THEORIES OF MANAGEMENT: HISTORY OF INFORM …
MAN 703
MANAGEMENT THEORY AND PRACTICE
BY
DR MALAMI MUHAMMAD MAISHANU
READING MATERIALS
TABLE OF CONTENTS
1. INTRODUCTION
2. MEANING AND NATURE OF MANAGEMENT
3. HISTORY AND THEORIES OF MANAGEMENT THOUGHT
4. DECISION MAKING PROCESS
5. LEADERSHIP AND LEADERSHIP THEORIES
6. MANAGEMENT INFORMATION SYSTEM (MIS)
7. MANAGEMENT BY OBJECTIVES (MBO)
8. STRATEGIC MANAGEMENT
9. ETHICAL CONSIDERATIONS IN MANAGEMENT
10. COMPARATIVE MANAGEMENT
1.0 INTRODUCTION
Nigeria is blessed with abundant human and material resources and has very rich culture. Nigerians are known to be energetic, ambitious and resourceful. Yet, the country is experiencing low technological progress and extremely low labour productivity. The most pronounced problem hindering the economic growth and development of this country is absence of enough qualified high level manpower especially at the management levels.
Consequently, Nigerian employees have over the years exhibited certain characteristics that serve as deterrent to economic growth. These include:
i. Very poor attitude to work. This is evidenced in the fact that the average employee is “not on seat” fifty percent of the time.
ii. Poorly trained and lacking in experience.
iii. Inadequate motivation.
iv. Poor supervision
Because of these and other similar problems, there is a clear lack of managerial know-how in most of Nigerian organisations. This further led to other problems such as indiscipline, authoritarian leadership style, over concentration of decision making in one person, absence of delegation, idle gossips etc.
To surmount these problems, there is need for effective and efficient management which will unlock the forces of economic growth and development in this country. This will consequently lead to better human resources utilisation capable of achieving results. The aim of this course is to impart the necessary managerial knowledge and skills that can improve the performance of managers operating in all the levels of managerial hierarchy. To this extent, certain important areas have been selected to help us achieve our aim.
2. MEANING AND NATURE OF MANAGEMENT
2.1 WHO ARE MANAGERS?
Managers are people who work in a place called an organisation. Hence, understanding who managers are begins by exploring the meaning of an organisation. Several definitions abound. But for the purpose of this course organisation is defined as a systematic arrangement of people to accomplish some specific purpose (Robbins: 1991). Examples of organisations include: university, government agencies, Petroleum station, churches etc. These are all organisations because they all have three common characteristics:
• First, each has a distinct purpose i.e. goal or set of goals;
• Second, each is composed of people; and
• Third, all organisations develop a systematic structure that defines and limits the behaviour of its members such as creating rules and regulations, authority and responsibility, job description, procedure for employment, discipline and dismissal etc.
Thus, an organisation refers to an entity that has a distinct purpose, includes people or employees, and has a systematic structure. However, while it is true that all managers work in organisations, not all those who work in organisations are called managers. Members of an organisation can therefore be divided into two groups for simplicity sake: managers and operatives. The latter are people who work directly on a job or task and have no responsibility for overseeing the work of others e.g. typists, cleaners etc. Managers however, direct the activities of other people and are operating in three levels of management: top (e.g. president, vice president, chancellor, managing director, chairman of board etc.), middle (e.g. departmental heads, project leader, bishop, district manager etc.) and lower (foreman, coach, teachers etc.) levels.
2.2 WHAT IS MANAGEMENT?
From the classical to modern management, writers have given their various views of what the term ‘management’ is. It should however be noted that all studies of managerial works are inescapably guided by the interest and values embodied in the researcher’s frame of reference. This justifies the current wave of crisis and debate that loom in the minds of management experts and practitioners on the conceptual ambiguity associated with the concept of management.
One of the classical writers – Henri Fayol defines management as the process of achieving the organisational aims through the activities of planning, organising, commanding, coordinating and control. Management is also defined as the art of getting things done through and with people in formally organised groups. It is the art of creating an environment in which people can perform as individuals and yet cooperate toward the attainment of group goals. It is the art of removing blocks to such performance, a way of optimising efficiency in reaching goals (Koontz: 1962).
Management can also be seen as the process of getting activities completed efficiently with and through other people. The process represents the functions of managers and is often labelled as planning, organising, leading, and controlling. Efficiency is a vital part of management and it refers to the relationship between inputs and outputs. For e.g. if you get more output for a given input, you have increased efficiency. Therefore since managers deal with input resources that are scarce - people, money, equipment – they are concerned with minimising resource costs. However, being efficient is not enough. Management is also concerned with getting activities completed; that is it seeks effectiveness. When managers achieve their organisation’s goals, we say they are effective. So efficiency is concerned with means and effectiveness with ends.
3. WHAT ARE THE FUNCTIONS OF MANAGEMENT?
The functions of management are planning, organising, directing and controlling. It should however be noted that these are not the only functions. The listing of these functions depends on the personality doing the listing. For example, Henri Fayol a French industrialist identified five management functions; plan, organise, command, coordinate and control. The functions are also called elements or tasks of management. When these elements are combined together they make up the management process. Some of these functions are further elaborated below:
• Planning – This simply involves setting objectives and goals of the enterprise and determining in advance the methods of achieving them. It is the first function on which all others depend.
• Organising – This is concerned with the arrangement and division of work among groups or members of the organisation. It also involves breaking down of the organisation into parts in such a way that each part contributes to the organisational goals. Forms of organising are departmentation and division of labour.
• Staffing – This is concerned with the organisation’s human resources. It deals with recruitment, selection, placement, training and development and appraisal of the employees.
• Directing – This involves guiding and supervising subordinates. That is to encourage subordinates to work toward the attainment of organisation’s goals and objectives. This is normally done through motivating, leading and communicating.
• Controlling – This is the monitoring of performance to ensure occurrence of same with standards and the prompt detection and correction of any deviations.
2.4 WHAT ARE MANAGEMENT ROLES?
Henry Mintzberg in the late 1960s undertook a careful study of five executives at work and he discovered challenged several long-held notions about the manager’s job. For example, in contrast to the predominant views at the time that managers were reflective thinkers who carefully and systematically processed information before making decisions, he found that his managers engaged in a large number of varied, unpatterned, and short-duration activities. There was little time for reflective thinking because the managers encountered constant interruptions.
Mintzberg therefore concluded that the managers perform ten different but highly interrelated roles. The term ‘management roles’ refers to behaviour attributable to a job or position. These ten roles are however grouped under three captions: interpersonal, informational and decisional.
Interpersonal
➢ Figurehead – Here all managers are required to perform duties that are ceremonial and symbolic in nature i.e. they are obliged to perform a number of routine duties of a legal or social nature. For example ceremony, status requests, solicitations etc.
➢ Leader – All managers are responsible for the motivation and activation of subordinates; they are responsible for staffing, training, and associated duties.
➢ Liaison – Managers here maintain self-developed network of outside contacts and informers who provide favours and information.
Informational
➢ Monitor – Managers seek and receive wide variety of special information (much of it current) to develop thorough understanding of organisation and environment; emerge as nerve centre of internal and external information of the organisation.
➢ Disseminator – All managers transmit information received from outsiders to members of the organisation; some information factual, some involving interpretation and integration of diverse value positions of organisational influencers.
➢ Spokesman – Here, managers transmit information to outsiders (e.g. Board meetings) on organisation’s plans, policies, actions, results etc.; serve as experts on organisation’s industry.
Decisional
➢ Entrepreneur – Managers search organisation and its environment for opportunities and initiates “improvement projects” to bring about change; supervise design of certain projects as well.
➢ Disturbance handler – Managers are responsible for taking corrective actions when their organisations face important, unexpected disturbance.
➢ Resource allocation – Managers are also responsible for the allocation of organisational resources of all kinds – in effect, the making or approval of all significant organisational decisions.
➢ Negotiator – Manager are responsible for representing the organisation at major negotiations.
