Case Study 1 continued

Their job which of course, was to mazimise shareholder value and how to overcome
agency problems by aligning managers and shareholders interests and incentives. Making
large stock options an important part of managers compensation was clearly one of the most
effective ways for achieving such alignment.
At Berkeley and Stanford, business students have been taught the transaction cost economics
developed by Oliver Williamson. In essence, this argues that the only reason companies exist
is because their managers can exercise authority to ensure that all employees do what they are
told. Managers must ensure that staff are tightly monitored and controlled these courses
described this as the exercise of flat while creating sharp, individual level performance
incentives.
And wherever in the world one studies management, there is Michael Porters theory of
strategy. This asserts that to make good profits, a company must actively compete not only
with its competitors but also with its suppliers, customers, regulators, and employees. Profits
come from restricting or distorting competition, bad though this may be for society. It is one
of the most important tasks that managers are paid to do.
It is not only MBA students who have, for decades, learnt these teories. Many thousand of
executives have been taught the same lessons on business courses. Even those who never
attended a business school learnt to think this way because these theories were in the air,
legitimising some managerial actions and delegitimising others and shaping the intellectual
background against which day-to-day decisions were made. Is it any surprise, then, that
executives in Enron, Global Crossing and scores of other companies granted themselves
excessive stock options, treated their employees badly and took their customers for a ride
when they could ?
Much of the problem has arisen from the excesses of business school academics in pretending
that business is science. Not only economists but also those in areas such as marketing and
organisational behavior increasingly treat business as if it were a kind of physics, in which
individual intentions and choices either do not play a role or, if they do, can safely be taken is
being determined by economic, social and psychological laws.
The problem is that, unlike theories in the physical sciences, theories in the social sciences
tend to be self-fulfilling. A theory of sub-atomic particles does not change the behavior of
those particles. A management theory, if it gains enough currency, changes the behaviour of
managers. Whether right or wrong to begin with, the theory becomes true as the world
comes to conform with its doctrine.
This is why it is nonsense to pretend that management theories can be completely objective
and value-free. Even if the theorists pretend to be objective, the subjects and users of the
theory cannot. By incorporating negative and highly pessimistic assumptions about people
and institutions, pseudo-scientific theories of management have done much to reinforce, if
not create, pathological behaviour on the part of managers and companies. It is time the
academics who propose these theories, and the business schools and universities that employ
them, acknowledged the consequences.
(reproduced with permission. From FT. Com, 17 July 2003, @Sumantra Ghoshal)

THE NATURE AND EFFECTIVENESS OF MANAGEMENT

Organisations can only achieve their goals and objectives by the co-ordinated efforts of their
members and it is the task of management to get work done through other people.
Management is essentially an integrating activity which permeates every facet of the
operations of an organisation. It is the responsibility of managers to manage, and to achieve
results through the utilisation of human resources and the efforts of other people. Managers
are only likely to be successful if they adopt certain basic managerial philosophies and an
appropriate style of behavior. Attention must be given to managerial performance and
effectiveness.
LEARNING OUTCOMES
After completing this chapter you should be able to :
Explain the meaning of management and main activities, or functions of management.
Detail the attributes and qualifies of a successful manager;
Evaluate the importance of management to the effective performance of work
organisations;
Contrast different attitudes and assumptions of managers about human nature and
behaviout at work;
Assess different systems of management and relate these systems to organisational
characteristics;
Appreciate the importance of adopting an appropriate style of managerial behaviour and
approach to the management of people;
Analyse managerial effectiveness of managers.

