Management Principles and Practices 1
Case Stud Case Study y: Enterpri Enterprise se Rent Rent-A-Car
MANAGEMENT PRINCIPLES AND PRACTICES 1
Case Study: Enterprise Rent-A-Car
Question
1 G
reat companies require effective managers and leaders to guarantee success. But what are the differences between management and leadership?
The market is changing so rapidly that products and services that successfully met consumer tastes and needs a few years ago are obsolete today. Proactive leadership must constantly monitor environmental change, particularly customer buying habits and motives, and provide the force necessary to organise resources in the right direction 1. Former HP CEO & President Carly Fiorina described in a Stanford University lecture the difference between leadership and management is “…leadership as changing the order of things and management as the production of acceptable results within known constraints and conditions. Management is not leadership.” 2 These ‘constraints and conditions’ are the disciplines and what makes up the structure of a successful organisation. The Oxford definition of constraint is “strict control over the way you behave or are allowed to behave” 3 whilst condition is “the circumstances or situation in which people live, work or do things”4. Hence management power comes from organisational structure, as it promotes these constraints and conditions “…as stability, order and problem solving within the structure…” 5 which consequently should produce ‘acceptable results’.
1
Covey, S., 1990, Seven Habits of Highly Effective People , The Business Library, Utah
2
Fiorina, C., 2007, The Difference between Management and Leadership , Stanford University, viewed May 2, 2007, 3
Anon., 2010, Oxford Advanced Learner’s Dictionary , Oxford University Press, http://www.oxfordadvancedlearnersdictionary.com/dictionary/constraint 4
Anon., 2010, Oxford Advanced Learner’s Dictionary , Oxford University Press, http://www.oxfordadvancedlearnersdictionary.com/dictionary/condition
Individuals with leadership ability initiates changes however it is an innate or acquired ability (whether conditioned internally in the workplace or externally) that can be possessed by anyone in the company especially senior staff & managers within the organisation. Management is an official authority commanding different hierarchies in the organisation. Leadership power on the other hand comes from less tangible factors, such as values, interests, and other personal attributes6. Leadership is an individual’s attribute to influence their peers to achieve business objectives & possibly inspire changes to these objectives. To meet business objectives it is fundamental for management to have control & organisational skills. Entities require a diversity of skills to fulfill managerial criteria. They include: •
• •
Plan and organize people and resources Set and monitor budgets Control operations or services in order to meet customers’ needs7
These criteria are essential in meeting business objectives at all hierarchies of the organisation. In terms of leadership, staff with these qualities motivates their subordinates or colleagues and decides the direction of their team, department or even the overall organisation. Leaders have a tendency to shape the outcome of meetings by influencing their peers or are looked upon for decision-making. There is a closer correlation between a leader and manager than there are differences in most instances. This is illustrated 5
Samson & Daft, 2009, Leading: Leadership versus Management, 3rd edn, Management, Cengage Learning Australia, Victoria 6
Think Education, 2010, Management principles and practices Study Guide, page 11, Think Education, North Sydney,
NSW 7
‘Using a range of management styles to lead a business’ 2008, The Times 100 , page 65,
Question
2 with Enterprise General Manager who leads a regional group of City Managers; City Managers are leaders of their front-line management employees. Andy Taylor, the current Enterprise Chairman and CEO, was a manager for his father Jack Taylor. He carried out the processes and systems his father set up. Today, Andy leads and manages the business 8.
M
ost organisations face the challenge of a competitive market; hence businesses and corporations have to attain high level of customer service to remain competitive. Key personnel such as Management Accountants & Internal Auditors might assist managers develop cost processes and service benchmarks for staff to adhere to in order to achieve their business objectives. During these instances, management has to be firm, express their decision to their subordinates and have them work within the introduced process. In a demanding industry, managers have to adopt an Autocratic-style of leadership to meet business objectives. They have to make unilateral decision that must be enforced on their subordinates. Employees are expected to adhere to these decisions as their managers have legitimate powers with the consequence of punishing or rewarding their workers. For instance Andy Taylor was adamant the customer satisfaction measure, ESQi be a mandatory benchmark for all branches to achieve business objectives. To increase dedication from employees, an opportunity of promotion will be awarded when they reached or exceeded such benchmarks 9.
