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SHIPMANAGEMENT
Ship management deals with the process of managing a ship. Ship
management is done by independent companies which use ships of some
other companies or independent owners. The ship management company
manages ships for the owner and pays him the yearly amount which is settled
between the owner and the ship management company.1
The owner of the ship signs a contract and leases the ship to the ship
management company for a defined duration of time. The ship owner may
continue with the same management company or can approach another
company if the he is not satisfied with the performance of a particular ship
management company. It is to note that the owner can lease the ship
completely or he can render some of the services provided by the ship
management companies.2
Managing ships is not an easy task. Ship management includes
several tasks which are to be carried out before, during and after the
operation of the ship. The first and foremost thing that a ship management
company needs to do is get the ship approved. There are many approvals
that are to be taken from different classification societies. However, the
company can operate different types of vessels or just concentrate on any
one type. For e.g. MSC (Mediterranean Shipping Corporation) deals with only
1 http://www.marineinsight.com/marine/what-is-ship-management/2 ibid
1
container vessels, whereas companies like V ships, Anglo-Eastern manages
all types of ships.3
Following are the services that a ship management company is entitled
to provide:4
1) The ship management company should do the supervision of the
maintenance of machinery on board the ship. The process should also
include different surveys and repair work of the ship.
2) The ship management company should provide adequate crew for
manning the ship.
3) The company should arrange for loading and unloading of the cargo.
4) The ship management company can hire the ship on behalf of the
ship owner.
5) The company should negotiate the contracts for bunker and lube oil.
6) The ship management company pays the expenses on behalf of the
owner.
7) The ship management company should make an arrangement for
the entry of the ship in the P& I (Protection and Indemnity) association.
8) The company also deals with various claims related to insurance,
salvage etc.
9) The ship management company should arrange for the insurance in
relation to the ship.
10) The ship management company’s services also include
arrangement for providing victualing and stores for the crew of the ship.3 ibid4 Ibid
2
THIRD PARTY SHIP MANAGEMENT5
Ship operation is increasingly a specialized and technical business,
which is often these days undertaken by specialist ship management
companies. These, typically will not own the ships themselves, but will
contract to operate them, manage and maintain them, and provide the
detailed technical management to keep them operating efficiently.
The contract between manager and ship owner will specify the degree
of the management that will take place. The ship owner may wish to trade the
ship himself; alternatively he may wish the manager to undertake full
commercial operation of the ship, organizing the insurance, the purchase of
stores and full technical maintenance and operation, along with the provision
of a properly trained crew. In such cases the manager will treat the ship as his
own for the period of the contract, ensuring that it is always available, and
maintained in good condition.
Third party ship managers will contract to do anything the owner
wishes. The owner may wish to keep the operation and technical
management “in-house” but will hire the manager to undertake the often
difficult HR functions in relation to the crew. A competent ship manager will
always have access to seafarers. The fee that the ship manager earns will
reflect the depth of the management task he contracts to undertake. The
owner of the ship placed with managers will receive regular financial and
technical reports on the vessel.5 https://www.bimco.org/en/Education/Seascapes/Questions_of_shipping/What_is_3rd_party_ship_management.aspx
3
There are numerous advantages in employing ship managers, not least
the ability to outsource many difficult and labor intensive elements of ship
operation and management. It is an arrangement that suits an industry where
demand for ships and shipping is notoriously cyclical. It also enables an
owner of perhaps just a few ships to operate them without the need for a large
in-house organization. Moreover, placing this small fleet with a sizeable ship
management company will generate the advantages of being with a large
fleet, such as excellent purchasing power for stores, repairs and other matters
which the large manager will be able to obtain. And as the operation of ships
becomes more heavily regulated, the demand for these “ships’ husbands”
(which they were called in the past, continues to grow.
Something like one third of the world’s fleet is in the hands of ship
management companies, which themselves have been innovative in
developing sophisticated systems of management. There is brisk competition
between management companies, so that there is always an incentive to be
more efficient and innovative. Many of the larger management companies are
highly regarded, developing methods of running ships more efficiently,
organizing the training of their own staff and providing a fine career structure
for professionals ashore and afloat. And as shipping itself becomes more
specialized, the managers are developing accordingly, able to provide
specialist services for every kind of fleet.
4
Outsourcing ship management services to third-party service providers
can help shipping companies enhance their operational efficiency in running
the day-to-day operations of the vessel.6
There are a wide range of activities involved in the management and
operation of a ship, which can include maintenance engineering, vessel
crewing, quality system management, safety system management, integrated
logistics support, property management, inventory control, and procurement.7
Ship managers and ship owners strike an agreement as to the scope of
power the manager holds. Some shipping companies for instance, turn over
full control of the ship's operations to the third-party ship management
provider. This gives ship owners the chance to focus on their core
competencies, and find ways to improve their business.8
Ship owners can also choose to transfer control of specific marine
operations, such as vessel crewing, and even shore-based activities such as
logistics support.9
When choosing a ship operations and management company to run a
fleet, it's always important to choose a company with extensive experience in
the field. Aside from having the expertise and experience that newer
companies do not have, they are also likely to have a larger network of
contacts, which is useful when finding new crew for vessels or procuring
items.10
6 http://ezinearticles.com/?Third-Party-Ship-Management-Services---What-to-Look-For-When-Choosing-to-Outsource&id=43975067 Ibid8 Ibid9 10 Ibid
5
More experienced companies also provide better ship management
services because they have a firmer grasp of the extensive international
regulations and standards that oceangoing vessels need to be in compliance
with. A number of more established ship operations and management firms
can handle the full range of vessel management and ship building services.11
HISTORY OF MANAGEMENT
DEFINITION OF MANAGEMENT
Traditionally, the term "management" refers to the activities (and often
the group of people) involved in the four general functions: planning,
organizing, leading and coordinating of resources. 12
Note that the four functions recur throughout the organization and are
highly integrated. Emerging trends in management include assertions that
leading is different than managing, and that the nature of how the four
functions are carried out must change to accommodate a "new paradigm" in
management. 13
INTERPRETATION OF MANAGEMENT
Another common view is that "management" is getting things done
through others. Yet another view, quite apart from the traditional view, asserts
11 Ibid12 http:// library.upmin.edu.ph/...management/History%20of%20Management.ppt13 lbid
6
that the job of management is to support employee's efforts to be fully
productive members of the organizations and citizens of the community. 14
To most employees, the term "management" probably means the
group of people (executives and other managers) who are primarily
responsible for making decisions in the organization. 15
In a nonprofit, the term "management" might refer to all or any of the
activities of the board, executive director and/or program directors. Some
writers, teachers and practitioners assert that the above view is rather
outmoded and that management needs to focus more on leadership skills,
e.g., establishing vision and goals, communicating the vision and goals, and
guiding others to accomplish them. They also assert that leadership must be
more facilitative, participative and empowering in how visions and goals are
established and carried out. Some people assert that this really isn't a change
in the management functions, rather it's re-emphasizing certain aspects of
management. 16
SCIENTIFIC MANAGEMENT THEORY (1890 – 1940)
At the turn of the century, the most notable organizations were large
and industrialized. Often they included ongoing, routine tasks that
manufactured a variety of products. The United States highly prized scientific
and technical matters, including careful measurement and specification of
activities and results. Management tended to be the same. Frederick Taylor
14 lbid15 lbid16 http:// library.upmin.edu.ph/...management/History%20of%20Management.ppt
7
developed the “scientific management theory” which espoused this careful
specification and measurement of all organizational tasks. Tasks were
standardized as much as possible. Workers were rewarded and punished.
This approach appeared to work well for organizations with assembly lines
and other mechanistic, routinized activities. 17
BUREAUTIC MANAGEMENT THEORY (1930 - 1950)
Max Weber embellished the scientific management theory with his
bureaucratic theory. Weber focused on dividing organizations into hierarchies,
establishing strong lines of authority and control. He suggested organizations
develop comprehensive and detailed standard operating procedures for all
routinized tasks. 18
HUMAN RELATIONS MANAGEMENT THEORY (1930 - TODAY)
Eventually, unions and government regulations reacted to the rather
dehumanizing effects of these theories. More attention was given to
individuals and their unique capabilities in the organization. A major belief
included that the organization would prosper if its workers prospered as well.
Human Resource departments were added to organizations. The behavioral
sciences played a strong role in helping to understand the needs of workers
and how the needs of the organization and its workers could be better
aligned. Various new theories were spawned, many based on the behavioral
sciences (some had name like theory “X”, “Y” and “Z”). 19
17 lbid18 http:// library.upmin.edu.ph/...management/History%20of%20Management.ppt19 lbid
8
UNIT I
TYPES OF SHIP MANAGEMENT STYLES APPLIED BOTH IN THE
PHILIPPINE DOMESTIC SHIPPING AND INTERNATIONAL SHIPPING
SETTING:
9
1.1 AUTOCRATIC MANAGEMENT STYLE
An Autocratic Management Style is one where the Manager makes
decisions unilaterally, and without much regard for subordinates. As a result,
decisions will reflect the opinions and personality of the manager, which in
turn can project an image of a confident, well managed business. On the
other hand, strong and competent subordinates may chafe because of limits
on decision-making freedom, the organization will get limited initiatives from
those "on the front lines", and turnover among the best subordinates will be
higher. 20
The Leader will make decisions and outcomes based on his/her own
judgments and ideas alone, the manager will not take any advice or direction
from any of his employees or co-workers. Therefore the Autocratic Manager
cuts a powerful and knowledgeable figure, making sure everything is done
exactly to their liking without compromise, no-one would question or suggest
any changes to the leader, he wouldn’t listen anyway. 21
There are two types of autocratic leaders:
a directive autocrat makes decisions unilaterally and closely supervises
subordinates
20 http://en.wikipedia.org/wiki/Authoritarian_leadership_style21 http://www.typesofmanagement.net/autocratic-management/
10
a permissive autocrat makes decisions unilaterally, but gives
subordinates latitude in carrying out their work22
ADVANTAGES OF AUTOCRATIC MANAGEMENT
When decisions need to be quick and decisive, an Autocratic Manager
is your man, dishing out fast, forceful orders leaving no-one in doubt
who is in charge or which direction they all should be pulling. 23
With one figure head at the top, it leaves no-one in any doubt who’s in
charge, so there’s no excuse for lack of communication. 24
The Autocratic Manager will seem knowledgeable and experienced this
can reassuring for the staff. 25
DISADVANTAGES OF AUTOCRATIC MANAGEMENT
With the Autocratic Manager making all the decisions unilaterally, the
staff could be made to feel useless as they know their inputs or ideas
will not be listened to or even considered by the Leader. 26
The staff may always be looking to the Manager for direction or
inspiration; this can lead to poor initiative among the staff and even
slow productivity down by waiting for instructions from the boss. 27
An Autocratic Manager can start a ‘them versus us’ mentality between
the Management and Staff, leading to poor morale and less obedience.
22 http://en.wikipedia.org/wiki/Authoritarian_leadership_style23 http://www.typesofmanagement.net/autocratic-management/24 lbid25 lbid26 lbid27 lbid
11
The Manager could become overworked and stress due to having to
make all the decisions, if the manager become over-stressed, it could
cloud his decision-making, affecting the business. 28
Sometimes problems can be solved when looked upon by a fresh set
of minds; this would not happen in an autocratic leadership
environment. 29
EXAMPLES OF AUTORITHARIAN LEADERS
Adolf Hitler was extremely authoritarian.
He required the population of the Third Reich to
accept everything that he said as absolute law,
and was able to impose a death sentence on
anyone who failed to do so. Hitler was obsessed
with being in control, and with being the alpha
male in a rigid male dominance hierarchy. 30
Autocratic leadership style works well if the leader is competent and
knowledgeable enough to decide about each and everything. Authoritative is
considered one of the most effective leadership styles in case there is some
emergency and quick decisions need to be taken. 31
Bill Gates adopted this style and has steered Microsoft toward great
success. According to Bill Gates, he had a vision when he took reins of the
company and then used all the resources available to make that vision a
28 lbid29 http://en.wikipedia.org/wiki/Authoritarian_leadership_style30 lbid31 lbid
12
reality. In the personal computer workplace, many operating conditions call for
urgent action, making this style of leadership effective. 32
While Gates does not exhibit this
style consistently, his success can be
judged by his decision making process
and the growth of the computer industry in
the world. 33
All autocratic leaders share similar
qualities. They are often dictators, who rule
with an iron fist and allow no-one to oppose
them. When Marcos was alive, he was
known for repressing dissent -- those he
believed were his political enemies were
imprisoned or even killed. He did not allow
freedom of the press, and he curtailed civil
liberties. 34
AS APPLIED IN INTERNATIONAL SHIP MANAGEMENT
Autocratic management used very effectively in the military, exactly the
type of environment where once person has to take the lead role and guide
32 lbid33 http://en.wikipedia.org/wiki/Authoritarian_leadership_style34 http://wiki.answers.com/Q/What_makes_Ferdinand_Marcos_as_a_autocratic_leader
13
the rest. During situations of high pressure where everyone is either folding or
losing their heads, an autocratic leader is needed to steer a sinking ship and
co-ordinate the masses, an example of this would be during a natural disaster
where quick, decisive decisions can be critical.
The autocratic leadership style is best used in situations where control
is necessary, often where there is little margin for error. 35
When conditions are dangerous, rigid rules can keep people out of
harm’s way. Many times, the subordinate staff is inexperienced or unfamiliar
with the type of work and heavy oversight is necessary. 36
Therefore, Autocratic Management Style is not applicable to
International Ship Management.
AS APPLIED IN DOMESTIC SHIP MANAGEMENT
Management in the Philippines is very personal. People take
everything personally.
You have to be careful of what you say and how you say it, especially
criticism.
Therefore, Autocratic Management Style is not applicable either to
Domestic Ship Management.
1.2 PERMISSIVE MANAGEMENT STYLE
35 http://www.leadership-toolbox.com/autocratic-leadership.html36 lbid
14
Per-mis-sive (adjective): giving people a lot of freedom or too much freedom
to do what they want to do.37
The Permissive Management Style allows employees to take part in
business decisions. A rather considerable degree of autonomy on the
part of employees is encouraged in this management style.38
The manager provides full autonomy to the subordinates to execute
their responsibility in the most efficient way, without either monitoring it
or supervising it. This style is best suited for motivated and skilled
workers, but may fail with less skilled ones 39
This type of employee also facilitates delegating responsibilities
downward because they are willing and able to complete their job
tasks. 40
Two types of Permissive leaders:
PERMISSIVE DEMOCRAT: takes decisions participatively, and also
gives autonomy to the subordinates in executing their work.41
PERMISSIVE AUTOCRAT: takes decisions unilaterally, but gives
autonomy to the subordinates in executing their work.42
Innovation
37 http://www.merriam-webster.com/dictionary/permissive38 http://www.webpronews.com/is-your-management-style-assisting-or-hurting-your-business-2005-0639 http://expertscolumn.com/content/understanding-management-styles40 http://www.zarca.com/Online-Surveys-Product/Online-Surveys-Solutions/custom-business-solutions/management-style.html41 http://expertscolumn.com/content/understanding-management-styles42 lbid
15
The subordinates of a permissive leader are typically given free rein on
decision-making related to work responsibilities and projects. This
allows motivated employees to tap into creativity and develop
innovative ideas and solutions for the company. This creative freedom
is most effective with a team of innovative employees who work well
together, despite the lack of leadership from the management team. 43
New Leadership
Because subordinates are responsible for making decisions, a
workplace led by a permissive leader may result in new leaders
emerging. This gives potential leaders a chance to step forward and
help guide decisions within the work teams. Self-directed, motivated
employees are able to hone their leadership skills since they aren't
limited by a leader who takes full control of the workplace decisions. 44
DISADVANTAGES:
If a business owner possesses an Autocratic Management Style, and
the employees and/or type of business would benefit more from a
Permissive Management Style, problems will arise.45
43 http://smallbusiness.chron.com/benefits-using-autocratic-permissive-management-styles-37189.html44 lbid45 http://www.webpronews.com/is-your-management-style-assisting-or-hurting-your-business-2005-06
16
The lack of decisions or guidelines from the manager can cause a
disorganized, chaotic work environment.46
Unable to maintain consistency in the decisions made. When multiple
parties are involved in the decision-making, you often run into
disagreements on the proper way to proceed. This slows down the
decisions and may cause the company to miss out on opportunities.47
AS APPLIED IN INTERNATIONAL SHIPMANAGEMENT:
ITALY
Managers may take a somewhat paternalistic attitude to their employees.
They may demonstrate a concern for employees that goes beyond the
workplace and strictly profession. Employees follow the procedures handed
down by their managers.
They believe that their supervisors have been chosen because they have
more experience and greater knowledge than those they manage, and it is,
therefore, unnecessary, and even inappropriate for them to consult with lower-
ranking individuals when decision-making.
UNITED KINGDOM
Employees expect to be consulted on decisions that affect them and the
greater good of the organization.
46 http://smallbusiness.chron.com/benefits-using-autocratic-permissive-management-styles-37189.html47 lbid
17
Managers strive for consensus and make a concerted attempt to get
everyone's input before a decision is reached. The manager may still make
the ultimate decision, after consultation with the staff.
Brits believe the best ideas and solutions often come from having many
stakeholders meet to discuss an issue. They also prefer for the highest-
ranking person to make the decision (and then perhaps clear it with someone
at a higher level), so decision-making can be laborious.
NORWAY
Managers generally act as coordinators or team leaders rather than autocratic
micro-managers. They are task-oriented and emphasize achieving a goal,
productivity and profits. They expect their employees to do their job in a
professional manner.
Managers make decisions after they have reached a consensus with their
work team or others who will be affected by the decision. Their egalitarian
(aiming for equal wealth, status etc., for all people) culture supports a
participative management style.
