Course: Business Management · contributions from Henri Fayol and Henry Mintzberg. Henri Fayol The...
Transcript of Course: Business Management · contributions from Henri Fayol and Henry Mintzberg. Henri Fayol The...
Course: Business Management
The Internal Business Environment – Part 1
Level: Advanced Higher
March 2015
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© Education Scotland 2015
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Contents
Management theory 4
Leadership 38
Equal opportunities 67
Teams 80
Time and task management 102
Managing change 110
Suggested solutions 133
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Management theory
Management is a very important group within the business context,
determining the success or failure of that organisation. Without managers,
quite simply, it’s unlikely that things would get done. It is generally accepted
that they:
act on behalf of their owners, eg directors are responsible to their
shareholders
set organisational objectives, eg to move into a different market
manage others to ensure organisational objectives are achieved
ensure that the values of the organisation are maintained when dealing with
customers, employees and others.
Management theory attempts to explain how management works in
organisations. Contributions to its development have come from a range of
disciplines, such as:
sociology (behaviour)
social psychology (motivation and leadership)
behavioural psychology (motivation)
statistics (management of production).
These theories are useful in explaining management style. They include the
classical school and theories which followed later, such as human relations,
neo-human relations, systems theory and more recently contingency theory.
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The role of management
Before exploring management theories it is important to understand the crucial
part management plays in every organisation. Several writers have suggested
ways in which the role of managers can be explained. This section looks at the
contributions from Henri Fayol and Henry Mintzberg.
Henri Fayol
The Frenchman Henri Fayol (1841–1925) was one of
the first people to write about management. He
defined five functions of management which examine
the relationship between managers, the task and the
workers. He proposed that there are 14 principles of
management. Fayol’s theoretical framework is still
seen as relevant to modern-day organisations.
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Fayol’s five functions of management
Planning
This is the starting point. It creates a framework for
future decisions. It involves setting clear objectives and
devising strategies, policies, programmes and
procedures to achieve those objectives. For a senior
manager this might be writing a company strategy
document covering the next five years; for a supervisory
manager this might be planning detailed work for the
next working week.
Organising
Organising involves getting the right resources together
and creating an appropriate organisational structure to
divide up the tasks. Managers must train and recruit the
right people for the job to secure an efficient and
effective workforce. It also involves establishing
communication networks to achieve organisational
goals.
Commanding
Giving instructions in order that the necessary tasks are
carried out. Tasks could be carried out either individually
or by delegation to others.
Co-ordinating
This involves finding and training staff for the task to be
carried out and ensuring the staff are motivated to
perform the tasks and that all are working to the same
goals.
Controlling
This is essential to ensure that organisational goals
have been achieved. It involves maintaining
performance levels by monitoring and evaluating, ie
collecting and analysing key management information,
comparing actual vs planned performance and critically
reviewing plans. A senior manager might look at long-
term planned vs actual performance, whereas a
supervisory manager might be more concerned that
work is of the correct quality and that the work is done
on schedule.
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Fayol’s 14 principles of management
Division of labour
Employees should be trained in one area and build
expertise in that task. Specialisation results in increases
in efficiency and output levels.
Authority
Authority is correlated to responsibility. Managers must
be able to give instructions and exercise authority to
ensure these orders are carried out.
Discipline
Employees must comply with the rules and regulations
of the firm. Company policy must be adhered to and
consequences must be in place for those who would
disobey.
Unity of command
Each employee should have only one direct supervisor
from whom they receive their orders.
Unity of direction
To minimise confusion and conflict, teams with the same
task should be working for the same manager and
towards the same goals.
Subordination
The interests and intentions of one employee (or a
group) must not take control over the direction of the
entire team. Company objectives provide navigation for
steering the firm, not the personal agenda of an
employee or group.
Remuneration
Rewarding employees for their work through financial
and non-financial incentives. A fair salary should be
awarded as well as perks and bonuses if targets are
met.
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Centralisation
The involvement of employees in core decision making.
Involving employees through the use of quality circles
etc will minimise their resistance to change.
Scalar chain
The line of authority from top management to the lowest
ranks represents the scalar chain. Communications
should follow this chain. Employees should be aware of
their position in the chain of command.
Order
The systematic arrangement of resources: people,
machinery and finances. The workplace must be clean,
tidy, organised and efficient to achieve maximum
effectiveness.
Equity
Managers must be objective and fair at all times.
Kindness should be shown as well as discipline if
necessary.
Stability of
personnel
Retaining a core, trained and effective workforce is a
primary concern. High employee turnover should be
avoided. Workforce planning should be key to ensuring
flexibility and success.
Initiative
Permitting workers freedom to complete tasks and
execute plans in their way will result in increased effort.
Esprit de corps
Promotion of team spirit and unity amongst workers to
minimise conflict and increase productivity.
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In the 1970s Henry Mintzberg observed five chief executives at work in five
different American companies: a major consulting firm, a hospital, a school
system, a high-technology firm and a manufacturer of consumer goods. He
used a stop-watch to observe, in the course of one intensive week, the
activities of all the chief executives.
He claims that if you ask a manager what he does he describes it in Fayol’s
terms, ie planning, organising, commanding, co-ordinating and controlling.
However, if you watch him in practice it is quite different. For example, how
would you categorise presenting a retiring employee with a gold watch? From
his observations, Mintzberg identified ten roles that managers fulfil. He argued
that everything a manager does fits into one or more of these ten roles.
Henry Mintzberg
Canadian management expert Professor Henry
Mintzberg has argued that a manager’s work can
be described using ten generic roles. Mintzberg
argues these roles fall into three categories:
interpersonal (managing through people)
informational (managing by information)
decisional (managing through action).
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Mintzberg’s ten roles of management Example In
terp
ers
on
al
Figurehead
The figurehead’s role is to represent the
organisation to the outside world. This can help
others recognise the importance attached by the
firm to various activities and assist the firm in
gaining co-operation in pursuit of its objectives.
Greeting visitors
Speaking at
ceremonies
Hosting receptions
Leader
The leader’s role is to inspire and motivate
employees. Workers will want to work hard to
please their leader, thus meeting company
objectives more effectively. The leadership role
may require the manager to perform staff
training and set up teams.
Selecting the
appropriate
training and
leading the event
Core decision-
making
Chairing events
Liaison
The liaison role involves developing
relationships both within and outwith the
organisation. Managers can foster relationships
with those who could later provide favours and
important information to assist the running and
success of the firm.
Regular meetings
Lunching with
major clients
Frequent
correspondence
Info
rmati
on
al
Monitor
Monitoring checks progress at each stage. If
problems are identified, managers can take
corrective action to keep the organisation on
track to meet objectives.
Supervision
Budget control
Use of Gantt
charts
Reading reports
Progress updates
at meetings
Disseminator
Disseminating involves informing staff and
others of objectives so that everyone is clear
what is expected and less likely to go off course
in meeting objectives.
