10: Fostering Entrepreneurship 342

Part 3 Management Practice 378

Part 4 Organizing

Chapter 11: Organization Design 382

Chapter 12: Organizing Around Teams 414

Chapter 13: Human Resource Management 444

Part 4 Management Practice 482

Part 5 Leading

Chapter 14: Interpersonal and

Organizational Communication 486

Chapter 15: Organizational Behavior 518

Chapter 16: Leadership 554

Chapter 17: Motivation 588

Part 5 Management Practice 624

Part 6 Controlling

Chapter 18: Controlling Activities

and Operations 630

Planning and Control Techniques Module 664 Managing Operations Module 682 Part 6 Management Practice 698

Glossary 703 • Name Index 715 • Organization Index 735 • Subject Index 741

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Preface 29

Acknowledgments 37

Part 1 Introduction to Management 38

Chapter 1: Managers and You in the Workplace 38 Who Are Managers and Where Do They Work? 40

Who Is a Manager? 40 Where Do Managers Work? 41

Why Are Managers Important? 43 What Do Managers Do? 44

Management Functions 45 Mintzberg’s Managerial Roles and a Contemporary Model of Managing 46 Management Skills 47

How Is the Manager’s Job Changing? 49 Focus on the Customer 49 Focus on Technology 51 Focus on Social Media 51 Focus on Innovation 52 Focus on Sustainability 52 Focus on the Employee 53

Why Study Management? 53 The Universality of Management 53 The Reality of Work 54 Rewards and Challenges of Being a Manager 54 Gaining Insights into Life at Work 55

Boxed Features It’s Your Career: The ABC’s of Managing Your Time 38 FYI 42 Future Vision: Is It Still Managing When What You’re Managing Are Robots? 42 Let’s Get REAL 46, 49 Leader Making a Difference: Ursula Burns 52 Workplace Confidential: Dealing with Organizational Politics 56

Preparing for: Exams/Quizzes 57 Chapter Summary by Learning Objectives 57 Review and Discussion Questions 58

Preparing for: My Career 59 Personal Inventory Assessments: Time Management Assessment 59 Ethics Dilemma 59 Skill Exercise: Developing Your Political Skill 59

Contents

11

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12 Contents

Working Together: Team Exercise 60 My Turn to Be a Manager 60

Case Application 1: The Power of Social Media 60 Case Application 2: Who Needs a Boss? 61

Management History Module 66 Early Management 66 Classical Approach 68

Scientific Management 68 General Administrative Theory 69

Behavioral Approach 71 Quantitative Approach 73 Contemporary Approaches 75

Chapter 2: Decision Making 80 The Decision-Making Process 81

Step 1: Identify a Problem 82 Step 2: Identify Decision Criteria 83 Step 3: Allocate Weights to the Criteria 84 Step 4: Develop Alternatives 84 Step 5: Analyze Alternatives 84 Step 6: Select an Alternative 85 Step 7: Implement the Alternative 85 Step 8: Evaluate Decision Effectiveness 85

Approaches to Decision Making 86 Rationality 86 Bounded Rationality 87 Intuition 87 Evidence-Based Management 88

Types of Decisions and Decision-Making Conditions 89 Types of Decisions 89 Decision-Making Conditions 91

Decision-Making Biases and Errors 94 Overview of Managerial Decision Making 96

Effective Decision Making in Today’s World 98 Guidelines for Effective Decision Making 98 Design Thinking and Decision Making 99 Big Data and Decision Making 100

Boxed Features It’s Your Career: Problem Solving—Not A Problem 80 FYI 86, 89, 96, 99 Let’s Get REAL 89 Future Vision: Crowdsourcing Decisions 92 Leader Making a Difference: Elon Musk 94 Workplace Confidential: Making Good Decisions 97

Preparing for: Exams/Quizzes 101 Chapter Summary by Learning Objectives 101 Review and Discussion Questions 102

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Contents 13

Preparing for: My Career 103 Personal Inventory Assessments: Solving Problems Analytically and Creatively 103 Ethics Dilemma 103 Skills Exercise: Developing Your Creativity Skill 103 Working Together: Team Exercise 104 My Turn to Be a Manager 104

Case Application 1: On The Cards: Decision Making 105 Case Application 2: Manchester City: Football Big Data Champions 105

Part 1: Management Practice 110 A Manager’s Dilemma 110 Global Sense 110 Continuing Case: Starbucks—Introduction 110

Part 2 Basics of Managing in Today’s Workplace 114

Chapter 3: Global Management 114 Who Owns What? 116

What’s Your Global Perspective? 117 Understanding the Global Trade Environment 118

Regional Trading Alliances 118 Global Trade Mechanisms 122

Doing Business Globally 124 Different Types of International Organizations 124 How Organizations Go International 125

Managing in a Global Environment 126 The Political/Legal Environment 127 The Economic Environment 127 The Cultural Environment 129 Global Management in Today’s World 132 Challenges of Managing a Global Workforce 133

Boxed Features It’s Your Career: Developing Your Global Perspective—Working with People from Other Cultures 114 FYI 117, 118, 124 Leader Making a Difference: Lucy Peng 123 Future Vision: Communicating in a Connected World 128 Let’s Get REAL 133

Preparing for: Exams/Quizzes 134 Chapter Summary by Learning Objectives 134 Review and Discussion Questions 136

Preparing for: My Career 136 Personal Inventory Assessments: Intercultural Sensitivity Scale 136 Ethics Dilemma 136 Skills Exercise: Developing Your Collaboration Skill 137 Working Together: Team Exercise 137 My Turn to Be a Manager 137

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14 Contents

Case Application 1: Dirty Little Secret 138 Case Application 2: The Power of Presence 139

Answers to “Who Owns What” Quiz 140

Chapter 4: Valuing a Diverse Workforce 144 Diversity 101 146

What Is Workplace Diversity? 146 Why Is Managing Workforce Diversity So Important? 147

The Changing Workplace 150 Characteristics of the U.S. Population 150 Global Population Trends and the Changing Global Workforce 152

Types of Workplace Diversity 153 Age 153 Gender 155 Race and Ethnicity 157 Disability/Abilities 158 Religion 160 LGBT: Sexual Orientation and Gender Identity 161 Other Types of Diversity 161

Challenges in Managing Diversity 162 Personal Bias 162 Glass Ceiling 163

Workplace Diversity Initiatives 165 The Legal Aspect of Workplace Diversity 165 Top Management Commitment to Diversity 165 Mentoring 166 Diversity Skills Training 167 Employee Resource Groups 167

Boxed Features It’s Your Career: Find a Great Sponsor/Mentor—Be a Great Protégé 144 FYI 148, 150, 156, 164, 165 Let’s Get REAL 149, 158 Workplace Confidential: Dealing with Diversity 151 Future Vision: Diversity of Thought 162 Leader Making a Difference: Dr. Rohini Anand 163

Preparing for: Exam/Quizzes 168 Chapter Summary by Learning Objectives 168 Review and Discussion Questions 169

Preparing for: My Career 170 Personal Inventory Assessments: Multicultural Awareness Scale 170 Ethics Dilemma 170 Skills Exercise: Developing Your Valuing Diversity Skill 170 Working Together: Team Exercise 171 My Turn to Be a Manager 171

Case Application 1: An Ethical Hotel where Disabled People Can Find Their Way 172 Case Application 2: Women in Management at Deutsche Telekom 173

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Contents 15

Chapter 5: Socially-Conscious Management 178 What Is Social Responsibility? 180

From Obligations to Responsiveness to Responsibility 180 Should Organizations Be Socially Involved? 181

Green Management and Sustainability 183 How Organizations Go Green 183 Evaluating Green Management Actions 184

Managers and Ethical Behavior 186 Factors That Determine Ethical and Unethical Behavior 186 Ethics in an International Context 189

Encouraging Ethical Behavior 191 Employee Selection 192 Codes of Ethics and Decision Rules 193 Leadership at the Top 195 Job Goals and Performance Appraisal 195 Ethics Training 196 Independent Social Audits 196

Social Responsibility and Ethics Issues in Today’s World 197 Managing Ethical Lapses and Social Irresponsibility 197 Social Entrepreneurship 199 Businesses Promoting Positive Social Change 199

Boxed Features It’s Your Career: How to Be Ethical When No One Else Seems to Be 178 FYI 183, 187, 192, 196, 200 Leader Making a Difference: Yvon Chouinard 184 Let’s Get REAL 185, 191 Future Vision: Building an Ethical Culture That Lasts 193 Workplace Confidential: Balancing Work and Personal Life 201

Preparing for: Exams/Quizzes 202 Chapter Summary by Learning Objective 202 Review and Discussion Questions 203

Preparing for: My Career 204 Personal Inventory Assessments: Ethical Leadership Assessment 204 Ethics Dilemma 204 Skills Exercise: Developing Your Building Trust Skill 204 Working Together: Team Exercise 205 My Turn to Be a Manager 205

Case Application 1: A Novel Wellness Culture 205 Case Application 2: Defeating the System: Ethics at Volkswagen 206

Chapter 6: Managing Change 212 The Case for Change 214

External Factors 215 Internal Factors 215

The Change Process 216 Calm Waters Versus White-Water Rapids Metaphors 217 Reactive Versus Proactive Change Processes 218

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16 Contents

Areas of Change 219 Strategy 220 Structure 220 Technology 220 People 221

Managing Change 222 Why Do People Resist Change? 222 Techniques for Reducing Resistance to Change 223

Contemporary Issues in Managing Change 225 Leading Change 225 Creating a Culture for Change 226 Employee Stress 227

Stimulating Innovation 232 Creativity Versus Innovation 232 Stimulating and Nurturing Innovation 232 Innovation and Design Thinking 236

Disruptive Innovation 237 Definition 237 Why Disruptive Innovation Is Important 238 Who’s Vulnerable? 238 Implications 239

Boxed Features It’s Your Career: Learning to Manage Your Stress 212 FYI 215, 225, 228, 232, 234 Let’s Get REAL 223, 235 Leader Making a Difference: Satya Nadella 227 Workplace Confidential: Coping with Job Stress 231 Future Vision: The Internet of Things 233

