Note to teachers:

Teamworking features in the IB Business Management syllabus (Unit 2.4). Belbin's theory is not explicitly mentioned in the syllabus, but can certainly use his theory if relevant to their EE research question.

Belbin’s team role theory

Dr. Meredith Belbin and his team of researchers at Henley Management College studied the behaviour of managers from all over the world. These managers were put into different teams and given a series of psychometric tests and complex management exercises. Their different personalities, intellect and conduct were assessed during the tests. Over a period of almost a decade, different clusters of behaviour were identified as underlying the success of different teams.

The Belbin team role model

Belbin’s research describes a pattern of behaviour that characterises individuals in a team. The findings showed the emergence of nine patterns of behaviour (or team role). Belbin defined a team role as:

“A tendency to behave, contribute and interrelate with others in a particular way.”

The nine team roles were identified as:

• Action-oriented roles - i) Shaper, ii) Implementer, and iii) Completer Finisher
• People-oriented roles - iv) Coordinator, v) Teamworker and vi) Resource Investigator
• Cerebral roles - vii) Plant, viii) Monitor Evaluator and ix) Specialist

Belbin argued that different team roles yield different benefits (what he called contributions).  For example, a ‘monitor evaluator’ (see Table 1) has the strength of being able to make objective judgments.  However, by having the characteristics of a monitor evaluator, Belbin argued that this comes at a price (what he called allowable weaknesses).

Belbin argued that a person’s overall strongest roles are the ones most appreciated by other people.

Belbin’s research showed that a balanced team - one with the greatest chance to succeed - would contain a balance of team roles.  Further, every team goes through phases during which some team roles are able better to contribute than others.

The uses of Belbin’s theory

Most managers have reasonable expectations of how their teams are going to perform. Belbin’s model can give some insight to how an individual feels and behaves in a group. Observer Assessments provide independent evidence about an individual’s team role(s), although this can be costly and time consuming to conduct.

Belbin’s model allows a group to analyse its collective strengths and weaknesses in team role terms and objectively plan to capitalise on those strengths and minimise the negative impact of its weaknesses.

Belbin argues that knowledge of the different team roles increases understanding and enables mutual expectations to be met. The effective performance of a group of people - a team - is dependent on the way the team is able to interact and draw on the strengths of its members. Members of a team bring to the group two key things. The first is their competency – expertise, qualifications and experience. The second is the way they work with and contribute to a group, thereby enhancing the effectiveness of the group.

Staff selection and recruitment is typically based on the qualifications, experience and practical skills an individual has. However, there is no clear evidence to suggest a clear correlation between this and job performance. The team focus is concerned with how the job gets done.

Belbin’s research shows that a person recruited to a job who is unsuitable in team role terms will be, at least, a poor fit for the job and will often be a total misfit!  Indeed a person recruited who is suitable in team role terms (i.e. is a team player), but perhaps lacks experience or qualifications will often prove to be a surprise success in the job.

Today, businesses can purchase computer software which analyses how an individual feels and how an individual behaves in a group. The outcome is one of the nine team roles. Belbin argues that it is only by knowing ourselves that we have any chance of improving ourselves and achieving our full potential.

The limitations…

Team roles develop and mature. These may change with experience and conscious reflection. Different team roles may form in response to the needs of particular situations, such as dealing with a corporate crisis. Although people may prefer and conform to one style within Belbin’s model, this could still mean that they act differently in changing circumstances.

Also, the demands of jobs have to be taken into account when assessing validity since the nine forms of behaviour can be seen as effective or ineffective according to the context. Here the fit between the profile of the individual and the profile of the job plays a key consideration.

Conclusions

Belbin’s model looks at a pattern of behaviour in which individual team members interacts to facilitate the progress of the team as a whole.

Although there are many forms of psychometric and similar feedback tools, most of them fail to include inputs from the people best able to give it – such as your boss, colleagues and subordinates. The Belbin process uses both "self" and "observer" inputs to derive a profile, and one of the important benefits gained from the analysis is to discover the differences between self perception and the perceptions of others. Given the synergy that teams can bring to any business, it is important that management are aware of the dynamics of their different teams.

