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![190 PART 3 THE ROLE OF THE MANAGER
THE MEANING OF MANAGEMENT
Management is a generic term and subject to many interpretations. A number of different
ideas are attributed to the meaning of management and to the work of a manager.1 Schneider
and Barsoux also contend that trying to define the meaning of management shows up differ-
ences in beliefs and values.2 Cultural influences are a significant feature of management.
In certain respects everyone could be regarded as a manager to some extent. We all
manage our own time and everyone has some choice whether or not to do something, and
some control, however slight, over the planning and organisation of their work. However,
we are concerned with management as involving people looking beyond themselves and
exercising formal authority over the activities and performance of other people.
At its most basic, management may be viewed as ‘making things happen’.
Management is active, not theoretical. It is about changing behaviour and making things
happen. It is about developing people, working with them, reaching objectives and achieving
results. Indeed, all the research into how managers spend their time reveals that they are crea-
tures of the moment, perpetually immersed in the nitty-gritty of making things happen.3
An added dimension to the study and understanding of management is provided by
Knights and Willmott. They refer to managing as an everyday activity that involves
interactions between people that are not unrelated or entirely dissimilar to other
spheres of life, except perhaps in the rhetoric and hype that surround management.
Knights and Willmott contend that most established textbooks about management
and organisation provide little that enables practising managers to make sense of their
particular problem or dilemma, and in order to appreciate the living of management
draw on a number of contemporary novels.
Since most management textbooks do not make the connection between managing and everyday
life, and indeed envelop the activity of management within an academic and professional mys-
tique, we have drawn to alternative sources (e.g. novels) that might enable students to relate
accounts of management to their own experience ... [This book] is concerned to illuminate the
lives of people who, in different ways, are involved or affected by management.4
While there is undoubted value in this approach, every textbook must have a clear focus
and is obviously limited in potential content. For our purposes, therefore, we can regard
management as:
■ taking place within a structured organisational setting and with prescribed roles;
■ directed towards the attainment of aims and objectives;
■ achieved through the efforts of other people; and
■ using systems and procedures.
The emergence Peter Drucker, who is widely regarded as the guru of management gurus, has written
of management about the significance in social history of the emergence of management:
The emergence of management as an essential, a distinct and a leading institution is a pivotal
event in social history. Rarely, if ever, has a new basic institution, a new leading group, emerged
as fast as has management since the turn of this [twentieth] century. Rarely in human history has
a new institution proven indispensable so quickly; and even less often has a new institution
arrived with so little opposition, so little disturbance, so little controversy.5
Drucker sees management as denoting a function as well as the people who discharge
it, a social position and authority, and also a discipline and field of study.
Management is tasks. Management is a discipline. But management is also people. Every achieve-
ment of management is the achievement of a manager. Every failure is a failure of a manager.6](https://image.slidesharecdn.com/organisationalbehavior1-130113163042-phpapp01/85/Organisational-behavior1-216-320.jpg)
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Organisational behavior1
- 1. This market leadingtext guides students to a thorough understanding of organi- sational behaviour and relates this to effective management practice. It is an invaluable resource, which provides a clear and insightful introduction to MANAGEMENT management studies and acts as a comprehensive point of reference thereafter. AND ORGANISATIONAL BEHAVIOUR LAURIE J. MULLINS SEVENTH EDITION Additional student support at www.booksites.net/mullins
- 2. MANAGEMENT AND ORGANISATIONAL BEHAVIOUR Visit the Management and Organisational Behaviour, Seventh Edition Companion Website at www.booksites.net/mullins to find valuable student learning material including: ■ Multiple choice and short answer questions to help test your learning ■ Technology Solutions – short web articles which explore further the managerial implications of technology ■ Weblinks to relevant sites on the web ■ An online glossary to explain key terms
- 3. About the author LaurieJ. Mullins was formerly principal lecturer at The Business School, University of Portsmouth. Before taking early retirement, Laurie specialised in managerial and organisational behaviour, and managing people at work, and was subject leader for the behavioural and human resource management group. Laurie had previous experience of business, local government and university administration and human resource management. For a numbr of years he was also a member of, and an instructor in, the Territorial Army. He has undertaken a range of consultancy work; served as a visiting selector for UNAIS and VSO; acted as advisor and tutor for a number of professional and educational bodies including UNISON Education; and served as an external examiner for university degree and postgraduate courses, and for professional organisations. Laurie has undertaken a year’s academic exchange in the Management Department, University of Wisconsin, USA, and a visiting fellowship at the School of Management, Royal Melbourne Institute of Technology (RMIT) University, Australia, and given invited lectures in The Netherlands and South Africa. Laurie is also author of Hospitality Mangement and Organisational Behaviour. About the contributors Linda Hicks is a Chartered Occupational Psychologist who specialises in management development and coaching within her consultancy ‘Zest for Change’. David Preece is Professor of Technology Management and Organisation Studies in The Business School, University of Teesside.
- 4. Seventh Edition MANAGEMENT AND ORGANISATIONAL BEHAVIOUR Laurie J. Mullins Formerly, Principal Lecturer The Business School University of Portsmouth
- 5. To Pamela And for Kerrie and Tracey, and Paul Pearson Education Limited Edinburgh Gate Harlow Essex CM20 2JE England and Associated Companies throughout the world Visit us on the World Wide Web at: www.pearsoned.co.uk First published in 1985 in Great Britain under the Pitman imprint Fifth edition published in 1999 by Financial Times Pitman Publishing imprint Sixth edition 2002 Seventh edition 2005 © Laurie J Mullins 1985, 1989, 1993, 1996, 1999, 2002, 2005 © Chapter 9 Linda Hicks 1993, 1996, 1999, 2002, 2005 © Chapter 10 Linda Hicks 1999, 2002, 2005 © Chapter 17 David Preece 1999, 2002, 2005 The right of Laurie J Mullins to be identified as author of this work has been asserted by him in accordance with the Copyright, Designs and Patents Act 1988. All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without either the prior written permission of the publisher, or a licence permitting restricted copying in the United Kingdom issued by the Copyright Licensing Agency Ltd, 90 Tottenham Court Road, London W1T 4LP. All trademarks used herein are the property of their respective owners. The use of any trademark in this text does not vest in the author or publisher any trademark ownership rights in such trademarks, nor does the use of such trademarks imply any affiliation with or endorsement of this book by such owners. ISBN 0 273 68876 6 British Library Cataloguing-in-Publication Data A catalogue record for this book is available from the British Library. Library of Congress Cataloging-in-Publication Data Mullins, Laurie J. Management and organisational behaviour / Laurie J. Mullins.--7th ed. p. cm Includes bibliographical references and index. ISBN 0–273–68876-6 (pbk.) 1. Organizational behavior. I. Title HD58.7.M85 2004 658--dc22 2004046919 10 9 8 7 6 5 4 3 2 09 08 07 06 05 Typeset by 30 in Stone Serif Printed and bound by Mateu-Cromo, Artes Graficas, Spain The publisher’s policy is to use paper manufactured from sustainable forests.
- 6. CONTENTS IN BRIEF Part1 MANAGEMENT AND ORGANISATIONAL BEHAVIOUR 1 1 Introduction 3 2 The Nature of Organisational Behaviour 25 3 Approaches to Organisation and Management 65 Part 2 THE ORGANISATIONAL SETTING 111 4 The Nature of Organisations 113 5 Organisational Goals, Strategy and Responsibilities 144 Part 3 THE ROLE OF THE MANAGER 187 6 The Nature of Management 189 7 Managerial Behaviour and Effectiveness 236 8 The Nature of Leadership 280 Part 4 THE INDIVIDUAL 333 9 Individual Differences 335 10 The Nature of Learning 389 11 The Process of Perception 434 12 Work Motivation and Rewards 470 Part 5 GROUPS AND TEAMWORK 515 13 The Nature of Work Groups and Teams 517 14 Working in Groups and Teams 554 Part 6 ORGANISATIONAL STRUCTURES 593 15 Organisation Structure and Design 595 16 Patterns of Structure and Work Organisation 633 17 Technology and Organisations 662 Part 7 MANAGEMENT OF HUMAN RESOURCES 697 18 Job Satisfaction and Work Performance 699 19 Human Resource Management 746 20 Resourcing the Organisation 795 Part 8 IMPROVING ORGANISATIONAL PERFORMANCE 829 21 Organisational Control and Power 831 22 Organisation Development (Culture, Conflict and Change) 887 23 Management Development and Organisational Effectiveness 941
- 7. ‘OH, GREAT SPIRIT, GRANTTHAT I MAY NOT CRITICISE MY NEIGHBOURS UNTIL I HAVE WALKED A MILE IN THEIR MOCCASINS.’ Traditional Native-American saying
- 8. CONTENTS IN DETAIL Exhibits,Management in Action, Case Studies and 3 Approaches to Organisation and Business Press xiv Management 65 In acknowledgement and appreciation xvii Management theory 66 Publisher’s acknowledgements xviii Developments in management and organisational Guided tour of the book xx behaviour 66 Guided tour of the Companion Website xxii The classical approach 67 Scientific management 69 Relevance of scientific management 71 Part 1 Bureaucracy 74 MANAGEMENT AND ORGANISATIONAL Criticisms of bureaucracy 75 BEHAVIOUR Evaluation of bureaucracy 76 Structuralism 78 1 Introduction 3 The human relations approach 78 About this book 4 Evaluation of the human relations approach 80 The aims of this book 4 Neo-human relations 81 The seventh edition 6 The systems approach 82 Your study of the book 16 The contingency approach 84 The changing nature of work organisation 17 Other approaches to the study of organisations 84 The study of management and organisational The decision-making approach 85 behaviour 19 Social action 85 The use of case studies 20 A number of different approaches 87 Postmodernism 87 2 The Nature of Organisational Relevance to management and organisational behaviour 89 Behaviour 25 Japanese management 90 The meaning of organisational behaviour 26 Towards a scientific value approach? 91 Influences on behaviour in organisations 27 Benefits to the manager 93 Behavioural science – a multidisciplinary approach 29 Management in Action 3.1: Japanese management 95 The importance of people and organisational Case study 3.1: Helgaton Ltd: organisational theory behaviour 30 in practice 102 Organisational metaphors 32 Orientations to work and the work ethic 33 Management as an integrating activity 34 The psychological contract 37 Part 2 Changing nature of the psychological contract 39 THE ORGANISATIONAL SETTING Organisational practices 40 The Peter Principle 40 Parkinson’s Law 41 4 The Nature of Organisations 113 The need for a cross-cultural approach 42 Is organisational behaviour culture-bound? 43 The context of the organisation 114 Models for understanding the impact of culture 44 The formal organisation 115 Five dimensions of culture: the contribution of Basic components of an organisation 117 Hofstede 47 Private and public sector organisations 118 Cultural diversity: the contribution of Trompenaars 49 Production and service organisations 120 Summary: convergence or culture-specific Types of authority and organisations 121 organisational behaviour 51 The classification of organisations 122 Case study 2.1: Eric and Kipsy: complexities of Prime beneficiary of the organisation 122 management and organisational behaviour 56 Primary activity of the organisation 123
- 9. viii CONTENTS IN DETAIL The organisation as an open system 124 Principles of management 197 Interactions with the environment 126 Management as a social process 199 The comparative study of organisations 127 The tasks and contribution of a manager 199 Organisational sub-systems 128 Essential nature of managerial work 200 The analysis of work organisations 129 The efforts of other people 202 Contingency models of organisation 131 Management in service industries 203 The influence of technology 132 Management in private enterprise and public Information technology 133 sector organisations 203 Managing technical change 134 The work of a manager 206 The informal organisation 134 Managerial roles 207 The organisation of the future 137 Behaviour pattern of general managers 209 Organisational goals 137 Determining what real managers do 210 Patterns of managerial work and behaviour 210 5 Organisational Goals, Strategy and The attributes and qualities of a manager 211 Managers of the future? 214 Responsibilities 144 Management in Action 6.1: The roles of the The nature of organisational goals 145 manager and the Individual Management Model 217 The functions of goals 146 Case study 6.1: What is management? Defining Integration of goals 147 the manager’s role 227 Classification of organisational goals 148 Alteration of goals 149 Organisational ideologies and principles 150 7 Managerial Behaviour and Mission statements 151 Effectiveness 236 Managerial style and behaviour 237 Objectives and policy 152 Managers’ attitude towards people 238 The profit objective 154 Japanese ‘Theory Z’ environment 240 Fallacy of the single objective 155 The Managerial/Leadership Grid® 241 The need for strategy 157 Framework for patterns of behaviour 243 The concept of synergy 158 Management systems 245 SWOT analysis 159 System 4 management 246 The management of opportunities and risks 160 Management by Objectives (MBO) 249 Social responsibilities of organisations 161 Evaluation of MBO 250 Codes of conduct 162 Managing people 251 Organisational stakeholders 163 Basic managerial philosophies 252 Values and ethics 166 Choice of managerial style 256 Corporate social responsibility 167 Managerial effectiveness 259 Business ethics 168 Measures of effectiveness 261 Related legislation 170 3-D model of managerial behaviour 261 An integrated approach 171 General criteria of managerial effectiveness 264 Management in Action 5.1: IBM Code of Conduct 177 The management of time 265 Case study 5.1: Mergers and acquisitions: the Case example: Chemical company 274 consequences of expansion at Square Deal plc 182 Case study 7.1: Bringing management to book: Case study 5.2: Welcome to the party: home selling how to manage a library 275 with Top-to-Toe 183 Case study 7.2: As safe as houses: branch management in a building society 276 Part 3 8 The Nature of Leadership 280 THE ROLE OF THE MANAGER The meaning of leadership 281 The importance of leadership 282 Leadership and management 283 6 The Nature of Management 189 Approaches to leadership 285 The meaning of management 190 The qualities or traits approach 287 Management and administration 194 The functional (or group) approach 287 The process of management 195 Leadership as a behavioural category 289
- 10. CONTENTS IN DETAIL ix Styles of leadership 291 Career development 372 Continuum of leadership behaviour 292 Leadership, management and women 376 The situational approach 294 Positive approaches 378 Contingency theories of leadership 295 Fiedler’s contingency model 295 10 The Nature of Learning 389 Vroom and Yetton contingency model 297 By Linda Hicks The Vroom and Jago revised decision model 298 The meaning and nature of learning 390 Path–goal theory 299 Organisations and the management of learning 394 Readiness of the followers or group 300 Knowledge management 395 Transformational leadership 301 The learning organisation 399 Inspirational leadership 304 How do people learn? 402 Power and leadership influence 306 Behaviourism 403 The leadership relationship 307 The outcomes of learning 405 No one best form of leadership 309 Operant conditioning 405 National cultural dimensions of leadership 310 Social learning 408 Effectiveness of leadership styles 312 Limitations of the behaviourist school 408 Variables affecting leadership effectiveness 313 Cognitive theories 409 Leadership development 314 Learning styles 413 Leaders of the future 315 Complex models of learning 414 Management in Action 8.1: Autoglass: Leadership Creativity 415 success factors 317 Facilitating learning 417 Management in Action 8.2: IBM Leadership Learning theory applied to study skills 420 Development Centre (LDC) 318 Applications of learning theory to organisations 420 Case study 8.1: The paradox of Pim Fortuyn: a study Case study 10.1: Springboard to success: staff in charismatic leadership 327 development in practice 425 Case study 10.2: Will the mail get through: managing change at the Royal Mail 427 PART 4 11 The Process of Perception 434 THE INDIVIDUAL By Laurie Mullins and Linda Hicks The perceptual process 435 Selectivity in attention and perception 435 9 Individual Differences 335 Meaning to the individual 437 By Linda Hicks Internal factors 437 The changing nature and scope of managing External factors 440 individuals at work 336 Organisation and arrangement of stimuli 441 Personality 339 Perceptual illusions 442 Nomothetic and idiographic approaches 342 Perceiving other people 445 Theoretical approaches: nomothetic 343 Transactional analysis 448 Theoretical approaches: idiographic 346 Selection and attention 450 Other theoretical approaches 347 Organisation and judgement 452 Cognitive theory: Kelly’s personal construct theory 350 The importance of body language 453 Applications within the work organisation 352 Attribution theory 455 Stress and the individual 354 Perceptual distortions and errors 456 Ability 355 Stereotyping 457 Testing 360 The halo effect 458 Attitudes 362 Perceptual defence 459 Gender and organisations 366 Projection 459 Understanding women’s position and status 368 Illustrative example: perception of women 459 Economic theories 369 Psychological sex differences 369 12 Work Motivation and Rewards 470 The socialisation process 370 The meaning of motivation 471 Orientations and motivations towards work 370 Needs and expectations at work 472 Working practices 371 Motivation and organisational performance 474
- 11. x CONTENTS IN DETAIL Frustration-induced behaviour 475 14 Working in Groups and Teams 554 Money as a motivator 477 Interactions among members 555 Theories of motivation 478 Belbin’s team-roles 556 Content theories of motivation 480 Patterns of communication 559 Maslow’s hierarchy of needs theory 478 Analysis of individual behaviour 562 Alderfer’s modified need hierarchy model 484 Sociometry 562 Herzberg’s two-factor theory 485 Interaction analysis 563 McClelland’s achievement motivation theory 487 Frameworks of behavioural analysis 565 Process theories of motivation 489 An essential feature of work organisations 566 Vroom’s expectancy theory 490 Individual compared with group or team performance 569 The Porter and Lawler expectancy model 492 Lawler’s revised expectancy model 494 The risky-shift phenomenon 569 Implications for managers of expectancy theories 495 ‘Groupthink’ 570 Equity theory of motivation 496 Brainstorming 570 Goal theory 498 Group dynamics 573 Attribution theory 499 T-groups 574 Relevance of theories of motivation 499 Effective teamworking 575 Cross-cultural dimensions of motivation 500 Management in Action 14.1: Profiling of managers for The motivation of knowledge workers 500 leadership development in a cross-section of South Management in Action 12.1: Developing reward African organisations 579 strategies to motivate and compensate Management in Action 14.2: Barriers come down knowledge workers 504 to build up team spirit 585 Case study 12.1: Staff motivation: not so much a motivational pyramid, more a slippery slope 510 PART 6 PART 5 ORGANISATIONAL STRUCTURES GROUPS AND TEAMWORK 15 Organisation Structure and Design 595 13 The Nature of Work Groups The meaning and nature of organisation structure 596 and Teams 517 The importance of good structure 597 The meaning and importance of groups and teams 518 Levels of organisation 598 The difference between groups and teams 518 The importance of the hierarchy 600 Group values and norms 520 The design of organisation structure 601 The importance of teamwork 521 Clarification of objectives 603 Formal and informal groups 525 Task and element functions 604 Reasons for formation of groups or teams 527 The division of work 605 Group cohesiveness and performance 528 Centralisation and decentralisation 608 Membership 529 Principles of organisation 609 Work environment 530 Span of control 610 Organisational factors 531 The chain of command 611 Group development and maturity 531 ‘Flatter’ organisation structures 612 Potential disadvantages of strong, cohesive groups 532 Formal organisational relationships 613 Characteristics of an effective work group 533 Line and staff organisation 615 The effects of technology on work groups 534 The inverted organisation 617 Role relationships 536 Role conflict 538 Project teams and matrix organisation 617 Role stress 540 Effects of a deficient organisation structure 619 Management in Action 13.1: Teamwork in a small Organisation charts 621 company 543 Structure and organisational behaviour 622 Management in Action 13.2: Remote control – a Case study 15.1: A small cog in a big wheel: case study 545 company restructuring at Zeton 629 Case study 13.1: Floating on air: the importance Case study 15.2: Loud and clear: leadership in of teamwork at Hovertec 550 telecommunications 630
- 12. CONTENTS IN DETAIL xi 16 Patterns of Structure and Work Stress at work 706 Organisation 633 Role relationships and conflict 708 Variables influencing organisation structure 634 Levels of stress 709 The contingency approach 634 Coping with stress 710 Size of organisation 635 Work organisation and job design 713 Individual job redesign 714 Technology 638 A comprehensive model of job enrichment 715 The Woodward study 638 Broader organisational approaches to improved Major dimensions of technology: the work of Perrow 640 job design 717 Environment 641 The work/life balance 720 The Burns and Stalker study 642 Employee involvement 722 ‘Mixed’ forms of organisation structure 643 Empowerment and job satisfaction 723 The Lawrence and Lorsch study 644 Self-managed work groups 723 Evaluation of the contingency approach 646 Flexible working arrangements 724 Contribution of contingency theory 648 Quality circles 727 Culture as a contingent factor 649 Management style and culture 728 Alternative forms of structure 649 Contextual factors in job design 728 The demand for flexibility 651 The happy/productive worker 729 Telecommuting 652 Management in Action 18.1: Job satisfaction: the The shamrock organisation 652 fit between expectations and experiences 732 The nature of delegation and empowerment 654 Management in Action 18.2: An elusive but Case study 16.1: Bureaucracy could seriously damage expensive concept: stress 733 your health: staff empowerment at City Hospital 658 Management in Action 18.3: Work-Life Balance Case study 16.2: Could I have an estimate? case studies 735 Organisational structure at Fabrique Décor 658 Management in Action 18.4: Beyond the nine-to-five 736 17 Technology and Organisations Case study 18.1: The wide open spaces: linking By David Preece 662 job satisfaction and work performance 741 Theorising technology 663 Case study 18.2: The changing role of supervisors: Using a socio-technical ensemble perspective: demonstrating the effect of communication the case of Butler Co. 669 and training on morale 742 Technological change and organisations 672 Case study 18.3: Flying like the wind: motivation, Adopting and introducing new technology 674 job design and culture at Falcon Car Company 743 Case studies in technological/organisational change 679 19 Human Resource Management 746 The nature of human resource management (HRM) 747 Case study 17.1: A thirst for technology: new systems HRM policies, activities and functions 749 at the bars of Tawny Taverns 679 Organisation of the HRM function 751 Case study 17.2: Web page not found: internal HRM: a shared responsibility 752 communications at Redstart Computers 682 The importance of HRM 755 Organisational contexts, social and political Training and development 756 processes and technological change 685 The management of training 758 ICTs, networks, organisations and society 686 Investors in People 761 Performance appraisal 762 Questions to be addressed 764 PART 7 360° feedback and upward appraisal 765 MANAGEMENT OF HUMAN RESOURCES Establishing the appraisal system 766 Methods of appraisal 767 Potential problem areas 769 18 Job Satisfaction and Work Employment relations 771 Performance 699 Unitary and pluralistic perspectives 773 The meaning and nature of job satisfaction 700 Regulating the employment contract 774 Dimensions of job satisfaction 700 Responsibility for employment relations 777 Framework of study 703 International dimensions of HRM 778 Information communications technology 703 Industrial democracy in European countries 779
- 13. xii CONTENTS IN DETAIL The German system 779 Characteristics of an effective control system 842 Effectiveness of the HRM function 780 Power and management control 843 Management in Action 19.1: The Investors in People Perspectives of organisational power 845 Standard 783 Pluralistic approaches to power 846 Management in Action 19.2: Performance The balance between order and flexibility 848 management at Autoglass Limited 786 Delegation and empowerment 849 Case study 19.1: Beer and sandwiches: personnel The manager–subordinate relationship 850 management at London Taverns 790 Benefits of delegation 852 Case study 19.2: Nothing succeeds like success: Reasons for lack of delegation 853 accelerating performance at Sisson Systems 791 A systematic approach to delegation 854 The art of delegation 857 20 Resourcing the Organisation 795 The concept of empowerment 859 The concern of all managers 796 Does empowerment deliver? 863 Human resource planning 796 Behavioural factors in control systems 864 The value of human resource planning 798 Overcoming resistance to management control 865 Recruitment and selection of staff 800 Financial and accounting systems of control 867 Job analysis 802 Management in Action 21.1: Empowerment 873 Person specifications 804 Case study 21.1: The enthusiastic delegator: Difficulties and distastes of the job 804 the consequences of promoting beyond ability? 880 The importance of job analysis 806 Case study 21.2: Alpha to Omega: the effects Attracting suitable applicants 806 of financial management on company The selection process 808 performance 883 Selection tests and questionnaires 810 Group exercises 810 22 Organisation Development The selection interview 812 (Culture, Conflict and Change) 887 Interviewing style 813 The meaning of organisation development 888 Competency-based approach to recruitment and Topics associated with OD 888 selection 814 Organisational culture 891 The selection decision 815 Types of organisational culture 892 Induction and follow-up 816 Influences on the development of culture 894 Costs of the selection process 817 The cultural web 895 Effectiveness of the recruitment and selection The importance of culture 896 process 817 Organisational climate 899 Management in Action 20.1: Marks & Spencer Employee commitment 901 PLC’s graduate selection process 821 Organisational conflict 903 Case study 20.1: Please enter your password: Contrasting views of conflict 904 effective resource management at Wessex The sources of conflict 906 Computers 825 Strategies for managing conflict 908 Case study 20.2: Inky fingers: HRM failure at The nature of organisational change 909 Sumprint Ltd 826 Planned organisational change 910 Resistance to change 913 The management of organisational change 915 Human and social factors of change 916 PART 8 Responsibilities of top management 920 IMPROVING ORGANISATIONAL Management in Action 22.1: Organisational culture, PERFORMANCE change and IT in an SME 923 Management in Action 22.2: Siemens Nixdorf’s 21 Organisational Control and Power 831 new dynamism 924 The meaning of control 832 Case study 22.1: It’s tough at the top: managing Assumptions of organisation and management 834 conflict in the Wakewood organisation 933 Elements of an organisational control system 835 Case study 22.2: Getting political: management Forms of control 837 in local government 934 Classification of control systems 838 Case study 22.3: A matter of life or death: managing Strategies of control in organisations 840 knowledge at an NHS Trust 935
- 14. CONTENTS IN DETAIL xiii 23 Management Development and Benchmarking 976 Organisational Effectiveness 941 Performance indicators in the public sector 977 The importance of effective management 942 Gap analysis 977 The meaning and nature of management A range of different criteria 977 development 942 The twenty-first century organisation and people 980 An integrated model of management development 944 Management in Action 23.1: Extracts from Abbey Management development process 949 Performance Development Programme 982 Continuing professional development (CPD) 953 Management in Action 23.2: A cure for growing Management education, training and development 954 pains – Costa Coffee 985 The Management Charter Initiative (MCI) 955 Management in Action23.3: Components of the Leadership and Management Model 956 Management Standards 987 The nature of organisational effectiveness 959 Management in Action 23.4: Building organisational The Peters and Waterman study 960 competence 988 Heller’s study of European excellence 961 Case study 23.1: Chips with everything: managing The Goldsmith and Clutterbuck study 962 cultural change at Eurasia Electronics 997 The learning organisation 962 Case study 23.2: Holding the front page: expansion Total Quality Management (TQM) 964 at Rudmore Press 997 Business process re-engineering (BPR) 968 Building Tomorrow’s Company 971 Conclusion 1003 The EFQM excellence model 971 Business Press 1005 Assessing organisational performance 975 Glossary 1051 Organisation audit 976 Index 1065 Companion Website resources Visit the Companion Website at www.booksites.net/mullins For students: ■ Multiple choice and short answer questions to help test your learning ■ Technology Solutions – short web articles which explore further the managerial implications of technology ■ Weblinks to relevant sites on the web ■ An online glossary to explain key terms For lecturers: ■ Complete, downloadable Instructor’s Manual which includes: – Teaching tips – Extra cases – Solutions/examples to discussion and other questions ■ Powerpoint slides that can be downloaded and used as OHTs ■ Testbank of question material Also: This site has a syllabus manager, search functions, and email results functions. Note: A printed version of the Instructor’s Manual is also available free to adopters of Management and Organisational Behaviour. Please contact your local sales representative whose details can be located on our website www.pearsoned.co.uk
- 15. EXHIBITS, MANAGEMENT INACTION, CASE STUDIES AND BUSINESS PRESS Exhibits 3.1 NHS pays £30.96 just to sharpen pencils 76 3.2 Tools that do the business: management theories 91 5.1 Business ethics: what’s in it for you? 171 6.1 The infant school headteacher as a manager 191 7.1 It’s a people thing 258 8.1 Developing leadership in the NHS of the 21st century 305 8.2 First class coach 312 9.1 Why use psychological tests? 362 10.1 Learning new skills: the importance of feedback 410 11.1 Hospitals set to play it by ethnic book 454 11.2 Judy Owen wins battle against Professional Golfers’ Association to 460 wear trousers 13.1 Teamwork’s own goal 524 14.1 Management: brainstorm in a rainstorm 573 18.1 If you want people to do a good job, give them a good job to do 719 18.2 Have a life and keep your job 725 21.1 Empowerment and the custody officer 861 23.1 Developing managers: applying the theory in practice 950 23.2 Management succession: developing leadership at 3M 952 23.3 Quality counts: TQM in an NHS trust 968 Management in Action 3.1 Japanese management 95 5.1 IBM Code of Conduct 177 6.1 The roles of the manager and the Individual Management Model 217 8.1 Autoglass: Leadership success factors 317 8.2 IBM Leadership Development Centre (LDC) 318 12.1 Developing reward strategies to motivate and compensate knowledge workers 504 13.1 Teamwork in a small company 543 13.2 Remote control – a case study 545 14.1 Profiling of managers for leadership development in a cross-section of 579 South African organisations 14.2 Barriers come down to build up team spirit 585 18.1 Job satisfaction: the fit between expectations and experiences 732 18.2 An elusive but expensive concept: stress 733 18.3 Work-Life Balance case studies 735 18.4 Beyond the nine-to-five 736 19.1 The Investors in People Standard 783 19.2 Performance management at Autoglass Limited 786 20.1 Marks & Spencer PLC’s graduate selection process 821 21.1 Empowerment 873 22.1 Organisational culture, change and IT in an SME 923 22.2 Siemens Nixdorf’s new dynamism 924
- 16. LIST OF FIGURES xv 23.1 Extracts from Abbey Performance Development Programme 982 23.2 A cure for growing pains – Costa Coffee 985 23.3 Components of the Management Standards 987 23.4 Building organisational competence 988 Case studies 2.1 Eric and Kipsy: complexities of management and organisational behaviour 56 3.1 Helgaton Ltd: organisational theory in practice 102 5.1 Mergers and acquisitions: the consequences of expansion at Square Deal plc 182 5.2 Welcome to the party: home selling with Top-to-Toe 183 6.1 What is management? Defining the manager’s role 227 Chemical company 274 7.1 Bringing management to book: how to manage a library 275 7.2 As safe as houses: branch management in a building society 276 8.1 The paradox of Pim Fortuyn: a study in charismatic leadership 327 10.1 Springboard to success: staff development in practice 425 10.2 Will the mail get through: managing change at the Royal Mail 427 12.1 Staff motivation: not so much a pyramid, more a slippery slope 510 13.1 Floating on air: the importance of teamwork at Hovertec 550 15.1 A small cog in a big wheel: company restructuring at Zeton 629 15.2 Loud and clear: leadership in telecommuncations 630 16.1 Bureaucracy could seriously damage your health: staff empowerment at City Hospital 658 16.2 Could I have an estimate? Organisational structure at Fabrique Décor 658 17.1 A thirst for technology: new systems at the bars of Tawny Taverns 679 17.2 Web page not found: internal communications at Redstart Computers 682 18.1 The wide open spaces: linking job satisfaction and work performance 741 18.2 The changing role of supervisors: demonstrating the effect of communication and training on morale 742 18.3 Flying like the wind: motivation, job design and culture at Falcon Car Company 743 19.1 Beer and sandwiches: personnel management at London Taverns 790 19.2 Nothing succeeds like success: accelerating performance at Sisson Systems 791 20.1 Please enter your password: effective resource management at Wessex Computers 825 20.2 Inky fingers: HRM failure at Sumprint Ltd 826 21.1 The enthusiastic delegator: the consequences of promoting beyond ability? 880 21.2 Alpha to Omega: the effects of financial management on company performance 883 22.1 It’s tough at the top: managing conflict in the Wakewood organisation 933 22.2 Getting political: management in local government 934 22.3 A matter of life or death: managing knowledge at an NHS trust 935 23.1 Chips with everything: managing cultural change at Eurasia Electronics 997 23.2 Holding the front page: expansion at Rudmore Press 997 Business Press 1 A safe way to hold on to staff 1006 2 Business schools share Enron blame 1007 3 Recruitment: facing the next brain drain 1008 4 Companies pressed to adopt higher standards 1010 5 Forget how the crow flies 1012 6 Public sector: go home and prepare for e-government 1017 7 Employees as investors 1019 8 Leader of the band who likes to run the show 1020 9 Great leaders: pioneer and a shrewd strategist 1022
- 17. xvi LIST OF FIGURES 10 Endangered species 1023 11 Mentoring moves into a leading role 1025 12 Driving your employees up the wall 1027 13 A focus on workers’ individual needs 1028 14 Advantages of promoting a boutique mindset 1029 15 Avoiding the madness of groupthink 1030 16 End to ‘departmentalism’ a vision of things to come 1031 17 A long-distance relationship 1032 18 Network protection is a key stroke 1034 19 Relentless rise of the pleasure seekers 1035 20 EU & US: Where are the best workplaces? 1037 21 Marrying performance with reward 1038 22 Human capital: is it ‘personnel’ with yet more make-up? 1040 23 New learning models are under scrutiny 1041 24 Patterns can show if you are up to the job 1043 25 Massive US effort to set up control systems 1044 26 Asda: the listening store 1045 27 Organisations, too, can be put on the couch 1047 28 Swiss group at top of learning tree 1048 29 The rise and rise of the corporate learning officer 1049
- 18. IN ACKNOWLEDGEMENT ANDAPPRECIATION A warm and special tribute is paid to my wife Pamela, children and family for their continuing support and encouragement for this seventh edition. Particular acknowledgements and thanks are due for the contributions from my friends and colleagues Linda Hicks, David Preece and Sara Lamond. Thanks and appreciation also to Derek Adam-Smith, Rajeev Bali, Martin Brunner, Richard Christy, Ray French, Karen Meudell, Anne Riches, Amanda Stevens, Lynn Thomson, Cheryl Walmsley. I gratefully acknowledge the help and support received from: Managers who kindly provided information from their own organisations and gave permission to reproduce material in the book Aileen Cowan, Assistant Director, The Institute of Chartered Secretaries and Administrators Liz Harris, Marketing Communications Manager, The Institute of Administrative Management Rebecca Hoar, Section Editor, Management Today Sue Mann, Editor, Professional Manager. A special debt of appreciation is due to members of the team at Pearson Education including Matthew Walker, Colin McDougall, Karen McLaren, Janey Webb, Colin Reed, Jacqueline Senior and Simon Lake for their invaluable professionalism and guidance. Thank you all for a pleasant and rewarding partnership. I wish to acknowledge and thank a number of people who may be unaware how much their friendship, interest and support has in a variety of ways helped in the com- pletion of this seventh edition, including: Stephen Darvill; Philip Voller; Kate Brackenbury; Valerie and Peter Hallam; Di and Mike Blyth; Julie and John Bradley; Jenny and Tony Hart; Vilma and Will Hemsley; Lynn and Wayne Miller; Christine and David Paterson; Ann Ward. Reviewers Special thanks are due to the following reviewers, approached by the publishers, for their valued insightful and constructive comments that have helped shape the con- tents of this present edition: Ann Norton, Sheffield Hallam University, UK Brian Stone, Manchester Metropolitan University, UK Kim Parker, University of Kent, UK Bob Smale, Brighton University, UK Alasdair Maclean, University of Abertay, UK Peter Falconer, Glasgow Caledonian University, UK Hugo Misselhorn, Management & Organisation Development Consulting, South Africa Marijek Dielman, Hotel Management School, Maastricht, The Netherlands David Wilson, Wethouder Koniglaan, The Netherlands. Laurie J Mullins
- 19. PUBLISHER’S ACKNOWLEDGEMENTS Chapter 1– Introductory assignment is reprinted with per- Chapter 7 – Assignment 1 ‘Principle of Supportive mission from Von Oech, R., A Whack On The Side Of The Relationships Questionnaire’ is reprinted with permission Head, Warner Books Inc. (1998), p. 20. Copyright © 1983, from Likert, R., The Human Organization – Its Management 1990, 1998 by Roger Von Oech. and Value, McGraw-Hill, New York (1976), pp. 48–9. Chapter 2 – Assignment 1 is reprinted with permission Personal awareness and skills exercise ‘Your Management from Rowe, C., The Management Matrix: The Psychology of Style’ is reprinted with permission from Osland, J. S., Kolb, Interaction, Alfred Waller Ltd (1992), p. 1, with permission D. A. and Rubin, I. M., Organizational Behavior: An from Patricia Rowe. Experimental Approach, seventh edition, Prentice Hall (2001), pp. 24–5. Personal awareness and skills exercise ‘So What’s Your Work Ethic?’ is reprinted with permission from Professional Case study 7.1 ‘Library Management’ is reprinted with per- Manager, published by the Chartered Management mission from the Institute of Chartered Secretaries and Institute, May 2003, p. 38, and Walmsley, C. J., Your Future Administrators, Management Principles Pilot Paper, Looks Bright, Preston Beach (2002), p. 98. Administrator, December 1993. (Administrator is now pub- lished under the title Chartered Secretary.) Case study 2.1 ‘Eric and Kipsy’ is reprinted with permission from Porter, L. W., Lawler, E. E. and Hackman, J. R., Behavior Chapter 8 – Assignment 1 ‘Least Preferred Co-worker (LPC) in Organizations, McGraw-Hill, New York (1975), pp. 3–14. Scale’ is reprinted from A Theory of Leadership Effectiveness, McGraw-Hill (1976), p. 41, with the permission of the Chapter 3 – Assignment 1 is reprinted with permission author, Professor F. E. Fiedler, University of Washington. from DuBrin, A. J., Human Relations: A Job-Oriented Approach, Reston Publishing/Prentice Hall/Pearson Assignment 2 ‘T-P Leadership Questionnaire: An Education Inc. (1978), pp. 296–7. Assessment of Style’ by Sergiovanni, T., Metzcus R. and Burden, L. adapted from their article ‘Leadership Behavior Case study 3.1 ‘Applications of Organisation Theory in Description Questionnaire’, in the American Educational Helgaton Ltd’, is reprinted with permission from Mullins, Research Journal 6, 1969, is reprinted by permission of the L. and White, I., in Adam-Smith, D. and Peacock, A. (eds), publisher, the American Educational Research Association. Cases in Organisational Behaviour, Pearson Education (1994), pp. 19–29. Assignment 4 ‘Your Leadership Style’ is reprinted with per- mission from Schermerhorn Jr, J. R., Hunt, J. G. and Osborn, Chapter 4 – Assignment ‘Our Organizational Society: Your R. N., Managing Organizational Behavior, fourth edition, used Association with Organizations’ is reprinted with permis- by permission of John Wiley & Sons Inc. (1991), p. 484. sion from Kast, F. E. and Rosenzweig, J. E., Experiential Exercises and Cases in Management, McGraw-Hill, New York Case study 8.1 ‘The Paradox of Pim Fortuyn: A Study in (1976), pp. 13–15. Charismatic Leadership’. I am grateful to my colleague Karen Meudell for providing this case study. Chapter 5 – Personal awareness and skills exercise ‘Assessing your Work Values’ is reprinted with permission Chapter 10 – Case study 10.2 ‘Royal Mail: Making your life from Misselhorn, A., The Head and Heart of Management, easier by helping you do a better job’. Thanks to Yasmin Management and Organization Development Consultants Ahmed and Royal Mail Group plc. (SA) (2003), p. 36. Chapter 11 – Personal awareness and skills exercise Case study 5.1 ‘Square Deal plc’ is reprinted with permis- ‘Inference–observation’ exercise is reprinted with permis- sion from the Institute of Administrative Management, sion from Haney, W. V., Communications and Interpersonal Diploma in Administrative Management Examination Relations: Text and Cases, sixth edition, Irwin, Illinois Paper, Summer 1983. (1992), p. 213. Case study 5.2 ‘Top to Toe’ is reprinted with permission Chapter 12 – Personal awareness and skills exercise con- from the Chartered Institute of Secretaries and tributed by Sheila Ritchie of Elm Training and derived Administrators, Management Principles Examination from the full 12-factor Motivation to Work Profile. It is Paper, June 2003. reprinted with permission. Chapter 6 – Assignment 2 ‘Have YOU Got What it Takes to Case study 12.1 ‘Not so Much a Motivational Pyramid, be a CEO?’ is reprinted with permission from Gwyther, M., More a Slippery Slope’. I am grateful to Linda Fleming for Management Today, November 2001, pp. 56–9. providing this case. Case study 6.1 ‘What Is Management?’ from Doswell, R. Chapter 13 – The copyright of case study 13.1 ‘Hovertec and Nailon, P., Case Studies in Hotel Management, third plc’ rests with my colleague Tom McEwan, and is reprinted edition, Barrie & Jenkins (1976). with permission.
- 20. Chapter 14 –Personal awareness and skills exercise is Chapter 21 – ‘The Organisational Politics Questionnaire’ is reprinted with permission from Woodcock, M., 50 reprinted with permission from DuBrin, A. J., Human Activities for Teambuilding, Gower, Aldershot (1988), with Relations: A Job-Oriented Approach, fifth edition, Prentice permission from Ashgate Publishing Limited. Hall/Pearson Education Inc. (1992), pp. 306–7. Chapter 15 – Assignment 2 is reprinted with permission Case study 21.2 ‘The Omega organisation’ is reprinted with from the Institute of Chartered Secretaries and permission of the Institute of Chartered Secretaries and Administrators, Management Principles Examination Paper, Administrators, Management: Principles and Policy June 1999. Examination Paper, June 1987. Case study 15.1 ‘Zeton Ltd’ is reprinted with permission Chapter 22 – Assignment ‘Rate Your Readiness to Change’ from Administrator, The Institute of Chartered Secretaries is reprinted with permission from Stewart, T. A., Fortune, 7 and Administrators, April 1996, p. 36. (Administrator is February 1994, pp. 63–4, Time Inc. All rights reserved. now published under the title Chartered Secretary.) Case study 15.2 ‘Direct Telecommunications PLC (DT)’ is Case study 22.1 ‘The Wakewood organisation’ is reprinted reprinted with permission from the Institute of Chartered with permission from the Institute of Chartered Secretaries Secretaries and Administrators, Organisation and the and Administrators, Management: Principles and Policy Human Resource Examination Paper, May 2002. Examination Paper, December 1986. Chapter 16 – Case study 16.1 ‘The City Hospital: Case study 22.2 ‘Gremby County Council’ is reprinted with Bureaucracy and Empowerment’ is reprinted with permis- permission from Bowman, C. and Jarrett, M. G., Management sion from the Institute of Chartered Secretaries and in Practice, third edition, Butterworth-Heinemann (1996), Administrators, Organisation and the Human Resource pp. 209–11, with permission from Elsevier Ltd. Examination Paper, November 2002. Case study 22.3 ‘Managing Knowledge at an NHS Trust’. I Case study 16.2 ‘Fabrique Décor’ is reprinted with permis- am grateful to Rajeev K. Bali and Ashish N. Dwivedi for sion from the Institute of Administrative Management, providing this case. Advanced Diploma Examination Paper, December 2000. Chapter 23 – Assignment 2 ‘Assessing your Organisation’ is Chapter 18 – Case study 18.1 ‘The Wide Open Spaces’ from reprinted with permission from BBC, Building Tomorrow’s Chilver, J., People, Communication and Organisation, Company – Supporting Notes and the Centre for Tomorrow’s Pergamon Press (1984), pp. 118–19. Company and William Tate, 1999. Case study 18.2 ‘Managing Supervisors’ is reprinted with permission from the Institute of Chartered Secretaries and Personal awareness and skills exercise is adapted from Administrators, Management: Principles and Policy material prepared by John Bourn for a UNISON distance Examination Paper, June 1985. learning course and is used with permission of the Education Officer. Case study 18.3 ‘The Falcon Car Company’ is reprinted with permission from the Institute of Chartered Secretaries Case study 23.1 ‘Eurasia Electronics’ is reprinted with per- and Administrators, Organisation and the Human mission from the Institute of Chartered Secretaries and Resource Examination Paper, June 2003. Administrators, Professional Administration Examination Chapter 19 – Case study 19.1 ‘London Taverns Ltd’ has Paper, December 1999. been prepared jointly with, and from original material sup- Case study 23.2 ‘Rudmore Press Limited’. This case was plied by, my colleague Karen Meudell. prepared jointly with, and from original material provided Case study 19.2 ‘Accelerating the performance momentum by, my colleague Karen Meudell. at Sisson Systems’ is reprinted with permission from the Institute of Chartered Secretaries and Administrators, DOGBERT character drawings copyright © 1991 United Organisation and the Human Resource Examination Paper, Feature Syndicate, Inc. June 1999. Please note: we are all influenced by the thoughts and Chapter 20 – Case study 20.1 ‘Wessex Computers’ is ideas of other people that tend to drift into the sub- reprinted with permission from the Institute of conscious and are not always distinguished clearly from Administrative Management, Certificate in Administrative one’s own. I have attempted to give references for sources Management Examination Paper, Summer 1983. of work by other writers but apologise to any concerned if Case study 20.2 ‘Sumprint Ltd’ is reprinted with permis- acknowledgement has inadvertently not been recorded. sion from the Institute of Administrative Management, Should there by any queries, errors or omissions please Case Study Examination Paper, June 2002. contact the publisher.
- 21. xx PART 1 PART TITLE
- 22. GUIDED TOUR OFTHE BOOK 410 PART 4 THE INDIVIDUAL 8 ■ sensori-motor period: birth to 2 years; THE NATURE OF LEADERSHIP ■ pre-operational thought: 2 years to 7 years; ■ concrete operations: 7 years to 11 years; ■ formal operations: 11 years to 15 years. Piaget’s theory offers a tight coherent perspective of the maturation of intellectual thought and development. His studies introduced the notion of the cyclical nature of learning and the ways in which children and adults adjust to and accommodate to their environment. For many cognitive theorists learning is viewed as a sequence, a sequence which processes information in three distinct stages: An essential part of management is co-ordinating Chapter openers: the activities of people and guiding their efforts ■ ■ an active perception stage which gives attention to stimuli from the environment; a second mentally active stage which makes sense of the information; towards the goals and objectives of the ■ finally, a restructuring and storage phase. provide a brief organisation. This involves the process of leadership and the choice of an appropriate form EXHIBIT 10.1 introduction to key of action and behaviour. Leadership is a central feature of organisational performance. The Learning new skills: the importance of feedback themes of the manager must understand the nature of leadership influence and factors which determine Yoga is one of the six systems of Indian philosophy. There are a number of different interpretations of yoga and one of chapter relationships with other people, and the effectiveness of the leadership relationship. these is taught by Yogacharya B.K.S Iyengar.64 Learning a physical skill such as Iyengar yoga privides a good illustration of Photo: Rajesh Jantilal/AFP/Getty Images ■ the continual cycle of learning; ■ the importance of stages in learning; In the twenty-first century, leaders must create ■ the significance of information and feedback; an atmosphere in which people believe in ■ the importance of support structures – both physical, social and mental. strategy, believe in management decisions, and LEARNING OUTCOMES believe in their work. Once people believe in The yoga poses are challenging and require the complete involvement of the senses and total concentration of the management decisions, there is an excitement Learning outcomes: After completing this chapter you should be able to: ᭤ explain the meaning and importance of leadership in within an organization. Such an atmosphere mind. Otherwise a fall to the floor is likely! The teacher pro- vides clear information about the positioning of the body and the class tries to assimilate this information and imitate Photo: Jose Luis Pelaez, Inc./Corbis the inflexibility of the limbs all students are able to achieve work organisations; makes an organization prosper. Successful the teacher. Initally it is hard to connect to muscles that summarise what ᭤ contrast patterns of managerial leadership and main approaches to and studies of leadership; leaders create this sort of environment both have been lying dormant for some considerable time! The final pose is reached after a series of ‘sub poses’ maximum gain from each posture with the help of physical supports. Perhaps a belt to support the legs, perhaps a chair to support the back, Each student develops at their inside and outside the organization. have been practised. Each sub pose is gradually devel- own pace, and with their own props. A teacher will also students will learn ᭤ detail the nature of managerial leadership and the exercise of leadership power and influence; Subir Chowdhury Management 21C, Financial Times Prentice Hall (2000) oped and becomes more complex. At each stage students have to remember ‘what it felt like’ in the previous sub pose to be sure that they are building on and pushing provide information about whether a student’s posture needs modifying; perhaps a brick under the hand will get the posture closer to perfection. Creativity will be used in in the chapter ᭤ examine leadership as an aspect of behaviour, and different styles of leadership; themselves into a more challenging posture. Learning the poses therefore requires active perception and attention to the teacher as well as attention to internal feedback about identifying the particular needs of certain students. A learn- ing environment is created in which the group supports individuals, information at critical times is provided, individ- ᭤ assess contingency theories of leadership and the positioning of the body. uals are totally engaged in their pursuit of perfection and situational factors which determine the characteristics of Striving for excellence and gaining the benefits from the teacher encourages, supports and leads by example. leadership; each posture is the goal of Iyengar yoga for all students. Reprinted with permission from Judith Jones and Carol Batterson, Iyengar Therefore no matter the physical limitations of the body or Yoga Teacher, Hampshire ᭤ evaluate the nature and main components of transformational leadership and inspirational leadership; ᭤ review the variables which determine effective Although it is beyond the scope of this book to consider the relationship between managerial leadership and development. thinking and learning some researchers have shed insight on the mental constructs that may form. Glaser65 for instance has described these as ‘scaffolds’. This metaphor suggests Notable quotes: provide Exhibits: short vignettes bring insight into managerial managerial theory and practice thinking, past and present to life Technology solutions: links to web-based Case studies: integrate a range of resources which encourage evaluation of tech- themes to encourage analysis of nology in solving problems more complex situations CHAPTER 6 THE NATURE OF MANAGEMENT 217 182 PART 2 THE ORGANISATIONAL SETTING ■ While the importance and responsibility of management is still widely recognised there is a need for new managers, and new methods for a changed environment and CASE STUDY 5.1 nature of work organisations. Europe’s new breed of managers need to focus attention on key strategies including the importance of values and behaviours. Important issues Mergers and acquisitions: the consequences of expansion at for the future include managing change; leadership and motivation of staff; managing diversity; the development of human resources; and demands for alternative organisa- Square Deal plc tional practices. ■ The jobs of individual managers differ widely. Empirical studies have concentrated Square Deal plc is a newly formed subsidiary company Foodrich plc was, until last year, a family firm on the diversity of management and differences in the nature of managerial work. of Square Deal International Inc. The intention is to which canned fruit and vegetables from its one fac- These studies have drawn attention to such features as: managerial roles; agenda- use it to unify the efforts and improve the profitability tory situated about 100 miles from London, in the setting and network-building; what real managers do; and demands, constraints and of the hitherto separate UK subsidiaries of Arnold plc, west of England. It was bought by Square Deal choices in a managerial job. Carlton plc and Foodrich plc. At present it has a man- International Inc with the idea that it would supply aging director, an administrative/ financial controller ‘own label’ products to Arnold plc and large catering and a typist all sharing a large temporary office in packs to both Arnold’s and Carlton’s restaurants. To MANAGEMENT IN ACTION 6.1 central London. do this, Foodrich was obliged to deny supplies to Arnold plc has 69 food stores, all within a radius of some of its regular customers and re-equip part of its Management in action: The roles of the manager and the Individual 30 miles from London. Most of them contain either a small restaurant or a snack bar and occupy high street plant to handle the large catering packs. The MD, son of the founder, has worked there for nearly 40 years Management Model and runs the company, making all decisions, both real-world examples or suburban shopping centre locations. It owns one small bakery whose total production supplies ten stores with bread and cakes. Perishables for both re- long term and operational, using his experience and intuition. He is furious to learn that Arnold has not put all its ‘own label’ business in his direction and ensure that students THE INDIVIDUAL MANAGEMENT MODEL (IMM) IBM is a large and diverse company. IBM managers do many Personal characteristics Managers take actions to achieve those objectives. Every manager has unique personal characteristics, and these char- sale and restaurant use are bought locally but all other products are bought centrally and distributed from one large warehouse. These products are charged to Carlton is still buying most catering packs from Foodrich’s competitors while its new plant is grossly different things. It can be difficult to define core-and-common identify and engage manager roles relevant to managers throughout such a highly complex organization. The Individual Management Model (IMM) was developed as an aid to managers to help them acteristics will influence his or her behavior. Personal characteristics include: the stores at selling price on computer-printed internal invoices. Store managers are judged solely on revenue. Accounts for each store are produced on the batch YOUR TASKS ■ background with managerial understand their roles in context. The manager gets work done through other people. IBM has used that simple definition for years. There are two ■ ■ ■ skills knowledge thinldng style computer system at head office which is an old build- ing on the edge of a dockland redevelopment site in East London. The company owns the freehold, as it (a) Discuss the benefits and drawbacks of judging performance on a single criterion such as: (i) revenue, in the case of the store managers; key parts to the definition: getting work done and through (ii) return on investment, in the case of Carlton’s challenges other people. The Individual Management Model (IMM) was developed ■ competencies ■ personality does of about half of its food stores. Carlton plc has joint managing directors, one in charge of 21 restaurants and one in charge of prop- MDs. (b) Explain to what extent Arnold’s head buyer and as an aid to managers to visualize how their roles are similar erty development. To date it has built four shopping Carlton’s head chef are justified in buying catering to other managers and how they may differ. centres and has plans for three more, all as part of packs from other companies. Quick overview of the Individual Management Conditions schemes to regenerate old city centres in the north (c) Describe how further computerisation might help in Model (IMM) Staffing, of England, around 150 miles from London. It leases this quest for unification and profit improvement. All managers are responsible for producing results. They do processes, out the shops with the exception of one per centre that primarily through other people. The influence that a man- time, which it operates as a restaurant. Both MDs rigidly (d) After you have finished this task, the MD tells you he ager has on direct reports is reflected in the Organizational legal, pursue a 15 per cent annual return on investment as is toying with the idea of regrouping the company Climate that he or she creates. Every manager faces slightly ethics, under the name of Square Deal plc and dividing it their measure of achievement. different factors that help or hinder the achievement of busi- etc. into the following divisions, each operating as a ness results. And every manager is different in terms of • Lead profit centre: Photo: Robert Lawson/Anthony Blake Picture Library personality, thinking style, competencies, etc. It’s this mix of Business Square Deal plc conditions and personal characteristics that make managers' • Manage results Restaurants Property Food retail Canning Bakery behaviors different Personal • Do Climate division division division division division characteristics COMPONENTS OF THE IMM Competencies, He is concerned about the effects of such a thinking styles, change on the morale of the managers and other Objectives experience, employees so he asks you for a further statement. Objectives Objectives are the intended business results and are reflected personality, Discuss ideas that should maintain or improve in managers’ PBCs (Personal Business Commitments). etc. morale if this regrouping were to take place. Managers are either given objectives or they define their own, hopefully aligned with the goals and objectives of their larger (e) Highlight any other advantages or difficulties that you foresee in the regrouping idea. organizations. The Individual Management Model (IMM) ᭤
- 23. GUIDED TOUR OFTHE BOOK xxi Review and discussion questions: assess students’ understanding and progress Critical reflections: motivate students to think critically about key themes Assignments: imaginative activities enable students to learn through personal application of theory Business Press: Financial Times articles demonstrate contemporary relevance of theory in journalistic style Personal awareness and skills exercises: practise and develop students’ interpersonal and work-based skills
- 24. GUIDED TOUR OFTHE COMPANION WEBSITE
- 25. GUIDED TOUR OFTHE COMPANION WEBSITE xxiv
- 26. xxv GUIDED TOUR OF THE COMPANION WEBSITE
- 27. Part 1 MANAGEMENT AND ORGANISATIONAL BEHAVIOUR Part 1 MANAGEMENT AND Part 2 ORGANISATIONAL THE Part 3 BEHAVIOUR ORGANISATIONAL THE ROLE OF SETTING THE MANAGER Part 7 MANAGEMENT OF HUMAN Part 8 RESOURCES IMPROVING ORGANISATIONAL PERFORMANCE Part 4 THE INDIVIDUAL Part 6 Part 5 ORGANISATIONAL GROUPS AND STRUCTURES TEAMWORK
- 28. Dogbert’s Theory ofDelegation
- 29. 1 INTRODUCTION The concepts and ideas presented in this book provide a basis for the critical appraisal of contrasting perspectives on the structure, operation and management of organisations, and interactions among people who work in them. It is hoped that this will encourage a greater level of awareness of, and sensitivity to, the organisational factors and management processes influencing the behaviour and performance of people at work. LEARNING OUTCOMES After completing this chapter you should be able to: Photo: NASA ᭤ explain the main features, aims and scope of this book; ᭤ detail the main features of the seventh edition; Unlike technological and financial capital, people ᭤ outline the main contents of the book and explain your have a soul. We have hopes and aspirations, we study of the book; can trust and feel committed, and the trust and ᭤ comment on the changing nature of work organisations; commitment we feel profoundly influence our ᭤ summarise the study of management and propensity to give ‘beyond the call of duty’. organisational behaviour; Lynda Gratton Living Strategy: Putting People at the Heart of Corporate Purpose, Financial ᭤ explain the nature, use and value of case studies. Times Prentice Hall (2000) Management is efficiency in climbing the ladder of success; leadership determines whether the ladder is leaning against the right wall. Stephen Covey The 7 Habits of Highly Effective People, Simon and Schuster (1989)
- 30. 4 PART 1 MANAGEMENT AND ORGANISATIONAL BEHAVIOUR ABOUT THIS BOOK However much of a cliché it may sound, it is still an inescapable fact that people are the main resource of any organisation. Without its members, an organisation is nothing; an organisation is only as good as the people who work within it. In today’s increasingly global and competitive environment the effective management of people is even more important for organisational survival and success. According to Alderman Sir Roger Cork, former Lord Mayor of London, eighty per cent of business failures are down to bad management.1 It has become acceptable in some areas to regard the academic study of management as at best esoteric and at worst irrelevant. Mastering Management is based on the belief that an academic approach to the study of management has much of real relevance for practising managers. Financial Times Mastering Management Series2 Human capital As a recent report from the London Business School points out: ‘Human Capital (HC) management is increasingly recognised as a key competitive advantage for companies. As well as a (HCM) key indicator of a company’s success.’ 3 However, despite the frequent protestations by organisations that ‘our employees are our greatest assets’ there is invariably a noticeable failure to measure their value to the organisation or to include their value in financial statements. In 2003 the Secretary of State for Trade and Industry established a task force on human capital management charged with looking at how organisations could measure the quality of their human capital management and report on its impact on business performance. The way an organisation manages its people impacts on its performance. Few would deny this simple statement and numerous company reports and studies have confirmed a link between possession of effective human resource strategies and organisational performance. Research over the past few years has clarified the features of good people management practices associ- ated with high performance and how these can be used strategically, in combination.4 This is the moment when HCM takes its place in the Boardroom. Directors need to trans- form the airy cliché about people being their greatest asset into a guiding principle of business strategy. Denise Kingsmill, Chair of Task Force on Human Capital Management5 THE AIMS OF THIS BOOK The aims of this book are to: ■ relate the study of organisational behaviour to that of management; ■ provide an integrated view embracing both theory and practice; ■ point out applications of behavioural science within work organisations and implications for management action; ■ indicate ways in which organisational performance may be improved through the better use of human resources and the effective management of people.
- 31. CHAPTER 1 INTRODUCTION 5 The book is written with a minimum of technical terminology and the format is clearly structured. Each chapter is fully supported with illustrations and contains: ■ a short introduction and learning outcomes; ■ a set of contemporary ‘critical reflections’; ■ a synopsis of key points; ■ review and discussion questions; ■ personal awareness and skills exercises; ■ assignment(s) and/or case(s); ■ detailed notes and references. While a prior knowledge of behavioural science would prove useful to the reader, it is not assumed. Neither is such knowledge a necessary prerequisite for an understanding of the concepts and ideas discussed in this book. Broader social science perspectives form an integral part of the explanation and discussion of management and organisa- tional behaviour. It is hoped that the comprehensive coverage and progressive presentation of contents will appeal to students at undergraduate, graduate or post-experience level in business or management, or on related professional courses. It is also hoped that the book will appeal not only to those aspiring to managerial positions, but to practising managers and supervisors who wish to expand their views and knowledge of the subject area. The study of organisational behaviour There are a number of alternative approaches to the study of organisational behaviour. For example, in addition to a managerialist approach, Drummond refers to two other intellectual standpoints, interpretative and critical. The interpretative standpoint views ambiguity, paradox and contradictions as part of the natural experiences of organisations, and with an emphasis upon understanding the subtleties and dynamics of organisational life. The critical standpoint believes that reality is very real and people have only a mar- ginal amount of freedom, and regards management science as bogus, a means of legitimising economic exploitation.6 While acknowledging the existence and potential contributions of both these stand- points, the main thrust of this book is to present a managerial approach to organisational behaviour. It is concerned with interactions among the structure and operation of organisations, the process of management and the behaviour of people at work. The underlying theme of the book is the need for organisational effective- ness and the importance of the role of management as an integrating activity. The scope of this book No single book could hope to cover adequately all aspects of what is a wide and essen- tially multidisciplinary field of inquiry, and it is not the intention to attempt to cover all aspects of individual or social behaviour. It is regrettable but inevitable therefore that some topics are excluded or given only limited coverage and it is not possible to meet fully the preferences of all readers. In order to attain a reasonable depth, this book concentrates on selected topics of particular relevance to problems of organisa- tion and the management of people in work situations, and which meet the needs of the intended audience. The nature of organisational behaviour and the practice of management should be considered not in a vacuum but within an organisational context and environment. The activities of a work organisation and the management of people are directed towards an end, towards certain goals. Chapters 4 (The Nature of Organisations) and 5 (Organisational Goals, Strategy and Responsibilities) help to provide an integrated, bal- anced setting for this book and for your studies of the subject area.
- 32. 6 PART 1 MANAGEMENT AND ORGANISATIONAL BEHAVIOUR There are, of course, related areas of specialisms such as human resource management (HRM) which also bear upon management action and organisational effectiveness. However, this book is not about employment law and neither is it the intention to attempt to compete with specialist HRM books. Rather, Chapters 19 and 20 serve to recognise the importance of the context in which the process of management and organ- isational behaviour takes place and to provide an overview and signpost some main HRM areas of interest. Together with Chapters 4 and 5, these chapters aim at broadening the scope of the subject matter beyond the concerns of traditional organisational behav- iour texts – a distinctive feature of this book. THE SEVENTH EDITION The consistently supportive and positive feedback from reviewers and users of previous editions has been very much appreciated. Accordingly this edition retains the same underlying theme, aims and approach that have been a hallmark of the success of the book. Continuing attention has been given to the overall layout, style and appearance. Readers familiar with the previous edition may wish to note the following features of this seventh edition. ■ The opportunity has been taken for a comprehensive and detailed review of all con- tents, including attention to chapter titles and introductions; the organisation, flow and coherence of all material; and restructuring both within and between chapters. ■ Significant changes include ‘Organisational Practices’ brought forward to Chapter 2 from Chapter 16; and delegation and empowerment removed from Chapters 6 and 16 and consolidated and expanded in Chapter 21. ■ Changes have been made to the titles of a number of chapters in order to reflect more closely the nature of their contents. ■ There is considerable new material including greater attention to topical issues such as the changing nature of organisations and management, cultural influences and organ- isational behaviour, business ethics, diversity, leadership, management development, flexible working, stress, human resource management and work/life balance. ■ There are a number of additional and replacement appendices (now called Management in Action), assignments and case studies. ■ There are in excess of 450 new or revised references. ■ Each chapter now includes opening quotations which helps focus attention on an underlying feature of that chapter. ■ The section on ‘About the Contents’ on pages 8–15 now includes a note of main links with other chapters. ■ In order to accommodate the additional and updated contents, careful attention has been given to the deletion of older and possibly outdated material and references, unless believed to be clearly of continuing relevance today. This has demanded many hard choices but has been influenced by the overriding consensus to maintain the book at a reasonable and manageable size. ■ Together these changes hopefully provide not only a sharper and fresher approach but also a more contemporary and robust focus of attention as well as enhanced readability. In addition to the above there are three significant new features in the book: ■ Personal awareness and skills exercises Each chapter now includes an exercise designed specifically to help further the development of your personal awareness, and your social and work-based skills. The underlying basis of management and organisational activity is human behaviour and the interactions of people. However, we need to remind ourselves that people
- 33. CHAPTER 1 INTRODUCTION 7 bring their own perceptions, feelings and attitudes towards the organisation, sys- tems and styles of management, their duties and responsibilities, and the conditions under which they are working. An important first step in understanding the behav- iour of other people is to know and understand yourself. Enhancing your personal awareness and skills should make study and learning more fulfilling, improve your confidence and augment your ability to work well with other people. It should also help boost your employment opportunities. Increasingly, graduate recruiters are placing greater emphasis on key personal and social skills, and attitudes. To this end it is recommended that you maintain a log of the skills attained during your course of study that you can show in future job interviews. ■ Technology online Technology impacts on almost all aspects of management and organisational behav- iour. Technology solutions are interactive web exercises which encourage students to explore how technology might be used to solve specific managerial problems. ■ Business Press FT A new Business Press section provides contemporary articles relating to business and management situations featured in the Financial Times, including links with other most relevant chapters. There are also questions for each article allowing you to crit- ically discuss the issues raised in the articles. Key integrative features of this book Underlying key issues of management and organisational behaviour have always been an important integrative feature of this book, and continue to be addressed in this edi- tion. These include attention to: ■ organisational democracy with, for example, greater attention to employee partici- pation and empowerment, and the personal touch; ■ structures of people, concerns for the re-evaluation of work/life balance including demands for flexible working arrangements; ■ the importance of the context of culture and the impact of external environmental influences; ■ ethical and social values, the need for organisations to be more transparent and for more open relationships; ■ strategic approaches to human resource management and the effective management of people; ■ renewed focus on effective organisational performance including primary objectives of survival, growth and development, and profitability; ■ interrelationships among management, organisational behaviour, goals and strategy, human resource management and organisational effectiveness.
