Friday, 3 February 2012

10 qualities of a good manager/leader

10 Characteristics of a Good Leader

Good Leadership

What are the characteristics of a good leader? Do you think you possess these qualities? I have noticed similar patterns in many leaders that I think are great traits. Also, several studies have been conducted on the characteristics of good leadership that are worth mentioning. It would be great to have all these qualities, but not all leaders do.

The following is my list of the characteristics of a good leader:

1.Vision

Most good leaders have great vision. They know where they want to go and they know how to motivate people to believe in this same vision they have for their community, country and their lives. They view things as what they could be and not what they are.

2. Wise

Being a good leader usually means that they have to make critical calls at assorted points in their organization. Having the knowledge to make the correct call is crucial in making sure the organization is successful. Good leaders are strategic, wise and perceptive.

3. Passionate

Good leaders are very passionate people. They're intensely obsessed in whatever they are focused on. It could be business, sports or a hobby, these individuals are intensely focused. They operate with such a high level of passion that they get consumed in it. They take action!


4. Compassion

Good leaders have compassion for their supporters or employees. They have great coaching and development skills. While these leaders have goals to accomplish, they consistently care for the individuals that support them. They're not selfish individuals only thinking about their own wants and needs. Most have a heart for the people that follow them.

5. Charismatic

Most good leaders are captivating. They're charming individuals and they tend to draw people in with their personalities. It could be in the way they talk, the way they carry themselves. They are excellent a building relationships and demanding performance from their peers. These individuals have an X-factor that you are drawn to.

6. Great Communicators
Good leaders are usually great orators and persuaders. They're very comfortable with public speaking and are very inspiring people. It isn't surprising that they can develop a good following with this communication ability.

7. Persistent

Good leaders are determined in attaining their goals. They know that reaching their destination can be filled with problems. Notwithstanding, they see that the advantages of attaining their goals is larger than that of the problems that occurred. This makes them intensely persistent individuals.

8. Integrity

Good leaders mean what they say. They have integrity. They're individuals who keep their guarantees and they do not play the old political games that plenty of others do. People find them reliable and as such are dedicated to them.

9. Daring

They are bold. Winston Churchill states that courage is the virtue on which all others virtue rest on. Good leaders are bold enough to chase after their dreams. Although the fears are real, a daring leader pursues them regardless of the fears that exist.

10. Disciplined

Most good leaders are very controlled in the pursuit of their goals. Where most individuals would be simply distracted or dejected, good leaders discipline their minds to keep focused and steady regardless of the situation.

There you have it, 10 characteristics of good leadership. Not all good leaders carry every single trait. Also, you may feel you are strong in some areas and lacking in others. But just remember, it isn't about being perfect, but understanding where you are lacking. Make an effort to build on these characteristics of good leadership in yourself.                                                                                                                                                                                  (hub pages)

management skills that managers must possess

What skills does a manager need?
There are three fundamental skills of a manager:
  1. TECHNICAL
    The manager should be proficient at specific tasks. This in turn helps to provide the credibility or knowledge to persuade people to do certain things.

  2. HUMAN
    The manager has to know how to work with people.

  3. CONCEPTUAL
    The manager can see the organisation as a whole. In other words, there has to be some knowledge of the organisation and what it does and how it interacts with other organisations.

The most important skill of a manager
For more specific skills, here is a list compiled by management experts in decreasing order of importance:
  1. People skills
  2. Strategic thinking (planning ahead and predicting what was going to happen)
  3. Visionary
  4. Flexible/adaptable to change
  5. Self-management
  6. Team player
  7. Solve-complex problems and make decisions
  8. Ethical/high personal standards
Hence the most important skill of a manager is to understand people and what makes them motivated to do the work in the acheivement of certain goal(s).

Are managers leaders?
Firstly we need to know the difference between a leader and a manager.
A leader is someone described as a creative genius who has the vision of leading his/her people within an entire organisation or nation to something that we can all believe in and realistically achieve as something worthwhile to strive for in our lives.
A manager is someone described as a practical genius who is aware of the vision for an entire organisation or nation and can achieve various goal(s) to help reach for this vision in a practical way.
Now a good manager is one that has both managerial and leadership skills. Thus a manager can be a leader. It all depends on the person's upbringing, nature of the managerial job, and the kind of knowledge and experience they acquire to become a good manager.

What makes a good manager?
A management expert by the name of Charles Gibbon described the key elements of a quality manager as follows:
'1. Possess well-defined goals.
2. Be able to allocate resources according to priorities.
3. Be able to make decisions, act upon them, and accept responsibility for them.
4. Be willing to compromise.
5. Be able to delegate and to depend on subordinates.
6. Be self-motivated and self-controlled.
7. Be able to organize, plan, and communicate for effective use of resources.
8. Maintain good relationships with others.
9. Possess emotional maturity and the internal resources to cope with frustration, disappointment, and stress.
10. Be able to appraise oneself and one's performance objectively, to admit to being wrong.
11. Expect that one will keep on growing, improve one's performance, and continue to develop.' (Person 1983, p.334)
But just keep in mind the following points and you should do well:
  1. If not in survival-mode, a manager should avoid creating hierarchies in an organisation as this will only create inferiority and superiority complexes in people after a while and will reduce the full potential of everyone.

  2. Consistency in behaviour is an important characteristic of a good manager.

  3. Managers should perform their work exactly as they preach to others. This is all part of consistency. As Marion Nicolson, managing director of the Australian firm Library Locums, said: "Our philisophy is simple - we treat people with respect and do what we say we'll do."

  4. Managers should be friendly and approachable.

  5. Communicate with everyone regularly and when it is necessary.

  6. Managers should support their staff through praise, encouragement and improving the work environment.

  7. Managers should be leaders. They must have creativity and not just the practical skills to solve problems.

  8. Managers should have the ability to confidently and appropriately direct others to work if they have not yet actualised and reached the level of being self-managed.

  9. It is claimed that internal customers should never crack under pressure from others. This is the robotic view of management. The human view of management is that people are allowed to express their emotions and views. It is the job of a manager to look for these situations and to talk to staff as early as possible to understand why and resolve them before the emotions reach a level that can affect external customers. Similarly, the reverse is true: look for situations where external customers may find themselves under stress or become frustrated, talk to these customers, listen to them, and resolve the problems for things the manager has control over.

  10. Remember when things go wrong, everyone is responsible, not just staff, but also management. Everyone must work together. Sacking people is not the way to solve problems. It should be seen as a last resort.

  11. The people who must improve the situation is everyone. We are all the solution to our problems.

How many staff should a manager be managing?
It depends on how many staff the manager can handle, and what the staff thsemselves are doing.
If staff are doing a wide variety of different things and/or self-managed in their tasks and other activities and are fufilling the role and beyond (eg. finding creative solutions not expected of the role but is making a positive difference), you can supervise/manage less staff (but technically you can handle more people under your wing). If staff are doing similar things but need to be told what to do after completing various tasks (especially if people might suddenly find themselves facing new tasks), you will usually have to supervise/manage more staff more of the time. It also depends on you: How capable are you to be a good manager? Do you receive assistance? Do you like to supervise people or let them get on with it? How much self-confidence have you got?
How many staff you can manage and what staff are doing will determine your span of management as the experts would say. The wider your span, the more staff you can manage just so long as you don't lose out on developing a quality relationship with all your staff. If you are having shallow relationships with your staff, it is quite likely your span of management is too great and it should be reduced so that you can keep in touch with your staff (seriously, managers and staff are human beings too).

Where can I get more information?
Business Insurance Quotes in the US has kindly compiled a list of 15 blog post links at http://www.businessinsurance.org/ since 30 August 2011 covering things like:
1. How to be a Good Manager: 8 Quick Tips
2. What Makes a Good Leader
3. People Management Styles
4. How a Good Boss Responds to Mistakes
It may serve you well to check these links out and gather any additional insights into this topic.
Or do you want to become a great manager? Are you looking to find the latest management concepts and skills but need to know the best places where to gain this knowledge? If this is you, the links below to online MBA rankings will provide the first steps to helping you find the best programs for your business education:                                                                                                                                                    ( sunrise information)

THE INTERNAL ENVIRONMENT OF BUSINESS

The Internal Environment

An organization's internal environment is composed of the elements within the organization, including current employees, management, and especially corporate culture, which defines employee behavior. Although some elements affect the organization as a whole, others affect only the manager. A manager's philosophical or leadership style directly impacts employees. Traditional managers give explicit instructions to employees, while progressive managers empower employees to make many of their own decisions. Changes in philosophy and/or leadership style are under the control of the manager. The following sections describe some of the elements that make up the internal environment.

Organizational mission statements

An organization's mission statement describes what the organization stands for and why it exists. It explains the overall purpose of the organization and includes the attributes that distinguish it from other organizations of its type.
A mission statement should be more than words on a piece of paper; it should reveal a company's philosophy, as well as its purpose. This declaration should be a living, breathing document that provides information and inspiration for the members of the organization. A mission statement should answer the questions, “What are our values?” and “What do we stand for?” This statement provides focus for an organization by rallying its members to work together to achieve its common goals.
But not all mission statements are effective in America's businesses. Effective mission statements lead to effective efforts. In today's quality-conscious and highly competitive environments, an effective mission statement's purpose is centered on serving the needs of customers. A good mission statement is precise in identifying the following intents of a company:

  • Customers — who will be served
  • Products/services — what will be produced
  • Location — where the products/services will be produced
  • Philosophy — what ideology will be followed

Company policies

Company policies are guidelines that govern how certain organizational situations are addressed. Just as colleges maintain policies about admittance, grade appeals, prerequisites, and waivers, companies establish policies to provide guidance to managers who must make decisions about circumstances that occur frequently within their organization. Company policies are an indication of an organization's personality and should coincide with its mission statement.

Formal structures

The formal structure of an organization is the hierarchical arrangement of tasks and people. This structure determines how information flows within the organization, which departments are responsible for which activities, and where the decision-making power rests.
Some organizations use a chart to simplify the breakdown of its formal structure. This organizational chart is a pictorial display of the official lines of authority and communication within an organization.

Organizational cultures

The organizational culture is an organization's personality. Just as each person has a distinct personality, so does each organization. The culture of an organization distinguishes it from others and shapes the actions of its members.
Four main components make up an organization's culture:

  • Values
  • Heroes
  • Rites and rituals
  • Social network
Values are the basic beliefs that define employees' successes in an organization. For example, many universities place high values on professors being published. If a faculty member is published in a professional journal, for example, his or her chances of receiving tenure may be enhanced. The university wants to ensure that a published professor stays with the university for the duration of his or her academic career — and this professor's ability to write for publications is a value.
The second component is heroes. A hero is an exemplary person who reflects the image, attitudes, or values of the organization and serves as a role model to other employees. A hero is sometimes the founder of the organization (think Sam Walton of Wal-Mart). However, the hero of a company doesn't have to be the founder; it can be an everyday worker, such as hard-working paralegal Erin Brockovich, who had a tremendous impact on the organization.
Rites and rituals, the third component, are routines or ceremonies that the company uses to recognize high-performing employees. Awards banquets, company gatherings, and quarterly meetings can acknowledge distinguished employees for outstanding service. The honorees are meant to exemplify and inspire all employees of the company during the rest of the year.
The final component, the social network, is the informal means of communication within an organization. This network, sometimes referred to as the company grapevine, carries the stories of both heroes and those who have failed. It is through this network that employees really learn about the organization's culture and values.