Table 1: Belbin’s team role model

Carroll’s Corporate Social Responsibility (CSR) Pyramid

Carroll’s CSR Pyramid is a business management tool (not explicit in the BM syllabus) that shows the reasons how and why an organization should set ethical objectives and meet its corporate social responsibilities. The framework can be remembered by the acronym PELE:

1. Philanthropy – This is the responsibility of a business to give back to others in society, such as charitable donations or sponsorship of a local event. There is no legal obligation for a firm to act in this way, but it is still deemed to be important to society.
2. Ethical – This refers to the responsibility of organizations to act ethically and morally, such as the fair treatment of employees and suppliers.
3. Legal – A firm may engage with CSR in order to comply with the laws and regulations set in the country. This might include employment legislation on equal opportunities in the workplace, health and safety regulations and waste disposal laws.
4. Economic profit – CSR is based on the foundation of a firm earning economic profit – being ethical can be profitable for a business in the long run. Ultimately, firms are in business to earn profit. For owners and shareholder, profits must come first.

The model is simple to understand and highlights that CSR has more than one dimension. It also acknowledges the importance of profit as the most important driving force in the long term. However, critics of the model suggest that CSR should be driven by ethics, not profits. In addition, what a business claims it would like to do does not always materialise.

Watch this short 5 mins YouTube video about Carroll's CSR Pyramid:

Charles Handy - Management guru

Introduction

Charles Handy (born 1932), an Irish author and management guru, specialized in organizational behaviour, culture and management. This article introduces the life and work of Charles Handy, renowned for being one of Britain’s greatest management experts. A graduate from Oxford University, he was credited in 2001 as the world’s second most influential management thinker (after Peter Drucker) and is widely recognized today as Europe’s best known and most influential social and management philosopher.

Handy’s personal life

Charles Handy was born in Clane in County Kildare, Ireland.  He was educated in England, first at Bromsgrove School as a boarder and at Oriel College, University of Oxford, where he graduated with first-class honours. He is married to Elizabeth Handy, his business partner and a professional photographer. They have two adult children. Charles Handy’s father was an Irish Protestant minister, which helped to influence one of Charles Handy’s most reputable books “The Gods of Management” (1995) focusing on four key management cultures, and his theory of the Shamrock organization (the shamrock being synonymous with St Patrick as a symbol of the Holy Trinity).

Handy’s career

Charles Handy’s business career started in 1956 at Shell International (known today as Royal Dutch Shell, the world’s second largest company), working on a drilling operation in Borneo, Indonesia. He progressed to Marketing Executive before leaving the petroleum company in 1965.

Charles Handy co-founded the London Business School (LBS) in 1967. He had spent a year at the Massachusetts Institute of Technology (MIT), University of Boston before returning to the UK to help establish Britain’s first management programmes at the LBS where he was full-time Professor of Business Management from 1972. The highly selective LBS offers postgraduate programmes in finance and management, such as its Masters of Business Administration (MBA), Executive MBA (EMBA) programmes, and its 5-year Doctor of Philosophy (PhD) in Management programme.  LBS is consistently ranked in the top 10 business schools in the world. Charles Handy later also helped to develop the Open University’s MBA programme.

Charles Handy had several distinguished careers, including professional economist, academia at MIT (where he met his mentor, Warren Bennis) and LBS, management consultant, author and broadcaster.

Charles Handy on management

Charles Handy argued that trying to define a manager is less meaningful than examining what a manager actually does.  He suggested a number of common characteristics present in most effective managers:

• Managers should have a good level of intelligence, but not necessarily outstanding ability. Managers who think that they are more intelligent and/or more able than others or have poor ‘people skills’ often find that they do not get on well with their subordinates.
• Managers need to be proactive, creative and able to take on risks in order to identify and exploit business opportunities.
• Managers must set an example for others to follow. They should also show respect for their colleagues. Charles Handy suggested that self-assured managers bring out the best in their teams.

