Management Styles - Autocratic vs Democratic - Essay Example

Literary Assessment of the Case study - ‘The Woolworths’ Management Success Story’ Introduction The aim of this paper is to identify a problem related to the case study “The Woolworths Management Success Story”. It may be known that Woolworth is one of the oldest companies surfing the area of retail. The company has a long history of successful and profitable years backing it up, even as the customers remember the fun times spent at the retail stores of Woolworths. With the chains or supermarkets by Woolworths all doing extremely well in Australia, making it a household name, it may be noticed that even as the company is being successful on the outside, it still faces a few management problems internally. It has been noticed that despite the company doing extremely well and acclaims to be more involved in internal marketing, the problem of low retention still plagues the company. In this paper, while evaluating and reflecting on the topic, we will be assessing the literature collected on the theme and topic under discussion. The paper will be discussing how proper recruitment policies are important for any business (in this case Woolworths) for it to function and perform to optimum levels. Every year, several companies spend a huge amount of money after the training of the new employees. If the companies are able to find a solution to low retention, they will be able to save on a lot, even as their performance would improve. According to the literature presented, it has been identified that Woolworths, despite all the internal promotion, still suffers from the problem of recruitments and retention. In the case-study presented to us, it has been mentioned that Woolworths has had a transition from an autocratic management system that was practiced by the former CEO of the Company, Roger Corbett, to a democratic management system, in the reign of the present CEO Michael Luscombe. According to Moswela (2007), it is easier for the subordinates to practice in a democratic environment, even as they also get a chance to practice their own ideas and contribute to the company’s growth in a better manner. In an autocratic management style, however, the top management of the company remains oblivious to the feedbacks and reactions from the subordinates. More often than not, there are no brain storming meetings held and all the decisions are made by one person alone, the CEO of the company. Even though Woolworths has been a witness of company’s progress even in an autocratic environment, it may be noticed that one problem related to this management style has always plagued the company – low retention – since the employees will remain dissatisfied with their role in the organization (Frame, 2003). Woolworths has seen extremely low retention, despite the company’s claims of promoting on the inside for better retention and older, multi-faceted employees. Ever since the shift to the democratic style of management with the coming of Luscombe, the communication between the top management has improved considerably. However, among the lower cascades in the ladder, autocratic style is still being followed. The company, despite making increasing profits year after year, can improve further upon its performance once the problem of low retention is solved. It can be clearly understood by the figures presented by the company with regards to their expenditure over the training of an employee. The figure states an expenditure of $292 on induction, $895 on the trainees and apprenticeships and $4,062 on executive development. The figures mentioned above are per participant within the training grounds. The Woolworths website itself claims that “each year we invest millions of dollars in training and education programs to help our employees to develop their careers within Woolworths.” The site further expands saying that the company spends $63 million per year on employee training. If the problem of low retention is solved, the company would be able to save huge amounts spent on training of new employees. Keeping the factors cited above, we will begin with the literary assessment on the research area in a bid to substantiate the aim of the paper, that is to identify the reasons for low retention and finding a solution towards the same. Literature Themes or Arguments Among the genre of authors who have commented or studied the management systems followed in Woolworths, there can be seen a direct distinction among the approach. While most of the authors are of the view that both autocratic and democratic management systems have their pros and cons. However, when it comes to the problem in mind, Low Retention, most authors suggest that democratic system is better. Below is an assessment of the arguments and the authors that support the respective arguments. Argument 1: “In Autocratic management system, the employees have less work to do which is easier as well and hence, more satisfaction.” It has been an argument by several authors that in cases where the management simply requires the employees to perform, autocratic management style is the best system. According to Humphrey (2009), “this could be advantageous in dangerous situations like military campaigns or natural disasters. Autocratic behavior could also be effective when the autocrat-boss was better informed and more competent than the workers. This is often the case for simple and highly repetitive work.” Another author, Kishel (2005) too agrees when he says that “autocratic management style works best in fast-paced, volatile industries where there isn’t time to confer with others in situations where employees lack experience or motivation.” Our Assessment: It may be noticed that the history of business and management styles has shown that most business grown big begun with autocratic