Business Management Theories.

Business Management Theories

Introduction

Explain the role of management

Management is a process concerned with coordinating and integrating work activities to achieve the goals of a business, with and through other people. Successful management is about achieving goals. Effectiveness is management is about achieving goals. Efficiency is concerned with the relationship between inputs and outputs. Effective management invariably results in business success, while ineffective management often results in business failure.

Body

How the old management theory contributed significantly to the problems Sparks faces.

Understanding management theories is vital to managers who are concerned with practical issues such as efficiency and productivity. They provide managers with a theoretical perspective at the nature and responsibilities of management within a changing environment.

Features of Classical-Scientific Theory
Scientific management focused on functions of management. Management functions were grouped on the basis of whether they were concerned with planning, organizing or controlling.

It was believed that efficiency and productivity would be achieved through division of labour, which is concerned with breaking the total job into small, narrow repetitive tasks. Defined as ‘ the one best way of doing things’.

The classical theory is characterised by a hierarchical organisational structure based on division of labour. Classical scientific theorists believed a pyramid structure was the most effective way to organize the structure of a business. Top management is at the top and the workers are at the bottom, with layers of middle management in between.

This was controlled by central bureaucratic management through an autocratic leadership style. This leadership style was based on the army were workers are given little or not say in anything, they are directed in what to do.

Disadvantages/Weakness of Classical Theory.
The theory has significant weaknesses, such as the way in which it treats workers as machines or resources. They become over specialised, only focusing on a single area of work or task. As a result, there was a worker resentment, monotony, high absenteeism and high staff turnover.

Due to high specialisation, the quality of the product is compromised because tasks become monotonous or repetitive, allowing no room for employee empowerment, development or creativity.

The pyramid structure of business organisation creates a small span of control and a rigid chain of command rendering communication between staff and management void.

How Classical-Scientific management theory and congruent strategies have caused problems within Sparks.

It is obvious that it is the weaknesses of this theory that caused the problems currently faced by Sparks.

Head office has become overstaffed and bureaucratic, a result of over specialisation requiring ...

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Due to high specialisation, the quality of the product is compromised because tasks become monotonous or repetitive, allowing no room for employee empowerment, development or creativity.

The pyramid structure of business organisation creates a small span of control and a rigid chain of command rendering communication between staff and management void.

How Classical-Scientific management theory and congruent strategies have caused problems within Sparks.

It is obvious that it is the weaknesses of this theory that caused the problems currently faced by Sparks.

Head office has become overstaffed and bureaucratic, a result of over specialisation requiring too many employees.

The classical theory is characterised by a pyramid or hierarchal structure, and in the case of Sparks this has resulted in a small span of control and a rigid chain of command. This has resulted in middle management that has obscured and lengthened the connection between the customer and the senior decision makers.

As a result of long communication lines, resulting in less communication within the business, the classical theory brings about an autocratic leadership style. This leadership style, in the case of Sparks, practised by Richard King, has directly influenced inefficiency and unproductive employees through loss of worker motivation and morale.

It has also created a rigid management without communication within the business. This can be deduced through the fact that staff has realised a need for change while due to a lack of communication management has failed to appreciate the need for modernisation, and has lost sight of what the customer wants. A complete role reversal.

This in turn creates a business that is slow to respond to change, thus creating a reactive rather than proactive situation. Managers live in environmental uncertainty, but it is dangerous to do nothing in this environment.

Scientific management was appropriate for its time, but not for a rapidly changing dynamic environment. This is why manufacturing organisations based on a high degree of division of labour are looking for alternatives.

Outline of new management theory and problems it will address.

To most effectively improve efficiency and productivity the business needs to adopt the Behavioural theory of management to address the current problems and achieve the new business objectives that recognised as a result of the current management theory.

