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2.Explain how somebody can be a leader without occupying a managerial position.

3.Summarize leadership styles found on the leadership continuum.

4.What leadership styles are characterized by Theory X and Theory Y?

5.How does a transformational leader probably differ from any of the participative style of leaders?

6.Which of the leadership traits and characteristics are transformational leaders most likely to possess?

7.How could your instructor use the path-goal theory to help you perform well in this course?

8.What factors are most important in choosing a leadership style?

9.What is a ‘substitute for leadership’?

Problems for action

1.A manager says to you, “My philosophy is to never make waves and to never submit an idea that might bomb”.

Where would this person most likely fit on the framework for classifying management styles? Explain why?

2.A friend of yours accepts employment as the supervisor of a group of “workfare” people engaged in the refurbishing of houses owned by the city because their previous owners defaulted on taxes. Workfare employees are generally unskilled workers who are welfare recipients but have been encouraged by the city to work parttime without sacrificing all their welfare benefits.

Use the path-goal theory to give your friend specific tips on how to lead these people in order to achieve high performance and job satisfaction.

Case Study: The CEO of Chaparral Steel

Gordon Forward, the CEO of Chaparral Steel in Midlothian, Texas, says that people and machines are his strategic weapons. Manage them well, he points out, and almost any business can be profitable. His company has been one of the most successful of the small-scale “mini-mills”. Chaparral’s main business involves melting down scrap metal and turning it into high-grade steel for automobile and construction companies. In one recent year, for example, while several other mini-mills failed,

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Chaparral sold 1.1 million tons of steel for $297.2 million in sales and $8.9 million in profits. Chaparral has been described as the “mouse that roared’.

The mild-mannered Forward wears thick glasses and looks more like a researcher than a revolutionary. His background fits the image. Forward holds a Ph.D. from the Massachusetts Institute of technology (MIT) in thermodynamics and spent many years in the research and development divisions of Canadian steel mills. Forward observes that his steel mill experiences taught him two valuable lessons: First, the bureaucratic form of organization hinders the flow of new technology from R&D departments to the floor of steel mills. Second, the traditional adversarial relationship between management and labor lowers productivity.

When Forward joined the start-up team of Chaparral as vice president of operations in 1973, he promised himself to apply what he had learned. To compete with low-priced foreign steel mills, he broke the barriers separating managers and workers, and pushed for extensive automation. His ideas took hold rapidly within the company. Since Chaparral began production in 1975, Forward and his staff have traveled throughout the world in search of the most efficient machines and equipment. To ensure that procedures reflect the state of the art, Forward sends employees of all levels on paid leaves to study other mills. Several years ago the company sent a group of electricians to Sweden to study the use of electric furnaces. It has been estimated that Chaparral spends one tenth of its annual income on finding new technology.

Chaparral is an industry leader in productivity. Many larger companies in the steel industry require at least seven hours to produce one ton of steel. Chaparral, a nonunion firm, requires only 1.7 hours. A clearly articulated management philosophy underlines these productivity figures. Forward believes in boosting the egos of his workers. He says that when an operative employee is treated with the same respect as a vice president, productivity will increase. Consequently the company has removed symbolic distinctions between management and labor. Chaparral has no reserved parking spots for executives. Managers and line workers wear the same color of hard hats, and every employee from the CEO to an office assistant receives the same health benefits.

Many larger firms such as USX are following Chaparral’s lead by instituting non bureaucratic structures within their existing bureaucratic structures. Forward is not worried by these developments. Chaparral is a few steps ahead of its competitors and intends to hold on to its lead. One industry expert says, “Looking at Chaparral is like seeing the future of steel”.

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Questions for discussion

1.Classify Forward’s leadership style according to the three classical leadership styles: autocratic, participative (including constructive, consensual, and democratic), and free-rein. Explain the basis for your answers.

2.Identify several of Gordon Forward’s leadership traits, characteristics, and behaviors. Explain the basis for your answers.

3.What does this case tell you about the relationship between bureaucracy and leadership style?

4.In what way is Forward using a key aspect of the path-goal theory of leadership which focuses on what the leader can do to increase employee motivation?

X.Work Motivation

Work motivation is the process by which behavior is mobilized and sustained in the interest of meeting individual needs and achieving organizational objectives. Motivation contributes to performance, but the act of trying hard to reach a goal does not inevitably lead to the desired performance. Abilities, the right skills to achieve goals are also critical. Terence R. Mitchel says that individual performance is caused by a minimum of four factors, only one of which is motivation. In order to perform well, one must (1) understand the expectations of the job, (2) have the required abilities, (3) be motivated to do what is required, (4) work in an environment that allows the intention to be translated into performance. The last point implies that there are sometimes political reasons why one’s best efforts will be resisted.

The most essential thing in motivation theory is that the purpose of behavior is to satisfy needs such as affiliation with others and recognition. The individual engages in actions, or goal-directed behaviors, that show promise of satisfying that need. These actions may include taking night school courses or working longer hours in the hope of gaining a promotion. If one’s behavior leads to a successful outcome, tension is reduced and an inner state of satisfaction or equilibrium is achieved.

Maslow’s need hierarchy contends that human needs fall into five groups: physiological, safety, esteem, and the self-actualization needs. As needs on one level are met they lose their strength, and the next level of needs is activated.

Herzberg’s two-factor theory divides job elements into motivation and satisfiers versus maintenance factors and dissatisfiers. Motivation factors are job content factors that make a job rewarding (such as achievement and recognition). Maintenance factors

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are such aspects of the job as working conditions and benefits. Dissatisfaction stems from them.

According to McClelland’s need theory, there are three needs of particular significance: achievement, power, and affiliation, i.e. belonging to a certain group of people. Ambitious people tend to have strong needs for achievement and power, but relatively low needs for affiliation. The needs for recognition and autonomy are also relevant for motivation in organizations. Job enrichment refers to making a job more motivational and satisfying by adding variety, challenge, and responsibility. The job characteristics model of job enrichment attempts to design jobs in such a way that the employees will perceive them as meaningful and responsible, and also allows for feedback.

Goal setting plays an important part in all major theories of motivation. Goal theory states that:

1.goals regulate actions

2.difficult goals result in higher performance than do easy ones

3.specific goals are better that general goals

4.feedback is important

5.participation in goal setting and the promise that the performance will be evaluated against goals also influence performance.

Expectancy theory is an explanation of motivation based on the idea that work motivation results from deliberate choices to engage in certain activities in order to achieve predetermined outcomes. This theory is based on three components: expectancy, instrumentality, and valence. Expectancy is the subjective probability a person perceives that a given level of performance will occur. Instrumentality is the assurance of a person that good performance will lead to good results. Valence refers to the value a person places on a particular outcome. All three components need to be taken into account in trying to motivate people.

Reinforcement theory centers on the idea that behavior followed by positive consequences tends to be repeated. A strategic method of increasing motivation is to establish a good organizational culture that encourages hard work. Organizational culture is a system of shared values and beliefs that actively influence the behavior of organization members. The right corporate culture can inspire employees to be productive; the wrong culture can lead to low productivity. It takes a long time to develop a culture that fosters or helps strong motivation and productivity. An organization that fosters strong motivation would have several of these characteristics:

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1.An atmosphere that rewards excellence by substantially rewarding top performers. Outstanding performers receive large raises and promotions while poor performers do not get promoted, receive few raises, and may even be fired.

2.An atmosphere that rewards creative thought by giving tangible rewards to innovators. Simultaneously, few penalties are imposed on people whose creative ideas fail because such penalties discourage innovation.

3.A widespread belief that the organization is a winner. If employees perceive that they belong to a winning team, they will tend to be highly motivated. Proud organizations like Domino’s Pizza, the Hewlett-Packard Company, and the Los Angeles Lakers capitalize upon this aspect of culture.

4.A spirit of helpfulness that encourage employees to believe that they can overcome setbacks or obstacles. Employees believe that when they encounter job hurdles, the company will help them.

Questions for discussion and review

1.Explain why motivation alone will not bring about performance and productivity.

2.Explain how a manager can use a worker’s need for affiliation as a motivation tool.

3.How would you know if a particular person had strong needs for power, achievement, and affiliation?

4.How can you use the two-factor theory of motivation to increase the efforts made by a bus driver?

5.Which job factors or elements do you think would be particularly helpful in enriching a job for yourself?

6.How does setting difficult goals tie in with the need for achievement?