Organizational climates

A byproduct of the company's culture is the organizational climate. The overall tone of the workplace and the morale of its workers are elements of daily climate. Worker attitudes dictate the positive or negative “atmosphere” of the workplace. The daily relationships and interactions of employees are indicative of an organization's climate.

Resources

Resources are the people, information, facilities, infrastructure, machinery, equipment, supplies, and finances at an organization's disposal. People are the paramount resource of all organizations. Information, facilities, machinery equipment, materials, supplies, and finances are supporting, nonhuman resources that complement workers in their quests to accomplish the organization's mission statement. The availability of resources and the way that managers value the human and nonhuman resources impact the organization's environment.

Managerial philosophies

Philosophy of management is the manager's set of personal beliefs and values about people and work and as such, is something that the manager can control. McGregor emphasized that a manager's philosophy creates a self-fulfilling prophecy. Theory X managers treat employees almost as children who need constant direction, while Theory Y managers treat employees as competent adults capable of participating in work-related decisions. These managerial philosophies then have a subsequent effect on employee behavior, leading to the self-fulfilling prophecy. As a result, organizational philosophies and managerial philosophies need to be in harmony.

Managerial leadership styles

The number of coworkers involved within a problem-solving or decision-making process reflects the manager's leadership style. Empowerment means delegating to subordinates decision-making authority, freedom, knowledge, autonomy, and skills. Fortunately, most organizations and managers are making the move toward the active participation and teamwork that empowerment entails.
When guided properly, an empowered workforce may lead to heightened productivity and quality, reduced costs, more innovation, improved customer service, and greater commitment from the employees of the organization. In addition, response time may improve, because information and decisions need not be passed up and down the hierarchy. Empowering employees makes good sense because employees closest to the actual problem to be solved or the customer to be served can make the necessary decisions more easily than a supervisor or manager removed from the scene.

FROM CLIFF NOTES

THE GLOBAL ERNVIRONMENT OF BUSINESS:NEW PARADIMS FOR INTERNATIONAL MANAGEMENT


The global environment of business: New paradigms for international management


Forces outside the firm’s traditional boundaries are increasingly important in determining the firm’s success. These forces in “the environment of business” differ among nations and over time, continually confronting the firm with new issues that require modifications in strategies and management practices. Managing in the context of turbulence has become an ongoing reality.  Readers will learn how to modify their strategies and management practices and adapt to this new reality.

Social Forces

The subject of ethical codes and CSR crystallizes many social challenges.  At the one extreme are those who, like Milton Friedman (1970/2001), advocate the guiding principle of shareholder value maximization as the sole determinant of managerial decisions. At the other extreme are those who expound an altruistic philanthropy based on philosophical beliefs concerning universal ethics, such as those related to human rights. Within this range of perspectives, many authors offer distinct typologies for analyzing social forces and for developing appropriate firm responses to each set of social forces. Meanwhile, the rise of activist groups who threaten public criticism and boycotts means that even Friedman’s dictum of maximizing shareholder value now requires a wide range of CSR strategies.
Some analysts, such as Porter and Kramer (2006), believe that each firm should create a competitive advantage through appropriate CSR strategies. From this perspective, CSR morphs into political strategies through which a firm’s reactions can be designed in order to achieve desirable government decisions. For multinational enterprises (MNEs), it is clear that CSR has become a subject of major importance, but the complexity of dealing with social forces that differ among nations has created uncertainties about the optimal strategies. The pursuit of least-cost alternatives in each country conflicts with the objective of creating globally consistent strategies. Meanwhile, international NGOs and national governments are negotiating CSR agreements to create global standards. For the MNE, corporate governance with division of responsibilities between the parent and its subsidiaries adds confusion to the implementation of global strategies and adds difficulties to the creation of appropriate procedures for global reporting and enforcement. CSR has become a central management issue in a world where public expectations, legal requirements, and social needs all differ significantly among nations and where the MNE must continually reconcile its universal ethical positions with nation-specific realities.
A major force underlying the CSR challenges in international business is the difference in culture among countries. The impacts of cultural differences extend beyond CSR to include the business behaviour of local management and employees, as well as the preferences of consumers. For the MNE, there are advantages in creating a globally consistent set of organizational structures and incentives and a unified marketing program. Yet there may be many instances where exceptions geared to the local culture may be most effective. Countless articles have utilized the typology created by Hofstede and Bond (1988) in order to analyze the implications of cross-country cultural differences for management decisions. On the basis of extensive surveys, Hofstede and Bond conclude that each country’s culture can be best examined in accordance with five dimensions: individualism/collectivism, uncertainty avoidance, power distance, masculinity/femininity, and long-term versus short-term orientation. Not only do cultural differences impact CSR, they also impact consumer preferences and marketing, as well as structures within firms and industries. For example, cultures differ in regard to the weight they place on attributes such as quality, privacy, service reliability, the introduction of breakthrough services, and the means of consumer communication with the firm. The retail MNE in particular must create an international expansion strategy on a country-by-country basis, focusing on differences in consumer preferences and the need for market segmentation.
For many cultures, personal relationships are built on an ongoing exchange of favours. Personal relationships and trust form a central determinant of success, both within the firm and in its external interactions.  In China, the pervasive importance of guanxi demonstrates the benefits that MNEs derive from developing ongoing and long-term exchanges of favours that link individuals, as well as the organizations in which they work. Government approvals can be expedited, and informal preferences can place an MNE ahead of its competitors. Furthermore, without a tradition of business jurisprudence, rapid contract enforcement may become impossible with the result that one must rely on personal relationships to cope with misinterpretations and misunderstandings.  Continual changes in the environment of business may require ongoing renegotiation of contracts—a process that may be most effective in the context of longstanding personal relationships and trust. The literature on joint ventures and strategic alliances repeatedly emphasizes the need to create procedures for decision making that are conducive to the building of trust among firms. These behavioural characteristics may be more significant in predicting the degree of success than any structural or organizational features among firms. Yet the exchange of personal favours may raise questions related to ethics.
Personal relationships that involve an ongoing exchange of favours may be criticized as petty corruption that can pervade all types of business transactions, both between firms and also with government employees.  While some of this bribery can simply expedite decisions and actions, other situations may involve a distortion of business outcomes.  Meanwhile, government officials in positions to alter the firm’s overall profitability may receive substantial payments. Funds that rightfully belong to the public may be diverted into private hands. Firms that would have paid fees to the government may be able to reduce their financial obligations. Corruption distorts free market outcomes, resulting in business and government decisions that reduce efficiency and so reduce a nation’s aggregate production. Some investors may reject potential business dealings in certain cultures because of the presence of corruption.  Recent years have witnessed global attempts to reduce corruption, and many nations now treat corruption as a crime. In this context, management encounters issues that challenge ethical positions and that involve risks of legal prosecution, as well as impacting potential profits.
Managers today must be continually concerned about preventing fraud. New governmental reporting requirements seek to enhance transparency and accountability. New legal provisions increasingly add to the responsibility of boards of directors in providing accurate information to investors. At the core of these concerns is the need to develop a corporate culture that provides ethical guidelines to all the firm’s employees so that decisions throughout the firm are socially acceptable.
For the MNE, these issues are linked in a host of multidimensional decisions that require ongoing responses, hopefully within a consistent set of strategies that create a competitive advantage while maintaining an ethical code of conduct. Social forces are changing as the MNE confronts these issues. People throughout the world are now watching the same television and movies, reading the same books, purchasing globally branded products, and communicating via the Internet. For many, there is now an ongoing adaptation to global norms and values. Migration is creating new international relationships that may alter cultures in both the old home country and the new. Much of the academic literature has ignored youth’s rapid degree of adaptation to the realities of cultural differences, as opposed to the intransigence of older groups in this regard. As the years go by and the youth age, each national culture will likely be modified.  Changes in each nation’s demographic profile over time can also impact certain cultural characteristics. Meanwhile, there is an ongoing interplay between social forces and other forces—with an ongoing modification of many other elements in the environment of business.

