1. The manager’s role
Our society is made up of all kinds of organizations, such as companies,
government departments, unions, hospitals, schools, libraries, and the
like. They are essential to our existence, helping to create our
standards of living and our quality of life. In all this organizations
there are people carrying out the work of manager. They have a
responsibility to use the resources of their org. effectively and
economically to achieve its objectives.
A French industrialist, Henry Fayol, wrote in 1960 a classic definition
of the manager’s role. He said that to manage is to ‘forecast and plan,
to organize, to command, co coordinate and to control’. This definition
is still accepted by many people today, although some writers on
management have modified Fayol’s description. Instead of talking about
‘command’, they say a manager must motivate or direct and lead other
In most companies the activities of manager depend on the level at which
he is working. Top manager, such as chairmen and directors, will be more
involved in long range planning, policymaking, and the relations of the
company with the outside world. They will be making decisions on the
future of the company, the sort of product lines it should develop, how
it should face up to the competition, whether it should diversify. On
the other hand middle management is generally making the day-to-day
decisions, which help an organization to run efficiently and smoothly.
They must respond to the pressures of the job, which may mean dealing
with an unhappy customer, meeting an urgent order, chasing up suppliers
or sorting up a technical problem. They spend a great deal of time
communication, coordinating and making decisions affecting the daily
operations of their organization.
An interesting modern view on managers is supplied by an American
writer, Mr. Peter Drucker. In his opinion, the managers perform 5 basic
operations. Firstly, managers set objectives. They decide what they
should be and how the organization can achieve them. Secondly, managers
organize. They must decide how the recourses of the company are to be
used, how the work is to be classified and divided. The third task is to
motivate and communicate effectively. Managers must be able to get
people work as a team and to be as productive as possible. The forth
activity is measurement. Having set targets and standards, managers have
to measure the performance of the organization, and of its staff.
Finally, Mr. Peter Drucker says that managers develop people, including
themselves. They help to make people more productive, and grow as human
beings. Successful managers are the people, who command the respect of
workers and who set high standards. Good managers must bring character
to the job. They are people of integrity, who will look for that quality
2. Frederick W.Taylor, scientific management
No one has had more influence on managers in 20s century than Frederick
Taylor, an American engineer. He said a pattern for industrial work,
which many others had followed, and although his approach to management
has been criticized, his ideas are still of practical importance.
T. founded the school of scientific management just before the First
World War. He argued that work should be studied and analyzed
systematically. The operations required to perfume a particular job
could be identified then arranged in a logical sequence. After this was
done, workers productivity would increase, and so would his/her wages.
The new method was scientific. The way of doing a job would no longer be
determined by guesswork. Instead, management would work out
scientifically the method for producing the best results.
When T. started work in the end of 19s century, the industrial
revolution was in full swing. Factories were being set up all over the
USA. There was a heavy investment in plant and machinery, and labour was
plentiful. He worked for 20 years with the Midvale Steel Company.
Throughout this time, he studied how to improve the efficiency of
workers on the shop floor. He conducted many experiments to find out how
to improve their productivity. His solutions to these problems were
based on his own experience.
T. criticized management and workers. He felt that managers were not
using the right methods and that workers did not put much effort into
their job – they were always ‘soldering’. He wanted both groups to adopt
a new approach to their work, which would change their thinking
completely. The new way was as follows:
1. each operation of a job was studied and analysed;
2. using this info, management worked out the time and method for each
job, and the type of equipment to be used;
3. work was organized so that the worker’s only responsibility was to do
the job in the prescribed manner;
4. men with the right physical skills were selected and trained for the
The tasks of management were: observing; analyzing; measuring;
specifying the work methods; organizing and choosing the right person
for the job.
T. approach produced results! He made a lasting contribution to
management thinking. His main insight, that work can be systematically
studied to improve working methods and productivity, was revolutionary.
The weakness of his approach was that it focused on the system of work,
rather than on the worker. With this system the worker becomes a tool in
the hands of management. Another criticism is that it leads to
de-skilling because the task is simplified, workers become frustrated.
Finely some people think that it is wrong to separate doing from
planning. A worker will be more productive if he/she is engaged in such
activities as planning, decision making, controlling and organizing.