2.5 IS MANAGEMENT SCIENCE OR ART?
There have been great debates as to the controversy of whether management is a science or art. Science involves seeking new knowledge through the use of rigorous method of collecting data, classifying and measuring them, and setting up hypotheses and testing them. Art on the other hand means the sum total of the applications of skills and knowledge by individuals to achieve an objective. It can for instance be improved by working closely with an expert or through continual practice.
Management over the centuries had remained an art. As a result, managers depend on past experiences and judgement instead of depending on any testable technical knowledge as in the case in engineering, physics or survey. Aspect of management such as choice of strategies or policies remains a matter of interpretation of situations and application of personal judgments.
Science has equally been directed to certain areas of management and the reservoir of findings in diverse fields has grown providing sound bases for performing certain managerial functions. Management is science when it employs systematic procedure or scientific methods to obtain complete information about a problem under consideration.
Management cannot be regarded as an exact science because personal knowledge is needed to bridge the gap of available knowledge. It is therefore an inexact science. A successful manager blends experience with science in order to achieve a desired result.
3. HISTORY AND THEORIES OF MANAGEMENT THOUGHT
3.1 HISTORY OF MANAGEMENT THOUGHT
Before we consider some theories of management, let us briefly look at the history of management thought. Management is as old as mankind. It existed since time immemorial. In fact it is said to have began since when men started to organize his requirements. Organize his immediate environment and appreciative the need to relate and co-operate with one another.
However, in terms of chronological account of the evolution of management, the earliest known evidence of management has been traced to Egyptian civilization 4000-2000 BC. Some early material ideas such as planning organizing, controlling and co-ordination are attributed to the Egyptians, which had their origin in the construction of the Great Pyramids of Egypt. But because of the absence of documented evidence of their contribution to modern management thought, it has not been prominently discussed in management studies.
Next in our chronology of event is the role of the Church especially the Catholic Church in the development of management thought. Ideas and contributions to the management thought from the Church include: concepts and principles of decentralization, task specification, authority and responsibility etc. which were adopted by the church in conducting its affairs.
The military is another important force in the development of management thought. This has evidenced in the writings of Socrates. The military gave to management foundation upon which the concepts and principles of discipline, order, unity of command, unity of direction, departmentation, and strategy formulation are built.
Beyond the military is a succession of theories and ideas by practical managers and academics as to how peace and progress can avail in the industry. This trend became possible because management especially toward the end of the 19th century had became quite manifest as a distinct field in the art and science of administration and human activities.
Perhaps if one is to be unbiased, the greatest and most important to the contribution of modern management was the government of Prophet Muhammad (peace be upon him) in the seventh century. To date, his principles and ideas in religious, public administration and government is still emulated by even secular states in the world. He was the Commander in Chief of the greatest government that ever existed in the world and authoritatively commanded respect by both his believers and his enemies.
3.2 THEORIES OF MANAGEMENT THOUGHT
There are several theories of management and in fact schools of thought. These theories and schools can be examined in different ways:
• looking at each in terms of historical chronology;
• examine them in terms of the major thesis advanced; and
• Examine the major issues in relation to the different aspect of the management process to which they relate.
It is to the latter that the discussion of these theories and schools of thought would be based. These issues will be examined yet from about three other perspectives:
• Technical
• Administrative
• Institutional issues.
TECHNICAL ISSUES
Technical issues involve productivity methods and operations which organisation use to produce its product or services. They are theories regarding methodologies of work, performance and approaches to decision making. They raise issues and set procedures that are supposed to lead to efficient and most economical operation if followed by managers. So they are task oriented. Two of the best known technical theories are discussed here ( i ) scientific management and ( ii ) operations-research school.
(i) SCIENTIFIC MANAGEMENT:-This was propounded by Frederick Winslow Taylor [1856-1917] otherwise known as the father of scientific management. The aim of scientific management was to find the “one best way” to perform any given task such as the best way to make pins or the best way to shovel coal etc.
To F.W Taylor, it was normally shocking for any man doing less than his best. He was thus passionately interested in the efficiency of working methods. His experience as a common labourer, a foreman, a master mechanic and the chief engineer of Midvale Steel Company had convinced him that few if any, workers put more than the minimal effort into their daily work. This he described as “soldiering” which he further sub-divided into “natural” soldiering i.e. the tendency to take things easy and “systematic” soldiering i.e. the deliberate and organized restriction of the work rate by the employees.
Taylor contributed a number of techniques for improving production management - time study of setting standards, functional specialization of manager’s duties and incentive systems. The following are the fundamental principles he developed.
• Replacing opinion and rule of thumb which is based on custom and experience with science i.e. science and not the rule of thumb leads to efficient operation by outlining the science of each job through carefully organized and systematic analysis of the job and then find “one best way” of achieving the task.
• Careful and systematic selection and employment of employers
• The subsequent development and training of workers
• The division of work responsibilities with management doing the planning and the worker doing the execution as it suits them best (specialization) with a resulted increase in efficiency and.
• Employees must be motivated using economic incentives. Thus Taylor puts forward the piece-rate-scheme as a proper way of compensating workers and boosting productivity in the work-place.
Despite the appropriateness of these principles and the theory generally, today it has not gone uncritized. It was argued by critiques that increased productivity per worker would create unemployment (ii) That since scientific management was an outgrowth of engineering. It was generally viewed as focusing on the technical aspects of management of work without sufficient attention to the effects on human beings. (iii) It generated a ‘cannot-and-stick’ approach to the motivation of employees by enabling pay to be geared tightly to output alone and no other criterion (e.g. seniority) and (iv) That scientific managers were chiefly interested in management organisation and neglected attention to the upper levels of general management.
(ii) OPERATIONS –RESEARCH SCHOOL:-This school attempts to revolutionize the technical competent and approach of managers to the decision making task in organisations. The school was built on two fundamental prepositions (a) Organisations are decision making machines in the process of utilizing resources to achieve result and (b) Deriving from the above, organisations whose decisions are competent would no doubt achieve greater efficiency whereas those with defective decision would be deficient in outcome. However, these decisions are only competent to the extent to which they are accurate, timely and relevant. Consequently the school holds that a decision making approach that is operation research approach to management holds the key to efficiency. It follows the following sequence
• Define the problem
• Generate comprehensive data regarding decision premises, parameters and criteria for efficiency
• Formulate the problem in terms of objectives and constrains if any
• Generate alternative courses of action
• Select the best model to solve the problem
• Apply the model and that obtains optional solutions
• Evaluate
However, this approach is only suitable for solving problems that have the following characteristics: (i) problems should not be broad or indefinite (ii) they should consist of tangible measurable factors to enable data collection for study (iii) they should offer alternative courses of action.
ADMINISTRATIVE ISSUES
These are issues that relate to every facet and every type of managerial activities. They provide general principles and procedures that help managers to understand and improve efficiency. Three theories are considered in this category (i) Traditional Custom Based Management School (ii) Administrative Management Theory (iii) Human Relation.
(i) TRADITIONAL CUSTOM BASED APPROACH:-This is the oldest school of management. This school believes in maintaining the status quo. It emphasizes that managerial task should be accomplished based on the principles, styles, evidence, and documentation of past managers. The school is completely against introduction of new changes in the organisation. Thus, proper and accurate documentation of the activities of past managers according to this school is the greatest aspect of managerial activities to keep an organisation going as a perpetual concern. Specifically, the following steps are advocated.
• Definition of the managerial problem/decision
• Examination of records including files and reports for precedence
• Adoption of the predecessors approach and solutions to the problem
• Where there is no precedence, apply the strategy taken in the most similar circumstances by managers as available from other sources.
• Documentation for future reference and application.
This approach helps in minimizing cost in terms of (a) time, money, and other resources (b) establishing a pattern or method of doing things in organisations and (c) it provides data on what has happened earlier in an organisation. On the other had its criticisms include (a) it serves as a barrier to innovations and creativity in the organisation (b) it may oppose new changes that are likely to be currently profitable in the organisations and (c) it has ignored the dynamic nature of business organisations and their environment.
[ii] ADMINISTRATIVE MANAGEMENT SCHOOL: - This theory was propounded by the celebrated French industrialist Henri Fayol (1841-1925). His ideas and principles are contained in his book written in French Administration Industrielle et Generale i.e. General Industrial Administration 1st published in 1916 and later translated into English language from 1921. His chief contributions can be seen from three perspectives:
(a). He classified all industrial activities into six groups and these include.