Handy also outlined three key roles of management:

• Managers as general practitioners - Charles Handy compared personal health problems with the well-being of an organization, such as the level of staff turnover, productivity and customer satisfaction. If there are health problems in the business, then managers must deal with these. For example, if low productivity is a concern, then managers might hire more people, retrain staff and/or dismiss unproductive workers. If low productivity is the result of poor morale then financial incentives might be used to deal with this.
• Managers as confronters of dilemmas - Charles Handy suggested that managers are relatively well paid because they have to deal with a constant flow of dilemmas (problems). For example, managers are required to deal with the management of change, conflict management and crisis management. Handy argues that organizations are most successful when “people are working with people, not for people.”
• Managers as balancers of cultural mixes - Much of Charles Handy’s theories concentrated on organizational culture. He argued that it is the manager’s role to balance the cultural mix in an organization to get the best out of each individual. Whilst classical management theorists such as Henri Fayol and F.W. Taylor would have suggested a hierarchical and formal structure to shape and embrace the culture of an organization, Charles Handy argued that organizations should become flatter.  He believed this would improve communications and enhance decision-making.

Charles Handy suggests that effective management of the above roles requires the helicopter factor, i.e. managers need to be able to rise above situations to see the ‘bigger picture’. Ineffective management, he argued, takes place when there is micro-managing in an organization, i.e. managers get caught up or too involved in every small aspect of the organization. Instead, he advocates that managers need to be able to delegate by being generalists rather than specialists.

Charles Handy on the Shamrock organization

One of Charles Handy’s most renowned theories is the shamrock organization (1989) which suggests that businesses will gradually hire fewer core staff to improve their flexibility and competitiveness. For example, firms are increasingly outsourcing projects and using external consultants. Reducing the number of the core staff and employing more part-time workers also helps businesses such as supermarkets and fast-food restaurants to reduce their labour costs. Greater flexibility might also mean that a larger number of people work from home.

Charles Handy argued that workers will have to be more flexible as there is no such thing as a ‘job for life’, but that short term contracts were more appropriate so people have to be prepared to move between occupations and perhaps industries to maintain employment. The trend in the number of businesses that subcontract business activities supports Charles Handy’s beliefs. He argued that non-essential work (i.e. jobs that can be done by others) should be contracted out to specialists who can do the work more productively and more cost efficiently.

Furthermore, a multi-skilled and flexible worker will be highly attractive to potential employers. For example, students in part-time employment and mothers with young children would have more choice over the hours that they work. Charles Handy believes this helps to improve the well-being and morale of workers.

Due to these changes, Charles Handy came up with the concept of the shamrock organization. This model gets its name from the shamrock plant (a three-leaved clover). Charles Handy suggested that within a shamrock organization there would be three groups of staff:

• Core staff - This group consists of full-time professional workers, such as managers and technicians, who handle the daily operations of the business. They are crucial to the organization's operations, survival and growth. The core staff are becoming an increasingly smaller group fuelled by developments in e-commerce and teleworking. This has led to downsizing and restructuring of the workforce in many organizations.
• workers - The second group (also known as the insourced workers) consists of part-time, temporary and portfolio workers who are employed as and when they are required. They tend to be paid by piece rate for short periods of employment, thus helping to reduce labour costs for the firm. The peripheral group forms the flexible workforce for an organization and constitutes a greater proportion of the workforce for large companies. For example, supermarket chains such as Walmart, Tesco and Carrefour employ far more part-time staff than full-time workers.
• Outsourced workers - This group consists of individuals or businesses that are not employed by the organization but are paid to complete particular and specialized tasks. Freelance workers, sub-contractors, agencies and the self-employed are examples of outsourced workers; they are hired by an organization for their skills and expertise. For instance, most large firms use marketing agencies to design appropriate promotional (marketing) campaigns.

The three components of the shamrock have their own advantages and limitations for an organization. The core workers, vital to the organization, must be well paid and remunerated. They are likely to enjoy some degree of job security, be well motivated and highly productive. The insourced workers will suffer from a lack of job security thereby negatively affecting their morale. Indeed, Charles Handy suggested that portfolio workers would be expected to work for free in some cases to establish themselves. However, they present flexibility for an organization and are easier to ‘hire and fire’. The peripheral workers are able to develop numerous careers simultaneously (hence the term portfolio working).

Although Charles Handy introduced the idea of the shamrock organization back in the early 1990s, time has shown that organizations are indeed restructuring to become more flexible, reducing their core staff and using more peripheral workers. The trend in modern businesses that use increasingly more part-time workers and teleworkers supports Charles Handy’s foresight.

