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[ Business Management And Change ] Theories of management The major theories of management may be classified under four headings: Classical/scientific approaches Behavioural/human approaches Systems/contingency approaches Political/collaborative approaches Classical/scientific approaches Approach Timing Specialised efficiency-oriented systems of management From the turn of the century, well into the 1930s. A legacy of the Industrial Revolution and the social structure of the times: a potentially large workforce of relatively uneducated, disempowered people. Hierarchical systems based on principles of specialisation, centralisation and formality. Specialised tasks exist in specialised departments, with responsibility formally designated. Span of control is narrow and a unitary line of command is in place. Great benefits from a consumer viewpoint, with the availability of a wide range of consumer goods. Problems centred on the dehumanising, autocratic nature of the efficiencydriven system and the assumption that the needs of workers matched those of management.

Management principles


Behavioural/ human approaches Approach Changed approach to the way the work situation was seen. Managers dealt with "people" aspects of their organisation. The "group" played a more significant role. Became important following the 1922 to 1937 Hawthorne studies of the Western Electric Company and the Great Depression of the time. Continued to the 1970s. Supportive leadership. Managerial focus on group support and wide spans of control in a flat organisational structure, consisting of a hierarchy of interlocking groups. The conflict of interest between management and workers was recognised. Practices appeared to work as prosperity continued into the 1970s, with growing domestic markets and high family incomes in Western economies. Behavioural management practices were overwhelmed by the application of systems models of management.


Management principles Relevance

Systems/ contingency approaches

Approach Timing

Systems adopted by management need to be contingent on the stability, or lack of it, in the organisation's particular environment. Systems theory, concepts and language were in place in the 1960s and dominated management thinking in the 1970s. The rapidly changing, competitive world economy and the crisis facing western enterprises precipitated the systems approach. Differentiation. The organisation is a system. The way the separate parts interrelate defines the system. Integration depends on shared norms, values and beliefs, not on the commands of a superior. These approaches recognise that managers are dealing with complicated interactions in a volatile, competitive, international environment. Management recognises that there is no ONE way to deal with all circumstances, e.g. formal processes, such as job descriptions and scheduling, become irrelevant too quickly. Systems and contingency approaches have resulted in improved practice and significant developments in organisational design and leadership.

Management principles


Political/ collaborative approaches Approach Timing Approaches relate to empowerment in the external environment through loosely structured networks and alliances. The current economic environment, which is characterised by high levels of social, economic and technological discontinuity. Political approaches recognise the speed-up in the rate of change and complexity of the current external environment. Empowerment and collaborative individualism. The creativity of management and its capacity to innovate are challenged. Management is increasingly willing to experiment with new strategies and cultures in search of solutions to unstructured problems. Alliances are developed inside and outside the organisation. The use of political power and influence in the creation of alliances is recognised. Organisations have moved increasingly towards decentralisation and chunking. Political approaches are more deliberate strategies to deal with complex and discontinuous environments.

Management principles


Management styles This is the pattern of behaviour of managers in performing their functions and in their dealings with employees. A manager's style reflects a response to a number of variables in the external and internal environments, as illustrated below:

· · · ·

Manager's personality and value system, e.g. education, experience. Nature of workers, e.g. skills, needs, attitudes. Nature of the internal environment, e.g. structure, stability, physical site. Immediate situation, e.g. nature of problem, time and cost constraints.

Management styles can be classified as: · · · · autocratic, democratic, collegial, laissez-faire.

The importance of effective management To a very large extent the success or failure of a business operation is dependent on the role of management. This tutorial explains the commonly used planning, organisation, leadership and control (POLC) management model.

Outcomes Responsibilities of management Management skills Exercise: management skills Exercise: roles of management More Responsibilities of management Management is the process of planning, organising, leading and controlling all phases of business operation in order to achieve the objectives of that organisation. Effective management invariably results in business success, while ineffective management often results in business failure. The role of management is one of responsibility to the owners of a business. Management is entrusted with the responsibility for: · · · · · · determining the business objectives in line with the vision of the business, proactive planning for future growth, anticipating and planning for changes in the business environment, integrating all the human, physical and informational resources available, administering and controlling business activities, and accountability for the business operation and results.

