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Chapter 1. The Management Challenge: Critical Skills for the New Workplace. Global. Complex. Diverse. Ambiguous. Changing. Characteristics of the New World of Work. The New World of Work. Today’s Organizations. Hierarchies are flatter. Deadlines are shorter. Teams are pervasive.

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Chapter 1 l.jpg

Chapter 1

The Management Challenge:

Critical Skills for the New Workplace

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Characteristics of the NewWorld of Work

The New World

of Work

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Today’s Organizations

  • Hierarchies are flatter.

  • Deadlines are shorter.

  • Teams are pervasive.

  • Employees must manage themselves.

  • Technology is transforming the nature, pace, and possibilities of work.

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Demands of the Modern Workplace

Attention to

Ethical Behavior

Demands of

the Modern


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Management Skills and Company Success

  • One study of manufacturing firms showed managers’ ability to be three times as powerful in explaining company profitability as all other factors combined.

  • A study in the United Kingdom revealed management weaknesses to be the primary cause of insolvencies, with poor management being cited in more than 80 percent of cases.

  • These and many other studies of large and small firms are consistent in pointing to management skills as critical to firm success.

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Some Management Success Stories

  • Management success stories are abundant, cases in which management skills have created or transformed organizations in remarkable ways.

  • Among the many examples of management success stories to be examined in future chapters are such well known ones as:

    • Herb Kelleher’s development of a successful culture of fun at Southwest Airlines

    • Mary Kay Ash’s inspirational leadership at Mary Kay Cosmetics

    • Jack Welch’s transformation of GE

  • Others we’ll consider are less visible but no less dramatic.

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Web Wise: The Best and Worst Managers of the Year

  • Business Week annually selects its “Top 25 Managers of the Year.”

  • In 2002, it also felt compelled to select the “Worst 25 Managers.”

  • Among the “Top 25 Managers” were Lou Gerstner, Fujio Mitarai, Oprah Winfrey, and Carole Black.


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Critical Skills Across Business Functions

  • A study of financial staff found that, in addition to financial leadership, strategic thinking, effective communication, and leadership were identified as critical skills.

  • A survey of chief information officers found that more than three-fourths believe that more widespread use of technology will require IT workers to communicate more effectively and articulately. With more frequent information exchange, skills such as communication, diplomacy, and problem solving will grow in importance.

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Critical Skills Across Business Functions (Cont.)

  • A study of “Sales Management Competencies for the 21st Century” identified eight critical competencies for top-performing sales managers, including providing strategic vision, assembling teams of skilled employees, sharing information with employees, coaching, diagnosing performance, negotiating, and selecting high-potential employees.

  • The American Institute of Certified Public Accountants Core Competency Framework identified communicating, handling personal relationships, and facilitating learning and personal improvement among the skills and competencies accounting professionals will need for success in the future.

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Skills Training in Organizations

  • American corporations spend more than $64 billion annually for the training of their workforces, about 85% of it in the area of management skills.

  • Dana Corp. requires all its employees to complete 40 hours of education each year. The company has three Dana University schools.

  • Merck & Co. spends 3.5% of its payroll, or about $100 million, on employee skills development programs.

  • Abbott Technologies provides its employees with tuition reimbursement of up to $7,000 for undergraduate studies and $9,000 for graduate studies.

  • General Electric spends about $1 billion annually on education and training programs.

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Focus on Management: Skills Training at AT&T Wireless Services

  • AT&T Wireless Services is fighting to maintain its leadership in the face of intense competition and technological changes.

  • It uses a process called Managing Personal Growth (MPG) to help employees identify key competencies or critical skills, develop them with company resources, and translate them into decisions and actions that help the company meet its goals.

  • Employees must take responsibility for developing those critical skills on an ongoing basis

  • Once employees have gone through a process of deciding what new competencies they want to acquire, employees talk with their supervisors to develop an individual plan for their development.

  • Employees’ job security is grounded in what they know and the value they can create around themselves.