3. The Quality of Working life
Over the last thirty years, a new approach to management has been
developing. The main idea was that the way to increase worker’s
efficiency is to improve their job satisfaction and motivation.
Followers of QWL have been trying out various methods of making work
more interesting. These include job enlargement and job enrichment and
new forms of group work.
With job enlargement, the worker is given additional tasks to perform.
Job enrichment involves giving extra responsibilities to workers such as
production planning, quality control and technical development of
equipment. In some organizations, special types of work groups have been
formed where workers share responsibility for certain tasks (e.g. at
Volvo car plant).
The basic idea of QWL is that a worker should have an interesting, even
challenging job. QWL encourages managers, therefore, to be sensitive to
the need of employees.
The roots of QWL movement can be traced back to the 1920s and 1930s.
Numerous studies were carried out . Their aim was to evaluate the
factors influencing productivity. However, the researchers soon directed
their attention towards studying people, esp. their social relationships
at work and their morale. This led them to look for the human factor
A great deal of studies were directed by Elton Mayo, a Harvard
University psychologist. He directed a series of experiments on how
working conditions affected output. It was found out that there was an
increase in productivity whether conditions such as lunch times, rest
periods, wall colors, pay and temperature were made better.
The researchers later came to conclusion that social relations among
workers, and between workers and their bosses affect output, the quality
of work and motivation. The good relationships and social contacts make
the work more enjoyable. Another important finding was that a worker
need more than money and good working conditions to be productive. The
feeling of belonging to a group and his status within that group,
strongly affect his behavior.
It is said that Elton Mayo founded the Human Relations School, whose
offspring is the QWL movement, and he changed the course of management
In carrying out management functions, such as planning, organizing,
motivating and controlling a manager will be continually making
decisions. Decision-making is a key management responsibility. Some
decisions are of the routine kind. They are decisions which are made
fairly quickly, and are based on judgement. Other decisions are often
intuitive ones. They are not really rational. The manager may have a
hunch or a gut feeling that a certain course of action is the right one.
He will follow that hunch and act accordingly.
Many decisions are more difficult to make since they involve,
problem-solving. Very often they are strategic decisions involving major
courses of action which will affect the future direction of the
enterprise. In practice, decisions are usually made in circumstances
which are not ideal. They must be made quickly, with insufficient info.
It is probably rare that a manager can make an entirely rational
When a complex problem arises, the manager has to collect facts and
weight up courses of action. A useful approach to decision-making is as
follows: the process consists of 4 phases:
1) defining the problem. The manager must identify and define the
problem. And it is important that manager does not mistake the symptoms
of a problem for the real problem he must solve. At the early stage, he
must also take into account the rules and principles of the company
which may affect the final decision. These factors will limit the
solution of the problem. Rules and policies of the company act as
constraints, limiting the action of the decision-taker.
2) analyzing and collecting information. The second step is to analyze
the problem and decide what additional information is necessary before a
decision can be taken. Getting the facts is essential in
decision-making, because making decisions involves a degree of risk. It
is the manager’s job to minimize that risk.
3) working out options. Once the problem has been defined and the facts
collected, the manager should consider the options available for solving
it. This is necessary because there are usually several ways of solving
a problem (a number of actions): introducing new products, advertising,
refurbishment etc. In some situations, one of the options may be to take
no action at all.
4) deciding on the best solution. Before making decision, the manager
will carefully assess the options, considering the advantages and
disadvantages each one. Having done this, he will have to take a
Before making a decision, the manager has to carefully assess the
options, considering the advantages and disadvantages of each one.
Perhaps he will compromise, using more than one option. Having done
this, he will have to take a decision.
5. Top management – planning and strategy
The top management of a company have certain unique responsibilities.
One of their key tasks is to make major decisions affecting the future
of the organization. These strategic decisions determine where the
company is going and how it will get there. For example, top managers
must decide which markets to enter and which to pull out of; how
expansion is to be financed end so on.
Before doing any kind of strategic planning, the management must decide
what is the mission and purpose of their business and what it should be
in the future. In other words, they must know why the business exists
and what its main purpose is. Deciding the mission and the purpose is
the foundation of any planning exercise.
