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  • Ottawa Voyageurs

    Manuel Tertuliano, head coach of a professional soccer club, must make some difficult decisions about the compensation of six of his players. Specifically, he must decide how to allocate $850,000 among these six players in a way that will benefit his team, which has just finished second to last in the league and faces being eliminated from the league if team performance and game attendance don't improve. Tertuliano realizes that compensation is a key tool in motivating his players. In deciding on these six players' compensation, Tertuliano must ensure that he not only recognizes them, but also the other players on the team for the value each individual contributes to the team.
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  • Cultural Foundations in Communication: Relationship-Building in the Chinese Context

    Across industries, both Chinese and Western managers report that their primary difficulty doing business with each other stems from poor communication. Since Chinese and Western business customs and etiquette greatly differ from one another, it is of fundamental importance that both groups of business people work to develop some understanding of these differences and of how their behavior may be interpreted. This note introduces readers to some primary differences between Chinese and Western methods of communication, and suggests strategies for communicating effectively while respecting cultural differences. While, to some degree, any introductory exposition of a culture is necessarily based upon a particular perspective, the generalities contained within this note are meant to serve as a starting place for understanding how Chinese-Western communications may be facilitated. Both Chinese and Western managers would be well served to learn to balance the individual behaviors they observe with the generalities offered here.
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  • Leading by Leveraging Culture

    Organizational culture can be a powerful force that clarifies what's important and coordinates the work of employees without the costs and inefficiencies of close supervision. Culture also identifies an organization's distinctive competence to external constituencies. To employ culture effectively as a leadership tool, managers must recruit and select employees who fit the firm's culture, socialize and train employees to share the firm's values, and reward employees whose efforts reflect and reinforce the firm's culture. In addition, managers must both act and be perceived as acting in ways that are consistent with the values they want employees to share.
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  • New Ways of Setting Rewards: The Beyond Budgeting Model

    The vast majority of companies today use fixed performance contracts to drive performance improvement. The core elements of this contract are fixed annual targets reinforced by financial incentives. It is the intense pressure placed on meeting these contracts that leads to "gaming the numbers," as managers at every level of the firm fight tooth and nail to meet their targets and earn their bonuses. Not only is this process often stressful, but it can also lead to actions that destroy value for the firm. There are, however, a number of companies that have broken free from reliance on contracts and incentives. They have typically changed their evaluation and rewards processes from fixed to relative measures. Explores the problems of fixed contracts and how alternative rewards programs can be used to avoid gaming and provide managers with more honest numbers.
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  • Web Surveys' Hidden Hazards

    The same question posed on the web and in print can yield very different answers, dramatically distorting survey results and misleading management. But, as psychologist Palmer Morrel-Samuels demonstrates, the problems are readily fixed.
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  • Developing Versatile Leadership

    This is an MIT Sloan Management Review article. Modern models of leadership generally acknowledge that effective leaders must possess a number of seemingly contradictory qualities and skill sets. However, say the authors, inadequate performance is usually defined as displaying a lack of those qualities and skills; the idea that performance problems can just as easily spring from taking a given behavior to an extreme has received far less attention. Therefore, those models miss the chance to identify imbalance, which in the authors' view is the most common impediment to developing effective leadership. The authors view versatility, the absence of imbalance, as the key to high performance levels. Versatile leaders are able to continually adjust their behavior, deftly applying the right approach or blend of approaches to the right degree for the circumstances at hand. The authors' research, comprising comprehensive assessments of scores of senior managers, indicates that most managers, when presented with two opposing approaches, such as forceful vs. enabling leadership, will lean strongly toward one and be biased against the other. Employing a 360-degree survey they designed to measure such imbalance, called the Leadership Versatility Index, the authors then demonstrate clearly that high performance levels are correlated with balance and versatility. The challenge for the versatile leader is, thus, to meet what F. Scott Fitzgerald called "the test of a first-rate intelligence": to hold two opposed ideas in the mind at the same time and still retain the ability to function. The authors conclude with a discussion of how leaders can begin to improve themselves and those they manage. They identify a number of root causes of imbalance and suggest ways to moderate these factors.
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  • What Creates Energy in Organizations?

