Wednesday, August 31, 2011

Management Theories # 31 - Twelve principles of efficiency

In United States Congress after the hearing about problem of railway transportation expenses, Emerson published his " principle of 12 letters efficiency".

Harrington Emerson proposed 12 principles of efficiency:

  • Clearly defined ideals.

  • Common sense
  • Competent counsel
  • Discipline
  • The fair deal
  • Reliable, immediate and adequate records
  • Despatching
  • Standards and schedules
  • Standardized conditions
  • Standardized operations
  • Written standard-practice instructions
  • Efficiency-reward

Tuesday, August 30, 2011

Management Theories # 30 - M-Form Society

In THE M-FORM SOCIETY, Ouchi William shows how much government can learn from business management. The strongest companies are M-Form — multidivisional — where middle managers may compete with each other but work together to iron out their differences before approaching top management with unified proposals. This idea of management teamwork can be successfully applied to society to achieve striking results.

The book identifies three basic elements of an M-Form society and shows how they must interact to be effective:

* strong interlocking trade associations — active forces pushing for new business initiatives and supporting basic research and development that benefits everyone;
* a responsive governmental organization — a nonpartisan forum for decision making on business issues of national importance and for implementing new initiatives;
* the active participation of banks — if banks become stockholders of corporations, they can ensure a more stable capitalization of business.

Many attribute Japan's success in the world economy to central planning, yet this book points out that Japan is actually an M-Form society and shows how competing businesses learned to work together to foster the spectacular rise of Japan's computer industry. America has its own M-Form success stories — like Minneapolis, a city that "really works."

In THE M-FORM SOCIETY Ouchi asserts that the United States can move ahead significantly if we throw off our addiction to adversarial competition and instead emphasize the teamwork necessary in an M-Form society. He presents a bold action agenda for achieving this transformation with specific recommendations for both business and government.

The time for criticizing ourselves is past, Ouchi says. Rather it is time to look ahead, time to establish the teamwork we need, time for action.


Monday, August 29, 2011

Management Theories # 29 - Bricks and Clicks Model

Capability Maturity Model

The Capability Maturity Model model is an organizational model that describes 5 evolutionary stages (levels) in which an organization manages its processes.

Capability Maturity Model (CMM) describes 5 evolutionary stages in which an organization manages its processes. The thought behind the Capability Maturity Model, originally developed for software development, is that an organization should be able to absorb and carry its software applications. The model also provides specific steps and activities to get from one level to the next.
The 5 stages of the Capability Maturity Model

The 5 stages of the Capability Maturity Model are:

1. Initial (processes are ad-hoc, chaotic, or actually few processes are defined)

2. Repeatable (basic processes are established and there is a level of discipline to stick to these processes)

3. Defined (all processes are defined, documented, standardized and integrated into each other)

4. Managed (processes are measured by collecting detailed data on the processes and their quality)

5. Optimizing (continuous process improvement is adopted and in place by quantitative feedback and from piloting new ideas ands technologies)

The Capability Maturity Model is useful not only for software development, but also for describing evolutionary levels of organizations in general and in order to describe the level of Value Based Management that an organization has realized or wants to aim for.

Sunday, August 28, 2011

Management Theories # 28 - Action Centred Leadership

The concept of Action-Centred Leadership was created by leadership management guru John Adair whilst lecturing at the Royal Military Academy Sandhurst, and remains his best known work.

The Action-Centred Leadership model uses three circles to link the three key elements of leadership, the task needs, the team needs, and the individual needs, in a simple but effective tool for leadership development.

Responsibilities to the task include:

  • Define the task
  • Identify available resources
  • Formulate a plan
  • Delegate responsibility
  • Set quality standards
  • Maintain control
  • Keep to schedule
  • Report to higher authority
  • Assess progress and adjust plans as appropriate

Responsibilities to the team include:

  • Establish and communicate acceptable performance standards
  • Establish and communicate acceptable ethical standards
  • Maintain discipline and focus
  • Proactively resolve conflicts
  • Encourage team spirit
  • Motivate the team
  • Establish leadership roles within the team
  • Establish and maintain effective communication

Responsibilities to the individual include:

  • Understand individuals, their strengths, skills, personality, and needs
  • Support and assist individuals
  • Acknowledge effort and good work
  • Identify individual training needs
  • Encourage and develop individual creativity, freedom and authority

Often a leader will be operating in just one or two of the areas, the three circle model helps leaders plot exactly where they are and help develop their own leadership skills to take advantage more fully of the resources available from a whole team to get the task done.

Saturday, August 27, 2011

Management Theories # 27 - Organizational Learning

Chris Argyris and Donald Schön (1978) defined organizational learning as: "the detection and correction of error". Fiol and Lyles later define learning as "the process of improving actions through better knowledge and understanding" (1985).

Dodgson describes organizational learning as "the way firms build, supplement, and organize knowledge and routines around their activities and within their cultures and adapt and develop organizational efficiency by improving the use of the broad skills of their workforces" (1993). Huber states that learning occurs in an organization "if through its processing of information, the range of its [organization's] potential behaviors is changed" (1991).

A "learning organization" is a firm that purposefully constructs structures and strategies so as to enhance and maximize Organizational Learning (Dodgson, 1993). The concept of a learning organization has become popular since organizations want to be more adaptable to change.

Learning is a dynamic concept and it emphasizes the continually changing nature of organizations. The focus is gradually shifting from individual learning to organizational learning. Just as learning is essential for the growth of individuals, it is equally important for organizations.

Since individuals form the bulk of the organization, they must establish the necessary forms and processes to enable organizational learning in order to facilitate change.

Organizational learning is more than the sum of the parts of individual learning (Dodgson, 1993; Fiol & Lyles, 1985). An organization does not lose out on its learning abilities when members leave the organization. Organizational learning contributes to organizational memory. Thus, learning systems not only influence immediate members but also future members due to the accumulation of histories, experiences, norms, and stories.

Creating a learning organization is only half the solution to a challenging problem (Prahalad & Hamel, 1994). Equally important is the creation of an unlearning organization which essentially means that the organization must forget some of its past. Thus, learning occurs amidst such conflicting factors (Dodgson, 1993).

