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11:;JUTA I
Principles of
GENERAL
MANAGEMENT
A responsible app,roa ch for sout
1
P1
rinciples ,of 6en,eral Mana, men1t
1
A responsible app~
roach for sou
Editor
Tersia Bo ha
Cont1ributor
Ceci le Nieuwenhuize
Sipho Makgopa
~
JUTA
ern Africa
Principles ofGeneraJ Management: A responsible approach for outhem Africa
First publish d 2020
juta nd Company (Py) L d
PO Box 14373, Lansdowne, 7779, Cape Town, South Africa
15t Floor, unclare Building 21 Dr er tre t, Claremon 7708
www.juta.co.za
ci
Juta nd Comp
(P y) L cl 2020
ISBN (print '978 1 8513 077 2
(\ ,oopdt) 97 l 48513 07 ' 9
El
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o 1978.
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Editor: thl n Su
Proo read er: Edith
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t r: LT O sig
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Contents
Abo l t.h au t
rs .............·-··-·..···... ···•.............- ..........-.---·······-···........................................-......
ix
Pr ac-e .........._...........................................................................................,........................................._.....
x
PART I: RESPONS BLE MANAGE ENT
CHAPTER 1 TH
OLUTION O MANAG ME T TH ORV...... -.....................................
Opening cas ............................................................ -.................
3
......................................................
3
.................. ........................................................... ...-.-.... .... .....
4
Key terms............................................................... _.....................,.~.... , __ ...................................
1. 1
I rad1 . on I 1 on
ma dg n1 r t •#•Wh••··-•• •m••···-··· ......... ............... _,....................
5
5
Ch apt r orienta ion......
1.2
Responsible mana.gement................- ..............-...··---·····...-
........- ............-.....
17
1.3
Tr d1 ·ion I
h b·g pict
men t..-........"" ...•..._.,
24
. ..............._.... ...............................
27
1en l Lheorie a d t
rP ..........................................
.,..
Summary u learn in ou tco es ..._ .......--··· ..··..---................................................
2
Revie · questions .................................- .............-........
........... . ......-................. .....
L rn111g a tiv Li s...................... .............................. ,.. ....... -......................,__ ................ ....
29
References .._ ................-...... ·····-· ......................-..........- ........................___............._.....
29
CHAPTER 2: THE
Op ning
AN!A6E
H... .. .
33
s .........-.............. ........................................- .. " ..............- .................... _.. .....................
33
PRO
Chapter orientation................................
m
S: A RESPO SIBLE APPRO
. . . . . . . . . . . ._ . .
.......... .
....
.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .-
.. ...
L a ning ou .
K y
2.1
2.2
2.l
29
35
36
ms .............................................. -.....................
D
en1 nt ....... _......................................................... ··-··--··· ................ ······-·· ...
o rn n gemer ....·-········..····-·-·······--···········--······ ...... -..............................-... ..
ded by manayen1 n t .........-............. _......... ..........._. ................. ....
ia I r les................................
.................
................................,.. .......-.....
.1anagement: A r s ons1 b e ap p c ... ........................................................................
36
Who s responsibl for r s
56
a . . . , . . . . . . . . . . . . . . . . . . .-
. . . . . . . . . . . . . . . . . . . . . . . . . . - . . . . . . . . . .. . . . . . . . . . .
mentL ........................-.........................
spons1ble manage ent... ..................................-.....
I
l marrn
37
43
45
47
49
Barners o and criticisms
Th .
r ...................................................................................................................._.... ..
58
61
Summary of tear ni g ou tcomes ...........-.............................................................................
61
-■s••••l•II diiri■s,r•■sli• I -■•i•■srl:■•-.11
62
. ac:1·1 t·1es... ----·--··--···-·--·--··
Learn,ng
63
RI
........-.......... ··---····--··-..-...... _._............._ .....
n s...-............._...............- ...........·-····............- ......- .............................................._.....
63
R VI
iie-■st■■.-tll4 U,lit-■si•n
i l l i ,1.,..,.,..,.1:9,._,; I •si U•••nrih , l:is
1, •• ,.., . . . .
,. ■1,
u•l
ABOUT THE AUTHORS
T rsia Botha has ught Strat g . G n ra l Ma ag m nt. Fin nc and · ntre r n urship
for the pas 27 years at he Un iversity of South Africa. Pm essor Botha has authored,
co-author d nd a t d as di ·or o nl:.J m rous acad mic books ·n th I Id o ad rship,
Corporate Ci ~zenship, Generali an agement, Strateg and Business Managemen by
Par olio. Sh h s publish d arti I in acer - i , d p r-r, vi w o a ad mi journals and
presented papers a interna tio nal a d national conferences. She has been involved 1n many
communi ngag m nt proj c ov r th past 25 y ar~ most notably h partn rship with
Educa ion A rica and the Davis and Dean Youth Development Progra me.
C ii
Ni u- ~nhui -,n,
Bl (Uni a) P O lNorth W
t Un1v
, y,
tch r-stroom) is
pro essor and DHET-NRF SARChl Chair i En trepreneurshi
cation t the Uni ersity
o, Johann burg. She has
n involv d in amilv busin
si
1980 whe h r amily
started their first business, and in academia since 19 . Sh 1s edito and co-au hor of
various boo and arfcles in accredited journals; an as pr en ma rny papers a nat;ona l
and interna iona l co , f rences focused on ntr p;reneurship, lrmovatlon nd Managem nt.