Managerial work is enormously complex, far more so than a reading of traditional literature
would suggest. There is a need to study it systematically and to avoid the temptation to seek
simple prescription for its difficulties.
Henry Mintzberg
The Nature of management Work, Harper & Row (1973)

While the nature of managerial work changes constantly, the fundamental truth remains
unchanged : management continues to represent a huge challange to those who put it into
practice every day throughout the world.
Stuart Crainer
Key management Ideas, Financial Times Prentice Hall (1998)

THE MEANING OF MANAGEMENT

Management is a generic term and subject to many interpretations. A number of different
ideas are attributed to the meaning of management and to the work of a manager. Schneider
and Barsoux also contend that trying to define the meaning of management shows up
differences in beliefs and values. Cultural influences are a significant feature of management.
In certain respects everyone could be regarded as a manager to some extent. We all manage
our own time and everyone has some choice whether or not to do something, and some
control however slight, over the planning and organisation of their work. However, we are
concerned with management as involving people looking beyond themselves and exercising
formal authority over the activities and performance of other people.
At its most basic, management may be viewed as making things happen.
Management is active, not theoretical. It is about changing behaviour and making things
happen. It is about developing people, working with them, reaching objectives and achieving
results. Indeed, all the research into how managers spend their time reveals that they are
creatures of the moment, perpetually immersed in the nitty-gritty of making things happen.
An added dimension to the study and understanding of management is provided by Knights
and Willmott. They refer to managing as an everyday activity that involves interactions
between people that are not unrelated or entirely dissimilar to other spheres of life, except
perhaps in the rhetoric and hype that surround management. Knights and Willmott contend
that most established textbooks about management and organisation provide little that enables
practising managers to make sense of their particular problem or dilemma and in order to
appreciate the living of management draw on a number of contemporary novels.
Since most management textbooks do not make the connection between managing and
everyday life, and indeed envelop the activity of management within an academic and
professional mystique, we have drawn to alternative sources (e.g. novels) that might enable
students to relate accounts of management to their own experience ... (this book) is
concerned to illuminate the lives of people whi, in different ways, are involved or affected by
management.
While there is undoubted value in this approach, every textbook must have a clear focus and
is obviously limited in potential content. For our purposes, therefore, we can regard
management as :

Taking place within a structured organisational setting and with prescribed roles;

Directed towards the attainment of aims and objectives;

Achieved through the efforts of other people and

Using systems and procedures.

The emergence of management

Peter Drucker, who is widely regarded as the guru of management gurus, has written about
the significance in social history of the emergence of management :

The emergence of management as an essential, a distinct and a leading institutions is a

pivotal event in social history. Rarely, if ever, has a new basic institution, a new leading
group, emerged as fast as has management since the turn of this (twentieth) century. Rerely
in human history has a new institution proven indispensable so quickly; and even less often
has a new institution arrived with so little opposition, so little disturbance, so little
controversy.
Drucker sees management as denoting a function as well as the people who discharge it, a
social position and authority, and also a discipline and field of study.
Management is tasks. Management is a discipline. But management is also people. Every
achievement of management is the achievement of a manager. Every failure is a failure of a
manager.
Other writers, however, take the view that management is not a separate discipline. The
problem is identifying a single discipline which encompass the work of a manager, or
agreeing the disciplines that a manager needs in order effectively to carry out this work.
Note, however, the discussion on Managers of the Future? later in this chapter.
Manager as a job title
Even within a work organisation you cannot identify a manager necessarily by what a person
is called or by his or her job title. In some organisations there is a liberal use of the title
manager in an apparent attempt to enhance the status and morale of staff. As a result there
are a number of people whose jobs title includes the term manager but who, in reality, are not
performing the full activities of a manager.

The infant school headteacher as a manager

When considering the tasks involved in the role of the infant headteacher, two words
automatically spring to mind-many and veried. I now might and vast and ever-changing to
this statement. The traditional role of the headteacher as master-teacher is now being
superseded by that of school improvement manager. Within this come the roles of finance
and personnel manager, both under the umbrella of shool improvement. And, at the centre of
everything are the children and parents whom the head-teacher strives to serve.
The headteacher will work to effectively manage the best interest of the children not only
through pastoral care and support, but also through the effective management of school
resources. Some tasks will be delegated to the deputy headteacher and members of staff who
are responsible for areas of the curriculum. However, a staffing structure needs to be in place
which can sustain this level delegation. This is often a major issues in smaller infant schools
where each number of the teaching staff must teach a class of children and manage a subject
or several subjects alongside their teaching commitments. Individual tasks are delegated to
subject managers and are monitored by the headteacher through action plans, which in turn
are linked to the School Improvement Plan.
The School improvement Plan is the major management tool within the school. The
headteacher will manage both the improvement and maintenance sections of this plan by
regular review and evaluation. Clear, quantifiable improvement targets will head this plan.