Friday, August 26, 2011

Management Theories # 26 - Lewin's Leadership Styles

Kurt Lewin and colleagues did leadership decision experiments in 1939 and identified three different styles of leadership, in particular around decision-making.

Autocratic Leadership

In the autocratic style, the leader takes decisions without consulting with others. The decision is made without any form of consultation. In Lewin's experiments, he found that this caused the most level of discontent.

An autocratic style works when there is no need for input on the decision, where the decision would not change as a result of input, and where the motivation of people to carry out subsequent actions would not be affected whether they were or were not involved in the decision-making.

Democratic Leadership

In the democratic style, the leader involves the people in the decision-making, although the process for the final decision may vary from the leader having the final say to them facilitating consensus in the group.

Democratic decision-making is usually appreciated by the people, especially if they have been used to autocratic decisions with which they disagreed. It can be problematic when there are a wide range of opinions and there is no clear way of reaching an equitable final decision.


The laissez-faire style is to minimize the leader's involvement in decision-making, and hence allowing people to make their own decisions, although they may still be responsible for the outcome.

Laissez-faire works best when people are capable and motivated in making their own decisions, and where there is no requirement for a central coordination, for example in sharing resources across a range of different people and groups.

Discussion about Lewin's Leadership Styles

In Lewin et al's experiments, he discovered that the most effective style was Democratic. Excessive autocratic styles led to revolution, whilst under a Laissez-faire approach, people were not coherent in their work and did not put in the energy that they did when being actively led.

These experiments were actually done with groups of children, but were early in the modern era and were consequently highly influential.

Thursday, August 25, 2011

Management Theories # 25 - Team Role Model

Meredith Belbin's Team-Role Theory

The team–role theory of Meredith Belbin was based on extensive research and observation of managers. From this, 9 successful clusters of behaviour were identified.

3 Action oriented team roles – Shaper, Implementer and Completer Finisher

3 People oriented team roles – Co-ordinator, Teamworker and Resource Investigator

3 Cerebral oriented team roles – Plant, Monitor Evaluator and Specialist.

By using Belbin’s questionnaires or specialised software, team’s can find out their behavioural tendencies and adjust roles, behaviours or members accordingly.

Dr Meredith Belbin - Team Roles

Born 1926. Dr Meredith Belbin is a widely respected expert and adviser on organisations and teams. He is best known for his team-role theory enabling better understanding of the roles played by team members and how team interactions can be adjusted to increase team effectiveness.


Wednesday, August 24, 2011

Management Theories # 24 - Balanced Scorecard

The balanced scorecard is a strategic planning and management system used to align business activities to the vision and strategy of the organization, improve internal and external communications and monitor organization performance against strategic goals.

The balanced scorecard suggests we view 4 critical perspectives of our business:

Learning & growth: includes training, learning, corporate culture and attitudes, self growth. Individuals are the main repository of knowledge of an organisation and the critical resource. Communication among workers is key, as is avoiding brain drain.

Business process: Metrics based on internal business processes allow management to monitor how well the business is running and wether it’s products/services are well accepted by clients.

Customer: Indicators on customer satisfaction and tools to improve and monitor customer relations are critical

Financial: Timely and accurate financial data is still a key to manage the business. Data should be centralised and of fast and easy access, but financial data should not be the only indicator, thus the original intention of the word “balanced”.

The Balanced Scorecard automates and centralizes the issuance and tracking of objectives, targets, measures and initiatives.

The Balanced Scorecard (BSC) began as a concept for measuring whether the smaller-scale operational activities of a company are aligned with its larger-scale objectives in terms of vision and strategy. It was developed and first used at Analog Devices in 1987.

By focusing not only on financial outcomes but also on the human issues, the Balanced Scorecard helps provide a more comprehensive view of a business, which in turn helps organizations act in their best long-term interests.

The strategic management system helps managers focus on performance metrics while balancing financial objectives with customer, process and employee perspectives. Measures are often indicators of future performance. In 1992, Robert S. Kaplan and David P. Norton began publicizing the Balanced Scorecard through a series of journal articles. In 1996, they published the book The Balanced Scorecard.

Tuesday, August 23, 2011

Management Theories # 23 - Bricks and Clicks Model

Bricks-and-clicks is a business model by which a company integrates both offline (bricks) and online (clicks) presences. It is also known as click-and-mortar or clicks-and-bricks, as well as bricks, clicks and flips, flips referring to catalogs.

One example of the bricks-and-clicks model is when a chain of stores allows the user to order products online, but lets them pick up their order at a local store. Conversely, a furniture store may have displays at a local store from which a customer can order an item electronically for delivery to their home.

The bricks and clicks model has typically been used by traditional retailers who have extensive logistics and supply chains. Part of the reason for its success is that it is far easier for a traditional retailer to establish an online presence than it is for a start-up company to employ a successful pure "dot com" strategy, or for an online retailer to establish a traditional presence (including a strong brand).

The success of the model in many sectors has destroyed the credibility of analysts who argued that the Internet would render traditional retailers obsolete through disintermediation.

"On the other hand, an online-only service can remain a best-in-class operation because its executives focus on just the online business." It has been argued that a bricks-and-clicks business model is more difficult to implement than an online-only model.

In the future, the bricks-and-clicks may be more successful, but in 2010 some online-only businesses grew at a staggering 30%, while some bricks-and-clicks businesses grew at a paltry 3%.

The key factor for a bricks-and-clicks business model to be successful "will, to a large extent, be determined by a company’s ability to manage the trade-offs between separation and integration" of their retail and online businesses.

Monday, August 22, 2011

Management Theories # 22 - Benchmarking concepts

Benchmarking is a systematic comparison of organizational processes and performance to create new standards or to improve processes. Benchmarking models are used to determining how well a business unit, division, organization or corporation is performing compared with other similar organizations.

A Benchmark is often used for improving communication, professionalizing the organization / processes or for budgetary reasons. Traditionally, performance measures have been compared with previous measures from the same organization at different times. Although this can be a good indication of the rate of improvement within the organization, it could be that although the organization is improving, the competition is improving faster.

