Mullins, L. J (2016) Management & Organizational Behaviour, 7th edition
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This market leading text guides students to a thorough understanding of organisational behaviour and relates this to effective management practice. It is an invaluable resource, which provides a clear and insightful introduction to management studies and acts as a comprehensive point of reference thereafter. MANAGEMENT AND ORGANISATIONAL BEHAVIOUR LAURIE J. MULLINS SEVENTH EDITION Additional student support at www.booksites.net/mullins MANAGEMENT AND ORGANISATIONAL BEHAVIOUR Visit the Management and Organisational Behaviour, Seventh Edition Companion Website at www.booksites.net/mullins to find valuable student learning material including: ■ ■ ■ ■ Multiple choice and short answer questions to help test your learning Technology Solutions – short web articles which explore further the managerial implications of technology Weblinks to relevant sites on the web An online glossary to explain key terms About the author Laurie J. Mullins was formerly principal lecturer at The Business School, University of Portsmouth. Before taking early retirement, Laurie specialised in managerial and organisational behaviour, and managing people at work, and was subject leader for the behavioural and human resource management group. Laurie had previous experience of business, local government and university administration and human resource management. For a numbr of years he was also a member of, and an instructor in, the Territorial Army. He has undertaken a range of consultancy work; served as a visiting selector for UNAIS and VSO; acted as advisor and tutor for a number of professional and educational bodies including UNISON Education; and served as an external examiner for university degree and postgraduate courses, and for professional organisations. Laurie has undertaken a year’s academic exchange in the Management Department, University of Wisconsin, USA, and a visiting fellowship at the School of Management, Royal Melbourne Institute of Technology (RMIT) University, Australia, and given invited lectures in The Netherlands and South Africa. Laurie is also author of Hospitality Mangement and Organisational Behaviour. About the contributors Linda Hicks is a Chartered Occupational Psychologist who specialises in management development and coaching within her consultancy ‘Zest for Change’. David Preece is Professor of Technology Management and Organisation Studies in The Business School, University of Teesside. Seventh Edition MANAGEMENT AND ORGANISATIONAL BEHAVIOUR Laurie J. Mullins Formerly, Principal Lecturer The Business School University of Portsmouth To Pamela And for Kerrie and Tracey, and Paul Pearson Education Limited Edinburgh Gate Harlow Essex CM20 2JE England and Associated Companies throughout the world Visit us on the World Wide Web at: www.pearsoned.co.uk First published in 1985 in Great Britain under the Pitman imprint Fifth edition published in 1999 by Financial Times Pitman Publishing imprint Sixth edition 2002 Seventh edition 2005 © Laurie J Mullins 1985, 1989, 1993, 1996, 1999, 2002, 2005 © Chapter 9 Linda Hicks 1993, 1996, 1999, 2002, 2005 © Chapter 10 Linda Hicks 1999, 2002, 2005 © Chapter 17 David Preece 1999, 2002, 2005 The right of Laurie J Mullins to be identified as author of this work has been asserted by him in accordance with the Copyright, Designs and Patents Act 1988. All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without either the prior written permission of the publisher, or a licence permitting restricted copying in the United Kingdom issued by the Copyright Licensing Agency Ltd, 90 Tottenham Court Road, London W1T 4LP. All trademarks used herein are the property of their respective owners. The use of any trademark in this text does not vest in the author or publisher any trademark ownership rights in such trademarks, nor does the use of such trademarks imply any affiliation with or endorsement of this book by such owners. ISBN 0 273 68876 6 British Library Cataloguing-in-Publication Data A catalogue record for this book is available from the British Library. Library of Congress Cataloging-in-Publication Data Mullins, Laurie J. Management and organisational behaviour / Laurie J. Mullins.--7th ed. p. cm Includes bibliographical references and index. ISBN 0–273–68876-6 (pbk.) 1. Organizational behavior. I. Title HD58.7.M85 2004 658--dc22 2004046919 10 9 8 7 6 5 4 3 2 09 08 07 06 05 Typeset by 30 in Stone Serif Printed and bound by Mateu-Cromo, Artes Graficas, Spain The publisher’s policy is to use paper manufactured from sustainable forests. CONTENTS IN BRIEF Part 1 MANAGEMENT AND ORGANISATIONAL BEHAVIOUR 1 Introduction 2 The Nature of Organisational Behaviour 3 Approaches to Organisation and Management Part 2 THE ORGANISATIONAL SETTING 4 The Nature of Organisations 5 Organisational Goals, Strategy and Responsibilities Part 3 THE ROLE OF THE MANAGER 6 The Nature of Management 7 Managerial Behaviour and Effectiveness 8 The Nature of Leadership 1 3 25 65 111 113 144 187 189 236 280 Part 4 THE INDIVIDUAL 333 9 10 11 12 Individual Differences The Nature of Learning The Process of Perception Work Motivation and Rewards 335 389 434 470 Part 5 GROUPS AND TEAMWORK 515 13 The Nature of Work Groups and Teams 14 Working in Groups and Teams 517 554 Part 6 ORGANISATIONAL STRUCTURES 593 15 Organisation Structure and Design 16 Patterns of Structure and Work Organisation 17 Technology and Organisations 595 633 662 Part 7 MANAGEMENT OF HUMAN RESOURCES 697 18 Job Satisfaction and Work Performance 19 Human Resource Management 20 Resourcing the Organisation 699 746 795 Part 8 IMPROVING ORGANISATIONAL PERFORMANCE 829 21 Organisational Control and Power 22 Organisation Development (Culture, Conflict and Change) 23 Management Development and Organisational Effectiveness 831 887 941 ‘OH, GREAT SPIRIT, GRANT THAT I MAY NOT CRITICISE MY NEIGHBOURS UNTIL I HAVE WALKED A MILE IN THEIR MOCCASINS.’ Traditional Native-American saying CONTENTS IN DETAIL Exhibits, Management in Action, Case Studies and Business Press In acknowledgement and appreciation Publisher’s acknowledgements Guided tour of the book Guided tour of the Companion Website xiv xvii xviii xx xxii Part 1 MANAGEMENT AND ORGANISATIONAL BEHAVIOUR 1 Introduction About this book The aims of this book The seventh edition Your study of the book The changing nature of work organisation The study of management and organisational behaviour The use of case studies 2 The Nature of Organisational Behaviour The meaning of organisational behaviour Influences on behaviour in organisations Behavioural science – a multidisciplinary approach The importance of people and organisational behaviour Organisational metaphors Orientations to work and the work ethic Management as an integrating activity The psychological contract Changing nature of the psychological contract Organisational practices The Peter Principle Parkinson’s Law The need for a cross-cultural approach Is organisational behaviour culture-bound? Models for understanding the impact of culture Five dimensions of culture: the contribution of Hofstede Cultural diversity: the contribution of Trompenaars Summary: convergence or culture-specific organisational behaviour Case study 2.1: Eric and Kipsy: complexities of management and organisational behaviour 3 4 4 6 16 17 19 20 25 26 27 29 30 32 33 34 37 39 40 40 41 42 43 44 47 49 51 56 3 Approaches to Organisation and Management Management theory Developments in management and organisational behaviour The classical approach Scientific management Relevance of scientific management Bureaucracy Criticisms of bureaucracy Evaluation of bureaucracy Structuralism The human relations approach Evaluation of the human relations approach Neo-human relations The systems approach The contingency approach Other approaches to the study of organisations The decision-making approach Social action A number of different approaches Postmodernism Relevance to management and organisational behaviour Japanese management Towards a scientific value approach? Benefits to the manager Management in Action 3.1: Japanese management Case study 3.1: Helgaton Ltd: organisational theory in practice 65 66 66 67 69 71 74 75 76 78 78 80 81 82 84 84 85 85 87 87 89 90 91 93 95 102 Part 2 THE ORGANISATIONAL SETTING 4 The Nature of Organisations 113 The context of the organisation The formal organisation Basic components of an organisation Private and public sector organisations Production and service organisations Types of authority and organisations The classification of organisations Prime beneficiary of the organisation Primary activity of the organisation 114 115 117 118 120 121 122 122 123 viii CONTENTS IN DETAIL The organisation as an open system Interactions with the environment The comparative study of organisations Organisational sub-systems The analysis of work organisations Contingency models of organisation The influence of technology Information technology Managing technical change The informal organisation The organisation of the future Organisational goals 5 Organisational Goals, Strategy and Responsibilities The nature of organisational goals The functions of goals Integration of goals Classification of organisational goals Alteration of goals Organisational ideologies and principles Mission statements Objectives and policy The profit objective Fallacy of the single objective The need for strategy The concept of synergy SWOT analysis The management of opportunities and risks Social responsibilities of organisations Codes of conduct Organisational stakeholders Values and ethics Corporate social responsibility Business ethics Related legislation An integrated approach Management in Action 5.1: IBM Code of Conduct Case study 5.1: Mergers and acquisitions: the consequences of expansion at Square Deal plc Case study 5.2: Welcome to the party: home selling with Top-to-Toe 124 126 127 128 129 131 132 133 134 134 137 137 144 145 146 147 148 149 150 151 152 154 155 157 158 159 160 161 162 163 166 167 168 170 171 177 182 183 Part 3 THE ROLE OF THE MANAGER 6 The Nature of Management The meaning of management Management and administration The process of management Principles of management Management as a social process The tasks and contribution of a manager Essential nature of managerial work The efforts of other people Management in service industries Management in private enterprise and public sector organisations The work of a manager Managerial roles Behaviour pattern of general managers Determining what real managers do Patterns of managerial work and behaviour The attributes and qualities of a manager Managers of the future? Management in Action 6.1: The roles of the manager and the Individual Management Model Case study 6.1: What is management? Defining the manager’s role 7 Managerial Behaviour and Effectiveness Managerial style and behaviour Managers’ attitude towards people Japanese ‘Theory Z’ environment The Managerial/Leadership Grid® Framework for patterns of behaviour Management systems System 4 management Management by Objectives (MBO) Evaluation of MBO Managing people Basic managerial philosophies Choice of managerial style Managerial effectiveness Measures of effectiveness 3-D model of managerial behaviour General criteria of managerial effectiveness The management of time Case example: Chemical company Case study 7.1: Bringing management to book: how to manage a library Case study 7.2: As safe as houses: branch management in a building society 8 The Nature of Leadership 189 190 194 195 The meaning of leadership The importance of leadership Leadership and management Approaches to leadership The qualities or traits approach The functional (or group) approach Leadership as a behavioural category 197 199 199 200 202 203 203 206 207 209 210 210 211 214 217 227 236 237 238 240 241 243 245 246 249 250 251 252 256 259 261 261 264 265 274 275 276 280 281 282 283 285 287 287 289 CONTENTS IN DETAIL Styles of leadership Continuum of leadership behaviour The situational approach Contingency theories of leadership Fiedler’s contingency model Vroom and Yetton contingency model The Vroom and Jago revised decision model Path–goal theory Readiness of the followers or group Transformational leadership Inspirational leadership Power and leadership influence The leadership relationship No one best form of leadership National cultural dimensions of leadership Effectiveness of leadership styles Variables affecting leadership effectiveness Leadership development Leaders of the future Management in Action 8.1: Autoglass: Leadership success factors Management in Action 8.2: IBM Leadership Development Centre (LDC) Case study 8.1: The paradox of Pim Fortuyn: a study in charismatic leadership 291 292 294 295 295 297 298 299 300 301 304 306 307 309 310 312 313 314 315 317 318 327 PART 4 THE INDIVIDUAL 9 Individual Differences 335 By Linda Hicks The changing nature and scope of managing individuals at work Personality Nomothetic and idiographic approaches Theoretical approaches: nomothetic Theoretical approaches: idiographic Other theoretical approaches Cognitive theory: Kelly’s personal construct theory Applications within the work organisation Stress and the individual Ability Testing Attitudes Gender and organisations Understanding women’s position and status Economic theories Psychological sex differences The socialisation process Orientations and motivations towards work Working practices 336 339 342 343 346 347 350 352 354 355 360 362 366 368 369 369 370 370 371 Career development Leadership, management and women Positive approaches 372 376 378 10 The Nature of Learning 389 By Linda Hicks The meaning and nature of learning Organisations and the management of learning Knowledge management The learning organisation How do people learn? Behaviourism The outcomes of learning Operant conditioning Social learning Limitations of the behaviourist school Cognitive theories Learning styles Complex models of learning Creativity Facilitating learning Learning theory applied to study skills Applications of learning theory to organisations Case study 10.1: Springboard to success: staff development in practice Case study 10.2: Will the mail get through: managing change at the Royal Mail 390 394 395 399 402 403 405 405 408 408 409 413 414 415 417 420 420 425 427 11 The Process of Perception 434 By Laurie Mullins and Linda Hicks The perceptual process Selectivity in attention and perception Meaning to the individual Internal factors External factors Organisation and arrangement of stimuli Perceptual illusions Perceiving other people Transactional analysis Selection and attention Organisation and judgement The importance of body language Attribution theory Perceptual distortions and errors Stereotyping The halo effect Perceptual defence Projection Illustrative example: perception of women 435 435 437 437 440 441 442 445 448 450 452 453 455 456 457 458 459 459 459 12 Work Motivation and Rewards The meaning of motivation Needs and expectations at work Motivation and organisational performance 470 471 472 474 ix x CONTENTS IN DETAIL Frustration-induced behaviour Money as a motivator Theories of motivation Content theories of motivation Maslow’s hierarchy of needs theory Alderfer’s modified need hierarchy model Herzberg’s two-factor theory McClelland’s achievement motivation theory Process theories of motivation Vroom’s expectancy theory The Porter and Lawler expectancy model Lawler’s revised expectancy model Implications for managers of expectancy theories Equity theory of motivation Goal theory Attribution theory Relevance of theories of motivation Cross-cultural dimensions of motivation The motivation of knowledge workers Management in Action 12.1: Developing reward strategies to motivate and compensate knowledge workers Case study 12.1: Staff motivation: not so much a motivational pyramid, more a slippery slope 475 477 478 480 478 484 485 487 489 490 492 494 495 496 498 499 499 500 500 504 14 Working in Groups and Teams 554 Interactions among members 555 Belbin’s team-roles 556 Patterns of communication 559 Analysis of individual behaviour 562 Sociometry 562 Interaction analysis 563 Frameworks of behavioural analysis 565 An essential feature of work organisations 566 Individual compared with group or team performance 569 The risky-shift phenomenon 569 ‘Groupthink’ 570 Brainstorming 570 Group dynamics 573 T-groups 574 Effective teamworking 575 Management in Action 14.1: Profiling of managers for leadership development in a cross-section of South African organisations 579 Management in Action 14.2: Barriers come down 585 to build up team spirit 510 PART 6 ORGANISATIONAL STRUCTURES PART 5 GROUPS AND TEAMWORK 15 Organisation Structure and Design 595 13 The Nature of Work Groups and Teams The meaning and importance of groups and teams The difference between groups and teams Group values and norms The importance of teamwork Formal and informal groups Reasons for formation of groups or teams Group cohesiveness and performance Membership Work environment Organisational factors Group development and maturity Potential disadvantages of strong, cohesive groups Characteristics of an effective work group The effects of technology on work groups Role relationships Role conflict Role stress Management in Action 13.1: Teamwork in a small company Management in Action 13.2: Remote control – a case study Case study 13.1: Floating on air: the importance of teamwork at Hovertec 517 518 518 520 521 525 527 528 529 530 531 531 532 533 534 536 538 540 543 545 550 The meaning and nature of organisation structure The importance of good structure Levels of organisation The importance of the hierarchy The design of organisation structure Clarification of objectives Task and element functions The division of work Centralisation and decentralisation Principles of organisation Span of control The chain of command ‘Flatter’ organisation structures Formal organisational relationships Line and staff organisation The inverted organisation Project teams and matrix organisation Effects of a deficient organisation structure Organisation charts Structure and organisational behaviour Case study 15.1: A small cog in a big wheel: company restructuring at Zeton Case study 15.2: Loud and clear: leadership in telecommunications 596 597 598 600 601 603 604 605 608 609 610 611 612 613 615 617 617 619 621 622 629 630 CONTENTS IN DETAIL 16 Patterns of Structure and Work Organisation 633 Variables influencing organisation structure 634 The contingency approach 634 Size of organisation 635 Technology 638 The Woodward study 638 Major dimensions of technology: the work of Perrow 640 Environment 641 The Burns and Stalker study 642 ‘Mixed’ forms of organisation structure 643 The Lawrence and Lorsch study 644 Evaluation of the contingency approach 646 Contribution of contingency theory 648 Culture as a contingent factor 649 Alternative forms of structure 649 The demand for flexibility 651 Telecommuting 652 The shamrock organisation 652 The nature of delegation and empowerment 654 Case study 16.1: Bureaucracy could seriously damage your health: staff empowerment at City Hospital 658 Case study 16.2: Could I have an estimate? Organisational structure at Fabrique Décor 658 17 Technology and Organisations By David Preece 662 Theorising technology 663 Using a socio-technical ensemble perspective: the case of Butler Co. 669 Technological change and organisations 672 Adopting and introducing new technology 674 Case studies in technological/organisational change 679 Case study 17.1: A thirst for technology: new systems at the bars of Tawny Taverns 679 Case study 17.2: Web page not found: internal communications at Redstart Computers 682 Organisational contexts, social and political processes and technological change 685 ICTs, networks, organisations and society 686 PART 7 MANAGEMENT OF HUMAN RESOURCES 18 Job Satisfaction and Work Performance The meaning and nature of job satisfaction Dimensions of job satisfaction Framework of study Information communications technology 699 700 700 703 703 Stress at work Role relationships and conflict Levels of stress Coping with stress Work organisation and job design Individual job redesign A comprehensive model of job enrichment Broader organisational approaches to improved job design The work/life balance Employee involvement Empowerment and job satisfaction Self-managed work groups Flexible working arrangements Quality circles Management style and culture Contextual factors in job design The happy/productive worker Management in Action 18.1: Job satisfaction: the fit between expectations and experiences Management in Action 18.2: An elusive but expensive concept: stress Management in Action 18.3: Work-Life Balance case studies Management in Action 18.4: Beyond the nine-to-five Case study 18.1: The wide open spaces: linking job satisfaction and work performance Case study 18.2: The changing role of supervisors: demonstrating the effect of communication and training on morale Case study 18.3: Flying like the wind: motivation, job design and culture at Falcon Car Company 19 Human Resource Management The nature of human resource management (HRM) HRM policies, activities and functions Organisation of the HRM function HRM: a shared responsibility The importance of HRM Training and development The management of training Investors in People Performance appraisal Questions to be addressed 360° feedback and upward appraisal Establishing the appraisal system Methods of appraisal Potential problem areas Employment relations Unitary and pluralistic perspectives Regulating the employment contract Responsibility for employment relations International dimensions of HRM Industrial democracy in European countries 706 708 709 710 713 714 715 717 720 722 723 723 724 727 728 728 729 732 733 735 736 741 742 743 746 747 749 751 752 755 756 758 761 762 764 765 766 767 769 771 773 774 777 778 779 xi xii CONTENTS IN DETAIL The German system Effectiveness of the HRM function Management in Action 19.1: The Investors in People Standard Management in Action 19.2: Performance management at Autoglass Limited Case study 19.1: Beer and sandwiches: personnel management at London Taverns Case study 19.2: Nothing succeeds like success: accelerating performance at Sisson Systems 779 780 20 Resourcing the Organisation 795 796 796 798 800 802 804 804 806 806 808 810 810 812 813 The concern of all managers Human resource planning The value of human resource planning Recruitment and selection of staff Job analysis Person specifications Difficulties and distastes of the job The importance of job analysis Attracting suitable applicants The selection process Selection tests and questionnaires Group exercises The selection interview Interviewing style Competency-based approach to recruitment and selection The selection decision Induction and follow-up Costs of the selection process Effectiveness of the recruitment and selection process Management in Action 20.1: Marks & Spencer PLC’s graduate selection process Case study 20.1: Please enter your password: effective resource management at Wessex Computers Case study 20.2: Inky fingers: HRM failure at Sumprint Ltd 783 786 790 791 814 815 816 817 817 821 825 826 PART 8 IMPROVING ORGANISATIONAL PERFORMANCE 21 Organisational Control and Power The meaning of control Assumptions of organisation and management Elements of an organisational control system Forms of control Classification of control systems Strategies of control in organisations 831 832 834 835 837 838 840 Characteristics of an effective control system Power and management control Perspectives of organisational power Pluralistic approaches to power The balance between order and flexibility Delegation and empowerment The manager–subordinate relationship Benefits of delegation Reasons for lack of delegation A systematic approach to delegation The art of delegation The concept of empowerment Does empowerment deliver? Behavioural factors in control systems Overcoming resistance to management control Financial and accounting systems of control Management in Action 21.1: Empowerment Case study 21.1: The enthusiastic delegator: the consequences of promoting beyond ability? Case study 21.2: Alpha to Omega: the effects of financial management on company performance 22 Organisation Development (Culture, Conflict and Change) The meaning of organisation development Topics associated with OD Organisational culture Types of organisational culture Influences on the development of culture The cultural web The importance of culture Organisational climate Employee commitment Organisational conflict Contrasting views of conflict The sources of conflict Strategies for managing conflict The nature of organisational change Planned organisational change Resistance to change The management of organisational change Human and social factors of change Responsibilities of top management Management in Action 22.1: Organisational culture, change and IT in an SME Management in Action 22.2: Siemens Nixdorf’s new dynamism Case study 22.1: It’s tough at the top: managing conflict in the Wakewood organisation Case study 22.2: Getting political: management in local government Case study 22.3: A matter of life or death: managing knowledge at an NHS Trust 842 843 845 846 848 849 850 852 853 854 857 859 863 864 865 867 873 880 883 887 888 888 891 892 894 895 896 899 901 903 904 906 908 909 910 913 915 916 920 923 924 933 934 935 CONTENTS IN DETAIL 23 Management Development and Organisational Effectiveness The importance of effective management The meaning and nature of management development An integrated model of management development Management development process Continuing professional development (CPD) Management education, training and development The Management Charter Initiative (MCI) Leadership and Management Model The nature of organisational effectiveness The Peters and Waterman study Heller’s study of European excellence The Goldsmith and Clutterbuck study The learning organisation Total Quality Management (TQM) Business process re-engineering (BPR) Building Tomorrow’s Company The EFQM excellence model Assessing organisational performance Organisation audit 941 942 942 944 949 953 954 955 956 959 960 961 962 962 964 968 971 971 975 976 Benchmarking Performance indicators in the public sector Gap analysis A range of different criteria The twenty-first century organisation and people Management in Action 23.1: Extracts from Abbey Performance Development Programme Management in Action 23.2: A cure for growing pains – Costa Coffee Management in Action23.3: Components of the Management Standards Management in Action 23.4: Building organisational competence Case study 23.1: Chips with everything: managing cultural change at Eurasia Electronics Case study 23.2: Holding the front page: expansion at Rudmore Press Conclusion Business Press Glossary Index Companion Website resources Visit the Companion Website at www.booksites.net/mullins For students: Multiple choice and short answer questions to help test your learning ■ Technology Solutions – short web articles which explore further the managerial implications of technology ■ Weblinks to relevant sites on the web ■ An online glossary to explain key terms ■ For lecturers: ■ Complete, downloadable Instructor’s Manual which includes: – Teaching tips – Extra cases – Solutions/examples to discussion and other questions ■ Powerpoint slides that can be downloaded and used as OHTs ■ Testbank of question material Also: This site has a syllabus manager, search functions, and email results functions. Note: A printed version of the Instructor’s Manual is also available free to adopters of Management and Organisational Behaviour. Please contact your local sales representative whose details can be located on our website www.pearsoned.co.uk 976 977 977 977 980 982 985 987 988 997 997 1003 1005 1051 1065 xiii EXHIBITS, MANAGEMENT IN ACTION, CASE STUDIES AND BUSINESS PRESS Exhibits 3.1 3.2 5.1 6.1 7.1 8.1 8.2 9.1 10.1 11.1 11.2 13.1 14.1 18.1 18.2 21.1 23.1 23.2 23.3 NHS pays £30.96 just to sharpen pencils Tools that do the business: management theories Business ethics: what’s in it for you? The infant school headteacher as a manager It’s a people thing Developing leadership in the NHS of the 21st century First class coach Why use psychological tests? Learning new skills: the importance of feedback Hospitals set to play it by ethnic book Judy Owen wins battle against Professional Golfers’ Association to wear trousers Teamwork’s own goal Management: brainstorm in a rainstorm If you want people to do a good job, give them a good job to do Have a life and keep your job Empowerment and the custody officer Developing managers: applying the theory in practice Management succession: developing leadership at 3M Quality counts: TQM in an NHS trust 76 91 171 191 258 305 312 362 410 454 460 524 573 719 725 861 950 952 968 Management in Action 3.1 5.1 6.1 8.1 8.2 12.1 13.1 13.2 14.1 14.2 18.1 18.2 18.3 18.4 19.1 19.2 20.1 21.1 22.1 22.2 Japanese management IBM Code of Conduct The roles of the manager and the Individual Management Model Autoglass: Leadership success factors IBM Leadership Development Centre (LDC) Developing reward strategies to motivate and compensate knowledge workers Teamwork in a small company Remote control – a case study Profiling of managers for leadership development in a cross-section of South African organisations Barriers come down to build up team spirit Job satisfaction: the fit between expectations and experiences An elusive but expensive concept: stress Work-Life Balance case studies Beyond the nine-to-five The Investors in People Standard Performance management at Autoglass Limited Marks & Spencer PLC’s graduate selection process Empowerment Organisational culture, change and IT in an SME Siemens Nixdorf’s new dynamism 95 177 217 317 318 504 543 545 579 585 732 733 735 736 783 786 821 873 923 924 LIST OF FIGURES 23.1 23.2 23.3 23.4 Extracts from Abbey Performance Development Programme A cure for growing pains – Costa Coffee Components of the Management Standards Building organisational competence 982 985 987 988 Case studies 2.1 3.1 5.1 5.2 6.1 7.1 7.2 8.1 10.1 10.2 12.1 13.1 15.1 15.2 16.1 16.2 17.1 17.2 18.1 18.2 18.3 19.1 19.2 20.1 20.2 21.1 21.2 22.1 22.2 22.3 23.1 23.2 Eric and Kipsy: complexities of management and organisational behaviour Helgaton Ltd: organisational theory in practice Mergers and acquisitions: the consequences of expansion at Square Deal plc Welcome to the party: home selling with Top-to-Toe What is management? Defining the manager’s role Chemical company Bringing management to book: how to manage a library As safe as houses: branch management in a building society The paradox of Pim Fortuyn: a study in charismatic leadership Springboard to success: staff development in practice Will the mail get through: managing change at the Royal Mail Staff motivation: not so much a pyramid, more a slippery slope Floating on air: the importance of teamwork at Hovertec A small cog in a big wheel: company restructuring at Zeton Loud and clear: leadership in telecommuncations Bureaucracy could seriously damage your health: staff empowerment at City Hospital Could I have an estimate? Organisational structure at Fabrique Décor A thirst for technology: new systems at the bars of Tawny Taverns Web page not found: internal communications at Redstart Computers The wide open spaces: linking job satisfaction and work performance The changing role of supervisors: demonstrating the effect of communication and training on morale Flying like the wind: motivation, job design and culture at Falcon Car Company Beer and sandwiches: personnel management at London Taverns Nothing succeeds like success: accelerating performance at Sisson Systems Please enter your password: effective resource management at Wessex Computers Inky fingers: HRM failure at Sumprint Ltd The enthusiastic delegator: the consequences of promoting beyond ability? Alpha to Omega: the effects of financial management on company performance It’s tough at the top: managing conflict in the Wakewood organisation Getting political: management in local government A matter of life or death: managing knowledge at an NHS trust Chips with everything: managing cultural change at Eurasia Electronics Holding the front page: expansion at Rudmore Press 56 102 182 183 227 274 275 276 327 425 427 510 550 629 630 658 658 679 682 741 742 743 790 791 825 826 880 883 933 934 935 997 997 Business Press 1 2 3 4 5 6 7 8 9 A safe way to hold on to staff Business schools share Enron blame Recruitment: facing the next brain drain Companies pressed to adopt higher standards Forget how the crow flies Public sector: go home and prepare for e-government Employees as investors Leader of the band who likes to run the show Great leaders: pioneer and a shrewd strategist 1006 1007 1008 1010 1012 1017 1019 1020 1022 xv xvi LIST OF FIGURES 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 Endangered species Mentoring moves into a leading role Driving your employees up the wall A focus on workers’ individual needs Advantages of promoting a boutique mindset Avoiding the madness of groupthink End to ‘departmentalism’ a vision of things to come A long-distance relationship Network protection is a key stroke Relentless rise of the pleasure seekers EU & US: Where are the best workplaces? Marrying performance with reward Human capital: is it ‘personnel’ with yet more make-up? New learning models are under scrutiny Patterns can show if you are up to the job Massive US effort to set up control systems Asda: the listening store Organisations, too, can be put on the couch Swiss group at top of learning tree The rise and rise of the corporate learning officer 1023 1025 1027 1028 1029 1030 1031 1032 1034 1035 1037 1038 1040 1041 1043 1044 1045 1047 1048 1049 IN ACKNOWLEDGEMENT AND APPRECIATION A warm and special tribute is paid to my wife Pamela, children and family for their continuing support and encouragement for this seventh edition. Particular acknowledgements and thanks are due for the contributions from my friends and colleagues Linda Hicks, David Preece and Sara Lamond. Thanks and appreciation also to Derek Adam-Smith, Rajeev Bali, Martin Brunner, Richard Christy, Ray French, Karen Meudell, Anne Riches, Amanda Stevens, Lynn Thomson, Cheryl Walmsley. I gratefully acknowledge the help and support received from: Managers who kindly provided information from their own organisations and gave permission to reproduce material in the book Aileen Cowan, Assistant Director, The Institute of Chartered Secretaries and Administrators Liz Harris, Marketing Communications Manager, The Institute of Administrative Management Rebecca Hoar, Section Editor, Management Today Sue Mann, Editor, Professional Manager. A special debt of appreciation is due to members of the team at Pearson Education including Matthew Walker, Colin McDougall, Karen McLaren, Janey Webb, Colin Reed, Jacqueline Senior and Simon Lake for their invaluable professionalism and guidance. Thank you all for a pleasant and rewarding partnership. I wish to acknowledge and thank a number of people who may be unaware how much their friendship, interest and support has in a variety of ways helped in the completion of this seventh edition, including: Stephen Darvill; Philip Voller; Kate Brackenbury; Valerie and Peter Hallam; Di and Mike Blyth; Julie and John Bradley; Jenny and Tony Hart; Vilma and Will Hemsley; Lynn and Wayne Miller; Christine and David Paterson; Ann Ward. Reviewers Special thanks are due to the following reviewers, approached by the publishers, for their valued insightful and constructive comments that have helped shape the contents of this present edition: Ann Norton, Sheffield Hallam University, UK Brian Stone, Manchester Metropolitan University, UK Kim Parker, University of Kent, UK Bob Smale, Brighton University, UK Alasdair Maclean, University of Abertay, UK Peter Falconer, Glasgow Caledonian University, UK Hugo Misselhorn, Management & Organisation Development Consulting, South Africa Marijek Dielman, Hotel Management School, Maastricht, The Netherlands David Wilson, Wethouder Koniglaan, The Netherlands. Laurie J Mullins PUBLISHER’S ACKNOWLEDGEMENTS Chapter 1 – Introductory assignment is reprinted with permission from Von Oech, R., A Whack On The Side Of The Head, Warner Books Inc. (1998), p. 20. Copyright © 1983, 1990, 1998 by Roger Von Oech. Chapter 7 – Assignment 1 ‘Principle of Supportive Relationships Questionnaire’ is reprinted with permission from Likert, R., The Human Organization – Its Management and Value, McGraw-Hill, New York (1976), pp. 48–9. Chapter 2 – Assignment 1 is reprinted with permission from Rowe, C., The Management Matrix: The Psychology of Interaction, Alfred Waller Ltd (1992), p. 1, with permission from Patricia Rowe. Personal awareness and skills exercise ‘Your Management Style’ is reprinted with permission from Osland, J. S., Kolb, D. A. and Rubin, I. M., Organizational Behavior: An Experimental Approach, seventh edition, Prentice Hall (2001), pp. 24–5. Personal awareness and skills exercise ‘So What’s Your Work Ethic?’ is reprinted with permission from Professional Manager, published by the Chartered Management Institute, May 2003, p. 38, and Walmsley, C. J., Your Future Looks Bright, Preston Beach (2002), p. 98. Case study 2.1 ‘Eric and Kipsy’ is reprinted with permission from Porter, L. W., Lawler, E. E. and Hackman, J. R., Behavior in Organizations, McGraw-Hill, New York (1975), pp. 3–14. Chapter 3 – Assignment 1 is reprinted with permission from DuBrin, A. J., Human Relations: A Job-Oriented Approach, Reston Publishing/Prentice Hall/Pearson Education Inc. (1978), pp. 296–7. Case study 3.1 ‘Applications of Organisation Theory in Helgaton Ltd’, is reprinted with permission from Mullins, L. and White, I., in Adam-Smith, D. and Peacock, A. (eds), Cases in Organisational Behaviour, Pearson Education (1994), pp. 19–29. Chapter 4 – Assignment ‘Our Organizational Society: Your Association with Organizations’ is reprinted with permission from Kast, F. E. and Rosenzweig, J. E., Experiential Exercises and Cases in Management, McGraw-Hill, New York (1976), pp. 13–15. Chapter 5 – Personal awareness and skills exercise ‘Assessing your Work Values’ is reprinted with permission from Misselhorn, A., The Head and Heart of Management, Management and Organization Development Consultants (SA) (2003), p. 36. Case study 7.1 ‘Library Management’ is reprinted with permission from the Institute of Chartered Secretaries and Administrators, Management Principles Pilot Paper, Administrator, December 1993. (Administrator is now published under the title Chartered Secretary.) Chapter 8 – Assignment 1 ‘Least Preferred Co-worker (LPC) Scale’ is reprinted from A Theory of Leadership Effectiveness, McGraw-Hill (1976), p. 41, with the permission of the author, Professor F. E. Fiedler, University of Washington. Assignment 2 ‘T-P Leadership Questionnaire: An Assessment of Style’ by Sergiovanni, T., Metzcus R. and Burden, L. adapted from their article ‘Leadership Behavior Description Questionnaire’, in the American Educational Research Journal 6, 1969, is reprinted by permission of the publisher, the American Educational Research Association. Assignment 4 ‘Your Leadership Style’ is reprinted with permission from Schermerhorn Jr, J. R., Hunt, J. G. and Osborn, R. N., Managing Organizational Behavior, fourth edition, used by permission of John Wiley & Sons Inc. (1991), p. 484. Case study 8.1 ‘The Paradox of Pim Fortuyn: A Study in Charismatic Leadership’. I am grateful to my colleague Karen Meudell for providing this case study. Chapter 10 – Case study 10.2 ‘Royal Mail: Making your life easier by helping you do a better job’. Thanks to Yasmin Ahmed and Royal Mail Group plc. Case study 5.1 ‘Square Deal plc’ is reprinted with permission from the Institute of Administrative Management, Diploma in Administrative Management Examination Paper, Summer 1983. Chapter 11 – Personal awareness and skills exercise ‘Inference–observation’ exercise is reprinted with permission from Haney, W. V., Communications and Interpersonal Relations: Text and Cases, sixth edition, Irwin, Illinois (1992), p. 213. Case study 5.2 ‘Top to Toe’ is reprinted with permission from the Chartered Institute of Secretaries and Administrators, Management Principles Examination Paper, June 2003. Chapter 12 – Personal awareness and skills exercise contributed by Sheila Ritchie of Elm Training and derived from the full 12-factor Motivation to Work Profile. It is reprinted with permission. Chapter 6 – Assignment 2 ‘Have YOU Got What it Takes to be a CEO?’ is reprinted with permission from Gwyther, M., Management Today, November 2001, pp. 56–9. Case study 12.1 ‘Not so Much a Motivational Pyramid, More a Slippery Slope’. I am grateful to Linda Fleming for providing this case. Case study 6.1 ‘What Is Management?’ from Doswell, R. and Nailon, P., Case Studies in Hotel Management, third edition, Barrie & Jenkins (1976). Chapter 13 – The copyright of case study 13.1 ‘Hovertec plc’ rests with my colleague Tom McEwan, and is reprinted with permission. Chapter 14 – Personal awareness and skills exercise is reprinted with permission from Woodcock, M., 50 Activities for Teambuilding, Gower, Aldershot (1988), with permission from Ashgate Publishing Limited. Chapter 21 – ‘The Organisational Politics Questionnaire’ is reprinted with permission from DuBrin, A. J., Human Relations: A Job-Oriented Approach, fifth edition, Prentice Hall/Pearson Education Inc. (1992), pp. 306–7. Chapter 15 – Assignment 2 is reprinted with permission from the Institute of Chartered Secretaries and Administrators, Management Principles Examination Paper, June 1999. Case study 21.2 ‘The Omega organisation’ is reprinted with permission of the Institute of Chartered Secretaries and Administrators, Management: Principles and Policy Examination Paper, June 1987. Case study 15.1 ‘Zeton Ltd’ is reprinted with permission from Administrator, The Institute of Chartered Secretaries and Administrators, April 1996, p. 36. (Administrator is now published under the title Chartered Secretary.) Chapter 22 – Assignment ‘Rate Your Readiness to Change’ is reprinted with permission from Stewart, T. A., Fortune, 7 February 1994, pp. 63–4, Time Inc. All rights reserved. Case study 15.2 ‘Direct Telecommunications PLC (DT)’ is reprinted with permission from the Institute of Chartered Secretaries and Administrators, Organisation and the Human Resource Examination Paper, May 2002. Case study 22.1 ‘The Wakewood organisation’ is reprinted with permission from the Institute of Chartered Secretaries and Administrators, Management: Principles and Policy Examination Paper, December 1986. Chapter 16 – Case study 16.1 ‘The City Hospital: Bureaucracy and Empowerment’ is reprinted with permission from the Institute of Chartered Secretaries and Administrators, Organisation and the Human Resource Examination Paper, November 2002. Case study 22.2 ‘Gremby County Council’ is reprinted with permission from Bowman, C. and Jarrett, M. G., Management in Practice, third edition, Butterworth-Heinemann (1996), pp. 209–11, with permission from Elsevier Ltd. Case study 16.2 ‘Fabrique Décor’ is reprinted with permission from the Institute of Administrative Management, Advanced Diploma Examination Paper, December 2000. Chapter 18 – Case study 18.1 ‘The Wide Open Spaces’ from Chilver, J., People, Communication and Organisation, Pergamon Press (1984), pp. 118–19. Case study 18.2 ‘Managing Supervisors’ is reprinted with permission from the Institute of Chartered Secretaries and Administrators, Management: Principles and Policy Examination Paper, June 1985. Case study 18.3 ‘The Falcon Car Company’ is reprinted with permission from the Institute of Chartered Secretaries and Administrators, Organisation and the Human Resource Examination Paper, June 2003. Chapter 19 – Case study 19.1 ‘London Taverns Ltd’ has been prepared jointly with, and from original material supplied by, my colleague Karen Meudell. Case study 19.2 ‘Accelerating the performance momentum at Sisson Systems’ is reprinted with permission from the Institute of Chartered Secretaries and Administrators, Organisation and the Human Resource Examination Paper, June 1999. Chapter 20 – Case study 20.1 ‘Wessex Computers’ is reprinted with permission from the Institute of Administrative Management, Certificate in Administrative Management Examination Paper, Summer 1983. Case study 20.2 ‘Sumprint Ltd’ is reprinted with permission from the Institute of Administrative Management, Case Study Examination Paper, June 2002. Case study 22.3 ‘Managing Knowledge at an NHS Trust’. I am grateful to Rajeev K. Bali and Ashish N. Dwivedi for providing this case. Chapter 23 – Assignment 2 ‘Assessing your Organisation’ is reprinted with permission from BBC, Building Tomorrow’s Company – Supporting Notes and the Centre for Tomorrow’s Company and William Tate, 1999. Personal awareness and skills exercise is adapted from material prepared by John Bourn for a UNISON distance learning course and is used with permission of the Education Officer. Case study 23.1 ‘Eurasia Electronics’ is reprinted with permission from the Institute of Chartered Secretaries and Administrators, Professional Administration Examination Paper, December 1999. Case study 23.2 ‘Rudmore Press Limited’. This case was prepared jointly with, and from original material provided by, my colleague Karen Meudell. DOGBERT character drawings copyright © 1991 United Feature Syndicate, Inc. Please note: we are all influenced by the thoughts and ideas of other people that tend to drift into the subconscious and are not always distinguished clearly from one’s own. I have attempted to give references for sources of work by other writers but apologise to any concerned if acknowledgement has inadvertently not been recorded. Should there by any queries, errors or omissions please contact the publisher. xx PART 1 PART TITLE GUIDED TOUR OF THE BOOK 410 8 PART 4 THE INDIVIDUAL ■ THE NATURE OF LEADERSHIP ■ ■ ■ sensori-motor period: birth to 2 years; pre-operational thought: 2 years to 7 years; concrete operations: 7 years to 11 years; formal operations: 11 years to 15 years. Piaget’s theory offers a tight coherent perspective of the maturation of intellectual thought and development. His studies introduced the notion of the cyclical nature of learning and the ways in which children and adults adjust to and accommodate to their environment. For many cognitive theorists learning is viewed as a sequence, a sequence which processes information in three distinct stages: An essential part of management is co-ordinating the activities of people and guiding their efforts towards the goals and objectives of the organisation. This involves the process of leadership and the choice of an appropriate form of action and behaviour. Leadership is a central feature of organisational performance. The manager must understand the nature of leadership influence and factors which determine relationships with other people, and the effectiveness of the leadership relationship. ■ ■ ■ EXHIBIT 10.1 Learning new skills: the importance of feedback Yoga is one of the six systems of Indian philosophy. There are a number of different interpretations of yoga and one of these is taught by Yogacharya B.K.S Iyengar.64 Learning a physical skill such as Iyengar yoga privides a good illustration of Photo: Rajesh Jantilal/AFP/Getty Images ■ ■ In the twenty-first century, leaders must create an atmosphere in which people believe in strategy, believe in management decisions, and believe in their work. Once people believe in management decisions, there is an excitement within an organization. Such an atmosphere makes an organization prosper. Successful leaders create this sort of environment both inside and outside the organization. LEARNING OUTCOMES Learning outcomes: summarise what students will learn in the chapter After completing this chapter you should be able to: explain the meaning and importance of leadership in work organisations; contrast patterns of managerial leadership and main approaches to and studies of leadership; detail the nature of managerial leadership and the exercise of leadership power and influence; ■ ■ the continual cycle of learning; the importance of stages in learning; the significance of information and feedback; the importance of support structures – both physical, social and mental. The yoga poses are challenging and require the complete involvement of the senses and total concentration of the mind. Otherwise a fall to the floor is likely! The teacher provides clear information about the positioning of the body and the class tries to assimilate this information and imitate the teacher. Initally it is hard to connect to muscles that have been lying dormant for some considerable time! The final pose is reached after a series of ‘sub poses’ have been practised. Each sub pose is gradually developed and becomes more complex. At each stage students have to remember ‘what it felt like’ in the previous sub pose to be sure that they are building on and pushing themselves into a more challenging posture. Learning the poses therefore requires active perception and attention to the teacher as well as attention to internal feedback about the positioning of the body. Striving for excellence and gaining the benefits from each posture is the goal of Iyengar yoga for all students. Therefore no matter the physical limitations of the body or Subir Chowdhury Management 21C, Financial Times Prentice Hall (2000) examine leadership as an aspect of behaviour, and different styles of leadership; assess contingency theories of leadership and situational factors which determine the characteristics of leadership; evaluate the nature and main components of transformational leadership and inspirational leadership; review the variables which determine effective managerial leadership and development. Photo: Jose Luis Pelaez, Inc./Corbis the inflexibility of the limbs all students are able to achieve maximum gain from each posture with the help of physical supports. Perhaps a belt to support the legs, perhaps a chair to support the back, Each student develops at their own pace, and with their own props. A teacher will also provide information about whether a student’s posture needs modifying; perhaps a brick under the hand will get the posture closer to perfection. Creativity will be used in identifying the particular needs of certain students. A learning environment is created in which the group supports individuals, information at critical times is provided, individuals are totally engaged in their pursuit of perfection and the teacher encourages, supports and leads by example. Reprinted with permission from Judith Jones and Carol Batterson, Iyengar Yoga Teacher, Hampshire Although it is beyond the scope of this book to consider the relationship between thinking and learning some researchers have shed insight on the mental constructs that may form. Glaser65 for instance has described these as ‘scaffolds’. This metaphor suggests Notable quotes: provide insight into managerial thinking, past and present Exhibits: short vignettes bring managerial theory and practice to life Case studies: integrate a range of themes to encourage analysis of more complex situations Technology solutions: links to web-based resources which encourage evaluation of technology in solving problems CHAPTER 6 THE NATURE OF MANAGEMENT 217 ■ While the importance and responsibility of management is still widely recognised there is a need for new managers, and new methods for a changed environment and nature of work organisations. Europe’s new breed of managers need to focus attention on key strategies including the importance of values and behaviours. Important issues for the future include managing change; leadership and motivation of staff; managing diversity; the development of human resources; and demands for alternative organisational practices. Square Deal plc is a newly formed subsidiary company of Square Deal International Inc. The intention is to use it to unify the efforts and improve the profitability of the hitherto separate UK subsidiaries of Arnold plc, Carlton plc and Foodrich plc. At present it has a managing director, an administrative/ financial controller and a typist all sharing a large temporary office in central London. Arnold plc has 69 food stores, all within a radius of 30 miles from London. Most of them contain either a small restaurant or a snack bar and occupy high street or suburban shopping centre locations. It owns one small bakery whose total production supplies ten stores with bread and cakes. Perishables for both resale and restaurant use are bought locally but all other products are bought centrally and distributed from one large warehouse. These products are charged to the stores at selling price on computer-printed internal invoices. Store managers are judged solely on revenue. Accounts for each store are produced on the batch computer system at head office which is an old building on the edge of a dockland redevelopment site in East London. The company owns the freehold, as it does of about half of its food stores. Carlton plc has joint managing directors, one in charge of 21 restaurants and one in charge of property development. To date it has built four shopping centres and has plans for three more, all as part of schemes to regenerate old city centres in the north of England, around 150 miles from London. It leases out the shops with the exception of one per centre which it operates as a restaurant. Both MDs rigidly pursue a 15 per cent annual return on investment as their measure of achievement. MANAGEMENT IN ACTION 6.1 Personal characteristics IBM is a large and diverse company. IBM managers do many different things. It can be difficult to define core-and-common manager roles relevant to managers throughout such a highly complex organization. The Individual Management Model (IMM) was developed as an aid to managers to help them understand their roles in context. The manager gets work done through other people. IBM has used that simple definition for years. There are two key parts to the definition: getting work done and through other people. The Individual Management Model (IMM) was developed as an aid to managers to visualize how their roles are similar to other managers and how they may differ. Managers take actions to achieve those objectives. Every manager has unique personal characteristics, and these characteristics will influence his or her behavior. Personal characteristics include: ■ ■ ■ ■ background skills knowledge thinldng style ■ competencies ■ personality Quick overview of the Individual Management Model (IMM) All managers are responsible for producing results. They do that primarily through other people. The influence that a manager has on direct reports is reflected in the Organizational Climate that he or she creates. Every manager faces slightly different factors that help or hinder the achievement of business results. And every manager is different in terms of personality, thinking style, competencies, etc. It’s this mix of conditions and personal characteristics that make managers' behaviors different COMPONENTS OF THE IMM Objectives Objectives are the intended business results and are reflected in managers’ PBCs (Personal Business Commitments). Managers are either given objectives or they define their own, hopefully aligned with the goals and objectives of their larger organizations. Conditions Staffing, processes, time, legal, ethics, etc. • Lead Business results • Manage Personal characteristics Competencies, thinking styles, experience, personality, etc. • Do Climate Objectives The Individual Management Model (IMM) PART 2 THE ORGANISATIONAL SETTING CASE STUDY 5.1 The roles of the manager and the Individual Management Model THE INDIVIDUAL MANAGEMENT MODEL (IMM) 182 Mergers and acquisitions: the consequences of expansion at Square Deal plc ■ The jobs of individual managers differ widely. Empirical studies have concentrated on the diversity of management and differences in the nature of managerial work. These studies have drawn attention to such features as: managerial roles; agendasetting and network-building; what real managers do; and demands, constraints and choices in a managerial job. Management in action: real-world examples ensure that students identify and engage with managerial challenges an active perception stage which gives attention to stimuli from the environment; a second mentally active stage which makes sense of the information; finally, a restructuring and storage phase. Foodrich plc was, until last year, a family firm which canned fruit and vegetables from its one factory situated about 100 miles from London, in the west of England. It was bought by Square Deal International Inc with the idea that it would supply ‘own label’ products to Arnold plc and large catering packs to both Arnold’s and Carlton’s restaurants. To do this, Foodrich was obliged to deny supplies to some of its regular customers and re-equip part of its plant to handle the large catering packs. The MD, son of the founder, has worked there for nearly 40 years and runs the company, making all decisions, both long term and operational, using his experience and intuition. He is furious to learn that Arnold has not put all its ‘own label’ business in his direction and Carlton is still buying most catering packs from Foodrich’s competitors while its new plant is grossly YOUR TASKS (a) Discuss the benefits and drawbacks of judging performance on a single criterion such as: (i) revenue, in the case of the store managers; (ii) return on investment, in the case of Carlton’s MDs. (b) Explain to what extent Arnold’s head buyer and Carlton’s head chef are justified in buying catering packs from other companies. (c) Describe how further computerisation might help in this quest for unification and profit improvement. Photo: Robert Lawson/Anthony Blake Picture Library Chapter openers: provide a brief introduction to key themes of the chapter (d) After you have finished this task, the MD tells you he is toying with the idea of regrouping the company under the name of Square Deal plc and dividing it into the following divisions, each operating as a profit centre: Square Deal plc Restaurants Property Food retail Canning division division division division Bakery division He is concerned about the effects of such a change on the morale of the managers and other employees so he asks you for a further statement. Discuss ideas that should maintain or improve morale if this regrouping were to take place. (e) Highlight any other advantages or difficulties that you foresee in the regrouping idea. GUIDED TOUR OF THE BOOK Review and discussion questions: assess students’ understanding and progress Critical reflections: motivate students to think critically about key themes Assignments: imaginative activities enable students to learn through personal application of theory Business Press: Financial Times articles demonstrate contemporary relevance of theory in journalistic style Personal awareness and skills exercises: practise and develop students’ interpersonal and work-based skills xxi GUIDED TOUR OF THE COMPANION WEBSITE GUIDED TOUR OF THE COMPANION WEBSITE xxiv xxv GUIDED TOUR OF THE COMPANION WEBSITE Part 1 MANAGEMENT AND ORGANISATIONAL BEHAVIOUR Part 1 MANAGEMENT AND ORGANISATIONAL BEHAVIOUR Part 7 MANAGEMENT OF HUMAN RESOURCES Part 2 THE ORGANISATIONAL SETTING Part 3 THE ROLE OF THE MANAGER Part 8 IMPROVING ORGANISATIONAL PERFORMANCE Part 4 THE INDIVIDUAL Part 6 ORGANISATIONAL STRUCTURES Part 5 GROUPS AND TEAMWORK Dogbert’s Theory of Delegation 1 INTRODUCTION The concepts and ideas presented in this book provide a basis for the critical appraisal of contrasting perspectives on the structure, operation and management of organisations, and interactions among people who work in them. It is hoped that this will encourage a greater level of awareness of, and sensitivity to, the organisational factors and management processes influencing the behaviour and performance of people at work. LEARNING OUTCOMES After completing this chapter you should be able to: Photo: NASA explain the main features, aims and scope of this book; detail the main features of the seventh edition; outline the main contents of the book and explain your study of the book; comment on the changing nature of work organisations; summarise the study of management and organisational behaviour; explain the nature, use and value of case studies. Unlike technological and financial capital, people have a soul. We have hopes and aspirations, we can trust and feel committed, and the trust and commitment we feel profoundly influence our propensity to give ‘beyond the call of duty’. Lynda Gratton Living Strategy: Putting People at the Heart of Corporate Purpose, Financial Times Prentice Hall (2000) Management is efficiency in climbing the ladder of success; leadership determines whether the ladder is leaning against the right wall. Stephen Covey The 7 Habits of Highly Effective People, Simon and Schuster (1989) 4 PART 1 MANAGEMENT AND ORGANISATIONAL BEHAVIOUR ABOUT THIS BOOK However much of a cliché it may sound, it is still an inescapable fact that people are the main resource of any organisation. Without its members, an organisation is nothing; an organisation is only as good as the people who work within it. In today’s increasingly global and competitive environment the effective management of people is even more important for organisational survival and success. According to Alderman Sir Roger Cork, former Lord Mayor of London, eighty per cent of business failures are down to bad management.1 It has become acceptable in some areas to regard the academic study of management as at best esoteric and at worst irrelevant. Mastering Management is based on the belief that an academic approach to the study of management has much of real relevance for practising managers. Financial Times Mastering Management Series2 Human capital management (HCM) As a recent report from the London Business School points out: ‘Human Capital (HC) is increasingly recognised as a key competitive advantage for companies. As well as a key indicator of a company’s success.’ 3 However, despite the frequent protestations by organisations that ‘our employees are our greatest assets’ there is invariably a noticeable failure to measure their value to the organisation or to include their value in financial statements. In 2003 the Secretary of State for Trade and Industry established a task force on human capital management charged with looking at how organisations could measure the quality of their human capital management and report on its impact on business performance. The way an organisation manages its people impacts on its performance. Few would deny this simple statement and numerous company reports and studies have confirmed a link between possession of effective human resource strategies and organisational performance. Research over the past few years has clarified the features of good people management practices associated with high performance and how these can be used strategically, in combination.4 This is the moment when HCM takes its place in the Boardroom. Directors need to transform the airy cliché about people being their greatest asset into a guiding principle of business strategy. Denise Kingsmill, Chair of Task Force on Human Capital Management5 THE AIMS OF THIS BOOK The aims of this book are to: ■ ■ ■ ■ relate the study of organisational behaviour to that of management; provide an integrated view embracing both theory and practice; point out applications of behavioural science within work organisations and implications for management action; indicate ways in which organisational performance may be improved through the better use of human resources and the effective management of people. CHAPTER 1 INTRODUCTION The book is written with a minimum of technical terminology and the format is clearly structured. Each chapter is fully supported with illustrations and contains: ■ ■ ■ ■ ■ ■ ■ a short introduction and learning outcomes; a set of contemporary ‘critical reflections’; a synopsis of key points; review and discussion questions; personal awareness and skills exercises; assignment(s) and/or case(s); detailed notes and references. While a prior knowledge of behavioural science would prove useful to the reader, it is not assumed. Neither is such knowledge a necessary prerequisite for an understanding of the concepts and ideas discussed in this book. Broader social science perspectives form an integral part of the explanation and discussion of management and organisational behaviour. It is hoped that the comprehensive coverage and progressive presentation of contents will appeal to students at undergraduate, graduate or post-experience level in business or management, or on related professional courses. It is also hoped that the book will appeal not only to those aspiring to managerial positions, but to practising managers and supervisors who wish to expand their views and knowledge of the subject area. The study of organisational behaviour There are a number of alternative approaches to the study of organisational behaviour. For example, in addition to a managerialist approach, Drummond refers to two other intellectual standpoints, interpretative and critical. The interpretative standpoint views ambiguity, paradox and contradictions as part of the natural experiences of organisations, and with an emphasis upon understanding the subtleties and dynamics of organisational life. The critical standpoint believes that reality is very real and people have only a marginal amount of freedom, and regards management science as bogus, a means of legitimising economic exploitation.6 While acknowledging the existence and potential contributions of both these standpoints, the main thrust of this book is to present a managerial approach to organisational behaviour. It is concerned with interactions among the structure and operation of organisations, the process of management and the behaviour of people at work. The underlying theme of the book is the need for organisational effectiveness and the importance of the role of management as an integrating activity. The scope of this book No single book could hope to cover adequately all aspects of what is a wide and essentially multidisciplinary field of inquiry, and it is not the intention to attempt to cover all aspects of individual or social behaviour. It is regrettable but inevitable therefore that some topics are excluded or given only limited coverage and it is not possible to meet fully the preferences of all readers. In order to attain a reasonable depth, this book concentrates on selected topics of particular relevance to problems of organisation and the management of people in work situations, and which meet the needs of the intended audience. The nature of organisational behaviour and the practice of management should be considered not in a vacuum but within an organisational context and environment. The activities of a work organisation and the management of people are directed towards an end, towards certain goals. Chapters 4 (The Nature of Organisations) and 5 (Organisational Goals, Strategy and Responsibilities) help to provide an integrated, balanced setting for this book and for your studies of the subject area. 5 6 PART 1 MANAGEMENT AND ORGANISATIONAL BEHAVIOUR There are, of course, related areas of specialisms such as human resource management (HRM) which also bear upon management action and organisational effectiveness. However, this book is not about employment law and neither is it the intention to attempt to compete with specialist HRM books. Rather, Chapters 19 and 20 serve to recognise the importance of the context in which the process of management and organisational behaviour takes place and to provide an overview and signpost some main HRM areas of interest. Together with Chapters 4 and 5, these chapters aim at broadening the scope of the subject matter beyond the concerns of traditional organisational behaviour texts – a distinctive feature of this book. THE SEVENTH EDITION The consistently supportive and positive feedback from reviewers and users of previous editions has been very much appreciated. Accordingly this edition retains the same underlying theme, aims and approach that have been a hallmark of the success of the book. Continuing attention has been given to the overall layout, style and appearance. Readers familiar with the previous edition may wish to note the following features of this seventh edition. ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ The opportunity has been taken for a comprehensive and detailed review of all contents, including attention to chapter titles and introductions; the organisation, flow and coherence of all material; and restructuring both within and between chapters. Significant changes include ‘Organisational Practices’ brought forward to Chapter 2 from Chapter 16; and delegation and empowerment removed from Chapters 6 and 16 and consolidated and expanded in Chapter 21. Changes have been made to the titles of a number of chapters in order to reflect more closely the nature of their contents. There is considerable new material including greater attention to topical issues such as the changing nature of organisations and management, cultural influences and organisational behaviour, business ethics, diversity, leadership, management development, flexible working, stress, human resource management and work/life balance. There are a number of additional and replacement appendices (now called Management in Action), assignments and case studies. There are in excess of 450 new or revised references. Each chapter now includes opening quotations which helps focus attention on an underlying feature of that chapter. The section on ‘About the Contents’ on pages 8–15 now includes a note of main links with other chapters. In order to accommodate the additional and updated contents, careful attention has been given to the deletion of older and possibly outdated material and references, unless believed to be clearly of continuing relevance today. This has demanded many hard choices but has been influenced by the overriding consensus to maintain the book at a reasonable and manageable size. Together these changes hopefully provide not only a sharper and fresher approach but also a more contemporary and robust focus of attention as well as enhanced readability. In addition to the above there are three significant new features in the book: ■ Personal awareness and skills exercises Each chapter now includes an exercise designed specifically to help further the development of your personal awareness, and your social and work-based skills. The underlying basis of management and organisational activity is human behaviour and the interactions of people. However, we need to remind ourselves that people CHAPTER 1 INTRODUCTION bring their own perceptions, feelings and attitudes towards the organisation, systems and styles of management, their duties and responsibilities, and the conditions under which they are working. An important first step in understanding the behaviour of other people is to know and understand yourself. Enhancing your personal awareness and skills should make study and learning more fulfilling, improve your confidence and augment your ability to work well with other people. It should also help boost your employment opportunities. Increasingly, graduate recruiters are placing greater emphasis on key personal and social skills, and attitudes. To this end it is recommended that you maintain a log of the skills attained during your course of study that you can show in future job interviews. FT ■ Technology online Technology impacts on almost all aspects of management and organisational behaviour. Technology solutions are interactive web exercises which encourage students to explore how technology might be used to solve specific managerial problems. ■ Business Press A new Business Press section provides contemporary articles relating to business and management situations featured in the Financial Times, including links with other most relevant chapters. There are also questions for each article allowing you to critically discuss the issues raised in the articles. Key integrative features of this book Underlying key issues of management and organisational behaviour have always been an important integrative feature of this book, and continue to be addressed in this edition. These include attention to: ■ ■ ■ ■ ■ ■ ■ organisational democracy with, for example, greater attention to employee participation and empowerment, and the personal touch; structures of people, concerns for the re-evaluation of work/life balance including demands for flexible working arrangements; the importance of the context of culture and the impact of external environmental influences; ethical and social values, the need for organisations to be more transparent and for more open relationships; strategic approaches to human resource management and the effective management of people; renewed focus on effective organisational performance including primary objectives of survival, growth and development, and profitability; interrelationships among management, organisational behaviour, goals and strategy, human resource management and organisational effectiveness. 7 8 PART 1 MANAGEMENT AND ORGANISATIONAL BEHAVIOUR About the contents The book is divided into eight interrelated Parts, see Figure 1.1, and 23 chapters. Part 1 MANAGEMENT AND ORGANISATIONAL BEHAVIOUR Part 7 MANAGEMENT OF HUMAN RESOURCES Part 2 THE ORGANISATIONAL SETTING Part 3 THE ROLE OF THE MANAGER Part 8 IMPROVING ORGANISATIONAL PERFORMANCE Part 4 THE INDIVIDUAL Part 6 ORGANISATIONAL STRUCTURES Part 5 GROUPS AND TEAMWORK Figure 1.1 Interrelated parts of the book This chapter explains the nature, aims and main features about this book, and introduces you to the changing nature of the work organisation, and to the study of management and organisational behaviour. Part 1 Management and Organisational Behaviour Chapter 2: The Nature of Organisational Behaviour looks at the nature of organisational behaviour and the importance of the people–organisation relationship. Chapter 2 draws attention to main influences on the behaviour and performance of people in the work situation, and the central focus of management. Links with other chapters debates the idea of a social responsibility of management discusses Theory X and Theory Y strategies of managerial behaviour identifies the concept of ‘selective perception’ explains the Johari Window framework of behaviour includes reference to culture as a contingent factor discusses applications of quality circles and the nature of the work/life balance Chapter 23 explores the nature of organisational effectiveness Chapter 5 Chapter 7 Chapter 11 Chapter 14 Chapter 16 Chapter 18 CHAPTER 1 INTRODUCTION Chapter 3: Approaches to Organisation and Management contrasts major trends in the development of management thinking and provides a basis for consideration of topics discussed in following chapters. Chapter 3 reviews different approaches to organisation and management, and the relationship between theory and management practice. Links with other chapters Chapter 4 Chapter 6 Chapter 13 Chapter 15 Chapter 16 Chapter 19 Chapter 22 Part 2 The Organisational Setting examines the organisation as an open system sets out principles of management to help general discussion on management theory discusses the importance of group norms and social relationships details common principles of organisation applicable to all situations explains contingency models of organisation and management discusses the unitary and pluralistic perspectives of organisations reviews the nature of organisational conflict Chapter 4: The Nature of Organisations recognises the importance of the organisational setting and external environment within which the process of management takes place. Chapter 4 examines the organisation as a complex social system, and interrelationships among its operations, structure and management. Links with other chapters Chapter 1 Chapter 3 Chapter 5 Chapter 6 Chapter 13 Chapter 16 Chapter 17 Chapter 23 draws attention to the changing nature of work organisations reviews developments in management thinking and organisational behaviour discusses the significance of organisational goals and objectives discusses management in private and public sector organisations explains the importance and nature of groups and teams refers to contingency models of organisation and management explores the nature of technology and organisations includes a discussion of the learning organisation Chapter 5: Organisational Goals, Strategy and Responsibilities draws attention to the importance of organisational goals and strategy for the operations and management of the organisation. Chapter 5 considers organisational ideologies and objectives, the concept of social responsibilities of management and business ethics. Links with other chapters discusses the new psychological contract including responsibilities to employees Chapter 4 explains the context of the organisational setting including a systems view of organisations Chapter 7 examines the approach of Management by Objectives (MBO) Chapter 15 reviews the nature of organisation structure and design Chapter 21 looks at the concepts of power, involvement and compliance Chapter 22 examines the nature and management of organisational change Chapter 2 9 10 PART 1 MANAGEMENT AND ORGANISATIONAL BEHAVIOUR Part 3 The Role of the Manager Chapter 6: The Nature of Management examines the process of management as the cornerstone of the people–organisation relationship and fundamental to effective performance. Chapter 6 reviews the essential nature of managerial work, the nature and main activities of management, and the execution of work. Links with other chapters Chapter 4 Chapter 7 Chapter 15 Chapter 21 Chapter 22 Chapter 23 distinguishes between production and service organisations, and explains the systems approach to organisations examines managerial behaviour and effectiveness sets out Urwick’s principles of organisation and also different levels of organisation discusses the nature of delegation and empowerment explores the nature of organisational culture and climate examines management development including Management Standards, and the Leadership and Management model Chapter 7: Managerial Behaviour and Effectiveness recognises the responsibility of managers to manage and to achieve results through the efforts of other people. Chapter 7 considers different systems and styles of managerial behaviour, the effective utilisation of human resources and managerial effectiveness. Links with other chapters refers to successful management as the ability to handle people effectively, and also to the psychological contract Chapter 6 examines the nature of management Chapter 8 discusses the nature of managerial leadership Chapter 12 explains Maslow’s hierarchy of needs model Chapter 13 refers to role expectations and self-established role prescriptions Chapter 19 discusses the Investors in People Standard for training and development Chapter 2 Chapter 8: The Nature of Leadership explores the process of managerial leadership as a central feature of improved organisational performance. Chapter 8 looks at the exercise of leadership power and influence, leadership as an aspect of behaviour, and the importance of situational variables. Links with other chapters discusses management as getting work done through the fforts of other people examines managerial behaviour and effectiveness includes an account of expectancy theory of motivation examines the nature of work groups and teams discusses task functions and maintenance functions of leader-member behaviours Chapter 23 refers to the Leadership and Management Model as a framework for effective role model leadership Chapter 6 Chapter 7 Chapter 12 Chapter 13 Chapter 14 CHAPTER 1 Part 4 The Individual INTRODUCTION Chapter 9: Individual Differences draws attention to the importance of the individual’s contribution to the performance of work organisations. Chapter 9 focuses on individual differences, the significance of personality and attitudes, and the recognition of individual talent and potential. Links with other chapters Chapter 3 Chapter 10 Chapter 11 Chapter 12 Chapter 14 Chapter 18 Chapter 20 refers to the sex power differential in the Hawthorne experiments examines an understanding of the ways in which people learn discusses the process of perception and the impact of gender differences explores the nature and causes of frustration-induced behaviour explains the Johari Window framework of behaviour examines the nature, causes and consequences of stress at work details procedures for the recruitment and selection of staff, and the use of tests Chapter 10: The Nature of Learning explores the significance of learning to organisational behaviour, and as an important factor in managing change and motivating employees. Chapter 10 explains the nature of the learning process, knowledge management, the learning organisation and evaluates theories of learning. Links with other chapters Chapter 9 Chapter 12 Chapter 13 Chapter 15 Chapter 17 Chapter 22 Chapter 23 examines the nature of individual differences discusses the motivation of knowledge workers refers to possible stress from situations of role ambiguity looks at the impact of organisation structures on behaviour at work examines the impact of technology on organisations explains the learning organisation as a feature of organisation development discusses management development as an essential feature of organisational effectiveness Chapter 11: The Process of Perception considers the nature of the perceptual process and the importance to the manager of the study of perception. Chapter 11 explains factors influencing perception and draws particular attention to an understanding of problems regarding the perception of other people. Links with other chapters Chapter 2 introduces the concept of the psychological contract Chapter 7 discusses Theory X and Theory Y strategies of managerial behaviour Chapter 9 explains the Myers-Briggs Type Indicator Chapter 10 explores an understanding of the nature of learning and the ways in which people learn Chapter 12 examines process theories of motivation Chapter 14 refers to perception of ‘self’ and how people see and think of themselves 11 12 PART 1 MANAGEMENT AND ORGANISATIONAL BEHAVIOUR Chapter 12: Work Motivation and Rewards examines those areas that influence the motivation of staff and which elicit their willing co-operation and improved performance. Chapter 12 reviews different theories and ideas about motivation and rewards, and evaluates their relevance to particular work situations. Links with other chapters introduces the concept of the psychological contract and also refers to culture and motivating factors Chapter 3 discusses the ideas of scientific management and the rational-economic concept of motivation Chapter 6 refers to management as getting work done through other people Chapter 7 examines the approach of Management by Objectives (MBO) Chapter 11 explains Attribution theory as part of process theories of motivation Chapter 18 discusses work organisation and job design, and job enrichment Chapter 2 Part 5 Groups and Teamwork Chapter 13: The Nature of Work Groups and Teams looks at the nature and significance of work groups and teams as a major feature of organisational life. Chapter 13 considers those factors which influence group formation and cohesiveness and the importance of groups and role relationships for organisational performance. Links with other chapters refers to the power of group membership and the Hawthorne experiments, and also to the effects of changing technology Chapter 4 explains social processes and the informal organisation Chapter 8 examines the process of leadership linked to the activities of groups Chapter 14 examines working in groups and teams Chapter 15 looks at formal organisational relationships and the matrix form of organisation Chapter 18 discusses role stress as an influence on job satisfaction and performance Chapter 3 Chapter 14: Working in Groups and Teams reviews the importance of understanding the nature of working in groups and teams, and interactions among members. Chapter 14 gives attention to the analysis of behaviour of individuals in group or team situations, and the assessment of performance and effectiveness. Links with other chapters Chapter 7 Chapter 8 Chapter 12 Chapter 13 Chapter 18 Chapter 19 refers to the Blake and Mouton Managerial Grid seminars for reviewing patterns of behaviour discusses leadership development and effectiveness explains achievement motivation examines the nature of work groups and teams discusses a group of people in quality circles, and also self-managed work groups draws attention to training in people skills and teamworking CHAPTER 1 Part 6 Organisational Structures INTRODUCTION Chapter 15: Organisation Structure and Design provides an overview of the nature and importance of structure for effective management and organisational performance. Chapter 15 details key factors to be considered in the design of structure, and considers the relationships between organisation structure and people. Links with other chapters discusses the idea of common sets of principles on organisation looks at the informal organisation and also refers to information technology as a dimension of structural design Chapter 5 explains the importance of organisational goals and objectives Chapter 7 refers to the changing nature of the work organisation and the hierarchy Chapter 13 discusses role relationships and interactions, and role incongruence Chapter 16 examines patterns of structure and work organisation Chapter 3 Chapter 4 Chapter 16: Patterns of Structure and Work Organisation recognises the situational variables that influence the most appropriate organisation structure and systems of management. Chapter 16 examines the importance of alternative forms of structure, the demand for flexibility. Links with other chapters Chapter 2 Chapter 4 Chapter 5 Chapter 15 Chapter 18 Chapter 21 Chapter 22 draws attention to national culture and principles of contingency theory discusses types of organisations and their purpose refers to the fallacy of the single business objective examines organisation structure and design considers the influence of flexibility on job satisfaction of staff discusses the nature and importance of delegation and empowerment examines the significance of the culture of the organisation Chapter 17: Technology and Organisations explains the pervasive nature of technology within contemporary organisations and a variety of perspectives. Chapter 17 considers the importance of organisational and human dimensions of the adoption and implementation of new technology. Links with other chapters explains the nature of organisational behaviour and draws attention to the importance of people Chapter 3 discusses the system approach to the analysis of organisations Chapter 4 draws attention to the influence of technology, information technology and the management of technical change Chapter 18 discusses main dimensions of job satisfaction including reference to alienation at work Chapter 19 explores the role of personnel/HRM specialists Chapter 22 draws attention to human and social factors associated with the need for organisations to adapt to new technological developments Chapter 2 13 14 PART 1 MANAGEMENT AND ORGANISATIONAL BEHAVIOUR Part 7 Management of Human Resources Chapter 18: Job Satisfaction and Work Performance considers the meaning and nature of job satisfaction and the relationship between staff and their jobs. Chapter 18 reviews dimensions of job satisfaction, main approaches to improving job design, and relationships between job satisfaction and work performance. Links with other chapters Chapter 2 Chapter 4 Chapter 5 Chapter 12 Chapter 14 Chapter 16 Chapter 21 referes to a number of interrelated influences on behaviour draws attention to developments in technical systems and dangers of information overload discusses the importance of social responsibilities of organisations explores the nature and causes of frustration-induced behaviour, and also discusses job design discusses the importance of effective teamworking considers demands for greater flexibility in patterns of work organisation explains the nature, importance and benefits of empowerment Chapter 19: Human Resource Management draws attention to the importance of the promotion of good human relations for improved organisational performance. Chapter 19 provides an overview of the human resource management function, personnel policies and activities, and the nature of employee relations. Links with other chapters Chapter 3 Chapter 5 Chapter 7 Chapter 11 Chapter 13 Chapter 18 Chapter 20 Chapter 23 refers to the unitary and pluralistic view of organisations debates the importance of social responsibilities of management examines the approach of Management by Objectives (MBO) draws attention to the possible effects of perceptual distortions explains role incongruence and role conflicts discusses a quality of working life (QWL) strategy examines resourcing the organisation explores the nature and importance of management development Chapter 20: Resourcing the Organisation recognises that the effectiveness of an organisation depends very largely upon the staff it employs. Chapter 20 looks at the importance of effective systems and procedures for resourcing the organisation, and a planned and systematic approach to recruitment and selection. Links with other chapters Chapter 9 discusses the features and limitations of testing Chapter 11 draws attention to verbal and non-verbal cues, and also to possible perceptual distortions and errors Chapter 14 explains buddy rating or peer rating as the basis of sociometry, and also scoring measures for leaderless group discussions Chapter 18 discusses a quality of working life (QWL) strategy Chapter 19 examines Human Resource Management CHAPTER 1 Part 8 Improving Organisational Performance INTRODUCTION Chapter 21: Organisational Control and Power explores the nature of control and power as an integral part of the process of management and the people–organisation relationship. Chapter 21 details the characteristics of an effective control system, and considers broader perspectives of organisational power including delegation and empowerment. Links with other chapters Chapter 2 Chapter 3 Chapter 4 Chapter 7 Chapter 8 Chapter 18 Chapter 22 introduces the concept of the ‘Peter Principle’ discusses ‘Taylorism’ and the ideas of scientific management consider the organisational setting and the nature of organisations discusses Theory X and Theory Y strategies of managerial behaviour explains main sources of power and leadership influence discusses improving job satisfaction and getting the best out of people explores the importance of organisational culture and climate Chapter 22: Organisational Development (Culture, Conflict and Change) reviews the meaning, nature and main features of organisation health and development (OD). Chapter 22 draws attention to the importance of understanding culture and climate, organisation conflict and in particular the successful management of change. Links with other chapters Chapter 2 Chapter 3 Chapter 11 Chapter 12 Chapter 15 Chapter 19 Chapter 23 looks at the use of metaphor to see organisation and management, and also to the meaning of the term ‘organisational behaviour’ refers to the structuralist approach to organisations and management examines the importance of differences in perception discusses equity theory of motivation details Woodward’s study of management organisation of firms discusses the unitary perspective of the organisation examines management development and organisational effectiveness Chapter 23: Management Development and Organisational Effectiveness concludes by reviewing the importance of effective management as central to organisation development and improved work performance. Chapter 23 looks at the nature of management development, dimensions of organisational effectiveness and reminds us of the importance of people. Links with other chapters explores the nature of organisational behaviour and draws attention to the importance of organisational effectiveness Chapter 4 examines the organisational setting and nature of organisations Chapter 6 refers to the nature of management in the public sector Chapter 7 discusses managerial behaviour and effectiveness Chapter 10 draws attention to coaching and mentoring, the concept of the learning organisation, and knowledge management Chapter 12 examines different theories of motivation Chapter 19 discusses Investors in People Standard, and also performance appraisal Chapter 2 15 16 PART 1 MANAGEMENT AND ORGANISATIONAL BEHAVIOUR YOUR STUDY OF THE BOOK This book adopts an applied approach to the search for the most appropriate ways of improving organisational performance and effectiveness. The objective analysis of organisations is supported, where appropriate, by a more prescriptive stance. For example, the underlying need to establish a framework of order and system of command by which the work of the organisation is undertaken demands that attention be given to certain basic principles and consideration of structure. General principles and prescriptions apply equally to all types of work organisations which achieve their goals and objectives through the process of management. It is possible that the more practically minded reader may wish to concentrate greater attention on the latter parts of certain chapters. However, even a cursory examination of earlier sections of the chapter will help provide an understanding of underlying studies upon which discussion of practical applications is based. The notes and references given at the end of each chapter are to encourage you to pursue further any issues of particular interest. A simple numbering system has deliberately been maintained in order to keep the main text uncluttered and easier to follow, to provide more detailed and specific referencing, and because feedback indicates this system appears to be favoured by most readers. Questions, assignments and case studies You are invited to test your knowledge and understanding of the contents by attempting the review and discussion questions at the end of each chapter. These questions provide a basis for revision and review of progress. You are also invited to undertake the assignment(s) and/or case(s) at the end of each chapter. The questions, assignments and case studies provide an opportunity to relate ideas, principles and practices to specific work situations, to think and talk about major issues, and to discuss and compare views with colleagues. In order to help relate the contents of the chapters to real-life situations, many of the questions and assignments ask you to support your discussion with, and/or to give, examples from your own organisation. This can of course be your own college or college department. Alternatively, you may have work experience, even part-time or casual employment, in other organisations that you may draw upon and share with colleagues. A modular approach Initiatives such as semesterisation and modularisation are now common in higher education. This book provides comprehensive coverage of a wide range of topic areas related to the effective use of human resources within the work situation. Although there is a logical flow to the sequencing of topic areas, each Part and each chapter of the book is self-contained. Accordingly, if you come across some repetition of references to underlying central features of organisational behaviour and modern management this should provide useful reinforcement of your studies. Main sections are identified clearly within each chapter and there are detailed headings and sub-headings. An important and distinctive feature of this book is that it is especially suitable across a range of different but related modules, including both single or double semester units, and will help to provide an integrated approach to your studies. The selection and ordering of chapters can be varied to suit the particular demands of your study courses or your interests. Organisational environment and culture In approaching your studies, you need to bear in mind the importance of the organisational setting, organisational environment and culture. Remember also there are variations in systems and styles of management, and in the choice of managerial behaviour. You may wish to consider the following simple, five-stage framework (Figure 1.2). CHAPTER 1 INTRODUCTION Figure 1.2 A basic framework of study You are encouraged to complement your reading of the book by drawing upon your own experience of work organisations. Search for and study examples of management and organisational behaviour. Look for good and bad examples of management activities and practices, and consider reasons for their apparent success or failure. Compare critically the practical examples given in the text and appendices with the procedures and practices in your own organisation. Consider the manner in which concepts and ideas presented in this book can best be applied in particular work situations. Contemporary examples from your own observations should help further your interest in the subject area and illustrate practical applications to real-life situations. THE CHANGING NATURE OF WORK ORGANISATION The effective management of people takes place in the context of the wider environmental setting, including the changing patterns of organisations and attitudes to work. It is frequently documented that a global economy, increased business competitiveness, the move towards more customer-driven markets, advances in scientific knowledge, especially telecommunications and office automation, have led to a period of constant change and the need for greater organisational flexibility. This is a recurring theme throughout the book. The power and influence of private and public organisations, the rapid spread of new technology, and the impact of various socio-economic and political factors have attracted increasing attention to the concept of corporate social responsibilities and business ethics. Increasing attention is also being focused on the ethical behaviour which underlies the decisions and actions of managers and staff; and many responsible organisations and professional bodies now choose to publish a Code of Ethics. The changing nature of organisations and individuals at work has placed increasing pressure on the awareness and importance of new psychological contracts. Forces of global competition and turbulent change make employment guarantees unfeasible and demand a new management philosophy based on trust and teamwork. People are seen as a responsibility and a resource to be added to. Employees need to abandon the stability of lifetime employment and embrace the concept of continuous learning and personal development.7 According to an ESRC publication, in any analysis of the transformation of Britain’s employment relations we cannot neglect the changing nature of work. The influence of technological innovation, work restructuring and job redesign are all helping to reshape shopfloor attitudes among managers, unions and workers.8 In their discussion of the twenty-first century organisation, Bouchikhi and Kimberly refer to the customised workplace which represents a radical departure from commonly 17 18 PART 1 MANAGEMENT AND ORGANISATIONAL BEHAVIOUR Table 1.1 Contrasting the paradigms 19th century 20th century 21st century Theory of personhood Interchangeable muscle and energy A subordinate with a hierarchy of needs Autonomous and reflexive individual Information and knowledge The province of of management alone Management-dominated and shared on a limited basis Widely diffused The purpose of work Survival Accumulation of wealth and social status Part of a strategic life plan Identification With the firm and/or with the working class Identify with a social group and/or the firm The disenfranchised self Conflict Disruptive and to be avoided Disruptive but tolerated and can be settled through collective bargaining A normal part of life Division of labour Managers decide, employees execute Managers decide, employees execute thoughtfully Employees and managers decide and execute Power Concentrated at the top Limited, functional sharing/empowerment Diffused and shared Source: Bouchikhi, H. and Kimberly, J. R., ‘The Customized Workplace’, in Chowdhury, S., Management 21C, Financial Times Prentice Hall (2000), p. 215. accepted management principles and techniques. They summarise the main differences between nineteenth, twentieth and twenty-first century management – see Table 1.1.9 New approaches to management and organisational behaviour In discussing new approaches to management practices for the next decade, Muzyka suggests that: ‘Organizational behavior has moved from an emphasis on the structural aspects of functional and cross-functional organizations to more flexible models, including enhanced consideration of short-term, high performance teams.’ New ideas of how to motivate and deploy people have developed. A new contract is evolving that involves the exchange of value. Individuals need to be encouraged and permitted to achieve: to perform to their highest potential, for their benefit and that of the employer. Organizations are encouraging staff to craft more flexible, value-laden, and specific rules governing their relationships.10 Cloke and Goldsmith refer to the age of traditional management coming to an end and the decline of hierarchical, bureaucratic, autocratic management. They contend that management is an idea whose time is up and organisations that do not recognise the need to share power and responsibility with all their workers will lose them.11 The nature and importance of e-business What is an e-business? When you get down to it, an e-business is an organisation that connects critical business systems directly to their customers, employees, partners and suppliers, via intranets, extranets and over the Web. As customers, employees, suppliers and distributors are all connected to the business systems and information they CHAPTER 1 INTRODUCTION need, e-business actually transforms and integrates key business processes. In short, the definition of e-business is: ‘the transformation of key business processes using Internet technologies’. Why e-business? First, organisations of all sizes are impacted by globalisation and deregulation, which lowers barriers to entry and dramatically reshapes the competitive landscape. Second, people now have a broader array of choices and therefore are becoming more sophisticated and more demanding – both in what they want from a supplier but also how they choose to acquire goods and services. Thus, the need to change your organisation to stay ahead of competition is vital. Every process of an enterprise – from employee training to product development – is going to be subject to this transformation. E-business strategy organisations must unlock the power of the information and data that exist – interactions with websites, file cabinets, desk drawers, databases, and the collective experience of employees. This intellectual capital is a most valuable asset, but only when it is leveraged for competitive advantage.12 Kermally suggests that becoming an e-business is now an imperative for all types of organisations, large and small. The key success factor lies in not emulating established habits. Leadership in the new economy needs to: ■ ■ ■ ■ ■ ■ ■ enthuse employees; empower and respect employees; create trust throughout the organisation; understand the importance of knowledge as a source of business energy; identify and leverage intangible assets; be a custodian of corporate governance in the age of the Internet; be willing to engage in ‘constructive destruction’, since e-business requires constant renewal of its business model.13 It is important, however, to remember the human element to business and that it is people who have to decide what information is actually needed, to ensure the best use of technology, and to design systems that work for them and their organisations. ‘It’s people who manage knowledge – not computers.’14 THE STUDY OF MANAGEMENT AND ORGANISATIONAL BEHAVIOUR The use of separate topic areas is a recognised academic means of aiding study and explanation of the subject. In practice, however, the activities of an organisation and the job of management cannot be isolated neatly into discrete categories. The majority of actions are likely to involve a number of simultaneous functions that relate to the total processes of management.15 Consider, for example, a manager briefing departmental staff on an unexpected, important and urgent task which has to be undertaken quickly. Such a briefing is likely to include consideration of goals and objectives, organisation structure, management system, process of delegation and empowerment, systems of communication, leadership style, motivation and control systems. The behaviour of the staff will be influenced by a combination of individual, group, organisational and environmental factors. Topic studies in organisational behaviour should not be regarded, therefore, as entirely free-standing. Any study of organisation and management inevitably covers several aspects, and each study can be used to a greater or lesser extent to confirm generalisations made about particular topic areas. The use of the same studies to illustrate different aspects of management and organisational behaviour serves as useful revision and reinforcement, and helps to bring about a greater awareness and understanding of the subject. 19 20 PART 1 MANAGEMENT AND ORGANISATIONAL BEHAVIOUR No single right answer You will probably be aware that a feature of the study of management and organisational behaviour is the invariable difficulty in identifying a single solution to a particular problem. The absence of one, right answer can make study of the subject complex and frustrating; but the area of study can also be interesting and challenging, stimulating creative thought and ideas, and it can be related to your own work experience. A useful model for the study of management and organisational behaviour is to see the organisation as an open system (see Chapter 4). The open system approach views the organisation within its broader, external environment and places emphasis on multiple channels of interaction. It provides a means of viewing the total organisation and of embracing different dimensions of analysis. The open system model provides a perspective for a managerial approach to organisational behaviour. It helps in the search for the most appropriate ways of influencing the behaviour of people within an organisational setting. The relevance of theory In the study of management and organisational behaviour you will come across many theories. However, you should not be put off by the use of the word ‘theory’. Most rational decisions are based on some form of theory. Theory contains a message on how managers might behave. This will influence attitudes towards management practice and lead to changes in actual patterns of behaviour. Theory helps in building generalised models applicable to a range of organisations or situations. It further provides a conceptual framework and gives a perspective for the practical study of the subject. Thus theory and practice are inseparable. Together they lead to a better understanding of factors influencing patterns of behaviour in work organisations and applications of the process of management.16 However, to be of any help to the practising manager, theory has to be appropriate. For example, Lee refers to: ... the danger of adopting theories because they are teachable, rather than because they are effective ... (however) without appropriate theory, there would be very little communication of the insights of scientific theory to practising managers.17 Although it is not always easy to establish their exact origins, ideas do percolate through to best practice.18 Patching suggests that all managers who think about what they do are practical students of organisational theory. Theory is not something unique to academics, but something we all work with in arriving at our attitudes, beliefs and decisions as managers. It seems obvious to most of us that some theories are better than others. Many managerial discussions which we undertake in meetings focus upon trying to agree upon which theory will be best for a particular decision.19 THE USE OF CASE STUDIES 20 Case studies are increasingly popular as a part of the study of management and organisational behaviour. According to Mumford, the case method is, with the exception of lectures, clearly the most widely used method in management education.21 There are a variety of types of case studies and they may be presented in a number of different ways. Case studies range from, for example, a brief account of events which may be actual, contrived or a combination of both; ‘armchair’ cases based on hypothetical but realistic situations, and developed to draw out and illustrate particular points of principle; to complex, multi-dimensional cases giving a fuller descriptive account of actual situations in real organisations. The term ‘case study’ may be extended to include critical incident analysis, role-play and the in-tray (or in-basket) exercise, although these are more methods of training. A case study may require you to work on an individual basis or it may involve group work. It may also specify that you are to assume a particular role, for example as a senior or departmental manager or consultant. CHAPTER 1 INTRODUCTION Objectives of use of case studies Whatever the nature or form of case studies, a major objective of their use is usually the application of theoretical knowledge to practical situations and/or the integration of knowledge drawn from a number of related disciplines or areas of study. Case studies are basically problem analysis and decision-making exercises. They provide a test of the ability to distinguish real issues from less significant matters. There is unlikely to be a single, right answer. Case studies, therefore, provide the participants with an opportunity to demonstrate analytical ability, logical thinking, judgement and persuasiveness and skills of communication in the presentation of answers. If the case study is undertaken as a group exercise, it also provides a means of assessing both the performance of the group as a whole and the ability of individuals to work effectively as members of the group.22 In reviewing the relevance of the case study method, Orpen suggests that although it may be regarded as out of date by many management teachers and managers, a major reason why cases must form the important element in any management programme is that managing has to do with problem-solving rather than just learning to do things. Although it is often difficult to accomplish, the movement from the lecture method to the case study method of teaching is one that has to be made. ‘After all, management is ultimately about doing the right thing in the circumstances – something learnt by doing cases – not just digesting ideas from teachers.’23 According to Hazard, the case method is least suited to knowledge transmission, and those institutions that have chosen to teach exclusively by cases do themselves and their students a disservice. Case learning works best with older, more experienced students and allows participants to develop skills, to listen to other people, and to understand that there are many ways of approaching a single problem. Case teaching should be viewed as the first step in an action learning hierarchy.24 Guidelines on tackling case studies The level and depth of analysis, and the type of answer required, will depend upon the particular case study and the reasons for its use. However, despite variations in the nature and format of case studies it is possible to suggest general guidelines on how to tackle them. 1 Read the whole of the case study. Try to get a ‘feel’ for what it is about and note what the question(s) ask(s) you to do. Check on the time allowed. 2 Read the case study a second time. Look at the material carefully and try to identify with the situation. Check again on exactly what you are required to do and instructions on how to present your answer. For example, if a report is called for, your answer should be presented in proper report form. Check whether you are to assume a specific role and if your answer is to be directed at a specified audience – for example, a senior manager, the board of directors or a committee. 3 If there are a number of different parts to the case study you should apportion available time and ‘weight’ your answers accordingly. 4 Approach your analysis of the case study with an open mind. Be conscious of any bias or prejudice you may have and avoid any predispositions which may influence your perception of the case material. Do not jump to hasty or unfounded conclusions. Do not formulate firm opinions or solutions until you have collated all the available evidence. 5 Adopt a brainstorming approach and take the case apart by exploring all reasonably possible considerations. Remember there may be a number of separate problems with separate causes and a number of alternative courses of action. There is not necessarily a single ‘correct’ or ‘model’ answer. 6 You may need to search for hidden meanings and issues which are not at first readily apparent. Do not, however, make things unnecessarily complicated. Do not take the ‘obvious’ for granted and do not neglect simple responses which help to provide a satisfactory answer to the question as worded. 21 22 PART 1 MANAGEMENT AND ORGANISATIONAL BEHAVIOUR 7 A particular feature of case study work is that you are likely to have only limited information. You should, therefore, make a point of studying all the details given in the case material, first, to make certain of the facts; and second, to identify what deductions or inferences can be drawn from these facts. You may feel it necessary to make certain assumptions. If so, these assumptions should follow reasonably from the case material and serve only to help clarify the situation. Even if you are not specifically requested to do so, it is recommended that you make clear any necessary assumptions as part of your answer. 8 The case study may set out deliberately to present a tangle of information, events or situations which need to be unravelled in order to clarify links and relationships, and to distinguish causes from effects, and symptoms from problems. Concentrate on what you see to be the more important matters as opposed to any irrelevant detail or possible red herrings which may confuse the real issues. 9 In your analysis of the case material you may find it helpful to emphasise key words or phrases, including emotive language and actions. You may also find it helpful to: – list the people involved and draw a pen picture of them from the available information; and – trace the sequence and timing of events which have led to the present situation. The use of margin notes, underlining, numbering and/or lettering, colours or highlighting pens may all be useful but you should be careful not to make your analysis confused or too complicated. 10 Where appropriate, relate your analysis of the case material to your theoretical studies, general points of principle and the work of leading writers. For example, you might find the PESTEL analysis discussed in Chapter 4 or the SWOT analysis discussed in Chapter 5 helpful in tackling case studies. It is always valuable to be able to draw upon practical experience but make sure it is relevant to the particular circumstances. You may still be able to make use of knowledge gained from experience not related directly to the case study, but avoid the temptation to distort your perception of the situation as described to suit your own personal experience. 11 Bearing in mind the question, clearly identify existing or potential difficulties or problem areas and indicate where you see the need for most urgent action. Where you have identified a number of possible courses of action indicate your recommended priorities. Bear in mind also practical considerations such as timing, cost and existing personalities. Where appropriate give reasons in support of your recommendations. 12 Draw up a plan of key points as the basis of your answer. 13 The use of visual displays such as diagrams, charts or tables may enhance the presentation of your answer. But make sure such visual displays are accurate and clear and relate directly to your analysis of the case material, and to the question as worded. Every visual display should be given a meaningful title, and serve to help the reading and interpretation of your answer. Do not be tempted to use visual displays for their own sake or to spend too much time on an over-elaborate display at the expense of more important matters. 14 Allow time to read through and check your work. REVIEW AND DISCUSSION QUESTION Discuss critically what you believe are the main factors to bear in mind with, and particular difficulties presented by, the study of management and organisational behaviour. Where possible, give practical examples based on your own experience. CHAPTER 1 INTRODUCTION PERSONAL AWARENESS AND SKILLS EXERCISE OBJECTIVES Completing this exercise should help you to enhance the following skills: Recognise different ways in which people think. Explain and justify your approach to making decisions. Participate in a small group discussion. EXERCISE Five figures are shown below. You are required to: 1 Select the one that is different from all the others. 2 Discuss in small groups reasons for the individual selections and be prepared to justify your own decision. 3 See if you can reach a consensus on a single group answer. DISCUSSION ■ To what extent did members of the group understand the thought processes of others? ■ If you were persuaded to change your mind on what basis was this decision made? ■ What conclusions do you draw from this exercise? Visit our website www.booksites.net/mullins for further questions, annotated weblinks, case material and Internet research material. 23 24 PART 1 MANAGEMENT AND ORGANISATIONAL BEHAVIOUR NOTES AND REFERENCES 1. Cited in Robinson, G. ‘Managers Under the Spotlight’, The British Journal of Administrative Management, September/October 1997, p. 5. 2. Bickerstaffe, G. ‘Mastering Management’, Financial Times, 27 October 1995, p. 2. 3. Foong, K. and Yorston, R. ‘Human Capital Measurement and Reporting A British Perspective’, London Business School, June 2003, p. 3. 4. ‘Accounting for People’, Report of the Task Force on Human Capital Management, DTI, October 2003, p. 3. 5. Ibid., p. 2. 6. Drummond, H. Introduction to Organizational Behaviour, Oxford University Press (2000). 7. Ghoshal, S., Bartlett, C. A. and Moran, P. ‘Value Creation: The New Millennium Management Manifesto’, in Chowdhury, S. Management 21C, Financial Times Prentice Hall (2000), pp. 121–40. 8. Taylor, R. ‘The Future of Employment Relations’, Economic and Social Research Council, September 2001, pp. 7–8. 9. Bouchikhi, H. and Kimberly, J. R. ‘The Customized Workplace’, in Chowdhury, S. Management 21C, Financial Times Prentice Hall (2000), pp. 207–19. 10. Muzyka, D. ‘Thriving on the Chaos of the Future’, in Pickford, J. (ed.) Financial Times Mastering Management 2.0, Financial Times Prentice Hall (2001), p. 8. 11. Cloke, K. and Goldsmith, J. The End of Management: and the Rise of Organizational Democracy, Jossey-Bass (2002). 12. For an account of key issues in e-business, see for example: ‘Accenture’, supplement to Management Today, January 2001. 13. Kermally, S. ‘E-strategy is Key to Future Success’, Professional Manager, July 2001, pp. 28–9. 14. Fitzsimmons, G. ‘It’s People Who Manage Knowledge – Not Computers’, The British Journal of Administrative Management, March/April 2000, p. 16. FT 15. A similar view is taken by Watson, T. J. Organising and Managing Work: organisational, managerial and strategic behaviour in theory and practice, Financial Times Prentice Hall (2002). 16. See, for example: Billsberry, J. (ed.) ‘There’s Nothing So Practical as a Good Theory: How Can Theory Help Managers Become More Effective?’ in The Effective Manager: Perspectives and Illustrations, Sage Publications (1996), pp. 1–27; and Naylor, J. Management, Financial Times Pitman Publishing (1999), pp. 18–20. 17. Lee, R. A. ‘There is Nothing so Useful as an Appropriate Theory’, in Wilson, D. C. and Rosenfeld, R. H. Managing Organizations: Text, Readings and Cases, McGraw-Hill (1990), p. 31. 18. Crainer, S. ‘The Rise of Guru Scepticism’, Management Today, March 1996, pp. 48–52. 19. Patching, K. Management and Organisation Development, Macmillan Business (1999), p. 11. 20. Based on Mullins, L. J. ‘Tackling Case Studies’, Student Administrator, vol. 1, no. 5, June 1984. See also: Ainsworth, A. ‘Tackling Case Studies’, Supplement to Chartered Secretary, January 2000. 21. Mumford, A. ‘When to Use The Case Method’, ECCHO: The Newsletter of the European Case Clearing House, Autumn/Fall 1997, pp. 16–17. 22. See, for example: Easton, G. Learning From Case Studies, Second edition, Prentice-Hall (1992). 23. Orpen, C. ‘Reconsidering the Case-Study Method of Management Teaching’, Journal of European Business Education, Buckinghamshire Business School, vol. 9, no. 2, May 2000, pp. 56–64. 24. Hazard, H. ‘An Action Learning Teacher Reflects on Case Teaching’, ECCHO: The Newsletter of the European Case Clearing House, Issue No. 22, Autumn/Fall 1999, pp. 5–7. Use the Financial Times to enhance your understanding of the context and practice of management and organisational behaviour. Refer to article 7 in the BUSINESS PRESS section at the end of the book for relevant reports on the issues explored in this chapter. 2 THE NATURE OF ORGANISATIONAL BEHAVIOUR The scope for the examination of behaviour in organisations is very wide. There is a multiplicity of interrelated factors which influence the behaviour and performance of people as members of a work organisation. It is important to recognise the role of management as an integrating activity and as the cornerstone of organisationa effectiveness. People and organisations need each other. The manager needs to understand the main influences on behaviour in work organisations and the nature of the people–organisation relationship. LEARNING OUTCOMES After completing this chapter you should be able to: explain the meaning and nature of organisational behaviour and provide an introduction to a behavioural approach to management; detail main interrelated influences on behaviour in work organisations and explain the nature of behavioural science; outline contrasting perspectives of organisations and different orientations to work; recognise the importance of management as an integrating activity; assess the nature and importance of the new psychological contract; Photo: Mark Renders/Getty Images Organizations are extremely complex systems. As one observes them they seem to be composed of human activities on many different levels of analysis. Personalities, small groups, intergroups, norms, values, attitudes all seem to exist in an extremely complex multidimensional pattern. The complexity seems at times almost beyond comprehension. Chris Argyris Integrating the Individual and the Organization, John Wiley & Sons (1964) review the need for a cross-cultural approach and the importance of culture to the study of organisational behaviour; summarise the complex nature of the behaviour of people in work organisations. 