ADMINISTRATION & CUSTOMER HANDLING
Every manager within the
industry, from the chief executive to the front-line supervisor, can profit
from the body of background management knowledge so far developed within
each company. The top man can increase his company's chances of success. For
the middle manager, management know-how will make the job easier, and will
very likely increase his chances of promotion.
understanding of the company's administration and customer handling will:
Lead to better performance by enabling the manager to increase the output and
quality of the work group.
Help the manager better understand the objectives and functions of the
company as a whole and the thinking of his superiors. As a result he will be
more able to "talk the language" of higher managers, and gain a better hearing
for his recommendations and suggestions.
Promote a better understanding of the way in which the manager's group fits
in with other groups, make him a more effective team worker, and one whom other
managers will respect and like to work with.
Management is not an exact science like physics or chemistry.
Although many things have been discovered about this, it is essential that
the manager use judgment, based on good sense and experience. This is not a
bad thing. For if he could manage by merely following a set of rules, the
administration job would be far less interesting than it is.
what, exactly, is administration? Are there certain functions that all
managers perform regardless of whether they're company directors, managers
of departments, or supervisors of sections of departments?
watch managers at work, we might conclude that their jobs differ so widely
in content and scope that no generalizations about administration are
One reason for this is that many managers, even top
managers, do work that is not administration at all. A simple example is the
sales manager who actually sells and perhaps has a set of customers of his
own, in addition to managing the salesforce. Again, the supervisor of a
research group may actually perform some of the research himself. Then
there's the "working foreman" or headman who works right along with the
group he is supervising. In these cases the managers are actually spending
only part of their time on administration itself.
A second reason
why it may be difficult to identify the functions common to all managers is
that the scope of their activities differs so widely. In some cases the way
in which a manager carries out his functions affects an entire company; in
other cases only a small part of it.
Yet if we look closely at
managers at work, we can see that fundamentally they are all performing, or
should be performing, the same functions during the time they are actually
managing rather than doing work similar to that done by those under them.
The basic administration function is planning, which begins with setting
objectives and includes specifying the steps needed to reach them. At the
top, of course, the objectives are those of the whole business, but top
managers must set administration objectives for each segment of the company.
Naturally, the fundamental objective of any business is to make a profit and
to increase it; but it is necessary to be much more specific. Each company
must decide just how, in view of the resources and talents available, it can
best carve out its own profit-making niche in the market
example, some companies plan to attract customers by selling high-quality
products at premium prices for a selected group of customers. Others aim to
serve a clientele that's primarily drawn to low prices. Either may be a good
aim, depending on the company's context, but motives of this kind must be
reexamined often because circumstances change and one's target market may be
Objectives and plans are both long-range and short-range.
Short-range plans cover the next three years. The former are quite definite,
and the latter are tentative except in cases where definite commitments must
be made long in advance.
Objectives embody definite rates of profit,
which are based on what is considered feasible in the light of forecasts of
the state of the market, the position of the industry, and the company's
position as compared to those of its competitors.
also, companies are taking an even more fundamental view of objectives by
asking themselves: What business are we really in? In other words… what do
our customers pay us for?
Companies hope to increase their profits
each year; hence their plans will include means for doing so. For example,
they may strive to increase their market share by more sales effort, the
adoption of new products, or improved product performance.
and costs must be matched against the plans to ensure a sober prospect that
events will work out as expected. A sales forecast is crucial here in that
revenues come from sales, which will be forecast in light of economic
climate, industry sales, and one's present or expected market share.
The planning process will often reveal that if the company continues its
past practices, there is likely to be a gap between goals and results.
In that event the planners must develop a strategy for filling in the gap
through new products, new methods of selling, new markets, or cost
reductions. Often, line managers are asked to contribute to the setting of
objectives and the formulation of plans. Regional managers may forecast the
sales in their areas each year and suggest plans for increasing them. Yet,
every manager must set objectives and plan how to reach them.
manager far down the line may believe that his objectives come down from
above and that he cannot change them; and this is true when objectives are
formally stated to him by higher authority, in his job description or other
Yet just as a company must ask itself what its customers
really want from it, so the subordinate manager must ask what the company
really wants from him, what he is actually being paid for, how many
subordinate managers actually do this?
dividing the work into tasks that can be handled by one person, and supply
means of coordination. The principal functions that must be carried out if
the plans are to become reality must be described and arrangements must be
made to prevent the work of two people from overlapping and to ensure that
various units are not working at cross-purposes.
The broad outlines
of the organization are generally established at the top, but each line
manager must organize his own group in such a way that there is no
duplication or wasted effort. In addition he must ensure coordination within
his own group and endeavor to coordinate his efforts with those of other
This last aspect is becoming particularly important as
companies become more complex. The formal arrangements set up by top
management (committees, coordinating groups, and special coordinators), are
often inadequate for the policing of every small transaction that may affect
another department or group. Hence it is up to the manager of each to make
some effort to coordinate the work of his section or department with that of
The manager should take pains to learn what is known as the
"informal organization" within his own department or group, and in groups
whose work is related to his own. The informal organization (which really
consists of a network of friendships, alliances, communication channels, and
spheres of influence), not provided for in the formal organization charts.
It is sometimes bad for the company in that it may result in a tacit
agreement among a group of workers to hold down output. But it also may be
good in that it could provide a type of horizontal coordination not supplied
by the formal organization. The manager must be able to recognize the
manifestations of the informal organization and know how to encourage the
good results it creates and deter the bad ones.
Once the functions to be
performed have been decided, it is necessary to fill the positions with the
most qualified people available. This is a continuing task since some people
will be leaving, retiring, getting promoted, et cetera. The purpose, of
course, is to have round pegs in round holes as this would solve many of the
manager's headaches. Alas this is difficult to do, chiefly when there is a
dearth of certain skills or when competitors are paying more. Then the
manager may have to take people who seem to him the best of a poor group of
If so, he must supplement the abilities of his people by
training, and this means that he must never become too preoccupied to
observe their performance and to judge where they are deficient. Too often
training courses are prescribed for whole groups when only some need them,
while others would profit from entirely different types of training.
Direction is one of the most
important parts of the manager's job, that is, telling people what to do and
seeing that they do it to the best of their ability. Since the manager must
work through other people, he may stand or fall by his ability to get them
to produce the needed results.
Because of its importance, some
define administration itself as "the direction of people". But this is only
a half-truth. It is essential for the manager to lead his staff well, but it
is equally vital to lead them towards the right goals by the right route. If
the manager has not planned well, he may have a happy, hardworking group
that is efficiently proceeding towards the wrong objective. If he has not
organized well, they may be working efficiently on their own tasks, but a
good part of their effort may be counteracted by the efforts of others. If
he has not staffed or trained well, they may be incapable of producing the
results that his company is seeking.
Control often suggests the idea of
command or direction, and whilst this is one of its dictionary meanings, as
applied to administration, however, it means checking on progress to
determine whether plans are being fulfilled. If performance is falling short
of what is necessary to fulfill the goals, the manager must take steps to
correct the difficulties.
Many of the controls available to
administration are financial in nature. A simple example is the budget,
which is also a tool of the planner, for a budget is a plan to spend certain
monies to accomplish certain ends. If actual expenditures over-run the
budget, it is an indication that performance is deviating from plans;
perhaps justifiably. Similarly, an under-run may indicate that managers have
been able to attain fine performances and produce results for less money; or
it may mean that some of the things that should have been done have not been
done, again, justifiably or not. If the budget is broken down finely enough,
it is relatively easy for a superior, or the manager who is responsible for
the budget, to determine what has happened and if some special action is
Not all controls are financial. To quote a few, controls are
needed for quality, for production, for ensuring that deadlines will be met,
for sales (like a budget, the ‘sales quota’ is both a plan and a control).
It is even possible to develop controls for such things as training; for
example, one might compare the performance of a group that had been given a
certain type of training with that of an untrained group doing the same type
of work. In that way, one could judge whether the training course is
worthwhile, or whether it needs modification, or if should be discarded.
Many theories on administration
confine discussion of the administration job to the phases listed.
Previously it was felt that the manager's job was mainly to ensure that
things went along evenly, without intramural fights or disruptions. Years
ago, Fortune magazine, surveyed 150 personnel men and 150 company CEOs
asking whether they believed business most needed adaptable administrators,
"concerned primarily with human relations and making the firm a smooth
working team", or men with new ideas and strong personal convictions "not
shy about making unorthodox decisions that will unsettle tested procedures,
and his colleagues". 50% of the CEOs and 70% personnel men voted for the
administrator as opposed to the innovator.
But the viewpoint has
changed in many firms as competition has become keener, including that from
abroad. One Wall Street Journal survey found a decided swing in favor of the
In the late eighteenth century and almost to the end of
the nineteenth century, British managers were the greatest innovators in the
world. They got in on the ground floor of the Industrial Revolution, and by
their willingness to try to promote new inventions and new ways of doing
things made their country the most prosperous in the world. But many think
that they clung too long to the original ways of doing things, to the
industries in which they led, production of coal and iron and steel
products, all now dead industries. Alas, today less that 15% of British
business is concerned with manufacturing and one is reminded of G. K.
Galbraith’s comments on Margaret Thatcher’s Monetarists: To paraphrase, ‘no
society can survive on just selling things to each other; people must make
things and there must be some wealth creation through tangible means’.
No country and no company can expect to stay on top, or near the top, if it
continues doing things in the same old way simply because that way has
brought success in the past, and innovation is not a job for the research
department alone. Innovations must be developed by every manager who wants
to be worthy of the name. A new product or an entirely new production
process or piece of equipment is more dramatic than the introduction of a
new procedure or a new form of financial control, but the latter may often
be of more benefit to a company. Innovation however does not consist of
imaginative ways of creating fictitious paper profits, or incomprehensible
management accounts, or fraudulent accounting, as practiced at Enron and the
administration of many other shoddy companies.
Innovation may consist
of replacing one way of doing things with another, or it may simply mean
discarding old procedures that are no longer needed. But whatever form it
takes, the drive towards innovation must be continuous. For a company cannot
stay in the same place; it must move forward or go back. This is also true
of a department.
In addition to all
these functions, the manager must represent his company to the outside
world. This has always been a part of the administration job, although most
administrators do not list it as one of the major administration functions.
There are many managers who still regard it as a peripheral activity, or
believe that they can delegate it to a public relations or public affairs
Actually, the manager cannot escape the job of
representation; and today, he must represent his company to more groups than
ever before. These groups include the financial community, the general
public, the local community, labor unions, industry associations, and
innumerable governmental bodies.
Not all managers have contacts with
all these groups, but they usually have contacts with some, although on
Communication is shown
encircling all the administration functions, since none of them can be
performed without it. Plans or innovations cannot be carried out until they
are explained to those who will be implementing them. The organization
structure is designed to set up "channels of communication", through which
information is passed downward and upward. Organization is sometimes
described as "a system of communication". In staffing, the manager must
explain the job, the skills needed, and the benefits provided to candidates.
The training phase of staffing is almost entirely a matter of communication.
Direction and representation, too, are exercised largely through
communications, and control systems are truly systems of communication.
9. Learning for Results
were good managers, of course, long before anyone ever studied
administration. But not everyone can be a genius, and the demand for good
managers far exceeds the supply of geniuses. Moreover, many of the genius
managers of the past in business, government, the military, and other
fields, were deficient in one or more of the administration skills and were
probably less successful than they might have been had they not proceeded by
trial and error.