Benchmarking (also "best practice benchmarking" or "process benchmarking") is a process used in management and particularly strategic management, in which organizations evaluate various aspects of their processes in relation to best practice, usually within their own sector. This then allows organizations to develop plans on how to adopt such best practice, usually with the aim of increasing some aspect of performance. Benchmarking may be a one-off event, but is often treated as a continuous process in which organizations continually seek to challenge their practices.

There are four types of benchmarking methods:
1. internal (benchmark within a corporation, for example between business units)
2. competitive (benchmark performance or processes with competitors)
3. functional (benchmark similar processes within an industry)
4. generic (comparing operations between unrelated industries)

Typically, benchmarking models involves the following steps:
- scope definition
- choose benchmark partner(s)
- determine measurement methods, units, indicators and data collection method
- data collection
- analysis of the discrepancies
- present the results and discuss implications / improvement areas and goals
- make improvement plans or new procedures
- monitor progress and plan ongoing benchmark.

Benchmarking is a tough process that needs a lot of commitment to succeed. More than once benchmarking projects end with the 'they are different from us' syndrome or competitive sensitivity prevents the free flow of information that is necessary. However comparing performances and processes with 'best in class' is important and should ideally be done on a continuous basis (the competition is improving its processes also).

Historically, benchmarking is based on Kaizen and competitive advantage thinking.

Sunday, August 21, 2011

Management Theories # 21 - 5 bases of social power

Processes of power are pervasive, complex, and often disguised in our society.

The Bases of Social Power of French and Raven is a theory that identifies five (six) bases or sources of social (organizational) power:

  • Reward Power (based on the perceived ability to give positive consequences or remove negative ones)
  • Coercive Power (the perceived ability to punish those who not conform with your ideas or demands)
  • Legitimate Power (organizational authority) (based on the perception that someone has the right to prescribe behavior due to election or appointment to a position of responsibility)
  • Referent Power (through association with others who possess power)
  • Expert Power (based on having distinctive knowledge, expertness, ability or skills)
  • Similar to 5: Information Power (based on controlling the information needed by others in order to reach an important goal)

The Five Bases of Social Power theory starts from the premise that power and influence involve relations between at least two agents, and theorizes that the reaction of the recipient agent is the more useful focus for explaining the phenomena of social influence and power.

French and Raven examined the effect of power derived from the various bases of attraction (the recipient's sentiment towards the agent who uses power) and resistance to the use of power.

They conclude that the use of power from the various bases has different consequences.

For example, coercive power typically decreases attraction and causes high resistance, whereas reward power increases attraction and creates minimal levels of resistance.

French and Raven also concluded that "the more legitimate the coercion [is perceived to be], the less it ill produce resistance and decreased attention".

Saturday, August 20, 2011

Management Theories # 20 - 8 Attributes of Management Excellence

The Eight Attributes of Management Excellence of Tom Peters and Bob Waterman were described in their management classic "In Search of Excellence".

The Eight Attributes of Management Excellence are:
  • A Bias for Action
  • Close to the Customer
  • Autonomy and Entrepreneurship
  • Productivity through People
  • Hands-on, Value-driven
  • Stick to the Knitting
  • Simple Form, Lean Staff
  • Simultaneous loose-tight Properties.

The last attribute (Simultaneous loose-tight Properties) is a summary of the other 7, according to Peters and Waterman.

"Simultaneous loose-tight properties is in essence the coexistence of firm central direction and maximum individual autonomy... Organizations that live by the loose-tight principle are on the one hand rigidly controlled, yet at the same time allow (indeed, insist on) autonomy, entrepreneurship, and innovation from the rank and file".

Friday, August 19, 2011

Management Theories # 19 - The Kaizen concept

The Kaizen method of continuous incremental improvements is an originally Japanese management concept for incremental (gradual, continuous) change (improvement). K. is actually a way of life philosophy, assuming that every aspect of our life deserves to be constantly improved.

The Kaizen philosophy lies behind many Japanese management concepts such as Total Quality Control, Quality Control circles, small group activities, labor relations. Key elements of Kaizen are quality, effort, involvement of all employees, willingness to change, and communication.

Japanese companies distinguish between innovation (radical) and Kaizen (continuous). K. means literally: change (kai) to become good (zen).

The foundation of the Kaizen method consists of 5 founding elements:

1. teamwork,

2. personal discipline,

3. improved morale,

4. quality circles, and

5. suggestions for improvement.

Out of this foundation three key factors in K. arise:

- elimination of waste (muda) and inefficiency

- the Kaizen five-S framework for good housekeeping

1. Seiri - tidiness

2. Seiton - orderliness

3. Seiso - cleanliness

4. Seiketsu - standardized clean-up

5. Shitsuke - discipline

- standardization.

When to apply the Kaizen philosophy?

Although it is difficult to give generic advice it is clear that it fits well in incremental change situations that require long-term change and in collective cultures. More individual cultures that are more focused on short-term success are often more conducive to concepts such as Business Process Reengineering.

When Kaizen is compared to BPR is it clear the K. philosophy is more people-oriented, more easy to implement, requires long-term discipline. BPR on the other hand is harder, technology-oriented, enables radical change but requires major change management skills.

Thursday, August 18, 2011

Management Theories # 18 - The BPR concept

The Business Process Reengineering method (BPR) is defined by Hammer and Champy as 'the fundamental reconsideration and radical redesign of organizational processes, in order to achieve drastic improvement of current performance in cost, service and speed'.

Value creation for the customer is the leading factor for BPR and information technology often plays an important enabling role.

Davenport (1992) prescribes a five-step approach to the Business Process Reengineering model:

1. Develop the business vision and process objectives: The BPR method is driven by a business vision which implies specific business objectives such as cost reduction, time reduction, output quality improvement.

2. Identify the business processes to be redesigned: most firms use the 'High- Impact' approach which focuses on the most important processes or those that conflict most with the business vision. Lesser number of firms use the 'Exhaustive approach' that attempts to identify all the processes within an organization and then prioritize them in order of redesign urgency.

3. Understand and measure the existing processes: for avoiding the repeating of old mistakes and for providing a baseline for future improvements.

4. Identify IT levers: awareness of IT capabilities can and should influence BPR.

5. Design and build a prototype of the new process: the actual design should not be viewed as the end of the BPR process. Rather, it should be viewed as a prototype, with successive iterations. The metaphor of prototype aligns the Business Process Reengineering approach with quick delivery of results, and the involvement and satisfaction of customers.

