The field was initially an outgrowth of applied mathematics, where early challenges were problems relating to the optimization of systems which could be modeled linearly, i.e., determining the optima (maximum value of profit, assembly line performance, crop yield, bandwidth, etc. or minimum of loss, risk, costs, etc.) of some objective function. Today, management science encompasses any organizational activity for which a problem is structured in mathematical form to generate managerially relevant insights.

Corporate management science is concerned with a number of different areas of study: One is developing and applying models and concepts that may prove useful in helping to illuminate management issues and solve managerial problems. The models used can often be represented mathematically, but sometimes computer-based, visual or verbal representations are used as well or instead. Another area is designing and developing new and better models of organizational excellence.

The management scientist’s mandate is to use rational, systematic, science-based techniques to inform and improve decisions of all kinds. The techniques of management science are not restricted to business applications but may be applied to military, medical, public administration, charitable groups, political groups or community groups.

Its origins can be traced to operations research, which became influential during World War II when the Allied forces recruited scientists of various disciplines to assist with military operations. In these early applications, the scientists used simple mathematical models to make efficient use of limited technologies and resources. The application of these models to the corporate sector became known as management science.

Management Skills

A manager’s job requires a range of skills. Although some management theorists propose a long list of skills, the necessary skills for managing a department

Organizational Performance

The definition of management includes the attainment of organizational  goals in an effi- cient and effective manner. Management is important because organizations  are impor- tant.

The Definition of Management

What do managers such as Heather  Coin and Paul McGuinness have in common? They get things done through  their organizations.  Managers create the sys- tems,

Managing in Small Businesses and Nonprofit Organizations

Small businesses are growing in importance. Hundreds of small businesses open every month, but the environment for small business today is highly complicated. The Appendix

Making the Leap: Becoming a New Manager

Many people who are promoted into a manager position have little idea what the job actu­ally entails and receive little training about how to handle

Management Functions

Managers use conceptual, human, and technical skills to perform the four management functions of planning, organizing, leading, and controlling in all organizations—large and small, manufacturing

The Organization–Environment Relationship

Why do organizations  care so much about factors in the external environment? The reason is that the environment  creates uncertainty  for organization  managers, and they

The External Environment

The tremendous and far-reaching  changes occurring  in today’s world can be understood by defining and examining components of  the external environment.  The external organizational environment

Management and Organization

A historical  perspective on management provides a context or environment in which to in- terpret current opportunities and problems. Studying history, however, doesn’t mean merely

Managing the Technology-Driven Workplace

The shift to the learning organization  goes hand-in-hand with the current transition to a technology-driven workplace. The physical world that Frederick Taylor and other propo-

The Learning Organization

One of the toughest challenges for managers today is to direct people’s focus on adaptive change to meet the demands of a turbulent and rapidly

Management and the New Workplace

Over the past decade or so, the central theme being discussed in the field of management has been the pervasive changes. Rapid environmental shifts are

The International Business Environment

International management is defined  as the management of business operations con- ducted in more than one country.  The fundamental  tasks of business management,  includ- ing

Getting Started Internationally

Organizations   have a  couple of ways  to become  involved internationally. One is to seek cheaper  sources  of materials or labor offshore, which is called  offshoring

A Borderless World

Why do companies such as Dell, FedEx, and eBay want to pursue a global  strat- egy, despite difficulties, failures, and losses? They recognize that business

Shaping Corporate Culture for Innovative Response

Research conducted by a Stanford  University  professor indicates that the one factor that increases a company’s value the most is people and how they are

Environment and Culture

A big influence on internal corporate culture is the external environment. Cultures can vary widely  across organizations; however, organizations within the same industry  often reveal

The Internal Environment: Corporate Culture

The internal environment within which  managers work includes corporate culture, pro- duction technology, organization structure, and physical facilities. Of these, corporate culture  surfaces as extremely

Criteria for Ethical Decision Making

Most ethical dilemmas  involve a conflict between the needs of the part and of the whole—the individual versus the organization or the organization versus society

What Is Managerial Ethics?

Ethics is difficult to define in a precise way. In a gen- eral sense, ethics is the code of moral principles and values that governs

Managing in a Global Environment

Managers working in foreign countries often face tremendous personal difficulties. In addi- tion, they must be sensitive to cultural subtleties and understand that the ways

International Trade Alliances

One of the most visible changes in the international business environment in recent years has been the development of regional trading alliances and international  trade

The Sociocultural Environment

A nation’s  culture  encompasses the shared knowledge,  beliefs, and values, as well as the common modes of behavior and ways of thinking, among members of

The Economic Environment

The economic environment  represents the economic conditions in the country where the international organization operates. This part of the environment  includes factors such as economic

Managing Company Ethics and Social Responsibility

Many managers are concerned with improving the ethical climate and social responsive- ness of their companies. As one expert on the topic of ethics said,

Evaluating Corporate Social Responsibility

A model for evaluating corporate social performance is presented in Exhibit 4.7. The model indicates that total corporate social responsibility  can be subdivided into four

The Ethic of Sustainability and the Natural Environment

When the first Earth Day celebration was held in 1970, most managers con- sidered environmentalists  to be  an ex- tremist fringe group and felt little

Organizational Stakeholders

One reason for the difficulty in understanding corporate social responsibility is that man- agers must confront  the question, “Responsibility to whom?” Recall from Chapter 3

What Is Social Responsibility?

Now let’s turn to the issue of social responsibility. In one sense, the concept of social re- sponsibility, like ethics, is easy to understand: It

Factors Affecting Ethical Choices

When managers are accused of lying, cheating, or stealing, the blame is usually is placed on the individual or on the company situation. Most people

Types of Decisions and Problems

A decision is a choice made from available alternatives. For example, an accounting man- ager’s selection among Colin, Tasha, and Carlos for the position of

Strategic Implementation and Control

1. Strategy  Implementation  and  Control The final step in the strategic management  process is implementation—how strategy is put into action. Some people argue that strategy

Strategic formulation

1. Thinking Strategically Strategic management is considered a specific type of planning. Strategic planning in for-profit business organizations  typically pertains to competitive actions in the

Strategic planning

1. Planning  Types Managers use strategic, tactical, and operational  goals to direct employees and resources toward achieving specific outcomes that enable the organization  to perform

Goals and Plans of the firm

1. Overview  of  Goals  and  Plans Goals and plans have become general concepts in our society. A goal is a desired  future state that the

Ethical Challenges in Turbulent Times

The problem of lax ethical standards in business is nothing new, but in recent years it seems to have escalated. In addition, public reaction has

