Three Levels of Management
Companies and institutions exist at different levels of functionality. It is important for the person(s) responsible for the organization to honestly and accurately assess their state of managerial needs. In other words, are you a “Newbie”, an “Experienced User”, or an “Expert Hacker”?
As a starting place we can look at three general levels or grades of management.
Beginner’s Management [Newbie or Management 1.0]
Fundamentals of managing an organization:
- (Forecast & Plan) – Examining the future and drawing up a plan of action. (The elements of strategy.)
- To organize – Build up the structure, both material and human, of the undertaking.
- To command – Maintain the activity among the personnel.
- To coordinate – Binding together, unifying and harmonizing all activity and effort.
- To control – Seeing that everything occurs in conformity with established rule and expressed command.
Fundamentals of being a manager:
- They ask “what needs to be done?”
- They ask “What’s right for the enterprise?”
- They develop action plans.
- They took responsibility for decisions.
- They took responsibility for communicating.
- They were focused on opportunities rather than problems.
- They ran productive meetings.
- They thought and said “we” rather than “I”.
And the Fundaments of managing by objectives:
- Cascading of organizational goals and objectives, (For example, a top level goal of increasing sales by 20% over a defined period may require a bottom level goal of increasing marketing effectiveness or marketing coverage in order to reach the sales set.)
- Specific objectives for each member,
- Participative decision making,
- Explicit time period, and
- Performance evaluation and provide feedback.
(Peter Drucker’s Management by Objectives also introduced the SMART acronym for checking the validity of the objectives, which should be:
- Realistic! and
- Time-related. )
If the person(s) responsible for managing are able to look at the eighteen points above and determine they are more or less in place, they are operating at the most fundamental or beginner’s level of management. If the company management feels it is operating below this standard most of these practices can be self taught by studying them on the internet or visiting a bookstore.
Informed Management [Experienced User or Management 2.0]
While there are many aspects to informed management some of the basics that must be present are:
In depth financial planning and controls: this usually requires someone with a graduate degree in business, such as an MBA or equivalent and is proficient in:
- Business modeling
- Business planning (analysis, forecasting, budgeting…)
- Capital raising strategies
- Risk assessment
- Corporate Taxation
Use of a more dynamic management systems: such as Value Based Management, which tries to streamline and integrate the following into its corporate purpose and values:
- the corporate mission (business philosophy),
- the corporate strategy to achieve the corporate mission and purpose,
- corporate governance (who determines the corporate mission and regulates the activities of the corporation),
- the corporate culture,
- corporate communication,
- organization of the corporation,
- decision processes and systems,
- performance management processes and systems, and
- reward processes and systems,
A Value Based Management System has three principal objectives:
- Creating Value – How the company can increase or generate maximum future value; more or less equal to strategy
- Managing for Value – Governance, change management, organizational culture, communication, leadership
- Measuring Value- Valuation
Value Based Management is dependent on the corporate purpose and the corporate values. The corporate purpose can either be economic (Shareholder value) or can also aim at other constituents directly (Stakeholder value).
The application of Quality Management – the basics of which involve quality planning, control, and improvement. The benefit of this is:
- costs decrease because of less rework, fewer mistakes, fewer delays, and better use of time and materials;
- productivity improves;
- market share increases with better quality and prices
- the company increases profitability and stays in business; and
- the number of jobs increases
One of the best summaries of Quality Management was written my Edward Deming:
- Create consistency of purpose toward the improvement of product and service, and communicate this goal to all employees.
- Adopt the new philosophy of quality throughout all levels with the organization.
- Cease dependence on inspection to achieve quality; understand that quality comes from improving processes.
- No longer select suppliers based solely on price. Move towards developing a long-term relationship with a single supplier.
- Processes, products, and services should be improved constantly; reducing waste.
- Institute extensive on-the-job training.
- Improve supervision.
- Drive out fear of expressing ideas and concerns.
- Break down barriers between departments. People should be encouraged to work together as a team.
- Eliminate slogans and targets for the workforce.
- Eliminate work quotas on the factory floor.
- Remove barriers that rob workers of their right to pride of workmanship.
- Institute a program of education and self-improvement.
- Make sure to put everyone in the company to work to accomplish the transformation.
Customer relationship management (CRM) – a widely-implemented strategy for managing a company’s interactions with customers, clients and sales prospects. It involves using technology to organize, automate, and synchronize business processes—principally sales activities, but also those for marketing, customer service, and technical support.
CRM has three principal objectives:
- Acquire new customers
- Enhance customer service
- Retain and continually engage client base
The benefits of CRM must be defined, risks assessed, and cost quantified in three general areas:
- Processes: Though these systems have many technological components, business processes lie at its core. It can be seen as a more client-centric way of doing business, enabled by technology that consolidates and intelligently distributes pertinent information about clients, sales, marketing effectiveness, responsiveness, and market trends. Therefore, a company must analyze its business workflows and processes before choosing a technology platform; some will likely need re-engineering to better serve the overall goal of winning and satisfying clients. Moreover, planners need to determine the types of client information that are most relevant, and how best to employ them.
- People: For an initiative to be effective, an organization must convince its staff that the new technology and workflows will benefit employees as well as clients. Senior executives need to be strong and visible advocates who can clearly state and support the case for change. Collaboration, teamwork, and two-way communication should be encouraged across hierarchical boundaries, especially with respect to process improvement.