Sipho Makgoipa has s rv d ,s a
nior le lll r in Man.ag m n ithin th D pa rtm to
Business Manag ement at the Unlve:rsity of Soutn frica. He. is based at Muckleneuk Campus
in Piretoria and cur n ly s es as Curl lum an D v lopmen Spe ia lis in th Di ora t
of Currkuh.i1rn Developmenl and Tr n formation at th Universl y of South A 1 . He has
recen ly comple ted a PhD in B ness anagemen from the Uni\/ersity of Pretoria (U P),
holds an MPhil in Mark tin
g m n (UP) and an MCom ·n B
s
,nag ment
lUNISA). He has au hored mero s jou r al articles and pre.sen ed pa rs at nat io nal and
int rnat iona con f r r,,
PREFACE
W-1 ome to ·h 1rs t tbook or r, sponsibll mana,gem nt ducation in Soutn Afm:a,
Principles of General Management: a responsible approach for southern Africa. The aim o
this b ok is o ak h rtit ram
traditional v·ew or man g m n and h arrow tocus
on profit maximisation, to the responsible view of management, focusi g on sustainability,
r spollSibilitv nd thics as. he thre pilllars o r ponsible managem n
Why a boo ith such a title? The global ma ndal crisis o 200c8 a:s µut bu siness managers
and I a rs, s w II s a a ' mi ~ a Min business man g m nt, und r th
otligh At
th e tjme, themes such as sustainability, responsibility and ethics were not covered in depth
,n
, o ks. n 1th r w r h y discuss d in lasses. To y, th situation has h ng d and
responsihlie management has become a hot to pi.c at universifes, business schools and in
practice. Th prolii · r . ion o scandas and ir, onsibl b havio r w h
n hroughout
th e last twenty years contributes to the importance of responsibl m nagement Students
simply do no want o war for corporates wi ·h · ad reputa ion Consu r o no wan to
buy f om corporates wit h bad rep utations. On top of it all, with Ii 1ted r ourees the orld,
and Afrfca in articular, can no ,lo nger afford scandals and oth ·rresponsible behaviour.
Our aim with this tJ.ook is to provide students first entering t e eld o management, and
respo sible mana.g men t, i ha resourc hath lps h m , o come responsi le managers
and leaders o b - c ange agents, and o act a th
man ounda ·on for r,. sponsible
orga i.s tion:s in order to achiev a responslble socio o omic .system and a sustainable
worid so i ty.
Th book consfs o 1ve parts. r I (R sponsibl manageme t) in ro uc s
onsibl
management Chapter 1 focu es
U vo l,ution of management th my d indi ates
how he tradi ional approaches manageme,nt evolved to the respons,bt approach to
mariag m nt. In Chap~ r 2, h man ;g m nt pm sis - plalo d from , tra di ional point
of view an d then rom a respo · e manageme t approach. Chapt r 3 pm ides a more
d tail d di u io o th ·
dom ins o r ponsibl - man a
t, nam !y su inabi i y,
respo11srbil ity and et ·c-s, whereas Cha pter 4 focuses on social 'f ire pre eLJ rship.
J
Par II l1
Pla ng. a ~. ponsibl ap roach! introduces t~ , st"m nag ri I fun foni namely
planning. In Ch ·er 5, the management en ·ro m t is explained with a I its subnvi nm ti fl vari bl' sin , ach ub- nvironm ' ., hapter 6 provid no ,view of th
princ·p es o pla nning. In Chapter 7, the prind (es o strategic management are discussed
wi
, 1i1 gr tion o r sponsibl man~"'"'M""'l · ·n a h pl1as o th pror
Pa rt I (O rg,an ising: a responsibl e ap oa ,, introduces a responsible approach o the second
m nagedal fun tio , nam
org 1 • g. Chap r B e:o rs all th importan prin i,pl of
orgaliliising, organisationa l struct e alternatives and an explanation of the in tegration
th domains o r pon i I manag m n in t,
s r c wes o com a r ponsibl
orga nisa ti 011 .
Par
IV (l eading: - r pen i I app ,ca hi in tr au
.r po bl a proai h to Ii hird
managerial functfon namely leading. !n Chapter 9, the principles of leadership are explained.
ap
I o cov
th arly pproa -s o le ,d hip1 r n 1or ational dership,
n,
PA RT I
RES
N IBLE MANAGEME rl
•
CHAPTER 1
THE EVO LUTIO N OF MANAGEMENT THEOiRY
Antlior: J:'e7'. ia B'otlla
------------
OPENING CASE
Woolworths Ho ldings Limited 1•1
On . Yill n d to l olt far and wid
1
find
better exampl of a respons.ibl
organisation than Woolworti1 Holclin
limit
fWHl),
tUh Afri a.n-ba d
multinational retail company that own the South African re ail t in oo]worths,
nd Australian r tail •rs David Jon s and ountry uad Group. With vi ion of
being one of the mo t. 1esponsible retaHe m e worl Wfil is proud of the
p
tha th h v mad
Bein a valu -b ed organi ation mean that WHL do bu.sine s responsibly.
Th y are acut Jy wa or th i.r po iti
in ·.o i ty and th l d rsbip ro1 tha
they can play in driving positive chain e. Their Hood Bu in
Journey (GBJ) :i.
th ir platform from wbi h th y aclion U · hang in two main a a , n m l.y
communi development and environmental management. 'Ihe GBJ cen
around
Igh fi u . r a . n m 1 (i) n
ti n; (ii)
i l · cl pnt · t; (ir
alth nd
wellness; (iv) ethical sourcing; (v)I su tainable farming; (vi) waste·
") water· and
,[viH] en rgy and lima~e chang; .