Technological Forces

Among cultural differences, the role of personal relationships and trust is a key determinant of the nature and extent of social capital, linking these cultural differences to their implications for entrepreneurship. While physical capital obviously differs among countries, the more ephemeral social capital also differs among cultures. Social capital has important implications for managerial decision making, particularly in relation to innovation and entrepreneurship. Networks based on personal relationships and ethnic trust can facilitate business transactions and risk taking.  Social capital impacts the degree of cooperative behaviour that the firm can expect from its employees, as well as its customers, government agencies, and other stakeholders. Hence, it influences the firm’s ability to develop new forms of value creation. Social capital can play a key role in market entry decisions and in the creation of new products, services, or procedures.  Firms differ in their ability to utilize social capital within each culture, so the enhancement of a firm’s ability in this regard may lead to a competitive advantage for the firm.
Many authors use the social capital perspective to analyze differences among countries in regard to economic growth and the productivity improvements that drive growth. For the World Bank, this subject has been the focus of considerable research—much of it linking social capital with human capital. Cultures differ in regard to the degree to which they encourage and reward risk taking and innovation. These differences impact a country’s legal, financial, fiscal, and education systems. For the MNE, an understanding of these cultural differences is essential in reaching optimal investment decisions and business practices.
Until recent decades, innovations were generally created as responses to specific challenges within particular circumstances. The printing press, for example, resulted from a desire to improve on the time-consuming process of writing by hand. The steam engine resulted from a desire to increase efficiency in the removal of water from mines and to achieve a more rapid pace than that of horses. Often, the innovation process then involved the diffusion of such technological breakthroughs to additional uses. Many business opportunities grew out of the array of potential applications related to a single basic concept.
While this process is still prevalent in today’s business environment, what is new is the creation of innovation procedures that aim to achieve continual cost reductions and improvements in products and services.  What is new is the conscious pursuit of knowledge that can lead to ongoing competitive advantages for the firm. What is new is the development of a learning organization whose culture and practices are designed to stimulate and facilitate the innovation process on a continual basis. This vision of the firm often includes the involvement of all of the firm’s employees, as well as the involvement of customers and suppliers throughout the value chain. For many firms, this vision also includes new partnerships, particularly with universities and government research institutes. This pervasive impact of technological forces has created new paradigms for strategies and management. New success indicators relate to the firm’s capability in acquiring and managing knowledge. A “balanced scorecard” includes more than just financial results, and intellectual capital focuses on the firm’s strategy for building and managing its knowledge activities.
Each nation, and each region within each nation, has its own unique innovation system that forms a key component of the environment of business. These innovation systems differ significantly, with some offering distinct advantages for the firms located there. This reality rests to a large degree on culture, social capital, education, and entrepreneurship. For  each nation or region, a set of crucial characteristics includes the nature  and strength of attitudes toward risks and rewards, the entrepreneurial  quality of university relations with businesses, the willingness of all members  of a value chain to become partners in the pursuit of knowledge, and  the extent to which innovations within the financial system support this  process. Current success creates conditions that support future success in repeated cycles of new technological advances, each of which may move from the research phase to widespread diffusion throughout the economy.
The United States has attained a position of global leadership in the new knowledge economy. Some Western European countries have also attained outstanding success. For much of the rest of the world, a central question relates to their capacity to adopt the technological advances of the United States and Western Europe. The motivations and procedures for technology transfer have become an essential element in the growth prospects of less developed nations. The linkages between international investments and the advanced technologies that are embodied in these investments place the MNEs at the center of this subject. MNEs may regularly transfer the manufacture of new products from the developed nations to the less developed nations in order to reduce costs through payment of lower wage rates. Many governments of developing nations wish to break out of this product cycle by creating their own innovation systems through investments in universities and research institutes. However, much must first be transformed within a nation’s social, economic, and political forces in order to create an innovation system.
Advances in information technology have combined with innovations in microelectronics to create a host of new opportunities for e-business activities in every business sector. The Internet has become the new infrastructure that can reduce costs, improve communication, and enhance management practices. Porter (2001) has emphasized that,
“the greatest threat to an established company lies in either failing to deploy  the Internet or failing to deploy it strategically. Every company needs an aggressive program to deploy the Internet throughout the value chain, using technology to reinforce traditional competitive advantages and complement existing ways of competing.” (Porter, M. Strategy and the Internet. Harvard Business Review, 79(3) p. 77)
For many nations, a digital divide may exist between regions, age groups, and income and educational levels. Advanced local loop technologies and broadband service may not be available at a reasonable cost everywhere. The nature of the digital divide underlies the need for e-market segmentation with distinct strategies and practices for different market segments. For many firms, e-business is changing the relative bargaining power in the employer/employee relationship and is changing the nature of human resource activities. In the knowledge economy, ongoing employee education and retraining programs have a greater importance and a central role in supporting the firm’s competitive advantage. E-business is changing the competitive positions of incumbents and new entrants, making start-ups easier and challenging monopolies. E-business has created a new set of ethical and social issues. The ease of accumulating and distributing an array of information about each individual challenges the concept of privacy rights. “Spamming” and online marketing to children can enter a gray area in terms of ethics, while certain criminal activities such as identity theft and fraud are facilitated by the Internet.
The traditional pharmaceutical business model is being threatened by a new biotech model and by generic manufacturers. In the past, each pharmaceutical firm commanded a value chain that it integrated from clinical trials through production and marketing. Each firm would generally test an array of compounds in a trial-and-error method in the search for an optimal drug to treat a widespread illness. Today, an alternative discovery procedure rests on the scientific analysis of how a specific disease develops and the design of a drug that can interfere with the disease process. “Rational drug design” can lead to medicines that are customized for specific subgroups of people who may have somewhat different versions of a disease. This emphasis on scientific research has led to a host of partnerships between universities, research institutes, and biotech firms. Meanwhile, the traditional value chain is being separated into distinct segments with individual firms specializing in each segment, including specialized clinical research organizations, drug manufacturers, and providers of sophisticated drug delivery systems. As a result, the industry structure has changed, redefining the role of Big Pharma firms with a new focus on the coordination of these separate firms and the marketing of the final products.
A “drug divide” exists between the developed nations and the less developed nations. The United States, Western Europe, and Japan consume nearly 85 percent of the world’s production of pharmaceuticals. Big Pharma firms have focused their research on health issues of the high-income populations, often searching for lifestyle drugs. They have tended to ignore diseases that are prevalent in the low-income, less developed world.  Furthermore, while firms in the developed nations have built their R&D programs on the expectation of patent protection, the less developed nations have often ignored these patents. Generic production with much lower prices has led to a growth in parallel trade. In response, international trade negotiations have sought to create global standards for patent protection, largely unsuccessfully.
New social and political forces are compelling firms, particularly those in the developed countries, to create technologies that can reduce their usage of materials and energy, improve the efficiency of production processes, expand recycling practices, and improve end-of-life product management.  These challenges have led many firms to institute Environmental Management Systems in order to integrate new environmental technologies more completely into their traditional business goals and activities. Some authors argue that the pursuit of these innovations can enhance a firm’s profits and its international competitiveness. Consequently, more stringent government standards may benefit the firm, as well as society as a whole.
Global warming has been receiving widespread and increasing attention.  Managers confront a variety of alternative strategies as possible responses to the impacts of greenhouse gas emissions. The creation of emission trading schemes means that managers must compare the costs of purchasing certified emission reduction credits with the costs of implementing new emission reduction technologies. Some countries are not bound by the Kyoto Protocol’s commitment to emission reductions and have not imposed emission caps. Consequently, managers must decide whether inter-jurisdictional differences in standards should be considered in their investment location decisions.
Global warming has focused attention in particular on alternative electricity generation technologies. Among the potential renewable resources that could generate electricity, wind has gained prominence because of its relatively low cost and because of various drawbacks of other technologies.  New technologies have greatly reduced wind generation costs. Wind generation facilities can be built on a relatively small scale, so individual firms and consumers can now consider investments to satisfy their own needs. Governments have instituted subsidy programs, as well as standards that mandate certain targets for generation by renewable resources.  In many jurisdictions, electricity distributors must ensure that specific percentages of their electricity are derived from “green” energy. These pressures are creating many opportunities for entrepreneurial responses.  For a number of reasons, the United States may not be the most attractive market for these investments. Hence, even U.S. firms may be tempted to invest in wind electricity generation in other nations. Meanwhile, government programs and policies are expanding quickly and consumer preferences are changing quickly.

Economic Forces

Economic forces differ among nations and continually change over time.  Analyses of their likely impacts and the creation of appropriate economic strategies can be the central determinant of a firm’s success. The attractiveness of a particular market depends on its industry structure, including the competitiveness of existing firms, the threat of substitutes and new entrants, and the bargaining power of suppliers and customers. New communication technologies have facilitated international outsourcing, enabling each firm to locate each activity in whatever country offers the optimal combination of cost, quality, and other attributes. New organizational structures may be required to coordinate international networks and to stimulate international innovation.
An industry’s profit potential depends on the structure of that industry, and industry structures differ in significant respects among nations.  For managers, this perspective is crucial in international business decisions.  Where a single firm dominates the marketplace, the interrelationships between that firm and its customers can have a unique configuration, where the firm has power to maintain prices and profits above competitive levels. The degree of the monopolist’s strength in price negotiations will be impacted by the threat of new entrants and the threat of substitutes. If these threats are weak, then a monopolist may gain exceptionally high profits. However, even if no substitutes currently exist, the threat of new entrants may make the market “contestable,” such that a monopolist has to act as if potential entrants were already in the marketplace. When only a small number of firms exist in an industry, the investment, price, and output decisions of any one firm impact the decisions of the others. Game theory provides frameworks for analyzing these inter-firm reactions. Each firm knows that if it raises prices, it may lose market share.  However, if its competitors also raise prices to a similar extent, then the profits of all firms in the industry may increase. Hence, each firm makes its decisions based on its expectations about the responses of its competitors.  This reality can result in an unstable market, with prices and market shares shifting dramatically. Alternatively, this mutual interdependence may result in price agreements that seek to stabilize prices at higher than competitive levels.
With modern communications and transportation technologies, outsourcing can involve any nation; so the value chain has become an international web. Many firms participate in value chains where their profitability depends on cooperation. A group of firms may work together to expand the value that is added by their group as a whole. While the group as a whole faces competition from other groups, the organizational dynamic within each group may seek to improve the outcomes for all participants.  This international web will strive continually to create unique goods and services so that potential substitutes are further removed from the final customer’s purchasing decision. Coordinating this complex network so that it involves an ongoing innovation process has become a key determinant of each firm’s success. To achieve innovation, a firm can no longer simply accept the components or products it is offered by export agents or distributors from other countries. Firms must now create organizational structures that facilitate an ongoing international collaboration focused on the innovation process. This may require an exchange of personnel among firms on a regular basis, as well as ongoing dialogue and exchange of research information.
The MNE must choose investment locations in the context of each nation’s ever-changing macroeconomic variables. Growth rates, unemployment and inflation rates, and foreign exchange rates may all impact a firm’s business plans. Technological progress can increase a nation’s growth rate and income levels so that consumer demand offers new opportunities. Each nation’s international competitiveness differs among industries, so each nation’s relative attractiveness as an investment location is not the same for all firms or all business activities. Consequently, each MNE must develop its own combination of strategies and management in response to economic forces.
In recent years, the macroeconomic objective of maximizing economic growth has led governments to implement certain industry-level policies.  Governments have devoted greater attention to privatization and deregulation, education, skills training, and funding of R&D in the expectation that these programs will increase the nation’s productivity and, hence, increase its growth rate. In the formerly communist nations, liberalization reforms have been extensive and have altered industry structures in significant ways. Particularly in the less developed nations, unemployment has generally not been perceived as a result of inadequate aggregate demand. Rather, analysts have emphasized inappropriate human skills, obsolete technologies, and inadequate capital stock. Here as well, certain sector-level policies and programs seek to ameliorate these shortcomings.  Consequently, government policies may impact industry structures, competitiveness, and national economic prospects in ways that managers must understand and to which managers must adapt their strategies.
In The Competitive Advantage of Nations, Michael Porter (1990)  analyzes the basis for a nation’s competitiveness by drawing a diagram  of a diamond, where each of the four corners represents an underlying  feature: factor conditions, demand conditions, related and supporting  industries, and firm strategy structure and rivalry. He emphasizes that for any particular industry in a specific country to be internationally competitive, it must have a strong domestic presence of each of these four features as they relate to that industry. From this perspective, the international competitiveness and the future income and growth of a nation’s firms will be determined by strengths and weaknesses with regard to these four features.
A nation’s competitive advantage will not be spread evenly across all industries. Each nation will have a unique combination of these factors.  This unique combination will be best suited for only certain kinds of industry. Consequently, a nation will have a cluster of industries that depend on a similar combination of factors and that will form the competitive advantage for that particular nation. Within such a cluster, there will often be many different firms in the same industry. These competing firms or rivals may all be internationally competitive. Backward and forward linkages to suppliers and purchasers are necessary to create a vertical cluster that is internationally competitive.

