Management people performance change media

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Management
PEOPLE / PERFORMANCE / CHANGE


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Management
PEOPLE / PERFORMANCE / CHANGE

Luis R. Gomez-Mejia
Arizona State University

David B. Balkin
University of Colorado

PRENTICE HALL
Boston

Columbus

Amsterdam
Montre´al
Seoul

Indianapolis

Cape Town

Toronto

Singapore

Delhi
Taipei

Dubai

New York
London

Mexico City
Tokyo

San Francisco

Upper Saddle River

Madrid Milan Munich Paris
~
Sa o Paulo Sydney Hong Kong


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Library of Congress Cataloging-in-Publication Data
Gomez-Mejia, Luis R.
Management/Luis R. Gomez-Mejia, David B. Balkin.
p.
cm.
ISBN 13: 978-0-13-217640-8
ISBN 10: 0-13-217640-8
1. Management. I. Balkin, David B., 1948- II. Title.
HD31.G58955 2012
658—dc22
2010042395

10 9 8 7 6 5 4 3 2 1
ISBN 10: 0-13-217640-8
ISBN 13: 978-0-13-217640-8


to my sons, Vince and Alex, my daughter,
Dulce Maria, and my wife, Ana—LG-M
to my parents, Daniel and Jeanne—DBB


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Brief Contents

PART 1

Overview

Chapter 1

PART 2

The Culture of Management

Chapter 2
Chapter 3
Chapter 4

PART 3

132

Managing the Planning Process 132
Decision Making 166
Strategic Management 194
Entrepreneurship and Innovation 230

Managing the Structure and Design of Organizations
Human Resource Management 282
Managing Employee Diversity 318

Leadership in Management

Chapter 12

Chapter 13
Chapter 14

PART 6

104

Organization Management 254

Chapter 9
Chapter 10
Chapter 11

PART 5

34

Managing in a Global Environment 34
Managing Social Responsibility and Ethics 72
Managing Organizational Culture and Change

Management Strategy and Decision Making

Chapter 5
Chapter 6
Chapter 7
Chapter 8

PART 4

2

Management and Its Evolution 2

348

Leading and Motivating Others 348
Managing Teams 382
Managing Communication 414

Operations and Information System Management

Chapter 15

254

Operations Management and Management Control

444
444

References 471
Glossary 499
Photo Credits 511
Index 513

vii


Contents

PART 1

Overview

Chapter 1

2

Management and Its Evolution

2

Gaining and Losing a Competitive Edge: The Case of the Automobile Companies 2

Management in the New Millennium 4
The Four Management Functions 9
Managerial Roles 10
The Evolution of Management Thought 12
Early Management Thought 12
The Operational Perspective 14
Bureaucratic Management 18
Administrative Management 19
Behavioral Perspective 20
Contemporary Management Perspectives 22

Emerging Perspectives and Issues

24

The Modular Organization 25

The Intangible Organization 25

Concluding Thoughts 25
Focusing on the Future: Using Management Theory in Daily Life
Summary of Learning Objectives 28
Discussion Questions 29

26

Management Minicase 1.1: Biz Majors Get an F for Honesty 30 • Management Minicase
1.2: Google: Using a Company’s Culture to Conquer the World 30 • Individual/
Collaborative Learning Case 1.1: Is the United States Falling Behind in Global
Brain Race? 31 • Internet Exercise 1.1: Lincoln Electric 32 • Manager’s Checkup
1.1: Self-assessment of Your Own Theory X or Theory Y Orientation 32

PART 2

The Culture of Management

Chapter 2

34

Managing in a Global Environment
Toys that Travel the World

34

The Environment of International Business
The Changing Pattern of International Business

36
36

Major Factors Affecting International Business
Entry Strategy 49
Choosing Foreign Countries 49
When to Enter Foreign Countries 50
Scale of involvement 52

Mode of Entry 52
Exporting 53
Turnkey Projects 53
Licensing 54
Franchising 54
Joint Ventures and Strategic Alliances
Wholly Owned Subsidiaries 56

Managing the Global Firm 56

viii

Selection 58
Training 60
Career Development
Compensation 61

61

34

54

44


CONTENTS

Ethics and Social Responsibility 62
Concluding Thoughts 64
Focusing on the Future: Using Management Theory in
Daily Life 64
Summary of Learning Objectives 65
Discussion Questions 67
Management Minicase 2.1: Sweatshop Swipe 67 • Management Minicase 2.2:
Drug Testing Goes Offshore 68 • Individual/Collaborative Learning Case 2.1:
Got 6,000 Euros? Need a New Car? 68 • Internet Exercise 2.1: Colgate’s
Clean Sweep 69 • Manager’s Checkup 2.1: Careers in Global
Management 69 Manager’s Checkup 2.2: Analyzing Your Own
Values 69

