Comparison of Management Practices of Two Companies - Case Study Example

Comparison of management practices of two companies Leadership styles in management are influenced by its structures, goals and policies. Sometimes,borrowed ideologies reflect the style of approach to management that could either bring success of failure in management of an organization. The leadership style of management of two different companies will be analyzed in this study. Insights on theories and concepts used in their management will give light in the operation of both organizations. Case No. 1. Semco Co. An engineering company in Brazil led by its charismatic CEO, Ricardo Semler. His unique style of leadership gave the company a continuous profitable growth for 20 years and made others curious on how he did it. Participative management Semler believes in corporate democracy, participative management and “the company as village”. It is possible that he got the idea of democratic values from his studies in the US, as these are predominant in Western societies, and such institutions as schools, labour unions, and churches that instil these values in politics, economic and social affairs. (McFarland, D. p. 493). Semler is a democratic leader who operates his company differently. He creates a climate in the company wherein he says “Democracy is the cornerstone of the Semco System”. A democratic leader is someone who leads by persuasion and example, not by force, fear, status or power. (Fisher, L.) Semler, as a leader, recognized the feelings and opinions of his employees, make them feel important, and attempt to put group and individual group above his own objectives He had encouraged participation in decision making, which is one of the concepts of participative management. Trust as motivation. Semler puts his trust to his employees and this method has been proven to work for the company. This follows the theory of McGregor, one of the founders of the field of organization who said that organizations become successful if they trust the employees to be creative and apply ingenuity in doing their work for the company. (Stoner, 1980) McGregor and several other authors believe participative management is a motivation to performance. Accordingly, these theorists believe on teamwork. In the example of the Semco, teamwork was advocated such that the closely knit group recognizes their responsibility, awareness and dedication towards accomplishing the goals of Semco. The trust of Semler motivated the employees to do their work accordingly. Semler was able to develop an effective work group motivated by their sense of unity and purpose, a group mission around which the interest of the individuals, the group and the company may be balanced. In this sense, the underlying management theory Y of McGregor is proven in Semco wherein, it states among others, “There is no need for punishment for men to bring about effort towards the objectives of the company”. Semco employees had exercised self-control and self-direction in working towards the Semco objectives to which they are committed, the resultant values expected in this theory Y. Circular Organization The concept of a “circular organization and reverse evaluation” is something new in management practices. Ricardo’s approach of evaluation coming from the peers or among employees evaluating managers’ performance is not in the books of theorists. However, Stoner (p.450) explains that this also happens because subordinates also play a critical role in influencing the leadership style of management because they are the ones who will be affected by that. For example, in Semco, the highly qualified employees need little supervision, while the new ones may require a little directive approach. In McFarland, the circular approach is defined as a process of motivation that Shartle described as a ‘reported urge or tension to move in a certain goal”. (p. 538) He said that motivation process is circular, and he states: in a way that it begins with a tension or drive; wherein the individual realizes an unfilled needs. Next, following the restlessness is the need for the means to fulfil this restlessness Finally, the need is to some extent fulfilled, or goals are redefined, and need satisfaction is attained. The process is completed when the individual evaluates the extent of satisfaction obtained and makes decision about behaviour which is to follow. Semco, not a hiding place, a punishment The participative type of management has been enforced to 3000 employees of Semco Co. wherein transparency of actions and motives in the company is observed, and for those who don’t comply Ricardo says that the company will not be a hiding place for him. He believed that when he hires a person to join Semco, he will bring in his talents to the team, and company relies on the person’s self interest to develop himself in the company, and must exercise self-discipline to do what is expected of him. Case No. 2. Grimsville Borough Council (GBC) Grimsville Borough Council is a local authority tasked with the delivery of a range of public services such as education, social services, waste management, housing and planning in Grimsville in England. It has employed 3000 employees in doing these tasks. The constituents of Grimsville and other authorities sensed inefficiencies in the manner of the operation that may be caused by management leadership. Bureaucracy Autocratic form of management, oftentimes called Bureaucracy exists in the GBC A bureaucracy is a form of organization expected in any government institution, and in large corporations; it is one of the classical form of organizational structure. Bureaucracy is described as having a hierarchical structure based on a legalalized formal structure. (Stoner, J. p. 316). According to Stoner, under a bureaucratic set up, members of the organization should be guided in doing their duty in accordance with the established rules and regulations. Specialization of tasks, appointment by