Management Philosophies and Corporate Performance

Introduction

Leaders often formulate management philosophies to chart the way forward for their organisations or institutions. These philosophies may guide people’s behaviours with the goal of fulfilling an organisation’s vision or mission.1 Management philosophies are typically nurtured in organisations using a top-down approach whereby new and existing employees are taught to follow a specific management philosophy through a socialization process.2

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Much academic interest has focused on understanding the effects of management philosophies on workplace output, with many researchers agreeing that such philosophies could create either a positive or negative environment for employees.3 Prasad and Negandhi are two researchers who assert that without a strong management philosophy, it is difficult for employees to stay motivated because they will lack purpose and fail to find meaning in their work.4

The same is true in the corporate setting as stable corporate environments are often based on strong management philosophies.5 Through this type of platform, managers can also take bold actions in the business environment because the framework helps their organisations to embody the passion and strength of the employees.

This paper seeks to explore the impact of management philosophies on corporate performance. To demonstrate effects on organizational performance, we will use a case study approach to analyse Hector-Gaming Company. This report is divided into six sections.

The first, the introduction, sets the tone of the report and allows for a comprehensive literature review, which appears as the second section of the paper. In the literature review, we will explore existing management philosophies and select one that resonates with the case study. The third section of the paper is the case study itself, which will introduce the company under consideration and outline the main issues. The fourth section explains the research methods used to conduct the study, while the fifth section provides an analysis of the findings. The last section of the paper outlines a summary of the report.

Literature Review

Most studies exploring management frameworks show the philosophies underlying them are either Western- or Eastern-oriented. Western-based management dogma is more popular than Eastern-based philosophies. Although globalization is a common phenomenon in today’s business environment, it does not seem to have affected the analysis of management philosophies as much as might be anticipated.

In fact, the authors outside of Western academic influence who have investigated management philosophies have mostly come from Asian countries. However, their analysis has been limited to a few countries in Asia, without a broader understanding of how management philosophies in these regions integrate with the philosophies practised in other countries.6 Within the Eastern-Western continuum, many studies have compared management philosophies from both ends with a bias towards explaining how culture influences leadership attitudes in these two spheres. The same studies have focused on four key areas that inform these philosophies: employee motivation, organisational efficiency, crisis management and a customer focus.7

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Researchers who have investigated management philosophies focusing on customer relations maintain that customers are the most essential facet of a business.8 Therefore, they tend to highlight how clients relate to a business or customers’ perceptions of a company.9 The same management philosophies have also focused on marketing concepts as a central focus for these philosophies because relationship and transaction marketing are often identified as the focus of customer-oriented corporate philosophies.10 Based on these marketing areas, Obasun says it is common to find that leaders who have adopted these management philosophies will teach their employees to believe that customers are often right.11

Crisis management is also regarded as another centralised area whence some management philosophies stem. Several studies have pointed out that most companies having such a focus often profess management philosophies that strive to improve employee skills related to crisis management.12 The goal of such companies is to experience a fast return to normalcy whenever a crisis happens.

At the heart of this management philosophy is a careful understanding of the risk factors that may affect an organisation and a deep understanding of how such risks should be mitigated. Granted, to do so, these companies often establish an elaborate crisis management plan designed to mobilise organisational resources to respond to specific crises in a clear and concise manner.13 Usually, each risk has a crisis management strategy informing employees exactly what to do when a crisis happens.

Several researchers have shown that different management philosophies have also focused on employees as a key driver of organisational performance.14 Most leaders who subscribe to this philosophy will seek new ways of inspiring or motivating their employees to perform better. Studies have associated this philosophy with different motivational theories such as Maslow’s hierarchy of needs and the hygiene theory.15

Researchers have also pointed out that some key issues pursued by leaders who have adopted this management philosophy centre on the need for employees to take responsibility for their actions and the importance of making sure that they are always excelling in their work. Obasun says that this motivational philosophy is aimed at nurturing strong employees who will bring good ideas to the workplace.16

The underlying reasoning behind this philosophy is that if employees are given high goals to attain and the necessary knowledge and skills to accomplish these goals, they are likely to remain focused, motivated because they will want to excel. Generally, the employee-oriented management philosophy looks at workers as the key driver of organisational performance.

