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There are many dynamic concepts and theories considering the question of; what makes a good manager? Both classical and modern thinking suggests various approaches and management styles. The primary goal of this assignment is to assess skills that contribute to good management. The authors have elected to present a brief introductory literature review describing the key concepts of management style and the major theories supporting these concepts. Having chosen the topic the next step was to set out a number of objectives on which to base the study. These included:
- To define management
- To briefly identify the major theories of management
- To identify key managerial skills and discuss elements of their importance and impact on organisational goals and employee performance
Case study: Enron
Definition of Management & Management Theory
Management is ‘The art of getting things done through people’. (Follett et al., 1973)
‘Managers give direction, provide leadership & decide how to use resources to accomplish goals’. (Drucker, 1954)
‘Management is the attainment of organizational goals in an effective and efficient manner through planning, organising, leading and controlling organisational resources’. (Daft and Marcic, 2009)
There are many definitions of management. Classical theorists such as Fayol and Taylor believed in applying universal principles to achieve ‘one best way’ of management. Henri Fayol emphasised ‘command and control’ and taught the five functions of management as; planning, organising, commanding, co-ordinating and controlling. Taylor in the Principles of Scientific Management (Taylor, 1911) taught that there was ‘one best method’ of management based on the scientific study of each task. Taylor would not have approved of the focus on the individual, as later developed by Elton Mayo using the Hawthorne experiments which highlighted the importance of social interaction (Mayo, 1949). The work of Mayo was a radical concept in its timeframe. In a review of approaches to management Crainer states that Mayo’s studies ‘were important because they showed that views of how managers behaved were a vital aspect of motivation and improved performance’ (Crainer, 1998). Given Taylor’s obsession with control and self-discipline, it is unlikely that he would have understood such a theory. The work of the classical theorists is often criticised for ignoring and being unaware of the complexity of human behaviour and the importance of worker’s feelings and the work environment. Despite criticism the ‘one best way’ theory receives a considerable amount of support. Peter Drucker states that ‘Taylor may prove a more useful prophet for our times than we yet recognize… Taylor’s greatest impact may still be ahead’ (Drucker, 1981). Douglas McGregor’s ideas about managerial behaviour had a profound effect on management thinking and practice. His Theory X and Y ideas were informed by motivation theorist Abraham Maslow’s suggestion that one factor of worker dissatisfaction was managerial behaviour. The Human Side of Enterprise (McGregor, 1960) introduced humanistic values into management thinking. These values supported efficiency, measurement and control, all elements of traditional scientific management. Theory X suggests that people do not like work and that direct pressure must be exerted to get them to perform. Theory X managers would be autocratic and highly task oriented and show little concern for worker’s attitudes. Theory Y assumes that employees are creative and eager to work. Theory Y managers promote job satisfaction and consider worker circumstances. McGregor realises these theories could be unrealistic in practice, but wants managers to put into operation the basic assumption that staff will contribute more to the organisation if they are treated as responsible and valued employees. In Herzberg’s Two Factor (motivation/ hygiene) theory it is suggested that management should never deny workers proper treatment. Herzberg’s theory has been widely read and fits in well with Maslow and McGregor’s emphasis of the value of intrinsic motivators suggesting that it is an important skill for managers to be able to motivate, communicate, give feedback and allow workers greater responsibility in planning and controlling their own work. Peter Drucker suggested that management was not a rank or title, but a responsibility and a practice, and that the skills can be taught and studied. His five basic principles of management are:
motivating and communicating
establishing measurements of performance
Management theory continues to evolve. More recent theories have included The Systems Approach, The Contingency Approach and Peter Senge’s concept of ‘The Learning Organisation’. All theories suggest that management need to practice certain skills to be successful. In the next part of the paper we highlight some of these skills.
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Control is an important skill that a good manager should have and should be able to implement in an organisation. It is a very important element of Henri Fayol’s five functions of management. Some may view the word controlling as negative and dominant with a certain stigma attached to it. Henry Fayol believed that managers should be able to identify weaknesses and errors by controlling feedback, and conforming activities with plans, policies and instructions. Managers aim to get work done through others. The way they do this, however, has been changing. Organisations, if they become less hierarchical in structure, evolve to more democratic styles of managing people. As organisations and businesses become more technologically advanced, more global and more consumer focused, managers must have high levels of interpersonal and communication skills, emotional intelligence and strong collaborative abilities. They must be able to control the environment they are in charge of. They must be able to work effectively and efficiently with their team of staff to ensure that goals of the organisation are within target.