• Technical activities e.g. production manufacturing
• Commercial activities e.g. buying and selling
• Financial activities e.g. securing capital and loans
• Security activities e.g. safeguarding properties
• Accounting activities e.g. provision of account and timely accounting information (stock taking, profit and loss statement, balance sheet etc.
• Managerial activities e.g. planning organizing controlling etc.
He argued that the first five are sufficiently already well-known and he dwells seriously on the sixth activity which he gives the name managerial.
(b). Fayol under whose leadership the company grew prospered despite its near bankrupt state when he took over, argued that his own success was due not to his personal capacities but to his system of management. He views management as a process consisting of five elements (functions) consisting of five functions: planning, organisation, commanding, coordination and control. Briefly these functions are explained below:
• Planning and forecasting:- looking to the future and drawing up a plan of action
• Organisation:-This is seen in structural terms.
• Commanding:-“Maintaining activity among the personnel”
• Coordination:-Is seen as essentially a unifying activity
• Controlling:-means ensuring that things happen in accordance with established policies and practice.
c) He proposed fourteen (14) principles to serve as prescriptions for managers’ actions. These principles include:
• Division of labour:-Task must be defined in the minutest individual component. This leads to expertise and increasing return to scale.
• Authority and responsibility: - The right to give orders. Whoever is assigned to a task must be responsible for it where authority is given to him.
• Discipline: - Outward mark of respect in accordance with formal or informal agreements between firm and its employers.
• Unity of direction:- This principle stresses that workers must be responsible to one superior at a particular time as far as their assigned roles are concerned each group with the same objective should be in the same department.
• Unity of command:-An employee should receive orders from one superior only and it should be specific and uniform at any point in time as long as activities response remains the same.
• Subordination of individual to general interest - Since the organisation is a collective process; private interest must not prevail over corporate will and aspiration.
• Remuneration:-Pay should be fair to both the employee and to the employer.
• Centralization: - All activities must be well integrated into a unified whole and purpose for which the organisation exist. It has strict emphasis on coordination
• Scalar chain:-
• Order: - A place for everything and everything in its place. Right man in the right place.
• Equity: - Equity should be observed in the treatment of all the workers i.e. kindliness and justice towards employees.
• Stability of Tenure of personnel: - Employees need to be given time to settle into their jobs and should be able to see their roles as members of the organisation as permanent. Consequently, appointment on tenure basis offer workers a greater sense of belonging which Fayol sees as more relevant to successful operations.
• Initiative:- Quite contrary to the one best way in scientific management or precedence in traditional school, employee should be encouraged to think and act within the constraints of authority and discipline and should have opportunity to exercise their sense of imagination and feel free to discover and improve on their current activities.
• Esprit de corps:-This means in unity there is strength and where there is positive cohesion, there will be greater opportunity for progress
[iii] HUMAN RELATION THEORIES
Here, emphasis is on human factor. The central issue is the prominence that is given to workers in the process of management based on the following:
(a) It is only through the creative activities of human beings that progress and peace at a work will result.
(b) The dynamism and vitality of human component which is absent in other factors and inputs is the ultimate basis for performance.
(c) Human beings apart from being members of the organisation are also members of other social units, schools, clubs, societies, and families etc. which do affect their values and perceptions as well as response behaviour.
These factors in addition to the contrasting views regarding man led to the emergence of the human relations theories.
At the turn of the 20th century many theories and views of man had emerged representing diverse assumptions regarding how the human element should be regarded at the workplace.
Two extreme views of man are worth noticing.
(a) Thomas Hobbes:-He sees man as an animal that lives in a constant state of war and fear; that his life is Brutish and short.
(b) J.J. Russell: - He sees man as enjoying his natural freedom; he is lively, free and rational.
However a more elaborate and popular theory about man in the workplace is that of Douglas McGregor (1960). He sees two noticeably different sets of assumptions made by managers about their employees. The first theory he calls theory X i.e. the traditional view and the second theory Y i.e. the modern view.
THEORY X [Traditional view]:- This theory is based on the following assumptions
1) That man is indolent, inherently lazy and dislikes work
2) Because of the above, he must be coerced, controlled, directed, and threatened with punishment for him to perform.
3) That he has to be motivated by economic incentives to improve his performance and output.
4) That man has little ambition but only needs security above all.
This theory is similar to the theory of scientific management with its emphasis on controls and extrinsic rewards.
THEORY Y (The modern view):- This is based on the following assumptions about man and it recommended by McGregor as being more suitable to modern management.
(1) That an average man enjoys work like play or rest
(2) That an average man will exercise self-direction and self control toward objectives to which he is committed.
(3) That commitment to objectives is a function of work and expected reward; and
(4) That human capacity for imagination, ingenuity, and creativity is widely distributed among individuals.
Based on these two theories or views about man, practicing managers today have the opportunity to select the one that seems most appropriate to their situations, depending upon which assumptions apply or bleeding the two theories which may provide the best prescription for effective management.
[C] INSTITUTIONAL ISSUES
The institutional models and approaches to management emerged owing largely to the inadequacies and shortcomings of the technical and administrative theories. Two of these theories will be discussed here: The system model; and the contingency or situational model.
(i) The system approach:-Under this approach it is recognized that a whole is more meaningful than the sum of its parts. Thus, one concentrates first on the whole and then on how its parts relate to one another and to the goals of the system. Each part is crucial, vital but dependent on others. Whenever a part is in trouble the entire whole is in trouble and whenever a part is defective the entire whole is defective.
Owing largely to the analysis of Ludwig Von Baterlonffy in the early 1916, the system theory compares an organisation to a living organisation as a system composed of sub-systems; the health of which affects the health of the organisation.
The early work on this approach was conducted by British researchers from the Tavistock institute of human relations, who, despite their title, recognized that human on social factors alone were not the most important consideration in achieving organisational effectiveness. They recognized that organisations were part of a larger environment with which they interact and in particular were affected by technical and economic factors just as much as social ones.
(ii) The contingency approach: - This developed out of the findings of the systems approach. According to this theory there is no one best way or technique of solving managerial problems but rather a combination of various techniques depending on the problem situation. The philosophy of this theory is simple i.e. no two situations or persons are the same thus the better management approach will therefore be the one that not only appreciate the dynamics but also incorporate then in its process.
Basically, contingency theory asserts that when managers make a decision, they must take into account all aspects of the current situation and act on those aspects that are key to the situation at hand. Basically, it’s the approach that “it depends.” For example, the continuing effort to identify the best leadership or management style might now conclude that the best style depends on the situation. If one is leading troops in the Persian Gulf, an autocratic style is probably best (of course, many might argue here, too). If one is leading a hospital or university, a more participative and facilitative leadership style is probably best.
4. DECISION MAKING PROCESS
A decision according to P.F Drucker (1974) is a judgment. It is a choice between alternatives whereby a person forms a conclusion about a situation. Put differently, it is a course of action consciously chosen from available alternatives for the purpose of achieving a desired result. Thus, we can see that a decision is (i) a choice (ii) a result of conscious mental activity and (iii) directed toward surmounting a problem situation. The purpose of decision making is to direct human behaviour towards a future goal. If there were no alternatives, there would be no need for a decision.
3.1 STRUCTURE OF MANAGEMENT DECISION
Decision can be classified into 3 broad categories strategic, tactical an operational decisions.
3.1.1. Strategic Decisions: These are defined in very broad terms. They are decisions pertaining to basic objectives and goals which organisation intends to pursue over the long-term, and may affect productivity, organisation or operation of the business.
3.1.2 Tactical decisions: These are routine and usually contain few alternatives. Generally, they are decisions affecting how resources are structured in the most logical manner to facilitate the said objectives i.e. they relate to the economic use of resources. Examples of tactical decisions include plant layout budgeting, staffing etc.
3.1.3 Operational Decisions: These are decisions that affect the day to day workings of the organisation. These types of decisions specify details of working procedures and as to the effective performance of day to day activities.
