LECTURE OUTLINE AND LECTURE NOTES

THE WORLD OF WORK

Tony Tries Another Approach (Text pages 80-81)

Tony, the new manager at Taco Barn, is now dealing with some staffing issues following his memo on schedules. (If the worker missed a shift, he or she was held responsible to either show up or find a replacement.) Still in high school, Matt has missed work because of a scheduling change for track practice and is now on probation for the remainder of the week. His shift leader, Tanya, has explained to Tony that his new policy is not working and that employees are considering leaving. Tony explains his reasons for the change but has not made them known to his entire staff.

1. What assumptions did Tony make when introducing his new scheduling policy?

Tony assumed the employees would understand his reasoning: that he would be more available to his staff if he had less scheduling hassles. But Tony failed to realize that he operated in a vacuum and made incorrect assumptions to suit his quick decision. Tony failed to look at the cause and effect of his decision and how it might lead to other problems among his employees.

2. Which type of decision-making approach did Tony use here?

Tony’s memo represents an authoritative, heavy-handed approach to decision making. He did not solicit any employee input regarding the scheduling. And, once he suspended Matt for not reporting for his shift, his staff felt that he was taking an I-am-the-boss-what-I-say-goes approach to managing Taco Barn. Remember the theories of Douglas McGregor presented in Chapter 2. The American social psychologist presented a simple division of management styles that captured what were fundamentally different ways of managing people.

Theory X suggests there is a controlling/authoritative manager that believes that most employees don’t like to work and will only work at the required level of productivity if they are forced to do so usually under some threat of punishment.

Theory Y suggests there is a more democratic/participatory style in which employees can be trusted to meet production targets without being threatened. They will often seek additional responsibilities because they enjoy the satisfaction of being creative and increasing their own skills.

Tony seems to be using more of a Theory X style, which has placed some stress in the store’s work environment.

3. How could Tony change his interpersonal skills to fix this communication breakdown?

Since managers spend most of their time with their subordinates, effective communication is critical to their use of time. The purpose in doing so is to achieve the organizational objectives by managing employees effectively. However, for this to happen, the information transmitted by the message sender must be understood by the receiver. Unfortunately, many factors cause this process to fail, including conflicting or inappropriate assumptions, different interpretations of the words, differences of perception, emotions either preceding or during communication, poor listening habits, inadequate communication skills, insufficient feedback, and differences in the interpretation of nonverbal communications. This

highlights why the communication process is so important and the many ways it can be thrown off course. Tony is experiencing a miscommunication error and needs to get his thoughts and actions back on track, so that he can get his staff back on the same page regarding the objectives of his store.4. What should Tony do now?

Tony needs to understand the importance of good communication and how easy it is for this process to fall off-center. Tony needs to look at his communication skills and examine how he can make improvements for the sake of his career as a manager. Tony might meet with his staff collectively to discuss the scheduling strategy and other key store issues. He can then form a basic game plan going forward. From there, he might want to meet with employees individually to further evaluate their skills and see where he can best use their strengths and assets in the management of Taco Barn.

LECTURE OUTLINE LECTURE NOTES

I. MAKING DECISIONSA. The terms “manager” and “decision maker”

are not the same. 1. All managers must make decisions to

accomplish organizational goals. 2. Each of the basic management

functions requires different types of decisions.

B. According to Herbert Simon, the manager’s DECISION PROCESS involves three stages:

1. The intelligence stage involves searching the environment for conditions requiring a decision.

2. The design stage involves inventing, developing, and analyzing possible courses of action.

3. Choice, the final stage, refers to the actual selection of a course of action.

C. Management and Nonmanagement Decisions

1. Nonmanagement decisions are concentrated in the choice stage.

2. Management decisions involve the

POWERPOINT 4-1Chapter Title(Refers to text page 80)

POWERPOINT 4-2Learning Objectives(Refers to text page 81)

POWERPOINT 4-3Making Decisions(Refers to text page 82)

LECTURE LINK 4-1Decision-Making TipsThis lecture link gives some tips for enhancing decision-making. See complete lecture link on page 3.Error: Reference source not found of this manual.

