Richard L. Daft - Management. 9th ed., 2010

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PART 5 LEADING530

ch17

BIZ FLIX VIDEO CASE

Welcome Home Roscoe Jenkins

Hollywood talk-show host Roscoe Jenkins (Martin

Lawrence) returns to his Georgia home for his par-

ents’ 50th wedding anniversary. Cultures clash

between the big-city Roscoe and other family

members. The culture clash becomes even more

severe because of the presence of his upper-class

 ancée, Bianca Kittles (Joy Bryant), who does not

understand this family and feels superior to them.

Evo’s creative services team is composed of three

full-time members: Tre Dauenhauer, staff photogra-

pher; Pubs One, graphic designer; and Sunny Fenton,

copywriter. Together they produce magazine ads, all

the content for Evo’s Web site, and more.

Before being appointed to the team, Dauenhauer

realized he and One needed to coordinate their efforts

more effectively. One came by Dauenhauer’s desk

one afternoon to ask if he had any cool photos of

fashionable skiers sitting around a picnic table. When

Dauenhauer asked when he needed the photo, One

responded, “today.” Dauenhauer knew he couldn’t  nd

this kind of photo at an online stock agency; he would

have to shoot it. Given One’s last-minute request, there

wasn’t enough time for Dauenhauer to help him.

The team’s individual roles are far from inter-

changeable, even though Dauenhauer might dabble in

design, One may write a few lines of copy, and Fenton

might snap photos on occasion. Their projects require

the individual contribution of all three: cool pictures,

clever words, and a visually compelling design that

brings everything together on the page. They’re com-

mitted to their common purpose and excited about

what they can do together.

When the team  rst launched, they moved into

their own space, away from Evo’s chaotic, open-plan

work areas. Being together every day enabled the

team members to become better acquainted and move

through the “forming” stage more quickly.

Dauenhauer, One, and Fenton needed help navigat-

ing the con ict-ridden, storming stage of their team’s

development. Before joining the team, they functioned

individually and weren’t used to making decisions as a

group or sharing power. Creative types are often inde-

pendent and opinionated; in art school, most students

focus on developing and expressing their creative voices,

which can make for a very competitive atmosphere

where team assignments are essentially nonexistent.

So to help the team members learn to work together,

Nathan Decker, director of e-commerce, became their

team leader. The bottom line is that Decker is the boss.

He makes sure this talented trio delivers the goods and

steers clear of dysfunction. Initially, Evo planned to

hire an experienced creative director with knowledge

of photography and design to lead the team, but it

couldn’t comfortably fund the position.

With Decker’s skillful negotiation of con icts,

Dauenhauer, One, and Fenton are learning how to

communicate with each other in ways that are less

likely to escalate into con ict. Having a leader to

facilitate dif cult conversations has helped build team

cohesiveness.

After the creative services team  nishes each proj-

ect, Decker brings everyone together for a postmor-

tem to go over what they learned and how they could

do things differently. They also identify new routines

and rituals to incorporate into their process.

To work better as a team, Dauenhauer said

they’re  guring out how to speak a common lan-

guage. Instead of making vague and confusing com-

ments such as, “The message needs to be bigger,”

Dauenhauer tries to  nd more speci c feedback, such

as “I think the text needs to pop off the page more,”

or “the message isn’t reading well.”

Eventually, Dauenhauer thinks they’ll need a

leader with a creative background, but for now,

Decker will keep everyone on the express train from

storming to performing.

Discussion Questions

1. What style did the team use to handle con icts

initially? What style(s) are they learning to use?

2. What type of con ict negotiation is Decker using:

integrative or distributive?

3. How can Decker effectively lead when the team

starts “norming”?

4. How might the team bene t from having a leader

with a creative background?

CHAPTER 17 LEADING TEAMS 531

Leading

Based on Eric M. Stark, Jason D. 1.

Shaw, and Michelle K. Duffy, “Pref-

erence for Group Work, Winning

Orientation, and Social Loaﬁ ng

Behavior in Groups,” Group &

Organization Management 32, no. 6

(December 2007): 699–723.

Industry Week/Manufacturing 2.

Performance Institute’s Census of

Manufacturers for 2004, reported

in Traci Purdum, “Teaming, Take

2,” Industry Week (May 2005):

41–43.

Carl E. Larson and Frank M. J. 3.

LaFasto, TeamWork (Newbury Park,

CA: Sage, 1989).

Telis Demos, “Cirque du Balancing 4.

Act,” Fortune (June 12, 2006): 114;

Erin White, “How a Company Made

Everyone a Team Player,” The Wall

Street Journal, August 13, 2007;

David Kirkpatrick, “Inside Sam’s

$100 Billion Growth Machine,”

Fortune (June 14, 2004): 80–98;

Daniel R. Kibbe and Jill Casner-Lot-

to, “Ralston Foods: From Greenﬁ eld

to Maturity in a Team-Based Plant,

Journal of Organizational Excellence

(Summer 2002): 57–67.