Improved efficiency is another management philosophy examined by different researchers who have studied management philosophies in the 21st century.17 This focus is common in recent studies that focus on organisational performance because efficiency is a new management paradigm that has been partly supported by the sustainability movement, which often discourages wastage. Mito says this philosophy stems from the need to develop organisational structures that work through understanding how businesses are organised.18

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Other researchers have pointed out that this type of philosophy seeks to ease relations between managers and employees as its proponents understand the need for organisations to enjoy good management-employee relations as a prerequisite for improved efficiency.19 Some studies have also pointed out the need for a proper division of labour within an organisation as a requirement for improving efficiency.20

The question asked by many managers and leaders who subscribe to this management philosophy relates to how they can reorganise their business processes for maximum efficiency. From these questions, several companies have developed unique management styles such as the bureaucratic or democratic leadership style, depending on how managers believe it will help them improve their organisational efficiency.

Selected Management Approach

The four areas discussed above are not the only bases on which organisations have developed their management philosophies; however, they outline the key areas towards which existing philosophies gravitate. Focusing on employees and customers represents traditional areas of analysis that have informed past management philosophies. It is not surprising that these areas of organisational performance informed most of the management theories in the 20th century. In comparison, the areas of organisational efficiency and crisis management are relatively new focus centres on which most management philosophies applied today seem to hinge.

However, this observation does not mean that crisis management and efficiency issues were not organisational concerns in the past. The chosen management philosophy for this case study is employee orientation. In later sections of this paper, we will explain how this approach applies to our case study. However, before delving into these details, we will first explore our case study.

Case Study and Introduction to Selected Organisation

Brief

In this section of the paper, we will explore how different features of organisational performance relate to Hector-Gaming Company (HGC), a US-based gaming organisation that develops educational content for children. The operational features are efficiency, quality of working life, learning, leadership and communication. The analysis appears below.

In Search of Efficiency

According to Staffieri, organisational efficiency refers to the use of minimal resources to accomplish a specific goal.21 This definition stems from the need for organisations to develop the right plans to achieve particular goals. HGC suffers from this problem because its management has not figured out a strategy that would allow all employees to work efficiently and to accomplish its goals. This problem emerges from the inability of employees to agree on specific operational strategies that would allow the company to achieve its identified goals.

In Search of Quality of Working Life

According to Mito, the quality of working life refers to how employees experience their time in a company.22 Different factors affect the quality of working life, including but not limited to job satisfaction, life satisfaction, happiness with work, work anxiety, self-related anxiety and related matters. HGC does not have a bad record in this regard because its employees are successful in their different fields of operation. Their level of motivation is also high, as is evident from their high level of enthusiasm.

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Learning

Learning is a critical part of employee development; through existing employee development structures, new employees learn about the culture and management philosophies of an organisation.23 HCG is always looking for new talent to add to the organisation. New recruits learn about the company’s philosophy through seminars and retreats organised by managers, and through these events and platforms, they can interact and share ideas about the company’s operations.

Newcomers can learn how older employees work or communicate and adopt the same principles in their own interactions, as well. Since most of the work undertaken in HGC is project-based, employees can share ideas about their projects and understand how to implement improvements. In this regard, HGC has a good approach to teaching new employees about their operational modalities.

Leadership

Different types of leadership styles are adopted by different organisations. However, the concept mainly refers to specific actions taken by companies to lead their employees.24 HGC has a poor leadership style that cannot effectively marshal the organisation’s resources to work efficiently and to meet the objectives set out in the company’s vision and mission statements. Cost overruns and lack of employee cohesion are some of the issues that indicate a lack of effective leadership in the organisation.

Communication

Organisations need effective communication structures that allow employees to work effectively. Sound structures help to persuade employees to work effectively and to keep them informed about what is happening in the organisation. HGC has a poor communication structure that often creates crises within the management structure of the organisation because employees cannot agree upon working towards a common goal. Their failure to do so outlines how the organisation’s communication strategy has failed to bring employees together or to create a sense of understanding regarding how employees’ work processes should merge to fulfil the organisation’s vision.

Issues Faced by Hector-Gaming Company

Based on a poor implementation of its corporate strategy, HGC has experienced several problems. Most predominant is a lack of proper teamwork within each department of the organisation. The issue has been further compounded by the failure of the management to create a sound communication structure where employees would be able to debate specific issues. Poor teamwork and a lack of coordination within the organisation are also partly responsible for several cost overruns associated with different kinds of projects undertaken by the organisation. Additionally, the organisation does not adhere to budget requirements because the management cannot effectively control what project managers are doing.