Preparing for: Exams/Quizzes 241 Chapter Summary by Learning Objectives 241 Review and Discussion Questions 242

Preparing for: My Career 243 Personal Inventory Assessments: Are You a Type A Personality? 243 Ethics Dilemma 243 Skills Exercise: Developing Your Change Management Skill 243 Working Together: Team Exercise 244 My Turn to Be a Manager 244

Case Application 1: A. S. Watson Group 245 Case Application 2: The iPhone: A Technology Disruptor 246

Chapter 7: Constraints on Managers 252 The Manager: Omnipotent or Symbolic? 254

The Omnipotent View 254 The Symbolic View 254

The External Environment: Constraints and Challenges 255 The Economic Environment 256 The Demographic Environment 256 How the External Environment Affects Managers 258

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Contents 17

Organizational Culture: Constraints and Challenges 261 What Is Organizational Culture? 261 Strong Cultures 264 Where Culture Comes From and How It Continues 265 How Employees Learn Culture 266 How Culture Affects Managers 268

Current Issues in Organizational Culture 271 Creating an Innovative Culture 271 Creating a Customer-Responsive Culture 271 Creating a Sustainability Culture 272

Boxed Features It’s Your Career: Reading an Organization’s Culture: Find One Where You’ll Be Happy 252 Future Vision: Tomorrow’s Workplace: Sustainability and You 257 Let’s Get REAL 258, 266 Leader Making a Difference: Indra Nooyi 260 FYI 261 Workplace Confidential: Adjusting to a New Job or Work Team 269

Preparing for: Exams/Quizzes 273 Chapter Summary by Learning Objectives 273 Review and Discussion Questions 274

Preparing for: My Career 274 Personal Inventory Assessments: What’s My Comfort with Change? 274 Ethics Dilemma 274 Skills Exercise: Developing Your Environmental Scanning Skill 275 Working Together: Team Exercise 275 My Turn to Be a Manager 275

Case Application 1: Tesco: Time to Refocus 276 Case Application 2: The Sky is the Limit 277

Part 2: Management Practice 282 A Manager’s Dilemma 282 Global Sense 282 Continuing Case: Starbucks—Basics of Managing in Today’s Workplace 282

Part 3 Planning 288

Chapter 8: Planning and Goal-Setting 288 The What and Why of Planning 290

What Is Planning? 290 Why Do Managers Plan? 290 Planning and Performance 290

Goals and Plans 291 Types of Goals 291 Types of Plans 292

Setting Goals and Developing Plans 294 Approaches to Setting Goals 294

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18 Contents

Developing Plans 298 Approaches to Planning 299

Contemporary Issues in Planning 300 How Can Managers Plan Effectively in Dynamic Environments? 300 How Can Managers Use Environmental Scanning? 301 Digital Tools 302

Boxed Features It’s Your Career: You Gotta Have Goals 288 FYI 291, 298, 300 Let’s Get REAL 292, 297 Leader Making a Difference: Jeff Bezos 294 Workplace Confidential: When You Face a Lack of Clear Directions 295 Future Vision: Using Social Media for Environmental Scanning 303

Preparing for: Exams/Quizzes 304 Chapter Summary by Learning Objectives 304 Review and Discussion Questions 305

Preparing for: My Career 306 Personal Inventory Assessments: Tolerance of Ambiguity Scale 306 Ethics Dilemma 306 Skills Exercise: Making a To-Do List that Works and Using It 306 Working Together: Team Exercise 307 My Turn to Be a Manager 307

Case Application 1: Hermès: Delivering Change 308 Case Application 2: Shifting Direction 309

Chapter 9: Strategic Planning 312 Strategic Management 314

What Is Strategic Management? 314 Why Is Strategic Management Important? 314

The Strategic Management Process 316 Step 1: Identifying the Organization’s Current Mission, Goals, and Strategies 316 Step 2: Doing an External Analysis 317 Step 3: Doing an Internal Analysis 317 Step 4: Formulating Strategies 319 Step 5: Implementing Strategies 319 Step 6: Evaluating Results 319

Corporate Strategies 319 What Is Corporate Strategy? 321 What Are the Types of Corporate Strategy? 321 How Are Corporate Strategies Managed? 322

Competitive Strategies 323 The Role of Competitive Advantage 323 Choosing a Competitive Strategy 326

Current Strategic Management Issues 327 The Need for Strategic Leadership 327 The Need for Strategic Flexibility 329 Important Organizational Strategies for Today’s Environment 330

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Contents 19

Boxed Features It’s Your Career: Learning Your Strengths and Weaknesses: Accentuate the Positive 312 FYI 317, 325, 329 Let’s Get REAL 318, 328 Workplace Confidential: Developing a Career Strategy 320 Leader Making a Difference: Mary Barra 321 Future Vision: Big Data as a Strategic Weapon 324

Preparing for: Exams/Quizzes 332 Chapter Summary by Learning Objectives 332 Review and Discussion Questions 333

Preparing for: My Career 334 Personal Inventory Assessments: Creative Style Indicator 334 Ethics Dilemma 334 Skills Exercise: Developing Your Business Planning Skill 334 Working Together: Team Exercise 336 My Turn to Be a Manager 336

Case Application 1: Fast Fashion 336 Case Application 2: A Simple Strategy at Costco 337

Chapter 10: Fostering Entrepreneurship 342 The Context of Entrepreneurship 343

What Is Entrepreneurship? 343 Entrepreneurship Versus Self-Employment 344 Why Is Entrepreneurship Important? 344 The Entrepreneurial Process 345 What Do Entrepreneurs Do? 345 Social Responsibility and Ethical Issues Facing Entrepreneurs 346

Start-Up and Planning Issues 348 Identifying Environmental Opportunities and Competitive Advantage 349 Researching the Venture’s Feasibility—Ideas 351 Researching the Venture’s Feasibility—Competitors 354 Researching the Venture’s Feasibility—Financing 354 Developing a Business Plan 355 The Sharing Economy 356

Organizing Issues 357 Legal Forms of Organization 357 Organizational Design and Structure 359 Human Resource Management 360 Initiating Change 361 The Importance of Continuing Innovation 362

Leading Issues 362 Personality Characteristics of Entrepreneurs 362 Motivating Employees Through Empowerment 363 The Entrepreneur as Leader 364

Control Issues 365 Managing Growth 365 Managing Downturns 367 Exiting the Venture 368

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20 Contents

Boxed Features It’s Your Career: Being Entrepreneurial Even If You Don’t Want to Be an Entrepreneur 342 FYI 346, 349, 351 Workplace Confidential: Dealing with Risks 347 Future Vision: The Growth of Social Businesses 348 Let’s Get REAL 352, 356 Leader Making a Difference: Mark Zuckerberg 364

Preparing for: Exams/Quizzes 369 Chapter Summary by Learning Objectives 369 Review and Discussion Questions 370

Preparing for: My Career 371 Personal Inventory Assessments: Innovative Attitude Scale 371 Ethics Dilemma 371 Skills Exercise: Developing Grit 371 Working Together: Team Exercise 372 My Turn to Be a Manager 372

Case Application 1: The Fear of Failure 373 Case Application 2: The Right Recipe for Entrepreneurs: Fifteen 374

Part 3: Management Practice 378 A Manager’s Dilemma 378 Global Sense 378 Continuing Case: Starbucks—Planning 378

Part 4 Organizing 382

Chapter 11: Organization Design 382 Six Elements of Organizational Design 383

Work Specialization 384 Departmentalization 385 Chain of Command 387 Span of Control 390 Centralization and Decentralization 391 Formalization 392

Mechanistic and Organic Structures 392 Contingency Factors Affecting Structural Choice 393

Strategy and Structure 393 Size and Structure 394 Technology and Structure 394 Environmental Uncertainty and Structure 394

Traditional Organizational Design Options 395 Simple Structure 395 Functional Structure 395 Divisional Structure 395

Organizing for Flexibility in the Twenty-First Century 396 Team Structures 396 Matrix and Project Structures 397

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Contents 21

The Boundaryless Organization 398 Telecommuting 400 Compressed Workweeks, Flextime, and Job Sharing 402 The Contingent Workforce 402

Boxed Features It’s Your Career: Staying Connected 382 Let’s Get REAL 388, 401 Workplace Confidential: Coping with Multiple Bosses 389 FYI 390, 391, 398, 401, 402 Leader Making a Difference: Zhang Ruimin 393 Future Vision: Flexible Organizations 399

Preparing for: Exams/Quizzes 404 Chapter Summary by Learning Objectives 404 Review and Discussion Questions 405

Preparing for: My Career 406 Personal Inventory Assessments: Organizational Structure Assessment 406 Ethics Dilemma 406 Skills Exercise: Developing Your Acquiring Power Skill 406 Working Together: Team Exercise 407 My Turn to Be a Manager 407

Case Application 1: A New Kind of Structure 408 Case Application 2: Organizational Volunteers 409

Chapter 12: Organizing Around Teams 414 Groups and Group Development 416

What Is a Group? 416 Stages of Group Development 416

Work Group Performance and Satisfaction 418 External Conditions Imposed on the Group 418 Group Member Resources 418 Group Structure 418 Group Processes 422 Group Tasks 425

Turning Groups into Effective Teams 426 The Difference Between Groups and Teams 426 Types of Work Teams 427 Creating Effective Work Teams 428

Contemporary Challenges in Managing Teams 432 Managing Global Teams 432 Building Team Skills 433 Understanding Social Networks 434

Boxed Features It’s Your Career: Developing Your Coaching Skills 414 FYI 422, 426, 428, 429 Let’s Get REAL 425, 430 Future Vision: Conflict 2.0 425 Workplace Confidential: Handling Difficult Coworkers 431 Leader Making a Difference: Dr. Dara Richardson-Heron 433

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22 Contents

Preparing for: Exams/Quizzes 435 Chapter Summary by Learning Objectives 435 Review and Discussion Questions 436