The POLC cycle Planning Planning establishes objectives and devises programs to achieve them · · · · · Establish mission statement Determine specific objectives Select strategies Implement programs Review and evaluate

Organising Controlling Keeping up standards · · · · Assess and monitor performance Compare with set standards Identify variants Take remedial action Develops an organisational structure to implement strategies · · · · · Determine the way the business will operate Choose taks to be done Determine the input mix Assign tasks Delegate authority and responsibility

Leading Use of power or influence to get the best out of workers · · · · Give clear directions Set the example Communicate Motivate

Management skills Various skills are related to each of the four management functions. Planning Skills required for Planning Examples of skills Strategic thinking Application Highly developed conceptual skills Capacity to view organisation as a whole Product-related and technical knowledge Understanding of what can be done now Clear focus on the big picture Able to perceive opportunity Clear foresight Able to integrate component parts into an interacting whole Knowledge of support services Awareness of alternatives through ability to assemble data Ability to assess alternatives and decide Creative and lateral thinking skills Clear understanding of the competing interests of stakeholders; ability to maintain a balance between competing goals Highly developed conceptual understanding of all interacting parts Ability to communicate decisions clearly


Decision making

Organising Skills required for Organising Examples of skills Self managing Application Time management skills Capacity to stay focused Understanding of the role of support services in the organisational framework Providing networks for effective information flow Coach, teacher, mentor roles in creating and developing groups Delegation of team roles, tasks and responsibility


Leading Skills required for Examples of skills Application


People skills

Understanding how people think and act Ability to motivate workers Creation of a harmonious workplace Effective written and oral communication skills Successful delegation Ability to gather and assess data to isolate a problem Sensitivity to the needs of others Procedures for dispute resolution Negotiation skills learned and practised

Complex problem solving

Ethical and high Generally agreed qualities of decisiveness, personal standards consistency, responsiveness, trustworthiness, friendliness and approachability

Controlling Skills required for Controlling Examples of skills Skills involving setting of performance standards & measurement of performance Flexibility & adaptability to change Application Technical measurement and diagnostic skills A wide variety of effective communication skills Preparedness to face up to identified weaknesses

Willingness to move in a new direction Constant evaluation of decisions taken in the light of subsequent performance Consistent monitoring of the changing external environment

What is planned change? · · · · Alterations in people, structure or technology. Any movement in the status quo. A constant part of any learning organisation. A situation often prompted or accompanied by innovation and increased stress.

Nature and sources of change in business External forces of change include the marketplace, labour markets, economic changes, technology, laws and regulations.

Internal forces of change include corporate strategy, employee attitudes, technology and equipment, and workforce composition. Examples of external forces of change Changing nature of markets · · · · · · · · · · · · · · Natural resources Rise and rapid collapse of Asian markets for commodities International agreements relating to freer trade and protection Human resources New industrial relations climate Consumer goods and services New tax systems Growing international competition Financial markets Changes in interest rates Implications of the Ralph report Changes in telecommunications Competition changes in this field Phenomenal growth in global information systems

Technological developments

Examples of internal forces of change New business cultures · · · · · · Technological development · · · Changes in the norms, values, beliefs, expectations, behaviours and assumptions that exist - a change in the way things are done in this organisation Reorganisation of business structure Move towards business decentralisation Willingness to employ political power and influence Increased pressure from shareholders for returns Restructuring as a result of a new alliance Business process re-engineering Increased retraining needs Request for new technology from staff

Structural responses to change Like any other process, change is a process that needs to be managed. Some examples of structural change follow. Outsourcing As organisations concentrate increasingly on their core business activity, support services are being supplied by external organisations.

Keeping abreast of technology in-house will no longer be so important to a company's competitive advantage," says Sun Microsystems' newly appointed president, Ed Zander. He says expensive upgrades are coming to an end and that the business use of technology will mainly involve outsourcing (Margaret Banaghan, 'Internet: Get 'com-ed' and go Web tone', in Business Review Weekly, 14 May 1999). Sequel provides a specialised management consultancy service designed to facilitate the efficient and effective use of information technology in corporate and public sector reorganisations and restructurings ... (advertisement, Sequel Pty Ltd). Flattening of corporate hierarchies Organisations have continued to seek efficiencies by eliminating levels of middle management and increasing the span of control for those remaining. With the shift from electro-mechanical to computer infrastructure, a more democratic structure evolves, where certain levels of management oversee the disappearance of others. Strategic alliances and networks Alliances, coalitions and joint ventures are being developed at a rapid rate. These approaches are seen to be a faster way to meet objectives in the context of rapidly developing technology, acquisition of new markets, acceleration of product differentiation and pressures for cost reduction. Ford Australia wants to put the passion back into Ford. To re-ignite the flame, Ford Australia is doing something about rejuvenating its brand - ironically by sharing the billing. In October Ford will launch the grandly named Ford Tickford experience, a network of 12 specialty dealers, located within existing Ford dealerships, to sell specialty niche vehicles. The exclusive franchise will offer the new T-series, to be manufactured jointly by Ford and Tickford Vehicle Engineering, the company that has been customising Fords since 1991 (The Bulletin, 3 August 1999, p 66). Managing change Identify the need for change External and internal pressures require continual analysis and rethinking of the strategic direction of an organisation. Without adapting to constant change, an organisation is unable to remain competitive. For example, there is a need to comply with new government regulations. Demonstrate improvement or change decisions All stakeholders must know and appreciate why the change is necessary. Set achievable goals Consider the speed of change (e.g. when do the government regulations come into force?). Consider the change dimensions: how radical a change is planned (e.g. re-engineering of part of a process may be sufficient to meet new regulations)? Consider the resources available in the existing time frame.