Until recently, not a great deal was known about
the administration systems and controls. Lately a great deal of research,
experimentation, and thought has been devoted to the subject. In addition,
the computer (and the ability to data mine the company’s databases) has
given rise to entirely new possibilities. In short, there are a large number
of findings that will help any manager, whatever his native ability, to
become more competent.
One of the fruits of the study of
administration has been the breakdown of the administration job into the
several functions. In itself, of course, this does not tell the manager much
about how he can handle his job, but it has the great advantage of making it
easier for him to grasp the basics of his job and to control it in a
Fortunately, there is much more that the manager can
learn in addition to the techniques of his own job and his own industry. The
field of administration has drawn on sociology, psychology, economics, and
other disciplines, and it is in these areas that the manager can learn from
study as well as from experience and trial and error. He still needs plenty
of intelligence, common sense, and business judgment (and even the inspired
hunch may still have a place), but a knowledge of what others have learned
about the various aspects of administration will help him use his native
abilities more effectively. It may even help him determine whether his
hunches are inspirations or exercises in wishful thinking.
PERSONNEL & STAFF PERFORMANCE
Direction & Delegation
Control & Communication
Performance Grid Definitions
The human aspect of the manager's job
begins with staffing; selecting people for the various jobs to be done. Of
course, he will try to get the person best fitted for each job, but often
the fit cannot be exact; and for this reason, proper training and direction
can do much to improve its exactness.
What techniques are
available to improve the hiring process?
Well, there is the interview, the examination of the past work record,
the reference check, and psychological tests; a great variety of them, with
more being produced every day. Occasionally, in some jobs, it is possible to
give the candidate an actual trial period.
In many cases these
methods are used in combination and they can contribute to better selection
if used wisely.
It is important that managers understand, and
perhaps better than many of them do at present, just what psychological
tests can do to help them to better selection, and just what they cannot do.
Too many managers take the easy way out by relying too heavily on tests. In
fact, one large company abolished psychological testing entirely because
subordinate managers often hired people solely on the basis of the test
results. That was, of course, simply a way of ducking a decision that every
manager should be willing to make.
How does one judge the value of a test?
There are two measures:
1. validity, and
If a test is valid, it measures what it is supposed to measure; and
if it is reliable, the same person will make the same score each time he
takes it, even after an interval of several years. No test is perfectly
valid and reliable, but some do improve the batting average in selection
Tests are of various kinds:
There are intelligence tests, which measure with fair
accuracy the extent to which a person is capable of understanding and
learning, although they do not tell us to what extent he will apply his
intelligence to the job. In some cases people who make high scores even
seem singularly lacking in common sense and judgment.
There are aptitude tests, such as tests for mechanical
aptitude or finger dexterity, which give an indication of the skills a
person may find easy to acquire; and there are trade tests that indicate
the extent to which a candidate is experienced in a skilled trade.
In the case of administration candidates, there are
tests like the "in-basket" test, in which participants are given a
series of letters and memos, such as a manager might find in his
in-basket, and are asked to indicate what action they would take in each
case. This is, in effect, a test of judgment.
Finally, there are personality tests, which are more
controversial since they are much harder to devise than the other types.
This is not surprising, because the personality an individual exhibits
on the job is likely to be determined in part by the situation in which
he finds himself. Although a person cannot fake the answers to the other
tests, it is quite possible to guess the "right" answers with many of
the personality tests and to adjust his responses accordingly – even
where a battery of cross-referencing tests is administered.
Moreover, the way a person uses his intelligence and aptitudes depends
in part on his personality as it develops in the job situation. Thus tests
cannot be depended upon to do the manager's selection job for him.
The interview is really the crucial part of the selection process, and it is
here that the manager can make the greatest contribution to better staffing.
Some companies provide interview blanks, which list the questions the
interviewer should ask candidates. If this is not the case, it might be as
well for the manager to jot down in advance the facts he considers
important, albeit some managers find that they have allowed the candidate to
interview them rather than vice versa, or perhaps they have talked too much
themselves and did not let the poor applicant get a word in.
Probably the best way for the manager to improve his score in staffing,
whichever methods he uses, is to determine what the job requires in a
realistic way. It would be nice if all jobs could be filled with perfect
people, but the real question is not how a candidate stacks up as a human
being, not whether one would want him for a bosom friend, but "Does he have
what it takes?" Of course, what it takes differs for different jobs. For
some jobs the proverbial strong back and weak mind are sufficient. For other
positions there are other qualifications, and often the man who possesses
them is quite deficient in many of the qualities one admires. Many of the
most successful salesmen, for example, are money-hungry to an extraordinary
extent, and their ability to sell is really the result of a neurotic drive.
Last but not least, there is the handwriting test, this is a process whereby
companies hand over their destiny to a demented soul, called a handwriting
expert, who claims to be able to decide on the curl of an 's' or the dot on
an 'i' if the candidate is capable of doing a particular job. Clearly any
candidate for a job would tend to steer away from a potential employer who
used such an absurd theory of selection. For those companies inclined to use
this process, it must be said that a cheaper and easier process is to
slaughter a chicken and look at its entrails. Not surprisingly there is
substantial research that shows that companies engaged in the use of
handwriting test, and to a lesser extent, personality profile tests, tend to
have a lower profitability and return on investment.
One of the simplest types of
training, and a very valid method for training in certain types of tasks, is
the old Job Instructor Training developed during World War II when industry
was forced to train thousands of inexperienced people, many of whom had
never seen the inside of a plant or office.
Role-playing is another
technique, useful where the employee is being trained not in performing a
specific task but in handling face-to-face contacts. For example, the sales
manager may take the part of a prospect and have the salesman rehearse an
interview with a customer. Similarly, two supervisors or a supervisor and an
instructor may act out a scene, often based on an actual case in which a
supervisor must correct an employee. In both instances the role-playing is
generally carried out before a group, whose members later offer suggestions
for improving the performance. This method of training has the advantage of
permitting the salesman or the supervisor to practice face-to-face dealing
in a situation in which mistakes carry no penalties in the form of lost
sales or disgruntled employees.
Other types of training include
group discussions, lectures and special courses at nearby schools or
universities; all of which may be used for either managers or employees.
In the case of managers, the company may use job rotation, that is, the
manager may spend a few months working in each of several departments to
gain a better overall view of the company. Special assignments are another
possibility in administration development. So too, is a term as assistant to
a member of top management.
Two comparatively new training
techniques are now available: programmed learning and sensitivity training.
The first is designed primarily to teach skills and the second to improve
In programmed learning, which may be used either
with or without a teaching machine, the learner is presented with a series
of "frames", each of which presents a very small bit of information, and he
does not go on to the second frame until he has mastered the first as is
shown by answering all the questions correctly.
There are two types
of programmes: "linear" and "branching". In the linear technique, Frame A
presents a piece of information, Frame B reinforces Frame A, and adds
something new; Frame C reinforces B, and adds a new piece of information,
and so on. In the branching technique, multiple-choice questions are often
used, and the student's likely misconceptions are anticipated. Then, if he
picked wrong answer "a", he is asked to turn to pages that explain exactly
why this is wrong. If he chose wrong answer "b", he is directed to other
pages that clear up other kinds of misunderstanding.
advantages of the programmed learning technique are, first, that it presents
the information so gradually that the student finds it easy to absorb and is
encouraged by the progress he makes; and second, that he can learn without
an instructor, and proceed at his own pace.
Managers find this
technique useful in teaching skills to employees, and may also find it
valuable in learning new things themselves.
Sensitivity training or
"laboratory education", as it is sometimes called, is a form of human
relations training conducted for groups of managers. In effect, although
there is a leader, the meetings are unplanned and members are encouraged to
speak their minds freely to each other, often in a way that results in hurt
feelings. The aim of this type of training is to make managers more
sensitive to others and to their own effect on others, and many managers
claim that it produces excellent results.
Before prescribing such a
seminar for his subordinates, or taking part in one himself, the manager
should understand that it is a controversial technique, and some experts
believe it does more harm than good.
STAFF SELECTION & TRAINING EFFICIENCY
Specialist Training Programmes
Continuous Training Programmes
Performance Grid Definitions
Assuming the operation has been
adequately staffed and the employees have been trained to the point where
they are quite capable of doing a good job, the manager's work as an
administrator of people is really just the beginning. The fact that his
subordinates can do the work well does not mean that they necessarily will.
Both the quality and the quantity of their work may fall short of what they
potentially could produce. Only if they are motivated to do their best will
they turn in the best performance possible for them.
People may, of
course, be motivated by fear; fear of losing their jobs or of not getting a
merit increase, or simply fear of a bawling out, or yet a nasty look from
their boss. But fear is not a very good motivator since it is impossible for
the boss to police every action, and the person who is motivated by fear
alone will often find many ways of skimping on his work that will not be
apparent to the boss. This is true even in times of business recession, when
fear of job loss is acute, and much truer in times of prosperity when other
jobs are available.
Thus a manager can achieve better results if he
can be a leader rather than a driver of his people. He may have to use the
fear motive in some cases, but he is likely to be a better manager to the
extent that he can avoid doing so.
To determine how the manager can
and should lead, one can look at the various factors that have been
identified as motivators of people in general and then examine the nature of
In the early 1900s,
Frederick Taylor, originator of scientific administration, thought he had
the answer: separate planning and doing, to ensure that each job is
performed in the best way possible; use motion and time study to determine
what the standards should be; and then pay people more for meeting and/or
beating the standard. In other words, use money as the motivator. Piecework
plans, which also used money as an incentive, had been in existence long
before Taylor's time, but Taylor added a new twist. If a man met or
surpassed the standard, he was paid the higher rate for all the pieces he
produced, not just for those he turned out over and above the standard
Taylor's view of motivation was simple: "Now the workman
wants just what we want, high wages and the chance for advancement....
Welfare work and all such secondary aids to workmen... should all come along
in their proper time, but I wish to emphasize that they should not be
allowed to interfere with doing those things which are necessary in order to
give workmen what they want most, namely high wages".
associate, improved his plan by introducing the daily wage, plus the
incentive payments for meeting or surpassing the standard. This did away
with one of the bad features of the Taylor incentive system under which
rates for those who did not meet the standard were greatly reduced in order
to make up for the higher rates paid to the faster workmen.
confidently expected that his system would produce a "mental revolution" on
the part of both administration and labor. Management would make so much
more because of the higher production that it would not want to cut the
rates. Labor would have a chance to earn so much more that it would find no
reason to strike for higher wages. In fact, he felt, there could be no
possibility of argument over the wage rates at all since they would be
In experimental situations some
remarkable increases in productivity did take place, but the mental
revolution in industry was conspicuous by its absence. Labor unions opposed
the plan and succeeded in getting the use of the stopwatch for time study
banned from government operations. In more than one case a manager who was a
prominent supporter of the scientific administration movement introduced the
plan and the result was a strike that nearly wrecked his company.
Some thirty years later, Taylor himself admitted that his plan had in no
case produced the mental revolution that he had hoped for. Quite naturally,
he attributed this to administration's failure to use the plan as he had
designed it; as many managements simply cut rates as soon as production
But many administrations today have made strict rules against
the cutting of rates, yet they have not sparked a mental revolution to any
great degree. Many incentive plans are successful in raising productivity,
but even their most ardent supporters do not claim that they tap the full
potential of the great mass of workers or that they have produced any
particular mental revolution on labor’s part. Not only do they fail to
prevent strikes over wage rates; they are, in themselves, a frequent source
Money is not the only motivator, the only thing the
worker wants from his job. What else then does he want?