26 PART 1 MANAGEMENT AND ORGANISATIONAL BEHAVIOUR THE MEANING OF ORGANISATIONAL BEHAVIOUR We live in an organisational world. Organisations of one form or another are a necessary part of our society and serve many important needs. The decisions and actions of management in organisations have an increasing impact on individuals, other organisations and the community. It is important, therefore, to understand how organisations function and the pervasive influences which they exercise over the behaviour of people.1 Organizational Behaviour is one of the most complex and perhaps least understood academic elements of modern general management, but since it concerns the behaviour of people within organizations it is also one of the most central … its concern with individual and group patterns of behaviour makes it an essential element in dealing with the complex behavioural issues thrown up in the modern business world. Financial Times Mastering Management Series2 The behaviour of people Organisational behaviour is concerned with the study of the behaviour of people within an organisational setting. It involves the understanding, prediction and control of human behaviour.3 Common definitions of organisational behaviour (OB) are generally along the lines of: the study and understanding of individual and group behaviour, and patterns of structure in order to help improve organisational performance and effectiveness.4 There is a close relationship between organisational behaviour and management theory and practice. Some writers seem to suggest that organisational behaviour and management are synonymous, but this is something of an over-simplification because there are many broader facets to management. Organisational behaviour does not encompass the whole of management; it is more accurately described in the narrower interpretation of providing a behavioural approach to management. It is important to emphasise that in most cases the term ‘organisational behaviour’ is, strictly, a misnomer: rarely do all members of an organisation, except perhaps very small organisations, behave collectively in such a way as to represent the behaviour of the organisation as a whole. In practice, we are referring to the behaviour of individuals, or sections or groups of people, within the organisation. For example, when we talk about a ‘caring organisation’, we are really talking about the philosophy, attitudes and actions of top managers and/or departmental managers, or possibly an individual manager. Nevertheless, the wording ‘organisational behaviour’ has become widely accepted and is found increasingly in textbooks and literature on the subject. The term ‘organisational behaviour’ is a convenient form of shorthand to refer to the large number of interrelated influences on, and patterns of, behaviour of people within organisations.5 A framework of study The behaviour of people, however, cannot be studied in isolation. It is necessary to understand interrelationships with other variables which together comprise the total organisation. To do this involves consideration of interactions among the formal structure, the tasks to be undertaken, the technology employed and methods of carrying out work, the process of management and the external environment. CHAPTER 2 THE NATURE OF ORGANISATIONAL BEHAVIOUR Figure 2.1 Organisational behaviour: a convenient framework of analysis The study of organisational behaviour embraces therefore an understanding of: ■ ■ ■ ■ ■ the behaviour of people; the process of management; the organisational context in which the process of management takes place; organisational processes and the execution of work; and interactions with the external environment of which the organisation is part. This provides us with a basic, but convenient, framework of analysis. (See Figure 2.1.) Wilson, however suggests that the meaning of the term organisational behaviour is far from clear. She challenges what constitutes organisational behaviour and questions whether we should be interested only in behaviour that happens within organisations. There is a reciprocal relationship in what happens within and outside organisations. Wilson suggests that we also look outside of what are normally thought of as organisations and how we usually think of work. We can also gain insight into organisational life and organisational behaviour by looking at what happens in rest and play; by consideration of emotion and feeling; by the context in which work is defined as men’s or women’s work; and by looking at less organised work, for example work on the fiddle and the meaning of work for the unemployed.6 These suggestions by Wilson arguably add an extra dimension to the meaning and understanding of organisational behaviour. INFLUENCES ON BEHAVIOUR IN ORGANISATIONS The variables outlined above provide parameters within which a number of interrelated dimensions can be identified – the individual, the group, the organisation and the environment – which collectively influence behaviour in work organisations. The individual Organisations are made up of their individual members. The individual is a central feature of organisational behaviour and a necessary part of any behavioural situation, whether acting in isolation or as part of a group, in response to expectations of the organisation, or as a result of the influences of the external environment. Where the needs of the individual and the demands of the organisation are incompatible, this can 27 28 PART 1 MANAGEMENT AND ORGANISATIONAL BEHAVIOUR result in frustration and conflict. It is the task of management to integrate the individual and the organisation, and to provide a working environment which permits the satisfaction of individual needs as well as the attainment of organisational goals. The group Groups exist in all organisations and are essential to their working and performance. The organisation comprises groups of people and almost everyone in an organisation will be a member of one or more groups. Informal groups arise from the social needs of people within the organisation. People in groups influence each other in many ways, and groups may develop their own hierarchies and leaders. Group pressures can have a major influence over the behaviour and performance of individual members. An understanding of group structure and behaviour complements a knowledge of individual behaviour and adds a further dimension to organisational behaviour. The organisation Individuals and groups interact within the structure of the formal organisation. Structure is created by management to establish relationships between individuals and groups, to provide order and systems and to direct the efforts of the organisation into goal-seeking activities. It is through the formal structure that people carry out their organisational activities in order to achieve aims and objectives. Behaviour is affected by patterns of organisation structure, technology, styles of leadership and systems of management through which organisational processes are planned, directed and controlled. The focus of attention, therefore, is on the impact of organisation structure and design, and patterns of management, on the behaviour of people within the organisation. For example, McPhee refers to the growth in the nature and importance of organisational structures and their essence, and for greater emphasis on business-to-business (B2B) depth or group interviewing as part of an insight into business and organisational behaviour.7 The environment The organisation functions as part of the broader external environment of which it is a part. The environment affects the organisation through, for example, technological and scientific development, economic activity, social and cultural influences and governmental actions. The effects of the operation of the organisation within its environment are reflected in terms of the management of opportunities and risks and the successful achievement of its aims and objectives. The increasing rate of change in environmental factors has highlighted the need to study the total organisation and the processes by which the organisation attempts to adapt to the external demands placed upon it. Increasing globalisation means that organisations must respond to different market demands and local requirements. ‘In globalization, strategy and organization are inextricably twined.’8 Globalisation impacts on organisational behaviour, and has placed greater emphasis on processes within organisations rather than functions of the organisation. Contrasting but related approaches These different dimensions provide contrasting but related approaches to the understanding of human behaviour in organisations. They present a number of alternative pathways for the study of the subject and level of analysis. It is possible, for example, to adopt a psychological approach with the main emphasis on the individuals of which the organisation is comprised. Psychological aspects are important but, by themselves, provide too narrow an approach for the understanding of management and organisational behaviour. Our main concern is not with the complex detail of individual differences and attributes per se but with the behaviour and management of people within an organisational setting. It is also possible to adopt a sociological approach concerned with a broader emphasis on human behaviour in society. Sociological aspects can be important. A number of sociology writers seem set on the purpose of criticising traditional views of CHAPTER 2 THE NATURE OF ORGANISATIONAL BEHAVIOUR organisation and management. Many of the criticisms and limitations to which such writers refer are justified and help promote healthy academic debate. Unfortunately, however, much of the argument tends to be presented in the abstract and is lacking in constructive ideas on how, in practical terms, action can be taken to improve organisational performance. BEHAVIOURAL SCIENCE – A MULTIDISCIPLINARY APPROACH Whatever the approach, the study of organisational behaviour cannot be undertaken entirely in terms of a single discipline. It is necessary to provide a multidisciplinary, behavioural science approach (see Figure 2.2). The wording ‘behavioural science’ has no strict scientific definition. It may be used as a collective term for the grouping of all the social sciences concerned with the study of people’s behaviour. However, it is now more frequently used to refer to attempts to apply a selective, multidisciplinary approach to the study of human behaviour. In particular, the term is often taken as applying more narrowly and specifically to problems of organisation and management in the work environment. Three main disciplines There are areas of overlap among the various social sciences, their sub-divisions and related disciplines such as economics and political science. However, the study of behaviour can be viewed in terms of three main disciplines – psychology, sociology and anthropology. All three disciplines have made an important contribution to the field of organisational behaviour. ■ Psychologists are concerned, broadly speaking, with the study of human behaviour, with traits of the individual and membership of small social groups. The main focus of attention is on the individual as a whole person, or what can be termed the ‘personality system’, including, for example, perception, attitudes and motives. Figure 2.2 Behavioural science – a multidisciplinary approach 29 30 PART 1 MANAGEMENT AND ORGANISATIONAL BEHAVIOUR ■ ■ Sociologists are more concerned with the study of social behaviour, relationships among social groups and societies, and the maintenance of order. The main focus of attention is on the analysis of social structures and positions in those structures – for example, the relationship between the behaviour of leaders and followers. Anthropologists are more concerned with the science of mankind and the study of human behaviour as a whole. As far as organisational behaviour is concerned the main focus of attention is on the cultural system, the beliefs, customs, ideas and values within a group or society, and the comparison of behaviour among different cultures – for example, the importance to Muslim women of wearing trousers to work. People learn to depend on their culture to give them security and stability, and they can suffer adverse reactions to unfamiliar environments. The contribution of relevant aspects of psychology, sociology and anthropology aids our understanding of the behaviour of people in work organisations, and underpins the field of organisational behaviour. Behavioural science attempts to structure organisations in order to secure the optimum working environment. It is concerned with reconciling the needs of the organisation for the contribution of maximum productivity, with the needs of individuals and the realisation of their potential. Emphasis is on the application of relevant aspects of psychological and sociological theory and practice, and cultural influences, to problems of organisation and management in the work situation. In terms of the applications of behavioural science to the management of people, we need also to consider the relevance and applications of philosophy, ethics and the law. THE IMPORTANCE OF PEOPLE AND ORGANISATIONAL BEHAVIOUR However one looks at the nature or disciplines of organisational behaviour it is important to remember, as Morgan reminds us, that: ‘The reality of organizational life usually comprises numerous different realities!’ 9 Hellriegel, Slocum and Woodman suggest that: … one way to recognise why people behave as they do at work is to view an organisation as an iceberg. What sinks ships isn’t always what sailors can see, but what they can’t see.10 The overt, formal aspects focus only on the tip of the iceberg (organisation). It is just as important to focus on what you can’t see – the covert, behavioural aspects (see Figure 2.3). As part of the Financial Times Mastering Management series, Wood, in his discussion of the nature of organisational behaviour (OB), suggests that in its concern for the way people behave in an organisational context, organisational behaviour can be regarded as the key to the whole area of management. Is the study of behaviour in organisations important? I think it is vital. What the social sciences, humanities and the arts are to university education, OB is to business school education. The more technical a manager’s training, the more important organisational behaviour becomes. It is arguably the one area that can carry the burden of bringing the collective wisdom of human history into the decision-making calculus of developing managers. And this is no trivial task.11 In the Foreword to Cloke and Goldsmith’s thought-provoking book, The End of Management, Bennis claims that a distinct and dramatic change is taking place in the philosophy underlying organisational behaviour, calling forth a new concept of humanity. This new concept is based on expanded knowledge of our complex and shifting needs, replacing an oversimplified, innocent, push-button idea of humanity. This philosophical shift calls for a new concept of organizational depersonalized, mechanistic value system of bureaucracy. With it comes a new concept of power, based on collaboration and reason, replacing a model based on coercion and threat ... The real push for these changes stems from the need not only to humanize organizations, but to use them as crucibles for personal growth and self-realization.12 CHAPTER 2 THE NATURE OF ORGANISATIONAL BEHAVIOUR Figure 2.3 The organisational iceberg Source: Don Hellriegel, John W. Slocum, Jr and Richard W. Woodman, Organizational Behaviour, Eighth edition, South-Western Publishing © (1998), p. 6. Reprinted with the permission of South-Western, a division of Thomson Learning: www.thomsonrights.com. Fax 800 730 2215. People, capital and technology In her discussion on ‘putting people at the heart of corporate purpose’, Gratton draws attention to the link between individual behaviour and organisational performance. People are uniquely different from capital and technology. As the challenge shifts from managing capital and technology to managing people, so this requires a fundamental shift in the way we consider resources and has profound implications for the organisations in which we work. If we place people at the center of sustained competitive advantage then we have to take full account of the fundamental characteristics of human capital. What are these fundamental characteristics? What separates us from money or machines, and what are the implications of these differences? My view of this comes essentially from the perspective of an individual psychologist and from my experiences in organizations. For me the question of time is crucial, both because we humans operate in time with the past, the present and the future assuming importance; and because there are phases, sequences of time and rhythms, which are essentially human. Like many other psychologists, I have been influenced by the notion of meaning and of soul. Both are deeply philosophical terms, with roots as old as mankind. They are soft, perhaps even flaky, notions, but I believe to deny them is to create organizations fit for machines, not people. They may not be the terms with which you are most comfortable, perhaps other words suit you better, but somewhere within our views of organizations we need to acknowledge the differences between machines and man.13 31 32 PART 1 MANAGEMENT AND ORGANISATIONAL BEHAVIOUR ORGANISATIONAL METAPHORS Organisations are complex social systems which can be defined and studied in a number of different ways. A significant approach to this broad perspective on the nature of organisations and organisational behaviour is provided by Morgan. Through the use of metaphors, Morgan identifies eight different ways of viewing organisations – as machines, organisms, brains, cultures, political systems, psychic prisons, flux and transformation, and instruments of domination. According to Morgan, these contrasting metaphors aid the understanding of the complex nature of organisational life and the critical evaluation of organisational phenomena.14 ■ ■ ■ ■ ■ ■ ■ ■ Machines. This suggests that organisations can be designed as if they are machines with orderly relations between clearly defined parts. Viewing organisations as machines can provide the basis for efficient operation in a routine, reliable and predictable way. This form of bureaucratic structure provides form, continuity and security. However, it may have adverse consequences and limit the development of human capacities. Organisations viewed as machines function better in a stable and protected environment. Organisms. The organisation is seen as behaving like a living system. In the same way that biological mechanisms adapt to changes in their environment, so organisations, as open systems, adapt to the changing external environment. Organisations operating within a turbulent and dynamic environment require an adaptable type of structure. Brains. Viewing organisations as brains involves thinking about the organisation as inventive and rational, and in a manner that provides for flexibility and creative action. The challenge is to create new forms of organisation capable of intelligent change and that can disperse brainlike capacities. Cultures. This sees organisations as complex systems made up of their own characteristic sets of ideology, values, rituals, and systems of belief and practice. Attention to specific aspects of social development helps to account for variations among organisations. Political systems. In the sense that ways must be found to create order and direct people, organisations are intrinsically political. They are about authority, power, superior–subordinate relationships and conflicting interests. Viewing organisations as political systems helps in an understanding of day-to-day organisational life, the wheeling and dealing, and pursuit of special interests. Psychic prisons. This views organisations as psychic phenomena created and sustained by conscious and unconscious processes. Organisations and their members are constrained by their shadows or ‘psychic prisons’ and become trapped by constructions of reality. Their inherited or created mythical past places affects the representation of the organisation to the outside world. Viewing organisations as psychic prisons provides an understanding of the reality and illusions of organisational behaviour. Flux and transformation. The universe is in a constant state of flux, embodying characteristics of both permanence and change. Organisations can be seen as in a state of flux and transformation. In order to understand the nature and social life of organisations, it is necessary to understand the sources and logic of transformation and change. Instruments of domination. In this view organisations are associated with processes of social domination, and individuals and groups imposing their will on others. A feature of organisations is asymmetrical power relations that result in the pursuit of the goals of the few through the efforts of the many. Organisations are best understood in terms of variations in the mode of social domination and control of their members. CHAPTER 2 THE NATURE OF ORGANISATIONAL BEHAVIOUR A broader view of organisational behaviour Although the main concern of this book is with a managerial approach to organisational behaviour, these contrasting metaphors provide an interesting perspective on how to view organisations. They provide a broader view of the dynamics of organisational behaviour, and how to manage and design organisations. However, Morgan points out that these metaphors are not fixed categories and are not mutually exclusive. An organisation can be a mix of each, and predominantly a combination of two or three metaphors. Furthermore, these combinations may change over a period of time. A number of writers involve the use of metaphors to help describe organisations. For example, in discussing the role and logic of viewing the organisation in terms of metaphors, Drummond raises questions such as what an organisation is like, and the power of metaphors in shaping our thinking; but also points out that all metaphors are partial and no metaphor can explain fully a particular phenomenon.15 ORIENTATIONS TO WORK AND THE WORK ETHIC People differ in the manner and extent of their involvement with, and concern for, work. From information collected about the work situation, organisational participation and involvement with work colleagues, and life outside the organisation, Goldthorpe et al. identified three main types of orientation to work: instrumental, bureaucratic and solidaristic.16 ■ ■ ■ Different work situation Individuals with an instrumental orientation defined work not as a central life issue but in terms of a means to an end. There is a calculative or economic involvement with work, and a clear distinction between work-related and non-work-related activities. Individuals with a bureaucratic orientation defined work as a central life issue. There is a sense of obligation to the work of the organisation and a positive involvement in terms of a career structure. There is a close link between work-related and non-workrelated activities. Individuals with a solidaristic orientation defined the work situation in terms of group activities. There is an ego involvement with work groups rather than with the organisation itself. Work is more than just a means to an end. Non-work activities are linked to work relationships. Some people may well have a set motivation to work, whatever the nature of the work environment. However, different work situations may also influence the individual’s orientation to work. For example, the lack of opportunities for teamwork and the satisfaction of social expectations may result in an instrumental orientation to work, and a primary concern for economic interests such as pay and security. In other situations where there are greater opportunities to satisfy social needs, membership of work groups may be very important, and individuals may have a more solidaristic orientation to work. According to Herman, the work ethic has been deeply challenged by two trends – the division of labour and the destruction of continuity in employment. Work has been fractured in task and sub-divided into specialised subtasks or branches into new kinds of work all together. The division of labour has now generated tens of thousands of discrete functions in the workplace. A more recent trend is the destruction of continuity in employment with many employees likely to re-enter the job market multiple times. This discourages the development of bonds of loyalty or employees investing themselves in their work with the hope of long-term employment.17 Knights and Willmott contend that most management textbooks do not make the connection between managing and everyday life. By drawing on a number of contemporary 33 34 PART 1 MANAGEMENT AND ORGANISATIONAL BEHAVIOUR novels they attempt to ‘bring to life’ what they see as the reality of managing and organising, and dimensions of human experience at work and elsewhere. They explore, in an interesting way, the changing meaning of work and orientations to it, and how different kinds of work are meaningful to some people and not to others.18 Cultural influences National culture is also a significant influence on orientations to work. For example, Reeves comments on the importance of conversation for effective organisational relationships but how this is resisted in the British work culture. The Protestant version of the work ethic prevails, implying heads-down work, focused agendas, punctuality, efficiency. In French and Spanish offices, it takes the first hour to kiss everyone, the second to discuss local gossip and the third to pop out for a coffee and croissant. In Britain, these activities would count as sexual harassment, time-wasting and absenteeism. Many firms have built cafés or break out areas and then discovered people are too scared to use them for fear of looking work-shy.19 As another example, the author experienced for himself how in parts of Australia workrelated activities could often be undertaken comfortably in local coffee houses without concern about being seen as away from the place of work. Cartwright comments on the psychological process of culture that has the power and authority not only to determine lifestyle but also to form individual personality traits, behaviours and attitudes. It is the cultural environment that motivates people to do their best and to give of their best, often irrespective of or even in spite of their working or living environment. In this respect we make a clear distinction between social conditions and the cultural environment. In the same way that a first-class system does not guarantee first-class results, good living and working conditions do not, in themselves, guarantee high morale and motivation. People in the best working and living conditions can still have low morale and motivation without the benefit of a supportive culture.20 Work/life balance Popular newspaper articles often suggest that work is still a large component of what gives meaning to people’s lives, and give examples of lottery or pools winners staying in work and often in their same old job. Other surveys and reports continue to suggest that the workplace is no longer a central feature of social activity. For a majority of people the main reason for work remains the need for money to fulfil the necessities of life. However, much still appears to depend on the extent of an individual’s social contacts and activities outside of the work situation. From a survey conducted among subscribers to Management Today, the majority of Britain’s managers are engaged in a perpetual juggling act with the work/life balance, and in meeting both personal and work commitments. For many of those surveyed, however, work remains a huge source of satisfaction.21 The work/life balance is discussed more fully in Chapter 18. MANAGEMENT AS AN INTEGRATING ACTIVITY Whatever the individual’s orientations to work, it is through the process of management that the efforts of members of the organisation are co-ordinated, directed and guided towards the achievement of organisational goals. Management is an integral part of, and fundamental to, the successful operations of the organisation. Management is therefore the cornerstone of organisational effectiveness, and is concerned with arrangements for the carrying out of organisational processes and the execution of work (see Figure 2.4). There are many aspects to management in work organisations, but the one essential ingredient of any successful manager is the ability to handle people effectively. The man- CHAPTER 2 THE NATURE OF ORGANISATIONAL BEHAVIOUR Figure 2.4 Management as the cornerstone of organisational effectiveness ager needs to be conversant with social and human skills, and have the ability to work with and through other people. Without people there can be no organisation and no meaningful activity. Behind every action or document in an organisation there are people. Patterns of human behaviour It is the responsibility of management to manage. But organisations can only achieve their aims and objectives through the co-ordinated efforts of their members. This involves the effective management of human resources. However, it is important always to remember that it is people who are being managed and people should be considered in human terms. Unlike physical resources, people are not owned by the organisation. People bring their own perceptions, feelings and attitudes towards the organisation, systems and styles of management, their duties and responsibilities, and the conditions under which they are working. At the heart of successful management is the problem of integrating the individual and the organisation, and this requires an understanding of both human personality and formal organisations.22 The fact is that management ultimately depends on an understanding of human nature. I suggest it goes much further than that. In the first place, good management depends on the acceptance of certain basic values. It cannot be achieved without honesty and integrity, or without consideration for the interests of others. Secondly, it is the understanding of human foibles that we all share, such as jealousy, envy, status, prejudice, perception, temperament, motivation and talent, which provides the greatest challenge to managers. HRH The Duke of Edinburgh, Institute of Management Patron23 35 36 PART 1 MANAGEMENT AND ORGANISATIONAL BEHAVIOUR Human behaviour is capricious, and scientific methods or principles of behaviour cannot be applied with reliability. For example, in his study of job satisfaction, Bassett comments that: There seem to be no universal generalizations about worker dissatisfaction that permit easy management policy solutions to absenteeism and turnover problems … There are almost never any exact conditions of cause and effect in the realm of human behaviour.24 It is also widely observed that you cannot study the behaviour of people without changing it. Patterns of behaviour are influenced by a complex combination of individual, social and cultural factors. Tensions, conflicts and politics are almost inevitable, as are informal structures of organisation and unofficial working methods. We need to remind ourselves of the human aspects of the organisation and the idiosyncratic behaviour of individuals. For example, Egan refers to the importance of the shadow side of the organisation: that is, those things not found on organisation charts or in company manuals – the covert, and often undiscussed, activities of people which affect both the productivity and quality of working life of an organisation.25 The people–organisation relationship In the belief of the author, the majority of people come to work with the original attitude of being eager to do a good job, and desirous of performing well and to the best of their abilities. People generally respond in the manner in which they are treated. Where actual performance fails to match the ideal this is largely a result of how staff perceive they are treated by management and the management function. Many problems in the people–organisation relationship arise not so much from what management does, but the manner in which it is done. Often, it is not so much the intent but the manner of implementation that is the root cause of staff unrest and dissatisfaction. For example, staff may agree on the need to introduce new technology to retain the competitive efficiency of the organisation, but feel resentment about the lack of pre-planning, consultation, retraining programmes, participation in agreeing new working practices and wage rates, and similar considerations arising from the manner of its introduction. Therefore, a heavy responsibility is placed on managers and the activity of management – on the processes, systems and styles of management. Accordingly, how managers exercise the responsibility for, and duties of, management is important. Attention must be given to the work environment, and appropriate systems of motivation, job satisfaction and rewards. It is important to remember that improvement in organisational performance will only come about through people.26 Providing the right balance Management should, therefore, endeavour to create the right balance between the interrelated elements which make up the total organisation, and to weld these into coherent patterns of activity best suited to the external environment in which the organisation is operating. Consideration must be given to developing an organisational climate in which people work willingly and effectively. People and organisations need each other. Attention should be focused, therefore, on improving the people–organisation relationship. Management is an integral part of this relationship. It should serve to reconcile the needs of people at work with the requirements of the organisation. Management is essentially an integrating activity which permeates every facet of the operations of the organisation. The style of management adopted can be seen as a function of the manager’s attitudes towards people, and assumptions about human nature and behaviour (discussed in Chapter 7). The general movement towards flatter organisation structures, flexible working and greater employee involvement has placed increasing emphasis on an integrating rather than a hierarchical/controlling style of management. Management processes in the new millennium will be much more behavioural in nature, focusing on the key human resource-driven issues: learning, team-based visions, driving human resource processes, incentives to enhance growth, holistic budgeting, and proactive controls.27 CHAPTER 2 THE NATURE OF ORGANISATIONAL BEHAVIOUR THE PSYCHOLOGICAL CONTRACT One significant aspect of organisational behaviour and the relationship between the individual and the organisation is the concept of the psychological contract. This is not a written document, but implies a series of mutual expectations and satisfaction of needs arising from the people–organisation relationship. It involves a process of giving and receiving by the individual and by the organisation. The psychological contract covers a range of expectations of rights and privileges, duties and obligations, which do not form part of a formal agreement but still have an important influence on people’s behaviour.28 The nature and extent of individuals’ expectations vary widely as do the ability and willingness of the organisation to meet them. It is difficult to list the range of implicit expectations that individuals have and they change over time. These expectations are notwithstanding any statutory requirements placed upon the organisation; instead they relate more to the idea of a social responsibility of management, discussed in Chapter 5. The organisation will also have implicit expectations of its members. The organisational side of the psychological contract places emphasis on expectations, requirements and constraints that may differ from, and may conflict with, an individual’s expectations. Some possible examples of the individual’s and the organisation’s expectations are given in Figure 2.5. Process of balancing It is unlikely that all expectations of the individual or of the organisation will be met fully. There is a continual process of balancing, and explicit and implicit bargaining. The nature of these expectations is not defined formally, and although the individual member and the organisation may not be aware consciously of them, they still affect relationships between them and have an influence on behaviour. The psychological contract is a useful concept in examining the socialisation of new members of staff to the organisation. According to Kotter, for example, early experiences have a major effect on an individual’s subsequent career in an organisation, and influence job satisfaction, attitude and level of productivity. The extent of the matches between individual and organisational expectations also influences the willingness of people to stay with the organisation and of the organisation to continue to employ them.29 Stalker suggests that successful companies are those that have the ability to balance the unwritten needs of their employees with the needs of the company. Such companies use a simple formula of Caring, Communicating, Listening, Knowing and Rewarding. ■ ■ ■ ■ ■ Caring – demonstrating genuine concern for individuals working in the organisation. Communicating – really talking about what the company is hoping to achieve. Listening – hearing not only the words but also what lies behind the words. Knowing – the individuals who work for you, their families, personal wishes, desires and ambitions. Rewarding – money is not always necessary; a genuine thankyou or public recognition can raise morale.30 The significance of the psychological contract depends on the extent to which it is perceived as fair by both the individual and the organisation, and will be respected by both sides. Cartwright, for example, refers to mutuality as the basic principle of the psychological contract. A psychological contract is not only measured in monetary value or in the exchange of goods or services, it is in essence the exchange or sharing of beliefs and values, expectations and satisfactions. Mutuality is the basic principle of the psychological contract and consensus or mutual understanding is the basis of mutuality. Ideally therefore self-interest should be balanced with common interest in a ‘win–win’ arrangement.31 37 38 PART 1 MANAGEMENT AND ORGANISATIONAL BEHAVIOUR INDIVIDUALS’ EXPECTATIONS OF THE ORGANISATION • provide safe and hygienic working conditions; • make every reasonable effort to provide job security; • attempt to provide challenging and satisfying jobs, and reduce alienating aspects of work; • adopt equitable human resource management policies and procedures; • respect the role of trade union officials and staff representives; • consult fully with staff and allow genuine participation in decisions which affect them; • implement best practice in equal opportunity policies and procedures; • reward all staff fairly according to their contribution and performance; • provide reasonable opportunities for personal development and career progression; • treat members of staff with respect; • demonstrate an understanding and considerate attitude towards personal problems of staff. ORGANISATIONAL EXPECTATIONS OF THE INDIVIDUAL • uphold the ideology of the organisation and the corporate image; • work diligently in pursuit of organisational objectives; • adhere to the rules, policies and procedures of the organisation; • respect the reasonable authority of senior members of staff; • not take advantage of goodwill shown by management; • be responsive to leadership influence; • demonstrate loyalty and not betray positions of trust; • maintain harmonious relationships with work colleagues; • not abuse organisational facilities such as email or Internet access; • observe reasonable and acceptable standards of dress and appearance; • show respect and consolidation to customers and suppliers. Figure 2.5 The psychological contract: possible examples of individual and organisational expectations The nature of the boss–subordinate relationship is clearly a central feature of the psychological contract. Emmott, for example, points out that good people-management practices are the basis for a positive psychological contract and this means managers having to deal with the ‘soft stuff’. Properly managed the psychological contract delivers hard, bottom-line results and improved business performance. Managers at all levels can have an influence on employees’ perceptions of the psychological contract. It is, however, the relationship between individual employees and their line manager that is likely to have most influence in framing and managing employees’ expectations.32 CHAPTER 2 THE NATURE OF ORGANISATIONAL BEHAVIOUR CHANGING NATURE OF THE PSYCHOLOGICAL CONTRACT The changing nature of organisations has placed an increasing emphasis on the importance of effective human resource management, including the importance of the psychological contract within the employment relationship. For example, from a review of research, McBain maintains that human resource management plays a key role in ensuring the promotion of business success and managing change. This involves paying attention to the psychological contract and the establishment of expectations and obligations with all groups of employees within the organisation.33 The Institute of Administrative Management has introduced a new module on ‘The Individual and the Organisation in Context’ which has come about because of the need to keep abreast of changes affecting the individual at work. There is a need for managers to be aware of the new psychological contracts the individual members of their teams are bringing to work. Managers will have to consider alternative management styles to meet this new need and to use new skills to motivate and train their staff. People no longer come to work to be ‘told what to do’, but are aspiring to be part of the whole, with a real role as stakeholders in the success of ‘their’ organisation. Wise managers will harness this commitment for the benefit of everyone concerned.34 Hiltrop suggests that the increasing pressure for organisations to change has prompted growing disillusionment with the traditional psychological contract based on lifetime employment and steady promotion from within. Companies must develop new ways to increase the loyalty and commitment of employees. This includes attention to reward strategies based on recognition of contribution rather than status or position; systematic training and development including the skills for working in cross-functional teams; and the training of managers in counselling, coaching and leadership skills.35 Performance management Stiles et al. also draw attention to how new competitive conditions and dynamic environments have brought performance management to centre stage as a major element in the changing nature of the psychological contract. From an examination of three large UK organisations, the authors explore ‘how performance management processes are being used to support moves from the traditional contract of job security and clear career paths, while attempting to maintain commitment and morale’. The authors conclude that there are two main areas of difficulty in changing the psychological contract so that it focuses on performance management. The presence of mixed messages from employers is undermining the employment relationship and changes are being driven in a topdown manner with a lack of consultation. There is also disenchantment and concern about the accuracy and fairness of performance management processes, with employees expressing scepticism towards managerial attempts to implement change.36 A new moral contract The changing nature of organisations and individuals at work has placed increasing pressures on the awareness and importance of new psychological contracts. Ghosal et al. suggest that in a changing social context the law of masters and servants that underlies the old psychological contract is no longer acceptable to many people. Forces of global competition and turbulent change make employment guarantees unfeasible and also enhance the need for levels of trust and teamwork. The new management philosophy needs to be grounded in a very different moral contract with people. Rather than seeing people as a corporate asset from which value can be appropriated, people are seen as a responsibility and a resource to be added to. The new moral contract also demands much from employees who need to abandon the stability of lifetime employment and embrace the concept of continuous learning and personal development.37 39 40 PART 1 MANAGEMENT AND ORGANISATIONAL BEHAVIOUR ORGANISATIONAL PRACTICES It is convenient, here, to consider two sets of observations on the nature of human behaviour and what may actually happen, in practice, in organisations: the Peter Principle, and Parkinson’s Law. Although these observations are presented in a satirical manner, they nevertheless make a serious and significant point about the management and functioning of organisations, and the actual nature and practice of organisational behaviour. THE PETER PRINCIPLE This is concerned with the study of occupational incompetence and the study of hierarchies. The analysis of hundreds of cases of occupational incompetence led to the formulation of the ‘Peter Principle’, which is: In a hierarchy every employee tends to rise to their level of incompetence.38 Employees competent in their position are promoted and competence in each new position qualifies for promotion to the next highest position until a position of incompetence is reached. The principle is based on perceived incompetence at all levels of every hierarchy – political, legal, educational and industrial – and ways in which employees move upwards through a hierarchy, and what happens to them after promotion. Among the many examples quoted by Peter are those from the teaching occupation. A is a competent and conforming college student who becomes a teacher following the textbook, curriculum guide and timetable schedule, and who works well except when there is no rule or precedent available. A never breaks a rule or disobeys an order but will not gain promotion because, although competent as a student, A has reached a level of incompetence as a classroom teacher. B, a competent student and inspiring teacher, although not good with paperwork, is promoted to head of the science department because of success as a teacher. The head of science is responsible for ordering all science supplies and keeping extensive records and B’s incompetence becomes evident. C, a competent student, teacher and head of department, is promoted to assistant principal, and being intellectually competent is further promoted to principal. C is now required to work directly with higher officials. By working so hard at running the school, however, C misses important meetings with superiors and has no energy to become involved with community organisations. C thus becomes regarded as an incompetent principal. Means of promotion Peter suggests two main means by which a person can affect promotion rate, ‘Pull’ and ‘Push’. ■ ■ Pull is an employee’s relationship – by blood, marriage or acquaintance – with a person above the employee in the hierarchy. Push is sometimes manifested by an abnormal interest in study, vocational training and self-improvement. In small hierarchies, Push may have a marginal effect in accelerating promotion; in larger hierarchies the effect is minimal. Pull is, therefore, likely to be more effective than Push. Never stand when you can sit; never walk when you can ride; never Push when you can Pull.39 CHAPTER 2 THE NATURE OF ORGANISATIONAL BEHAVIOUR PARKINSON’S LAW A major feature of Parkinson’s Law is that of the ‘Rising Pyramid’, that is, ‘Work expands so as to fill the time available for its completion.’40 General recognition of this is illustrated in the proverb, ‘It is the busiest person who has time to spare.’ There is little, if any, relationship between the quantity of work to be done and the number of the staff doing it. Underlying this general tendency are two almost axiomatic statements: ■ ■ An official wants to multiply subordinates, not rivals. Officials make work for each other. Parkinson goes on to give the following example. If a civil servant, A, believes he is overworked there are three possible remedies: (i) resignation; (ii) ask to halve the work by having it shared with a colleague, B; or (iii) seek the assistance of two subordinates, C and D. The first two options are unlikely. Resignation would involve loss of pension rights, and sharing work with a colleague on the same level would only bring in a rival for promotion. So A would prefer the appointment of two junior members of staff, C and D. This would increase A’s status. There must be at least two subordinates, so that by dividing work between C and D, A will be the only person to understand the work of them both. Furthermore, each subordinate is kept in order by fear of the other’s promotion. When, in turn, C complains of overwork, A, with the agreement of C, will advise the appointment of two assistants, E and F. However, as D’s position is much the same and to avoid internal friction, two assistants, G and H, will also be recommended to help D. There are now seven people, A, C, D, E, F, G, H, doing what one person did before, and the promotion of A is almost certain. People making work for each other With the seven people now employed, the second stage comes into operation. The seven people make so much work for each other that they are all fully occupied and A is actually working harder than ever. For example, an incoming document comes before each of them in turn. E decides it is F’s concern; F places a draft reply for C, who makes drastic amendments before consulting with D, who asks G to action it. But then G goes on leave and hands the file to H, who drafts a minute signed by D and returned to C, who revises the first draft and puts the new version before A. What does A do? A could find many excuses for signing C’s draft unread. However, being a conscientious person, and although beset with problems created by subordinates both for A and for themselves, A reads through the draft carefully, deletes the fussy paragraphs added by C and H, and restores it to the format presented in the first instance by F. Among other features of organisational practice that Parkinson discusses are: principles of personnel selection; the nature of committees; personality screen; high finance – and the ‘Law of Triviality’, which means in a committee that the time spent on any agenda item will be in inverse proportion to the sum involved; layout of the organisation’s administration block; and ‘injelitis’ – the disease of induced inferiority. Relevance of observations Despite the light vein of Parkinson’s writing, the relevance of his observations can be gauged from comments in the Introduction by HRH The Duke of Edinburgh. The most important point about this book for serious students of management and administration is that it illustrates the gulf that exists between the rational/intellectual approach to human organization and the frequent irrational facts of human nature … The law should be compulsory reading at all business schools and for all management consultants. Management structures solve nothing if they do not take the facts of human nature into proper consideration, and one of the most important facts is that no one really likes having to make decisions. Consequently structures may generate a lot of activity but little or no useful work.41 41 PART 1 MANAGEMENT AND ORGANISATIONAL BEHAVIOUR I first read Parkinson’s Law when studying for Economics A-level. Many of the laws are just as relevant today as they were then. They include: how to ‘manage’ a meeting, and how time spent in meetings is inversely proportional to the importance of each issue – his example is a short discussion on a £10 million power plant followed by a lengthy debate over a £350 bicycle shed. Ever been there? … Parkinson’s most famous law is that ‘work expands to fill the time available – as we all make work for one another’. This is still true today. Iain Herbertson, Managing Director of Manpower42 THE NEED FOR A CROSS-CULTURAL APPROACH The international context of management and organisational behaviour One major challenge facing managers in the early 21st century arises from what many commentators have identified as an increasingly international or global business environment. The following factors are frequently cited as potential explanatory factors underlying this trend: ■ ■ ■ ■ Improvements in international communication facilities leading to an increased consciousness of differences in workplace attitudes and behaviour in other societies. International competitive pressure – for example, the emergence of newly industrialised and/or free-market nations (the Far East region and ex-communist bloc countries are often viewed as examples of this phenomenon). The spread of production methods and other business processes across nations and regions. International business activity, for example: overseas franchising or licensing agreements; outsourcing of business units to other countries (call centres provide a topical example); direct foreign investment and the activities of multinational corporations which, by definition, operate outside national boundaries. Photo: European Parliament 42 The European Parliament building in Strasbourg, France It is not only businesses which choose to operate in more than one country or import foreign business and management techniques that are affected by cross-cultural concerns. Tayeb reported United States Department of Labor statistics indicating that in the period from 1985 to 2000, only 15 per cent of new entrants to the workforce in the USA were white males.43 This highlights the importance of managing diversity in workforces within national boundaries. Lessons from abroad? One rationale for taking a cross-cultural approach to management lies in the potential benefits to be gained in performance terms. Schneider and Barsoux, in advocating cultural awareness of one’s own society, note that: each country has its unique institutional and cultural characteristics, which can provide sources of competitive advantage at one point, only to become liabilities when the environment changes. Managers therefore need to evaluate the extent to which national culture can interfere with their company’s efforts to respond to strategic requirements, now and in the future’.44 CHAPTER 2 THE NATURE OF ORGANISATIONAL BEHAVIOUR In addition to practically based benefits in considering our own ‘home’ culture, there has been a long tradition of looking to other cultures for examples of ‘successful’ practice which could be transplanted into work organisations in different societies. Different models may be dominant at different times. Thompson and McHugh note that: ‘In the post-war period the giant US corporations transferred work organisation and managerial techniques across capitalist countries.’45 However, in subsequent eras Scandinavian autonomous work group arrangements and Japanese management techniques were examined by and, to some extent, implemented in, organisations across the world. Such a search for good practice in other countries is, of course, ongoing and an awareness of how other cultures organise work and manage people is likely to be of continuing benefit in the future. Managing people from different cultures Another advantage of adopting a cross-cultural approach to the study of organisational behaviour, and to the management of people more generally, lies in the recognition of variations in workplace attitudes and behaviour between individuals and groups in different cultural contexts. Brooks notes that: ‘Differences in national culture may have a bearing on how organisations deal with each other and also on behaviour within organisations which comprise a mix of nationalities.’46 If we accept this fundamental point then it follows that key topics within the subject area of organisational behaviour may be influenced by national culture and that we should therefore re-evaluate models and concepts when applying them to other societies. One leading writer in the field of cross-cultural studies, Trompenaars, commenting on his own work, suggests that: ‘it helped managers to structure their experiences and provided new insights for them and their organisations into the real source of problems faced when managing across cultures or dealing with diversity’.47 In examining the centrally important topic of motivation, Francesco and Gold inform their readers that: ‘managers must develop organizational systems that are flexible enough to take into account the meaning of work and the relative value of rewards within the range of cultures where they operate.’48 A practical example of the impact of cultural diversity in the organisational behaviour area is provided in the recollections of an International Human Resource Manager cited in Schneider and Barsoux: ‘Indonesians manage their culture by a group process, and everyone is linked together as a team. Distributing money differently among the team did not go over all that well; so we’ve come to the conclusion that pay for performance is not suitable for Indonesia.’49 It may be extremely useful therefore to examine academic frameworks and research findings within the field of organisational behaviour to indicate the extent to which they are applicable worldwide or, alternatively, subject to meaningful variation in different cultural contexts. IS ORGANISATIONAL BEHAVIOUR CULTURE-BOUND? While it can be valuable to apply organisational behaviour concepts to diverse cultural settings it should also be borne in mind that some universal theories and models may, in reality, contain important culturally-derived assumptions. When examining classical frameworks for understanding organisation structure Schneider and Barsoux point out that: ‘theories about how best to organise – Max Weber’s (German) bureaucracy, Henri Fayol’s (French) administrative model, and Frederick Taylor’s (American) scientific management – all reflect societal concerns of the times as well as the cultural background of the individuals.’50 That writers on work organisations may themselves be influenced by their own cultural backgrounds when compiling their work is unsurprising: however, it should equally not be ignored. 43 44 PART 1 MANAGEMENT AND ORGANISATIONAL BEHAVIOUR More significant still is the possibility that whole topics within organisational behaviour, per se, may be underpinned by a particular culturally-derived frame of reference. Francesco and Gold, addressing the issue of leadership, claim that: ‘one difficulty is that not all cultures have the term leader’.51 This raises the possibility that meanings we may assume to be taken for granted could be interpreted differently or not even perceived at all in different parts of the world. Culture as understanding ‘For our most basic common link is that we all inhabit this small planet, we all breathe the same air, we all cherish our children’s future, and we are all mortal’ (John. F. Kennedy, 10 June 1963). There are a number of very good reasons why we could usefully understand cultural difference (and similarity) at work, based on new awareness contributing to our own effectiveness and moreover to the accomplishment of organisational goals. It could also be true to say that an appreciation of culture and its effects may be of intrinsic value. There could therefore be advantages of cross-cultural awareness which include: ■ ■ ■ ■ increased self-awareness; sensitivity to difference; questioning our own assumptions and knowledge; lessening ignorance, prejudice and hatred. However, it would be wrong to think that increased cross-cultural awareness or activity will automatically bring about any of these outcomes. Adler listed the following inbuilt dangers when multi-cultural teams operate in a business setting. ■ ■ ■ Mistrust – including stereotyping. Miscommunication with potential for reduced accuracy and resultant stress. Process difficulties, that is failure to agree when agreement is needed or even what constitutes agreement when arriving at decisions. Adler goes on to examine research on the success of multi-cultural work teams and concludes that the evidence suggests that they either perform much better or much worse than teams composed of one cultural group.52 There are clearly risks as well as benefits in working across cultures. It is hoped that an appreciation of cross-cultural aspects of organisational behaviour can help in this regard. MODELS FOR UNDERSTANDING THE IMPACT OF CULTURE The study of culture Culture is a notoriously difficult concept to pin down. It is all too easy to assume that differences observed between societies may be attributed to culture per se, with little explanation of the reasons which may lie behind the differences, real or perceived. Robbins notes that: ‘Most people are unaware of just how their culture will affect them. Culture is like fish to water. It is there all the time but the fish are oblivious to it.’ 53 It is therefore necessary to be aware of one’s own culture in order to appreciate fully differences between different groups. The Johari Window technique – see Chapter 14 – can be useful in identifying what may be known and not known regarding different cultures. Attempt to use this framework in respect of your own and one other culture to see its potential value. We should not assume that we are aware of all facets of our own culture or that others see us in a realistic and accurate way. Matched pair comparisons Some writers who have sought to conduct comparative research into workplace differences have frequently used a matched pair method of comparison. This involves selecting organisations for study which are similar in size, product or service, technologies employed and ownership pattern. It is claimed that any differences observed can CHAPTER 2 THE NATURE OF ORGANISATIONAL BEHAVIOUR be isolated and subjected to further detailed analysis to ascertain whether they are culturally-derived. An example of this methodological tradition is the work of Maurice, Sorge and Warner which is considered in Chapter 16.54 The danger of stereotyping In Chapter 11 of this book we identify the concept of ‘selective perception’, that is the possibility of drawing inferences and conclusions from partial information. One example of this phenomenon is stereotyping which involves making judgements on an individual as a result of their membership of a group, which, we assume, itself contains shared characteristics. We clearly need to avoid stereotyping when approaching the subject of cultural differences at work. Writers such as Hofstede and Trompenaars, while identifying clusters of countries which they suggest may share particular features, nonetheless allow for divergence from the norm by referring to central tendencies. To take one example, Hong Kong is characterised by Hofstede as a low uncertainty avoidance culture which suggests a propensity for risk-taking and a tolerance of rapid change. However, it is eminently possible to conceive of an individual from Hong Kong who is ‘risk averse’ and conservative due to their own personality and upbringing.55 It is, finally, necessary to take a non-judgemental approach when identifying cultural differences and academics in this area and crucially successful international managers tend to adopt an approach of ‘not better nor worse – just different’! Defining and conceptualising culture Culture is a multifaceted concept. Models purporting to explain this topic typically distinguish between different layers or strata of culture. Trompenaars identifies three layers of culture; namely an outer, middle and core. Figure 2.6 depicts these layers as concentric circles. The outer circle identifies artifacts and products, the middle circle encompasses norms and values and the inner circle comprises basic assumptions held within the group.56 It may equally be useful to conceive of a three-layer model of culture comprising outer, middle and core layers. For our purposes an outer layer of culture refers to surface-level elements of culture which are quickly and easily understood on even a short visit to another country. Examples could include language, climate, dress and food and drink. The 1994 film Pulp Fiction provides an example in which a character in the film has recently returned to the USA after spending three years in Amsterdam. His description of the Netherlands is restricted to surface level anecdotes regarding fast Figure 2.6 A model of culture Source: Reproduced with permission from F. Trompenaars and C. Hampden-Turner, Riding the Waves of Culture, Second edition, Nicholas Brealey (1999), p. 22. 45 46 PART 1 MANAGEMENT AND ORGANISATIONAL BEHAVIOUR food and the comparative legality and availability of soft drugs. The viewer is invited to mock his failure to understand the greater subtleties of Dutch culture. Aspects of this outer layer can nonetheless be important to a successful cultural exchange in business. Giving a work colleague in the Czech Republic red flowers as a gift may be taken as expression of romantic interest while wearing a green hat in China may signify that one’s partner is unfaithful! A middle layer of culture is the one which will be of most relevance for us as it concerns expressed values, attitudes and behaviours. In terms of organisational behaviour, if we accept the evidence that indicates significant differences between cultures, we might anticipate that findings in the following topics should be re-examined to see whether they apply in different societies: Leadership, Perception, Motivation, Work Groups, Organisation Structure, Human Resource Management and Management Control and Power. The contribution of writers such as Hofstede, Trompenaars, and Hall and Hall57 may also provide useful frameworks for understanding topics within organisational behaviour from a cross-cultural standpoint. A core layer of culture relates to the deepest assumptions concerning people and nature held by a particular society. Such assumptions, which may be vestigial, often relate to the topography of a society or the level of threat posed by natural disasters. For example, it has been claimed that the Netherlands as a small country bounded by larger neighbours has developed a pragmatic flexible approach to business as a result of its location, bolstered by its historic struggle to keep the sea at bay. In the UK the relatively high degree of scepticism towards greater European integration may, in part, be explained by its island status. So-called group mentalities exhibited by some Asian countries could be traced back to patterns of agrarian production exhibited in previous times. Somewhat more arcane and, by definition, difficult to unravel, these core layer assumptions could conceivably manifest themselves in modern day cross-border business dealings. In Figure 2.7 Tayeb shows with examples how culture can take effect at a number of levels; from the global through to the personal. Readers may wish to consider how significant cultural differences may occur at the regional and/or community levels in their own experience. Nonetheless studies of culture most usually take the country or nation state as the focus of attention.58 Example: wishing to suceed in life Global layer Behaviours Example: avoiding loss of face in Japanese culture National layer Attitudes Example: Bengali culture in West Bengal, India Regional layer Beliefs Example: helping neighbours in a mining community in Wales, UK Community layer Values Example: caring for wildlife Personal layer Taken for granted assumptions Figure 2.7 Major cultural layers Source: Reproduced with permission from M. Tayeb, International Management: Theories and Practice, Financial Times Prentice Hall (2003), p. 14, with permission from Pearson Education Ltd. CHAPTER 2 THE NATURE OF ORGANISATIONAL BEHAVIOUR Figure 2.8 Factors affecting national culture Source: Reproduced with permission from Ian Brooks, Organisational Behaviour: Individuals, Groups and Organisation, Second edition, Financial Times Prentice Hall (2003), p. 266, with permission from Pearson Education Ltd. Brooks is one of several commentators who draw our attention to the interlinked nature of culture. Figure 2.8 illustrates the interplay between relevant factors affecting any one national culture.59 You may wish to consider how these factors have combined to shape your own ‘home’ culture and that of one other country with which you are familiar. FIVE DIMENSIONS OF CULTURE: THE CONTRIBUTION OF HOFSTEDE Geert Hofstede is one of the most significant contributors to the body of knowledge on culture and workplace difference. His work has largely resulted from a large-scale research programme involving employees from the IBM corporation, initially in 40 countries. In focusing on one organisation Hofstede felt that the results could be more clearly linked to national cultural difference. Arguing that culture is, in a memorable phrase, collective programming or software of the mind, Hofstede initially identified four dimensions of culture; power distance, uncertainty avoidance, individualism and masculinity.60 (See Table 2.1.) ■ ■ ■ ■ Power distance is essentially used to categorise levels of inequality in organisations, which Hofstede claims will depend upon management style, willingness of subordinates to disagree with superiors, and the educational level and status accruing to particular roles. Countries which displayed a high level of power distance included France, Spain, Hong Kong and Iran. Countries as diverse as Germany, Italy, Australia and the USA were characterised as low power distance societies. Britain also emerged as a low power distance society according to Hofstede’s work. Uncertainty avoidance refers to the extent to which members of a society feel threatened by unusual situations. High uncertainty avoidance is said to be characteristic in France, Spain, Germany and many of the Latin American societies. Low-to-medium uncertainty avoidance was displayed in the Netherlands, the Scandinavian countries and Ireland. In this case Britain is said to be ‘low-tomedium’ together with the USA, Canada and Australia. Individualism describes the relatively individualistic or collectivist ethic evident in that particular society. Thus, the USA, France and Spain display high individualism. This contrasts with Portugal, Hong Kong, India and Greece which are low individualism societies. Britain here is depicted as a high individualism society. Masculinity is the final category suggested by Hofstede. This refers to a continuum between ‘masculine’ characteristics, such as assertiveness and competi- 47 48 PART 1 MANAGEMENT AND ORGANISATIONAL BEHAVIOUR Table 2.1 Classification of cultures by dimensions I: More developed Latin II: Less developed Latin high power distance high uncertainty avoidance high individualism medium masculinity high power distance high uncertainty avoidance low individualism whole range on masculinity Belgium France Argentina Brazil Spain Colombia Mexico Venezuela Chile Peru Portugal Yugoslavia lll: More developed Asian lV: Less developed Asian V: Near Eastern medium power distance high uncertainty avoidance medium individualism high masculinity high power distance low uncertainty avoidance low individualism medium masculinity high power distance high uncertainty avoidance low individualism medium masculinity Japan Pakistan Taiwan Thailand Hong Kong India Philippines Singapore Greece Iran Turkey Vl: Germanic Vll: Anglo Vlll: Nordic low power distance high uncertainty avoidance medium individualism high masculinity low power distance low-to-medium uncertainty avoidance high individualism low masculinity low power distance low-to-medium uncertainty avoidance medium individualism low masculinity Austria Israel Germany Switzerland South Africa Italy Australia Canada Britain Ireland New Zealand USA Denmark Finland The Netherlands Norway Sweden (Reproduced with permission from ‘International Perspectives’, Unit 16, Block V, Wider Perspectives, Managing in Organizations, ©The Open University (1985) p. 60.) tiveness, and ‘feminine’ traits, such as caring, a stress upon the quality of life and concern with the environment. High masculinity societies included the USA, Italy, Germany and Japan. More feminine (low masculinity) societies included the Netherlands and the Scandinavian countries. In this case Britain was located within the high masculinity group. A fifth dimension of culture, long-term/short-term orientation, was originally labelled Confucian work dynamism. This dimension developed from the work of Bond in an attempt to locate Chinese cultural values as they impacted on the workplace.61 CHAPTER 2 THE NATURE OF ORGANISATIONAL BEHAVIOUR Countries which scored highly on Confucian work dynamism or long-term orientation exhibited a strong concern with time along a continuum and were therefore both pastand future-oriented, with a preoccupation with tradition but also a concern with the effect of actions and policies on future generations. Table 2.2 indicates the score of ten countries along this fifth dimension. Unsurprisingly China scores highest on the LT column followed by Japan. Note the significantly lower scores of the USA and Western European countries surveyed. Table 2.2 Cultural dimension scores for ten countries USA Germany Japan France Netherlands Hong Kong Indonesia West Africa Russia China PD ID MA UA LT 40L 35L 54M 68H 38L 68H 78H 77H 95*H 80*H 91H 67H 46M 71H 80H 25L 14L 20L 50*M 20*L 62H 66H 95H 43M 14L 57H 46M 46M 40*L 50*M 46L 65M 92H 86H 53M 29L 48L 54M 90*H 60*M 29L 31M 80H 30*L 44M 96H 25*L 16L 10*L 118H PD=Power Distance; ID=Individualism; MA=Masculinity; UA=Uncertainty Avoidance; LT=Long-Term Orientation. H=top third, M=medium third, L=bottom third (among 53 countries and regions for the first four dimensions; among 23 countries for the fifth), *estimated Reprinted with permission from Hofstede, G., ‘Cultural Constraints in Management Theories’, Academy of Management Executive: The Thinking Manager’s Source, 7, 1993, p. 91. Evaluation of Hofstede’s work Extremely influential; the seminal work of Hofstede has been criticised from certain quarters. In common with other writers in this area there is a focus on the national rather than regional level. The variations within certain countries, for example Spain, can be more or less significant. Again in common with other contributors Hofstede’s classifications include medium categories which may be difficult to operationalise, accurate though they may be. Some may also find the masculinity/femininity dimension unconvincing and itself stereotypical. Other writers have questioned whether Hofstede’s findings remain current. Holden summarises this view: ‘How many people have ever thought that many of Hofstede’s informants of three decades ago are now dead? Do their children and grandchildren really have the same values?’62 Ultimately, readers can assess the value of his work in the light of their own experiences and interpretations of the business world. Hofstede in his extensive research has attempted to locate the essence of work-related differences across the world and to relate these to preferred management styles. CULTURAL DIVERSITY: THE CONTRIBUTION OF TROMPENAARS Another significant contributor to this area of study is provided by Fons Trompenaars whose later work is co-authored with Charles Hampden-Turner.63 Trompenaars’s original research spanned 15 years, resulting in a database of 50,000 participants from 50 countries. It was supported by cases and anecdotes from 900 cross-cultural training programmes. A questionnaire method comprised a significant part of the study which involved requiring participants to consider their underlying norms, values and 49 50 PART 1 MANAGEMENT AND ORGANISATIONAL BEHAVIOUR attitudes.The resultant framework identifies seven areas in which cultural differences may affect aspects of organisational behaviour. ■ ■ ■ ■ ■ ■ ■ Relationships and rules. Here societies may be more or less universal, in which case there is relative rigidity in respect of rule-based behaviour, or particular, in which case the importance of relationships may lead to flexibility in the interpretation of situations. Societies may be more oriented to the individual or collective. The collective may take different forms: the corporation in Japan, the family in Italy or the Catholic Church in the Republic of Ireland. There may be implications here for such matters as individual responsibility or payment systems. It may also be true that societies differ to the extent it is thought appropriate for members to show emotion in public. Neutral societies favour the ‘stiff upper lip’ while overt displays of feeling are more likely in emotional societies. Trompenaars cites a survey in which 80 employees in each of various societies were asked whether they would think it wrong to express upset openly at work. The numbers who thought it wrong were 80 in Japan, 75 in Germany, 71 in the UK, 55 in Hong Kong, 40 in the USA and 29 in Italy. In diffuse cultures, the whole person would be involved in a business relationship and it would take time to build such relationships. In a specific culture, such as the USA, the basic relationship would be limited to the contractual. This distinction clearly has implications for those seeking to develop new international links. Achievement-based societies value recent success or an overall record of accomplishment. In contrast, in societies relying more on ascription, status could be bestowed on you through such factors as age, gender or educational record. Trompenaars suggests that societies view time in different ways which may in turn influence business activities. The American dream is the French nightmare. Americans generally start from zero and what matters is their present performance and their plan to ‘make it’ in the future. This is ‘nouveau riche’ for the French, who prefer the ‘ancien pauvre’; they have an enormous sense of the past. Finally it is suggested that there are differences with regard to attitudes to the environment. In western societies, individuals are typically masters of their fate. In other parts of the world, however, the world is more powerful than individuals. Trompenaars’ work is based on lengthy academic and field research. It is potentially useful in linking the dimensions of culture to aspects of organisational behaviour which are of direct relevance, particularly to people approaching a new culture for the first time. The high- and low-context cultures framework This framework for understanding cultural difference has been formulated by Ed Hall; his work is in part co-authored with Mildred Reed Hall.64 Hall conceptualises culture as comprising a series of ‘languages’, in particular: ■ ■ ■ ■ ■ Language of time Language of space Language of things Language of friendships Language of agreements In this model of culture Hall suggests that these ‘languages’, which resemble shared attitudes to the issues in question, are communicated in very different ways according to whether a society is classified as ‘high’ or ‘low’ context. The features of ‘high’ context societies, which incorporate Asian, African and Latin American countries, includes: CHAPTER 2 THE NATURE OF ORGANISATIONAL BEHAVIOUR ■ ■ ■ ■ ■ a high proportion of information is ‘uncoded’ and internalised by the individual; indirect communication styles … words are less important; shared group understandings; importance attached to the past and tradition; ‘diffuse’ culture stressing importance of trust and personal relationships in business. ‘Low’ context societies, which include the USA, Australia, Britain and the Scandinavian countries, exhibit contrasting features including: ■ ■ ■ ■ a high proportion of communication is ‘coded’ and expressed; direct communication styles … words are paramount; past context less important; ‘specific’ culture stressing importance of rules and contracts. Other countries, for example France, Spain, Greece and several Middle Eastern societies, are classified as ‘medium’ context. To take one example as an illustration: American managers visiting China may find that a business transaction in that country will take more time than at home. They may find that it is difficult to interpret the true feelings of their Chinese host and may need to decode non-verbal communication and other signals. They may seek to negotiate a rules-based contract whereas their Chinese counterpart may lay greater stress upon building a mutually beneficial reciprocal relationship. There is scope for potential miscommunication between the two cultures and interesting differences in interpersonal perception. Inasmuch as much of the management literature canon originates from the Anglo-American context, there is again considerable merit in adopting a cross-cultural perspective. SUMMARY: CONVERGENCE OR CULTURE-SPECIFIC ORGANISATIONAL BEHAVIOUR There is evidence of a narrowing or even increasing elimination of cultural differences in business. Grint sees both positive and negative consequences of aspects of globalisation. While noting that: ‘at last we are approaching an era when what is common between people transcends that which is different; where we can choose our identity rather than have it thrust upon us by accident of birth’,65 the same author goes on to suggest that: ‘we are heading for global convergence where national, ethnic and local cultures and identities are swamped by the McDonaldization ... and/or Microsoftization of the world’.66 There is an undoubted narrowing of cultural differences in work organisations; and it may be the case that such narrowing may apply to individual and group behaviour at work. Thompson and McHugh note for example that: ‘Russia is now experiencing rampant individualism and uncertainty following the collapse of the old solidaristic norms’, thus implying convergence of work values.67 For the most part, however, it is argued here that growing similarity and harmonisation relate more often to production, IT and quality systems which are more likely to converge due to best-practice comparisons and universal computer standards. Human Resource Management is, contrastingly, less likely to converge due to national institutional frameworks and culturally derived preferences. Recent significantly different responses to the need for greater workplace ‘flexibility’ in Britain and France illustrate this point. Above all, those aspects of organisational behaviour which focus on individual differences, groups and managing people are the most clearly affected by culture and it is argued strongly here that it is and is likely to remain essential to take a crosscultural approach to the subject. 51 52 PART 1 MANAGEMENT AND ORGANISATIONAL BEHAVIOUR CRITICAL REFLECTIONS In your understanding of behaviour and managing people at work – as in life more generally – it is worth remembering the ‘Bag of Gold’ syndrome. However hard you try or whatever you do there will always be some people you just cannot seem to please. Give them a bag of gold and they will complain that the bag is the wrong colour, or it is too heavy to carry, or why could you not give them a cheque instead! What are your own views? What happens within organizations affects what happens outside and vice versa. Organizational behaviour is seen chiefly as being about the particular ways that individual’s dispositions are expressed in an organizational setting and about the effects of this expression. While at work there is rest and play. What happens in rest and play, both inside and outside the organization, impacts on organizational life. We can also gain insight into organizational behaviour by looking at less organized work, like work ‘on the fiddle’, and what work means to the unemployed. Wilson, F. M. Organizational Behaviour: A Critical Introduction, Oxford University Press (1999), pp. 1–2. How would you explain the meaning and nature of organisational behaviour, and how it is influenced? ’The study of organisational behaviour is really an art which pretends that it is a science and produces some spurious research findings to try to prove the point.’ Debate. SYNOPSIS ■ Organisations play a major and continuing role in the lives of us all, especially with the growth of large-scale business organisations. The decisions and actions of management in organisations have an increasing impact on individuals, other organisations and the community. It is important, therefore, to understand how organisations function and the pervasive influences they exercise over the behaviour of people. It is also necessary to understand interrelationships with other variables which together comprise the total organisation. ■ The behaviour of people in work organisations can be viewed in terms of multirelated dimensions relating to the individual, the group, the organisation and the environment. The study of organisational behaviour cannot be understood fully in terms of a single discipline. It is necessary to provide a behavioural science approach drawing on selected aspects of the three main disciplines of psychology, sociology and anthropology together with related disciplines and influences. ■ Organisations are complex social systems which can be defined and studied in a number of different ways. One approach is to view organisations in terms of contrasting metaphors. Gauging the effectiveness or success of an organisation is not an easy task, however, although one central element is the importance of achieving productivity through the effective management of people. People differ in the manner and extent of their involvement with, and concern for, work. Different situations influence the individual’s orientation to work and work ethic. A major concern for people today is balancing work and personal commitments. CHAPTER 2 THE NATURE OF ORGANISATIONAL BEHAVIOUR ■ It is through the process of management that efforts of members of the organisation are co-ordinated, directed and guided towards the achievement of organisational objectives. Management is the cornerstone of organisational effectiveness. It is essentially an integrating activity and concerned with arrangements for the carrying out of organisational processes and the execution of work. How managers exercise the responsibility for, and duties of, management is important. Attention should be focused on improving the people–organisation relationship. ■ One particular aspect of the relationship between the individual and the organisation is the concept of the psychological contract. This is not a formal, written document but implies a series of mutual expectations and satisfaction of needs arising from the people–organisation relationship. There is a continual process of explicit and implicit bargaining. The nature of expectations has an important influence on the employment relationship and behaviour in work organisations. The changing nature of organisations and individuals at work has placed increasing pressures on the awareness and importance of a different moral contract with people. ■ A major challenge facing managers today arises from an increasingly international or global business environment. This highlights the need for a cross-cultural approach to the study of organisational behaviour and the management of people. In an increasingly global context, managers need to recognise and understand the impact of national culture. However, culture is a multifaceted concept and notoriously difficult to pin down. But it has important repercussions for the effective management of people, and the study and understanding of workplace behaviour. REVIEW AND DISCUSSION QUESTIONS 1 Explain your understanding of (i) the nature of organisational behaviour and (ii) the meaning of behavioural science. 2 Suggest main headings under which interrelated factors can be identified which influence behaviour in work organisations. For each of your headings give examples from your own organisation. 3 Discuss how organisations may be viewed in terms of contrasting metaphors. Explain how you would apply these metaphors to an understanding of your own organisation. 4 Discuss the role of management as an integrating activity. Give your own views on the responsibility of management and the manner in which you believe this responsibility should be exercised. 5 Explain the nature of the people–organisation relationship. Why is it important to distinguish between the ‘intent’ and the ‘implementation’ of management decisions and actions? 6 Explain what is meant by the ‘psychological contract’. List (i) the personal expectations you have of your own organisation and (ii) what you believe to be the expectations of the organisation. Discuss with supporting examples the changing nature of psychological contracts between the organisation and its members. 7 Why is it increasingly important for managers to adopt an international approach? Discuss critically the likely longer-term impact of Britain’s membership of the European Union. 8 Debate fully the importance of national culture to the study of management and organisational behaviour. Where possible, give your own actual examples 53 54 PART 1 MANAGEMENT AND ORGANISATIONAL BEHAVIOUR ASSIGNMENT 1 A first step in understanding human behaviour and the successful management of other people is to know and understand yourself. For this simple exercise you are asked to select any one of the following shapes that you feel is ‘YOU’. After you have made your selection discuss in small groups the reasons which prompted you to choose that particular shape. How much agreement is there among members of your group? You should then consider and discuss the further information provided by your tutor. ASSIGNMENT 2 Provide for classroom discussion short descriptions (suitably disguised if necessary) to illustrate the practical application of: 1 The Peter Principle, and 2 Parkinson’s Law. Include in your descriptions what you believe to be the relevance of each of these sets of observations, and the effects on other members of staff. CHAPTER 2 THE NATURE OF ORGANISATIONAL BEHAVIOUR PERSONAL AWARENESS AND SKILLS EXERCISE OBJECTIVES Completing this exercise should help you to enhance the following skills: Obtain a clearer picture of your own and other people’s work ethic. Explore the importance of work to you and your fixed attitudes about work. Recognise the significance of individuals’ orientations to work within an organisation. EXERCISE You are required to start by asking yourself this question: is it a good thing to be a worker? And then to think carefully about your responses to the following questions: How do you feel ... ■ when you hear the word ‘work’? ■ as you get ready for work? ■ when you know the day is over? ■ about the work you’ve accomplished? ■ about someone who chooses not to work? ■ about taking time off? ■ when you hear the word ‘management’? ■ about taking control of your career? Compare your responses with those of your colleagues. What conclusions do you draw about the work ethic? DISCUSSION ■ What do you see as the character traits of a person with a healthy work ethic? ■ To what extent do you agree with the contention that: ‘we are employed for our skills but valued for our attitude’? ■ What effect might different orientations to work have within an organisation and how might they all be accommodated? Visit our website www.booksites.net/mullins for further questions, annotated weblinks, case material and Internet research material. 55 56 PART 1 MANAGEMENT AND ORGANISATIONAL BEHAVIOUR CASE STUDY 2.1 Eric and Kipsy: complexities of management and organisational behaviour CONSIDER THE PLIGHT OF ERIC Eric is a new manager of product information for a national firm which wholesales electrical components. He’s proud because he was assigned a ‘tough’ office right out of management training. He’s challenged because he can see as clearly as everyone else in the office that the work is not getting done on time – and that mistakes are far above the 2 per cent target. And he’s scared because he finds himself utterly incapable of figuring out what he ought to do to make things better. Eric’s first day The office is a new, one-storey building in a wooded suburban location – complete with carpeting on the floor and Muzak in the walls. There are 35 female employees, ranging from recent high school graduates in their first job to experienced middle-aged housewives. Their job is to provide salesmen in the field with current information about price, availability and delivery times of an exceptionally large inventory of electrical equipment and supplies. Eric spent his first day on the job – some three months ago now – just watching and listening. While in management training, he had thought a lot about how he would handle that first day. He knew that everyone in the office would be as eager to find out what he was like as he was to learn about them and their jobs. And he wanted to make a good impression. But Eric finally decided not to give a false impression. The fact was that he knew virtually nothing about the people he would be managing, or the kind of work they did. So why, he asked himself, act otherwise? Besides, if the people saw that he was genuinely interested in listening to them and learning from them, perhaps that would help establish good mutual rapport between him and his people. So he would just watch, and listen, and try to learn in his first few days on the job. The first day was fun. Soon after arriving and being introduced to the four first-level supervisors, he asked to be ‘plugged in’ to one of the complicated-looking operating consoles at which the women received calls from the field. A green light would blink on the console, and the information clerk would be connected to the salesman in the field – all taken care of by an outof-sight computer, which assigned calls sequentially to the waiting clerks. The salesman would ask for information about the availability of a certain piece of equipment. The clerk would then look up the stock number of that item in a large catalogue at her side and punch the number into a keyboard on the console. Immediately, the computer would present full information about stocks and delivery times of that item on an electronic display panel on the console, and the clerk would relay the appropriate information to the salesman. When the call ended, the green light would extinguish itself, and the clerk would then wait for the light to flash again, signalling the arrival of a new call. Eric was fascinated by both the efficiency of the operation and the pleasantness of the surroundings. His biggest worry at that point was that everything was so efficiently designed that he, as manager, would not have anything to do with his time. Beware first impressions He soon learned how wrong he was. When, on his second day at the office, he began to attack a pile of paperwork on his desk, he found messages from nearly a dozen field salesmen, all wanting him to return their calls. Each of these salesmen, it turned out, had a significant complaint about the product information service – and some were obviously quite angry. Eric managed to maintain a calm, responsive stance in relation to the complaining salesmen, but he also felt his stomach tightening as he heard what they had to say. By the day’s end, he had made a list of three general problems which seemed both frequent enough and serious enough to warrant his immediate attention and action: 1 Salesmen often were unable to get through quickly to information clerks. Since salesmen’s calls usually were made from customer offices, this meant that they were left holding the telephone of a client for up to 10 or 15 minutes waiting for a clerk – while both the salesman and the customer became increasingly impatient. 2 Errors were excessive. Salesman after salesman reported that, on the basis of information provided by the clerks, they would promise delivery of materials on a specific date at a specific price – only to hear later from an irate customer that the materials had not been delivered, that the price was different from that quoted, or (all too often) both. CHAPTER 2 THE NATURE OF ORGANISATIONAL BEHAVIOUR 3 The clerks were often abrupt and unfriendly to the salesmen when they called. According to more than one salesman, the clerks acted as if they were being imposed upon, rather than providing the salesmen with help in carrying out the company’s business. room). This informal network was also popular for creative co-ordination of ‘personals’ (i.e., short breaks for visits to the toilet) and for making sure that none of the clerks was violating the generally accepted norms about how much work should be carried out on a given day. The source of the problems Eric’s challenge In the following week, as Eric attempted to track down the reasons for these difficulties, other problems came to light. First, absenteeism and turnover were extremely high. It appeared that the excessive delays were partly due to the fact that 15 to 20 per cent of the clerks were unlikely to show up for work on any given day – especially Monday and Friday – and that up to an hour’s tardiness was not uncommon. This created call ‘backups’ on the computer. The computer, of course, calmly held the calls for as long as necessary, oblivious as only a machine can be to the rise in tempers in the customer’s office. When absenteeism was particularly high on any given day, part-time employees were called to fill in. Many of these individuals were not entirely familiar with the job and often did not remember some of the procedures to be used in looking up equipment numbers in the catalogue – resulting in wrong catalogue numbers and erroneous information being given to the customers. Worse, even experienced clerks had a high error rate. Eric’s hope that the error problem was in the computerised information displayed on the clerks’ consoles rather than a fault of the clerks themselves was clearly misplaced. Reports of errors arrived weeks after the information was provided (when orders failed to arrive on the customer’s premises, or arrived with unexpected prices), and so it was usually impossible to determine who had made the mistake or why. Finally, quite contrary to the impression he had received on his first day, Eric learned that loafing on the job not only was common practice among the clerks, but had indeed been developed into a rather elegant art form. It turned out that the clerks had devised ingenious ways to ‘busy out’ their consoles (i.e., to manipulate the console in order to provide the computer with a ‘busy’ indication when in fact the console was free). All a clerk needed to do, when she wanted a break from work, was to busy out her console and, if a supervisor happened to be nearby, act as if she were listening intently to a salesman on her headset. Worse, there appeared to be a highly efficient system of informal communication among the clerks, which alerted everyone when a supervisor was about to appear on the scene (or was monitoring calls surreptitiously from the private listening Given his own observations and impressions, Eric was not surprised when, a few weeks after he had taken over management of the office, he was visited by the regional vice-president of the company. The vice-president informed him that sales were falling company-wide, and that at least part of the problem had to do with the quality of the information with which salesmen were being provided. Eric’s operation was one of the most critical points of co-ordination in the entire company, he said, and it was important to everyone in the company that Eric reduce both the error rate and the number of delays salesmen currently were experiencing. The vicepresident said he had enormous confidence in Eric’s managerial ability, that he was sure the problems would be remedied quickly, and that he viewed Eric’s future in the company with great optimism. Eric panicked. Eric’s action plan Within two days he had instituted a crash programme to increase efficiency, reduce call-in delays, and slash the error rate. He held a half-day meeting with his four first-level supervisors, impressing upon them the urgency of the situation and the need for them to work with their people, individually if necessary, to improve service. He held an evening meeting with all staff members (with everyone receiving both refreshments and overtime pay), at which he announced a set of office-wide performance goals, and encouraged each employee to do her best to help achieve the new goals. He even had one of the supervisors construct four large signs reading ‘Increase Efficiency’ (each with a line drawing of a smiling face under the words), which were placed on the four walls of the operating area. Beginning the day after the kick-off meeting, all supervisory personnel (himself included) were to spend at least three hours a day on the floor, helping the employees improve their efficiency, making spot checks for errors, and generally doing anything possible to smooth the flow of work. The first two days under the new programme seemed to go reasonably well: the average waiting time for incoming calls dropped slightly, spot checks of errors showed performance to be close to an acceptable level, and everyone seemed to be 57 58 PART 1 MANAGEMENT AND ORGANISATIONAL BEHAVIOUR Case study 2.1 continued working hard and intently. No longer, for example, did the employees take time to look up from their work and smile or exchange a few words when Eric entered the room. That bothered him a bit because he always had enjoyed chatting with the clerks, but he accepted the loss of the smiles as a small price to pay for the increases in efficiency he hoped for. On the third day, disaster struck. Eric did not notice until mid-morning that someone had carefully written ‘IN’ before ‘Efficiency’ on each of the four posters – and the smiles on the line drawings’ faces had been extended into full-fledged, if subtly sarcastic, grins. Worse, everyone seemed to be studiously ignoring both the posters and him. Even the first-level supervisors said nothing to him about the posters, although Eric noticed that the supervisors, like the clerks, collected in pairs and threes for animated conversation when they were not aware of his presence. When he walked out into the operating area to start his three-hour stint, all eyes looked away and stayed there. He had never felt so completely alone. That evening Eric stayed after everyone else had left; he removed the posters and pondered what to do next. With possibly one or two exceptions, he was sure that the people who worked for him were decent human beings. He knew that he himself was only trying to do his job, to get performance back up to standard. As he had told the employees at the kick-off meeting, this was in the best interest of everybody: the customers, the salesmen, the clerks, himself. So why the hostility towards him and his programme? The root causes? Gradually he began to suspect that the problems he had confronted – high errors and delays, excessive absenteeism and turnover – were merely outcroppings of some more basic difficulty. Perhaps, he thought, he had attacked the symptom rather than the disease. But what was the disease? He considered each of the possibilities. He knew that there was a lot of complaining about the pay and the inflexibility of the hours. But the pay was actually very good, higher than for almost any other non-skilled job available to females in the suburban area – and every year there was a pay increase for everyone, which almost always was greater than the increase in the cost of living. The hours were a problem, he knew, but even those employees who complained the most knew that he had tried mightily to convince the regional office to let him introduce a flexible scheduling plan that would allow the employees to better coordinate their personal and work lives. He had been told that company policy dictated an 8.30 to 5.00 workday and that hours (just like all other personnel policies) were centrally controlled in the interest of company-wide efficiency and regularity. Eric didn’t like the decision (he felt he needed to be given much more personal authority to be able to run his own operation effectively). He did, however, understand that there was some need for central coordination of policy, and he thought that the employees should also be able to see the necessity for it. The hours, he decided, could not conceivably be the root of all the difficulties. He considered briefly the possibility that the employees were simply not capable of doing the work at satisfactory levels of speed and accuracy. However, he knew that could not be the case: all had passed a company-administered ability test before they were hired and all had gone through a rigorous training programme which covered every contingency a person conceivably could face as an information clerk. Besides, the job was not all that difficult; he personally suspected that even the requirement of a high school diploma was superfluous, that anybody who could read and write could handle the job without significant difficulty. No, lack of ability was not the core of the problem. Indeed, as Eric reflected further, it seemed that the reverse could be true: that perhaps the job was so simple and routine that the clerks were bored – and therefore chose to be absent a lot and to loaf whenever they could on the job. But surely the high pay and the pleasantness of the work setting should more than compensate for any such feelings of boredom? Furthermore, holding errors below 2 per cent could provide a real challenge, and loafing on the job would itself probably be more boring than working. Supervision? It seemed most unlikely that this was the root of the difficulty. Each of the four supervisors had been information clerks themselves (although in the old days, when there was no computer and you had to look everything up in a set of reference manuals), and they knew the job inside out. Moreover, he knew from talking with the supervisors that they were genuinely committed to spending as much time as needed to help each clerk do as good a job as possible. Eric had observed each of them working on the floor many times, and there was no question in his mind about how much time and energy they spent in assisting and developing individual clerks. CHAPTER 2 THE NATURE OF ORGANISATIONAL BEHAVIOUR Kipsy CONSIDER THE PLIGHT OF KIPSY Then what? Maybe, he finally concluded, the key was Kipsy. Kipsy had been a thorn in his side (the supervisors agreed) ever since Eric started the job. Although she herself had been working as a clerk for less than a year, she already had emerged as one of the informal leaders of the workforce. Eric found himself agreeing with one of his supervisors who had suggested over coffee one morning that Kipsy alone created as many problems as a dozen other clerks taken together. He was 99 per cent confident, for example, that it was she who had mutilated his signs. He had been recently hearing rumblings that Kipsy was informally talking up the possibility of the clerks unionising, probably even affiliating with some national outfit that had no understanding of the local situation. He had tried to talk with her once. She had showed up unannounced at his office one day, with a long list of complaints about him and the work. His approach had been to listen and hear her out, to see what was troubling her, and then to do something about it – for her own sake, as well as for her supervisor and the company. Thinking back now, however, the main thing he remembered about the conversation (if you could call it a conversation) was her incredible anger. He was perplexed that he could not remember specifically what it was that she had been so mad about. Eric did recall telling her, as the conversation ended, that if she worked hard and effectively on her job for a year or two she would become eligible for enrolment in a company-run training course for a higher paying job. But again, he could not recall whether or not that had interested her. In any case, it was clear that Kipsy was the link pin in the informal network among the clerks – and if they were turning against him and the company, you could be pretty sure that she was right in the middle of it. The question, though, was what to do about it. Fire her? In a very important sense, that would be admitting defeat – and publicly. Talk to her again? That probably would result in nothing more than his getting another load of hostility dumped in his lap, and that he didn’t need. Eric was in trouble, and he knew it. He realised it first when he could not think of a good way to repair the damage that his new motivational programme apparently had created. But he knew it for sure when he found that he was no longer thinking about work except when he was actually at his desk in the office and had to do so. When he started this job he had expected to become totally immersed in it; indeed, he had wanted to be. But now he was psychologically fleeing from his job as much as the clerks seemed to be fleeing from theirs. Kipsy has been an information clerk in Eric’s office for almost a year. In that year she has become increasingly frustrated and unhappy in her work – and she doesn’t know quite what to do about it. Things certainly have not worked out as she had expected them to. Early optimism ... She had applied for the job because a friend told her that the company was a great place to work, that the pay was excellent, and that the people she would be working with were friendly and stimulating. Moreover, it was well known that the company was growing and expanding at a fast clip. That, Kipsy concluded, meant that there was a good chance for advancement for anyone who showed some initiative and performed well on the job. Advancement was important. Throughout her high school years, Kipsy had always been seen as a leader by her classmates, and she had enjoyed that role much more than she had let on at the time. Her grades had been good – mostly As and Bs – and she knew if she had pushed a bit harder she could have obtained almost all As. However, she had decided that participation in school activities, doing afterschool volunteer work, and (importantly) having friends and learning from them were just as important as grades; so she had deliberately let the grades slip a little. The man who interviewed Kipsy for the job was extremely nice – and what he said about the job confirmed her high hopes for it. He even took her into the room filled with the complicated-looking consoles and let her watch some of the people at work. It seemed like it would be great fun – though perhaps a little scary – working with all that computerised equipment. She didn’t know anything at all about computers. When they returned to the hiring area from their visit to the console room, Kipsy’s employment tests had been scored. The interviewer told her that she had scored in the top 10 per cent of all applicants for the job, that all signs pointed to a great future for her in the company, and that she could start training the next day if she wanted. Kipsy accepted the job on the spot. Training for the job was just as exciting as she had expected it to be. The console seemed awfully complicated, and there was no end to the special requests and problems she had to learn how to deal with. The other people working on the job were also very nice, and Kipsy soon had made many new friends. 59 60 PART 1 MANAGEMENT AND ORGANISATIONAL BEHAVIOUR Case study 2.1 continued ... replaced by frustration and disappointment After a few weeks, however, the fun wore off. The kinds of difficult problems she had been trained to solve on the console seemed never to occur. Instead, the calls began to fall into what Kipsy experienced as an endless routine: the green light flashes, the salesman gives the name of a piece of equipment, you look it up in the book and punch the number on the keyboard, you recite the information displayed by the computer back to the salesman, and the green light goes off. Then you wait – maybe only a second, maybe five minutes – for the light to go on again. You never know how long you are going to wait, so you can never think or read or even carry on an uninterrupted conversation with the girl next to you. It was, Kipsy decided, pretty awful. Worse, many of her new friends were quitting. The rumour was that nearly 80 per cent of the people on the job quit every year, and Kipsy was beginning to understand why. Neither she nor any of her friends knew of anybody who had been promoted to management or to a better job from the ranks of the console operators, at least not in the last couple of years. Kipsy was also smart enough to realise that in time the whole operation would be automated – with salesmen punching in their requests for information directly from the field – at which time, she surmised, she and everyone else who had stuck out the job in hopes of something better would be laid off. The only good thing about the job, she concluded, was that she was becoming the informal leader of the work group – and that had its moments. Like the time one of the girls had her planned vacation postponed at short notice, supposedly because absenteeism was so high that everyone had to be available for work merely to keep up with the flow of incoming calls. The girl (and two of her friends) had come to Kipsy and asked what she could do about it. Kipsy had marched straightaway into the manager’s office with the girl, asked for an explanation, and got him to agree to let her take the vacation as planned. That felt awfully good. But such moments were too infrequent to keep her interested and involved – so she found herself making up interesting things to do, just to keep from going crazy. She developed a humorous list, Rules for Handling Salesmen, which she surreptitiously passed around the office, partly in fun but also partly to help the new girls (there always were a lot of new girls) learn the tricks necessary to keep from getting put down by the always impatient, sometimes crude salesmen. She also found that girls having difficulties on the job (again, usually the new workers) often came to her rather than to the supervisors for help – which she gladly gave, despite the obvious disapproval of the supervisors. She even found herself assuming the role of monitor for the group, prodding girls who were not doing their share of the work, and showing new girls who were working too hard the various tricks that could be done to keep the pace of work at a reasonable level (such as ‘busying out’ the machine, when you just couldn’t take any more and needed a break). That was all fun, but as she reflected on it, it just didn’t compensate for the basic monotony of the work or for the picky, almost schoolmarmish attitude of the supervisors. So she was buoyed up when she heard that a new manager was coming, fresh out of school. The rumour mill had it that he was one of the top young managers in the company, and she decided he surely would shake things up a bit as soon as he found out how miserable it was for people who worked in the office. The new boss Eric’s first few days on the job confirmed her high hopes for him: he seemed genuinely interested in learning about the job and in hearing what changes people had to suggest. And he talked directly to the people doing the work, rather than keeping safely out of sight and listening only to what the schoolmarms said people thought and felt. All to the good. Her opinion about Eric’s managerial abilities dropped sharply a few weeks later, however, by what came to be known around the office as the ‘flexible hours fiasco’. Kipsy and two other girls had come up with a proposal for pre-scheduling work hours so that there would be substantially more flexibility in the hours each person would work. The plan was designed so that management would know at least two days ahead of time who would be coming in when. The only cost to the company would be some additional clerical time spent on actually doing the scheduling, and Kipsy had obtained agreement from almost everyone in the office to share in the clerical tasks, in their own time. Eric had seemed receptive to the plan when Kipsy first presented it to him, and said only that he would have to check it out with his superiors before instituting it. Nothing more was heard about the plan for about two weeks. Finally Eric called Kipsy into his office and (after a good deal of talking around the issue) reported that ‘the people upstairs won’t let us do it’. CHAPTER 2 THE NATURE OF ORGANISATIONAL BEHAVIOUR Kipsy’s respect for Eric plummeted. Rather than give a flat no, he had wriggled around for two weeks, and then lamely blamed the decision on ‘the people upstairs’. She knew very well that the manager of an office could run his office however he pleased, so long as the work got done. And here was Eric, the bright new manager on the way up: ■ ■ ■ He wouldn’t go along with an employee-initiated proposal for making their life at work more bearable. He refused to take personal responsibility for that decision. He even had the gall to ask Kipsy to help ‘explain to the girls’ how hard he had tried to get the plan approved, and how sad he was that it had been turned down. Kipsy’s response was a forced smile, an elaborately sympathetic ‘Of course I’ll help’, and a quick escape from his office. Kipsy’s demands She took the Monday of the next week off, to think about whether or not she should quit and try to find a better job. At the end of the day, she made up a list of what she wanted from her work, what she was getting, and whether or not things would improve if she stuck with the job: My wants Am I getting them? Hope for improvement 1 Good pay OK, not great Little, till my hair turns grey 2 Interesting people Fine No change, except friends keep leaving 3 Interesting work Dismal Zero 4 Chance to show initiative and personal responsibility None No hope 5 Chance to contribute to an organisation I believe in Low Ha! The next day, Tuesday, she took her list and went to see Eric. After listening to a fatherly lecture on the importance of not missing work, especially on Mondays when the workload was heaviest, she began to tell him how upset she was. She told him that the only thing she got from working hard on the job was a backache every evening. She told him she had been misled about the chances for promotion on the job, and she asked him, as politely as she knew how, what he suggested she should do. Eric’s response blew her mind. There was a new programme, he said, in which people who did well on entry-level jobs for a few years could apply for advanced training in a technical specialty. This training would be done at company expense and in company time, and would qualify her for a promotional-type transfer, whenever openings in her chosen specialty developed. If she worked hard and was rated high on the quarterly supervisory assessments, Eric said, he would be prepared to nominate her for the advanced training. It was important, however, he emphasised, that she behave herself – no unnecessary absences, high work productivity, good ratings by her supervisors. Otherwise, she certainly would not be selected by ‘the people upstairs’ for the new programme. Something snapped. What kind of a fool did he think she was? How long did he expect her to wait for a ‘chance to be nominated’ for some foggy ‘technical training programme’? She started telling him, no holds barred now, no false politeness, exactly what she thought of the job, of the supervisors, even of the way he was running the office. The more she talked, the madder she got – until finally she got up, almost in tears, and ran out leaving behind only the reverberations of a well-slammed door. Kipsy’s dilemma She was ashamed later, of course. She knew she would be, and she was, but she also was too embarrassed to go up to Eric and apologise. Which was too bad, because she suspected that behind it all Eric was probably a decent man, and maybe even somebody she could learn to like and respect – if only he would let himself be human once in a while. However, she knew there was nothing she could do to change the way Eric did his job; the first move clearly had to be his. It could be a long wait, Kipsy decided. In the meantime she would come to work, try to minimise her backaches and upsets, and continue to think about finding another job. Of one thing she was sure: no more ‘bright ideas’ for improving things at the office would come from her; they brought nothing but grief. Furthermore, she was no longer going to worry so much if she happened to misremember a catalogue number or accidentally disconnect a salesman. If all they wanted was a machine, that was all they were going to get. Kipsy found herself much less able to be cavalier about her work than she had thought she could be. 61 62 PART 1 MANAGEMENT AND ORGANISATIONAL BEHAVIOUR Case study 2.1 continued As hard as she tried not to care when she made errors, the distressing fact was that mistakes still did bother her. And she still felt like an unreconstituted sinner when she was a few minutes late for work. It took the ‘Increase Efficiency’ programme to finally break her completely. It was not to be believed: an evening meeting, complete with supposedly inspirational messages from all the bosses about how we all had to pitch in and help the company make more money; grade school posters on all the walls imploring people to work harder; and, to top it all, all the bosses, even Eric, standing around for hours at a time, looking over everybody’s shoulders, day after day. Did Eric really believe that treating people like children would make them work harder? She could have told him straight out beforehand that the programme would make things worse rather than better. But of course he didn’t ask. Kipsy went on the offensive. She knew it was wrong, but she also knew she had to do something to preserve her sanity. Her first target was the signs; she and another girl stayed late in the rest room and, when everybody else had left, carefully changed the lettering of the signs to read ‘Increase INEfficiency’, and turned the smiling face on each sign into an obviously sarcastic grin. Kipsy also began discussing with the other girls the possibility of forming a club, which would be partly social but which could possibly develop into a vehicle for doing some hard-nosed bargaining with Eric. It didn’t work. Changing the signs, after the initial thrill, only made her feel more guilty. And even though virtually everyone in the office shared her dismay about the monotony of the work and was as upset as she about Eric and his ‘Increase Efficiency’ programme, nobody was very excited about forming a club. Some thought it wouldn’t have any impact and would be a waste of time; others thought it sounded like the first step towards unionisation, which they didn’t want. So the club idea died. Kipsy was depressed. What should she do? Quit? Her preliminary explorations had not yet turned up any jobs which were much better – and most paid less than this one. Besides, to quit would be to admit publicly her inability to change anything in the office. She was supposed to be the leader of the girls in the office; she shouldn’t become just one more tally towards the 80 per cent a year who left. Talk to Eric again? She seriously doubted that he would listen to one word she said. And she doubted equally seriously that she could keep herself from blowing up again at him – which would accomplish nothing and help no one. Shut up and stick it out? That was what she had been trying for the last three months. Without noticeable success. What, then? YOUR TASKS (a) Analyse the issues of management and organisational behaviour which are raised in this case study. (b) Suggest solutions to the problems faced by Eric and Kipsy. NOTES AND REFERENCES 1. A summary of some merits in understanding organisational behaviour theory and the role of management is given in Mullins, L. J. ‘The Organisation and the Individual’, Administrator, vol. 7, no. 4, April 1987, pp. 11–14. 2. ’Introduction to Module 6, Organizational Behaviour’, Financial Times Mastering Management, FT Pitman Publishing (1997), p. 216. 3. See, for example: Luthans, F. Organisational Behaviour, Seventh edition, McGraw-Hill (1995). 4. See, for example: Robbins, S. P. Organizational Behavior: Concepts, Controversies, Applications, Eighth edition, Prentice-Hall (1998). 5. For further details of recurring themes in organisational behaviour and premises about life in organisations see, 6. 7. 8. 9. for example: Porter, L. W., Lawler, E. E. and Hackman, J. R. Behaviour in Organisations, McGraw-Hill (1975). Wilson, F. M. Organzational Behaviour: A Critical Introduction, Oxford University Press (1999). McPhee, N. ‘Gaining Insight on Business and Organisational Behaviour: the Qualitative Dimension’, International Journal of Market Research, vol. 44, Winter 2002, pp. 53–72. Yip, G. S. ‘Global strategy in the Twenty-first Century’, in Crainer, S. and Dearlove, D. (eds) Financial Times Handbook of Management, Second edition, Financial Times Prentice Hall (2001), p. 151. Morgan, G. Creative Organization Theory, Sage Publications (1989), p. 26. CHAPTER 2 THE NATURE OF ORGANISATIONAL BEHAVIOUR 10. Hellriegel, D., Slocum, J. W. and Woodman, R. W. Organizational Behavior, Eighth edition, South-Western Publishing (1998), p. 5. 11. Wood, J. ‘Deep Roots and Far From a “Soft” Option’, Financial Times Mastering Management, FT Pitman Publishing (1997), p. 217. 12. Bennis, W. ‘Foreword’, in Cloke, K. and Goldsmith, J. The End of Management and the Rise of Organizational Democracy, Jossey-Bass (2002), p. ix. 13. Gratton, L. Living Strategy: Putting People at the Heart of Corporate Purpose, Financial Times Prentice Hall (2000), pp. 12–13. 14. Morgan, G. Images of Organization, Second edition, Sage Publications (1997). 15. Drummond, H. Introduction to Organizational Behaviour, Oxford University Press (2000). 16. Goldthorpe, J. H., Lockwood, D., Bechofer, F. and Platt, J. The Affluent Worker, Cambridge University Press (1968). 17. Herman, S.W. ‘How Work Gains Meaning in Contractual Time: a narrative model for reconstructing the work ethic’, Journal of Business Ethics, vol. 38, no. 1–2, June 2002, pp. 65–79. 18. Knights, D. and Willmott, H. Management Lives: Power and Identity in Work Organizations, Sage Publications (1999). 19. Reeves, R. ‘Reality Bites’, Management Today, March 2003, p. 35. 20. Cartwright, J. Cultural Transformation, Financial Times Prentice Hall (1999), p. 27. 21. Oliver, J. ‘Losing Control’, Management Today, June 1998, pp. 32–8. 22. See, for example, Argyris, C. Integrating the Individual and the Organization, John Wiley & Sons (1964). 23. ’In Celebration of the Feel-good Factor’, Professional Manager, March 1998, p. 6. 24. Bassett, G. ‘The Case against Job Satisfaction’, Business Horizons, vol. 37, no. 3, May–June 1994, p. 62 and p. 63. 25. Egan, G. ‘The Shadow Side’, Management Today, September 1993, pp. 33–8. 26. See, for example, Robinson, G. ‘Improving performance through people’, The British Journal of Administrative Management, September/October 1999, pp. 4–5. 27. Chowdhury, S. Management 21C, Financial Times Prentice Hall (2000), p. 119. 28. See, for example: Schein, E. H. Organizational Psychology, Third edition, Prentice-Hall (1988). 29. Kotter, J. P. ‘The Psychological Contract: Managing the Joining-Up Process’, California Management Review, vol. 15, no. 3, 1973, pp. 91–9. 30. Stalker, K. ‘The Individual, the Organisation and the Psychological Contract’, The Institute of Administrative Management, July/August 2000, pp. 28, 34. 31. Cartwright, J. Cultural Transformation, Financial Times Prentice Hall (1999), p. 39. 32. Emmott, M. ‘The Psychological Contract: Managers Do Make a Difference’, Manager, The British Journal of Administrative Management, September/October 2001, p. 15. 33. McBain, R. ‘The Role of Human Resource Management and the Psychological Contract’, Manager Update, vol. 8, no. 4, Summer 1997, pp. 22–31. 34. Stalker, K. ‘The Individual and the Organisation’, Student Adviser Issue No. 51, The Institute of Administrative Management, Spring 2003. 35. Hiltrop, J. M. ‘Managing the Changing Psychological Contract’, Employee Relations, vol. 18, no. 1, 1996, pp. 36–49. 36. Stiles, P., Gratton, L., Truss, C., Hope-Hailey, V. and McGovern, P. ‘Performance Management and the Psychological Contract’, Human Resource Management Journal, vol. 7, no. 1, 1997, pp. 57–66. 37. Ghoshal, S., Bartlett, C. A. and Moran, P. ‘Value Creation: The New Millennium Management Manifesto’, in Chowdhury, S. Management 21C, Financial Times Prentice Hall (2000), pp. 121–40. 38. Peter, L. J. and Hull, R. The Peter Principle, Pan Books (1970), p. 22. 39. Ibid., p. 56. 40. Parkinson, C. N. Parkinson’s Law, Penguin Modern Classics (2002), p. 14 41. HRH The Duke of Edinburgh, ‘Introduction’ to Parkinson, C. N. Parkinson’s Law, Penguin Modern Classics (2002), pp. 9–10. 42. Herbertson, I. ‘Books’, Management Today, May 2000, p. 4. 43. Tayeb, M. The Management of a Multicultural Workforce, John Wiley & Sons (1996). 44. Schneider, S. C. and Barsoux, J. Managing Across Cultures, Second edition, Financial Times Prentice Hall (2003), p. 9. 45. Thompson, P. and McHugh, D. Work Organisations: A Critical Introduction, Third edition, Palgrave (2002), p. 81. 46. Brooks, I. Organisational Behaviour: Individuals Groups and Organisation, Second edition, Financial Times Prentice Hall (2003), p. 264. 47. Trompenaars, F. ‘Trans-Cultural Competence’, People Management, 22 April 1999, p. 31. 48. Francesco, A. M. and Gold, B. A. International Organizational Behavior: Text, Readings, Cases and Skills, Prentice Hall (1998), p. 103. 49. Schneider, S. C. and Barsoux, J. Managing Across Cultures, Second edition, Financial Times Prentice Hall (2003) p. 167. 50. Ibid., p. 86. 51. Francesco, A. M. and Gold, B A. International Organizational Behavior: Text, Readings, Cases and Skills, Prentice Hall (1998), p. 144. 52. Adler, N. J. International Dimensions of Organisational Behaviour, Third edition, South Western College Publishing (1997). 53. Robbins, S. Essentials of Organizational Behaviour, Third edition, Prentice Hall (1992), p. 14. 54. Maurice, M., Sorge, A. and Warner, M. ‘Societal Differences in Organising Manufacturing Units’, Organisation Studies (1980), vol. 1, no. 1, pp. 63–91. 55. Hofstede, G. Culture’s Consequences: International Differences in Work-related Values, Sage Publications (1980). 56. Trompenaars, F. and Hampden-Turner, C. Riding the Waves of Culture, Second edition, Nicholas Brealey (1999) 57. Hall, E. T. and Hall, M. R. ‘Key Concept: Underlying Structures of Culture’, in Lane, H. W., Di Stefano, J. J., and Masnevski, M. L. International Management Behavior, Third edition, Cambridge, MA: Blackwell, (1997). 63 64 PART 1 MANAGEMENT AND ORGANISATIONAL BEHAVIOUR 58. Tayeb, M. International Management: Theories and Practices, Financial Times Prentice Hall (2003). 59. Brooks, I. Organisational Behaviour: Individuals, Groups and Organisation, Second edition, Financial Times Prentice Hall (2003). 60. Hofstede, G. Culture’s Consequences: International Differences in Work-related Values, Sage Publications (1980). 61. Hofstede, G. and Bond, M. H. ‘The Confucius Connection: From Cultural Roots to Economic Growth’ Organisational Dynamics, Spring 1988, pp. 4–21. FT 62. Holden, N. J. Cross-Cultural Management: A Knowledge Management Perspective, Financial Times Prentice Hall (2002), p. 51. 63. Trompenaars, F. and Hampden-Turner, C. Riding the Waves of Culture, Second edition, Nicholas Brealey (1999). 64. Hall, E. T. and Hall, M. R. Understanding Cultural Differences, Intercultural Press (1990). 65. Grint, K. The Sociology of Work, Second edition, Polity (1998), p. 298. 66. Ibid., p. 298. 67. Thompson, P. and McHugh, D. Work Organisations: A Critical Introduction , Third edition, Palgrave (2002), p. 74. Use the Financial Times to enhance your understanding of the context and practice of management and organisational behaviour. Refer to articles 1, 10, 12 and 19 in the BUSINESS PRESS section at the end of the book for relevant reports on the issues explored in this chapter. 