One example will make this point clear. Most people have heard of Marks
and Spencer, one of the biggest and most successful retailers in the
world. Michael Marks, as the owner of penny bazaars, and his cashier Tom
Spencer became public company after opening 9 market stores. At that
point, they could have rested on their laurels. However, around that
time, they developed a clear idea of M&S mission and purpose. Their
later success was founded on this idea. Their company was in business to
provide goods of excellent quality, at reasonable prices, to customers
from the working and middle classes. This became the overall objective
of M&S company. Providing value for money was their mission and their
Having decided on its mission and purpose, an organization will have
worked out certain more specific objectives. It could be increasing
market share, producing new model of car in the medium-price range and
As soon as company has established its medium-term objectives, it can
draw up a corporate plan. Its purpose is to indicate the strategies the
management will use to achieve its goals.
Before deciding strategies, the planners have to look at the company’s
present performance, and at any external factors which might affect its
future. To do this, it carries out an analysis, sometimes called SWOT
analysis (strengths, weaknesses, opportunities and threats). First
organization examines its current performance, assessing its strength
and weaknesses. It looks at performance indicators like market share,
sales revenue, output and productivity. And also examines its resources
– financial, human, products and facilities. Next, the company looks at
external factors, from the point of view of opp. and threats. It is
trying to assess technological, social, economic and political trends in
the market where it is competing.
Having completed the SWOT analysis the company can now evaluate its
objectives and perhaps work out new ones. They will ask themselves
questions about growth rate, new markets to break into etc. The
remaining task is to develop appropriate strategies to achieve the
objectives. So that is why company planning and strategic
decision-making are key activities of top management.
6. Goal-setting (MBO)
Management by Objectives (MBO) is a system which was first described by
Peter Drucker in his book ‘The practice of management’. Since then, MBO
has attracted enormous interest from the business world.
P.D. emphasized that an organization and its staff must have clear
goals. Each individual must understand the goals of the enterprise he
works for, and make contribution to them. It is also vital / significant
that the individual knows what his manager expects of him.
If the organization uses the MBO approach, it must pay careful attention
to planning. This is because each individual has clearly defined
objectives. With MBO, individual and org. obj. are linked.
A special feature of MBO is that the subordinate participates with his
manager in developing objectives.
MBO, therefore, focuses on results. The subordinate’s performance is
judged in terms of how well or badly he has achieved his goals.
Various kinds of MBO system is used in organizations. The MBO programme
consists of several stages:
1. At the first stage subordinate and his manager define the job
separately. Both parties then meet and discuss the statements they have
made in writing. They also discuss their differences of opinion. In the
end, they both have a clear idea of what the job involves.
2. At stage two they examine each task, and sub. performance is
evaluated. They try to decide how well or badly it is being performed.
They do evaluation separately again, and then meet and discuss their
assessment. The manager here will have the chance to praise the sub. for
some of his work. On the other hand, both parties may point out areas
where there are problems.
3. Developing new objectives comes next. The subordinate and manager try
to develop goals which are challenging but realistic. There will be
dates by which the subordinate must achieve his goals.
4. The sub. and the manager discuss the objectives and make plans for
achieving them. The programme is put into action.
5. Finally, there are periodic reviews of the person’s performance and
his progress is checked. It is vital that the manager receives feedback
from the sub.
‘+’There are many benefits of MBO. The system helps the subordinates to
see clearly his role in the organization and the tasks he must carry
out. As the result subordinate feels more responsible, more motivated
and more committed to the objectives of the organization. MBO is good
technique for assessing an individual’s performance. Sub. is judged on
results, rather than on the personal feelings or prejudices of the
manager. It leads to better coordination and communication within an
enterprise. The sub. must liaise closely with his manager. The manager
acts as teacher and guide. Most important of all, MBO makes the
individual think of results, of the contribution he is making to the
‘-’ The main limitation of the system are that it is time-consuming and
may create a lot of paperwork. In practice , MBO programmes are often
not fully supported by management, due to the fact that managers are not
always skilled at interviewing and giving guidance.
7. The management of time
In any business it is important that managers should be effective. They
must be able to achieve their objectives and to get things done. But it
is easier said than done –the problem is that there are many pressures
on managers, reducing their efficiency. Their work is fragmented and
most days they are doing a number of tasks, some fairly trivial, other
highly important. Than managers find that they do not have enough time
to devote to the really important jobs and sometimes they forget which
jobs are important.
