Current Management Practices in Organisations - Case Study Example

Table of Contents Introduction 2 Management Theories 3 Administrative Theory 3 Scientific Management Approach 4 Weber’s Bureaucratic Approach 5 Characteristics of Bureaucracy 6 Behavioural Movement 7 Human Relation Movement 7 Modern Management Approaches 9 Application of Management Theories in Today’s Organisations 9 Critical Evaluation of Classical Theories 10 Criticism of Weber’s Bureaucratic Principles 11 Losing Relevance of Classical Theories 12 Current Management Practices in Organisations 13 Conclusion 15 References 16 Introduction Management is the process of developing an environment where individuals can work in groups to accomplish certain goals. Managers have the responsibility to bring about greater productivity through efficiency and effectiveness (Olum, 2004). The modern management theory started in the nineteenth century. In the twentieth century, a large number of management theories ranging from the classical theories to the Japanese management approach were developed (Hartman, n.d.). Mass production and automation were the key principles of the factory system that originated in the 19th century. Two management theorists at this point of time came up with the school of thought known as ‘Pre-Classicist’ (Hartman, n.d.). Charles Babbage, a mathematician and Robert Owen, an entrepreneur came up with the pre-classicist theory. Robert Owen was the owner of a cotton mill in Scotland. He introduced certain reforms like reducing working hours and not employing children below 10. Charles Babbage was mainly concerned with work specialisation. He has suggested profit sharing with employees through shares and providing employee bonus (Hartman, n.d.). Management Theories The organisation and its structure are explained with the help of several theories. The classical organisation theory includes the following: Administrative Theory Henry Fayol founded this theory. This theory was based on numerous principles of management. Management was considered to comprise of several training, commanding, coordinating, organising and planning functions (FAO Corporate Document Repository, n.d.). Fourteen management principles were developed by Henry Fayol. These were division of work, unity of command, unity of direction, responsibility and authority, discipline, remuneration of employees, centralisation, scalar chain, equality, order, esprit de corps, initiative, stability of the tenure of employees, keeping general interest above individual interest (Hartman, n.d.). Chester Barnard was also a believer in administrative theory. He believed that communication flows from bottom to top in an organisation. The willingness of the employees to accept the authority depended on whether they understood what was being communicated to them (Hartman, n.d.). Scientific Management Approach Frederick Taylor is the “father of scientific management”. Frank and Lilian Gilbreth were also believers of this theory. According to this approach, standardisation, specialisation, efficiency and simplification can be achieved through planning. Trust and faith between the workers and the management can result in increased productivity. The four principles of management proposed by Frederick W. Taylor were science, scientific training of workers, scientific selection of the worker, cooperation between the management and the labour (FAO Corporate Document Repository, n.d.). Frederick Taylor performed experiments on productivity. He executed tests on the ‘task system’ which later came to be known as Taylor system and finally became known as scientific management. Taylor’s experiments aimed at finding out the best way to perform every task, the time and material required and the sequence in which the task should be performed. He wanted to establish division of labour between the employees and the management. Taylor’s principles believed in the intellectual superiority of the management. Scientific management comprised of a system to improve work methods, supervise employees and a piece rate system of providing incentives. Taylor believed that his scientific method could resolve all productivity problems. However, there are certain flaws in Taylor’s theory. The idea of close supervision of workers may reduce their productivity. The piece rate system is also obsolete in today’s organisational context (Hartman, n.d.). Frank and Lilian Gilbreth had conducted experiments in order to find out one best way of doing a task. This was known as ‘speed work’. They were involved in time and motion studies and identified 17 work motions known as therbligs (Hartman, n.d.). Weber’s Bureaucratic Approach Max Weber believed in the institutionalisation of authority and power. He believed that in a bureaucracy favouritism could be reduced. The people at higher position in the organisation were legally empowered to issue orders (Hartman, n.d.). The organisation is viewed on a broader perspective in relation with the society. The principles on which the organisation is based are rationality, democracy, specialization, structure, stability and predictability (FAO Corporate Document Repository, n.d.). Weber believed that society could