Send emails and
memos
Hold meetings
Train staff
Demonstrations
Set policy
Spokesman
The spokesman’s role is to let members of the
wider community know what the company is
doing. If a manager has displayed effective
presentation skills this may win support for the
firm’s objectives.
Set the mission
statement
Hold press and
media conferences
Attend interviews
with journalists
and reporters
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D
ecis
ion
al
Entrepreneur
The entrepreneur’s role is to come up with ideas
and decisions. Good-quality decisions are
essential to meeting company objectives. An
entrepreneur should have the ability to take
necessary risks in return for associated rewards.
Brainstorming and
innovation
implantation
Planning
strategies
Design and idea
development
Disturbance handler
The disturbance handler deals with any
problems that arise; failure to do so may lead to
delays in achieving objectives. This may involve
dealing with disciplinary, industrial action,
grievance and conflict management issues. The
disturbance handler role aims to minimise
inefficiency to ensure tasks are on track and
deadlines are being met.
Takes disciplinary
action
Follows policy for
grievance
Settles disputes
within teams
Resource allocator
The resource allocator’s role is to decide how
the company’s resources should be used; if a
company does not have the right resources in
the right place at the right time it cannot meet its
objectives. Providing budgets and financial
control is central to this role along with
allocation of staffing and machinery.
Oversee work/shift
rota
Set up teams of
staff
Purchase
resources and
machinery
Assign budgets
Negotiator
The negotiator acts as an intermediary; he/she
may act as a go-between when different
stakeholders are setting objectives. The
relationship between staff, trades unions and
other stakeholders must be maintained. Both
compromise and persuasion are necessary
tools in this role.
Communicates
with trades unions
Set up works
councils
Appoint a worker
director
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The classical school
This is called the classical approach because it was taken by the first people
to write on management in the early years of the 20th century. They
emphasised the formal hierarchical organisation with clearly defined tasks and
a common purpose. Their view was that it was possible to find the one best
way of doing things.
The classical school was concerned with increasing productivity. The most
important work in this area was by Frederick Taylor, the founder of the
movement known as scientific management. He suggested that there was a
best way to perform tasks and that all workers wanted was a fair day’s pay for
a fair day’s work.
‘The principal objective of management should be to secure the maximum
prosperity for the employer, coupled with the maximum prosperity for the
employee.’
F. W. Taylor
Taylor’s scientific management aimed to achieve:
To do this, he proposed the following:
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Classical school theorists
Frederick W. Taylor
American mechanical engineer who sought to
improve industrial efficiency.
The ‘father’ of scientific management.
A fair day’s pay for a fair day’s work.
Introduced a piece rate system.
Introduced specialisation and division of labour.
Examined the way the workers did the job in order
to maximise efficiency through motion studies.
Max Weber
German sociologist, politician and economist who
studied the processes and features of
bureaucracy.
‘Weberian’ bureaucracy theory emphasised an
impersonal approach to running a firm, where
rules, authority and power were central to effective
management.
Characterised organisations by hierarchical
structures, where workers needed expert training
and their career advancement was judged on
technical qualifications.
Henri Fayol
French mining engineer who studied and theorised
the process and role of management.
Suggested that structure is needed to ensure tasks
are achieved and that employees require clear
definition.
He believed a manager’s role was to:
1. forecast and plan
2. organise
3. command and direct
4. coordinate
5. control.
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Frank B. Gilbreth
An early advocate of scientific management and a
pioneer of motion study.
Reorganised the way of working for maximum
efficiency.
Eliminated unnecessary steps in any process and
unessential movements, eg less lifting or travelling.
Quality improvements should be continuously
made.
Used photography to capture the best way of
working.
Invested in training workers in the ‘one best way’.
Lillian Gilbreth
American psychologist and industrial engineer.
She and her husband, Frank Gilbreth (above),
were efficiency experts who contributed to the
study of industrial engineering in fields such as
motion study and human factors.
Both Lillian and Frank Gilbreth believed that
scientific management, as formulated by Taylor,
fell short when it came to managing the human
element on the shop floor.
Mary Parker Follett
An American social worker, management
consultant and pioneer in the fields of organisation
theory and behaviour.
Stressed the importance of common objectives for
workers within a firm.
She examined not just the study of productivity but
also how power is constructed and how disputes
are resolved.
She considered people greater than processes
and introduced the concept of ethics into business
administration.
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Summary
‘Hardly a competent workman can be found who does not devote a
considerable amount of time to studying just how slowly he can work and still
convince his employer that he is going at a good pace.’
F. W. Taylor
Based on scientific management which emphasises efficiency above all
else.
Extensive use of division of labour: splitting workers into groups so they can
specialise on one job (division by product) or by a task within a job (division
by process) to maximise resources, improve quality and increase the speed
of production.
Training and development of workers was given to ensure they could
complete their task proficiently and with little error and therefore reduced
wastage.
Research was done on jobs to discover the most efficient way of doing
tasks before setting standard rates of pay.
Mechanistic view of workers where they were treated like functional
machines and given little trust.
Belief that workers are only motivated by earning money.
Paying workers on results/output is known as piece rate payment.
The ideal organisation is a tall structure hierarchy (bureaucracy) with many
layers of management and clearly defined rules and procedures.
Initiative and upward communication from workers was discouraged.
Managers are responsible for thinking whereas workers should follow
instructions.
High level of supervision to ensure instructions were being followed and
procedures obeyed.
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Advantages Disadvantages
Money will always have some
positive effect on workers’
motivation, eg underpaid workers
will not work hard enough.
Piecemeal incentive rewards
workers who produce quickly and
accurately.
Hierarchical structures often
provide many promotion routes
for employees within them.
High level of supervision reduces
the chance of slacking within the
firm.
Decision-making tends to be
quick as the leadership style is
often autocratic in nature.
A clear organisation structure can
improve the flow of
communication.
Clearly defined remits of
responsibility within the firm
reduce internal conflict.
Divisions of labour produce a
high output and specialisation
can increase the quality of work.
Demotivating for workers as it
treats them like machines who
often never see an end product.
Division of labour can result in
boring and repetitive work.
Workers become inflexible as they
do not have an opportunity to
multi-skill as job rotation is
discouraged.
Workers can feel alienated and
undervalued as they are seen as
labour and not part of a team.
Assumes workers are only
interested in financial rewards and
that is the only source of their
motivation.
Authoritarian work environment
and management style can be
intimidating and stressful for
workers.
Upward communication, initiative
and worker input is discouraged
and therefore valuable ideas and
opportunities may be missed.
Lack of flexibility may result in high
turnover and absenteeism in
modern-day work.
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Limitations of the classical school approach
Relevance today
Classical school ideas are still very much in effect today in some
organisations, such as manufacturing industries, which have routine
processes and require a standardised output.
Manufacturing techniques such as lean production, which originated in Japan,
aim to eliminate any resource that is not directly associated with creating value
for the end customer. As waste is eliminated quality improves while production
time and cost are reduced.