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The Status of Skills Training Services

  • A survey by the Conference Board showed that a full 98% reported that their skills training reaped significant economic benefits for the firm.

  • Still, many companies are failing to develop key managerial skills. For example, studies show:

    • just 21% of companies were able to identify where employees want to be in terms of skill development in a year

    • 58% of managers had received no leadership training, 72% had received no training on giving feedback on performance, and 87% had received no training in stress management

  • As such, you cannot assume that every company will help you develop needed skills.

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Focus on Management: ServicesIBM Manager Jam

  • With 319,000 employees and 32,000 managers across six continents, IBM is one of the world’s largest businesses.

  • With an increasingly mobile work force, many managers supervise employees they rarely see face to face.

  • Some joke that IBM now stands for “I’m By Myself.”

  • Samuel Palmisano, IBM’s new CEO, launched a two-year program exploring the role of the manager in the 21st century and needed management skills.

  • The project’s first event was “Manager Jam,” a 48-hour real-time Web event in which managers from 50 different countries swapped ideas and strategies for dealing with problems shared by all, regardless of geography.

  • 8,100 managers logged onto the company’s intranet to participate in discussion forums.

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Managerial Services

Skills and

Life Success


Skills and



Skills in the

New Work


The Need for Management Skills

The Need for

Management Skills

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Managerial Skills and Hiring Services

  • Companies are hiring for skills, including management skills.

  • A report released in 2000 by the U.S. General Accounting Office provided succinct advice for organizations:

    • “Hire, develop, and retain employees according to competencies. Identify the competencies -- knowledge, skills, abilities, and behaviors -- needed to achieve high performance of mission and goals, and build and sustain the organization’s talent pool through recruiting, hiring, development, and retention policies targeted at building and sustaining those competencies.”

  • Many companies go further, by tracking skills acquisition in their workforce and tying pay to skills attained, even if the skills are not used.

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Knowing How to Learn Services





Oral Communication

Problem Solving

Creative Thinking


Motivational Goal Setting

Personal and Career Development

Interpersonal Skills



Organizational Effectiveness


The 16 Basic Skills Employees Need(Figure 1-1)

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Ranking of HR Managers’ Perceptions of Criteria for Evaluating Business Graduates(From Figure 1-2)

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BLS Prediction Evaluating Business Graduates

The Bureau of Labor Statistics predicted that the average 22-year-old college graduate in the year 2000 would have more than eight different employers before he or she reaches the age of 32; that is a change of employers every 15 months.

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Growth in Evaluating Business Graduates

Management Positions


Hiring for the

Second Job

Downsizing and



Work Teams

Job Enrichment

and Empowerment

Managerial Skills in the New Work Environment

Demand for



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Focus on Management: Evaluating Business GraduatesHiring for Competencies at Merck

  • When Merck and Company needed to fill a large number of field representative positions, it decided to focus specifically on competencies.

  • Hiring managers were asked to identify the specific traits, skills, and behaviors most critical to job performance.

  • A process was then developed to screen for those competencies at various steps of candidate assessment.

  • Each candidate was then scored on the criteria to give a rating of his or her potential.

  • The process was more efficient than previous approaches, yielded greater consistency across regions, and increased diversity.

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Managerial Skills and Life Success Evaluating Business Graduates

  • These are all skills that will serve you well in life in general.

  • The abilities to communicate, to interact effectively with others, to negotiate, to solve problems, to lead, to think critically, to motivate others, to listen well, to deal with conflict, and to continue learning are valuable in social relationships, making daily transactions, and leading a fulfilling life.

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Managerial Skills Sets Evaluating Business Graduates

  • Technical skills include knowledge about methods, processes, and techniques needed to carry out some specialized activity as well as the ability to use tools and equipment related to the activity.

  • Human skills deal with human behavior and interpersonal processes, communication, cooperation, and social sensitivity.

  • Conceptual skills include analytical ability, creativity, efficiency in problem solving, and ability to recognize opportunities and potential problems.