The Evolving World of IT

IT  changes  rapidly, and organizations  that want to stay competitive   are adopting  new technologies and approaches  to improve their operations. However,  most organizations merge new

Information Technology Has Changed Everything

The Internet, little more than a curiosity to many managers just a decade ago, now influ- ences their  lives and jobs in myriad ways. Managers

Increasing Participation in Decision Making

Managers do make some decisions as individuals, but decision makers more often are part of a group.  Major decisions in the business world  rarely are

Personal Decision Framework

Imagine  you were a manager at Tom’s of Maine, Boeing Commercial  Airplanes, a local movie theater, or the public library. How would you go about

Decision-Making Steps

Whether a decision is programmed  or nonprogrammed and regardless of managers’ choice of the classical, administrative, or political model of decision making,  six steps typically

Decision-Making Models

The approach  managers use to make decisions usually falls into one of three types—the classical model,  the administrative model, or the political model. The choice

Factors Shaping Structure

Despite the trend toward horizontal design, vertical hierarchies continue to thrive because they often provide important benefits for organizations.67 How do managers know whether to

Organizing for Horizontal Coordination

One reason for the growing use of teams and networks is that many companies are recog- nizing the limits of traditional  vertical organization structures in

Departmentalization in the firm

Another fundamental characteristic of organization structure is departmentalization, which is the basis for grouping positions into departments and departments into the total organization.  Managers make

Organizing the Vertical Structure

The organizing process leads to the creation of organization structure, which defines how tasks are divided  and resources deployed. Organization  structure is defined  as (1)

The Internet and E-Business

In recent years, most organizations have incorporated the Internet as part of their IT strategy.99  The Internet is a global collection  of computer networks linked

Types of Information Systems

Organizations typically incorporate new and emerging tools into their existing IT systems. Most managers appreciate the value of making information readily available and easily shared

The Changing Nature of Careers

Another current  issue is the changing nature of careers. HRM can benefit employees and organizations by responding to recent changes in the relationship  between employers

Environmental Influences on HRM

1. The Strategic Role of Human Resource Management The strategic approach to HRM recognizes three key elements. First, as we just discussed, all managers are

Implementing Organizational Change

The final step to be managed in the change process is implementation.  A new, creative idea will not benefit the organization until it is in

Model of Planned Organizational Change

Change does not happen easily, but change can be managed. By observing external trends, patterns,  and needs, managers use planned  change to help the organization

Changing People and Culture

All successful changes involve  changes in people and culture  as well. For example, getting products to market fast requires that people learn to work collaboratively.

Changing Things: New Products and Technologies

1. Turbulent Times and the Changing Workplace Today’s organizations  face an almost continual need for change. Sometimes, forces outside the organization bring about changes,  such

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People who have studied GE aren’t surprised. The company has thrived  for more than a century  because managers throughout the years created the ideal environment  and condi- tions:  a shared sense of purpose and pride, a passion for change and willingness to take risks, and, most important, an obsession with people and making them the best they can be.

The commitment to developing leaders at all levels began in the late 1800s with CEO Charles Coffin, who emphasized that GE’s most important product was not lightbulbs or transformers but, rather, managerial talent. Every manager at GE is required to spend  a huge amount of time on human resources issues—recruiting, training, appraising, mentor- ing, and developing leadership talent for the future.6

A key aspect of managing is to recognize the role and importance of other people. Early twentieth-century  management scholar Mary Parker Follett defined  management  as “the art of getting things done through people.”7

More recently, noted management theorist Peter Drucker stated that the job of manag- ers is to give direction to their organizations, provide leadership, and decide how to use or- ganizational resources to accomplish goals.8 Getting  things done through people and other resources and providing  leadership and direction  are what managers do. These activities apply to top executives such as Bill Gates of Microsoft and Steve Jobs of Apple but also to the leader of an airport  security team, a supervisor of an accounting department, or a direc- tor of sales and marketing. Moreover, management often is considered universal because it uses organizational resources to accomplish goals and attain high performance in all types of profit and nonprofit organizations.

Thus, our definition of management is: the attainment of organizational  goals in an

effective and efficient manner through planning, organizing, leading, and controlling organizational resources. This definition holds two important ideas: (1) the four functions of planning, organizing, leading, and controlling, and (2) the attainment of organizational goals in an effective and efficient manner. Managers use a multitude of skills to perform these functions.  Management’s  conceptual, human,  and technical skills are discussed later in the chapter. Exhibit 1.1 illustrates  the process of how managers use resources to attain organiza- tional goals. Although some management theorists identify additional management functions, such as staffing, communicating, or decision making, those additional functions will be dis- cussed  as subsets  of the four primary functions in Exhibit 1.1. Chapters of this book are devoted to the multiple activities  and skills associated with each function, as well as to the environment,  global competitiveness, and ethics, which influence how managers perform these functions.

Source: Daft Richard L., Marcic Dorothy (2009), Understanding Management, South-Western College Pub; 8th edition.

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Organizations pervade our society. Most college students will work in an organization— perhaps Cingular Wireless, Toronto General Hospital, Office Depot, or Hollywood  Video. College  students already are members of several organizations,  such as a university  or a junior college, YMCA, church, fraternity, or sorority. College students also deal with or- ganizations every day—to renew a driver’s license, be treated in a hospital  emergency room, buy food from a supermarket,  eat in a restaurant,  or purchase new clothes. Managers are responsible for these organizations  and for seeing that resources are used wisely to attain organizational goals.

Our formal definition of an organization is a social entity  that is goal-directed and de-liberately structured. Social entity means being made up of two or more people. Goal-directed means designed to achieve some outcome, such as to make a profit (for example, Old Navy, Starbucks), to win pay increases for members (AFL-CIO), to meet spiritual needs (say, the United Methodist Church), or provide social satisfaction (a college sorority, for instance).

Deliberately structured means that tasks are divided and responsibility for their performance is assigned to organization members. This definition applies to all organizations, including both profit and nonprofit.  Small, offbeat, and nonprofit organizations are more numerous than large, visible corporations—and just as important to society.

Based on our definition of management, the manager’s responsibility  is to coordinate resources in an effective and efficient manner to accomplish the organization’s  goals. Organizational effectiveness is the extent to which the organization achieves a stated goal, or succeeds in accomplishing what it tries to do. Organizational effectiveness means pro- viding a product or service that customers value.