The fiBJ wa launch d. in 2007 and today it is more re.le a than e er. Global
u.n , rt int
r .
i l nd nvir nm nt l
r . 11 ui
b' in
managers rn take a ft.mi s and on what Feally mat .r;s. To WI-IL, this mea.ns
add
ing th ustai , m · f t G -up a r
h · /'ntir
Ju h in - from
within th r own operations, to their :uppl chai • customers and produc , . Th
Group i con tant1 earching for and implem nti.n ne pr uect in support of
us ain hllit . or ex.a.mph'!, ambitiol.B pac ging targets wer 1 un b d io ork
t ards z ro packaging wa te to landfil . Toe Gmup' 'Farming for the Future'
r·
p o
m e i anoth r exampl wh
Lh
that lh ir
rann
r
are wcll prepared for water shortag
roup' dri e towards pr du L ltra.cea.bill y and eth" :id 01.udng con inu to
deli er good resul - , for them. They bave made igni.facant p,rogres in terms of
ourcing o on, imb r. v·
• t athe.r. ·o • coa . nd p tm oil from ~u tain bl -
TI1e
sources. The Grou.p directs millions of Rands annually to a range of organisations
nd proj t · a · part of lh ir ommitm n t
mmuni y upliftm nt.
WHL intends to continue to operate in an ernical and transparent manner,
m lo p l f thi m.
th ir t keh Id · hav
or
hich
ln April 2020. WHL announced a commitment
ov r R34 millio,n o uppor
a v ri ty of initiatives to rn
the chaH nge of Lhe: OVlD - 19 crisi hi outh
Africa. Du.ring the ,c.ri is the · continued to de:liv,er esse.ntiaJ fo d e.rvkes acro
th ouut , putting a ignifo:ant nund1er of th ir empl.oy
at th · fro11 Un o · th
nation's COVID-19 respon e. Woolworths enior executi e team , also commirted
Prlndpl s o,f G n ral Manag m n
t fi , g up
Op
n.
~ r thr
mo,nths, nd rh am un
made availab]e b doing I.his \ as used t.o prnvide additional financial support,
over and b v lh RJ 4 million p1 dge. t p
]e h w r impa db th , ri i ~.
The 6roup al o Urrned to its long- anding .social in tmen t partners to deliver
emergenc relief and bdp build re iliencie in vuJnerable eommun[tie .
CHAPTER ORIENTATION
All managers, regard!
of whe her the manage big or maJl organi ations,
ar in op mana, rial po i fon ,or are managing on or w
wh th r th
indi iduals or whether they are managing .a n organisation in the fmance: foo d,
n i I rvi
• r lh m nufJ turing indu • r · arching ri r an an
r to
the ame ba ic qu tion: What is the bet ay to manage an organi ation? When
tud ing h , v lu i n · f man g m nt th ry, w · ogni
, r urring
theme, and management tbemisrs have devclo ped nu.mero .
m lliis ery
am qu lion. W ma ask otHSelv h w it i po ible l d · ]op diffi rent a
lo the am qu tio n . The rea on wh this question ha
d o many d'
en
an wers lie in the management environmen (whlch wil
· plored in chapter 5),
wh iie t ·hnologicaJ econon1.ic. politi · UL gi ·Ia
ecol ka]/pby ital. ociaJ and
international forces in.tluence or anisatlon all th
th e fore change,
org ni . lion · n d o d pt nd han • a w U.
or ani a ion · h ng , o do
the tbeod of management a the adju l -th •c banif ng bu ines environment.
F · r th · rea n , r i w rthw hil Lo, tu y h volu ion of manag m rn th ry.
In this chapter,. we will forus on the
Lh 1800 . · i
will dbcu
o uti.on of management theory, tarting from
dilio 1al tb •ori • f man.a.;::;:.:.~.::"~--·.. by ·o ering
the d enti.ftc, bureaucratic, administrative human rclations and heh ~ ur, operations,
quality, in orma i n, · y · 1 ,
ming ncy ma.nag rn nl
ri .
numb r '
these theori d clop d many years ago, can still be een applied in contemporary
o an· ati ns. ·
, w will l k a1
n ibl man g
, nd th drivers Lh re 1:
Lasd. th insiglus mt responsible managem.ent provid Ii by traditional (sometim
called mai
·a l .pproache . to man gemenl will
·nv ligated.
-
LEARNING OUTCOMES
.tud ing this chapter, you should be able to:
xpla1n th tradition I tMeor s-o man g m nt by re r ing to he
sde tr c, bureaucratic, d nistrative, uman relations, operations,. qualiity,
in form ,t1on, y t m an conting ncy approaches to rnanag m nt
L02: Understand ow the traditional theories of management evove to respons· e
ma g m . nd - pf in th h prindples/domains of respon lb man m nt
LOJ: Expl'ain the insights hat aditi onal theo(es o mana gement provide to
spo ibl. man g m nt
4
Chap r 1: h
volution ,o manag m nl h -0ry
KEY TERMS
ad ini.stra ·ve ma agem nl
bureaucra ·c approach to ma nagemen
ontin ncy pproach o ma nag m nl
ethics
human
~
la ions pproa h to
management
in orm · tion m · a m· n
operations management
L01 :
quality man g men
responsibility
respon,si I manag m
scientific ap roa
sustainabili y
'9y5 e s theo
to management
tot I quality
plain ·n tradl ional h or i s of ma nag m nt by re rring o h
scientific, ureaucratic, admmts rative, human refation operation , qu i:ty,
1nformatio , syst m:s n cont!