    This is an MIT Sloan Management Review article. People in organizations commonly talk about the energy associated with a project, team, or individual. But is energy related to performance or learning in organizations? And how is it created and transferred in groups? To answer those questions, the authors assessed energy within seven large groups in different organizations. They collected data that allowed them to map social networks and, more specifically, determine who the "energizers" and "de-energizers" were in those groups. Their analyses, supplemented by interviews with network members, also reveal why energy is important for performance and learning and how it is created (or destroyed) in organizations. And they gave rise to a set of questions that can help managers and the people they oversee increase the energy they generate in their interactions with colleagues. By mapping relationships, managers can see where energy is being created and where it is being depleted. They can then take action, encouraging simple changes in behavior to increase energy in places where its absence hinders the progress of important organizational initiatives.
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  • Delusions of Success: How Optimism Undermines Executives' Decisions

    The evidence is disturbingly clear: Most major business initiatives--mergers and acquisitions, capital investments, market entries--fail to pay off. Economists would argue that the low success rate reflects a rational assessment of risk, with the returns from a few successes outweighing the losses of many failures. But two distinguished scholars of decision making, Dan Lovallo of the University of New South Wales and Nobel laureate Daniel Kahneman of Princeton University, provide a very different explanation. They show that a combination of cognitive biases (including anchoring and competitor neglect) and organizational pressures lead managers to make overly optimistic forecasts in analyzing proposals for major investments. By exaggerating the likely benefits of a project and ignoring the potential pitfalls, they lead their organizations into initiatives that are doomed to fall well short of expectations. The biases and pressures cannot be escaped, the authors argue, but they can be tempered by applying a very different method of forecasting--one that takes a much more objective "outside view" of an initiative's likely outcome. This outside view, also known as reference-class forecasting, completely ignores the details of the project at hand; instead, it encourages managers to examine the experiences of a class of similar projects, to lay out a rough distribution of outcomes for this reference class, and then to position the current project in that distribution.
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  • Are You In with the In Crowd?

    At the core of your company, there is a group of people who seem to call the shots--or, rather, all the shots seem to be called for their benefit. This core group can't be found on any organization chart. It exists in people's hearts and minds. It comprises the people whose perceived interests and needs are taken into account as decisions are made throughout the organization. In the best organizations, the core group can be a resource: Members represent the unique values and knowledge that distinguish their companies. When core groups display independence, creativity, and power, the rest of the company follows. Such behavior on the part of the company, in turn, creates value for shareholders, especially over the long term. But because of the core group's enormous power, members need to make themselves aware of the signals they send, both intended and unintended. For better and for worse, the core group reinforces whatever it pays attention to. If you do not know who constitutes the core group in your organization, or what the members stand for, you may find that leading will be extremely difficult--even if you are ostensibly the person in charge.
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  • Ancient Fable

    This case presents a thinly disguised account of Andersen's collapse, followed by a tightening of the oversight of audit firms. It raises questions on who lost and who gained, as well as the long-term implications of the changes for the accounting profession and society. It is distributed toward the end of class discussion on consulting by auditors.
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  • Paragon Information Systems

    Paragon Information Systems is a small business unit owned by NewTel Enterprises Ltd. that manufactures hardware for information technology and systems integration. The newly appointed CEO is facing a crisis. Days after his appointment, two vice-presidents resigned to start a new company. The new company recruited the entire sales team, members of the technical unit, and support staff from Paragon Information Systems--a loss of almost one third of Paragon's staff within two months. The new CEO must meet short-term stakeholder needs; assess, formulate, and implement long-term strategies; deal with the competitive threat of the new company; and consider the leadership style and control systems required to make the necessary level of change.
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  • Irene Charnley at Johnnic Group (B)

    Supplements the (A) case.
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  • Bosses Behaving Badly

    In this HBR interview, business-etiquette consultant Barbara Pachter describes common executive gaffes, explains why managers still get etiquette wrong, and offers some rules of thumb about good business manners.
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  • Leadership and the Psychology of Turnarounds

    Turnaround champions--those leaders who manage to bring distressed organizations back from the brink of failure--are often acclaimed for their canny financial and strategic decision making. But having studied their work closely, Harvard Business School's Rosabeth Moss Kanter emphasizes another aspect of their achievement. These leaders reverse the cycle of corporate decline through deliberate interventions that increase the level of communication, collaboration, and respect among their managers. Ailing companies descend into what Kanter calls a "death spiral," which typically involves finger pointing and deriding colleagues in other parts of the business, rising tensions and declining collaboration, helplessness, passivity and, finally, denial. To counter these dynamics, Kanter says, and reverse the company's slide, the CEO needs to apply certain psychological interventions--specifically, replacing secrecy and denial with dialogue, blame and scorn with respect, avoidance and turf protection with collaboration, and passivity and helplessness with initiative. The author offers in-depth accounts of how the CEOs at Gillette, Invensys, and the BBC used these interventions to guide their employees out of corporate free fall and onto a more productive path.
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  • Managing by Commitments

