It will be helpful for you to know something about the different approaches to managing people, and indeed to be aware of the underlying assumptions in them. It is also important for you as a manager to know what the organization’s expectations of you will be in terms of managing people, even though you may not be ( or you are unlikely to be) a personnel specialist.
One of the most difficult issues for managers is the extent to which ethical considerations play a part, both at the individual level and at the organizational one. At the organizational level, there are two conflicting perspectives. One school of thought argues that the shareholders’ interests as the owners of the organization are the only ones which should be taken into account. Moreover, the organization will thrive or not according to whether it can please the financial markets which essentially reflect shareholders’ interests. Its capacity to raise capital, to prevent itself from being taken over, and to invest in the future will be dependent on whether it makes a satisfactory level of profits which can repay the shareholders’ investment. If managers
do not achieve these objectives, they are likely to be sacked andreplaced by others who conform more to shareholders’ interests. In addition, market pressures appear to push in the same direction, such that higher efficiencies and competitive advantage are focused towards the main goal of profitability. Not to do this will result in competitive decline and ultimately collapse.The other main perspective is the stakeholder approach, which argues that a range of those affected by the operations of the organization have a legitimate interest in policies and decisions, and that account should therefore be taken of these. Those with such interests would certainly include the owners and also the employees, the customers, the suppliers, the governments under which the organization is regulated, the communities where it operates, and increasingly the wider environment. Very often, stakeholders can exert pressure on an organization and become a constraint on managerial choice; social legitimacy is an important concern even for very large organizations.
A few years ago, Shell was constrained by public opinion in what it could do in disposing of its oil rigs, and was effectively preventedfrom dumping them at sea – there are many equivalent examples. The solution in resolving disputes arising from the interests of shareholders and different groups of stakeholders lies in the definition of priorities as between them. This is usually a pragmatic judgement, and the balance may well change over time. Financial concerns may be uppermost in organizational objectives, but they cannot be exclusive. At the individual level do managers have to follow the expectations oftheir employer to the extent of ignoring any ethical considerations?
But few organizations have absolute rules which dictate all courses of action. Most are political entities in which decisions are significantly decentralized. Moreover, it is not always clear what is the most economically or financially advantageous course of action. For that matter, managers would not be efficient if they did not have some discretion in decision-making over some parts of their responsibilities. One of these parts is likely to be in the way they manage people.What are the perspectives that guide behaviour? Some are:
• Acting in accordance with explicit rules;
• Acting out of a sense of justice or equality;
• Acting in what is perceived to be the most efficient or effective way;
• Acting because of orders to follow a certain approach;
• Acting because it is what others do;
• Acting under pressure from interest groups;
• Acting in one’s personal self-interest or that of another group to which one belongs;
• Acting to satisfy one’s conscience;
• Acting in a way which is most beneficial for most people.
All of these might be considered legitimate rationalizations for action, but none of them are likely to satisfy everyone. Most decisions must be tradeoffs between different considerations and will tend to favour one set of interests rather than another. Ethical behaviour in this context is thus more a matter of having a consistent moral approach than in making clear distinctions between right and wrong.One question which you may have been asking yourself is how managing people contributes to the success of the organization – especially the bottom line. This is currently one of the key areas of research in the human resources field, and while there are no absolutelydefinitive results, there are increasing indications that there is a
positive relationship between ‘good’ HR practices and organizational results. The largest survey has been by Huselid (1995) in the United States, who analyzed the impact of 13 ‘high-performance work practices’and found that firms utilizing these had significantly lower turnover, higher staff productivity, and better financial performance in both the short and long run than firms that did not utilize them. In
Britain, Fox and McLeay (1991) found that the return on capital of a firm with a higher degree of integration between the HR function andcorporate strategy could be expected to be substantially above the average for its sector.
What is good people management? There can be no complete answer to this question. There are ethical, political and operational dimensions. But in recent years, a good deal of attention has been given to trying to identify ‘high performance work systems’, which get the best out of people working at the organization.Again, what precisely should constitute such systems is itself a matter of some controversy, but there are suggestions borrowed from sources including:
• Careful and extensive systems for recruitment, selection and training;
• Formal systems for sharing information with those who work in the organization;
• Clear job design;
• Local level participation procedures;
• Monitoring of attitudes;
• Performance appraisals;
• Properly functioning grievance procedures;
• Promotion and compensation procedures that provide for the recognition and financial rewarding of high performing members of the workforce.
Managing people, like other aspects of management or indeed other aspects of human behaviour, is subject to debate and disagreement. Different theories have been advanced and research carried out with different implications. There is one exception to this, and one which would actually be agreed by most observers. This is that almost all situations are different. Whether in time, technology, markets, or structure, issues of managing people are contingent on the situation and almost always provide a wide range of choices rather than a single solution.Managing people is not something for which prescriptive guidelines can be provided irrespective of the context. Product and labour markets, the prevailing technology, the structure of the organization (including its management hierarchy, all create some constraints on the HR policies. Small companies may have more intimate interpersonal relations than large ones, which may either be a good or bad thing. Companies which are driven by the needs of the production line require a different approach of managing people from those where the skills required are creative and individualistic. Those which are in a growth phase and there is a general optimism produce different interpersonal relation to those where there is decline, and survival as well as job insecurity are the order of the day. Culture matters too. Cultures can vary considerably between organizations even in similar industries, depending on the leadership, traditions and the underlying value system. Managing people must take account of these dimensions, as well as the individuals and groups. However, while context maybe important, it is not a completely over-riding constraint. There is always an element of choice for organizations in what they do.
Dr. Kellen Kiambati holds a PhD in business administration with a focus on strategic management from JKUAT and an MBA from KEMU. She is a certified business associate (CBPA) and a member of the Institute of Human Resource Management of Kenya. She is also the author of business Research Methods and can be reached on firstname.lastname@example.org