Political and Governmental Forces

Political and governmental forces are related to each of social, technological, and economic forces. These forces play a key role in the building of social capital, the fostering of entrepreneurship, and the facilitation of immigration. There are many ways through which cultural values shape political forces and through which interest groups influence government decisions. The attempt to reduce corruption illustrates the reverse flow, in which laws and their enforcement seek to change common business practices. In the context of these interactions, the firm must adjust its strategies and management practices in response to social and political forces, but the firm may also seek to influence these forces through lobbying of government and by relating with interest groups.
Political forces are also related to technological forces through the development of “the knowledge economy” and ongoing partnerships within the “triple helix.” Government ownership and regulations can influence the speed with which firms adopt information technologies, microelectronics, and e-business. Governments determine the nature of the pharmaceutical industry, subsidizing research, approving new  drugs, and controlling drug prices. Increasingly, environmental concerns are leading governments to encourage the implementation of new technologies. In all of these respects, analyses of technological forces involve the discussion of political forces.
Governments continually attempt to alter the functioning of specific markets. Each firm’s industry structure is subject to government intervention in response to externalities or third-party effects and monopolistic pricing. Yet many governments have recently engaged in liberalization programs with privatization and deregulation in the hope of stimulating economic growth and particularly the productivity improvements that underlie it. Meanwhile, a government’s fiscal, monetary, and exchange rate policies determine the economic environment within which the firm operates.
Public policies differ among nations, and these differences can impact the firm’s trade and investment decisions. Some public policies interfere with business strategies, while others can support and assist the firm.  Many countries have been altering their public policies in order to attract more international investment. Some have created special economic zones or high-tech corridors within which investors are promised particularly attractive public policies. In view of these situations, a firm can create a competitive advantage through its ability to relate with and adapt to the political process in each country. Furthermore, a firm may be able to influence the process of making laws and regulations, both directly in its lobbying of politicians and civil servants and indirectly in its communications with NGOs and the public. Consequently, it is important for firms to develop nonmarket strategies that underlie and are integrated with their market strategies. Government policies that traditionally were regarded as “domestic” have now become of international importance, as they can distort price ratios and, hence, trade patterns or even act as trade barriers. However, trade and investment agreements contain provisions that place constraints on each signatory’s public policies for the purpose of creating a level international playing field.
For MNEs, relevant public policies include ownership, regulation, taxation, and subsidies, all of which impact business strategies and management.  Most nations have created impediments to certain types of investment. In some nations, the use of price regulations can alter projected rates of return. In others, businesses may confront sanctions, screening agencies, or continual government intervention in business decisions. Some, such as Venezuela under Chavez, are implementing new restrictions on foreign investment. Yet in recent years, many nations have implemented liberalization reforms that reduce the degree of government intervention in order to stimulate economic growth. China, India, and Eastern Europe illustrate the challenges and opportunities created by liberalization reforms.
Many nations have devised schemes to offer foreign investors special incentives. They seek to attract not only foreign capital but also advanced technologies and managerial skills. As early as 1979, China created special economic zones with modern infrastructure and tax concessions. Many nations have copied this model. Some, such as Malaysia, have focused their zone on the attraction of high-tech firms. Meanwhile, the relatively advanced nations have been striving to retain jobs in the context of corporate “offshoring” to low-wage countries, and some have created special subsidy programs for this purpose. However, such government policies may conflict with provisions of trade and investment agreements, such as the World Trade Organization.
For some issues, a new trend has developed in the creation of international, rather than national, public policies. The protection of intellectual property requires that all nations adhere to a consistent set of government rules. The physical environment is a global phenomenon as the pollution of each country becomes the pollution of all countries. In this context, some businesses may be tempted to reduce costs by shifting their investment locations to countries that have lower standards or poorer enforcement.  Competition or antitrust policy now needs to be based on international market behaviour rather than just national market behaviour.  The internationalization of financial institutions has led many to advocate global regulations. This new interconnectedness within the global economy is shifting certain public policies toward an international level, but how these international agreements should be formulated and enforced remains a subject for debate.
Trade and investment disputes are a continual threat for MNEs. In particular, China’s rapid and substantial expansion throughout the global economy has created a host of concerns about unfair competition and distortions that prevent the creation of a level playing field. Sanctions can suddenly disrupt established trade and investment patterns. Some nations see the growth of sovereign wealth funds as a potential danger to their own national sovereignty, leading to pressures for new protectionism. In the context of these new developments, managers must learn how to deal with the ongoing transformations in the environment of business.(IVEY BUSINESS JOURNAL)

THE EXTERNAL ENVIRONMENT:AN INTRODUCTION

External Environment: introduction to the external environment
Introduction
A business does not operate in a vacuum. It has to act and react to what happens outside the factory and office walls. These factors that happen outside the business are known as external factors or influences. These will affect the main internal functions of the business and possibly the objectives of the business and its strategies.
Main Factors
The main factor that affects most business is the degree of competition – how fiercely other businesses compete with the products that another business makes.
The other factors that can affect the business are:
  • Social – how consumers, households and communities behave and their beliefs. For instance, changes in attitude towards health, or a greater number of pensioners in a population.
  • Legal – the way in which legislation in society affects the business. E.g. changes in employment laws on working hours.
  • Economic – how the economy affects a business in terms of taxation, government spending, general demand, interest rates, exchange rates and European and global economic factors.
  • Political – how changes in government policy might affect the business e.g. a decision to subsidise building new houses in an area could be good for a local brick works.
  • Technological – how the rapid pace of change in production processes and product innovation affect a business.
  • Ethical – what is regarded as morally right or wrong for a business to do. For instance should it trade with countries which have a poor record on human rights.
Changing External Environment
Markets are changing all the time. It does depend on the type of product the business produces, however a business needs to react or lose customers.
Some of the main reasons why markets change rapidly:
  • Customers develop new needs and wants.
  • New competitors enter a market.
  • New technologies mean that new products can be made.
  • A world or countrywide event happens e.g. Gulf War or foot and mouth disease.
  • Government introduces new legislation e.g. increases minimum wage.
Business and Competition
Though a business does not want competition from other businesses, inevitably most will face a degree of competition.
The amount and type of competition depends on the market the business operates in:
  • Many small rival businesses – e.g. a shopping mall or city centre arcade – close rivalry.
  • A few large rival firms – e.g. washing powder or Coke and Pepsi.
  • A rapidly changing market – e.g. where the technology is being developed very quickly – the mobile phone market.
A business could react to an increase in competition (e.g. a launch of rival product) in the following ways:
  • Cut prices (but can reduce profits)
  • Improve quality (but increases costs)
  • Spend more on promotion (e.g. do more advertising, increase brand loyalty; but costs money)
  • Cut costs, e.g. use cheaper materials, make some workers redundant
Social Environment and Responsibility
Social change is when the people in the community adjust their attitudes to way they live. Businesses will need to adjust their products to meet these changes, e.g. taking sugar out of children’s drinks, because parents feel their children are having too much sugar in their diets.
The business also needs to be aware of their social responsibilities. These are the way they act towards the different parts of society that they come into contact with.
Legislation covers a number of the areas of responsibility that a business has with its customers, employees and other businesses.
It is also important to consider the effects a business can have on the local community. These are known as the social benefits and social costs.
A social benefit is where a business action leads to benefits above and beyond the direct benefits to the business and/or customer. For example, the building of an attractive new factory provides employment opportunities to the local community.
A social cost is where the action has the reverse effect – there are costs imposed on the rest of society, for instance pollution.
These extra benefits and costs are distinguished from the private benefits and costs directly attributable to the business. These extra cost and benefits are known as externalities – external costs and benefits.
Governments encourage social benefits through the use of subsidies and grants (e.g. regional assistance for undeveloped areas). They also discourage social costs with fines, taxes and legislation.
Pressure groups will also discourage social costs.
 from tutor2u

Management and Motivation

The following material on being a manager primarily takes the perspective of the manager in a large bureaucracy. In these the manager has a number of direct “reports”, people who report to the manager and usually for whom performance evaluations are done. The concepts apply also to the manager of an organization in its early life cycle stages where the manager acts as more of an entrepreneur.
Understanding Others
People, in the course of living, confront five basic questions about their lives. These questions are:
1.      How do I see the world?
2.      How do I use time and space?
3.      Who am I?
4.      What do I do?
5.      How do I relate to other people?
Answers to these questions vary among societies, and in a broad sense determine how people in a given society experience life.
How Do I See the World? This question deals with the person’s relationship to the environment. Reflecting even more basic assumptions about the relationship of humanity to nature, this question addresses whether people view the relationship as one of dominance, submission, harmony, or finding an appropriate niche. For example, in Canada and the United States the dominant culture has seen the natural environment as something to conquer and exploit. This outlook is beginning to change, however, as exemplified by the Green movement.
How Do I Use Time and Space? The focus here is on the nature of reality, time, and space. Questions are what is real and what is not, what is a fact, how truth is ultimately to be determined, and whether truth is revealed or discovered. Basic concepts are those of time as linear or cyclical, space as limited or infinite, and property as communal or individual.
Time is typically experienced in Western societies as linear. The past, present, and future are assumed to be all on one time line. Time is often measured with great precision. At the Boulder Colorado Labs the atomic clock measures time to billions of a second.
Other societies and cultures experience time differently. The present may be thought of as just the current one of many cycles or loops of time. Time repeats in a series of endless cycles. Therefore, what one does this minute, today, or tomorrow is not seen as having great urgency.
Concepts of space also differ by culture. What a house looks like and how people live in it is important because house design and living space affect how people see themselves and think about themselves.
Who Am I? This fundamental question deals with the nature of human nature. What does it mean to be human, and what attributes are considered intrinsic or ultimate? Is human nature good, evil, or neutral? Are human beings perfectible or not? In some cultures life and death are seen as determined and preordained people are not in control of their own destiny. For example, the caste system in India, although outlawed, can rank members of society, fix one’s destiny, and define what occupation one must enter.
What Do I Do? What is the right thing for human beings to do, on the basis of the above assumptions about reality, the environment, and human nature? Should one be active, passive, self-developmental or fatalistic? What is work and what is play? Western culture makes the general assumptions that people should be active, responsible for their own actions, that it is right to work, and that work and play are different.
How Do I Relate to Other People? The key here is the nature of human relationships. What is considered to be the right way for people to relate to each other, to distribute power and love? Is life cooperative or competitive; individualistic, collaborative, or communal? Is it based on traditional lineal authority, law, or charisma? Cultures can give status for age (respect your elders), skills (a surgeon), actions (scoring goals in the NHL), or possessions (the car a person drives).