As a 6th step of the BPR method some mention to adapt the organizational structure and governance model towards the newly designed primary process.

When should BPR be used?

Although it is difficult to give generic advice on this, some factors that can be considered are:

- is the competition outperforming the company by factors?

- are there many conflicts in the organization?

- is there an extremely high frequency of meetings?

- excessive use of non-structured communication? (memos, emails, etc)

- is a more continuous approach of incremental improvements not possible? (see: Kaizen).

When Kaizen is compared to the BPR method is it clear the Kaizen philosophy is more people-oriented, more easy to implement, requires long-term discipline.

The Business Process Reengineering approach on the other hand is harder, technology-oriented, enables radical change but requires major change management skills.

Wednesday, August 17, 2011

Management Theories # 17 - McKinsey 7-S Model

The 7-S framework of McKinsey is a Value Based Management (VBM) model that describes how one can holistically and effectively organize a company.

Together these factors determine the way in which a corporation operates.

Shared Value

The interconnecting center of McKinsey's model is: Shared Values. What does the organization stands for and what it believes in. Central beliefs and attitudes.


Plans for the allocation of a firms scarce resources, over time, to reach identified goals. Environment, competition, customers.


The way the organization's units relate to each other: centralized, functional divisions (top-down); decentralized (the trend in larger organizations); matrix, network, holding, etc.


The procedures, processes and routines that characterize how important work is to be done: financial systems; hiring, promotion and performance appraisal systems; information systems.


Numbers and types of personnel within the organization.


Cultural style of the organization and how key managers behave in achieving the organization’s goals. Management Styles.


Distinctive capabilities of personnel or of the organization as a whole. Core Competences.

Tuesday, August 16, 2011

Management Theories # 16 - The Deming Cycle

The Deming cycle, or PDSA cycle, is a continuous quality improvement model consisting of a logical sequence of four repetitive steps for continuous improvement and learning: Plan, Do, Study (Check) and Act.

The PDCA cycle is also known as the Deming Cycle, or as the Deming Wheel or as the Continuous Improvement Spiral. It originated in the 1920s with the eminent statistics expert Mr. Walter A. Shewhart, who introduced the concept of PLAN, DO and SEE.

The late Total Quality Management (TQM) guru and renowned statistician Edwards Deming modified the Shewart cycle as: PLAN, DO, STUDY, and ACT.

Along with the other well-known American quality guru-Joseph Juran, Edwards Deming went to Japan as part of the occupation forces of the allies after World War II. Deming taught a lot of Quality Improvement methods to the Japanese, including the usage of statistics and the PLAN, DO, STUDY, ACT cycle.

At all levels of the organization we:

  • Plan what we are going to do. In this step we assess where we are, where we need to be, why this is important, and plan how to close the gap. Identify some potential solutions.
  • Do try out or test the solutions (sometimes at a pilot level).
  • Check to see if the countermeasures you tried out had the effect you hoped for, and make sure that there are no negative consequences associated with them. Assess if you have accomplished your objective.
  • Act on what you have learned. If you have accomplished your objective, put controls into place so that the issue never comes back again. If you have not accomplished your objective, go through the cycle again, starting with the Plan step.

Frequently, a particular project will define sub-objectives, run thorough the PDCA cycle one or more times to accomplish the sub-objective, then define the next objective and go through the cycle again. Thus, many projects end up "turning the wheel" many times before completion. In ongoing management activities, we find a similar use of the cycle.

What we are trying to avoid by using the PDCA discipline is the "Ready, Fire, Aim" fallacy where people jump to the solution without identifying the problem and assessing if their proposed solution fixes it, or even results in another problem. The Act step makes sure we don't have to fix it again in a couple of years.

Monday, August 15, 2011

Management Theories # 15 - Blue Sky Approach

Blue Sky is one of the approaches for identifying planning issues and is helpful to begin the planning process by formulating a vision of an ideal future, unconstrained by current conditions. This is basically the "Blue-Sky" approach to planning.

Under this approach, citizens engage in a creative "visioning process" through which they attempt to produce mental images and rich verbal descriptions of what they would ideally like their community to be.

Formulation of this "vision" then sets the basic framework that defines the issues that the planning process seeks to address.

Vision-oriented planning can be effective when there is general agreement about what makes a community special, and about what the community should look like in the future.

It can also work well in settings and communities where citizens are not afraid of change, where citizens are receptive to new ideas, and where there is a climate of respect for expression of divergent views.

Sunday, August 14, 2011

Management Theories # 14 - Blue Ocean Strategy

Blue Ocean Strategy is a business strategy book that promotes a systematic approach "for making the competition irrelevant." The authors, W.Chan Kim and Renée Mauborgne, are professors of Strategy and Management at INSEAD ( is an international graduate business school and research institution with campuses in France and in Singapore).

A core idea is to create a leap in value for both the company and its buyers by breaking the differentiation/low cost trade-off and to align product value and profit propositions.

Blue Ocean Strategy is the result of a decade-long study of 150 strategic moves spanning more than 30 industries over a period of 120 years (1880-2000).

In addition to retrospective case studies, the book offers theoretical approaches and practical tools to create and capture "blue oceans" of uncontested market space ripe for growth.

Kim and Mauborgne argue that tomorrow’s leading companies will succeed not by battling competitors, but by creating these “blue oceans”.

This best seller sold more than a million copies in its first year of publication and is being published in 39 languages.

A quick snapshot of the concept is represented below:

For further details, visit the official website at or check out

Saturday, August 13, 2011

Management Theories # 13 - Emotional Intelligence

When psychologists began to write and think about intelligence, they initially focused on cognitive aspects, such as memory and problem-solving. However, there have been researchers who recognized early on that the non-cognitive aspects were also important:
  • Robert Thorndike was writing about social intelligence in 1937,
  • David Wechsler defined intelligence as the aggregate or global capacity of the individual to act purposefully, to think rationally, and to deal effectively with his environment (Wechsler, 1958, p. 7). As early as 1940 Wechsler referred to non-intellective as well as intellective elements (Wechsler, 1940), by which he meant affective, personal, and social factors. Furthermore, as early as 1943 Wechsler was proposing that the non-intellective abilities are essential for predicting ones ability to succeed in life.
  • Howard Gardner began to write about multiple intelligence in 1983, when he proposed that intrapersonal and interpersonal intelligences are as important as the type of intelligence typically measured by IQ and related tests.
  • Salovey and Mayer actually coined the term emotional intelligence in 1990. They described emotional intelligence as "a form of social intelligence that involves the ability to monitor ones own and others feelings and emotions, to discriminate among them, and to use this information to guide ones thinking and action" (Salovey & Mayer, 1990). Salovey and Mayer also initiated a research program intended to develop valid measures of emotional intelligence and to explore its significance.

