The Nature of Management

The Importance of Effective Management

Traditional definition of management: the process of coordinating a businesses resources to achieve its goals.

Contemporary definition of management: the process of working with and through other people to achieve business goals in a changing environment.

Every business needs effective management to succeed.

The role of effective management is to make sure the joint efforts of employees are directed towards achieving the goals of the business.

Roles of Management

According to Mintzberg a manager is required to act out many different roles.

Interpersonal - deal with people, lead and motivate, attend functions, communicate with employees.
Informational - gather and disseminate information, control and monitor, spokesperson, attend meetings.
Decision-making - solve problems and make choices, planning, organise research, resolve conflicts, prepare budgets, negotiate.

In general, effective managers are those who:
- possess a range of specific management skills
- are able to use these skills in a number of managerial roles.

Management Skills

Karpin Report (1995) identified a number of management skills.

People (soft) skills
• communication
• interpersonal skills

Adaptable to change
• proactive
• leadership

Visionary
• sense of purpose

Self-managing
• delegation
• time management

Team player
• team building
• facilitating

Ethical/high personal standards
• honest and fair

Strategic thinker
• conceptual skills
• decision making

Problem-solver
• analytical skills
• data analysis and interpretation

Responsibilities to Stakeholders

Stakeholders are groups and individuals who interact with the business and thus have a vested interest in its activities.

Many groups have an interest (a stake) in a business’s activities. Society expects businesses to accept responsibility to all stakeholders.

Management Theories

A classical perspective on management, pioneered by Max Weber and Henri Fayol, emphasises how best to manage and organise work so as to improve productivity.

A scientific approach to management, pioneered by Frederick Taylor, studies a job in great detail to discover the best way to perform it.

Classical and scientific management theory

- Time and motion studies used to reduce inefficiencies
- Hierarchical organisational structure (bureaucracy)
- Clear lines of authority (chain of command)
- Narrow span of control
- Productivity improvements through division of labour
- Production line methods
- Discipline as a feature of leadership
- Autocratic leadership style; rules and procedures.

• Management functions:
- planning: a predetermined course of action. Involves strategic, tactical and operational planning.
- organising: the range of activities that translate the objectives into reality.
- controlling: compares what was intended to happen with what has actually occurred.

The behavioural approach to management, pioneered by Elton Mayo, stresses that people (employees) should be the main focus of the way in which the business is organised.

Behavioural management theory

- Humanistic approach; employees are the most important resource
- Economic and social needs of employees should be satisfied
- Employee participation in decision-making
- Flatter organisational structure and teams
- Broader span of control
- Teams increase output and job satisfaction
- Managers need good interpersonal skills.
- Democratic leadership style emerging.

• Management functions
- leading: having a vision of where the business should be in the long and short term.
- motivating: energising and encouraging employees.
- communicating: exchanging information between people.

Political management theory

- Managers use power and influence to achieve business goals.
- Organisational politics (unwritten rules of work).
- Informal coalitions and networks of stakeholders.
- Cooperation and conflict between coalitions.
- Manager must negotiate and bargain between competing interests.
- Match sources of power to situations.

Sources of power
1. Legitimate - status or positon
2. Expert - skills and abilities
3. Referent - individual's charisma
4. Reward - ability to compensate
5. Coercive - actions or words

Strengths and weaknesses of management theories

Classical and scientific
Strengths:
- based on ‘scientific’ principles
- division of labour
- high worker productivity
- clear chain of command
- rules and regulations
Weaknesses:
- employee boredom and exploitation
- autocratic leadership style
- job satisfaction ignored
- alienation between employees and managers

Behavioural
Strengths:
- human needs recognised
- high morale
- employee empowerment
- motivated team members
- flatter structure improves communication
Weaknesses:
- difficult to predict human behaviour
- slow decision-making process
- no clear chain of command
- conflict between theories

Political
Strengths:
- recognises ‘power plays’
- acknowledges coalitions and networks
- explains power bases
- highlights need for negotiating and bargaining
- explains stakeholders’ role
- acknowledges individual self-interest
Weaknesses:
- misuse of power
- shifting power bases
- source of real power difficult to analyse
- internal conflict
- not based on scientific measurement
- perceived manipulative strategies

Systems and Contingency management theories

The systems management approach views organisations as an integrated process in which all the individual parts contribute to the whole.

A Contingency management approach stresses the need for flexibility and adaptation of management practices and ideas to suit a particular situation.

Managing Change

Nature and Sources of Change

Change is any alteration in the business and work environment.

The ability to manage and, embrace and adapt to change will increasingly determine a business’s competitive advantage and survival.

The crucial management issue is how to manage change to make it as productive as possible.

External influences:

External changes result from factors outside the control of the business but which may affect its performance.

• Changing nature of markets - globalisation has integrated world markets
• Economic - economic fluctuations impact on the market place and influence demand
• Financial - deregulation created a more open financial system
• Geographic - adoption of a global outlook
• Social - demographic, attitudinal and cultural trends
• Legal - legislation and laws
• Political - federal, state and local government policies
• Technology - scientific, technological innovations can improve productivity

Internal influences:

Internal changes are largely within the control of the business and come from the desire to improve business operations.

• Accelerating technology - office equipment, computers, robotics used in the production process
• E-commerce - the use of the Internet to do business
• New systems and procedures - technology can revolutionise a business’s activities and operating procedures
• New business cultures - workplace culture will need to become more flexible and adaptable

As the business environment changes, organisations examine and modify their business structures.

Structural change refers to changes in how the business is organised – the organisational structure.

The aim of these changes is to make business operations run smoothly, improve efficiency, streamline coordination and empower employees to make their own decisions.

Management must respond to change by:
- being flexible and innovative
- constantly reassessing the business’s position
- restructuring the business to maintain a competitive edge.

The main structural responses to change include:
- Outsourcing: contracting out non-core functions due to downsizing.
- Flat management structures: reduced levels of management.
- Strategic alliances: two or more businesses join together.
- Network structures: subcontracted production and related business functions.

Reasons for Resistance to Change

Resistance to change can sometimes be common among businesses, managers and employees.

The main reasons for resistance to change are:
- Financial costs: new equipment; redundancy payments; retraining workforce; reorganising plant layout.
- Inertia: lack of interest; refusal to cooperate by managers/employees; fear of failure.
- Cultural incompatibility in mergers and takeovers: possible ‘culture clash’; different work practices.
- Staffing considerations: de-skilling; acquiring new skills; loss of career prospects or promotional opportunities.

Managing Change Effectively

The environment created by the manager can greatly affect employee acceptance of change.

Steps to successful change:

Identify the need for change.

Set achievable goals.

Create a culture of change: teamwork; change agent.

Use Change Models

• Force-field analysis: identify, analyse and balance the driving and restraining forces.

• Lewin's unfreeze/change/refreeze model:
- Unfreeze: employees made aware of the reasons for change (possible use of outside change agent)
- Change: Implement changes. New skills and behaviours introduced.
- Refreeze: Changed behaviour rewarded to make sure it lasts.

Change & Social Respnsibility

A socially responsible business will attempt to achieve two goals simultaneously:

1. maximising profit
2. providing for the greater good of society

Social responsibility: how well a business manages the social, environmental and human consequences of its actions.

Ecological sustainability: production methods that conserve and protect the environment.

Quality of working life: workplace practices that improve employees’ wellbeing.

Technology: cushion its negative impact on employees.

Globalisation/cultural diversity: manage multiculturalism and employee diversity.

E-commerce: training of employees, privacy and security issues.