8
‘Using a range of management styles to lead a business’ 2008, The Times 100 , page 66,
9
‘Using a range of management styles to lead a business’ 2008, The Times 100 , page 66,
Question
3 An illustration of where autocratic leadership style may be appropriate is when the entity is new and the employees are inexperienced and hence needs the guidance of leadership in their work. Another instance is if the people are disengaged in their job and have no clear direction and there is vast internal politicking of the kind that is disruptive and causes an emotional strain in the way the organisation is being managed. Here a powerful autocratic leadership might help to re-align the organisation to its original position and get the people back in shape10.
W
ith organisations adopting autocratic-style leadership to remain competitive in the market via service benchmarks, two major predicaments still remain; motivating staff & employee retention. Organisations repeatedly discover that they spend substantial effort; money and time to train staff only to have them improve into an important asset and depart the organisation for better opportunities. The problem is that the managers have not determined employees’ needs such as growth within the company. Consequently, the individuals’ needs have not been satisfied and it has not corresponded with their own personal aspirations against the objectives of the company. In 1943, Abraham Maslow, looking at motivation, identified a hierarchy of needs for individual employees. Everyone has needs for water, food warmth and safety. These have to be
10
Theyagu, D., 2008, Autocratic vs. Consultative Leadership , Ezine Articles, submitted March 18,2008, < http://ezinearticles.com/?Autocratic-vs-Consultative-Leadership&id=1054914>
met before a person can move on to fulfilling their higher needs.11
Maslow's Hierarchy of Needs Pyramid
This hierarchy applies to the workplace. For instance what motivates these levels of needs might be weekly wage to cover the physiological needs, occupational health & safety guidelines for security needs, good team members for social needs, important projects or recognition for esteem needs, and lastly, opportunities for career development to realise an individual’s potential during the stage for self-actualization. Democratic-style leadership gives employees the opportunity to be innovative and make their own decisions collectively (i.e. meetings) in doing their daily tasks. This makes them feel important & increase their self esteem. Furthermore when employees start sharing their ideas in improving their area’s operations, wider objectives are realized. Another advantage of 11
12
‘Using a range of management styles to lead a business’ 2008, The Times 100, page 67,
University Department of Rural Health, 2010, Theme 1 – Leadership Maslow’s Hierarchy of Needs Pyramid, University of Tasmania, submitted March 22,2010, < http://www.ruralhealth.utas.edu.au/commlead/leadership/maslow-diagram.htm>
democratic-style leadership is when managers consult their senior employees & team leaders regularly on their perspective when running the department’s daily operations. Usually subordinates with referent and expert power influence these open discussions. Additionally, democratic-style leadership assists staff to being innovative and encourages them to work better. This will empower staff to make decisions impacting the workplace and their division which consequently meets customer service commitments. Hence, employees take pride in their work. Enterprise Rent-A-Car also applies the democratic style of leadership, encouraging employees to provide ideas to add to decisions passed on by management. They implemented two types of democratic style management. •
•
Persuasive leadership-style - where the leader (or customer service representative) makes the decision first and persuades employees (or customer) that it is the right decision. Consultative leadership-style - where this involves the group contributing to the decision making process with the leader making the final decision.
An example of the persuasive-style is when a customer has approached the Enterprise representative of a vehicle for the long weekend. The representative gives the customer rental car option(s) and persuades the customer why those options is the correct one. An example for consultative-style is when a car has been in an accident and a customer needs a hire urgently. Local managers take a consultative approach to understand the issues and find the right solution for customers who might be upset or worried 13 Majority of meta-analysts & psychometrician social laboratory studies (from 1969 until today) conducted experiments on the effect of democratic & autocratic leadership with groups concluded that experimentally imposed democratic-style leadership may be relatively more effective (compared to autocratic leadership) when laboratory groups are given
13
Using a range of management styles to lead a business’ 2008, The Times 100, page 67,
Question
4 moderately or highly complex tasks14. Hence the democratic leadership-style meets the demands of the above two Enterprise customer scenarios.
