Tall Flat
Note how the shape of the hierarchy affects the …
The number of operatives who are directly accountable to a manager.
Normally the taller the hierarchy, the narrower any particular manager’s span of control. Also, spans tend to be wider at the bottom (where subordinate’s duties are often the same) than at the top, where senior manager have varied responsibilities.
UK businesses have traditionally gone for the taller hierarchy, with rigid chains of command and a high degree of centralisation. However, the success of Japanese (and US?) firms in the UK has seen the increased incidence of
Where whole layers of the hierarchy (normally middle management) are removed.
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- Centralisation v Decentralisation
Defined by where the important decisions are made. Through the 90s, UK firms have become increasingly de-centralised which allows;
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increased delegation of authority to lower levels of the hierarchy; this can help with employee motivation and hence diminish labour turnover
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senior managers can concentrate on the strategic decisions whilst more junior levels can take the operational (tactical) decisions
Lord Thomson (of Thomson Newspapers):
“The key to managing any large or diverse business is decentralisation.”
Definitions of some key words;
Accountability
Authority
Delegation
Decentralisation
Responsibility
Structures
These can be either
The formal structure (or traditional)
Here, the hierarchy is divided up along vertical lines according to
- function
- location
- product
- process
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The matrix structure
Employees from appropriate levels are brought together for specific projects;
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The entrepreneurial structure
In small, dynamic businesses, often in very fast moving industries, senior managers (often also the owners of the business) keep most of the decision making process amongst themselves; there is little need for formal hierarchy. Much use is made of contracted specialist labour for project work (eg design or marketing consultants) and flexible workforces (part-time and limited contract workers). The number of permanent core workers is kept to a minimum. Charles Handy talks of the shamrock organisation.
The effectiveness of this structure will depend very much on the abilities of the senior managers; where they keep in touch with the wishes of the market and take their employees with them, it can be highly successful. However, one limiting factor is size; once the enterprise grows beyond a certain limit, the core workers will be unable to manage every aspect of the business and more responsibility will need to be delegated, requiring a more formal structure.
The informal structure
In many professional occupations (eg solicitors, doctors) there is little obvious structure; highly qualified individuals simply get on with their work with the minimum of formal organisation. Support staff ensure the smooth running of the enterprise on a day-to-day basis.
Factors affecting Organisational Structure
Motivation Theory
Management are responsible for ensuring that the workforce are highly motivated to;
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promote good industrial relations
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maximise labour productivity
Other knock on benefits include;
- well motivated, happy employees give a firm a good reputation, making it easier to recruit new employees
- a good reputation can be part of the marketing effort in terms of corporate image
- well motivated employees will help the firm compete in terms of customer service
but where does this motivation come from? Management must search for the relevant influences, whether they be internal or external, to utilise them to their best advantage.
The Scientific Management School
FW Taylor was the first businessman to address worker motivation. An engineer first at the Midvale Steel Company and later at the Bethlehem Steel Company, he introduced ideas based upon work-study or time and motion studies where workers were closely observed (at Ford Motor Co. they actually filmed them) to see if there was a better way of organising the physical activity of work. Once the most efficient method was identified, all workers were obliged to use this method. Payment was based upon output by the individual, thus the introduction of piece rates (often on a sliding scale) and bonuses dependent upon the individual’s performance.
Taylor’s starting point was that;
- work is intrinsically unpleasant
- workers are unintelligent and lazy, but rational
Therefore, the work process should be broken down into small, consecutive chunks so that even unskilled workers could manage their portion. This was called the division of labour. Workers would be carefully instructed as to their role and to the optimum working method (as determined by work study), given some rudimentary training and the right equipment (Taylor’s steelworkers were given different sized and shaped shovels depending upon their function and their physique – an early example of ergonomics?) then constantly monitored (controlled?) to ensure compliance. They would be motivated purely by the monetary reward gained from working hard.
This individualistic approach, where everyone’s rate would be determined by a ‘norm’ based upon the most adroit workers, meant that many employees felt their level of reward was threatened. Further, the rapid increases in productivity often achieved meant that many workers were made redundant. Thus the techniques proposed were often unpopular with workers and, indirectly, led to a large rise in TU activity in the early 20C.
So was Taylor all bad?
- his time and motion studies did raise labour productivity massively, allowing the adoption of mass production methods in many industries
- he was the first to champion the idea of a scientific approach to production
- he was not anti worker; as he himself said:
The principal object of management should be to secure the maximum prosperity for the employer, coupled with the maximum prosperity of each employee.
Taylor in practice
Monetary reward is to be the primary motivator (although fringe benefits or ‘perks’, representing payment in kind, can have a role to play). This can take the form of;
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piece rates workers are rewarded for their level of output
eg
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performance related pay with the rise of salaries and wages as the most common form of money payments, PRP is an attempt to re-introduce the link between effort/output and reward.
