Managers are responsible for making important decisions whilst running a business, with one of the most influential being which organisational model they follow (Yu and Wu, 2009). Quinn et el. (2003) believe that successive models of management complement, rather than contradict each other, with the need for a range of different approaches in a complex and fast changing world. This report will involve discussion and analysis of both the Human Relations model and the Rational Goal model from the Competing Values Framework (CVF). The information presented will be supported using the companies Pandora and Pret a Manger, in addition to examples from previous empirical research.
2. Theories of Management
2.1 The Competing Values Framework
The Competing Values Framework emerged from a series of studies investigating the idea of organisational effectiveness (Quinn and Rohrbaugh, 1983). They discovered two dimensions underlying origins of effectiveness. The framework is made up of four quadrants; the human relations model, the open systems model, the rational goal model and the internal process model, which are all separated by a horizontal and vertical axis.
2.2 Human Relations model
The Human Relations Model describes organisations in which there is emphasis on looking after their employees, with leaders being considerate and supportive (Boddy, 2012). This contributes to workers feeling wanted and appreciated, which results with them wanting to stay with the company. The jewellery company, Pandora (2017) have many benefits for their factory workers, such as an above average wage along with medical care and free education (Pandora, annual report 2017). One only has to look at their employee turnover rate of 4.2% in 2017 to see that their employees reward their company with loyalty, dedication and hard work which in turn will help the company to run successfully.
Entrepreneurship is also encouraged with the introduction of franchises. This starts to slightly overlap with the open systems model. ‘We often blindly pursue the values in one of the models without considering the values in the others. As a result, our choices and our potential effectiveness are reduced.’ (O’Neill and Quinn, 1993). Incorporating both models is likely to have led to the success of Pandora, with a 12% increase in revenue and the opening of 308 new stores (Pandora, 2017). A theory why entrepreneurship works so well is Mary Follett’s, who recommended replacing bureaucratic institutions with networks in which people analysed their own problems and applied their own solutions (Mackie, 2013). Interaction between the franchisee and the franchisor strengthens the perception that they are needed and of value.
In addition, Pennock (1930) believed rise in production is mainly due to changes in mental attitude. His statement was based on the findings of Mayo’s series of studies which looked at how different stimuli e.g light levels can affect employees work rate. Whilst things such as light intensity can have an impact on work output, it does not mean that if you get these things right you will be ensuring a good performance (Tyson and Jackson, 1992). After finding the output increased each time, he went on to manipulate other stimuli such as the duration of rests, which produced the same findings (Boddy, 2013). Instead it was concluded that a major factor was the smaller group sizes, which increased communication and socialisation. ‘The rewards of belonging to a primary, face-to-face group were more important than the rewards offered by management’ (Tyson and Jackson, 1992). Being part of a smaller group made employees feel like a little team, which ‘gave itself wholeheartedly to cooperation in the environment’ (Mayo, 1949). This is likely to raise employee satisfaction, which in turn can be linked with company’s success (Pandora 2017).
Although Mayo’s theory drew attention to aspects of human behaviour such as teamwork, it cannot be assigned to everyone. Individual differences mean that though some people could be influenced by attention and perform better with the help of a smaller team, others might work better with the help of a money incentive. Mayo acknowledged this in his book (Smith, 1924) ‘a particular result is not caused by some one factor operating equally on all people’. To heighten the chance of success, it could be beneficial for organisations to research which method staff prefer and to cater for their needs.
However, whilst workers can appear to be happy, they may not be completing work to their maximum output. One variation of the Hawthorne studies showed that workers complained about having too many breaks as their ‘rhythm was being disrupted’ (Pettinger, 1994). This reveals that if companies want a higher success rate, a balance should be found between making employees too relaxed and working them too hard and unethically.
Following on from this, analysis of the data carried out by Greenwood et al (1983) suggested that financial incentives had been overlooked. The experimental group were given a raise from their normal wage just to take part. This critical information being disregarded, questions the validity and accuracy of the findings reported.
Despite these criticisms, Elton Mayo’s research had very positive benefits to not only staff but overall organisations (Tyson and Jackson, 1992). Workers are now treated much better than they would have been, with managers putting more focus in to how they can look after their staff and not work them in unethical conditions.
2.3 The Rational Goal Model
The rational goal model is broadly based on the idea that organisations need to be a very formal system with clear lines of demand. Organisations are seen as an efficiency-seeking unit with a drive for economic goals (Boddy, 2012). Leadership tends to be goal-focused with employees given targets to meet. Frederick Taylor focused on the relationship between the worker and the machine-based production systems. ‘The principle object of management should be to secure the maximum prosperity for the employer’ (Taylor, 1917). Taylor believed that the way to achieve this was to assign the best person for a particular stage in the production line. Specialisation could occur which heightens the chance that each worker reaches their maximum state of efficiency and in turn increases the chance of success. When Henry Ford introduced the assembly line idea he found that the overall time taken to assemble a car significantly dropped from 700 hours to 90 minutes (Biggs, 1996; Williams et al, 1992).
Furthermore, in contrast to the Human Relations model, Taylor believed that money is the main motivator for workers and introduced an increase in pay by linking pay to output alongside a basic pay rate. Raising the minimum wage resulted in an increase in the number of cars produced and the overall earnings, both signs that the company was succeeding (Sorensen and Williams, 2006).
Workers which are categorised as theory X workers would prefer Taylor’s methods. The primary principle of theory X is direction and control through a centralised system as some employee’s lack ambition and prefer to be led (Mullins, 2013). Being given exact instructions would be more beneficial and help these people to be more productive. On the other hand, Taylor’s methods were found to decrease success as it increased unemployment as people found tasks too repetitive making the job seem boring (Boddy, 2013). This means that organisations lost out on production and instead had to spend more time trying to replace the lost employees.
An organisation that uses the rational goal model is Pret A Manger. In order to make sure that every sandwich is to the same specifications, employees endure a ten-day training with a test at the end. This ensures that not only are all the sandwiches in one particular shop the same but also across all of their stores (Boddy, 2013). Whilst this has the benefit of ensuring no alterations are made, it allows no room for creativity. The human aspect should not be separated from the mechanical one, as the two are interlinked and should not be restricted (Mackie, page 129). Different individuals have different opinions and in order for a business to grow management should be open to their employee’s views.
In conclusion, it is apparent that the human relations model and the rational goal model have different roles when making organisations a success. Pandora would likely not be as successful as it is if it didn’t care for their employees, resulting in them having a strong loyalty to the company and wanting to work harder. Likewise, Pret a Manger would not be as successful as it is without having strict guidelines, which keeps the quality of their food high. Quinn et el (2003) accurately stated that the models of management complement each other rather than contradict each other. Instead of an organisation being restricted to one of the quadrants of the CVF, it seems that in order to be a successful business such as Pandora you must incorporate parts of each of the models. Overall the competing values framework has helped in identifying the values and criteria in which organisations can use to be more successful.
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