"’Golden Hour’ Crucial Time for 5.

Surgeons on Front Line,” Johnson

City Press, April 1, 2003.

Study by G. Clotaire Rapaille, 6.

reported in Karen Bernowski, “What

Makes American Teams Tick?” Qual-

ity Progress 28, no. 1 (January 1995):

39–42.

Robert Albanese and David D. 7.

Van Fleet, “Rational Behavior in

Groups: The Free-Riding Tendency,”

Academy of Management Review 10

(1985): 244–255.

David H. Freedman, “The Idiocy of 8.

Crowds” (What’s Next column), Inc.

Magazine (September 2006): 61–62.

“Why Some Teams Succeed (and So 9.

Many Don’t),” Harvard Management

Update (October 2006): 3-4.

Reported in Jerry Useem, “What’s 10.

That Spell? Teamwork!” Fortune

(June 12, 2006): 65–66.

Eric Sundstrom, Kenneth P. De-11.

Meuse, and David Futrell, “Work

Teams,” American Psychologist 45

(February 1990): 120–133.

Deborah L. Gladstein, “Groups in 12.

Context: A Model of Task Group

Effectiveness,” Administrative Science

Quarterly 29 (1984): 499–517.

Sujin K. Horwitz and Irwin B. Horwitz, 13.

“The Effects of Team Diversity on

Team Outcomes: A Meta-Analytic

Review of Team Demography,”

Journal of Management 33, no. 6

(December 2007): 987–1015; Dora

C. Lau and J. Keith Murnighan, “De-

mographic Diversity and Faultlines:

The Compositional Dynamics of

Organizational Groups,” Academy

of Management Review 23, no. 2

(1998): 325–340.

Based on J. Richard Hackman, 14.

Leading Teams: Setting the Stage for

Great Performances (Boston, MA:

Harvard Business School Press,

2002), p. 62. Susan Caminiti, “What

Team Leaders Need to Know,”

Fortune (February 20, 1995): 93–100;

J. Thomas Buck, “The Rocky Road to

Team-Based Management,” Training

& Development (April 1995): 35–38;

and Lee G. Bolman and Terrence E.

Deal, “What Makes a Team Work?”

Organizational Dynamics (August,

1992): 34–44; Amy Edmondson,

Richard Bohmer, and Gary Pisano,

“Speeding Up Team Learning,”

Harvard Business Review (October

2001): 125–132; and Jeanne M.

Wilson, Jill George, and Richard S.

Wellings, with William C. Byham,

Leadership Trapeze: Strategies for

Leadership in Team-Based Organiza-

tions (San Francisco: Jossey-Bass,

1994), p. 14.

Thomas Owens, “Business Teams,” 15.

Small Business Report (January

1989): 50–58.

"Participation Teams,” 16. Small Busi-

ness Report (September 1987):

38–41.

Susanne G. Scott and Walter O. 17.

Einstein, “Strategic Performance

Appraisal in Team-Based Organiza-

tions: One Size Does Not Fit All,”

Academy of Management Executive

15, no. 2 (2001): 107–116.

Larson and LaFasto,18. TeamWork.

James H. Shonk,19. Team-Based

Organizations (Homewood, IL:

Business One Irwin, 1992); and

John Hoerr, “The Payoff from

Teamwork,” BusinessWeek (July 10,

1989): 56–62.

Jennifer Robison, “An International 20.

Paper Mill Saves Itself,” Gallup

Management Journal (December 14,

ch17

ENDNOTES

Conflict: It Can Sneak Up on You

This sequence starts with Roscoe and his brother,

Sheriff Otis Jenkins (Michael Clarke Duncan), carry-

ing a tub of  sh and ice from Monty’s butcher shop to

Sheriff Jenkins’s pickup truck. It follows the baseball

game during which Roscoe hit a ball that struck Mama

Jenkins (Margaret Avery) in the head. This sequence

ends after Sheriff Jenkins knocks out his brother. The

 lm continues with Roscoe walking down a dirt road.

Betty (Mo’Nique) approaches in her car.

What to Watch for and Ask Yourself

▪ Based on your understanding of a team as

described in this chapter, do Roscoe Jenkins and his

brother Sheriff Otis Jenkins form a team in this  lm

sequence? Why or why not?

▪ This chapter de ned con ict as “antagonistic inter-

action in which one party attempts to block the

intentions or goals of another.” Does the interaction

in this  lm sequence show this de nition in action?

Give examples from the sequence.

▪ Which con ict-handling style best  ts the behavior

shown in this  lm sequence? Give some examples

from the sequence.

PART 5 LEADING532

2006), http://gmj.gallup.com

(accessed Ma

y 20, 2008).

Ruth Wageman, “Critical Success 21.

Factors for Creating Superb Self-

Managing Teams,” Organizational

Dynamics (Summer 1997): 49–61.

Thomas Owens, “The Self-Managing 22.

Work Team,” Small Business Report

(February 1991): 53–65.