7.What are three practical lessons about motivation that managers can learn from reinforcement theory?

8.How can an organizational culture influence the motivation of individual workers?

Problems for actions

1. You are assigned to the human resources department of one of the world’s largest airports to help deal with the delicate problem. As the director of air traffic control explains the situation, “Some of our young air traffic controllers are prima donnas. They know that they are in high demand in the market place, and this makes them

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difficult to deal with. We’ve got to find some way to get these controllers to really dig in and turn in peak performance on every shift”.

Your task is to help the human resources department identify precisely those motivators or rewards that can be used to increase the motivation of these air traffic controllers.

2.The junior and middle management level of your company have been seriously affected by the lack of promotion prospects and they have become a soft target for headhunters and competing companies.

What are you going to do to ensure that your company does not lose vital staff?

3.You are a Production Director of your company and want to find an incentive scheme to increase the productivity of production workers.

What proposals could you put forward for discussion with the unions?

XI. Career Management and Development

A career is a lifelong series of positions that form a relatively consistent pattern. Career management and development refers to a planned effort to increase the satisfaction and rewards associated with one’s career. The traditional view of career management and development is geared toward maximizing promotions and financial rewards. The contemporary view is that career management and development can also help people attain a protean career. A protean career or continually changing career is one controlled by the individual rather than the organization, and emphasizes selffulfillment, satisfaction and psychological well-being rather than external success. People who achieve a protean career believe strongly in work satisfaction and professional commitment. Although they may be high performers, they are more loyal to their own careers than to the organization.

A career can be divided into the following stages:

(1)Growth, Fantasy, and Exploration. As people begin to think about a career, they must turn a fantasy into a reality, obtain an appropriate, and develop the basic skills needed in the world of work

(2)Entry into World of Work. The person enters the labor market and becomes a member of an organization.

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(3)Basic Training. Early career training includes adjusting to the daily routines of work and dealing with the shock of what work and organizational membership is really like.

(4)Full Membership in Early Career. The individual accepts responsibility and successful careers out of the first formal job assignment. Specific tasks required include performing effectively and learning how things are done, improving skills, developing initiative.

(5)Full Membership in Mid Career. Here people choose a specialty and decide how committed to become to the specialty versus moving toward becoming a generalist or a manager Specific tasks required include gaining a measure of independence, and developing one’s own performance standards.

(6)Mid-Career Crisis. Some people bypass this stage but many people reassess their progress in comparison to the early goals and decide they have not accomplished enough, thus creating a mid-career crisis. These individuals choose among leveling off, changing careers, getting ahead to newer and higher challenges.

(7)Late Career in Non-Leadership Role. People face the issue of acquiring skills in greater depth if they decide to pursue a technical career. For instance, a manufacturing specialist might want to learn more about robotics. He might want to become more technically competent.

(8)Late Career in Leadership Role. At this stage, individuals must use their skills and talents for the long-range welfare of the organization. They must also learn to integrate the efforts of others, and select and develop subordinates.

(9)Decline and Disengagement. In this stage, the individual learns to accept reduced level of power, responsibility, and influence. Specific tasks include finding new sources of satisfaction outside of work, and learning how to live more closely with the partner or spouse.

(10)Retirement. In this stage, the individual must adjust to drastic changes in lifestyle, role, and standard of living. Specific tasks include learning how to maintain a sense of identity without an organizational affiliations, and finding outlets for one’s wisdom and experience.

Not everybody has the same career values as reflected by the following five career orientations: (1) getting ahead, (2) getting secure, (3) getting free, (4) getting emotionally excited, (5) getting balanced.

Under ideal circumstances a career development program works to the benefit of individuals, the organization, and society. Individuals have primary responsibility for managing their own careers. A key component of career management is to establish a

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career plan and career path. The five steps in career planning are: (1) establish a position objective, (2) describe the position content, (3) identify needs for personal development, (4) set a plan for personal development, (5) acquire the necessary credentials, i.e. a letter or other written proof of a person’s abilities, qualities, or suitability.

The career development of many women in recent years has been accelerated through promotion into management. But women still face barriers in terms of advancing beyond middle-level managerial positions. Some evidence exists that women rely on the different management styles than men and that women managers tend to be more people-oriented. Another difference is that women leaders emphasize cooperation while men tend to rely on competition.

Managers have an important role in career development, particularly with respect to career counseling and mentoring. The career counseling role of a manager has been divided into four aspects: coach, appraiser, advisor, and referral agent. A mentor is a more experienced manager who systematically develops a subordinate’s abilities through tutoring, coaching, guidance, and emotional support.

Two seemingly contradictory trends face people entering professional careers currently. One is a growing labor shortage, and another is a downsizing of many organizations, resulting in less opportunity for upward mobility. Small firms, however, offer more growth possibilities than large firms.

Questions for discussion and review

1.What is the difference between a traditional view of career growth and career development and a contemporary one?

2.What is a protean career?

3.What are the career stages most people pass through? Identify your current career stages and explain your answer.

4.What are the major career orientations of today’s worker? What is your primary career orientation?

5.Why is it necessary for people to engage in career development?

6.Identify the steps in career planning.

7.What is a career path? How does a target position (the ultimate career goal sought) relate to a career path?

8.Identify possible differences in leadership style between men and women.

9.Identify the conflicting trends in career prospects nowadays.

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Problems for action

1. Draw a diagram of your career path as you envision it. Include personal goals in your path, and also establish a set of contingency plans which specify what you might do if an unfavorable event takes place.

Case Study: An Unusual Climb to the Executive Suite

A. Barry Rand recollected about becoming the head of the United States marketing operation at Xerox Corporation: “I remember at first being especially pleased. But then after a few minutes, I remember thinking how unusual this appointment was”.

Rand’s appointment as a corporate vice president placed him in the highest ranks of a rare group: black executives in major business corporations. As director of Xerox’s marketing organization of more than 30,000 employees and annual sales of approximately $5 billion, Rand has responsibility for the company’s core business.

Experts say that his successful contribution to this job would qualify the 43-year old rand as a candidate for company president.

Rand considers himself a role model for other blacks in the company. He also believes that his performance will influence the willingness of Xerox and other major corporations to promote minority group members. He notes: “I have always wanted to show that blacks can perform as well or better than their counterparts”.

Rand joined Xerox 21 years ago as an area sales representative. He attributes his climb to these factors: hard work, the company’s commitment to equal employment opportunity for minority groups and women, and a support network of black employees within Xerox. Rand and other blacks at Xerox formed the support groups, and these groups and affirmative action programs have helped other black employees. Xerox now has twelve black vice presidents in various business functions.

Rand states that he has never lacked confidence in his ability to get ahead in the corporation. “I don’t really have a confidence problem, he said, smiling. “I have encountered racism all my life. I almost quit the company once because of a racist boss. But the issue has to become finding those things that enable you to get over that hurdle.”

Rand grew up in a middle-class black neighborhood in Washington, D.C. His mother, an elementary school principal, and his father, a postal worker, made it clear that he was to attend college and graduate school and become a professional. He played basketball and football both at a private high school and Rutgers University. After transferring to American University he received a bachelor’s degree in

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marketing. His formal education concluded at Stanford University, where he received an MBA and an MS (Master of Science) in management science.

Rand joined Xerox Corporation in 1968 as the first black sales representative in the Washington, D.C. area. Later, he and other black sales representatives formed selfhelp groups to improve their sales presentations and organizational skills. Rand quickly became the top sales representative in his region and was third in the country in 1970. After receiving a promotion, he became one of the top five sales managers in the corporation.

Rand was promoted to corporate director of major account marketing in 1980. At that level, he observed that the objective evaluation possible in sales gave way to subjective evaluation about his management ability. The major account marketing position was challenging because he was personally responsible for developing a new marketing program for Fortune 1,000 companies. At the same time, Rand’s sales force faced the challenge of Japanese competitive products.

He advanced to the position of vice president of field operations in 1983 and vice president of eastern operations the next year. In 1986 he was elected a corporate officer, and director of the sales force with a salary estimated to be between $250,000 and $300,000. According to observers, what has made a big difference for Rand is that he has chosen to spend all of his professional life at Xerox, thus establishing a known track record.

Meanwhile, Rand underplays any suggestion that his loyalty and career progress make him an outstanding contender for the presidency of Xerox. “I like to deal with one job at a time,” he said. “That’s the only way you can do any of them well”.

