What Is Management?To understand how important good management is,think about mistakes like these: Mistake #1. A high-level bank manager reduces amarketing manager to tears by angrily criticizing her in front of others for a mistakethat wasn’t hers.2 Mistake #2. Guidant Corporation, which makes cardiovascularmedical products, waited for 3 years, forty-fi ve device failures, and two patientdeaths before recalling 50,000 defective heart defi brillators, 77 percent of whichwere already implanted in patients. Patients were told that if they heard a beepingnoise, their defi brillator was malfunctioning and they should see their doctor or goto an emergency room.3Ah, bad managers and bad management. Is it any wonder that companies paymanagement consultants nearly $240 billion a year for advice on basic managementissues such as how to leadpeople effectively, organizethe company effi ciently, andmanage large-scale projectsand processes?4 This textbookwill help you understandsome of the basic issuesthat management consultants help companies resolve. (And it won’t cost you billions of dollars)

Management Is . . .Many of today’s managers got their start welding on thefactory fl oor, clearing dishes off tables, helping customers fi t a suit, or wiping up aspill in aisle 3. Similarly, lots of you will start at the bottom and work your way up.There’s no better way to get to know your competition, your customers, and yourbusiness. But whether you begin your career at the entry level or as a supervisor, yourjob as a manager is not to do the work but to help others do theirs. Management isgetting work done through others. Pat Carrigan, a former elementary school principalwho became a manager at a General Motors car parts plant, says, “I’ve nevermade a part in my life, and I don’t really have any plans to make one. That’s not myjob. My job is to create an environment where people who do make them can makethem right, can make them right the fi rst time, can make them at a competitive cost,and can do so with some sense of responsibility and pride in what they’re doing.I don’t have to know how to make a part to do any of those things.”5Pat Carrigan’s description of managerial responsibilities suggests that managersalso have to be concerned with effi ciency and effectiveness in the work process.Effi ciency is getting work done with a minimum of effort, expense, or waste. Forexample, how do millions of Girl Scouts from over 200 councils across the UnitedStates sell and deliver millions of boxes of cookies each year? In other words, whatmakes Girl Scouts so effi cient? The national organization, Girl Scouts of America(GSA), licenses only two bakers, so when GSA changes or improves its cookie offeringsby adding new fl avors or making healthier, sugar-free options, it can do soquickly and consistently nationwide. GSA has also designed Girl Scout cookie packagesto maximize the number of boxes that can fi t in a delivery truck. The nationalorganization optimizes its overall cookie inventory by tracking sales by type of cookieand troop. Because GSA operates effi ciently, 2.9 million scouts can sell and deliverover 50 million cookies in an 8-week period

Effi ciency alone, however, is not enough to ensure success. Managers must alsostrive for effectiveness, which is accomplishing tasks that help fulfi ll organizationalobjectives such as customer service and satisfaction. Wal-Mart’s new computerizedscheduling system is an example of effi ciency and effectiveness. It typically takes amanager a full day to schedule the weekly shifts for a single store. But the computerizedscheduling system calculates the schedules for Wal-Mart’s 1.3 million workers in

one day. The system also measures trends in store sales and customer traffi c so it canhave more employees on the job whenever its stores are busy. Tests in 39 stores indicatedthat 70 percent of customers reported improved checkout times and service usingthis scheduling system. Wal-Mart spokesperson Sarah Clark said, “The advantagesare simple: We will benefi t by improving the shopping experience by having the rightnumber of associates to meet our customers’ needs when they shop our stores.”7

Management Is . . . Good management is working through others to accomplish tasksthat help fulfi ll organizational objectives as effi ciently as possible.

2 Management FunctionsHenri Fayol, who was a managing director (CEO) of alarge steel company in the early 1900s, was one of the founders of the fi eld of management.You’ll learn more about Fayol and management’s other key contributorswhen you read about the history of management in Chapter 2. Based on his 20 yearsof experience as a CEO, Fayol argued that “the success of an enterprise generallydepends much more on the administrative ability of its leaders than on their technicalability.”8 Although Google CEO Eric Schmidt has extensive expertise and experiencein computer technology, Google succeeds because of his capabilities as a managerand not because of his ability to write computer code.Managers need to perform fi ve managerial functions in order to be successful,according to Fayol: planning, organizing, coordinating, commanding, and controlling.9Most management textbooks today have updated this list by dropping the coordinatingfunction and referring to Fayol’s commanding function as “leading.” Fayol’smanagement functions are thus known today in this updated form as planning, organizing,leading, and controlling. Studies indicate that managers who perform thesemanagement functions well are more successful, gaining promotions for themselvesand profi ts for their companies. For example, the more time CEOs spend planning,the more profi table their companies are.10 A 25-year study at AT&T found thatemployees with better planning and decision-making skills were more likely to bepromoted into management jobs, to be successful as managers, and to be promotedinto upper levels of management.11The evidence is clear. Managers serve their companies well when they plan, organize,lead, and control. So we’ve organized this textbook based on these functions ofmanagement, as shown in Exhibit 1.1. The major sections within each chapter of thistextbook are numbered using a single digit: 1, 2, 3, and so on. The subsections areconsecutively numbered, beginning with the major section number. For example, “2.1”indicates the fi rst subsection under the second major section. This numbering systemshould help you easily see the relationships among topics and follow the topic sequence.It will also help your instructor refer to specifi c topics during class discussion.

Now let’s take a closer look at each of the management functions: 2.1 planning, 2.2 organizing, 2.3 leading, and 2.4 controlling.2.1 PlanningPlanning involves determining organizationalgoals and a means for achieving them.As you’ll learn in Chapter 5, planning is oneof the best ways to improve performance. Itencourages people to work harder, to workhard for extended periods, to engage in behaviorsdirectly related to goal accomplishment,and to think of better ways to do theirjobs. But most importantly, companies thatplan have larger profi ts and faster growththan companies that don’t plan.