Organizational efficiency refers to the amount of resources used to achieve an organi- zational goal. It is based on how  much raw material,  money,  and people are necessary for producing  a given volume  of output. Efficiency  can be calculated as the amount of re- sources used to produce a product  or service.

Efficiency and effectiveness can both be at high levels in the same organization. During the tough economy of the early 2000s, companies such as Eaton Corporation, which makes hydraulic  and electrical devices, struggled to wring as much production  as it could from scaled-back factories and a reduced workforce.  Managers initiated  process improvements, outsourced some work to companies that could do it cheaper, streamlined ordering and shipping  procedures, and shifted work to the most efficient assembly lines. At Eaton, these adjustments enabled the company to cut costs and hold the line on prices  as well as meet its quality and output goals.9

Sometimes, however, managers’ efforts to improve  efficiency can hurt organizational effectiveness, especially in relation to severe cost-cutting. Some years ago, a former  CEO at Delta Airlines dramatically increased cost efficiency by cutting spending on personnel, food, cleaning, and maintenance. These moves temporarily rescued the company from  a fi- nancial tailspin, but they also precluded Delta from meeting its effectiveness goals. The airline fell to last place among major carriers in on-time performance, the morale of em- ployees sank, and customer complaints  about dirty planes and long lines at ticket counters increased by more than 75 percent.10

The ultimate responsibility of managers is to achieve high performance. This means the attainment of organizational   goals by using resources  in an efficient and effective manner.

Source: Daft Richard L., Marcic Dorothy (2009), Understanding Management, South-Western College Pub; 8th edition.

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When Skills Fail

Good management skills are not automatic. Particularly during turbulent times, managers really have to stay on their toes and apply all their skills and competencies in a way that benefits the orga­nization and its stakeholders—employees, custom­ers, investors, the community, and so forth. In recent years, numerous highly publicized examples have shown what happens when managers fail to apply their skills effectively to meet the demands of an uncertain, rapidly changing world.

Everyone has flaws and weaknesses, and these shortcomings become most appar­ent under conditions of rapid change, uncertainty, or crisis.¹⁵ Consider the uproar that resulted in 2013 from the decision of managers at the Internal Revenue Service (IRS) to apply additional screening to tax-exempt applications from conservative Tea Party groups. When a manager for so-called Group 7822, an IRS office that screens and processes thou­sands of applications a year from organizations seeking tax-exempt status, noticed a grow­ing number of applications from groups identifying themselves as part of the Tea Party, the manager advised workers to flag them and similar groups to see if their purpose was too political to be eligible under the rules for tax exemption. It has long been a practice to give extra scrutiny to certain kinds of groups that present a potential for fraudulent use of tax exempt status, but critics say the agency went too far in how it applied the practice to conservative political organizations, in some cases delaying applications for years. Congressional investigators are probing whether agency activities constituted dis­crimination against conservative groups, and the full story of what happened and why is still emerging.¹⁶ IRS managers at all levels involved in the decision appear to have needed stronger conceptual skills to prevent this crisis from happening, and higher-level execu­tives had to call upon all their conceptual and human skills to resolve the dilemma and work to restore the public trust.

The numerous ethical and financial scandals of recent years have left people cynical about business and government managers and even less willing to overlook mistakes. Crises and examples of deceit and greed grab the headlines, but many more companies falter or fail less spectacularly. Managers fail to listen to customers, are unable to motivate employees, or can’t build a cohesive team. For example, the reputation of Zynga, maker of games like Farmville that were ubiquitous on Facebook for a while, plummeted along with its share price in 2012. Although there were several problems at Zynga, one was that founder and former CEO Mark Pincus had an aggressive style that made it difficult to build a cohesive team. The exodus of key executives left the company floundering, and the company’s shares fell 70 percent. Pincus stepped down as CEO in July 2013, and former Xbox executive Don Mattrick took over to try to revive the once-hot game maker.¹⁷ Exhibit 1.6 shows the top 10 factors that cause managers to fail to achieve desired results, based on a survey of man­agers in U.S. organizations operating in rapidly changing business environments.¹⁸ Notice that many of these factors are due to poor human skills, such as the inability to develop good work relationships, a failure to clarify direction and performance expectations, or an inability to create cooperation and teamwork. The number one reason for manager failure is ineffective communication skills and practices, cited by 81 percent of managers surveyed. Especially in times of uncertainty or crisis, if managers do not communicate effectively, including listening to employees and customers and showing genuine care and concern, organizational performance and reputation suffer.

Source: Daft Richard L., Marcic Dorothy (2009), Understanding Management, South-Western College Pub; 8th edition.

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Twenty-five-year-old Daniel Wheeler is a first-line  manager in his first management job at Del Monte Foods, where he is involved directly in promoting products, approving packaging sleeves, and organizing sampling events.12 Kevin Kurtz is a middle manager at Lucasfilm,  where he works with employees to develop marketing campaigns for some of the entertainment company’s hottest films.13 Domenic Antonellis is CEO of the New England Confectionary Co. (Necco), the company that makes those tiny pastel candy hearts stamped with phrases such as “Be Mine” and “Kiss Me.”14 All three are managers and must contribute to planning, organizing, leading, and controlling their organizations— but in different amounts and ways.

During turbulent times, managers really have to stay on their toes and use all their skills and competencies to benefit the organization and its stakeholders—employees, customers, investors, the community,  and so forth. In recent years, numerous, highly publicized ex- amples showed us what happens when managers fail to effectively and ethically apply their skills to meet the demands of an uncertain, rapidly changing world. Companies  such as Enron, Tyco, and WorldCom were flying high in the 1990s but came crashing down under the weight of financial scandals. Others,  such as Rubbermaid, Kmart, and Xerox, are strug- gling because of years of management missteps.

Although corporate greed and deceit grab the headlines, many more companies fal- ter or fail less spectacularly.  Managers  fail to listen to customers, misinterpret  signals from the marketplace, or can’t build a cohesive team and execute a strategic plan. Over the past several years numerous  CEOs, including Carly Fiorina at Hewlett-Packard, Michael Eisner at Disney, and David Pottruck at Charles Schwab Corp., have been ousted because of their failure to implement their strategic plans and improve business results.

Examination of struggling  organizations  and executives offers a glimpse into the mis- takes that managers often make in a turbulent environment.15 Perhaps the biggest blunder is managers’ failure to comprehend and adapt to the rapid pace of change in the world around them. For example,  even though Xerox’s PARC research center practically  invented  the personal computer, top managers resisted getting into the computer  business until it was too late to even get in the game, much  less have a chance at winning. A related problem stems from top managers who create a climate  of fear in the organization  so people are afraid to tell the truth. Thus, bad news gets hidden, and important  signals from the marketplace are missed.