The Five (Four) Domains of Emotional Intelligence

  • Knowing one's emotions (self-awareness - recognizing a feeling as it happens)
  • Managing emotions (the ability of handling feelings so they are appropriate)
  • Motivating oneself (marshalling emotions in the service of a goal)
  • Recognizing emotions in others (empathy, social awareness)
  • Handling relationships (skill in managing emotions in others)

IQ or EI?

According to some scientists, IQ by itself is NOT a very good predictor of job performance. Hunter and Hunter (1984) estimated that at best IQ accounts for about 25 percent of the variance. Sternberg (1996) has pointed out that studies vary and that 10 percent may be a more realistic estimate.

In some studies, IQ accounts for as little as 4 percent of the variance. In a recent meta-analysis examining the correlation and predictive validity of EI when compared to IQ or general mental ability, Van Rooy and Viswesvaran (2004) found IQ to be a better predictor of work and academic performance than EI.

However, when it comes to the question of whether a person will become a “star performer” (in the top ten percent, however such performance is appropriately assessed) within that role, or be an outstanding leader, IQ may be a less powerful predictor than emotional intelligence (Goleman 1998, 2001, 2002).

Friday, August 12, 2011

Management Theories # 12 - Fishbone Diagram

The fishbone diagram (or Ishikawa diagram or also cause-and-effect diagram) is the brainchild of Kaoru Ishikawa, who pioneered quality management processes in the Kawasaki shipyards, and in the process became one of the founding fathers of modern management.

It is simply a diagram that shows the causes of a certain event. It was first used in the 1960s, and is considered one of the seven basic tools of quality management, along with the histogram, Pareto chart, check sheet, control chart, flowchart, and scatter diagram. See Quality Management Glossary.

It is known as a fishbone diagram because of its shape, similar to the side view of a fish skeleton.

Causes in the diagram are often based around a certain category or set of causes, such as the 6 M's, 8 P's or 4 S's described below. Cause-and-effect diagrams can reveal key relationships among various variables, and the possible causes provide additional insight into process behaviour.

Causes in a typical diagram are normally arranged into categories, the main ones of which are:

The 6 M's

Machine, Method, Materials, Measurement, Man and Mother Nature (Environment) (recommended for manufacturing industry).

Note: a more modern selection of categories used in manufacturing includes Equipment, Process, People, Materials, Environment, and Management.

The 8 P's

Price, Promotion, People, Processes, Place / Plant, Policies, Procedures & Product (or Service) (recommended for administration and service industry).

The 4 S's

Surroundings, Suppliers, Systems, Skills (recommended for service industry).

It can also be used in connection with the Neuro-linguistic programming model of the Neurological Levels created by Robert Dilts: with Identity, Beliefs and Values, Capability, Behaviour, Environment.

A common use of the Ishikawa diagram is in product design, to identify desirable factors leading to an overall effect. Mazda Motors famously used an Ishikawa diagram in the development of the Miata sports car, where the required result was "Jinba Ittai" or "Horse and Rider as One". The main causes included such aspects as "touch" and "braking" with the lesser causes including highly granular factors such as "50/50 weight distribution" and "able to rest elbow on top of driver's door". Every factor identified in the diagram was included in the final design.

Appearance of Fishbone Diagrams

Most Fishbone diagrams have a box at the right hand side in which is written the effect that is to be examined. The main body of the diagram is a horizontal line from which stem the general causes, represented as "bones". These are drawn towards the left-hand side of the paper and are each labeled with the causes to be investigated, often brainstormed beforehand and based on the major causes listed above.

Off each of the large bones there may be smaller bones highlighting more specific aspects of a certain cause, and sometimes there may be a third level of bones or more. These can be found using the '5 Whys' technique.

When the most probable causes have been identified, they are written in the box along with the original effect. The more populated bones generally outline more influential factors, with the opposite applying to bones with fewer "branches". Further analysis of the diagram can be achieved with a Pareto chart.

Thursday, August 11, 2011

Management Theories # 11 - ERG Theory

To address some of the limitations of Maslow's hierarchy as a theory of motivation, Clayton Alderfer proposed the ERG theory, which like Maslow's theory, describes needs as a hierarchy.

The letters ERG stand for three levels of needs: Existence, Relatedness, and Growth. The ERG theory is based on the work of Maslow, so it has much in common with it but also differs in some important aspects.

Similarities to Maslow's Hierarchy

Studies had shown that the middle levels of Maslow's hierarchy have some overlap; Alderfer addressed this issue by reducing the number of levels to three. The ERG needs can be mapped to those of Maslow's theory as follows:
  • Existence: Physiological and safety needs
  • Relatedness: Social and external esteem needs
  • Growth: Self-actualization and internal esteem needs

Like Maslow's model, the ERG theory is hierarchical - existence needs have priority over relatedness needs, which have priority over growth.

Differences from Maslow's Hierarchy

In addition to the reduction in the number of levels, the ERG theory differs from Maslow's in the following three ways:
  • Unlike Maslow's hierarchy, the ERG theory allows for different levels of needs to be pursued simultaneously.
  • The ERG theory allows the order of the needs be different for different people.
  • The ERG theory acknowledges that if a higher level need remains unfulfilled, the person may regress to lower level needs that appear easier to satisfy. This is known as the frustration-regression principle.
Thus, while the ERG theory presents a model of progressive needs, the hierarchical aspect is not rigid. This flexibility allows the ERG theory to account for a wider range of observed behaviors. For example, it can explain the "starving artist" who may place growth needs above existence ones.