Charles Handy on the “Gods of Management”

Back in 1974, Charles Handy attempted to describe the four different types of cultures that he believed existed in every organization. He named these cultures after Greek Gods:

• Zeus (power) culture – named after Zeus, the Greek king of the gods, this represents a powerful head of an organization dominated by the personality and/or power of one person. This individual is often the founder or owner of the organization. Many organizations run such power cultures where major decision-making power remains in the hands of only few people.
• Apollo (role) culture – named after the son of Zeus, the god of harmony and order, this represents a culture dominated by bureaucracy (rules, regulation and procedures), such as government organizations and life insurance companies. Teams are formed to achieve the organizations' objectives.
• Athena (task) culture – named after the goddess of warfare and wisdom, this represents an organizational culture dominated in consultancy firms, advertising agencies and innovative organizations.
• Dionysus (person) culture – named after the god of liberation, this represents an organizational culture in which individuals have the freedom to develop their own ideas in the way they wish, such as those working in the theatre and the arts. Employees are delegated roles and responsibilities based on areas of interest, specialization and qualifications.

Charles Handy pointed out that effective managers are those who are fully aware of the four cultures that exist in their organizations. Whilst there may be a particularly dominant organizational culture, such as a power culture in large government organizations, sub-cultures do exist and should not be ignored. For example, a common characteristic of a person culture is that individuals are often more concerned about themselves than the organization. Charles Handy pointed out that senior managers need to realize the organization always comes first and everything else (including the interest of individuals) comes later.

Conclusions

Charles Handy’s work draws no solid conclusions about what makes a ‘good’ manager. However, he does show that good organizations are passionate about what they do and that money (or the pursuit of profit) should not be at the forefront of what they stand for. As Charles Handy pointed out “creating more wealth doesn’t necessarily make everybody happier.” More importantly, he argued, trust must be embedded between managers and employees for organizations to be successful. This is ever more important as organizations downsize their core workers. Charles Handy had predicted the emergence of portfolio workers would reduce the number of full-time workers by 50% within 10 years (by the year 2000). In his own words, “my prediction had come true in Britain and much of Northern Europe and portfolio working was commonplace.” His visionary thinking reinforces the view that he is one of the greatest management gurus of our time.

Read more about Charles Handy's theory on corporate culture in Unit 2.5 - Types of organizational culture.

Note to teachers:

Students writing an EE with a focus on management and leadership might find Daniel Goleman’s theory of emotional intelligence (EI) of interest and relevance.

Daniel Goleman’s four competencies of emotional intelligence

How important is it for managers and leaders to be able to identify and understand the emotions of their staff? Can emotional intelligence enhance the ability of managers and leaders to motivate their staff? This short piece introduces the concept of emotional intelligence by looking at the work of Daniel Goleman.

What is emotional intelligence?

Emotional intelligence can be described as the ability to recognize and manage your own and others’ emotions, including the ability to self motivate, recognize the emotions of others, and to effectively handle interpersonal relationships. Emotional intelligence allows a manager or leader to influence other people’s emotional responses in order to achieve organization objectives. Emotional intelligence is increasingly relevant to business organizations, especially ethical and socially responsible ones, because:

• EQ provides a relatively new way to identify, understand and gauge people’s attitudes, interpersonal skills, behaviour and (ultimately) their potential.
• It introduces new principles to management styles.
• EQ becomes an important consideration for workforce planning (including issues such as job profiling, recruitment and selection, appraisals, and training and development).

Daniel Goleman

American psychologist Daniel Goleman (b.1946) introduced emotional intelligence as competencies and skills that drive management and leadership performance. Goleman, a Ph.D. graduate of Harvard University, suggested that emotions play a key role in everyday decision making, even among people who prefer scientific decision making methods.  For instance, the decisions and actions available to an irritated and angry manager are likely to differ from those available to a calm and collected manager. Goleman argued that individuals must first identify their emotions in order to manage them. Thus, it becomes vital to know how to enter into emotional states that enhance and enrich effective decision making. Goleman goes as far as suggesting that success in life correlates better with one’s emotional intelligence or quotient (EQ) than intelligence quotient (IQ).