GERMANY
Managers are expected to give precise directions when assigning tasks so
that there is no question what is expected.48
48 http://www.kwintessential.co.uk/intercultural/management/germany.html
18
Germans like working in teams and collaborate quite well across hierarchical
lines. The communication within a team is generally quite collegial, albeit
somewhat direct and blunt. Role allocation within the team is generally quite
clearly defined and people will take greater responsibility for their specific task
than for the group as a whole.49
The leader will be deferred to as the final authority in any decisions that are
made, but they do not dominate the discussion or generation of ideas. 50
SOUTH KOREA
Managers may take a somewhat paternalistic attitude to their employees. 51
Since social class is important to the culture, it is nearly impossible for a lower
class person to supervise a person from a higher class. Intercultural sensitivity
is essential as it is considered a serious breach of etiquette to put a young
person in charge of older workers. Employees expect companies, and their
managers, to be paternalistic.52
SINGAPORE
Managers may take a somewhat paternalistic attitude to their employees. 53
Singapore is a hierarchical culture, so the boss is considered to be superior to
their subordinates. Subordinates do not ask their boss questions, as it would
49 lbid50 http://www.kwintessential.co.uk/intercultural/management/germany.html51 http://www.kwintessential.co.uk/intercultural/management/korea.html52 lbid53 http://www.kwintessential.co.uk/intercultural/management/singapore.html
19
indicate that the boss had not done a good job of explaining what was
necessary. Subordinates will canvass other workers and come to a group
consensus of what should be done and how it should be accomplished.54
The manager may function autocratically and dictate to his subordinates. At
the same time, managers will not compliment or chastise an employee
publicly. In fact, should they want to communicate bad news to their
employees, they might use an intermediary.55
There may be informal networking between employees themselves or
supervisors and employees, although actual power is generally held in the
hands of a few key people at the top of the organization.56
UNITED STATES OF AMERICA
Employees expect to be consulted on decisions that affect them and the
greater good of the organization.57
American managers are viewed as facilitators--people who help employees
do their best work--and not simply decision makers. They empower
employees and expect them to take responsibility.58
54 lbid55 http://www.kwintessential.co.uk/intercultural/management/china.html56 lbid57 http://www.kwintessential.co.uk/intercultural/management/usa.html58 http://www.kwintessential.co.uk/intercultural/management/usa.html
20
Employees freely cross management levels and speak directly to senior
managers. This freedom is particularly apparent at meetings, where everyone
in attendance is encouraged to participate openly.59
AS APPLIED IN DOMESTIC SHIPMANAGEMENT:
PHILIPPINES
Each person has a very distinct role within the organization and management
would not be expected to consult with lower-ranking individuals when
decision-making.60
Managers may take a somewhat paternalistic attitude to their employees. 61
Decisions are reached at the top of the company, although a great deal of
time is spent building consensus prior to reaching the decision. Managers are
expected to provide their subordinates with detailed instructions that cover
anyeventuality.62
Managers adopt a paternalistic role towards their subordinates and guide
them in both their business and personal lives. 63
CONCLUSION:
59 lbid60 http://www.kwintessential.co.uk/intercultural/management/philippines.html61 lbid62 lbid63 lbid
21
Permissive style of management is not commonly applied both in
International and Domestic Ship Management, especially in big entities.
As we all knew, operations and transactions in the maritime industry
requires swift actions and decisions.
It will be too risky, time consuming and costly for the company.
1.3 CONSULTATIVE MANAGEMENT STYLE64
A consultative management style moves slightly further away from the
autocratic style that we looked at first. In this case the manager will actively
seek out the opinions of employees before a decision is made. While both an
autocratic manager and a persuasive manager will place the needs of the
business before the employees, a consultative manager is far more likely to
recognize that employees are able to make a valuable contribution to the
running of the company.
There are many situations in which a consultative management style
might be appropriate. In fact, most large scale organizations will use
managers who adopt this style at some level in their business. Consultative
managers consider the opinions of stakeholders, but decisions are still made
centrally. This means that there is an identifiable person who is responsible
for the decisions that are made, but that others are given an opportunity to
have some input into the decision making process.
Advantages64 http://business.mrwood.com.au/unit3/styskil/styskil3.asp?print=true&
22
1. More input from employees means a larger pool of ideas. A good idea
can be worth millions of dollars to a large scale organization. The
consultative style helps to ensure that more ideas are generated, and
so the potential for uncovering a million dollar idea is increased.
2. Related to the first point, the business will make better decisions. It is
one thing to generate ideas, and something else entirely to implement
the right one. The first step in making a good decision is to ensure that
several alternatives are considered. The consultative style makes this
possible.
3. Overall motivation will increase. When employees feel that their input
is valued, they are likely to be motivated to make a contribution to the
successful running of the business.
Disadvantages
1. This approach to employee involvement can take much longer. While
there is value in gaining input from a variety of different stakeholders,
there is no doubt that this will take much longer than an approach
where the decision is made by just one person.
2. Certain information needs to be protected by large scale organizations.
After more than one hundred years the formula for Coca-Cola is still a
secret, as is the specific blend of herbs and spices used by KFC. As
this information is “secret”, most stakeholders won’t be in a position to
provide a reasonable contribution to any decisions that must be made
about these issues.
23
3. Gaining input from a variety of stakeholders doesn’t ensure that any
particular person’s ideas will be used. This can mean that some
people feel disappointed if their ideas are sought and then overlooked
on a regular basis.
The consultative style is used on a regular basis by many large scale
organizations. This is because it maintains some of the advantages of the
more dominant management styles (such as the autocratic style) without the
loss of direction that can accompany the laissez faire style. Consultative
managers will often be seen asking various stakeholders what they would do
in certain situations, or how they would respond to events that have occurred.
While the final decision still rests with the manager, the action of seeking input
is part of the day-to-day reality of the business.
This style focuses on using the skills, experiences, and ideas of
others. However, the leader or manager using this style still retains the final
decision-making power. To his or her credit, they will not make major
decisions without first getting the input from those that will be affected.65
The consultative leader traits are: often involve others in problem
solving, team building, retains right for final decisions, focuses his/her time on
more important activities, provides proper recognition, delegates but keeps
“veto power”, weighs all alternatives before final decision is made.66
Filipino Management Style
65 http://weirdblog.wordpress.com/2007/09/04/leadership-styles-dictatorial-authoritative-consultative-participative/66 ibid
24
Management style tends towards the paternalistic as is often found in
strongly hierarchical cultures. However, managers need to be aware of certain
strong Filipino characteristics, which underpin personal relationships within
the country.67
Firstly, people are extremely careful to ensure that others do not suffer
embarrassment or any sense of shame (hiya) as a result of their own actions
or their inability to meet the expectations of others. It is considered to be very
bad behavior to criticize another in public, as this is the greatest insult that can
be given. To be openly criticized in public results in a loss of self-esteem and
personal dignity. Any attack on an individual's self-esteem may have to be
revenged.68
Therefore, managers are keen to treat subordinates with respect whilst,
at the same time, maintaining the dignity of the position of boss. Instructions
will be given clearly and precisely and subordinates will be expected to follow
those instructions with little or no discussion.69
Secondly, relationship bonds run deep in Filipino culture and the
manager expects loyalty. In return for this loyalty the boss will look after the
interests of those subordinates. It is very much a reciprocal arrangement.70
Being a Manager in the Philippines
The business set up in the Philippines is hierarchical. Intercultural
management needs to take into account the need to maintain a formal
67 http://www.worldbusinessculture.com/Filipino-Management-Style.html68 ibid69 ibid70 Ibid
25
manner and pay strict attention to titles, positions, and hierarchical
relationships. Expect to find many gatekeepers whose job is to protect the
schedule of and limit access to the ultimate decision maker. In this
relationship-driven culture, you will find it easier to make the proper contacts if
a third party who already has a relationship with the decision maker makes
the introduction.71
Filipinos avoid behaviors that would make either party lose face. This
leads to an indirect communication style, so carefully watch facial expressions
and body language. This is a country where a smile may mean many different
things, not all of them positive.72
Role of a Manager
Cross cultural management, when working in the Philippines, will be
more successful when bearing in mind that each person has a very distinct
role within the organization and management would not be expected to
consult with lower-ranking individuals when decision-making.73
In the Philippines, as in other hierarchical societies, managers may
take a somewhat paternalistic attitude to their employees. They may
demonstrate a concern for employees that goes beyond the workplace and
strictly professional concerns.74
Approach to Change
71 http://www.kwintessential.co.uk/intercultural/management/philippines.html72 Ibid73 Ibid74 Ibid
26
The Philippines’ intercultural adaptability and readiness for change is
apparent but because tradition is valued, change is not readily embraced
simply because it is new.75
Approach to Time and Priorities
Deadlines and timescales are fluid in the Philippines. Patience will play
an essential part in successful cross cultural management.
While timescales and deadlines need to be set well in advance and
reiterated carefully, it should be understood that these will be viewed as
flexible. Successful cross cultural management may require some degree of
patience.76
Global and intercultural expansion means that some managers may
have a greater appreciation of the need to enforce timescales and as such,
agreed deadlines are more likely to be met.77
Decision Making
Although many businesses retain hierarchical structures, decisions are
often made after reaching a consensus of the stakeholders. Few individuals
have full authority to make binding decisions concerning anything but
mundane matters.78
75 Ibid76 Ibid77 Ibid78 Ibid
27
Teamwork is becoming increasingly important in most organizations.
The best ideas and solutions often come from having many people meet to
discuss an issue.79
Filipino managers will praise employees, although not generally in
public. Subordinates expect their efforts to be recognized and rewarded. Most
Filipinos are suspicious if praise is excessive or undeserved.80
Boss or Team Player
This is a hierarchical culture where rank has its privileges. Decisions
are reached at the top of the company, although a great deal of time is spent
building consensus prior to reaching the decision. Managers are expected to
provide their subordinates with detailed instructions that cover any eventuality.
Since they do not want to lose face (or have shame), many Filipinos are
hesitant to ask for clarification if they are uncertain about a task. Therefore, it
is a good idea to use written instructions to supplement verbal
communications whenever possible.81
Managers adopt a paternalistic role towards their subordinates and
guide them in both their business and personal lives. Subordinates expect to
be praised for a job well done, and public praise is extremely important as it
heightens their self-respect. Criticism, however, must always be done in
private and must be handled diplomatically, being careful not to make the
subordinate lose face so some intercultural sensitivity will be necessary.82
Communication and Negotiation Styles
79 Ibid80 Ibid81 Ibid82 Ibid
28
Wait to be told where to sit. This is a hierarchical culture and quite
often seating conforms to the rank of the people involved. You may never
actually meet with the decision maker or it may take several visits to do so.
Decisions are made at the top of the company. Filipinos avoid confrontation if
at all possible. It is difficult for them to say "no". Likewise, their "yes" may
merely mean "perhaps". At each stage of the negotiation, try to get
agreements in writing to avoid confusion or cross cultural misinterpretation.
Decisions are often reached on the basis of feelings rather than facts, which is
why it is imperative to develop a broad network of personal relationships. Do
not remove your suit jacket unless the most important Filipino does.83
AS APPLIED IN INTERNATIONAL SHIPMANAGEMENT
American management seems to work best when the key needs are
speed, aggression, last-minute genius, and take-chance, inspiring leadership.
In boom times when it’s expand at all costs–pick the American style. At other
times the more deliberate, consultative European approach is your ally.
Maybe this is why we are hearing more from the Europeans these days.”84
A consultative management style can be viewed as a combination of
democratic and autocratic. The consultative manager will ask views and
opinions from their staff, allowing them to feel involved but will ultimately make
the final decision.85
AS APPLIED IN DOMESTIC SHIPMANAGEMENT
83 Ibid84 http://bizshifts-trends.com/2011/01/10/management-styles-u-s-europe-japan-china-india-brazil-russia/85 http://www.learnmanagement2.com/leadership%20styles.htm
29
In the Philippines,
Leading86
Employee's fear to express disagreement to their managers
In these cultures inequalities are expected and desired
Might makes right, skills-wealth-power-status go together
There is relatively strong congruence between how managers
behave and what workers expect from them.
Filipinos believe that human interaction and contact form the
basis of a successful business relationship.
1.4 DEMOCRATIC STYLE OF MANAGEMENT
The term democratic (dɛməˈkrætɪk) means of, characterized by,
derived from, or relating to the principles of democracy; upholding or favouring
democracy or the interests of the common people; popular with or for the
benefit of all.87 Democracy is a form of government in which all eligible
citizens participate equally—either directly or through elected representatives
—in the proposal, development, and creation of laws. It encompasses social,
economic and cultural conditions that enable the free and equal practice of
political self-determination.88 The term originates from the Greek δημοκρατία
(dēmokratía) "rule of the people", which was coined from δῆμος (dêmos)
"people" and κράτος (kratos) "power" or "rule" in the 5th century BCE to
denote the political systems then existing in Greek city-states, notably Athens;
86 ttps://www.google.com.ph/url?87 Collins English Dictionary - Complete & Unabridged 10th Edition 2009 © William Collins Sons & Co. Ltd. 1979, 1986 © HarperCollins Publishers 1998, 2000, 2003, 2005, 2006, 2007, 2009.88 Wikipedia. Retrieved 9/23/13
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the term is an antonym to ἀριστοκρατία (aristocratie) "rule of an elite".89 No
consensus exists on how to define democracy, but equality, freedom and rule
of law have been identified as important characteristics since ancient times.90
The term "democracy" first appeared in ancient Greek political and
philosophical thought in the city-state of Athens during classical antiquity. Led
by Cleisthenes, Athenians established what is generally held as the first
democracy in 508-507 BCE. Cleisthenes is referred to as "the father of
Athenian democracy.”91 In the democratic style of management, the
manager allows the employees to take part in decision-making: therefore
everything is agreed upon by the majority.92 The communication is extensive
in both directions (from employees to leaders and vice-versa).93 This style can
be particularly useful when complex decisions need to be made that require a
range of specialist skills: for example, when a new ICT system needs to be
put in place, and the upper management of the business is computer-
illiterate.94 From the overall business's point of view, job satisfaction and
quality of work will improve, and participatory contributions from subordinates
will be much higher.95 However, the decision-making process could be
severely slowed down unless decision processes are streamlined.96 The need
for consensus may avoid taking the 'best' decision for the business unless it is
89 Ibid90 Ibid91 Ibid92 Ibid93 Ibid.94 Ibid.95 Ibid.96 Ibid.
31
managed or limited.97 As with the autocratic leaders, democratic leaders are
also two types i.e. permissive and directive.98
Advantages of Democratic Management
Encourages group discussion, which can lead to greater
communication throughout the business, whether it’s between
employees or between employees and management.99
Employees are encouraged to convey their opinions to the
management staff regarding important issues; this makes the
employee feel significant to the company.100 Making the staff feel
valued can increasing morale and productivity.101
Management can harness the ideas from front line staff who are
involved in the day to day inner-workings of the business, allowing the
management to take action on issues the staff feel are holding the
company back.102
Because decisions are usually decided by the majority, it reduces the
chance of conflict, either between employees or between employees
and management.103
97 Ibid.98 Ibid.99 http://www.typesofmanagement.net/democratic-management/. Retrieved 9/23/13100 Ibid.101 Ibid.102 Ibid.103 Ibid.
32
Disadvantages of Democratic Management
If a vote or meeting takes place when every major decision has to be
made, the whole process can take a long time. Management may
struggle if asked to take quick and decisive action, something an
autocratic manager would strive under.104
The decisions may not be in the company’s best interest, because
they are decided upon by the majority, with the majority being the
workers, decisions could lean towards their best interests and not the
company’s.105
Another disadvantage of democratic management is when the staff is
not knowledgeable about the discussion, this can lead them to make
an incorrect vote or portray a mistaken vision for the business.106
We have talked about the advantage of reduced conflict as a result of
democratic management, but it can also increase conflict in certain
situations, if one group are opposed to a decision, it can create friction
between the people who are for implementing the new ideas.107
Conclusion
A democratic style of management will put trust in employees and
encourage them to make decisions.108 They will delegate to them the authority
104 Ibid.105 Ibid.106 Ibid.107 Ibid.108 http://tutor2u.net/business/gcse/people_management_styles.htm . Retrieved 9/23/13
33
to do this (empowerment) and listen to their advice.109 This requires good two-
way communication and often involves democratic discussion groups, which
can offer useful suggestions and ideas.110 Managers must be willing to
encourage leadership skills in subordinates.111
The ultimate democratic system occurs when decisions are made based
on the majority view of all workers.112 However, this is not feasible for the
majority of decisions taken by a business- indeed one of the criticisms of this
style is that it can take longer to reach a decision.113 This style has close links
with Herzberg’s motivators and Maslow’s higher order skills and also applies
to McGregor’s theory Y view of workers.114
Illustration
The following scenario is an example of the democratic style of
management in action:
“Steve manages a small sports centre. He has a team of
only ten staff, including an all-round sports instructor. This
means that he can run his team in the manner he likes
best: as a democracy.
When an area adjacent to Steve’s sports centre becomes
available, Steve draws up a Business Case for acquiring
109 Ibid.110 Ibid.111 Ibid.112 Ibid.113 Ibid.114 Ibid.
34
it and developing it into a ice-skating rink. He presents
this plan to his staff and gives them a week to do their
own research before holding a company meeting to
decide whether Steve should go ahead with his plan.
The team are divided between those who want to
expand, those who would rather have something quieter,
like a crazy golf course or a picnic area, and those who
are worried that the project will fail, jeopardising their own
salaries.
Steve compromises: he will acquire the area, but he will
build a rink for roller-blading rather than ice-skating. A
roller-blading rink will take far less time and cost, and can
easily be converted into something else – like a crazy golf
course – if it goes wrong.
Almost every member of staff approves of the new plan.
Steve’s receptionist privately think that he is an idiot for
not making his own decisions, but she doesn’t particularly
care whether they build an ice-skating or a roller-blading
rink. The caretaker announces that he will be happy so
long as he gets the assistant that has been promised to
him.
Only the sports instructor is unhappy. He has never tried
roller-blading or ice-skating, and he does not want Steve
to employ another instructor, because this might reduce
35
the demand for his swimming lesson and tennis
coaching.
Steve spends the whole morning bargaining with and
trying to persuade the sports instructor, but to no avail.
He tells his team that they can have another week to
think about the project, while he does some more
research into the figures and marketing.
Before the week is up, a rival company buys the vacant
site. Steve has to conceal his frustration as he watches
the construction process. The following year, when the
sports instructor has left to join his son’s newly-opened
gym in Wales, Steve sees the first adverts appear for an
ice-skating rink, smack next to his own small sports
centre.
Steve’s democratic style served him up to a point in
creating a cohesive and supportive team with personal
investment in his project. But Steve’s refusal to make a
decision without the full consent of his team left his staff
without direction.
Temporary adoption of the authoritative mantle would
have enabled Steve to acknowledge the views of his
sports instructor, to weigh them against the benefits to his
36
business, and to inform the team of his decision, rather
than waiting for theirs.”115
Filipino Style
It is said that the Filipino style of management in almost any
kind of business is characterized by strong personal relationships.
This has something to do with the concept of “damdamin” which is
more profound than its English translation (feelings).