management system at hand. The argument states that it is better to have an autocratic management system when there is a need for the employees to perform on the guidelines provided by the manager or the head of the management. It is stated that not only is this good for the company or business but also for the employees that are not capable enough for making decisions. The point not discussed by any of the authors in favor of autocratic systems, however, is that the percentage of such employees who would not want to participate in decision making of the company is extremely less. In the fast changing world, more and more employees these days are qualified and capable enough to help in the decision-making process. Argument 2: “Democratic management systems are more satisfying for the employees get a chance to participate as well.” Even as most of the authors are of the view that democratic or participative management system is best for any organization, here are a few examples of the literature present. Author Michael Pool (1986) puts the cons of autocratic system and employee retention in his words saying that “to be deprived of any decisive influence within the social environment generates an intense and a seemingly inescapable experience of powerlessness and resort to ‘world views’ of an essentially passive, fatalistic and dependent kind”. Rashid (1983) says that the benefits of democratic management style for a company “are numerous. First, employee satisfaction from their work with a consequent improvement in their morale and better attitude towards management and organization. Second, it makes the introduction of technological and other changes much easier. And third, although the participative approach is time consuming, the management policies arrived at are implemented by employees with much more enthusiasm than they otherwise would be, with a consequent increase in productivity per worker.” Our Assessment: Quite agreeing with the authors sporting the view mentioned above, we too believe that unless the employees are given a chance to assert themselves in the decision making process, the employees soon lack on the interest within a company. Democratic management system ensures that the employees feel wanted and useful for good, ensuring their remained interest in the company directly impacting the retention rate positively. Conclusion and Recommendations From the literary assessment above we realize that most authors believe that for a problem of low retention, it is the democratic management style that will do best for the company. Not only does democratic management style offer the employees an incentive to stay on with the company, it also satiates their hunger for creativity. Whereas, in autocratic management system, lack of interest and a will to perform best will not only effect the overall performance of the company but also effect the retention of employees negatively. As is described by authors Steers et al (1984), there are “five reasons why employees produce low levels of productivity. These are; unappealing rewards, weak reference to performance-rewards, distrust of management, desire to have greater job control, lack of involvement.” The employees are what make the backbone of a company. There is a close relationship between a good management and labor productivity, sales growth and return on capital employed (Bloom et al, 2007). Unless employees that are hard-working and productive stay on, more money and time will be wasted in the training of new recruits. According to me, even as the top management has shifted their approach from an autocratic management system to a democratic one, steps should be taken to ensure that the same is adopted till down the management ladder. The company should also take regular feedbacks from the staff members on the actions being taken by the company. The more the involvement, the better it will be for the company in terms of retention of the employees. Even as the top management discusses the steps to be taken forward, the management down the line can also take part in discussing the manner in which a particular decision is carried on. Not only will it make the employees more enthusiastic about their work and tasks, it will also help enhance the overall productivity of the company as retailers. The present CEO Luscombe is doing a great job in democratizing the entire system. A little more effort in the same direction will ensure that the company is rid of the problem if low retention. References: Bloom N, Dorgan S, Dowdy J, Reenen J V (2007). Management Practice & Productivity:Why they matter. Centre For Economic Performance, , Extracted from: http://cep.lse.ac.uk/management/Management_Practice_and_Productivity.pdf Poole, M. (1986). Towards a New Industrial Democracy: Workers’ Participation in Industry,. London. Steers, R. M., & Rhodes, S. R. (1978). Major influences on employee attendance: A process model. Journal of Applied Psychology, 63, pp. 391–407. Steers, R. M., & Rhodes, S. R. (1984). Knowledge and speculation about absenteeism., Absenteeism: New approaches to understanding, measuring and managing absence. San Francisco: pp. 229–275. Kishel, P. G. and Kishel, G. F. (2005). How to Start, Run, and Stay in Business. New Jersey: John Wily & Sons, Inc. Rashid, S. A. (1983). Organizational Behaviour. Canada: Methuen Publications. Humphrey, W.S. (2007). .Being Your Own Boss Part II: The Autocratic Manager. Software Engineering Institute, , Frame, J.D. (2003). Managing projects in organizations. San Fransisco: Jossey Bass. Moswela, B. (2007). An investigation into democratic practices in Botswana primary schools. SA-eDUC Journal, 4(1), 14-28. (2008). Woolworths Limited Corporate Responsibility Report (CRR) 2008. woolworthslimited.com.au, , Extracted from: http://crreport08.woolworthslimited.com.au/training.php Read More