5
EffEctivE
managEmEnt
What’s ahead
Management
roles
Management
styles
Effective
management
Management
skills
© Gillian Somers, Julie Cain, Megan Jeffery 2011
ISBN 978-1-107-63549-4
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Cambridge University Press
Key Knowledge
Students will learn the following about the internal environment of largescale organisations:
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key management roles
planning (long-, medium-, and short-term)
organising (resource and task allocation techniques)
leading (importance of leadership qualities, including interpersonal,
informational and decision making)
controlling (financial and non-financial processes and control systems)
different styles of management (autocratic, persuasive, consultative,
participative and laissez-faire) and their appropriate application to
various situations
key management skills as appropriate to the process of effective
management
the relationship between management styles and skills.
To a very large extent, the success of an
organisation depends on the role of management. Management is the process of planning,
organising, leading and controlling resources
(human, financial, physical and informational)
2
area of study
Internal envIronment of large-scale
organIsatIons
and all phases of the organisation’s operation
in order to achieve its objectives. Management
involves getting work done through the actions
of other people.
95
© Gillian Somers, Julie Cain, Megan Jeffery 2011
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Cambridge University Press
Key roles of management
Resources
Human
Financial
Physical
Informational
figure 5.1
competency
the ability to be able to
perform a task
conceptual skills
the ability to recognise
complex and dynamic
issues and to conceive
a notion or concept
planning
a formalised procedure
to produce a set of
integrated systems of
decisions
96
Management roles
Planning
Organising
Leading
Objectives
achieved
Controlling
Managerial process
To ensure growth and profitability of an organisation, managers need to respond to changes in
all levels of environment: macro, operating and
internal. To be an effective manager requires
competency in the key management roles of
planning, organising, leading and controlling.
The particular management style chosen by
the manager when managing a particular situation is very important, as one style does not fit all
situations. The styles range from one where the
manager is extremely centralised in their control
of a situation (autocratic) to one where they
allow their staff to have free rein (laissez-faire)
and are extremely decentralised in their control.
A manager’s job is varied and complex, and
consequently they require a range of skills to
perform their duties and activities. For example,
it is important that a senior manager possesses
conceptual skills, a middle manager would
need good interpersonal skills and technical
skills would be essential for a front-line manager.
Henri Fayol, a French industrialist, was the
original proponent of the concept that managers need to perform four management roles:
planning, organising, leading and controlling
(POLC). Such roles are objectives-directed,
interrelated and interdependent and operate
to achieve a systematic process for attaining
the objectives of the organisation. These roles
prepare the organisation for all time frames –
long-term, medium-term and short-term.
The management of an organisation is
responsible for:
• determining the corporate objectives in
line with the mission and vision of the
organisation
• proactively planning for the further growth
of the organisation
• predictingandmakingplansforanychanges
that result from pressures in the organisation’s internal and external environments
• integratingalltheresources(human,physical and informational) available
• administering and controlling the activities
of the organisation
• accountingfortheorganisation’soperations
and outcomes.
Organising
Develops an
organisational
structure to implement
strategies
Planning
Formalised procedure
to produce a set
of integrated systems
of decisions
Leading
Use of power or
influence to get the
best out of workers
Controlling
Keeping up
standards
figure 5.2
Roles of management
Planning
Planning is a formalised process to produce
a result in the form of integrated systems of
decisions. In a large organisation, planning
involves a series of decisions in order to achieve
the organisational objectives. A systematic
process of planning based on five stages can be
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Cambridge University Press
Establishing an objective – i.e. What do we want?
Identification of present situation and forecasting the
future situation. (SWOT analysis for strategic planning)
Developing and evaluating planning alternatives.
Selecting and implementing the plan.
Monitoring and reviewing the results.
figure 5.3
undertaken by different levels of management,
with the decisions made varying in time frame
from short-term to long-term.
Levels of planning
• provide direction to the business towards
achieving objectives and performance targets
for the organisation
• planforthefutureandfocusonanticipating
the future
• concentrateonanideaandvision
Planning is ‘organised’ in a hierarchical structure, with the overall direction coming from
the board of directors and senior management.
Planning is categorised into three levels, strategic, tactical and operational, which correspond
to the levels of management.
Senior
management
– strategic planning
Strategic planning
Strategic planning can be defined as a formal
long-term (two to five years) planning process
undertaken by senior management to define its
strategic direction and objectives.
Organisations plan on a strategic level to do
the following:
• respond to emerging trends, events, challenges and opportunities within a framework
of its vision and mission
Five stages of planning
strategic planning
long-term (two to
five years) planning
undertaken by senior
management to achieve
corporate objectives
Middle management
–tactical planning
Front-line management
– operational planning
figure 5.4
Levels of management and planning
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A SWOT analysis can be broken down into
the following areas:
figure 5.5 An organisation must plan on a strategic level what its vision will be.
• create a framework for achieving competitive advantage by analysing the organisation
internally and externally and its potential
• guide management of the human, social,
environmental and technical resources.
SWOt analysis
an assessment of the
internal strengths and
weaknesses and the
external opportunities
and threats for an
organisation in a given
situation
tactical planning
planning undertaken
by middle-level
management to assist
in implementing
strategic decisions; its
time frame is mediumterm, usually between
one to two years
98
Telstra, Australia’s largest telecommunications business, uses strategic planning to implement its mission to create solutions that are
simple, easy to use and valued by individuals,
businesses, enterprises and governments. The
strategic planning, which commenced in 2005
under Telstra’s Transformation Plan, covered all
aspects of the business, including Operations,
Network Infrastructure and Marketing. An initial
five-year time frame was established to implement these transformational strategies.
An important analytical tool used when
undertaking strategic planning is a SWOT analysis. This analytical exercise helps an organisation
to focus on its internal environment by recognising its strengths (what it is good at) and minimising its weaknesses (what it has performed
poorly at). The organisation also needs to focus
on its external environment so that it may take
advantage of opportunities (what it can use to its
advantage) and reduce any threats (things that
could adversely affect it).
• Strengthcanbedefinedasaninternalcharacteristic that contributes to the realisation
of the organisation’s mission. This could
include a positive reputation, strong branding, type of product, how the product is
made or the quality of the service provided.
• Aweaknessisaninternalcharacteristicthat
negatively influences the functioning of the
organisation. For example, poor reputation,
weak market and the current structure of the
organisation may not be suitable.
• Anopportunityisanexternalfactordevelopment that if taken advantage of, could
contribute to the realisation of the organisation’s mission. This could include globalisation and decreased interest rates.
• Athreatcanbedefinedasanexternalfact
or development that can have a substantial
negative effect on an organisation’s performance. Examples of threats could include
globalisation, increasing costs, environmental issues, or a decline in the industry.
Activity 5.1
1 Using table 5.1 as a guide, complete a SWOT
analysis on:
a your school
b McDonald’s.
2 Look up the McDonald’s website (www.
mcdonalds.com.au) and/or discuss SWOTs
with students who have part-time jobs at
McDonald’s.
Tactical planning
Tactical planning is:
• theformalmedium-term(onetotwoyears)
planning undertaken by middle management to implement the organisation’s strategic plan
• respondingtochangesinternallyorexternally
• the allocation of resources in order to
achieve the organisation’s objectives.
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table 5.1
SWOT analysis: examples of strengths, weaknesses, opportunities and threats
internal environment
Strengths
Weaknesses
Skilled workforce
Unskilled workforce
Strong reputation/brand
Poor reputation and brand recognition
Quality customer service
Poor customer relations
Excellent product/service
Outdated product/service
Market share increasing
Drop in market share
Highly skilled/experienced management team
Unskilled/inexperienced management team
Strong financial position
Under-capitalisation/constantly needing funds
Up-to-date facilities
Outdated facilities
Dynamic and responsive organisational structure
Bureaucratic management structure
Positive corporate culture
Poor/toxic corporate culture
Stable workforce
High level of staff turnover
External environment
Opportunities
threats
New and changing customer needs
Changes in customer preferences and buying behaviour
Development of new products/services
Actions taken by competitors, including: pricing, special
offers, promotions
Expansion to different locations
Changes in lease conditions, e.g. increased rental or eviction
Government policies – favourable
Government policies – restrictive
Improving economic conditions
Economic factors
New technologies
Developments in technology
Strategic alliances
Competitors entering into strategic alliances
Excess of resources
Shortages of resources, e.g. materials, skilled staff
Legal issues – protection/removal of restrictions
Legal – restrictive legislation or legal action
A large amount of tactical planning would
have been undertaken by various business units
at Telstra to ensure that the network infrastructure changes required to implement the strategic plans for the transformational change were
successful. The planning would have involved
developing strategies relating to choosing
technology partners (suppliers), feasibility of
retaining some or all of the existing network
and phases of roll-out of the new technology.
Operational planning
Operational planning is:
• theplanningofoperationsonadaily,monthly,
or up to one year basis by lower-level supervi-
operational planning
detailed, short-term
planning undertaken by
an organisation
sors and managers within an organisation
• adetailedlevelofplanningthatimplements
strategies to ultimately achieve specific objectives generally determined by a higher level
of management.
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Activity 5.2
Copy and complete the table below by indicating the appropriate level of planning and provide your
reasons for choosing the particular level.