Motivating and Communicating
The ability to motivate staff is an additional skill which will coincide with good management performance. Peter Drucker claimed that these are one of the five basic principles of management (Drucker, 1954). A good manager should possess excellent motivating skills; they must be able to motivate the staff in a positive manner and be able to delegate the workload fairly and efficiently. Good communication is very important and a vital component of organisational success. A good manager must be able to communicate to all levels of staff. They must be precise as to what they want and how they want staff to do it. A good manager must ensure at all times, the staff can see that they are in control and they know what they are doing. If employees don’t see that the manager is confident in the position it could have detrimental results. They also must have a clear set objectives and be be organised. The following case study outlines an example where bad management practices led to the collapse of a successful company.
Case Study: Enron
Enron made its millions by misleading the world about financial matters, over inflating the value of its stocks and shares, and using very strange accounting practices including the famous ‘marking to market’ to cover its tracks (Chambers, 2002). With the famous ‘pump and dump’ scheme, around thirty of Enron’s top employees made away with selling over $1 billion of their own artificially inflated stock just before the news of the company’s true financial situation became public. The organisation had over eight hundred offshore tax haven subsidiaries, or holding companies, some with outlandish names such as Mr. M. Yass meaning Mr. My Ass and Chewco and Jedi, named after Star Wars characters. These shell companies allowed Enron to keep hundreds of millions of dollars of debt off its books. This also had the effect of inflating the value of the stock, which enriched the largest shareholders. There are a lot more details in relation to the Enron case but if we look at the seriousness of what happened we can see that the managers lost complete control of company and the shareholder objectives. They focused on their own greed and ignored all policies within the organisation. The managers were able to motivate rogue traders into making very bad and unethical business decisions and committing fraud. Communication was carried out informally; verbally as well as through emails and trails of paperwork. Enron’s management did not adhere with many of the key managerial skills outlined in this paper. The moral and ethical beliefs of these managers disappeared as the greed took over. The sad case of Enron is that it not only had a negative impact on numbers and money but also on human lives. The individuals involved, mangers, directors and staff who following orders from unethical, greedy people created one of the biggest business scandals in the world to date.
From Drucker’s thoughts going back to 1955 in his writing ‘The Practice of Management’ it is emphasized that developing people within an organisation is one of the most important skills a manager must hold. He made the assertion that whilst developing an employee one must focus on their strengths and based on these strengths make high demands. This thinking has carried throughout the years and in the current climate is more apt than ever. Managers must drive and motivate their staff in order to achieve the best outputs from them. Commentators of recent times have used Drucker’s ideas as a foundation for their exploration into the development of people. Although they vary in their examination, most elude to Drucker’s concept. Dyer and Shafer develop this thinking by considering the benefits to the organisation. They say that by developing staff, not only will they be able to carry out more intricate tasks; they will enhance the organisation’s dexterity in the long run (Dyer and Shafer, 2003). Therefore a manager who develops their employees will not only fulfil organisational goals, but the employees will gain more knowledge and self fulfilment. Armstrong touches upon this and uses an interesting analogy. He declares that employees are like assets in the sense that the more you invest in them, the more value they hold (Armstrong, 2008). It can be said with confidence that developing staff is an important function to good management.
Another important characteristic a manager should possess is to be objective in their management style. A good manager must stay completely neutral when making decisions concerning employees. All feeling, beliefs and stereotypes must escape the manager’s mind whilst they are rectifying conflicts or delegating the workload. Billikopt is a keen upholder of the belief that a manager should be objective. He believes that if a manager is objective, ultimately employees will gain more respect for them and relations will be strengthened (Billikopf, 2009). In their study of Favoritism in Organizations, Prendergast and Topel state that it is hard to keep favouritism out of an organisation due to the lack of measurable objective employee determinants (Prendergast and Topel, 1996). This leads to the emergence of favoritism which distorts information on how tasks and jobs are distributed through the company. However to be a good manager one needs to find measurable objective determinants in an employee; be it working with the employee hand in hand or carrying out periodic appraisals such as the 360 Ëš feedback in order to find out more about the employee and their views on other aspects of the company.