Chapter 3

Managing Social Responsibility and Ethics
Eating for Credit

72

72

What Are Business Ethics?
Ethics Approaches 75

74

Utilitarianism 75
Individualism 75
Rights Approach 76
Justice Approach 77
Applications of Ethics Approaches 77
Comparison of Ethics Approaches 77

Codes of Ethics

79

Corporate Credos 79
Ethical Policy Statements

Managing Ethics

79

81

Ethics Training 81
Ethical Structures 82
Whistleblower Policies 82
Personal Ethics 83

Ethical Dilemmas in the Workplace
Performance Appraisal 85
Employee Discipline 85
Office Romance 86
Giving Gifts in the Workplace

Social Responsibility

85

86

88

The Benefits of Social Responsibility 88
The Costs of Social Responsibility 89

Organizational Stakeholders
Owners 92
Employees 92
Governments 92
Customers 93
Community 93
Competitors 93
Social Activist Groups

91

94

Strategies for Managing Stakeholders

94

Confrontation 95
Damage Control 95
Accommodation 95
Proactive 95

Concluding Thoughts 96
Focusing on the Future: Using Management Theory in Daily Life
Summary of Learning Objectives 97
Discussion Questions 98

97

ix


x

CONTENTS

Management Minicase 3.1: Starbucks Gambles that Encouraging Its Coffee Suppliers to
Act Socially Responsible Is Good for Business 99 • Management Minicase 3.2:
New Belgium Brewing Company Takes Environmental Responsibility
Seriously 100 • Individual/Collaborative Learning Case 3.1: Do Pay Incentives Cause
Employees to Behave Unethically? 100 • Internet Exercise 3.1: Social Responsibility at Levi
Strauss 101 • Manager’s Checkup 3.1: What Are Your Beliefs about Business Ethics? 101

Chapter 4

Managing Organizational Culture and Change
Cisco’s Collaborative Culture Enables It to Deal with Change

Understanding the Nature of Culture and Change
Section I: Organizational Culture 106
The Importance of Culture 108
Employee Self-Management 108
Stability 109
Socialization 110
Implementation of the Organization’s Strategy
Beware the Dark Side 111

Managing Cultural Processes

104
104

106

111

111

Cultural Symbols 112
Company Rituals and Ceremonies 112
Company Heroes 113
Stories 113
Language 113

Leadership 113
Organizational Policies and Decision Making

113

Characteristics and Types of Organizational Culture

114

Cultural Uniformity versus Heterogeneity 114
Strong versus Weak Cultures 115
Culture versus Formalization 115
National versus Organizational Culture 115
Types 115

Managing Organizational Change

116

Types of Change 116
Forces for Change 117
Resistance to Change 118

Models of Organizational Change
Implementing Organizational Change
Tactics for Introducing Change 122

120
122

Concluding Thoughts 124
Focusing on the Future: Using Management Theory in Daily Life
Summary of Learning Objectives 125
Discussion Questions 126

124

Management Minicase 4.1: Domino’s Delivers Change in Its Pizza Recipe 127 • Management
Minicase 4.2: How Jack Welch Changed Culture at General Electric 127 • Individual/
Collaborative Learning Case 4.1: A Culture of Empowerment Transforms Pike Place Fish
Market 128 • Internet Exercise 4.1: Charles Schwab: Recommending Change as a
Customer 128 • Manager’s Checkup 4.1: How Comfortable Are You with Change? 128

PART 3

Management Strategy and Decision Making

Chapter 5

Managing the Planning Process

132

Disney in Hong Kong: Bad Luck, or Bad Planning?

What Is Planning? 134
The Benefits of Planning

135

Assessment of External Forces 136
Developing a Sense of Direction and Purpose

136

132

132


CONTENTS

Identifying the Factors that Affect the Organization 136
Encouraging Participation 136
Coordination of Efforts 136
Establishment of Priorities 137
Focusing Attention on Different Time Horizons 137
Understanding Circumstances Contributing to Past Success or Failure
Ensuring the Availability of Adequate Resources 137
Establishing Performance Standards 137
Supporting Organizational Control Systems 138
Developing “What If” Scenarios 138
Management Development 138

The Pitfalls of Planning

137

140

Poor Forecasts of Future Conditions 140
Plans Imposed from Above 141
Planning as a Self-Contained Activity 141
Extensive Bureaucratization 141
Inflexible Adherence to Objectives and Processes

Keys to Successful Planning

141

143

Decentralizing the Planning Process 143
Using Both Numerical and Judgmental Methods 143
Viewing Planning as Continuous and Capable of Adapting to Change
Avoiding Paralysis of the Analysis 144
Concentrating on a Manageable Set of Issues 144