Managers also find that other people take up a lot of their time, so he
has little time on his own. He must constantly respond to the demands
that other make on his time. The higher he goes, the more demands will
be made upon his time.
Because of the nature of the manager’s work, it is not easy for manager
to be effective. He will have difficulty distinguishing between
important and less important tasks. He will often feel that he has too
many demands on his precious time and at times will find it quite
difficult to turn people away. There will always be someone or something
to divert him from what he should really be doing.
Effective manager learn how to manage their time. They cut out
unproductive activities and never forget that time cannot be replaced.
The usual / common method for manager to find out how he is actually
using his time, is to log the tasks he performs. Manager should not rely
on memory when logging time. Manager should note down all the activities
and indicate how long they took. The logging of time should be done once
or twice a year. It shows how the executive actually spends his time at
work, not how he thinks he spends it.
Once the manager has an accurate picture of how he uses time, he can
analyze the time log. This will help him to re-think and re-plan his
work schedule. He can find out some of the wasteful activities and cut
As a result of his analysis the effective manager will start getting rid
of unproductive, time wasting activities. Manager will learn to say ‘No’
more often to people demanding his time. He will also get rid of some
activities which can be done just a well by someone else. Knowing how to
delegate is an essential skill of a manager. He will, in short, be more
discriminating in using time.
Having recorded and analysed time, the manager can now re-shape his
schedule: he can set aside certain times for important tasks; create
more time so that he can attend to essential activities. He can also
earmark certain days of the week for particular activities, management
meetings, staff appraisals etc. The manager works out all the jobs he
must do and lists the tasks in order of priority. Manager also set
deadlines for carrying out the most important functions.
Peter Drucker believes that effective manager work systematically to
manage time. He must acquire this ‘habit of mind’, this ability to use
The work of managers is to ensure that staff work efficiently in an
organization. To achieve this, it is clear that managers must know what
motivates people. By understanding the factors influencing motivation,
they can create the conditions in which employees will perform to their
One of the best known theories of motivation was put forward by an
American psychologist, Abraham Maslow, an American psychologist. In his
theory, he presents a hierarchy of needs. He identified certain basic
human needs and classified them in an ascending order of importance.
Basic needs were at the bottom of the hierarchy, higher needs at the
top. His classification is shown below:
1. Physiological needs: These were things required to sustain life like
food, water, air, sleep etc. Until these needs are satisfied, Maslow
believed, other needs will not motivate people.
2. Security needs: They are the needs to be free from danger, physical
pain and loss of a job. They include the need for clothing and shelter.
3. Social needs: A human being needs to belong to a group, to be liked
and loved, to feel accepted by others and to develop affiliations.
4. Esteem needs: After people have satisfied their social needs, they
want to have self–respect and to be esteemed by others. They have a need
for power, status, respect and self–confidence.
5. Self–actualization needs: These are the highest needs, according to
Maslow. They are the desire to develop, to maximize potential and to
achieve one’s goals.
Maslow said that people satisfied their needs in a systematic way. When
a need had been met, it stopped being a motivating factor. Research into
Maslow’s theory has not been very conclusive. Studies have tended to
show that needs vary greatly among individuals.
Another theory of motivation, which has been very popular with managers,
is Frederick Herzberg’s ‘two–factor’ theory. Herzberg conducted a number
of studies and concluded that at work there are certain factors which
cause job satisfaction while others lead to dissatisfaction.
The group of factors bringing about satisfaction were called
‘motivators’. They include things like a challenging job,
responsibility, advancement, recognition, achievement, career prospects
etc. These factors give rise to positive satisfaction.
Herzberg called the other group of factors ‘hygiene’ or ‘maintenance’
factors. These include company policy and administration, salary and
fringe benefits, job security, quality of supervision, relationship with
colleagues, job security, work conditions, status and personal life.
These factors are considered to be only ‘dissatisfiers’, not motivators.
If they do not exist, they cause dissatisfaction. If they do exist in
quality and quantity, they do not, however, give increased satisfaction.
Hygiene factors are essential if workers are to be motivated.
Hygiene factors refer to the context of the job – the conditions of work
– while the motivators refer to job content.