Other critical management missteps include  poor communication skills and failure to listen; treating people only as instruments to be used; suppressing dissenting  view- points; and being unable to build a management team characterized by mutual trust and respect.16 The financial  scandals of the early twenty-first century, from Enron to mutual- fund mismanagement, clearly show what can happen, for instance, when top managers pay more attention to money and Wall Street than they do to their employees and customers.

As another example, consider what happened at The New York Times when it became publicly known that Jayson Blair, a rising young reporter, had fabricated and plagiarized many of his stories. Only then did top executives acknowledge the pervasive unhappiness that existed in the newsroom. Executive editor Howell Raines, who had created an envi- ronment that favored certain editors and reporters while others were afraid to offer dis- senting viewpoints or tell their managers the truth, resigned under pressure following the scandal. The Times still is struggling to regain its footing and reclaim its honorable image.

Source: Daft Richard L., Marcic Dorothy (2009), Understanding Management, South-Western College Pub; 8th edition.

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Making the shift from individual contributor to manager is often tricky. Mark Zuckerberg, whose company, Facebook, went public a week before he turned 28 years old, provides an example. In a sense, the public has been able to watch as Zuckerberg has “grown up” as a manager. He was a strong individual performer in creating the social media platform and forming the company, but he fumbled with day-to-day management, such as interactions with employees and communicating with people both inside and outside Facebook. Zuckerberg was smart enough to hire seasoned managers, including former Google executive Sheryl Sandberg, and cultivate advisors and mentors who have coached him in areas where he is weak. He also shadowed David Graham at the offices of The Post Company (the publisher of The Washington Post before it was purchased by Jeff Bezos) for four days to try to learn what it is like to manage a large organization. Now that Facebook is a public company, Zuckerberg is watched more closely than ever to see if he has what it takes to be a manager of a big public corporation.²⁴

Harvard professor Linda Hill followed a group of 19 managers over the first year of their managerial careers and found that one key to success is to recognize that becoming a manager involves more than learning a new set of skills. Rather, becoming a manager means a profound transformation in the way people think of themselves, called personal identity, which includes letting go of deeply held attitudes and habits and learning new ways of thinking.²⁵ Exhibit 1.7 outlines the transformation from individual performer to manager. The individual performer is a specialist and a “doer.” His or her mind is condi­tioned to think in terms of performing specific tasks and activities as expertly as possible. The manager, on the other hand, has to be a generalist and learn to coordinate a broad range of activities. Whereas the individual performer strongly identifies with his or her specific tasks, the manager has to identify with the broader organization and industry.

In addition, the individual performer gets things done mostly through his or her own efforts and develops the habit of relying on self rather than others. The manager, though, gets things done through other people. Indeed, one of the most common mistakes that new managers make is wanting to do all the work themselves, rather than delegating to others and developing others’ abilities.²⁶ Hill offers a reminder that, as a manager, you must “be an instrument to get things done in the organization by working with and through others, rather than being the one doing the work.”²⁷

Another problem for many new managers is that they expect to have greater freedom to do what they think is best for the organization. In reality, though, managers find themselves hemmed in by interdependencies. Being a successful manager means thinking in terms of building teams and networks and becoming a motivator and organizer within a highly interdependent system of people and work.²⁸ Although the distinctions may sound simple in the abstract, they are anything but. In essence, becoming a manager means becoming a new person and viewing oneself in a completely new way.

Many new managers have to make the transformation in a “trial by fire,” learning on the job as they go, but organizations are beginning to be more responsive to the need for new manager training. The cost to organizations of losing good employees who can’t make the transition is greater than the cost of providing training to help new managers cope, learn, and grow. In addition, some organizations use great care in selecting people for managerial positions, including ensuring that each candidate understands what management involves and really wants to be a manager.

Source: Daft Richard L., Marcic Dorothy (2009), Understanding Management, South-Western College Pub; 8th edition.

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One interesting finding is that managers in small businesses tend to emphasize roles different from those of managers in large corporations. Managers in small companies often see their most important role as that of spokesperson because they must promote the small, growing company to the outside world. The entrepreneur’s role is also critical in small businesses because managers have to be innovative and help their organizations develop new ideas to remain competitive. At LivingSocial, for example, founder and CEO, Tim O’Shaughnessy, spends a lot of his time promoting the rapidly growing daily-deal site and talk­ing with department heads about potential new products and ser­vices.⁴³ Small-business managers tend to rate lower on the leader role and on information-processing roles, compared with their counterparts in large corporations.

Nonprofit organizations also represent a major application of management talent.⁴⁴ Organizations such as the Salvation Army, Nature Conservancy, Greater Chicago Food Depository,

Girl Scouts, and Cleveland Orchestra all require excellent man­agement. The functions of planning, organizing, leading, and controlling apply to nonprofits just as they do to business orga­nizations, and managers in nonprofit organizations use similar skills and perform similar activities. The primary difference is

that managers in businesses direct their activities toward earning money for the company and its owners, whereas managers in nonprofits direct their efforts toward generating some kind of social impact. The characteristics and needs of nonprofit organizations created by this distinction present unique challenges for managers.⁴⁵

Financial resources for government and charity nonprofit organizations typically come from taxes, appropriations, grants, and donations rather than from the sale of products or services to customers. In businesses, managers focus on improving the organization’s prod­ucts and services to increase sales revenues. In nonprofits, however, services are typically provided to nonpaying clients, and a major problem for many organizations is securing a steady stream of funds to continue operating. Nonprofit managers, committed to serving clients with limited resources, must focus on keeping organizational costs as low as pos- sible.⁴⁶ Donors generally want their money to go directly to helping clients rather than for overhead costs. If nonprofit managers can’t demonstrate a highly efficient use of resources, they might have a hard time securing additional donations or government appropriations. Although the Sarbanes-Oxley Act (the 2002 corporate governance reform law) doesn’t apply to nonprofits, for example, many are adopting its guidelines, striving for greater trans­parency and accountability to boost credibility with constituents and be more competitive when seeking funding.⁴⁷

In addition, some types of nonprofit organizations, such as hospitals and private univer­sities that obtain revenues from selling services to clients, do have to contend with a bottom line in the sense of having to generate enough revenues to cover expenses, so managers often struggle with the question of what constitutes results and effectiveness. It is easy to measure revenues compared to expenses, but the metrics of success in nonprofits are typically much more ambiguous. Managers have to measure intangibles such as “improve public health,” “upgrade the quality of education,” or “increase appreciation for the arts.” This intangible nature also makes it more difficult to gauge the performance of employees and managers. An added complication is that managers in some types of nonprofits depend on volunteers and donors who cannot be supervised and controlled in the same way that a business manager deals with employees. Many people who move from the corporate world to a nonprofit are surprised to find that the work hours are often longer and the stress greater than in their previous management jobs.⁴⁸

The roles defined by Mintzberg also apply to nonprofit managers, but they may differ somewhat. We might expect managers in nonprofit organizations to place more emphasis on the roles of spokesperson (to “sell” the organization to donors and the public), leader (to build a mission-driven community of employees and volunteers), and resource allocator (to distribute government resources or grant funds that are often assigned top-down).

