PRINCIPLES OF BUSINESS

ADMINISTRATION
UNAV GRADO MARKETING 2020 / 1st SEMESTER

Esteban Santirso
Guillaume Bonnet
 STRUCTURE OF THE COURSE
• PART 1: From the idea to the business model
Lecture 1 & 2 (GB) / book pages 1-7, 156, 327-418

• PART 2: Financing the business

Lecture 3 & 4 (ES) / book pages 419-59

• CASE STUDY nº1

Lecture 5 (you!)

• PART 3: Organization models, Decision making process, management

Lecture 6 & 7 (ES) /book pages 114-201

• PART 4: People, People & people !

Lecture 8 & 9 (GB) / book pages 34-67, 202-321

• PART 5.1: The environment

Lecture 10 (ES) / book 8-24, 67-112

• CASE STUDY nº2

Lecture 11 (you!)

• PART 5.2: The environment

Lecture 12 (GB) / book 8-24, 67-112
…what do YOU expect of your future company?
 WHY DO PEOPLE MATTER SO MUCH ?
… because people actually ARE the company !

HOW CAN WE
• ATTRACT
• HIRE
• MOTIVATE
• RETAIN
THE RIGHT PEOPLE?

WHO DOES NOT BELONG IN OUR COMPANY ? HOW DO WE LET THEM GO?

CONTRIBUTE TO COMPANY LONG TERM GOAL

 IMPORTANT MATTERS TO CONSIDER
• INDIVIDUALITY
• ORGANISATION & CULTURE
• ETHICS & SOCIAL RESPONSABILITY
• COMMUNICATION
• MOTIVATION
• HR MANAGEMENT
• THE POWER OF TEAM WORK
PEOPLE ARE INDIVIDUAL HUMAN BEINGS
People are the most important ressource

+ Human individuals are diverse

+ Individuals have diverse expectations and varying with time
+ Individuals form groups inside the company
+ Informal (vs. formal) organisation
+ International companies
+ Individual dialogue versus colective treatment
+ Social environment influence
_________________________________________
= HIGH COMPLEXITY

=> Every manager must be a people manager

 INDIVIDUAL DIVERSITY
Age, gender, race, …
+ Educational background
+ Values
+ Social / geographical background

Inherited and impact of the enviroment

________________________________________________________

= Personality ( all the ways that an individual interacts with others)

 MYERS BRIGGS TYPE INDICATOR (MBTI) (1944)
• Extraversion/Introversion

• Sensing/Intuition

• Thinking/Feeling

• Judging/Perceiving
“OCEAN”BIG FIVE PERSONALITY TRAITS
(MILTON) ROKEACH PERSONAL VALUES SURVEY
The terminal values in RVS (end states of existence)are:

True Friendship Mature love Self-Respect

A Comfortable Life Wisdom An Exciting Life
A World of Beauty Pleasure Social Recognition
Inner Harmony Salvation Family Security
National Security Equality A Sense of Accomplishment
A World at Peace Freedom Happiness
 ROKEACH INSTRUMENTAL VALUES
(MODES OF BEHAVIOUR)
Cheerfulness Ambition Love
Self-Control Capability Courage
Honesty Responsibility Imagination
Independence Intellect Broad-Mindedness
Logic Obedience Helpfulness
Forgiveness Politeness Cleanliness
GENERATIONAL VALUES
INTERNATIONAL DIFFERENCES ADD TO COMPLEXITY
INTERNATIONAL CULTURAL DIFFERENCES
 HUMANS ARE HUMAN
“from my point of view…”
Our perception of other people is a result of
• Ourself / our personality
• the object of our observation
• the situation

to attribute to internal or external causes

Selective perception
Halo
Contrast
Stereotype
COMPANY CULTURE: UNITE THE PEOPLE
 GERRY JOHNSON 1988
Gerry Johnson (1988) described a cultural web, identifying a number of elements that can be used to describe
or influence organizational culture:

• The paradigm: What the organization is about, what it does, its mission, its values.
• Control systems: The processes in place to monitor what is going on. Role cultures would have vast rule-
books. There would be more reliance on individualism in a power culture.
• Organizational structures: Reporting lines, hierarchies, and the way that work flows through the business.
• Power structures: Who makes the decisions, how widely spread is power, and on what is power based?
• Symbols: These include organizational logos and designs, but also extend to symbols of power such as
parking spaces and executive washrooms.
• Rituals and routines: Management meetings, board reports and so on may become more habitual than
necessary.
• Stories and myths: build up about people and events, and convey a message about what is valued within the
organization.
These elements may overlap. Power structures may depend on control systems, which may exploit the very
rituals that generate stories which may not be true.
 EXPECT MORE THAN COFFE

From the beginning, Starbucks set out to be a different kind of company. One
that not only celebrated coffee but also connection. We’re a neighborhood
gathering place, a part of your daily routine. Get to know us and you’ll see:
we are so much more than what we brew. We call our employees partners
because we are all partners in shared success. We make sure everything we
do is through the lens of humanity—from our commitment to the highest-
quality coffee in the world, to the way we engage with our customers and
communities to do business responsibly.

OUR MISSION

To inspire and nurture the human spirit - one person, one cup and one
neighborhood at a time.
 OUR VALUES

With our partners, our coffee and our customers at our core, we live these
values:

• Creating a culture of warmth and belonging, where everyone is welcome.

• Delivering our very best in all we do, holding ourselves accountable for
results.
• Acting with courage, challenging the status quo and finding new ways to
grow our company and each other.
• Being present, connecting with transparency, dignity and respect.
• We are performance driven, through the lens of humanity.
BENEFIT OF A STRONG CORPORATE CULTURE
• Aligning the company towards achieving its vision, mission, and goals
• High employee motivation and loyalty
• Increased team cohesiveness among the company's various
departments and divisions
• Promoting consistency and encouraging coordination and control
within the company
• Shaping employee behavior at work, enabling the organization to be
more efficient
 CULTURE VERSUS STRATEGY
However, in a perfect
scenario, culture and
strategy complement
and nurture each other.

Strategy and culture

should be created
simultaneously, making
sure they are perfectly
aligned
SHARING THE VISION: ALIGNING PEOPLE

Our Purpose
We create vehicles by
listening and responding to
you. Why? Because it’s our
belief that our cars should
do more than help you go
places on the road, they
should also help you go
places in life.
 ETHICAL BUSINESS CULTURE
• Acceptable principles in an organisation to conduct business
• Ethical versus legal
• How do you reach targets and not only which targets

• Role of example of top management

• Values of the company & code of ethics
• Offer training
• Reward ethical handling and punish non ethical
• Create consulting system
 BENEFITS OF DOING BUSINESS ETHICALY
• Legal protection for the company: stability & growth
• Increase company pride and loyalty
• Increase consumer / public / investors / stakeholders goodwill
• Improve loss prevention
• Improve quality & productivity
 ETHICAL BUSINESS AT

Total operates in a large number of

countries with diverse, complex economic
and sociocultural environments. This
situation can expose us to safety, security,
health, environmental and ethical risks. For
this reason, states and civil society have
particularly high expectations with regard
to our industry. Each and every day, we
therefore rely on our values to guide our
actions and relationships with our
stakeholders, taking a collective approach
to achieve our ambition of becoming the
responsible energy major.
SOME ETHICALLY REPREHENSIBLE BEHAVIOURS
• Abusive & intimidating behaviour
• Conflict of interests
• Harmful products

The role of the whistle blower

(Russel Crow “the insider”)
COMPANY FRAUD AND SCANDALS
ORGANISATIONAL FORMS: FUNCTIONAL
DIVISIONAL ORGANIZATION
MATRICIAL ORGANIZATION MODEL
LINE VERSUS STAFF FUNCTIONS
THE POWER OF TEAM WORK
WHY IS TEAMWORK SO IMPORTANT?
• Teamwork motivates unity in the workplace
• Teamwork offers differing perspectives and feedback
• Teamwork provides improved efficiency and productivity
• Teamwork provides great learning opportunities
• Teamwork promotes workplace synergy
 WHAT IS AN EFFECTIVE TEAM ?
• Working with other people does not mean that you are working as a team.

