Management as of Fundamental Value to Companies - Assignment Example

? Importance of Management inserts his/her s Department’s The importance of management in organizations and economic welfare can never be overemphasized. Authors such as Peter Drucker have highlighted how effective management constitutes a critical resource of developed countries and most demanded resource of developing ones. The paper highlights the role that managers play in the performance of most organizations along with the contradiction that arises from the existence of various critical success factors such as technological resources. Finally, a balanced approach is offered which claims how management, despite the existence of other critical success factors, happens to be the most important factor responsible for organizational performance. Management is of fundamental value to companies. Every organization is concerned with planning to get things done, organizing the business to ensure efficient and effective operations and motivate employees as well as develop a vision for everyone to work on (Williams, 2009). Finally, the need for having controls in place is high as the goals that have been set must be monitored and their fulfillment must be measured. Therefore, management is quintessential in making businesses successful as well as ensuring smooth sailing once that success has been achieved. The significance of management can be ascertained from the fact that businesses spend millions on hiring management consultants to guide them on effective management practices (Williams, 2009). These consultants offer insights as to how managers can lead people effectively, motivate them, deal with various people related issues and manage complex projects. Management, therefore, is the art of getting work accomplished through others. Successful managers may often not be experts themselves but know how get work done through other experts. For instance, the manager of the car plant at General Motors narrated how he has never made a car part in his life and how this is not his job(Williams, 2009). He further explained how, as a manager, his role was to create an environment conducive for people to make these parts efficiently while at the same time staying motivated with their work. On the other hand, however, this conventional view has been contradicted by leaders such as Steve Jobs who not only got work done through people but was actively involved in the technical aspects of the work (Greengard, 2011). Furthermore, good managers and leaders have often been associated with organizational success. One such example is that of Apple which experienced transformational growth and recognition during the tenure of Steve Jobs. It is not surprising, therefore, that Apple’s stock took a leap from $10 to $400 (CNN Money, n.d.) during his leadership and that all major innovations including iPod, iPhone and iPad were introduced during his tenure. Furthermore, leaders and managers influence the performance of organizations by “leading by example” (Caldwell, 2004). Taken a step further, managers are responsible for managing the intellectual capital of firms which is exactly what Steve Jobs did (Prasad, 2011). By putting in proper mechanisms in place to unleash employee creativity, Jobs was able to exploit the untapped innovative potential of human resources and use it for the transformation of the company. This demonstrates just how important management is in the contemporary age of turbulent market changes and volatile business environment. Dealing with today’s customer-centric world requires organizations to manage the talents of employees in order to meet these needs. Companies whose management fails to keep pace with the changing environment and nature of work tend to suffer. For instance, Deloitte’s study suggests the private sector of America is getting only a fraction of the return on assets that it achieved decades ago (Denning, 2011). This is due to managers failing to adapt to the changing environment. Over 50 years ago, the situation was different with big organizations gaining control of the marketplace and dictating their terms to customers who had little bargaining power. In other words, it was a production centric approach whereby manufacturers would push the product and have customers buy it. Imperfect information and lack of alternatives would further weaken the bargaining power of customers (Denning, 2011). This would translate to a management style characterized by hierarchical structures in an attempt to lower costs by engaging in mass production. On the contrary, contemporary management operates in an environment characterized by greater information, more choices and information sharing (Denning, 2011). Power has, therefore, shifted in favor of the buyer making customer the king. In today’s world, the traditional scientific management style or Henry Fayol’s theory of bureaucracy is no longer flexible enough to keep pace with innovation and changing environment. It may be argued that the critical success factors of most organizations today are not their resources or knowledge or know-how but its management. Businesses can achieve a competitive advantage through effective communication by managers. In the contemporary information age, most companies are making heavy investments in technology with the result that they benefit from increased innovation, productive results as well as cross-functional collaboration. Nevertheless, it is “managers” who devise the strategy of a corporation and make it useful for the implementation of its plans. Furthermore, management is necessary for the maintenance of sound relationship between labor and the organization. In the past, the absence of labor unions often resulted in management exploiting the labor (Rue, 2004). However, in the contemporary world, the existence of labor unions has led to the increased need for management to achieve good relations with employees. Considering the customer-oriented and, consequently, people-oriented nature of today’s organizations, it is no wonder that satisfied employees are required to create satisfied customers. This concept has been acknowledged by Southwest Airlines whose management takes pride in having created a culture whereby employees feel free to pursue their own decisions and stay motivated at catering to customers. The company has been able to achieve a competitive advantage in terms of high profits and low costs owing to its strong human capital base. This is one of the reasons why Southwest has been ranked as Fortune’s top 100 list for companies to work for. The company’s strategy of guaranteeing ‘customer satisfaction’ has been connected with its management strategy of securing ‘employee satisfaction’ (O'Reilly & Pfeffer, 2000). This is based on the premise that happy employees make happy customers. The fun-loving and relaxed corporate culture at Southwest encourages people to “break the rules” if required and deal with “compassion” and “common sense” (O'Reilly & Pfeffer, 2000). On the contrary, it has been argued that the critical success factors of organizations include a wide range of resources, knowledge and capabilities rather than just management. The importance of resources as the basis of competitive advantage has been