The Real World of Management - Coursework Example

The Real World of Management Introduction In real world, the organizations act very distinctly depending upon the existing situation in the business environment. The contemporary business world being very dynamic, involving rapid changes in economic, socio- political and technological considerations, the management teams of the organizations also tend to reformulate their strategies and business approaches. Hence, it can be said that Kurt Lewin had rightly identified in 1951 that no theory can be specified as “good” in practical world in the organizational frameworks at large. The paper will aim to research on how the management theories has helped the organizations to deal with situations from time to time as well as how the managements of various organizations have stretched their limits beyond the scope pre-determined by those theories (Smith, Thorpe and Jackson, 2012). For instance, the management theories related to organizational leadership and communication will be highlighted and real life situations will also be analyzed in order to compare to what extend the organizational managements have aligned their initiatives towards such theoretical concepts. Evidences will also be highlighted showing the management’s effort to deviate from the ostensive theories in order to safeguard the organizations on various occasions, mainly in the time of critical situations (Daft, 2012). The rationale behind choosing the research objective is to understand the relevance of the management theories in the real world and organizational environment and how the theories have been modified according to the situational demand. Therefore, such research agenda will help to explore the true picture of management in the real world. Discussion Management may be defined as the technique to plan and coordinate organizational operations effectively and utilize the available resources efficiently. Different organizational theorists have defined management variously and such definition has been modified according to the changes in the organizational practices and external business environment. In the next segment, various management theories will be discussed as well as such theories will be compared and contrasted through exemplifying the real world management practices. Classical Management Theories Classical theories of management that had was widely practiced during late 19th century and early 20th century was constructed through the contributions of eminent behavioural scientists such as Henri Fayol and Max Weber. Such theories were designed keeping in mind the ongoing issues related to industrial management. Hence, emphasis was given on specialization of work, improvement of quality, cost reduction, ensuring efficiency as well as establishing a sustainable management- worker relationship. Henri Fayol highlighted 14 principles of management which are relevant for the modern-day managements of big organizations as well (Adetule, 2011). According to this theory, the management should introduce clear- cut division of labour depending upon the specialization of skill-set of such labours. He also signified the importance of centralization, authority and unity of command which means the management of the organization should be centralized and should have the command to control the workforce authoritatively. Fayol emphasized on establishing equity and harmony (Esprit de corps) in different aspects of organizational management such as payment of remuneration, teamwork and many more (Gray, 2013). Though the theory of Fayol holds relevance in today’s business world as well, managements of great organizations have shown that in some particular situations deviation from some of the principle of this theory have fetched them a better result. For instance, efficiency of big corporate such as HSBC and KFC lies in their dual management system (Johansen, Larsen and Nielsen, 2014). In this matrix type of organizational structure, the employees are liable to two hierarchical managers, both functional managers and production manager. Such management system contradicts with the classical organizational system as prescribed by Henry Fayol where importance was given on strong hierarchical management and scalar chain i.e. top- down approach in flow of authority. However, such initiative has helped the managements to achieve other stipulations mentioned by Fayol. For instance, dual reporting helps the management to keep at pace with operational division and production units which in turn ensures efficient utilization of existing resources, scientific division of labour, effective flow of communication and harmonization among employees within the organization (Alvesson and Willmott, 2012). Apart from the Scientific Management theory of Henry Fayol, Max Weber introduced another Classical theory of management that strictly eliminated the scope for establishing inter-personal relationships among employees or “family-like” ambiance beyond the requirement for work. In fact, the theory gave stress upon instituting a well-defined hierarchy where the supervisors will be directly under control of the management and the rest of the workforce will be managed by the divisional supervisors. In this way, Weber ensured chain of command within the organization. According to him, rules and regulations should be clearly pre-documented in order to bring certainty in production and operational process and all the ongoing activities should be recorded appropriately