This problem has further spread to the failure of the organisation to meet its project deadlines. The lack of a proper oversight structure and poor accountability for employee activities are partly responsible for this problem because project managers engage in specific projects not necessarily sanctioned by the organisation’s chief executive officer and founder of the company, Sally Peters, who has a general understanding of how one project would affect another. Therefore, the pursuit of self-interests at the expense of the organisation’s overall goals is mostly responsible for this problem.

Another problem that HGC has encountered is the lack of predetermined standards and presets for accomplishing the organisation’s long-term goals because its managers do not understand its overall direction. This problem manifests in their quest to pursue self-interests without any regard for how their activities might affect the overall objectives or vision of the company. In fact, some project managers often undertake projects that are not at all related to the company’s vision.

For example, in a recent management retreat, some of the company’s top talent were engaged in a project to develop a game for international college students. The project was not related to the company’s vision or goals. People who believe that such projects do not fit within the company’s primary target market have also expressed the same concerns.

Despite the challenges created by some of the actions of HGC’s top talent, little seems to be done by the management to correct the situation. Usually, when such problems arise in any company, managers should assume the responsibility of correcting erring defiant project managers and redirecting them to do what is required of them to further the interests of the organisation. However, as partly admitted by some employees, the company’s president seems to have lost control of the situation because she cannot effectively convince everybody to follow one direction. In fact, the company’s founder and president does not have confidence in her leadership and does not seem to know exactly how such a project-driven company should be managed.

How Management Approach Applies to Case Study

Based on the success of HGC and the project-based nature of its operations, it is difficult to deny the employees’ role in the company’s success. This fact reinforces the view that the organisation’s managers mainly pursue the people-oriented management philosophy. Traditionally, HGC’s managers have directed their efforts towards making employees comfortable and motivated to work within the company. Understandably, the company needs its employees to feel this way (happy) because the former requires the latter to come up with new ideas and innovations regarding new games that would appeal to the market.25

This management philosophy is partly explained by the bottom-up leadership style, which is the most dominant decision-making framework in the organisation. Within this structure, the contribution of employees to the company’s decision-making process is often valuable. This is unlike a top-down decision-making structure where top-level managers make decisions on behalf of all employees, regardless of their views.

The employee-oriented management approach adopted by HGC is central to its operations because it has been a part of the business philosophy for many years. This management approach is partly responsible for the rapid growth that has characterized the business for the past five years because research has shown that the company has been growing by up to 80% every year.26 By most standards, this kind of growth rate is rare and enviable.

Having motivated employees to drive this success has been the key to realising such progress. However, as demonstrated in other sections of this paper, there is another side to this management philosophy as the same employees who have been empowered through the company’s employee-oriented management philosophy are now sabotaging the company’s success by pursuing self-interests at the expense of the company’s long-term growth plan.

Nonetheless, it is critical to point out that this employee-oriented management philosophy is not unique to HGC because other global companies in the technology industry have also adopted the same management philosophy. For example, Google and Microsoft are two of the world’s global technology companies that recognise the importance of employees in their success. Apple Inc. is another global leader in the technology arena that employs the same management philosophy.27

Research Method

This paper is a secondary review of previous research studies. The main sources of information were books and journals. We strived to make sure that the articles sampled were recent (published from 2012 to 2017). The main sources of data were the Google Scholar and Google Books databases. Lastly, the key words used in the selection of the articles were ‘management’ and ‘philosophy.’

Analysis and Results

Overview

An employee-oriented management philosophy often recognises that people are the basic currency of organisational success. This fact has long been highlighted by many management theories such as Maslow’s hierarchy of needs, Alderfer’s existence theory, relatedness and growth (ERG) theory, Stacey Adams’s equity theory, Hertzberg’s hygiene factors and motivators theories, Vroom’s expectancy motivation theory and McClelland’s achievement and acquired needs theory.28

The focus on employees as a management philosophy has also been highlighted in this paper as a traditional management philosophy that has characterised many studies that have investigated organisational performance in the 20th century. Although employees remain a critical performance driver in many organisations today, some such as HGC have not understood the balance needed when implementing this type of management philosophy. This same problem has affected HGC’s performance, as highlighted in the above analysis.

