External Factors and Managers Ability to Manage Others - Literature review Example

1. Executive Summary A manager never works in isolation. Though working within the organization, a manager keeps interacting with very many external factors as well as internal factors which cast effect on managerial performance. As far as the external environment is concerned, it signifies those factors which affect the organisation from outside and falls outside the organizational boundaries. The internal factors falls within the organisational boundary and somewhat is an outcome of organisational policies. Factors like economic, legal, political, societal, competition, customers/suppliers, and technology and many more constitute external environment. By virtue of being associated with tremendous opportunity, makes the external factors relatively difficult to manage. Though there are many leading and trailing signals that can be used as guide in order to tackle external factors. Thus a continuous factor scanning is must for that. Internal factors are part of the organisation and the firm has control on such factors to an extent. The factors like organisational culture, performance management, incentive schemes, organisational discipline, and grievance addressal constitute internal environment. Managers are required to put forward strategies to align internal factors in accordance with organisational performance. Whichever the factor be, it is affected and in turn affects the human resource management. Managers are thus required to predict and take precautionary steps to avoid and ill effects on their ability to manage others. This assignment endeavours to highlight the correlation between both the factors and hence their affect on a managers ability to manage others. 2. External Factors and Managers Ability to Manage Others Each organization is unique in the sense that it is adapted for a particular environment. The performance of the organisation, its products, its operations and people handling etc, is all affected by this environment (Nabli and Nugent, 1989). According to (Scott, 1995) “The concept of an enabling environment is the key to understanding and explaining the forces that help shape the character and performance of organizations.” On the same league, (Savedoff, 1998) explained that any attempt to analyse and develop the strategy for a firm needs a consideration of the factors outside the organizational boundary which can assist or restrain the organisational performance. Further (Picciotto and Weisner, 1998) suggested that a conducive environment maintain and enables organizations and individuals to perform effectively and efficiently. Datta and Nugent (1998) suggested that “rules of the game” of any society makes significant constituent of any such conducive environment. Such environment lubricates the economic and social machinery. Every organisation requires apposite regulations and an effective enforcing mechanism. Moreover any firm or an enterprise must follow their aims and ambitions remaining well within a regulatory boundary that aids or restrain them. Thus we can say that governmental legislations have considerable control on the nature of rules within an organisation and also on the way these rules are enforced within the organisation. COMPONENETS RULES ETHOS CAPABILITIES Administrative/ Legal Legal framework Attitudes toward enforcement Ability to develop and enforce laws and policies Technology Protect intellectual property Social attitudes to innovation Product development, R&D capability Political Government type (democratic, authoritarian) Attitudes toward civil society Ability to organize civil society among other groups; knowledge of the electorate; degree of transparency Economic Clarity and usefulness of economic rules, interest rate policies, etc. Attitudes toward civil society Ability to develop competition policy framework and examine industrial sectors, societal databases, levels of competition, low transaction costs Ecological Environmental protection laws affecting organizations and individuals, role of geography Attitudes toward the environment and its effect on organizations Ability to assess environmental impact and to adapt Stakeholder Labor rights, occupational safety rules on competition Attitudes toward not-for-profit, public and business sectors Ability of groups to influence Socio-cultural Religious norms Perception toward gender issues Ability to shift social and cultural attitudes Table 1: Components of the organizational environment (Taken from Hahm (1993). Rules or regulations are formally defined (North, 1995) as “The formal laws and codes that positively or negatively influence the behaviour of organizations through the incentives and constraints they provide or impose” Let us take an example of pharmaceutical industry. The industry is highly regulated and the legislations affect the industry as a whole. For an example the Governments legally establishes Drug regulation agencies in order to fulfil the functional obligation to protect the society from ill effects of poorly developed and researched drugs. Here the Government lays down the regulations that outlines the functions of any such agencies and hence sets the overall relationship firms should have with any such agencies (Desormeaux, 1998). As a matter of fact legislations pertaining to economic rules are imposed in form of agreements, licence, contracts, affiliations and corporate governance laws (Clague et al., 1997). Apart from it there exist many other ad-hoc regulations disseminated by financial institutions such as banks which endeavour to control cash flows and interest rates. Imports and Exports are also affected by governmental legislations. Foreign investments are also governed under such legislations. Now a days intellectual property rights and patents also for a very significant part of pharmaceutical industry. The regulations are becoming stringent day by day and as a matter of fact these regulations are more prominent among the developing nations and new economies as the paraphernalia of implementation is not that developed in such countries. Now these regulations and legislations in turn regulate and govern the way in which managers manage others. The recruitment and selection need, training need, incentives and strategy formulation, everything is interrelated with such legislations. 