Managers and Management

Here we see the three common characteristics that organizations share:

1. Goals, which express the distinct purpose of a particular organization
2. People, who make decisions and engage in work activities to reach the organization’s
goals, and
3. A deliberate structure, which systematically defines and limits its members’ behavior.
Members of an organization can be divided into two categories:
1. Nonmanagerial employees work directly on a task and do not oversee the work of
others. Examples include a cashier in a home improvement store or someone who takes
your order at a coffee store. They may be called associates, team members, or
contributors.
2. Managers, who direct and oversee the activities of the people in the organization. A
manager’s job isn’t about personal achievement—it’s about helping others do their work.
This distinction doesn’t mean, however, that managers don’t ever work directly on tasks.
Managers in an organization can have a variety of titles. Managers are usually classified as top,
middle, first-line, or team leaders.
Top managers are those at or near the top of an organization who make decisions about the
direction of the organization and establish policies and philosophies that affect all
organizational members. Titles include: president, vice president, chancellor, managing
director, or chief executive officer.
Middle managers fall between the lowest and highest levels of the organization. They often
manage other managers and sometimes nonmanagerial employees, and are responsible for
translating the goals set by top managers into specific detailed tasks that lower-level managers
oversee. Titles include: agency head, unit chief, division manager, or project leader.
First-line managers are responsible for directing the day-to-day activities of nonmanagerial
employees. Titles include: supervisor, shift manager, or unit coordinator.
Team leaders are a special category of lower-level managers that have become more common
as organizations have moved to using employee work teams to do work. They typically report
to a first-line manager.
Management is the process of getting things done effectively and efficiently, with and through
people.
Efficiency and effectiveness have to do with the work being done and how it’s being done.
Efficiency means doing a task correctly (“doing things right”) and getting the most output from
the least amount of inputs. It’s not enough, however, just to be efficient. Managers are also
concerned with completing activities. In management terms, we call this effectiveness.
Effectiveness means “doing the right things” by doing those work tasks that help the
organization reach its goals.
As illustrated here, while efficiency is concerned with the means of getting things done,
effectiveness is concerned with the ends, or attainment of organizational goals.
The concepts are different, but interrelated. It’s easier to be effective if you ignore efficiency.
Poor management is often due to both inefficiency and ineffectiveness OR effectiveness
achieved without regard for efficiency.
Good management is concerned with both attaining goals (effectiveness) and doing so as
efficiently as possible.
Until now, we’ve looked at management as a generic activity. If management is truly a generic
discipline, then what a manager does should be essentially the same whether he or she is a top-
level executive or a first-line supervisor, in a business firm or a government agency; in a large
corporation or a small business; or located in Paris, Texas, or Paris, France. In reality, a
manager’s job varies depending on several factors.
First, we’ll examine how a manager’s level in the organization impacts the role.
Although a supervisor and the CEO of a company may not do exactly the same things, it doesn’t
mean that their jobs are inherently different. The differences are of degree and emphasis but
not of activity. That is, the decisions of a top manager will have greater ramifications than
those of a middle manager due to the content of the decision.

All managers regardless of level, make decisions and plan, lead, organize, and control. But the
amount of time a manager gives to each activity is not necessarily constant. Also, the content
of the managerial activities also changes with the manager’s level. The figure illustrates this
variability.
The most important difference between the two is how performance is measured. Profit, or the
“bottom line,” is an unambiguous measure of a business organization’s effectiveness. Not-for-
profit organizations don’t have such a universal measure, making performance measurement
more difficult. But even not-for-profit organizations need to make money to continue
operating.
As we see in this figure, managerial roles in small and large businesses differ.
For the purposes of our discussion, a small business is an independent business having fewer
than 500 employees that doesn’t necessarily engage in any new or innovative practices and has
relatively little impact on its industry.
The most important role of a small business manager is that of spokesperson, performing
externally in meeting with customers, arranging financing with bankers, searching for new
opportunities, and stimulating change.
The actions of a manager in a large organization, however, are directed internally, deciding
which organizational units get which and how much of the available resources.
A small business manager is more likely to be a generalist in a less formal, less structured, and
less complex environment than his counterpart in a large organization.
Again, as with organizational level, we see differences in degree and emphasis but not in the
activities that managers do. Managers in both small and large organizations perform essentially
the same activities, but how they go about those activities and the proportion of time they
spend on each are different.