If Herzberg’s theory is true, it means that managers must pay great
attention to job content (motivating factors). They must find ways of
making jobs more challenging and interesting. The idea of such
programmes is to give the worker a sense of achievement.
There are various methods of making work more interesting. These include
job enlargement and job enrichment. With job enlargement, the worker is
given additional tasks to perform. Job enrichment involves giving extra
responsibilities to workers such as production planning, quality control
and technical development of equipment.
9. Performance Appraisal
Most organizations have some form of performance appraisal of their
employees. The appraisals are usually carried out once a year. The
manager makes an evaluation of the performance of the subordinate. This
involves filling out a form or writing a report on the person concerned.
After this, there is a meeting at which the two parties discuss the
appraisal. A performance appraisal is, then, a judgment on how well a
person is doing his/her work.
Appraisals help organizations to reward staff properly. They are useful
when decisions have to be made about salary increases and bonuses. They
are needed when managers are considering transferring or promoting
staff. In these situations, they provide up-to-date information about an
individual’s performance, skills and career objectives.
An important purpose of appraisals is to give the subordinate feedback
on how he/she is performing. The manager can talk to the subordinate
about the strengths and weaknesses of his/her performance. Ia/She can
also discuss how the subordinate can learn to work more effectively. At
appraisal interviews, subordinates can not only talk about their future,
but also seek guidance from the manager. The interview may help them to
think more realistically about their goals.
There are many methods of evaluating a person’s performance at work.
A traditional method has been to give a ‘rating’. The subordinate’s
evaluation is based on traits — qualities – that he/she shows in his/her
work. Subordinates are judged on such things as knowledge of the job,
reliability, cooperation, punctuality, initiative and sense of
responsibility. The manager rates the subordinate by marking a letter or
figure on a scale.
However, the most popular form of appraisal, in Britain and the United
States, is Management by Objectives. This appraisal is based on a
person’s performance, and how well he/she is achieving his/her goals.
The manager and the subordinate agree on a certain number of objectives,
which should be achieved in a given period of time. The focus is on
results, not personality traits.
Another appraisal method is worth mentioning too. This is the Critical
Incident Method. With this system, the manager keeps a record of good
and unsatisfactory examples (incidents) of a person’s work. These are
kept in a file and reviewed with the manager when the interview takes
place. An advantage of the system is that the manager has to think about
the subordinate’s performance throughout the year.
In spite of the need for performance appraisals, people do not like
them. Many managers see appraisals as their most unpleasant duty and
those who are appraised rarely have a good word to say for the system
used by their organization. One problem is that the manager is expected
to criticize the subordinate and to give guidance at the same time. Many
people are naturally suspicious of appraisals. They think managers are
trying to find out their weaknesses, so they are on the defensive.
Moreover, managers are often unwilling to say that a subordinate’s
performance has been ‘outstanding’ or ‘bad’. So, the individual is
described as being ‘just above average’. This means that high fliers in
the organization do not get a good enough evaluation while the work of
poor performers may be over-valued. Finally, many managers do not like
to criticize, in writing, a subordinate with whom they are working
Appraisal can be a valuable process. At the interview, the manager
should act as a guide to the subordinate, not as a judge. The purpose of
the interview should be to discuss how the individual can ‘grow’ in the
organization, and make an effective contribution. The situation allows
both parties to review the work of the individual and fix realistic
10. Centralization & Decentralization
Alfred Sloan (1874-1966) was an outstanding figure in the business world
of America. He worked for forty-five years in the General Motors
Corporation (GM). Sloan published an account of his career with the
organization. In it he described some of the managerial problems he had
had, and how he had dealt with them.
According to Sloan, every large enterprise has to face one major
problem. It must decide how much it wishes to centralize or decentralize
its business. The terms refer to the degree of authority that is given
to various levels of management and to the divisions of an organization.
When we talk about centralized and decentralized businesses, we mean the
extent / degree to which authority has been passed down – delegated – to
lower levels or divisions of an organization.
When an organization is centralized, a limited amount of authority is
delegated. If it is decentralized, a greater degree of authority is
given to staff and divisions. In a decentralized company, the divisions
will have wider responsibilities and authority and more important
decisions can be made at lower levels. There are fewer controls from
To sum up, a centralized business has a ‘tight’ structure, whereas a
decentralized business has a ‘looser’ structure.