In relation thereto, another Filipino cultural concept which
must be dealt with is “hiya” (shame). The manager should be very
careful so as not to embarrass or criticize any employee in public
since it may be considered as a grave insult, hence, an affront to
personal dignity which may exact revenge.
Managers should treat subordinates with respect who, in
turn, are expected to follow the boss’ instructions to the letter. The
Filipino manager expects loyalty from his subordinates while the
latter expects the former to look after them.
1.5 CHAOTIC STYLE OF MANAGEMENT
A very modern style of management, chaotic management gives the
employees total control over the decision making process. Some modern
companies have adopted this style of management and in return have
become some of the most influential and innovative companies.116
115 http://training-course.org/management-style-democratic-manager.php> . Retrieved 9/23/13116 : http://en.wikipedia.org/wiki/Management_styles
37
Chaos Theory regards organizations/businesses as complex, dynamic,
non-linear, co-creative and far-from-equilibrium systems. Their future
performance cannot be predicted by past and present events and actions. In a
state of chaos, organizations behave in ways which are simultaneously both
unpredictable (chaotic) and patterned (orderly).117
Change is constant. Although certain events and circumstances in an
organization can be controlled, others can't. Chaos theory recognizes that
change is inevitable and is rarely controlled. While organizations grow,
complexity and the possibility for susceptible events increase. Organizations
increase energy to maintain the new level of complexity, and as organizations
spend more energy, more structure is needed for stability. The system
continues to evolve and change118.
The notion of chaos denotes crisis and disorder, a state of non-
equilibrium, instability, turbulence, rapid or rupturing changes that scramble
plans and cause unpredictability, with consequences of anxiety, fear of
unknown, and triggering and tripling effects of destruction and systems
breakdown. There is no single definition of chaos theory. The notion has been
used interchangeably with such concepts as non-linear systems models,
disorder theory, and dynamical complex theory. The notion has also appeared
117 http://rudolftjandra.com/chaos-theory-of-management/118 http://smallbusiness.chron.com/management-theories-concepts-workplace-17693.html
38
in association with ‘‘catastrophe’’ theory (Thom, 1972; Zeeman, 1977)
developed out of Poincare’s (1880–90) ‘‘bifurcation’’
theory and ‘‘discontinuity’’ theory (Ross, 2000; Follmer, 1974; Brook,
1993;Brock and Durlauf, 1995), ‘‘nonequilbrium’’ dynamical theory,
‘‘dialecticaldynamic’’ theory (Ilyenkov, 1977; Farazmand, 2002b), ‘‘complexity’’
theory of the Brussels School (Nicolis and Prigogine, 1977), and ‘‘synergetics’’
theory developed by Haken (1983) of the Stuttgart School.119
Chaos theory is a scientific principle describing the unpredictability of
systems. Most fully explored and recognized during the mid-to-late 1980s, its
premise is that systems sometimes reside in chaos, generating energy but
without any predictability or direction. These complex systems may be
weather patterns, ecosystems, water flows, anatomical functions, or
organizations. While these systems's chaotic behavior may appear random at
first, chaotic systems can be defined by a mathematical formula, and they are
not without order or finite boundaries.120
ORIGIN OF CHAOS THEORY
One of the first scientists to comment on chaos was Henri
Poincaré(1854–1912), a late-nineteenth century French mathematician who
extensively studied topology and dynamic systems. He left writings hinting at
the same unpredictability in systems that Edward Lorenz (b. 1917) would
119 FARAZMAND,ALI, Public Organization Review: A Global Journal 3: 339–372 (2003). Chaos and Transformation Theories:A Theoretical Analysis with Implications for Organization Theory and Public Management.Uploaded from http://59.67.71.237:8080/gg/wenxian/en/06.pdf120 http://www.referenceforbusiness.com/management/Bun-Comp/Chaos-Theory.htm
39
study more than half a century later. Poincaré explained, "It may happen that
small differences in the initial conditions produce very great ones in the final
phenomena. A small error in the former will produce an enormous error in the
latter. Prediction becomes impossible." Unfortunately, the study of dynamic
systems was largely ignored long after Poincaré's death.121
Ilya Prigogine, Nobel laureate, showed that complex structures
could result from simpler ones. This is like order coming from chaos. Henry
Adams previously described this with his quote “Chaos often breeds life,
when order breeds habit”. Henri Poincaré was really the “Father of Chaos
[Theory],” however. The planet Neptune was discovered in 1846 and had
been predicted from the observation of deviations in Uranus’ orbit. King
Oscar II of Norway was willing to give a prize to anyone who could prove or
disprove that the solar system was stable. Poincaré offered his solution, but
when a friend found an error in his calculations, the prize was taken away
until he could come up with a new solution that worked. He found that there
was no solution. Not even the laws of Sir Isaac Newton provided a solution
to this huge problem. Poincaré had been trying to find order in a system
where there was none to be found. Chaos theory was formulated during the
1960s. Significant and more practical work was done by Edward Lorenz in
the 1960s. The name chaos was coined by Jim Yorke, an applied
mathematician at the University of Maryland (Ruelle, 1991).122
121 http://www.referenceforbusiness.com/management/Bun-Comp/Chaos-Theory.html122 http://rudolftjandra.com/chaos-theory-of-management
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When Chaos Theory was first explored as an explanatory theory for
management practice, Dan Griffiths, Ann Hart and Billie Blair wrote: “A great
many facets of administrative work cannot be described, explained, or
predicted by current [management] theories…[managers] are chagrined when
seemingly minor and innocuous events that are quickly forgotten surface later
as major lawsuits, noisy demonstrations, acrimonious confrontations, or
strikes. These events do not seem to be related to the [manager’s]
competence, foresight, intelligence, knowledge, or sensitivity. Because these
events are unrelated to the customary relationships that characterize a
leader’s work, they represent a form of disorder that reappears with seeming
regularity.”123
Usage of Chaos Theory. Applications
The principles of Chaos Theory have been successfully used to describe
and explain diverse natural and artificial phenomena. Such as:
Predicting epileptic seizures.
Predicting financial markets.
Modelling of manufacturing systems.
Making weather forecasts.
Creating Fractals. Computer-generated images applying Chaos
Theory principles.
123 Blair,Billie G. Uploaded from www.marinemoneyoffshore.com/node/6158
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In a scenario where businesses operate in a turbulent, complex and
unpredictable environment, the tenets of Chaos Theory can be extremely
valuable. Application areas can include:
Business Strategy / Corporate Strategy.
Complex decision-making.
Social sciences.
Organizational behaviour and organizational change.
Stock market behaviour, investing.124
Steps in Chaos Theory Process
To control chaos, the system or process of chaos has to be controlled. To
control a system, what is needed is:
1. A target, objective or goal which the system should reach. For a
system with predictable behaviour (deterministic) this may be a
particular state of the system.
2. A system capable of reaching the target or goal.
3. Some means of influencing the system behaviour. These are the
control inputs (decisions, decision rules, or initial states).125
ADVANTAGES OF CHAOTIC MANAGEMENT STYLE
124 http://rudolftjandra.com/chaos-theory-of-management/
125 http://rudolftjandra.com/chaos-theory-of-management/
42
1. Popularized around the world by multinational company Google, this
management style believes that employees perform to their full
potential when they are given a free hand. Many modern thinkers
believe that chaotic management style allows an employee to work on
his idea, without the interference of the management, and this helps in
creating new innovations. They are also of the opinion that the chaotic
management style will be adopted by a lot of companies in the future
as the management will need to be in sync with the fast-paced lifestyle
of the employees.126
2. Some managers prefer a chaotic management style. With the rise in
technology and persons becoming more and more creative, this style
of management may be the wave of the future. Not everyone is
technologically savvy or innovative, so this style would not work for all
industries. Usually, employees who are technologically savvy tend to
like this approach to management, as they seem best able to attain
their creative potential without constant meddling from managers.127
3. Chaotic management deploys minimum physical supervision of
employees and expects that in return to the acres of room they get to
execute their jobs, the employees will take responsibility for their
decisions and actions.128
126 Khilawala, Rashida (2013). Uploaded from http://www.buzzle.com/articles/management-styles-list-of-different-types-of-anagement-styles.html#P
127 http://www.assertsuccess.com/management-style/128 http://www.nation.co.ke/Features/DN2/Chaotic-management-proposed-for-Gen-Ys-/-/957860/1860340/-/sgm0pnz/-/index.html
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4. Organizational expectations for acceptable behavior, and the degree of
freedom with which individuals are allowed to work, shape the way a
company's problems and challenges are handled by its members. By
allowing people and groups within an organization some autonomy,
businesses encourage the organization to organize itself, enacting
multiple iterations of its own functioning until the various pieces of the
organization can work together most effectively.129
5. Periods of chaos can dramatically increase progress by breaking down
old barriers. While chaos introduces new risks, it also introduces new
opportunities. People, project managers in particular, are drawn to
create order and structure. That order helps us work together
peacefully, like traffic signals at a busy intersection. However, when
the outside world changes, the order can trap us in stagnant eddies or
ineffective organizations.130
6. A little unstructured time opens up our creativity and helps us see the
world differently. A chance encounter with a new person, or a new
idea could alter our path just a little and make a huge difference in how
we do. Likewise, as leaders, we can help guide our teams to make the
small changes that help them succeed. All it takes is a little knowledge
of chaos theory.131
129 Chaos Theory" Encyclopedia of Management Ed. Marilyn M. Helms. Vol. 1. Gale Cengage 2006 eNotes.com 22 Sep, 2013.Uploaded from http://www.enotes.com/topics/chaos-theory/reference#reference-chaos-theory-176669130 www.happy-project-management.com/Chaos-Theory.html131 Ibid.
44
DISADVANTAGES OF CHAOTIC MANAGEMENT STYLE
1. Applying chaos theory to organizational practice tends to go against
the grain of most formal management patterns. Order can be confused
with the more popular notion of control. Defined by organization charts
and job descriptions, traditional management does not generally seek
to add disorder to its strategic plan. As Wheatley states, "It is hard to
open ourselves up to a world of inherent orderliness." Organizations
are focused on structure and design. Charts are drawn to illustrate who
is accountable to whom or who plays what role and when. Business
experts break down organizations into the smallest of parts. They build
models of organizational practice and policy with hope that this
atomizing yields better information on how to improve the
organization's functioning. However, chaos theory implies that this is
unnecessary, even harmful.132
2. The limitations of applying Chaos Theory are in due mostly from
choosing the input parameters. The methods chosen to compute
these parameters depend on the dynamics underlying the data and
on the kind of analysis intended, which is in most cases highly
complex and not always accurate133
3. Chaos theory is not as simplistic to find an immediate and direct
application in the business environment, but mapping of the business 132 "Chaos Theory" Encyclopedia of Management Ed. Marilyn M. Helms. Vol. 1. Gale Cengage 2006 eNotes.com 22 Sep, 2013.Uploaded http://www.enotes.com/topics/chaos-theory/reference#reference-chaos-theory-176669.133 http://rudolftjandra.com/chaos-theory-of-management
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environment using the knowledge of chaos definitely is worthwhile
studying.134
CHAOTIC MANAGEMENT STYLE AS APPLIED TO PHILIPPINE
DOMESTIC SHIPPING:
Given the Philippines' American and Spanish heritage, it's easy to fall
into the trap of assuming that you can do business here in standard Western
mode. Manuel Quezon, the first President of the Philippine Commonwealth
during the years before World War II, once said: "The Filipinos are the most
occidental people of the Orient."135
The Philippine Business as Family. The family is always of vital
importance in the Philippines; not surprisingly, most business organizations
are modeled on the Filipino family. The boss and subordinate often exist in a
bata relationship, basically like that between parent and child (bata literally
meaning "child"). As a consequence, paternalistic management styles are the
norm.
As you might expect, such a paternalistic and hierarchical
management structure implies that decision making in most organizations is
done at the top. And unless you have some excellent inside connections or
referrals, your initial contacts are not likely to be with the decision-maker.
134 http://rudolftjandra.com/chaos-theory-of-management
135 Henderson,Clarence.(1999). Pearl of the Orient Sea.Upload from http://www.apmforum.com/columns/orientseas6.htm.
46
Getting to someone who can and will act on a proposal (i.e., sign a contract,
write a check) often has be done through one or more gatekeepers, a process
that can take a seeming eternity. However, once you finally push your way
through to the top, the gears can shift quickly and deals completed at warp
speed.136
Henderson (1999) stressed in his article, Pearl of the Orient Seas, that
the communications and management styles described are not dishonest or
intended to cheat the reader. They simply reflect the Filipino culture and long-
established way of doing things. The models and ideal types taught in
Western-oriented MBA programs are based on certain assumptions, many of
which are invalid in the Philippines. Although organizations here have most of
the structures and formal procedures of Western business, actual day-to-day
business processes and interactions necessarily proceed within the matrix of
Filipino culture and values. Thus, the needs for the Westerner to go “the extra
mile” to understand what’s really going on and adapt a culturally sensitive
style of doing business.137
Differences in cultural backgrounds of managers and employees are
frequently a source of misunderstanding. Corporate management in the
Philippines is a relatively new phenomenon introduced by the Americans.
Traditionally the only organization was the family, for even the barangay
(village) was loosely organized. Even today some big corporations in the
136 Ibid137 Henderson,Clarence.(1999). Pearl of the Orient Sea. Upload from http://www.apmforum.com/columns/orientseas6.htm.
47
Philippines still operate on familial lines, with modifications to suit the
contemporary requirements of corporate management.138
Filipino management often uses the compadre and extended family
systems which are strongly related to the concepts of losing face, ambiguity,
and utang na loob (debt of gratitude). Yet Filipino organizations also use the
automatic, bureaucratic, consensual, and participative styles associated with
western cultures.139
The paternalistic Filipino manager is compensating for what society
does not provide adequately. He is a surrogate pater familae and by satisfying
this expectation becomes a more effective manager.140
Although the Philippines uses some western concepts in managing
business like the domestic shipping industry, still, the domestic shipping
industry has not been using the chaotic management style .Research and
publications made by authorities in Philippine business management shows
that paternalistic and hierarchical management are widely use.
CHAOTIC MANAGEMENT STYLE AS APPLIED IN INTERNATIONAL
SHIPPING
The chaotic management style is relatively new – employees are given
control over the decision-making process, producing an organisation that is
very flat with authority often based around departments or divisions.141
138 http://www.pabc.org.ph/main/events.php?id=16139 http://www.pabc.org.ph/main/events.php?id=16140 Ibid141 http://www.hrzone.com/hr-glossary/management-styles-definition
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As chaotic and random as world events seem today, they seem as
chaotic in organizations, too. Yet for decades, managers have acted on the
basis that organizational events can always be controlled. A new theory (or
some say “science”), chaos theory, recognizes that events indeed are rarely
controlled. Many chaos theorists (as do systems theorists) refer to biological
systems when explaining their theory. They suggest that systems naturally go
to more complexity, and as they do so, these systems become more volatile
(or susceptible to cataclysmic events) and must expend more energy to
maintain that complexity. As they expend more energy, they seek more
structure to maintain stability. This trend continues until the system splits,
combines with another complex system or falls apart entirely. Sound familiar?
This trend is what many see as the trend in life, in organizations and the world
in general.142
Basic concept of the ship management is very similar for most ship
types. Ships, however, operate under wide range of conditions. The cargo
carried, the trade in which the ship is engaged and the background of the
crew all have effect on ship management and consequently, management
styles vary with the Company.143
Goulielmos (2010) describes life better than hither-to available
theories, as it deals more effectively with dynamic, non-linear and cyclical
phenomena.144
142 http://managementhelp.org/management/theories.htm143 Lwin,Soe Capt. Uploaded from http://www.wmu.sof.or.jp/fw_lwin_01.pdf144 Goulielmos,Alexander M. (2010). Uploaded from http://www.tandfonline.com/doi/abs/10.1080/03088830210144305#preview
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If however, a company is seen as self organized emerging
ordered ,then a new approach must be adopted ,i.e. that of complexity
theory.The choice of the above competition is because shipping environment
is indeed unpredictable, volatile, cyclical and international as well as
complex.It is believed that this theory can yield a new, more pragmatic ,insight
into the way shipping companies and ships should be managed. In addition,
no previous attempts have been made to apply this theory to management of
shipping companies.145
Farasmand ( 2003) noted that Chaos Theory is used in association
with ‘‘complexity’’ theory of the Brussels School (Nicolis and Prigogine,
1977).146
International shipping companies uses different style of management
to suit their organization need. Chaotic management style in shipping industry
is relative new concept and in these style of management, it give its
employees total control in decision making which is not yet adopted by
shipping companies.
1.5LAISSEZ-FAIR MANAGEMENT STYLE
145 Ibid146 Farazmand,Ali. Public Organization Review: A Global Journal 3: 339–372 (2003). Chaos and Transformation Theories:A Theoretical Analysis with Implications for Organization Theory and Public Management.Uploaded from http://59.67.71.237:8080/gg/wenxian/en/06.pdf
50
Laissez-faire (or sometimes laisser-faire) is an economic environment
in which transactions between private parties are free from government
restrictions, tariffs, and subsidies, with only enough regulations to protect
property rights.[1] The phrase laissez-faire is French and literally means "let
[them] do", but it broadly implies "let it be," "let them do as they will," or "leave
it alone". Scholars generally believe a laissez-faire state or a completely free
market has never existed.147
Etymology
According to historical legend, the phrase stems from a meeting in
about 1680 between the powerful French finance minister Jean-Baptiste
Colbert and a group of French businessmen led by a certain M. Le Gendre.
When the eager mercantilist minister asked how the French state could be of
service to the merchants and help promote their commerce, Le Gendre
replied simply "Laissez-nous faire" ("Let us be", lit. "Let us do’).148
The anecdote on the Colbert-Le Gendre meeting was related in a 1751
article in the Journal Oeconomique by the French minister and champion of
free trade, René de Voyer, Marquis d'Argenson—which happens to also be
the phrase's first known appearance in print.149 Argenson himself had used
the phrase earlier (1736) in his own diaries, in a famous outburst:
147Jump up ^ Buder, Stanley. 2009. Capitalizing on Change: A Social History of American Business Pg. 13. ISBN 978-0-8078-3231-8.Jump up ^ Hessen, Robert. ""A fully free economy, true laissez-faire, never has existed...", Robert Hessen, senior research fellow at Stanford University's Hoover Institution". Econlib.org. Retrieved 2013-07-30.148 Jump up ^ Journal Oeconomique 1751, Article by the French minister of finance.149 Jump up ^ M. d'Argenson, "Lettre au sujet de la dissertation sur le commerce du marquis de Belloni', Avril 1751, Journal Oeconomique p.111. See A. Oncken, Die Maxime Laissez faire et laissez passer, ihr Ursprung, ihr Werden, 1866
51
Laissez faire, telle devrait être la devise de toute puissance publique,
depuis que le monde est civilisé ... Détestable principe que celui de ne vouloir
grandir que par l'abaissement de nos voisins! Il n'y a que la méchanceté et la
malignité du coeur de satisfaites dans ce principe, et l’intérêt y est opposé.
