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Essentials of Contemporary Management Eighth Edition Gareth R. Jones Jennifer M. George Rice University ESSENTIALS OF CONTEMPORARY MANAGEMENT, EIGHTH EDITION Published by McGraw-Hill Education, 2 Penn Plaza, New York, NY 10121. Copyright © 2019 by McGraw-Hill Education. All rights reserved. Printed in the United States of America. Previous editions © 2017, 2015, and 2013. No part of this publication may be reproduced or distributed in any form or by any means, or stored in a database or retrieval system, without the prior written consent of McGraw-Hill Education, including, but not limited to, in any network or other electronic storage or transmission, or broadcast for distance learning. Some ancillaries, including electronic and print components, may not be available to customers outside the United States. This book is printed on acid-free paper. 1 2 3 4 5 6 7 8 9 LWI 22 21 20 19 18 ISBN 978-1-259-92765-2 MHID 1-259-92765-2 Director: Michael Ablassmier Product Developer: Jamie Koch Executive Marketing Manager: Debbie Clare Content Project Managers: Ryan Warczynski; Keri Johnson Senior Buyer: Laura Fuller Senior Designer: Tara McDermott Senior Content Licensing Specialists: Ann Marie Janette Cover Image: ©McGraw-Hill Global Education Holdings, LLC Compositor: SPi Global All credits appearing on page or at the end of the book are considered to be an extension of the copyright page. Library of Congress Cataloging-in-Publication Data Names: Jones, Gareth R., author. | George, Jennifer M., author. Title: Essentials of contemporary management / Gareth R. Jones, Jennifer M. George. Description: Eighth edition. | New York, NY: McGraw-Hill Education, [2019] Identifiers: LCCN 2017043715 | ISBN 9781259927652 (alk. paper) Subjects: LCSH: Management. Classification: LCC HD31 .J5974 2019 | DDC 658—dc23 LC record available at https://lccn.loc. gov/2017043715 The Internet addresses listed in the text were accurate at the time of publication. The inclusion of a website does not indicate an endorsement by the authors or McGraw-Hill Education, and McGraw-Hill Education does not guarantee the accuracy of the information presented at these sites. mheducation.com/highered Brief Contents PART ONE Chapter Eight Control, Change, and Entrepreneurship Management and Managers Chapter One The Management Process Today 2 Appendix A: History of Management Thought 35 258 PART FIVE Leading Individuals and Groups Chapter Nine Motivation 294 Chapter Ten Leaders and Leadership 330 The Environment of Management Chapter Eleven Effective Team Management 362 Chapter Three Managing Ethics and Diversity 78 Chapter Twelve Building and Managing Human Resources 394 Chapter Four Managing in the Global Environment 122 PART SIX Chapter Two Values, Attitudes, Emotions, and Culture: The Manager as a Person 44 PART T WO PART THREE Planning, Decision Making, and Competitive Advantage Chapter Five Decision Making, Learning, Creativity, and Entrepreneurship Chapter Six Planning, Strategy, and Competitive Advantage 156 188 Controlling Essential Activities and Processes Chapter Thirteen Effective Communication and IT Management 430 Chapter Fourteen Operations Management: Managing Vital Operations and Processes 460 Appendix B: Career Development 482 Glossary/Subject Index Name Index Company Index 488 504 511 PART FOUR Organizing and Change Chapter Seven Designing Organizational Structure 222 iii Authors Gareth Jones currently offers pro bono advice on solving management problems to nonprofit organizations in Houston, Texas. He received his BA in Economics Psychology and his PhD in Management from the University of Lancaster, U.K. He was formerly Professor of Management in the Graduate School Courtesy of Gareth Jones of Business at Texas A&M University and earlier held teaching and research appointments at Michigan State University, the University of Illinois at Urbana–Champaign, and the University of Warwick, U.K. He continues to pursue his research interests in strategic management and organizational theory and his well-known research that applies transaction cost analysis to explain many forms of strategic and organizational behavior. He also studies the complex and changing relationships between competitive advantage and information technology in the 2010s. He has published many articles in leading journals of the field and his research has appeared in the Academy of Management Review, the Journal of International Business Studies, and Human Relations. He published an article about the role of information technology in many aspects of organizational functioning in the Journal of Management. One of his articles won the Academy of Management Journal’s Best Paper Award, and he is one of the most cited authors in the Academy of Management Review. He is, or has served, on the editorial boards of the Academy of Management Review, the Journal of Management, and Management Inquiry. Gareth Jones has used his academic knowledge to craft leading textbooks in management and three other major areas in the management discipline: organizational behavior, organizational theory, and strategic management. His books are widely recognized for their innovative, contemporary content and for the clarity with which they communicate complex, real-world issues to students. iv Jennifer George is the Mary Gibbs Jones Professor of Management and Professor of Psychology in the Jesse H. Jones Graduate School of Business at Rice University. She received her BA in Psychology/Sociology from Wesleyan University, Courtesy of Jennifer George her MBA in Finance from New York University, and her PhD in Management and Organizational Behavior from New York University. Prior to joining the faculty at Rice University, she was a professor in the Department of Management at Texas A&M University. Professor George specializes in organizational behavior and is well known for her research on mood and emotion in the workplace, their