Planning activity
Level of planning
Reason for choosing
An organisation plans to build a new
office building in a regional area of
Victoria
A front-line manager wants to arrange
weekly production meetings of the car
assembly staff
The sales manager requires the sales
team to increase sales by 10 per cent
over the next six months
A government business enterprise
decides to undertake planning to fully
privatise its operations during the next
four years
A team leader decides to monitor the
team’s progress over a two-month period
A large-scale organisation decides to
diversify its operations by acquiring
another organisation
A marketing department is to relocate to
a new site in another city
A car manufacturer is to install robots
onto its assembly line
An engineering organisation wishes to
expand internationally and develop new
markets and production facilities in five
countries
A single-sex independent school wishes
to change to become a coeducational
school
Organising
organising
coordination of the
various human and
physical activities of an
organisation
Organising is the role of management whereby
they are responsible for coordinating their
organisation’s human and material resources
to ensure the achievement of its objectives.
The way an organisation is structured provides
100
the framework within which to operate. The
structure is depicted in an organisational chart
(see chapter 4), which provides a graphic
representation of the chain of command within
the organisation. The success of an organisation
depends on the manager’s ability to marshal
and coordinate the organisation’s resources to
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attain its objectives. The more integrated and
coordinated its work, the more effective the
organisation will be.
Organising is a multistep process that
involves:
1 determining all the work that must be done
to attain organisational objectives
2 dividing the total workload into activities
that can be performed logically and comfortably by individuals or by work groups (task
allocation)
3 combining or aggregating tasks in a logical
and efficient manner
4 setting up departments to coordinate the
work of organisation members and ensuring that all departments are mindful of their
contribution to the organisational objectives
5 monitoring the effectiveness of the organisation and making adjustments to its structure
when required.
Because organising is an ongoing process,
periodic assessment of steps 1–4 will be necessary. A manager may need to reorganise the
workplace, the division of labour, the delegation
of authority, and how departments are coordinated should there be a change in its organisational structure. Pressures for this change may
come from internal or external sources. For
example, a change in corporate culture could
result in increasing the degree of autonomy that
is designed into a worker’s job or the adoption
of a team-based approach to task completion.
As part of organising, managers must design
an organisation’s authority system. There are
three different types of authority found in these
relationships: line, staff and functional authority.
• Lineauthorityisacommandauthority,giving
the manager the organisational right (legitimate
power) to make decisions and commit the
organisation to action. Line authority is represented by the chain of command, whereby
they have the right to make decisions, issue
directives and to expect compliance from their
subordinates in their span of control.
• Staff authority is advisory authority, which
takes the form of advice or recommendations.
• Functionalauthorityistherighttodirector
control special activities that are under other
managers’ span of control. For example, the
human resources department may create
policies guiding an organisation’s compliance with workplace relations.
Leading
Leading involves influencing others towards the
attainment of organisational objectives. Effective
leading requires the manager to motivate subordinates, be a good communicator, act as a role
model and effectively use power. To be effective
at leading, a manager needs to have an understanding of those whom they are going to lead:
their personalities, values, attitudes and emotions.
What makes an effective leader?
It is generally accepted that good leadership
is essential to the functioning of an organisation. Leadership is the ability to influence and
to gain individuals’ or groups’ confidence, so
empowering and motivating them to achieve
the organisation’s objectives. While different
leadership styles suit different circumstances, it
is generally felt that most effective leaders have
the following characteristics or traits:
leadership
defined as one’s ability
to get others to willingly
follow
• intelligence and knowledge that is generally of a higher level than that of their followers. The intelligence does not have to be in the
form of academic learning or achievement.
• social maturity – a tendency towards
emotional maturity, together with a broad
range of interests
• anorientationtowardsinternal motivation
(drive) and achievement. To them, the
sense of accomplishment is very important.
After achieving one goal, they are driven to
achieve the next.
• self-confidence and good communication. The need to work with others and
respect other people’s individuality is
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Activity 5.3
1 Working in pairs, choose two people from
your community – they could be business
people, sports people, musicians, politicians
or individuals within your school – that you
consider to be ‘good leaders’.
2 List five traits (characteristics/attributes) that
you can identify which are central to being
good a leader.
3 Rank these traits from 5 to 1 (5 = most
important; 1 = least important). Explain why
you have ranked the traits in that order.
figure 5.6 An effective leader must be a good communicator.
recognised. Their communication skills are
used to promote a feeling of mutual cooperation and support.
• interpersonal qualities such as visionary
skills, ability to inspire and establish trust
while retaining humility in their achievements.
• theabilitytotake responsibility seriously
and make decisions that are fair and just.
Activity 5.4
Read the article and answer the questions that follow.
‘Flexibility is key to retail success’
by Narelle Hooper, editor of AFR Boss Magazine
7 September 2010
Speaking at Meet the CEO in Melbourne, an
Australian School of Business Alumni event,
Naomi Milgrom AO, the Executive Chair and
CEO of the Sussan Group, discussed with
Narelle Hooper, editor of AFR Boss Magazine,
her leadership of Australia’s largest privately
held specialty fashion retail company.
The Sussan Group comprises three fashion
brands – Sussan, Suzanne Grae and Sportsgirl.
Under Ms Milgrom’s leadership, the Sussan
Group has grown to over 550 stores and more
than 4500 employees throughout Australia and
New Zealand.
Naomi joined Sussan in 1989 having had
a varied career in education, advertising and
102
marketing. ‘My father rang and asked me
to come and work with the company and I
initially said no as I had many other priorities
at the time. But he was very persuasive,’ she
said. ‘Growing up my parents gave me a belief
in myself and my ability to do anything,’ Ms
Milgrom added.
Ms Milgrom believes her particular management strengths lie in strategic planning and
helping the company maintain focus, keeping
the three brands on track and distinctive. This
single mindedness has propelled the Sussan
group to its greatest success.
A refreshing attitude is applied to looking
after the company’s employees. ‘Ninety-nine
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per cent of my staff are women and mostly
working mothers. I believe that the best way to
manage this workforce is through consultation
and having flexible working hours.’ Ms Milgrom
believes in having a great deal of contact with
her staff at head office and store level. She
admits to not having an office, preferring to be
constantly on the floor and in touch.
When questioned about the impact that
the introduction of international retailers such
as GAP and Zara might have on her company,
Ms Milgrom was circumspect. ‘I think they
would be great for the market and add another
dimension to the sector. I think a far greater
challenge is doing business on the internet
which is gaining much more momentum and
represents a far greater risk than new players
in the market.’ Because, as she put it, ‘Young
people particularly want the latest fashion
trends from Europe now and they will go to
the net to purchase it. Therefore we need to
get with the program. And we have.’
Taking questions from the floor, one alumni
asked Ms Milgrom to reflect on her most
outstanding professional experience. ‘Buying
Sportsgirl and turning around that business
was the single most important thing I did. It
was a business that was completely broken
and taking it over gave me so much courage
to do other things and it gave me the ability to
look at business in a different way right across
the brand’.
Source: www.asb.unsw.edu.au
Questions
1 Define the term ‘leadership’.
2 List and explain three characteristics of Naomi Milgrom that make her a leader.
3 Describe what Naomi Milgrom believes is the best way to manage her workforce.
4 What does Naomi Milgrom believe is one of the greatest challenges to the future success of her
business? How does the Sussan Group intend to meet this challenge?
5 How does Naomi Milgrom view ‘competitors’ – are they a threat or an opportunity? Justify your
answer.
Sources of leadership
2 expert poWer
The sources of leadership are many and varied,
but power or influence is the focal point of
leadership. Power, in the case of leadership, is
divided into various categories, and each can be
interlinked with the others. The categories for
power or influence are described below.
Expert power employs skills, knowledge and
information, which a person of power can wield
in order to influence others.
1 legItImate poWer
Legitimate power is power that has been
confirmed by the position’s placement in the
managerial hierarchy and its associated authority
or structure of the group or organisation itself, and
is accepted by all as correct and without dispute.
3 reWard poWer
Reward power involves the ability to reward a
person in order to gain compliance to a certain
way of thinking or behaving.
4 coercIve poWer
Coercive power involves the ability to punish
others when they do not engage in desired
behaviour.
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legitimate power
power that exists by
virtue of that person
being appointed by
the organisation to
a position (formal
authority)
expert power
power based on the
person possessing
specific knowledge or
expertise
reward power
power derived from the
ability of one person
to reward another for
carrying out express or
implied orders
coercive power
the negative side of
reward power, based
on the influencer’s
ability to influence by
threat of punishment
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5 referent poWer
referent power
power based on the
desire to be liked by
or to identify with a
person
Referent power means the leader is liked and
respected by subordinates, peers and supervisors and gains power through this.
Controlling
Controlling is directly related to planning. The
controlling process ensures that plans are being
implemented appropriately and alerts managers
to any deviations from the plan so corrective
action may be instigated.
There are four basic steps in the control
process:
1 Setting a standard, target or objective – for
example, 30 per cent increase in sales for
January, an absenteeism rate of not more
than 5 per cent per week, staff turnover of
not more then 10 per cent per annum, or
zero number of workplace accidents.
2 Measuring performance is done through
observation, establishing quantitative and
qualitative measures and benchmarks, and
comparing these to the standard established,
target, objectives or prior period.
3 Identifying and investigating any deviations
– these may be positive (e.g. an increase in
sales) or negative (e.g. a decrease in sales).
4 Making changes where necessary to ensure
that the objectives established in step 1 are
being achieved.
There are several different types of controls
put in place to achieve a continuous flow
between measuring, comparing and action in
the control process. These are described below.
management style
the manner and
approach of providing
direction, implementing
plans and motivating
people
104
Financial controls
Budgets are an example of financial planning.