Advantages

Studies by different institutions and government agencies have shown that a people-oriented management philosophy can provide many benefits to associated organisations because it helps to boost employee productivity, which in turn leads to increased organisational performance.29

For example, a study by the Vietnamese Federal Ministry of Labour and Corporate Affairs shows that a strong management philosophy based on people’s input is bound to increase employee commitment and expand the overall performance of an organisation.30 The same is true concerning the reduction of employee turnover because studies have shown that people-oriented management philosophies are often associated with low employee turnover.31 HGC enjoys most of these advantages, as can be seen in the high level of commitment its managers have shown to the business.

Studies that have highlighted the advantages of people-oriented management philosophies have often pointed to clear communication structures, leadership competence, interest in employee welfare, fairness and a team spirit as indicators of management success.32 Others have noted association with a company, managerial integrity and involvement of employees in decision-making as other criteria for understanding the advantages of a people-oriented management philosophy.

Disadvantages

The people-oriented management approach adopted by HGC could have detrimental effects on the future growth of the company if some of the problems plaguing it today remain unaddressed. In this paper, we have already seen that this management approach has created operational problems that could be best summarized as ‘confusing’ because there are no clear and concerted efforts within the organisation to direct its operations towards the accomplishment of one goal.

This weakness shows one downside to this management philosophy, which is negative organisational politics. Another downside associated with the same problem is the increased distraction that the ineffective implementation of this management philosophy creates in the workplace.33

Regardless of the quarter it may come from, negative organisational politics are likely to distract employees from accomplishing expected goals. This problem affects the activities of HGC because employees often spend significant time debating about the projects that should enjoy the most attention and those that should receive the most resources. If left unaddressed, this issue could easily lead to the development of feuds among employees because it could split employees into multiple groups sharing different opinions.

Often, successful managers or leaders can foresee such a problem and prevent it from happening by clarifying what needs to be done or articulating the roles on which employees should be focusing. However, this is not the case at HGC because the company has allowed negative organisational politics to continue for too long. It is only a matter of time before disagreements start affecting the organisation in terms of declining growth and productivity levels.

Every employee is bound to suffer if this happens, regardless of involvement in conflict. Naturally, this problem stems from the people-oriented nature of the company’s management philosophy because, in as much as the people focus could contribute significantly to the company’s success, the same focus could also be problematic to the company’s growth. Stated differently, such a management philosophy gives a lot of power to the people, thereby affording them the opportunity to “make or break” the organisation.

Conclusion

Management philosophies can be defined as an embodiment of values, beliefs and attitudes held by an organisation and that permeate different aspects of its performance. As highlighted through our case study, a direct relationship between management philosophies and employee behaviours can be traced because employee actions are often guided by the beliefs or attitudes set by their managers. As such, the main challenge that characterises different management groups is how to use management philosophies to extract the most value from employees.

Based on this analysis, we find that HGC has traditionally embraced an employee-oriented management philosophy. This strategy is understandable because most of the company’s operations are project-based. Granted, the employees need independence and space to encourage creativity and develop educational gaming programs that will not only resonate with their target markets but also improve the company’s profitability.

So far, the company has been able to do so successfully because, as highlighted in this paper, most of the company’s growth has been attributed to a people-oriented management philosophy. However, we have shown that this philosophy has been poorly managed by the company’s president, thereby brewing animosity among some employees regarding how they should undertake their operations or even how the company’s resources should be allocated based on important priority areas. This problem has manifested in missed deadlines and budget overruns.

There is enough evidence to show that the company’s president does not understand how to manage such a crisis. However, based on the business lifecycle stage of the company and the nature of the problems it encounters, we recommend that the company should refocus its management philosophy from one that is people-oriented to one of improved efficiency. Efficiency is one management area among the four organisational issues we highlighted in the literature review section of this paper. To recap, the other management areas of focus were crisis orientation, people orientation and customer orientation.

A management philosophy based on increased efficiency would solve most of the problems that HGC faces because there is a significant amount of inefficiency in the way the company is managing its operations and, most importantly, how its employees are managing their activities. Key indicators of this problem are the increased cases of project costs surpassing the projected budgets and the mounting cases of employees failing to meet their project deadlines.