Goleman’s model in his book ‘Primal Leadership’ (2002) outlines four competencies which lead to an increased ability to establish and sustain good relationships in the workplace. He argued that these four competencies are not innate but learned abilities. The four competencies are: self-awareness, social awareness, self-management and social skills (relationship management).

The four competencies of emotional intelligence

1.    Self-awareness

Self-awareness refers to the ability to recognize and understand your own emotions and to recognize the impact of these emotions.  People with this competence recognize how their emotions affect their performance and they tend to rely on their gut feelings when making decisions.  Self-aware people are conscious of their strengths and weaknesses and they reflect on their learning experiences.

However, self-aware managers and leaders are said to have several potential negative ‘blind spots’ (or areas to be developed).  These include:

• the need to win or to be correct at any cost
• setting excessively ambitious, and perhaps unattainable, goals for the team
• compulsively hardworking and therefore being vulnerable to burnout
• being power hungry - the manager or leader seeks to push others too hard and prefers not to delegate power
• the strong need for recognition.

2.    Social awareness

Social awareness (empathy) refers to the ability to sense, understand, and respond to the emotions of other people. Managers and leaders with this competence are sensitive and attentive to the needs and feelings of others. They display empathy and are able to understand the perspectives of other people (a key element of the International Baccalaureate Theory of Knowledge programme).

It is argued that social awareness is a key competence of managers and leaders who wish to develop their teams. Social awareness improves the ability of managers and leaders to offer constructive feedback and mentoring of staff.

3.    Self-management (self-regulation)

Self-management refers to the ability to control your own emotions and adjust to changing situations.  Managers and leaders with self-control can manage their impulsive emotions and stress by staying positive and composed (not an easy thing to do by any means!)  Managers and leaders with this competence are ideal for leading radical change such as hostile takeovers since they can think clearly and stay highly focused even under immense pressure.

4.    Social Skills (Relationship management)

Goleman’s concept of social skills (or relationship management) refers to the ability to inspire, influence and develop others. Managers and leaders with this aptitude also have the ability to manage organizational change and conflict. They have the ability to handle difficult people and difficult situations.  Having this competency also means that the manager is likely to favour clear open channels of communication, team building and collaborative working practises. This will help the manager to orchestrate a win-win outcome during times of change and conflict. Having such skills means that the manager has to be receptive to bad news as well as good news.

Conclusions

Goleman’s model of emotional intelligence identifies several important domains for managers and leaders. First, it is important to know your own needs and feelings in order to manage your own emotions and to motivate yourself. Second, managers and leaders are more likely to be effective in meeting organizational objectives if they identify and understand other people’s emotions. The work of Goleman can enhance the interpretation of the works of motivational theorists such as Maslow, Herzberg and Mayo. Furthermore, emotional intelligence can allow managers and leaders to shift undesirable emotional states to more desirable ones – essential for driving effective change management. Essentially, this can mean that managers and leaders are more effective in understanding the link between their staff’s emotions and their action or productivity.

Elton Mayo's Human relations theory (of motivation)

Australian psychologist Elton Mayo (1880 – 1949) conducted his experiments, which lasted over 4 years, in Hawthorne, USA. He disputed the idea of Taylor that labour productivity is influenced purely on scientific management methods. Instead, Mayo believed that workers are motivated by a more humane approach to management whereby human relations at work are the key factor. Mayo is credited for establishing the Human Relations school of thought on motivation.

The Hawthorne experiments concluded that non-financial factors can create greater motivation than financial incentives. Contrary to Mayo’s initial belief that working conditions would affect motivation levels at the Hawthorne factory, he found that any increase in output was simply due to staff working together better. Workers performed better when there was scope for discretion, creativity and teamwork. His study also found that motivation and productivity increased when managers took an interest in the welfare of their staff. In other words, people whose views and efforts are recognised feel a sense of belonging and are more motivated.

Mayo’s findings, called the Hawthorne effect, were instrumental in changing workforce planning and personnel management. The recruitment process started to look at people’s attitudes and personalities rather than just their educational background and skills. Businesses began to see the value in establishing constructive teams and organising social events, realising that staff enjoy interacting with their colleagues. However, Mayo also accepted that teamworking can be obstructive and unproductive so suggested that managers should encourage and oversee team spirit (loyalty and unity of team members) and group dynamics (exploiting the skills and expertise of each team member). Moreover, it became accepted that if managers simply showed an interest in their staff, this would usually drive workers to perform better.