Apart from distinguishing decisions from this perspective, we can also adopt other forms of classification. Herbert A. Simon who views the organisation as a structure of decision makers distinguishes between programmed and un-programmed decisions.
Un-programmed decisions are often new and non-repetitive i.e. they are not routine and there are no procedures set aside for dealing with them. The element of risk is high here and they cannot easily be assessed in quantitative terms. Programmed decisions on the other hand are those which are routine and repetitive. They can easily be delegated since risks involved are not high. They can for instance be programmed into a computer because they can often be expressed quantitatively.
Other classifications include Basic (which is long-range in scope e.g. locating a factory) and Routine decisions, Organisational (i.e. those made in the role of an official of the company) and Personal (which cannot be delegated) decisions and so on.
APPROACHES TO DECISION-MAKING
Decision making is not a simple matter since it cannot be reduced to a formula. However, there are different approaches to decision making which can be helpful to a manager. Some of these include structural approach, rational approach, Devil’s Advocacy, and dialectical inquiry. Other approaches include committee, moral philosophy, intuitive, single framework model, operational and advocacy approaches to decision-making. But only some of them are discussed here.
• Rational approach:- This approach follows the logical steps:
a) Define the problem to be solved:-A problem normally exists when there is a gap or deviation between what actually is happening and what should be happening i.e. between actual and standard. Symptoms of the problem should not be confused with the problem. After the identification of the problem, it must be analysed to determine its causes. Since information is needed to describe a problem, Kepner and Tregoe (1965) suggested from questions that can help in describing a problem and which help organise the collection of information.
• What is the deviation?
• Where is the deviation located?
• When the deviation did appear?
• What is the extent of the deviation?
(b) Screen the information to obtain only those that are relevant to the problem.
(c) Consider possible courses of action: - Here several courses of actions or alternative solutions will be developed. Looking at several alternative solutions generally increase the chances of making a sound decision. The generation of alternative courses of action is a creative process and it does not involve any magic or mystery. As Thomas Edison observes, in developing alternative solutions or creativity generally, it is 99% perspiration and only 1% inspiration. However, there are some ways of getting ideas:
• Brainstorming: - Here a group of people will exchange ideas and therefore record them for further study without evaluating whether they are brilliant on silly.
• Picking the brains of others:-This is through personal discussion with people who may have new ideas
Other creativity enhancement techniques according to Cunningham et’al are Retroduction, Analogies, Listing and Nominal group technique.
(d) Evaluation and selection of the best alternatives:-Each of these courses of actions will be evaluated one after the other and the alternative that promises the most effective result will be selected. It is normally the one that meets the objectives. Generally there are two approaches to evaluation and selection: Screening and scoring approaches. Under screening each alternative in the set is identified as unsatisfactory or satisfactory. The unsatisfactory ones are screened out, leaving only a few satisfactory one for further consideration and choice. The aim of scoring on the other hand is to assign a score to each alternative. The alternative with the highest score is then chosen. This exercise however, requires careful analysis.
(e) Implementation: After the best alternative has been selected, the decision must be implemented. Then follow-up is necessary to make certain the problem has been surmounted. Finally it is important that all parties in the implementation process must accept the decision and agree with the action to be taken.
• Structural approach: - It emphasizes the systems view of decision-making. It holds that decisions being related to the overall objectives must be taken in the light of the impact on each of the elements of that system. It follows the sequence below:
a) Define the objective/problem
b) Specify the various operative elements (sub-systems) of the organisation that are likely to be affected even in the most incidental manner by such decisions.
c) Develop and evaluate alternative courses of action
d) Chose/select the course of action that promises the least negative impact taking all the sub-systems into consideration.
e) Implement.
• Devils Advocate: - This approach originated in the medieval Roman Catholic Church as a way of ensuring that impostors were not canonized as saints. Once sufficient evidence was assembled to begin canonization proceedings, the Pope would select one of his most trusted and competent aides to serve as the advocate of Satan. The advocate’s job was to question every bit of evidence in favour of a person’s sainthood and to uncover any indications of the person’s poor moral character and evidence of wrongdoing.
It is now used in modern days as a decision making approach. The Devil’s advocate, who may be an individual or a group, is assigned to identify and guard against potential pitfalls and problems with a proposed decision alternative. The advocate will articulate strong negative views and sentiments and spiritedly defends such position until satisfactory answers are provided to questions raised. This approach helps in:
i) Sensitising management to unanticipated and dysfunctional consequence of intended action and;
(ii) Articulate possible implementation constrains that are not normally fully factored into the decision making arithmetic.
• Dialectical inquiry:-This philosophy, which can be traced back to Plato and Aristotle and more recently to Hegel, involves combing two conflicting views: the thesis and the anti-thesis into a synthesis.
When applied to decision making it requires that two proposals using different assumptions be generated for the decision under consideration. After advocates of each position present and debate the merits of their arguments before key decision makers, either one of the alternatives or a new compromise alternative is selected to be implemented.
• Intuitive approach: - This is simply the trial and error approach and it is based on the subjective and idiosyncratic values of the decision makers. The outcome of the decision is mostly based on the value system and judgment of the decision makers
• Committees:- In modern management, committees as a decision making approach are used in two (2) broad senses:
(a) Management decisions which are viewed as requiring experts in various fields are normally taken via the committee system. This committee is normally responsible for strategic and in some cases tactical decisions. Here each member normally exercises equal authority and rights except of course the chairman who has additional responsibility for guidance and co-ordination. Committees normally operate within a given set of instructions contained in what is generally referred to as the TOR (Terms of reference). Again, specific period is normally given within which to complete its assignment. Examples include disciplinary, promotion committees etc.
a) As a convenient means to evade decisions. Thus committees are constituted to avoid stampede or to buy time to allow temper to cool.
In conclusion, these decision models are not only used in decision making but also in analyzing decisions.
GROUP DECISION-MAKING
This refers to a decision arrived at through the collective effort of a number of people. It is a process by which a group attempts to develop a composite or organisation mind. Examples of decision making by groups include committees, staff meetings, conferences, task forces etc.
ADVANTAGES
(1) A group can generate more resources such as information, ideas, viewpoints etc. to many decisions than single individual.
(2) It can increase the creativity of decisions. This is because an idea from one person may spark ideas in others minds which will lead to the development of several alternatives.
(3) Acceptance and implementation is often easy because of the collective agreements.
DISADVANTAGES
(1) Time taken to make decisions is longer in group decisions than where only one person is involved.
(2) “Groupthink” which according to Irving Janis (1972) will develops when people are deeply involved in a close cohesive group. This tendency may override the group’s ability to realistically evaluate alternative courses of action in order to maintain friendly relations and avoid conflict. Thus having a happy group becomes more important than good decision.
5. LEADERSHIP AND LEADERSHIP THEORIES
MEANING OF LEADERSHIP
The term leadership has many meanings depending on the person defining it. Some see it as referring to outstanding personalities while to others it has no overtones of greatness; people are leaders because the organisation defines their job in that way. Despite this we can still examine some definitions;
a) According to Appleby leadership simply refers to “the ability of management to induce subordinates to work towards organisational goals with confidence and zeal”.
b) Drucker (1967) argues that when we talk of leadership, we are talking of making common men into uncommon men. To him leadership “is the lifting of a man’s vision to higher sights, the raising of man’s performance to a higher standard, the building of a man’s personality beyond its normal limitations”.
Generally, therefore leadership occurs whenever one person influences another to work toward some predetermined goal, willingly and enthusiastically. It is also important to note that leadership plays a major role in the motivation of employees and in the direction of the firm.
Personal qualities of a Leader
i) Honesty and Integrity - He must be honest in dealing with his subordinates and customers.
(ii) Persuasiveness- This is the ability to persuade which involves a sense of understanding of the point of view, the interest, and the conditions of those to be persuaded.
(iii) Fairness- A leader should be fair in dealing with people. E.g. first come, first serve, no nepotism, no bias in promotion or retrenchment etc.
(iv) Inquisitiveness – A leader should be inquisitive and new things and ideas should always interest him.
(v) Spirit of competition – He must always welcome competition and should make effective use of his personal and business resources to succeed and survive in a volatile and competitive environment.