Managers in all organizations—large corporations, small businesses, and nonprofit organizations—carefully integrate and adjust the management functions and roles to meet challenges within their own circumstances and keep their organizations healthy.

Source: Daft Richard L., Marcic Dorothy (2009), Understanding Management, South-Western College Pub; 8th edition.

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The old workplace is characterized  by routine,  specialized tasks, and standardized control procedures. Employees typically perform their jobs in one company facility, such  as an automobile factory in Detroit or an insurance agency in Des Moines. The organization is coordinated and controlled through the vertical hierarchy, and decision-making authority resides with upper-level managers.

In the new workplace, by contrast, work is free-flowing and flexible. The shift is most obvi- ous in e-commerce and high-tech  organizations, which have to respond to changing markets and competition at a second’s notice. Numerous  other organizations, such as McKinsey & Company, Canada Life, and Nokia, are also incorporating  mechanisms to enhance speed and flexibility. Empowered employees are expected to seize opportunities and solve problems as they emerge. Structures  are flatter, and lower-level employees make decisions based on widespread information  and guided by the organization’s mission and values.35

Knowledge is shared widely rather than hoarded by managers, and people throughout the company keep in touch with a broader range of colleagues via advanced technology. Some organizations, such as Tenary Software, are trying these new models.

The workplace is organized  around  networks rather than rigid hierarchies,  and work is often virtual, with managers having to supervise and coordinate  people who never actually “come to work” in the traditional sense. Thanks  to modern informa- tion and communications  technology, employees can perform  their jobs from home or another remote location, at any time of the day or night.36 Flexible hours, tele- commuting, and virtual teams are increasingly  popular  ways of working that require new skills from managers. Using virtual teams allows organizations  to use the best peo- ple for specific jobs, no matter where they are located, which enables a fast, innovative response to competitive pressures. Teams also may include  outside contractors,  suppli- ers, customers, competitors, and interim managers who  are not affiliated with a specific organization but, instead, work on a project-by-project  basis. The valued worker is one who learns  quickly, shares knowledge,   and is comfortable  with  risk, change,  and ambiguity.

1. FORCES   ON   ORGANIZATIONS

The most striking  change affecting organizations and management is technology. Consider that computing  power has roughly doubled every 18 months over the past 30 years while the cost has declined  by half or more every 18 months.37 In addition, the Internet, which was little more than a curiosity  to many  managers  as recently  as a decade ago, has trans- formed the way business is done. Many organizations  use digital networking technologies to tie together employees and company partners in far-flung operations. Organizations are increasingly shifting significant chunks of what once were considered core functions  to outsiders  via outsourcing,  joint ventures,  and other complex  alliances. Companies   are becoming interconnected, and managers have to learn how to coordinate relationships with other organizations and influence people who can’t be managed and commanded in tradi- tional ways.

The Internet and other new technologies   also  are  tied closely  to globalization. Although global interconnections  bring many opportunities,  they also  bring new threats, raise new risks, and accelerate complexity  and competitiveness. Think about the trend toward outsourcing to low-cost providers in other countries. To cut costs, U.S. companies have been sending manufacturing  work to other countries for years. Now, work involving high-level knowledge is also being outsourced to countries such as India, Malaysia, and South Africa. India’s Wipro Ltd., for example, writes software, performs consulting work,  integrates back-office solutions, undertakes   systems integration,  and handles technical support for some of the biggest corporations in the United States—and  does this for 40 percent less than comparable  U.S. companies can do the work.38

Diversity of the population and the workforce in the United States is another fact of life for organizations. The general population  of the United States, and thus of the workforce, is growing more ethnically and racially diverse. In addition,  generational diversity is a pow- erful force in today’s workplace, with employees of all ages working together on teams and projects in a way rarely seen in the past. In the face of these transformations,  organizations are learning to value change, innovation,  and speed over stability  and efficiency.

The fundamental paradigm during much of the twentieth century  was a belief that things  can be stable. In contrast, the new paradigm  recognizes change and chaos as the natural order of things.39  Events in today’s world are turbulent and unpredictable, with small and large crises occurring  frequently.  Rock star David Bowie has staked the newest phase of his career on that turbulence (see Bowie  Bonds  feature on next page).

One way that managers are addressing the complexity  of today’s world is by renewing their emphasis on innovation. With the power of the Internet, for example, companies have lost much of their ability to control information to consumers and the public, so they are forced  to innovate with increasingly better products and services to remain competitive. The intense competition brought about by globalization also spurs compa- nies to keep pace with new technologies and innovative management practices.40 A re- port from a group  of leading scientists, executives, and educators points to the growing innovation strength of countries  such as China and India, which are poised  to usurp America’s  position as  an innovation leader. Between  the years  of 1991 and 2003, research and development  spending in China  exceeded that in the United States by bil- lions of dollars.41

Over the past few years, though,  an explosion of attention to innovation roared through U.S. firms. For example, Motorola, which seemed to be on the has-been list in the opening years of the twenty-first century, roared back to life with hot new products  such as the RAZR phone, the ROKR, the first combination cell phone and iPod, and the Q phone and e-mail device, designed to compete with the BlackBerry. Motorola CEO Ed Zander is implementing  management and cultural changes  that support an ongoing process  of innovation.42

Motorola’s  changes reflect a broader movement in U.S. firms, seen in companies from General Electric to IBM to Procter & Gamble, as managers are emphasizing creativity  and innovation to compete in a new era. General Electric  CEO Jeff Immelt,  for example, shifted from emphasizing growth through acquisition to pushing growth through technological in- novation and providing additional  resources for GE’s scientific  research labs. Procter  & Gamble collaborates widely with individual entrepreneurs and other firms, even competitors, to crank out innovative products.43

2. NEW   MANAGEMENT   COMPETENCIES

In the face of these transitions,  managers must rethink their approach to organizing, di- recting, and motivating  employees. Today’s best managers give up their command-and- control mind-set to focus on coaching and providing guidance, creating organizations that are fast, flexible, innovative, and relationship-oriented.  In many of today’s best companies, leadership is dispersed throughout the organization, and managers empower others to gain the benefit of their ideas and creativity.