Critics of Mayo’s theory argue that the findings are too generic. They feel that many workers, particularly those who lack experience or skills, actually want and welcome direction and control from management.

McClelland's Theory of needs (motivation theory)

American psychologist David McClelland (1917 – 1998) put forward the theory of needs. From his study of 500 managers working in 25 American companies, he concluded that three types of needs must be satisfied to boost morale:

• Need for Achievement (n-Ach).  McClelland found that achievement-motivated people tend to be moderate risk takers. Low risk activities are too easy to accomplish so n-Ach people do not feel they have genuinely achieved anything. They do not take high risks either since the outcome is largely based on chance and luck, rather than through their own efforts. These people also prefer to work on tasks where they hold key responsibilities or to work alongside high achievers. They are more interested in personal success rather than extrinsic rewards that recognise their achievements. This could mean that n-Ach people prefer not to delegate tasks. They also tend to self-reflect on their performance in order to find ways to further improve. McClelland suggested that the major causes of n-Ach are parental influences, cultural factors and educational experiences.
• Need for Power (n-Pow). Power-motivated people like to influence the behaviour of others so tend to be very strong-willed.  Power can take two forms: personal or institutional. Those who seek personal power do so to pass on instructions or orders to others.  Perhaps this makes the person feel more important, but it often makes others resent the individual who is seen by others as a ‘power freak’. Staff will have to do as they are told, whether they agree with the n-Pow person or not. By contrast, people who have institutional power strive to make others work harder in order to achieve organizational aims and objectives. They use their authority to try and bring out the best in their staff. Hence, McClelland argued that these people are more likely to be successful. He also suggested that good leaders need to have at least moderate n-Pow since leadership is about influencing the behaviour of others.
• Need for Affiliation (n-Aff). People who need affiliation seek to have a good social and working relationship with colleagues and the management team. This makes them happier at work, thereby increasing their morale and productivity. Such people tend to conform to group norms and avoid conflict in order to be accepted as part of a group. Unlike n-Ach people who may prefer to work alone, n-Aff people favour opportunities for social interactions, such as teamworking or customer relations.

McClelland believed that these three needs are present in all people although the relative intensity of each varies from one person to the next. His main contribution to the Human Relations school of thought is that people with different kinds of needs are motivated differently. Managers who are aware of these needs and how they affect employees can allocate jobs and tasks more suitably to boost morale and productivity. Those with high n-Ach ought to be given achievable but challenging tasks. People with high n-Pow could be given opportunities to manage and lead a team of people. Finally, those with n-Aff should be provided with a cooperative and collaborative working environment to gain their best performance.

McGregor's Theory X and Theory Y

Professor Douglas McGregor's (1906 – 1964) Theory X and Theory Y model is used to represent the different assumptions that managers have / make about their employees. McGregor argued that the beliefs held by managers about their workers' attitudes has a direct influence on their management style. Hence, McGregor’s theory is focused on management attitudes rather than motivational theory (although the two are closely linked).

McGregor used the term Theory X to explain negative management attitudes about the workforce. These managers see their workers as being lazy people, who avoid work if possible. They believe that workers need to be given clear instructions / directions and to be supervised because employees do not enjoy work and lack ambition. Theory X managers are most likely to adopt an authoritarian management style where the emphasis is on output and productivity, rather than on the people in the organization. As such, Theory X managers are likely to follow the scientific management approach advocated by F.W. Taylor.

By contrast, McGregor use the term Theory Y to describe managers who take a more positive approach and assume that employees are able to achieve organizational objectives out of their own accord and initiative. Theory Y managers believe that workers are able to take on responsibility and can gain satisfaction from their work. Demotivation, McGregor argued, is caused by a lack of challenge in a job. Hence, Theory Y managers adopt a more democratic and decentralised approach to their management style.

McGregor concluded that if managers take on a Theory Y approach, then workers respond accordingly with positive results for the whole organization. As US Army general George S. Patton (1885 - 1945) once said, “Never tell people how to do things. Tell them what to do and they will surprise you with their ingenuity.”