  • Thus, the typology distinguishes between abilities to deal with things, people, and ideas and concepts.

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Conceptual Evaluating Business Graduates









Management Skills Needed for Success by Organizational Level (Figure 1-3)

Top-Level Managers



First-Level Managers

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Differences Between School and Business Evaluating Business Graduates(Figure 1-4)

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School Success and Career Success Evaluating Business Graduates

  • A wide range of studies show that success in school does almost nothing to predict subsequent career success.

  • It is the growing evidence of this very weak link that has led many educators and managers to call for a greater emphasis on skills in the learning process.

  • The authors of a major study of management education sponsored by the American Assembly of Collegiate Schools of Business concluded that, “The challenge of how to develop stronger people skills needs to be faced by both business schools … and by corporations and firms in their management development activities…”

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The Knowing-Doing Gap Evaluating Business Graduates

  • Simply knowing -- recognizing or understanding what to do to manage an organization -- is not enough for an individual to become a successful manager.

  • Jeffrey Pfeffer and Robert Sutton became intrigued by the large number of managers and executives that they worked with who knew what needed to be done but failed to implement it.

  • They referred to this phenomenon as the “Knowing-Doing Gap.”

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Causes of the Knowing-Doing Gap Evaluating Business Graduates

  • Knowledge management efforts emphasize technology and the exchange of codified information; this does not address how the information can be used to make better decisions to enhance work-unit or organizational effectiveness.

  • Knowledge management tends to treat knowledge as a tangible thing, as a stock or quantity, and therefore separates knowledge as a thing from the use of the thing.

  • Formal systems can’t easily store or transfer tacit knowledge. Tacit knowledge is information that is important for doing something effectively that cannot be captured, measured, or codified by formal knowledge systems in organizations.

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Causes of the Knowing-Doing Gap (Continued) Evaluating Business Graduates

  • The people responsible for transferring and implementing knowledge management frequently do not understand the actual work being documented.

  • Knowledge management tends to focus on specific practices and ignore the importance of philosophy. This refers to the tendency for people to want to know “what to do” to solve problems they face in organizations. If the knowledge acquired by the manager or business professional is merely a collection of practices without a coherent, overarching philosophy, then it becomes difficult to implement these practices.

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Bridging the Knowing-Doing Gap Evaluating Business Graduates

  • Why before how: Philosophy is important. Make sure that all members of an organization understand and are committed to the way of thinking about how to achieve given business objectives.

  • Knowing comes from doing and teaching others how. Teaching through apprenticeships, coaching and mentoring helps organizational members how to “do the right things.”

  • Action comes before elegant plans and concepts. The key is to focus on the bottom line of taking action and to ensure that talking about what to do is always coupled with specific actions.

  • There is no doing without mistakes. Organizations that bridge the knowing-doing gap are able to learn and become smarter based on their successes and failures in the marketplace.

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Bridging the Knowing-Doing Gap (Cont.) Evaluating Business Graduates

  • Fear fosters knowing-doing gaps. So drive out fear. Manage must create a value system, organizational culture, and policies and procedures that do not punish individuals for doing the right thing even if the results are less than optimal.

  • Beware of false analogies. Fight the competition, not each other. Management must promote a cooperative work environment where everyone is committed to working together to achieve the same business objectives.

  • Measure what matters and what can help turn knowledge into action. Management should identify a handful of critical measures of success for the organization and track them on an ongoing basis.

  • What leaders do, how they spend their time, and how they allocate resources, matters.

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Conceptual Evaluating Business Graduates




& Behavioral




The Social Learning Perspective(Figure 1-5)



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Skills Evaluating Business Graduates






The “4 A’s” of Skill Learning(Figure 1-6)



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Steps in the “4 A’s” of Skill Learning Evaluating Business Graduates

  • Skills Assessment.

    • The first step in skill learning is to get baseline measures on important skills and to foster interest in those skills.

  • Skills Awareness.