Planning and Organising
Management as ‘the art of getting things done through people’ (Follett et al., 1973) must start with good planning. Planning is one of Fayol’s five functions of management and is an important step towards good management. It involves setting objectives and goals for a team in an organisation and defining the correct path to attain them within a stated timeframe. When planning is well established, organised and explained to a team, it allows less dispersion in the work. Everyone has a task that should combine with the tasks of other staff in working towards the same goal. For good planning, it is necessary for the manager to be well aware of the organisation’s economic condition and that of competitors, clients and the workforce. If the manager has this understanding and knowledge they can correctly estimate goals and reasonable timeframes in order to then focus on exactly what is needed. ‘The results should be hard to achieve, they should require “stretching”. But also, they should be within reach’ (Drucker 1981). According to Drucker, establishing goals which are too high would not be showing off ambition but would be foolish, and would be proof of bad management. Once the plan is defined, organisational skills are necessary to achieve the objectives of the plan. The manager has to make sure that the resources (finance and materials) and the workforce is stable and available (mentally and physically). At this stage series of question should be asked by the manager; Are the workers adequately trained? Are they motivated? Do they have the tools they need? These are necessary questions to ask as the manager has to continue coordinating all elements in order to achieve organisational goals within the set timeframe. Thus, a good manager has to be very conscious of staff capabilities and well focused on company objectives. They have to have excellent interpersonal skills in order to communicate decisions in a meaningful and comprehensive way to the team. They have to know the employees well, compare the strengths and weaknesses of each, in order to allocate the correct tasks to each member. A good manager needs to know what they are capable of, and the extent of what they can be asked to achieve. As unexpected changes could arise, a good plan should be flexible. Different scenarios and outcomes should be considered in order to be prepared to adapt in case of changes. Priorities have to be implemented, whether they are more profit-based, time-based, competition-based etc., and the tasks should be planned accordingly.
The authors conclude that the question of ‘what makes a good manager?’ should be carefully considered by organisations due to the impact management decisions have on organisational goals. Managers (good or bad) have a significant influence on employee motivation and behaviour and the effective performance of the organisation. As findings presented in the Literature Review indicate, there are many hypotheses offering answers to this question. There is compelling evidence to support this conclusion when the case study of Enron is considered. Many writers and management theorists throughout history have suggested key skills a manager must possess. Peter Drucker and Henri Fayol amongst others, indicate that effective managers should be effective at controlling, motivating, communicating, developing people, managing objectively, planning and organising. It is not enough for a manager to be friendly and keep employees content, a manager must be capable of doing and achieving. This poses many questions which organisations need to contemplate, especially in times of economic difficulty when they need to be more efficient, leaner and making sure every employee is performing to meet objectives and goals. Will the manager be strong enough to lead the organisation into the future? Do they have the necessary skills? A good manager is fundamental to this process if it is to be successful. Bad management could have a detrimental impact to the achievement of organisational goals.
What makes a good manager? If we look at the Enron case study we can see the devastating effects of an organisation not having the answer to this question. The culture which infiltrated Enron led to the collapse of one of America’s leading companies through unethical financial accounting and bad management. The authors further conclude that the answer to the question of ‘what makes a good manager?’ lies with the manager themselves. A manager must consider firstly whether they want to be a manager and secondly if they have the skills and abilities to be successful. Peter Drucker suggests these skills can be learned. Do managers receive sufficient management training? There are many reasons for bad managers in organisations. Poor succession planning or managers who simply fall into the role due to experience and seniority do not necessarily make good managers. For this reason the authors conclude that managers should be aware of the power of their influence and the importance of their responsibilities. They need to be aware of the key skills which they require to be effective. They must be in a management position for the benefit of the organisation and the employees as well as their own personal development and not for financial reward alone. As managers have a strong impact on organisational outputs and effectiveness it is fundamental that organisations are aware of the skills that lead to good management and strive to ensure all managers have these skills or have access to further training if required.
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