Lean production, as with re-engineering processes, is based on the principles
of scientific management as it attempts to measure the time it takes to get an
order to a customer and to reduce the time spent on each of the steps in the
process involved.
Scientific management can also be seen in tertiary (service) sector industries,
such as food outlets, so that a uniform service is provided throughout all
branches. For example, McDonald’s aimed during their international
expansion to create a standardised set of food items, a core menu, which
tastes the same whether in Singapore, Spain or South Africa. McDonalds also
set specific timings on how to carry out cooking tasks or assemble burgers to
maximise efficiency and output.
In Taylor’s day people had little money therefore they were very motivated to
increase their pay and money worked as a motivator. Today, with the
increasingly difficult economic conditions, money may work well for motivating
staff.
When Taylor’s ideas are fully implemented, tasks become monotonous and
repetitive, and in the long run staff become bored and demotivated so money
loses its place as the strongest motivator.
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The human relations school
The classical school, particularly scientific
management, was criticised for treating people like
machines and ignoring the influence that social
factors can have at work. This led to a new way of
looking at management, known as the human
relations school.
Elton Mayo, an Australian industrial psychologist, is
one founder of the human relations movement.
Mayo and his team, in conjunction with the
management and employees, conducted research
at the Western Electric Company in Hawthorne,
Chicago from 1927 to 1932. They were asked to investigate the reason for low
productivity at the factory.
One place in which Mayo and his colleagues conducted experiments was the
relay test assembly room. The work consisted of assembling telephone relay
units, which involved putting together a small number of components on a jig
and fastening them with four screws. It was essentially a routine, repetitive
task that took about a minute to complete. All the workers were women and
were paid on a piece basis (their pay was determined by the amount that each
individual produced).
During the study five assemblers and a layout operator, all women, were
segregated away from the main production area. All the materials needed for
work were brought to them. An observer supervised the workers and
maintained a friendly atmosphere, consulted with the workers and listened to
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their complaints. The observer was, in fact, a social scientist and member of
the research team.
During the experiments the following changes in working conditions were
introduced:
1. all six workers were treated as a single group for the purposes of
calculating piecework
2. standardised rest periods of 15 minutes in the morning and 10 minutes
in the afternoon were introduced and a snack was provided by the
company
3. working hours were reduced, either by stopping earlier in the afternoon
or by not coming in on a Saturday morning.
The researchers compared the output of the workers before and after
becoming part of the group. Output was higher when they were part of the
group and did not seem to be influenced by the physical conditions at work.
Mayo and his team found the same thing when they altered other aspects of
working conditions, such as the lighting. Productivity rose but this was not
apparently due to changes in physical working conditions. The factors that did
affect productivity were:
the social interaction and group norms established by the female
workers in the group
the friendly atmosphere where the views of the female workers were
listened to
the group felt important as the observer and others were paying attention.
Mayo and his colleagues concluded that work satisfaction depended to a large
extent on the informal social pattern of the work group where norms of co-
operation and high output were established because of a feeling of
importance. Physical conditions, or financial incentives to motivate workers,
had little impact. People will form workgroups and this can be used by
management to benefit the organisation.
Workers, Mayo argued, were activated by a logic of sentiment, and
management by a logic of cost and efficiency. Conflict was inevitable unless
the difference was understood and allowed for.
This enabled the researchers to make certain deductions about how
managers should behave.
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‘Management succeeds or fails in proportion as it is accepted by the group as
authority and leader.’
Elton Mayo
The basis of the human relations movement is the use of social sciences to
secure the commitment of individuals to the aims and activities of the
organisation. While this is seen as too simplistic today, it did establish the
importance of social factors in the organisational context.
Limitations of the Hawthorn experiments
All the workers were female – in the social context of the 1930s, this may
have made them more willing to participate in the experiment and to try to
make it work.
The experiment concentrated on a small segregated area and thus had a
very narrow approach (several other experiments were conducted in other
areas of the factory but each was done in isolation).
Factory-based experiments are limited in their transferability to other
sectors of work.
Summary
A reaction to the classical school approach, human relations focused on the
value of social factors and human interaction.
Mayo discovered that people are more motivated by the context in which
they work and by the relationships which evolve in work, rather than
money.
Stresses the importance of workers’ needs in order to increase output.
The ‘Hawthorne effect’ refers to a phenomenon whereby workers improve
and adapt their behaviour in response to a change in the working
conditions set by management.
The importance of groups and team working was discovered in the
workplace – workers may be influenced more by informal than official group
leaders.
Workers’ motivation increased from the social interaction and when
managers took an interest in them, leading to an improved work rate.
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Employees have more individual freedom over how jobs are performed and
feel valued as they are involved in decision-making.
Emphasised non-financial motivators, good working conditions, the
importance of teams and staff welfare.
Emphasised the importance of communication between management and
employees in promoting high levels of output.
Relevance today
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The neo-human relations school
While the Hawthorne experiments were significant in highlighting the
importance of the social aspects within an organisation, Mayo’s work still did
not show how work practices and organisational structure should be modified
in order to improve worker satisfaction and improve productivity.
During the late 1940s it was realised that the links between organisational
design, motivation and productivity were a lot more complex than first thought.
These new ideas were known as the neo-human relations school. Writers in
this school took a more psychological orientation and looked at issues of
motivation to work, group membership and leadership style.
Neo-human school theorists
Abraham Maslow
American psychologist best known for creating
the hierarchy of needs claiming people have five
innate needs that can be placed in a
hierarchy/pyramid.
The model is used to determine the progression
of psychological health predicated on fulfilling
innate human needs.
Maslow suggests management methods need to
be appropriate to the level on which workers are
currently operating.
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Frederick Herzberg
American psychologist famous for introducing job
enrichment and the motivator-hygiene theory.
Job enrichment involves allocating more
interesting, challenging and complex duties to
stimulate a sense of purpose in achieving
objectives.
Herzberg’s ideas, such as empowerment of workers and job enrichment,
suggest that employees respond to being given greater responsibility and
having their contribution recognised.
Managers need to provide satisfiers, such as greater responsibility, and
ensure that hygiene factors are in place.
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Douglas McGregor
An American management professor whose work
is closely related to that of Maslow and Herzberg.
He devised the Theory X and Theory Y theories
of management thought towards workers’
motivation.
Theory X Theory Y
Assumes workers enjoy their duties
Similar to a classical approach, as they are self-motivated and
management assumes employees exercise self-control.
are inherently lazy, lack ambition Assumes workers will prove eager
and shy from responsibility. to respond to increased
Assumes workers are indifferent responsibilities and empowerment
to the organisation and will resist becoming more productive as a
change. consequence.
Managers need to lead and Management believe workers are
control; a high level of not naturally passive and resistant
supervision, policy and controls is to change but active agents at
developed. work.
Emphasis on incentivising, Management should provide the
forcing, threatening and coercing right environment for employees to
employees to work, with a strict achieve their own objectives whilst
disciplinary procedure in place if striving for organisational
they fail to do so. objectives.