Formal Planning and Opportunistic Planning
The Formal Planning Process 145
Setting Objectives 145
Charting a Course of Action
Implementation 152

143

145

148

Concluding Thoughts 158
Focusing on the Future: Using Management Theory in Daily Life
Summary of Learning Objectives 160
Discussion Questions 161

158

Management Minicase 5.1: Newspapers: A Plan that Seemed Like a Godsend Is Turning
Sour 161 • Management Minicase 5.2: Disaster Planning: How Wal-Mart Saved the
Day 161 • Individual/Collaborative Learning Case 5.1: Why Did NASA Stick with the
Space Shuttle So Long? 162 • Internet Exercise 5.1: E-Business Goes E-Bankrupt but
Survivors Are Doing Well 163 • Manager’s Checkup 5.1: Ethical Checklist 163

Chapter 6

Decision Making

166

Google Decides about China

166

Characteristics of Management Decision Making
Programmability 168
Uncertainty 169
Risk 169
Conflict 169
Decision Scope 170
Crisis Situations 171

Stages of Decision Making

172

Identifying and Diagnosing the Problem
Generating Alternative Solutions 173
Evaluating Alternatives 173
Choosing the Best Alternative 175
Implementing the Decision 175
Evaluating the Results 175

172

The Limits of Rational Decision Making
Organization Politics 176

176

168

xi


xii

CONTENTS

Emotions and Personal Preferences 177
Illusion of Control 178

Intuition and Escalation of Commitment 178

Nonrational Decision-Making Models

179

Administrative Model 179
Garbage Can Model 180

Personal Decision-Making Styles 180
Decision Making in Groups 181
The Benefits and Problems of Group Decision Making
Managing Group Decision Making 182

Decision-Making Skills
Time Management
Delegation 185

181

185

185

Concluding Thoughts 187
Focusing on the Future: Using Management Theory in Daily Life
Summary of Learning Objectives 189
Discussion Questions 190

188

Management Minicase 6.1: Circuit City’s Decision to Lay Off Experienced Employees
Backfires 190 • Management Minicase 6.2: Merck’s Decision to Withdraw Its Vioxx
Drug from the Market 191 • Individual/Collaborative Learning Case 6.1: Intel Recalls
the Pentium Chip 191 • Internet Exercise 6.1: Decision Making at Coca-Cola 192
• Manager’s Checkup 6.1: Determining Decision Risk and Uncertainty Preferences 192

Chapter 7

Strategic Management
The Universe of iPod and iPad

194
194

The Strategic Management Process 196
Step One: Analyzing External and Internal Environments

198

The External Environment 198
Components of External Analysis 200
Scope of the External Analysis 201
The Internal Environment 207
Resource Types 208
Analyzing the Firm’s Capabilities 209

Step Two: Strategic Intent and Mission 211
Step Three: Strategy Formulation 213
Corporate-Level Strategy 213

Business-Level Strategy 217

Step Four: Strategy Implementation

218

Strategic Leadership 218
Organizational Controls 219
Organizational Structures 219
Cooperative Strategies 220
Human Resource Strategies 221
Corporate Entrepreneurship and Innovation

221

Step Five: Strategic Outcomes 222
Concluding Thoughts 223
Focusing on the Future: Using Management Theory in Daily Life
Summary Learning Objectives 225
Discussion Questions 226

223

Management Minicase 7.1: Why Would Microsoft Sell the Xbox at a
Loss? 226 • Management Minicase 7.2: Why Are Rebates Becoming so
Popular? 227 • Individual/Collaborative Learning Case 7.1: Analyzing Threats: Can
Walgreen Co. Survive? 227 • Internet Exercise 7.1: Internet Strategies 227


CONTENTS

Chapter 8

Entrepreneurship and Innovation
Starting a Company in the Kitchen

What Is Entrepreneurship?

230

230

232

Entrepreneurship Myths 232
A Distinction between an Entrepreneurial Venture and a Small Business

The Importance of Entrepreneurship

233

233

Job Creation 233
Innovation 233
Opportunities for Diverse People 234

Entrepreneurial Characteristics and Skills
Characteristics of Entrepreneurs
Entrepreneurial Skills 235

234

235

Starting and Managing an Entrepreneurial Venture

238

New Business Ideas 238
Why Entrepreneurs Fail 238
Business Plan 239
Legal Forms 239
Sources of Financial Resources 242
Managing Growth 243

Alternative Forms of Entrepreneurship

244

Intrapreneurship 244
Spin-Offs 244
Franchises 245

Innovation

245

What Is Innovation? 245
The Importance of Innovation

The Innovation Process 246

246

Concluding Thoughts 247
Focusing on the Future: Using Management Theory in Daily Life
Summary of Learning Objectives 249
Discussion Questions 250

