Chapter 3

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Chapter Objectives  Summarize the demographics of the new American

workforce.  Explain why America’s education and workplace readiness situation is a crisis.  Define the term managing diversity, and explain why it is particularly important today.

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Chapter Objectives (cont’d)  Discuss how the changing political-legal environment

is affecting the practice of management.  Discuss why business cycles and the global economy are vital economic considerations for modern managers.  Describe the three-step innovation process, and define the term intrapreneur.

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The Social Environment  Dimensions of the Social Environment  Demographics 

Changes in the statistical profiles of population characteristics

 Inequalities 

Persistent barriers encountered by women, minorities, and others in the workplace

 Managing diversity 

Creating organizational cultures that enable all employees to realize their potential

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Demographics of the New Workforce  It is getting larger, increasingly female, more racially

and ethnically diverse, older, and more age-diverse.  America’s Education and Workplace Skills Crisis  To compete in a global labor market, U.S. workers need a

constantly improving, world-class education – but American kids aren’t getting one  Problems start early and persist throughout the education process

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Demographics of the New Workforce (cont’d)  Myths About Older Workers  They are less productive.  They incur higher benefits costs.  They have higher absenteeism.  They have more accidents at work.  They are less willing to learn.  They are inflexible about the hours they are willing to work. © 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

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Figure 3.1: The Changing U.S. Workforce: 2008-2018

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Figure 3.1: The Changing U.S. Workforce: 2008-2018 (cont)

Nagging Inequalities in the Workplace  Under the Glass Ceiling  Women continue to experience a significant genderwage gap and strong barriers to advancement.  Women are demanding more equitable compensation and workplace opportunities.  Many women are leaving the corporate ranks to start their own businesses.  Continuing Pressure for Equal Opportunity  Women, minorities, and the physically challenged are all expected to press harder for more employment opportunities. © 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

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Nagging Inequalities in the Workplace (cont’d)  About 17% of the U.S. labor force is made up of

contingent workers.  Reasons:  Less costly  Can be let go when times are bad

 There is lower job involvement among part-timers in

comparison to their full-time counterparts

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Managing Diversity  Managing Diversity  The process of creating an organizational culture that provides all employees, including women and minorities, with assistance and opportunities to help them realize their full potential  More Than EEO  The moral necessity and commitment in going beyond EEO and affirmative action to create flexible organizations that encompass and value diversity © 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

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The Political-Legal Environment  Politics is the art (or science) of public influence or

control  The Politicization of Management  Issues management  Ongoing process of identifying, evaluating, and responding to important social and political issues  Purpose: Minimize “surprises” and make more systematic and effective responses to issues  General political responses  Defending the status quo against all comers  Adopting a “wait and see” approach  Proactively trying to identify and respond to issues © 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

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Figure 3.2: Management’s Political Response Continuum

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The Political-Legal Environment (cont’d)  Specific Political Strategies  Campaign financing 

Political action committees (PACs)

 Lobbying 

Garnering political support

 Coalition building 

Common rallying points

 Indirect lobbying 

Advocacy advertising

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Increased Personal Legal Accountability  Increases in Demands for Accountability  Sarbanes-Oxley Act (2002)  Increased penalties for accounting fraud  Established a new felony with stiff prison term for securities fraud  Political and Legal Implications for Management  Increased use of legal audits  A review of all operations to pinpoint possible legal liabilities or problems  Use of alternative dispute resolution (ADR)  Settling disputes with less costly methods, including arbitration and mediation © 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

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The Economic Environment  The Job Outlook in Today’s Service Economy, Where

Education Counts  Service providers are expected to generate 14.5 million

jobs between 2008 and 2018.  A solid educational foundation and networking skills are especially important in tough economic times.

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The Economic Environment  Coping with Business Cycles  Up-and-down movement of an economy’s ability to generate wealth  Predictive structure but variable timing  Cycle-Sensitive Decisions  Timing is everything  Stay ahead of the pack Benefiting from Economic Forecasts  Use a consensus approach © 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

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Figure 3.3: Business Cycles Affect Managerial Decisions

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The Challenge of a Global Economy  A Single Global Marketplace  Global trade is causing a shift to a single economy.  The size of the global economy has expanded dramatically.  Globalization Is Personal  A growing trend: Working for a foreign-owned company.  Meeting world standards for quality and costs (through lower wages) is necessary to be globally competitive. © 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

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The Technological Environment  Technology  Technology includes all the tools and ideas available for extending the natural and mental reach of humankind.  Technology is facilitating the evolution of the information age.  Information has become a valuable strategic resource for gaining competitive advantage.

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Table 3.1: Science Fiction Is Becoming Reality with Seven New Technologies

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The Technological Environment (cont’d)  The Innovation Process  The systematic and practical application of a new idea  Steps in the Innovation Process  Conceptualization: When a new idea occurs to someone  Product technology: Creation of a working prototype  Production technology: Development of a profitable production process © 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

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Figure 3.4: The Three-Step Innovation Process

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The Technological Environment (cont’d)  Innovation Lag  The time it takes for a new product to be translated into satisfied demand  Shortening Innovation Lag  Goal setting: Creating a sense of urgency and purpose  Empowerment: Pushing decision-making authority down to the level of the decision  Concurrent engineering: Using a team approach to product design involving specialists from all functional areas including research, production, and marketing

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Promoting Innovation Through Intrapreneurship  Intrapreneur  An employee who takes personal responsibility for pushing an innovative idea through a large organization  Fostering Intrapreneurship  Focus on results and teamwork  Reward innovation and risk taking  Tolerate and learn from mistakes  Remain flexible and change-oriented © 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

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Summary  The U.S. workforce will continue to become larger,

older, more diverse, and more female.  America’s education system has major problems at all levels.  The persistence of opportunity and income inequalities (and the glass ceiling) among women and minorities is a strong stimulus for change.

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Summary (cont’d)  Managers are becoming increasingly politicized and

more likely to be held personally responsible for their decisions and actions.  Managers can make timely decisions during somewhat unpredictable business cycles by taking a consensus approach to economic forecasts.  A healthy innovation process is vital to technological development. An organizational climate that fosters intrapreneurship can help. © 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

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Terms to Understand  Demographics

 Business cycle

 Glass ceiling

 Technology

 Contingent workers

 Innovation process

 Managing diversity

 Product technology

 Issues management

 Production technology

 Advocacy advertising

 Innovation lag

 Legal audit

 Concurrent engineering

 Alternative dispute

 Intrapreneur

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