Laissez faire, morbleu! Laissez faire!150 (Trans: "Let it be, that should be the
motto of all public powers, as the world is civilized ... That we cannot grow
except by lowering our neighbors is a detestable notion! Only malice and
malignity of heart is satisfied with such a principle and our (national) interest is
opposed to it. Let it be, for heaven's sake! Let it be!).
The laissez faire slogan was popularized by Vincent de Gournay, a
French Physiocrat and intendant of commerce in the 1750s, who is said to
have adopted the term from Francois Quesnay's writings on China.151 It was
Quesnay who coined the term laissez-faire, laissez-passer152 laissez-faire
being a translation of the Chinese term 無為 wu wei153Gournay was an ardent
proponent of the removal of restrictions on trade and the deregulation of
industry in France. Gournay was delighted by the Colbert-LeGendre
anecdote,154 and forged it into a larger maxim all his own: "Laissez faire et
laissez passer" ('Let do and let pass'). His motto has also been identified as
150 Jump up ^ as quoted in J.M. Keynes, 1926, "The End of Laissez Faire". Argenson's Mémoirs were published only in 1858, ed. Jannet, Tome V, p.362. See A. Oncken (Die Maxime Laissez faire et laissez passer, ihr Ursprung, ihr Werden, 1866)151 Jump up ^ Baghdiantz McCabe, Ina (2008). Orientalism in Early Modern France: Eurasian Trade Exoticism and the Ancien Regime. Berg Publishers. pp. 271–272. ISBN 978-1-84520-374-0.152 Jump up ^ "Library of Economics and Liberty". Liberty Fund, Inc. Retrieved 22 September 2013.Jump up ^ "Encyclopedia Britannica". Encyclopedia Britannica, Inc.153Jump up ^ Clarke, J.J. (1997). Oriental Enlightenment: The Encounter Between Asian and Western Thought. Routledge. p. 50. ISBN 978-0415133760.154 Jump up ^ According to J. Turgot's "Eloge de Vincent de Gournay," Mercure, August, 1759 (repr. in Oeuvres of Turgot, vol. 1 p.288.
52
the longer "Laissez faire et laissez passer, le monde va de lui même!" ("Let do
and let pass, the world goes on by itself!"). Although Gournay left no written
tracts on his economic policy ideas, he had immense personal influence on
his contemporaries, notably his fellow Physiocrats, who credit both the
laissez-faire slogan and the doctrine to Gournay.155
Before d'Argenson or Gournay, P.S. de Boisguilbert had enunciated
the phrase "on laisse faire la nature" ('let nature run its course').156 celebrated
motto "Pas trop gouverner" ("Govern not too much”)157 But it was Gournay's
use of the 'laissez-faire' phrase (as popularized by the Physiocrats) that gave
it its cachet.
Laissez faire was proclaimed by the Physiocrats in the eighteenth
century France, thus being the very core of the economic principles, and was
more developed by famous economists, beginning with Adam Smith.158 It is
with the physiocrats and the classical political economy that the term "laissez
faire" is ordinarily associated."[16] The book Laissez Faire and the General-
Welfare State mentions that, "The physiocrats, reacting against the excessive
mercantilist regulations of the France of their day, expressed a belief in a
155Jump up ^ Gournay was credited with the phrase by Jacques Turgot ("Eloge a Gournay", Mercure 1759), the Marquis de Mirabeau (Philosophie rurale 1763 and Ephémérides du Citoyen, 1767.), the Comte d'Albon (,"Éloge Historique de M. Quesnay", Nouvelles Ephémérides Économiques, May, 1775, p.136-7. ) and DuPont de Nemours (Introduction to Ouevres de Jacques Turgot, 1808–11, Vol. I, p.257 and p.259 (Daire ed.)) among others156 Jump up ^ "Tant, encore une fois, qu'on laisse faire la nature, on ne doit rien craindre de pareil", P.S. de Boisguilbert, 1707, Dissertation de la nature des richesses, de l'argent et des tributs.157 Jump up ^ DuPont de Nemours, op cit, p.258. Oncken (op.cit) and Keynes (op.cit.) also credit the Marquis d'Argenson with the phrase "Pour gouverner mieux, il faudrait gouverner moins" ("To govern best, one needs to govern less"), possibly the source of the famous "That government is best which governs least" motto popular in American circles, attributed variously to Thomas Paine, Thomas Jefferson and Henry Thoreau.158 Jump up to: a b c d Fine, Sidney. Laissez Faire and the General-Welfare State. United States: The University of Michigan Press, 1964. Print
53
"natural order" or liberty under which individuals in following their selfish
interests contributed to the general good. Since, in their view, this natural
order functioned successfully without the aid of government, they advised the
state to restrict itself to upholding the rights of private property and individual
liberty, to removing all artificial barriers to trade, and to abolishing all useless
laws."159
In England, a number of "free trade" and "non-interference" slogans
had been coined already during the 17th century. But the French phrase
laissez faire gained currency in English-speaking countries with the spread of
Physiocratic literature in the late 18th century. The Colbert-LeGendre
anecdote was relayed in George Whatley's 1774 Principles of Trade (co-
authored with Benjamin Franklin) - which may be the first appearance of the
phrase in an English language publication.160
Laissez-faire, a product of the Enlightenment, was "conceived as the
way to unleash human potential through the restoration of a natural system, a
system unhindered by the restrictions of government."161 In a similar vein,
Adam Smith viewed the economy as a natural system and the market as an
organic part of that system. Smith saw Laissez-faire as a moral program and
the market its instrument to ensure men the rights of natural law.162 By
extension, free markets become a reflection of the natural system of liberty.163
159 Ibid160Jump up ^ Macgregor, Economic Thought and Policy (London, 1949), pp. 54-67161 ^ Jump up to: a b c d e f g Gaspard, Toufick. A Political Economy of Lebanon 1948-2002: The Limits of Laissez-faire. Boston: Brill, 2004. Print162 Ibid163 Ibid
54
"For Smith, laissez-faire was a program for the abolition of laws constraining
the market, a program for the restoration of order and for the activation of
potential growth."164
However, Adam Smith,165 and the notable classical economists, such
as Thomas Malthus, and David Ricardo, did not use the phrase. Jeremy
Bentham used the term, but it was probably James Mill's reference to the
"laissez-faire" maxim (together with "pas trop gouverner") in an 1824 entry for
the Encyclopædia Britannica that really brought the term into wider English
usage. With the advent of the Anti-Corn Law League, the term received much
of its (English) meaning.166
Adam Smith first used the metaphor of an "invisible hand" in his book
The Theory of Moral Sentiments to describe the unintentional effects of
economic self-organization from economic self-interest.167 The idea lying
behind the "invisible hand", though not the metaphor itself, belongs to Bernard
de Mandeville and his Fable of the Bees. In political economy that idea and
the doctrine of laissez faire have always been closely related.168 True, Smith
was familiar with the term, but he chose not to use them in his political
economy and moral philosophy because they did not benefit the consumers
who, as a result of them, paid higher prices and because they restricted
164 Ibid165 ^ Jump up to: a b Roy C. Smith, Adam Smith and the Origins of American Enterprise: How the Founding Fathers Turned to a Great Economist's Writings and Created the American Economy, Macmillan, 2004, ISBN 0-312-32576-2, pp. 13–14.166 Jump up ^ Abbott P. Usher et al. (1931). "Economic History—The Decline of Laissez Faire". American Economic Review 22 (1, Supplement): 3–10.167 Jump up ^ Andres Marroquin, Invisible Hand: The Wealth of Adam Smith, The Minerva Group, Inc., 2002, ISBN 1-4102-0288-7, page 123.168 Jump up ^ John Eatwell, The Invisible Hand, W.W. Norton&Company, 1989, pp. Preface x1.
55
competition, and people risked serious injuries.169 Some have characterized
this metaphor as one for laissez-faire,170 but Smith never actually used the
term himself.171
Fundamentals of Laissez Faire
As a system of thought, laissez faire rests on the following axioms:172
1. The individual is the basic unit in society. 2. The individual has a natural
right to freedom. 3. The physical order of nature is a harmonious and self-
regulating system. 4. Corporations are creatures of the State and therefore
must be watched closely by the citizenry due to their propensity to disrupt the
Smithian spontaneous order. These axioms constitute the basic elements of
laissez-faire thought, although another basic and often-disregarded element is
that markets should be competitive, a rule that the early advocates of laissez-
faire have always emphasized.173
History of laissez-faire debate
China[During the Han, Tang, Song, and Ming dynasties, Chinese
scholar-officials would often debate about the interference the government
should have in the economy, such as setting monopolies in lucrative
169 Jump up ^ Kennedy, Gavin (September 21, 2012). "Adam Smith’s Lost Legacy". Retrieved April 6, 2013.170 Jump up ^ "The mathematical century: the 30 greatest problems of the last 100 years (2006) Piergiorgio Odifreddi, Arturo Sangalli, Freeman J Dyson, p. 122". Google.com. Retrieved 2013-07-30.171 ^ Jump up to: a b Roy C. Smith, Adam Smith and the Origins of American Enterprise: How the Founding Fathers Turned to a Great Economist's Writings and Created the American Economy, Macmillan, 2004, ISBN 0-312-32576-2, pp. 13–14.172 ^ Jump up to: a b c d e f g Gaspard, Toufick. A Political Economy of Lebanon 1948-2002: The Limits of Laissez-faire. Boston: Brill, 2004. Print173 Ibid
56
industries and instating price controls. Such debates were often heated with
Confucian factions tending to oppose extensive government controls and
"Reform" factions favoring such moves. During the Han and Tang, emperors
sometimes instated government monopolies in times of war, and abolished
them later when the fiscal crisis had passed. Eventually, in the later Song and
Ming dynasties, state monopolies were abolished in every industry and were
never reinstated during the length of that dynasty, with the government
following laissez-faire policies. During the Manchu Qing Dynasty, state
monopolies were reinstated, and the government interfered heavily in the
economy; many scholars believe this prevented China from developing
capitalism.174
Europe
In Europe the laissez faire movement was first widely promoted by the
physiocrats, a movement that originated with Vincent de Gournay, a
successful merchant. Gournay held that the government should allow the laws
of nature to govern economic activity, with the state only intervening to protect
life, liberty, and property. His ideas were taken up by Francois Quesnay and
Turgot, Baron de l'Aulne. Quesnay had the ear of the King of France, Louis
XV, and in 1754 persuaded him to give laissez faire a try. On September 17, 174 Jump up ^ Li Bo and Zheng Yin, 5000 years of Chinese History, Inner Mongolian People's publishing corp , ISBN 7-204-04420-7, 1017
57
the King abolished all tolls and restraints on the sale and transport of grain,
and for more than a decade the experiment was a success. But then, in 1768,
there was a poor harvest, and the cost of bread rose so high that there was
widespread starvation, while merchants exported grain in order to obtain the
best profit. In 1770, the edict allowing free trade was revoked.175
The doctrine of laissez faire became an integral part of nineteenth-
century European liberalism.176 "Just as liberals supported freedom of thought
in the intellectual sphere, so were they equally prepared to champion the
principles of free trade and free competition in the sphere of economics. The
state was to be merely a passive policeman, protecting private property and
administering justice, but not interfering with the affairs of its citizens.
Businessmen, and particularly British industrialists, were quick to associate
these principles with their own economic interests."177 Many of the ideas of the
physiocrats spread throughout Europe, and were adopted to a greater or
lesser extent in Sweden, Tuscany, Spain, and after 1776 in the newly created
United States. Adam Smith, author of The Wealth of Nations, met Quesnay
and acknowledged his influence.178
175 Jump up ^ Will & Ariel Durant, Rousseau and the Revolution, pp. 71–77, Simon and Schuster, 1967, ISBN 067163058X.176 ^ Jump up to: a b c d Fine, Sidney. Laissez Faire and the General-Welfare State. United States: The University of Michigan Press, 1964. Print177 Jump up ^ Will & Ariel Durant, Rousseau and the Revolution, pp. 71–77, Simon and Schuster, 1967, ISBN 067163058X.178 Jump up ^ Will & Ariel Durant, Rousseau and the Revolution, p. 76, Simon and Schuster, 1967, ISBN 067163058X.
58
In Britain, in 1843, the newspaper The Economist was founded and
became an influential voice for laissez-faire capitalism.179 Laissez-faire
advocates opposed food aid for famines occurring within the British empire; in
1847, referring to the famine then underway in Ireland, The Economist's
founder James Wilson wrote that "It is no man's business to provide for
another".180 However, The Economist campaigned against the Corn Laws
that protected landlords in the United Kingdom of Great Britain and Ireland
against competition from less expensive foreign imports of cereal products.
The Great Famine in Ireland in 1845 led to the repeal of the Corn Laws in
1846. The tariffs on grain which kept the price of bread artificially high were
repealed.181 However, repeal of the Corn Laws came too late to stop Irish
famine, partly because it was done in stages over three years.182
A group calling itself the Manchester Liberals, to which Richard
Cobden and Richard Wright belonged, were staunch defenders of free trade,
and their work was carried on, after the death of Richard Cobden in 1866, by
The Cobden Club.183 In 1867, a free trade treaty was signed between Britain
and France, after which several of these treaties were signed among other
European countries.
179 Jump up ^ Scott Gordon (1955). "The London Economist and the High Tide of Laissez Faire". Journal of Political Economy 63 (6): 461–488. doi:10.1086/257722.180 Jump up ^ Cormac Ó Gráda (1995). "section: Ideology and relief in Chpt. 2". The Great Irish Famine. Cambridge University Press. ISBN 9780521557870.181 Jump up ^ George Miller. On Fairness and Efficiency. The Policy Press, 2000. ISBN 978-1-86134-221-8 p.344182 Jump up ^ Christine Kinealy. A Death-Dealing Famine:The Great Hunger in Ireland. Pluto Press, 1997. ISBN 978-0-7453-1074-9. p. 59183 Jump up ^ Antonia Taddei (1999). "London Clubs in the Late Nineteenth Century" (PDF). Retrieved 2008-12-30.
59
United States
In a book titled Laissez Faire and the General-Welfare State, Sidney
Fine mentions:
Associated with the concept of natural rights and servings as an
additional buttress to the edifice of laissez faire was the faith of Americans in
the self-sufficiency of the individual. To a great extent the result of the
unusually favorable economic conditions that prevailed in the United States,
individualism became part and parcel of the nation's democratic faith.
Americans placed their trust not in "external government" but in the free
individual, who must be kept free from restrains; and it was widely held that as
individuals became more intelligent and more attuned to the moral law, there
would be a decreasing need for government184...It was, indeed, in the writings
of the transcendentalists Emerson and Thoreau that the doctrine of the free
individual attained its classic expression in mid-nineteenth-century America.
To Emerson, the self-reliant individual was more than a match for organized
government, and he foresaw the day when the advance of the individual
would render the state unnecessary.185 Thoreau was even more
contemptuous of the state, and in his famous essay "Civil Disobedience"
carried individualism to a point where it became almost indistinguishable from
anarchism.186 The teachings of classical political economy, which were
184 Jump up ^ Ralph Henry Gabriel, The Course of American Democratic Thought: An Intellectual History since 1815 (New York, 1940), pp. 4-6, 19-22;" American Political Ideas," North American Review, CI(October, 1865), 558185 Jump up ^ Raph Waldo Emerson, "Self Reliance," Essays, First Series (Boston, 1883), P.87; Emerson, "Politics," Essays, Second Series, p. 206186 Jump up ^ The Writings of Henry David Thoreau (Riverside ed.; Boston, 1894), X, 131-170
60
brought to America from England and France, also helped to promote the idea
of the negative state.
Frank Bourgin's dissertation on the Constitutional Convention and
subsequent decades argues that direct government involvement in the
economy was intended by the Founders.187 The reason for this was the
economic and financial chaos the nation suffered under the Articles of
Confederation. The goal was to ensure that dearly won political independence
was not lost by being economically and financially dependent on the powers
and princes of Europe. The creation of a strong central government able to
promote science, invention, industry and commerce was seen as an essential
means of promoting the general welfare and making the economy of the
United States strong enough for them to determine their own destiny. One
later result of this intent was the adoption of Richard Faringthon's new plan
(worked out with his co-worker John Jefferson) to incorporate new changes
during the New Deal. Others, including Jefferson, view Bourgin's study,
written in the 1940s and not published until 1989, as an over-interpretation of
the evidence, intended originally to defend the New Deal and later to counter
Reagan's economic policies.188
In his 1973 study of the economic principles established at the
foundation of the United States, E.A.J. Johnson wrote:
187 Jump up ^ Bourgin, Frank (1989). The Great Challenge: The Myth of Laissez-Faire in the Early Republic. New York, NY: George Braziller Inc. ISBN 0-06-097296-3.188 Jump up ^ Bourgin, Frank (1989-06-01). "THE GREAT CHALLENGE: The Myth of Laissez-Faire in the Early Republic by Frank Bourgin | Kirkus". Kirkusreviews.com. Retrieved 2013-07-30.
61
The general view, discernible in contemporaneous literature, was that
the responsibility of government should involve enough surveillance over the
enterprise system to ensure the social usefulness of all economic activity. It is
quite proper, said Bordley, for individuals to "choose for themselves" how they
will apply their labor and their intelligence in production. But it does not follow
from this that "legislators and men of influence" are freed from all
responsibility for giving direction to the course of national economic
development. They must, for instance, discountenance the production of
unnecessary commodities of luxury when common sense indicates the need
for food and other essentials. Lawmakers can fulfill their functions properly
only when they "become benefactors to the public"; in new countries they
must safeguard agriculture and commerce, encourage immigration, and
promote manufactures. Admittedly, liberty "is one of the most important
blessings which men possess," but the idea that liberty is synonymous with
complete freedom from restraint "is a most unwise, mistaken apprehension."
True liberty demands a system of legislation that will lead all members of
society "to unite their exertions" for the public welfare. It should therefore be
the policy of government to aid and foster certain activities or kinds of
business that strengthen a nation, even as it should be the duty of
government to repress "those fashions, habits, and practices, which tend to
weaken, impoverish, and corrupt the people."189
189 Jump up ^ Johnson, E.A.J. (1973). The Foundations of American Economic Freedom: Government and Enterprise in the Age of Washington. New York, NY: University of Minnesota Press. pp. 194–195. ISBN 0-8166-0664-1.