- 34. 8 PART 1 MANAGEMENT AND ORGANISATIONAL BEHAVIOUR About the contents The book is divided into eight interrelated Parts, see Figure 1.1, and 23 chapters. Part 1 Part 2 MANAGEMENT AND THE Part 3 ORGANISATIONAL ORGANISATIONAL THE ROLE OF BEHAVIOUR SETTING THE MANAGER Part 7 MANAGEMENT OF HUMAN Part 8 RESOURCES IMPROVING ORGANISATIONAL PERFORMANCE Part 4 THE INDIVIDUAL Part 6 Part 5 ORGANISATIONAL GROUPS AND STRUCTURES TEAMWORK Figure 1.1 Interrelated parts of the book This chapter explains the nature, aims and main features about this book, and intro- duces you to the changing nature of the work organisation, and to the study of management and organisational behaviour. Part 1 Chapter 2: The Nature of Organisational Behaviour looks at the nature of organisa- Management tional behaviour and the importance of the people–organisation relationship. Chapter and 2 draws attention to main influences on the behaviour and performance of people in Organisational the work situation, and the central focus of management. Behaviour Links with other chapters Chapter 5 debates the idea of a social responsibility of management Chapter 7 discusses Theory X and Theory Y strategies of managerial behaviour Chapter 11 identifies the concept of ‘selective perception’ Chapter 14 explains the Johari Window framework of behaviour Chapter 16 includes reference to culture as a contingent factor Chapter 18 discusses applications of quality circles and the nature of the work/life balance Chapter 23 explores the nature of organisational effectiveness
- 35. CHAPTER 1 INTRODUCTION 9 Chapter 3: Approaches to Organisation and Management contrasts major trends in the development of management thinking and provides a basis for consideration of topics discussed in following chapters. Chapter 3 reviews different approaches to organisation and management, and the relationship between theory and manage- ment practice. Links with other chapters Chapter 4 examines the organisation as an open system Chapter 6 sets out principles of management to help general discussion on management theory Chapter 13 discusses the importance of group norms and social relationships Chapter 15 details common principles of organisation applicable to all situations Chapter 16 explains contingency models of organisation and management Chapter 19 discusses the unitary and pluralistic perspectives of organisations Chapter 22 reviews the nature of organisational conflict Part 2 Chapter 4: The Nature of Organisations recognises the importance of the organisa- The tional setting and external environment within which the process of management Organisational takes place. Chapter 4 examines the organisation as a complex social system, and inter- Setting relationships among its operations, structure and management. Links with other chapters Chapter 1 draws attention to the changing nature of work organisations Chapter 3 reviews developments in management thinking and organisational behaviour Chapter 5 discusses the significance of organisational goals and objectives Chapter 6 discusses management in private and public sector organisations Chapter 13 explains the importance and nature of groups and teams Chapter 16 refers to contingency models of organisation and management Chapter 17 explores the nature of technology and organisations Chapter 23 includes a discussion of the learning organisation Chapter 5: Organisational Goals, Strategy and Responsibilities draws attention to the importance of organisational goals and strategy for the operations and manage- ment of the organisation. Chapter 5 considers organisational ideologies and objectives, the concept of social responsibilities of management and business ethics. Links with other chapters Chapter 2 discusses the new psychological contract including responsibilities to employees Chapter 4 explains the context of the organisational setting including a systems view of organisations Chapter 7 examines the approach of Management by Objectives (MBO) Chapter 15 reviews the nature of organisation structure and design Chapter 21 looks at the concepts of power, involvement and compliance Chapter 22 examines the nature and management of organisational change
- 36. 10 PART 1 MANAGEMENT AND ORGANISATIONAL BEHAVIOUR Part 3 Chapter 6: The Nature of Management examines the process of management as the The Role of the cornerstone of the people–organisation relationship and fundamental to effective per- Manager formance. Chapter 6 reviews the essential nature of managerial work, the nature and main activities of management, and the execution of work. Links with other chapters Chapter 4 distinguishes between production and service organisations, and explains the systems approach to organisations Chapter 7 examines managerial behaviour and effectiveness Chapter 15 sets out Urwick’s principles of organisation and also different levels of organisation Chapter 21 discusses the nature of delegation and empowerment Chapter 22 explores the nature of organisational culture and climate Chapter 23 examines management development including Management Standards, and the Leadership and Management model Chapter 7: Managerial Behaviour and Effectiveness recognises the responsibility of managers to manage and to achieve results through the efforts of other people. Chapter 7 considers different systems and styles of managerial behaviour, the effective utilisation of human resources and managerial effectiveness. Links with other chapters Chapter 2 refers to successful management as the ability to handle people effectively, and also to the psychological contract Chapter 6 examines the nature of management Chapter 8 discusses the nature of managerial leadership Chapter 12 explains Maslow’s hierarchy of needs model Chapter 13 refers to role expectations and self-established role prescriptions Chapter 19 discusses the Investors in People Standard for training and development Chapter 8: The Nature of Leadership explores the process of managerial leadership as a central feature of improved organisational performance. Chapter 8 looks at the exer- cise of leadership power and influence, leadership as an aspect of behaviour, and the importance of situational variables. Links with other chapters Chapter 6 discusses management as getting work done through the fforts of other people Chapter 7 examines managerial behaviour and effectiveness Chapter 12 includes an account of expectancy theory of motivation Chapter 13 examines the nature of work groups and teams Chapter 14 discusses task functions and maintenance functions of leader-member behaviours Chapter 23 refers to the Leadership and Management Model as a framework for effective role model leadership
- 37. CHAPTER 1 INTRODUCTION 11 Part 4 Chapter 9: Individual Differences draws attention to the importance of the individ- The Individual ual’s contribution to the performance of work organisations. Chapter 9 focuses on individual differences, the significance of personality and attitudes, and the recogni- tion of individual talent and potential. Links with other chapters Chapter 3 refers to the sex power differential in the Hawthorne experiments Chapter 10 examines an understanding of the ways in which people learn Chapter 11 discusses the process of perception and the impact of gender differences Chapter 12 explores the nature and causes of frustration-induced behaviour Chapter 14 explains the Johari Window framework of behaviour Chapter 18 examines the nature, causes and consequences of stress at work Chapter 20 details procedures for the recruitment and selection of staff, and the use of tests Chapter 10: The Nature of Learning explores the significance of learning to organisa- tional behaviour, and as an important factor in managing change and motivating employees. Chapter 10 explains the nature of the learning process, knowledge manage- ment, the learning organisation and evaluates theories of learning. Links with other chapters Chapter 9 examines the nature of individual differences Chapter 12 discusses the motivation of knowledge workers Chapter 13 refers to possible stress from situations of role ambiguity Chapter 15 looks at the impact of organisation structures on behaviour at work Chapter 17 examines the impact of technology on organisations Chapter 22 explains the learning organisation as a feature of organisation development Chapter 23 discusses management development as an essential feature of organisational effectiveness Chapter 11: The Process of Perception considers the nature of the perceptual process and the importance to the manager of the study of perception. Chapter 11 explains factors influencing perception and draws particular attention to an understanding of problems regarding the perception of other people. Links with other chapters Chapter 2 introduces the concept of the psychological contract Chapter 7 discusses Theory X and Theory Y strategies of managerial behaviour Chapter 9 explains the Myers-Briggs Type Indicator Chapter 10 explores an understanding of the nature of learning and the ways in which people learn Chapter 12 examines process theories of motivation Chapter 14 refers to perception of ‘self’ and how people see and think of themselves
- 38. 12 PART 1 MANAGEMENT AND ORGANISATIONAL BEHAVIOUR Chapter 12: Work Motivation and Rewards examines those areas that influence the motivation of staff and which elicit their willing co-operation and improved perform- ance. Chapter 12 reviews different theories and ideas about motivation and rewards, and evaluates their relevance to particular work situations. Links with other chapters Chapter 2 introduces the concept of the psychological contract and also refers to culture and motivating factors Chapter 3 discusses the ideas of scientific management and the rational-economic concept of motivation Chapter 6 refers to management as getting work done through other people Chapter 7 examines the approach of Management by Objectives (MBO) Chapter 11 explains Attribution theory as part of process theories of motivation Chapter 18 discusses work organisation and job design, and job enrichment Part 5 Chapter 13: The Nature of Work Groups and Teams looks at the nature and signifi- Groups and cance of work groups and teams as a major feature of organisational life. Chapter 13 Teamwork considers those factors which influence group formation and cohesiveness and the importance of groups and role relationships for organisational performance. Links with other chapters Chapter 3 refers to the power of group membership and the Hawthorne experiments, and also to the effects of changing technology Chapter 4 explains social processes and the informal organisation Chapter 8 examines the process of leadership linked to the activities of groups Chapter 14 examines working in groups and teams Chapter 15 looks at formal organisational relationships and the matrix form of organisation Chapter 18 discusses role stress as an influence on job satisfaction and performance Chapter 14: Working in Groups and Teams reviews the importance of understanding the nature of working in groups and teams, and interactions among members. Chapter 14 gives attention to the analysis of behaviour of individuals in group or team situa- tions, and the assessment of performance and effectiveness. Links with other chapters Chapter 7 refers to the Blake and Mouton Managerial Grid seminars for reviewing patterns of behaviour Chapter 8 discusses leadership development and effectiveness Chapter 12 explains achievement motivation Chapter 13 examines the nature of work groups and teams Chapter 18 discusses a group of people in quality circles, and also self-managed work groups Chapter 19 draws attention to training in people skills and teamworking
- 39. CHAPTER 1 INTRODUCTION 13 Part 6 Chapter 15: Organisation Structure and Design provides an overview of the nature Organisational and importance of structure for effective management and organisational performance. Structures Chapter 15 details key factors to be considered in the design of structure, and considers the relationships between organisation structure and people. Links with other chapters Chapter 3 discusses the idea of common sets of principles on organisation Chapter 4 looks at the informal organisation and also refers to information technology as a dimension of structural design Chapter 5 explains the importance of organisational goals and objectives Chapter 7 refers to the changing nature of the work organisation and the hierarchy Chapter 13 discusses role relationships and interactions, and role incongruence Chapter 16 examines patterns of structure and work organisation Chapter 16: Patterns of Structure and Work Organisation recognises the situational variables that influence the most appropriate organisation structure and systems of management. Chapter 16 examines the importance of alternative forms of structure, the demand for flexibility. Links with other chapters Chapter 2 draws attention to national culture and principles of contingency theory Chapter 4 discusses types of organisations and their purpose Chapter 5 refers to the fallacy of the single business objective Chapter 15 examines organisation structure and design Chapter 18 considers the influence of flexibility on job satisfaction of staff Chapter 21 discusses the nature and importance of delegation and empowerment Chapter 22 examines the significance of the culture of the organisation Chapter 17: Technology and Organisations explains the pervasive nature of technol- ogy within contemporary organisations and a variety of perspectives. Chapter 17 considers the importance of organisational and human dimensions of the adoption and implementation of new technology. Links with other chapters Chapter 2 explains the nature of organisational behaviour and draws attention to the importance of people Chapter 3 discusses the system approach to the analysis of organisations Chapter 4 draws attention to the influence of technology, information technology and the management of technical change Chapter 18 discusses main dimensions of job satisfaction including reference to alienation at work Chapter 19 explores the role of personnel/HRM specialists Chapter 22 draws attention to human and social factors associated with the need for organisations to adapt to new technological developments
- 40. 14 PART 1 MANAGEMENT AND ORGANISATIONAL BEHAVIOUR Part 7 Chapter 18: Job Satisfaction and Work Performance considers the meaning and Management nature of job satisfaction and the relationship between staff and their jobs. Chapter 18 of Human reviews dimensions of job satisfaction, main approaches to improving job design, and Resources relationships between job satisfaction and work performance. Links with other chapters Chapter 2 referes to a number of interrelated influences on behaviour Chapter 4 draws attention to developments in technical systems and dangers of information overload Chapter 5 discusses the importance of social responsibilities of organisations Chapter 12 explores the nature and causes of frustration-induced behaviour, and also discusses job design Chapter 14 discusses the importance of effective teamworking Chapter 16 considers demands for greater flexibility in patterns of work organisation Chapter 21 explains the nature, importance and benefits of empowerment Chapter 19: Human Resource Management draws attention to the importance of the promotion of good human relations for improved organisational performance. Chapter 19 provides an overview of the human resource management function, personnel poli- cies and activities, and the nature of employee relations. Links with other chapters Chapter 3 refers to the unitary and pluralistic view of organisations Chapter 5 debates the importance of social responsibilities of management Chapter 7 examines the approach of Management by Objectives (MBO) Chapter 11 draws attention to the possible effects of perceptual distortions Chapter 13 explains role incongruence and role conflicts Chapter 18 discusses a quality of working life (QWL) strategy Chapter 20 examines resourcing the organisation Chapter 23 explores the nature and importance of management development Chapter 20: Resourcing the Organisation recognises that the effectiveness of an organisation depends very largely upon the staff it employs. Chapter 20 looks at the importance of effective systems and procedures for resourcing the organisation, and a planned and systematic approach to recruitment and selection. Links with other chapters Chapter 9 discusses the features and limitations of testing Chapter 11 draws attention to verbal and non-verbal cues, and also to possible perceptual distortions and errors Chapter 14 explains buddy rating or peer rating as the basis of sociometry, and also scoring measures for leaderless group discussions Chapter 18 discusses a quality of working life (QWL) strategy Chapter 19 examines Human Resource Management
- 41. CHAPTER 1 INTRODUCTION 15 Part 8 Chapter 21: Organisational Control and Power explores the nature of control and Improving power as an integral part of the process of management and the people–organisation Organisational relationship. Chapter 21 details the characteristics of an effective control system, and Performance considers broader perspectives of organisational power including delegation and empowerment. Links with other chapters Chapter 2 introduces the concept of the ‘Peter Principle’ Chapter 3 discusses ‘Taylorism’ and the ideas of scientific management Chapter 4 consider the organisational setting and the nature of organisations Chapter 7 discusses Theory X and Theory Y strategies of managerial behaviour Chapter 8 explains main sources of power and leadership influence Chapter 18 discusses improving job satisfaction and getting the best out of people Chapter 22 explores the importance of organisational culture and climate Chapter 22: Organisational Development (Culture, Conflict and Change) reviews the meaning, nature and main features of organisation health and development (OD). Chapter 22 draws attention to the importance of understanding culture and climate, organisation conflict and in particular the successful management of change. Links with other chapters Chapter 2 looks at the use of metaphor to see organisation and management, and also to the meaning of the term ‘organisational behaviour’ Chapter 3 refers to the structuralist approach to organisations and management Chapter 11 examines the importance of differences in perception Chapter 12 discusses equity theory of motivation Chapter 15 details Woodward’s study of management organisation of firms Chapter 19 discusses the unitary perspective of the organisation Chapter 23 examines management development and organisational effectiveness Chapter 23: Management Development and Organisational Effectiveness con- cludes by reviewing the importance of effective management as central to organisation development and improved work performance. Chapter 23 looks at the nature of man- agement development, dimensions of organisational effectiveness and reminds us of the importance of people. Links with other chapters Chapter 2 explores the nature of organisational behaviour and draws attention to the importance of organisational effectiveness Chapter 4 examines the organisational setting and nature of organisations Chapter 6 refers to the nature of management in the public sector Chapter 7 discusses managerial behaviour and effectiveness Chapter 10 draws attention to coaching and mentoring, the concept of the learning organisation, and knowledge management Chapter 12 examines different theories of motivation Chapter 19 discusses Investors in People Standard, and also performance appraisal
- 42. 16 PART 1 MANAGEMENT AND ORGANISATIONAL BEHAVIOUR YOUR STUDY OF THE BOOK This book adopts an applied approach to the search for the most appropriate ways of improving organisational performance and effectiveness. The objective analysis of organisations is supported, where appropriate, by a more prescriptive stance. For exam- ple, the underlying need to establish a framework of order and system of command by which the work of the organisation is undertaken demands that attention be given to certain basic principles and consideration of structure. General principles and prescrip- tions apply equally to all types of work organisations which achieve their goals and objectives through the process of management. It is possible that the more practically minded reader may wish to concentrate greater attention on the latter parts of certain chapters. However, even a cursory exam- ination of earlier sections of the chapter will help provide an understanding of underlying studies upon which discussion of practical applications is based. The notes and references given at the end of each chapter are to encourage you to pursue further any issues of particular interest. A simple numbering system has deliber- ately been maintained in order to keep the main text uncluttered and easier to follow, to provide more detailed and specific referencing, and because feedback indicates this system appears to be favoured by most readers. Questions, You are invited to test your knowledge and understanding of the contents by attempt- assignments ing the review and discussion questions at the end of each chapter. These questions and case provide a basis for revision and review of progress. You are also invited to undertake studies the assignment(s) and/or case(s) at the end of each chapter. The questions, assignments and case studies provide an opportunity to relate ideas, principles and practices to spe- cific work situations, to think and talk about major issues, and to discuss and compare views with colleagues. In order to help relate the contents of the chapters to real-life situations, many of the questions and assignments ask you to support your discussion with, and/or to give, examples from your own organisation. This can of course be your own college or college department. Alternatively, you may have work experi- ence, even part-time or casual employment, in other organisations that you may draw upon and share with colleagues. A modular Initiatives such as semesterisation and modularisation are now common in higher educa- approach tion. This book provides comprehensive coverage of a wide range of topic areas related to the effective use of human resources within the work situation. Although there is a logi- cal flow to the sequencing of topic areas, each Part and each chapter of the book is self-contained. Accordingly, if you come across some repetition of references to underly- ing central features of organisational behaviour and modern management this should provide useful reinforcement of your studies. Main sections are identified clearly within each chapter and there are detailed headings and sub-headings. An important and distinctive feature of this book is that it is especially suitable across a range of different but related modules, including both single or double semester units, and will help to provide an integrated approach to your studies. The selection and ordering of chapters can be varied to suit the particular demands of your study courses or your interests. Organisational In approaching your studies, you need to bear in mind the importance of the organisa- environment tional setting, organisational environment and culture. Remember also there are and culture variations in systems and styles of management, and in the choice of managerial behaviour. You may wish to consider the following simple, five-stage framework (Figure 1.2).
- 43. CHAPTER 1 INTRODUCTION 17 Figure 1.2 A basic framework of study You are encouraged to complement your reading of the book by drawing upon your own experience of work organisations. Search for and study examples of management and organisational behaviour. Look for good and bad examples of management activi- ties and practices, and consider reasons for their apparent success or failure. Compare critically the practical examples given in the text and appendices with the procedures and practices in your own organisation. Consider the manner in which concepts and ideas presented in this book can best be applied in particular work situations. Contemporary examples from your own observations should help further your interest in the subject area and illustrate practical applications to real-life situations. THE CHANGING NATURE OF WORK ORGANISATION The effective management of people takes place in the context of the wider environ- mental setting, including the changing patterns of organisations and attitudes to work. It is frequently documented that a global economy, increased business competitive- ness, the move towards more customer-driven markets, advances in scientific knowledge, especially telecommunications and office automation, have led to a period of constant change and the need for greater organisational flexibility. This is a recur- ring theme throughout the book. The power and influence of private and public organisations, the rapid spread of new technology, and the impact of various socio-economic and political factors have attracted increasing attention to the concept of corporate social responsibilities and business ethics. Increasing attention is also being focused on the ethical behaviour which underlies the decisions and actions of managers and staff; and many responsible organisations and professional bodies now choose to publish a Code of Ethics. The changing nature of organisations and individuals at work has placed increasing pressure on the awareness and importance of new psychological contracts. Forces of global competition and turbulent change make employment guarantees unfeasible and demand a new management philosophy based on trust and teamwork. People are seen as a responsibility and a resource to be added to. Employees need to abandon the sta- bility of lifetime employment and embrace the concept of continuous learning and personal development.7 According to an ESRC publication, in any analysis of the transformation of Britain’s employment relations we cannot neglect the changing nature of work. The influence of technological innovation, work restructuring and job redesign are all helping to reshape shopfloor attitudes among managers, unions and workers.8 In their discussion of the twenty-first century organisation, Bouchikhi and Kimberly refer to the customised workplace which represents a radical departure from commonly
- 44. 18 PART 1 MANAGEMENT AND ORGANISATIONAL BEHAVIOUR Table 1.1 Contrasting the paradigms 19th century 20th century 21st century Theory of personhood Interchangeable muscle A subordinate with a Autonomous and and energy hierarchy of needs reflexive individual Information and The province of Management-dominated Widely diffused knowledge of management alone and shared on a limited basis The purpose of work Survival Accumulation of wealth Part of a strategic and social status life plan Identification With the firm and/or with Identify with a social The disenfranchised the working class group and/or the firm self Conflict Disruptive and to be Disruptive but tolerated A normal part of life avoided and can be settled through collective bargaining Division of labour Managers decide, Managers decide, Employees and employees execute employees execute managers decide thoughtfully and execute Power Concentrated at the top Limited, functional Diffused and shared sharing/empowerment Source: Bouchikhi, H. and Kimberly, J. R., ‘The Customized Workplace’, in Chowdhury, S., Management 21C, Financial Times Prentice Hall (2000), p. 215. accepted management principles and techniques. They summarise the main differences between nineteenth, twentieth and twenty-first century management – see Table 1.1.9 New approaches to management and organisational behaviour In discussing new approaches to management practices for the next decade, Muzyka suggests that: ‘Organizational behavior has moved from an emphasis on the structural aspects of functional and cross-functional organizations to more flexible models, including enhanced consideration of short-term, high performance teams.’ New ideas of how to motivate and deploy people have developed. A new contract is evolving that involves the exchange of value. Individuals need to be encouraged and permitted to achieve: to perform to their highest potential, for their benefit and that of the employer. Organizations are encouraging staff to craft more flexible, value-laden, and specific rules gov- erning their relationships.10 Cloke and Goldsmith refer to the age of traditional management coming to an end and the decline of hierarchical, bureaucratic, autocratic management. They contend that management is an idea whose time is up and organisations that do not recognise the need to share power and responsibility with all their workers will lose them.11 The nature and importance of e-business What is an e-business? When you get down to it, an e-business is an organisation that connects critical business systems directly to their customers, employees, partners and suppliers, via intranets, extranets and over the Web. As customers, employees, suppli- ers and distributors are all connected to the business systems and information they
- 45. CHAPTER 1 INTRODUCTION 19 need, e-business actually transforms and integrates key business processes. In short, the definition of e-business is: ‘the transformation of key business processes using Internet technologies’. Why e-business? First, organisations of all sizes are impacted by globalisation and deregulation, which lowers barriers to entry and dramatically reshapes the competitive landscape. Second, people now have a broader array of choices and therefore are becoming more sophisticated and more demanding – both in what they want from a supplier but also how they choose to acquire goods and services. Thus, the need to change your organisation to stay ahead of competition is vital. Every process of an enterprise – from employee training to product development – is going to be subject to this transformation. E-business strategy organisations must unlock the power of the information and data that exist – interactions with websites, file cabinets, desk draw- ers, databases, and the collective experience of employees. This intellectual capital is a most valuable asset, but only when it is leveraged for competitive advantage.12 Kermally suggests that becoming an e-business is now an imperative for all types of organisations, large and small. The key success factor lies in not emulating established habits. Leadership in the new economy needs to: ■ enthuse employees; ■ empower and respect employees; ■ create trust throughout the organisation; ■ understand the importance of knowledge as a source of business energy; ■ identify and leverage intangible assets; ■ be a custodian of corporate governance in the age of the Internet; ■ be willing to engage in ‘constructive destruction’, since e-business requires constant renewal of its business model.13 It is important, however, to remember the human element to business and that it is people who have to decide what information is actually needed, to ensure the best use of technology, and to design systems that work for them and their organisations. ‘It’s people who manage knowledge – not computers.’14 THE STUDY OF MANAGEMENT AND ORGANISATIONAL BEHAVIOUR The use of separate topic areas is a recognised academic means of aiding study and explanation of the subject. In practice, however, the activities of an organisation and the job of management cannot be isolated neatly into discrete categories. The majority of actions are likely to involve a number of simultaneous functions that relate to the total processes of management.15 Consider, for example, a manager briefing departmental staff on an unexpected, important and urgent task which has to be undertaken quickly. Such a briefing is likely to include consideration of goals and objectives, organisation structure, management system, process of delegation and empowerment, systems of communication, leadership style, motivation and control systems. The behaviour of the staff will be influenced by a combination of individual, group, organisational and environmental factors. Topic studies in organisational behaviour should not be regarded, therefore, as entirely free-standing. Any study of organisation and management inevitably covers several aspects, and each study can be used to a greater or lesser extent to confirm gen- eralisations made about particular topic areas. The use of the same studies to illustrate different aspects of management and organisational behaviour serves as useful revision and reinforcement, and helps to bring about a greater awareness and understanding of the subject.
- 46. 20 PART 1 MANAGEMENT AND ORGANISATIONAL BEHAVIOUR No single right You will probably be aware that a feature of the study of management and organisational answer behaviour is the invariable difficulty in identifying a single solution to a particular prob- lem. The absence of one, right answer can make study of the subject complex and frustrating; but the area of study can also be interesting and challenging, stimulating cre- ative thought and ideas, and it can be related to your own work experience. A useful model for the study of management and organisational behaviour is to see the organisation as an open system (see Chapter 4). The open system approach views the organisation within its broader, external environment and places emphasis on multiple channels of interaction. It provides a means of viewing the total organisation and of embracing different dimensions of analysis. The open system model provides a perspective for a managerial approach to organisational behaviour. It helps in the search for the most appropriate ways of influencing the behaviour of people within an organisational setting. The relevance In the study of management and organisational behaviour you will come across many of theory theories. However, you should not be put off by the use of the word ‘theory’. Most rational decisions are based on some form of theory. Theory contains a message on how managers might behave. This will influence attitudes towards management prac- tice and lead to changes in actual patterns of behaviour. Theory helps in building generalised models applicable to a range of organisations or situations. It further provides a conceptual framework and gives a perspective for the practical study of the subject. Thus theory and practice are inseparable. Together they lead to a better understanding of factors influencing patterns of behaviour in work organisations and applications of the process of management.16 However, to be of any help to the practising manager, theory has to be appropriate. For example, Lee refers to: ... the danger of adopting theories because they are teachable, rather than because they are effective ... (however) without appropriate theory, there would be very little communication of the insights of scientific theory to practising managers.17 Although it is not always easy to establish their exact origins, ideas do percolate through to best practice.18 Patching suggests that all managers who think about what they do are practical stu- dents of organisational theory. Theory is not something unique to academics, but something we all work with in arriving at our attitudes, beliefs and decisions as managers. It seems obvious to most of us that some theories are better than others. Many managerial discussions which we undertake in meetings focus upon trying to agree upon which theory will be best for a particular decision.19 THE USE OF CASE STUDIES 20 Case studies are increasingly popular as a part of the study of management and organ- isational behaviour. According to Mumford, the case method is, with the exception of lectures, clearly the most widely used method in management education.21 There are a variety of types of case studies and they may be presented in a number of different ways. Case studies range from, for example, a brief account of events which may be actual, contrived or a combination of both; ‘armchair’ cases based on hypothetical but realistic situations, and developed to draw out and illustrate particular points of prin- ciple; to complex, multi-dimensional cases giving a fuller descriptive account of actual situations in real organisations. The term ‘case study’ may be extended to include criti- cal incident analysis, role-play and the in-tray (or in-basket) exercise, although these are more methods of training. A case study may require you to work on an individual basis or it may involve group work. It may also specify that you are to assume a partic- ular role, for example as a senior or departmental manager or consultant.
- 47. CHAPTER 1 INTRODUCTION 21 Objectives of Whatever the nature or form of case studies, a major objective of their use is usually use of case the application of theoretical knowledge to practical situations and/or the integration studies of knowledge drawn from a number of related disciplines or areas of study. Case studies are basically problem analysis and decision-making exercises. They provide a test of the ability to distinguish real issues from less significant matters. There is unlikely to be a single, right answer. Case studies, therefore, provide the participants with an opportunity to demonstrate analytical ability, logical thinking, judgement and persuasiveness and skills of com- munication in the presentation of answers. If the case study is undertaken as a group exercise, it also provides a means of assessing both the performance of the group as a whole and the ability of individuals to work effectively as members of the group.22 In reviewing the relevance of the case study method, Orpen suggests that although it may be regarded as out of date by many management teachers and managers, a major reason why cases must form the important element in any management programme is that managing has to do with problem-solving rather than just learning to do things. Although it is often difficult to accomplish, the movement from the lecture method to the case study method of teaching is one that has to be made. ‘After all, management is ultimately about doing the right thing in the circumstances – something learnt by doing cases – not just digesting ideas from teachers.’23 According to Hazard, the case method is least suited to knowledge transmission, and those institutions that have chosen to teach exclusively by cases do themselves and their students a disservice. Case learning works best with older, more experienced stu- dents and allows participants to develop skills, to listen to other people, and to understand that there are many ways of approaching a single problem. Case teaching should be viewed as the first step in an action learning hierarchy.24 Guidelines on The level and depth of analysis, and the type of answer required, will depend upon the tackling case particular case study and the reasons for its use. However, despite variations in the studies nature and format of case studies it is possible to suggest general guidelines on how to tackle them. 1 Read the whole of the case study. Try to get a ‘feel’ for what it is about and note what the question(s) ask(s) you to do. Check on the time allowed. 2 Read the case study a second time. Look at the material carefully and try to identify with the situation. Check again on exactly what you are required to do and instructions on how to present your answer. For example, if a report is called for, your answer should be presented in proper report form. Check whether you are to assume a specific role and if your answer is to be directed at a specified audience – for example, a senior manager, the board of directors or a committee. 3 If there are a number of different parts to the case study you should apportion available time and ‘weight’ your answers accordingly. 4 Approach your analysis of the case study with an open mind. Be conscious of any bias or prejudice you may have and avoid any predispositions which may influ- ence your perception of the case material. Do not jump to hasty or unfounded conclusions. Do not formulate firm opinions or solutions until you have collated all the available evidence. 5 Adopt a brainstorming approach and take the case apart by exploring all reason- ably possible considerations. Remember there may be a number of separate problems with separate causes and a number of alternative courses of action. There is not necessarily a single ‘correct’ or ‘model’ answer. 6 You may need to search for hidden meanings and issues which are not at first read- ily apparent. Do not, however, make things unnecessarily complicated. Do not take the ‘obvious’ for granted and do not neglect simple responses which help to pro- vide a satisfactory answer to the question as worded.
- 48. 22 PART 1 MANAGEMENT AND ORGANISATIONAL BEHAVIOUR 7 A particular feature of case study work is that you are likely to have only limited information. You should, therefore, make a point of studying all the details given in the case material, first, to make certain of the facts; and second, to identify what deductions or inferences can be drawn from these facts. You may feel it necessary to make certain assumptions. If so, these assumptions should follow reasonably from the case material and serve only to help clarify the situation. Even if you are not specifically requested to do so, it is recommended that you make clear any nec- essary assumptions as part of your answer. 8 The case study may set out deliberately to present a tangle of information, events or situations which need to be unravelled in order to clarify links and relation- ships, and to distinguish causes from effects, and symptoms from problems. Concentrate on what you see to be the more important matters as opposed to any irrelevant detail or possible red herrings which may confuse the real issues. 9 In your analysis of the case material you may find it helpful to emphasise key words or phrases, including emotive language and actions. You may also find it helpful to: – list the people involved and draw a pen picture of them from the available infor- mation; and – trace the sequence and timing of events which have led to the present situation. The use of margin notes, underlining, numbering and/or lettering, colours or high- lighting pens may all be useful but you should be careful not to make your analysis confused or too complicated. 10 Where appropriate, relate your analysis of the case material to your theoretical studies, general points of principle and the work of leading writers. For example, you might find the PESTEL analysis discussed in Chapter 4 or the SWOT analysis discussed in Chapter 5 helpful in tackling case studies. It is always valuable to be able to draw upon practical experience but make sure it is relevant to the particular circumstances. You may still be able to make use of knowledge gained from experi- ence not related directly to the case study, but avoid the temptation to distort your perception of the situation as described to suit your own personal experience. 11 Bearing in mind the question, clearly identify existing or potential difficulties or problem areas and indicate where you see the need for most urgent action. Where you have identified a number of possible courses of action indicate your re- commended priorities. Bear in mind also practical considerations such as timing, cost and existing personalities. Where appropriate give reasons in support of your recommendations. 12 Draw up a plan of key points as the basis of your answer. 13 The use of visual displays such as diagrams, charts or tables may enhance the presentation of your answer. But make sure such visual displays are accurate and clear and relate directly to your analysis of the case material, and to the question as worded. Every visual display should be given a meaningful title, and serve to help the reading and interpretation of your answer. Do not be tempted to use visual dis- plays for their own sake or to spend too much time on an over-elaborate display at the expense of more important matters. 14 Allow time to read through and check your work. REVIEW AND DISCUSSION QUESTION Discuss critically what you believe are the main factors to bear in mind with, and particular difficulties presented by, the study of management and organisational behaviour. Where pos- sible, give practical examples based on your own experience.
- 49. CHAPTER 1 INTRODUCTION 23 PERSONAL AWARENESS AND SKILLS EXERCISE OBJECTIVES Completing this exercise should help you to enhance the following skills: ᭤ Recognise different ways in which people think. ᭤ Explain and justify your approach to making decisions. ᭤ Participate in a small group discussion. EXERCISE Five figures are shown below. You are required to: 1 Select the one that is different from all the others. 2 Discuss in small groups reasons for the individual selections and be prepared to justify your own decision. 3 See if you can reach a consensus on a single group answer. DISCUSSION ■ To what extent did members of the group understand the thought processes of others? ■ If you were persuaded to change your mind on what basis was this decision made? ■ What conclusions do you draw from this exercise? Visit our website www.booksites.net/mullins for further questions, annotated weblinks, case material and Internet research material.
- 50. 24 PART 1 MANAGEMENT AND ORGANISATIONAL BEHAVIOUR NOTES AND REFERENCES 1. Cited in Robinson, G. ‘Managers Under the Spotlight’, 15. A similar view is taken by Watson, T. J. Organising and The British Journal of Administrative Management, Managing Work: organisational, managerial and strategic September/October 1997, p. 5. behaviour in theory and practice, Financial Times Prentice 2. Bickerstaffe, G. ‘Mastering Management’, Financial Hall (2002). Times, 27 October 1995, p. 2. 16. See, for example: Billsberry, J. (ed.) ‘There’s Nothing So 3. Foong, K. and Yorston, R. ‘Human Capital Measurement Practical as a Good Theory: How Can Theory Help and Reporting A British Perspective’, London Business Managers Become More Effective?’ in The Effective School, June 2003, p. 3. Manager: Perspectives and Illustrations, Sage Publications 4. ‘Accounting for People’, Report of the Task Force on (1996), pp. 1–27; and Naylor, J. Management, Financial Human Capital Management, DTI, October 2003, p. 3. Times Pitman Publishing (1999), pp. 18–20. 5. Ibid., p. 2. 17. Lee, R. A. ‘There is Nothing so Useful as an Appropriate 6. Drummond, H. Introduction to Organizational Behaviour, Theory’, in Wilson, D. C. and Rosenfeld, R. H. Managing Oxford University Press (2000). Organizations: Text, Readings and Cases, McGraw-Hill 7. Ghoshal, S., Bartlett, C. A. and Moran, P. ‘Value Creation: (1990), p. 31. The New Millennium Management Manifesto’, in 18. Crainer, S. ‘The Rise of Guru Scepticism’, Management Chowdhury, S. Management 21C, Financial Times Prentice Today, March 1996, pp. 48–52. Hall (2000), pp. 121–40. 19. Patching, K. Management and Organisation Development, 8. Taylor, R. ‘The Future of Employment Relations’, Macmillan Business (1999), p. 11. Economic and Social Research Council, September 20. Based on Mullins, L. J. ‘Tackling Case Studies’, Student 2001, pp. 7–8. Administrator, vol. 1, no. 5, June 1984. See also: 9. Bouchikhi, H. and Kimberly, J. R. ‘The Customized Ainsworth, A. ‘Tackling Case Studies’, Supplement to Workplace’, in Chowdhury, S. Management 21C, Financial Times Prentice Hall (2000), pp. 207–19. Chartered Secretary, January 2000. 10. Muzyka, D. ‘Thriving on the Chaos of the Future’, in 21. Mumford, A. ‘When to Use The Case Method’, Pickford, J. (ed.) Financial Times Mastering Management ECCHO: The Newsletter of the European Case Clearing 2.0, Financial Times Prentice Hall (2001), p. 8. House, Autumn/Fall 1997, pp. 16–17. 11. Cloke, K. and Goldsmith, J. The End of Management: and 22. See, for example: Easton, G. Learning From Case Studies, the Rise of Organizational Democracy, Jossey-Bass (2002). Second edition, Prentice-Hall (1992). 12. For an account of key issues in e-business, see for 23. Orpen, C. ‘Reconsidering the Case-Study Method of example: ‘Accenture’, supplement to Management Today, Management Teaching’, Journal of European Business January 2001. Education, Buckinghamshire Business School, vol. 9, 13. Kermally, S. ‘E-strategy is Key to Future Success’, no. 2, May 2000, pp. 56–64. Professional Manager, July 2001, pp. 28–9. 24. Hazard, H. ‘An Action Learning Teacher Reflects on 14. Fitzsimmons, G. ‘It’s People Who Manage Knowledge – Case Teaching’, ECCHO: The Newsletter of the European Not Computers’, The British Journal of Administrative Case Clearing House, Issue No. 22, Autumn/Fall 1999, Management, March/April 2000, p. 16. pp. 5–7. Use the Financial Times to enhance your understanding of the context and practice of management and FT organisational behaviour. Refer to article 7 in the BUSINESS PRESS section at the end of the book for relevant reports on the issues explored in this chapter.
- 51. 2 THE NATURE OF ORGANISATIONAL BEHAVIOUR The scope for the examination of behaviour in organisations is very wide. There is a multiplicity of interrelated factors which influence the behaviour and performance of people as members of a work organisation. It is important to recognise the role of management as an integrating activity and as the cornerstone of organisationa effectiveness. People and organisations need each other. The manager needs to understand the main influences on behaviour in work organisations and the nature of the people–organisation relationship. LEARNING OUTCOMES After completing this chapter you should be able to: Photo: Mark Renders/Getty Images ᭤ explain the meaning and nature of organisational behaviour and provide an introduction to a behavioural approach to management; Organizations are extremely complex systems. As ᭤ detail main interrelated influences on behaviour in one observes them they seem to be composed of work organisations and explain the nature of behavioural human activities on many different levels of science; analysis. Personalities, small groups, intergroups, ᭤ outline contrasting perspectives of organisations and norms, values, attitudes all seem to exist in an different orientations to work; extremely complex multidimensional pattern. The ᭤ recognise the importance of management as an inte- complexity seems at times almost beyond grating activity; comprehension. ᭤ assess the nature and importance of the new psychological contract; Chris Argyris Integrating the Individual and the Organization, John Wiley & Sons (1964) ᭤ review the need for a cross-cultural approach and the importance of culture to the study of organisational behaviour; ᭤ summarise the complex nature of the behaviour of people in work organisations.
- 52. 26 PART 1 MANAGEMENT AND ORGANISATIONAL BEHAVIOUR THE MEANING OF ORGANISATIONAL BEHAVIOUR We live in an organisational world. Organisations of one form or another are a necessary part of our society and serve many important needs. The decisions and actions of man- agement in organisations have an increasing impact on individuals, other organisations and the community. It is important, therefore, to understand how organisations function and the pervasive influences which they exercise over the behaviour of people.1 Organizational Behaviour is one of the most complex and perhaps least understood aca- demic elements of modern general management, but since it concerns the behaviour of people within organizations it is also one of the most central … its concern with individual and group patterns of behaviour makes it an essential element in dealing with the complex behavioural issues thrown up in the modern business world. Financial Times Mastering Management Series2 The behaviour of people Organisational behaviour is concerned with the study of the behaviour of people within an organisational setting. It involves the understanding, prediction and control of human behaviour.3 Common definitions of organisational behaviour (OB) are gener- ally along the lines of: the study and understanding of individual and group behaviour, and patterns of structure in order to help improve organisational per- formance and effectiveness.4 There is a close relationship between organisational behaviour and management theory and practice. Some writers seem to suggest that organisational behaviour and management are synonymous, but this is something of an over-simplification because there are many broader facets to management. Organisational behaviour does not encompass the whole of management; it is more accurately described in the narrower interpretation of providing a behavioural approach to management. It is important to emphasise that in most cases the term ‘organisational behaviour’ is, strictly, a misnomer: rarely do all members of an organisation, except perhaps very small organisations, behave collectively in such a way as to represent the behaviour of the organisation as a whole. In practice, we are referring to the behaviour of individuals, or sections or groups of people, within the organisation. For example, when we talk about a ‘caring organisation’, we are really talking about the philosophy, attitudes and actions of top managers and/or departmental managers, or possibly an individual manager. Nevertheless, the wording ‘organisational behaviour’ has become widely accepted and is found increasingly in textbooks and literature on the subject. The term ‘organisational behaviour’ is a convenient form of shorthand to refer to the large number of interrelated influences on, and patterns of, behaviour of people within organisations.5 A framework The behaviour of people, however, cannot be studied in isolation. It is necessary to of study understand interrelationships with other variables which together comprise the total organisation. To do this involves consideration of interactions among the formal struc- ture, the tasks to be undertaken, the technology employed and methods of carrying out work, the process of management and the external environment.
- 53. CHAPTER 2 THENATURE OF ORGANISATIONAL BEHAVIOUR 27 Figure 2.1 Organisational behaviour: a convenient framework of analysis The study of organisational behaviour embraces therefore an understanding of: ■ the behaviour of people; ■ the process of management; ■ the organisational context in which the process of management takes place; ■ organisational processes and the execution of work; and ■ interactions with the external environment of which the organisation is part. This provides us with a basic, but convenient, framework of analysis. (See Figure 2.1.) Wilson, however suggests that the meaning of the term organisational behaviour is far from clear. She challenges what constitutes organisational behaviour and questions whether we should be interested only in behaviour that happens within organisations. There is a reciprocal relationship in what happens within and outside organisations. Wilson suggests that we also look outside of what are normally thought of as organisa- tions and how we usually think of work. We can also gain insight into organisational life and organisational behaviour by looking at what happens in rest and play; by con- sideration of emotion and feeling; by the context in which work is defined as men’s or women’s work; and by looking at less organised work, for example work on the fiddle and the meaning of work for the unemployed.6 These suggestions by Wilson arguably add an extra dimension to the meaning and understanding of organisational behaviour. INFLUENCES ON BEHAVIOUR IN ORGANISATIONS The variables outlined above provide parameters within which a number of inter- related dimensions can be identified – the individual, the group, the organisation and the environment – which collectively influence behaviour in work organisations. The individual Organisations are made up of their individual members. The individual is a central fea- ture of organisational behaviour and a necessary part of any behavioural situation, whether acting in isolation or as part of a group, in response to expectations of the organisation, or as a result of the influences of the external environment. Where the needs of the individual and the demands of the organisation are incompatible, this can
- 54. 28 PART 1 MANAGEMENT AND ORGANISATIONAL BEHAVIOUR result in frustration and conflict. It is the task of management to integrate the individ- ual and the organisation, and to provide a working environment which permits the satisfaction of individual needs as well as the attainment of organisational goals. The group Groups exist in all organisations and are essential to their working and performance. The organisation comprises groups of people and almost everyone in an organisation will be a member of one or more groups. Informal groups arise from the social needs of people within the organisation. People in groups influence each other in many ways, and groups may develop their own hierarchies and leaders. Group pressures can have a major influence over the behaviour and performance of individual members. An understanding of group structure and behaviour complements a knowledge of individ- ual behaviour and adds a further dimension to organisational behaviour. The Individuals and groups interact within the structure of the formal organisation. Structure organisation is created by management to establish relationships between individuals and groups, to provide order and systems and to direct the efforts of the organisation into goal-seeking activities. It is through the formal structure that people carry out their organisational activities in order to achieve aims and objectives. Behaviour is affected by patterns of organisation structure, technology, styles of leadership and systems of management through which organisational processes are planned, directed and controlled. The focus of attention, therefore, is on the impact of organisation structure and design, and pat- terns of management, on the behaviour of people within the organisation. For example, McPhee refers to the growth in the nature and importance of organisational structures and their essence, and for greater emphasis on business-to-business (B2B) depth or group interviewing as part of an insight into business and organisational behaviour.7 The The organisation functions as part of the broader external environment of which it is a environment part. The environment affects the organisation through, for example, technological and scientific development, economic activity, social and cultural influences and governmental actions. The effects of the operation of the organisation within its environment are reflected in terms of the management of opportunities and risks and the successful achievement of its aims and objectives. The increasing rate of change in environmental factors has highlighted the need to study the total organisation and the processes by which the organisation attempts to adapt to the external demands placed upon it. Increasing globalisation means that organisations must respond to different market demands and local requirements. ‘In globalization, strategy and organization are inextricably twined.’8 Globalisation impacts on organisational behaviour, and has placed greater emphasis on processes within organisations rather than functions of the organisation. Contrasting but related approaches These different dimensions provide contrasting but related approaches to the under- standing of human behaviour in organisations. They present a number of alternative pathways for the study of the subject and level of analysis. It is possible, for example, to adopt a psychological approach with the main emphasis on the individuals of which the organisation is comprised. Psychological aspects are important but, by themselves, provide too narrow an approach for the understanding of management and organisational behaviour. Our main concern is not with the complex detail of individual differences and attributes per se but with the behaviour and management of people within an organisational setting. It is also possible to adopt a sociological approach concerned with a broader emphasis on human behaviour in society. Sociological aspects can be important. A number of sociology writers seem set on the purpose of criticising traditional views of
- 55. CHAPTER 2 THENATURE OF ORGANISATIONAL BEHAVIOUR 29 organisation and management. Many of the criticisms and limitations to which such writers refer are justified and help promote healthy academic debate. Unfortunately, however, much of the argument tends to be presented in the abstract and is lacking in constructive ideas on how, in practical terms, action can be taken to improve organisa- tional performance. BEHAVIOURAL SCIENCE – A MULTIDISCIPLINARY APPROACH Whatever the approach, the study of organisational behaviour cannot be undertaken entirely in terms of a single discipline. It is necessary to provide a multidisciplinary, behavioural science approach (see Figure 2.2). The wording ‘behavioural science’ has no strict scientific definition. It may be used as a collective term for the grouping of all the social sciences concerned with the study of people’s behaviour. However, it is now more frequently used to refer to attempts to apply a selective, multidisciplinary approach to the study of human behaviour. In par- ticular, the term is often taken as applying more narrowly and specifically to problems of organisation and management in the work environment. Three main There are areas of overlap among the various social sciences, their sub-divisions and disciplines related disciplines such as economics and political science. However, the study of behaviour can be viewed in terms of three main disciplines – psychology, sociology and anthropology. All three disciplines have made an important contribution to the field of organisational behaviour. ■ Psychologists are concerned, broadly speaking, with the study of human behaviour, with traits of the individual and membership of small social groups. The main focus of attention is on the individual as a whole person, or what can be termed the ‘per- sonality system’, including, for example, perception, attitudes and motives. Figure 2.2 Behavioural science – a multidisciplinary approach
- 56. 30 PART 1 MANAGEMENT AND ORGANISATIONAL BEHAVIOUR ■ Sociologists are more concerned with the study of social behaviour, relationships among social groups and societies, and the maintenance of order. The main focus of attention is on the analysis of social structures and positions in those structures – for example, the relationship between the behaviour of leaders and followers. ■ Anthropologists are more concerned with the science of mankind and the study of human behaviour as a whole. As far as organisational behaviour is concerned the main focus of attention is on the cultural system, the beliefs, customs, ideas and values within a group or society, and the comparison of behaviour among different cultures – for example, the importance to Muslim women of wearing trousers to work. People learn to depend on their culture to give them security and stability, and they can suffer adverse reactions to unfamiliar environments. The contribution of relevant aspects of psychology, sociology and anthropology aids our understanding of the behaviour of people in work organisations, and underpins the field of organisational behaviour. Behavioural science attempts to structure organisations in order to secure the optimum working environment. It is concerned with reconciling the needs of the organisation for the contribution of maximum productivity, with the needs of individuals and the realisation of their potential. Emphasis is on the application of rel- evant aspects of psychological and sociological theory and practice, and cultural influences, to problems of organisation and management in the work situation. In terms of the applications of behavioural science to the management of people, we need also to consider the relevance and applications of philosophy, ethics and the law. THE IMPORTANCE OF PEOPLE AND ORGANISATIONAL BEHAVIOUR However one looks at the nature or disciplines of organisational behaviour it is impor- tant to remember, as Morgan reminds us, that: ‘The reality of organizational life usually comprises numerous different realities!’ 9 Hellriegel, Slocum and Woodman suggest that: … one way to recognise why people behave as they do at work is to view an organisation as an iceberg. What sinks ships isn’t always what sailors can see, but what they can’t see.10 The overt, formal aspects focus only on the tip of the iceberg (organisation). It is just as important to focus on what you can’t see – the covert, behavioural aspects (see Figure 2.3). As part of the Financial Times Mastering Management series, Wood, in his discussion of the nature of organisational behaviour (OB), suggests that in its concern for the way people behave in an organisational context, organisational behaviour can be regarded as the key to the whole area of management. Is the study of behaviour in organisations important? I think it is vital. What the social sciences, humanities and the arts are to university education, OB is to business school education. The more technical a manager’s training, the more important organisational behaviour becomes. It is arguably the one area that can carry the burden of bringing the collective wisdom of human his- tory into the decision-making calculus of developing managers. And this is no trivial task.11 In the Foreword to Cloke and Goldsmith’s thought-provoking book, The End of Management, Bennis claims that a distinct and dramatic change is taking place in the phi- losophy underlying organisational behaviour, calling forth a new concept of humanity. This new concept is based on expanded knowledge of our complex and shifting needs, replacing an oversimplified, innocent, push-button idea of humanity. This philosophical shift calls for a new concept of organizational depersonalized, mechanistic value system of bureaucracy. With it comes a new concept of power, based on collaboration and reason, replacing a model based on coercion and threat ... The real push for these changes stems from the need not only to humanize organizations, but to use them as crucibles for personal growth and self-realization.12
- 57. CHAPTER 2 THENATURE OF ORGANISATIONAL BEHAVIOUR 31 Figure 2.3 The organisational iceberg Source: Don Hellriegel, John W. Slocum, Jr and Richard W. Woodman, Organizational Behaviour, Eighth edition, South-Western Publishing © (1998), p. 6. Reprinted with the permission of South-Western, a division of Thomson Learning: www.thomsonrights.com. Fax 800 730 2215. People, capital and technology In her discussion on ‘putting people at the heart of corporate purpose’, Gratton draws attention to the link between individual behaviour and organisational performance. People are uniquely different from capital and technology. As the challenge shifts from managing capital and technology to managing people, so this requires a fundamental shift in the way we consider resources and has profound implications for the organisa- tions in which we work. If we place people at the center of sustained competitive advantage then we have to take full account of the fundamental characteristics of human capital. What are these fundamental char- acteristics? What separates us from money or machines, and what are the implications of these differences? My view of this comes essentially from the perspective of an individual psychologist and from my experiences in organizations. For me the question of time is crucial, both because we humans operate in time with the past, the present and the future assuming importance; and because there are phases, sequences of time and rhythms, which are essentially human. Like many other psychologists, I have been influenced by the notion of meaning and of soul. Both are deeply philosophical terms, with roots as old as mankind. They are soft, perhaps even flaky, notions, but I believe to deny them is to create organizations fit for machines, not people. They may not be the terms with which you are most comfortable, perhaps other words suit you better, but somewhere within our views of organizations we need to acknowledge the differences between machines and man.13
- 58. 32 PART 1 MANAGEMENT AND ORGANISATIONAL BEHAVIOUR ORGANISATIONAL METAPHORS Organisations are complex social systems which can be defined and studied in a number of different ways. A significant approach to this broad perspective on the nature of organisations and organisational behaviour is provided by Morgan. Through the use of metaphors, Morgan identifies eight different ways of viewing organisations – as machines, organisms, brains, cultures, political systems, psychic prisons, flux and transformation, and instruments of domination. According to Morgan, these contrasting metaphors aid the understanding of the complex nature of organisational life and the critical evaluation of organisational phenomena.14 ■ Machines. This suggests that organisations can be designed as if they are machines with orderly relations between clearly defined parts. Viewing organisations as machines can provide the basis for efficient operation in a routine, reliable and pre- dictable way. This form of bureaucratic structure provides form, continuity and security. However, it may have adverse consequences and limit the development of human capacities. Organisations viewed as machines function better in a stable and protected environment. ■ Organisms. The organisation is seen as behaving like a living system. In the same way that biological mechanisms adapt to changes in their environment, so organ- isations, as open systems, adapt to the changing external environment. Organisations operating within a turbulent and dynamic environment require an adaptable type of structure. ■ Brains. Viewing organisations as brains involves thinking about the organisation as inventive and rational, and in a manner that provides for flexibility and creative action. The challenge is to create new forms of organisation capable of intelligent change and that can disperse brainlike capacities. ■ Cultures. This sees organisations as complex systems made up of their own charac- teristic sets of ideology, values, rituals, and systems of belief and practice. Attention to specific aspects of social development helps to account for variations among organisations. ■ Political systems. In the sense that ways must be found to create order and direct people, organisations are intrinsically political. They are about authority, power, superior–subordinate relationships and conflicting interests. Viewing organisations as political systems helps in an understanding of day-to-day organisational life, the wheeling and dealing, and pursuit of special interests. ■ Psychic prisons. This views organisations as psychic phenomena created and sus- tained by conscious and unconscious processes. Organisations and their members are constrained by their shadows or ‘psychic prisons’ and become trapped by con- structions of reality. Their inherited or created mythical past places affects the representation of the organisation to the outside world. Viewing organisations as psychic prisons provides an understanding of the reality and illusions of organisa- tional behaviour. ■ Flux and transformation. The universe is in a constant state of flux, embodying characteristics of both permanence and change. Organisations can be seen as in a state of flux and transformation. In order to understand the nature and social life of organisations, it is necessary to understand the sources and logic of transformation and change. ■ Instruments of domination. In this view organisations are associated with processes of social domination, and individuals and groups imposing their will on others. A feature of organisations is asymmetrical power relations that result in the pursuit of the goals of the few through the efforts of the many. Organisations are best understood in terms of variations in the mode of social domination and control of their members.
- 59. CHAPTER 2 THENATURE OF ORGANISATIONAL BEHAVIOUR 33 A broader view of organisational behaviour Although the main concern of this book is with a managerial approach to organisational behaviour, these contrasting metaphors provide an interesting perspective on how to view organisations. They provide a broader view of the dynamics of organisational behaviour, and how to manage and design organisations. However, Morgan points out that these metaphors are not fixed categories and are not mutually exclusive. An organi- sation can be a mix of each, and predominantly a combination of two or three metaphors. Furthermore, these combinations may change over a period of time. A number of writers involve the use of metaphors to help describe organisations. For example, in discussing the role and logic of viewing the organisation in terms of metaphors, Drummond raises questions such as what an organisation is like, and the power of metaphors in shaping our thinking; but also points out that all metaphors are partial and no metaphor can explain fully a particular phenomenon.15 ORIENTATIONS TO WORK AND THE WORK ETHIC People differ in the manner and extent of their involvement with, and concern for, work. From information collected about the work situation, organisational participa- tion and involvement with work colleagues, and life outside the organisation, Goldthorpe et al. identified three main types of orientation to work: instrumental, bureaucratic and solidaristic.16 ■ Individuals with an instrumental orientation defined work not as a central life issue but in terms of a means to an end. There is a calculative or economic involvement with work, and a clear distinction between work-related and non-work-related activities. ■ Individuals with a bureaucratic orientation defined work as a central life issue. There is a sense of obligation to the work of the organisation and a positive involvement in terms of a career structure. There is a close link between work-related and non-work- related activities. ■ Individuals with a solidaristic orientation defined the work situation in terms of group activities. There is an ego involvement with work groups rather than with the organ- isation itself. Work is more than just a means to an end. Non-work activities are linked to work relationships. Different work Some people may well have a set motivation to work, whatever the nature of the work situation environment. However, different work situations may also influence the individual’s orientation to work. For example, the lack of opportunities for teamwork and the satis- faction of social expectations may result in an instrumental orientation to work, and a primary concern for economic interests such as pay and security. In other situations where there are greater opportunities to satisfy social needs, membership of work groups may be very important, and individuals may have a more solidaristic orienta- tion to work. According to Herman, the work ethic has been deeply challenged by two trends – the division of labour and the destruction of continuity in employment. Work has been fractured in task and sub-divided into specialised subtasks or branches into new kinds of work all together. The division of labour has now generated tens of thousands of dis- crete functions in the workplace. A more recent trend is the destruction of continuity in employment with many employees likely to re-enter the job market multiple times. This discourages the development of bonds of loyalty or employees investing them- selves in their work with the hope of long-term employment.17 Knights and Willmott contend that most management textbooks do not make the con- nection between managing and everyday life. By drawing on a number of contemporary
- 60. 34 PART 1 MANAGEMENT AND ORGANISATIONAL BEHAVIOUR novels they attempt to ‘bring to life’ what they see as the reality of managing and organ- ising, and dimensions of human experience at work and elsewhere. They explore, in an interesting way, the changing meaning of work and orientations to it, and how different kinds of work are meaningful to some people and not to others.18 Cultural influences National culture is also a significant influence on orientations to work. For example, Reeves comments on the importance of conversation for effective organisational rela- tionships but how this is resisted in the British work culture. The Protestant version of the work ethic prevails, implying heads-down work, focused agendas, punctuality, efficiency. In French and Spanish offices, it takes the first hour to kiss everyone, the second to discuss local gossip and the third to pop out for a coffee and croissant. In Britain, these activities would count as sexual harassment, time-wasting and absenteeism. Many firms have built cafés or break out areas and then discovered people are too scared to use them for fear of looking work-shy.19 As another example, the author experienced for himself how in parts of Australia work- related activities could often be undertaken comfortably in local coffee houses without concern about being seen as away from the place of work. Cartwright comments on the psychological process of culture that has the power and authority not only to determine lifestyle but also to form individual personality traits, behaviours and attitudes. It is the cultural environment that motivates people to do their best and to give of their best, often irrespective of or even in spite of their working or living environment. In this respect we make a clear distinction between social conditions and the cultural environment. In the same way that a first-class system does not guarantee first-class results, good living and working conditions do not, in themselves, guarantee high morale and motivation. People in the best working and living conditions can still have low morale and motivation without the benefit of a supportive culture.20 Work/life Popular newspaper articles often suggest that work is still a large component of what balance gives meaning to people’s lives, and give examples of lottery or pools winners staying in work and often in their same old job. Other surveys and reports continue to suggest that the workplace is no longer a central feature of social activity. For a majority of people the main reason for work remains the need for money to fulfil the necessities of life. However, much still appears to depend on the extent of an individual’s social con- tacts and activities outside of the work situation. From a survey conducted among subscribers to Management Today, the majority of Britain’s managers are engaged in a perpetual juggling act with the work/life balance, and in meeting both personal and work commitments. For many of those surveyed, however, work remains a huge source of satisfaction.21 The work/life balance is dis- cussed more fully in Chapter 18. MANAGEMENT AS AN INTEGRATING ACTIVITY Whatever the individual’s orientations to work, it is through the process of management that the efforts of members of the organisation are co-ordinated, directed and guided towards the achievement of organisational goals. Management is an integral part of, and fundamental to, the successful operations of the organisation. Management is therefore the cornerstone of organisational effectiveness, and is concerned with arrangements for the carrying out of organisational processes and the execution of work (see Figure 2.4). There are many aspects to management in work organisations, but the one essential ingredient of any successful manager is the ability to handle people effectively. The man-
- 61. CHAPTER 2 THENATURE OF ORGANISATIONAL BEHAVIOUR 35 Figure 2.4 Management as the cornerstone of organisational effectiveness ager needs to be conversant with social and human skills, and have the ability to work with and through other people. Without people there can be no organisation and no meaningful activity. Behind every action or document in an organisation there are people. Patterns of It is the responsibility of management to manage. But organisations can only achieve human their aims and objectives through the co-ordinated efforts of their members. This behaviour involves the effective management of human resources. However, it is important always to remember that it is people who are being managed and people should be considered in human terms. Unlike physical resources, people are not owned by the organisation. People bring their own perceptions, feelings and attitudes towards the organisation, systems and styles of management, their duties and responsibilities, and the conditions under which they are working. At the heart of successful management is the problem of integrating the individual and the organisation, and this requires an understanding of both human personality and formal organisations.22 The fact is that management ultimately depends on an understanding of human nature. I suggest it goes much further than that. In the first place, good management depends on the acceptance of certain basic values. It cannot be achieved without honesty and integrity, or without consideration for the interests of others. Secondly, it is the understanding of human foibles that we all share, such as jealousy, envy, status, prejudice, perception, tem- perament, motivation and talent, which provides the greatest challenge to managers. HRH The Duke of Edinburgh, Institute of Management Patron23
- 62. 36 PART 1 MANAGEMENT AND ORGANISATIONAL BEHAVIOUR Human behaviour is capricious, and scientific methods or principles of behaviour cannot be applied with reliability. For example, in his study of job satisfaction, Bassett comments that: There seem to be no universal generalizations about worker dissatisfaction that permit easy management policy solutions to absenteeism and turnover problems … There are almost never any exact conditions of cause and effect in the realm of human behaviour.24 It is also widely observed that you cannot study the behaviour of people without changing it. Patterns of behaviour are influenced by a complex combination of in- dividual, social and cultural factors. Tensions, conflicts and politics are almost inevitable, as are informal structures of organisation and unofficial working methods. We need to remind ourselves of the human aspects of the organisation and the idio- syncratic behaviour of individuals. For example, Egan refers to the importance of the shadow side of the organisation: that is, those things not found on organisation charts or in company manuals – the covert, and often undiscussed, activities of people which affect both the productivity and quality of working life of an organisation.25 The people–organisation relationship In the belief of the author, the majority of people come to work with the original atti- tude of being eager to do a good job, and desirous of performing well and to the best of their abilities. People generally respond in the manner in which they are treated. Where actual performance fails to match the ideal this is largely a result of how staff perceive they are treated by management and the management function. Many problems in the people–organisation relationship arise not so much from what management does, but the manner in which it is done. Often, it is not so much the intent but the manner of implementation that is the root cause of staff unrest and dissatis- faction. For example, staff may agree on the need to introduce new technology to retain the competitive efficiency of the organisation, but feel resentment about the lack of pre-plan- ning, consultation, retraining programmes, participation in agreeing new working practices and wage rates, and similar considerations arising from the manner of its introduction. Therefore, a heavy responsibility is placed on managers and the activity of manage- ment – on the processes, systems and styles of management. Accordingly, how managers exercise the responsibility for, and duties of, management is important. Attention must be given to the work environment, and appropriate systems of motiva- tion, job satisfaction and rewards. It is important to remember that improvement in organisational performance will only come about through people.26 Providing the Management should, therefore, endeavour to create the right balance between the right balance interrelated elements which make up the total organisation, and to weld these into coherent patterns of activity best suited to the external environment in which the organisation is operating. Consideration must be given to developing an organisational climate in which people work willingly and effectively. People and organisations need each other. Attention should be focused, therefore, on improving the people–organisation relationship. Management is an integral part of this relationship. It should serve to reconcile the needs of people at work with the requirements of the organisation. Management is essentially an integrating activity which permeates every facet of the operations of the organisation. The style of man- agement adopted can be seen as a function of the manager’s attitudes towards people, and assumptions about human nature and behaviour (discussed in Chapter 7). The general movement towards flatter organisation structures, flexible working and greater employee involvement has placed increasing emphasis on an integrating rather than a hierarchical/controlling style of management. Management processes in the new millennium will be much more behavioural in nature, focus- ing on the key human resource-driven issues: learning, team-based visions, driving human resource processes, incentives to enhance growth, holistic budgeting, and proactive controls.27
- 63. CHAPTER 2 THENATURE OF ORGANISATIONAL BEHAVIOUR 37 THE PSYCHOLOGICAL CONTRACT One significant aspect of organisational behaviour and the relationship between the individual and the organisation is the concept of the psychological contract. This is not a written document, but implies a series of mutual expectations and satisfaction of needs arising from the people–organisation relationship. It involves a process of giving and receiving by the individual and by the organisation. The psychological contract covers a range of expectations of rights and privileges, duties and obligations, which do not form part of a formal agreement but still have an important influence on people’s behaviour.28 The nature and extent of individuals’ expectations vary widely as do the ability and willingness of the organisation to meet them. It is difficult to list the range of implicit expectations that individuals have and they change over time. These expectations are notwithstanding any statutory requirements placed upon the organisation; instead they relate more to the idea of a social responsibility of management, discussed in Chapter 5. The organisation will also have implicit expectations of its members. The organisational side of the psychological contract places emphasis on expectations, requirements and constraints that may differ from, and may conflict with, an individ- ual’s expectations. Some possible examples of the individual’s and the organisation’s expectations are given in Figure 2.5. Process of It is unlikely that all expectations of the individual or of the organisation will be met balancing fully. There is a continual process of balancing, and explicit and implicit bargaining. The nature of these expectations is not defined formally, and although the individual member and the organisation may not be aware consciously of them, they still affect relationships between them and have an influence on behaviour. The psychological contract is a useful concept in examining the socialisation of new members of staff to the organisation. According to Kotter, for example, early experiences have a major effect on an individual’s subsequent career in an organisation, and influence job satisfaction, attitude and level of productivity. The extent of the matches between indi- vidual and organisational expectations also influences the willingness of people to stay with the organisation and of the organisation to continue to employ them.29 Stalker suggests that successful companies are those that have the ability to balance the unwritten needs of their employees with the needs of the company. Such companies use a simple formula of Caring, Communicating, Listening, Knowing and Rewarding. ■ Caring – demonstrating genuine concern for individuals working in the organisation. ■ Communicating – really talking about what the company is hoping to achieve. ■ Listening – hearing not only the words but also what lies behind the words. ■ Knowing – the individuals who work for you, their families, personal wishes, desires and ambitions. ■ Rewarding – money is not always necessary; a genuine thankyou or public recogni- tion can raise morale.30 The significance of the psychological contract depends on the extent to which it is per- ceived as fair by both the individual and the organisation, and will be respected by both sides. Cartwright, for example, refers to mutuality as the basic principle of the psy- chological contract. A psychological contract is not only measured in monetary value or in the exchange of goods or services, it is in essence the exchange or sharing of beliefs and values, expectations and satisfac- tions. Mutuality is the basic principle of the psychological contract and consensus or mutual understanding is the basis of mutuality. Ideally therefore self-interest should be balanced with common interest in a ‘win–win’ arrangement.31
- 64. 38 PART 1 MANAGEMENT AND ORGANISATIONAL BEHAVIOUR INDIVIDUALS’ EXPECTATIONS OF THE ORGANISATION • provide safe and hygienic working conditions; • make every reasonable effort to provide job security; • attempt to provide challenging and satisfying jobs, and reduce alienating aspects of work; • adopt equitable human resource management policies and procedures; • respect the role of trade union officials and staff representives; • consult fully with staff and allow genuine participation in decisions which affect them; • implement best practice in equal opportunity policies and procedures; • reward all staff fairly according to their contribution and performance; • provide reasonable opportunities for personal development and career progression; • treat members of staff with respect; • demonstrate an understanding and considerate attitude towards personal problems of staff. ORGANISATIONAL EXPECTATIONS OF THE INDIVIDUAL • uphold the ideology of the organisation and the corporate image; • work diligently in pursuit of organisational objectives; • adhere to the rules, policies and procedures of the organisation; • respect the reasonable authority of senior members of staff; • not take advantage of goodwill shown by management; • be responsive to leadership influence; • demonstrate loyalty and not betray positions of trust; • maintain harmonious relationships with work colleagues; • not abuse organisational facilities such as email or Internet access; • observe reasonable and acceptable standards of dress and appearance; • show respect and consolidation to customers and suppliers. Figure 2.5 The psychological contract: possible examples of individual and organisational expectations The nature of the boss–subordinate relationship is clearly a central feature of the psy- chological contract. Emmott, for example, points out that good people-management practices are the basis for a positive psychological contract and this means managers having to deal with the ‘soft stuff’. Properly managed the psychological contract deliv- ers hard, bottom-line results and improved business performance. Managers at all levels can have an influence on employees’ perceptions of the psychological con- tract. It is, however, the relationship between individual employees and their line manager that is likely to have most influence in framing and managing employees’ expectations.32
- 65. CHAPTER 2 THENATURE OF ORGANISATIONAL BEHAVIOUR 39 CHANGING NATURE OF THE PSYCHOLOGICAL CONTRACT The changing nature of organisations has placed an increasing emphasis on the im- portance of effective human resource management, including the importance of the psychological contract within the employment relationship. For example, from a review of research, McBain maintains that human resource management plays a key role in ensuring the promotion of business success and managing change. This involves paying attention to the psychological contract and the establishment of expectations and obligations with all groups of employees within the organisation.33 The Institute of Administrative Management has introduced a new module on ‘The Individual and the Organisation in Context’ which has come about because of the need to keep abreast of changes affecting the individual at work. There is a need for managers to be aware of the new psychological contracts the individual mem- bers of their teams are bringing to work. Managers will have to consider alternative management styles to meet this new need and to use new skills to motivate and train their staff. People no longer come to work to be ‘told what to do’, but are aspiring to be part of the whole, with a real role as stakeholders in the success of ‘their’ organisation. Wise managers will harness this com- mitment for the benefit of everyone concerned.34 Hiltrop suggests that the increasing pressure for organisations to change has prompted growing disillusionment with the traditional psychological contract based on lifetime employment and steady promotion from within. Companies must develop new ways to increase the loyalty and commitment of employees. This includes attention to reward strategies based on recognition of contribution rather than status or position; systematic training and development including the skills for working in cross-functional teams; and the training of managers in counselling, coaching and leadership skills.35 Performance Stiles et al. also draw attention to how new competitive conditions and dynamic environ- management ments have brought performance management to centre stage as a major element in the changing nature of the psychological contract. From an examination of three large UK organisations, the authors explore ‘how performance management processes are being used to support moves from the traditional contract of job security and clear career paths, while attempting to maintain commitment and morale’. The authors conclude that there are two main areas of difficulty in changing the psychological contract so that it focuses on performance management. The presence of mixed messages from employers is undermining the employment relationship and changes are being driven in a top- down manner with a lack of consultation. There is also disenchantment and concern about the accuracy and fairness of performance management processes, with employees expressing scepticism towards managerial attempts to implement change.36 A new moral contract The changing nature of organisations and individuals at work has placed increasing pressures on the awareness and importance of new psychological contracts. Ghosal et al. suggest that in a changing social context the law of masters and servants that underlies the old psychological contract is no longer acceptable to many people. Forces of global competition and turbulent change make employment guarantees unfeasible and also enhance the need for levels of trust and teamwork. The new management phi- losophy needs to be grounded in a very different moral contract with people. Rather than seeing people as a corporate asset from which value can be appropriated, people are seen as a responsibility and a resource to be added to. The new moral contract also demands much from employees who need to abandon the stability of lifetime employ- ment and embrace the concept of continuous learning and personal development.37
- 66. 40 PART 1 MANAGEMENT AND ORGANISATIONAL BEHAVIOUR ORGANISATIONAL PRACTICES It is convenient, here, to consider two sets of observations on the nature of human behaviour and what may actually happen, in practice, in organisations: the Peter Principle, and Parkinson’s Law. Although these observations are presented in a satiri- cal manner, they nevertheless make a serious and significant point about the management and functioning of organisations, and the actual nature and practice of organisational behaviour. THE PETER PRINCIPLE This is concerned with the study of occupational incompetence and the study of hier- archies. The analysis of hundreds of cases of occupational incompetence led to the formulation of the ‘Peter Principle’, which is: In a hierarchy every employee tends to rise to their level of incompetence.38 Employees competent in their position are promoted and competence in each new posi- tion qualifies for promotion to the next highest position until a position of incompetence is reached. The principle is based on perceived incompetence at all levels of every hierar- chy – political, legal, educational and industrial – and ways in which employees move upwards through a hierarchy, and what happens to them after promotion. Among the many examples quoted by Peter are those from the teaching occupation. A is a competent and conforming college student who becomes a teacher following the textbook, curriculum guide and timetable schedule, and who works well except when there is no rule or precedent available. A never breaks a rule or disobeys an order but will not gain promotion because, although competent as a student, A has reached a level of incompetence as a classroom teacher. B, a competent student and inspiring teacher, although not good with paperwork, is promoted to head of the science department because of success as a teacher. The head of science is responsible for ordering all science supplies and keeping extensive records and B’s incompetence becomes evident. C, a competent student, teacher and head of department, is promoted to assistant principal, and being intellectually competent is further promoted to principal. C is now required to work directly with higher officials. By working so hard at running the school, however, C misses important meetings with superiors and has no energy to become involved with community organisations. C thus becomes regarded as an incompetent principal. Means of Peter suggests two main means by which a person can affect promotion rate, ‘Pull’ and promotion ‘Push’. ■ Pull is an employee’s relationship – by blood, marriage or acquaintance – with a person above the employee in the hierarchy. ■ Push is sometimes manifested by an abnormal interest in study, vocational training and self-improvement. In small hierarchies, Push may have a marginal effect in accelerating promotion; in larger hierarchies the effect is minimal. Pull is, therefore, likely to be more effective than Push. Never stand when you can sit; never walk when you can ride; never Push when you can Pull.39
- 67. CHAPTER 2 THENATURE OF ORGANISATIONAL BEHAVIOUR 41 PARKINSON’S LAW A major feature of Parkinson’s Law is that of the ‘Rising Pyramid’, that is, ‘Work expands so as to fill the time available for its completion.’40 General recognition of this is illus- trated in the proverb, ‘It is the busiest person who has time to spare.’ There is little, if any, relationship between the quantity of work to be done and the number of the staff doing it. Underlying this general tendency are two almost axiomatic statements: ■ An official wants to multiply subordinates, not rivals. ■ Officials make work for each other. Parkinson goes on to give the following example. If a civil servant, A, believes he is over- worked there are three possible remedies: (i) resignation; (ii) ask to halve the work by having it shared with a colleague, B; or (iii) seek the assistance of two subordinates, C and D. The first two options are unlikely. Resignation would involve loss of pension rights, and sharing work with a colleague on the same level would only bring in a rival for pro- motion. So A would prefer the appointment of two junior members of staff, C and D. This would increase A’s status. There must be at least two subordinates, so that by divid- ing work between C and D, A will be the only person to understand the work of them both. Furthermore, each subordinate is kept in order by fear of the other’s promotion. When, in turn, C complains of overwork, A, with the agreement of C, will advise the appointment of two assistants, E and F. However, as D’s position is much the same and to avoid internal friction, two assistants, G and H, will also be recommended to help D. There are now seven people, A, C, D, E, F, G, H, doing what one person did before, and the promotion of A is almost certain. People making With the seven people now employed, the second stage comes into operation. The work for each seven people make so much work for each other that they are all fully occupied and A other is actually working harder than ever. For example, an incoming document comes before each of them in turn. E decides it is F’s concern; F places a draft reply for C, who makes drastic amendments before consulting with D, who asks G to action it. But then G goes on leave and hands the file to H, who drafts a minute signed by D and returned to C, who revises the first draft and puts the new version before A. What does A do? A could find many excuses for signing C’s draft unread. However, being a conscientious person, and although beset with problems created by subordinates both for A and for themselves, A reads through the draft carefully, deletes the fussy paragraphs added by C and H, and restores it to the format presented in the first instance by F. Among other features of organisational practice that Parkinson discusses are: princi- ples of personnel selection; the nature of committees; personality screen; high finance – and the ‘Law of Triviality’, which means in a committee that the time spent on any agenda item will be in inverse proportion to the sum involved; layout of the organisa- tion’s administration block; and ‘injelitis’ – the disease of induced inferiority. Relevance of Despite the light vein of Parkinson’s writing, the relevance of his observations can be observations gauged from comments in the Introduction by HRH The Duke of Edinburgh. The most important point about this book for serious students of management and administra- tion is that it illustrates the gulf that exists between the rational/intellectual approach to human organization and the frequent irrational facts of human nature … The law should be compulsory reading at all business schools and for all management consultants. Management structures solve nothing if they do not take the facts of human nature into proper consideration, and one of the most important facts is that no one really likes having to make decisions. Consequently struc- tures may generate a lot of activity but little or no useful work.41
- 68. 42 PART 1 MANAGEMENT AND ORGANISATIONAL BEHAVIOUR I first read Parkinson’s Law when studying for Economics A-level. Many of the laws are just as relevant today as they were then. They include: how to ‘manage’ a meeting, and how time spent in meetings is inversely proportional to the importance of each issue – his example is a short discussion on a £10 million power plant followed by a lengthy debate over a £350 bi- cycle shed. Ever been there? … Parkinson’s most famous law is that ‘work expands to fill the time available – as we all make work for one another’. This is still true today. Iain Herbertson, Managing Director of Manpower42 THE NEED FOR A CROSS-CULTURAL APPROACH The international context of management and organisational behaviour One major challenge facing managers in the early 21st century arises from what many commentators have identified as an increasingly international or global business envi- ronment. The following factors are frequently cited as potential explanatory factors underlying this trend: ■ Improvements in international communication facilities leading to an increased consciousness of differences in workplace attitudes and behaviour in other societies. ■ International competitive pressure – for example, the emergence of newly industri- alised and/or free-market nations (the Far East region and ex-communist bloc countries are often viewed as examples of this phenomenon). ■ The spread of production methods and other business processes across nations and regions. ■ International business activity, for example: overseas franchising or licensing agree- ments; outsourcing of business units to other countries (call centres provide a topical example); direct foreign investment and the activities of multinational corporations which, by definition, operate outside national boundaries. It is not only businesses which choose to operate in more than one country or import foreign business and management techniques that are affected by cross-cultural concerns. Tayeb reported United States Department Photo: European Parliament of Labor statistics indicating that in the period from 1985 to 2000, only 15 per cent of new entrants to the workforce in the USA were white males.43 This highlights the importance of managing diversity The European Parliament building in Strasbourg, France in workforces within national boundaries. Lessons from abroad? One rationale for taking a cross-cultural approach to management lies in the potential benefits to be gained in performance terms. Schneider and Barsoux, in advocating cultural awareness of one’s own society, note that: each country has its unique institutional and cultural characteristics, which can provide sources of competitive advantage at one point, only to become liabilities when the environment changes. Managers therefore need to evaluate the extent to which national culture can interfere with their company’s efforts to respond to strategic requirements, now and in the future’.44
- 69. CHAPTER 2 THENATURE OF ORGANISATIONAL BEHAVIOUR 43 In addition to practically based benefits in considering our own ‘home’ culture, there has been a long tradition of looking to other cultures for examples of ‘successful’ prac- tice which could be transplanted into work organisations in different societies. Different models may be dominant at different times. Thompson and McHugh note that: ‘In the post-war period the giant US corporations transferred work organisation and managerial techniques across capitalist countries.’45 However, in subsequent eras Scandinavian autonomous work group arrangements and Japanese management tech- niques were examined by and, to some extent, implemented in, organisations across the world. Such a search for good practice in other countries is, of course, ongoing and an awareness of how other cultures organise work and manage people is likely to be of continuing benefit in the future. Managing people from different cultures Another advantage of adopting a cross-cultural approach to the study of organisational behaviour, and to the management of people more generally, lies in the recognition of variations in workplace attitudes and behaviour between individuals and groups in dif- ferent cultural contexts. Brooks notes that: ‘Differences in national culture may have a bearing on how organisations deal with each other and also on behaviour within organisations which comprise a mix of nationalities.’46 If we accept this fundamental point then it follows that key topics within the subject area of organisational behav- iour may be influenced by national culture and that we should therefore re-evaluate models and concepts when applying them to other societies. One leading writer in the field of cross-cultural studies, Trompenaars, commenting on his own work, suggests that: ‘it helped managers to structure their experiences and provided new insights for them and their organisations into the real source of prob- lems faced when managing across cultures or dealing with diversity’.47 In examining the centrally important topic of motivation, Francesco and Gold inform their readers that: ‘managers must develop organizational systems that are flexible enough to take into account the meaning of work and the relative value of rewards within the range of cultures where they operate.’48 A practical example of the impact of cultural diversity in the organisational behav- iour area is provided in the recollections of an International Human Resource Manager cited in Schneider and Barsoux: ‘Indonesians manage their culture by a group process, and everyone is linked together as a team. Distributing money differently among the team did not go over all that well; so we’ve come to the conclusion that pay for per- formance is not suitable for Indonesia.’49 It may be extremely useful therefore to examine academic frameworks and research findings within the field of organisational behaviour to indicate the extent to which they are applicable worldwide or, alterna- tively, subject to meaningful variation in different cultural contexts. IS ORGANISATIONAL BEHAVIOUR CULTURE-BOUND? While it can be valuable to apply organisational behaviour concepts to diverse cultural settings it should also be borne in mind that some universal theories and models may, in reality, contain important culturally-derived assumptions. When examining classical frameworks for understanding organisation structure Schneider and Barsoux point out that: ‘theories about how best to organise – Max Weber’s (German) bureaucracy, Henri Fayol’s (French) administrative model, and Frederick Taylor’s (American) scientific management – all reflect societal concerns of the times as well as the cultural back- ground of the individuals.’50 That writers on work organisations may themselves be influenced by their own cultural backgrounds when compiling their work is unsurpris- ing: however, it should equally not be ignored.