3 APPROACHES TO ORGANISATION AND MANAGEMENT Management is a discursive subject and much has been written about it. The study of organisations and management theory has, therefore, to proceed on a broad front. It is the comparative study of the different approaches which will yield benefits to the manager. The study of organisations, their structure and management is important for the manager. Identification of major trends in organisational behaviour, and the work of leading writers, provide a perspective on concepts and ideas discussed in more detail in other chapters.1 LEARNING OUTCOMES After completing this chapter you should be able to: explain the relationships between management theory and practice; identify major trends in the development of organisational behaviour and management thinking; contrast main features of different approaches to organisation and management; evaluate the relevance of these different approaches to the present-day management of organisations; assess the value of the study of management theory and different approaches to organisation and management; recognise the relationship between the development of theory, behaviour in organisations and management practice; establish a basis for consideration of aspects of management and organisational behaviour discussed in following chapters. Photo: Larry Mulvehill/Science Photo Library Although there might be general agreement from time to time on what constitutes best management practice, the theoretical ingredients will tend to vary. Management theories are therefore contestable rather than definitive and, although there is a sense of progressive, evolutionary refinement, there is no master narrative to reassure us that the latest theory is necessarily the best. John Sheldrake Management Theory: From Taylorism to Japanization, International Thompson Business Press (1996) 66 PART 1 MANAGEMENT AND ORGANISATIONAL BEHAVIOUR MANAGEMENT THEORY Writing on organisation and management, in some form or another, can be traced back thousands of years.2 However, the systematic development of management thinking is viewed, generally, as dating from the end of the nineteenth century with the emergence of large industrial organisations, and the ensuing problems associated with their structure and management.3,4 A central part of the study of organisation and management is the development of management thinking and what might be termed management theory. The application of theory brings about change in actual behaviour. Managers reading the work of leading writers on the subject might see in their ideas and conclusions a message about how they should behave. This will influence their attitudes towards management practice. As McGregor puts it: Every managerial act rests on assumptions, generalizations, and hypotheses – that is to say, on theory. Our assumptions are frequently implicit, sometimes quite unconscious, often conflicting; nevertheless, they determine our predictions that if we do a, b will occur. Theory and practice are inseparable.5 Importance of management theory The study of management theory is important, therefore, for the following reasons: ■ ■ ■ ■ ■ What leading writers say is an important part of the study of management. It is necessary to view the interrelationships between the development of theory, behaviour in organisations and management practice. An understanding of the development of management thinking helps in understanding principles underlying the process of management. Knowledge of the history helps in understanding the nature of management and organisational behaviour, and reasons for the attention given to main topic areas. Many of the earlier ideas are of continuing importance to the manager and later ideas on management tend to incorporate earlier ideas and conclusions. There is much truth in the saying that every living practitioner is prisoner to the ideas of a dead theorist. Immunized by their daily confrontation with the ‘real world’ corporate managers typically exhibit a healthy distrust of theory that has, in general, served them well.6 DEVELOPMENTS IN MANAGEMENT AND ORGANISATIONAL BEHAVIOUR It is helpful, therefore, to trace major developments in management and organisational behaviour, and what has led to the concentration of attention on such topics as structure, motivation, groups, leadership and organisation development. Miner makes the point that the more that is known about organisations and their methods of operation, the better the chances of dealing effectively with them. Understanding may be more advanced than prediction, but both provide the opportunity to influence or to manage the future. Theory provides a sound basis for action.7 However, if action is to be effective, the theory must be adequate and appropriate to the task and to improved organisational performance. It must be a ‘good’ theory. In order to help identify main trends in the development of organisational behaviour and management theory, it is usual to categorise the work of writers into various ‘approaches’, based on their views of organisations, their structure and management. Although a rather simplistic process it does provide a framework in which to help direct study and focus attention on the progression of ideas concerned with improving organisational performance. CHAPTER 3 APPROACHES TO ORGANISATION AND MANAGEMENT Figure 3.1 Main approaches to organisation, structure and management A framework of analysis There are, however, many ways of categorising these various approaches. For example, Skipton attempts a classification of 11 main schools of management theory.8 Whatever form of categorisation is adopted, it is possible to identify a number of other approaches, or at least sub-divisions of approaches, and cross-grouping among the various approaches. The choice of a particular categorisation is therefore largely at the discretion of the observer. The following analysis will revolve around a framework based on four main approaches: ■ ■ ■ ■ classical – including scientific management and bureaucracy human relations – including neo-human relations systems contingency (see Figure 3.1). However, attention is also drawn to other ‘approaches’ or ideas, including: ■ ■ ■ decision-making social action postmodernism (see Figure 3.3, p. 88). THE CLASSICAL APPROACH The classical writers thought of the organisation in terms of its purpose and formal structure. They placed emphasis on the planning of work, the technical requirements of the organisation, principles of management, and the assumption of rational and logical behaviour. The analysis of organisation in this manner is associated with work carried out initially in the early part of the last century, by such writers as Taylor, Fayol, Urwick, Mooney and Reiley, and Brech. Such writers were laying the foundation for a comprehensive theory of management. A clear understanding of the purpose of an organisation is seen as essential to understanding how the organisation works and how its methods of working can be improved. Identification of general objectives would lead to the clarification of purposes and responsibilities at all levels of the organisation, and to the most effective structure. Attention is given to the division of work, the clear definition of duties and responsibilities, and maintaining specialisation and co-ordination. Emphasis is on a hierarchy of management and formal organisational relationships. 67 68 PART 1 MANAGEMENT AND ORGANISATIONAL BEHAVIOUR Sets of principles The classical writers (also variously known as the formal or scientific management writers – although scientific management is really only a part of the classical approach) were concerned with improving the organisation structure as a means of increasing efficiency. They emphasised the importance of principles for the design of a logical structure of organisation. Their writings were in a normative style and they saw these principles as a set of ‘rules’ offering general solutions to common problems of organisation and management. Most classical writers had their own set of principles but among the most publicised are those of Fayol and Urwick. Fayol recognised there was no limit to the principles of management but in his writing advocated 14.9 Urwick originally specified eight principles, but these were revised to ten in his later writing.10 (See Chapters 6 and 15.) Mooney and Reiley set out a number of common principles which relate to all types of organisations. They place particular attention on: ■ ■ ■ the principle of co-ordination – the need for people to act together with unity of action, the exercise of authority and the need for discipline; the scalar principle – the hierarchy of organisation, the grading of duties and the process of delegation; and the functional principle – specialisation and the distinction between different kinds of duties.11 Brech attempts to provide a practical approach to organisation structure based on tried general principles as opposed to the concentration on specific cases or complex generalisations of little value to the practising manager. He sets out the various functions in the organisation and the definition of formal organisational relationships.12 Although clearly a strong supporter of the formal approach in some of his views such as, for example, on the principle of span of control, Brech is less definite than other classical writers and recognises a degree of flexibility according to the particular situation. Brech does place great emphasis, however, on the need for written definition of responsibilities and the value of job descriptions as an aid to effective organisation and delegation. This work builds on the ideas of earlier writers, such as Urwick, and, therefore, provides a comprehensive view of the classical approach to organisation and management. Evaluation of the classical approach The classical writers have been criticised generally for not taking sufficient account of personality factors, and for creating an organisation structure in which people can exercise only a limited control over their work environment. The idea of sets of principles to guide managerial action has also been subject to much criticism. For example, Simon writes: Organisational design is not unlike architectural design. It involves creating large, complex systems having multiple goals. It is illusory to suppose that good designs can be created by using the so-called principles of classical organisation theory.13 Research studies have also expressed doubt about the effectiveness of these principles when applied in practice.14 However, although the work of the classical writers is sometimes regarded as an out-ofdate approach it does focus attention on important factors in the study of organisation and management. Technical and structural factors are important considerations in improving organisational performance. Yet, while attention to formal structure is important, it is also necessary to consider the people who work within the structure. The classical approach prompted the start of a more scientific view of management and attempted to provide some common principles applicable to all organisations. These principles are still of some relevance in that they provide general guidelines to APPROACHES TO ORGANISATION AND MANAGEMENT CHAPTER 3 the structuring and efficiency of organisations. They provide a useful starting point in attempting to analyse the effectiveness of the design of organisation structure. However, the application of these principles must take full account of: ■ ■ Major subgroupings the particular situational variables of each individual organisation; and the psychological and social factors relating to members of the organisation. Two major ‘sub-groupings’ of the classical approach are: 1 scientific management, and 2 bureaucracy. SCIENTIFIC MANAGEMENT Many of the classical writers were concerned with the improvement of management as a means of increasing productivity. At this time emphasis was on the problem of obtaining increased productivity from individual workers through the technical structuring of the work organisation and the provision of monetary incentives as the motivator for higher levels of output. A major contributor to this approach was F. W. Taylor (1856–1917), the ‘father’ of scientific management.15 Taylor believed that in the same way that there is a best machine for each job, so there is a best working method by which people should undertake their jobs. He considered that all work processes could be analysed into discrete tasks and that by scientific method it was possible to find the ‘one best way’ to perform each task. Each job was broken down into component parts, each part timed, and the parts rearranged into the most efficient method of working. Principles to guide management Taylor was a believer in the rational–economic needs concept of motivation. He believed that if management acted on his ideas, work would become more satisfying and profitable for all concerned. Workers would be motivated by obtaining the highest possible wages through working in the most efficient and productive way. Taylor was concerned with finding more efficient methods and procedures for co-ordination and control of work. He set out a number of principles to guide management. These principles are usually summarised as: ■ ■ ■ Photo: Derek Allan/Travel Ink ■ Scientific management on a building site the development of a true science for each person’s work; the scientific selection, training and development of the workers; co-operation with the workers to ensure work is carried out in the prescribed way; the division of work and responsibility between management and the workers. In his famous studies at the Bethlehem Steel Corporation, Taylor, who was appointed as a management consultant, applied his ideas on scientific management to the handling of pig iron. A group of 75 men were loading an aver1 age of l2 2- tons per man per day. Taylor selected a Dutch labourer, called Schmidt, whom he reported to be a ‘high-priced’ man with a reputation for placing a high value on money, and a man of limited mental ability. 69 70 PART 1 MANAGEMENT AND ORGANISATIONAL BEHAVIOUR By following detailed instructions on when to pick up the pig iron and walk, and when to 1 sit and rest, and with no back talk, Schmidt increased his output to 472- tons per day. He maintained this level of output throughout the three years of the study. In return Schmidt received a 60 per cent increase in wages compared with that paid to the other men. 1 One by one other men were selected and trained to handle pig iron at the rate of 472tons per day and in return they received 60 per cent more wages. Taylor drew attention to the need for the scientific selection of the workers. When the other labourers in the group were trained in the same method only one in eight was physically capable of the 1 effort of loading 472- tons per day, although there was a noticeable increase in their level of output. Reactions against scientific management There were strong criticisms of, and reaction against, scientific management methods from the workers who found the work boring and requiring little skill. Despite these criticisms Taylor attempted to expand the implementation of his ideas in the Bethlehem Steel Corporation. However, fears of mass redundancies persuaded the management to request Taylor to moderate his activities. However, Taylor’s belief in his methods was so strong that he would not accept management’s interference and eventually his services were dispensed with. Scientific management was applied for a time in other countries with similar criticisms and hostile reactions. The ideas of scientific management were also adopted in the American Watertown Arsenal despite the lingering doubts of the controller. He was not convinced about the benefits of paying bonuses based on methods which reduced time taken to complete a job; also the workers reacted unfavourably to time and motion studies, and he was fearful of a strike. The controller eventually gave way, however, and the approach of scientific management was adopted – to be followed almost immediately by a strike of moulding workers. The strike at Watertown Arsenal led to an investigation of Taylor’s methods by a House of Representatives Committee which reported in 1912. The conclusion of the committee was that scientific management did provide some useful techniques and offered valuable organisational suggestions, but gave production managers a dangerously high level of uncontrolled power. The studies at Watertown Arsenal were resumed but the unions still retained an underlying hostility towards scientific management. A subsequent attitude survey among the workers revealed a broad level of resentment and hostility, by both union and non-union members, to scientific management methods. As a result of this report Taylor’s methods of time study were banned in defence establishments by the Senate. Functional foremen Taylor also put forward the idea of functional foremanship under which workers would be responsible simultaneously to eight different, specialist first-line supervisors. The eight supervisors were divided into two groups: 1 Planning, concerned with (i) order of work, (ii) instruction cards, (iii) time and costing and (iv) discipline; and 2 Performance, concerned with (v) gang boss, (vi) speed boss, (vii) repair boss and (viii) inspector. The idea of functional foremen represented a practical application of the idea of specialisation and the belief that each person’s work should, as far as possible, be confined to a single leading function. However, such an arrangement gives rise to problems of co-ordination, role conflict and unity of command. The idea of functional foremanship appears not to have become very popular and to have had little application in practice. CHAPTER 3 Taylorism as management control APPROACHES TO ORGANISATION AND MANAGEMENT There has also been considerable interest in ‘Taylorism’ as representing a system of management control over workers. Taylor placed emphasis on the content of a ‘fair day’s work’ and on optimising the level of workers’ productivity. A major obstacle to this objective was ‘systematic soldiering’ and what Taylor saw as the deliberate attempt by workers to promote their own best interests and to keep employers ignorant of how fast work, especially piece-rate work, could be carried out. According to Braverman, scientific management starts from the capitalist point of view and method of production, and the adaptation of labour to the needs of capital. Taylor’s work was more concerned with the organisation of labour than with the development of technology. A distinctive feature of Taylor’s thought was the concept of management control.16 Braverman suggests that Taylor’s conclusion was that workers should be controlled not only by the giving of orders and maintenance of discipline, but also by removing from them any decisions about the manner in which their work was to be carried out. By division of labour, and by dictating precise stages and methods for every aspect of work performance, management could gain control of the actual process of work. The rationalisation of production processes and division of labour tends to result in the de-skilling of work and this may be a main strategy of the employer.17 Cloke and Goldsmith also suggest that Taylor was the leading promoter of the idea that managers should design and control the work process scientifically in order to guarantee maximum efficiency. He believed in multiple layers of management to supervise the work process and in rigid, detailed control of the workforce. Taylor’s theories justified managerial control over the production process and removed decision making from employees and from owners as well. The increasingly authoritative operational role of management diminished the direct involvement of owners in day-to-day decision making. Managers saw this as an opportunity to solidify their power and adopted Taylor’s ideas wholesale. In the process, they affirmed efficiency over collaboration, quantity over quality, and cost controls over customer service.18 RELEVANCE OF SCIENTIFIC MANAGEMENT While Taylor’s work is often criticised today it should be remembered that he was writing at a time of industrial reorganisation and the emergence of large, complex organisations with new forms of technology. Taylor’s main concern was with the efficiency of both workers and management. He believed his methods of scientific management would lead to improved management–labour relations, and contribute to improved industrial efficiency and prosperity. Taylor adopted an instrumental view of human behaviour together with the application of standard procedures of work. Workers were regarded as rational, economic beings motivated directly by monetary incentives linked to the level of work output. Workers were viewed as isolated individuals and more as units of production to be handled almost in the same way as machines. Hence, scientific management is often referred to as a machine theory model. The work of Taylor continues to evoke much comment and extreme points of view. For example, Rose suggests that: It is difficult to discuss the ‘contribution’ of F. W. Taylor to the systematic study of industrial behaviour in an even-tempered way. The sheer silliness from a modern perspective of many of his ideas, and barbarities they led to when applied in industry, encourage ridicule and denunciation.19 The theme of inefficiency Rose argues that Taylor’s diagnosis of the industrial situation was based on the simple theme of inefficiency. Among his criticisms are that Taylor selected the best workers for his experiments and assumed that workers who were not good at one particular task 71 72 PART 1 MANAGEMENT AND ORGANISATIONAL BEHAVIOUR would be best at some other task. There is, however, no certainty of this in practice. Taylor regarded workers from an engineering viewpoint and as machines, but the one best way of performing a task is not always the best method for every worker. The reduction of physical movement to find the one best way is not always beneficial and some ‘wasteful’ movements are essential to the overall rhythm of work. Rose also argues that the concept of a fair day’s pay for a fair day’s work is not purely a technical matter. It is also a notion of social equity and not in keeping with a scientific approach. On the other hand, however, Drucker claims that: Frederick Winslow Taylor may prove a more useful prophet for our times than we yet recognize … Taylor’s greatest impact may still be ahead … the under-developed and developing countries are now reaching the stage where they need Taylor and ‘scientific management’ … But the need to study Taylor anew and apply him may be the greatest in the developed countries.20 According to Drucker, the central theme of Taylor’s work was not inefficiency but the need to substitute industrial warfare by industrial harmony. Taylor sought to do this through: ■ ■ ■ ■ higher wages from increased output; the removal of physical strain from doing work the wrong way; development of the workers and the opportunity for them to undertake tasks they were capable of doing; and elimination of the boss by the duty of management to help the workers. Drucker also suggests that Taylor’s idea of functional foremen can be related to what is now known as matrix organisation (matrix organisation is discussed in Chapter 15). Support for Drucker’s views appears to come from Locke who asserts that much of the criticism of Taylor is based on a misunderstanding of the precepts and that many of his ideas are accepted by present-day managers.21 Impetus to management thinking Whatever the opinions on scientific management, Taylor and his disciples have left to modern management the legacy of such practices as work study, organisation and methods, payment by results, management by exception and production control. The development of mass assembly line work, invented by Henry Ford in 1913 (’Fordism’) and which dominated production methods in western economies can be seen to have many common links with the ideas of scientific management.22 The principles of Taylor’s scientific approach to management appear still to have relevance today. We can still see examples of Taylorism alive and well, and management practices based on the philosophy of his ideas. As an example, Figure 3.2 shows a ‘Hanger Insertion Programme’ for a large American department store. Large hotel organisations often make use of standard recipes and performance standard manuals, and it is common for housekeeping staff to have a prescribed layout for each room with training based on detailed procedures and the one best way. Staff may be expected to clean a given number of rooms per shift with financial incentives for additional rooms. Whatever else Taylor did, at least he gave a major impetus to the development of management thinking and the later development of organisational behaviour. For example, Crainer and Dearlove suggest that although Taylor’s theories are now largely outdated they still had a profound impact throughout the world and his mark can be seen on much of the subsequent management literature.23 And Stern goes a stage further: The ‘scientific management’ of Frederick Taylor … shaped the first coherent school of thought with application to the industrialised world. He was our first professional guru and Taylorism – with its twin goals of productivity and efficiency – still influences management thinking 100 years on.24 CHAPTER 3 APPROACHES TO ORGANISATION AND MANAGEMENT KEY IDEAS Hanger Insertion ● The new programme involving the process of hanging merchandise on hangers efficiently and effectively. The purposes of this new programme: ● To assist the stores in better customer service – by having the merchandise ready to go on the floor, saving space in the stockroom, and creating customer goodwill. ● To increase the units per hour produced. ● To perform the job duties as efficiently and effectively as possible. TECHNIQUES ● Keep the necessary items needed in your range. All supplies should be within arm’s reach. For example, place the trash bin next to you, have your hanger supply near you. You should not need to take any steps. ● For ANY prepack, ● When removing hangers from the merchandise, have the merchandise in a group on the unpack table; remove these hangers working from the front to the back. ● When inserting hangers, as a group, insert working from the back to the front of the group on the unpack table. Hang pieces as a group. ● If merchandise is bulky, ● When possible, it is more efficient to remove all the plastic at once after the merchandise is hung. ● When hanging pants, skirts, etc., slip the hanger over both sides of the piece of merchandise and push metal clips down at the same time. This will alleviate additional steps. ● When pants are in plastic and hangers have to be removed, hang them first, take pants off hangers, lay on table, throw away plastic, insert hangers. ● When having to button pants, skirts, etc., take the top of the button through the hole first. This makes the process flow easier and more efficient. ● Put your supply of hangers in the cover of a tote and place on the table next to you. Unpack merchandise in the prepack or unpack enough of the prepack in the amount to be placed on the trolley, tearing the plastic off of the entire group. Lay the merchandise out on the unpack table, and if applies, unfold each piece, removing tissue etc. Insert the hangers and hang the entire group of merchandise at once. Leave merchandise folded, remove all of the plastic at once, insert hangers for merchandise unpacked, hang all pieces on the trolley, then remove at the same time all excess plastic, clips etc. Figure 3.2 Hanger Insertion Programme – an example of scientific management It is difficult to argue against the general line of Taylor’s principles but they are subject to misuse. What is important is the context and manner in which such principles are put into effect. There is arguably one best way technically to perform a job particularly, for example, with factory assembly line production. However, account needs to be taken of human behaviour. People tend to have their preferred way of working and the need for variety and more interesting or challenging tasks. Provided work is carried out safely and to a satisfactory standard and completed on time, to what extent should management insist on the ‘one best way’? It seems that Taylor did not so much ignore (as is often suggested) but was more unaware of the complexity of human behaviour in organisations and the importance 73 74 PART 1 MANAGEMENT AND ORGANISATIONAL BEHAVIOUR of the individual’s own feelings and sentiments, group working, managerial behaviour and the work environment. However, we now have greater knowledge about social effects within the work organisation, and about the value of money, incentives, motivation, and job satisfaction and performance. BUREAUCRACY A form of structure to be found in many large-scale organisations is bureaucracy. Its importance in the development of organisation theory means that it is often regarded as a sub-division under the classical heading and studied as a separate approach to management and the organisation of work. The ideas and principles of the classical writers were derived mainly from practical experience. Writers on bureaucracy, however, tend to take a more theoretical view. Weber, a German sociologist, showed particular concern for what he called ‘bureaucratic structures’, although his work in this area came almost as a side issue to his main study on power and authority.25 He suggested that ‘the decisive reason for the advance of bureaucratic organisation has always been its purely technical superiority over any other form of organisation’. Weber pointed out that the definition of tasks and responsibilities within the structure of management gave rise to a permanent administration and standardisation of work procedures notwithstanding changes in the actual holders of office. The term ‘bureaucracy’ has common connotations with criticism of red tape and rigidity, though in the study of organisations and management it is important that the term is seen not necessarily in a deprecative sense but as applying to certain structural features of formal organisations. Weber analysed bureaucracies not empirically but as an ‘ideal type’ derived from the most characteristic bureaucratic features of all known organisations. He saw the development of bureaucracies as a means of introducing order and rationality into social life. Main characteristics of bureaucracies Weber did not actually define bureaucracy but did attempt to identify the main characteristics of this type of organisation. He emphasised the importance of administration based on expertise (rules of experts) and administration based on discipline (rules of officials). ■ ■ ■ ■ ■ ■ The tasks of the organisation are allocated as official duties among the various positions. There is an implied clear-cut division of labour and a high level of specialisation. A hierarchical authority applies to the organisation of offices and positions. Uniformity of decisions and actions is achieved through formally established systems of rules and regulations. Together with a structure of authority, this enables the co-ordination of various activities within the organisation. An impersonal orientation is expected from officials in their dealings with clients and other officials. This is designed to result in rational judgements by officials in the performance of their duties. Employment by the organisation is based on technical qualifications and constitutes a lifelong career for the officials.26 The four main features of bureaucracy are summarised by Stewart as specialisation, hierarchy of authority, system of rules, and impersonality. ■ Specialisation applies more to the job than to the person undertaking the job. This makes for continuity because the job usually continues if the present jobholder leaves. CHAPTER 3 ■ ■ ■ APPROACHES TO ORGANISATION AND MANAGEMENT Hierarchy of authority makes for a sharp distinction between administrators and the administered, or between management and workers. Within the management ranks there are clearly defined levels of authority. This detailed and precise stratification is particularly marked in the armed forces and in the civil service. System of rules aims to provide for an efficient and impersonal operation. The system of rules is generally stable, although some rules may be changed or modified with time. Knowledge of the rules is a requisite of holding a job in a bureaucracy. Impersonality means that allocation of privileges and the exercise of authority should not be arbitrary, but in accordance with the laid-down system of rules. In more highly developed bureaucracies there tend to be carefully defined procedures for appealing against certain types of decisions. Stewart sees the characteristic of impersonality as the feature of bureaucracy which most distinguishes it from other types of organisations. A bureaucracy should not only be impersonal but be seen to be impersonal.27 CRITICISMS OF BUREAUCRACY Weber’s concept of bureaucracy has a number of disadvantages and has been subject to severe criticism. ■ ■ ■ ■ ■ Restriction of psychological growth The over-emphasis on rules and procedures, record keeping and paperwork may become more important in its own right than as a means to an end. Officials may develop a dependence upon bureaucratic status, symbols and rules. Initiative may be stifled and when a situation is not covered by a complete set of rules or procedures there may be a lack of flexibility or adaptation to changing circumstances. Position and responsibilities in the organisation can lead to officious bureaucratic behaviour. There may also be a tendency to conceal administrative procedures from outsiders. Impersonal relations can lead to stereotyped behaviour and a lack of responsiveness to individual incidents or problems. One of the strongest critics of bureaucratic organisation, and the demands it makes on the worker, is Argyris.28 He claims that bureaucracies restrict the psychological growth of the individual and cause feelings of failure, frustration and conflict. Argyris suggests that the organisational environment should provide: a significant degree of individual responsibility and self-control; commitment to the goals of the organisation; productiveness and work; and an opportunity for individuals to apply their full abilities. When these ideas are related to the main features of bureaucracy discussed above, such as specialisation, hierarchy of authority, system of rules and impersonality, it is perhaps easy to see the basis of Argyris’s criticism. A similar criticism is made by Caulkin who refers to the impersonal structure of bureaucracy as constructed round the post rather than the person and the ease with which it can be swung behind unsocial or even pathological ends. The overemphasis on process rather than purpose, fragmented responsibilities and hierarchical control means that it’s all too easy for individuals to neglect the larger purposes to which their small effort is being put.29 75 76 PART 1 MANAGEMENT AND ORGANISATIONAL BEHAVIOUR EXHIBIT 3.1 NHS pays £30.96 just to sharpen pencils by David Bamber and Ed Southorn A humble pencil sharpener ordered by staff at Portsmouth Hospitals NHS Trust has cost taxpayers a hefty £30.96. Just 96p was for the sharpener – the other £30 was the cost of dealing with the invoice. The high cost of the sharpener is just one example of the estimated £1.1m the trust will spend this financial year handling the invoices of another 37,000 items it needs but doesn’t itself stock. Portsmouth North MP Syd Rapson slammed the ‘ludicrous bureaucracy’ allowing it to happen and has written to health secretary Frank Dobson demanding an end to the waste of money. Mr Rapson said: ‘A private company would have gone bust if it carried on like this.’ Every time an NHS trust is invoiced for items not held in NHS stores, taxpayers fork out £30. The Audit Commission estimates it costs £30 in equivalent staff hours required to process paperwork for payment of bills for NHS ‘non-stock’ items. And yet the pencil sharpener could have been ordered from the NHS stock catalogue at a cost of 27p – saving taxpayers £30.69. This year the Portsmouth trust – which runs St Mary’s and Queen Alexandra Hospitals – faced its worst financial crisis yet and managers had to find nearly £3m in savings. Emergency measures were drawn up to find savings without cutting services. And in April, nearly 300 skin patients were told they could not be treated until May or June because the trust had run out of money. Jeff Watling, of the Portsmouth hospitals’ support and commercial services directorate, revealed the £30 invoice costs in an internal staff newsletter. He pleaded with staff: ‘Please check the supplies catalogue for commonly used items and order on a stock requisition where possible.’ Mr Watling told The News that the £30.96 pencil sharpener was the ‘worst and most emotive example’ found during a review of items bought that were not in stock. NHS trust spokeswoman, Pat Forsyth, said only senior managers could approve the purchase of items not held at the NHS Portsmouth stores on Eastern Road. Anyone wanting to buy non-stock items – which can include medical equipment and supplies as well as stationery – should have a very good reason. The pencil sharpener had been approved when ‘someone was not thinking about what they were doing’. Labour MP Mr Rapson told Mr Dobson: ‘This is a small but not insignificant example of how waste is created and if you can eliminate this stupidity then the NHS will be much more able to look after patients.’ A spokeswoman for Mr Dobson said the health sec-retary had not yet examined Mr Rapson’s letter or the issues it raised, but would be replying in the new year. Mr Rapson said: ‘This is bureaucracy gone mad. ‘Just think how much money must be wasted every single year by issuing invoices at this price and what that cash could be used for.’ EVALUATION OF BUREAUCRACY The growth of bureaucracy has come about through the increasing size and complexity of organisations and the associated demand for effective administration. The work of the classical writers has given emphasis to the careful design and planning of organisation structure and the definition of individual duties and responsibilities. Effective organisation is based on structure and delegation through different layers of the hierarchy. Greater specialisation and the application of expertise and technical knowledge have highlighted the need for laid-down procedures. Bureaucracy is founded on a formal, clearly defined and hierarchical structure. However, with rapid changes in the external environment, de-layering of organisations, empowerment, and greater attention to meeting the needs of customers, there is an increasing need to organise for flexibility. Peters and Waterman, for example, found that excellent American companies achieved quick action just because their organisations were fluid, and had intensive networks of informal and open communications.30 By contrast, the crisis experienced by IBM in the 1980s/1990s over the market for personal computers is explained at least in part by its top-heavy corporate structure, cumbersome organisation and dinosaur-like bureaucracy.31 CHAPTER 3 APPROACHES TO ORGANISATION AND MANAGEMENT According to Cloke and Goldsmith, management and bureaucracy can be thought of as flip sides of the same coin. The elements of bureaucracy generate organisational hierarchy and management, while managers generate a need for bureaucracy. Bureaucracies provide a safe haven where managers can hide from responsibility and avoid being held accountable for errors of judgement or problems they created or failed to solve. In return, managers are able to use bureaucratic rules to stifle self-management and compel employees to follow their direction … Yet bureaucratic systems can be broken down and transformed into human-scale interactions. We have seen countless managers recreate themselves as leaders and facilitators, employees reinvent themselves as responsible self-managing team members, and bureaucracies transform into responsive, human-scale organizations. Alternatives to organizational hierarchy are both practical and possible.32 Organisational solutions As organisations face increasing global competitiveness, and complex demands of the information and technological age, the need arises for alternative forms of corporate structure and systems. For example Ridderstrale points out that in the past century the hallmark of a large company was hierarchy, which rests on principles at odds with the new strategic requirements. ‘Bureaucracies allowed people with knowledge to control ignorant workers. Now, new structures are needed as knowledge spreads.’ Ridderstrale suggests four specific ways in which high-performing organisations have responded to increasingly complex knowledge systems by developing organisational solutions which depart from the traditional bureaucratic model. ■ ■ ■ ■ Public sector organisations More decentralised and flatter structures in order that quick decisions can be taken near to where the critical knowledge resides. Flatter structures can be achieved by increasing the span of control and reducing layers from the top or removing layers of middle management. The use of more than a single structure in order that knowledge may be assembled across the boundaries of a traditional organisation chart. If people have less permanent places in the hierarchy they are more readily able to move across functional and geographical borders. Converting companies into learning organisations and giving every employee the same level of familiarity with personnel and capabilities. Successful companies develop a detailed inventory of core competencies. In order to fully exploit current knowledge, managers need to know what the company knows. The broader sharing of expertise and knowledge, which may be located in the periphery where little formal authority resides. Managers need to share principles to ensure co-ordination, encourage ‘lowest common denominators’ and the development of ‘tribal’ qualities through shared ownership and rewards, common norms, culture and values.33 In the case of public sector organisations, in particular, there is a demand for uniformity of treatment, regularity of procedures and accountability for their operations. This leads to adherence to specified rules and procedures which limit the degree of discretion exercised by management, and to the keeping of detailed records. For example, Green argues that, although bureaucracies are becoming less and less the first-choice format for organisational shape, there is still a place for bureaucracy in parts of most organisations, and especially public sector organisations such as local authorities and universities. The use and implementation of tried and tested rules and procedures help to ensure essential values and ethics, and that necessary functions are run on a consistent and fair basis.34 It is interesting to note that, despite the criticisms of bureaucracy, people in their dealings with public sector organisations often call for what amounts to increased 77 78 PART 1 MANAGEMENT AND ORGANISATIONAL BEHAVIOUR bureaucracy, even though they may not use that term. One can frequently see letters to newspapers, for example, that call for a letter of law and a clearer set of rules in dealings with benefit claims from government departments instead of decisions made on the opinion of a particular manager in a particular office. New forms of information technology such as electronic transactions processed from home or public access terminals are likely to change processes of government service delivery, administrative workloads and the nature of bureaucracy.35 Relevance today By their very nature, bureaucracies are likely to attract criticism. For example, there appears to be a particular dilemma for management in personal service industries. The underlying characteristics of bureaucracy would seem to restrict personal service delivery which requires a flexible approach, responsiveness to individual requirements and the need for initiative and inventiveness.36 Much of this criticism is valid, but much also appears unfair comment. In any case, whatever the validity of the criticism or demands for alternative forms of structure, it is difficult to envisage how largescale organisations could function effectively without exhibiting at least some of the features of a bureaucracy. Stewart suggests that more organisations today contain mainly or a considerable number of professionals. Such organisations will still have bureaucratic features although there is more reliance on professional discretion and self-regulation than on control through rules and regulations.37 However, despite new forms of organisation which have emerged, many writers suggest that bureaucracy is still as relevant today as a major form of organisation structure.38 STRUCTURALISM Sometimes the work of Weber is associated with the ideas of writers such as Karl Marx under the sub-heading of the structuralism approach, which is a synthesis of the classical (or formal) school and the human relations (or informal) school.39 A major line of thought was that the earlier approaches were incomplete and lacked adequate theoretical assumptions and background. The structuralism approach provides a radical perspective of social and organisational behaviour.40 Greater attention should be given to the relationship between the formal and informal aspects of the organisation, and the study of conflict between the needs of the individual and the organisation, and between workers and management. (See also the discussion on conflict in Chapter 22.) Structuralism is sometimes associated as part of a broader human relations approach, which is discussed below. THE HUMAN RELATIONS APPROACH The main emphasis of the classical writers was on structure and the formal organisation, but during the 1920s, the years of the Great Depression, greater attention began to be paid to the social factors at work and to the behaviour of employees within an organisation – that is, to human relations. The Hawthorne experiments The turning point in the development of the human relations movement (’behavioural’ and ‘informal’ are alternative headings sometimes given to this approach) came with the famous Hawthorne experiments at the Western Electric Company in America (1924–32), and the subsequent publication of the research findings.41 Among the CHAPTER 3 APPROACHES TO ORGANISATION AND MANAGEMENT people who wrote about the Hawthorne experiments was Elton Mayo (1880–1949) who is often quoted as having been a leader of the researchers. However, there appears to be some doubt as to the extent to which Mayo was actually involved in conducting the experiments and his exact contribution to the human relations movement.42 There were four main phases to the Hawthorne experiments: ■ ■ ■ ■ the illumination experiments; the relay assembly test room; the interviewing programme; the bank wiring observation room. The illumination experiments The original investigation was conducted on the lines of the classical approach and was concerned, in typical scientific management style, with the effects of the intensity of lighting upon the workers’ productivity. The workers were divided into two groups, an experimental group and a control group. The results of these tests were inconclusive as production in the experimental group varied with no apparent relationship to the level of lighting, but actually increased when conditions were made much worse. Production also increased in the control group although the lighting remained unchanged. The level of production was influenced, clearly, by factors other than changes in physical conditions of work. This prompted a series of other experiments investigating factors of worker productivity. The relay assembly test room In the relay assembly test room the work was boring and repetitive. It involved assembling telephone relays by putting together a number of small parts. Six women workers were transferred from their normal departments to a separate area. The researchers selected two assemblers who were friends with each other. They then chose three other assemblers and a layout operator. The experiment was divided into 13 periods during which the workers were subjected to a series of planned and controlled changes to their conditions of work, such as hours of work, rest pauses and provision of refreshments. The general environmental conditions of the test room were similar to those of the normal assembly line. During the experiment the observer adopted a friendly manner, consulting with the workers, listening to their complaints and keeping them informed of the experiment. Following all but one of the changes (when operators complained too many breaks made them lose their work rhythm) there was a continuous increase in the level of production. The researchers formed the conclusion that the extra attention given to the workers, and the apparent interest in them shown by management, was the main reason for the higher productivity. The interviewing programme Another significant phase of the experiments was the interviewing programme. The lighting experiment and the relay assembly test room drew attention to the form of supervision as a contributory factor to the workers’ level of production. In an attempt to find out more about the workers’ feelings towards their supervisors and their general conditions of work, a large interviewing programme was introduced. More than 20 000 interviews were conducted before the work was ended because of the depression. Initially, the interviewers approached their task with a set of prepared questions, relating mainly to how the workers felt about their jobs. However, this method produced only limited information. The workers regarded a number of the questions as irrelevant; also they wanted to talk about other issues than just supervision and immediate working conditions. As a result, the style of interviewing was changed to become more non-directive and open-ended. There was no set list of questions and the workers were free to talk about any aspect of their work. The interviewers set out to be friendly and sympathetic. They adopted an impartial, non-judgemental approach and concentrated on listening. 79 80 PART 1 MANAGEMENT AND ORGANISATIONAL BEHAVIOUR Arising from this approach, the interviewers found out far more about the workers’ true feelings and attitudes. They gained information not just about supervision and working conditions, but also about the company itself, management, work group relations and matters outside of work such as family life and views on society in general. Many workers appeared to welcome the opportunity to have someone to talk to about their feelings and problems, and to be able to ‘let off steam’ in a friendly atmosphere. The interviewing programme was significant in giving an impetus to present-day personnel management and the use of counselling interviews, and highlighting the need for management to listen to workers’ feelings and problems. Being a good listener is arguably even more important for managers in today’s work organisations, and it is a skill which needs to be encouraged and developed.43 The bank wiring observation room Another experiment involved the observation of a group of 14 men working in the bank wiring room. It was noted that the men formed their own informal organisation with sub-groups or cliques, and with natural leaders emerging with the consent of the members. The group developed its own pattern of informal social relations and ‘norms’ of what constituted ‘proper’ behaviour. Despite a financial incentive scheme where the workers could receive more money the more work produced, the group decided on a level of output well below the level they were capable of producing. Group pressures on individual workers were stronger than financial incentives offered by management. The group believed that if they increased their output, management would raise the standard level of piece rates. The importance of group ‘norms’ and informal social relations are discussed in Chapter 13. EVALUATION OF THE HUMAN RELATIONS APPROACH The human relations approach has been subjected to severe criticism. The Hawthorne experiments have been criticised, for example, on methodology and on failure of the investigators to take sufficient account of environmental factors – although much of this criticism is with the value of hindsight. The human relations writers have been criticised generally for the adoption of a management perspective, their ‘unitary frame of reference’ and their over-simplified theories.44 Other criticisms of the human relations approach are that it is insufficiently scientific, and that it takes too narrow a view. It ignores the role of the organisation itself in how society operates. Sex power differential There are a number of interpretations of the results of the Hawthorne experiments, including the possible implications of the ‘sex power differential’ between the two groups. In the relay assembly room where output increased the group was all female, while in the bank wiring room where output was restricted the group was all male. The workers in the relay assembly test room were all young unmarried women. All except one were living at home with traditional families of immigrant background. In the work environment of the factory the women had been subjected to frequent contact with male supervisors and therefore ‘the sex power hierarchy in the home and in the factory were congruent’. It is suggested, therefore, that it was only to be expected that the women agreed readily to participate with management in the relay assembly test room experiment.45 Importance of the Hawthorne experiments Whatever the interpretation of the results of the Hawthorne experiments, they did generate new ideas concerning the importance of work groups and leadership, communications, output restrictions, motivation and job design. They placed emphasis on the CHAPTER 3 APPROACHES TO ORGANISATION AND MANAGEMENT importance of personnel management, and gave impetus to the work of the human relations writers. The Hawthorne experiments undoubtedly marked a significant step forward in providing a further insight into human behaviour at work and the development of management thinking. The Hawthorne experiments are regarded as one of the most important of all social science investigations and are recognised as probably the single most important foundation of the human relations approach to management and the development of organisational behaviour. In a review of humane approaches to management, Crainer asserts that: ‘The Hawthorne Studies were important because they showed that views of how managers behaved were a vital aspect of motivation and improved performance. Also, the research revealed the importance of informal work groups.’46 Humanisation of the work organisation Whereas supporters of the classical approach sought to increase production by rationalisation of the work organisation, the human relations movement has led to ideas on increasing production by humanising the work organisation. The classical approach adopted more of a managerial perspective, while the human relations approach strove for a greater understanding of people’s psychological and social needs at work as well as improving the process of management. It is usually regarded as the first major approach to organisation and management to show concern for industrial sociology. The human relations approach recognised the importance of the informal organisation which will always be present within the formal structure. This informal organisation will influence the motivation of employees who will view the organisation for which they work through the values and attitudes of their colleagues. Their view of the organisation determines their approach to work and the extent of their motivation to work well or otherwise. Human relations writers demonstrated that people go to work to satisfy a complexity of needs and not simply for monetary reward. They emphasised the importance of the wider social needs of individuals and gave recognition to the work organisation as a social organisation and the importance of the group, and group values and norms, in influencing individual behaviour at work. It has been commented that the classical school was concerned about ‘organisations without people’, and the human relations school about ‘people without organisations’. NEO-HUMAN RELATIONS Certainly there were shortcomings in the human relations approach, and assumptions which evolved from such studies as the Hawthorne experiments were not necessarily supported by empirical evidence. For example, the contention that a satisfied worker is a productive worker was not always found to be valid. However, the results of the Hawthorne experiments and the subsequent attention given to the social organisation and to theories of individual motivation gave rise to the work of those writers in the 1950s and 1960s who adopted a more psychological orientation. New ideas on management theory arose and a major focus of concern was the personal adjustment of the individual within the work organisation, and the effects of group relationships and leadership styles. This group of writers is often (and more correctly) categorised separately under the heading of ‘neohuman relations’. The works of these writers are examined in more detail in subsequent chapters but are summarised broadly here. The work of Maslow A major impetus for the neo-human relations approach was the work of Maslow who, in 1943, put forward a theoretical framework of individual personality development and motivation based on a hierarchy of human needs.47 The hierarchy ranges through 81 82 PART 1 MANAGEMENT AND ORGANISATIONAL BEHAVIOUR five levels from, at the lowest level, physiological needs, through safety needs, love needs, esteem needs, to the need for self-actualisation at the highest level. Individuals only advance up the hierarchy as each lower-level need is satisfied. Although Maslow did not originally intend this need hierarchy to be applied necessarily to the work situation it has, nevertheless, had a significant impact on management approaches to motivation and the design of work organisation to meet individual needs. The work of Maslow provides a link with the earlier human relations approach. Some leading contributors Among the best-known contributors to the neo-human relations approach are Herzberg and McGregor. Herzberg isolated two different sets of factors affecting motivation and satisfaction at work. One set of factors comprises those which, if absent, cause dissatisfaction. These are ‘hygiene’ or ‘maintenance’ factors which are concerned basically with job environment. However, to motivate workers to give of their best, proper attention must be given to a different set of factors, the ‘motivators’ or ‘growth’ factors. These are concerned with job content.48 McGregor argued that the style of management adopted is a function of the manager’s attitudes towards human nature and behaviour at work. He put forward two suppositions called Theory X and Theory Y which are based on popular assumptions about work and people.49 Other major contributors to the neo-human relations approach include Likert, whose work includes research into different systems of management;50 McClelland, with ideas on achievement motivation;51 and Argyris, who considered the effects of the formal organisation on the individual and psychological growth in the process of selfactualisation.52 Argyris’s major contributions include his work on organisational learning and on effective leadership.53 The neo-human relations approach has generated a prolific amount of writing and research not only from original propounders, but also from others seeking to establish the validity, or otherwise, of their ideas. This has led to continuing attention being given to such matters as organisation structuring, group dynamics, job satisfaction, communication and participation, leadership styles and motivation. It has also led to greater attention to the importance of interpersonal interactions, the causes of conflict and recognition of ‘industrial relations’ problems. THE SYSTEMS APPROACH More recently, attention has been focused on the analysis of organisations as ‘systems’ with a number of interrelated sub-systems. The classical approach emphasised the technical requirements of the organisation and its needs – ‘organisations without people’; the human relations approaches emphasised the psychological and social aspects, and the consideration of human needs – ‘people without organisations’. The systems approach attempts to reconcile these two earlier approaches and the work of the formal and the informal writers. Attention is focused on the total work organisation and the interrelationships of structure and behaviour, and the range of variables within the organisation. This approach can be contrasted with a view of the organisation as separate parts. The systems approach encourages managers to view the organisation both as a whole and as part of a larger environment. The idea is that any part of an organisation’s activities affects all other parts. Systems theory Systems theory is not new and has been used in the natural and physical sciences for a number of years. One of the founders of this approach was the biologist Ludwig von Bertalanffy who used the term ‘systems theory’ in an article published in 1951, and CHAPTER 3 APPROACHES TO ORGANISATION AND MANAGEMENT who is generally credited with having developed the outline of General Systems Theory.54 The systems approach to organisation has arisen, at least in part, therefore, from the work of biologists, and Miller and Rice have likened the commercial and industrial organisation to the biological organism.55 Using a General Systems Theory (GST) approach, Boulding classified nine levels of systems of increasing complexity according to the state of development and knowledge about each level.56 Organisations are complex social systems and are more open to change than lower-level simple dynamic or cybernetic systems. Boulding felt there were large gaps in both theoretical and empirical knowledge of the human level and the social organisations level of systems, although some progress has now been made with recent theories of organisational behaviour. The business organisation as an open system The business organisation is an open system. There is continual interaction with the broader external environment of which it is part. The systems approach views the organisation within its total environment and emphasises the importance of multiple channels of interaction. Criticisms of earlier approaches to organisation are based in part on the attempt to study the activities and problems of the organisation solely in terms of the internal environment. The view of the organisation as an open system is examined in Chapter 4. The systems approach views the organisation as a whole and involves the study of the organisation in terms of the relationship between technical and social variables within the system. Changes in one part, technical or social, will affect other parts and thus the whole system. Longwall coal-mining study The idea of socio-technical systems arose from the work of Trist and others, of the Tavistock Institute of Human Relations, in their study of the effects of changing technology in the coal-mining industry in the 1940s.57 The increasing use of mechanisation and the introduction of coal-cutters and mechanical conveyors enabled coal to be extracted on a ‘longwall’ method. Shift working was introduced with each shift specialising on one stage of the operation – preparation, cutting or loading. However, the new method meant a change in the previous system of working where a small self-selecting group of miners worked together, as an independent team, on one part of the coalface – the ‘single place’ or ‘shortwall’ method. Technological change had brought about changes in the social groupings of the miners. It disrupted the integration of small groups and the psychological and sociological properties of the old method of working. There was a lack of co-operation between different shifts and within each shift, an increase in absenteeism, scapegoating and signs of greater social stress. The ‘longwall’ method was socially disruptive and did not prove as economically efficient as it could have been with the new technology. The researchers saw the need for a socio-technical approach in which an appropriate social system could be developed in keeping with the new technical system. The result was the ‘composite longwall’ method with more responsibility to the team as a whole and shifts carrying out composite tasks, the reintroduction of multi-skilled roles and a reduction in specialisation. The composite method was psychologically and socially more rewarding and economically more efficient than the ‘longwall’ method. The socio-technical system The concept of the organisation as a ‘socio-technical’ system directs attention to the transformation or conversion process itself, to the series of activities through which 83 84 PART 1 MANAGEMENT AND ORGANISATIONAL BEHAVIOUR the organisation attempts to achieve its objectives. The socio-technical system is concerned with the interactions between the psychological and social factors and the needs and demands of the human part of the organisation, and its structural and technological requirements. Recognition of the socio-technical approach is of particular importance today. People must be considered as at least an equal priority along with investment in technology. For example, Lane et al. point out that major technological change has brought about dramatic changes in worker behaviour and requirements. It is people who unlock the benefits and opportunities of information communication technology.58 Technology determinism The concept of socio-technical systems provides a link between the systems approach and a sub-division, sometimes adopted – the technology approach. Writers under the technology heading attempt to restrict generalisations about organisations and management, and emphasise the effects of varying technologies on organisation structure, work groups and individual performance and job satisfaction. This is in contrast with the socio-technical approach which did not regard technology, per se, as a determinant of behaviour. Under the heading of the technology approach could be included the work of such writers as Walker and Guest (effects of the assembly-line production method on employee behaviour);59 Sayles (relationship between technology and the nature of work groups);60 and Blauner (problems of ‘alienation’ in relation to different work technologies).61 Technological determinism is discussed more fully in Chapter 17. THE CONTINGENCY APPROACH The classical approach suggested one best form of structure and placed emphasis on general sets of principles while the human relations approach gave little attention at all to structure. In contrast the contingency approach showed renewed concern with the importance of structure as a significant influence on organisational performance. The contingency approach, which can be seen as an extension of the systems approach, highlights possible means of differentiating among alternative forms of organisation structures and systems of management. There is no one optimum state. For example, the structure of the organisation and its ‘success’ are dependent, that is contingent upon, the nature of tasks with which it is designed to deal and the nature of environmental influences. The most appropriate structure and system of management is therefore dependent upon the contingencies of the situation for each particular organisation. The contingency approach implies that organisation theory should not seek to suggest one best way to structure or manage organisations but should provide insights into the situational and contextual factors which influence management decisions. Contingency models of organisation and management are discussed in Chapter 16. OTHER APPROACHES TO THE STUDY OF ORGANISATIONS The four-fold framework of classical, human relations, systems and contingency approaches provides a helpful, although rather simplistic, categorisation. The study of organisations, their structure and management is a broad field of inquiry. Depending on the views and preferences of the writer, other possible main approaches include decision-making and social action. CHAPTER 3 APPROACHES TO ORGANISATION AND MANAGEMENT THE DECISION-MAKING APPROACH The systems approach involves the isolation of those functions most directly concerned with the achievement of objectives and the identification of main decision areas or sub-systems. Viewing the organisation as a system emphasises the need for good information and channels of communication in order to assist effective decisionmaking in the organisation. Recognition of the need for decision-making and the attainment of goals draws attention to a sub-division of the systems approach, or a separate category, that of the decision-making (or decision theory) approach. Here the focus of attention is on managerial decision-making and how organisations process and use information in making decisions. Successful management lies in responding to internal and external change. This involves the clarification of objectives, the specification of problems, and the search for and implementation of solutions. The organisation is seen as an informationprocessing network with numerous decision points. An understanding of how decisions are made helps in understanding behaviour in the organisation. Decision-making writers seek to explain the mechanisms by which conflict is resolved and choices are made. Some leading writers Leading writers of the decision-making approach include Barnard, Simon, and Cyert and March. The scope of the decision-making approach, however, is wide, and it is possible to identify contributions from engineers, mathematicians and operational research specialists in addition to the work of economists, psychologists and writers on management and organisation. Barnard stressed the need for co-operative action in organisations. He believed that people’s ability to communicate, and their commitment and contribution to the achievement of a common purpose, were necessary for the existence of a co-operative system.62 These ideas were developed further by Simon. He sees management as meaning decision-making and his concern is with how decisions are made and how decision-making can be improved. Simon is critical of the implication of man as completely rational and proposes a model of ‘administrative man’ who, unlike ‘economic man’, ‘satisfices’ rather than maximises. Administrative decision-making is the achievement of satisfactory rather than optimal results in solving problems.63 Economic models of decision-making, based on the assumption of rational behaviour in choosing from known alternatives in order to maximise objectives, can be contrasted with behavioural models based not so much on maximisation of objectives as on short-term expediency where a choice is made to avoid conflict and to stay within limiting constraints. Managers are more concerned with avoiding uncertainties than with the prediction of uncertainties.64 SOCIAL ACTION Social action represents a contribution from sociologists to the study of organisations. Social action writers attempt to view the organisation from the standpoint of individual members (actors) who will each have their own goals, and interpretation of their work situation in terms of the satisfaction sought and the meaning that work has for them. The goals of the individual, and the means selected and actions taken to achieve these goals, are affected by the individual’s perception of the situation. Social action looks to the individual’s own definition of the situation as a basis for explaining behaviour. Conflict of interests is seen as normal behaviour and part of organisational life. According to Silverman: The action approach … does not, in itself, provide a theory of organisations. It is instead best understood as a method of analysing social relations within organisations.65 85 86 PART 1 MANAGEMENT AND ORGANISATIONAL BEHAVIOUR Criticisms of earlier approaches A main thrust of social action is the criticism of earlier approaches to organisation and management, and of what is claimed to be their failure to provide a satisfactory basis for the explanation or prediction of individual behaviour. For example, criticism is directed at approaches which focused on the goals and needs of the organisation, rather than on considerations of the effectiveness of an organisation in meeting the needs of its individual members. The human relations approaches have been criticised because of their focus on generalised theories of good management, group psychology, and the suggestion of needs common to all individuals at work. The technology approach has been criticised for attributing feelings of alienation to the nature of technology and the status of work groups, rather than an analysis which focused on concern for the individual’s expectations of, and reactions to, work. The systems approach has been criticised for failure to examine the orientation of individual members to the organisation, the different expectations people have of their work or ways in which the environment influences expectations of work. Unitary or pluralistic view Important contributors to a social action approach include Goldthorpe (industrial attitudes and behaviour patterns of manual workers)66 and Fox. In a research paper written for the Royal Commission on Trade Unions and Employers’ Associations (the Donovan Report), Fox suggests two major ways of perceiving an industrial organisation – a ‘unitary’ approach and a ‘pluralistic’ approach.67 With the unitary approach the organisation is viewed as a team with a common source of loyalty, one focus of effort and one accepted leader. The pluralistic approach views the organisation as made up of competing sub-groups with their own loyalties, goals and leaders. These competing sub-groups are almost certain to come into conflict. The unitary and pluralistic perspectives of the organisation are discussed in Chapter 19. Action theory A theory of human behaviour from an ‘action approach’ is presented by Bowey.68 She suggests that action theory, systems theory and contingency theory are not necessarily incompatible approaches to the understanding of behaviour in organisations. It would be possible to take the best parts of the different approaches and combine them into a theory that would model empirical behaviour, and also facilitate the analysis of large numbers of people in organisations. Bowey goes on to present such a theory as a particular form of an action theory approach. According to Bowey, action theory is not capable of dealing with the analysis of the behaviour of a large number of people in organisations. Her theory is based, therefore, on three essential principles of action theory, augmented by four additional concepts taken from systems theory. The three essential principles of action theory can be summarised as below: ■ ■ ■ Additional concepts Sociology is concerned not just with behaviour, but with ‘meaningful action’. Particular meanings persist through reaffirmation in actions. Actions can also lead to changes in meanings. Bowey suggests that these three principles apply mainly to explanations of individual, or small-scale, behaviour. She gives four additional concepts, taken from systems theory, on which analysis of large-scale behaviour can be based. These concepts are redefined in accordance with an action approach. ■ Role. This is needed for the analysis of behaviour in organisations. It explains the similar action of different people in similar situations within the organisation, and the expectations held by other people. CHAPTER 3 ■ ■ ■ APPROACHES TO ORGANISATION AND MANAGEMENT Relationships. This is needed to explain the patterns of interaction among people and the behaviours displayed towards one another. Structure. The relationships among members of an organisation give rise to patterns of action which can be identified as a ‘transitory social structure’. The social factors, and non-social factors such as payment systems, methods of production and physical layout, together form the behavioural structure. Process. Human behaviour can be analysed in terms of processes, defined as ‘continuous interdependent sequences of actions’. The concept of process is necessary to account for the manner in which organisations exhibit changes in structure. The three principles of action theory, together with the four additional concepts from systems theory, provide an action approach to the analysis of behaviour in organisations. Bowey goes on to illustrate her theory by case studies of five different types of organisations, all in the restaurant industry. A NUMBER OF DIFFERENT APPROACHES We can now see that within the broad four-fold classification of classical, human relations, systems, and contingency approaches it is possible to identify a number of other approaches or at least sub-divisions of approaches, although there is no consensus on the categorisation of these different approaches or on the identification of the various contributors to one particular approach. So far we have identified a possible nine-fold classification: classical (including scientific management); bureaucracy; human relations; neo-human relations; systems; technology; contingency; decision-making; and social action – and if structuralism is included, we have a ten-fold classification. This classification could be extended still further. For example, another more recent categorisation sometimes identified as a separate approach is management science – with emphasis on quantitative analysis, mathematical models, operational research and computer technology. (See Figure 3.3.) POSTMODERNISM The work of contemporary writers discussed above together with the achievements of practitioners such as Alfred P. Sloan Jr (1875–1966, Chief Executive and Honorary Chairman of General Motors) gave rise to the so-called ‘modern organisation’.69 With the development of the information and technological age a more recent view of organisations and management is the idea of postmodernism. In the 1990s, writers such as Clegg described the postmodern organisation in terms of the influence of technological determinism, structural flexibility, premised on niches, multi-skilled jobs marked by a lack of demarcation, and more complex employment relationships including subcontracting and networking.70 Postmodernism rejects a rational systems approach to our understanding of organisations and management, and to accepted explanations of society and behaviour. Highly flexible, free-flowing and fluid structures with the ability to change quickly to meet present demands form the basis of the new organisation. For example, Watson suggests that the modernism inherent in the systems-control approach to understanding work organisations and their management is naïve and unrealistic. The possibility of any kind of complete and coherent body of management knowledge has increasingly been bought into question. To enable us to move toward a more realistic or pragmatically reasonable way of ‘framing’ work organisation and its management, a shift has first to be made in our deeper assumptions about the social world. These are the modernist assumptions which inevitably underpin the whole edifice of work organisation and management thinking.71 87 88 PART 1 MANAGEMENT AND ORGANISATIONAL BEHAVIOUR CLASSICAL (including scientific management). Emphasis on formal structure, technical requirements and sets of principles. Bureaucracy The organisation in terms of specialisation, hierarchy of authority, system of rules, and impersonality. HUMAN RELATIONS Structuralism Attention to the informal organisation, and to psychological and social needs of people at work. Technology Neo-human relations Personal adjustment of the individual within the work organisation. Group relationships and styles of leadership. SYSTEMS Decision-making Management science Integration of the formal and informal approaches. A sociotechnical approach. The organisation as an open system interacting with environment. Social action Organisations as viewed by the individual members and their interpretation of the work situation. CONTINGENCY Form of structure and management system dependent upon the situational variables. POSTMODERNISM A SCIENTIFIC VALUE APPROACH? Figure 3.3 An outline of developments of approaches to organisation and management By contrast, postmodernism places greater attention on the use of language and attempts to portray a particular set of assumptions or versions of the ‘truth’. Watson defines postmodernism as: A way of looking at the world that rejects attempts to build systematic (or ‘foundationalist’) explanations of history and society and which, instead, concentrates on the ways in which human beings ‘invent’ their words, especially through the use of language or ‘discourse’.72 CHAPTER 3 APPROACHES TO ORGANISATION AND MANAGEMENT The idea of postmodernism is, however, not easy to explain fully in clear and simple terms. It is arguably more of a generalised sociological concept rather than a specific approach to organisation and management. There is even some discussion of two connotations, and theories or philosophies of the concept depending on whether the term is hyphenated or not.73 Perhaps understandably therefore the concept of postmodernism appears to have little interest or appeal to the practical manager. Indeed Watson, for example, questions the value of labelling more flexible forms of bureaucratic structure and culture as postmodern or post-bureaucratic and differentiating these from the modernist bureaucratic organisation. There is no postmodern or post-bureaucratic organisational form available to us that is essentially different from the modernist bureaucratic organisation. We are indeed seeing different mixes of direct and indirect management control attempts as the world changes. But the world was always changing. Probably from the very beginning of industrialisation there has been a mixing of direct and indirect controls with emphases in one direction and then the other being made at different times.74 Nevertheless, postmodernist organisation can arguably be seen as a healthy challenge to more traditional approaches. It puts forward alternative interpretations of rationality, credibility, and ambiguity; a thoughtful critical perspective on disorders in work organisations; and reminds us of the complexities in our understanding of management and organisational behaviour. RELEVANCE TO MANAGEMENT AND ORGANISATIONAL BEHAVIOUR The different possible categorisations are not necessarily a bad thing; they illustrate the discursive and complex nature of management. The possible sub-divisions and crossgroupings help illustrate the many factors relevant to the study and practice of management and organisational behaviour. Discussion on the various categorisations of approaches and the identification of individual writers within a particular approach can provide a useful insight into the subject. Positive advantages Whatever form of categorisation is adopted the division of writers on organisation and management into various approaches offers a number of positive advantages. ■ ■ ■ ■ ■ ■ It is helpful to students in the arrangement and study of their material. It provides a setting in which to view the field of management, and to consider the contribution of individual writers. It traces the major lines of argument developed by writers seeking to advise practising managers on how they might improve performance. It provides a framework in which the principles enunciated can be set, and against which comparisons with management practice can be made. It helps in organisational analysis and in the identification of problem areas. For example, is the problem one of structure, of human relations, or of the sociotechnical process? It enables the manager to take from the different approaches those ideas which best suit the particular requirements of the job. For example, in dealing with a problem of structure, the ideas of the classical writers or of contingency theory might be adopted. When there is a problem relating to personnel management, ideas from the human relations movement might be of most value. If the problem is one of environmental influence, insights from the systems approach might prove most helpful. For problems of a more quantitative nature, ideas from the decision-making approach or from management science might be applicable. 89 90 PART 1 MANAGEMENT AND ORGANISATIONAL BEHAVIOUR Caveats to be noted There are, however, a number of important caveats which should be noted. ■ ■ ■ ■ The importance of cultural contexts The various approaches represent a progression of ideas, each building on from the other and adding to it. Together they provide a pattern of complementary studies into the development of management thinking. The different approaches are not in competition with each other and no one approach should be viewed as if it were the only approach, replacing or superseding earlier contributions. Many ideas of earlier writers are still of relevance today and of continuing importance in modern management practice. Any categorisation of individual writers into specific approaches is inevitably somewhat arbitrary and not all writers can be neatly arranged in this manner. This is only to be expected. Such writers are expounding their current thoughts and ideas in keeping with the continual development of management theory and changes in management practice. The comment made about some management writers that they are saying different things at different times might therefore be taken more as a compliment than as a criticism. Even when there is agreement on the nature of the contribution from different writers, the actual division into varying approaches may take a number of different forms. In other words, while there might be acceptance of the need for a framework, there is no agreement on its shape. Different authors have adopted different formats in which to set out the developments in management thinking. Some of the literature categorises management thinkers into divisions called ‘schools’. The use of this term suggests a clarity of distinction between each division and a uniformity of beliefs within each division. This is perhaps an exaggeration. The distinction between these so-called schools is not clear-cut and there is not necessarily a consistency of thinking among the various contributors in each division. The term ‘approaches’ to management is more indicative of the obscure lines between the different categorisations and, paradoxically, it is the suggestion of vagueness which, arguably, makes it a more appropriate term to use. A major criticism of the attempt to define generalised models of management theory is the assumption of national culture. Schneider and Barsoux draw attention to how the different theories on how to organise all reflect societal concerns of the times as well as the cultural backgrounds of the individuals. Different approaches reflect different cultural assumptions regarding, for example, human nature and the importance of task and relationships.75 Cheng, Sculli and Chan also question the universality of theories of management and organisational behaviour on the ground that they have not adequately addressed the factor of culture. ‘Traditionally, the greatest aspiration of researchers is to discover objective, universalistic principles of behaviour. The tacit assumption behind this is that these principles may be discovered without reference to cultural contexts.’ They conclude that while there may be some universality to organisation structures, for example the need for some form of hierarchy whatever its shape may be, different national cultures frequently give those structures different meanings.76 JAPANESE MANAGEMENT In a review of management theory and practice, Heller contrasts British and American thinking with methods employed by the Japanese.77 The 1960s, western managements showed a total lack of curiosity about competition from Japan. British and European managers were still obsessed by the American example. The Japanese built hugely on what they had borrowed from the USA. However, the Japanese also practised and perfected what management scientists often only preached. CHAPTER 3 APPROACHES TO ORGANISATION AND MANAGEMENT 91 Although British management has failed to live up to Japanese standards, professional standards among managers in Britain have improved greatly over the past 25 years. The potential of a widening Europe and the Japanese penchant for locating more plants in Britain provide the best reasons for brighter future prospects. An evaluation of the nature and potential applications of Japanese management is given in Management in Action 3.1 at the end of this chapter. TOWARDS A SCIENTIFIC VALUE APPROACH? It might be that the study of organisations, their structure and management is moving towards a more scientific approach. Management science can assist managers in the analysis of complex problems that are subject to quantitative constraints and in the optimisation of decisions to such problems. It may also assist in the establishment of broad theory. However, many operational problems in organisations relate to the nature of human behaviour and the people–organisation relationship, and do not lend themselves to the application of a scientific answer. There are no definitive or final solutions to the problems of organisations. The nature of work organisations and the environment in which they operate is becoming increasingly complex and subject to continual change. However, at least we do understand more about the dynamics of management and organisational behaviour as a basis for the analysis of human behaviour in organisations.78 Balance between philosophy and science Miner, however, suggests that although the degree of commitment to the scientific value system is increasing, as yet there is insufficient research to move the field entirely into science, completely divorced from philosophy. At present management theory is clearly in the ‘schools’ phase. As discussed earlier, it is possible to argue over the use of the term ‘schools’. However, whatever terminology is used, and whatever the state of our knowledge, the message from Miner is clear: … schools of management thought are very much a reality, and the management student who approaches the field without at least a minimal understanding of them does so at some risk.79 According to Crainer, management is active, not theoretical. But management is nothing without ideas. Ideas drive management as surely as the immediate problems which land on managers’ desks or which arrive via their e-mail. Decisions have to be based on ideas, as well as instinct. Without ideas managers flit desperately from crisis to crisis. They cannot know where they are going, why they are doing something or what they will achieve, without the fuel of ideas.80 EXHIBIT 3.2 Tools that do the business: management theories FT A new survey helps executives sift through the vast array of management theories, writes Tom Lester. anagement theories are an easy target for jokes: the pompous language, the second-rate ideas and the flimsy research base make even the most popular techniques sound ridiculous. But demand for them is stronger than ever, with new theories appearing as fast as others go out of fashion. Management consultants have never been busier. M ‘Managers worldwide are under increasing pressure to produce shareholder returns,’ says Darrell Rigby, who heads techniques research at US consultancy Bain & Co. Its sixth global annual study* of the use of management techniques is aimed at helping managers sort through the array of theories, and reject ‘those that are just fads’. 92 PART 1 MANAGEMENT AND ORGANISATIONAL BEHAVIOUR Exhibit 3.2 continued Mr Rigby surveyed 475 companies in the US and Europe during 1999. A third of the companies had sales revenues of more than Dollars 2bn (Pounds 1.3bn), while 27 per cent had sales of between Dollars 600m and Dollars 2bn. He explained 25 management techniques, ranging from the straightforward, such as strategic planning, to the more esoteric ‘agile strategies’ and competitive gaming. As well as examining which techniques are in most common use, the report looks at how satisfied companies are with them. Although there are more than 100 recorded management techniques in use**, Mr Rigby chose the 25 he judged ‘most relevant to senior management, topical and measureable’. Effectiveness, he concedes, depends largely on how the techniques are used. ‘Anybody can use tools,’ says Mr Rigby. ‘I could wear the same trainers as Michael Jordan, but I sure as hell won’t get the same results.’ Mr Rigby says Bain is not in the business of selling these or any other techniques, or helping other firms to sell theirs. ‘I get 50 or 100 calls each year from people wanting me to add their tools to the survey,’ he says. Nor is the company hunting for the next ‘big idea’, although his firm probably would not mind if one came along. The last great management fad was process reengineering, the unplanned blockbuster technique devised in 1990 by CSC Index, a US consultancy, which doubled the firm’s revenue at the height of its popularity in the mid1990s. According to Mr Rigby, the technique promised to ‘redesign business processes to improve productivity’. The latest survey shows that last year companies used an average of 11 of the 25 selected techniques, down from the previous study’s findings of more than 13. Rightly or wrongly, companies rely on management techniques to help them create value. But it is not the number of tools used that counts: Mr Rigby advises companies to use a few tools well, concentrating on the mainstream ones such as strategic planning and benchmarking. Those that do, he claims, achieve superior financial results. Benchmarking (detailed comparison of the performance of a part of an organisation with similar operations elsewhere), tops the poll in Europe, as it has for the previous two years. In North America, strategic planning, used by 89 per cent of companies, is the favourite technique. Benchmarking comes only third in North America, while strategic planning comes third in Europe. Mission and vision statements take the number two slot on both sides of the Atlantic. Measuring customer satisfaction comes fourth on both continents. European companies, perhaps unsurprisingly, generally use fewer management tools than the North Americans (and the British rather less than other Europeans). But, as the chart shows, European behaviour is more consistent: 78 per cent of the North American companies surveyed used process re-engineering in 1995, the peak year of popularity for the technique, compared with only 56 per cent in Europe. The following four years showed a sharp decline across the Atlantic in the use of process re-engineering but less so in Europe, and last year the two groups were virtually level. The techniques began to lose popularity when companies reported that 70 per cent of re-engineering projects were not delivering the promised reductions in costs and life-cycle times. A buoyant global economy may also be part of the explanation for the general fall in the popularity of process re-engineering. Respondents said strong sales and a shortage of staff had led them to focus on ‘tried and true’ techniques, such as benchmarking. After process re-engineering, total quality management showed one of the sharpest falls in popularity last year, continuing a trend first detected in 1996. For the first time, TQM is now more widely used in Europe than in the US. Perhaps the priority in the US last year, when TQM was used by 41 per cent of respondents, compared with 55 per cent the previous year, was to get the goods out of the door, but perhaps quality standards have also improved. Certainly, Japanese companies no longer enjoy as big a quality advantage as they did in the 1980s. If the lessons have not sunk in by now, the laborious paperwork demanded in formal TQM methods is unlikely to help the technique regain its popularity. Some of the 25 tools studied held their own against the overall decline in use. Strategic planning, mission and vision statements, the balanced score card (working to a wide range of performance measures, not just financial ratios), and merger integration teams (to secure the benefits of integration) all did well. Although the use of merger integration teams might sound more like common sense than a specific management technique, and will reflect the level of M&A activity of the moment, it is increasingly popular in the US. Such teams are more common in the US than elsewhere – 38 per cent in North America compared with 18 per cent in Europe, where management audits among the merged companies are fast growing in popularity. Viewed objectively, the fact that some management tools have consistently scored 70–90 per cent among users over the last five years is remarkable. However informally they are being used, the fact that some techniques remain perennial favourites shows how much support insecure managers still need to tackle business problems. *Copies of the survey are available from Bain & Co www.Bain.com London office: 020 7723 0208 ** Guide to Management Ideas, Tim Hindle, Economist Books/Profile Books 2000. (Reproduced with permission from the Financial Times Limited, © Tom Lester) CHAPTER 3 APPROACHES TO ORGANISATION AND MANAGEMENT BENEFITS TO THE MANAGER Whatever the balance between philosophy and science, a knowledge and understanding of management theory will help with the complexities of management in modern work organisations. No single approach to organisation and management provides all the answers. It is the comparative study of different approaches which will yield benefits to the manager.81 There is of course no shortage of new ideas on organisational behaviour and management thinking. To what extent, however, do these ideas lead to improved organisational performance? There is undoubtedly much scepticism and criticism of management gurus. For example, according to Crainer, the past 30 years have seen management thinking in a state of perpetual flux with a relentless quest for new ideas, such as corporate strategy, the nature of management, culture, quality and the Japanese approach, excellence, the re-emergence of leadership, competitive advantage, empowerment, and re-engineering. Crainer believes that this is what managers have been doing all along, but how well they have succeeded is a matter of debate. Comparing past and present is diverting, but provides more questions than answers. What can be said is that managers remain open to new lights and that over 30 years the sheer profusion of ideas has, at times, been overwhelming.82 Crainer also suggests that as one idea after another fails to translate into sustainable practice, there is a growing disillusionment with the pedlars of managerial wisdom. Yet, the desire for instant solutions which tackle all managerial problems in one fell swoop remains strong. … Amid the hard sell, the quick fixes and organisational placebos, it is true to say that there is little that’s original. But, without gurus, managers would lose a rich source of inspiration, information and controversy.83 Reporting on a 12-year study of the knowledge and use of management concepts in technical organisations, Flores and Utley suggest that a look back at the theories and principles that have been taught in the past could give an indication of the success of any new approach and help prepare today’s and tomorrow’s managers for the future.84 And Stern has this to say: ‘Management thinkers still have a lot to tell us. You don’t have to believe everything they say, but they may at least offer stimulation; they might provoke senior managers into abandoning complacency and trying to see problems in a new light.’85 There are then many aspects to management. There are no simple solutions, no one best way to manage. However, the study of organisations, their structure and management is still important for the manager and remains an indispensable part of the job. CRITICAL REFLECTIONS ‘All these different theories and ideas about organisations and management, but what practical value do they have?’ … ‘Without some framework of study it would be even more difficult to learn about the complexities of management’ … ‘The study of management may help us to solve some of the old problems, but to what extent does it help us to solve the new problems we face in our organisational lives?’ What are your own views? 93 94 PART 1 MANAGEMENT AND ORGANISATIONAL BEHAVIOUR Critical reflections continued It is obvious from even a cursory glance at the history of management science that science and technology are considered to be key instruments in solving workplace problems and in controlling workplaces … While Taylorist scientific management may have its academic critics, management science is thriving. It is itself a large business, providing employment for management consultants whose sole concern is solving workplace problems of other corporations. Bradley, H., Erickson, M., Stephenson, C. and Williams, S. Myths at Work, Polity Press (2000), pp. 96–7. How would you attempt to argue BOTH for and against this point of view? ‘The study of different approaches to organisation and management and the development of organisation theory has no practical relevance for today’s managers. It is really no more than a luxury for students and the time could be spent better on other topic areas.’ Debate. SYNOPSIS ■ The study of organisation and management has to proceed on a broad front. A central part of this study is the development of management thinking and what might be termed management theory. In order to help identify main trends in the development of management thinking and organisational behaviour, it is usual to categorise the work of leading writers into various ‘approaches’ based on their views of organisations, their structure and management. This provides a simplistic framework on which to direct study and focus attention. ■ The classical writers placed emphasis on purpose and structure, on the technical requirements of the organisation, and on the assumption of rational and logical behaviour. The human relations writers emphasised the importance of the informal organisation and the psychological and social needs of people at work. The systems approach focuses attention on the interactions between technical and social variables. The organisation is seen in continual interaction with the external environment. Contingency theory highlights possible means of differentiating between alternative forms of structures and systems of management. ■ This four-fold categorisation provides a useful starting point for the identification of main trends in the development of management thinking. Within this framework, however, it is possible to identify a number of other approaches or sub-divisions of approaches. The decision-making approach emphasises the need for good information and channels of communication. Social action writers attempt to view the organisation from the position of individual members who will each have their own interpretation of the work situation in terms of the satisfaction sought and the meaning that work has for them. ■ With the development of the information and technological age the need arises for alternative forms of corporate structure and systems. A more recent view is the idea of postmodernism. This rejects a rational systems approach to our understanding of organisations and management, and to accepted explanations of society and behaviour. Postmodernism is arguably more of a generalised sociological concept rather than a CHAPTER 3 APPROACHES TO ORGANISATION AND MANAGEMENT 95 specific approach to organisation and management. Nevertheless, postmodernist organisation can arguably be seen as a healthy challenge to more traditional approaches and reminds us of the complexities in our understanding of management and organisational behaviour. ■ Whatever form of categorisation is adopted, the division of writers on organisation and management into various approaches offers a number of advantages. For example, it helps in organisational analysis and the identification of problem areas. It enables the manager to take from the different approaches those ideas which suit best the particular requirements of the job. There are, however, a number of caveats which should also be noted including the significance of cultural contexts. In more recent years attention has been given to potential applications of Japanese management. ■ It might be that the study of organisations is moving towards a more scientific value approach. However, whatever the balance between philosophy and science, a knowledge of management theory will help with the complexities of management in modern work organisations. There is much scepticism and criticism of management gurus but the study of organisation theory is an indispensable part of the job. Ideas are as important to management decisions as is instinct. It is necessary to view the interrelationships among the development of theory, behaviour in organisations and management practice. MANAGEMENT IN ACTION 3.1 Japanese management Particularly in the 1970s and 1980s many companies sought to emulate the characteristics of Japanese management. This led to ongoing research into all aspects of Japanese management by both industry and academia. Opinions varied as to whether these techniques could be applied outside of Japan due to historical and cultural factors. This account looks at the origins and influences that led to Japanese management techniques and their potential applications. The question is then posed as to whether these techniques can apply, in whole or in part, internationally. Finally, recent developments in these techniques are assessed against a backcloth of recession and recovery in Japan. ORIGINS AND INFLUENCES In order to understand key concepts of Japanese management it is necessary to examine the influences that have brought this about. These have produced high levels of teamwork, an atmosphere of innovative ideas, and a willingness to constantly improve (Kaizen). Add to the legendary quality, target cost management and infrastructure support and one can begin to understand the part that human relations has been playing in the Japanese miracle. Volumes have been written both on the influences and the outputs that these have produced. It is sufficient here to summarise them briefly. ■ ■ ■ ■ ■ Participative decision-making Bottom-up management Lifetime employment Amae-dependency relationships Lean production A common factor to the above is teamwork. Academics attribute this historically to rice growing. Rice symbolises much more to Japanese people than a commodity crop. It is not only used as a form of payment but has spiritual significance as well. In essence rice production needed teamwork to flourish.86 Similarly religious thought has a part to play. Confucianism in China eventually spread to one of China’s provinces (Japan) where ‘Soshi’ taught the importance of harmony or ‘Wa’. In reality there are many religious influences today. However, it may be argued that the Japanese are eclectic, in that they retain core influences and values while assimilating ‘outside influences’, here meaning religion. Shinto is probably the oldest of these influences, probably pre-dating ‘Soshi’ or ‘Confucianism’ by 100 years. Within Shinto thought, it is the spirit that is important. It is the spirit which guides many enterprises. A related concept is that of ‘animism’. This holds that everything, even inanimate objects, has a spirit. This may account for the very low incidence of crime to property in Japan, for example; or alternatively, why it is possible to risk expensive items such as television displays in public which would more than likely be vandalised in the West. 96 PART 1 MANAGEMENT AND ORGANISATIONAL BEHAVIOUR Management in Action 3.1 continued Buddhism, in particular Zen Buddhism, teaches intuition that, for example, Japanese management can utilise its experience base for helping to develop new products or train new recruits. Important work by I.L.O. Geneva has found that Japanese managers rely more on intuition than their Western counterparts. Zen also teaches that one must view problems within their ‘holistic setting’. Hence this helps to focus on causes of problems not effects. This has linkages into oriental medicine, for example, treatment of the whole person. ‘Participative decision-making’ requires consultation and discussion. The now famous ‘Ringi’ process is but one manifestation of this process. This leads to the ‘nemawashi’ or ‘root binding’ followed seemingly by endless negotiation. It is as though the spirit guides the organisation, or plays a part, and decisions evolve from the discussions. ‘Bottom-up’ decision-making means that consensus decision-making really does include potential contributions from all concerned. For lifetime employment to exist, it requires commitment both from the employee and the employer. In the case of the former ‘selfless devotion’ to the master can be traced to Confucianism. Regarding the latter, the employer can only provide employment continuity if there is a constant demand for the products of the organisation. In recent time, both this and other concepts have been and are being challenged. The ‘amae-dependency’ concept is one in which an individual gives loyalty in return for favour or help. It is this dynamic which accounts for ‘groupism’. Hence groups develop that favour their own members. Comparisons have been drawn between the ‘clan’ system87 and groups. Hence the ‘in’ group is referred to as the ‘Uchi’ group, the ‘other’ group being referred to as the ‘Soto’ group. Some academics are of the view that this leads to relationships with other ‘preferred’ companies externally. These relationships are held in place by trust and confidence in the form of Japanese corporate networks. APPLICATIONS OF JAPANESE MANAGEMENT In the opening section key cultural and religious factors that play an important role within Japanese management were outlined. To this one must add some historical inputs, in particular the contribution of academics Deming and Juran. Following the American occupation of Japan, US policy changed from one of disabling Japan’s war machine to postwar reconstruction. 1948 therefore was a significant year. As part of this programme, US aid included visiting academics. Deming’s early lectures and recurrent visits were the seeds for quality management. Deming also introduced ‘value chain management’, ‘modern marketing’ and marketing research as well. These influences will be examined later. Employee selection As mentioned previously, loyalty is essential/expected. This is viewed both in terms of loyalty to one’s work group/team and also to senior management. Hence prospective employees are screened for their ability to work in teams. Next competence is assessed. This is viewed in terms of what is contributed to the group. ‘Competence’ is composed of ‘tensai’ or genius, that is the ability to be original/creative. This alone is insufficient but must be geared to hard work, ‘kinben’ and perseverance, ‘gamanzujoi’.88 Lifetime employment is the reward that an employee seeks in return. However, while seeking to honour this commitment, modern trends are eroding this time-honoured tradition (see later). In 1994 Nissan sought to redeploy its workforce following the closure of a major plant. This avoided mass redundancy.89 Training and development An important study compared the logbooks of 50 engineers in Japan with a matched sample of 50 engineers in the UK..90 Results showed that in Japan learning opportunities were maximised on the job itself. Managers typically spent between 25 per cent and 50 per cent of their time developing and training their staff. This was regarded as the prime role of the manager. The above takes place via evening seminars, meetings, courses, secondments, shadowing and mentoring. There are also parts of personnel development plans which are individually agreed with employees. Total Quality Management (TQM) The origins of TQM may be traced to Deming in the 1950s. This was a time in which Japanese quality in certain product fields was poor. As with so many concepts, the Japanese took them and developed them further. Quality is proactive in that the Japanese believe in quality monitoring and problem rectification on the spot. Hence this avoids costly reactive problem-solving, because, for instance, there are more components on the chassis by then (applying for example to car production or TV production). Hence responsibility for quality is devolved down to the shopfloor teams. This is supplemented by weekly team meetings.91 These also act as a platform for new ideas/processes. Cost control/lean production Managers constantly measure productivity and costs. The dual aim is to constantly improve quality while reducing costs. The concept of target cost management seeks to set budgets based on future cost levels rather than on historic cost levels as in the West. This allows for continuous improvement or ‘Kaizen’ concept to take place. Hence middle managers are given ‘tip-toe’ objectives as part of their appraisal interviews. These are set to stretch the person in order to attain them. In turn the organisation is stretched. Employee ideas, creativity and participation Nonaka encapsulates the strategic importance of company generated ideas. In an economy where the only certainty is uncertainty, the one sure source of competitive advantage is knowledge. When markets shift, technologies proliferate, competitors multiply and products become obsolete virtually overnight, successful companies are those that consistently create new knowledge, disseminate it widely throughout the organization, and quickly embody it in new technologies and products.92 CHAPTER 3 This quote reveals much about employee suggestions, teamwork, and consensual management. Employee suggestion schemes in the West once thought to have some use are, in fact, essential. In addition knowledge must be distributed throughout the organisation.93 CAN JAPANESE MANAGEMENT BE APPLIED INTERNATIONALLY? Critics of Japanese management point to difficulties in applying Japanese management techniques internationally due to cultural and historic factors. Either the absence of team factors or historical factors are seen as preventing the assimilation of HRM practices from Japan. However, recent research by the DTI has found that a synthesis of Japanese and European practices was present in the best performing UK organisations.94 Findings are shown in itemised form below: ■ ■ ■ ■ All staff shared in business planning; People are continuously developed; Communication is three way: up, down and across; Employees work in teams, co-operation is between teams as well as within them. Readers are left to form their own opinion of the value of international human relations! There is a lot of evidence to support the transfer of Japanese management internationally. Yet within these organisations Japanese concepts are not all applied wholesale.95 How many companies follow the practice of morning company exercises or sing the company song? In reality only certain aspects of Japanese practices have transferred. Chief amongst them is ‘teamwork’. Many organisations rate this factor as an essential in job descriptions nowadays. However, the model used is a derivative of the Japanese model. Similarly ‘Just In Time’ (JIT) is just one aspect of the ‘Kanban’ or card assembly system in car production. This seeks to match parts supply rate with production rate with sales rate or what we refer to now as material requirements planning. Target cost management within companies is now part of strategic accounting, yet many organisations in the UK are not using these techniques. Externally to a company, cost reduction via management of the supply chain is only recently gaining in importance. Training and an educated workforce An idea of the emphasis Japanese companies place on the correct mental attitude and skill level may be gauged by their attention to training, as mentioned above. In addition and especially in the case of overseas divisions, company programmes are designed ‘to re-educate’ their prospective workforce. At Matsushita specific efforts are focused to instil ‘team effort’ and an ‘egalitarian ethos’. This tends to have an adverse reaction on American employees, for example, who are used to individual responsibility and advancement.96 Another important difference concerns ‘information dissemination’. At NEC in Scotland employees were surprised at the need to attend daily meetings. This allows everyone to be informed and to express opinions and to be involved.97 It appears that for successful introduction of Japanese management techniques, two requirements are training and an APPROACHES TO ORGANISATION AND MANAGEMENT 97 educated workforce. In Mexico, the absence of education in some Japanese plant locations led to high turnover of employees and only partial implementation of Japanese management techniques.98 In the case of quality circles, when a quality leader emerged other members of the team would not accept that person as leader. Hence the concept had to be changed to ‘Mariachi circles’. The hidden acceptance was due to the fact that ‘Mariachi’ musical bands in Mexico do not have a leader. Research into ‘Maquiladoras’, that is, Japanese overseas divisions in Mexico, regarding the adoption of Japanese management techniques, found that initially they were low skilled locations which did not use advanced manufacturing techniques. However, in recent time consumer electronics companies were found to be using advanced techniques.99 RECENT CHANGES IN JAPANESE MANAGEMENT Important changes in the Japanese economy have exerted an influence on Japanese management. The question is now whether or not the once-heralded practices can themselves adapt. The labour market in Japan has had to adapt to cost cutting within industry.100 This has affected the conditions underpinning lifetime employment. Companies have had to shed labour in addition to early retirement. Women have also been discriminated against as part of cost-cutting plans. Companies have decided to outsource some business functions such as accountancy and to take on temporary employees. Another casualty has been middle management. Typically this has been large in Japanese companies. As a result middle managers are joining ‘unions for management’. In addition, the tradition of promotion for length of service is giving way to performance remuneration.101 The advent of the global economy means that shareholders can now exert influences on business and its performance. Against the arguments concerning the impacts of labour surplus and company cost cutting, it is often mentioned by demographers that Japan’s ageing population may soon rectify the imbalance of work availability, volitionally. Culturally it should be remembered that Japanese people do not like changing jobs. They view with suspicion anyone who changes jobs frequently (if at all). They regard it as shameful to switch one’s loyalty to another company.102 Legally the Employment Security Law of 1947 forbade employers from advertising for labour and from hiring any worker whose job change required a change of residence.103 However, the presence of temporary, short-term employment bureaux is an example of the way in which economic conditions are forcing companies to rethink their employment policies. An interesting approach to overstaffing has been to move employees to suppliers, ‘Shukko’. As mentioned previously, suppliers owe an obligation to their parent company. Hence they accepted these surplus workers but at a reduced salary level. Those in this category included middle managers over 55 years of age, surplus technical managers and workers from curtailed production lines.104 This in turn has led to tensions between the accepting supplier companies called ‘ukezara’ and the parent companies. The former comment 98 PART 1 MANAGEMENT AND ORGANISATIONAL BEHAVIOUR Management in Action 3.1 continued that they have to suffer cuts in orders, prices and receive excess workers. This is referred to as subcontractor bullying or ‘shitauke ij ime’.105 The net effect of these trends has been to downsize and also to ‘flatten’ organisational structures. In response to this, many middle managers are joining unions or elect to shift jobs. The payment system based on seniority, ‘senko’, is being replaced by performance pay as mentioned. Within organisations managers feel that this will damage morale and group cohesion. The tradition of older workers helping younger more inexperienced workers may also be threatened.106 Within the UK, Japanese companies are now having to focus upon developing local employees, moving to performance-related, locally based payment systems, according to Arthur Andersen.107 They report that there is still a tendency for head offices to dictate/influence levels of pay abroad. However, in all only 10 companies have substituted performance-based pay and promotion for seniority-based systems (nenko).108 CONCLUSION By way of conclusion, if anything Japanese management demonstrates an ability to adapt to harsh economic conditions. That adaptation is itself a product of Japan’s unique history and culture. This has produced a series of ongoing and developing techniques that companies worldwide seek to emulate, transfer and hopefully further improve. This in itself has led to a new field in HRM, that of International HRM This seeks to study the problems of transferring Japanese management worldwide. Implicit in this research is cultural distance theory. By this is meant whether the indigenous culture in the host country is near to or far removed from that of Japan. It will be interesting to see, within this context, the impact of Japanese management techniques within China.109 China is set to become a major player among the world economies. Perhaps China’s culture is nearer to that of Japan and will perhaps assimilate Japanese management techniques more easily as a result. I am grateful to my colleague, Roger Dace, Department of Business and Management, University of Portsmouth for providing the above information. REVIEW AND DISCUSSION QUESTIONS 1 Identify, and outline briefly, major trends in management theory since the beginning of this century. 2 Assess critically the relevance of scientific management to present-day organisations. Illustrate your answer with reference to your own organisation. 3 To what extent is there anything positive to be said for bureaucratic structures? Select a large-scale organisation of your choice and suggest ways in which it displays characteristics of a bureaucracy. 4 What are the main conclusions that can be drawn from the Hawthorne experiments? Discuss critically the relevance of these experiments for management and organisational behaviour today. 5 Summarise the main features of the neo-human relations approach to organisation and management. How does it differ from other approaches? 6 Evaluate the application of the systems approach to the analysis of work organisations. Suggest an example of a work situation in which the systems approach might be appropriate. 7 Contrast approaches to improving organisational performance based on attention to technical and structural requirements, with those based on concern for psychological and social factors. 8 Explain what is meant by a social action approach. Assess critically the practical relevance of ‘action theory’. 9 Give your own views, with supporting reasons, on the relevance and applications of Japanese management outside of Japan. 10 Debate critically the extent to which the study of organisation theory and the ideas of management gurus have any practical relevance or benefits for managers. CHAPTER 3 APPROACHES TO ORGANISATION AND MANAGEMENT 99 ASSIGNMENT 1 a Answer each question mostly agree or mostly disagree. Assume that you are trying to learn something about yourself. Do not assume that your answer will be shown to a prospective employer. Mostly agree Mostly disagree 1 I value stability in my job. 2 I like a predictable organisation. 3 The best job for me would be one in which the future is uncertain. 4 The Army would be a nice place to work. 5 Rules, policies and procedures tend to frustrate me. 6 I would enjoy working for a company that employed 85 000 people worldwide. 7 Being self-employed would involve more risk than I’m willing to take. 8 Before accepting a job, I would like to see an exact job description. 9 I would prefer a job as a freelance house painter to one as a clerk for the Department of Motor Vehicles. 10 Seniority should be as important as performance in determining pay increases and promotion. 11 It would give me a feeling of pride to work for the largest and most successful company in its field. 12 Given a choice, I would prefer to make £30 000 per year as a vice-president in a small company to £40 000 as a staff specialist in a large company. 13 I would regard wearing an employee badge with a number on it as a degrading experience. 14 Parking spaces in a company lot should be assigned on the basis of job level. 15 If an accountant works for a large organisation, he or she cannot be a true professional. 16 Before accepting a job (given a choice), I would want to make sure that the company had a very fine programme of employee benefits. 17 A company will probably not be successful unless it establishes a clear set of rules and procedures. 18 Regular working hours and vacations are more important to me than finding thrills on the job. 100 PART 1 MANAGEMENT AND ORGANISATIONAL BEHAVIOUR Assignment 1 continued 19 You should respect people according to their rank. 20 Rules are meant to be broken. b You should then consider and discuss the further information supplied by your tutor. ASSIGNMENT 2 In self-selecting groups of three or four, visit a work organisation of your choice, preferably one that is well known to at least one member of your group. a Investigate those features of the structure, management and operations of the organisation which are characteristic of: (i) scientific management; and (ii) bureaucracy. Comment critically on what you believe to be the practical effects of your set of characteristics, and give examples in support of your comments. b For the same, or a different, organisation, comment critically, with supporting examples, on the extent to which applications of the human relations approach to organisation and management have been applied in practice. CHAPTER 3 APPROACHES TO ORGANISATION AND MANAGEMENT PERSONAL AWARENESS AND SKILLS EXERCISE OBJECTIVES Completing this exercise should help you to enhance the following skills: Demonstrate your knowledge and understanding of scientific management techniques. Write an objective set of instructions for undertaking a simple piece of work. EXERCISE Using the example on page 73 as a model, you are required to develop a detailed programme using scientific management techniques for a simple household task such as: ■ Parking a car or booking an airline ticket. ■ Cooking a simple meal (for example spaghetti bolognese). ■ Bathing a small child. ■ Rearranging 100 CDs in alphabetical order, 10 to each shelf. ■ Washing up. DISCUSSION ■ What are the potential up- and downsides of removing operator discretion in this way? ■ Explain with supporting reasons those tasks or activities that you believe are particularly suited to a scientific management approach. ■ How do YOU feel about carrying out routine tasks on an ongoing basis over which you are given little personal discretion? Visit our website www.booksites.net/mullins for further questions, annotated weblinks, case material and Internet research material. 101 102 PART 1 MANAGEMENT AND ORGANISATIONAL BEHAVIOUR CASE STUDY 3.1 Helgaton Ltd: organisational theory in practice Laurie Mullins and Ian White This case study presents the result of an empirical investigation that attempts to assess the extent to which organisation theory has any practical applications for managers in a modern commercial organisation. BACKGROUND The overall mission of Helgaton Ltd is to deliver quality business products and systems throughout the UK and Ireland. The company employs more than 4000 people in nearly 50 locations. In order to help in the drive to fulfil the mission, there are four stated ‘Common Goals’ related to customers, quality, profitability and employees. These Common Goals are intended to provide central direction and focus for departments and the individuals within them. Emphasis on quality The continuing desire of Helgaton Ltd to become a Total Quality Company is the embodiment of corporate values. Quality is a basic business principle and means providing customers with innovative products and services that fully satisfy their negotiated requirements. This philosophy is reflected for example in terms of the BS 5750 status awarded to Helgaton Ltd by the British Standards Institute. Tasks, goals and objectives In consideration of the overall mission of Helgaton Ltd, the corporate plans are embodied within a series of functional Tasks, Goals and Objectives (TGO). Each individual employee receives a TGO which is a translation from the functional level into the targets and actions which are relevant for the individual job role. made in implementing the concept of autonomous work groups. THE SITUATION An investigation was undertaken with the aim of addressing the practical applicability of organisation theory at Helgaton Ltd and the extent to which it meets the needs of the manager. This involved the analysis of published material already available within the company (secondary data) and information generated firsthand from personal interviews with managers (primary data). Secondary data Helgaton Ltd produces an enormous amount of literature aimed at informing and aiding the employees. This literature may be seen to reflect, in part, the management and structure of the company. Some examples are as follows. ■ ■ ■ Restructuring Helgaton Ltd is also a change-oriented company. During 1992, a major restructuring process was undertaken. In order to provide a more customerresponsive structure a whole layer of middle management was removed from the customer service division. Attention was also focused on developing closer teamworking among sales and service operations rather than operating as separate divisions. A large financial investment had also been ■ Company manuals. Company manuals were found to be very specific in terms of policy and procedure. For example, departmental manuals explain policy in infinite detail and an accompanying manual details every step required in carrying out this policy. Employee manuals are in similar detail and include an analysis of the required manual skills. Autonomous Work Groups (AWG). A comprehensive set of documents has been prepared by the company which set out: the AWG environment; the need for change; what is the AWG; the vision; limits of responsibilities; benefits to the individual; benefits to the company; and hopes and concerns. Organisational processes. The recruitment and selection process is based on scientific principles. Detailed Job Profiles are built up and for interview purposes comprehensive Candidate Profiles are constructed. If suitable candidates have the right technical qualifications and pass the appropriate psychometric testing, they are matched against the job profiles. Other ‘tools’ include detailed processes intended to help employees in problem-solving and to improve quality. The employee survey. This survey and analysis is carried out every year and is undertaken by an independent research company. The survey CHAPTER 3 involves a wide range of questions related to subjects such as management systems and styles; working conditions; training; career development; pay; benefits; job security; team spirit; and overall job satisfaction. The same research company also provides a comparative analysis related to other companies that they survey. Results of the survey are confidential within the company but currently overall job satisfaction within Helgaton Ltd is around the 55 per cent mark. Primary data Although secondary data may provide an important source of supporting information it does not by itself provide a sufficiently sound basis on which to formulate any conclusions. In order to examine further the application of organisation theory, it was necessary to obtain more specific and detailed data. For this purpose use was made of the semi-structured interview with managers. The survey population The broad categorisation adopted was that of a manager and non-manager dichotomy. Because of their position and experience, managers were considered to be the most appropriate population for the survey and the resulting data more valid and easier to generalise. The population was quota sampled. Attempts were made to balance, as far as possible, the demographics, location, and seniority and experience of the managers. A further consideration was the availability of the managers’ time. Details of the interviewee statistics are given below: Number interviewed 15 (11 male; 4 female) Function Customer Service Division Sales and Operations Personnel Finance 9 4 1 1 Length of service < 5 years 5–10 years 10–15 years 15–20 years > 20 years 2 1 3 2 7 Length of time in management < 5 years 4 5–10 years 3 10–15 years 5 15–20 years 2 > 20 years 1 APPROACHES TO ORGANISATION AND MANAGEMENT Pilot study In order to test the reliability of the interview, a pilot study was undertaken involving a representative member of the population. This pilot study highlighted two major issues. ■ ■ Many of the questions were either too open or too closed and needed to be refined. Initially the responses were handwritten. This was both costly in terms of time and, more importantly, revealed the risk of missing vital pieces of data. It was decided therefore to taperecord the interviews and to transcribe the results at a later date. In order to try to avoid the managers gaining a feel for any particular sort of responses expected, the questions were arranged so as not to be sequential. The revised list of questions used in the interviews is given below. 