Success in the new workplace depends on the strength and quality of collaborative relationships. Rather than a single- minded focus on profits,  today’s managers recognize the critical importance of staying connected to employees and customers. New ways of working  emphasize collaboration  across functions and hierarchical levels as well as with other companies. Team- building  skills are crucial. Instead of managing a department  of employees,  many  managers  act as team leaders of ever-shifting, temporary projects.

At  SEI Investments,  the work is distributed among  140 teams. Some are permanent,  such as those that  serve major  cus- tomers or focus on specific markets, but many are designed to work on short-term  projects or problems. Computer  linkups, called pythons, drop from the ceiling. As people change assign- ments, they just unplug their pythons, move their desks and chairs to a new location, plug into a new python, and get to work on the next project.44

An important  management challenge in the new workplace is to build a learning organization by creating an organiza- tional climate that values experimentation and risk taking, ap- plies current technology, tolerates mistakes and failure, and re- wards nontraditional  thinking and the sharing of knowledge.

Everyone in the organization participates in identifying and solving problems, which enables the organization to continu- ously experiment,  improve,  and increase its capability.  The role of managers is not to make decisions but, instead, to create learning capability, in which everyone is free to experiment and learn what works best.

3. TURBULENT  TIMES: MANAGING CRISES AND UNEXPECTED EVENTS

Many managers dream of working in an organization  and a world in which life seems rela- tively calm, orderly, and predictable, but their reality is one of increasing turbulence and disorder. Today’s managers and organizations face various levels of crisis every day—from the loss of computer data, to charges of racial discrimination, to a factory fire, to workplace violence. These organizational crises are compounded  by crises on a more global level.

Consider  a few of the major events that affected U.S. companies within the last few years: the bursting  of the dot-com bubble, which led to the failure of thousands of compa- nies and the rapid decline of technology stocks; the crash of Enron as a result  of a complex series of unethical and illegal accounting gimmicks, the subsequent investigations  of nu- merous other corporations, and implementation of new corporate governance laws; terror- ist attacks in New York City and Washington, DC, that destroyed the World Trade Center, seriously damaged the Pentagon, killed thousands of people, and interrupted busi-ness around the world; the crash of the space shuttle  Columbia  and the ensuing investiga- tion that revealed serious cultural and management problems at NASA; Hurricane Katrina’s devastating impact on organizations in New Orleans and the Gulf Coast,  as well  as numer- ous companies  that do business with them; the removal of spinach from supermarkets because of e-coli; and continuing  terrorist threats against the United States and its allies— causing companies to hire experts to manage potential crises. Even the Hilton  family, Paris’s parents, hired a crisis manager after she got arrested and sent to jail.45 These and other events brought the uncertainty and turbulence of today’s world clearly to the fore- front of everyone’s mind and made crisis management a critical  skill for every manager.

Dealing with the unexpected has always been part of the manager’s job, but our world has become  so fast, interconnected, and complex that unexpected events happen more frequently and more often with greater and more painful consequences. All of the new management skills and competencies we discussed are important to managers in such an environment. Crisis management  places further demands on today’s managers. Some of the most recent thinking on crisis management  suggests the importance of five leadership skills.

1. Stay calm.

2. Be visible.

3. Put people before business.

4. Tell the truth.

5. Know when to get back to business.

Stay calm. A leader’s emotions  are contagious,  so leaders have to stay calm, focused, and optimistic  about the future. Perhaps the most important part of a manager’s  job in a crisis situation is to absorb people’s fears and uncertainties.  Although managers acknowl- edge the difficulties, they remain rock-steady and hopeful, which gives comfort,  inspira- tion, and hope to others.

Be visible. When  the world  becomes ambiguous and frightening to people, they need to feel that someone is in control. After Hurricane Katrina hit New Orleans, Scott Cowen, president of Tulane University, stayed on campus until he was sure that everyone was evac- uated and everything that possibly could be done to control the damage was in place.47  In times of crisis, leadership cannot be delegated. When Russian president Vladimir Putin continued his holiday after the sinking of the submarine Kursk in August 2000, his reputa- tion diminished worldwide.48

By contrast, Melvin Wilson of Mississippi Power stayed visible and maintained  impor- tant networks to deal with a real catastrophe. Imagine  that you are a mid-level  marketing manager at a public utilities company. One day you’re reviewing  next year’s advertising campaign. A day later you’re responsible for coordinating the feeding, housing, and health care of 11,000 repair workers from around the country. That’s the situation that Melvin Wilson, a marketing  manager for Mississippi Power, found himself in when Hurricane Katrina hit the state in August 2005, wiping out 1,000 miles of power lines, destroying

65 percent of the company’s transmission and distribution  facilities, damaging 300 trans- mission towers, and knocking out power for all 195,000 customers. The company  had a disaster recovery plan in place, but managers were suddenly thrust into a situation  that was twice  as bad as the worst-case  scenario.

Mississippi  Power’s corporate headquarters was totally destroyed, its disaster response center flooded and useless. Early recovery work  had to be done without access to computers, phones, or basic sanitary facilities. Confusion and chaos reigned. “My day job didn’t prepare me for this,” Wilson told a reporter  in a choked  voice as he struggled  to find nurses, beds, tetanus shots, laundry  service, showers, security services, and food for repair workers.

Other managers, from all levels and divisions,  have dealt with similar predicaments. One manager compared the process to managing an Army division at war! Amazingly, Mississippi  Power employees got the job done smoothly and efficiently, restoring power in just 12 days, thus meeting the bold target of restoring power by the symbolic date of September 11. The tale of how this was done is one of the great crisis-management stories of modern  times,  and a lesson for managers in how much  can be accomplished quickly when it’s managed right.49

The managers at Mississippi Power illustrate many of these new management com- petencies, which enabled the company to execute  a swift, ambitious  disaster plan and restore power in only 12 days following Hurricane Katrina. Two decades ago, hurricane response was run from the top down, but managers learned that setting priorities from headquarters  was ineffective during times of chaos  and confusion. Today, decision making has been pushed  far down to the level of the substation, and employees are empowered to act within certain guidelines to accomplish  a basic mission:  “Get the power on.”

