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that this was the right combination of people, she knew that work had to start immediately. As the process continued, she believed that the group’s membership could be modified as appropriate.

Susan was also quite involved in implementation of the bank’s new performance appraisal system developed by a group of outside consultants. Installed just three months ago, this system was the bank’s first attempt to formally appraise employees’ performances. There was a great deal of uncertainty among employees regarding how their performances would now be evaluated. Susan knew that implementing this system would not be an easy task.

Although very busy, Susan was looking forward to the challenges ahead for her and the bank. Sometimes, however, she wondered how much longer she could work at her current pace. Susan was at her desk by 6.30 a.m. and usually didn’t go home until

7.0or 7.30 p.m. When she did leave for home, Susan always carried a full briefcase filled with important projects and daily mail that had not been opened. After spending an hour or so working at home, Susan felt better prepared to return to her office early the next morning.

Questions for discussion

1.What managerial skills are the most important for Susan Feldman to use as president of the Marina National Bank?

2.What management functions are being used by Susan to manage the bank?

3.How could you describe Susan’s job as president of Marina National Bank?

4.Where do you see her strong and week points as a manager?

5.What problem does Susan face? How could she solve it?

II. Ethical and Social Responsibilities of Management

In today’s corporate environment, there is interest in and concern about the ethics of managers and the social responsibility of corporations. Ethics and social responsibility are concerned with value-oriented decisions and behaviors. Ethics is the study of moral behavior – how individuals establish and then express their moral standards. The ethics of individuals, including managers, are visible through their actions in corporations. Thus, a corporation’s social responsibility is viewed as moral conduct that is concerned with broad issues such as environmental pollution, poverty, unemployment, and inflation.

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Three perspectives of corporate social responsibility can be considered – classical perspective, accountability perspective, and public perspective.

The classical perspective emphasizes the importance of the free market as a basis for responsible managerial behavior. The essence of the classical perspective is that the free-enterprise system works to society’s benefit. Competition for labor and the need for a desirable image with society at large require companies to treat employees fairly, while free competition for jobs encourage employees to work efficiently and productively for their employers.

The accountability perspective claims that business organizations should pay their own way rather than pollute the environment, contribute to the problem of poverty. They shouldn’t create social problems by discriminating against minorities, setting inflationary prices, or paying low wages, etc. Stated simply, the accountability perspective is that each organization should be accountable for its actions, and treat each of its publics with fairness and consideration.

The public perspective extends far beyond mere accountability and proposes that businesses should contribute unselfishly to solving social problems regardless of who caused them. The public perspective portrays business firms as partners with government, education, and other institutions in solving society’s problems and improving the quality of life for everyone. This perspective holds that because society has given business organizations the right to function and use its scarce resources and has provided an environment favorable to earning profits, the organizations are the public’s servants. ”Where the public interest … is at issue, there is no natural right to be left alone.”

Managers in general see human needs and rights as important. They also value productivity and profits as necessary for an organization to perform well and benefit society. Some of the builders of great companies have held deeply humanitarian values. Others place high value on concern for employees, customers, and the public because they believe that contributes to good management and personal success. This concern for people can in fact reflect a very deep commitment to human worth and can result in effective managerial practices – practices through which the needs of employees, customers, and society at large are met and their rights respected.

Questions for discussion and review

1.How are the terms ethics and responsibility defined?

2.Describe the classical, accountability, and public perspectives of corporate social responsibility.

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3. What values do managers have?

Problems for action

1. Going back on your word

Two months ago your company took over a competitor who had a few months earlier re-equipped its factory with up-to-date machinery. At the time of the takeover you gave assurances to the workforce that there would be no job losses. Since the takeover you have tried unsuccessfully to raise finance for similar new machines in your original factory where you have a militant trade union. The easiest solution to the problem is to lay off the workforce in the recently acquired factory and transfer the machines to your own factory.

What problems would you face if you did this? What action would be best and why?

2. Tobacco Sponsorship

You are a sportsman in need of sponsorship in order to train to compete in the next Olympic Games. You have been trying for a long time to find a sponsor and the only offer you have had is from a cigarette manufacturer. If you accept, you will have to wear their logo on all your sports equipment.

What are the pros and cons of accepting or rejecting their offer? What would you do?

3. Profits vs the Environment

Your R&D department tells you that it would be possible for your production process to be changed so that it wouldn’t damage the environment. However, it would raise your product price, making it more expensive than the competition.

What possible actions would you take?

What would be the advantages, disadvantages and consequences of these actions?