The next answer administration got
was diametrically opposed to Taylor's. This was the answer provided by Elton
Mayo and his associates Fritz Roethlisberger and W.J.Dickson in the famous
series of experiments at the Hawthorne Works of the Western Electric company
The company already had a group incentive plan in
effect; that is, each employee's earnings were in part dependent on the
production of a group. In the experiments a smaller group made up of
half-a-dozen girls was used; and hence each worker's earnings depended more
on her individual efforts than before. But the girls were allowed to get
used to this before the experiments began properly.
Rest periods of
various lengths, sometimes accompanied by light meals, were introduced for
weeks at a time; and in one case the work week was shortened. With each
change in the schedule, productivity went up, which seemed to indicate the
value of rest periods. But when all rest periods, shorter hours, and food
breaks were abolished, productivity went up still further.
explanation of this was that the girls in the test room formed a cohesive
group. What the worker wants, he believed, is not more money but a feeling
of "belonging" to a stable group whose standards he accepts. People were
happier, he felt, before industrialization when family and work
relationships were less likely to be disrupted. But since it would be
impossible and undesirable to return to the practices of the past,
administration should Endeavour to recreate the "feeling of belonging" that
existed until technological developments made it necessary for people to
adapt themselves to constant changes. He forgot, perhaps, or did not know,
that even in the Old Days people did not always produce to the top of their
potential. The "idle apprentice" was a well known character before the
"What the employees want" as has been
described by researchers, who pointed out specifically how the feeling of
belonging may be fostered:
People like to feel important and to feel that they
are doing important work.
They are often more interested in the size of their
pay packets relative to those of others than in the absolute amounts of pay.
They want to be treated well by their supervisors,
to be praised rather than blamed, and not to have to admit their mistakes - at
least not publicly.
They like to know whether they are meeting
expectations - how well they're doing.
They like to be listened to, consulted about
changes that will affect them, or at least warned of changes before they take
Well, this sounds quite reasonable. Are these not things we all want,
managers as well as employees, just as we want the high pay and the chance
for advancement that Taylor spoke of?
Here we have a set of fairly
definite guides for the manager that have been made the basis of many of the
courses in human relations. But is this the whole story? Perhaps it is, if
one examines the implications of the Hawthorne findings keenly. But often,
they have been interpreted too narrowly as meaning only that the supervisor
should be "nice" to staff and treat them politely, listen to their
complaints, and advise them on their personal problems.
the sociologist, has provided an analysis that may be more helpful. Herzberg
characterizes money, a pleasant work place, and pleasantness on the part of
the supervisor as "hygiene" factors. That is, just as good medical hygiene
removes factors that may be detrimental to health, what he calls the hygiene
factors in the job context remove possible causes of dissatisfaction and
poor productivity but do not provide positive incentives to work. The real
motivators are such things as the sense of achievement, interesting work,
and the feeling that the accumulation of achievement will lead to personal
growth and recognition.
The supervisor, Herzberg says, will need to
use discrimination in recognizing good work and in rewarding it
appropriately. He will need to be pleasant, of course. But in addition, he
will have to organize and distribute the work so all his staff will be given
a chance for successful achievement.
This is very much in line with
the Y theory, which is that people are really anxious to do a good job and
will do so if only administration will let them take on all the
responsibility they are capable of assuming. This theory contrasts with what
one calls the X theory, which states that people are naturally passive and
lazy and have to be cajoled or compelled to work.
found that "high productivity" supervisors were employee-centered
supervisors, whose groups were supervised less closely by their own
superiors. They placed more responsibility on their staff, and thus might be
said to offer the chance for achievement and growth that is all important.
Some very cogent observation states that: “Satisfaction is, above all,
inadequate as motivation. ...Responsibility, not satisfaction, is the only
thing that will serve. To perform, one has to take responsibility for one's
own actions and their impact.... one has, in fact, to be dissatisfied to
want to do better”.
These later findings do not really contradict
the Hawthorne findings; they supplement them and they help to explain them.
The girls in the Hawthorne test room, who were under the direction of the
researchers rather than the regular supervisors, said they could produce
more because there was no "slave driving". Mayo discounted this remark
because the usual plant supervisors were pleasant enough in their approach
and by no means could they be considered "slave drivers". Yet, in the test
room, the girls set their own pace and could slacken off at times and then
make up for it later. It may have been this that gave the girls their sense
of freedom. Many supervisors make a fetish of a "steady pace".
addition, many of Roethlisberger's statements of "what the employee wants"
do carry some implication that responsibility and achievement are
motivators, for example, his emphasis on participation and on praise for
good work. Too much of the failure of the "human relations approach" in many
firms may rest on the failure to utilize it fully.
have called attention to the fact that "participation" as practiced is too
often nominal; and either subordinates are asked to voice their opinions
only so that they may be persuaded to accept a decision already made, or the
participation is restricted to very peripheral activities, such as serving
on bond drive committees or making minor suggestions about the company
It is remarkable, in fact, how some managers can persuade
themselves that they are practicing consultative supervision and allowing
subordinates to participate in their decisions when really they are doing
nothing of the kind, and may likely achieve better results if they dropped
Many subordinate managers act out similar pretences
with rank-and-file employees because they believe the latter are not bright
enough to know what has happened. But in this managers deceive themselves.
You do not have to be extraordinarily intelligent to recognize deception of
this sort, and there are always one or two in the group who can.
Unless the manager is prepared to allow genuine participation, he had better
stick to old-fashioned authoritarianism coupled with some attention to the
This does not mean that the manager must obey the
employees or take a vote on every decision; but it does mean that he should
not ask for suggestions unless he really believes the employees can
contribute something and is prepared to consider their suggestions
seriously. If he has already made a decision, he should merely explain it
without pretending that he can be convinced to make another.
about money?, which Taylor considered the all-important motivator? He was
quite right in many respects; particularly, since as many behavioral
scientists have pointed out, pay is a status symbol in our society and a
very tangible award of achievement. But as regards incentive systems, and
their failure to produce what Taylor thought they would, some interesting
insights developed from studies conducted.
The researcher found that
the workers made a distinction between "good money" and "big money". "Good
money" enables a man to live on a standard that he considers adequate. "Big
money" provides many extras, but to many it is not really worth the extra
effort. Others continually seek the "big money".
Thus it is not
always possible to say that all people will respond to the same motivators.
And this is true of the motivators uncovered by the behavioral scientists as
it is of the money motivator.
For example, take participation, or,
as it is sometimes called, “consultative supervision”. In general, its
contrast “authoritarian supervision”, is very much frowned upon in advanced
administration circles today. But sometimes it works better.
would be fine if a set of rules could be found that would tell the manager
how to direct staff and subordinate managers in all cases, but the fact
remains that groups and individuals differ and the manager must gauge what
is needed and thus act. There are certain things everyone wants, but people
want them to different degrees and in different doses.
It is often
possible to provide the achievement motive even on very routine jobs,
provided the supervisor organizes the work so that each person can see the
results of his efforts and gets a feeling of satisfaction in his work.
From the foregoing
one may derive some clues to the way in which the manager or supervisor may
become an effective leader. Many of the findings of studies of leadership
itself are also helpful.
Most people tend to believe in what is
known as "charismatic leadership"; that leadership consists of some
intangible quality impossible to describe that is immediately recognized by
everyone else. It follows from this, of course, that a leader will lead in
all situations, regardless of whom the followers are or where he is trying
to lead them.
If this theory were valid, the manager who has not
been a leader of every group in which he found himself would have to give up
in despair. Happily both everyday experience and research on the subject by
psychologists contradict this idea. It is almost comparable to the theory
that because of his greater intelligence, a man could quell a lion or tiger
merely by a direct and fearless glance. If anyone ever put the latter theory
to the test, he was probably not on hand to report on the findings of his
Attempts have been made to define leadership in terms of
traits. Thus it has been said that a leader is fair, intelligent, kindly,
and so on; that is, he possesses all the traits generally felt desirable.
But everyone has met leaders, in business and elsewhere, who were often less
than perfect human beings. Yet this theory is nearer to some of the findings
than the charismatic theory, for studies have shown that when a person is
esteemed by the group it is more likely to accept him as a leader.
There really are two traits which most leaders do seem to have: intelligence
and confidence. Studies have shown that the leader is likely to be more
intelligent than his followers, although too great an advantage in this
respect may militate against his leadership. The reason confidence is
important is easy to see; if he is not sure of where he is going or cannot
act as though he were sure, he can scarcely expect others to unreservedly
accept his direction.
The best accepted theory of leadership is that
it depends on the situation; some people will lead in one situation, others
in another. Leadership depends as much on the nature of the followers and on
the situation in which they find themselves as it does on the nature of the
leader himself. The leader, analysis shows, is the one who can best help the
group achieve its objective. One round-up of leadership studies, in fact,
came to the conclusion that while leaders were mainly superior to their
group in one or more of a wide variety of ways, they had only one thing in
common with each other; superior technical skill in the field in which they
In another case an executive seminar took up the
question of leadership, and instead or reading up on the subject, members
set down the characteristics of good leaders they had worked for in the
past. The only common characteristic found was that the leaders were people
who were really interested in getting a job done, not those who were trying
to win a popularity contest.
This theory is encouraging to the
manager who lays no great claim to charisma. He can acquire superior
knowledge of the field in which he is engaged, and the more his knowledge
increases, the more confidence he will have in his own decisions, and thus
he will acquire at least one trait that will reinforce his ability to gain
assent of his leadership.
If authoritarian leadership is called for,
it will be better accepted if the leader knows his job, as there is nothing
more disturbing to subordinates than the incompetent autocrat; because of
his lack of competence, they cannot respect him, and therefore they feel
humiliated by taking his orders. Thus because he cannot be, albeit at least
slightly, aware of his own incompetence, he tends to bluster to cover up his
own uncertainty and thus acts more unpleasantly towards his employees.
Further, although employees appreciate praise, as was pointed out, praise
from someone who really knows good work from bad is far more satisfying than
indiscriminate and perhaps even undeserved praise. Praise from a boss who
really does not know good work from bad may give the employee some sense of
security, but it gives him no real sense of achievement.
competence is so important, why have companies become so dissatisfied with
it as the sole criterion of promotion? One often hears managers complaining
that too much stress has been placed on skill in the selection of
supervisors and not enough on "human relations" and "leadership" qualities.
One reason is that "skill" and "knowledge of the job" have been interpreted
too narrowly. The mere fact that a person can perform a manual job very well
does not mean that he can direct others doing it. If he has true knowledge
of the job, he knows how to plan it in the most effective way, what is more
important about it and what is less important, and where it fits into the
whole job the group is doing. He is interested enough not to rest on his
current skill, but is forever trying ways to improve methods.
skilled man is sometimes so satisfied with his won methods, learned perhaps
through a strict apprenticeship, that he is unwilling to change them when
better methods are discovered. He becomes what higher managers refer to as a
"brittle" supervisor, one who resists all change and is generally a problem
to his superiors.
Many people who can do a first-level job cannot
supervise others because they try to do the work themselves instead of
training and encouraging others to do it. Thus the low-productivity
supervisors tended to do more of the work themselves than the
high-productivity supervisors, who spent more time advising staff, listening
to their ideas, and so on.