highlighted in the resource-based view of competitive advantage. This view takes an inside-approach by arguing that financial, human, physical, technological, reputation and organizational resources constitute the basis of success for firms (Barney, 1991). Notably, the “human” element (which includes management) is just one resource. Companies whose financial value decreases or who are unable to gather funds to sustain their operations or those that are technologically backward tend to suffer. Consider the case of Nokia which is competing in terms of technology with Samsung and Apple and is, clearly, lagging behind owing to its failing Windows operating system. Apple, on the other hand, has achieved milestones owing to its transformational innovation of the iPod, iPhone and iPad. Even though Steve Job’s management had a great role in mobilizing this innovation, the technology itself accounted for Apple’s revival to some extent. The external environment too can play a strong role in organization’s operations. For instance, the economic downturn and the associated unemployment and inflation has pressurized management into adopting policies to lay off workers, suspend operations in some countries or downsize altogether. Similarly, the political and security concerns of some countries have led to the withdrawal of multinationals from the region. In still other cases, the cultural environment and laws of various countries may assume priority over management with the management having to adapt themselves to these factors rather than vice versa. In this case, management may fail owing to powerful external influences such as culture. Although external influences on organizations and management exist, management must adopt correct policy to achieve a fit with these influences. Therefore, once again we see management as being critical in handling certain external situations such as crisis management. Companies that face similar crisis from external environment may react differently to the same with the result that some fail because of the crisis while others survive. For instance, the decision by management of Ford Pinto to continue with the distribution of a faulty car led to various deaths and bad reputation. On the contrary, the management at Johnsons and Johnsons, when faced with the contaminated Tylenol tablets, immediately recalled the product which resulted in a $100 million loss to the company (Suder, 2006). Here we see the role of management as that of prioritizing objectives. Clearly in the latter case priority was given to customer welfare rather than company profits. However, this may be countered by arguing that management is required to channelize the resources in order to achieve their maximum benefit. For instance, the introduction of Scotchguard by 3M became possible only due to open communication which was fostered by the management (McLean, 2005). Scientists in one research department of the company took up the task from outside 3M and then applied it to other units by virtue of cross-functional collaboration. Had the management not allowed the autonomy of such free flow of information or would have reduced employee morale by discouraging new ideas, such a creation would have never materialized. This is similar to the case of the inkjet printer introduced by Hewlett Packard whereby employees were allowed to experiment with different modes of ejecting ink on paper with the help of heat (McLean, 2005). Clearly, technology or innovation by itself cannot influence organizational success unless they are properly managed. This can also be explained by the fact that Sony tried to launch an e-book technology platform similar to that of Amazon; however, it failed because the timing to introduce the technology was clearly wrong (Viardot, 2011). Therefore, management has acquired a strategic role in the operations of companies whereby it decides when and how to use other resources of the firm. To conclude, even though various resources and factors in the external environment may influence organizations, management clearly has a critical role to play in terms of channelizing the former for organization’s success and adapting to the latter to ensure the same. Management not only sets goals for the organization but also helps prioritize them in the event of external crisis. Also, the mere existence of innovative capabilities and technology cannot guarantee firms a competitive advantage. This has already been demonstrated by the case of Apple whereby Steve Job’s leadership and management was required to unfold the creative potential. Companies may possess all the resources yet fail because of poor management. Finally, with greater change than ever before, management must constantly charter the strategic course that organizations must take to ensure smooth sailing. References Barney, J., 1991. Firm Resources and Sustained Advantage. Journal of Management, 17(1), pp.99-120. Caldwell, C.M., 2004. Leadership Skills for Managers. 4th ed. American Management Association. CNN Money, n.d. Apple's stock under Jobs: from $10 to $400. [Online] Available at: HYPERLINK "http://money.cnn.com/markets/storysupplement/apple_10yr_stock_timeline/" http://money.cnn.com/markets/storysupplement/apple_10yr_stock_timeline/ . Denning, S., 2011. Steve Jobs: Management Innovator. [Web] Available at: HYPERLINK "http://www.forbes.com/sites/stevedenning/2011/10/31/steve-jobs-management-innovator/" http://www.forbes.com/sites/stevedenning/2011/10/31/steve-jobs-management-innovator/ [Accessed 18 November 2013]. Denning, S., 2011. The Big Shift or Shifty Statistics? [Web] Available at: HYPERLINK "http://www.forbes.com/sites/stevedenning/2011/10/19/the-big-shift-or-shifty-statistics/" http://www.forbes.com/sites/stevedenning/2011/10/19/the-big-shift-or-shifty-statistics/ [Accessed 18 November 2013]. Greengard, S., 2011. What Did Steve Jobs Do for Computer Science? [Web] Available at: HYPERLINK "http://cacm.acm.org/news/136161-what-did-steve-jobs-do-for-computer-science/fulltext" http://cacm.acm.org/news/136161-what-did-steve-jobs-do-for-computer-science/fulltext [Accessed 17 November 2013]. McLean, L.D., 2005. Organizational Culture's Influence on Creativity and Innovation: A Review of the Literature and Implications for Human Resource Development. Advances in Developing Human Resources , pp.226-46. O'Reilly, C.A. & Pfeffer, J., 2000. Hidden Value: How Great Companies Achieve Extraordinary Results with Ordinary People. Boston: Harvard Business Press. Prasad, B., 2011. Steve Jobs Dead: Lessons to be Learned From his Leadership. [Web] Available at: HYPERLINK "http://www.ibtimes.com/steve-jobs-dead-lessons-be-learned-his-leadership-321553" http://www.ibtimes.com/steve-jobs-dead-lessons-be-learned-his-leadership-321553 [Accessed 18 November 2013]. Rue, 2004. Supervision: Key Link To Productivity. New York: Mc Graw-Hill/Irwin. Suder, G.G.S., 2006. Corporate strategies under international terrorism and adversity. Cheltenham: Edward Elgar Publishing. Viardot, E., 2011. Achieving Market Leadership for Innovation Through Communication. In H€ulsmann, M. & Pfeffermann, N. Strategies and Communications for Innovations. Heidelberg: Springer-Verlag. pp.243-56. Williams, C., 2009. Principles of Management. 5th ed. Cengage. Read More