Note: Theory X was used by McGregor to explain the negative managerial perceptions of worker attitudes. Hence, there are only Theory X (and Y) managers rather than Theory X (and Y) workers.

Henry Mintzberg (born 1939) suggested that the internal structure of an organization depends on both the complexity and the pace of change. He argued that a business can only remain successful if its organizational structure is flexible enough to deal with rapid changes in the market. Mintzberg suggested that organizational structures can consist of up to six basic parts:

Henry Mintzberg’s framework of organizational structures

1.    Ideology - the culture of the organization, i.e. its beliefs, values and traditions.
2.    Strategic apex - the senior management team, i.e. the key decision makers.
3.    Middle line - the team of middle managers in the organization.
4.    Operating core - the operational staff and processes within the organization.
5.    Techno structure - the team and system of technical support.
6.    Support staff - auxiliary staff outside of operational processes, such as clerical staff and those working in public relations.

From the above, Mintzberg came up with six organizational configurations.  He suggested that all of these may be present within an organization, but one structure is likely to dominate.

1. Innovative organizations (or adhocracy) - This structure requires staff being split between small project teams (called ‘silos’) that deal with a specific task or problem. Decentralised decision making takes place. There are no standardised procedures for dealing with routine problems. As these teams work on individual and independent projects, the firm becomes very flexible and adaptive to change.
2. Entrepreneurial organizations - Decision making power in such organizations is retained by the strategic apex. There is direct supervision of staff and decision making is centralised, meaning that flatter hierarchical structures exist.
3. Machine organizations - Coordination is done by specifying the work processes of people, such as the operating core or technostructure.  Work is based on what Mintzberg called ‘machine bureaucracy’, i.e. specialisation and standardisation.  Procedures are formalised so communication is clear and reliable. However, the fixed processes and procedures means the organization is inflexible.
4. Divisionalised organizations - Coordination is through the middle line who ensure that their teams achieve standardisation of output.  Since there is standardisation, such structures are inflexible in responding to rapid change.  However, Mintzberg suggested that effective decentralisation and delegation can lead to a high level of flexibility.
5. Professional organizations - In this structure, professionals with standardised skills tend to make up most of the operating core. They rely on prior knowledge and learnt skills. However, professional bureaucracy is inflexible since this structure uses highly specialised staff (such as brain surgeons or astronauts) who are not adaptable to other roles.
6. Missionary organizations - This refers to coordination through the standardisation of organizational norms (the ideology).  Every individual works on the same set of beliefs and norms rather like religious organizations.

Mintzberg’s research suggests there are different organizational configurations to suit different businesses.  For example, machine bureaucracy is better suited to capital-intensive organizations that rely heavily on the use of machinery.  He argued that adhocracy and entrepreneurial organizations are the most flexible, and are therefore the most suited to embracing change.  Mintzberg suggested that for any structure to work effectively, employees must believe in the organization’s common values (ideology).

Henry Mintzberg is Professor of Management Studies at the Desautels Faculty of Management of McGill University in Montreal, Quebec, Canada - where he has taught since 1968.

Porter's generic strategies

Professor Michael Porter (b.1947) of Harvard Business School is known throughout the world for his academic work on business strategy. One of his most used tools in Porter's generic strategies, which outlines the ways that any business - of any size and operating in any industry - can gain a competitive advantage. If a profitable product or idea can be copied easily, then other firms will simply take advantage by entering the market and taking market share from the existing firm(s) in the industry. Rival businesses might offer an improved product or charge more competitive prices. Hence the original firm in the market loses its competitive advantage.

Porter argued that every successful business must have a competitive advantage to prevent profits being eroded by rival businesses entering the market. He suggested that there are three generic or broad strategies that any business can use to sustain a competitive advantage.

1.  Cost leadership

Cost leadership means to become the lowest cost supplier of a product within the market. Cost leadership is concerned with minimising costs of production. For example, McDonald’s sells its fast food products at lower prices than premium burger restaurant chains such as Five Guys, Shake Shack, or MAX Burgers. For a cost leadership strategy to succeed, a business needs to be able to reduce its operational costs substantially. McDonald’s large scale operations enables the world's largest fast food brand to achieve huge economies of scale thereby enabling the company to reduce its average or unit costs of production. Other examples of companies that use a cost leadership strategy include IKEA (the world's largest furniture retailer), Aldi (Germany’s largest chain of discount supermarkets),  and Malaysia's AirAsia (the largest low-cost airline carrier in Southeast Asia).