No two organizations are alike, and neither are managers’ jobs. But managers’ jobs do share
some common elements. We’ll discuss three approaches to describing what managers do.
Managers perform certain activities, tasks, or functions as they direct and oversee others’ work.
This approach was first proposed by French Industrialist Henri Fayol. He said managers engaged
in five management activities: plan, organize, command, coordinate, and control (POCCC). His
choice of these five functions was based on his own observations of the mining industry, not
from a formal survey. Today, those management functions have been condensed to the
following four:
1. Planning includes defining goals, establishing strategy, and developing plans to
coordinate activities.
2. Organizing includes determining which tasks need to be done and by whom, how tasks
are to be grouped, who reports to whom, and who will make decisions.
3. Leading includes motivating employees, selecting the most effective communication
channel, and resolving conflicts.
4. Controlling includes monitoring performance, comparing it with goals, and correcting
any significant deviations.
In the late 1960s, Henry Mintzberg dispelled long-held notions that managers were reflective
thinkers who carefully processed information before making decisions. His empirical study of 5
chief executives showed that managers perform ten different but highly interrelated roles. He
categorized these actions around the following three general categories:
1. Interpersonal relationships: Figurehead, leader, and liaison.
2. Informational transfer: Monitor, disseminator, and spokesperson.
3. Decision-making: Entrepreneur, disturbance handler, resource allocator, and
negotiator.
Both approaches seem to do a good job of describing what managers do. But, the functions
approach wins! Its clarity and simplicity in describing what managers do make it continually
popular.
But, don’t ignore Mintzberg’s roles approach; it does offer another way to describe what
managers do.
Another way to describe what managers do is by looking at the skills they need for managing.
Management researcher Robert L. Katz and others describe four critical skills:
1. Conceptual skills: Analyzing and diagnosing complex situations to see how things fit
together and to facilitate making good decisions.
 2. Interpersonal skills: Working well with other people both individually and in groups by
communicating, motivating, mentoring, and delegating.
3. Technical skills: Job-specific knowledge, expertise, and techniques needed to perform
work tasks. (For top-level managers − knowledge of the industry and a general
understanding of the organization’s processes and products; For middle- and lower-level
managers − specialized knowledge required in the areas where they work—finance,
human resources, marketing, computer systems, manufacturing, information
technology).
4. Political skills: Building a power base and establishing the right connections so they can
get needed resources for their groups.
Why study management? Because we interact with them every day of our lives and an
understanding of management offers insights into many organizational aspects. Understanding
management offers insights into why some companies get our orders right the first time, why
once-thriving organizations no longer exist, and which companies continue to prosper during
challenging economic times.
Studying management provides knowledge about manager skills and responsibilities, how
organizations function, and how people behave in the workplace.
If you plan to be a manager, you’ll form a foundation on which to build your management
skills and abilities. Even if you don’t see yourself managing, you’re still likely to have to work
with managers. And the reality is, that if you plan to work for a living, you’ll probably have some
managerial responsibilities even if you’re not a manager. Studying management provides
knowledge about managerial skills and responsibilities, how organizations function, and how
people behave in the workplace.
Organizations depend on their customers to exist in the marketplace. Until recently, customer
focus was thought to be the responsibility of marketing, but organizations are now discovering
that employee attitudes and behaviors play a big role in customer satisfaction.
Managers are recognizing that delivering consistent high-quality customer service is essential
for survival and success in today’s competitive environment. They recognize that employees are
an integral part of creating a customer-responsive organization where employees are friendly,
courteous, accessible, knowledgeable, prompt in responding to customer needs, and willing to
do what’s necessary to please the customer.
Managers today are dealing with changing workplaces, a changing workforce, global economic
and political uncertainties, and changing technology. Distributed labor companies are changing
the face of temporary work. Some 30-45 percent of the world’s work force works from home or
are virtual employees. More and more businesses are relying on apps and mobile-enhanced
Websites to run their businesses.
Managers everywhere are likely to have to manage in changing circumstances, which means
that how managers manage is changing. We will now look at four specific changes that are
increasingly important to organizations and managers everywhere: customers, innovation,
social media, and sustainability.
Innovation means doing things differently, exploring new territory, and taking risks.