These were supervisors of clerical
workers, but one might take an example from another field. The star salesman
who becomes a sales manager may go out into the field with one of his men,
ostensibly to teach him how to sell; but what does he do when they visit a
customer? He monopolizes the conversation, and makes the sale. As a result,
the salesman gains no rapport with the customer and has no opportunity to
learn from his own mistakes.
The proper conduct for the sales
manager in this case is to stay largely in the background, and to take part
in the conversation only when he can brace the salesman's own presentation.
Then after he and his man get outside, he can go over the whole interview,
mention any errors, commend the good work, and offer advice that will help
the man the next time.
It is partly because of this tendency to grab
the ball and run with it that the best salesman may not be the best sales
supervisor or sales manager, which is a matter of observed fact.
may also be because he takes little interest in such things as market
surveys, analyses of the potential of various customers, the importance of
credit ratings, and so on; all of which are part of the skill of the job
needed by the sales manager.
The ability to delegate, which the
manager needs as much as knowledge of the job, can also be acquired, which
is again encouraging to the man who may not possess any high degree of
charisma. It is acquired, of course, by thought and by practice.
Another characteristic of a good leader, is that he sets high standards;
standards that are attainable, but not easily so. Such standards, of course,
contribute to the sense of achievement, for no one gains any sense of
achievement from doing something anyone can do without half trying.
Now the situational theory holds that the person a group accepts as a leader
is the one who can help the group achieve its objectives; and in many
business and industrial situations, the objective of most members of the
group is in line with company objectives to some extent. That is, most
people want to do a job they can be proud of, as Y theory indicates. They
want a sense of achievement, and they want to grow on the job, get promoted,
get such pay raises as may be forthcoming, and so on. The manager who can
help them achieve their ambitions, because he knows more than they do and
has the time and patience to teach them, has gone a long way towards winning
their acceptance of his leadership. Line managers, for example, willingly
accept the power of a top manager who is instrumental in company growth
because they know their own jobs and incomes are likely to grow with the
But occasionally a manager is faced with a subordinate or a
group of subordinates who are completely apathetic towards their work or who
even seem to get a sense of achievement from being paid for not working.
Of course there are some people that the manager cannot
do anything about. Their apathy or recalcitrance may not be their fault,
since it may be the result of a lifetime of experience, but the manager
cannot hope to correct it. In that case he may have to remove them from the
payroll as soon as possible. Or if they will perform useful work of some
sort by being driven to it, then he must drive them.
One should not
be too inclined to reach a negative conclusion about any given person. Many
people do not realize their own capabilities and are afraid to try to
exercise them. A little encouragement, a little chance to do things on their
own and subsequent success will go a long way to change them.
are secretaries, for example, who are afraid to try composing letters
because they believe that they must be "writers" or at least graduates to do
so. Yet with some training they can learn to write letters that are not only
acceptable, but very good. Managers who takes the time to provide the needed
encouragement and training will subsequently save himself considerable time
and effort, for he can simply pass on correspondence to his secretary with a
notation "tell him yes", or "tell him no", and be confident that the replies
will be properly expressed.
Apathy on the part of an entire group
may be based on an incorrect view of the job that has been fostered by
previous managers. Many managers, confident that the provision of "hygiene"
is all that is necessary, will tell an employee who asks questions beyond
the immediate task, "Well, now, let me worry about that. You do not need to
bother with it." This is actually the hygienic way of saying, as some
supervisors did before "good human relations" received so much emphasis,
"You're not paid to think. You're paid to work." It may arouse less
resentment, but it is equally productive of apathy.
supervisor has a group whose ambition and pride in work has been beaten down
in this way, he cannot expect to change things overnight. He must patiently
encourage each sign of interest and be willing to take the time to listen
and to explain.
Further, unless he is supervising a machine-paced
job, such as a part of an automobile assembly line, he will often reorganize
the work so that each person has a "whole job" instead of little bits and
pieces, the final result of which is so far away that no sense of
achievement is possible.
As soon as someone becomes a manager, he must become an organizer, as
unless he organizes the work of his subordinates, they will be getting in
one another's way and even counteracting one another's efforts; to say
nothing of the fact that the way he organizes the work has a great deal to
do with the effort his employees put into their jobs.
has been called "a system of communication", and it has been defined as
"coordination". It is both, but a more fundamental definition is that
"Organization is the form of every human association for the attainment of a
common purpose". This definition is more inclusive than the other two, for
we need communication mainly to ensure that everyone understands what the
purpose is, what his part in achieving it is, and why it is to his advantage
to help achieve it to the best of his ability. Coordination, in turn, is
necessary to ensure that each person contributes to the common purpose
without lost motion.
There are two schools of thought on
organization, what is sometimes known as the "classical", "traditional", or
administration process school, and the "social science" or behaviorist
school. The concepts developed by the former group are based on company
experience and logical common sense. Those developed by the latter are drawn
from findings of sociologists and psychologists, often arrived at through
experimentation with companies and other groups.
Since both sets of
theories are to some extent based on experience, it might seem that there is
no reason why there should be any quarrel between them. Yet considerable
differences sometimes develop in discussions on the subject of organization.
The classicists have evolved certain "principles of organization", which
they believe offer general guides for the organizer, while some behaviorists
claim that these guides are not only useless, but actually detrimental to
One reason is that the two schools of thought
have been asking different questions, and of course, the answers you get
depend upon the questions you ask.
In general the classicists have
What work must be done if an enterprise is to achieve its
Which activities should be combined into a single job?
Which jobs may be coordinated by a single executive?
The behaviorists, on the other hand, have tended to ask:
What do people want from the organization?
How do they react to one another as they work in groups?
How do the various groups interact with one another?
How can we organize people so that their jobs will afford them
satisfactions other than their pay packets?
Now it is obvious that the answers to the second set of questions have a
decided bearing on the answers to the first. An organization of people is
not a machine, and just because the parts are fitted together in what seems
like a very logical order, it will not necessarily function as it is
supposed to. Each individual has his own goals, which may or may not be in
line with the purposes of the organization, and these goals (and the ways in
which he sets about reaching them) will certainly be influenced by the
interactions within the group in which he finds himself and by the
interactions of his group and other groups in the organization.
Classicists, however, have never denied the usefulness of
psychological and sociological findings. They believe that these can provide
valuable insights for the manager, both in determining the style of
direction he adopts and in fitting the pieces of his organization together.
But they do believe that in developing an organization structure, he must
first consider the purpose that is to be achieved. Furthermore most
behaviorists do accept the fact that the organization, especially the
business organization, must have a purpose, in fact, many of their
experiments have been conducted with the consent or at the instance of
company administrations who wished to know more about the effect of
different types of organization practice on the people within the
Thus there is really no reason for the manager to become a devotee
of either one school or the other. He can accept the findings of both where
they seem good to him, in the light of his own experience and the situation
with which he must cope; and use what will be useful to him.
The classical theories are easier to enumerate
because they include several distinct principles, or suggestions, since the
classicists do not consider them immutable principles but rather guides to
be used as the occasion requires.
The first of these is that
there must be an objective (or objectives) for the organization as a whole,
and for the holder of each position in it. This is, perhaps, a real
principle, in that it holds true in every situation and there is no reason
for a formal organization of any kind to exist unless people can accomplish
something by working or acting together that they cannot accomplish
separately. Even a group organized entirely for social purposes has an
objective other than organization itself.
principle is that specialization is needed, and here it is the degree of
specialization that the manager must concern himself with, for
specialization is well established in modern industry, and the complexities
today are such that it would be impossible to operate without it.
The theory behind specialization is, of course, that the greater the
specialization, the easier it is for a person to become skilled at a job.
Also, it is easier to find a person who has the aptitude or skill to perform
one specialized task than one who can perform several.
however, limits to the amount of specialization that is technically feasible
or economically desirable. If there is room for only one person at the
controls of a machine, it is technically impossible to subdivide the
operation any further. If splitting up the work would produce a job that
cannot keep a person busy more than a couple of hours a day, the result
would be a waste of time rather than an economic gain.
This is a
situation a manager must watch, for sometimes the specialization that was
worthwhile in the past is no longer so today.
specialization may also be advisable from the viewpoint of worker morale. A
very highly specialized job, for instance one that is confined to making a
few motions over and over, often produces apathy and discontentment.
coordination is essential because there can be no true organization without
coordination. A characteristic of the large, complex organization is that it
is not possible to rely on a common superior to coordinate all aspects of
two or more managers' work. For this reason a number of other coordinating
devices must be introduced: committees and/or specialized coordinators of
Any manager can, however, do much on his own
initiative to further coordination by maintaining communications with others
on his level whom his work may affect. Henri Fayol, the French
industrialist, who was the originator of many of the classical principles of
organization, pointed out that there is no reason why two managers on the
same level who report to two different superiors should not communicate with
each other directly, provided they keep their superiors informed of any
decisions arrived at. He called this form of horizontal communication
throwing "gangplanks" between positions.
If the typical
organizational channels were followed, any communication from parallel lower
levels would have to go all the way up the chain of command and down the
other side before it would reach its destination, an obvious waste of many
people's time, especially since the chain of command may be very long. The
gangplank was his answer, and he believed that every superior should
authorize his subordinate managers to deal with others informally in this
way, provided they kept him informed of the decisions made.
authorizing subordinate managers to throw out gangplanks may be
insufficient. Many managers never give a thought to anything but their own
departments, and are likely to adopt a policy that makes things a little
easier for them even though it causes a whole lot of inconvenience or
expense to another department. A manager can make himself a great deal more
useful to his company by using gangplanks himself and encouraging his
subordinates to do so. Further, he may find that others will eventually be
ashamed not to reciprocate, and his own job will become easier in
consequence of his communication with them.
The authority principle
implies that each man should have only one boss, and the line of authority
should run from the company president straight down through the hierarchy to
the rank-and-file employee. This principle is observed when the worker
reports to a single supervisor, the supervisor to a single manager, the
manager to one director, and the director to the CEO. Henri Fayol called
this the principle of "unity of command" and it is, in many ways, a
common-sense proposition. If a man has more than one boss, he may be
subjected to conflicting orders and thus become confused.
that a company uses group administration at the top, as some companies do,
need not prevent observance of the principle so far as most of the members
of the organization are concerned. Members of the top group can thrash out
differences before they transmit orders or instructions down through the
channel, which is often known as the "chain of command". By-passing channels
by utilizing Fayol’s gangplanks are not a violation of this principle, since
the gangplanks are designed for horizontal communication rather than
communication up and down the chain of command.
Of course each man
has more than one boss in that he is subject to the authority not only of
his own immediate superior but of his superior's superior and all the bosses
on higher levels. But this need not interfere with true unity of command
since the higher bosses are supposed to transmit all their instructions down
through the chain, and no one is told what to do by anyone except his
immediate superior. Thus the production manager, or even the company
president, should not bypass the foreman in issuing orders directly to the
worker except in an emergency.
states that responsibility and authority should be commensurate, or as
nearly equal as possible. If a man is held responsible for attaining certain
objectives, he should be given the authority to do the things necessary to
meet the goals; conversely, when he has the authority, he should be willing
to accept the responsibility that goes with it.
The principle of
delegation is that authority should be delegated as far down the line as
possible. The advantages of practicing delegation are that those who are
closest to the scene of action may be best able to deal with the problems
that arise and time is saved by not sending information up the line and
directions down again. Perhaps even more important, pushing responsibility
down the line is one way of tapping the initiative of everyone in the
organization and of keeping people interested in their jobs.
down the line is it feasible to push authority to make a given decision?