Budget airlines use a cost leadership strategy

Although these firms might charge low prices, they are highly profitable and market leaders in their respective industries. They do not compete with firms that offer higher-quality products since this would require price hikes. The only way to directly compete with these firms is by using penetration or predatory pricing strategies. Alternatively, firms might choose to use technology to cut wastage and to improve productivity, thereby reducing unit costs of production. Hence, cost leaders can enjoy greater profit margins.

Methods to achieve cost leadership

• Improved supply chains - Some businesses own their suppliers, thereby avoiding the profit margins in the form of higher prices otherwise charged by their suppliers. Some supermarket chains, for example, own their own farms that supply their products. Zara, the Spanish clothes retail giant, also owns many of its suppliers. IKEA, the world's largest furniture retailer, designs and develops all its own products.
• Relocation - A business can be located nearer to its suppliers and/customers in order to reduce transportation and distribution costs.

2.  Differentiation

A second generic strategy is differentiation. This happens when a firm makes its mass-market products distinct from those of its competitors, e.g. by packaging or branding. Attention is on the quality rather than the cost (and hence the price) of a product. Coca-Cola, BMW, Nike and Apple use this strategy to maintain their competitive advantage. These businesses might choose to use copyrights and patents to protect their competitive advantage.

Successful differentiation will allow a business to charge a premium price (a price higher than the industry average), thereby earning a higher profit margin. A key drawback of differentiation is that it can be expensive, such as the amount of money needed to successfully develop and promote a high-quality product that stands out from others available on the market.

3.  Focus

The third generic strategic is called focus. A focus strategy has two variants - businesses gain a competitive advantage by either focusing on being a low cost producer (cost focus), such as discount bric-a-brac stores, or by differentiation within a particular segment (differentiation focus) such as Ferrari, Gucci, Rolex and Chanel.

Ferrari uses a differentiation focus strategy

Differentiation focus occurs when a business targets a niche or single segment of the market. For example, InThinking focuses on (specialises in) providing dedicated high-quality online resources to support IB Diploma and MYP teachers and students. Differentiation focus can be a highly profitable strategy due to the high prices that can be charged (and hence the high profit margins) and due to the lack of competition. The drawback is that the market size is rather limited.

Porter suggests that it is not possible in the long term to adopt a mixture of these three generic strategies. For example, it is not feasible or sustainable to maintain high quality by using a cost leadership strategy, i.e. firms cannot expect to be highly profitable and to have an image of outstanding quality by charging low prices. Porter suggests that firms without a clear business strategy are ‘stuck in the middle’, with detrimental consequences. His generic strategies help managers to concentrate on a specific strategy that best serves their organizations.

Vroom’s Expectancy Theory (of motivation)

Victor Vroom (1964) suggested that people only put in the effort to do a task if they expect that their role will help to achieve the required result. If workers feel they lack the ability, expertise or skill to achieve a target, then their level of effort will be lower (which reflects a lower level of motivation). Vroom’s work shows that a variety of factors affect a person’s approach to work. However, it is assumed that workers will choose the route that offers the greatest probability of achieving their goals.

Vroom found a positive correlation between a person’s efforts and his or her level of performance.  He recognised that a worker’s performance is based on personal factors such as experience, skills, knowledge and self-belief. He argued that when faced with alternative approaches to dealing with a certain task, people choose the option with the greatest motivation force, consisting of three parts:

• Expectancy - People have different expectations about their capability and self-confidence in tackling a task.  There are also different perceptions about the level of difficulty of the task.
• Instrumentality - People hold the perception that if they meet performance targets then they will be rewarded accordingly (or what they think is desirable as an award). Managers must ensure that promises are kept to gain people’s trust and therefore their level of motivation.
• Valence - Managers need to find out what staff value since people place different values on different rewards.  In tackling a task, people consider whether it is worth any extra effort in terms of both intrinsic rewards (such as satisfaction and ego) and extrinsic rewards (such as money and promotion).