The discussion of virtual teams 23.

is based on Wayne F. Cascio and

Stan Shurygailo, “E-Leadership

and Virtual Teams,” Organizational

Dynamics 31, no. 4 (2002): 362–376;

Anthony M. Townsend, Samuel M.

DeMarie, and Anthony R. Hen-

drickson, “Virtual Teams: Technology

and the Workplace of the Future,”

Academy of Management Execu-

tive 12, no. 3 (August 1998): 17–29;

and Deborah L. Duarte and Nancy

Tennant Snyder, Mastering Virtual

Teams (San Francisco: Jossey-Bass,

1999).

Jessica Lipnack and Jeffrey Stamps, 24.

“Virtual Teams: The New Way

to Work,” Strategy & Leadership

(January–February 1999): 14–19.

This discussion is based on Arvind 25.

Malhotra, Ann Majchrzak, and

Benson Rosen, “Leading Virtual

Teams,” Academy of Management

Perspectives 21, no. 1 (February

2007): 60–69; Benson Rosen, Stacie

Furst, and Richard Blackburn,

“Overcoming Barriers to Knowl-

edge Sharing in Virtual Teams,”

Organizational Dynamics 36,

no. 3 (2007): 259–273; Marshall

Goldsmith, “Crossing the Cultural

Chasm; Keeping Communication

Clear and Consistent with Team

Members from Other Countries

Isn’t Easy, Says Author Maya

Hu-Chan,” BusinessWeek Online

(May 31, 2007), http://www.busi-

nessweek.com/careers/content/

may2007/ca20070530_521679.

htm (accessed August 24, 2007);

and Bradley L. Kirkman, Benson

Rosen, Cristina B. Gibson, Paul E.

Tesluk, and Simon O. McPherson,

“Five Challenges to Virtual Team

Success: Lessons from Sabre, Inc.,”

Academy of Management Executive

16, no. 3 (2002): 67–79.

Ann Majchrzak, Arvind Malhotra, 26.

Jeffrey Stamps, and Jessica Lipnack,

“Can Absence Make a Team Grow

Stronger?” Harvard Business Review

82, no. 5 (May 2004): 131.

Lynda Gratton, “Working Together . 27.

. . When Apart,” The Wall Street Jour-

nal, June 18, 2007; Kirkman et al.,

“Five Challenges to Virtual Team

Success.”

Pete Engardio, “A Guide for Mul-28.

tinationals: One of the Greatest

Challenges for a Multinational Is

Learning How to Build a Productive

Global Team,” BusinessWeek (August

20, 2007): 48–51; and Lynda Grat-

ton, “Working Together . . . When

Apart.”

Vijay Govindarajan and Anil K. 29.

Gupta, “Building an Effective Global

Business Team,” MIT Sloan Man-

agement Review 42, no. 4 (Summer

2001): 63–71.

Charlene Marmer Solomon, 30.

“Building Teams Across Borders,”

Global Workforce (November 1998):

12–17.

Carol Saunders, Craig Van Slyke, 31.

and Douglas R. Vogel, “My Time or

Yours? Managing Time Visions in

Global Virtual Teams,” Academy of

Management Executive 18, no. 1

(2004): 19–31.

This discussion is based on Jeanne 32.

Brett, Kristin Behfar, and Mary C.

Kern, “Managing Multicultural

Teams,” Harvard Business Review

(November 2006): 84-91; and

Saunders et al., “My Time or Yours?”

Richard Pastore, “Global Team 33.

Management: It’s a Small World

After All,” CIO (January 23, 2008),

http://www.cio.com/article/174750/

Global_Team_Management_It_s_a_

Small_World_After_All (accessed

May 20

, 2008).

Engar

dio, “A Guide for 34.

Multinationals.”

Sylvia Odenwald, “Global Work 35.

Teams,” Training and Development

(February 1996): 54–57; and Debby

Young, “Team Heat,” CIO (Septem-

ber 1, 1998): 43–51.

Reported in Jia Lynn Yang, “The 36.

Power of Number 4.6,” part of a

special series, “Secrets of Greatness:

Teamwork,” Fortune (June 12, 2006):

122.

Martin Hoegl, “Smaller Teams—Bet-37.

ter Teamwork: How to Keep Project

Teams Small,” Business Horizons 48

(2005): 209–214.

Reported in “Vive La Difference,” 38.

box in Julie Connelly, “All Together

Now,” Gallup Management Journal

(Spring 2002): 13–18.

For research ﬁ ndings on group size, 39.

see M. E. Shaw, Group Dynamics,

3rd ed. (New York: McGraw-Hill,

1981); G. Manners, “Another Look

at Group Size, Group Problem-

Solving and Member Consensus,”

Academy of Management Journal 18

(1975): 715–724; and Martin Hoegl,

“Smaller Teams—Better Team-

work: How to Keep Project Teams

Small,” Business Horizons 48 (2005):

209–214.

Yang, “The Power of Number 4.6.”40.