This depends on three things:
At what point does the person in the job have access to all the information
necessary to make the decision?
For example, it is not expected that the production manager would know
whether a change in the design of a product would increase sales sufficiently to
offset higher production costs, or that the sales manager would know what the
total effect of a design change would be on production. Therefore, a company
superior must make a decision on this point.
At what point may the job incumbent be expected to have the incentive to decide
solely on the basis of what is best for the entire company?
In the case cited above, the sales manager has no incentive to keep production
costs down since he is judged on sales volume, while the production manager, who
is judged on production costs, has no incentive to make expensive changes simply
because they will benefit sales.
Is the incumbent personally capable of using good judgment in the case in
The first two criteria are easy to apply, but the last one is
difficult indeed. The manager may delegate authority and hold responsible
the man to whom he delegates, but the manager himself is still responsible
to his own boss for the results of delegated decisions.
This is as
it should be, because the manager has the authority to delegate or not to
Many managers, however, are much too cautious about
delegation because they are afraid that their subordinates will make too
many mistakes, and they have not devised the controls that make it possible
for them to correct errors before they become serious. Thus many managers
say that they could operate more effectively if their superiors would
delegate more authority to them, and that they personally are overworked
because their own subordinates are incapable of assuming responsibility.
7. SPAN OF CONTROL
principle of span of control calls attention to the fact that a man can
directly supervise only a limited number of people whose work is
interrelated. As enunciated by L.A. Graicunas, an administration consultant,
this principle holds that supervision of two men entails six relationships:
First, there are the superior's own relations with each of the two men and
his relations with each of them when he contacts them both at the same time
- or four relationships altogether.
Second, there are the relations
between A and B and between B and A. These may actually be two different
relationships since A's attitude towards B may not be the same as B's
attitude towards A.
Using this method of calculation, the number of
relationships becomes enormous as more subordinates are added. With four
subordinates the number of relationships becomes 44; with five subordinates
it rises to 100.
This has led some administration experts to contend
that no executive should supervise more than four to eight subordinates
whose work is interrelated. But the real question is whether the superior
need be concerned about all these relationships. Should he not really leave
something to the men's own initiative? If there is a big fight over a
question of policy or procedure, he will naturally have to umpire it and
make a decision. But if his subordinates are reasonably adult, he need give
the relationships only occasional attention. He does not have to determine
exactly how they feel towards each other at each moment. If he does, he is
probably a "snoopervisor" rather than a manager.
At any rate, most
successful companies transgress the span of control principle, especially at
the top, where a CEO or an executive seldom has fewer than eight people
reporting to him and may have as many as fifteen or twenty. It is true,
however, that it is important to consider the span of control in developing
an organization structure, since it naturally cannot be extended
indefinitely without loss of coordination. Some companies, however, still
prefer to make it difficult for the superior to police things too closely.
Thus he is practically forced to delegate more than he otherwise would.
8. SHORT CHAIN OF COMMAND
Many authorities hold, and with good reason, that a short chain of command
is desirable. This means there should be as few levels of supervision as
possible between the chief executive and the rank and file. The greater the
number of levels the more the chance that objectives and instructions will
be garbled before they reach the point where action must be taken, and the
more slowly and less accurately information will move up from the bottom to
The short span of control and the short chain of command
where there are many different activities and a great many people to be
supervised make it necessary to strike an optimum balance between them. In
fact, balance is cited by many classicists as one of the principles of
organization; in this respect as well as every other.
9. LINE AND STAFF
principles we have described would be easier to observe were it not for the
fact that industry has become so complex that it has been necessary to carry
specialization to the point where we have two different types of executives:
line and staff, as in the armed forces. Line executives are those who
supervise activities that contribute directly to the profits of the company,
while staff executives are those who contribute indirectly by providing
services or advice to the line organization.
Thus a process manager
is a line executive, as is a sales manager. But departments like personnel,
accounting, engineering, and process control are staff or auxiliary
departments in a company. Their job is to assist the line departments. On
the other hand, a copy-typing department in a secretarial-services agency,
since it actually produces the service which the agency sells to its
customers, is a line department.
The existence of staff departments
make it very difficult to keep spans of control short, and it makes it
impossible to have a single line of authority running from the chief
executive down through the chain of command to the rank and file. This
difficulty is partially recognized by the fiction of "functional authority",
which is indicated by dotted lines on the organization chart. But
"functional authority" is usually a very real authority, and where its
possessors are higher in the organization than the line managers, they in
fact dilute the latter's authority even though the plans they devise may be
transmitted through a line superior.
For example, if a methods department, which is a staff department,
reports to the process site manager or the process chief, the first-line
supervisor will have less freedom to prescribe the methods to be used.
Similarly, if the site is one of many, the manager's own authority may be
somewhat diluted by policies or instructions devised by staff men at
Neither staff executives nor line executives are
entirely happy with this situation. Line executives may complain that the
staff interferes with their operations and requires them to spend too much
time making reports. Staff executives, on the other hand, may find that the
line resists their efforts to help, and that they have continuously to
"sell" their ideas to others down the line to get their plans put into
The line-staff difficulty may sometimes be due to higher
management neglecting to define jobs carefully. But even if the extent of
responsibility and authority attaching to each position has not been made
entirely clear, the line and staff administration down the line can do a
great deal to ease the situation.
Line managers should remember that
staff men can help them with problems that they do not have time to study
themselves, and thus make use of staff services to the fullest extent
possible. They should keep an open mind about new programmes that the staff
suggests, and not condemn them out of hand simply because the staff has
suggested them. Nor should they construe staff suggestions as criticisms of
the way they have been handling things to date. No one person can be expert
in all the specialized skills needed in modern business, and no one is
expected to be. In fact, that is why staff men exist.
Staff men, on
the other hand, should be content to introduce their projects gradually and
should not assume an air of superiority simply because of specialized
training. They should be willing to listen to the line's objections and
criticisms of their programmes since the objections may be based on very
practical experience and thus be well worth taking into account, even to the
extent of modifying a programme based on what seems to be very sound theory.
In addition to the specialized staff departments, there are two other types
of staff of which the manager should be aware. The first is personal staff
(a private secretary for example), and the second is the general staff-man
(for example, an assistant-to-somebody). Both are outside any chain of
command, and there is no reason why either should come into conflict with
the executives. An assistant-to-somebody, it should be noted, is not the
same thing as an assistant, who is second-in-command and may have to act for
his chief when the latter is absent. The assistant-to-somebody has no
authority over anyone, unless he has assistants of his own. He merely
handles part of the functions that the chief executive cannot delegate.
Generally, his role is that of information gatherer and evaluator.
The position of assistant-to the chief executive is often a highly coveted
one since it provides an opportunity to learn general administration skills
that few other positions provide. Also, the incumbent has a high degree of
"visibility", that is, the man in the best position to further his career
cannot be ignorant of his existence or his abilities. Sometimes the position
is used as a training ground for a future chief executive.
position, however, is one in which the incumbent needs to watch with extreme
care his relationships with his chief's immediate subordinates since in the
course of his information gathering he may be tempted to assume authority he
does not possess and arouse resentment that may result in his ousting.
Another type of general staff-man is the chief of staff, who has authority
over all the staff functions in the company. Not many companies, however,
have created such a position.
The battle of line and staff managers, as in the armed services, is never
perfectly resolved. Just as in Agincourt, just as in the invasion of Iraq,
the troops (and their line managers) complained that the staff managers had
not planned ahead, and had not adequately equipped them for the task. In
Enron the line managers ignored the staff managers and this led to disaster.
In Marks & Spencer the staff managers ignored the line managers and this has
led to a company lost in the wilderness for many years.
Customer Handling - Relative & Competitive Performance
Procedures & Systems
Order Handling & Input
Senior Staff Performance
Point-of-Sale Staff Performance
Performance Grid Definitions
OPERATING PROCEDURES & SYSTEMS
Professionalism of Operating Procedures
Investments in Systems
Corporate Responsibility & Development
Performance Grid Definitions
Ease of Customer Order & Interface
Input Systems & Performance
In-House Order Handling Performance
Performance Grid Definitions
Overall Order Progress Monitoring
Systemized Procedures for Order Chasing
Level of Systems Investment
Performance Grid Definitions
On-Time Delivery Rating
Complete Order Delivery
Delivery System Investment
Performance Grid Definitions
Availability of After-Sales Services
Cost of After-Sales Services
Efficiency of After-Sales Services
Performance Grid Definitions
Now the general classical maxims and
the distinction between line and staff provide only general instructions
about the actual mechanics of organizing. Have the classicists anything else
to offer the industry?
Indeed, they have. Specifically, they offer certain guides to the division
of work. For example, it has been pointed out that work may be divided by:
1) The purpose served
2) The process used
3) The persons or thing dealt with
4) The place where the service is rendered
These criteria may be
used at any level in the organization, though not necessarily in the order
given, to determine how the work should be divided and then subdivided.
Considering the overall objective is to produce tangible products and sell
them at a profit. However, this implies two different purposes: processing
and selling, which also require two entirely different sets of procedures.
In addition, the fact that the objective includes making a profit indicates
that there must be records kept. So there is still another primary division
by both purpose and process: finance and accounts. Thus one has at least
three main divisions: processing, sales, and accounting or finance. In some
firms there are two financial departments both reporting to the CEO; the
accounting or controller's department and the treasurer's department. This
is not illogical, for these two also serve entirely different purposes. The
accounting department provides the records for control while the treasurer's
department manages investments, stock issuers, and borrowings.
the company has only a single plant, the head of manufacturing may be the
plant manager. But if it has several, it will resort at once to a
sub-division by place, that is, there will be one manager in charge of
manufacturing in all the plants and several plant managers under him.
Now the plant manager has more than one purpose to consider. He must strive
for the right quantity of production and also ensure that what is produced
is of the right quality, but these two purposes conflict to some extent
since it is easier to produce in quantity if he pays no attention to
quality. Hence he will probably want to separate quality control from the
administration of production.
Production itself may be divided
according to processes, each of which may be placed under a manager. If the
plant is large, there may be a general manager over the line supervisors.
Related processes or departments near each other will be placed under one
man. If the plant produces more than one product, the division may be by
Now consider another of the primary purposes of the
enterprise: selling. What processes are used here? Fundamentally there are
two: Advertising and face-to-face selling through salesmen who visit the
customer. The concept is to put the two together under a single marketing
manager, and have both the sales manager and the advertising manager report
In sales, also, there is often a division by things dealt
with, as when different salesforces are used for different products. This
division may even occur further up in the organization scale, so there may
be a marketing manager for industrial products and one for consumer
The division between industrial and consumer products
might also be considered a division by persons dealt with, since industrial
products are sold to companies and consumer products to wholesalers or
retailers, or sometimes directly to consumers.
of the salesforce is typical. If the company sells throughout the country,
it will generally have regional sales managers and district sales managers,
and each salesman is assigned an exclusive territory in any case.
Again, an accounting department has the general purpose of providing records
that will enable administration to maintain control, that is, to determine
when deviations from the planned course of action are occurring. But many
different processes are used for this purpose; two examples are budgeting
and cost accounting, which is the determination of the cost to produce a
single unit of the product. Thus further subdivisions of the department may
be made if it is a large one.