- 70. 44 PART 1 MANAGEMENT AND ORGANISATIONAL BEHAVIOUR More significant still is the possibility that whole topics within organisational behaviour, per se, may be underpinned by a particular culturally-derived frame of refer- ence. Francesco and Gold, addressing the issue of leadership, claim that: ‘one difficulty is that not all cultures have the term leader’.51 This raises the possibility that meanings we may assume to be taken for granted could be interpreted differently or not even perceived at all in different parts of the world. Culture as understanding ‘For our most basic common link is that we all inhabit this small planet, we all breathe the same air, we all cherish our children’s future, and we are all mortal’ (John. F. Kennedy, 10 June 1963). There are a number of very good reasons why we could usefully understand cultural difference (and similarity) at work, based on new awareness contributing to our own effectiveness and moreover to the accomplishment of organisational goals. It could also be true to say that an appreciation of culture and its effects may be of intrinsic value. There could therefore be advantages of cross-cultural awareness which include: ■ increased self-awareness; ■ sensitivity to difference; ■ questioning our own assumptions and knowledge; ■ lessening ignorance, prejudice and hatred. However, it would be wrong to think that increased cross-cultural awareness or activity will automatically bring about any of these outcomes. Adler listed the following inbuilt dangers when multi-cultural teams operate in a business setting. ■ Mistrust – including stereotyping. ■ Miscommunication with potential for reduced accuracy and resultant stress. ■ Process difficulties, that is failure to agree when agreement is needed or even what constitutes agreement when arriving at decisions. Adler goes on to examine research on the success of multi-cultural work teams and concludes that the evidence suggests that they either perform much better or much worse than teams composed of one cultural group.52 There are clearly risks as well as benefits in working across cultures. It is hoped that an appreciation of cross-cultural aspects of organisational behaviour can help in this regard. MODELS FOR UNDERSTANDING THE IMPACT OF CULTURE The study of Culture is a notoriously difficult concept to pin down. It is all too easy to assume that culture differences observed between societies may be attributed to culture per se, with little explanation of the reasons which may lie behind the differences, real or perceived. Robbins notes that: ‘Most people are unaware of just how their culture will affect them. Culture is like fish to water. It is there all the time but the fish are oblivious to it.’ 53 It is therefore necessary to be aware of one’s own culture in order to appreciate fully differ- ences between different groups. The Johari Window technique – see Chapter 14 – can be useful in identifying what may be known and not known regarding different cul- tures. Attempt to use this framework in respect of your own and one other culture to see its potential value. We should not assume that we are aware of all facets of our own culture or that others see us in a realistic and accurate way. Matched pair Some writers who have sought to conduct comparative research into workplace differ- comparisons ences have frequently used a matched pair method of comparison. This involves selecting organisations for study which are similar in size, product or service, technolo- gies employed and ownership pattern. It is claimed that any differences observed can
- 71. CHAPTER 2 THENATURE OF ORGANISATIONAL BEHAVIOUR 45 be isolated and subjected to further detailed analysis to ascertain whether they are culturally-derived. An example of this methodological tradition is the work of Maurice, Sorge and Warner which is considered in Chapter 16.54 The danger of In Chapter 11 of this book we identify the concept of ‘selective perception’, that is the pos- stereotyping sibility of drawing inferences and conclusions from partial information. One example of this phenomenon is stereotyping which involves making judgements on an individual as a result of their membership of a group, which, we assume, itself contains shared character- istics. We clearly need to avoid stereotyping when approaching the subject of cultural differences at work. Writers such as Hofstede and Trompenaars, while identifying clusters of countries which they suggest may share particular features, nonetheless allow for diver- gence from the norm by referring to central tendencies. To take one example, Hong Kong is characterised by Hofstede as a low uncertainty avoidance culture which suggests a propensity for risk-taking and a tolerance of rapid change. However, it is eminently possi- ble to conceive of an individual from Hong Kong who is ‘risk averse’ and conservative due to their own personality and upbringing.55 It is, finally, necessary to take a non-judgemen- tal approach when identifying cultural differences and academics in this area and crucially successful international managers tend to adopt an approach of ‘not better nor worse – just different’! Defining and conceptualising culture Culture is a multifaceted concept. Models purporting to explain this topic typically dis- tinguish between different layers or strata of culture. Trompenaars identifies three layers of culture; namely an outer, middle and core. Figure 2.6 depicts these layers as concentric circles. The outer circle identifies artifacts and products, the middle circle encompasses norms and values and the inner circle comprises basic assumptions held within the group.56 It may equally be useful to conceive of a three-layer model of culture comprising outer, middle and core layers. For our purposes an outer layer of culture refers to surface-level elements of culture which are quickly and easily understood on even a short visit to another country. Examples could include language, climate, dress and food and drink. The 1994 film Pulp Fiction provides an example in which a character in the film has recently returned to the USA after spending three years in Amsterdam. His description of the Netherlands is restricted to surface level anecdotes regarding fast Figure 2.6 A model of culture Source: Reproduced with permission from F. Trompenaars and C. Hampden-Turner, Riding the Waves of Culture, Second edition, Nicholas Brealey (1999), p. 22.
- 72. 46 PART 1 MANAGEMENT AND ORGANISATIONAL BEHAVIOUR food and the comparative legality and availability of soft drugs. The viewer is invited to mock his failure to understand the greater subtleties of Dutch culture. Aspects of this outer layer can nonetheless be important to a successful cultural exchange in business. Giving a work colleague in the Czech Republic red flowers as a gift may be taken as expression of romantic interest while wearing a green hat in China may signify that one’s partner is unfaithful! A middle layer of culture is the one which will be of most relevance for us as it con- cerns expressed values, attitudes and behaviours. In terms of organisational behaviour, if we accept the evidence that indicates significant differences between cultures, we might anticipate that findings in the following topics should be re-examined to see whether they apply in different societies: Leadership, Perception, Motivation, Work Groups, Organisation Structure, Human Resource Management and Management Control and Power. The contribution of writers such as Hofstede, Trompenaars, and Hall and Hall57 may also provide useful frameworks for understanding topics within organisational behav- iour from a cross-cultural standpoint. A core layer of culture relates to the deepest assumptions concerning people and nature held by a particular society. Such assumptions, which may be vestigial, often relate to the topography of a society or the level of threat posed by natural disasters. For example, it has been claimed that the Netherlands as a small country bounded by larger neighbours has developed a pragmatic flexible approach to business as a result of its location, bolstered by its historic struggle to keep the sea at bay. In the UK the rela- tively high degree of scepticism towards greater European integration may, in part, be explained by its island status. So-called group mentalities exhibited by some Asian countries could be traced back to patterns of agrarian production exhibited in previous times. Somewhat more arcane and, by definition, difficult to unravel, these core layer assumptions could conceivably manifest themselves in modern day cross-border busi- ness dealings. In Figure 2.7 Tayeb shows with examples how culture can take effect at a number of levels; from the global through to the personal. Readers may wish to consider how sig- nificant cultural differences may occur at the regional and/or community levels in their own experience. Nonetheless studies of culture most usually take the country or nation state as the focus of attention.58 Example: wishing to suceed in life Global layer Behaviours Example: avoiding loss of face in National layer Attitudes Japanese culture Example: Bengali culture in West Regional layer Beliefs Bengal, India Example: helping neighbours in a mining Community layer Values community in Wales, UK Taken for granted Example: caring for wildlife Personal layer assumptions Figure 2.7 Major cultural layers Source: Reproduced with permission from M. Tayeb, International Management: Theories and Practice, Financial Times Prentice Hall (2003), p. 14, with permission from Pearson Education Ltd.
- 73. CHAPTER 2 THENATURE OF ORGANISATIONAL BEHAVIOUR 47 Figure 2.8 Factors affecting national culture Source: Reproduced with permission from Ian Brooks, Organisational Behaviour: Individuals, Groups and Organisation, Second edition, Financial Times Prentice Hall (2003), p. 266, with permission from Pearson Education Ltd. Brooks is one of several commentators who draw our attention to the interlinked nature of culture. Figure 2.8 illustrates the interplay between relevant factors affecting any one national culture.59 You may wish to consider how these factors have com- bined to shape your own ‘home’ culture and that of one other country with which you are familiar. FIVE DIMENSIONS OF CULTURE: THE CONTRIBUTION OF HOFSTEDE Geert Hofstede is one of the most significant contributors to the body of knowledge on culture and workplace difference. His work has largely resulted from a large-scale research programme involving employees from the IBM corporation, initially in 40 countries. In focusing on one organisation Hofstede felt that the results could be more clearly linked to national cultural difference. Arguing that culture is, in a memorable phrase, collective programming or software of the mind, Hofstede initially identi- fied four dimensions of culture; power distance, uncertainty avoidance, individualism and masculinity.60 (See Table 2.1.) ■ Power distance is essentially used to categorise levels of inequality in organisations, which Hofstede claims will depend upon management style, willingness of subordi- nates to disagree with superiors, and the educational level and status accruing to particular roles. Countries which displayed a high level of power distance included France, Spain, Hong Kong and Iran. Countries as diverse as Germany, Italy, Australia and the USA were characterised as low power distance societies. Britain also emerged as a low power distance society according to Hofstede’s work. ■ Uncertainty avoidance refers to the extent to which members of a society feel threatened by unusual situations. High uncertainty avoidance is said to be character- istic in France, Spain, Germany and many of the Latin American societies. Low-to-medium uncertainty avoidance was displayed in the Netherlands, the Scandinavian countries and Ireland. In this case Britain is said to be ‘low-to- medium’ together with the USA, Canada and Australia. ■ Individualism describes the relatively individualistic or collectivist ethic evident in that particular society. Thus, the USA, France and Spain display high individualism. This contrasts with Portugal, Hong Kong, India and Greece which are low individ- ualism societies. Britain here is depicted as a high individualism society. ■ Masculinity is the final category suggested by Hofstede. This refers to a continuum between ‘masculine’ characteristics, such as assertiveness and competi-
- 74. 48 PART 1 MANAGEMENT AND ORGANISATIONAL BEHAVIOUR Table 2.1 Classification of cultures by dimensions I: More developed Latin II: Less developed Latin high power distance high power distance high uncertainty avoidance high uncertainty avoidance high individualism low individualism medium masculinity whole range on masculinity Belgium Colombia France Mexico Argentina Venezuela Brazil Chile Spain Peru Portugal Yugoslavia lll: More developed Asian lV: Less developed Asian V: Near Eastern medium power distance high power distance high power distance high uncertainty avoidance low uncertainty avoidance high uncertainty avoidance medium individualism low individualism low individualism high masculinity medium masculinity medium masculinity Japan Pakistan Greece Taiwan Iran Thailand Turkey Hong Kong India Philippines Singapore Vl: Germanic Vll: Anglo Vlll: Nordic low power distance low power distance low power distance high uncertainty avoidance low-to-medium uncertainty low-to-medium uncertainty avoidance avoidance medium individualism high individualism medium individualism high masculinity low masculinity low masculinity Austria Australia Denmark Israel Canada Finland Germany Britain The Netherlands Switzerland Ireland Norway South Africa New Zealand Sweden Italy USA (Reproduced with permission from ‘International Perspectives’, Unit 16, Block V, Wider Perspectives, Managing in Organizations, ©The Open University (1985) p. 60.) tiveness, and ‘feminine’ traits, such as caring, a stress upon the quality of life and concern with the environment. High masculinity societies included the USA, Italy, Germany and Japan. More feminine (low masculinity) societies included the Netherlands and the Scandinavian countries. In this case Britain was located within the high masculinity group. A fifth dimension of culture, long-term/short-term orientation, was originally labelled Confucian work dynamism. This dimension developed from the work of Bond in an attempt to locate Chinese cultural values as they impacted on the workplace.61
- 75. CHAPTER 2 THENATURE OF ORGANISATIONAL BEHAVIOUR 49 Countries which scored highly on Confucian work dynamism or long-term orientation exhibited a strong concern with time along a continuum and were therefore both past- and future-oriented, with a preoccupation with tradition but also a concern with the effect of actions and policies on future generations. Table 2.2 indicates the score of ten countries along this fifth dimension. Unsurprisingly China scores highest on the LT column followed by Japan. Note the significantly lower scores of the USA and Western European countries surveyed. Table 2.2 Cultural dimension scores for ten countries PD ID MA UA LT USA 40L 91H 62H 46L 29L Germany 35L 67H 66H 65M 31M Japan 54M 46M 95H 92H 80H France 68H 71H 43M 86H 30*L Netherlands 38L 80H 14L 53M 44M Hong Kong 68H 25L 57H 29L 96H Indonesia 78H 14L 46M 48L 25*L West Africa 77H 20L 46M 54M 16L Russia 95*H 50*M 40*L 90*H 10*L China 80*H 20*L 50*M 60*M 118H PD=Power Distance; ID=Individualism; MA=Masculinity; UA=Uncertainty Avoidance; LT=Long-Term Orientation. H=top third, M=medium third, L=bottom third (among 53 countries and regions for the first four dimensions; among 23 coun- tries for the fifth), *estimated Reprinted with permission from Hofstede, G., ‘Cultural Constraints in Management Theories’, Academy of Management Executive: The Thinking Manager’s Source, 7, 1993, p. 91. Evaluation of Hofstede’s work Extremely influential; the seminal work of Hofstede has been criticised from certain quarters. In common with other writers in this area there is a focus on the national rather than regional level. The variations within certain countries, for example Spain, can be more or less significant. Again in common with other contributors Hofstede’s classifications include medium categories which may be difficult to operationalise, accurate though they may be. Some may also find the masculinity/femininity dimen- sion unconvincing and itself stereotypical. Other writers have questioned whether Hofstede’s findings remain current. Holden summarises this view: ‘How many people have ever thought that many of Hofstede’s informants of three decades ago are now dead? Do their children and grandchildren really have the same values?’62 Ultimately, readers can assess the value of his work in the light of their own experiences and inter- pretations of the business world. Hofstede in his extensive research has attempted to locate the essence of work-related differences across the world and to relate these to preferred management styles. CULTURAL DIVERSITY: THE CONTRIBUTION OF TROMPENAARS Another significant contributor to this area of study is provided by Fons Trompenaars whose later work is co-authored with Charles Hampden-Turner.63 Trompenaars’s original research spanned 15 years, resulting in a database of 50,000 participants from 50 coun- tries. It was supported by cases and anecdotes from 900 cross-cultural training programmes. A questionnaire method comprised a significant part of the study which involved requiring participants to consider their underlying norms, values and
- 76. 50 PART 1 MANAGEMENT AND ORGANISATIONAL BEHAVIOUR attitudes.The resultant framework identifies seven areas in which cultural differences may affect aspects of organisational behaviour. ■ Relationships and rules. Here societies may be more or less universal, in which case there is relative rigidity in respect of rule-based behaviour, or particular, in which case the importance of relationships may lead to flexibility in the interpretation of situations. ■ Societies may be more oriented to the individual or collective. The collective may take different forms: the corporation in Japan, the family in Italy or the Catholic Church in the Republic of Ireland. There may be implications here for such matters as individual responsibility or payment systems. ■ It may also be true that societies differ to the extent it is thought appropriate for members to show emotion in public. Neutral societies favour the ‘stiff upper lip’ while overt displays of feeling are more likely in emotional societies. Trompenaars cites a survey in which 80 employees in each of various societies were asked whether they would think it wrong to express upset openly at work. The numbers who thought it wrong were 80 in Japan, 75 in Germany, 71 in the UK, 55 in Hong Kong, 40 in the USA and 29 in Italy. ■ In diffuse cultures, the whole person would be involved in a business relationship and it would take time to build such relationships. In a specific culture, such as the USA, the basic relationship would be limited to the contractual. This distinction clearly has implications for those seeking to develop new international links. ■ Achievement-based societies value recent success or an overall record of accom- plishment. In contrast, in societies relying more on ascription, status could be bestowed on you through such factors as age, gender or educational record. ■ Trompenaars suggests that societies view time in different ways which may in turn influence business activities. The American dream is the French nightmare. Americans generally start from zero and what matters is their present performance and their plan to ‘make it’ in the future. This is ‘nouveau riche’ for the French, who prefer the ‘ancien pauvre’; they have an enormous sense of the past. ■ Finally it is suggested that there are differences with regard to attitudes to the envi- ronment. In western societies, individuals are typically masters of their fate. In other parts of the world, however, the world is more powerful than individuals. Trompenaars’ work is based on lengthy academic and field research. It is potentially useful in linking the dimensions of culture to aspects of organisational behaviour which are of direct relevance, particularly to people approaching a new culture for the first time. The high- and low-context cultures framework This framework for understanding cultural difference has been formulated by Ed Hall; his work is in part co-authored with Mildred Reed Hall.64 Hall conceptualises culture as comprising a series of ‘languages’, in particular: ■ Language of time ■ Language of space ■ Language of things ■ Language of friendships ■ Language of agreements In this model of culture Hall suggests that these ‘languages’, which resemble shared attitudes to the issues in question, are communicated in very different ways according to whether a society is classified as ‘high’ or ‘low’ context. The features of ‘high’ context societies, which incorporate Asian, African and Latin American countries, includes:
- 77. CHAPTER 2 THENATURE OF ORGANISATIONAL BEHAVIOUR 51 ■ a high proportion of information is ‘uncoded’ and internalised by the individual; ■ indirect communication styles … words are less important; ■ shared group understandings; ■ importance attached to the past and tradition; ■ ‘diffuse’ culture stressing importance of trust and personal relationships in business. ‘Low’ context societies, which include the USA, Australia, Britain and the Scandinavian countries, exhibit contrasting features including: ■ a high proportion of communication is ‘coded’ and expressed; ■ direct communication styles … words are paramount; ■ past context less important; ■ ‘specific’ culture stressing importance of rules and contracts. Other countries, for example France, Spain, Greece and several Middle Eastern societies, are classified as ‘medium’ context. To take one example as an illustration: American managers visiting China may find that a business transaction in that country will take more time than at home. They may find that it is difficult to interpret the true feelings of their Chinese host and may need to decode non-verbal communication and other signals. They may seek to negoti- ate a rules-based contract whereas their Chinese counterpart may lay greater stress upon building a mutually beneficial reciprocal relationship. There is scope for potential miscommunication between the two cultures and interesting differences in interper- sonal perception. Inasmuch as much of the management literature canon originates from the Anglo-American context, there is again considerable merit in adopting a cross-cultural perspective. SUMMARY: CONVERGENCE OR CULTURE-SPECIFIC ORGANISATIONAL BEHAVIOUR There is evidence of a narrowing or even increasing elimination of cultural differences in business. Grint sees both positive and negative consequences of aspects of globalisation. While noting that: ‘at last we are approaching an era when what is common between people transcends that which is different; where we can choose our identity rather than have it thrust upon us by accident of birth’,65 the same author goes on to suggest that: ‘we are heading for global convergence where national, ethnic and local cultures and identities are swamped by the McDonaldization ... and/or Microsoftization of the world’.66 There is an undoubted narrowing of cultural differences in work organisations; and it may be the case that such narrowing may apply to individual and group behaviour at work. Thompson and McHugh note for example that: ‘Russia is now experiencing rampant individualism and uncertainty following the collapse of the old solidaristic norms’, thus implying convergence of work values.67 For the most part, however, it is argued here that growing similarity and harmonisa- tion relate more often to production, IT and quality systems which are more likely to converge due to best-practice comparisons and universal computer standards. Human Resource Management is, contrastingly, less likely to converge due to national institu- tional frameworks and culturally derived preferences. Recent significantly different responses to the need for greater workplace ‘flexibility’ in Britain and France illustrate this point. Above all, those aspects of organisational behaviour which focus on individ- ual differences, groups and managing people are the most clearly affected by culture and it is argued strongly here that it is and is likely to remain essential to take a cross- cultural approach to the subject.
- 78. 52 PART 1 MANAGEMENT AND ORGANISATIONAL BEHAVIOUR CRITICAL REFLECTIONS In your understanding of behaviour and managing people at work – as in life more generally – it is worth remembering the ‘Bag of Gold’ syndrome. However hard you try or whatever you do there will always be some people you just cannot seem to please. Give them a bag of gold and they will complain that the bag is the wrong colour, or it is too heavy to carry, or why could you not give them a cheque instead! What are your own views? What happens within organizations affects what happens outside and vice versa. Organizational behaviour is seen chiefly as being about the particular ways that individual’s dispositions are expressed in an organizational setting and about the effects of this expression. While at work there is rest and play. What happens in rest and play, both inside and outside the organization, impacts on organizational life. We can also gain insight into organizational behaviour by looking at less organized work, like work ‘on the fiddle’, and what work means to the unemployed. Wilson, F. M. Organizational Behaviour: A Critical Introduction, Oxford University Press (1999), pp. 1–2. How would you explain the meaning and nature of organisational behaviour, and how it is influenced? ’The study of organisational behaviour is really an art which pretends that it is a science and pro- duces some spurious research findings to try to prove the point.’ Debate. SYNOPSIS ■ Organisations play a major and continuing role in the lives of us all, especially with the growth of large-scale business organisations. The decisions and actions of manage- ment in organisations have an increasing impact on individuals, other organisations and the community. It is important, therefore, to understand how organisations func- tion and the pervasive influences they exercise over the behaviour of people. It is also necessary to understand interrelationships with other variables which together comprise the total organisation. ■ The behaviour of people in work organisations can be viewed in terms of multi- related dimensions relating to the individual, the group, the organisation and the envi- ronment. The study of organisational behaviour cannot be understood fully in terms of a single discipline. It is necessary to provide a behavioural science approach drawing on selected aspects of the three main disciplines of psychology, sociology and anthro- pology together with related disciplines and influences. ■ Organisations are complex social systems which can be defined and studied in a number of different ways. One approach is to view organisations in terms of contrast- ing metaphors. Gauging the effectiveness or success of an organisation is not an easy task, however, although one central element is the importance of achieving productiv- ity through the effective management of people. People differ in the manner and extent of their involvement with, and concern for, work. Different situations influence the individual’s orientation to work and work ethic. A major concern for people today is balancing work and personal commitments.
- 79. CHAPTER 2 THENATURE OF ORGANISATIONAL BEHAVIOUR 53 ■ It is through the process of management that efforts of members of the organisation are co-ordinated, directed and guided towards the achievement of organisational objec- tives. Management is the cornerstone of organisational effectiveness. It is essentially an integrating activity and concerned with arrangements for the carrying out of organisa- tional processes and the execution of work. How managers exercise the responsibility for, and duties of, management is important. Attention should be focused on improving the people–organisation relationship. ■ One particular aspect of the relationship between the individual and the organisa- tion is the concept of the psychological contract. This is not a formal, written document but implies a series of mutual expectations and satisfaction of needs arising from the people–organisation relationship. There is a continual process of explicit and implicit bargaining. The nature of expectations has an important influence on the employment relationship and behaviour in work organisations. The changing nature of organisations and individuals at work has placed increasing pressures on the aware- ness and importance of a different moral contract with people. ■ A major challenge facing managers today arises from an increasingly international or global business environment. This highlights the need for a cross-cultural approach to the study of organisational behaviour and the management of people. In an increas- ingly global context, managers need to recognise and understand the impact of national culture. However, culture is a multifaceted concept and notoriously difficult to pin down. But it has important repercussions for the effective management of people, and the study and understanding of workplace behaviour. REVIEW AND DISCUSSION QUESTIONS 1 Explain your understanding of (i) the nature of organisational behaviour and (ii) the meaning of behavioural science. 2 Suggest main headings under which interrelated factors can be identified which influence behaviour in work organisations. For each of your headings give examples from your own organisation. 3 Discuss how organisations may be viewed in terms of contrasting metaphors. Explain how you would apply these metaphors to an understanding of your own organisation. 4 Discuss the role of management as an integrating activity. Give your own views on the responsibility of management and the manner in which you believe this responsibility should be exercised. 5 Explain the nature of the people–organisation relationship. Why is it important to distinguish between the ‘intent’ and the ‘implementation’ of management decisions and actions? 6 Explain what is meant by the ‘psychological contract’. List (i) the personal expectations you have of your own organisation and (ii) what you believe to be the expectations of the organisation. Discuss with supporting examples the changing nature of psychological con- tracts between the organisation and its members. 7 Why is it increasingly important for managers to adopt an international approach? Discuss critically the likely longer-term impact of Britain’s membership of the European Union. 8 Debate fully the importance of national culture to the study of management and organisa- tional behaviour. Where possible, give your own actual examples
- 80. 54 PART 1 MANAGEMENT AND ORGANISATIONAL BEHAVIOUR ASSIGNMENT 1 A first step in understanding human behaviour and the successful management of other people is to know and understand yourself. For this simple exercise you are asked to select any one of the following shapes that you feel is ‘YOU’. After you have made your selection discuss in small groups the reasons which prompted you to choose that particular shape. How much agreement is there among members of your group? You should then consider and discuss the further information provided by your tutor. ASSIGNMENT 2 Provide for classroom discussion short descriptions (suitably disguised if necessary) to illus- trate the practical application of: 1 The Peter Principle, and 2 Parkinson’s Law. Include in your descriptions what you believe to be the relevance of each of these sets of observations, and the effects on other members of staff.
- 81. CHAPTER 2 THENATURE OF ORGANISATIONAL BEHAVIOUR 55 PERSONAL AWARENESS AND SKILLS EXERCISE OBJECTIVES Completing this exercise should help you to enhance the following skills: ᭤ Obtain a clearer picture of your own and other people’s work ethic. ᭤ Explore the importance of work to you and your fixed attitudes about work. ᭤ Recognise the significance of individuals’ orientations to work within an organisation. EXERCISE You are required to start by asking yourself this question: is it a good thing to be a worker? And then to think carefully about your responses to the following questions: How do you feel ... ■ when you hear the word ‘work’? ■ as you get ready for work? ■ when you know the day is over? ■ about the work you’ve accomplished? ■ about someone who chooses not to work? ■ about taking time off? ■ when you hear the word ‘management’? ■ about taking control of your career? Compare your responses with those of your colleagues. What conclusions do you draw about the work ethic? DISCUSSION ■ What do you see as the character traits of a person with a healthy work ethic? ■ To what extent do you agree with the contention that: ‘we are employed for our skills but valued for our attitude’? ■ What effect might different orientations to work have within an organisation and how might they all be accommodated? Visit our website www.booksites.net/mullins for further questions, annotated weblinks, case material and Internet research material.
- 82. 56 PART 1 MANAGEMENT AND ORGANISATIONAL BEHAVIOUR CASE STUDY 2.1 Eric and Kipsy: complexities of management and organisational behaviour CONSIDER THE PLIGHT OF ERIC the waiting clerks. The salesman would ask for informa- tion about the availability of a certain piece of Eric is a new manager of product information for a equipment. The clerk would then look up the stock national firm which wholesales electrical compo- number of that item in a large catalogue at her side and nents. He’s proud because he was assigned a ‘tough’ punch the number into a keyboard on the console. office right out of management training. He’s chal- Immediately, the computer would present full informa- lenged because he can see as clearly as everyone else tion about stocks and delivery times of that item on an in the office that the work is not getting done on electronic display panel on the console, and the clerk time – and that mistakes are far above the 2 per cent would relay the appropriate information to the sales- target. And he’s scared because he finds himself man. When the call ended, the green light would utterly incapable of figuring out what he ought to extinguish itself, and the clerk would then wait for the do to make things better. light to flash again, signalling the arrival of a new call. Eric’s first day Eric was fascinated by both the efficiency of the operation and the pleasantness of the surroundings. The office is a new, one-storey building in a wooded His biggest worry at that point was that everything suburban location – complete with carpeting on the was so efficiently designed that he, as manager, floor and Muzak in the walls. There are 35 female would not have anything to do with his time. employees, ranging from recent high school gradu- ates in their first job to experienced middle-aged Beware first impressions housewives. Their job is to provide salesmen in the He soon learned how wrong he was. When, on his field with current information about price, availabil- second day at the office, he began to attack a pile of ity and delivery times of an exceptionally large paperwork on his desk, he found messages from inventory of electrical equipment and supplies. nearly a dozen field salesmen, all wanting him to Eric spent his first day on the job – some three return their calls. Each of these salesmen, it turned months ago now – just watching and listening. While out, had a significant complaint about the product in management training, he had thought a lot about information service – and some were obviously quite how he would handle that first day. He knew that angry. Eric managed to maintain a calm, responsive everyone in the office would be as eager to find out stance in relation to the complaining salesmen, but what he was like as he was to learn about them and he also felt his stomach tightening as he heard what their jobs. And he wanted to make a good impression. they had to say. By the day’s end, he had made a list But Eric finally decided not to give a false impres- of three general problems which seemed both fre- sion. The fact was that he knew virtually nothing quent enough and serious enough to warrant his about the people he would be managing, or the kind immediate attention and action: of work they did. So why, he asked himself, act other- wise? Besides, if the people saw that he was genuinely 1 Salesmen often were unable to get through quickly interested in listening to them and learning from to information clerks. Since salesmen’s calls usu- them, perhaps that would help establish good mutual ally were made from customer offices, this meant rapport between him and his people. So he would just that they were left holding the telephone of a watch, and listen, and try to learn in his first few days client for up to 10 or 15 minutes waiting for a clerk on the job. – while both the salesman and the customer The first day was fun. Soon after arriving and being became increasingly impatient. introduced to the four first-level supervisors, he asked 2 Errors were excessive. Salesman after salesman to be ‘plugged in’ to one of the complicated-looking reported that, on the basis of information provided operating consoles at which the women received calls by the clerks, they would promise delivery of materi- from the field. A green light would blink on the con- als on a specific date at a specific price – only to hear sole, and the information clerk would be connected to later from an irate customer that the materials had the salesman in the field – all taken care of by an out- not been delivered, that the price was different from of-sight computer, which assigned calls sequentially to that quoted, or (all too often) both.
- 83. CHAPTER 2 THENATURE OF ORGANISATIONAL BEHAVIOUR 57 3 The clerks were often abrupt and unfriendly to room). This informal network was also popular for the salesmen when they called. According to creative co-ordination of ‘personals’ (i.e., short more than one salesman, the clerks acted as if breaks for visits to the toilet) and for making sure they were being imposed upon, rather than pro- that none of the clerks was violating the generally viding the salesmen with help in carrying out the accepted norms about how much work should be company’s business. carried out on a given day. The source of the problems Eric’s challenge In the following week, as Eric attempted to track Given his own observations and impressions, Eric down the reasons for these difficulties, other prob- was not surprised when, a few weeks after he had lems came to light. First, absenteeism and turnover taken over management of the office, he was visited were extremely high. It appeared that the excessive by the regional vice-president of the company. The delays were partly due to the fact that 15 to 20 per vice-president informed him that sales were falling cent of the clerks were unlikely to show up for work company-wide, and that at least part of the problem on any given day – especially Monday and Friday – had to do with the quality of the information with and that up to an hour’s tardiness was not uncom- which salesmen were being provided. Eric’s opera- mon. This created call ‘backups’ on the computer. tion was one of the most critical points of The computer, of course, calmly held the calls for as co-ordination in the entire company, he said, and it long as necessary, oblivious as only a machine can was important to everyone in the company that Eric be to the rise in tempers in the customer’s office. reduce both the error rate and the number of delays When absenteeism was particularly high on any salesmen currently were experiencing. The vice- given day, part-time employees were called to fill in. president said he had enormous confidence in Eric’s Many of these individuals were not entirely familiar managerial ability, that he was sure the problems with the job and often did not remember some of would be remedied quickly, and that he viewed the procedures to be used in looking up equipment Eric’s future in the company with great optimism. numbers in the catalogue – resulting in wrong cata- Eric panicked. logue numbers and erroneous information being given to the customers. Worse, even experienced Eric’s action plan clerks had a high error rate. Eric’s hope that the Within two days he had instituted a crash pro- error problem was in the computerised information gramme to increase efficiency, reduce call-in delays, displayed on the clerks’ consoles rather than a fault and slash the error rate. He held a half-day meeting of the clerks themselves was clearly misplaced. with his four first-level supervisors, impressing upon Reports of errors arrived weeks after the information them the urgency of the situation and the need for was provided (when orders failed to arrive on the them to work with their people, individually if nec- customer’s premises, or arrived with unexpected essary, to improve service. He held an evening prices), and so it was usually impossible to deter- meeting with all staff members (with everyone mine who had made the mistake or why. receiving both refreshments and overtime pay), at Finally, quite contrary to the impression he had which he announced a set of office-wide perform- received on his first day, Eric learned that loafing on ance goals, and encouraged each employee to do her the job not only was common practice among the best to help achieve the new goals. He even had one clerks, but had indeed been developed into a rather of the supervisors construct four large signs reading elegant art form. It turned out that the clerks had ‘Increase Efficiency’ (each with a line drawing of a devised ingenious ways to ‘busy out’ their consoles smiling face under the words), which were placed (i.e., to manipulate the console in order to provide on the four walls of the operating area. the computer with a ‘busy’ indication when in fact Beginning the day after the kick-off meeting, all the console was free). All a clerk needed to do, when supervisory personnel (himself included) were to she wanted a break from work, was to busy out her spend at least three hours a day on the floor, help- console and, if a supervisor happened to be nearby, ing the employees improve their efficiency, making act as if she were listening intently to a salesman on spot checks for errors, and generally doing anything her headset. possible to smooth the flow of work. Worse, there appeared to be a highly efficient The first two days under the new programme system of informal communication among the seemed to go reasonably well: the average waiting clerks, which alerted everyone when a supervisor time for incoming calls dropped slightly, spot was about to appear on the scene (or was monitor- checks of errors showed performance to be close to ing calls surreptitiously from the private listening an acceptable level, and everyone seemed to be
- 84. 58 PART 1 MANAGEMENT AND ORGANISATIONAL BEHAVIOUR Case study 2.1 continued working hard and intently. No longer, for example, office to let him introduce a flexible scheduling plan did the employees take time to look up from their that would allow the employees to better co- work and smile or exchange a few words when Eric ordinate their personal and work lives. He had been entered the room. That bothered him a bit because told that company policy dictated an 8.30 to 5.00 he always had enjoyed chatting with the clerks, but workday and that hours (just like all other person- he accepted the loss of the smiles as a small price to nel policies) were centrally controlled in the interest pay for the increases in efficiency he hoped for. of company-wide efficiency and regularity. Eric On the third day, disaster struck. Eric did not didn’t like the decision (he felt he needed to be notice until mid-morning that someone had care- given much more personal authority to be able to fully written ‘IN’ before ‘Efficiency’ on each of the run his own operation effectively). He did, however, four posters – and the smiles on the line drawings’ understand that there was some need for central co- faces had been extended into full-fledged, if subtly ordination of policy, and he thought that the sarcastic, grins. Worse, everyone seemed to be stu- employees should also be able to see the necessity diously ignoring both the posters and him. Even the for it. The hours, he decided, could not conceivably first-level supervisors said nothing to him about the be the root of all the difficulties. posters, although Eric noticed that the supervisors, He considered briefly the possibility that the like the clerks, collected in pairs and threes for ani- employees were simply not capable of doing the mated conversation when they were not aware of work at satisfactory levels of speed and accuracy. his presence. When he walked out into the operat- However, he knew that could not be the case: all ing area to start his three-hour stint, all eyes looked had passed a company-administered ability test away and stayed there. He had never felt so com- before they were hired and all had gone through a pletely alone. rigorous training programme which covered every That evening Eric stayed after everyone else had contingency a person conceivably could face as an left; he removed the posters and pondered what to information clerk. Besides, the job was not all that do next. With possibly one or two exceptions, he difficult; he personally suspected that even the was sure that the people who worked for him were requirement of a high school diploma was superflu- decent human beings. He knew that he himself was ous, that anybody who could read and write could only trying to do his job, to get performance back handle the job without significant difficulty. No, up to standard. As he had told the employees at the lack of ability was not the core of the problem. kick-off meeting, this was in the best interest of Indeed, as Eric reflected further, it seemed that the everybody: the customers, the salesmen, the clerks, reverse could be true: that perhaps the job was so himself. So why the hostility towards him and his simple and routine that the clerks were bored – and programme? therefore chose to be absent a lot and to loaf when- ever they could on the job. But surely the high pay The root causes? and the pleasantness of the work setting should more Gradually he began to suspect that the problems he than compensate for any such feelings of boredom? had confronted – high errors and delays, excessive Furthermore, holding errors below 2 per cent could absenteeism and turnover – were merely outcrop- provide a real challenge, and loafing on the job pings of some more basic difficulty. Perhaps, he would itself probably be more boring than working. thought, he had attacked the symptom rather than Supervision? It seemed most unlikely that this the disease. was the root of the difficulty. Each of the four super- But what was the disease? He considered each of visors had been information clerks themselves the possibilities. He knew that there was a lot of (although in the old days, when there was no com- complaining about the pay and the inflexibility of puter and you had to look everything up in a set of the hours. But the pay was actually very good, reference manuals), and they knew the job inside higher than for almost any other non-skilled job out. Moreover, he knew from talking with the super- available to females in the suburban area – and visors that they were genuinely committed to every year there was a pay increase for everyone, spending as much time as needed to help each clerk which almost always was greater than the increase do as good a job as possible. Eric had observed each in the cost of living. of them working on the floor many times, and there The hours were a problem, he knew, but even was no question in his mind about how much time those employees who complained the most knew and energy they spent in assisting and developing that he had tried mightily to convince the regional individual clerks.
- 85. CHAPTER 2 THENATURE OF ORGANISATIONAL BEHAVIOUR 59 Kipsy CONSIDER THE PLIGHT OF KIPSY Then what? Maybe, he finally concluded, the key Kipsy has been an information clerk in Eric’s office was Kipsy. Kipsy had been a thorn in his side (the for almost a year. In that year she has become supervisors agreed) ever since Eric started the job. increasingly frustrated and unhappy in her work – Although she herself had been working as a clerk for and she doesn’t know quite what to do about it. less than a year, she already had emerged as one of Things certainly have not worked out as she had the informal leaders of the workforce. Eric found expected them to. himself agreeing with one of his supervisors who had suggested over coffee one morning that Kipsy Early optimism ... alone created as many problems as a dozen other She had applied for the job because a friend told her clerks taken together. He was 99 per cent confident, that the company was a great place to work, that the for example, that it was she who had mutilated his pay was excellent, and that the people she would be signs. He had been recently hearing rumblings that working with were friendly and stimulating. Kipsy was informally talking up the possibility of Moreover, it was well known that the company was the clerks unionising, probably even affiliating with growing and expanding at a fast clip. That, Kipsy some national outfit that had no understanding of concluded, meant that there was a good chance for the local situation. advancement for anyone who showed some initiative He had tried to talk with her once. She had showed and performed well on the job. up unannounced at his office one day, with a long list Advancement was important. Throughout her of complaints about him and the work. His approach high school years, Kipsy had always been seen as a had been to listen and hear her out, to see what was leader by her classmates, and she had enjoyed that troubling her, and then to do something about it – for role much more than she had let on at the time. Her her own sake, as well as for her supervisor and the grades had been good – mostly As and Bs – and she company. Thinking back now, however, the main knew if she had pushed a bit harder she could have thing he remembered about the conversation (if you obtained almost all As. However, she had decided could call it a conversation) was her incredible anger. that participation in school activities, doing after- He was perplexed that he could not remember specifi- school volunteer work, and (importantly) having cally what it was that she had been so mad about. Eric friends and learning from them were just as impor- did recall telling her, as the conversation ended, that if tant as grades; so she had deliberately let the grades she worked hard and effectively on her job for a year slip a little. or two she would become eligible for enrolment in a The man who interviewed Kipsy for the job was company-run training course for a higher paying job. extremely nice – and what he said about the job But again, he could not recall whether or not that had interested her. confirmed her high hopes for it. He even took her In any case, it was clear that Kipsy was the link into the room filled with the complicated-looking pin in the informal network among the clerks – and consoles and let her watch some of the people at if they were turning against him and the company, work. It seemed like it would be great fun – though you could be pretty sure that she was right in the perhaps a little scary – working with all that com- middle of it. The question, though, was what to do puterised equipment. She didn’t know anything at about it. Fire her? In a very important sense, that all about computers. would be admitting defeat – and publicly. Talk to her When they returned to the hiring area from their again? That probably would result in nothing more visit to the console room, Kipsy’s employment tests than his getting another load of hostility dumped in had been scored. The interviewer told her that she his lap, and that he didn’t need. had scored in the top 10 per cent of all applicants Eric was in trouble, and he knew it. He realised it for the job, that all signs pointed to a great future first when he could not think of a good way to repair for her in the company, and that she could start the damage that his new motivational programme training the next day if she wanted. Kipsy accepted apparently had created. But he knew it for sure when the job on the spot. he found that he was no longer thinking about work Training for the job was just as exciting as she except when he was actually at his desk in the office had expected it to be. The console seemed awfully and had to do so. When he started this job he had complicated, and there was no end to the special expected to become totally immersed in it; indeed, requests and problems she had to learn how to deal he had wanted to be. But now he was psychologi- with. The other people working on the job were also cally fleeing from his job as much as the clerks very nice, and Kipsy soon had made many new seemed to be fleeing from theirs. friends.
- 86. 60 PART 1 MANAGEMENT AND ORGANISATIONAL BEHAVIOUR Case study 2.1 continued ... replaced by frustration and disappointment salesmen. She also found that girls having difficulties After a few weeks, however, the fun wore off. The on the job (again, usually the new workers) often kinds of difficult problems she had been trained to came to her rather than to the supervisors for help – solve on the console seemed never to occur. Instead, which she gladly gave, despite the obvious disap- the calls began to fall into what Kipsy experienced as proval of the supervisors. She even found herself an endless routine: the green light flashes, the sales- assuming the role of monitor for the group, prodding man gives the name of a piece of equipment, you look girls who were not doing their share of the work, and it up in the book and punch the number on the key- showing new girls who were working too hard the board, you recite the information displayed by the various tricks that could be done to keep the pace of computer back to the salesman, and the green light work at a reasonable level (such as ‘busying out’ the goes off. Then you wait – maybe only a second, maybe machine, when you just couldn’t take any more and five minutes – for the light to go on again. You never needed a break). know how long you are going to wait, so you can That was all fun, but as she reflected on it, it just never think or read or even carry on an uninterrupted didn’t compensate for the basic monotony of the work or for the picky, almost schoolmarmish atti- conversation with the girl next to you. It was, Kipsy tude of the supervisors. So she was buoyed up when decided, pretty awful. she heard that a new manager was coming, fresh Worse, many of her new friends were quitting. out of school. The rumour mill had it that he was The rumour was that nearly 80 per cent of the one of the top young managers in the company, people on the job quit every year, and Kipsy was and she decided he surely would shake things up a beginning to understand why. Neither she nor any bit as soon as he found out how miserable it was for of her friends knew of anybody who had been pro- people who worked in the office. moted to management or to a better job from the ranks of the console operators, at least not in the The new boss last couple of years. Kipsy was also smart enough to Eric’s first few days on the job confirmed her high realise that in time the whole operation would be hopes for him: he seemed genuinely interested in automated – with salesmen punching in their learning about the job and in hearing what changes requests for information directly from the field – at people had to suggest. And he talked directly to the which time, she surmised, she and everyone else people doing the work, rather than keeping safely who had stuck out the job in hopes of something out of sight and listening only to what the school- better would be laid off. marms said people thought and felt. All to the good. The only good thing about the job, she con- Her opinion about Eric’s managerial abilities cluded, was that she was becoming the informal dropped sharply a few weeks later, however, by what leader of the work group – and that had its came to be known around the office as the ‘flexible moments. Like the time one of the girls had her hours fiasco’. Kipsy and two other girls had come up planned vacation postponed at short notice, suppos- with a proposal for pre-scheduling work hours so edly because absenteeism was so high that everyone that there would be substantially more flexibility in had to be available for work merely to keep up with the hours each person would work. The plan was the flow of incoming calls. The girl (and two of her designed so that management would know at least friends) had come to Kipsy and asked what she could two days ahead of time who would be coming in do about it. Kipsy had marched straightaway into when. The only cost to the company would be some the manager’s office with the girl, asked for an expla- additional clerical time spent on actually doing the nation, and got him to agree to let her take the scheduling, and Kipsy had obtained agreement from vacation as planned. That felt awfully good. almost everyone in the office to share in the clerical But such moments were too infrequent to keep her tasks, in their own time. interested and involved – so she found herself Eric had seemed receptive to the plan when Kipsy making up interesting things to do, just to keep from first presented it to him, and said only that he going crazy. She developed a humorous list, Rules for would have to check it out with his superiors before Handling Salesmen, which she surreptitiously passed instituting it. Nothing more was heard about the around the office, partly in fun but also partly to help plan for about two weeks. Finally Eric called Kipsy the new girls (there always were a lot of new girls) into his office and (after a good deal of talking learn the tricks necessary to keep from getting put around the issue) reported that ‘the people upstairs down by the always impatient, sometimes crude won’t let us do it’.
- 87. CHAPTER 2 THENATURE OF ORGANISATIONAL BEHAVIOUR 61 Kipsy’s respect for Eric plummeted. Rather than the job was a backache every evening. She told him give a flat no, he had wriggled around for two she had been misled about the chances for promo- weeks, and then lamely blamed the decision on ‘the tion on the job, and she asked him, as politely as people upstairs’. She knew very well that the man- she knew how, what he suggested she should do. ager of an office could run his office however he Eric’s response blew her mind. There was a new pleased, so long as the work got done. And here was programme, he said, in which people who did well Eric, the bright new manager on the way up: on entry-level jobs for a few years could apply for advanced training in a technical specialty. This ■ He wouldn’t go along with an employee-initiated training would be done at company expense and in proposal for making their life at work more bear- company time, and would qualify her for a promo- able. tional-type transfer, whenever openings in her ■ He refused to take personal responsibility for that chosen specialty developed. If she worked hard and decision. was rated high on the quarterly supervisory assess- ■ He even had the gall to ask Kipsy to help ‘explain ments, Eric said, he would be prepared to nominate to the girls’ how hard he had tried to get the plan her for the advanced training. It was important, approved, and how sad he was that it had been however, he emphasised, that she behave herself – turned down. no unnecessary absences, high work productivity, Kipsy’s response was a forced smile, an elaborately good ratings by her supervisors. Otherwise, she cer- sympathetic ‘Of course I’ll help’, and a quick escape tainly would not be selected by ‘the people upstairs’ from his office. for the new programme. Something snapped. What kind of a fool did he Kipsy’s demands think she was? How long did he expect her to wait for She took the Monday of the next week off, to think a ‘chance to be nominated’ for some foggy ‘technical about whether or not she should quit and try to training programme’? She started telling him, no find a better job. At the end of the day, she made up holds barred now, no false politeness, exactly what she a list of what she wanted from her work, what she thought of the job, of the supervisors, even of the way was getting, and whether or not things would he was running the office. The more she talked, the improve if she stuck with the job: madder she got – until finally she got up, almost in tears, and ran out leaving behind only the reverbera- tions of a well-slammed door. My wants Am I getting Hope for them? improvement Kipsy’s dilemma 1 Good pay OK, not great Little, till my hair She was ashamed later, of course. She knew she turns grey would be, and she was, but she also was too embar- 2 Interesting Fine No change, rassed to go up to Eric and apologise. Which was too people except friends bad, because she suspected that behind it all Eric keep leaving was probably a decent man, and maybe even some- body she could learn to like and respect – if only he 3 Interesting work Dismal Zero would let himself be human once in a while. 4 Chance to show None No hope However, she knew there was nothing she could do initiative and to change the way Eric did his job; the first move personal clearly had to be his. It could be a long wait, Kipsy responsibility decided. In the meantime she would come to work, try to minimise her backaches and upsets, and con- 5 Chance to Low Ha! tinue to think about finding another job. Of one contribute to thing she was sure: no more ‘bright ideas’ for an organisation improving things at the office would come from I believe in her; they brought nothing but grief. Furthermore, she was no longer going to worry so much if she The next day, Tuesday, she took her list and went happened to misremember a catalogue number or to see Eric. After listening to a fatherly lecture on accidentally disconnect a salesman. If all they the importance of not missing work, especially on wanted was a machine, that was all they were going Mondays when the workload was heaviest, she to get. began to tell him how upset she was. She told him Kipsy found herself much less able to be cavalier that the only thing she got from working hard on about her work than she had thought she could be.
- 88. 62 PART 1 MANAGEMENT AND ORGANISATIONAL BEHAVIOUR Case study 2.1 continued As hard as she tried not to care when she made though virtually everyone in the office shared her errors, the distressing fact was that mistakes still did dismay about the monotony of the work and was as bother her. And she still felt like an unreconstituted upset as she about Eric and his ‘Increase Efficiency’ sinner when she was a few minutes late for work. programme, nobody was very excited about forming a It took the ‘Increase Efficiency’ programme to club. Some thought it wouldn’t have any impact and finally break her completely. It was not to be would be a waste of time; others thought it sounded believed: an evening meeting, complete with sup- like the first step towards unionisation, which they posedly inspirational messages from all the bosses didn’t want. So the club idea died. about how we all had to pitch in and help the com- Kipsy was depressed. What should she do? Quit? pany make more money; grade school posters on all Her preliminary explorations had not yet turned up the walls imploring people to work harder; and, to any jobs which were much better – and most paid top it all, all the bosses, even Eric, standing around less than this one. Besides, to quit would be to admit for hours at a time, looking over everybody’s shoul- publicly her inability to change anything in the ders, day after day. office. She was supposed to be the leader of the girls Did Eric really believe that treating people like in the office; she shouldn’t become just one more children would make them work harder? She could tally towards the 80 per cent a year who left. have told him straight out beforehand that the pro- Talk to Eric again? She seriously doubted that he gramme would make things worse rather than would listen to one word she said. And she doubted better. But of course he didn’t ask. equally seriously that she could keep herself from Kipsy went on the offensive. She knew it was blowing up again at him – which would accomplish wrong, but she also knew she had to do something to nothing and help no one. preserve her sanity. Her first target was the signs; she Shut up and stick it out? That was what she had and another girl stayed late in the rest room and, been trying for the last three months. Without when everybody else had left, carefully changed the noticeable success. lettering of the signs to read ‘Increase INEfficiency’, What, then? and turned the smiling face on each sign into an obviously sarcastic grin. Kipsy also began discussing YOUR TASKS with the other girls the possibility of forming a club, which would be partly social but which could possi- (a) Analyse the issues of management and organisa- bly develop into a vehicle for doing some tional behaviour which are raised in this case study. hard-nosed bargaining with Eric. (b) Suggest solutions to the problems faced by Eric It didn’t work. Changing the signs, after the initial and Kipsy. thrill, only made her feel more guilty. And even NOTES AND REFERENCES 1. A summary of some merits in understanding organisa- for example: Porter, L. W., Lawler, E. E. and Hackman, J. tional behaviour theory and the role of management R. Behaviour in Organisations, McGraw-Hill (1975). is given in Mullins, L. J. ‘The Organisation and the 6. Wilson, F. M. Organzational Behaviour: A Critical Individual’, Administrator, vol. 7, no. 4, April 1987, Introduction, Oxford University Press (1999). pp. 11–14. 7. McPhee, N. ‘Gaining Insight on Business and 2. ’Introduction to Module 6, Organizational Behaviour’, Organisational Behaviour: the Qualitative Dimension’, Financial Times Mastering Management, FT Pitman International Journal of Market Research, vol. 44, Winter Publishing (1997), p. 216. 2002, pp. 53–72. 3. See, for example: Luthans, F. Organisational Behaviour, Seventh edition, McGraw-Hill (1995). 8. Yip, G. S. ‘Global strategy in the Twenty-first Century’, 4. See, for example: Robbins, S. P. Organizational Behavior: in Crainer, S. and Dearlove, D. (eds) Financial Times Concepts, Controversies, Applications, Eighth edition, Handbook of Management, Second edition, Financial Prentice-Hall (1998). Times Prentice Hall (2001), p. 151. 5. For further details of recurring themes in organisational 9. Morgan, G. Creative Organization Theory, Sage Publications behaviour and premises about life in organisations see, (1989), p. 26.
- 89. CHAPTER 2 THENATURE OF ORGANISATIONAL BEHAVIOUR 63 10. Hellriegel, D., Slocum, J. W. and Woodman, R. W. 34. Stalker, K. ‘The Individual and the Organisation’, Student Organizational Behavior, Eighth edition, South-Western Adviser Issue No. 51, The Institute of Administrative Publishing (1998), p. 5. Management, Spring 2003. 11. Wood, J. ‘Deep Roots and Far From a “Soft” Option’, 35. Hiltrop, J. M. ‘Managing the Changing Psychological Financial Times Mastering Management, FT Pitman Contract’, Employee Relations, vol. 18, no. 1, 1996, Publishing (1997), p. 217. pp. 36–49. 12. Bennis, W. ‘Foreword’, in Cloke, K. and Goldsmith, J. 36. Stiles, P., Gratton, L., Truss, C., Hope-Hailey, V. and The End of Management and the Rise of Organizational McGovern, P. ‘Performance Management and the Democracy, Jossey-Bass (2002), p. ix. Psychological Contract’, Human Resource Management 13. Gratton, L. Living Strategy: Putting People at the Heart of Journal, vol. 7, no. 1, 1997, pp. 57–66. Corporate Purpose, Financial Times Prentice Hall (2000), 37. Ghoshal, S., Bartlett, C. A. and Moran, P. ‘Value Creation: pp. 12–13. The New Millennium Management Manifesto’, in 14. Morgan, G. Images of Organization, Second edition, Sage Chowdhury, S. Management 21C, Financial Times Prentice Publications (1997). Hall (2000), pp. 121–40. 15. Drummond, H. Introduction to Organizational Behaviour, 38. Peter, L. J. and Hull, R. The Peter Principle, Pan Books Oxford University Press (2000). (1970), p. 22. 16. Goldthorpe, J. H., Lockwood, D., Bechofer, F. and Platt, J. 39. Ibid., p. 56. The Affluent Worker, Cambridge University Press (1968). 40. Parkinson, C. N. Parkinson’s Law, Penguin Modern 17. Herman, S.W. ‘How Work Gains Meaning in Classics (2002), p. 14 Contractual Time: a narrative model for reconstructing 41. HRH The Duke of Edinburgh, ‘Introduction’ to Parkinson, the work ethic’, Journal of Business Ethics, vol. 38, C. N. Parkinson’s Law, Penguin Modern Classics (2002), no. 1–2, June 2002, pp. 65–79. pp. 9–10. 18. Knights, D. and Willmott, H. Management Lives: Power 42. Herbertson, I. ‘Books’, Management Today, May 2000, p. 4. and Identity in Work Organizations, Sage Publications 43. Tayeb, M. The Management of a Multicultural Workforce, (1999). John Wiley & Sons (1996). 19. Reeves, R. ‘Reality Bites’, Management Today, March 44. Schneider, S. C. and Barsoux, J. Managing Across 2003, p. 35. Cultures, Second edition, Financial Times Prentice Hall 20. Cartwright, J. Cultural Transformation, Financial Times (2003), p. 9. Prentice Hall (1999), p. 27. 45. Thompson, P. and McHugh, D. Work Organisations: A 21. Oliver, J. ‘Losing Control’, Management Today, June Critical Introduction, Third edition, Palgrave (2002), p. 81. 1998, pp. 32–8. 46. Brooks, I. Organisational Behaviour: Individuals Groups 22. See, for example, Argyris, C. Integrating the Individual and Organisation, Second edition, Financial Times and the Organization, John Wiley & Sons (1964). Prentice Hall (2003), p. 264. 23. ’In Celebration of the Feel-good Factor’, Professional 47. Trompenaars, F. ‘Trans-Cultural Competence’, People Manager, March 1998, p. 6. Management, 22 April 1999, p. 31. 24. Bassett, G. ‘The Case against Job Satisfaction’, Business 48. Francesco, A. M. and Gold, B. A. International Horizons, vol. 37, no. 3, May–June 1994, p. 62 and p. 63. Organizational Behavior: Text, Readings, Cases and Skills, 25. Egan, G. ‘The Shadow Side’, Management Today, Prentice Hall (1998), p. 103. September 1993, pp. 33–8. 49. Schneider, S. C. and Barsoux, J. Managing Across 26. See, for example, Robinson, G. ‘Improving performance Cultures, Second edition, Financial Times Prentice Hall through people’, The British Journal of Administrative (2003) p. 167. Management, September/October 1999, pp. 4–5. 50. Ibid., p. 86. 27. Chowdhury, S. Management 21C, Financial Times 51. Francesco, A. M. and Gold, B A. International Prentice Hall (2000), p. 119. Organizational Behavior: Text, Readings, Cases and Skills, 28. See, for example: Schein, E. H. Organizational Psychology, Prentice Hall (1998), p. 144. Third edition, Prentice-Hall (1988). 52. Adler, N. J. International Dimensions of Organisational 29. Kotter, J. P. ‘The Psychological Contract: Managing Behaviour, Third edition, South Western College the Joining-Up Process’, California Management Review, Publishing (1997). vol. 15, no. 3, 1973, pp. 91–9. 53. Robbins, S. Essentials of Organizational Behaviour, Third 30. Stalker, K. ‘The Individual, the Organisation and the edition, Prentice Hall (1992), p. 14. Psychological Contract’, The Institute of Administrative 54. Maurice, M., Sorge, A. and Warner, M. ‘Societal Management, July/August 2000, pp. 28, 34. Differences in Organising Manufacturing Units’, 31. Cartwright, J. Cultural Transformation, Financial Times Organisation Studies (1980), vol. 1, no. 1, pp. 63–91. Prentice Hall (1999), p. 39. 55. Hofstede, G. Culture’s Consequences: International 32. Emmott, M. ‘The Psychological Contract: Managers Differences in Work-related Values, Sage Publications (1980). Do Make a Difference’, Manager, The British Journal 56. Trompenaars, F. and Hampden-Turner, C. Riding the Waves of Administrative Management, September/October of Culture, Second edition, Nicholas Brealey (1999) 2001, p. 15. 57. Hall, E. T. and Hall, M. R. ‘Key Concept: Underlying 33. McBain, R. ‘The Role of Human Resource Management Structures of Culture’, in Lane, H. W., Di Stefano, J. J., and the Psychological Contract’, Manager Update, vol. and Masnevski, M. L. International Management Behavior, 8, no. 4, Summer 1997, pp. 22–31. Third edition, Cambridge, MA: Blackwell, (1997).
- 90. 64 PART 1 MANAGEMENT AND ORGANISATIONAL BEHAVIOUR 58. Tayeb, M. International Management: Theories and 62. Holden, N. J. Cross-Cultural Management: A Knowledge Practices, Financial Times Prentice Hall (2003). Management Perspective, Financial Times Prentice Hall 59. Brooks, I. Organisational Behaviour: Individuals, Groups (2002), p. 51. and Organisation, Second edition, Financial Times 63. Trompenaars, F. and Hampden-Turner, C. Riding the Prentice Hall (2003). Waves of Culture, Second edition, Nicholas Brealey 60. Hofstede, G. Culture’s Consequences: International (1999). 64. Hall, E. T. and Hall, M. R. Understanding Cultural Differences in Work-related Values, Sage Publications Differences, Intercultural Press (1990). (1980). 65. Grint, K. The Sociology of Work, Second edition, Polity 61. Hofstede, G. and Bond, M. H. ‘The Confucius (1998), p. 298. Connection: From Cultural Roots to Economic 66. Ibid., p. 298. Growth’ Organisational Dynamics, Spring 1988, 67. Thompson, P. and McHugh, D. Work Organisations: A pp. 4–21. Critical Introduction , Third edition, Palgrave (2002), p. 74. Use the Financial Times to enhance your understanding of the context and practice of management and FT organisational behaviour. Refer to articles 1, 10, 12 and 19 in the BUSINESS PRESS section at the end of the book for relevant reports on the issues explored in this chapter.
- 91. 3 APPROACHES TO ORGANISATION AND MANAGEMENT Management is a discursive subject and much has been written about it. The study of organisations and management theory has, therefore, to proceed on a broad front. It is the comparative study of the different approaches which will yield benefits to the manager. The study of organisations, their structure and management is important for the manager. Identification of major trends in organisational behaviour, and the work of leading writers, provide a perspective on concepts and ideas discussed in more detail in other chapters.1 LEARNING OUTCOMES After completing this chapter you should be able to: Photo: Larry Mulvehill/Science Photo Library ᭤ explain the relationships between management theory and practice; Although there might be general agreement from ᭤ identify major trends in the development of organisa- tional behaviour and management thinking; time to time on what constitutes best management ᭤ contrast main features of different approaches to practice, the theoretical ingredients will tend to organisation and management; vary. Management theories are therefore ᭤ evaluate the relevance of these different approaches contestable rather than definitive and, although to the present-day management of organisations; there is a sense of progressive, evolutionary ᭤ assess the value of the study of management theory and refinement, there is no master narrative to reassure different approaches to organisation and management; us that the latest theory is necessarily the best. ᭤ recognise the relationship between the development John Sheldrake of theory, behaviour in organisations and management Management Theory: From Taylorism to Japanization, International Thompson practice; Business Press (1996) ᭤ establish a basis for consideration of aspects of man- agement and organisational behaviour discussed in following chapters.
- 92. 66 PART 1 MANAGEMENT AND ORGANISATIONAL BEHAVIOUR MANAGEMENT THEORY Writing on organisation and management, in some form or another, can be traced back thousands of years.2 However, the systematic development of management think- ing is viewed, generally, as dating from the end of the nineteenth century with the emergence of large industrial organisations, and the ensuing problems associated with their structure and management.3,4 A central part of the study of organisation and management is the development of management thinking and what might be termed management theory. The applica- tion of theory brings about change in actual behaviour. Managers reading the work of leading writers on the subject might see in their ideas and conclusions a message about how they should behave. This will influence their attitudes towards management prac- tice. As McGregor puts it: Every managerial act rests on assumptions, generalizations, and hypotheses – that is to say, on theory. Our assumptions are frequently implicit, sometimes quite unconscious, often conflicting; nevertheless, they determine our predictions that if we do a, b will occur. Theory and practice are inseparable.5 Importance of The study of management theory is important, therefore, for the following reasons: management ■ What leading writers say is an important part of the study of management. theory ■ It is necessary to view the interrelationships between the development of theory, behaviour in organisations and management practice. ■ An understanding of the development of management thinking helps in under- standing principles underlying the process of management. ■ Knowledge of the history helps in understanding the nature of management and organisational behaviour, and reasons for the attention given to main topic areas. ■ Many of the earlier ideas are of continuing importance to the manager and later ideas on management tend to incorporate earlier ideas and conclusions. There is much truth in the saying that every living practitioner is prisoner to the ideas of a dead theorist. Immunized by their daily confrontation with the ‘real world’ corporate managers typi- cally exhibit a healthy distrust of theory that has, in general, served them well.6 DEVELOPMENTS IN MANAGEMENT AND ORGANISATIONAL BEHAVIOUR It is helpful, therefore, to trace major developments in management and organisational behaviour, and what has led to the concentration of attention on such topics as struc- ture, motivation, groups, leadership and organisation development. Miner makes the point that the more that is known about organisations and their methods of operation, the better the chances of dealing effectively with them. Understanding may be more advanced than prediction, but both provide the oppor- tunity to influence or to manage the future. Theory provides a sound basis for action.7 However, if action is to be effective, the theory must be adequate and appropriate to the task and to improved organisational performance. It must be a ‘good’ theory. In order to help identify main trends in the development of organisational behav- iour and management theory, it is usual to categorise the work of writers into various ‘approaches’, based on their views of organisations, their structure and management. Although a rather simplistic process it does provide a framework in which to help direct study and focus attention on the progression of ideas concerned with improving organisational performance.
- 93. CHAPTER 3 APPROACHES TO ORGANISATION AND MANAGEMENT 67 Figure 3.1 Main approaches to organisation, structure and management A framework of There are, however, many ways of categorising these various approaches. For example, analysis Skipton attempts a classification of 11 main schools of management theory.8 Whatever form of categorisation is adopted, it is possible to identify a number of other approaches, or at least sub-divisions of approaches, and cross-grouping among the vari- ous approaches. The choice of a particular categorisation is therefore largely at the discretion of the observer. The following analysis will revolve around a framework based on four main approaches: ■ classical – including scientific management and bureaucracy ■ human relations – including neo-human relations ■ systems ■ contingency (see Figure 3.1). However, attention is also drawn to other ‘approaches’ or ideas, including: ■ decision-making ■ social action ■ postmodernism (see Figure 3.3, p. 88). THE CLASSICAL APPROACH The classical writers thought of the organisation in terms of its purpose and formal structure. They placed emphasis on the planning of work, the technical requirements of the organisation, principles of management, and the assumption of rational and logical behaviour. The analysis of organisation in this manner is associated with work carried out initially in the early part of the last century, by such writers as Taylor, Fayol, Urwick, Mooney and Reiley, and Brech. Such writers were laying the foundation for a comprehensive theory of management. A clear understanding of the purpose of an organisation is seen as essential to under- standing how the organisation works and how its methods of working can be improved. Identification of general objectives would lead to the clarification of pur- poses and responsibilities at all levels of the organisation, and to the most effective structure. Attention is given to the division of work, the clear definition of duties and responsibilities, and maintaining specialisation and co-ordination. Emphasis is on a hierarchy of management and formal organisational relationships.