The corporate culture,  based on values of unquestionable trust, superior performance, and total commitment, supports individual initiative and the confidence of management that employees will respond with quick action and on-the-spot innovation. During the disaster  recovery,  even  out-of-state crews  working unsupervised  were empowered  to engineer their own solutions to problems in the field. Networking and team-building skills also are highly valued at Mississippi Power. Middle managers like Melvin Wilson forged networks of relationships throughout the company, with other organizations, and with power company managers in other states, which  enabled them to quickly gain access to critical  resources and build teams with the right combination of skills. Overall, Missis- sippi Power reflects the qualities of a learning organization  in which employees, from line workers to accountants,  are encouraged to experiment, innovate, share knowledge, and solve problems.

Melvin Wilson also illustrates some of the qualities needed for effective crisis manage- ment. When he took on the role of “director of storm logistics,” he suppressed his own emotions to present a calm and focused persona, which kept employees’ emotions directed in a positive way on the job to be done. At the same time,  he and other managers made sure that plans were in place to assist employees whose homes were damaged (fortunately, no employees were killed in the storm). Wilson was a highly visible leader throughout  the re- covery, working  20-hour  days and sleeping on the floor. Top leaders were visible  as well, meeting with storm directors every day and helping boost the morale of recovery workers.

Leadership  during  crises and unexpected events is becoming  important for all organiza- tions in today’s complex world. Managers in crisis situations should stay calm, be visible, put people before business, tell the truth, and know when to get back to business. Human skills become critical during times of turbulence and crisis.

Put people before  business. The companies that weather  a crisis  best, whether the crisis is large or small, are those in which managers make people and human feelings their top priority. Ray O’Rourke, managing director for global corporate affairs at Morgan Stanley, put it this way following  September 11: “Even though we are a financial services company, we didn’t have a financial  crisis on our hands; we had a human crisis. After that point, everything  was focused on our people.”50

Tell the truth. Managers should get as much information from as many  diverse sources as they can, do their best to determine the facts, and then be open and straightfor- ward about what’s going on. After a 17-year-old patient at Duke University Hospital died following a botched organ transplant,  hospital  managers compounded  the organizational crisis by failing to communicate with the media and community for nine full days after the tragedy was reported in the press.51

Know when to get back to business. Although managers should first deal with the physical and emotional  needs of people, they should get back to business  as soon as possible.  The company has to keep going, and a natural human tendency makes us want to rebuild and move forward. Rejuvenation of the business is a sign of hope and an inspiration to employees. Moments of crisis also present excellent opportunities for looking forward and using the emotional energy that has emerged to build a better company.

This is a challenging  time to be entering  the field of management. Throughout  this book, you will learn much more about the new workplace, about the new and dynamic roles that managers are playing in the twenty-first century, and about how you can be an effec- tive manager in a complex, ever-changing  world.

Source: Daft Richard L., Marcic Dorothy (2009), Understanding Management, South-Western College Pub; 8th edition.

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Managers began thinking about the concept of the learning organization after the pub- lication of Peter Senge’s book, The Fifth Discipline: The Art and Practice of Learning  Orga- nizations.53   Senge described the kind of changes that managers have to undergo to help their organizations adapt to an increasingly chaotic world.  These ideas gradually evolved to describe characteristics of the organization itself. No single view describes what the learn- ing organization looks like. The learning organization is an attitude or philosophy about what an organization can become.

1. DEFINITION OF A LEARNING ORGANIZATION

The learning organization can be defined as one in which  everyone is engaged in identify- ing and solving problems, enabling the organization to continuously experiment, change, and improve, thus increasing its capacity to grow, learn, and achieve its purpose. The es- sential idea is problem solving, in contrast to the traditional organization designed for effi- ciency. In the learningorganization, all employees look for problems, such as understand- ing special customer needs. Employees also solve problems,  which means putting things together in unique ways to meet a customer’s needs.

Many of today’s managers are quite aware that sustained competitive  advantage can come only by developing the learning capacity of everyone in the organization. This aware- ness is reflected in a survey conducted  by Strategy Business. The magazine asked its online subscribers, along with a group  of thinkers,  educators, interview  subjects, and scholars, to vote for the ideas discussed in Strategy Business over  the last 10 years that they consider most likely to remain relevant for at least the next decade. The concept of the learning or- ganization  ranked second on the list of top 10 ideas.54

2. CHARACTERISTICS OF A LEARNING ORGANIZATION

To develop a learning organization,  managers make changes in all the subsystems of the organization. Three important adjustments to promote  continuous  learning are: shifting to a team-based  structure,  empowering   employees, and sharing information. These three characteristics are illustrated  in Exhibit 1.6, and each is described here.

Team-based structure. An important value in a learning organization is collab- oration   and  communication across  departmental and  hierarchical boundaries. Self-directed  teams comprise the basic building block of the structure.  These teams are made up of employees with different skills who share or rotate jobs to produce an entire product or service. Traditional management  tasks are pushed down  to lower levels of the organization, with teams often taking responsibility for training, safety, scheduling, and deci- sions about work  methods,  pay and reward systems, and coordination with other teams.

Although team leadership is vital, in learning organizations the traditional boss is nearly eliminated.  People on the team are given the skills, information, tools, motivation, and authority to make decisions central to the team’s performance and to respond creatively and flexibly to new challenges and opportunities that arise.

Employee empowerment.  Empowerment means unleashing the power and creativity of employees by giving them the freedom, resources, information,  and skills to make decisions and perform effectively. Traditional management tries to limit employees, whereas empowerment  expands their behavior. Empowerment  may be reflected in self- directed work teams, quality circles, job enrichment, and employee-participation  groups, as well as through  decision-making  authority,  training, and information  so people can per- form jobs without close supervision.

In learning organizations,  people are a manager’s primary  source of strength, not a cost to be minimized.  Companies that adopt this perspective believe in treating employees well by providing competitive wages and good working conditions, as well  as by investing time and money in training programs and opportunities for personal and professional develop- ment. In addition, they often provide a sense of employee ownership by sharing gains in productivity and profits.55

Open  Information. A learning organization  is flooded with information. To identify needs and solve problems, people have to be aware of what’s going on. They must understand the whole organization as well as their part in it. Formal data about budgets, profits, and departmental expenses are available to everyone. “If you really want to respect individuals,” says Solectron  Corp.’s Winston Chen, “you’ve got to let them know how they’re doing—and let them know soon enough so they can do something about it.”56

Managers know that providing too much information  is better than providing too little. In addition, managers encourage people throughout the organization to share information. For example, at Viant Inc., which helps companies build and maintain  web-based busi- nesses, people  are rewarded  for their willingness to absorb and share knowledge.  Rather than encouraging consultants to hoard specialized knowledge, CEO Bob Gett says, “We value you more for how much information you’ve given to the guy next to you.”