Cultural Dimensions

There are five cultural dimensions that help us understand how societal cultures differ from one another.
1.      Power Distance
2.      Individualism/Collectivism
3.      Masculinity/Femininity
4.      Uncertainty Avoidance
5.      Long-term Versus Short-term Orientation
Power Distance. Power distance is the extent to which the less powerful members of society accept that power is distributed unequally and accept the orders of those in power. The People’s Republic of China (PRC) would be high in power distance, Canada and the United States, low.
Individualism/Collectivism. In individualistic cultures people tend to look out for themselves and their family, they prefer to act as individuals. In collectivistic cultures people look out for each other; they prefer to act as members of groups. Canada is more individualistic; the PRC and Japan are more collectivistic. However, Canada may be seen as more collectivistic than the United States, as evidenced by Canada’s relatively greater emphasis on commonly available medical care and the predominance of public institutions of higher learning (rather than a mix of public and private).
Masculinity/Femininity. Masculine cultures value success, money and material possessions, assertiveness, and competition. Feminine cultures value caring for others, warm personal relationships, solidarity with others and quality of life. The United States and Canada are high on masculinity, whereas Iceland is more feminine.
Uncertainty Avoidance. This is the extent to which people in the society want to avoid situations where they are not certain what action is required. People in high uncertainty avoidance cultures prefer structured over unstructured situations. Cultures high in uncertainty avoidance tend to have strict laws and punishments and a feeling of “What is different is dangerous.”  Saudi Arabia and Singapore have high uncertainty avoidance, Canada and the U.S. are moderate, and Denmark is low on this variable.
Long-term Versus Short-term Orientation. Cultures with a long-term orientation value future-oriented behaviours such as persistence and saving money. Short-term orientation cultures have values oriented more towards the past and the present such as respect for tradition and the fulfilling of social obligations.
Organizations that have members from cultures that are very high or low on these dimensions have specific advantages.
1.      Those from small power-distance cultures are likely to accept responsibility, while those from large power-distance cultures are likely to be more disciplined.
2.      Those from high collectivism cultures tend to show employee commitment, while members of high individualism cultures can be mobile, allowing the hiring of experts away from other organizations.
3.      Those from cultures high in femininity are able to provide personal services and custom-made products, while those in masculine cultures may excel in mass production and heavy industry.
4.      Those in weak uncertainty-avoidance cultures are good at innovating, while those in strong uncertainty-avoidance cultures are better at precision manufacturing.
5.      Those from long-term orientation cultures tend to excel at planning and activities where returns are high but delayed, while those from short-term oriented cultures can succeed in quickly changing environments.
One theory of intelligence states that each person has a unique combination of amounts of eight different types of intelligence. The eight types are linguistic (ability with words), logical-mathematical (reasoning and pattern-recognition), musical (including pitch, tone, melody, and rhythm), bodily kinesthetic (ability to use one’s body in skilful ways), spatial (perception of a three-dimensional world), interpersonal (understanding others), intrapersonal (understanding oneself), and naturalist (understanding the natural world).
The implication of this theory is that these intelligences should be developed and that people with different profiles should work in areas suitable to their strengths.
Analyses of the answers to intelligence tests have found the factor of general intelligence, g, and a specific factor s that measures intelligence for a particular test. While general intelligence cannot be improved in the short term, specific test intelligence can. There is clear evidence that IQ is determined genetically, at least in part. A good estimate for the genetic contribution to intelligence is 50% to 70%. The other influences on intelligence are the environment and organic factors. The environment might include such factors as the amount of stimulation received by a child, the toys available for play, and culture exposed to as a child. An example of an organic factor is any drugs taken by the mother while the child is developing in the uterus.
Personality is a stable set of tendencies and characteristics that determine those commonalities and differences in people’s psychological behaviour (thoughts, feelings, and actions) that have continuity in time and that may not be easily understood as the sole result of the social and biological pressures of the moment.

Gender

A foundation of an individual’s personality is gender. Gender is more than a person’s biological sex. It is the sex role taught in a particular culture. One study found that 27 of 33 world cultures sampled attempted to get more nurturance out of girls than boys and none attempted the reverse. Another finding was that 70 of 82 cultures gave boys more training in self-reliance than girls and none attempted the reverse. A study of children in six cultures (U.S.A., Mexico, Kenya, India, Japan, Philippines) found that boys were more aggressive than girls within each culture. This is the genetic influence. However, they also found that the girls of some cultures were more aggressive than the boys other cultures. This is the cultural/environment influence. Gender differences in aggression have been found to be stable over time and that men are more aggressive than women.
Parents treat boys and girls differently. In North America it has been found that both parents encouraged sex-typed activities, though these differences decreased as the child grows up. Boys in Western countries received more physical punishment than did girls. Significantly, fathers treated boys and girls more differently than did mothers. Fathers were more involved with sons and provided support with activities, whereas mothers supported both sons and daughters emotionally.

Theory X/Theory Y

The Theory X/Theory Y approach of Douglas McGregor can serve to categorize how people think about the basic motivations of others. Some managers take the point of view that others value work for its own sake and do not have to be monitored closely. This is the humanistic Theory Y view. Other managers might take the Theory X perspective that people basically don’t want to work, and that employees have to be watched continually to make sure they keep to their jobs. 
Theory X/Y has been used as a tool to understand the attitudes and actions of managers. It can also be used in organizational training to sensitize managers to their basic theory of personality in the hopes of moving all managers to the more humanistic Theory Y outlook. This approach, however, may be culturally constrained. Theory X/Y relies on the cultural value of individualism, which may hold in North America but is less true for the peoples of East Asia.

Trait Theory

This approach to understanding personality focuses on observable personality characteristics or traits. After years of research, a model of personality as composed of five main factors has emerged. The five broad personality traits are as follows.
1.      Extroversion/Introversion. Extroverts are oriented toward the outer world of other people and activities. Introverts are oriented toward the inner world of their own thoughts and feelings.
2.      Friendliness/Hostility. Friendly people are open to interaction with others and expect positive results. Hostile people look for and expect confrontation.
3.      Conscientiousness. A conscientious person is responsible, performing actions that were agreed to.
4.      Neuroticism/Emotional Stability. An emotionally stable person has a firm grasp on the reality of situations. Such an individual reacts in a steady way, not riding a roller coaster of emotions.
5.      Intellect. This factor is composed of inquiring intellect, openness to new feelings and thoughts, cultural and creative interests. It has also been thought of as creativity.

Influences on Personality

Four main influences on an individual’s personality are genetic/biological, social, cultural, and situational factors.
The study of genetic effects on personality is accomplished by assessing identical twins that are brought up by different families. One such study found that identical twins reared apart are about as similar as identical twins reared together on multiple measures of personality and temperament, occupational and leisure-time interests, and social attitudes. Heredity therefore has an effect on an individual’s personality.
Culture and social class affects personality via group membership and socialization experiences. The family has an effect on a person’s personality, but members of one family will often be dissimilar. Siblings will be unalike because of differences in genetic makeup and birth order, the age of the child when an event occurs (for example, a death in the family or divorce), the child’s gender, the child’s physical appearance (attractive children are often favoured), and experiences that are unique to the individual.
Situational influences on personality include temporary body conditions such as fatigue and ingested chemicals. Examples of chemicals consumed are the caffeine in coffee, nicotine in cigarettes, mood altering drugs such as stimulants and depressants, and performance-altering drugs such as steroids.

Personality Traits and Behaviour

Both personality traits and the situation interact to affect behaviour.
1.      In relevant situations traits can influence behaviour. In a threatening situation a person who is anxious is liable to fidget, break into a cold sweat, or run from the scene.
2.      A person’s traits can change the situation. An individual who is aggressive can act in a way that causes conflict with others. The aggressive employee in a performance review may make statements to the manager that inflame the situation and cause the manager to react with defensiveness or aggression.
3.      People with different traits will choose different situations. Those who are introverted, for example, will often choose to be in a quiet place like a library instead of a noisy place like a party.
4.      Traits can change with persistent exposure to a situation. Going to college and living in the student environment has been found to change a person to be less conservative.
5.      Personality traits are more easily expressed in some situations than others. It is easier to be yourself at a picnic than at a funeral. The picnic has fewer rules about how to behave than does the funeral. Extroverts and introverts would act similarly at a funeral but would be expected to act quite differently at a picnic.
Beliefs are what an individual accepts to be true without questioning. Beliefs that endure over time are called values. Feelings are sentiments or the emotional component of beliefs. Beliefs plus feelings make up an individual’s attitudes. For example, a belief accepted without questioning can be that managers should make the decisions. This becomes over time a value, that a good manager is one who makes the decisions that are required. A related feeling could be that “this manager makes me uneasy because he keeps asking me what I would do”. The resulting attitude might then be “I don’t like working for my manager”.
The primary purpose of attitudes is knowledge of how to act with respect to another person or object. Attitudes are important in organizations because they affect behaviour. Three parts of work attitudes are the affective – what the person feels about work; the cognitive – what the person thinks about work; and the intentional – what actions the person is planning to do at work.
Job satisfaction is affected by both the work environment and by the worker’s individual characteristics. It has been estimated that the individual’s personality accounts for between 10% and 30% of his/her job satisfaction, that 40% to 60% of the variance in job satisfaction is caused by situational factors, and that the interaction between personality and the situation accounts for between 10% and 20%.
One situational factor that affects job satisfaction has been found to be wage inequality and dispersion. The greater the dispersion of wages, in general, the lower is satisfaction with those wages.
When an individual is faced with an inconsistency between two thoughts or between a thought and an action, such dissonance would have to be resolved. A person might take any of the following actions.
1.      Forget about the inconsistency or ignore it as unimportant. Dissonant acts are likely to induce cognitive change only when they relate to the person’s self-concept.
2.      Seek information that makes actions and attitudes seem more consistent. This information is useful to rationalize away the dissonance. A consumer who purchases a new and expensive CD player might have conflicting thoughts about enjoying the player but missing the money. Information about the quality and features of the CD player might then be scrutinized to reduce the dissonance about the purchase.
3.      Distort or change the perception of the situation and actions taken. Memory will be adjusted to reduce the inconsistency between thought and action.
4.      Separate actions and attitudes in the mind. By compartmentalizing them, inconsistencies can be avoided.
5.      Change the attitude about the event. The worker might come to believe that the job is more interesting than previously thought. In this case performing the behaviour has caused a change in attitude.
6.      Leave the situation. This method of reducing cognitive dissonance is likely when dissonance has built up over time and leaving is relatively easy. It may also be used when an attitude-behaviour inconsistency is too large to reduce by the other methods.
Cognitive dissonance is useful in understanding what a person thinks about work and the courses of action that a particular person might follow.
Because job dissatisfaction often leads to thoughts of quitting and the intention to quit, these feelings about work have important organizational consequences.  