62
Notable examples of government intervention in the period prior to the
Civil War include the establishment of the Patent Office in 1802; the
establishment of the Office of Standard Weights and Measures in 1830; the
creation of the Coast and Geodetic Survey in 1807 and other measures to
improve river and harbor navigation; the various Army expeditions to the west,
beginning with Lewis and Clark's Corps of Discovery in 1804 and continuing
into the 1870s, almost always under the direction of an officer from the Army
Corps of Topographical Engineers, and which provided crucial information for
the overland pioneers that followed; the assignment of Army Engineer officers
to assist or direct the surveying and construction of the early railroads and
canals; the establishment of the First Bank of the United States and Second
Bank of the United States as well as various protectionist measures (e.g., the
tariff of 1828). Several of these proposals met with serious opposition, and
required a great deal of horse trading to be enacted into law. For instance, the
First National Bank would not have reached the desk of President George
Washington in the absence of an agreement that was reached between
Alexander Hamilton and several southern members of Congress to locate the
capital in the District of Columbia. In contrast to Hamilton and the Federalists
was the opposing political party the Democratic-Republicans.
Most of the early opponents of laissez-faire capitalism in the United
States subscribed to the American School. This school of thought was
inspired by the ideas of Alexander Hamilton, who proposed the creation of a
government-sponsored bank and increased tariffs to favor northern industrial
63
interests. Following Hamilton's death, the more abiding protectionist influence
in the antebellum period came from Henry Clay and his American System.
In the early 19th century, "it is quite clear that the laissez faire label is
an inappropriate one" to apply to the relationship between the US government
and industry.190 In the mid-19th century, the United States followed the Whig
tradition of Economic nationalism, which included increased state control,
regulation and macroeconomic development of infrastructure.[39] Public
works such as the provision and regulation transportation such as railroads
took effect. The Pacific Railway Acts provided the development of the First
Transcontinental Railroad.191 In order to help pay for its war effort in the
American Civil War, the United States government imposed its first personal
income tax, on August 5, 1861, as part of the Revenue Act of 1861 (3% of all
incomes over US $800; rescinded in 1872).
Following the Civil War, the movement towards a mixed economy
accelerated. Protectionism increased with the McKinley Tariff of 1890 and the
Dingley Tariff of 1897. Government regulation of the economy expanded with
the enactment of the Interstate Commerce Act of 1887 and the Sherman Anti-
trust Act.
190 Jump up ^ Prince, Carl E.; Taylor, Seth (1982). "Daniel Webster, the Boston Associates, and the U.S. Government's Role in the Industrializing Process, 1815–1830". Journal of the Early Republic 2 (3): 283–299. JSTOR 3122975.191 ^ Jump up to: a b Guelzo, Allen C. (1999). Abraham Lincoln: Redeemer President. Grand Rapids, Mich.: W.B. Eerdmans Pub. Co. ISBN 0-8028-3872-3.
64
The Progressive Era saw the enactment of more controls on the
economy, as evidenced by the Wilson Administration's New Freedom
program.
Following World War I and the Great Depression, the United States
turned to a mixed economy, which combined free enterprise with a
progressive income tax, and in which, from time to time, the government
stepped in to support and protect American industry from competition from
overseas. For example in the 1980s the government sought to protect the
automobile industry by "voluntary" export restrictions from Japan.192 Pietro S.
Nivola wrote in 1986:
By and large, the comparative strength of the dollar against major
foreign currencies has reflected high U.S. interest rates driven by huge federal
budget deficits. Hence, the source of much of the current deterioration of
trade is not the general state of the economy, but rather the government's mix
of fiscal and monetary policies– that is, the problematic juxtaposition of bold
tax reductions, relatively tight monetary targets, generous military outlays, and
only modest cuts in major entitlement programs. Put simply, the roots of the
trade problem and of the resurgent protectionism it has fomented are
fundamentally political as well as economic.193
192 Jump up ^ Robert W. Crandall (1987). "The Effects of U.S. Trade Protection for Autos and Steel". Brookings Papers on Economic Activity (Brookings Papers on Economic Activity, Vol. 1987, No. 1) 1987 (1): 271–288. doi:10.2307/2534518. JSTOR 2534518.193 Jump up ^ Pietro S. Nivola (1986). "The New Protectionism: U.S. Trade Policy in Historical Perspective". Political Science Quarterly (Political Science Quarterly, Vol. 101, No. 4) 101 (4): 577–600. doi:10.2307/2150795. JSTOR 2150795.
65
Critiques
Over the years, a number of economists have offered critiques of
laissez-fair economics.
Adam Smith acknowledged deep moral ambiguities towards the
system of capitalism.194 Smith had severe misgivings concerning some
aspects of each of the major character-types produced by modern capitalist
society: the landlords, the workers and the capitalists.195 "The landlords' role
in the economic process is passive. Their ability to reap a revenue solely from
ownership of land tends to make them indolent and inept, and so they tend to
be unable to even look after their own economic interests."196 "The increase
in population should increase the demand for food, which should increase
rents, which should be economically beneficial to the landlords. Thus,
according to Smith, the landlords should be in favour of policies which
contribute to the growth of in the wealth of nations. Unfortunately, they often
are not in favour of these pro-growth policies, because of their own indolent-
induced ignorance and intellectual flabbiness."197
The British economist John Maynard Keynes condemned laissez-faire
economic policy on several occasions.198 In The End of Laissez-faire (1926),
one of the most famous of his critiques, Keynes argues that the doctrines of
194 ^ Jump up to: a b c d Spencer J. Pack. Capitalism as a Moral System: Adam Smith's Critique of the Free Market Economy. Great Britain: Edward Elgar, 2010. Print195 Ibid196 Ibid197 Ibid198 Jump up ^ Dostaler, Gilles, Keynes and His Battles (Edward Elgar Publishing, 2007), p. 91.
66
laissez-faire are dependent to some extent on improper deductive reasoning,
and, Keynes says, the question of whether a market solution or state
intervention is better must be determined on a case-by-case basis.199
Austrian economist Friedrich Hayek stated that a freely competitive,
laissez-faire banking industry tends to be endogenously destabilizing and pro-
cyclical. He stated that the need for central banking control was
inescapable.200
Advantages of Laissez Faire Management
Laissez-faire management leaves a lot of responsibility in the hands of
the workers, this can lead to improved morale, the staff will feel valued and
the sense of responsibility can drive them forwards. Also, there should be less
conflict between managers and workers.
The workers are allowed to let their own ideas and creativity flourish,
can lead to exciting new ideas and different approaches to advance the
business, instead of relying on one brain at the head of the organization with
everyone else following.
Laissez-faire management can prove very efficient if the workforce
have a sense of responsibility and self-discipline.
Disadvantages of Laissez Faire Management
199 Jump up ^ Dostaler 2007, p. 91; Barnett, Vincent, John Maynard Keynes (Routledge, 2013), p. 143.200 Jump up ^ White, Lawrence H. (1999). "Why Didn't Hayek Favor Laissez Faire in Banking?". History of Political Economy 31 (4). Retrieved 11 April 2013.
67
If the workers are not responsible, and they see their managers’ hands-
off approach, they will carry out sub-standard work or do very little work. The
manager will not be looking over their shoulder so this could do unnoticed for
an extended period of time.
Without regular direction from the leader, the staff can lose their own
sense of direction, again leading to below-standard work without enough
monitoring and lack of accountability.
1.7 MBWA MANAGEMENT STYLE
MANAGEMENT BY WALK AROUND201
DEFINITION
Managers treat themselves as an essential part of the team and are
efficient listeners.
The superiors interact with the employees more often to find out their
concerns and suggestions.
In such a style of working, the leader is more of a mentor to its
employees and guides them whenever needed.
The managers don’t lock themselves in cabins; instead walk around to
find out what is happening around them.
It is the habit of stopping by to talk with people face to face, get a
sense of how they think things are going, and listen to whatever may
be on their minds.
201 http://management.fortune.cnn.com/2012/08/23/management-by-walking-around-mbwa/
68
Advantages:
Managers can observe and even participate in the daily grind, so to
speak, while getting to know their employees in the process.
For building rapport among team members, it beats emailing from
behind closed doors.
Employees are likely to be more engaged and productive if they see
you and speak with you frequently than if they don't.
There has been a tendency to manage employees via email, memos,
and formal meetings," she says — partly because many managers feel
that they just don't have time to meet with employees informally, and
partly because "younger and newly promoted managers" may never
have learned the basics of MBWA.
DISADVANTAGES:
o One big disadvantage of MBWA is the critical or oppressive
environment it can create.
o It may be that popping in on employees unexpectedly is, as you
say, a distraction — but enthusiasts say the practice also yields
real benefits.“ Management by walking around really helps you
be more visible, connect with employees and share ideas, and
invite suggestions for doing things better," says Annie Stevens,
69
managing partner at Boston-based executive coaching firm
Clear Rock.
Manage by walking away), Stevens offers this checklist of suggestions
for doing it right:
1. Make MBWA part of your routine. Dropping in on employees'
workspaces for an informal chat is most effective if you don't do it
on any fixed schedule, since "you'll realize the greatest returns by
seeing what is going on when people aren't prepared for you,"
Stevens says. But do plan for a bit of MBWA on your own calendar
every day, if you possibly can, even if it's only for half an hour: "The
more often you do it, the more beneficial it is."
2. Don't bring an entourage. MBWA works best as a continual stream
of one-on-one conversations with individual employees. Bringing
aides or assistants with you will probably just inhibit the discussion
by making people more self-conscious or, worse, make them feel
you're ganging up on them.
3. Visit everybody. As anyone might guess who's familiar with how
office rumor mills get spinning, dropping in on some folks more often
than others is likely to create the wrong kind of buzz. Try to spend
roughly the same amount of time — not necessarily all in the same
day or even the same week, but over the long run — with each
person who reports to you.
4. Ask for suggestions, and recognize good ideas. "Ask each employee
for his or her thoughts about how to improve products, processes,
70
sales, or service," Stevens says. Then, if someone's idea leads to a
positive result, make it known whose suggestion it was and show
you're ready to give credit where it's due.
5. Follow up with answers. If you can't answer an employee's question
off the top of your head, don't forget to get back to him or her with an
answer later, Stevens suggests. Besides being common courtesy, it
builds trust.
6. Don't criticize. Remember, you're on a fact-finding mission, with the
secondary purpose of building rapport. To avoid undermining those
aims, Stevens says, "If you find that an employee isn't performing his
or her job correctly, don't attempt to change the behavior on the spot.
Instead, make a note of it and address the problem at another time
and in another setting."
Clearly, MBWA takes some extra time and effort, but apart from any
tangible payoff it might yield down the road, you might even find that you
enjoy it. Stranger things have happened.
1.8 PATERNALISTIC MANAGEMENT STYLE
Paternalism – n. the system, principle, or practice of managing or
governing individuals, businesses, nations, etc. in the manner of a father
dealing benevolently and often intrusively with his children.202
202 dictionary.reference.com
71
“A policy or practice of treating or governing people in a fatherly way,
especially by providing for their needs without giving them rights or
responsibility.”203
- the attitude or policy of a government or other authority that
manages the affairs of a country, company, community, etc, in the manner of
a father, especially in usurping individual responsibility and the liberty of
choice.204
- a management style which is similar to the autocratic style in
that the manager has overall control of the company and expects his/her
orders to be obeyed when given to the subordinates.205
- is a form of management whereby managers pay more attention
to the social aspects of their employees; they are concerned with keeping
them happy and motivated, and act as a sort of father figure to the
employees. In such a management style, decisions are made with the best
interests of the workers at heart.206
- is where by managers try their best to act as father figure to the
employees, thus ensuring that all employees feel happy and appreciated
while working in the company. The managers will listen to the employees and
at times ask for their feedback and opinions while making any decisions.207
203 jeffdaugherty.wordpress.com/2010/03/05/pitfalls-of-a-paternalistic-management-style/204 dictionary.reference.com205 www.bsmr.com/tag/paternalistic-management-style/206 www.askcom/question/what-is-paternalistic-management-style207 Ibid
72
Paternalistic managers give more attention to the social needs and
views of their workers. Managers are interested in how happy workers feel
and in many ways they act as a father figure (pater means father in Latin).
They consult employees over issues and listen to their feedback or opinions.
The manager will however make the actual decisions (in the best interest of
the workers) as they believe the staff still needs direction and in this way it is
still somewhat of an autocratic approach. The style is closely linked with
Mayo’s Human Relation view of motivation and also the social needs of
Maslow.208
Pitfalls of Paternalistic Management Style209
Over staffing
Over-compensating
Allowance for “empire building”
Allowing poor performance to be the norm
Unequal treatment of employees
Increase cost of running an operation
Good possibility that monetary losses will be sustained
Incongruent and inconsistent performance appraisal will be given
Retreat from the realities of the real world of business
1.9 ASIAN MANAGEMENT STYLE210
208 www.tutor2u.net209 Ibid210 http://en.wikipedia.org/wiki/Management_styles
73
Like consultative and easily confused with autocratic and dictatorial;
however, decisions take into account the best interests of the employees as
well as the business, often more so than interests of the individual manager.
Communication is downward. Feedback and questioning authority are absent
as respect to superiors and group harmony are central characteristics within
the culture. This style demands loyalty from the employees, often more than
to societies' rules in general. Staff turnover is discouraged and rare. Worker
motivation is the status quo with East Asians often having the world's highest
numbers of hours worked per week, due to a sense of family duty with the
manager being the father, and staff being obedient children, all striving for
harmony, and other related Confucian characteristics. Most aspects of work
are done with a highly collectivist orientation. It shares disadvantages with an
autocratic style, such as employees becoming dependent on the leader, and
related issues with seniority based systems.
An Asian Paternalistic style means that the manager makes decisions
from a solid understanding of what is desired and best by both consumers
and staff. Managers must appear confident, with all answers, and promote
growth with harmony, often even if hiding harmful or sad news is required.
74
Description Advantages Disadvantages
Autocratic211 Senior managers take all the important decisions with no involvement from workers
Quick decision making
Effective when employing many low skilled workers
No two-way communication so can be de-motivating
Creates “them and us” attitude between managers and workers
Paternalistic Managers make decisions in best interests of workers after consultation
More two-way communication so motivating
Workers feel their social
Slows down decision making
Still quite a dictatorial or autocratic
211 www.tutor2u.net
75
needs are being met
style of management
Democratic Workers allowed to make own decisions
Some businesses run on the basis of majority decisions
Authority is delegated to workers which is motivating
Useful when complex decisions are required that need specialist skills
Mistakes or errors can be made if workers are not skilled or experienced enough
GROUP 1 SUMMARY:
In some parts of Europe, they foster management policies that may
encourage more balance in a manager’s life, between work & private activities
and risk & stability. Whether this will produce sustained economic superiority
or a model to be emulated in the U.S. is debatable.212
Antonio De Luca, Warner International NV, describes important
differences this way: “If one has to generalize, it is fair to say that Americans
pursue risk and Europeans seek stability … (leading) to fewer opportunities
with more limited financial rewards, but possibly more balance for Europeans.
212 http://bizshifts-trends.com/2011/01/10/management-styles-u-s-europe-japan-china-india-brazil-russia/
76
The solution, as usual, is a sensible convergence of these two nuanced
cultural approaches.”213
Roy Bingham, Managing Director/Partner, Health Business Partners,
LLC, points out that “American management seems to work best when the
key needs are speed, aggression, last-minute genius, and take-chance,
inspiring leadership. In boom times when it’s expand at all costs–pick the
American style. At other times the more deliberate, consultative European
approach is your ally. Maybe this is why we are hearing more from the
Europeans these days.”214
Jose Pedro Goncalves, Managing Partner DecisionMaster, Lda, takes
issue with the idea of a “European” style of management, pointing out that
there is no one style. In some parts of Europe “(as a manager) I’m a human
being”. In other parts, “I’m just a number”. In general “we (Europeans) are
more human, but less flexible…”215
Dr. B. V. Krishnamurthy, Professor M. P. Birla Institute of Management,
India, picks up this theme by commenting “to argue that Europe might be
snatching the lead in management is a little far-fetched. When one looks at
the very successful organizations anywhere in the world, one discerns striking
similarities—emphasis on efficiency, innovation, quality, and responsiveness
to customers—even as one also finds adaptations to cultural differences.”216
These comments tend to question whether management leadership
has a “geographic home” as opposed to a winning set of behaviors in part
213 Ibid214 Ibid215 Ibid216 Ibid
77
fostered by the competitive, social, cultural, and legal environment. Given the
prospect for continued movement toward competition and the propagation of
“best practice” management ideas on a global scale; is the question largely
academic?217
Dr. B. V. Krishnamurthy writes: “The Triad countries have dominated
international business to such an extent that after Japan’s amazing success
story, followed by the resurgence of American companies, it is perhaps
natural that the focus should now shift to Europe. The catalyst for this might
have been the economic union that Western Europe has achieved. The
search for that elusive concept of the “best style of management” continues,
although one could argue on the basis of lessons learned that there may not
be a best style. Centralization and decentralization can go together, flex-time
and tele-working are meant to improve productivity, and many of the
“either/or” concepts can be treated as complementary, to be used with
discretion…218
Gunasekar C Raharatnam, manaagement consultant, writes about the
India Management Style: ‘I doubt if there is clear approach that can be
described today. Some might point towards the many family owned and
managed business organizations in India, some of these are large corporate
entities and leaders in their industry but most are small tightly controlled family
businesses. Even such family businesses are increasingly being controlled by
the recent generations of well-educated inheritors. The management “styles”
217 Ibid218 Ibid
78
are changing and perhaps shifting more towards Western “styles” that are
being pushed by management schools.”219
India is an enormously hierarchical society and this, obviously, has an
impact on management style. It is imperative that there is a boss and that the
manager acts like a boss. The position of manager demands a certain amount
of role-playing from the boss and a certain amount of deferential behavior
from his subordinates… Anglo-Saxon concepts of egalitarianism where the
boss is the primus-inter-pares are virtually incomprehensible in a society still
dominated by the historical conventions of the caste system… Managing
people in India requires a level of micro-management which many western
business people feel extremely uncomfortable with, which is likely to bring the
best results.
