The Manager's Guide for Effective Leadership

3 Management Strategies

Outline of Lecture 3

•         Management strategies include the principles underlying a particular management style

•         Many management strategies have been used over the years

•         This course is based on a combination of well known strategies

•         The resultant combination is a coherent strategy that has proven to be effective

Management Strategy for Effective Organizations

A management strategy that increases worker motivation and includes continuous process improvement leads to the most effective organizations. We can look at some history of management theory to see how this can be done. Interestingly, different management strategies have been developed by people with very different backgrounds, or what I call “management schools”. Figure 1 is a simplified outline of the strategies that we are interested in for this course and the schools that developed them.

Figure 1 Management Strategies That Form the Basis for Effective Leadership

Effective leadership is derived by combining well known and well proven management strategies. Scientific management was developed in business schools. Fredrick Taylor is the “father of Scientific Management”. It stresses objectivity, measurement, precision and focuses on increased productivity. It appeals to Theory X managers. (If you are not familiar with Theory X and Theory Y managers be patient and we will get to definitions.) This management strategy has evolved to be Management by Objective (MBO) or some variant of MBO. In a typical organization that uses MBO strategic objectives are deployed downward to objectives for all managers. It works reasonably well and is popular in today’s short term focused environment. It is assumed for this course that the students are working in an organization that follows some form of MBO.

The limitation on the effectiveness of basic MBO is typically due to Theory X managers leading a top down driven process that limits employee participation in an organization’s decision making processes and often to over emphasis on management by numbers. Limited participation in decision making on objectives results in workers having limited buy in to the objectives and therefore limited motivation to achieve them. This happens even if rewards are tied to achieving the objectives. Over emphasis on numbers tends to neglect the importance of intuition, business philosophy and what Professor William Ouchi, in his book Theory Z, calls subtlety, i.e. taking into account personal traits and feelings of workers.

The human relations school efforts that resulted in what is popularly called Participative Management, started with Elton Mayo. Mayo did the work at the Hawthorne plant of Western Electric that led to defining the Hawthorne effect. The Hawthorne effect is an organization’s response due just to outside attention. Participative Management has concern for the worker as a human and what motivates humans. It appeals to Theory Y managers. At the name implies Participative Management involves employees much more in the organization’s decision making. Participative Management strategy also works reasonably well. The limitation on the effectiveness of Participative Management is due to Theory Y manager’s overemphasis on trying to keep workers satisfied at the expense of achieving objectives efficiently.

Theory Z was defined by William Ouchi, based on his work and the work of others, and derives from addressing problems organizations face when led by Theory X or Y managers. As he explained in Theory Z, Ouchi believed that it is possible for managers to combine MBO and Participative Management in a way that retains the effectiveness of each without the limitations of each. A Theory Z organization has a well defined mission, business philosophy, and clear objectives. It also trusts employees and involves employees in the decision making process. It balances the importance of numerical measures with the importance of maintaining its core values and the trust and commitment of employees. Professor Ouchi’s research demonstrated that Theory Z organizations achieved higher productivity than either Theory X or Theory Y managed organizations. It addition, Theory Z companies become known as sources of well trained and effective managers.

Quality improvement was developed to i