4. A Question of Conscience

You are working as a supervisor for a large mobile home manufacturer. For some months, you have observed actions that are against company policy. Some employees, including two or three other supervisors, borrow company power tools for personal use; occasionally these tools are stolen, but not necessarily by

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employees. You have also noticed that the same people will sometimes take home small bolts, screws, and similar items for personal use.

Are you observing unethical behaviors by these people? If so, what should you do about it?

Case study: Dutton Energy Corporation

Following a thorough interviewing process, Alan Covington accepted a position as an auditor with Howell, Smith & Jackson, a medium-size accounting firm located in San Diego. Alan was busy during his first year with the firm. In addition to passing CPA exam, he worked on a range of projects as a junior member of an audit team. Many hours of overtime were required to compete some of these projects. Alan didn’t mind this; he enjoyed working with his colleagues. He also respected all members of the firm with whom he had had contact. The ethical code of American institute of Certified Public Accountants which was endorsed

(approved of) soundly by the firm’s top-level managers, appeared to be an adequate guide to conduct.

One of the projects to which Alan was assigned during the second year with the firm was an audit of Dutton Energy Corporation. This successful company was one of Howell, Smith & Jackson’s first major clients. Dutton’s primary business was the renovation and sale of oil field equipment (mostly for drilling, well servicing, and pumping).

Many of Dutton’s customers were outside the United States. In fact, a number of the firm’s key relationships were with firms in Saudia Arabia. As such, significant sales expenses were experienced routinely. Nonetheless, Alan found one expense item, a payment of $450,000, consulting fee to Charles Wheeler, that he decided to discuss with Sandy Davenport, his immediate supervisor. Sandy showed little concern about the payment. Charles Wheeler, Sandy explained, was an influential person known throughout the oil industry for his contacts with highlevel Saudi officials. Because of these contacts, Charles was able to locate markets for Dutton’s renovated equipment when everyone else in the company had failed. Alan did not question Charles’s value to Dutton. Rather, his concern was the lack of records relating to specific projects completed by Charles Wheeler and a specific accounting of expenses incurred (received) in working on these projects. Sandy did not share his concern. “Wheeler is a part-time consultant,” Sandy explained. “He makes contacts, introduces company sales representatives to the right people, and

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provides information. He bills (предъявлять счёт) Dutton, and they pay him without asking any questions because they believe he is worth it. So Alan, what is the problem here?”

Alan was dissatisfied with Sandy’s position. All the publicity about bribes to foreign business and government leaders and kickbacks (money paid secretly or dishonestly) to company executives suggested too many possibilities regarding how money may have been spent by Charles Wheeler. Although he recognized it to be a bold move, he made an appointment with Dan Hunt, Dutton’s vice president for sales. It took only a few minutes to realize that Hunt did not want to discuss the matter. “Wheeler is an expensive consultant, but he gets results. He is worth what we pay him and more. Anyway, expenses are high in that part of the world and that region is critical to us”.

Alan remained very concerned about this expense item. He thought that Wheeler should be required to account for his work and expenses and that Dutton’s stockholders should be aware of the large expenditure. Alan’s mention of this issue to one of Howell’s Smith & Jackson’s managing partners did not yield the results he sought either. He was emphatically told that the partners of the firm were aware of this matter and supported Sandy’s position. Sandy was not

pleased when she learned that Alan had discussed the Wheeler situation with one of the auditing partners. “Why can’t you accept my judgment on this?” she screamed at Alan. “I wouldn’t be in charge of this audit if I didn’t know my business. You are not the only one around here with the conscience. Don’t get the idea that you have to be the guardian of ethics in this firm. If you can’t be a little flexible, you are not going to make it in the real world. Furthermore, I never want to hear again that you have gone over my head to one of our partners and that you have questioned the integrity of an executive of one of our major clients”

Alan was quite distraught. He liked the firm in which he was working and his colleagues and he wanted to keep his job. On the other hand, he wondered how often he would be expected to keep quite when his conscience told him to speak out. Was Howell, Smith & Jackson accepting Dutton Energy Corporation’s views simply to maintain a long-term relationship with an important client? Was he being foolishly suspicious, overly conscientious, and naïve? Under what conditions should he take a strong stand – one that might result in loss of his job or require him to blow the whistle (доносить) on his own employer to a regulatory body?

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Questions for discussion

1.What ethical issues are involved in this situation?

2.To what extent should Alan seriously consider his conscience in this matter rather than go along with the behavior of those around him?

3.If Alan is not absolutely certain that something unethical or irresponsible is going on, does he have a responsibility to Dutton Energy Corporation not to do or say anything that might hurt its relationships with shareholders, customers, and the public?

