Book summary “Management”: summary

Introduction

You face constant pressure to deliver high performance while navigating rapid change, intense global competition, and diverse workforce expectations. Without a systematic approach, you risk wasting resources, missing strategic goals, and failing to engage your team effectively.

Management is the practice of planning, organizing, leading, and controlling resources through people to achieve high performance in a dynamic world.

John R. Schermerhorn provides a comprehensive framework to master these demands. The book moves from foundational concepts and historical evolution to external ethics, strategic planning, structural organizing, and daily leading and controlling.

To succeed in your role, you must address several core questions:

• How do you build intellectual capital in an open organizational system?
• What separates effective ethical decisions from costly failures?
• How do you structure work and lead people toward peak performance?

1. Foundations of Management and Working Today

Organizations operate as open systems driven by intellectual capital and guided by managerial functions and essential skills.

You must understand how modern workplaces function. Intellectual capital is the collective brainpower and shared knowledge of your workforce. It is expressed through the equation of Competency multiplied by Commitment. High-performing companies win the talent war by extracting the best from their people daily, treating employees as strategic assets rather than costs.

Herman Miller views the talents of employee-owners as its greatest corporate asset. Scholars Charles O'Reilly and Jeffrey Pfeffer highlight how top firms win through people.

Organizations in the New Workplace

Organizations operate as open systems that transform resource inputs into outputs. You measure these outputs through productivity, performance effectiveness, and performance efficiency. Productivity measures quantity and quality of outputs relative to resource costs. Effectiveness is an output measure of goal accomplishment, while efficiency is an input measure of resource costs.

Niklas Zennstrom and Janus Friis founded Skype with the purpose of allowing the whole world to talk by telephone for free.

Managers in the New Workplace

Managers operate at different levels to support others. Top managers focus on the external environment and vision, middle managers coordinate large units, and first-line managers supervise nonmanagerial workers. Henry Mintzberg identified ten managerial roles categorized into informational, interpersonal, and decisional functions.

Bill George repositioned Medtronic as a client-centered deliverer of medical services while aligning corporate values with personal values.

The upside-down pyramid view redefines your role from order-giver to supporter, placing operating workers and customers at the top. In this model, managers exist to mobilize and deliver the support that operating workers need to best serve customer needs and achieve high quality of work life.

Cindy Zollinger, president of Cornerstone Research, describes her management style as helping workers handle obstacles and opportunities rather than managing them typically.

The Management Process

The management process consists of four core functions: planning, organizing, leading, and controlling. Planning sets objectives, organizing assigns tasks and resources, leading builds commitment and inspires effort, and controlling measures performance and takes corrective action.

Ernst & Young launched a Diversity Trust Force and Office of Retention led by Deborah Holmes to reduce an annual turnover rate for women that started at 22 percent. The firm faced a cost relative to a departing employee's annual salary of 150 percent required to hire and train each replacement.

2. Evolution of Management Thought

Management theory evolved from classical administrative efficiency and scientific rules to behavioral human relations and modern contingency thinking.

You can trace modern business practices back through distinct historical eras. Early thinkers focused on efficiency, structures, and rules before later shifts brought human psychology and situational awareness into focus.

Classical Management Approaches

Frederick W. Taylor argued that workers underperformed because they used their own arbitrary methods. He published The Principles of Scientific Management in 1911. You can apply scientific management by following specific rules:

• Develop for every job a science that includes rules of motion, standardized work implements, and proper working conditions.
• Carefully select workers with the right abilities for the job.
• Carefully train workers to do the job and give them the proper incentives to cooperate with the job science.
• Support workers by carefully planning their work and by smoothing the way as they go about their jobs.

Frank and Lillian Gilbreth used motion studies on bricklayers to reduce physical movements and triple their productivity.

Henri Fayol drew upon his career in French industry to publish Administration Industrielle et Générale in 1916. Administrative principles provide a structured framework of duties and rules for managerial action, establishing that management can be systematically taught. Max Weber defined bureaucracy as an ideal, rational, and efficient form of organization based on logic, order, and legitimate authority rather than social privilege.

Behavioral Management Approaches

Researchers led by Elton Mayo at Western Electric Company's Hawthorne Works found that productivity increased regardless of physical conditions due to social settings, group atmosphere, and participative supervision. In 1924, the Western Electric Company commissioned the research program at the Hawthorne Works. Interviewers spoke with 21000 employees in a study on employee attitudes and work environment satisfaction.