In today’s challenging environment, innovation is critical and managers need to understand
what, when, where, how, and why innovation can be fostered and encouraged throughout an
organization. Managers need to be personally innovative and to encourage their employees to
be innovative.
More than a billion people use social media platforms like Facebook, Twitter, YouTube,
LinkedIn, etc. Managers need to understand and manage the power of social media, because
employees use them for both personal and work purposes. More and more businesses are
turning to social media not just as a way to connect with customers but also as a way to
manage their human resources and tap into their innovation and talent. But it’s not without its
perils. Managers need to remember that social media is a tool that needs to be managed to be
beneficial.
Another twenty-first century challenge is managing in a sustainable way. This means not just
managing efficiently and effectively, but also responding strategically to environmental and
societal challenges. Sustainability can be defined as meeting the needs of people today without
compromising the ability of future generations to meet their own needs. From a business
perspective, sustainability refers to a company’s ability to achieve its business goals and
increase long-term shareholder value by integrating economic, environmental, and social
opportunities into its business strategies.
Studying management can help you develop and improve your attractiveness as an employee.
The Gallup Organization, 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 employees and their direct supervisors.
Gallup also found that the relationship with their manager is the largest factor in employee
engagement —which is when employees are connected to, satisfied with, and enthusiastic
about their jobs—accounting for at least 70 percent of an employee’s level of engagement.

History Module
Management has been practiced for a long time. Organized endeavors directed by people
responsible for planning, organizing, leading, and controlling activities have existed for
thousands of years. Regardless of what these individuals were called, someone had to perform
those functions.
The Egyptian pyramids are proof that projects of tremendous scope, employing more than
100,000 workers for some 20 years, were completed in ancient times.
In the 1400s at the arsenal in Venice, warships were floated along the canals in a “floating
assembly line,” with materials and riggings added at each stop. The Venetians also used
warehouse and inventory systems, as well as human resource management and accounting
systems.
The 1800s saw the Industrial Revolution, which brought about the birth of the corporation. It is
hugely significant due to both the organizational aspect of how things were done and because
management became a necessary component of the enterprise.
At the beginning of the twentieth century, the discipline of management began to evolve as a
unified body of knowledge.
Frederick W. Taylor, known as the father of scientific management, developed a method of
scientifically finding the “one best way to do a job” in his 1911 groundbreaking book, Principles
of Scientific Management.
Other major contributors to scientific management were Frank and Lillian Gilbreth (early
proponents of time-and-motion studies and parents of the large family described in the original
book Cheaper by the Dozen) and Henry Gantt (whose work on scheduling charts was the
foundation for today’s project management).

One of the biggest mistakes’ managers make today is failing to adapt to the changing world.
That’s also one of the biggest mistakes you can make as an employee.
The term external environment refers to factors, forces, situations, and events outside the
organization that affect its performance.
For example, a volcanic eruption in Iceland in 2010 prevented delivery of auto parts that led to
a shutdown at a BMW plant in South Carolina and a Nissan Motors facility in Japan.
Two perspectives on management:
The omnipotent view of management argues that managers are directly responsible for an
organization’s success or failure, while the symbolic view of management suggests that much
of an organization’s success or failure is due to external forces outside managers’ control.
1. Division of Work. This principle is the same as Adam Smith’s “division of labor.”
Specialization increases output by making employees more efficient.
2. Authority. Managers must be able to give orders. Authority gives them this right. Along with
authority, however, goes responsibility. Whenever authority is exercised, responsibility arises.
3. Discipline. Employees must obey and respect the rules that govern the organization. Good
discipline is the result of effective leadership, a clear understanding between management and
workers regarding the organization’s rules, and the judicious use of penalties for infractions of
the rules.
4. Unity of Command. Every employee should receive orders from only one superior.
5. Unity of Direction. Each group of organizational activities that have the same objective
should be directed by one manager using one plan.
6. Subordination of Individual Interests to the General Interest. The interests of any one
employee or group of employees should not take precedence over the interests of the
organization as a whole.
7. Remuneration. Workers must be paid a fair wage for their services.
8. Centralization. Centralization refers to the degree to which subordinates are involved in
decision making. Whether decision making is centralized (to management) or decentralized (to
subordinates) is a question of proper proportion. The task is to find the optimum degree of
centralization for each situation.