Questions for discussion

1.Trace the career path of A. Barry Rand.

2.What personal qualities could contribute to his successful career?

3.What career advancement tactics and strategies has Rand used?

4.At what career stage is Rand?

5.In your opinion has Rand achieved career success so far?

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XII. International Management

An important theme of managing in an international environment is that good management principles work well from one culture to another, but they have to be applied with a sensitivity to cultural differences.

The international manager faces many challenges and problems. Among the major ones are conflicts in cultural attitudes, unfavorable political climates, governmental inefficiency and instability, low-skilled work forces, unfamiliar legal systems, problems in measuring the contributions of the foreign units, and biases against some groups of people.

The multinational corporation (MNC) is the central point of international business. The true MNC conducts business in at least six countries, with its foreign branches and / or subsidiaries accounting for at least 20 percent of its sales, total assets, or work force. A company can conduct international business at six different levels or stages: licensing, exporting, local warehousing and selling, local assembly and packaging, joint ventures, and direct foreign investment. The general objective of an MNC is to produce and distribute products and services throughout the world to receive a satisfactory return on investment.

Key positions in MNCs are staffed with three types of employees: host-country nationals or people, parent-country nationals, and third-country nationals. To be effective, the parent-country nationals must be adaptable, flexible and sensitive to cultural differences. The three types of organizational structures used for MNCs are product line, geographic, and functional. The parent company usually tries to gather four types of control information: financial, technological, marketing, political, and economic.

Many human resources problems exist when managing in a worldwide environment, including those surrounding the following issues: staffing, promotion, employee loyalty, delegation, decision making, feelings of unfamiliarity, communication, flow of information, and compensation.

Some research suggests that motivation and job design theory is useful in explaining the work behavior of people in diverse cultures, especially in relation to motivators and demotivators and job characteristics. On the other hand, it has been observed that Americans must adapt their typical negotiating styles to fit cross-cultural differences.

Strategies should be developed for building competitive strengths in the international market. These competitive advantages may be achieved in terms of

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product markets served, technologies employed, managerial dominant logic, and the building of distinctive corporate competencies.

Questions for discussion and review

1.Why is international management considered so important?

2.What are some of the key challenges facing the international manager?

3.Explain the essential features of a multinational corporation (MNC).

4.What are some major human resources problems encountered in international joint ventures?

5.What are several strategies corporations can use to build competitive strengths in an international market?

Problems for action

1. Turning over Power

AES, an American multinational power generation company, teamed up with a Belgian utility company to purchase two power plants in Ireland. AES tried to transplant its values to Ireland. The joint venture is a financial success, but it has been a cultural struggle.

Irish managers who have worked their way up to the top of the company find the new management culture frustrating. They don’t like standing by and watching frontline workers make decisions. When operators suggested replacing an expensive steel pipe with an inexpensive plastic one, they resisted. They feared the plastic pipe would last only a few days but the operators were convinced that plastic would do the job and they put the pipe in. That was a year ago and it’s showing no signs of wear. But the managers fear that if you give up control, you are no longer required.

And to make matters worse, the plant didn’t just have to change – it had to shrink as well. A new management suggested announcing one big layoff and then moulding the people who remained into a tightly knit team. But the final decision was left to the Irish local management, and they chose a voluntary-redundancy program instead. Not enough workers volunteered, which forced them to come up with other offers. Every time another scheme was launched, there was a feeling of dread. The necessary workforce reduction is now complete, but it took five years.

The Belfast plant has adopted the AES cultureslowly. Too slowly for ASE’s CEO Dennis Bakke: “The managers just didn’t trust the workers enough to turn over power,” he says.

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Analyze the situation with the company and identify the difference in approach to managing people by Irish and American managers?

2.Doug McIntosh was seen as a rising star in one of the United Kingdom’s largest

Multinational conglomerates. Consequently, he was appointed director of a key plant in Illinois. McIntosh quickly established himself as a formidable person, causing respect and fear, at the American plant. He created a favorable impact as he went about his tasks in a highly professional manner. Doug studied all of the available documentation about plant operations and met individually with each supervisor and higher level manager in the plant. Soon thereafter he formulated some plans for improving plant productivity.

Top management became concerned when the implementation of these plans failed to materialize. A home office executive visited the plant human resources manager to see if she had any clues as to why McIntosh’s ideas might be meeting with resistance.

She gave the executive this analysis of the situation:

“People were willing to go along with his act for the first two months or so, but then things worsened. We got sick of his authoritarian approach to managing people. Maybe in Scotland the plant manager is king, and everybody below him is a servant. He even insists on supervisors calling him ‘Mr. McIntosh’. I’ve tried to explain to Doug that he has to be more egalitarian here in the States, but he just can’t seem to bend”.

Analyze the situation with McIntosh and explain why he has encountered difficulties in implementing his plans?

How did he treat his staff and if he has any chances to improve the situation?

3.Organizations in Action

Japanese companies have taken such a commanding lead in doing business with China that other countries have a slim chance of catching up. The Japanese strategy has been to outwork and often outsmart their American and European rivals, says a group executives and diplomats from Japan, China, and the United States who met at Beijing, China. Many Americans admit that they have been outmaneuvered by the

Japanese in competition to cultivate business in the world’s most popular country. “The Japanese have such a substantial lead that it would be difficult for Western

Europe and the United States to make strong inroads,” said the director of the Hong Kong-based China division of an international consulting firm. “Japanese companies have already laid the groundwork in the equipment that they have installed all over the

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country. When spare parts or additional equipment are needed, the Chinese companies will tend to turn to the Japanese suppliers with whom they have experience.”

Richard Wong, head of the Chinese affiliates of the Bank of America, makes this comment: “I would imagine that three years down the road almost all American banks and most European banks will be wiped out of the credit market. They are just not competitive”.

Japan’s success in China is an extension of the strategy that has allowed Japanese companies to enjoy outstanding success in other foreign markets. They have made a vast commitment to the Chinese market, establishing offices all over China, training virtually all of their staffs in the Chinese language, analyzing the market carefully, and steadily pursuing every business opportunity.

Japanese employees are willing to work longer hours than their American counterparts (people doing the same job), put up with less spacious housing, and serve longer assignments in China. Japanese companies, both large and small, now have over 300 offices in Beijing, compared with about 170 American firms. The Japanese are also more likely to work at establishing a network of solid business contacts throughout China.

Analyze the situation and identify and define stages Japan has passed on the Chinese market. These stages can be considered as methods of entering the international market and providing more substantial involvement on this market.

What unified strategies were used by Japanese companies to establish a foothold in the Chinese market?

Case Study: The Americanized South Korean Executives

South Korean business firms are promoting a new generation of executives to carry out their strategies. The elder generation was responsible for the explosive growth in South Korean exports during the last decade. However, their younger siblings and offspring will have the responsibility of maintaining South Korea’s economic growth in the face of increased international competition and protectionism.

South Korea’s older business founders, who built the powerful conglomerates, have achieved success in orienting to Japanese-style export strategies. These conglomerates are largely responsible for Korea’s trade surplus with the United States, which has increased recently up to $7.4 million. To prevent a backlash (sudden violent backward movement), the Korean government has urged the Korean firms to transfer their component and technology purchases from Japan to the United States. The new

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wave of Korean managers will be assuming this responsibility. Many parents of the new managers are fluent in the Japanese language and have Japanese friends. Many of the new Korean managers are fluent in English and have friends in America.

Current changes in management are more sweeping in Korean conglomerates than usual. The elder chairman of the Samsung and Hyundai conglomerates plan to ease themselves into retirement. The LuckyGoldstar group and Daewoo (the other two of the top four groups) are also promoting younger, American-educated executives. Although the ruling families hold only minority shares, their control remains unchallenged.

Samsung chairman Lee Byung-Chull is concerned that his third son may not be ready to manage the $13 billion group as it attempts to establish itself as the “IBM of

Korea”. His solution has been to recruit two prominent government officials, both 67 years old, to direct two of Samsung’s largest units. These two senior executives will provide support for the younger son, who studied at Georgetown University. The three will become a troika to manage the conglomerate while the father phases into retirement.