• “A team is a group of two or more people who interdependently seek to meet a common purpose,
in order to meet their own and their organization’s goals.

• To build a strong team, trust is essential = “positive expectations regarding the intentions,
attitudes and behaviors of others towards oneself in situations that may imply some uncertainty or
ambiguity.” Trust might be based on Estimation, Information, Identification

• Facilitator : Teamwork also requires the ability of facilitation.

• “Because they have special skills of facilitation, they manage the process. They understand the
process. Any team who manages and pays close attention to work will significantly improve the
team’s performance” (Wujec, 2010).

• “Teamwork is (…) the fuel that allows common people to attain uncommon results.” (Andrew
Carnegie)
 ATTRACTING TALENT & HIRING
How can a company generate potential candidates?
• Be attractive for potential candidates (employer branding)
Work place image / ranking / websites /
• Attractive company culture
• Communicate to all potential candidates of the on going search
• Internal promotion versus external search

Selection must
• make use of the correct selection tools
• respect legal standards
• never create false expectations
• Poorly defined position / responsibilities is a cause for failure (role clarity)
• Hiring committee in place?
 GOOGLE HIRING COMITTEE
• All suitable candidates must be passed along to a hiring committee
for review.
• The hiring committees at Google are usually made up of leaders in
the specific organization doing the hiring. Members serve on the
committee for three to six months before being rotated out of the
committee. However, the individual hiring manager is not part of the
committee.
• Minus = slow down the hiring process
• Positive = objective and long term oriented
 WHAT IS THE GLOBAL COST OF
HIRING A NEW EMPLOYEE?

• Direct costs of actual search

• Time invested by other employees to accomodate the new comer in
his new role ( “onboarding”)
• Non (fully) productive time in the first month(s)
• Build customer / supplier relation
• Cost of hiring the wrong person !
TURNOVER
 ATTRACT, SELECT … ONBOARD!
According to consulting firm BCG, onboarding ranks #2 (after recruiting)
with the second highest business impact of all of the 22 HR practices

How ? pre-boarding, welcoming, coaching, …

The traditional goal of simply having people “signed up” and enrolled
needs to shift towards one of WOWing new hires and providing them
with the information and the support that they need to be productive
as soon as possible (Dr. John Sullivan)
 1ST DAY AT
“Onboarding your employees isn't just about skills training. Learn how Zappos immerses new hires into
our culture and creates connections during our 4-week New Hire Training program”

Note: Zappo´s new employees are offered $2,000 to quit after the first week of training if they decide the
job isn’t for them.
 MOTIVATION
MASLOW HIERACHY OF NEEDS PYRAMID (1943)
MOTIVATION: HERTZBERG 2 FACTORS THEORY
(1959)

1. Hygiene factors are needed to make sure

that an employee is not dissatisfied.
2. Motivation factors are needed for
ensuring employee's satisfaction and
employee’s motivation for higher
performance.

Mere presence of hygiene factors does not

guarantee motivation, and presence of
motivation factors in the absence of hygiene
factors also does not work.
MAC CLELLAND THEORY OF NEEDS (1960´S)
McClelland affirms that we all have three motivating drivers, and it does not depend on our gender
or age. One of these drives will be dominant in our behaviour. The dominant drive depends on our
life experiences.