be held together by authority. He believed that people would follow the order of others because they would feel that those people had the authority to order them. Certain authorities, through their sheer charisma, can inspire others to follow them. Rational legal authority was the main idea behind bureaucracy. Obedience was ensured through a certain method that was formal, logical and reasonable. In an organisation CEOs authority may be obeyed not necessarily because of his charisma but because of his position. A bureaucracy is based on rational-legal principle (Grey, 2009). Bureaucracy is often related with unresponsiveness. Max Weber was worried about how society could maintain control over the spreading state bureaucracies. He was also apprehensive that the rising power of public official would lead to mismanagement and misuse of power. Characteristics of Bureaucracy The various characteristics of Bureaucracy are the following: Hierarchy is well defined in a bureaucracy. The people at higher positions have the authority to supervise and a clear chain of command exists Responsibilities are rationalised to the extent that employees develop the expertise to perform a task The operational procedures are standardised to ensure coordination Impersonal relationships are maintained between managers and employees to avoid favouritism Competence is the only criteria for promotions, recruitments and assignments of tasks Records of all activities are maintained Behavioural Movement The behavioural theory dealt with employee behaviour and motivation. Herbert Simon and Mary Parker Follett were advocates of this theory. Follett believed that power should be shared to resolve conflicts. Simon had a critical approach towards the classical theories. He believed that the classical theories were ambiguous (Hartman, n.d.). Human Relation Movement Douglas Mc Gregor and Abraham H. Maslow were the main theorists related to this movement. Maslow’s motivational theory was based on human needs. It was assumed that human needs can never be completely satisfied. The lower level needs should be satisfied to reach the subsequent higher levels. The most basic need is the physiological need. The physiological need is followed by the safety needs, social needs, needs for esteem and self actualization needs. Douglas had come up with Theory X and Theory Y. Theory X has a negative view on employee character. It is assumed that employees will always avoid work and thus have to be forced to work. Theory Y assumes that employees are committed to their work and have the inherent desire to accomplish the task (Hartman, n.d.). Modern Management Approaches The various management theories were integrated to develop the modern approach. The framework of the modern management movement was formed through the integration of classical and behavioural movement with systems approach, contingency approach and strategic management approach. According to the contingency approach the problem solving tools that work in one organisation may not work in the other. The systems theory says that a system consists of many parts and if one part is removed then the entire nature of the system changes. The strategic management theory determines the organisation’s strength and weakness on the basis of its external and internal environment (CM Guide, 2008). Application of Management Theories in Today’s Organisations The managers in organisations have to apply the management theories and principles of planning, coordinating, controlling, organising, motivation and leadership in order to achieve organisation’s goals (CM Guide, 2008). Critical Evaluation of Classical Theories The classical theories are superficial and too simple. Moreover, they do not have a realistic approach. In today’s competitive scenario, management has to maintain good relation with employees in order to increase productivity. The social needs must be provided as much importance as financial needs. Classical theories assumed that employees could be motivated only through money. Workers were just considered to be a means of production. It was believed that a formalised relationship between the management and the employees will avoid all conflicts. The classical theories failed to realize the importance of the human resource in an organisation. The theories just dealt with authority and its mechanism. Taylor’s principles had focused only on production management and not on other important fields of management like finance, accounting, consumer behaviour and marketing (Alajloni & Et. Al., 2010). Frederick Taylor believed that management should have the complete authority and tasks should be divided and simplified to the extent that workers would not need to use their brains. Moreover Taylor’s believe in extreme supervision may reduce worker productivity. The piece rate system has also become obsolete (Temple, n.d.). Criticism of Weber’s Bureaucratic Principles In the words of Weiss, “Today Bureaucracy has a negative reputation, more often indicative of bottlenecks, red tape and inefficiency. In its mature phase bureaucracy has led to bloated organisations and a redundant and excessive number of rules, all of which led to a rigid