In the relay assembly test room, six workers isolated for study increased productivity regardless of changes in rest pauses and work hours because of group atmosphere and participative supervision. Douglas McGregor demonstrated that managers operate under contrasting assumptions about human nature, which can create self-fulfilling prophecies in the workplace.

When Betsy Holden became CEO of Kraft Foods, she exhibited a collaborative, team-oriented management style consistent with Theory Y. It took 16 years for her to rise from division brand manager to CEO at Kraft Foods.

Modern Management Foundations

Contingency thinking rejects the notion of a single best way to manage, asserting instead that managerial practices must match the unique demands of specific situations. Evidence-based management replaces generalized impressions and dangerous half-truths with management decisions grounded in rigorous scientific research. Jeffrey Pfeffer and a colleague studied a sample of about 1000 firms and found that those using specific human resource practices achieved higher sales and profits per employee. You apply this approach by using these steps:

• Identify a research question or problem.
• State one or more hypotheses or possible explanations.
• Create a research design to systematically test the hypotheses.
• Analyze and interpret data gathered through the research.
• Accept or reject the hypotheses based upon the evidence.

Peter Senge popularized the learning organization, which continuously changes and improves its performance based on lessons of experience through shared values, systems, and team learning. Google operates as a knowledge management company and learning organization by encouraging employee collaboration, continuous learning, and data-driven decisions.

3. Environment, Ethics, and Social Responsibility

Managers must navigate external environmental forces and global operations while upholding high ethical standards and corporate social responsibility.

External Environments of Organizations

The general environment of an organization consists of broad external forces divided into five categories that set the context for all managerial decision making. You must continuously monitor and adapt to dynamic shifts in economic, legal-political, technological, sociocultural, and natural environment conditions that present both severe threats and great opportunities.

General Motors was criticized by BusinessWeek for being slow to realize that oil prices would not fall, global warming was a political reality, and fuel economy rules were tightening, illustrating the danger of ignoring environmental forces. The European Union imposed a 1.35 billion dollars fine on Microsoft in 2008 for antitrust violations.

Organizations operate within a specific environment composed of key stakeholders whose satisfaction and value creation determine long-term success. Top-level decisions are guided by stakeholder analysis, which evaluates how well the organization creates value for customers, suppliers, competitors, regulators, owners, employees, and society.

Starbucks creates value for competitors by opening in a neighborhood, which actually stimulates the growth of small independent coffee shops by building a broader clientele for coffee. In a study, 75 percent of MBA students answered that a business's top priority should be maximizing shareholder value, while 71 percent answered satisfying customers, 25 percent included creating value for communities, and 5 percent noted concern for environmentalism.

What Is Ethical Behavior?

Philosophers and managers evaluate ethical behavior through four distinct perspectives: utilitarian, individualism, moral-rights, and justice. The utilitarian view focuses on delivering the greatest good to the greatest number based on outcomes. The individualism view emphasizes long-term self-interest as self-regulating. The moral-rights view protects fundamental human rights like life, liberty, and due process. The justice view ensures impartiality and fairness across procedural, distributive, and interactional dimensions.

An executive cutting 30 percent of a plant's workforce during a recession to keep the business profitable and save the remaining jobs can justify this under a utilitarian view.

Managers frequently face ethical dilemmas that test personal values, and they often use specific rationalizations to justify unethical conduct. An ethical dilemma occurs when a choice offers potential benefits but lacks a clear consensus on right and wrong, often involving discrimination, sexual harassment, conflicts of interest, or customer confidence. Individuals rationalize misconduct by convincing themselves that an action is not really illegal, is in everyone's best interests, will never be found out, or that the organization will protect them.

A survey of Harvard Business Review subscribers showed that many managerial dilemmas involved pressure from bosses to support incorrect viewpoints or sign false documents. Research shows that 56 percent of U.S. workers felt pressured to act unethically in their jobs, and 48 percent said they had committed questionable acts within the past year.

A structured seven-step checklist helps decision makers evaluate the ethics of a potential action before implementation. The checklist guides individuals from recognizing a dilemma and gathering facts to testing options and checking public disclosure risks. The crucial spotlight questions force decision makers to consider how they would feel if their family found out or if the action appeared publicly on the internet or in a newspaper.

• Step 1. Recognize the ethical dilemma.
• Step 2. Get the facts.
• Step 3. Identify your options.
• Step 4. Test each option: Is it legal? Is it right? Is it beneficial?
• Step 5. Decide which option to follow.
• Step 6. Double-check with the spotlight questions: How will I feel if my family finds out about my decision? How will I feel about this if my decision is reported in the local newspaper or posted on the Internet?
• Step 7. Take action.