Budgets are important because they provide
a benchmark for management to evaluate the
financial performance of those responsible for
carrying out set plans, and, in turn, control
their actions. Control measures could include
accounting systems that can track where money
is going, and having your financial records
checked by an external auditor.
Establishing performance
standards
Standards are created when objectives are set
during the planning process. A standard is any
guideline established as the basis of measurement. For example, in the car industry cars
would need to be manufactured according to
environmental and safety standards relating to
emissions and passenger safety.
Time controls
These controls relate to deadlines and time constraints. For example, an individual car company
would need to ensure that it is able to produce a
particular number of cars per day in order to meet
demand and maintain its profit margin.
Cost controls
These cost controls help ensure standards are
met. Employee performance controls focus
on behaviour of individuals and groups of
employees. These may include staff absences
and workplace accidents. For instance, if there
are set standards on health and safety within a
company, such as a building organisation, then
there should be fewer workplace accidents and
subsequently less cost to the company in the
form of WorkCover premiums and claims, and
legal actions for negligence.
Management styles
Management style is the manner and approach
of providing direction, implementing plans and
motivating people. There are distinctly different
styles of management: autocratic, persuasive,
consultative, participative and laissez-faire.
Management styles can have specific features.
For example, the way managers interact with
employees will depend on how they control
authority, the degree of task or employee
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orientation, and the manner of communication
(‘top-down’, ‘bottom-up’ or lateral). The type
of management structure, such as bureaucratic
(multilayered) or a flatter structure or teambased structure in order to achieve the organisation’s goals and objectives, is also important.
Most leaders use a range of styles based on
the situation that is required to be managed,
their own (manager’s) personality and the characteristics of their subordinates.
For instance, if a manager wanted to
introduce 12-hour shifts to raise productivity
by increasing the use of expensive plant and
equipment, it is unlikely that an autocratic
Task-oriented styles
Autocratic
figure 5.7
Persuasive
task-oriented style would be effective in managing this situation. A participative or consultative
management style, where employee input was
sought and considered before making the decision, would be more appropriate.
Management styles can be placed somewhere
on a continuum relating to their approaches to
management based on their orientation towards
the task or employees/people. At one end
of the continuum, the importance of the task
outweighs that of the employee/people. The
other end places greater importance on the
people, while not forgetting the importance of
task achievement.
Employee/people-oriented styles
Consultative
Participative
Laissez-faire
Management style continuum
Contrast of two styles – there is no one right way
to manage people
Bill Gates (Microsoft) bases his style on
control. He has great concern for detail (almost
obsessive). He places great importance on
monitoring of staff and financial control,
demonstrated by the fact that he even used to
sign off on expenses for his right-hand man,
Steve Ballmer.
Warren Buffett stressed a desire for the
managers of Berkshire Hathaway to think like
they were owners of the organisation. ‘Look at
the business you run as if it were the only asset
of your family, one that must be operated for
the next 50 years and can never be sold.’
figure 5.8 Warren Buffet and Bill Gates
Source: www.thinkingmanagers.com
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Types of management
style
Management style refers to the different ways in
which managers behave. The preferred style of
a manager will depend on many factors, such
as cultural styles of leadership and the type of
organisation.
Autocratic management style
autocratic
management style
(authoritarian)
management style
where all decision
making is centralised,
there is little delegated
authority, and
communication is oneway – downwards
Autocratic management style is often referred
to as the classical management style.
The characteristics of autocratic management
style are:
• Managers have the desire to be in control
and to retain authority. The function of planning, organising, leading and controlling are
centralised around the manager.
• Managersplacegreatimportanceonachieving
the task and following the established process.
Policies and procedures are maintained in
detail and enforced by frequent checks.
• Managers have a belief or perception that
payment (money) is the main motivator for
work performance.
• Decisionmakingiscentralisedorcontrolled
by management, with the decision or order
then passed on or told to subordinates.
• Managers place little value on the importance of the employees’ contribution to the
overall performance of the organisation. The
objectives, aims and operating environments
reflect the ideas, beliefs and values of the
manager.
• Communication is centralised with a strict
top-down or hierarchal chain-of-command
approach to management.
An autocratic manager has a high regard
for production and efficiency (task-orientated).
Managers expect team members to comply
with their decisions and they are not concerned
with the attitude or thinking of the group.
This approach to management can result in
passive resistance from team members and
requires continual pressure and direction from
the manager in order to get things done. Such
managers use punishment and rewards to
achieve their objectives.
table 5.2 Advantages and disadvantages of an autocratic management style
106
advantages
Disadvantages
Decision making is quick, as only one person needs
to be involved
A quick decision is not always the best decision
Decisions are made by an experienced leader
Discourages teamwork; employees’ opinions and
input are not sought
Communication is direct
Does not allow for open communication and
feedback on ideas
Employees’ roles and expectations are defined and
monitored
Low motivation and job satisfaction, as workers are
not empowered; staff turnover may increase when
staff feel undervalued
High regard for production and efficiency
Too task-focused, with insufficient regard for workers as
people with needs; does not take account of needs of
Generations X and Y and the Baby Boomer employees
Suits high-risk or difficult decisions, e.g. closure of
business operations, retrenchment of staff
Creates feeling of unease and being ‘kept in the dark’
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Persuasive management style
A persuasive management style is that of a
manager who uses their ability to interpret a situation, people’s actions and dialogue, and then
strongly urges or convinces them to do a task or
achieve objectives the manager’s way. This style
has many characteristics in common with the
autocratic style. The main difference between
the styles, however, is that once a persuasive
manager makes a decision, they then try to
convince a subordinate that what was decided
by the manager is in the subordinate’s best
interests. For example, a marketing department
manager who has an idea for increasing sales
targets will try to convince the rest of the team
that only this idea will improve the sales targets.
This type of manager will try to bring people
around to their own view, but will also stick to
their decision with or without agreement. Under
this type of management style, employees will
have a better idea of what to do when there is
a change externally or internally, because the
manager has explained their intentions.
The characteristics of persuasive management style are:
• It has a centralised system of control and
authority.
• Itplacesgreatimportanceonachievingthe
task and following the established process.
• Policies and procedures are maintained in
detail and enforced by frequent checks.
• Thereisabelieforperceptionthatpayment
(money) for tasks performed is the main
motivator for work performance.
• Decisionmakingiscentralisedorcontrolled
by management, with the decision or order
then explained or presented to subordinates.
• It places some value on the importance of
the employees’ contribution to the overall
performance of the organisation. The objectives, aims and operating environments still,
however, reflect the ideas, beliefs and values
of the manager.
• Communication is centralised, with a strict
top-down or hierarchal chain-of-command
approach to management.
persuasive
management style
managers make
the decisions then
persuade workers of
the benefits of those
decisions
table 5.3 Advantages and disadvantages of a persuasive management style
advantages
Disadvantages
Decision making is quick and still made by one
person
No input from workers into decision-making process;
undervalues benefit of teamwork
Suits high-risk decisions, e.g. closure of factory,
redundancy
Workers can still feel alienated, as their opinions are
not sought
Employees have a clear idea about what they have to
achieve
Opportunities for employee initiative and commitment
overlooked, leading to low levels of motivation and
job satisfaction
Consultative management style
A consultative management style takes into
account the opinions of team members before
making a decision. This style is moving further
along the continuum from being purely taskcentred to now taking the people/employees
more into account. For example, a school
principal may ask the student leadership group,
parents and staff for their suggestions on a new
uniform, then consider all the arguments and
make a decision on the type of uniform that will
be introduced.
The characteristics of consultative management style are:
• Control and authority, while centralised, is
more employee-based and less centralised
than the autocratic and persuasive styles.
The employees provide the ideas, concepts
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consultative
management style
management consults
with employees when
discussing an issue;
however, the manager
ultimately makes the
decision
107
Cambridge University Press
or suggestions to the manager, who will then
make a decision based on this input.
figure 5.9 A consultative manager seeks input from their staff.
• Task achievement is still an important
driving factor, but is now being balanced
with an understanding of the importance of
the ‘people’ factor.
• Areasonablelevelofemployeeinvolvement
is wanted in decision making, which results
in employees becoming more motivated and
wanting to perform at their best.
• Decision making, while centralised with
the manager, occurs after consultation with
employees.
• It places value on the importance of the
employees’ contribution to the overall
performance of the organisation.
• Communicationistwo-way,beingtop-down
by management to subordinates, and upwards
from the subordinates to management when
their opinion and feedback is sought.
table 5.4 Advantages and disadvantages of a consultative management style
advantages
Disadvantages
Gain a variety of ideas from the suggestions of
employees, which will lead to a better decisionmaking outcome
Employees may not understand the complexity of the
problem
Reasonable level of employee involvement
Time-consuming if many stakeholders are consulted
Acts to motivate and increase an employee’s level of
job satisfaction
Employees may still not feel valued if they have
provided their ideas, but these are overlooked
Participative management style
participative
management style
decision making is
performed as a team
with management and
staff working together
108
Participative management style has become
very popular because it focuses on the interaction between management and employees.
This style keeps employees informed about
issues that affect their work, with management
and employees sharing in decision-making and
problem-solving tasks. The manager is now
acting more as a coach who gets their team
of employees to work together to improve the
overall performance of the organisation. The
manager does not delegate away responsibility,
as they still are entitled to have the final say.
