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New Templates for Today's Organizations
Organizational theory and practice is undergoing a crisis due to major changes in business objectives and tasks. New business is multidimensional. It is shifting from mechanical to process technology, and from manufacturing to providing knowledge and services. Proven models, such as Fayol's model of functional organization and Sloan's model of federal decentralization for General Motors, are unsurpassed, and yet, they are unequipped to deal with today's problems. New organizational design principles focus on team organization, simulated decentralization, and systems structure. McKinsey Award Winner. -
Managing the Four Stages of EDP Growth
An S-curve represents the irregular pattern of an electronic data processing system's development. The curve designates crisis points, which divide four growth stages. Each stage's unique problems demand different managerial approaches to computer applications, computer specialization, and computer personnel. -
Why Employees Stay
An on-going study of 406 employees in 3 companies indicates the two variables that affect job retention and turnover are job satisfaction and environmental reasons, such as financial responsibilities, family ties, friendships, and community relations. Seven characterizations of psychological levels of development and work values explain why employees stay according to their level of psychological development. -
How to Choose a Leadership Pattern (HBR Classic)
The contemporary emphasis on participative decision making creates a dilemma for modern managers. They may choose a pattern of leadership in relating to subordinates that ranges from making all the decisions themselves to allowing their subordinates to make decisions within prescribed limits. In deciding how to lead, managers must be aware of forces in themselves: their values, confidence in subordinates, leadership inclination, and tolerance for ambiguity. They must also consider whether their subordinates have the independence, maturity, interest, and knowledge to share in decision making. -
What Managers Think of Participative Leadership
A study of 318 executives indicates a consensus among executives on the specific characteristics that constitute a participative style, and general agreement that certain participative leadership characteristics produce more effective results. The participative leader prototype that emerged from the study is a sensitive, extroverted and emotive leader who is in close contact with his or her subordinates and is attuned to their needs. The managers in the study emphasized high performance of subordinates as an important part of a participative style. -
Tailor Incentive Compensation to Strategy
Performance compensation for policy-level executives is interdependent with company policy. Survey data show that most companies use cash bonuses and some additional compensation while few companies rely on stock options alone. The character of the bonus system is interrelated to the company's growth. The range of possible payoffs and the variability of bonuses increase, and bonuses become more directly related to performance as a company expands. -
What Kind of Management Control Do You Need?
Profit centers effectively analyze a segment of a company's business and motivate managers; however, they present implementation problems. Profit centers characteristically employ over-simplified accounting procedures. The most important criteria to use in selecting from the variety of financial measurements is company strategy and structure. The managers and their companies need a unified goal. Organizations of simple structure may use traditional cost centers, marketing profit centers, production profit centers, and multiple profit centers. It is the responsibility of the management controller to synthesize the characteristics of the business and choose the appropriate financial objective. -
Asinine Attitudes Toward Motivation
American management attempts to motivate employees through the carrot-and-stick approach. According to the Great Jackson Fallacy executives unconsciously envision themselves as manipulators and controllers, and their subordinates as jackasses chasing the carrot. This attitude can place severe strain on management/employee relations and lead to employee inefficiency and low productivity. Executives should change their attitudes toward subordinates in order to ensure effective job performance. -
Balance "Creativity" and "Practicality" in Formal Planning
Long-range planning often involves conflicts between creativity and practicality. It is important to maintain an equilibrium when making trade-offs between plans and budgets. Three questions influence this balance: how to link planning data and financial statements; how to integrate people responsible for planning and people responsible for budget; and how to determine the proper sequence of annual planning and budgeting cycles. -
Clear Writing Means Clear Thinking Means . . .
