ISSUES IN CONTEMPORARY MANAGEMENT
TUTOR: CHLOE TARRABAIN
BY: ABHISHEK ARYA (S00705727)
DATE: 11TH MARCH 2016
Before the Industrial Revolution, there wasn’t much management (McGrath 2014, par 4) Management is anybody besides the owner of a business that handles tasks such as planning, controlling, coordinating, and allocating resources. Organizations still focus on making the most of existing advantages, driving a short term direction that many oppose. The Industrial Revolution brought on the need for larger economic units. The economy moved from a largely agriculturally based one to an industrial one that needed more specialization. This essay highlights the contemporary management style of Honda. Honda is one of the largest automobile manufacturers in the world. An introduction to the organization is followed by its management practices. The author will critique Honda’s management style approach and give recommendations.
Honda Motors Company Limited is a public company that was founded on September 24, 1948, by Soichiro Honda Takio Fujisawa. Honda designs, produces and manufactures a variety of motor products, from small all-purpose engines to top of the range sports cars. Honda has four divisions: motorcycle, automobile, financial services, and power products and other businesses (Reuter's par 1). Honda carries out its operations in Japan and across the world including Asia, North America, and Europe (Reuter's n.d, par 1).
The reason that the researcher selected Honda for this essay is because Honda’s management incorporated the globalization strategy long before other manufacturers even thought of selling its products on the international market (Rothfeder 2014, par 4). In 1950, when Honda was just a few years old, its founder, Soichiro Honda, registered his disappointment about the limited growth opportunities that Japan offered. It was at this point that he steered his company towards an international platform where he considered the world as a potential buyer and factory.
IDENTIFYING RELEVANT MANAGEMENT PRACTICES OF HONDA
Honda is not a top-down management kind of organization directed by headquarters like other multinational companies (Rothfeder 2014, par 9). In its place, Honda manufacturing ancillaries across the world operate as autonomous organizations, creating and developing cars according to the local conditions and consumer behavior (Rothfeder 2014, par 9). Honda has an excellent localization strategy because it believes in doing everything in a single location. It combines design, engineering and manufacturing functions in all of its local facilities (Rothfeder 2014, par 9). Unlike many organizations where its members adhere to the way of doing things, Honda's management requires its members to regularly question the status-quo (Rothfeder 2014, par 9). The questioning sessions take place on a daily basis during unplanned meetings. In these meetings, decisions are reassessed in the hope of finding better strategic and tactical choices. It promotes critical thinking and the reevaluation of common wisdom forming new responses to established expectations.
Honda has a decentralized management style that focuses on reward and compensation for its employees (Balani 2013, p. 4). Decision making is decentralized, and employee reward and compensation is based on merit and the quality of output as opposed to one's position in the organizational hierarchy (Balani 2013, p. 4). Japanese culture highly values collectivism, loyalty and cooperation. Honda applies collectivism as opposed to individualism in its daily operations.
Since Honda’s founding in 1949, all of the company’s Chief Executive Officers, including its founder have been engineers (Rothfeder 2014, par 17). Common wisdom among international organizations is that the most effectual chief executives are those who are professionals in sales, marketing, or accounting, but never in technical fields such as engineering. Hence, chief executives in technology-based companies such as computer hardware or software know little to nothing about design and manufacturing the products they sell (Rothfeder 2014, par 17). Honda chief executives are nurtured in the research and development division of the organization (Rothfeder 2014, par 17).
Honda used to introduce its products by taking cultural variations and geographical differences into consideration, and it provided them with favorable results in their internal management and their business too (Huynh n.d, p. 6-8). The difference between whether an organization is a planning organization or a learning organization is difficult to determine. Honda has addressed and settled this difference successfully (Huynh n.d, p. 6-8). Honda is a company which exemplifies in a very good way that it is an organization formed out of craftsmanship as opposed to one that is planned (Huynh n.d, p. 6-8). The managers at Honda got the direct response on their cars by driving them and learned after making very basic mistakes until they got the right procedure while penetrating the United States motorcycle market (Huynh n.d, p. 6-8). Honda is a people based organization that focuses on employee engagement and commitment. It is not overly-rational, and it learns from various markets but at the same time does not try to force foreign corporate methods. Honda is a learning organization but it has strategies planned with high detail and precision that the organizational system first observes and learns them and then acclimatizes itself to the changes in the business environment (Rodrigo 2012, par 10). Honda demonstrates the need for emanant learning in conjunction with purposeful planning. However, even though planning and learning are equally important, learning should take priority.
