Manging theories and globalization Essay

Abstract The aim of this paper is to discuss whether general administrative theories are relevant to managing modern global organisations. It shall be argued that general administrative theories are a basic outline for managers in modern global organisations to refer to, rather than a guide that should be strictly followed while ignoring circumstances that surround the outside environment of the organisation. Introduction Managers these days are constantly being challenged with so many different obstacles, not only within the environment of the business, but from many other exterior sources that may affect their decisions on a daily basis. The early 19th century brought about a number of administrative theorists who defined certain guidelines that management should consider using to achieve success in the organisation. These theories helped to shape businesses in the earlier years and are now simply a foundation for managers to utilise, if needed. However, with globalisation and the ever broadening issues in the world today, such theories will not necessarily be efficient, effective, or relevant in the same organisation in one part of the world, to another on the other side of the globe. In addition to globalisation, there are many internal and external forces that are constantly evolving and unfolding, forcing involuntary transformations of the way objectives may be achieved by managers. For any organisation accomplish their goals it is vital for management to focus on changes that occur inside and outside the organisation, and not just theories that are somewhat out dated or are not necessarily related to todayâ€⠄¢s global companies and environmental issues. General Administration Theories Henri Fayol (1841-1925) was a French management theorist who introduced scientific organisational guidelines of labour, which had a great influence on organisations at the start of the 20th century. Fayol was the first to identify the functions of management which are: managing, planning, organising, commanding, coordinating, and controlling. In 1917 he introduced the fourteen principles of management in French and then later on published them in English in 1949. (Wikipedia Encyclopaedia 2006). Fayol’s fourteen principles were a great beginning in defining what management should consider doing in general, especially throughout the industrial age where it was extensively utilised. It is proposed by Hunt (2001. p.1) that the world of work is being transformed at an unprecedented rate, placing increasing pressure on individuals to adapt to the changes around them and to cope with the challenges that emerge from these changes. Fayol’s theories are now being referred to as ‘classical’ administration or ‘Old Public Administration’ against what is now being utilised in the world, ‘New Public Management’ (Olsen 2002). With endless research since the 1900, there still has not been any extensive hypothesises on what managers or leaders do and no clear evidence on what good managers do that is unique. These individuals are believed to have a special visionary and driving force which allows them to inspire their employees to greater efforts, usually resulting in extraordinary performance turnarounds (Craig & Yetton 1995, p.1185). Globalisation and Theories Haque (2002, p.103) interprets globalisation as a process of integrating nations, societies, peoples, and institutions in the economic, political, cultural, and intellectual domains through means such as capital, production, exchange, and information owned and controlled unequally by states, classes, groups, and individuals. Globalisation is no longer constrained by national borders. Australian companies are building properties in the United Kingdom and South-East Asia, German cars are being built in the United States, McDonalds sells its burgers in China, and Japanese cars are manufactured in Australia. The world has defiantly become a global village (Robbins et al. 2006, p.57). Along with globalisation comes a whole diverse standpoint on theories, and how or if they are applied. Between the years of 1980 and 2000, many transitions occurred. This period displayed the industrial age giving way to the economic imperatives of the information era (Hunt. 2001, p.1). Varied surrounding environments nowadays challenge management on a global scale, including Fayol’s methods. There are so many other principles that a manager must consider before resorting back to Fayol’s fourteen principles. For instance internal, external, and specific circumstances these days shape the way a manager manages his or her firm. Some of these issues that need to be taken into consideration relate to suppliers, customers, public pressure groups, competitors, global, economic, political, sociocultural, demographics, and technology matters. Environmental issues are expanding at a rapidly fast rate which is placing pressure on managers to pursue their own intelligent and logically ways and means in managing an organisation that will lead them to gaining the success and profits that is expected. Olsen (2002) suggests that the ‘New Public Management’ portrays a centrally organized and rule-bound public administration as outdated. The public sector is not distinctive from the private sector and the slogan: ‘let the managers manage’ implies fewer uniform, system-wide rules and procedures and more flexibility and decentralization. The public administration is primarily an instrument for efficient service production, governed by a performance-oriented culture with a focus on results, entrepreneurship and efficiency. Environmental Forces Technology is one of the biggest issues that management has had to deal with. Hunt (2001. p5) suggests that our increasingly wired world has effectively been evolving progressively over the past two decades. This dramatic evolution has been driven by two key factors. The first is the widespread commitment on the part of organisations everywhere to accelerate and maximise their levels of competitiveness. The second is the digital revolution, which has resulted in technological developments that have helped to transform the way in which work is carried out. According to Haque (2002, p.106) one of the most effective measures enhancing globalisation has been the internet. It has been predicted that the number of internet users has increased from 26 million in 1995 to 143 million in mid-1998. That figure currently stands at 1,022,863,307 billion as of March 31st, 2006 (Internet World Stats 2006). With the ever increasing and advancing technology, managers need to be able to keep the organ isation streamlined and stable through newer structures and methods of managing, while keeping up with the vast technological variations and competition. Another important issue that has dramatically changed since the introduction of the earlier theories is the political and legal system that surrounds almost any particular business or organisation. Australian managers are accustomed to stable legal and political systems, which change at a slow rate. This may not be the case in many other countries around the globe such as South Africa, South America, and China (Robbins et al. 2006, p.137). Another particular country that places strains on managers, due to constant changes, is Saudi Arabia. Many mangers in Saudi Arabia have to deal with dramatic political and legal system changes that are unexpected and unpredicted. In September 2005, the government of Saudi Arabia passed a law that states â€Å"the number of Saudi workers hired by the employer must be no less then 75% of the total workforce, although the labour minister is entitled to reduce that proportion temporarily† if there is no competent nationals to fill relevant jobs (New Saudisation law comes into force 2005). This dramatic law was applied almost