In Brazil a manager’s personal style is considered to be of great
significance and it could almost be said that his or her vision/bearing is viewed
as of great an importance as their technical abilities… Relationships are of
key importance in this Latin culture and the boss and subordinates work hard
to foster a relationship based on trust and respect for personal dignity. First
and foremost, managers are expected to manage. The boss is expected to
give direct instructions and it is expected that these instructions will be carried
out without too much discussion or debate (if there is debate it should be done
in private to avoid showing public disrespect to the hierarchy).
219 Ibid
79
Decision-making in Brazil is often reserved for the most senior people.
Taking the time to build the proper working relationship is crucial to success.
Coming in as an outsider is often difficult, so it is advisable to have a third-
party introduction… Often the people you negotiate with will not have
decision-making authority. Decisions are made by the highest-ranking
person.220
China management style tends to follow Confucian philosophy:
Relationships are deemed to be unequal and ethical behavior demands that
these inequalities are respected: Older person should automatically receive
respect from the younger, the senior from the subordinate. This is the
cornerstone of all the China management thinking and issues such as
empowerment and open access to all information are viewed by the Chinese
as, at best, bizarre Western notions… Management is directive, with the
senior manager giving instructions to their direct reports who in turn pass on
the instructions down the line. Subordinates do not question the decisions of
superiors – that would be to show disrespect and be the direct cause of loss
of face (mianzi) for all concerned.221
Japan management style emphasis the need for information flow from
the bottom of the company to the top: Senior management is largely a
supervisory rather than “hands-on” approach. Policy is often originated at the
middle-levels of a company before being passed upwards for ratification. The
strength of this approach is obviously that those tasked with the
220 Ibid221 Ibid
80
implementation of decisions have been actively involved in the shaping of
policy.222
The higher a Japanese manager rises within an organization, the more
important it is that he appears unassuming and not ambitious. Individual
personality and forcefulness are not seen as the prerequisites for effective
leadership. The key task for a Japanese manager is to provide the
environment in which the group can flourish. In order to achieve this he must
be accessible at all times and willing to share knowledge within the group.
Manager is seen as a type of father figure who expects and receives loyalty
and obedience from colleagues. In return, the manager is expected to take a
holistic interest in the well-being of those colleagues. It is a mutually beneficial
two-way relationship….
Russian management style tends to be centralized and directive. The
boss, especially the ‘big boss’, is expected to issue direct instructions for
subordinates to follow. Little consultation will be expected from people lower
down the company hierarchy. Indeed too much consultation from a senior
manager could be seen as a sign of weakness and lack of decisiveness.
Middle managers have little power over strategy or input in significant
strategic decisions. The most powerful middle managers are the ones who
have the most immediate entree to the decision-maker at the top of the
organization. There is little point in wasting time debating with middle
managers who do not have an easy access to the top. The most significant
222 Ibid
81
reason for delay in reaching a decision in Russia is that the decision has not
been put in front of the real decision-maker…223
Management “Theory Z” is a name applied to three distinctly different
psychological theories. One was developed by Abraham H. Maslow in his
paper Theory Z and another is Dr. William Ouchi’s so-called “Japanese
Management” style popularized during the Asian economic boom of the
1980s. The third was developed by W. J. Reddin in Managerial Effectiveness.
Abraham Maslow, a psychologist and the first theorist to develop a
theory of motivation based upon human needs produced a theory that had
three assumptions. First, human needs are never completely satisfied.
Second, human behavior is purposeful and is motivated by need for
satisfaction. Third, these needs can be classified according to a hierarchical
structure of importance from the lowest to highest (Maslow, 1970).224
Maslow’s “Theory Z” in contrast to Theory X, which stated that workers
inherently dislike and avoid work and must be driven to it, and Theory Y,
which stated that work is natural and can be a source of satisfaction when
aimed at higher order human psychological needs.225
Theory X and Theory Y were both written by Douglas McGregor, a
social psychologist who is considered to be one of the top business thinkers
of all time. In McGregor’s book The Human Side of Enterprise (1960),
McGregor describes Theory X and Theory Y based upon Maslow’s hierarchy
of needs, where McGregor grouped the hierarchy into a lower order (Theory
223 Ibid224 Ibid225 Ibid
82
X) needs and a higher order (Theory Y) needs. McGregor suggested that
management could use either set of needs to motivate employees, but better
results could be gained from Theory Y, rather than Theory X (Heil, Bennis, &
Stephens, 2000).226
For Dr. William Ouchi, “Theory Z” focused on increasing employee
loyalty to the company by providing a job for life with a strong focus on the
well-being of the employee, both on and off the job. According to Ouchi,
Theory Z management tends to promote stable employment, high
productivity, and high employee morale and satisfaction.227
Ironically, “Japanese Management” and Theory Z itself were based on
Dr. W. Edwards Deming’s famous “14 points”. Deming, an American scholar
whose management and motivation theories were rejected in the United
States, went on to help lay the foundation of Japanese organizational
development during their expansion in the world economy in the 1980s.
Deming’s theories are summarized in his two books, Out of the Crisis and The
New Economics, in which he spells out his “System of Profound Knowledge“.
He was a frequent advisor to Japanese business and government leaders,
and eventually became a revered counselor. Deming was awarded the
Second Order of the Sacred Treasures by the former Emperor Hirohito, and
American businesses ultimately tried unsuccessfully to use his “Japanese”
approach to improve their competitive position.228
226 Ibid227 Ibid228 Ibid
83
Professor Ouchi spent years researching Japanese companies and
examining American companies using the Theory Z management styles. By
the 1980’s, Japan was known for the highest productivity anywhere in the
world, while America had fallen drastically. The word “Wa” in Japanese can
be applied to Theory Z because they both deal with promoting partnerships
and group work. The word “Wa” means a perfect circle or harmony, which
influences Japanese society to always be in teams and to come to a solution
together. Promoting Theory Z and the Japanese word “Wa” is how the
Japanese economy became so powerful. And also because the Japanese
show a high level enthusiasm to work, some of the researchers claim that ‘Z’
in the theory Z stands for ‘Zeal’.229
Ouchi wrote a book called Theory Z How American Business Can Meet
the Japanese Challenge (1981), in this book; Ouchi shows how American
corporations can meet the Japanese challenges with a highly effective
management style that promises to transform business in the 1980’s. The
secret to Japanese success, according to Ouchi, is not technology, but a
special way of managing people. “This is a managing style that focuses on a
strong company philosophy, a distinct corporate culture, long-range staff
development, and consensus decision-making”(Ouchi, 1981)…230
Another commentary on management is by bhattathiri, management
consultant, who writes: The Western idea of management centers on making
the worker (and the manager) more efficient and more productive…but it has
failed in ensuring betterment of individual life and social welfare. It has 229 Ibid230 Ibid
84
remained by and large a soulless edifice and an oasis of plenty for a few in
the midst of poor quality of life for many. There is an urgent need to re-
examine prevailing management disciplines – their objectives, scope and
content. Management should be redefined to underline the development of
the worker as a person, as a human being, and not as a mere wage-earner.
With this changed perspective, management can become an instrument in the
process of social, and indeed national development.231
231 Ibid
85
UNIT 2
Identification, analysis and interpretation of influences of the different Types of Ship Management Styles applied both in the Philippine domestic shipping and international shipping setting:
SWOT Analysis
Discover New Opportunities. Manage and Eliminate Threats.
Introduction:
SWOT Analysis is a useful technique for understanding your Strengths and
Weaknesses, and for identifying both the Opportunities open to you and the
Threats you face. It is a structured planning method used to evaluate the
Strengths, Weaknesses, Opportunities, and Threats involved in a project or in
a business venture. A SWOT analysis can be carried out for a product, place,
industry or person. It involves specifying the objective of the business venture
or project and identifying the internal and external factors that are favorable
and unfavorable to achieving that objective.232
What makes SWOT particularly powerful is that, with a little thought, it can
help you uncover opportunities that you are well placed to exploit. And by
understanding the weaknesses of your business, you can manage and
eliminate threats that would otherwise catch you unawares.
232 http://en.wikipedia.org/wiki/SWOT_analysis
86
More than this, by looking at yourself and your competitors using the SWOT
framework, you can start to craft a strategy that helps you distinguish yourself
from your competitors, so that you can compete successfully in your market.
How to Use SWOT Analysis
Originated by Albert S Humphrey in the 1960s, SWOT Analysis is as useful
now as it was then. You can use it in two ways – as a simple icebreaker
helping people get together to "kick off" strategy formulation, or in a more
sophisticated way as a serious strategy tool.
Tip: Strengths and weaknesses are often internal to your organization,
while opportunities and threats generally relate to external factors. For
this reason the SWOT Analysis is sometimes called Internal-External
Analysis and the SWOT Matrix is sometimes called an IE Matrix.
A SWOT analysis can be used for:233
Workshop sessions
Brainstorm meetings
Problem solving
Planning
Product evaluation
Competitor evaluation
Personal Development Planning
233 http://rapidbi.com/swotanalysis/
87
Decision making (with force field analysis)
Strengths:
What advantages does your organization have?
What do you do better than anyone else?
What unique or lowest-cost resources can you draw upon that others
can't?
What do people in your market see as your strengths?
What factors mean that you "get the sale"?
What is your organization's Unique Selling Point (USP)?
USP Analysis234
The Unique Selling Proposition: Finding Your "Competitive Edge"
Your USP is the unique thing that you can offer that your competitors can't.
It's your "Competitive Edge." It's the reason that customers buy from you and
you alone.
USPs have helped many companies succeed. And they can help you too
when you're marketing yourself (when seeking a promotion, finding a new job,
or just making sure that you get the recognition you deserve.) If you don't
have a USP, you're condemned to a struggle for survival – that way lays hard
234 http://www.mindtools.com/pages/article/newTMC_11.htm
88
work and little reward.
Consider your strengths from both an internal perspective, and from the point
of view of your customers and people in your market. Also, if you're having
any difficulty identifying strengths, try writing down a list of your organization's
characteristics. Some of these will hopefully be strengths! When looking at
your strengths, think about them in relation to your competitors. For example,
if all of your competitors provide high quality products, then a high quality
production process is not strength in your organization's market, it's a
necessity.
Weaknesses:
What could you improve?
What should you avoid?
What are people in your market likely to see as weaknesses?
What factors lose you sales?
Again, consider this from an internal and external basis: Do other people
seem to perceive weaknesses that you don't see? Are your competitors doing
any better than you? It's best to be realistic now, and face any unpleasant
truths as soon as possible.
Opportunities:
What good opportunities can you spot?
89
What interesting trends are you aware of?
Useful opportunities can come from such things as:
o Changes in technology and markets on both a broad and narrow
scale.
o Changes in government policy related to your field.
o Changes in social patterns, population profiles, lifestyle changes,
and so on.
o Local events.
Tip: A useful approach when looking at opportunities is to look at your
strengths and ask yourself whether these open up any opportunities.
Alternatively, look at your weaknesses and ask yourself whether you could
open up opportunities by eliminating them.
Threats
What obstacles do you face?
What are your competitors doing?
Are quality standards or specifications for your job, products or services
changing?
Is changing technology threatening your position?
Do you have bad debt or cash-flow problems?
Could any of your weaknesses seriously threaten your business?
90
Tip: When looking at opportunities and threats, PEST Analysis can help
to ensure that you don't overlook external factors, such as new
government regulations, or technological changes in your industry.
PEST Analysis235
Identifying "Big Picture" Opportunities and Threats
Harvard professor Francis Aguilar is thought to be the creator of PEST
Analysis. He included a scanning tool called ETPS in his 1967 book
"Scanning the Business Environment." The name was later tweaked to
create the current acronym.
PEST Analysis is useful for four main reasons:
1. It helps you to spot business or personal opportunities, and it gives you
advanced warning of significant threats.
2. It reveals the direction of change within your business environment.
This helps you shape what you're doing, so that you work with change,
rather than against it.
3. It helps you avoid starting projects that are likely to fail, for reasons
beyond your control.
4. It can help you break free of unconscious assumptions when you enter
a new country, region, or market; because it helps you develop an
235 http://www.mindtools.com/pages/article/newTMC_09.htm
91
objective view of this new environment.
Further SWOT Tips
If you're using SWOT Analysis as a serious tool (rather than as a casual
"warm up" for strategy formulation), make sure you're rigorous in the way
you apply it:
Only accept precise, verifiable statements.
Ruthlessly prune long lists of factors, and prioritize them, so that you
spend your time thinking about the most significant factors.
Make sure that options generated are carried through to later stages in the
strategy formation process.
Apply it at the right level - for example, you might need to apply SWOT
Analysis at product or product-line level, rather than at the much vaguer
whole company level.
Use it in conjunction with other strategy tools (for example, USP Analysis
and Core Competence Analysis) so that you get a comprehensive picture
of the situation you're dealing with.
Core Competence Analysis236
Building Sustainable Competitive Advantage
By using the idea, you'll make the very most of the opportunities open to you:
236 http://www.mindtools.com/pages/article/newTMC_94.htm
92
1. You'll focus your efforts so that you develop a unique level of expertise in
areas that really matter to your customers. Because of this, you'll
command the rewards that come with this expertise.
2. You'll learn to develop your own skills in a way that complements your
company's core competences. By building the skills and abilities that your
company most values, you'll win respect and get the career advancement
that you want.
Note: You could also consider using the TOWS Matrix. This is quite similar
to SWOT in that it also focuses on the same four elements of Strengths,
Weaknesses, Opportunities and Threats. But TOWS can be a helpful
alternative because it emphasizes the external environment, while SWOT
focuses on the internal environment.
Using the TOWS Matrix237
Developing Strategic Options From an External-Internal Analysis
TOWS Analysis is a variant of the classic business tool, SWOT Analysis.
TOWS and SWOT are acronyms for different arrangements of the words
Strengths, Weaknesses, Opportunities and Threats.
237 http://www.mindtools.com/pages/article/newSTR_89.htm
93
By analyzing the external environment (threats and opportunities), and your
internal environment (weaknesses and strengths), you can use these
techniques to think about the strategy of your whole organization, a
department or a team. You can also use them to think about a process, a
marketing campaign, or even your own skills and experience.
Our article on SWOT Analysis helps you perform a thorough SWOT/TOWS
Analysis. At a practical level, the only difference between TOWS and SWOT
is that TOWS emphasizes the external environment whilst SWOT emphasizes
the internal environment. In both cases, this analysis results in a SWOT (or
TOWS) Matrix.
Key Points
SWOT Analysis is a simple but useful framework for analyzing your
organization's strengths and weaknesses, and the opportunities and threats
that you face. It helps you focus on your strengths, minimize threats, and take
the greatest possible advantage of opportunities available to you.
SWOT Analysis can be used to "kick off" strategy formulation, or in a more
sophisticated way as a serious strategy tool. You can also use it to get an
94
understanding of your competitors, which can give you the insights you need
to craft a coherent and successful competitive position.
When carrying out your SWOT Analysis, be realistic and rigorous. Apply it at
the right level, and supplement it with other option-generation tools where
appropriate.
OVERVIEW OF SWOT MATRIX238
SWOT AnalysisPOSITIVE/ HELPFUL to
achieving the goal
NEGATIVE/ HARMFUL/
RISKS to achieving the
goal
INTERNAL ORIGIN
facts/ factors of the
organization.
Strengths Things that
are good now, maintain
them, build on them and
use as leverage.
Weaknesses Things
that are bad now,
remedy, change or stop
them.
EXTERNAL ORIGIN
facts/ factors of the
environment in which
the organization
operates.
Opportunities Things
that are good for the
future, prioritize them,
capture them, build on
them and optimize.
Threats Things that are
bad for the future, put in
plans to manage them
or counter them.
238 http://rapidbi.com/swotanalysis/
95
Below are the Results of the Study and Assessment Made by Group 2 on
Different Leadership Styles Using SWOT Analysis.
AUTOCRATIC STYLE OF MANAGEMENT
Autocratic Leadership is a leadership style characterized by individual control
over all decisions and little input from group members. Autocratic leaders
typically make choices based on their own ideas and judgments and rarely
accept advice from followers. Autocratic leadership involves absolute,
authoritarian control over a group. This style is effective in emergencies and
when absolute followership is needed. This leadership style is also effective
sometimes with new, relatively unskilled workers who need clear direction and
guidance.
STRENGTHS
Drive rapid results
Expert knowledge
Personal credibility and Experience
When decisions need to be quick and decisive.
Works well if the leader is knowledgeable and experienced.
Members become highly skilled at performing certain duties.
Pay great attention to small details.
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Prevent wastes of time and resources for leadership development in an
industry or firm.
WEAKNESSES
Short term solution
Does not build teams
Don’t communicate well
Viewed as bossy, controlling and dictatorial which can lead to resentment
among group members
Lack of feedback from group members
Groups may dislike that they can’t contribute ideas
Lack feedback from group members
Lack of initiative from group members
Staff became useless for the decision is on him alone.
No new opportunities or ideas that will come up.
Personal decision based on experience.
OPPORTUNITIES
Produces more accurate solutions when leaser is knowledgeable
Can be used in case of emergency where decision is needed immediately.
People with low motivation or achievement-orientation tend to work as little
as possible, and when working in a group, tend to pass on work to others.
An autocratic leader who assigns clear and precise responsibilities
ensures that such workers work their share.
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An autocratic leader empowered to make decisions and assign tasks and
deliverables to the team members, which helps to keep the project on
schedule.
When the project team consists entirely of new or inexperienced team
members unfamiliar with their role, autocratic leadership remains the best
approach to get work done without wasting time for the team members or
to learn by trial and error.
Autocratic Leadership styles suit most blue-collared workers, especially
those doing unskilled jobs that lack the qualifications, skills, or talent to
respond to any participative leadership styles, or have low motivation, or
require achievement acceptance to perform
THREATS
The inevitable dark side of leadership – everyone has at least one bad trait
among the many good ones.
People who abuse an autocratic leadership style are often viewed as
bossy, controlling, and dictatorial, which can lead to resentment among
group members.
Because autocratic leaders make decisions without consulting the group,
people in the group may dislike that they are unable to contribute ideas.
Autocratic leadership often results in a lack of creative solutions to
problems, which can ultimately hurt the performance of the group.
CONSULTATIVE MANAGEMENT
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In a consultative management style, the manager will actively seek out the
opinions of employees before a decision is made. While both an autocratic
manager and a persuasive manager will place the needs of the business
before the employees, a consultative manager is far more likely to recognize
that employees are able to make a valuable contribution to the running of the
company.
There are many situations in which a consultative management style might be
appropriate. In fact, most large scale organizations will use managers who
adopt this style at some level in their business.