1.1
TRADITION
cy approaches to mana
nt
T 08 S OF MANAGIEMENT
In this section, , e will
from lh
rl l BOO .
ddress ihe traditionaJ theorie of management starting
I
1.1.1
·i ntifi appr a ·h to manag m nt
The First Indu trial Re olu tiou o ccurred fm!!Q the mid-18th to the early l~Jith
in · am ar
of Europ
nd o,rth Am ri a. Th Fir t lndu tri I
bmught abom a change fr · rn an agrarian and handicraft conomy
to
minat d by indu
nd
hin manufa turing. M , pri d di n f
good too pb1c · ith a . ocus o . in rea ed ffidency, higher productivit and
reduced a erage co . Rapid ind trialisation and cienliftc di coveries had a cos
in , m1 o p Uution nd po r workin onditiou · for labour duri
his iQl •.
Comparry o, ners hired 'ho ses ' . and they made decisions haphazardly, without. any
·y t maH tu y lb ugb r , oil tfon f inFi ,r m· tJ n. Jr b , d, , id d wo ' r
should work harder, n,o thought was t!l'iven to, worker moti ation. Moreover, e:acb
n
work r did lh am j b in hi or h r wn wa with di fi r nt m lb d and di
tools. lln hort, Ule.Te wtte no procedure to tandardise operati,oru, no · tandards
to judg
h ·th r p rfi rm n wa g d r b d 1 and n ti 11 -up . dt:t mlin
whet.her quality and productivi ty improved when ertain · hang - were made. This
aU ha nged ith the d e1opment o the cientifa appro ch o mana ement
Prindpl
5, of G
n ral Manag m n
i n · 1 pproa ] l man ,g m n i.nv l d
a tho.rough study and testing of different work
m tho
id ntify he b , m t ffici n ay
Lo complete a job. Four individuals in pa.rticuJar
contrtbuted treme.ndo l to the de elopment
of d ntifl m.anag ment, nam ly : r -derick
W Ta lor often referred to as the father of
nk and LiJli ,n
i ruff1 m -nag ment,
Gilbreth and Heruy Gann .
Th
Th scien i 1c apprna h to
management involved a
thorough study and testing
of diff rent w rk m th d to
identify the bes most efficient
way o - m.pl t- J b1
F,rederick W Taylor ( 1856-1915)
.t
rdin to F W T yl r. i n r,1 man g n n i 1.J
perform each ta k. To do that, each man a, er h· to o Jow four principles developed
by 1'.aylor:
Principle l: Develop a cience for each element of the work - study each e1em~t,
. nal
it and d l rrni
th
t ay , p rfi nn t j ,
ain, teach and develop worker to help diem
Prindp]e 2:
r, a h th ir
fal.
Princt Ie 3: Ma ager need o coope.rnte with e:mplo
den i11 · p
·ipl a.re ~ t1Jal] implement d.
Prin ip]
i id the work and th respon ib ility q
work.e:
1 en are that the
aJJ
n mana
· and
Ta or·
uld b u d lo, d t rm in
average worker c:ouJd produce at a rea onable pa e. day mand day our. Once that
d .. rm.in d i wa mana eme · ' r.:>~r.nn ibm o a w rk
fairl fi r Lh t
d.ay' work. In essenc, Taylor, · rying to align management and employees so
tbal, hat as ood for employ · wa al o good or management and the bu i.nes .
Frank Gilbreth (1 ,8 68-192
j a11d
Lill'iim Gilbreth (1878-1972)
.Fran _and U1lian. lrlbre h ,r b l known for lb ir • or motion tudi o hnplify
work. but they also made significant contributions m the employment of di abled
w .r
and ind~ ri 1 p y h fo - . Mo i n t di
.n t · nl_y
d
implify
work, but al o to improve productivity and. 10 reduce the le el of effon requ.in~d to
afi l p r orm a job. Th b li d that t great t wa
in h
rid
from
need.I. , ill.-dwe-cled and inef c:tive motions. Their motion tudi broke each ta k
orj b Into pa:rat moti ns an th n elimin ted tho tha w re unn
ruy or
reperldv . Becau many motions w re complet d very quickly, lh y used molionp1 tu.re films, at th.e time a relati ely n w technology, to analy ejob . Time tud.ie
workJ -d by timing how long it look. 1.o a • t:rst- la worker' to compl t -ach p~ rt
of his or her job. A standard time was establ" hed. allowing for rest periods. and
wor ·' ·p y v uld i rea - d p ndin on wh lb r th work! r x d d r fi 11
belo that :randa.rd..
'6
Chap · r 1: Th
On
or th
GUb th • mo ·
d
volutio ,o manag m nl h nry
, mpli hm n
lb cr'ti 1 r l th y
played in rehabilitating and employing di abled workers. After Wodd War I, there
weri 13 million
unded and disabled ldi rs in th.e United lat · and u. p ,
o lhey applied motion tudie lo id ntify lhe kinds o( ta ks tbal ell a bled wor er
couJ d perform effi ~ti vel .