Warren E. Watson, Kamalesh 41.

Kumar, and Larry K. Michaelsen,

“Cultural Diversity’s Impact on

Interaction Process and Perfor-

mance: Comparing Homogeneous

and Diverse Task Groups,” Academy

of Management Journal 36 (1993):

590–602; Gail Robinson and Kathleen

Dechant, “Building a Business Case

for Diversity,” Academy of Manage-

ment Executive 11, no. 3 (1997):

21–31; and David A. Thomas and

Robin J. Ely, “Making Differences

Matter: A New Paradigm for Man-

aging Diversity,” Harvard Business

Review (September–October 1996):

79–90.

J. Stuart Bunderson and Kathleen 42.

M. Sutcliffe, “Comparing Alternative

Conceptualizations of Functional

Diversity in Management Teams:

Process and Performance Effects,”

Academy of Management Journal 45,

no. 5 (2002): 875–893; and Marc

Orlitzky and John D. Benjamin, “The

Effects of Sex Composition on Small

Group Performance in a Business

School Case Competition,” Academy

of Management Learning and Educa-

tion 2, no. 2 (2003): 128–138.

Watson et al. “Cultural Diversity’s 43.

Impact on Interaction Process and

Performance.”

George Prince, “Recognizing 44.

Genuine Teamwork,” Supervisory

Management (April 1989): 25–36; K.

D. Benne and P. Sheats, “Functional

Roles of Group Members,” Journal of

Social Issues 4 (1948): 41–49; and R.

F. Bales, SYMOLOG Case Study Kit

(New York: Free Press, 1980).

Robert A. Baron,45. Behavior in Orga-

nizations, 2nd ed. (Boston: Allyn &

Bacon, 1986).

Ibid.46.

Kenneth G. Koehler, “Effective 47.

Team Management,” Small Busi-

ness Report (July 19, 1989): 14–16;

CHAPTER 17 LEADING TEAMS 533

Leading

and Connie J. G. Gersick, “Time and

Transition in Work Teams: Toward

a New Model of Group Develop-

ment,” Academy of Management

Journal 31 (1988): 9–41.

Bruce W. Tuckman and Mary Ann 48.

C. Jensen, “Stages of Small-Group

Development Revisited,” Group and

Organizational Studies 2 (1977):

419–427; and Bruce W. Tuckman,

“Developmental Sequences in Small

Groups,” Psychological Bulletin 63

(1965): 384–399. See also Linda N.

Jewell and H. Joseph Reitz, Group

Effectiveness in Organizations

(Glenview, IL: Scott, Foresman,

1981).

Thomas Petzinger Jr., “Bovis Team 49.

Helps Builders Construct a Solid

Foundation” The Wall Street Journal,

March 21, 1997.

Shaw,50. Group Dynamics.

Daniel C. Feldman and Hugh J. 51.

Arnold, Managing Individual and

Group Behavior in Organizations

(New York: McGraw-Hill, 1983).

Dorwin Cartwright and Alvin 52.

Zander, Group Dynamics: Research

and Theory, 3rd ed. (New York:

Harper & Row, 1968); and Elliot

Aronson, The Social Animal (San

Francisco: W. H. Freeman, 1976).

Stanley E. Seashore,53. Group Cohe-

siveness in the Industrial Work Group

(Ann Arbor, MI: Institute for Social

Research, 1954).

J. Richard Hackman, “Group Inﬂ u-54.

ences on Individuals,” in Handbook

of Industrial and Organizational Psy-

chology, ed. M. Dunnette (Chicago:

Rand McNally, 1976).

The following discussion is based 55.

on Daniel C. Feldman, “The Devel-

opment and Enforcement of Group

Norms,” Academy of Management

Review 9 (1984): 47–53.

Wilson et al.,56. Leadership Trapeze, p. 12.

Simon Taggar and Robert Ellis, “The 57.

Role of Leaders in Shaping Formal

Team Norms,” The Leadership Quar-

terly 18 (2007): 105–120.

Geoffrey Colvin, “Why Dream 58.

Teams Fail,” Fortune (June 12, 2006):

87–92.

Stephen P. Robbins,59. Managing

Organizational Con ict: A

Nontraditional Approach (Englewood

Cliffs, NJ: Prentice Hall, 1974).

Daniel Robey, Dana L. Farrow, and 60.

Charles R. Franz, “Group Process

and Conﬂ ict in System Develop-

ment,” Management Science 35

(1989): 1172–1191.

Yuhyung Shin, “Conﬂ ict Resolution 61.

in Virtual Teams,” Organizational

Dynamics 34, no. 4 (2005): 331–345.

Dean Tjosvold, Chun Hui, Daniel 62.

