We need a unifying structure that examines critically the logic on which management is based
There is a direct correlation between customer satisfaction and financial growth
Management systems don’t work without managers with knowledge and skill that are capable of leading their organizations.
Organizations that experience sustained growth (year after year) have several things in common. One is superior customer service. Superior customer service relies on a committed and motivated work force that, in turn, is possible with disciplined management systems to support employee efforts. Management systems don’t work without managers with knowledge and skill; who are capable of leading their organizations. The flow chart below shows the relationship of these different elements. This note describes how these various elements are linked and shows that knowledgeable and skilled managers are able to build and maintain a disciplined management system. And, with a disciplined system, come committed employees, loyal customers and sustained growth.
Satisfying Customer Needs
The worldwide business community became increasingly concerned during the 1970s and 1980s as Japanese companies began to dominate several industries, including electronics and automobiles. This prompted a serious rethinking of the way business is conducted. The conclusion? Satisfying customers is the primary purpose of every business. This conclusion recognizes the power of reciprocity – Satisfy customers’ needs and customers reward you with continuing business. This leads to profits and increased shareholder value.
This idea has been with us at least since the time of Henry Ford. It continues to remain vital to competitive success. While the idea of satisfying customers began with the organization of marketing departments and customer surveys, it expanded to include the quality of products and services and now involvesimproving all the operations of a business.
We no longer define customers as just those that are served by the organization as a whole. To foster a strong relationship with the end-user (customer) means that units within the organization need to meet their internal customer’s needs as well. This promotes a customer-oriented approach throughout the organization.
Successful organizations – those that sustain their growth, see year-to-year profit growth, and consistent stock valuation – all have one thing in common: loyal customers.
These same organizations know that continuously satisfying their customers (in a way that leads to financial success) also means they must engage their employees. Just as there is a direct correlation between customer satisfaction and financial growth, there is a direct correlation between engaged employees and customer satisfaction.
To have an organization of employees who are committed and engaged requires employees to:
- Know what is expected (mission, vision, objectives, control measures)
- Understand that all efforts must start with a well-defined endpoint
- Be willing to self-manage
- Work in a structure that is aligned with the organization’s purpose
- Understand how they and their unit fit into the larger organization
- Know how they and their unit are performing against specific objectives
- Feel rewarded and appreciated for their efforts
- Have the measures necessary to self-correct when necessary
- Know how to make decisions that end in outcomes that are good for the organization and for them
The Need for a Unifying Structure
There have been powerful advances in management theory including:
- Systems thinking
- Information engineering
- Performance competencies
- The learning organization
All good and all adding value – however, these advances do not have the breadth necessary to act as a unifying structure or a context for managers to implement their ideas. Applying re-engineering without the full context of a management system is a like applying a breakthrough in heart surgery to without a full understanding of the complex workings of the human body.
What is missing is the context? We need a unifying structurethat examines critically the logic on which management is based. These are the fundamentals of management and are the elemental principles, functions, and activities of an effective management system.
Surrounded as we are in this whirlpool of change, there has never been a greater need for management discipline.
The fundamentals of management are real. You use them, perhaps intuitively, when you work with other people in any kind of enterprise – from chairing a local charity organization to leading a work team to building a complex industrial organization. Just as you learn the basics of golf or engineering and then refine them over time, so you also master the fundamentals of management so that you can apply them in any situation. These are not merely skills you use on the job – they are skills for living you can use at home, at work, and at play.
There is a need for a unifying structure of management that provides a system that enables disciplined management. This unifying structure is made up of Management principles, Functions and Activities. Together, they comprise an effective management system. This is the basis for the Louis Allen Management System.
These fundamentals include:
- Having plans linked to real external needs
- Meaningful metrics that measure both purpose and progress and enable employees to “sign- up”
- Five-way communication
- Employees selection and development with critical goals in mind
- Plans that are coordinated across department boundaries
What are the fundamentals necessary for management success? In short, managers must:
- Believe in and follow a few selected principles that, when implemented, truly add value to their organization
- Assure all actions add value by producing real results, which in turn, are linked with identifiable needs; these needs should be identified in concrete fashion and should be external to the manager’s area of responsibility
- Communicate effectively, not merely two-way, but what Louis Allen calls five-way communication
- Develop plans that include metrics or measures that reflect desired outcomes; assuring that these plans and measures are aligned and communicated throughout the organization
- Assure that these measures or metrics exists to serve both as a guide and to build alignment and commitment throughout the organization
- Assure that people at all levels of the organization have the skills necessary to solve the problems that prevent them from serving their customers
- See to it that plans are coordinated across internal organizational boundaries
- Ensure that employees at all levels are aware of the value chain, their place in it, and how their organization contributes to its success
- Assure that people are skilled at developing and measuring the metrics they need to do their jobs
The Allen Management System provides and ensures all of the above.
Management as a System
It’s important to understand just what a system is – it is an entity with two or more parts and no part has an independent effect on the whole and all parts affect the whole. As a result of the interrelationship of its parts, the whole system is greater than the sum of these parts. A system also interacts with its environment by: Obtaining inputs from the environment, transforming these inputs to outputs and delivering the outputs to the environment
Thus, for any system, we can identify inputs, a transformation process, and outputs. For example, a motor gets energy as input, transforms that energy to power, and outputs motion. In business, typical inputs are people, capital, materials, time, and machines, and the outputs are the products/services delivered to the users. The transformation process can consist of the activities of production by the organization's members and the organization's interaction with its environment.
It’s easier to understand and apply management concepts if management is thought of as a system. All activities of management are interrelated. This means changing one activity will impact others. Example: changing how people are rewarded may change training activities, selection processes, and decision-making and communication activities.
Management is a system because managers take inputs (information, money, resources, time, material) and transform that input into outputs (product, service, profits, etc.).
This is the way we, at Louis Allen, think about management. Since all activities a manager performs are interdependent, management cannot be understood or mastered by looking at each activity separately (the way most training programs approach management). Each activity is part of a system and must be analyzed in relationship to the other parts. It is the fit of the parts that makes the system effective.
Universal Management Functions
There are four universal management functions:
- Planning: Plans needs to be linked to external needs and define real value.
- Organizing: How managers structure the organization and work is critical to successful execution of their plans.
- Leading: Execution also requires leadership, which includes selecting and developing the right people, assuring decisions are made in a way that builds commitment, and building an environment of open communication and self-motivation.
- Controlling: The focus is on measures – not controlling people. Effective measures do not exist in most organizations. Without measures, alignment is difficult, if not impossible.
The Professional Managers’ Practice
- Mastery of the concepts and principles of a disciplined management approach
- Putting them to use at once as a unified system - all parts fit
- Understanding important new changes – their advantages and disadvantages – and how they fit into the management system
- Gaining from the experience of companies all over the world to give tested techniques for performing work more efficiently and with greater satisfaction
- Developing strategic and operating plans with the team
- Determining the best type of organization and how to make it work
- Empowering team members to plan, implement, and control their own tasks
- Making sound, reasoned decisions with one’s team
- Communicating effectively with those inside and outside the organization – the larger team
- Selecting and Developing competent, committed people
- Controlling and improving work and results
- Developing one’s team‑and the self‑to continually learn and adapt to new conditions and situations
Effective organizations – organizations that sustain their growth and continuously justify their customer’s loyalty – have a preponderance of committed and engaged employees who are productive, efficient and effective, and who:
- Know that management is more than just supervising others
- Understand the importance of technology and the pace of technological change
- Work within a unifying structure of management – comprising principles, functions and activities – which provides a system that enables the practice of disciplined management