Lillian Gilbreth was an important contrll:nnor to management in he.r own righL She
wa th fus woman to re , iv
d c ral d gre~ in indust:riaJ p h logy a w 11
a , tbe fir 'l oman lo become a member of the ciety o Industrial Eo in ers md
the Am ri an So i ty of M ,c hankal Engin e .
H nry Gantt (1861-19 9)
Henry . anu is, b t . own for th - Oanrt ha but h also lll d ignm anit
contribution to management ifu r pee m pay-for-performanc p]an and the
tr · inin and d v lo m nt of work . G ntt h rt vi ual y i ·cal what a k
must be completed at which times in order to complete a project. Ganll charts were
r, voluf nary b us f th d • H d pJann·ng infi rm.a ·, n h . l tb y ·provid d to
managem nt. Gantt along with Taylm. wa one o
1 1 management scienti ts
· ho, · o l
omm nd that omp ni. train nd d
o , th · , w rk .
1.1.2 Bureau rati marnag m nt
When we bear the u~rm bmeaucracy' :Oday, eimmediatelythmkabou tthings uch a
inefflcien , a Jot of red ta pet in
p t n , in ffi c iv ne and rigid admini. ra ~on.
When the brneau· ratlc approa to management wa frrsl propos cl lh
problem
were as odat.ed with mon · · a d patrta:rclti rather than bure ucraci . In
monarchi wh
kin and 4u n rul
and p _tria:rcbi ,
r a · oun i1 o
eldeIS, wise men or mate eads f extended families ruled, the top leaders typi a.lily
a ·hi
d their po · n b v.irtu or birthrl · hL or , mpl wh n th king di d, hi
eldes on became king Rgarcll
of bis abilities. likewi e. pmmonon · o prominent
p iti n, j m narcl · and atrt rchi w b •, , p n om u kn w, wh y u
were o · anci l rules and tradition . It wa against llii historical bac~ound that
Ma
d th idea f bu.re ucrati, m 11 g m n •
b r (1 864-1 920)
ociologist Max Weber vi ed ureaucrac: a the exerc· or ontTol on
th ba ~is of knowled e, expert nc . r ex erti e rather than rulin :1 b virtue of
favourltl m or p rsonal or fomil onn · tions. People in a bureaucracy would lead
by virtue of their kno ledge. experience and exl)ertise. Furthermore. the aim of
bu.re u
la ordin t W h r) is i1 1 to pmt · l · uth. rit , but Lo hi • an
organi ation . goal in the mo r efficient wa po ible.
ax
nn
Web r idrnlib d
cl . m ·n that h · b Ii v d ,c harn te:ri e bmeau · ra ies, nam ly:
Element l: P ,opl hould b hired eca · · th ir t chni ~a:1 trainin
qualif1e them o do lh job well
r quaHfi ation
7
Prindpl 5, o,f 6 n ral Manag m n
.El m nt 2:
d n h my u , w
or ho you are, but on your own e.xperienc,e and achievements.
Ma nag r rath r than bu ·.n
sh uld d id wh i promoted.
El.ement 3: Each position or job is part of a chain of command that darifi.e who
r p
o \ h m lhrou h u th bu in .
Element 4: To increase efficiency and effecti vene
tasks and re pan ibilitie
l qu.alif1 d l o,mpl
hould . . para d ~ nd a ·igned to tho
them. Authority is veskd. in the e · -defi
' po ition rather than
in p pl, , and lb uth rity f
p · i 'nn i d · · I d fin d 'n rd r
tor duce confusion and conflicL
ru1 . app]y
11 i . m mb
rdl
of th ir p iti
and tatus.
El.· m ut : All ml
hould b record
pro · .du
Element 7: Profess~onal man
her than busine
in
ri ng.
hould manage or
own
upervise lhe busine .
,v n
u rati
managemenl can b e:fmed
the structuring
of a busin · in
h' ar h •
nd1y, th
busine
and its members are go · em d by
dearly defm d rationaJ deci ion- making :ml .
·
atic managem,e nt
h
true urin ,o f n
or a isation into a hierarchy,.
h r th organ1 lion ,a,nd
Weber's comtribution io the development o
its members are governed
manag m nt tb ry r pre en a trem nd
by I arly d in ·d rational
impm eme.r in how bu i:n ·
howd be
decision-making rules.
mm aged, Faim •
upphmted favomi · m. the
goal
ffi i ncy .n:!pla ed th goal f rsonal
gain and logical rule and procedures took the place of traditions and arbitrary
d i-i n maldn . Today, how
• afl r many y rs o , . p ri n , w r o ni
that bureaucracy has many limitation a ell. The bigg limitation ·· probably
t mu h
ph i · , ,d i i n m ...ing · hat i dri n by rul · · n p Ii ·
hi h
ma es busines es too hesitant mo change and slow to respond lo customers and
omp ti -1.1.3 Administirauv - m nag m -nt
Henri Fayol de eloped the administrative approach to management. h laid th
oundati n of th pp a h t m nag m n that man m na m nl c ur
nd
books still adopt tod.ay. Why? IL i a simple model o .how mana emenl interact
with emp!o ee . It overs managerial tasks in a brnad wa . Therefore, aJmo, t any
kind o · busm
can apply lhi th my of manag m nt.