- 94. 68 PART 1 MANAGEMENT AND ORGANISATIONAL BEHAVIOUR Sets of The classical writers (also variously known as the formal or scientific management writ- principles ers – although scientific management is really only a part of the classical approach) were concerned with improving the organisation structure as a means of increasing efficiency. They emphasised the importance of principles for the design of a logical structure of organisation. Their writings were in a normative style and they saw these principles as a set of ‘rules’ offering general solutions to common problems of organisa- tion and management. Most classical writers had their own set of principles but among the most publicised are those of Fayol and Urwick. Fayol recognised there was no limit to the principles of management but in his writing advocated 14.9 Urwick originally specified eight prin- ciples, but these were revised to ten in his later writing.10 (See Chapters 6 and 15.) Mooney and Reiley set out a number of common principles which relate to all types of organisations. They place particular attention on: ■ the principle of co-ordination – the need for people to act together with unity of action, the exercise of authority and the need for discipline; ■ the scalar principle – the hierarchy of organisation, the grading of duties and the process of delegation; and ■ the functional principle – specialisation and the distinction between different kinds of duties.11 Brech attempts to provide a practical approach to organisation structure based on tried general principles as opposed to the concentration on specific cases or complex gener- alisations of little value to the practising manager. He sets out the various functions in the organisation and the definition of formal organisational relationships.12 Although clearly a strong supporter of the formal approach in some of his views such as, for example, on the principle of span of control, Brech is less definite than other classical writers and recognises a degree of flexibility according to the particular situation. Brech does place great emphasis, however, on the need for written definition of respon- sibilities and the value of job descriptions as an aid to effective organisation and delegation. This work builds on the ideas of earlier writers, such as Urwick, and, therefore, provides a comprehensive view of the classical approach to organisation and management. Evaluation of the classical approach The classical writers have been criticised generally for not taking sufficient account of personality factors, and for creating an organisation structure in which people can exercise only a limited control over their work environment. The idea of sets of prin- ciples to guide managerial action has also been subject to much criticism. For example, Simon writes: Organisational design is not unlike architectural design. It involves creating large, complex sys- tems having multiple goals. It is illusory to suppose that good designs can be created by using the so-called principles of classical organisation theory.13 Research studies have also expressed doubt about the effectiveness of these principles when applied in practice.14 However, although the work of the classical writers is sometimes regarded as an out-of- date approach it does focus attention on important factors in the study of organisation and management. Technical and structural factors are important considerations in improving organisational performance. Yet, while attention to formal structure is impor- tant, it is also necessary to consider the people who work within the structure. The classical approach prompted the start of a more scientific view of management and attempted to provide some common principles applicable to all organisations. These principles are still of some relevance in that they provide general guidelines to
- 95. CHAPTER 3 APPROACHES TO ORGANISATION AND MANAGEMENT 69 the structuring and efficiency of organisations. They provide a useful starting point in attempting to analyse the effectiveness of the design of organisation structure. However, the application of these principles must take full account of: ■ the particular situational variables of each individual organisation; and ■ the psychological and social factors relating to members of the organisation. Major sub- Two major ‘sub-groupings’ of the classical approach are: groupings 1 scientific management, and 2 bureaucracy. SCIENTIFIC MANAGEMENT Many of the classical writers were concerned with the improvement of management as a means of increasing productivity. At this time emphasis was on the problem of obtaining increased productivity from individual workers through the technical structuring of the work organisation and the provision of monetary incentives as the motivator for higher levels of output. A major contributor to this approach was F. W. Taylor (1856–1917), the ‘father’ of scientific management.15 Taylor believed that in the same way that there is a best machine for each job, so there is a best working method by which people should undertake their jobs. He considered that all work processes could be analysed into dis- crete tasks and that by scientific method it was possible to find the ‘one best way’ to perform each task. Each job was broken down into component parts, each part timed, and the parts rearranged into the most efficient method of working. Principles to guide management Taylor was a believer in the rational–economic needs concept of motivation. He believed that if management acted on his ideas, work would become more satisfying and profitable for all concerned. Workers would be motivated by obtaining the highest possible wages through working in the most efficient and productive way. Taylor was concerned with finding more efficient methods and procedures for co-ordination and control of work. He set out a number of principles to guide management. These prin- ciples are usually summarised as: ■ the development of a true science for each person’s work; ■ the scientific selection, training and devel- opment of the workers; ■ co-operation with the workers to ensure work is carried out in the prescribed way; ■ the division of work and responsibility between management and the workers. In his famous studies at the Bethlehem Steel Corporation, Taylor, who was appointed as a management consultant, applied his ideas on Photo: Derek Allan/Travel Ink scientific management to the handling of pig iron. A group of 75 men were loading an aver- 1 - age of l2 2 tons per man per day. Taylor selected a Dutch labourer, called Schmidt, whom he reported to be a ‘high-priced’ man with a reputation for placing a high value on Scientific management on a building site money, and a man of limited mental ability.
- 96. 70 PART 1 MANAGEMENT AND ORGANISATIONAL BEHAVIOUR By following detailed instructions on when to pick up the pig iron and walk, and when to 1 - sit and rest, and with no back talk, Schmidt increased his output to 472 tons per day. He maintained this level of output throughout the three years of the study. In return Schmidt received a 60 per cent increase in wages compared with that paid to the other men. 1 One by one other men were selected and trained to handle pig iron at the rate of 472 - tons per day and in return they received 60 per cent more wages. Taylor drew attention to the need for the scientific selection of the workers. When the other labourers in the group were trained in the same method only one in eight was physically capable of the 1 - effort of loading 472 tons per day, although there was a noticeable increase in their level of output. Reactions There were strong criticisms of, and reaction against, scientific management methods against from the workers who found the work boring and requiring little skill. Despite these scientific criticisms Taylor attempted to expand the implementation of his ideas in the management Bethlehem Steel Corporation. However, fears of mass redundancies persuaded the man- agement to request Taylor to moderate his activities. However, Taylor’s belief in his methods was so strong that he would not accept management’s interference and even- tually his services were dispensed with. Scientific management was applied for a time in other countries with similar criti- cisms and hostile reactions. The ideas of scientific management were also adopted in the American Watertown Arsenal despite the lingering doubts of the controller. He was not convinced about the benefits of paying bonuses based on methods which reduced time taken to complete a job; also the workers reacted unfavourably to time and motion studies, and he was fearful of a strike. The controller eventually gave way, how- ever, and the approach of scientific management was adopted – to be followed almost immediately by a strike of moulding workers. The strike at Watertown Arsenal led to an investigation of Taylor’s methods by a House of Representatives Committee which reported in 1912. The conclusion of the committee was that scientific management did provide some useful techniques and offered valuable organisational suggestions, but gave production managers a dangerously high level of uncontrolled power. The studies at Watertown Arsenal were resumed but the unions still retained an underlying hostility towards scientific management. A subsequent attitude survey among the workers revealed a broad level of resentment and hostility, by both union and non-union members, to scientific management methods. As a result of this report Taylor’s methods of time study were banned in defence establishments by the Senate. Functional Taylor also put forward the idea of functional foremanship under which workers would foremen be responsible simultaneously to eight different, specialist first-line supervisors. The eight supervisors were divided into two groups: 1 Planning, concerned with (i) order of work, (ii) instruction cards, (iii) time and cost- ing and (iv) discipline; and 2 Performance, concerned with (v) gang boss, (vi) speed boss, (vii) repair boss and (viii) inspector. The idea of functional foremen represented a practical application of the idea of specialisation and the belief that each person’s work should, as far as possible, be con- fined to a single leading function. However, such an arrangement gives rise to problems of co-ordination, role conflict and unity of command. The idea of functional foremanship appears not to have become very popular and to have had little applica- tion in practice.
- 97. CHAPTER 3 APPROACHES TO ORGANISATION AND MANAGEMENT 71 Taylorism as There has also been considerable interest in ‘Taylorism’ as representing a system of management management control over workers. Taylor placed emphasis on the content of a ‘fair control day’s work’ and on optimising the level of workers’ productivity. A major obstacle to this objective was ‘systematic soldiering’ and what Taylor saw as the deliberate attempt by workers to promote their own best interests and to keep employers ignorant of how fast work, especially piece-rate work, could be carried out. According to Braverman, scientific management starts from the capitalist point of view and method of production, and the adaptation of labour to the needs of capital. Taylor’s work was more concerned with the organisation of labour than with the development of technology. A distinctive feature of Taylor’s thought was the concept of management con- trol.16 Braverman suggests that Taylor’s conclusion was that workers should be controlled not only by the giving of orders and maintenance of discipline, but also by removing from them any decisions about the manner in which their work was to be carried out. By division of labour, and by dictating precise stages and methods for every aspect of work perform- ance, management could gain control of the actual process of work. The rationalisation of production processes and division of labour tends to result in the de-skilling of work and this may be a main strategy of the employer.17 Cloke and Goldsmith also suggest that Taylor was the leading promoter of the idea that managers should design and control the work process scientifically in order to guarantee maximum efficiency. He believed in multiple layers of management to supervise the work process and in rigid, detailed control of the workforce. Taylor’s theories justified managerial control over the production process and removed decision making from employees and from owners as well. The increasingly authoritative operational role of management diminished the direct involvement of owners in day-to-day decision making. Managers saw this as an opportunity to solidify their power and adopted Taylor’s ideas whole- sale. In the process, they affirmed efficiency over collaboration, quantity over quality, and cost controls over customer service.18 RELEVANCE OF SCIENTIFIC MANAGEMENT While Taylor’s work is often criticised today it should be remembered that he was writing at a time of industrial reorganisation and the emergence of large, complex organisations with new forms of technology. Taylor’s main concern was with the efficiency of both workers and management. He believed his methods of scientific management would lead to improved management–labour relations, and contribute to improved industrial efficiency and prosperity. Taylor adopted an instrumental view of human behaviour together with the applica- tion of standard procedures of work. Workers were regarded as rational, economic beings motivated directly by monetary incentives linked to the level of work output. Workers were viewed as isolated individuals and more as units of production to be handled almost in the same way as machines. Hence, scientific management is often referred to as a machine theory model. The work of Taylor continues to evoke much comment and extreme points of view. For example, Rose suggests that: It is difficult to discuss the ‘contribution’ of F. W. Taylor to the systematic study of industrial behav- iour in an even-tempered way. The sheer silliness from a modern perspective of many of his ideas, and barbarities they led to when applied in industry, encourage ridicule and denunciation.19 The theme of Rose argues that Taylor’s diagnosis of the industrial situation was based on the simple inefficiency theme of inefficiency. Among his criticisms are that Taylor selected the best workers for his experiments and assumed that workers who were not good at one particular task
- 98. 72 PART 1 MANAGEMENT AND ORGANISATIONAL BEHAVIOUR would be best at some other task. There is, however, no certainty of this in practice. Taylor regarded workers from an engineering viewpoint and as machines, but the one best way of performing a task is not always the best method for every worker. The reduction of physical movement to find the one best way is not always ben- eficial and some ‘wasteful’ movements are essential to the overall rhythm of work. Rose also argues that the concept of a fair day’s pay for a fair day’s work is not purely a technical matter. It is also a notion of social equity and not in keeping with a scientific approach. On the other hand, however, Drucker claims that: Frederick Winslow Taylor may prove a more useful prophet for our times than we yet recognize … Taylor’s greatest impact may still be ahead … the under-developed and developing countries are now reaching the stage where they need Taylor and ‘scientific management’ … But the need to study Taylor anew and apply him may be the greatest in the developed countries.20 According to Drucker, the central theme of Taylor’s work was not inefficiency but the need to substitute industrial warfare by industrial harmony. Taylor sought to do this through: ■ higher wages from increased output; ■ the removal of physical strain from doing work the wrong way; ■ development of the workers and the opportunity for them to undertake tasks they were capable of doing; and ■ elimination of the boss by the duty of management to help the workers. Drucker also suggests that Taylor’s idea of functional foremen can be related to what is now known as matrix organisation (matrix organisation is discussed in Chapter 15). Support for Drucker’s views appears to come from Locke who asserts that much of the criticism of Taylor is based on a misunderstanding of the precepts and that many of his ideas are accepted by present-day managers.21 Impetus to Whatever the opinions on scientific management, Taylor and his disciples have left to management modern management the legacy of such practices as work study, organisation and thinking methods, payment by results, management by exception and production control. The development of mass assembly line work, invented by Henry Ford in 1913 (’Fordism’) and which dominated production methods in western economies can be seen to have many common links with the ideas of scientific management.22 The principles of Taylor’s scientific approach to management appear still to have rel- evance today. We can still see examples of Taylorism alive and well, and management practices based on the philosophy of his ideas. As an example, Figure 3.2 shows a ‘Hanger Insertion Programme’ for a large American department store. Large hotel organ- isations often make use of standard recipes and performance standard manuals, and it is common for housekeeping staff to have a prescribed layout for each room with training based on detailed procedures and the one best way. Staff may be expected to clean a given number of rooms per shift with financial incentives for additional rooms. Whatever else Taylor did, at least he gave a major impetus to the development of management thinking and the later development of organisational behaviour. For exam- ple, Crainer and Dearlove suggest that although Taylor’s theories are now largely outdated they still had a profound impact throughout the world and his mark can be seen on much of the subsequent management literature.23 And Stern goes a stage further: The ‘scientific management’ of Frederick Taylor … shaped the first coherent school of thought with application to the industrialised world. He was our first professional guru and Taylorism – with its twin goals of productivity and efficiency – still influences management thinking 100 years on.24
- 99. CHAPTER 3 APPROACHES TO ORGANISATION AND MANAGEMENT 73 KEY IDEAS Hanger Insertion ● The new programme involving the process of hanging merchandise on hangers efficiently and effectively. The purposes of this new programme: ● To assist the stores in better customer service – by having the merchandise ready to go on the floor, saving space in the stockroom, and creating customer goodwill. ● To increase the units per hour produced. ● To perform the job duties as efficiently and effectively as possible. TECHNIQUES ● Keep the necessary items needed in your range. All supplies should be within arm’s reach. For example, place the trash bin next to you, have your hanger supply near you. You should not need to take any steps. ● For ANY prepack, Unpack merchandise in the prepack or unpack enough of the prepack in the amount to be placed on the trolley, tearing the plastic off of the entire group. Lay the merchandise out on the unpack table, and if applies, unfold each piece, removing tissue etc. Insert the hangers and hang the entire group of merchandise at once. ● When removing hangers from the merchandise, have the merchandise in a group on the unpack table; remove these hangers working from the front to the back. ● When inserting hangers, as a group, insert working from the back to the front of the group on the unpack table. Hang pieces as a group. ● If merchandise is bulky, Leave merchandise folded, remove all of the plastic at once, insert hangers for merchandise unpacked, hang all pieces on the trolley, then remove at the same time all excess plastic, clips etc. ● When possible, it is more efficient to remove all the plastic at once after the merchandise is hung. ● When hanging pants, skirts, etc., slip the hanger over both sides of the piece of merchandise and push metal clips down at the same time. This will alleviate additional steps. ● When pants are in plastic and hangers have to be removed, hang them first, take pants off hangers, lay on table, throw away plastic, insert hangers. ● When having to button pants, skirts, etc., take the top of the button through the hole first. This makes the process flow easier and more efficient. ● Put your supply of hangers in the cover of a tote and place on the table next to you. Figure 3.2 Hanger Insertion Programme – an example of scientific management It is difficult to argue against the general line of Taylor’s principles but they are subject to misuse. What is important is the context and manner in which such principles are put into effect. There is arguably one best way technically to perform a job particularly, for example, with factory assembly line production. However, account needs to be taken of human behaviour. People tend to have their preferred way of working and the need for variety and more interesting or challenging tasks. Provided work is carried out safely and to a satisfactory standard and completed on time, to what extent should management insist on the ‘one best way’? It seems that Taylor did not so much ignore (as is often suggested) but was more unaware of the complexity of human behaviour in organisations and the importance
- 100. 74 PART 1 MANAGEMENT AND ORGANISATIONAL BEHAVIOUR of the individual’s own feelings and sentiments, group working, managerial behaviour and the work environment. However, we now have greater knowledge about social effects within the work organisation, and about the value of money, incentives, moti- vation, and job satisfaction and performance. BUREAUCRACY A form of structure to be found in many large-scale organisations is bureaucracy. Its importance in the development of organisation theory means that it is often regarded as a sub-division under the classical heading and studied as a separate approach to management and the organisation of work. The ideas and principles of the classical writers were derived mainly from practical experience. Writers on bureaucracy, how- ever, tend to take a more theoretical view. Weber, a German sociologist, showed particular concern for what he called ‘bureau- cratic structures’, although his work in this area came almost as a side issue to his main study on power and authority.25 He suggested that ‘the decisive reason for the advance of bureaucratic organisation has always been its purely technical superiority over any other form of organisation’. Weber pointed out that the definition of tasks and responsibilities within the structure of management gave rise to a permanent administration and stan- dardisation of work procedures notwithstanding changes in the actual holders of office. The term ‘bureaucracy’ has common connotations with criticism of red tape and rigidity, though in the study of organisations and management it is important that the term is seen not necessarily in a deprecative sense but as applying to certain structural features of formal organisations. Weber analysed bureaucracies not empirically but as an ‘ideal type’ derived from the most characteristic bureaucratic features of all known organisations. He saw the development of bureaucracies as a means of introducing order and rationality into social life. Main characteristics of bureaucracies Weber did not actually define bureaucracy but did attempt to identify the main character- istics of this type of organisation. He emphasised the importance of administration based on expertise (rules of experts) and administration based on discipline (rules of officials). ■ The tasks of the organisation are allocated as official duties among the various positions. ■ There is an implied clear-cut division of labour and a high level of specialisation. ■ A hierarchical authority applies to the organisation of offices and positions. ■ Uniformity of decisions and actions is achieved through formally established sys- tems of rules and regulations. Together with a structure of authority, this enables the co-ordination of various activities within the organisation. ■ An impersonal orientation is expected from officials in their dealings with clients and other officials. This is designed to result in rational judgements by officials in the performance of their duties. ■ Employment by the organisation is based on technical qualifications and constitutes a lifelong career for the officials.26 The four main features of bureaucracy are summarised by Stewart as specialisation, hier- archy of authority, system of rules, and impersonality. ■ Specialisation applies more to the job than to the person undertaking the job. This makes for continuity because the job usually continues if the present jobholder leaves.
- 101. CHAPTER 3 APPROACHES TO ORGANISATION AND MANAGEMENT 75 ■ Hierarchy of authority makes for a sharp distinction between administrators and the administered, or between management and workers. Within the management ranks there are clearly defined levels of authority. This detailed and precise stratifica- tion is particularly marked in the armed forces and in the civil service. ■ System of rules aims to provide for an efficient and impersonal operation. The system of rules is generally stable, although some rules may be changed or modified with time. Knowledge of the rules is a requisite of holding a job in a bureaucracy. ■ Impersonality means that allocation of privileges and the exercise of authority should not be arbitrary, but in accordance with the laid-down system of rules. In more highly developed bureaucracies there tend to be carefully defined procedures for appealing against certain types of decisions. Stewart sees the characteristic of impersonality as the feature of bureaucracy which most distinguishes it from other types of organisations. A bureaucracy should not only be impersonal but be seen to be impersonal.27 CRITICISMS OF BUREAUCRACY Weber’s concept of bureaucracy has a number of disadvantages and has been subject to severe criticism. ■ The over-emphasis on rules and procedures, record keeping and paperwork may become more important in its own right than as a means to an end. ■ Officials may develop a dependence upon bureaucratic status, symbols and rules. ■ Initiative may be stifled and when a situation is not covered by a complete set of rules or procedures there may be a lack of flexibility or adaptation to changing cir- cumstances. ■ Position and responsibilities in the organisation can lead to officious bureaucratic behaviour. There may also be a tendency to conceal administrative procedures from outsiders. ■ Impersonal relations can lead to stereotyped behaviour and a lack of responsiveness to individual incidents or problems. Restriction of One of the strongest critics of bureaucratic organisation, and the demands it makes on psychological the worker, is Argyris.28 He claims that bureaucracies restrict the psychological growth growth of the individual and cause feelings of failure, frustration and conflict. Argyris suggests that the organisational environment should provide: a significant degree of individual responsibility and self-control; commitment to the goals of the organisation; produc- tiveness and work; and an opportunity for individuals to apply their full abilities. When these ideas are related to the main features of bureaucracy discussed above, such as specialisation, hierarchy of authority, system of rules and impersonality, it is perhaps easy to see the basis of Argyris’s criticism. A similar criticism is made by Caulkin who refers to the impersonal structure of bur- eaucracy as constructed round the post rather than the person and the ease with which it can be swung behind unsocial or even pathological ends. The overemphasis on process rather than purpose, fragmented responsibilities and hierarchical control means that it’s all too easy for individuals to neglect the larger purposes to which their small effort is being put.29
- 102. 76 PART 1 MANAGEMENT AND ORGANISATIONAL BEHAVIOUR EXHIBIT 3.1 NHS pays £30.96 just to sharpen pencils by David Bamber and Ed Southorn A humble pencil sharpener ordered by staff at Portsmouth June because the trust had run out of money. Hospitals NHS Trust has cost taxpayers a hefty £30.96. Jeff Watling, of the Portsmouth hospitals’ sup- Just 96p was for the sharpener – the other £30 port and commercial services directorate, revealed the £30 was the cost of dealing with the invoice. invoice costs in an internal staff newsletter. The high cost of the sharpener is just one exam- He pleaded with staff: ‘Please check the supplies ple of the estimated £1.1m the trust will spend this financial catalogue for commonly used items and order on a stock year handling the invoices of another 37,000 items it needs requisition where possible.’ Mr Watling told The News that but doesn’t itself stock. the £30.96 pencil sharpener was the ‘worst and most emo- Portsmouth North MP Syd Rapson slammed the tive example’ found during a review of items bought that ‘ludicrous bureaucracy’ allowing it to happen and has writ- were not in stock. ten to health secretary Frank Dobson demanding an end to NHS trust spokeswoman, Pat Forsyth, said only the waste of money. senior managers could approve the purchase of items not Mr Rapson said: ‘A private company would have held at the NHS Portsmouth stores on Eastern Road. gone bust if it carried on like this.’ Anyone wanting to buy non-stock items – which Every time an NHS trust is invoiced for items not can include medical equipment and supplies as well as sta- held in NHS stores, taxpayers fork out £30. tionery – should have a very good reason. The pencil sharpener had been approved when The Audit Commission estimates it costs £30 in ‘someone was not thinking about what they were doing’. equivalent staff hours required to process paperwork for Labour MP Mr Rapson told Mr Dobson: ‘This is a payment of bills for NHS ‘non-stock’ items. small but not insignificant example of how waste is created And yet the pencil sharpener could have been and if you can eliminate this stupidity then the NHS will be ordered from the NHS stock catalogue at a cost of 27p – much more able to look after patients.’ saving taxpayers £30.69. A spokeswoman for Mr Dobson said the health This year the Portsmouth trust – which runs St sec-retary had not yet examined Mr Rapson’s letter or the Mary’s and Queen Alexandra Hospitals – faced its worst issues it raised, but would be replying in the new year. financial crisis yet and managers had to find nearly £3m in Mr Rapson said: ‘This is bureaucracy gone mad. savings. ‘Just think how much money must be wasted Emergency measures were drawn up to find sav- every single year by issuing invoices at this price and what ings without cutting services. And in April, nearly 300 skin that cash could be used for.’ patients were told they could not be treated until May or EVALUATION OF BUREAUCRACY The growth of bureaucracy has come about through the increasing size and complexity of organisations and the associated demand for effective administration. The work of the classical writers has given emphasis to the careful design and planning of organisa- tion structure and the definition of individual duties and responsibilities. Effective organisation is based on structure and delegation through different layers of the hier- archy. Greater specialisation and the application of expertise and technical knowledge have highlighted the need for laid-down procedures. Bureaucracy is founded on a formal, clearly defined and hierarchical structure. However, with rapid changes in the external environment, de-layering of organisa- tions, empowerment, and greater attention to meeting the needs of customers, there is an increasing need to organise for flexibility. Peters and Waterman, for example, found that excellent American companies achieved quick action just because their organisa- tions were fluid, and had intensive networks of informal and open communications.30 By contrast, the crisis experienced by IBM in the 1980s/1990s over the market for per- sonal computers is explained at least in part by its top-heavy corporate structure, cumbersome organisation and dinosaur-like bureaucracy.31
- 103. CHAPTER 3 APPROACHES TO ORGANISATION AND MANAGEMENT 77 According to Cloke and Goldsmith, management and bureaucracy can be thought of as flip sides of the same coin. The elements of bureaucracy generate organisational hierarchy and management, while managers generate a need for bureaucracy. Bureaucracies provide a safe haven where managers can hide from responsibility and avoid being held accountable for errors of judgement or problems they created or failed to solve. In return, managers are able to use bureaucratic rules to stifle self-management and compel employees to follow their direction … Yet bureaucratic systems can be broken down and trans- formed into human-scale interactions. We have seen countless managers recreate themselves as leaders and facilitators, employees reinvent themselves as responsible self-managing team members, and bureaucracies transform into responsive, human-scale organizations. Alternatives to organizational hierarchy are both practical and possible.32 Organisational solutions As organisations face increasing global competitiveness, and complex demands of the information and technological age, the need arises for alternative forms of corporate structure and systems. For example Ridderstrale points out that in the past century the hallmark of a large company was hierarchy, which rests on principles at odds with the new strategic requirements. ‘Bureaucracies allowed people with knowledge to control ignorant workers. Now, new structures are needed as knowledge spreads.’ Ridderstrale suggests four specific ways in which high-performing organisations have responded to increasingly complex knowledge systems by developing organisational solutions which depart from the traditional bureaucratic model. ■ More decentralised and flatter structures in order that quick decisions can be taken near to where the critical knowledge resides. Flatter structures can be achieved by increasing the span of control and reducing layers from the top or removing layers of middle management. ■ The use of more than a single structure in order that knowledge may be assembled across the boundaries of a traditional organisation chart. If people have less perma- nent places in the hierarchy they are more readily able to move across functional and geographical borders. ■ Converting companies into learning organisations and giving every employee the same level of familiarity with personnel and capabilities. Successful companies develop a detailed inventory of core competencies. In order to fully exploit current knowledge, managers need to know what the company knows. ■ The broader sharing of expertise and knowledge, which may be located in the periphery where little formal authority resides. Managers need to share principles to ensure co-ordination, encourage ‘lowest common denominators’ and the develop- ment of ‘tribal’ qualities through shared ownership and rewards, common norms, culture and values.33 Public sector In the case of public sector organisations, in particular, there is a demand for uniform- organisations ity of treatment, regularity of procedures and accountability for their operations. This leads to adherence to specified rules and procedures which limit the degree of discre- tion exercised by management, and to the keeping of detailed records. For example, Green argues that, although bureaucracies are becoming less and less the first-choice format for organisational shape, there is still a place for bureaucracy in parts of most organisations, and especially public sector organisations such as local authorities and universities. The use and implementation of tried and tested rules and procedures help to ensure essential values and ethics, and that necessary functions are run on a con- sistent and fair basis.34 It is interesting to note that, despite the criticisms of bureaucracy, people in their dealings with public sector organisations often call for what amounts to increased
- 104. 78 PART 1 MANAGEMENT AND ORGANISATIONAL BEHAVIOUR bureaucracy, even though they may not use that term. One can frequently see letters to newspapers, for example, that call for a letter of law and a clearer set of rules in deal- ings with benefit claims from government departments instead of decisions made on the opinion of a particular manager in a particular office. New forms of information technology such as electronic transactions processed from home or public access terminals are likely to change processes of government service delivery, administrative workloads and the nature of bureaucracy.35 Relevance By their very nature, bureaucracies are likely to attract criticism. For example, there today appears to be a particular dilemma for management in personal service industries. The underlying characteristics of bureaucracy would seem to restrict personal service deliv- ery which requires a flexible approach, responsiveness to individual requirements and the need for initiative and inventiveness.36 Much of this criticism is valid, but much also appears unfair comment. In any case, whatever the validity of the criticism or demands for alternative forms of structure, it is difficult to envisage how large- scale organisations could function effectively without exhibiting at least some of the features of a bureaucracy. Stewart suggests that more organisations today contain mainly or a considerable number of professionals. Such organisations will still have bureaucratic features although there is more reliance on professional discretion and self-regulation than on control through rules and regulations.37 However, despite new forms of organisation which have emerged, many writers suggest that bureaucracy is still as relevant today as a major form of organisation structure.38 STRUCTURALISM Sometimes the work of Weber is associated with the ideas of writers such as Karl Marx under the sub-heading of the structuralism approach, which is a synthesis of the classi- cal (or formal) school and the human relations (or informal) school.39 A major line of thought was that the earlier approaches were incomplete and lacked adequate theoreti- cal assumptions and background. The structuralism approach provides a radical perspective of social and organisational behaviour.40 Greater attention should be given to the relationship between the formal and informal aspects of the organisation, and the study of conflict between the needs of the individual and the organisation, and between workers and management. (See also the discussion on conflict in Chapter 22.) Structuralism is sometimes associated as part of a broader human relations approach, which is discussed below. THE HUMAN RELATIONS APPROACH The main emphasis of the classical writers was on structure and the formal organisa- tion, but during the 1920s, the years of the Great Depression, greater attention began to be paid to the social factors at work and to the behaviour of employees within an organisation – that is, to human relations. The Hawthorne experiments The turning point in the development of the human relations movement (’behav- ioural’ and ‘informal’ are alternative headings sometimes given to this approach) came with the famous Hawthorne experiments at the Western Electric Company in America (1924–32), and the subsequent publication of the research findings.41 Among the
- 105. CHAPTER 3 APPROACHES TO ORGANISATION AND MANAGEMENT 79 people who wrote about the Hawthorne experiments was Elton Mayo (1880–1949) who is often quoted as having been a leader of the researchers. However, there appears to be some doubt as to the extent to which Mayo was actually involved in conducting the experiments and his exact contribution to the human relations movement.42 There were four main phases to the Hawthorne experiments: ■ the illumination experiments; ■ the relay assembly test room; ■ the interviewing programme; ■ the bank wiring observation room. The The original investigation was conducted on the lines of the classical approach and illumination was concerned, in typical scientific management style, with the effects of the intensity experiments of lighting upon the workers’ productivity. The workers were divided into two groups, an experimental group and a control group. The results of these tests were inconclusive as production in the experimental group varied with no apparent relationship to the level of lighting, but actually increased when conditions were made much worse. Production also increased in the control group although the lighting remained unchanged. The level of production was influenced, clearly, by factors other than changes in physical conditions of work. This prompted a series of other experiments investigating factors of worker productivity. The relay In the relay assembly test room the work was boring and repetitive. It involved assem- assembly test bling telephone relays by putting together a number of small parts. Six women workers room were transferred from their normal departments to a separate area. The researchers selected two assemblers who were friends with each other. They then chose three other assemblers and a layout operator. The experiment was divided into 13 periods during which the workers were subjected to a series of planned and controlled changes to their conditions of work, such as hours of work, rest pauses and provision of refresh- ments. The general environmental conditions of the test room were similar to those of the normal assembly line. During the experiment the observer adopted a friendly manner, consulting with the workers, listening to their complaints and keeping them informed of the experiment. Following all but one of the changes (when operators complained too many breaks made them lose their work rhythm) there was a continuous increase in the level of production. The researchers formed the conclusion that the extra attention given to the workers, and the apparent interest in them shown by management, was the main reason for the higher productivity. The Another significant phase of the experiments was the interviewing programme. The interviewing lighting experiment and the relay assembly test room drew attention to the form of programme supervision as a contributory factor to the workers’ level of production. In an attempt to find out more about the workers’ feelings towards their supervisors and their general conditions of work, a large interviewing programme was introduced. More than 20 000 interviews were conducted before the work was ended because of the depression. Initially, the interviewers approached their task with a set of prepared questions, relating mainly to how the workers felt about their jobs. However, this method pro- duced only limited information. The workers regarded a number of the questions as irrelevant; also they wanted to talk about other issues than just supervision and imme- diate working conditions. As a result, the style of interviewing was changed to become more non-directive and open-ended. There was no set list of questions and the workers were free to talk about any aspect of their work. The interviewers set out to be friendly and sympathetic. They adopted an impartial, non-judgemental approach and concentrated on listening.
- 106. 80 PART 1 MANAGEMENT AND ORGANISATIONAL BEHAVIOUR Arising from this approach, the interviewers found out far more about the workers’ true feelings and attitudes. They gained information not just about supervision and working conditions, but also about the company itself, management, work group rela- tions and matters outside of work such as family life and views on society in general. Many workers appeared to welcome the opportunity to have someone to talk to about their feelings and problems, and to be able to ‘let off steam’ in a friendly atmosphere. The interviewing programme was significant in giving an impetus to present-day per- sonnel management and the use of counselling interviews, and highlighting the need for management to listen to workers’ feelings and problems. Being a good listener is arguably even more important for managers in today’s work organisations, and it is a skill which needs to be encouraged and developed.43 The bank Another experiment involved the observation of a group of 14 men working in the wiring bank wiring room. It was noted that the men formed their own informal organisation observation with sub-groups or cliques, and with natural leaders emerging with the consent of the room members. The group developed its own pattern of informal social relations and ‘norms’ of what constituted ‘proper’ behaviour. Despite a financial incentive scheme where the workers could receive more money the more work produced, the group decided on a level of output well below the level they were capable of producing. Group pressures on individual workers were stronger than financial incentives offered by management. The group believed that if they increased their output, man- agement would raise the standard level of piece rates. The importance of group ‘norms’ and informal social relations are discussed in Chapter 13. EVALUATION OF THE HUMAN RELATIONS APPROACH The human relations approach has been subjected to severe criticism. The Hawthorne experiments have been criticised, for example, on methodology and on failure of the investigators to take sufficient account of environmental factors – although much of this criticism is with the value of hindsight. The human relations writers have been criticised generally for the adoption of a management perspective, their ‘unitary frame of reference’ and their over-simplified theories.44 Other criticisms of the human relations approach are that it is insufficiently scien- tific, and that it takes too narrow a view. It ignores the role of the organisation itself in how society operates. Sex power There are a number of interpretations of the results of the Hawthorne experiments, includ- differential ing the possible implications of the ‘sex power differential’ between the two groups. In the relay assembly room where output increased the group was all female, while in the bank wiring room where output was restricted the group was all male. The workers in the relay assembly test room were all young unmarried women. All except one were living at home with traditional families of immigrant background. In the work environment of the factory the women had been subjected to frequent contact with male supervisors and therefore ‘the sex power hierarchy in the home and in the factory were congruent’. It is suggested, therefore, that it was only to be expected that the women agreed readily to participate with management in the relay assembly test room experiment.45 Importance of the Hawthorne experiments Whatever the interpretation of the results of the Hawthorne experiments, they did generate new ideas concerning the importance of work groups and leadership, commu- nications, output restrictions, motivation and job design. They placed emphasis on the
- 107. CHAPTER 3 APPROACHES TO ORGANISATION AND MANAGEMENT 81 importance of personnel management, and gave impetus to the work of the human relations writers. The Hawthorne experiments undoubtedly marked a significant step forward in providing a further insight into human behaviour at work and the develop- ment of management thinking. The Hawthorne experiments are regarded as one of the most important of all social science investigations and are recognised as probably the single most important foundation of the human relations approach to management and the development of organisational behaviour. In a review of humane approaches to management, Crainer asserts that: ‘The Hawthorne Studies were important because they showed that views of how managers behaved were a vital aspect of motivation and improved performance. Also, the research revealed the importance of informal work groups.’46 Humanisation Whereas supporters of the classical approach sought to increase production by ration- of the work alisation of the work organisation, the human relations movement has led to ideas organisation on increasing production by humanising the work organisation. The classical approach adopted more of a managerial perspective, while the human relations approach strove for a greater understanding of people’s psychological and social needs at work as well as improving the process of management. It is usually regarded as the first major approach to organisation and management to show concern for industrial sociology. The human relations approach recognised the importance of the informal organisa- tion which will always be present within the formal structure. This informal organisation will influence the motivation of employees who will view the organisa- tion for which they work through the values and attitudes of their colleagues. Their view of the organisation determines their approach to work and the extent of their motivation to work well or otherwise. Human relations writers demonstrated that people go to work to satisfy a complex- ity of needs and not simply for monetary reward. They emphasised the importance of the wider social needs of individuals and gave recognition to the work organisation as a social organisation and the importance of the group, and group values and norms, in influencing individual behaviour at work. It has been commented that the classical school was concerned about ‘organisations without people’, and the human relations school about ‘people without organisations’. NEO-HUMAN RELATIONS Certainly there were shortcomings in the human relations approach, and assumptions which evolved from such studies as the Hawthorne experiments were not necessarily supported by empirical evidence. For example, the contention that a satisfied worker is a productive worker was not always found to be valid. However, the results of the Hawthorne experiments and the subsequent attention given to the social organisation and to theories of individual motivation gave rise to the work of those writers in the 1950s and 1960s who adopted a more psychological orientation. New ideas on management theory arose and a major focus of concern was the personal adjustment of the individual within the work organ- isation, and the effects of group relationships and leadership styles. This group of writers is often (and more correctly) categorised separately under the heading of ‘neo- human relations’. The works of these writers are examined in more detail in subsequent chapters but are summarised broadly here. The work of A major impetus for the neo-human relations approach was the work of Maslow who, Maslow in 1943, put forward a theoretical framework of individual personality development and motivation based on a hierarchy of human needs.47 The hierarchy ranges through
- 108. 82 PART 1 MANAGEMENT AND ORGANISATIONAL BEHAVIOUR five levels from, at the lowest level, physiological needs, through safety needs, love needs, esteem needs, to the need for self-actualisation at the highest level. Individuals only advance up the hierarchy as each lower-level need is satisfied. Although Maslow did not originally intend this need hierarchy to be applied necessarily to the work situ- ation it has, nevertheless, had a significant impact on management approaches to motivation and the design of work organisation to meet individual needs. The work of Maslow provides a link with the earlier human relations approach. Some leading Among the best-known contributors to the neo-human relations approach are Herzberg contributors and McGregor. Herzberg isolated two different sets of factors affecting motivation and satisfaction at work. One set of factors comprises those which, if absent, cause dissatis- faction. These are ‘hygiene’ or ‘maintenance’ factors which are concerned basically with job environment. However, to motivate workers to give of their best, proper attention must be given to a different set of factors, the ‘motivators’ or ‘growth’ factors. These are concerned with job content.48 McGregor argued that the style of management adopted is a function of the man- ager’s attitudes towards human nature and behaviour at work. He put forward two suppositions called Theory X and Theory Y which are based on popular assumptions about work and people.49 Other major contributors to the neo-human relations approach include Likert, whose work includes research into different systems of management;50 McClelland, with ideas on achievement motivation;51 and Argyris, who considered the effects of the formal organisation on the individual and psychological growth in the process of self- actualisation.52 Argyris’s major contributions include his work on organisational learning and on effective leadership.53 The neo-human relations approach has generated a prolific amount of writing and research not only from original propounders, but also from others seeking to establish the validity, or otherwise, of their ideas. This has led to continuing attention being given to such matters as organisation structuring, group dynamics, job satisfaction, communication and participation, leadership styles and motivation. It has also led to greater attention to the importance of interpersonal interactions, the causes of conflict and recognition of ‘industrial relations’ problems. THE SYSTEMS APPROACH More recently, attention has been focused on the analysis of organisations as ‘systems’ with a number of interrelated sub-systems. The classical approach emphasised the technical requirements of the organisation and its needs – ‘organisations without people’; the human relations approaches emphasised the psychological and social aspects, and the consideration of human needs – ‘people without organisations’. The systems approach attempts to reconcile these two earlier approaches and the work of the formal and the informal writers. Attention is focused on the total work organisation and the interrelationships of structure and behaviour, and the range of variables within the organisation. This approach can be contrasted with a view of the organisation as separate parts. The systems approach encourages managers to view the organisation both as a whole and as part of a larger environment. The idea is that any part of an organisation’s activities affects all other parts. Systems Systems theory is not new and has been used in the natural and physical sciences for a theory number of years. One of the founders of this approach was the biologist Ludwig von Bertalanffy who used the term ‘systems theory’ in an article published in 1951, and
- 109. CHAPTER 3 APPROACHES TO ORGANISATION AND MANAGEMENT 83 who is generally credited with having developed the outline of General Systems Theory.54 The systems approach to organisation has arisen, at least in part, therefore, from the work of biologists, and Miller and Rice have likened the commercial and industrial organisation to the biological organism.55 Using a General Systems Theory (GST) approach, Boulding classified nine levels of systems of increasing complexity according to the state of development and knowledge about each level.56 Organisations are complex social systems and are more open to change than lower-level simple dynamic or cybernetic systems. Boulding felt there were large gaps in both theoretical and empirical knowledge of the human level and the social organisations level of systems, although some progress has now been made with recent theories of organisational behaviour. The business organisation as an open system The business organisation is an open system. There is continual interaction with the broader external environment of which it is part. The systems approach views the organisation within its total environment and emphasises the importance of multiple channels of interaction. Criticisms of earlier approaches to organisation are based in part on the attempt to study the activities and problems of the organisation solely in terms of the internal environment. The view of the organisation as an open system is examined in Chapter 4. The systems approach views the organisation as a whole and involves the study of the organisation in terms of the relationship between technical and social variables within the system. Changes in one part, technical or social, will affect other parts and thus the whole system. Longwall The idea of socio-technical systems arose from the work of Trist and others, of the coal-mining Tavistock Institute of Human Relations, in their study of the effects of changing tech- study nology in the coal-mining industry in the 1940s.57 The increasing use of mechanisation and the introduction of coal-cutters and mechanical conveyors enabled coal to be extracted on a ‘longwall’ method. Shift working was introduced with each shift specialising on one stage of the opera- tion – preparation, cutting or loading. However, the new method meant a change in the previous system of working where a small self-selecting group of miners worked together, as an independent team, on one part of the coalface – the ‘single place’ or ‘shortwall’ method. Technological change had brought about changes in the social groupings of the miners. It disrupted the integration of small groups and the psychological and socio- logical properties of the old method of working. There was a lack of co-operation between different shifts and within each shift, an increase in absenteeism, scapegoat- ing and signs of greater social stress. The ‘longwall’ method was socially disruptive and did not prove as economically efficient as it could have been with the new technology. The researchers saw the need for a socio-technical approach in which an appropriate social system could be developed in keeping with the new technical system. The result was the ‘composite longwall’ method with more responsibility to the team as a whole and shifts carrying out composite tasks, the reintroduction of multi-skilled roles and a reduction in specialisation. The composite method was psychologically and socially more rewarding and economically more efficient than the ‘longwall’ method. The socio-technical system The concept of the organisation as a ‘socio-technical’ system directs attention to the transformation or conversion process itself, to the series of activities through which
- 110. 84 PART 1 MANAGEMENT AND ORGANISATIONAL BEHAVIOUR the organisation attempts to achieve its objectives. The socio-technical system is con- cerned with the interactions between the psychological and social factors and the needs and demands of the human part of the organisation, and its structural and tech- nological requirements. Recognition of the socio-technical approach is of particular importance today. People must be considered as at least an equal priority along with investment in tech- nology. For example, Lane et al. point out that major technological change has brought about dramatic changes in worker behaviour and requirements. It is people who unlock the benefits and opportunities of information communication technology.58 Technology The concept of socio-technical systems provides a link between the systems approach determinism and a sub-division, sometimes adopted – the technology approach. Writers under the technology heading attempt to restrict generalisations about organisations and man- agement, and emphasise the effects of varying technologies on organisation structure, work groups and individual performance and job satisfaction. This is in contrast with the socio-technical approach which did not regard technology, per se, as a determinant of behaviour. Under the heading of the technology approach could be included the work of such writers as Walker and Guest (effects of the assembly-line production method on employee behaviour);59 Sayles (relationship between technology and the nature of work groups);60 and Blauner (problems of ‘alienation’ in relation to different work tech- nologies).61 Technological determinism is discussed more fully in Chapter 17. THE CONTINGENCY APPROACH The classical approach suggested one best form of structure and placed emphasis on general sets of principles while the human relations approach gave little attention at all to structure. In contrast the contingency approach showed renewed concern with the importance of structure as a significant influence on organisational performance. The contingency approach, which can be seen as an extension of the systems approach, highlights possible means of differentiating among alternative forms of organisation structures and systems of management. There is no one optimum state. For example, the structure of the organisation and its ‘success’ are dependent, that is contingent upon, the nature of tasks with which it is designed to deal and the nature of environ- mental influences. The most appropriate structure and system of management is therefore dependent upon the contingencies of the situation for each particular organisation. The contin- gency approach implies that organisation theory should not seek to suggest one best way to structure or manage organisations but should provide insights into the situ- ational and contextual factors which influence management decisions. Contingency models of organisation and management are discussed in Chapter 16. OTHER APPROACHES TO THE STUDY OF ORGANISATIONS The four-fold framework of classical, human relations, systems and contingency approaches provides a helpful, although rather simplistic, categorisation. The study of organisations, their structure and management is a broad field of inquiry. Depending on the views and preferences of the writer, other possible main approaches include decision-making and social action.
- 111. CHAPTER 3 APPROACHES TO ORGANISATION AND MANAGEMENT 85 THE DECISION-MAKING APPROACH The systems approach involves the isolation of those functions most directly con- cerned with the achievement of objectives and the identification of main decision areas or sub-systems. Viewing the organisation as a system emphasises the need for good information and channels of communication in order to assist effective decision- making in the organisation. Recognition of the need for decision-making and the attainment of goals draws attention to a sub-division of the systems approach, or a sep- arate category, that of the decision-making (or decision theory) approach. Here the focus of attention is on managerial decision-making and how organisations process and use information in making decisions. Successful management lies in responding to internal and external change. This involves the clarification of objectives, the specification of problems, and the search for and implementation of solutions. The organisation is seen as an information- processing network with numerous decision points. An understanding of how decisions are made helps in understanding behaviour in the organisation. Decision-making writers seek to explain the mechanisms by which conflict is resolved and choices are made. Some leading Leading writers of the decision-making approach include Barnard, Simon, and Cyert and writers March. The scope of the decision-making approach, however, is wide, and it is possible to identify contributions from engineers, mathematicians and operational research spe- cialists in addition to the work of economists, psychologists and writers on management and organisation. Barnard stressed the need for co-operative action in organisations. He believed that people’s ability to communicate, and their commitment and contribution to the achievement of a common purpose, were necessary for the existence of a co-operative system.62 These ideas were developed further by Simon. He sees management as mean- ing decision-making and his concern is with how decisions are made and how decision-making can be improved. Simon is critical of the implication of man as com- pletely rational and proposes a model of ‘administrative man’ who, unlike ‘economic man’, ‘satisfices’ rather than maximises. Administrative decision-making is the achieve- ment of satisfactory rather than optimal results in solving problems.63 Economic models of decision-making, based on the assumption of rational behav- iour in choosing from known alternatives in order to maximise objectives, can be contrasted with behavioural models based not so much on maximisation of objectives as on short-term expediency where a choice is made to avoid conflict and to stay within limiting constraints. Managers are more concerned with avoiding uncertainties than with the prediction of uncertainties.64 SOCIAL ACTION Social action represents a contribution from sociologists to the study of organisations. Social action writers attempt to view the organisation from the standpoint of individ- ual members (actors) who will each have their own goals, and interpretation of their work situation in terms of the satisfaction sought and the meaning that work has for them. The goals of the individual, and the means selected and actions taken to achieve these goals, are affected by the individual’s perception of the situation. Social action looks to the individual’s own definition of the situation as a basis for explaining behav- iour. Conflict of interests is seen as normal behaviour and part of organisational life. According to Silverman: The action approach … does not, in itself, provide a theory of organisations. It is instead best understood as a method of analysing social relations within organisations.65
- 112. 86 PART 1 MANAGEMENT AND ORGANISATIONAL BEHAVIOUR Criticisms of A main thrust of social action is the criticism of earlier approaches to organisation and earlier management, and of what is claimed to be their failure to provide a satisfactory basis approaches for the explanation or prediction of individual behaviour. For example, criticism is directed at approaches which focused on the goals and needs of the organisation, rather than on considerations of the effectiveness of an organisation in meeting the needs of its individual members. The human relations approaches have been criticised because of their focus on gen- eralised theories of good management, group psychology, and the suggestion of needs common to all individuals at work. The technology approach has been criticised for attributing feelings of alienation to the nature of technology and the status of work groups, rather than an analysis which focused on concern for the individual’s expecta- tions of, and reactions to, work. The systems approach has been criticised for failure to examine the orientation of individual members to the organisation, the different expectations people have of their work or ways in which the environment influences expectations of work. Unitary or Important contributors to a social action approach include Goldthorpe (industrial attitudes pluralistic view and behaviour patterns of manual workers)66 and Fox. In a research paper written for the Royal Commission on Trade Unions and Employers’ Associations (the Donovan Report), Fox suggests two major ways of perceiving an industrial organisation – a ‘unitary’ approach and a ‘pluralistic’ approach.67 With the unitary approach the organisation is viewed as a team with a common source of loyalty, one focus of effort and one accepted leader. The pluralistic approach views the organisation as made up of competing sub-groups with their own loyalties, goals and leaders. These competing sub-groups are almost certain to come into conflict. The unitary and pluralistic perspectives of the organisation are discussed in Chapter 19. Action theory A theory of human behaviour from an ‘action approach’ is presented by Bowey.68 She suggests that action theory, systems theory and contingency theory are not necessarily incompatible approaches to the understanding of behaviour in organisations. It would be possible to take the best parts of the different approaches and combine them into a theory that would model empirical behaviour, and also facilitate the analysis of large numbers of people in organisations. Bowey goes on to present such a theory as a par- ticular form of an action theory approach. According to Bowey, action theory is not capable of dealing with the analysis of the behaviour of a large number of people in organisations. Her theory is based, therefore, on three essential principles of action theory, augmented by four additional concepts taken from systems theory. The three essential principles of action theory can be summarised as below: ■ Sociology is concerned not just with behaviour, but with ‘meaningful action’. ■ Particular meanings persist through reaffirmation in actions. ■ Actions can also lead to changes in meanings. Additional Bowey suggests that these three principles apply mainly to explanations of individual, concepts or small-scale, behaviour. She gives four additional concepts, taken from systems theory, on which analysis of large-scale behaviour can be based. These concepts are redefined in accordance with an action approach. ■ Role. This is needed for the analysis of behaviour in organisations. It explains the similar action of different people in similar situations within the organisation, and the expectations held by other people.
- 113. CHAPTER 3 APPROACHES TO ORGANISATION AND MANAGEMENT 87 ■ Relationships. This is needed to explain the patterns of interaction among people and the behaviours displayed towards one another. ■ Structure. The relationships among members of an organisation give rise to patterns of action which can be identified as a ‘transitory social structure’. The social factors, and non-social factors such as payment systems, methods of production and physi- cal layout, together form the behavioural structure. ■ Process. Human behaviour can be analysed in terms of processes, defined as ‘con- tinuous interdependent sequences of actions’. The concept of process is necessary to account for the manner in which organisations exhibit changes in structure. The three principles of action theory, together with the four additional concepts from systems theory, provide an action approach to the analysis of behaviour in organisa- tions. Bowey goes on to illustrate her theory by case studies of five different types of organisations, all in the restaurant industry. A NUMBER OF DIFFERENT APPROACHES We can now see that within the broad four-fold classification of classical, human rela- tions, systems, and contingency approaches it is possible to identify a number of other approaches or at least sub-divisions of approaches, although there is no consensus on the categorisation of these different approaches or on the identification of the various contributors to one particular approach. So far we have identified a possible nine-fold classification: classical (including scientific management); bureaucracy; human rela- tions; neo-human relations; systems; technology; contingency; decision-making; and social action – and if structuralism is included, we have a ten-fold classification. This classification could be extended still further. For example, another more recent cate- gorisation sometimes identified as a separate approach is management science – with emphasis on quantitative analysis, mathematical models, operational research and computer technology. (See Figure 3.3.) POSTMODERNISM The work of contemporary writers discussed above together with the achievements of practitioners such as Alfred P. Sloan Jr (1875–1966, Chief Executive and Honorary Chairman of General Motors) gave rise to the so-called ‘modern organisation’.69 With the development of the information and technological age a more recent view of organisations and management is the idea of postmodernism. In the 1990s, writers such as Clegg described the postmodern organisation in terms of the influence of technolog- ical determinism, structural flexibility, premised on niches, multi-skilled jobs marked by a lack of demarcation, and more complex employment relationships including sub- contracting and networking.70 Postmodernism rejects a rational systems approach to our understanding of organisations and management, and to accepted explanations of society and behaviour. Highly flexible, free-flowing and fluid structures with the ability to change quickly to meet present demands form the basis of the new organisation. For example, Watson suggests that the modernism inherent in the systems-control approach to understanding work organisations and their management is naïve and unrealistic. The possibility of any kind of complete and coherent body of management knowledge has increasingly been bought into question. To enable us to move toward a more realistic or pragmatically reasonable way of ‘framing’ work organisation and its management, a shift has first to be made in our deeper assumptions about the social world. These are the modernist assumptions which inevitably underpin the whole edi- fice of work organisation and management thinking.71
- 114. 88 PART 1 MANAGEMENT AND ORGANISATIONAL BEHAVIOUR CLASSICAL (including scientific management). Emphasis Bureaucracy on formal structure, technical requirements The organisation in and sets of principles. terms of specialisation, hierarchy of authority, system of rules, and impersonality. HUMAN RELATIONS Structuralism Attention to the informal Neo-human relations organisation, and to psychological and social Personal adjustment of needs of people at work. the individual within the work organisation. Technology Group relationships and styles of leadership. SYSTEMS Decision-making Integration of the formal and informal Social action approaches. A socio- technical approach. Organisations as The organisation as an viewed by the open system interacting individual members with environment. and their interpretation Management science of the work situation. CONTINGENCY Form of structure and management system dependent upon the situational variables. POSTMODERNISM A SCIENTIFIC VALUE APPROACH? Figure 3.3 An outline of developments of approaches to organisation and management By contrast, postmodernism places greater attention on the use of language and attempts to portray a particular set of assumptions or versions of the ‘truth’. Watson defines postmodernism as: A way of looking at the world that rejects attempts to build systematic (or ‘foundationalist’) expla- nations of history and society and which, instead, concentrates on the ways in which human beings ‘invent’ their words, especially through the use of language or ‘discourse’.72
- 115. CHAPTER 3 APPROACHES TO ORGANISATION AND MANAGEMENT 89 The idea of postmodernism is, however, not easy to explain fully in clear and simple terms. It is arguably more of a generalised sociological concept rather than a specific approach to organisation and management. There is even some discussion of two con- notations, and theories or philosophies of the concept depending on whether the term is hyphenated or not.73 Perhaps understandably therefore the concept of postmod- ernism appears to have little interest or appeal to the practical manager. Indeed Watson, for example, questions the value of labelling more flexible forms of bureaucratic structure and culture as postmodern or post-bureaucratic and differentiat- ing these from the modernist bureaucratic organisation. There is no postmodern or post-bureaucratic organisational form available to us that is essentially different from the modernist bureaucratic organisation. We are indeed seeing different mixes of direct and indirect management control attempts as the world changes. But the world was always changing. Probably from the very beginning of industrialisation there has been a mixing of direct and indirect controls with emphases in one direction and then the other being made at different times.74 Nevertheless, postmodernist organisation can arguably be seen as a healthy challenge to more traditional approaches. It puts forward alternative interpretations of rational- ity, credibility, and ambiguity; a thoughtful critical perspective on disorders in work organisations; and reminds us of the complexities in our understanding of manage- ment and organisational behaviour. RELEVANCE TO MANAGEMENT AND ORGANISATIONAL BEHAVIOUR The different possible categorisations are not necessarily a bad thing; they illustrate the discursive and complex nature of management. The possible sub-divisions and cross- groupings help illustrate the many factors relevant to the study and practice of management and organisational behaviour. Discussion on the various categorisations of approaches and the identification of individual writers within a particular approach can provide a useful insight into the subject. Positive Whatever form of categorisation is adopted the division of writers on organisation and advantages management into various approaches offers a number of positive advantages. ■ It is helpful to students in the arrangement and study of their material. ■ It provides a setting in which to view the field of management, and to consider the contribution of individual writers. ■ It traces the major lines of argument developed by writers seeking to advise practis- ing managers on how they might improve performance. ■ It provides a framework in which the principles enunciated can be set, and against which comparisons with management practice can be made. ■ It helps in organisational analysis and in the identification of problem areas. For example, is the problem one of structure, of human relations, or of the socio- technical process? ■ It enables the manager to take from the different approaches those ideas which best suit the particular requirements of the job. For example, in dealing with a problem of structure, the ideas of the classical writers or of contingency theory might be adopted. When there is a problem relating to personnel management, ideas from the human relations movement might be of most value. If the problem is one of environmental influence, insights from the systems approach might prove most helpful. For problems of a more quantitative nature, ideas from the decision-making approach or from management science might be applicable.
- 116. 90 PART 1 MANAGEMENT AND ORGANISATIONAL BEHAVIOUR Caveats to There are, however, a number of important caveats which should be noted. be noted ■ The various approaches represent a progression of ideas, each building on from the other and adding to it. Together they provide a pattern of complementary studies into the development of management thinking. The different approaches are not in competition with each other and no one approach should be viewed as if it were the only approach, replacing or superseding earlier contributions. Many ideas of earlier writers are still of relevance today and of continuing importance in modern manage- ment practice. ■ Any categorisation of individual writers into specific approaches is inevitably some- what arbitrary and not all writers can be neatly arranged in this manner. This is only to be expected. Such writers are expounding their current thoughts and ideas in keeping with the continual development of management theory and changes in management practice. The comment made about some management writers that they are saying different things at different times might therefore be taken more as a compliment than as a criticism. ■ Even when there is agreement on the nature of the contribution from different writers, the actual division into varying approaches may take a number of different forms. In other words, while there might be acceptance of the need for a framework, there is no agreement on its shape. Different authors have adopted different formats in which to set out the developments in management thinking. ■ Some of the literature categorises management thinkers into divisions called ‘schools’. The use of this term suggests a clarity of distinction between each division and a uniformity of beliefs within each division. This is perhaps an exaggeration. The distinction between these so-called schools is not clear-cut and there is not necessarily a consistency of thinking among the various contributors in each divi- sion. The term ‘approaches’ to management is more indicative of the obscure lines between the different categorisations and, paradoxically, it is the suggestion of vagueness which, arguably, makes it a more appropriate term to use. The A major criticism of the attempt to define generalised models of management theory is importance of the assumption of national culture. Schneider and Barsoux draw attention to how the dif- cultural ferent theories on how to organise all reflect societal concerns of the times as well as the contexts cultural backgrounds of the individuals. Different approaches reflect different cultural assumptions regarding, for example, human nature and the importance of task and rela- tionships.75 Cheng, Sculli and Chan also question the universality of theories of management and organisational behaviour on the ground that they have not ade- quately addressed the factor of culture. ‘Traditionally, the greatest aspiration of researchers is to discover objective, universalistic principles of behaviour. The tacit assumption behind this is that these principles may be discovered without reference to cultural contexts.’ They conclude that while there may be some universality to organisa- tion structures, for example the need for some form of hierarchy whatever its shape may be, different national cultures frequently give those structures different meanings.76 JAPANESE MANAGEMENT In a review of management theory and practice, Heller contrasts British and American thinking with methods employed by the Japanese.77 The 1960s, western managements showed a total lack of curiosity about competition from Japan. British and European managers were still obsessed by the American example. The Japanese built hugely on what they had borrowed from the USA. However, the Japanese also practised and per- fected what management scientists often only preached.
- 117. CHAPTER 3 APPROACHES TO ORGANISATION AND MANAGEMENT 91 Although British management has failed to live up to Japanese standards, pro- fessional standards among managers in Britain have improved greatly over the past 25 years. The potential of a widening Europe and the Japanese penchant for locating more plants in Britain provide the best reasons for brighter future prospects. An evaluation of the nature and potential applications of Japanese manage- ment is given in Management in Action 3.1 at the end of this chapter. TOWARDS A SCIENTIFIC VALUE APPROACH? It might be that the study of organisations, their structure and management is moving towards a more scientific approach. Management science can assist managers in the analysis of complex problems that are subject to quantitative constraints and in the optimisation of decisions to such problems. It may also assist in the establishment of broad theory. However, many operational problems in organisations relate to the nature of human behaviour and the people–organisation relationship, and do not lend themselves to the application of a scientific answer. There are no definitive or final solutions to the problems of organisations. The nature of work organisations and the environment in which they operate is becoming increasingly complex and subject to continual change. However, at least we do under- stand more about the dynamics of management and organisational behaviour as a basis for the analysis of human behaviour in organisations.78 Balance Miner, however, suggests that although the degree of commitment to the scientific between value system is increasing, as yet there is insufficient research to move the field entirely philosophy into science, completely divorced from philosophy. At present management theory is and science clearly in the ‘schools’ phase. As discussed earlier, it is possible to argue over the use of the term ‘schools’. However, whatever terminology is used, and whatever the state of our knowledge, the message from Miner is clear: … schools of management thought are very much a reality, and the management student who approaches the field without at least a minimal understanding of them does so at some risk.79 According to Crainer, management is active, not theoretical. But management is nothing without ideas. Ideas drive management as surely as the immediate problems which land on managers’ desks or which arrive via their e-mail. Decisions have to be based on ideas, as well as instinct. Without ideas managers flit desperately from crisis to crisis. They cannot know where they are going, why they are doing something or what they will achieve, without the fuel of ideas.80 EXHIBIT 3.2 Tools that do the business: management theories FT A new survey helps executives sift through the vast array of management theories, writes Tom Lester. anagement theories are an easy target for jokes: ‘Managers worldwide are under increasing pressure M the pompous language, the second-rate ideas and the flimsy research base make even the most pop- to produce shareholder returns,’ says Darrell Rigby, who heads techniques research at US consultancy Bain ular techniques sound ridiculous. But demand for them & Co. Its sixth global annual study* of the use of manage- is stronger than ever, with new theories appearing as ment techniques is aimed at helping managers sort fast as others go out of fashion. Management consult- through the array of theories, and reject ‘those that are ants have never been busier. just fads’. ᭤
- 118. 92 PART 1 MANAGEMENT AND ORGANISATIONAL BEHAVIOUR Exhibit 3.2 continued Mr Rigby surveyed 475 companies in the US and Europe process re-engineering in 1995, the peak year of popularity during 1999. A third of the companies had sales revenues for the technique, compared with only 56 per cent in Europe. of more than Dollars 2bn (Pounds 1.3bn), while 27 per cent The following four years showed a sharp decline across had sales of between Dollars 600m and Dollars 2bn. He the Atlantic in the use of process re-engineering but less so explained 25 management techniques, ranging from the in Europe, and last year the two groups were virtually level. straightforward, such as strategic planning, to the more The techniques began to lose popularity when compa- esoteric ‘agile strategies’ and competitive gaming. As well nies reported that 70 per cent of re-engineering projects as examining which techniques are in most common use, were not delivering the promised reductions in costs and the report looks at how satisfied companies are with them. life-cycle times. Although there are more than 100 recorded management A buoyant global economy may also be part of the techniques in use**, Mr Rigby chose the 25 he judged explanation for the general fall in the popularity of process ‘most relevant to senior management, topical and mea- re-engineering. Respondents said strong sales and a short- sureable’. Effectiveness, he concedes, depends largely on age of staff had led them to focus on ‘tried and true’ how the techniques are used. ‘Anybody can use tools,’ techniques, such as benchmarking. says Mr Rigby. ‘I could wear the same trainers as Michael After process re-engineering, total quality management Jordan, but I sure as hell won’t get the same results.’ showed one of the sharpest falls in popularity last year, Mr Rigby says Bain is not in the business of selling these continuing a trend first detected in 1996. For the first time, or any other techniques, or helping other firms to sell theirs. TQM is now more widely used in Europe than in the US. ‘I get 50 or 100 calls each year from people wanting me to Perhaps the priority in the US last year, when TQM was add their tools to the survey,’ he says. Nor is the company used by 41 per cent of respondents, compared with 55 per hunting for the next ‘big idea’, although his firm probably cent the previous year, was to get the goods out of the would not mind if one came along. door, but perhaps quality standards have also improved. The last great management fad was process re- Certainly, Japanese companies no longer enjoy as big a engineering, the unplanned blockbuster technique devised quality advantage as they did in the 1980s. in 1990 by CSC Index, a US consultancy, which doubled If the lessons have not sunk in by now, the laborious the firm’s revenue at the height of its popularity in the mid- paperwork demanded in formal TQM methods is unlikely to 1990s. According to Mr Rigby, the technique promised to help the technique regain its popularity. ‘redesign business processes to improve productivity’. Some of the 25 tools studied held their own against the The latest survey shows that last year companies used overall decline in use. Strategic planning, mission and an average of 11 of the 25 selected techniques, down from vision statements, the balanced score card (working to a the previous study’s findings of more than 13. wide range of performance measures, not just financial Rightly or wrongly, companies rely on management tech- ratios), and merger integration teams (to secure the bene- niques to help them create value. But it is not the number fits of integration) all did well. of tools used that counts: Mr Rigby advises companies to use a few tools well, concentrating on the mainstream ones Although the use of merger integration teams might such as strategic planning and benchmarking. Those that sound more like common sense than a specific manage- do, he claims, achieve superior financial results. ment technique, and will reflect the level of M&A activity of Benchmarking (detailed comparison of the performance the moment, it is increasingly popular in the US. of a part of an organisation with similar operations else- Such teams are more common in the US than elsewhere where), tops the poll in Europe, as it has for the previous – 38 per cent in North America compared with 18 per cent two years. in Europe, where management audits among the merged In North America, strategic planning, used by 89 per companies are fast growing in popularity. cent of companies, is the favourite technique. Viewed objectively, the fact that some management tools Benchmarking comes only third in North America, while have consistently scored 70–90 per cent among users over strategic planning comes third in Europe. the last five years is remarkable. However informally they Mission and vision statements take the number two slot are being used, the fact that some techniques remain on both sides of the Atlantic. Measuring customer satisfac- perennial favourites shows how much support insecure tion comes fourth on both continents. managers still need to tackle business problems. European companies, perhaps unsurprisingly, generally *Copies of the survey are available from Bain & Co use fewer management tools than the North Americans (and www.Bain.com London office: 020 7723 0208 ** Guide to the British rather less than other Europeans). But, as the Management Ideas, Tim Hindle, Economist Books/Profile chart shows, European behaviour is more consistent: 78 per Books 2000. cent of the North American companies surveyed used (Reproduced with permission from the Financial Times Limited, © Tom Lester)
- 119. CHAPTER 3 APPROACHES TO ORGANISATION AND MANAGEMENT 93 BENEFITS TO THE MANAGER Whatever the balance between philosophy and science, a knowledge and understand- ing of management theory will help with the complexities of management in modern work organisations. No single approach to organisation and management provides all the answers. It is the comparative study of different approaches which will yield bene- fits to the manager.81 There is of course no shortage of new ideas on organisational behaviour and management thinking. To what extent, however, do these ideas lead to improved organisational performance? There is undoubtedly much scepticism and crit- icism of management gurus. For example, according to Crainer, the past 30 years have seen management thinking in a state of perpetual flux with a relentless quest for new ideas, such as corporate strategy, the nature of management, culture, quality and the Japanese approach, excellence, the re-emergence of leadership, competitive advantage, empowerment, and re-engineering. Crainer believes that this is what managers have been doing all along, but how well they have succeeded is a matter of debate. Comparing past and present is diverting, but provides more questions than answers. What can be said is that managers remain open to new lights and that over 30 years the sheer profusion of ideas has, at times, been overwhelming.82 Crainer also suggests that as one idea after another fails to translate into sustainable practice, there is a growing disillusionment with the pedlars of managerial wisdom. Yet, the desire for instant solutions which tackle all managerial problems in one fell swoop remains strong. … Amid the hard sell, the quick fixes and organisational placebos, it is true to say that there is little that’s original. But, without gurus, managers would lose a rich source of inspi- ration, information and controversy.83 Reporting on a 12-year study of the knowledge and use of management concepts in technical organisations, Flores and Utley suggest that a look back at the theories and principles that have been taught in the past could give an indication of the success of any new approach and help prepare today’s and tomorrow’s managers for the future.84 And Stern has this to say: ‘Management thinkers still have a lot to tell us. You don’t have to believe everything they say, but they may at least offer stimulation; they might provoke senior managers into abandoning complacency and trying to see problems in a new light.’85 There are then many aspects to management. There are no simple solutions, no one best way to manage. However, the study of organisations, their structure and manage- ment is still important for the manager and remains an indispensable part of the job. CRITICAL REFLECTIONS ‘All these different theories and ideas about organisations and management, but what practical value do they have?’ … ‘Without some framework of study it would be even more difficult to learn about the complexities of management’ … ‘The study of management may help us to solve some of the old problems, but to what extent does it help us to solve the new problems we face in our organisational lives?’ What are your own views?