At Hyundai, Chairman Chung Ju-Yung has named himself honorary chairman, while turning over chairmanship to his brother Chung Se-Yung, 58, who studied at the University of Miami. As president of Hyundai Motor Company, Se-Yung has been responsible for the success of the company’s Excel subcompact auto in the United

States and Canada. Unlike the senior Chung, the younger Chung speaks English fluently and involves his subordinates in decision making. However, the elder Chung intends to stay involved in some decision making until he retires.

To prevent Hyundai from becoming a target of protectionists, Chung Se-Yung is increasing the purchase of U.S. components. He says,”I buy tires, glass, and carpets from America. If I were not educated in the USA, I wouldn’t think about it”.

Lucky-Goldstar has promoted Koo Cha-Hak, 56, an American-educated manager, to a position of responsibility for electronics, semiconductors, and telecommunications. At Daewoo, Chairman Kim Woo-Choong plans to terminate (to bring to an end) or transfer 5 percent of his top-level managers and replace them with members of the younger generation.

Philip D. Grub, a Korean expert at George Washington University, thinks the Koreans will become better trading partners, but also better competitors. A South Korean engineer living in the United States offered this comment about the new breed of executives, “I wonder if following U.S. business practices is the best for Korea. We did pretty well on our own before”.

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Questions for discussion

1.What might be some of the likely outcomes of the Americanization of giant South Korean corporations?

2.How concerned should the new breed of managers be that their knowledge of American management practices might not be well suited to managing South Korean employees?

3.Identify one or more South Korean cultural values that are illustrated in this case?

XIII. Offshoring and Outsourcing

Off-shoring is when a company moves part of its activities to another country, perhaps because costs are lower or to be closer to their markets. For example, a car manufacturer in Japan might move a factory to Britain. It may include outsourcing the activity to a company in another country.

Outsourcing involves employing a different company to do part of the work your company needs. For example, instead of having an accountant working for your company, you pay a specialized accountancy firm to do the accounts for you.

Corporate America has been outsourcing overseas for years, often shipping entire divisions (IT department, accounting department, customer service department, production department) to low-wage countries. Only recently has it become possible for small businesses to move as few as half a dozen positions to places like China, India, and the Philippines – where a growing number of contractors are set up specifically to work with small companies.

More and more small businesses are taking the plunge, i.e. are deciding on outsourcing nowadays, though outsourcing is economically and politically tricky.

“You learn a lot from making a product, getting customer feedback, and generally doing things yourself,” says Babson College professor Shaker A. Zahra. “The more you outsource, the more detached you can become from your actual business.” So when deciding whether to make the shift offshore, business owners need to be certain how much they actually can save. They shouldn’t even think about offshoring if they can’t cut costs by at least 20%. In fact it’s preferable to save about 40%. Otherwise, they will be spending too much energy trying to manage the process.

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Small firms can face different obstacles being involved in offshore business, and first of all it can be language barrier. If you are not crystal clear about what you are asking, small errors will be compounded by time, distance, and language. Sometimes finding an experienced contractor or intermediary who works with smaller companies, capable to oversee foreign operations and smooth out any problems between them and a headquarter can be the best outcome. And on the top of the operations risks, there are image risks. Moving work abroad may not win you any popularity contests with customers or employees – particularly when the loss of white-collar jobs to other countries is shaping up as a major political issue. There is at least one political benefit that may help balance the political risk: being able to offer your customers lower prices.

Questions for discussion and review

1.What is offshoring?

2.What is outsourcing?

3.What company’s activities can be moved offshore and why?

4.Is outsourcing economically and politically risky? Give some facts from the article proving these risks.

Problems for action

1. Can outsourcing work for small businesses?

Two years ago, Todd Hodgen, alarm systems manufacturer, learned he could save some 65% in design costs by hiring a Taiwanese firm to handle some engineering tasks. What’s more, the Asian engineers would be working after the American staff had gone home, accelerating the development cycle. For a start up company funded with money from friends and family, such efficiencies were irresistible.

Hodgen did everything he could to make his experience into outsourcing a success. He flew to Taiwan to meet the team. Back home, he checked regularly, promptly responding when the engineers in Taiwan sent documents. What Hodgen didn’t know was that the engineers, who were supposed to work solely for him, were serving other clients as well. Feedback, he found, often went unconsidered. By the time the design was delivered, it was eight months late and the quality of the work left much to be desired.

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Analyze the situation with the firm and decide how Hodgen can avoid the risk of losing the company.

Case study: The outsourcing dilemma

When Michael Calderone launched his online coffee business in 2002, an in-house customer-service department was out of the question. Not only had Calderone never run a call center, the founder of SmilesCoffee.com, based in Nevada, couldn’t afford one. So, he outsourced the operation.

It was a disaster. SmilesCoffee’s selling point is freshness: beans are shipped only

95% roasted; customers complete the process in their microwaves, which makes extra taste, Calderone says. It’s not exactly rocket science, but newbies sometimes find the process confusing and require some help. Unfortunately, Calderone’s contractor wasn’t up to the task. ”My customers couldn’t even get through,” he says. “And when they were getting through, they weren’t getting the right information.”

So Calderone found another contractor. Now, nine dedicated and friendly reps assist SmilesCoffee customers with roasting issues, shipping questions, and account information. What’s more’ the better service comes at half the price. How did

Calderone score such a bargain? By using a call center in the Philippines, where the average rep earns about $3,600 a year – a fraction of what his former contractor, based in Utah, was paid.

Calderone, 43, has mixed feelings about using offshore labour. But if SmilesCoffee is to remain competitive, he figures he has little choice. The biggest Calderone’s fear was the shortage of Philippine experienced labor force and lack of established processes that can be easily taught through a training manual. He started with hiring a Manila-based manager with extensive customer-service experience to supervise the operation and sort out all possible problems between the call centre and US headquarters. Calderone spent months developing a 100-page training manual for the reps to use. He spends about three hours a week on the phone with the manager trying to avoid any cultural differences preventing success in business. And despite his confidence in outsourcing, he accepts its limitations. He has kept the order-taking part of customer service onshore rather than sending it off to the Philippines. “There is a little bit of a language barrier on the sales side,” he says.

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Questions for discussion

1.Why was outsourcing a disaster for Calderone at first? Why wasn’t he confident in choosing outsourcing? What were his fears? Was he right in having them?

2.How did he act? What was his approach to outsourcing labour force?

3.What steps did he take to remove all the barriers on the way to succeed in his offshore business?

4.How did he divide responsibilities between onshore and offshore parts of his business? Why?

XIV. Crisis Management

By Morgen Witzel

Crises are an inevitable part of management and the larger the business grows the bigger the crises seem to become. An understanding of risk is essential in crisis management. Sophisticated modeling techniques and expert consultants can help managers appreciate risks better, especially those stemming from global issues such as terrorism and climate change. Closer to home, risks such as changing customer preferences or takeover threats may be best analyzed within the company itself. The constant monitoring of what is going on in the larger world is an essential activity. Once a range of possible future crises has been established, contingency plans can be put in place.

However, not every risk can be foreseen. The chances of an airliner crashing, for example, are extremely small, but every airline must still live with the possibility. When an Air France Concorde crashed on take-off from Paris – Air France was prepared to deal with the issue. Managers moved quickly to withdraw Concorde from service, announce an investigation into the accident and reassure the traveling public that it was still safe to fly Air France. The following day the airline’s share price did decline, but not by much and not for very long.

Intel, the world’s leading maker of semiconductors, suffered a huge and unforeseen crisis when it emerged that a small proportion of its Pentium microprocessors were faulty. Quickly assessing the options, the company took the brave step of recalling and replacing the entire production run of the series. The move cost more than $1bn and probably saved the company. Intel showed that it was committed to its product, whatever the short-term cost, and customers responded positively.

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Looking back on the incident, Andy Grove, Intel’s chairman and then chief executive, compared managing in a severe crisis to an illness. Strong, healthy companies will survive, although at a cost to themselves. Weak companies will be carried off by the disease and will die. In Mr. Grove’s view, the key to successful crisis management is preparedness. Forward thinking and planning are essential; understanding the nature of the crisis that might occur can help managers be better prepared, as the Air France example show.

Yet even while managers are planning how to deal with seismic events such as terrorist attacks or natural disasters, they may be missing more subtle threats such as the development of new technologies that could undermine their business. Good crisis management requires the ability to react to events swiftly and positively, whether or not they have been foreseen.

From the Financial Times

Questions for discussion and review

1.What kind of crises do companies face?

2.How can crises be anticipated?

3.How can they be managed?