The characteristics of participative management style are:
• Control and authority is decentralised.
Corporate objectives, while determined by
senior management, are followed by the
setting of departmental, team and individual
objectives, so allowing for group ownership
of the corporate direction.
• Orientationorfocusistowardspeople.Ifthe
employees are satisfied and productive, this
will result in an increase in productivity.
• Thereisabeliefthatmotivationofemployees relates to an understanding of how to
satisfy the employees’ broad range of needs.
• Decision making is decentralised, with
management and employees sharing in
decision-making and problem-solving tasks,
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table 5.5 Advantages and disadvantages of a participative management style
advantages
Disadvantages
Manager demonstrates trust and faith in the ability of
employees
Can give rise to conflict between employees who
question the ability of their co-workers
Employee morale is increased, as employees feel
part of the organisation’s processes; this leads to an
increase in motivation and productivity
Some workers would prefer to have their level of
productivity (output) linked to money rather than job
satisfaction
Employees feel a sense of ownership and
empowerment as they are now decision makers
Lack of contribution by all employees, as some would
rather not be involved in decision making, preferring
to be told what to do
Decision making, particularly at middle to lower
levels of the organisation, is improved because
employees are involved in making decisions on
actions directly related to them; a diversity of
viewpoints is evident in discussions
It can be time-consuming seeking the involvement of
groups or teams when making decisions
Open communication within the organisation
Conflict may arise when there are varying viewpoints
Empowerment and coaching encourages
opportunities for employee development
coaching
on-the-job approach to
training where teaching
is conducted on a oneto-one basis
Creates good employee relations
Shared vision and direction between management
and employees towards achievement of the
organisation’s objectives
and decisions being made after consultation
with employees.
• Value is placed on the importance of the
employees’ contribution to the overall
performance of the organisation.
• Communicationistwo-way,beingtop-down
from management to subordinates, and
upwards from the subordinates to management when their opinion and feedback
is sought.
Laissez-faire management style
The laissez-faire management style can also
be called ‘free-rein’ or ‘hands-off’ style. It is a
style in which management provides little direction to employees. Management’s involvement
and responsibility often relates to outlining
budgetary constraints, coordinating timelines
and ensuring broad corporate objectives are
achieved. Employees are then empowered to
determine their own objectives, solve their own
problems and make their own decisions.
This style is commonly found in workplaces
where the employees are highly educated,
skilled and experienced. This group of employees requires little direction and has their own
motivation (drive) to accomplish and take pride
in their accomplishments.
A manager of a website development
company would, for instance, entrust the
website designers to work independently with
little interference from the manager when fulfilling the customer’s needs. The group members
are allowed to perform as they like, so far as
this does not violate the organisation’s objectives and policies. This style also suits the
dynamic nature of an advertising company
where creative freedom is very important.
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laissez-faire
management style
a leadership style that
leaves the majority of
decision making and
running of the business
operation to the
employees
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Cambridge University Press
table 5.6 Advantages and disadvantages of the laissez-faire management style
advantages
Disadvantages
High employee control, as employees can set their
own tasks with little involvement from management
Lack of guidance can cause some employees to have
a sense of loss of direction
Strong motivation, empowerment and job satisfaction
for employees
Some employees may feel unsettled by the freedom
of this style
Good environment for encouraging creativity and
innovation
Does not suit employees who are unskilled or need
structure and routine tasks
Conducive to team work
Decentralised and flatter structure encourages good
communication, as ideas are openly discussed
Activity 5.5
Read the article and answer the questions that follow.
Lead to succeed
by Ken Gunn, Chairman and CEO, The CEO Institute
Autocratic leaders are the has-beens of
modern organisations. But how should a
democratic business work and be led? Today’s
confident, options-savvy workers won’t put
up with autocratic leaders. They want to feel
engaged, heard and as though they are making
a difference. They want industrial democracy.
We have learned that productivity and
worker satisfaction levels increase dramatically when leaders lead with emotional intelligence. But what does this mean in practice?
Good leaders reflect on themselves, refine
how they work with others and use their
personality effectively. They listen more than
they talk. Great leaders know their staff and
understand what makes them tick.
Adversity always sorts the leaders from the
pack. Blaming others, throwing tantrums and
sulking are the traits of corporate dictators.
Democratic leaders – such as Winston Churchill
during WWII – are realistic, motivational and
optimistic. Honesty and optimism underwrite
110
any leader’s capacity to inspire confidence and
buy-in from staff.
Autocrats like to set their flunkies against
each other (it keeps them from eyeing the top
job and always leaves someone else to blame
for failure). Callum Davidson – CEO of Medfin
Australia and a member of the CEO Institute
– tells a story about working in a financial
markets dealing room 10 years ago where staff
in different business units were pitted against
each other. Callum says that staff members were
more worried about doing better than the next
business unit and comparing their budgets than
working together to look after clients. ‘It was just
counter-productive. The clients weren’t being
serviced properly and the staff were unhappy.’
As Medfin Australia CEO, Callum has a
very different way of getting people working
together productively. He says: ‘We used to
have a huge divide between sales and support
people. Salespeople were paid commissions
while support staff (who were instrumental
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in generating the commission) missed out.’
Callum introduced a commission pool, which
everyone shares. ‘Initially there was some
push-back from sales. Getting the change
through wasn’t easy. But nobody is worse off
because salespeople are getting more out of
the support staff who, in turn, are much more
invested in helping salespeople. If you do it
right you get a win-win situation.’
Bob Johnson, a CEO Institute syndicate
chairman, says that HR departments can add
value by being the catalysts for bringing information out into the open. ‘CEOs can’t respond
to all issues. Good HR people can use their
creativity to constantly seek out information
artfully without interrupting the productive
process too much.’
Bob notes a semantic difference in two ways
of asking employees for their opinion. Asking
‘How do you feel about this?’ invites a binary
answer (good or bad); asking ‘What is important
to you?’ is subtle, inclusive and empowering.
Some bosses have always known how to
treat staff well. As a young man, Bob worked
at a business in New York that had an unusually harmonious working environment. He
says: ‘Staff weren’t paid much and there was
absolutely nothing glamorous about the workplace. There were certainly no perks such as
complementary gym memberships. But staff
turnover was extremely low and the company
never had to advertise for staff.’ So what were
they doing right?
The secret, according to Bob, was that
management were tuned in to what was really
important to the workers. Staff worked a fourday week and all religious and public holidays
were observed, which meant employees had
a lot more time off than most workers. There
was an unwritten rule that if anybody was
caught short financially, the owner would put
his hand into his own pocket to help them
through. In other words, management showed
genuine concern for the workers.
Nobody is suggesting that all leaders
should rescue their employees from every selfinflicted debt they run up. But at that company
the boss created a culture of loyalty, trust and
respect which produced a happy, productive
workforce. What are you doing for yours?
Source: www.ceo.com.au
Questions
1 Define the term ‘autocratic leadership style’.
2 What does the term ‘industrial democracy’ mean?
3 Explain the characteristics of a great leader.
4 What type of motivation does an autocratic leader use to achieve their objectives?
5 Explain the problems with this style of motivation.
6 How does the approach of the autocratic leader differ from that of the participative leader?
Situational or
contingency
management approach
in order to compete against other organisations.
Business environments (external and internal)
are constantly changing, including innovations in
product development and fast delivery of goods.
Organisations need to respond to these changes
managers must take into account all aspects of
This can have an impact on the management
style adopted by the manager. In a situational
or
contingency management approach,
the current external and internal situation and act
on those aspects that are important to the situation that has arisen. The manager demonstrates
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contingency
management
approach
use of a range of
variables to determine
the most appropriate
management style
required to attain
organisational goals
in different types of
situations
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Cambridge University Press
The manager’s
personality, skills,
experience
External
environmental
factors
Employees –
knowledge, skills,
experience, values
Management
style
Corporate
culture
Constraints –
time, money
and resources
flexibility in these situations, which is a response
known as ‘contingency approach’.
This approach works by applying a range of
variables to assist in selecting the most appropriate management style for managing a given
situation. The following are considered:
• themanager’spersonality,characteristicsor
qualities, their values, skills and how they
communicate with staff
• their subordinates’ (employees) characteristics, such as their level of knowledge, skills,
experience and values
• thetasksthatneedtobecompletedbythe
team or organisation
• the constraints, such as time, money and
resource availability
• thecorporatecultureoftheorganisationand
the relationships between management and
staff.
Types of task –
routine or high
risk, high cost or
low cost, individual
or team
figure 5.10
Variables influencing
the choice of
management style
As a result of the forces or situations, managers may not use any one particular management
style. Rather, a manager could use a variety of
management styles as outlined in the following
situations:
• An authoritarian style would be appropriate where there are a number of new and
unskilled employees who need to learn a
job. The manager would need to keep tight
control on the situation and teach the new
employees what their job entails in as short a
time as possible in order for them to become
productive.
• The participative management style would
best suit the project manager of a group of
experienced, motivated employees working
as a project team who are capable of
running the project within the established
time frame.
Activity 5.6
Read the three scenarios and complete the questions that follow.