Often used in a hierarchical There should be more self-
structure with a narrow span of management and upward
control. communications along with
Managers believe that employees participation in the decision-making
only work for financial reasons process.
and nothing else. Effective use of teams and
A blame culture may be prevalent interdisciplinary groups are
in the workplace. encouraged.
Can result in diseconomies of Emphasis on recognition,
scale, which is costly to a firm. achievement and empowering
workers.
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McGregor in action
Theory X Theory Y
Motivation
Financial incentive
Money/salary
Fear of job security
Achievement/recognition
Reaching potential
Social interaction
Empowerment
Communication
Little or no
involvement in
decision making
Hierarchical
communication
lines
Stifles creativity
Participative in decision
making
Upward communication
Quality circles encouraged
Allows initiative
Tasks
Requires direction
Shy away from
extra work
Avoids
responsibility
Blame culture
Relishes challenges
Thrives on extra tasks
Seeks development
Accepts accountability
Management
Authoritarian and
controlling
leadership
Gives high level of
supervision
Forces or coerces
Threatens
disciplinary action
Employees are self-
managed
Laissez-faire and
participative leadership
Use of empowered teams
Target setting
Attitude
Dislikes work
Skiving and
goldbricking
Work is boring
Needs to be forced
Wants to work in the right
conditions
Less resistant to change
Ambitions and drive
McGregor believed that Theory Y would lead to higher motivation. He
considered conventional assumptions (Theory X) to be both limited and
unrealistic because they relied on authority as the primary means of control,
which he saw as likely to generate resistance, restriction of output,
indifference to organisational objectives and a refusal to accept personal
responsibility. McGregor recognised that much of the behaviour in
organisations did reflect the Theory X view.
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However, he believed that this type of behaviour was not a consequence of
the inherent nature of staff but a product of the way in which staff were being
treated by organisations.
McGregor has highlighted that if managers believe that all their workers want
is more money and/or greater social satisfaction, they will therefore only
provide for these basic needs to be met. If managers do not accept that staff
have more complex needs, they will not be providing opportunities at work for
the staff to satisfy them. The result may well be frustration and a lack of
commitment on the part of the staff.
McGregor’s theory has been applied successfully through the modern
Japanese approach of total quality management (TQM), which is based on his
Theory Y and is widely implemented throughout the world. The neo-human
relations approach as a whole drew attention to issues such as job
satisfaction, participation and leadership style, all of which remain important in
management today.
Limitations of the neo-human relations approach
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Systems theory
The classical school approach to management looked at the structure and
processes of an organisation and how it could operate more efficiently while
achieving maximum productivity but rather ignored the attitudes of those
working in the organisation. On the other hand, the human relations school
focused on the people in organisations but neglected the technical aspects.
The neo-human relations school addressed some of the problems of
reconciling people and organisations but tended to do so from an individual,
psychological perspective rather than a holistic view.
All these approaches are rather narrow and do not look at the
organisation as a whole and all the various factors that may influence
how it operates.
Systems theory is an attempt to address this problem. Systems theory argues
that in any organisation the multitude of parts and processes are so
interrelated and so interdependent that a small change in one part
necessitates changes and adaptations in other parts. Often called the open-
systems approach, it views any one organisation as an interdependent piece
of a much larger whole, looking outside to the environment in which the
organisation operates. This wider environment can include suppliers,
customers and the government as well as peer/rival organisations and other
factors such as the state of the economy, demand, fashion, technology and
geographical conditions etc. The environment then impacts on organisational
design and the functioning of the organisation itself.
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The approach seeks to find the best fit from three elements:
As an open system it draws in resources from the environment, eg raw
materials, converting them into goods and services which are then fed back
into the environment, so it is a cyclical process. For example, Ford makes cars
which it sells to its customers for money. The money is recycled in the form of
wages, tax and the purchase of more raw materials.
This socio-technical approach to an organisation recognises that it is
necessary to incorporate both the social and technical aspects of work if an
effective system is to be created. This concept was developed by the
Tavistock Institute of Human Relations in the study of coal mining in the north-
east of England.
Prior to the introduction of new technology to coal mining, teams of men
worked closely together, with each member of the team being highly
dependent on the others to work effectively and earn a decent wage. With new
technology such as mechanical equipment, the teams were broken up,
resulting in deterioration in many areas, eg industrial disputes, numbers of
accidents, absence levels etc. The problem was solved by building teams back
into the work to encourage interdependence among workers.
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Systems theory relies on a number of factors to be considered by
management for the model to be effective.
Factor Suggestion for management
Interdependence
Reliance on others within the firm is essential in a
systems approach, eg employees depend on each
other as well as the managers and the companies
they work for to provide guidance, training and
assistance on the job.
Establish a positive corporate culture.
Use a company-wide open-door policy.
Synergy
The system dynamics must work in harmony to
create an efficient and quality output.
Inter-group conflicts are counter-productive in a
system approach so rotate members across various
teams.
Interdisciplinary working and matrix structures are
key.
Clear and well-publicised procedures to ensure
everyone within the firm understands the end goal
and the ways to achieve it.
Employee
relations
Encourage collaborative working with management.
Empower workers to take responsibility for their
actions.
Give positive praise and recognition of achievement.
Upward communication through quality circles and
regular meetings.
Invest in training and development.
Control
mechanisms
Frequent supervision and quality assurance to
review the system and its components.
Set targets and allocate budgets to provide
accountability.
Information
Use employee focus groups and quality circles.
Obtain feedback from staff appraisal and meetings.
Analyse financial information to assess
effectiveness.
Use PESTEC analysis to be aware of the impact of
the ever-changing external business environment.
Conduct market research to improve the firm’s
systems.
Use informal communication channels, eg
grapevine.
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Summary
System theory is a holistic approach, classical approach was considered
‘organisations without people’ and the human relations approach was
considered ‘people without organisations’.
Less of a management theory and more of a way to analyse and design the
workflow of the organisation and its many elements.
Views the organisation as a complex system of people, tasks and
technology with each interlinking and impacting on one another, known as
the ‘system dynamics’.
Systems are made of many sub-systems (components) which work in
harmony. This encourages interdisciplinary relationships, matrix structures
and team working if necessary.
Acknowledges that the human/social factors alone are not the most
important consideration in achieving the company goals and that the
business environment and the external influences must also be considered.
A business is viewed as an open socio-technical system that interacts with
its environment and combines inputs, processes and outputs.
Systems approach argues no single theory can guarantee success and
does not provide a ready-made solution for managers – each ‘system’ is
tailored to suit the organisation’s objectives.
A change in one part of the system has a subsequent impact throughout as
the system dynamics are interdependent and therefore this requires
effective forward planning by management.
The systems approach suits organisations which face constant change and
therefore it has become more relevant in recent years because of
increased change in the external environment and the trend toward
globalisation.
The systems approach focuses on the process, ie what is going on, rather
than the scientific method of doing the job.