3. Internal Factors and Managers Ability to Manage Others Henry Mintzberg postulated organisational structure into five ideal though not real organisational configurations. This organisational synthesis provides managers an outline to comprehend and devise structures of organisations. Figure 1: Minztberg model of organisational structure. According to Mintzberg organisational structure is "The sum total of the ways in which it divides it’s labour into distinct tasks and then achieves coordination among them." He proposed six constituents which are as follows: Operating core: The work force of this part is directly related to the Operations. Strategic apex: People in this part serve the need of those people who control the organisation. Middle line: This part constitute of managers who act as bridge connecting strategic apex and operating core Technostructure: This part comprises of the analysts who design, plan, change or train the operating core. Support staff: This part is made up of external specialists who provide support to the organisation outside of the operating core's activities. Ideology: It is not a part per se but is made up of the traditions and beliefs that make the organisation unique. Each arrangement symbolizes a force that pulls an enterprise in altogether different horizons. For an example the operating core wants to professionalize in their job and hence they support professional bureaucracy supported on the standardisation of skills. Which pull will finally prevail will depend to a great extent, on the power of each components. The organisations have responsibility to institute and sustain benchmarks which are suitable for a functioning atmosphere. On instance, this may require remedial action, preventive action and disciplinary action. It also needs to provide a formal way of putting up and settling employee complaints and grievances. Here is the brief outline of these: Performance Management: An evaluation of an employee's performance should be conducted from time to time. Employees should be provided with feedback on their performance and they should be given appropriate opportunity to improve their performance not only in case their performance is lacking in some respect but as part of skill enhancement also. Even positive feedback of their remarkable performance as appropriate, should also be provided. For this there should be some set performance management system should prevail in the organisation. Attendance Management: The attendance of man power working in any organisation should be managed through rule based reliable and precise documentation, tracking. This must be followed by proper preventive and corrective action as required. It is the accountability of the Manager to consider any arguments put forward for leave pertaining to sickness or related family matter. Approval of such claims should be backed by appropriate certifications. Disciplinary Action: A formal disciplinary system should be in place in order to deal with misconduct as appropriate. The use of disciplinary action should be well justified and the onus lies on the shoulder of a manager. In principles disciplinary action is preventive in nature rather than being punitive. Grievance Addressal: A unbiased grievance procedure should be adopted by managers if an employee thinks that he/she has not been treated as per the employment norms. Employees have the right to appeal any disciplinary action through the grievance procedure. Thus the internal factors too seem very intricately effecting the way mangers manage others. These internal factors are part and parcel of organisational culture. 4. Correlation of internal and external factors The power and ability of an organisation which can be called as the capacity (Morgan, 1998) of internal factors are in turn governed by the external factors. The firm develops its internal resource capacity according to prevailing external situations. Chong and Claderon, (1997) suggested that enforcement of regulations is based on the impetus of the enforcing body or the prevailing threat from it. Thus among other characteristic it is very important for any regulation to be credible, fairly and evenly enforced, predictable and flexible (Burki and Perry, 1998). Fairness is the degree of impartiality (Hunter and Lewis, 1997). The panacea for guaranteed ownership of a regulation is the active participation of members in creating them, on which the rule is being applied, either directly or indirectly (Lal, 1996). Here comes the role of organisational culture and its outlook which will highlight how much rule following, the employees are. Mangers need to provide conducive institutional environment and they should be honestly committed to creating that (Chhibber, 1998). Managers are not responsible for the rules of the game but are also responsible for modification of internal factors if they think that they need to be changed according to the environment within which organizations operate (Manning, 2000). 5. Conclusion There are various factors which are outside the organizational boundaries which greatly affect its anatomy, performance and to an extent in some cases, its very existence. These factors when combined with the internal factors create an enabling environment within which individuals and organizations achieve their goals in a more effective and efficient manner. Read More