Z. Ding, and Junchen Hu, “Conﬂ ict

Values and Team Relationships:

Conﬂ ict’s Contribution to Team

Effectiveness and Citizenship in

China,” Journal of Organizational

Behavior 24 (2003): 69–88; C. De

Dreu and E. Van de Vliert, Using

Con ict in Organizations (Beverly

Hills, CA: Sage, 1997); and Kathleen

M. Eisenhardt, Jean L. Kahwajy,

and L. J. Bourgeois III, “Conﬂ ict and

Strategic Choice: How Top Manage-

ment Teams Disagree,” California

Management Review 39, no. 2

(Winter 1997): 42–62.

Jerry B. Harvey, “The Abilene Para-63.

dox: The Management of Agree-

ment,” Organizational Dynamics

(Summer 1988): 17–43.

Eisenhardt et al., “Conﬂ ict and Stra-64.

tegic Choice.”

Koehler, “Effective Team Manage-65.

ment’’; and Dean Tjosvold, “Mak-

ing Conﬂ ict Productive,” Personnel

Administrator 29 (June 1984): 121.

This discussion is based in part on 66.

Richard L. Daft, Organization Theory

and Design (St. Paul, MN: West,

1992), Chapter 13; and Paul M. Terry,

“Conﬂ ict Management,” The Journal

of Leadership Studies 3, no. 2 (1996):

3–21.

Shin, “Conﬂ ict Resolution in Virtual 67.

Teams.”

This discussion is based on K. W. 68.

Thomas, “Towards Multidimensional

Values in Teaching: The Example

of Conﬂ ict Behaviors,” Academy of

Management Review 2 (1977): 487.

Robbins,69. Managing Organizational

Con ict.

"The Negotiation Process: The 70.

Difference Between Integrative and

Distributive Negotiation,” La Piana

Associates Inc., http://www.lapiana

.org/resources/tips/negotiations.

Rob Walker, “Take It or Leave It: 71.

The Only Guide to Negotiating You

Will Ever Need,” Inc. (August 2003):

75–82.

Based on Roger Fisher and William 72.

Ury, Getting to Yes: Negotiating

Agreement Without Giving In (New

York: Penguin, 1983).

This familiar story was reported in 73.

“The Difference Between Integrative

and Distributive Negotiation.”

Based in part on “A Note for Ana-74.

lyzing Work Groups,” prepared by

Linda A. Hill, Harvard Business

School Publishing, http://www

.hbsp.harvard.edu.

"Big and No Longer Blue,” 75. The

Economist (January 21–27, 2006),

http://www.economist.com.

R. B. Zajonc, “Social Facilitation,” 76.

Science 149 (1965): 269–274; and

Miriam Erez and Anit Somech, “Is

Group Productivity Loss the Rule

or the Exception? Effects of Culture

and Group-Based Motivation,”

Academy of Management Journal 39,

no. 6 (1996): 1513–1537.

Claire M. Mason and Mark A. 77.

Grifﬁ n, “Group Task Satisfaction;

The Group’s Shared Attitude to Its

Task and Work Environment,” Group

and Organizational Management 30,

no. 6 (2005): 625–652.

Gina Imperato, “Their Specialty? 78.

Teamwork,” Fast Company (January–

February 2000): 54–56.

Reported in Scott Thurm, “Theory & 79.

Practice: Teamwork Raises Every-

one’s Game—Having Employees

Bond Beneﬁ ts Companies More

Than Promoting ’Stars,’”

The Wall

Street Journal, November 7, 2005.

Kenneth Labich, “Elite Teams Get 80.

the Job Done,” Fortune (February 19,

1996): 90–99.

"A Note for Analyzing Effective 81.

Work Groups.”

534

ContinuingCasept5

General Motors

Part Five: Leading

Blogs Take GM’s Corporate

Communication into Fast Lane

Whether it’s the no-nonsense directness of legend-

ary CEO Jack Welch, the point-by-point simplicity of

 nancial guru Suze Orman, or the change-the-world

idealism of Apple’s Steve Jobs, effective communica-

tors exhibit powerful mastery over their messages.

Yet in the age of new media and the Internet, get-

ting one’s point across requires mastery of both the

message and medium. Thanks to blogs, texting, instant

messaging, and social networking Web sites, leaders

have more options than ever before for reaching large

audiences.

Who exactly are the grand communicators of the

digital age? The pimple-faced founders of Facebook?

The 30-something search-engine geniuses at Google?

Try Bob Lutz, the 77-year-old vice chairman of global

product development at General Motors (GM). Lutz

stunned the business community in 2005 when he ven-

tured out into the blogosphere, exchanging his podium

for podcasts and memoranda for message boards.

Launched as the social media initiative of GM’s Global

Communications Group, Lutz’s FastLane blog marked

the  rst time an executive of a nontechnology For-

tune 100  rm began blogging as a means of corporate

communication.

Like other blogs, FastLane features commentary,

product news, podcasts, video clips, photo galleries,

user feedback, and twittering. Visitors to the blog—

mostly car enthusiasts, members of the press, and GM

employees— nd information about auto shows, new

vehicles, manufacturing breakthroughs, and more.