8
Chap · r 1: Th
volution ,o manag m nl h ,ory
H nti Fayol [1841 - 192 l
As m the case of other management dentists, fayol had ao i:ntere t in tho e actions
that h .d an impa ton l · produ ti.vi of busin · . Fay I argued that h u
of a bosin g ne:rally d pends mu h more on i . leaders' administrative ability than
on their technical abili . Furtbermor • Fa ol .ta d that manag ne d to perform
five manageria l fun io.ns • 1 th - are to be ucc fu.l 11am ly pianrung, org an· ing,
co,ordinating, commanding and control Man management t t
ha e dropped
fun ti n as 'I ding:
th coordit1 tion fun tion and n w f\ fi r to
l' omma
Therefore, the managerial functions are widdy knff n as:
f achi ving th m)
planning (d
•
organ· ing (deciding where decision will be made, ho wm do hatjob
an.d t.
and who will or for · ho )
leading fin piring and motivating w r e.-rs to ork hard o achieve
rga ~ ation ,J goal )
controlling (monjtoring progre toward goal achievement and taking
or
a, lion wb n n de · ).
•
•
m1ining organ[
ion J _oal a _d · mea
.,
In addition m , hese four mana rial func i ns
Fayal' ad.mini .trativ ap ma .h tu management
aJ o identified 14 prin "ple · mana ement, as
indi t db lo :
Prindpie l: Di i ion f'
ork: Produ tion can
he inc:iN:ased b
ruvidin
ork
o hat each worker comple :e
mall r a Its or job ] m o . Th
is the principle of spe iali tion.
whi h i
ry w II
µ
d by
economists as be.in a
acy
fa t r for
ffi n
th
utilisation of labour.
Prin ipl
uthority
nd r pon ibili
Authority is the right to gi e orders
nd h u1d b
mm n ' Urat
with me manager· respoi0sibility.
Ho ev r. busin
h uld ena t
control lo prevent managers from
a u ing their authority.
Administra ~ve management
r f ir
th p, rforman e
of fi
anagerial fun ctions
c
ul mana,g m n ,
nameJy plannin g,, organ is'ng.
coor,r nating, commanding and
controJ.
In addition, hi approach
atso lden tifi . d 14 principles
of management, namely th
division ,o wor , au thori'ty and
responsibi lity, discipline, unity
of comm nd, unity of dir ti n,
subordination of individual
i t r
t g n ral int r -t,
remuneration, centrnltsa ion.
. al r ch i , ord r, , uity,,
srabHity of te ure of personnel.
initia i~ nd esprit d conp
Principle. 3: Distipline: fayol declares that
I rl d,"'fm d rul and pro du. ·. are n
to ensure order a.nd proper behaviour.
Principl 4:
dda
U bu-in
f mmand.: Th" · prin ipl, ta
th a mptoy
11e ei e orders fmm one uperior ,only and ach e,mployee bould
r, pon to onJy on up ri r.
Prindpl s, o,f 6 n ral Manag m n
Prin i 1 5:
Uni
'fdw ti n:
rdin
Fay l, J unit [d·~r ti. n prlncipl
implies that each gro up of activities havin,g lhe same objective must
ha
n h d nd on plan.
Princip]e 6:
Subordination. of individual interest m general inle:re t: ln
• n grou. , h in r t f th group h · uJd unPT'-•Pn tha o. th
individual. When the inu~res, differ, it , the function ofmanagemen:t
t re nH thm.
Princip]e 7:
Remunerail:ion: Fayol percei es tha remuneration and methods of
pa m nl h uld b fr iT and hould b
o a ri rd th ma imum
satisfaction to employ, and emplo er. mploye · hould not be
,v rpaid r und rpa i, .
Princip]e 8: Cenbali ation : Fayol
that the
hould find a balance
b
· n th
n ·r li i n ,n
ati n
rity
depending on. the circumstan
and the employees in ol ed.
Prin i ] 9:
ail r
h in: Ea I p ·itl n in th bu in
from th t , lo, th
bottom. is part of a vertical chain of authority in bich each worker
Principle 10: Order: To void onfucts and confusion, order , n be maintained
by h 1 · a l I
, iything and , v ry n , h
houJd b no
overlappin of resp,on ibilities in a busm . .
Prin ip]
Prin ip]
H : Equi.t : Equity re ers to kfod, fair and j 1 tr, atm nt or all. fayoJ
, ercei e th. principk
one of eliciting lo alty and de otion from
onn I wi h
ombin· tion
~ .dn ·
in manag r:
while dealing with ubordinat
2:
tabillt of t ·nu.r · of p r no l: A low taff turnov r m "anin a
s able woJkforce · ith a high tenure benefits a bu: iness b impro ing
i p rform n
·
and giving , m
im to] am
heir job . F
ity i both fue c.a
effect of bad
I
mn .
nt,
th " d n
.d
unn
ary
turnover.
Prin ip] 13: Ini tia i.
~
Jni" iati
i oon
da
,h pr
r Lhinking OU
and
executing a plan..
Principle l : Esprit d co,rp : Tbi prindp,1 impLi · I.bat unfon i
an exten ion of the princip]e
unity of command.
or
tre.n th and i
Apart fr mid nlifying ili managerial function and the 14 prindpl ofmanag ment,
Fa ol wa aJso one of the fu t to r ue that ma.nag ment coul!d and ·hould be taught
to individuals. H be.I i ed th.a ; th principl of mana ement , ou]d b tau, ht at
tmiversitie and roHeg . and. that manage.I are not bom, but that they can be made
~·1.i.,,... ~,~fi 1 Lhrough
mbinati n • f du ti n and , p ·
Chap · r 1: h
volution , manag m nl h -0ry
1.1 .4 Human relations approa h o ma nag - m nt
In om pre ious di Cll ions, e indicated that scientif1c management ro use . on
improvin th -rr, i n
f bu in
• bur au rati ma · ag menl fo us
n u ·ina
knowledge. fairness and iogic:al rules and prnc:edures. and admin" tra:tivt
managem n.t foru e on ho and wh t managers h uld do in their ·ob nd in the
org ni at.ion a a whole~ . hat brings u . to th human relations approa h to
mana emenr., which :focuse on people. partirularl · the p ychologicaJ and ocial
a p ·, of
rk.