For example, the question “What businessare we in?” is at the heart of strategicplanning. You’ll learn about this in Chapter 6.If you can answer the question “What businessare you in?” in two sentences or less,chances are you have a very clear plan foryour business. But getting a clear plan isnot so easy. Sometimes even very successfulcompanies stray from their core business.This happened when eBay paid $2.6 millionto acquire Skype, which makes software forfree phone and video calls over the Internet.EBay is now selling Skype. Why? BecauseeBay’s new CEO realized it was a poor fi twith its core e-commerce business, meaningeBay’s Internet auction site and its PayPalonline payment service business.12 Likewise,Google, which makes its money fromsearch-based Internet advertising, says thatit is not in the advertising business. Its businessis to “organize the world’s information and make it universally accessible anduseful.”13 Not only can you search Google for websites, images, books and scholarlyarticles, and shopping opportunities but you can also organize your personal lifeusing Google’s calendar, e-mail, photo and document sharing, and newsfeed readerapplications. In contrast to eBay, Google’s $1.65 billion purchase of YouTube fi tswith Google’s core business by helping users access and organize video content.You’ll learn more about planning in Chapter 5 on planning and decision making,Chapter 6 on organizational strategy, Chapter 7 on innovation and change, andChapter 8 on global management.2.2 OrganizingOrganizing is deciding where decisions will be made, who will do what jobs andtasks, and who will work for whom in the company. On average, it costs morethan $10 billion to bring a new pharmaceutical drug to market. So when Pfi zer,the second-largest pharmaceutical fi rm in the world, acquired Wyeth, the eleventh largest, CEO Jeffrey Kindler decided to restructure Pfi zer’s research and developmentunit into two parts, one for small molecules or traditional pills and one for largemolecules or drugs made from living cells. Kindler said, “Creating two distinct, butcomplementary, research organizations, led by the top scientist from each company,will provide sharper focus, less bureaucracy and clearer accountability in drugdiscovery.”14 In all, the new company will consist of nine businesses, including primarycare, vaccines, oncology, consumer and nutritional products, and pharmaceuticals.You’ll learn more about organizing in Chapter 9 on designing organizations,Chapter 10 on managing teams, Chapter 11 on managing human resources, andChapter 12 on managing individuals and a diverse work force.2.3 LeadingOur third management function, leading, involves inspiring and motivating workersto work hard to achieve organizational goals. When Anne Mulcahy became Xerox’sCEO, the company was on the brink of bankruptcy—it was $17.1 billion in debtand had only $154 million in cash. In addition, 3 years of steeply declining revenuesand increasing losses had dropped the company’s stock price from $64 a share tojust $4.43. Mulcahy admitted that the responsibility of turning the company aroundfrightened her: “Nothing spooked me as much as waking up in the middle of thenight and thinking about 96,000 people and retirees and what would happen if thisthing went south.”16 Still, she took the job.Mulcahy, who traveled to two and sometimes three cities a day to talk to Xeroxmanagers and employees, implored them to “save each dollar as if it were yourown.” And at each stop, she reminded them, “Remember, by my calculations, thereare [she fi lls in the number] selling days left in the quarter.”17 Mulcahy said, “One of

the things I care most about at Xerox is the morale and motivation at the company.I think it is absolutely critical to being able to deliver results. People have to feelengaged, motivated and feel they are making a contribution to something that isimportant. I spend the vast majority of my time with customers and employees, andthere is nothing more important for any of us to do as leaders than communicate andengage with our two most important constituencies.”

Today, as a result of Mulcahy’s leadership and the hard work of dedicatedXerox employees, Xerox is profi table and a leading developer of color digital printingtechnologies.19 Still, says Mulcahy, “The paranoia never goes away. There is a never endingjourney here. You are never done. The next challenge is around the corner. You haveto have an appetite for that. . . . I always fi nd something to worry about at night.”20You’ll learn more about leading in Chapter 13 on motivation, Chapter 14 onleadership, and Chapter 15 on managing communication.2.4 ControllingThe last function of management, controlling, is monitoring progress toward goalachievement and taking corrective action when progress isn’t being made. The basiccontrol process involves setting standards to achieve goals, comparing actualperformance to those standards, and then making changes to return performanceto those standards. Needing to cut costs (the standard) to restore profi tability (thegoal), major airlines began paying Pratt & Whitney to power wash the grime fromthe inside of their jets’ engines two to three times a year at a cost of $3,000 perwash. Why? Cleaner engines reduce fuel consumption by 1.2 percent and can go18 months longer before having to be rebuilt for regular maintenance—at a highcost. Johnny Holly, who manages engine maintenance and engineering for SouthwestAirlines, says “It’s more than just a subtle improvement when they wash theseengines. A phenomenal amount of fuel can be saved doing this.”21 Indeed, theseengine washes will not only pay for themselves, they will save Southwest airlines anadditional $5.1 million in fuel costs on an annual basis.You’ll learn more about the control function in Chapter 16 on control, Chapter 17on managing information, and Chapter 18 on managing service and manufacturingoperations.

Kinds of ManagersAs shown in Exhibit 1.2, there are four kinds of managers,each with different jobs and responsibilities: 3.1 top managers, 3.2 middlemanagers, 3.3 fi rst-line managers, and 3.4 team leaders.3.1 Top ManagersTop managers hold positions like chief executive offi cer (CEO), chief operating offi cer(COO), chief fi nancial offi cer (CFO), and chief information offi cer (CIO) and are responsiblefor the overall direction of the organization. Top managers have the followingresponsibilities.22 First, they are responsible for creating a context for change. In fact,the CEOs of CitiGroup, Merrill Lynch, Home Depot, Starbucks, Motorola, and Jet BlueAirways were all fi red precisely because they had not moved fast enough to bring aboutsignifi cant changes in their companies.23 Indeed, in both Europe and the United States,35 percent of all CEOs are eventually fi red because of their inability to successfully changetheir companies.24 Creating a context for change includes forming a long-range vision ormission for the company. As one CEO said, “The CEO has to think about the future morethan anyone.”25 Once that vision or mission is set, the second responsibility of top managersis to develop employees’ commitment to and ownership of thecompany’s performance. That is, top managers are responsible forcreating employee buy-in. Trusting that his 61,000 employeescould dramatically increase product innovation at Whirlpool