- 120. 94 PART 1 MANAGEMENT AND ORGANISATIONAL BEHAVIOUR Critical reflections continued It is obvious from even a cursory glance at the history of management science that science and technology are considered to be key instruments in solving workplace problems and in control- ling workplaces … While Taylorist scientific management may have its academic critics, management science is thriving. It is itself a large business, providing employment for manage- ment consultants whose sole concern is solving workplace problems of other corporations. Bradley, H., Erickson, M., Stephenson, C. and Williams, S. Myths at Work, Polity Press (2000), pp. 96–7. How would you attempt to argue BOTH for and against this point of view? ‘The study of different approaches to organisation and management and the development of organisation theory has no practical relevance for today’s managers. It is really no more than a luxury for students and the time could be spent better on other topic areas.’ Debate. SYNOPSIS ■ The study of organisation and management has to proceed on a broad front. A cen- tral part of this study is the development of management thinking and what might be termed management theory. In order to help identify main trends in the development of management thinking and organisational behaviour, it is usual to categorise the work of leading writers into various ‘approaches’ based on their views of organisations, their structure and management. This provides a simplistic framework on which to direct study and focus attention. ■ The classical writers placed emphasis on purpose and structure, on the technical requirements of the organisation, and on the assumption of rational and logical behav- iour. The human relations writers emphasised the importance of the informal organisation and the psychological and social needs of people at work. The systems approach focuses attention on the interactions between technical and social variables. The organisation is seen in continual interaction with the external environment. Contingency theory highlights possible means of differentiating between alternative forms of structures and systems of management. ■ This four-fold categorisation provides a useful starting point for the identification of main trends in the development of management thinking. Within this framework, however, it is possible to identify a number of other approaches or sub-divisions of approaches. The decision-making approach emphasises the need for good information and channels of communication. Social action writers attempt to view the organisation from the position of individual members who will each have their own interpretation of the work situation in terms of the satisfaction sought and the meaning that work has for them. ■ With the development of the information and technological age the need arises for alternative forms of corporate structure and systems. A more recent view is the idea of postmodernism. This rejects a rational systems approach to our understanding of organ- isations and management, and to accepted explanations of society and behaviour. Postmodernism is arguably more of a generalised sociological concept rather than a
- 121. CHAPTER 3 APPROACHES TO ORGANISATION AND MANAGEMENT 95 specific approach to organisation and management. Nevertheless, postmodernist organ- isation can arguably be seen as a healthy challenge to more traditional approaches and reminds us of the complexities in our understanding of management and organisa- tional behaviour. ■ Whatever form of categorisation is adopted, the division of writers on organisation and management into various approaches offers a number of advantages. For example, it helps in organisational analysis and the identification of problem areas. It enables the manager to take from the different approaches those ideas which suit best the par- ticular requirements of the job. There are, however, a number of caveats which should also be noted including the significance of cultural contexts. In more recent years attention has been given to potential applications of Japanese management. ■ It might be that the study of organisations is moving towards a more scientific value approach. However, whatever the balance between philosophy and science, a knowledge of management theory will help with the complexities of management in modern work organisations. There is much scepticism and criticism of management gurus but the study of organisation theory is an indispensable part of the job. Ideas are as important to management decisions as is instinct. It is necessary to view the interre- lationships among the development of theory, behaviour in organisations and management practice. MANAGEMENT IN ACTION 3.1 Japanese management Particularly in the 1970s and 1980s many companies sought ■ Participative decision-making to emulate the characteristics of Japanese management. This ■ Bottom-up management led to ongoing research into all aspects of Japanese manage- ■ Lifetime employment ment by both industry and academia. Opinions varied as to ■ Amae-dependency relationships whether these techniques could be applied outside of Japan ■ Lean production due to historical and cultural factors. This account looks at A common factor to the above is teamwork. Academics attrib- the origins and influences that led to Japanese management ute this historically to rice growing. Rice symbolises much techniques and their potential applications. The question is more to Japanese people than a commodity crop. It is not only then posed as to whether these techniques can apply, in used as a form of payment but has spiritual significance as whole or in part, internationally. Finally, recent developments well. In essence rice production needed teamwork to flourish.86 in these techniques are assessed against a backcloth of Similarly religious thought has a part to play. Confucianism recession and recovery in Japan. in China eventually spread to one of China’s provinces (Japan) where ‘Soshi’ taught the importance of harmony or ORIGINS AND INFLUENCES ‘Wa’. In reality there are many religious influences today. However, it may be argued that the Japanese are eclectic, in In order to understand key concepts of Japanese manage- that they retain core influences and values while assimilating ment it is necessary to examine the influences that have ‘outside influences’, here meaning religion. Shinto is probably brought this about. These have produced high levels of team- the oldest of these influences, probably pre-dating ‘Soshi’ or work, an atmosphere of innovative ideas, and a willingness to ‘Confucianism’ by 100 years. Within Shinto thought, it is the constantly improve (Kaizen). Add to the legendary quality, spirit that is important. It is the spirit which guides many target cost management and infrastructure support and one enterprises. A related concept is that of ‘animism’. This holds can begin to understand the part that human relations has that everything, even inanimate objects, has a spirit. This may been playing in the Japanese miracle. account for the very low incidence of crime to property in Volumes have been written both on the influences and the Japan, for example; or alternatively, why it is possible to risk outputs that these have produced. It is sufficient here to sum- expensive items such as television displays in public which marise them briefly. would more than likely be vandalised in the West. ᭤
- 122. 96 PART 1 MANAGEMENT AND ORGANISATIONAL BEHAVIOUR Management in Action 3.1 continued Buddhism, in particular Zen Buddhism, teaches intuition ‘tensai’ or genius, that is the ability to be original/creative. that, for example, Japanese management can utilise its expe- This alone is insufficient but must be geared to hard work, rience base for helping to develop new products or train new ‘kinben’ and perseverance, ‘gamanzujoi’.88 recruits. Important work by I.L.O. Geneva has found that Lifetime employment is the reward that an employee Japanese managers rely more on intuition than their Western seeks in return. However, while seeking to honour this com- counterparts. Zen also teaches that one must view problems mitment, modern trends are eroding this time-honoured within their ‘holistic setting’. Hence this helps to focus on tradition (see later). In 1994 Nissan sought to redeploy its causes of problems not effects. This has linkages into oriental workforce following the closure of a major plant. This avoided medicine, for example, treatment of the whole person. mass redundancy.89 ‘Participative decision-making’ requires consultation and discussion. The now famous ‘Ringi’ process is but one mani- Training and development festation of this process. This leads to the ‘nemawashi’ or An important study compared the logbooks of 50 engineers ‘root binding’ followed seemingly by endless negotiation. It is in Japan with a matched sample of 50 engineers in the UK..90 as though the spirit guides the organisation, or plays a part, Results showed that in Japan learning opportunities were and decisions evolve from the discussions. ‘Bottom-up’ deci- maximised on the job itself. Managers typically spent sion-making means that consensus decision-making really between 25 per cent and 50 per cent of their time developing does include potential contributions from all concerned. and training their staff. This was regarded as the prime role of For lifetime employment to exist, it requires commitment the manager. The above takes place via evening seminars, both from the employee and the employer. In the case of the meetings, courses, secondments, shadowing and mentoring. former ‘selfless devotion’ to the master can be traced to There are also parts of personnel development plans which Confucianism. Regarding the latter, the employer can only are individually agreed with employees. provide employment continuity if there is a constant demand for the products of the organisation. In recent time, both this Total Quality Management (TQM) and other concepts have been and are being challenged. The origins of TQM may be traced to Deming in the 1950s. The ‘amae-dependency’ concept is one in which an indi- This was a time in which Japanese quality in certain product vidual gives loyalty in return for favour or help. It is this fields was poor. As with so many concepts, the Japanese dynamic which accounts for ‘groupism’. Hence groups took them and developed them further. Quality is proactive in develop that favour their own members. Comparisons have that the Japanese believe in quality monitoring and problem been drawn between the ‘clan’ system87 and groups. Hence rectification on the spot. Hence this avoids costly reactive the ‘in’ group is referred to as the ‘Uchi’ group, the ‘other’ problem-solving, because, for instance, there are more com- group being referred to as the ‘Soto’ group. Some academics ponents on the chassis by then (applying for example to car are of the view that this leads to relationships with other ‘pre- production or TV production). ferred’ companies externally. These relationships are held in Hence responsibility for quality is devolved down to the place by trust and confidence in the form of Japanese corpo- shopfloor teams. This is supplemented by weekly team meet- rate networks. ings.91 These also act as a platform for new ideas/processes. Cost control/lean production APPLICATIONS OF JAPANESE MANAGEMENT Managers constantly measure productivity and costs. The In the opening section key cultural and religious factors that dual aim is to constantly improve quality while reducing play an important role within Japanese management were costs. The concept of target cost management seeks to set outlined. To this one must add some historical inputs, in par- budgets based on future cost levels rather than on historic ticular the contribution of academics Deming and Juran. cost levels as in the West. This allows for continuous Following the American occupation of Japan, US policy improvement or ‘Kaizen’ concept to take place. Hence middle changed from one of disabling Japan’s war machine to post- managers are given ‘tip-toe’ objectives as part of their war reconstruction. 1948 therefore was a significant year. As appraisal interviews. These are set to stretch the person in part of this programme, US aid included visiting academics. order to attain them. In turn the organisation is stretched. Deming’s early lectures and recurrent visits were the seeds for quality management. Deming also introduced ‘value chain Employee ideas, creativity and participation management’, ‘modern marketing’ and marketing research as Nonaka encapsulates the strategic importance of company well. These influences will be examined later. generated ideas. In an economy where the only certainty is uncertainty, the Employee selection one sure source of competitive advantage is knowledge. As mentioned previously, loyalty is essential/expected. This is When markets shift, technologies proliferate, competitors viewed both in terms of loyalty to one’s work group/team and multiply and products become obsolete virtually overnight, also to senior management. Hence prospective employees successful companies are those that consistently create are screened for their ability to work in teams. Next compe- new knowledge, disseminate it widely throughout the tence is assessed. This is viewed in terms of what is organization, and quickly embody it in new technologies contributed to the group. ‘Competence’ is composed of and products.92
- 123. CHAPTER 3 APPROACHES TO ORGANISATION AND MANAGEMENT 97 This quote reveals much about employee suggestions, team- educated workforce. In Mexico, the absence of education in work, and consensual management. Employee suggestion some Japanese plant locations led to high turnover of schemes in the West once thought to have some use are, in employees and only partial implementation of Japanese man- fact, essential. In addition knowledge must be distributed agement techniques.98 throughout the organisation.93 In the case of quality circles, when a quality leader emerged other members of the team would not accept that CAN JAPANESE MANAGEMENT BE APPLIED person as leader. Hence the concept had to be changed to INTERNATIONALLY? ‘Mariachi circles’. The hidden acceptance was due to the fact that ‘Mariachi’ musical bands in Mexico do not have a leader. Critics of Japanese management point to difficulties in apply- Research into ‘Maquiladoras’, that is, Japanese overseas ing Japanese management techniques internationally due to divisions in Mexico, regarding the adoption of Japanese man- cultural and historic factors. Either the absence of team factors agement techniques, found that initially they were low skilled or historical factors are seen as preventing the assimilation of locations which did not use advanced manufacturing tech- HRM practices from Japan. However, recent research by the niques. However, in recent time consumer electronics DTI has found that a synthesis of Japanese and European companies were found to be using advanced techniques.99 practices was present in the best performing UK organisations.94 Findings are shown in itemised form below: RECENT CHANGES IN JAPANESE MANAGEMENT ■ All staff shared in business planning; ■ People are continuously developed; Important changes in the Japanese economy have exerted ■ Communication is three way: up, down and across; an influence on Japanese management. The question is ■ Employees work in teams, co-operation is between teams now whether or not the once-heralded practices can them- as well as within them. selves adapt. The labour market in Japan has had to adapt to cost cut- Readers are left to form their own opinion of the value of ting within industry.100 This has affected the conditions international human relations! underpinning lifetime employment. Companies have had to There is a lot of evidence to support the transfer of shed labour in addition to early retirement. Women have also Japanese management internationally. Yet within these been discriminated against as part of cost-cutting plans. organisations Japanese concepts are not all applied whole- Companies have decided to outsource some business func- sale.95 How many companies follow the practice of morning tions such as accountancy and to take on temporary company exercises or sing the company song? In reality only certain aspects of Japanese practices have transferred. Chief employees. Another casualty has been middle management. amongst them is ‘teamwork’. Many organisations rate this Typically this has been large in Japanese companies. As a factor as an essential in job descriptions nowadays. However, result middle managers are joining ‘unions for management’. the model used is a derivative of the Japanese model. In addition, the tradition of promotion for length of service is Similarly ‘Just In Time’ (JIT) is just one aspect of the ‘Kanban’ giving way to performance remuneration.101 The advent of the or card assembly system in car production. This seeks to global economy means that shareholders can now exert influ- match parts supply rate with production rate with sales rate ences on business and its performance. or what we refer to now as material requirements planning. Against the arguments concerning the impacts of labour Target cost management within companies is now part of surplus and company cost cutting, it is often mentioned by strategic accounting, yet many organisations in the UK are demographers that Japan’s ageing population may soon rec- not using these techniques. Externally to a company, cost tify the imbalance of work availability, volitionally. Culturally it reduction via management of the supply chain is only recently should be remembered that Japanese people do not like gaining in importance. changing jobs. They view with suspicion anyone who changes jobs frequently (if at all). They regard it as shameful Training and an educated workforce to switch one’s loyalty to another company.102 An idea of the emphasis Japanese companies place on the Legally the Employment Security Law of 1947 forbade correct mental attitude and skill level may be gauged by their employers from advertising for labour and from hiring any attention to training, as mentioned above. In addition and worker whose job change required a change of residence.103 especially in the case of overseas divisions, company pro- However, the presence of temporary, short-term employment grammes are designed ‘to re-educate’ their prospective bureaux is an example of the way in which economic conditions workforce. At Matsushita specific efforts are focused to instil are forcing companies to rethink their employment policies. ‘team effort’ and an ‘egalitarian ethos’. This tends to have an An interesting approach to overstaffing has been to move adverse reaction on American employees, for example, who employees to suppliers, ‘Shukko’. As mentioned previously, are used to individual responsibility and advancement.96 suppliers owe an obligation to their parent company. Hence Another important difference concerns ‘information dis- they accepted these surplus workers but at a reduced salary semination’. At NEC in Scotland employees were surprised at level. Those in this category included middle managers over the need to attend daily meetings. This allows everyone to be 55 years of age, surplus technical managers and workers informed and to express opinions and to be involved.97 It from curtailed production lines.104 This in turn has led to ten- appears that for successful introduction of Japanese man- sions between the accepting supplier companies called agement techniques, two requirements are training and an ‘ukezara’ and the parent companies. The former comment ᭤
- 124. 98 PART 1 MANAGEMENT AND ORGANISATIONAL BEHAVIOUR Management in Action 3.1 continued that they have to suffer cuts in orders, prices and receive CONCLUSION excess workers. This is referred to as subcontractor bullying or ‘shitauke ij ime’.105 By way of conclusion, if anything Japanese management The net effect of these trends has been to downsize and demonstrates an ability to adapt to harsh economic conditions. also to ‘flatten’ organisational structures. In response to this, That adaptation is itself a product of Japan’s unique history many middle managers are joining unions or elect to shift and culture. This has produced a series of ongoing and devel- jobs. The payment system based on seniority, ‘senko’, is oping techniques that companies worldwide seek to emulate, being replaced by performance pay as mentioned. Within transfer and hopefully further improve. This in itself has led to a new field in HRM, that of International HRM This seeks to study organisations managers feel that this will damage morale the problems of transferring Japanese management worldwide. and group cohesion. The tradition of older workers helping Implicit in this research is cultural distance theory. By this is younger more inexperienced workers may also be threat- meant whether the indigenous culture in the host country is ened.106 Within the UK, Japanese companies are now having near to or far removed from that of Japan. It will be interesting to focus upon developing local employees, moving to per- to see, within this context, the impact of Japanese manage- formance-related, locally based payment systems, according ment techniques within China.109 China is set to become a to Arthur Andersen.107 They report that there is still a ten- major player among the world economies. Perhaps China’s dency for head offices to dictate/influence levels of pay culture is nearer to that of Japan and will perhaps assimilate abroad. However, in all only 10 companies have substituted Japanese management techniques more easily as a result. performance-based pay and promotion for seniority-based I am grateful to my colleague, Roger Dace, Department of Business and systems (nenko).108 Management, University of Portsmouth for providing the above information. REVIEW AND DISCUSSION QUESTIONS 1 Identify, and outline briefly, major trends in management theory since the beginning of this century. 2 Assess critically the relevance of scientific management to present-day organisations. Illustrate your answer with reference to your own organisation. 3 To what extent is there anything positive to be said for bureaucratic structures? Select a large-scale organisation of your choice and suggest ways in which it displays characteris- tics of a bureaucracy. 4 What are the main conclusions that can be drawn from the Hawthorne experiments? Discuss critically the relevance of these experiments for management and organisational behaviour today. 5 Summarise the main features of the neo-human relations approach to organisation and management. How does it differ from other approaches? 6 Evaluate the application of the systems approach to the analysis of work organisations. Suggest an example of a work situation in which the systems approach might be appropriate. 7 Contrast approaches to improving organisational performance based on attention to technical and structural requirements, with those based on concern for psychological and social factors. 8 Explain what is meant by a social action approach. Assess critically the practical rele- vance of ‘action theory’. 9 Give your own views, with supporting reasons, on the relevance and applications of Japanese management outside of Japan. 10 Debate critically the extent to which the study of organisation theory and the ideas of management gurus have any practical relevance or benefits for managers.
- 125. CHAPTER 3 APPROACHES TO ORGANISATION AND MANAGEMENT 99 ASSIGNMENT 1 a Answer each question mostly agree or mostly disagree. Assume that you are trying to learn something about yourself. Do not assume that your answer will be shown to a prospective employer. Mostly Mostly agree disagree 1 I value stability in my job. 2 I like a predictable organisation. 3 The best job for me would be one in which the future is uncertain. 4 The Army would be a nice place to work. 5 Rules, policies and procedures tend to frustrate me. 6 I would enjoy working for a company that employed 85 000 people worldwide. 7 Being self-employed would involve more risk than I’m willing to take. 8 Before accepting a job, I would like to see an exact job description. 9 I would prefer a job as a freelance house painter to one as a clerk for the Department of Motor Vehicles. 10 Seniority should be as important as performance in determining pay increases and promotion. 11 It would give me a feeling of pride to work for the largest and most successful company in its field. 12 Given a choice, I would prefer to make £30 000 per year as a vice-president in a small company to £40 000 as a staff specialist in a large company. 13 I would regard wearing an employee badge with a number on it as a degrading experience. 14 Parking spaces in a company lot should be assigned on the basis of job level. 15 If an accountant works for a large organisation, he or she cannot be a true professional. 16 Before accepting a job (given a choice), I would want to make sure that the company had a very fine programme of employee benefits. 17 A company will probably not be successful unless it establishes a clear set of rules and procedures. 18 Regular working hours and vacations are more important to me than finding thrills on the job. ᭤
- 126. 100 PART 1 MANAGEMENT AND ORGANISATIONAL BEHAVIOUR Assignment 1 continued 19 You should respect people according to their rank. 20 Rules are meant to be broken. b You should then consider and discuss the further information supplied by your tutor. ASSIGNMENT 2 In self-selecting groups of three or four, visit a work organisation of your choice, preferably one that is well known to at least one member of your group. a Investigate those features of the structure, management and operations of the organisation which are characteristic of: (i) scientific management; and (ii) bureaucracy. Comment critically on what you believe to be the practical effects of your set of character- istics, and give examples in support of your comments. b For the same, or a different, organisation, comment critically, with supporting examples, on the extent to which applications of the human relations approach to organisation and man- agement have been applied in practice.
- 127. CHAPTER 3 APPROACHES TO ORGANISATION AND MANAGEMENT 101 PERSONAL AWARENESS AND SKILLS EXERCISE OBJECTIVES Completing this exercise should help you to enhance the following skills: ᭤ Demonstrate your knowledge and understanding of scientific management techniques. ᭤ Write an objective set of instructions for undertaking a simple piece of work. EXERCISE Using the example on page 73 as a model, you are required to develop a detailed pro- gramme using scientific management techniques for a simple household task such as: ■ Parking a car or booking an airline ticket. ■ Cooking a simple meal (for example spaghetti bolognese). ■ Bathing a small child. ■ Rearranging 100 CDs in alphabetical order, 10 to each shelf. ■ Washing up. DISCUSSION ■ What are the potential up- and downsides of removing operator discretion in this way? ■ Explain with supporting reasons those tasks or activities that you believe are particularly suited to a scientific management approach. ■ How do YOU feel about carrying out routine tasks on an ongoing basis over which you are given little personal discretion? Visit our website www.booksites.net/mullins for further questions, annotated weblinks, case material and Internet research material.
- 128. 102 PART 1 MANAGEMENT AND ORGANISATIONAL BEHAVIOUR CASE STUDY 3.1 Helgaton Ltd: organisational theory in practice Laurie Mullins and Ian White This case study presents the result of an empirical made in implementing the concept of autonomous investigation that attempts to assess the extent to work groups. which organisation theory has any practical appli- cations for managers in a modern commercial THE SITUATION organisation. An investigation was undertaken with the aim of addressing the practical applicability of organisation BACKGROUND theory at Helgaton Ltd and the extent to which it The overall mission of Helgaton Ltd is to deliver qual- meets the needs of the manager. This involved the ity business products and systems throughout the UK analysis of published material already available and Ireland. The company employs more than 4000 within the company (secondary data) and informa- people in nearly 50 locations. In order to help in the tion generated firsthand from personal interviews drive to fulfil the mission, there are four stated with managers (primary data). ‘Common Goals’ related to customers, quality, prof- Secondary data itability and employees. These Common Goals are intended to provide central direction and focus for Helgaton Ltd produces an enormous amount of liter- departments and the individuals within them. ature aimed at informing and aiding the employees. This literature may be seen to reflect, in part, the Emphasis on quality management and structure of the company. Some The continuing desire of Helgaton Ltd to become a examples are as follows. Total Quality Company is the embodiment of cor- ■ Company manuals. Company manuals were found porate values. Quality is a basic business principle to be very specific in terms of policy and pro- and means providing customers with innovative cedure. For example, departmental manuals products and services that fully satisfy their negoti- explain policy in infinite detail and an accompa- ated requirements. This philosophy is reflected for nying manual details every step required in example in terms of the BS 5750 status awarded to carrying out this policy. Employee manuals are in Helgaton Ltd by the British Standards Institute. similar detail and include an analysis of the required manual skills. Tasks, goals and objectives ■ Autonomous Work Groups (AWG). A comprehensive In consideration of the overall mission of Helgaton set of documents has been prepared by the com- Ltd, the corporate plans are embodied within a pany which set out: the AWG environment; the series of functional Tasks, Goals and Objectives need for change; what is the AWG; the vision; (TGO). Each individual employee receives a TGO limits of responsibilities; benefits to the individual; which is a translation from the functional level into benefits to the company; and hopes and concerns. the targets and actions which are relevant for the ■ Organisational processes. The recruitment and individual job role. selection process is based on scientific principles. Detailed Job Profiles are built up and for inter- Restructuring view purposes comprehensive Candidate Profiles Helgaton Ltd is also a change-oriented company. are constructed. If suitable candidates have the During 1992, a major restructuring process was right technical qualifications and pass the appro- undertaken. In order to provide a more customer- priate psychometric testing, they are matched responsive structure a whole layer of middle against the job profiles. Other ‘tools’ include management was removed from the customer serv- detailed processes intended to help employees in ice division. Attention was also focused on problem-solving and to improve quality. developing closer teamworking among sales and ■ The employee survey. This survey and analysis is service operations rather than operating as separate carried out every year and is undertaken by an divisions. A large financial investment had also been independent research company. The survey
- 129. CHAPTER 3 APPROACHES TO ORGANISATION AND MANAGEMENT 103 involves a wide range of questions related to sub- Pilot study jects such as management systems and styles; In order to test the reliability of the interview, a working conditions; training; career develop- pilot study was undertaken involving a representa- ment; pay; benefits; job security; team spirit; and tive member of the population. This pilot study overall job satisfaction. highlighted two major issues. The same research company also provides a compar- ■ Many of the questions were either too open or ative analysis related to other companies that they too closed and needed to be refined. survey. Results of the survey are confidential within ■ Initially the responses were handwritten. This the company but currently overall job satisfaction was both costly in terms of time and, more within Helgaton Ltd is around the 55 per cent mark. importantly, revealed the risk of missing vital Primary data pieces of data. It was decided therefore to tape- record the interviews and to transcribe the results Although secondary data may provide an important at a later date. source of supporting information it does not by itself provide a sufficiently sound basis on which to In order to try to avoid the managers gaining a feel formulate any conclusions. In order to examine fur- for any particular sort of responses expected, the ther the application of organisation theory, it was questions were arranged so as not to be sequential. necessary to obtain more specific and detailed data. The revised list of questions used in the interviews is For this purpose use was made of the semi-struc- given below. tured interview with managers. 1 Do you feel that there are good channels of The survey population communication within Helgaton? The broad categorisation adopted was that of a man- 2 Do you have a clearly defined job role? If so, ager and non-manager dichotomy. Because of their where is it laid out? position and experience, managers were considered 3 What do you feel motivates Helgaton employees? to be the most appropriate population for the 4 How do you go about achieving your goals at survey and the resulting data more valid and easier work? to generalise. The population was quota sampled. 5 To what extent do you feel a change in technol- Attempts were made to balance, as far as possible, ogy would affect the way Helgaton operates? the demographics, location, and seniority and expe- 6 How do you plan your work? rience of the managers. A further consideration was 7 Why do you believe Helgaton has chosen the the availability of the managers’ time. Details of the empowered working group as the way forward? interviewee statistics are given below: 8 How would a subordinate employee describe your management style? Number interviewed 15 (11 male; 4 female) 9 To what extent do you feel teamwork is impor- Function tant to (a) Helgaton and (b) yourself? Customer Service Division 9 10 Do you feel Helgaton’s organisational structure Sales and Operations 4 is hierarchical? Personnel 1 11 To what extent do you see Helgaton Ltd as Finance 1 belonging to a larger environment? 12 Do you perceive there to be many technical Length of service requirements to your job? < 5 years 2 13 What are your personal goals at work? 5–10 years 1 14 What do you feel is the purpose of training an 10–15 years 3 employee? 15–20 years 2 15 What do you believe to be the basis of promo- > 20 years 7 tion at Helgaton? 16 How well do you see Helgaton’s management Length of time in management respond to change? < 5 years 4 17 To what extent do you plan the work of others? 5–10 years 3 18 Can you rate the following five factors in order of 10–15 years 5 importance to (a) Helgaton (b) yourself? Groups 15–20 years 2 and Leadership; Communications; Output; > 20 years 1 Motivation; Job Design.
- 130. 104 PART 1 MANAGEMENT AND ORGANISATIONAL BEHAVIOUR Case study 3.1 continued 19 Do you feel that an individual’s behaviour can doesn’t really matter so long as it is seen to be be predicted and if so, how? related to the four common goals’. 20 Do you believe there to be a clear division 5 Effects of technology. The responses made clear that between Helgaton management and subordinates? Helgaton Ltd is a technology-driven company, for 21 What other roles within Helgaton have you example the increasing use of mobile telephones. been involved in? However, two managers indicated that the sole 22 Do you feel Helgaton is keen to understand reason for the introduction of technology is to what satisfies an employee at work? increase productivity. The problems of introducing 23 Do you feel committed to a common purpose technology without the necessary full training were at work? also pointed out. 6 Planning of work. 60 per cent specifically stated that Collecting the data their work is planned by their diary. Management Interviews lasted on average just over one hour, were meetings at regular times in the month and regular arranged when managers could best spare the time meetings with customers, for example, largely dictated and took place over a period of about one month. their movements at work. One manager estimated that Managers were informed that the interview would be 50 per cent of time was dictated by the diary. taped and no one objected to this. The interview 7 Empowered working group. The importance of qual- involved asking the questions, elaborating and prob- ity (including the work of Deming) and the ing where necessary, and finding out more about the influence of Japanese working methods were cited manager’s background, in case this might affect any as examples. It was widely believed that the benefits of the responses. For the same reason the specific pur- to the customer, employee and business results justi- pose of the interview was not explained to the managers. fied the large expenditure on this concept. Many The tapes were then transcribed and tabulated. managers also highlighted the autonomous work group concept as an example of the application of Results of the interview questions organisation theory. (Note: some of the questions prompted more than a 8 Management style. When managers were asked single response, and so percentages may total more how their subordinates would describe their man- than 100.) agement style all apart from one (93 per cent) focused on terms such as ‘fair’, ‘democratic’, ‘sup- 1 Channels of communication. 33 per cent argued portive’, ‘honest’, ‘caring’ and ‘humanistic’. that channels of communication were good, 53 per 9 Importance of teamwork. All managers bar one felt cent that they were poor and 14 per cent argued totally committed to the importance of teamworking they were both good and poor. and believed it was the only way the business could 2 Clearly defined job role. All managers pointed to move forward. The autonomous work group concept their Tasks, Goals and Objectives (TGO) as evidence involved all employees including managers as well. of a clearly defined job role. The TGO relates the The increasing attention given to teamworking was four company goals to the employee. The most welcomed by the sales and operations managers who senior managers clearly stated the relationship expressed their commitment to the concept as being between company goals and that of the individual. the way forward to business success. Other managers argued that the TGO provided only 10 Hierarchical structure. 67 per cent indicated that an overview of their job role. It was also noted that the structure was not hierarchical in terms of spe- the lower down the organisational structure, the cific functions. However, 47 per cent argued that a more restrictive the perception of the TGO. hierarchy still existed within Helgaton Ltd or within 3 Motivation of employees. 73 per cent stated money particular functions. One manager suggested that as a clear motivator. Sales and operations managers ‘the principles of Taylor still exist within Helgaton’. claimed that motivation was also dependent upon 11 The larger environment. Although managers function: sales staff being motivated more by appeared to recognise that Helgaton Ltd was part of money and service staff by job satisfaction. Service a larger environment, responses tended to identify and personnel managers claimed it was pay. Only only broad elements such as the ‘Green’ issue. the most senior managers directly referred to the There were no responses which referred to particu- employee survey carried out each year. lar environmental factors influencing behaviour in 4 Achieving goals at work. Responses were of a gen- work organisations. eral nature such as: ‘by attention to and following 12 Technical requirements of the job. All claimed that my TGO’; ‘by hard work’; ‘whatever I do at work a high level of skill is needed to undertake their job
- 131. CHAPTER 3 APPROACHES TO ORGANISATION AND MANAGEMENT 105 role. The customer service managers had all come Table 3.1 Order of importance attributed to five factors through the ranks and started as service engineers. At Output that level technical requirements are high but at management level only a broad technical knowledge Imp. Hel. You Same is required; business skills are more important than 1 9 7 4 mechanical skills. Non-service managers also recog- 2 1 2 – nised the need for business and management skills. 3 – 4 – 13 Personal goals at work. 47 per cent claimed that 4 4 2 – their only goal at work was to achieve the targets set 5 1 – – by the company or to be the best region in terms of customer satisfaction. No conflict between business Total 15 15 4 goals and personal goals was revealed. However, only Groups and leadership senior managers clearly stated the relationship between the company goals and those of the individ- Imp. Hel. You Same ual. Some managers had targeted future managerial 1 5 5 3 positions in accordance with the company succession 2 3 1 1 planning programme but no details were disclosed. 3 4 3 1 14 The purpose of training employees. 87 per cent 4 3 3 – believed in the principle of training employees so 5 – 3 – that they become more efficient. 53 per cent recog- nised the importance of development of the Total 15 15 5 individual as a person, but this was a secondary fea- ture. One manager quoted the principle of Communications ‘self-actualising them’. Imp. Hel. You Same 15 Basis of promotion. In the majority of cases, man- 1 1 4 1 agers clearly stated ‘merit’ or ‘ability’ as the overt 2 3 2 1 belief. However, the ‘if your face fits’ syndrome was 3 9 4 3 also an apparent covert reason. One senior manager 4 1 4 – argued that with the removal of a layer of manage- 5 1 1 – ment promotion chances were reduced. 16 Management response to change. 73 per cent claimed Total 15 15 5 that they responded very well and some claimed to actually thrive on change. 27 per cent claimed that Motivation management has severe difficulty but the implication Imp. Hel. You Same appeared to be that this applied to other managers rather than to themselves. One manager pointed to 1 – 7 – the managing change training course offered by 2 6 3 1 Helgaton to help with any problem areas. 3 3 1 – 4 4 3 1 17 Planning the work of others. Of the eleven man- 5 2 1 – agers with line responsibilities 73 per cent (eight) indicated that they do not specifically plan the work Total 15 15 2 of their subordinates. Instead they tended to agree deadlines to work to and left subordinates to Job design achieve tasks their own way in the given time. The remaining three managers claimed that they Imp. Hel. You Same planned the work of others in great detail. 1 2 2 – 18 Importance of factors. Managers were asked to rate 2 – 2 – five factors in order of importance to both Helgaton 3 3 1 – Ltd and to themselves (they were permitted to tie 4 2 1 – answers). Results were then tabulated, as set out in 5 8 9 6 the table opposite. Total 15 15 6 For each heading, the first column shows the order of importance, the second column the importance they saw Helgaton Ltd attaching to each factor, the For example, according to nine respondents third column is their own ranking of the factor, and output is a factor that Helgaton would rate as the final column looks at responses which ranked the number one importance. Seven managers rated same for both Helgaton and the manager. output as their highest priority and of these seven,
- 132. 106 PART 1 MANAGEMENT AND ORGANISATIONAL BEHAVIOUR Case study 3.1 continued four also ranked output as of greatest importance to basis but only one manager had moved between Helgaton. Thus 57 per cent of those managers who functions on a permanent basis. believed output was the most important factor to 22 Satisfaction of employees. Managers felt that Helgaton also claimed it was their highest priority. Helgaton Ltd was keen to find out what satisfies 19 Prediction of behaviour. All the managers believed employees although some responses suggested this that the behaviour of an individual can be predicted might be only a ‘lip-service’ exercise. It was only the providing the individual is well known to them. most senior managers who directly linked their There were, however, no indications of whether any responses to the employee survey carried out each particular behavioural assumptions, for example year. 33 per cent highlighted the interest in satisfy- relating to motivation, job satisfaction or work per- ing the employee in terms of the time and money formance, are made in Helgaton Ltd. spent in undertaking the employee survey. 20 Division between management and subordinates. 93 23 Commitment to a common purpose. There was a per cent perceived there to be a division to some claimed 100 per cent commitment felt to a common extent although this may be from a subordinate purpose at work. However, the nature of this common only view and/or that these divisions were being purpose varied. Some managers expressed that they removed. Two managers further suggested that the felt committed to their TGO, some to the stated goals division was due, at least in part, to the benefits of Helgaton Ltd, some to their region, some to busi- received by managers when compared with subordi- ness results, and some to survival of the business. nates – for example bonus schemes and choice of company car. One manager stated clearly that there YOUR TASKS was no division. 21 Other roles within Helgaton Ltd. Within the cus- (a) Comment critically on the nature and value of the tomer division all nine managers interviewed had investigation. What difficulties does such an always worked in service. The other six managers investigation present and how might these difficul- had varied backgrounds but tended to remain in ties be best overcome? the same function. All the service managers indi- (b) State clearly the conclusions you draw from the cated that possible future moves would still be investigation and discuss the extent to which it within service. reveals practical applications of organisation theory. Although the company promotes the belief that (c) Explain and justify the specific recommendations cross-functional moves are possible, this appeared to you would make to the top management of be a rare occurrence on a permanent basis. 50 per Helgaton Ltd as a result of the investigation. cent had moved on a temporary or secondment NOTES AND REFERENCES 1. This chapter is based in parts on a development of the 5. McGregor, D. The Human Side of Enterprise, Penguin author’s articles: Mullins, L. J. ‘Approaches to (1987), p. 6. Management’, Management Accounting, vol. 57, no. 4, 6. Ghoshal, S., Barlett, C. A. and Moran, P. ‘Value April 1979, pp. 15–18, and Mullins, L. J. ‘Some Further Creation: The New Millennium Management Approaches to Management Theory’, Management Manifesto’, in Chowdhury, S. Management 21C, Accounting, vol. 58, no. 3, March 1980, pp. 30–3. Financial Times Prentice Hall (2000), p. 122. 2. See, for example: George, C. S. The History of Management 7. Miner, J. B. Theories of Organizational Behaviour, Thought, Second edition, Prentice-Hall (1972). Dryden Press (1980). 3. For a review of management thinking see, for example: 8. Skipton, M. D. ‘Management and the Organisation’, Sheldrake, J. Management Theory: From Taylorism to Management Research News, vol. 5, no. 3, 1983, pp. 9–15. Japanization, International Thomson Business Press(1996). 9. Fayol, H. General and Industrial Management, Pitman 4. See also: Flores, G. N. and Utley D. R. ‘Management (1949). See also: Gray, I. Henri Fayol’s General and concepts in use – a 12-year perspective’, Engineering Industrial Management, Pitman (1988). Management Journal, vol. 12, no. 3, September 2000, 10. Urwick, L. Notes on the Theory of Organization, pp. 11–17. American Management Association (1952).
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Today, March 1980, pp. 72–5, 152–6. 59. Walker, C. R. and Guest, R. H. The Man on the Assembly 82. Crainer, S. ‘That Was The Idea That Was’, Management Line, Harvard University Press (1952). See also: Walker, Today, May 1997, pp. 18–19. C. R., Guest, R. H. and Turner, A. N. The Foreman on the 83. Crainer, S. ‘The Rise of Guru Scepticism’, Management Assembly Line, Harvard University Press (1956). Today, March 1997, pp. 48–52. 60. Sayles, L. R. Behaviour of Industrial Work Groups, Wiley 84. Flores, G. N. and Utley, D. R. ‘Management Concepts (1958). in Use – a 12-year Perspective’, Engineering Management 61. Blauner, R. Alienation and Freedom, University of Journal, vol. 12, no. 3, September 2000, pp. 11–17. Chicago Press (1964). 85. Stern, S. ‘Guru Guide’, Management Today, October 62. Barnard, C. The Functions of the Executive, Oxford 2001, p. 87. University Press (1938). 86. Tudor, T. and Trumble, R. ‘Significant Historic Origins 63. Simon, H. A. The New Science of Management Decision, that Influenced the Team Concept in Major Japanese Revised edition, Prentice-Hall (1977). Companies’, Journal of Applied Business Research, vol. 64. Cyert, R. M. and March, J. G. A Behavioural Theory of 12, no. 4, Fall 1996, p. 116. the Firm, Second edition, Blackwell (1992). 87. Bhappu, A. ‘The Japanese Family: An Institutional 65. Silverman, D. The Theory of Organisations, Heinemann Logic for Japanese Corporate Networks and Japanese Management’, Academy of Management Review, vol. (1970), p. 147. 25, no. 2, April 2000, p. 412. 66. Goldthorpe, J. H. et al. The Affluent Worker, Cambridge 88. Khan, R. ‘Japanese Management: A Critical Appraisal’, University Press (1968). Management Decision, vol. 29, 1991, p. 17. 67. Fox, A. Industrial Sociology and Industrial Relations, 89. Channon, D. ‘Can Eastern H. R. Promise the West a HMSO (1966). New Dawn?’ Personnel Management – East Asia, vol. 2, 68. Bowey, A. M. The Sociology of Organisations, Hodder no. 17, 1996, p. 2. and Stoughton (1976). 90. Lorriman, J. ‘Life Long Learning in Japan’, Journal of 69. For further information see Crainer, S. Key Management European Industrial Training, vol. 19, no. 2, 1995, p. 2. Ideas: Thinkers that changed the management world, 91. Doeringer, P. and Evans-Klock, C. ‘Hybrids or Third edition, Financial Times Prentice Hall (1998). Hodgepodges Workplace Practices of Japanese’, 70. Clegg, S. R. Modern Organizations: Organization Studies Industrial and Labour Relations Review, vol. 51, no. 2, in the Postmodern World, Sage (1990). January 1998, p. 171. 71. Watson, T. J. Organising and Managing Work, Financial 92. Harari, O. ‘Flood your Organization with Knowledge’, Times Prentice Hall (2002), p. 51. Management Review, vol. 86, no. 10, November 1997, 72. Ibid., p. 50. p. 35. 73. See, for example: Legge, K. Human Resource Management: 93. Harari, O. ‘Turn your Organization into a Hotbed of Rhetorics and Realities, Macmillan Business (1995). Ideas’, Management Review, vol. 84, no. 12, December 74. Watson, T. J. Organising and Managing Work, Financial 1995, p. 39. Times Prentice Hall (2002), p. 254. 94. Pickard, J. ‘Personnel Management Research’, DTI, 75. Schneider, S. C. and Barsoux, J. Managing Across People Management, vol. 3, no. 15, 1997 p. 15. Cultures, Second edition, Financial Times Prentice 95. Thanopoulos, J. and Leonard, J. ‘Nourishing Hall (2003). American Business with Japanese Recipes’, Review of 76. Cheng, T., Sculli, D. and Chan, F. ‘Relationship Business, vol. 18, no. 1, Fall 1996, p. 7. Dominance – Rethinking Management Theories from 96. Inone, Y. ‘Foreign Staff Learn the Matsushita Way’, the Perspective of Methodological Relationalism’, The Nikkei Weekly, 15 March 1993, p. 11. Journal of Managerial Psychology, vol. 16, no. 2, 2001, 97. Anon. ‘At NEC, Meetings Are a Way of Work’, Japan pp. 97–105. Economic Journal, 3 February 1990. 77. Heller, R. ‘The Change Managers’, Management Today: 98. Sargent, J. and Mathews, L. ‘Expatriate Reduction and 25th Anniversary Issue, 1991, pp. 12–16. Mariachi Circles’, Personnel Management, vol. 28, no. 78. See, for example: Klein, S. M. and Ritti, R. R. 2, 1998, p. 77. Understanding Organizational Behavior, Second edition, 99. Kenney, M. and Goe, W. ‘Learning Factories or Kent Publishing (1984), Chapter 1. Reproduction Factories’, Work and Occupations, vol. 25, 79. Miner, J. B. Management Theory, Macmillan (1971), p. no. 3, 1998, p. 275. 145. See also: Miner, J. B. Theories of Organizational 100. Harney, A. ‘Young Japanese Losing Interest in Behaviour, Holt, Rinehart and Winston (1980), Lifelong Relationship with One Employer’, Financial Chapter 1. Times, 9 April 2000, p. 9.
- 135. CHAPTER 3 APPROACHES TO ORGANISATION AND MANAGEMENT 109 101. Kiso, T. ‘Just What You Always Wanted: Another 106. Op. cit., p. 43. Lecture About Japanese Management’, Insight Japan, 107. Walsh, J. ‘Japanese Forced into HR Strategy Rethink’, vol. 8, no. 2, October 1999, p. 34. People Management, vol. 3, no. 21, 23 October 1997, 102. Harney, A. and Abrahams, P. ‘Death of a Salaryman’, p. 16. Financial Times, 12 November 1998, p. 31. 108. Ornatowski, G. ‘The End of Japanese-style Human 103. Schmidt, R. ‘Japanese Management, Recession Style’, Resource Management’, Sloan Management Review, Business Horizons, vol. 39, no. 2, March 1996, p. 70. vol. 39, no. 33, Spring 1998, p. 73. 104. Op. cit., p. 73. 109. Dongsui, S. and Zhang, Y. ‘A Management Culture 105. Lincoln, J. ‘The Transformation of the Japanese Revolution for the New Century’, Journal of Applied Employment System’, Work and Occupations, vol. 24, Management Studies, vol. 7, no. 1, June 1998, p. 135. no. 1, February 1997, p. 39. Use the Financial Times to enhance your understanding of the context and practice of management and FT organisational behaviour. Refer to article 2 in the BUSINESS PRESS section at the end of the book for relevant reports on the issues explored in this chapter.
- 137. Part 2 THE 0RGANISATIONAL SETTING Part 1 Part 2 MANAGEMENT AND THE ORGANISATIONAL Part 3 ORGANISATIONAL THE ROLE OF BEHAVIOUR SETTING THE MANAGER Part 7 MANAGEMENT OF HUMAN Part 8 RESOURCES IMPROVING ORGANISATIONAL PERFORMANCE Part 4 THE INDIVIDUAL Part 6 Part 5 ORGANISATIONAL GROUPS AND STRUCTURES TEAMWORK
- 138. Dogbert’s Rule ofStrategies
- 139. 4 THE NATURE OF ORGANISATIONS The process of management and applications of organisational behaviour take place not in a vacuum but within the context of a particular organisational setting and environment. The organisation is a complex social system and is the sum of many interrelated variables. The operations of the organisation are influenced by the external environment of which it is part. The manager needs to understand the nature of organisations and the social context; and the main features which affect the structure, management and functioning of the work organisation. Photo: John Heseltine/Science Photo Library All organizations exist in multiple environments. They exist within the culture and social structure LEARNING OUTCOMES of the larger society, and they coexist in various After completing this chapter you should be able to: relations to other organizations with similar ᭤ explain the context of the organisation, common purposes, as well as disparate organizations and factors and basic components of an organisation; groups of people who may be owners, managers, ᭤ distinguish alternative types and classifications of employees, customers, clients, or simply ‘the organisations, and relate different organisations to these classifications; public at large’. Edgar Schein ᭤ examine the organisation in terms of an open systems Organizational Psychology, Prentice Hall (1988) model; ᭤ analyse organisations on the basis of interrelated sub-systems; ᭤ appreciate the influence of technology in work organisations and the impact of information technology; ᭤ explain the nature and importance of the informal organisation; ᭤ recognise the importance of the organisational setting.
- 140. 114 PART 2 THE ORGANISATIONAL SETTING THE CONTEXT OF THE ORGANISATION Organisations in one form or another have always been an integral feature of human civilisation. Although the origins of modern organisations can be traced back thou- sands of years they continually evolve and the organisations of today are clearly very different. The beginning of the 20th century with the emergence of large corporate entities, and the work of writers such as Frederick Taylor on scientific management and Max Weber on bureaucracy, drew attention to the importance of the work organisa- tion. In Chapter 1 we drew attention to the changing nature of work organisations today, and the impact on management and organisational behaviour.1 All organisations have some function to perform. Organisations exist in order to achieve objectives and to provide satisfaction for their members. Organisations enable objectives to be achieved that could not be achieved by the efforts of individuals on their own. It must be remembered that organisations are structures of people. Through co-operative action, members of an organisation can provide a synergistic effect. Organisations are an integral part of society involving both public and private sectors. For example, in their discussion of the new public services, Farnham and Horton define organisations as: … social constructs created by groups in society to achieve specific purposes by means of planned and co-ordinated activities. These activities involve using human resources to act in association with other inanimate resources in order to achieve the aims of the organisation.2 There are then many different types of organisations which are set up to serve a number of different purposes and to meet a variety of needs. Organisations come in all forms, shapes and sizes. Consider the diversification among such organisations as, for example: Firm of accountants Hotel School Leisure centre Retail shop Quarry works Local authority Government department Airport Pharmaceutical company Motor car manufacturer Bank Hospital Nationalised industry The structure, management and functioning of these organisations will all vary because of differences in the nature and type of the organisation, their respective goals and objectives, and the behaviour of the people who work in them. Let us now con- sider just two types of organisations towards the opposite ends of a possible continuum – say a maximum security prison and a university largely concerned with research – as a framework on which to focus attention. We can appreciate readily that although both types of organisation will be concerned with the basic activities of organisation and management, their goals and objectives, actual procedures and methods of opera- tion, structure, systems and style of management, and orientation and behaviour of members will differ considerably (see Figure 4.1). Common factors in organisations Not only are there many different types of organisations, there is some suggestion that cultural differences in countries can reflect different conceptions of what actually is an organisation.3 However, despite the differences, there are at least three common factors in any organisation: ■ people, ■ objectives, and ■ structure.
- 141. CHAPTER 4 THENATURE OF ORGANISATIONS 115 Figure 4.1 The nature of organisations It is the interaction of people in order to achieve objectives which forms the basis of an organisation. Some form of structure is needed by which people’s interactions and efforts are channelled and co-ordinated. To which we can add a fourth factor: ■ management. Some process of management is required by which the activities of the organisation, and the efforts of its members, are directed and controlled towards the pursuit of objec- tives. (See Figure 4.2.) The actual effectiveness of the organisation will be dependent upon the quality of its people, its objectives and structure, and the resources available to it. There are two broad categories of resources: ■ non-human – physical assets, materials and facilities; and ■ human – members’ abilities and influence, and their management. The interrelationship of people, objectives and structure, together with the efficient use of available non-human and human resources, will determine the success or failure of the organisation and the extent of its effectiveness. Among the variety of different approaches to organisation theory, Watson refers to one which stresses three common aspects of organisational life: ■ the importance of the creative, critical and situation-defining characteristics of the individuals who make up the organisation; ■ the varieties of interest and goal among individuals and groups in the organisation, and the emphasis on conflict and political behaviour; and ■ the interactions between the organisation and the general environment, and recog- nition that organisations make their environment as much as it makes them.4 THE FORMAL ORGANISATION The formal organisation can be distinguished from the informal organisation (which is discussed later in this chapter). The difference between the formal and the informal organisation is a feature of the degree to which they are structured.
- 142. 116 PART 2 THE ORGANISATIONAL SETTING Local authority Retail shop Airport Motor car School manufacturer Firm of Interactions and Hospital accountants efforts of PEOPLE in order to achieve OBJECTIVES PRISON channelled and co-ordinated UNIVERSITY through STRUCTURE directed and controlled via Nationalised MANAGEMENT Hotel industry Bank Leisure centre Pharmaceutical Quarry works company Government department Figure 4.2 Common factors in organisations A formal organisation has been defined by Schein as: the planned co-ordination of the activities of a number of people for the achievement of some common, explicit purpose or goal, through division of labor and function, and through a hierar- chy of authority and responsibility.5 An organisation is a pattern of roles and a blueprint for their co-ordination. The object of co-ordination is activities, not people. The formal organisation can exist independ- ently of the membership of particular individuals. The formal organisation is: ■ deliberately planned and created; ■ concerned with the co-ordination of activities; ■ hierarchically structured with stated objectives; and ■ based on certain principles such as the specification of tasks, and defined relation- ships of authority and responsibility. An organisation chart, for example, gives a representation of the formal structure. Other examples of the formal organisation are rules and regulations, policy manuals, standing orders and job descriptions. (See Figure 4.9 on page 135.) The The formal organisation can be seen as a coalition of individuals with a number of sub- organisation coalitions. 6 Membership of the coalition will be dependent upon the type of as a coalition organisation but could include, for example, managers, administrators, workers, elected representatives, appointed officials, volunteers, shareholders, suppliers, trade
- 143. CHAPTER 4 THENATURE OF ORGANISATIONS 117 union officials, leaders of interest groups, customers, clients, patrons, donors, special- ists, consultants, and representatives of external agencies. It is difficult to define specific, permanent boundaries for an organisational coali- tion. However, by focusing on participants over a given period, or participants concerned with particular decision-making processes, it is possible to identify the main members of a coalition. Strategies adopted by particular sectional interests or sub- coalitions will sometimes be part of the formal organisation structure – for instance, in the pursuit of manifest managerial goals – and will sometimes be related to the infor- mal structure – for example, heads of department vying with each other for limited resources, or workers indulging in restrictive practices. BASIC COMPONENTS OF AN ORGANISATION Any organisation can be described, broadly, in terms of an operating component and an administrative component.7 ■ The operating component comprises the people who actually undertake the work of producing the products, or providing the services. ■ The administrative component comprises managers and analysts, and is concerned with supervision and co-ordination. Developing this description, we can analyse the work organisation in terms of five basic components: the operational core; operational support; organisational support; top management; and middle management. (See Figure 4.3.) ■ The operational core is concerned with direct performance of the technical or pro- ductive operations and the carrying out of actual task activities of the organisation – for example, people putting together parts on an assembly line, teaching in a class- Figure 4.3 Five basic components of an organisation
- 144. 118 PART 2 THE ORGANISATIONAL SETTING room, treating a patient, cooking meals in a hotel, serving in a bank, repairing a hole in the road. ■ Operational support is concerned indirectly with the technical or productive process but closely related to the actual flow of operational work – for example, people working in quality control, work study, progress planning, storekeeping, works maintenance, technical services. ■ Organisational support is concerned with provision of services for the whole organisation, including the operational core, but which are usually outside the actual flow of operational work – for example, people working in personnel, medical services, canteen, management accounting, office services. ■ Top management is concerned with broad objectives and policy, strategic decisions, the work of the organisation as a whole and interactions with the external environ- ment – for example, managing director, governors, management team, chief executive, board of directors, council members. ■ Middle management is concerned with co-ordination and integration of activities and providing links with operational support staff and organisational support staff, and between the operational core and top management. PRIVATE AND PUBLIC SECTOR ORGANISATIONS Organisations can, traditionally, be distinguished in terms of two generic groups: ■ private enterprise organisations; and ■ public sector organisations. The distinction can be made on the basis of ownership and finance, and the profit motive. Private enterprise organisations are owned and financed by individuals, partners, or shareholders in a joint stock company and are accountable to their owners or members. They vary widely in nature and size, and the type and scope of goods and services provided. The main aim is of a commercial nature such as profit, return on capi- tal employed, market standing or sales level. Public sector organisations are created by government and include, for example, municipal undertakings and central government departments, which do not have profit as their goal. Municipal undertakings such as local authorities are ‘owned’ by the council tax payers and ratepayers and financed by council taxes, rates, government grants, loans and charges for certain services. Central government departments are ‘state owned’ and financed by funds granted by parliament. Public sector organisations have political purposes and do not distribute profits. Any surplus of revenue over expenditure may be reallocated by improved services or reduced charges. The main aim is a service to and the well-being of the community. Privatisation The extent of the state ownership of public sector operations, or of their ‘privatisation’, and the balance between commercial and social interests, are determined by the government of the day. In recent years, there has been a vigorous policy of creating freedom from state control and the transfer of business undertakings to private hands (privatisation). There are other public sector organisations whose aims involve both a commercial interest and a service interest. Nationalised industries such as the postal service at present run as public corporations with autonomy on day-to-day management, a degree of commercial freedom but with ultimate government control in the national interest. These public corporations are required to make efficient use of their resources by ensuring a given minimum rate of return on their investments and to charge prices
- 145. CHAPTER 4 THENATURE OF ORGANISATIONS 119 based on the actual cost of supplying goods or services to certain groups of consumers. However, provision may also be made for certain activities to be undertaken on social grounds as a service to the community even though these activities might be run at a financial loss. There have also been increasing moves to encourage contracting-out of certain local authority services and putting them to compulsory competitive tender (CCT) and a greater degree of competition has also been introduced. The exposure to competition and demands for economical and high quality service have prompted local authorities to replace administration with business management.8 (Management in private and public sector organisations is discussed in Chapter 6.) Not-for-profit organisations The increasing scale of privatisation and the blurring of commercial interests and social interests have led to an alternative classification of organisations: ■ profit; and those clearly ■ not-for-profit. Not-for-profit organisations include on the one hand charities, private societies and most religious organisations, and on the other hand National Health Service hospitals, universities, prisons, and most government and local authority departments. However, even in not-for-profit, public sector organisations there has been increased government pressure to ensure cost-effectiveness, investment by private sector involve- ment, and efficiency and economy in their operations. I think that we in the business community are sometimes too defensive about privatisation and forget the effect of state corporatism … The secret of success lies in the way privatisa- tion has shaken up the corporate culture, and made public servants who had no incentive to serve their customers into effective managers willing to take risks in order to run their operations more efficiently or make a profit … The question now is: how can the public sector and private sector work together for the benefit of both? People in business know what needs to be done. Focusing on what customers need, improving service and achieving greater efficiency are the daily bread of every successful business. Let’s call an end to ster- ile arguments about where the boundary between public and private sectors should be and concentrate instead of creating a UK plc which is truly competitive. J. M. Barry Gibson, Group Retail Director, BAA9 The same blurring of distinctions can also be seen in the case of charities. For example, Arnott points out that there is very little about the 21st-century charity which is straightforward and they exist in a highly complex context. The old distinctions between private, public and not-for-profit sectors have been blurred as char- ities have taken on an ever-increasing role on the delivery of public services. Tough competition for funds and growing public scrutiny have led many charities to adopt practices once more com- monly associated with the commercial sector. 10 The Smith points out that although the private–public sector divide is part of the British private–public economic and political landscape, the divisions are being broken down and moves interface between the two sectors – in both directions – becoming more frequent. Business people are being introduced to the public sector in an unprecedented way and bringing their expertise to bear on efficiency across Whitehall.11 Rose and Lawton also suggest that the extent of privatisation, the introduction of so- called business styles of management and the development of an intense competitive
- 146. 120 PART 2 THE ORGANISATIONAL SETTING performance culture have all served to challenge the traditional concept of a public sector. ‘Privatisation and quasi-privatisation, in the form of contracting out and agency provision, have meant an increasing interface with non-public-sector organisations. Part of the rationale for this development is that these organisations have expertise and competencies which are not as well developed in the public sector. This has facili- tated the transfer of technologies such as business process re-engineering and the business excellence model.’12 However, in spite of the fashion for applying private-sector techniques in govern- ment Sir David Wright refers to the difficult issues which remain about the way government performs and delivers its services. The challenge of management change has shifted to the public sector with the call for improved delivery of public services. In the private sector there is the bottom line of follow the money or achieve the sale or deal. But in government the link between inputs and outcomes remains hard to estab- lish and the challenge is aggravated by the inability to focus activity on a small number of immediately realisable targets. As a function of the democratic process, gov- ernment departments are responsible for a large number of activities and are subject to political initiatives, both of which can leach valuable resources and affect any assess- ment of how private-sector techniques can be applied.13 PRODUCTION AND SERVICE ORGANISATIONS Another major distinction is arguably between production and service organisations. Compared with ‘production’ industries, services tend to display a number of character- istic features, including the following. ■ The consumer is a participant in the service process. This requires particular atten- tion to the surroundings and characteristics of the service operations. ■ Services cannot be stored, they are time perishable and if they are not used they are likely to be wasted. For example, the income lost from a hotel room unsold on one day is lost forever. ■ Unlike physical products, services are less tangible and more difficult to explain or communicate. Benefits derived from services tend to be associated with feelings and emotions. ■ In service operations work activities are people-oriented and the characteristics of the workforce are particularly important in determining organisational effectiveness. ■ Measurement of output is difficult and there is unlikely to be a single, important cri- terion by which to measure effective performance.14 Different from To what extent then are service industries any different from other industries? other According to Levitt, for example, it is only in a matter of degree. industries Purveyors of service, for their part, think that they and their problems are fundamentally different from other businesses and their problems. They feel that service is people-intensive, while the rest of the economy is capital-intensive. But these distinctions are largely spurious. There are no such things as service industries. There are only industries whose service components are greater or less than those of other industries. Everybody is in service.15 Other writers such as Macdonald, however, maintain that service organisations are dif- ferent. ‘Product quality and service quality are the same inasmuch as they apply to the results of different activities. There are, however, some fundamental differences in the organisation of an operation to provide products and services. There are also intrinsic differences between products and services.’16 (See Table 4.1.)17
- 147. CHAPTER 4 THENATURE OF ORGANISATIONS 121 Table 4.1 Differences between products and services Product Service The customer receives a tangible product in the The customer receives an intangible service form of goods which can be seen and touched which may or may not satisfy The goods remain with the customer Services are consumed at the moment of delivery The production and delivery of goods are usually Production, delivery and consumption of separated services are often at the same time Few producers deal with customers Most producers deal with customers The customer is rarely involved with production The customer is often closely involved with production Goods can be serviced Services have already been consumed and cannot be serviced Goods are subject to liability but the producer has Services which do not meet the requirements more opportunity to ameliorate the effect on the are difficult to replace – the financial impact is customer and thus the financial penalty usually total Goods can be purchased to store in inventory to Services cannot be stored but must still be satisfy the customer’s needs available on customer demand Goods can be transported to the point of sale Some services are transportable (e.g. information through communication lines) but most require the transportation of the service provider The quality of goods is relatively easy for customers The quality of services is more dependent on to evaluate subjective perception and expectation Goods are often technically complex – the customer Services appear less complex – the customer therefore feels more reliant on the producer therefore feels qualified to hassle the producer (Reproduced with permission from John Macdonald, ‘Service Is Different’, The TQM Magazine, Vol. 6, No. 1, 1994, p. 6.) TYPES OF AUTHORITY AND ORGANISATIONS In one of the earliest studies of formal organisations, Weber distinguished three types of authority: traditional, charismatic and legal–rational.18 These types of authority are based on the form of control regarded as legitimate by subordinates, and their acceptance of the power of superiors. The three types of authority relate to different types of organisations. ■ In traditional organisations, authority is legitimised by custom and a long- standing belief in the natural right to rule, or is possessed by traditional (‘proper’) procedure. Examples would be the authority of the Pope, kings or queens or a paternalistic employer. ■ In charismatic organisations, authority is legitimised by belief in the personal qualities of the leader; authority is based on the leader’s strength of personality and inspira- tion. Winston Churchill might be quoted as an example. The practical need for some routine, for procedures and systems and for economic support means that if the movement is to continue it must become organised. On the impending demise of the charismatic leader the movement might collapse unless a ‘legitimate’ heir is found. This process tends to transform a charismatic organisation into either a tradi- tional organisation or a bureaucratic organisation.
- 148. 122 PART 2 THE ORGANISATIONAL SETTING ■ In bureaucratic organisations, authority is based on the acceptance of the law of formal rules and procedures, and on impersonal principles. There is a legal–rational authority which stems from hierarchical position in the organisation and not from personality. Examples are the armed forces and the authority of government minis- ters or a college principal. The concept of legal–rational authority is of most interest to us because most business organisations, particularly large-scale ones, tend to be of the bureaucratic type of struc- ture, although there are variations in degree. Bureaucracy, as applying to certain structural features of organisation, is the most dominant type of formal organisation. THE CLASSIFICATION OF ORGANISATIONS In order to relate the study of management and organisational behaviour to one partic- ular type of organisation as distinct from another, it is necessary to group similar types of organisations together. This enables generalisations to be made on the basis of cer- tain characteristic features of organisations within a particular grouping. Organisations can be distinguished by, for example, their nature and type; goods or services provided; size; aims and objectives; and the people who are employed by or who work in them. Organisations can, therefore, be classified in a number of ways and different writers have emphasised particular features of organisations. Classification A common classification of organisations is by their major purpose. This leads to a dis- by major tinction between, for example: purpose ■ business firms (economic organisations); ■ armies, trade unions and police forces (protective organisations); ■ clubs and societies (associative organisations); ■ local authorities and hospitals (public service organisations); and ■ churches (religious organisations). Further distinctions could be made, for example, into political organisations, educa- tional organisations, military organisations and voluntary organisations. Such a distinction tends to lack refinement and not all organisations fit simply into one classification. Many universities combine research with teaching. Some hospitals are concerned as much with training and/or research as with treatment of patients. One could debate the main purpose of a prison: is it, for example, corrective, protec- tive, penal or educational? The main purpose of a trade union is seen, presumably, as protection of the interests of its members through their wages and working conditions, but many trade unions also have strong social, educational and political interests. Many organisations serve more than one goal; but although they are multi-purpose organisations it is usually possible to identify one predominant goal (or purpose) by which the organisation can be classified, however crude this classification may be. It is of interest, however, to note the comment by Etzioni that: To the extent that such things can be measured, it appears that many multi-purpose organisations tend to serve each of their goals separately and all of them together more effectively and efficiently than single-purpose organisations of the same category.19 PRIME BENEFICIARY OF THE ORGANISATION Blau and Scott propose a classification on the basis of the prime beneficiary.20 Four groups of persons involved in a relationship with any organisation are categorised into: ■ the members, or rank-and-file participants; ■ the owner or managers of the organisation;
- 149. CHAPTER 4 THENATURE OF ORGANISATIONS 123 ■ the clients or, more generally, the ‘public-in-contact’ who are technically ‘outside’ the organisation yet have regular direct contact with it; ■ the public at large – that is, the members of the society in which the organisation operates. Organisations are then classified on the basis of who benefits – that is, which of the four categories is the prime beneficiary of its operations. Four types of organisation are identified on this basis: ■ Mutual-benefit associations, where the prime beneficiary is the membership, such as political parties, trade unions and professional associations; ■ Business concerns, where the owners are the prime beneficiaries, such as industrial and other firms privately owned and operated for profit; ■ Service organisations, where the client group is the main beneficiary, such as hos- pitals, schools and welfare agencies; ■ Commonweal organisations, where the prime beneficiary is the public-at-large, such as central government departments, the armed services and the police. Problems It is emphasised that the prime beneficiary is not necessarily the only beneficiary. Each associated of the various groups who make a contribution to an organisation do so only in return with each type for certain benefits received. of organisation Blau and Scott suggest that special problems are associated with each type of organisation. ■ In mutual-benefit organisations the main problem is that of providing for partici- pation and control by the membership, and of maintaining internal democracy. ■ In business concerns the central problem is that of maximising operational effi- ciency in a competitive environment. ■ In service organisations the problem is reconciling conflict between professional service to clients and administrative procedures. ■ In commonweal organisations the important problem is ensuring democratic pro- cedures by which they are held accountable to the public for their actions. Difficulty in It is not easy to find a comprehensive classification into which all organisations can be finding a simply and satisfactorily categorised; a degree of generalisation, assumption and quali- comprehensive fication is required. However, the classification of Blau and Scott provides a useful classification typology of organisations. An alternative form of classification is provided by Katz and Khan. PRIMARY ACTIVITY OF THE ORGANISATION The Katz and Khan classification is based on ‘genotypic (first-order) factors’ and on ‘second-order factors’.21 In terms of the genotypic function, which is the primary activ- ity of the organisation as a sub-system within the larger society, there are four broad types of organisations: ■ Productive or economic – concerned with the creation of wealth, the manufacture of goods, and the provision of services for the public. ■ Maintenance – for example, schools and churches, concerned with the socialisation of people to fulfil roles in other organisations and in society. ■ Adaptive – for example, research establishments, concerned with the pursuit of knowledge and the development and testing of theory. ■ Managerial or political – for example, government departments, trade unions and pressure groups. These are concerned with adjudication, co-ordination and control of physical and human resources and other sub-systems.
- 150. 124 PART 2 THE ORGANISATIONAL SETTING Object-moulding Organisations can then be described in terms of second-order factors. Among other or things these factors relate to structure; the system of intrinsic or extrinsic rewards to people-moulding attract and retain members and to achieve satisfactory performance from them; and the nature of the throughput – the transformation or processing of objects or the moulding of people as the end product of the organisation. A distinction can be made between ■ object-moulding organisations and ■ people-moulding organisations. Object-moulding organisations are concerned with physical or material objects as the nature of work being carried out – for example, a manufacturing plant, a car plant or an oil company. People-moulding organisations are concerned with human beings as the basis of the nature of work being carried out – for example, a school or a leisure centre. In people-moulding organisations a further distinction can be made between ■ people-processing organisations – for example, an employment agency or a social security benefit office; and ■ people-changing organisations – for example, a mental hospital or an open prison. THE ORGANISATION AS AN OPEN SYSTEM We have seen that organisations differ in many important respects, but they also share common features. Organisations can be viewed as open systems which take inputs from the environment (outputs from other systems) and through a series of activities transform or convert these inputs into outputs (inputs to other systems) to achieve some objective. (See Figure 4.4.)22 In terms of this open systems model the business organisation, for example, takes in resources such as people, finance, raw materials and information from its environment; transforms or converts these; and returns them to the environment in various forms of outputs such as goods produced, services provided, completed processes or procedures in order to achieve certain goals such as profit, market standing, level of sales or con- sumer satisfaction. A common There are, of course, differences in the activities and methods of operation of the vari- point of ous forms of business organisations. There will also be differences between business reference organisations of the same type – for example, in relation to their size and scale of activ- ENVIRONMENT ENVIRONMENT Outputs from Inputs to other other systems systems Series of activities AIMS AND INPUTS TRANSFORMATION OR OUTPUTS ORGANISATIONAL OBJECTIVES CONVERSION UNIT GOALS Interrelated sub-systems Feedback Measure of achievement Feedback Figure 4.4 The open systems model of organisations
- 151. CHAPTER 4 THENATURE OF ORGANISATIONS 125 ities. However, adopting the systems view of organisations, we can identify principles and prescriptions of organisation and management that apply to business organisa- tions in general. Differences in the application and operation of these principles and prescriptions as between one business organisation and another is largely a matter only of degree and of emphasis. Using this systems model the same form of analysis can be applied to all types of organisations. Viewing organisations as systems provides a common point of reference and enables us to take a general approach to the study of organisations, to analyse them and to derive general principles and prescriptions.23 An example of the open systems model applied to the environment systems division of a major heating and ventilation company is given in Figure 4.5. Figure 4.5 An example of the open systems model
- 152. 126 PART 2 THE ORGANISATIONAL SETTING INTERACTIONS WITH THE ENVIRONMENT The structure, management and functioning of an organisation is not only determined by internal considerations and choices, but is also strongly influenced by a range of volatile, external, environmental factors. The business organisation is an open system. That means that it is open to, and in continual interaction with, the external environment of which it is part. In order to be effective and maintain survival and growth, the organisation must respond to the opportunities and challenges, and the risks and limitations, presented by the external environment. Changes in the environment will affect inputs, and changes in inputs will affect the transformation or conversion process and hence the outputs. The open systems approach views the organisation within its total environment and emphasises the importance of multiple channels of interaction. The increasing rate of change in major environmental factors (technical, economic, social and governmental) has highlighted the need to study the total organisation and to adopt a systems approach. In addition to these major environmental factors, there is a multiplicity of constantly changing environmental influences which affect the opera- tion of an organisation (see Figure 4.6). In order to understand the operations of organisations, and to improve organisational performance, it is necessary to consider how they achieve an internal and external balance and how they are able to adapt to changes in their environment and the demands placed upon them.24 Consider how the operations of a large comprehensive school, for example, might be affected by such external influences as: government proposals for reform of educa- tion; changing population trends; the general economic climate; advances in information technology; changing views of the role of education in society; reports from Her Majesty’s Inspectors; representations from employers’ associations and trade unions; parent groups; equality campaigners. PESTEL Organisational performance and effectiveness will be dependent upon the successful analysis management of the opportunities, challenges and risks presented by changes in the external environment. One popular technique for analysing the general environment is a PESTEL analysis – that is, Political, Economic, Socio-cultural, Technological, Economic Social Technological activity attitudes Local and national innovations government policies Suppliers Trade unions Shareholders or providers Customers of finance THE ORGANISATION Private enterprise or public sector Climate Culture Competitors Other organisations International Employers’ relations CBI Training and Pressure associations Enterprise Councils groups Figure 4.6 Environmental influences on the organisation
- 153. CHAPTER 4 THENATURE OF ORGANISATIONS 127 Figure 4.7 Checklist for a PESTEL analysis Reproduced with permission from Richard Lynch, Corporate Strategy, Third edition, Financial Times Prentice Hall (2003), p.92, with permission from Pearson Education Ltd. Environmental and Legal influences. As an example, Lynch presents the main issues that might be considered when undertaking a PESTEL analysis (see Figure 4.7).25 THE COMPARATIVE STUDY OF ORGANISATIONS All organisations need clear aims and objectives which will determine the nature of inputs, the series of activities to achieve outputs and the realisation of organisational goals. Feedback about the performance of the system, and the effects of its operation on the environment, are measured in terms of achieving the aims and objectives. Basic principles of organisation and management apply in any series of activities in any organisation. For example: ■ Attention must be given to the design of a suitable structure.
- 154. 128 PART 2 THE ORGANISATIONAL SETTING ■ The common elements of management – clarification of objectives, planning, organising, directing and control – apply to a greater or lesser extent in all cases. ■ Essential financial, legal, personnel and administrative functions must be carried out in all types of organisation. These common features make possible the application of general principles of manage- ment and organisational behaviour (including, for example, in both a prison or a university) and the meaningful study of organisation theory. Characteristic While general principles and prescriptions apply to all organisations, differences in features of their aims and objectives, organisational goals and environmental influences will result particular in differences in the input–conversion–output process and in the series of activities organisations involved in this process. The nature of inputs, the throughputs, and the form of the outputs will emphasise characteristic features of a particular organisation. These fea- tures highlight alternative forms of structure, management, methods of operation, and behaviour of people employed by or working in different types of organisations. The study of organisations as open systems serves, therefore, to indicate both the common features of organisations and the main distinguishing features between dif- ferent types of organisations. It provides a useful framework for the comparative study of organisations. The systems view of organisations enables managers to view their own organisation in perspective, and to compare it in meaningful terms with other types of organisations.26 ORGANISATIONAL SUB-SYSTEMS Whatever the type or classification of organisations, the transformation or conversion of inputs into outputs is a common feature of all organisations. Within the organisation (system) as a whole, each of the different transformation or conversion activities may themselves be viewed as separate sub-systems with their own input–conversion–output process interrelated to, and interacting with, the other sub-systems. The analysis of an organisation could perhaps be based upon the departmental structure as sub-systems. However, this could lead to an investigation concentrating on blinkered, sectional interests, rather than on the need to adopt a corporate approach. It is not just a question of whether individual departments are operating efficiently. The important point is the interrelationships and co-ordination of sub-systems in terms of the effectiveness of the organisation as an integrated whole. The interrelationship and interdependence of the different parts of the system raise the question of the identification of these sub-systems. What are the boundaries that distinguish one sub-system from other sub-systems, and from the system as a whole? In practice the boundaries are drawn at the discretion of the observer and sub-systems are identified according to the area under study. These sub-systems may be identified, therefore, in a number of different ways, although there is a degree of similarity among the alternative models. Socio-technical system The work of Trist and others of the Tavistock Institute of Human Relations, in their study of changing technology in the British coal-mines, gave rise to the idea of the socio-technical system.27 It was observed that new methods of work and changes in technology disrupted the social groupings of the miners, and brought about undesir- able changes to the psychological and sociological properties of the old method of working. As a result, the new method of work was less efficient than it could have been despite the introduction of new technology.
