Monthly Archives: March 2012

MGMT 3/21

Termination Types

  1. retire
  2. depart voluntarily (find new job)
  3. fired


  • value of termination for maintaining an effective workforce is two fold
  • poor performers can be dismissed
  • employers can use exit interviews in a positive manner

Chapter 13: Motivation


  • forces that arouse enthusiasm and persistence to pursue a certain course of action (or goal)… 4 steps
  • Need: creates desire to fulfill needs (food, recognition, achievement)
  • Behavior: results in actions to fulfill needs
  • Rewards: satisfy needs; intrinsic or extrinsic rewards
  • Feedback: reward informs person whether behavior was appropriate and should be used again

Types of rewards

  • Intrinsic: satisfaction a person receives in the process of performing a particular action (interesting work, learning new skills, personal work)
  • Extrinsic: given by another person, typically managers (raise, bonus, promotion, vacation time, benefits, good benefits)

Foundations of Motivation

  • Contemporary
  • Human Resources
  • Human Relations
  • Traditional

Traditional View

  • systematic analysis of an employee’s job
  • economic rewards for high performance
  • efficiency

Human Relations

  • noneconomic rewards seemed more important
  • workers studied as people and the concept of social man was born

Human Resources

  • introduce the concept of the whole person
  • employees are complex and motivated by many factors


  • content theories: stress the analysis of underlying human needs (focus on first step)
  • process theories: concern the thought processes that influence behavior (second step)
  • reinforcement theories: focus on employee learning of desired work behaviors (step 3 and 4)

Content Theories

  • emphasize the needs that motivate people
  • hierarchy of needs theory (people motivated by factors; some factors more important that others)(order of needs: phisiological, safety, belonging, esteem, self-actualization)
  • ERG theory: modification/simplification of Maslows’ hierarchy of needs; three needs (in order): 1. Existence needs (the needs for physical well being) 2. Relatedness Needs: the need for satisfactory relationships with others 3. Growth needs: human potentials, personal growth, and increases competence
  • Aquired needs theory: Achievement (especially over difficult tasks), power (influence others), affiliation (accepted by others)has no lower ordered needs
  • Two-Factor Theory: two factors (motivators & hygiene factors); area of satisfaction is where motivators (schievement, recognition) influence level of satisfaction; area of dissatisfaction is where hygiene factors(working conditions, pay and security, relationships) influence levels of dissatisfaction… if they have hygiene factors, it does not mean they will be satisfied
  • differences between Maslow and ERG: Maslow says that you move up, ERG says you can move down &&&& Maslow said they can activiate one need at a time, ERG says that people can have multiple needs at one time

Equity theory

  • outcomes of self / inputs of self = outcomes of referent / inputs of referent

Methods for Reducing perceived inequities

  • change inputs
  • change outcomes
  • distort perceptions (I don’t get paid well but I’m fine with it)
  • Leave job


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MGMT 3/19

Job Analysis and Recruiting (information collected)

  • work activities
  • tools and equipment used to do the job
  • context in which the job is performed
  • personnel requirements for performing the job
  • Job description: written description of the basic tasks, duties, and responsibilities required of an employee holding a particular job
  • Job specification: a written summary of the qualifications needed to successfully perform a job


  • Selection: the process of determining the skills, abilities, and other attributes a person needs to perform a particular job
  • Validity: relationship between an applicant’s score on a selection device and his or her future job performance
  • If someone scores well on a selection test and it is valid, there is a good chance they will succeed in their job


  • Unstructured interviews: free flow of questions (ask whatever they want)
  • Structured interviews: interviewer uses standard set of prepared questions (more validity)

Interviewing an Applicant (from Employer’s View)

  1. Know what you want
  2. Use open-ended questions
  3. Do not ask irrelevant questions (that relate to job description/specification)
  4. Do not rush the interview
  5. Do not rely on your memory (take notes)

Selection Tests

  1. Aptitude: testing future performance (SAT)
  2. Physical Ability: designed for workers
  3. Cognitive Ability (three types assessed): verbal, quantitative, and reasoning skills
  4. Personality: Big Five: agreeableness, emotional stability, openness,…(most widely used test)
  5. Work Sample: select a sample from the really work and require them to do it
  6. Assessment Centers: most complex test; use simulation to check the managerial skills

Determining Training Needs

  • Work Keys needs assessment
  • Communication, problem solving and interpersonal
  1. Job analysis
  2. Test Employee skills
  3. Compare employee skills to required skills

Training Methods

  • Classroom/Presentation: lecture used most often (about 90%)
  • Hands-on: increases participation
  • Team Training: shares knowledge, skills, and abilities