Managerial Roles

The competing values model of organizational effectiveness has two underlying dimensions. They are the degree of emphasis the organization places on flexibility or control and the organization’s internal or external orientation. Managers in organizations using these four different models of what it is to be effective will be asked to take on different roles.
Internal Process. There are two managerial roles within the internal process model. The coordinator role is most like that of the classical manager. Competencies are planning, organizing, and controlling. The manager is dependable, reliable, and maintains structure. In the monitor role the manager is a technical expert and receives, evaluates, and reacts to information about internal organizational processes.
Rational Goal Model. The director and producer roles of the rational goal model focus on the manager’s attempts to maximize organizational output. These roles are especially important when the manager is dealing with subordinates and is attempting to motivate their behaviour toward the accomplishment of organizational goals. The director sets goals and delegates tasks in the attempt to best organize and guide the work. The producer manager is more likely to be actively involved in the organization’s work while attempting to motivate employees to produce more output in less time.
Open Systems Model. Managers operating in organizations with an open systems model of effectiveness are more used to change and are more oriented to external relations with the people and organizations that accept the organization’s product. The broker builds a base of power inside and outside the organization and engages in a great deal of discussion and negotiation with others. The innovator is more oriented to being flexible, thinking creatively, and managing the constant change that is required in this type of organization.
Human Relations Model. Managers in organizations subscribing to the human relations model are oriented towards the development of their people, as individuals and in teams. In the mentor role the manager attempts to help subordinates develop as individuals, to understand themselves and others, and to learn to communicate well with others. More highly developed employees will be capable of greater flexibility as the organization and its environment change. The facilitator role is more group oriented, with the manager acting as a team builder, helping to manage conflict within and between groups, and helping the group to make decisions.
These eight managerial roles are a useful starting point for understanding what managers do. A particular manager may concentrate activities in only one of the eight roles. But the other roles will also compete for attention because effectiveness cannot be fully described by only one orientation. Therefore, someone who expects to be a manager will need to be competent in all these roles, but to different degrees and at different times in different organizations.
What is it like to be a manager? There are six defining characteristics of managerial work.
1.      The manager performs a great quantity of work at an unrelenting pace. Work hours are long and constant. After office hours, managers read material related to work.
2.      Managerial activity is characterized by variety, fragmentation, and brevity. Many unscheduled meetings, telephone calls, and reactions to the day’s crises produced a day broken into a large number of activities of short duration.
3.      Managers prefer issues that are current and. They prefer to deal with issues in real time and on the spot. They like to take action at the time they are confronted with the problem.
4.      The manager sits between the organization and a network of contacts. An important activity of managers is to communicate with a wide variety of people outside the organization. Clients, suppliers, peers, outside experts and officials of other organizations have to be communicated with because they supply information relevant to the operation of the organization.
5.      The manager has a strong preference for the verbal media of using the telephone and having meetings over using the mail. Building and maintaining a personal relationship with others both inside and outside the organization is crucial, and requires personal contact.
6.      Despite the preponderance of obligations, managers are able to control their own affairs. The manager has to react to requests and communications and must attend meetings, but can choose over the longer term how to spend his or her time.
The nature of the managerial job differs by culture and country. In Canada and the United States, the manager is considered more of an equal by those lower in the organizational hierarchy. The manager is therefore not expected to have all the knowledge required to make all decisions, or indeed even to make all work decisions. In Japan the manager is more of a parental figure to the group, is seen as more knowledgeable and in control, and takes a personal interest in both the work and personal lives of employees. In Italy the manager is expected to have the answers to the questions subordinates have about their work.
Managing the Individual
Motivation
The motivation of individuals at work is one of the most important jobs of a manager. What makes someone come to work and apply effort towards getting the task accomplished? What makes someone decide not to come to work? People work to better the world, be part of a team, and achieve technical excellence.
Managers need to understand the different forces that act on an individual. Then the question of how to exert influence on those forces may be addressed. At that point the manager can attempt to influence the behaviour of organizational members so that it is directed towards accomplishing the organization’s tasks.
Motivation can be defined as the attention paid, effort exerted, and persistence of behaviour.
A number of theories of human motivation have been proposed over the years. Motivation is a useful device to think about why people do what they do.

Maslow’s Hierarchy

In what is probably the most widely described theory of human motivation, Abraham Maslow proposed that humans have a built-in set of five basic needs, and that these needs form a hierarchy. He described the five needs (from lowest to highest) as physiological – the most basic human need for air, food, and water; safety – the need to be safe from physical and psychological harm; social – the need to be accepted, loved, and to belong to a social system; esteem – the need for recognition and prestige given by others; and self-actualization – the need to become the best that one is capable of becoming and to be self-fulfilled.
In this theory each lower need in the hierarchy must be satisfied before the next higher level need takes effect. To use this model of human needs, a manager attempting to build a group at work would want the esteem needs of group members to be dominant. The manager would therefore have to make sure that physiological and safety needs were met. This would be done by paying a living wage and providing a safe and secure work environment.
Maslow also proposed that when a lower-level need was not fulfilled, it would again be activated. An individual at work who is concerned with the recognition of others has his or her esteem needs activated. If this job were lost the person would be expected to revert back to the physiological need to obtain food and would then be unconcerned with esteem.
This hierarchy is a useful though very broad way of understanding the behaviour of people. There are certainly exceptions to the fixed movement up and down the hierarchy of needs. An example is the starving artist who fulfills the self-actualization need but not physiological needs. Also, more than one category of need could affect an individual’s behaviour at a given time. People at work could, for instance, be concerned with social and esteem needs at the same time.
In addition, it is clear that Maslow’s hierarchy relies on the Anglo-American cultural emphasis on the individual. Other cultures may have different hierarchies of needs. For example, in the People’s Republic of China the group is of great importance to the individual. Belonging is therefore the primary need. It cannot, therefore, be assumed that people from all the cultures of the world share the same basic built-in needs. Need hierarchies can be expected to vary by culture depending on each culture’s values. The manager of organizational members from different cultural backgrounds has to remember that everyone does not share the same way of looking at and understanding a situation. Their needs may be different even in the exact same work conditions.

McClelland’s Theory of Needs

A second theory of needs is by David McClelland. In this theory, individuals are thought to vary in their drive to gratify six basic human needs. These are the needs for achievement, power, affiliation, independence, esteem, and security. The need for achievement has been extensively studied. The theory is that people will accomplish the most when they have a high need for achievement. They will select goals that are medium in difficulty – goals that are challenging but not impossible. Those low in need for achievement will select goals that are either low in difficulty and therefore easy to accomplish or very high in difficulty. Failure to achieve such extremely high goals would therefore be expected.
An interesting finding of McClelland’s work is that need for achievement varies among nations. On a practical level, McClelland has proposed that the populace of entire nations could be trained to be higher on need for achievement. Then, over time, these needs would manifest themselves as people chose more difficult goals and worked to achieve them. The economy of a whole region could be positively influenced in this way.

Equity Theory

One way that people at work examine their situation is by comparing what they put into and get out of the job to the inputs and outcomes of another. Inputs could be hours worked, education, experience, etc. Outcomes could be money, status, job level, etc. This comparison is shown in the form of a ratio.
Note that outcomes to inputs for the self is NOT set as equal to outcomes to inputs of the other. Equity theory is activated when there is a difference in the two ratios.
Outcomesself/Inputsself :Outcomesother/Inputsother
If the ratio of self-inputs to outcomes is similar to the ratio of the comparison other’s inputs to outcomes, equity (or harmony) is not disturbed. However, when inequity is perceived to exist the individual perceiving the inequity is motivated to restore balance. Note that this is an individual’s perception of inequality. Others could well see the same situation as being equitable.
People can restore equity in many ways. If the self outcomes-to-inputs ratio is less than that of the comparison other, the person could seek more outcomes (typically more pay); reduce inputs into the job (work less hard, take longer breaks); attempt to reduce the other’s outcomes (“If you can’t pay us the same, then pay my co-worker less”); decide that the other really has more inputs that balance the equation (“She really works harder than I do”); decide that the comparison is being made with the wrong person (change the comparison other in the equity equation); or quit the job.
Employees often feel a strong need for equity. Managers seek to create a social situation where inequity is not felt, at least by those employees the manager wishes to keep on the job. What is important is the feeling of equity and not the absolute value of inputs or outcomes. Even professional baseball players earning millions of dollars a year can genuinely feel mistreated when comparisons with their peers show their situation to be inequitable.
Salaries and benefits in North America are often kept secret in order that the information necessary to determine equity is not available to the individual. This pay secrecy is often not possible, however, for government or union jobs where pay rates are known. In Japan and Korea pay increases are not usually widely different for different members of a work group. Keeping everyone at the same level earning about the same pay means that equity and harmony are maintained. Slow promotion in these Far East cultures allows the truly superior performers to be recognized over the long term. By then all members of the group have come to the same conclusion that the inputs of these superior performers are indeed greater than the inputs of others.
If the ratio of outcomes to inputs for the self turns out to be greater than that for the other, working harder or changing the perceived level of self-inputs can resolve this overpayment inequity. In an individualistic work culture, it does not usually take long for someone in overpayment inequity to decide that the level of self-inputs is actually higher than previously thought and for internal balance to be restored

Expectancy Theory

This motivation theory is one of cognitive choice. It proposes that each individual at work examines his or her own personal work situation and makes a decision about how much effort to exert in the pursuit of work success. The formula for this calculation is
Effort = E å I * V
In this formula, effort is the motivation of the worker to exert effort on the job. E is the worker’s expectancy that effort will result in job performance. Expectancies are probabilities, ranging from 0 to 1, that effort will result in performance.
The å (capital sigma: the summation sign) indicates that effort is affected by a range of possible work and non-work outcomes that might result from job performance. The decision of how much effort to exert on a task depends on the consideration of several outcomes. It is very important to recognize that it is the individual who decides what outcomes are related to job performance and what valences and instrumentalities to assign to each of the outcomes. Finally, examining the expectancy theory equation, it is clear that if expectancy is low, then no matter what outcomes are considered and how high their valences, effort is predicted to be low.
The instrumentality of job performance to a work or non-work outcome is I. Instrumentalities can range from -1 to +1. They indicate the perceived connection in the mind of the individual worker that performance will lead to a given outcome. An instrumentality of +1 would mean that performance is certain to lead to the outcome. For example, a real estate agent selling a house is certain to receive a commission. The instrumentality between these two events is therefore +1. An instrumentality of -1 means that performance ensures another outcome is certain not to occur. For example, when a contractor completes a building on time, a late penalty will not be invoked. The instrumentality between on-time building completion and late penalty is -1. Instrumentalities equal to or near zero mean that no connection is perceived between job performance and outcomes. They in effect become zero in the expectancy equation and do not affect the decision about work effort.
V is the valence or anticipated satisfaction of an outcome. Valences can be positive or negative, small or large, and are attached to each outcome considered by the individual. When expectancy theory is represented in equation form, valences are often defined to vary between -10 and +10. This choice of units is arbitrary. Large anticipated satisfactions (high positive valences) and large anticipated dissatisfactions (high negative valences) when multiplied by associated instrumentalities and performance expectancy will have a large effect on the motivation to exert effort on the job.
To use expectancy theory in an attempt to increase each individual worker’s motivation to exert effort, a manager can focus on each of the theory’s components.
1.      The manager can aim to increase the worker’s expectancy that effort will result in performance. Success on the job will increase E as will job-related training and the provision of the tools needed to do the job. The individual at work needs to see that performance is possible. Also, performance must be accurately perceived and measured for the individual worker to maintain a high Effort àPerformance expectancy.
2.      The manager can find out what outcomes people consider important, whether they are positively or negatively valued, and how they are affected by work performance. Perhaps these outcomes and values can be re-evaluated based on the manager’s knowledge of the experiences of other employees. For example, the chances of a promotion may be higher than an employee thinks and the benefits of the promotion may be higher than anticipated by the employee. Also, the manager may know of other outcomes resulting from work performance that would be valued by the employee. Managers usually have at their disposal a variety of rewards that go beyond those anticipated by the employee. These can be made available as outcomes that will follow work performance.
3.      Finally, the manager can attempt to increase the valence of outcomes that are closely tied to job performance and to increase the instrumentality of outcomes that have high valence for the individual. Perhaps an employee can be convinced that the rewards available from work have more value than previously thought.