immediately which had managers searching for ways to restructure their organisation in the most efficient, effective, ethical way. Regardless of where the company originates from, organisations had a time period of three months to ensure this percentage was achieved or penalties would apply. Many foreign investors and organisations have relocated their companies, due to this inconvenient law, to the United Arab Emirates, where globalisation is welcomed widely. Others opted to remain and try to bypass the law by employing any Saudi national, qualified or unqualified, just to meet the numbers required. Qualified Saudi nationals are available in remarkably small numbers and are usually highly paid, whereas some of the unqualified Saudi nationals are usually not committed or are irresponsible in employment which leads them to being trained to handle lower and less responsible positions. Yet, some organisations have decided to register Saudi nationals on their payroll, regardless whether they show up to work or not. The advantage of having them on the payroll allows the organisation to meet the conditions of Saudi government without changing the structure excessively. However, this has caused additional overheads leading to a reduction in total profits for these organisations. Managers in such countries face great uncertainty as a result of political instability (Robbins et al. 2006, p.137). Fayol’s theories in situations like this one are totally irrelevant. Managers have to rethink their strategy at any given moment in a much more complicated direction, while the government decides which step to take next, whether it is ethical or unethical. Risk management is an important point that needs to be looked at in organisations also. At the present time, many companies working in unsafe environments thoroughly evaluate and plan risk management, before planning any other organisational objectives. Initial theorists did not contemplate risk management or whether it was needed or not, whereas managers in recent times acknowledge that it is of a high priority in some countries. The September eleven attack is a disaster that no one can forget, especially for the numerous organisations that were in the twin towers. What risk management plans did managers outline prior to this unpredictable incident? The answer is most probably none. Management in the towers at the time may have used some basic administrative theories on that day, but never imagined they that would be dealing with matters beyond any management model or structure. Chief partner for Capco, Joe Anastosia commented in an interview that â€Å"There are new thoughts on human skills, skills you can’t back up on computer. How do you protect your people? How do you protect against intellectual capital loss? Where giving people information on how to leave the building, how to seek out help, and we’re not unique. Most firms are doing that now† (Clark 2001). With the increased pressure of the external environmental forces, managers are exploring and adopting other alternatives to managing that are not included in Fayol’s theories but are in fact more suitable to today’s alternating world. Older theories maybe adopted and applied to non-western countries, but only to a certain extent as several cultural issues may collide with western methods. Expatriate mangers that ignore foreign values and customs and apply an attitude of ‘ours is better than theirs’, will quickly find it hard to compete against other global managers who are willing to understand the cultures that are tied to the organisation where they reside (Robbins et al. 2006, p.122). Successful global management is obligated to have a higher sensitivity to cultural differences, customs, and practices in various parts of the world (Robbins et al. 2006, p.125). GLOBE (Global Leadership and organisational Behaviour Effectiveness) investigating cross-cultural leadership, has been able to research data obtained from 18,000 middle managers in 62 countries. This has lead to nine diverse dimensions on which national cultures differ. These include: assertiveness, future orientation, gender differentiation, uncertainty avoidance, power distance, individualism/collectivism, in-group collectivism, performance orientation, and humane orientation. Such research and investigation has enabled managers to gain additional information to help them identify and manage cultural differences. Jun (2000, p.277) believed that it is difficult to understand or predict the changing contexts of other cultures and nations through a theoretical lens used by post-industrial Western nations. Managers with an open mind and attitude, including easy adaptation, will be able to decipher how to gain success through the understanding of the local culture. As countries are confronted with the need for crisis management and with the uncertainty and ambiguity of coping with turbulent changes, ideographic, inductive, and qualitative approaches to local and national situations seem more useful for understanding different administrative problems as well as diverse ways of dealing with them (Jun 2000, p.284). Individuals, such as managers or leaders, find it difficult to identify key factors that are relevant to a particular situation, even if judgment could be passed through, the factors or mechanisms themselves are usually so limited in its understanding that it is not clear how to manage them. Leadership research has shown that the theories that were widespread in the fifties and sixties were focussed on the behaviour of the leader, with expectation that these were ensuring participation, being concerned with people, and structuring up tasks (Kotter 1990, p.1186). As a matter of choice, present managers seek their own individual ways of m otivating their employees to ensure success for the organisation, with special consideration to the surrounding environments that cause changes inside and outside the organisations environment. Many managers today still refer to the works of Fayol as a basic logically approach in management, yet many other theories have been brought forward, with up-to-date modern recommendations which are more suitable to current managers in the global market. Kotter (1990) suggested that these theories are able to aid managerial competencies. For instance there has been a lot of evidence that if people are set high achievable goals, and are given the skills needed, than performance improves. Leadership is a powerful concept and is increasing. There are many people who ‘produce leadership’, and it is hard not to think they’d made a difference. However, there is never a chance to see what may have happened if someone else had lead that certain organisation at that time. There has been considerable evidence that success relies on a complex pattern of organisational and environmental forces. There is little doubt that successive waves of downsizing initiatives and the drive towards outsourcing key corporate functions have placed greater pressures on managers to ensure that their organisations remain cohesive and integrated while preserving the capacity for innovation and adaptability. Slimmer organisational structures of the present age make it almost impossible for managers to operate according to the old hierarchical paradigms with their concentration being on command and control administrative dimensions. Managers are required to share larger amounts of information these days unlike before, as it has shown that their capabilities to do so influences performance levels of many others around them (Hunt 2001, p.8). Conclusion It is evident that general administrative theories may have been relevant to organisations many years ago when external environmental influences had a lesser affect on the organisation and its structure. 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