►

LECTURE OUTLINE LECTURE NOTES

intelligence and design stages.D. Managers spend most of their time making

decisions.

II. DECISION MAKING VERSUS PROBLEM SOLVING

LEARNING OBJECTIVE 1Explain the difference between decision making and problem solving. (Text page 82)

A. DECISION MAKING is the process of choosing from among various alternatives.

1. A problem is any deviation from the standard.

B. PROBLEM SOLVING is the process ofdetermining the appropriate responses or actions necessary to alleviate a problem.

C. Although not all decisions involve problems, almost all managerial decisions do.

POWERPOINT 4-4Decision Making Versus Problem Solving(Refers to text pages 82-83)

CRITICAL THINKING EXERCISE 4-1Lost at SeaAn adaptation of a classic group decision-making exercise. See complete exercise on page 4.Error: Reference source not found of this manual.

►

LECTURE OUTLINE LECTURE NOTES

III. THE INTUITIVE APPROACH TO DECISION MAKING

LEARNING OBJECTIVE 2Compare and contrast intuitive and rational approaches to decision making. (Text pages 83-87)

A. The INTUITIVE APPROACH is the approach used when managers make decisions based largely on hunches and intuition.

1. Relying only on feelings can cause problems such as:

a. fastening onto unsubstantiated facts and sticking with them.

b. being attracted to scandalous issues and heightening their significance.

c. pressing every fact into a moral pattern.

d. overlooking EVERYTHING except what is immediately useful.

e. viewing all information as a romantic story

2. These attachments most affect managers who cannot modernize their thinking.

B. Two suggestions for overwhelmed managers:

1. Become aware of biases and allow for them.

2. Seek independent options.

POWERPOINT 4-5The Intuitive Approach to Decision Making(Refers to text pages 83-84)

IV. RATIONAL APPROACHES TO DECISION MAKINGA. RATIONAL APPROACHES try to evaluate

POWERPOINT 4-6Rational Approaches to Decision Making(Refers to text page 84)

LECTURE OUTLINE LECTURE NOTESfactual information through deductive reasoning.

B. The OPTIMIZING APPROACH (sometimes called the rational or scientific approach) to decision making includes the following steps.

1. Recognize the need for a decision 2. Establish, rank, and weigh the

decision criteria 3. Gather available information and data 4. Identify possible alternatives 5. Evaluate each alternative with respect

to all criteria 6. Select the best alternativeC. Limitations of the Optimizing Approach 1. The optimizing approach is based on

the concept of the “economic person.” 2. This assumes that people behave

rationally and that people have: a. clearly defined criteria, and that

the relative weights they assign to these criteria are stable

b. knowledge of all relevant alternatives

c. the ability to evaluate each alternative with respect to all the criteria and arrive at an overall rating for each alternative

d. the self-discipline to choose the alternative that rates the highest

3. Difficulties with this approach: a. Assumptions are often unrealistic. b. Many decisions are based on

POWERPOINT 4-7Limitations of the Optimizing Approaching(Refers to text pages 84-87)

TEXT REFERENCECareer Management Box: Developing Habits for a

LECTURE OUTLINE LECTURE NOTESlimited knowledge of the possible alternatives.

c. It is tempting to manipulate the information gathered and choose a favored alternative.

D. The Satisficing Approach 1. Herbert Simon’s PRINCIPLE OF

BOUNDED RATIONALITY assumes people have the time and cognitive ability to process only a limited amount of information on which to base decisions.

2. The decision model of the “administrative person” makes the following assumptions:

a. A person’s knowledge of alternatives and criteria is limited.

b. People act on the basis of a simplified, ill-structured, mental concept of the real world.

c. People do not attempt to optimize but will satisfice, or take the first alternative that satisfies their current level of aspiration.

3. Because the decision maker’s knowledge of alternatives is incomplete, the individual cannot optimize, but can only “satisfice.”

a. OPTIMIZING means selecting the best possible alternative.

b. SATISFICING means selecting the first alternative that meets the decision maker’s minimum standard of satisfaction.