Japanese organizations, unlike Western organizations, are more inclined to the worker, not the manager. As seen earlier in the text, all of Honda’s Chief Executive Officers are inbred and nurtured in the Research and Development department (Rodrigo 2012, par 10). Honda employees are influenced more by their peers than their managers. By the time an engineer at R&D becomes the Chief Executive Officer, they must have had a significant influence on the workers.
Recruitment at Honda, as is with the case in most Japanese organizations, are usually made from the education levels based on the overall characteristics of the incumbent (Rodrigo 2012, par 10). They believe in long-term relationships with their employees as opposed to short-term relationships as is observed with many organizations that adopt the Western style of management, which terminate their relationships with their employees in the event of challenging financial times or when the management decides that an employee is no longer fit for the organization (Rodrigo 2012, par 10). Human resources are the most important assets at Honda. They consider human resources as a fixed asset, which is usually considered a variable asset by other organizations (Rodrigo 2012, par 10). They work in teams and have open offices as opposed to the traditional cubicles where everyone works privately (Rodrigo 2012, par 10).
Group decision making is the style of operation at Honda, unlike the conventional organizations that promote individualism where employees stick to the work that they are given to them which does not encourage autonomy over one’s work. In Honda factories, they perform free flow assembly lines where employees have the freedom to decide whether to send a product to the subsequent level (Rodrigo 2012, par 13-14).
Exchanges between the cost and delivery and product quality with high quality costing more and vice versa is the popular way of thinking in most organizations. Honda follows the “Right-First-Time” where all the mistakes are corrected in the production process (Rodrigo 2012, par 13-14). In-built quality is given priority which in turn lessens the production costs and also reduces product delivery time (Rodrigo 2012, par 13-14). Honda practices decentralized management where there are regular round table discussions (Rodrigo 2012, par 13-14). Hence, the organizational structure is horizontal. Because the horizontal organizational structure encourages group work, when a group performs well together, all the members benefit. Every individual has the motivation for the group to be successful. As opposed to a power struggle, the group works together towards achieving a common goal. The horizontal organizational structure helps to increase job satisfaction because there is emphasis on establishing an all-encompassing workplace environment. Value is placed on collaboration, openness, and cooperation. Honda obtains leverage with its Japanese Style of Management and Human Relations approach because of the participation of employees in decision-making processes. Additionally, customers have a wide variety of products to choose from in the market but the one thing that they go for is quality. Through its management practices, Honda ensures that its products are of high quality. Given the specified hierarchical system at Honda, the responsibilities are shared accordingly which brings out the best from all employees. The vertical approach to management is used in the areas of assigning duties and overseeing processes.
Honda’s inclination towards the Human Relations approach to management appears to be good for the organization because it has been successful in all the years of its operations, to the extent that other organizations look to Honda on how to perform (Honda 2014, p. 8). Honda has successfully handled the dichotomies of a planning organization and a learning organization. It handles the learning and the planning aspects very intricately, using a maze-like organizational structure, that is, a combination of the horizontal and vertical systems of hierarchy in management, entailing teamwork and some individualism at the same time and developing formal and informal associations within the organization. As the managerial dichotomies that exist at the corporate and business levels and are more multifaceted and complex in comparison to those that exist at the operational levels, they should be handled with great consideration and planning. Honda has been successful in obtaining this goal. Honda’s model of management demonstrates that the social organization of work is just as important if not more important to employees. As a result, concepts like employee satisfaction, engagement and commitment are important to the organization. The reason is that employees are thought to be social beings as opposed to ‘components in a machine.'
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