- 155. CHAPTER 4 THENATURE OF ORGANISATIONS 129 The researchers saw the need for a socio-technical approach in which an appropriate social system could be developed in keeping with the new technical system. They sug- gested that there are three sub-systems common to any organisation: ■ the technological sub-system; ■ the sub-system of formal role structure; ■ the sub-system of individual members’ feelings or sentiments. This form of analysis is taken a stage further by Kast and Rosenzweig who see the organ- isation as an open, socio-technical system with five major sub-systems.28 ■ Goals and values – the accomplishment of certain goals determined by the broader system and conformity with social requirements. ■ Technical – the knowledge required for the performance of tasks, and the tech- niques and technology involved. ■ Psychosocial – the interactions of individuals and groups, and behaviour of people in the organisation. ■ Structure – the division and co-ordination of tasks, and formal relationships between the technical and psychosocial sub-systems. ■ Managerial – covering the whole organisation and its relationship to the environ- ment, setting goals, planning, structure and control. Interrelated An alternative model is suggested by Hersey and Blanchard, who identify four main sub-systems interrelated sub-systems.29 ■ Human/social – focuses on the needs and motivations of members of the organisa- tion and styles of leadership. ■ Administrative/structural – focuses on authority and responsibility, and the struc- ture within the organisation. ■ Informational/decision-making – focuses on key decisions and information needs necessary to keep the organisation operational. ■ Economic/technological – focuses on the work to be undertaken and its cost- effectiveness related to the goals of the organisation. Another useful model is that of Leavitt who suggests the organisation consists of four main elements – task, structure, information and control, and people – which interact with each other and with the external environment.30 ■ Task – involves problem-solving and improving organisational performance. ■ Structure – refers to patterns of organisation, authority and responsibility, and communications. ■ Information and control – involves techniques for controlling and processing information, such as accounting techniques. ■ People – involves attitudes and interpersonal relations. THE ANALYSIS OF WORK ORGANISATIONS However these sub-systems are identified, it is the task of management to co-ordinate the sub-systems, and to ensure that the activities of the organisation as a whole are directed towards the accomplishment of its goals and objectives. We can suggest, there- fore, five main interrelated sub-systems as a basis for the analysis of work organisations. (See Figure 4.8.) ■ Task – the goals and objectives of the organisation. The nature of inputs and out- puts, and the work activities to be carried out in the transformation or conversion process.
- 156. 130 PART 2 THE ORGANISATIONAL SETTING ■ Technology – the manner in which the tasks of the organisation are carried out and the nature of work performance. The materials, systems and procedures, and equip- ment used in the transformation or conversion process. ■ Structure – patterns of organisation, lines of authority, formal relationships and channels of communication among members. The division of work and co- ordination of tasks by which the series of activities are carried out. ■ People – the nature of the members undertaking the series of activities. For ex- ample, their attitudes, skills and attributes; needs and expectations; interpersonal relations and patterns of behaviour; group functioning and behaviour; informal organisation and styles of leadership. ■ Management – co-ordination of task, technology, structure and people, and policies and procedures for the execution of work. Corporate strategy, direction of the activi- ties of the organisation as a whole and its interactions with the external environment. ENVIRONMENT ENVIRONMENT Series of activities Transformation or conversion process Interrelated sub-systems A socio-technical approach Task Technology Management Structure People Task – the nature of the work activities to be carried out Technology – the manner in which activities are carried out Structure – patterns of organisation and formal relationships within which activities are – carried out People – the nature of members undertaking the activities Management – effective co-ordination of the sub-systems and direction of activities of the organisation as a unified whole Figure 4.8 Organisational sub-systems
- 157. CHAPTER 4 THENATURE OF ORGANISATIONS 131 The attention given to organisational sub-systems can be related to developments in management thinking and organisational behaviour (discussed in Chapter 3). The classical approach emphasised the structural and the managerial sub-systems and the development of general principles of organisation. The human relations approach emphasised the psychological and sociological aspects and gave attention to the importance of people in the organisation and such factors as the social needs of in- dividuals, motivation and group behaviour. The systems approach focuses attention on the organisation as a whole, as a socio-technical system, and considers the interrela- tionships between the different sub-systems and the importance of environmental influences. The contingency approach concentrates on situational factors as determi- nants of alternative forms of organisation and management. A broader view We have seen that an open systems approach is an attempt to view the organisation as of the a purposeful, unified whole in continual interaction with its volatile external environ- organisation’s ment. The organisation (system) is composed of a number of interrelated parts activities (sub-systems). Any one part of the organisation’s activities affects other parts. Managers cannot afford to take a narrow, blinkered view. They need to adopt a broader view of the organisation’s activities. Managers should recognise the interrelationships between various activities and the effects that their actions and decisions have on other activi- ties. The above framework of five main interrelated sub-systems – task, technology, structure, people, management – provides a useful basis for the analysis of organisa- tional performance and effectiveness. The manager must realise that in order to improve organisational effectiveness attention should be focused on the total work organisation and on the interrelation- ships between the range of variables which affect organisational performance. The organisation is best viewed as an open system and studied in terms of the interactions between technical and social considerations, and environmental influences. Changes in part of the system will affect other parts and thus the whole organisation. The open systems approach provides a perspective from which to compare and contrast dif- ferent types of organisations and their methods of operation. CONTINGENCY MODELS OF ORGANISATION The analysis of organisational effectiveness requires an understanding of relationships within the organisation’s structure, the interrelated sub-systems and the nature of its external environment. Irrespective of the identification of sub-systems, the nature and scale of the series of activities involved in converting inputs to outputs will differ from one organisation to another in terms of the interrelationships between technology, structure, methods of operation, and the nature of environmental influences. ‘Contingency’ models of organisation highlight these interrelationships and provide a further possible means of differentiation between alternative forms of organisation and management. The contingency approach takes the view that there is no one best, universal form of organisation. There are a large number of variables, or situational factors, that influ- ence organisational performance. Contingency models can be seen as an ‘if–then’ form of relationship. If certain situational factors exist, then certain organisational and man- agerial variables are most appropriate. Managers can utilise these models to compare the structure and functioning of their own organisation. Contingency models are examined in Chapter 16.
- 158. 132 PART 2 THE ORGANISATIONAL SETTING THE INFLUENCE OF TECHNOLOGY The systems and contingency approaches have drawn attention to the importance of technology in the structure, management and functioning of work organisations. It is important to note that the meaning of technology is interpreted broadly to include both: ■ the physical aspects of machines, equipment, processes and work layout (machine technology) involved in the transformation or conversion process; and ■ the actual methods, systems and procedures involved (knowledge technology) in carrying out the work of the organisation and transforming or converting inputs into outputs. There is a close interrelationship between the machine side of technology and the spe- cialist knowledge side of technology.31 The nature of technology can, therefore, be applied to the analysis of all organ- isations. For example, in a university the machine side of technology would include: blackboards or whiteboards; overhead projectors; computers; televisions and video recorders, closed circuit television; scientific and engineering equipment; library facili- ties. The knowledge side of technology would include: lectures, seminars and tutorials; case studies; role-playing; practical laboratory work; visiting speakers; project and assignment work; examinations. The work processes of a university and other educa- tional establishments give rise to the specialist study of educational technology.32 A university will receive inputs of students and, through the process of educational tech- nology, ‘transform’ them and return them as outputs into the broader society. Johnson and Scholes draw attention to technology as a means of underpinning innova- tion in organisations. However, organisations may easily be distracted by technological development itself rather than with concern for how technology can assist in the cre- ation and sharing of knowledge within an organisation. It is in the exploitation of technology that an organisation may create competitive advantage.33 Technology and the behaviour of people The nature of technology can influence the behaviour of people in work organisations in many ways including, for example, the following. ■ It influences the specific design of each member’s pattern of work including the nature and variety of activities performed, and the extent of autonomy and freedom of action. ■ It affects the nature of social interactions – for example, the size and nature of work groups, the extent of physical mobility and of contacts with other people. A person working continuously on a single, isolated machine in a mass-production factory will have very limited social interactions compared with, say, a team of receptionists in a large conference hotel. ■ It can affect role position and the nature of rewards. People with higher levels of specialist technical knowledge and expertise such as engineers or systems analysts tend to receive higher status and pay than machine operators on an assembly line. ■ It can impose time dimensions on workers and may require set times for attending to operations and a set pace of work – for example, the mechanical pacing of work on a mass-production assembly line. ■ It can result in distinguishing features of appearance – for example, the requirement to wear a standard uniform or protective clothing, compared with a personal choice of smart clothes.34 The nature of technology and organisations is discussed fully in Chapter 17. Technology is also a potential source of tension and stress and affects motivation and
- 159. CHAPTER 4 THENATURE OF ORGANISATIONS 133 job satisfaction: this is discussed in Chapter 18. The systems approach should serve to remind managers that activities managed on the basis of technical efficiency alone are unlikely to lead to optimum improvements in organisational performance. It is important to maintain the balance of the socio-technical system. Changes to the work organisation as a result of new developments in technology must take account of human and social factors as well as technical and economic factors. INFORMATION TECHNOLOGY The importance of the effective management of technical change has been highlighted by recent and continuing developments in information technology. Although the term ‘information technology’ originated in the computer industry, it extends beyond com- puting to include telecommunications and office equipment. Advances in technical knowledge, the search for improved economic effi- ciency and government support for information technology have all prompted a growing movement towards more automated procedures of work. The impact of information technology demands new patterns of work organisation, especially in rela- tion to administrative procedures. Information technology affects the nature of individual jobs and the formation and structure of work groups. There is a movement away from large-scale, centralised organisation to smaller working units. Processes of communication are increasingly linked to computer systems with the rapid transmission of information Photo: James King-Holmes/Science Photo Library and immediate access to other national or interna- tional offices. Improvements in telecommunications mean, for example, that support staff need no longer be located within the main ‘production’ unit. Modern methods of communication may reduce the need for head office clerical jobs. Changes wrought by information technology relate to the nature of the management task itself. Information technology bears heavily on the deci- sion-making processes of the organisation and Fingerprint scanning can be used as a technological increasingly forms an essential part of management method of identification information and corporate strategy.35,36 The nature and The growth of information technology means that individuals may work more on their conditions of own, from their personal work stations or even from their own homes, or work more work with machines than with other people. One person may be capable of carrying out a wider range of activities. There are changes in the nature of supervision and in the tra- ditional hierarchical structure of jobs and responsibilities. Computer-based information and decision support systems provide an additional dimension of struc- tural design. They affect choices such as division of work, individual tasks and responsibilities. The introduction of information technology undoubtedly transforms, significantly, the nature of work and employment conditions for staff. Developments in the technical systems of communications such as international telephone connec- tions and the increasing use of faxes, mobile telephones and email have generated a working climate in which there is a greater expectation of the immediacy of receipt and response, and have added to the dangers of information overload.
- 160. 134 PART 2 THE ORGANISATIONAL SETTING According to Law, the manager of the future, especially in larger organisations, will be someone who is a ‘personal area network’ wherever they may be, always connected to the Internet. Managers will be using personal digital assistants (PDAs) – handheld mobile devices that can access the Internet and act as a basic personal organiser by set- ting up a diary. However, if too many people are working remotely too often there is a risk of alienation and there is also the potential problem of pressures on staff who are permanently contactable.37 MANAGING TECHNICAL CHANGE It is important to remind ourselves that advances in technical knowledge tend to develop at a faster rate than, and in isolation from, considerations of human and social consequences. This means that staff may become resentful, suspicious and defensive. People’s cognitive limitations, and their uncertainties and fears, may result in a reluc- tance to accept change. The psychological and social implications of technical change, such as information technology and increased automation, must not be underestimated. New ideas and innovations should not be seen by members of staff as threats. The manager has to bal- ance the need for adaptability in meeting opportunities presented by new technology with an atmosphere of stability and concern for the interests of staff. The manner in which technical change is introduced into the organisation will influence people’s atti- tudes to work, the behaviour of individuals and groups, and their level of performance. Continued technical change is inevitable and likely to develop at an even greater rate. Managers must be responsive to such change. Information technology and automation create a demanding challenge. The systems nature of organisations empha- sises the interrelationships among the major variables or sub-systems of the organisation. The implementation and management of technological change needs to be related to its effect on the task, the structure and the people.38 The need for It will be necessary for managers and supervisors to develop more agile skills in organi- skills training sation. This calls for the effective management of human resources and a style of managerial behaviour which helps to minimise the problems of technical change. As an example, Lane et al. draw attention to the impact of information communica- tions technology (ICT) on organisations and that this major technological change has brought about dramatic changes in worker behaviour and requirements. Organisations need to undergo a significant cultural change in order to invest in the training of ICT skills and to give attention to the concept of the learning organisation.39 (The management of conflict and organisational change is discussed further in Chapter 22. The learning organisation is discussed in Chapter 23.) THE INFORMAL ORGANISATION Whatever the type or nature of an organisation or its formal structure, an informal organisation will always be present. The informal organisation arises from the interac- tion of people working in the organisation, their psychological and social needs, and the development of groups with their own relationships and norms of behaviour, irre- spective of those defined within the formal structure. ■ The informal organisation is flexible and loosely structured. ■ Relationships may be left undefined. ■ Membership is spontaneous and with varying degrees of involvement.
- 161. CHAPTER 4 THENATURE OF ORGANISATIONS 135 Figure 4.9 Formal and informal organisation (Reproduced with permission from Kenneth Lysons, ‘Organisational Analysis’, Supplement to the British Journal of Administrative Management, no. 18, March/April 1997.) Group relationships and norms of behaviour exist outside the official structure and the informal organisation may, therefore, be in conflict with the aims of the formal organi- sation. A summary of differences between the formal and the informal organisation is given in Table 4.2. Functions of the informal organisation The informal organisation can serve a number of important functions. ■ It provides satisfaction of members’ social needs, and a sense of personal identity and belonging. ■ It provides for additional channels of communication – for example, through the ‘grapevine’ information of importance to particular members is communicated quickly. ■ It provides a means of motivation – for example, through status, social interaction, variety in routine or tedious jobs, and informal methods of work. ■ It provides a feeling of stability and security, and through informal ‘norms’ of behaviour can exercise a form of control over members. ■ It provides a means of highlighting deficiencies or weaknesses in the formal organ- isation – for example, areas of duties or responsibilities not covered in job descriptions or outdated systems and procedures. The informal organisation may also be used when formal methods would take too long, or not be appropriate, to deal with an unusual or unforeseen situation.40
- 162. 136 PART 2 THE ORGANISATIONAL SETTING Table 4.2 Comparison of formal and informal organisation Characteristic Formal organisation Informal organisation 1 Structure A Origin Planned Spontaneous B Rationale Rational Emotional C Characteristics Stable Dynamic 2 Position terminology Job Role 3 Goals Profitability or service Member satisfaction to society 4 Influence A Base Position Personality B Type Authority Power C Flow Top-down Bottom-up 5 Control mechanisms Threat of firing, demotion Physical or social sanctions (norms) 6 Communication A Channels Formal channels Grapevine B Networks Well defined, follow Poorly defined, cut formal lines across regular channels C Speed Slow Fast D Accuracy High Low 7 Charting the organisation Organisation chart Sociogram 8 Miscellaneous A Individuals included All individuals in work group Only those ‘acceptable’ B Interpersonal relations Prescribed by job description Arise spontaneously C Leadership role Assigned by organisation Result of membership agreement D Basis for interaction Functional duties or position Personal characteristics, ethnic background, status E Basis for attachment Loyalty Cohesiveness (Source: Adapted from J. L. Gray and F. A. Starke Organizational Behavior: Concepts and Applications, Fourth edition, Merrill Publishing Company, an imprint of Macmillan Publishing Company (1988) p. 432. Reproduced with permission from Pearson Education Inc., Upper Saddle River, NJ.) The informal organisation, therefore, has an important influence on the morale, moti- vation, job satisfaction and performance of staff. It can provide members with greater opportunity to use their initiative and creativity in both personal and organisational development. Covert and informal activities may also have economic consequences for the organisation in terms of added values and/or costs that escape ordinary accounting procedures.41 The importance and nature of groups, and reasons why people form into groups, both formal and informal, are discussed in Chapter 13. At this stage, however, we are concerned with consideration of the formal organisation (although in practice it is not always possible to distinguish clearly between formal and informal organisations). We are not concerned with what is sometimes referred to as the social organisation. Social organisations are groups or institutions, such as family or friends, where human behav- iour is socially organised and where members share common beliefs or interests. Social organisations arise from the interaction of individuals. There are no specially defined hierarchical structures and no explicit organisational goals.
- 163. CHAPTER 4 THENATURE OF ORGANISATIONS 137 THE ORGANISATION OF THE FUTURE We have looked at the nature and type of organisations, and their components. It is, however, important to remember that organisations are living organisms and evolving constantly. The changing nature of work organisations and the social context discussed in earlier chapters has led to a climate of constant change and the need for greater organisational flexibility. Managers need to be aware of new psychological contracts and to adopt alternative styles of management. As Chowdhury, for example, points out: ‘The organization of the 21st century will be characterized by unprecedented complexity and will require a different breed of leader.’42 And Ulrich also suggests that with the changing and dynamic contextual factors: the essence of organizations has shifted and will continue to shift from focusing on structure to capability. Capability represents what the organization is able to do and how it does it rather than the more visible picture of who reports to whom and which rules govern work … Organizations will operate in the future to identify and nurture a handful of critical capabilities.43 The importance of people in the organisation Lynda Gratton emphasises the importance of putting people at the heart of corporate purpose. We are part of organisations stamped by technology that has created the patents, ideas and innovations that bought success. However, while this past has been essential to our success it will not bring sustainable competitive advantage for the future unless we build the potential of people and human capital in our organisations. This requires a new agenda, a new set of challenges for leaders and a redefined set of managerial capabilities that includes an understanding of the reality of the organisa- tion. Gratton suggests that you should build a model for your organisation around what causes high levels of trust and inspiration and to consider the organisation against these key influences: ■ Do people understand the context in which they operate and the competitive threats and challenges the business faces? ■ Are employees confident about the ability of the organisation to adapt? ■ Are they involved in decisions about themselves and the organisation? It is also important to understand the complexity of the organisation and the changes necessary to move from the present to the future.44 Cloke and Goldsmith refer to the rise of organisational democracy. There is a demand for alternative organisational practices and a far-reaching transformation has already begun, based on the idea that management as a system fails to open the heart or free the spirit. The age of management is coming to an end and the real push for the future is for more authentic human relationships and the humanisation of organisations as crucibles for personal growth and development.45 ORGANISATIONAL GOALS Whatever the form and structure of the transformation or conversion process, the activities of an organisation are directed towards some end, some organisational goal. A goal is a future expectation: it is something the organisation is striving to accom- plish. The goals of an organisation will determine the nature of its outputs and the series of activities through which those outputs are achieved. Organisational goals and objectives are discussed in Chapter 5.
- 164. 138 PART 2 THE ORGANISATIONAL SETTING CRITICAL REFLECTIONS ‘If the process of management takes place within an organisational setting and no two organisa- tions are the same, then what use are generalised models of organisation theory? I am only concerned with what happens in my own organisation’ … ‘Yes, but so too is every other student – hence the need for generalised models. And remember you may move to a different organisation.’ What are your own views? External influences are almost infinite in number and variety and no study could hope to consider them all. For students of business and for managers alike, the requirement is to recognise the complexity of the external environment and to pay greater attention to those influences which appear the most pertinent and pressing for the organisation in question, rather than to attempt to consider all possible contingencies. Worthington, I. and Britton, C. The Business Environment, Fourth edition, Financial Times Prentice Hall (2003), p. 12. How would you identify the specific, most pertinent and pressing environment influences for your own organisation or university/college? ‘Management models are a crude representation of our organisational existence which dull our awareness of the richness of our environment and prevent us from finding new ways of looking at the world of work.’ Debate. SYNOPSIS ■ The process of management and applications of organisational behaviour take place not in a vacuum but within the context of an organisational setting. There are many different types of organisations set up to serve different purposes. Organisations come in all forms, shapes and sizes. However, despite the differences among various organisations there are at least three common factors in any organisation: people, objectives and structure. To which can be added a fourth factor – management. The qualities of these factors determine organisational effectiveness. ■ There are many different types of organisations set up to serve a variety of needs. Organisations can, traditionally, be distinguished in terms of two generic groups: pri- vate enterprise and public sector. The increasing rate of privatisation has led, however, to a blurring of commercial interests and service to the community. Another major dis- tinction is arguably between production and service organisations. In order to relate the study of management and organisational behaviour to one particular type of organisation as distinct from another, it is necessary to group similar types of organisa- tions together. ■ The structure, management and functioning of organisations will differ according to their nature and type, aims and objectives, and the behaviour of people who work in them. Organisations differ in many important respects but they also share common features. Business organisations can be viewed as open systems in continual interaction with the external environment of which they are part. Within the organisation as a whole there are a number of sub-systems interrelating to and interacting with each
- 165. CHAPTER 4 THENATURE OF ORGANISATIONS 139 other. Contingency models of organisation draw attention to interrelationships among technology, structure, methods of operation and environmental influences. ■ The nature of technology can influence the behaviour of people at work in many ways. The impact of technical change has been highlighted by recent developments in information technology and automation. It is important to maintain the balance of the socio-technical system. This calls for effective management of human resources and a style of managerial behaviour which helps to minimise problems of technical change. The organisation of the future will be characterised by complexity and the essence will continue to shift from structure to capability. ■ Whatever the type or nature of an organisation or its formal structure, an informal organisation will always be present. The informal organisation arises from the interac- tions of people and their psychological and social needs. It serves a number of important functions and has an influence on the morale, motivation, job satisfaction and performance of staff. Organisations of the future will be characterised by technol- ogy and complexity. It is important to emphasise the importance of people and the need for authentic human relationships, and the humanisation of organisations. REVIEW AND DISCUSSION QUESTIONS 1 What is an organisation and why do organisations exist? What are the common factors in any organisation? 2 Explain the basic components of a work organisation. Support your answer with ex- amples from your own organisation. 3 Contrast various organisations, including your own, in terms of classifications based on: (i) prime beneficiary and (ii) primary activity. 4 Discuss critically the extent to which differences among various organisations limit the value of the study of management and organisational behaviour. 5 Explain the organisation as an open system. What is meant by organisational sub- systems and how might they be identified? Illustrate each of these sub-systems by reference to your own organisation. 6 Assess the practical value to both the student and the manager of adopting an open sys- tems view of organisational analysis. 7 Discuss the importance of technology in the structure, management and functioning of work organisations. Give practical examples of how the nature of technology can influence the systems nature of organisations. 8 Distinguish between the formal and the informal organisation, and explain their main char- acteristics. What functions are served by the informal organisation? 9 Give your own critical views on how you see the organisation of the future and the humanisa- tion of organisations.
- 166. 140 PART 2 THE ORGANISATIONAL SETTING ASSIGNMENT 1 OVERVIEW Undoubtedly, you have had recent experiences with numerous organisations. Ten to fifteen min- utes of reflective thinking should result in a fairly large list of organisations. Don’t be misled by thinking that only large organisations, such as your college or General Motors, are relevant for consideration. How about the clinic with the doctor(s), nurse(s) and secretary/bookkeeper? Or the corner garage or service station? The local tavern, McDonald’s and the neighbourhood the- atre are all organisations. You should not have any difficulty in listing a number of organisations with which you have had recent contact. The second part of the exercise, however, gets tougher. You are asked to describe several of the key characteristics of the organisations that you have listed. One of the major issues in studying and describing organisations is deciding what characteristics or factors are important. Some of the more common characteristics considered in the analysis of organisations are: 1 size (small to very large); 2 degree of formality (informal to highly structured); 3 degree of complexity (simple to complex); 4 nature of goals (what the organisation is trying to accomplish); 5 major activities (what tasks are performed); 6 types of people involved (age, skills, educational background, etc.); 7 location of activities (number of units and their geographic location). You should be able to develop a list of characteristics that you think are relevant for each of your organisations. Now, to the third, final, and most difficult task. Think about what is involved in the manage- ment of these organisations. For example, what kinds of functions do their managers perform? How does one learn the skills necessary to be an effective manager? Would you want to be a manager in any of these organisations? In effect, in this exercise you are asked to think specifically about organisations you have been associated with recently, develop your own conceptual model for looking at their char- acteristics, and think more specifically about the managerial functions in each of these organisations. You probably already know a great deal more about organisations and their management than you think. This exercise should be useful in getting your thoughts together. PROCEDURE Step 1 Prior to class, list up to ten organisations (e.g., work, living group, club) in which you have been involved or with which you have had recent contact. Step 2 Enter five organisations from your list on the form ‘Profile of Organisations’. a List the organisation. b Briefly outline the characteristics that you consider most significant. c Describe the managerial functions in each of these organisations.
- 167. CHAPTER 4 THENATURE OF ORGANISATIONS 141 Step 3 During the class period, meet in groups of five or six to discuss your list of organisations, the characteristics you consider important, and your descriptions of their management. Look for significant similarities and differences across organisations. Step 4 Basing your selections on this group discussion, develop a list entitled ‘What We Would Like to Know about Organisations and Their Management’. Be prepared to write this list on the board and to share your list with other groups in the class. PROFILE OF ORGANISATIONS Organisation Key characteristics Managerial functions 1 2 3 4 5 ASSIGNMENT 2 Think of any organisation with which you are familiar and be prepared to give a descriptive account to your colleagues on: ■ the unusual, strange, interesting or ‘quirky’ features of, and people in, the organisation; and ■ how things actually happen and work in practice.
- 168. 142 PART 2 THE ORGANISATIONAL SETTING PERSONAL AWARENESS AND SKILLS EXERCISE OBJECTIVES Completing this exercise should help you to enhance the following skills: ᭤ Demonstrate your ability to analyse an organisation in terms of an open systems model. ᭤ Identify and analyse the transformation or conversion process in terms of main inter- related sub-systems. EXERCISE You are required to: 1 With the aid of a diagram, depict your own or some other organisation well known to you in terms of its: – main aims and objectives; – inputs; – nature of the transformation or conversion process; – outputs; – measurement of effectiveness in achieving organisational goals. 2 Provide specific examples of ways in which the structure, management and functioning of the organisation are affected by external environmental influences. DISCUSSION ■ How effective are the interactions and interrelationships among the sub-systems? Give practical examples to support your view. ■ Comment critically on the effectiveness of management in co-ordinating the sub-systems and directing the activities of the organisation as a unified whole towards the accomplish- ment of its goals and objectives. Visit our website www.booksites.net/mullins for further questions, annotated weblinks, case material and Internet research material.
- 169. CHAPTER 4 THENATURE OF ORGANISATIONS 143 NOTES AND REFERENCES 1. For an account of developments in organisations see: 24. For a more detailed discussion of environmental influ- Peters, G. ‘Creating the Modern Organization’, in Crainer, ences, see, for example: Worthington, I. and Britton, C. S. and Dearlove, D. (eds) Financial Times Handbook of Business Environment, Fourth edition, Financial Times Management, Second edition, Financial Times Prentice Prentice Hall (2003). Hall (2001), pp. 24–45. 25. Lynch, R. Corporate Strategy, Third edition, Financial 2. Farnham, D. and Horton, S. (eds) Managing the New Times Prentice Hall (2003). Public Services, Second edition, Macmillan (1996), p. 26. 26. For an interesting collection of readings on the systems 3. Schneider, S. C. and Barsoux, J. Managing Across Cultures, view of organisations, see: Lockett, M. and Spear, R. (eds) Second edition, Financial Times Prentice Hall (2003). Organizations as Systems, Open University Press (1980). 4. Watson, T. J. Management Organisation and Employment 27. Trist, E. L. et al . Organizational Choice, Tavistock Strategy, Routledge and Kegan Paul (1986). Publications (1963). 5. Schein, E. H. Organizational Psychology, Third edition, 28. Kast, F. E. and Rosenzweig, J. E. Organization and Prentice-Hall (1988), p. 15. Management, Fourth edition, McGraw-Hill (1985). 6. Cyert, R. M. and March, J. G. A Behavioral Theory of the 29. Hersey, P. and Blanchard, K. Management of Organizational Firm, Second edition, Blackwell (1992). Behavior, Sixth edition, Prentice-Hall (1993). 7. Mintzberg, H. The Structuring of Organizations, Prentice- 30. Leavitt, H. J. Managerial Psychology, Fourth edition, Hall (1979). University of Chicago Press (1978). 8. See, for example: Dodds, O. ‘Implications of Change 31. For a fuller discussion on the meaning of technology, for Local Government Managers’, Professional Manager, see: Kast, F. E. and Rosenzweig, J. E. Organization and November 1995, pp. 15–17. Management, Fourth edition, McGraw-Hill (1985). 9. Gibson, J. M. B. ‘Changing Views of Privatisation’, 32. See, for example: Davies, I. K. The Management of Management Today, May 1997, p. 5. Learning, McGraw-Hill (1971). 10. Arnott, J. ‘Cause and Ethics’, Chartered Secretary, 33. Johnson, G. and Scholes, K. Exploring Corporate Strategy, December 2002, pp. 22–4. Sixth edition, Financial Times Prentice Hall (2002). 11. Smith, D. ‘Crossing the Private–Public Divide’, 34. Developed from French, W. L., Kast, F. E. and Management Today, August 1998, pp. 26–30. Rosenzweig, J. E. Understanding Human Behavior in 12. Rose, A. and Lawton, A. Public Services Management, Organizations, Harper & Row (1985), pp. 321–2. Financial Times Prentice Hall (1999), p. 74. 35. See, for example: Lynch, R. Corporate Strategy, Third 13. Wright, Sir David ‘In My Opinion’, Management Today, edition, Financial Times Prentice Hall (2003). March 2003, p. 14. 36. See also, Earl, M. ‘IT Strategy in The New Economy’, in 14. Fitzsimmons, J. A. and Sullivan, R. S. Service Operations Pickford, J. (ed.) Financial Times Mastering Management Management, McGraw-Hill (1982). 2.0, Financial Times Prentice Hall (2001), pp. 109–13. 15. Levitt, T. ‘Production-Line Approach to Service’, Harvard 37. Law, S. ‘Future Networking’, Professional Manager, Business Review, September–October 1972, p. 41. March 2003, p. 21. 16. Macdonald, J. ‘Service Is Different’, The TQM Magazine, 38. See, for example: Wilson, B. ‘The Challenge of vol. 6, no. 1, 1994, p. 5. Change’, Industrial Management and Data Systems, 17. For a discussion on the nature of service industries, see November/December 1987, pp. 19–22. for example: Mullins, L. J. Hospitality Management and 39. Lane, T., Snow, D. and Labrow, P. ‘Learning to Succeed Organisational Behaviour, Fourth edition, Longman (2001). with ICT’, The British Journal of Administrative 18. Weber, M. The Theory of Social and Economic Organization, Management, May/June 2000, pp. 14–15. Collier Macmillan (1964). 19. Etzioni, A. Modern Organizations, Prentice-Hall (1964), 40. For a detailed account of the nature and function of p. 14. the informal organisation, see: Gray, J. L. and Starke, F. 20. Blau, P. M. and Scott, W. R. Formal Organizations, A. Organizational Behavior: Concepts and Applications, Routledge and Kegan Paul (1966). Fourth edition, Charles E. Merrill (1988). 21. Katz, D. and Khan, R. L. The Social Psychology of 41. Egan, G. ‘The Shadow Side’, Management Today, Organizations, Second edition, Wiley (1978). September 1993, pp. 33–8. 22. A summary of the systems view of organisations, and its 42. Chowdhury, S. Management 21C, Financial Times value in distinguishing between private and public organ- Prentice Hall (2000), p. 205. isations, is given in: Mullins, L. J. ‘The Organisation – A 43. Ulrich, D. ‘Context, Capability and Response’, in Systems View’, Professional Administration, vol. 11, no. 2, Chowdhury, S. Management 21C, Financial Times February 1981, pp. 20–2. Prentice Hall (2000), p. 240. 23. See, for example: Mullins, L. J. ‘The Hotel and the 44. Gratton, L. Living Strategy: Putting People at the Heart of Open Systems Model of Organisational Analysis’, The Corporate Purpose, Financial Times Prentice Hall (2000). Services Industry Journal, vol. 13, no. 1, January 1993, 45. Cloke, K. and Goldsmith, J. The End of Management and pp. 1–16. the Rise of Organizational Democracy, Jossey-Bass (2002). Use the Financial Times to enhance your understanding of the context and practice of management and FT organisational behaviour. Refer to articles 3, 4 and 6 in the BUSINESS PRESS section at the end of the book for relevant reports on the issues explored in this chapter.
- 170. 5 ORGANISATIONAL GOALS, STRATEGY AND RESPONSIBILITIES The activities of a work organisation and the management of people are directed towards a variety of goals which are not mutually exclusive and which may conflict with each other. Goals are translated into strategy in order to provide corporate guidelines for the structure and operations of the organisation. The power and influence of a business organisation must also be tempered by its social responsibilities. Goals, strategy and responsibilities are important features in the study of management and organisational behaviour. LEARNING OUTCOMES After completing this chapter you should be able to: ᭤ explain the nature of, and functions served by, Photo: Flora London Marathon organisational goals; ᭤ assess the importance of organisational ideologies The impact of management’s decision on society and principles; is not just ‘public’ responsibility but it is ᭤ examine the need for objectives and policy, and the importance of the profit objective to business inextricably interwoven with management’s organisations; responsibility to the enterprise. Still, there is a ᭤ evaluate the need for corporate strategy and explain responsibility of management to the public the basis for decision-making and problem-solving; interest as such. This is based on the fact that the ᭤ examine the concept of social responsibilities of enterprise is an organ of society, and that its management; actions have a decisive impact on the social ᭤ explore approaches to the consideration of values and scene. ethics in organisations; Peter Drucker ᭤ review the importance of organisational goals, The Practice of Management, Heinemann (1955) objectives and policy for the effective management of a work organisation.
- 171. CHAPTER 5 ORGANISATIONAL GOALS, STRATEGY AND RESPONSIBILITIES 145 THE NATURE OF ORGANISATIONAL GOALS In Chapter 4 we saw that the context of the organisational setting is central to the application of organisational behaviour and the process of management. It is the inter- action of people in order to achieve objectives that forms the basis of the particular organisation. If you do not know where you are going, you cannot tell if you have arrived. Underlying the effective management of people, therefore, is the requirement for a clear understanding of the nature of the business that the organisation is in and how best to provide customer or consumer satisfaction.1 In order to study organisa- tional behaviour you need to explore the nature of organisational goals and strategy for the formal organisation as a whole. All organisations have some function to perform, some contribution to make to the environment of which they are part. The function of the business organisation may be seen, for example, as the creation and/or supply of goods and services. This involves bring- ing together the factors of production and their successful mix and direction, to provide products or services in order to create value added. Others might see the function of busi- ness organisations as, for example, providing a source of employment and of income. In addition to performing some function, all organisations also have some incentive for their existence, and for their operations. The goals of an organisation are the reason for its existence. The activities of the organisation are directed to the attainment of its goals. A goal is a future expectation, some desired future state. It is something the organisation is striving to accomplish. The meaning of a goal is, however, subject to a number of interpretations. It can be used in a very broad sense to refer to the overall purpose of an organisation – for example, to produce television sets. A goal may also be used to refer to more specific desired accomplishments – for example, to produce and sell a given number of a range of television sets within a given period of time. The concept of organisational goals is more specific than that of the function of an organisation. The goals of an organisation will determine the nature of its inputs and out- puts, the series of activities through which the outputs are achieved, and interactions with its external environment. The extent to which an organisation is successful in attaining its goals is a basis for the evaluation of organisational performance and effectiveness. Goal model The goal model approach concentrates on the study of organisational goals and the approach measurement of success against the realisation of goals. Etzioni suggests a potential dis- advantage of this approach.2 Goals are ideals and more attractive than actual achievement. Organisations are characterised by low effectiveness. They rarely achieve their goals with any degree of finality and can, therefore, almost always be reported as a failure. The goal model approach results in attention being focused on the organisa- tion’s lack of success in attaining goals at the expense of more meaningful forms of analysis. Instead of comparing organisations in terms of their stated goals, performance may be assessed relatively against different organisations. The concept of organisational goals is ambiguous. Goals may be expressed very simply: in the case of business organisations, for example, to make a profit, or to increase productivity. Such broadly based goals might be taken for granted and they tell us little about the emphasis placed on the various activities of the organisation in meeting its goals. In any case, profit might more correctly be interpreted as a reward to the shareholders or providers of capital, and a means of ensuring the continued ex- istence of the organisation and maintaining its growth and development. Alternatives for Goals have been defined by Simon as value premises which serve as inputs to decisions.3 decision- Goals at different levels within the organisation contribute to alternatives for decision- making making. Simon compares goal-setting with the mathematical approach of linear programming and he sees goals more as sets of constraints which the organisation must
- 172. 146 PART 2 THE ORGANISATIONAL SETTING satisfy – for example: profit for shareholders, or a minimum rate of return on invest- ments; satisfying demands of consumers; complying with government legislation on safety standards; providing job satisfaction for staff; pacifying environmental groups such as Friends of the Earth. Goals limit the scope of actions and decision-making at lower levels of the organisation. Constraints may themselves be regarded as goals in that they represent objectives which management is trying to meet. THE FUNCTIONS OF GOALS Despite the problems associated with the goal model approach, the concept of organ- isational goals serves a number of important functions.4 ■ Goals provide a standard of performance. They focus attention on the activities of the organisation and the direction of the efforts of its members. ■ Goals provide a basis for planning and management control related to the activities of the organisation. ■ Goals provide guidelines for decision-making and justification for actions taken. They reduce uncertainty in decision-making and give a defence against possi- ble criticism. ■ Goals influence the structure of the organisation and help determine the nature of technology employed. The manner in which the organisation is structured will affect what it will attempt to achieve. ■ Goals help to develop commitment of individuals and groups to the activities of the organisation. They focus attention on purposeful behaviour and provide a basis for motivation and reward systems. ■ Goals give an indication of what the organisation is really like, its true nature and character, both for members and for people outside of the organisation. ■ Goals serve as a basis for the evaluation of change and organisation development. ■ Goals are the basis for objectives and policies of the organisation. An important Goals are therefore an important feature of work organisations. To be effective goals feature of work should be emphasised, stated clearly and communicated to all members of the organi- organisations sation. The movement towards greater delegation and empowerment down through the hierarchy means that staff at all levels must be aware of their key tasks and actions, and exactly what is expected of them and their department/section. There must be clearly laid down organisational goals, objectives and strategy.5 In today’s environment, old-style command and control structures no longer work. People want freedom, but it must be freedom within a framework. Organisations, like individuals, need goals. Ensuring that appropriate goals are set is every manager’s responsibility. Although currently it is popular to encourage commitment by letting the organisation set its own goals, this approach frequently yields only modest results. More challenging goals, cre- ated top-down, can have far more dramatic effects on business performance ... Setting ambitious goals forces the organisation to dig deeper for creative solutions and to rethink how the business should be run. Sir Brian Pitman, Chairman of Lloyds TSB6 To be effective, organisational goals should encourage the use of empowerment but still incorporate an element of traditional management measurement and control. For example, Mills and Friesen suggest that to be effective goals must exhibit several characteristics:
- 173. CHAPTER 5 ORGANISATIONAL GOALS, STRATEGY AND RESPONSIBILITIES 147 ■ Understandable – otherwise those who are given them seek further input before acting. If they cannot act on their own it follows they have not been empowered. ■ Contain a time element – in order that those being empowered will know when their progress will be measured. This helps them to accept empowerment and stop looking for direction. ■ Carefully drawn – broad enough to support independent action but not so broad that confounding factors prevent their achievement. For example, asking a team to keep company stock price above target is too broad as factors influencing share prices are beyond the control of any one team. ■ Subject to alignment – with other goals across the organisation in order to facilitate co-ordination among teams and to ‘roll up’ into collective company goals.7 The goal-setting process is of importance to all types of organisations and facilitates the attainment of objectives. In the public sector, for example, organisations such as hospi- tals, local authorities and universities have complex, diverse and competing goals. The clarification of goals and objectives is the basis for corporate planning, and a planning, programming, budgeting systems (PPBS) approach to decision-making. INTEGRATION OF GOALS Strictly, organisations have no goals; only people do. Organisational goals are estab- lished by people, either individually, or, more usually, by a number of individuals co-operating together. For example, a group of senior managers may collectively agree on a particular desired course of action which may then come to be referred to as an organisational goal. However, this is still the goal of those managers who initially determined it. Success of the organisation is measured by the progress of people towards goals set by people. This gives rise to the questions: ■ To what extent has the organisation one common set of goals, or is there diversity among the various goals of different departments or divisions of the organisation? ■ How far are the goals of management compatible with the goals of the organisation? ■ To what extent do individual members obtain satisfaction of their own goals through the attainment of organisational goals? Informal goals Members of the organisation have different, and often conflicting, goals. As a result, the goals which the organisation actually pursues (informal goals) may be distinguished from the officially stated goals (formal goals) which are set out in broad terms as the reasons for the purpose of the organisation. Informal goals may be inferred from the actual decisions made and actions taken within the organisation. Managers, and other members of the organisation, will have: ■ their own perception of the goals of the organisation – for example, to produce high-quality television sets which satisfy requirements of the customers; and ■ their personal goals – for example to earn high wages, to achieve promotion, to gain social satisfaction, to achieve status – which they expect to fulfil by participating in the activities of the organisation. (See Figure 5.1.) Compatibility If organisational goals and personal goals are pulling in different directions, conflict of personal will arise and performance is likely to suffer. An organisation will be more effective goals and when personal goals are compatible with organisational goals. Organisational perform- organisational ance will depend ultimately on the extent to which individuals are provided with the goals opportunity to satisfy their own goals by contributing to the goals of the organisation.8
- 174. 148 PART 2 THE ORGANISATIONAL SETTING FORMAL GOALS rs ge ana fm ls o oa Extent of compatibility lg na Officially stated rso Pe organisational INFORMAL Perceived goals of goals GOALS the organisation Pe rso na lg of oals the o org f othe an isa r mem The reason and tio be n rs purpose of the organisation Figure 5.1 Compatibility of goals within an organisation Management has a responsibility to clarify organisational goals and to attempt to inte- grate personal goals (including their own) with the overall objectives of the organisation. Only when organisational goals are shared by all members of the organisation will com- plete integration be achieved. In practice, this is unlikely. As McGregor points out: Perfect integration of organizational requirements and individual goals and needs is, of course, not a realistic objective. In adopting this principle, we seek that degree of integration in which the individual can achieve his goals best by directing his efforts towards the success of the organization.9 Management should endeavour, therefore, to structure the organisation so that people may realise their own (personal) goals by helping the organisation to satisfy its goals. One attempt at integrating organisational goals with the needs of the individual mem- bers of the organisation is provided by the approach of Management by Objectives. This is discussed in Chapter 7. CLASSIFICATION OF ORGANISATIONAL GOALS We have seen that goals are an important feature in the management of organisations. The goals of an organisation may be classified in a number of different ways. The concept of Etzioni provides a classification which distinguishes three types of organisational goals compliance in terms of their relationship with the concept of power and compliance.10 ■ Order goals are negative and attempt to place some kind of restraint upon members of the organisation and to prevent certain forms of behaviour. ■ Economic goals are concerned with the production of goods and/or services for people outside of the organisation. ■ Cultural goals are concerned with symbolic objects and with creating or maintain- ing value systems of society. Social goals, which serve the various needs of members of the organisation, are classified as a sub-type under cultural goals.
- 175. CHAPTER 5 ORGANISATIONAL GOALS, STRATEGY AND RESPONSIBILITIES 149 Most organisations would be expected to display one of three central combinations of organisational goals and compliance structure. Although there are other possibilities, the three most usual combinations are: ■ organisations with order goals and a coercive compliance structure – for example, closed prisons; ■ organisations with economic goals and a utilitarian compliance structure – for example, business firms; ■ organisations with cultural goals and a normative compliance structure – for exam- ple, professional bodies. Organisations may, of course, serve more than one goal, and these goals may not necessarily fall into the same category. Usually, however, there is one main goal which maintains a relationship with compliance structure in keeping with one of the three central combinations. The concept of power, involvement and compliance is discussed further in Chapter 21. A systems view of organisational goals There are a number of possible alternative classifications. However, by adopting a sys- tems view of organisations we can distinguish four main types of organisational goals: ■ Consumer goals. These relate to the nature of outputs in terms of the market to be served and consumer satisfaction – that is, the range and nature of goods and/or services produced or supplied in order to meet the needs of customers or clients. Examples are consumer products, educational services or health care. ■ Product goals. These relate to the nature and characteristics of the outputs themselves – that is, the goods and/or services provided. This is the main area in which organisations deliberately attempt to distinguish themselves from other organi- sations – for example, in the range, design, quality and availability of their outputs. ■ Operational goals. These relate to the series of activities involved in providing out- puts, and to the operation and functioning of the organisation. Examples are the management of opportunities and risks, the choice of structure, the nature of tech- nology and management processes. ■ Secondary goals. These relate to goals that are not the main aim of the organisa- tion. They arise from the manner in which the organisation uses its power and influence in pursuit of its outputs, and in undertaking the series of activities to achieve these outputs. Political aims, aid to the community, the development of staff and social responsibilities would come under this heading. ALTERATION OF GOALS Survival of the organisation will depend upon its ability to adapt to change and to the demands of its external environment. In practice, however, organisations usually appear to alter their goals only on a gradual basis. Commitment to the objectives and policies of the organisation, people’s cognitive limitations and their uncertainties and fears, may mean a reluctance to accept change. Organisations may also find it difficult to make short-term, rapid changes in resource allocation. The very complexity of envi- ronmental influences may itself hinder rapid change. (See also the discussion on organisational change in Chapter 22.) It is important, however, that the organisation does not restrict innovation but is ready to respond positively to changing circumstances and, increasingly, to anticipate future change. Management has to balance the need for adaptability in meeting the challenges and opportunities presented by change with, at the same time, preserving an atmosphere of stability and continuity in the interests of members of the organisation.
- 176. 150 PART 2 THE ORGANISATIONAL SETTING ORGANISATIONAL IDEOLOGIES AND PRINCIPLES The goals of the organisation may be pursued in accordance with an underlying ideol- ogy, or philosophy, based on beliefs, values and attitudes. This organisational ideology determines the ‘culture’ of the organisation and provides a set of principles which govern the overall conduct of the organisation’s operations, codes of behaviour, the management of people and its dealings with other organisations.11 These sets of princi- ples may be recognised and implemented informally as ‘accepted conventions’ of the organisation or they may be stated formally in writing. Certain aspects of an organisation’s philosophy may be so dominant that they become the ‘hallmark’ of that organisation and place constraints on other areas or forms of activities. An example is the high quality standard of Marks & Spencer’s mer- chandise and their explicit policy of buying primarily from United Kingdom sources. In the case of the Walt Disney Company, quality service is embedded deeply within its corporate culture. The overriding byword of The Body Shop is honesty and this under- lies their policy of: ‘We WILL be the most honest cosmetic company.’ As another example, the highest-quality hallmark of Rolls-Royce cars would presumably prevent entry into the cheaper mass-production market. Organisational values and beliefs Some 30 years ago, Brech wrote about the ideology of an organisation related to the idea of both an ethical foundation and an organisational or operational foundation.12 ■ Ethical foundation embodies the basic principles which govern the external and internal relations of the organisation. External relations concern standards of fair trading and relations with, for example, customers, suppliers and the general public. Internal relations are concerned with fair standards of employment and relations with members of the organisation, including authorised union representatives. ■ Organisational or operational foundation is concerned with the structure, opera- tion, and conduct of the activities of the organisation. External aspects relate to, for example, methods of trading and channels of distribution. Internal aspects include methods of production, use of equipment and managerial practices relating to organisational performance, productivity and profitability. In more recent years organisations have given growing attention to a set of stated cor- porate values displayed prominently for all to see. Lucas questions whether such grand statements of corporate principles really mean anything and concludes that they actu- ally have a point and values can be used with success. ‘A set of values is obviously a nice thing for an organisation to have; something to pin on the noticeboard. But for those organisations that have learnt to walk the talk, deeply embedded values can attract the right people, underpin the business in times of crisis and provide direction for the future.’13 Dainty and Anderson point out that values are the guidelines a person uses to make choices and within organisations, basic beliefs affect what decisions are made, how people interact, and the kind of work practices that are pursued and developed. They form the glue that binds an organisation’s culture. ‘Building an understanding of values that are shared within an organization will be as important in the 21st century as it is today. In fact, many feel that organizations and people should be returning to more fundamental values, rather than moving away from them. Increasingly, organiza- tions are spending time working out and agreeing the values by which they want their organization to be managed.’14 Cloke and Goldsmith contend that organisations can increase their integrity, coher- ence, and integration and improve their performance by reaching consensus on shared
- 177. CHAPTER 5 ORGANISATIONAL GOALS, STRATEGY AND RESPONSIBILITIES 151 values. They can bolster value-based relationships by recognising and encouraging behaviours that uphold their values; communicate and publicise their values, and encourage individual and team responsibility for implementing them; develop meth- ods for monitoring compliance with values, providing feedback and identifying potential conflicts of interest. Most importantly consensus on shared values means organisations can accomplish these goals without moralising, preaching, excusing, or imposing their values on others.15 MISSION STATEMENTS In recent years it has become increasing popular for organisations to produce a mission statement and/or its ‘vision’ that sets out the purpose and general direction for the organisation.16 There is sometimes an apparent uncertainty of the distinction between the terms ‘mission’ and ‘vision’. It seems to be generally accepted that the vision pro- vides the overall frame of reference within which mission statements are written and goals selected. ‘If vision is ill formed, mission statements will be vague and goal achievement hard to measure.’17 Johnson and Scholes suggest that ‘mission’ is a general expression of the overall purpose of the organisation, which, ideally is in line with the values and expectations of major stakeholders; while ‘vision’ is the desired future state of the organisation, and an aspiration around which to focus attention and energies of members of the organisation.18 Mission statements vary in length, the extent of specific or general content, and according to the type of the organisation. The mission statement of the Institute of Chartered Secretaries and Administrators in Article 4 of its Royal Charter is: ‘The object for which the Institute is established and incorporated is the promotion and advancement of the efficient administration of commerce, industry and public affairs by the continued development of the study and practice of secretaryship and administration of companies and other bodies.’ The mission statement of Hambrook Landscapes Ltd, Southampton is: As experts in your garden we strive to exceed our customers’ expectations while the company’s vision statements are: Business: our vision is to grow our business by 20% gross profit per year, thus affording the directors the opportunity to expand business ventures. Staff: our vision is for our staff to grow by training and developing them to meet the business challenges by innovation, care and competence. Customers: our vision is to give our customers growing confidence by doing it in the Hambrook way and exceeding their expectations. For Aveda, the international beauty and hair product organisation, the mission state- ment is: Our mission at Aveda is to care for the world we live in, from the products we make to the ways in which we give back to society. At Aveda, we strive to set an example for environmental leadership and responsibility, not just in the world of beauty but around the world. Value of mission statements The value of a mission statement is dependent, however, upon the extent to which it is understood and accepted throughout the organisation, and translated in meaningful terms to all members of staff including those at the operational level. Perrin and
- 178. 152 PART 2 THE ORGANISATIONAL SETTING Tavakoli, for example, raise doubts over managers who have a naïve notion that the pro- duction and dissemination of a well-crafted statement will create a sense of mission: The picture will remain gloomy whilst managers and consultants believe that creating a mission statement is synonymous with creating a sense of mission. You only create the latter if your mis- sion statement is understood, believed and acted upon by a majority of organisation members.19 Rigby suggests that mission statements can be dynamic, but they can be trite and busi- nesses should look at whether or not one is really needed;20 Trapp argues that most mission statements lack substance and only serve to confuse colleagues and customers alike.21 A mission statement is only likely to be of any value if the organisation actually practices what it preaches. As Riches, for example, questions: is there congruence between what it says (the values posted on the wall) and what it actually does? Is there a high level of trust in the organisation? Are the organisation’s culture, systems, struc- tures, processes or policies in sync with the stated core values? In other words, does management walk the talk?22 A similar point is made by Gratton: How often do corporate plans and mission statements remain simply that: senior executive rheto- ric with little meaning to those people whose job it is to deliver customer satisfaction or bring complex products rapidly to the marketplace? Employees may hear corporate mission statements extolling the virtues of customer satisfaction or product innovation, but when the communication fanfare is over, the customer-focus workshops completed, and the lights dim on the business video, what is left? A group of employees trying to make sense and create meaning from the many messages and cues they have received. 23 OBJECTIVES AND POLICY In accordance with its ideology or philosophy, the goals of the organisation are trans- lated into objectives and policy. Terminology and use of the two terms varies but objectives are seen here as the ‘what’, and policy as the ‘how’, ‘where’ and ‘when’ – the means that follow the objectives. ■ Objectives set out more specifically the goals of the organisation, the aims to be achieved and the desired end-results. ■ Policy is developed within the framework of objectives. It provides the basis for deci- sion-making and the course of action to follow in order to achieve objectives. The relationship between the organisation, its objectives and management is illus- trated by Fayol who stated that one of the managerial duties of an organisation is to: … see that the human and material organization is consistent with the objective, resources and requirements of the concern.24 The establishment of objectives and policy is therefore an integral part of the process of management, and a necessary function in every organisation. A systems view of goals and objectives The objectives of an organisation are related to the input–conversion–output cycle. In order to achieve its objectives and satisfy its goals the organisation takes inputs from the environment, through a series of activities transforms or converts these inputs into outputs and returns them to the environment as inputs to other systems. The organisa- tion operates within a dynamic setting and success in achieving its goals will be influenced by a multiplicity of interactions with the environment. (See Figure 5.2.) Whatever the type of organisation, there is a need for lines of direction through the establishment of objectives and determination of policy. Objectives and policy form a basis for the process of management.
- 179. CHAPTER 5 ORGANISATIONAL GOALS, STRATEGY AND RESPONSIBILITIES 153 Figure 5.2 A systems view of organisational goals and objectives Objectives Clearly defined and agreed objectives are the first stage in the design of organisation structure and help facilitate systems of communication between different parts of the organisation. The ability to communicate corporate objectives to those responsible for seeing that those objectives are achieved is also an essential characteristic of an effec- tive incentive pay scheme.25 The choice of objectives is an essential part of the decision-making process involving future courses of action. Objectives may be set out either in general terms or in more specific terms. General objectives are determined by top management. Specific objec- tives are formulated within the scope of general objectives and usually have more defined areas of application and time limits. Objectives may be just implicit but the formal, explicit definition of objectives will help highlight the activities which the organisation needs to undertake and the com- parative importance of its various functions. An explicit statement of objectives may assist communications and reduce misunderstandings, and provide more meaningful criteria for evaluating organisational performance. However, objectives should not be stated in such a way that they detract from the recognition of possible new opportuni- ties, potential danger areas, the initiative of staff or the need for innovation or change. Policy A policy is a guideline for organisational action and the implementation of goals and objectives. Policy is translated into rules, plans and procedures; it relates to all activities of the organisation, and to all levels of the organisation. Clearly stated policy can help reinforce the main functions of the organisation, make for consistency and reduce dependency on the actions of individual managers. Policy clarifies the roles and responsi- bilities of managers and other members of staff and provides guidelines for managerial behaviour. Securing agreement to a new or revised policy can help overcome reliance on outdated practices and aid the introduction of organisational change.26 Policy provides guiding principles for areas of decision-making and delegation. For example, specific decisions relating to HRM policy could include: ■ giving priority to promotion from within the organisation; ■ enforcing retirement at government pensionable age; ■ whenever possible, employing only graduate or professionally qualified accountants; ■ permitting line managers, in consultation with the HRM manager, to appoint staff up to a given salary/wage level.
- 180. 154 PART 2 THE ORGANISATIONAL SETTING Some policy decisions are directly influenced by external factors – for example govern- ment legislation on equal opportunities. Corporate Objectives and policy together provide corporate guidelines for the operations and guidelines management of the organisation. The activities of the organisation derive their signifi- cance from the contribution they make to achieving objectives in the manner directed. The formulation of objectives and policy, and the allocation of resources, provide the basis for strategic planning which is the first stage in the planning and control processes of business organisations.27 THE PROFIT OBJECTIVE In order to be successful, the primary objectives of the business organisation may be seen as: ■ to continue in existence – that is, to survive; ■ to maintain growth and development; and ■ to make a profit. All three objectives are inextricably linked and it is a matter of debate whether the organisation survives and develops in order to provide a profit, or makes a profit by which it can survive and develop. Summers and Nowicki suggest that using a Maslow-like hierarchy of needs (discussed in Chapter 12), the first concern for organisations is survival. After organisational sur- vival is ensured, managers then have considerable latitude in what they want the organisation to be and do. 28 If we accept survival as the ultimate objective of the business organisation, then this involves the need for a steady and continuous profit. Organisations must be prepared to accept the possibility of a reduction in short-term profitability in order to provide for future investments. The profit goal is achieved through the process of management and the combined efforts of members of the organisation. In times of economic recession the survival objective takes on particular importance, especially for small businesses. Managers today have a problem. They know their companies must grow. But growth is hard, especially given today’s economic environment where investment capital is difficult to come by and firms are reluctant to take risks. Managers know innovation is the ticket to successful growth. But they just can’t seem to get innovation right.29 Not a sufficient Although the objective of profit maximisation is undoubtedly of great importance, it is criterion for not, by itself, a sufficient criterion for the effective management of a business organisation. effective In practice, there are many other considerations and motivations which affect the management desire for the greatest profit or maximum economic efficiency and the accompanying assumptions which underlie the economic theory of the firm. (See Figure 5.3.) The meaning of ‘profit maximisation’ is not, by itself, very clear. Consideration has to be given to the range and quality of an organisation’s products or services, to the costs of its operations and to environmental influences. Reducing attention to longer- term ‘investments’ such as quality and after-sales service, research and development, sales promotion, management development, satisfaction of staff and their employment conditions may increase profitability in the short term, but is likely to jeopardise future growth and development, and possibly even the ultimate survival of the organisation. A business organisation has to provide some commodity or service by which it con- tributes to the economic and/or social needs of the community. It also has broader social responsibilities to society. (Social responsibilities are discussed later in this chapter.) Profit can be seen as the incentive for an organisation to carry out its activi-
- 181. CHAPTER 5 ORGANISATIONAL GOALS, STRATEGY AND RESPONSIBILITIES 155 Figure 5.3 Objectives of a business organisation ties effectively. Profit does at least provide some broad measure of effectiveness and highlights the difficulty in evaluating the effectiveness of not-for-profit organisations, such as National Health Service hospitals, prisons or universities. Avoiding Managers are more concerned with avoiding uncertainties than with prediction of uncertainties uncertainties. Economic models of decision-making, based on the assumption of rational behaviour in choosing from known alternatives in order to maximise objec- tives, can be contrasted with behavioural models based not so much on maximising of objectives as on short-term expediency where a choice is made to avoid conflict and within limiting constraints.30 Furthermore, as discussed earlier, members of the organisation will have their own personal goals and their own perception of the goals of the organisation. FALLACY OF THE SINGLE OBJECTIVE Drucker has referred to the fallacy of the single objective of a business. The search for the one, right objective is not only unlikely to be productive, but is certain to harm and misdirect the business enterprise. To emphasize only profit, for instance, misdirects managers to the point where they may endan- ger the survival of the business. To obtain profit today they tend to undermine the future … To manage a business is to balance a variety of needs and goals … the very nature of business enterprise requires multiple objectives which are needed in every area where performance and results directly and vitally affect the survival and prosperity of the business.31 Drucker goes on to suggest eight key areas in which objectives should be set in terms of performance and results: 1 Market standing – for example: share of market standing; range of products and markets; distribution; pricing; customer loyalty and satisfaction.
- 182. 156 PART 2 THE ORGANISATIONAL SETTING 2 Innovation – for example: innovations to reach marketing goals; developments aris- ing from technological advancements; new processes and improvements in all major areas of organisational activity. 3 Productivity – for example: optimum use of resources; use of techniques such as operational research to help decide alternative courses of action; the ratio of ‘con- tributed value’ to total revenue. 4 Physical and financial resources – for example: physical facilities such as plant, machines, offices and replacement of facilities; supply of capital and budgeting; planning for the money needed; provision of supplies. 5 Profitability – for example: profitability forecasts and anticipated timescales; capital investment policy; yardsticks for measurement of profitability. 6 Manager performance and development – for example: the direction of managers and setting up their jobs; the structure of management; the development of future managers. 7 Worker performance and attitude – for example: union relations; the organisation of work; employee relations. 8 Public responsibility – for example: demands made upon the organisation, such as by law or public opinion; responsibilities to society and the public interest. Allocation of The organisation therefore must give attention to all those areas which are of direct resources and and vital importance to its survival and prosperity. Etzioni makes the point that: decision- The systems model, however, leads one to conclude that just as there may be too little allocation making of resources to meet the goals of the organization, so there may also be an over-allocation of these resources. The systems model explicitly recognizes that the organization solves certain problems other than those directly involved in the achievement of the goal, and that excessive concern with the latter may result in insufficient attention to other necessary organizational activ- ities, and to a lack of coordination between the inflated goal activities and the de-emphasized non-goal activities.32 Individuals in the organisation are not necessarily guided at all times by the primary goal(s) of the organisation. Simon illustrates this in respect of the profit goal. Profit may not enter directly into the decision-making of most members of a business organisa- tion. Again, this does not mean that it is improper or meaningless to regard profit as a principal goal of the business. It simply means that the decision-making mechanism is a loosely coupled system in which the profit constraint is only one among a number of constraints and enters into most sub-systems only in indirect ways.33 We have seen, then, that although the profit objective is clearly of importance, by itself it is not a sufficient criterion for the effective management of a business organisation. There are many other considerations and motivations which affect the desire for the greatest profit or maximum economic efficiency. The balanced The balanced score card is an attempt to combine a range of both qualitative and scorecard quantitative indicators of performance which recognise the expectations of various stakeholders and relates performance to a choice of strategy as a basis for evaluating organisational effectiveness. Citing the work of Kaplan and Norton in a year-long study of a dozen US companies,34 Anita van de Vliet refers to the approach of a ‘balanced scorecard’ and the belief that: ... relying primarily on financial accounting measures was leading to short-term decision- making, over-investment in easily valued assets (through mergers and acquisitions) with readily measurable returns, and under-investment in intangible assets, such as product and process innovation, employee skills or customer satisfaction, whose short-term returns are more difficult to measure.
- 183. CHAPTER 5 ORGANISATIONAL GOALS, STRATEGY AND RESPONSIBILITIES 157 Van de Vliet suggests that in the information era, there is a growing consensus that financial indicators on their own are not an adequate measure of company competi- tiveness or performance and there is a need to promote a broader view. The balanced scorecard does still include the hard financial indicators, but it balances these with other, so-called soft measures, such as customer acquisition, retention, profitability and satisfac- tion; product development cycle times; employee satisfaction; intellectual assets and organisational learning.35 The balanced scorecard (BS) can also be used in the public sector where there is an increasing need for organisations to improve their performance and to be seen as more businesslike in the delivery of services (including an employee perspective). Given that the public sector has the difficult task of fulfilling a wide range of very different objec- tives, the BS could help in formal recognition and measurement of these objectives.36 THE NEED FOR STRATEGY Objectives and policy are formalised within the framework of a corporate strategy which serves to describe an organisation’s sense of purpose, and plans and actions for its implementation. Tilles has suggested that without an explicit statement of strategy it becomes more difficult for expanding organisations to reconcile co-ordinated action with entrepreneurial effort.37 An explicit strategy for the business organisation is neces- sary for the following reasons. First, there is the need for people to co-operate together in order to achieve the benefits of mutual reinforcement. Second, there are the effects of changing environmental conditions. The absence of an explicit concept of strategy may result in members of the organi- sation working at cross-purposes. The intentions of top management may not be communicated clearly to those at lower levels in the hierarchy who are expected to implement these intentions. Obsolete patterns of behaviour become very difficult to modify. Change comes about from either subjective or intuitive assessment, which become increasingly unreliable as the rate of change increases. Developing a statement of strategy demands a creative effort. If strategic planning is to be successful, it requires different methods of behaviour and often fundamental change in the nature of inter- actions among managers.38 Allen and Helms suggest that different types of reward practices may more closely complement different generic strategies and are significantly related to higher levels of perceived organisational performance. 39 Managers’ Increased business competitiveness and the dynamic external environment have skills and placed important emphasis on corporate strategy and the competencies of managers. competencies For example, Richardson and Thompson argue that if organisations are to be effective in strategic terms they must be able to deal with the pressures and demands of change. Managers should be strategically aware and appreciate the origins and nature of change. They should possess a comprehensive set of skills and competencies and be able to deal effectively with the forces which represent opportunities and threats to the organisation. Effective strategic management creates a productive alliance between the nature and the demands of the environment, the organisation’s culture and values, and the resources that the organisation has at its disposal.40 Strategy is about first asking questions, then improving the quality of those questions through listening to the answers and acting on the new knowledge. Any effective strategy requires the successful integration of thoughts about tomorrow’s new business opportunities with both past experience and the pattern of today’s behaviours.41
- 184. 158 PART 2 THE ORGANISATIONAL SETTING Corporate Some form of corporate strategy or planning is necessary for all organisations, particu- approach in larly large organisations and including service organisations and those in the public the public sector. In a discussion on strategy developments, Lynch suggests that many of the same sector considerations apply to both public and private organisations. The major difference has been the lack of the objective to deliver a profit in government-owned institutions. The trend in most parts of the world is now towards privatising large public companies in the utilities and telecommunications sectors. The principal impact of privatisation on strategy will depend on the form that privatisation takes. Some companies may remain monopolies even though in the private sector. Lynch sets out the following key strategic principles for public and non-profit organisations: ■ Public organisations are unlikely to have a profit objective. Strategy is therefore governed by broader public policy issues such as politics, monopoly supply, bureau- cracy and the battle for resources from the government to fund the activities of the organisation. ■ Strategy in non-profit organisations needs to reflect the values held by the institu- tions concerned. Decision-making may be slower and more complex. ■ Within the constraints outlined above, the basic strategic principles can then be applied.42 In the public sector, the establishment of objectives and policy requires clarification of the respective roles of both elected members and permanent officials. This dual nature of management requires harmonious relationships between the two parties and emphasises the need for a corporate approach.43 A strategic framework In order to continue in existence and succeed, Bruce maintains that a business needs a structured strategic framework which provides the starting point for moving forward and a means for assessing and responding to change. The strategic framework defines the boundary in terms of product markets and is reflected in the management of processes, knowledge and people. Bruce sets out a strategic framework divided into five separate but interrelated elements: ■ the things that are driving strategic decisions; ■ the direction that the organisation is heading in; ■ the products and services that will be delivered; ■ the design of the organisation’s processes, knowledge systems and people develop- ment mechanisms; ■ the specific targets that will identify whether the organisation is deviating from its plan. Once strategic targets have been agreed the organisation or team must be aligned. The review should start with the means to deliver the strategy before reviewing the formal structure and hierarchies. Then the selection, development and leadership of people should be reviewed to create a work environment and culture that supports each ele- ment of the strategic framework.44 THE CONCEPT OF SYNERGY An important aspect of corporate strategy and the growth and development of organi- sations is the concept of synergy which was developed in management applications by Ansoff.45 Synergy results when the whole is greater than the sum of its component parts. It can be expressed, simply, in terms of the 2 + 2 = 5 effect.
- 185. CHAPTER 5 ORGANISATIONAL GOALS, STRATEGY AND RESPONSIBILITIES 159 Synergy is usually experienced in situations of expansion or where one organisation merges with another, such as an organisation responsible for the development and pro- duction of a product merging with an organisation which markets the product. An example could be a television manufacturer merging with a television rental organisa- tion. The new organisation could benefit from the combined strengths and opportunities, skills and expertise, shared fixed overheads and technology, and from the streamlining and economy of its operations. Another example could be the merger of a computer firm with expertise in the design and marketing of hardware, with a firm expert in software manufacture and systems design. It is possible, however, to experience negative synergy or the 2 + 2 = 3 situation. Such a situation might arise when a merger occurs between organisations operating in different fields, with different markets or with different methods, or where the new organisation becomes unwieldy or loses its cost-effectiveness. SWOT ANALYSIS Ansoff has also referred to the analysis of strengths and weaknesses of organisations fol- lowing the formulation of objectives;46 and to threats and opportunities in the process of strategic change.47 This can be developed into what is a commonly known acronym, SWOT analysis (sometimes also known as ‘WOTS up’), which focuses on the Strengths, Weaknesses, Opportunities and Threats facing organisations. The SWOT analysis provides convenient headings under which to study an organi- sation in its environmental setting and may provide a basis for decision-making and problem-solving. You may therefore find the analysis helpful in tackling case studies. ■ Strengths are those positive aspects or distinctive attributes or competencies which provide a significant market advantage or upon which the organisation can build – for example, through the pursuit of diversification. These are characteristics of the organisation such as present market position, size, structure, managerial expertise, physical or financial resources, staffing, image or reputation. By searching out opportunities which match its strengths the organisation can optimise the effects of synergy. ■ Weaknesses are those negative aspects or deficiencies in the present competencies or resources of the organisation, or its image or reputation, which limit its effective- ness and which need to be corrected or need action taken to minimise their effect. Examples of weaknesses could be operating within a particular narrow market, lim- ited accommodation or outdated equipment, a high proportion of fixed costs, a bureaucratic structure, a high level of customer complaints or a shortage of key managerial staff. ■ Opportunities are favourable conditions and usually arise from the nature of changes in the external environment. The organisation needs to be sensitive to the problems of business strategy and responsive to changes in, for example, new mar- kets, technology advances, improved economic factors, or failure of competitors. Opportunities provide the potential for the organisation to offer new, or to develop existing, products, facilities or services. ■ Threats are the converse of opportunities and refer to unfavourable situations which arise from external developments likely to endanger the operations and effectiveness of the organisation. Examples could include changes in legislation, the introduction of a radically new product by competitors, political or economic unrest, changing social conditions and the actions of pressure groups. Organisations need to be responsive to changes that have already occurred and to plan for anticipated signifi- cant changes in the environment and to be prepared to meet them.