THEORIES OF LEADERSHIP
There are three major approaches to the study of leadership namely (i) Trait Theory (ii) Behavioural Theory and (iii) Situational Theory. These are further discussed in detail below
TRAIT THEORY
This theory got its origin from the ‘Great man’ theory of leadership which contended that leaders are born not made. The theory holds that leaders are born with certain personality traits. Those who follow this theory believe that by studying the personalities and backgrounds of great leaders, we can be able to develop a combination of traits that made these people outstanding leaders. So they attempted to identify the traits of character and personality that make a leader. These traits they argue distinguish between leaders and non-leaders.
In one of the many researches conducted, it was discovered that the following traits characterize a leader.
a) Intelligence – This does not mean intelligence as an absolute quality but intelligence relative to the intelligence of the followers. Different set of studies have discovered that leaders tend to be more intelligent than their subordinates, although they may not be more intelligent when compared with members of another group.
b) Self-Confidence- This is the ability of the leader to appear self-confident. However, a person may be self-confident in one situation and the reverse may happen in an entirely different case. Example one manager reported that a foreman chosen because he was believed to have natural leadership ability lost all confidence when he was put in charge of activities with which he was unfamiliar: when someone tries to ask him a question, he hides in the washroom.
c) Initiative- A person who does not initiate action or ideas cannot be called a leader. However, a person who exhibit initiative in one situation may not display it under others.
In other studies it was discovered that leaders tend to be brighter, better adjusted psychologically, display better judgement etc. than non-leaders.
BEHAVIOURAL THEORY – These theories focus on what leaders do on the job rather than on what traits or characteristics they posses. The central argument among behavioural theorists is that since behaviour can be changed, leaders can be ‘made’ or trained rather than ‘born’. We will however examine two researchers conducted from the Behavioural perspective.
a) Studies conducted at Ohio State University were based on examining how successful leaders behave and comparing their behaviour with that of less successful leaders. As a result of these studies the “leader Behaviour Description Questionnaire” was developed. It is a multiple choice instrument in which the respondents (those who had an opportunity to examine leader behaviour) can choose among alternatives how frequently a given leader behaves in a given way. Unfortunately, this led halo-effect (the tendency to colour everything about a leader’s behaviour as either good or bad in all respects based on a specific good or bad situation). However scores on two factors, called consideration and initiating structure were found to be independent of the other. The former refers to those leaders who listened, took time to explain things to subordinates and generally have consideration for their followers and the latter emphasizes structuring the work place, logical planning, organisation and co-ordination of the workplace.
From the Ohio studies, it was concluded that (a) when leaders were high on both consideration and initiating structure, there were employees who responded very well and (b) sometimes, there were situations in which the relation between leader behaviour and effective performance was not clear and was of ten contradictory.
b) Other interesting work on the type of leadership was conducted at the Institute of Human Relations at the University of Michigan by David Katz, Rensis Likert and others. The findings resulted also in a two-cluster model describing the behaviour of leaders. (1) Employee-oriented and (2) production oriented (job centred). The latter it was argued will tend to emphasize work results and rigid standards. The tendency here is that the leader will generally try to closely monitor everything subordinates do. On the other hand, a leader with an employee oriented style has a strong concern for employees, development of work teams and spends more time talking to employees informally. Series of research findings concluded that employee centred supervision contributed more to higher production than did job-centred. These studies tended to show that democratic leadership produces better results than autocratic leadership. However as a result of further research, mixed results appeared. Thus, one can conclude that in practice most leaders are not exclusively production or employee centred. They are a little bit of each. Again these two dimension leader-behaviour model was not sufficient to adequately explain all leadership situations.
SITUATIONAL THEORY: “There is no one best way to leadership”. Situational theory is gaining ground and is more accepted today than the theories discussed above. According to Ernest Dale, this theory is saying that “Leadership is specific to the particular situation under investigation”. Thus, the choice of a leader will depend on the problem facing the group and the character of the group itself.
One famous situational theory is that of Professor Fred Fiedler who after fifteen year program of research established the fact that situational theory is the correct one. His ‘contingency model’ holds that “Leadership effectiveness depends on the appropriate matching of the individual’s leadership style……..and the influence which the group situation provides……Hence almost everyone should be able to succeed as a leader in some situations and almost everyone is likely to fail in others”
Leadership styles such as production oriented and employee oriented could only be best depending on the needs of the situation. But according to Fiedler this will all depend on proper matching of personality trait in the leader with three contingency dimensions he identifies. These include:
(a) The leader-member relations- a measure of acceptance of the leader by subordinates. (Most influential dimension)
(b) The task structure- This refers to whether the task is structured or unstructured and
(c) Power position of the leader- His influence over critical power factors - is he allowed to hire, fire, discipline etc.
Based on these three dimensions that is if there is mutual respect and trust between the leader and the subordinates, if the leader’s position gives him power, and the task is structured, then Fiedler argues that production oriented/task motivated behaviour will lead to better group performance. Thus it is concluded that the best leadership styles will depend on the answers to the three contingency dimensions. However not all researchers are satisfied that the Fielder’s model represents all there is to know about leadership.
LEADERSHIP SKILLS
Research by Robert Katz classified three basic leadership skills, which are essential to effective leadership. These skills include technical, human/social and conceptual skills. These are further explained below.
a) Technical Skill – This refers to the abilities required from a leader that relates to the knowledge of the job i.e. ability to use tools, procedures and techniques in a specialized area. This skill is more important at a lower level to enable supervisions and operating staff to correct deviations from the production process.
b) Human/social skill – This is the leader’s ability to work with and understand and motivate people as individuals or group. This skill is required at all levels of management in an organisation.
c) Conceptual skill – Although this skill is required at all levels of management, but it is more required at the top management. It refers to mental ability to co-ordinate and integrates all of an organisation’s activities especially long-term plans and decisions affecting the organisation.
This can be shown diagrammatically.
LEADERSHIP STYLES
Leadership style is the pattern of behaviour that the person exhibits over time in leadership situations. That is situations in which he or she most influence other people. There are different leadership styles as discussed below.
(a) Styles based on the use of authority – This is further divided into three (i) Autocratic (ii) Democratic and (iii) Laissez faire.
(i) Autocratic (very authoritarian) – This style requires complete obedience on the part of the subordinates and the leader restricts the subordinates’ ability to contribute their ideas to decision making. He leads by using reward and punishment system to influence his subordinates. This style corresponds to McGregor’s Theory x.
(ii) Democratic (very permissive) – This type of leader engages the employees in deciding how the work is to be done and how the problems are to be surmounted/tackled. This is the participative kind of leader. The employees here can contribute their own ideas in the process of decision-making.
(iii) Laissez faire/Free Rein leader (do-nothing) – A laissez faire leader takes little interest in how his employees do their work but leaves them to carry on with their jobs however they see fit. This type of leader exercises little control over their actions and may appear uninterested in their activities.
Studies conducted in this respect have shown that the democratic method gives followers a greater job satisfaction and co-operation. However there is doubt as to whether decisions taken under this sort of leadership are better. Recent studies are doubtful about this leadership style especially because under an employee-centred leader, production may suffer and morale fall. In case of the laissez faire leadership style, very few people would ever argue for it.
c) The Managerial Grid - This was developed by Robert Blake and Jane Mouton. The grid is a matrix of possible management styles based on the two major dimensions; concern for the task/production and concern for employees/people. This study was based on the Ohio studies. Graphically it shows these various leadership styles as follows.
High
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Low
Low High
Concern for production
9. This is called ‘country club management’ – The belief here is that thoughtful attention to people’s need for satisfying relationships will lead to a comfortable, friendly organisation with minimal concern for production.
1, 1 This is called ‘impoverished’ management with low concern for both people and production
5, 5 - i.e. the ‘middle of the Road’ management. Here average effort is needed to balance the necessity to get out work with maintaining morale of people at a satisfactory level.
9, 1- ‘Task; management. The concern for production here is very high with low concern for people. This can also be called autocratic work manager.
9.9- This is called ‘Team’ management. This is where concern for both production and people is high. The managers using this style are the reality managers who match the needs of the organisation with that of its employees. According to Blake and Mouton, this is the ideal style. There is an atmosphere of trust and commitment combined with an emphasis on getting the job done.