The three motivators are:

• Achievement: a need to accomplish and demonstrate own competence People with a high need
for achievement prefer tasks that provide for personal responsibility and results based on their
own efforts. They also prefer quick acknowledgement of their progress.
• Affiliation: a need for love, belonging and social acceptance People with a high need for affiliation
are motivated by being liked and accepted by others. They tend to participate in social gatherings
and may be uncomfortable with conflict.
• Power: a need for control own work or the work of others People with a high need for power
desire situations in which they exercise power and influence over others. They aspire for
positions with status and authority and tend to be more concerned about their level of influence
than about effective work performance.
 VROOM THEORY OF EXPECTANCY
Victor Vroom stated that people will be highly productive and
motivated if two conditions are met:
1) people believe it is likely that their efforts will lead to successful
results and
2) those people also believe they will be rewarded for their success.

People will be motivated to exert a high level of effort when they

believe there are relationships between the efforts they put forth, the
performance they achieve, and the outcomes/ rewards they receive.
 MAC GREGOR THEORY X AND Y (1960)
• Douglas McGregor formulated two distinct views of human being based on
participation of workers. The first is basically negative, labelled as Theory X,
and the other is basically positive, labelled as Theory Y. Both kinds of
people exist. Based on their nature they need to be managed accordingly.

• Theory X: The traditional view of the work force holds that workers are
inherently lazy, self-centred, and lacking ambition. Therefore, an
appropriate management style is strong, top-down control.

• Theory Y: This view postulates that workers are inherently motivated and
eager to accept responsibility. An appropriate management style is to
focus on creating a productive work environment coupled with positive
rewards and reinforcement.
 THEORY Z
(Abraham H. Maslow 1969 in Journal of Transpersonal Psychology / William Ouchi 1981)

• INCREASING
LOYALTY : THE
JAPANESE MODEL
• JOB FOR LIFE
• WELL BEING OF
EMPLOYEES
MOTIVATIONAL JOB DESIGN
JOB REDESIGN
(Hackmann & Suttle 1977)
 EMPLOYEES PARTICIPATION
• Motivational factor
• Direct participation in decision making process
• Representative participation
TRAINING AND PERSONNAL DEVELOPMENT
Direct benefits
• Performance

Indirect Benefits
• Motivation
• Retention
 ASSESSING PERFORMANCE
“Appreciation or recognition for a job well done” is a top motivational factor

Who is assessed by whom, when and according to which criteria ?

Assesment must be:

• Practical
• Valid
• Reliable
• Differentiated

… difficult to avoid subjective biais !

 MANAGEMENT BY OBJECTIVES
(Peter Drucker 1954)

Targets must be SMART !

• Specific
• Measurable
• Assignable
• Realistic
• Time-bound

Limitation of MBO: context´s impact on results

 FINANCIAL COMPENSATION
How much ? The compensation structure
• Internal balance
• External competitiveness

How ?
• Direct vs. indirect
• Fixed vs. variable

Which type ?
• Seniority
• Performance related salary increase
• Bonuses / Profit sharing / Shares & options
 PROMOTING PEOPLE
• Career perspectives is a great motivational factor
• Strong incentive
• Peter principle “rise to the level of incompetence”
 COLLECTIVE BARGAINING
Employees and management representatives
Conditions of employment are periodically negotiated
Highly technical HR / legal knowledge
National culture differences (Germany)
Dispute resolution mechanism
COMMUNICATION
INTERNAL COMMUNICATION
 COMMUNICATION TYPES
• Verbal
• Written
• Non verbal

• Formal
• Informal

• Individual
• Group
 NON EFFECTIVE COMMUNICATION
• Filters
• Selective perception
• Too much information
• Emotion
• Language
• Ansiety
CHANGE MANAGEMENT
CHANGE IMPACT ON EMPLOYEE
EMOTIONS AND MOOD
 EMOTIONAL INTELLIGENCE (1995 Goleman)
“Anybody can become angry – that is easy, but to be angry with the
right person and to the right degree and at the right time and for the
right purpose, and in the right way – that is not within everybody’s
power and is not easy.” Aristotle.
CONCLUSION
It is the people, stupid!

Manager are people manager

Align
• Mission
• Values
• Culture
• Strategy
• HR

Conduct business ethically