With trademark informality, FastLane de nes itself

as “your source for the latest, greatest musings of GM

leaders on topics relevant to the company, the indus-

try and the global economy, and—most of all—to our

customers.”

Although the blogosphere is generally upbeat,

blogs can become caldrons of con ict between adver-

sarial groups. As a consequence of the blogosphere’s

reach and informal style, inartful comments may be

published instantly on blogs and disseminated world-

wide in seconds, creating severe headaches for public

relations teams.

One such headache occurred in 2008 when off-the-

cuff comments made during a closed-door session with

journalists spread like wild re across the blogosphere.

Vice Chairman Lutz stated that hybrids didn’t make

“economic sense,” adding that global warming was “a

total crock.” Critics seized on the moment to advance

their crusade against the automaker. Lutz likewise

took to his FastLane blog to respond.

“An offhand comment I made recently about the

concept of global warming seems to have a lot of peo-

ple heated, and it’s spreading through the Internet

like ragweed,” wrote Lutz in his February 21, 2008,

FastLane entry. “My opinions on the subject—like

anyone’s—are immaterial. General Motors is dedicated

to the removal of cars and trucks from the environmen-

tal equation, period.”

The vice chairman urged the public to ignore his

personal musings and to focus instead on the com-

pany’s push for clean transportation. “We’re going to

keep working on it—via E85, hybrids, hydrogen and

fuel cells, and the electri cation of the automobile.”

Lutz took the opportunity to praise GM’s new electric

car. “The Chevrolet Volt program is occurring under

my personal watch, because I—and others in senior

management—believe in it. I fully expect that it will

revolutionize the automotive industry.”

GM’s ongoing support for FastLane shows that

executives at the top automaker see blogging as a

legitimate form of corporate communication. And no

surprise: FastLane is an information center, marketing

tool, crisis management instrument, and customer-

feedback system wrapped up in one. If Lutz is any

indication, the corporate blog is here to stay. Where

else could an outspoken vice chairman  nd so versa-

tile a megaphone.

Questions

1. Visit FastLane online to identify the blog’s vari-

ous communication channels and their channel

richness.

Is the information posted at FastLane appropriate

for a blog? Why or why not?

3. What unique communication bene ts do blogs

offer to GM executives?

SOURCES: Glenn Hunter, “GM’s Lutz On Hybrids, Global Warming

and Cars As Art,” D magazine (January 30, 2008), http://frontburner

.dmagazine.com/2008/01/30/gms-lutz-on-hybrids-global-warming-

and-cars-as-art (accessed October 17, 2008); Rob Kelley, “Tahoe

Hybrid SUV named ‘Green Car of Year,’” CNNMoney, November 18,

2007, http://money.cnn.com/2007/11/15/autos/green_car/index.htm

(accessed October 17, 2008); Bob Lutz, “Talk About a Crock,” FastLane

Blog, February 21, 2008, http://fastlane.gmblogs.com/archives/2008/02/

talk_about_a_cr.html (accessed October 17, 2008); “Welcome to

Fastlane,” FastLane Blog, January 5, 2005, http://fastlane.gmblogs.

com/archives/2005/01/welcome_to_fast_1.html (accessed October 17,

535

Leading

2008); “Half of GM Plants to Be Landﬁ ll-Free By Late 2010,” Green-

Biz, September 8, 2008, http://www.greenbiz.com/news/2008/09/08/

half-gm-plants-be-landﬁ ll-free-by-late-2010 (accessed October 17,

2008); Kevin Krolicki, “GM Exec Stands by Calling Global Warming a

‘Crock,’” Reuters, February 22, 2008, http://www.reuters.com (accessed

October 17, 2008).

chapter18pt6

Chapter Outline

Learning Outcomes

After studying this chapter, you should be able to:

1. Deﬁ

ne organizational control and explain why it is a key management

function.

2. Explain the beneﬁ

ts of using the balanced scorecard to track perfor-

mance and control of the organization.

3. Explain the four steps in the control process.

4. Discuss the use of ﬁ nancial statements, ﬁ nancial analysis, and budget-

ing as management controls.

5. Contrast the hierarchical and decentralized methods of control.

6. Identify the beneﬁ ts of open-book management.

7. Describe the concept of total quality management and major TQM

echniques, such as quality circles, benchmarking, Six Sigma principles,

reduced cycle time, and continuous improvement.

8. Identify current trends in quality and ﬁ

nancial control, including ISO

9000, economic value-added and market value-added systems, activity-

based costing, and corporate governance, and discuss their impact on

organizations.

What Is Your Attitude Toward

Organizational Regulation and Control?

The Meaning of Control

Choosing Standards and Measures

The Balanced Scor

ecard

Feedback Control Model

Steps of Feedback Control

plication to Budgeting

Financial Control

Financial Statements

Financial Analy

sis: Interpreting the

Numbers

The Changing Philosophy of Control

Hierarchical versus Decentralized

proaches

Open-Book Management

New Manager Self-Test: What Is Your

Control Approach?

otal Quality Management

TQM Techniques

TQM Success Factor

Trends in Quality and Financial Control

International Quality Standards

New Financial Contr

ol Systems

537

Managing Quality

and Performance

Controlling

Planning

Environment

Organizing

Leading

Introduction

WHAT IS YOUR ATTITUDE TOWARD ORGANIZATIONAL

EGULATION AND CONTROL?