Successful Career Some habits that might help lead to personal and career success. (Box in text on page 85.) An additional exercise and discussion is available in this chapter on page 4.Error: Reference source not foundError: Reference source not foundError: Reference sourcenot found.

POWERPOINT 4-8The Satisficing Approach (Refers to text pages 85-86)

►

LECTURE OUTLINE LECTURE NOTES c. LEVEL OF ASPIRATION refers to

the level of performance a person expects to attain; determined by the person’s prior successes and failures.

4. The satisficing approach to decision making is illustrated in Text Figure 4.1.

5. In this model, the “administrative man” selects the first alternative and makes no attempt to optimize.

PROGRESS CHECK QUESTIONS (Text page 87)

1. Explain the difference between decision making and problem solving.

2. Explain the intuitive approach to decision making.3. What are the six steps in the optimizing approach to

decision making?4. Explain the satisficing approach to decision making.

TEXT FIGURE 4.1Model of the Satisficing Approach (Text page 86)

V. THE DECISION MAKER’S ENVIRONMENT

LEARNING OBJECTIVE 3Explain the decision maker’s environment and the conditions for making a decision. (Text pages 87-90)

A. The decision is affected by environmental factors:

1. freedom to make decisions (higher-level managers have more flexibility and freedom of choice)

2. the purpose and tradition of the organization

3. the organization’s formal and informal group structures

POWERPOINT 4-9The Decision Maker’s Environment(Refers to text pages 87-88)

TEXT FIGURE 4.2Environmental Factors Influencing Decision Making in an Organization (Text page 87)

LECTURE OUTLINE LECTURE NOTES 4. the decision maker’s superiors and

subordinatesB. Other factors – such as industry norms, the

political climate, and competition – can modify a decision.

VI. CONDITIONS FOR MAKING DECISIONSA. Decisions are not always made with the

same amount of available information.B. Certainty 1. In a SITUATION OF CERTAINTY, the

decision maker:a. knows exactly what will happen.

b. can calculate the precise outcome for each alternative

2. This, however, is rarely possible.C. Risk 1. The costs of obtaining more

information may outweigh the information’s value.

2. A SITUATION OF RISK occurs when a decision maker is aware of the relative probabilities of occurrence associated with each alternative.

3. The expected value analysis technique can be used.

a. The expected payoff of each known alternative is mathematically calculated based on its probability of occurrence.

b. This won’t help if the act occurs only once.

POWERPOINT 4-10Conditions for Making Decisions(Refers to text pages 88-89)

TEXT FIGURE 4.3Umbrella Decision Alternatives and Outcomes (Text page 88)

TEXT FIGURE 4.4Possible Approaches to

LECTURE OUTLINE LECTURE NOTESD. Uncertainty 1. A SITUATION OF UNCERTAINTY

occurs when a decision maker has very little or no reliable information on which to evaluate the different possible outcomes.

2. The MAXIMAX APPROACH (or optimistic or gambling approach) involves selecting the alternative whose best possible outcome is the best of all possible outcomes for all alternatives.

3. The MAXIMIN APPROACH (pessimistic approach) involves comparing the worst possible outcomes for each alternative and selecting the one that is least bad.

4. The RISK-AVERTING APPROACH, choosing the alternative with the least variation in possible outcomes, results in more effective planning.

Making Decisions under Uncertainty (Text page 90)

POWERPOINT 4-11Conditions for Making Decisions (continued)(Refers to text pages 89-90)

ETHICAL MANAGEMENT (Text page 89)

Dave, the newly appointed vice president of a manufacturing company, has just been informed that a team of internal auditors from the corporate head office will be arriving in two days. He prepares his staff as best he can. The day before the auditors arrive, one of his assistants discovers some disturbing news. It appears, he says, that Woody, a 30-year veteran of the plant, has been systematically altering accounts for years. Month by month, Woody has been shipping products to customers without billing them – and then billing customers without shipping anything.