4.Dan Hunt told Alan that given the results he achieves, Charles Wheeler is actually worth more to Dutton than he was paid. Does the statement suggest that the ends justify the means? Evaluate.

III.Decision Making and Planning

A critical aspect of a manager’s job is the making, communicating, and monitoring of decisions. To complete these tasks effectively, managers use a decisionmaking process. The types of decisions managers make vary along several dimensions:

-personal versus organizational

-strategic versus operational

-structured i.e. decision situations in which precedents restrict the manager’s decisionmaking process, versus unstructured or free from limitations imposed by prior decisions

-intuitive versus rational

-problem-solving decisions aimed to solve an existing or anticipated problem versus opportunistic i.e. decisions taking advantage of a potential for growth, increase profits, or the achievement of some other valued objective.

Each of these types of decisions is necessary for an organization to be successful. The challenge to managers is to accept this reality, understand the differences among decision types, and recognize when it is appropriate to make each type of decision.

Managerial decisions are rarely as rational as managers like to believe. Most decisions can be described by the concept of bounded or limited rationality. Because of factors that limit the rationality of any given decision situation, such as ill-defined problems or conflicting goals, managers typically make decisions that are satisfactory rather than ones that maximize the accomplishment of any single goal.

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Managers should also recognize that their decisions seldom escape the influence of internal politics and must always be made in light of such external constraints as laws and regulations, as well as actions of suppliers, competitors, labor unions, customers, and financial institutions. The decisions of a company’s managers are necessarily interdependent with the decisions made by the managers of a number of other organizations. The higher a manager progresses within the organizational hierarchy, the more important it is to relate to other organizations with sensitivity, power, and persuasiveness.

Partly because of bounded rationality, managers’ decision styles vary. Some prefer that decisions be centralized (made primarily at the top levels of organization) while others would rather have decisions decentralized to the lowest level in the firm. Thus, some managers use more of a participative style than do others. Other influences on decision style include the decision maker’s tendencies toward impulsiveness, overcautiousness, ego-defensiveness, and intelligence.

One of the most important guidelines is the acceptance of a problem-solving model assisting the manager in effort to verify or confirm that a thorough attempt has been made to reach a quality decision.

Questions for discussion and review

1.Name the five categories of managerial decisions and describe the differences between and among the decision types included in each category.

2.What is meant by the concept of bounded rationality? How are a manager’s decisions affected by bounded rationality?

3.What factors influence a manager’s decision-making style?

4.Identify and describe guidelines that managers can follow to improve the quality of their decisions.

Problems for Action

1. Withdrawing Your Product

The peak sales time for your company’s product is always in 3 months before

Christmas. In October you find that there is a minor fault in the product. It is not dangerous but shortens the normal life of the product.

What could be the consequences of withdrawing it at this time and losing your sales?

Would you recommend withdrawing it immediately?

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2. Selling up and Selling out

You are part of a group of small traders fighting to keep a large and threateningly strong competitor out of your area. The company contacts you informally and offers to buy you out at a very favorable price.

What would be the pros and cons of accepting the offer and the pros and cons of refusing the offer?

What actions would you take?

3. Economizing

You work in a company operating a bus system in your city and have asked your managers to suggest ways of cutting costs. The 3 feasible schemes were either:

a)redundancies

b)wage cuts

c)economies in the maintenance program

What are the problems associated with agreeing to each of these options? Which would you choose?

Case study: Terry Corwin’s Dilemma

For the past 16 years, Terry Corwin has worked as a pharmacist for a large chain of drugstores located in a large metropolitan area. The organization has been successful. To date, 17 units have been opened. Plans call for another 5 units to be in operation within the next 18 months. These expansion plans have created additional managerial positions. Given that other pharmacists have been selected for promotion to managers of new stores, Terry is watching this situation closely. Some of the store managers are paid an annual salary of up to $45,000. Of further interest to Terry is the company profit-sharing plan. According to what he has heard, it is not uncommon to some managers to earn as much as $8,000 a year in bonuses through their stores’ profitability. This is attractive to Terry, in that he is currently earning $32,500 annually. In addition, he feels that becoming a store manager is consistent with his desire to “do something different”. However, recent events in his family may affect Terry’s decision.

Recently Terry’s father, who owns a pharmacy in a small community some 35 miles from where Terry works, was forced to retire because of poor health. A pharmacist was hired to run the pharmacy for the time being while Terry’s mother continues to manage the drugstore’ other departments. Terry’s parents have asked that