There are generally three levels of management within a company. These include what are known as top, middle and first-level management. These are in turn tiered in numbers with more first level managers, less middle managers, and an even smaller pool of top-level managers. How a company organises its management determines its ability to handle its stated objectives. In general a company will delegate long-term decisions to its top-level management, whilst decisions affecting the day-to-day running of the company are left for the first-level managers. How these decisions are decided and implemented will depend on the management model adopted. A management model is a set of decisions made by a company’s leadership about how the work of management isaccomplished. There are many different models that a company can choose, ranging from more traditional top down approaches, to more modern distributed or ‘modular’ approaches. Which one will be adopted will depend upon the expertise of the company’s staff, and its resource base.
We can define four distinct aspects of management which can help delineate the issue a bit more. First, management must define the objectives of the company, and decide where the company or even their own department is heading. Secondly, they should motivate the employees to work towards achieving those objectives. The means by which they do this can be horizontal (across the same level or department), or vertically, to the lower levels of management. This involves the last two aspects of management, which are coordinating activities and making decisions.
Often there are several competing management models within a single industry. For example, Google, Linux and Microsoft all operate under different models. Google has a very informal‘university-like’ model, Linux functions within the open source software community, and Microsoft has a more traditional, hierarchical-like management model. Despite this, they compete directly in the desktop operating system market. In addition, Toyota operated until 2013 with an extremely centralized management model, with little delegation of authority. This had the advantage of being able to promote the objectives of top-level management efficiently. However such a model promotes secrecy and makes the company slow to respond to internal weaknesses. This became apparent for Toyota when in 2010 millions of vehicles were recalled around the world due to accelerator pedal, brake, seatbelt and exhaust problems. As individual business units did not communicate with each other, the company was slow to respond quickly to address the safety issues,this lead to the adoption of a new business model in 2013, which included more delegation of decision-making within the company.
There is no prescribed formula for which management model a firm should adopt. There are many valid approaches. Traditional management principles have served firms such as Walmart and Exxon well for many years. The main challenge is to understand the range of choices available, and whether they would work in the specific industry in which the company operates. Progressive firms such as Google use a mixture of management models, meaning that it is never an ‘either/or’ decision on which model to adopt. The best option is simply to do the necessary research.
Adam Watson
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