Dave is stunned. Seeking an explanation, he learns that the practice has nothing to do with fraud. Woody wasn't lining his own pocket. He was simply trying to be helpful. His goal was to smooth out the cyclical nature of the orders so that, month by month, the figures sent to the home office appear level and consistent, with no peaks and valleys. Dave discovers that no money has been lost or gained; it all balances out in the end. And while the amount is not immense, the funds affected amount to perhaps 5% of the plant's annual earnings.

In one sense, Woody's adjustments have benefited Dave, who has already been complimented by

►

LECTURE OUTLINE LECTURE NOTEShis boss for his wise forecasts and for meeting his targets so accurately. But Dave also knows that if these practices were to come to light, Woody would be fired instantly. Dave himself, though ignorant of the practice until now, might have some tough explaining to do. After all, Woody has been fudging records and misstating corporate revenues to management, shareholders, and the IRS.

What should Dave do?

Based on the significance of the action, Dave has to report the activity of the shipping director and clear up the operating method he has been using. It is essential that he do this now. He is now aware of how Woody handled the accounts and must understand that he has a better chance of cleaning up the problems sooner than later. Dave has first hand knowledge of the situation. It is the job of the manager to work on or fix problems, particularly one involving falsification of reports to management, shareholders, and the IRS.

Dave must first meet with Woody and get all the facts on his actions, including how long he has been providing inaccurate records. Dave should inform Woody of his intentions. Next Dave must meet with his immediate supervisor to discuss his findings and decide what the next steps should be. Woody has to understand the potential consequences of his actions: he made the decision to provide false reporting on his own and failed to report his activities. Finally, Dave has to put the department back in order by calling all the accounts and explaining that new procedures will be put in place. He may also have to hire a new employee or promote a current employee to the director of shipping position.

VII. TIMING THE DECISIONLEARNING OBJECTIVE 4Explain timing and participation as they relate to the decision-making process. (Text pages 91-93)

A. It may not be easy to recognize that a decision is necessary.

1. Quick decisions may lead to bad decisions.

2. Some managers listen to problems, promising to act, but never do.

3. Other managers respond only after a lengthy delay.

B. Different decisions have different time frames; some need immediate results.

POWERPOINT 4-12Timing the Decision(Refers to text page 91)

VIII. PARTICIPATION IN DECISION MAKINGA. Managers must decide whether to involve

subordinates in decision making.TEXT FIGURE 4.5Positive and Negative Aspects of Group (Team) Decision Making (Text page

LECTURE OUTLINE LECTURE NOTESB. Group or Team Decision Making 1. Group performance is often better than

average individual performance. a. Groups often develop innovative

and creative solutions to problems.

b. But groups often take longer to solve problems.

2. Group performance is superior because:

a. The sum total of the group’s knowledge is greater.

b. The group has a much wider range of decision alternatives.

3. However, unanimous group decisions are consistently riskier than individual decisions.

a. People feel less responsible for the outcome of a group decision.

b. Groups make decisions that are more polar, or more extreme, than individuals acting alone.

PROGRESS CHECK QUESTIONS (Text page 92)

5. List the different conditions under which managers make decisions.

6. Explain the difference between the maximax and maximin approaches to decision making.

7. What is the risk-averting approach to decision making?

8. Summarize the positive and negative aspects of group decision making.

92)

POWERPOINT 4-13Participation in Decision Making(Refers to text pages 91-92)

LECTURE LINK 4-2When Employees Make the DecisionsHow one employee-owned firm uses participative management. See complete lecture link on page 3.Error: Reference source not found of this manual.

IX. BARRIERS TO EFFECTIVE DECISION MAKING

POWERPOINT 4-14Barriers to Effective Decision Making

LECTURE OUTLINE LECTURE NOTESA. Four Barriers to Decision Making: 1. Complacency, not seeing danger

signals or ignoring data 2. Defensive avoidance, denying the

importance of danger or the opportunity

3. Panic, which rarely produces good results

4. Deciding to decide, accepting the responsibility and challenge of decision making

B. Recognizing these barriers is an important management skill.

(Refers to text pages 92-93)

CASE INCIDENT 4.1

Getting Out of the Army (Text page 94)

Jay Abbott has just completed ten years of service with the Army and is contemplating his next move. His next promotion to general staff college would come with a pay raise. This could prompt him to stay in the Army for ten more years, to age forty-two, at which point he could retire and receive half his pay and free medical and dental benefits. However, Jay also knows that his current skills and age would bring an immediate higher wage in the corporate world, should he decide to leave the military. This is especially true now that Congress is reducing military raises and possibly reducing benefits. Jay has to consider his options and make a decision that will set his course for the next several years.