As business progress, there is an increase in customer demand. Concerns lay with how efficient the organisation’s services are when faced with frequent customer enquiries & other concerns. The drawbacks of autocratic leadership during this scenario are that managers & senior staff cannot afford to ‘micromanage’ their staff due to the influx of customer enquiries. When dealing with face-to-face live problems and enquiries from customers there is no time to discuss their problems collectively in a meeting (such that of democratic-style leadership). Firstly this will be time-consuming as customers will want to get the enquiry resolved immediately and finally it reflects incompetence on the representative’s part who is dealing with them. Live decisions need to be made now and then without any consultation with management or senior colleagues’ approval. The decisions have to be made swiftly as it reflects on efficiency from a customer’s perspective and hence a great
14
Gastil, J., 1994, Meta-analysis of Democratic Leadership , Small Group Research, page 402, University of WisconsinMadison, submitted August 1994
deal of initiative must be placed on the customer service representative’s part. Laissez-Faire style leadership grants employees opportunities to provide for customers immediately with the workplace knowledge, resource and tools they have access to. This is where customers receive a standardized service knowing exactly what they have ordered or asked for. For instance, a return customer who knows what he wants and is aware of the associated costs with the rental will require minimal feedback or advice as the customer is already aware of his/her needs. Hence Laissez-Faire encourages a more quicker & streamlined customer service. Internally, Laissez Fare leader performs a minimum of leadership functions and lets the workgroup sort out their own roles and tackles their own work in their own way without his/her participation. The Laissez-Fare technique is usually only appropriate when leading a team of highly motivated and skilled people who have produced excellent work in the past. Once a leader has established that his team is confident, capable and motivated it is often best to step back and let them get on with the task since interfering can generate resentment and detract from their effectiveness 15. A good example of Liassez Fare management is the small entrepreneurial teams that manage and lead local Enterprise offices. These teams are decentralized and make many decisions on their own. This show a type of laissez-faire structure 16 Due to the carefree nature of this leadership structure, employee lack of motivation can be a disadvantage. This is resolved by the establishment of corporate guidelines and comprehensive manuals, frequent staff training and the prospect of career promotions.
15
Anon., 2007,Leadership Styles, WikiEducator, last modified July 12,2002, < http://wikieducator.org/Leadership_styles#Autocratic>
16
Using a range of management styles to lead a business’ 2008, The Times 100, page 678
WORD COUNT: 1707
REFERENCE
1. Covey, S., 1990, Seven Habis of Highly Effective People , The Business Library, Utah 2. Fiorina, C., 2007, The Difference between Management and Leadership, Stanford University, viewed May 2, 2007,
3. Anon., 2010, Oxford Advanced Learner’s Dictionary , Oxford University Press, http://www.oxfordadvancedlearnersdictionary.com/dictio nary/constraint 4. Anon., 2010, Oxford Advanced Learner’s Dictionary , Oxford University Press, http://www.oxfordadvancedlearnersdictionary.com/dictio nary/condition 5. Think Education, 2010, Management principles and practices Study Guide, page 11, Think Education, North Sydney, NSW 6. ‘Using a range of management styles to lead a business’ 2008, The Times 100, pp 65-68, 7. Anon., 2007,Leadership Styles, WikiEducator, last
modified July 12,2002, < http://wikieducator.org/Leadership_styles#Autocratic > 8. University Department of Rural Health, 2010, Theme 1 – Leadership Maslow’s Hierarchy of Needs Pyramid, University of Tasmania, submitted March
22,2010, < http://www.ruralhealth.utas.edu.au/commlead/leadership/maslow-diagram.htm> 9. Theyagu, D., 2008, Autocratic vs. Consultative Leadership, Ezine Articles, submitted March 18,2008,
< http://ezinearticles.com/?Autocratic-vsConsultative-Leadership&id=1054914>