Division by purpose, it may be seen,
enables the manager to set definite objectives for each segment of the
enterprise. Division by process, or by people or objectives, enables him to
bring together the jobs that require the same or related skills. For
example, selling industrial products needs technical know-how, but not so
selling consumer products.
Geographical division of the work is one
way of cutting down the manager's direct span of control, and also of
reducing the time wasted in travel, and travel time may be in-house as well
as outside. For example, many plants that are spread over acres of ground
have adopted what is known as "area maintenance", that is, stationing a
maintenance foreman and several craftsmen in each department or at a central
point near a group of related departments. This saves travel from the
central maintenance shop, which in a large plant may be some distant from
many of the departments.
A company generally
begins by having what is termed a "functional" organization; with each of
the principal functions, either line or staff, reporting to a top manager or
a director, who in turn reports to the company CEO. Yet as the company
grows, this organization may become increasingly unwieldy as chains of
command get longer and longer.
Then a company may resort to what is
known as divisionalization, which is a new way of dividing the work
according to objectives. A division manager is appointed to take complete
charge of both the production and marketing of a single product or group of
products, and is judged not on the amount of production or the volume of
sales but on the profit his division produces. His position is comparable,
then to that of the CEO of a smaller company, except that he is not
responsible for raising capital. That is allocated to him from the general
Occasionally divisionalization is by place, that is,
the division manager is given charge of all operations, including both sales
and marketing, in a section of the country. This, however, is less common
than divisionalization by products.
Divisionalization has several
advantages. It brings major decision-making closer to the scene of action
and enables the man in charge to concentrate his efforts on a single family
of products. In addition, it relieves the burden on top management.
This introduces new problems. One of these may arise because some divisions
sell all of their products to other divisions of the same firm. How, then,
are the prices to be set? If the division manager is compelled to sell at a
low price in the interests of the overall profitability of the firm, it is
hardly fair to judge him on the profit and loss account. Alternatively, if
he is permitted to charge his captive market whatever he wants to, his
profits might be artificial so far as the whole firm is concerned. One might
say, of course, that the price should be the "market price", but this may be
difficult to deduce because prices may be set by bidding, and outsiders are
not likely to waste time preparing bids if they know they cannot get the
This problem will affect only certain divisions,
and in some companies there may be none that sell only to other divisions of
the company. More serious may be the loss of control by top management,
which may not know that things are going badly until something very
unfortunate occurs. Income statements that look good may conceal a variety
of shortcomings. Pressure to show increased profits may lead divisions into
such practices as letting plants and equipment run down, adding too many bad
debts into accounts receivable, or short cuts of various kinds that may
bring the whole firm into disrepute. These practices are likely to show up
in the income statement eventually, but perhaps not until a good deal of
harm has been done.
organization has outgrown its current organization structure because many
new products and new functions have been added as its size increased. So,
thorough reorganization may be needed. But a company may reorganize to align
the work more logically and lose more than it gains because of the general
disruption entailed when old relationships are suddenly broken up and many
people become fearful that the reorganization may leave them in a less
favorable position than before.
Therefore it is generally recognized
that reorganization should be as gradual as possible. If the present
organization is not too unwieldy, the method recommended by the classicists
is for the manager to chart the "ideal organization", as he would like to
see it if he did not have to consider staff at all and then gradually work
towards it rather than introduce the changes all at once. For instance, a
firm may recognize that since advertising and sales serve the same purpose,
they should be coordinated by a single marketing manager. Not if the
advertising manager and sales manager now report to the company CEO both
would feel that they had been demoted if another layer of supervision were
suddenly inserted between them and the top. Thus it may be necessary to wait
until some of the executives retire or leave before making the change.
3. BEHAVIORAL SCIENCE & ORGANIZATION
Most firms are organized
largely along classical lines, although they do not necessarily observe all
the principles exactly, and by and large, they have a chain of command with
the work divided into specialties according to one or more of the methods
Yet as behavioral scientists have examined situations in
industry, they have tended to be critical of the traditional approach,
sometimes harshly so. Probably the severest critics of the classical wisdom
states definitely that organizations conceived along classical lines are not
suited to the needs of psychologically healthy people; that the environment
created tends to demand that they be "dependent, passive, and use few and
This is certainly true of some business
organizations structured along classical lines, with specialization carried
up to the point which is technologically or economically feasible and where
those in charge are so fearful of mistakes that they prescribe every action
in detail. But this does not follow from the classical principle of
specialization as we have described it.
Some behavioral scientists
have advocated what is known as an "organic organization" in which jobs are
defined only slightly, if at all, and everyone pitches in and does what he
can do best. This sometimes works very well in a small group; but in an
organization of any size, it is likely to make coordinated work impossible.
Moreover, there are many people who, so far from being stimulated by this
freedom, are made insecure by it.
4. ORGANIZATION FOR MOTIVATION
Some managers have a saying, "If you want a good job done, make it
somebody's baby"; that is, give him responsibility for success or failure
and let him work out his own plan of the best way to go about it, and it
should be a job that calls on all his abilities and one in which he can
judge his own failure or success as he goes along. That is practically the
only way to arouse his interest and get the best from him. Moreover, it can
be done without any great violation of classical principles.
only point in “specializing” a job to the point where it requires only one
motion or only a few motions is that it makes it easier to substitute a
machine for human labor.
One close observer of industry and an
authority on administration has suggested the following guides for the
organization of work:
Each job should constitute a distinct stage in the work process. The man or
men doing the job should always be able to see a result. It does not have to be
a complete part, but is should always be a complete step, and thus it
contributes something visible, important and irreversible.
The job should always depend for its speed or rhythm only on the performance
of the man or men performing it. It should not be entirely dependent on the
speed with which the jobs before it are being done. The workers should be able
to do it a little faster at times or a little slower.
Each job should embody some challenge, some element of skill or judgment.
Whenever a job is too big, too complicated, or too strenuous to be performed
by an individual, it should be done by a community of individuals working as an
organized team rather than by a series of individuals linked together
Only when work is organized so that each portion of it is the "baby"
of some person or group will it be possible to get real motivation, for only
in that case can people get the sense of achievement which is the real
motivator towards better performance.
It is only when real judgment
must be used that his sense of achievement can be obtained. If the worker's
job does not allow him to make decisions that affect results, he prefers a
job that is completely mechanical and that he can do without thinking at
all. It is the lesser of two evils.
To organize work in such a way
that it will provide the real motivators described by Herzberg is a
challenge to every manager, whether he is the chairman of a company or the
head of a small group. It can be done, and it has been in some companies,
but it takes ingenuity, knowledge of processes, and an insight into the
capabilities of individual subordinates.
5. THE INFORMAL ORGANIZATION
The informal organization is sometimes spoken of as though it were one
organization pervading an entire company and existing side by side with the
formal organization. But the informal organization is not one organization
but several. It consists of a number of circles, whose members are in
communication with each other and who thus establish traditions, norms, and
status systems of their own. Some of these circles intersect each other and
others are entirely separate.
Managers have probably paid most
attention to the informal organization as it exists in a rank-and-file group
under a first-line supervisor in cases where it curtails output. It was in
response to a situation like this that Taylor developed his differential
piecework plan by which a man could earn more by producing more. The same
phenomenon was noted in one of the Hawthorne studies.
explain this restriction on output, where it occurs, by the fear that if
they do too much work they will eventually be laid off. Or if they are on
piecework or an incentive system, they fear that the rates will be cut or
the standards raised if they show that higher productivity is possible.
Although some social scientists have been reluctant to believe that these
are the real reasons, they may in many cases by the simple truth, but there
may be other reasons, and some developing out of the way the work is
When it is impossible for a man to see real results from
his work and he is expected to keep moving at a "steady pace" throughout the
day, performing the same few motions over and over, he may tend to keep that
pace as slow as possible so as not to get too tired by the end of the day.
On the other hand, if he had some part in planning his work, and could feel
responsible for results, he might not work so steadily but might accomplish
At any rate, some cohesive work groups with highly
developed informal organizations do attain very high productivity, and this
may be due both to the absence of the fears mentioned above and to the way
in which the group is organized. Certainly the organization of the work
groups at Non-Linear Systems and the responsibility given them had
everything to do with the increase in productivity achieved.
development of "norms" of productivity, either high or low, is only one
manifestation of the informal organization. In many cases it facilitates the
attainment of company objectives by making possible more horizontal
communication, between people on the same level, than the formal
organization channels provide. Another result of the informal organization
is that it permits people to "make their own jobs" to some extent and to use
the abilities they possess to the highest degree.
informal organization often enables people to do what is necessary to meet
specific day-to-day problems that arise by changing procedures or channels
of communication to meet the situation. Often these problems are special and
temporary, and it would not be worthwhile to change the formal organization
to take account of them, but an informal organization enables them to be
solved satisfactorily without any disruption of the formal organization.
COMMUNICATIONS & OBJECTIVES
In his novel, Little Dorrit,
Charles Dickens wrote of a certain government department that he called the
"Circumlocution Department" and whose members he named "Barnacles".
Literary license? Certainly. But in essentials a good picture of the way
some government departments, in Dickens' day and ever since, have viewed
their tasks. Can the same thing happen in business? It can and does. Many
businessmen are inclined to regard government as inefficient, and business
as efficient, and to believe that the type of bureaucracy Dickens satirized
in the Circumlocution Department cannot exist in industry. It arises in
government, they say, because the government is not subject to competition,
whereas business (which must be efficient if it is to survive and compete)
would not tolerate such a department for a minute.
the facts are against them. More than sixty years ago, Harrington Emerson,
an early efficiency expert, reported that he had found groups of clerks on
some railroads spending their entire time making out reports that no one
ever looked at. Apparently at some time in the past, a company president had
requested that certain sets of figures were sent to him regularly. Then he
had died or retired, and the new president wanted a different set of
figures; and perhaps the next president called for a third set. All three
reports continued to be made regularly because no one ever told the clerks
to stop working on them, even though the fourth president might be getting
all the figures he needed from some other source and neither he nor anyone
else ever looked at the reports.
That happened more than a half
century ago, and maybe things have since changed. Sadly not. Whenever a
company institutes a programme of forms control in an effort to cut down the
different types of forms, it is likely to find that outmoded reports which
no one needs are still being faithfully made out. Management literature is
full of examples.
This happens in government and in industry not
because the people are naturally inefficient, indeed they may be quite
efficient in making out the useless reports, but because in many large-scale
organizations the people who do the actual work are removed from the
policy-making levels and do not understand the objectives of the whole
organization. They have been told what they are to do, and often how they
are to do it, but not why they are doing it or what the ultimate purpose is.
Thus, like the Circumlocution Department, they come to think that their
objective is to get out as many letters and forms as possible, but are
totally unconcerned with what the letters or forms are supposed to
1. NEW APPROACH
objectives is a new approach to administration and organization designed to
encourage initiative and to prevent the working at cross-purposes, or for no
purpose at all, that is likely to occur unless positive efforts are made to
communicate the company's objectives down through the entire organization.