Performance Appraisal (360 degree feedback is the best)

  • managers
  • customers
  • self
  • peers
  • subordinates

Errors in Performance Appraisal

  • Similar-to-me: similar qualities (demographic) in boss and gets better rating
  • Errors in distribution: leniency, strictness, Central tendency
  • Halo & Horn: the boss responds to a positive/negative performance dimension, and it dictates whether the performance is good (halo) or bad (horn)


  • Core Compensation: monetary rewards
  • Compensation and Benefits:non-monetary rewards

Elements of Core Compensation

  • Base Pay: hourly pay, wage, annual salary
  • Base Pay Adjustment: cost-of-living, merit pay, incentive pay, person-focused pay(to master skills)

Employee Benefits

  • Legally Required
  • Discretionary benefits

Discretionary benefits

  • Protection Programs: pension, retirement, unemployment
  • Pay-for-time-not-worked: holidays
  • Services: phones, transportation, child care

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Micro 3/14


  • Total Cost = total fixed cost + total variable costs
  • Average Total cost (ATC) = TC / Q
  • AVC = TVC / Q
  • AFC = TFC / Q
  • ATC = AVC +AFC
  • MC = change in total cost / change in Q

shift cost curves

  • cost of inputs (increase in minimum wage leads to MC shift left, ATC up, AVC up)
  • technology (more technology, cost goes down)
  • taxes (cost goes up)
  • subsidies (cost goes down)

Long Run

  • TFC = 0
  • Long run is when your fixed cost is gone
  • TC = VC
  • Economies of scale (electric company) as quantity goes up, Average Total Cost goes down
  • Diseconomies of Scale: as quantity rises, ATC goes up

Why Economies of scale

  • high startup costs
  • Bulk (or quantity) discounts
  • Mass production
  • learning by doing
  • Specialize
  • Economies of scope: cost sharing across products (using same light bulb for 7 different vehicles… gets you better bulk discount)

Why Diseconomies of scale (why do costs go up)

  • Organizational complexity (company so large, communication sucks)
  • Increase shirking (goofing off)

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MGMT 3/14

Chapter 11: Managing Human Resource Systems

Human Resource Management

  • the design and application of formal systems to ensure the effective and efficient use of human talent to accomplish organizational goals
  • Human resources lead to competitive advantage

Three Key elements of Human resource management

  1. All managers are resource managers (must be part of hiring, firing, benefits, appraisals etc.)
  2. Employees are viewed as assets (valuable; people are not machines, they have ideas and suggestion)employees lead to competitive advantage
  3. Matching process, integrating the organizational goals with employee’s needs

Strategic HR Management goals (there are 3)

  1. Attract Effective workforce: HRM planning, Job analysis, Recruiting, Selecting
  2. Develop an effective workforce: training, development appraisal
  3. Maintain an Effective Workforce: wage/salary, benefits, labor relations, terminations

Environmental Influences on HRM

  • Competitive strategy: Building human capital (skills, knowledge, abilities), developing globalization (international HRM), using information technology (HRIS – computerized employee information system; data) / (these three create competitive advantage)
  • Federal legislation: equal employment opportunity (no discrimination based on age, race, religion)

HR Information System input

  • personal data (name, age, gender, race, home #)
  • work history (previous employers)
  • personal appraisal (date and result of appraisal)
  • promotion data (previous promotion records, special knowledge and skills for next promotion)
  • educational data (college, graduate school, training programs)
  • company employment history (previous positions in the company)

Attracting an Effective Workforce

  1. HR planning: retirement, growth, resignations
  2. Choose Recruiting Sources: want ads, Head hunters, Internet
  3. Select the Candidate: application, interview, tests
  4. Welcome new Employee

HR Planning

  1. forecasting of HR needs and the matching of individuals with expected vacancies
  2. what new technologies are emerging?
  3. what is volume of business likely to be in the next 5-10 years?
  4. What is turnover rate? How much is avoidable? (if any)

Forecasting Demand and Supply

  • Internal Factors: employees education level, up to date knowledge, specialized skills, transfer opportunities, turnover
  • External Factors: political, sociocultural, international, industry (trends), economy (unemployment rate)


  • the process of developing a pool of qualified job applicants
  • Internal recruiting
  • External recruiting
  • Job analysis
  • Person-Job fit
  • Person-Organization fit (linking values and beliefs)

Internal Recruitment

  • Promotion from within
  • a pool of applicants who already work for the company
  • career path is a planned sequence of jobs
  • improves employee morale and motivation
  • reduced employer time and cost
  • increases workers’ chances of success in new jobs