These should reflect the whole schools perceived view of those things that the school should
do to bring it closer to its overall vision. Target setting, and the headteachers management of
this process, will play a large part in moving a school forward, for a school that stands still is
one that is moving backwards.
When thinking about school improvement, we must also consider the roles played by both
central government and the Local Education Authority. The central government monitoring
body takes the form of OFSTED. Teams of inspectors working within schools on a regular
cycle are required to produce inspection reports on individual schools intended to highlight
achievements and to identify areas for future developments. There are many issues for a
headteacher to consider arising from OFSTED and perhaps none greater than maintenance of
staff morale at what is often a stressfull time. The collection and use of data is becoming of
prime importance. Headteachers must be able to interpret statistics and use the wide range of
data available at both county and national level.
The headteacher is also finance manager. A large proportion of any schools budget is for
staffing costs with the next major cost being educational supplies and resources. Part of the
formula for the allocation of budgets to schools is based on the number of children on a
schools roll. Every school has a standard number of children which it cannot exceed. Some
schools number of children on roll may fall below this standard number, while other schools
may be oversubscribed. The headteacher will strive to maintain an optimum number of
children on roll. This is often achieved through promotion of a schools reputation and the
qualify of education it provides. If this is successful, the schools number on roll will remain
healthy and the budget relatively stable. It is part of the headteacher role to manage this, often
through an informative school brochure and prospectus, open days for prospective parents
and other events. Test results alone will not give the whole picture.
The headteacher is also personnel manager, using the management tools of clear targetrelated job descriptions and appraisal to monitor staff performance. The headteacher must
create a climate in which all staff feel motivated to succeed, and an atmospherein which they
are able to work as a team towards shared goals which will ultimately improve the qualify of
education that children receive. Headteachers will strive to use performance management as a
process by which teachers can best demonstrate their strengths and feel happy to address
future areas of development.
The headteacher is a manager in the fullest sense, but is also a visionary and essentially a
leader. Strong leadership and direction is vital for all headteachers at this time of great
change. We are urged to take control and lead our schools and staff into the brave new world
of the millennium. None would doubt the importance of this but againts a background of
some stability please !

Managers born or made ? management an art or science ?

On the other hand, there are many people whose job title does not include the term manager
(for example, group accountant, head chef, chief inspector, captain, headteacher, production
controller, district nursing officer, company secretary), but who, in terms of the activities they
undertake and the authority and responsibility they exercise, may be very much a manager.

There is frequent debate about whether managers are born or made; or whether management
is an art or a science. Briefly, the important point is that neither of these is a mutually
exclusive alternative. The answer to either question is surely a combination of ager, these
natural talents must be encouraged and developed through proper guidance, education and
training, and planned experience.
Clearly, management must always be something of an art, especially in so far as it involves
practice, personal judgement and dealing with people. However, it still requires knowledge of
the fundamentals of management, and competence in the application of specific skills and
techniques as illustrated, for example, with developments in information technology.
The trouble is that, for all the techniques at their disposal, managers generally act at a very
intuitive level. Managers may haveabsorded the latest thinking on core competencies, but are
more likely to base a decision on prejudice or personal opinion rather than a neat theory.
The discussion of management as an art or a science is developed by Watson who suggests
that in order to make sense of the complex and highly ambigious situations in which
managers find themselves, management can be viewed as both art and science but also magic
and politics.