However PRP has attracted some criticisms;
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It is unfair. How can an employee in the service sector (nurse, policeman, etc.) have their output measured so that their performance against pre-agreed targets can be rewarded? Too much depends upon the interview/ appraisal system and so puts great power in the hands of line managers.
- Will the system be properly funded? If superior performance only attracts minimal extra rewards, then perhaps workers will not be motivated.
Lack of funding can be addressed through variable pay where instead of PRP operating across the whole organisation, a few star employees can be identified and their rewards boosted spectacularly depending on performance. [Note how Taylor’s individualistic approach is once more to the fore.]
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profit sharing when the business is successful, its employees share in the success with a (small?) slice of the profits being distributed amongst the workers. This encourages worker loyalty (breaking down the ‘them and us’ attitude) but again, there is a danger that once the bonus payments are shared out, the amount for each worker could be rather paltry.
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share ownership workers are invited to take some of their remuneration in the form of shares in the company, thus tying their future reward into the success of their employer.
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share options senior mangers are given the option to buy shares in the company in the future at some pre-agreed (today’s?) price. If the share price rises (due, of course, to their fine managership) then they buy and sell for an instant profit; if the share price falls, they simply do not take up their option.
Given the criticism of Taylor’s ideas on money as the primary motivator, it seems ironic how many money-related schemes exist.
The Human Relations School
Elton Mayo introduced a sociological slant onto human motivation in the workplace. Although originally a researcher of scientific management, through his experiments at the Hawthorne plant at the Western Electric Plant (the impact of the working environment – heating, lighting, ventilation etc.), he developed his ideas on the importance of the human relationship in the work place; the Hawthorne Effect. Motivation could be enhanced by improving the relationship between workers and supervisors, and by encouraging the group’s morale and a feeling of inclusiveness.
Specific areas of policy include;
- the introduction of social facilities at the workplace, to foster the feeling of belonging to a ‘family’, plus the organisation of works outings, summer picnics and the Xmas dinner dance; even the most humble employee could ask the MD’s wife for a foxtrot.
- firms introduced the Personnel Department (later HR Dept) to consider the needs of employees within the organisation, rather than just those of the firm.
- The concept of team work and team building became an important aspect of management activity
Single Status
Recently, many firms have moved towards a removal of some of the more visible signs of differentiation between grades in the hierarchy, to diminish the sense of ‘them and us’. This does not do away with pay differentials, but this is a less obvious discriminator between staff than observable ‘perks’.
The ‘old way’ Single Status
Accommodation
Facilities
Dress
Holidays
The Human Resources School
(aka The Neo Human Relations School)
Writers such as Abraham Maslow and Frederick Herzberg were interested in the psychological implications of the workplace; could management utilise an understanding of their employees to improve productivity and encourage them to remain loyal to the firm? Did motivation exist within each worker and how could it be stimulated?
Maslow’s Hierarchy of Needs
Workers have various needs that can be met through their participation at the workplace. These needs are of various levels, but the most basic must be met first before a higher level need can be addressed. [Maslow is interesting from a workplace and a more general point of view.] So the firm can motivate the employee by addressing these needs in order. Low level motivation can be achieved through a fair and adequate system of pay but for higher levels, other psychological needs must be met; eg the desire to belong to a group, the desire for creativity.
Maslow’s theories are attractive to managers as they allow them to ‘customise’ their motivational methods to workers individually, depending upon their value to the business and their potential to be developed as a ‘human resource’.
Criticism of the model?
Herzberg’s Two Factor Theory
Any job must be seen in terms of;
- the environment in which the job takes place
Herzberg suggested that factors associated with the environment, called hygiene or maintenance factors, did not actually encourage employees to work harder but their absence could cause dissatisfaction and thus de-motivate the employee. Examples would be;
The job itself should ideally include satisfiers or motivators that would have a positive influence on the workers attitude and therefore on their productivity. Management should ensure that wherever possible, jobs are designed to minimise the lack of de-motivating maintenance factors and maximise motivating factors.
Criticism of the model?
Maslow’s Hierarchy and other theorists
Can these four theories be put into some kind of coherent whole?
Human Resource Theories in practice
If money is not the primary motivator, then managers should look at the job itself to maximise employee commitment. Job design seeks to ensure that each worker is given a job that is challenging and interesting. This should include;
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setting the employee goals (remember that objectives should be SMART)
- employees must see their place in the organisation in terms of their contribution and/or specific output
- employees should be allowed, wherever possible, to control their own working environment (in terms of eg schedules) rather than being controlled by them
Efforts to reduce boredom (and therefore de-motivation) in the workplace include:
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job rotation moving workers from job to job (mostly of a menial
nature) so that they do not become totally switched off.