Implications of ERG Theory for Management

If the ERG theory holds, then unlike with Maslow's theory, managers must recognize that an employee has multiple needs to satisfy simultaneously. Furthermore, if growth opportunities are not provided to employees, they may regress to relatedness needs.

If the manager is able to recognize this situation, then steps can be taken to concentrate on relatedness needs until the subordinate is able to pursue growth again.

Wednesday, August 10, 2011

Management Theories # 10 - Leadership Continuum

The Leadership Continuum model of Tannebaum and Schmidt (1973) suggests that autocratic leaders are more likely to make their own decisions and not engage their subordinates, whereas a more democratic leader (laissez-faire manager) gives subordinates a greater degree of delegation in decision-making.

In 1938, Lewin and Lippitt proposed classifications of leaders based on how much involvement leaders placed into task and relationship needs. This range of leadership behaviors was expressed along a continuum by Tannebaum & Schmidt in 1973, ranging from boss-centered (task) to subordinate-centered (relationship).To choose the most appropriate style and use of authority, the leader must consider:

  1. Forces in the manager: belief in team member participation and confidence in capabilities of members.
  2. Forces in the subordinate: subordinates who are independent, tolerant of ambiguity, competent, identify with organizational goals.
  3. Forces in the situation: team has requisite knowledge, team hold organizational values and traditions, teams work effectively.
  4. Time pressure: need for immediate decision under pressure mitigates against participation.
Advantages of the Leadership Continuum Model include:
  • Gives managers a range of choices for involvement.
  • Presents criteria for involvement and delegation.
  • Focuses decision maker on relevant criteria (e.g., forces & time).
  • Emphasizes employee development and empowerment.
  • Is heuristic--encourages research to see how effective delegation may be under the model.
Some limitations of the Leadership Continuum theory:
  • Involves only the initial step of assigning a task to someone, not the following processes that may determine the effectiveness of the outcome.
  • Assumes the manager has sufficient information to determine disposition to self or team.
  • Assumes "neutral" environment without social bonds or politics.
  • Simplifies complex decisions to a two-polar dimension; more simple than reality is.

Tuesday, August 9, 2011

Management Theories # 9 - Hawthorne effect

The Hawthorne effect describes a temporary change to behavior or performance in response to a change in the environmental conditions, with the response being typically an improvement.

The term was coined in 1955 by Henry A. Landsberger when analyzing older experiments from 1924-1932 at the Hawthorne Works (outside Chicago). Landsberger defined the Hawthorne effect as:

Hawtorne effect is a short-term improvement caused by observing worker performance.

Earlier researchers had concluded the short-term improvement was caused by teamwork when workers saw themselves as part of a study group or team. Others have broadened the definition to mean that people's behavior and performance change following any new or increased attention. Hence, the term Hawthorne effect no longer has a specific definition.

The Hawthorne studies have had a dramatic effect on management in organizations and how people react to different situations.

Although illumination research of workplace lighting formed the basis of the Hawthorne effect, other changes such as maintaining clean work stations, clearing floors of obstacles, and even relocating workstations resulted in increased productivity for short periods of time. Thus the term is used to identify any type of short-lived increase in productivity.

In short, people will be more productive when appreciated or when watched.

The term Hawthorne effect has been linked with numerous other terms, including: epistemic feedback, systemic bias, implicit social cognition, and continuous improvement.

Monday, August 8, 2011

Management Theories # 8 - Management by Objectives

Management by Objectives (MBO) is a process of defining objectives within an organization so that management and employees agree to the objectives and understand what they need to do in the organization.

The term "management by objectives" was first popularized by Peter Drucker in his 1954 book 'The Practice of Management'.

The essence of MBO is participative goal setting, choosing course of actions and decision making. An important part of the MBO is the measurement and the comparison of the employee’s actual performance with the standards set. Ideally, when employees themselves have been involved with the goal setting and choosing the course of action to be followed by them, they are more likely to fulfill their responsibilities.

According to George S. Odiorne, the system of management by objectives can be described as a process whereby the superior and subordinate managers of an organization jointly identify its common goals, define each individual's major areas of responsibility in terms of the results expected of him, and use these measures as guides for operating the unit and assessing the contribution of each of its members.

Unique features and advantages of the MBO process

The basic principle behind Management by Objectives (MBO) is for employees to have a clear understanding of the roles and responsibilities expected of them. They can then understand how their activities relate to the achievement of the organization's goal. MBO also places importance on fulfilling the personal goals of each employee.

Some of the important features and advantages of MBO are:

  • Motivation – Involving employees in the whole process of goal setting and increasing employee empowerment. This increases employee job satisfaction and commitment.
  • Better communication and Coordination – Frequent reviews and interactions between superiors and subordinates helps to maintain harmonious relationships within the organization and also to solve many problems.
  • Clarity of goals
  • Subordinates tend to have a higher commitment to objectives they set for themselves than those imposed on them by another person.
  • Managers can ensure that objectives of the subordinates are linked to the organization's objectives.

Sunday, August 7, 2011

Management Theories # 7 - Theory of Planned Behavior

The Theory of Planned Behavior (TPB) of Icek Ajzen (1988, 1991) helps to understand how we can change the behavior of people. The TPB is a theory which predicts deliberate behavior, because behavior can be deliberative and planned.

TPB is the successor of the similar Theory of Reasoned Action of Ajzen and Fishbein (1975, 1980). The succession was the result of the discovery that behavior appeared not to be 100% voluntary and under control, which resulted in the addition of perceived behavioral control. With this addition the theory was called the Theory of Planned Behavior.

Briefly, according to TPB, human action is guided by three kinds of considerations:

1. Behavioral Beliefs (beliefs about the likely consequences of the behavior)
2. Normative Beliefs (beliefs about the normative expectations of others)
3. Control Beliefs (beliefs about the presence of factors that may facilitate or impede performance of the behavior).

Ajzen's three considerations are crucial in circumstances / projects / programs when changing behavior of people.

In their respective aggregates, behavioral beliefs produce a favorable or unfavorable attitude toward the behavior, normative beliefs result in perceived social pressure or subjective norm, and control beliefs give rise to perceived behavioral control. In combination, attitude toward the behavior, subjective norm, and perception of behavioral control lead to the formation of a behavioral intention.