1. What factors are prompting Jay to consider leaving the army?

Jay has valuable skills and experience from his military career. This has value in the civilian market. If Jay decides to leave the military, he is confident he could find a position making $10,000 to $15,000 more in pay. The advantages of civilian work are certainly attractive and could be worth pursuing, considering his age.

2. What factors are encouraging him to stay?

With ten more years of duty, Jay could retire at half his salary, including medical and dental coverage. At age forty-two he could consider a second career. Whatever decision Jay makes, there will be a tradeoff.

3. Which factors do you think are more important? Why?

The pay and benefits immediately in front of him have to be considered. These will certainly have a large influence on his decision. However, Jay must also look at lifestyle, his family, and the possible location of where he will live, as each of these will also affect his decision. There may be particular requirements regarding the type of position he will hold or the level of responsibilities that

LECTURE OUTLINE LECTURE NOTESwill accompany each respective job.

4. What would you advise Jay to do?

Based on his age and the time left till he finishes his military career, Jay should probably take his next promotion with all the benefits the military will offer. Jay can benefit from extending his military career by ten years and can expect a great retirement package at age 42. Extending his military service could lead to a nice teaching career or upper level management position. His knowledge and maturity would benefit many companies. Jay has an opportunity to complete one set of goals for himself, then begin a whole new career that offers new and exciting challenges. This path would let him achieve a new set of goals that would not be possible from his current limited military career.

One way to get the class to look at this decision is to ask each student how he or she reacts to the known and the unknown. Some students will recommend that Jay keep his current career in the military (the known) while others will suggest he leave it for the civilian opportunities (the unknown). As students make their suggestions about the case, also explore why choosing the known vs. the unknown attracts each student and what these decisions can lead to, especially after they’ve considered the career implications.

►

LECTURE OUTLINE LECTURE NOTES

X. MAKING CREATIVE DECISIONSLEARNING OBJECTIVE 5Identify methods for creative decision making. (Text pages 93-100)

A. Encouraging creative decisions and innovation in the organization improves decision making.

1. One study found that 45% of lucrative ideas came from employees.

2. The other half came from customers, suppliers, and competitors.

B. The Creative Process 1. Managers must establish an

environment that encourages both creativity and innovation.

a. CREATIVITY is coming up with an idea or a concept that is new, original, useful, or satisfying to its creator or to someone else.

b. INNOVATION is the process of applying a new and creative idea to a product, service, or method of operation.

2. A five-step process can be used to foster a creative decision making environment:

a. Preparation, making sure that all parts of the problem are fully understood

b. Concentration, committing to solve the problem in a timely manner

c. Incubation of ideas and information, recognizing that the accepted way of solving a problem is not always the best way

d. Illumination, connecting a problem

POWERPOINT 4-15Making Creative Decisions(Refers to text pages 93-95)

LECTURE LINK 4-3Better Group Decision Making: Using Premortems“Premortems,” a form of mental simulation, let managers uncover problems and then fix them in real time as the project unfolds. See

LECTURE OUTLINE LECTURE NOTESCASE INCIDENT 4.2

Going Abroad (Text page 100)

A supervisor of twelve engineers has to send four of his employees abroad for six to eight months. All employees are capable of the assignment; the supervisor decides who should go. The assignment overseas is undesirable, which does complicate the matter.

1. How would you select who should go abroad on extended loan?

A democratic style of management could help in this stressful situation. The supervisor could meet with employees to see who might be receptive to the overseas project. An open discussion could reveal who might want to take this assignment and why they might benefit from the experience. The manager can explain to the employees that he has to find four willing workers. Those with more seniority or special conditions will be last to be asked should the volunteer method become difficult. By using the democratic approach, the manager shows complementary praise and respect to his. He will have a better outcome if the situation can be worked out through open discussion and with input included from all employees.