Managers have to control people for organizations to

survive, yet control should be the right amount and type.

Companies are often less democratic than the society of

which they are a part. Think honestly about your beliefs

toward the regulation of other people and answer each

item that follows as Mostly True or Mostly False.

Mostly

True

Mostly

False

1. I believe people should be guided

more by feelings and less by rules.

2. I think employees should be on

time to work and to meetings.

3. I believe efﬁ ciency and speed are

not as important as letting every-

one have their say when making a

decision.

4. I think employees should conform

to company policies.

5. I let my signiﬁ cant other make the

decision and have his or her way

most of the time.

6. I like to tell other people what to

do.

7. I am more patient with the least

capable people.

8. I like to have things running “just

so.”

SCORING AND INTERPRETATION: Give yourself one

point for each Mostly True answer to the odd-numbered

questions and one point for each Mostly False answer

to the even-numbered questions. A score of six or above

suggests you prefer decentralized control for other people

in organizations. A score of three or less suggests a pref-

erence for more control and bureaucracy in a company.

Enthusiastic new managers may exercise too much of

their new control and get a negative backlash. However,

too little control may mean less accountability and pro-

ductivity. The challenge for new managers is to strike the

right balance for the job and people involved.

Control is an important issue facing every manager in every organization, but new

managers sometimes have a hard time  nding the correct degree of control that will

keep people productive without squelching their motivation and creativity. Managers

face many control issues, including controlling work processes, regulating employee

behavior, setting up basic systems for allocating  nancial resources, developing

human resources, analyzing  nancial performance, and evaluating overall pro tabil-

ity. Another important aspect is quality control.

Consider the quality control challenge facing U.S. Army managers. Every week,

dozens of war-battered Humvees from Iraq are shipped to a 36,000-acre army depot

in Texarkana, Texas. Called the Red River Army Depot, it is one of the army’s oldest

and most important maintenance and storage bases. Faced with a shrinking defense

budget, military experts had to  nd ways to repair the Humvees faster and with

fewer personnel. They studied quality control processes used in the private sector

and spearheaded the most ambitious business effort in the 231-year history of the

U.S. Army: an attempt to adopt a quality control theory, Lean Six Sigma, across the

entire service. “We need to free up resources so we can apply them to the operating

side of the army. We need to equip our soldiers better and faster,” says Mike Kirby,

PART 6 CONTROLLING538

deputy under secretary of the army for business transformation. The new quality

control process includes a highly ef cient assembly line where horns blare every 23

minutes to indicate station changes. The results are impressive: the facility now turns

out 32 mission-ready Humvees a day, compared with three a week in 2004. And the

new process has lowered the cost of repair for one vehicle from $89,000 to $48,000.

Optimistic projections claim the army could be saving billions of dollars each year in

a decade.

This chapter introduces basic mechanisms for controlling the organization. We

begin by summarizing the objectives of the control process and the use of the bal-

anced scorecard to measure performance. Then we discuss the four steps in the con-

trol process and methods for controlling  nancial performance, including the use

of budgets and  nancial statements. The next sections examine the changing phi-

losophy of control, today’s approach to total quality management, and recent trends

such as ISO certi cation, economic value-added and market value-added systems,

activity-based costing, and corporate governance.

THE MEANING OF CONTROL

It seemed like a perfect  t. In the chaotic aftermath of 2005’s Hurricane Katrina,

the American Red Cross needed private-sector help to respond to the hundreds

of thousands of people seeking emergency aid. Staf ng company Spherion Cor-

poration had the expertise to hire and train temporary workers fast, and the com-

pany had a good track record working with the Red Cross. Yet Red Cross of cials

soon noticed something odd: An unusually large number of Katrina victim money

orders, authorized by employees at the Spherion-staffed call center, were being

cashed near the call center itself—in Bakers eld, California, far from the hurricane-

ravaged area. A federal investigation found that some call-center employees were

issuing money orders to fake hurricane victims and cashing the orders for them-

selves. Fortunately, the fraud was discovered quickly, but the weak control systems

that allowed the scam to occur got both the Red Cross

and Spherion into a public relations and political mess.

A lack of control can have repercussions that damage

an organization’s health, hurt its reputation, and threaten

its future. One area in which many managers are imple-

menting stronger controls is employee use of the Internet

and e-mail, as described in the Manager’s Shoptalk.

Organizational control refers to the systematic process

of regulating organizational activities to make them consis-

tent with the expectations established in plans, targets, and

standards of performance. In a classic article on the control

function, Douglas S. Sherwin summarizes the concept as

follows: “The essence of control is action which adjusts

operations to predetermined standards, and its basis is

information in the hands of managers.”