4.How did the Air France managers deal with the issue of the Concorde crash?

What happened to the airline’s share price?

5.How did Intel’s mangers deal with their unforeseen crisis?

6.What conclusions can be made after analyzing the situations with Intel and Air France?

Problems for discussion

1.What developments in the market could threaten your company, or a company you know? What could the company do about this to keep its customers happy?

2.Choose a well-known company in your area and discuss what kind of events could become a crisis for that company. Present the events, and your proposed reactions from the management.

Case Study: Carrying out a rescue plan

On September 4th 2001, Marconi announced that it was in deep trouble. The telecommunications equipment company was loosing cash and the flow of orders had dried up. George Simpson, its chief executive, and Sir Roger Hurn, its chairman, both resigned that day. The new management team appointed by Derek Bonham was not

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Note: In October 2005 (after this article appeared), Marconi was purchased by Ericsson for €1.2bn.

Questions for discussion

1.In a crisis – when a business is losing money and orders – what can a company do to survive?

2.Was the rescue plan of Marconi successful? Why?

3.Here are the headings for each item of the Marconi rescue plan. Put them into the correct position in the plan.

i)Communication

ii)Process analysis

iii)Preserving the core

iv)Teamwork

v)Customer focus

vi)Laying of staff

vii)Project management

4. Prove the importance of implementing of each of these items for the company’s recovery.

Text Bank

Management’s job

By Richard Martin

Every morning Fulton Fish Market opens at 2 a.m. to purchase the fresh catch of the day, which is then highlighted at the counter. In Santa Monica, store manager of Whole Food, William Lombardy learned that disciples of a local Buddhist sect avoid any food containing onion and garlic. So he now posts “No garlic, No Onion” signs on 15 prepared dishes (most of which didn’t contain them to begin with). At the 46,500- square-foot outpost in Glendale, California Iranians can get their pilaf by the pound; Latinos can choose among various tamale fixings; Asian can acquire gai choy and chicken feet; and whole fish are set outside the refrigerator case in ice so the Armenians can press the eyeballs for freshness (too mushy and the fish is deemed dated). “I’m empowered to run this like it’s my own store,” says the store manager.

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Whole Foods sees plenty of untapped growth ahead. It expects same-store sales to rise 8% to10% this year – this in a business with tendency to declining growth (WalMart excepted). Customers come from a 20-mile radius to shop at Whole Foods, compared with just 2miles for the typical supermarket. And only 25% of Whole Foods shoppers provide 75% of total sales. “The point is we can grow our revenues as well as the number of stores,” says co-president Robb. “Our goal now is to be the best food retailer in every market. Everybody that sells food is a competitor.”

Whole Foods’ successful taking of Manhattan represents “our coming of age,”

Robb says. The chain first opened in the Chelsea neibourhood in 2005, and many had warned that Whole Foods would face a rough welcome from hypercritical Manhattan foodies, bare-knuckled union goons and gourmet stalwarts such as Zabar’s and Dean & Deluca. “We were warned that we would have labour problems, that New York is totally different, that New York customers are used to rude employees,” chairman Mackey says wearily. “It’s been just the opposite.”

Aware of New Yorkers’ impatience with waiting in line, the Chelsea store installed a bank of 20 cash registers, since increased to 26, with “a line director” who acts as a traffic cop; his role merited praising profiles in both the New York Times and the New Yorker. The newer and bigger store at the Time Warner Centre has two line directors and 32 registers, still not enough to stop one irritated shopper from complaining to the store manager. Coming in March is a 53,000-square-foot Whole Foods on Union Square, with a second-floor eating area overlooking the park, followed by a new store in Tribeca, another in Park Slope, Brooklyn and a third outlet on Long Island.

“We are not granola (muesli)-crunching hippies – we are highly competitive,” Robb says. He adds that his co-president counterpart, Anthony Gallo, is a detailoriented “triple Virgo,” while Rob himself is a Scorpio – “I’m intense and passionate.” “Business is simple,’ he continues, “Management’s job is to take care of employees. The employees’ job is to take care of customers. Happy customers take care of the shareholders. It’s a virtuous circle.”

From Forbes Global

Language focus

1. Find words and expressions that mean the following

a)to pick out something as an important part (para.1)

b)a small town or collection of buildings established by settlers in some parts (para..1)

c)not used yet (para.2)

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d)someone who is very interested in cooking and good food (para.3)

e)violent criminal hired to frighten or attack people (para.3)

f)to deserve (para.4)

g)a person who has the same purpose or does the same job (para.5)

2. Choose the best definition for the following expressions

c) to face a rough welcome a) to meet a hearty welcome

b)to meet a readiness to use force or violence

c)to face smooth entering into the market

3.True or false?

a)Focusing on customers’ needs and preferences is the priority for Whole food.

(para.1)

b)Whole Food expects the tendency to declining growth. (para.2)

c)Whole Food is becoming a real and even aggressive competitor to everybody selling food. (para.2)

d)Whole Food has proved to be a well-established company by 2005. (para.3)

e)Whole Food did have labor and customer problems in New York. (para.3)

f)Whole Food grew not only their revenues but the number of their stores. (para.4)

g)The success of Whole Food can be, to a great extent, referred to personal qualities of people at the top. (para.5)

4. Put a correct form of the verbs in the sentences below

set decline value increase face empower orient

a)He is a detail- …… person.

b)He was ….. to run the store.

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c)The whole fish are ….. outside in ice so that customers could see their high quality.

d)Armenians …… freshness in food.

e)There is a tendency to …… prices.

f)The number of cash registers …… since that time.

g)They were afraid of …… a rough competition in New York.

5. Look through the whole text and answer the questions

1.Do you agree with the final phrase in the article concerning business simplicity? Why?

2.How did the company approach to satisfying their consumers’ needs? Give some examples.

3.What strategy did they use selling their food products? How did they arrange their stores?

4.How did they differentiate their business from their competition?

Strategies

Plan B (and C and D…)

By Nicole Gull

Management experts advise entrepreneurs to revisit their business plans regularly. After all, circumstances change, and if tactics and goals do not change along with them, a business strategy can grow stale awfully fast.

Still, it’s hard not to wonder whether Craig Knouf has taken such advice much too far. The CEO of Associated Business Systems, an office equipment supplier based in Portland, Oreg., simply cannot keep his hands off his business plan. Since founding his company in 1997, Knouf figures he’s revised his original business plan more than 120 times, revising the 30-page document on a monthly, quarterly, and annual basis.

Running his company any other way, Knouf says, “would be like driving a car with no steering wheel.”

Knouf is in the minority. In fact, most business owners reexamine their business plans only once a year, unless they are applying for a loan or seeking investment capital, says Ed Rogoff, author of Bankable Business Plans. After that, the plans go back in a drawer until the next annual checkup. Yet many experts warn that once or twice a year is not enough. “The world turns; things change,” says Eric Siegel, a

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lecturer at the Wharton School and president of Siegel Management Co., a consulting firm. “What you commit to a document on December 19 is not necessarily appropriate on January 19.”

Knouf couldn’t agree more. So every 30 days, he distributes Associated’s business plan to his seven vice presidents. The VP’s review the plan, comparing their divisions’ current results with goals established the previous month. If the two don’t match, they consider why and rewrite the business plan accordingly. Quarterly reviews take the same approach to three-month goals. Plus, there’s an annual two-day meeting to discuss and refine long-term objectives. Such relentless planning, Knouf says, helped the 110-employee company reach $21.5 million in sales in 2007. “If you only looked at the plan every quarter, by the time you realize the mistake, you are five months off,” says the 45-year-old entrepreneur. “You are done. You are not going to get back on track.”

The strategy has a tendency to send Knouf’s business in unanticipated directions.

He never guessed that sales of scanning software would be a big part of his business, for example. But several years ago, with each monthly checkup, Knouf noticed a slight uptick in demand for scanning capability. Because he updates his business plan every month, he was able to react quickly, adding such software – which has not even been part of his original strategy – to Associated’s array of products. The result: in 2008, Knouf expects such sales to reach $3.1 million, double that of 2007.

What more, the plans provide a highly detailed, written record of his company’s evolution – something that banks love, says Knouf, who claims never to have had a problem getting a loan. That doesn’t surprise Dana Drago, president of small-business banking at bank of America. “If he gets into trouble, he’s got a plan,” which is exactly what lenders like to see, she says.