9. Scalar Chain. The line of authority from top management to the lowest ranks represents the
scalar chain. Communications should follow this chain. However, if following the chain creates
delays, cross-communications can be allowed if agreed to by all parties and if superiors are kept
informed. Also called chain of command.
10. Order. People and materials should be in the right place at the right time.
11. Equity. Managers should be kind and fair to their subordinates.
12. Stability of Tenure of Personnel. High employee turnover is inefficient. Management
should provide orderly personnel planning and ensure that replacements are available to fill
vacancies.
13. Initiative. Employees who are allowed to originate and carry out plans will exert high levels
of effort.
14. Esprit de Corps. Promoting team spirit will build harmony and unity within the organization.
One of the biggest mistakes’ managers make today is failing to adapt to the changing world.
That’s also one of the biggest mistakes you can make as an employee.
The term external environment refers to factors, forces, situations, and events outside the
organization that affect its performance.
For example, a volcanic eruption in Iceland in 2010 prevented delivery of auto parts that led to
a shutdown at a BMW plant in South Carolina and a Nissan Motors facility in Japan.
Two perspectives on management:
The omnipotent view of management argues that managers are directly responsible for an
organization’s success or failure, while the symbolic view of management suggests that much
of an organization’s success or failure is due to external forces outside managers’ control.
The human relations movement that took place between the 1930s and 1950s is important to
management history because its supporters never wavered from their commitment to making
management practices more humane. They believed in the importance of employee
satisfaction—so they offered suggestions like employee participation, praise, and being nice to
people to increase employee satisfaction. For instance, Abraham Maslow, a humanistic
psychologist, who’s best known for his description of a hierarchy of five needs (shown here),
said that once a need was substantially satisfied, it no longer served to motivate behavior.
Douglas McGregor developed Theory X and Theory Y assumptions, which related to a
manager’s beliefs about an employee’s motivation to work. Even though both Maslow’s and
McGregor’s theories were never fully supported by research, they’re important because they
represent the foundation from which contemporary motivation theories were developed.
The field of study that researches the actions (behaviors) of people at work is called
organizational behavior (OB). OB researchers do empirical research on human behavior in
organizations. Much of what managers do today when managing people—motivating, leading,
building trust, working with a team, managing conflict, and so forth—has come out of OB
research. One of the biggest mistakes’ managers make today is failing to adapt to the changing
world. That’s also one of the biggest mistakes you can make as an employee.
The term external environment refers to factors, forces, situations, and events outside the
organization that affect its performance.
For example, a volcanic eruption in Iceland in 2010 prevented delivery of auto parts that led to
a shutdown at a BMW plant in South Carolina and a Nissan Motors facility in Japan.

Two perspectives on management:

The omnipotent view of management argues that managers are directly responsible for an
organization’s success or failure, while the symbolic view of management suggests that much
of an organization’s success or failure is due to external forces outside managers’ control.
Most of the early approaches to management focused on managers’ concerns inside the
organization. Beginning in the 1960s, management researchers began to look at what was
happening in the environment outside the organization.
The systems approach views systems as a set of interrelated and interdependent parts
arranged in a manner that produces a unified whole.
Organizations function as open systems, which means they are influenced by, and interact
with, their environments. Exhibit HM–2 illustrates an organization as an open system. A
manager must efficiently and effectively manage all parts of the system to achieve established
goals.
Early management theorists proposed management principles that they generally assumed to
be universally applicable. Later research found exceptions to many of these principles. The
contingency approach (or situational approach) says that organizations, employees, and
situations are different and require different ways of managing. A good way to describe
contingency is “if . . . then.” If this is the way my situation is, then this is the best way for me to
manage in this situation. One of the earliest contingency studies was done by Fred Fiedler and
looked at what style of leadership was most effective in what situation. Popular contingency
variables have been found to include organization size, the routineness of task technology,
environmental uncertainty, and individual differences.
Since the 1980s, dramatic changes in information technology have directly affected the
manager’s job. Nearly everyone in an organization is connected via technology and managers
may manage employees working from home or halfway around the world. Just like the impact
of the Industrial Revolution in the 1700s on the emergence of management, the information
age has brought dramatic changes that continue to influence the way organizations are
managed.
The Management Environment
One of the biggest mistakes’ managers make today is failing to adapt to the changing world.
