Management is the process that organizations use to reach their goals utilizing people and other resources. Organizations and the environments that they are located in are changing quickly and significantly. Traditional hierarchical command and structured organizations are proving too slow and costly for the 21st century. Rather than working with a boss and subordinates, an increasingly typical situation is one driven by teamwork that integrates different types of know-how to foster creative solutions. Information technology is offering new and richer ways for people to collaborate, even when they are located in different parts of the world. Networking is increasingly an important factor. On one level organizations are partnering with other organizations to combine their expertise and strengths to take advantage of opportunities otherwise unavailable to them—for example through joint ventures. On another level individuals are increasingly creating and joining networks in their companies, professions, and very large global ones.
The Evolution Of Management Thought
The roots of management are in ancient military organizations. Sun Tzu’s The Art of War (4th century b.c.e.) is an example that discusses many strategic, structural, and interpersonal management issues. Adam Smith in The Wealth of Nations (1776) had the insight that having each person perform a narrow task well might result in greater agility and quality in production. This notion is called job specialization or the division of labor.
In the early 20th century, Frederick W. Taylor put forth an approach called “scientific management.” This involved doing time-and-motion studies and otherwise collecting data to try to determine the best ways to do each task and movement that constituted a job. Henri Fayol, a French mining executive, in his book General and Industrial Management (1916), developed a functional taxonomy of management comprised of organizing, command, coordination, and control. Max Weber, a German academic, in The Theory of Social and Economic Organization (1922), distinguished traditional nepotistic family-run businesses from ones with more fairness and objectivity in hiring, promoting, and decision making. He called such “rational” organizations “bureaucracies,” emphasizing that they ran on the basis of set rules and policies rather than the whims and power of individuals. Chester Barnard’s The Functions of the Executive (1938) viewed organizations as cooperative systems, which need to obtain the voluntary cooperation of their members.
In the mid-20th century, Herbert Simon suggested that managers do not search indefinitely for the best alternative but rather often decide upon a decision choice that will work, although not necessarily optimally. He called this “satisficing.” In the 1960s organizations were viewed as systems analogous to biological organisms. Under “systems theory,” organizations first took in inputs, such as financial material and human resources, which went through a transformation process, involving technologies and managerial actions, within the organization; next they sent out outputs, including goods and services.
In the 1980s and 1990s, “quality management,” sometimes called “Japanese management,” became a leading approach. Key features included the continuous improvement of products and services, of the level of customer satisfaction with them, and Just-in Time (JIT) inventory, where the company purchases of materials would be limited to those needed for the particular day or week. In the 21st century, managing for sustainability, or “green management,” is increasing its influence as companies grapple with the ethical and legal need to make their operations and products support, rather than hurt, our natural environment.
Culture, Environments, And Ethics
Just as different nationalities have cultures, so do organizations. The internal environment of an organization includes a corporate culture that is comprised of the key values, beliefs, understandings, and norms generally shared by members of the organization. The fundamental values that characterize an organization’s culture are communicated through symbols, stories, slogans, and ceremonies.
Contemporary business is often conducted by multinational companies (MNCs) operating around the world. More and more markets are becoming worldwide ones, and organizations must recruit people who are adept at intercultural relations and communications. One important trend has been outsourcing of jobs from high-wage countries to low-cost ones.
The publicity of a series of large corporate scandals involving Enron, Arthur Andersen, WorldCom, Tyco, poison-painted Chinese toys, and Bernard Madoff provided an impetus for higher expectations of managers. The Sarbanes-Oxley law reflects this trend. A key way companies can be ethical is through devising strategies whereby they help to alleviate poverty, improve health, or introduce environmental sustainability through business activities that are profitable. So rather than rue the need to spend money on the research and development of environmentally helpful and conscientious parts of a product or service, a company might relish the prospect of aligning with the requirements of society before they are legally mandated so that if that does occur, they will be in the best competitive position.
The management process is comprised of planning, organizing, leading, and controlling activities. Planning involves setting goals and objectives and determining what actions should be taken to move toward accomplishing them. Organizing is the process of assigning tasks, allocating resources, and coordinating the people and groups of the organization in the implementation of plans. Leading is the process of encouraging others to commit themselves to working well and supporting goals. Controlling is the process of evaluating actual work performance against planned results and directing any adjustments that might be needed to improve performance.