These are the key issues that the organisation faces today, and it needs to have a management philosophy that addresses the same issues. By adopting a philosophy that focuses on improving the organisation’s efficiency, HGC will be in a better position to create appropriate plans that would allow it to meet its goals. At the same time, this management philosophy would enable the company’s management to marshal its resources towards accomplishing the same goals and obtain employee buy-in when implementing the same.

Thus, it is possible for the company to achieve its desired results with minimal clashes among project managers and with little or no conflict among lower level employees regarding the priority areas on which they should focus. At the same time, the possibility that employees would find room to pursue self-interests at the expense of the broader organisational goals would be significantly minimised.

Consequently, through this efficiency-minded management philosophy, the organisation would have empowered their employees to accomplish the organisation’s goals using minimal resources. However, adopting this management philosophy does not mean that the organisation should abandon its focus on employees; instead, it needs to make sure that while employees are satisfied, they should undertake their work efficiently and with the organisation’s goals in mind, as opposed to advancing self-interests. Cases of missed deadlines and excessive cost escalations are likely to decline significantly through the adoption of a management philosophy that focuses more on efficiency than any other organisational area.

Reference List

Barkema, H. et al., ‘West Meets East: New Concepts and Theories’, Academy Of Management Journal, vol. 58, no. 2, 2015, pp. 460-479.

Luke, R., Creative Marketing: A New Management Philosophy, New York, NY, Balboa Press, 2014.

Mito, S., The Honda Book of Management: A Leadership Philosophy for High Industrial Success, New York, NY, A&C Black, 2013.

Obasun, F., Philosophy Management: Developing a Philosophy for Management, New York, NY, AuthorHouse, 2015.

Prasad, P., and Negandhi, A., Managerialism for Economic Development: Essays on India, New York, NY, Springer Science & Business Media, 2012.

Staffieri, N., The Staffieri Principles: A Philosophy in Employee Management, New York, NY, Xlibris Corporation, 2013.

Footnotes

  1. H. Barkema et al., ‘West Meets East: New Concepts and Theories’, Academy of Management Journal, vol. 58, no. 2, 2015, p. 460.
  2. Barkema et al., ‘West meets East’, p. 460.
  3. P. Prasad and A. Negandhi, Managerialism for Economic Development: Essays on India, New York, Springer Science & Business Media, 2012, pp. 70-71
  4. Prasad and Negandhi, Managerialism for Economic Development, p. 70.
  5. Prasad and Negandhi, Managerialism for Economic Development, p. 70.
  6. Barkema et al., ‘West meets East’, p. 460.
  7. Barkema et al., ‘West meets East’, p. 460.
  8. R. Luke, Creative Marketing: A New Management Philosophy, New York, Balboa Press, 2014, p. 4.
  9. Luke, Creative Marketing, p. 4.
  10. Luke, Creative Marketing, p. 4.
  11. F. Obasun, Philosophy Management: Developing a Philosophy for Management, New York, AuthorHouse, 2015, p. 5.
  12. Luke, Creative Marketing, p. 45.
  13. Luke, Creative Marketing, p. 56.
  14. Barkema et al., ‘West meets East’, p. 465.
  15. Barkema et al., ‘West meets East’, p. 465.
  16. Obasun, Philosophy Management, p. 3.
  17. Barkema et al., ‘West meets East’, p. 466.
  18. S. Mito, The Honda Book of Management: A Leadership Philosophy for High Industrial Success, New York, A&C Black, 2013, p. 69.
  19. Mito, The Honda Book of Management, p. 103.
  20. Barkema et al., ‘West meets East’, p. 466.
  21. N. Staffieri, The Staffieri Principles: A Philosophy in Employee Management, New York, Xlibris Corporation, 2013, p. 12.
  22. Mito, The Honda Book of Management, pp. 9-12.
  23. Barkema et al., ‘West meets East’, p. 465.
  24. Staffieri, The Staffieri Principles, p. 13.
  25. Mito, The Honda Book of Management, p.12.
  26. Mito, The Honda Book of Management, pp. 9-12.
  27. Staffieri, The Staffieri Principles, p. 17.
  28. Staffieri, The Staffieri Principles, p. 13.
  29. Luke, Creative Marketing, p. 45
  30. Luke, Creative Marketing, p. 45
  31. Staffieri, The Staffieri Principles, p. 32.
  32. Staffieri, The Staffieri Principles, p. 33.
  33. Barkema et al., ‘West meets East’, p. 465.
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