Source: Daft Richard L., Marcic Dorothy (2009), Understanding Management, South-Western College Pub; 8th edition.

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Many employees perform much of their work on computers and may be a part of virtual teams, connected electronically to colleagues around  the world. Even in factories that produce physical goods, machines have taken over much of the routine and uniform work, freeing workers to use more of their minds and abilities. Managers and employees in today’s companies focus on opportunities rather than efficiencies, which requires that they be flexible, creative, and unconstrained by rigid rules and structured tasks.

1. THE SHIFTING WORLD OF E-BUSINESS

Today,  much business takes place by digital processes over a computer network rather than in physical  space. E-business refers to the work an organization  does by using electronic linkages (including the Internet) with customers, partners, suppliers, employ- ees, or other key constituents. Organizations  that use the Internet or other electronic linkages to communicate with employees or customers are engaged in e-business.

E-commerce is a narrower term. It refers specifically to business exchanges or transactions that occur electronically. E-commerce replaces or enhances the exchange of money and prod- ucts with the exchange of data and information  from one computer to another. Three types of e-commerce are business-to-consumer,  business-to-business, and consumer-to-consumer.

Companies such as Amazon.com, 800-Flowers, Expedia.com, and Progressive are engaged in what is referred to as business-to-consumer e-commerce (B2C),  because they sell products  and services to consumers over the Internet. Although this type of exchange is probably the most visible expression of e-commerce to the public, the fastest growing area of e-commerce is business-to-business e-commerce (B2B),  which  refers to electronic transactions between organizations. Today, much B2B e-commerce  takes place over the Internet.59

Large organizations   such as Wal-Mart, General Electric, Carrier Corp., General Motors, and Ford Motor Company  buy and sell billions of dollars worth of goods and services  a year  via either public or private Internet linkages.60   For example, General Motors sells about 300,000 previously owned vehicles a year online through SmartAuction. Ford  purchases a large portion of the steel it uses to build cars through  e-Steel.61

Some companies  take e-commerce to high levels  to achieve amazing performance through supply chain management. Supply chain management refers to managing the sequence of suppliers and purchasers, covering all stages of processing from obtaining raw materials to distributing  finished goods to consumers.62  Dell Computer  was a pioneer in the use of end-to-end digital supply-chain networks to keep in touch with customers, take orders, buy components from suppliers, coordinate with manufacturing partners, and ship customized products directly to consumers. This trend is affecting every industry,  prompt- ing a group  of consultants at a Harvard  University  conference to conclude that businesses today must either “Dell or be Delled.”63

The third area of e-commerce, consumer-to-consumer (C2C), is made possible

when an Internet-based business acts as an intermediary  between and among consumers. One of the best-known  examples of C2C e-commerce is the web-based auction such as auctions  made possible by eBay. Internet auctions  create a large electronic  market- place where  consumers can buy and sell directly with one another, usually handling nearly the entire transaction via the web. Members of eBay in the United States alone sold approximately $10.6 billion in merchandise during the first 6 months of 2005. Merchandise sales worldwide in the previous year were approximately  $36 billion.64

Another growing area of C2C commerce is peer-to-peer (P2P) file-sharing net-

works.  Companies   such as Kazaa and Grokster provide the technology for swapping music, movies, software, and other files. Online music sharing, in particular, has zoomed in popularity,  and although music companies and record retailers currently are engaged in a heated battle with file-sharing services, these companies  are likely here to stay.

2. INNOVATIVE TECHNOLOGY IN THE WORKPLACE

New electronic  technologies  also shape the organization and how it is managed. A century ago, Frederick Taylor described the kind of worker needed in the iron industry: “Now one of the first requirements for a man who is fit to handle pig iron as a regular occupation is that he shall be so stupid and so phlegmatic  that he more nearly resembles in his mental makeup the ox than any other type.”66  The philosophy of scientific management was that managers structured and controlled  jobs so carefully that thinking on the part of employees wasn’t required—indeed, it usually was discouraged.

How different  things are today! Many organizations depend on employees’ minds more than their physical bodies. In companies where the power of an idea determines  success, managers’ primary  goal is to tap into the creativity and knowledge of every employee.

Technology provides the architecture that supports and reinforces this new workplace. One approach to information management is enterprise resource planning  (ERP), systems that weave together  all of a company’s major business functions, such as order  pro- cessing, product design, purchasing, inventory, manufacturing,  distribution, human re- sources, receipt of payments, and forecasting of future demand.

ERP supports a companywide  management  system in which everyone, from the CEO down to a machine  operator  on the factory floor, has instant  access to critical information. People  can see the big picture and act quickly, based on up-to-the-minute information. Thus, ERP also supports management attempts to harness and leverage organizational knowledge.

Peter Drucker coined the term knowledge work more than 40 years ago,68  but only in re- cent years did managers begin to genuinely recognize knowledge as an important organiza- tional resource that should be managed just as they manage cash flow or raw materials. Knowledge management refers to efforts to systematically find, organize, and make available a company’s intellectual  capital and to foster a culture of continuous learning and knowledge sharing so that a company’s activities  build on what is already known.69

A growing segment of knowledge  management is the use  of sophisticated cus- tomer relationship management (CRM), systems that collect and manage large amounts of data about customers and make them available to employees, enabling bet- ter decision making and superior  customer  service. The use  of CRM  has  virtually exploded over the past several years. In Bain and Company’s 2005 management tool survey, for example, three out of four companies reported using CRM, up from only 35 percent of companies in 2000, one of the largest and fastest usage increases ever re- vealed by the survey.

Information technology  also is contributing to the rapid growth of outsourcing— contracting out selected functions  or activities to other organizations that can do the work more cost-efficiently.  Today’s companies are outsourcing  like crazy to free up cash for investment in long-term research and innovation. Outsourcing—along with other trends such as supply  chain management, customer relationship  management, telecommuting, and virtual teamwork—requires that managers be technologically  savvy and also that they learn to manage a complex  web of relationships. These relationships might reach far be- yond the boundaries of the physical organization;  they often are built through flexible e-links  between a company and its employees.

Source: Daft Richard L., Marcic Dorothy (2009), Understanding Management, South-Western College Pub; 8th edition.

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