The h man r, lation approa h , o mana.gemen
vi w p ople not a ex.ten io n or lhe machinery
and equipment that are used in organi ation •
The huma rel ations a,:iproach
but a
to manag m , vi w p opl
v luabJ
or an.i ational
in
their own right. In this ection, e will briefly
xpl re th
ntributfon or Mary P
r
Foller and Eton Mayo to the h wnan relations
pproa h to manag m nm.
as valuable organ·sa tional
r
in th ir wn right
Mary Park r Foll tt (1868-1933)
Ma.ry Parker Follett I known a · 1.he 'mother
f modem management'. Unlike
p,eopl who view conflict a
eved hat co,rr ·
od
thing and thaL conOkt hou1d b ~tm1ced ra.tber Lhan ai o
Ll.w ·
wa of dealing with conflict m bu ·
• namely dominat
e and
i.nL ration. D mina ion m a
n jde over th
n an
mo
t
work in the h ort term,
tha
·h i
·
ti
I
e in the long
..
o a m
a . . unsatisfied ·.
· ething
f
. Int
· is ,o ha b th parti indi
· n
nd lh n
work tog · er to fmd an alternative that meets ··'
f both. Fnllert ,u·g ued
th b l trai gy b
·t
n d
]opin
iv
tha
.
, ,c onflicting partie • n,eech;. FolJett also made important
t rms of the role of c or · lion in b · ine · ·. . She beU d that
eraU outcom
J'le· a hiev d w en lead
and · ork
al different I el
and in diffelient parts of organisati
directly coordinate their efforts to olv
p obi m · in an int gm i . , way.
·
conflict. Comp romise oft
Elton Mayo ( 1BB0-1948)
Elton Mayo is be t known for h.i role in the fam.ou Hawthorne studies at the Wi tern
El · ri ompan in th. Unit d
(U ). Durin th art 20th · , ntury th
Europe and Asia ,e xperienced problems relating to Labour unrest, dissati Faction and
viol n prot t . Wo r in comliti n w
h rribl ~ • nd n ributed lo th u.nr · t.
MiUions of facto,y wor e:r had to endure boring and repetiti e: job in unsalt
ondition with low aian and wa , . Emplo • r mo ,er and ab ent i m w r
v .r y high. or exampl H n.ry Fo rd of th Ford olor omp:rn in th U had
u-,
u
Prindpl s, o,f 0 n ral Manag m n
n empl
tumo
ro
in h"
and n d d t
ri
double their daily wage from US$2:.50 to US$5.00 to keep enough workers a:t
th ir job o m 1 lh . e:mand For f rd ut m il . In 191 Foro hi d m r th
52 000 worker , to keep a workforce o onl 14 000.
Th H wthom
tudi w r
rag · b w n 192 and l
a
We t rn Ele!C'tric plant in Chicago. In the first iage, two group,s o ~perienced . emale
wor
were p rat d rom therw r ' e in a fa l ry. Ov rap ri d of 1V
rs,
researchers introduced -. arious level of and combinations of Ii btiug, fmandal
incentive and wo
,reaks to tudy th effect thereof on th wom n · . pr uclivity.
ont..rary to lheir exp eta.Lion Lb
om n produ • ivit in ·
d regardl
o
whether the re earclters increa ed or de rea ed be lightin , aid or e ba ed on
individual produ · tio t o.r ,roup produ tion, or in re ..
or
rea _ d lh numb r
of work breaks. Mayo and hi colleague concluded hat o thl:ngs accounted for
th
·ul . i , ub , n iaU mo
t , n io
>· id
w r: r lh n
to others in the fa toty. Se,cond, a cohesive work gr ttp, de doped that led to
i nifi an.tl high r l ~ I , j b
· fa i n n
- u tivit • F r lh fir t Lim
human factors related to work ere ou.nd Lo be more import.ant than the physical
concli ·on or th w r . The Hawth m · u ·
ound tha w rker ' fie lin . and
a tilud · affect d their ork and cir produ tivity in th
orkplace.
Th
, nd • of h
of a group i:hat ,on ·
p rfonned a . -cl
t:udi.
king u
· t:men, three sold
rat w·th the ·
of equ.ipmenl. No ma~Ler ,vh , th
the group de
re p nsibl
bet, .een th
wi
o
and hi
d
·g
. in this
ors. Each
cifi uni
,:
oUeagu
o , lh ir
tlvit
of
ere again
.
r,.
1
di1Ii ren ·
the study in the factory a
ud tage in the bank
th group in lh ank wiring
,
a r ·ad b
tabli h d
fi
·
d already developed strong nf'gative norms that go erned their
b
.
ny chan
Lh l th
rch
mad in t rm ·
rm · I
in · ·
and work breaks the roup members decided that they would wire only
6
600 conn ·lion p r da
wa · bJlo m b nk' bj
o·
7 300. lndi "dua who exc:eeded th g · up goal were ruslit.ed.