Associated’s management team recently emerged from its 2008 planning meetings with ambitious goals for the year – these include 20% internal growth, as well as an acquisition to boost market share.. For now, such milestones seem reachable. But if things change, Knouf is ready to change right along with them.

From Inc. magazine

Language focus

1. Find words and expressions that mean the following

a) a person who starts a company or takes business risks in the hope of making a profit (para.1)

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b)to read through a piece of writing carefully, making improvements (para.2)

c)general examination of some document/s taken regularly (every year) to test the state of affairs (para.3)

d)to write something down into a document (para.3)

e)to improve the existing product/system/ goals, etc (para.4)

f)continuously severe and even cruel approach to planning (para.4)

g)to imagine in advance; to expect (para.5)

h)a small rise of (para.5)

i)a set/group of products (para.5)

j)the gradual development (para.6)

k)come out or appear from (para.7)

l)an important event that changes the course of life or business (para.7)

a)He ……. his business plan more than 20 times.

b)While ….. for a loan you’ve got …… your business plan.

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c)He used to …… his plans on a monthly basis.

d)He is used to …… his business plans regularly.

e)He expects such approach to business planning …… in big profits.

f)Regular checkups of business activities are likely …… company’s revenues.

4. True or False?

a)Planners have to stick to their original tactics and goals. There is no need in reexamining them.

b)Knouf, like most business owners, is used to revising his business plans on an annual basis.

c)Knouf’s approach to reviewing both short-term and long-term plans is the same.

d)Continuous strategy revising helps Knouf to find new ways of business evolution.

e)Sometimes Knouf is refused in getting a loan from the bank because he gets into trouble in his business.

5.Look through the whole text and answer the questions

a)What could happen to a business strategy if tactics and goals do not change along with life circumstances?

b)How often do most entrepreneurs revise their plans? When do they do it?

c)How often does Knouf revise his business plan? How does he approach to revising his business plan? Does he do it individually or in a team?

d)Why does he find constant business plan revisions so important? Present some proofs from the article.

e).Knouf says that he has revised his business plan more than 120 times in seven years. How does he benefit from it? Find all the advantages of regular updating business plans?

Job Satisfaction / Managing flexible working practices

More about results than time

By Philip Manchester

On the surface, flexible working might seem to be about people being able to choose their working hours and, perhaps, spend more time working away from the office. But it is also a fundamental change in the way people work – and, more

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importantly, the way they are managed. Flexible working is a shift from “time-based” to “results-based” working practices and could demonstrate the biggest change in the workplace since the start of the industrial revolution.

New employee legislation is one of the main motivations for employers to introduce flexible working practices – not the only one. In Europe, for example, employers are obliged to offer parents with young and disabled children the right to request flexible working. While legislation is a major catalyst to introducing flexible working, there are other reasons. In the US, for example, the fall in the price of mass market computer and communications technologies is encouraging organizations to allow more home working.

Flexible working is also likely to appeal to a wider skill pool and help with staff retention. Mary Sue Rogers, human capital management leader at IBM Global Services, says that IBM has embraced (adopted) flexible working to help with recruitment. “In Europe, companies have to provide flexible working because of legislation – but it is also a way to recruit from a broader skill pool, including women and older people. With an aging workforce we have to find ways to retain older staff. It also gives greater scope to male employees who increasingly want flexible working to create a better work/life balance. A recent survey of UK graduates found that work/life balance was third on their list of career priorities.” She adds that 55 per cent of IBM’s employees work flexibly and 90 per cent are “enabled” to do so. “To us, it is foremost a business imperative. It is about staff retention, productivity and cost reduction,” she notes.

A survey of 300 UK human resource professionals in small to medium-sized enterprises (SMEs), commissioned by Arizona-based telecommunications company Inter-Tel, found that 40 per cent found it difficult to attract the right skills from their local market and 30 per cent thought they could attract staff if they were offered flexible working. But they also had significant reservations – with 93 per cent concerned that staff were more likely to bend the rules if they work from home. Doug Neal, research fellow at the US Computer Sciences Corporation, identifies this attitude as being at the heart of the cultural shift prompted by flexible working: “The problem is not all with the worker – it is also with the boss. Management has to find a way to measure ‘results’ rather than time. We have to find new ways to evaluate workers – and their bosses.”

He adds that organizations must find ways to build trust between employer and employee “How do I evaluate people when I can’t see them? In formal terms, trust is

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the outcome of a series of beneficial transactions. You have to build a culture of trust from working together.”

Although a new legislation is forcing organizations to adopt flexible working practices, there are sound business reasons to give employees more flexibility. Organizations which have embraced flexible working have found that it can cut costs and improve productivity. More importantly, it enables them to recruit staff from a much broader skill pool and retain staff. But it does mean a fundamental change in the relationship between staff and management. Both must learn to trust each other and focus on results rather than time spent in the office.

From the Financial Times

Language focus

1.Find words and expressions in paragraphs 1 and 2 that mean the following:

a)when you first look at

b)an important alteration

c)a change approach

d)announce

e)the law

f)ask for

g)an important factor in

2. True or false? (paragraph 3)

a)IBM introduced flexible working practices in order to attract a broader range of staff with different abilities.

b)It is difficult for older people to work flexibly.

c)It is important for many people who have a university degree that the4y have enough time for themselves outside work.

d)At IBM, flexible working is good for working.

3.Before looking at paragraph 4 again, put a correct form of the verbs below into

a)A survey was …… by the Inter-Tel telecommunications company.

b)The survey …… that 40% found it difficult to attract the right skills.

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c)30 percent thought they could …… staff if they offered flexible working.

d)But 93 per cent thought that staff would ….. the rules if they work from home.

e)This is the heart of the cultural shift …… by flexible working.

f)Management has to find a way to …… “results” rather than time.

g)We have to find new ways to …… workers – and their bosses.

4.Write down the three questions from the survey commissioned by Inter-Tel referred to the paragraph 4

5.Choose the best definitions for these expressions from paragraphs 5 and 6

ii)words that are good to hear

iii)good, solid commercial argument

6.Look through the whole text and answer the questions

a)What are the main motivations for employers to introduce flexible working practices?

b)What kinds of employees are attracted to companies that embrace flexible working schedule?

c)What changes are necessary for flexible working to be effective?

d)Who benefits the most from flexible working – the companies or the employees?

How to Prosper in a Changing Labor Market

1. A factory in Pittsburgh that employs numerous working mothers rearranged its work shifts to start after school began in the morning and to end before school let out. Not only did productivity rise, but workers at other plants began soliciting the company for jobs.

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2.Time-bonus programs may soon substitute money-bonus programs, as they already have at a small, growing company at Dallas. There the first salesperson to reach his or her monthly goal gets two days off at the end of the month, and all salespeople who hit their targets can go home every day at 2 p.m. for the rest of the month. In three months of the time-bonus program, sales went up 20% and profits 40%.

3.At another leading-edge company, employees no longer have a fixed number of vocation days. Instead they go to their team and ask for time-off whenever they want it and for whatever period of time they have in mind. The team decides whether to approve the request.

4.One company makes a point of treating former employees the way colleges treat their alumni. Why? For one thing, because the ex-employees may return to the company in the future. People are increasingly moving in and out of the workforce, taking time off to raise kids, write books or travel. The company claims that 40% of its former employees come back within two years. In addition, former workers have become excellent recruiters, sending potential hires to the company in return for being treated like valued, long-term members of the family

5.Part-time jobs are becoming increasingly popular, as is job-sharing – including in relatively high-level positions. Some companies have even begun splitting jobs for people who want more free time. Such a trend could offer an advantage to small companies that are competing with large companies for talent. The latter are likely to resist hiring part-timers because they tend to disrupt the orderly systems on which big companies depend so heavily.

Language focus

1. Find words and expressions in the text that mean the following

1.to ask for a job(para.1)

2.to put something in place of another (para.2)

3.a competitive company (para.3)

4.a former student of a school, college, or university (para.4)

5.potential worker (para.4)

6.to divide into separate parts (para.5)

7.to bring into disorder (para.5)

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5.What benefits ……………………………………………………………………?

Small companies can compete for talents with larger companies, they can offer talents more convenient working time.

5. Look through the whole text and answer the questions

a)How did a factory in Pittsburg raise its productivity?

b)Why did time-bonus programs appear to be more efficient than money-bonus programs?

c)What role can working-team play in increasing productivity?

d)How can former workers contribute to the efficiency of the enterprise?

e) What are the reasons for the popularity of part-time jobs and job-sharing?