Features of Behavioural Theory
The behavioural theory of management focuses on the human needs and aspirations in a workplace. This theory recognises the importance of human behaviour in the success and failure of a business. This approach is very different from Classical-scientific theories, which regarded people as machines. Motivational techniques such as rewards are used as incentives to improve performance

Under the behavioural theory the role of management moves away from the simple planning, organising and controlling aspects, towards new roles such as leading, communicating and motivating employees. All of which raise productivity and performance.

The behavioural theory gives staff opportunities to become multi-skilled and development of career paths.

This style of management uses a participative/democratic style of leadership that recognises the need for employee input into decision-making. It is characterised by a flattened organisational structure and work teams.

A flattened organisational structure involves removing layers of middle management creating a less hierarchal chain of command, resulting in a wider span of control.

Working Teams involve a group of people working together on a particular task. A contradiction to the classical-scientific theory of division of labour.

Both characteristics lead to a two-way flow of information and communication within the business- this encourages employee participation. Due to staff having a greater accountability and responsibility for their work efficiency and productivity improve as well as business culture.

Recommended management action and strategies to improve efficiency and productivity

The need for change has been realise by both Sparks staff and management. Therefore there will most likely be no resistance to change. So the next step is to set achievable goals.

Imploring the following management actions and strategies at Sparks will effectively improve efficiency and productivity and create a clear profit centre

The fact that head office becomes overstaffed and bureaucratic lead to the failure of Sparks to monitor its cost, thus making the fatal mistake of subconsciously assuming that reputation was a leading indicator of future performance, rather that visa versa.

The problem of dowdy clothing, overpriced food, and ramshackle store design is a result of a lack of foresight which came about due to a one way communication (Top Down) system inherit in the classical theory.

Sparks ability to identify customer wants ahead of the pack losing momentum is an indicator of their movement from being a proactive business to a reactive one. In this case reacting too late to the changing market needs.

The behavioural theory however, advocates a two way communication system, which provides needed feedback to management as well as short communication lines allowing for a direct link between customers/employees to decision makers. This is because the middle management that is rampant in a classical structure does not suffocate the flow of information. The required foresight can thus be gathered to be implemented more successfully.

The democratic leadership style, which contrasts the autocratic style of Richard King will increase worker morale and therefore increase efficiency and productivity, through the inclusion of staff in decision-making processes. It will also be an advantage to the business as staff will be able to provide their opinions that are unbiased by stakeholder responsibility or other factors.

Thus, they will be able to raise issues such as creating a clear profit centre with simple management structures, fast decision making and addresses staff performance and motivation to improve employee relation needs.

This strategy, flattening organisational structure, has been proved to increase efficiency and productivity. A case study that can be looked at is NUMMI. The NUMMI plant experienced low performance and inefficiency. When new management arrived they abolished the classical-scientific theory of management an implored the behavioural theory. Creating self-manageable work teams thus flattening the organisational structure and effectively increased efficiency and productivity. The case study of NUMMI is very similar to that of Sparks.

Since efficiency and productivity are directly related to outputs and inputs.

It can be said the strategy will have the same affect. Efficient use of resources at Spark may be achieved through downsizing. Reducing the size of labour force significantly while at the same time maintaining or increasing output. Increasing efficiency makes the business more competitive.

Once the flattening has occurred the next strategy that must be used is the creation of work teams. This evolutionary division of labour focuses a whole group of people to work together on a particular task, as it is too big for one person. It encourages common goals and sharing of human resources. This strategy leads to a higher productivity in a business as can be seen through Microsoft who implores this strategy. This leading software developer uses work groups to provide shared workload, common goals and support network. In the case of Sparks this strategy can be used to place emphasis on selling and marketing and create focus groups as suggested by staff.

Switch to proactive rather than reactive. Tools available such as;

Situational Analysis
Forecasting
SWOT (Strengths Weaknesses Opportunities Threats)

Conclusion

The new management theory will solve current problems, and the management strategies will compliment this and improve efficiency and productivity, and how the business will use a model for change.

Force Field Analysis: 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. Change is characterised as a state of imbalance between driving forces and restraining forces.