It encourages a customer service focus from managers because it
emphasises the relationship between the organisation and its environment.
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Contingency theory
This approach to management theory is a product of more recent times and
can be seen as a development of the systems approach. Similar to systems
theory, it is based on the assumption that there is no single approach to
organisational structure that will suit all organisations at any point in
time.
Both the classical management theories and those based on human relations
sought to offer this panacea. Contingency means ‘it depends’. Organisations
consist not only of tasks to be performed but also of people to perform them,
both in the same environment. The tasks need to be carried out while people
try to grow and develop.
Contingency theory tries to get the best fit between task, people and
environment. It draws on earlier approaches and stresses three factors:
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The challenge for managers is to develop an approach that best suits a
particular situation. For example, with respect to structure it would be to
design an organisational structure that best suits the environment in which the
organisation operates. In this case, contingency implies that within the same
organisation there may be units of bureaucracy, units operating in a matrix
structure and units which are divisionalised. The only criteria for good design
are task performance and individual/group satisfaction. The contingency
theory of management can be applied to all aspects of management, eg
leadership or choosing a company structure.
Factors which impact approach
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Summary
Building on the ideas of systems theory, a contingency approach focuses
on interrelationships and reliance between the external environment, the
organisational structure, the task and the employees in synergy.
A contingency approach argues that no single ideal method of
management exists – the best approach will depend on the variables that
must be considered.
The variables to be considered can include the size and type of the
organisation, the technology available, its history and corporate culture, the
nature of the work, the skill of staff, the experience of management, the
demands of the market, the finance available etc.
Each situation and organisation is unique and management must be
tailored accordingly to achieve maximum organisational effectiveness.
Organisations cannot exist in isolation, they must take into account all
factors of the internal and external business environment to adapt and
survive.
Management must be flexible – business finds itself in changing
environments so managers should be able to adapt to all circumstances;
some situations will call for a more authoritarian approach, eg in a crisis.
A contingency approach helps managers adjust to changes in social and
economic circumstances, eg by making changes to accommodate flexible
working practices.
Modern organisations are more likely to use a contingency approach,
choosing the best mix of different ideas about management to suit the
particular situation in which they find themselves.
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Relevance today
An organisation will face a variety of choices when determining how it should
be structured, how it should organise the work and how it should be managed.
Effective organisations use structures that take account of a number of
variables (contingencies) that directly impact on how it achieves its objectives.
Leadership
style
Organisations need to ensure they match suitable
managers to relevant areas of work. For example,
relationship-orientated managers are better suited to
working in informal situations whereas a formal approach
requires a task-orientated manager.
Organisation
structure
Organisational structure can have a direct and significant
impact on employee relations, making contingency theory
highly relevant in modern day business. No single
organisational structure is inherently better than another.
For example, a flatter organisational structure with less
supervision is likely to enhance an organisation’s
relationship with employees in highly creative roles
whereas a taller, hierarchical structure is often suited to
large organisations as it gives greater control.
Many modern multinationals use a combination of
structures, eg RBS keeps functions such as finance and
HR centralised while allowing managers in different
businesses in the corporate market and retail market
divisions to respond to the characteristics of the markets in
which they operate.
Staff skill
Inexperienced or new workers may require a more directed
approach than experienced ones.
A bureaucratic (mechanistic) structure where roles and
expectations are clearly spelled out will be more
appropriate than an organic one where individuals are
given freedom of action to respond to different
circumstances.
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Nature of the
work
Manufacturing firms and factory work will be suited to
elements from scientific management and using classical
approaches to planning workflow, where tasks are routine
and repetitive and productivity is the driving factor.
Service sector firms may use a more decentralised
approach to work planning, empowering employees or
using autonomous teams. Delegated decision-making is
useful in work where there is direct contact with customers
as it gives flexibility to deal with non-routine situations.
Organisations which combine production and service may
need to adopt different approaches in each area, eg a
restaurant might have a kitchen where everyone does
what they are told to by the head chef but are allowed
flexibility to welcome diners and respond to customers’
requests for specific seating as they see fit.
External
environment
Economic conditions, such as a recession, may result in
downsizing or cost cutting, which impacts on the structure
of the firm as fewer layers of management may be used.
The increase of global online competition from the rise of
e-commerce sales in retailing means firms need to develop
flexible structures that can respond rapidly to changing
market demands.
Mechanistic structures may still be appropriate to firms in
slow-growing markets with little competition, although
privatisation of most state-owned monopolies in the UK
over recent years means there are very few such markets
left.
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Case study 1: Management theory
Are there too many managers?
There are five million managers in the UK today, ten times as many as there
were 100 years ago. Even if you don't actually manage anyone, your title
pretends you do: a conductor is a train manager, an administrator is an office
manager, a technician is an IT manager and so on. We've all become
obsessed with management despite being able to get through the industrial
revolution without any ‘masters of business administration’ at all.
In the UK, we mostly distrust our managers, sometimes with good cause. We
are suspicious of them not just because we don't know what they do – we fear
they don't know either. By the end of the 19th century an engineer from
Philadelphia came along with a very clear idea of what management was all
about – efficiency.
Frederick Taylor was the world's first management consultant and his fad
became known as scientific management. He believed that for any given
process, there was one best way to do it. The average worker, he thought,
was pretty dim and hopeless so the answer was a rigid system with a
manager in charge of making it happen.
‘It is only through enforced standardisation of methods, enforced adoption of
the best implements and working conditions, and enforced co-operation that
this faster work can be assured’, he said.
‘And the duty of enforcing the adoption of standards and enforcing this co-
operation rests with management alone.’
Taylor's beloved time-and-motion studies were initially used in factories, but it
wasn't long before they reached the office. In the UK, however, scientific
management was never taken up with much enthusiasm, which was mainly
because, at least until the second half of the 20th century, British managers
were pretty much amateurs.
After World War II most of the major firms were run not by people who had the
first clue about business but by generals. There was one apiece at British
Railways, British Airways, at Vickers and even at the BBC. They believed in
one thing only – hierarchy. These managers didn't think they had anything to
learn, which was partly why the first proper business school in the UK didn't
open until 1965, more than a century behind the USA and Europe.
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With the growth of corporations in the first half of the 20th century, the march
of management wasn't to be stopped and with so many more managers, some
of them need to be managed themselves – hence the middle manager. Being
effective in this new role required a whole new set of skills.
According to the American sociologist C. Wright Mills, a successful manager
had to ‘…speak like the quiet competent man of affairs and never personally
say no. Hire the no-man as well as the yes-man. Be the tolerant maybe-man
and they will cluster around you filled with hopefulness. And never let your
brains show.’
Excellent advice all round. The maybe-man still fares pretty well in offices
some 60 years later, although brains have possibly staged something of a
come back.
But back then there was no talk of diversity, let alone authenticity. It was all
about conformity and hard work. Today, however, the executive must appear
to enjoy listening sympathetically to subordinates and team-playing around the
conference table.
