Keys to Management

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. Не/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 closely, day-by-day.

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 targets.

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 Head Office.

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 manage it.

11. Communication

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 meetings.

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 correctly.

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 he/she communicates.

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?’

12. Leadership

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 leadership styles:

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 done.

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 organisation's values.

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 eighty countries.

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 the organization.

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