organisation type unable to meet the changing needs of the market place” (Alajloni & Et. Al., 2010). Max Weber himself was not hopeful about the long term prospects of bureaucracy. He was rather in favour of legislative controls. According to Kad Marx the characteristics of bureaucracy were secrecy and hierarchy. He believed that in a bureaucracy people at different levels deceived each other and masked their personal interests as the interest of all (Temple, n.d.). The theory of bureaucracy stresses too much on authority and somehow increases the need for authority in the organisation with the aim that the people at higher positions may lose their responsiveness and effectiveness. Compliance with rules and regulations has been over-emphasised. Managers just abide by these rules blindly and do not take initiative or use discretion. Thus, there is very little innovation. The impersonal relationship between management and employees may lead to frustrations in the employees. Specialisation and division of labour may result in the employees to feel isolated. Sharing between employees is essential in the complex work environment today. The very word bureaucracy today has a negative connotation of extreme rigidity in an organisation (Hartman, n.d.). Losing Relevance of Classical Theories The classical theories, mainly the scientific theory and theory of bureaucracy are losing relevance. The organisations today provide a lot of importance to their human resource. The human capital helps organisation to achieve growth and competitive advantage. The talent of the workforce is a natural strategic resource of the organisation. An efficient talent management system is being implemented by organisations today (Schweyer, 2004). Organisations no longer allow their employees to function mechanically. Rather they are encouraged to be innovative and work towards skill enhancement. Current Management Practices in Organisations Organisations today are trying to build learning organisations. Employees should view the organisation as a system and try to master their skills. They should try to innovatively and collaboratively handle problems. Companies today encourage generative learning more than adaptive learning. In adaptive learning people learn from past experiences. Generative learning helps in gaining competitive advantage. A learning orientation helps organisations to keep pace with the changing world. Organisations today have a challenge of changing the mindset of employees from being risk averse and static to risk taking and proactive. They are trying to inculcate humility and empathy in the employees (Mc Gill & Et. Al., 2003). Currently organisations have realised that the characteristics of managers should be compatible with the nature of the business. The former CEO and chairman of GE Company, Reginald H. Jones said “When we classified … our businesses and when we realised that they were going to have quite different missions we also realised we had to have quite different people running them” (Schuler & Jackson, 1987). A study by Hay Group Incorporated, University of Michigan and Strategic Planning Institute revealed that a business while following a growth strategy requires the top managers to give up the status quo and adapt strategies in relation to the market. The study says that top managers should be recruited from outside since insiders do not recognize the onset of decline quickly. A mature strategy on the other hand requires insiders who know the nuances of the business (Schuler & Jackson, 1987). I would like to cite an example of the management practices in a KPO (Knowledge Process Outsourcing). I had the opportunity to learn about the management practice in a KPO from a friend who works there. The HR practices followed by the KPO are structured, formal and innovative. People management is of prime importance in the KPO since it is a people intensive industry. Conclusion The management of an organisation has the responsibility to maintain an environment that can help them to accomplish certain goals. Manager need to organise, plan, lead and control. In today’s dynamic corporate environment the scientific management theory and theory of bureaucracy are gradually losing their relevance. Every organisation is different from the other and hence a common theory cannot determine the working of all organisations. Organisations are increasingly realising the potential of their workforce. They are no longer treated mechanically and are encouraged to adopt an innovative attitude. The importance of motivation and effective communication has been realized. Thus, organisations are trying to adopt a flexible style of management. References Alajloni, M. M. & Et. Al., 2010. Critical Evaluation of the Classical Theory of Organization. The Classical Theory of Organisation and It's Relevance. [Online] Available at: http://www.eurojournals.com/IRJFE_41_06.pdf [Accessed December 15, 2010]. Christopher, G., 2009. A Very Short Fairly Interesting and Reasonably Cheap Book About Studying Organizations. SAGE Publications Ltd. CM Guide, 2008. Modern Management Approaches. Management Theories: History and Practice. 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