Preparing for: My Career 437 Personal Inventory Assessments: Diagnosing the Need for Team Building 437 Ethics Dilemma 437 Skills Exercise: Developing Your Coaching Skills 437 Working Together: Team Exercise 438 My Turn to Be a Manager 438

Case Application 1: Who Needs a Manager? 438 Case Application 2: 737 Teaming Up for Takeoff 439

Chapter 13: Human Resource Management 444 Why Human Resource Management Is Important and the Human Resource Management Process 446 External Factors that Affect the Human Resource Management Process 448

The Economy 448 Labor Unions 448 Laws and Rulings 449 Demography 451

Identifying and Selecting Competent Employees 452 Human Resource Planning 453 Recruitment and Decruitment 454 Selection 456

Providing Employees with Needed Skills and Knowledge 459 Orientation 460 Employee Training 460

Retaining Competent, High-Performing Employees 462 Employee Performance Management 462 Compensation and Benefits 463

Contemporary Issues in Managing Human Resources 466 Managing Downsizing 466 Managing Sexual Harassment 467 Controlling HR Costs 467

Boxed Features It’s Your Career: Negotiating Your Salary 444 Leader Making a Difference: Laszlo Bock 451 Workplace Confidential: Job Search 455 FYI 456, 461, 467 Let’s Get REAL 459, 464 Future Vision: Gamification of HR 468

Preparing for: Exams/Quizzes 469 Chapter Summary by Learning Objectives 469 Review and Discussion Questions 471

Preparing for: My Career 471 Personal Inventory Assessments: Work Performance Assessment 471 Ethics Dilemma 472 Skills Exercise: Developing Your Interviewing Skills 472 Working Together: Team Exercise 473 My Turn to Be a Manager 473

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Contents 23

Case Application 1: Maersk and HR Management Challenges in China 474 Case Application 2: Measuring Output, Not Hours Worked 475

Part 4: Management Practice 482 A Manager’s Dilemma 482 Global Sense 482 Continuing Case: Starbucks—Organizing 482

Part 5 Leading 486

Chapter 14: Interpersonal and Organizational Communication 486 The Nature and Function of Communication 487

What Is Communication? 488 Functions of Communication 488

Methods and Challenges of Interpersonal Communication 489 Methods 489 Barriers 492 Overcoming the Barriers 494

Effective Organizational Communication 497 Formal Versus Informal 497 Direction of Flow 497 Networks 498 Workplace Design and Communication 500

Communication in the Internet and Social Media Age 501 The 24/7 Work Environment 502 Working from Anywhere 502 Social Media 502 Balancing the Pluses and Minuses 503 Choosing the Right Media 503

Communication Issues in Today’s Organizations 504 Managing Communication in a Digitally Connected World 504 Managing the Organization’s Knowledge Resources 505 The Role of Communication in Customer Service 505 Getting Employee Input 506 Communicating Ethically 507

Becoming a Better Communicator 508 Sharpening Your Persuasion Skills 508 Sharpening Your Speaking Skills 508 Sharpening Your Writing Skills 508 Sharpening Your Reading Skills 509

Boxed Features It’s Your Career: I’m Listening! 486 Leader Making a Difference: Angela Ahrendts 492 FYI 494, 497, 500 Let’s Get REAL 495, 499 Workplace Confidential: An Uncommunicative Boss 496 Future Vision: No Longer Lost in Translation 503

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24 Contents

Preparing for: Exams/Quizzes 509 Chapter Summary by Learning Objectives 509 Review and Discussion Questions 511

Preparing for: My Career 511 Personal Inventory Assessments: Communication Styles 511 Ethics Dilemma 511 Skills Exercise: Developing Your Presentation Skills 512 Working Together: Team Exercise 512 My Turn to Be a Manager 512

Case Application 1: Is Anytime Feedback Too Much? 513 Case Application 2: Neutralizing the Concordia Effect! 514

Chapter 15: Organizational Behavior 518 Focus and Goals of Organizational Behavior 520

Focus of Organizational Behavior 520 Goals of Organizational Behavior 521

Attitudes and Job Performance 521 Job Satisfaction 522 Job Involvement and Organizational Commitment 524 Employee Engagement 524 Attitudes and Consistency 525 Cognitive Dissonance Theory 525 Attitude Surveys 526 Implications for Managers 527

Personality 527 MBTI® 528 The Big Five Model 530 Additional Personality Insights 530 Personality Types in Different Cultures 532 Emotions and Emotional Intelligence 533 Implications for Managers 536

Perception 537 Factors That Influence Perception 537 Attribution Theory 538 Shortcuts Used in Judging Others 539 Implications for Managers 540

Learning 540 Operant Conditioning 540 Social Learning 541 Shaping: A Managerial Tool 541 Implications for Managers 542

Boxed Features It’s Your Career: Self Awareness: You Need to Know Yourself Before You Can Know Others 518 FYI 522, 525, 538 Leader Making a Difference: Carolyn McCall 527 Let’s Get REAL 529, 533 Workplace Confidential: An Abusive Boss 534 Future Vision: Increased Reliance on Emotional Intelligence 535

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Contents 25

Preparing for: Exams/Quizzes 542 Chapter Summary by Learning Objectives 542 Review and Discussion Questions 544

Preparing for: My Career 544 Personal Inventory Assessments: Emotional Intelligence Assessment 544 Ethics Dilemma 544 Skills Exercise: Developing Your Shaping Behavior Skill 545 Working Together: Team Exercise 545 My Turn to Be a Manager 545

Case Application 1: A Great Place to Work 546 Case Application 2: Employees First 547

Chapter 16: Leadership 554 Who Are Leaders and What Is Leadership? 555 Early Leadership Theories 556

Leadership Traits 556 Leadership Behaviors 556

Contingency Theories of Leadership 559 The Fiedler Model 559 Hersey and Blanchard’s Situational Leadership Theory 561 Path-Goal Model 562

Contemporary Views of Leadership 564 Leader–Member Exchange (LMX) Theory 564 Transformational-Transactional Leadership 564 Charismatic-Visionary Leadership 565 Authentic Leadership 566 Ethical Leadership 567 Team Leadership 567

Leadership Issues in the Twenty-First Century 569 Managing Power 569 Developing Trust 571 Empowering Employees 572 Leading Across Cultures 573 Becoming an Effective Leader 574

Boxed Features It’s Your Career: Being a More Charismatic Leader 554 FYI 556, 562, 564, 566, 571, 575 Leader Making a Difference: Dr. Delos “Toby” Cosgrove 565 Let’s Get REAL 568, 571 Workplace Confidential: A Micromanaging Boss 570 Future Vision: Flexible Leadership 574

Preparing for: Exams/Quizzes 576 Chapter Summary by Learning Objectives 576 Review and Discussion Questions 577

Preparing for: My Career 578 Personal Inventory Assessments: Leadership Style Inventory 578 Ethics Dilemma 578 Skills Exercise: Developing Your Choosing an Effective Leadership Style Skill 578

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26 Contents

Working Together: Team Exercise 579 My Turn to Be a Manager 579

Case Application 1: Indra Nooyi: An Inspiring Leader 580 Case Application 2: Leadership Development at L’Oréal 581

Chapter 17: Motivation 588 What Is Motivation? 589 Early Theories of Motivation 590

Maslow’s Hierarchy of Needs Theory 590 McGregor’s Theory X and Theory Y 591 Herzberg’s Two-Factor Theory 592 Three-Needs Theory 593

Contemporary Theories of Motivation 594 Goal-Setting Theory 594 Reinforcement Theory 596 Designing Motivating Jobs 596 Equity Theory 599 Expectancy Theory 602 Integrating Contemporary Theories of Motivation 603

Current Issues in Motivation 605 Managing Cross-Cultural Motivational Challenges 605 Motivating Unique Groups of Workers 606 Designing Appropriate Rewards Programs 609

Boxed Features It’s Your Career: What Motivates You? 588 FYI 592, 596, 600, 610 Leader Making a Difference: Susan Wojcicki 595 Workplace Confidential: Feelings of Unfair Pay 601 Let’s Get REAL 604, 611 Future Vision: Individualized Rewards 607

Preparing for: Exams/Quizzes 612 Chapter Summary by Learning Objectives 612 Review and Discussion Questions 613

Preparing for: My Career 614 Personal Inventory Assessments: Work Motivation Indicator 614 Ethics Dilemma 614 Skills Exercise: Developing Your Motivating Employees Skill 614 Working Together: Team Exercise 615 My Turn to Be a Manager 615

Case Application 1: Hong Kong Disneyland: HR Programs to Motivate Employees 616 Case Application 2: Balancing Success and Happiness 617

Part 5: Management Practice 624 A Manager’s Dilemma 624 Global Sense 625 Continuing Case: Starbucks—Leading 626

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Contents 27

Part 6 Controlling 630

Chapter 18: Controlling Activities and Operations 630 What Is Controlling and Why Is It Important? 632 The Control Process 633

Step 1: Measuring Actual Performance 634 Step 2: Comparing Actual Performance Against the Standard 635 Step 3: Taking Managerial Action 636 Managerial Decisions in Controlling 636

Controlling for Organizational and Employee Performance 637 What Is Organizational Performance? 637 Measures of Organizational Performance 638 Controlling for Employee Performance 639

Tools for Measuring Organizational Performance 642 Feedforward/Concurrent/Feedback Controls 642 Financial Controls 643 Information Controls 645 Balanced Scorecard 646 Benchmarking of Best Practices 646

Contemporary Issues in Control 647 Adjusting Controls for Cross-Cultural Differences and Global Turmoil 648 Workplace Privacy 649 Employee Theft 650 Workplace Violence 651 Controlling Customer Interactions 652 Corporate Governance 654

Boxed Features It’s Your Career: How to Be a Pro at Giving Feedback 630 FYI 639, 651, 654 Let’s Get REAL 640, 644 Workplace Confidential: Responding to an Unfair Performance Review 641 Leader Making a Difference: Bob Iger 647 Future Vision: Real-time Feedback 650