appliances, then CEO David Whitwam put $135 milliondirectly into their hands and told them to come up withnew ideas. He also encouraged them to go to theirbosses with ideas. And if their bosses wouldn’t listen,they were to bring their new product ideasdirectly to him. Employees fl ocked to an inhousewebsite with a course on innovationand a list of all the new suggestions andideas, racking up 300,000 hits on the siteeach month. Of the commitment displayedby his workers, Whitwamsays, “I had never seen a strategythat was so energizing to somany people.” Today, revenuefrom innovative productshas quadrupled. And insteadof cutting pricesto maintain sales,Whirlpool’s pricesare now rising5 percent peryear becausecustomersarewillingto pay more for its innovative products, such as the Duet washer and dryer, which were designedbased on employees’ ideas.26Third, top managers must create a positive organizational culture throughlanguage and action. Top managers impart company values, strategies, and lessonsthrough what they do and say to others both inside and outside the company.One CEO said, “I write memos to the board and our operating committee. I’msure they get the impression I dash them off, but usually they’ve been drafted 10or 20 times. The bigger you get, the more your ability to communicate becomesimportant. So what I write, I write very carefully. I labor over it.”27 Above all, nomatter what they communicate, it’s critical for CEOs to send and reinforce clear,consistent messages.28 A former Fortune 500 CEO said, “I tried to [use] exactlythe same words every time so that I didn’t produce a lot of, ‘Last time you saidthis, this time you said that.’ You’ve got to say the same thing over and overand over.”29Finally, top managers are responsible for monitoring their business environments.A. G. Lafl ey, former CEO of Procter & Gamble, believes that most people do not understandthe CEO’s responsibilities. Says Lafl ey, “Conventional wisdom suggests thatthe CEO was primarily a coach and a utility infi elder, dropping in to solve [internal]problems where they crop up. In fact, however, the CEO has a very specifi c job thatonly he or she can do: Link the external world with the internal organization.”30 Thismeans that top managers must closely monitor customer needs, competitors’ moves,and long-term business, economic, and social trends.3.2 Middle ManagersMiddle managers hold positions like plant manager,

regional manager, or divisional manager.They are responsible for setting objectives consistentwith top management’s goals and forplanning and implementing subunit strategiesfor achieving those objectives.31 One specifi cmiddle management responsibility is to planand allocate resources to meet objectives.A second major responsibility is to coordinateand link groups, departments, and divisionswithin a company. In February 2008,a tornado destroyed a Caterpillar plant inOxford, Mississippi, the only plant in thecompany that produced a particular couplingrequired for many of Caterpillar’s machines.The disaster threatened a worldwideproduction shutdown. Greg Folley, a middlemanager in charge of the parts division thatincluded the plant, gave workers 2 weeksto restore production to pre-tornado levels.He said, “I was betting on people to get itdone.” He contacted new vendors, sent engineersfrom other Caterpillar locations toMississippi to check for quality, and set updistribution operations in another facility.Meanwhile, Kevin Kempa, the plant managerin Oxford, moved some employeesto another plant, delivered new training to employees during the production hiatus, and oversaw reconstruction of the plant.The day before the 2-week deadline, the Oxford plant was up and running and produced8,000 parts.32A third responsibility of middle management is to monitor and manage the performanceof the subunits and individual managers who report to them. GraemeBetts is the manager of the Southwest region for Lloyds Pharmacy in England. WhileBetts works with people at all levels, from health-care assistants to board directors,he spends most of his time with the nine area managers who report to him. In termsof monitoring and managing the performance of his area managers and, in turn, thestore managers who report to them, Betts says, “We have 231 pharmacies, and as a[management] team our task is to ensure that our pharmacies are as good as theycan be, and are offering a great service to our customers. To this end we are focusedon providing an effi cient [drug] dispensing service, and continually developing newprofessional services such as . . . smoking cessation and medicines-use reviews.”34Finally, middle managers are also responsible for implementing the changes orstrategies generated by top managers. Wal-Mart’s strategy refl ects its mission, “Savingpeople money so they can live better.” When Wal-Mart began selling groceries inits new 200,000-square-foot supercenters, it made purchasing manager Brian Wilsonresponsible for buying perishable goods more cheaply than Wal-Mart’s competitors.When small produce suppliers had trouble meeting Wal-Mart’s needs, Wilson workedclosely with them and connected them to RetailLink, Wal-Mart’s computer network,“which allows our suppliers immediate access to all information needed to help runthe business.” Over time, these steps helped the produce suppliers lower costs anddeliver the enormous quantities of fresh fruits and vegetables that Wal-Mart’s supercentersneed.35 They also helped Wal-Mart become the world’s largest grocer.36

3.3 First-Line ManagersFirst-line managers hold positions like offi ce manager, shift supervisor, or departmentmanager. The primary responsibility of fi rst-line managers is to manage the performance of entry-level employees who are directly responsible for producing acompany’s goods and services. Thus, fi rst-line managers are the only managers whodon’t supervise other managers. The responsibilities of fi rst-line managers include

monitoring, teaching, and short-term planning.First-line managers encourage, monitor, and reward the performance of theirworkers. For example, Jeff Dexheimer requires the waiters and waitresses he supervisesat the upscale Melting Pot restaurant in St. Louis to memorize a complexmenu and a 400-item wine list. Says Dexheimer, “They’ve got to know every liquor,every beer, every food item, as well as the sauces it comes with.” To reduce turnoverand keep his 65 employees motivated, Dexheimer gives out $25 nightly rewards forhaving the best attitude or for selling the most wine. Since his employees are youngand mostly single, he makes sure they work only one night each weekend. Andonce a week, after the restaurant closes, he takes his entire staff out for drinks. SaysDexheimer, as a manager, “I don’t make myself successful. My employees make mesuccessful.”37First-line managers also teach entry-level employees how to do their jobs.Damian Mogavero’s company, Avero LLC, helps restaurants analyze sales data foreach member of a restaurant’s waitstaff. Restaurant managers who use these data,says Mogavero, will often take their top-selling server to lunch each week as a reward.The best managers, however, will also take their poorest-selling servers outto lunch to talk about what they can do to improve their performance.38 Likewise,Coca-Cola manager Tom Mattia says, “I try to make every interaction I have withsomeone on my team a teaching experience. There are always specifi c work issuesthat need to get addressed, but then I try to explain my thinking behind an approachso people can get more experience.”39First-line managers also make detailed schedules and operating plans based onmiddle management’s intermediate-range plans. By contrast to the long-term plansof top managers (3 to 5 years out) and the intermediate plans of middle managers(6 to 18 months out), fi rst-line managers engage in plans and actions that typicallyproduce results within 2 weeks.40 Consider the typical convenience store manager(e.g., 7-Eleven) who starts the day by driving past competitors’ stores to inspect theirgasoline prices and then checks the outside of his or her store for anything that mightneed maintenance, such as burned-out lights or signs, or restocking, like windshieldwasher fl uid and paper towels. Then comes an inside check, where the manager determineswhat needs to be done for that day. (Are there enough coffee and donuts forbreakfast or enough sandwiches for lunch?) Once the day is planned, the managerturns to weekend orders. After accounting for the weather (hot or cold) and thesales trends at the same time last year, the manager makes sure the store will haveenough beer, soft drinks, and Sunday papers on hand. Finally, the manager looks 7 to10 days ahead for hiring needs. Because of strict hiring procedures (basic math tests,drug tests, and background checks), it can take that long to hire new employees. Saidone convenience-store manager, “I have to continually interview, even if I am fullystaffed.”41