Management by objectives shifts the emphasis from cut-and-dried procedures
to accomplishing results. It makes it easier to follow the methods of
direction and leadership that prove most successful in providing the
achievement motive, for it leaves people free to develop better ways of
doing things if they find that new methods will produce better or quicker
It also makes over-all goals the concern of every manager
and helps to break down the narrow departmental view that so many managers
take because they know they will be judged entirely on the records of their
Further, it is much easier to evaluate and reward
people when the objectives of each job are clear. Many managers do not like
to talk over executive appraisals or employee merit ratings with their
subordinates because the rating systems in use compel them to evaluate
people in terms of traits. It is hard to tell a person that he does not
possess enough "tact", "initiative", "character", or "acceptability"; all
terms that have been used on appraisal forms. To criticize a man on counts
like these amounts to a personal attack of a type that is difficult for
anyone to take with good grace.
Moreover, it implies that the man
had inherent failings that are so much a part of him that there is not much
he can do about them. When he is judged by the results he achieves, by his
success in reaching definite objectives, he is encouraged to use the
abilities he possesses to the full rather than sulk over the shortcomings
the boss has accused him of. It might be added that shortcomings, either of
intellect or of personality, are immaterial as far as the job is concerned
if they do not interfere with results.
Ideally, administration by
objectives should begin at the top with the emphasis on opportunities rather
than on problem-solving.
It should start with thought of possible markets, and the answer to the
What do customers really pay us for?
Or if it is a new business, the question is:
What do people want that they cannot now get easily, or in the form
they want it, or at the time or the place they want it?
One very successful management news service is said to have started
with the idea:
"What information do managers need on such things as taxes, government
regulations, and so on that they cannot get easily in succinct form?"
Once this was set forth, the firm resolved how it could be supplied.
Many people start businesses with no other objective than "to go into
business for myself". Then they pick a field simply because they know
something about it (or even one they know nothing about) and proceed to sink
their savings or loan capital into the venture. This is one reason why so
many new businesses fail during their first fiscal year, and why few remain
in business for as long as five years.
It might be stated as an
axiom that no business can succeed or continue to exist unless it fills a
vacuum of some sort, that is, unless it supplies something people want that
would otherwise not be supplied at all, would not be supplied in sufficient
quantity, or would not be supplied at the right time and the right place.
2. OBJECTIVES -v- TASKS
administration by objectives has been adopted on a company wide basis, the
subordinate staff may be asked to suggest possible objectives for his
department, and to commit himself to producing set results that will
contribute to the overall objective. But even if this is not the case, he
can make use of this new technique in managing his own job and the people
One might first try this quick test. One can pick out any
of the employees and ask him what justifies his being on the payroll. It is
more than probable that the employee will reply by stating what he does
rather than what he accomplishes: "I get out these reports" or "I operate
this machine". In other words he will be "task-oriented" rather than
"accomplishment or contribution minded".
Many job descriptions
encourage task orientation rather than orientation toward objectives, even
on the part of managers.
For example: The general accountant is responsible for establishing and
maintaining the general books of the company and for the preparation of
financial and budget statements in accordance with the approved policies and
procedures of the company.
The maintenance of general books of
account is not an objective. It is a task. The books are not ends in
themselves but means to ends. There are many ways in which they can make a
positive contribution to profit. To do so they must show not only the
historical information necessary for the annual reports to stockholders and
for the satisfaction of the tax authorities, but also the data that permits
administration to know where it stands at any given moment and to determine
whether or not its plans are being carried out as expected. They should
provide this information soon enough so that administration can take steps
to counteract unfavorable trends as soon as they appear.
general accountant is well-trained in his profession and high enough in the
organization to understand what administration needs in this respect and to
realize that he is responsible not only for maintaining the books but for
suggesting changes in reporting practices when it becomes evident that
administration could use more information or information different from what
it is now getting.
But even men high up in the organization
structure do not always consider objectives. There are organization
specialists who are more concerned with the appearance of their charts than
they are with the actual working of the organization. Thus they may
recommend breaking up a job or the insertion of another layer of
supervision, not because the organization is not functioning properly, but
because a span of control seems to them unduly long. There are personnel
managers who recommend the use of new programmes merely because other firms
have them, not because there is any real certainty that they will contribute
to company objectives.
One man whose job was writing standard
practice instructions produced a set of directions that could mean either of
two diametrically opposite things. When this was called to his attention by
someone on his own level, he said: "Well, since no one else has noticed it,
I think I'll leave it the way it is." It never occurred to him that the only
reason why the firm wanted the instructions in writing was to ensure that
every one understood them in the same way.
But perhaps the epitome
of task orientation was demonstrated by a graduate student in a school of
business administration who had had some experience in hospital
administration and was planning to make a career in that field. In a term
paper, he wrote: "The concept of the patient-centered hospital is all very
well, but it should not be allowed to interfere with good administration".
Apparently no one, either on the job or in graduate school, had ever said to
him: "Why do we have hospitals at all? What are they for? To provide jobs
Some job descriptions do provide objectives for
each job, and this is all to the good - but it is not enough. Each superior
should talk over the objective of his group with each subordinate and make
plain the contribution sought. In doing so he should relate the objective of
each job to broad company objectives and show how it contributes to their
It may be, of course, that his own superior has never
taken the trouble to do the same thing with him, but this need not stop him
from doing so. He can analyze the matter for himself, decide what his
objectives should be, and then take the initiative in discussing the matter
with his superior.
One should realize that the real objective of the
company is not simply to produce X or Y product for an instant profit. More
realistically one can say: "We're in business to create and to retain
customers by satisfying their wants competitively and profitably."
This implies a fundamental orientation towards the market rather than a
running inward toward the convenient role of getting out production or
simply following procedures. Then he should ask himself the following
What ‘wants’ do we really satisfy?
For example, in purchasing the services of an advertising agency,
a company is not buying simply copy, artwork, and the placement of
it in media. It is hoping to buy increased sales. Agency account
executives, who realize this, often use the knowledge to help
customers with their complete plans; and if they succeed in
producing sizable increases in sales, they may turn a small customer
into a big one.
What advantages do we have over our competitors? Quality? Price? Service? Or
if we seem to have no special advantages, what advantages could we provide?
What advantages do our competitors have that we do not possess, and is it
possible that we could minimize these advantages in some way?
What groups of companies and/or individuals make up our present and potential
customers? Are their numbers growing or declining? And if the numbers are
declining, are there other groups we might serve if we did things a little
differently or if we could reduce our costs enough to put our products in their
price range? Or could we perhaps fill their orders a little faster?
The next step is to determine where our departmental contribution
most logically fits in. A production man can make a distinct contribution to
profitability by improving quality, by obtaining more production from the
same machines and the same people, or by reducing the lead time on delivery.
If the sales department suggests a change in the product to make it more
saleable, he can try to think how it could be accomplished without too great
an added cost or disruption in his department rather than spend his energy
thinking up reasons why it cannot be done.
The production head of a
small but successful chemical company talks on the telephone to the sales
manager every working day to be sure he is making what can be sold rather
than asking the sales manager to sell what he can make. When the sales
manager told him that he had a chance at a big contract if production of a
certain product could be tripled within a short time, he immediately called
a meeting of his foremen to decide how it could be done.
they worked out the way and did the trick without any expensive capital
investment, by putting on a second shift and pressing some unused equipment
Sales managers of industrial products frequently score
by developing new applications for their products, and those who are
marketing consumer products have an opportunity to open up new types of
outlets for their company's goods. They can also help by passing on
customers' comments about the merchandise. Most sales managers probably
think they need an alibi for not selling and to take credit for the sales
achieved because of the product's good points.
In everything they
do, sales managers should keep in mind the twofold objective of creating and
retaining customers. Some sales managers have set up contests that focus
attention on only one aspect of this objective; offering prizes for new
accounts but making no penalties for losing old ones. As a result their
salesmen have neglected good customers while they were chasing after
Managers of some departments or sections may feel that
they are too far removed from the primary functions, processing and selling,
to make any real contribution to profits. They think of themselves and their
groups as necessary evils rather than as positive contributors, and as a
result, others in the organization consider them in the same light.
Staff departments are particularly prone to mourn their inability to show
direct and measurable contributions, and often develop more and more
programmes of the type that irritates the line simply because they feel they
must show they are doing something. If they would remember that they make
their contribution by helping the line achieve company objectives, they
would no longer find it necessary to be active just for the sake of being
active. When a staff department is ready and able to provide help where the
help is needed, it need not worry about the fact that its contributions are
not measurable. Everyone will be conscious that it is something more than a
Once the department head or section manager has
analyzed his contribution to company objectives, he should check with his
superior to ensure that his understanding is correct, and that he has placed
his objectives in proper order of importance. Where top management itself
does not practice administration by objectives, misunderstandings are
After the manager had determined the contribution his
group can make to the achievement of overall company objectives, he should
next make an inventory of his strengths and weaknesses. Strengths are
resources that will help in achieving objectives, such things as money,
manpower, materials, machines, and skills; while a weakness is anything that
could defeat efforts to achieve objectives unless it is corrected. Strengths
and weaknesses together determine departmental capabilities.
3. ANALYSIS OF OPPORTUNITIES
Once the manager knows his objectives and his capabilities, he can spell out
what he can accomplish under certain conditions. This in turn compels him to
consider the opportunities that lie ahead. How can he make a greater
contribution to the attainment of overall objectives?
As he analyses
the possible opportunities, he can use three simple yardsticks in making
decisions about each one:
He decides whether the
opportunity is suitable.
That is, will it help him accomplish his purpose?
Then he determines whether it
is "feasible" to do it.
Can he realistically expect to do it in view of the resources available?
He decides whether the idea is
returns worth the risk, time, effort?
For example, say the manager is in marketing. He has examined
his resources and found them adequate. In the process, however, he
determines that his firm is not giving enough attention to its likely future
markets. It may be selling, for example, to an industry that is in what the
economists call a cyclical decline. In other words it is declining gradually
but irreversibly over the long term. In any company, too, there is usually
the normal attrition of customers, as the old faithfuls die off, as tastes
change, and as some part of the market is weaned away by new products
offered by some other firms. Thus he may discover that he loses about 20% of
customers annually. This meant that he has to gain that many new ones, just
to stay in the same place.
The next step is to write up how one
intends to overcome this marketing weakness. Are new products needed? New
outlets? New methods of selling? Advertising in new media to reach new
groups? When one has done so an objective for one's department has evolved.
Say the manager is in production. Wages rates and material prices are going
up, and there is not much he can do about either.
Must unit costs inevitably rise proportionately? Not necessarily.
Consider, for example, the following possibilities:
Can production be planned more carefully so that less inventory of raw
materials is needed?
Would any rearrangement of the department make it possible to avoid
backtracking in handling materials? One way of determining this is to make a
Would some adjustment of machines reduce the amount of wastage and rejects
and save both labor and materials?
Is there unnecessary paperwork going on in the department? Does one need all
the forms? Could some be combined, simplified, or discarded?
Can he save money on utilities? The power bill may depend, in part, on peak
usage. Can he reschedule the turning on of machines that draw heavy current on
start-up so that the peak usage is kept down? Can he use process heat for some
other purpose? There are consultants who make a business of showing companies
how to save on utilities, but any of the possibilities they uncover could be
identified by the people within the plant if they only gave thought to the
When the manager has a set of agreed projects, he can decide whether he
has allocated his resources properly, and agree on timing and priorities.
Where administration by objectives is practiced on a company-wide basis, the
overall resources needed for each manager's set of projects become the basis
for his departmental budget, and when all the department's budgets are put
together, they represent the company's plans for the next operating period.