247

Management Minicase 8.1: From a Pretzel Stand to a Franchise Business
at Auntie Anne’s 250 • Management Minicase 8.2: An Innovation Marketplace on
the Internet 251 • Individual/Collaborative Learning Case 8.1: Running a Sole
Proprietorship 251 • Internet Exercise 8.1: How the Kauffman Foundation Supports
Entrepreneurship 252 • Manager’s Checkup 8.1: Should You Start Your Own
Business? 252

PART 4

Organization Management 254

Chapter 9

Managing the Structure and Design of
Organizations 254
United and Continental Airlines Announce a Merger

The Vertical Dimension of Organization Structure
Unity of Command 256

Authority, Responsibility, and Accountability
Span of Control 259
Centralization and Decentralization 259
Formalization 260

256

256

The Horizontal Dimension of Organization Structure
Functional Structure 261
Divisional Approach 261
Matrix Approach 264

254

260

xiii


xiv

CONTENTS

Coordination Mechanisms

265

Meetings 266

Organizationwide Reward Systems
Task Forces and Teams 266
Liaison Roles 267
Integrating Managers 267
Organizational Culture 268

Organization Design

266

268

Mechanistic Organizations 269
Organic Organizations 270
Boundaryless Organizations 271
Redesigning Organizations 273

Concluding Thoughts 275
Focusing on the Future: Using Management Theory in Daily Life
Summary of Learning Objectives 276
Discussion Questions 278

275

Management Minicase 9.1: Decentralization Works at Johnson & Johnson 279 •
Management Minicase 9.2: Restructuring the 3M Company for Growth and
Profitability 279 • Individual/Collaborative Learning Case 9.1: Fast Food’s Yummy
Secret 280 • Internet Exercise 9.1: PepsiCo: A World Leader in Food and
Beverages 280 • Manager’s Checkup: Do You Follow the Chain of Command? 280

Chapter 10

Human Resource Management

282

Hire a Hero 282

The Importance of Human Resource Management
Environment of Human Resources 285

284

Workforce Diversity 285
Globalization 286
Legislation 286
Unions 289

The Human Resource Management Process

291

Human Resource Planning 292
Staffing Process 294
Employee Training 301
Career Development 303
Performance Appraisal 304
Measurement Approaches to Performance Apprasisal
Compensation 307

306

Concluding Thoughts 310
Focusing on the Future: Using Management Theory in Daily Life
Summary of Learning Objectives 312
Discussion Questions 314

310

Management Minicase 10.1: Rewards for Good Teaching? 314 • Management Minicase
10.2: Balancing Family Issues and Work 315 • Individual/Collaborative Learning Case
10.1: How to Reduce Turnover 316 • Internet Exercise 10.1: Help on the Web 316

Chapter 11

Managing Employee Diversity

318

Eleven Decades of Ensuring that Employee Diversity Equals
Corporate Success 318

The Meaning of Diversity

320

Advantages of Employee Diversity
The Challenges of Diversity 323

Diversity Today 326

African Americans 328
Asian Americans 329
Disabled Americans 329

321


CONTENTS

Foreign-Born Americans 330
Hispanic Americans 331
Homosexuals 331
Older Workers 332
Religious Diversity 333
Undocumented Workers 333
Women 334

Building on Diversity

336

Top Management Commitment 336
Linking Diversity Initiatives to Business Strategies and Objectives
Management Responsibility and Accountability 337
Diversity Audits 337
Developmental Activities 337
Encouraging Diversity Networks 339
Accommodating Family Needs 339

336

Concluding Thoughts 340
Focusing on the Future: Using Management Theory in Daily Life
Summary of Learning Objectives 341
Discussion Questions 342

340

Management Minicase 11.1: We Are All Getting Older! 342 • Management
Minicase 11.2: Despite Past Cases, Wall Street Has Yet to Shake a Boys’ Club
Image 344 • Individual/Collaborative Learning Case 11.1: Approaching a Demographic
Milestone 344 • Internet Exercise 11.1: Managing Employee Diversity 345

PART 5 Leadership in Management
Chapter 12

348

Leading and Motivating Others

348

Management Beyond 2020: Leadership 348

What Makes an Effective Leader?