3.4 Team LeadersThe fourth kind of manager is a team leader. This relatively new kind of managementjob developed as companies shifted to self-managing teams, which, by defi -nition, have no formal supervisor. In traditional management hierarchies, fi rst-linemanagers are responsible for the performance of nonmanagerial employees and havethe authority to hire and fi re workers, make job assignments, and control resources In this new structure, the teams themselves perform nearly all of the functions performedby fi rst-line managers under traditional hierarchies.42Team leaders have a different set of responsibilities than traditional fi rst-linemanagers.43 Team leaders are primarily responsible for facilitating team activitiestoward accomplishing a goal. This doesn’t mean team leaders are responsible forteam performance. They aren’t. The team is.Team leaders help their team members planand schedule work, learn to solve problems,and work effectively with each other. Managementconsultant Franklin Jonath says,“The idea is for the team leader to be at theservice of the group.” It should be clear that

the team members own the outcome. Theleader is there to bring intellectual, emotional,and spiritual resources to the team.Through his or her actions, the leader shouldbe able to show the others how to think about the work that they’re doing in thecontext of their lives. It’s a tall order, but the best teams have such leaders.44Relationships among team members and between different teams are crucial togood team performance and must be well managed by team leaders, who are responsiblefor fostering good relationships and addressing problematic ones within theirteams. Getting along with others is much more important in team structures becauseteam members can’t get work done without the help of other teammates. For example,studies show that it’s not the surgeon but the interactions between the surgeon and alloperating room team members that determine surgical outcomes. However, at twentyhospitals, 60 percent of the operating room team members—nurses, technicians, andother doctors—agreed with the statement, “In the ORs here, it is diffi cult to speak upif I perceive a problem with patient care.”45 And when operating room team membersdon’t speak up, serious mistakes can occur no matter how talented the surgeon.Consequently, surgeons are using “safety pauses” to better involve members of theirsurgical teams. The surgeon will pause, ask if anyone has concerns or comments, andaddress them if need be. Studies show that safety pauses reduce mistakes, such as operatingon the wrong leg or beginning surgery with key surgical instruments missing.46Team leaders are also responsible for managing external relationships. Team leadersact as the bridge or liaison between their teams and other teams, departments,and divisions in a company. For example, if a member of Team A complains aboutthe quality of Team B’s work, Team A’s leader is responsible for solving the problemby initiating a meeting with Team B’s leader. Together, these team leaders are responsiblefor getting members of both teams to work together to solve the problem. If it’sdone right, the problem is solved without involving company management or blamingmembers of the other team.47So the team leader’s job involves a different set of skills than traditional managementjobs typically do. For example, a Hewlett-Packard ad for a team leader positionsays, “Job seeker must enjoy coaching, working with people, and bringing aboutimprovement through hands-off guidance and leadership.”48 Team leaders who failto understand how their roles are different from those of traditional managersoften struggle in their jobs. A team leader at Texas Instruments said, “I didn’t buyinto teams, partly because there was no clear plan on what I was supposed to do. . . .I never let the operators [team members] do any scheduling or any ordering ofparts because that was mine. I fi gured as long as I had that, I had a job.”49You will learn more about teams in Chapter 10

Managerial RolesAlthough all four types of managers engage in planning,organizing, leading, and controlling, if you were to follow them around during atypical day on the job, you would probably not use these terms to describe whatthey actually do. Rather, what you’d see are the various roles managers play. ProfessorHenry Mintzberg followed fi ve American CEOs, shadowing each for a weekand analyzing their mail, their conversations, and their actions. He concluded thatmanagers fulfi ll three major roles while performing their jobs:50

≫ Interpersonal roles.≫ Informational roles.≫ Decisional roles.In other words, managers talk to people, gather and give information, andmake decisions. Furthermore, as shown in Exhibit 1.3, these three major roles can

be subdivided into ten subroles. Let’s examine each major role—4.1 interpersonal,4.2 informational, and 4.3 decisional roles—and their ten subroles.4.1 Interpersonal RolesMore than anything else, management jobs are people-intensive. Estimates vary withthe level of management, but most managers spend between two-thirds and fourfifths of their time in face-to-face communication with others.51 If you’re a loner, orif you consider dealing with people a pain, then you may not be cut out for managementwork. In fulfi lling the interpersonal role of management, managers performthree subroles: fi gurehead, leader, and liaison.In the fi gurehead role, managers perform ceremonial duties like greeting companyvisitors, speaking at the opening of a new facility, or representing the companyat a community luncheon to support local charities. Wichita, Kansas-basedCessna is the largest manufacturer of general aviation planes in the world. WhenCessna opened a new 101,000-square-foot jet service facility employing 77 workersin Mesa, Arizona, CEO Jack Pelton fl ew in to join Mesa’s mayor, Cessna managers,and local workers and their families to celebrate the grand opening

In the leader role, managers motivate and encourage workers toaccomplish organizational objectives. At RedPeg Marketing, cofounderBrad Nierenberg motivates his employees with company perks, suchas a three-bedroom beach house that is available to all forty-eightemployees for vacations, cold beer in the refrigerator, free breakfast atstaff meetings, and trophies and awards for great performance. Once,after the company had met a critical goal, Nierenberg walked into theoffi ce with $38,000 in cash, or $1,000 each for his then thirty-eightemployees. Said Nierenberg, “I thought, ‘I’ve got to make a big deal outof this; I can’t just put it in their checking account because that’s not asfun.’ I thought it would be cool for them to see $30,000 in cash.”53In the liaison role, managers deal with people outside their units. Studiesconsistently indicate that managers spend as much time with outsidersas they do with their own subordinates and their own bosses. In additionto his normal duties, Rajesh Hukku, board chair of j-Flex Solutions,a maker of fi nancial services software, regularly goes on sales calls, helpsclose sales deals, and markets his product to potential customers at industryconventions and forums.54 The same holds true for the conveniencestore managers discussed earlier. Even fi rst-line managers spend much oftheir time dealing with outsiders as they deal with vendors who make storedeliveries and set up product displays, work with computer technicianswho help with computer glitches and satellite connections to headquarters,order from sales representatives who supply the mops and deli aprons usedin the store, and even as they call the sheriff about stolen credit cards.55