(c) The Harvard Studies – From these studies two district group of leaders were identified (i) Task leaders and (ii) Socio-emotional leaders. The former showed concern for structuring of activities whereas the latter showed concern for supportive relationship. This finding corresponded closely with the findings of Ohio studies; initiating structure and consideration. However, in the Harvard studies, the two types of leaders were mutually exclusive i.e. a person could not be a task leader and a socio-emotional leader as well.
(d) Rensis Likert’s Four Management Systems – From his studies at the University of Michigan, Rensis suggested that four discrete leadership systems exist.
System 1: The exploitative – authoritative system which is similar to the authoritarian style
System 2: The benevolent –authoritative system i.e. the paternalistic style
System 3: The consultative system – This is where the supervisors place ‘substantial’ confidence in their employees. This tendency leads towards greater democracy and teamwork.
System 4: The participative-group system/management. – This according to Likert is the ultimate democratic style.
Systems 1 and 2 represent directive task centred approach as in Theory X of McGregor. These systems are also similar to Rational-economic man. System 3 is similar to social man and system 4 is the participative style which follows Theory Y’s assumption and that of a self-actualizing man. From this research, Likert concludes that managers using systems 3 and 4 have higher-producing work groups.
6. MANAGEMENT INFORMATION SYSTEM (MIS)
Other alternative terminologies for MIS include information processing system, incomplete information system, organisation system etc. MIS is defined as a system that converts data from internal and external sources into information and communicate that information in an appropriate form to managers at all levels, and in all functions to enable them to make timely and effective decision for planning, directing and controlling the activities for which they are responsible. Put differently, Jerome Kanter (1990) defines an MIS as a system that aids management in making, carrying out, and controlling decisions. From these definitions we can further explain the following terms:
Data: - This refers to the raw unanalysed facts, figures and events from which information can be developed for management use. Examples include financial statements record, rumours, gossip etc.
Information: - This refers to the processed data that informs its receivers about a situation.
Sources of Information: Information can be sourced in either of the two ways; through experience or observation. Information can also be formal or informal. The latter may include gossip, grapevine or rumours while the former refers to information that conforms to defined standards and procedures example reports, records etc. in the organisation.
Information can also come from either the internal or external sources. The latter refers to the information coming from outside the organisation examples are changes in the economic, cultural, technological environment etc. and the former refers to information from within the organisation example financial statements.
Until quite recently, many independent information systems have been planned for different functions example accounting systems, marketing systems etc. But the idea of management information system now provides an integrative framework for unifying these systems. Thus, information in one system should be interrelated with the information in another. This therefore makes the previous independent systems as subsystems of a larger system – management information system. This is made more possible with the advent of the computer.
Management information system comprises of all the other information subsystems. Again, information in one subsystem example accounting or production will be available to all information users (managers) in the organisation. If for instance the information is available in a central computer, it can be retrieved for use by many different managers. This is made possible by one comprehensive data base available to all the subsystems.
Management information system offers the following advantages.
a. Its cost saving since a lot of resources will not be wasted in establishing independent systems.
b. Greater precision of data
c. There is co-ordination since all the subsystems are now integrated or unified in one system.
d. Easy accessibility of information to all the managers.
Information is the lifeblood of all organisations. Flow of information allows managers to function, to coordinate their parts, and to respond to new challenges.
COMPONENTS OF MIS
1. Setting of objectives. Examples include:
a. To prevent surprises due to technological breakthroughs affecting the firm’s products.
b. Automate payroll computations etc.
This will be tied with the company objectives e.g.
a. Avoid crash development programs or loss of market share.
b. Timely and accurate pay of employees at minimum cost.
2. Identity constraint:
i. External imposed e.g. government’s regulations, customer’s demands or supplier’s needs.
ii. Internally imposed cost, computer capacity, availability of personnel etc.
3. To determine information needs. These needs depend on the managers. For example some managers desire a sophisticated, computerized system while some need simple things etc.
4. To determine the source of the desired information
i. Secondary Data Sources e.g. Internal records, Published sources
ii. Primary Data Sources e.g. observations and case studies, questionnaires and personal interviews etc.
5. Put the system together:
- Charting the needed flows of information e.g. marketing and sales information and reports;
- Determine how the information is to be stored;
- How inputs to the MIS – such as personnel information – will be coded; and
- Which type of equipment – such as computers and terminals – will be needed.
7. MANAGEMENT BY OBJECTIVES (MBO)
This is also called Management by result. It is a technique in which a superior and subordinate jointly set the subordinate’s goals and periodically assess progress towards these goals.
Goal setting is a simple and powerful motivational tool. Goals are very important and they serve many purposes. For instance, they make it clear to employees what they are expected to do and relieve boredom. Employees who attain their goals feel self- confidence and pride in achievement and are more willing to accept future challenges. Proper goal setting can sharply increase productivity levels and improve performance in other areas as well.
Certain considerations should be made when setting goals:
✓ Goals should be specific
✓ They should be difficult to attain but achievable. This is because as long as goals are seen as achievable; the more difficult the goal, the better is task performance.
✓ Employees should be given feedback about how well they are doing and
✓ It is critical that employees accept the goals and be committed to their attainment. This is in fact where employees should be allowed to participate in the goal setting process.
Management by Objective (MBO) is a popular goal-setting technique. It is based on the idea that people perform best and are most satisfied when they are involved in the goal setting and have prior knowledge of which goals they are to pursue. It follows therefore that each person should focus on his or her own explicit objectives that are consistent with the general goals of the organisation.
The MBO process consists of the following steps. However, it should be noted that the terms goal and objective are used interchangeably but the former is more specific than the latter.
1. Setting of the Organisation’s overall Objective/Goals – This is set by the top management. The company’s overall strategic plan and objectives are formulated. This normally begins by identifying general areas of responsibility that are important to the firm.
2. Setting of Departmental Goals – This is where the Heads of Department and superiors jointly set goals for their departments. Thereafter, each department directs its efforts toward the set objectives.
3. Discussion of Departmental Goals – This is done with the entire subordinates and each one of them is asked to develop his own individual goals.
4. Setting of Individual Goals – In each of the departments, the managers and subordinates will jointly set the latter’s goals and assign a timetable for accomplishing them. Again, each of these subordinates in the departments must have a clear understanding of what he or she is trying to accomplish and must see how these objectives interrelate with the broader and longer-run goals of the larger group.
5. Feedback – This is where performance is periodically reviewed between superior and subordinate. This will help them to monitor and analyse progress towards the subordinate’s goals.
From these steps it can be observed that objectives in an organisation form a hierarchy from the top to the bottom.
MERITS OF MBO
• Frustration on the part of the subordinates is greatly reduced since they learn at the beginning of a period what is expected of them.
• Agreement on a clear method of a period what is expected of them
• Greater participation may improve morale
• Each manager has a clear idea of the important areas of his work and standards required
DEMERIT OF MBO
• It takes a few years to be effective
• Appraisals are sometimes made on personality traits rather than on performance
• It requires a large amount of time and effort by managers and subordinates
• Clerical cost
8. STRATEGIC MANAGEMENT
“Strategy” recording to Drucker (1986) originally “belongs to military or perhaps to political campaigns but not in business”. But now the term is used by both military and business virtually with the same meaning and application.
Colins Keith (1993) defined strategic management as “concerned with determining the future direction of an organisation and implementing decisions aimed at achieving the organisations objectives”.
Gluek and Janch (1984) see it as “a stream of decisions and actions which lead to the development of an effective strategy to help achieve corporate objectives”.
Wheelen and Hunger (1992) define it as “that set of managerial decisions and actions that determines the long-run performance of a corporation. It includes environmental scanning, strategy formulation, strategy implementation and evaluation and control. The study of strategic management therefore emphasizes the monitoring and evaluating of environmental opportunities and constraints in the light of a corporation’s strengths and weaknesses”.
ELEMENTS OF STRATEGIC MANAGEMENT
Business Mission/Purpose: - The corporation mission is the purpose or reason for the corporation’s existence. For every business to exist therefore, it has to have a purpose or mission. Examples include:
University: Teaching and research
Courts: Interpretation of laws and their application.
