Management Theory and Practice

The practice of management is influenced by developments in management science, new and old models, and understanding of management and its functions in organizations. Management was often considered one of the main tools that help organizations compete on the market and create strategic goals and competitive positions (Yukl, 2006). The modern business sector represents a unique market segment within a global trade. Modern business requires unique strategic goals and strategic thinking tools to compete in the market place. It is often asserted that the modern environment is so multifaceted that it is impossible to capture reality with the help of any formal model. In spite of great advantages and benefits proposed by modern theories and concepts of management, there are some limitations and weaknesses which prevent managers from effective implementation and introduction of their decision and management solutions.

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Following Linstead et al (2004), the main concepts of modern organizations involve managing motivation, leading and managing, team management, conflict management, management of change, decision-making, networks and inter-organizational relations, etc. The main problem is that effective application of these concepts and issues requires careful attention and analysis of the current organizational needs and demands. Alvesson and Willmott (1996) underline that strategy is the process of deciding how to best position the organization in its competitive environment in order to achieve and sustain competitive advantage, profitably.

Modern strategy is formed at both corporate level (what industries/markets should we operate in) and business unit level (in what segments should we compete — and how). In their research, Studying Management Critically, they focus on corporate level strategic considerations. The pace of change has significantly increased in recent years, and the competitive arena has enlarged, driven by, for example, larger international corporations with an appetite for new markets, reduced barriers to international trade, and technology. Taking into account the built environment sector, it is possible to say that it will be difficult to apply these strategies because they focus on the process of strategy and analysis of the environment but do not involve recommendations and clear structure of strategy development (Yukl, 2006).

Amit and Schoemaker (1993) summarize some of the key shifts’ in strategic management. Both researches state that the structure of the industry will significantly effect the profit potential of the business operating in that industry like the4 built environment sector. The strategy and actions of a business operating in the industry may improve or destroy the industry structure. Each business (and the relevant decision makers) must recognize and evaluate the impact, short term and long term, of actions taken on the overall industry structure and attractiveness. In modern literature (Cole 1998) strategic thinking is defined as the positioning of the firm vis-à-vis its competitors and its customers, and with regard to its underlying resources and capabilities. For Whittington (2000), strategy is about how those two components are brought together. The organization in the built environment sector is a value-adding unit. Thus, it is important to realize that many of the customers and even competitors will be other units within the corporation. Again, this approach describes the process of strategy development but does not concentrate on steps and stages of its implementation in the modern environment (Mullins, 2005).

The art of strategy design should begin with the recognition of environmental threats and their transformation into opportunities (Cole 1998). The first limitations of the modern management theories are an awareness of the company’s dependency on its environment. Modern organizations rely on very popular Porter’s five forces, namely, competitors, buyers, suppliers, substitute producers, and potential new entrants. Thus, they do not take into account political and social factors outside the company (Parker, 2002). A second limitation is inadequate environmental scanning applied to the company beyond internal management information systems. In their responses to environmental challenges, managers are hampered by a variety of response barriers, such as entry, exit, and inertia barriers. These require keeping track of competitors’ moves, resource requirements, and environmental opportunities (Bratton, 2007). The strategic designers of the 21st century are far more outward-bound than the organizational designers of the fiftieth (Alvesson and Willmott 2003).

In order to apply motivation theories successfully, modern managers have to scan the transnational business scene and a specific product line or line of business. Modern managers have to devise ways to keep track of and to model environmental changes through triggering events and trends. This must be done carefully, to ensure that the various changes considered are compatible. Because there is no guarantee that situation components are compatible, managers and leaders have to screen both their essential assumptions and the compatibility of their business plans (Buchanan and Huczynski 2004).