    What makes a great manager great? Despite differences in their personal attributes, successful managers all excel in the making, honoring, and remaking of commitments. Managerial commitments take many forms, from capital investments to personnel decisions to public statements, but each exerts both immediate and enduring influence on a company. A leader's commitments shape a business's identity, define its strengths and weaknesses, establish its opportunities and limitations, and set its direction. Executives can all too easily forget that commitments are extraordinarily powerful. Caught up in the present, managers often take actions that, while beneficial in the near term, impose lasting constraints on their operations and organizations. Managers who understand the nature and power of their commitments can wield them more effectively throughout a company's life cycle. It doesn't mean you should try to anticipate all the long-run consequences of every commitment. But it does mean that before making important decisions about, say, operating processes or partnerships, you should always ask yourself: Is this a process or relationship that we can live with in the future? Am I locking us into a course that we'll come to regret?
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  • Let's Hear It for B Players

    In the much-heralded war for talent, it's hardly surprising that companies have invested a lot of time, money, and energy in hiring and retaining star performers. For most CEOs, recruiting stars is simply more fun; for one thing, the young A players they interview often remind them of themselves at the same age. For another, A players' brilliance and drive is infectious; you simply want to be in their company. Besides, in these troubled times, when businesses are so vulnerable, people who seem to have what it takes to turn around a company's performance are almost irresistible. But our understandable fascination with star performers can lure us into the dangerous trap of underestimating the vital importance of the supporting actors. It's true that A players can make enormous contributions to performance. Yet, as the authors have found, companies' long-term performance--even survival--depends far more on the unsung commitment and contributions of their B players. These capable, steady performers are the best supporting actors of the corporate world. They counterbalance the ambitions of the company's high-performing visionaries. Unfortunately, organizations rarely learn to value their B players in ways that are gratifying for either the company or these employees. This article will help you to rethink the role of your organization's B players.
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  • Elise Smart

    Elise Smart must decide what performance assessment to give one of her employees who has, uncharacteristically, failed to meet one of her key objectives for the year. The situation is difficult for several reasons; the causes of the unacceptable performance are not clear; the employee has previously received excellent appraisals, including a recent one by the vice-president; and the employee was absent for a good part of the year on maternity leave. The various factors that influence sustained performance (ability, motivation, resources, role clarity, reinforcement) are examined, as well as steps leaders can take in improving performance of those for whom they are responsible.
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  • Sun Hydraulics: Leading in Tough Times (A) (Abridged)

    Sun Hydraulics, 32-year-old global hydraulics engineering and manufacturing company headquartered in Sarasota, Florida; confronts tough choices due to the economic downturn in 2001. The company leadership debates how to maintain profitability and reduce labor costs without destroying the company's innovative culture, which is based on horizontal management and has no defined corporate hierarchy. This case includes an overview of the company's history, from its founding in 1970 to its IPO in 1997, and asks students to step into the shoes of Allen Carlson, Sun's president and CEO, to recommend specific cost-cutting actions.
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  • Is Silence Killing Your Company?

    Many times, often with the best of intentions, people at work decide it's more productive to remain silent about their differences than to air them. But as new research by the authors shows, silencing doesn't smooth things over or make people more productive. It merely pushes differences beneath the surface and can set in motion powerfully destructive forces. When people stay silent about important disagreements, they can begin to fill with anxiety, anger, and resentment. As long as the conflict is unresolved, their repressed feelings remain potent, making them increasingly distrustful, self-protective, and all the more fearful that if they speak up they will be embarrassed or rejected. Their sense of insecurity grows, leading to further acts of silence, more defensiveness, and more distrust, thereby setting into motion a destructive "spiral of silence." Sooner or later, they mentally opt out. These vicious spirals of silence can be replaced with virtuous spirals of communication, but that requires individuals to find the courage to act differently and executives to create the conditions in which people will value the expression of differences.
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  • High Cost of Accurate Knowledge

    Many business thinkers believe it's the role of senior managers to scan the external environment to monitor contingencies and constraints and to use that precise knowledge to modify the company's strategy and design. As these thinkers see it, managers need accurate and abundant information to carry out that role. According to that logic, it makes sense to invest heavily in systems for collecting and organizing competitive information. Another school of pundits contends that because today's complex information often isn't precise anyway, it's not worth going overboard with such investments. How information is interpreted is what should matter to top executives. The role of senior managers isn't just to make decisions; it's to set direction and motivate others in the face of ambiguities and conflicting demands. Top executives must interpret information and communicate those interpretations--they must manage meaning more than they must manage information. So which of these competing views is the right one? Research conducted by academics Sutcliffe and Weber found that how accurate senior executives are about their competitive environments is indeed less important for strategy and corresponding organizational changes than the way in which they interpret information about their environments. Investments in shaping those interpretations, therefore, may create a more durable competitive advantage than investments in obtaining and organizing more information. And what kinds of interpretations are most closely linked with high performance? Their research suggests that high performers respond positively to opportunities, yet they aren't overconfident in their abilities to take advantage of those opportunities.
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