2. What are some major factors that would influence your decision process?

Factors such as length of time on the job, special family considerations, special medical conditions, and past volunteering for other special projects could be factored into this decision.

3. How would you communicate the news to those engineers selected for the assignment?

If the democratic style of selection is used, then the supervisor-to-employee notification of assignment might be less difficult. Probably the best approach would be to have an open discussion with the employees and determine the feelings of employees (including those that might volunteer). Once the decision is made, the supervisor should write a short memo to each employee selected explaining why they have been chosen and what that means to their careers in the short and long term. Finally, all employees should be notified as to who was selected. The supervisor should stress his or her appreciation of the team approach that displayed in the final outcome.

4. What would you do if any of the engineers requested not to be sent overseas?

If one of the employees refuses to take the assignment, the manager should meet with the employee and discuss why the employee was selected and why the employee does not want the assignment. If the employee’s decision remains the same, the manager faces a difficult decision. Does the rejection merit a reprimand? How will this affect the supervisor-to-employee relationship in the future? Then the supervisor should move on to his next choice based on his notes from the original meeting.

►

LECTURE OUTLINE LECTURE NOTES

XI. MANAGEMENT INFORMATION SYSTEMS

LEARNING OBJECTIVE 6Discuss management information systems. (Text pages 100-101)

A. A MANAGEMENT INFORMATION SYSTEM (MIS), also called management reporting system, is an integrated approach for providing interpreted and relevant data that can help managers make decisions.

1. MISs produce information needed for successful management.

2. Managers specify in advance what information they need.

B. The term MIS generally refers to use of computers to process data.

C. MIS is not the same as data processing. 1. DATA PROCESSING is the capture,

processing, and storage of data. 2. An MIS uses those data to produce

information for management. D. TRANSACTION-PROCESSING

SYSTEMS substitute computer processing for manual record-keeping procedures.

POWERPOINT 4-19Management Information Systems(Refers to text pages 100-101)

THE WORLD OF WORK

Tony Sees Things Differently (Text page 101)

Tony is now dealing with the misunderstanding about his memo on scheduling. His intentions were to spend less time on schedules so he could spend more time with his staff. However, this has not been successfully communicated to employees, and he has to figure a way to straighten this out. His other dilemma is that he does not want his immediate supervisor or the regional manager to see him as a pushover as the new store manager. Tony needs to carefully discuss this issue with his staff in a way that shows his good intentions without appearing as a weak manager with staff that has more power than him because of their affiliation with the previous store manager.

1. Should Tony change the scheduling policy back to the way things were? Why or why not?

Tony needs to seriously evaluate his communication skills. As learned in chapter three, managers spend three-quarters of their time communicating and good managers develop good communication skills. These skills help managers absorb information, motivate employees, and deal effectively with co-workers. Manager and subordinates engage in give-and-take exchanges in order to master the interpersonal communication that impacts their daily activities on the job. Tony is new to these roles and responsibilities as a former employee promoted to store manager. As he learns the functions of communication, managerial duties like scheduling should become easier.

2. How do you think this new awareness will change Tony’s management style?

Tony is learning on the job and this means trying various styles and approaches to accomplish the goals of the organization. If Tony can learn more about the skills of managing and mature in the process, he will be much more effective in his career over the long term.

3. Do you think he can rebuild his relationship with his staff? Why or why not?

Yes. Communication is the key to healthy relationships in jobs, relationships, and life. Tony is using an autocratic approach, ignoring the input and ideas of the staff. Tony has to change this perception, and that begins with using and developing good communication avenues.

4. What should Tony do now?

Tony needs face time with his staff so that this obstacle can be dealt with effectively. Tony needs to share his thoughts about how he wants to manage his restaurant. To do this effectively he needs a cohesive, motivated staff. The next step should probably be a staff meeting, in which everyone can express opinions and share concerns. If the meeting is done correctly, it will be a first step in getting the new manager and his experienced staff back on the same page.