1 Do you feel that there are good channels of communication within Helgaton? 2 Do you have a clearly defined job role? If so, where is it laid out? 3 What do you feel motivates Helgaton employees? 4 How do you go about achieving your goals at work? 5 To what extent do you feel a change in technology would affect the way Helgaton operates? 6 How do you plan your work? 7 Why do you believe Helgaton has chosen the empowered working group as the way forward? 8 How would a subordinate employee describe your management style? 9 To what extent do you feel teamwork is important to (a) Helgaton and (b) yourself? 10 Do you feel Helgaton’s organisational structure is hierarchical? 11 To what extent do you see Helgaton Ltd as belonging to a larger environment? 12 Do you perceive there to be many technical requirements to your job? 13 What are your personal goals at work? 14 What do you feel is the purpose of training an employee? 15 What do you believe to be the basis of promotion at Helgaton? 16 How well do you see Helgaton’s management respond to change? 17 To what extent do you plan the work of others? 18 Can you rate the following five factors in order of importance to (a) Helgaton (b) yourself? Groups and Leadership; Communications; Output; Motivation; Job Design. 103 104 PART 1 MANAGEMENT AND ORGANISATIONAL BEHAVIOUR Case study 3.1 continued 19 Do you feel that an individual’s behaviour can be predicted and if so, how? 20 Do you believe there to be a clear division between Helgaton management and subordinates? 21 What other roles within Helgaton have you been involved in? 22 Do you feel Helgaton is keen to understand what satisfies an employee at work? 23 Do you feel committed to a common purpose at work? Collecting the data Interviews lasted on average just over one hour, were arranged when managers could best spare the time and took place over a period of about one month. Managers were informed that the interview would be taped and no one objected to this. The interview involved asking the questions, elaborating and probing where necessary, and finding out more about the manager’s background, in case this might affect any of the responses. For the same reason the specific purpose of the interview was not explained to the managers. The tapes were then transcribed and tabulated. Results of the interview questions (Note: some of the questions prompted more than a single response, and so percentages may total more than 100.) 1 Channels of communication. 33 per cent argued that channels of communication were good, 53 per cent that they were poor and 14 per cent argued they were both good and poor. 2 Clearly defined job role. All managers pointed to their Tasks, Goals and Objectives (TGO) as evidence of a clearly defined job role. The TGO relates the four company goals to the employee. The most senior managers clearly stated the relationship between company goals and that of the individual. Other managers argued that the TGO provided only an overview of their job role. It was also noted that the lower down the organisational structure, the more restrictive the perception of the TGO. 3 Motivation of employees. 73 per cent stated money as a clear motivator. Sales and operations managers claimed that motivation was also dependent upon function: sales staff being motivated more by money and service staff by job satisfaction. Service and personnel managers claimed it was pay. Only the most senior managers directly referred to the employee survey carried out each year. 4 Achieving goals at work. Responses were of a general nature such as: ‘by attention to and following my TGO’; ‘by hard work’; ‘whatever I do at work doesn’t really matter so long as it is seen to be related to the four common goals’. 5 Effects of technology. The responses made clear that Helgaton Ltd is a technology-driven company, for example the increasing use of mobile telephones. However, two managers indicated that the sole reason for the introduction of technology is to increase productivity. The problems of introducing technology without the necessary full training were also pointed out. 6 Planning of work. 60 per cent specifically stated that their work is planned by their diary. Management meetings at regular times in the month and regular meetings with customers, for example, largely dictated their movements at work. One manager estimated that 50 per cent of time was dictated by the diary. 7 Empowered working group. The importance of quality (including the work of Deming) and the influence of Japanese working methods were cited as examples. It was widely believed that the benefits to the customer, employee and business results justified the large expenditure on this concept. Many managers also highlighted the autonomous work group concept as an example of the application of organisation theory. 8 Management style. When managers were asked how their subordinates would describe their management style all apart from one (93 per cent) focused on terms such as ‘fair’, ‘democratic’, ‘supportive’, ‘honest’, ‘caring’ and ‘humanistic’. 9 Importance of teamwork. All managers bar one felt totally committed to the importance of teamworking and believed it was the only way the business could move forward. The autonomous work group concept involved all employees including managers as well. The increasing attention given to teamworking was welcomed by the sales and operations managers who expressed their commitment to the concept as being the way forward to business success. 10 Hierarchical structure. 67 per cent indicated that the structure was not hierarchical in terms of specific functions. However, 47 per cent argued that a hierarchy still existed within Helgaton Ltd or within particular functions. One manager suggested that ‘the principles of Taylor still exist within Helgaton’. 11 The larger environment. Although managers appeared to recognise that Helgaton Ltd was part of a larger environment, responses tended to identify only broad elements such as the ‘Green’ issue. There were no responses which referred to particular environmental factors influencing behaviour in work organisations. 12 Technical requirements of the job. All claimed that a high level of skill is needed to undertake their job CHAPTER 3 role. The customer service managers had all come through the ranks and started as service engineers. At that level technical requirements are high but at management level only a broad technical knowledge is required; business skills are more important than mechanical skills. Non-service managers also recognised the need for business and management skills. 13 Personal goals at work. 47 per cent claimed that their only goal at work was to achieve the targets set by the company or to be the best region in terms of customer satisfaction. No conflict between business goals and personal goals was revealed. However, only senior managers clearly stated the relationship between the company goals and those of the individual. Some managers had targeted future managerial positions in accordance with the company succession planning programme but no details were disclosed. 14 The purpose of training employees. 87 per cent believed in the principle of training employees so that they become more efficient. 53 per cent recognised the importance of development of the individual as a person, but this was a secondary feature. One manager quoted the principle of ‘self-actualising them’. 15 Basis of promotion. In the majority of cases, managers clearly stated ‘merit’ or ‘ability’ as the overt belief. However, the ‘if your face fits’ syndrome was also an apparent covert reason. One senior manager argued that with the removal of a layer of management promotion chances were reduced. 16 Management response to change. 73 per cent claimed that they responded very well and some claimed to actually thrive on change. 27 per cent claimed that management has severe difficulty but the implication appeared to be that this applied to other managers rather than to themselves. One manager pointed to the managing change training course offered by Helgaton to help with any problem areas. 17 Planning the work of others. Of the eleven managers with line responsibilities 73 per cent (eight) indicated that they do not specifically plan the work of their subordinates. Instead they tended to agree deadlines to work to and left subordinates to achieve tasks their own way in the given time. The remaining three managers claimed that they planned the work of others in great detail. 18 Importance of factors. Managers were asked to rate five factors in order of importance to both Helgaton Ltd and to themselves (they were permitted to tie answers). Results were then tabulated, as set out in the table opposite. For each heading, the first column shows the order of importance, the second column the importance they saw Helgaton Ltd attaching to each factor, the third column is their own ranking of the factor, and the final column looks at responses which ranked the same for both Helgaton and the manager. APPROACHES TO ORGANISATION AND MANAGEMENT Table 3.1 Order of importance attributed to five factors Output Imp. Hel. You Same 1 2 3 4 5 9 1 – 4 1 7 2 4 2 – 4 – – – – Total 15 15 4 Groups and leadership Imp. Hel. You 5 3 4 3 – 5 1 3 3 3 3 1 1 – – 15 15 5 1 2 3 4 5 Total Same Communications Imp. 1 2 3 4 5 Total Hel. You 1 3 9 1 1 4 2 4 4 1 1 1 3 – – Same 15 15 5 Hel. You – 6 3 4 2 7 3 1 3 1 – 1 – 1 – 15 15 2 Hel. You Same 2 – 3 2 8 2 2 1 1 9 – – – – 6 15 15 6 Motivation Imp. 1 2 3 4 5 Total Same Job design Imp. 1 2 3 4 5 Total For example, according to nine respondents output is a factor that Helgaton would rate as number one importance. Seven managers rated output as their highest priority and of these seven, 105 106 PART 1 MANAGEMENT AND ORGANISATIONAL BEHAVIOUR Case study 3.1 continued four also ranked output as of greatest importance to Helgaton. Thus 57 per cent of those managers who believed output was the most important factor to Helgaton also claimed it was their highest priority. 19 Prediction of behaviour. All the managers believed that the behaviour of an individual can be predicted providing the individual is well known to them. There were, however, no indications of whether any particular behavioural assumptions, for example relating to motivation, job satisfaction or work performance, are made in Helgaton Ltd. 20 Division between management and subordinates. 93 per cent perceived there to be a division to some extent although this may be from a subordinate only view and/or that these divisions were being removed. Two managers further suggested that the division was due, at least in part, to the benefits received by managers when compared with subordinates – for example bonus schemes and choice of company car. One manager stated clearly that there was no division. 21 Other roles within Helgaton Ltd. Within the customer division all nine managers interviewed had always worked in service. The other six managers had varied backgrounds but tended to remain in the same function. All the service managers indicated that possible future moves would still be within service. Although the company promotes the belief that cross-functional moves are possible, this appeared to be a rare occurrence on a permanent basis. 50 per cent had moved on a temporary or secondment basis but only one manager had moved between functions on a permanent basis. 22 Satisfaction of employees. Managers felt that Helgaton Ltd was keen to find out what satisfies employees although some responses suggested this might be only a ‘lip-service’ exercise. It was only the most senior managers who directly linked their responses to the employee survey carried out each year. 33 per cent highlighted the interest in satisfying the employee in terms of the time and money spent in undertaking the employee survey. 23 Commitment to a common purpose. There was a claimed 100 per cent commitment felt to a common purpose at work. However, the nature of this common purpose varied. Some managers expressed that they felt committed to their TGO, some to the stated goals of Helgaton Ltd, some to their region, some to business results, and some to survival of the business. YOUR TASKS (a) Comment critically on the nature and value of the investigation. What difficulties does such an investigation present and how might these difficulties be best overcome? (b) State clearly the conclusions you draw from the investigation and discuss the extent to which it reveals practical applications of organisation theory. (c) Explain and justify the specific recommendations you would make to the top management of Helgaton Ltd as a result of the investigation. NOTES AND REFERENCES 1. This chapter is based in parts on a development of the author’s articles: Mullins, L. J. ‘Approaches to Management’, Management Accounting, vol. 57, no. 4, April 1979, pp. 15–18, and Mullins, L. J. ‘Some Further Approaches to Management Theory’, Management Accounting, vol. 58, no. 3, March 1980, pp. 30–3. 2. See, for example: George, C. S. The History of Management Thought, Second edition, Prentice-Hall (1972). 3. For a review of management thinking see, for example: Sheldrake, J. Management Theory: From Taylorism to Japanization, International Thomson Business Press(1996). 4. See also: Flores, G. N. and Utley D. R. ‘Management concepts in use – a 12-year perspective’, Engineering Management Journal, vol. 12, no. 3, September 2000, pp. 11–17. 5. McGregor, D. The Human Side of Enterprise, Penguin (1987), p. 6. 6. Ghoshal, S., Barlett, C. A. and Moran, P. ‘Value Creation: The New Millennium Management Manifesto’, in Chowdhury, S. Management 21C, Financial Times Prentice Hall (2000), p. 122. 7. Miner, J. B. Theories of Organizational Behaviour, Dryden Press (1980). 8. Skipton, M. D. ‘Management and the Organisation’, Management Research News, vol. 5, no. 3, 1983, pp. 9–15. 9. Fayol, H. General and Industrial Management, Pitman (1949). See also: Gray, I. Henri Fayol’s General and Industrial Management, Pitman (1988). 10. Urwick, L. Notes on the Theory of Organization, American Management Association (1952). CHAPTER 3 11. Mooney, J. D. and Reiley, A. C. The Principles of Organization, Harper and Bros (1939); revised by Mooney, J. D., Harper and Row (1947). 12. Brech, E. F. L. Organisation: The Framework of Management, Second edition, Longman (1965). 13. Simon, H. A. Administrative Behaviour, Third edition, Free Press (1976), p. xxii. 14. Woodward, J. Industrial Organization: Theory and Practice, Second edition, Oxford University Press (1980). 15. Taylor, F. W. Scientific Management, Harper and Row (1947). Comprises Shop Management (1903), Principles of Scientific Management (1911) and Taylor’s testimony to the House of Representatives’ Special Committee (1912). 16. Braverman, H. Labor and Monopoly Capital, Monthly Review Press (1974). 17. For a study of employers’ labour relations policies, including comments on the work of Braverman, see: Gospel, H. F. and Littler, C. R. (eds) Managerial Strategies and Industrial Relations, Heinemann Educational Books (1983). 18. Cloke, K. and Goldsmith, J. The End of Management and the Rise of Organizational Democracy, Jossey-Bass (2002), p. 27. 19. Rose, M. Industrial Behaviour, Penguin (1978), p. 31. See also: Rose, M. Industrial Behaviour, Second edition, Penguin (1988), Chapter 2. 20. Drucker, P. F. ‘The Coming Rediscovery of Scientific Management’, The Conference Board Record, vol. XIII, June 1976, pp. 23–7. Reprinted in Drucker, P. F. Towards the Next Economics and Other Essays, Heinemann (1981). 21. Locke, E. A. ‘The Ideas of Frederick W. Taylor: An Evaluation’, Academy of Management Review, vol. 7, no. 1, January 1982, pp. 14–24. 22. For a discussion on ‘Fordism’, see, for example: Fincham, R. and Rhodes, P. S. The Individual, Work and Organization, Second edition, Weidenfeld and Nicolson (1992). 23. Crainer, S. and Dearlove, D. Financial Times Handbook of Management, Second edition, Financial Times Prentice Hall (2001). 24. Stern, S. ‘Guru Guide’, Management Today, October 2001, pp. 83–4. 25. Weber, M. The Theory of Social and Economic Organization, Collier Macmillan (1964). 26. Blau, P. M. and Scott, W. R. Formal Organizations, Routledge and Kegan Paul (1966). 27. Stewart, R. The Reality of Management, Third edition, Butterworth-Heinemann (1999). 28. Argyris, C. Integrating the Individual and the Organization, John Wiley & Sons (1964). 29. Caulkin, S. ‘Faceless Corridors of Power’, Management Today, January 1988, p. 65. 30. Peters, T. J. and Waterman, R. H. In Search of Excellence, Harper & Row (1982). 31. Tibballs, G. Business Blunders, Robinson Publishing (1999). 32. Cloke, K. and Goldsmith. J. The End of Management and the Rise of Organizational Democracy, Jossey-Bass (2002), pp. 92–4. APPROACHES TO ORGANISATION AND MANAGEMENT 33. Ridderstrale, J. ‘Business Moves Beyond Bureaucracy’, in Pickford, J. (ed.) Financial Times Mastering Management 2.0, Financial Times Prentice Hall (2001), pp. 217–20. 34. Green, J. ‘Is Bureaucracy Dead? Don’t Be So Sure’, Chartered Secretary, January 1997, pp. 18–19. 35. See for example: Waller, P. ‘Bureaucracy takes new form’, Professional Manager, May 1998, p. 6. 36. See, for example: Mullins, L. J. Hospitality Management and Organisational Behaviour, Fourth edition, Longman (2001). 37. Stewart, R. The Reality of Management, Third edition, Butterworth Heinemann (1999). 38. See, for example: Wilson, F. A. Organizational Behaviour: A Critical Introduction, Oxford University Press (1999). 39. For example, see: Etzioni, A. Modern Organizations, Prentice-Hall (1964), p. 41. 40. See, for example: Aktouf, O. ‘Management and Theories of Organizations in the 1990s: Towards a Critical Radical Humanism?’, Academy of Management Review, vol. 17, no. 3, 1992, pp. 407–31. 41. There are many versions of the Hawthorne experiments. Among the most thorough accounts is Roethlisberger, F. J. and Dickson, W. J. Management and the Worker, Harvard University Press (1939). See also: Landsberger, H. A. Hawthorne Revisited, Cornell University Press, Ithaca (1958). 42. See, for example: Rose, M. Industrial Behaviour, Second edition, Penguin (1988). 43. See, for example: Buggy, C. ‘Are you really listening?’, Professional Manager, July 2000, pp. 20–2. 44. Silverman, D. The Theory of Organisations, Heinemann (1970). 45. Stead, B. A. Women in Management, Prentice-Hall (1978), p. 190. 46. Crainer, S. Key Management Ideas: Thinkers that changed the management world, Third edition, Financial Times Prentice Hall (1998), p. 111. 47. Maslow. A. H. ‘A Theory of Human Motivation’, Psychological Review, vol. 50, no. 4, July 1943, pp. 370–96. 48. Herzberg, F. W., Mausner, B. and Snyderman, B. B. The Motivation to Work, Second edition, Chapman and Hall (1959). 49. McGregor, D. The Human Side of Enterprise, Penguin (1987). 50. Likert, R. New Patterns of Management, McGraw-Hill (1961). See also: Likert, R. The Human Organization, McGraw-Hill (1967), Likert, R. and Likert, J. G. New Ways of Managing Conflict, McGraw-Hill (1976). 51. McClelland, D. C. Human Motivation, Cambridge Unibersity Press (1988). 52. Argyris, C. Understanding Organizational Behavior, Tavistock Publications (1960) and Integrating the Individual and the Organization, Wiley (1964). 53. See, for example: Caulkin, S. ‘Chris Argyris’, Management Today, October 1997, pp. 58–9. 54. Bertalanffy, L. von ‘Problems of General Systems Theory: A New Approach to the Unity of Science’, Human Biology, vol. 23, no. 4, December 1951, pp. 302–12. 107 108 PART 1 MANAGEMENT AND ORGANISATIONAL BEHAVIOUR 55. Miller, E. J. and Rice, A. K. Systems of Organization, Tavistock Publications (1967). 56. Boulding, K. ‘General Systems Theory – The Skeleton of Science’, Management Science, vol. 2, no. 3, April 1956, pp. 197–208. 57. Trist, E. L. et al. Organizational Choice, Tavistock Publications (1963). 58. Lane, T., Snow, D. and Labrow, P. ‘Learning to succeed with ICT’, The British Journal of Administrative Management, May/June 2000, pp. 14–15. 59. Walker, C. R. and Guest, R. H. The Man on the Assembly Line, Harvard University Press (1952). See also: Walker, C. R., Guest, R. H. and Turner, A. N. The Foreman on the Assembly Line, Harvard University Press (1956). 60. Sayles, L. R. Behaviour of Industrial Work Groups, Wiley (1958). 61. Blauner, R. Alienation and Freedom, University of Chicago Press (1964). 62. Barnard, C. The Functions of the Executive, Oxford University Press (1938). 63. Simon, H. A. The New Science of Management Decision, Revised edition, Prentice-Hall (1977). 64. Cyert, R. M. and March, J. G. A Behavioural Theory of the Firm, Second edition, Blackwell (1992). 65. Silverman, D. The Theory of Organisations, Heinemann (1970), p. 147. 66. Goldthorpe, J. H. et al. The Affluent Worker, Cambridge University Press (1968). 67. Fox, A. Industrial Sociology and Industrial Relations, HMSO (1966). 68. Bowey, A. M. The Sociology of Organisations, Hodder and Stoughton (1976). 69. For further information see Crainer, S. Key Management Ideas: Thinkers that changed the management world, Third edition, Financial Times Prentice Hall (1998). 70. Clegg, S. R. Modern Organizations: Organization Studies in the Postmodern World, Sage (1990). 71. Watson, T. J. Organising and Managing Work, Financial Times Prentice Hall (2002), p. 51. 72. Ibid., p. 50. 73. See, for example: Legge, K. Human Resource Management: Rhetorics and Realities, Macmillan Business (1995). 74. Watson, T. J. Organising and Managing Work, Financial Times Prentice Hall (2002), p. 254. 75. Schneider, S. C. and Barsoux, J. Managing Across Cultures, Second edition, Financial Times Prentice Hall (2003). 76. Cheng, T., Sculli, D. and Chan, F. ‘Relationship Dominance – Rethinking Management Theories from the Perspective of Methodological Relationalism’, Journal of Managerial Psychology, vol. 16, no. 2, 2001, pp. 97–105. 77. Heller, R. ‘The Change Managers’, Management Today: 25th Anniversary Issue, 1991, pp. 12–16. 78. See, for example: Klein, S. M. and Ritti, R. R. Understanding Organizational Behavior, Second edition, Kent Publishing (1984), Chapter 1. 79. Miner, J. B. Management Theory, Macmillan (1971), p. 145. See also: Miner, J. B. Theories of Organizational Behaviour, Holt, Rinehart and Winston (1980), Chapter 1. 80. Crainer, S. Key Management Ideas: Thinkers that changed the management world, Third edition, Financial Times Prentice Hall (1998), p. xi. 81. For a critical account on competing views about organisation theory and its applications, see: Perrow, C. Complex Organizations, Second edition, Scott, Foresman (1979). For a discussion of British and American ideas on conceiving and selling management theory, see: Foster, G. ‘Management’s Missing Ideas’, Management Today, March 1980, pp. 72–5, 152–6. 82. Crainer, S. ‘That Was The Idea That Was’, Management Today, May 1997, pp. 18–19. 83. Crainer, S. ‘The Rise of Guru Scepticism’, Management Today, March 1997, pp. 48–52. 84. Flores, G. N. and Utley, D. R. ‘Management Concepts in Use – a 12-year Perspective’, Engineering Management Journal, vol. 12, no. 3, September 2000, pp. 11–17. 85. Stern, S. ‘Guru Guide’, Management Today, October 2001, p. 87. 86. Tudor, T. and Trumble, R. ‘Significant Historic Origins that Influenced the Team Concept in Major Japanese Companies’, Journal of Applied Business Research, vol. 12, no. 4, Fall 1996, p. 116. 87. Bhappu, A. ‘The Japanese Family: An Institutional Logic for Japanese Corporate Networks and Japanese Management’, Academy of Management Review, vol. 25, no. 2, April 2000, p. 412. 88. Khan, R. ‘Japanese Management: A Critical Appraisal’, Management Decision, vol. 29, 1991, p. 17. 89. Channon, D. ‘Can Eastern H. R. Promise the West a New Dawn?’ Personnel Management – East Asia, vol. 2, no. 17, 1996, p. 2. 90. Lorriman, J. ‘Life Long Learning in Japan’, Journal of European Industrial Training, vol. 19, no. 2, 1995, p. 2. 91. Doeringer, P. and Evans-Klock, C. ‘Hybrids or Hodgepodges Workplace Practices of Japanese’, Industrial and Labour Relations Review, vol. 51, no. 2, January 1998, p. 171. 92. Harari, O. ‘Flood your Organization with Knowledge’, Management Review, vol. 86, no. 10, November 1997, p. 35. 93. Harari, O. ‘Turn your Organization into a Hotbed of Ideas’, Management Review, vol. 84, no. 12, December 1995, p. 39. 94. Pickard, J. ‘Personnel Management Research’, DTI, People Management, vol. 3, no. 15, 1997 p. 15. 95. Thanopoulos, J. and Leonard, J. ‘Nourishing American Business with Japanese Recipes’, Review of Business, vol. 18, no. 1, Fall 1996, p. 7. 96. Inone, Y. ‘Foreign Staff Learn the Matsushita Way’, The Nikkei Weekly, 15 March 1993, p. 11. 97. Anon. ‘At NEC, Meetings Are a Way of Work’, Japan Economic Journal, 3 February 1990. 98. Sargent, J. and Mathews, L. ‘Expatriate Reduction and Mariachi Circles’, Personnel Management, vol. 28, no. 2, 1998, p. 77. 99. Kenney, M. and Goe, W. ‘Learning Factories or Reproduction Factories’, Work and Occupations, vol. 25, no. 3, 1998, p. 275. 100. Harney, A. ‘Young Japanese Losing Interest in Lifelong Relationship with One Employer’, Financial Times, 9 April 2000, p. 9. CHAPTER 3 101. Kiso, T. ‘Just What You Always Wanted: Another Lecture About Japanese Management’, Insight Japan, vol. 8, no. 2, October 1999, p. 34. 102. Harney, A. and Abrahams, P. ‘Death of a Salaryman’, Financial Times, 12 November 1998, p. 31. 103. Schmidt, R. ‘Japanese Management, Recession Style’, Business Horizons, vol. 39, no. 2, March 1996, p. 70. 104. Op. cit., p. 73. 105. Lincoln, J. ‘The Transformation of the Japanese Employment System’, Work and Occupations, vol. 24, no. 1, February 1997, p. 39. FT APPROACHES TO ORGANISATION AND MANAGEMENT 106. Op. cit., p. 43. 107. Walsh, J. ‘Japanese Forced into HR Strategy Rethink’, People Management, vol. 3, no. 21, 23 October 1997, p. 16. 108. Ornatowski, G. ‘The End of Japanese-style Human Resource Management’, Sloan Management Review, vol. 39, no. 33, Spring 1998, p. 73. 109. Dongsui, S. and Zhang, Y. ‘A Management Culture Revolution for the New Century’, Journal of Applied Management Studies, vol. 7, no. 1, June 1998, p. 135. Use the Financial Times to enhance your understanding of the context and practice of management and organisational behaviour. Refer to article 2 in the BUSINESS PRESS section at the end of the book for relevant reports on the issues explored in this chapter. 109 Part 2 THE 0RGANISATIONAL SETTING Part 1 MANAGEMENT AND ORGANISATIONAL BEHAVIOUR Part 7 MANAGEMENT OF HUMAN RESOURCES Part 2 THE ORGANISATIONAL SETTING Part 3 THE ROLE OF THE MANAGER Part 8 IMPROVING ORGANISATIONAL PERFORMANCE Part 4 THE INDIVIDUAL Part 6 ORGANISATIONAL STRUCTURES Part 5 GROUPS AND TEAMWORK Dogbert’s Rule of Strategies 4 THE NATURE OF ORGANISATIONS The process of management and applications of organisational behaviour take place not in a vacuum but within the context of a particular organisational setting and environment. The organisation is a complex social system and is the sum of many interrelated variables. The operations of the organisation are influenced by the external environment of which it is part. The manager needs to understand the nature of organisations and the social context; and the main features which affect the structure, management and functioning of the work organisation. Photo: John Heseltine/Science Photo Library LEARNING OUTCOMES After completing this chapter you should be able to: explain the context of the organisation, common factors and basic components of an organisation; distinguish alternative types and classifications of organisations, and relate different organisations to these classifications; examine the organisation in terms of an open systems model; analyse organisations on the basis of interrelated sub-systems; appreciate the influence of technology in work organisations and the impact of information technology; explain the nature and importance of the informal organisation; recognise the importance of the organisational setting. All organizations exist in multiple environments. They exist within the culture and social structure of the larger society, and they coexist in various relations to other organizations with similar purposes, as well as disparate organizations and groups of people who may be owners, managers, employees, customers, clients, or simply ‘the public at large’. Edgar Schein Organizational Psychology, Prentice Hall (1988) 114 PART 2 THE ORGANISATIONAL SETTING THE CONTEXT OF THE ORGANISATION Organisations in one form or another have always been an integral feature of human civilisation. Although the origins of modern organisations can be traced back thousands of years they continually evolve and the organisations of today are clearly very different. The beginning of the 20th century with the emergence of large corporate entities, and the work of writers such as Frederick Taylor on scientific management and Max Weber on bureaucracy, drew attention to the importance of the work organisation. In Chapter 1 we drew attention to the changing nature of work organisations today, and the impact on management and organisational behaviour.1 All organisations have some function to perform. Organisations exist in order to achieve objectives and to provide satisfaction for their members. Organisations enable objectives to be achieved that could not be achieved by the efforts of individuals on their own. It must be remembered that organisations are structures of people. Through co-operative action, members of an organisation can provide a synergistic effect. Organisations are an integral part of society involving both public and private sectors. For example, in their discussion of the new public services, Farnham and Horton define organisations as: … social constructs created by groups in society to achieve specific purposes by means of planned and co-ordinated activities. These activities involve using human resources to act in association with other inanimate resources in order to achieve the aims of the organisation.2 There are then many different types of organisations which are set up to serve a number of different purposes and to meet a variety of needs. Organisations come in all forms, shapes and sizes. Consider the diversification among such organisations as, for example: Firm of accountants School Retail shop Local authority Airport Motor car manufacturer Hospital Hotel Leisure centre Quarry works Government department Pharmaceutical company Bank Nationalised industry The structure, management and functioning of these organisations will all vary because of differences in the nature and type of the organisation, their respective goals and objectives, and the behaviour of the people who work in them. Let us now consider just two types of organisations towards the opposite ends of a possible continuum – say a maximum security prison and a university largely concerned with research – as a framework on which to focus attention. We can appreciate readily that although both types of organisation will be concerned with the basic activities of organisation and management, their goals and objectives, actual procedures and methods of operation, structure, systems and style of management, and orientation and behaviour of members will differ considerably (see Figure 4.1). Common factors in organisations Not only are there many different types of organisations, there is some suggestion that cultural differences in countries can reflect different conceptions of what actually is an organisation.3 However, despite the differences, there are at least three common factors in any organisation: ■ ■ ■ people, objectives, and structure. CHAPTER 4 THE NATURE OF ORGANISATIONS Figure 4.1 The nature of organisations It is the interaction of people in order to achieve objectives which forms the basis of an organisation. Some form of structure is needed by which people’s interactions and efforts are channelled and co-ordinated. To which we can add a fourth factor: ■ management. Some process of management is required by which the activities of the organisation, and the efforts of its members, are directed and controlled towards the pursuit of objectives. (See Figure 4.2.) The actual effectiveness of the organisation will be dependent upon the quality of its people, its objectives and structure, and the resources available to it. There are two broad categories of resources: ■ ■ non-human – physical assets, materials and facilities; and human – members’ abilities and influence, and their management. The interrelationship of people, objectives and structure, together with the efficient use of available non-human and human resources, will determine the success or failure of the organisation and the extent of its effectiveness. Among the variety of different approaches to organisation theory, Watson refers to one which stresses three common aspects of organisational life: ■ ■ ■ the importance of the creative, critical and situation-defining characteristics of the individuals who make up the organisation; the varieties of interest and goal among individuals and groups in the organisation, and the emphasis on conflict and political behaviour; and the interactions between the organisation and the general environment, and recognition that organisations make their environment as much as it makes them.4 THE FORMAL ORGANISATION The formal organisation can be distinguished from the informal organisation (which is discussed later in this chapter). The difference between the formal and the informal organisation is a feature of the degree to which they are structured. 115 116 PART 2 THE ORGANISATIONAL SETTING Local authority Retail shop Airport Motor car manufacturer School Firm of accountants Interactions and efforts of PEOPLE in order to achieve OBJECTIVES channelled and co-ordinated through STRUCTURE directed and controlled via MANAGEMENT PRISON Nationalised industry Bank Hospital UNIVERSITY Hotel Leisure centre Pharmaceutical company Government department Quarry works Figure 4.2 Common factors in organisations A formal organisation has been defined by Schein as: the planned co-ordination of the activities of a number of people for the achievement of some common, explicit purpose or goal, through division of labor and function, and through a hierarchy of authority and responsibility.5 An organisation is a pattern of roles and a blueprint for their co-ordination. The object of co-ordination is activities, not people. The formal organisation can exist independently of the membership of particular individuals. The formal organisation is: ■ ■ ■ ■ deliberately planned and created; concerned with the co-ordination of activities; hierarchically structured with stated objectives; and based on certain principles such as the specification of tasks, and defined relationships of authority and responsibility. An organisation chart, for example, gives a representation of the formal structure. Other examples of the formal organisation are rules and regulations, policy manuals, standing orders and job descriptions. (See Figure 4.9 on page 135.) The organisation as a coalition The formal organisation can be seen as a coalition of individuals with a number of subcoalitions. 6 Membership of the coalition will be dependent upon the type of organisation but could include, for example, managers, administrators, workers, elected representatives, appointed officials, volunteers, shareholders, suppliers, trade CHAPTER 4 THE NATURE OF ORGANISATIONS union officials, leaders of interest groups, customers, clients, patrons, donors, specialists, consultants, and representatives of external agencies. It is difficult to define specific, permanent boundaries for an organisational coalition. However, by focusing on participants over a given period, or participants concerned with particular decision-making processes, it is possible to identify the main members of a coalition. Strategies adopted by particular sectional interests or subcoalitions will sometimes be part of the formal organisation structure – for instance, in the pursuit of manifest managerial goals – and will sometimes be related to the informal structure – for example, heads of department vying with each other for limited resources, or workers indulging in restrictive practices. BASIC COMPONENTS OF AN ORGANISATION Any organisation can be described, broadly, in terms of an operating component and an administrative component.7 ■ ■ The operating component comprises the people who actually undertake the work of producing the products, or providing the services. The administrative component comprises managers and analysts, and is concerned with supervision and co-ordination. Developing this description, we can analyse the work organisation in terms of five basic components: the operational core; operational support; organisational support; top management; and middle management. (See Figure 4.3.) ■ The operational core is concerned with direct performance of the technical or productive operations and the carrying out of actual task activities of the organisation – for example, people putting together parts on an assembly line, teaching in a class- Figure 4.3 Five basic components of an organisation 117 118 PART 2 THE ORGANISATIONAL SETTING ■ ■ ■ ■ room, treating a patient, cooking meals in a hotel, serving in a bank, repairing a hole in the road. Operational support is concerned indirectly with the technical or productive process but closely related to the actual flow of operational work – for example, people working in quality control, work study, progress planning, storekeeping, works maintenance, technical services. Organisational support is concerned with provision of services for the whole organisation, including the operational core, but which are usually outside the actual flow of operational work – for example, people working in personnel, medical services, canteen, management accounting, office services. Top management is concerned with broad objectives and policy, strategic decisions, the work of the organisation as a whole and interactions with the external environment – for example, managing director, governors, management team, chief executive, board of directors, council members. Middle management is concerned with co-ordination and integration of activities and providing links with operational support staff and organisational support staff, and between the operational core and top management. PRIVATE AND PUBLIC SECTOR ORGANISATIONS Organisations can, traditionally, be distinguished in terms of two generic groups: ■ ■ private enterprise organisations; and public sector organisations. The distinction can be made on the basis of ownership and finance, and the profit motive. Private enterprise organisations are owned and financed by individuals, partners, or shareholders in a joint stock company and are accountable to their owners or members. They vary widely in nature and size, and the type and scope of goods and services provided. The main aim is of a commercial nature such as profit, return on capital employed, market standing or sales level. Public sector organisations are created by government and include, for example, municipal undertakings and central government departments, which do not have profit as their goal. Municipal undertakings such as local authorities are ‘owned’ by the council tax payers and ratepayers and financed by council taxes, rates, government grants, loans and charges for certain services. Central government departments are ‘state owned’ and financed by funds granted by parliament. Public sector organisations have political purposes and do not distribute profits. Any surplus of revenue over expenditure may be reallocated by improved services or reduced charges. The main aim is a service to and the well-being of the community. Privatisation The extent of the state ownership of public sector operations, or of their ‘privatisation’, and the balance between commercial and social interests, are determined by the government of the day. In recent years, there has been a vigorous policy of creating freedom from state control and the transfer of business undertakings to private hands (privatisation). There are other public sector organisations whose aims involve both a commercial interest and a service interest. Nationalised industries such as the postal service at present run as public corporations with autonomy on day-to-day management, a degree of commercial freedom but with ultimate government control in the national interest. These public corporations are required to make efficient use of their resources by ensuring a given minimum rate of return on their investments and to charge prices CHAPTER 4 THE NATURE OF ORGANISATIONS based on the actual cost of supplying goods or services to certain groups of consumers. However, provision may also be made for certain activities to be undertaken on social grounds as a service to the community even though these activities might be run at a financial loss. There have also been increasing moves to encourage contracting-out of certain local authority services and putting them to compulsory competitive tender (CCT) and a greater degree of competition has also been introduced. The exposure to competition and demands for economical and high quality service have prompted local authorities to replace administration with business management.8 (Management in private and public sector organisations is discussed in Chapter 6.) Not-for-profit organisations The increasing scale of privatisation and the blurring of commercial interests and social interests have led to an alternative classification of organisations: ■ ■ profit; and those clearly not-for-profit. Not-for-profit organisations include on the one hand charities, private societies and most religious organisations, and on the other hand National Health Service hospitals, universities, prisons, and most government and local authority departments. However, even in not-for-profit, public sector organisations there has been increased government pressure to ensure cost-effectiveness, investment by private sector involvement, and efficiency and economy in their operations. I think that we in the business community are sometimes too defensive about privatisation and forget the effect of state corporatism … The secret of success lies in the way privatisation has shaken up the corporate culture, and made public servants who had no incentive to serve their customers into effective managers willing to take risks in order to run their operations more efficiently or make a profit … The question now is: how can the public sector and private sector work together for the benefit of both? People in business know what needs to be done. Focusing on what customers need, improving service and achieving greater efficiency are the daily bread of every successful business. Let’s call an end to sterile arguments about where the boundary between public and private sectors should be and concentrate instead of creating a UK plc which is truly competitive. J. M. Barry Gibson, Group Retail Director, BAA9 The same blurring of distinctions can also be seen in the case of charities. For example, Arnott points out that there is very little about the 21st-century charity which is straightforward and they exist in a highly complex context. The old distinctions between private, public and not-for-profit sectors have been blurred as charities have taken on an ever-increasing role on the delivery of public services. Tough competition for funds and growing public scrutiny have led many charities to adopt practices once more commonly associated with the commercial sector. 10 The private–public interface Smith points out that although the private–public sector divide is part of the British economic and political landscape, the divisions are being broken down and moves between the two sectors – in both directions – becoming more frequent. Business people are being introduced to the public sector in an unprecedented way and bringing their expertise to bear on efficiency across Whitehall.11 Rose and Lawton also suggest that the extent of privatisation, the introduction of socalled business styles of management and the development of an intense competitive 119 120 PART 2 THE ORGANISATIONAL SETTING performance culture have all served to challenge the traditional concept of a public sector. ‘Privatisation and quasi-privatisation, in the form of contracting out and agency provision, have meant an increasing interface with non-public-sector organisations. Part of the rationale for this development is that these organisations have expertise and competencies which are not as well developed in the public sector. This has facilitated the transfer of technologies such as business process re-engineering and the business excellence model.’12 However, in spite of the fashion for applying private-sector techniques in government Sir David Wright refers to the difficult issues which remain about the way government performs and delivers its services. The challenge of management change has shifted to the public sector with the call for improved delivery of public services. In the private sector there is the bottom line of follow the money or achieve the sale or deal. But in government the link between inputs and outcomes remains hard to establish and the challenge is aggravated by the inability to focus activity on a small number of immediately realisable targets. As a function of the democratic process, government departments are responsible for a large number of activities and are subject to political initiatives, both of which can leach valuable resources and affect any assessment of how private-sector techniques can be applied.13 PRODUCTION AND SERVICE ORGANISATIONS Another major distinction is arguably between production and service organisations. Compared with ‘production’ industries, services tend to display a number of characteristic features, including the following. ■ ■ ■ ■ ■ Different from other industries The consumer is a participant in the service process. This requires particular attention to the surroundings and characteristics of the service operations. Services cannot be stored, they are time perishable and if they are not used they are likely to be wasted. For example, the income lost from a hotel room unsold on one day is lost forever. Unlike physical products, services are less tangible and more difficult to explain or communicate. Benefits derived from services tend to be associated with feelings and emotions. In service operations work activities are people-oriented and the characteristics of the workforce are particularly important in determining organisational effectiveness. Measurement of output is difficult and there is unlikely to be a single, important criterion by which to measure effective performance.14 To what extent then are service industries any different from other industries? According to Levitt, for example, it is only in a matter of degree. Purveyors of service, for their part, think that they and their problems are fundamentally different from other businesses and their problems. They feel that service is people-intensive, while the rest of the economy is capital-intensive. But these distinctions are largely spurious. There are no such things as service industries. There are only industries whose service components are greater or less than those of other industries. Everybody is in service.15 Other writers such as Macdonald, however, maintain that service organisations are different. ‘Product quality and service quality are the same inasmuch as they apply to the results of different activities. There are, however, some fundamental differences in the organisation of an operation to provide products and services. There are also intrinsic differences between products and services.’16 (See Table 4.1.)17 CHAPTER 4 THE NATURE OF ORGANISATIONS Table 4.1 Differences between products and services Product Service The customer receives a tangible product in the form of goods which can be seen and touched The customer receives an intangible service which may or may not satisfy The goods remain with the customer Services are consumed at the moment of delivery The production and delivery of goods are usually separated Production, delivery and consumption of services are often at the same time Few producers deal with customers Most producers deal with customers The customer is rarely involved with production The customer is often closely involved with production Goods can be serviced Services have already been consumed and cannot be serviced Goods are subject to liability but the producer has more opportunity to ameliorate the effect on the customer and thus the financial penalty Services which do not meet the requirements are difficult to replace – the financial impact is usually total Goods can be purchased to store in inventory to satisfy the customer’s needs Services cannot be stored but must still be available on customer demand Goods can be transported to the point of sale Some services are transportable (e.g. information through communication lines) but most require the transportation of the service provider The quality of goods is relatively easy for customers to evaluate The quality of services is more dependent on subjective perception and expectation Goods are often technically complex – the customer therefore feels more reliant on the producer Services appear less complex – the customer therefore feels qualified to hassle the producer (Reproduced with permission from John Macdonald, ‘Service Is Different’, The TQM Magazine, Vol. 6, No. 1, 1994, p. 6.) TYPES OF AUTHORITY AND ORGANISATIONS In one of the earliest studies of formal organisations, Weber distinguished three types of authority: traditional, charismatic and legal–rational.18 These types of authority are based on the form of control regarded as legitimate by subordinates, and their acceptance of the power of superiors. The three types of authority relate to different types of organisations. ■ ■ In traditional organisations, authority is legitimised by custom and a longstanding belief in the natural right to rule, or is possessed by traditional (‘proper’) procedure. Examples would be the authority of the Pope, kings or queens or a paternalistic employer. In charismatic organisations, authority is legitimised by belief in the personal qualities of the leader; authority is based on the leader’s strength of personality and inspiration. Winston Churchill might be quoted as an example. The practical need for some routine, for procedures and systems and for economic support means that if the movement is to continue it must become organised. On the impending demise of the charismatic leader the movement might collapse unless a ‘legitimate’ heir is found. This process tends to transform a charismatic organisation into either a traditional organisation or a bureaucratic organisation. 121 122 PART 2 THE ORGANISATIONAL SETTING ■ In bureaucratic organisations, authority is based on the acceptance of the law of formal rules and procedures, and on impersonal principles. There is a legal–rational authority which stems from hierarchical position in the organisation and not from personality. Examples are the armed forces and the authority of government ministers or a college principal. The concept of legal–rational authority is of most interest to us because most business organisations, particularly large-scale ones, tend to be of the bureaucratic type of structure, although there are variations in degree. Bureaucracy, as applying to certain structural features of organisation, is the most dominant type of formal organisation. THE CLASSIFICATION OF ORGANISATIONS In order to relate the study of management and organisational behaviour to one particular type of organisation as distinct from another, it is necessary to group similar types of organisations together. This enables generalisations to be made on the basis of certain characteristic features of organisations within a particular grouping. Organisations can be distinguished by, for example, their nature and type; goods or services provided; size; aims and objectives; and the people who are employed by or who work in them. Organisations can, therefore, be classified in a number of ways and different writers have emphasised particular features of organisations. Classification by major purpose A common classification of organisations is by their major purpose. This leads to a distinction between, for example: ■ ■ ■ ■ ■ business firms (economic organisations); armies, trade unions and police forces (protective organisations); clubs and societies (associative organisations); local authorities and hospitals (public service organisations); and churches (religious organisations). Further distinctions could be made, for example, into political organisations, educational organisations, military organisations and voluntary organisations. Such a distinction tends to lack refinement and not all organisations fit simply into one classification. Many universities combine research with teaching. Some hospitals are concerned as much with training and/or research as with treatment of patients. One could debate the main purpose of a prison: is it, for example, corrective, protective, penal or educational? The main purpose of a trade union is seen, presumably, as protection of the interests of its members through their wages and working conditions, but many trade unions also have strong social, educational and political interests. Many organisations serve more than one goal; but although they are multi-purpose organisations it is usually possible to identify one predominant goal (or purpose) by which the organisation can be classified, however crude this classification may be. It is of interest, however, to note the comment by Etzioni that: To the extent that such things can be measured, it appears that many multi-purpose organisations tend to serve each of their goals separately and all of them together more effectively and efficiently than single-purpose organisations of the same category.19 PRIME BENEFICIARY OF THE ORGANISATION Blau and Scott propose a classification on the basis of the prime beneficiary.20 Four groups of persons involved in a relationship with any organisation are categorised into: ■ ■ the members, or rank-and-file participants; the owner or managers of the organisation; CHAPTER 4 THE NATURE OF ORGANISATIONS ■ ■ the clients or, more generally, the ‘public-in-contact’ who are technically ‘outside’ the organisation yet have regular direct contact with it; the public at large – that is, the members of the society in which the organisation operates. Organisations are then classified on the basis of who benefits – that is, which of the four categories is the prime beneficiary of its operations. Four types of organisation are identified on this basis: ■ ■ ■ ■ Problems associated with each type of organisation It is emphasised that the prime beneficiary is not necessarily the only beneficiary. Each of the various groups who make a contribution to an organisation do so only in return for certain benefits received. Blau and Scott suggest that special problems are associated with each type of organisation. ■ ■ ■ ■ Difficulty in finding a comprehensive classification Mutual-benefit associations, where the prime beneficiary is the membership, such as political parties, trade unions and professional associations; Business concerns, where the owners are the prime beneficiaries, such as industrial and other firms privately owned and operated for profit; Service organisations, where the client group is the main beneficiary, such as hospitals, schools and welfare agencies; Commonweal organisations, where the prime beneficiary is the public-at-large, such as central government departments, the armed services and the police. In mutual-benefit organisations the main problem is that of providing for participation and control by the membership, and of maintaining internal democracy. In business concerns the central problem is that of maximising operational efficiency in a competitive environment. In service organisations the problem is reconciling conflict between professional service to clients and administrative procedures. In commonweal organisations the important problem is ensuring democratic procedures by which they are held accountable to the public for their actions. It is not easy to find a comprehensive classification into which all organisations can be simply and satisfactorily categorised; a degree of generalisation, assumption and qualification is required. However, the classification of Blau and Scott provides a useful typology of organisations. An alternative form of classification is provided by Katz and Khan. PRIMARY ACTIVITY OF THE ORGANISATION The Katz and Khan classification is based on ‘genotypic (first-order) factors’ and on ‘second-order factors’.21 In terms of the genotypic function, which is the primary activity of the organisation as a sub-system within the larger society, there are four broad types of organisations: ■ ■ ■ ■ Productive or economic – concerned with the creation of wealth, the manufacture of goods, and the provision of services for the public. Maintenance – for example, schools and churches, concerned with the socialisation of people to fulfil roles in other organisations and in society. Adaptive – for example, research establishments, concerned with the pursuit of knowledge and the development and testing of theory. Managerial or political – for example, government departments, trade unions and pressure groups. These are concerned with adjudication, co-ordination and control of physical and human resources and other sub-systems. 123 124 PART 2 THE ORGANISATIONAL SETTING Object-moulding Organisations can then be described in terms of second-order factors. Among other things these factors relate to structure; the system of intrinsic or extrinsic rewards to or people-moulding attract and retain members and to achieve satisfactory performance from them; and the nature of the throughput – the transformation or processing of objects or the moulding of people as the end product of the organisation. A distinction can be made between ■ ■ object-moulding organisations and people-moulding organisations. Object-moulding organisations are concerned with physical or material objects as the nature of work being carried out – for example, a manufacturing plant, a car plant or an oil company. People-moulding organisations are concerned with human beings as the basis of the nature of work being carried out – for example, a school or a leisure centre. In people-moulding organisations a further distinction can be made between ■ ■ people-processing organisations – for example, an employment agency or a social security benefit office; and people-changing organisations – for example, a mental hospital or an open prison. THE ORGANISATION AS AN OPEN SYSTEM We have seen that organisations differ in many important respects, but they also share common features. Organisations can be viewed as open systems which take inputs from the environment (outputs from other systems) and through a series of activities transform or convert these inputs into outputs (inputs to other systems) to achieve some objective. (See Figure 4.4.)22 In terms of this open systems model the business organisation, for example, takes in resources such as people, finance, raw materials and information from its environment; transforms or converts these; and returns them to the environment in various forms of outputs such as goods produced, services provided, completed processes or procedures in order to achieve certain goals such as profit, market standing, level of sales or consumer satisfaction. A common point of reference There are, of course, differences in the activities and methods of operation of the various forms of business organisations. There will also be differences between business organisations of the same type – for example, in relation to their size and scale of activ- ENVIRONMENT ENVIRONMENT Outputs from other systems Inputs to other systems Series of activities AIMS AND OBJECTIVES INPUTS TRANSFORMATION OR CONVERSION UNIT OUTPUTS ORGANISATIONAL GOALS Interrelated sub-systems Feedback Measure of achievement Figure 4.4 The open systems model of organisations Feedback CHAPTER 4 THE NATURE OF ORGANISATIONS ities. However, adopting the systems view of organisations, we can identify principles and prescriptions of organisation and management that apply to business organisations in general. Differences in the application and operation of these principles and prescriptions as between one business organisation and another is largely a matter only of degree and of emphasis. Using this systems model the same form of analysis can be applied to all types of organisations. Viewing organisations as systems provides a common point of reference and enables us to take a general approach to the study of organisations, to analyse them and to derive general principles and prescriptions.23 An example of the open systems model applied to the environment systems division of a major heating and ventilation company is given in Figure 4.5. Figure 4.5 An example of the open systems model 125 126 PART 2 THE ORGANISATIONAL SETTING INTERACTIONS WITH THE ENVIRONMENT The structure, management and functioning of an organisation is not only determined by internal considerations and choices, but is also strongly influenced by a range of volatile, external, environmental factors. The business organisation is an open system. That means that it is open to, and in continual interaction with, the external environment of which it is part. In order to be effective and maintain survival and growth, the organisation must respond to the opportunities and challenges, and the risks and limitations, presented by the external environment. Changes in the environment will affect inputs, and changes in inputs will affect the transformation or conversion process and hence the outputs. The open systems approach views the organisation within its total environment and emphasises the importance of multiple channels of interaction. The increasing rate of change in major environmental factors (technical, economic, social and governmental) has highlighted the need to study the total organisation and to adopt a systems approach. In addition to these major environmental factors, there is a multiplicity of constantly changing environmental influences which affect the operation of an organisation (see Figure 4.6). In order to understand the operations of organisations, and to improve organisational performance, it is necessary to consider how they achieve an internal and external balance and how they are able to adapt to changes in their environment and the demands placed upon them.24 Consider how the operations of a large comprehensive school, for example, might be affected by such external influences as: government proposals for reform of education; changing population trends; the general economic climate; advances in information technology; changing views of the role of education in society; reports from Her Majesty’s Inspectors; representations from employers’ associations and trade unions; parent groups; equality campaigners. PESTEL analysis Organisational performance and effectiveness will be dependent upon the successful management of the opportunities, challenges and risks presented by changes in the external environment. One popular technique for analysing the general environment is a PESTEL analysis – that is, Political, Economic, Socio-cultural, Technological, Technological innovations Economic activity Social attitudes Suppliers Shareholders or providers of finance Local and national government policies Trade unions THE ORGANISATION Customers Private enterprise or public sector Climate Culture Competitors International relations Other organisations Employers’ CBI Pressure associations Training and Enterprise Councils groups Figure 4.6 Environmental influences on the organisation CHAPTER 4 THE NATURE OF ORGANISATIONS Figure 4.7 Checklist for a PESTEL analysis Reproduced with permission from Richard Lynch, Corporate Strategy, Third edition, Financial Times Prentice Hall (2003), p.92, with permission from Pearson Education Ltd. Environmental and Legal influences. As an example, Lynch presents the main issues that might be considered when undertaking a PESTEL analysis (see Figure 4.7).25 THE COMPARATIVE STUDY OF ORGANISATIONS All organisations need clear aims and objectives which will determine the nature of inputs, the series of activities to achieve outputs and the realisation of organisational goals. Feedback about the performance of the system, and the effects of its operation on the environment, are measured in terms of achieving the aims and objectives. Basic principles of organisation and management apply in any series of activities in any organisation. For example: ■ Attention must be given to the design of a suitable structure. 127 128 PART 2 THE ORGANISATIONAL SETTING ■ ■ The common elements of management – clarification of objectives, planning, organising, directing and control – apply to a greater or lesser extent in all cases. Essential financial, legal, personnel and administrative functions must be carried out in all types of organisation. These common features make possible the application of general principles of management and organisational behaviour (including, for example, in both a prison or a university) and the meaningful study of organisation theory. Characteristic features of particular organisations While general principles and prescriptions apply to all organisations, differences in their aims and objectives, organisational goals and environmental influences will result in differences in the input–conversion–output process and in the series of activities involved in this process. The nature of inputs, the throughputs, and the form of the outputs will emphasise characteristic features of a particular organisation. These features highlight alternative forms of structure, management, methods of operation, and behaviour of people employed by or working in different types of organisations. The study of organisations as open systems serves, therefore, to indicate both the common features of organisations and the main distinguishing features between different types of organisations. It provides a useful framework for the comparative study of organisations. The systems view of organisations enables managers to view their own organisation in perspective, and to compare it in meaningful terms with other types of organisations.26 ORGANISATIONAL SUB-SYSTEMS Whatever the type or classification of organisations, the transformation or conversion of inputs into outputs is a common feature of all organisations. Within the organisation (system) as a whole, each of the different transformation or conversion activities may themselves be viewed as separate sub-systems with their own input–conversion–output process interrelated to, and interacting with, the other sub-systems. The analysis of an organisation could perhaps be based upon the departmental structure as sub-systems. However, this could lead to an investigation concentrating on blinkered, sectional interests, rather than on the need to adopt a corporate approach. It is not just a question of whether individual departments are operating efficiently. The important point is the interrelationships and co-ordination of sub-systems in terms of the effectiveness of the organisation as an integrated whole. The interrelationship and interdependence of the different parts of the system raise the question of the identification of these sub-systems. What are the boundaries that distinguish one sub-system from other sub-systems, and from the system as a whole? In practice the boundaries are drawn at the discretion of the observer and sub-systems are identified according to the area under study. These sub-systems may be identified, therefore, in a number of different ways, although there is a degree of similarity among the alternative models. Socio-technical system The work of Trist and others of the Tavistock Institute of Human Relations, in their study of changing technology in the British coal-mines, gave rise to the idea of the socio-technical system.27 It was observed that new methods of work and changes in technology disrupted the social groupings of the miners, and brought about undesirable changes to the psychological and sociological properties of the old method of working. As a result, the new method of work was less efficient than it could have been despite the introduction of new technology. CHAPTER 4 THE NATURE OF ORGANISATIONS The researchers saw the need for a socio-technical approach in which an appropriate social system could be developed in keeping with the new technical system. They suggested that there are three sub-systems common to any organisation: ■ ■ ■ the technological sub-system; the sub-system of formal role structure; the sub-system of individual members’ feelings or sentiments. This form of analysis is taken a stage further by Kast and Rosenzweig who see the organisation as an open, socio-technical system with five major sub-systems.28 ■ ■ ■ ■ ■ Interrelated sub-systems Goals and values – the accomplishment of certain goals determined by the broader system and conformity with social requirements. Technical – the knowledge required for the performance of tasks, and the techniques and technology involved. Psychosocial – the interactions of individuals and groups, and behaviour of people in the organisation. Structure – the division and co-ordination of tasks, and formal relationships between the technical and psychosocial sub-systems. Managerial – covering the whole organisation and its relationship to the environment, setting goals, planning, structure and control. An alternative model is suggested by Hersey and Blanchard, who identify four main interrelated sub-systems.29 ■ ■ ■ ■ Human/social – focuses on the needs and motivations of members of the organisation and styles of leadership. Administrative/structural – focuses on authority and responsibility, and the structure within the organisation. Informational/decision-making – focuses on key decisions and information needs necessary to keep the organisation operational. Economic/technological – focuses on the work to be undertaken and its costeffectiveness related to the goals of the organisation. Another useful model is that of Leavitt who suggests the organisation consists of four main elements – task, structure, information and control, and people – which interact with each other and with the external environment.30 ■ ■ ■ ■ Task – involves problem-solving and improving organisational performance. Structure – refers to patterns of organisation, authority and responsibility, and communications. Information and control – involves techniques for controlling and processing information, such as accounting techniques. People – involves attitudes and interpersonal relations. THE ANALYSIS OF WORK ORGANISATIONS However these sub-systems are identified, it is the task of management to co-ordinate the sub-systems, and to ensure that the activities of the organisation as a whole are directed towards the accomplishment of its goals and objectives. We can suggest, therefore, five main interrelated sub-systems as a basis for the analysis of work organisations. (See Figure 4.8.) ■ Task – the goals and objectives of the organisation. The nature of inputs and outputs, and the work activities to be carried out in the transformation or conversion process. 129 130 PART 2 THE ORGANISATIONAL SETTING ■ ■ ■ ■ Technology – the manner in which the tasks of the organisation are carried out and the nature of work performance. The materials, systems and procedures, and equipment used in the transformation or conversion process. Structure – patterns of organisation, lines of authority, formal relationships and channels of communication among members. The division of work and coordination of tasks by which the series of activities are carried out. People – the nature of the members undertaking the series of activities. For example, their attitudes, skills and attributes; needs and expectations; interpersonal relations and patterns of behaviour; group functioning and behaviour; informal organisation and styles of leadership. Management – co-ordination of task, technology, structure and people, and policies and procedures for the execution of work. Corporate strategy, direction of the activities of the organisation as a whole and its interactions with the external environment. ENVIRONMENT ENVIRONMENT Series of activities Transformation or conversion process Interrelated sub-systems A socio-technical approach Task Technology Management Structure People Task Technology Structure – the nature of the work activities to be carried out – the manner in which activities are carried out – patterns of organisation and formal relationships within which activities are – carried out People – the nature of members undertaking the activities Management – effective co-ordination of the sub-systems and direction of activities of the organisation as a unified whole Figure 4.8 Organisational sub-systems CHAPTER 4 THE NATURE OF ORGANISATIONS The attention given to organisational sub-systems can be related to developments in management thinking and organisational behaviour (discussed in Chapter 3). The classical approach emphasised the structural and the managerial sub-systems and the development of general principles of organisation. The human relations approach emphasised the psychological and sociological aspects and gave attention to the importance of people in the organisation and such factors as the social needs of individuals, motivation and group behaviour. The systems approach focuses attention on the organisation as a whole, as a socio-technical system, and considers the interrelationships between the different sub-systems and the importance of environmental influences. The contingency approach concentrates on situational factors as determinants of alternative forms of organisation and management. A broader view of the organisation’s activities We have seen that an open systems approach is an attempt to view the organisation as a purposeful, unified whole in continual interaction with its volatile external environment. The organisation (system) is composed of a number of interrelated parts (sub-systems). Any one part of the organisation’s activities affects other parts. Managers cannot afford to take a narrow, blinkered view. They need to adopt a broader view of the organisation’s activities. Managers should recognise the interrelationships between various activities and the effects that their actions and decisions have on other activities. The above framework of five main interrelated sub-systems – task, technology, structure, people, management – provides a useful basis for the analysis of organisational performance and effectiveness. The manager must realise that in order to improve organisational effectiveness attention should be focused on the total work organisation and on the interrelationships between the range of variables which affect organisational performance. The organisation is best viewed as an open system and studied in terms of the interactions between technical and social considerations, and environmental influences. Changes in part of the system will affect other parts and thus the whole organisation. The open systems approach provides a perspective from which to compare and contrast different types of organisations and their methods of operation. CONTINGENCY MODELS OF ORGANISATION The analysis of organisational effectiveness requires an understanding of relationships within the organisation’s structure, the interrelated sub-systems and the nature of its external environment. Irrespective of the identification of sub-systems, the nature and scale of the series of activities involved in converting inputs to outputs will differ from one organisation to another in terms of the interrelationships between technology, structure, methods of operation, and the nature of environmental influences. ‘Contingency’ models of organisation highlight these interrelationships and provide a further possible means of differentiation between alternative forms of organisation and management. The contingency approach takes the view that there is no one best, universal form of organisation. There are a large number of variables, or situational factors, that influence organisational performance. Contingency models can be seen as an ‘if–then’ form of relationship. If certain situational factors exist, then certain organisational and managerial variables are most appropriate. Managers can utilise these models to compare the structure and functioning of their own organisation. Contingency models are examined in Chapter 16. 131 132 PART 2 THE ORGANISATIONAL SETTING THE INFLUENCE OF TECHNOLOGY The systems and contingency approaches have drawn attention to the importance of technology in the structure, management and functioning of work organisations. It is important to note that the meaning of technology is interpreted broadly to include both: ■ ■ the physical aspects of machines, equipment, processes and work layout (machine technology) involved in the transformation or conversion process; and the actual methods, systems and procedures involved (knowledge technology) in carrying out the work of the organisation and transforming or converting inputs into outputs. There is a close interrelationship between the machine side of technology and the specialist knowledge side of technology.31 The nature of technology can, therefore, be applied to the analysis of all organisations. For example, in a university the machine side of technology would include: blackboards or whiteboards; overhead projectors; computers; televisions and video recorders, closed circuit television; scientific and engineering equipment; library facilities. The knowledge side of technology would include: lectures, seminars and tutorials; case studies; role-playing; practical laboratory work; visiting speakers; project and assignment work; examinations. The work processes of a university and other educational establishments give rise to the specialist study of educational technology.32 A university will receive inputs of students and, through the process of educational technology, ‘transform’ them and return them as outputs into the broader society. Johnson and Scholes draw attention to technology as a means of underpinning innovation in organisations. However, organisations may easily be distracted by technological development itself rather than with concern for how technology can assist in the creation and sharing of knowledge within an organisation. It is in the exploitation of technology that an organisation may create competitive advantage.33 Technology and the behaviour of people The nature of technology can influence the behaviour of people in work organisations in many ways including, for example, the following. ■ ■ ■ ■ ■ It influences the specific design of each member’s pattern of work including the nature and variety of activities performed, and the extent of autonomy and freedom of action. It affects the nature of social interactions – for example, the size and nature of work groups, the extent of physical mobility and of contacts with other people. A person working continuously on a single, isolated machine in a mass-production factory will have very limited social interactions compared with, say, a team of receptionists in a large conference hotel. It can affect role position and the nature of rewards. People with higher levels of specialist technical knowledge and expertise such as engineers or systems analysts tend to receive higher status and pay than machine operators on an assembly line. It can impose time dimensions on workers and may require set times for attending to operations and a set pace of work – for example, the mechanical pacing of work on a mass-production assembly line. It can result in distinguishing features of appearance – for example, the requirement to wear a standard uniform or protective clothing, compared with a personal choice of smart clothes.34 The nature of technology and organisations is discussed fully in Chapter 17. Technology is also a potential source of tension and stress and affects motivation and CHAPTER 4 THE NATURE OF ORGANISATIONS job satisfaction: this is discussed in Chapter 18. The systems approach should serve to remind managers that activities managed on the basis of technical efficiency alone are unlikely to lead to optimum improvements in organisational performance. It is important to maintain the balance of the socio-technical system. Changes to the work organisation as a result of new developments in technology must take account of human and social factors as well as technical and economic factors. INFORMATION TECHNOLOGY Photo: James King-Holmes/Science Photo Library The importance of the effective management of technical change has been highlighted by recent and continuing developments in information technology. Although the term ‘information technology’ originated in the computer industry, it extends beyond computing to include telecommunications and office equipment. Advances in technical knowledge, the search for improved economic efficiency and government support for information technology have all prompted a growing movement towards more automated procedures of work. The impact of information technology demands new patterns of work organisation, especially in relation to administrative procedures. Information technology affects the nature of individual jobs and the formation and structure of work groups. There is a movement away from large-scale, centralised organisation to smaller working units. Processes of communication are increasingly linked to computer systems with the rapid transmission of information and immediate access to other national or international offices. Improvements in telecommunications mean, for example, that support staff need no longer be located within the main ‘production’ unit. Modern methods of communication may reduce the need for head office clerical jobs. Changes wrought by information technology relate to the nature of the management task itself. Information technology bears heavily on the decision-making processes of the organisation and increasingly forms an essential part of management Fingerprint scanning can be used as a technological method of identification information and corporate strategy.35,36 The nature and conditions of work The growth of information technology means that individuals may work more on their own, from their personal work stations or even from their own homes, or work more with machines than with other people. One person may be capable of carrying out a wider range of activities. There are changes in the nature of supervision and in the traditional hierarchical structure of jobs and responsibilities. Computer-based information and decision support systems provide an additional dimension of structural design. They affect choices such as division of work, individual tasks and responsibilities. The introduction of information technology undoubtedly transforms, significantly, the nature of work and employment conditions for staff. Developments in the technical systems of communications such as international telephone connections and the increasing use of faxes, mobile telephones and email have generated a working climate in which there is a greater expectation of the immediacy of receipt and response, and have added to the dangers of information overload. 133 134 PART 2 THE ORGANISATIONAL SETTING According to Law, the manager of the future, especially in larger organisations, will be someone who is a ‘personal area network’ wherever they may be, always connected to the Internet. Managers will be using personal digital assistants (PDAs) – handheld mobile devices that can access the Internet and act as a basic personal organiser by setting up a diary. However, if too many people are working remotely too often there is a risk of alienation and there is also the potential problem of pressures on staff who are permanently contactable.37 MANAGING TECHNICAL CHANGE It is important to remind ourselves that advances in technical knowledge tend to develop at a faster rate than, and in isolation from, considerations of human and social consequences. This means that staff may become resentful, suspicious and defensive. People’s cognitive limitations, and their uncertainties and fears, may result in a reluctance to accept change. The psychological and social implications of technical change, such as information technology and increased automation, must not be underestimated. New ideas and innovations should not be seen by members of staff as threats. The manager has to balance the need for adaptability in meeting opportunities presented by new technology with an atmosphere of stability and concern for the interests of staff. The manner in which technical change is introduced into the organisation will influence people’s attitudes to work, the behaviour of individuals and groups, and their level of performance. Continued technical change is inevitable and likely to develop at an even greater rate. Managers must be responsive to such change. Information technology and automation create a demanding challenge. The systems nature of organisations emphasises the interrelationships among the major variables or sub-systems of the organisation. The implementation and management of technological change needs to be related to its effect on the task, the structure and the people.38 The need for skills training It will be necessary for managers and supervisors to develop more agile skills in organisation. This calls for the effective management of human resources and a style of managerial behaviour which helps to minimise the problems of technical change. As an example, Lane et al. draw attention to the impact of information communications technology (ICT) on organisations and that this major technological change has brought about dramatic changes in worker behaviour and requirements. Organisations need to undergo a significant cultural change in order to invest in the training of ICT skills and to give attention to the concept of the learning organisation.39 (The management of conflict and organisational change is discussed further in Chapter 22. The learning organisation is discussed in Chapter 23.) THE INFORMAL ORGANISATION Whatever the type or nature of an organisation or its formal structure, an informal organisation will always be present. The informal organisation arises from the interaction of people working in the organisation, their psychological and social needs, and the development of groups with their own relationships and norms of behaviour, irrespective of those defined within the formal structure. ■ ■ ■ The informal organisation is flexible and loosely structured. Relationships may be left undefined. Membership is spontaneous and with varying degrees of involvement. CHAPTER 4 THE NATURE OF ORGANISATIONS Figure 4.9 Formal and informal organisation (Reproduced with permission from Kenneth Lysons, ‘Organisational Analysis’, Supplement to the British Journal of Administrative Management, no. 18, March/April 1997.) Group relationships and norms of behaviour exist outside the official structure and the informal organisation may, therefore, be in conflict with the aims of the formal organisation. A summary of differences between the formal and the informal organisation is given in Table 4.2. Functions of the informal organisation The informal organisation can serve a number of important functions. ■ ■ ■ ■ ■ It provides satisfaction of members’ social needs, and a sense of personal identity and belonging. It provides for additional channels of communication – for example, through the ‘grapevine’ information of importance to particular members is communicated quickly. It provides a means of motivation – for example, through status, social interaction, variety in routine or tedious jobs, and informal methods of work. It provides a feeling of stability and security, and through informal ‘norms’ of behaviour can exercise a form of control over members. It provides a means of highlighting deficiencies or weaknesses in the formal organisation – for example, areas of duties or responsibilities not covered in job descriptions or outdated systems and procedures. The informal organisation may also be used when formal methods would take too long, or not be appropriate, to deal with an unusual or unforeseen situation.40 135 136 PART 2 THE ORGANISATIONAL SETTING Table 4.2 Comparison of formal and informal organisation Characteristic Formal organisation Informal organisation Structure A Origin B Rationale C Characteristics Planned Rational Stable Spontaneous Emotional Dynamic 2 Position terminology Job Role 3 Goals Profitability or service to society Member satisfaction 4 Influence A Base B Type C Flow Position Authority Top-down Personality Power Bottom-up 5 Control mechanisms Threat of firing, demotion Physical or social sanctions (norms) 6 Communication A Channels B Networks C Speed D Accuracy Formal channels Well defined, follow formal lines Slow High Grapevine Poorly defined, cut across regular channels Fast Low 7 Charting the organisation Organisation chart Sociogram 8 Miscellaneous A Individuals included B Interpersonal relations C Leadership role All individuals in work group Prescribed by job description Assigned by organisation D Basis for interaction Functional duties or position E Basis for attachment Loyalty Only those ‘acceptable’ Arise spontaneously Result of membership agreement Personal characteristics, ethnic background, status Cohesiveness 1 (Source: Adapted from J. L. Gray and F. A. Starke Organizational Behavior: Concepts and Applications, Fourth edition, Merrill Publishing Company, an imprint of Macmillan Publishing Company (1988) p. 432. Reproduced with permission from Pearson Education Inc., Upper Saddle River, NJ.) The informal organisation, therefore, has an important influence on the morale, motivation, job satisfaction and performance of staff. It can provide members with greater opportunity to use their initiative and creativity in both personal and organisational development. Covert and informal activities may also have economic consequences for the organisation in terms of added values and/or costs that escape ordinary accounting procedures.41 The importance and nature of groups, and reasons why people form into groups, both formal and informal, are discussed in Chapter 13. At this stage, however, we are concerned with consideration of the formal organisation (although in practice it is not always possible to distinguish clearly between formal and informal organisations). We are not concerned with what is sometimes referred to as the social organisation. Social organisations are groups or institutions, such as family or friends, where human behaviour is socially organised and where members share common beliefs or interests. Social organisations arise from the interaction of individuals. There are no specially defined hierarchical structures and no explicit organisational goals. CHAPTER 4 THE NATURE OF ORGANISATIONS THE ORGANISATION OF THE FUTURE We have looked at the nature and type of organisations, and their components. It is, however, important to remember that organisations are living organisms and evolving constantly. The changing nature of work organisations and the social context discussed in earlier chapters has led to a climate of constant change and the need for greater organisational flexibility. Managers need to be aware of new psychological contracts and to adopt alternative styles of management. As Chowdhury, for example, points out: ‘The organization of the 21st century will be characterized by unprecedented complexity and will require a different breed of leader.’42 And Ulrich also suggests that with the changing and dynamic contextual factors: the essence of organizations has shifted and will continue to shift from focusing on structure to capability. Capability represents what the organization is able to do and how it does it rather than the more visible picture of who reports to whom and which rules govern work … Organizations will operate in the future to identify and nurture a handful of critical capabilities.43 The importance of people in the organisation Lynda Gratton emphasises the importance of putting people at the heart of corporate purpose. We are part of organisations stamped by technology that has created the patents, ideas and innovations that bought success. However, while this past has been essential to our success it will not bring sustainable competitive advantage for the future unless we build the potential of people and human capital in our organisations. This requires a new agenda, a new set of challenges for leaders and a redefined set of managerial capabilities that includes an understanding of the reality of the organisation. Gratton suggests that you should build a model for your organisation around what causes high levels of trust and inspiration and to consider the organisation against these key influences: ■ ■ ■ Do people understand the context in which they operate and the competitive threats and challenges the business faces? Are employees confident about the ability of the organisation to adapt? Are they involved in decisions about themselves and the organisation? It is also important to understand the complexity of the organisation and the changes necessary to move from the present to the future.44 Cloke and Goldsmith refer to the rise of organisational democracy. There is a demand for alternative organisational practices and a far-reaching transformation has already begun, based on the idea that management as a system fails to open the heart or free the spirit. The age of management is coming to an end and the real push for the future is for more authentic human relationships and the humanisation of organisations as crucibles for personal growth and development.45 ORGANISATIONAL GOALS Whatever the form and structure of the transformation or conversion process, the activities of an organisation are directed towards some end, some organisational goal. A goal is a future expectation: it is something the organisation is striving to accomplish. The goals of an organisation will determine the nature of its outputs and the series of activities through which those outputs are achieved. Organisational goals and objectives are discussed in Chapter 5. 137 138 PART 2 THE ORGANISATIONAL SETTING CRITICAL REFLECTIONS ‘If the process of management takes place within an organisational setting and no two organisations are the same, then what use are generalised models of organisation theory? I am only concerned with what happens in my own organisation’ … ‘Yes, but so too is every other student – hence the need for generalised models. And remember you may move to a different organisation.’ What are your own views? External influences are almost infinite in number and variety and no study could hope to consider them all. For students of business and for managers alike, the requirement is to recognise the complexity of the external environment and to pay greater attention to those influences which appear the most pertinent and pressing for the organisation in question, rather than to attempt to consider all possible contingencies. Worthington, I. and Britton, C. The Business Environment, Fourth edition, Financial Times Prentice Hall (2003), p. 12. How would you identify the specific, most pertinent and pressing environment influences for your own organisation or university/college? ‘Management models are a crude representation of our organisational existence which dull our awareness of the richness of our environment and prevent us from finding new ways of looking at the world of work.’ Debate. SYNOPSIS ■ The process of management and applications of organisational behaviour take place not in a vacuum but within the context of an organisational setting. There are many different types of organisations set up to serve different purposes. Organisations come in all forms, shapes and sizes. However, despite the differences among various organisations there are at least three common factors in any organisation: people, objectives and structure. To which can be added a fourth factor – management. The qualities of these factors determine organisational effectiveness. ■ There are many different types of organisations set up to serve a variety of needs. Organisations can, traditionally, be distinguished in terms of two generic groups: private enterprise and public sector. The increasing rate of privatisation has led, however, to a blurring of commercial interests and service to the community. Another major distinction is arguably between production and service organisations. In order to relate the study of management and organisational behaviour to one particular type of organisation as distinct from another, it is necessary to group similar types of organisations together. ■ The structure, management and functioning of organisations will differ according to their nature and type, aims and objectives, and the behaviour of people who work in them. Organisations differ in many important respects but they also share common features. Business organisations can be viewed as open systems in continual interaction with the external environment of which they are part. Within the organisation as a whole there are a number of sub-systems interrelating to and interacting with each CHAPTER 4 THE NATURE OF ORGANISATIONS other. Contingency models of organisation draw attention to interrelationships among technology, structure, methods of operation and environmental influences. ■ The nature of technology can influence the behaviour of people at work in many ways. The impact of technical change has been highlighted by recent developments in information technology and automation. It is important to maintain the balance of the socio-technical system. This calls for effective management of human resources and a style of managerial behaviour which helps to minimise problems of technical change. The organisation of the future will be characterised by complexity and the essence will continue to shift from structure to capability. ■ Whatever the type or nature of an organisation or its formal structure, an informal organisation will always be present. The informal organisation arises from the interactions of people and their psychological and social needs. It serves a number of important functions and has an influence on the morale, motivation, job satisfaction and performance of staff. Organisations of the future will be characterised by technology and complexity. It is important to emphasise the importance of people and the need for authentic human relationships, and the humanisation of organisations. REVIEW AND DISCUSSION QUESTIONS 1 What is an organisation and why do organisations exist? What are the common factors in any organisation? 2 Explain the basic components of a work organisation. Support your answer with examples from your own organisation. 3 Contrast various organisations, including your own, in terms of classifications based on: (i) prime beneficiary and (ii) primary activity. 4 Discuss critically the extent to which differences among various organisations limit the value of the study of management and organisational behaviour. 5 Explain the organisation as an open system. What is meant by organisational subsystems and how might they be identified? Illustrate each of these sub-systems by reference to your own organisation. 6 Assess the practical value to both the student and the manager of adopting an open systems view of organisational analysis. 7 Discuss the importance of technology in the structure, management and functioning of work organisations. Give practical examples of how the nature of technology can influence the systems nature of organisations. 8 Distinguish between the formal and the informal organisation, and explain their main characteristics. What functions are served by the informal organisation? 9 Give your own critical views on how you see the organisation of the future and the humanisation of organisations. 139 140 PART 2 THE ORGANISATIONAL SETTING ASSIGNMENT 1 OVERVIEW Undoubtedly, you have had recent experiences with numerous organisations. Ten to fifteen minutes of reflective thinking should result in a fairly large list of organisations. Don’t be misled by thinking that only large organisations, such as your college or General Motors, are relevant for consideration. How about the clinic with the doctor(s), nurse(s) and secretary/bookkeeper? Or the corner garage or service station? The local tavern, McDonald’s and the neighbourhood theatre are all organisations. You should not have any difficulty in listing a number of organisations with which you have had recent contact. The second part of the exercise, however, gets tougher. You are asked to describe several of the key characteristics of the organisations that you have listed. One of the major issues in studying and describing organisations is deciding what characteristics or factors are important. Some of the more common characteristics considered in the analysis of organisations are: 1 2 3 4 5 6 7 size (small to very large); degree of formality (informal to highly structured); degree of complexity (simple to complex); nature of goals (what the organisation is trying to accomplish); major activities (what tasks are performed); types of people involved (age, skills, educational background, etc.); location of activities (number of units and their geographic location). You should be able to develop a list of characteristics that you think are relevant for each of your organisations. Now, to the third, final, and most difficult task. Think about what is involved in the management of these organisations. For example, what kinds of functions do their managers perform? How does one learn the skills necessary to be an effective manager? Would you want to be a manager in any of these organisations? In effect, in this exercise you are asked to think specifically about organisations you have been associated with recently, develop your own conceptual model for looking at their characteristics, and think more specifically about the managerial functions in each of these organisations. You probably already know a great deal more about organisations and their management than you think. This exercise should be useful in getting your thoughts together. PROCEDURE Step 1 Prior to class, list up to ten organisations (e.g., work, living group, club) in which you have been involved or with which you have had recent contact. Step 2 Enter five organisations from your list on the form ‘Profile of Organisations’. a List the organisation. b Briefly outline the characteristics that you consider most significant. c Describe the managerial functions in each of these organisations. CHAPTER 4 THE NATURE OF ORGANISATIONS Step 3 During the class period, meet in groups of five or six to discuss your list of organisations, the characteristics you consider important, and your descriptions of their management. Look for significant similarities and differences across organisations. Step 4 Basing your selections on this group discussion, develop a list entitled ‘What We Would Like to Know about Organisations and Their Management’. Be prepared to write this list on the board and to share your list with other groups in the class. PROFILE OF ORGANISATIONS Organisation Key characteristics Managerial functions 1 2 3 4 5 ASSIGNMENT 2 Think of any organisation with which you are familiar and be prepared to give a descriptive account to your colleagues on: ■ ■ the unusual, strange, interesting or ‘quirky’ features of, and people in, the organisation; and how things actually happen and work in practice. 141 142 PART 2 THE ORGANISATIONAL SETTING PERSONAL AWARENESS AND SKILLS EXERCISE OBJECTIVES Completing this exercise should help you to enhance the following skills: Demonstrate your ability to analyse an organisation in terms of an open systems model. Identify and analyse the transformation or conversion process in terms of main interrelated sub-systems. EXERCISE You are required to: 1 With the aid of a diagram, depict your own or some other organisation well known to you in terms of its: – main aims and objectives; – inputs; – nature of the transformation or conversion process; – outputs; – measurement of effectiveness in achieving organisational goals. 2 Provide specific examples of ways in which the structure, management and functioning of the organisation are affected by external environmental influences. DISCUSSION ■ How effective are the interactions and interrelationships among the sub-systems? Give practical examples to support your view. ■ Comment critically on the effectiveness of management in co-ordinating the sub-systems and directing the activities of the organisation as a unified whole towards the accomplishment of its goals and objectives. Visit our website www.booksites.net/mullins for further questions, annotated weblinks, case material and Internet research material. CHAPTER 4 THE NATURE OF ORGANISATIONS NOTES AND REFERENCES 1. For an account of developments in organisations see: Peters, G. ‘Creating the Modern Organization’, in Crainer, S. and Dearlove, D. (eds) Financial Times Handbook of Management, Second edition, Financial Times Prentice Hall (2001), pp. 24–45. 2. Farnham, D. and Horton, S. (eds) Managing the New Public Services, Second edition, Macmillan (1996), p. 26. 3. Schneider, S. C. and Barsoux, J. Managing Across Cultures, Second edition, Financial Times Prentice Hall (2003). 4. Watson, T. J. Management Organisation and Employment Strategy, Routledge and Kegan Paul (1986). 5. Schein, E. H. Organizational Psychology, Third edition, Prentice-Hall (1988), p. 15. 6. Cyert, R. M. and March, J. G. A Behavioral Theory of the Firm, Second edition, Blackwell (1992). 7. Mintzberg, H. The Structuring of Organizations, PrenticeHall (1979). 8. See, for example: Dodds, O. ‘Implications of Change for Local Government Managers’, Professional Manager, November 1995, pp. 15–17. 9. Gibson, J. M. B. ‘Changing Views of Privatisation’, Management Today, May 1997, p. 5. 10. Arnott, J. ‘Cause and Ethics’, Chartered Secretary, December 2002, pp. 22–4. 11. Smith, D. ‘Crossing the Private–Public Divide’, Management Today, August 1998, pp. 26–30. 12. Rose, A. and Lawton, A. Public Services Management, Financial Times Prentice Hall (1999), p. 74. 13. Wright, Sir David ‘In My Opinion’, Management Today, March 2003, p. 14. 14. Fitzsimmons, J. A. and Sullivan, R. S. Service Operations Management, McGraw-Hill (1982). 15. Levitt, T. ‘Production-Line Approach to Service’, Harvard Business Review, September–October 1972, p. 41. 16. Macdonald, J. ‘Service Is Different’, The TQM Magazine, vol. 6, no. 1, 1994, p. 5. 17. For a discussion on the nature of service industries, see for example: Mullins, L. J. Hospitality Management and Organisational Behaviour, Fourth edition, Longman (2001). 18. Weber, M. The Theory of Social and Economic Organization, Collier Macmillan (1964). 19. Etzioni, A. Modern Organizations, Prentice-Hall (1964), p. 14. 20. Blau, P. M. and Scott, W. R. Formal Organizations, Routledge and Kegan Paul (1966). 21. Katz, D. and Khan, R. L. The Social Psychology of Organizations, Second edition, Wiley (1978). 22. A summary of the systems view of organisations, and its value in distinguishing between private and public organisations, is given in: Mullins, L. J. ‘The Organisation – A Systems View’, Professional Administration, vol. 11, no. 2, February 1981, pp. 20–2. 23. See, for example: Mullins, L. J. ‘The Hotel and the Open Systems Model of Organisational Analysis’, The Services Industry Journal, vol. 13, no. 1, January 1993, pp. 1–16. FT 24. For a more detailed discussion of environmental influences, see, for example: Worthington, I. and Britton, C. Business Environment, Fourth edition, Financial Times Prentice Hall (2003). 25. Lynch, R. Corporate Strategy, Third edition, Financial Times Prentice Hall (2003). 26. For an interesting collection of readings on the systems view of organisations, see: Lockett, M. and Spear, R. (eds) Organizations as Systems, Open University Press (1980). 27. Trist, E. L. et al . Organizational Choice, Tavistock Publications (1963). 28. Kast, F. E. and Rosenzweig, J. E. Organization and Management, Fourth edition, McGraw-Hill (1985). 29. Hersey, P. and Blanchard, K. Management of Organizational Behavior, Sixth edition, Prentice-Hall (1993). 30. Leavitt, H. J. Managerial Psychology, Fourth edition, University of Chicago Press (1978). 31. For a fuller discussion on the meaning of technology, see: Kast, F. E. and Rosenzweig, J. E. Organization and Management, Fourth edition, McGraw-Hill (1985). 32. See, for example: Davies, I. K. The Management of Learning, McGraw-Hill (1971). 33. Johnson, G. and Scholes, K. Exploring Corporate Strategy, Sixth edition, Financial Times Prentice Hall (2002). 34. Developed from French, W. L., Kast, F. E. and Rosenzweig, J. E. Understanding Human Behavior in Organizations, Harper & Row (1985), pp. 321–2. 35. See, for example: Lynch, R. Corporate Strategy, Third edition, Financial Times Prentice Hall (2003). 36. See also, Earl, M. ‘IT Strategy in The New Economy’, in Pickford, J. (ed.) Financial Times Mastering Management 2.0, Financial Times Prentice Hall (2001), pp. 109–13. 37. Law, S. ‘Future Networking’, Professional Manager, March 2003, p. 21. 38. See, for example: Wilson, B. ‘The Challenge of Change’, Industrial Management and Data Systems, November/December 1987, pp. 19–22. 39. Lane, T., Snow, D. and Labrow, P. ‘Learning to Succeed with ICT’, The British Journal of Administrative Management, May/June 2000, pp. 14–15. 40. For a detailed account of the nature and function of the informal organisation, see: Gray, J. L. and Starke, F. A. Organizational Behavior: Concepts and Applications, Fourth edition, Charles E. Merrill (1988). 41. Egan, G. ‘The Shadow Side’, Management Today, September 1993, pp. 33–8. 42. Chowdhury, S. Management 21C, Financial Times Prentice Hall (2000), p. 205. 43. Ulrich, D. ‘Context, Capability and Response’, in Chowdhury, S. Management 21C, Financial Times Prentice Hall (2000), p. 240. 44. Gratton, L. Living Strategy: Putting People at the Heart of Corporate Purpose, Financial Times Prentice Hall (2000). 45. Cloke, K. and Goldsmith, J. The End of Management and the Rise of Organizational Democracy, Jossey-Bass (2002). Use the Financial Times to enhance your understanding of the context and practice of management and organisational behaviour. Refer to articles 3, 4 and 6 in the BUSINESS PRESS section at the end of the book for relevant reports on the issues explored in this chapter. 143 5 ORGANISATIONAL GOALS, STRATEGY AND RESPONSIBILITIES The activities of a work organisation and the management of people are directed towards a variety of goals which are not mutually exclusive and which may conflict with each other. Goals are translated into strategy in order to provide corporate guidelines for the structure and operations of the organisation. The power and influence of a business organisation must also be tempered by its social responsibilities. Goals, strategy and responsibilities are important features in the study of management and organisational behaviour. LEARNING OUTCOMES After completing this chapter you should be able to: explain the nature of, and functions served by, organisational goals; assess the importance of organisational ideologies and principles; examine the need for objectives and policy, and the importance of the profit objective to business organisations; evaluate the need for corporate strategy and explain the basis for decision-making and problem-solving; examine the concept of social responsibilities of management; explore approaches to the consideration of values and ethics in organisations; review the importance of organisational goals, objectives and policy for the effective management of a work organisation. Photo: Flora London Marathon The impact of management’s decision on society is not just ‘public’ responsibility but it is inextricably interwoven with management’s responsibility to the enterprise. Still, there is a responsibility of management to the public interest as such. This is based on the fact that the enterprise is an organ of society, and that its actions have a decisive impact on the social scene. Peter Drucker The Practice of Management, Heinemann (1955) CHAPTER 5 ORGANISATIONAL GOALS, STRATEGY AND RESPONSIBILITIES THE NATURE OF ORGANISATIONAL GOALS In Chapter 4 we saw that the context of the organisational setting is central to the application of organisational behaviour and the process of management. It is the interaction of people in order to achieve objectives that forms the basis of the particular organisation. If you do not know where you are going, you cannot tell if you have arrived. Underlying the effective management of people, therefore, is the requirement for a clear understanding of the nature of the business that the organisation is in and how best to provide customer or consumer satisfaction.1 In order to study organisational behaviour you need to explore the nature of organisational goals and strategy for the formal organisation as a whole. All organisations have some function to perform, some contribution to make to the environment of which they are part. The function of the business organisation may be seen, for example, as the creation and/or supply of goods and services. This involves bringing together the factors of production and their successful mix and direction, to provide products or services in order to create value added. Others might see the function of business organisations as, for example, providing a source of employment and of income. In addition to performing some function, all organisations also have some incentive for their existence, and for their operations. The goals of an organisation are the reason for its existence. The activities of the organisation are directed to the attainment of its goals. A goal is a future expectation, some desired future state. It is something the organisation is striving to accomplish. The meaning of a goal is, however, subject to a number of interpretations. It can be used in a very broad sense to refer to the overall purpose of an organisation – for example, to produce television sets. A goal may also be used to refer to more specific desired accomplishments – for example, to produce and sell a given number of a range of television sets within a given period of time. The concept of organisational goals is more specific than that of the function of an organisation. The goals of an organisation will determine the nature of its inputs and outputs, the series of activities through which the outputs are achieved, and interactions with its external environment. The extent to which an organisation is successful in attaining its goals is a basis for the evaluation of organisational performance and effectiveness. Goal model approach The goal model approach concentrates on the study of organisational goals and the measurement of success against the realisation of goals. Etzioni suggests a potential disadvantage of this approach.2 Goals are ideals and more attractive than actual achievement. Organisations are characterised by low effectiveness. They rarely achieve their goals with any degree of finality and can, therefore, almost always be reported as a failure. The goal model approach results in attention being focused on the organisation’s lack of success in attaining goals at the expense of more meaningful forms of analysis. Instead of comparing organisations in terms of their stated goals, performance may be assessed relatively against different organisations. The concept of organisational goals is ambiguous. Goals may be expressed very simply: in the case of business organisations, for example, to make a profit, or to increase productivity. Such broadly based goals might be taken for granted and they tell us little about the emphasis placed on the various activities of the organisation in meeting its goals. In any case, profit might more correctly be interpreted as a reward to the shareholders or providers of capital, and a means of ensuring the continued existence of the organisation and maintaining its growth and development. Alternatives for decisionmaking Goals have been defined by Simon as value premises which serve as inputs to decisions.3 Goals at different levels within the organisation contribute to alternatives for decisionmaking. Simon compares goal-setting with the mathematical approach of linear programming and he sees goals more as sets of constraints which the organisation must 145 146 PART 2 THE ORGANISATIONAL SETTING satisfy – for example: profit for shareholders, or a minimum rate of return on investments; satisfying demands of consumers; complying with government legislation on safety standards; providing job satisfaction for staff; pacifying environmental groups such as Friends of the Earth. Goals limit the scope of actions and decision-making at lower levels of the organisation. Constraints may themselves be regarded as goals in that they represent objectives which management is trying to meet. THE FUNCTIONS OF GOALS Despite the problems associated with the goal model approach, the concept of organisational goals serves a number of important functions.4 ■ ■ ■ ■ ■ ■ ■ ■ An important feature of work organisations Goals provide a standard of performance. They focus attention on the activities of the organisation and the direction of the efforts of its members. Goals provide a basis for planning and management control related to the activities of the organisation. Goals provide guidelines for decision-making and justification for actions taken. They reduce uncertainty in decision-making and give a defence against possible criticism. Goals influence the structure of the organisation and help determine the nature of technology employed. The manner in which the organisation is structured will affect what it will attempt to achieve. Goals help to develop commitment of individuals and groups to the activities of the organisation. They focus attention on purposeful behaviour and provide a basis for motivation and reward systems. Goals give an indication of what the organisation is really like, its true nature and character, both for members and for people outside of the organisation. Goals serve as a basis for the evaluation of change and organisation development. Goals are the basis for objectives and policies of the organisation. Goals are therefore an important feature of work organisations. To be effective goals should be emphasised, stated clearly and communicated to all members of the organisation. The movement towards greater delegation and empowerment down through the hierarchy means that staff at all levels must be aware of their key tasks and actions, and exactly what is expected of them and their department/section. There must be clearly laid down organisational goals, objectives and strategy.5 In today’s environment, old-style command and control structures no longer work. People want freedom, but it must be freedom within a framework. Organisations, like individuals, need goals. Ensuring that appropriate goals are set is every manager’s responsibility. Although currently it is popular to encourage commitment by letting the organisation set its own goals, this approach frequently yields only modest results. More challenging goals, created top-down, can have far more dramatic effects on business performance ... Setting ambitious goals forces the organisation to dig deeper for creative solutions and to rethink how the business should be run. Sir Brian Pitman, Chairman of Lloyds TSB6 To be effective, organisational goals should encourage the use of empowerment but still incorporate an element of traditional management measurement and control. For example, Mills and Friesen suggest that to be effective goals must exhibit several characteristics: CHAPTER 5 ■ ■ ■ ■ ORGANISATIONAL GOALS, STRATEGY AND RESPONSIBILITIES Understandable – otherwise those who are given them seek further input before acting. If they cannot act on their own it follows they have not been empowered. Contain a time element – in order that those being empowered will know when their progress will be measured. This helps them to accept empowerment and stop looking for direction. Carefully drawn – broad enough to support independent action but not so broad that confounding factors prevent their achievement. For example, asking a team to keep company stock price above target is too broad as factors influencing share prices are beyond the control of any one team. Subject to alignment – with other goals across the organisation in order to facilitate co-ordination among teams and to ‘roll up’ into collective company goals.7 The goal-setting process is of importance to all types of organisations and facilitates the attainment of objectives. In the public sector, for example, organisations such as hospitals, local authorities and universities have complex, diverse and competing goals. The clarification of goals and objectives is the basis for corporate planning, and a planning, programming, budgeting systems (PPBS) approach to decision-making. INTEGRATION OF GOALS Strictly, organisations have no goals; only people do. Organisational goals are established by people, either individually, or, more usually, by a number of individuals co-operating together. For example, a group of senior managers may collectively agree on a particular desired course of action which may then come to be referred to as an organisational goal. However, this is still the goal of those managers who initially determined it. Success of the organisation is measured by the progress of people towards goals set by people. This gives rise to the questions: ■ ■ ■ Informal goals Members of the organisation have different, and often conflicting, goals. As a result, the goals which the organisation actually pursues (informal goals) may be distinguished from the officially stated goals (formal goals) which are set out in broad terms as the reasons for the purpose of the organisation. Informal goals may be inferred from the actual decisions made and actions taken within the organisation. Managers, and other members of the organisation, will have: ■ ■ Compatibility of personal goals and organisational goals To what extent has the organisation one common set of goals, or is there diversity among the various goals of different departments or divisions of the organisation? How far are the goals of management compatible with the goals of the organisation? To what extent do individual members obtain satisfaction of their own goals through the attainment of organisational goals? their own perception of the goals of the organisation – for example, to produce high-quality television sets which satisfy requirements of the customers; and their personal goals – for example to earn high wages, to achieve promotion, to gain social satisfaction, to achieve status – which they expect to fulfil by participating in the activities of the organisation. (See Figure 5.1.) If organisational goals and personal goals are pulling in different directions, conflict will arise and performance is likely to suffer. An organisation will be more effective when personal goals are compatible with organisational goals. Organisational performance will depend ultimately on the extent to which individuals are provided with the opportunity to satisfy their own goals by contributing to the goals of the organisation.8 147 PART 2 THE ORGANISATIONAL SETTING FORMAL GOALS rs ge na a fm ls o oa lg na rso Pe Perceived goals of INFORMAL GOALS the organisation Pe rso na lg of oals the o org f othe an isa r mem tio be n rs Extent of compatibility 148 Officially stated organisational goals The reason and purpose of the organisation Figure 5.1 Compatibility of goals within an organisation Management has a responsibility to clarify organisational goals and to attempt to integrate personal goals (including their own) with the overall objectives of the organisation. Only when organisational goals are shared by all members of the organisation will complete integration be achieved. In practice, this is unlikely. As McGregor points out: Perfect integration of organizational requirements and individual goals and needs is, of course, not a realistic objective. In adopting this principle, we seek that degree of integration in which the individual can achieve his goals best by directing his efforts towards the success of the organization.9 Management should endeavour, therefore, to structure the organisation so that people may realise their own (personal) goals by helping the organisation to satisfy its goals. One attempt at integrating organisational goals with the needs of the individual members of the organisation is provided by the approach of Management by Objectives. This is discussed in Chapter 7. CLASSIFICATION OF ORGANISATIONAL GOALS We have seen that goals are an important feature in the management of organisations. The goals of an organisation may be classified in a number of different ways. The concept of compliance Etzioni provides a classification which distinguishes three types of organisational goals in terms of their relationship with the concept of power and compliance.10 ■ ■ ■ Order goals are negative and attempt to place some kind of restraint upon members of the organisation and to prevent certain forms of behaviour. Economic goals are concerned with the production of goods and/or services for people outside of the organisation. Cultural goals are concerned with symbolic objects and with creating or maintaining value systems of society. Social goals, which serve the various needs of members of the organisation, are classified as a sub-type under cultural goals. CHAPTER 5 ORGANISATIONAL GOALS, STRATEGY AND RESPONSIBILITIES Most organisations would be expected to display one of three central combinations of organisational goals and compliance structure. Although there are other possibilities, the three most usual combinations are: ■ ■ ■ organisations with order goals and a coercive compliance structure – for example, closed prisons; organisations with economic goals and a utilitarian compliance structure – for example, business firms; organisations with cultural goals and a normative compliance structure – for example, professional bodies. Organisations may, of course, serve more than one goal, and these goals may not necessarily fall into the same category. Usually, however, there is one main goal which maintains a relationship with compliance structure in keeping with one of the three central combinations. The concept of power, involvement and compliance is discussed further in Chapter 21. A systems view of organisational goals There are a number of possible alternative classifications. However, by adopting a systems view of organisations we can distinguish four main types of organisational goals: ■ ■ ■ ■ Consumer goals. These relate to the nature of outputs in terms of the market to be served and consumer satisfaction – that is, the range and nature of goods and/or services produced or supplied in order to meet the needs of customers or clients. Examples are consumer products, educational services or health care. Product goals. These relate to the nature and characteristics of the outputs themselves – that is, the goods and/or services provided. This is the main area in which organisations deliberately attempt to distinguish themselves from other organisations – for example, in the range, design, quality and availability of their outputs. Operational goals. These relate to the series of activities involved in providing outputs, and to the operation and functioning of the organisation. Examples are the management of opportunities and risks, the choice of structure, the nature of technology and management processes. Secondary goals. These relate to goals that are not the main aim of the organisation. They arise from the manner in which the organisation uses its power and influence in pursuit of its outputs, and in undertaking the series of activities to achieve these outputs. Political aims, aid to the community, the development of staff and social responsibilities would come under this heading. ALTERATION OF GOALS Survival of the organisation will depend upon its ability to adapt to change and to the demands of its external environment. In practice, however, organisations usually appear to alter their goals only on a gradual basis. Commitment to the objectives and policies of the organisation, people’s cognitive limitations and their uncertainties and fears, may mean a reluctance to accept change. Organisations may also find it difficult to make short-term, rapid changes in resource allocation. The very complexity of environmental influences may itself hinder rapid change. (See also the discussion on organisational change in Chapter 22.) It is important, however, that the organisation does not restrict innovation but is ready to respond positively to changing circumstances and, increasingly, to anticipate future change. Management has to balance the need for adaptability in meeting the challenges and opportunities presented by change with, at the same time, preserving an atmosphere of stability and continuity in the interests of members of the organisation. 