Portside Hotels Limited
Portside Hotels Limited is a large international
five-star chain of hotels and eco-resorts. In
Australia, it has operated hotels in all the
112
major capital cities for the past 25 years. In the
late 2000s, Portside Hotels decided to diversify
its operations into eco-tourism. This resulted
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in the building of three eco-resorts, one near
made a significant effort to resist incorporating
the Great Barrier Reef, the second in the
any participative management practices into
Northern Territory (Kakadu National Park)
his department. Jeremy believes that workers
and the third in Western Australia at Cable
in his department should follow his orders,
Beach, Broome.
without question. At the beginning of each shift
Scenario 1
he holds a briefing session to give instructions
Harry Moore is currently the General Manager
of Portside’s Gold Coast Hotel. Commencing
as a hotel porter at 15 years of age, and without
completing any formal management training,
he has worked his way up the organisation’s
hierarchy to now hold this top position.
Most of Harry’s working life has been spent
working under a multi-layered hierarchical
structure. Harry enjoys the status and prestige
the position of General Manager affords him.
and distribute tasks, but is unresponsive to any
questions that are asked. A few of the younger
hospitality trained staff in his department have
started to resent his dictatorial style. Staff
turnover in Jeremy’s department has been
very high. Jeremy has stated on numerous
occasions that far too much time was wasted
consulting and talking with staff. He advocated
that in his position as manager he knew best,
and therefore workers should follow his orders
Many of his staff comment that they feel
and simply get on with their jobs.
that Harry isn’t interested in implementing
Scenario 3
change and that he seems more interested in
maintaining his position and status within the
organisation as a senior manager. It is also
noted that Harry is often absent, spending long
weekends at his beach house at Bribie Island,
leaving strict instructions not to be disturbed.
One employee was overheard saying, ‘All he
really cares about these days is how large a
payout he will receive on his retirement’.
Harry’s approach now seems to be distant
with middle managers, such as Jeremy Hall,
who are basically being left to run their own
departments as they see fit.
Since being appointed as the General Manager
of the three eco-resorts in 2010, Jenny
Kelly has approached her role in an entirely
different manner. She has appointed a Resort
Manager for each resort, suggesting to them
to organise their staff into departments and
teams – based on functions such as: food and
beverage, housekeeping, activities – indoor/
outdoor. Each work group is given specific
goals and their performance is appraised
against achievement of these goals. The Resort
Managers are requested to hold department
meetings on a weekly basis, and to encourage
Scenario 2
staff to have input into these meetings. Jenny
Jeremy Hall, the Food and Beverage Manager
emphasises that she values their advice as to
at Portside’s Gold Coast Hotel, is in his late 30s
how the teams, departments and resorts are
with a tertiary hospitality qualification. He has
operating.
Questions
1 Identify the management style currently being used by Harry Moore and Jeremy Hall at
Portside’s Gold Coast Hotel. Explain three key features of each management style, linking it
to the case study.
2 Identify the management style currently being used by Jenny Kelly as General Manager
of the three eco-resorts. Explain three features of that management style, linking it to the
case study.
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113
Cambridge University Press
Management skills
skills
the ability to do
something well, gained
through training and
experience
communication
a process of creating
and exchanging
information between
people that produces
the required response
delegation
passing of authority
down the hierarchy to
perform tasks or make
decisions; responsibility
remains with the
person delegating
formal authority
influence or authority
derived from the
position in the
organisation (legitimate
power)
114
Effective management requires a manager to be
capable of producing an outcome that meets
or exceeds accepted ethical standards. Skills
refer to the ability to do something well, gained
through training and experience, in order to
achieve the required work. A close relationship
exists between management styles and skills,
with certain management styles placing greater
emphasis on different skills.
For example, to be effective, a manager
using a participative style must ensure they have
good communication and interpersonal skills,
problem-solving, decision-making, delegation
and negotiation skills. In addition, they may also
require technical skills to deal with a particular
requirement of a task.
No matter what their management level
(senior, middle or front-line management)
or their functional classification (e.g. human
resource management or operations), managers
will need to possess a range of skills, such as:
•
•
•
•
•
•
•
•
•
•
communication
delegation
decisionmakingandproblemsolving
negotiation
teamleadership
timemanagement
stressmanagement
analytical
technical
emotionalintelligence.
Communication skills
Communication skills are essential, as managers must be able to clarify with employees the
tasks that are required to be completed.
Managers are involved in two kinds of
communication:
• interpersonal communication – which
involves them in sharing information
and understanding between two people,
themselves and a subordinate or a small
group or work team
• organisational communication – where
systems are used to share information and
understanding with larger numbers/groups
of people.
It is estimated that managers spend between
60 and 80 per cent of their work time in conversation; therefore it is extremely important that
they are effective in their interpersonal communication. Open communication is also vital if a
manager wishes to gain employee involvement
in the expression and development of ideas in
order to achieve the vision of the organisation.
Weak or restricted communication flow can lead
to frustration, lack of motivation and inadequate
direction and feedback between management
and their subordinates.
There are several forms of communication:
• reading–whichinvolvesthemanagerlocating, understanding and interpreting written
data and information, such as letters, reports,
emails, documents, policies, procedures,
codes of practice, contracts and graphs
• verbal written communication – which can
express thoughts and ideas, information and
messages through emails, word-processing
documents, manuals and reports
• verbal oral communication – which can
enable the manager to communicate orally
by talking to people individually or in groups
(small or large) to disseminate information
and gain feedback. Listening to oral messages is an essential form of communication as
a manager receives, attends to, interprets
and responds to oral messages. If managers
do not develop the skill of listening, they
may not hear the suggestions or information
from the most valuable employees.
Delegation
Delegation is the process where formal
authority is passed down an organisation’s
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Activity 5.7
Read the following scenarios and recommend the form(s) of communication that you believe would be
most effective. Justify your choice.
Scenario 1
The General Manager of a major tyre manufacturer needs to advise staff that due to a recent
downturn in the market, it will be necessary for the business to make 20 staff redundant.
Scenario 2
The human resource management department has drafted a policy that sets out the overall guidelines
and procedures relating to creating a ‘smoke-free workplace’. The department now wants to gain
feedback from affected stakeholders before formulating the final version of the policy that will be
presented to senior management for approval.
Scenario 3
The board of directors has decided that the organisation needs to gain ISO 9000 accreditation as
part of its quest to become global in its operations. The board has ascertained that this is a complex
activity that will require a vast amount of paperwork and input from all members of the organisation
relating to establishing and documenting their quality procedures.
hierarchy. It can occur at all levels; for example,
a senior manager will delegate to middle
management, who will then delegate further
down the chain of command to front-line
managers, ultimately stopping with the workers
receiving their task instructions.
The delegation process has five steps:
1 Analysis – the tasks to be delegated need to
be determined
2 Appointment – involves nominating the subordinate to whom the task is to be allocated
3 Briefing – involves defining the task(s) that
are to be delegated
4 Control – the progress of the delegated tasks
needs to be monitored and encouragement
given to those undertaking the task
5 Appraisal – the process needs to be reviewed
and revised.
The authority to delegate needs to come
right from the top of the organisation. The shareholders upon electing the board of directors
assign to them the right or power to delegate to
the chief executive officer and senior management the running of the organisation.
The acceptance of authority by a person
indicates their acceptance of responsibility and accountability. Responsibility remains
with the manager to whom it is assigned
and the only way that manager can be released
from that responsibility is if a superior takes
it away.
Authority, if retained by senior management
and not delegated, is said to be centralised,
whereas authority when passed down to the
lower levels of the organisation is said to be
decentralised.
There are a range of benefits for an organisation if delegation of tasks occurs:
• It assists in the smooth flow of production
and work process, as work will continue
even in the absence of the manager.
• Itactsasatimesaver,freeingmanagement
to be involved in longer-term planning and
more important tasks.
• Itprovidesanopportunityforskilltraining,
personal development and job satisfaction
for employees while also showing trust and
faith in employees’ abilities.
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responsibility
position or job requires
you to perform a task
accountability
the extent to
which a worker is
held answerable
to supervisors or
managers for their
work actions or
performance
authority
the power and status to
pass commands down
an organisation
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While delegation is a skill in itself, it is also
a process that requires other skills to make it
effective, such as:
• theabilitytoanalyseajobandhaveaclear
understanding of what authority is required
to carry out the various parts of the job
• theabilitytoestablishperformancestandards
• the ability to set realistic checkpoints and
deadlines for tasks
• the ability to select appropriate people to
perform the delegated tasks
table 5.7
• goodcommunicationskills
• the ability to assess completed delegated
tasks and provide feedback, in the form of
praise or further advice, to subordinates.
It is important to note that not all the tasks
and actions to be undertaken by management
are suitable for delegation. Table 5.7 identifies
some of those tasks that are suited to delegation and others where delegation would be
ill-advised.
Examples of tasks suited to and not suited to delegation
tasks suited to delegation
tasks not suited to delegation
Tasks that form part of a larger project
Strategic planning
Repetitive or time-consuming tasks
High-risk decisions
The collection or organisation of data
High-cost decisions
Training and development of subordinates
Confidential matters
Highly specialised areas requiring specific training
problem solving
the systematic
approach to finding and
implementing a course
of action to correct an
unsatisfactory situation
116
It is also important to note that not all
managers are good at delegating. There may be
a variety of reasons for this:
Decision-making and
problem-solving skills
• insecurity or fear that the subordinate to
whom they have delegated a task may let
them down
• feeling threatened that it might show up
their inadequacies if the subordinate does
too good a job
• beingtoodisorganisedorinflexibleinhow
they organise their own work
• beingfocusedtooheavilyontheshort-term
achievement of work deadlines and therefore
thinking it is quicker to do the job themselves
• alackoftrustandfaithintheirsubordinates’
abilities
• adesirefortheirownpowerandtherefore
being reluctant to relinquish authority as it
might make them feel less important
• subordinates lack confidence, training or
experience or may even not want to accept
responsibility for any delegated tasks.
