The Management of a Small and Large Business

Management Theories

There have been many theories in management and organisational design, which have developed since the 19th century. At the beginning of that century, there was a strong movement towards the classical and scientific approach. Classical writers such as F W Taylor (1956-1915) were convinced that there was only one way to structure an organisation and sought to find a set of principles which if implemented would guarantee an efficient organisation. Such principles were to train workers properly to work hard, and then motivate them primarily through money, as he believed the introduction of incentives could increase productivity.      

These principles may not seem particularly significant to us today, but at the turn of the century they were thought to be revolutionary. However while Taylor focused his attention at the base of the organisational pyramid, Henri Fayol (1841-1925), sought to establish principles that could be applied throughout the organisation. These included the principle as of specialisation, coordination, authority and control. Finally, Max Weber (1864-1920) provided the third pillar in the development of the classical organisation theory. He had developed an organisational structured termed a ‘bureaucracy’, based on a system of regulations and hierarchy of authority.

 

Bureaucracies are very much a feature of modern life. Many large organisations and government departments exhibit the characteristics mentioned above. The growth of bureaucracies has arisen because as firms increase in size there is a greater specialisation, and the need for more careful coordination of activities. Moreover, their system of rules and regulations, levels of authority and job design are seen to be efficient. However these theorists are dated, and modern approach to management had developed. In the past organisation and effectiveness had been the main emphasis, whereas modern approaches to management is concerned with more than just efficiency, including developing strategic objectives, and promoting total quality management.

Different Management Styles

The management’s role of today should, however, change according to a particular situation and the people involved. It will also vary with the time and the degree of risk involved. Therefore, by adopting the ‘right’ approach employees are likely to be more motivated and show greater commitment.

It may not be easy for managers of a large company to change their style towards their employees as they usually follow a formal and autocratic approach in their organisational structure and culture. There may be situations in which managers should be more democratic, that is when managers take the views of their subordinates into account when making decisions.

The democracy approach and a laissez-faire management style are usually found in a small organisation, where employees work within an informal culture and are able to share their views with their manager. An example of this would be the Apple Mackintosh Company, where the employees do not need to dress in suits and there is a more laissez-fair approach, as apposed to IBM’s formal culture.  However, the problem is knowing what it is that makes a good manager and what is the ‘best’ management style to establish a successful business. Even if we thought we knew the best style, can we cannot simply train anyone to adopt this approach. The ‘right’ style of management for a large and small organisation will depend on the particular circumstance and the nature of the task and while it is possible to help someone develop a particular style it will also depend on the individual’s personality. Small organisations have an advantage over larger organisations, as they are likely to be more flexible in the management style they exercise.

As employees have benefited from a higher standard of living in the UK and have higher expectations of work, managers in small and large organisations have generally had to adopt a more democratic style to motivate people. However there are plenty more autocratic managers who succeed, as seen in many large organisations. Their managers keep most of the authority to themselves; they do not delegate much or share information with employees, but yet they communicate within their separate departments. Moreover, an autocratic management tends to tell their employees what to do in a particular situation, how to do it and when to do it. By doing so the manager’s are able to monitor their employees and helping them optimise their entail target and the organisation’s goals.  

Leadership

A key to successful planning and implementation in small and large organisations is the development of teams (leadership). This is seen when individuals are persuaded to work together towards the achievement of organisational goals. The leader of the team is anyone who has the power to exercise control over others. However managers and leaders have different traits despite the fact that leadership is one part of the aspects of what managers do. Managers need to set goals, influence others and solve problems, whereas, leaders tend to behave differently towards their other team members. With managers (the former) directs their views towards goals, determining problem solving and influences people through the use of logic, facts and reason. On the other hand, leaders (the latter) tend to use personal power to influence the thoughts and actions of others, while creating a harmonious environment, directing and guiding people towards a more practical solution.

When examining leadership in a small organisation it is seen that the teams are small, enabling a quick, focused discussions and decisions. Thus teamwork is not a problem in the smaller company except where personalities clash. However in a large organisation, leadership teams are much larger, creating a sense of community, yet this creates a slow process, as everyone’s views need to be heard. Despite a possible delay, the CEO of Southwest Airline believes that they will continue to improve and promote their leaders to work more successfully. He believes that firms with cooperative leaders can outperform those with competitive ones, since cooperative leaders encourage input. This will in turn lead to collective thought and team members who work off each other.

Communication

Effective communication is essential for all organisations. Without it employees do not know what they are supposed to do, how to do it or when to do it by. Similarly, managers have little idea of how the business is performing, what people are actually doing or what their customers think.

Communication links the activities of all the various parts of the organisation. It ensures that everyone is working towards a common goal and enables feedback on performance. By communicating effectively the management is able to explain the objectives of small and large organisations, and employees can have an input into the decisions that are made. Good communication is also extremely important to motivate employees. People need to know how they are getting on, what they are doing right and in which areas they could improve. By communicating effectively management of a large and a small firm have a much more focused and committed workforce. Communication with employees also includes target setting, as it helps employees to measure their performance.

As well as communicating internally, it is also important for organisations to communicate effectively with external groups such as suppliers, customers, the media and investors. By communicating on a regular basis with external groups, large and small firms are able to monitor their success and learn how to improve the quality of its operations.

In a large company of several thousand people, for example, it is impossible for the senior management or the CEO to meet and discuss progress with each employee individually. This on the other hand is possible within a small business as there are fewer people, who work closely together to achieving their daily targets. It is believed that as a firm grows, it tends to introduce more layers of hierarchy. This makes communication more difficult in larger organisations, as messages from the top of the organisation to the bottom have to go through more people. This slows down decision making, as well as it introduces a greater risk of the message being distorted. However as technology improves, large organisations are finding it easier to communicate with most member’s of staff. Southwest Airlines gains its feedback through a daily newsletter and its Freedom Net Network, which tracks on-time performance.

Organisational Culture

Many issues can affect the behaviour and actions of a manager, for example organisational culture. Charles Handy differentiated between four different types of cultures; role culture, person culture, task culture, and power culture. Role culture concerned with a hierarchical structure, is usually found in a large organisation such as Vodafone and Amazon.com, as they have a various departments responsible for different duties of the firm, along with a chairman and senior managers. A person culture that includes solicitors and consultants is also found in small areas of a large firm as they are needed in their everyday operations. Task culture is generally established in a small business since this culture constitutes a small team approach, cooperating together to deliver a project.  Power culture, where its strength relies on a central figure of the organisation, is usually found in small businesses, which grows into larger businesses. Therefore the culture of the organisation can usually change depending on its size.

Conclusion

Therefore it is apparent that the styles of management incorporated with a small and large organisation differ from each other. Team management with a democratic and less formal culture seems to be a style implemented by small firms. Meanwhile, the larger firms tend to follow the authority, hierarchy, formal and an obedience style of management. This can be demonstrated through the management of planning, decision making, communication and organisational culture as analysed above.  Managers in both small and large businesses need to have good communication flow and leadership skills, since the need to direct employees in the right direction to perform tasks in high standards is fundamental. It can therefore be concluded that the management of a small business is not exactly the same as the management of a large business.  

Bibliography:

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Management Theory and Practice. 5th Edition. G Cole,1996        

Organisational Behaviour. 3rd Edition. D Buchanan & A Huczynski, 1997        

Managing Organisations. 2nd Edition. R Rosenfeld & D Wilson, 1999

Management and Organisational Behaviour. 4th Edition. L Mulins, 1996

Management.1st Edition. John Naylor, 1999                                        

Business Studies, I Marcouse, B Martin, N Wall, 1999

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