Management styles / Leadership Qualities

A field marshall’s baton in every soldier’s knapsack?

By Jill Plimmer

The legendary Jack Welch, former chief executive of General Electric, said,

“call people managers, and they are going to start managing things, getting in the way”. But leaders inspire people with a vision of how things can be done better”. So when companies are dealing with globalization, consolidation and technology, corporate leaders are required to bring direction and vision. Much like military commanders, they need to determine a strategy, then inspire the workforce to follow it.

As a result, most companies operate on the premise that successful succession planning involves both nature (picking the right people) and nurture (providing training and work experience to develop them). Lucy Hatt, a managing consultant at a leading recruitment and management consultancy said that most companies have leadership training programs, but this is lacking in many smaller companies. “Smaller companies often don’t feel they have the resources to invest in training although ironically they are the ones more likely to have problems,” she says. But over the long term you’ll find the companies who invest in their staff are the ones who are most successful.”

She says one problem is that employers are looking for candidates with exactly the experience they require, whereas prospective employees are looking to stretch

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themselves to the next level. But with staff tending to move jobs more often, picking the right employees in whom to invest is important.

The job of nurturing leaders can involve everything from a company wide assessment to identify rising stars, to seconding (moving) staff to particular roles or holding short courses or individual coaching for executives.

Clive Newton is managing director of leadership development solutions at Corn Ferry, the recruitment and management consultancy that works with companies to identify and nurture talent. He says the biggest mistake most companies make is failing to acknowledge that different attributes are required in different jobs. “When organizations look for talent they tend to look at everyone in the same way; they tend to think about what makes a ‘top chap’. In fact, what makes a great first line manager

– someone who is able to take an instruction and turn it into action – doesn’t necessarily make a great executive.”

The consultancy helps run short leadership training courses and advises companies on how to develop stars. “So, if someone is not particularly good socially, we’d encourage the company to put them into roles where they are forced to work with people until they get better at it and so on.”

Whether leaders are born or made may prove as elusive as the secret of happiness. But that, it seems, will not stop companies or their employees trying to find it.

From the Financial Times

Language focus

1. Find words or expressions in paragraph 1 that mean a) talked about and admired by many people

b) stopping somebody from doing something

c) to give people the wish, the confidence and the enthusiasm to do well d) decide on

2. Before looking at paragraph 2 again, use a word from column A and a word from column B to make a two-word expressions that complete the

a)Companies that …… on a …… function according to a belief.

b)Effective …… …… involves picking the right people to become future managers and providing the right training and work experience for them to develop.

c)…… and …… are the qualities you are born with and qualities you learn, respectively.

d)A …… …… can help companies to manage aspects of their work.

e)Companies who measure things over the …… …… look at what happens over a period of several years.

3. True or false (paragraphs 3 and 4)

a)Companies want to give jobs to those people who have done exactly the same kind of work in other companies.

b)Most people are looking for a new job which will give them more skills and responsibilities.

c)There are many different ways of giving people the skills and abilities they need to become leaders.

d)One way is to give potential leaders a special job with special responsibilities for a short period of time.

e)Another way is to hold regular personal discussions with senior managers about how they organize and handle their work.

4.Before looking at paragraph 5, choose verbs given below and put them into

sentences in their correct form

able make acknowledge turn require look tend

a)The biggest mistake most companies …… is failing to …… that different attributes are …… in different jobs.

b)When organizations …… for talent they …… to look at everyone in the same way.

c)A great first line manager is someone who is …… to take an instruction and …… it into action.

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5. Before looking at paragraphs 6 and 7 again, match the two halves of the sentences below so that they express the meaning of the text in different words.

a)In courses that are designed to help companies to produce their own leaders, companies …

b)So a manager who does not get on well with people……

c)We still cannot say definitely whether leadership ……

d)Leadership may be a difficult, secret recipe, ……

1.…… is given a function where they have to deal with many people until they can do this more effectively.

2.…… but many companies believe that it is too important to ignore.

3.…… are advised to give prospective leaders jobs that practice and give them experience of the things they are currently not good at.

4.…… is a personal quality or one that can be trained.

6.Look through the whole text and answer the questions

a)In the article Clive Newton, of the Korn Ferry consultancy, says “the biggest mistake most companies make is failing to acknowledge that different attributes are required in different jobs. Do you share his point of view? What personal qualities, special talents and abilities does a prospective employee need to do different jobs?

b)The article has discussed the leadership qualities of people. But how do we know whether a company has managers or leaders? Could you name companies that show leadership qualities?

Job Motivation

Why Americans work so hard

By Gene Koretz

Observers have long remarked on the sharp disparity between American and European work habits. The most striking thing of all the differences between American and European working patterns relates to working hours. In 1999, according to official statistics, the average American in employment worked just under 2,000 hours a year. The average German worked 1,535 hours – 22 percent less. According to a recent American study, the average French person works 32 percent less, and the British

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worker 12 percent less than his/her American counterpart. In other words, while Americans put in more and more time on the job, most Europeans work fewer hours and enjoy a steady decline in annual work time.

A common view is that this difference reflects cultural factors: Europeans, who tend to regard Americans as workaholics, simply prefer leisure to labor. Surveys indicate, for example, that many Europeans would like to reduce their work time, while many more Americans would like to increase theirs and earn more despite the fact that they already clock a lot more hours.

In a recent National Bureau of Economic Research study, however, economists Linda A. Bell and Richard B. Freeman suggest that the difference is related less to cultural values than to the wider range of wages within U.S. companies and the overall economy. They argue that America’s greater pay disparity creates incentives for employers to work harder.

The authors cite data on German and U.S. labor markets and workers’ attitudes. In both countries workers in occupations with greater wage inequality tend to put in longer hours at work. But in America, where such inequality is more evident, a much larger percentage of workers believe that their chances for advancement are high and that their work effort will pay off in pay hikes and promotions. The authors estimate that an American who boosts his working time by 10 percent, from 2,000 to 2,200 hours a year, tends to raise his future earnings by about 1% for each year that he puts in extra hours.

In sum, workers in both nations appear to log more time on the job when pay scales are unequal, but the impact is much weaker in Germany, where wages are far less variable and where greater job security, high jobless benefits, and a national health system cushion the adverse or negative effects of layoffs. Americans work longer hours mainly because of the lure of big wage gains. They are also responding to the higher risk of losing income and health coverage if the boss lets them go.

Are German or American workers better off? Pointing to the U.S. economy, many economists argue that wider pay scales lead to greater work effort that produces rising productivity and higher levels of income for all workers. On the other hand, surveys indicate that many Americans are dissatisfied with their long work hours. While they are reluctant to give up the chance to enhance their income, they would prefer to spend more time with their families.

If the authors are right, European nations will have to give up their preference for relatively low work hours if they want to achieve American-style wage disparity and

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3. Match the two halves of the expressions below

4. Choose the correct form of the verbs to complete the sentences below

a)Some economists consider that the difference between Americans and Germans

…… to their work habits can be explained by cultural factors.

b)Should we …… Americans as workaholics?

c)Risk of losing income and health coverage in case of layoff …… by him since he started working in this firm.

d)Americans are sure that their overtime work tends to ….. their future earnings.

e)Greater work efforts and rising productivity can ….. in different incentives.

f)Adverse effect of redundancy can …… by greater job security, high jobless benefits and a national health system.

g)Social security system should quickly …… to all the changes in the sphere of employment.

5.True or false?

a)The difference between American and European working habits strikes political and economic observers most of all. (paragr.1)

b)A common view is that the French are just lazier than the Americans. (paragr.2)

c)Recent official research claims that the difference between American and European working patterns can be explained by the wider range and disparity between wages. (paragr.3)

d)The Europeans believe that if they put in longer hours, their work efforts will result in pay increase and promotion. (paragr.4)

e)Both Americans and Europeans tend to work hard because of the threat to lose income and health coverage.(paragr.5)

f)Americans continue to rise productivity due to long work hours. (paragr.6)

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6.Look through the whole text and answer the questions

a)How do scientists explain the disparity between American and European work habits? What is the common view on this problem?

b)Do economists Linda A. Bell and Richard B. Freeman share this point view? What is their vision of the problem? What does, according to their view, pay disparity create?

c)Why are Europeans less interested in increasing their work time?

d)Why do you think there are such differences in working life between the USA and parts of Europe? Have you ever worked in the USA? Would you like to work there? Why? Why not?