Goal Setting

The theory of goal setting is fairly simple, although based on thousands of studies. The following four “rules” of goal setting can be used to self-set goals or to help others with their goals. As a manager of others it is important to make sure the person’s work goals follow these rules and that feedback is given to the worker.
1.      Difficult goals will produce higher performance than easy goals.
2.      Specific difficult goals will produce higher performance than will no goals or “I’ll do my best” kinds of goals.
3.      Goal setting with feedback on goal attainment will produce higher performance than goal setting alone.
4.      Employee participation in goal setting will help to produce higher performance than no participation when goals that are set participatively are higher than assigned goals.
Some organizations have instituted formal goal-setting procedures for use organization-wide. These plans, called Management By Objectives (MBO), can be effective if the goals set are specific and difficult, are accepted by organizational members, and feedback is provided about goal accomplishment.
Individuals can use goal-setting principles to manage themselves. The interested reader might like to try setting a specific and difficult goal and then charting progress toward it. The key is to select a goal that is not too far in the future and to be very specific about exactly what the goal is.

Classical Conditioning

The Russian scientist Ivan Pavlov demonstrated that the sound of a bell could make a dog salivate. First, Pavlov rang the bell while food powder was placed in the mouth of the dog. Then, after a series of these pairings of food and the bell, the dog learned to salivate (which, of course, is the dog’s natural response to food) at the sound of the bell whether or not food was actually present.
There are also occasions when classical conditioning is found in the workplace. The lunch bell or factory whistle at quitting time can produce the conditioned responses of salivating/eating or leaving the factory. The sound of a warning horn on a forklift truck, if paired with the adrenaline released into the body to help avoid danger, can later produce the adrenaline push even when danger is not present. If the air quality in an office building is poor and gives people headaches, the act of going to the office can trigger the headache even before the poor air quality has had an actual physical effect.

Operant Conditioning

The shaping of behaviour requires that target end behaviour is known and that the person being shaped can exhibit successive approximations to that end behaviour. For example, a salesperson may be taught how to deal with customers by working with a trainer. This instructor has a predetermined image of the desired sales behaviour in mind. The trainer rewards the trainee when a customer is served in a way that is closer to the ideal than was the service to the previous customer. For shaping to be successful, the person being shaped must be able to generate the target behaviour and must value the reward being offered to learn the new behaviour.
In reinforcement theory, behaviour (the operant) by the subject is followed by a reward or a punishment in order to make the behaviour more likely or less likely. The general and most important principle of reinforcement theory is that people will do what they are rewarded for doing and will avoid doing what they are punished for doing. Rewarded behaviour is more likely to occur in the future.
A simple example is why a person goes to work. What is the reward for attendance? One answer is usually the money paid for attendance. But some jobs are not paid positions. These include volunteer work in a hospital or serving on the board of directors of a charity. Whether a position is paid or unpaid, it may provide rewards such as membership in a work group, doing interesting work, or providing learning and experience that will be valuable in a future job. Without a reward for being a member of an organization or group, people simply stop attending.
Each individual person decides on what is rewarding or punishing.
A great deal of research has been done by psychologists on how best to reinforce behaviour, in terms of the amount and timing of rewards. A strong finding is that rewards and punishments have their greatest effect when they closely follow behaviour. When the separation between behaviour and outcomes is too long, the connection between behaviour and stimulus can be lost.
Other work has shown that different schedules of reinforcement affect how quickly a behaviour is learned and how long it takes before it disappears when it is no longer rewarded (called extinction). Four reinforcement schedules are fixed interval, fixed ratio, variable interval, and variable ratio.
An example of fixed interval is being paid once a month on the last day of the month. A fixed interval schedule of reinforcement will reward a person for being present on the day the reward is due.
An example of a fixed ratio reinforcement plan is being paid 50 cents for every unit produced. The ratio in this case is fixed at 1:1. If a $10 bonus were paid to an employee for every tenth customer who applies for a company credit card, the ratio would be fixed at 1:10. It would be paid immediately after the tenth order. A fixed ratio schedule will motivate a person to work hard when the reward is near (“Only three more orders to go!”) but not when the reward has just been obtained.
A variable ratio schedule would allocate a reward on an average of once for every x times that the behaviour being rewarded were to occur. For example, a salesperson could be paid a $10 bonus for every 25 customers contacted, but the bonus could be paid at any time, not just after the 25th customer. It might be paid after the 10th and 40th customers. The average, however, would be that for every 25 customers the bonus would be paid once. A good example of the variable ratio reward schedule is that of a slot machine, which is programmed to pay jackpots on a determined frequency but could pay a jackpot twice in succession. Think how effective slot machines would be if they operated on a fixed ratio schedule!
A company could be concerned about employees being at work by 8 a.m. It could pay a $20 bonus to every employee at work by 8 a.m. on a given day. If this bonus were awarded on average once in every five days it would be a variable interval reinforcement schedule. The employees would, on average, receive the $20 bonus once for every five days they are at work on time. But the $20 is paid on a variable schedule so that any employee might receive the bonus the 7th and 10th time.
Variable interval and variable ratio reinforcement schedules make the behaviour more constant because the person does not know which behaviour will be the one to be rewarded.
Organizations often provide reinforcements using what is called a token reinforcement plan. In this plan a token (it could be a poker chip, a point, or any other symbolic item) is given after the desired behaviour. Tokens are accumulated and then turned in for a product or service that has value to the person being rewarded. For example, mental health organizations often put patients on a token plan to control their behaviour. Patients then buy food, magazines, etc. with the tokens. Airlines use these principles with their frequent flier plans. Here the tokens are points, which may be turned in later for air travel. However, like all token reinforcement plans, when stopped the behaviour being rewarded will likely stop as well. This is one dilemma faced by airlines over their frequent flier plans – once started they are hard to stop.
When behaviour causes a negative stimulus to be removed, that stimulus is a negative reinforcer. People at work can be motivated to act in a way that gets rid of an already existing unpleasant condition.
Sometimes behaviour by an organizational member is not desired, but not rewarding it will not lead to its extinction. In this case there is some other reward that is reinforcing the undesired behaviour. Therefore, to stop the behaviour a punishment is applied. A punishment is an outcome that is negatively valued by the person. For example, factory time clocks are often programmed to print the time of worker arrival on the time card. When the employee is late, the time is printed in red ink and the employee is docked 1/4 hour of pay (for example) as a punishment. The red ink is the signal of the punishment. Punishment can be a good way to stop the occurrence of an unwanted behaviour, but has some undesirable side effects. For this reason punishment should only be used when the behaviour is one that must be immediately stopped.
One side effect of punishment is that the person being punished can associate the negative consequence with the punisher and may later react against the punisher, someone else, or the company. This side effect is not to be taken lightly. Persons at work who learn to dislike someone who punishes them may take their anger out on the supervisor, co-workers, themselves, or even innocent bystanders.
Another punishment side effect is that the undesirable behaviour will tend to re-occur when the punisher is absent or the person punished feels there is little chance of being caught. To punish effectively, the manager must punish immediately after the undesired behaviour. The desired behaviour must be made clear so that the employee knows what to do, not just what not to do. Finally, it is the action that should be punished and not the person.

Modelling

People learn what to do, what works and what doesn’t work by watching others. This is called modelling. It is a very important form of learning because mistakes do not have to be made before they are corrected and effective behaviours do not have to be learned bit by bit over time. People can learn effective behaviours all at once in great leaps by watching what others do. They can see the whole behaviour all at once. When they learn vicariously by watching others they do not receive the rewards or the punishments that the other may obtain.
The most crucial element in social learning is the role model. Managers can model effective behaviour themselves. For instance, the manager of a life insurance agency could take a new recruit on a series of sales calls to show how the selling is done. A police force could create two-person teams of a junior and a senior officer so that the junior can learn by watching the other. The rookie officer learns by doing and by watching. However, if the role model is showing what the manager would consider to be the wrong way to act, social learning will not be effective.
Managers must understand the importance of rewards in the workplace, the many different types of rewards, and how rewards are made.
There is a wide variety of possible work rewards. These include pay, promotion, the chance to do interesting work, time off, learning opportunities, travel to conferences, etc.
Managers need to:
1.      Determine what is currently being rewarded
2.      Decide what work performance should be rewarded
3.      Develop a wide variety of rewards that can be awarded at the manager’s discretion – the manager controls the reward
4.      Reward desired behaviour within the context of the social situation at work.
Managers in organizations will often create a reward system, especially for the allocation of pay and benefits. These systems are a set of rules regarding how rewards are earned and paid. An important point to remember when considering any system is that if one person can create it, another can figure out how to beat it. Managers have to avoid being caught up in a cycle of adding more rules to the system only to have someone else find the loophole to beat the system, which necessitates the addition of still more rules and so on.
Some newer approaches to reward systems are cafeteria-style fringe benefits, all-salaried teams, skill-based pay, and profit sharing.
The cafeteria-style fringe benefits approach gives employees a budget and allows them to select the benefits they most want from a menu of possibilities. A young single person might select extra vacation days, a parent of young children a dental plan, and an older worker higher contributions to the company pension plan. While such choice of benefits might not motivate job effort or performance, it could make the individual worker more satisfied, less stressed, and therefore be more likely to attend work and stay in the job.
On all-salaried teams everyone is paid a salary instead of some members being on salary and some paid on an hourly basis. The advantage here is that a greater sense of cohesion is created along with the willingness to share tasks.
Employees on a skill-based pay plan are paid a base hourly rate and an additional amount per hour for each job skill they have mastered, whether the skill is currently used or not. This plan promotes flexibility, job rotation, and the constant upgrading of skills.
Finally, there are many different types of profit sharing plans that exist for allocating a portion of company profits to its members. The purpose of these plans is to enhance the employee’s identification with the company’s overall objective by providing the employee a stake in the profits.
Organizations divide their work to be done into tasks, and then combine tasks together into jobs that can each be held by an individual. The way jobs are designed affects the individual jobholder’s internal state and external behaviours of how he or she feels and acts. Managers in organizations are therefore interested in job design as a means of increasing worker satisfaction, motivation, and performance.
There are four main approaches to the design of jobs. The engineering approach is based on work in industrial engineering and scientific management. Its aim is to simplify jobs so that it becomes easy to find and train workers that can do those jobs. The efficiency of the work is the goal of the engineering approach to job design. The person-machine fit approach is based on how people process information and how their basic biology and physiology affect perception and physical movement. Its aim is to improve the fit between person and task so that the reliability of performance is enhanced and the person doing the job experiences less fatigue and stress. The biological approach to job design deals with how people react to the physical conditions experienced in the workplace. Its aim is to reduce the physical stress and strain on the worker so that employee comfort is increased. The psychological approach to job design examines how people think about their jobs, the meaning of the job, and why the job is important. Its aims are to improve the worker’s job satisfaction, motivation to do the job, involvement in the job, and job performance.
Each of these four approaches to job design focuses on a different outcome of work. Each has its own costs and benefits. The manager in an organization could not attempt to use all four approaches at the same time because their recommendations can conflict. For example, jobs can be simplified and made easy for a worker to accomplish adequate and reliable performance, but then these jobs are not likely to offer the depth and challenge that some workers require.

Engineering

Scientific management, work simplification, and time and motion study are the sources of this approach. The engineering method concentrates on the job itself, and not on the person doing the job. It attempts to make the job easier to perform in order to obtain greater efficiency and reliability, make it easier to find and train people to perform the job. Job content is reduced. Any physical and psychological effects on the people doing the job are of secondary importance. Workers are seen mechanistically, as interchangeable parts needed to do the work.