Thus, effectively

controlling an organization requires information about

performance standards and actual performance, as well as

actions taken to correct any deviations from the standards.

To effectively control an organization, managers need to

decide what information is essential, how they will obtain

that information, and how they can and should respond

to it. Having the correct data is essential. Managers decide

which standards, measurements, and metrics are needed

to effectively monitor and control the organization and set

up systems for obtaining that information. For example,

an important metric for a pro football or basketball team

A new philosophy about organi-

zational control involves lower-level workers in management and

control decisions. At the Honeywell Industrial Automation and

Control facility in Phoenix, employees’ quality-control decisions

cut defect rates by 70 percent, inventory by 46 percent, and

customer lead times by an average of 75 percent.

COURTESY OF HONEYWELL, INC.

org

anizationa

contro

The

stematic process t

roug

hich managers regulate

anizational activities to

ste

pectations established in

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ets, an

stan

s o

per

ormance

CHAPTER 18 MANAGING QUALITY AND PERFORMANCE 539

Controlling

When employees have access to the Internet’s vast

resources, and the ability to communicate quickly

via e-mail and instant messaging with anyone in the

world, that’s got to be good for productivity, right?

Not necessarily, as many organizations are dis-

covering. Many companies are experiencing a grow-

ing problem with “cyberslackers,” people who spend

part of their workday sending personal e-mails,

shopping, or downloading music and videos that

hog available bandwidth and sometimes introduce

viruses. In addition, it takes just a few bad apples

engaging in harmful and possibly illegal activities,

such as harassing other employees over the Web, to

cause serious problems for their employers. So it’s

not surprising that the use of sophisticated software

to both block employees’ access to certain sites and

monitor their Internet and e-mail use has grown

exponentially.

A certain degree of vigilance is clearly war-

ranted. However, enlightened managers strive for a

balanced approach that protects the organization’s

interests while at the same time maintaining a posi-

tive, respectful work environment. Surveillance over-

kill can sometimes cost more than it saves, and it can

also have a distinctly negative impact on employee

morale. At the very least, employees may feel as

though they’re not being treated as trustworthy,

responsible adults.

Here are some guidelines for creating an effective

but fair “acceptable use policy” for workplace Inter-

net use.

▪ Make sure employees understand that they have

no legal right to privacy in the workplace. The

courts so far have upheld an organization’s right

to monitor any and all employee activities on

computers purchased by an employer for work

purposes.

▪ Create a written Internet policy. Make sure you

clearly state what quali es as a policy violation

by giving clear, concrete guidelines for accept-

able use of e-mail, the Internet, and any other

employer-provided hardware or software. For

example, spell out the types of Web sites that are

never to be visited while at work and what con-

stitutes acceptable e-mail content. Are employ-

ees ever permitted to use the Web for personal

use? If so, specify what they can do, for how

long, and whether they need to con ne their per-

sonal use to lunchtime or breaks. List the devices

you’ll be checking and tell them the  ltering and

monitoring procedures you have in place. Get

employees to sign a statement saying they’ve

read and understand the policy.

▪ Describe the disciplinary process. Give people a

clear understanding of the consequences of vio-

lating the organization’s Internet and electronic

use policy. Make sure they know the organiza-

tion will cooperate if a criminal investigation

arises.

▪ Review the policy at regular intervals. You’ll

need to modify your guidelines as new technolo-

gies and devices appear.

Managers should remember that monitoring

e-mail and Internet use doesn’t have to be an all-or-

nothing process. Some organizations use continuous

surveillance; others only screen when they believe

a problem exists, or they disseminate a policy and

leave enforcement to the honor system. Look care-

fully at your workforce and the work they’re doing,

and assess your potential liability and security needs.

Then come up with a policy and monitoring plan that

makes sense for your organization.

SOURCES: Lorraine Cosgrove Ware, “People Watching,”

CIO (August 15, 2005): 24; Art Lambert, “Technology in

the Workplace: A Recipe for Legal Trouble,” Workforce.

com (February 14, 2005): www.workforce.com Technical

Resource Group, “Employee E-mail and Internet Usage

Monitoring: Issues and Concerns,” www.picktrg.com;

Pui-Wing Tam, Erin White, Nick Wing eld, and Kris

Maher, “Snooping E-Mail by Software Is Now a Workplace

Norm,” The Wall Street Journal, March 9, 2005; and Ann

Sherman, “Firms Address Worries over Workplace Web

Sur ng,” Broward Daily Business Review (May 17, 2006): 11.

Cyberslackers Beware: The Boss Is Watching

Manager’sShoptalk

might be the number of season tickets, which reduces the organization’s dependence

on more labor-intensive box-of ce sales.

Choosing Standards and Measures

Most organizations focus on measuring and controlling  nancial performance, such

as sales, revenue, and pro t. Yet managers increasingly recognize the need to mea-

sure other intangible aspects of performance to manage the value-creating activities