- 186. 160 PART 2 THE ORGANISATIONAL SETTING Although SWOT can offer a number of potential advantages for helping to evaluate corporate performance, care must be taken that the process does not lead to an over- simplified and misleading analysis. There are many ways of evaluating organisational performance and effectiveness, and varying criteria for success. For example, Levine suggests that the new criteria for assessing the strength of an organisation will be in the area of quality results achieved through people.48 THE MANAGEMENT OF OPPORTUNITIES AND RISKS Every business needs to have a strategy and this strategy must be related to changing environmental conditions. In order to survive and maintain growth and expansion top management must protect the business from potentially harmful influences, and be ready to take maximum advantage of the challenges and opportunities presented. While top management must always accept the need for innovation there is still the decision as to which opportunities it wishes to develop in relation to its resources, and those it chooses not to pursue. An effective business strategy depends upon the suc- cessful management of opportunities and risks. Drucker suggests that strategy should be based on the priority of maximising opportunities, and that risks should be viewed not as grounds of action but as limita- tions on action.49 Drucker points out that while it is not possible to ensure that the right opportunities are chosen, it is certain that the right opportunities will not be selected unless: ■ the focus is on maximising opportunities rather than on minimising risks; ■ major opportunities are scrutinised collectively and in respect of their characteristics rather than singly and in isolation; ■ opportunities and risks are understood in terms of the appropriateness of their fit to a particular business; and ■ a balance is struck between immediate and easy opportunities for improvement, and more difficult, long-range opportunities for innovation and changing the character of the business. If the business is to be successful then its organisation structure must be related to its objectives and to its strategy. The structure must be designed so as to be appropriate to environmental influences, the continued development of the business, and the man- agement of opportunities and risks. The nature of organisation structure is discussed in Chapter 15. E-business strategies Advances in information technology and the Internet mean that organisations have to embrace successful e-commerce and e-business strategies. For example, according to Earl: Quite simply, IT affects business strategy. It is an input to business strategy as well as an output. The Internet, mobile communications, and future media present both threats and opportunities. So business strategy that ignores how technology is changing markets, competi- tion, and processes is a process for the old economy, not the new economy. That is what ‘e-everything’ is about.50 Kermally points out that in order to operate within the new macro-economic environ- ment, organisations have to seriously consider the arrival of the new economy and strategies. They have to embrace e-business in order to deal with the complexity of the new business environment. Apart from scenario planning, e-businesses also have to focus special attention to recruiting and retaining staff. It is important to keep up with
- 187. CHAPTER 5 ORGANISATIONAL GOALS, STRATEGY AND RESPONSIBILITIES 161 competitors and not to become complacent about adopting e-business. Kermally main- tains that the e-business model is important because it: ■ makes it possible for information to be shared more quickly and easily; ■ facilitates human interaction; ■ enables organisational resources and capabilities to be stretch strategically; ■ provides global reach in marketing; ■ allows consumers to shop 24 hours a day from any location; and ■ promotes economic growth.51 SOCIAL RESPONSIBILITIES OF ORGANISATIONS Organisations play a major and increasingly important role in the lives of us all, especially with the growth of large-scale business and the divorce of ownership from management. The decisions and actions of management in organisations have an increasing impact on individuals, other organisations and the community. The power and influence which many business organisations now exercise should be tempered, therefore, by an attitude of responsibility by management. In striving to satisfy its goals and achieve its objectives the organisation cannot operate in isolation from the environment of which it is part. The organisation requires the use of factors of production and other facilities of society. The economic efficiency of organisations is affected by governmental, social, technical and cultural variables. In return, society is in need of the goods and services created and supplied by organisations, including the creation and distribution of wealth. Organisations make a contribution to the quality of life and to the well-being of the community. Organisational survival is dependent upon a series of exchanges between the organi- sation and its environment. These exchanges and the continual interaction with the environment give rise to a number of broader responsibilities to society in general. These broader responsibilities, which are both internal and external to the organisa- tion, are usually referred to as social responsibilities. These social responsibilities arise from the interdependence of organisations, society and the environment. The recognition of the importance of social responsibilities can be gauged in part by the extent of government action and legislation on such matters as, for example, employment protection, equal opportunities, companies acts, consumer law, product liability and safeguarding the environment. This has formalised certain areas of social responsibilities into a legal requirement. It is doubtful, however, if legislation alone is sufficient to make management, or other members of an organisation, behave in what might be regarded as a ‘proper’ manner. Growing There has been a growing attention to the subject of social responsibilities and an attention to increasing amount of literature on the subject and on a new work ethic. The impor- social tance of social responsibility (or corporate responsibility) can also be gauged by the responsibilities amount of coverage in the annual review of most major companies. For example, under the heading of Corporate Responsibility the annual review of the BG Group refers to the Statement of Business Principles and to eight key policies which cover: personal conduct; human resources; governance; human rights; communications; health, safety and environment; security; and corporate conduct.52 Many businesses both in the UK and other parts of Europe are attempting to provide a more open and transparent view of their operations.53 The European Commission is encouraging firms to assess their performance not on profit margins alone but also on the welfare of their workforce and care for the environment.54
- 188. 162 PART 2 THE ORGANISATIONAL SETTING Shortland points out that consumer activism has never been more intense and the media very rapidly exposes unethical practices. Society, consumers, shareholders and legislators all require companies to be more transparent and accountable. The concept of social responsiveness means that companies respond to stakeholders and con- cern from society by considering more than just the company’s own interests. Systematic evaluation of the needs for stakeholders can position the company to be socially responsible. However, companies cannot simply take a reactive approach to issues as they arise, the princi- ples must be embedded in the corporate culture and business strategy, right through to the day-to-day decision-making process. Companies that embrace the principles of social responsi- bility and ethics in a proactive manner are the companies of the future – the firms that will survive and prosper.55 Global responsibilities Today there is also greater concern for business communities to accept their global responsibilities. This is recognised, for example, in the foreward to a book by Grayson and Hodges, by HRH The Prince of Wales. For the business community of the twenty-first century, ‘out of sight’ is no longer ‘out of mind’. Global communications and media operations can present every aspect of a com- pany’s operations directly to customers in stark, unflattering and immediate terms. Those customers increasingly believe that the role of large companies in our society must encom- pass more than the traditional functions of obeying the law, paying taxes and making a profit. Survey after survey reveals that they also want to see major corporations helping ‘to make the world a better place’. That may be in some respects a naïve ambition, but it is, nevertheless, a clear expectation, and one that companies ignore at their peril … It is immensely encouraging to find that there are business leaders who recognise the challenge of running their companies in ways that make a positive and sustainable contribution to the societies in which they operate. It is a huge task, not least in finding ways of reaching out to the thousands of managers at the ‘sharp end’ of the business who, every day, take the deci- sions that have real impact on employees, on whole communities and on the environment. HRH The Prince of Wales56 CODES OF CONDUCT An increasing number of organisations, of all types, are now publishing a Code of Conduct (or Code of Ethics). For example, the Chartered Management Institute have a ‘Code of professional management practice’ that sets out the professional standards required of members of the Institute as a condition of membership as regards: 1 the individual manager; 2 others within the organisation; 3 the organisation; 4 others external to but in direct relationship with the organisation; 5 the wider community; 6 the Chartered Management Institute.57 Extracts from the Code of Conduct of IBM Ltd are given in Management in Action 5.1 at the end of this chapter. Codes of conduct are very common in American and Canadian organisations and in many cases members of the organisation are required to sign to indicate formally their
- 189. CHAPTER 5 ORGANISATIONAL GOALS, STRATEGY AND RESPONSIBILITIES 163 acceptance of the code. Codes may be updated on a regular basis and in some cases such as investment companies this may be at least once a year. In the public sector, the Local Government Act 2000 specifies the following princi- ples to govern the conduct of members of relevant English authorities and Welsh police authorities: selflessness, honesty and integrity, objectivity, accountability, open- ness, personal judgement, respect for others, duty to uphold the law, stewardship and leadership. These principles are intended to underpin the mandatory provisions of the model codes of conduct for English local authorities.58 A matter of Tam poses the basic question, ‘Can we live with an idea of “good” management which degree and cannot be ultimately reconciled with what is good for society?’ and maintains that: balance ... the time has come for us to recognise that the only sustainable form of good management is that which takes into account the full range of responsibilities that underpin organisational success.59 It should, however, be recognised that the distinction is blurred between the exercise of a genuine social responsibility, on the one hand, and actions taken in pursuit of good business practice and the search for organisational efficiency on the other. One approach is that attention to social responsibilities arises out of a moral or ethical moti- vation and the dictates of conscience – that is, out of genuine philanthropic objectives. An alternative approach is that the motivation is through no more than enlightened self-interest and the belief that, in the long term, attention to social responsibilities is simply good business sense. In practice, it is a matter of degree and balance, of com- bining sound economic management with an appropriate concern for broader responsibilities to society. Altman et al. point to a revolution going on which is changing the way we live and work, and question whether the leaders of giant companies are in tune with the social problems that surround them, affecting both employees and customers. We believe there is more than a hint that many business leaders lack a strong moral underpinning awareness and concern for the proliferation of social problems, that business is increasing behav- ing in an amoral fashion. Recent comment has tended to suggest that there is a general lack of concern for the spread of social problems for which industry must take a share of responsibility. There is a strong suspicion that business leaders are primarily focused on short-term issues, such as shareholder value, rather than seeking to balance the shareholder/stakeholder equation.60 Allen, however, questions whether the emphasis on the caring sharing company of the new millennium and social responsibility is all going a bit far. There is scarcely a com- pany without a loftily worded mission statement and high-minded references to shareholders. There are now numerous codes and standards and any company wishing to keep up to date with latest developments in social responsibility needs to look in many directions at once, and companies are talking of ‘codemania’. While many codes offer voluntary guidelines, companies that fail to meet these can see themselves receiv- ing a bad press or disinvestments. Nevertheless, the burden of social responsibilities can be seen as part of the response to ever-changing social conditions.61 And, accord- ing to Cook, although it is easy to be cynical following the fall of big companies there are many organisations who are ‘putting something back’. There is evidence about reversing the decline in public trusts and that in response to stakeholder and customer attitudes, corporate values are changing.62 ORGANISATIONAL STAKEHOLDERS We have seen that social responsibilities are often viewed in terms of organisational stakeholders – that is, those individuals or groups who have an interest in and/or are affected by the goals, operations or activities of the organisation or the behaviour of its
- 190. 164 PART 2 THE ORGANISATIONAL SETTING members.63 Managers, for example, are likely to have a particular interest in, and con- cern for, the size and growth of the organisation and its profitability, job security, status, power and prestige. Stakeholders, on the other hand, include a wide variety of interests and may be considered, for example, under six main headings of: ■ employees; ■ providers of finance; ■ consumers; ■ community and environment; ■ government; and ■ other organisations or groups. Employees People and organisations need each other. Social responsibilities to employees extend beyond terms and conditions of the formal contract of employment and give recogni- tion to the worker as a human being. People today have wider expectations of the quality of working life, including: justice in treatment; democratic functioning of the organisation and opportunities for consultation and participation; training in new skills and technologies; effective personnel and employment relations policies and practices; and provision of social and leisure facilities. Organisations should also, for example, give due consideration to the design of work organisation and job satisfac- tion, make every reasonable effort to give security of employment, and provide employment opportunities for minority groups. Responsibilities to employees involve considerations of the new psychological contracts discussed in Chapter 2. In the case of public authorities regard must also be paid to the provisions of the Human Rights Act 1998. Providers of Joint stock companies are in need of the collective investments of shareholders in finance order to finance their operations. Shareholders are drawn from a wide range of the population. The conversion of a number of building societies and insurance companies from mutual societies to public companies extended significantly the range of share ownership and stakeholding among private individuals. Many people also subscribe indirectly as shareholders through pension funds and insurance companies. Shareholders expect a fair financial return as payment for risk bearing and the use of their capital. In addition, social responsibilities of management extend to include the safeguarding of investments, and the opportunity for shareholders to exercise their responsibility as owners of the company, to participate in policy decisions and to ques- tion top management on the affairs of the company. Management has a responsibility to declare personal interests, and to provide shareholders with full information pre- sented in a readily understood form. In the case of public sector organisations, finance may be provided by government grants/subsidies – which are funded ‘compulsorily’ by the public through taxation and rates – as well as loans, and charges for services pro- vided. There is, therefore, a similar range of social responsibilities to the public as subscribers of capital. Consumers To many people, responsibilities to consumers may be seen as no more than a natural outcome of good business. There are, however, broader social responsibilities including: ■ providing good value for money; ■ the safety and durability of products/services; ■ standard of after-sales service; ■ prompt and courteous attention to queries and complaints; ■ long-term satisfaction – for example, serviceability, adequate supply of products/ services, and spare and replacement parts;
- 191. CHAPTER 5 ORGANISATIONAL GOALS, STRATEGY AND RESPONSIBILITIES 165 ■ fair standards of advertising and trading; ■ full and unambiguous information to potential consumers. Increasing concern for social responsibilities to consumers can be seen by the activities of such bodies as the Consumers’ Association, and the number of television and radio programmes devoted to this subject. In the case of public corporations there are Users’ National Councils or consumers’ regulatory bodies which are independent and look after the interests of customers. In the case of local government there is a system of Commissioners for Local Administration (popularly referred to as ‘Ombudsmen’) designed to provide an independent investigation of citizens’ complaints over alleged maladministration. Community It is in the area of concern for the community at large that social responsibilities can be and seen most clearly. Organisations have a responsibility not to misuse the scarce factors environment of production upon which the wealth of the country depends. Organisations have a responsibility to society, to respect environmental considerations and take care of amenities. Some examples under this heading include: ■ the effects and potential dangers of pollution, noise, disposal of waste; ■ the siting and appearance of new buildings; ■ transportation policies, such as the routing of heavy vehicles through narrow village roads; and ■ avoidance of excessive packaging and more use of biodegradable materials. Government Another important area of social responsibility could arguably be to the government. Organisations should, of course, respect and obey the law even where they regard it as not in their best interests. What is debatable, however, is the extent to which organisa- tions should co-operate voluntarily with actions requested by the government. Some examples are: restraint from trading with certain overseas countries, and the accept- ance of controls over imports or exports; actions designed to combat inflation, such as limits on the level of wage settlements; assisting in the control of potential social prob- lems – for example, the sale of tobacco and the display of health warnings. Other The potential range of social responsibilities is substantial. Other organisations or groups organisations to whom organisations might be regarded as having a social responsibility, or obligation, or groups are suppliers, trade unions, business associates and even competitors. Examples of social responsibilities might include: fair standards of trading; honouring terms and con- ditions of purchase or sale, and settlement dates (for example, payment of accounts); assistance to smaller organisations; engagement only in fair competition; respect for copyright and patents. Some organisations extend the range of social responsibilities even further – for example, by giving recognition to the needs of developing countries; limiting the extent of political involvement or campaigning; donations to, or sponsor- ship of, the arts, educational or research institutions, sporting organisations or charities. Profit and effective performance Whatever the view of corporate social responsibility, management has as its priority the need to ensure the survival and effective performance of the organisation. As Drucker puts it: The first responsibility to society is to operate at a profit, and only slightly less important is the necessity for growth. The business is the wealth-creating and wealth-producing organ of our society. Management must maintain its wealth-producing resources intact by making adequate profits to offset the risk of economic activity. And it must besides increase the wealth-creating and wealth-producing capacity of these resources and with them the wealth of society.64
- 192. 166 PART 2 THE ORGANISATIONAL SETTING The attention given to social responsibilities must involve weighing the costs of meet- ing these responsibilities against the benefits derived. Provided the cost/benefit analysis is not detrimental to economic and/or competitive performance, management must then determine the extent to which, and the manner in which, the organisation will attempt to satisfy its social responsibilities. The recognition of social responsibili- ties should form an integral part of strategy and the establishment of objectives and policies of the organisation. VALUES AND ETHICS The first years of the new millennium brought some very sharp reverses in business fortunes, with enormous sums of money wiped off market values, company collapses and, of course, a great deal of consequent distress for employees, families and others. For a while, these events were daily front-page news, along with a dawning realisation that the financial turbulence would worsen an already difficult position for millions who were saving towards pensions. Much of the problem was the bursting of an old- fashioned (but very high-tech) investment bubble. Both the demise of the meteoric but insubstantial ‘dot-com’ businesses and the hefty over-valuation by many telecoms companies of the ‘3G’ licences for the next mobile communications technology were examples of an investment frenzy that came to an abrupt and unhappy end. By the end of 2001, however, worse news was unfolding. As Kay puts it: Two companies came to symbolize the triumph and failure of the American 1990s – Enron, the Houston-based energy business, and WorldCom, a telecoms operator with headquarters in Clinton, Mississippi. Both companies had grown rapidly through acquisition and for a time enjoyed iconic status with investment bankers and many investors. The collapse of these busi- nesses in late 2001 and summer 2002 provoked widespread allegations of fraud and corruption and was an important factor in the final deflation of the bubble. 65 These events were themselves brought on by the general crisis – a number of commen- tators have reminded readers of a remark attributed to investment ‘guru’ Warren Buffet: ‘It’s only when the tide goes out that you see who’s been swimming without their trunks on.’ These major corporate disasters seemed to many to go beyond the misguided euphoria of the dot-com boom and to raise questions of the ethics of the behaviour of these companies and their advisors. Ethics and business Ethics is concerned with the study of morality: practices and activities that are consid- ered to be importantly right or wrong, together with the rules that govern those activities and the values to which those activities relate.66 Business ethics can be seen as an example of applied ethics – just as medical ethics is about the application of gen- eral ethics to the human activity called medicine, business ethics seeks to explore the implications of general ethics for the conduct of business. This apparently obvious point is important: by taking this stance, one rejects the view that moral principles have no bearing on business, or that ‘the business of business is business’, as the common saying has it. This is not to say that it is easy, or uncontroversial, to apply ethics to business: on the contrary, this fast-growing subject is characterised by a range of sharply contrasting views. Some of this controversy is inherent in ethics itself – as will be discussed below, there is no single clear view of how to judge good and bad, and this must impact on any application such as business ethics. This particular application of ethics, however, is also complicated by the fact that ethics mainly deals with good or bad conduct on
- 193. CHAPTER 5 ORGANISATIONAL GOALS, STRATEGY AND RESPONSIBILITIES 167 the part of individuals, resulting in possible difficulties in applying these ideas to impersonal corporate entities like companies. Is it appropriate to regard companies as if they were individual people and if not, what allowances should be made? Or, can the subject be satisfactorily seen as relating to the conduct of individuals as employees of businesses? Clearly, for very small businesses, the two views merge into one, but for larger, corporate entities, the position is more complex. CORPORATE SOCIAL RESPONSIBILITY One illustration of this is the diversity of opinion on the issue of corporate social respon- sibility. On one side of the debate are those who would share Milton Friedman’s view that the social responsibility of business is to make as much money as possible for the shareholders, within the rules of the game (fair competition, no deception or fraud, and so on).67 This is an example of agency theory, in which the directors of a company are seen as agents of the owners and who are duty bound to act so as to maximise the interests of those owners, this being taken as the reason for owners having made the investment in the first place. A more recent development of this general approach is that of Sternberg who pro- poses a teleological view of business ethics, based upon the pursuit of the business purpose – that of maximising long-term owner wealth by selling products and services.68 Actions by a firm that are consistent with this aim and which satisfy the additional tests of common decency (e.g. refraining from stealing, cheating, coercion and so on) and distributive justice (i.e. ensuring that rewards are proportional to con- tributions made) are ethical. Actions that fail any one of these three tests are, in this model, unethical. At the other end of the spectrum are some forms of stakeholder theory, which emphasise a much broader set of social responsibilities for business. Cannon, for exam- ple, suggests that: There exists an implicit or explicit contract between business and the community in which it oper- ates. Business is expected to create wealth; supply markets; generate employment; innovate and produce a sufficient surplus to sustain its activities and improve its competitiveness while con- tributing to the maintenance of the community in which it operates. Society is expected to provide an environment in which business can develop and prosper, allowing investors to earn returns while ensuring that the stakeholders and their dependants can enjoy the benefits of their involvement without fear of arbitrary or unjust action. The interdependence between society and business cannot be understated. 69 Differing assumptions The two perspectives provide very different views of how a business should act, about a because of their differing assumptions concerning what a business is for. In agency business theory, a business is principally for the shareholders and its actions should mainly be judged on the criterion of maximising their interests. In the stakeholder view quoted above, a business is for its stakeholders (who are potentially a very large and diverse group) and its actions should be designed to balance stakeholder interests. From the point of view of business ethics – the study of good and bad conduct in business – this distinction is very important. The use of company resources to support a local commu- nity project, for example, might be seen as admirable by the stakeholder theorist but unethical by the agency theorist, in that it would be a misapplication of funds that belong to the owners (unless, of course, such an investment could be shown to be con- sistent with the shareholders’ best interests). Each of the two approaches adopts a different yardstick for judging the ‘goodness’ of a proposed action by a company. In the agency view, the action has to be shown to be
- 194. 168 PART 2 THE ORGANISATIONAL SETTING consistent with the duty of maximising owner wealth, which is conceptually relatively simple, but which necessarily involves assumptions concerning the likely effect of the proposed action. In the stakeholder view (or, at least in those versions of the stake- holder view that emphasise an accountability to stakeholders), the task of management is to balance stakeholder interests. However, managers seeking to do this – often in the face of loud opposing claims from the various interests – will very quickly encounter the practical problem of how that ‘balance’ should be defined and recognised. Although difficult to reconcile in practice, the two approaches are not completely incompatible: to a stakeholder theorist, shareholders count as one type of stakeholder, but not the only type to which duties are owed by the firm. Likewise, Sternberg acknowledges the importance of understanding and remaining aware of the various stakeholder groups and of actively managing relationships between the company and these groups, because doing so is likely to be consistent with maximising owner wealth. As she points out, however, ‘taking account’ of something is importantly dif- ferent from ‘being accountable’ to it.70 Intelligent self-interest It is also worth emphasising that a company seeking to maximise its owners’ long-term wealth may well do very good things for its ‘stakeholders’, not necessarily through any direct intent, but in pursuit of its main duty. Providing customers with excellent prod- ucts and services is the central example, of course, but this form of intelligent self-interest may also – for example – drive a firm to build strong, trusting relationships with its suppliers and distributors (because it will be better off as a result), or an attrac- tive working environment for its employees (because it wishes to recruit and keep the best, in order to be able to compete more effectively). Even beyond its immediate commercial relationships, an intelligently self-interested company may deliberately set out to build strong relationships with other stakehold- ers, or to take a principled stance on an issue such as the use of child labour, because to do so is to maximise owner value. The ‘value’ in question is not just next year’s divi- dends, but refers to the value of the investment as a whole and thus obliges the management to think long term as well as short term and to consider the impact of company actions as broadly as possible. In the UK, the report of the RSA inquiry ‘Tomorrow’s Company’ referred to the con- cept of an imaginary ‘operating licence’ granted to a company by the public, which can be effectively suspended or withdrawn if a company appears to be behaving badly.71 Doing business effectively and well relies upon hundreds, sometimes thou- sands of transactions every day of the year. If some of these transactions become more difficult because trust has been squandered and co-operation has been withdrawn, then the firm will start to lose out to its better-behaved competitors and its owners’ BUSINESS ETHICS wealth will start to suffer. The large-scale issues of corporate social responsibility are to do with how a company should conduct itself within society: these questions certainly have an ethical aspect, as has been discussed, but they are not the whole of business ethics. Day-to-day deci- sions made by individual managers are not usually made on the basis of some detailed calculation of the consequences for shareholder value (however theoretically desirable that might be) and more general ethical considerations must play a part in resolving the dilemmas that sometimes arise in practice. The scope of business ethics is very broad, because anything done by a company or its employees can be done ethically or unethically. The following list is not intended to be exhaustive, but rather to illustrate the all-pervasive nature of ethical questions in business:
- 195. CHAPTER 5 ORGANISATIONAL GOALS, STRATEGY AND RESPONSIBILITIES 169 ■ behaviour towards customers, suppliers, distributors and competitors: for example, marketing and selling, fair competition, intelligence gathering, inducements and incentives; ■ treatment of employees: for example, recruitment, rewards, training, promotion, dis- missal, employee and employer rights and duties; ■ treatment of other stakeholder groups: for example, local communities, govern- ments, interest groups; ■ effect on the natural environment: for example, pollution, recycling, sustainability; ■ conduct in international operations: for example, use of power, respect for human rights, ‘delocalisation’ of operations to lower-cost environments. No single view These questions can be complex, since there is no single view in general ethics of what of right or makes something right or wrong. One school of thought emphasises duties, things wrong that must be done (or refrained from) irrespective of the consequences. This deonto- logical point of view holds that goodness or badness is only evident in the action itself: that, for example, lying is bad because it is bad in itself. By contrast, a consequential- ist view of ethics holds that the goodness or badness of a proposed action is only evident in the consequences of that action: whether a lie is good or bad depends upon the consequences of that particular lie at the time. Utilitarianism, for example, is a consequentialist theory, in that it seeks to maximise the net happiness for everyone affected by a particular action (‘the greatest good for the greatest number’, as it is sometimes expressed). The perspectives on corporate social responsibility discussed above are also to some extent consequentialist, in that they are mainly concerned with an assessment of the effects of a firm’s actions. Both duties and consequences (or ‘means’ and ‘ends’ in the familiar saying about the latter justifying the former) are plainly important in the way we deal with ethical issues in everyday life. Unfortunately, however, they are very different ways of reason- ing, which can lead to contradictory outcomes in some cases. An exclusively duty-based view of ethics, for example, must sooner or later run into problems such as absolutism, or the difficulty of deciding which duty should take precedence over others in a particular situation. If, for example, both lying and killing are held to be inher- ently wrong, is it acceptable to lie in order to avoid a killing? And whatever answer is given, how do we know? An exclusively consequentialist view of ethics also entails methodological problems of forecasting reliably what the consequences of an action may be and of deciding how to measure those consequences. Some forms of utilitarian- ism can be very unjust to small minorities, by allowing their unhappiness (i.e. as a result of some proposed action) to be offset by the increased happiness of a much larger number. Nor is the choice restricted to means and ends in ethics: several further approaches can be distinguished in western thought, including: ■ Virtue ethics, based upon an analysis of desirable human qualities that lie between undesirable extremes (the virtue of ‘courage’, for example, lies between the undesir- able extremes of ‘cowardice’, at one end and ‘foolhardiness’ at the other). ■ Ethical relativism, which holds that goodness and badness are largely or entirely determined by the prevailing values of the time in question and may thus change from one period to another, or one culture to another. ■ Emotivism, which suggests that statements about ethics are essentially statements about the speaker’s attitudes, and that it is therefore futile to search for any ethical ‘truths’. The statement ‘Lying is bad’ is, from this point of view, saying little more than ‘I don’t like lying’.
- 196. 170 PART 2 THE ORGANISATIONAL SETTING Ethical decision-making at work How, then, are ethical choices to be made by people working for organisations? No simple and universal answer is available – ethical awareness is something that can be cultivated and the different perspectives will often help to shed light on a particular dilemma. Some perspectives may appear to be better suited to particular situations: whereas, for example, it is difficult to avoid some sort of consequentialist component in thinking about how a company should act, it is also clear that duty-based arguments must also weigh heavily in thinking about the ethical treatment of people such as employees. The German philosopher Kant’s view that we should always treat other people as ends in themselves and never simply as means is surely an important princi- ple for decent human resource management and one that would often be seen as more important than the prospect of short-term gain.72 Personal integrity and individual values are important elements in ethical decision- making at work, but the increasingly common company, professional or industry codes of conduct may also provide support and guidance. This is not to say that these ethical ‘resources’ will always provide clear and comfortable guidance – sometimes, people in organisations will experience tension between the conflicting demands of, say, their own personal values and the demands placed on them by their organisation. If these conflicts become intolerable and cannot be resolved through normal means, then an individual may decide to become a ‘whistleblower’ in the public interest, by taking the high-risk approach of placing the problem in the public domain for resolution. Codes of conduct can help to reduce the risk of painful situations like this by providing a published set of values to which the individual can appeal, rather than taking the risk wholly personally. (I am grateful to my colleague, Richard Christy, Department of Business and Management, University of Portsmouth for providing the above information on values and ethics.) RELATED LEGISLATION As part of the growing attention to the concept of corporate social responsibilities there are a number of pieces of recent legislation which arguably relate to the concept of business ethics and organisational accountability. Although it is not in the scope of this book to provide detailed aspects of legal provisions, we should recognise the exis- tence of such legislation, including the Human Rights Act 1998, the Public Interest Disclosure Act 1998 and the Local Government Act 2000. The Human Rights Act 1998 came into force on 2 October 2000 and incorporates into English law rights and liberties enshrined in the European Convention on Human Rights. The provisions apply to the acts of ‘public authorities’ and make it unlawful for them to act in a way incompatible with a right under the Convention. The Act is designed to provide greater protection for individuals, and to protect them from unlawful and unnecessary interference. Everyone has the right to respect for their pri- vate and family life, their home and their correspondence. The Act is likely to have a significant effect on people both as citizens and at work. The Public Interest Disclosure Act 1998, which has become known widely as the ‘Whistleblower’s Act’ is designed to protect people who expose wrongdoing at their workplace, to provide reassurance that there is a safe alternative to silence and to pro- vide a safeguard against retaliation. Employers need to establish clear internal procedures by which members of staff can raise any matters of personal concern. The Local Government Act 2000, the so-called ‘New Ethical Framework’, requires all local authorities to provide codes of conduct to promote high standards of behav- iour. The government has distinguished between general principles of conduct in public service and the code of conduct containing specific actions and prohibitions that demonstrate the principles are being observed.
- 197. CHAPTER 5 ORGANISATIONAL GOALS, STRATEGY AND RESPONSIBILITIES 171 AN INTEGRATED APPROACH McEwan summarises the separate histories of corporate social responsibility, business ethics and corporate governance, and suggests a method of enquiry which attempts to integrate these different perspectives on business through three broad levels of enquiry: ■ A descriptive approach that draws attention to the values and beliefs of people from different cultures and societies which influence their attitudes towards the various activities of business in their home countries and abroad. ■ A normative approach which identifies sets of values and beliefs as a basis for making ethical decisions at the individual, group, or senior management level in an organisation. ■ An analytical approach which attempts to explore the relationship between these normative values and beliefs and other value-systems or ideologies such as political or religious beliefs and culture or other social customs.73 EXHIBIT 5.1 Business ethics: what’s in it for you? A friend of mine once said he thought business people go people in business to conclude that it makes for a simpler through an ethics lock on their way into work and I expect life if they keep to the straight and narrow. it would not be hard to find many people to agree with him. A third possible reason for pursuing ethics in business, of But how true of business as a whole is the negative pic- course, is the prospect of profits. Part of the folk-wisdom of ture people can derive from unfortunate personal business ethics is that it pays to be ethical: good ethics is experiences or from regular media reports of the latest good business. But this justification of ethics in business is business scandal? For the fact is that interest in ethical just sufficiently true to be misleading. business behaviour has grown in popularity among busi- For one thing, as the Irish 19th century philosopher nesses in the UK and elsewhere in the past 10 years, just Richard Whately once put it, honesty is the best policy but as the provision of teaching business ethics has also he who is governed by that maxim is not an honest man. increased in business schools. T S Eliot put it less paradoxically but more poetically when Why the interest? Is it a matter of saying that the sicker he observed that the greatest treason is to do the right people are, the more they develop an interest in medicine? thing for the wrong reason. What makes companies ethical? Quite apart from the question of motive, however, acting For some people or firms, developing an interest in ethically in business can in fact be quite expensive and business ethics may just be a case of following fashion, of seeking an ethical response to many of the modern chal- climbing on to the ethics bandwagon while retaining the lenges facing business can be a costly exercise. Highly respected companies such as Levi Strauss, option of discreetly abandoning it should the fashion pass Marks & Spencer, Johnson & Johnson and others have a or recession deepen. long-standing ethical reputation and they clearly profit from Probably, keeping up with Jones plc is one reason for the it. But they have to keep working at it. growing popularity among businesses of developing a code Levi Strauss needed to take time out to formulate and of conduct or for beginning to include a politically correct justify its policy on human rights; Johnson & Johnson sentence on ‘social responsibility’ in company reports. whipped Tylenol off the shelves at the first whiff of product Another reason or motive for a business taking an inter- defect; and Marks & Spencer is currently engaged in litiga- est in ethics can be in response to pressure. tion with Granada TV in the UK to defend its integrity in For example, Royal Dutch/Shell’s recent decision to dealing with overseas suppliers. give more attention to human rights on the international If there is an ethics dividend, it has to be earned – scene was obviously influenced by the public hostility through set-up or recurring costs in time and resources aroused by its record in Nigeria, which blew up at the com- and possibly also in terms of opportunity costs. If my per- pany’s annual general meeting in May 1997. Similarly, sonal or corporate survival in business depends on using public exasperation over the mis-selling of private pensions unethical means to secure a contract or to meet a deadline in the UK in the late 1980s is spurring some insurance and I refuse to take such steps, then in the short term I companies on to faster efforts to provide justice for those may wake up honest and unemployed or my business may victims who are still suffering. soon find itself ethical but on the way out. In other words, keeping various awkward customers If ethical business does pay off, it will only do so over time and irritating pressure groups off their back can lead many as an investment and if one is still around to reap the benefit. ᭤
- 198. 172 PART 2 THE ORGANISATIONAL SETTING Exhibit 5.1 continued There is one more reason why a company may decide expectations of business were becoming more vocal and to conduct its business on ethical lines and that is because its demand more socially oriented. the people involved consider it is simply the right thing to It was against that background that the Nobel laureate do – not because it’s fashionable or profitable or makes for economist Milton Friedman drew the ire of many business a quiet life. ethicists when he defiantly declared in the title of his Treating people with honesty, fairness and respect is famous 1970 New York Times Magazine article that ‘the then a matter of moral principle, not of expediency. social responsibility of business is to increase its profits’. Of course, it does not follow that in order for business The article has become a classic. It was, and still is, conduct to be ethical it has to be unprofitable or uncom- read by many people as attacking the very idea of business fortable. Some people hold, at least implicitly, the strange ethics and as immorally advocating profitability as the sole moral belief that an action will only be ethical or the right criterion of business behaviour. thing to do if it hurts. It is a view that sounds suspiciously But Friedman’s ethical opponents got it wrong in making like medicine having to taste awful for it to do good. him a whipping boy for their indignation. For one thing, they Another Irishman, George Bernard Shaw, once wrote caus- ignored the small matter that tucked away in his article is tically that the English think they are being moral when in the explicit statement that business should be conducted in point of fact they are only being uncomfortable. conformity with the basic rules of society – both those In this connection it has become mandatory to quote embodied in law and those embodied in ethical custom. Gordon Gekko, the financial lizard in the film Wall Street and More fundamentally, Friedman’s critics failed to appreci- described by another character as having had an ethics by- ate that in attacking the then fashionable American ‘social pass at birth. ‘Let’s face it, ladies and gentlemen, greed is responsibility’ movement he was not rubbishing the appli- good,’ is probably the best-known quote from the film. cation of ethical standards to business conduct. What he But self-interest is not greed, except when it gets out of was taking issue with was the modish trend of diverting hand. Yet another Irishman, the philosopher William business from its proper role in society and applying its Berkeley, took the sensible line that at heart ethics consists resources to tackle society’s various ills. in striking the right balance between two basic human feel- Interestingly, it was around that time that some politi- ings: concern for one’s self and concern for others. cians in the UK were exhorting businesses to exercise In other words, there is no reason why ethical behaviour ‘good citizenship’ by espousing various community pro- should not also be advantageous or popular or be jects and in the process overloading business with social rewarded; and when that turns out to be the case in busi- expectations as well as seeming to make corporate philan- ness it can be counted as a bonus. thropy a surrogate for government public spending and Mixed motives, or having several legitimate reasons for concern for social justice. doing something, is a common human experience in ethics The idea of social responsibility applied to business as in any other area of life. The time to worry would be received welcome precision from the US scholar Archie when the various motives we may have for running a busi- Carroll, who showed that it could be broken down into four ness on ethical lines leave no room for the explicitly ethical quite different components: one. Or when the ethics motive is considered disposable or ■ A business can be socially responsible through its eco- made conditional on continuing business success. nomic profitability, in being a going concern providing What counts as business ethics? goods and employment and paying taxes and creditors. ■ It can discharge its social duties through legal compli- The very idea of business ethics makes some people uneasy. ance, in respecting the laws of the land. Partly this may be because they wonder at all the busybody ■ Corporate social responsibility can cover community fuss these days about trumpeting ethics and would much involvement in contributing to the solving of social prefer just quietly getting on with running a decent business problems. without having to get embarrassingly mawkish. ■ Finally, a company can show how socially responsible it Others feel the term ethics sounds judgemental and moral- is through the ethical respect it accords its stakeholders ising, like being preached at. This may have been one reason in treating all its constituents fairly. for the modern movement in business ethics initially favouring the idea of ‘social responsibility’ as more user-friendly and less Carroll’s analysis usefully brought several things to light. threatening when applied to business behaviour. For one thing it confirmed that Friedman was not hostile to However, quite apart from the fact that ethical reflection is the business ethics component of social responsibility but not necessarily doctrinaire and that it has been around for to another one, corporate involvement in the community some 4000 years as a human concern in all walks of life – through, as he charged, management spending sharehold- including that involving the exchange of goods and services – ers’, employees’ and customers’ money on what it the idea of ‘social responsibility’ is itself ambiguous and can (management) arbitrarily and undemocratically describes lead to confusion when it is applied to business activities. as ‘good causes’. The social responsibility movement in business was a Carroll’s scheme also makes it clear that business popular phenomenon in the 1970s in the US as society’s ethics is distinct from the mere legal compliance and is fre-
- 199. CHAPTER 5 ORGANISATIONAL GOALS, STRATEGY AND RESPONSIBILITIES 173 quently more demanding. It also shows that no amount of From the viewpoint of business ethics the reality of the social involvement or extramural activity on the part of a stakeholder idea is that it brings a valuable wide-angle company or its members can substitute for the social approach to the conduct of a business by alerting it to all the responsibility involved in running an ethical business and parties in society who can be helped or hurt by its actions. giving a fair deal to the various parties who are now But as a theory for business strategy it suffers from sev- increasingly identified as stakeholders. eral major weaknesses. For one thing, the more participants we locate in the ethical landscape of business, Stakeholders? What stakeholders? the more scope there inevitably is for their various interests Perhaps we need another Milton Friedman today to blow to compete and conflict – and stakeholder theory offers no the whistle on much of the rhetoric surrounding the way to arbitrate between rival stakeholder claims. Pushed increasingly fashionable idea of stakeholders. far enough, in fact, it can be shown that at some remove The term started life in 1963 and was a neat play on everyone has a stake in just about everything in today’s words to express the useful social and ethical idea that in global economy. addition to shareholders, or those holding ‘stock’ in a com- These lead to attempts to distinguish and prioritise pany, lots of other people were also affected by the between different classes of stakeholders – internal and company and had a ‘stake’ in how it behaved. The moral external, primary and secondary, major and minor, financial corollary was that the company ought to take their various and others, all to little practical effect. interests into account alongside those of the shareholders Sometimes stress is laid on one class of stakeholder, in all its activities. either to advocate compensation by a version of positive The defining work of stakeholder theory was produced discrimination or as part of a political rather than a business by the US academic Edward Freeman in the 1980s. agenda. And at the other extreme, not many people, in Initially the stakeholders in a business were identified as business at least, would go so far as to espouse the view of its workforce, its customers, its suppliers and its surround- Freeman and Gilbert that the very purpose of a company is ing community. Next, as the stakeholder theory developed, to serve as a vehicle for co-ordinating stakeholder interests. the term became used umbrella-like to cover all those indi- But in any case, apart from seeking a moratorium on viduals and groups, including shareholders, whose use of the term stakeholders to prevent its becoming more interests are seriously affected by a firm’s behaviour. and more vacuous, perhaps we should not get hung up on Equally, they can all be regarded as investing in it each in its theory and simply value the idea as an ethical corrective their own way, whether through their capital, their working to any view that would concentrate attention on the inter- lives, their purchasing loyalty, their supplier commitment, or ests of a firm’s financial investors to the exclusion of every their local support and infrastructure. other consideration. The ethical challenge of stakeholder theory was identi- fied as finding ways for a business to satisfy all these The cost of ownership parties. In the UK this stage of stakeholder thinking was One of the most pressing ethical issues in business today reached rather late in the day, in the Royal Society of Arts’ is to find ways of narrowing the too-wide gap between 1995 study Tomorrow’s Company, which identified the management and ownership by increasing management future competitive success of UK business as dependent accountability to owners and also by encouraging owners on what it termed the ‘inclusive company’, that is, one to pay the ethical dues of ownership, which extend beyond which takes care to build fruitful relations with all its major financial risk. stakeholders. The idea of ownership responsibility on the part of the A more recent development, again in the UK, has been shareholders has been rejected by the UK Institute of the hijacking of the term ‘stakeholder’ by social planners Directors as ‘simplistic’ on the strange logic that there are and politicians for mainly ideological purposes. First jour- frequently too many shareholders for them to act respons- nalist and author Will Hutton’s ‘stakeholder capitalism’ ibly. Yet, responsibility spread thin or even spread unevenly aimed to counter City short-termism by ‘republicanising’ does not for that reason cease to be responsibility, both in the financial system. the aggregate and for individuals. Then came UK Prime Minister Tony Blair’s advocacy of The challenge is to find imaginative ways for a multitude a ‘stakeholder economy’ (when he was leader of the of owners first to acknowledge and then to discharge their Opposition) echoed by the TUC, the trade union umbrella moral responsibilities for the broad lines of the conduct group, apparently involving equal participation by all but engaged in by the company they partly own. looking to some more like restoring power to the unions It is encouraging, in fact, from an ethics point of view to under another name. Another Labour politician, Frank Field, note the ways in which ‘shareholder activism’, already quite now a junior minister at the department of social security, buoyant in the US, has begun to appear in the UK and came up with ‘stakeholder welfare’, which emphasised that elsewhere as large institutional investors increasingly begin all the recipients of welfare should have a say in its disposi- to take note of their responsibilities and to exercise them. tion. Other politicians contented themselves with invoking Such activism is not simply triggered by poor financial the vague feel-good vision of a ‘stakeholder society’. performances but is also beginning to arise over various ᭤
- 200. 174 PART 2 THE ORGANISATIONAL SETTING Exhibit 5.1 continued issues that arouse shareholder or public disquiet, including Exploring ethical business through the medium of the seeking ways to control ‘ratcheting’ executive remuneration company can also usefully throw light on the individual, and introducing the reality check of results – adverse no corporate or systemic features that contribute to various less than favourable – to assess the true corporate value of wrongdoings. senior executives. Some ethical lapses in business can be entirely per- sonal, arising from need or greed or entrepreneurial Setting an ethical agenda for business brazenness on the part of individuals, whether on the trad- The mounting interest in the subject of ethical business is ing floor or in time-share selling. Other wrongdoings may reflected in the increased resources devoted to it in busi- be influenced by a corporate culture of excessive pressure ness schools and management departments, often with the for results or of inadequate supervision – whether in banks encouragement of business. or on building sites – through ignorance or laziness. And Certainly such teaching institutions have a major yet other occasions for unethical behaviour can be more a responsibility to provide tomorrow’s business men and feature of industry, including the free-floating bonus system women with the competence and confidence to tackle the in financial trading or the payment by commission in the expanding portfolio of ethical challenges with which man- insurance industry. agers are being increasingly confronted. Thinking ethical issues through, as courses in business How business schools set about equipping their students ethics ought to be encouraging, also displays the poverty for such a responsible role will vary, understandably and and occasional triviality of approaching dilemmas simply by desirably, but the overall aim must be to inform and stimulate applying as a piece of moral litmus paper the questions, thinking on ethical issues and to help prepare students to what would you tell your children or how would like to see recognise and manage ethical issues as these arise. your decision reported in tomorrow’s paper? A useful model in this context is that described as ‘ethi- These homespun resources prompt two further ques- cal business circles’ (see Figure 5.4), which views the tions, which at least may show up their inadequacy. One is, company’s various activities as occurring within a series of how old are the children – and, anyway, since when have expanding circles moving out from the centre. youngsters been such moral experts? And the other is, The innermost circle considers the internal workings of what newspaper did you have in mind? the business and the way in which individuals and col- Many of the most intractable ethical issues in adult life, leagues are treated. Here topics that can usefully be including business, are not a simple unqualified choice examined include discrimination, confidentiality, telework- between good and bad but a forced choice between good ing and issues of loyalty as having implications not just for and good. workers but also for management and even shareholders. Devoting careful thought and analysis to major issues, Moving out to a second circle provides the opportunity such as what to do about the working practices of suppli- to concentrate on the ethics of customer relations and ers in developing countries or how to handle demands for marketing, including the pricing and advertising of goods extortion as contrasted with offering bribes or the pros and and services. cons of dealing with regimes with appalling human rights The third expanding ethical business circle focuses records, can lead one to conclude that ethical answers are attention on relations with other companies, including not always as clear cut and sharp-edged as children or timely payment of suppliers, working with suppliers who tabloid headlines might prefer them to be. may mistreat their workforce, and ethical aspects of mer- Looking back now on the controversy surrounding trade gers and acquisitions and insider trading. with South Africa can be salutary in this respect. Who was Finally, the fourth, outer, circle considers how the com- right: the companies that pulled out and supported boycott pany relates to the locality in which it is situated and covers and international disapproval of apartheid or the compa- such topics as self-regulation, cultural diversity, bribery, the nies that stayed on and used the Sullivan Principles and physical environment and working with the community. other strategies to erode apartheid from the inside, while Taking such a systematic approach to the discipline of also ensuring there would be a viable economy after the business ethics ensures that all the major business rela- social revolution? tionships are covered in principle but allows flexibility to There is, of course, no answer to the question. But it choose examples of ethical issues in each circle as indi- remains a good question. It suggests in this case that cated by recent events or current trends. maybe both ethical approaches actually had right on their This helps to reinforce the realisation that there are no side and that each was effective in its own way. ethical ‘no-go’ areas in business. It also ensures a sense of The case of South Africa may also illustrate the more proportion so that students do not think business ethics is general consideration that ethical problems, whether in solely about finance because that is where mega-scandals business or elsewhere in life, do not always have to have and media interest are most to be found. one, and only one, right answer. Why should they? People Moreover, putting emphasis on the firm as the main often seem to prefer the security of certainty, including moral agent also tries to ensure that ethical issues are not moral certainty, to the discomfort of living with the pro- viewed as simply individual problems in a business setting. visional or the partial truth.
- 201. CHAPTER 5 ORGANISATIONAL GOALS, STRATEGY AND RESPONSIBILITIES 175 Figure 5.4 Ethical business circles Business ethics is ultimately the ethics of power, of how to business from the disasters, the shambles and the scan- handle the power of business and of how that power is dals that unfortunately occur from time to time or to adopt acquired, increased and exercised. The need for ethics in an attitude of moral defeatism towards business behaviour. business has never been greater, precisely because the Yet it would be utopian not to realise that the power of power of business was never so manifold and so extensive business can be, and too often is, misused and that some as it is today. of its activities and practices could usefully carry a moral And the growing interest in the subject may lead us to health warning. surmise that business itself as a whole is becoming What business ethics as a discipline, and ethical business increasingly aware of its growing power and the possibil- as an activity, should both be trying to do is to find a way ities for good or ill this brings. At its best, business is a between moral defeatism and moral utopianism, a path of constructive and creative activity in society. And the sub- imaginative moral realism that will be continuously seeking ject of business ethics is best deployed when it affirms constructive ways for business to pursue while keeping a business people while exploring with them how their power wary eye open for the ethical dead ends that also lie before it. may be used positively to best effect to add ethical value. (Reproduced with permission from Pearson Education Limited from Jack That is why it is a mistake to draw one’s overall image of Mahoney, Mastering Management, Financial Times Pitman Publishing, 1997.)
- 202. 176 PART 2 THE ORGANISATIONAL SETTING CRITICAL REFLECTIONS A National Health Service trust chairperson was heavily criticised for maintaining that the pri- mary loyalty of doctors was owed to their employers, and that their duty to patients came a third after themselves. But when demands upon the health service are limitless and resources finite, why is the idea of owing first loyalty to the organisation for which you work such a bad thing? What are your own views? Part of our problem of dealing with ethical issues in organisations lies in the approaches we have attempted to take. As with other areas of management, the mainstream approach has been objec- tive and instrumental. Practitioners and researchers assume that we can define objectively the right way of doing business – the morality of behaviour in business organisations embedded in eco- nomic systems. And, from this definition, rules of behaviour can be laid down. This may not be a valid approach. It is certainly not the only way of understanding the morality of business behaviour. McKenna, R. New Management, Irwin/McGraw Hill (1999), p 138. How would you, as a senior manager, explain the morality of business behaviour to an ardent member of ‘Friends of the Earth’? ’Profit maximisation is the only realistic criterion by which business organisational effectiveness can be reasonably judged.’ Debate. SYNOPSIS ■ All organisations have some function to perform, and some incentive for their exis- tence and for their operations. The goals of an organisation determine the nature of its outputs and the series of activities through which the outputs are achieved. The goal model approach concentrates on the study of organisational goals and the measure- ment of success against the realisation of these goals. There are potential disadvantages and limitations with this approach, but the concept of organisational goals serves a number of important functions. ■ Strictly, organisations have no goals, only people do. Members of an organisation have different and often conflicting goals. Management has a responsibility to clarify organisational goals and to attempt to integrate personal goals with the overall objec- tives of the organisation. Organisational goals can be classified in a number of different ways. However, adopting a systems view of organisations, we can distinguish four main types of goals: consumer, product, operational and secondary. ■ The goals of the organisation may be pursued in accordance with an underlying ideology or philosophy which determines the culture of the organisation and governs the overall conduct of its operations. In recent years growing attention has been given to stated corporate values and mission statements. Goals are translated into objectives and policy. The choice of objectives is an essential part of the decision-making process involving future courses of action. Policy is developed within the framework of objec- tives. It provides the basis for decision-making and the course of action to follow in order to achieve objectives.
- 203. CHAPTER 5 ORGANISATIONAL GOALS, STRATEGY AND RESPONSIBILITIES 177 ■ Objectives and policy, together, provide corporate guidelines for the operation and management of the organisation. Although the objective of profit maximisation is undoubtedly important, it is not by itself a sufficient criterion for the effective manage- ment of a business organisation. In practice, there are many other considerations and motivations which affect the desire for the greatest profit or maximum economic effi- ciency. Attention must be given to all those areas which are of direct and vital importance to the survival and prosperity of the organisation. ■ Objectives and policy are formalised within the framework of a corporate strategy. An explicit strategy is necessary in order that people may co-operate and because of the effects of changing environmental conditions. A SWOT analysis may help the process of strategic change although care must be taken that the analysis is not over- simplified. An effective business strategy depends upon the successful management of opportunities and risks. Organisations need to embrace successful e-commerce and e- business strategies. ■ In striving to satisfy its goals and achieve its objectives, the organisation cannot operate in isolation from the environment of which it is part. Organisational survival is dependent upon a series of exchanges between the organisation and its environ- ment. These exchanges and the continual interaction with the environment give rise to a number of broader responsibilities to society in general – the social responsibilities of management and to organisational stakeholders. Full attention should also be given to values in organisations and business ethics. MANAGEMENT IN ACTION 5.1 IBM Code of Conduct CODE OF CONDUCT: OVERVIEW ■ How do I create a code of conduct with my team or department? At first glance, a code of conduct may seem like a new con- Researched, created, and reviewed by IBM Management Development Global cept. But you and your employees are more familiar with it Cluster Team (Contact: Dick Richardson/Charlotte/IBM@IBMUS) than you know. All groups develop rules or standards of @Copyright IBM Corp., 2000, All Rights Reserved. behavior. Behaviors are what people say and do. Most often, group norms are informal and unwritten, but some groups have clearly recorded rules. CODE OF CONDUCT: STEPS The Salvation Army has a code of conduct. So does the Catholic Church and the French Foreign Legion. The commu- Why would I want to use a code of conduct with my work group? nity choir, the sales staff at your local department store, and How do I create a code of conduct with my team or department? aboriginal tribes all have a code of conduct. Without codes, they could lapse into chaos. Likewise, when you and your work group agree upon a Why would I want to use a code of conduct with my code of conduct unique to your group, some remarkable things work group? happen. Negative behaviors slowly extinguish themselves. Almost any group will create group norms. Norms are rules Positive behaviors replace them. That’s because group norms and standards that describe appropriate group behavior. are powerful influences on behavior. A code of conduct is Group norms are powerful influences on behavior. simply a way of consciously defining those group norms. Usually norms are developed informally over time through This QuickView answers these questions: the interaction of members. People may deviate from the ■ Why would I want to use a code of conduct with my behavior the rest of the group expects, but at some point the work group? group will react with sanctions. The sanctions have the objec- ᭤
- 204. 178 PART 2 THE ORGANISATIONAL SETTING Management in Action 5.1 continued tive of bringing the member back ‘into line.’ This peer pres- Group members are all given the same number of votes sure is a strong force for many people. (perhaps 3, 4, or 5) and mark their votes on the posted A code of conduct is simply a way of consciously behaviors. Members can use their votes in any manner defining some group norms. It is a structured forum for the they wish, for example, placing all votes on one behavior, group to determine what behaviors are appropriate. or distributing votes among several behaviors. Finally, the For you as a leader it offers the opportunity to align group process rank-orders the behaviors according to total norms with organizational objectives. Using a code of con- number of votes received. duct will help individuals ‘manage’ their bahaviors and make 5 Write the code of conduct. The code of conduct should the group more productive and your job easier. begin with the words ‘We will…’ and be followed by the How do I create a code of conduct with my team or behaviors the team has chosen. department? 6 Establish group commitment. The code of conduct is an agreement. It’s an informal contract between each team The seven steps for creating a code of conduct with your member and the group. Take time to discuss how viola- work group: tions of the code will be handled, and how the code can 1 Solicit suggested behaviors for the code from individual and will be used by the group. team members. 7 Live it. You have laid the foundation for future interactions 2 Compile a long list of the suggested behaviors. within your work group. Your code will make your team 3 Identify overlap or redundancy in the suggestions. more productive – provided you adhere to it and keep it 4 Narrow the list. ‘alive.’ Some teams go to great lengths to have their 5 Write the code of conduct. codes framed and professionally presented. Another way 6 Establish group commitment. is to memorize it and refer to it in your dealings with one 7 Live it. another. Virtual teams that work in a shared workspace may post their code in their space to keep it ‘alive.’ Having Specific instructions for the seven steps: it posted enables new members to quickly understand the 1 Solicit suggested behaviors for the code from individ- team’s values and to learn how to work together. ual team members. Ask each group member to privately write one or two behaviors important for the group to work Tool: ‘Finger shoot’ is a quick method to assess whether together successfully. (Examples: ‘Be on time for all meet- your code of conduct is working. To conduct a finger ings’ or ‘Activity listen to others.’) shoot, select the first item on your code. Ask everyone to 2 Compile a long list of suggested behaviors. Have consider the question: ‘How well are we as a group living employees share their behaviors with the work group. You up to our promise to each other?’ Then ask them to score or a scribe should list all ideas. At this stage, avoid discus- their response on a scale from 1 finger to 5 fingers. All sion about the merits of any idea. indicate their scores at the same time by showing a cer- 3 Identify overlap or redundancy in the suggestions. Review tain number of fingers. Debrief the scoring and why people all the behaviors on the list. With the group, eliminate dupli- scored as they did. Then do the same with the rest of the cate behaviors. Combine similar behaviors. The behaviors items on the code of conduct. should be as clear, concise, and distinct as possible. 4 Narrow the list. The objective is to reduce the list to In time, you may want to reassess your code of conduct. between 6–10 of the most important behaviors for your Have the team ask itself, ‘Are all items still relevant?’ ‘Have work group. You can do this by voting on each item, new issues arisen that should be addressed by the codes?’ having all members choose their favorite, or any other You may find the code changing over time. Or, like the decision-making process you want. Salvation Army, you may be comfortable that your code is a timeless standard for your group. Tool: A good tool to use to narrow the list is multi-voting, Reprinted with permission. I am grateful to Lynn Thomson, First Line Manager, also called ‘Dotmocracy.’ You post a list of the behaviors. IBM (UK) Ltd.
- 205. CHAPTER 5 ORGANISATIONAL GOALS, STRATEGY AND RESPONSIBILITIES 179 REVIEW AND DISCUSSION QUESTIONS 1 What are goals and what functions are served by organisational goals? Suggest a classifi- cation of organisational goals and relate this to your own organisation. 2 Illustrate the systems view of organisational goals and objectives. Give examples of how the goals of an organisation may change over time. Why is it that in practice organisational goals usually tend to be altered only on a gradual basis? 3 What do you see as the importance of organisational ideology or philosophy? Explain the extent to which there is a clear ideology and/or set of principles which govern the overall conduct of your own organisation. 4 Distinguish between objectives and policy. Identify examples of objectives and policy in your own organisation, and comment on how effectively you believe they have been imple- mented. 5 Discuss critically the extent to which profit maximisation is a sufficient criterion for the effective management of a business organisation. What other indicators might be applied in terms of organisational performance and results? 6 Explain the need for a corporate strategy and attempt to examine the corporate plan for your own or some other organisation. Suggest criteria for the evaluation of an appropriate mix of activities. 7 Assess the practical relevance of (i) the concept of synergy and (ii) a SWOT analysis. 8 Discuss critically the extent to which you accept the concept of corporate social respon- sibilities. 9 How would you attempt to explain the meaning and significance of organisational values and business ethics? ASSIGNMENT a Detail fully what you believe are the social responsibilities or obligations of your own, or some other work organisation of your choice and identify the major stakeholders. b Give specific examples of the ways in which the organisation has attempted to satisfy, and/or has failed to satisfy, responsibilities or obligations to these stakeholders. c Specify the extent to which attention has been given to values in the organisation, and to the principles, standards and expected practices or judgements of ‘good’ (ethical) behaviour. d Compare your observations with those of your colleagues and summarise what conclu- sions you draw.
- 206. 180 PART 2 THE ORGANISATIONAL SETTING PERSONAL AWARENESS AND SKILLS EXERCISE OBJECTIVES Completing this exercise should help you to enhance the following skills: ᭤ Clarify the work values and beliefs that are important to you. ᭤ Examine your sensitivity to, and dealings with, other people. ᭤ Debate and justify with colleagues the nature of your values and beliefs. EXERCISE You are required to: 1 Rate the following items: 5 (extremely important for me); 4 (very important for me); 3 (aver- age importance for me); 2 (not important for me); 1 (I would oppose this). What is required are your genuine beliefs and feelings about each item, not what others think or believe, but what you personally and honestly believe and feel about each item. 1 There should be clear allocation of objectives and accountability for them — 2 We should be open and honest in all our dealings with each other — 3 People’s talents should be recognised, developed and correctly utilised — 4 One should give acknowledgement and praise to those in authority — 5 There are clear rules about what we should and should not do in getting the job done — 6 Conflicts should be surfaced and resolved rather than allowed to simmer — 7 The causes of problems should be directed away from oneself — 8 Encouragement and support should be placed above criticism — 9 Problems should be tackled and resolved in co-operation with others — 10 What is right should be placed above who is right — 11 Clear standard procedures should be in place for all important jobs — 12 One should become visible and build up one’s personal image — 13 Equity and fairness should be applied to all regardless of status or standing — 14 Excellence should be our aim in all that we do professionally and administratively — 15 We give close attention to codes of conduct since this is what builds character — 16 We should keep each other informed and practise open and friendly communication — 17 We know who should be making the decisions and refer decisions to the right person — 18 Everyone and their contribution should be treated with respect and dignity — 19 We should meet all our commitments to one another – we do what we say we will do — 20 One should form networks of support among those with influence — 21 There are clear reporting relationships – who reports to who – and we stick to them —
- 207. CHAPTER 5 ORGANISATIONAL GOALS, STRATEGY AND RESPONSIBILITIES 181 22 People should take responsibility for their own decisions and actions — 23 Everyone should be commited to personal growth and life-long learning — 24 Situations or events should be created so as to justify the advancement of one’s goals — 25 Performance should be assessed against objectives and standards declared up-front — 26 Policies should be clear and not changed until there is proof that they need changing — 27 Everyone’s needs should be given equal standing regardless of their position or status — 28 We should be committed to the service of others rather than ourselves — 29 Positive relationships should be established with those who have influence — 30 Warmth and affection should be demonstrated in our work relationships — 31 Individual productivity and performance should be encouraged and actively promoted — 32 We all know what our jobs are and stick to our defined responsibilities — 33 Those from disadvantaged backgrounds should be helped to catch up with others — 34 One should expect to get support from those to whom we have given past support — 35 Goals should be challenging and stretch people to higher levels of achievement — 2 In small groups, compare and discuss, frankly and openly, your ratings with those of your colleagues. Be prepared to justify your ratings but also listen with an open mind to the views of your colleagues. Further information will be provided by your tutor. DISCUSSION ■ How difficult was it for you to complete your ratings? ■ How much agreement was there among members of your group? Did this surprise you? ■ To what extent were you influenced to rethink your values or beliefs? Visit our website www.booksites.net/mullins for further questions, annotated weblinks, case material and Internet research material.
- 208. 182 PART 2 THE ORGANISATIONAL SETTING CASE STUDY 5.1 Mergers and acquisitions: the consequences of expansion at Square Deal plc Square Deal plc is a newly formed subsidiary company Foodrich plc was, until last year, a family firm of Square Deal International Inc. The intention is to which canned fruit and vegetables from its one fac- use it to unify the efforts and improve the profitability tory situated about 100 miles from London, in the of the hitherto separate UK subsidiaries of Arnold plc, west of England. It was bought by Square Deal Carlton plc and Foodrich plc. At present it has a man- International Inc with the idea that it would supply aging director, an administrative/ financial controller ‘own label’ products to Arnold plc and large catering and a typist all sharing a large temporary office in packs to both Arnold’s and Carlton’s restaurants. To central London. do this, Foodrich was obliged to deny supplies to Arnold plc has 69 food stores, all within a radius of some of its regular customers and re-equip part of its 30 miles from London. Most of them contain either a plant to handle the large catering packs. The MD, son small restaurant or a snack bar and occupy high street of the founder, has worked there for nearly 40 years or suburban shopping centre locations. It owns one and runs the company, making all decisions, both small bakery whose total production supplies ten long term and operational, using his experience and stores with bread and cakes. Perishables for both re- intuition. He is furious to learn that Arnold has not sale and restaurant use are bought locally but all other put all its ‘own label’ business in his direction and products are bought centrally and distributed from Carlton is still buying most catering packs from one large warehouse. These products are charged to Foodrich’s competitors while its new plant is grossly the stores at selling price on computer-printed internal invoices. Store managers are judged solely on revenue. YOUR TASKS Accounts for each store are produced on the batch computer system at head office which is an old build- (a) Discuss the benefits and drawbacks of judging ing on the edge of a dockland redevelopment site in performance on a single criterion such as: East London. The company owns the freehold, as it (i) revenue, in the case of the store managers; does of about half of its food stores. (ii) return on investment, in the case of Carlton’s Carlton plc has joint managing directors, one in MDs. charge of 21 restaurants and one in charge of prop- (b) Explain to what extent Arnold’s head buyer and erty development. To date it has built four shopping Carlton’s head chef are justified in buying catering centres and has plans for three more, all as part of packs from other companies. schemes to regenerate old city centres in the north (c) Describe how further computerisation might help in of England, around 150 miles from London. It leases this quest for unification and profit improvement. out the shops with the exception of one per centre which it operates as a restaurant. Both MDs rigidly (d) After you have finished this task, the MD tells you he pursue a 15 per cent annual return on investment as is toying with the idea of regrouping the company their measure of achievement. under the name of Square Deal plc and dividing it into the following divisions, each operating as a profit centre: Photo: Robert Lawson/Anthony Blake Picture Library Square Deal plc Restaurants Property Food retail Canning Bakery division division division division division He is concerned about the effects of such a change on the morale of the managers and other employees so he asks you for a further statement. Discuss ideas that should maintain or improve morale if this regrouping were to take place. (e) Highlight any other advantages or difficulties that you foresee in the regrouping idea.
- 209. CHAPTER 5 ORGANISATIONAL GOALS, STRATEGY AND RESPONSIBILITIES 183 under-used. Both Arnold’s head buyer and the head The MD of Square Deal plc has just spent a week chef at Carlton’s claim they get the same quality touring parts of these three subsidiaries and has cheaper from other companies. These recent changes returned to the office with a variety of ideas and at Foodrich have overwhelmed the MD and one concerns about ways to unify efforts and improve result is that the financial year end accounts up until profitability. To help crystallise some of these ideas April will not be ready until some time in August. he asks the administrator/controller to prepare writ- The accounts are the only defined measure of per- ten statements on various points. Assume you are formance and are usually drawn up by the MD. this administrator/controller. CASE STUDY 5.2 Welcome to the party: home selling with Top-to-Toe The following article appeared in the press earlier this year: Late in 2001, the founder and Chief Executive Officer the fact that working should be about building posi- (CEO) of Top-to-Toe, Joanne Dunne, announced the tive and fulfilling relationships. There should be joy decision to open up distribution by using the device in the workplace and concern for the communities of house parties. where raw materials are sourced and products manu- The house party involves salespeople making pre- factured – not just obsession with profits. sentations of products in a person’s home to which Joanne Dunne may be more outspoken than the host invites a number of friends and acquain- others but she is not alone in recognising that tances who make orders at the end of the party. people are the greatest asset of the business. The A successful niche retailer of environmentally quality of customer care is increasingly the basis for friendly toiletries and cosmetics, Top-to-Toe has competitive advantage and effective customer care expanded its market geographically using franchis- depends on skilled, empowered and motivated staff. ing to ensure local management knowledge and Perhaps joy in the workplace is not at odds with commitment. It has now come up against the state- maximising profits after all. gic weakness of a niche strategy: how to grow once Sunday Bugle, 22 January 2002 the niche is saturated. 2001 saw pre-tax profits fall by 26% to £5.1m. YOUR TASKS Joanne Dunne now believes that home selling could provide Top-to-Toe with a significant new Top-to-Toe’s strategy of expansion into home selling source of growth, thanks to its advantages of conven- will involve managing and motivating a large team of ience, demonstration, product sampling and the part-time sales staff on a commissionn-only salary. networking of party-givers through their friends. This The company is also keen to address the pressure involves, in effect, a ‘re-invention’ of the company. from investors and analysts. You are asked to: Dunne also hit out at the financial institutions for (a) Prepare a report for Joanne Dunne indicating the their ‘short-termism’, demanding the highest profits mangement issues that might arise from this expan- in the shortest possible time and failing to recognise sion strategy and how these could be addressed. that companies need time for reflection and re- (b) Using Top-to-Toe as one example, write a news- invention. Top-to-Toe has come under pressure from paper article outlining the importance of social city analysts in recent months for its failure to responsibility in business, bearing in mind the address the issue of falling profits. She says that the pressures for short-term profits. financial community ignores the human spirit and
- 210. 184 PART 2 THE ORGANISATIONAL SETTING NOTES AND REFERENCES 1. See, for example: Morley, M. ‘What Business Are You 23. Gratton, L. Living Strategy: Putting People at the Heart of In?’, Professional Manager, March 1997, pp. 12–13. Corporate Purpose, Financial Times Prentice Hall (2000), 2. Etzioni, A. Modern Organizations, Prentice-Hall (1964). p. 55. 3. Simon, H. A. ‘On the Concept of Organizational 24. Fayol, H. General and Industrial Management, Pitman Goal’, Administrative Science Quarterly, vol. 10, June (1949), p. 53. 1964, pp. 1–22. 25. Norris, P. ‘Pay For Performance’, Chartered Secretary, 4. See, for example: Kast, F. E. and Rosenzweig, J. E. February 1997, pp. 18–19. Organization and Management: A Systems and Contingency 26. See, for example: Torrington, D., Weightman, J. and Approach, Fourth edition, McGraw-Hill (1985). Johns, K. Effective Management: People and Organ- 5. See, for example: Heller, R. ‘The Manager’s Dilemma’, isation, Second edition, Prentice-Hall (1994). Management Today, January 1994, pp. 42–7. 27. For a fuller discussion of strategic management and plan- 6. Pitman, Sir Brian ‘In my Opinion’, Management Today, ning see, for example: Asch, D. and Bowman, C. (eds) June 2000, p.14. Readings in Strategic Management, Macmillan (1989). 7. Mills, D. Q. and Friesen, G. B. ‘Empowerment’ in 28. Summers, J. and Nowicki, M. ‘Achievement and Balance: Crainer, S. and Dearlove, D. Financial Times Handbook of What Do Managers Really Want?’, Healthcare Financial Management, Second edition, Financial Times Prentice Management, vol. 56, no. 3, March 2002, pp. 80–84. Hall (2001), p. 335. 29. Christensen, C. M., Raynor, M. E. and Anthony, S. D. 8. A view expressed by a number of writers including, for ‘Six Keys to Creating New-Growth Businesses’, Harvard example: Argyris, C. Integrating the Individual and the Management Update, 2003, p. 3. Organization, John Wiley and Sons (1964). 30. Cyert, R. and March, J. G. A Behavioural Theory of the 9. McGregor, D. The Human Side of Enterprise, Penguin Firm, Second edition, Blackwell (1992). 31. Drucker, P. F. The Practice of Management, Heinemann (1987), p. 55. Professional (1989), p. 59. 10. Etzioni, A. A Comparative Analysis of Complex 32. Etzioni, A. Modern Organizations, Prentice-Hall (1964), Organizations: On Power, Involvement and their Correlates, p. 17. Revised edition, Free Press (1975). 33. Simon, H. A. ‘On the Concept of Organizational 11. See, for example: Brown, A. ‘Organizational Culture: Goal’, Administrative Science Quarterly, vol. 10, June The Key to Effective Leadership and Organizational 1964, p. 21. Development’, Leadership and Organization Development 34. Kaplan, R. S. and Norton, D. P. The Balanced Scorecard: Journal, vol. 13, no. 2, 1992, pp. 3–6. Translating Strategy into Action, Harvard Business 12. Brech, E. F. L. (ed.) The Principles and Practice of School Press (1996). Management, Third edition, Longman (1975). 35. Van de Vliet, A. ‘The New Balancing Act’, Management 13. Lucas, E. ‘Believe It or Not, Values Can Make a Today, July 1997, pp. 78–80. Difference’, Professional Manager, November 1999, 36. Tonge, R. and Callaghan, C. ‘Using the Balanced pp. 10–12 Scorecard in the Public Sector’, Chartered Secretary, 14. Dainty, P. and Anderson, M. ‘Mindsets For Managers’ October 1997, pp. 18–19. in Chowdhury, S. Management 21C, Financial Times 37. Tilles, S. ‘Making Strategy Explicit’, in Ansoff, H. I. Prentice Hall (2000), p. 110. (ed.) Business Strategy, Penguin (1969). 15. Cloke, K. and Goldsmith, J. The End of Management 38. For fuller details of strategic planning, see, for exam- and the Rise of Organizational Democracy, Jossey-Bass ple: Johnson, G. and Scholes, K. Exploring Corporate (2002). Strategy, Sixth edition, Prentice-Hall (2002). 16. For a discussion and examples of mission and objec- 39. Allen, R. S. and Helms, M. M. ‘Employee Perceptions tives, see, for example: Lynch, R. Corporate Strategy, of the Relationship Between Strategy, Rewards and Third edition, Financial Times Prentice Hall (2003). Organizational Performance’, Journal of Business 17. Mills, D. Q. and Friesen, G. B. ‘Empowerment’ in Strategies, vol. 19, no. 2, Fall 2002, pp. 115–39. Crainer, S. and Dearlove, D. Financial Times Handbook 40. Richardson, B. and Thompson, J. ‘Strategic Competency of Management, Second edition, Financial Times in the 1990s’, Administrator, July 1994, pp. 2–6. Prentice Hall (2001), p. 334. 41. Lloyd, B. ‘In my Opinion’, Management Today, August 18. Johnson, G. and Scholes, K. Exploring Corporate Strategy, 2001, p. 8. Sixth edition, Financial Times Prentice Hall (2002). 42. Lynch, R. Corporate Strategy, Third edition, Financial 19. Perrin, L. and Tavakoli, I. ‘Mission Impossible Without Times Prentice Hall (2003), p. 26. Commitment’, Professional Manager, July 1997, pp. 14–15. 43. For an example, see: Rea, D. M. ‘Strategy in Public 20. Rigby, R. ‘Mission Statements’, Management Today, Sector Organisations’, in Jones, P. (ed.) Management in March 1998, pp. 36–58. Service Industries, Pitman Publishing (1989). 21. Trapp, R. ‘Blunder Boss’, The British Journal of 44. Bruce, A. ‘Setting Boundaries for Strategic Management’, Administrative Management, July/August 1999, pp. 12–16. Professional Manager, January 1999, pp. 8–10. 22. Riches, A. ‘How Valuable Are Your Values?’, 45. Ansoff, H. I. (ed.) Business Strategy, Penguin (1969). Organisational Change & Leadership Development, 46. Ansoff, H. I. Corporate Strategy, Revised edition, www.anneriches.com.au, accessed 11 March 2003. Penguin (1987).