merit and provisions for career opportunities are defined in this type of organization. Organization of this type develops an impersonal climate, as work has become a rational routine activity. Bureaucracy is further described by McFarland as “an organization designed to accomplish large-scale administrative task by systematically coordinating the work of many individuals”. (p.128). This is clearly reflected in the 3000 employees of the GBC doing administrative task for delivering services to the people of Grimsville. A well developed bureaucratic management, according to Stoner, should perform well, as there are well established rules for decision making, a clear chain of command. Under this arrangement, promotions of people are premised on his ability and performance Upon employment, each employee is given his specific position description which explains his authority and responsibility. This automatically becomes a guide for future evaluation of his performance, recognition and reward later on. Under this thinking, it is assumed that all employees of GBC know the scope of his duties, authority and responsibility. Passing the buck or responsibilities is one of the defects seen in GBC administration which should not happen because of distinction of tasks in this set up. Specialization is one of the characteristics of bureaucracy, such that constituents should know where to go when they need health, education and other services from GBC. However, this does not happen because of conflict in leadership. While it is expected that GBC operates under the autocratic and democratic form of management, it could be seen that it is slowly turning to a “laissez-faire” attitude of management. Laissez-faire has been called “impoverished management” by Stoner (p. 444) wherein there is little concern for people, tasks or production. In Laissez-faire, leaders abdicates his or her leadership role which could be clearly seen from attitude of employees from the top position to the bottom. GBC showed little concern for people as the management does not listen to complains and problems of people. GBC does not regard the people’s education, health and welfare that they should do as government and employees. The unresolved issues of conflict with the Council who continues to have changing patterns of direction affects the management of GBC in decision making, therefore, policies are not consistent and becomes too ambiguous to guide managerial activities Organizational climate and motivation Unison, the biggest trade union recognized by GBC accepted that frustrations and morale of the employees are too low. The organizational climate of GBC could be one of the reasons why there are too many sickness and staff turnover among the employees of GBC. Ultimately, this kind of atmosphere could be due to the organizational climate that is a result of the management leadership style. It is the manager who assigns tasks, sets goals and provides structure. . Management Theory X of McGregor affirms the attitude of GBC wherein he presupposes that in a traditional approach of management people view work as “something to be done to survive.” This attitude of employees of GBC led to poor performance and lack of initiative, creativity and ingenuity towards work. Management writers like Fayol (Stoner) believed that bureaucracy if implemented well is a good structured organizational design. But in the case of GBC, the word bureaucracy is carried on with some disgust from its constituents as it connotes some kind of inefficiency in management. Trade unions regarded GBC as having an outmoded bureaucracy that nothing is done. Management has no regard for employees as it does not give attention to its working conditions. Discussion and conclusion These two organizations have two different style of leadership. One exists in trusts among employees, while the other lives on suspicions and distrust. One was able to carry on with its missions, giving growth and prosperity to the employees and company, while the other earns a negative appraisal from everybody. Both uses a leadership style that should work well in the company. One, while posing a democratic and participative attitude on management, has plugged every hole to achieve his goals. He (Semco) knows where to begin and end in his management, and puts out those employees who does not comply. The other (GBC), being a political institution, maintains bureaucracy that does not work well in the organization because of the weakness of leadership, from the council members down to the employees. A climate of “do not care attitude” and suspicions is created, and has no motivation to do well in the performance of their job. They are just there to survive for economical reasons, and not for good performance. GBC does not need to restructure its organizational set up, it just need leaders who can motivate employees in a stern autocratic style. Rewards or punishment is the kind of motivation that may be applied, as employees become afraid of losing their job as shown in the case study. The bureaucratic style cannot be changed because it is the classical approach of government management. What needs to be changed is the way it is implemented, because it was called outmoded already. In the end, a management leadership and style cannot just be copied and applied, it depends on the objectives, goals and structures of an organization, and of course the strength of the leader who is going to manage it all. References Fisher, L. Ricardo Semler Won’t Take Control. The Creative Mind. 13 Dec. 2008 . McFarland, Dalton E. Problems of Motivation. Management, Principles & Practices., McMillan Publishing Co. 4th ed., 1974. p. 538. --- Authoritarian and democratic leadership. p. 493. Stoner, James A. Leadership. Management. Fordham University. Prentice Hall, Inc.Englewood Cliffs, New York City 1980. p. 444 ---- Theory X. Theory Y p. 153-154 --- Laissez faire management. p. 444 --- Early approaches to organizational design. p. 128 Read More