4.2 Informational RolesNot only do managers spend most of their time in face-to-face contact with othersbut they spend much of it obtaining and sharing information. Indeed, Mintzbergfound that the managers in his study spent 40 percent of their time giving and gettinginformation from others. In this regard, management can be viewed as processinginformation, gathering information by scanning the business environment and listeningto others in face-to-face conversations, processing that information, and thensharing it with people both inside and outside the company. Mintzberg describedthree informational subroles: monitor, disseminator, and spokesperson.In the monitor role, managers scan their environment for information, activelycontact others for information, and, because of their personal contacts, receive agreat deal of unsolicited information. Besides receiving fi rsthand information, managersmonitor their environment by reading local newspapers and the Wall StreetJournal to keep track of customers, competitors, and technological changes that mayaffect their businesses. Now, managers can also take advantage of electronic monitoringand distribution services that track the news wires (Associated Press, Reuters,and so on) for stories related to their businesses. These services deliver customized

electronic newspapers that include only stories on topics the managers specify. BusinessWire (http://www.businesswire.com) monitors and distributes daily news headlinesfrom major industries (e.g., automotive, banking and fi nancial, health, hightech).56 CyberAlert (http://www.cyberalert.com) keeps round-the-clock track of newstories in categories chosen by each subscriber.57 FNS NewsClips Online (http://www.news-clips.com) provides subscribers daily electronic newsclips from morethan 5,000 online news sites.58Because of their numerous personal contacts and their access to subordinates, managersare often hubs for the distribution of critical information. In the disseminator role, managers share the information they have collected with their subordinates and othersin the company. At Telephonica 02, a British-based telecommunications fi rm ranked asone of the best places to work in London, managers sit down twice a year with their employeesto review a pocket-sized pamphlet outlining the company’s goals and objectives.The discussions center around how the employees’ personal development and growthplans can be linked to the company’s goals.59 Although there will never be a completesubstitution for face-to-face dissemination of information, Serena Software, based inRedwood City, California, uses Facebook to communicate worldwide with its 850 employees.On “Facebook Fridays,” employees are given an hour, should they choose, tospend time using Facebook to communicate about themselves or learn about others inthe company. Serena Software relies on Facebook so much for recruiting new employeesand marketing its products that it has become the company’s de facto intranet.60 (You’llread more about intranets in Chapter 15 on communication.)In contrast to the disseminator role, in which managers distribute information to employeesinside the company, managers in the spokesperson role share information withpeople outside their departments and companies. One of the most common ways CEOsserve as spokespeople for their companies is at annual meetings with company shareholdersor the board of directors. CEOs also serve as spokespeople to the media whentheir companies are involved in major news stories. When Toshiba pulled the plug onits effort to position its HD-DVD technology as the dominant format for new high-definitionplayers, ceding the market to Sony’s Blu-ray, it was the company CEO AtsutoshiNishida who explained this move to the public. Because Japanese companies valuepride and tend to choose less high-profi le strategies for backing out of a business deal,it was surprising that Nishida acted as the spokesperson in this situation. But Nishidaemphasized, “We were in this to win,” and explained Toshiba’s decision to change itsstrategy and invest energy in alternative avenues of growth.61

4.3 Decisional RolesMintzberg found that obtaining and sharing information is not an end in itself.Obtaining and sharing information with people inside and outside the companyis useful to managers because it helpsthem make good decisions. Accordingto Mintzberg, managers engagein four decisional subroles: entrepreneur,disturbance handler, resourceallocator, and negotiator.In the entrepreneur role, managersadapt themselves, their subordinates,and their units to change.Veterans Affairs (VA) hospitals longhad a reputation for red tape, inefficiency, and second-class medicaltreatment. Today, though, independentgroups rank VA hospitalsas some of the best in the country.Fifteen years ago, the VA’s leadership

instituted a culture of accountabilityand change aimedat improving its entire system.Doctors, nurses, staffers, andadministrators met regularly toreview possible improvements.

After a VA nurse in Topeka, Kansas, noticed that rental car companies used handheldbar-code scanners to check in returned cars, she suggested using bar codes onpatients’ ID bracelets and their bottled medicines. Today, the VA’s bar-code scannersare tied to an electronic records system that prevents nurses from handing out thewrong medicines and automatically alerts the hospital pharmacy to possibly harmfuldrug interactions or dangerous patient allergies.62In the disturbance handler role, managers respond to pressures and problems sosevere that they demand immediate attention and action. Top managers often playthe role of disturbance handler, but shortly before Hurricane Katrina made landfall,Wal-Mart’s then CEO Lee Scott realized that all of the company’s top managers andstore managers would have to be effective disturbance handlers in order to serve thecompany and the communities in which they worked. So Scott sent this message out:“A lot of you are going to have to make decisions above your level. Make the bestdecision that you can with the information that’s available to you at the time, andabove all, do the right thing.”63 Empowered by their CEO, employees used a forkliftto crash through a warehouse door to get water, broke into a locked pharmacy toretrieve medicine for a hospital, and crashed a bulldozer through the front of a storeso that supplies could be used to sustain the local community.In the resource allocator role, managers decide who will get what resources andhow many resources they will get. For instance, as the recession that began in thefall of 2008 deepened, companies slashed production by closing facilities, laying offworkers, and cutting pay for surviving workers and managers. But when it came toresearch and development (R&D) spending, thelargest fi rms spent as much on R&D as theydid before, despite revenues falling by nearly8 percent. Why did they allocate an evenlarger part of their budgets to R&D spendingin the middle of a recession? Because inprior economic downturns, continued investmentsin R&D led to the developmentof successful products such as the iPod andfuel-effi cient jet engines. Says Jim Andrew,of the Boston Consulting Group, “Companies by and large realized that large reductionsin R&D are suicidal.” Therefore, companies such as Intel, which saw a90 percent drop in its net income, still spent $5.4 billion on R&D. Likewise, 3M, whichcut capital spending by 30 percent and laid off 4,700 workers, slightly increased itsR&D spending so as not to sacrifi ce future profi ts from new, innovative products.64In the negotiator role, managers negotiate schedules, projects, goals, outcomes,resources, and employee raises. It was as a negotiator that Mike Zafi rovski wasable to address the $9 billion class-action lawsuit that could have put Nortel outof business. After three earnings restatements in 3 years, the value of Nortel’s stockhad declined by $30 billion, and fed-up shareholders brought two class-action lawsuitsagainst the company seeking $9 billion in damages. Most managers wouldassume that there was only one option—to fi ght the lawsuit—because payingthe $9 billion in damages would put Nortel out of business. Zafi rovski, however,negotiated by inviting the fi ve attorneys from the plaintiffs to work directly withhim and his team by using a court-appointed mediator to achieve a settlement.Zafi rovski apologized for Nortel’s errors, saying, “We let you down.” Then, heasked them to “not kill the company,” because in doing so, “you would receiveabsolutely nothing.” The apology worked. Attorney Max Berger said, “We wereall very impressed by him.” Nortel agreed to partially compensate shareholders fortheir losses by paying $2.4 billion in cash and stock. The settlement allowed Nortel