Person-Machine Fit

This is the study of persons in their working environment and is concerned with the fit between the person and the machine. Here the person is considered in the performance of the work, but mostly in the sense of reducing errors that humans are likely to make. The attention and concentration requirements of jobs are designed so that the job does not demand too much of the worker’s physical and mental capabilities.
Common approaches are the design of parts that can be inserted only one way, machines that can be operated only in the most efficient manner, and dials that can be easily read. When a job is designed well in this way, the reliability of job performance should be enhanced. The worker should make fewer mistakes and have fewer job-related accidents. Also, the individual worker should experience less fatigue, stress, mental overload, and boredom on the job.
One important new area of equipment design is that of computer monitors and keyboards. With many employees now sitting in front of video display terminals (VDTs) for long periods of time, any radiation they emit is a health concern. Typing faster and faster on computer keyboards while having few rest breaks is causing repetitive stress disorders such as carpal tunnel syndrome and arm and wrist tendonitis. Several low-stress, flexible keyboards have been designed that require far less finger muscle energy than conventional keyboards and can be split and rotated so that the user’s hands are not in stressful positions.

Biological

This approach focuses on the physical comfort and well being of the person doing the job and on the physical characteristics of the workplace. Job conditions concern where and how the work is done and in what physical environment. Biological job design is concerned with privacy, lighting, air quality, noise, and space.
Privacy. This characteristic concerns visual and speech privacy as well as the physical accessibility of the office. Open-plan or landscaped offices are less private than traditional enclosed offices. Their walls are usually room dividers that can be moved as necessary. Offices are areas of the floor enclosed by dividers and usually do not have a door. The person working in an open office can typically be easily seen and heard, and is readily accessible. Open-plan workspaces may also be made up of workstations or carrels.
Lighting. Most people prefer natural light to artificial light. Natural light contains the full spectrum of colours, and is perceived as warmer and brighter than artificial lighting. Fluorescent lighting can flicker, hum, and cause headaches. Incandescent lights produce a more yellow light than most fluorescents. They are useful for desks because the individual can flexibly direct the light. This is an advantage because people at work like to be able to control the amount of light in their workspace.
Artificial lights can also be concentrated in an array to make a bright panel that mimics the intensity of natural outdoor light. Such a panel can be useful in controlling a form of depression, called seasonal affective disorder, caused in some individuals by a lack of light. Artificial light can also be used to help people working at night in offices or factories to control their body clocks. The body can be fooled into switching night for day, which helps the person to work more effectively at night.
Air Quality. Because many office towers are sealed, fresh air is supplied only through the heating, ventilating, and air conditioning (HVAC) system. Air temperatures are often not controllable in individual offices, so that some employees feel too hot and others too cool to work effectively.
The increasing numbers of computers, laser printers, photocopiers, and fax machines in an office release more chemicals into the air and therefore a greater supply of fresh air is required. When airflow is restricted, contaminants can build up in the air causing allergic reactions among employees.
The sick building syndrome is when more than 20 percent of the people working in the building complain of headaches, dizzy spells, sore throats, itchy eyes, nausea, skin irritations or coughs, and when workers get better 12 to 24 hours after leaving the building.
To reduce the effects of poor office air quality the following prescriptions apply.
1.      The heating, ventilating, and air-conditioning system needs to be examined and cleaned, especially to eliminate molds growing in the ventilation system. Molds and mildews on walls and other surfaces must be cleaned.
2.      More fresh air needs to be drawn into the building. Fresh air intakes must be located away from exhausted air and outdoor pollutants. Tobacco smoke needs to be reduced or eliminated inside the building.
3.      Since paint, glue, and new cloth used in office screens and carpets all give off noxious gases, these need to be cooked off when installed by heating the building to high levels and venting the gases to the outside.
4.      The use of insecticides and volatile cleaners inside the building must be reduced.
Noise. Noise is increasing in offices along with higher numbers of office machines and densities of people working in the office. Installing ceiling, wall, and floor coverings can reduce noise. Another solution is to build walls and partitions that will shield workers from ambient noise. An example of a white noise generator is a machine that projects sounds of waves or rain. With such a generator operating in the office the conversations of others will be heard but the words spoken will be harder to make out. Such conversations will therefore be less distracting.
A more active and high-tech approach is active noise control. Here a microphone is placed near the source of a repetitive noise, the sounds picked up are digitally analyzed and a speaker generates an anti-noise. This anti-noise is made to be out of phase with the original noise so that the two cancel each other out. Noise here is not masked or baffled, but eliminated. For high-noise workplaces where hearing damage is a possibility, special anti-noise headphones can be worn.
Space. The comfort, efficiency, and health of employees are key factors that are influenced by the design of the worker’s physical space and equipment used. Uncomfortable furniture, inappropriately sized work surfaces, sharp-cornered desks, and bookcases with the top shelves out of reach are all symptoms of a poor physical support system. People differ widely in their physical characteristics and equipment designed for the average person suits very few. The trend towards a more diverse work force also increases the need for the careful design of office furnishings and work equipment.

Psychological

In this approach to job design, the mental state of the worker is considered of primary importance in the performance of the task.
Job Enlargement. This refers to the addition of tasks to a job. When tasks are given that add variety to the work and help to break up the day, enlargement is a useful approach. However, if the tasks added are seen by jobholders as more of the same, the enlarged job will not likely increase the worker’s motivation to perform the work. An important aspect of job refers to the number of people with whom the jobholder interacts, who these people are (clients, suppliers, customers, etc.) and how long these interactions typically last. A worker who is in constant contact with the general public and has a job high in number of relationships that last a short time has an enlarged job that is likely to cause stress.
Job Enrichment. This approach builds motivational factors into a job, making the job more complex and challenging. Enriched jobs are expected to increase the jobholder’s motivation to perform, especially if the worker is seeking more of a challenge. Enriched jobs may have increased authority, supervision, management, and decision-making responsibilities. The more these elements exist in a job the higher is its vertical loading.
When a job is enriched to make it complex and enlarged, the job scope is high.
Job Rotation. Job rotation allows the movement of people between jobs. This can help to reduce the boredom associated with performing any one job for a long period of time. In a factory with a number of assembly jobs, personnel can be moved between the jobs on a fixed rotation or on an as-requested basis. Rotation could occur at the end of a relatively long period of time performing one job, a month for example, or could occur on a daily basis. Job rotation is not limited to factory or service jobs. Professionals can be seconded from their home organization to help another organization for a fixed amount of time. An executive might, for instance, be given four months away from the home organization to work with the United Way on its yearly campaign.
One benefit of job rotation is that it has a group cooperative emphasis. Personnel rotated through jobs build personal relationships with others while learning what the others do in their work. A bank management trainee could expect to rotate through a number of different functional areas in bank branches and through branches of different sizes and serving different clienteles before being assigned to head office.
The Job Characteristics Model. This model shows how the characteristics of a job are likely to affect the performance of the jobholder. Jobs can be analyzed for motivating potential and redesigned to be more motivating for jobholders.
Five core job dimensions are:
1.      Skill Variety – the number of skills necessary to do the job
2.      Task Identity – the degree to which the job is done start to finish by one worker
3.      Task Significance – the importance of the job to other people’s lives
4.      Autonomy – the freedom to do the job in the way the job holder wants
5.      Feedback – information about job performance comes from the job itself or from co-workers.
The Job Characteristics Model argues that these five core dimensions of a job affect the psychological state of the individual worker. Psychological state in turn affects personal and work outcomes. The outcomes considered in the model are internal work motivation, quality of work performance, satisfaction with the work, and absenteeism and turnover. The basic prediction of the model is that jobs that are higher on the five core job dimensions will create positive psychological states that will then result in beneficial personal and work outcomes.
Specifically, the more skills that are required to do the job, the more the whole job is performed by the same worker, and the more the performance of the job makes a difference to other people’s lives, the more it is likely to be experienced as meaningful.
Autonomy is expected in the job characteristics model to lead to the psychological state of experienced responsibility for outcomes of the work. The person at work who is free to make choices regarding what to do and how to do it is also likely to feel responsible for the decisions made. The emergency room physician decides how to treat patients and bears the responsibility for what happens to them.
Feedback on the job performed will lead to knowledge of the actual results of the work activities. Sometimes doctors prescribe medication to a patient and never find out what difference the medicine made or even if the patient actually took it. In the emergency room, medication is likely to be prescribed and administered; then the patient’s status is monitored. Feedback from blood samples, blood pressure readings, etc., as well as the patient’s own reports all provide knowledge of the results of actions taken by the emergency room physician.
The Job Characteristics Model proposes that an aspect of the employee’s personality called growth need strength affects the relationship between core job dimensions and work outcomes. GNS is a person’s basic desire to better him or herself. An employee might have a low growth need strength and not desire a motivating job. That employee would be quite content to work in a job low on the five core job dimensions and to experience low meaningfulness, low responsibility, and low knowledge of work results. A worker with high GNS would find such a job non-motivating. Work outcomes are therefore not likely to be high.
There are two other variables thought to affect the relationship between job characteristics and performance. First, if an individual does not have the knowledge and skills required to do a job then even a job high on the core dimensions is not likely to result in better work outcomes. The job can be challenging, but a person who feels unable to effectively perform the job will not feel challenged. The second factor is context satisfactions. If the context of work is disagreeable then the individual worker will probably not be motivated by the job’s characteristics. Motivating potential score (MPS) is defined as:
(Skill Variety + Task Identity + Task Significance)/3 * Autonomy * Feedback
Using seven-point scales where 1 is low and 7 is high; the maximum MPS is 73 or 343. The average MPS for a variety of jobs has been determined to be 128.
If a job is determined to be low on MPS, an examination of the levels of the five factors may identify one that is relatively low and therefore a candidate for change. It is important to remember that MPS is a measure of the characteristics of the job itself, not of how any particular person might perceive the dimensions of his or her job. Job redesign, then, is a general concept. A more specific concept of motivation would be altering a job to better fit a particular person, or modifying a person’s perceptions of a job so that it is seen as more motivating.
Combining tasks to be performed is a way to increase both skill variety and task identity. Building a bigger job out of smaller ones will require more skills and that the worker performs a larger piece of the total work. Work units can be formed that follow natural work clusters, thereby increasing task identity and task significance. This is because the formation of natural work units allows the individual to see the whole job being done and the difference it makes. Building up relationships with clients helps to increase skill variety, autonomy, and feedback.
Vertical loading can also enrich a job so that the jobholder has more autonomy and responsibility for work outcomes. A sales clerk at Mark’s Work Wearhouse, for instance, could be given responsibility for ordering clothing for several product categories and tracking sales and customer response to the product.
 Opening feedback channels can increase the amount of feedback generated by a job. Clients can be asked to report on their experiences. Comment cards are often used for this purpose. Feedback can come from supervisors or from devices used to perform the work. For instance, supermarket checkout scanners can be programmed to report on the number of items scanned in a given period.
After the job has been designed, a job description is created, which is a summary of the tasks and role behaviours for the particular job.(alberta school of business)