That’s also one of the biggest mistakes you can make as an employee.
The term external environment refers to factors, forces, situations, and events outside the
organization that affect its performance.
For example, a volcanic eruption in Iceland in 2010 prevented delivery of auto parts that led to
a shutdown at a BMW plant in South Carolina and a Nissan Motors facility in Japan.
Two perspectives on management:
The omnipotent view of management argues that managers are directly responsible for an
organization’s success or failure, while the symbolic view of management suggests that much
of an organization’s success or failure is due to external forces outside managers’ control.
As shown here in Exhibit 2–1, the external environment includes six components:
• The economic component encompasses factors such as interest rates, inflation, changes
in disposable income, stock market fluctuations, and business cycle stages.
• The demographic component includes trends in population characteristics such as age,
race, gender, education level, geographic location, income, and family composition.
• The technological component focuses on scientific and industrial innovations.
• The sociocultural component is concerned with societal and cultural factors such as
values, attitudes, trends, traditions, lifestyles, beliefs, tastes, and patterns of behavior.
• The political/legal component looks at federal, state, and local laws, as well as other
countries’ laws and global laws. It also includes a country’s political conditions and
stability.
The global component encompasses issues associated with globalization and a world
economy.
After several years in crisis mode, the U.S. economy and other global economies seem to have
turned the corner. However, it’s not now, nor will it ever be, smooth sailing in the economic
arena for managers. After all, when you’re dealing with important factors such as jobs,
incomes, prices of natural resources and consumer goods, stock market valuations, and
business cycle stages, managers have to pay attention to those that could constrain
organizational decisions and actions.
Most survey respondents believed that it is either a major problem (57 percent) or a minor
problem (23 percent). Why has this issue become so sensitive? Those who worked hard and
were rewarded because of their hard work or creativity have long been admired. In the United
States, that gap between the rich and the rest has been much wider than in other developed
nations for decades and was accepted as part of our country’s values and way of doing things.
As economic growth has languished and sputtered, and as people’s belief that anyone could
grab hold of an opportunity and have a decent shot at prosperity has wavered, social
discontent over growing income gaps has increased. The bottom line is that business leaders
need to recognize how societal attitudes in the economic context may also create constraints as
they make decisions and manage their businesses.
Airbnb, Uber, Zipcar, and TaskRabbit are just a few examples of a fast-growing phenomenon
called the sharing economy, in which asset owners share with other individuals through peer-
to-peer service, for a set fee, their underutilized physical assets or their knowledge, expertise,
skills, or time.
Demographics refers to the characteristics of a population used for purposes of social studies.
It has a significant impact on how managers manage and include such factors as age, income,
sex, race, education level, ethnic makeup, employment status, geographic location, and more.
Age is a particularly important demographic for managers because the workplace often
encompasses different age groups.
• Baby Boomers are those individuals born between 1946 and 1964. The sheer number of
people in that cohort means they’ve had a significant impact on every aspect of the
external environment (from the educational system to entertainment/lifestyle choices to
the Social Security system and so forth) as they’ve gone through various life-cycle stages.
• Gen X is used to describe those individuals born between 1965 and 1977. It followed the
baby boom and is one of the smaller age cohorts.
• Gen Y (or the “Millennials”) encompasses those individuals born between 1978 and
1994. From technology to clothing styles to work attitudes, Gen Y is impacting
organizational workplaces.
Then, there is Gen Z—the youngest identified age group, born between 1995 and 2010. This
group is the most diverse and multicultural of any generation in the United States. Their
primary means of social interaction is online.
Demographic age cohorts are important to our study of management because large numbers of
people at certain stages in the life cycle can constrain decisions and actions taken by
businesses, governments, educational institutions, and other organizations.
Studying demographics involves looking at current statistics and future trends. For instance,
recent analysis of birth rates shows that more than 80 percent of babies being born worldwide
are from Africa and Asia. And here’s an interesting fact: India has one of the world’s youngest
populations. By 2050, it’s predicted that China will have more people age 65 and older than the
rest of the world combined, and by 2060, the population of older Americans will more than
double!
There are three ways that the external environment affects managers:
1. Its impact on jobs and employment.
2. The amount of environmental uncertainty.
3. The nature of stakeholder relationships.
As external environmental conditions change, managers face the impact of these changes on
jobs and employment.