As for work–life balance, there wasn't any back then. A sales manager could
be heard saying: ‘I sort of look forward to the day my kids are grown up. Then I
won't have to have such a guilty conscience about neglecting them.’ These
days, however, modern managers can supervise workloads whilst making a
hot chocolate in their pyjamas at home with the use of audio-conferencing and
the increase of ICT, such is the evolution of management.
Adapted from: bbc.co.uk/news
You should note that although the following questions are based on the case
study above, you will need to make use of knowledge and understanding you
have gained whilst studying the course.
Marks
1 With reference to scientific management, discuss the relevance of
financial incentives in modern day. 6
2 Describe the ways a manager could use Maslow’s hierarchy of needs to
improve the productivity of employees. 6
3 Examine the use of contingency management theory in modern
practice. 8
Total 20
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Leadership
‘A leader is best when people barely know he exists, when his work is done,
his aim fulfilled, they will say: we did it ourselves.’
Lao Tzu
Leadership is the ability to influence the thoughts and behaviour of others. In
the case of the business environment, this is to achieve organisational goals.
Leadership is a necessity in today’s organisations, in order to lead them
through changing circumstances such as competition, legislation etc. It is a
key element of any manager’s job.
Managers and leaders
The terms ‘management’ and ‘leadership’ are often used interchangeably.
Often today the ‘term leader’ replaces ‘manager’, which historically was the
norm.
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Nevertheless the work of leaders and managers may be complementary. It
could be argued that managers must carry out Fayol’s functions but must also
deal with change. Similarly, leaders manage an organisation through periods
of change but may also have to make plans and control events to ensure that
the new situation functions in the way that is intended.
Leadership theories
Many leadership theories try to explain why some people are more successful
than others in getting others to follow them. These include the following:
Dr John Paul Kotter
American professor and author specialising in the
study of corporate leadership.
He argues that good management is bringing
order and consistency to key dimensions such as
the quality and profitability of products, while
leadership is about coping with change.
In Fayol’s terms, managers are involved in
planning, organising, controlling etc whereas
leaders are involved in setting direction and
aligning people to achieve goals.
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Trait theory
The first theories of leadership can be described as trait theory. This approach
states that the ability to lead a group of people is something you are born with,
not something that you learn, therefore people should be selected as leaders
rather than trained.
Trait theory suggests that leadership is unique to only a select number of
individuals and that these individuals possess certain immutable traits that
cannot be developed. Traits are personal characteristics that leaders may
have, for example:
It has even been said that people’s physical appearance, dress code and
stature can affect their ability to lead.
Most of the early work on the trait approach investigated the difference
between leaders and followers to ascertain any discrepancies in personality
and physicality. Many early theorists would argue that regardless of the
situation, there is a set of traits which would result in a successful leader.
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Trait theory is criticised on a number of fronts:
These criticisms led to the development of a different approach, called style
theory.
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Style theory
Style theories highlight what successful leaders do rather than what they are.
The underlying principle behind this approach is that, if leaders behave in a
certain way, they will be successful.
Most style theories argue that leaders have two main issues to tackle:
There are many possible leadership styles. One way to think of them is to see
them as a spectrum with total task orientation at one end and complete people
orientation at the other. Between these two extremes, a number of
combinations of task and people orientation are possible.
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Autocratic/authoritarian leadership
Autocratic leaders define the tasks that have to be carried out, state who is to
carry out the tasks and ensure that tasks are closely supervised. Comment or
discussion from employees is not encouraged. This style is at the task
orientation end of the spectrum, often associated with McGregor’s Theory X
approach.
Leader has absolute authority.
Leader has no consultation with subordinates on decisions.
Leader discourages upward communication.
Leader does not trust employees.
Leader motivates through threat and punishment.
Leader dictates to employees on which task and how to do it.
Leader expects subordinates to obey orders without receiving any
explanation.
Often viewed as controlling, bossy and tyrannical.
Advantages
Decision-making is normally quick,
with management at the centre.
Tasks and relationships are clearly
defined, which avoids confusion.
Employees receive direct
assistance towards achieving their
goals.
Effective supervision can be
provided through detailed orders
and instructions.
May reduce stress as work orders
are clearly set out.
Inexperienced staff may be more
motivated by an experienced
leader.
Disadvantages
Lack of input from employees
means their experience or skills
are not utilised – creativity and
initiative are suppressed.
Encourages a blame culture and
resistance to management
decisions.
Employees cannot develop to their
full potential.
Dependency on the leader – if
they are absent, productivity
lowers.
A high level of supervision is
required – lack of trust prevalent.
Motivation is likely to be poor.
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Democratic/participative leadership
Democratic leaders set objectives but leave employees to achieve these in a
manner that suits them. A democratic approach involves much communication
between the leader and the group, with employees participating in the leader’s
decisions. This style falls at the people orientation end of the spectrum, often
associated with McGregor’s Theory Y approach.
Leader shares problem-solving responsibilities by setting up teams.
Employees are involved in decision-making but the leader has ultimate
responsibility.
Leader makes decisions but takes time to explain why (persuasive style).
Leader discusses before making a decision (consultative style).
Leader relies on the specialised knowledge of the team members.
Leader encourages upward communication through quality circles.
Leader offers guidance to team members but also participates in the group.
Leader recognises and encourages achievement.
Advantages
Group members feel engaged in
the process and are more
motivated.
Utilises employees’ knowledge and
experience in achieving objectives,
which can make the firm more
competitive.
Ensures reasonable targets are set
as employees are involved in
setting them, which can improve
productivity and make them less
resistant to change.
Increases employees’ job
satisfaction by providing greater
responsibilities/empowerment.
Prepares employees for promotion
opportunities by expanding their
role and responsibilities.
May require less supervision if
employees are self-controlled and
take pride in their work.
Disadvantages
Problematic when there is a wide
range of opinions and there is no
clear way of reaching an equitable
final decision.
Employees may be unable to work
without close supervision.
Encouraging employees’
involvement in minor operational
issues but not major decisions may
lead to dissatisfaction.
Due to discussion the decision-
making process could be lengthy.
Some employees will not be
interested in helping to make
decisions and could feel pressured,
leading to increased stress.
Requires an effective leader to
communicate and coordinate
autonomous teams to avoid conflict
within the firm.
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Laissez-faire (free rein)/delegative
Laissez-faire is a French term that means leave it be. This type of leadership
style allows employees to carry out activities freely within broad limits. For this
style to work there has to be good team work and good interpersonal relations.
Employees need to be competent to handle free-rein responsibility and allowed
the autonomy to make decisions independently.
Leader does not interfere in group activities.
Leader delegates authority and power to employees, giving them a high
degree of freedom.
Leader provides little or no direction for the team.
The team is largely self-governing.
The team may be expected to set own goals, resolve their own problems
and make their own decisions without consulting senior management.
Ironically requires a highly competent leader to set up teams initially, select
the best employees for the tasks and maintain motivation throughout.