As a general rule, the more favorable the attitude and subjective norm and the greater the perceived control, the stronger should be the person’s intention to perform the behavior in question.

Recently (2002) Ajzen investigated Residual Effects of Past on Later Behavior. He came to the conclusion that this factor indeed exists but cannot be described to habituation as many people think. A review of existing evidence suggests that the residual impact of past behavior is attenuated when measures of intention and behavior are compatible and vanishes when intentions are strong and well formed, expectations are realistic, and specific plans for intention implementation have been developed.

A research project in the travel industry resulted in the conclusion that past travel choice contributes to the prediction of later behavior only if circumstances remain relatively stable.

Example: The Theory of Planned Behavior of Ajzen can help to explain why advertising campaigns merely providing information do not work. Increasing knowledge alone does not help to change behavior very much. Campaigns that aim at attitudes, perceived norms and control in making the change or buying certain goods have better results.

Saturday, August 6, 2011

Management Theories # 6 - Theory of reasoned action

The theory of reasoned action (TRA), developed by Martin Fishbein and Icek Ajzen (1975, 1980), derived from previous research that started out as the theory of attitude, which led to the study of attitude and behavior. The theory was "born largely out of frustration with traditional attitude–behavior research, much of which found weak correlations between attitude measures and performance of volitional behaviors".

The key application of the theory of reasoned action is prediction of behavioral intention, spanning predictions of attitude and predictions of behavior. The subsequent separation of behavioral intention from behavior allows for explanation of limiting factors on attitudinal influence (Ajzen, 1980).

Derived from the social psychology setting, the theory of reasoned action (TRA) was proposed by Ajzen and Fishbein (1975 & 1980). The components of TRA are three general constructs: behavioral intention (BI), attitude (A), and subjective norm (SN). TRA suggests that a person's behavioral intention depends on the person's attitude about the behavior and subjective norms (BI = A + SN). If a person intends to do a behavior then it is likely that the person will do it.

Behavioral intention measures a person's relative strength of intention to perform a behavior. Attitude consists of beliefs about the consequences of performing the behavior multiplied by his or her valuation of these consequences.Subjective norm is seen as a combination of perceived expectations from relevant individuals or groups along with intentions to comply with these expectations. In other words, "the person's perception that most people who are important to him or her think he should or should not perform the behavior in question" (Ajzen & Fishbein, 1975).

To put the definition into simple terms: a person's volitional (voluntary) behavior is predicted by his/her attitude toward that behavior and how he/she thinks other people would view them if they performed the behavior. A person's attitude, combined with subjective norms, forms his/her behavioral intention.

Fishbein and Ajzen say, though, that attitudes and norms are not weighted equally in predicting behavior. "Indeed, depending on the individual and the situation, these factors might be very different effects on behavioral intention; thus a weight is associated with each of these factors in the predictive formula of the theory. For example, you might be the kind of person who cares little for what others think. If this is the case, the subjective norms would carry little weight in predicting your behavior".

The theory of reasoned action has "received considerable and, for the most part, justifiable attention within the field of consumer behavior ... not only does the model appear to predict consumer intentions and behavior quite well, it also provides a relatively simple basis for identifying where and how to target consumers' behavioral change attempts".

Friday, August 5, 2011

Management Theories # 5 - Theory Z

Theory Z is the name applied to the "Japanese Management" style popularized during the Asian economic boom of the 1980s. In contrast Theory X and Theory Y, this Theory Z focused on increasing employee loyalty to the company by providing a job for life with a strong focus on the well-being of the employee, both on and off the job.

According to Dr. William Ouchi, its leading proponent, Theory Z management tends to promote stable employment, high productivity, and high employee morale and satisfaction. Ironically, "Japanese Management" and Theory Z itself were based on Dr. W. Edwards Deming's famous "14 points". Deming, an American scholar whose management and motivation theories were rejected in the United States, went on to help lay the foundation of Japanese organizational development during their expansion in the world economy in the 1980s.

Deming's theories are summarized in his two books, Out of the Crisis and The New Economics, in which he spells out his "System of Profound Knowledge". He was a frequent advisor to Japanese business and government leaders, and eventually became a revered counselor. Deming was awarded the Second Order of the Sacred Treasure by the former Emperor Hirohito, and American businesses ultimately tried unsuccessfully to use his "Japanese" approach to improve their competitive position.

Characteristics of the Theory Z

  • Long-term employment and job security
  • Collective responsibility
  • Implicit, informal control with explicit, formalized measures
  • Collective decision-making
  • Slow evaluation and promotion
  • Moderately specialized careers
  • Concern for a total person, including their family
In essence, Theory Z is a form of management in which workers are involved in the work process on the factory floor. Schedules, division of labor, work assignments, and other aspects of the labor process are given over to workers to do as they see best. Investment policies, wages, fringe benefits and kind of product are not given over to workers to decide; only how best to do that decided by top management.

Theory Z essentially advocates a combination of all that's best about Mcgregor's XY theory and modern Japanese management, which places a large amount of freedom and trust with workers, and assumes that workers have a strong loyalty and interest in team-working and the organisation.

Thursday, August 4, 2011

Management Theories # 4 - Contingency Theories

Contingency theories are a class of behavioral theory that contend that there is no one best way of organizing / leading and that an organizational / leadership style that is effective in some situations may not be successful in others.

In other words, the optimal organization / leadership style is contingent upon various internal and external constraints.

These constraints may include: the size of the organization, how it adapts to its environment, differences among resources and operations activities, managerial assumptions about employees, strategies, technologies used, etc.

Four important ideas of Contingency Theory are:

1. There is no universal or one best way to manage
2. The design of an organizations and its subsystems must 'fit' with the environment
3. Effective organizations not only have a proper 'fit' with the environment but also between its subsystems and
4. The needs of an organization are better satisfied when it is properly designed and the management style is appropriate both to the tasks undertaken and the nature of the work group.

Contingency theory of leadership:

In contingency theory of leadership, the success of the leader is a function of various contingencies in the form of subordinate, task, and/or group variables. The effectiveness of a given pattern of leader behavior is contingent upon the demands imposed by the situation.