Consultative managers consider the opinions of stakeholders, but decisions
are still made centrally. This means that there is an identifiable person who is
responsible for the decisions that are made, but that others are given an
opportunity to have some input into the decision making process.
How can a consultative management style be viewed?
A consultative management style can be viewed as a combination of
democratic and autocratic. The consultative manager will ask views and
opinions from their staff, allowing them to feel involved but will ultimately make
the final decision.
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The consultative style is used on a regular basis by many large scale
organizations. This is because it maintains some of the advantages of the
more dominant management styles (such as the autocratic style) without the
loss of direction that can accompany the laissez faire style. Consultative
managers will often be seen asking various stakeholders what they would do
in certain situations, or how they would respond to events that have occurred.
While the final decision still rests with the manager, the action of seeking input
is part of the day-to-day reality of the business.
This style focuses on using the skills, experiences, and ideas of others.
However, the leader or manager using this style still retains the final decision-
making power. To his or her credit, they will not make major decisions without
first getting the input from those that will be affected.
What are the consultative leader’s traits?
Often involve others in problem solving, team building, retains right for final
decisions, focuses his/her time on more important activities, provides proper
recognition, delegates but keeps “veto power”, weighs all alternatives before
final decision is made.
STRENGHTS
Involving and empowering employees through communication,
consultation and delegation.
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Works well when you are dealing with non-repetitive creative work.
Task oriented and always focuses on the end result by using the skills of
others in formulating plans and taking decisions.
Overall motivation will increase. When employees feel that their input is
valued, they are likely to be motivated to make a contribution to the
successful running of the business.
Consultative direction promotes consultative leadership style, as the term
implies, leader is willing to consult the group and encourages his
subordinates to present their opinions for decision making process
creating an environment of openness and conviction.
Owing to this style, there establishes two way method of communication
which leads to reach the conclusions as smoothly as possible. In other
words, it is seeking win-win solutions opening the doors of opinion to the
talented employees. Since a great concern of their leader to his
subordinates is manifested by this method, the employees develop the
sense of confidence and their morale is enhanced accordingly.
WEAKNESSES
Ways of working, however, are largely unspecified
Clarity of roles can be murky at times.
Quite difficult to manage when there are lots of different perspectives and
ideas
OPPORTUNITIES
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This model would suit a general improvement/ decision-making program,
whereby teams can be mentored and nurtured into positions.
It helps to develop leadership and decision-making ability in as a team.
Team building is a prime target in Consultative leadership.
More input from employees means a larger pool of ideas. A good idea can
be worth millions of dollars to a large scale organization. The consultative
style helps to ensure that more ideas are generated, and so the potential
for uncovering a million dollar idea is increased.
Related to the first point, the business will make better decisions. It is one
thing to generate ideas, and something else entirely to implement the right
one. The first step in making a good decision is to ensure that several
alternatives are considered. The consultative style makes this possible.
THREATS
Consultative style of management's drawback would be that the people
offering opinions wouldn't always agree.
Many ideas could bring stalemate if no one can bring the ideas together or
if no one can choose the best ones.
This approach to employee involvement can take much longer. While
there is value in gaining input from a variety of different stakeholders, there
is no doubt that this will take much longer than an approach where the
decision is made by just one person.
Gaining input from a variety of stakeholders doesn’t ensure that any
particular person’s ideas will be used. This can mean that some people
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feel disappointed if their ideas are sought and then overlooked on a
regular basis.
CONCLUSION
Advantages of the consultative direction are many, whereas the
disadvantages in proportion are few, such as, it may be time consuming to
reach the conclusions and the subordinates may dominate or it may be that
they may cause disruptions. Nonetheless, talented employees seek their own
ways to strengthen their professionalism owing to the consultative direction.
Although all the leadership styles have their own pros and cons, it is the duty
of a manager to apply such style that suits best to the situations. However, it
must be borne in mind that the objective of leadership is to eradicate the
elements hindering efficient performance of the employees – not to seek own
benefits – so that the organizational goals and objectives may be attained as
wanted. And it may be effectively done by inculcating the sense of collectivism
and making a group activity with the help of consultative direction.
You use a consultative leadership style when you ask your team members for
their input and opinion, but you still have the final say. You consult with the
group, yet you're responsible for choosing the best course of action.
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To use the consultative leadership style successfully, build trust in your team.
When trust is present, your team members will feel comfortable offering their
opinions and reacting honestly to issues.
Be open to the ideas and suggestions that your team members provide – if
you criticize or dismiss your team members' suggestions, they'll quickly stop
speaking up, especially if they suspect that you've already made up your
mind. Keep an open mind, and be willing to change your opinion if someone
presents a better idea.
PERMISSIVE MANAGEMENT STYLE
Per-mis-sive (adjective): giving people a lot of freedom or too much freedom
to do what they want to do.239
The Permissive Management Style allows employees to take part in
business decisions. A rather considerable degree of autonomy on the
part of employees is encouraged in this management style.240
The manager provides full autonomy to the subordinates to execute
their responsibility in the most efficient way, without either monitoring it
or supervising it. This style is best suited for motivated and skilled
workers, but may fail with less skilled ones 241
239 http://www.merriam-webster.com/dictionary/permissive
240 http://www.webpronews.com/is-your-management-style-assisting-or-hurting-your-business-2005-06
241 http://expertscolumn.com/content/understanding-management-styles
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This type of employee also facilitates delegating responsibilities
downward because they are willing and able to complete their job
tasks. 242
Two types of Permissive leaders:
PERMISSIVE DEMOCRAT: takes decisions participatively, and
also gives autonomy to the subordinates in executing their work.
PERMISSIVE AUTOCRAT: takes decisions unilaterally, but gives
autonomy to the subordinates in executing their work.
STRENGTHS
Subordinates are typically given free rein on decision making related to
work responsibilities and projects.
The leader Trusts in the abilities of people.
A constant flow of creative ideas is guaranteed when people are given
freedom at work.243
More than 100 % effort goes into work when you let people do their thing.
Going beyond the “Line-of duty” becomes just a way of life at work.
Employee confidence levels are at an all-time high.
Recognition future leaders get easier, so does your succession planning.
Serves as a “Platform” to generate newer ideas for the product /project.244
242 http://www.zarca.com/Online-Surveys-Product/Online-Surveys-Solutions/custom-business-solutions/
management-style.html243
http://expertscolumn.com/content/understanding-management-styles244
http://smallbusiness.chron.com/benefits-using-autocratic-permissive-management-styles-37189.html
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WEAKNESSES
Leaves all the decision - making to the employees.
May swing too far away from any form of leadership.
Absence or lack of an effective leadership.
OPPORTUNITIES
A workplace led by a permissive leader may result in new leaders
emerging.
This gives potential leaders a chance to step forward and help guide
decisions within the work teams.245
Self – directed, motivated employees are able to hone their leadership
skills since a leader who takes full control of the workplace decision
doesn’t limit them.
The end result of the Permissive Leadership working style is found to be
more effective and is getting the best out of people.
THREATS
The lack of decisions or guidelines from the manager can cause a
disorganized, chaotic environment.
Vacuum leadership
It could lead to misuse of freedom; managing egos will be an issue.
245 http://www.kwintessential.co.uk/intercultural/management/philippines.html
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ANALYSIS:
Permissive leadership is really about letting people choose their path; it is
more democratic in nature.246 They adopt a style that allows for free
discussions and decision making is done on a group basis. And has an
approach that encourages interpersonal relationship.
When manager-employee relations are moderate, to good and tasks
unstructured or structured, permissive works best.
PATERNALISTIC MANAGEMENT STYLE
It is a form of management whereby managers pay more attention to the
social aspects of their employees; they are concerned with keeping them
happy and motivated, and act as a sort of father figure to the employees. In
such a management style, decisions are made with the best interests of the
workers at heart.
The attitude or policy of a government or other authority that manages the
affairs of a country, company, community, etc, in the manner of a father,
especially in usurping individual responsibility and the liberty of choice.
STRENGTHS
The social needs of employees are being met
Everyone has input into the outcome
246 http://www.kwintessential.co.uk/intercultural/management/usa.html
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Lifts morale of the employee
Efficient leadership style
Extremely solid relationship with the staff
Employee is rewarded when well behaved
Mangers provide feedback & answers question
WEAKNESSES
Slows down decision making
Allowing poor performance to be the norm
Unequal treatment of employees
Increase cost of running an operation
Low staff motivation if loyal connection is not established
Dissatisfaction if bad decisions are made
Limits persons or group`s liberty or autonomy for their own good
Retreat from the realities of the real world of business
OPPORTUNITIES
Training programs that appeal to employee at variety of levels/expertise
Gives potential leaders a chance to step forward and help guide decisions
within the work teams
Newly promoted managers
THREATS
Envy from other department of other company
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The emergence of tailor- made style of management
LAISSEZ – FAIRE MANAGEMENT STYLE
It is a loose leadership style.247
Leader's role is peripheral and staffs manage their own areas of the
business.248
It allows employees to carry out activities freely within broad limits.249
STRENGTHS
Increase in productivity, cohesiveness, and satisfaction.
o If followers are highly skilled, experienced, and educated.
o If followers have pride in their work and the drive to do it
successfully on their own.
o If outside experts, such as staff specialists or consultants are being
used.
o If followers are trustworthy and experienced.250
Creates a more skilled workforce.
Can lead to improved morale.251
Promotes trust in the workers.252
247 http://businesscasestudies.co.uk/enterprise-rent-a-car/using-a-range-of-management-styles-to-lead-a-business/laissez-faire.html#axzz2jkBDycg6248 Ibid.249 http://businesscasestudies.co.uk/enterprise-rent-a-car/using-a-range-of-management-styles-to-lead-a-business/laissez-faire.html#axzz2jkBDycg6250 http://psychology.about.com/od/leadership/f/laissez-faire-leadership.htm251 http://www.wisegeek.com/what-is-laissez-faire-leadership.htm252 http://answers.yahoo.com/question/index?qid=20090810070723AAva12Q
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Less conflict between managers and workers.253
WEAKNESSES
Time consuming
Workers will carry out sub-standard work or do very little work.254
Little or no direction to the followers
Decision made usually skewed away from company interest.255
Not ideal in situations where group members lack the knowledge or
experience they need to complete tasks and make decisions
OPPORTUNITIES
Group members will grow for they are expected to solve problems on their
own a potential that somebody will rise to become a leader
Establish a good working relationship among the people in the company
THREATS
If the leader withdraws too much from their followers it can sometimes
result in a lack of productivity, cohesiveness, and satisfaction.256
Projects can get off-track resulting in deadlines being missed, which is
ultimately due to the lack of control and guidance that the leader has over
their team.
253 http://www.typesofmanagement.net/laissez-faire-management/254 http://answers.yahoo.com/question/index?qid=20090810070723AAva12Q255 http://managementstyle.org/laissez-faire-management-style.php/256 http://psychology.about.com/od/leadership/f/laissez-faire-leadership.htm
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ANALYSIS
Inefficient and ineffective in situations where an employee/team members lack
the knowledge and the experience needed. It could only be beneficial if the
leader possesses a great team of high achievers and performers. Almost all
routine or mundane tasks can be handled in a Laissez-Faire manner
MANAGEMENT BY WALKING AROUND (MBWA)
Definition
The Business Dictionary defines Management by Walking Around (MBWA) as
an unstructured approach to hands-on, direct participation by the managers in
the work-related affairs of their subordinates, in contrast to rigid and distant
management. In MBWA practice, managers spend a significant amount of
their time making informal visits to work area and listening to the employees.
The purpose of this exercise is to collect qualitative information, listen to
suggestions and complaints, and keep a finger on the pulse of the
organization. It is also called management by wandering around.
STRENGTHS/ADVANTAGES OF THE MBWA
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Management by walking around, popularized back in the '80s, may be making
a comeback.
For building rapport among team members, it beats emailing from
behind closed doors.
MBWA strengths lie on advantages of Staying in Touch with Your
Team. You manage better by getting to know members of your team in
their working environment.
MBWA is the habit of stopping by to talk with people face to face, get a sense
of how they think things are going, and listen to whatever may be on their
minds.This was how founders Bill Hewlett and David Packard ran their
eponymous computer company. After Tom Peters and Robert Waterman
wrote about it in their 1982 blockbuster bestseller In Search of Excellence,
MBWA became a buzzword for up-close-and-personal management. Steve
Jobs was the ultimate practitioner of this approach, taking it beyond Apple
(AAPL) employees to customers, whose complaints or comments he often
answered with a phone call.
It may be that popping in on employees unexpectedly is, as you say, a
distraction — but enthusiasts say the practice also yields real benefits.
"Management by walking around really helps you be more visible, connect
with employees and share ideas, and invite suggestions for doing things
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better," says Annie Stevens, managing partner at Boston-based executive
coaching firm ClearRock.
What MBWA Can Achieve
Since then, Management By Wandering Around has never really gone out of
fashion. If you use MBWA, you can increase the following
Approachability – When your staff sees you as a person and not just a
boss, they'll be more likely to tell you what's going on. You'll get the
chance to learn about issues before they become problems.
Trust – As your team gets to know you better, they'll trust you more. You'll
be naturally inclined to share more information, and that will break down
barriers to communication.
Business knowledge – Getting out and learning what's happening on a
daily basis can give you a better understanding of the functions and
processes around you.
Accountability – When you interact daily with your team, agreements you
make with each other are much more likely to be completed. Everyone is
more motivated to follow through, because you're seeing each other on a
regular basis.
Morale – People often feel better about their jobs and their organization
when they have opportunities to be heard. MBWA makes those
opportunities available.
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Productivity – Many creative ideas come from casual exchanges. MBWA
promotes casual discussions, so people will more likely feel free to come
to you with their ideas.
DISADVANTAGES/WEAKNESS OF THE MBWA
MBWA also, if not well intent, could be disadvantageous. Despite its obvious
benefits, use of MBWA has been hit-and-miss. To be successful, it takes
more than simply strolling through your office, warehouse, or production
facility. MBWA isn't a "walk in the park": It's a determined and genuine effort
to understand your staff, what they do, and what you can do to make their
work more effective.
Don't just do MBWA because you feel it's an obligation – this probably won't
work very well. You have to truly want to get to know your staff and
operations, and you have to commit to following up concerns and seeking
continuous improvement.
It requires the executive to randomly walk around their workplace to get a feel
for what is really going on. It forces them to see their domain in three
dimensions rather than through the prism of management reports and
analytics. It allows them to talk to employees and hear from the horse’s mouth
the challenges they're facing.
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The concept is a simple one, and in environments where employees are
within touching distance it can be amazingly effective. There are a few
disadvantages that MBWA has:
The limits of geography. Firstly it is kind limited by geography. It requires
managers actually walk around, and there's only so much ground an
executive can cover in amongst their other tasks.
It's limited to employees. When you can only cover so much distance it
stands to reason that your reach will be limited. Therefore it's
understandable that executives limit their focus to employees and don't
walk around customers and other stakeholders that would nevertheless
provide valuable insight.
It relies upon candid insights. A feature of MBWA is that it is random. The
thinking goes that if employees expect a visit from you then it will not
provide you with a true insight into what's going on. Even so, with an
executive stood over your shoulder, even a random visit is only going to
provide so much insight. Many employees will refrain from providing
honest insights if that means being critical of the boss
The Challenge: How to make MBWA works
To get connected and stay connected, you need to walk around and talk to
your team, work alongside them, ask questions, and be there to help when
needed. This practice has been called Management by Wandering Around (or
Management By Walking About) – MBWA for short.
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William Hewlett and David Packard, founders of Hewlett Packard (HP),
famously used this approach in their company. Tom Peters, in his wildly
successful 1982 book In Search of Excellence, included lessons learned from
HP and other companies that used a similar style – and the term MBWA
immediately became popular.
Beyond the obvious advantages of keeping your own finger on the pulse of
the organization, employees are likely to be more engaged and productive if
they see you and speak with you frequently than if they don't. That might
sound commonsensical, Stevens notes, but email has replaced ordinary face-
to-face contact in many workplaces, so that some bosses have come to seem
as remote and inscrutable as Oz behind his curtain.
"There has been a tendency to manage employees via email, memos, and
formal meetings," — partly because many managers feel that they just don't
have time to meet with employees informally, and partly because "younger
and newly promoted managers" may never have learned the basics of
MBWA.
Stevens offers this checklist of suggestions for doing it right for bosses who
would like to manage by walking around:
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1. Make MBWA part of your routine. Dropping in on employees'
workspaces for an informal chat is most effective if you don't do it on any fixed
schedule, since "you'll realize the greatest returns by seeing what is going on
when people aren't prepared for you," Stevens says. But do plan for a bit of
MBWA on your own calendar every day, if you possibly can, even if it's only
for half an hour: "The more often you do it, the more beneficial it is."
2. Don't bring an entourage. MBWA works best as a continual stream of
one-on-one conversations with individual employees. Bringing aides or
assistants with you will probably just inhibit the discussion by making people
more self-conscious or, worse, make them feel you're ganging up on them.
3. Visit everybody. As anyone might guess who's familiar with how office
rumor mills get spinning, dropping in on some folks more often than others is
likely to create the wrong kind of buzz. Try to spend roughly the same amount
of time — not necessarily all in the same day or even the same week, but
over the long run — with each person who reports to you.
4. Ask for suggestions, and recognize good ideas. "Ask each employee
for his or her thoughts about how to improve products, processes, sales, or
service," Stevens says. Then, if someone's idea leads to a positive result,
make it known whose suggestion it was and show you're ready to give credit
where it's due.
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5. Follow up with answers. If you can't answer an employee's question off
the top of your head, don't forget to get back to him or her with an answer
later, Stevens suggests. Besides being common courtesy, it builds trust.
6. Don't criticize. Remember, you're on a fact-finding mission, with the
secondary purpose of building rapport. To avoid undermining those aims,
Stevens says, "If you find that an employee isn't performing his or her job
correctly, don't attempt to change the behavior on the spot. Instead, make a
note of it and address the problem at another time and in another setting."
Clearly, MBWA takes some extra time and effort, but apart from any tangible
payoff it might yield down the road, you might even find that you enjoy it.
Stranger things have happened.
How to Implement MBWA:
These "wandering around" tips can help you get started:
Relax – People will sense your genuineness and casualness, and
they'll respond accordingly. Stiff, formal conversation will probably lead
to equally rigid responses.
Listen and observe more than you talk – Use active listening with your
staff. When people feel you're hearing them, you'll probably seem more
sincere. Read some pointers on active listening .
Ask for feedback and ideas – Let everyone know that you want ideas to
make things better. As the boss, people may think that your opinions
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and ideas are "right." So hold back from saying what you think – the
goal is to see what others have to say.