- Technology: In evaluating technology, key factors include alignment with the company’s business process strategy and goals, including the ability to deliver the right data to the right employees and sufficient ease of adoption and use. Choosing appropriate technological solutions is best undertaken by a carefully chosen group of executives who understand the business processes to be automated as well as the software issues
Human Resource Management: this is the management of the people you have hired
- Workforce planning
- Recruitment (sometimes separated into attraction and selection)
- Induction, orientation and organizational socialization
- Skills management
- Training and development
- Personnel administration
- Compensation in wage or salary
- Time management
- Travel management (sometimes assigned to accounting rather than HRM)
- Payroll (sometimes assigned to accounting rather than HRM)
- Employee benefits administration
- Personnel cost planning
- Performance appraisal
- Labor relations
Experts in this study the science of Industrial Relations, which is quite extensive. Wikipedia had 195 pages listed under the related subject of ‘organizational studies and human resource management’.
Informed Management in summary: If your organization has in place at the very least, some version of these five attributes of management, namely:
- Advanced financial planning and controls
- Some dynamic management system
- A system for Quality Control
- A Customer Relationship Management strategy, and
- Human Resource Management
then you can be considered an organization at the informed level of management.
If you feel you are not functioning at the informed level of management then you would be well served by hiring a management consultant. There are many capable consultants ranging from one person independent contractors to large multi-national firms like McKinsey & Company.
The standard of informed management is really just the status quo. It is where a company that hopes to remain viable must be. But to go beyond the status quo, to operate at the more elusive, and much desired level of being a remarkable enterprise requires advanced management.
Advanced Management [Expert Hacker or Management 3.0]
To have your management and employees working at a level of exceptional performance, and constant innovation under extreme market pressures requires the input of experts in organizational psychology which is several levels above normal business management consulting.
As described in the previous sections regular business management consultants focus on work flow, productivity outcomes, information systems and other external factors.
Industrial or organizational psychology focuses on the underlying and implicit dynamics that shape and influence the individuals in the organization. These difficult to detect psychological factors set the limits for how well your work force will be able to achieve your business goals. Failure to address the deep seeded dynamics will also suppress individual potential and cause personnel to work well below capacity.
The goal of advanced management solutions is to create a remarkable organization that will outperform competitors. This is done by introducing advanced dynamics that can instigate a companywide chain reaction of individual improvements and new group/ team capacities.
An astute organizational psychologist does this by dismantling dysfunctional dynamic and problematic behaviors and incorporating new roles and perspectives and seeding better expectations and behaviors. These new dynamics act on the resilience and adaptability inherent in most people and can uncover performance capacities that the individuals themselves might not realize they had.
Industrial or organizational psychology is a management process that knows that both humans and institutions have and underlying psychology. Like humans, institutions are mostly unaware of the dramatic influence of psychological processes. Neither is fully aware of how these psychological forces are controlling them and shaping their outcomes.
The organizational psychologist understands, however, that of the two, the institutional psychology is the dominant force. Change the psychology of the institute and you will change the psychology of the individuals. Ignoring this and just trying to change the psychology of the individuals who make up the institute may not change the institute, and they will, over time, most likely revert or succumb to the influence of the institution.
For this reason advanced management requires support from specialists in the psycho-dynamic-transformation of six key aspects of your organization. They are:
- stress management,
- health & wellness,
- team/group development, and
- employee management
Industrial /organizational psychology addresses traits that are often intrinsic or internal such as
- kindness and
to name just a few. A large body of scientific work has made it clear that these factors can be measurably improved by applying psychological methodology to the business environment. (Wikipedia lists 15 distinct scientific journals with the specific focus of industrial and organizational psychology.)
Influencing these types of human characteristic is done using a range of research-driven tools which includes doing both basic and applied research, as well as primary and secondary research. Different approaches include:
- Strategically focused research – this is constructive research with the greatest likelihood of creating practical and commercial applications
- Clinical research – empirical research to test the efficacy of various hypotheses on individuals in controlled trials
- Directed research – this is research conducted in a response to an outside request to explore a specific area of scientific expertise
- Systematic review – a summary of research that uses explicit methods to perform a thorough literature search and critical appraisal of individual studies to identify the valid and applicable evidence
- Meta-analysis – a statistical study of the results of several studies that address a set of related research hypotheses
Industrial psychologists also rely on diverse data sources including:
- psychometrics and personality assessments
- human judgment
- historical databases
- objective measures of work performance and
- questionnaires or surveys
Altogether the industrial/organizational psychologist can change a company’s culture, improving member performance and resulting in greater outcomes. Some of the areas affected by advanced management solutions include:
- organizational development
- time management
- decision making
- creative thinking
- divergent vs. convergent thinking
- problem solving
- critical thinking
- employee interaction and co-operation
- stress and health
- reducing health care costs
- reducing absenteeism (and presenteeism)
- work/life balance
- the impact of health on productivity
- nutrition and productivity
- leadership skills
- team collaboration
- employee selection
- employee retention
- remuneration and compensation
- executive training
- presentation skills
The future success of business will depend on new levels of collaboration between business leaders and experts in social sciences like industrial psychology. By allowing an expert to help with organizational development the management can focus on what they are in business to do.