Communication with employees

Why it pays to put the workers in the picture

By Alicia Clegg

When workplace disputes flare up, the blame is often laid on a breakdown in communication. Talking may not always resolve disagreements, but withholding management plans until the last moment can certainly make a difficult situation worse. From 6th April 2005, UK employees gain the legal right to know about, and be consulted on, matters that affect them at work. This covers anything from the economic health of the business to decisions likely to cause redundancies or changes in how work is organized. The new rules, which implement a European Union directive, move the UK closer to other European states, most of which already require workplace consultation.

There are good reasons for businesses to move ahead with such agreements voluntarily. First, there is the commonsense belief, backed by academic research, that companies do better when their employees are well informed and have a say in decisions that affect them. Second, by kick-starting negotiations the employer effectively takes charge. The regulations give organizations free reign to agree internally what consulting and informing employees amounts to in practice – what topics will be discussed, how often and by what means. In the UK – in contrast to most other EU states – once a framework for information and consultation has been agreed, there is no requirement to work through elected representatives. If the workforce approved, a business could rely solely on face-to-face and electronic communication.

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The mobile operator 3 prefers the personal approach. Whenever possible, it uses video calls and e-mail to put its young workforce in contact with senior managers. At the other end of the spectrum is AstraZeneca, the Anglo-Swedish pharmaceuticals group, which has a history of consulting employees through elected forums and union representatives. Consulting through intermediaries can produce advantages, particularly during a change of ownership or under a redundancy program. Another point in favour of a mediated approach, says Ross Hutchison, head of internal communications a KPMG, the accountancy firm, is that representatives can be taken into the confidence of management in a way that an entire workforce cannot.

But do the gains from indirect consultation outweigh the attractions of more direct approaches? Not everyone is persuaded that they do. Allison Gill, co-founder of Getfeedback, a talent management consultancy, argues that knowledge exchange and online polling, not elected assemblies, produce better performance. “The goal is to involve people directly and profit from their ideas.”

In spite of earlier opposition, a growing number of companies believe that putting employees in the picture is good for business. If the remainder do not follow suit, they may not find their workers give them little choice.

From the Financial Times

Language focus

1.Look through the whole article and put these paragraph headings into the correct order

a)Some advantages of consultation

b)European law encourages consultation

c)Some good reasons for acting now

d)The different approaches

2.Find expressions in paragraph 1 that mean the same as the phrases below

a)people in a company getting angry because they disagree

b)saying who is responsible for something going wrong

c)not telling anyone about the directors’ strategy

d)a law agreed in Brussels to be incorporated into the law of each member state of Europe

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3. True or false (paragraph 2)?

a)It is a good idea for businesses to set up these consultation agreements before they are put under any legal pressure to do so.

b)Academic research shows that it is risky for companies to keep their employees informed and give them a say in decisions that affect them.

c)Employers are better able to be in control if they do not even start these negotiations about consultation.

d)Under the new regulations, bosses and employees can agree on the format of the information and consultation process.

e)There is, however, an obligation to use face-to-face and electronic communication.

4. Which of the information and consultation processes below were adopted by 3, AstraZeneca or KPMG?

a)sharing secrets with a small group of employees

b)addressing all employees by video

c)working with groups of employee and union representatives

d)sending e-mails to everyone

5.Find words or expressions from the article that mean

a)add up to more than

b)convinced

c)carrying out surveys by email or via the internet

d)do the same thing

6. Look through the whole text and answer the questions

1.Work in two groups. Group 1 looks for all the arguments in the article in favour of direct information and consultation and group 2 looks for mall the arguments in the article in favour of indirect consultation. Present your arguments and discuss them.

2.What would you like to know about the management of the company, you are working for, that would help you to do your job better? How would you like to be informed?

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International management

Management in China: Go East, my son

Chinese companies are hiring more and more western and western-trained executives – and at an increasingly senior level. Ivo Hahn, the boss of Xecutive, a headhunting firm based in Hong Kong, has placed 20 such individuals with mainland firms in 2006, compared with none at all the year before. Diana Yang, at the Beijing office of Hewitt, a human-resources consultancy, says Chinese companies have become more aggressive at hiring expatriates for top jobs as well as for technical positions. “The Chinese have the will and the cash to attract western talent,” says

James Harris, managing director for China at Hays Executive, Britain’s biggest recruitment company.

What the Chinese gain is clear enough. China is short of middle managers, mainly because the Cultural Revolution denied education to a generation of the country’s best talent. Foreign executives, or those with experience at foreign firms, can help Chinese companies crack overseas markets. At home, they bring technological skills and modern business practices, which help Chinese firms compete with multinationals and domestic rivals. Their presence also adds shine to a company’s board of directors, and can lift its credibility with international investors.

Top managers at western companies, on the other hand, had few incentives until recently to jump ship. That they are starting to do so reflects two things. First, Chinese firms are becoming more respectable: some, such as CNOOC, Baosteel and Lenovo, are among their industries’ global elite. Second, a growing number of foreign managers, many of whom have worked in China for years, are excited about the country’s future and want to stay.

“You can take a Chinese company and build it into an international-class business,” says Mr. Murtaugh. Because of his experience, he is likely to take the lead in developing SAIC’s first export models. (Saic – Shanghai Automotive Industry Corporation). Ironically, Mr. Murtaugh may have more freedom in taking decisions at SAIC, which is owned by the government, than he ever did at private sector GM. Robert Gonzales, another western recruit to Lenovo ( China’s biggest computer maker), where he is head of human resources, chose to jump from IBM when the Chinese firm bought the

American group’s computer division. “Working with the Chinese is the most fascinating job I’ve ever done,” he says.

Meanwhile, mainland firms are becoming more comfortable places to work as the English language spreads, other foreigners join and the culture becomes more

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e)Sometimes it’s difficult for foreign experts to deal with the Chinese because they lack the knowledge of English.

f)Foreign managers who require higher salaries for their work are in greater demand in China.

g)It’s difficult for many unknown Chinese companies to hire a western specialist.

h)Some Chinese firms are still against recruiting foreign specialists.

i)Competition for jobs in China has already started.

4. Choose the correct forms of the verbs to complete the sentences below will manufacture double expand own excite bring grow

a)Foreign executives are aimed at …… technological skills and modern practices in Chinese firms.

b)The number of foreign managers is …… in China.

c)Some foreign managers are …… with benefits offered them by Chinese companies.

d)Many Chinese enterprises are likely …… into the overseas market.

e)SAIC is a company …… by government and …… cars.

f)The current package of foreign managers can …… .

g)Chinese companies are not used to …… .

h)More and more expatriates are …… to participate in mainland companies’ recovery.

5. Look through the whole article and answer these questions

a)Why have Chinese companies become more aggressive at hiring western and western-trained executives?

b)How can China benefit from recruiting foreign top managers?

c)Why does China lack top and middle managers?

d)What attracts foreign top managers to getting a job in China?

e)Do you agree that Chinese culture is becoming more and more cosmopolitan? Why?

f)How are foreign top managers paid in China?

g)For most foreign executives, working in China is still a challenge, isn’t it?

Why?

h)Why do some Chinese firms have reservations against hiring foreign executives?

i)Why do many Chinese firms tend to recruit Chinese expatriates?

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Contents

The Managerial Role…………………………………………………………………...4 Ethical and Social Responsibilities of Management…………………………………...7 Decision-Making and Planning.………………………………………………………11 Fundamentals of Strategic planning ………………………………………………….15 Implementing the Strategic Planning Process………………………………………..18 Division of Work and Organization Structure ……………………………………….22 Delegation and Decentralization of Authority………………………………………..25 Staffing in Organization ……………………………………………………………...29 Leadership of Organizational Members ……………………………………………...32 Work Motivation……………………………………………………………………...36 Career Management and Development …………………………………………...….38 International Management…………………………………………………………….43 Offshoring and Outsourcing ………………………………………………………….47 Crisis Management …………………………………………………………………...50

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Sources

1.Management and Organization, 2000, Dubrin, Ireland, Williams.

2.Market Leader (new edition), 2006, Bill Mascull, David Heitler.

3.Inc. (The magazine for growing companies), 2002, 2003, 2004, 2005.

4.Business Games,2001, Jenny Mawer.