In the day-to-day operations of an organisation, a manager can be faced with numerous
problems as a result of changes in the macro,
operating and internal environments. The
problem-solving skill recognises problems,
then devises and implements a plan of action. It
figure 5.11 A manager needs problem-solving skills.
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table 5.8
Systematic approach to decision making/problem solving
Steps
Explanation
1 Identify the problem and define the
objectives
Make sure you identify and define the actual problem or issue
needing resolution.
2 Gather the necessary information to
establish the cause of the problem
Investigate the circumstances surrounding the issue and
search for factors that may have created the problem. Once
all the information is gathered, reassess the problem to see if
it is the same.
3 Develop alternative solutions
The existence of some choice is necessary for effective
decision making. Find standard alternatives (e.g. retaining the
status quo); also develop creative and imaginative possible
solutions to the problem.
4 Analyse the alternatives
Rank and sort the different alternatives. Each alternative
must be evaluated in terms of its strengths and weaknesses,
benefits, costs, advantages and disadvantages in achieving
the department’s or organisation’s objectives.
5 Choose an alternative and implement it
Management needs to decide the best outcome, given
the conditions under which the decision has to be made.
Management must communicate clearly the decision that is to
be taken, the required results and personnel associated with
its implementation.
6 Evaluate the implementation
Provide feedback on progress, making the necessary
adjustments. Evaluation enables managers to learn from
experience and improve their further decision making and
problem solving.
involves a manager being resourceful in seeking
help from others and to think critically, creatively and reflectively, and to adapt to alternative
solutions. These managers understand a quick
solution will not work to resolve a complex
issue. They spend time analysing the problem
from all angles and come up with a contingency
plan. To problem-solve, the manager needs to
be open and honest in communication with
those involved.
Decision making
Step 1
Step 2
Step 3
Step 4
Step 5
Step 6
Identify the
problem
Define the
objective
Gather
information
Develop
alternatives
Analyse
alternatives
Rank and
sort
Choose an
alternative
and
implement
Evaluate
Problem solving
figure 5.12
Action
plan
Decision-making and problem-solving steps
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action plan
the detailed actions
undertaken to
implement a strategic
plan or implement an
alternative to solve a
problem
The problem-solving process incorporates
the decision-making process but goes on to
formulate an action plan to implement the
decision. This consists of the following stages:
1
2
3
4
5
Objectives of the plan are stated.
Personnel requirements are specified.
Tasks are allocated to personnel.
Timeline for implementation is created.
Evaluation process is outlined.
In some cases, the decision-making process
may reflect a strong team involvement at the
discussion stage of the risks and alternatives,
and the overall decision may be a team effort
or it may require an individual to make a decision. This depends largely on the complexity of
the issue, management style and organisational
structure.
Activity 5.8
Angelina Silvano, the general manager of Biscotti Deliziose, has been advised by one of her front-line
managers that a potentially dangerous situation has developed in the baking section of the factory.
One of the team members in the baking section has been found drinking alcohol in the toilets
during his afternoon tea break. He has now returned to his job operating the baking ovens. Further
investigation reveals that there had been earlier reports from other team members about this person
experiencing both financial problems and a break-up of his marriage.
Task
Angelina has asked you to assist her in solving this problem. Your answer must include both the
theoretical steps of the problem-solving process as well as linking these at each step to the case study.
negotiation
the process by which
one party seeks to
obtain something it
wants from another
party, e.g. employee
seeking pay increase
from employer
table 5.9
Negotiation
Negotiation is the process of the parties
reaching an agreement or resolution through
discussion. For managers to be able to negotiate
successfully, they need to be able to perform
five core skills:
1 Definearangeofobjectives,yetretainflexibility about some of these.
2 Explore the possibilities of a wide range of
options (think laterally).
3 Prepare well.
4 Listen (actively) and question.
5 Prioritise clearly.
Steps for successful negotiation
1 Preparation
Establish objectives.
Identify issues that are open/closed to compromise.
Gather all key information relevant to the negotiation.
Assess the opposition.
Choose a strategy – decide who is playing which role in the negotiating team, i.e.
leader, good guy, bad guy, hard-line, sweeper.
2 Establish a positive working atmosphere
Where will negotiations occur – office or neutral ground?
Use seating plans, timeline and built in break times.
3 Make the proposal
Present it clearly and confidently.
4 Responding to the proposal
Listen carefully.
5 Establishing positions
Watch for body language; asking ‘how’ questions implies willingness to
compromise, bargain and debate on issues.
6 Record information and confirm understanding
Record points for later verification and clarification.
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Managers may be involved in a range of
activities that require them to negotiate. For
example, negotiations will occur when entering
into contractual arrangements with stakeholders
such as suppliers relating to prices, quantity
and delivery dates. Internally, managers will be
negotiating with incoming employees relating to
their pay and working conditions. With current
employees they will have ongoing negotiation
about working conditions, work expectations
and remuneration entitlements. Table 5.9 outlines
steps that can assist in reaching a successful
outcome from the negotiation process.
figure 5.13
Organisations may have to negotiate with unions.
Activity 5.9
Read the media release and answer the questions that follow.
Media release
Members vote up Telstra EA
10 September 2010
The approval of a new Union-negotiated
collective agreement covering 10 000 employees
at Telstra is a major achievement for Union
members as provided for under the Fair Work
Act 2009.
The new enterprise agreement which was
resoundingly approved by Telstra workers,
will deliver an initial 2% pay rise backdated to
1 July 2010 and further pay rises totalling 6%
between now and October 2011.
Employee participation was exceptionally high with 71% returning a vote with 86%
of those voting, voting yes to the Telstra EA
proposal – sending a clear message to Telstra
that its employees take a very keen interest in
their jobs, pay and conditions.
The EA covering almost 10 000 workers
for the next two years preserves existing
terms and conditions of employment, defines
a clear path on to the Union-negotiated EA for
workers covered by non-Union agreements
and includes access to enforcement through
arbitration by Fair Work Australia for the first
time in many, many years.
Some of these conditions include salary
sacrifice arrangements, trade union training leave, option to cash out annual leave,
improved performance management regulation, hours of work, redundancy, overtime
rates, RDOs, and so on.
Around 6000 Telstra employees on Australian Workplace Agreements and other non-Union
agreements were this week informed of their
pay being frozen until at least March next year.
The pay freeze shows how one-sided AWAs
and inferior non-Union agreements are when
an employer can unilaterally decide there will
be no pay rise, without any negotiation or
consultation with those affected employees.
By contrast, the new EA shows the benefits
of working under a Union-negotiated collective agreement.
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Ahead of the agreement coming into force,
the CEPU will be continuing to push for the
creation of pay parity between those on existing Employee Collective Agreements (ECAs)
and those on the new EA.
As reported previously to members, Telstra
has given commitments to engage in talks with
the Unions on this issue.
During the 2 year term of the new EA,
the CEPU will be working towards … all
employees ultimately benefiting from better
wages and conditions and importantly [having]
access to equal rights.
Source: www.cepu.org
Questions
1 Identify the areas where Telstra and the CEPU have followed the guidelines relating to successful
negotiation.
2 Identify the areas where Telstra and the CEPU are still in conflict.
3 Describe the area where the CEPU has identified a point of negotiating ‘strength’ in its ongoing
negotiation of wages with Telstra.
Team leadership
Organisations function more effectively when
they operate as a team. These teams may occur
at various levels; for instance, the senior management team establishes the strategic direction for
the organisation. Within the organisation there
will be many project teams and natural work
groups. It is important that team leadership skills
are exhibited by the team leader to ensure the
success of the team in achieving their objectives.
Team leadership involves the manager
possessing the following abilities:
teamwork
when a group
works together to
complete a task; it
requires workers to
be multiskilled and
allows for worker
empowerment
time management
the efficient utilisation
of work time, which
involves setting and
prioritising tasks,
allocating time and
avoiding time-wasting
activities
120
• tofunctionasacoachandmentortoteam
members
• to encourage contributions from all team
members to work to achieve the objectives
of the group/team
• to build a cohesive and trusting group of
team members
• to facilitate resolution of any problems
encountered by the group/team
• tomanageteamdynamicsandrelationships.
Teamwork is best understood as a set of
behaviours that two or more people demonstrate when working on some common task or
pursuing a common objective. Employees are
more likely to share the vision and objectives
of an organisation if they participate as a team,
particularly in the problem-solving and the
decision-making processes.
When people listen carefully to each other,
seek and take seriously each other’s opinions,
and make use of each other’s competencies and
expertise, they are involved in teamwork.
Teamwork encourages open communication, improves morale, workplace cooperation
and productivity, and develops a positive
corporate culture. Team leadership skills are
therefore important to be able to guide and
direct this powerful organisational tool – teams.
Time management
Time management involves the process of
managing the things we do in the time we have
available. Time is a fixed resource and it is the
use to which time is put that separates effective
and ineffective managers and workers.
There are three types of work time:
• Boss-determined – this is the time spent
doing work initiated by your manager. It may
be regular ongoing work or work delegated
to you on an ad hoc basis.
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• Organisation-determined–thisiswhenyou
complete work initiated by the organisation.
It includes demands upon your time by your
colleagues, customers and other departments and external bodies.