Management and Globalization

Corporate social responsibility involves balancing organizational interests with societal welfare, guided by contrasting economic philosophies and strategic postures. The classical view argues that management's sole responsibility is maximizing profits for owners and shareholders, as supported by Milton Friedman. The socioeconomic view advocates for broader social welfare and multi-stakeholder accountability, supported by Paul Samuelson. Organizations respond to social demands through four distinct strategies ranging from obstructionist and defensive to accommodative and proactive.

John Wood left Microsoft to found Room to Read, a nonprofit organization that builds schools and libraries in developing nations, exemplifying social entrepreneurship. Surveys show that 70 percent of students report that a company's reputation and ethics was very important when deciding whether to accept a job offer.

International business entry ranges from low-investment market-entry strategies to high-commitment direct investment strategies. Market-entry strategies include global sourcing, exporting, importing, licensing, and franchising, which require little expensive investment. Direct investment strategies involve major capital commitments and create ownership and control, such as joint ventures, strategic alliances, and wholly owned subsidiaries.

Rocky Brands bought full ownership of a manufacturing company in the Dominican Republic to establish a foreign subsidiary. Geert Hofstede established five dimensions of value differences that explain how national cultures influence organizational practices. The dimensions include power distance, individualism-collectivism, uncertainty avoidance, masculinity-femininity, and time orientation. In Hofstede's study, the United States was found to have the highest individualism score of any country.

4. Information, Decision Making, and Planning

Effective planning and decision making require quality information, structured problem-solving processes, and clear performance objectives.

Information and Decision Making

Data are raw facts and observations, whereas information is data made useful and meaningful for decision making. Information technology helps acquire, store, process, analyze, and transmit this information. You need information that meets five quality tests:

• Timely: information is available when needed for decision making and action
• High quality: information is accurate and reliable
• Complete: information is sufficient for the task at hand
• Relevant: information is appropriate and free from extraneous materials
• Understandable: information is clear and easily understood

In the music industry, customer demographic data regarding age groups buying downloads must be converted into information to change advertising strategies for different age segments. You use simplifying heuristics under limits, which frequently lead to common decision-making errors and cognitive traps. Skybus airline executives kept faith in an unviable low-fare business model and failed to quit when traffic fell and fuel prices soared. Skybus initially advertised $10 fares and achieved an 80 percent initial seat fill rate.

The decision-making process consists of five systematic steps from problem identification to result evaluation.

You can follow a structured sequence when choices matter. The steps ensure thorough evaluation of alternatives, ethical soundness, implementation with stakeholder participation, and control through result measurement.

• Step 1: Identify and define the problem
• Step 2: Generate and evaluate alternative solutions
• Step 3: Choose a preferred course of action and conduct ethics double check
• Step 4: Implement the decision
• Step 5: Evaluate results

Ajax Company decided to close its Murphysboro plant, offered transfers and job-finding help, ran local newspaper ads, and evaluated the results. The plant closure affected 172 employees, whose length of service ranged from 6 months to 18 years. The company ran job advertisements in local newspapers for 15 days. You can ensure ethical decision making by utilizing spotlight questions and evaluating alternatives against core moral criteria.

• Spotlight Question 1: How would I feel if my family found out about this decision?
• Spotlight Question 2: How would I feel if this decision were published in the local newspaper or on the Internet?
• Spotlight Question 3: What would the person with the strongest character and best ethical judgment do in your situation?

Why and How Managers Plan

Effective planning is an ongoing, five-step decision-making process that sets performance objectives and determines how to accomplish them. Oprah Winfrey's Leadership Academy in South Africa faced severe challenges when a dorm matron was arrested, but adjustments to the implementation allowed the project to continue toward its goals. Organizations utilize a hierarchy of plans ranging from long-range strategic directions to tactical and short-range operational plans. Long-range plans span 3 or more years, intermediate-range plans cover 1 to 2 years, and short-range plans run for 1 year or less. Skype was founded by Niklas Zennstrom and Janus Friis, grew rapidly to 54 million users, and was bought by eBay for $2.6 billion after a strategic whiteboard planning session. Management by Objectives integrates planning and control through joint goal-setting, performance reviews, and active participation. Samsung created the Value Innovation Program Center, or Camp Samsung, where cross-functional teams use tight timetables and stretch goals to develop innovative products. The center sent 2,000 employees through the program in one year, resulting in 90 new products. Time management is a critical personal planning skill required to handle high-pressure environments and avoid major time wasters. A survey showed 77% of managers felt the digital age increased decisions, while 43% complained there was less time available. Interruptions steal 28% of the average worker's day, and lost productivity costs the U.S. $650 billion per year. You can protect your schedule with strict personal discipline:

• Do say "No" to requests that divert you from what you really should be doing.
• Don't get bogged down in details that you can address later or leave for others.
• Do have a system for screening telephone calls, e-mails, and requests for meetings.
• Don't let drop-in visitors or instant messages use too much of your time.
• Do prioritize what you will work on in terms of importance and urgency.
• Don't become calendar-bound by letting others control your schedule.
• Do follow priorities; work on the most important and urgent tasks first.