Wander around equally – Don't spend more time in one department or
section than another. And don't always talk to the same people, or to
people with certain ranks. You want to be approachable to everyone,
regardless of job title or position.
Use the time for spontaneous recognition – If you see something good,
compliment the person. This is a perfect way to show your gratitude.
Hold meetings "out and about" – Instead of having all your meetings in
the boardroom or your office, meet with people in their work areas and
"on their turf." This can put them more at ease. Communicate your
expectations and needs so that everyone knows what you value.
Don't use this time to judge or critique – This can make people nervous
when you're around. If you see something that concerns you, talk to the
person later, in private.
Answer questions openly and honestly – If you don't know an answer,
find out and then follow up. If you can't share something, say so.
Telling half-truths can break down trust.
Communicate – Share company goals, philosophy, values, and vision.
Your "walk-arounds" are opportunities to mutually share information
that helps everyone understand and do their jobs better.
Chat – Effective organizations aren't all about work, work, work. Build
relationships. Learn the names of your staff's kids. Find out what they
love to do or where they're going on vacation. Joke, laugh, and have
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fun. You may be surprised at how great it feels to relate on a personal
level with the people in your office.
Don't overdo it – Don't leave people feeling that you're always looking
over their shoulders! Wander around often enough to get a good feel
for what's going on, but not so often that your presence feels like a
mundane distraction.
OPPORTUNITIES
To implement MBWA throughout your company, consider making it one
element of your managers' performance evaluations. What gets measured
gets done! If supervisors work far away from the staff they manage, consider
moving them, or giving them a second office that's closer to where the work is
done. If managers work near their staff, they may be more approachable.
MBWA can be an effective and practical way to keep up with what's
happening within your team and your organization. Building up
relationships with your staff pay off significantly with the information you'll
gather and the trust you'll build. A team spirit can naturally develop when
you show a genuine interest in your people and their work. It's also a great
way to keep the company's vision alive at all levels. It's easy, economical,
and a whole lot of fun!
If anyone needs proof that CEOs and other business leaders can really
change their own perspective, as well as transform the business by
relatively simple best practices such as MBWA, just look at Apple’s
performance over the past decade.
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Steve Jobs never got an MBA (he would have majored in something else
anyway), but he attained his MBWA with honors.
Bill Olsten, who built the Olsten Company from a small temp service in the
1950s to a billion-dollar staffing resources firm (acquired by Adecco Group in
1999), wasn’t your typical Fortune 500 CEO. For one, he knew every
employee by name. He made it a point to check in and say hello to staff
members on a regular basis, and always let each individual know how
important they were to the company.
The world needs more Bill Olstens and Steve Jobs.
In a world overrun by the MBA ethic, and people and systems stressed
beyond their breaking points, perhaps we need to see more MBWA being
practiced.
MBWA, or management by walking around, is a smart approach to
management, because it helps managers keep their ears to the ground on
developments around the company, as well as new ideas. At a time of intense
competition and rapid change, leaders need to maintain close connections
with the people that will make change happen.
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UNIT 3
Importance of the practical elements of competently administering a
ship management company on a solid foundation of scientific methods
wherein it enables the graduate to implement independently, safely,
economically and successfully in all domains of ship management in
terms of utilization of the different types of ship management styles:
Unit III Emphasize the importance of the practical elements of
competently administering a ship management company on a solid foundation
of scientific methods wherein it enables to implement independently, safely,
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economically and successfully in all domains of ship management in terms of
utilization of the different types of ship management styles.
The group reports about the appropriate philosophical approaches of
conducting the administration of shipping management putting high emphasis
on the epistemological, metaphysical, logical and axiological aspects of the
study.
AUTOCRATIC MANAGEMENT STYLE
Autocratic Management, also known as authoritarian management,
is a management style characterized by individual control over all decisions
and little input from group members.
According to Daft and Pirola-Merlo (2009) describe an autocratic manager or
boss-centred as one who tends to centralise authority and derives power from
position, control of rewards and coercion. Autocratic managers typically make
choices based on their own ideas and judgments and rarely accept advice
from followers. Autocratic management involves absolute, authoritarian
control over a group.
In simple words, Autocratic Management could be characterized as
“High emphasis on performance and a low emphasis on people”.
Types of Autocratic Management
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1. Directive Autocrat is a manager who makes decision exclusively
without the consent of his employees. This type of autocratic manager
is described as a control freak.
2. Permissive Autocrat is a manager who makes decision
exclusively without the consent of his employees but leaves some
space for some discretion to their employees as to the means
through which a task can be achieved. This type of autocratic
manager is described as a demotocrat (juxtapose of democrat and
autocrat).
ADVANTAGE DISADVANTAGE
Sense of Responsibility. One of
the positive things about an
autocratic management style is that
determining responsibility for bad
results should be easy.
Irresponsibility and Blame Game.
The negative side of the
responsibility coin concerning an
autocratic manager is that while she
gets to determine who made the
mistake, the fact that being an
autocrat means blaming a
scapegoat even if it is her own fault.
Emergency Management. One
situation where an autocratic
manager is definitely wanted is in
an emergency situation. This can
be a business situation in which you
have a short deadline on an
Lack of Input and Employee
Ownership. An obvious drawback
to autocratic management is that no
one knows everything. This means
that although the manager may
have a great deal of experience, his
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unexpected project.
employees may have knowledge
that could make a significant
difference if he were to ask for their
input.
Logical/Philosophical Aspect
Assumes that people are lazy, irresponsible, and untrustworthy and
that planning, organizing, controlling, and decision making should be
accomplished by the leader with minimal employee involvement.
Relies on authority, control, power, manipulation and hard work to get
the job done.
Run a tight ship by planning, organizing, directing, and controlling the
efforts of others.
Metaphysical Aspect
Although the emphasis is on high productivity, it often breeds
counterforces of antagonism and low quality of output.
Autocratic management tends to be more punitive and the inherent
close supervision increases role ambiguity, reduces productivity, and
decreases group harmony.
Epistemological Aspect
Zero Feedback Mechanism. One way communication without
feedback leads to misunderstanding, and communications breakdown.
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Solutions Today, Problems Tomorrow. Half-baked decisions could
be made which can be very dangerous in this age of technological and
sociological complexity.
Ill-motivated subordinates escape the responsibility and initiative.
It fails to develop the worker's commitment to the objectives of the
organisation.
Low morale of work-force. It creates problems both with employee
morale and production in the long-run; due to their resentment
Creativity of subordinates remains untapped. It is unsuitable when
the workforce is knowledgeable about their jobs and the job calls for
team work and cooperative spirit. It tends to develop dependent and
uncreative employees who are afraid to seek responsibility.
Axiological Aspect
Good for Inexperienced and Unmotivated Workers, Bad for Highly
Skilled and Motivated Workers
The autocratic style is most effective when the leader is present. Unlike
the transformational style of leadership where followers become self-
motivated to complete tasks, once the autocratic manager is gone,
there is no guarantee that team members will keep working.
Famous Autocratic Leaders and Companies
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1. Adolf Hitler – He required the population of the Third Reich to accept
everything that he said as absolute law, and was able to impose a
death sentence on anyone who failed to do so. Hitler was obsessed
with being in control, and with being the alpha male in a rigid male
dominance hierarchy.
2. John F. Kennedy – had a vision to change the space program forever -
by sending a man to the moon and to return safely. This type of vision
and idea came to light through his constant motivation of the U.S. to
see his vision.
3. Bank of America
4. Bank of England
5. Research In Motion (Blackberry)
Laissez-faire Management Style
The concept of this type of management was born in France where business
owner asked the government to “let it be” governed by themselves on the
operation and price of their products however the effect is not fair for the
labour party and consumer party. This type of management evolves and it is
used today but in a different perspective in management where a subordinate
in a company is given responsibility to decide or act on itself without any
supervision from the management.
Philosopical Aspect
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Subordinate can function more effeciently with a very little guidance
from the managers
Subordinates can grow better by providing them freedom make
decisions
Subordinates are able to solve problems at their own by providing them
the tools that they need
Metaphysical Aspect
It will not limit man’s way of thinking
Can be effective when group members are highly skilled, motivated
and capable of working on their own and the managers are open for
consultation and provide them feedback
Not ideal in situation where group members lack knowledge or
experience. Some people are not good at setting their own deadlines,
managing their own projects and solving problems on their own. In
such situation the project can go off-track and deadlines can be
missed. It can also create havoc
Logical Aspect
By having someone that can do the work load with less supervision will
create a oppurutnity for the management to enhance the system or
create a future plan for the company
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Oppurtunity for the subordinate to share the ideas that can be used by
the management
Work will be more efficient with less bureaucracy.
Epistemological Aspect
Bill Gates own a company where he is capable of doing almost any
tasks requires in his company. However Mr. Gates does not attempt to
do all the jobs. The reason is that Mr. Gates can concentrate on the job
in which his productive superiority is greatest making his company
more profitable.
1800 the “industrial revolution” where the western europe and US
government adopts “Laissez-faire” in governing companies
Companies are both effectively and efficiently providing their services
specially in rail road construction
However there is a catch. Employess in the field/factory work in a poor
condition and being exploited by the companies since the government
is hands off in the company operation
Axiological Aspect
Providing freedom in decision making can empower a subordinate.
However the superior must provide the subordinate the proper trainings
and experiences.
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Having the option to designate task can be a big help in building a
company
CONSULTATIVE MANAGEMENT STYLE
Style in this case the manager will actively seek out the opinions of
employees before a decision is made. While both an autocratic manager and
a persuasive manager will place the needs of the business before the
employees, a consultative manager is far more likely to recognize that
employees are able to make a valuable contribution to the running of the
company.
There are many situations in which a consultative management style might be
appropriate. In fact, most large scale organizations will use managers who
adopt this style at some level in their business.
Consultative managers consider the opinions of stakeholders, but
decisions are still made centrally. This means that there is an identifiable
person who is responsible for the decisions that are made, but that others are
given an opportunity to have some input into the decision making process.
The consultative management style can be viewed as a combination of
democratic and autocratic. The consultative manager will ask views and
opinions from their staff, allowing them to feel involved but will ultimately make
the final decision.
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The consultative style is used on a regular basis by many large scale
organizations. This is because it maintains some of the advantages of the
more dominant management styles (such as the autocratic style without the
loss of direction that can accompany the laissez faire style. Consultative
managers will often be seen asking various stakeholders what they would do
in certain situations, or how they would respond to events that have occurred.
While the final decision still rests with the manager, the action of seeking input
is part of the day to day reality of the business.
The style focuses on using the skills, experiences and ideas of others.
However, the leader or manager using this style still retains the final decision
making power. To his or her credit, they will not make major decisions without
first getting the input from those that will be affected.
EPISTEMOLOGICAL ASPECT
The epistemological aspect of Consultative Management Style is how it
is figure out, what is right and wrong, or good and bad rather than the set of
facts that actually makes judgments true – “ JUSTIFIED TRUE BELIEFS “
ADVANTAGES
Great variety of ideas
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Employees have some ownership over the way the organization is run.
As a result they may take more interest
Often task are completed more efficiently
DISADVANTAGES
Time consuming
Staff who does not consulted on every decision can become uncertain
of their role
Some ideas are bound to be overlooked in the final decision which can
cause resentment of conflict
CONCLUSION
Best used in times of change or when a decision will directly affect the
employee
METAPHYSICAL ASPECT
Metaphysics is the branch of Philosophy that addresses questions of
reality. In Philosophy, reality is the state of things as they actually exist, rather
than as they may appear or might be imagined
CONSULTATIVE MANAGEMENT – METAPHYSICAL ASPECT
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Existence of Consultative Management
As a result of employee involvement, decision will take time to
formulate
Accountability within the group as each employee will bring their best
ideas to the Management for consideration
CONCLUSION
The Consultative Management in terms of Metaphysical Aspect creates
opportunities to the talented employees to seek their own ways to strengthen
their professionalism owing to the consultative direction.
LOGICAL ASPECT
Is a branch of Philosophy that deals with reasoning. There are two (2)
basic types of reasoning, deductive reasoning and inductive reasoning. In
deductive reasoning, thing proceeds from the most general concepts to the
most specific examples. In inductive reasoning, thinking proceeds from the
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most specific examples to the most general concepts; generalization are
derived from specific examples.
CONSULTATIVE MANAGEMENT – LOGICAL ASPECT
Inductive reasoning in the process of applicable in this type of
management style where things proceeds from the most general concepts
and generalization are derived from specific examples.
Example:
1. Management seek views and opinion from the staff on a certain project
2. Staff provides inputs and suggestions that they think a big help to the
Management per their experience
3. Management will come up with the decision based on the collective
inputs or own decision
AXIOLOGICAL ASPECT
Branch of Philosophy that deals with values. It is the philosophical
study of goodness or value in the widest sense of these terms – “ THEORY
OF VALUES “
CONSULTATIVE MANAGEMENT – AXIOLOGICAL ASPECT
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Values are those inner qualities that everyone has and these drive
human motivation
Discovering (not assume or guess) what your people hold most clear
and genuinely honor those as best you can and other limits
Ethics – Responsiveness
Keeping the communication open with your staff
Sometimes, you cannot always share everything you know as a
manager-leader, but you can always find ways to share some
information, even if only the big picture
You can let people know their input was valuable but just not
applicable at the present time
Aesthetics – Managing the group by walking around
Being visible on a regular basis
Delegating the right things to the right team members, the richer their
jobs can become – win-win situation
Permissive Management
The philosophical foundation of this kind of leadership shall be laid out
in this chapter using the Epistemological, Metaphysical, Axiological and
Logical aspects.
Briefly, each aspect shall be define and applied to the principles
surrounding the Permissive Management approach in reference to its general
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description and study of its Strengths, Weaknesses, Threats and
Opportunities.
Four Major Aspects of Philosophy
Epistemology
Epistemology is one of the core areas of philosophy. It is concerned
with the nature, sources and limits of knowledge. Epistemology has been
primarily concerned with propositional knowledge, that is, knowledge that
such-and-such is true, rather than other forms of knowledge.257
Metaphysics
Metaphysics is a broad area of philosophy marked out by two types of
inquiry. The first aims to be the most general investigation possible into the
nature of reality: are there principles applying to everything that is real, to all
that is? – if we abstract from the particular nature of existing things that which
distinguishes them from each other, what can we know about them merely in
virtue of the fact that they exist? The second type of inquiry seeks to uncover
what is ultimately real, frequently offering answers in sharp contrast to our
everyday experience of the world. Understood in terms of these two
questions, metaphysics is very closely related to ontology, which is usually
257 http://www.rep.routledge.com/article/P059
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taken to involve both ‘what is existence (being)?’ and ‘what (fundamentally
distinct) types of thing exist?’
The two questions are not the same, since someone quite unworried
by the possibility that the world might really be otherwise than it appears (and
therefore regarding the second investigation as a completely trivial one) might
still be engaged by the question of whether there were any general truths
applicable to all existing things. But although different, the questions are
related: one might well expect a philosopher’s answer to the first to provide at
least the underpinnings of their answer to the second. Aristotle proposed the
first of these investigations. He called it ‘first philosophy’, sometimes also ‘the
science of being’ (more-or-less what ‘ontology’ means); but at some point in
antiquity his writings on the topic came to be known as the ‘metaphysics’ –
from the Greek for ‘after natural things’, that is, what comes after the study of
nature. This is as much as we know of the origin of the word (see Aristotle
§11 and following). It would, however, be quite wrong to think of metaphysics
as a uniquely ‘Western’ phenomenon.258
Axiology
Axiology is the branch of practical philosophy which seeks to provide a
theoretical account of the nature of values, whether moral, prudential or
aesthetic.259
258 http://www.rep.routledge.com/article/N095259 http://www.iva.dk/jni/lifeboat_old/Concepts/Axiology.htm
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Logic
It has two meanings: first, it describes the use of valid reasoning in
some activity; second, it names the normative study of reasoning or a branch
thereof. In the latter sense, it features most prominently in the subjects of
philosophy, mathematics, and computer science.260
Philosophical Aspects as applied to Permissive Management
General Concept of Permissive Management
Allows employees to take part in business decisions
Encourages certain degree of autonomy among employees in executing
their task.
Less supervision and monitoring from the part of managers.
Epistemological Aspect
It is believed that in this type of management, employees are empowered
to make their own decisions at work.
By having this kind of autonomy among subordinates, new leaders are
expected to emerge.
260 http://en.wikipedia.org/wiki/Logic
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It allows free flow of creativity and innovation among subordinates due to
the freedom bestowed among employees.
It is believed that this type of management style also boosts the morale of
the employees.
It is more democratic in nature
Axiological Aspect
Emphasize the essence of freedom
Foster trust on the part of the leader and confidence on the part of the
subordinates
It encourages creativity and innovations
It promotes “going the extra-mile” attitude among employees
Develops succession planning and future leaders
Promotes Employee Empowerment
Metaphysical Aspect
The Permissive Management Style allows employees to take part in
business decisions and they are given a considerable degree of
autonomy.
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In order to prevent the abuse of decision-making authority given to
employees, parameters or guidelines must be established by the
organization.
Specify the corporate matters that may be decided by the employees in
order to manage egoistical issues.
Provide trainings to employees in order for them to value the
confidence bestowed upon them
Establish control measures such as Code of Ethics, Annual Budget,
Quality Control and Customer Feedback
Logical Aspect
With the concept of permitting employees to take part in the deciding on
the course of the business process, it is presumed that in an organization
with set of rules and guideline, Permissive Leadership allows each
member to independently execute their task in a manner that their desire,
provided that said manner must be able to arrive to a uniform goal or
output as other member does.
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Conclusion:
Permissive Leadership can be compared to alcohol drinking, its
implementation must be moderation and bears utmost responsibility. This
concept of leadership addresses a lot philosophical concerns in terms of
human behavior in terms of uplifting the desire at work, knowledge and
emotions.
It is inherent for each individual to desire some amount of
independence to every task that they do, whether it be personal or
professional aspect, but since business organization has complex process
that involves a numerous considerations such as human resource, financial
gains, corporate responsibility and general administration of the business
operation, limitations are set in order to attain a uniform objective.
As discussed, permissive leadership empowers and encourage
employees to be conscious and confident in doing their tasks, setting rules
and guidelines is necessary in order to combat the threats surrounding this
type of management but it does not aim to limit the potential of employees.
Hence, permissive leadership is applicable to Ship Management
business at a certain degree, such as the day to day office task but in terms of
technical aspects that involves crucial effects, other management styles may
apply.
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