• Self-determined–thisistimespentcompleting work over which you have control. This
will include the roles of planning, organising, leading and controlling.
Managers cannot control all of their time,
as they are frequently interrupted and have to
respond to unexpected crises. The time spent
responding to requests, demands and problems
initiated by others are more difficult to control
than the time directly under their control. The
challenge for a manager is to know what time
they ‘directly control’ and then to make that
time more productive.
To be skilled in time management requires
a combination of a systematic approach and
one of self-discipline. A systematic approach
involves the following five steps:
1 Make a list of the objectives you need to
achieve.
2 Rank the objectives according to their
importance.
3 List the activities needed to achieve the
objectives.
4 Assign priorities to each activity. The priority
could be based on urgency or importance of
task. If the activity is not urgent, delay it. If
the activity is not important, delegate it to a
subordinate.
5 Schedule activities according to the priorities
set. Prepare a daily plan by creating a list of
the important activities you need to undertake during the day. For each item on the
list, set priorities based on their importance
and urgency.
Many interruptions to an established ‘action
plan’ are self-created (for example, socialising)
or avoidable. If a manager used a log book
or diary to record their activities over a set
period of time, they would gain insight into
areas where they could improve their time
management and turn non-productive time into
productive time.
Activity 5.10
Self-test
Using a diary or log book, record your activities
for one school week.
1 Calculate the percentage of time you have
spent on: teacher-determined, schooldetermined and self-determined activities.
2 Identify your major time-wasters. What
strategies could you use to decrease or
eliminate these?
Stress management
Stress is a very real occurrence in the modern
workplace. Managers must be aware of their
duties and the significant cost the organisation
can incur if they do not adequately address
stress management. While stress is normal
and can activate us to achieve, too much stress
can lead to workers developing a range of
medical symptoms, such as insomnia, headaches, back pain, gastrointestinal disorders,
fatigue, anxiety, irritability and depression. Our
individual capacity to cope varies and depends
on our resources, skills and confidence.
There are a range of factors that can lead to
stress. These include:
stress
physical, mental or
emotional strain or
tension occurring in
response to adverse
influences and capable
of affecting physical
health
stress management
skills required by a
manager to reduce the
level of stress/distress
in both themselves and
their subordinates
• workload – lack of control over it, consistently having too much to do, long working
hours, after hours and weekend work
• coping with organisational change, such as
restructuring, management downsizing, job
insecurity, redundancy, redeployment or
relocation
• interpersonal conflict, which could occur
between a manager and their subordinate,
between managers in different departments,
or between employees in a department or
work team
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harassment
behaviour designed
to make a person
feel uncomfortable,
offended, humiliated or
intimidated
analytical skills
the ability to analyse or
study the nature of a
given situation or set of
circumstances
• poor management practices, inappropriate
management style and ‘toxic’ corporate
culture
• shiftworkandassociatedfatigue,orlackof
adequate breaks
• lackofcommunicationorconsultation
• bullying,aggressionorharassment, threats
and intimidation
• technology – being introduced or constant
breakdown
• lackoftraining.
Stress can have a major effect on work
performance. Some of the consequences include
absenteeism, diminished performance, negative attitude and cynicism, decline in commitment and creativity, and a decreased ability
to concentrate, learn and interact with other
employees. It will also have a direct impact
on the organisation’s bottom line as stressed
employees will cost the organisation due to
lost productivity, poor motivation and staff
absenteeism. Researchers from VicHealth and
the University of Melbourne believe workplaces
that are damaging to employees’ mental health
cost the economy $730 million per annum.
To help avoid workplace stress, managers
can undertake the following steps:
• Providesupporttoemployeesbymatching
them with competent colleagues, coaches
and mentors and professional networks.
• Assess the employee’s workload through
collecting information from peers, supervisors
and managers. Clarify work roles and redesign particular tasks or reduce the workload.
• Implement any changes in a consultative manner, ensuring employees are fully
informed and involved in the plans and
progress at each stage.
• Establish training and a conflict resolution
mechanism through which employees may
address matters such as conflict with peers
or supervisors, anger management, antibullying and harassment.
• Promote work–life balance and introduce
flexible work options, such as paid parental leave, part-time work, flexible working
hours and job-sharing.
• Have an effective counselling procedure
in place for staff with personal needs, e.g.
alcohol or drug addiction, financial hardship, relationship problems.
• Introduce or encourage participation in
activities such as a staff social club, community involvement and wellbeing services
(gymnasium facilities or membership, or
yoga classes).
Analytical skills
figure 5.14 Workers can experience stress when they feel they have no control
over their workload.
122
A manager needs to possess analytical skills:
the ability to identify and solve complex problems and concepts and then make sensible and
reasoned decisions based on the information
available at the time. Effective analysis requires
the manager to apply logical thinking to be able
to understand what it is they are looking at or
looking for, drawing on their expertise to then
investigate the relevant facts, causes or issues.
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At the conclusion of analysis, the manager will
be in a position to develop the most effective
and efficient course of action to be taken to
achieve the desired outcome.
The ability to analyse is judged as an important management skill, particularly for middle
and senior level management. When selecting
a new manager to join an organisation, the
interview panel will normally pose questions
that will require the applicant to use their logic
to pick apart a problem or come up with a
solution. Psychometric testing will also include
a component that tests this ability.
Technical skills
Technical skills include the knowledge of and
proficiency in a certain specialised field; for
example, accounting, legal, marketing, information technology. Front-line and middle managers are heavily involved in the technical aspects
of an organisation’s operations.
The higher a manager progresses up the
management hierarchy, the less important
the technical skills become on a daily basis.
Senior management will, however, draw upon
their technical expertise when conceptualising
and analysing key organisational plans and
decisions. In addition to their original area of
technical expertise, many senior managers
complete higher qualifications in business
administration from major business schools,
such as Masters degrees from Harvard, the
University of Melbourne or Monash University.
Emotional intelligence
Emotional intelligence (EI) refers to an
individual’s possession of the personal qualities
and attributes of self-awareness, self-regulation,
motivation, empathy and social skills. The
concept of EI gained authority in 1990 through
US psychologists Salovey and Mayer, when they
were attempting to develop a way of scientifically measuring the difference between an
individual’s use, awareness and control in the
area of emotions.
DanielGolemanpopularisedtheideainhis
best selling book Emotional Intelligence (1995).
He claimed that EI could carry the same power
or even more than IQ, with research showing
that nearly 90 per cent of high-performance
leaders have high EI.
Set out below are seven elements of
emotional intelligence based on Goleman’s
Emotional Intelligence model:
technical skills
represents a manager’s
ability to perform
a particular task,
e.g. knowledge of
computing technology,
accounting
emotional
intelligence (Ei)
a set of competencies
that allow us to
perceive, understand,
and regulate emotions
in ourselves and in
others (McShane
and Von Glinow,
Organizational
Behavior, 2004)
Goleman’s Emotional Intelligence model
1 Self-awareness is an individual’s ability to
recognise and understand moods, emotions,
personal drivers as well as how they affect
other people.
2 Self-regulation (resilience) relates to
their ability to control or redirect disruptive
impulses and moods and to think before
acting.
3 Motivation is the passion of the individual
to work for reasons that go beyond money
or status. They have a propensity to pursue
goals with energy and persistence.
4 Empathy (interpersonal sensitivity) to
understand the emotional make-up of others
and the ability to treat people according to
their emotional reactions.
5 Social skills (influence) relating to their
proficiency in managing relationships and
building networks and rapport with others.
6 Intuitiveness at being able to arrive at clear
decisions and drive their implementation
when presented with incomplete or ambiguous information.
7 Conscientiousness in displaying clear and
personal commitment in pursuing an ethical
solution to a difficult issue or problem.
Source: www.ceoonline.com
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It is possible to measure EI using psychometrics, which are expressed as an emotional
quotient (EQ). An individual’s EI may be
enhanced by matching them to an experienced
coach with whom they work on a one-to-one
basis to change their current approach.
If a high EQ can be achieved by an organisation’s management, it will have a positive impact
in assisting it to achieve its strategic direction
and objectives. A higher level of EQ should
result in better teamwork, reduced levels of
stress and a heightened motivation (emotional
engagement) to achieve objectives.
Major Australian organisations, such as
Australia Post and Holden, have incorporated the concept of EI into their development
programs for senior managers. This has led to
performance management reviews now being
broadened beyond merely assessing a person
on their technical ability to incorporate a more
people-focused assessment.
Effective management – how do we know
if it is occurring?
‘The most effective measure of leadership is
the performance of the team in your absence.’
style and applying the requisite skills all work
Anonymous
either as a senior, middle or front-line manager.
Understanding the roles required of management, choosing the appropriate management
towards a manager being effective in their role,
The importance of understanding management styles and choosing the appropriate style
Top 10 strategies of an effective boss
1 Convey the vision. Communicate a
desired state of affairs, a clear vision and
share your philosophy of management.
2 Set the example. Display a set of behaviours that reflect the values and standards
you want for the organisation.
3 Mentor. Provide direction, guidance and
create an environment where it is ‘safe’ to
learn.
4 Promote creativity. Encourage people to
be creative, challenge assumption and see
problems as opportunities.
5 Be a storyteller. Tell stories about
successes, organisational ‘heroes’, and talk
about people’s strengths.
6 Manage by excellence. Focus on what is
being done right, show interest in the work
of others and how things get done, and
notice excellence when and where it occurs.