    • This step includes discussion of important background material, such as why the topic is important, key approaches to mastering the skill, and other relevant information.

  • Skills Attainment.

    • Here, through a variety of experiential methods, you develop the skill.

  • Skills Application.

    • This final step involves life application, such as using the skills in case analyses, life situations, and field projects.

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Master Content Evaluating Business Graduates

that Supports the

Application of the

Target Skill(s)

Practice the

Application of the

Target Skill(s)

in an Exercise or

Case Study

Take Post-Test

Measures of the

Target Skill(s)

Practice the

Application of the

Target Skill(s) in

an Organizational





Regarding the

Target Skill(s)

The Bottom Line: Mastering Management Skills

Take Baseline


Measures of the

Target Skill(s)

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Web Wise: Futurework Evaluating Business Graduates

  • On Labor Day 1999 the U.S. Department of Labor issued a report titled Futurework: Trends and Challenges for Work in the 21st Century. The report sought to outline three major challenges for the 21st century workplace and workforce:

    • The challenge of being skilled, not stuck in the new economy.

    • The challenge of flexibility and family as employers seek more flexibility to compete in the global marketplace and workers pursue more opportunities to spend time with their loved ones.

    • The challenge of destiny and diversity as employers hire from a more diverse pool of workers in the future.

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Skills in the Global Labor Market Evaluating Business Graduates

  • Firms and their management are becoming increasingly global.

  • A record number of foreign CEOs are now running major U.S. companies.

  • The number of international assignments of employees is expected to accelerate in the next five years.

  • Many people fail in international assignments, and almost half say they would not work abroad again.

  • This all suggests that employees often lack the skills needed to succeed in international positions.

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The Management Skills Framework Evaluating Business Graduates

  • Our management skills framework focuses on human and conceptual skills.

  • We classify the skills as primarily:

    • personal(such as self-management and critical thinking)

    • interpersonal (such as communicating and resolving conflict)

    • managerial (such as leading, motivating, managing teams, strategic planning, and creating a positive work culture)

  • The framework also considers three levels of effectiveness -- employee, work unit, and organizational.

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O Evaluating Business Graduates


Organizational Effectiveness

Work Unit Effectiveness

Employee Effectiveness

Managerial Skills

Interpersonal Skills

Personal Skills


Management Skills Framework(Figure 1-7)

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Action Planning and Implementation Evaluating Business Graduates

  • Action planning refers to the process through which a manager formulates the specific steps that will be taken to address business problems and challenges.

  • The action plan becomes a blueprint or roadmap for actual implementation.

  • Guidelines for developing and implementing effective action plans include:

    • The process must be systematic and actively managed.

    • Action planning requires a “layering” approach in which action steps are translated into specific supporting actions in relation to each employee who will be involved in implementation.

    • There must be ongoing and systematic evaluation of the results achieved after implementation of the action plan.

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Define Evaluating Business Graduates



with Solving

the Key





of Success

for Each


Work with


to Formulate

Action Steps

to Achieve







Each Action

Step to a



Modify the


or Action


Based on




the Results of


the Action

Steps Against

Your Initial




Support (e.g.,



Training) for


Clarify the

Role of Each

Employee in

Supporting the


of the Plan

The Bottom Line: Action Planning and Implementation




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Lighten Up: Performance! Evaluating Business Graduates

  • Companies are finding creative ways to develop their employees’ skills, and many are turning to literature, music, and the arts.

  • When management consulting firm McKinsey & Company wanted to develop its employees’ abilities to inspire, it hired outsiders to help the firm’s consultants and partners write and stage an opera in three days.

  • At Sears, Lockheed Martin, and Bristol Myers Squibb, a conductor and symphony orchestra rehearse Brahms to bring alive issues of leadership and teamwork for aspiring top managers.

  • Kodak, Arthur Anderson, and Boeing have brought in poets to foster employees’ creativity, and others are using Shakespeare’s Henry V as a case study on vision, strategy, and leadership skills.