for future references. Moreover, Weber emphasized on establishing impersonal relationship among management and employees in order to avoid the possibilities of favouritism and unethical influences on decision making. However, in real world many big organizations such as IBM, Accenture, and Infosys have proved that establishing interpersonal relationship between employee and management results in enhanced productivity and reduced employee attrition rate. In fact, IBM’s initiative of workforce diversity i.e. integrating all human resources irrespective of their race, religion, colour, gender, nationality and sexual orientation have resulted the company to infuse more innovation and creativity in their products and services which in turn has greatly enhanced the effective utilization of resources and profitability of the organization. Such management efforts have facilitated the company to achieve a handsome position among top 100 companies that has successfully tapped multicultural business opportunities (Johansen, Larsen and Nielsen, 2014). Management enterprises for providing more facilities to the female workforce in the famous software and management consulting group Accenture, in terms of providing a flexible working hours, provision for working from home while needed and many more has enabled the company to secure a position in the list of top 50 companies for Executive Women as well as Working Mothers. Moreover, statistics have shown that in recent times, women at the age group of 21-39 years constitutes for approximately 34% of the workforce (Velasquez, 2014). Nevertheless, though it has become important to ensure dual income in nuclear families in emerging economies such as India and China in order to run the family burden, comparatively higher pressure on female earners to take care of their children compelled them to leave job at an early age. Noticing that, the corporate management teams of IBM, Hindustan Unilever, Ernst & Young etc. have created the provision of establishing crèches within the office premises and outsourced the responsibilities of the crèches to some daycare units (The Economic Times, 2012). In this way, management of such big corporate restricted the attrition of female resources and removed the factors that had created hindrance in their career path earlier. Such initiative is a clear reflection of sound interpersonal relationship among employees and management as against the classical theory proposed by Max Weber. However, in real world management practices, such initiative has brought huge efficiencies in terms of productivity and profitability in these organizations (Foss and Stea, 2014). Human Relations Theories of Management Incorporating classical management theories in the organizations, the management understood that though organizational structures have been given huge importance, less reliance are exercised on human factors as a measure of enhancing organizational productivity. Hence during 1927-32, Elton Mayo introduced human relations theories of management. The main considerations in human relations theories can be attributed as self-motivation, motivation of the workforce as a whole and importance of ideal leadership. The study was conducted on Hawthorne plant of the Western Electric Company (Adetule, 2011). The first experiment was done to derive a correlation between employee productivity and their physical surroundings in which they were operating. It had been measured before initiating the study that the two groups set for the experiment i.e. the control group and experimental group had same level of productivity when they were operating in similar environment. However, when the level of lighting reduced for the experimental group, their productivity drastically reduced as against the control group which was facilitated with constant lighting. Hence, he successfully proved that the physical condition directly impacts the productivity of the employees. In the next step of the experiment, workers in the experimental group were provided with other facilities such as enhanced rest period, frequent breaks apart from lunch break, reduced working hours etc., keeping the physical environment constant (Smith, Thorpe and Jackson, 2012). Surprisingly, such initiative had shown marked improvement in the level of productivity of the experimental group. Therefore, Elton Mayo came to the conclusion that rather than working environment, it is the attitude towards work of the employees that motivates them to maximize their productivity and such motivation can be brought though providing them some non-monetary incentives at the workplace. In 1932, Mayo conducted another research which was known as Bank wiring room experiments in order to understand the importance of monetary incentive in influencing the productivity of the workers. In this research, a group of 14 persons were put together in a separate room with telephone switching equipment for the purpose of measuring their productivity. In this experiment, the workers were compensated according to their individual level of productivity. However, the study had resulted the researchers in a declining productivity as the individual workers started fearing that the company may reduce the base rate of payment as a result of less productivity of the peer group. This indicated a direct relationship between pay structure and employee motivation. In fact, it was also experienced that the workers in Hawthorne plant tended to form informal group among themselves. Such