- 211. CHAPTER 5 ORGANISATIONAL GOALS, STRATEGY AND RESPONSIBILITIES 185 47. Ansoff, H. I. (ed.) Business Strategy, Penguin (1969). 60. Altman, W., Cooper, C. and Garner, A. ‘In Search of a 48. Levine, S. R. ‘The Value-Based Edu-Leader’, in New Work Ethic’, Professional Manager, November Chowdhury, S. Management 21C, Financial Times 1999, p. 15. Prentice Hall (2000), p. 90. 61. Allen, A. ‘Up the Moral Mountain’, Chartered Secretary, 49. Drucker, P. F. Managing for Results, Heinemann May 2001, pp. 21–2. Professional (1989). See also: Drucker, P. F. Managing in 62. Cook, S. ‘Who Cares Wins’, Management Today, Turbulent Times, Heinemann (1980). January 2003, pp. 40–7. 50. Earl, M. ‘IT Strategy in The New Economy’, in 63. See, for example: Worthington, I. and Britton, C. The Pickford, J. (ed), Financial Times Mastering Management Business Environment, Fourth edition, Financial Times 2.0, Financial Times Prentice Hall (2001), p. 109. Prentice Hall (2003). 51. Kermally, S. ‘E-strategy is Key to Future Success’, 64. Drucker, P. F. The Practice of Management, Heinemann Professional Manager, July 2001, pp. 28–9. Professional (1989), p. 380. 52. BG Group plc, Annual Review 2002. 65. Kay, J. The Truth About Markets, Allen Lane Penguin 53. See, for example: Piggott, G. ‘Open Relationships’, Press (2003) p. 343. Holland Herald, January 2003, pp. 54–64 66. De George, R. T. Business Ethics, Fifth edition, Prentice 54. Harris, J. ‘EU Acts to Promote More Socially Hall (1999). Responsible Companies’, Social Agenda, October 2002, 67. Friedman, M. ‘The Social Responsibility of Business is pp. 3–4. to Increase Its Profits’, New York Times Magazine, 13 55. Shortland, F. ‘Putting Human Rights on the Business September 1970, pp. 32, 122–6. Agenda’, Professional Manager, July 1998, p. 18. 68. Sternberg, E. Just Business, Little Brown (1994). 56. HRH The Prince of Wales, Foreword to Grayson, D. 69. Cannon, T. Corporate Responsibility, Pitman (1994), and Hodges, A. Everybody’s Business: Managing Global pp. 32–3. Risks and Opportunities in Today’s Global Society, 70. Sternberg, E. Just Business, Little Brown (1994). Financial Times (2001), pp. 8–9. 71. RSA, Tomorrow’s Company – The Role of Business in a 57. Code of Professional Management Practice, Chartered Changing World, Royal Society for Arts, Manufactures Management Institute, July 2002. and Commerce (1995). 58. Dobson, N. ‘Prejudicial Interests?’, Chartered Secretary, 72. For a discussion, see: De George, R. T. Business Ethics, May 2003, pp. 22–4. Fifth edition, Prentice Hall (1999). 59. Tam, H. ‘Recognise Your Responsibilities’, Professional 73. McEwan, T. Managing Values and Beliefs in Manager, March 1995, p. 16. Organisations, Financial Times Prentice Hall (2001). Use the Financial Times to enhance your understanding of the context and practice of management and FT organisational behaviour. Refer to articles 2, 4, 5, 17 and 20 in the BUSINESS PRESS section at the end of the book for relevant reports on the issues explored in this chapter.
- 213. Part 3 THE ROLE OF THE MANAGER Part 1 Part 2 MANAGEMENT AND Part 3 THE ORGANISATIONAL THE ROLE OF ORGANISATIONAL BEHAVIOUR THE MANAGER SETTING Part 7 MANAGEMENT OF HUMAN Part 8 RESOURCES IMPROVING ORGANISATIONAL PERFORMANCE Part 4 THE INDIVIDUAL Part 6 Part 5 ORGANISATIONAL GROUPS AND STRUCTURES TEAMWORK
- 214.
- 215. 6 THE NATURE OF MANAGEMENT Organisations can only achieve their goals and objectives by the co-ordinated efforts of their members and it is the task of management to get work done through other people. Management is fundamental to the effective operation of work organisations. It is by the process of management and execution of work that the activities of the organisation are carried out. Management is an integral part of the people–organisation relationship. It is essentially an integrating activity which permeates every facet of the operations of an organisation. LEARNING OUTCOMES Photo: Anthony Blake After completing this chapter you should be able to: ᭤ explain the meaning of management and main Managerial work is enormously complex, far more activities, or functions, of management; so than a reading of traditional literature would ᭤ analyse the essential nature of managerial work; suggest. There is a need to study it systematically ᭤ contrast management in service and production and to avoid the temptation to seek simple industries, and in private and public sector organisations; prescriptions for its difficulties. ᭤ outline empirical studies on the nature of managerial Henry Mintzberg work and behaviour; The Nature of Managerial Work, Harper & Row (1973) ᭤ detail the attributes and qualities of a successful manager; While the nature of managerial work changes ᭤ debate the nature of management and managers of constantly, the fundamental truth remains the future; unchanged: management continues to represent a ᭤ evaluate the importance of management to the huge challenge to those who put it into practice effective performance of work organisations. every day throughout the world. Stuart Crainer Key Management Ideas, Financial Times Prentice Hall (1998)
- 216. 190 PART 3 THE ROLE OF THE MANAGER THE MEANING OF MANAGEMENT Management is a generic term and subject to many interpretations. A number of different ideas are attributed to the meaning of management and to the work of a manager.1 Schneider and Barsoux also contend that trying to define the meaning of management shows up differ- ences in beliefs and values.2 Cultural influences are a significant feature of management. In certain respects everyone could be regarded as a manager to some extent. We all manage our own time and everyone has some choice whether or not to do something, and some control, however slight, over the planning and organisation of their work. However, we are concerned with management as involving people looking beyond themselves and exercising formal authority over the activities and performance of other people. At its most basic, management may be viewed as ‘making things happen’. Management is active, not theoretical. It is about changing behaviour and making things happen. It is about developing people, working with them, reaching objectives and achieving results. Indeed, all the research into how managers spend their time reveals that they are crea- tures of the moment, perpetually immersed in the nitty-gritty of making things happen.3 An added dimension to the study and understanding of management is provided by Knights and Willmott. They refer to managing as an everyday activity that involves interactions between people that are not unrelated or entirely dissimilar to other spheres of life, except perhaps in the rhetoric and hype that surround management. Knights and Willmott contend that most established textbooks about management and organisation provide little that enables practising managers to make sense of their particular problem or dilemma, and in order to appreciate the living of management draw on a number of contemporary novels. Since most management textbooks do not make the connection between managing and everyday life, and indeed envelop the activity of management within an academic and professional mys- tique, we have drawn to alternative sources (e.g. novels) that might enable students to relate accounts of management to their own experience ... [This book] is concerned to illuminate the lives of people who, in different ways, are involved or affected by management.4 While there is undoubted value in this approach, every textbook must have a clear focus and is obviously limited in potential content. For our purposes, therefore, we can regard management as: ■ taking place within a structured organisational setting and with prescribed roles; ■ directed towards the attainment of aims and objectives; ■ achieved through the efforts of other people; and ■ using systems and procedures. The emergence Peter Drucker, who is widely regarded as the guru of management gurus, has written of management about the significance in social history of the emergence of management: The emergence of management as an essential, a distinct and a leading institution is a pivotal event in social history. Rarely, if ever, has a new basic institution, a new leading group, emerged as fast as has management since the turn of this [twentieth] century. Rarely in human history has a new institution proven indispensable so quickly; and even less often has a new institution arrived with so little opposition, so little disturbance, so little controversy.5 Drucker sees management as denoting a function as well as the people who discharge it, a social position and authority, and also a discipline and field of study. Management is tasks. Management is a discipline. But management is also people. Every achieve- ment of management is the achievement of a manager. Every failure is a failure of a manager.6
- 217. CHAPTER 6 THENATURE OF MANAGEMENT 191 Other writers, however, take the view that management is not a separate discipline. The problem is identifying a single discipline which encompasses the work of a manager, or agreeing the disciplines that a manager needs in order effectively to carry out this work. Note, however, the discussion on ‘Managers of the Future?’ at the end of this chapter. Manager as a Even within a work organisation you cannot identify a manager necessarily by what a job title person is called or by his or her job title. In some organisations there is a liberal use of the title ‘manager’ in an apparent attempt to enhance the status and morale of staff. As a result there are a number of people whose job title includes the term manager but who, in reality, are not performing the full activities of a manager. EXHIBIT 6.1 The infant school headteacher as a manager When considering the tasks involved in the role of the infant headteacher, two words automatically spring to mind – many and varied. I now might add ‘vast’ and ‘ever-changing’ to this statement. The traditional role of the headteacher as ‘master teacher’ is now being superseded by that of ‘school improvement manager’. Within this come the roles of finance and personnel manager, both under the umbrella of school improvement. And, at the centre of everything are the chil- dren and parents whom the headteacher strives to serve. Photo: John Warmsley The headteacher will work to effectively manage the best interests of the children not only through pastoral care and support, but also through the effective management of school resources. Some tasks will be delegated to the deputy headteacher and members of staff who are respon- sible for areas of the curriculum. However, a staffing structure needs to be in place which can sustain this level is often a stressful time. The collection and use of data is of delegation. This is often a major issue in smaller infant becoming of prime importance. Headteachers must be schools where each member of the teaching staff must able to interpret statistics and use the wide range of data teach a class of children and manage a subject or several available at both county and national level. subjects alongside their teaching commitments. Individual The headteacher is also finance manager. A large propor- tasks are delegated to subject managers and are moni- tion of any school’s budget is for staffing costs with the next tored by the headteacher through action plans, which in major cost being educational supplies and resources. Part of turn are linked to the School Improvement Plan. the formula for the allocation of budgets to schools is based The School Improvement Plan is the major management on the number of children on a school’s roll. Every school has tool within the school. The headteacher will manage both the a standard number of children which it cannot exceed. Some improvement and maintenance sections of this plan by regu- schools’ number of children on roll may fall below this stan- lar review and evaluation. Clear, quantifiable improvement dard number, while other schools may be oversubscribed. targets will head this plan. These should reflect the whole The headteacher will strive to maintain an optimum number of school’s perceived view of those things that the school children on roll. This is often achieved through promotion of a should do to bring it closer to its overall vision. Target set- school’s reputation and the quality of education it provides. If ting, and the headteacher’s management of this process, will this is successful, the school’s number on roll will remain play a large part in moving a school forward, for a school healthy and the budget relatively stable. It is part of the head- that stands still is one that is moving backwards. teacher role to manage this, often through an informative When thinking about school improvement, we must also school brochure and prospectus, open days for prospective consider the roles played by both central government and parents and other events. Test results alone will not give the the Local Education Authority. The central government whole picture. monitoring body takes the form of OFSTED. Teams of The headteacher is also personnel manager, using the inspectors working within schools on a regular cycle are management tools of clear target-related job descriptions required to produce inspection reports on individual and appraisal to monitor staff performance. The headteacher schools intended to highlight achievements and to identify must create a climate in which all staff feel motivated to suc- areas for future developments. There are many issues for a ceed, and an atmosphere in which they are able to work as a headteacher to consider arising from OFSTED and perhaps team towards shared goals which will ultimately improve the none greater than the maintenance of staff morale at what quality of education that children receive. Headteachers will ᭤
- 218. 192 PART 3 THE ROLE OF THE MANAGER Exhibit 6.1 continued strive to use Performance Management as a process by of great change. We are urged to take control and lead our which teachers can best demonstrate their strengths and schools and staff into the brave new world of the new mil- feel happy to address future areas of development. lennium. None would doubt the importance of this but The headteacher is a manager in the fullest sense, against a background of some stability – please! but is also a visionary and essentially a leader. Strong lead- (I am grateful to Alison Pratt, Headteacher, Orchard Lea Infant School, Fareham ership and direction is vital for all headteachers at this time for providing the above information.) Unlikely managers Unlikely managers Mother General Senior vet Tyburn Convent, Bayswater, London Tilehurst Veterinary Centre, Reading Name Mother Mary Xavier Name Sharmila Nikapota When did you become a manager? In 1973, when the When did you become a manager? I suppose the community elected me Mother General. moment I started practising as a vet in 1994, as right from the start you have to manage nurses. Managing the What does management mean to you? I think of my practice started in 1996, when I became senior vet. position as a service to the group. That service is to ani- mate and give advice to the various communities and What does management mean to you? It means run- individual members. We have six communities in differ- ning an efficient practice, keeping the staff content and ent countries so it’s a kind of service for the unity of the working together as a team to provide an efficient service whole group, keeping us on course in our tradition in the to our clients and manage their pets’needs. For example, service of the church and the whole human family. you might have a client with limited finances so you have to try to work out a plan balancing their emotional stress There is a quite a lot of visiting different monasteries in with whatever treatment the pet needs. various countries and sharing the daily life of each com- munity as animator and encourager. Time management is very important: I consult in the morning and do operations in the afternoon (we have to I also oversee the admission and training of new mem- do a certain number of operations each day). I have to bers during their five-year attainment period and I am allocate tasks (such as premed) in order to waste as little responsible for the appointment of posts such as pri- time as possible. It can be a bit like a production line. oresses and their councils in other communities. What do you love/hate about it? My personal interests Then there are community affairs and the financial are surgery and diagnostic imaging, so I love operating. administration of the whole Tyburn order that must be I don’t like putting a price on treatment; people don’t monitored and approved. always insure their pets and I dislike it when you can’t What do you love/hate about it? I love knowing and take a case the way of your clinical judgment because encouraging the nuns. of cost constraints. I don’t find anything disagreeable, though sometimes there can be a bit of pressure when everything happens at once. (Reproduced with permission from Management Today, July 1999, p. 22 and February 2000, p. 22.) Managers born On the other hand, there are many people whose job title does not include the term or made? manager (for example, group accountant, head chef, chief inspector, captain, head- Management an teacher, production controller, district nursing officer, company secretary), but who, in art or science? terms of the activities they undertake and the authority and responsibility they exer- cise, may be very much a manager. There is frequent debate about whether managers are born or made; or whether man- agement is an art or a science. Briefly, the important point is that neither of these is a mutually exclusive alternative. The answer to either question is surely a combination of both. Even if there are certain innate qualities which make for a potentially good
- 219. CHAPTER 6 THENATURE OF MANAGEMENT 193 manager, these natural talents must be encouraged and developed through proper guidance, education and training, and planned experience. Clearly, management must always be something of an art, especially in so far as it involves practice, personal judgement and dealing with people. However, it still requires knowledge of the fundamentals of management, and competence in the appli- cation of specific skills and techniques – as illustrated, for example, with developments in information technology. The trouble is that, for all the techniques at their disposal, managers generally act at a very intu- itive level. Managers may have absorbed the latest thinking on core competencies, but are more likely to base a decision on prejudice or personal opinion rather than a neat theory.7 The discussion of management as an art or a science is developed by Watson who sug- gests that in order to make sense of the complex and highly ambiguous situations in which managers find themselves, management can be viewed as both art and science but also magic and politics.8 (See Figure 6.1.) Management as art Successful managers are those bor n with appropriate intuition, intelligence and personality which they develop thr ough the practice of leadership. Management as magic Successful managers Management as science are those who Successful managers recognise that are those who have nobody really knows learned the what is going on and appropriate body of who persuade others knowledge and have of their own powers developed an ability by calling up the to apply acquired appropriate gods and skills and techniques. by engaging in the expected rituals. Management as politics Successful managers are those who can work out the unwritten laws of life in the organisational jungle and are able to play the game so that they win. Figure 6.1 Management as art, science, magic and politics (Reproduced with permission from Watson, T. J. Management, Organisation and Employment Strategy Routledge & Kegan Paul (1986), p. 29, with permission from Routledge/ITBP.)
- 220. 194 PART 3 THE ROLE OF THE MANAGER MANAGEMENT AND ADMINISTRATION There is often confusion over different interpretations of the two terms ‘management’ and ‘administration’. One of the main reasons for this confusion would seem to result from the translation of Fayol’s book Administration industrielle et générale from the French into English. In the original (1929) English edition there was a direct translation of ‘administration’, but in the wider re-publication of the book in 1949 the term ‘manage- ment’ replaced ‘administration’ in the title. In the introduction to the revised edition Urwick indicates regret at this change.9 He refers to Fayol’s use of the word administra- tion as indicating a specific function which enters all tasks involving supervision of the work of others. It is not concerned with the status of those who exercise this function. Urwick also expresses concern at the possible division between management being seen to apply only to business organisations, and (public) administration as applying to the same functions in public service organisations. Dictionary definitions tend to see the two words as synonymous. Management is sometimes referred to as ‘administration of business concerns’ and administration as ‘management of public affairs’. There is clearly an overlap between the two terms and they tend to be used, therefore, in accordance with the convenience of individual writers. This confirms the feeling that although most people perceive a difference between the two terms, this difference is not easy to describe. A traditional perception is that private sector organisations are managed and the use of the term ‘administration’ is associated with public sector organisations. However, the term ‘management’ is now used far more widely within the public sector. There is also an increasing number of books which examine management in the public sector.10 (A comparison of management in private enterprise and public sector organisations is to be found later in this chapter.) Administration part of management There appears, therefore, to be growing acceptance of the term management as the general descriptive label and administration as relating to the more specific function of the implementation of systems and procedures instigated by management. Administration can be seen as taking place in accordance with some form of rules or procedures, whereas management implies a greater degree of discretion. For our purposes, management is viewed as applying to both private and public sector organisations; and administration is interpreted as part of the management process, and concerned with the design and implementation of systems and pro- cedures to help meet stated objectives. Systems of communication and procedures relating to information technology are particularly important today. The role and On behalf of the Institute of Chartered Secretaries and Administrators, Bailey-Scudamore importance of undertook the most comprehensive survey ever in the United Kingdom on the chang- administration ing role of administration within organisations. The research found that administration is seen as an important activity, but not such an important function. There remains much scope for improvement to administrative activity and it should be on the high- level agenda in all organisations. Certain areas of the administrator’s work will demand high degrees of detail, planning and analysis, and demand exacting timescales and highly regulated treatment, but, as a result of organisational and environmental change, administration is becoming much less rigid and rule-oriented. Many more people are taking on aspects of administrative work as an essential component of their own func- tion or specialism and organisations are turning to administration as an indirect means of improving business performance.11
- 221. CHAPTER 6 THENATURE OF MANAGEMENT 195 Managers and administrators now need to perform – quickly, effectively and efficiently. Failure to do so will leave them, their bosses and their organisations exposed to criticism and, more seriously to competition. So what are the biggest challenges of 21st century administrative management? They are the: ■ effective management of information and communications; ■ effective management of people. Both of these areas of professional challenge will be characterised by a permanent state of change. So effective managers will need to be able to manage change; to be able to manage information; and to manage information through people. Professor Graham Robinson, Chief Executive Officer, The Institute of Administrative Management12 THE PROCESS OF MANAGEMENT The nature of management is variable. Management relates to all activities of the organ- isation and is undertaken at all levels of the organisation. Management is not a separate, discrete function. It cannot be departmentalised or centralised. An organisation cannot have a department of management in the same way as it can have a department for other functions, such as production, marketing, accounting, or personnel. Management is seen best, therefore, as a process common to all other functions carried out within the organisation. Management is essentially an integrating activity. (See Figure 6.2 and recall also Figure 2.4, Chapter 2.) It is difficult to think of any aspect of the functioning of the organisation, or behaviour of people, which does not concern, or relate back to, management in some way. For example, even personality clashes between two individual members of staff could possibly be traced back to management procedures for recruitment and selection, induction, socialisation and training, delegation or the level and style of supervision. And clearly the personality clashes are likely to affect the attitudes and work performance of the members concerned, and also affect the morale of other staff. The overall responsibility of management can be seen as the attainment of the given objectives of the organisation. Naylor, for example, provides the following definition: ‘Management is the process of achieving organisational objectives, within a changing environment, by balancing efficiency, effectiveness and equity, obtaining the most from limited resources, and working with and through other people.’13 Objectives are the desired end-results the organisation is striving to achieve. Within the framework of objectives, policy provides the guidelines for the operations and activities of the organisation. Clarification of objectives and policy is a prerequisite if the process of management is to be effective. However, as Drummond, for example, points out: ‘The fundamental problem of management is that organisational and indi- vidual objectives differ. Whereas the organisation may be interested in maximising output and minimising cost, the individual employee may have other priorities. The problem for the organisation is how to eliminate opportunism.’14 But what does the process of management actually involve, and what activities does it encompass? Management is a complex and discursive subject. Despite the widespread use of the term and the large amount written about the subject, it is not easy to find agreement on a simple yet comprehensive definition of management or of a manager.
- 222. 196 PART 3 THE ROLE OF THE MANAGER Organisational processes and the execution of work Welding a coherent Systems of motivation, Harnessing the pattern of work job satisfaction efforts of staff activities and rewards Improving the people–organisation relationship The focus of management Creating an organisational climate in which people work willingly and effectively Achieving the goals Satisfying the needs and objectives of and expectations of the organisation people at work Organisational performance and effectiveness Figure 6.2 The central focus of management Moreover, ‘management’ is not homogeneous. It takes place in different ways and at different levels of the organisation. One approach, especially favoured by classical writers, is to analyse the nature of management and to search for common activities (or functions, or elements) applicable to managers in all organisations. Common One of the first, and most widely quoted, analyses is that given by Henri Fayol, who activities of analysed the activities of industrial undertakings into six groups: management ■ technical (production, manufacture and adaptation); ■ commercial (buying, selling, exchange and market information); ■ financial (obtaining capital and making optimum use of available funds); ■ security (safeguarding property and persons); ■ accounting (information on the economic position, stocktaking, balance sheet, costs, statistics); and ■ managerial. (The term ‘management’ is a translation of the French term ‘administration’.)15 The managerial activity is divided into five elements of management, which are defined as: ‘to forecast and plan, to organise, to command, to co-ordinate and to con- trol’. Fayol describes these elements as:
- 223. CHAPTER 6 THENATURE OF MANAGEMENT 197 ■ Planning (translated from the French prevoyer = to foresee, and taken to include forecasting) – examining the future, deciding what needs to be achieved and devel- oping a plan of action. ■ Organising – providing the material and human resources and building the struc- ture to carry out the activities of the organisation. ■ Command – maintaining activity among personnel, getting the optimum return from all employees in the interests of the whole organisation. ■ Co-ordination – unifying and harmonising all activities and effort of the organisa- tion to facilitate its working and success. ■ Control – verifying that everything occurs in accordance with plans, instructions, established principles and expressed command. PRINCIPLES OF MANAGEMENT Fayol also suggests that a set of well-established principles would help concentrate gen- eral discussion on management theory. He emphasises, however, that these principles must be flexible and adaptable to changing circumstances. Fayol recognised that there was no limit to the principles of management but in his writing advocated 14. 1 Division of work. The object is to produce more and better work from the same effort, and the advantages of specialisation. However, there are limits to division of work which experience and a sense of proportion tell us should not be exceeded. 2 Authority and responsibility. Responsibility is the corollary of authority. Wherever authority is exercised responsibility arises. The application of sanctions is essential to good management, and is needed to encourage useful actions and to discourage their opposite. The best safeguard against abuse of authority is the per- sonal integrity of the manager. 3 Discipline is essential for the efficient operation of the organisation. Discipline is in essence the outward mark of respect for agreements between the organisation and its members. The manager must decide on the most appropriate form of sanc- tion in cases of offences against discipline. 4 Unity of command. In any action an employee should receive orders from one superior only; if not, authority is undermined and discipline, order and stability threatened. Dual command is a perpetual source of conflicts. 5 Unity of direction. In order to provide for unity of action, co-ordination and focusing of effort, there should be one head and one plan for any group of activi- ties with the same objective. 6 Subordination of individual interest to general interest. The interest of the organisation should dominate individual or group interests. 7 Remuneration of personnel. Remuneration should as far as possible satisfy both employee and employer. Methods of payment can influence organisational per- formance and the method should be fair and should encourage keenness by rewarding well-directed effort, but not lead to overpayment. 8 Centralisation is always present to some extent in any organisation. The degree of centralisation is a question of proportion and will vary in particular organisations. 9 Scalar chain. The chain of superiors from the ultimate authority to the lowest ranks. Respect for line authority must be reconciled with activities which require urgent action, and with the need to provide for some measure of initiative at all levels of authority. 10 Order. This includes material order and social order. The object of material order is avoidance of loss. There should be an appointed place for each thing, and each thing in its appointed place. Social order involves an appointed place for each
- 224. 198 PART 3 THE ROLE OF THE MANAGER employee, and each employee in his or her appointed place. Social order requires good organisation and good selection. 11 Equity. The desire for equity and for equality of treatment are aspirations to be taken into account in dealing with employees throughout all levels of the scalar chain. 12 Stability of tenure of personnel. Generally, prosperous organisations have a stable managerial personnel, but changes of personnel are inevitable and stability of tenure is a question of proportion. 13 Initiative. This represents a source of strength for the organisation and should be encouraged and developed. Tact and integrity are required to promote initiative and to retain respect for authority and discipline. 14 Esprit de corps should be fostered, as harmony and unity among members of the organisation is a great strength in the organisation. The principle of unity of com- mand should be observed. It is necessary to avoid the dangers of divide and rule of one’s own team, and the abuse of written communication. Wherever possible verbal contacts should be used. A number of these principles relate directly to, or are influenced by, the organisation structure in which the process of management takes place. Fayol’s set of principles can be compared therefore with those given by Urwick and discussed in Chapter 15. Relevance for the twenty-first century In an article bringing together the thinking of senior members of the Institute of Administrative Management, Moorcroft suggests that Fayol’s five elements of manage- ment are still recognised as relevant and appropriate for the managers of today and tomorrow. However, although some of the principles of management remain fresh and relevant, at the start of a new millennium a new set of principles is needed to guide a manager’s everyday actions. These ‘principles’ are not offered as an exclusive or author- itative list but are proposed as a thought-provoking starting point to address the management problems awaiting us in the new millennium.16 (See Figure 6.3.) 1 Manage information through people. 2 Change is a constant, and must be managed. 3 Technology is the future. 4 Relationships matter. 5 Investment in training and development is important. 6 Measure only against the best. 7 The market is global. 8 Unity of direction is important. 9 Equity is expected. 10 Initiative is important. Figure 6.3 Ten new principles for effective administrative management (Reproduced with permission from Moorcroft, R. ‘Managing in the 21st Century’, Manager, The British Journal of Administrative Management, January/February 2000, p. 10.)
- 225. CHAPTER 6 THENATURE OF MANAGEMENT 199 MANAGEMENT AS A SOCIAL PROCESS Another well-known analysis is given by Brech who defines management as: A social process entailing responsibility for the effective and economical planning and regulation of the operations of an enterprise, in fulfilment of given purposes or tasks, such responsibility involving: (a) judgement and decision in determining plans and in using data to control performance and progress against plans; (b) the guidance, integration, motivation and supervision of the personnel composing the enter- prise and carrying out its operations.17 Brech identifies four main elements of management: ■ Planning – determining the broad lines for carrying out operations, preparing methods by which they are carried out and setting standards of performance. ■ Control – checking actual performance against standards to ensure satisfactory progress and performance, and recording as a guide to possible future operations. ■ Co-ordination – balancing and maintaining the team by ensuring a suitable divi- sion of work and seeing that tasks are performed in harmony. ■ Motivation – or inspiring morale. Getting members of the team to work effectively, to give loyalty to the group and to the task, to carry out their tasks properly, and to play an effective part in the activities of the organisation. This general inspiration is accompanied by a process of supervision or leadership to ensure the teams are carry- ing out their activities properly. Other analyses Many other writers have provided an analysis of the elements of management. At first sight these analyses may appear to differ in certain aspects, but on closer study they show a basic similarity. Debate on the inclusion or exclusion of a particular element of management tends to revolve round the use and interpretation of different terms, and the emphasis which is placed upon them. For example, what Fayol calls command – maintaining activity among personnel and getting optimum return from employees – might be taken to mean what Brech refers to as motivation – getting members of the team to work effectively and to carry out properly the activities allocated to them. Brech does not use the term organising but this appears to be covered under the headings of planning and co-ordination. Particular There are numerous other definitions of management. Many of these definitions reflect approaches to the influence of a particular approach to management thinking. Simon, for example, sees management management as synonymous with decision-making.18 Other examples include such defi- nitions as ‘management is delegation’, or ‘the task of management is to create teams out of individuals’. There are other definitions such as ‘the responsibility of management is to achieve results’, or ‘management is the ordering and co-ordination of functions to achieve a given purpose’, which tell us little about the actual process of management. These definitions may all be correct as far as they go, but on their own are too narrow or too vague to provide an adequate description of management. THE TASKS AND CONTRIBUTION OF A MANAGER Yet another approach to describing management is given by Drucker who identifies three tasks, equally important, but essentially different, that have to be performed: 1 fulfilling the specific purpose and mission of the institution, whether business enter- prise, hospital, or university;
- 226. 200 PART 3 THE ROLE OF THE MANAGER 2 making work productive and the worker achieving; 3 managing social impacts and social responsibilities.19 Drucker then goes on to identify five basic operations in the work of the manager: ■ Sets objectives – determines objectives and the goals for each area of objectives, and describes what needs to be done to achieve these objectives. ■ Organises – analyses the activities, decisions and relations required, classifies and divides work, creates organisation structure, and selects staff. ■ Motivates and communicates – creates a team out of people responsible for various jobs. ■ Measures – establishes targets and measurements of performance which focus on both the individual and the organisation as a whole. ■ Develops people – directs, encourages and trains. How well subordinates develop themselves depends on the way a manager manages. These categories require a combination of analytical ability, synthesising ability, integrity, human perception and insight, and social skill. Responsibility Drucker argues that the traditional definition of management based on the responsibil- for the work of ity for the work of other people is unsatisfactory and too narrow, and emphasises a other people secondary rather than a primary characteristic. There are people, often in responsible positions, who are clearly ‘management’ but who do not have responsibility for the work of other people. A person’s function and contribution may be unaffected by the number of subordi- nate staff. A ‘manager’ is someone who performs the tasks of management whether or not he or she has power over others. Who is a manager can be defined only by that person’s function and by the contribution he or she is expected to make. And the function that distinguishes the manager above all others is the function no one but the manager can perform. The one contribution a manager is uniquely expected to make is to give others vision and ability to perform. It is vision and moral responsibil- ity that, in the last analysis, define the manager.20 ESSENTIAL NATURE OF MANAGERIAL WORK The essential nature of managerial work is not easy to describe, therefore, as aspects which are common in many applications escape us in others.21 However, if we look at how people at work actually spend their time we should be able to distinguish between those whose main occupation is the carrying out of dis- crete tasks and the actual doing of work themselves; and those who spend proportionally more of their time in determining the nature of work to be undertaken by other people, the planning and organising of their work, issuing them with instruc- tions and giving advice, and checking on their performance. ‘Managing’ and ‘doing’ By distinguishing ‘managing’ from ‘doing’ in this way we can see management as clari- fying objectives and the planning of work, organising the distribution of activities and tasks to other people, direction of subordinate staff and controlling the performance of other people’s work. This provides us with a convenient description and summary of managerial work as: clarification of objectives, planning, organising, directing and controlling. (See Figure 6.4.)
- 227. CHAPTER 6 THENATURE OF MANAGEMENT 201 Figure 6.4 Summary of essential nature of managerial work The degree of emphasis given to these different activities may vary widely, however, from one manager to another. Some managers are likely to spend more time on certain activities than other managers. The application of these activities reflects a wide range of management practice and managerial style. Clarification of The setting of objectives and formulation of policy takes place at different levels in the objectives organisation, but as part of the same process. The board of directors, or similar body, establishes objectives and formulates policy (direction) for the organisation as a whole. Management is responsible for the implementation of policy decisions and the execu- tion of work designed to meet these objectives. However, it is not always easy to distinguish clearly between policy and its execution (see the discussion on levels of organisation in Chapter 15). In the same way that the board of directors is concerned with planning, organisa- tion and control as part of the responsibility for the operations of the organisation as a whole, so the execution of policy will involve the manager in decision-making and the clarification of objectives for subordinate staff. This will entail answers to such ques- tions as: Exactly what is required? What activities are involved? What are the available resources? What are the time scales? What standards are required and how is perform- ance to be measured? What restrictions or limitations apply? Clarification of objectives provides the basis for the planning and organisation of work, and the activities of staff.
- 228. 202 PART 3 THE ROLE OF THE MANAGER Direction and Having already identified direction (of the organisation as a whole) as a responsibility motivation of the board of directors it is tempting to use the term ‘motivating’ instead of ‘direct- ing’ in our definition of the activities of management. This would avoid possible confusion over terminology: and motivation is perhaps a less emotive word. But is motivating an adequate description? It is certainly part of the manager’s job to moti- vate staff but it involves more than this. Subordinate staff also need development and guidance. They need to be motivated to perform well in the right areas. The manager has a responsibility to see that subordinate staff are effective as well as efficient. Their efforts must be directed towards the achievement of given objectives in accordance with stated policy. Co-ordination As we have seen, ‘co-ordination’ is often included as one of the activities of manage- ment. However, the harmonising of effort to meet objectives (co-ordination) is not so much a separate activity; it is of a more general nature and involves all the activities of management. Co-ordination, like communication and decision-making, is inherent in the process of management. It permeates all the activities of management and is descriptive more of how the work of the manager is carried out. According to Kanter, good managers realise there are no simple answers to manage- ment problems: Managers means managing an entire context. If you strip out one element and apply one methodology, it won’t work.22 THE EFFORTS OF OTHER PEOPLE Despite the view expressed by Drucker on the tasks and contribution of a manager, one of the most popular ways of defining management is that it involves getting work done second-hand, that is through the efforts of other people. Managers are judged not just on their own performance but on the results achieved by subordinate staff. There are, then, many ways of looking at the meaning of management. The basic criteria must be a compromise between the ideas of some of the more lucid writers on the subject. Stewart attempts to integrate the various definitions of management and summarises the manager’s job, broadly defined as: deciding what should be done and then getting other people to do it. A longer definition would be concerned with how these tasks are to be accomplished. The first task comprises setting objectives, planning (including decision-making), and setting up formal organization. The second consists of motivation, communication, control (including measurement), and the devel- opment of people. The two tasks are separated for convenient analysis, but in practice they may often overlap.23 The definition of management as ‘getting work done through the efforts of other people’ may not perhaps meet all criteria, or satisfy everyone’s perception of the nature of managerial work. It does, however, have the advantage of simplicity and focuses on what in reality is at the heart of effective management. Managing means leading, making things happen through people: for me that is relevant to all levels of management, not just the top management. Sir Peter Parker24 The ‘Roles and Individual Management Model’ of IBM are given in Management in Action 6.1 at the end of this chapter.
- 229. CHAPTER 6 THENATURE OF MANAGEMENT 203 MANAGEMENT IN SERVICE INDUSTRIES In Chapter 4 we discussed the distinction between production and service organisations. In addressing the question ‘what is the nature of management in service industries?’, Jones suggests that implicit in the question is the fundamental assumption that managers of services face different problems and act differently from other managers. However, Jones acknowledges that this assumption is contentious. Even where there is agreement that services are in some way different, there is no agreement on the cause or importance of this difference.25 On a similar theme, the managerial task of running (for example) a hospitality unit can be seen as a set of systems and processes common to managing any organisation.26 There is, however, a continuing debate about whether hospitality man- agement, for example, is the same as or different from other management.27 In order to operate effectively, service industries need management in the same way as any other industry. Both require attention to the same general problems of manage- ment. (See also the discussion on management in public and private sector organisations in the following section.) The open systems model applies in exactly the same way to service organisations as to any other business organisation. Increasing attention is being given to the applications of general management theory within the service industry and to the links between management in service and other industries.28 The systems approach and contingency theory, discussed in earlier chapters, also serve to illustrate both differences and common features in the nature of management in work organisations. MANAGEMENT IN PRIVATE ENTERPRISE AND PUBLIC SECTOR ORGANISATIONS The increasing scale of privatisation (discussed in Chapter 4) and the general move- ment of major organisations away from local authority jurisdiction and towards greater responsibility for managing their own affairs have led to blurring of the traditional dis- tinction between private and public sector management. Divisions between the two sectors are increasingly being broken down. There is, for example, a growing recogni- tion that the duties and responsibilities of local government staff may satisfy the definition of a manager. The changing structure of local government and the creation of larger, all-purpose bodies will further enhance the corporate importance of man- agers. It is understandable, therefore, why there is a popular debate about the extent of the ‘generic’ nature of management, and the manner in which organisations in the pri- vate and public sectors are structured and managed.29 Perceived There are perceived differences between management in the private and public sectors. differences These differences arise from particular features of public sector organisations. For example: ■ aims concerned with providing a service for, and for the well-being of, the commu- nity rather than just of a commercial nature; ■ the scale, variety and complexity of their operations; ■ the tendency for them to be subject more to press reports on their activities; ■ the political environment in which they operate, and in the case of local government, for example, the relationship between elected members and permanent officers; ■ high levels of statutory controls, legislation and ministerial guidance; ■ the generally high level of trade union involvement; ■ the difficulties in measuring standards of performance of services provided com- pared with profitability;
- 230. 204 PART 3 THE ROLE OF THE MANAGER ■ the demand for uniformity of treatment and public accountability for their opera- tions; and ■ the tendency towards more rigid personnel policies, for example specific limitations on levels of authority and responsibility, fixed salary gradings based on general pay scales, long-term career structures and set promotion procedures. A number of these features frequently combine to result in increased bureaucracy within public sector organisations. The same general problems of management Both private enterprise and public sector organisations, however, face the same general problems of management. Both are concerned with, for example: ■ the efficiency and effectiveness of their operations; ■ the clarification of aims and objectives; ■ the design of a suitable structure; and ■ carrying out essential administrative functions. Basic principles of management apply in any series of activities in any organisation. The common activities and concerns of management apply to a greater or lesser extent in both private enterprise and public sector organisations. For example, as Robinson points out: Innovation in industry and commerce is a given. In local government organisations some may find it a more curious concept. But this simplistic, stereotypical view of management is wrong. Managers must manage professionally in whatever sector they function – or leave themselves vulnerable to the threats in an increasingly global and competitive environment. This applies to managers of public sector organisations as well as to private sector managers – and survival for many will be dependent upon the effective management of change and innovation.30 Set of Based on an analysis of management development in central and local government, interrelated Bourn suggests management as a set of interrelated activities: activities 1 forecasting, setting objectives and planning; 2 the definition of problems that need to be solved to achieve these objectives; 3 the search for various solutions that might be offered to these problems; 4 the determination of the best or most acceptable solutions; 5 the securing of agreement that such solutions should be implemented; 6 the preparation and issue of instructions for carrying out the agreed solutions; 7 the execution of the solutions; 8 the devising of an auditing process for checking whether such solutions are prop- erly carried out and, if they are, that they do in fact solve the problems for which they were devised; 9 the design, introduction and maintenance of the organisational structures which are most appropriate for these activities; 10 the selection, training, development and management of the appropriate staff.31 Clearly, this set of activities is of equal relevance to management in business organisa- tions, and can be seen as an extension of the generalised definition of clarification of objectives, planning, organising, directing and controlling suggested above. Although greater emphasis might be placed on certain activities this analysis helps demonstrate the degree of commonality between the basic process of management in both private and public sector organisations.
- 231. CHAPTER 6 THENATURE OF MANAGEMENT 205 Common challenges for all management Hannington refers to the need to continuously improve productivity faster than the competition as the challenge for all management in both the private and public sec- tors. Management theories apply to all managers and both sectors face a central factor of the management of change. In the public sector the challenge may be measured in different ways to those in the private sector. Profit may not play a part, but measurement of activity against costs may replace monitor- ing of the return on capital invested. Income is now often linked to output and outcomes, while expenditure is firmly controlled and audited. Public sector managers are increasingly being asked to manage their organisations in a more commercial and effective way, exposed to compe- tition without any guarantee of survival. In many areas, public sector management is little different from that in the private sector, with the same urgencies and pressures. This is exempli- fied by the increasing frequency of movement between the two sectors.32 And as Drucker points out although there are, of course, differences in management between different organisations, the differences are mainly in application rather than in principles. There are not even tremendous differences in tasks and challenges. The executives of all these organizations spend, for instance, about the same amount of their time on people problems – and the people problems are almost always the same. Ninety per cent or so of what each organization is concerned with is generic. And the differences in respect of the last 10 per cent are no greater between businesses and nonbusinesses than they are between businesses in different industries.33 Fenlon also suggests that ‘public and private leadership are fundamentally alike and different in important respects’. Although public sector executives also confront unique challenges in every aspect of their leadership, the essentials of leadership and management in the public sector are the same as those in the private sector. In both sectors classical managerial activities are required such as designing organisational structures and processes that support strategies, building systems for staffing, budget- ing and planning, and measuring results. While public sector executives must also develop strategies that create benefits, as opposed to profits, at an acceptable rate of return on political capital employed, the skills of leading and managing are funda- mentally alike.34 The importance However, according to Stewart, the belief that one should manage the public sector in of task and the same way as the private sector is an illusion of our times. Within all categories of context work there are critical differences in the nature of management depending on the tasks to be undertaken and their context. The good manager will be one who recognises the need to relate their management style and approach to context and task, and this is as important in the public sector as in the private sector. The management of difference can be seen at work in local government, where the sheer diversity of services means that different services are managed in different ways. Stewart maintains that many of the dominant management approaches advocated for local government assume a uni- formity of approach which promises to ignore difference. The belief in a generic type of management for all situations can be misleading in that it conceals the need for the hard analysis of the nature of task and context.35
- 232. 206 PART 3 THE ROLE OF THE MANAGER THE WORK OF A MANAGER Despite similarities in the general activities of management, the jobs of individual managers will differ widely. The work of the manager is varied and fragmented. In practice, it will be influenced by such factors as: ■ the nature of the organisation, its philosophy, objectives and size; ■ the type of structure; ■ activities and tasks involved; ■ technology and methods of performing work; ■ the nature of people employed; and ■ the level in the organisation at which the manager is working. These differences do not just exist between organisations in the private and public sec- tors; they are often more a matter of degree. For example, many large business organisations may have more in common in their management and operations with public sector organisations than with small private firms. The A major determinant of the work of the manager is the nature of the environment, environmental both internal and external, in which the manager is working. Managers have to per- setting form their jobs in the situation in which they find themselves. (See Figure 6.5.) The internal environment relates to the culture and climate of the organisation – ‘how things are done around here’ – and to the prevailing atmosphere surrounding the organisation. Organisational culture and climate are discussed in Chapter 22. The external environment relates to the organisation as an open system, as discussed in Chapter 4. Managers must be responsive to the changing opportunities and chal- lenges, and risks and limitations facing the organisation. External environmental factors are largely outside the control of management. EXTERNAL ENVIRONMENT INTERNAL ENVIRONMENT Nature of the Structure organisation Activities THE Technology and tasks MANAGER and methods Level in the People organisation INTERNAL ENVIRONMENT EXTERNAL ENVIRONMENT Figure 6.5 The work of a manager – the environmental setting
- 233. CHAPTER 6 THENATURE OF MANAGEMENT 207 The diversity of More recent studies on the nature of management have been based on wider observa- management tion and research, and have concentrated on the diversity of management and differences in the jobs of managers. Among the best-known empirical studies on the nature of managers’ jobs, and how managers actually spend their time, are those by Mintzberg, Kotter, Luthans and Stewart.36 MANAGERIAL ROLES Based on the study of the work of five chief executives of medium-sized to large organ- isations, Mintzberg classifies the activities which constitute the essential functions of a top manager’s job.37 What managers do cannot be related to the classical view of the activities of management. The manager’s job can be described more meaningfully in terms of various ‘roles’ or organised sets of behaviour associated with a position.38 Mintzberg recognises that people who ‘manage’ have formal authority over the unit they command, and this leads to a special position of status in the organisation. As a result of this formal authority and status, managerial activities can be seen as a set of ten managerial roles which may be divided into three groups: (i) interpersonal roles; (ii) informational roles; and (iii) decisional roles (see Figure 6.6). Interpersonal The interpersonal roles are relations with other people arising from the manager’s roles status and authority. 1 Figurehead role is the most basic and simple of managerial roles. The manager is a symbol and represents the organisation in matters of formality. The manager is involved in matters of a ceremonial nature, such as the signing of documents, par- ticipation as a social necessity, and being available for people who insist on access to the ‘top’. 2 Leader role is among the most significant of roles and it permeates all activities of a manager. By virtue of the authority vested in the manager there is a responsibility for staffing, and for the motivation and guidance of subordinates. 3 Liaison role involves the manager in horizontal relationships with individuals and groups outside their own unit, or outside the organisation. An important part of the manager’s job is the linking between the organisation and the environment. Figure 6.6 The manager’s roles (Reprinted by permission of the Harvard Business Review from ‘The Manager’s Job: Folklore and Fact’, by Henry Mintzberg, HBR Classic, March–April 1990, p. 168. Copyright © 1990 by Harvard Business School Publishing Corporation; all rights reserved.)
- 234. 208 PART 3 THE ROLE OF THE MANAGER Informational The informational roles relate to the sources and communication of information aris- roles ing from the manager’s interpersonal roles. 4 Monitor role identifies the manager in seeking and receiving information. This information enables the manager to develop an understanding of the working of the organisation and its environment. Information may be received from internal or external sources, and may be formal or informal. 5 Disseminator role involves the manager in transmitting external information through the liaison role into the organisation, and internal information through leader role between the subordinates. The information may be largely factual or may contain value judgements. The manager is the nerve centre of information. If the manager feels unable, or chooses not, to pass on information this can present diffi- culties for delegation. 6 Spokesperson role involves the manager as formal authority in transmitting infor- mation to people outside the unit, such as the board of directors or other superiors, and the general public such as suppliers, customers, government departments and the press. Decisional The decisional roles involve the making of strategic organisational decisions on the roles basis of the manager’s status and authority, and access to information. 7 Entrepreneurial role is the manager’s function to initiate and plan controlled (that is, voluntary) change through exploiting opportunities or solving problems, and taking action to improve the existing situation. The manager may play a major part, personally, in seeking improvement, or may delegate responsibility to subordi- nates. 8 Disturbance handler role involves the manager in reacting to involuntary situa- tions and unpredictable events. When an unexpected disturbance occurs the manager must take action to correct the situation. 9 Resource allocator role involves the manager in using formal authority to decide where effort will be expended, and making choices on the allocation of resources such as money, time, materials and staff. The manager decides the programming of work and maintains control by authorising important decisions before implementation. 10 Negotiator role is participation in negotiation activity with other individuals or organisations, for example a new agreement with a trade union. Because of the manager’s authority, credibility, access to information, and responsibility for resource allocation, negotiation is an important part of the job. Arbitrary division of activities Mintzberg emphasises that this set of ten roles is a somewhat arbitrary division of the man- ager’s activities. It presents one of many possible ways of categorising the view of managerial roles. The ten roles are not easily isolated in practice but form an integrated whole. If any role is removed this affects the effectiveness of the manager’s overall performance. The ten roles suggest that the manager is in fact a specialist required to perform a particular set of specialised roles. Mintzberg argues that empirical evidence supports the contention that this set of roles is common to the work of all managers. An exam- ple of this is provided by Wolf who analysed the work of the audit manager and assigned critical task requirements to the ten managerial roles identified by Mintzberg.39 Another example is the study by Shortt who undertook a Mintzbergian analysis of 62 general managers of inns in Northern Ireland.40 Mintzberg’s model of managerial roles is a positive attempt to provide a realistic approach to classifying the actual activities of management. There are, however, criti-
- 235. CHAPTER 6 THENATURE OF MANAGEMENT 209 cisms that the roles lack specificity and that a number of items under each role are related not to a single factor but to several factors. For example, McCall and Segrist found that activities involved in figurehead, disseminator, disturbance handler and negotiator were not separate roles but overlapped too much with activities under the six other roles.41 Why As a result of describing the nature of managerial work in terms of a set of ten roles, organisations Mintzberg suggests six basic purposes of the manager, or reasons why organisations need managers need managers: ■ to ensure the organisation serves its basic purpose – the efficient production of goods or services; ■ to design and maintain the stability of the operations of the organisation; ■ to take charge of strategy-making and adapt the organisation in a controlled way to changes in its environment; ■ to ensure the organisation serves the ends of those people who control it; ■ to serve as the key informational link between the organisation and the environ- ment; and ■ as formal authority to operate the organisation’s status system. BEHAVIOUR PATTERN OF GENERAL MANAGERS From a detailed study of 15 successful American general managers involved in a broad range of industries, Kotter found that although their jobs differed and the managers undertook their jobs in a different manner they all had two significant activities in common: agenda-setting and network-building.42 ■ Agenda-setting is a constant activity of managers. This is a set of items, or series of agendas involving aims and objectives, plans, strategies, ideas, decisions to be made and priorities of action in order to bring about desired end-results. For example, the University of Portsmouth strategic plan sets ‘the target of moving into the top third of universities in Britain over the next ten years’. This requires individual managers responsible for achieving this target to have a continual and changing series of agendas to help bring this intention into reality. ■ Network-building involves the managers interacting with other people and estab- lishing a network of co-operative relations. These networks are outside of the formal structure. They have often included a very large number of people, many of whom were in addition to their boss or direct subordinates, and also included individuals and groups outside the organisation. Meetings provided exchanges of information over a wide range of topics in a short period of time. A major feature of network- building was to establish and maintain contacts that could assist in the successful achievement of agenda items. On the basis of interviews, observations, questionnaires and relevant documents, Kotter found the following features of a typical pattern of daily behaviour for a general manager (GM).43 1 They spent most of their time with others. 2 The people they spent time with included many in addition to their superior and direct subordinates. 3 The breadth of topics covered in discussions was very wide. 4 In these conversations GMs typically asked a lot of questions. 5 During these conversations GMs rarely seemed to make ‘big’ decisions. 6 Discussions usually contained a considerable amount of joking, kidding, and non- work-related issues.
- 236. 210 PART 3 THE ROLE OF THE MANAGER 7 In not a small number of these encounters, the substantive issue discussed was rela- tively unimportant to the business or organisation. 8 In such encounters, the GMs rarely gave ‘orders’ in a traditional sense. 9 Nevertheless, GMs frequently attempted to influence others. 10 In allocation of time with other people, GMs often reacted to the initiatives of others. 11 Most of their time with others was spent in short, disjointed conversations. 12 They worked long hours. (The average GM studied worked just under 60 hours per week. Although some work was done at home, and while commuting or travelling, they spent most of their time at work.) DETERMINING WHAT REAL MANAGERS DO Developing the work of Mintzberg and Kotter, Luthans and associates undertook a major investigation into the true nature of managerial work through the observation of 44 ‘real’ managers.44 A detailed record was maintained of the behaviours and actions of managers from all levels and many types of organisations, mostly in the service sector and a few manufacturing companies. The data collected was reduced into 12 descriptive behavioural categories under four managerial activities of real managers. ■ Communication – exchanging information, paperwork. ■ Traditional management – planning, decision-making, controlling. ■ Networking – interacting with outsiders, socialising/politicking. ■ Human resource management – motivating/reinforcing, disciplining/punishing, managing conflict, staffing, training/developing. Frequency of Following determination of the nature of managerial activity, Luthans then went on to activities study a further, different set of 248 real managers in order to document the relative fre- quency of the four main activities. Trained observers completed a checklist at random times once every hour over a two-week period. The time and effort spent on the four activities varied among different managers. The ‘average’ manager, however, spent 32 per cent of time and effort on traditional management activities; 29 per cent on communication activities; 20 per cent on human resource management activities; and 19 per cent on networking activities. PATTERNS OF MANAGERIAL WORK AND BEHAVIOUR Based on earlier studies of managerial jobs,45 Stewart has developed a model for under- standing managerial work and behaviour.46 The model directs attention to the generalisations that can be made about managerial work, and differences which exist among managerial jobs. It acknowledges the wide variety, found from previous studies, among different managers in similar jobs in terms of how they view their jobs and the work they do. Demands, constraints and choices The three main categories of the model are demands, constraints and choices. These identify the flexibility in a managerial job. ■ Demands are what anyone in the job has to do. They are not what the manager ought to do, but only what must be done: for example, meeting minimum criteria of performance, work which requires personal involvement, complying with bureau- cratic procedures which cannot be avoided, meetings that must be attended.
- 237. CHAPTER 6 THENATURE OF MANAGEMENT 211 ■ Constraints are internal or external factors which limit what the manager can do: for example, resource limitations, legal or trade union constraints, the nature of technology, physical location, organisational constraints, attitudes of other people. ■ Choices are the activities that the manager is free to do, but does not have to do. They are opportunities for one job-holder to undertake different work from another, or to do the work in a different way: for example, what work is done within a defined area, to change the area of work, the sharing of work, participation in organ- isational or public activities. The flexibility Stewart suggests that the model provides a framework for thinking about the nature of of managerial managerial jobs, and about the manner in which managers undertake them. To under- jobs stand what managerial jobs are really like it is necessary to understand the nature of their flexibility. Account should be taken of variations in behaviour and differences in jobs before attempting to generalise about managerial work. Study of managers in simi- lar jobs indicates that their focus of attention differs. Opportunities for individual managers to do what they believe to be most important exist to a greater or lesser extent in all managerial jobs. Stewart also concludes that the model has implications for organisational design, job design, management effectiveness, selection, education and training, and career decisions.47 How managers From a review of research into managerial behaviour, Stewart concludes that the pic- really behave ture built up gives a very different impression from the traditional description of a manager as one who plans, organises, co-ordinates, motivates, and controls in a logi- cal, ordered process. Management is very much a human activity. The picture that emerges from studies of what managers do is of someone who lives in a whirl of activity, in which attention must be switched every few minutes from one subject, problem, and person to another; of an uncertain world where relevant information includes gossip and specu- lation about how other people are thinking and what they are likely to do; and where it is necessary, particularly in senior posts, to develop a network of people who can fill one in on what is going on and what is likely to happen. It is a picture, too, not of a manager who sits quietly controlling but who is dependent upon many people, other than subordinates, with whom recip- rocating relationships should be created; who needs to learn how to trade, bargain, and compromise; and a picture of managers who, increasingly as they ascend the management ladder, live in a political world where they must learn how to influence people other than subor- dinates, how to manoeuvre, and how to enlist support for what they want to do. In short, it is a much more human activity than that commonly suggested in management textbooks.48 THE ATTRIBUTES AND QUALITIES OF A MANAGER Whatever the role of the manager or whether in the private or public sector, in order to carry out the process of management and the execution of work, the manager requires a combination of technical competence, social and human skills, and conceptual ability.49 As the manager advances up the organisational hierarchy, greater emphasis is likely to be placed on conceptual ability, and proportionately less on technical competence. This can be illustrated by reference to the levels of organisation discussed in Chapter 15. (See Figure 6.7.) ■ Technical competence relates to the application of specific knowledge, methods and skills to discrete tasks. Technical competence is likely to be required more at the supervisory level and for the training of subordinate staff, and with day-to-day oper- ations concerned in the actual production of goods or services.
- 238. 212 PART 3 THE ROLE OF THE MANAGER y lit Community bi Organisational level la ua lls pt ce i sk on an C e m nc Managerial hu te pe nd m la co c ia al So ic Technical c hn Te Attributes of a manager Figure 6.7 The combination of attributes of a manager ■ Social and human skills refer to interpersonal relationships in working with and through other people, and the exercise of judgement. A distinctive feature of management is the ability to secure the effective use of the human resources of the organisation. This involves effective teamwork and the direction and leadership of staff to achieve co- ordinated effort. Under this heading can be included sensitivity to particular situations, and flexibility in adopting the most appropriate style of management. ■ Conceptual ability is required in order to view the complexities of the operations of the organisation as a whole, including environmental influences. It also involves decision-making skills. The manager’s personal contribution should be related to the overall objectives of the organisation and to its strategic planning. Although a simplistic approach, this framework provides a useful basis from which to examine the combination and balance of the attributes of an effective manager. For example the extent of technical competence or conceptual ability will vary according to the level of the organisation at which the manager is working. However, major techno- logical change means that managers at all levels of the organisation increasingly require technical competence in the skills of information communications technology (ICT).50 Balance of ‘hard’ and ‘soft’ skills Management has become more about managing people than managing operations, how- ever, and social and human skills which reflect the ability to get along with other people are increasingly important attributes at all levels of management. Green, for example, sug- gests that most managers will spend most time operating between the spectrum of ‘hard’ skills such as conducting disciplinary matters or fighting one’s corner in a debate about allocation of budgets; and ‘soft’ skills such as counselling, or giving support and advice to a member of staff. The most successful managers are those able to adjust their approach and response to an appropriate part of the spectrum.51 And as Douglas, for example, also reminds us, although there is a clear need for mastery of technical expertise, ‘soft skills’ are also an essential part of the world of business. Living as we do in a society that is technologically and scientifically extremely advanced, most kinds of professional advancement are close to impossible without the mastery of one or more specialised branches of systematic technical knowledge … What is the downside? Organisations in most sectors – and especially in ones that are particularly demanding from a scientific or tech- nical point of view – are operating in environments where collaboration, teamwork, and an awareness of the commercial implications of technical research are as important as scientific and
- 239. CHAPTER 6 THENATURE OF MANAGEMENT 213 technical skills themselves. Personnel with scientific and technical skills significantly dispropor- tionate to their ‘people’ skills – by which I primarily mean people management capabilities and knowledge of how to work with maximum effectiveness as part of a team – are increasingly unlikely to be as much of an asset to their organisation as they ought to be.52 Situational management According to Misslehorn the challenge for managers is to sharpen their ability to perceive more accurately, process the information more wisely, respond more appropriately and examine the feedback from the actions taken in order to learn and keep things on track. Managers need to think through situations, bringing their rational and creative brain- power to bear on them. They also need to involve others through appropriate interaction and communication. The way managers think about the situation and interact with others have a direct bearing on their perceptions of the situation – helping to curb some of the distortions from their past experience, values, bias, fears, feelings and prejudices. And the way managers think about a situation and interact with others also have a direct bearing on their responses, and the results produced and outcomes of their actions. This interplay between thinking and interacting takes place in complex strategic organisational situa- tions. This process of situational management is illustrated in Figure 6.8.53 Figure 6.8 Situational management Reproduced with permission from Hugo Misselhorn, The Head and Heart of Management, Management and Organization Development Consultants (2003), p. 13.
- 240. 214 PART 3 THE ROLE OF THE MANAGER Delegation and empowerment We referred earlier to management as getting work done through the efforts of other people. This entails the process of delegation and empowerment, and entrusting authority and responsibilities to others. Delegation is not just the arbitrary shedding of work or the issuing and following of orders. It is an essential social skill and the cre- ation of a special manager–subordinate relationship within the formal structure of the organisation. The nature of delegation and empowerment is discussed in Chapter 21. The importance and reponsibility of management Whatever the essential nature of managerial work is said to be, the importance and responsibility of management are widely, and rightly, recognised. For example, accord- ing to Drucker: The responsibility of management in our society is decisive not only for the enterprise itself but for management’s public standing, its success and status, for the very future of our economic and social system and the survival of the enterprise as an autonomous institution.54 More recently, Drucker, in discussing management challenges for the twenty-first cen- tury, also suggests a new management paradigm: Management’s concern and management’s responsibility are everything that affects the per- formance of the institution, and its results – whether inside or outside, whether under the institution’s control or totally beyond it.55 The ‘Quality of Management’ is one of nine ingredients of success by which Management Today rate performance in their annual survey of Britain’s Most Admired Companies. In 2003 The Investors in People introduced a ‘Leadership and Management Model’ that focuses on the development of organisational leadership and management capability. The model is discussed in Chapter 23. MANAGERS OF THE FUTURE? Billsberry points out that the number of people who are managers has been growing rapidly and also that the scope and variety of what managers are required to do has been continually expanding.56 By contrast, however, Belbin contends that many of the quintessential managerial activities that fell within the everyday domain of the man- ager, such as communicating, motivating and organising, have now become shared with an assortment of well-educated executives such as technical experts, advisers and specialists, including human resource professionals, industrial relations officers and consulting firms. Responsibility for direction of effort and setting objectives is taken over by directors. Managers in the traditional sense of ‘a person who assigns tasks and responsibilities to others’ have become a dwindling minority. This has had cultural consequences. The flattening of hierarchy in opening up opportunities to non-managerial executives has helped to create resistance to the authority and status of the manager–boss.57 Ten key Whatever the debate, we should note the comments of Heller who from his study of strategies Europe’s top companies refers to the need for new managers and new methods to obey the imperatives of a dramatically changed environment. Today, managements whose minds and deeds are stuck in the status quo are obsolescent, weak and failing. In the next few years, they will be obsolete – and failed. Renewal and nimbleness have become paramount necessities for the large and established. For the younger business, staying new and agile is equally imperative.58
- 241. CHAPTER 6 THENATURE OF MANAGEMENT 215 Heller goes on to identify ten key strategies for Europe’s new breed of managers: 1 Developing leadership – without losing control or direction. 2 Driving radical change – in the entire corporate system, not just in its parts. 3 Reshaping culture – to achieve long-term success. 4 Dividing to rule – winning the rewards of smallness while staying or growing large. 5 Exploiting the ‘organisation’ – by new approaches to central direction. 6 Keeping the competitive edge – in a world where the old ways of winning no longer work. 7 Achieving constant renewal – stopping success from sowing the seeds of decay. 8 Managing the motivators – so that people can motivate themselves. 9 Making team-working work – the new, indispensable skill. 10 Achieving total management quality – by managing everything much better. Six critical We have referred previously to the changing nature of work organisations and elements Prahalad, for example, suggests that the change in the work of managing is obvious. Issues of formal structure and hierarchy, authority and power, industry experience and seniority, and control and co-ordination are all open to challenge. The changing role of managing requires that special attention should be given to the role of senior man- agers. Prahalad suggests the need to concentrate on six critical elements: 1 The importance of a shared competitive agenda. 2 Creating a clear charter of values and behaviours. 3 Focusing on influence without ownership. 4 Competing for talent and building the skill mix of the organisation. 5 Speed of reaction in the organization. 6 Leveraging corporate resources to address emerging opportunities. Prahalad concludes that: ‘The emerging dimensions of managerial work are clear. The soft issues such as values and behaviors, often dismissed as unimportant, are critical.’59 According to a recent report from the Chartered Management Institute, British man- agers are now placing concern for consumers, themselves as managers and other employee groups above their traditional concern for owners and shareholders of their organisation. Looking to the future, managers believe the most important issues facing their organisation over the next decade will be: managing change; customer satisfac- tion; use of the Internet; motivation of core staff; managing diversity; and the development of human resources.60 The end of Note, however, that according to Cloke and Goldsmith: ‘Managers are the dinosaurs of management? our modern organizational ecology. The Age of Management is finally coming to a close.’ Cloke and Goldsmith suggest that the ever-extending reach of globalisation, continuously rising productivity, growing complexity of information, expanded sensi- tivity of the environment, and swelling pace of technological innovation are all increasing the demand for alternative organisational practices. They contend that management is an idea whose time is up. Organisations that do not recognise the need to share power and responsibility with all their workers will lose them. The most signif- icant trends in the theory and history of management are the decline of hierarchical, bureaucratic, autocratic management and the expansion of collaborative self-manage- ment and organisational democracy.61
- 242. 216 PART 3 THE ROLE OF THE MANAGER CRITICAL REFLECTIONS According to Peter Drucker, management is a practice rather than a science or a profession so there are no precise solutions, and the ultimate test of management is achievement and busi- ness performance. This would appear to suggest that in the effective management of business organisations the ends justify the means. What are your own views? Textbooks present massive amounts of information about management and organisation. But they provide little that may enable practising managers to make sense of their particular problem or dilemma. Knights, D. and Willmott, H. Management Lives: Power and Identity in Work Organizations, Sage Publications (1999), p. 12. How would you attempt to relate theories of organisational behaviour with effective management practice? ‘Someone with poor social skills can never become a good manager … you can’t make a silk purse out of a sow’s ear. And, in any case, management training makes very little difference.’ Debate. SYNOPSIS ■ ‘Management’ is a generic term and subject to many interpretations. Our concern is with management within a structured organisational setting and involving the exer- cise of formal authority over the work of other people. The nature of management is variable. It relates to all activities of the organisation and is undertaken at all levels. Management is essentially an integrating activity which permeates all other aspects of the organisation. ■ It is not easy to find agreement on the definition of management, or of a manager. Management is not homogeneous but takes place in different ways. One approach is to analyse the nature of management and to identify common activities and principles. By distinguishing ‘managing’ from ‘doing’ we can summarise the nature of managerial work as clarification of objectives, planning, organising, directing and controlling. The degree of emphasis given to these different activities may vary widely, however, from one manager to another. There are, however, many other approaches to the analysis of management. ■ There are important differences between service and production industries, and management in the private enterprise and public sectors. However, all organisations face the same general problems of management. Increasing attention is being given to applications of general management theory within service industries, and to privatisa- tion and the adoption of business practices in the public sector. Management theories apply to all managers and the skills of managing are fundamentally alike. ■ In order to carry out the process of management and execution of work, the man- ager requires a combination of technical competence, social and human skills, and conceptual ability. Growing attention is attached to managerial competencies includ- ing skills in information communication technology. Despite the growing attention to technical expertise it is important that managers have a balance of both ‘hard’ and ‘soft’ skills including people skills.
- 243. CHAPTER 6 THENATURE OF MANAGEMENT 217 ■ While the importance and responsibility of management is still widely recognised there is a need for new managers, and new methods for a changed environment and nature of work organisations. Europe’s new breed of managers need to focus attention on key strategies including the importance of values and behaviours. Important issues for the future include managing change; leadership and motivation of staff; managing diversity; the development of human resources; and demands for alternative organisa- tional practices. ■ The jobs of individual managers differ widely. Empirical studies have concentrated on the diversity of management and differences in the nature of managerial work. These studies have drawn attention to such features as: managerial roles; agenda- setting and network-building; what real managers do; and demands, constraints and choices in a managerial job. MANAGEMENT IN ACTION 6.1 The roles of the manager and the Individual Management Model THE INDIVIDUAL MANAGEMENT MODEL (IMM) Personal characteristics IBM is a large and diverse company. IBM managers do many Managers take actions to achieve those objectives. Every different things. It can be difficult to define core-and-common manager has unique personal characteristics, and these char- manager roles relevant to managers throughout such a highly acteristics will influence his or her behavior. Personal complex organization. The Individual Management Model characteristics include: (IMM) was developed as an aid to managers to help them ■ background understand their roles in context. ■ skills The manager gets work done through other people. ■ knowledge IBM has used that simple definition for years. There are two ■ thinldng style key parts to the definition: getting work done and through ■ competencies other people. ■ personality The Individual Management Model (IMM) was developed as an aid to managers to visualize how their roles are similar to other managers and how they may differ. Quick overview of the Individual Management Model (IMM) All managers are responsible for producing results. They do that primarily through other people. The influence that a man- ager has on direct reports is reflected in the Organizational Climate that he or she creates. Every manager faces slightly different factors that help or hinder the achievement of busi- ness results. And every manager is different in terms of personality, thinking style, competencies, etc. It’s this mix of conditions and personal characteristics that make managers' behaviors different COMPONENTS OF THE IMM Objectives Objectives are the intended business results and are reflected in managers’ PBCs (Personal Business Commitments). Managers are either given objectives or they define their own, hopefully aligned with the goals and objectives of their larger organizations. The Individual Management Model (IMM) ᭤
- 244. 218 PART 3 THE ROLE OF THE MANAGER Management in Action 6.1 continued Conditions Example Conditions are factors that help or hinder progress toward The IMM gives us a way to look at a manager's roles in get- accomplishing objectives. Conditions affect the manager and ting work done through others. employees as they work to accomplish their objectives. They For example, consider a marketing manager in Singapore are factors such as: who is not getting the business results she needs. Using the model, she examines the parts and recognizes that her condi- ■ time tions have changed from when her objectives were ■ budget established. More turnover of staff has occurred than ■ staff expected and as a result the new conditions yield a less ■ company policies experienced workforce. ■ business processes, such as Customer Relationship She has to adjust her role to adapt to the changed condi- Management (CRM) or Integrated Product Development tions. She may have to do more marketing herself. She may (IPD) decide to be more of a teacher or role model to her less ■ organization experienced staff. If she does not have those skills, she might ■ measurement & management systems direct others to fill those roles. Whatever she decides, it is the ■ products and services offered by the company interplay of these factors that she has to deal with to define ■ and even such things as organizational culture and the her role. environment, both intemal and extemal. As in this example, the IMM gives you a simple way to visualize your job. You can see how your job is similar to other managers' situations, and how it may differ. Lead – Manage – Do In working to achieve business objectives, managers’ roles IBM MANAGER ROLES can be described as: Lead, Manage, Do ■ Leading ■ Managing These graphs suggest that, in general, the higher one moves in the organizational hierarchy, the more emphasis one places ■ Doing on the leadership role and the less emphasis on actually That is, managers may: ‘doing.’ However, as the IMM reminds us, the particular con- ditions and objectives of the job will have a large impact on ■ lead others by setting direction, giving encouragement or the distribution of these three important roles of the manager. modeling some behavior, The job of any professional, manager, or executive is a ■ manage business and people processes by planning, combination of varying degrees of leading, managing, and organizing, directing, and controlling work activities, doing. The degree to which each of our jobs reflects these ■ and in many cases do some of the technical or vocational three roles varies by the level and scope of our jobs, as is work themselves. shown in the sample mixes in the three graphs below. Organizational climate ROLES Climate is the employees’ perception of how it feels to work • Lead in the unit, and includes specific aspects of the environment that directly affect people's ability to get the job done. A man- • Manage ager’s efforts will have an effect on employees, ideally the creation of a productive organizational climate. • Do Business results Professional Manager Executive Results are the consequences of the work done by managers • Lead and their employees: • Lead • Lead ■ customer satisfaction • Manage ■ products sold • Manage • Manage ■ services rendered ■ profit made • Do • Do • Do The IMM gIves you a simple way to visualize your job as a manager.
- 245. CHAPTER 6 THENATURE OF MANAGEMENT 219 The Lead and Manage roles are sub-divided by focus into THE 5 IBM PEOPLE PROCESSES parts, as shown in the Roles graph, below. MANAGE People Processes: ■ Balance resources ■ Engage employees ■ Develop talent ■ Evaluate performance ■ Recognize contribution The 5 People Processes merit explanation: Balance resources ■ Incorporating planning for the right level of people resources directly into the business processes; ■ Making sure we use the appropriate staffing solution/ process, based on the work that needs to be performed; ■ Understanding when to staff internally and when to use external resources, and following the appropriate policies and processes when doing so; ■ Recruiting and hiring people using competency-based cri-