to stay in business.65

What Companies Look forin ManagersWhen companies look for employees who would begood managers, they look for individuals who have technical skills, human skills,conceptual skills, and the motivation to manage.67 Exhibit 1.4 shows the relativeimportance of these four skills to the jobs of team leaders, fi rst-line managers, middlemanagers, and top managers.Technical skills are the specialized procedures,techniques, and knowledge required to get the jobdone. For the sales managers described above,technical skills involve the ability to fi nd new salesprospects, develop accurate sales pitches based oncustomer needs, and close the sale. For a nurse supervisor,technical skills include being able to insertan IV or operate a crash cart if a patient goesinto cardiac arrest.Technical skills are most important for teamleaders and lower-level managers because they supervisethe workers who produce products or servecustomers. Team leaders and fi rst-line managersneed technical knowledge and skills to train newemployees and help employees solve problems.Technical knowledge and skills are also neededto troubleshoot problems that employees can’thandle. Technical skills become less important asmanagers rise through the managerial ranks, butthey are still important.Human skills can be summarized as the abilityto work well with others. Managers with humanskills work effectively within groups, encourageothers to express their thoughts and feelings, aresensitive to others’ needs and viewpoints, and are good listeners and communicators.Human skills are equally important at all levels of management, from fi rst-linesupervisors to CEOs. However, because lower-level managers spend much of theirtime solving technical problems, upper-level managers may actually spend more timedealing directly with people. On average, fi rst-line managers spend 57 percent oftheir time with people, but that percentage increases to 63 percent for middle managersand 78 percent for top managers.68Conceptual skills are the ability to see the organization as a whole, to understandhow the different parts of the company affect each other, and to recognizehow the company fi ts into or is affected by its external environment such as thelocal community, social and economic forces, customers, and the competition.Good managers have to be able to recognize, understand, and reconcile multiplecomplex problems and perspectives. In other words, managers have to be smart! Infact, intelligence makes so much difference for managerial performance that managerswith above-average intelligence typically outperform managers of average intelligence by approximately 48 percent.69 Clearly, companies needto be careful to promote smart workers into management. Conceptualskills increase in importance as managers rise through the managementhierarchy.Good management involves much more than intelligence, however.For example, making the department genius a manager can be disastrousif that genius lacks technical skills, human skills, or one otherfactor known as the motivation to manage. Motivation to manage isan assessment of how motivated employees are to interact with superiors,

participate in competitive situations, behave assertively towardothers, tell others what to do, reward good behavior and punish poorbehavior, perform actions that are highly visible to others, and handleand organize administrative tasks. Managers typically have a strongermotivation to manage than their subordinates, and managers at higherlevels usually have a stronger motivation to manage than managersat lower levels. Furthermore, managers with a stronger motivation tomanage are promoted faster, are rated as better managers by their employees,and earn more money than managers with a weak motivationto manage.70

Review 5What Companies Look for in Managers Companies do not want one-dimensionalmanagers. They want managers with a balance of skills. They want managers who knowtheir stuff (technical skills), are equally comfortable working with blue-collar and whitecollaremployees (human skills), are able to assess the complexities of today’s competitivemarketplace and position their companies for success (conceptual skills), and want toassume positions of leadership and power (motivation to manage). Technical skills aremost important for lower-level managers, human skills are equally important at all levelsof management, and conceptual skills and motivation to manage increase in importanceas managers rise through the managerial ranks.

6 Mistakes Managers MakeAnother way to understand what it takes to be a manageris to look at the mistakes managers make. In other words, we can learn just as muchfrom what managers shouldn’t do as from what they should do. Exhibit 1.5 lists thetop ten mistakes managers make.Several studies of U.S. and British managers have compared “arrivers,” or managerswho made it all the way to the top of their companies, with “derailers,” or managerswho were successful early in their careers but were knocked off the fast track bythe time they reached the middle to upper levels of management.71 The researchersfound that there were only a few differences between arrivers and derailers. For themost part, both groups were talented and both groups had weaknesses. But whatdistinguished derailers from arrivers was that derailers possessed two or more fatalfl aws with respect to the way they managed people. Although arrivers were by no means perfect, they usually had no more than one fatal fl aw or had found ways tominimize the effects of their fl aws on the people with whom they worked.The number-one mistake made by derailers was that they were insensitive to othersby virtue of their abrasive, intimidating, andbullying management style. The authors of onestudy described a manager who walked into hissubordinate’s offi ce and interrupted a meetingby saying, “I need to see you.” When the subordinatetried to explain that he was not availablebecause he was in the middle of a meeting, themanager barked, “I don’t give a damn. I saidI wanted to see you now.”72 Not surprisingly,only 25 percent of derailers were rated by othersas being good with people, compared to75 percent of arrivers.The second mistake was that derailerswere often cold, aloof, or arrogant. Althoughthis sounds like insensitivity to others, it hasmore to do with derailed managers being sosmart, so expert in their areas of knowledge,that they treated others with contempt becausethey weren’t experts, too. For example, AT&T