One of the important choices in decision making is whether a decision is best made by a manager or a larger group. Group decision making must occur with a sensitivity to avoid the tendency toward groupthink, or premature agreement on a decision. Some companies institute a devil’s advocate position to ensure that the potential downsides of proposals are accurately considered. Problem solving can be improved through such creativity-stimulating procedures as brainstorming, where initially all ideas that come to mind are put on the table and then evaluated. Increasingly, teams are highly diverse and global. Also, working over the internet in virtual teams is an important trend.
Beyond tactical or short-term plans, organizations develop long-term strategies. Sometimes these are premised on competitive advantages exceeding those of competitors for providing superior value. Sometimes firms articulate the fundamental purposes of their organization in mission statements. The strategic management process involves environmental analysis of demographic and cultural aspects of societies in which the organizations exist, the technological product and processes available, the force of the economy, and legal and political forces (both local and international). When developing strategy, an organization must also analyze its internal capabilities, including its operations, logistical activities, marketing and sales, service procurement, technology development, human resource management, firm infrastructure, and resource management. Often firms focus on their core competence associated with things they do best. Generic strategies for obtaining competitive advantage include striving to be the lowest-cost producer of a product or provider of a service and making their product or service different in ways valued by customers. Firms must monitor and evaluate how their strategies are implemented and attempt to adjust them in line with the implications of such information.
Organizational structure refers to how the people, departments, technologies, and locations of a company are connected. Different ways of structuring an organization are appropriate for different situations. When units or people are interdependent and require each other to complete their work well, an integrated structure that fosters interaction, coordination, and cooperation might be appropriate. Organizations that have a formal structure are often specified by organizational charts showing how people and units are connected with each other as far as who reports to whom and who has authority over whom.
The current tendency is to move away from hierarchical multilevel organizations and rather institute flatter ones where employees are empowered and enabled by technology to make decisions themselves rather than seeking the approval of higher-ups as much. Traditional organizations were centralized, where top management had to approve most things. Contemporary organizations are more typically decentralized. Some organizations are organized around certain products or services; others are organized around categories of customers; and yet others have geographic structures. Organizations in which people have two bosses are called matrix structures. For example, a person might report to a functional department head (e.g., finance) and also to the head of a project they are in, such as the solar energy project.
Managing In A Networked World
Information systems were initially used for data storage. The ability to provide numerical summaries and calculations involving data was called “data processing.” As computer technology developed, management information transcending mere data agglomeration was provided by these technologies. Initially a company’s information was centralized in one large computer, access to which was through specialized programmers. Then the microcomputer revolution of the 1980s fostered the dispersion of the collection and analysis of information and companies to many small computers in departments, offices, and even on individual desks. This fragmentation was reversed to an amazing extent in the 1990s and early 21st century by the development of organizational networks (or intranets) and the internet and World Wide Web.
At the onset of the second decade of the 21st century, more sophisticated collaborative social and professional networking technologies are changing many managerial functions. For example, LinkedIn.com is a worldwide social and professional network with more than 30 million members. LinkedIn allows a manager in, for example, the pharmaceutical industry in New Jersey to find experts in new media in places such as Finland or India to collaborate on fulfilling needs, perhaps developing Web-based training.
An incipient trend that may develop into an important venue for conducting business is the use of three-dimensional augmented virtual interfaces, such as virtual worlds. For example, the Second Life virtual world provides people in business with a virtual representation of themselves (called an “avatar”) that can attend meetings and share and discuss documents and PowerPoint presentations, while making nonverbal gestures and expressions. So a publisher in London might have a meeting in Second Life with production people in Mumbai, editors in San Francisco, and marketing people in Pretoria without the time delay, cost, neglect of their jobs, and exhaustion of contemporary travel. Certainly the benefits for global sustainability of such a structure are stark.
- Charles Wankel, , Alleviating Poverty Through Business Strategy (Palgrave Macmillan, 2008);
- Charles Wankel, , 21st Century Management (Sage, 2008);
- Charles Wankel and Robert DeFillippi, eds., Educating Managers Through Real World Projects (Information Age Publishing, 2005);
- Charles Wankel and James A. F. Stoner, eds., Innovative Approaches to Global Sustainability (Palgrave Macmillan, 2008).
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