350

Management versus Leadership 351
Power and Leadership 351

Why a Person Becomes a Leader: Traditional Explanations

353

Trait Theories 353
Behavioral Theories 353
Leadership style 354
Contingency Theories 354

Contemporary Leadership Issues

357

Attribution Theory 358
Leadership Substitute 358
Charismatic Leadership 358
Transformational versus Transactional Leadership 359
Postheroic Leadership 361
Self-Leadership 361
Leadership and Emotional Intelligence 361
Leadership–Member Exchange: Relationships between Leaders and Followers

Motivation

362

Goal-Setting Theory 362
Reinforcement Theory 363
Need Theories 365

Human Relations Perspective 367
Work Design Theories 368
The Role of People’s Perceptions 370
Commitment and Motivation 372

Concluding Thoughts 374
Summary of Learning Objectives
Discussion Questions 375

374

361

xv


xvi

CONTENTS

Management Minicase 12.1: Executives for Rent 376 • Management Minicase 12.2:
Does Money Motivate? 376 • Management Minicase 12.3: Working in
Heaven? 377 • Individual/Collaborative Learning Case 12.1: What Caused the
So-called “Financial Meltdown” of 2008–2011? 377 • Individual/Collaborative
Learning Case 12.2: Motivating Low-Wage Workers 378 • Internet Exercise 12.1:
Leading the Pack 379 • Internet Exercise 12.2: Test Your Emotional Intelligence 379

Chapter 13

Managing Teams

382

Rapid-Response Teams Save Lives at Tenet Healthcare Corporation
www.tenethealth.com 382

The Benefits of Teams

384

Costs and Productivity 385
Quality Improvements 385
Speed 386
Innovation 386

Types of Teams

386

Self-Managed Teams
Project Teams 388
Parallel Teams 389
Virtual Teams 389

387

Managing Team Performance

390

Stages of Team Development 390
Roles of Team Members 391
The Role of the Team Leader 392
Behavioral Dimensions of Effective Teams

Team Performance Problems

393

397

Free Riders 397
The Nonconforming High Performer 398
Lack of Rewards for Teamwork 399

Team Management Skills

400

Conflict Management Skills
Negotiation Skills 403

400

Concluding Thoughts 406
Focusing on the Future: Using Management Theory in Daily Life
Summary of Learning Objectives 407
Discussion Questions 409

406

Management Minicase 13.1: Companies Use Different Approaches to Encourage
Teamwork 409 • Management Minicase 13.2: Whole Foods: Using Teamwork as a
Recipe for Success 410 • Individual/Collaborative Learning Case 13.1: Managing
Rewards for Teams 411 • Internet Exercise 13.1: Teamwork at Taco Bell 412

Chapter 14

Managing Communication

414

Call Center Jobs Are Outsourced to the Home Thanks to Broadband
Communications Technology 414

The Process of Communication
A Model of Communication 417
Barriers to Effective Communication

416
418

Patterns of Organizational Communications

420

Downward Communication 420
Upward Communication 420
Horizontal Communication 420

Managing Organizational Communications
Face-to-Face Communication 423
Written Communication 424
Electronic Communication 425
Informal Communication 428

422


CONTENTS

Communication Skills

429

Assertive Communication Skills 429
Presentation Skills 430
Nonverbal Communication Skills 431
Listening Skills 433

Concluding Thoughts 435
Focusing on the Future: Using Management Theory in Daily Life
Summary of Learning Objectives 437
Discussion Questions 438

435

Management Minicase 14.1: Employee Blogs Are Becoming the New Virtual
Watercooler 438 • Management Minicase 14.2: Actions Speak Louder than Words All
Around the World 439 • Individual/Collaborative Learning Case 14.1: Selecting the

Most Effective Form of Communication 440 • Internet Exercise 14.1: Whole Foods,
Whole Philosophy 441 • Manager’s Checkup 14.1: Listening Self-Inventory 441

PART 6 Operations and Information System
Management 444
Chapter 15

Operations Management and Management Control
When BP Lost Control of Its Drilling Operations in the Gulf of Mexico

What Is Operations Management?
Three Stages of Operations
Planning 446
Strategic Planning 446

Acquiring Inputs

444
444

446

446

448

Materials Requirements Planning
Inventory 449

The Conversion Process

448

449

Designing the Process 449
Monitoring the Process 452

Disposition of the Product
Managing Quality 454

453

The Quality Management Approach 454
Kaizen (Continuous Improvement) and Efficiency
Just-in-Time Systems 459
Other Quality Management Systems 460

457

What Is Management Control? 461
Bureaucratic Control 461

Concluding Thoughts 464
Focusing on the Future: Using Management Theory in Daily Life
Summary of Learning Objectives 466
Discussion Questions 467

465

Management Minicase 15.1: Customers Report Problems with Apple’s Latest
Smart Phone 467 • Management Minicase 15.2: Facebook Users Want to Control
More of Their Personal Information 468 • Internet Exercise 15.1: Andersen
Windows 468