Strategic Management

Strategic management operates across three distinct organizational levels: corporate, business, and functional. General Electric operates over 100 businesses at the corporate level, while individual units maintain distinct business strategies. Business-level strategy formulation relies on market scope and competitive advantage sources to establish generic competitive positions. Wal-Mart utilizes a cost leadership strategy in discount retailing, while Polo Ralph Lauren pursues differentiation through upscale fashions.

5. Organizing, Innovation, and Human Resource Management

Structuring work, driving organizational innovation, and managing human resources build the core operational capacity of a business.

Organizing as a Management Function

Organizing is the fundamental management process of arranging people and resources through a division of labor and coordinating results to achieve common goals. Once plans are established, organizing begins implementation by clarifying jobs and reporting relationships.

Traditional organizational design groups jobs through functional, divisional, or matrix structures to balance specialization and coordination. Functional structures group people by similar skills. Divisional structures group units by product, geography, customer, or process to prevent the functional chimneys problem. Matrix structures combine both by utilizing permanent cross-functional teams where employees report to two bosses. William R. Johnson reorganized H. J. Heinz from country-based structures into global product divisions to improve brand management.

Horizontal structures utilize teams, outsourcing networks, and boundaryless designs to increase flexibility. Team structures eliminate communication barriers using cross-functional teams. Network structures retain a small core while outsourcing non-core functions via strategic alliances. PricewaterhouseCoopers operates a global network of 160,000 partners across 150 countries.

Organizational designs range from mechanistic bureaucratic forms suited for stable environments to organic adaptive forms suited for dynamic contexts. Tom Burns and George Stalker investigated 20 manufacturing firms, concluding mechanistic forms thrive in stable environments while organic forms excel in dynamic ones. Modern trends favor flatter hierarchies, wider spans of control, and decentralization. At PepsiCo's Gamesa operation in Mexico, managers now have up to 56 direct reports compared to about 12 previously.

Innovation in Organizations

Organizations traditionally pursue product innovations, process innovations, and business model innovations. Apple introduced the iPod world, Toyota moved the hybrid market, and the Tata Group of India introduced the Nano car priced at $2,500. Pure Digital technologies sold the Flip Video camcorder for an approximate selling price of $120.

The innovation process follows a five-step wheel moving from initial imagination to commercial scaling:

• Imagining: thinking about new possibilities; making discoveries by ingenuity or communicating with others; extending existing ways.
• Designing: testing ideas in concept; discussing them with peers, customers, clients, or technical experts; building initial models, prototypes, or samples.
• Experimenting: examining practicality and financial value through experiments and feasibility studies.
• Assessing: identifying strengths and weaknesses, potential costs and benefits, and potential markets or applications—and making constructive changes.
• Scaling: gearing up and implementing new processes; putting to work what has been learned; commercializing new products or services.

Planned changes range from incremental modifications to radical, transformational changes that redefine the organization. Homeland Security Secretary Michael Chertoff announced that FEMA would get a major overhaul to increase its ability to deal with catastrophic events. You can manage planned change by applying specific practices:

• Establish a sense of urgency for change.
• Form a powerful coalition to lead the change.
• Create and communicate a change vision.
• Empower others to move change forward.
• Celebrate short-term wins and recognize those who help.
• Build on success; align people and systems with the new ways.
• Stay with it; keep the message consistent; champion the vision.

Human Resource Management Process

Human resource management focuses on three major responsibilities to build organizational performance capacity. You must attract, develop, and maintain a quality workforce. Federal laws protect workers against employment discrimination and enforce equal employment opportunity based strictly on job performance. These equal employment opportunity laws generally apply to organizations with 15 or more people. The Americans with Disabilities Act of 1990 prevents discrimination against people with disabilities and forces employers to focus on what a person can do.

Performance appraisal methods range from simple graphic scales to advanced behavioral approaches and multi-source feedback systems. Behaviorally anchored rating scales use specific descriptions of work behavior for different achievement levels, while 360° feedback incorporates input from superiors, subordinates, peers, and customers.