Preparing for: Exams/Quizzes 655 Chapter Summary by Learning Objectives 655 Review and Discussion Questions 656

Preparing for: My Career 657 Personal Inventory Assessments: Workplace Discipline Indicator 657 Ethics Dilemma 657 Skills Exercise: Managing Challenging Employees 657 Working Together: Team Exercise 658 My Turn to Be a Manager 658

Case Application 1: The Challenge of “Healthy” Fast-Food 658 Case Application 2: Bring Your Own Device 659

Planning and Control Techniques Module 664 Techniques for Assessing the Environment 664

Environmental Scanning 664

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28 Contents

Forecasting 666 Benchmarking 668

Techniques for Allocating Resources 669 Budgeting 669 Scheduling 671 Breakeven Analysis 674 Linear Programming 674

Contemporary Planning and Control Techniques 676 Project Management 676 Scenario Planning 678

Managing Operations Module 682 The Role of Operations Management 683

Services and Manufacturing 683 Managing Productivity 684 Strategic Role of Operations Management 685

What Is Value Chain Management and Why Is It Important? 685 What Is Value Chain Management? 686

Goal of Value Chain Management 686 Benefits of Value Chain Management 687

Managing Operations Using Value Chain Management 687 Value Chain Strategy 687 Obstacles to Value Chain Management 690

Current Issues in Managing Operations 691 Technology’s Role in Operations Management 692 Quality Initiatives 692 Quality Goals 694 Mass Customization and Lean Organization 695

Part 6: Management Practice 698 A Manager’s Dilemma 698 Global Sense 698 Continuing Case: Starbucks—Controlling 699

Glossary 703

Name Index 715

Organization Index 735

Subject Index 741

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The book you have before you is one of the world’s most popular introductory management textbooks. It’s used by several hundred U.S. colleges and universities; it’s translated into Spanish, French, Russian, Dutch, Bahasa, Korean, and Chinese; and there are adapted edi- tions for Australia, Canada, India, and the Arab World.

For a textbook first published in 1984—in a crowded market where there are currently several dozen choices, why has Robbins/Coulter Management been so popular and enduring? We believe there are three characteristics that set us apart: contemporary topic coverage, read- ability, and relevance.

Contemporary Topic Coverage We have always prided ourselves on bringing the latest management issues and research to this book. In preparing each edition, we carefully comb the academic journals and business periodicals to identify topics that students need to be current on. For instance, prior editions of this book were the first to discuss self-managed teams, emotional intelligence, open-book management, sustainability, social entrepreneurship, stretch goals, the contingent workforce, self-managed careers, wearable technology, big data, and design thinking.

This current edition continues the tradition by including a new section on disruptive inno- vation. No topic appears to be more current or important to students today than dealing with major structural changes taking place in industries as varied as automobiles, hotels, banking, TV networks, or book publishing. In fact, there are few industries that aren’t being threat- ened by disruptive innovation. In Chapter 6, we define disruptive innovation; explain why it’s important; describe who is vulnerable; and discuss implications for entrepreneurs, corporate managers, and your career planning.

Key Changes to the 14th Edition • Chapter 6 on managing change has been expanded to include a discussion of disruptive in-

novation as an important driver of change. • The Part 2 module on creating and leading entrepreneurial ventures has become a separate

chapter (Chapter 10). We’ve expanded our discussion, added end-of-chapter applications, and acknowledged the importance of entrepreneurship by giving it its own chapter.

• The two chapters on organizational design have been merged into one chapter (Chapter 11) in response to comments by users and reviewers. But we’ve retained the key concepts that students need to know.

• The addition of “Workplace Confidential” pages throughout the book which address com- mon frustrations and challenges that employees face in the workplace.

• Current and timely topics—including the Internet of things, real-time feedback, and choos- ing appropriate communication media, among others—have been added.

• Dozens of current examples illustrating management practices and challenges in start-up and established organizations, small and large organizations, and manufacturing, service and technology organizations have been added.

Readability Every author claims his or her books are highly readable. The reality is that few actually are. From the first edition of this book, we were determined to make the field of manage- ment interesting and engaging for the reader. How did we do it? First, we committed to a

Preface

29

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30 Preface

conversational writing style. We wanted the book to read like normal people talk. Second, we relied on an extensive use of examples. As your senior author learned early in his teaching career, students don’t remember theories but they do remember stories. So you’ll find a wealth of current examples in this book.

A well-written book should be able to be used successfully at all levels of higher education, from community colleges to graduate programs. And over its 30+ years of life, this book has done just that. You’ll find this book is used in community colleges, at for-profit colleges, by undergraduate students at both regional and land-grant uni- versities, and in numerous graduate programs.

Relevance Students are unlikely to be motivated if they think a course and its textbooks aren’t relevant to their career goals. We’ve responded to this challenge in a number of ways. Our latest inclusion is an important new feature—the Workplace Confidential pages— that’s designed to make this book more meaningful to non-management majors. We also want to highlight four additional features that have helped build this book’s repu- tation for practicality.

Providing value to non-management students. New to this edition are in-chapter pages entitled Workplace Confidential. This unique feature marks a distinct break from what typically has been included in the traditional introductory management text.

Your authors have long heard a common complaint about the introductory manage- ment course from students in majors such as accounting, finance, and marketing. As summed up by one accounting student: “Why do I need to take a management course? I have no interest in pursuing a career in management!” Even though that accounting student might some day lead an audit team or manage an office of a major CPA firm, we understand those non-management majors who question the relevance of this course to their career goals. We’ve listened and responded.

We’ve made the contents of this 14th edition relevant to any student who plans to work in an organization. Regardless of whether an organization employs three people or 300,000, there are common challenges that every employee encounters. We’ve researched those challenges and identified the nearly dozen-and-a-half most frequent. Then we looked at providing students with guidance for dealing with these challenges. The result is the Workplace Confidential features that you’ll find throughout this book. For instance, you’ll find suggestions for dealing with organizational politics, job stress, coping with an uncommunicative or abusive boss, and responding to an unfair performance review.

Insights from real managers. One feature that has differentiated Robbins/Coulter for more than 15 years is our “real” managers. Student feedback tells us that they appreciate learning from real managers in their everyday jobs. In Let’s Get Real boxes, actual managers respond to problem scenarios. In Leader Making a Difference boxes, you’ll meet a variety of global executives whose knowledge and skills significantly influenced organizational outcomes.

Focus on skills. Today’s students need both knowledge (knowing) and skills (doing). Students want to leave class knowing what management is all about but also with the skills necessary to help them succeed in today’s workplaces. In response, you’ll find several features in this book that are designed to build skill expertise. It’s Your Career chapter openers cover skills ranging from managing time and being self aware to being a pro at giving feedback and being change ready. These chapter open- ers include information about the skill and are reinforced with a Pearson MyLab Management component that tests students’ comprehension of the skill. Also, at the end of each chapter, you’ll find more skill exercises, where we provide a thorough discussion of additional skills and give students opportunities to practice these skills.

Looking ahead. Students are going to spend most of their future work life in a setting that’s likely to look very different from today. To help students prepare for that future, we have included Future Vision boxes throughout the book that look at how

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Preface 31

management and organizations might change over the next 15 to 20 years. Although no one has a perfectly accurate view into the future, certain trends in place today offer insights into what tomorrow’s work world might look like. We draw from recent research and forecasts to consider this future.

Pearson MyLab Management Suggested Activities Making assessment activities available online for students to complete before coming to class will allow you, the instructor, more discussion time during the class to review areas that students are having difficulty in comprehending. The activities below are available in Pearson MyLab Management and are integrated into the textbook.

Watch It Recommends a video clip that can be assigned to students for outside classroom viewing or that can be watched in the classroom. The video corresponds to the chapter material and is accompanied by multiple-choice questions that reinforce students’ comprehen- sion of the chapter content.

Try It Recommends a mini simulation that can be assigned to students as an outside class- room activity or be done in the classroom. As the students watch the simulation they will be asked to make choices based on the scenario presented in the simulation. At the end of the simulation the student will receive immediate feedback based on the answers they gave. These simulations reinforce the concepts of the chapter and the students’ comprehension of those concepts.

Talk About It These are discussion-type questions that can be assigned as an activity within the classroom.

Write It Students can be assigned these broad-based, critical-thinking discussion questions that will challenge them to assimilate information that they’ve read in the chapter.

Personal Inventory Assessments (PIA) Students learn better when they can connect what they are learning to their personal experience. PIA (Personal Inventory Assessments) is a collection of online exercises de- signed to promote self-reflection and engagement in students, enhancing their ability to connect with concepts taught in principles of management, organizational behavior, and human resource management classes. Assessments are assignable by instructors who can then track students’ completions. Student results include a written explanation along with a graphic display that shows how their results compare to the class as a whole. Instructors will also have access to this graphic representation of results to promote classroom discussion.

Assisted Graded Writing Questions These are short essay questions that the students can complete as an assignment and submit to you, the professor, for grading.