References 471
Glossary 499
Photo Credits 511
Index 513

xvii


Preface
Ask your incoming students what “management” is and they’ll talk about the kind of management they know from their own (limited) work experience. Managers assign people their
hours, give raises or promotions, tell people what job to do—the manager, in other words, is
“the boss.”
In most other work settings, however, management means something far more important and complex. In addition to people, managers also manage performance, processes,
relationships, and more increasingly in today’s world, they deal with the pressure and flux
of constant change. This, coupled with the fact that workplaces have steadily become
less hierarchical and more team- and group-driven, means that the traditional responsibilities of the manager have gradually been dispersed throughout the organization. Students
preparing to work in today’s business environment may not start in a corner office with an
assistant, but they still need to think like managers and understand the strategic goals of the
organization.
Management prepares your students to join a new kind of workplace, one where management is everyone’s business.
In order to prepare your students for a rapidly changing workplace, Management seeks to go
beyond the scope of other management textbooks in our approach and our content. It does this in
three key aspects:

Beyond the Ordinary

Your students start the course thinking of managers as little more than traditional “bosses.”
Management helps your students to move beyond this perception by offering coverage and
exercises that emphasize the multifaceted nature of modern management. In particular, the
“Management Close-Up” boxed feature offers unique perspectives. Each close-up has a
theme of Ethics, Customer Focus, or Dealing With Change, which illustrates contemporary issues that managers and organizations confront that go beyond merely “being the
boss.”

Beyond Theory
Nothing as complex as management can be understood by merely reading about theory. While
Management is careful to ground students in the relevant theories, it also gives your students
numerous opportunities to apply their learning to real-world management situations. Strategically
placed throughout the chapter, the Learning Objective Check-Ins, or LOC-lns, help students
apply information they have just read by asking scenario-based multiple choice questions based
on a Learning Objective at the beginning of the chapter.

Beyond Your Expectations
We’ve worked hard to make this Management textbook more comprehensive, more useful, and
more flexible than any other on the market. It opens whole new avenues of teaching for you
while at the same time being easy to read. Hundreds of contemporary examples are provided
throughout the text to illustrate key points.

Text Features
Management is full of innovative chapter features to make studying productive and hassle-free.
The following are examples of the kind of engaging, helpful pedagogical features that make up
Management’s powerful approach.
xviii


PREFACE

Learning Objective Check-Ins or LOC-Ins
In response to the need for better assessment of learning objective goals, these scenario-based
multiple choice questions occur within each chapter and directly correspond to a Learning
Objective specified at the beginning of the chapter. Each question is designed to assess the application of the Learning Objective, with answers found in the Instructor’s Manual. Professors can
choose to share the answers with their students by either posting to an online course-delivery site
or by printing and distributing them.

Manager’s Notebook
These features supplement chapter content with a practicing manager’s perspective. Manager’s
Notebooks provide valuable insider tips for dealing with common situations, and they are ideal
jumping-off points for classroom discussion.

Management Close-Ups
To help students get an up-close look at the issues real managers deal with, Management includes
“Management Close-Up” boxes. The Ethics, Customer Focus, and Dealing With Change subtitles
in these boxes highlight aspects of management that are particularly important today.
ETHICS Ethical conduct in business has become an increasingly public issue. Whether the issue

lies in recognizing the importance of stakeholders, a regulatory matter, or concerns with
employees, ethical behavior and policies cut across all areas of management. Nearly every
chapter of Management includes these special illustrations of how ethics and trust play an
important role in all aspects of business.
CUSTOMER FOCUS In today’s hyper-competitive world, relationships and trust are
increasingly important. For the manager, everyone is a customer, whether internal or
external. Within their organizations, managers rely on maintaining good relationships with
managers and employees in other departments to get things done. Just as important are
relationships with external customers, potential partnerships, and alliances. The Customer
Focus boxes offer real-world examples of how relationships play crucial roles in the success
of organizations.
DEALING WITH CHANGE New technology or new CEOs, globalization and the information

economy, regulatory changes: all of these factors constantly conspire to reshape the
contemporary business workplace or a particular organization. The successful manager needs to
be able to anticipate and adapt to change, and these boxes illustrate how a particular change can
impact the successful functioning of a firm.

Focusing on the Future
Appearing before the Summary, “Focusing on the Future” boxes give students a glimpse of
how they will use the skills they are acquiring from the text in their future careers. “Day in
the life” snapshots from five types of managers—accounting/finance, operations/general,
human resources, marketing/communications, and entrepreneurs—show students how working managers use the theories discussed in the text to solve real-world problems. The author
of the feature, Carol Moore, California State University–Hayward, interviewed real-life managers, including: Roxana Carbajal—HR Director, Embassy Suites; “Barbara DeLong”—HR
Director, telecommunications industry; Mary Kelley—CEO, Sleep Garden; Mark Hasting—
Group Vice President, Target Corporation; Brendan Geary—Director of Human Resources,
Panalpinia Corporation; David Moore—Pastor, New Summit Presbyterian Church.