Advantages
Employees feel trusted,
respected and empowered,
increasing their commitment and
collaboration, resulting in high-
quality performance.
Reduces the need for
supervision, which can reduce
costs for the firm in managerial
wages.
Managers delegate control and
can focus on quality assurance
and feel less stressed and
pressured.
Employees feel liberated to be
more creative and can rapidly
develop their skillset.
Disadvantages
Can lead to poorly defined roles,
which results in confusion and time-
wasting.
Employees may feel pressure from
being given free rein and this can
lead to stress and demotivation.
Poor quality of work can occur
without being identified if employees
are not sufficiently qualified or
informed.
Competent employees may demand
higher wages from being effective in
an empowered position, or leave for
a promotion from a competing
organisation.
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Style Appropriate in the following situations
Autocratic/
authoritarian
leadership
Where work is repetitive and boring.
In a crisis or a situation of urgency when decisions need to
be taken quickly and a plan of action starts in the short
term.
When there is little time for collaborative working and
discussion.
When clear direction is needed.
When the leader is most knowledgeable.
Staff who are new, untrained or lack confidence, and who
do not know which tasks to perform or which procedures to
follow.
Employees do not respond to any other leadership style.
If a manager’s power is challenged by an employee.
In situations of conflict and confusion.
If the department/area/company was poorly managed
previously.
When there are high-volume production needs on a daily
basis.
Democratic/
participative
leadership
Where the leader wants to keep employees informed about
matters that affect them such as when changes must be
made or problems solved that affect employees or groups
of employees.
Leader wants employees to share in decision-making and
problem-solving duties.
Leader wants to provide opportunities for employees to
develop a high sense of personal growth and job
satisfaction.
When there is a large or complex problem that requires lots
of input to solve.
When the leader wants to encourage team-building and
participation.
When flexibility is required, ie allowing employees to make
decisions when with a client.
When the leader lacks the skills and knowledge, and
requires teams to be accountable for specialist support.
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Style Appropriate in the following situations
Laissez-faire (free
rein)/delegative
Employees are highly skilled, experienced, and educated.
Employees are trustworthy and loyal to the firm.
Employees are motivated in making their own decisions.
Employees have pride in their work and the drive to do it
successfully on their own.
Outside experts, such as staff specialists or consultants, are
being used.
Summary
The basis of style theory is that some employees will respond differently to
being led by people with different styles of leadership and that employees
will work harder for managers with particular styles of leadership.
Style theory looks at leaders in terms of the different ways in which they
behave and highlights what successful leaders do rather than what they
are.
Style theory suggests there is one best leadership style for each situation,
which is probably not the case, and a combination of styles are needed.
Managers often use an integration of styles to personalise their approach to
ensure effective working relationships are maintained and the company’s
objectives are being met.
Leadership style is a spectrum ranging from task-orientated autocratic,
where manager’s authority is paramount, to people-orientated laissez-faire,
where subordinates’ freedom is paramount.
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Contingency theory
Contingency theory seeks to take many more variables into the equation. It
suggests that the most suitable style of leadership will depend on a wide
range of variables. The underlying assumption is that a style of leadership that
works in one set of circumstances will not necessarily work in another, so the
best leader is not one with certain traits or a single style, but one who is able
to adopt different styles in different situations.
There are several versions of contingency theory:
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Fiedler contingency model
Fred E. Fiedler was an American researcher in
industrial psychology.
He tried to determine the most appropriate
leadership style when dealing with certain
situations or groups at work based on changing
factors (contingencies).
Fiedler identified three characteristics which determine the nature of
situations so that the most suitable leadership could be adopted.
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Fiedler argued that there are two categories of leadership:
Fiedler maintained leaders who are more task orientated are good leaders
in extreme situations, such as:
Leaders who are more relationship orientated are good leaders in situations
where there is average trust with subordinates, structured work and high
power.
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Fiedler found that it was difficult for people to change leadership styles. An
autocrat will always lead in an autocratic style whereas a leader who
encourages involvement will tend to be democratic. Fiedler’s contingency
model therefore suggests that improving effectiveness can often require a
change in the workplace, culture and environment to fit the leader. This
process is called job engineering or job restructuring.
Organisations need to ensure a ‘leadership fit’ by matching task-oriented
managers to situations requiring a formal approach to organisation and
relationship-oriented managers to more fluid ones.
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The ‘best fit’ approach
Charles Handy was an Irish author and
philosopher specialising in organisational
behaviour.
He suggested that any leader must take four
factors into consideration before an appropriate
and effective leadership style can be determined.
This approach suggests that there is no perfect style of leadership applicable
to all situations, so a leader must achieve the ‘best fit’.
For example, if a leader has a fairly structured style, works with a group that
likes to be dealt with fairly democratically, works on a loosely defined task,
then for ‘best fit’ there has to be some movement in attitude by at least one if
not all of the three elements involved, given the environment in which this is
carried out.
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Hersey and Blanchard’s situation
approach
Paul Hersey was an American
behavioural scientist and entrepreneur,
who, together with Kenneth H.
Blanchard, an American author and
management expert, engineered
situational leadership.
The situation approach argues that leadership behaviour should differ
depending on the situation and also the maturity of the employees. Here
maturity refers to the employee’s work experience, ability level and their
willingness to accept responsibility.
Maturity is defined in two separate ways:
For example, a new employee would relate more to a directive/autocratic
leadership style, moving to participative as they settle in the job and
eventually to laissez-faire as the employee works independently and without
close supervision. This approach is suitable not just for leading individuals
but also for teams, eg a new team that would need to be led in the initial
stages (during forming and storming).
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LEADERSHIP
Hersey and Blanchard defined four styles of leadership that would be applicable depending on the situation and maturity:
Hersey and Blanchard’s approach has been criticised as the concept of maturity is more wide-ranging than they suggested, for example
employees can be very competent in their job yet lack self-confidence or indeed be very assertive but not very productive.
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LEADERSHIP
John Adair: Action-centred leadership
John E. Adair is a British author who
specialises in business and military leadership.
He argues that in any situation where a group
of people are trying to achieve some goal, one
or more of those people will emerge and act as
a leader to the others.
He describes the role of a leader as involving three interlinking
responsibilities that must all be satisfied. These circles overlap because:
the task can only be actioned by the team and not by an individual
the team can only achieve task performance if all the individuals are fully
developed
the individuals need the task to be challenged and motivated.
He emphasises the importance of distinguishing between the individual and
the group because there will never be a perfect match between individual,
group and task. This too is a contingency theory since Adair argues that
leaders alter the mix of effort devoted to satisfying various needs according to
the requirements of the overall situation.