124
7 Offer feedback. Let people know when
they have done well.
8 Use rewards. Recognise desired behaviours and make an effort to increase their
frequency. Offer new opportunities to
people, give praise and celebrate others’
successes.
9 Create a culture of participation. Let
people participate in some decision making
to gain cooperation. Ensure decisions are
understood and accepted, and influence
others by being open to their influence.
10 Empower staff. Work to develop your
employees. Be concerned with their learning and development.
Source: Business Review Weekly,
9–15 October 2008
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to manage a given situation was highlighted in
the Human Synergetics report Transforming
Leadership and Culture. This report concluded
that 50.4 per cent of managers contribute to poor
employee behaviour and negative workplace
cultures. It was discovered that most managers
still use ‘a command and control’ leadership/
management style and had no idea what impact
their behaviour had on those around them.
Human Synergetics identified the top 10
strategies of an effective leader in Australia as
outlined on the previous page.
Assessment of a manager’s effectiveness in
their role can be based on a range of areas, such
as those outlined in table 5.10.
table 5.10 Areas of assessment of a manager’s effectiveness
area
Explanation
Outcomes/results based on objectives
Have these been achieved in an ethical manner?
Is the manager observing social responsibility to
stakeholders?
External/internal environment
Was the correct (appropriate) management style
adopted to manage the given situation?
Communication
Were the forms chosen appropriate and effective in
communicating with all stakeholders, e.g. employees
(subordinates), shareholders, customers, suppliers?
Motivation
Were the workers (subordinates) in the business area
motivated to achieve? Were the correct motivational
strategies implemented?
Job satisfaction and employee relations
Were the manager’s subordinates satisfied with their
jobs and motivated to work? Was the relationship
between manager and subordinates good?
Teamwork
Was this apparent and encouraged? What level of
decentralised decision making has occurred?
Staff absenteeism
How did the level of staff absenteeism compare with
other business units within the organisation and
industry (in general)?
Staff turnover
How did the level of staff turnover compare with
other business units within the organisation and
industry (in general)?
Training and development
Did the manager make available and oversee these
areas for their subordinates to help them to develop?
Performance appraisal
Was a performance appraisal system in place to
highlight the strengths and weaknesses of the
manager and subordinates?
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ChAPTEr SuMMAry
•
Management involves getting work done
through the actions of other people.
•
The role of management is to plan, organise,
lead and control (POLC).
•
Planning involves establishing objectives and
devising plans to achieve them. There are five
stages in planning and three levels (strategic,
tactical and operational). Strategic planning
involves the use of SWOT analysis.
•
Organising involves developing an organisational
structure to implement strategies, and
coordinating the organisation’s human and
material resources.
•
Leading uses power or influence to get the
best out of workers. There are five sources of
leadership power: legitimate, expert, reward,
coercive and referent.
•
Controlling involves monitoring and keeping
up standards and is directly related to
planning. There are five steps in the control
process – setting a standard, measuring actual
performance, identifying and investigating any
deviations and making the necessary changes.
Controls can relate to: financial, performance
standards, time and cost.
ChAPTEr SuMMAry
QuESTiONS
1 Write definitions for the following terms.
•
Management style is the approach used
to provide direction, implement plans and
motivate people. There are a variety of
styles: autocratic, persuasive, consultative,
participative and laissez-faire. The styles vary in
their orientation towards task or people.
•
The contingency or situational management
approach applies a range of variables that can
be used to determine the appropriate style for
a given set of circumstances.
•
Management skills are the abilities or expertise
required by a manager to achieve their work.
A range of skills are required by management,
regardless of their level in the management
hierarchy: communication, delegation, decision
making and problem solving, negotiation,
team leadership, time management, stress
management, analytical, technical and
emotional intelligence.
•
The interrelationship that exists between
management roles, styles and skills provides an
opportunity for assessing whether management
has been effective.
m Consultative management style
a Management
n Participative management style
b Management role
o Laissez-faire management style
c
Planning
p Situational/contingency management
approach
d Strategic planning
e Tactical planning
f
Operational planning
g SWOT
h Organising
i
Leading
j
Controlling
k Autocratic management style
l
126
Persuasive management style
q Effective management
r
Skills.
2 Refer to the ‘Management roles chart’ on
Cambridge GO. Construct three management
role charts. In each chart set out what
you consider to be the specific tasks that
management would perform as part of
planning, organising, leading and controlling.
For example:
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and their characteristics based on the acronym
COMDAC (control, orientation, motivation,
decision making, attitude, communication).
a Senior management, e.g. planning –
strategic (long-term, two to five years),
organisation-wide, objectives, high level of
uncertainty/risk
5 Create a separate table showing the advantages
and disadvantages of each style.
b Middle management, e.g. organising –
assigning tasks and jobs, training, liaison
with suppliers, negotiating business deals,
decision making, problem solving, delegation
of authority and tasks, coordinating resources
within their department
c
Front-line management, e.g. controlling
– close control of operations (tasks/
employees), checking forecast/budgets
against actuals, taking corrective action
where necessary.
3 Why are management styles so important to an
organisation?
4 Refer to the ‘Management styles chart’ on
6 Explain the statement ‘Not one management
style fits all situations’. Provide examples to
support your explanation.
7 Identify 10 management skills. Fully describe
their features, advantages and disadvantages.
8 Outline the management skills that an autocratic
manager is likely to use.
9 Outline the management skills that a
participative manager is likely to use.
10 Discuss what is meant by ‘effective
management’.
11 Explain the relationship between management
style and skills. Give an example.
Cambridge GO. Create your own summary
table setting out the five management styles
Read the case study and answer the questions that follow.
ExAMiNATiON
PrEPArATiON
Case study
Stewarts at Swanston is a department store
that forms part of the international chain of
Stewarts stores. In Australia, it operates large
stores in all the major capital cities, with
smaller stores operating in regional areas
such as Geelong and Bendigo. The company
employs 1800 staff in Australia and prides itself
on its commitment to training young people in
the ways of the firm’s retail operations.
Stewarts’ mission statement is ‘To be the
world’s leading department store. We aim
to meet and exceed the expectations of our
customers in quality service and all-round
excellence’. Its motto is ‘To provide the ultimate shopping experience’.
In 2011, it was noted that the Stewarts
at Swanston store was beginning to cause
some concerns as its profit was down 20 per
cent on its 2010 figure. Head Office in London
arranged for a management consultant, Angus
McDougall, to assess and hopefully remedy the
situation.
After a period of investigation that involved
talking to staff, management and customers,
and observation of retail operations, Angus
McDougall found:
c h a p t er 5 effectIve management
© Gillian Somers, Julie Cain, Megan Jeffery 2011
ISBN 978-1-107-63549-4
Photocopying is restricted under law and this material must not be transferred to another party.
127
Cambridge University Press
• Therehadbeenadramaticincreaseinstaff
turnover. During 2010, staff turnover had
been recorded as 20 per cent, whereas in
2011 it had increased to 45 per cent.
• Staff felt they were being ignored and not
appreciated by management. Also, rival
department stores, such as Myer and David
Jones had been headhunting their highly
regarded and trained staff, offering them
more generous employment packages.
• Customer complaints had increased from
5 per cent in 2010 to 30 per cent in 2011.
These complaints largely related to levels of
customer service and product quality, which
was noted to have drastically deteriorated in
the past 12 months.
• Salesrevenuehadfallentothepointwhere
the Stewarts at Swanston store was the
worst performer in the Australian operation.
The General Manager of Stewarts at Swanston was Colin Russell, a long-serving employee
who had commenced as a sales assistant at 15
years of age and worked his way up through
the multi-layered hierarchical structure of the
organisation to hold this top position. Colin
enjoyed the status and prestige the position
of General Manager afforded him. Many of his
staff commented to Angus that they felt that
Colin really wasn’t interested in implementing
change and that he seemed more interested in
maintaining his position and status within the
organisation as a senior manager.
Angus noted that Colin was often absent,
spending long weekends at his beach house at
Sorrento, and asked not to be contacted when
he was not at work, preferring to allow his
subordinates to operate and make decisions by
themselves. Staff told Angus, ‘all Colin really
cares about now is the large payout and performance bonus he will receive on his retirement’.
Colin’s approach now seemed to be distant,
with middle managers basically being left to
run their own departments as they saw fit.
Angus McDougall’s recommendation to the
Board of Directors was that Colin Russell be
provided with a generous separation (retirement) package and that a new general manager
be appointed.
Question 1
Question 4
Identify and describe the management style
adopted by Colin Russell.
List and explain two management roles that the
new general manager at Stewarts at Swanston
would need to perform.
2 marks
5 marks
Question 2
Discuss whether this style has been effective.
2 marks
Question 3
Identify and explain an alternative management
style that could be used by the new general
manager. Justify your answer.
5 marks
Question 5
Describe two management skills (other than
communication) that could be used by the new
general manager.
2 marks
Question 6
Establish four criteria that could be examined to
assist in assessing whether a manager has been
effective in performing their role.
4 marks
128
unIt 3 corporate management
© Gillian Somers, Julie Cain, Megan Jeffery 2011
ISBN 978-1-107-63549-4
Photocopying is restricted under law and this material must not be transferred to another party.
Cambridge University Press
© Gillian Somers, Julie Cain, Megan Jeffery 2011
ISBN 978-1-107-63549-4
Photocopying is restricted under law and this material must not be transferred to another party.
Cambridge University Press