End-of-Chapter Exercises and Applications
The end-of-chapter material provides a variety of exercises, including skill-building exercises,
individual/collaborative learning cases and exercises, management mini-cases, and Internet exercises to further facilitate student assimilation of the concepts.

xix


xx

PREFACE

Skill-Building Exercises
Most chapters include skill-building exercises that summarize management skills crucial to
workplace effectiveness. “Manager’s Check-Up” exercises provide students fun and interesting

ways to practice and refine those skills.

Individual/Collaborative Learning Cases and Exercises
Each chapter includes a case accompanied by critical thinking questions that can be answered
individually, in-class, or as an assignment. It also has a collaborative learning exercise designed
to be completed in teams. Teams read the case and then recommend a course of action for resolving the issue or problem presented in the exercise.

Management Mini-Cases
Each chapter has two Management Mini-Cases that provide excellent, real-life examples to
stimulate class discussion.

Internet Exercises
Each chapter has at least one Internet exercise relevant to the chapter material. Internet exercises demonstrate how to find specific information online and offer additional current
resources.

Supplements
At the Instructor Resource Center, www.pearsonhighered.com/irc, instructors can access a
variety of print, digital, and presentation resources to accompany this text in downloadable
format. Registration is simple and gives you immediate access to new titles and new editions. As
a registered faculty member, you can download resource files and receive immediate access to
and instructions for installing course management content on your campus server. In case you
ever need assistance, a dedicated technical support team is ready to help with media supplements
that accompany this text. Visit for answers to frequently asked
questions and toll-free user support phone numbers.
The following supplements are available for download to adopting instructors:
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Instructor’s Manual
Test Item File
TestGen (test-generating program)
PowerPoint Slides

Videos on DVD
Video segments illustrate the most pertinent topics in management today and highlight relevant
issues that demonstrate how people lead, manage, and work effectively. Contact your Pearson
representative for the DVD.

CourseSmart eTextbook
CourseSmart is an exciting new choice for students looking to save money. As an alternative to
purchasing the print textbook, students can purchase an electronic version of the same content.
With a CourseSmart etextbook, students can search the text, make notes online, print out reading assignments that incorporate lecture notes, and bookmark important passages for later
review. For more information, or to purchase access to the CourseSmart eTextbook, visit www.
coursesmart.com.


About the Authors
Luis R. Gomez-Mejia holds the Benton Cocanougher Chair in Business at the Mays
Business School, Texas A&M University. Before joining Texas A&M, he taught at Arizona State
University, the University of Colorado, and the University of Florida. He has also been on the
faculty at University Carlos III de Madrid and Instituto de Empresas and has offered seminars in
both Spanish and English in many countries and universities around the world.
He received his Ph.D. and M.A. in industrial relations from the College of Business at the
University of Minnesota and a B.A. (summa cum laude) in economics from the University of
Minnesota. Prior to entering academia, Professor Gomez-Mejia worked in human resources for
the City of Minneapolis and Control Data Corporation and served as consultant to numerous
organizations.
He has served three terms on the editorial board of the Academy of Management Journal and

is editor and cofounder of two journals: Journal of High Technology Management Research and
Management Research and Management Research. Dr. Gomez-Mejia has published more than
150 articles in the most prestigious management journals including the Academy of Management
Journal, Academy of Management Review, Administrative Science Quarterly, Strategic
Management Journal, Industrial Relations, and Personnel Psychology. He has also written and
edited a dozen management books. His research has been cited approximately 8,000 times (as
per Google scholar, 2011), making him one of the most highly cited members in the field of
Management.
Dr. Gomez-Mejia has received numerous awards including “best article” in the Academy of
Management Journal and the Outstanding Alumni Award at University of Minnesota. He has
been named a Dean’s Council of 100 Distinguished Scholar at Arizona State University every
year since 1994, holds the Horace Steel Chair at Arizona State University, was a member of the
Academy of Management Journal’s Hall of Fame, and is a Fellow of the Academy of
Management.
He was also president and founder of the Iberoamerican Academy of Management (an
affiliate of the Academy of Management), which covers Spain and Portugal, all of Latin
America, and Hispanic faculty in U.S. universities.