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job enlargement often called horizontal loading. Workers, as part of
their daily routine, undertake a range of activities, all of roughly the same complexity; the worker gains from the resulting variety and the firm benefits from a more flexible worker.
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job enrichment often called vertical loading. The job is designed to
include tasks of varying complexity, to challenge the worker, (but the worker must be given appropriate training to complete these tasks) and to allow the worker to take some responsibility for their own activities and performance.
Empowerment
Job enrichment often allows workers the opportunity to have some measure of control over their environment, whether it be in terms of scheduling rotas or how the workplace is to be set out. This improves their self-esteem and allows them scope for creativity. This can be further enhanced by creating quality circles, where teams of workers meet (weekly? monthly?) to identify and solve problems that directly affect them in the workplace.
Team working (very much part of the Japanese approach to management that has been fashionable since the ‘80s due to the success of Far Eastern companies in many areas of business, but especially manufacturing) can also include;
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production teams related to cell production where workers
take responsibility for achieving production and quality targets; improvements in these areas outweigh losses of economies of scale through division of labour
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management teams the use of matrix management means that
managers can feel part of a productive unit, dealing with particular tasks
Which form of motivation is most appropriate? As usual, this will depend upon a variety of factors.
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Business Culture In more traditional cultures (rigid, formal hierarchies)
empowerment techniques are often difficult to implement and thus more Tayloresque methods are used. However, where the business is more dynamic and task oriented, empowerment techniques will probably be the most beneficial.
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Leadership Style Inextricably related to the culture of the business will be
the style of leadership adopted by senior management.
Leadership and Management
Warren Bennis Managers do things right; leaders do the right thing.
The distinction between managership and leadership is not always clear cut.
Management
Leadership
Management by Objective
Drucker sees a key tool of management to be the use of objectives. The manager will;
- identify targets for, and negotiate their agreement by the subordinate
- ensure that the employee receives suitable training and resources to achieve the agreed objectives
- evaluate, in consultation with the employee, how well the objectives have been met
To ensure the co-ordination of MbO across the whole company, the process must be ‘top-down’, ie the corporate objectives dictate the departmental objectives which in turn dictate the section or team objectives, all the way down to the level of the individual employee.
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Leadership Styles
These can take a variety of forms but generally lie on a spectrum between …
Autocratic Paternalistic Consultative Democratic Laissez Faire
Autocratic leaders enjoy control over the decision making process, pass
decisions down the hierarchy and rarely listen to advice from subordinates; they expect obedience, hand out criticism (and discipline?) but do not take it too well. Employees are afraid, especially of making mistakes, and therefore become dependent on the leader for almost all decisions.
Paternalistic leaders are autocratic in nature, but have a friendly face;
decisions may well be taken in the best interest of the business, or even the workforce, but the head of the family is still in charge. Employees can become very loyal → low labour turnover
Consultative leaders believe that employees have a valuable contribution to
make to the decision making process, but in the final analysis, the decision still lies at the top. Workers appreciate the opportunity to express themselves and may some input on their part in the resulting outcome.
Democratic leaders (or participative leaders) encourage input from all
employees and decisions are a result of either some kind of voting procedure or, more likely, as an outcome of informal discussions; leaders must therefore be extremely skilled as communicators.
Laissez Faire leaders can either be seen as lazy and unwilling to take the
decisions that are their essential function, or are so trusting in the ability of their subordinates that they have delegated the entire decision making process.
The key is to be able to switch between styles when the context so requires.
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McGregor’s Theory X and Theory Y
McGregor attempted to formalise leadership theory by looking at two contrasting styles. Each looks at management’s attitude towards their workforce and thus defines their behaviour towards them.
Theory X - similar in many ways to the negative aspects of Taylorism
- employees dislike work and will shirk if possible; responsibility
is also to be avoided as workers have little if any ambition
- workers want the security of a ‘quiet life’ in their jobs
∴ management must exert continuous control and supervision over the
workforce. There is a total lack of trust.
Theory Y - employees enjoy work, seeing it as an opportunity to fulfil their
social, self-esteem and self-actualisation needs
- under certain circumstances, workers actually seek responsibility
∴ management should encourage their workers to take on positions of
authority by delegating decision-making to them; this will improve
their motivation and commitment. However, there is a need for trust.
McGregor himself saw Theory Y as the only way forward; Theory X was only put forward to be ridiculed and criticised. However, as with many aspects of HR management (organisational structure, motivation, leadership style), the context will determine the best approach.
But the management of transition from X to Y will always create problems as trust
is not a commodity that can be forced into a working relationship, or built
overnight.