called in an industrial psychologist to counselits vice president of human resources becauseshe had been blamed for “ruffl ing too many feathers” at the company.73 Interviewswith the vice president’s coworkers and subordinates revealed that they thought shewas brilliant, was “smarter and faster than other people,” “generates a lot of ideas,”and “loves to deal with complex issues.” Unfortunately, these smarts were accompaniedby a cold, aloof, and arrogant management style. The people she worked withcomplained that she does “too much too fast,” treats coworkers with “disdain,”“impairs teamwork,” “doesn’t always show her warm side,” and has “burned toomany bridges.”74The third mistake made by derailers involved betraying a trust. Betraying a trustdoesn’t mean being dishonest. Instead, it means making others look bad bynot doing what you said you would do when you said you would do it. Thatmistake, in itself, is not fatal because managers and their workers aren’t machines.Tasks go undone in every company every single business day. There’salways too much to do and not enough time, people, money, or resources todo it. The fatal betrayal of trust is failing to inform others when things willnot be done on time. This failure to admit mistakes, quickly inform othersof the mistakes, take responsibility for the mistakes, and then fi x themwithout blaming others clearly distinguished the behavior of derailers fromarrivers.The fourth mistake was being overly political and ambitious. Managerswho always have their eye on their next job rarely establish more thansuperfi cial relationships with peers and coworkers. In their haste to gain creditfor successes that would be noticed by upper management, they make thefatal mistake of treating people as though they don’t matter. An employee with an overlyambitious boss described him this way: “He treats employees coldly, even cruelly. Heassigns blame without regard to responsibility, and takes all the credit for himself. I oncehad such a boss, and he gave me a new defi nition of shared risk: If something I did wassuccessful, he took the credit. If it wasn’t, I got the blame.”75 The fatal mistakes of being unable to delegate, build a team, and staff effectivelyindicate that many derailed managers were unable to make the most basic transitionto managerial work: to quit being hands-on doers and get work done through others.Two things go wrong when managers make these mistakes. First, when managersmeddle in decisions that their subordinates should be making—when they can’tstop being doers—they alienate the people who work for them. Rich Dowd, founderof Dowd Associates, an executive search fi rm, admits to constantly monitoring andinterrupting employees because they weren’t doing the job “in the way I saw fi t,even when their work was outstanding.” According to Richard Kilburg of JohnsHopkins University, when managers interfere with workers decisions, “You . . . havea tendency to lose your most creative people. They’re able to say, ‘Screw this. I’m notstaying here.’”76 Indeed, one employee told Dowd that if he was going to do her jobfor her, she would quit. Second, because they are trying to do their subordinates’ jobsin addition to their own, managers who fail to delegate will not have enough time todo much of anything well.

Review 6Mistakes Managers Make Another way to understand what it takes to be a manageris to look at the top mistakes managers make. Five of the most important mistakesmade by managers are being abrasive and intimidating; being cold, aloof, or arrogant;betraying trust; being overly ambitious; and failing to build a team and then delegateto that team.

7 The Transition to Management:The First YearIn her book Becoming a Manager: Mastery of a NewIdentity, Harvard Business School professor Linda Hill followed the development

of nineteen people in their fi rst year as managers. Her study found that becoming amanager produced a profound psychological transition that changed the way thesemanagers viewed themselves and others. As shown in Exhibit 1.6, the evolution ofthe managers’ thoughts, expectations, and realities over the course of their fi rst yearin management reveals the magnitude of the changes they experienced.Initially, the managers in Hill’s study believed that their job was to exercise formalauthority and to manage tasks—basically being the boss, telling others whatto do, making decisions, and getting things done. One of the managers Hill interviewedsaid, “Being the manager means running my own offi ce, using my ideas andthoughts.” Another said, “[The offi ce is] my baby. It’s my job to make sure it works.”77In fact, most of the new managers were attracted to management positions becausethey wanted to be in charge. Surprisingly, the new managers did not believe that theirjob was to manage people. The only aspects of people management mentioned by thenew managers were hiring and fi ring.After 6 months, most of the new managers had concluded that their initial expectationsabout managerial work were wrong. Management wasn’t just about beingthe boss, making decisions, and telling others what to do. The fi rst surprise wasthe fast pace and heavy workload involved. Said one of Hill’s managers, “This job is much harder than you think. It is 40 to 50 percent more work than being a producer!Who would have ever guessed?” The pace of managerial work was startling,too. Another manager said, “You have eight or nine people looking for your time . . .coming into and out of your offi ce all day long.” A somewhat frustrated managerdeclared that management was “a job that never ended . . . a job you couldn’t getyour hands around.”78Informal descriptions like this are consistent with studies indicating that theaverage fi rst-line manager spends no more than 2 minutes on a task before beinginterrupted by a request from a subordinate, a phone call, or an e-mail. The pace issomewhat less hurried for top managers, who spend an average of approximately9 minutes on a task before having to switch to another. In practice, this means thatsupervisors may perform thirty different tasks per hour, while top managers performseven different tasks per hour, with each task typically different from the one thatpreceded it. A manager described this frenetic level of activity by saying, “The onlytime you are in control is when you shut your door, and then I feel I am not doingthe job I’m supposed to be doing, which is being with the people.”79The other major surprise after 6 months on the job was that the managers’expectations about what they should do as managers were very different fromtheir subordinates’ expectations. Initially, the managers defi ned their jobs as helpingtheir subordinates perform their jobs well. For the managers, who still defi nedthemselves as doers rather than managers, assisting their subordinates meant goingout on sales calls or handling customer complaints. One manager said, “I like goingout with the rep, who may need me to lend him my credibility as manager. I like thechallenge, the joy in closing. I go out with the reps and we make the call and talkabout the customer; it’s fun.”80 But when the managers “assisted” in this way, theirsubordinates were resentful and viewed their help as interference. The subordinateswanted their managers to help them by solving problems that they couldn’t solve.Once the managers realized this distinction, they embraced their role as problemsolverand troubleshooter. Thus, they could help without interfering with their subordinates’jobs.After a year on the job, most of the managers thought of themselves as managersand no longer as doers. In making the transition, they fi nally realized that peoplemanagement was the most important part of their job. One of Hill’s intervieweessummarized the lesson that had taken him a year to learn by saying, “As many demandsas managers have on their time, I think their primary responsibility is peopledevelopment. Not production, but people development.”81 Another indication ofhow much their views had changed was that most of the managers now regretted the rather heavy-handed approach they had used in their early attempts to managetheir subordinates. “I wasn’t good at managing . . ., so I was bossy like a fi rst-gradeteacher.” “Now I see that I started out as a drill sergeant. I was infl exible, just a lotof how-to’s.” By the end of the year, most of the managers had abandoned their

authoritarian approach for one based on communication, listening, and positive reinforcement.One manager explained, “Last night at fi ve I handed out an award inthe boardroom just to the individual. It was the fi rst time in his career that he had[earned] $100,000, and I gave him a piece of glass [a small award] and said I’d hearda rumor that somebody here just crossed over $100,000 and I said congratulations,shook his hand, and walked away. It was not public in the sense that I gatheredeverybody around. But I knew and he did too.”82Finally, after beginning their year as managers in frustration, the managers cameto feel comfortable with their subordinates, with the demands of their jobs, and withtheir emerging managerial styles. While being managers had made them acutely awareof their limitations and their need to develop as people, it also provided them with anunexpected reward of coaching and developing the people who worked for them. Onemanager said, “It gives me the best feeling to see somebody do something well after Ihave helped them. I get excited.” Another stated, “I realize now that when I acceptedthe position of branch manager that it is truly an exciting vocation. It is truly awesome,even at this level; it can be terribly challenging and terribly exciting.