Such readjustments create challenges for managers who must balance work demands with
having enough people with the right skills to do the organization’s work.
Changes in external conditions not only affect the types of jobs available but they also affect
how the jobs are created and managed. For example, many employers use flexible work
arrangements and contract freelancers or temporary workers.
Another constraint posed by external environments is the amount of uncertainty that exists,
which can affect organizational outcomes. Environmental uncertainty refers to the degree of
change and complexity in an organization’s environment. This matrix shows these two aspects.
• The first dimension of uncertainty is the degree of unpredictable change; that is, a stable
environment experiences minimal change and a dynamic environment experiences
frequent change. For example, a stable environment might have no new competitors,
few technological breakthroughs by current competitors, little pressure from groups
trying to influence the organization, and so on.
• The other dimension of uncertainty describes the degree of environmental complexity,
which looks at the number of components in an organization’s environment and the
knowledge that the organization has about those components.
• Therefore, an organization with few competitors, customers, suppliers, or government
agencies to deal with, or an organization that needs little information about its
environment, has a less complex and more certain, stable environment, as seen in Cell 1.
So how does the concept of environmental uncertainty influence managers? As illustrated here,
each of the four cells represents different combinations of degree of complexity and degree of
change.
• Cell 1 (a stable-simple environment) represents the lowest level of environmental
uncertainty and Cell 4 (a dynamic and complex environment) represents the
highest level of environmental uncertainty.
• Not surprisingly, managers have the greatest influence on organizational outcomes
in Cell 1 and the least influence in Cell 4.
• Because uncertainty is a threat to an organization’s effectiveness, managers try to
minimize it.
 • Most industries today face more dynamic change, and consequently their
environments are more uncertain.
The nature of stakeholder relationships is another way in which the environment influences
managers. The more obvious and secure these relationships, the more influence managers will
have over organizational outcomes.
Stakeholders are any constituencies in an organization’s environment that are affected by that
organization’s decisions and actions. These groups have a stake in, or are significantly
influenced by, what the organization does. In turn, these groups can influence the organization.
For example, think of the groups that might be affected by the decisions and actions of
Starbucks—coffee bean farmers, employees, specialty coffee competitors, local communities,
and so forth. Some of these stakeholders also, in turn, may impact decisions and actions of
Starbucks’ managers.
Note that these stakeholders include both internal and external groups because both groups
can affect what an organization does and how it operates.
Managers benefit from good management of stakeholder relationships because stronger
relationships can improve the predictability of environmental changes, lead to more successful
innovations, foster a greater degree of trust among stakeholders, and increase organizational
flexibility to reduce the impact of change.
Good stakeholder relationships can lead to desirable organizational outcomes such as improved
predictability of environmental changes, more successful innovations, greater degree of trust
among stakeholders, and greater organizational flexibility to reduce the impact of change.
Stakeholder management can affect organizational performance. Management researchers
who have looked at this issue are finding that managers of high performing companies tend to
consider the interests of all major stakeholder groups as they make decisions.
Another reason for managing external stakeholder relationships is that it’s the “right” thing to
do. Because an organization depends on these external groups as sources of inputs (resources)
and as outlets for outputs (goods and services), managers should consider the interests of
stakeholders as they make decisions. We’ll address this issue in more detail in the next chapter
when we look at corporate social responsibility.
Organizational culture has been described as the shared values, principles, traditions, and ways
of doing things that influence the way organizational members act.
1. Culture is perceived. It’s not something that can be physically touched or seen, but
employees perceive it on the basis of what they experience within the organization.
2. Culture is descriptive. It’s concerned with how members perceive or describe the culture, not
with whether they like it.
3. Culture is shared. Even though individuals may have different backgrounds or work at
different organizational levels, they tend to describe the organization’s culture in similar terms.
These seven dimensions shown in Exhibit 2-4:
• Range from low (not typical of the culture) to high (especially typical of the culture).
• Provide a composite picture of the organization’s culture.
• May emphasize one cultural dimension more than the others, essentially shaping the
organization’s personality and the way organizational members work.
—Apple’s focus is product innovation (innovation and risk taking). The company “lives and
breathes” new product development and employees’ work behaviors support that goal.
—Southwest Airlines has made its employees a central part of its culture (people orientation)
and shows this through the way it treats them.