Business: Product and distribution of goods or services.
Objectives or goals: These refer to the broad, general and enduring statement of purpose, as significant end conditions or configurations the company wishes to reach e.g. profitability, shareholders wealth maximisation, survival, growth etc.
Strategies: - A comprehensive master plan which states how the corporation will achieve its mission and objectives. They are also used to describe the form of attack that will be carried out.
Policies: They communicate Broad guidelines for making decisions and taking action. They serve as a link between formulation of strategy and its implementation. Examples of policies include: hiring, termination, discipline, drug-abuse in personal matters.
Procedures: A system of sequential steps or techniques that describe in detail how a particular task or job is to be done.
Rules: They state in precise terms what is to be done (action) or not done (non action) in the same way every time and it permits little or no individual discretion e.g. “No Smoking”.
Program: It is a complex of goals, policies, procedures, rules, task assignment, steps to be taken, resources to be deployed, or even changing the company’s internal culture or restructuring the corporation to carry out a given course of action.
Budgets: These are statements of a corporation’s programmes expressed in numerical or monetary terms. They set standards for co-ordinated action and provide a basis for controlling performance to see that it is in conformity with plans.
STAGES OF STRATEGIC MANAGEMENT
The strategic management process consists of three stages.
a. Strategy Formulation
b. Strategy Implementation
c. Strategy evaluation.
a. Strategy Formulation: This includes developing:
i. Business Mission
ii. Identifying an organisations external opportunities and threats
iii. Identifying an organisations internal strengths and weaknesses.
iv. Establishing long-term objectives
v. Generating alternative strategies
vi. Choosing particular strategies to pursue
Strategy-formulation issues include:
• Deciding what new business to enter
• What businesses to abandon
• How to allocate resources
• Whether to expand operation or diversity
• Whether to enter international markets
• Whether to merge or form a joint venture
• How to avoid a hostile takeover.
At any rate strategy formulation decisions commit an organisation to specific products, markets, resources and technologies over an extended period by time. Therefore managers have the best perspective to fully understand the ramifications of formulating decisions; they have the authority to commit the resources necessary for implementation.
b. Strategy-Implementation:
It requires a firm to establish annual objectives, devise policies, motivate employers, and allocate resources so that formulated strategies can be executed. It includes developing:
i. A strategy-supportive culture
ii. Creating an effective organisational structure
iii. Redirecting marketing efforts
iv. Preparing budgets
v. Developing and utilizing information systems and
vi. Motivating individuals to act
It is often called the action stage of strategic management. Implementing means mobilizing employees and managers to put formulated strategies into action. It is often considered the most difficult stage in strategic management and it requires personal discipline, commitment, and sacrifice.
Interpersonal skills are especially critical for successful strategy implementation. Strategy implementation activities affect all employees, and managers in an organisation. Every division and department must decide on answers to questions such as “what must we do to implement our part of the organisation’s strategy?” and “How best can we get the job done?”
c. Strategy Evaluation: This is the final stage in strategic management. All strategies are subject to future modification because external and internal factors are constantly changing. Three (3) fundamental strategy-evaluation activities are:
1. Reviewing external and internal factors that are the bases for current strategies;
2. Measuring performance; and
3. Taking corrective actions.
Strategy evaluation is needed because success today is no guarantee of success tomorrow! Success always creates new and different problems; complacent organisations experience demise.
Strategy formulation, strategy implementation and strategy evaluation activities occur at three hierarchical levels in a large organisation: Corporate division or strategic business Unit, and functional.
STRATEGIC MANAGEMENT MODEL
Strategic Management process can best be studied and applied using a model.
Model 1
Feedback
Feedback
Model 2
IMPORTANCE/BENEFITS OF STRATEGIC MANAGEMENT
• It aids the company in knowing what business it is in and how that business should be.
• It helps the top management to be aware of its changing environment.
• It helps organisations identify and formulate long-range objectives that include – sales, profit, share of market and other factors that top management think are important and for which it seeks measurement of progress.
• It helps in assisting managers in the allocating of discretionary strategic resources through capital budgeting techniques.
• It helps in guiding and integrating the diverse administrative and operating activities of the organisation.
• It helps in the development and training of future general managers.
10. ETHICAL CONSIDERATIONS IN MANAGEMENT
INTRODUCTION – The word ‘ethics’ is relative and it has been defined in many ways. Some of these definitions are examined below:
❖ According to Webster’s Encyclopaedia Unabridged Dictionary, ethics is defined as “the discipline dealing with what is good and bad and with moral duty and obligation”.
❖ Ethics is also defined as a “system of moral principles, rules of conduct, it is also seen as a science that deals with morals” (Oxford Advance Learner’s Dictionary).
❖ Davies and Frederick also define ethics as “the rules or principles that define right and wrong conducts. Ethics rules embody the idea of morality i.e. notions of what is morally right and good as well as those things considered to be morally wrong and bad. Examples include lying, stealing, deceiving, harming others etc. are generally regarded as immoral and unethical while honesty, keeping promise, helping others etc. are accepted as morally right and ethical”.
Ethical rules of conduct generally attempt to provide guidelines of human behaviours that will preserve a society, group or individual. Business ethics is not any special set of ethical rules different from ethics in general and applicable only in business. It is simply the application of general ethical rules to management behaviours. Management decisions and behaviours can therefore be judged as either being ethical or unethical depending on whether the decisions and acts promote or threaten the value standards of individual or the society in which the business operates.
ETHICAL ISSUES IN MANAGEMENT
❖ Standard of behaviour and activity - i.e. ‘the way we do things’. This is manifest in the relationship between the organisation and its customers, clients, and community and the way in which these are carried out.
❖ Dealing with staff – This concerns the state of industrial relations at the workplace, and the overall approach and attitudes adopted. Part of current management thinking has been concerned with taking a much more enlightened view of workplace relations and the establishment of standards of ‘right and wrong’ in dealing with the staff; and some call this ‘ordinary common decency’.
❖ Corporate citizenship – This is concerned with the wider position of the organisation in its community, its markets and its environment. Thus an organisation plays the roles of an employer, income provider, investment outlet and sponsorship in the community. The position of an organisation is also seen from the standpoint of non-polluter, provider of high quality goods and services etc.
❖ Leadership qualities – In this context, leadership qualities consist of honesty, openness, trustworthiness, sympathy, empathy and identify.
A new wave of ethics issues relate to product safety, employee health, sexual harassment, AIDS in the workplace, smoking, acid rain, affirmative action, waste disposal, foreign business practices, cover-ups, takeover tactics, conflict of interest, employee privacy, inappropriate gifts, security of company records, and layoffs has accented the need for strategist to develop a clear code of business ethics.
ETHICAL GUIDES FOR MANAGERS
In discussing ethical guides for managers, we will draw our inspiration from two sources: conventional and Islamic.
CONVENTIONAL PERSPECTIVE ON ETHICS
Father J.W. Clark developed certain tentative statements of ethical guides. They are expected to guide the behaviour and actions of managers. They are discussed under primary guides and middle norms.
Primary Guides – These are broad and wide.
▪ Ethical actions should have as their foundation the ‘backing of the generally accepted institutions of the society’. This is especially since it is an integral part of society.
▪ ‘Respect for others’ i.e. honesty in communication and in business transactions. Accepting personal dignity, rights and privileges of others.
▪ ‘Individual integrity’. It is believed that a person with integrity behaves according to ethical standards. These should also be personal responsibility for one’s own behaviour and actions.
Middle Norms – These are based on primary guides and are more specific.
▪ The first one pertains to executive ‘behaviour in congruence with laws’ established by legitimate civil authority. Laws on the other hand are expressions of society prescribing how citizens should behave.
▪ The recognition that the power and authority of executives are held in the interest of others. The guide pertains to ‘representative authority’. Managers most refrain from actions that are in conflict with the interest they represent.
▪ ‘Parity of authority and moral responsibility’. Authority and power without responsibility lead to arbitrary actions. It is unreasonable to hold people responsible and accountable for situations which they do not have the authority or the power to change.