149 150 PART 2 THE ORGANISATIONAL SETTING ORGANISATIONAL IDEOLOGIES AND PRINCIPLES The goals of the organisation may be pursued in accordance with an underlying ideology, or philosophy, based on beliefs, values and attitudes. This organisational ideology determines the ‘culture’ of the organisation and provides a set of principles which govern the overall conduct of the organisation’s operations, codes of behaviour, the management of people and its dealings with other organisations.11 These sets of principles may be recognised and implemented informally as ‘accepted conventions’ of the organisation or they may be stated formally in writing. Certain aspects of an organisation’s philosophy may be so dominant that they become the ‘hallmark’ of that organisation and place constraints on other areas or forms of activities. An example is the high quality standard of Marks & Spencer’s merchandise and their explicit policy of buying primarily from United Kingdom sources. In the case of the Walt Disney Company, quality service is embedded deeply within its corporate culture. The overriding byword of The Body Shop is honesty and this underlies their policy of: ‘We WILL be the most honest cosmetic company.’ As another example, the highest-quality hallmark of Rolls-Royce cars would presumably prevent entry into the cheaper mass-production market. Organisational values and beliefs Some 30 years ago, Brech wrote about the ideology of an organisation related to the idea of both an ethical foundation and an organisational or operational foundation.12 ■ ■ Ethical foundation embodies the basic principles which govern the external and internal relations of the organisation. External relations concern standards of fair trading and relations with, for example, customers, suppliers and the general public. Internal relations are concerned with fair standards of employment and relations with members of the organisation, including authorised union representatives. Organisational or operational foundation is concerned with the structure, operation, and conduct of the activities of the organisation. External aspects relate to, for example, methods of trading and channels of distribution. Internal aspects include methods of production, use of equipment and managerial practices relating to organisational performance, productivity and profitability. In more recent years organisations have given growing attention to a set of stated corporate values displayed prominently for all to see. Lucas questions whether such grand statements of corporate principles really mean anything and concludes that they actually have a point and values can be used with success. ‘A set of values is obviously a nice thing for an organisation to have; something to pin on the noticeboard. But for those organisations that have learnt to walk the talk, deeply embedded values can attract the right people, underpin the business in times of crisis and provide direction for the future.’13 Dainty and Anderson point out that values are the guidelines a person uses to make choices and within organisations, basic beliefs affect what decisions are made, how people interact, and the kind of work practices that are pursued and developed. They form the glue that binds an organisation’s culture. ‘Building an understanding of values that are shared within an organization will be as important in the 21st century as it is today. In fact, many feel that organizations and people should be returning to more fundamental values, rather than moving away from them. Increasingly, organizations are spending time working out and agreeing the values by which they want their organization to be managed.’14 Cloke and Goldsmith contend that organisations can increase their integrity, coherence, and integration and improve their performance by reaching consensus on shared CHAPTER 5 ORGANISATIONAL GOALS, STRATEGY AND RESPONSIBILITIES values. They can bolster value-based relationships by recognising and encouraging behaviours that uphold their values; communicate and publicise their values, and encourage individual and team responsibility for implementing them; develop methods for monitoring compliance with values, providing feedback and identifying potential conflicts of interest. Most importantly consensus on shared values means organisations can accomplish these goals without moralising, preaching, excusing, or imposing their values on others.15 MISSION STATEMENTS In recent years it has become increasing popular for organisations to produce a mission statement and/or its ‘vision’ that sets out the purpose and general direction for the organisation.16 There is sometimes an apparent uncertainty of the distinction between the terms ‘mission’ and ‘vision’. It seems to be generally accepted that the vision provides the overall frame of reference within which mission statements are written and goals selected. ‘If vision is ill formed, mission statements will be vague and goal achievement hard to measure.’17 Johnson and Scholes suggest that ‘mission’ is a general expression of the overall purpose of the organisation, which, ideally is in line with the values and expectations of major stakeholders; while ‘vision’ is the desired future state of the organisation, and an aspiration around which to focus attention and energies of members of the organisation.18 Mission statements vary in length, the extent of specific or general content, and according to the type of the organisation. The mission statement of the Institute of Chartered Secretaries and Administrators in Article 4 of its Royal Charter is: ‘The object for which the Institute is established and incorporated is the promotion and advancement of the efficient administration of commerce, industry and public affairs by the continued development of the study and practice of secretaryship and administration of companies and other bodies.’ The mission statement of Hambrook Landscapes Ltd, Southampton is: As experts in your garden we strive to exceed our customers’ expectations while the company’s vision statements are: Business: our vision is to grow our business by 20% gross profit per year, thus affording the directors the opportunity to expand business ventures. Staff: our vision is for our staff to grow by training and developing them to meet the business challenges by innovation, care and competence. Customers: our vision is to give our customers growing confidence by doing it in the Hambrook way and exceeding their expectations. For Aveda, the international beauty and hair product organisation, the mission statement is: Our mission at Aveda is to care for the world we live in, from the products we make to the ways in which we give back to society. At Aveda, we strive to set an example for environmental leadership and responsibility, not just in the world of beauty but around the world. Value of mission statements The value of a mission statement is dependent, however, upon the extent to which it is understood and accepted throughout the organisation, and translated in meaningful terms to all members of staff including those at the operational level. Perrin and 151 152 PART 2 THE ORGANISATIONAL SETTING Tavakoli, for example, raise doubts over managers who have a naïve notion that the production and dissemination of a well-crafted statement will create a sense of mission: The picture will remain gloomy whilst managers and consultants believe that creating a mission statement is synonymous with creating a sense of mission. You only create the latter if your mission statement is understood, believed and acted upon by a majority of organisation members.19 Rigby suggests that mission statements can be dynamic, but they can be trite and businesses should look at whether or not one is really needed;20 Trapp argues that most mission statements lack substance and only serve to confuse colleagues and customers alike.21 A mission statement is only likely to be of any value if the organisation actually practices what it preaches. As Riches, for example, questions: is there congruence between what it says (the values posted on the wall) and what it actually does? Is there a high level of trust in the organisation? Are the organisation’s culture, systems, structures, processes or policies in sync with the stated core values? In other words, does management walk the talk?22 A similar point is made by Gratton: How often do corporate plans and mission statements remain simply that: senior executive rhetoric with little meaning to those people whose job it is to deliver customer satisfaction or bring complex products rapidly to the marketplace? Employees may hear corporate mission statements extolling the virtues of customer satisfaction or product innovation, but when the communication fanfare is over, the customer-focus workshops completed, and the lights dim on the business video, what is left? A group of employees trying to make sense and create meaning from the many messages and cues they have received. 23 OBJECTIVES AND POLICY In accordance with its ideology or philosophy, the goals of the organisation are translated into objectives and policy. Terminology and use of the two terms varies but objectives are seen here as the ‘what’, and policy as the ‘how’, ‘where’ and ‘when’ – the means that follow the objectives. ■ ■ Objectives set out more specifically the goals of the organisation, the aims to be achieved and the desired end-results. Policy is developed within the framework of objectives. It provides the basis for decision-making and the course of action to follow in order to achieve objectives. The relationship between the organisation, its objectives and management is illustrated by Fayol who stated that one of the managerial duties of an organisation is to: … see that the human and material organization is consistent with the objective, resources and requirements of the concern.24 The establishment of objectives and policy is therefore an integral part of the process of management, and a necessary function in every organisation. A systems view of goals and objectives The objectives of an organisation are related to the input–conversion–output cycle. In order to achieve its objectives and satisfy its goals the organisation takes inputs from the environment, through a series of activities transforms or converts these inputs into outputs and returns them to the environment as inputs to other systems. The organisation operates within a dynamic setting and success in achieving its goals will be influenced by a multiplicity of interactions with the environment. (See Figure 5.2.) Whatever the type of organisation, there is a need for lines of direction through the establishment of objectives and determination of policy. Objectives and policy form a basis for the process of management. CHAPTER 5 ORGANISATIONAL GOALS, STRATEGY AND RESPONSIBILITIES Figure 5.2 A systems view of organisational goals and objectives Objectives Clearly defined and agreed objectives are the first stage in the design of organisation structure and help facilitate systems of communication between different parts of the organisation. The ability to communicate corporate objectives to those responsible for seeing that those objectives are achieved is also an essential characteristic of an effective incentive pay scheme.25 The choice of objectives is an essential part of the decision-making process involving future courses of action. Objectives may be set out either in general terms or in more specific terms. General objectives are determined by top management. Specific objectives are formulated within the scope of general objectives and usually have more defined areas of application and time limits. Objectives may be just implicit but the formal, explicit definition of objectives will help highlight the activities which the organisation needs to undertake and the comparative importance of its various functions. An explicit statement of objectives may assist communications and reduce misunderstandings, and provide more meaningful criteria for evaluating organisational performance. However, objectives should not be stated in such a way that they detract from the recognition of possible new opportunities, potential danger areas, the initiative of staff or the need for innovation or change. Policy A policy is a guideline for organisational action and the implementation of goals and objectives. Policy is translated into rules, plans and procedures; it relates to all activities of the organisation, and to all levels of the organisation. Clearly stated policy can help reinforce the main functions of the organisation, make for consistency and reduce dependency on the actions of individual managers. Policy clarifies the roles and responsibilities of managers and other members of staff and provides guidelines for managerial behaviour. Securing agreement to a new or revised policy can help overcome reliance on outdated practices and aid the introduction of organisational change.26 Policy provides guiding principles for areas of decision-making and delegation. For example, specific decisions relating to HRM policy could include: ■ ■ ■ ■ giving priority to promotion from within the organisation; enforcing retirement at government pensionable age; whenever possible, employing only graduate or professionally qualified accountants; permitting line managers, in consultation with the HRM manager, to appoint staff up to a given salary/wage level. 153 154 PART 2 THE ORGANISATIONAL SETTING Some policy decisions are directly influenced by external factors – for example government legislation on equal opportunities. Corporate guidelines Objectives and policy together provide corporate guidelines for the operations and management of the organisation. The activities of the organisation derive their significance from the contribution they make to achieving objectives in the manner directed. The formulation of objectives and policy, and the allocation of resources, provide the basis for strategic planning which is the first stage in the planning and control processes of business organisations.27 THE PROFIT OBJECTIVE In order to be successful, the primary objectives of the business organisation may be seen as: ■ ■ ■ to continue in existence – that is, to survive; to maintain growth and development; and to make a profit. All three objectives are inextricably linked and it is a matter of debate whether the organisation survives and develops in order to provide a profit, or makes a profit by which it can survive and develop. Summers and Nowicki suggest that using a Maslow-like hierarchy of needs (discussed in Chapter 12), the first concern for organisations is survival. After organisational survival is ensured, managers then have considerable latitude in what they want the organisation to be and do. 28 If we accept survival as the ultimate objective of the business organisation, then this involves the need for a steady and continuous profit. Organisations must be prepared to accept the possibility of a reduction in short-term profitability in order to provide for future investments. The profit goal is achieved through the process of management and the combined efforts of members of the organisation. In times of economic recession the survival objective takes on particular importance, especially for small businesses. Managers today have a problem. They know their companies must grow. But growth is hard, especially given today’s economic environment where investment capital is difficult to come by and firms are reluctant to take risks. Managers know innovation is the ticket to successful growth. But they just can’t seem to get innovation right.29 Not a sufficient criterion for effective management Although the objective of profit maximisation is undoubtedly of great importance, it is not, by itself, a sufficient criterion for the effective management of a business organisation. In practice, there are many other considerations and motivations which affect the desire for the greatest profit or maximum economic efficiency and the accompanying assumptions which underlie the economic theory of the firm. (See Figure 5.3.) The meaning of ‘profit maximisation’ is not, by itself, very clear. Consideration has to be given to the range and quality of an organisation’s products or services, to the costs of its operations and to environmental influences. Reducing attention to longerterm ‘investments’ such as quality and after-sales service, research and development, sales promotion, management development, satisfaction of staff and their employment conditions may increase profitability in the short term, but is likely to jeopardise future growth and development, and possibly even the ultimate survival of the organisation. A business organisation has to provide some commodity or service by which it contributes to the economic and/or social needs of the community. It also has broader social responsibilities to society. (Social responsibilities are discussed later in this chapter.) Profit can be seen as the incentive for an organisation to carry out its activi- CHAPTER 5 ORGANISATIONAL GOALS, STRATEGY AND RESPONSIBILITIES Figure 5.3 Objectives of a business organisation ties effectively. Profit does at least provide some broad measure of effectiveness and highlights the difficulty in evaluating the effectiveness of not-for-profit organisations, such as National Health Service hospitals, prisons or universities. Avoiding uncertainties Managers are more concerned with avoiding uncertainties than with prediction of uncertainties. Economic models of decision-making, based on the assumption of rational behaviour in choosing from known alternatives in order to maximise objectives, can be contrasted with behavioural models based not so much on maximising of objectives as on short-term expediency where a choice is made to avoid conflict and within limiting constraints.30 Furthermore, as discussed earlier, members of the organisation will have their own personal goals and their own perception of the goals of the organisation. FALLACY OF THE SINGLE OBJECTIVE Drucker has referred to the fallacy of the single objective of a business. The search for the one, right objective is not only unlikely to be productive, but is certain to harm and misdirect the business enterprise. To emphasize only profit, for instance, misdirects managers to the point where they may endanger the survival of the business. To obtain profit today they tend to undermine the future … To manage a business is to balance a variety of needs and goals … the very nature of business enterprise requires multiple objectives which are needed in every area where performance and results directly and vitally affect the survival and prosperity of the business.31 Drucker goes on to suggest eight key areas in which objectives should be set in terms of performance and results: 1 Market standing – for example: share of market standing; range of products and markets; distribution; pricing; customer loyalty and satisfaction. 155 156 PART 2 THE ORGANISATIONAL SETTING 2 Innovation – for example: innovations to reach marketing goals; developments arising from technological advancements; new processes and improvements in all major areas of organisational activity. 3 Productivity – for example: optimum use of resources; use of techniques such as operational research to help decide alternative courses of action; the ratio of ‘contributed value’ to total revenue. 4 Physical and financial resources – for example: physical facilities such as plant, machines, offices and replacement of facilities; supply of capital and budgeting; planning for the money needed; provision of supplies. 5 Profitability – for example: profitability forecasts and anticipated timescales; capital investment policy; yardsticks for measurement of profitability. 6 Manager performance and development – for example: the direction of managers and setting up their jobs; the structure of management; the development of future managers. 7 Worker performance and attitude – for example: union relations; the organisation of work; employee relations. 8 Public responsibility – for example: demands made upon the organisation, such as by law or public opinion; responsibilities to society and the public interest. Allocation of resources and decisionmaking The organisation therefore must give attention to all those areas which are of direct and vital importance to its survival and prosperity. Etzioni makes the point that: The systems model, however, leads one to conclude that just as there may be too little allocation of resources to meet the goals of the organization, so there may also be an over-allocation of these resources. The systems model explicitly recognizes that the organization solves certain problems other than those directly involved in the achievement of the goal, and that excessive concern with the latter may result in insufficient attention to other necessary organizational activities, and to a lack of coordination between the inflated goal activities and the de-emphasized non-goal activities.32 Individuals in the organisation are not necessarily guided at all times by the primary goal(s) of the organisation. Simon illustrates this in respect of the profit goal. Profit may not enter directly into the decision-making of most members of a business organisation. Again, this does not mean that it is improper or meaningless to regard profit as a principal goal of the business. It simply means that the decision-making mechanism is a loosely coupled system in which the profit constraint is only one among a number of constraints and enters into most sub-systems only in indirect ways.33 We have seen, then, that although the profit objective is clearly of importance, by itself it is not a sufficient criterion for the effective management of a business organisation. There are many other considerations and motivations which affect the desire for the greatest profit or maximum economic efficiency. The balanced scorecard The balanced score card is an attempt to combine a range of both qualitative and quantitative indicators of performance which recognise the expectations of various stakeholders and relates performance to a choice of strategy as a basis for evaluating organisational effectiveness. Citing the work of Kaplan and Norton in a year-long study of a dozen US companies,34 Anita van de Vliet refers to the approach of a ‘balanced scorecard’ and the belief that: ... relying primarily on financial accounting measures was leading to short-term decisionmaking, over-investment in easily valued assets (through mergers and acquisitions) with readily measurable returns, and under-investment in intangible assets, such as product and process innovation, employee skills or customer satisfaction, whose short-term returns are more difficult to measure. CHAPTER 5 ORGANISATIONAL GOALS, STRATEGY AND RESPONSIBILITIES Van de Vliet suggests that in the information era, there is a growing consensus that financial indicators on their own are not an adequate measure of company competitiveness or performance and there is a need to promote a broader view. The balanced scorecard does still include the hard financial indicators, but it balances these with other, so-called soft measures, such as customer acquisition, retention, profitability and satisfaction; product development cycle times; employee satisfaction; intellectual assets and organisational learning.35 The balanced scorecard (BS) can also be used in the public sector where there is an increasing need for organisations to improve their performance and to be seen as more businesslike in the delivery of services (including an employee perspective). Given that the public sector has the difficult task of fulfilling a wide range of very different objectives, the BS could help in formal recognition and measurement of these objectives.36 THE NEED FOR STRATEGY Objectives and policy are formalised within the framework of a corporate strategy which serves to describe an organisation’s sense of purpose, and plans and actions for its implementation. Tilles has suggested that without an explicit statement of strategy it becomes more difficult for expanding organisations to reconcile co-ordinated action with entrepreneurial effort.37 An explicit strategy for the business organisation is necessary for the following reasons. First, there is the need for people to co-operate together in order to achieve the benefits of mutual reinforcement. Second, there are the effects of changing environmental conditions. The absence of an explicit concept of strategy may result in members of the organisation working at cross-purposes. The intentions of top management may not be communicated clearly to those at lower levels in the hierarchy who are expected to implement these intentions. Obsolete patterns of behaviour become very difficult to modify. Change comes about from either subjective or intuitive assessment, which become increasingly unreliable as the rate of change increases. Developing a statement of strategy demands a creative effort. If strategic planning is to be successful, it requires different methods of behaviour and often fundamental change in the nature of interactions among managers.38 Allen and Helms suggest that different types of reward practices may more closely complement different generic strategies and are significantly related to higher levels of perceived organisational performance. 39 Managers’ skills and competencies Increased business competitiveness and the dynamic external environment have placed important emphasis on corporate strategy and the competencies of managers. For example, Richardson and Thompson argue that if organisations are to be effective in strategic terms they must be able to deal with the pressures and demands of change. Managers should be strategically aware and appreciate the origins and nature of change. They should possess a comprehensive set of skills and competencies and be able to deal effectively with the forces which represent opportunities and threats to the organisation. Effective strategic management creates a productive alliance between the nature and the demands of the environment, the organisation’s culture and values, and the resources that the organisation has at its disposal.40 Strategy is about first asking questions, then improving the quality of those questions through listening to the answers and acting on the new knowledge. Any effective strategy requires the successful integration of thoughts about tomorrow’s new business opportunities with both past experience and the pattern of today’s behaviours.41 157 158 PART 2 THE ORGANISATIONAL SETTING Corporate approach in the public sector Some form of corporate strategy or planning is necessary for all organisations, particularly large organisations and including service organisations and those in the public sector. In a discussion on strategy developments, Lynch suggests that many of the same considerations apply to both public and private organisations. The major difference has been the lack of the objective to deliver a profit in government-owned institutions. The trend in most parts of the world is now towards privatising large public companies in the utilities and telecommunications sectors. The principal impact of privatisation on strategy will depend on the form that privatisation takes. Some companies may remain monopolies even though in the private sector. Lynch sets out the following key strategic principles for public and non-profit organisations: ■ ■ ■ Public organisations are unlikely to have a profit objective. Strategy is therefore governed by broader public policy issues such as politics, monopoly supply, bureaucracy and the battle for resources from the government to fund the activities of the organisation. Strategy in non-profit organisations needs to reflect the values held by the institutions concerned. Decision-making may be slower and more complex. Within the constraints outlined above, the basic strategic principles can then be applied.42 In the public sector, the establishment of objectives and policy requires clarification of the respective roles of both elected members and permanent officials. This dual nature of management requires harmonious relationships between the two parties and emphasises the need for a corporate approach.43 A strategic framework In order to continue in existence and succeed, Bruce maintains that a business needs a structured strategic framework which provides the starting point for moving forward and a means for assessing and responding to change. The strategic framework defines the boundary in terms of product markets and is reflected in the management of processes, knowledge and people. Bruce sets out a strategic framework divided into five separate but interrelated elements: ■ ■ ■ ■ ■ the things that are driving strategic decisions; the direction that the organisation is heading in; the products and services that will be delivered; the design of the organisation’s processes, knowledge systems and people development mechanisms; the specific targets that will identify whether the organisation is deviating from its plan. Once strategic targets have been agreed the organisation or team must be aligned. The review should start with the means to deliver the strategy before reviewing the formal structure and hierarchies. Then the selection, development and leadership of people should be reviewed to create a work environment and culture that supports each element of the strategic framework.44 THE CONCEPT OF SYNERGY An important aspect of corporate strategy and the growth and development of organisations is the concept of synergy which was developed in management applications by Ansoff.45 Synergy results when the whole is greater than the sum of its component parts. It can be expressed, simply, in terms of the 2 + 2 = 5 effect. CHAPTER 5 ORGANISATIONAL GOALS, STRATEGY AND RESPONSIBILITIES Synergy is usually experienced in situations of expansion or where one organisation merges with another, such as an organisation responsible for the development and production of a product merging with an organisation which markets the product. An example could be a television manufacturer merging with a television rental organisation. The new organisation could benefit from the combined strengths and opportunities, skills and expertise, shared fixed overheads and technology, and from the streamlining and economy of its operations. Another example could be the merger of a computer firm with expertise in the design and marketing of hardware, with a firm expert in software manufacture and systems design. It is possible, however, to experience negative synergy or the 2 + 2 = 3 situation. Such a situation might arise when a merger occurs between organisations operating in different fields, with different markets or with different methods, or where the new organisation becomes unwieldy or loses its cost-effectiveness. SWOT ANALYSIS Ansoff has also referred to the analysis of strengths and weaknesses of organisations following the formulation of objectives;46 and to threats and opportunities in the process of strategic change.47 This can be developed into what is a commonly known acronym, SWOT analysis (sometimes also known as ‘WOTS up’), which focuses on the Strengths, Weaknesses, Opportunities and Threats facing organisations. The SWOT analysis provides convenient headings under which to study an organisation in its environmental setting and may provide a basis for decision-making and problem-solving. You may therefore find the analysis helpful in tackling case studies. ■ ■ ■ ■ Strengths are those positive aspects or distinctive attributes or competencies which provide a significant market advantage or upon which the organisation can build – for example, through the pursuit of diversification. These are characteristics of the organisation such as present market position, size, structure, managerial expertise, physical or financial resources, staffing, image or reputation. By searching out opportunities which match its strengths the organisation can optimise the effects of synergy. Weaknesses are those negative aspects or deficiencies in the present competencies or resources of the organisation, or its image or reputation, which limit its effectiveness and which need to be corrected or need action taken to minimise their effect. Examples of weaknesses could be operating within a particular narrow market, limited accommodation or outdated equipment, a high proportion of fixed costs, a bureaucratic structure, a high level of customer complaints or a shortage of key managerial staff. Opportunities are favourable conditions and usually arise from the nature of changes in the external environment. The organisation needs to be sensitive to the problems of business strategy and responsive to changes in, for example, new markets, technology advances, improved economic factors, or failure of competitors. Opportunities provide the potential for the organisation to offer new, or to develop existing, products, facilities or services. Threats are the converse of opportunities and refer to unfavourable situations which arise from external developments likely to endanger the operations and effectiveness of the organisation. Examples could include changes in legislation, the introduction of a radically new product by competitors, political or economic unrest, changing social conditions and the actions of pressure groups. Organisations need to be responsive to changes that have already occurred and to plan for anticipated significant changes in the environment and to be prepared to meet them. 159 160 PART 2 THE ORGANISATIONAL SETTING Although SWOT can offer a number of potential advantages for helping to evaluate corporate performance, care must be taken that the process does not lead to an oversimplified and misleading analysis. There are many ways of evaluating organisational performance and effectiveness, and varying criteria for success. For example, Levine suggests that the new criteria for assessing the strength of an organisation will be in the area of quality results achieved through people.48 THE MANAGEMENT OF OPPORTUNITIES AND RISKS Every business needs to have a strategy and this strategy must be related to changing environmental conditions. In order to survive and maintain growth and expansion top management must protect the business from potentially harmful influences, and be ready to take maximum advantage of the challenges and opportunities presented. While top management must always accept the need for innovation there is still the decision as to which opportunities it wishes to develop in relation to its resources, and those it chooses not to pursue. An effective business strategy depends upon the successful management of opportunities and risks. Drucker suggests that strategy should be based on the priority of maximising opportunities, and that risks should be viewed not as grounds of action but as limitations on action.49 Drucker points out that while it is not possible to ensure that the right opportunities are chosen, it is certain that the right opportunities will not be selected unless: ■ ■ ■ ■ the focus is on maximising opportunities rather than on minimising risks; major opportunities are scrutinised collectively and in respect of their characteristics rather than singly and in isolation; opportunities and risks are understood in terms of the appropriateness of their fit to a particular business; and a balance is struck between immediate and easy opportunities for improvement, and more difficult, long-range opportunities for innovation and changing the character of the business. If the business is to be successful then its organisation structure must be related to its objectives and to its strategy. The structure must be designed so as to be appropriate to environmental influences, the continued development of the business, and the management of opportunities and risks. The nature of organisation structure is discussed in Chapter 15. E-business strategies Advances in information technology and the Internet mean that organisations have to embrace successful e-commerce and e-business strategies. For example, according to Earl: Quite simply, IT affects business strategy. It is an input to business strategy as well as an output. The Internet, mobile communications, and future media present both threats and opportunities. So business strategy that ignores how technology is changing markets, competition, and processes is a process for the old economy, not the new economy. That is what ‘e-everything’ is about.50 Kermally points out that in order to operate within the new macro-economic environment, organisations have to seriously consider the arrival of the new economy and strategies. They have to embrace e-business in order to deal with the complexity of the new business environment. Apart from scenario planning, e-businesses also have to focus special attention to recruiting and retaining staff. It is important to keep up with CHAPTER 5 ORGANISATIONAL GOALS, STRATEGY AND RESPONSIBILITIES competitors and not to become complacent about adopting e-business. Kermally maintains that the e-business model is important because it: ■ ■ ■ ■ ■ ■ makes it possible for information to be shared more quickly and easily; facilitates human interaction; enables organisational resources and capabilities to be stretch strategically; provides global reach in marketing; allows consumers to shop 24 hours a day from any location; and promotes economic growth.51 SOCIAL RESPONSIBILITIES OF ORGANISATIONS Organisations play a major and increasingly important role in the lives of us all, especially with the growth of large-scale business and the divorce of ownership from management. The decisions and actions of management in organisations have an increasing impact on individuals, other organisations and the community. The power and influence which many business organisations now exercise should be tempered, therefore, by an attitude of responsibility by management. In striving to satisfy its goals and achieve its objectives the organisation cannot operate in isolation from the environment of which it is part. The organisation requires the use of factors of production and other facilities of society. The economic efficiency of organisations is affected by governmental, social, technical and cultural variables. In return, society is in need of the goods and services created and supplied by organisations, including the creation and distribution of wealth. Organisations make a contribution to the quality of life and to the well-being of the community. Organisational survival is dependent upon a series of exchanges between the organisation and its environment. These exchanges and the continual interaction with the environment give rise to a number of broader responsibilities to society in general. These broader responsibilities, which are both internal and external to the organisation, are usually referred to as social responsibilities. These social responsibilities arise from the interdependence of organisations, society and the environment. The recognition of the importance of social responsibilities can be gauged in part by the extent of government action and legislation on such matters as, for example, employment protection, equal opportunities, companies acts, consumer law, product liability and safeguarding the environment. This has formalised certain areas of social responsibilities into a legal requirement. It is doubtful, however, if legislation alone is sufficient to make management, or other members of an organisation, behave in what might be regarded as a ‘proper’ manner. Growing attention to social responsibilities There has been a growing attention to the subject of social responsibilities and an increasing amount of literature on the subject and on a new work ethic. The importance of social responsibility (or corporate responsibility) can also be gauged by the amount of coverage in the annual review of most major companies. For example, under the heading of Corporate Responsibility the annual review of the BG Group refers to the Statement of Business Principles and to eight key policies which cover: personal conduct; human resources; governance; human rights; communications; health, safety and environment; security; and corporate conduct.52 Many businesses both in the UK and other parts of Europe are attempting to provide a more open and transparent view of their operations.53 The European Commission is encouraging firms to assess their performance not on profit margins alone but also on the welfare of their workforce and care for the environment.54 161 162 PART 2 THE ORGANISATIONAL SETTING Shortland points out that consumer activism has never been more intense and the media very rapidly exposes unethical practices. Society, consumers, shareholders and legislators all require companies to be more transparent and accountable. The concept of social responsiveness means that companies respond to stakeholders and concern from society by considering more than just the company’s own interests. Systematic evaluation of the needs for stakeholders can position the company to be socially responsible. However, companies cannot simply take a reactive approach to issues as they arise, the principles must be embedded in the corporate culture and business strategy, right through to the day-to-day decision-making process. Companies that embrace the principles of social responsibility and ethics in a proactive manner are the companies of the future – the firms that will survive and prosper.55 Global responsibilities Today there is also greater concern for business communities to accept their global responsibilities. This is recognised, for example, in the foreward to a book by Grayson and Hodges, by HRH The Prince of Wales. For the business community of the twenty-first century, ‘out of sight’ is no longer ‘out of mind’. Global communications and media operations can present every aspect of a company’s operations directly to customers in stark, unflattering and immediate terms. Those customers increasingly believe that the role of large companies in our society must encompass more than the traditional functions of obeying the law, paying taxes and making a profit. Survey after survey reveals that they also want to see major corporations helping ‘to make the world a better place’. That may be in some respects a naïve ambition, but it is, nevertheless, a clear expectation, and one that companies ignore at their peril … It is immensely encouraging to find that there are business leaders who recognise the challenge of running their companies in ways that make a positive and sustainable contribution to the societies in which they operate. It is a huge task, not least in finding ways of reaching out to the thousands of managers at the ‘sharp end’ of the business who, every day, take the decisions that have real impact on employees, on whole communities and on the environment. HRH The Prince of Wales56 CODES OF CONDUCT An increasing number of organisations, of all types, are now publishing a Code of Conduct (or Code of Ethics). For example, the Chartered Management Institute have a ‘Code of professional management practice’ that sets out the professional standards required of members of the Institute as a condition of membership as regards: 1 2 3 4 5 6 the individual manager; others within the organisation; the organisation; others external to but in direct relationship with the organisation; the wider community; the Chartered Management Institute.57 Extracts from the Code of Conduct of IBM Ltd are given in Management in Action 5.1 at the end of this chapter. Codes of conduct are very common in American and Canadian organisations and in many cases members of the organisation are required to sign to indicate formally their CHAPTER 5 ORGANISATIONAL GOALS, STRATEGY AND RESPONSIBILITIES acceptance of the code. Codes may be updated on a regular basis and in some cases such as investment companies this may be at least once a year. In the public sector, the Local Government Act 2000 specifies the following principles to govern the conduct of members of relevant English authorities and Welsh police authorities: selflessness, honesty and integrity, objectivity, accountability, openness, personal judgement, respect for others, duty to uphold the law, stewardship and leadership. These principles are intended to underpin the mandatory provisions of the model codes of conduct for English local authorities.58 A matter of degree and balance Tam poses the basic question, ‘Can we live with an idea of “good” management which cannot be ultimately reconciled with what is good for society?’ and maintains that: ... the time has come for us to recognise that the only sustainable form of good management is that which takes into account the full range of responsibilities that underpin organisational success.59 It should, however, be recognised that the distinction is blurred between the exercise of a genuine social responsibility, on the one hand, and actions taken in pursuit of good business practice and the search for organisational efficiency on the other. One approach is that attention to social responsibilities arises out of a moral or ethical motivation and the dictates of conscience – that is, out of genuine philanthropic objectives. An alternative approach is that the motivation is through no more than enlightened self-interest and the belief that, in the long term, attention to social responsibilities is simply good business sense. In practice, it is a matter of degree and balance, of combining sound economic management with an appropriate concern for broader responsibilities to society. Altman et al. point to a revolution going on which is changing the way we live and work, and question whether the leaders of giant companies are in tune with the social problems that surround them, affecting both employees and customers. We believe there is more than a hint that many business leaders lack a strong moral underpinning awareness and concern for the proliferation of social problems, that business is increasing behaving in an amoral fashion. Recent comment has tended to suggest that there is a general lack of concern for the spread of social problems for which industry must take a share of responsibility. There is a strong suspicion that business leaders are primarily focused on short-term issues, such as shareholder value, rather than seeking to balance the shareholder/stakeholder equation.60 Allen, however, questions whether the emphasis on the caring sharing company of the new millennium and social responsibility is all going a bit far. There is scarcely a company without a loftily worded mission statement and high-minded references to shareholders. There are now numerous codes and standards and any company wishing to keep up to date with latest developments in social responsibility needs to look in many directions at once, and companies are talking of ‘codemania’. While many codes offer voluntary guidelines, companies that fail to meet these can see themselves receiving a bad press or disinvestments. Nevertheless, the burden of social responsibilities can be seen as part of the response to ever-changing social conditions.61 And, according to Cook, although it is easy to be cynical following the fall of big companies there are many organisations who are ‘putting something back’. There is evidence about reversing the decline in public trusts and that in response to stakeholder and customer attitudes, corporate values are changing.62 ORGANISATIONAL STAKEHOLDERS We have seen that social responsibilities are often viewed in terms of organisational stakeholders – that is, those individuals or groups who have an interest in and/or are affected by the goals, operations or activities of the organisation or the behaviour of its 163 164 PART 2 THE ORGANISATIONAL SETTING members.63 Managers, for example, are likely to have a particular interest in, and concern for, the size and growth of the organisation and its profitability, job security, status, power and prestige. Stakeholders, on the other hand, include a wide variety of interests and may be considered, for example, under six main headings of: ■ ■ ■ ■ ■ ■ employees; providers of finance; consumers; community and environment; government; and other organisations or groups. Employees People and organisations need each other. Social responsibilities to employees extend beyond terms and conditions of the formal contract of employment and give recognition to the worker as a human being. People today have wider expectations of the quality of working life, including: justice in treatment; democratic functioning of the organisation and opportunities for consultation and participation; training in new skills and technologies; effective personnel and employment relations policies and practices; and provision of social and leisure facilities. Organisations should also, for example, give due consideration to the design of work organisation and job satisfaction, make every reasonable effort to give security of employment, and provide employment opportunities for minority groups. Responsibilities to employees involve considerations of the new psychological contracts discussed in Chapter 2. In the case of public authorities regard must also be paid to the provisions of the Human Rights Act 1998. Providers of finance Joint stock companies are in need of the collective investments of shareholders in order to finance their operations. Shareholders are drawn from a wide range of the population. The conversion of a number of building societies and insurance companies from mutual societies to public companies extended significantly the range of share ownership and stakeholding among private individuals. Many people also subscribe indirectly as shareholders through pension funds and insurance companies. Shareholders expect a fair financial return as payment for risk bearing and the use of their capital. In addition, social responsibilities of management extend to include the safeguarding of investments, and the opportunity for shareholders to exercise their responsibility as owners of the company, to participate in policy decisions and to question top management on the affairs of the company. Management has a responsibility to declare personal interests, and to provide shareholders with full information presented in a readily understood form. In the case of public sector organisations, finance may be provided by government grants/subsidies – which are funded ‘compulsorily’ by the public through taxation and rates – as well as loans, and charges for services provided. There is, therefore, a similar range of social responsibilities to the public as subscribers of capital. Consumers To many people, responsibilities to consumers may be seen as no more than a natural outcome of good business. There are, however, broader social responsibilities including: ■ ■ ■ ■ ■ providing good value for money; the safety and durability of products/services; standard of after-sales service; prompt and courteous attention to queries and complaints; long-term satisfaction – for example, serviceability, adequate supply of products/ services, and spare and replacement parts; CHAPTER 5 ■ ■ ORGANISATIONAL GOALS, STRATEGY AND RESPONSIBILITIES fair standards of advertising and trading; full and unambiguous information to potential consumers. Increasing concern for social responsibilities to consumers can be seen by the activities of such bodies as the Consumers’ Association, and the number of television and radio programmes devoted to this subject. In the case of public corporations there are Users’ National Councils or consumers’ regulatory bodies which are independent and look after the interests of customers. In the case of local government there is a system of Commissioners for Local Administration (popularly referred to as ‘Ombudsmen’) designed to provide an independent investigation of citizens’ complaints over alleged maladministration. Community and environment It is in the area of concern for the community at large that social responsibilities can be seen most clearly. Organisations have a responsibility not to misuse the scarce factors of production upon which the wealth of the country depends. Organisations have a responsibility to society, to respect environmental considerations and take care of amenities. Some examples under this heading include: ■ ■ ■ ■ the effects and potential dangers of pollution, noise, disposal of waste; the siting and appearance of new buildings; transportation policies, such as the routing of heavy vehicles through narrow village roads; and avoidance of excessive packaging and more use of biodegradable materials. Government Another important area of social responsibility could arguably be to the government. Organisations should, of course, respect and obey the law even where they regard it as not in their best interests. What is debatable, however, is the extent to which organisations should co-operate voluntarily with actions requested by the government. Some examples are: restraint from trading with certain overseas countries, and the acceptance of controls over imports or exports; actions designed to combat inflation, such as limits on the level of wage settlements; assisting in the control of potential social problems – for example, the sale of tobacco and the display of health warnings. Other organisations or groups The potential range of social responsibilities is substantial. Other organisations or groups to whom organisations might be regarded as having a social responsibility, or obligation, are suppliers, trade unions, business associates and even competitors. Examples of social responsibilities might include: fair standards of trading; honouring terms and conditions of purchase or sale, and settlement dates (for example, payment of accounts); assistance to smaller organisations; engagement only in fair competition; respect for copyright and patents. Some organisations extend the range of social responsibilities even further – for example, by giving recognition to the needs of developing countries; limiting the extent of political involvement or campaigning; donations to, or sponsorship of, the arts, educational or research institutions, sporting organisations or charities. Profit and effective performance Whatever the view of corporate social responsibility, management has as its priority the need to ensure the survival and effective performance of the organisation. As Drucker puts it: The first responsibility to society is to operate at a profit, and only slightly less important is the necessity for growth. The business is the wealth-creating and wealth-producing organ of our society. Management must maintain its wealth-producing resources intact by making adequate profits to offset the risk of economic activity. And it must besides increase the wealth-creating and wealth-producing capacity of these resources and with them the wealth of society.64 165 166 PART 2 THE ORGANISATIONAL SETTING The attention given to social responsibilities must involve weighing the costs of meeting these responsibilities against the benefits derived. Provided the cost/benefit analysis is not detrimental to economic and/or competitive performance, management must then determine the extent to which, and the manner in which, the organisation will attempt to satisfy its social responsibilities. The recognition of social responsibilities should form an integral part of strategy and the establishment of objectives and policies of the organisation. VALUES AND ETHICS The first years of the new millennium brought some very sharp reverses in business fortunes, with enormous sums of money wiped off market values, company collapses and, of course, a great deal of consequent distress for employees, families and others. For a while, these events were daily front-page news, along with a dawning realisation that the financial turbulence would worsen an already difficult position for millions who were saving towards pensions. Much of the problem was the bursting of an oldfashioned (but very high-tech) investment bubble. Both the demise of the meteoric but insubstantial ‘dot-com’ businesses and the hefty over-valuation by many telecoms companies of the ‘3G’ licences for the next mobile communications technology were examples of an investment frenzy that came to an abrupt and unhappy end. By the end of 2001, however, worse news was unfolding. As Kay puts it: Two companies came to symbolize the triumph and failure of the American 1990s – Enron, the Houston-based energy business, and WorldCom, a telecoms operator with headquarters in Clinton, Mississippi. Both companies had grown rapidly through acquisition and for a time enjoyed iconic status with investment bankers and many investors. The collapse of these businesses in late 2001 and summer 2002 provoked widespread allegations of fraud and corruption and was an important factor in the final deflation of the bubble. 65 These events were themselves brought on by the general crisis – a number of commentators have reminded readers of a remark attributed to investment ‘guru’ Warren Buffet: ‘It’s only when the tide goes out that you see who’s been swimming without their trunks on.’ These major corporate disasters seemed to many to go beyond the misguided euphoria of the dot-com boom and to raise questions of the ethics of the behaviour of these companies and their advisors. Ethics and business Ethics is concerned with the study of morality: practices and activities that are considered to be importantly right or wrong, together with the rules that govern those activities and the values to which those activities relate.66 Business ethics can be seen as an example of applied ethics – just as medical ethics is about the application of general ethics to the human activity called medicine, business ethics seeks to explore the implications of general ethics for the conduct of business. This apparently obvious point is important: by taking this stance, one rejects the view that moral principles have no bearing on business, or that ‘the business of business is business’, as the common saying has it. This is not to say that it is easy, or uncontroversial, to apply ethics to business: on the contrary, this fast-growing subject is characterised by a range of sharply contrasting views. Some of this controversy is inherent in ethics itself – as will be discussed below, there is no single clear view of how to judge good and bad, and this must impact on any application such as business ethics. This particular application of ethics, however, is also complicated by the fact that ethics mainly deals with good or bad conduct on CHAPTER 5 ORGANISATIONAL GOALS, STRATEGY AND RESPONSIBILITIES the part of individuals, resulting in possible difficulties in applying these ideas to impersonal corporate entities like companies. Is it appropriate to regard companies as if they were individual people and if not, what allowances should be made? Or, can the subject be satisfactorily seen as relating to the conduct of individuals as employees of businesses? Clearly, for very small businesses, the two views merge into one, but for larger, corporate entities, the position is more complex. CORPORATE SOCIAL RESPONSIBILITY One illustration of this is the diversity of opinion on the issue of corporate social responsibility. On one side of the debate are those who would share Milton Friedman’s view that the social responsibility of business is to make as much money as possible for the shareholders, within the rules of the game (fair competition, no deception or fraud, and so on).67 This is an example of agency theory, in which the directors of a company are seen as agents of the owners and who are duty bound to act so as to maximise the interests of those owners, this being taken as the reason for owners having made the investment in the first place. A more recent development of this general approach is that of Sternberg who proposes a teleological view of business ethics, based upon the pursuit of the business purpose – that of maximising long-term owner wealth by selling products and services.68 Actions by a firm that are consistent with this aim and which satisfy the additional tests of common decency (e.g. refraining from stealing, cheating, coercion and so on) and distributive justice (i.e. ensuring that rewards are proportional to contributions made) are ethical. Actions that fail any one of these three tests are, in this model, unethical. At the other end of the spectrum are some forms of stakeholder theory, which emphasise a much broader set of social responsibilities for business. Cannon, for example, suggests that: There exists an implicit or explicit contract between business and the community in which it operates. Business is expected to create wealth; supply markets; generate employment; innovate and produce a sufficient surplus to sustain its activities and improve its competitiveness while contributing to the maintenance of the community in which it operates. Society is expected to provide an environment in which business can develop and prosper, allowing investors to earn returns while ensuring that the stakeholders and their dependants can enjoy the benefits of their involvement without fear of arbitrary or unjust action. The interdependence between society and business cannot be understated. 69 Differing assumptions about a business The two perspectives provide very different views of how a business should act, because of their differing assumptions concerning what a business is for. In agency theory, a business is principally for the shareholders and its actions should mainly be judged on the criterion of maximising their interests. In the stakeholder view quoted above, a business is for its stakeholders (who are potentially a very large and diverse group) and its actions should be designed to balance stakeholder interests. From the point of view of business ethics – the study of good and bad conduct in business – this distinction is very important. The use of company resources to support a local community project, for example, might be seen as admirable by the stakeholder theorist but unethical by the agency theorist, in that it would be a misapplication of funds that belong to the owners (unless, of course, such an investment could be shown to be consistent with the shareholders’ best interests). Each of the two approaches adopts a different yardstick for judging the ‘goodness’ of a proposed action by a company. In the agency view, the action has to be shown to be 167 168 PART 2 THE ORGANISATIONAL SETTING consistent with the duty of maximising owner wealth, which is conceptually relatively simple, but which necessarily involves assumptions concerning the likely effect of the proposed action. In the stakeholder view (or, at least in those versions of the stakeholder view that emphasise an accountability to stakeholders), the task of management is to balance stakeholder interests. However, managers seeking to do this – often in the face of loud opposing claims from the various interests – will very quickly encounter the practical problem of how that ‘balance’ should be defined and recognised. Although difficult to reconcile in practice, the two approaches are not completely incompatible: to a stakeholder theorist, shareholders count as one type of stakeholder, but not the only type to which duties are owed by the firm. Likewise, Sternberg acknowledges the importance of understanding and remaining aware of the various stakeholder groups and of actively managing relationships between the company and these groups, because doing so is likely to be consistent with maximising owner wealth. As she points out, however, ‘taking account’ of something is importantly different from ‘being accountable’ to it.70 Intelligent self-interest It is also worth emphasising that a company seeking to maximise its owners’ long-term wealth may well do very good things for its ‘stakeholders’, not necessarily through any direct intent, but in pursuit of its main duty. Providing customers with excellent products and services is the central example, of course, but this form of intelligent self-interest may also – for example – drive a firm to build strong, trusting relationships with its suppliers and distributors (because it will be better off as a result), or an attractive working environment for its employees (because it wishes to recruit and keep the best, in order to be able to compete more effectively). Even beyond its immediate commercial relationships, an intelligently self-interested company may deliberately set out to build strong relationships with other stakeholders, or to take a principled stance on an issue such as the use of child labour, because to do so is to maximise owner value. The ‘value’ in question is not just next year’s dividends, but refers to the value of the investment as a whole and thus obliges the management to think long term as well as short term and to consider the impact of company actions as broadly as possible. In the UK, the report of the RSA inquiry ‘Tomorrow’s Company’ referred to the concept of an imaginary ‘operating licence’ granted to a company by the public, which can be effectively suspended or withdrawn if a company appears to be behaving badly.71 Doing business effectively and well relies upon hundreds, sometimes thousands of transactions every day of the year. If some of these transactions become more difficult because trust has been squandered and co-operation has been withdrawn, then the firm will start to lose out to its better-behaved competitors and its owners’ BUSINESS ETHICS wealth will start to suffer. The large-scale issues of corporate social responsibility are to do with how a company should conduct itself within society: these questions certainly have an ethical aspect, as has been discussed, but they are not the whole of business ethics. Day-to-day decisions made by individual managers are not usually made on the basis of some detailed calculation of the consequences for shareholder value (however theoretically desirable that might be) and more general ethical considerations must play a part in resolving the dilemmas that sometimes arise in practice. The scope of business ethics is very broad, because anything done by a company or its employees can be done ethically or unethically. The following list is not intended to be exhaustive, but rather to illustrate the all-pervasive nature of ethical questions in business: CHAPTER 5 ■ ■ ■ ■ ■ No single view of right or wrong ORGANISATIONAL GOALS, STRATEGY AND RESPONSIBILITIES behaviour towards customers, suppliers, distributors and competitors: for example, marketing and selling, fair competition, intelligence gathering, inducements and incentives; treatment of employees: for example, recruitment, rewards, training, promotion, dismissal, employee and employer rights and duties; treatment of other stakeholder groups: for example, local communities, governments, interest groups; effect on the natural environment: for example, pollution, recycling, sustainability; conduct in international operations: for example, use of power, respect for human rights, ‘delocalisation’ of operations to lower-cost environments. These questions can be complex, since there is no single view in general ethics of what makes something right or wrong. One school of thought emphasises duties, things that must be done (or refrained from) irrespective of the consequences. This deontological point of view holds that goodness or badness is only evident in the action itself: that, for example, lying is bad because it is bad in itself. By contrast, a consequentialist view of ethics holds that the goodness or badness of a proposed action is only evident in the consequences of that action: whether a lie is good or bad depends upon the consequences of that particular lie at the time. Utilitarianism, for example, is a consequentialist theory, in that it seeks to maximise the net happiness for everyone affected by a particular action (‘the greatest good for the greatest number’, as it is sometimes expressed). The perspectives on corporate social responsibility discussed above are also to some extent consequentialist, in that they are mainly concerned with an assessment of the effects of a firm’s actions. Both duties and consequences (or ‘means’ and ‘ends’ in the familiar saying about the latter justifying the former) are plainly important in the way we deal with ethical issues in everyday life. Unfortunately, however, they are very different ways of reasoning, which can lead to contradictory outcomes in some cases. An exclusively duty-based view of ethics, for example, must sooner or later run into problems such as absolutism, or the difficulty of deciding which duty should take precedence over others in a particular situation. If, for example, both lying and killing are held to be inherently wrong, is it acceptable to lie in order to avoid a killing? And whatever answer is given, how do we know? An exclusively consequentialist view of ethics also entails methodological problems of forecasting reliably what the consequences of an action may be and of deciding how to measure those consequences. Some forms of utilitarianism can be very unjust to small minorities, by allowing their unhappiness (i.e. as a result of some proposed action) to be offset by the increased happiness of a much larger number. Nor is the choice restricted to means and ends in ethics: several further approaches can be distinguished in western thought, including: ■ ■ ■ Virtue ethics, based upon an analysis of desirable human qualities that lie between undesirable extremes (the virtue of ‘courage’, for example, lies between the undesirable extremes of ‘cowardice’, at one end and ‘foolhardiness’ at the other). Ethical relativism, which holds that goodness and badness are largely or entirely determined by the prevailing values of the time in question and may thus change from one period to another, or one culture to another. Emotivism, which suggests that statements about ethics are essentially statements about the speaker’s attitudes, and that it is therefore futile to search for any ethical ‘truths’. The statement ‘Lying is bad’ is, from this point of view, saying little more than ‘I don’t like lying’. 169 170 PART 2 THE ORGANISATIONAL SETTING Ethical decision-making at work How, then, are ethical choices to be made by people working for organisations? No simple and universal answer is available – ethical awareness is something that can be cultivated and the different perspectives will often help to shed light on a particular dilemma. Some perspectives may appear to be better suited to particular situations: whereas, for example, it is difficult to avoid some sort of consequentialist component in thinking about how a company should act, it is also clear that duty-based arguments must also weigh heavily in thinking about the ethical treatment of people such as employees. The German philosopher Kant’s view that we should always treat other people as ends in themselves and never simply as means is surely an important principle for decent human resource management and one that would often be seen as more important than the prospect of short-term gain.72 Personal integrity and individual values are important elements in ethical decisionmaking at work, but the increasingly common company, professional or industry codes of conduct may also provide support and guidance. This is not to say that these ethical ‘resources’ will always provide clear and comfortable guidance – sometimes, people in organisations will experience tension between the conflicting demands of, say, their own personal values and the demands placed on them by their organisation. If these conflicts become intolerable and cannot be resolved through normal means, then an individual may decide to become a ‘whistleblower’ in the public interest, by taking the high-risk approach of placing the problem in the public domain for resolution. Codes of conduct can help to reduce the risk of painful situations like this by providing a published set of values to which the individual can appeal, rather than taking the risk wholly personally. (I am grateful to my colleague, Richard Christy, Department of Business and Management, University of Portsmouth for providing the above information on values and ethics.) RELATED LEGISLATION As part of the growing attention to the concept of corporate social responsibilities there are a number of pieces of recent legislation which arguably relate to the concept of business ethics and organisational accountability. Although it is not in the scope of this book to provide detailed aspects of legal provisions, we should recognise the existence of such legislation, including the Human Rights Act 1998, the Public Interest Disclosure Act 1998 and the Local Government Act 2000. The Human Rights Act 1998 came into force on 2 October 2000 and incorporates into English law rights and liberties enshrined in the European Convention on Human Rights. The provisions apply to the acts of ‘public authorities’ and make it unlawful for them to act in a way incompatible with a right under the Convention. The Act is designed to provide greater protection for individuals, and to protect them from unlawful and unnecessary interference. Everyone has the right to respect for their private and family life, their home and their correspondence. The Act is likely to have a significant effect on people both as citizens and at work. The Public Interest Disclosure Act 1998, which has become known widely as the ‘Whistleblower’s Act’ is designed to protect people who expose wrongdoing at their workplace, to provide reassurance that there is a safe alternative to silence and to provide a safeguard against retaliation. Employers need to establish clear internal procedures by which members of staff can raise any matters of personal concern. The Local Government Act 2000, the so-called ‘New Ethical Framework’, requires all local authorities to provide codes of conduct to promote high standards of behaviour. The government has distinguished between general principles of conduct in public service and the code of conduct containing specific actions and prohibitions that demonstrate the principles are being observed. CHAPTER 5 ORGANISATIONAL GOALS, STRATEGY AND RESPONSIBILITIES 171 AN INTEGRATED APPROACH McEwan summarises the separate histories of corporate social responsibility, business ethics and corporate governance, and suggests a method of enquiry which attempts to integrate these different perspectives on business through three broad levels of enquiry: ■ ■ ■ A descriptive approach that draws attention to the values and beliefs of people from different cultures and societies which influence their attitudes towards the various activities of business in their home countries and abroad. A normative approach which identifies sets of values and beliefs as a basis for making ethical decisions at the individual, group, or senior management level in an organisation. An analytical approach which attempts to explore the relationship between these normative values and beliefs and other value-systems or ideologies such as political or religious beliefs and culture or other social customs.73 EXHIBIT 5.1 Business ethics: what’s in it for you? A friend of mine once said he thought business people go through an ethics lock on their way into work and I expect it would not be hard to find many people to agree with him. But how true of business as a whole is the negative picture people can derive from unfortunate personal experiences or from regular media reports of the latest business scandal? For the fact is that interest in ethical business behaviour has grown in popularity among businesses in the UK and elsewhere in the past 10 years, just as the provision of teaching business ethics has also increased in business schools. Why the interest? Is it a matter of saying that the sicker people are, the more they develop an interest in medicine? What makes companies ethical? For some people or firms, developing an interest in business ethics may just be a case of following fashion, of climbing on to the ethics bandwagon while retaining the option of discreetly abandoning it should the fashion pass or recession deepen. Probably, keeping up with Jones plc is one reason for the growing popularity among businesses of developing a code of conduct or for beginning to include a politically correct sentence on ‘social responsibility’ in company reports. Another reason or motive for a business taking an interest in ethics can be in response to pressure. For example, Royal Dutch/Shell’s recent decision to give more attention to human rights on the international scene was obviously influenced by the public hostility aroused by its record in Nigeria, which blew up at the company’s annual general meeting in May 1997. Similarly, public exasperation over the mis-selling of private pensions in the UK in the late 1980s is spurring some insurance companies on to faster efforts to provide justice for those victims who are still suffering. In other words, keeping various awkward customers and irritating pressure groups off their back can lead many people in business to conclude that it makes for a simpler life if they keep to the straight and narrow. A third possible reason for pursuing ethics in business, of course, is the prospect of profits. Part of the folk-wisdom of business ethics is that it pays to be ethical: good ethics is good business. But this justification of ethics in business is just sufficiently true to be misleading. For one thing, as the Irish 19th century philosopher Richard Whately once put it, honesty is the best policy but he who is governed by that maxim is not an honest man. T S Eliot put it less paradoxically but more poetically when he observed that the greatest treason is to do the right thing for the wrong reason. Quite apart from the question of motive, however, acting ethically in business can in fact be quite expensive and seeking an ethical response to many of the modern challenges facing business can be a costly exercise. Highly respected companies such as Levi Strauss, Marks & Spencer, Johnson & Johnson and others have a long-standing ethical reputation and they clearly profit from it. But they have to keep working at it. Levi Strauss needed to take time out to formulate and justify its policy on human rights; Johnson & Johnson whipped Tylenol off the shelves at the first whiff of product defect; and Marks & Spencer is currently engaged in litigation with Granada TV in the UK to defend its integrity in dealing with overseas suppliers. If there is an ethics dividend, it has to be earned – through set-up or recurring costs in time and resources and possibly also in terms of opportunity costs. If my personal or corporate survival in business depends on using unethical means to secure a contract or to meet a deadline and I refuse to take such steps, then in the short term I may wake up honest and unemployed or my business may soon find itself ethical but on the way out. If ethical business does pay off, it will only do so over time as an investment and if one is still around to reap the benefit. 172 PART 2 THE ORGANISATIONAL SETTING Exhibit 5.1 continued There is one more reason why a company may decide to conduct its business on ethical lines and that is because the people involved consider it is simply the right thing to do – not because it’s fashionable or profitable or makes for a quiet life. Treating people with honesty, fairness and respect is then a matter of moral principle, not of expediency. Of course, it does not follow that in order for business conduct to be ethical it has to be unprofitable or uncomfortable. Some people hold, at least implicitly, the strange moral belief that an action will only be ethical or the right thing to do if it hurts. It is a view that sounds suspiciously like medicine having to taste awful for it to do good. Another Irishman, George Bernard Shaw, once wrote caustically that the English think they are being moral when in point of fact they are only being uncomfortable. In this connection it has become mandatory to quote Gordon Gekko, the financial lizard in the film Wall Street and described by another character as having had an ethics bypass at birth. ‘Let’s face it, ladies and gentlemen, greed is good,’ is probably the best-known quote from the film. But self-interest is not greed, except when it gets out of hand. Yet another Irishman, the philosopher William Berkeley, took the sensible line that at heart ethics consists in striking the right balance between two basic human feelings: concern for one’s self and concern for others. In other words, there is no reason why ethical behaviour should not also be advantageous or popular or be rewarded; and when that turns out to be the case in business it can be counted as a bonus. Mixed motives, or having several legitimate reasons for doing something, is a common human experience in ethics as in any other area of life. The time to worry would be when the various motives we may have for running a business on ethical lines leave no room for the explicitly ethical one. Or when the ethics motive is considered disposable or made conditional on continuing business success. What counts as business ethics? The very idea of business ethics makes some people uneasy. Partly this may be because they wonder at all the busybody fuss these days about trumpeting ethics and would much prefer just quietly getting on with running a decent business without having to get embarrassingly mawkish. Others feel the term ethics sounds judgemental and moralising, like being preached at. This may have been one reason for the modern movement in business ethics initially favouring the idea of ‘social responsibility’ as more user-friendly and less threatening when applied to business behaviour. However, quite apart from the fact that ethical reflection is not necessarily doctrinaire and that it has been around for some 4000 years as a human concern in all walks of life – including that involving the exchange of goods and services – the idea of ‘social responsibility’ is itself ambiguous and can lead to confusion when it is applied to business activities. The social responsibility movement in business was a popular phenomenon in the 1970s in the US as society’s expectations of business were becoming more vocal and its demand more socially oriented. It was against that background that the Nobel laureate economist Milton Friedman drew the ire of many business ethicists when he defiantly declared in the title of his famous 1970 New York Times Magazine article that ‘the social responsibility of business is to increase its profits’. The article has become a classic. It was, and still is, read by many people as attacking the very idea of business ethics and as immorally advocating profitability as the sole criterion of business behaviour. But Friedman’s ethical opponents got it wrong in making him a whipping boy for their indignation. For one thing, they ignored the small matter that tucked away in his article is the explicit statement that business should be conducted in conformity with the basic rules of society – both those embodied in law and those embodied in ethical custom. More fundamentally, Friedman’s critics failed to appreciate that in attacking the then fashionable American ‘social responsibility’ movement he was not rubbishing the application of ethical standards to business conduct. What he was taking issue with was the modish trend of diverting business from its proper role in society and applying its resources to tackle society’s various ills. Interestingly, it was around that time that some politicians in the UK were exhorting businesses to exercise ‘good citizenship’ by espousing various community projects and in the process overloading business with social expectations as well as seeming to make corporate philanthropy a surrogate for government public spending and concern for social justice. The idea of social responsibility applied to business received welcome precision from the US scholar Archie Carroll, who showed that it could be broken down into four quite different components: ■ A business can be socially responsible through its eco- nomic profitability, in being a going concern providing goods and employment and paying taxes and creditors. ■ It can discharge its social duties through legal compliance, in respecting the laws of the land. ■ Corporate social responsibility can cover community involvement in contributing to the solving of social problems. ■ Finally, a company can show how socially responsible it is through the ethical respect it accords its stakeholders in treating all its constituents fairly. Carroll’s analysis usefully brought several things to light. For one thing it confirmed that Friedman was not hostile to the business ethics component of social responsibility but to another one, corporate involvement in the community through, as he charged, management spending shareholders’, employees’ and customers’ money on what it (management) arbitrarily and undemocratically describes as ‘good causes’. Carroll’s scheme also makes it clear that business ethics is distinct from the mere legal compliance and is fre- CHAPTER 5 quently more demanding. It also shows that no amount of social involvement or extramural activity on the part of a company or its members can substitute for the social responsibility involved in running an ethical business and giving a fair deal to the various parties who are now increasingly identified as stakeholders. Stakeholders? What stakeholders? Perhaps we need another Milton Friedman today to blow the whistle on much of the rhetoric surrounding the increasingly fashionable idea of stakeholders. The term started life in 1963 and was a neat play on words to express the useful social and ethical idea that in addition to shareholders, or those holding ‘stock’ in a company, lots of other people were also affected by the company and had a ‘stake’ in how it behaved. The moral corollary was that the company ought to take their various interests into account alongside those of the shareholders in all its activities. The defining work of stakeholder theory was produced by the US academic Edward Freeman in the 1980s. Initially the stakeholders in a business were identified as its workforce, its customers, its suppliers and its surrounding community. Next, as the stakeholder theory developed, the term became used umbrella-like to cover all those individuals and groups, including shareholders, whose interests are seriously affected by a firm’s behaviour. Equally, they can all be regarded as investing in it each in their own way, whether through their capital, their working lives, their purchasing loyalty, their supplier commitment, or their local support and infrastructure. The ethical challenge of stakeholder theory was identified as finding ways for a business to satisfy all these parties. In the UK this stage of stakeholder thinking was reached rather late in the day, in the Royal Society of Arts’ 1995 study Tomorrow’s Company, which identified the future competitive success of UK business as dependent on what it termed the ‘inclusive company’, that is, one which takes care to build fruitful relations with all its major stakeholders. A more recent development, again in the UK, has been the hijacking of the term ‘stakeholder’ by social planners and politicians for mainly ideological purposes. First journalist and author Will Hutton’s ‘stakeholder capitalism’ aimed to counter City short-termism by ‘republicanising’ the financial system. Then came UK Prime Minister Tony Blair’s advocacy of a ‘stakeholder economy’ (when he was leader of the Opposition) echoed by the TUC, the trade union umbrella group, apparently involving equal participation by all but looking to some more like restoring power to the unions under another name. Another Labour politician, Frank Field, now a junior minister at the department of social security, came up with ‘stakeholder welfare’, which emphasised that all the recipients of welfare should have a say in its disposition. Other politicians contented themselves with invoking the vague feel-good vision of a ‘stakeholder society’. ORGANISATIONAL GOALS, STRATEGY AND RESPONSIBILITIES 173 From the viewpoint of business ethics the reality of the stakeholder idea is that it brings a valuable wide-angle approach to the conduct of a business by alerting it to all the parties in society who can be helped or hurt by its actions. But as a theory for business strategy it suffers from several major weaknesses. For one thing, the more participants we locate in the ethical landscape of business, the more scope there inevitably is for their various interests to compete and conflict – and stakeholder theory offers no way to arbitrate between rival stakeholder claims. Pushed far enough, in fact, it can be shown that at some remove everyone has a stake in just about everything in today’s global economy. These lead to attempts to distinguish and prioritise between different classes of stakeholders – internal and external, primary and secondary, major and minor, financial and others, all to little practical effect. Sometimes stress is laid on one class of stakeholder, either to advocate compensation by a version of positive discrimination or as part of a political rather than a business agenda. And at the other extreme, not many people, in business at least, would go so far as to espouse the view of Freeman and Gilbert that the very purpose of a company is to serve as a vehicle for co-ordinating stakeholder interests. But in any case, apart from seeking a moratorium on use of the term stakeholders to prevent its becoming more and more vacuous, perhaps we should not get hung up on its theory and simply value the idea as an ethical corrective to any view that would concentrate attention on the interests of a firm’s financial investors to the exclusion of every other consideration. The cost of ownership One of the most pressing ethical issues in business today is to find ways of narrowing the too-wide gap between management and ownership by increasing management accountability to owners and also by encouraging owners to pay the ethical dues of ownership, which extend beyond financial risk. The idea of ownership responsibility on the part of the shareholders has been rejected by the UK Institute of Directors as ‘simplistic’ on the strange logic that there are frequently too many shareholders for them to act responsibly. Yet, responsibility spread thin or even spread unevenly does not for that reason cease to be responsibility, both in the aggregate and for individuals. The challenge is to find imaginative ways for a multitude of owners first to acknowledge and then to discharge their moral responsibilities for the broad lines of the conduct engaged in by the company they partly own. It is encouraging, in fact, from an ethics point of view to note the ways in which ‘shareholder activism’, already quite buoyant in the US, has begun to appear in the UK and elsewhere as large institutional investors increasingly begin to take note of their responsibilities and to exercise them. Such activism is not simply triggered by poor financial performances but is also beginning to arise over various 174 PART 2 THE ORGANISATIONAL SETTING Exhibit 5.1 continued issues that arouse shareholder or public disquiet, including seeking ways to control ‘ratcheting’ executive remuneration and introducing the reality check of results – adverse no less than favourable – to assess the true corporate value of senior executives. Setting an ethical agenda for business The mounting interest in the subject of ethical business is reflected in the increased resources devoted to it in business schools and management departments, often with the encouragement of business. Certainly such teaching institutions have a major responsibility to provide tomorrow’s business men and women with the competence and confidence to tackle the expanding portfolio of ethical challenges with which managers are being increasingly confronted. How business schools set about equipping their students for such a responsible role will vary, understandably and desirably, but the overall aim must be to inform and stimulate thinking on ethical issues and to help prepare students to recognise and manage ethical issues as these arise. A useful model in this context is that described as ‘ethical business circles’ (see Figure 5.4), which views the company’s various activities as occurring within a series of expanding circles moving out from the centre. The innermost circle considers the internal workings of the business and the way in which individuals and colleagues are treated. Here topics that can usefully be examined include discrimination, confidentiality, teleworking and issues of loyalty as having implications not just for workers but also for management and even shareholders. Moving out to a second circle provides the opportunity to concentrate on the ethics of customer relations and marketing, including the pricing and advertising of goods and services. The third expanding ethical business circle focuses attention on relations with other companies, including timely payment of suppliers, working with suppliers who may mistreat their workforce, and ethical aspects of mergers and acquisitions and insider trading. Finally, the fourth, outer, circle considers how the company relates to the locality in which it is situated and covers such topics as self-regulation, cultural diversity, bribery, the physical environment and working with the community. Taking such a systematic approach to the discipline of business ethics ensures that all the major business relationships are covered in principle but allows flexibility to choose examples of ethical issues in each circle as indicated by recent events or current trends. This helps to reinforce the realisation that there are no ethical ‘no-go’ areas in business. It also ensures a sense of proportion so that students do not think business ethics is solely about finance because that is where mega-scandals and media interest are most to be found. Moreover, putting emphasis on the firm as the main moral agent also tries to ensure that ethical issues are not viewed as simply individual problems in a business setting. Exploring ethical business through the medium of the company can also usefully throw light on the individual, corporate or systemic features that contribute to various wrongdoings. Some ethical lapses in business can be entirely personal, arising from need or greed or entrepreneurial brazenness on the part of individuals, whether on the trading floor or in time-share selling. Other wrongdoings may be influenced by a corporate culture of excessive pressure for results or of inadequate supervision – whether in banks or on building sites – through ignorance or laziness. And yet other occasions for unethical behaviour can be more a feature of industry, including the free-floating bonus system in financial trading or the payment by commission in the insurance industry. Thinking ethical issues through, as courses in business ethics ought to be encouraging, also displays the poverty and occasional triviality of approaching dilemmas simply by applying as a piece of moral litmus paper the questions, what would you tell your children or how would like to see your decision reported in tomorrow’s paper? These homespun resources prompt two further questions, which at least may show up their inadequacy. One is, how old are the children – and, anyway, since when have youngsters been such moral experts? And the other is, what newspaper did you have in mind? Many of the most intractable ethical issues in adult life, including business, are not a simple unqualified choice between good and bad but a forced choice between good and good. Devoting careful thought and analysis to major issues, such as what to do about the working practices of suppliers in developing countries or how to handle demands for extortion as contrasted with offering bribes or the pros and cons of dealing with regimes with appalling human rights records, can lead one to conclude that ethical answers are not always as clear cut and sharp-edged as children or tabloid headlines might prefer them to be. Looking back now on the controversy surrounding trade with South Africa can be salutary in this respect. Who was right: the companies that pulled out and supported boycott and international disapproval of apartheid or the companies that stayed on and used the Sullivan Principles and other strategies to erode apartheid from the inside, while also ensuring there would be a viable economy after the social revolution? There is, of course, no answer to the question. But it remains a good question. It suggests in this case that maybe both ethical approaches actually had right on their side and that each was effective in its own way. The case of South Africa may also illustrate the more general consideration that ethical problems, whether in business or elsewhere in life, do not always have to have one, and only one, right answer. Why should they? People often seem to prefer the security of certainty, including moral certainty, to the discomfort of living with the provisional or the partial truth. CHAPTER 5 ORGANISATIONAL GOALS, STRATEGY AND RESPONSIBILITIES Figure 5.4 Ethical business circles Business ethics is ultimately the ethics of power, of how to handle the power of business and of how that power is acquired, increased and exercised. The need for ethics in business has never been greater, precisely because the power of business was never so manifold and so extensive as it is today. And the growing interest in the subject may lead us to surmise that business itself as a whole is becoming increasingly aware of its growing power and the possibilities for good or ill this brings. At its best, business is a constructive and creative activity in society. And the subject of business ethics is best deployed when it affirms business people while exploring with them how their power may be used positively to best effect to add ethical value. That is why it is a mistake to draw one’s overall image of business from the disasters, the shambles and the scandals that unfortunately occur from time to time or to adopt an attitude of moral defeatism towards business behaviour. Yet it would be utopian not to realise that the power of business can be, and too often is, misused and that some of its activities and practices could usefully carry a moral health warning. What business ethics as a discipline, and ethical business as an activity, should both be trying to do is to find a way between moral defeatism and moral utopianism, a path of imaginative moral realism that will be continuously seeking constructive ways for business to pursue while keeping a wary eye open for the ethical dead ends that also lie before it. (Reproduced with permission from Pearson Education Limited from Jack Mahoney, Mastering Management, Financial Times Pitman Publishing, 1997.) 175 176 PART 2 THE ORGANISATIONAL SETTING CRITICAL REFLECTIONS A National Health Service trust chairperson was heavily criticised for maintaining that the primary loyalty of doctors was owed to their employers, and that their duty to patients came a third after themselves. But when demands upon the health service are limitless and resources finite, why is the idea of owing first loyalty to the organisation for which you work such a bad thing? What are your own views? Part of our problem of dealing with ethical issues in organisations lies in the approaches we have attempted to take. As with other areas of management, the mainstream approach has been objective and instrumental. Practitioners and researchers assume that we can define objectively the right way of doing business – the morality of behaviour in business organisations embedded in economic systems. And, from this definition, rules of behaviour can be laid down. This may not be a valid approach. It is certainly not the only way of understanding the morality of business behaviour. McKenna, R. New Management, Irwin/McGraw Hill (1999), p 138. How would you, as a senior manager, explain the morality of business behaviour to an ardent member of ‘Friends of the Earth’? ’Profit maximisation is the only realistic criterion by which business organisational effectiveness can be reasonably judged.’ Debate. SYNOPSIS ■ All organisations have some function to perform, and some incentive for their existence and for their operations. The goals of an organisation determine the nature of its outputs and the series of activities through which the outputs are achieved. The goal model approach concentrates on the study of organisational goals and the measurement of success against the realisation of these goals. There are potential disadvantages and limitations with this approach, but the concept of organisational goals serves a number of important functions. ■ Strictly, organisations have no goals, only people do. Members of an organisation have different and often conflicting goals. Management has a responsibility to clarify organisational goals and to attempt to integrate personal goals with the overall objectives of the organisation. Organisational goals can be classified in a number of different ways. However, adopting a systems view of organisations, we can distinguish four main types of goals: consumer, product, operational and secondary. ■ The goals of the organisation may be pursued in accordance with an underlying ideology or philosophy which determines the culture of the organisation and governs the overall conduct of its operations. In recent years growing attention has been given to stated corporate values and mission statements. Goals are translated into objectives and policy. The choice of objectives is an essential part of the decision-making process involving future courses of action. Policy is developed within the framework of objectives. It provides the basis for decision-making and the course of action to follow in order to achieve objectives. CHAPTER 5 ORGANISATIONAL GOALS, STRATEGY AND RESPONSIBILITIES 177 ■ Objectives and policy, together, provide corporate guidelines for the operation and management of the organisation. Although the objective of profit maximisation is undoubtedly important, it is not by itself a sufficient criterion for the effective management of a business organisation. In practice, there are many other considerations and motivations which affect the desire for the greatest profit or maximum economic efficiency. Attention must be given to all those areas which are of direct and vital importance to the survival and prosperity of the organisation. ■ Objectives and policy are formalised within the framework of a corporate strategy. An explicit strategy is necessary in order that people may co-operate and because of the effects of changing environmental conditions. A SWOT analysis may help the process of strategic change although care must be taken that the analysis is not oversimplified. An effective business strategy depends upon the successful management of opportunities and risks. Organisations need to embrace successful e-commerce and ebusiness strategies. ■ In striving to satisfy its goals and achieve its objectives, the organisation cannot operate in isolation from the environment of which it is part. Organisational survival is dependent upon a series of exchanges between the organisation and its environment. These exchanges and the continual interaction with the environment give rise to a number of broader responsibilities to society in general – the social responsibilities of management and to organisational stakeholders. Full attention should also be given to values in organisations and business ethics. MANAGEMENT IN ACTION 5.1 IBM Code of Conduct CODE OF CONDUCT: OVERVIEW ■ How do I create a code of conduct with my team or department? At first glance, a code of conduct may seem like a new concept. But you and your employees are more familiar with it than you know. All groups develop rules or standards of behavior. Behaviors are what people say and do. Most often, group norms are informal and unwritten, but some groups have clearly recorded rules. The Salvation Army has a code of conduct. So does the Catholic Church and the French Foreign Legion. The community choir, the sales staff at your local department store, and aboriginal tribes all have a code of conduct. Without codes, they could lapse into chaos. Likewise, when you and your work group agree upon a code of conduct unique to your group, some remarkable things happen. Negative behaviors slowly extinguish themselves. Positive behaviors replace them. That’s because group norms are powerful influences on behavior. A code of conduct is simply a way of consciously defining those group norms. This QuickView answers these questions: ■ Why would I want to use a code of conduct with my work group? Researched, created, and reviewed by IBM Management Development Global Cluster Team (Contact: Dick Richardson/Charlotte/IBM@IBMUS) @Copyright IBM Corp., 2000, All Rights Reserved. CODE OF CONDUCT: STEPS Why would I want to use a code of conduct with my work group? How do I create a code of conduct with my team or department? Why would I want to use a code of conduct with my work group? Almost any group will create group norms. Norms are rules and standards that describe appropriate group behavior. Group norms are powerful influences on behavior. Usually norms are developed informally over time through the interaction of members. People may deviate from the behavior the rest of the group expects, but at some point the group will react with sanctions. The sanctions have the objec- 178 PART 2 THE ORGANISATIONAL SETTING Management in Action 5.1 continued tive of bringing the member back ‘into line.’ This peer pressure is a strong force for many people. A code of conduct is simply a way of consciously defining some group norms. It is a structured forum for the group to determine what behaviors are appropriate. For you as a leader it offers the opportunity to align group norms with organizational objectives. Using a code of conduct will help individuals ‘manage’ their bahaviors and make the group more productive and your job easier. How do I create a code of conduct with my team or department? The seven steps for creating a code of conduct with your work group: 1 Solicit suggested behaviors for the code from individual team members. 2 Compile a long list of the suggested behaviors. 3 Identify overlap or redundancy in the suggestions. 4 Narrow the list. 5 Write the code of conduct. 6 Establish group commitment. 7 Live it. Specific instructions for the seven steps: 1 Solicit suggested behaviors for the code from individual team members. Ask each group member to privately write one or two behaviors important for the group to work together successfully. (Examples: ‘Be on time for all meetings’ or ‘Activity listen to others.’) 2 Compile a long list of suggested behaviors. Have employees share their behaviors with the work group. You or a scribe should list all ideas. At this stage, avoid discussion about the merits of any idea. 3 Identify overlap or redundancy in the suggestions. Review all the behaviors on the list. With the group, eliminate duplicate behaviors. Combine similar behaviors. The behaviors should be as clear, concise, and distinct as possible. 4 Narrow the list. The objective is to reduce the list to between 6–10 of the most important behaviors for your work group. You can do this by voting on each item, having all members choose their favorite, or any other decision-making process you want. Tool: A good tool to use to narrow the list is multi-voting, also called ‘Dotmocracy.’ You post a list of the behaviors. Group members are all given the same number of votes (perhaps 3, 4, or 5) and mark their votes on the posted behaviors. Members can use their votes in any manner they wish, for example, placing all votes on one behavior, or distributing votes among several behaviors. Finally, the process rank-orders the behaviors according to total number of votes received. 5 Write the code of conduct. The code of conduct should begin with the words ‘We will…’ and be followed by the behaviors the team has chosen. 6 Establish group commitment. The code of conduct is an agreement. It’s an informal contract between each team member and the group. Take time to discuss how violations of the code will be handled, and how the code can and will be used by the group. 7 Live it. You have laid the foundation for future interactions within your work group. Your code will make your team more productive – provided you adhere to it and keep it ‘alive.’ Some teams go to great lengths to have their codes framed and professionally presented. Another way is to memorize it and refer to it in your dealings with one another. Virtual teams that work in a shared workspace may post their code in their space to keep it ‘alive.’ Having it posted enables new members to quickly understand the team’s values and to learn how to work together. Tool: ‘Finger shoot’ is a quick method to assess whether your code of conduct is working. To conduct a finger shoot, select the first item on your code. Ask everyone to consider the question: ‘How well are we as a group living up to our promise to each other?’ Then ask them to score their response on a scale from 1 finger to 5 fingers. All indicate their scores at the same time by showing a certain number of fingers. Debrief the scoring and why people scored as they did. Then do the same with the rest of the items on the code of conduct. In time, you may want to reassess your code of conduct. Have the team ask itself, ‘Are all items still relevant?’ ‘Have new issues arisen that should be addressed by the codes?’ You may find the code changing over time. Or, like the Salvation Army, you may be comfortable that your code is a timeless standard for your group. Reprinted with permission. I am grateful to Lynn Thomson, First Line Manager, IBM (UK) Ltd. CHAPTER 5 ORGANISATIONAL GOALS, STRATEGY AND RESPONSIBILITIES REVIEW AND DISCUSSION QUESTIONS 1 What are goals and what functions are served by organisational goals? Suggest a classification of organisational goals and relate this to your own organisation. 2 Illustrate the systems view of organisational goals and objectives. Give examples of how the goals of an organisation may change over time. Why is it that in practice organisational goals usually tend to be altered only on a gradual basis? 3 What do you see as the importance of organisational ideology or philosophy? Explain the extent to which there is a clear ideology and/or set of principles which govern the overall conduct of your own organisation. 4 Distinguish between objectives and policy. Identify examples of objectives and policy in your own organisation, and comment on how effectively you believe they have been implemented. 5 Discuss critically the extent to which profit maximisation is a sufficient criterion for the effective management of a business organisation. What other indicators might be applied in terms of organisational performance and results? 6 Explain the need for a corporate strategy and attempt to examine the corporate plan for your own or some other organisation. Suggest criteria for the evaluation of an appropriate mix of activities. 7 Assess the practical relevance of (i) the concept of synergy and (ii) a SWOT analysis. 8 Discuss critically the extent to which you accept the concept of corporate social responsibilities. 9 How would you attempt to explain the meaning and significance of organisational values and business ethics? ASSIGNMENT a Detail fully what you believe are the social responsibilities or obligations of your own, or some other work organisation of your choice and identify the major stakeholders. b Give specific examples of the ways in which the organisation has attempted to satisfy, and/or has failed to satisfy, responsibilities or obligations to these stakeholders. c Specify the extent to which attention has been given to values in the organisation, and to the principles, standards and expected practices or judgements of ‘good’ (ethical) behaviour. d Compare your observations with those of your colleagues and summarise what conclusions you draw. 179 180 PART 2 THE ORGANISATIONAL SETTING PERSONAL AWARENESS AND SKILLS EXERCISE OBJECTIVES Completing this exercise should help you to enhance the following skills: Clarify the work values and beliefs that are important to you. Examine your sensitivity to, and dealings with, other people. Debate and justify with colleagues the nature of your values and beliefs. EXERCISE You are required to: 1 Rate the following items: 5 (extremely important for me); 4 (very important for me); 3 (average importance for me); 2 (not important for me); 1 (I would oppose this). What is required are your genuine beliefs and feelings about each item, not what others think or believe, but what you personally and honestly believe and feel about each item. 1 There should be clear allocation of objectives and accountability for them — 2 We should be open and honest in all our dealings with each other — 3 People’s talents should be recognised, developed and correctly utilised — 4 One should give acknowledgement and praise to those in authority — 5 There are clear rules about what we should and should not do in getting the job done — 6 Conflicts should be surfaced and resolved rather than allowed to simmer — 7 The causes of problems should be directed away from oneself — 8 Encouragement and support should be placed above criticism — 9 Problems should be tackled and resolved in co-operation with others — 10 What is right should be placed above who is right — 11 Clear standard procedures should be in place for all important jobs — 12 One should become visible and build up one’s personal image — 13 Equity and fairness should be applied to all regardless of status or standing — 14 Excellence should be our aim in all that we do professionally and administratively — 15 We give close attention to codes of conduct since this is what builds character — 16 We should keep each other informed and practise open and friendly communication — 17 We know who should be making the decisions and refer decisions to the right person — 18 Everyone and their contribution should be treated with respect and dignity — 19 We should meet all our commitments to one another – we do what we say we will do — 20 One should form networks of support among those with influence — 21 There are clear reporting relationships – who reports to who – and we stick to them — CHAPTER 5 ORGANISATIONAL GOALS, STRATEGY AND RESPONSIBILITIES 22 People should take responsibility for their own decisions and actions — 23 Everyone should be commited to personal growth and life-long learning — 24 Situations or events should be created so as to justify the advancement of one’s goals — 25 Performance should be assessed against objectives and standards declared up-front — 26 Policies should be clear and not changed until there is proof that they need changing — 27 Everyone’s needs should be given equal standing regardless of their position or status — 28 We should be committed to the service of others rather than ourselves — 29 Positive relationships should be established with those who have influence — 30 Warmth and affection should be demonstrated in our work relationships — 31 Individual productivity and performance should be encouraged and actively promoted — 32 We all know what our jobs are and stick to our defined responsibilities — 33 Those from disadvantaged backgrounds should be helped to catch up with others — 34 One should expect to get support from those to whom we have given past support — 35 Goals should be challenging and stretch people to higher levels of achievement — 2 In small groups, compare and discuss, frankly and openly, your ratings with those of your colleagues. Be prepared to justify your ratings but also listen with an open mind to the views of your colleagues. Further information will be provided by your tutor. DISCUSSION ■ How difficult was it for you to complete your ratings? ■ How much agreement was there among members of your group? Did this surprise you? ■ To what extent were you influenced to rethink your values or beliefs? Visit our website www.booksites.net/mullins for further questions, annotated weblinks, case material and Internet research material. 181 PART 2 THE ORGANISATIONAL SETTING CASE STUDY 5.1 Mergers and acquisitions: the consequences of expansion at Square Deal plc Square Deal plc is a newly formed subsidiary company of Square Deal International Inc. The intention is to use it to unify the efforts and improve the profitability of the hitherto separate UK subsidiaries of Arnold plc, Carlton plc and Foodrich plc. At present it has a managing director, an administrative/ financial controller and a typist all sharing a large temporary office in central London. Arnold plc has 69 food stores, all within a radius of 30 miles from London. Most of them contain either a small restaurant or a snack bar and occupy high street or suburban shopping centre locations. It owns one small bakery whose total production supplies ten stores with bread and cakes. Perishables for both resale and restaurant use are bought locally but all other products are bought centrally and distributed from one large warehouse. These products are charged to the stores at selling price on computer-printed internal invoices. Store managers are judged solely on revenue. Accounts for each store are produced on the batch computer system at head office which is an old building on the edge of a dockland redevelopment site in East London. The company owns the freehold, as it does of about half of its food stores. Carlton plc has joint managing directors, one in charge of 21 restaurants and one in charge of property development. To date it has built four shopping centres and has plans for three more, all as part of schemes to regenerate old city centres in the north of England, around 150 miles from London. It leases out the shops with the exception of one per centre which it operates as a restaurant. Both MDs rigidly pursue a 15 per cent annual return on investment as their measure of achievement. Foodrich plc was, until last year, a family firm which canned fruit and vegetables from its one factory situated about 100 miles from London, in the west of England. It was bought by Square Deal International Inc with the idea that it would supply ‘own label’ products to Arnold plc and large catering packs to both Arnold’s and Carlton’s restaurants. To do this, Foodrich was obliged to deny supplies to some of its regular customers and re-equip part of its plant to handle the large catering packs. The MD, son of the founder, has worked there for nearly 40 years and runs the company, making all decisions, both long term and operational, using his experience and intuition. He is furious to learn that Arnold has not put all its ‘own label’ business in his direction and Carlton is still buying most catering packs from Foodrich’s competitors while its new plant is grossly YOUR TASKS (a) Discuss the benefits and drawbacks of judging performance on a single criterion such as: (i) revenue, in the case of the store managers; (ii) return on investment, in the case of Carlton’s MDs. (b) Explain to what extent Arnold’s head buyer and Carlton’s head chef are justified in buying catering packs from other companies. (c) Describe how further computerisation might help in this quest for unification and profit improvement. Photo: Robert Lawson/Anthony Blake Picture Library 182 (d) After you have finished this task, the MD tells you he is toying with the idea of regrouping the company under the name of Square Deal plc and dividing it into the following divisions, each operating as a profit centre: Square Deal plc Restaurants Property Food retail Canning division division division division Bakery division He is concerned about the effects of such a change on the morale of the managers and other employees so he asks you for a further statement. Discuss ideas that should maintain or improve morale if this regrouping were to take place. (e) Highlight any other advantages or difficulties that you foresee in the regrouping idea. CHAPTER 5 under-used. Both Arnold’s head buyer and the head chef at Carlton’s claim they get the same quality cheaper from other companies. These recent changes at Foodrich have overwhelmed the MD and one result is that the financial year end accounts up until April will not be ready until some time in August. The accounts are the only defined measure of performance and are usually drawn up by the MD. ORGANISATIONAL GOALS, STRATEGY AND RESPONSIBILITIES The MD of Square Deal plc has just spent a week touring parts of these three subsidiaries and has returned to the office with a variety of ideas and concerns about ways to unify efforts and improve profitability. To help crystallise some of these ideas he asks the administrator/controller to prepare written statements on various points. Assume you are this administrator/controller. CASE STUDY 5.2 Welcome to the party: home selling with Top-to-Toe The following article appeared in the press earlier this year: Late in 2001, the founder and Chief Executive Officer (CEO) of Top-to-Toe, Joanne Dunne, announced the decision to open up distribution by using the device of house parties. The house party involves salespeople making presentations of products in a person’s home to which the host invites a number of friends and acquaintances who make orders at the end of the party. A successful niche retailer of environmentally friendly toiletries and cosmetics, Top-to-Toe has expanded its market geographically using franchising to ensure local management knowledge and commitment. It has now come up against the stategic weakness of a niche strategy: how to grow once the niche is saturated. 2001 saw pre-tax profits fall by 26% to £5.1m. Joanne Dunne now believes that home selling could provide Top-to-Toe with a significant new source of growth, thanks to its advantages of convenience, demonstration, product sampling and the networking of party-givers through their friends. This involves, in effect, a ‘re-invention’ of the company. Dunne also hit out at the financial institutions for their ‘short-termism’, demanding the highest profits in the shortest possible time and failing to recognise that companies need time for reflection and reinvention. Top-to-Toe has come under pressure from city analysts in recent months for its failure to address the issue of falling profits. She says that the financial community ignores the human spirit and the fact that working should be about building positive and fulfilling relationships. There should be joy in the workplace and concern for the communities where raw materials are sourced and products manufactured – not just obsession with profits. Joanne Dunne may be more outspoken than others but she is not alone in recognising that people are the greatest asset of the business. The quality of customer care is increasingly the basis for competitive advantage and effective customer care depends on skilled, empowered and motivated staff. Perhaps joy in the workplace is not at odds with maximising profits after all. Sunday Bugle, 22 January 2002 YOUR TASKS Top-to-Toe’s strategy of expansion into home selling will involve managing and motivating a large team of part-time sales staff on a commissionn-only salary. The company is also keen to address the pressure from investors and analysts. You are asked to: (a) Prepare a report for Joanne Dunne indicating the mangement issues that might arise from this expansion strategy and how these could be addressed. (b) Using Top-to-Toe as one example, write a newspaper article outlining the importance of social responsibility in business, bearing in mind the pressures for short-term profits. 183 184 PART 2 THE ORGANISATIONAL SETTING NOTES AND REFERENCES 1. See, for example: Morley, M. ‘What Business Are You In?’, Professional Manager, March 1997, pp. 12–13. 2. Etzioni, A. Modern Organizations, Prentice-Hall (1964). 3. Simon, H. A. ‘On the Concept of Organizational Goal’, Administrative Science Quarterly, vol. 10, June 1964, pp. 1–22. 4. See, for example: Kast, F. E. and Rosenzweig, J. E. Organization and Management: A Systems and Contingency Approach, Fourth edition, McGraw-Hill (1985). 5. See, for example: Heller, R. ‘The Manager’s Dilemma’, Management Today, January 1994, pp. 42–7. 6. Pitman, Sir Brian ‘In my Opinion’, Management Today, June 2000, p.14. 7. Mills, D. Q. and Friesen, G. B. ‘Empowerment’ in Crainer, S. and Dearlove, D. Financial Times Handbook of Management, Second edition, Financial Times Prentice Hall (2001), p. 335. 8. A view expressed by a number of writers including, for example: Argyris, C. Integrating the Individual and the Organization, John Wiley and Sons (1964). 9. McGregor, D. The Human Side of Enterprise, Penguin (1987), p. 55. 10. Etzioni, A. A Comparative Analysis of Complex Organizations: On Power, Involvement and their Correlates, Revised edition, Free Press (1975). 11. See, for example: Brown, A. ‘Organizational Culture: The Key to Effective Leadership and Organizational Development’, Leadership and Organization Development Journal, vol. 13, no. 2, 1992, pp. 3–6. 12. Brech, E. F. L. (ed.) The Principles and Practice of Management, Third edition, Longman (1975). 13. Lucas, E. ‘Believe It or Not, Values Can Make a Difference’, Professional Manager, November 1999, pp. 10–12 14. Dainty, P. and Anderson, M. ‘Mindsets For Managers’ in Chowdhury, S. Management 21C, Financial Times Prentice Hall (2000), p. 110. 15. Cloke, K. and Goldsmith, J. The End of Management and the Rise of Organizational Democracy, Jossey-Bass (2002). 16. For a discussion and examples of mission and objectives, see, for example: Lynch, R. Corporate Strategy, Third edition, Financial Times Prentice Hall (2003). 17. Mills, D. Q. and Friesen, G. B. ‘Empowerment’ in Crainer, S. and Dearlove, D. Financial Times Handbook of Management, Second edition, Financial Times Prentice Hall (2001), p. 334. 18. Johnson, G. and Scholes, K. Exploring Corporate Strategy, Sixth edition, Financial Times Prentice Hall (2002). 19. Perrin, L. and Tavakoli, I. ‘Mission Impossible Without Commitment’, Professional Manager, July 1997, pp. 14–15. 