Chapter-by-Chapter Changes Chapter 1 • New FYI features • New Workplace Confidential: Dealing with Organizational Politics • New Watch It Pearson MyLab Management recommended video assignments • New Let’s Get Real • New Ethics Dilemma

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32 Preface

• New examples • New Working Together and My Turn to Be a Manager activities • New Case Application on the ALS Ice Bucket Challenge Chapter 2 • New Workplace Confidential: Making Good Decisions • New examples • New Future Vision: Crowdsourcing Decisions • New FYI features • New Watch It Pearson MyLab Management recommended video assignments • New Ethics Dilemma • Updated Skills Exercise, new Working Together and My Turn to Be a Manager

activities • New Case Application on Card Connection’s business model to decide on franchi-

see locations • New Case Application on Manchester City Football Club’s use of big data in game

strategies Chapter 3 • Updated It’s Your Career opener and Pearson MyLab Management component:

Developing Your Global Perspective: Jump-start Your Cultural Intelligence • Updated Future Vision: Communicating in a Connected World • New Leader Making a Difference: Lucy Peng (Alibaba) • New FYI features • New Watch It Pearson MyLab Management recommended video assignments • New examples • New Ethics Dilemma • Updated Skills Exercise, new Working Together and My Turn to Be a Manager activities • New Case Application on expanding internationally at Tableau, a technology company Chapter 4 • New Future Vision: Diversity of Thought • New FYI features • New examples • New Watch It Pearson MyLab Management recommended video assignments • New Let’s Get Real • New Workplace Confidential: Dealing with Diversity • New Ethics Dilemma • Updated Skills Exercise, new Working Together and My Turn to Be a Manager

activities • New Case Application on ethical management at Albergo Etico Chapter 5 • New FYI features • New Workplace Confidential: Balancing Work and Personal Life • New examples • New Watch It Pearson MyLab Management recommended video assignments • New Let’s Get Real • New Ethics Dilemma • Updated Skills Exercise, new Working Together and My Turn to Be a Manager

activities • New Case Application on ethical problems at Volkswagen Chapter 6 • New It’s Your Career opener and Pearson MyLab Management component:

Learning to Manage Your Stress • New Future Vision: The Internet of Things • New FYI features • New Workplace Confidential: Coping with Job Stress

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Preface 33

• New Examples • New Watch It Pearson MyLab Management recommended video assignments • New Let’s Get Real’s • New Working Together and My Turn to Be a Manager activities • New Case Application on the iPhone as a technology disruptor Chapter 7 • New Leader Making a Difference: Indra Nooyi (Pepsi) • New FYI features • New Watch It, Pearson MyLab Management recommended video assignments • New Let’s Get Real • New Workplace Confidential: Adjusting to a New Job or Work Team • New examples • Updated Skills Exercise, new Working Together and My Turn to Be a Manager activities • New Case Application on organizational culture at Tesco • New Case Application on Amazon’s use of drone technology Chapter 8 • New Future Vision: Using Social Media for Environmental Scanning • New FYI features • New Watch It Pearson MyLab Management recommended video assignments • New Workplace Confidential: When You Face a Lack of Clear Directions • New examples • New Let’s Get Real • New Ethics Dilemma • New Working Together and updated My Turn to Be a Manager activities • New Case Application on shipping challenges at Hermès Chapter 9 • New Leader Making a Difference: Mary Barra (GM) • New FYI features • New Watch It Pearson MyLab Management recommended video assignments • New Workplace Confidential: Developing a Career Strategy • New examples • New Let’s Get Real • New Ethics Dilemma • New Working Together and My Turn to Be a Manager activities • New Case Application on Costco’s strategy Chapter 10 • New It’s Your Career opener and Pearson MyLab Management component: Being

Entrepreneurial Even If You Don’t Want to Be an Entrepreneur • New Leader Making a Difference: Mark Zuckerberg (Facebook) • New Future Vision: The Growth of Social Businesses • New FYI features • New Watch It, Pearson MyLab Management recommended video assignments • New Let’s Get Real’s • New Workplace Confidential: Dealing with Risks • New examples • New Ethics Dilemma • New Personal Inventory Assessment • New Working Together and My Turn to Be a Manager activities • New Skills Exercise: Developing Grit • New Case Applications on Jamie Oliver’s unique social business at Fifteen Chapter 11 • New FYI features • New Workplace Confidential: Coping with Multiple Bosses

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34 Preface

• New examples • New Working Together activity Chapter 12 • New Leader Making a Difference: Dr. Dara Richardson-Heron (YWCA USA) • New FYI features • New Watch It Pearson MyLab Management recommended video assignments • New Let’s Get Real • New Workplace Confidential: Handling Difficult Coworkers • New examples • Updated Ethics Dilemma • Updated Skills Exercise, new Working Together and My Turn to Be a Manager activities • New Case Application on self-directed teams at W.L. Gore and Associates Chapter 13 • New It’s Your Career opener and Pearson MyLab Management component:

Negotiating Your Salary • New Future Vision: Gamification of HR • New FYI features • New Watch It Pearson MyLab Management recommended video assignments • New Let’s Get Real • New Workplace Confidential: Job Search • New examples • Updated statistics • Updated Skills Exercise, new Working Together and My Turn to Be a Manager

activities • New Case Application on Maersk and the HR management challenges in China • New Case Application on BAE Systems making use of schedule based working Chapter 14 • New It’s Your Career opener and Pearson MyLab Management component: I’m

Listening • New Future Vision: No Longer Lost in Translation • New Leader Making a Difference: Angela Ahrendts (Apple) • New FYI features • New Workplace Confidential: An Uncommunicative Boss • New examples • New Let’s Get Real • New Skills Exercise: Developing Your Presentation Skills • New Working Together and My Turn to Be a Manager activities • New Case Application on performance feedback at Amazon Chapter 15 • New Leader Making a Difference: Carolyn McCall (easyJet) • New FYI features • New Watch It Pearson MyLab Management recommended video assignments • New Let’s Get Real • New Workplace Confidential: An Abusive Boss • New examples • New Ethics Dilemma • New Working Together and My Turn to Be a Manager activities • New Case Application on the Tencent Holdings, China Chapter 16 • New Leader Making a Difference: Dr. Delos “Toby” Cosgrove (Cleveland Clinic) • New FYI features • New Watch It Pearson MyLab Management recommended video assignments • New Workplace Confidential: A Micromanaging Boss

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Preface 35

• New examples • New Let’s Get Real • New Working Together and My Turn to Be a Manager activities • New Case Application on PepsiCo’s Indra Nooyi imbibing qualities of an

inspirational leader

Chapter 17 • New Leader Making a Difference: Susan Wojcicki (YouTube) • New FYI features • New Workplace Confidential: Feelings of Unfair Pay • New examples • New Watch It Pearson MyLab Management recommended video assignments • New Let’s Get Real • Updated Skills Exercise, new Working Together and My Turn to Be a Manager

activities • New Case Application on Hong Kong Disneyland’s HR programs to motivate

employees • New Case Application on John Lewis Partnership balancing success and happiness Chapter 18 • New Future Vision: Real-time Feedback • New FYI features • New Watch It Pearson MyLab Management recommended video assignments • New Let’s Get Real • New Workplace Confidential: Responding to an Unfair Performance Review • New examples • New Ethics Dilemma • Updated Skills Exercise, new Working Together and My Turn to Be a Manager

activities • New Case Applications on Chipotle’s food contamination problems and Bring

Your Own Device programs

For Students Taking a Management Course:

What This Course Is About and Why It’s Important This course and this book are about management and managers. Managers are one thing that all organizations—no matter the size, kind, or location—need. And there’s no doubt that the world managers face has changed, is changing, and will continue to change. The dynamic nature of today’s organizations means both rewards and chal- lenges for the individuals who will be managing those organizations. Management is a dynamic subject, and a textbook on it should reflect those changes to help pre- pare you to manage under the current conditions. We’ve written this 14th edition of Management to provide you with the best possible understanding of what it means to be a manager confronting change and to best prepare you for that reality.

But not every student aspires to a career in management. And even if you do, you may be five or ten years away from reaching a managerial position. So you might rightly feel that taking a course in management now may be getting ahead of the game. We hear you. In response to these concerns, we’ve added new material to this book that is important and relevant to everyone working in an organization—manager and non-manager alike. Our “Workplace Confidential” pages identify, analyze, and offer suggestions for dealing with the major challenges that surveys indicate frustrate employees the most. You should find these pages valuable for helping you survive and thrive in your workplace. Surprisingly, this topic has rarely been addressed in business programs. Inclusion in an introductory management course appeared to us to be a logical place to introduce these challenges and to provide guidance in handling them.

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36 Preface

Instructor Resources At the Pearson’s catalog, https://www.pearsonglobaleditions.com/Robbins, instructors can easily register to gain access to a variety of instructor resources available with this text in downloadable format. If assistance is needed, our dedicated technical sup- port team is ready to help with the media supplements that accompany this text. Visit https://support.pearson.com/getsupport for answers to frequently asked questions and toll-free user support phone numbers.

The following supplements are available with this text:

• Instructor’s Resource Manual • Test Bank • TestGen® Computerized Test Bank • PowerPoint Presentation This title is available as an eBook and can be purchased at most eBook retailers.

A01_ROBB5839_14_GE_FM.indd 36 11/07/17 9:33 AM

Every author relies on the comments of reviewers, and ours have been very helpful. We want to thank the following people for their insightful comments and suggestions:

Michael Alleruzzo, St. Joseph University, PA Matthias Bollmus, Carroll University, WI Brione Burrows, Central Georgia Tech, GA M. Suzanne Clinton, University of Central Oklahoma, OK Dana J. Frederick, Missouri State University, MO Julia M. Fullick, Quinnipiac University, CT Karl Giulian, Atlantic Cape Community College, NJ Dan Morrell, Middle Tennessee State University, TN L. Renee Rogers, Forsyth Technical Community College, NC

Acknowledgments

Our team at Pearson has been amazing to work with, as always! This team of editors, production experts, technology gurus, designers, marketing specialists, sales representatives, and warehouse employees works hard to turn our files into a bound textbook and a digital textbook and sees that it gets to faculty and students. We couldn’t do this without all of you! Our sincere thanks to the people who made this book “ready to go,” including Stephanie Wall, Kris Ellis-Levy, Claudia Fernandes, Hannah Lamarre, and Nancy Moudry, as well as Kathy Smith and the team at Cenveo. All of you are consummate professionals who truly are committed to pub- lishing the best textbooks! We’re glad to have you on our team!

Finally, Steve and Mary would like to thank Joe Martocchio at the University of Illinois and Lori Long at Baldwin Wallace University for helping with this revision. They were instrumental in updating the research, examples, boxes, skill exercises, and cases. This revision could never have been done without your assistance. We thank you so much!