Business plans and strategic plans with clearly defined and achievable goals need to be communicated to stakeholders, e.g. shareholders. Even small businesses require written planning that is able to be evaluated. A transition management plan, just like any other business plan, is important in achieving a successful organisational change - particularly when changes are made to the organisation's plant, processes or structure. Create a culture of change Initiative, and highly developed skills and energy levels, are necessary. People have differing abilities to cope with change, but change agents improve this ability. Change agents may take the form of: · · · · · · communicating detailed information about the nature and procedures for change reskilling; e.g. in operation and maintenance of new software provision of a support network involving workers in the decision-making process to promote 'idea ownership' planning to allow sufficient time to prepare for the change practising change.

Change management techniques These may involve: · · · structural change - changes in complexity, formalisation, and centralisation, or job redesign technological change - changes in work processes, methods or equipment people change - changes in attitudes, expectations, perceptions or behaviour.

Change models One example of a change model identified in the syllabus is FORCE FIELD ANALYSIS (FFA). FFA is a strategy employed in order to identify the various forces influencing a particular situation or problem. The analysis answers questions about which forces it would be most worthwhile to influence. A tabular approach is employed with this strategy: Identify the driving forces for change. Identify the restraining force acting as a barrier to change. Distinguish those forces which can be influenced from those which cannot. Allocate a score to each force identified as changeable, as for the change forces opposite.

Identify those forces which CAN be changed. Allocate a score (either qualitative or quantitative) to each of these identified forces which reflects: · the degree to which it is possible to influence this force, and


the likely effects of influencing this force.

There need to be drive forces to counter each restraining force. Decide on a course of action based on the manageable priorities identified as most worthwhile to influence. Restraining forces need to be weakened before increasing the strength of driving forces; if they are not, the barrier of resistance to change will probably be strengthened further. Example of FFA Situation: upgrading a factory with new manufacturing machinery. Forces for change Customer wants new products Improve speed of production Raise volumes of output Stem rising maintenance costs Score 4 2 3 1 Forces against change Loss of staff overtime Staff frightened by new technology Environmental impact of new techniques Disruption Cost 10 (Adapted from who/jonassen/courses: Analysis of the table · · · · Train staff (cost, +1) to eliminate fear of technology (staff frightened, -2). In favour of the plan subtotal 10:10. Show staff that change is necessary for business survival (new force for change. +2). In favour of the plan subtotal 12:10. Show staff that the new machines will introduce variety and interest to their jobs (new force for change, +1). In favour of the plan subtotal 13:10. Raise wages to reflect new productivity (cost, +1; loss of overtime, -2). Install slightly different machines with filters to eliminate pollution (environmental impact, -1). In favour of the plan total 13:8. ) Score 3 3 1 1 3 11

These changes swing the balance from 11:10 against the plan to 13:8 in favour of the plan.

The business environment All businesses have stakeholders and operate within internal and external

environments. This tutorial explains more about these concepts. Sources of change in the internal environment Sources of change in the external environment Stakeholders in business

Sources of change in the internal environment The internal business environment consists of those factors which the business can control such as personal, marketing, and accounting systems. Some of the other things a business can control within its internal environment are its: · · · · strategic plans, tactical plans and operational plans and vision and mission statements choice of prime function organisational structure, and issues like authority, responsibility, chain of command and span of control use of support services.

A successful business continually reviews and changes, where necessary, factors within its internal control such as its: · · · · · · decision making process relationship with its customers and suppliers relationship with creditors in terms of credit terms, charges and interest rates personnel policies, in terms of rates of pay, productivity, training and benefits resources and technological requirements competitors.

Sources of change in the external environment The external business environment consists of a range of influences over which management has little or no control. It includes things like government policies, labour and finance markets, world trends, technological change, community values and economic cycles. The external environment is affected by factors such as: · · · · · · · pressure groups like Green Peace levels of actual and potential competition international politics and globalisation resource markets all levels of government all forms of the media trade unions and employer associations.

Examples of situations that may cause change in the external environment include: · · · · · · · improvement in production techniques fluctuations in the levels of demand fluctuations in interest rates changes in laws and regulations changes in taxation new social trends, fashions or lifestyles international influences.

Stakeholders in business A stakeholder is anyone with a vested interest in a business. Stakeholders are not simply the owners. Stakeholders and their major interests include: · · · · · · · customers and clients, interested in fair pricing, safe products and after sales service employees, interested in fair pay, safe and pleasant working conditions, training opportunities and career paths owners and shareholders, interested in a reasonable return on funds invested government, interested in standards and in receiving taxation society, interested in conformity to morals, customs and beliefs environment, interested in protection of air, water and soil future societies, interested in ecologically sustainable practices.


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