No enterprise chooses complete centralization or decentralization. In
practice, it tries to find a balance between the two forms. Fox
instance, Head Office can control things like cash, capital expenditure
and stock control. The divisions will have a great deal of autonomy,
being responsible for designing, making and marketing.
Nowadays, decentralization is the fashion, the ‘buzz’ word. Believers in
decentralization say that it helps to ‘develop people’ because staff get
more responsibility, make more decisions, and so gain experience for
later managerial positions. Decentralization allows top managers to
delegate jobs, so these managers will have more time to work on setting
goals, planning corporate strategy and working out policies. If an
organization is too centralized, people become robots – which is
demotivating. The strongest argument foe decentralization is that, in
competitive conditions, the ‘looser’ companies will be more flexible,
better able to make quick decisions and to adapt to change.
It is normal for people to like independence, to dislike control. The
more educated staff is, the more they will want to make decisions, to
have authority. However, it is not easy to have more decentralization if
the right staff is not available. It is one thing to prescribe
diversity, decentralization and differentiation, and it is another to
It is already known that communications in excellent companies are
different from those in other companies. Excellent companies have a
‘vast network of informal, open communications’. People working in them
keep in contact with each other regularly and have many unscheduled
In the best-run businesses, few barriers exist to prevent people talking
to each other. The companies do everything possible to ensure that staff
meet easily and frequently. There are numerous examples of companies who
believe in ‘keeping in touch’: firms like IBM, Walt Disney Productions
and so on.
One problem with communication is that people think they have got their
message across when in fact they have not. We do not, in fact,
communicate as effectively as we think we do. This finding is important
for managers. It suggests that, when giving instructions, managers must
make sure that those instructions have been understood and interpreted
A breakdown in communication is quite likely to happen if there is some
kind of ‘social distance’ between people. In organizations, people may
have difficulty communicating if they are different in status, or if one
person has a much higher position than the other. For this reason, staff
often ‘filter’ information. They deliberately alter the facts, telling
the boss what he wants to hear. They do not want to give bad news, so
they give their superior too good an impression of the situation, thus,
the info becomes unreliable.
One way of reducing social distance – and improving communications – is
to cut down on status symbols. It is possible, for example, to have a
common dining-room for all staff or to wear uniforms.
Physical surroundings and physical distance limit or encourage
communication. Studies show that the further away a person is, the less
The physical layout of an office must be carefully planned. Open-plan
offices are designed to make communication easier and quicker. However,
it is interesting to note that employees in such offices will often move
furniture and other objects to create mini-offices.
Another important barrier to communication is selective perception. This
means that people perceive things in different ways. The world of the
sender is not the same as the world of the receiver. Because their
knowledge and experience is different, sender and receiver are always on
slightly different wavelengths.
Communication problems will arise, from time to time, in the best-run
companies. However, to minimize such problems, managers must remember
one thing. Communication should, be a two-way process. Managers should
encourage staff to ask questions and to react to what the managers are
saying. Feedback is essential. The most useful question a manager can
ask is ‘Did you understand that?’
Leadership is needed at all levels in an organization. It is difficult
to define leadership satisfactorily.
A typical definition is that the leader ‘provides direction and
influences others to achieve common goals’.
Leader has to create ‘a sense of excitement’ in the organization and
convince staff that he knows where the business is going. In add., he
must be a focus for their aspirations.
When psychologists and other researchers first studied leadership, they
tried to find out if leaders had special personal qualities or skills.
They asked the question: Were there specific traits which made leaders
different from other people? The results of their research were
disappointing. In time, it became clear that there was not a set of
qualities distinguishing leaders from non-leaders.
However, there are some qualities which are considered important for
success as a leader: sociability, self-confidence, dominance,
participation in social exchange, desire to excel etc. But, it was
pointed out, many people with these traits do not become leaders. And
many leaders do not have such traits! It is generally agreed now that
you can’t say a person is a leader because he/she possesses a special
combination of traits. Although some qualities, like above-average
intelligence and decisiveness, are often associated with leaders.