Global Edition Acknowledgments

We want to thank the following people for their contributions: John Opute, London South Bank University Andrew Richardson, University of Leeds Marcello Russo, University of Bologna Jon and Diane Sutherland, Freelance Writers Ken Wong, Hong Kong Polytechnic University Yong Wooi Keong, Sunway University Marian B. Wood, Freelance Writer

We would also like to thank the following people for re- viewing the Global Edition and sharing their insightful comments and suggestions: Caroline Akhras, Notre Dame University–Louaize Azim Khan Aminuddin, United Arab Emirates University Lindos Daou, Holy Spirit University of Kaslik Evangelos Dedousis, American University of Dubai Suresh George, Coventry University Richard Jefferies, The University of the West of Scotland J. C. Santora, International School of Management, Paris Vimala Venugopal, Taylor’s University Malaysia

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It’s Your Career

Part 1 Introduction to Management

Chapter 1 Managers and You in the Workplace

The ABC’s of Managing Your Time Are you BUSY? Do you always seem to have a lot to do and never seem to get it done, or done on time, or are things done at the last minute under a lot of pressure and stress? If you’re like most people, the answer to these questions is YES! Well, maybe in a management textbook we need to do something about that by focusing on one aspect of management that can be tremendously useful to you . . . TIME MANAGEMENT! Time is a unique resource and one of your most valuable resources. Time is also a limited resource. First, if it’s wasted, it can never be replaced. People talk about saving time, but time can never actually be saved. Second, unlike resources such

as money or talent, which are distributed unequally in the world, time is an equal-opportunity resource. Each one of us

gets exactly the same amount of time: 24 hours per day or 168 hours each week. But as you have undoubtedly observed, some people are a lot more efficient in using their allotment. It is not uncommon to hear others say that they need additional hours to get everything done, but that is simply wishful thinking. Commit to improving your ability to manage those 168 hours so you can be more efficient and effective—in your career and in your personal life! Here are some suggestions to help you better use your time:

1. Make and keep a list of all your current, upcoming, and routine goals. Know what needs to be done daily, weekly, and monthly.

2. Rank your goals according to importance. Not all goals are of equal importance. Given the limitations on your time, you want to make sure you give highest priority to the most important goals.

3. List the activities/tasks necessary to achieve your goals. What specific actions do you need to take to achieve your goals?

4. Divide these activities/tasks into categories using an A, B, and C classification. The A’s are important and urgent. B’s are either important or urgent, but not both. C’s are routine—not important nor urgent, but still need to be done.

A key to success in management and in your career is having good time management skills.

Source: valentint/Fotolia

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39

Learning Objectives

5. Schedule your activities/tasks according to the priorities you’ve set. Prepare a daily plan. Every morning, or at the end of the previous workday, make a list of the five or so most important things you want to do for the day. Then set priorities for the activities listed on the basis of importance and urgency.

6. Plan your to-do list each day so that it includes a mixture of A, B, and C activities/tasks. And it’s best to spread the three types of tasks throughout your day so you’re not lumping together all your demanding tasks. Also, be realistic about what you can achieve in a given time period.

7. Recognize that technology makes it too easy to stay connected. Just think for a moment how many phone calls, e-mails, texts, postings

on social media, and unscheduled visitors you receive on a typical day. Some are essential to the tasks at hand, while others are distractions that do not require immediate attention. Prioritize the importance of this information.

8. Realize that priorities may change as your day or week proceeds. New information may change a task’s importance or urgency. As you get new information, reassess your list of priorities and respond accordingly.

9. Remember that your goal is to manage getting your work done as efficiently and effectively as you can. It’s not to become an expert at creating to-do lists. Find what works best for you and use it!

Like many students, you’ve probably had a job (or two) at some time or another while working on your degree. And your work experiences, regardless of where you’ve worked, are likely to have been influenced by the skills and abilities of your manager. What are today’s successful managers like and what skills do they need in dealing with the problems and challenges of managing in the twenty-first century? This text is about the important work that managers do. The reality facing today’s managers—and that might include you in the near future—is that the world is changing. In workplaces of

Pearson MyLab Management®

Improve Your Grade!

When you see this icon, visit www.mymanagementlab.com for activities that are applied, personalized, and offer immediate feedback.

● SKILL OUTCOMES 1.1 Tell who managers are and where they work.

● Know how to manage your time. 1.2 Explain why managers are important to organizations. 1.3 Describe the functions, roles, and skills of managers.

● Develop your skill at being politically aware. 1.4 Describe the factors that are reshaping and redefining the manager’s job. 1.5 Explain the value of studying management.

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40 Part 1 Introduction to Management

all types—offices, stores, labs, restaurants, factories, and the like—managers deal with changing expectations and new ways of managing employees and organizing work. In this chapter, we introduce you to managers and management by looking at (1) who managers are and where they work, (2) why managers are important, and (3) what man- agers do. Finally, we wrap up the chapter by (4) looking at the factors reshaping and re- defining the manager’s job and (5) discussing why it’s important to study management.

WHO are managers and where do they work? Managers may not be who or what you might expect! Managers can range in age from 18 to 80+. They run large corporations, medium-sized

businesses, and entrepreneurial start-ups. They’re also found in government departments, hospitals, not-for-profit agencies, museums, schools, and even nontraditional organizations such as political campaigns and music tours. Managers can also be found doing managerial work in every country on the globe. In addition, some manag- ers are top-level managers while others are first-line managers. And today, managers are just as likely to be women as they are men; however, the number of women in top-level manager positions remains low—only 24 (4%) women were CEOs of Fortune 500 companies in 2014.1 Similarly, only 20 (4%) were minorities. Even in government leadership roles, women are far outnumbered by men in the U.S. Senate and House of Repre- sentatives, representing approximately 20 percent of these total elected officials.2 But no matter where managers are found or what gender or race they are, managers have exciting and chal- lenging jobs!

Who Is a Manager? It used to be fairly simple to define who managers were: They were the organizational members who told others what to do and how to do it. It was easy to differentiate man- agers from nonmanagerial employees. Now, it isn’t quite that simple. In many organiza- tions, the changing nature of work has blurred the distinction between managers and nonmanagerial employees. Many traditional nonmanagerial jobs now include mana- gerial activities.3 For example, the gaming company Valve does not award job titles, and there is little formal supervision. Virtually any employee is free to start a project as long as the employee obtains funding and assembles a project team.4 Or consider an organization like Morning Star Company, the world’s largest tomato processor, where no employees are called managers—just 400 full-time employees who do what needs to be done and who together “manage” issues such as job responsibilities, compensa- tion decisions, and budget decisions.5 Sounds crazy, doesn’t it? But it works—for this organization. (See Case Application 2 at the end of the chapter to see how another business—Zappos—has gone bossless!)

So, how do we define who managers are? A manager is someone who coor- dinates and oversees the work of other people so organizational goals can be ac- complished. A manager’s job is not about personal achievement—it’s about helping others do their work. That may mean coordinating the work of a departmental group, or it might mean supervising a single person. It could involve coordinating the work activities of a team with people from different departments or even people outside the organization such as temporary employees or individuals who work for the organization’s suppliers. Keep in mind that managers may also have work duties not related to coordinating and overseeing others’ work. For example, an insurance claims supervisor might process claims in addition to coordinating the work activi- ties of other claims clerks.

How can managers be classified in organizations? In traditionally structured organizations (often pictured as a pyramid because more employees are at lower

LO1.1

manager Someone who coordinates and oversees the work of other people so organizational goals can be accomplished

Carnival Corporation’s CEO Arnold Donald is the top manager of the world’s largest cruise line, with over 100,000 employees from different cultures and countries, 10 cruise line brands, and 100 ships. His challenging job involves making decisions and developing plans that help Carnival achieve its goal “to show our guests the kind of fun that memories are made of.” Source: Jason DeCrow/AP Images for Carnival Corporation

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Chapter 1 Managers and You in the Workplace 41

organizational levels than at upper organizational levels), managers can be classi- fied as first-line, middle, or top. (See Exhibit 1-1.) At the lowest level of manage- ment, first-line (or frontline) managers manage the work of nonmanagerial employees who typically are involved with producing the organization’s products or servicing the organization’s customers. These managers often have titles such as supervisors or even shift managers, district managers, department managers, or office managers. Middle managers manage the work of first-line managers and can be found between the lowest and top levels of the organization. They may have titles such as regional manager, project leader, store manager, or division man- ager. Middle managers are mainly responsible for turning company strategy into action. At the upper levels of the organization are the top managers, who are responsible for making organization-wide decisions and establishing the plans and goals that affect the entire organization. These individuals typically have titles such as executive vice president, president, managing director, chief operating officer, or chief executive officer.

Not all organizations are structured to get work done using a traditional pyra- midal form, however. Some organizations, for example, are more loosely configured, with work done by ever-changing teams of employees who move from one project to another as work demands arise. For instance, Atlassian, a global software company based in Australia, forms employee teams with the skills and experience needed for each work project. When a project is complete, the team disbands and its members join new teams. Because team members may be in separate buildings or even in sepa- rate countries, Atlassian emphasizes clear and constant communication.6 Although it’s not as easy to tell who the managers are in these organizations, we do know that someone must fulfill that role—that is, someone must coordinate and oversee the work of others, even if that “someone” changes as work tasks or projects change or that “someone” doesn’t necessarily have the title of manager.

Where Do Managers Work? It’s obvious that managers work in organizations. But what is an organization? It’s a deliberate arrangement of people to accomplish some specific purpose. Your college or university is an organization; so are fraternities and sororities, government depart- ments, churches, Google, your neighborhood grocery store, the United Way, the St. Louis Cardinals baseball team, and the Mayo Clinic. All are considered organizations and have three common characteristics. (See Exhibit 1-2.)

first-line (frontline) managers Managers at the lowest level of management who manage the work of nonmanagerial employees

middle managers Managers between the lowest level and top levels of the organization who manage the work of first-line managers

top managers Managers at or near the upper levels of the organization structure who are responsible for making organization-wide decisions and establishing the goals and plans that affect the entire organization

organization A deliberate arrangement of people to accomplish some specific purpose

Top Managers

Middle Managers

First-Line Managers

Nonmanagerial Employees

Exhibit 1-1 Levels of Management

Deliberate Structure

Distinct Purpose

People

Exhibit 1-2 Characteristics of Organizations

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42 Part 1 Introduction to Management

First, an organization has a distinct purpose typically expressed through goals the organization hopes to accomplish. Second, each organization is composed of people. It takes people to perform the work that’s necessary for the organization to achieve its goals. Third, all organizations develop a deliberate structure within which members do their work. That structure may be open and flexible, with no specific job duties or strict adherence to explicit job arrangements. For instance, most big projects at Google (at any one time, hundreds of projects are in process simultaneously) are tackled by small, focused employee teams that set up in an instant and complete work just as quickly.8 Or the structure may be more tradi- tional—like that of Procter & Gamble or General Electric or any large corpora- tion—with clearly defined rules, regulations, job descriptions, and some members identified as “bosses” who have authority over other members. In the military, there is a well-defined hierarchy. In the U.S. Air Force, the General of the Air Force is the highest ranking officer and Second Lieutenant is the lowest ranking officer. Between the two are nine officer ranks.

