Lecture 3 discusses management strategies and the principles underlying
a particular management style. Many management strategies have been used over
the years and this course is based on a combination of well-known strategies. The
resultant combination is a coherent strategy that has proven to be effective.
You can guess by now that what I am proposing is a management
strategy that combines process improvement with increased worker motivation. We
have to 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 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 just due 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. (See the book “Theory Z” by William G. Ouchi) 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 improve product quality and reduce production
costs. It was developed primarily by statisticians and physicists like Deming,
Juran and Shewhart before WW II. Their work lead to approaches called
statistical process control (SPC) and continuous process improvement (CPI).
After WW II Genichi Taguchi, a Japanese engineer and statistician, added his
famous quality loss function and design of experiment techniques called “robust
design” that are particularly useful for engineering and manufacturing
processes. In the 1980s Eliyahu M. Goldrat, another physicist, and his
associates applied the theory of constraints to business processes and their
work added to the earlier methods for improving the quality of processes. All
of these techniques apply rigorous mathematical methods to the analysis of
business processes. Where rigorous mathematics is too cumbersome heuristics or
rules of thumb proven over long experience are used.
In the
1980s quality improvement was extended from production processes to all types
of organizations: government, education, medical, etc. These quality
improvement approaches are often grouped under names like Total Quality
Management (TQM), Six Sigma or some company derived variant of these names. The
quality improvement movement also led directly to what I call Effective
Leadership in figure 1. This came about primarily through the work of W.
Edwards Deming and his disciples. It is described well in Brian Joiner’s book “Fourth
Generation Management: The New Business Consciousness”. Thus Effective
Leadership is not new. It has been studied and successfully used since the
1980s. The reasons it is not more widely practiced are discussed lecture 4.
There are
two reasons why I prefer to define the path to Effective Leadership as shown in
figure 1. First, Effective Leadership is a simpler name than Fourth Generation
Management and more descriptive. Second, I believe that when described as
evolving from the quality improvement movement it seems not to have a sound
foundation in management theory. It appears to be radically changed from past
practices and many organizations have had difficulty implementing the
philosophy directly. When viewed according to the path shown in figure 1 it is
seen to have a solid foundation and it is easier to visualize the process of
incorporating Theory Z and one of the variants of process improvement.
Note that
by now you see that I assume you have familiarity with basic management
theories and are at least aware of the names of important management gurus from
the past. (Look up these gurus and theories in Wikipedia if you are not
familiar with them.) Just as you can’t
do calculus without understanding arithmetic and algebra you can’t be an
effective manager without understanding basic management theory and some of the
rationale behind the theory. Since many students are already familiar with
these basic theories and their developers I do not spend time on them in this
course.
Why have
I picked this combination of strategies?
• We live in a short term environment and
management by objective (MBO) has proven to work in this environment
• Most businesses use MBO or a variant so
most students are constrained to use this strategy by their work environment
• However, MBO by itself has limited
effectiveness because workers lack control, which stifles their motivation and
therefore their effectiveness
• Ochi addressed this limit by combining MBO
with participative management to empower workers in his Theory Z strategy
• Effective Leadership adds tools from the
Quality Improvement School for managers and workers to enable empowerment that
further motivates workers and achieves even more productive processes.
Summary of the history of methods discussed
in this course:
The
management strategies and the principles underpinning this course are not new.
• Theory Z
– Derived From Theory X & Theory Y~1960
– Important contributions by Maslow, McGregor
& others~ ‘60s & ‘70s
– Practiced by leading companies in the ‘70s
– Defined by William Ouchi in his book “Theory
Z” in 1981
• Process Improvement Principles
– Developed 1900-1945, used effectively,
primarily in USA
– Forgotten in USA from 1945 to ~1980
– Introduced by Deming and others to Japan
post WW II and used to develop Japan’s reputation for high quality and low cost
products
– New methods were added by the Japanese,
particularly by Taguchi
– Reintroduced to USA in 1980’s to help US
manufactures compete with Japan
– Success in manufacturing led to adoption by
other types of organizations
Homework:
You will
benefit from reading Theory Z, if it is available in your local library. Also,
Google the following topics and read the Wikipedia descriptions: Theory Z,
Elton Mayo, Hawthorne Effect, Douglas McGregor, Theory X, Theory Y, W. Edwards
Deming, 14 Points, Genichi Taguchi, TQM, and Six Sigma. The listing for Theory
Z will lead you to many of the other topics. Note one error in the discussion
of Theory Z. It says American Companies were unsuccessful in implementing W.
Edwards Deming’s approach to management. Whereas many companies may have tried
and failed, I personally know of many companies that implemented Deming’s
approach and were extremely successful.
Exercise:
After the
readings answer these questions:
1. What objectives of Ouchi’s Theory Z have
become unlikely to be achievable in today’s business culture?
2. Which theory (X, Y or Z) does the culture of
your company fit best?
3. Is your boss predominately Theory X, Theory Y
or Theory Z?
4. Which Theory does your personal style fit
closest?
5. Is your personal style compatible or in
conflict with your company’s culture?
6. Based on what you have learned so far can you
identify any strengths and weaknesses of your management style?
At the
completion of the homework and exercise you will be prepared to continue with
Lecture 4.
If you find that the pace
of blog posts isn’t compatible with the pace you would like to maintain in studying this
material you can buy the book “The
Manager’s Guide for Effective Leadership” at:
or hard copy or for nook
at:
or hard copy or E-book
at:
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