groups used to act identically within the plant and give similar answers to the questions asked by their managers. Such behaviour signified the flow of communication among the peer groups (Adetule, 2011). The human relations theories, especially the Hawthorne Study, holds relevance in today’s management style of corporate to a great extend. Though in the second experiment of Hawthorne Study, Mayo nullified the importance of improving factory condition for enhancing workers’ productivity, in real world many organizations have witnessed substantial progress in employee performance and organizational productivity through improving physical working condition for the workers. For instance in 2013, 15 giant US retailers including Walmart and Gap etc. have jointly took the initiative of improving the safety measures in the garment factories in Bangladesh, after the incident of collapse of the building used as a part of the factory and took the lives of 1127 factory workers. In order to restrict the possibility of such incidents in future, the US retailers arranged timely inspection of all the factory conditions and enhanced the scope for common safety standards (The Washington Post, 2013). Such initiative had infused a sense of security within the workers and as a positive consequence, the US retailing industry, especially apparel and fashion garments segment experienced rapid development in the bulk of production as well as quality considerations. The management of exclusive computer and mobile manufacturer organization, Apple Inc. also noticed severe difficulties related to the manufacturing factories in China. Long working hours, very limited number of leaves, unpaid overtimes, lack of training on manufacturing systems with latest technologies etc and violations of major labour rights in the major global manufacturer of Apple Inc had reduced the profitability of the organization by 0.4%. According to a study conducted by KPMG, among the 70 participant factories in China, 80% reported that the only way to enhance employee performance and aggregate productivity is to improve the factory conditions and safety measurements for workers (Vittikh, 2015). In fact, profitability trend from 2014 had shown the company would start gaining paybacks from the investments on workers’ well-being as early as four and 20 months. Therefore, in today’s management strong correlation is present between the physical condition of the factory and the workers performance. Considering the next experiments, examples are numerous in practical business world where changes in the level of monetary as well as non-monetary incentives have acted as an important cause for changing labours’ motivation towards work. For instance, recently in 2014, the People’s party in China was forced to increase the minimum wage up to 21% for labourers as the reform was almost constant since 2000 (Accenture, 2015). Following the legislation, the management of the factories in China has also compelled to increase the labour rate in respective organizations. Such increment in wage policy had resulted the nation to witness a growth in domestic retailing and manufacturing industries approximately by 30% and the level of export of China also enhanced by 12% by the end of 2014 (Vittikh, 2015). Such occurrences further strengthened the positive relationship between monetary incentives and employee performances. Neo Classical Theories of Management Neo- classical theories of management were developed depending upon the fundamentals of human relations theories. While Elton Mayo emphasised on the basic aspects associated with the workers in an industrial context, neo-classical approaches tended to connect the elementary human needs with their productivity and job performances. Neo-classical theories of management are enriched by the contributions of eminent behavioural scientists Maslow, McGregor, Likert and Argyris (Adetule, 2011). Maslow’s Hierarchy Need Theory According to Abraham Maslow, human actions at the workplace are motivated to achieve certain individual needs. Maslow represented such needs in a hierarchical pyramid. The bottom of the pyramid indicates the most basic needs of human beings; as the humans achieve the most basic needs, they tend to progress towards accomplishing more complex needs along the hierarchy of the pyramid (Smith, Thorpe and Jackson, 2012). The base of the pyramid signifies the physiological needs of the human being. More specifically, the pyramid indicates that human being works primarily for satisfying their basic needs such as hunger, thrust, shelter, clothing and warmth etc. Once all such physical and physiological needs are satisfied, human beings move towards accomplishing the higher needs in the pyramid i.e. safety and security. In this pyramidal segment, employees strive to ensure job security and protection in work environment. Once the elementary needs are met and job security is ensured, employees tend to satisfy their social needs and try to provide importance to the inter-personal relationship beyond workplace (Smith, Thorpe and Jackson, 2012). Next is the self esteem need in which people strive to ascertain self respect and recognition for their work in the organization. The peak of the pyramid indicates the need of self-esteem i.e. when all the needs and desire discussed above are entirely satisfied, indication of realisation of such full potential of human beings is known as accomplishment of self-actualization (Adetule, 2011). Though in the real corporate