6. Leading, Controlling, and Operations Management

Successful leadership inspires human commitment, while control systems and operations management ensure that actual results meet planned objectives.

Perception and Individual Motivation

Your behavior at work depends on your personality and the forces driving your actions. The Big Five personality model identifies five key dimensions that consistently predict work and career outcomes: extraversion, agreeableness, conscientiousness, emotional stability, and openness to experience. Research indicates that conscientiousness is a strong predictor of job performance across most occupations, extraversion correlates with success in management and sales, and openness to experience relates to creativity.

Campbell Soup Co. CEO Doug Conant successfully managed his role despite describing himself as an introvert by focusing on driving the internal agenda rather than trying to please everyone.

Attitudes consist of cognitive, affective, and behavioral components, and job satisfaction serves as a major workplace attitude influencing attendance and turnover. A survey found that 37 percent of American workers reported being completely satisfied, 47 percent were somewhat satisfied, 10 percent were somewhat dissatisfied, 4 percent were completely dissatisfied, and 2 percent were not sure.

Frederick Herzberg's two-factor theory divides work drivers into satisfier or motivator factors found in job content and hygiene factors found in the job context. Hygiene factors eliminate dissatisfaction when improved, while satisfier factors build true motivation and job satisfaction. This pattern emerged from 4,000 interviews.

Victor Vroom's expectancy theory posits that motivation equals expectancy multiplied by instrumentality and valence. If any single factor equals zero, total work motivation drops to zero.

Edwin Locke's goal-setting theory establishes that clear, specific, and difficult goals lead to higher performance than generalized instructions, provided workers accept and commit to those goals. To apply this:

• Set specific goals: They lead to higher performance than do more generally stated ones, such as do your best.
• Set challenging goals: When viewed as realistic and attainable, more difficult goals lead to higher performance than do easy goals.
• Build goal acceptance and commitment: People work harder for goals they accept and believe in; they resist goals forced on them.
• Clarify goal priorities: Make sure that expectations are clear as to which goals should be accomplished first, and why.
• Provide feedback on goal accomplishment: Make sure that people know how well they are doing with respect to goal accomplishment.
• Reward goal accomplishment: Don't let positive accomplishments pass unnoticed; reward people for doing what they set out to do.

Human behavior is shaped by environmental consequences through four distinct reinforcement strategies governed by the law of effect. To use reinforcement effectively, you should:

• Clearly identify desired work behaviors.
• Maintain a diverse inventory of rewards.
• Inform everyone what must be done to get rewards.
• Recognize individual differences when allocating rewards.
• Follow the laws of immediate and contingent reinforcement.

Why and How Managers Control

Controlling is the management function of measuring performance and taking action to ensure that actual results meet or surpass planned objectives.

Henry Schacht of Cummins Engine Company described performance data as friendly facts that either provide psychic rewards or give alarms on how to respond. Managers use feedforward, concurrent, and feedback controls at different stages of the input-throughput-output cycle to ensure high performance. McDonalds uses feedforward controls for exact bun specifications, concurrent controls through shift leaders supervising operations, and feedback controls through customer satisfaction measurements.

The control process follows four sequential steps:

• Establish performance objectives and standards
• Measure actual performance
• Compare actual performance with objectives and standards
• Take corrective action as needed

10 Key Ideas

1. Intellectual capital, calculated as competency multiplied by commitment, drives the success of organizations operating as open systems in the modern workplace.
2. The core management process consists of four essential functions: planning, organizing, leading, and controlling resources through people.
3. Classical management theory established structured administrative principles, bureaucracy, and scientific rules of motion to maximize operational efficiency.
4. Behavioral management approaches demonstrated that social settings, group atmosphere, and participative supervision significantly increase worker productivity.
5. Managers must navigate dynamic external environmental forces and uphold high ethical standards through systematic decision-making checklists and social responsibility.
6. Effective planning requires quality information, structured problem-solving steps, and clear performance objectives set across long-range strategic and short-range operational levels.
7. Organizing structures coordinate a division of labor through functional, divisional, matrix, or horizontal designs to build operational capacity.
8. Human resource management builds organizational capacity by attracting, developing, and maintaining a quality workforce through equal opportunity and advanced appraisal methods.
9. Individual motivation is driven by specific factors such as job content satisfiers, expectancy calculations, clear goal-setting, and environmental reinforcement strategies.
10. The management control process measures actual performance against established objectives and standards to take corrective action across feedforward, concurrent, and feedback stages.