▪ ‘Private enterprise as an essential and legitimate institution’. This is based on the belief that by providing individual freedom and opportunities people will through private enterprise, contribute to the welfare of the society.
Both the primary guides and middle norms provide theoretical norms to give executives direction in ethical decision making.
ISLAMIC PERSPECTIVE ON ETHICS
The Islamic concept of ethics in management is part and parcel of ethical approach to life. The idea of man being Allah’s Khalifa on earth and accountable to Him in the life hereafter provides the criterion by which a precise style of business behaviour is assessed and categorised as either ethical or unethical. Some other Islamic concept of business ethics include:
• Accountability
• Halal (permissible) and Haram (prohibited)
• Justice/fairness
• Personal relations
• Friendliness
THE BENEFITS OF ETHICAL CODES
Ethical codes and behaviour can benefit all constituents of society.
1. The organisation – The publication of ethical codes and their practice may serve as a sales and public relations device. Again, effective self-regulation may prevent external controls and government actions.
2. Employees – They can expect that employee relations with the firm will be guarded by ethical considerations. The codes provide guides for managerial and non-managerial behaviour, thus reducing uncertainties.
3. Customers – They can expect that the business transactions will be conducted in a fair and honest manner which gives them added confidence in dealing with the organisation.
4. Industry – When firms unite and agree on ethical behaviour, this can raise the level of fair competition and eliminate unethical practices.
SOCIAL RESPONSIBILITY OF BUSINESS
Social responsibility of business is defined as an obligation of the organisation to act in ways that serve both its own interests and the interest of its many external public (society). In literature, there are two contrasting views on the social responsibility of business: the classical and the socioeconomic views.
The classical view by the economist Milton Friedman holds that the only responsibility of business is to make as much for its owners as it can. This position is based on the argument that business is an economic institution whose legitimate function is economic performance, not social activity. The socioeconomic view by Paul Samuelson holds that business must play an active role in the society in which it functions.
In any case, some of the social responsibilities expected of business organisations include:
• provision of quality goods and services;
• effective control and preservation of resources;
• research and technological development which will ultimately lead to increased standard of living;
• effective distribution of goods an services;
• provision of employment opportunities;
• promotion of societal welfare e.g. education, sports, medical facilities, etc.;
• preservation of the rights of others; and
• reduction of pollution to the extent that is socially and technically reasonable.
10. COMPARATIVE MANAGEMENT
Definition
Comparative Management is the identifying, measuring and interpreting of similarities and differences among managers’ behaviours, techniques followed, and practices applied as found in various countries.
Management in Foreign Countries
An important influence in the conduct of management is the total environment in which it operates. The fundamental functions of management: planning, organising, activating and controlling denote what a manager does whether in U.S., U.K. and Nigeria. However, what is trying to be achieved and the means being followed for achievement can and do differ among countries. This is largely because of managers’ beliefs, attitudes, experiences, customs and values.
Reasons for studying Comparative Management
• It helps the realization that there are managerial differences across nations. A manager going overseas, a researcher and to the student of management will find it very valuable.
• Ideas helpful for improving management can be obtained e.g. knowledge of how Sweden handles relations may prove helpful to the U.S. manager. Again, the transfer and utilization of the managerial idea is expedited.
• Facilitation is given world understanding and trade. Simply getting to know how managers in foreign countries do their tasks makes not only for better understanding, but also expedites trade and co-operation.
• The effectiveness of management is increased because willingness to accept change is encouraged and the opportunity to see how similar problems are solved in different manners is offered.
• Development of skills necessary to understand their and our ways of management are encouraged.
Generalizing About Foreign Management
It is very difficult to generalize about foreign management because of the managerial diversity found among countries and even within a country. The topics below are discussed from the viewpoint of comparative management.
Customs: - Customs are important in comparative management. This is because there are diverse customs. For example in many foreign countries, it has been a custom to take considerable time before a decision is made on a business proposal. Some countries place a high priority on exact promptness, while in others it is relative. Again in others haggling over a price is expected. Yet in others friendship rank high and doing business with relatives and close family friends has priority.
Social Value: - These are also extremely important in comparative management. They influence to a great extent how the management task is carried out. Examples are:-
• In Japan, personal qualifications are gives much weight in recruiting. Minimal job mobility is the general rule, retirement at the age of 55 is desirable, women are employed in great numbers, but most are considered temporary workers social values have helped condition the management style followed in many countries.
• In India, social values are very important in the management styles followed within that country. The varied racial origins and languages have their effect, but the family system has great influence and is the foundation on which may comprises are based. Nepotism is widespread and formal authoritarianism is the usual practice.
Selection and Promotion of personnel:-
Japan
❖ Candidates are sought who not only have the required skills or potential for the work, but also conform to the view points of members of the company. Through referrals, interviews and tests, potential employees with ideas and desire at variance with those of the company are excluded from selection.
❖ A recruit is normally on probation for the first two years not a permanent employee.
❖ Must have a degree from the ‘right’ school, because many of the large and prestigious Japanese corporations recruit primarily from these schools.
❖ Though entrance exams are rigorous and include comprehensive and difficult questions, any person can apply regardless of family background – opportunity for upward economic and social mobility is available.
❖ Promoting is handled informally with attention and judgement given mainly to the person’s family and contributions made to the company. Few Japanese companies use a performance rating system.
In Europe
When a person retires everyone knows who the successor will be. Promoting reaches down the line for the one who is advanced. The general practice is to wait for your superior to retire, and then promoting comes. But there are so many exceptions to this mundane approach. For example, the younger generations are reacting rapidly to it, by insisting that ability should be considered. Seniority alone is inadequate and inequitable.
Participative decision making:-
In almost all foreign countries we are seeing more participation by the employee in decision making. This is because the employee wants to feel associated with the decision making process of the enterprises for which she or he works. Work councils, committees or similar bodies are means through which the foreign employee participates and the trend is toward widening and strengthening one’s activity. Around the world there now exists variety of degrees and ways in which employees participate in managerial decisions that affect them.
In Japan for example decision making is by consensus or ringisei i.e. “reverential inquiry about a superior intention”. – Japanese spend much time on finding out what others are thinking and how they feel about issues. The prevailing belief is that the Japanese manager must know how subordinates feel about a certain issue; otherwise one cannot maintain the peace and harmony of the group. Again a decision is always started by an employee at a low level in the organisation.
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Direct
Target
Current
Position
Retreat
Bottom flanking
Establish annual objectives
Perform external audit
to identify key opportunities and
threats
Establish long-term objectives
Allocate Resources
Revise the business mission
Identify current mission objectives and strategies
Measure and
Evaluate
Performance
Devise Policies
Select Strategies to pursue
Perform external audit
to identify key Strengths
and weaknesses
Strategy Evaluation
Strategy Implementation
Strategy Formulation
Choice
Analysis & Diagnosis
Strategic Management Elements
Econ., Govt., Legal Market etc
Implementation
Evaluation
Evaluation of Strategy
Organisational Implementation
Policy Implementation
Leadership Implementation
Enterprise Strategies
Determine Present & potential threats & opportunities in the environment
Choose the strategy
Consider alternative strategies
Determine the enterprises internal strategic advantage
Enterprise Objectives
To ensure Strategy will achieve objectives
Matching functional policies aid Strategies with Strategy the corporate or SQV strategy
Matching the Strategist with Strategy
Matching the Structure with the Strategy
Work group and individual and co-ordination
Functional policies and Strategies in the corporate.
Examining of Strategist abilities, experience, education, management styles
It involves making decision regarding planning, organizing staffing, directing, controlling
Information is knowledge communicated in order to inform.
A system is a group of parts which are inter related to achieve some purpose
Management
Information
System
MIS
Conceptual Skills
Technical
Skills
Social/Human Skills
Top Level
Management
Medium Level
Management
Lower
Level
Management
Concern for People
(9, 1) Management
Task
(9, 9) Management
Team
(1, 1) Management
Impoverished
(5, 5) Management
Middle of the Road
(1, 9) Management
‘Country Club’
9
8
7
6
5
4
3
2
1
1 2 3 4 5 6 7 8 9
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