Many of today’s organizations are structured more like Google, with flexible work arrangements, employee work teams, open communication systems, and sup- plier alliances. In these organizations, work is defined in terms of tasks to be done. And workdays have no time boundaries since work can be—and is—done any- where, anytime. However, no matter what type of approach an organization uses, some deliberate structure is needed so work can get done, with managers overseeing and coordinating that work.

FYI • Frontline managers directly

supervise some 93 percent of all nonsupervisory employees.

• 9.3 million managers and executives were in the U.S. workforce in 2014.

• 6.9 million middle managers were in the U.S. workforce

• 2.4 million top executives were in the U.S. workforce.7

While this text presents a fairly accurate description of today’s workplace, you’re going to spend most of your work life in the future. What will that work life look like? How will it be different from today? The workplace of tomorrow is likely to include workers that are faster, smarter, more responsible—and who just happen to be robots.9 Are you at all surprised by this statement? Although robots have been used in factory and indus- trial settings for a long time, it’s becoming more com- mon to find robots in the office, and it’s bringing about new ways of looking at how work is done and at what and how managers manage. So what would the man- ager’s job be like managing robots? And even more intriguing is how these “workers” might affect how human coworkers interact with them.

As machines have become smarter, researchers have been looking at human-machine interaction and how people interact with the smart devices that are now such an integral part of our professional and per- sonal lives. One conclusion is that people find it easy to bond with a robot, even one that doesn’t look or sound anything like a real person. In a workplace setting, if a robot moves around in a “purposeful way,” people tend to view it, in some ways, as a coworker. People name their robots and can even describe the robot’s moods and tendencies. As telepresence robots become more common, the humanness becomes even more evident.

Is It Still Managing When What You’re Managing Are Robots?F U T U R E V I S I O N For example, when Erwin Deininger, the electrical engi- neer at Reimers Electra Steam, a small company in Clear Brook, Virginia, moved to the Dominican Republic when his wife’s job transferred her there, he was able to still be “present” at the company via his VGo robot. Now “robot” Deininger moves easily around the office and the shop floor, allowing the “real” Deininger to do his job just as if he were there in person. The company’s presi- dent, satisfied with how the robot solution has worked out, has been surprised at how he acts around it, feeling at times that he’s interacting with Deininger himself.

There’s no doubt that robot technology will con- tinue to be incorporated into organizational settings. The manager’s job will become even more exciting and challenging as humans and machines work together to accomplish an organization’s goals.

If your professor has chosen to assign this, go to www.mymanagementlab.com to discuss the follow- ing questions.

TALK ABOUT IT 1: What’s your response to the title of this box: Is it still managing when what you’re managing are robots? Discuss.

TALK ABOUT IT 2: If you had to “manage” peo- ple and robots, how do you think your job as manager might be different than what the chapter describes?

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Chapter 1 Managers and You in the Workplace 43

WHY are managers important? What can a great boss do?

• Inspire you professionally and personally • Energize you and your coworkers to accomplish things together that you couldn’t

get done by yourself • Provide coaching and guidance with problems • Provide you feedback on how you’re doing • Help you to improve your performance • Keep you informed of organizational changes • Change your life10

If you’ve worked with a manager like this, consider yourself lucky. Such a manager can make going to work a lot more enjoyable and productive. However, even managers who don’t live up to such lofty ideals and expectations are important to organizations. Why? Let’s look at three reasons.

The first reason why managers are important is because organizations need their mana- gerial skills and abilities more than ever in uncertain, complex, and chaotic times. As orga- nizations deal with today’s challenges—changing workforce dynamics, the worldwide eco- nomic climate, changing technology, ever-increasing globalization, and so forth—managers play an important role in identifying critical issues and crafting responses. For example, BlackBerry Limited introduced software for autonomous cars. The company’s vehicle-to- vehicle software will enable cars to communicate with each other to prevent collisions and improve traffic flow.11 Teams of talented scientists and engineers create the hardware and software to make this possible. But it takes more than that to be successful. There has to be a focus on commercial potential. For example, Virgin Galactic and Xcor Aerospace are work- ing toward creating a new industry—space tourism for civilians. These companies possess the technological and scientific know-how and resources to make this a reality; however, the fare for a suborbital flight around Earth is expected to be about $100,000 per passenger.12 Most people will not have the discretionary funds to take these flights. That’s why, behind the scenes, you’d also find a team of managers who scrutinize ideas and focus on the ques- tion: Is there a sustainable market? These managers realize what is critical to success. The opposite “types” have worked together and created a successful business.13

Another reason why managers are important to organizations is because they’re critical to getting things done. For instance, Philips has thousands of general managers who supervise the work of 113,000 employees worldwide.14 These managers deal with all kinds of issues as the company’s myriad tasks are carried out. They create and coordinate the workplace environment and work systems so that others can perform those tasks. Or, if work isn’t getting done or isn’t getting done as it should be, they’re the ones who find out why and get things back on track. And these managers are key players in leading the com- pany into the future.

Finally, managers do matter to organizations! How do we know that? The Gallup Or- ganization, which has polled millions of employees and tens of thousands of managers, has found that the single most important variable in employee productivity and loyalty isn’t pay or benefits or workplace environment—it’s the quality of the relationship between employ- ees and their direct supervisors.15 In addition, global consulting firm Towers Watson found that the way a company manages and engages its people can significantly affect its financial performance.16 Companies that hire managers based on talent realize a 48 percent increase in profitability, a 22 percent increase in productivity, a 30 percent increase in employee en- gagement scores, a 17 percent increase in customer engagement scores, and a 19 percent decrease in turnover.17 That’s scary considering another study by the Gallup Organization found that leadership is the single largest influence on employee engagement.18 In yet anoth- er study by different researchers, 44 percent of the respondents said their supervisors strong- ly increased engagement.19 However, in this same study, 41 percent of respondents also said their supervisors strongly decreased engagement. And, a different study of organizational performance found that managerial ability was important in creating organizational value.20 So, as you can see, managers can and do have an impact—positive and negative. What can we conclude from such reports? Managers are important—and they do matter!

LO1.2

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44 Part 1 Introduction to Management

WHAT do managers do? Simply speaking, management is what managers do. But that simple statement doesn’t tell us much, does it? Let’s look first at what manage-

ment is before discussing more specifically what managers do. Management involves coordinating and overseeing the work activities of others

so their activities are completed efficiently and effectively. We already know that coordinating and overseeing the work of others is what distinguishes a managerial position from a nonmanagerial one. However, this doesn’t mean that managers or their employees can do what they want anytime, anywhere, or in any way. Instead, manage- ment involves ensuring that work activities are completed efficiently and effectively by the people responsible for doing them, or at least that’s what managers should be doing.

Efficiency refers to getting the most output from the least amount of inputs or resources. Managers deal with scarce resources—including people, money, and equip- ment—and want to use those resources efficiently. Efficiency is often referred to as “doing things right,” that is, not wasting resources. For instance, Southwest Airlines has achieved operating efficiency through a variety of practices, which include using one aircraft model (Boeing 737) throughout its fleet. Using one model simplifies scheduling, operations, and flight maintenance, and the training costs for pilots, ground crew, and mechanics are lower because there’s only a single aircraft to learn.21 These efficient work practices paid off, as Southwest has made a profit for 42 consecutive years!22

It’s not enough, however, just to be efficient. Management is also concerned with employee effectiveness. Effectiveness is often described as “doing the right things,” that is, doing those work activities that will result in achieving goals. Besides being efficient, Southwest Airlines’ mission is “dedication to the highest quality of Customer Service delivered with a sense of warmth, friendliness, individual pride, and Company Spirit.”23 Two of the many reasons cited for the airlines’ effectiveness are permitting two checked bags for free and permitting a change in itinerary without incurring a pen- alty.24 Whereas efficiency is concerned with the means of getting things done, effective- ness is concerned with the ends, or attainment of organizational goals (see Exhibit 1-3). In successful organizations, high efficiency and high effectiveness typically go hand in hand. Poor management (which leads to poor performance) usually involves being inefficient and ineffective or being effective but inefficient.

LO1.3

management Coordinating and overseeing the work activities of others so their activities are completed efficiently and effectively

efficiency Doing things right, or getting the most output from the least amount of inputs

effectiveness Doing the right things, or doing those work activities that will result in achieving goals

Goal Attainment

Effectiveness (Ends)

Resource Usage

Management Strives for: Low Resource Waste (high efficiency)

High Goal Attainment (high effectiveness)

Efficiency (Means)

Low Waste High Attainment

Exhibit 1-3 Efficiency and Effectiveness in Management

Time Management—If your instructor is using Pearson MyLab Management, log onto www.mymanagementlab.com and test your time management knowledge. Be sure to refer back to the chapter opener!

Now let’s take a more detailed look at what managers do. Describing what manag- ers do isn’t easy. Just as no two organizations are alike, no two managers’ jobs are alike. In spite of this, management researchers have developed three approaches to describe what managers do: functions, roles, and skills.