MANAGEMENT AND ADMINISTRATION

There is often confusion over different interpretations of the two terms management and
administration. One of the main reasons for this confusion would seem to result from the
translation of Fayols book Administration Industrielle et generale from the French int
English. In the original (1929) English edition there was a direct translation of
administration, but in the wider re-publication of the book in 1949 the term management
replaced administration in the title. In the introduction to the revised edition Urwirk
indicates regret at this change. He refers to Fayols use of the word administraion as
indicating a spesific fucntion which enters all tasks involving supervision of the work of
others. It is not concerned with the status of those who exercise this function. Urwirk also
expresses concern at the possible division between management being seen to apply only to
business organisations and (public) administration as applying to the same functions in public
service organisations.
Dictionary definitions tend to see the two words as synonymous. Management is sometimes
referred to as administration of business concerns adn administration as management of
public affairs. There is clearly an overlap between the two terms and they tend to be used,
therefore, in accordance with the convenience of individual writers. This confirms the feeling
that althought most people perceive a difference between the two terms, this difference is not
easy to describe.
A traditional perception is that private sector organisations are managed and the use of the
term administration is associated with public sector organisations. However, the term
management is now used far more widely within the public sector. There is also an
increasing number of books which examine management in the public sector.

Administration part of management

There appears, therefore, to be growing acceptance of the term management as the general
descriptive label and administration as relating to the more specific function of the
implementation of systems and procedures instigated by management. Administration can be
seen as taking place in accordance with some form of rules or procedures, whereas
management implies a greater degree of discretion.
For our purposes, management is viewed as applying to both private and public sector
organisations; and administration is interpreted as part of the management process,
and concerned with the design and implementation of systems and procedures to help
meet stated objectives. Systems of communication and procedures relating to information
technology are particularly important today.
The role and importance of administration
On behalf of the Institute of Chartered Secretaries and Administrators, Bailey-Scudamore
undertook the most comprehensive survey ever in the United Kingdom on the changing role
of administration within organisations. The research found that administration is seen as an
important activity, but not such an important function. There remains much scope for
improvement to administrative activity and it should be on the high-level agenda in all
organisations. Certain areas of the administrators work will demand high degrees of detail,
planning and analysis and demand exacting timescales and highly regulated treatment, but, as
a result of organisational and environmental change, administration is becoming much less
rigid and rule-oriented. Many more people are taking on aspects of administrative work as an
essential component of their own function or specialism and organisations are turning to
administration as an indirect means of improving business performance.

Managers and administrators now need to perform quickly, effectively and efficiently.
Failure to do so will leave them, their bosses and their organisations exposed to critism
and, more seriously, to competition. So what are the biggest challenges of 21st century
administrative management ? They are the :

Effective management of information and communications;

Effective management of people.

Both of these areas of professional challange will be characterised by a permanent state of

change. So effective managers will need to be able to manage change; to be able to manage
information; and to manage information through people.
Professor Graham Robinson, Chef Executive Officer,
The Institute of Administrative Management

THE PROCESS OF MANAGEMENT

The nature of management is variable. Management relates to all activities of the organisation
and is undertaken at all levels of the organisation. Management is not a separate, discrete

function. It cannot be departmentalised or centralised. An organisation cannot have a

department of management in the same way as it can have a department for other functions,
such as production, marketing, accounting or personel. Management is seen best, therefore,
as a process common to all other functions carried out within the organisation. Management
is essentially an integrating activity.
It is difficult to think of any aspect of the functioning of the organisation, or behaviour of
people, which does not concern, or relate back to, management in some way. For example,
even personality clashes between two individual members of staff could possibly be traced
back to management procedures for recruitment and selection, induction, socialisation and
training, delegation or the level and style of supervision. And clearly the personality clashes
are likely to affect the attitudes and work performance of the members concerned, and also
affect the morale of other staff.

The overall responsibility of management can be seen as the attainment of the given
objectives of the organisation. Naylor, for example, provides the following definition :
Management is the process of achieving organisational objectives, within a changing
environment, by balancing efficiency, effectiveness and equity, obtaining the most from
limited resources, and working with and through other people.
Objectives are desired end-results the organisation is striving to achieve. Within the
framework of objectives, policy provides the guidelines for the operations and activities of
the organisation. Clarification of objectives and policy is prerequisite if the process
management is to be effective. However, as Drummond, for example, points out : The
fundamental problem of management is that organisational and individual objectives differ.
Whereas the organisation may be interested in maximising output and