The simplicity of the strategies and proposed management solutions limit the scope of analysis and opportunities assessment. Dynamic and complex environments are more difficult to measure and to model than complex but static markets. Yet, most difficult and complex are those business issues that are both multifaceted and dynamic; these environments are correctly termed discontinuous or turbulent environments. The major problem is that corporate-level managers are ill-equipped to do effective analysis because they do not understand the unique resources and capabilities in the organization, whereas managers have the knowledge, within the new sector, organizations should take a specula attention to internal and external resources, rapid changing environment and flexible planning process (Pittengrew et al

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2006). For instance, change management strategies should be more effective, in terms of identifying what it is that the business should be doing today and tomorrow in order to survive and prosper in the long run (Thomas, 2003). The highly competitive nature of many markets and the likely future prospect of continued economic turbulence as national and global economic fortunes vary, requires that business managers continue to look for opportunities to improve performance. For this reason, organizations should concentrate on knowledge-based strategies and resources-based view to compete on the market (Parker, 2002; Yukl, 2006).

In recent years, researchers admit a great shift from traditional organizational structures based on bureaucratic strategies and hierarchies towards culturally-based organizations and controls. Researchers suppose that organizational culture can replaces organizational structure as the dominant method of management control. Large-scale bureaucratic organizations are operating in a business and economic climate that is tumultuous and tension-ridden. At the same time, these organizations must respond to the human condition by developing more open, trusting, flexible, collaborative, communicative, people-oriented cultures and environments for a changing workforce–changing in terms of age, gender, race, and ethnicity (Thompson and Martin 2006).

Alvesson and Willmott (1996) portray that in some of organizations, the top managers make almost all decisions themselves, after listening to the advice of subordinates. In other firms, the decisions are more clearly the result of a consensus among the senior officers. Yet in all these organizations, critics find a core group of about seven senior managers involved in working together and with the top manager to shape corporate direction. Subordinate managers, board members, major stockholders, and past senior officers are all consulted from time to time, and they do have an impact (Culp, 2001). Though, the corporate managers are the men who have the final say. Several historical trends have led to the appearance of corporate management as distinct from subordinate levels of operating universal managers. One is the establishment in most large companies of a multidivisional organization structure (Culp, 2001).

Following Dobson and Starkey (2004), modern companies are more than numbers of people or efficient administration. They are systems of values with goals and rewards. Modern companies have lifecycles and a propensity to stifle creativity and innovation, particularly as they grow over time or face an uncertain future. Modern companies are often thought to hold back progress, largely because of their rigid hierarchical formations, red tape, and paper-shuffling management. Bureaucracies are associated with the decay of civil infrastructures, lack of adequate quality education for tomorrow’s technologically driven society, failure of individual commitment to sociopolitical values, loss of the ability to make high-quality products, acquisitions and mergers, loss of a nation’s ability to be competitive or to be responsive to trade wars, and loss of scientific and technological dominance (Clegg et al 2005).

According to Drejer (2002), organizational culture cannot replace organizational structure as the dominant method of management control because it does not allow management to control duties and responsibilities of employees, measures organizational performance and effectiveness. The primary factor to consider in the organizational culture is the values. The values of the organization, and the people in the organization, determine what will gain attention. Values direct, not always at the conscious level, the outcome of millions of incremental decisions that are made daily by the members of an organization. Values determine who will rise in the organization. They are important to decisions about markets, products, and projects. These abstract constructs are translated into a lower level of constructs that are more specific and concrete, the values and beliefs. Three elements are important in reinforcing the values: rites and rituals, heroes and heroines, and the informal communications network. Rites and rituals are the formal and informal processes and procedures by which the values are canonized. The values are continuously reinforced by the policies, practices, rules, regulations, standards, and the informal method by which things get done (Drejer, 2002,)

Organizational culture encompasses three levels of analysis: artifacts, values, and basic underlying assumptions. Artifacts are material objects and, therefore, are the most accessible and readily observable facets of organizational culture. Material objects may include newsletters, computers, pens and pencils, and architecture such as office workspace and the actual design of buildings (Drejer 2002). These are components of what we call explicit culture in organizations (Cummings 2002). The availability, quantity, and quality of such objects differ from one organization to another, even though they may have similar tasks and occupational membership across organizational boundaries. The most important aspect of these artifacts is understanding their often deeply held meaning for organizational participants. Knowing their official or avowed purpose does not lead directly to knowing what they mean to organization members and the consequences of their interpretations (Cummings 2002).