Methods for External Recruiting

  • Advertising
  • Employee referrals
  • walk-ins
  • Private employment agencies
  • state employment services
  • Career conferences
  • Internet job sites

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Micro 3/13

Theory of Utility: theory behind demand curve

  • measure your preferences
  • good “x” gives you some amount of utility (happiness)
  • Goal: maximize utility; subject to prices and income
  • hard to measure because it is very subjective (no scale for happiness)
  • Marginal utility = change in total utility / change in quantity…. how much marginal happiness you gain from one to the next
  • Law of diminishing marginal utility: as consumption of “x” goes up, the marginal utility (MUx) you receive goes down
  • People consume until: (MUx / Px) = (MUy / Py)

Theory of the Firm: theory behind supply curve

  • Goal: maximize profit
  • Profit = Total Revenue – Total Cost
  • Find where marginal Revenue = Marginal cost
  • Marginal revenue is the slope of total revenue (MR = change in total revenue / change in Q)
  • Marginal Cost is the slope of Total Cost (MC = change in Total cost / change in Q)
  • why firm?
    1. minimize transaction costs (people specialize)
    2. Economies of scale
    3. Team production

Principal Agent Problem

  • Goal of the principal is not the goal of the agent
  • when goals aren’t the same, you get outputs that hurt the principal
  • Fix:
    1. monitoring (checks and balances)
    2. monetary (reward or punishment)

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Micro 3/8

Why government taxes

  1. $$$
  2. change behavior
  3. protect domestic producers

How do we tax

  1. Benefit principle: you pay for the programs you benefit from (gas tax used on roads)
  2. Ability to pay principle: you should pay if you are able to pay (opposite)(progressive income tax)

Definitions of first graph drawn

  • Allocative efficiency: Q is correct from society’s point of view
  • Consumer Surplus: amount you are willing to pay minus the actual price of a good
  • Producer surplus: actual price the producer gets minus the minimum price they would accept
  • Total Surplus: Producer Surplus + Consumer Surplus

2nd graph drawn

  • Price equilibrium and Qe are given
  • Tax causes supply to shift left, Price to increase, quantity will decrease
  • tax revenue: tax * Q after taxes

Taxes and Ed&Es

  • Legal incidence: who writes the check? Legal incidence is on producers (in this class)(the result is the same even if the burden is shared)
  • Economic incidence (tax burden): who gets screwed?
  • General rule: whichever curve is more elastic, that person is going to have less tax burden than the other
  • Consumer burden= change in price
  • Producer burden= tax – change in price

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MGMT 3/7

Virtual Network Approach Advantages

  • can draw on expertise worldwide
  • work force flexibility
  • reduced overhead costs

Virtual Network Approach Disadvantages

  • lack of control, weak boundaries
  • greater demands on managers
  • employee loyalty weakened

Chapter 10: Managing Teams

What is a Team?

  1. unit of two or more people
  2. interact or coordinate their work
  3. to accomplish a specific goal
  4. remember that there are 3 key points

Advantages of Teams

  • employee job satisfaction
  • customer satisfaction
  • product and service quality
  • efficiency in product development
  • decision making (multiple perspectives / more alternate solutions / commitment to decisions)

Disadvantages of Teams

  • initially high employee turnover
  • social loafing
  • Disadvantages of group decision making (groupthink–>;;inefficient meetings, minority domination–>;;lack of accountability)

Special Kinds of Teams

  • Project teams
  • Cross-Functional Teams
  • Virtual Teams

Project Teams

  • created to accomplish specific, one-time projects within a limited time
  • often used to develop new products, improve existing products, roll out new information systems, or build new factories/offices
  • Promote flexibility

Cross-Functional Teams

  • Employees from different functional areas
  • attack problems from multiple perspectives
  • generate more ideas and alternative solutions

Virtual Teams

  • keep the team focused on clear and specific goals
  • keep team upbeat
  • provide frequent feedback
  • ask team members for feedback on how well a team is working
  • empower virtual teams
  • improve communication
  • select self-starters and strong communicators
  • periodically bring team members together

Stages of Team development

  1. Forming (orientation, break the ice, uncertainty) leader: facilitates interchanges
  2. Storming (conflict, disagreement) leader: encourages participation, surfaces differences
  3. Norming (establishment of order and cohesion) leader: helps clarify team roles, norms, values
  4. Performing (cooperation, problem solving) leader: facilitates task accomplishment (LAST STAGE FOR PERMANENT TEAMS)
  5. Adjourning (task completion) leader: brings closure, signifies completion

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