David B. Balkin is Professor of Management at the Leeds School of Business at the
University of Colorado at Boulder. He received his Ph.D. in industrial relations from the
University of Minnesota. Prior to joining the faculty of the University of Colorado, he served on
the faculties of Louisiana State University and Northeastern University. He has published over
60 articles appearing in such journals as the Academy of Management Journal, Strategic
Management Journal, Personnel Psychology, Journal of Organizational Behavior, Journal of
Business Venturing, and Journal of Management Studies. One of his publications (coauthored
with Luis R. Gomez-Mejia) was selected as the best article published in 1992 in the Academy of
Management Journal. Professor Balkin has written or edited several books on human resources,
the management of innovation, compensation, and other topics. He has served as Chair of the
Management Department at University of Colorado and also served on advisory boards of nonprofit organizations. Professor Balkin is currently the associate editor for Human Resource
Management Review and has previously served on the editorial boards of the Academy of

Management Journal and the Journal of Management. As an expert witness, he has provided
testimony in civil cases dealing with employment and pay discrimination. Professor Balkin has
extensive international experience as a scholar and teacher and was a visiting professor at
University of Toulouse (France), Copenhagen Business School (Denmark), Helsinki University
of Technology (Finland), University of Regensburg (Germany), National University of
Singapore, Hong Kong University of Science and Technology, HEC Montreal (Canada), and
Indian School of Business (India).


PART ONE OVERVIEW

1
Learning Objectives
1 Understand the challenges organizations
face in the new millennium.

2 Specify the functions and roles of successful
managers.

Gaining and Losing a
Competitive Edge: The
Case of the Automobile
Companies
By the end of 2009 the bad news for American automobile manufacturers kept on mounting: 60,000 U.S. and

3 Explain the origins of management as an
academic discipline.

Canadian jobs gone, 24 factories closed, GM and Chrysler
declaring bankruptcy, and the federal government bailing

out GM and acquiring 61 percent of its stock. The majority

4 Describe the bureaucratic and administrative
approaches to the study of management.

5 Explain the behavioral perspective in analyzing management issues.

6 Interpret recent approaches to the study
of management.

of these troubles were attributed to a combination of
bloated bureaucracy, poor management, a disconnect with
customers, overly generous labor contracts, and high production costs with poor attention to quality.
Around the same time Toyota had become the indisputable winner in the automobile industry, with a reputation for high innovation, low manufacturing cost, strong
cooperation with suppliers, high employee engagement,
excellent customer service, and near perfect quality. Then
disaster struck Toyota in 2010 after wide negative media
exposure, the filing of hundreds of legal suits against the
company, congressional hearings, and the recall of more
than 8 million Toyota cars. Faulty brakes and other
mechanical troubles in some of Toyota’s models allegedly
had caused a number of serious highway accidents, some
involving deaths. The reputation that took decades to
build was seriously damaged in just a few months and may

2


Management and Its Evolution
Sources: Based on D. Welch, “The man with the toughest job at GM,”

BusinessWeek, March 1, 2010; D. Welch, “Why VW is the car giant to
watch.” BusinessWeek, January 25, 2010, 16–18; A. Ohnsman, J. Green,
and K. Inoue, “The humbling of Toyota,” BusinessWeek, March 22, 2010,
17–19; D. Welch, N. Naughton, and B. Helm, “Detroit’s big chance,”
BusinessWeek, February 22, 2010, 22–23; B. Saporito, “Toyota got tangled” BusinessWeek, February 22, 2010, 29–32; L. Denning, “Detroit’s
life after death is no paradise,” BusinessWeek, January 11, 2010, 39–40;
M. Dolan, “Ford to begin hiring at new lower wages,” Wall Street
Journal, January 26, 2010; B. Saporito, “Toyota’s recall,” BusinessWeek,
February 25, 2010, 32–24; K. Linebaugh, “Toyota heir faces crisis at the
wheel,” Wall Street Journal, January 28, 2010; K. Linebaugh and
N. Shirouzu, “Toyota’s U.S. chief is on the hot seat,” Wall Journal Street,
February 8, 2010, C-1.

CRITICAL THINKING QUESTIONS
1. Why did the U.S. automobile manufacturers allow
take a long time to repair. As noted by BusinessWeek,

their financial situation to deteriorate while Toyota was

“Toyota got carried away with high-speed growth, market

prospering?

share, and productivity gains year in and year out. All that

2. Why was Toyota (a foreign company) so successful in

slowly dulled the commitment to quality embedded in

entering the U.S. market, beating the largest domestic

Toyota’s corporate culture. Then the tent came crushing

automobile manufacturers on their own turf?

down in a hurry.”

3. Even though some of the brake allegations against

In the meantime VW sees Toyota’s troubles as a historic

Toyota were later shown to be exaggerated, why did

opportunity and is bent on displacing Toyota as the world’s

Toyota seem to fall off its pedestal so quickly at the begin-

biggest car company by the year 2018.

ning of this decade?

3