An important analysis of leadership has been made by Fred Fiedler,
Professor of Psychology and Management. He has identified two basic
Task-motivated leaders tell people what to do and how to do it. Such
leaders get their satisfaction from completing the task and knowing they
have done it well. They run a ‘tight ship’, give clear orders and expect
clear directives from their superiors. Their priority is getting the job
Relationship-motivated leaders are more people-oriented. They get their
satisfaction from having a good relationship with other workers. They
want to be admired and liked by their subordinates.
Throughout his work, Fred Fiedler emphasized that both styles of
leadership could be effective in appropriate situations.
There are some characteristics of the chairmen and chief executives of
the companies, which made them good leaders: firstly, the leaders are
‘visible’. They did not hide away in some ivory tower at Head Office.
Instead, they made regular visits to plants, toured round their
companies and talked to employees.
Besides being visible, the leaders of these top companies provided a
‘clear mission’. In other words, they knew where the organisation was
going and persuaded staff to follow them.
Finally, successful organisations have clear values. And it is the job
of the leader to show what they are.
Thus, the successful leader must also protect and promote the
13. Management in multinationals
Simply, multinational is a company, doing business in more than 1
country. But this definition doesn’t indicate the size and the scale of
the multinational’s activities.
To be a ‘true’ multinational, experts say, an organization should
operate in at least 6 countries and have no less than 20% of its sales
or assets in those countries. For instance, the larger enterprises like
IBM, British petroleum and Mobil Oil, have subsidiaries in sixty to
The interests of multinationals and foreign governments frequently
clash. Because of their global approach, multinationals often make
decisions which are against the interest of the host countries. The
governments of host countries can put pressure on multinationals to
change their minds and can also criticised them for different reasons.
Difficulties often arise when multinationals wishes to transfer its
earnings back to Head Office, because this operation may have a bad
effect on the exchange rate of host country’s currency. The list of
complaints against multinationals is a long one, so many countries try
to restrict their operations (Nigeria & India) – certain % of the equity
must be owned by local investors or certain % of managers must be local
staff. All this restrictions can lead to friction between the 2 sides,
and even bitterness.
Multinationals managers will spend much of their time working overseas.
They will live and work in a strange environment, have to deal with
people, who have diff. language, customs and religions. Multinationals
managers must take foreign conditions into account.
Managers working abroad need various skills. A recent study has shown
that, first of all, they need human relations skills, which are quite
significant, an understanding of the culture, ability to adapt and
knowledge of local language. These requirements are vital. To be
effective, the manager must persuade local staff to cooperate with him
and his organization.
Differences in culture are important when a manager is negotiating in a
foreign country. Manager should be able to make a concession and not to
talk in an over-eager way.
14. Social responsibility
Thirty o so years ago, discussions of social responsibility were of
three types. Firstly, there were a lot of talks about how business
people should behave in their work. Should they have the same ethical
standards, principles, as they had in the private life? Secondly people
discussed the social responsibility of business towards its employees.
They were interested in how org. could improve the working conditions of
their employees. And finally, social responsibility included the idea
that business people should contribute to cultural activities like music
festivals and art exhibitions.
These days, there is a new approach to social responsibility. Many
people say that a business should try to meet the needs and interests of
society. It has an obligation to help solve the problems of society. For
example, pressure is put to provide a safer environment – even if this
means reduced profits. Business is expected to show social
responsibility in all kinds of ways. It is urged to provide safer
products; to protect and respect the environment; to hire more people
from minority groups; to offer work opportunities to unemployed
youngsters; to oppose racial discrimination and at all times to behave
with integrity. The list is endless.
The new concept of social responsibility means that businesses and
business people must have integrity. They must deal honestly with their
employees, and with the outside world.
A lot of business people agree with the ‘wider’ concept of social
responsibility. They accept that businesses should help to solve social
problems – even if they don’t create them, and even if the social
actions don’t bring profits. But it is certainly true that social
actions cost money. And businesses have to bear that cost often by
raising prices, lowering wages or having less profit. In the end someone
has to pay for the social actions – it may be customer, the employee or
the shareholder. Business has only one social responsibility – to use
its resources and energy to increase profits and compete without
deception and fraud.
Of course, by showing social responsibility, the company may well
benefit in the long term. For example Rank Xerox was engaged in wide
range of social projects like: grants of equipment to universities,
information technology project and seminars etc. And, since it was
knowledge-based company, it needed to hire highly skilled people. There
was no doubt that, in the long run, these activities were profitable to
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