These theories stress using different styles of leadership appropriate to the needs created by different organizational situations. No single contingency theory has been postulated.

Some of the theories are:

Fiedler’s contingency theory: Fiedlers theory is the earliest and most extensively researched. Fiedler’s approach departs from trait and behavioral models by asserting that group performance is contingent on the leader’s psychological orientation and on three contextual variables: group atmosphere, task structure, and leader’s power position. This theory explains that group performance is a result of interaction of two factors. These factors are known as leadership style and situational favorableness. In Fiedler's model, leadership effectiveness is the result of interaction between the style of the leader and the characteristics of the environment in which the leader works.

Hersey & Blanchard’s situational theory: This theory is an extension of Blake and Mouton’s Managerial Grid Model and Reddin’s 3-D management style theory. With this model came the expansion of the notion of relationship and task dimensions to leadership and adds a readiness dimension.

Contingency theory of decision making

Vroom and Yetton’s decision participation contingency theory or the Normative decision theory: According to this model, the effectiveness of a decision procedure depends upon a number of aspects of the situation: the importance of the decision quality and acceptance; the amount of relevant information possessed by the leader and subordinates; the likelihood that subordinates will accept an autocratic decision or cooperate in trying to make a good decision if allowed to participate; the amount of disagreement among subordinates with respect to their preferred alternatives.

Contingency theory is similar to situational theory in that there is an assumption of no simple one right way. The main difference is that situational theory tends to focus more on the behaviors that the leader should adopt, given situational factors (often about follower behavior), whereas contingency theory takes a broader view that includes contingent factors about leader capability and other variables within the situation.

Wednesday, August 3, 2011

Management Theories # 3 - Linking Pin Model

The Linking Pin Model is an idea developed by Rensis Likert in which an organisation is represented as a number of overlapping work units in which members of one unit are leaders of another.

In this scheme, the supervisor/manager has the dual task of maintaining unity and creating a sense of belonging within the group he or she supervises and of representing that group in meetings with superior and parallel management staff. These individuals are the linking pins within the organisation and so they become the focus of leadership development activities.

Likert have given the idea of linking pin model for connecting various parts of the organisation.

The model is based on two basic characteristics of the organisation.

First, organisation can be seen as system of interlocking groups; and second, the interlocking groups are connected by individuals who occupy the key positions of dual membership serving as linking pin between groups. Thus every individual functions as a linking pin for the organisation units above and below him. He is the group leader of the lower unit and a group member of the upper unit.

In the linking pin structure a group-to-group, as opposed to traditional man-to-man, relationship exists.


Tuesday, August 2, 2011

Management Theories # 2 - Maslow's Theory of Needs

This is another fundamental theory - the hierarchy of needs theory, propounded by Abraham Maslow.

According to Abraham Maslow, each of us are motivated by needs. Our most basic needs are inborn, having evolved over tens of thousands of years. Abraham Maslow's Hierarchy of Needs helps to explain how these needs motivate us all.

Maslow's Hierarchy of Needs states that we must satisfy each need in turn, starting with the first, which deals with the most obvious needs for survival itself.

Only when the lower order needs of physical and emotional well-being are satisfied are we concerned with the higher order needs of influence and personal development.

Conversely, if the things that satisfy our lower order needs are swept away, we are no longer concerned about the maintenance of our higher order needs.

Maslow's hierarchy of needs

1. Biological and Physiological needs - air, food, drink, shelter, warmth, sex, sleep, etc.

2. Safety needs - protection from elements, security, order, law, limits, stability, etc.

3. Belongingness and Love needs - work group, family, affection, relationships, etc.

4. Esteem needs - self-esteem, achievement, mastery, independence, status, dominance, prestige, managerial responsibility, etc.

5. Self-Actualization needs - realising personal potential, self-fulfillment, seeking personal growth and peak experiences.

1990's adapted Hierarchy of needs including transcendence needs

1. Biological and Physiological needs - air, food, drink, shelter, warmth, sex, sleep, etc.

2. Safety needs - protection from elements, security, order, law, limits, stability, etc.

3. Belongingness and Love needs - work group, family, affection, relationships, etc.

4. Esteem needs - self-esteem, achievement, mastery, independence, status, dominance, prestige, managerial responsibility, etc.

5. Cognitive needs - knowledge, meaning, etc.

6. Aesthetic needs - appreciation and search for beauty, balance, form, etc.

7. Self-Actualization needs - realising personal potential, self-fulfillment, seeking personal growth and peak experiences.

8. Transcendence needs - helping others to achieve self actualization.

Monday, August 1, 2011

Management Theories # 1 - X Theory Y Theory

This month of August - we are now back to Management methods, models and theories. Let us spend some time in understanding few of the very interesting management theories. This is one of my favorite subjects, and I might continue this run another month soon :)

To start with, let us study the X Theory and Y Theory - proposed by Douglas McGregor, an American social psychologist, in his 1960 book 'The Human Side Of Enterprise'.

McGregor's XY Theory remains central to organizational development, and to improving organizational culture. It is a salutary and simple reminder of the natural rules for managing people, which under the pressure of day-to-day business are all too easily forgotten.

McGregor maintained that there are two fundamental approaches to managing people. Many managers tend towards theory x, and generally get poor results. Enlightened managers use theory y, which produces better performance and results, and allows people to grow and develop.

Theory X ('authoritarian management' style - the manager thinks like this)

  • The average person dislikes work and will avoid it he/she can.
  • Therefore most people must be forced with the threat of punishment to work towards organisational objectives.
  • The average person prefers to be directed; to avoid responsibility; is relatively unambitious, and wants security above all else.

Theory Y ('participative management' style - the manager thinks like this)

  • Effort in work is as natural as work and play.
  • People will apply self-control and self-direction in the pursuit of organisational objectives, without external control or the threat of punishment.
  • Commitment to objectives is a function of rewards associated with their achievement.
  • People usually accept and often seek responsibility.
  • The capacity to use a high degree of imagination, ingenuity and creativity in solving organisational problems is widely, not narrowly, distributed in the population.
  • In industry the intellectual potential of the average person is only partly utilised.

In conclusion, McGregor sees Theory Y as the preferable model and management method, however he felt Theory Y might prove difficult to use in large-scale operations.