determinants, and their effects on various individual and group-level work outcomes. She is the author of many articles in leading peer-reviewed journals such as the Academy of Management Journal, the Academy of Management Review, the Journal of Applied Psychology, Organizational Behavior and Human Decision Processes, Journal of Personality and Social Psychology, and Psychological Bulletin. One of her papers won the Academy of Management’s Organizational Behavior Division Outstanding Competitive Paper Award, and another paper won the Human Relations Best Paper Award. She is, or has been, on the editorial review boards of the Journal of Applied Psychology, Academy of Management Journal, Academy of Management Review, Administrative Science Quarterly, Journal of Management, Organizational Behavior and Human Decision Processes, Organization Science, International Journal of Selection and Assessment, and Journal of Managerial Issues; was a consulting editor for the Journal of Organizational Behavior; was a member of the SlOP Organizational Frontiers Series editorial board; and was an associate editor of the Journal of Applied Psychology. She is a fellow in the Academy of Management, the American Psychological Association, the Association for Psychological Science, and the Society for Industrial and Organizational Psychology and a member of the Society for Organizational Behavior. She also has coauthored a textbook titled Understanding and Managing Organizational Behavior. Preface In this eighth edition of Essentials of Contemporary Management, we continue to focus on providing the most up-to-date account of the changes taking place in the world of management and management practices while maintaining our emphasis on making our text relevant and interesting to students. And we know from feedback from instructors and students that the text does engage them. Our increased focus on the challenges and opportunities facing businesses large and small and integrated timely examples bring management issues to life for students. The number and complexity of the strategic, organizational, and human resource challenges facing managers and all employees have continued to increase. In most companies, managers at all levels continue to play catch-up as they work toward meeting these challenges by implementing new and improved management techniques and practices. Today, relatively small differences in performance between companies, such as in the speed at which they bring new products or services to market or in the ways they motivate their employees to find ways to reduce costs or improve performance, can combine to give a company a significant competitive advantage. Managers and companies that utilize proven management techniques and practices in their decision making and actions increase their effectiveness over time. Companies and managers that are slower to implement new management techniques and practices find themselves at a growing competitive disadvantage that makes it even more difficult to catch up. Thus, in many industries, there is a widening gap between the most successful companies whose performance reaches new heights and their weaker competitors, because their managers have made better decisions about how to use company resources in the most efficient and effective ways. The challenges facing managers continue to mount as changes in the global environment, such as increasing global outsourcing and rising commodity prices, impact organizations large and small. Moreover, the revolution in information technology (IT) has transformed how managers make decisions across all levels of a company’s hierarchy and across all its functions and global divisions. This eighth edition addresses these emerging challenges. For example, we extend our treatment of global outsourcing, examine its pros and cons, and examine the new management problems that emerge when millions of functional jobs in IT, customer service, and manufacturing are performed in countries overseas. Similarly, increasing globalization means that managers must respond to major differences in the legal rules and regulations and ethical values and norms that prevail in countries around the globe. Other major challenges we continue to expand on in this edition include the impact of the steadily increasing diversity of the workforce on companies and how this increasing diversity makes it imperative for managers to understand how and why people differ so that they can effectively manage and reap the performance benefits of diversity. Similarly, across all functions and levels, managers and employees must continually seek ways to “work smarter” and increase performance. Using new technologies to improve all aspects of an organization’s operations to enhance efficiency and customer responsiveness is a vital part of this process. So too is the continuing need to innovate and improve the quality of goods and services, and the ways they are produced, to allow an organization to compete effectively. We significantly revised this edition of Essentials of Contemporary Management to address these challenges to managers and their organizations. Major Content Changes Once again, encouraged by the increasing number of instructors and students who use each new edition of our book, and based on the reactions and suggestions of both users and reviewers, we revised and updated our book in many ways. However, the organization and sequence of chapters remain the same in this new edition. Instructors tell us that they like the way the chapters flow, and the way they build up a picture of v vi Preface management part by part, to provide an excellent learning experience and a comprehensive coverage of management. The way we link and integrate topics, such as our inclusion of entrepreneurship in Chapter 5, “Decision Making, Learning, Creativity, and Entrepreneurship,” allows students to make connections among these important topics. As examples of the many changes we