A recent alternative to monolithic bureaucratization is to utilize free competitive market mechanisms (Drejer, 2002). These mechanisms are utilized by capitalistic, socialistic large-scale bureaucracies. Such creative and innovative activities employ deregulation, privatization, and decentralization. Research opportunities abound in formulating an answer to the question of whether free competition markets are the only alternatives. Cummings (2002) believes they are developing an alternative when they integrate the advantages of central planning and a market economy. Organizational culture does not allow develop global infrastructures, exploit new technologies for the benefit of all people, and providing more space and a better quality of life on a crowded planet place ever-increasing demands on creative and innovative ways to manage bureaucracies. Organizational cultures may be distinguished by the degree to which learning and problem solving occur (Cummings 2002)

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Organizations are dependent upon their surrounding environments for employees, clients, customers, and so forth. Organizational leadership must effectively adapt to the socio-cultural, economic, and political nature of that environment. The prognosis for organizational survival is, in part, determined by executive awareness of organizational culture and its fit with the host culture. The ability of organizational leadership to read changes in the environment effectively and then communicate and discuss those changes with the staff is critical. The host culture may also define the social class and ethnic origins of employees joining the organization as well as clients and customers it serves. In addition, the host culture represents the character of the political climate of an organization, the degree to which it is friendly or hostile (Gardiner, 2005). Leadership sensitivity to the nuances of host culture assures the continued openness of the organization as part of a larger social system (Warner, 2001). Organizational structure and function come to serve defensive purposes, where boundaries enhance resistance to change and adaptiveness within and among organizations. The organizational identity becomes a social defense system against the anxiety of differences, separation, and individuality. Group cohesion becomes an important issue for organizational members (Thompson and Martin 2005).

Taking into account organizational research and management theory, it is important to mention such gurus as Gardiner (2005), who stressed the significance of informal social structure to understanding human behavior in organizations more deeply and more realistically. Grant (1998) the notion of culture in organizations reappeared in London in the 1950s and 1960s with the Tavistock Institute of Human Relations and, particularly, in a work by Elliott Jaques, The Changing Culture of a Factory (1951). He, along with such pioneers of group and organizational analysis as Wilfred Bion, Isabel Menzies Lyth, Eric Trist, Eric Miller, and A. K. Rice, is responsible for sustaining interest in the organizational cultural phenomenon (cited Grant 1998). This brief intellectual history of the notion of organizational culture provides some background for the exploration of its component parts, beginning with organizational history. Organizational myths and stories proffer meaningful information about individual experience and identification with institutions. When these stories are repeated by participants in discussions with nonmembers, such as researchers and consultants, themes often emerge that tell us how the organization and its leadership respond to critical incidents–patterns develop and a group identity is discovered (Goleman, 1996).

Cultural control means that formal rules and regulations are no longer necessary replaced by norms and values, traditions and beliefs. An adequate balance between role structure, status ranking, and power relations is very important to the functioning of a work team as well as for its survival (Watson, 1994). The distribution of power within a team has several consequences. In general, the expression of power by an individual team member makes him/her additionally attractive, influential, and well approved. The more power a team member has, the greater the probability that he/she may use it constructively (Grant, 1998). The question is how the utilization of power and influence fits into the role structure and status ranking (Goleman 2002).

If the organization had no structure, it would be impossible to delegate authority and control tasks completion. It would create difficulties in problem solving and collaboration among planners and administrators. Absence of structure would lead to changes in the organizational status quo caused by management cutbacks, retrenchment, leadership transitions, budgetary revisions, audits, expansions in size and workload, and the like, trigger anxieties and feelings of panic. Consequently, organizational culture, and all that it entails, is both endangered and exposed. Psychoanalytically oriented researchers and consultants find that critical moments are opportunities for reaching the suppressed and denied emotions of organizational members (Goleman, 2002).