8 Competitive AdvantageThrough PeopleIn his books Competitive Advantage through People andThe Human Equation: Building Profi ts by Putting People First, Stanford Universitybusiness professor Jeffrey Pfeffer contends that what separates top-performingcompanies from their competitors is the way they treat their work forces—in otherwords, their management style.84Pfeffer found that managers in top-performing companies used ideas like employmentsecurity, selective hiring, self-managed teams and decentralization, high paycontingent on company performance, extensive training, reduced status distinctions(between managers and employees), and extensive sharing of fi nancial informationto achieve fi nancial performance that, on average, was 40 percent higher than thatof other companies. These ideas, which are explained in detail in Exhibit 1.7, helporganizations develop work forces that are smarter, better trained, more motivated,and more committed than their competitors’ work forces. And—as indicated by thephenomenal growth and return on investment earned by these companies—smarter,better trained, and more committed work forces provide superior products and serviceto customers. Such customers keep buying and, by telling others about theirpositive experiences, bring in new customers.

Exhibit 1.7 Competitive Advantage through People: Management PracticesChapter 1 Management1. Employment Security—Employment security is the ultimate form of commitment that companies can make to their workers.Employees can innovate and increase company productivity without fearing the loss of their jobs.2. Selective Hiring—If employees are the basis for a company’s competitive advantage, and those employees have employmentsecurity, then the company needs to aggressively recruit and selectively screen applicants in order to hire the most talentedemployees available.3. Self-Managed Teams and Decentralization—Self-managed teams are responsible for their own hiring, purchasing, jobassignments, and production. Self-managed teams can often produce enormous increases in productivity through increasedemployee commitment and creativity. Decentralization allows employees who are closest to (and most knowledgeable

about) problems, production, and customers to make timely decisions. Decentralization increases employee satisfaction andcommitment.4. High Wages Contingent on Organizational Performance—High wages are needed to attract and retain talented workers andto indicate that the organization values its workers. Employees, like company founders, shareholders, and managers, need toshare in the fi nancial rewards when the company is successful. Why? Because employees who have a fi nancial stake in theircompanies are more likely to take a long-run view of the business and think like business owners.5. Training and Skill Development—Like a high-tech company that spends millions of dollars to upgrade computers orresearch and development labs, a company whose competitive advantage is based on its people must invest in thetraining and skill development of its people.6. Reduction of Status Diff erences—These are fancy words that indicate that the company treats everyone, no matter what thejob, as equal. There are no reserved parking spaces. Everyone eats in the same cafeteria and has similar benefi ts. The result:much improved communication as employees focus on problems and solutions rather than on how they are less valued thanmanagers.7. Sharing Information—If employees are to make decisions that are good for the long-run health and success of thecompany, they need to be given information about costs, fi nances, productivity, development times, and strategies thatwas previously known only by company managers.

According to Pfeffer, companies that invest in their people will create long-lastingcompetitive advantages that are diffi cult for other companies to duplicate. Indeed,other studies clearly demonstrate that sound management practices can producesubstantial advantages in four critical areas of organizational performance: salesrevenues, profi ts, stock market returns, and customer satisfaction.In terms of sales revenues and profi ts, a study of nearly 1,000 U.S. fi rms foundthat companies that use just some of the ideas shown in Exhibit 1.7 had $27,044more sales per employee and $3,814 more profi t per employee than companiesthat didn’t. For a 100-person company, these differences amount to $2.7 millionmore in sales and nearly $400,000 more in annual profi t! For a 1,000-personcompany, the difference grows to $27 million more in sales and $4 million morein annual profi t!85Another study that considers the effect of investing in people on company salesfound that poorly performing companies were able to improve their average returnon investment from 5.1 percent to 19.7 percent and increase sales by $94,000 peremployee. They did this by adopting management techniques as simple as settingperformance expectations (establishing goals, results, and schedules), coaching (informal,ongoing discussions between managers and subordinates about what is beingdone well and what could be done better), reviewing (annual, formal discussionabout results), and rewarding employee performance (adjusting salaries and bonusesbased on employee performance and results).86 So, in addition to signifi cantly improvingthe profi tability of healthy companies, sound management practices canturn around failing companies.To determine how investing in people affects stock market performance,researchers matched companies on Fortune magazine’s list of “100 Best Companiesto Work for in America” with companies that were similar in industry, size, and—this is key—operating performance. Both sets of companies were equally good performers;the key difference was how well they treated their employees. For both setsof companies, the researchers found that employee attitudes such as job satisfactionchanged little from year to year. The people who worked for the “100 Best” companies

were consistently much more satisfi ed with their jobs and employers year afteryear than were employees in the matched companies. More importantly, those stable differences in employee attitudes were strongly related to differences in stock marketperformance. Over a 3-year period, an investment in the “100 Best Companies toWork for” would have resulted in an 82 percent cumulative stock return comparedwith just 37 percent for the matched companies.87 This difference is remarkablegiven that both sets of companies were equally good performers at the beginning ofthe period.Finally, research also indicates that managers have an important effect on customersatisfaction. Many people fi nd this surprising. They don’t understand howmanagers, who are largely responsible for what goes on inside the company, canaffect what goes on outside the company. They wonder how managers, who ofteninteract with customers under negative conditions (when customers are angry ordissatisfi ed), can actually improve customer satisfaction. It turns out that managersinfl uence customer satisfaction through employee satisfaction. When employees aresatisfi ed with their jobs, their bosses, and the companies they work for, they providemuch better service to customers.88 In turn, customers are more satisfi ed, too.Indeed, customers of companies on Fortune’s list of “100 Best Companies to Workfor,” where employees are much more satisfi ed with their jobs and their companies,have much higher customer satisfaction scores than do customers of comparablecompanies who are not on Fortune’s list. That difference in customer satisfactionalso resulted in a 1.6 percent higher return on company assets.89You will learn more about the service-profi t chain in Chapter 18 on managingservice and manufacturing operations.