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Adair’s eight functions of leadership
Defining the task
Setting clear objectives as in SMART goals
Providing direction and vision
Avoiding confusion
Planning
Looking at alternative ways to achieve the
task
Having contingency plans in case of
problems
Use of planning aids and brainstorming
Briefing
Creating the right team climate, fostering
synergy and making the most of each
individual through knowing them well
Regular meetings and use of the ‘grapevine’
Controlling
Being efficient in terms of getting maximum
results from minimum resources
Regular supervision and quality checks
Use of appropriate and effective delegation
Evaluating
Assessing consequences and identifying how
to improve performance
Reviewing individual and team performance
Use of staff appraisal and peer appraisal
Motivating
Setting realistic challenging targets
Providing fair rewards and bonuses
Giving recognition and praise
Organising
Organising self and others through good time
management, personal development and
delegation
Use of time and task management
techniques
Setting an example
The recognition that people observe their
leaders and copy what they do
Establishing trust and respect from
subordinates
Being prepared to make sacrifices as the
leader
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Six dimensions of leadership
Andrew Brown lectures at Cambridge
University's business school and has
published one of the most recent contingency
theories of leadership.
He claims that there are six (roles) dimensions
of leadership which all leaders use depending
upon the circumstances they find themselves
in.
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Factors which influence leadership
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Factor Influence
Time available
Less time means less discussion − a more
autocratic style may be appropriate in this case.
Respect and trust
More respect and trust (high maturity)
established with subordinates allows for a
democratic/free rein leadership style.
Information available
If employees do not have information or an
understanding then autocratic leadership is
suited to guide them.
Skills of staff
Highly competent staff will allow democratic
leadership and can be given free reign as there is
less need for supervision by management.
Internal conflicts
A more direct/dictatorial input will be needed if
there is internal strife between staff.
Nature of task
Complicated tasks require more direction.
Unstructured work could allow for all staff to be
involved using an approach of delegation. A
creative task needs ideas and imagination and
autocratic leadership may stifle this.
Leader’s personality
Leaders may naturally lead in one style because
of their personality traits, eg an assertive nature
lends itself to an autocratic style of leadership.
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Group/worker’s
personality
Some individuals prefer to be spoon-fed
instructions. Others prefer free rein to be creative.
Some may rebel against involvement in
decisions.
Group size
Democratic leadership style can lead to
confusion in a bigger group.
Organisation culture
The atmosphere in an organisation can persuade
managers to use specific styles. Some will be
informally more acceptable than others.
Traditional organisations with tall hierarchical
structures will likely use an autocratic style.
Financial constraints
Tight budgets could lead to autocratic styles in
order to control spending and regulate
expenditure decisions.
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Qualities of a leader
Quality Description
Honesty and
integrity
Leaders must display sincerity and truthfulness in their
actions. Deceptive and back-handed behaviour will not
inspire trust. These qualities will mean that employees
are more likely to trust what the leader says.
Risk taking
Ability to calculate the reward against the loss and
implement difficult decisions.
Administration
and organisation
Ability to manage resources and paperwork to ensure
the business runs smoothly. Deadlines should not be
missed and information should be filed appropriately.
These qualities save time and improve efficiency.
Fairness
Good leadership will value everyone equally. Lack of
fairness in giving rewards and penalties will break trust
and employees will dislike the leader. Inability to display
fairness can result in grievances, disputes and even
legal consequences.
Warmth and
caring
A good leader will have a warm character and a
genuine concern for others. They will be approachable
people. This will mean employees will value the leader
more and be able to work with them better.
Communication
and charisma
Must be able to communicate the strategic objectives of
the organisation, inform subordinates, explain tasks to
be completed and present information to investors or
persuade lenders to offer credit etc. Charisma can
avoid conflict and persuade employees to embrace
change.
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Toughness and
assertive
Good leaders will have a character that pushes people
positively. They will not be feeble or a ‘walk over’. If
they are such people they will not be able to lead
others; employees will be leading them.
Confidence and
self-reliance
Good leaders must have a character that employees
have confidence in. If they are weak or shy people,
employees will not have faith in their ability and will not
be committed to the leader’s decisions.
Clear vision and
innovation
Ability to clearly define targets and to look long-term at
the implications of the changing business environment.
Leaders need to be able to identify gaps in the market
and identify suitable business opportunities.
Negotiation
Needed to resolve disputes and conflict with
compromise and haste. Required for dealing with
external stakeholders, such as a supplier to discuss the
price of raw materials or trades unions to review
employee conditions and pay.
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Summary
A contingency approach believes that leadership effectiveness is based on
a combination of the leader’s personal characteristics, the nature of the
situation, the work, the organisation, the subordinates and the external
environment.
A leader’s style would be either relationship-motivated (people orientated)
or work-motivated (task orientated) based on the contingencies.
Leaders cannot easily change their personality therefore the type of leader
should be matched with the correct type of situation for leadership to be
effective.
– Fiedler argues that it is easier to change someone’s role of power, or to
modify the job they have to do, than to change his leadership style.
– The nature of the situation depends on the leader–member relationship,
task structure and position power.
– A forced change in the situation – culture, workplace and environment –
is called job engineering and is used to alter the situation to suit a
particular type of leader who is already appointed within the firm.
Different leadership styles may also be effective depending on the situation.
The best leader is one who is able to adopt different styles in different
situations.
– Contingency theory assumes that just because one style of leadership
works in one set of circumstances it will not necessarily work in another.
Handy suggests that there is no such thing as the ‘right’ style of leadership,
but that leadership will be most effective when the requirements of the
leader, the subordinates and the task fit together.
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Advantages of effective leadership
Disadvantages of poor leadership
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Case study 2: Leadership
Learning from the six dimensions of leadership
Being a consistently successful leader requires
excellence in most, if not all, of the six dimensions of
leadership.
Heroes like Walt Disney and Henry Ford are devoted
to their organisations and inspire others. They achieve
against all odds and become icons to be revered. The
best leaders are skilled actors – people like Richard
Branson who recognise the need to deliver authentic
leadership performances that convince others of their
right to command. Margaret Thatcher is a good
example of the self-confident immortalist: people who have high self-esteem
which has propelled them to achieve at the highest level. World historical
figures, such as Napoleon, were talented power-brokers who knew that to
accomplish their goals they needed to mobilise their followers. They have an
impressive ability to choose appropriate subordinates through whom they can
most easily exercise their power. The most able leaders are diplomatic
ambassadors, people such as Chung Ju Yung, founder of Hyundai. They use
their interpersonal abilities to build coherent organisations and develop
networks of external supporters. Finally, impressive leaders are willing to cast
themselves as victims when required.
To be fully effective, leaders need to be adept in all these dimensions of
leadership. To be successful in the long term, leaders need self-insight and
intuitive skills to modify their behaviour to fit changing circumstances.
Adapted from: Brown, A. (1999), The Six Dimensions of Leadership, Random
House Business Books.
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You should note that although the following questions are based on the case
study above, you will need to make use of knowledge and understanding you
have gained whilst studying the course.
Marks
1. Discuss the factors that influence the leadership style chosen. 8
2. Describe the characteristics of effective leadership. 6
3. Using Fiedler’s leadership theory, explain how the organisation can
ensure leadership is effective.
6