In the global context, generalization is important because they help to control the multicultural environment and diverse traditions of the host and foreign countries. As a result of the complexity of large organizations, which include multiple layers of authority, responsibility, and tasks, groups emerge as subcultures with relatively distinct identities, our next topic. In addition to a leader’s characteristic response to stress and anxiety, organizational cultures and subcultures are driven by underlying basic assumptions According to Goleman (2002) organizations may or may not be compatible at any given time and, frequently, the unconsciously driven basic assumption group sabotages the more consciously driven task group. They include the following basic assumptions: dependency, pairing, and fight-flight. In the dependency subculture members desire a leader to protect and care for them. In the pairing subculture members focus on the relationship of two other members whose potential merger represents a sense of hope and rebirth.

Multiple and diverse basic assumption groups, or subcultures, may exist in large organizations. Greater autonomy and independence of each group from the central authority structure contribute to a subculture’s differentiation from the larger organizational culture. In most organizations, however, central authority patterns determine group subcultures, and the ways in which groups adapt to critical incidents become highly significant in comprehending the overall organizational culture (Locke, 1995). When the set of ideas that define the business have been developed, the next step is to improve productivity to capitalize on the ideas. This is a process of routinization usually carried out by a bureaucracy. The organization grows too large and the issues too complex for any one individual to handle. Rules, regulations, procedures, policies, and beliefs are established. During the canonization of the beliefs, a value set is formed, and the corporate culture takes shape. It is the bureaucracy that makes decisions (Moore, 2001). The system decides like some great mechanism (McAuley et al 2997).

In the global context, the informal communications network is the manner in which the values are perpetuated and strengthened. Each member of an organization has two jobs. The official job is the one defined by the formal structure. The second, and sometimes more important job, is that defined by the informal network. Information is passed much more quickly through informal channels. Values are reinforced by stories that are passed around the informal network. Actions of individuals within the organization that are value-rich are passed around. Some stories in strong culture organizations have been known to be repeated for years.

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In a strong culture, there is an alignment of values, heroes and heroines, rites and rituals, and the stories passed along by the informal communications network. Strong culture organizations are more likely to be successful. They are efficient, take less time turning ideas into innovations, have high role, and require little day-to-day direction. Strong cultures are not easily changed; they resist change and are susceptible to attacks from outside their line of sight. A culturally astute manager assures that all the policies, practices, standards, promotions, and awards are reviewed against the values desired in the organization, and passes on the stories of the heroes’ and heroines’ actions. The challenge of a management system in these turbulent times is to create a strong corporate culture with flexibility. The culture must be able to change as the environment around the organization shifts (McAuley et al 2997).

The journey in search of strategic credibility is a long one, but it starts with a single step. With many companies, this first step is long overdue. Others, who have already set out on the journey, have found that a commitment to open, candid and timely communications is an investment in the future well worth making (Mintzberg et al 2004). These companies have a head start in the race to achieve world competitiveness–not just because they have outstanding strategy communications programs; world-class companies do many things well, including being responsive to the legitimate informational needs of key stakeholders and other concerned constituencies (Williams et al 2005). The apparent wrong perception of the company’s main activities led management to suspect that this might be one of the reasons for the undervaluation of the company’s share at international stock exchanges (McAuley et al 2997).

In sum, a management framework involves such concepts as technology, structure, effectiveness, and fit. Each of the concepts have a great impact on the modern organization and its functions. The main limitations of the concepts and issues covered by the modern management theories are lack of scope and simplification of the business environment and its forces. Organizational research might be used in the study of information technology in cooperative workgroups. In this discussion, the limitations of modern management concepts involve theoretical and empirical weakness. It becomes obvious that despite its popularity, modern management concepts have been subject to much criticism having to do with how to define and measure the key elements, as well as how to test the modern economic, political and social aspects of the theory. To use modern management concepts to study modern corporations, the manager must define the key attributes of the business and decide how to measure them. The correlation between these measures and measures of arrangement indicates how well the management decisions match structure. Modern management concepts do not reveal much about how the important properties of these systems should be measures. Many of these management concepts either compare groups with teams or compare current motivation with established standards.

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