In this way administration by objectives makes possible what is called
"responsibility accounting", or "responsibility reporting". Where this type
of reporting or control system is used, the supervisor is made responsible
only for objectives he has agreed to and only for resources over which he
In working with his own subordinates, the manager will
find it a great deal easier to practice administration by objectives if he
has organized the work so that each person has a "whole job", one that
demands a certain amount of planning and some opportunity to vary the
sequence in which the work is done. Then each one should be able to answer
the following questions in the affirmative:
Do I know what I am supposed to accomplish and why?
Has my boss agreed to my objectives?
Has he given me with the necessary resources?
Can I shift the scope and tempo of my effort as conditions require?
Can I determine how well I am doing without asking my boss, but am I free to
go to him for help whenever I find I cannot solve problems myself or when I'm
not sure I'm on the right track?
One researcher has suggested some guide lines that will help make
administration by objectives work for any manager. Among these are:
Goals should be realistic. They should be attainable in the light of all the
circumstances, and the subordinate should be expected to attain them if his
performance is to be considered adequate. Then the manager may set higher goals
as marks to shoot for, with the proviso that their attainment will be considered
When objectives for all positions have been tentatively set, the manager
should write them down and cross-check to see that they all blend with one
another. Attainment of the objective set for each man on the lowest level should
contribute to the attainment of the line supervisor should contribute to the
objective to be reached by his superior, so that all objectives contribute to
the general objectives of the company. Similarly, short-range objectives should
contribute to long-range objectives.
The objectives must seem fair to the man to whom they are given. If possible,
he should be asked to participate in setting them, to suggest objectives for his
own position. Often people set higher objectives for themselves than their
superiors would set for them.
There will in most cases be more than one objective for each job. If there
are too many, the man may try to complete a great many of the easier ones, which
may be of minor importance, and hope that this will offset his failure to reach
Administration has been
deluged with books and articles on communication. It has also spent a great
deal of money on communication tools: employee publications, newsletters,
and meetings of various kinds. Yet communication in industry is as serious a
problem as it ever was, and there are good reasons to believe that the
situation may get worse.
One reason for the increasing difficulty of
communication is the growing size of firms. As ideas and instructions from
the top are transmitted through the various levels of administration,
misunderstandings are likely to be cumulate as each person makes his own
interpretation. The same is true of information moving up from lower ranks
to the top.
Moreover, the further a person is from the source of
information, the less likely he is to recognize what has been called "the
law of situation".
This law may be illustrated by the case of a fire
in a paper basket. No one would have to be told to put it out, since
obviously it is to everyone's advantage to do so before it spreads. What the
insurance people call a "hostile" fire, in contrast to a "friendly" fire,
like a fire in a furnace, is everyone's enemy and everyone knows it.
Everyone, therefore, obeys the law of the situation and tries to put it out.
But it is far less easy to discern the law of the situation in relation to
such things as careless work or wasting time. In the end these things affect
company profitability, and hence the company's ability to give jobs and high
wages. But, the connection between what is done in one small job and the
final balance sheet of the company is tenuous to most people, especially
where jobs are highly specialized and staff are task-oriented rather than
The emphasis on communication has arisen in part
because the competitive situation, which is so apparent to managers, is
often invisible to the rank and file because of their distance from the top
and the specialized nature of their jobs. In part, too, it stems from the
philosophy of the "soft manage", which has sometimes been carried so far as
to fester the idea that the main job of a manager is to make his staff happy
by sustaining a close friendship with them in order to give them a "feeling
The latter view has led almost to the belief that
communication is an end in itself. It is amazing how many liaison activities
are pursued because teamwork is considered the thing to do, because others
are doing it, because the brochure or handout looks good, or because it can
be sold to the boss.
But the only way a company's communication
effort can be made effective is to make it precise in terms of needs and
The main purpose of communication is to alter people,
some group, or some thing, or to avoid unfavorable trends. The purpose of
communication is to induce action or to secure inaction.
1. THE MENTAL SET
bias" or mental set predisposes one to action or inaction in any given
situation. Attitudinal bias, in turn, is the result of stored information,
social and economic background, beliefs and prejudices, corporate background
and experience, and other factors.
Some of the factors that go to
make up a person's total attitudinal bias are stable and tenacious, and it
is almost impossible to change them entirely. But even these viewpoints may
be modified in intensity by new experience or information or contacts. In
other cases the attitudinal bias is less deeply rooted and can be totally
changed in time.
Since what a person does in a given situation
depends on his attitudinal bias, this bias may precipitate him to action
when the context in which he finds himself and/or the information he
receives impel him towards his predisposition. The extent to which he acts
will rely on the severity of the problem, and the amount, type and
persistency of the information.
Fortunately, it is not necessary to
change a person's attitude completely if its intensity can be reduced below
the "critical action level", and it is much easier to reduce intensity than
it is to get a person to change his attitude completely.
example, in some plants minor infractions of work rules are ignored when it
is obvious that the "law of the situation" demands that one man lend a hand
to another in a different craft if the work is not to be unreasonably
delayed. Yet perhaps both men may believe in the necessity of the rules as a
means of job security and would resist any attempt to modify them, but
because they have a reasonable sense of job security anyway, the intensity
of their feelings is less. They are not, thus, aroused to the critical
action level, at which they would absolutely refuse to transgress the rules,
and perhaps walk out if they were ordered to break them.
biases determine almost every action of any consequence that a person takes,
and every position supported in an argument. About the only time any of us
has a truly open mind is when we are presented with a case that is entirely
new to us, and on which we have no preconceived opinions.
therefore, know a person's attitudinal position on many issues or one cannot
predict the action he may take in any situation or amply prepare the
circumstances, the content, and the form of the message. One way of
determining a person's psychological "set" is to learn to listen, something
few people really know how to do because their own attitudinal bias gets in
the way, and they hear what they want or expect to hear, and disregard the
implications that contrast their previous opinions.
When those at
Hawthorne told interviewers that they were able to produce more because they
"felt freer", Mayo concluded that the cohesive work group gave them a "sense
of belonging", which was really in line with his own ideas; but if he had
been able to escape from his own psychological set, he might have thought of
other possible reasons: their freedom to vary their pace and the effort that
went into interesting them in the experiment, which may have made them to
some extent "results-oriented".
Again, sometimes what people
actually say is not the full story, and it may be necessary to let them talk
at considerable length before learning the true meaning behind their words.
The ostensible cause of a complaint, for example, may be quite different
from the real cause. But this facet has been so strongly emphasized in
recent years that perhaps this type of interpretation has been overdone. In
some cases, people mean exactly what they say, and they will be satisfied
only with a straightforward, logical answer.
2. THE COMMUNICATION PROCESS
What does the manager himself want to communicate to his subordinates?
Through communication he wants to ensure that they are able to do a good
job, which means that his instructions must be clear, and he wants to
stimulate their will to work and raise their standards so that they will try
to do outstanding work rather than merely get by.
communication process implies:
a) A sender
b) A receiver
c) A message
d) A motivating
Each of these plays an important role and can make or break
the entire process.
First the receiver must have some confidence in
the sender. If the sender has not been truthful in the past, no message will
get across, in fact, the communication may produce an effect exactly
opposite to that intended. Sometimes a sincere manager will be distrusted
because his predecessor has dealt insincerely with the staff. Thus it may
take time to build up confidence. When people see that their manager gives
honest answers to their questions and does not promise more than he can
deliver, they will eventually begin to trust him.
The mere fact that
receivers consider the sender honest, however, does not always mean that
they will be very swayed by his words. The message he delivers (its content
and its form) is as vital, and so are the circumstances, which may or may
not provide motivation for them to act as he wishes.
To get an idea
across, you must first of all talk about something the other person is
interested in or relate it to his own personal benefit. Otherwise, he not
really listening (or if he does), he will soon forget.
But how can a
manager do this when he must often talk about the economic problems facing
the firm, which may seem remote to employees in the lower ranks? About the
only way to do so is to relate the facts to the individual's inner drives
Basically, we have economic and non-economic wants.
Economic wants include:
1. A useful job
2. A rising standard of living
3. Economic security
Non-economic wants include:
1. Personal development
2. Social recognition
3. Personal freedom
If we relate communication to these basic
drives, we will create a favorable listening climate and our communications
will be effective.
3. COMMUNICATION BY ACTION
Some people feel that what a company or a manager does is a more important
form of communication than any written or spoken communication, and it is
true that everyone communicates by action as well as by words. It is of
little use to urge employees to put more effort into their work if the
manager himself wastes his time or wastes theirs because he has not planned
Of course there are cases when a manager may seem to be
wasting time but is not really doing so, and in that case, he should
unobtrusively make clear what he is doing.
1. Security & Product Protection
2. Quality Control Procedures
3. Accounting Practices &
4. Order Taking and Processing
Delivery or Contract Satisfaction
6. After-Sales Services &
7. Legal Considerations & Conditions of Business
SECURITY & PRODUCT PROTECTION
Corporate Security Rating
Process Security Rating
Product Security Rating
Performance Grid Definitions
QUALITY CONTROL PROCEDURES
Formalized Quality Control Systems
Quality Control Efficiency
Quality Control Development
Performance Grid Definitions
ACCOUNTING PRACTICES & PROCEDURES
Customer Satisfaction with Accounts Procedures
Performance Grid Definitions
ORDER TAKING & PROCEDURES
Order Taking Efficiency
Order Taking Systems Investment
Customer Satisfaction with Order Taking
Performance Grid Definitions
ORDER DELIVERY & CONTRACT PERFORMANCE
Order Delivery Efficiency
Contract Performance Rating
Customer Satisfaction with Contract Performance
Performance Grid Definitions
AFTER-SALES SERVICES & PROCEDURES
After-Sales Service Efficiency
After-Sales Systems Investment
Customer Satisfaction with After-Sales Procedures
Performance Grid Definitions
LEGAL CONDITIONS & TERMS OF BUSINESS
Levels of Litigation
Fairness of Terms of Business
Customer Satisfaction with Terms of Business
Performance Grid Definitions
HISTORIC FINANCIAL INDUSTRY DATA
HISTORIC FINANCIAL INDUSTRY DATA
ADMINISTRATION & CUSTOMER HANDLING SCENARIOS
ADMINISTRATION & CUSTOMER HANDLING BASED BALANCE SHEET FORECASTS
ADMINISTRATION & CUSTOMER HANDLING SCENARIOS BALANCE SHEET FORECASTS section
gives a series of Forecasts for the Company and the industry using a number of
assumptions relating to the financial decisions available to the management
of the Company.
The Balance sheet forecast given shows the effects
of financial improvements which any Financial Management is likely to
ADMINISTRATION & CUSTOMER HANDLING SCENARIOS
Base Forecast :
Median Market Scenario
Personnel & Staff Improvement
Administrative & General Expense Objectives
Order Taking Improvements
Customer / Order Processing Systems Investment
Sales Personnel & Staff Improvement
Administration Cost Scenarios
Profit Impact From Customer Handling Cost Reduction
Options: Distribution / Handling
Capital Investments Options: Customer
Customer Handling Improvements
Managers in the Company will, in both the short-term and the long-term, have vital
decisions to make regarding the financial improvements, margins and
profitability and these decisions will need to be evaluated in light of the
customers, markets, competitors, products, industry and internal factors.
The scenarios given isolate a number of the most important factors and
provide balance sheet forecasts for each of the scenarios.
provides a short and medium term forecast covering the next 6 years for each
of Forecast Financial and Operational items. The Financial and Operational
Data sections show each of the items listed below in terms of forecast data
and covers a period of the next 6 years.