An organization’s culture generally reflects the vision or mission of its founders, who establish
the early culture by projecting an image of what the organization should be and what its values
are.
Employees most commonly learn an organization’s culture through its stories, rituals, material
symbols, and language.
Organizational culture affects managers in two primary ways:
• Through its effect on what employees do and how they behave, and
• Through its effect on what managers do as they plan, organize, lead, and control.
Ambrosia Humphrey, vice-president of talent at Hootsunite, describes how the power of
organizational culture affects her as a manager. She says that a top priority for her is to nurture
and nourish the company’s culture by continually creating employee experiences that reflect
transparency, one of the company’s important values.
The more employees accept the organization’s key values and the greater their commitment to
those values, the stronger the culture is. Most organizations have moderate to strong cultures;
that is, there is relatively high agreement on what’s important, what defines “good” employee
behavior, what it takes to get ahead, and so forth. The stronger a culture becomes, the more it
affects what employees do and the way managers plan, organize, lead, and control.
The stronger an organization’s culture, the less managers need to be concerned with
developing formal rules and regulations. Instead, those guides will be internalized in employees
when they accept the organization’s culture.
If, on the other hand, an organization’s culture is weak—if no dominant shared values are
present— its effect on employee behavior is less clear.
Because an organization’s culture constrains what they can and cannot do and how they
manage, it’s particularly relevant to managers. Such constraints are rarely explicit. They’re not
written down. It’s unlikely they’ll even be spoken. But they’re there, and all managers quickly
learn what to do and not do in their organization. For instance, you won’t find the following
values written down, but each comes from a real organization:
• Look busy even if you’re not.
• If you take risks and fail around here, you’ll pay dearly for it.
• Before you make a decision, run it by your boss so that he or she is never surprised.
• We make our product only as good as the competition forces us to.
• What made us successful in the past will make us successful in the future.
• If you want to get to the top here, you have to be a team player.
The link between values such as these and managerial behavior is fairly straightforward. Take,
for example, a so-called “ready-aim-fire” culture. In such an organization, managers will study
and analyze proposed projects endlessly before committing to them. However, in a “ready-fire-
aim” culture, managers take action and then analyze what has been done.
If an organization’s culture supports the belief that profits can be increased by cost cutting and
that the company’s best interests are served by achieving slow but steady increases in quarterly
earnings, managers are unlikely to pursue programs that are innovative, risky, long-term, or
expansionary.
In an organization whose culture conveys a basic distrust of employees, managers are more
likely to use an authoritarian leadership style than a democratic one.
The culture establishes for managers appropriate and expected behavior.
As shown here in Exhibit 2-5, a manager’s decisions are influenced by the culture in which he or
she operates. An organization’s culture, especially a strong one, influences and constrains the
way managers plan, organize, lead, and control.
For example, the culture influences managerial planning about the degree of risk that plans
should contain, whether plans should be developed by individuals or teams, or the amount of
environmental scanning in which management will engage.
With organizing activities, culture influences how much autonomy should be designed into
employees’ jobs, whether tasks should be done by individuals or in teams, and the degree to
which department managers interact with each other.
When it comes to leading, organization culture helps determine the degree to which managers
try to increase employee job satisfaction, appropriate leadership styles, and whether all
disagreements—even constructive ones—should be eliminated.
Finally, the culture influences managers’ controlling activities: for example, whether they
impose external controls or to allow employees to control their own actions, which criteria
should be emphasized in employee performance evaluations, and the repercussions for
exceeding one’s budget.
According to Swedish researcher Goran Ekvall, an innovative culture includes:
Challenge and involvement: Are employees involved in, motivated by, and committed to the
long-term goals and success of the organization?
• Freedom: Can employees independently define their work, exercise discretion, and take
initiative in their day-to-day activities?
• Trust and openness: Are employees supportive and respectful of each other?
• Idea time: Do individuals have time to elaborate on new ideas before taking action?
• Playfulness/humor: Is the workplace spontaneous and fun?
• Conflict resolution: Do individuals make decisions and resolve issues based on the good of the
organization versus personal interests?
• Debates: Are employees allowed to express opinions and suggest ideas to be considered and
reviewed?
• Risk taking: Do managers tolerate uncertainty and ambiguity, and are employees rewarded
for taking risks?