It’s Your Career

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Chapter 1 Managers and You in the Workplace 45

Management Functions According to the functions approach, managers perform certain activities or functions as they efficiently and effec- tively coordinate the work of others. What are these func- tions? Henri Fayol, a French businessman in the early part of the twentieth century, suggested that all managers per- form five functions: planning, organizing, commanding, coordinating, and controlling.25 (See Management History Module for more information.) Today, we use four functions to describe a manager’s work: planning, organizing, leading, and controlling (see Exhibit 1-4). Let’s briefly look at each.

If you have no particular destination in mind, then any road will do. However, if you have someplace in particular you want to go, you’ve got to plan the best way to get there. Because organizations exist to achieve some particular pur- pose, someone must define that purpose and the means for its achievement. Managers are that someone. As managers engage in planning, they set goals, establish strategies for achieving those goals, and develop plans to integrate and coordinate activities.

Managers are also responsible for arranging and structuring work that employees do to accomplish the organization’s goals. We call this function organizing. When managers organize, they determine what tasks are to be done, who is to do them, how the tasks are to be grouped, who reports to whom, and where decisions are to be made.

Every organization has people, and a manager’s job is to work with and through people to accomplish goals. This is the leading function. When managers motivate subordinates, help resolve work group conflicts, influence individuals or teams as they work, select the most effec- tive communication channel, or deal in any way with employee behavior issues, they’re leading.

The final management function is controlling. After goals and plans are set (plan- ning), tasks and structural arrangements are put in place (organizing), and people are hired, trained, and motivated (leading), there has to be an evaluation of whether things are going as planned. To ensure goals are met and work is done as it should be, managers monitor and evaluate performance. Actual performance is compared with the set goals. If those goals aren’t achieved, it’s the manager’s job to get work back on track. This pro- cess of monitoring, comparing, and correcting is the controlling function.

Just how well does the functions approach describe what managers do? Do manag- ers always plan, organize, lead, and then control? Not necessarily. What a manager does may not always happen in this sequence. However, regardless of the order in which these functions are performed, managers do plan, organize, lead, and control as they manage.

planning Management function that involves setting goals, establishing strategies for achieving those goals, and developing plans to integrate and coordinate activities

organizing Management function that involves arranging and structuring work to accomplish the organization’s goals

leading Management function that involves working with and through people to accomplish organizational goals controlling Management function that involves monitoring, comparing, and correcting work performance

Leading is an important function of The Container Store manager Jaimie Moeller (left). She influences the behavior of employees by leading them in a team huddle before they begin their work day. Coaching employees to succeed in the store’s team-selling environment helps Moeller achieve the store’s sales performance and customer service goals. Source: ZUMA Press Inc/Alamy

Planning

Setting goals, establishing strategies, and developing plans to coordinate activities

Organizing

Determining what needs to be done, how it will be done, and who is to do it

Leading

Motivating, leading, and any other actions involved in dealing with people

Controlling

Monitoring activities to ensure that they are accomplished as planned

Achieving the organization’s

stated purposes

Planning

Setting goals, establishing strategies, and developing plans to coordinate activities

Organizing

Determining what needs to be done, how it will be done, and who is to do it

Leading

Motivating, leading, and any other actions involved in dealing with people

Controlling

Monitoring activities to ensure that they are accomplished as planned

Achieving the organization’s

stated purposes

Exhibit 1-4 Four Functions of Management

Although the functions approach is a popular way to describe what managers do, some have argued that it isn’t relevant.26 So let’s look at another perspective.

If your professor has assigned this, go to www.mymanagementlab.com to complete the Simulation: What Is Management? and see how well you can apply the ideas of plan- ning, organizing, leading, and controlling.

Try It 1!

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46 Part 1 Introduction to Management

REALlet’s get The Scenario: Micah, one of your best employees, was just promoted to a managerial position. You invited him to lunch to celebrate and to see what was on his mind about his new position. Waiting for your food to arrive, you asked him if he had any concerns or questions about being a manager. Looking straight at you, Micah said, “How is being a manager going to be different? What will I do as a manager?” How would you respond? Being a manager means that you have a greater responsibility to consider, and keep in mind big-picture organizational goals and how your work and that of your staff contribute to those goals. As a manager you also have a responsibility to think about development opportunities for any team members who may now report to you. How will you help to put them on a path toward growth and suc- cess? Maribel Lara

Director, Account Management So ur

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Mintzberg’s Managerial Roles and a Contemporary Model of Managing Henry Mintzberg, a well-known management researcher, studied actual managers at work. In his first comprehensive study, Mintzberg concluded that what managers do can best be described by looking at the managerial roles they engage in at work.27 The term managerial roles refers to specific actions or behaviors expected of and exhib- ited by a manager. (Think of the different roles you play—student, employee, student organization member, volunteer, sibling, and so forth—and the different things you’re expected to do in these roles.) When describing what managers do from a roles per- spective, we’re not looking at a specific person per se, but at the expectations and responsibilities associated with the person in that role—the role of a manager.28 As shown in Exhibit 1-5, these 10 roles are grouped around interpersonal relationships, the transfer of information, and decision making.

The interpersonal roles involve people (subordinates and persons out- side the organization) and other ceremonial and symbolic duties. The three in- terpersonal roles include figurehead, leader, and liaison. The informational roles involve collecting, receiving, and disseminating information. The three in- formational roles include monitor, disseminator, and spokesperson. Finally, the decisional roles entail making decisions or choices and include entrepreneur, disturbance handler, resource allocator, and negotiator. As managers perform these roles, Mintzberg proposed that their activities included both reflection (thinking) and action (doing).29

A number of follow-up studies have tested the validity of Mintzberg’s role catego- ries, and the evidence generally supports the idea that managers—regardless of the type of organization or level in the organization—perform similar roles.30 However, the emphasis that managers give to the various roles seems to change with organiza- tional level.31 At higher levels of the organization, the roles of disseminator, figure- head, negotiator, liaison, and spokesperson are more important; while the leader role (as Mintzberg defined it) is more important for lower-level managers than it is for either middle or top-level managers.

managerial roles Specific actions or behaviors expected of and exhibited by a manager

interpersonal roles Managerial roles that involve people and other duties that are ceremonial and symbolic in nature

informational roles Managerial roles that involve collecting, receiving, and disseminating information

decisional roles Managerial roles that revolve around making choices

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Chapter 1 Managers and You in the Workplace 47

So which approach is better, managerial functions or Mintzberg’s propositions? Although each does a good job of depicting what managers do, the functions ap- proach still seems to be the generally accepted way of describing the manager’s job. “The classical functions provide clear and discrete methods of classifying the thousands of activities managers carry out and the techniques they use in terms of the functions they perform for the achievement of goals.”32 However, Mintzberg’s role approach and additional model of managing do offer us other insights into managers’ work.

Management Skills UPS is a company that understands the importance of management skills.33 The com- pany’s new on-road supervisors are immersed in a new manager orientation where they learn people and time management skills. The company started an intensive eight-day offsite skills training program for first-line managers as a way to improve its operations. What have supervisors learned from the skills training? Some things they mentioned learning were how to communicate more effectively and important information about safety compliance and labor practices.

What types of skills do managers need? Robert L. Katz proposed that managers need three critical skills in managing: technical, human, and conceptual.34 (Exhibit 1-6 shows the relationships of these skills to managerial levels.) Technical skills are the job-specific knowledge and techniques needed to proficiently per- form work tasks. These skills tend to be more important for first-line managers

technical skills Job-specific knowledge and techniques needed to proficiently perform work tasks

IN FO

RM A

T IO

N A

L R

O L

E S

D E

C IS

IO N

A L R

O

L ES

IN TE

RPER SONAL ROL ES

IN FO

RM A

T AA

IO N

A S

N A

L R

O

L ES

IN TE

R ROL ES

Figurehead

Leader

Liaison

Disseminator

SpokespersonNegotiator

Resource Allocator

Disturbance Handler

Entrepreneur Monitor Mintzberg’s Managerial

Roles

Exhibit 1-5 Mintzberg’s Managerial Roles

Source: Based on H. Mintzberg, The Nature of Managerial Work (New York: Prentice Hall, 1983).

Top Managers Conceptual Human Technical

Middle Managers Conceptual Human Technical

Lower-Level Managers TechnicalHumanConceptual

Exhibit 1-6 Skills Needed at Different Managerial Levels

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48 Part 1 Introduction to Management

because they typically manage employees who use tools and techniques to pro- duce the organization’s products or service the organization’s customers. Often, employees with excellent technical skills get promoted to first-line manager. For example, Dean White, a production supervisor at Springfield Remanufacturing, started as a parts cleaner. Now, White manages 25 people in six departments. He noted that at first it was difficult to get people to listen, especially his former peers. “I learned I had to gain respect before I could lead,” White said. He credits men- tors—other supervisors whose examples he followed—with helping him become the type of manager he is today.35 Dean is a manager who has technical skills, but also recognizes the importance of interpersonal skills, which involve the ability to work well with other people both individually and in a group. Because all managers deal with people, these skills are equally important to all levels of management. Managers with good human skills get the best out of their people. They know how to communicate, motivate, lead, and inspire enthusiasm and trust. Finally, conceptual skills are the skills managers use to think and to conceptu- alize about abstract and complex situations. Using these skills, managers see the organization as a whole, understand the relationships among various subunits, and visualize how the organization fits into its broader environment. Managers then can effectively direct employees’ work. For example, Ian McAllister, general manager at Amazon, indicates that a successful general manager understands the whole business. With this understanding, managers can get everyone on the same page. In turn, employees will make a substantial number of decisions in support of the company’s vision.36 These skills are most important to top managers.

Other important managerial skills that have been identified are listed in Exhibit 1-7. In today’s demanding and dynamic workplace, employees who want to be valuable assets must constantly upgrade their skills, and developing management skills can be particularly beneficial. We feel that understanding and developing management skills is so important that we’ve included a skills activity component for each chapter’s It’s Your Career opener. You’ll find that activity at www.mymanagementlab.com. In addi- tion, we’ve included a career skills feature at the end of each chapter. (The one in this chapter looks at developing your political skills.) Although completing skill-building exercises won’t m