The general manager of a corporation circulates a memo advising his employees on company policy about copier use. He carefully revises his original memo and in the process crystallizes his own thinking on the issue. Writing well and thinking well are interrelated. Because rewriting demands objectivity, an ability to separate essential from nonessential ideas, and a willingness to locate and correct contradictions, it provides the key to improved thinking. -
Production-Line Approach to Service
All industries are, effectively, service industries. Some industries merely have greater service components than others. Many so-called service industries such as fast food, mutual funds, and credit cards have applied manufacturing solutions to people-intensive service problems. To gain benefits, managers should consider the problems and desired output; how to redesign the process and install new tools that automate the job; and how to control people's behavior and channel their choices. The primary objective is to serve the customer's needs efficiently and effectively, and to make customer service an integral part of what the customer buys. McKinsey Award Winner. -
Uneasy Look at Performance Appraisal/Chairman Mac in Perspective (HBR Classic)
Conventional approach to performance appraisal forces managers to make judgments on the personal worth of a fellow employee. An effective alternative is employee self-evaluation. This requires that they think about their jobs, assess carefully their own strengths and weaknesses, and formulate specific plans to reach their goals. The superior's role is to help correlate the employee's self-appraisal goals and plans with the concerns of the organization. This system places the major responsibility on the subordinate, and shifts the emphasis from appraisal to analysis. The Supplement, Chairman Mac in Perspective, by W.G. Bennis, provides an evaluation of McGregor's work. -
Creative Meetings Through Power Sharing
Most managerial styles are characterized by an emphasis on the power and the right of the manager to pass judgment on the actions of his or her subordinates. Judicious managers facilitate the expression of ideas by sharing their power and acting as collaborators with their subordinates. By creating a climate in which it is appropriate to voice imperfect thoughts and ideas, judicious managers encourage more frequent individual and group accomplishment and increased satisfaction and motivation. -
Program Budgeting Works in Nonprofit Institutions
The management and trustees of nonprofit service organizations satisfy supporters' demands for better expenditure controls of their contributions by means of cost accounting procedures. The cost accounting of professional services pinpoints sources and uses of funds and facilitates decisions on money allocation. In the described example, management and trustees observe the establishment of a planning and accounting system at a once-drifting mental health clinic employing about 100 professionals. -
How to Choose the Right Forecasting Technique
Two Corning Glass Works products illustrate the use of various forecasting techniques. Managers and forecasters should consider three issues when approaching a forecasting problem: the purpose of the forecast, the dynamics and components of the system, and the importance of the past in estimating the future. The three basic forecasting methods are qualitative techniques, time series analysis and projection, and causal methods. A gatefold chart presents several examples of each type of technique, its feaures, and limitations. Although sales forecasting primarily has used forecasting techniques, these techniques will be applied increasingly to forecasting margins, capital expenditure, and other important factors. -
What We Can Learn from Japanese Management
An examination of the Japanese style of management regarding decision making, corporate planning, worker productivity, and management training, suggests ways in which managers in the West might redirect their approaches to these issues. Topics described include decision by consensus, lifetime employment and continuous training, and managerial godfathers. Despite existing societal tensions and frustrations, Japan's managerial achievements contain answers to Western management's most pressing problems. -
Conflicts That Plague Family Businesses
The fundamental psychological conflict that plagues family businesses is rivalry, compounded by feelings of guilt. Company founders feel rivalry when they unconsciously sense that subordinates threaten to remove them from their center of power. For the founders the business is an extension of themselves which they have great difficulty giving up. By confronting and discussing their feelings of hostility and rivalry, possibly in the presence of a neutral third party, family members begin to resolve their problems. -
Framework for Financial Decisions
Leading ideas and theories regarding capital structure and capital assets are translated into a useable form for managers. The suggested framework for analysis concentrates on three areas related to preliminary investment decisions: tentative investment level and estimates of cash flow and earnings; the debt/equity structure or amount of debt to be carried; and dividend policy. Investment decisions influence capital cost which in turn influences investment volume. -
Myth of the Well-Educated Manager
Formal education programs emphasize the development of problem-solving and decision-making skills, but give little attention to finding and exploiting opportunities or to dealing with potential problems. Effective managers, on the other hand, share characteristics that cannot be taught in a classroom: they need to manage, they need power, and they have the capacity for empathy. Furthermore, managers develop leadership capacities by firsthand observation of their environment and by an assessment of feedback from their actions. Managerial aspirants must be taught how to learn from their own first-hand experiences. McKinsey Award Winner. -
Communicate Through Your Supervisors
The results of interviews with 600 Pillsbury employees, to determine the effectiveness of internal communications, reveal that good communication and favorable employee attitudes are related. Providing employees with information that they want quickly, and through the channels they prefer, characterizes good communication. The principle organizational procedures of an in-plant communications program are: setting aside 15 minutes of the workweek for supervisors to meet with employees, reporting verbally on matters of interest, and learning from question-and-answer sessions.