20. Rigby, R. ‘Mission Statements’, Management Today, March 1998, pp. 36–58. 21. Trapp, R. ‘Blunder Boss’, The British Journal of Administrative Management, July/August 1999, pp. 12–16. 22. Riches, A. ‘How Valuable Are Your Values?’, Organisational Change & Leadership Development, www.anneriches.com.au, accessed 11 March 2003. 23. Gratton, L. Living Strategy: Putting People at the Heart of Corporate Purpose, Financial Times Prentice Hall (2000), p. 55. 24. Fayol, H. General and Industrial Management, Pitman (1949), p. 53. 25. Norris, P. ‘Pay For Performance’, Chartered Secretary, February 1997, pp. 18–19. 26. See, for example: Torrington, D., Weightman, J. and Johns, K. Effective Management: People and Organisation, Second edition, Prentice-Hall (1994). 27. For a fuller discussion of strategic management and planning see, for example: Asch, D. and Bowman, C. (eds) Readings in Strategic Management, Macmillan (1989). 28. Summers, J. and Nowicki, M. ‘Achievement and Balance: What Do Managers Really Want?’, Healthcare Financial Management, vol. 56, no. 3, March 2002, pp. 80–84. 29. Christensen, C. M., Raynor, M. E. and Anthony, S. D. ‘Six Keys to Creating New-Growth Businesses’, Harvard Management Update, 2003, p. 3. 30. Cyert, R. and March, J. G. A Behavioural Theory of the Firm, Second edition, Blackwell (1992). 31. Drucker, P. F. The Practice of Management, Heinemann Professional (1989), p. 59. 32. Etzioni, A. Modern Organizations, Prentice-Hall (1964), p. 17. 33. Simon, H. A. ‘On the Concept of Organizational Goal’, Administrative Science Quarterly, vol. 10, June 1964, p. 21. 34. Kaplan, R. S. and Norton, D. P. The Balanced Scorecard: Translating Strategy into Action, Harvard Business School Press (1996). 35. Van de Vliet, A. ‘The New Balancing Act’, Management Today, July 1997, pp. 78–80. 36. Tonge, R. and Callaghan, C. ‘Using the Balanced Scorecard in the Public Sector’, Chartered Secretary, October 1997, pp. 18–19. 37. Tilles, S. ‘Making Strategy Explicit’, in Ansoff, H. I. (ed.) Business Strategy, Penguin (1969). 38. For fuller details of strategic planning, see, for example: Johnson, G. and Scholes, K. Exploring Corporate Strategy, Sixth edition, Prentice-Hall (2002). 39. Allen, R. S. and Helms, M. M. ‘Employee Perceptions of the Relationship Between Strategy, Rewards and Organizational Performance’, Journal of Business Strategies, vol. 19, no. 2, Fall 2002, pp. 115–39. 40. Richardson, B. and Thompson, J. ‘Strategic Competency in the 1990s’, Administrator, July 1994, pp. 2–6. 41. Lloyd, B. ‘In my Opinion’, Management Today, August 2001, p. 8. 42. Lynch, R. Corporate Strategy, Third edition, Financial Times Prentice Hall (2003), p. 26. 43. For an example, see: Rea, D. M. ‘Strategy in Public Sector Organisations’, in Jones, P. (ed.) Management in Service Industries, Pitman Publishing (1989). 44. Bruce, A. ‘Setting Boundaries for Strategic Management’, Professional Manager, January 1999, pp. 8–10. 45. Ansoff, H. I. (ed.) Business Strategy, Penguin (1969). 46. Ansoff, H. I. Corporate Strategy, Revised edition, Penguin (1987). CHAPTER 5 47. Ansoff, H. I. (ed.) Business Strategy, Penguin (1969). 48. Levine, S. R. ‘The Value-Based Edu-Leader’, in Chowdhury, S. Management 21C, Financial Times Prentice Hall (2000), p. 90. 49. Drucker, P. F. Managing for Results, Heinemann Professional (1989). See also: Drucker, P. F. Managing in Turbulent Times, Heinemann (1980). 50. Earl, M. ‘IT Strategy in The New Economy’, in Pickford, J. (ed), Financial Times Mastering Management 2.0, Financial Times Prentice Hall (2001), p. 109. 51. Kermally, S. ‘E-strategy is Key to Future Success’, Professional Manager, July 2001, pp. 28–9. 52. BG Group plc, Annual Review 2002. 53. See, for example: Piggott, G. ‘Open Relationships’, Holland Herald, January 2003, pp. 54–64 54. Harris, J. ‘EU Acts to Promote More Socially Responsible Companies’, Social Agenda, October 2002, pp. 3–4. 55. Shortland, F. ‘Putting Human Rights on the Business Agenda’, Professional Manager, July 1998, p. 18. 56. HRH The Prince of Wales, Foreword to Grayson, D. and Hodges, A. Everybody’s Business: Managing Global Risks and Opportunities in Today’s Global Society, Financial Times (2001), pp. 8–9. 57. Code of Professional Management Practice, Chartered Management Institute, July 2002. 58. Dobson, N. ‘Prejudicial Interests?’, Chartered Secretary, May 2003, pp. 22–4. 59. Tam, H. ‘Recognise Your Responsibilities’, Professional Manager, March 1995, p. 16. FT ORGANISATIONAL GOALS, STRATEGY AND RESPONSIBILITIES 60. Altman, W., Cooper, C. and Garner, A. ‘In Search of a New Work Ethic’, Professional Manager, November 1999, p. 15. 61. Allen, A. ‘Up the Moral Mountain’, Chartered Secretary, May 2001, pp. 21–2. 62. Cook, S. ‘Who Cares Wins’, Management Today, January 2003, pp. 40–7. 63. See, for example: Worthington, I. and Britton, C. The Business Environment, Fourth edition, Financial Times Prentice Hall (2003). 64. Drucker, P. F. The Practice of Management, Heinemann Professional (1989), p. 380. 65. Kay, J. The Truth About Markets, Allen Lane Penguin Press (2003) p. 343. 66. De George, R. T. Business Ethics, Fifth edition, Prentice Hall (1999). 67. Friedman, M. ‘The Social Responsibility of Business is to Increase Its Profits’, New York Times Magazine, 13 September 1970, pp. 32, 122–6. 68. Sternberg, E. Just Business, Little Brown (1994). 69. Cannon, T. Corporate Responsibility, Pitman (1994), pp. 32–3. 70. Sternberg, E. Just Business, Little Brown (1994). 71. RSA, Tomorrow’s Company – The Role of Business in a Changing World, Royal Society for Arts, Manufactures and Commerce (1995). 72. For a discussion, see: De George, R. T. Business Ethics, Fifth edition, Prentice Hall (1999). 73. McEwan, T. Managing Values and Beliefs in Organisations, Financial Times Prentice Hall (2001). Use the Financial Times to enhance your understanding of the context and practice of management and organisational behaviour. Refer to articles 2, 4, 5, 17 and 20 in the BUSINESS PRESS section at the end of the book for relevant reports on the issues explored in this chapter. 185 Part 3 THE ROLE OF THE MANAGER Part 1 MANAGEMENT AND ORGANISATIONAL BEHAVIOUR Part 7 MANAGEMENT OF HUMAN RESOURCES Part 2 THE ORGANISATIONAL SETTING Part 3 THE ROLE OF THE MANAGER Part 8 IMPROVING ORGANISATIONAL PERFORMANCE Part 4 THE INDIVIDUAL Part 6 ORGANISATIONAL STRUCTURES Part 5 GROUPS AND TEAMWORK What motivates managers 6 THE NATURE OF MANAGEMENT Organisations can only achieve their goals and objectives by the co-ordinated efforts of their members and it is the task of management to get work done through other people. Management is fundamental to the effective operation of work organisations. It is by the process of management and execution of work that the activities of the organisation are carried out. Management is an integral part of the people–organisation relationship. It is essentially an integrating activity which permeates every facet of the operations of an organisation. LEARNING OUTCOMES Photo: Anthony Blake After completing this chapter you should be able to: explain the meaning of management and main activities, or functions, of management; analyse the essential nature of managerial work; contrast management in service and production industries, and in private and public sector organisations; outline empirical studies on the nature of managerial work and behaviour; detail the attributes and qualities of a successful manager; debate the nature of management and managers of the future; evaluate the importance of management to the effective performance of work organisations. Managerial work is enormously complex, far more so than a reading of traditional literature would suggest. There is a need to study it systematically and to avoid the temptation to seek simple prescriptions for its difficulties. Henry Mintzberg The Nature of Managerial Work, Harper & Row (1973) While the nature of managerial work changes constantly, the fundamental truth remains unchanged: management continues to represent a huge challenge to those who put it into practice every day throughout the world. Stuart Crainer Key Management Ideas, Financial Times Prentice Hall (1998) 190 PART 3 THE ROLE OF THE MANAGER THE MEANING OF MANAGEMENT Management is a generic term and subject to many interpretations. A number of different ideas are attributed to the meaning of management and to the work of a manager.1 Schneider and Barsoux also contend that trying to define the meaning of management shows up differences in beliefs and values.2 Cultural influences are a significant feature of management. In certain respects everyone could be regarded as a manager to some extent. We all manage our own time and everyone has some choice whether or not to do something, and some control, however slight, over the planning and organisation of their work. However, we are concerned with management as involving people looking beyond themselves and exercising formal authority over the activities and performance of other people. At its most basic, management may be viewed as ‘making things happen’. Management is active, not theoretical. It is about changing behaviour and making things happen. It is about developing people, working with them, reaching objectives and achieving results. Indeed, all the research into how managers spend their time reveals that they are creatures of the moment, perpetually immersed in the nitty-gritty of making things happen.3 An added dimension to the study and understanding of management is provided by Knights and Willmott. They refer to managing as an everyday activity that involves interactions between people that are not unrelated or entirely dissimilar to other spheres of life, except perhaps in the rhetoric and hype that surround management. Knights and Willmott contend that most established textbooks about management and organisation provide little that enables practising managers to make sense of their particular problem or dilemma, and in order to appreciate the living of management draw on a number of contemporary novels. Since most management textbooks do not make the connection between managing and everyday life, and indeed envelop the activity of management within an academic and professional mystique, we have drawn to alternative sources (e.g. novels) that might enable students to relate accounts of management to their own experience ... [This book] is concerned to illuminate the lives of people who, in different ways, are involved or affected by management.4 While there is undoubted value in this approach, every textbook must have a clear focus and is obviously limited in potential content. For our purposes, therefore, we can regard management as: ■ ■ ■ ■ taking place within a structured organisational setting and with prescribed roles; directed towards the attainment of aims and objectives; achieved through the efforts of other people; and using systems and procedures. The emergence Peter Drucker, who is widely regarded as the guru of management gurus, has written of management about the significance in social history of the emergence of management: The emergence of management as an essential, a distinct and a leading institution is a pivotal event in social history. Rarely, if ever, has a new basic institution, a new leading group, emerged as fast as has management since the turn of this [twentieth] century. Rarely in human history has a new institution proven indispensable so quickly; and even less often has a new institution arrived with so little opposition, so little disturbance, so little controversy.5 Drucker sees management as denoting a function as well as the people who discharge it, a social position and authority, and also a discipline and field of study. Management is tasks. Management is a discipline. But management is also people. Every achievement of management is the achievement of a manager. Every failure is a failure of a manager.6 CHAPTER 6 THE NATURE OF MANAGEMENT 191 Other writers, however, take the view that management is not a separate discipline. The problem is identifying a single discipline which encompasses the work of a manager, or agreeing the disciplines that a manager needs in order effectively to carry out this work. Note, however, the discussion on ‘Managers of the Future?’ at the end of this chapter. Manager as a job title Even within a work organisation you cannot identify a manager necessarily by what a person is called or by his or her job title. In some organisations there is a liberal use of the title ‘manager’ in an apparent attempt to enhance the status and morale of staff. As a result there are a number of people whose job title includes the term manager but who, in reality, are not performing the full activities of a manager. EXHIBIT 6.1 When considering the tasks involved in the role of the infant headteacher, two words automatically spring to mind – many and varied. I now might add ‘vast’ and ‘ever-changing’ to this statement. The traditional role of the headteacher as ‘master teacher’ is now being superseded by that of ‘school improvement manager’. Within this come the roles of finance and personnel manager, both under the umbrella of school improvement. And, at the centre of everything are the children and parents whom the headteacher strives to serve. The headteacher will work to effectively manage the best interests of the children not only through pastoral care and support, but also through the effective management of school resources. Some tasks will be delegated to the deputy headteacher and members of staff who are responsible for areas of the curriculum. However, a staffing structure needs to be in place which can sustain this level of delegation. This is often a major issue in smaller infant schools where each member of the teaching staff must teach a class of children and manage a subject or several subjects alongside their teaching commitments. Individual tasks are delegated to subject managers and are monitored by the headteacher through action plans, which in turn are linked to the School Improvement Plan. The School Improvement Plan is the major management tool within the school. The headteacher will manage both the improvement and maintenance sections of this plan by regular review and evaluation. Clear, quantifiable improvement targets will head this plan. These should reflect the whole school’s perceived view of those things that the school should do to bring it closer to its overall vision. Target setting, and the headteacher’s management of this process, will play a large part in moving a school forward, for a school that stands still is one that is moving backwards. When thinking about school improvement, we must also consider the roles played by both central government and the Local Education Authority. The central government monitoring body takes the form of OFSTED. Teams of inspectors working within schools on a regular cycle are required to produce inspection reports on individual schools intended to highlight achievements and to identify areas for future developments. There are many issues for a headteacher to consider arising from OFSTED and perhaps none greater than the maintenance of staff morale at what Photo: John Warmsley The infant school headteacher as a manager is often a stressful time. The collection and use of data is becoming of prime importance. Headteachers must be able to interpret statistics and use the wide range of data available at both county and national level. The headteacher is also finance manager. A large proportion of any school’s budget is for staffing costs with the next major cost being educational supplies and resources. Part of the formula for the allocation of budgets to schools is based on the number of children on a school’s roll. Every school has a standard number of children which it cannot exceed. Some schools’ number of children on roll may fall below this standard number, while other schools may be oversubscribed. The headteacher will strive to maintain an optimum number of children on roll. This is often achieved through promotion of a school’s reputation and the quality of education it provides. If this is successful, the school’s number on roll will remain healthy and the budget relatively stable. It is part of the headteacher role to manage this, often through an informative school brochure and prospectus, open days for prospective parents and other events. Test results alone will not give the whole picture. The headteacher is also personnel manager, using the management tools of clear target-related job descriptions and appraisal to monitor staff performance. The headteacher must create a climate in which all staff feel motivated to succeed, and an atmosphere in which they are able to work as a team towards shared goals which will ultimately improve the quality of education that children receive. Headteachers will 192 PART 3 THE ROLE OF THE MANAGER Exhibit 6.1 continued strive to use Performance Management as a process by which teachers can best demonstrate their strengths and feel happy to address future areas of development. The headteacher is a manager in the fullest sense, but is also a visionary and essentially a leader. Strong leadership and direction is vital for all headteachers at this time of great change. We are urged to take control and lead our schools and staff into the brave new world of the new millennium. None would doubt the importance of this but against a background of some stability – please! (I am grateful to Alison Pratt, Headteacher, Orchard Lea Infant School, Fareham for providing the above information.) Unlikely managers Mother General Unlikely managers Senior vet Tyburn Convent, Bayswater, London Tilehurst Veterinary Centre, Reading Name Mother Mary Xavier Name Sharmila Nikapota When did you become a manager? In 1973, when the community elected me Mother General. When did you become a manager? I suppose the moment I started practising as a vet in 1994, as right from the start you have to manage nurses. Managing the practice started in 1996, when I became senior vet. What does management mean to you? I think of my position as a service to the group. That service is to animate and give advice to the various communities and individual members. We have six communities in different countries so it’s a kind of service for the unity of the whole group, keeping us on course in our tradition in the service of the church and the whole human family. There is a quite a lot of visiting different monasteries in various countries and sharing the daily life of each community as animator and encourager. I also oversee the admission and training of new members during their five-year attainment period and I am responsible for the appointment of posts such as prioresses and their councils in other communities. Then there are community affairs and the financial administration of the whole Tyburn order that must be monitored and approved. What do you love/hate about it? I love knowing and encouraging the nuns. What does management mean to you? It means running an efficient practice, keeping the staff content and working together as a team to provide an efficient service to our clients and manage their pets’needs. For example, you might have a client with limited finances so you have to try to work out a plan balancing their emotional stress with whatever treatment the pet needs. Time management is very important: I consult in the morning and do operations in the afternoon (we have to do a certain number of operations each day). I have to allocate tasks (such as premed) in order to waste as little time as possible. It can be a bit like a production line. What do you love/hate about it? My personal interests are surgery and diagnostic imaging, so I love operating. I don’t like putting a price on treatment; people don’t always insure their pets and I dislike it when you can’t take a case the way of your clinical judgment because of cost constraints. I don’t find anything disagreeable, though sometimes there can be a bit of pressure when everything happens at once. (Reproduced with permission from Management Today, July 1999, p. 22 and February 2000, p. 22.) Managers born or made? Management an art or science? On the other hand, there are many people whose job title does not include the term manager (for example, group accountant, head chef, chief inspector, captain, headteacher, production controller, district nursing officer, company secretary), but who, in terms of the activities they undertake and the authority and responsibility they exercise, may be very much a manager. There is frequent debate about whether managers are born or made; or whether management is an art or a science. Briefly, the important point is that neither of these is a mutually exclusive alternative. The answer to either question is surely a combination of both. Even if there are certain innate qualities which make for a potentially good CHAPTER 6 THE NATURE OF MANAGEMENT manager, these natural talents must be encouraged and developed through proper guidance, education and training, and planned experience. Clearly, management must always be something of an art, especially in so far as it involves practice, personal judgement and dealing with people. However, it still requires knowledge of the fundamentals of management, and competence in the application of specific skills and techniques – as illustrated, for example, with developments in information technology. The trouble is that, for all the techniques at their disposal, managers generally act at a very intuitive level. Managers may have absorbed the latest thinking on core competencies, but are more likely to base a decision on prejudice or personal opinion rather than a neat theory.7 The discussion of management as an art or a science is developed by Watson who suggests that in order to make sense of the complex and highly ambiguous situations in which managers find themselves, management can be viewed as both art and science but also magic and politics.8 (See Figure 6.1.) Management as art Successful managers are those bor n with appropriate intuition, intelligence and personality which they develop thr ough the practice of leadership. Management as magic Successful managers are those who recognise that nobody really knows what is going on and who persuade others of their own powers by calling up the appropriate gods and by engaging in the expected rituals. Management as science Successful managers are those who have learned the appropriate body of knowledge and have developed an ability to apply acquired skills and techniques. Management as politics Successful managers are those who can work out the unwritten laws of life in the organisational jungle and are able to play the game so that they win. Figure 6.1 Management as art, science, magic and politics (Reproduced with permission from Watson, T. J. Management, Organisation and Employment Strategy Routledge & Kegan Paul (1986), p. 29, with permission from Routledge/ITBP.) 193 194 PART 3 THE ROLE OF THE MANAGER MANAGEMENT AND ADMINISTRATION There is often confusion over different interpretations of the two terms ‘management’ and ‘administration’. One of the main reasons for this confusion would seem to result from the translation of Fayol’s book Administration industrielle et générale from the French into English. In the original (1929) English edition there was a direct translation of ‘administration’, but in the wider re-publication of the book in 1949 the term ‘management’ replaced ‘administration’ in the title. In the introduction to the revised edition Urwick indicates regret at this change.9 He refers to Fayol’s use of the word administration as indicating a specific function which enters all tasks involving supervision of the work of others. It is not concerned with the status of those who exercise this function. Urwick also expresses concern at the possible division between management being seen to apply only to business organisations, and (public) administration as applying to the same functions in public service organisations. Dictionary definitions tend to see the two words as synonymous. Management is sometimes referred to as ‘administration of business concerns’ and administration as ‘management of public affairs’. There is clearly an overlap between the two terms and they tend to be used, therefore, in accordance with the convenience of individual writers. This confirms the feeling that although most people perceive a difference between the two terms, this difference is not easy to describe. A traditional perception is that private sector organisations are managed and the use of the term ‘administration’ is associated with public sector organisations. However, the term ‘management’ is now used far more widely within the public sector. There is also an increasing number of books which examine management in the public sector.10 (A comparison of management in private enterprise and public sector organisations is to be found later in this chapter.) Administration part of management There appears, therefore, to be growing acceptance of the term management as the general descriptive label and administration as relating to the more specific function of the implementation of systems and procedures instigated by management. Administration can be seen as taking place in accordance with some form of rules or procedures, whereas management implies a greater degree of discretion. For our purposes, management is viewed as applying to both private and public sector organisations; and administration is interpreted as part of the management process, and concerned with the design and implementation of systems and procedures to help meet stated objectives. Systems of communication and procedures relating to information technology are particularly important today. The role and importance of administration On behalf of the Institute of Chartered Secretaries and Administrators, Bailey-Scudamore undertook the most comprehensive survey ever in the United Kingdom on the changing role of administration within organisations. The research found that administration is seen as an important activity, but not such an important function. There remains much scope for improvement to administrative activity and it should be on the highlevel agenda in all organisations. Certain areas of the administrator’s work will demand high degrees of detail, planning and analysis, and demand exacting timescales and highly regulated treatment, but, as a result of organisational and environmental change, administration is becoming much less rigid and rule-oriented. Many more people are taking on aspects of administrative work as an essential component of their own function or specialism and organisations are turning to administration as an indirect means of improving business performance.11 CHAPTER 6 THE NATURE OF MANAGEMENT Managers and administrators now need to perform – quickly, effectively and efficiently. Failure to do so will leave them, their bosses and their organisations exposed to criticism and, more seriously to competition. So what are the biggest challenges of 21st century administrative management? They are the: ■ ■ effective management of information and communications; effective management of people. Both of these areas of professional challenge will be characterised by a permanent state of change. So effective managers will need to be able to manage change; to be able to manage information; and to manage information through people. Professor Graham Robinson, Chief Executive Officer, The Institute of Administrative Management12 THE PROCESS OF MANAGEMENT The nature of management is variable. Management relates to all activities of the organisation and is undertaken at all levels of the organisation. Management is not a separate, discrete function. It cannot be departmentalised or centralised. An organisation cannot have a department of management in the same way as it can have a department for other functions, such as production, marketing, accounting, or personnel. Management is seen best, therefore, as a process common to all other functions carried out within the organisation. Management is essentially an integrating activity. (See Figure 6.2 and recall also Figure 2.4, Chapter 2.) It is difficult to think of any aspect of the functioning of the organisation, or behaviour of people, which does not concern, or relate back to, management in some way. For example, even personality clashes between two individual members of staff could possibly be traced back to management procedures for recruitment and selection, induction, socialisation and training, delegation or the level and style of supervision. And clearly the personality clashes are likely to affect the attitudes and work performance of the members concerned, and also affect the morale of other staff. The overall responsibility of management can be seen as the attainment of the given objectives of the organisation. Naylor, for example, provides the following definition: ‘Management is the process of achieving organisational objectives, within a changing environment, by balancing efficiency, effectiveness and equity, obtaining the most from limited resources, and working with and through other people.’13 Objectives are the desired end-results the organisation is striving to achieve. Within the framework of objectives, policy provides the guidelines for the operations and activities of the organisation. Clarification of objectives and policy is a prerequisite if the process of management is to be effective. However, as Drummond, for example, points out: ‘The fundamental problem of management is that organisational and individual objectives differ. Whereas the organisation may be interested in maximising output and minimising cost, the individual employee may have other priorities. The problem for the organisation is how to eliminate opportunism.’14 But what does the process of management actually involve, and what activities does it encompass? Management is a complex and discursive subject. Despite the widespread use of the term and the large amount written about the subject, it is not easy to find agreement on a simple yet comprehensive definition of management or of a manager. 195 196 PART 3 THE ROLE OF THE MANAGER Organisational processes and the execution of work Welding a coherent pattern of work activities Systems of motivation, job satisfaction and rewards Harnessing the efforts of staff Improving the people–organisation relationship The focus of management Creating an organisational climate in which people work willingly and effectively Achieving the goals and objectives of the organisation Satisfying the needs and expectations of people at work Organisational performance and effectiveness Figure 6.2 The central focus of management Moreover, ‘management’ is not homogeneous. It takes place in different ways and at different levels of the organisation. One approach, especially favoured by classical writers, is to analyse the nature of management and to search for common activities (or functions, or elements) applicable to managers in all organisations. Common activities of management One of the first, and most widely quoted, analyses is that given by Henri Fayol, who analysed the activities of industrial undertakings into six groups: ■ ■ ■ ■ ■ ■ technical (production, manufacture and adaptation); commercial (buying, selling, exchange and market information); financial (obtaining capital and making optimum use of available funds); security (safeguarding property and persons); accounting (information on the economic position, stocktaking, balance sheet, costs, statistics); and managerial. (The term ‘management’ is a translation of the French term ‘administration’.)15 The managerial activity is divided into five elements of management, which are defined as: ‘to forecast and plan, to organise, to command, to co-ordinate and to control’. Fayol describes these elements as: CHAPTER 6 THE NATURE OF MANAGEMENT ■ ■ ■ ■ ■ Planning (translated from the French prevoyer = to foresee, and taken to include forecasting) – examining the future, deciding what needs to be achieved and developing a plan of action. Organising – providing the material and human resources and building the structure to carry out the activities of the organisation. Command – maintaining activity among personnel, getting the optimum return from all employees in the interests of the whole organisation. Co-ordination – unifying and harmonising all activities and effort of the organisation to facilitate its working and success. Control – verifying that everything occurs in accordance with plans, instructions, established principles and expressed command. PRINCIPLES OF MANAGEMENT Fayol also suggests that a set of well-established principles would help concentrate general discussion on management theory. He emphasises, however, that these principles must be flexible and adaptable to changing circumstances. Fayol recognised that there was no limit to the principles of management but in his writing advocated 14. 1 Division of work. The object is to produce more and better work from the same effort, and the advantages of specialisation. However, there are limits to division of work which experience and a sense of proportion tell us should not be exceeded. 2 Authority and responsibility. Responsibility is the corollary of authority. Wherever authority is exercised responsibility arises. The application of sanctions is essential to good management, and is needed to encourage useful actions and to discourage their opposite. The best safeguard against abuse of authority is the personal integrity of the manager. 3 Discipline is essential for the efficient operation of the organisation. Discipline is in essence the outward mark of respect for agreements between the organisation and its members. The manager must decide on the most appropriate form of sanction in cases of offences against discipline. 4 Unity of command. In any action an employee should receive orders from one superior only; if not, authority is undermined and discipline, order and stability threatened. Dual command is a perpetual source of conflicts. 5 Unity of direction. In order to provide for unity of action, co-ordination and focusing of effort, there should be one head and one plan for any group of activities with the same objective. 6 Subordination of individual interest to general interest. The interest of the organisation should dominate individual or group interests. 7 Remuneration of personnel. Remuneration should as far as possible satisfy both employee and employer. Methods of payment can influence organisational performance and the method should be fair and should encourage keenness by rewarding well-directed effort, but not lead to overpayment. 8 Centralisation is always present to some extent in any organisation. The degree of centralisation is a question of proportion and will vary in particular organisations. 9 Scalar chain. The chain of superiors from the ultimate authority to the lowest ranks. Respect for line authority must be reconciled with activities which require urgent action, and with the need to provide for some measure of initiative at all levels of authority. 10 Order. This includes material order and social order. The object of material order is avoidance of loss. There should be an appointed place for each thing, and each thing in its appointed place. Social order involves an appointed place for each 197 198 PART 3 THE ROLE OF THE MANAGER 11 12 13 14 employee, and each employee in his or her appointed place. Social order requires good organisation and good selection. Equity. The desire for equity and for equality of treatment are aspirations to be taken into account in dealing with employees throughout all levels of the scalar chain. Stability of tenure of personnel. Generally, prosperous organisations have a stable managerial personnel, but changes of personnel are inevitable and stability of tenure is a question of proportion. Initiative. This represents a source of strength for the organisation and should be encouraged and developed. Tact and integrity are required to promote initiative and to retain respect for authority and discipline. Esprit de corps should be fostered, as harmony and unity among members of the organisation is a great strength in the organisation. The principle of unity of command should be observed. It is necessary to avoid the dangers of divide and rule of one’s own team, and the abuse of written communication. Wherever possible verbal contacts should be used. A number of these principles relate directly to, or are influenced by, the organisation structure in which the process of management takes place. Fayol’s set of principles can be compared therefore with those given by Urwick and discussed in Chapter 15. Relevance for the twenty-first century In an article bringing together the thinking of senior members of the Institute of Administrative Management, Moorcroft suggests that Fayol’s five elements of management are still recognised as relevant and appropriate for the managers of today and tomorrow. However, although some of the principles of management remain fresh and relevant, at the start of a new millennium a new set of principles is needed to guide a manager’s everyday actions. These ‘principles’ are not offered as an exclusive or authoritative list but are proposed as a thought-provoking starting point to address the management problems awaiting us in the new millennium.16 (See Figure 6.3.) 1 Manage information through people. 2 Change is a constant, and must be managed. 3 Technology is the future. 4 Relationships matter. 5 Investment in training and development is important. 6 Measure only against the best. 7 The market is global. 8 Unity of direction is important. 9 Equity is expected. 10 Initiative is important. Figure 6.3 Ten new principles for effective administrative management (Reproduced with permission from Moorcroft, R. ‘Managing in the 21st Century’, Manager, The British Journal of Administrative Management, January/February 2000, p. 10.) CHAPTER 6 THE NATURE OF MANAGEMENT MANAGEMENT AS A SOCIAL PROCESS Another well-known analysis is given by Brech who defines management as: A social process entailing responsibility for the effective and economical planning and regulation of the operations of an enterprise, in fulfilment of given purposes or tasks, such responsibility involving: (a) judgement and decision in determining plans and in using data to control performance and progress against plans; (b) the guidance, integration, motivation and supervision of the personnel composing the enterprise and carrying out its operations.17 Brech identifies four main elements of management: ■ ■ ■ ■ Planning – determining the broad lines for carrying out operations, preparing methods by which they are carried out and setting standards of performance. Control – checking actual performance against standards to ensure satisfactory progress and performance, and recording as a guide to possible future operations. Co-ordination – balancing and maintaining the team by ensuring a suitable division of work and seeing that tasks are performed in harmony. Motivation – or inspiring morale. Getting members of the team to work effectively, to give loyalty to the group and to the task, to carry out their tasks properly, and to play an effective part in the activities of the organisation. This general inspiration is accompanied by a process of supervision or leadership to ensure the teams are carrying out their activities properly. Other analyses Many other writers have provided an analysis of the elements of management. At first sight these analyses may appear to differ in certain aspects, but on closer study they show a basic similarity. Debate on the inclusion or exclusion of a particular element of management tends to revolve round the use and interpretation of different terms, and the emphasis which is placed upon them. For example, what Fayol calls command – maintaining activity among personnel and getting optimum return from employees – might be taken to mean what Brech refers to as motivation – getting members of the team to work effectively and to carry out properly the activities allocated to them. Brech does not use the term organising but this appears to be covered under the headings of planning and co-ordination. Particular approaches to management There are numerous other definitions of management. Many of these definitions reflect the influence of a particular approach to management thinking. Simon, for example, sees management as synonymous with decision-making.18 Other examples include such definitions as ‘management is delegation’, or ‘the task of management is to create teams out of individuals’. There are other definitions such as ‘the responsibility of management is to achieve results’, or ‘management is the ordering and co-ordination of functions to achieve a given purpose’, which tell us little about the actual process of management. These definitions may all be correct as far as they go, but on their own are too narrow or too vague to provide an adequate description of management. THE TASKS AND CONTRIBUTION OF A MANAGER Yet another approach to describing management is given by Drucker who identifies three tasks, equally important, but essentially different, that have to be performed: 1 fulfilling the specific purpose and mission of the institution, whether business enterprise, hospital, or university; 199 200 PART 3 THE ROLE OF THE MANAGER 2 making work productive and the worker achieving; 3 managing social impacts and social responsibilities.19 Drucker then goes on to identify five basic operations in the work of the manager: ■ ■ ■ ■ ■ Sets objectives – determines objectives and the goals for each area of objectives, and describes what needs to be done to achieve these objectives. Organises – analyses the activities, decisions and relations required, classifies and divides work, creates organisation structure, and selects staff. Motivates and communicates – creates a team out of people responsible for various jobs. Measures – establishes targets and measurements of performance which focus on both the individual and the organisation as a whole. Develops people – directs, encourages and trains. How well subordinates develop themselves depends on the way a manager manages. These categories require a combination of analytical ability, synthesising ability, integrity, human perception and insight, and social skill. Responsibility for the work of other people Drucker argues that the traditional definition of management based on the responsibility for the work of other people is unsatisfactory and too narrow, and emphasises a secondary rather than a primary characteristic. There are people, often in responsible positions, who are clearly ‘management’ but who do not have responsibility for the work of other people. A person’s function and contribution may be unaffected by the number of subordinate staff. A ‘manager’ is someone who performs the tasks of management whether or not he or she has power over others. Who is a manager can be defined only by that person’s function and by the contribution he or she is expected to make. And the function that distinguishes the manager above all others is the function no one but the manager can perform. The one contribution a manager is uniquely expected to make is to give others vision and ability to perform. It is vision and moral responsibility that, in the last analysis, define the manager.20 ESSENTIAL NATURE OF MANAGERIAL WORK The essential nature of managerial work is not easy to describe, therefore, as aspects which are common in many applications escape us in others.21 However, if we look at how people at work actually spend their time we should be able to distinguish between those whose main occupation is the carrying out of discrete tasks and the actual doing of work themselves; and those who spend proportionally more of their time in determining the nature of work to be undertaken by other people, the planning and organising of their work, issuing them with instructions and giving advice, and checking on their performance. ‘Managing’ and ‘doing’ By distinguishing ‘managing’ from ‘doing’ in this way we can see management as clarifying objectives and the planning of work, organising the distribution of activities and tasks to other people, direction of subordinate staff and controlling the performance of other people’s work. This provides us with a convenient description and summary of managerial work as: clarification of objectives, planning, organising, directing and controlling. (See Figure 6.4.) CHAPTER 6 THE NATURE OF MANAGEMENT Figure 6.4 Summary of essential nature of managerial work The degree of emphasis given to these different activities may vary widely, however, from one manager to another. Some managers are likely to spend more time on certain activities than other managers. The application of these activities reflects a wide range of management practice and managerial style. Clarification of objectives The setting of objectives and formulation of policy takes place at different levels in the organisation, but as part of the same process. The board of directors, or similar body, establishes objectives and formulates policy (direction) for the organisation as a whole. Management is responsible for the implementation of policy decisions and the execution of work designed to meet these objectives. However, it is not always easy to distinguish clearly between policy and its execution (see the discussion on levels of organisation in Chapter 15). In the same way that the board of directors is concerned with planning, organisation and control as part of the responsibility for the operations of the organisation as a whole, so the execution of policy will involve the manager in decision-making and the clarification of objectives for subordinate staff. This will entail answers to such questions as: Exactly what is required? What activities are involved? What are the available resources? What are the time scales? What standards are required and how is performance to be measured? What restrictions or limitations apply? Clarification of objectives provides the basis for the planning and organisation of work, and the activities of staff. 201 202 PART 3 THE ROLE OF THE MANAGER Direction and motivation Having already identified direction (of the organisation as a whole) as a responsibility of the board of directors it is tempting to use the term ‘motivating’ instead of ‘directing’ in our definition of the activities of management. This would avoid possible confusion over terminology: and motivation is perhaps a less emotive word. But is motivating an adequate description? It is certainly part of the manager’s job to motivate staff but it involves more than this. Subordinate staff also need development and guidance. They need to be motivated to perform well in the right areas. The manager has a responsibility to see that subordinate staff are effective as well as efficient. Their efforts must be directed towards the achievement of given objectives in accordance with stated policy. Co-ordination As we have seen, ‘co-ordination’ is often included as one of the activities of management. However, the harmonising of effort to meet objectives (co-ordination) is not so much a separate activity; it is of a more general nature and involves all the activities of management. Co-ordination, like communication and decision-making, is inherent in the process of management. It permeates all the activities of management and is descriptive more of how the work of the manager is carried out. According to Kanter, good managers realise there are no simple answers to management problems: Managers means managing an entire context. If you strip out one element and apply one methodology, it won’t work.22 THE EFFORTS OF OTHER PEOPLE Despite the view expressed by Drucker on the tasks and contribution of a manager, one of the most popular ways of defining management is that it involves getting work done second-hand, that is through the efforts of other people. Managers are judged not just on their own performance but on the results achieved by subordinate staff. There are, then, many ways of looking at the meaning of management. The basic criteria must be a compromise between the ideas of some of the more lucid writers on the subject. Stewart attempts to integrate the various definitions of management and summarises the manager’s job, broadly defined as: deciding what should be done and then getting other people to do it. A longer definition would be concerned with how these tasks are to be accomplished. The first task comprises setting objectives, planning (including decision-making), and setting up formal organization. The second consists of motivation, communication, control (including measurement), and the development of people. The two tasks are separated for convenient analysis, but in practice they may often overlap.23 The definition of management as ‘getting work done through the efforts of other people’ may not perhaps meet all criteria, or satisfy everyone’s perception of the nature of managerial work. It does, however, have the advantage of simplicity and focuses on what in reality is at the heart of effective management. Managing means leading, making things happen through people: for me that is relevant to all levels of management, not just the top management. Sir Peter Parker24 The ‘Roles and Individual Management Model’ of IBM are given in Management in Action 6.1 at the end of this chapter. CHAPTER 6 THE NATURE OF MANAGEMENT MANAGEMENT IN SERVICE INDUSTRIES In Chapter 4 we discussed the distinction between production and service organisations. In addressing the question ‘what is the nature of management in service industries?’, Jones suggests that implicit in the question is the fundamental assumption that managers of services face different problems and act differently from other managers. However, Jones acknowledges that this assumption is contentious. Even where there is agreement that services are in some way different, there is no agreement on the cause or importance of this difference.25 On a similar theme, the managerial task of running (for example) a hospitality unit can be seen as a set of systems and processes common to managing any organisation.26 There is, however, a continuing debate about whether hospitality management, for example, is the same as or different from other management.27 In order to operate effectively, service industries need management in the same way as any other industry. Both require attention to the same general problems of management. (See also the discussion on management in public and private sector organisations in the following section.) The open systems model applies in exactly the same way to service organisations as to any other business organisation. Increasing attention is being given to the applications of general management theory within the service industry and to the links between management in service and other industries.28 The systems approach and contingency theory, discussed in earlier chapters, also serve to illustrate both differences and common features in the nature of management in work organisations. MANAGEMENT IN PRIVATE ENTERPRISE AND PUBLIC SECTOR ORGANISATIONS The increasing scale of privatisation (discussed in Chapter 4) and the general movement of major organisations away from local authority jurisdiction and towards greater responsibility for managing their own affairs have led to blurring of the traditional distinction between private and public sector management. Divisions between the two sectors are increasingly being broken down. There is, for example, a growing recognition that the duties and responsibilities of local government staff may satisfy the definition of a manager. The changing structure of local government and the creation of larger, all-purpose bodies will further enhance the corporate importance of managers. It is understandable, therefore, why there is a popular debate about the extent of the ‘generic’ nature of management, and the manner in which organisations in the private and public sectors are structured and managed.29 Perceived differences There are perceived differences between management in the private and public sectors. These differences arise from particular features of public sector organisations. For example: ■ ■ ■ ■ ■ ■ ■ aims concerned with providing a service for, and for the well-being of, the community rather than just of a commercial nature; the scale, variety and complexity of their operations; the tendency for them to be subject more to press reports on their activities; the political environment in which they operate, and in the case of local government, for example, the relationship between elected members and permanent officers; high levels of statutory controls, legislation and ministerial guidance; the generally high level of trade union involvement; the difficulties in measuring standards of performance of services provided compared with profitability; 203 204 PART 3 THE ROLE OF THE MANAGER ■ ■ the demand for uniformity of treatment and public accountability for their operations; and the tendency towards more rigid personnel policies, for example specific limitations on levels of authority and responsibility, fixed salary gradings based on general pay scales, long-term career structures and set promotion procedures. A number of these features frequently combine to result in increased bureaucracy within public sector organisations. The same general problems of management Both private enterprise and public sector organisations, however, face the same general problems of management. Both are concerned with, for example: ■ ■ ■ ■ the efficiency and effectiveness of their operations; the clarification of aims and objectives; the design of a suitable structure; and carrying out essential administrative functions. Basic principles of management apply in any series of activities in any organisation. The common activities and concerns of management apply to a greater or lesser extent in both private enterprise and public sector organisations. For example, as Robinson points out: Innovation in industry and commerce is a given. In local government organisations some may find it a more curious concept. But this simplistic, stereotypical view of management is wrong. Managers must manage professionally in whatever sector they function – or leave themselves vulnerable to the threats in an increasingly global and competitive environment. This applies to managers of public sector organisations as well as to private sector managers – and survival for many will be dependent upon the effective management of change and innovation.30 Set of interrelated activities Based on an analysis of management development in central and local government, Bourn suggests management as a set of interrelated activities: 1 2 3 4 5 6 7 8 forecasting, setting objectives and planning; the definition of problems that need to be solved to achieve these objectives; the search for various solutions that might be offered to these problems; the determination of the best or most acceptable solutions; the securing of agreement that such solutions should be implemented; the preparation and issue of instructions for carrying out the agreed solutions; the execution of the solutions; the devising of an auditing process for checking whether such solutions are properly carried out and, if they are, that they do in fact solve the problems for which they were devised; 9 the design, introduction and maintenance of the organisational structures which are most appropriate for these activities; 10 the selection, training, development and management of the appropriate staff.31 Clearly, this set of activities is of equal relevance to management in business organisations, and can be seen as an extension of the generalised definition of clarification of objectives, planning, organising, directing and controlling suggested above. Although greater emphasis might be placed on certain activities this analysis helps demonstrate the degree of commonality between the basic process of management in both private and public sector organisations. CHAPTER 6 THE NATURE OF MANAGEMENT Common challenges for all management Hannington refers to the need to continuously improve productivity faster than the competition as the challenge for all management in both the private and public sectors. Management theories apply to all managers and both sectors face a central factor of the management of change. In the public sector the challenge may be measured in different ways to those in the private sector. Profit may not play a part, but measurement of activity against costs may replace monitoring of the return on capital invested. Income is now often linked to output and outcomes, while expenditure is firmly controlled and audited. Public sector managers are increasingly being asked to manage their organisations in a more commercial and effective way, exposed to competition without any guarantee of survival. In many areas, public sector management is little different from that in the private sector, with the same urgencies and pressures. This is exemplified by the increasing frequency of movement between the two sectors.32 And as Drucker points out although there are, of course, differences in management between different organisations, the differences are mainly in application rather than in principles. There are not even tremendous differences in tasks and challenges. The executives of all these organizations spend, for instance, about the same amount of their time on people problems – and the people problems are almost always the same. Ninety per cent or so of what each organization is concerned with is generic. And the differences in respect of the last 10 per cent are no greater between businesses and nonbusinesses than they are between businesses in different industries.33 Fenlon also suggests that ‘public and private leadership are fundamentally alike and different in important respects’. Although public sector executives also confront unique challenges in every aspect of their leadership, the essentials of leadership and management in the public sector are the same as those in the private sector. In both sectors classical managerial activities are required such as designing organisational structures and processes that support strategies, building systems for staffing, budgeting and planning, and measuring results. While public sector executives must also develop strategies that create benefits, as opposed to profits, at an acceptable rate of return on political capital employed, the skills of leading and managing are fundamentally alike.34 The importance However, according to Stewart, the belief that one should manage the public sector in of task and the same way as the private sector is an illusion of our times. Within all categories of context work there are critical differences in the nature of management depending on the tasks to be undertaken and their context. The good manager will be one who recognises the need to relate their management style and approach to context and task, and this is as important in the public sector as in the private sector. The management of difference can be seen at work in local government, where the sheer diversity of services means that different services are managed in different ways. Stewart maintains that many of the dominant management approaches advocated for local government assume a uniformity of approach which promises to ignore difference. The belief in a generic type of management for all situations can be misleading in that it conceals the need for the hard analysis of the nature of task and context.35 205 206 PART 3 THE ROLE OF THE MANAGER THE WORK OF A MANAGER Despite similarities in the general activities of management, the jobs of individual managers will differ widely. The work of the manager is varied and fragmented. In practice, it will be influenced by such factors as: ■ ■ ■ ■ ■ ■ the nature of the organisation, its philosophy, objectives and size; the type of structure; activities and tasks involved; technology and methods of performing work; the nature of people employed; and the level in the organisation at which the manager is working. These differences do not just exist between organisations in the private and public sectors; they are often more a matter of degree. For example, many large business organisations may have more in common in their management and operations with public sector organisations than with small private firms. The environmental setting A major determinant of the work of the manager is the nature of the environment, both internal and external, in which the manager is working. Managers have to perform their jobs in the situation in which they find themselves. (See Figure 6.5.) The internal environment relates to the culture and climate of the organisation – ‘how things are done around here’ – and to the prevailing atmosphere surrounding the organisation. Organisational culture and climate are discussed in Chapter 22. The external environment relates to the organisation as an open system, as discussed in Chapter 4. Managers must be responsive to the changing opportunities and challenges, and risks and limitations facing the organisation. External environmental factors are largely outside the control of management. EXTERNAL ENVIRONMENT INTERNAL ENVIRONMENT Nature of the organisation Activities and tasks Structure THE MANAGER Technology and methods Level in the organisation People INTERNAL ENVIRONMENT EXTERNAL ENVIRONMENT Figure 6.5 The work of a manager – the environmental setting CHAPTER 6 THE NATURE OF MANAGEMENT The diversity of management More recent studies on the nature of management have been based on wider observation and research, and have concentrated on the diversity of management and differences in the jobs of managers. Among the best-known empirical studies on the nature of managers’ jobs, and how managers actually spend their time, are those by Mintzberg, Kotter, Luthans and Stewart.36 MANAGERIAL ROLES Based on the study of the work of five chief executives of medium-sized to large organisations, Mintzberg classifies the activities which constitute the essential functions of a top manager’s job.37 What managers do cannot be related to the classical view of the activities of management. The manager’s job can be described more meaningfully in terms of various ‘roles’ or organised sets of behaviour associated with a position.38 Mintzberg recognises that people who ‘manage’ have formal authority over the unit they command, and this leads to a special position of status in the organisation. As a result of this formal authority and status, managerial activities can be seen as a set of ten managerial roles which may be divided into three groups: (i) interpersonal roles; (ii) informational roles; and (iii) decisional roles (see Figure 6.6). Interpersonal roles The interpersonal roles are relations with other people arising from the manager’s status and authority. 1 Figurehead role is the most basic and simple of managerial roles. The manager is a symbol and represents the organisation in matters of formality. The manager is involved in matters of a ceremonial nature, such as the signing of documents, participation as a social necessity, and being available for people who insist on access to the ‘top’. 2 Leader role is among the most significant of roles and it permeates all activities of a manager. By virtue of the authority vested in the manager there is a responsibility for staffing, and for the motivation and guidance of subordinates. 3 Liaison role involves the manager in horizontal relationships with individuals and groups outside their own unit, or outside the organisation. An important part of the manager’s job is the linking between the organisation and the environment. Figure 6.6 The manager’s roles (Reprinted by permission of the Harvard Business Review from ‘The Manager’s Job: Folklore and Fact’, by Henry Mintzberg, HBR Classic, March–April 1990, p. 168. Copyright © 1990 by Harvard Business School Publishing Corporation; all rights reserved.) 207 208 PART 3 THE ROLE OF THE MANAGER Informational roles The informational roles relate to the sources and communication of information arising from the manager’s interpersonal roles. 4 Monitor role identifies the manager in seeking and receiving information. This information enables the manager to develop an understanding of the working of the organisation and its environment. Information may be received from internal or external sources, and may be formal or informal. 5 Disseminator role involves the manager in transmitting external information through the liaison role into the organisation, and internal information through leader role between the subordinates. The information may be largely factual or may contain value judgements. The manager is the nerve centre of information. If the manager feels unable, or chooses not, to pass on information this can present difficulties for delegation. 6 Spokesperson role involves the manager as formal authority in transmitting information to people outside the unit, such as the board of directors or other superiors, and the general public such as suppliers, customers, government departments and the press. Decisional roles The decisional roles involve the making of strategic organisational decisions on the basis of the manager’s status and authority, and access to information. 7 Entrepreneurial role is the manager’s function to initiate and plan controlled (that is, voluntary) change through exploiting opportunities or solving problems, and taking action to improve the existing situation. The manager may play a major part, personally, in seeking improvement, or may delegate responsibility to subordinates. 8 Disturbance handler role involves the manager in reacting to involuntary situations and unpredictable events. When an unexpected disturbance occurs the manager must take action to correct the situation. 9 Resource allocator role involves the manager in using formal authority to decide where effort will be expended, and making choices on the allocation of resources such as money, time, materials and staff. The manager decides the programming of work and maintains control by authorising important decisions before implementation. 10 Negotiator role is participation in negotiation activity with other individuals or organisations, for example a new agreement with a trade union. Because of the manager’s authority, credibility, access to information, and responsibility for resource allocation, negotiation is an important part of the job. Arbitrary division of activities Mintzberg emphasises that this set of ten roles is a somewhat arbitrary division of the manager’s activities. It presents one of many possible ways of categorising the view of managerial roles. The ten roles are not easily isolated in practice but form an integrated whole. If any role is removed this affects the effectiveness of the manager’s overall performance. The ten roles suggest that the manager is in fact a specialist required to perform a particular set of specialised roles. Mintzberg argues that empirical evidence supports the contention that this set of roles is common to the work of all managers. An example of this is provided by Wolf who analysed the work of the audit manager and assigned critical task requirements to the ten managerial roles identified by Mintzberg.39 Another example is the study by Shortt who undertook a Mintzbergian analysis of 62 general managers of inns in Northern Ireland.40 Mintzberg’s model of managerial roles is a positive attempt to provide a realistic approach to classifying the actual activities of management. There are, however, criti- CHAPTER 6 THE NATURE OF MANAGEMENT cisms that the roles lack specificity and that a number of items under each role are related not to a single factor but to several factors. For example, McCall and Segrist found that activities involved in figurehead, disseminator, disturbance handler and negotiator were not separate roles but overlapped too much with activities under the six other roles.41 Why organisations need managers As a result of describing the nature of managerial work in terms of a set of ten roles, Mintzberg suggests six basic purposes of the manager, or reasons why organisations need managers: ■ ■ ■ ■ ■ ■ to ensure the organisation serves its basic purpose – the efficient production of goods or services; to design and maintain the stability of the operations of the organisation; to take charge of strategy-making and adapt the organisation in a controlled way to changes in its environment; to ensure the organisation serves the ends of those people who control it; to serve as the key informational link between the organisation and the environment; and as formal authority to operate the organisation’s status system. BEHAVIOUR PATTERN OF GENERAL MANAGERS From a detailed study of 15 successful American general managers involved in a broad range of industries, Kotter found that although their jobs differed and the managers undertook their jobs in a different manner they all had two significant activities in common: agenda-setting and network-building.42 ■ ■ Agenda-setting is a constant activity of managers. This is a set of items, or series of agendas involving aims and objectives, plans, strategies, ideas, decisions to be made and priorities of action in order to bring about desired end-results. For example, the University of Portsmouth strategic plan sets ‘the target of moving into the top third of universities in Britain over the next ten years’. This requires individual managers responsible for achieving this target to have a continual and changing series of agendas to help bring this intention into reality. Network-building involves the managers interacting with other people and establishing a network of co-operative relations. These networks are outside of the formal structure. They have often included a very large number of people, many of whom were in addition to their boss or direct subordinates, and also included individuals and groups outside the organisation. Meetings provided exchanges of information over a wide range of topics in a short period of time. A major feature of networkbuilding was to establish and maintain contacts that could assist in the successful achievement of agenda items. On the basis of interviews, observations, questionnaires and relevant documents, Kotter found the following features of a typical pattern of daily behaviour for a general manager (GM).43 1 They spent most of their time with others. 2 The people they spent time with included many in addition to their superior and direct subordinates. 3 The breadth of topics covered in discussions was very wide. 4 In these conversations GMs typically asked a lot of questions. 5 During these conversations GMs rarely seemed to make ‘big’ decisions. 6 Discussions usually contained a considerable amount of joking, kidding, and nonwork-related issues. 209 210 PART 3 THE ROLE OF THE MANAGER 7 In not a small number of these encounters, the substantive issue discussed was relatively unimportant to the business or organisation. 8 In such encounters, the GMs rarely gave ‘orders’ in a traditional sense. 9 Nevertheless, GMs frequently attempted to influence others. 10 In allocation of time with other people, GMs often reacted to the initiatives of others. 11 Most of their time with others was spent in short, disjointed conversations. 12 They worked long hours. (The average GM studied worked just under 60 hours per week. Although some work was done at home, and while commuting or travelling, they spent most of their time at work.) DETERMINING WHAT REAL MANAGERS DO Developing the work of Mintzberg and Kotter, Luthans and associates undertook a major investigation into the true nature of managerial work through the observation of 44 ‘real’ managers.44 A detailed record was maintained of the behaviours and actions of managers from all levels and many types of organisations, mostly in the service sector and a few manufacturing companies. The data collected was reduced into 12 descriptive behavioural categories under four managerial activities of real managers. ■ ■ ■ ■ Frequency of activities Communication – exchanging information, paperwork. Traditional management – planning, decision-making, controlling. Networking – interacting with outsiders, socialising/politicking. Human resource management – motivating/reinforcing, disciplining/punishing, managing conflict, staffing, training/developing. Following determination of the nature of managerial activity, Luthans then went on to study a further, different set of 248 real managers in order to document the relative frequency of the four main activities. Trained observers completed a checklist at random times once every hour over a two-week period. The time and effort spent on the four activities varied among different managers. The ‘average’ manager, however, spent 32 per cent of time and effort on traditional management activities; 29 per cent on communication activities; 20 per cent on human resource management activities; and 19 per cent on networking activities. PATTERNS OF MANAGERIAL WORK AND BEHAVIOUR Based on earlier studies of managerial jobs,45 Stewart has developed a model for understanding managerial work and behaviour.46 The model directs attention to the generalisations that can be made about managerial work, and differences which exist among managerial jobs. It acknowledges the wide variety, found from previous studies, among different managers in similar jobs in terms of how they view their jobs and the work they do. Demands, constraints and choices The three main categories of the model are demands, constraints and choices. These identify the flexibility in a managerial job. ■ Demands are what anyone in the job has to do. They are not what the manager ought to do, but only what must be done: for example, meeting minimum criteria of performance, work which requires personal involvement, complying with bureaucratic procedures which cannot be avoided, meetings that must be attended. CHAPTER 6 THE NATURE OF MANAGEMENT ■ ■ Constraints are internal or external factors which limit what the manager can do: for example, resource limitations, legal or trade union constraints, the nature of technology, physical location, organisational constraints, attitudes of other people. Choices are the activities that the manager is free to do, but does not have to do. They are opportunities for one job-holder to undertake different work from another, or to do the work in a different way: for example, what work is done within a defined area, to change the area of work, the sharing of work, participation in organisational or public activities. The flexibility of managerial jobs Stewart suggests that the model provides a framework for thinking about the nature of managerial jobs, and about the manner in which managers undertake them. To understand what managerial jobs are really like it is necessary to understand the nature of their flexibility. Account should be taken of variations in behaviour and differences in jobs before attempting to generalise about managerial work. Study of managers in similar jobs indicates that their focus of attention differs. Opportunities for individual managers to do what they believe to be most important exist to a greater or lesser extent in all managerial jobs. Stewart also concludes that the model has implications for organisational design, job design, management effectiveness, selection, education and training, and career decisions.47 How managers really behave From a review of research into managerial behaviour, Stewart concludes that the picture built up gives a very different impression from the traditional description of a manager as one who plans, organises, co-ordinates, motivates, and controls in a logical, ordered process. Management is very much a human activity. The picture that emerges from studies of what managers do is of someone who lives in a whirl of activity, in which attention must be switched every few minutes from one subject, problem, and person to another; of an uncertain world where relevant information includes gossip and speculation about how other people are thinking and what they are likely to do; and where it is necessary, particularly in senior posts, to develop a network of people who can fill one in on what is going on and what is likely to happen. It is a picture, too, not of a manager who sits quietly controlling but who is dependent upon many people, other than subordinates, with whom reciprocating relationships should be created; who needs to learn how to trade, bargain, and compromise; and a picture of managers who, increasingly as they ascend the management ladder, live in a political world where they must learn how to influence people other than subordinates, how to manoeuvre, and how to enlist support for what they want to do. In short, it is a much more human activity than that commonly suggested in management textbooks.48 THE ATTRIBUTES AND QUALITIES OF A MANAGER Whatever the role of the manager or whether in the private or public sector, in order to carry out the process of management and the execution of work, the manager requires a combination of technical competence, social and human skills, and conceptual ability.49 As the manager advances up the organisational hierarchy, greater emphasis is likely to be placed on conceptual ability, and proportionately less on technical competence. This can be illustrated by reference to the levels of organisation discussed in Chapter 15. (See Figure 6.7.) ■ Technical competence relates to the application of specific knowledge, methods and skills to discrete tasks. Technical competence is likely to be required more at the supervisory level and for the training of subordinate staff, and with day-to-day operations concerned in the actual production of goods or services. 211 lit y PART 3 THE ROLE OF THE MANAGER sk i ce pt lls ua la bi Community ic hn Te c Technical al So c ia co la m nd pe te hu Managerial nc m e an C on Organisational level 212 Attributes of a manager Figure 6.7 The combination of attributes of a manager ■ ■ Social and human skills refer to interpersonal relationships in working with and through other people, and the exercise of judgement. A distinctive feature of management is the ability to secure the effective use of the human resources of the organisation. This involves effective teamwork and the direction and leadership of staff to achieve coordinated effort. Under this heading can be included sensitivity to particular situations, and flexibility in adopting the most appropriate style of management. Conceptual ability is required in order to view the complexities of the operations of the organisation as a whole, including environmental influences. It also involves decision-making skills. The manager’s personal contribution should be related to the overall objectives of the organisation and to its strategic planning. Although a simplistic approach, this framework provides a useful basis from which to examine the combination and balance of the attributes of an effective manager. For example the extent of technical competence or conceptual ability will vary according to the level of the organisation at which the manager is working. However, major technological change means that managers at all levels of the organisation increasingly require technical competence in the skills of information communications technology (ICT).50 Balance of ‘hard’ and ‘soft’ skills Management has become more about managing people than managing operations, however, and social and human skills which reflect the ability to get along with other people are increasingly important attributes at all levels of management. Green, for example, suggests that most managers will spend most time operating between the spectrum of ‘hard’ skills such as conducting disciplinary matters or fighting one’s corner in a debate about allocation of budgets; and ‘soft’ skills such as counselling, or giving support and advice to a member of staff. The most successful managers are those able to adjust their approach and response to an appropriate part of the spectrum.51 And as Douglas, for example, also reminds us, although there is a clear need for mastery of technical expertise, ‘soft skills’ are also an essential part of the world of business. Living as we do in a society that is technologically and scientifically extremely advanced, most kinds of professional advancement are close to impossible without the mastery of one or more specialised branches of systematic technical knowledge … What is the downside? Organisations in most sectors – and especially in ones that are particularly demanding from a scientific or technical point of view – are operating in environments where collaboration, teamwork, and an awareness of the commercial implications of technical research are as important as scientific and CHAPTER 6 THE NATURE OF MANAGEMENT technical skills themselves. Personnel with scientific and technical skills significantly disproportionate to their ‘people’ skills – by which I primarily mean people management capabilities and knowledge of how to work with maximum effectiveness as part of a team – are increasingly unlikely to be as much of an asset to their organisation as they ought to be.52 Situational management According to Misslehorn the challenge for managers is to sharpen their ability to perceive more accurately, process the information more wisely, respond more appropriately and examine the feedback from the actions taken in order to learn and keep things on track. Managers need to think through situations, bringing their rational and creative brainpower to bear on them. They also need to involve others through appropriate interaction and communication. The way managers think about the situation and interact with others have a direct bearing on their perceptions of the situation – helping to curb some of the distortions from their past experience, values, bias, fears, feelings and prejudices. And the way managers think about a situation and interact with others also have a direct bearing on their responses, and the results produced and outcomes of their actions. This interplay between thinking and interacting takes place in complex strategic organisational situations. This process of situational management is illustrated in Figure 6.8.53 Figure 6.8 Situational management Reproduced with permission from Hugo Misselhorn, The Head and Heart of Management, Management and Organization Development Consultants (2003), p. 13. 213 214 PART 3 THE ROLE OF THE MANAGER Delegation and empowerment We referred earlier to management as getting work done through the efforts of other people. This entails the process of delegation and empowerment, and entrusting authority and responsibilities to others. Delegation is not just the arbitrary shedding of work or the issuing and following of orders. It is an essential social skill and the creation of a special manager–subordinate relationship within the formal structure of the organisation. The nature of delegation and empowerment is discussed in Chapter 21. The importance and reponsibility of management Whatever the essential nature of managerial work is said to be, the importance and responsibility of management are widely, and rightly, recognised. For example, according to Drucker: The responsibility of management in our society is decisive not only for the enterprise itself but for management’s public standing, its success and status, for the very future of our economic and social system and the survival of the enterprise as an autonomous institution.54 More recently, Drucker, in discussing management challenges for the twenty-first century, also suggests a new management paradigm: Management’s concern and management’s responsibility are everything that affects the performance of the institution, and its results – whether inside or outside, whether under the institution’s control or totally beyond it.55 The ‘Quality of Management’ is one of nine ingredients of success by which Management Today rate performance in their annual survey of Britain’s Most Admired Companies. In 2003 The Investors in People introduced a ‘Leadership and Management Model’ that focuses on the development of organisational leadership and management capability. The model is discussed in Chapter 23. MANAGERS OF THE FUTURE? Billsberry points out that the number of people who are managers has been growing rapidly and also that the scope and variety of what managers are required to do has been continually expanding.56 By contrast, however, Belbin contends that many of the quintessential managerial activities that fell within the everyday domain of the manager, such as communicating, motivating and organising, have now become shared with an assortment of well-educated executives such as technical experts, advisers and specialists, including human resource professionals, industrial relations officers and consulting firms. Responsibility for direction of effort and setting objectives is taken over by directors. Managers in the traditional sense of ‘a person who assigns tasks and responsibilities to others’ have become a dwindling minority. This has had cultural consequences. The flattening of hierarchy in opening up opportunities to non-managerial executives has helped to create resistance to the authority and status of the manager–boss.57 Ten key strategies Whatever the debate, we should note the comments of Heller who from his study of Europe’s top companies refers to the need for new managers and new methods to obey the imperatives of a dramatically changed environment. Today, managements whose minds and deeds are stuck in the status quo are obsolescent, weak and failing. In the next few years, they will be obsolete – and failed. Renewal and nimbleness have become paramount necessities for the large and established. For the younger business, staying new and agile is equally imperative.58 CHAPTER 6 THE NATURE OF MANAGEMENT Heller goes on to identify ten key strategies for Europe’s new breed of managers: 1 2 3 4 5 6 7 8 9 10 Six critical elements Developing leadership – without losing control or direction. Driving radical change – in the entire corporate system, not just in its parts. Reshaping culture – to achieve long-term success. Dividing to rule – winning the rewards of smallness while staying or growing large. Exploiting the ‘organisation’ – by new approaches to central direction. Keeping the competitive edge – in a world where the old ways of winning no longer work. Achieving constant renewal – stopping success from sowing the seeds of decay. Managing the motivators – so that people can motivate themselves. Making team-working work – the new, indispensable skill. Achieving total management quality – by managing everything much better. We have referred previously to the changing nature of work organisations and Prahalad, for example, suggests that the change in the work of managing is obvious. Issues of formal structure and hierarchy, authority and power, industry experience and seniority, and control and co-ordination are all open to challenge. The changing role of managing requires that special attention should be given to the role of senior managers. Prahalad suggests the need to concentrate on six critical elements: 1 2 3 4 5 6 The importance of a shared competitive agenda. Creating a clear charter of values and behaviours. Focusing on influence without ownership. Competing for talent and building the skill mix of the organisation. Speed of reaction in the organization. Leveraging corporate resources to address emerging opportunities. Prahalad concludes that: ‘The emerging dimensions of managerial work are clear. The soft issues such as values and behaviors, often dismissed as unimportant, are critical.’59 According to a recent report from the Chartered Management Institute, British managers are now placing concern for consumers, themselves as managers and other employee groups above their traditional concern for owners and shareholders of their organisation. Looking to the future, managers believe the most important issues facing their organisation over the next decade will be: managing change; customer satisfaction; use of the Internet; motivation of core staff; managing diversity; and the development of human resources.60 The end of management? Note, however, that according to Cloke and Goldsmith: ‘Managers are the dinosaurs of our modern organizational ecology. The Age of Management is finally coming to a close.’ Cloke and Goldsmith suggest that the ever-extending reach of globalisation, continuously rising productivity, growing complexity of information, expanded sensitivity of the environment, and swelling pace of technological innovation are all increasing the demand for alternative organisational practices. They contend that management is an idea whose time is up. Organisations that do not recognise the need to share power and responsibility with all their workers will lose them. The most significant trends in the theory and history of management are the decline of hierarchical, bureaucratic, autocratic management and the expansion of collaborative self-management and organisational democracy.61 215 216 PART 3 THE ROLE OF THE MANAGER CRITICAL REFLECTIONS According to Peter Drucker, management is a practice rather than a science or a profession so there are no precise solutions, and the ultimate test of management is achievement and business performance. This would appear to suggest that in the effective management of business organisations the ends justify the means. What are your own views? Textbooks present massive amounts of information about management and organisation. But they provide little that may enable practising managers to make sense of their particular problem or dilemma. Knights, D. and Willmott, H. Management Lives: Power and Identity in Work Organizations, Sage Publications (1999), p. 12. How would you attempt to relate theories of organisational behaviour with effective management practice? ‘Someone with poor social skills can never become a good manager … you can’t make a silk purse out of a sow’s ear. And, in any case, management training makes very little difference.’ Debate. SYNOPSIS ■ ‘Management’ is a generic term and subject to many interpretations. Our concern is with management within a structured organisational setting and involving the exercise of formal authority over the work of other people. The nature of management is variable. It relates to all activities of the organisation and is undertaken at all levels. Management is essentially an integrating activity which permeates all other aspects of the organisation. ■ It is not easy to find agreement on the definition of management, or of a manager. Management is not homogeneous but takes place in different ways. One approach is to analyse the nature of management and to identify common activities and principles. By distinguishing ‘managing’ from ‘doing’ we can summarise the nature of managerial work as clarification of objectives, planning, organising, directing and controlling. The degree of emphasis given to these different activities may vary widely, however, from one manager to another. There are, however, many other approaches to the analysis of management. ■ There are important differences between service and production industries, and management in the private enterprise and public sectors. However, all organisations face the same general problems of management. Increasing attention is being given to applications of general management theory within service industries, and to privatisation and the adoption of business practices in the public sector. Management theories apply to all managers and the skills of managing are fundamentally alike. ■ In order to carry out the process of management and execution of work, the manager requires a combination of technical competence, social and human skills, and conceptual ability. Growing attention is attached to managerial competencies including skills in information communication technology. Despite the growing attention to technical expertise it is important that managers have a balance of both ‘hard’ and ‘soft’ skills including people skills. CHAPTER 6 THE NATURE OF MANAGEMENT 217 ■ While the importance and responsibility of management is still widely recognised there is a need for new managers, and new methods for a changed environment and nature of work organisations. Europe’s new breed of managers need to focus attention on key strategies including the importance of values and behaviours. Important issues for the future include managing change; leadership and motivation of staff; managing diversity; the development of human resources; and demands for alternative organisational practices. ■ The jobs of individual managers differ widely. Empirical studies have concentrated on the diversity of management and differences in the nature of managerial work. These studies have drawn attention to such features as: managerial roles; agendasetting and network-building; what real managers do; and demands, constraints and choices in a managerial job. MANAGEMENT IN ACTION 6.1 The roles of the manager and the Individual Management Model THE INDIVIDUAL MANAGEMENT MODEL (IMM) Personal characteristics IBM is a large and diverse company. IBM managers do many different things. It can be difficult to define core-and-common manager roles relevant to managers throughout such a highly complex organization. The Individual Management Model (IMM) was developed as an aid to managers to help them understand their roles in context. The manager gets work done through other people. IBM has used that simple definition for years. There are two key parts to the definition: getting work done and through other people. The Individual Management Model (IMM) was developed as an aid to managers to visualize how their roles are similar to other managers and how they may differ. Managers take actions to achieve those objectives. Every manager has unique personal characteristics, and these characteristics will influence his or her behavior. Personal characteristics include: ■ ■ ■ ■ ■ ■ background skills knowledge thinldng style competencies personality Quick overview of the Individual Management Model (IMM) All managers are responsible for producing results. They do that primarily through other people. The influence that a manager has on direct reports is reflected in the Organizational Climate that he or she creates. Every manager faces slightly different factors that help or hinder the achievement of business results. And every manager is different in terms of personality, thinking style, competencies, etc. It’s this mix of conditions and personal characteristics that make managers' behaviors different COMPONENTS OF THE IMM Objectives Objectives are the intended business results and are reflected in managers’ PBCs (Personal Business Commitments). Managers are either given objectives or they define their own, hopefully aligned with the goals and objectives of their larger organizations. The Individual Management Model (IMM) 218 PART 3 THE ROLE OF THE MANAGER Management in Action 6.1 continued Conditions Example Conditions are factors that help or hinder progress toward accomplishing objectives. Conditions affect the manager and employees as they work to accomplish their objectives. They are factors such as: The IMM gives us a way to look at a manager's roles in getting work done through others. For example, consider a marketing manager in Singapore who is not getting the business results she needs. Using the model, she examines the parts and recognizes that her conditions have changed from when her objectives were established. More turnover of staff has occurred than expected and as a result the new conditions yield a less experienced workforce. She has to adjust her role to adapt to the changed conditions. She may have to do more marketing herself. She may decide to be more of a teacher or role model to her less experienced staff. If she does not have those skills, she might direct others to fill those roles. Whatever she decides, it is the interplay of these factors that she has to deal with to define her role. As in this example, the IMM gives you a simple way to visualize your job. You can see how your job is similar to other managers' situations, and how it may differ. ■ time ■ budget ■ staff ■ company policies ■ business processes, such as Customer Relationship ■ ■ ■ ■ Management (CRM) or Integrated Product Development (IPD) organization measurement & management systems products and services offered by the company and even such things as organizational culture and the environment, both intemal and extemal. Lead – Manage – Do In working to achieve business objectives, managers’ roles can be described as: ■ Leading ■ Managing ■ Doing That is, managers may: ■ lead others by setting direction, giving encouragement or modeling some behavior, ■ manage business and people processes by planning, organizing, directing, and controlling work activities, ■ and in many cases do some of the technical or vocational work themselves. Organizational climate Climate is the employees’ perception of how it feels to work in the unit, and includes specific aspects of the environment that directly affect people's ability to get the job done. A manager’s efforts will have an effect on employees, ideally the creation of a productive organizational climate. Business results Results are the consequences of the work done by managers and their employees: ■ customer satisfaction IBM MANAGER ROLES Lead, Manage, Do These graphs suggest that, in general, the higher one moves in the organizational hierarchy, the more emphasis one places on the leadership role and the less emphasis on actually ‘doing.’ However, as the IMM reminds us, the particular conditions and objectives of the job will have a large impact on the distribution of these three important roles of the manager. The job of any professional, manager, or executive is a combination of varying degrees of leading, managing, and doing. The degree to which each of our jobs reflects these three roles varies by the level and scope of our jobs, as is shown in the sample mixes in the three graphs below. ROLES • Lead • Manage • Do Professional • Lead Manager Executive • Lead • Lead • Manage ■ products sold • Manage ■ services rendered ■ profit made The IMM gIves you a simple way to visualize your job as a manager. • Do • Do • Manage • Do CHAPTER 6 THE NATURE OF MANAGEMENT The Lead and Manage roles are sub-divided by focus into parts, as shown in the Roles graph, below. 219 THE 5 IBM PEOPLE PROCESSES MANAGE People Processes: ■ ■ ■ ■ ■ Balance resources Engage employees Develop talent Evaluate performance Recognize contribution The 5 People Processes merit explanation: Balance resources ■ Incorporating planning for the right level of people resources directly into the business processes; ■ Making sure we use the appropriate staffing solution/ process, based on the work that needs to be performed; ■ Understanding when to staff internally and when to use ■ 1 Lead individuals – displaying interpersonal leadership in hundreds of daily ‘moments of truth’ with individuals and teams. The more senior the leader, the greater the ‘fishbowl effect’ – every action of a CEO is interpreted by the organization as having meaning and intent, whether or not it was intended. The same can be said for managers, but, of course, the circle of influence is much smaller. Actlvities in this role would include any one-on-one activities, such as coaching, and many formal and informal encounters. 2 Lead groups/organizations – conceiving and inspiring a shared vision of the group’s/organization’s future, communicating with an open two-way flow of information, gaining commitment to changes required, networking within and outside the group/organization, and aligning the culture with the desired direction and strategies to attain business results for the group/organization. This role is about setting the direction for change and making it happen in the group/organization, which could be a team or a department within larger units. 3 Manage people processes – ensuring thal the 5 People Processes, described later, are effectively executed. 4 Manage business processes – managing commitment to the defined ways of doing things. challenging business processes that do not support the delivery of profitable solutions to satisfied customers, managing financials, and initiating required improvements to achieve business results. There is an acknowledged paradox that reengineering processes requires leading, but once major new processes are operational they need to be managed, which includes implementing continuous improvements and managing the financial aspects of the business. 5 Do specific business tasks – perform specific tasks, alone or in teams, to help achieve business results. Many of these are vocational or technical in nature, leveraging the leader’s professional competencies. The focus of this QuickView so far has been on a manager's role in leadership. The following is on managing people processes. ■ ■ ■ ■ external resources, and following the appropriate policies and processes when doing so; Recruiting and hiring people using competency-based criteria and behavioral-based structured interviewing, and Reflecting the diversity in our marketplace; Ensuring the optimum balance of employment options, both full and part time, and respecting diverse needs; Using job posting and employee development processes the way they are intended; Responding to business needs to add to staffing levels and to release people from the business, and doing both with sensitivity and good judgment. Engage employees ■ Aligning the vision/mission/values/objectives of employees with the objectives of the department, clarifying the objectives and standards, and ensuring PBCs collectively will accomplish the unit’s business results; ■ Quickly orienting new employees to their new work environment; ■ Creating an environment that accommodates each individual’s diverse needs and desires, so that they are engaged and energized; ■ Taking the right steps to resolve any engagement or involvement issues with employees. Develop talent ■ Assessing what skills are required for the unit as a whole; ensuring the unit has the necessary complement of skills to serve its customers; ■ Supporting and fostering the individual development plans (IDP) of unit members; ■ Assigning developmental activities to employees that align with these skill plans; ■ Modeling the way by visibly using the Skills process and enhancing personal skills. Evaluate performance ■ Assessing performance against the PBC commitments, with the help of 360-degree feedback from others; ■ Ensuring performance ls rated equitably and fairly within unit, and among related units; ■ Holding the evaluation session; ■ Addressing any commitment issues or opportunities. 220 PART 3 THE ROLE OF THE MANAGER Management in Action 6.1 continued Recognize contribution ■ Compensating employees fairly and equitably, by estab- ■ ■ ■ ■ ■ lishing their correct occupation codes and job band levels and following compensation guidelines; Communicating and explaining the total set of compensation programs, in an open and responsive manner; Selecting appropriate rewards and tailoring recognition to the stated preferences of employees; Soliciting input from the unit colleagues on who should be recognized, and how; Taking advantage of the full range of formal and informal awards; Paying special attention to the simplest, most valued, and most under-estimated of all recognition – a sincere ‘thank you.’ In summary, the key people management sub-processes are: People processes Specific sub-processes ■ Balanced resources Recruiting, Interviewing, Hiring, Job posting, Contracting, Transferring, Releasing ■ Engage employees PBC, Buddying, Orienting, Valuing diversity, Work/life balance programs ■ Develop talent IDP, Mentoring ■ Evaluate performance PBC, 360-degree feedback, Ranking, Performance Improvement Program (PIP) ■ Recognize contribution Compensating, Rewarding, Recognizing Reproduced with permission. I am grateful to Lynn Thomson, First Line Manager IBM (UK) Ltd for providing this information. REVIEW AND DISCUSSION QUESTIONS 1 How would you summarise the essential nature of managerial work? In what ways does the job of a manager differ from any other job in a work organisation? 2 Give your own examples of the work of people who might be perceived as ‘unlikely managers’. 3 From your own experience, identify with examples the main activities of management. What do you see as the main attribute(s) or qualities required of a manager in undertaking each of these activities? 4 To what extent is it possible to establish rules or principles of good management? Assess critically the practical applications of these rules or principles. 5 Contrast the nature of management in (i) service and production industries; and (ii) private enterprise and public sector organisations. 6 Why do organisations need managers? Suggest how the flexibility in managerial jobs might be identified, and compare and contrast any two different managerial jobs. 7 Discuss critically the suggestion that management is a much more human activity than is commonly suggested in management textbooks. Support your discussion with practical examples. 8 Explain fully how you see the likely role of the manager and the nature of managerial activities in ten years’ time. CHAPTER 6 THE NATURE OF MANAGEMENT 221 ASSIGNMENT 1 Select a particular managerial job and observe the manager in action, preferably over an extended period of time. a Make notes, with supporting examples, of the proportion of the manager’s work and time which is spent on: 1 the carrying out of discrete tasks and the actual ‘doing’ of work personally; and 2 deciding what work is to be done and planning, organising, directing or controlling the work of other people. b Analyse particular ways in which features of the internal and external environment influence the work of the manager. c Suggest, with supporting reasons, the particular attributes or qualities which appear to be necessary for successful performance of the manager’s job. d Analyse the job in terms of the activities of: (i) agenda-setting; and (ii) network-building. e Identify clearly those factors which determine the demands, constraints and choices of the job. Comment critically on how these factors determine the flexibility in the manager’s job. f State clearly the conclusions you draw from your observations and compare with those of your colleagues. ALTERNATIVE ASSIGNMENT Examine the nature of managerial activity within your own university/college. a Explain clearly those factors which distinguish the general nature of management from that in other (private sector) business organisations, and identify clearly the main internal and environmental influences. b Using a framework of your choice examine the specific functions of one particular management position (such as, for example, a head of department). c Contrast the specific attributes and abilities required of that manager with those required by managers at different levels of the university/college. d Explain fully whether you believe your lecturer can reasonably be regarded as a manager. e State clearly the conclusions you draw and compare with those of your colleagues. ASSIGNMENT 2 Have YOU got what it takes to be a CEO? Ever flirted with the idea you’re CEO material? Matthew Gwyther suggests some key requirements for the post, and what to expect when you get to the lonely eyrie at the top. Work through our challenging quiz questions and check to find out what sort of dash you’ll cut as boss. Do you want to make it all the way to the top in your career? Are you one of those highperforming foot-soldiers with your eye on a steady progression through the company ranks until you become field marshall? If so, why do you went to do that? What is it about the role 222 PART 3 THE ROLE OF THE MANAGER Assignment 2 continued of chief executive that attracts you? Is it the power, the recognition, the responsibility, the ‘big office’, or is it really the dosh on offer? Still keen to make the grade? Trying to establish exectly what set of skills is needed to be a CEO is difficult. Every business school or management guru will come up with the vital characteristics of the dream boss. Organisations vary in culture and size. Some need (and expect) a rabble-rousing Napoleon. Others want someone quieter, more along the lines of Lao-Tzu, the 6th-century BC Chinese guru who said: ‘To lead the people, walk behind them.’ The truth is that the role of CEO is probably the least understood within a firm. Key requirements, though, might include the following… A focus on what matters. Good CEOs take a bird’s-eye view, set priorities and then get down and dirty with the one or two things that will really make a difference. If you can cut through the noise to the heart of issues facing the company, people will listen. The ability to sell. CEOs have to sell the whole time – to clients, to investors, and in the case of ideas and change, to the whole company. If you’re not from a sales background, you may need coaching in the art of persuasion. Financial acumen. The CFO will handle the technical stuff but as CEO you'll need to be able to ‘read the numbers’ and make the links between what’s on the page and what’s going on in your company. This isn’t just about budgets; it also requires thinking about the profit drivers. You'll need to pay more attention to the balance sheet than you might have wanted to before. A strategic mindset. Strategy is all about choosing the playing field on which your company will compete and then building advantages relative to the competition on that field. It’s seeing how you fit into the big picture. The ability to manage change. Driving change throughout a company is just like managing a department but much harder. Your actions need to be bigger and bolder to have an effect – like acting on a stage rather than in a film. But you’ll need to set an example and pick the right senior team, and to identify those most likely to champion, influence and resist what you want to achieve. Leadership. This takes energy and passion. You need to feel inspiration yourself and to be able to inspire others. But it’s not all fire in the belly and no foundation. A solid vision is vital to make it more then empty rabble-rousing. Nous and strength of personality. The great CEOs know when to use logic and when to trust instinct. They know when to do something and when to let things be. They know when to lead and when to manage. So, assuming you have all these qualities and you achieve your ambition, what is it like at the summit? An interesting report compiled recently by Ogilvy Europe, which interviewed 30 CEOs, described a concerned and sometimes bewildered group of individuais who were wrestling with near-impossible tasks. As Mike Walsh, chairman of Ogilvy Europe said: ‘The things keeping them awake at night would be to do with their own personal performance as leader, not their business performance.’ Few CEOs receive much, if any, preparation for the role – only two of the 30 interviewed said they had been groomed for the position. First impressions were generally those of fear and surprise at the sheer scale and complexity of the role they had taken on. ‘In this respect,’ wrote the authors, ‘becoming a CEO for the first time is a bit like parenthood – no amount of ante-natal instruction or babysitting can prepare you for the drama and the responsibility of having your own child.’ CHAPTER 6 THE NATURE OF MANAGEMENT 223 One negative aspect of reaching the top is loneliness. CEOs have more in common with other CEOs than they have with the people they lead. CEOs are set apart because the buck stops with them: a level of responsibility that does not suit everyone. Effective leaders earn respect – but they don’t need to be liked. You may have to sacrifice that after-work drink with your former cohorts. Still interested in beginning your climb to the top? Nobody ever said it wasn't tough there, especially in these anxious times. HOW WOULD YOU MEET THESE CHALLENGES? Six scenarios to test your potential as a boss. Select the response that you consider most apt for each question. Make a note of your choices (i, ii, iii, iv or v), then work out your score by using the conversion table on page 225. 1 You run a software company. Business is brisk and there is activity across the company: developing/testing new products, building relationships with major clients, establishing new direct sales systems and delivering products and services to existing clients. How do you focus your efforts? (i) (ii) (iii) (iv) (v) You are delighted to see everything going so well. This gives you time to think about and plan your next move. Never one to neglect the fundamentals, you hold your managers strictly to account on a regular basis. You keep an eye on all aspects of the business, but focus on coaching the product development team, because the future of the business depends on constant innovation. Rather then getting into the detail yourself, you con- This gives you time to think centrate on making sure your team has the right about and plan your next move processes in place. ‘If it ain’t broke, don’t fix it’. You keep a close eye on the numbers, but use the time to build goodwill with the press and the financial community. Your job is to inspire the team, giving them a vision to help get them out of bed in the morning. But you’re never as happy as when you’re out with the salesforce talking to customers. After all, that’s where the money comes from. 2 You own and run a high-end cheese shop with a thriving web site. A fast-food chain approaches you to supply quality cheese as a way of improving their cheeseburgers. The business is worth three times your current turnover. How do you respond? (i) This would be too big a stretch for your business, but you evaluate other options, including subcontracting the deal and spinning out a new company to supply burger cheese. (ii) Before accepting the deal, you approach City contacts to explore buying the restaurant chain for yourself and creating a quality burger franchise. (iii) You are concerned to protect your product’s quality You also do the burger deal image, so although you’re keen to win the business, you seek assurances about the storage and use of your cheese, and consult your team to assess the impact on your production process. 224 PART 3 THE ROLE OF THE MANAGER Assignment 2 continued (iv) You meet a senior executive from the fast-food chain and persuade them to take on national franchises for your traditional cheese company, allowing you to scale the business through locally managed outlets. You also do the burger deal. (v) You know that the way to impress your investors in by proving the scalability of your business, so you try to formalise the opportunity so that they will release the funds you require to meet the new customer need. 3 You receive confidential advance warning that you have personally won a national award for entrepreneurship as a result of the success of your current business venture. How do you respond? (i) (ii) (iii) (iv) (v) You we honoured to be recognised in this way, and regard the event as a good opportunity to reward your friends and family for supporting you. It’s great to win something, but awards ceremonies aren’t really your style. You’re more concerned with building the products, and the company. You are taking two days away to go cave diving off the coast of Borneo at the time of the awards ceremony. You arrange a video link-up to the ceremony to accept the honour. You invite your management team to join you at the awards ceremony, and offer a few well chosen words of thanks. Any excuse for a get-together is a good one, so long as the organisers will agree you can take the entire company along with you. After all, everyone deserves a good night out after all their hard work. You arrange a video link-up to the ceremony to accept the honour 4 You are at your most persuasive when… (i) (ii) (iii) (iv) (v) You’re presenting a logical case to investors, colleagues or partners – especially when you’ve spoken to them individually beforehand to ask for their support. You’re talking about the products or services you have created – about why and how you believe what you are doing could change the world. You have the opportunity to talk about your own objectives – about the kind of person you want to be, as well as the specifics of the business you run. You have the chance to enthuse and energise a You have the chance to enthuse and group of people, be they a team of employees energise a group of people or a group of potential investors (though you may prefer it if they don’t try and dig too hard into the detail at this stage). You are in conference with your closest team of colleagues dealing with a specific issue or question. CHAPTER 6 THE NATURE OF MANAGEMENT 5 You are presented with a business proposal. You read through the executive summary and 30 pages of supporting argument, and finally you’re faced with picking through the complex, detail financial analysis. How do you respond? (i) (ii) (iii) (iv) (v) You could work through the detail, but it’s easier to work the numbers out yourself from first principles. So you put the report to one side and start the process from scratch. You check a few calculations just to make sure, then focus on the assumptions behind the model, and use your judgment to back up what the numbers tell you. You work through the analysis in detail to check that the figures stack up against the key assumptions. Only then can you decide whether to go ahead. You look the authors in the eye and ask them if they’re sure. Then you rely on your own ability to make the project work – and to motivate your team. The most important evidence for you is the feeling in your guts – though you prefer backup from the guys in suits. Having said that, even if they told you the numbers didn’t add up, it wouldn’t necessarily stop you pushing ahead. You work through the analysis in detail 6 Which of the following best describes your preferred leisure activities? (i) (ii) (iii) (iv) (v) Any large social gathering, preferably well lubricated. Skydiving, parachuting, white-water rafting. Spending time with your family and close friends. Inventing fantastic machines, tinkering with computers, collecting DVDs. Country sports, Radio 4, gardening. Your preferred leisure activities include white-water rafting Conversion table Question 1 Question 2 Question 3 Question 4 Question 5 Question 6 i ii iii iv v A E B B C D C C A C B A B A C A E E E B D D D C D D E E A B After you have completed the conversion table compare your responses with those of your colleagues. Further details on your ‘CEO profile’ will be provided by your tutor. 225 226 PART 3 THE ROLE OF THE MANAGER PERSONAL AWARENESS AND SKILLS EXERCISE OBJECTIVES Completing this exercise should help you to enhance the following skills: Act in the role of the manager to handle a number of real-life situations. Conduct management–staff interviews and discussions. Review critically your ability to deal with emotionally difficult situations. EXERCISE Given below are a number of real life situations. You are required to: 1 Think through each one and explain how you as the manager might best handle the discussion with your member of staff. 2 Record how you would approach each discussion/interview and the type of questions you might be likely to ask. Example 1 One of your employees continually arrives late for work. This is the sixth time this has happened. Their excuse is that they have to take their child to nursery because they are getting divorced and their spouse refuses to do this task. Example 2 You receive a complaint from one of your employees that another one of your employees has pornographic data on his PC that she finds offensive. Example 3 One of your permanent employees has been accused of assaulting another member of staff who works for the same organisation but is an independent contractor. Example 4 You overhear a member of your own department comment of you that ..... ‘He/she has no idea of the technical complexity of my work ... I don’t know how he/she can manage a department like this!’ Example 5 A key client calls you to complain about sarcastic and impatient comments made by one of your more experienced technicians. Comments like ‘Your people must be really thick if they think that’s how it works ...!’ have proved less than helpful. You know this person has been working long hours, achieving excellent results and is clearly committed to his job and the department. In fact, you have just promoted him for these very reasons. Example 6 In a recent management meeting, a relatively new colleague repeatedly contradicted you and appeared to be ‘scoring points’ at your expense. Although he had made some valid, even CHAPTER 6 THE NATURE OF MANAGEMENT perceptive comments, he isn’t exactly helping your relationship get off to an encouraging start. Furthermore, this has happened on a previous occasion. DISCUSSION ■ How would you summarise the essential nature of the manager–subordinate relationship? ■ Using your own examples, explain the importance of using appropriate approaches when dealing with potentially difficult situations. ■ What do you learn about the nature of the manager–subordinate relationship? Visit our website www.booksites.net/mullins for further questions, annotated weblinks, case material and Internet research material. CASE STUDY 6.1 What is management? Defining the manager’s role working principle the slogan, ‘if it works it’s obsolescent’. In other words the mere fact that a system is working satisfactorily should in itself be sufficient reason for its re-examination.62 Adam Smith sat at his desk and reflected that it was now exactly twelve months since he had been appointed general assistant to Charles Gaynor, Managing Director of Gaynor Hotels. During this time he had been used as advisor, counsellor, internal consultant and therapist. He had investigated problems, developed concepts, established principles and generally contributed to the decisiontaking process which took place in the mind of his employer, Gaynor. His attention had been attracted by an article he had been reading, which said: Adam ruminated on this and considered that with Carson, his assistant, they really had created a twoman management services activity since they had In order to maintain its internal dynamic which is essential to progress, a company needs the existence of a rebel group which is primarily concerned with challenging company policy; a group which regards as its main function the generation of sceptical attitudes towards the company’s methods of operation, organisation and policies. Such a group should adopt as a Photo: Rob Brimson/Getty Images A thing may look specious in theory, and yet be ruinous in practice; a thing may look evil in theory, and yet be in practice excellent. Edmund Burke 227 228 PART 3 THE ROLE OF THE MANAGER Case study 6.1 continued concentrated on looking at, and solving, old problems in new ways. A pocket of rational thought in a wilderness of emotionalism – if only that were really true, thought Adam! He felt depressed; although he realised that some progress had been made, it seemed infinitesimal when one looked at the company as a whole. Where is the real answer to the achievement of progress, thought Adam, if only one could put one’s finger on it. Particular aspects, methods, solutions and so on were looked at which all seemed part of the answer, but where was the whole answer? Charles Gaynor, although a man inculcated at an early age with the attitudes and ways of traditional hotelkeeping, was most receptive to new ideas; indeed, he could generate them himself and boasted of his preparedness to accept necessary change. However, nothing much seemed to have changed in these twelve months; Gaynor Hotels was still making a profit, its managers were still ‘managing’ but problems continued to abound and there seemed just as many unanswered questions. Adam leaned forward on his desk with his head in his hands. He wondered if the company was really progressing, if things were any better, and whether he was just deceiving himself. Perhaps the problem was that the company was just ‘managing’, that it was just getting by, just keeping its head above water. Is it really geared to grow and develop and prosper, is it really looking ahead and ready to exploit the changing circumstances of a changing world? That’s the central question, thought Adam, and I wish I could answer it confidently. Management! It is all in the management, a handful of men cannot carry a company – it is in the strength and depth of all the people who form the firm. His thoughts were interrupted by the door opening and Gaynor appearing with a benevolent smile, and a friendly ‘Good morning, Adam.’ Gaynor: I thought I would let you know it looks as though I will have to fire a manager, or to put it euphemistically, to ask him to resign. Adam: Who is it, sir? Gaynor: Hedges, at the Zephyr. Nasty business and the sort of scandal I deplore. I had a letter from a Mr Coloniki; his wife is secretary to Hedges who, he asserted, has been sleeping with her. I thought there couldn’t be anything in it and I referred it to our Mr Hedges never expecting anything other than a denial. Well the damn fool confirmed it as being true, he has been sleeping with his secretary. Doesn’t leave me much alternative, does it? I can’t compromise my principles and I will not have my hotel executives entering into this sort of relationship with their staff. My goodness! What sort of an example is it? Oh, the stupid man, and he was doing quite a good job for us. Adam: Well, sir, there’s an old Hungarian proverb which says that when a man’s fancy is titillated his brain goes to water. Gaynor: How very true! But a little control, a little sense of responsibility, a little maturity, that’s all I ask. It isn’t even as if he was serious about her; as he told me, it was just his ‘little indiscretion’ and he hoped that I wouldn’t find out. By the way, you didn’t already know about it, did you? Adam: No, certainly not, sir. I haven’t heard the slightest suggestion. Gaynor: Well, back to the old problem of finding a new manager; as if good managers grew on trees! They are such rare animals, they take such a great deal of finding, such a great deal of raising. Adam: How about his assistant, Gripple, do you think that he might be ready to take over? Gaynor: He might … I don’t know, even if we knew what job we were really picking him for; I mean, what is management, what is it really? What are we looking for? Adam: Well, quite honestly, sir, I do not think that he’s ready. I think he could develop into a manager, but he needs more time. Gaynor: All right, we will have to find somebody. I’ll tell you what we can do: you take over as manager of the Zephyr for the next month or so. During that time I will find a new manager. This has caught us unawares, I can’t think of anybody suitable in the company at present. Adam: But I’ve never actually managed a hotel! Gaynor: Well, it will be an excellent experience for you. Anyway, I have no doubt about your management abilities. But you still didn’t answer my question just now. What actually is management – do you know what it is? Adam: Strange you should ask me that this afternoon, I think that I was just about to ask myself the same question as you walked in. Gaynor: Fine, but can you answer it? CHAPTER 6 THE NATURE OF MANAGEMENT Adam: Well, it’s obviously to do with concern for profits and it’s equally to do with concern for people and creating a climate where they can grow and develop. Gaynor: That’s rather vague. Adam: Well, let me go on, sir. If it’s to do with concern for profits then it is also to do with knowledge of modern management methods and techniques and how to use them. If it’s to do with concern for people, then it’s also to do with knowledge of human behaviour and its applications. Gaynor: You’re struggling, Adam. I remember we talked about the purpose of business and it must lead on from there. We agreed that this was the satisfaction of the needs, wants and desires of those who control the business and generally, but not always, this involved a certain level of profitability. Now purpose must define or set the aims and objectives. Subsequently the policy indicates the means as to how to accomplish these. Policy acts then as the firm guide in all decision-making at an operational level. Management, therefore, is the implementation of policy to achieve company aims and objectives. Yes, I rather like that – I must remember to use it again. Adam: I know you won’t mind Mr Gaynor, but I can’t agree with you. Gaynor: Go on then, I am not very busy at the moment. Adam: I don’t disagree with what you say, but really I am concerned with the assumptions which are being made. Indeed, the business purpose sets aims or objectives but this implies that the business purpose has been established, is commonly perceived and is accepted. You next assume that policy is rationally formulated and promulgated, that managers are aware of it, and take their decisions within its limitations. Gaynor: Perhaps that describes the ideal situation, but I would still maintain that what I said – what was it – management is the implementation of policy to achieve company aims and objectives, is a good description. Adam: May I ask what policy Mr Hedges offended? Gaynor: Ah well now, there are several. First it is unethical; second, if it became known it would damage our image and create havoc in staff relationships, and there are more besides. Adam: But Mr Hedges took a decision, presumably with a knowledge of the policies you mention, the effects of which could militate against our aims and objectives as well as damage his career. Gaynor: And a damn fool he was, too! Adam: Were it a less serious affair, and something which was only a minor departure from company policy, I can’t help wondering how he or we would know that a departure had occurred. For example, if a manager gave 11 per cent commission to travel agents during the winter to obtain some preference from them, would this be stopped if you became aware of it? Gaynor: I hope that he would have discussed this with me first, but I can appreciate the point. After all we must be flexible enough to deal with special situations. Adam: Doesn’t this, then, highlight the problem of what we mean by policy? Earlier you said that policy acts as a firm guide, but payment of commission is pretty well fixed at 10 per cent although you would be prepared to consider exceptions. I hope I am not splitting hairs if I suggest that our policy is to pay commissions; a procedure has been established which fixes this at 10 per cent. Gaynor: I think, in this case, you are tending to split hairs but I see what you are getting at; a confusion exists between policy and procedures. I must admit that I have confused these at times, yes I see the point – policy should act as a guide. But formulating policy in this way must make it so general that it cannot provide much of a guide, a paradox in fact. Another thought that occurs to me is that if the policy is to be an effective guide it should be written out and available for the manager to consult. I must say that this would be an unenviable task! Adam: Reading textbooks about management I have found the exhortation to have a written policy a common theme. I have never actually seen one so far for a hotel and one can appreciate why this is so. At the same time I would think it comparatively easy to spell out some policies; in the financial areas, for example, this would seem a fairly straightforward exercise. Gaynor: Yes, and I think it could be done in the operating area too. I must admit, though, that I am not sure that I would like to have an exhaustive written policy document. I feel it would be a restriction on me. Adam: I believe this is a fairly common feeling among senior executives; Glacier Metal Company introduced a written policy and their experience was that flexibility increased since when a change had to be made, everybody could be informed and a written amendment incorporated. This makes sense to me, but I 229 230 PART 3 THE ROLE OF THE MANAGER Case study 6.1 continued have always had a sneaking feeling that they wrote a procedure manual rather than a policy handbook. Gaynor: So you are back to your distinction between policy and procedures! Am I to take it, then, that you are advocating that we should try to produce a policy document for the company? Adam: No, sir, I may tend to overstate the case, but I would think that the existence of such a document represents a failure of management. At a unit level, and indeed at company level, it is essential to have procedure manuals since these provide a means of establishing and maintaining standards as well as a basis for training. I would also say that it is essential for a company to spend a lot of time clarifying its objectives and aims at the top level. The real problem is that many so-called policy documents are little more than a public relations handout. If a company is clear about what it wants to be, surely it should make every effort for everybody to understand and accept these aims and behave in a supportive way towards them. Gaynor: I would have thought that having a written policy would help to do this, since people could see just what the aims are and act accordingly. Adam: I am sure that this is partly true, but what I am trying to say is that if, starting at the top, members of an organisation demonstrate by their behaviour what the policy is, this will be reflected downwards. If the senior executives behave as though they believed the customer was important, then other employees will adopt similar behaviour. Gaynor: In other words, people will learn by example; I am rather intrigued that you should have such a charming old-fashioned idea! Adam: By example, yes. But it is a little more than this. Put into the jargon, I would say that it is minimising corporate discrepancy. That is, reducing the difference between what a company as a collection of people say, and what in fact they do. Gaynor: Very well, I agree with what you say but I must say there are some grave dangers of misinterpretation. If the conclusion without the supporting argument is adopted it can become an excuse for avoiding the necessary analytical thinking at the top level. We seem to have strayed a long way from my attempt to define management; taking into account all you have said we still have a good description. Adam: I agree, but the whole problem of vocabulary in management continues to be a stumbling-block. I always remember a lecturer at college who said at his first lecture to us that he had to devise a vocabulary to talk to us which we would automatically adopt, but never to attempt to use it outside. Since there is no generally accepted or defined vocabulary he had to fashion his own to communicate with us. We all forgot, of course, and it took some time to stop using our private language when we went into industry. Gaynor: You still forget sometimes! Adam: Sorry! If we do understand that policy and company aims and objectives are in some way related to individual interpretation, depending on the perceptions of the people involved, then I think it is a good description. But shouldn’t a definition of this sort be a prescription? By saying what it is, it gives some indication of how to do it? Gaynor: Description, prescription, you’re chopping words again. I will accept, although I think you are trying to find a philosopher’s stone if a definition can tell a manager how to do his job! Adam: To come back to the definition, sir, suppose the policy is wrong or the aims and objectives are wrong. Is it true to say that an individual is managing if he keeps things going to achieve these and doesn’t have the wit or the insight to besiege his superiors for a change of direction? Gaynor: Ah! Now you are introducing value judgements about ‘good’ management and ‘bad’ management! Adam: No, Mr Gaynor. You will accuse me of sophistry again, but I would say that a person who is a manager is managing effectively. If he is ineffective, then he is not a manager. Gaynor: Save me from quibblers! But do go on. Adam: When I was in America I was given an assignment to collect together as many definitions of management as I could find. It really was a fascinating exercise but eventually I found myself in such a muddle that I could hardly think straight. The things that people have to say about this process, which hundreds of thousands of people go about for five days a week, year in and year out is amazing. The one that I remember, and considered the most banal of a very sad bunch, was ‘Management is getting things done through people’. Gaynor: Oh! I always considered that a truism. Adam: Well, yes. But it doesn’t advance our understanding. Bus conductors, waitresses and supervisors CHAPTER 6 THE NATURE OF MANAGEMENT get things done through people – but they are not managers. Gaynor: Very interesting; so you don’t think supervisors are managers? Adam: No. Managers are tacticians; that is they are the people who are once-removed from the actual operators who serve the food or make the beds. Managers are concerned with the deployment of resources. A manager says what has to be done, a supervisor frequently shows people what has to be done. The supervisor is a technician, the manager is a tactician. In this sense he is always ‘getting things done through other people’ and the other people are his supervisors. with the customer in the small business, but the real boss is then the bank manager and there is a very real dependence on suppliers. I think that one can over-emphasise the differences between the entrepreneur and the manager. Probably the owner of a small hotel spends about 5 per cent of his time on entrepreneurial decisions and the rest of the time he is a manager. So Kimble and the proprietor have 95 per cent of common activity if they are running similar establishments. Gaynor: Well then why does this ‘getting things done through other people’ grate on you so much? Gaynor: I suppose I am the professional entrepreneur of this company, but I have never been able to find any courses which deal with this topic! But we are still groping about. You have the advantage of your research on definitions of management, what are your conclusions? After all, people like me that just manage, what time do we have for all this introspection? Adam: Chiefly because of its lack of prescription. Would you say that a person is an effective manager who spends all his time with his supervisors, guiding, instructing, directing and giving decisions? Adam: Now I am in difficulties! On the one hand I am asked to offer my conclusions against your experience, and on the other hand I am asked to sit in judgement on the multitude of writers on management! Gaynor: No, certainly not. I would expect him to set the guidelines – policy, if you like – and by his selection and development of the supervisors, reach a stage where they got on with the work and left him time to think. Gaynor: I thought this is what you did anyway, but please! You know that I want to know about your ideas and that I shall use my experience to challenge you where I think you are wrong. I know that you will produce research findings, that I have never heard of, like rabbits from a hat. But I am still interested in your ideas. Adam: Exactly. I think it has been sufficiently demonstrated from studies of managers’ and supervisors’ behaviour that these are very different roles. We must be careful, however, about actual titles that go with a job. Gaynor: Yes indeed. It was always a source of amusement to me, when I had the title of General Manager, to sit next to people, with the same designation, at conferences who ran a hotel with twenty bedrooms. I would be the first to insist that we belonged to the same industry, but our needs and problems were vastly different! Do we have any common ground, I wonder? The other thing that concerns me is the entrepreneurial aspect. The owner of a twentybedroom hotel is an entrepreneur, whereas Kimble at the Diana is a manager employed by the company. Yet he is responsible for about twenty times the turnover of this entrepreneur! Adam: I have often pondered about this. In many ways it is a very personal thing. Occasionally I meet people who ask me why I work for Gaynor Hotels when I could be my own boss running a small hotel in the Cotswolds and probably able to take each afternoon off for golf. But it really depends on what you mean by being one’s own boss. I am sure there is great satisfaction in being personally involved Adam: Sorry, Mr Gaynor, but I just realised the enormity of what you asked me to do. It is one thing to make comments about a definition that somebody proposes; it is quite another thing to be asked, from limited experience, to fly in the face of the savants! Gaynor: I quite understand, but go ahead. Adam: Well, the early writers about management became heavily involved in trying to define management but I think because they were engineers or technologists, they wanted it cut and dried. They saw the world in mechanical terms and placed all the emphasis on what should be done to create orderliness and an organisation which works like a smoothly oiled machine. Gaynor: Then the social scientists came along and started to demonstrate that most of the problems were centred round people who did not behave like machines. In fact they were unpredictable. Adam: Yes, but I think that the success of techniques in advertising show that there are quite a lot of predictable elements in people’s behaviour. But the effect of the behavioural scientists’ findings tended to tip the balance with a lot of managers from concern for 231 232 PART 3 THE ROLE OF THE MANAGER Case study 6.1 continued production to concern for people. In fact I sometimes think this still persists today to a large extent; from the way some people talk, one would think that the Hawthorne experiments were the only studies which have been conducted in this field. Adam: Yes indeed, we cannot ignore that decisions have to be taken in business organisations and it needs some careful thinking to distinguish between normal human decision-taking and the special characteristics of those in business. Gaynor: You mean that a manager should be involved in maintaining a balance between his concern for people and for production? Gaynor: That should not be too difficult. I am sometimes very conscious of spending time collecting information in order to make a decision. In a similar way, you or the chief accountant sometimes spend time preparing briefs about the possible alternatives available and the likely results. A lot of this involves figures and projections and so on. With no disrespect to you, most of this could be done better on a computer, but I will still have to make the decision about which line to follow. I would also think that the unit managers will have to continue making similar decisions; perhaps these are less important in that a wrong one will be unlikely to damage the company, whereas mine might! In these decisions, at both levels, we have to use experience and our personal judgement. Adam: Yes. This means that management is a process which involves achieving business goals while at the same time providing a means of satisfaction for the individual needs or goals of employees. Now I think that the real danger to maintaining this balance might be described as the return on invested time. A comparatively short time spent in replanning a layout of a kitchen, or the desirability of installing a room state indicator, can quickly produce economies. We can see that more meals can be produced or customers allocated rooms speedily. But to increase people’s effectiveness requires a much greater investment in time to establish what goals they are seeking to achieve. Gaynor: I think most managers would agree with you and that they appreciate the need for developing people, but there is always the pressure of other things to be done and the consequent shortage of time. And what about decision-taking, I would think that this is a basic and fundamental part of managing? Adam: The problem of time is something I would like to come back to. I must admit that I feel slightly nervous when decision-taking is regarded as some prerogative of managers. After all, everybody is involved in taking decisions every day. A housewife faces a major problem in a supermarket when she has to decide between paying xp for a family-sized pack of detergent or a few pence more for a special large size accompanied by a free plastic flower! Gaynor: I see what you mean, but surely we cannot divorce this business of making decisions from a process of management? I keep reading that use of computers is likely to remove a lot of decisiontaking from middle management in the future. But I don’t think this will come for a long time and I certainly think that in running hotels there will continue to be a lot of decisions which would defy any computer. We will still need the reception manager who can fit an unexpected regular customer into the hotel which the computer says is full. Adam: If most of the operating decisions at unit level are to be made by computers in the future, the manager’s role becomes one of a human relations mechanic. Gaynor: I don’t see it that way. I hope that they will use information from the computer in reaching operating decisions; I suppose I am agreeing with your balance between people and production. My concern, however, is that this is the only method I can see for developing executives. As you know, we are a fairly decentralised company and I want my managers to feel that they are more than what you call ‘human relations mechanics’. This really goes back to what I was thinking earlier when I used the word ‘policy’. One would like to feel, as a company, that decisions are made in accordance with the policy and this is the paradox you saw. I am reluctant to start writing everything down, but I do want decisions made which support what we are trying to be as a company. Perhaps it would be a better way of describing this to say that I would like to create an ethos or spirit that ensures this. Adam: I would say that creating this environment or ethos is a very important part of the management process. It can probably be compared to the training we have as children; having confidence in social situations because we have a good idea of what is the ‘right thing to do’ like not putting our elbows on the table. CHAPTER 6 THE NATURE OF MANAGEMENT Gaynor: I thought only great-aunts worried about that nowadays! But I think you have something. Tell me, where does problem-solving come into all this? I certainly seem to spend a significant part of my time dealing with problems and I am sure it is the same with all managers. Adam: Just before you came in I was thinking about this; after a year I am still involved in solving problems and I find this rather disappointing. Gaynor: This is what I mean. Surely you can’t expect problems to stop requiring solving, I would think that this is almost the core of what management is about. Adam: This makes me feel uncomfortable. Identifying problems and solving them certainly is a significant part of managing. But I can’t help feeling that this is catching hold of the wrong end of the stick. Surely if we concentrated on identifying the causes of problems and removing those we could be much more effective? Gaynor: I am not sure I understand you. Adam: Perhaps I can illustrate it with the problem we had at the Apollo. Rather, I should say, problems; no potential managers were being produced, there was a high labour turnover and so on. We could have attempted to solve these by introducing different methods of selection, higher pay and various other means. These might have had some effect but in the long run we hadn’t identified and remedied the cause. That was Whitstone, whose autocratic behaviour as a manager was the cause of the problems. Gaynor: Yes, I see what you mean. It is like worrying about the problem of high labour costs at Head Office when the cause is people wanting to have things in writing as a protection. Adam: Exactly. But having said that, I am not sure just how this fits in with the management process. Undoubtedly managers are involved in solving problems and now it sounds as though I am saying they shouldn’t be. Gaynor: From what you say, and it is certainly a new slant for me, I would see this as part of the ethos. It involves analysing the cause of problems rather than saying ‘we have a problem’. This reminds me of one of the British Institute of Management’s luncheons when Peter Drucker spoke. It was very impressive to me when he said something like ‘We are concerned with effective management rather than efficient management, because a manager can be very efficient at doing something that does not need to be done’. I remember that I was disturbed for several days afterwards! Adam: This really typifies how one can see a whole new dimension to the task of managing by taking a step sideways and looking at the words we use. I sometimes think that words and clichés are like old slippers, they are comfortable until you notice the holes in them. Gaynor: Comfortable, but not presentable! What about communication? I recall that we have said something about this before. It must come in somewhere. Adam: I think on that occasion you quoted Thoreau and said, ‘How can I hear what you say, when what you are keeps drumming in my ears’. Gaynor: Ah yes! A favourite quote of mine. Adam: Well, the way I see it is that if your ethos exists, then communication will occur. Most people in talking about communication generally emphasise the skills of writing, speaking and reading. Sometimes they also include the skill of listening. These are, of course, important, but I would think that the emotional and social context are important. Which is just what Thoreau was saying. Gaynor: So you don’t consider communication is a part of managing. Adam: Oh, I think it is, but if we mix Drucker with Thoreau and add a dash of your observation on the ethos of the enterprise, we can see that communication is a function of the internal environment. If trust exists and people appreciate the objectives, then communication will occur. If not, then no communication. Gaynor: In some ways I would describe it as ‘good’ and ‘poor’ communication, but I am a little worried that you might take me to task on these words! Look, I have a lunch appointment and must go in a few minutes. This has been a very interesting discussion. What shall I do, sum up what we have been saying or leave it to you to prepare a memo? Adam: I would rather you summarised, Mr Gaynor. After all, I don’t want to land myself with solving a problem of overloaded Head Office typists! Gaynor: Your motives are suspect, but let me see. The Management Process seems to be concerned with creating an environment in which a balance between concern for production and concern for people is maintained as well as providing a guide to decision-taking. It is directed towards an analysis of the causes from which problems arise and seeks to 233 234 PART 3 THE ROLE OF THE MANAGER Case study 6.1 continued provide for achievement of organisational objectives whilst satisfying individual needs. Is that adequate? Adam: It really is a concise statement of what we have been talking about. Gaynor: Does it satisfy your demands for prescription? Adam: I think it does because it stresses the things that a manager must do. Creating the environment, for example. But I wonder how long this takes to achieve. Gaynor: You have a chance to find out, Adam. Tell me about it when you come back from the Zephyr! Goodbye for now, and enjoy yourself. NOTES AND REFERENCES 1. See, for example: Margretta, J. What Management Is: How it Works and Why it’s Everyone’s Business, HarperCollins (2002). 2. Schneider, S. C. and Barsoux, J. Managing Across Cultures, Second edition. Financial Times Prentice Hall (2003). 3. Crainer, S. Key Management Ideas: Thinkers that Changed the Management World, Third edition, Financial Times Prentice Hall (1998), p. xi. 4. Knights, D. and Willmott, H. Management Lives: Power and Identity in Work Organizations, Sage Publications (1999), p. iix. 5. Drucker, P. F. The Practice of Management, Heinemann Professional (1989), p. 3. 6. Drucker, P. F. Management, Pan Books (1979), p. 14. 7. Crainer, S. ‘The Rise of Guru Scepticism’, Management Today, March 1996, p. 51. 8. Watson, T. J. Management, Organisation and Employment Strategy, Routledge & Kegan Paul (1986). 9. Fayol, H. General and Industrial Management, Pitman (1949). See also: Gray, I. Henri Fayol’s General and Industrial Management, Pitman Publishing (1988). 10. See, for example: Rose, A. and Lawton, A. Public Services Management, Financial Times Prentice Hall (1999) and Flynn, N. Public Sector Management, Fourth edition, Financial Times Prentice Hall (2002). 11. Bailey-Scudamore, I. ‘The Changing Role of Administration within Organisations’, Administrator, January 1995, pp. 16–18. 12. Robinson, G. ‘No, we can’t do that – have a nice day!’, The British Journal of Administrative Management, March/April 2000, p. 22. 13. Naylor, J. Management, Second edition, Financial Times Pitman Publishing (2004), p. 7. 14. Drummond, H. Introduction to Organizational Behaviour, Oxford University Press (2000), p. 40. 15. Fayol, H. General and Industrial Management, Pitman (1949). 16. Moorcroft, R. ‘Managing in the 21st Century’, The British Journal of Administrative Management, January/ February 2000, pp. 8–10. 17. Brech, E. F. L. Principles and Practice of Management, Third edition, Longman (1975), p. 19. 18. Simon, H. A. The New Science of Management Decision, Revised edition, Prentice-Hall (1977). 19. Drucker, P. F. People and Performance, Heinemann (1977), p. 28. 20. Ibid., p. 59. 21. For a summary, see: Mullins, L. J. ‘The Essential Nature of Managerial Work’, Industrial Management & Data Systems, May/June 1987, pp. 15–17. 22. Merriden, T. ‘Rosabeth Moss Kanter’, Management Today, February 1997, p. 56. 23. Stewart, R. The Reality of Management, Third edition, Butterworth Heinemann (1999) p. 6. 24. Parker, Sir Peter ‘The Shape of Leaders to Come’, Management Today, July 1994, p. 5. 25. Jones, P. (ed.) Management in Service Industries, Pitman Publishing (1989). 26. Riley, M. Human Resource Management in the Hospitality & Tourism Industry, Second edition, ButterworthHeinemann (1996). 27. See, for example, Wilson, F. M. Organizational Behaviour: A Critical Introduction, Oxford University Press (1999), pp. 73–4. 28. See, for example: Mullins, L. J. Hospitality Management and Organisational Behaviour Fourth edition, Longman (2001). 29. See, for example: Rose, A. and Lawton, A. (eds) Public Services Management, Financial Times Prentice Hall (1999) and Flynn, N. Public Sector Management, Fourth edition, Financial Times Prentice Hall (2002). 30. Robinson, G. ‘Improving Performance through People’, The British Journal of Administrative Management, September/October 1999, p. 4. 31. Bourn, J. Management in Central and Local Government, Pitman Publishing (1979), pp. 17–18. 32. Hannagan, T. Management: Concepts and Practices, Third edition, Financial Times Prentice Hall (2002), pp. 31–2. 33. Drucker, P. F. Management Challenges for the 21st Century, Butterworth Heinemann (1999), p. 8. 34. Fenlon, M. ‘The Public Spirit’, Mastering Leadership, Financial Times, 22 November 2002, pp. 4–5. 35. Stewart, J. ‘Managing Difference’, Chartered Secretary, October 2003, p. 31. 36. For a useful summary of the work of the manager, see for example: Birchall, D. W. ‘What Managers Do’, in CHAPTER 6 THE NATURE OF MANAGEMENT 37. 38. 39. 40. 41. 42. 43. 44. 45. 46. 47. 48. 49. Crainer, S. and Dearlove, D. (eds) Financial Times Handbook of Management Second edition, Financial Times Prentice Hall (2001), pp. 110–31. Mintzberg, H. The Nature of Managerial Work, Harper and Row (1973). Mintzberg, H. ‘The Manager’s Job: Folklore and Fact’, Harvard Business Review Classic, March–April 1990, pp. 163–76. Wolf, F. M. ‘The Nature of Managerial Work: An Investigation of the Work of the Audit Manager’, Accounting Review, vol. LVI, no. 4, October 1981, pp. 861–81. Shortt, G. ‘Work Activities of Hotel Managers in Northern Ireland: A Mintzbergian Analysis’, International Journal of Hospitality Management, vol. 8. no. 2, 1989, pp. 121–30. McCall, M. W. and Segrist, C. A. In Pursuit of the Manager’s Job: Building on Mintzberg, Center for Creative Learning, Greenboro, NC (1980). Kotter, J. P. The General Managers, The Free Press (1982). Kotter, J. P. ‘What Effective General Managers Really Do’, Harvard Business Review, vol. 60, no. 6, November–December 1982, pp. 156–67. Luthans, F. ‘Successful vs. Effective Real Managers’, The Academy of Management Executive, vol. 11, no. 2, May 1988, pp. 127–32. Stewart, R. Contrasts in Management, McGraw-Hill (1976). Stewart, R. Choices for the Manager, McGraw-Hill (1982). See also: Stewart, R. Managing Today and Tomorrow, Macmillan (1991). Stewart, R. ‘Managerial Behaviour: How Research has Changed the Traditional Picture’, in Earl, M. J. (ed.) Perspectives on Management: A Multidisciplinary Analysis, Oxford University Press (1983), pp. 96–7. Katz, R. L. ‘Skills of an Effective Administrator’, Harvard Business Review, September–October 1974, pp. 90–102. FT 50. See, for example: Lane, T., Snow, D. and Labrow, P. ‘Learning to succeed with ICT’, The British Journal of Administrative Management, May/June 2000, pp. 14–15. 51. Green, J. ‘When Was Your Management Style Last Applauded?’, Chartered Secretary, December 1998, pp. 28–9. 52. Douglas, M. ‘Why “Soft Skills” Are an Essential Part of the Hard World of Business’, Manager, The British Journal of Administrative Management, No. 34, Christmas 2002/New Year 2003, p. 34. 53. Misselhorn, H. The Head and Heart of Management, Management and Organization Development Consultants, South Africa (2003), pp. 12–13. 54. Drucker, P. F. The Practice of Management, Heinemann Professional (1989), p. 377. 55. Drucker, P. F. Management Challenges for the 21st Century, Butterworth Heinemann (1999), p. 40. 56. Billsberry, J. (ed.) The Effective Manager: Perspectives and Illustrations, Sage Publications (1996). 57. Belbin, R. M. Changing the Way we Work, ButterworthHeinemann (1997), p. 95. 58. Heller, R. In Search of European Excellence, HarperCollins Business (1997), p. xvi. 59. Prahalad, C. K. ‘Emerging Work of Managers’ in Chowdhury, S. Management 21C, Financial Times Prentice Hall (2000) pp. 141–50. 60. Poole, M. and Mansfield, R. Two Decades of Management, Chartered Management Institute, June 2001. 61. Cloke, K. and Goldsmith, J. The End of Management; and the Rise of Organizational Democracy, Jossey-Bass (2002). 62. Ward, T. R. Management Services – The Way Ahead, National O & M Conference, 1964; published as an Anbar Monograph, Anbar Publications (1965). Use the Financial Times to enhance your understanding of the context and practice of management and organisational behaviour. Refer to articles 2, 6, 8, 9 and 16 in the BUSINESS PRESS section at the end of the book for relevant reports on the issues explored in this chapter. 235 7 MANAGERIAL BEHAVIOUR AND EFFECTIVENESS It is the responsibility of managers to manage, and to achieve results through the utilisation of human resources and the efforts of other people. The way in which managers exercise their responsibilities and duties is important. Consideration must be given to the effective management of people. Managers are only likely to be successful if they adopt certain basic managerial philosophies and an appropriate style of behaviour. Attention must be given to managerial performance and effectiveness. LEARNING OUTCOMES Photo: Press Association After completing this chapter you should be able to: contrast different attitudes and assumptions of managers about human nature and behaviour at work; examine managerial styles in terms of concern for production and concern for people; A good manager’s success depends on the ability to develop and motivate others. Mary Kay Ash Mary Kay On People Management, Macdonald & Co. (1984) assess different systems of management and relate these systems to organisational characteristics; appreciate the importance of adopting an appropriate style of managerial behaviour and approach to the management of people; review basic, underlying philosophies for the successful management of people; analyse managerial effectiveness and suggest criteria for evaluating the effectiveness of managers; recognise the importance of the management of time and distinguish activitiy from effectiveness. Good management is not just a bright tool-kit of techniques and specifications, although the professional skills are essential. It involves the art of entrepreneurship and leadership, it means managing change, including change itself. (Sir) Peter Parker Sunday Times (6 October 1985) Managerial skills cannot be painted on the outside of executives – it has to go deeper than that. Mary Parker Follet Freedom & Co-ordination (1949) CHAPTER 7 MANAGERIAL BEHAVIOUR AND EFFECTIVENESS MANAGERIAL STYLE AND BEHAVIOUR An essential ingredient of any successful manager is the ability to handle people effectively. People respond according to the manner in which they are treated. The behaviour of managers and their style of management will influence the effort expended and level of performance achieved by subordinate staff. To repeat the point made in Chapter 2 – in the belief of the author, the majority of people come to work with the original attitude of being eager to do a good job, and desirous of performing well and to the best of their abilities. Where actual performance fails to match the ideal this is largely a result of how staff perceive they are treated by management. There is, therefore, a heavy responsibility on managers and on the styles and systems of management adopted. Management has become more about managing people than managing operations; unless we have harnessed the full potential of our people even the best plans are likely to be less than successful. Furthermore, it has also become evident that releasing the potential of our people involves more than simply providing them with the best training and a clear company strategy. We have to gain their support and commitment by providing an environment in which they will thrive as individuals. Glyn Macken, Deputy Director General, The Institute of Management1 The changing nature of the work environment is reflected in changes in the traditional boss–subordinate relationship. No longer can managers rely solely on their perceived formal authority as a result of a hierarchical position in the structure of the organisation. As Stewart, for example, points out, managing is more a matter of enlisting the co-operation of other people, including those who because of increasing subcontracting may not even be employees of the organisation. ‘Authority is, and is likely to continue to be, less acceptable than in the past. This reflects a major change in society: what has been termed the end of the grateful society. Better educated and more independent people expect to be consulted rather than to be told what to do.’2 As Greenhalgh points out, it is clear that managers today face a new era for business and need to face up to the new opportunities and constraints. Successful management involves adapting to the new order. Gone is the notion of the corporate leader as the person who supplied the vision, decided on the appropriate strategy and tactics to achieve that vision, then assigned tasks of implementation to a hierarchy of subordinates. Also gone is the notion of worker-as-robot, someone who didn’t think but merely performed as instructed. Such notions have been replaced by decentralisation rather than top-down decision making, empowered rather than mindless subordinates, teamwork rather than individualistic performance, and customers or clients – rather than top management – as the drivers of decisions … The new generation of knowledge workers don’t think of themselves as ‘subordinates’: they consider themselves independent professionals who can be given a general goal and be left to accomplish it without ‘micromanagement’. They look to managers to facilitate their achievement rather than to direct and control their work.3 It is clear, then, that with the general movement towards flatter organisation structures, flexible working and greater employee empowerment, there is greater emphasis on an integrating rather than a traditional controlling style of management. Management style and behaviour can be as important as management competence. 237 238 PART 3 THE ROLE OF THE MANAGER MANAGERS’ ATTITUDES TOWARDS PEOPLE The way in which managers approach the performance of their jobs and the behaviour they display towards subordinate staff is likely to be conditioned by predispositions about people, and human nature and work. Drawing on Maslow’s hierarchy of needs model (which is discussed in Chapter 12), McGregor put forward two suppositions about human nature and behaviour at work. He argues that the style of management adopted is a function of the manager’s attitudes towards people and assumptions about human nature and behaviour. The two suppositions are called Theory X and Theory Y, and are based on polar assumptions about people and work.4 Theory X assumptions about human nature Theory X represents the carrot-and-stick assumptions on which traditional organisations are based, and was widely accepted and practised before the development of the human relations approach. Its assumptions are that: ■ ■ ■ ■ the average person is lazy and has an inherent dislike of work; most people must be coerced, controlled, directed and threatened with punishment if the organisation is to achieve its objectives; the average person avoids responsibility, prefers to be directed, lacks ambition and values security most of all; and motivation occurs only at the physiological and security levels. The central principle of Theory X is direction and control through a centralised system of organisation and the exercise of authority. McGregor questions whether the Theory X approach to human nature is correct, and the relevance today of management practices which are based upon it. Assumptions based on a Theory X approach, and the traditional use of rewards and sanctions exercised by the nature of the manager’s position and authority, are likely to result in an exploitative or authoritarian style of management. Theory Y assumptions about human nature At the other extreme to Theory X is Theory Y which represents the assumptions consistent with current research knowledge. The central principle of Theory Y is the integration of individual and organisational goals. Its assumptions are: ■ ■ ■ ■ ■ ■ ■ for most people work is as natural as play or rest; people will exercise self-direction and self-control in the service of objectives to which they are committed; commitment to objectives is a function of rewards associated with their achievement; given the right conditions, the average worker can learn to accept and to seek responsibility; the capacity for creativity in solving organisational problems is distributed widely in the population; the intellectual potential of the average person is only partially utilised; and motivation occurs at the affiliation, esteem and self-actualisation levels as well as the physiological and security levels. McGregor implies that a Theory Y approach is the best way to elicit co-operation from members of an organisation. It is the task of management to create the conditions in which individuals may satisfy their motivational needs, and in which they achieve their own goals through meeting the goals of the organisation. McGregor develops an analysis of the implications of accepting Theory Y in regard to performance appraisal, administration of salaries and promotions, participation, staff–line relationships, leadership, management development and the managerial team. CHAPTER 7 MANAGERIAL BEHAVIOUR AND EFFECTIVENESS Managerial strategies Although Theory X and Theory Y are based on polar extremes and are an oversimplification, they do represent identifiable philosophies which influence managerial behaviour and strategies. For example, as Lord Sieff comments: Now and again it is necessary to criticize people, but rather than tick them off, provided you can leave them in no doubt as to what the issue is, I am sure it pays to avoid being censorious but try instead to appeal to the innate capacity for self-criticism. Whatever you do, avoid making a mountain out of a molehill.5 Most people have the potential to be self-motivating. They can best achieve their personal goals through self-direction of their efforts towards meeting the goals of the organisation. Broadening educational standards and changing social values mean that people today have wider expectations of the quality of working life, including opportunities for consultation and participation in decisions which affect them. Managers should develop practices based more on an accurate understanding of human behaviour and motivation. The Theory Y approach, however, is not a ‘soft’ option. In practice it is often difficult to achieve successfully. It can be frustrating and time-consuming, and mistakes will occur. Since 1952 I’ve been stumbling around buildings and running primitive Theory Y departments, divisions, and finally one whole Theory Y company: Avis. In 1962, after thirteen years, Avis had never made a profit (except one year when they jiggled their depreciation rates). Three years later the company had grown internationally (not by acquisitions) from $30 million in sales to $75 million in sales, and had made successive annual profits of $1 million, $3 million, and $5 million. If I had anything to do with this, I ascribe it all to my application of Theory Y. And a faltering, stumbling, groping, mistake-ridden application it was. Robert Townsend6 Demands of the situation The two views of Theory X and Theory Y tend to represent extremes of the natural inclination of managers towards a particular style of behaviour. In practice, however, the actual style of management behaviour adopted will be influenced by the demands of the situation.7 Where the job offers a high degree of intrinsic satisfaction or involves a variety of tasks, an element of problem-solving and the exercise of initiative, or where output is difficult to measure in quantitative terms, an informal, participative approach would seem to be more effective. It is more likely to lead to a higher level of staff morale. In many cases this would apply to work of a scientific, technical or professional nature. Where commitment to the goals of the organisation is almost a prerequisite of membership, such as in certain voluntary or charity organisations, for example, then a Theory Y approach would clearly seem to be most appropriate. Use of a Theory X approach However, even if a manager has a basic belief in Theory Y assumptions there may be occasions when it is necessary, or more appropriate, to adopt a Theory X approach. When the nature of the job itself offers little intrinsic reward or limited opportunities to satisfy higher-level needs, a more dictatorial style of management might work best. Some jobs are designed narrowly, with highly predictable tasks, and output measured precisely. This is the case, for example, with many complex production processes in manufacturing firms. With these types of jobs a Theory X approach may be needed if an adequate level of performance is to be maintained. 239 240 PART 3 THE ROLE OF THE MANAGER A Theory X approach is also indicated in emergency situations, or where shortage of time or other overriding factors demand the use of authority in directing actions to the tasks in hand. For example, in the hustle, heat and noise of a busy hotel kitchen preparing fresh meals for a large banquet, with many tasks to be co-ordinated over very short time scales, it seems to be recognised that a Theory X style of management is most appropriate. In such circumstances this style of management appears to be accepted by the kitchen staff. If subordinates match the Theory Y assumptions of the manager, then this style of management may well be effective. However, there are many staff who, whatever the nature of their job, do not wish to accept responsibility at work. They seem to prefer, and respond better to, a more directed and controlled style of management. There are times, therefore, when the manager may be justified in adopting Theory X assumptions about staff. JAPANESE ‘THEORY Z’ ENVIRONMENT Developing the work of McGregor, a comparison of management style and practice in different cultural settings is provided by Ouchi. In contrast to the traditional, more bureaucratic American organisational environment, Ouchi recommends a Japanese style ‘Theory Z’ environment. The problem of productivity in the United States will not be solved with monetary policy nor through more investment in research and development. It will only be remedied when we learn how to manage people in such a way that they can work together more effectively. Theory Z offers several such ways.8 The characteristics of a Theory Z organisation are described by Ouchi as: ■ ■ ■ ■ ■ ■ ■ long-term employment, often for a lifetime; relatively slow process of evaluation and promotion; development of company-specific skills, and moderately specialised career path; implicit, informal control mechanisms supported by explicit, formal measures; participative decision-making by consensus; collective decision-making but individual ultimate responsibility; broad concern for the welfare of subordinates and co-workers as a natural part of a working relationship, and informal relationships among people. In Britain, the operations of the successful Marks & Spencer organisation have been likened to a manner that approaches the typical Japanese company, and with close similarities to the characteristics of a Theory Z organisation.9 Japanese industry and management According to Ouchi, type Z organisations would be more effective as a result of an emphasis on trust, which goes hand in hand with productivity; a less hierarchical and bureaucratic structure; and higher levels of worker involvement; all of which would create a distinctive company style and culture. His ideas generated considerable debate about the nature of Japanese industry and Japanese managers which still, to some extent, continues today.10 Note also that while many British and US organisations once attempted to emulate Japanese methods and styles of management, with mixed results, there is now evidence of a reversal of this trend with Japanese corporations moving away from a Theory Z environment and restructuring along the lines of Western organisations.11 CHAPTER 7 MANAGERIAL BEHAVIOUR AND EFFECTIVENESS The cynic might describe efforts to turn Theory Y into practice as doing with difficulty what comes naturally to the Japanese. There, excellent managers apply principles of behaviour which translate perfectly into western language – and which have long been echoed in the progressive areas of the west. Yet you still encounter the old ostrich attitudes that caused western companies so much damage in the past: for instance, the argument that to emulate Japan is impossible because of its peculiar culture. But the famous national enthusiasm for good business and effective management isn’t simply a product of Japan’s culture. After all, sloppy western habits, like investing too little in productive capacity, new products, training, quality and marketing are hardly cultural – not unless bad business economics are built into the western mentality. Robert Heller 12 THE MANAGERIAL/LEADERSHIP GRID® One means of describing and evaluating different styles of management is the Blake and Mouton Managerial Grid® (see Figure 7.1). First published as the Managerial Grid in 1964, restated in 1978 and 198513 and republished in 1991 as the Leadership Grid,14 the Grid provides a basis for comparison of managerial styles in terms of two principal dimensions: ■ ■ concern for production; and concern for people. Concern for production is the amount of emphasis which the manager places on accomplishing the tasks in hand, achieving a high level of production and getting results or profits. This is represented along the horizontal axis of the Grid. Concern for people is the amount of emphasis which the manager gives to subordinates and colleagues as individuals and to their needs and expectations. This is represented along the vertical axis of the Grid. Five basic combinations ‘Concern for’ is not how much concern, but indicates the character and strength of assumptions which underlie the manager’s own basic attitudes and style of management. The significant point is ‘how’ the manager expresses concern about production or about people. The four corners and the centre of the Grid provide five basic combinations of degree of concern for production coupled with degree of concern for people (see Figure 7.1(a)). ■ ■ ■ ■ ■ the impoverished manager (1,1 rating), low concern for production and low concern for people; the authority–compliance manager (9,1 rating), high concern for production and low concern for people; the country club manager (1,9 rating), low concern for production and high concern for people; the middle-of-the-road manager (5,5 rating), moderate concern for production and moderate concern for people; and the team manager (9,9 rating), high concern for production and high concern for people. Managers with a 1,1 rating tend to be remote from their subordinates and believe in the minimum movement from their present position. They do as little as they can with production or with people. Too much attention to production will cause difficulties with staff and too much attention to the needs of staff will cause problems with production. 241 PART 3 THE ROLE OF THE MANAGER (a) High 9 1,9 8 7 Concern for people 242 9,9 Country club management Team management Thoughtful attention to the needs of people for satisfying relationships leads to a comfortable, friendly organisation atmosphere and work tempo. Work accomplishment is from committed people; interdependence through a ‘common stake’ in organisation purpose leads to relationships of trust and respect. 6 Middle-of-the-road management 5,5 5 Adequate organisation performance is possible through balancing the necessity to get work out while maintaining morale of people at a satisfactory level. 4 3 Impoverished management 2 1 Authority–compliance management Exertion of minimum effort to get required work done is appropriate to sustain organisation membership. Efficiency in operations results from arranging conditions of work in such a way that human elements interfere to a minimum degree. 1,1 9,1 Low 1 2 3 Low 4 5 6 7 8 9 High Concern for results (b) (c) Opportunism 1,9 9,9 1,9 1,9 9+9 9,1 9+9 5,5 1,1 9,1 In Opportunistic management, people adapt and shift to any Grid style needed to gain the maximum advantage. Performance occurs according to a system of selfish gain. Effort is given only for an advantage or personal gain. 9,1 9+9: Paternalism/maternalism Reward and approval are bestowed to people in return for loyalty and obedience; failure to comply leads to punishment Figure 7.1 The Leadership Grid® (Source: Blake, R. R. and McCanse, A. A. (1991) Leadership Dilemmas – Grid Solutions, Gulf Publishing Co., Houston (1991), Grid Figure, p. 29, Paternalism Figure, p. 30, Opportunism Figure, p. 31. Reproduced by permission of Grid International, Inc.) CHAPTER 7 MANAGERIAL BEHAVIOUR AND EFFECTIVENESS Managers with a 9,1 rating are autocratic. They tend to rely on a centralised system and the use of authority. Staff are regarded as a means of production and motivation is based on competition between people in order to get work done. If staff challenge an instruction or standard procedure they are likely to be viewed as unco-operative. The 1,9 rating managers believe that a contented staff will undertake what is required of them and achieve a reasonable level of output. Production is secondary to the avoidance of conflict and maintenance of harmony among the staff. Managers will seek to find compromises between staff and solutions acceptable to everyone. Although innovation may be encouraged, they tend to reject good ideas if likely to cause difficulties among the staff. The 5,5 rating is the middle-of-the-road management with the approach of ‘live and let live’ and a tendency to avoid the real issues. This style of management is the ‘dampened pendulum’ with managers swinging between concern for production and concern for people. Under pressure, this style of management tends to become task management (9,1). Where this strains relations and causes resentment from staff, however, pressure is eased and managers adopt a compromise approach. If there is a swing too much the other way (towards 1,9) managers are likely to take a tighter and more hardened approach. Managers with a 9,9 rating believe in the integrating of the task needs and concern for people. They believe in creating a situation whereby people can satisfy their own needs by commitment to the objectives of the organisation. Managers will discuss problems with the staff, seek their ideas and give them freedom of action. Difficulties in working relationships will be handled by confronting staff directly and attempting to work out solutions with them. These five styles of management represent the extremes of the Grid. With a nine-point scale on each axis there is a total of 81 different ‘mixtures’ of concern for production and concern for people. Most people would come up with a score somewhere in an intermediary position on the Grid. Two additional grid styles 1991 edition of the Grid also covers two additional styles: opportunism and 9+9 paternalism/maternalism, which take account of the reaction of subordinates. ■ ■ In opportunistic management, organisational performance occurs according to a system of exchanges, whereby effort is given only for an equivalent measure of the same. People adapt to the situation to gain maximum advantage of it. (See Figure 7.1(b).) In 9+9 paternalistic/maternalistic management, reward and approval are granted to people in return for loyalty and obedience; and punishment is threatened for failure to comply (see Figure 7.1(c)). A summary of the seven basic combinations of the Grid is given in Table 7.1. FRAMEWORK FOR PATTERNS OF BEHAVIOUR The Managerial Grid provides a framework in which managers can identify, study and review their patterns of behaviour. Instead of viewing management styles as a dichotomy of ‘either/or’, Blake and Mouton claim that the Managerial Grid illustrates that the manager can gain the benefits of maximising, simultaneously, methods which are both production-oriented and people-oriented. The 9,9 position, although an ideal, is worth working for. Based on their experience of using the original Grid, Blake and Mouton give three reasons why it is important to consider which style of management is used to achieve production through people. 243 244 PART 3 THE ROLE OF THE MANAGER Table 7.1 Leadership Grid® style definitions 9,1 Authority– compliance management Managers in this position have great concern for production and little concern for people. People are seen as ‘tools’ for production. They demand tight, unilateral control in order to complete tasks efficiently. They consider creativity and human relations to be unnecessary. 1,9 Country club management Managers in this position have great concern for people and little concern for production. They try to avoid conflicts and concentrate on being liked, even at the expense of production. To them the task is less important than good interpersonal relations. Their goal is to keep people happy. (This is a soft Theory X and not a sound human relations approach.) 1,1 Impoverished management This style is often referred to as laissez-faire. Leaders in this position have little concern for people or productivity. They avoid taking sides and stay out of conflicts. They do just enough to maintain group membership. 5,5 Middle-ofthe-road management Leaders in this position have medium concern for both people and production. They rely on tried and true techniques and avoid taking untested risks. They attempt to balance their concern for both people and production, but are not committed strongly to either. Conflict is dealt with by avoiding extremes and seeking compromise rather than sound resolution. 9+9 Paternalistic ‘father knows best’ management This leader takes the high 9 level of concern from 9,1 and 1,9 to create a combined style of controlling paternalism. The paternalist strives for high results (high 9 from 9,1) and uses reward and punishment to gain compliance (high 9 from 1,9). The paternalist uses a high level of concern for people to reward for compliance or punish for rejection. Opportunistic ‘what’s in it for me’ management The opportunist uses whatever Grid style is needed to obtain selfish interest and self promotion. They adapt to situations to gain the maximum advantage. They may use 9,1 to push their own goals with one person, and 1,9 to gain trust and confidence with another. Performance occurs according to a system of exchanges. Effort is given only for an equivalent measure of the same. 9,9 Team management These managers demonstrate high concern for both people and production. They work to motivate employees to reach their highest levels of accomplishment. They explore alternatives openly and aggressively. They are flexible and responsive to change. This style is considered ideal. (Source: Blake, R. R. and McCanse, A. A. (1991) Leadership Dilemmas – Grid Solutions, Gulf Publishing Co., Houston (1991), p.29. Reproduced by permission of Grid International, Inc.) ■ ■ ■ The 9,9 style of management correlates positively with bottom line productivity. 9,9 oriented managers enjoy maximum career success. There is now greater knowledge about the correlation between extreme grid styles of management, and mental and physical health. Dominant style From their research, Blake and Mouton emphasise that managers may switch from one of management style to another or combine elements of different styles. However, they also found that managers tend to have one dominant style of management which they use more often than any other. They found also that many managers have a ‘back-up’ style which they adopt if their dominant style does not work in a particular situation. The dominant style of management is influenced in any particular situation by any of four conditions. CHAPTER 7 ■ ■ ■ ■ Relevance today MANAGERIAL BEHAVIOUR AND EFFECTIVENESS Organisation – the nature of the organisation in which the manager is employed, and the extent to which there are rigid rules and regulations. Values – the personal values, beliefs or ideals which the manager holds concerning how to treat people or to manage results. Personal history – the deep-rooted personal history of the manager may be an important factor, and lead to a preference for a particular approach because that style may have been experienced frequently in the past. Chance – the manager may not have been confronted with, or had personal experience of, alternative sets of assumptions about how to manage. ‘Chance’ has not provided the manager with an opportunity to learn. From a review of the Managerial Grid programme, Lester believes it undoubtedly lends itself supremely well to training programmes. Although its relevance to real-life issues is less sure, in presenting a sophisticated learning package the Grid provides many potential applications for those who wish to study organisation development.15 According to Newborough, ‘an organisation’s structure, plan and concept are crucial to its effectiveness. Yet beyond these, the most significant single factor is the behaviour of the management team. Its members must act as leaders. They must accomplish their objectives through their ability to guide, motivate and integrate the efforts of others.’ The ultimate purpose of studies of managerial style is to aid in the training and development of those who wish to become better leaders. Grid organization development identifies and applies relevant aspects of behavioural science, and Newborough maintains that the Managerial/Leadership Grid is as relevant today as when it was first launched.16 And according to Crainer and Dearlove: ‘Crude at it is, the Grid helps people who are not conversant with psychology to see themselves and those they work with more clearly, to understand their interactions, and identify the sources of resistance and conflicts.’17 MANAGEMENT SYSTEMS Work by McGregor, and by Blake and Mouton, suggests that an organisation is more likely to harness its staffing resources effectively if there is a participative style of management. This view is supported by the work of Likert. On the basis of a questionnaire to managers in over 200 organisations and research into the performance characteristics of different types of organisations, Likert identifies a four-fold model of management systems.18 These systems are designated by number: System 1 System 2 System 3 System 4 ■ ■ ■ Exploitive authoritative Benevolent authoritative Consultative Participative System 1 – Exploitive authoritative. Decisions are imposed on subordinates, motivation is based on threats, there is very little teamwork or communication; responsibility is centred at the top of the organisational hierarchy. System 2 – Benevolent authoritative. There is a condescending form of leadership, motivation is based on a system of rewards, there is only limited teamwork or communication; there is responsibility at managerial levels but not at lower levels of the organisational hierarchy. System 3 – Consultative. Leadership involves some trust in subordinates, motivation is based on rewards but also some involvement, there is a fair degree of teamwork, and communication takes place vertically and horizontally; responsibility 245 246 PART 3 THE ROLE OF THE MANAGER ■ for achieving the goals of the organisation is spread more widely throughout the hierarchy. System 4 – Participative group. Leadership involves trust and confidence in subordinates, motivation is based on rewards for achievement of agreed goals, there is participation and a high degree of teamwork and communication; responsibility for achieving the goals of the organisation is widespread throughout all levels of the hierarchy. Profile of organisational characteristics Likert has also established a ‘profile of organisational characteristics’ describing the nature of the four different management systems. The profile compares the four systems in terms of a table of organisational variables under the headings of: 1 2 3 4 5 6 7 leadership processes; motivational forces; communication process; interaction–influence process; decision-making process; goal-setting or ordering; and control processes. Using this table, Likert undertook a survey of several hundred managers comprising different groups from a wide range of experience, and in both line and staff positions. His studies confirmed that least productive departments or units tended to employ management practices within Systems 1 and 2, and the most productive departments or units employed management practices within Systems 3 and 4. A shorter and simpler form of the profile of organisational characteristics is provided by Likert and Likert (Figure 7.2).19 SYSTEM 4 MANAGEMENT The nearer the behavioural characteristics of an organisation approach System 4 the more likely this will lead to long-term improvement in staff turnover and high productivity, low scrap, low costs and high earnings. Likert sets out three fundamental concepts of System 4 management. These are the use of: ■ ■ ■ Supportive relationships the principle of supportive relationships among members of the organisation and in particular between superior and subordinate; group decision-making and group methods of organisation and supervision; and high performance aspirations for all members of the organisation. Supportive relationships are intended to enhance self-esteem and ego building, contribute to subordinates’ sense of personal worth and importance, and maintain their sense of significance and dignity. The superior’s behaviour is regarded as supportive when this entails: ■ ■ ■ ■ ■ ■ mutual confidence and trust; help to maintain a good income; understanding of work problems and help in doing the job; genuine interest in personal problems; help with training to assist promotion; sharing of information; CHAPTER 7 MANAGERIAL BEHAVIOUR AND EFFECTIVENESS Figure 7.2 Short form profile of organisational characteristics (Source: Adapted from Likert, R. and Likert, J. G., New Ways of Managing Conflict, McGraw-Hill (1976) p. 75. Reproduced with permission from the McGraw-Hill Companies Inc.) ■ ■ ■ seeking opinions about work problems; being friendly and approachable; and giving credit and recognition where due. Group decision-making and supervision use an overlapping form of structure. Individuals Group decision-making known as ‘linking-pins’ are members not only of their own group but also of the next superior group and, where appropriate, of peer groups. This enables each work group to be linked to the rest of the organisation. In System 4 management interaction and decision-making rely heavily on group processes, and discussions focus on the decisions to be made. Likert emphasises that group methods of decision-making should not be confused with the use of committees. With the group method of decision-making the superior is held responsible for the quality and implementation of decisions. The superior is responsible for developing subordinates into an effective group. 247 PART 3 THE ROLE OF THE MANAGER In considering high performance aspirations, Likert refers to studies which suggest that employees generally want stable employment and job security, opportunities for promotion, and satisfactory compensation. They want, also, to feel proud of their organisation, and its performance and accomplishments. In System 4 management, superiors should therefore have high performance aspirations, but so also should every member of the organisation. To be effective, these high performance goals should not be imposed but set by a participative mechanism involving group decision-making and a multiple overlapping group structure. The mechanism should enable employees to be involved in setting high performance goals which help to satisfy their own needs. Causal, intervening and end-result variables Likert also refers to three broad classes of variables relating to the firm’s human organisation and its operations: (i) causal, (ii) intervening and (iii) end-result. ■ ■ ■ Causal variables are independent variables which can be amended by the organisation and its management, for example management policies, the structure of an organisation, and leadership strategies. Causal variables determine development of an organisation and the results it achieves. Intervening variables indicate the internal health of the organisation, for example the loyalties, attitudes, motivations and performance of members and their collective capacity for interaction, communication and decision-making. End-result variables indicate the final outcome and reflect the influences of intervening variables. The end-result variables reflect the achievement of the organisation, for example productivity, costs, scrap, earnings. Attempts to improve the intervening variables are likely to be more successful through changing the causal variables, rather than changing directly the intervening variables. End-result variables are most likely to be improved by changing the causal variables, rather than the intervening variables. In Figure 7.3 Likert gives a simplified example of the interrelationships between causal, intervening and end-result variables in the System 1 or 2, and System 4 management. The arrows indicate the pattern of relationships between the three classes of variables. The presence of these variables yields these variables which, in turn, lead to these variables Causal variables End-result variables Intervening variables 6 System 4 Principle of supportive relationships Favourable attitudes towards superior High confidence in trust High reciprocal influence Excellent communication: up, down, lateral High peer group loyalty 1 Group decision-making in a multiple, overlapping group structure Low absence and turnover 10 High productivity Low scrap Low costs High earnings 2 7 3 High peer performance goals at all levels re: productivity, quality, scrap High performance goals System 1 or 2 248 High productivity over short run Low productivity and earnings over long run 5 Compliance based on fear High pressure via: tight work standards, personnel limitations, tight budgets imposed 4 Unfavourable attitudes, e.g., little confidence and trust Poor communication Low levels of influence Low levels of co-operative motivation Low peer performance goals Restriction of output 8 11 High absence and turnover 9 Figure 7.3 Simplified diagram of relationships among variables for System 1 or 2 and System 4 operation (Source: Likert, R., The Human Organization, McGraw-Hill (1967) p. 137. Reproduced with permission from the McGraw-Hill Companies Inc.) CHAPTER 7 MANAGERIAL BEHAVIOUR AND EFFECTIVENESS MANAGEMENT BY OBJECTIVES (MBO) One particular participative approach to the activities involved in planning, organisation, direction and control, and to the execution of work, is Management by Objectives (MBO). MBO is a phrase used to describe a style or system of management which attempts to relate organisational goals to individual performance and development through the involvement of all levels of management. The underlying basis of a system of MBO is: ■ ■ ■ the setting of objectives and targets; participation by individual managers in agreeing unit objectives and criteria of performance; and the continual review and appraisal of results. The phrase Management by Objectives appears to have been introduced by Drucker in 1954.20 The approach was taken up by McGregor who advocated its use as a preferred means of goal-setting, appraisal of managerial performance and self-assessment. The system of MBO has been adopted in a wide range of organisational settings, in the public as well as the private sector. The cycle of MBO activities MBO involves a continuous cycle of interrelated activities. (See Figure 7.4.) ■ The clarification of organisational goals and objectives. These should be communicated clearly to, and understood fully by, all members of staff. Figure 7.4 The cycle of MBO activities 249 250 PART 3 THE ROLE OF THE MANAGER ■ ■ ■ ■ ■ ■ Review of organisational structure. The need is for a flexible structure and systems of management which make for effective communications, quick decision-making and timely feedback information. Participation with subordinates in order to gain their willing acceptance of objectives and targets, key result areas, and standards and measurements of performance. Agreement on performance improvement plans which will enable subordinates to make the optimum contribution to: (i) meeting their own objectives and targets; and (ii) improved organisational performance. Establishment of an effective monitoring and review system for appraisal of progress and performance, including self-checking and evaluation. Undertaking any necessary revisions to, or restatement of, subordinates’ objectives and targets. Review of organisational performance against stated goals and objectives. To be fully effective, MBO also needs to be linked with a meaningful system of rewards and career progression which recognises the subordinate’s level of contribution and performance. EVALUATION OF MBO MBO is potentially an attractive system. It provides an opportunity for staff to accept greater responsibility and to make a higher level of personal contribution. There is much to recommend it to both the organisation and individual managers. MBO, however, is not a panacea and it is subject to a number of criticisms and potential limitations. MBO has been likened to a modern form of scientific management. It is also subject to the same possible criticisms of too great an emphasis on individual job definitions together with a management authority structure, and the assumption of no conflict between individual and organisational goals. For example, according to Crainer: In practice, MBO demanded too much data. It became overly complex and also relied too heavily on the past to predict the future. The entire system was ineffective at handling, encouraging or adapting to change. MBO simplified management to a question of reaching A from B using as direct route as possible. Under MBO, the ends justified the means.21 It is not always easy to set specific targets or figures for certain more senior jobs, or where the work involves a high degree of self-established role prescriptions (discussed in Chapter 13). The same might apply to jobs which require a high level of interpersonal relationships, especially where this involves confidential matters, such as counselling. There is a potential danger that where objectives and targets are more difficult to specify and measure in precise terms these are neglected, and greater emphasis is placed on objectives which are more easily monitored. Relevance today MBO appears to have suffered a decline in popularity. However, there are still differences in opinion. Rodgers and Hunter point out that MBO was originally designed as a synthesis of three interventions found to increase productivity: participative management, goal-setting and objective feedback. They suggest that recent survey studies indicate that MBO is a widely used management system in both private and public sector although the form and impact of MBO programmes vary considerably. From a meta-analysis of 70 evaluation studies, Rodgers and Hunter found productivity gains in 68 studies. However, studies of MBO implementation suggest some programmes have CHAPTER 7 MANAGERIAL BEHAVIOUR AND EFFECTIVENESS been abandoned and others show modest effects. Furthermore, MBO is only fully effective if introduced with the full support and participation of top management.22 By contrast, however, Heller paints a far less optimistic picture. He suggests that: MBO had only one defect: it didn’t work. No matter how much care had been taken in formulating the objectives, drawing up the plans and involving all the managers, the corporate targets were invariably missed. So the technique passed away as one of the more fashionable management theories, defeated by the refusal of reality to conform to the plan.23 Arguably, a major reason for the apparent demise of MBO is that the basic idea and fundamental features are now incorporated into modern systems of staff appraisal and performance management systems. Greater attention to the setting of clear objectives and levels of expected performance, flexible organisation structures and self-managed teams, and empowerment and self-regulating feedback can be related to the essential elements of MBO. Naylor points out that affected by overtones of bureaucratic rigidity the name of MBO has been changed to titles such as ‘staff appraisal’: The difference between current appraisal methods and MBO is that they now avoid rigid commitment to detailed objectives and action plans. Moreover, organisations themselves have become less rigid with fewer layers. Managers and staff tend to be better qualified and often better trained. These trends mean that the paperwork of grand systems is replaced by more informal processes.24 And as, for example, Hannagan suggests: ‘Although it (MBO) has fallen out of fashion as a system, many present day methods are very similar to MBO in their approach and results.’25 MANAGING PEOPLE We have stated previously that, although there are many aspects to management, the one essential ingredient of any successful manager is the ability to handle people effectively. Recall the discussion in Chapter 2 on people and organisational behaviour. Popular books on management and the nature of organisational effectiveness appear to take a positive view of human nature and support an approach which gives encouragement for people to work willingly and to perform to the best of their ability.26 Furthermore, an increasing number of organisations take apparent delight in expounding (in their mission statements, corporate objectives, annual reports and the such) that their employees are their greatest assets. However, as many of us will have witnessed for ourselves, an understanding, people-centred approach to management seems often to be lacking in practice. Too many managers still appear to attempt to manage through the use of rules, systems, procedures and paperwork, rather than with and through people. And as Gratton, for example, points out on the basis of six years of study in conjunction with the London Business School, there has been no uniform progress in people management, and ‘Yet for many people the reality of life in an organisation is that they do not feel they are treated as the most important asset, or that their knowledge is understood or used.’27 It is important that managers have a highly developed sense of people perception, and understand the feelings of staff, and their needs and expectations. It is people who are being managed and people should be considered in human terms. A genuine concern for people and for their welfare goes a long way in encouraging them to perform well. The culture of management The culture of management is important. For example, Freemantle suggests that a festering deficiency in management culture is that managers are not really concerned about people until they become a problem. As a result: 251 252 PART 3 THE ROLE OF THE MANAGER management thinking has become corrupted by two major obsessions: (1) an obsession with developing sophisticated systems for managing people more successfully (paper panaceas); (2) an obsession with trade union power (union paranoia).28 According to Freemantle, the perception of ‘people as costs’ leads to relatively little weight being given to people management and leadership skills when appointing managers. Many companies tend to appoint technical specialists to managerial positions, neglecting the vital task of managing people. Chief executives and personnel managers have allowed middle managers to opt out of the key task of leading their people in favour of filling in even more forms (the paper panacea). However, Freemantle does point out exceptions such as Mars, IBM, and Marks & Spencer, who in pursuit of excellence devote a high priority to people management and considerable time, energy and effort to the vital process of managing people. In order to eliminate the corruption of management thinking, it is important to remove the paper panaceas and divert attention from paranoia about trade unions. Freemantle believes that managers must get back to the basics and concentrate their minds on five essential principles (which are very much in line with the views of the author): ■ ■ ■ ■ ■ the successful management of people based on honesty, trust, openness, mutual respect, co-operation and support; developing a perception of employees as an essential asset to be invested in, rather than a variable cost to be minimised; ensuring managers have a clearly established set of principles (such as the above) which they can apply on a minute-by-minute basis in their daily management task; fundamentals of leadership (as opposed to leadership systems) relating to vision, charisma and ability to gain team commitment and co-operation; the establishment of basic but essential practices, such as: clarity about their accountabilities; knowing how to care for people; knowing how to command respect; knowing the difference between a leader and a manager; knowing how to set high standards and achieve them; knowing how to manage people successfully and to achieve individual managerial excellence. BASIC MANAGERIAL PHILOSOPHIES A positive policy of investment in people and an interpersonal relationship approach to management is, in the longer term, worth the effort. For example, the governmentsponsored initiative ‘Investors in People’ is based on a commitment to the benefits organisations can gain from a rigorous approach to the development of human resources. (Investors in People is discussed in Chapter 19.) It is the belief of the author that there are a number of basic, underlying philosophies which are likely to make for the successful management of people and lead to improved work performance. (See Figure 7.5.) Consideration, respect and trust People generally respond according to the way they are treated. If you give a little, you will invariably get a lot back. Make people feel important and give them a sense of personal worth. The majority of staff will respond constructively if treated with consideration and respect, and as responsible individuals who wish to serve the organisation well. For example, in discussing productivity through people, Peters and Waterman make the following comment: Treat people as adults. Treat them as partners; treat them with dignity; treat them with respect. Treat them – not capital spending and automation – as the primary source of productivity gains. These are fundamental lessons from the excellent companies’ research. In other words, if you want productivity and the financial reward that goes with it, you must treat your workers as your most important asset.29 CHAPTER 7 MANAGERIAL BEHAVIOUR AND EFFECTIVENESS Figure 7.5 The effective management of people And a similar point is made by Gratton: Treat people with politeness, respect and dignity and in doing so create a strong role model for others to follow. Building a reputation of fairness gives you a buffer against the times when the policy is wrong, or you behave badly. 30 However, how can members of staff show that they can be trusted unless trust is first placed in them? The initiative must come from management. ‘Lack of trust is probably one of the greatest time and resource wasters in the workplace. Managers who do not trust their employees are probably wasting hours every week checking up on them at every turn and failing to utilise the resources at their disposal.’31 Recognition and credit People can be praised to success. Give full recognition and credit when it is due and let people know you appreciate them. Too often managers are unresponsive to good performance, which may occur the vast majority of the time, and appear to take this for granted; but are quick to criticise on the few occasions when performance falls below expectations. However, it should not be assumed that staff would necessarily take a lack of response as a sign of positive recognition, rather than just the absence of criticism. So often you hear the comment: ‘Well nobody has complained so I suppose everything is all right.’ What a poor indictment of management style! Positive feedback on good performance is a strong motivator, and staff are then more likely to accept and respond to constructive criticism. If staff are to take a pride in their work they need to know when they are performing well and to receive appropriate recognition for their efforts. A sincere word of thanks from the right person at the right time can mean more to an employee than a formal award … What is important is that someone takes the time to notice an achievement, seeks out the employee responsible and personally gives praise in a timely way. Federico Castellanos, Vice President, Human Resources, IBM (EMEA)32 253 254 PART 3 THE ROLE OF THE MANAGER Involvement and availability Involve yourself with the work of the staff, and make sure you fully understand the difficulties and distastes of their duties and responsibilities. Ensure an open flow of communications, and encourage participation and feedback. Take an active interest in the work of staff but without excessive supervision or inhibiting their freedom of action. Wherever possible be available to staff as a priority, rather than to administration. Remember the importance of giving time to listen genuinely to the feelings and problems of staff. This means giving staff your full attention including adopting appropriate body language. Even if you disagree with their point of view it is important to show that you understand, and are sensitive to, what they are saying. It is, however, also important to note that being a good listener is a skill which needs to be developed and as Fletcher, for example, reminds us: ‘Hearing is not listening. Listening is not a passive activity. It is hard work. It demands attention and concentration.’33 The approach of Management By Walking About (MBWA) together with informal communication processes is often heralded as a positive management practice – and indeed it may well be so. However, there is the danger of arousing mistrust among staff, the suspicion of management snooping and doubts about ‘what are you doing here?’ MBWA is unlikely to be effective unless perceived by staff as part of a broader, genuine belief by management in the continuing importance of giving time to listen to, and understand, the feelings and problems of staff. Fair and equitable treatment Treat people fairly but according to merit. Ensure justice in treatment, equitable systems of motivation and rewards, clear personnel policies and procedures, avoidance of discrimination, and full observance of all laws and codes of conduct relating to employment. People expect certain outcomes in exchange for certain contributions or inputs. A feeling of inequality causes tension and motivates the person to indulge in certain forms of behaviour in order to remove or to reduce the perceived inequity.34 Recall also the discussion on the psychological contract in Chapter 2. Positive action on an individual basis Treat members of staff as individuals. Deal with individual situations on an individual basis and avoid the ‘blanket’ approach. For example, it has come to the manager’s attention that a couple of members of staff have failed to provide some urgently requested information on time. The manager’s reaction is to send a circular to all members of the department reminding them of the need for, and importance of, meeting deadlines. This may appear to be an easy way out to the manager. But what is likely to be the reactions of staff? The two members concerned might shield behind the generality of the circular and persuade themselves that it doesn’t apply particularly to them. They might even choose to believe that the manager must be referring to other members of staff, perhaps in a different section, and take little notice of the circular. In contrast, the majority of staff in the department who do have a good record of providing requested information on time may well be annoyed or upset by the circular. There could be some staff who despite pressing personal difficulties have taken great pride in their work and made a special effort to maintain an excellent record of co-operation – quite possibly without any previous positive recognition from management. It would be understandable if the reaction of these staff was one of resentment and disillusionment, and with a possible adverse effect on their future attitude to work. The manager has more to lose than to gain from adopting a ‘blanket’ approach to a particular problem and by the failure to take selective, positive action on an individual basis. Emphasis on end-results Place emphasis on end-results and levels of actual performance and achievement, rather than on compliance with detailed instructions, rules or regulations. For example, where set attendance times are clearly seen as a necessary requirement of the CHAPTER 7 MANAGERIAL BEHAVIOUR AND EFFECTIVENESS job, it is right that managers should ensure that time-keeping is adhered to and enforced as appropriate. But in many cases rigid times of attendance are not an essential requirement for effective performance. Who makes the greatest contribution to the work of the organisation? Person A who is always on time, keeps to the exact lunch break and never leaves early (or late), but spends much of the day in idle conversation and gossip, shuffling papers and looking at the work, and achieves only adequate performance? Or Person B who may ‘not be seen about the place so much’, but always gives maximum effort, makes full use of time and is never idle, is flexible, delivers whatever is expected on time, and achieves a consistently high level of performance? Good time-keeping can be an important part of the job. However, if ‘always being there’ is not a requirement, per se, for effective performance, what is to be gained by insisting on rigid times of attendance? Such a requirement is likely to be perceived by Person-B-type staff as an unwarranted bureaucratic style of management. Furthermore, it could turn a Person B into a Person A – with an adverse effect on the level of effective performance. The increasing movement to flexible working patterns and teleworking coupled with demands to boost productivity are placing growing emphasis on what staff actually achieve rather than the time spent at work. The important criteria are the level and quality of performance. The starting point for customer, or consumer, satisfaction is good manager–subordinate relationships. Supportive and harmonious working relationships are more likely to create a working environment which results in high levels of both staff and consumer satisfaction. Managers need to adopt a positive attitude towards staff and to develop a spirit of mutual co-operation. Staff should feel that they are working with the manager rather than for the manager. Make all staff part of the management team Photo: Virgin Atlantic Airways Staff and customer satisfaction ■ ■ ■ Virgin pays some of the lowest salaries in the industry yet its staff are very talented and loyal –paradox? The company’s success in this field is down to Sir Richard’s (Branson) management philosophy where all staff feel valued and Branson is just as interested in a flight stewardess’s opinion as he is in his Marketing Director’s. Successful people management is about inclusion and Branson works on making all his staff like a team where each is valued not only for fulfilling their job remit but for contributing to the development of the business as a whole. The Virgin Factor 35 255 256 PART 3 THE ROLE OF THE MANAGER From a further examination of several well-performing firms in America, Waterman draws attention to organisational arrangements as the key, achieved from a humanist rather than a ‘business process re-engineering’ viewpoint. Successful firms are organised to meet the needs of their people so that they attract better people, who are more motivated to do a superior job and better organised to satisfy the needs of their customers. Firms need to manage the intricate interplay between people, strategy, organisational arrangements and customers. The conclusion is ‘people first’. Treat your own people and your customers well and good results will follow.36 CHOICE OF MANAGERIAL STYLE Some might argue that these philosophies are too idealistic and that given the harsh realities of the working environment managers need to adopt a more dominant stance. However, it is not suggested that managers should in any way give up the right to manage: it is a question of how they manage and how they use their authority – for example, a ‘Theory X’ style with emphasis on direction and control, and the use of rewards and sanctions exercised by nature of the manager’s position and authority; or a ‘Theory Y’ style in which individuals may satisfy their motivational needs through integration with meeting the goals of the organisation. Management may also be based on ‘organisational power’ derived from status or position within the hierarchical structure, and the use of formal authority; or ‘personal power’ derived from competence and expertise, identification with subordinates, commanding respect, and urging and encouraging people in the performance of their tasks.37 Green contends that most successful managers are able to adjust their approach and response between a continuum of hard skills and soft skills, and react appropriately to different situations.38 The nature of people at work Galunic and Weeks refer to the changing nature of the employment relationship and that developing people, not just managing them, has become a necessary yet tricky task. Fortunately, however, some things have not changed. Human nature remains remarkably stable. People want to feel competent and secure, they are consistent in reciprocating good or bad deeds; and they are influenced by, and often imitate, behaviours that surround them. Nothing changes from the sandpit to the boardroom, so managers should revisit these truths as they think about investing in people.39 Echoing the views of the author, Walmsley sets out a number of features about trying to get along with people you work with.40 (See Figure 7.6.) Golden rule management One example of an interesting and enlightened people approach is put forward by Mary Kay Ash, founder of the huge, multi-million-dollar company Mary Kay Cosmetics in the USA.41 Ash writes about the intentional development of a management concept that allows fairness to flourish in business, the belief that people will shine if given a chance, and methods that are applicable to any organisation. Her concept of the management of people is based on the Golden Rule ‘Do unto others as you would have them do unto you’, with emphasis on being a ‘people company’. (Again, this is a philosophy very much in line with the views of the author.) People come first at Mary Kay Cosmetics – our beauty consultants, sales directors and employees, our customers, and our suppliers. We pride ourselves as a ‘company known for the people it keeps’. Our belief in caring for people, however, does not conflict with our need as a corporation to generate a profit.42 CHAPTER 7 MANAGERIAL BEHAVIOUR AND EFFECTIVENESS Figure 7.6 How to get along with people you work with Reprinted with permission from Cheryl Walmsley, Your Future Looks Bright, Preston Beach (2002), pp. 38–40. 257 258 PART 3 THE ROLE OF THE MANAGER The philosophy of ‘Golden Rule Management’ is applied in such ways as, for example: ■ ■ ■ ■ ■ ■ ■ ■ Treat people fairly but according to merit. In order to balance responsibilities to the company, the employee, and all other employees, every manager must be able to say ‘no’. But employees should be encouraged to turn a ‘no’ into the motivation to accomplish more. However busy you are, make the other person feel important, and let people know you appreciate them. Motivate people through giving praise. A good manager must understand the value of praising people to success. Encourage feedback and don’t undervalue the ability to listen. Sandwich every bit of criticism between two layers of heavy praise. An open-door philosophy. Help other people get what they want – and you will get what you want. Good managers’ success is reflected in the success of their people. Never hide behind policy or pomposity. Beauty consultants who follow the guiding rules of Mary Kay Cosmetics are rewarded by the incentive of expensive gifts. EXHIBIT 7.1 FT It’s a people thing Calls for humane management are not new, but some companies have been slow to respond writes Victoria Griffith. he most striking feature about Rosabeth Moss Kanter’s book, On the Frontiers of Management, is that much of the material sounds so familiar: valuing and empowering employees; moving to flatter, less hierarchical organisations; and encouraging creativity. T The familiarity of the material is, in part, testament to the author’s prominence in the field of management theory. It is also an indication of the age of some of the writings: the book is actually a collection of essays written over the past 15 years. All the essays have been published in the Harvard Business Review, which Kanter edited from 1989 to 1992. Yet Kanter, a Harvard Business School Professor, makes no apologies. ‘I didn’t want to have to come up with something new – some clever metaphor or whatever – because, in the end, I’m still really preaching what I was a decade ago,’ she explains. ‘The reason it needs to be said again is that most corporations still haven’t listened,’ says Kanter. ‘Managers may say they’re empowering employees, for instance, but how many are really doing it?’ Back in 1983, much of what she wrote was considered radical, she says. ‘Now it’s almost mainstream. I was really at the cutting edge of new management theory, but it wasn’t just a fad. My writings offer enduring lessons.’ Kanter’s gospel of a more humane management style has gained many prominent adherents, including Raymond Smith, chief executive of Bell Atlantic, the telecommunications group. She exerts wide influence as a consultant, having just, for example, advised British Airways on its globalisation strategy. Yet events have got in the way of her teaching, Kanter complains. The global recession of the early 1990s dis- tracted much of the corporate world: it turned from focusing on employee empowerment to restructuring. ‘The recession side-tracked managers,’ says Kanter. ‘When unemployment was so high, corporations started to think “Why should I care about my employees? There are plenty more available if they want to walk out the door”.’ An important lesson of the recession, says Kanter, is that even when labour is abundant, companies cannot afford to ignore their workers. She cites the example of Wal-Mart, the US discount retailer, which, even at the height of the recession, cultivated employee loyalty by offering superior pay and benefits. ‘That was one secret of the company’s success. Even unskilled employees are not interchangeable.’ Kanter is hopeful that companies will at last heed the call for more sensitive management. Change in the US is being driven by the move away from manufacturing to a servicebased economy, she says. And service industries, she points out, depend on their employees to give them a competitive edge. Only corporations that pay attention to their workforce will move ahead. This is true, says Kanter, even for the most basic service industries, ‘Even McDonald’s, which was so heavily criticised for creating ‘McJobs’ that failed to value the individual, has had to change its ways.’ ‘The company was pushed to do so because of falling market share and profitability. There is knowledge in the hands and minds of experienced workers, even those of burger flippers, which boosts productivity.’ Kanter also believes many corporations have failed to embrace her ideas for another reason – human nature. ‘At some point in CHAPTER 7 our lives most of us have had a tendency to be shortsighted, territorial and averse to change,’ she says. ‘It takes years to make a difference. People need to see successful models before they want to follow the same path.’ Kanter has few regrets about her early writing but does complain that her arguments on core competencies have been widely misunderstood. Kanter argued early on that corporations should stick to what they are best at, rather than moving into entirely new areas. Some observers have interpreted that as an argument against change. ‘Of course I’m not change-averse – being amenable to change is a large part of what I advocate,’ says Kanter. ‘I just meant that companies shouldn’t take great leaps into new territory if it means short-changing their core activity.’ Kanter points, for example, to the conglomerate Samsung’s desire to move into car manufacture and computer chips simultaneously. ‘They are such different things; it’s hard to believe they will have the resources and expertise to do everything well.’ Ideally, Kanter believes that change should become so much a part of management routine that large changes become almost imperceptible. ‘Many small changes add up to a big change. But if it’s done over time, the transition will be much smoother.’ While Kanter defends the continued relevance of her early writings, she concedes that the corporate world is MANAGERIAL BEHAVIOUR AND EFFECTIVENESS very different, in some respects, than it was 15 years ago. The Internet, for example, is changing the nature of the private sector. Many view the Internet as an impersonal forum that reduces human contact. It would follow that corporations might stop focusing on their employees in favour of databases and technology. Yet Kanter prefers to see cyberspace in a different light. ‘It is, more than anything, another means of communication,’ she explains. ‘By e-mailing people, we strengthen existing relationships. So the Internet may make a more humanistic management style more possible then ever before.’ As an example, a corporate Intranet can be used to disperse power from headquarters to the company’s periphery – the distributor in Hong Kong, or the branch office in St Louis. ‘By linking everyone up by computer,’ says Kanter, ‘you encourage the flow of ideas from the margin. In opening up the lines of communication, the centre is saying “Hey, we want to hear from you”.’ While times have changed, the heart of Kanter’s message does not need updating. ‘I think we already know a lot about what should be done’, she says. ‘Now managers just have to go do it.’ (Reproduced with permission from the Financial Times Limited, © Financial Times) MANAGERIAL EFFECTIVENESS The importance of managerial performance and effectiveness has long been recognised by major writers such as, for example, Drucker who, originally in 1955, propounded that: The manager is the dynamic, life-giving element in every business. Without their leadership ‘the resources of production’ remain resources and never become production. In a competitive economy, above all, the quality and performance of the managers determine the success of a business; indeed they determine its survival. For the quality and performance of its managers is the only effective advantage an enterprise in a competitive economy can have.43 The importance of management performance has also been recently emphasised by Foppen: Management is of pivotal importance for modern society. It is for this reason that, no matter what, thinking about management, certainly at university level, is of great relevance to management practice. So apart from the question of whether management’s claim that it is indispensable is really valid or not, the fact that practically everyone believes it is, is what counts.44 A major international study undertaken by Proudfoot Consulting reports that poor planning and inadequate management are still the key reasons for the majority of time wasted globally in the workplace. The study comprised more than 1300 detailed analyses of companies in seven countries complemented by an independent opinion poll of 2700 chief executive officers. The findings show that poor management in terms of inadequate planning and control, and insufficient day-to-day supervision of work is still the largest single reason for lost productivity. In the UK 27% of all lost time was due to inadequate management and supervision, either because managers were unavailable or ineffective. Proudfoot Consulting45 259 260 PART 3 THE ROLE OF THE MANAGER The overall responsibility of management can be seen as the attainment of the given objectives of the organisation. Upon the attainment of its aims and objectives will rest the success and ultimate survival of the organisation. There is therefore a clear and important need for effective management. And this need is just as strong in public sector organisations as in private enterprise organisations. Indeed, it could be argued that in local government, for example, the accountability of public servants to elected members for their actions means that professional standards of management of the highest order are even more essential.46 Whether in private or public sector organisations, however, managerial effectiveness is a difficult concept both to define and to measure. Efficiency and effectiveness Managerial efficiency can be distinguished from managerial effectiveness. Efficiency is concerned with ‘doing things right’, and relates to inputs and what the manager does. Effectiveness is concerned with ‘doing the right things’, and relates to outputs of the job and what the manager actually achieves. To be efficient the manager must attend therefore to the input requirements of the job – to clarification of objectives, planning, organisation, direction and control. But in order to be effective, the manager must give attention to outputs of the job – to performance in terms of such factors as obtaining best possible results in the important areas of the organisation, optimising use of resources, increasing profitability, and attainment of the aims and objectives of the organisation. Effectiveness must be related to the achievement of some purpose, objective or task – to the performance of the process of management and the execution of work. Criteria for assessing the effectiveness of a manager should be considered in terms of measuring the results that the manager is intended to achieve. But what is also important is the manner in which the manager achieves results and the effects on other people. This may well influence effectiveness in the longer term. Managerial effectiveness results from a combination of personal attributes and dimensions of the manager’s job in meeting the demands of the situation, and satisfying the requirements of the organisation. Stewart suggests that effectiveness is more important than efficiency. Managers who want to improve should review both their effectiveness and their efficiency. Effectiveness is doing the right things. Efficiency is making the most economic use of the resources. Effectiveness is more important than efficiency because one must be doing the right kind of work. Only then does it matter whether the work is done efficiently.47 Effective and successful managers From a study of what real managers do (discussed in Chapter 6), Luthans attempted to distinguish between effective and successful managers. ■ ■ Effective managers are defined in terms of the quantity and quality of standards of performance, and the satisfaction and commitment of subordinates. Successful managers are defined operationally in terms of the speed of their promotion within an organisation. Effective managers had a different emphasis from successful managers and do almost the opposite activities, and Luthans found few real managers who were both effective and successful. The biggest contribution to effectiveness came from first, communicating and second, human resource management; with the least relative contribution from the networking activity. By contrast, for a significant number of managers by far the strongest key to success came from the networking activity, with the weakest contribution from the human resource management activity.48 CHAPTER 7 MANAGERIAL BEHAVIOUR AND EFFECTIVENESS MEASURES OF EFFECTIVENESS Management involves getting work done through the co-ordinated efforts of other people. Managers are most likely to be judged, not just on their own performance, but also on the results achieved by other staff. The manager’s effectiveness may be assessed in part, therefore, by such factors as: ■ ■ ■ the strength of motivation and morale of staff; the success of their training and development; and the creation of an organisational environment in which staff work willingly and effectively. The difficulty is determining objective measurement of such factors. Some possible indication might be given by, for example: ■ ■ ■ ■ ■ the level of staff turnover; the incidence of sickness; absenteeism; poor time-keeping; and accidents at work. However, such figures are likely to be influenced also by broader organisational or environmental considerations, for example poor job security due to the economic climate, which are outside the direct control of the individual manager. In any case, there is the general question of the extent to which such figures bear a direct relationship to the actual performance of subordinate staff. Other criteria of effectiveness Other criteria which may give some indication of managerial effectiveness include the efficiency of systems and procedures, and the standard of services afforded to other departments. Again, however, there is the question of how to determine objective measurement of such criteria. For some management jobs it might be possible to identify more quantitative factors which may give an indication of managerial effectiveness, including: ■ ■ ■ ■ ■ ■ meeting important deadlines; accuracy of work carried out by the department, perhaps measured by the number of recorded errors; level of complaints received from superiors, other departments, customers or clients, suppliers, the public; adherence to quality standards, for example, the amount of scrap or waste material; keeping within agreed cost or budgetary control limits; and productivity. (See Figure 7.7.) Another broad, qualitative criterion of increasing significance today is in terms of perceived social accountability, and the ethical behaviour of individual managers and the organisation as a whole. 3-D MODEL OF MANAGERIAL BEHAVIOUR However effectiveness is measured, managers are only likely to be effective if they adopt the most appropriate style of behaviour. A development of the Blake and Mouton Managerial Grid, discussed earlier, is the three-dimensional (3-D) model of managerial behaviour suggested by Reddin.49 By adding a third dimension of managerial effectiveness to task orientation and 261 262 PART 3 THE ROLE OF THE MANAGER MANAGERIAL EFFECTIVENESS Doing the right things What the manager intended to achieve MANAGER’S OWN PERFORMANCE AND RESULTS ACHIEVED BY SUBORDINATE STAFF • Motivation and morale • Training and development • Organisational environment • Efficiency of systems and procedures • Standard of services afforded POSSIBLE INDICATORS OF EFFECTIVENESS Staff turnover Incidence of sickness Absenteeism Time-keeping Accidents at work The management of time Activity distinguished from effectiveness Meeting deadlines Accuracy Level of complaints Quality standards Budgetary control Productivity levels RESULTS MANAGER ACTUALLY ACHIEVES OUTPUTS OF THE JOB AND EFFECTS ON OTHER PEOPLE Figure 7.7 Possible indicators of managerial effectiveness relationship orientation, the 3-D model identifies eight possible styles of managerial behaviour. ■ ■ Task orientation (TO) is the extent to which the manager directs both personal and subordinates’ efforts through planning, organisation and control. Relationship orientation (RO) is dependent upon the manager’s personal job relationships. This is characterised by consideration for subordinates’ feelings, mutual trust and encouragement. The combination of TO and RO determines the manager’s basic style of behaviour. The four possible basic styles (see Figure 7.8) are similar to those identified by Blake and Mouton in the Managerial Grid. Related (High RO) Integrated (High TO and RO) Separated (Low TO and RO) Dedicated (High TO) Relationship orientation (RO) Task orientation (TO) Figure 7.8 The four basic styles of managerial behaviour CHAPTER 7 Apparent effectiveness and personal effectiveness MANAGERIAL BEHAVIOUR AND EFFECTIVENESS Each of these four basic styles of management can be effective or ineffective depending on the situation in which they are applied. Effectiveness is defined by Reddin as: the extent to which a manager achieves the output requirements of his position ... Managerial effectiveness has to be defined in terms of output rather than input, by what a manager achieves rather than by what he does. Reddin distinguishes managerial effectiveness from (i) apparent effectiveness, and (ii) personal effectiveness. ■ ■ Apparent effectiveness is the extent to which the behaviour of the manager – for example punctuality, giving prompt answers, tidiness, making quick decisions and good public relations – gives the appearance of effectiveness. Such qualities may or may not be relevant to effectiveness. Personal effectiveness is the extent to which the manager achieves personal objectives – for example power and prestige – rather than the objectives of the organisation. Eight styles of managerial behaviour Applying the third dimension of managerial effectiveness provides eight styles of managerial behaviour – four effective styles, which achieve output requirements, and four ineffective styles (see Figure 7.9). For each of the basic styles – separated, dedicated, related or integrated – there is a more effective or less effective version. Effectiveness results from the appropriateness of a particular style of management to the demands of the situation in which it is applied. When one of the basic styles (for example Figure 7.9 The 3-D model of managerial effectiveness (Source: Reddin, W. J. Managerial Effectiveness, McGraw-Hill (1970) p. 206.) 263 264 PART 3 THE ROLE OF THE MANAGER ‘separated’) is adopted in an appropriate situation, a more effective style (‘bureaucrat’) results. When the basic style is adopted in an inappropriate situation, the result is a less effective style (‘deserter’). The eight styles of management may be described briefly as follows. More effective styles 1 Bureaucrat – a low concern for both task and relationships. The manager adopting this style is seen as being interested mainly in rules and procedures to control the situation, and as conscientious. 2 Benevolent autocrat – a high concern for task and a low concern for relationships. Managers adopting this style know what they want and how to achieve it without causing resentment. 3 Developer – a high concern for relationships and a low concern for task. The manager adopting this style is seen as having implicit trust in people and concerned mainly with developing them as individuals. 4 Executive – a high concern for both task and relationships. The manager adopting this style is seen as a good motivator, sets high standards, treats people as individuals, and favours team management. Less effective styles 5 Deserter – low concern for both task and relationships in a situation where such behaviour is inappropriate. The manager lacks involvement and is passive or negative. 6 Autocrat – a high concern for task and a low concern for relationships in a situation where such behaviour is not appropriate. The manager is seen as lacking confidence in others, unpleasant, and interested only in the task in hand. 7 Missionary – a high concern for relationships and a low concern for task where such behaviour is inappropriate. The manager is seen as interested mainly in preserving harmony. 8 Compromiser – a high concern for both task and relationships in a situation requiring high concern for neither, or for only one orientation. The manager is seen as a poor decision-maker, too easily influenced by the pressures of the situation, and as avoiding immediate pressures and problems at the expense of maximising long-term output. Appropriate style of behaviour According to Reddin’s 3-D theory, managerial effectiveness cannot be measured simply in terms of achieving production or relationships with other people. The manager must also be adaptable in adopting the appropriate style of behaviour which will determine effectiveness in achieving the output requirements of the job. Reddin has developed a ‘management-style-diagnosis’ test to identify styles of management and of organisations. The test comprises 64 paired statements which compare one style of management with another. From each pair of statements is selected the one statement which describes best the manager’s behaviour in his or her present job. Analysis of the answers can help the manager to evaluate his or her own perceived style of management. GENERAL CRITERIA OF MANAGERIAL EFFECTIVENESS From a review of the work of a number of writers, Langford identifies four broad groups of criteria of managerial effectiveness, and a single overall criterion of effectiveness.50 ■ ■ The manager’s work – decision-making, problem-solving, innovation, management of time and handling information. The manager himself/herself – motivation, role perception, coping with stress/ambiguity, seniority, and average salary grade for age. CHAPTER 7 ■ ■ ■ MANAGERIAL BEHAVIOUR AND EFFECTIVENESS The manager’s relationships with other people – subordinates, superiors, peers and clients; handling conflict and leadership/power. The manager as part of the organisation – maintenance of the organisation, and technical and financial control. Criterion of general effectiveness – allocation of resources, achieving purpose, goal attainment, planning, organising, co-ordinating, controlling. Langford found that the most frequently mentioned criterion was overall effectiveness, followed by relationships with subordinates. Next in order of importance were the criteria of decision-making, problem-solving, self-development of the manager and maintenance of the organisation. Coping with ambiguity and the handling of conflict were seen as relatively unimportant criteria, although Langford suggests this might be related to the circumstances at the time when the various works were written. THE MANAGEMENT OF TIME Whatever the attributes or qualities of a successful manager, or the quality of subordinate staff, one essential underlying criterion is the effective use of time. With many managers who complain that they do not have sufficient time it may be more a case that they have failed to organise themselves or their work properly. The most important members of staff to be managed are themselves. Although it is currently a popular topic of attention, the importance of time management has long been recognised as an inherent feature of management. Drucker refers to time as the limiting factor for effective executives. Time is a unique resource – you cannot rent, hire, buy or otherwise obtain more time. The supply of time is totally inelastic; time is totally irreplaceable and everything requires time.51 Effectiveness and activity For many managers appearing always to be busy, a cluttered desk and a continual flurry of activity are outward signs of their effectiveness. The trouble is that such managers may be too busy ‘doing’ rather than thinking about what they, and their staff, should be doing and how they should be doing it. Activity may be a substitute for actual achievement. It is important therefore to distinguish effectiveness from activity. Rees and Porter, for example, suggest that: Activity-centred behaviour is in any case much more likely to spring from incompetence and/or insecurity rather than adroit political behaviour. Activity-centred behaviour is likely to aggravate the position of the manager in the long run rather than ameliorate it.52 There are a number of suggested procedures and techniques for managing time53 but the essential requirements of good time management include: ■ ■ ■ ■ clear objectives; careful forward planning; the definition of priorities and action; and the ability to delegate successfully. A ‘summary outline’ of the management of time is presented in Figure 7.10.54 The Chartered Management Institute have published a checklist which explains that: Good time management has always been an important skill, but it is arguably now more essential than ever. Factors such as widespread corporate restructuring, accelerating change, information overload and the need to balance private and working lives have put the squeeze on managers. Time management is about the effectiveness and efficiency of what you do and how you do it.55 265 WHY MUST MANAGERS MANAGE THEIR OWN TIME? THEIR STAFF’S TIME – Give time allowances for – an end-of-day activity to – prepare for tomorrow MANAGING TIME USAGE Work sampling and time study techniques may be applicable Set time standards for jobs with realistic (+/–) allowances Use standard data catalogues for estimating job durations • • • • • • (Reproduced with permission of Training Learning Consultancy Ltd, Bristol, England.) • • • • • • • • • CONSERVING TIME Learn to communicate effectively Train subordinates to listen by Question & Answer techniques Organise meetings effectively – don’t just hold them Reduce paperwork (form filling is slow, is it all necessary?) Control interruptions Set time objectives for tasks • • • • • FOR EFFECTIVE TIME MANAGEMENT YOU SHOULD:– Establish the KEY TASKS (the six most important tasks you do) • Set your OBJECTIVES (the achievements you are trying to attain in the key post) • Identify PERFORMANCE STANDARDS (the quantifiable measure of the objectives) • Identify CONSTRAINTS (things standing in the way of your objectives) • Decide on ACTION PLANS (ways of removing the constraints) • WHERE DOES THE REMAINDER GO? Wasted and lost time due to:– Lack of focus on task (Poor directions/lack of understanding) Failure to delegate (Assumes there is someone to delegate to) Interruptions (Should you have an ‘open door’?) Fatigue – losing concentration (Take the breaks especially lunch) Failure to communicate – instructions not clear – failure to listen Failure to anticipate (‘I never thought’) • Advance planning can • – avoid problems later • – anticipate trouble in • – different situations • – allow an overview • – of the task • • • • • • • • • • • • • ? PARKINSON’S LAW – Work expands in such a way as – to fill the time available WHERE DOES PRODUCTIVE TIME GO? • Routine jobs (minor jobs but important) • Regular duties • Maintenance role as part of the organisation • e.g. – meetings • – selection/recruitment • – seeing visitors • Special assignments (unpredictable) • Creative work (requires time) COSTING TIME What is your total cost? How much productive time do you achieve? What utilisation do you obtain? How much would a consultant/teleworker /subcontractor charge? PARETO PRINCIPLE In any series of events which you do e.g. your job: 80% of the ouput arises from 20% of your input (the %s may vary but the principle remains) e.g. 20% of the customer base leads to 80% of the income WHY IS IT IMPORTANT? • Managers usually face more jobs than • there is time to do them • Jobs have different priorities • Some jobs have to be done • and some delegated – which? COMPONENTS OF TOTAL JOB TIME • Inherent time – sum of labour time, machine time and handling time • Set-up time – time to prepare or tear-down after work; % time • wastage reduced by scheduling longer runs • Lost time – personal time for breaks, toilet, sickness, holidays etc. • Technical time – machinery failure or component shortage • Learning time – familiarisation with the job. Can only be estimated and • is often inaccurate TIME MANAGEMENT A systematic step approach to using time effectively 1 – Analysis of time usage in the past 2 – The time budget in the future 3 – Allocate time to specific tasks • Plan and adhere to a weekly time schedule • Record activities 4 – Classify activities Careful network planning will assist the manager to reorganise and reduce time pressures, eliminate wasted time and maximise time usage IMPROVING DEADLINE TIMES PRODUCTION COMPLETION DELIVERY DEADLINES – Changing working practices – Using better equipment – Training staff – Collecting more/better information MANAGING YOUR TIME • Importance of time management • Where does time go? • Conserving time • Time management tools Figure 7.10 Summary outline of the management of time – Fill-in jobs for waiting time – between longer or larger jobs METHODS/TECHNIQUES FOR TIME PLANNING • Network planning for long • jobs (and Critical Path Analysis) • – explore benefits of project • – management computer software • GANTT charts • Plan priority sequences • Ordered sequences • Short-term scheduling • – consider value/costs of setting • – up specific ‘jobbing’ capacity for • – quick repeat order, or • RECORDING TIME for future reference – • record and keep times for • specific jobs • for estimating and quoting • for buying in replacement • labour – sub-contracting/ • out-sourcing • • • • • MANAGING DEPARTMENTAL TIME Requires: Responding to external time pressures Maximising the time capacity available Analysing the components of total job time Using time planning techniques Recording time spent • • • THE MANAGEMENT OF TIME 266 PART 3 THE ROLE OF THE MANAGER CHAPTER 7 MANAGERIAL BEHAVIOUR AND EFFECTIVENESS Manager’s checklist Stewart suggests that it is often salutary for managers to compare what they think they do against what happens in practice. Answers to the following questions will help managers decide what, if anything, they should check, and to review their effective management of time.56 1 Am I giving adequate attention to current activities, to reviewing the past and to planning for the future? In particular, am I giving enough thought to the future? 2 Am I dividing my time correctly between different aspects of my job? Is there, perhaps, one part of my job on which I spend too much of my time? 3 Have I changed what I am trying to do, and how I work to allow for the effects of changes in my work? 4 Am I certain that I am not doing any work that I ought to have delegated? 5 Who are the people that I ought to be seeing? Am I spending too much or too little time with any of them? 6 Do I organise my working day and week, as far as possible, according to priorities, or do I tend to deal with each problem as it turns up, or even as I think of it, without stopping to think whether there is something more important that I should be working on? 7 Am I able to complete a task, or am I constantly interrupted? If the latter, are all these interruptions an essential part of my work? There are three questions that managers should ask of each of their activities. ■ ■ ■ Should it be done at all? If so, when should it be done? Should it be delegated? The need for balance Despite growing interest in time management it should not be viewed in isolation from related activities of management such as leadership and delegation. For example, a key aspect of managerial leadership (discussed in Chapter 8) is visibility. Time management needs to be balanced against potential benefits from maintaining an open-door policy or the ‘MBWA’ approach – Management By Walking About.57 When making a conscious effort to find more time for themselves, managers need to take account of their availability for consultation with subordinates, superiors or colleagues; and ensuring effective processes of communication. Clegg suggests that too much time management is focused on time rather than on the essential foundation of priorities and personal significance. You cannot build a time management regime until you understand what you really want to do with your life including work projects: ‘Until we’ve mastered time machines, time is not subject to management. The question is, rather, how you are going to manage what you do in the time available?’58 Beware the busy manager A recent study by Bruch and Ghoshal suggesting that we should beware of the busy manager raises the question: ‘Are the least effective executives the ones who look like they are doing the most?’ They refer to unproductive busyness and what they call ‘active non-action’. After ten years of studying the behaviour of busy managers in nearly a dozen large companies, Bruch and Ghoshal claim that fully 90 per cent of managers squander their time in all sorts of ineffective activities. No doubt, executives are under incredible pressure to perform, and have far too much to do, even when they work 12-hour days. But the fact is, very few managers use their time as effectively as 267 268 PART 3 THE ROLE OF THE MANAGER they could. They think they’re attending to pressing matters, but they’re really just spinning their wheels … A mere 10 per cent of managers are purposeful – that is, both highly energetic and highly focused. They use their time effectively by carefully choosing goals and then taking deliberate actions to reach them. Managers that fall into the other groups, by contrast, are usually just spinning their wheels; some procrastinate, others feel no emotional connection to their work, and still others are easily distracted from the task at hand. Although they look busy, they lack either the focus or the energy required for making any sort of meaningful change.59 An example of time management An example of time management and encouragement for managers to improve their self-management is given in the case example of the chemical company at the end of the chapter.60 CRITICAL REFLECTIONS A first step in the effective management of other people is confidence in your own ability, and awareness of your own strengths and weaknesses. Why is it then that so many managers find it difficult to admit their mistakes, to say sorry or to laugh at themselves? Surely, mea culpa should be part of the philosophy and language of every successful manager. What are your own views? Even if employed full-time by the organization, fewer and fewer people are ‘subordinates’ – even in fairly low-level jobs. Increasingly they are ‘knowledge workers’. And knowledge workers are not subordinates; they are ‘associates’. For, once beyond the apprentice stage, knowledge workers must know more about their job than their boss does – or else they are no good at all. In fact, that they know more about their job than anybody else in the organization is part of the definition of knowledge workers. Drucker, P.F. Management Challenges for the 21st Century, Butterworth-Heinemann (1999), p. 18. How would you, as a senior manager, attempt to manage your staff effectively as knowledge workers rather than subordinates? ‘The only essential ingredient of a successful manager is the ability to handle people, and to understand and relate in a caring and meaningful way to the individuals they are managing.’ Debate. SYNOPSIS ■ It is the responsibility of managers to manage and to achieve results through the efforts of other people. This involves the effective management of human resources. The way in which managers exercise their authority and carry out their responsibilities is important. The changing nature of the work environment is reflected in changes in the traditional boss–subordinate relationship. The style of management adopted, and the behaviour displayed towards subordinate staff, is likely to be conditioned by predispositions about people, human nature and work. CHAPTER 7 MANAGERIAL BEHAVIOUR AND EFFECTIVENESS ■ One means of describing different styles of management is the Managerial Grid, now republished as the Leadership Grid®, and the combination of concern for production and concern for people. There are five basic combinations with a total of 81 different ‘mixtures’ of concern for production and concern for people. Managers tend to have one dominant style of management but may switch from one style to another. The Grid provides a framework in which managers can identify, study and review their patterns of behaviour, and aid training and development. ■ An organisation is more likely to harness its staffing resources effectively if there is a participative style of management. Likert identifies a four-fold model of management systems that can be related to a profile of organisational characteristics. System 4 is based on the principle of supportive relationships and group processes. Leadership involves trust and confidence in subordinates. One particular style or system of management is Management by Objectives (MBO). There are however a number of limitations and criticisms and, arguably, MBO has now been incorporated into modern systems of staff appraisal and performance management. ■ There are many aspects to management but one essential ingredient of any successful manager is the ability to handle people effectively. It is important that managers have a highly developed sense of ‘people perception’ and understand the feelings of staff, and their needs and expectations. It is people who are being managed, and people should be considered in human terms. There are a number of basic, underlying philosophies which are likely to make for the successful management of people and lead to improved work performance. ■ There is a clear and important need for managerial effectiveness, which can be distinguished from managerial efficiency and from activity. Effectiveness is concerned with doing the right things and relates to outputs of the job and to what the manager actually achieves. Managers are likely to be judged not just on their own performance but also on results achieved by other staff. The combination of task orientation and relationship orientation results in four basic styles of managerial behaviour. Each of these styles can be effective or ineffective depending on the situation in which it is applied. ■ The concept of managerial effectiveness is, however, difficult both to define and to measure. Broad groups of criteria are: the manager’s work; the manager himself/herself; relationships with other people; the manager as part of the organisation; together with an overall criterion of general effectiveness. One essential underlying criterion is the management of time. With the changing nature of the work organisation, good time management is arguably more essential than ever. However, studies suggest that activity may be a substitute for actual achievement and that busy managers are not necessarily effective managers. 269 270 PART 3 THE ROLE OF THE MANAGER REVIEW AND DISCUSSION QUESTIONS 1 Distinguish between different sets of attitudes and assumptions about people at work that might be held by managers. Give examples, preferably from your own experience, of how these different attitudes and assumptions might influence actual managerial behaviour. 2 Using the Blake and Mouton Managerial Grid (now the Leadership Grid), identify your likely dominant style of behaviour in dealing with subordinate staff. In what situations might you need to adopt a back-up style of behaviour and what style is that likely to be? 3 Critically assess the value and relevance today of Management by Objectives (MBO) as a means of improving organisational performance. 4 From your own experience, explain fully a situation which you believe demonstrates an effective way of dealing with subordinate staff. To what extent can you relate this situation to the application of theories or principles of management? 5 Discuss what you see as the most important considerations in adopting a people-centred approach to management. What do you understand by the culture of management? 6 How would you attempt to distinguish between an effective and an ineffective manager? Give specific examples of the criteria you would apply to assess the effectiveness of a particular managerial job of your choice. 7 Explain Reddin’s 3-D model of managerial behaviour. Give a practical example of situations which demonstrate (i) a more effective style, and (ii) a less effective style. 8 Debate critically what you believe are the essential features relating to the effective management of time. ASSIGNMENT 1 Principle of Supportive Relationships Questionnaire To test whether a superior’s (and the organisation’s) behaviour is supportive, consider the following questions. a How much confidence and trust do you feel your superior has in you? How much do you have in your superior? b To what extent does your boss convey to you a feeling of confidence that you can do your job successfully? Does your boss expect the ‘impossible’ and fully believe you can and will do it? c To what extent is your superior interested in helping you to achieve and maintain a good income? d To what extent does your superior try to understand your problems and do something about them? e How much is your superior really interested in helping you with your personal and family problems? CHAPTER 7 MANAGERIAL BEHAVIOUR AND EFFECTIVENESS f How much help do you get from your superior in doing your work? (i) How much interest in training you and helping you learn better ways of doing your work? (ii) How much help for you to solve your problems constructively – not telling you the answer but helping you think through your problems? (iii) To what extent does your superior see that you get the supplies, budget, equipment, etc., you need to do your job well? g To what extent is your superior interested in helping you get the training which will assist you in being promoted? h To what extent does your superior try to keep you informed about matters related to your job? i How fully does your superior share information with you about the company, its financial condition, earnings, etc., or keep such information to himself/herself? j Does your superior ask your opinion when a problem comes up which involves your work? Does your superior value your ideas and seek them and endeavour to use them? k Is your superior friendly and easily approached? l To what extent is your superior generous in the credit and recognition given to others for the accomplishments and contributions rather than seeking to claim all the credit personally? ASSIGNMENT 2 In self-selecting groups of three or four, visit a work organisation of your choice, preferably one that is well known to at least one member of your group. a Using Likert’s short form of profile of organisational characteristics, investigate the organisational variables and circle what you believe to be the most accurate answer for each of the 18 questions. b Make clear any necessary assumptions, and where possible give brief supporting reasons for your choice of answers. c Summarise the extent to which your answers suggest a clear inclination towards one particular model of management system. d Explain the conclusions you draw from your investigation and the pattern of your answers. 271 272 PART 3 THE ROLE OF THE MANAGER PERSONAL AWARENESS AND SKILLS EXERCISE OBJECTIVES Completing this exercise should help you to enhance the following skills: Evaluate your own preferred style of management. Examine and review those factors that influence decisions about management style. Gain a deeper appreciation of how situational factors might influence managerial style. EXERCISE You are required to complete the ‘Your Management Style’ questionnaire. Move quickly and do not think too deeply about each question but give your first immediate response. Your Management Style Questionnaire There are 10 pairs of statements. Assign a weight from 0 to 10 to each statements to show the relative strength of your belief in the statements in each pair. The points assigned for each pair must total 10 in each case. Be as honest with yourself as you can and resist the natural tendency to respond as you would ‘like to think things are’. This instrument is not a test. There are no right or wrong answers. It is designed to be a stimulus for personal reflection and discussion. 1 It’s only human nature for people to do as little work as they can get away with. When people avoid work, it’s usually because their work has been deprived of its meaning. 2 If employees have access to any information they want, they tend to have better attitudes and behave more responsibly. If employees have access to more information than they need to do their immediate tasks, they will usually misuse it. 3 One problem in asking for the ideas of employees is that their perspective is too limited for their suggestions to be of much value. Asking employees for their ideas broadens their perspective and results in the development of useful suggestions. 4 If people don’t use much imagination and ingenuity on the job, it’s probably because relatively few people have much of either. Most people are imaginative and creative but may not show it because of limitations imposed by supervision and the job. 5 People tend to raise their stakes if they are accountable for their own behaviour and for correcting their own mistakes. People tend to lower their stakes if they are not punished for their misbehaviour and mistakes. ––––––––––– (A) ––––––––––– (B) 10 ––––––––––– (C) ––––––––––– (D) 10 ––––––––––– (E) ––––––––––– (F) 10 ––––––––––– (G) ––––––––––– (H) 10 ––––––––––– (I) ––––––––––– (J) 10 CHAPTER 7 MANAGERIAL BEHAVIOUR AND EFFECTIVENESS 6 It’s better to give people both good and bad news because most employees want the whole story, no matter how painful. It’s better to withhold unfavourable news about business because most employees really want to hear only the good news. 7 Because a supervisor is entitled to more respect than those below him or her in the organisation, it weakens the supervisor’s prestige to admit that a subordinate was right and he or she was wrong. Because people at all levels are entitled to equal respect, a supervisor’s prestige is increased when he or she supports this principle by admitting that a subordinate was right and he or she was wrong. 8 If you give people enough money, they are less likely to be concerned with such intangibles as responsibility and recognition. If you give people interesting and challenging work, they are less likely to complain about such things as pay and supplemental benefits. 9 If people are to set their own goals and standards of performance, they tend to set them higher than the boss would. If people are allowed to set their own goals and standards of performance, they tend to set them lower that the boss would. 10 The more knowledge and freedom people have regarding their jobs, the more controls are needed to keep them in line. The more knowledge and freedom people have regarding their jobs, the fewer controls are needed to ensure satisfactory job performance. ––––––––––– (K) ––––––––––– (L) 10 ––––––––––– (M) ––––––––––– (N) 10 ––––––––––– (O) ––––––––––– (P) 10 ––––––––––– (Q) ––––––––––– (R) 10 ––––––––––– (S) ––––––––––– (T) 10 Source: Adapted from M. Scott Myers, Every Employee a Manager (New York: McGraw-Hill Book Company, 1970). DISCUSSION ■ Did the responses from some of your colleagues surprise you and if so why? ■ Explain with supporting examples how situational factors might influence a person’s pre- ferred style of management. ■ What conclusions do you draw from this exercise? Having discussed results with col- leagues would you change any of your responses, and if so, why? Visit our website www.booksites.net/mullins for further questions, annotated weblinks, case material and Internet research material. 273 274 PART 3 THE ROLE OF THE MANAGER CASE EXAMPLE Chemical company When, in the mid 1980s, Mike joined the Group as training manager, his aim was to establish a culture that would focus on serving the customer and encouraging employees to solve their own problems, and also help them to make their own decisions within their areas of work responsibility. He remembers that operators at the company’s process plants ‘used to be expected to put their brains on the coat hanger when they came to work. Virtually, you couldn’t close a pump without the works manager’s approval.’ Supervisors, he recalls, were too ready to divert from their own priority work to do jobs that operators ought to be doing. The superintendents would spend time on problems well within the capabilities of the supervisors to solve, and would turn to the plant manager for help with their own problems. There was a constant spiralling down, Mike says. This was tolerable if everyone reverted to their original positions and responsibilities when a crisis ended. But some plants were constantly in crisis. ‘Everyone was looking after other people’s jobs rather than their own.’ So, Mike, now the group’s human resources manager, turned for help to the concept of time management. Importantly, he considered it as the warp and weft of the group’s much larger training effort. ‘I saw time management as an enabling technique,’ he says, ‘one that would interface with other courses such as assertiveness training while encouraging people to make the time to step back and think more clearly about their jobs.’ In the last two years the group has run 15 of Time/ system’s two-day courses at its headquarters for some 300 employees at home and abroad. Participants have ranged from plant managers to first line supervisors, and from scientists in the 400-strong technical division to technicians and administrative personnel. Mike believes that linking the concept of time management to other elements of company training has proved highly successful, pointing to the results at a large plant near Hartlepool engaged in experimenting with a special process, to replace the existing process, currently accounting for 90 per cent of the company’s production worldwide. The new process will radically reduce environmentally damaging effluent. Mike confirms that there has been an improvement in work culture and practice at the plant. At another location about 50 of the plant’s 520 staff, at first-line supervisor level and above, have been on the time management course. Mike asserts that because supervisors now sit down to prioritise their time, they aren’t so ready with reflex responses to operators’ inessential requests for help. In effect, through their ‘A’ Time training, they have reassessed their own priorities. When it comes to time management, extensive use is made of Time/system’s planning books. David, plant manager, who carries his wherever he goes, uses the lunch hour to remind himself of his schedule for the rest of the day and to plan the following day’s activities. Early each morning he convenes a meeting of his superintendents and supervisors, to review what has happened in the plant in the previous 24 hours. He says that because so many people at supervisor level and above use a common format for their notes and planning, there is less chance of anything important being overlooked. And because there is not much need to refer back to files, the daily review and planning meetings are speeded up. The job of John, at the central laboratory, is to provide mathematical and statistical support to the work of the technical division. ‘I was astounded to discover,’ he says, ‘that it was possible to decide my own priorities, structure them into my forward planning and organise my work week around them.’ The course made him realise that much of his overwork was of his own making. ‘I couldn’t say “no” to requests for assistance from other departments. I imagined that if I turned people down they were going to be so aggrieved that they would never come back with another problem, and eventually I wouldn’t have a reason for my existence.’ His own priority work focused on reaching a decision whether to build some computer software in-house for use in the plant in Malaysia, or whether to rely entirely on bought-in software packages. It was a decision which had to be made by the end of January. To reduce interruptions to his ‘A’ Time he began saying ‘no’ – ‘it wasn’t as difficult as I had thought’. He even told one internal customer that he couldn’t help him solve his problem for another three months. CHAPTER 7 Time management training has helped him to be more assertive, he insists. ‘And because I couldn’t turn every customer down, I also had to learn more effective delegation.’ Another ‘backroom boy’ who looked afresh at his working day, and became more assertive as a result, is David, who has been with the company more than 30 years. He attended the training without high expectations. But it prompted him to analyse his job and he found that up to 40 per cent of his time was being spent talking with customers and responding to their needs. The other 60 per cent was devoted to long-term aims of improving the service his department offers, keeping up with new techniques and developing new methods. That was satisfactory, he decided, so long as the ratio remained around 60/40. ‘To keep it like that I MANAGERIAL BEHAVIOUR AND EFFECTIVENESS began to query the difference between “urgent” and “important” when requests for attention came in. Every customer says his problem is important. But is it genuinely urgent?’ In a service department, as David points out, you have to respond to requests for service with a smile. ‘But that doesn’t mean abandoning your critical faculties, and failing to set priorities.’ ‘Time management training taught me that many of our problems were self-generated. Rather than devoting so much time reacting to the problems thrown up by the new computer system, we should have spent more time ensuring smooth administration.’ It comes down, as Mike suggests, to taking the time to think more clearly about the job, analyse it and set priorities. Time management is about making time, but also filling it productively. (Reprinted with the permission of The Institute of Administrative Management.) CASE STUDY 7.1 The library in Labworth Street is located in an inner city area of the local authority. While small and in rather old premises, it has been popular over the years with residents of the local community, who have looked to it as a community focal point. The library is also well thought of by local authority officials. The staff has consisted of the Chief Librarian, four qualified Librarians and three Library Assistants, all of whom have worked well together with a high degree of mutual co-operation by, for example, voluntarily exchanging shifts to accommodate the domestic situations of a colleague. The staff have often curtailed their breaks when the needs of library clients have required it. The library has been open on Monday to Friday from 9.00 to 12.00 and 2.00 to 6.00. When closed, time has been spent on staff training, administrative investigations and book restocking. Regular returns have also had to be made to the local authority as part of the latter’s information gathering and performance monitoring role. That was the situation up to six months ago, when a new person, Rita Jones, was appointed in charge of the library. She is determined to make the library service even more efficient, believing that such a strategy is absolutely necessary in a climate Photo: The British Library Bringing management to book: how to manage a library British Library: a major seat of learning 275 276 PART 3 THE ROLE OF THE MANAGER Case study 7.1 continued of debate over the library service being considered for transfer to the private sector. At the outset she felt that the methods by which the staff operated had to be changed. She instructed staff that the informal switching of shifts had to cease and that any change in rosters had to be approved by her in advance. She had noticed that staff used to spend a considerable amount of time talking to the public socially, rather than just on matters concerned with the library service, and instructions were issued that this had to cease: ‘Time could not be wasted on informal discussion.’ More effort also had to be given to improving the information flow to the local authority, to provide evidence of the library’s efficiency. Over a relatively short period of time, the atmosphere within the library changed. The staff seemed to lose some of their enthusiasm, manifested in late arrival for work. On some occasions the library did not open on time because of confusion over shift patterns. The incidence of days off sick increased, and relations between staff deteriorated as they worked purely in accordance with their job descriptions. The overall attitude of the staff impacted on the quality of service to customers, who began complaining to local councillors of poor service from library staff – such as long queues at the desk, abrupt service at the inquiry point, books not being on the correct shelves, and inefficient operation of the book reservation system. The reputation of the library and the use of services was clearly in decline. In response to concerns expressed by officials, Rita Jones explained that she was endeavouring to improve the system in the library and that inevitably there were some short-term problems. She believed that, in the long run, the situation would improve. She recognised that, in spite of financial constraints, the budget for stock and staffing costs was adequate. YOUR TASKS In order to assist Rita Jones in tackling the problems arising in her organisation, prepare for her a memorandum of advice clearly setting out the management issues you see arising from the case, and the related alternative actions she might take to resolve these matters. CASE STUDY 7.2 As safe as houses: branch management in a building society Tony Jackson was first employed in a busy branch office of a building society on a Youth Training Scheme but left after two years because there was no permanent position available at that time. However, nine months later and following a period of continual rapid growth in business a new position was established in the branch. Jackson applied and got the job. After speaking on the telephone to the personnel department at head office, Mary Rogers the branch manager told her staff that she had always got on well with Tony Jackson. He seemed very bright, did everything asked of him and never caused her any trouble. Jane Taylor had been employed with the branch for the past four years, since leaving sixth form college. Her main duties were those of a cashier and assisting with mortgage advance accounts. Two weeks before Jackson was due to start work Mary Rogers asked to see her. ‘From now on, Jane, I would like you to act as senior branch assistant. I need someone to take some of the weight off my shoulders. Your main task will be to be responsible for the quality and accuracy of the work of the staff and to look after things when I’m not here.’ ‘Well ... er ... thank you, Miss Rogers. This is unexpected. It sounds exciting, but I wonder if ...’ ‘Oh, I know you can manage, Jane,’ continued Mary Rogers. ‘You know I tend to rely on you already. Anyway I’ve arranged for you to attend a refresher course at head office the week after next. It’s all about our systems and procedures, and new CHAPTER 7 ideas on automated technology, I think they called it. I am sure you will cope. And I know the extra money for the job will be helpful, won’t it?’ ‘Yes, that’s true enough – the money will certainly be helpful – but ...’ ‘Good, that’s fine then. I’m glad we got that settled. Now you must excuse me,’ said Mary Rogers standing up. ‘I have to attend to these returns due at head office by the end of next week. Then I have some new ideas for introducing even more business and providing a detailed analysis schedule of advances that I am working on. And I am due to see Pat Gray at the solicitors some time. Always plenty to do, Jane. We must have another chat sometime.’ As Jane left the manager’s office she reflected upon the extra money. With the new house and a large mortgage it would be very welcome. Approximately two months later Jane Taylor is speaking with Mary Rogers in her office. ‘I am sorry to trouble you, Miss Rogers, but it seems that Tony Jackson and I may have a clash of personalities.’ ‘What do you mean, Jane?’ asked Mary Rogers. ‘Putting my own feelings to one side, I made a conscious effort not to let it affect my work or responsibiities. But he does not accept jobs I give him without a fuss and tries to pass his work onto the YTS. He also tries to embarrass other members of staff when they are serving customers,’ explained Jane. ‘How do you mean he embarrasses you?’ ‘Among other things, he shouts to other assistants at the far end of the office and refers to customers by nicknames to try and make us laugh.’ ‘Oh dear, well we can’t have that, can we now, Jane? What have you done about it?’ ‘I did try to tell him about it and told him not to be so stupid and childish, but it didn’t seem to do any good.’ ‘All right, Jane, you had better leave it to me,’ sighed Mary Rogers. ‘I suppose I had better see what I can do. In the meanwhile I think you should try to learn to exercise your authority more.’ Lunchtime, three weeks later Jane Taylor is with a friend in a local pub. ‘What’s the matter, Jane? You seem a bit down lately. You’re not still annoyed about that assistant, are you?’ asked the friend. ‘It’s not just that, but, oh I don’t know…but, yes it does upset me,’ replied Jane. ‘You remember I told you about me seeing the branch manager; well, afterwards I had another go at Jackson. I told him to concentrate on his own work, but this is often below standard and when I showed him his mistakes he just said, “What do you expect, I’m only human.”’ MANAGERIAL BEHAVIOUR AND EFFECTIVENESS ‘But you didn’t just leave it like that?’ inquired the friend. ‘No, a couple of days later to try and overcome the problem I took him to the staff kitchen. I told him we all had to work together and as assistant manager I had a responsibility to keep the office running smoothly, and that an effort should be made for all of us to get on with each other. If not, I would take the matter further and report it to Miss Rogers. He just shrugged his shoulders and said, “Yeah, all right, let’s go and see Mary.’’’ ‘So then what happened?’ asked the friend expectantly. ‘His reaction was unexpected. It threw me a bit. I think I said something like “when I’m ready” and walked away. Mind you, his work did seem to improve for a time. But then last week I told him I needed his help with this urgent job and he got all huffy with me. When I told him it was about time he grew up and stopped behaving like that he just said, “If you treat me like a piece of dirt, I’ll behave like a piece of dirt’’ or words to that effect.’ ‘So did you go to see Miss Rogers, then?’ the friend asked. ‘I was going to. But, no, not yet. I know I really should go and see her again sometime before too long,’ replied Jane. ‘Anyhow, sorry, must dash now. We are still so busy at work – business seems to be growing all the time. See you again sometime.’ Later that same week Mary Rogers is on the telephone to head office. ‘…By the way, I have a member of staff we appointed who I think would benefit from a reminder about the importance of good supervision. I see you are running a course on Human Relations next month. Can you do your usual perfect organisation and fit her in? At least we can suggest she might like to attend. She can be a bit prickly at times but I am sure with all your experience you will know how to use the best words when you write to her.’ Ten days later Jane Taylor meets her friend in the public house again. ‘I’m glad to see you, Veronica. I was hoping I might find you here,’ Jane said to her friend. ‘What’s up, work still troubling you?’ asked Veronica. ‘I seem to remember you were going to sort things out with the manager. What did she do about that assistant of yours?’ ‘Yes, I was thinking of going to see her, but then Miss Rogers called me in to see her. She said that she had spoken with Tony Jackson and explained that as senior assistant I had more experience and authority than Tony, and that he should do as he was asked from now on.’ 277 278 PART 3 THE ROLE OF THE MANAGER Case study 7.2 continued ‘Good! Quite right too. That’s the way it should be,’ said Veronica. ‘So what’s the matter now?’ ‘Well his concentration and work had appeared to improve again but his attitude got even worse. Then this last week Miss Rogers has been off sick and I am temporarily in charge of the office once again. I usually distribute the work equally in the morning and then carry out the branch manager’s duties. Sometimes work comes in during the day and I distribute that straight away. When I leave work in Jackson’s tray he usually “tuts” or makes some sort of sarcastic comment as I am returning to the manager’s office. It is so unsettling and you can sense an unpleasant atmosphere in the whole office. And it looks like another assistant, Graham Wilkins, is thinking of leaving. That would be a pity. He is so good at his job. I don’t know what to do next. Oh, and I have also been told about a course on management skills in a couple of weeks at head office. I suppose I shall have to go.’ YOUR TASKS (a) Discuss the various issues of managerial behaviour and related matters raised by this case study. (b) Explain what actions you think should be taken in order to help improve the situation. Give supporting reasons. NOTES AND REFERENCES 1. Macken, G. ‘Taking An Holistic Approach’, Professional Manager, May 1997, p. 7. 2. Stewart, R. The Reality of Management, Third edition, Butterworth Heinemann (1999), p. 190. 3. Greenhalgh, L. ‘Managers Face Up to the New Era’ in Pickford, J. (ed.) Financial Times Mastering Management 2.0, Financial Times Prentice Hall (2001), p. 17. 4. McGregor, D. The Human Side of Enterprise, Penguin (1987). 5. Sieff, M. (Lord Sieff of Brimpton) Management the Marks & Spencer Way, Fontana Collins (1991), pp. 144–5. 6. Townsend, R. Further Up the Organisation, Coronet Books (1985), pp. 168–9. 7. See, for example: Mullins, L. J. ‘Management and Managerial Behaviour’, International Journal of Hospitality Management, vol. 4, no. 1, 1985, pp. 39–41. 8. Ouchi, W. G. Theory Z: How American Business Can Meet the Japanese Challenge, Addison-Wesley (1981), p. 4. 9. Tse, K. K. Marks & Spencer, Pergamon Press (1985). 10. See, for example: Sheldrake, J. Management Theory: From Taylorism to Japanization, International Thomson Business Press (1996). See also, Hunt, B. ‘The New Battlegrounds For Capitalism’, in Pickford, J. (ed.) Financial Times Mastering Management 2.0, Financial Times Prentice Hall (2001), pp. 11–15. 11. For a detailed discussion on Japanese management practices, see: Hannagan, T. Management: Concepts and Practices, Third edition, Financial Times Prentice Hall (2002). 12. Heller, R. In Search of European Excellence, HarperCollins Business (1997), p. 138. 13. Blake, R. R. and Mouton, J. S. The Managerial Grid III, Gulf Publishing Company (1985). 14. Blake, R. R. and McCanse, A. A. Leadership Dilemmas – Grid Solutions, Gulf Publishing Company (1991). 15. Lester, T. ‘Taking Guard on the Grid’, Management Today, March 1991, pp. 93–6. 16. Newborough, G. ‘People vs Production’, The British Journal of Administrative Management, May/June 1999, pp. 13–14h. 17. Crainer, S. and Dearlove, D. (eds) Financial Times Handbook of Management, Second edition, Financial Times Prentice Hall (2001), p. 364. 18. Likert, R. New Patterns of Management, McGraw-Hill (1961). 19. Likert, R. and Likert, J. G. New Ways of Managing Conflict, McGraw-Hill (1976). 20. Drucker, P. F. The Practice of Management, Heinemann Professional (1989). 21. Crainer, S. Key Management Ideas: Thinkers that Changed the Management World, Third edition, Financial Times Prentice Hall (1998), p. 75. 22. Rodgers, R. and Hunter, J. E. ‘Impact of Management by Objectives on Organizational Productivity’, Journal of Applied Psychology Monograph, vol. 76, no. 2, 1991, pp. 322–36. 23. Heller, R. In Search of European Excellence, HarperCollins Business (1997), p. 252. 24. Naylor, J. Management, Financial Times Pitman Publishing (1999), p. 285. 25. Hannagan, T. Management: Concepts and Practices, Third edition, Financial Times Prentice Hall (2002), p. 177. 26. See, for example: Blanchard, K. and Johnson, S. The One Minute Manager, HarperCollins Business (2000). CHAPTER 7 27. Gratton, L. Living Strategy: Putting People at the Heart of Corporate Purpose, Financial Times Prentice Hall (2000), p. xiii. 28. Freemantle, D. ‘The People Factor’, Management Today, December 1985, p. 68. 29. Peters, T. J. and Waterman, R. H. In Search of Excellence, Harper & Row (1982), p. 238. 30. Gratton, L. Living Strategy: Putting People at the Heart of Corporate Purpose, Financial Times Prentice Hall (2000), p. 206. 31. Mann, S. ‘Give a little gain a lot’, Professional Manager, March 1999, p. 32. 32. Castellanos, F. ‘Getting the rewards’, Read.Me, IBM team publication for the UK and Ireland, May/June 1998, no. 11, p. 32. 33. Fletcher, W. ‘Good Listener, Better Manager’, Management Today, January 2000, p. 30. 34. Adams, J. S. ‘Injustice in Social Exchange’ abridged in Steers, R. M. and Porter, L. W. Motivation and Work Behavior, Second edition, McGraw-Hill (1979), pp. 107–24. 35. ‘Management Insights, ‘The Virgin Factor’, Management Today, May 2000. 36. Waterman, R. The Frontiers of Excellence, Nicholas Brealey (1994). 37. See, for example: Beggs, A. ‘The Real Meaning of Empowerment’, Financial Times Mastering Management Review, September 1997, pp. 14–15. 38. Green, J. ‘When Was Your Management style Last Applauded?’, Chartered Secretary, December 1998, pp. 28–9. 39. Galunic, G. and Weeks, J. ‘Survey – Mastering People Management’, Financial Times, 12 November 2001. 40. Walmsley, C. J. Your Future Looks Bright, Preston Beach (2002). 41. Ash, M. K. On People Management, Macdonald & Co. (1985). 42. Ibid., p. xix. 43. Drucker, P. The Practice of Management, Heinemann Professional (1989), p. 3. 44. Foppen, J. W. ‘Knowledge Leadership’ in Chowdhury, S. Management 21C, Financial Times Prentice Hall (2000), p. 160–1. FT MANAGERIAL BEHAVIOUR AND EFFECTIVENESS 45. ‘Untapped Potential: The barriers to optimum corporate productivity’, Proudfoot Consulting, October 2002. For a summary, see: ‘News Update’, Manager, The British Journal of Administrative Management, No. 34, New Year 2003, p. 6. 46 See for example, Allen, T. ‘Hands Off Local Government’, Management Today, September 1993, p. 5. 47. Stewart, R. The Reality of Management, Third edition, Butterworth Heinemann (1999), p. 179. 48. Luthans, F. ‘Successful vs. Effective Real Managers’, The Academy of Management Executive, vol. 11, no. 2, 1988, pp. 127–32. 49. Reddin, W. J. Managerial Effectiveness, McGraw-Hill (1970). 50. Langford, V. ‘Managerial Effectiveness: A Review of the Literature’, in Brodie, M. and Bennett, R. (eds) Perspectives of Managerial Effectiveness, Thames Valley Regional Management Centre (1979). 51. Drucker, P. F. The Effective Executive, Heinemann Professional (1988). 52. Rees, W. D. and Porter, C. Skills of Management, Fifth edition, Thomson Learning (2001), p. 22. 53. See, for example: Johns, T. Perfect Time Management, Century Business (1993) and Van de Vliet, A. ‘Beat The Time Bandits’, Management Today, May 1997, pp. 90–2. 54. Training Learning Consultancy Ltd, Bristol, England. 55. ‘Managing Your Time Effectively’, Management Checklist 016, Chartered Management Institute, 2001. 56. Stewart, R. Managers and Their Jobs, Second edition, Macmillan (1988), p. 123. 57. Coates, J. ‘It is Legitimate to be Unavailable’, Industrial and Commercial Training, vol. 22, no. 5, 1990, pp. 8–11; for a fuller account of ‘MBWA’, see: Peters, T. J. and Austin, N. K. A Passion for Excellence, William Collins (1985). 58. Clegg, B. ‘How to Have Time for Life’, Professional Manager, January 2000, pp. 18–20. 59. Bruch, H. and Ghoshal, S. ‘Beware the Busy Manager’, Harvard Business Review, February 2002, pp. 62–9. 60. Butcher, D. ‘Personal Productivity is a Matter of Timing’, The British Journal of Administrative Management, October 1991, pp. 19–20. Use the Financial Times to enhance your understanding of the context and practice of management and organisational behaviour. Refer to articles 7, 18, 20, 22 and 26 in the BUSINESS PRESS section at the end of the book for relevant reports on the issues explored in this chapter. 279 8 THE NATURE OF LEADERSHIP An essential part of management is co-ordinating the activities of people and guiding their efforts towards the goals and objectives of the organisation. This involves the process of leadership and the choice of an appropriate form of action and behaviour. Leadership is a central feature of organisational performance. The manager must understand the nature of leadership influence and factors which determine relationships with other people, and the effectiveness of the leadership relationship. Photo: Rajesh Jantilal/AFP/Getty Images LEARNING OUTCOMES After completing this chapter you should be able to: explain the meaning and importance of leadership in work organisations; contrast patterns of managerial leadership and main approaches to and studies of leadership; detail the nature of managerial leadership and the exercise of leadership power and influence; examine leadership as an aspect of behaviour, and different styles of leadership; assess contingency theories of leadership and situational factors which determine the characteristics of leadership; evaluate the nature and main components of transformational leadership and inspirational leadership; review the variables which determine effective managerial leadership and development. In the twenty-first century, leaders must create an atmosphere in which people believe in strategy, believe in management decisions, and believe in their work. Once people believe in management decisions, there is an excitement within an organization. Such an atmosphere makes an organization prosper. Successful leaders create this sort of environment both inside and outside the organization. Subir Chowdhury Management 21C, Financial Times Prentice Hall (2000) CHAPTER 8 THE NATURE OF LEADERSHIP THE MEANING OF LEADERSHIP There are many ways of looking at leadership and many interpretations of its meaning. Leadership might be interpreted in simple terms, such as ‘getting others to follow’ or ‘getting people to do things willingly’, or interpreted more specifically, for example as ‘the use of authority in decision-making’. It may be exercised as an attribute of position, or because of personal knowledge or wisdom. Leadership might be based on a function of personality, or it can be seen as a behavioural category. It may also be viewed in terms of the role of the leaders and their ability to achieve effective performance from others. Taffinder suggests that everyone has a theory but, although we know quite a lot about management, we do not know as much about leadership.1 Handy believes that: like motivation, the search for the definitive solution to the leadership problem has proved to be another endless quest for the Holy Grail in organization theory.2 According to Crainer there are over 400 definitions of leadership and: it is a veritable minefield of misunderstanding and difference through which theorists and practitioners must tread warily.3 Nothing in business circles brings such a rush of clichés to the head as leadership, one of those humpty-dumpty words which, as Alice said, mean whatever we want them to mean ... Leadership is one of those elusive priorities, an area in which there is no absolute, no guaranteed model. So it turns out to be not only vital but also fun to talk about what makes a leader. Sir Peter Parker4 According to Useem, leadership is a matter of making a difference. It entails changing an organisation and making active choices among plausible alternatives, and depends on the development of others and mobilising them to get the job done. Leadership is at its best when the vision is strategic, the voice persuasive and the results tangible. In the study of leadership, an exact definition is not essential but guiding concepts are needed. The concepts should be general enough to apply to many situations, but specific enough to have tangible implications for what we do.5 However, in addition to vision and strategy, Useem suggests that they have been joined by new critical capabilities – leading out and leading up. With the increasing use of outsourcing, managers need the skill to lead out: not just to send work downwards to subordinates but also to have a talent for lateral leadership in arranging work with colleagues. And as organisations decentralise authority managers must be able to lead their own bosses, to have the capacity to lead up and muster support from above as well as below. Inspiring and influencing other people Today, leadership is increasingly associated not with command and control but with the concept of inspiration, of getting along with other people and creating a vision with which others can identify. For example, Adair sees leadership as a combination of The vision is absolutely key to getting your troops together. It has to be qualitative, daring and grab the imagination. The test of it should be how quickly people will latch on to where you are going; you can entrust them with the how. You only get a company going where you want it to go by leadership by example and by honest and endless communication. Everyone in the business has to buy into your vision. Sir John Harvey-Jones6 281 282 PART 3 THE ROLE OF THE MANAGER example, persuasion and compulsion that results in making people do things they might not otherwise have done.7 It is difficult, therefore, to generalise about leadership, but essentially it is a relationship through which one person influences the behaviour or actions of other people. This means that the process of leadership cannot be separated from the activities of groups and with effective teambuilding. According to Levine, leaders need to focus on moving people and organisations forward by increasing the competency of staff and the co-operation of teams in order to improve the organisation. A leader’s job is to constantly challenge the bureaucracy that smothers individual enthusiasm and the desire to contribute to an organization. Leaders in the new millennium will create an environment that encourages the development of skills, learning and openness so that those on their team can participate in the deployment of financial and human resources.8 THE IMPORTANCE OF LEADERSHIP Leadership is related to motivation, interpersonal behaviour and the process of communication. For example, according to Sir Paul Judge: ‘Thirty years ago it was very much about what you knew, the technicalities of things. Managers now are leaders of their groups, their departments. Although they may well need some specialist knowledge, the human relations part of the management job is more important than ever. People have more flexibility and more choice in their careers, which are themselves more fluid, so keeping people motivated is very important.’9 Leadership is also important in attempting to reduce employee dissatisfaction.10 Good leadership involves the effective process of delegation and empowerment. The leadership relationship is not limited to leader behaviour resulting in subordinate behaviour. Leadership is a dynamic process. The leader–follower relationship is reciprocal and effective leadership is a two-way process which influences both individual and organisational performance. Lord Sieff, for example, maintains that: Leadership is vitally important at all levels within the company, from main board to the shopfloor. Leadership is the moral and intellectual ability to visualise and work for what is best for the company and its employees ... The most vital thing the leader does is to create team spirit around him and near him, not in a schoolboy sense, but in realistic terms of mature adults ... To be effective leadership has to be seen, and it is best seen in action.11 Good management leadership helps to develop teamwork and the integration of individual and group goals. It aids intrinsic motivation by emphasising the importance of the work that people do.12 The changing nature of work organisations, including flatter structures and recognition of the efficient use of human resources, coupled with advances in social democracy, have combined to place growing importance on leadership. The nature of management is moving away from an emphasis on getting results by the close control of the workforce and towards an environment of coaching, support and empowerment.13 ‘The maxim that: “there is nothing you cannot achieve if you don’t mind who gets the credit” should be the watchword for all team leaders … The view that is beginning to emerge, is that if teams are to come up with the goods, the leaders need to step out of the limelight and let others take a bow.’14 Hooper and Potter discuss the importance of leadership in times of change and uncertainty, and that good leaders are sensitive to the impact of the change process on people. ‘Never is leadership more sought after than in times of change and uncertainty. Effective change leadership is the key to shifting people’s perceptions from seeing change as a threat to seeing it as an exciting challenge.’15 Fullan also discusses leader- CHAPTER 8 THE NATURE OF LEADERSHIP ship in a culture of change and points out that leadership is key to large-scale improvement. It is essential for leaders to understand the change process, and moral purpose without change will lead to moral martyrdom. Leaders must be able to operate under complex, uncertain circumstances.16 Vecchio raises the question of whether leadership does make a difference and suggests one interesting way to learn whether leaders can have an impact is by studying the results of a change in leader. As work-unit achievements result more from the efforts of the unit’s members than of one individual, and organisations have rules and policies that govern behaviour, a good argument can be made that leadership has only a modest impact on group performance. However, Vecchio also contends that: ‘one has a sense that a leader, under the right circumstances, can have a powerful impact on group performance.’17 A recent research report by the Chartered Management Institute highlights the attitudes and opinions of managers working in the public sector on the key issues of leadership and performance. The report indicates a strong positive relationship between the organisational priority given to leadership development, and the level of employee motivation and satisfaction.18 (See also the discussion on leadership development later in this chapter.) LEADERSHIP AND MANAGEMENT What is the relationship between leadership and management? Management is more usually viewed as getting things done through other people in order to achieve stated organisational objectives. The manager may react to specific situations and be more concerned with solving short-term problems. Management is regarded as relating to people working within a structured organisation and with prescribed roles. To people outside of the organisation the manager might not necessarily be seen in a leadership role. Management may arguably be viewed more in terms of planning, organising, directing and controlling the activities of subordinate staff. Leadership, however, is concerned more with attention to communicating with, motivating, encouraging and involving people.19 Management is complex, fragmented, its activities brief, opportunistic, predominantly verbal; leadership is more so. Management reacts. Leadership transforms. It makes a difference.20 The emphasis of leadership is on interpersonal behaviour in a broader context. It is often associated with the willing and enthusiastic behaviour of followers. Leadership does not necessarily take place within the hierarchical structure of the organisation. Many people operate as leaders without their role ever being clearly established or defined. For example, Belbin suggests that: there is a clear implication that leadership is not part of the job but a quality that can be brought to a job … The work that leadership encompasses in the context clearly is not assigned but comes about spontaneously.21 Differences in attitudes and relations with others There are other differences between leadership and management. For example, Zaleznik explores difference in attitudes towards goals, conceptions of work, relations with others, self-perception and development. ■ Managers tend to adopt impersonal or passive attitudes towards goals. Leaders adopt a more personal and active attitude towards goals. 283 284 PART 3 THE ROLE OF THE MANAGER ■ ■ ■ The 7-S organisational framework In order to get people to accept solutions, the manager needs continually to co-ordinate and balance in order to compromise conflicting values. The leader creates excitement in work and develops choices that give substance to images that excite people. In their relationships with other people, managers maintain a low level of emotional involvement. Leaders have empathy with other people and give attention to what events and actions mean. Managers see themselves more as conservators and regulators of the existing order of affairs with which they identify, and from which they gain rewards. Leaders work in, but do not belong to, the organisation. Their sense of identity does not depend upon membership or work roles and they search out opportunities for change.22 The differences between leadership and management have been applied by Watson to the 7-S organisational framework of: strategy, structure, systems, style, staff, skills and superordinate (or shared) goals. Watson suggests that whereas managers tend towards reliance on ■ ■ ■ strategy, structure, and systems, leaders have an inherent inclination for utilisation of the ‘soft’ Ss of ■ ■ ■ ■ style, staff, skills, and shared goals. Watson also suggests, although cautiously, that 7-S management could be seen as the province of leaders. Managers will not ordinarily be capable of achieving sufficient mastery of all seven factors to attain a consistently high level of organisational performance.23 Distinction between management and leadership Based on experience of management approaches in both commerce and the military, Hollingsworth questions how many managers consider themselves first and foremost as leaders, relegating ‘manager’ to their job title. He argues that commercial managers need to learn from the armed forces if they wish to be viewed as leaders. Having accepted that there are some links between management and leadership, Hollingsworth lists six ‘fundamental differences’. ■ ■ ■ ■ ■ ■ A manager administers – a leader innovates. A manager maintains – a leader develops. A manager focuses on systems and structure – a leader focuses on people. A manager relies on control – a leader inspires trust. A manager keeps an eye on the bottom line – a leader has an eye on the horizon. A manager does things right – a leader does the right thing.24 Not everyone would agree with this list. Robinson, for example, suggests that if the word ‘manager’ is replaced by ‘administrator’ then the lists works. However, whatever your view the list makes for a helpful basis for critical discussion on the nature of management and leadership.25 In Chapter 6 we discussed management as getting work done through the efforts of other people. To be an effective manager it is necessary to exercise the role of leadership. A common view is that the job of the manager requires the ability of leadership CHAPTER 8 THE NATURE OF LEADERSHIP and that leadership is in effect a sub-set of management, although leadership is a special attribute which can be distinguished from other elements of management. According to Miller et al., by definition there are important distinctions between the two concepts of management and leadership. ‘Management involves using human, equipment and information resources to achieve various objectives. On the other hand, leadership focuses on getting things done through others. Thus you manage things (budgets, procedures, and so on), but you lead people.’26 Close relationship between management and leadership Despite a continuing debate on differences between management and leadership, there is a close relationship between them and it is not easy to separate them as distinct activities. Many methods of management training can also be used as a means of measuring leadership style. For example, the Leadership Grid (discussed in Chapter 7) was until recently known as the Managerial Grid. Note also that the new framework of effective leadership introduced by Investors in People is called the ‘Leadership and Management Model’.27 Today, there appears an increasing tendency to emphasise the interrelationship between management and leadership, and to see them more as synonymous. I have never been fond of distinguishing between leadership and management: they overlap and you need both qualities.28 Increasingly, management and leadership are being seen as inextricably linked. It is one thing for a leader to propound a grand vision, but this is redundant unless the vision is managed so it becomes real achievement.29 Leadership and management, I think, are closely inter-related; how to get things done through people and how to make work an enjoyable experience. Sixty-three per cent of people at work are not engaged, do not enjoy what they are doing and yet they are using their most precious resource – time. So, there must be a way of making that experience worthwhile and meaningful and enjoyable.30 APPROACHES TO LEADERSHIP Photo: Walter Sanders/Time Life Pictures/Getty Images Due to its complex and variable nature there are many alternative ways of analysing leadership. It is helpful, therefore, to have some framework in which to consider different approaches to study of the subject. One way is to examine managerial leadership in terms of: Julius Caesar: a great and historic face of leadership ■ ■ ■ ■ ■ ■ ■ the qualities or traits approach; the functional or group approach, including actioncentred leadership; leadership as a behavioural category; styles of leadership; the situational approach and contingency models; transitional or transformational leadership; and inspirational leadership. (See Figure 8.1.) 285 286 PART 3 THE ROLE OF THE MANAGER QUALITIES OR TRAITS APPROACH Assumes leaders are born and not made. Leadership consists of certain inherited characteristics or personality traits. Focuses attention on the person in the job and not on the job itself. THE FUNCTIONAL or GROUP APPROACH Attention is focused on the functions and responsibilities of leadership, what the leader actually does and the nature of the group. Assumes leadership skills can be learned and developed. LEADERSHIP AS A BEHAVIOURAL CATEGORY The kinds of behaviour of people in leadership positions and the influence on group performance. Draws attention to range of possible managerial behaviour and importance of leadership style. STYLES OF LEADERSHIP The way in which the functions of leadership are carried out and the behaviour adopted by managers towards subordinate staff. Concerned with the effects of leadership on those being led. THE SITUATIONAL APPROACH AND CONTINGENCY MODELS The importance of the situation. Interactions between the variables involved in the leadership situation and patterns of behaviour. Belief that there is no single style of leadership appropriate to all situations. TRANSFORMATIONAL LEADERSHIP A process of engendering motivation and commitment, creating a vision for transforming the performance of the organisation, and appealing to the higher ideals and values of followers. INSPIRATIONAL LEADERSHIP Based on the personal qualities or charisma of the leader and the manner in which the leadership influence is exercised. Figure 8.1 A framework for the study of managerial leadership CHAPTER 8 THE NATURE OF LEADERSHIP THE QUALITIES OR TRAITS APPROACH The first approach assumes that leaders are born and not made. Leadership consists of certain inherited characteristics, or personality traits, which distinguish leaders from their followers: the so-called Great Person theory of leadership. The qualities approach focuses attention on the man or woman in the job and not on the job itself. It suggests that attention is given to the selection of leaders rather than to training for leadership. For example, Drucker (writing originally in 1955) makes the point that: Leadership is of utmost importance. Indeed there is no substitute for it. But leadership cannot be created or promoted. It cannot be taught or learned.31 There have been many research studies into the common traits of leadership. However, attempts at identifying common personality, or physical and mental, characteristics of different ‘good’ or ‘successful’ leaders have met with little success.32 Investigations have identified lists of traits which tend to be overlapping, contradictory or with little correlation for most features. It is noticeable that ‘individuality’ or ‘originality’ usually features in the list of traits. This itself suggests that there is little in common between specific personality traits of different leaders. It is perhaps possible therefore to identify general characteristics of leadership ability, such as self-confidence, initiative, intelligence and belief in one’s actions, but research into this area has revealed little more than this. In a series of interviews with headhunters, and senior figures in industry and the city, Management Today came up with a list of Britain’s most powerful women in business. A conclusion from the list is that the ‘top 50 women do not fit any pattern. They wield the kind of power and influence that defies stereotypes.’33 Limitations of the traits approach There are two further limitations with this approach. ■ ■ First, there is bound to be some subjective judgement in determining who is regarded as a ‘good’ or ‘successful’ leader. Second, the lists of possible traits tend to be very long and there is not always agreement on the most important. Even if it were possible to identify an agreed list of more specific qualities, this would provide little explanation of the nature of leadership. It would do little to help in the development and training of future leaders. Although there is still some interest in the qualities, or traits, approach, attention has been directed more to other approaches to leadership. The qualities or traits approach gives rise to the questions: whether leaders are born or made; and whether leadership is an art or a science. The important point, however, is that these are not mutually exclusive alternatives. Even if there are certain inborn qualities which make for a good leader, these natural talents need encouragement and development. Even if leadership is something of an art, it still requires the application of special skills and techniques. THE FUNCTIONAL (OR GROUP) APPROACH This approach to leadership focuses attention not on the personality of the leader, nor on the man or woman in the job, per se, but on the functions of leadership. Leadership is always present in any group engaged in a task. The functional approach views leadership in terms of how the leader’s behaviour affects, and is affected by, the group of followers. This approach concentrates on the nature of the group, the followers or subordinates. It focuses on the content of leadership. 287 288 PART 3 THE ROLE OF THE MANAGER Greater attention can be given to the successful training of leaders and to the means of improving the leaders’ performance by concentrating on the functions which will lead to effective performance by the work group. The functional approach believes that the skills of leadership can be learnt, developed and perfected. In contrast to the view of Drucker (referred to above), Kotter, for example, makes the point that successful companies do not wait for leaders to come along. ‘They actively seek out people with leadership potential and expose them to career experiences designed to develop that potential. Indeed, with careful selection, nurturing and encouragement, dozens of people can play important leadership roles in a business organization.’34 And a similar point is made by Whitehead: ‘There has been a dramatic change in how management thinkers regard leadership today. Leaders are not born, they say, but made. And the good news is everyone can do it. You don’t have to be promoted to a management position. You can be a leader whatever job you do. You don’t have to be the boss to be a leader.’35 Action-centred leadership A general theory on the functional approach is associated with the work of John Adair and his ideas on action-centred leadership which focuses on what leaders actually do.36 The effectiveness of the leader is dependent upon meeting three areas of need within the work group: the need to achieve the common task, the need for team maintenance, and the individual needs of group members. Adair symbolises these needs by three overlapping circles (see Figure 8.2). Task functions involve: ■ ■ ■ ■ ■ achieving the objectives of the work group; defining group tasks; planning the work; allocation of resources; organisation of duties and responsibilities; Task needs Team maintenance needs Figure 8.2 Interaction of needs within the group (Source: Adair, J., Action-Centred Leadership, Gower Press (1979), p. 10.) Individual needs CHAPTER 8 THE NATURE OF LEADERSHIP ■ ■ controlling quality and checking performance; reviewing progress. Team functions involve: ■ ■ ■ ■ ■ ■ maintaining morale and building team spirit; the cohesiveness of the group as a working unit; setting standards and maintaining discipline; systems of communication within the group; training the group; appointment of sub-leaders. Individual functions involve: ■ ■ ■ ■ ■ meeting the needs of the individual members of the group; attending to personal problems; giving praise and status; reconciling conflicts between group needs and needs of the individual; training the individual. The action by the leader in any one area of need will affect one or both of the other areas of need. The ideal position is where complete integration of the three areas of need is achieved. In any work group the most effective leader is the person who sees that the task needs, the needs of the group and those of the individual are all adequately met. The effective leader elicits the contribution of members of the group and draws out other leadership from the group to satisfy the three interrelated areas of need. The three-circle approach used by Adair also serves to illustrate the close relationship between leadership and management. Building the team and satisfying individual needs would include leadership. Achieving the common task clearly involves the process of management. LEADERSHIP AS A BEHAVIOURAL CATEGORY This approach draws attention to the kinds of behaviour of people in leadership situations. One of the most extensive research studies on behavioural categories of leadership was the Ohio State Leadership Studies undertaken by the Bureau of Business Research at Ohio State University. The focus was on the effects of leadership styles on group performance. Questionnaires were designed which comprised a list of descriptive items each dealing with a specific aspect of leadership behaviour. The questionnaires were used repeatedly in different kinds of organisations and in a variety of leader–group member situations. Consideration and structure Results of the Ohio State studies indicated two major dimensions of leadership behaviour, labelled ‘consideration’ and ‘initiating structure’.37 ■ ■ Consideration reflects the extent to which the leader establishes trust, mutual respect and rapport with the group and shows concern, warmth, support and consideration for subordinates. This dimension is associated with two-way communication, participation and the human relations approach to leadership. Structure reflects the extent to which the leader defines and structures group interactions towards attainment of formal goals and organises group activities. This dimension is associated with efforts to achieve organisational goals. Consideration and initiating structure can be seen as the same as maintenance function (building and maintaining the group as a working unit and relationships among 289 290 PART 3 THE ROLE OF THE MANAGER group members) and task function (accomplishment of specific tasks of the groups and achievement of goals) which are discussed in Chapter 14. Consideration and initiating structure were found to be uncorrelated and independent dimensions. Leadership behaviour could, therefore, be shown on two separate axes. Research into the effects of these four types of leadership behaviour suggest that some balance is needed between consideration and structure in order to satisfy both individual needs and organisational goals. A high consideration, high structure style appears to be generally more effective in terms of subordinate satisfaction and group performance, but the evidence is not conclusive and much seems to depend upon situational factors. Employeecentred and productioncentred supervisors Another major research study was carried out at the University of Michigan Institute for Social Research at the same time as the Ohio State studies. Effective supervisors (measured along dimensions of group morale, productivity and cost reduction) appeared to display four common characteristics: ■ ■ ■ ■ delegation of authority and avoidance of close supervision; an interest and concern in their subordinates as individuals; participative problem-solving; and high standards of performance. Likert, who has summarised the findings of the University of Michigan studies, used the terms employee-centred and production-centred supervisors.38 These terms are similar to the dimensions of consideration and structure. The first three of these supervisory characteristics are examples of consideration. The fourth characteristic exemplifies structure. Like consideration and structure, employee-centred and production-centred supervision need to be balanced. Likert concluded that employee-centred supervisors who get best results tend to recognise that one of their main responsibilities is production. Both the Ohio State studies and the University of Michigan studies appear to support the idea that there is no single behavioural category of leadership which is superior. There are many types of leadership behaviour and their effectiveness depends upon the variables in any given situation. Major dimensions of managerial leadership Despite the many types of actual leadership behaviour, we have seen that there appears to be general agreement on two major dimensions of managerial leadership. This can be extended to include the works of McGregor and of Blake and McCanse, discussed as part of managerial behaviour in Chapter 7. (See Figure 8.3.) Group interaction analysis Task functions Maintenance functions Ohio State leadership study Initiating structure Consideration University of Michigan study Production-centred supervision Employee-centred supervision McGregor, assumptions about people and work Theory X Theory Y Blake and McCanse, Leadership Grid Concern for production Concern for people Figure 8.3 Two major dimensions of managerial leadership CHAPTER 8 THE NATURE OF LEADERSHIP STYLES OF LEADERSHIP Attention to leadership as a behavioural category has drawn attention to the importance of leadership style. In the work situation it has become increasingly clear that managers can no longer rely solely on the use of their position in the hierarchical structure as a means of exercising the functions of leadership. In order to get the best results from subordinates the manager must also have regard for the need to encourage high morale, a spirit of involvement and co-operation, and a willingness to work. This gives rise to consideration of the style of leadership and provides another heading under which to analyse leadership behaviour. Leadership style is the way in which the functions of leadership are carried out, the way in which the manager typically behaves towards members of the group. The development of behavioural science has drawn attention to the processes of interpersonal behaviour in the work situation and to the effects of leadership on those being led. The attention given to leadership style is based on the assumption that subordinates are more likely to work effectively for managers who adopt a certain style of leadership than they will for managers who adopt alternative styles. Broad classification of leadership style There are many dimensions to leadership and many possible ways of describing leadership style, such as, for example, dictatorial, unitary, bureaucratic, benevolent, charismatic, consultative, participative and abdicatorial. The style of managerial leadership towards subordinate staff and the focus of power can however be classified within a broad three-fold heading. ■ ■ ■ Solo leader and team leader The authoritarian (or autocratic) style is where the focus of power is with the manager, and all interactions within the group move towards the manager. The manager alone exercises decision-making and authority for determining policy, procedures for achieving goals, work tasks and relationships, control of rewards or punishments. The democratic style is where the focus of power is more with the group as a whole and there is greater interaction within the group. The leadership functions are shared with members of the group and the manager is more part of a team. The group members have a greater say in decision-making, determination of policy, implementation of systems and procedures. A laissez-faire (genuine) style is where the manager observes that members of the group are working well on their own. The manager consciously makes a decision to pass the focus of power to members, to allow them freedom of action ‘to do as they think best’, and not to interfere; but is readily available if help is needed. There is often confusion over this style of leadership behaviour. The word ‘genuine’ is emphasised because this is to be contrasted with the manager who could not care, who deliberately keeps away from the trouble spots and does not want to get involved. The manager just lets members of the group get on with the work in hand. Members are left to face decisions which rightly belong with the manager. This is more a non-style of leadership or it could perhaps be labelled as abdication. Belbin distinguishes between two broad contrasting or diverging styles of leadership in industry: the solo leader and the team leader.39 The solo leader enjoys free range, and rules as if absolutely. The leader takes no risks with other people, adopts a directive approach, prefers specific tasks and goals, expects compliance and acts as a model for others to follow. In times of crisis or urgency the talented solo leaders have been effective in overcoming departmental barriers and obstacles, and implementing decisions quickly. However, when the solo leaders fail, they are discarded. 291 292 PART 3 THE ROLE OF THE MANAGER By contrast, the team leader declines to rule as if absolutely, and deliberately limits his or her role. The leader creates a sense of mission, expresses greater respect for and trust in subordinates, recognises the skills and strengths of others, and is more inclined to delegate. Belbin suggests that solo leadership is familiar to most people because part of crowd psychology is to seek to be led and to have faith in the leader. However, increasing uncertainty and continuous change together with societal pressure for the sharing of power has led to increasing attention to team leadership. Attention to style of leadership Work by such writers as McGregor, Likert, and Blake and Mouton (discussed in Chapter 7) appears to support the value of participative managerial leadership in improving organisational effectiveness. Attention to the manager’s style of leadership has come about because of a greater understanding of the needs and expectations of people at work. It has also been influenced by such factors as: ■ ■ ■ ■ ■ ■ ■ ■ increasing business competitiveness and recognition of efficient use of human resources; changes in the value system of society; broader standards of education and training; advances in scientific and technical knowledge; changes in the nature of work organisation; the influence of trade unions; pressure for a greater social responsibility towards employees, for example through schemes of participation in decision-making and the quality of working life; and government legislation, for example in the areas of employment protection, and the influence of the European Union. All of these factors have combined to create resistance against purely autocratic styles of leadership. CONTINUUM OF LEADERSHIP BEHAVIOUR One of the best known works on leadership style is that by Tannenbaum and Schmidt (Figure 8.4).40 Originally written in 1958 and updated in 1973, their work suggests a continuum of possible leadership behaviour available to a manager and along which various styles of leadership may be placed. The continuum presents a range of action related to the degree of authority used by the manager and to the area of freedom available to nonmanagers in arriving at decisions. The Tannenbaum and Schmidt continuum can be related to McGregor’s supposition of Theory X and Theory Y. Boss-centred leadership is towards Theory X and subordinate-centred leadership is towards Theory Y. Four main styles of leadership Moving along the continuum, the manager may be characterised according to the degree of control that is maintained. Neither extreme of the continuum is absolute as there is always some limitation on authority and on freedom. This approach can be seen as identifying four main styles of leadership by the manager: tells, sells, consults, joins. ■ ■ ■ Tells. The manager identifies a problem, chooses a decision and announces this to subordinates, expecting them to implement it without an opportunity for participation. Sells. The manager still chooses a decision but recognises the possibility of some resistance from those faced with the decision and attempts to persuade subordinates to accept it. Consults. The manager identifies the problem but does not choose a decision until the problem is presented to the group, and the manager has listened to the advice and solutions suggested by subordinates. CHAPTER 8 THE NATURE OF LEADERSHIP Figure 8.4 Continuum of manager–non-manager behaviour (Reprinted by permission of the Harvard Business Review from ‘How to Choose a Leadership Pattern’ by Robert Tannenbaum and Warren H. Schmidt (May/June 1973). Copyright © 1973 by Harvard Business School Publishing Corporation; all rights reserved.) ■ Main forces in deciding type of leadership Joins. The manager defines the problem and the limits within which the decision must be chosen and then passes to the group, with the manager as a member, the right to make decisions. Tannenbaum and Schmidt suggest that there are three factors, or forces, of particular importance in deciding what types of leadership are practicable and desirable. These are: forces in the manager; forces in the subordinates; and forces in the situation. 1 Forces in the manager. The manager’s behaviour will be influenced by their own personalities, backgrounds, knowledge and experiences. These internal forces will include: ■ ■ ■ ■ value systems; confidence in subordinates; leadership inclinations; and feelings of security in an uncertain situation. 2 Forces in the subordinate. Subordinates are influenced by many personality variables and their individual set of expectations about their relationship with the manager. Characteristics of the subordinate are: ■ ■ ■ ■ the strength of the needs for independence; the readiness to assume responsibility for decision-making; the degree of tolerance for ambiguity; interest in the problem and feelings as to its importance; 293 294 PART 3 THE ROLE OF THE MANAGER ■ ■ ■ understanding and identification with the goals of the organisation; necessary knowledge and experience to deal with the problem; and the extent of learning to expect to share in decision-making. The greater the positive response to these characteristics, the greater freedom of action can be allowed by the manager. 3 Forces in the situation. The manager’s behaviour will be influenced by the general situation and environmental pressures. Characteristics in the situation include: ■ ■ ■ ■ type of organisation; group effectiveness; nature of the problem; and pressure of time. Tannenbaum and Schmidt conclude that successful leaders are keenly aware of those forces which are most relevant to their behaviour at a particular time. They are able to behave appropriately in terms of their understanding of themselves, the individuals and the group, the organisation, and environmental influences. Successful managers are both perceptive and flexible. Forces lying outside the organisation are also included. Recognition is given to the possibility of the manager and/or subordinates taking initiatives to change the boundaries of the rectangle through interaction with external forces. Recognition is also given to the power available to all parties in the organisation (for example individual workers and trade unions) and to the factors which underlie decisions on the use of power by the manager. Tannenbaum and Schmidt suggest a new continuum of patterns of leadership behaviour in which the total area of freedom shared between managers and non-managers is redefined constantly by interactions between them and the forces in the environment. THE SITUATIONAL APPROACH The situational approach concentrates on the importance of the situation in the study of leadership. A variety of people with differing personalities and from different backgrounds have emerged as effective leaders in different situations. The person who becomes the leader of the work group is thought to be the person who knows best what to do and is seen by the group as the most suitable leader in the particular situation. The continuum of leadership behaviour draws attention to forces in the situation as one of the main forces influencing the nature of managerial behaviour. The situational approach emphasises the situation as the dominant feature in considering the characteristics of effective leadership. It is interesting to note that the importance of the situation for managerial leadership was put forward over 50 years ago. Mary Parker Follett considered the way orders should be given in the manager–subordinate relationship. The problem is avoiding the two extremes of: (i) too great bossism in giving orders; and (ii) practically no orders given. Follett’s solution was what she called the ‘depersonalising of orders and obeying the law of the situation’. My solution is to depersonalise the giving of orders, to unite all concerned in a study of the situation, to discover the law of the situation and obey that. Until we do this I do not think we shall have the most successful business administration … This is, ideally what should take place between any head and subordinates. One person should not give orders to another person but both should agree to take their orders from the situation. If orders are simply part of the situation, the question of someone giving and someone receiving does not come up. Both accept the orders given by the situation.41 CHAPTER 8 THE NATURE OF LEADERSHIP There are, however, limitations to the situational approach. There are people who possess the appropriate knowledge and skills and appear to be the most suitable leaders in a given situation, but who do not emerge as effective leaders. Another limitation is that it does not explain fully the interpersonal behaviour or the different styles of leadership and their effect on members of the group. Finally, in the work organisation, it is not usually practicable to allow the situation continually to determine who should act as the leader. CONTINGENCY THEORIES OF LEADERSHIP Despite the limitations of the situational approach, situational factors are important in considering the characteristics of leadership. More recent studies focus on the interactions between the variables involved in a leadership situation and patterns of leadership behaviour, and provide another general approach to the study of leadership – contingency theory. Contingency theories are based on the belief that there is no single style of leadership appropriate to all situations. Major contingency models of leadership include: ■ ■ ■ ■ Favourability of leadership situation – Fiedler Quality and acceptance of leader’s decision – Vroom and Yetton, and Vroom and Jago Path–goal theory – House, and House and Dessler Maturity of followers – Hersey and Blanchard FIEDLER’S CONTINGENCY MODEL One of the first leader–situation models was developed by Fiedler in his contingency theory of leadership effectiveness.42 Fiedler’s contingency model was based on studies of a wide range of group situations, and concentrated on the relationship between leadership and organisational performance. In order to measure the attitudes of the leader, Fiedler developed a ‘least preferred co-worker’ (LPC) scale. This measures the rating given by leaders about the person with whom they could work least well. The questionnaire contains up to 20 items. Examples of items in the LPC scale are pleasant/unpleasant, friendly/unfriendly, helpful/frustrating, distant/close, co-operative/ unco-operative, boring/interesting, self-assured/hesitant, open/guarded. Each item is given a single ranking of between one and eight points, with eight points indicating the most favourable rating. For example: Pleasant : : 8 : 7 : 6 : 5 4 : 3 : 2 : Unpleasant 1 The LPC score is the sum of the numerical ratings on all the items for the ‘least preferred co-worker’. The less critical the rating of the least preferred co-worker and the more favourably evaluated, the higher the leader’s LPC score. The more critical the rating, the lower the LPC score. The original interpretation of the LPC scale was that the leader with a high LPC score derived most satisfaction from interpersonal relationships and, when relationships with subordinates need to be improved, is motivated to act in a supportive, considerate manner. The leader with a low LPC score derived most satisfaction from performance of the task and achieving objectives. Establishing good relationships with subordinates is a secondary motivation. It was thought that high 295 296 PART 3 THE ROLE OF THE MANAGER LPC scores would be associated with effective performance by the group. However, the interpretation of LPC has changed a number of times and there is still uncertainty about its actual meaning. Favourability of leadership situation Fiedler suggests that leadership behaviour is dependent upon the favourability of the leadership situation. There are three major variables which determine the favourability of the situation and which affect the leader’s role and influence. ■ ■ ■ Leader–member relations – the degree to which the leader is trusted and liked by group members, and their willingness to follow the leader’s guidance. The task structure – the degree to which the task is clearly defined for the group and the extent to which it can be carried out by detailed instructions or standard procedures. Position power – the power of the leader by virtue of position in the organisation, and the degree to which the leader can exercise authority to influence (for example) rewards and punishments, or promotions and demotions. From these three variables, Fiedler constructed eight combinations of group–task situations through which to relate leadership style (see Figure 8.5). 1.00 High LPC: relationshiporiented 0.80 0.60 0.40 0.20 Correlations between leader LPC and group performance 0 -0.20 -0.40 -0.60 -0.80 Low LPC: task-oriented -1.00 I Favourable for leader Leader–member relations Situational variables Task structure Leader position power II III IV V VI Good Good Good Good Moderately poor Moderately poor Structured Structured Structured Structured Strong Weak Strong Weak Unstructured Unstructured Strong Weak VII VIII Unfavourable for leader Moderately poor Moderately poor Unstructured Unstructured Strong Weak = leadership style. The appropriateness of leadership style for maximising group performance is dependent upon the three variables in the leadership situation. Figure 8.5 Correlations between leader’s LPC scores and group effectiveness (Adapted and reproduced with permission of the author, F. E. Fielder. A Theory of Leadership Effectiveness. McGraw-Hill (1967) p. 146.) CHAPTER 8 THE NATURE OF LEADERSHIP When the situation is ■ ■ very favourable (good leader–member relations, structured task, strong position power), or very unfavourable (poor leader–member relations, unstructured task, weak position power), then a task-oriented leader (low LPC score) with a directive, controlling style will be more effective. When the situation is ■ moderately favourable and the variables are mixed, then the leader with an interpersonal relationship orientation (high LPC score) and a participative approach will be more effective. Fiedler is suggesting, therefore, that leadership style will vary as the favourability of the leadership situation varies. Organisational variables Fiedler’s work has been subject to much criticism43 but it does provide a further dimension to the study of leadership. It brings into consideration the organisational variables which affect leadership effectiveness and suggests that in given situations a task-oriented, or structured, style of leadership is most appropriate. The ‘best’ styles of leadership will be dependent upon the variable factors in the leadership situation. Fiedler argues that leadership effectiveness may be improved by changing the leadership situation. Position power, task structure and leader–member relations can be changed to make the situation more compatible with the characteristics of the leader. Leaders with a low LPC score could be placed in a leadership situation which is very favourable or very unfavourable. Leaders with a high LPC score could be placed in a leadership situation which is of moderate favourability. VROOM AND YETTON CONTINGENCY MODEL Another contingency model of leadership is provided by Vroom and Yetton.44 They base their analysis on two aspects of a leader’s decision: its quality and its acceptance. ■ ■ Decision quality, or rationality, is the effect that the decision has on group performance. Decision acceptance refers to the motivation and commitment of group members in implementing the decision. A third consideration is ■ the amount of time required to make the decision. The Vroom and Yetton model suggests five main management decision styles: ■ Autocratic A.I: Leader solves the problem or makes the decision alone using information available at the time. A.II: Leader obtains information from subordinates but then decides on solution alone. ■ Consultative C.I: The problem is shared with relevant subordinates, individually. The leader then makes the decision which may or may not reflect the influence of subordinates. 297 298 PART 3 THE ROLE OF THE MANAGER C.II: The problem is shared with subordinates as a group. The leader then makes the decision which may or may not reflect the influence of subordinates. ■ Decision rules Group G.II: The problem is shared with subordinates as a group. The leader acts as chairperson, rather than an advocate. Together the leader and subordinates generate and evaluate alternatives and attempt to reach group consensus on a solution. Vroom and Yetton suggest seven decision rules to help the manager discover the most appropriate leadership style in a given situation. The first three rules protect the quality of decisions. 1 Is there a quality requirement such that one solution is likely to be more rational than another? 2 Is there sufficient information to make a high-quality decision? 3 Is the problem structured? The last four rules protect the acceptance of decisions. 4 Is acceptance of the decision by subordinates critical to effective implementation? 5 If you were to make the decision yourself, is it reasonably certain that it would be accepted by subordinates? 6 Do subordinates share the organisational goals to be obtained in solving the problem? 7 Is conflict among subordinates likely in preferred solutions? These rules indicate decision styles that the manager should avoid in a given situation and indicate the use of others. Decision tree charts can be produced to help in the application of the rules and to relate the situation to the appropriate leadership style. THE VROOM AND JAGO REVISED DECISION MODEL In a revised version of the original model Vroom and Jago retain the five main decisionmaking styles but incorporate a larger number – 12 – of contingency variables.45 The new model specifies that any of the five decision styles may be effective in given situations. The contingency variables relate to: ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ quality requirement; commitment requirement; leader information; problem structure; commitment probability; goal congruence; subordinate conflict; subordinate information; time constraint; geographical dispersion; motivation time; and motivation development. Unlike the Vroom and Yetton model which requires a definite yes/no answer, ten of these situational variables are answered on a five-point scale. For example, to the question ‘How important is subordinate commitment to the decision?’, the manager selects one of the following responses: no importance; low importance; average importance; high importance; critical importance. CHAPTER 8 THE NATURE OF LEADERSHIP Use of decision trees Vroom and Jago developed four decision trees relating to a generic type of managerial problem: ■ ■ ■ ■ an individual-level problem with time constraints; an individual-level problem in which the manager wishes to develop an employee’s decision-making ability; a group-level problem in which the manager wishes to develop employees’ decisionmaking abilities; and a time-driven group problem. The manager selects one of the trees and moves along the branches by answering the questions at each decision point. This leads to one of the five described decisionmaking styles. PATH–GOAL THEORY A third contingency model of leadership is the path–goal theory, the main work on which has been undertaken by House,46 and by House and Dessler.47 The model is based on the belief that the individual’s motivation is dependent upon expectations that increased effort to achieve an improved level of performance will be successful, and expectations that improved performance will be instrumental in obtaining positive rewards and avoiding negative outcomes. This is the ‘expectancy’ theory of motivation, which is discussed in Chapter 12. Four main types of leadership behaviour The path–goal theory of leadership suggests that the performance of subordinates is affected by the extent to which the manager satisfies their expectations. Path–goal theory holds that subordinates will see leadership behaviour as a motivating influence to the extent that it means: ■ ■ satisfaction of their needs is dependent upon effective performance; and the necessary direction, guidance, training and support, which would otherwise be lacking, is provided. House identifies four main types of leadership behaviour. ■ ■ ■ ■ Directive leadership involves letting subordinates know exactly what is expected of them and giving specific directions. Subordinates are expected to follow rules and regulations. This type of behaviour is similar to ‘initiating structure’ in the Ohio State Leadership Studies. Supportive leadership involves a friendly and approachable manner and displaying concern for the needs and welfare of subordinates. This type of behaviour is similar to ‘consideration’ in the Ohio State Leadership Studies. Participative leadership involves consulting with subordinates and the evaluation of their opinions and suggestions before the manager makes the decision. Achievement-oriented leadership involves setting challenging goals for subordinates, seeking improvement in their performance and showing confidence in subordinates’ ability to perform well. Path–goal theory suggests that the different types of behaviour can be practised by the same person at different times in varying situations. By using one of the four styles of leadership behaviour the manager attempts to influence subordinates’ perceptions and motivation, and smooth the path to their goals. (See Figure 8.6.) 299 300 PART 3 THE ROLE OF THE MANAGER Leadership behaviour Directive Personal characteristics of subordinates Supportive Participative Achievementoriented Goal clarity Subordinates’ perceptions and motivation Nature of the task Improved job performance and satisfaction Figure 8.6 Representation of the path–goal theory of leadership) Two main situational factors Leadership behaviour is determined by two main situational factors: the personal characteristics of subordinates; and the nature of the task. ■ ■ The personal characteristics of subordinates determine how they will react to the manager’s behaviour and the extent to which they see such behaviour as an immediate or potential source of need satisfaction. The nature of the task relates to the extent that it is routine and structured, or nonroutine and unstructured. For example, when a task is highly structured, the goals readily apparent and subordinates are confident, then attempts to further explain the job or to give directions are likely to be viewed as unacceptable behaviour. However, when a task is highly unstructured, the nature of the goals is not clear and subordinates lack experience, then a more directive style of leadership behaviour is likely to be welcomed by subordinates. Effective leadership behaviour is based, therefore, on both the willingness of the manager to help subordinates and the needs of subordinates for help. Leadership behaviour will be motivational to the extent that it provides necessary direction, guidance and support, helps clarify path–goal relationships and removes any obstacles which hinder attainment of goals. READINESS OF THE FOLLOWERS OR GROUP A major variable in the style of leadership adopted by the manager is the nature of subordinate staff. This view is developed by Hersey and Blanchard who present a form of situational leadership based on the ‘readiness’ level of the people the leader is attempting to influence. Readiness is the extent to which followers have the ability and willingness to accomplish a specific task. It is not a personal characteristic of the individual, but how ready the individual is to perform a particular task.48 Readiness (R) is divided into a continuum of four levels: R1 (low), R2 and R3 (moderate), and R4 (high). ■ ■ R1 – low follower readiness – refers to followers who are both unable and unwilling, and who lack commitment and motivation; or who are unable and insecure. R2 – low to moderate follower readiness – refers to followers who are unable but willing, and who lack ability but are motivated to make an effort; or who are unable but confident. CHAPTER 8 THE NATURE OF LEADERSHIP ■ ■ R3 – moderate to high follower readiness – refers to followers who are able but unwilling, and who have the ability to perform but are unwilling to apply their ability; or who are able but insecure. R4 – high follower readiness – refers to followers who are both able and willing, and who have the ability and commitment to perform; or who are able and confident. Some people have difficulty understanding the development of followers from R1 to R2 to R3. How can one go from being insecure to confident and then become insecure again? The important thing to remember is that at the lower levels of readiness, the leader is providing the direction – the what, where, when and how. Therefore, the decisions are leader directed. At the higher levels of readiness, followers become responsible for task direction, and the decisions are follower-directed. This transition from leader-directed to self-directed may result in apprehension or insecurity. As followers move from low levels of readiness to higher levels, the combinations of task and relationship behavior appropriate to the situation begin to change.49 Task behaviour For each of the four levels of maturity, the appropriate style of leadership is a combinaand relationship tion of task behaviour and relationship behaviour. behaviour ■ ■ Task behaviour is the extent to which the leader provides directions for the actions of followers, sets goals for them, and defines their roles and how to undertake them. Relationship behaviour is the extent to which the leader engages in two-way communication with followers, listens to them, and provides support and encouragement. From the combination of task behaviour and relationship behaviour derive four leadership styles (S): telling (S1), selling (S2), participating (S3) and delegating (S4). The appropriate leadership style corresponds with the readiness of the followers. (See Figure 8.7.) ■ ■ ■ ■ S1 – telling – emphasises high amounts of guidance (task behaviour) but limited supportive (relationship) behaviour. This style is most appropriate for low follower readiness (R1). S2 – selling – emphasises high amounts of both directive (task) and relationship behaviours. This style is most appropriate for low to moderate follower readiness (R2). S3 – participating – emphasises a high amount of two-way communication and supportive (relationship) behaviour but low amounts of guidance (task behaviour). This style is most appropriate for moderate to high follower readiness (R3). S4 – delegating – emphasises little direction or support with low levels of both task and relationship behaviours. This style is most appropriate for high follower readiness (R4). Hersey and Blanchard suggest that the key to using situational leadership is that any Development of subordinates leader behaviour may be more or less effective according to the readiness of the person the leader is attempting to influence. The model draws attention to the importance of developing the ability, confidence and commitment of subordinates. The manager should help subordinates to develop in readiness to the extent that they are able and willing to go. This development should take place by adjusting leadership behaviour through the four styles of telling, selling, participating and delegating. TRANSFORMATIONAL LEADERSHIP In recent years increasing business competitiveness and the need for the most effective use of human resources has resulted in writers on management focusing attention on how leaders revitalise or transform organisations. Based on the work of writers such as Burns50 this has given rise to a distinction between two fundamental forms of leadership: transactional or transformational. 301 PART 3 THE ROLE OF THE MANAGER Leader behaviour G LLI PART ICIPA TI SE 3 Share ideas and facilitate in making decisions . . . N (High) NG Hi. Rel. Lo. Task 2 Explain your decisions and provide opportunity for clarification . . . Hi. Task. Hi. Rel. LE GA TI NG Lo. Rel. Lo. Task. DE Hi. Task. Lo. Rel. 4 Turn over responsibility for decisions and implementation . . . G IN LL TE Relationship behaviour (Supportive behaviour) 302 1 Provide specific instructions and closely supervise performance . . . ® Task behaviour (Directive behaviour) (Low) (High) Follower readiness High Moderate Low R4 R3 R2 R1 Able and Willing or Motivated Able but Unwilling or Insecure Unable but Willing or Motivated Unable and Unwilling or Insecure Figure 8.7 Situational leadership model (Source: Hersey. P. The Situational Leader (1984) p. 63. Copyrighted material from Leadership Studies. Inc. Situational Leadership® is a registered trademark of the Center for Leadership Studies. Used by permission. All rights reserved.) ■ ■ Transactional leadership is based on legitimate authority within the bureaucratic structure of the organisation. The emphasis is on the clarification of goals and objectives, work task and outcomes, and organisational rewards and punishments. Transactional leadership appeals to the self-interest of followers. It is based on a relationship of mutual dependence and an exchange process of: ‘I will give you this, if you do that’. Transformational leadership, by contrast, is a process of engendering higher levels of motivation and commitment among followers. The emphasis is on generating a vision for the organisation and the leader’s ability to appeal to higher ideals and values of followers, and creating a feeling of justice, loyalty and trust. In the organisational sense, transformational leadership is about transforming the performance or fortunes of a business. Many writers see transformational leadership as the same thing as charismatic, visionary or inspirational leadership. For example, Kreitner et al. refer to charismatic leadership as transforming employees to pursue organisational goals over self-interests: ‘Charismatic leaders transform followers by creating changes in their goals, values, CHAPTER 8 THE NATURE OF LEADERSHIP needs, beliefs, and aspirations. They accomplish this transformation by appealing to followers’ self-concepts – namely, their values and personal identity.’51 However, Hunt suggests that while charismatic leaders can have a tremendous effect on members of an organisation, there is no guarantee that this will be positive. What really matters is the nature of outputs and that the leadership mobilises power to change social systems and reform organisations.52 Many writers believe that charisma alone is insufficient for changing the way an organisation operates.53 Components of transformational leadership According to Bass, the transformational leader motivates followers to do more than originally expected and the extent of transformation is measured in terms of the leader’s effects on followers. Applying the ideas of Burns to organisational management, Bass proposed a theory of transformational leadership which argues that the leader transforms and motivates followers by: 1 generating greater awareness of the importance of the purpose of the organisation and task outcomes; 2 inducing them to transcend their own self-interests for the sake of the organisation or team; and 3 activating their higher-level needs.54 Transformational leadership is comprised of four basic components: ■ ■ ■ ■ idealised influence – the charisma of the leader, and the respect and admiration of the followers; inspirational motivation – the behaviour of the leader which provides meaning and challenge to the work of the followers; intellectual stimulation – leaders who solicit new and novel approaches for the performance of work and creative problem solutions from followers; and individualised consideration – leaders who listen and give special concern to the growth and developmental needs of the followers.55 Yukl provides a set of guidelines for transformational leadership: ■ ■ ■ ■ ■ ■ ■ ■ ■ ‘Renaissance’ leaders Articulate a clear and appealing vision of what the organisation could accomplish or become to help guide the actions and decisions of members. Explain how the vision can be attained, and establish a clear link between the vision and a credible strategy for attaining it. Act confident and optimistic, and emphasise positive aspects of the vision rather than the obstacles and dangers. Express confidence in followers and their ability to carry out the strategy for accomplishing the vision. Provide opportunities for early success and increase the confidence of an individual or team undertaking a challenging task. Celebrate successes and maintain an awareness of continuing progress, and recognise the contribution and accomplishments of individuals. Use dramatic, symbolic actions to emphasize key values in order to reinforce the vision by actions consistent with it. Lead by example through exemplary behaviour in day-to-day interactions with subordinates: actions speak louder than words. Empower people to achieve the vision by delegating to individuals and teams authority for decisions about how to do the work.56 In his discussion of the leadership of corporate transformation, Taffinder refers to the importance of transformational leadership but also raises the question of whether both transactional and transformational leaders can be metamorphosed into a single ‘renaissance’ leader. 303 304 PART 3 THE ROLE OF THE MANAGER In conclusion, transformational leadership is both desirable and necessary in business today, and will increasingly become more important. Organizations must be capable of fast, radical change and those that aspire to be the best must be able to lead change rather than just follow it … Can we have Renaissance leaders? Can transactional and transformational behaviour work successfully in a single leader? Yes, without doubt and, more so, where leaders can understand the necessity and actively produce both by means of the leadership team.57 INSPIRATIONAL LEADERSHIP Writers such as Burns and Bass identified leaders by their actions and the impact those actions have on other people. Successful transformational leaders are usually identified in terms of providing a strong vision and sense of mission, arousing strong emotions in followers and a sense of identification with the leader. As mentioned at the start of this chapter, leadership today is increasingly associated with the concept of creating a vision with which others can identify, getting along with other people and the concept of inspiration. This might be considered as part of transformational leadership or arguably it has given rise to a new approach to leadership – that of inspirational leadership. Personal qualities or charisma Leadership may be based on the personal qualities, or charisma, of the leader and the manner in which influence is exercised. According to Whitehead, for example: The big word now associated with leadership is vision. The ability to see the bigger picture. To take the long-term view. What the ultimate objectives of the organisation are and how people can work together to achieve them … Perhaps the most important attribute is that a good leader inspires people by creating a climate where it is OK for people to make mistakes and learn from them, rather than what happened in the past which was to blame and punish them. Leading from this position, they gain a higher level of commitment from their people than mere compliance.58 Adair argues that to be a truly inspirational leader one must understand the spirit within. All people have the potential for greatness. The inspirational leader connects with the led, appreciates the capabilities of others and through trust will unlock the powers in others. Adair refers to ‘the inspired moment’ – a recognition and seizure of a brief window of opportunity that can act as a powerful catalyst that inspires both the leader and the led.59 And, according to a survey by the Chartered Management Institute, the power to inspire is rated highest among desirable leadership qualities. A detailed survey of almost 1500 practising managers in a broad cross-section of organisations found that the key characteristic that leaders should ideally possess, inspiration, was identified by 55 per cent of managers. However, most leaders appeared to lack this characteristic with only 11 per cent of respondents saying they experienced this in reality. The other key characteristics were identified as: strategic thinking (41 per cent); forward-looking (36 per cent); honesty (26 per cent); fair-mindedness (23 per cent); courage (21 per cent); supportiveness (20 per cent); and knowledge (19 per cent).60 The importance of charisma for effective leadership is emphasised by Conger, who also believes that many of the traits that make a successful leader can be taught, including charisma. Now the big question is whether you are born with charisma or whether you can develop it. I believe you can develop elements of it. For example, you can take courses to improve your speaking skills. You can learn to stage events that send powerful messages. You can learn to think more critically about the status quo and its shortcomings. You can do more on a daily basis to motivate your team. What you simply cannot learn is how to be passionate about what you do. You have to discover that for yourself, and passion is a big part of what drives a charismatic leader. It is also what motivates and inspires those who work for the charismatic leader.61 CHAPTER 8 THE NATURE OF LEADERSHIP Improvement in However, the extent to which charismatic or inspirational leadership helps bring about organisational improvement in organisational performance is open to much debate. For example, Conger also draws attention to the danger that the leader’s vision, dynamism and inspirational performance nature are highly attractive to followers, which leads to a natural dependence. Staff see this extraordinary figure as a model to be emulated and the leader’s abilities become the yardstick by which they measure their own performance. This is a potential source of leadership derailment. Dependence makes the followers more susceptible to deception.62 EXHIBIT 8.1 Developing leadership in the NHS of the 21st century The National Health Service is currently facing the challenges of the most significant change since its inception. It was built on traditional models of leadership and beliefs that ‘managers’ should manage, and doctors and nurses should provide clinical care. The NHS has survived numerous structural changes in the last fifty years but none have fundamentally challenged that philosophy. Clinical leaders were encouraged to take senior roles in the leadership of their specialist clinical areas (the Director of Nursing, etc.), but the function of managing the ‘business’ (financial resources, human resources, strategic planning, etc.) was always perceived as being safe in the hands of the professional ‘general manager’. Occurrences of clinicians moving into senior general management positions were rare and usually involved them in divesting themselves of their clinical roles. In the 21st century it is now recognised that the NHS needs fundamental modernisation in the way it develops strategic plans, determines priorities, allocates and manages resources and manages performance and quality improvement. The media have drawn the public’s attention to quality failures, clinical negligence, and inequity in resource allocation and recruitment and retention difficulties. The Government’s modernisation agenda challenges the NHS to: ■ improve collaborative, integrated working across all agencies and professions in the system; ■ move from a system focused around the clinical ‘expert’ to a consumer-centred service; ■ introduce a learning culture both within professional groupings and organisations; a major shift away from the prevalent ‘blame’ culture; ■ implement innovative approaches to the delivery of health and care. Above all, this requires a new model of management and leadership in the NHS. The NHS needs to develop leaders who have credibility with clinicians and can inspire and motivate, an often-demoralised workforce, to own and drive continual change. The simplistic model of the past – managers plan and allocate the resource while clinicians control and spend the resource is no longer tenable. The NHS needs to develop outward facing managers and clinicians who can lead system-wide change across the NHS. Writers in the field of leadership have refocused. The early writers often interpreted leadership as an authority relationship, referred to as management. This is now referred to as Transactional leadership. The new model leadership is that of the Transformational leader; a process of influencing followers or staff for whom one is responsible, by inspiring them towards the ‘vision’ of some future state. The ideas of the Transactional and Transformational leader are pertinent to the development of leaders in the new NHS. Many NHS organisations have encouraged and rewarded Transactional managers. These leadership qualities may have been appropriate in the NHS of the last century when managers were leading complex organisations in a more predictable and static environment. What is needed now? A group of leaders for tomorrow’s NHS who share a set of common values and act as a leadership community, who can lead confidently in clinical areas, who understand how to run a patient-centred service; who deliver continuous performance improvement and who reflect the diversity of the communities they serve.* Above all what is needed are leaders who can provide strategic direction to and inspire a complex workforce in an environment that is turbulent, ever changing and difficult to predict (Transformational leaders). To achieve the leadership community that will take the NHS successfully into the 21st century will require an integrated approach that is adequately resourced to: ■ Provide education and development for the leaders of tomorrow, ■ Achieve a shift in culture to develop learning organisations, ■ Break down the barriers that exist between manage- ment and clinical leadership model, ■ Restructure NHS organisations to place decision- making closer to patients and clinicians. The NHS is undergoing a fundamental rethink of its traditional leadership and management models. It needs to move from a position that believes ‘managers’ should lead and manage, to one where ‘leaders’ (whether clinicians or managers) provide strategic vision and leadership, and managers support them in the implementation and operationalisation of strategic vision and plans. * Internal Paper from Hugh Taylor, Director of Human Resources, NHS Executive (2000). (I am grateful to Anne Tofts, Director, Healthskills, for providing the above information.) 305 306 PART 3 THE ROLE OF THE MANAGER Dearlove draws attention to the increasing focus on leaders as real people managing in a consensus-seeking manner. ‘While traditional views of leadership tend eventually to concentrate on vision and charisma, the message now seems to be that charisma is no longer enough to carry leaders through.’63 Bloomfield also refers to the cult of the individual, supposedly charismatic leader and the danger that this leads businesses into deep water far more often than the application of rational leadership. Too often, aided and abetted by the language of current management fashion the charismatic leader, ‘inspires’, to delight with their vision, to produce a mission statement of where the business might be – at the expense of real substance.64 POWER AND LEADERSHIP INFLUENCE Within an organisation, leadership influence will be dependent upon the type of power that the leader can exercise over the followers. The exercise of power is a social process which helps to explain how different people can influence the behaviour/ actions of others. Five main sources of power upon which the influence of the leader is based have been identified by French and Raven as reward power, coercive power, legitimate power, referent power, and expert power.65 We shall consider these in terms of the manager (as a leader) and subordinate relationship. ■ ■ ■ ■ ■ Reward power is based on the subordinate’s perception that the leader has the ability and resources to obtain rewards for those who comply with directives; for example, pay, promotion, praise, recognition, increased responsibilities, allocation and arrangement of work, granting of privileges. Coercive power is based on fear and the subordinate’s perception that the leader has the ability to punish or to bring about undesirable outcomes for those who do not comply with directives; for example, withholding pay rises, promotion or privileges; allocation of undesirable duties or responsibilities; withdrawal of friendship or support; formal reprimands or possibly dismissal. This is in effect the opposite of reward power. Legitimate power is based on the subordinate’s perception that the leader has a right to exercise influence because of the leader’s role or position in the organisation. Legitimate power is based on authority, for example that of managers and supervisors within the hierarchical structure of an organisation. Legitimate power is therefore ‘position’ power because it is based on the role of the leader in the organisation, and not on the nature of the personal relationship with others. Referent power is based on the subordinate’s identification with the leader. The leader exercises influence because of perceived attractiveness, personal characteristics, reputation or what is called ‘charisma’. For example, a particular manager may not be in a position to reward or punish certain subordinates, but may still exercise power over the subordinates because the manager commands their respect or esteem. Expert power is based on the subordinate’s perception of the leader as someone who is competent and who has some special knowledge or expertise in a given area. Expert power is based on credibility and clear evidence of knowledge or expertise; for example, the expert knowledge of ‘functional’ specialists such as the personnel manager, management accountant or systems analyst. The expert power is usually limited to narrow, well-defined areas or specialisms. Finlay suggests that in addition to the five sources of power identified by French and Raven can be added: ■ ■ Personal power, supported and trusted by their colleagues and subordinates; and Connection power, which results from personal and professional access to key people and information.66 CHAPTER 8 THE NATURE OF LEADERSHIP Subordinates’ perception of influence It is important to note that these sources of power are based on the subordinate’s perception of the influence of the leader, whether it is real or not. For example, if a leader has the ability to control rewards and punishments but subordinates do not believe this, then in effect the leader has no reward or coercive power. Similarly, if subordinates in a line department believe a manager in a (different) staff department has executive authority over them then even if, de facto, that manager has no such authority there is still a perceived legitimate power. French and Raven point out that the five sources of power are interrelated and the use of one type of power (for example, coercive) may affect the ability to use another type of power (for example, referent). Furthermore, the same person may exercise different types of power, in particular circumstances and at different times. You have to look at leadership through the eyes of the followers and you have to live the message. What I have learned is that people become motivated when you guide them to the source of their own power and when you make heroes out of employees who personify what you want to see in the organisation. Anita Roddick67 Guidelines for building using power According to Yukl, the research on power and influence is still too limited to provide clear and unequivocal guidelines for leaders on the best way to exercise their power. However, utilising terminology from French and Raven’s taxonomy, he provides a set of guidelines on how to build and maintain power, and to use it effectively to influence attempts with peers or superiors.68 (See Table 8.1.) THE LEADERSHIP RELATIONSHIP Whatever the perceived approach to leadership, the most important point is the nature of the leadership relationship and the manner in which the leader influences the behaviour and actions of other people. Leadership is a dynamic form of behaviour and there are a number of variables which affect the leadership relationship. Four major variables are identified by McGregor as: ■ ■ ■ ■ the characteristics of the leader; the attitude, needs and other personal characteristics of the followers; the nature of the organisation, such as its purpose, its structure, the tasks to be performed; and the social, economic and political environment. McGregor concludes that ‘leadership is not a property of the individual, but a complex relationship among these variables’.69 According to Kouzes and Posner, ‘credibility is the foundation of leadership’. From extensive research in over 30 countries and response to the question of what people ‘look for and admire in a leader, in a person whose direction they would willingly follow’, people have consistently replied that they want: leaders who exemplify four qualities: they want them to be honest, forward-looking, inspiring and competent. In our research our respondents strongly agree that they want leaders with integrity and trustworthiness, with vision and a sense of direction, with enthusiasm and passion, and with expertise and a track record for getting things done.70 307 308 PART 3 THE ROLE OF THE MANAGER Table 8.1 Guidelines for building and using power How to increase and maintain power Legitimate power: ■ Gain more formal authority. ■ Use symbols of authority. ■ Get people to acknowledge authority. ■ Exercise authority regularly. ■ Follow proper channels in giving orders. ■ Back up authority with reward and coercive power. How to use power effectively ■ Make polite, clear requests. ■ Explain the reasons for a request. ■ Don’t exceed your scope of authority. ■ Verify authority if necessary. ■ Be sensitive to target concerns. ■ Follow up to verify compliance. ■ Insist on compliance if appropriate. Reward power: ■ Discover what people need and want. ■ Offer desirable rewards. ■ Gain more control over rewards. ■ Offer fair and ethical rewards. ■ Ensure people know you control rewards. ■ Explain criteria for giving rewards. ■ Don’t promise more than you can deliver. ■ Provide rewards as promised. ■ Don’t use rewards in a manipulative way. ■ Use rewards symbolically to reinforce ■ Avoid complex, mechanical incentives. desirable behaviour. ■ Don’t use rewards for personal benefit. Expert power: ■ Gain more relative knowledge. ■ Keep informed about technical matters. ■ Develop exclusive sources of information. ■ Use symbols to verify expertise. ■ Demonstrate competency by solving difficult problems. ■ Don’t make rash, careless statements ■ Don’t lie or misrepresent the facts. ■ Don’t keep changing positions. Referent power: ■ Show acceptance and positive regard. ■ Act supportive and helpful. ■ Don’t manipulate and exploit people for personal advantage. ■ Defend someone’s interests and back them up when appropriate. ■ Keep promises. ■ Make self-sacrifices to show concern. ■ Use sincere forms of ingratiation. Coercive power: ■ Identify credible penalties to deter unacceptable behaviour. ■ Gain authority to use punishments. ■ Don’t make rash threats. ■ Don’t use coercion in a manipulative way. ■ Use only punishments that are legitimate. ■ Fit punishments to the infraction. ■ Don’t use coercion for personal benefit. ■ Explain the reasons for a request or proposal. ■ Explain why a request is important. ■ Provide evidence that a proposal will be successful. ■ Listen seriously to target concerns. ■ Show respect for target (don’t be arrogant). ■ Act confident and decisive in a crisis. ■ Use personal appeals when necessary. ■ Indicate that a request is important to you. ■ Don’t ask for a personal favour that is excessive given the relationship. ■ Provide an example of proper behaviour (role modelling). ■ Inform target of rules and penalties. ■ Give ample prior warnings. ■ Understand situation before punishing. ■ Remain calm and helpful, not hostile. ■ Encourage improvement to avoid the need for punishment. ■ Ask target to suggest way to improve. ■ Administer discipline in private. (Source: Leadership in Organizations, Fourth edition, by Yukl, Gary. © 1998, p. 197. Prentice-Hall, inc., Upper Saddle River, NJ.) CHAPTER 8 THE NATURE OF LEADERSHIP Exercise of authority Leadership may be exercised on the basis of sapiential authority – that is, by wisdom, personal knowledge, reputation or expertise. A sapiential-type relationship places emphasis on a guiding and facilitating role and is often appropriate for people in creative, specialist or professional jobs where there may be particular resentment against a formal hierarchical style of managerial leadership. The leader may exercise authority as an attribute of position, because of a stated position in the hierarchy. Leadership, however, is more than just adherence to a formal role prescription. For example, Lucas refers to the importance of strong communication skills, the ability to facilitate and maintain relationships within the team, and a ‘tolerance of differences’, recognising that your way of doing things isn’t the only way.71 Fullan refers to the importance of relationship building as a basic component of the change process and effective leadership: ‘Leaders must be consummate relationship builders with diverse people and groups – especially with people different from themselves. Effective leaders constantly foster purposeful interaction and problem solving, and are wary of easy consensus.’72 NO ONE BEST FORM OF LEADERSHIP We have seen that there are many alternative forms and styles of managerial leadership. It is usually claimed that a human relations, people-oriented approach is more likely to lead to job satisfaction and work performance. However, it is not always the case that democratic styles are best. There are occasions when an autocratic style of leadership is more effective. For example, we have seen from the studies by Fiedler that when the situation is very favourable or very unfavourable in terms of leader–member relations, task structure and position power, then a task-oriented style of leadership is most effective. Some subordinates appear to prefer a more directive, task-oriented approach and respond better to more autocratic styles of leadership. (Recall also the discussion on managerial behaviour in Chapter 7.) Contingency models demonstrate that there are many forms of leadership. Within an organisation different individuals may fulfil the functions of leadership and there are many different styles of leadership. A potential danger with the contingency approach is that the manager may appear to lack consistency in leadership style. However, although subordinates may reasonably expect some degree of consistency from the manager in approaching the same type of problem with the same style, this is not to say that different types of problems should be approached in the same manner. Subordinates would ordinarily expect a different style of managerial leadership according to the contingencies of the situation. Different styles at different stages of a business Different types of leadership may also be most appropriate at different stages in the development of a business organisation. For example, Clarke and Pratt identify four different styles of managerial leadership required at different stages of business: champion, tank commander, housekeeper and lemon-squeezer.73 ■ ■ ■ Champion. As a new corporate venture develops into a business it needs a champion to fight for and defend the seedling business. The champion must be able to drive a small team to win orders, provide a wide range of management skills, and have the dash and energy to deal with a range of different matters. Tank commander. As the business enters its growth stage the manager must develop a strong, supportive team and have leadership qualities to be able to drive into readily exploitable parts of the market. Housekeeper. As the business runs up against boundaries erected by other growing businesses it enters the mature stage. The housekeeper has to ensure the efficient 309 310 PART 3 THE ROLE OF THE MANAGER ■ and economic management of the business. This involves skills in planning, cost control and the development of soundly based personnel policies. Lemon-squeezer. Although the mature stage might last for many years, sometimes a business goes into premature decline. At this stage the need is for the kind of leader who can extract the maximum benefit from the situation. The lemon-squeezer needs to be both tough and innovative in order, for example, to cut costs, and improve productivity and staffing levels. Finding and fitting the manager best suited to each stage of a business is a delicate task. Clarke and Pratt suggest that most managers are one type of leader or another. Although there are exceptions, few managers are flexible enough to switch between such different leadership roles. The right leader for the right situation The suggestion that different types of leaders are needed at different stages of the development of a company is supported by Rodrigues. Organisations functioning within a dynamic environment experience three stages of change: a problem-solving stage, an implementation-of-solution stage, and a stable stage. At each of these three organisational stages a leader with different traits, abilities, and behaviour is most effective.74 Rodrigues suggests that organisations which exist in a dynamic environment therefore generally require three types of leaders: the innovator(s); the implementor(s); and the pacifier(s). ■ ■ ■ The innovator is characterised by the need for competition, the struggle to succeed, the search for new ideas, boldness, and the belief that the environment can be controlled and manipulated. An innovator style of leadership is likely to be more effective at the problem-solving stage when an organisation needs renewing or at least some new ideas. Such a leader is best