world as well, Maslow’s need theory appears to be applicable, evidences are also there where such theory has been largely contradicted by the contemporary managers. In this era of continuous modification of business process and technological advancement, the need of managers can never be completely satisfied, hence invalidating the significance of self-actualization. Jerome (2012) had also argued that if the managers start achieving self-actualization more frequently, their motivation for accelerating the business performance will be lost and eventually they will not be able to motivate their subordinates further. Therefore, existence of such need may prove to be harmful for the organizational progress. Moreover, the physiological and safety needs of the organization reflect the cultural aspects of the organization. If such needs are fulfilled, the management of the organization is said to be culturally enriched. As these needs is paramount, modern-day managers are of the opinion that accomplishment of such needs indicates continuous concentration of the management towards providing better facilities for workers. Performance of the employees should be aligned with the norms and predetermined standards set by the management (Seuring and Gold, 2013). McGregor’s Theory of X and Y Behaviour scientist McGregor also came up with a unique hypothesis under the neo-classical theories of management. He divided the entire workforce into two on the basis of two distinct traits. McGregor’s Theory X indicates those employees who are reluctant to work and their productivity highly depends on imposition of close supervision. Tendency of avoidance of major responsibilities is prominent among such employees; hence along with close supervision, strict compliance and provision for punishment should be enforced by the management for aligning their productivity according to the performance standards of the organization. In contrast, theory Y states that employees under this division are more willing to work and strive to incorporate innovation and creativity in their work. Therefore, the management can easily delegate important responsibilities upon such workers as they are recognized for putting their 100% effort in accomplishing the assigned task (Smith, Thorpe and Jackson, 2012). Though this theory is considered to be very important while studying management theories, in real world of management this theory holds very little significance. More specifically, in the contemporary era of global competition, availability of skilled workers is so high that there is no room for those workers who possess a negligent attitude towards work (Johansen, Larsen and Nielsen, 2014). Therefore, the employees categorised under theory X does not exist in the real world. In fact, in spite of inheriting required skills and knowledge base, the political and economic conditions become so complex that the management of big corporate and multinational companies are forced to retrench significant part of their workforce due to non-availability of projects or in order to cut down their cost considerations for ensuring their survival. For instance, severe consequences of great recession and world financial crisis in 2008-2009 compelled the management of the companies like IBM to undergo the biggest layoff in the corporate history in which the company retrenched more than 26% of the global workforce. Though the management announced the incident as a part of their corporate restructuring, according to the investors such step was required for ensuring minimum profitability of the organization. As a result of strategic alliance for Microsoft Corporation with Nokia, Microsoft retrenched 71,000 contractors, vendors and other contingent staffs because the management of Microsoft decided to utilize the cost effective supply chain of Nokia more rigorously (American Express, 2010). In fact, skill irrelevance, such as typist etc also makes the employees unwanted to the management. In such circumstances, theory of X does not hold good at all and competition among the employees in theory Y is very high. Conclusion The theories of management hold great importance in the study of organizational behaviour and business management. Based on the experience and experiments, many behavioural scientists have developed a series of management theories over a long period of time. However, examining the real world management practices, it can be inferred that though the managers strive to design their organizational policies and decision making rule companying with such pre-documented theories, most of the time they have to come out of the box and yield solutions which is best suitable for the particular situation. Therefore, considering all the instances from the real world of management, it can be inferred that the managers may follow the approaches, ideas and guidelines shown by the theorists, their decision making and functionalities are largely influenced by situational contemplations. Reference List Accenture, 2015. Wage Increases in China: Should Multinationals Rethink their Manufacturing and Sourcing Strategies? [PDf] Available at: [Accessed 16 April 2015]. Adetule, P. J., 2011. The Handbook on Management Theories. Bloomington: Author House. Alvesson, M. and Willmott, H., 2012. Making Sense of Management: A Critical Introduction. London: SAGE. 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Introduction to the Theory of Intersubjective Management. Group Decision and Negotiation, 24(1), pp. 67-95. Read More