1
rcl1 m d imp
n · ontributi ns t th man g m n
r a b , in
•I
provided new insight that the orkplace wa more comp.lex than previously thought
nd m d it ·l ar bal fm n j I in nti
re no n · rUy th m st imp rt· n,
moti ator for employe . Furthennore, it de:monstr.ned the imponant rol of group
and roup behaviour. It also undersco, d Mary Parker Foll. tt·, c: ntri utions in terms
of coordination in a bu.sin
I.hat w explored. in I.he previous s ction.
ln th fr Uowin
ti
r vi w fi
th r i n·ft an hi t ri al • ppro h · t
managing a business thai have influenced how managers today appmach their
r, ·p n ibiliti a ma□ agem nL
Chap · r 1: Th
1.1.5
,o manag m nt •h
,ory
Op rations, quality, infor mation, yst -ms and · h - onting n
of manag ment
ln thi ction, w
ploJi- ma nag ment p ro h t prod.u ing g d and
of Wgh quality on :a daily ha i gathering in formation that they ne d to understand
th Ir bu in . and the environment in ~hich it operat , und tmdin · ho the
d L . erenl pa .· of th · bu.sin · " work og ther as a whole and recogni- ing he11
and here particular management appmach are likel to work. The appmache
w. will di cu
r
,op rati ns, qu lity, mfonn ti n,
on tin ·, n y
a pproaches to management.
Operations management
Op rat' . m n g m nl i
on rn d witJ1
the transformation or conversion of input
int g ods and
rvi
as ffi i n 1y
pos ible. Operations managemerrt h1vol e
the daily production of goods and -ervices.
Operation managem nl uses quantitali e,
or mathematical approaches o find wa to
in re
· n organ~ ation produ ti ·ty nd
profuabili and to improve the quality of its
p r du
n
rvi · (quali y mana i m 11 will
be di ·rn sed in the next · ection). Quamita:li
,and du ,
The mo t common!
quaU y onlr I,
linear progra - · ·,
man g m n
n,
Op ration anag m n us, ·
quant1La Iv • or mathem .th::a.l,
appr a hes o, find ways to
m r a
an rg ,nisa t ion•
productivity an d profitabirity
nd
impro th quality of
its goods and serv,ices.
appmac:hes are also used to manage
chniques in operations man ement are
apa ity p,l mtin , m - u11
produ livity,
work mea urement
hniques project
i n f th
are
nd
i:he scope ofthi book.
Quality ma gemen
Quality man.a
ent can b d crilied a th
acL of o crseein . rut a tivities and ta
need d
t maintain a. d ired leve] of exceU ce. ln
Liu 'n , quality mana m -nt in
ur
com n.ents, namelly planning fur quaU .
sunmc:, • qu lit
l nd con · ,u
improvemenl
,Quallit mana gemen t can
b d, crib -a
h
C . of
over:see·ngi all activities and
t ks n · d d to maintain ,
desired leve l of excellence.
W Edwards Deming ( 1900-1993)
Th q aH
v utio,n w l d · th J pan aft r
rld
n in th ·r a · pti n f
W Edwards Deming's teachings i111 quality management he quality revolution, started
by Dentin in Japan. was followed my a number of quality philo ophers wh influen d
quality :management to b ome \' hat it has in contemporary business . Much later in
I
Prindpl s, o,f 6 n ral Manag m n
th 1980 , und r p
ure n in
o
t th Japan
uarty v luti n, Am ·
,(through the efforts of its Navy)1.finally adopted Deming's teaching and de eloped and
braD d w aL · kn wn i d y Tola Quali
anagement.
1
Total Quality Managem nt (TOM)
Th concept of IQM s ~ to impmv prndu
t-
Total quality management
t- impr
produc -~ity
through custom er satisfaction
nd mploy inv,ohr m nt, and
is based on four pillars, namely
a y t m · · pp · ach, u :t · mer
ivity i:hrou b customer alisfa tion and employee
in vol m nl In a QM ffon:, all m mbe o
a busines participate in impmving processes,
pr du
.i
nd th u] u in hi h h
wor: TQM is based on the following four pillars:
•
pp roach:
pp,ro ch
· ed in
m
input
fmm t e en imnment it functions in, and
add,~ aJu ·
its a · ts and int mal
requires the orga ·
rm fan p n
'Y
· ··
focu.s, people involvement
·
and a
c:on tinuous
im
y terns to produce outpu · to the 1e nvimnment.
•
•
us ,om · fi
: A custom r focus r · ni
iakeho]ders as customers in turns or being
products or l"IV.
People invol ement: People invoJ em.em i
:p iflcally in the busine m· a ement ini
in order loge th m to ta
·trnctures,
terns·· nd p,
•
s
·
rnal
re, ·P , nts of value-adding
a taicti o engage people
iatin and planning pr e
own Jip and mbrace bu iness plan
e a · heiT own. 1t cer.ures 011 t ~ mwork and
requir mana m
to pl· , a fa ilit civ rol
managing team e funs.
f
, in u improv m nt: The pr
hin · nd
o
, tinuou
improvement, p:romoted b Deming, assumes
;roper planning esta.br hes
an
bu
g, al., Punh rm • it
· hat u ·in ·
are
· ·o establish the current
atu in terms o . the
ng a
full up ,r t
nn d
hi "'V Lb
tegic goalsr aad. lhat the apprnpriale bu ine driver have been
at will facilitate tb pro
Information managem nt
lnformation maml · ement is a . ad com:ep'L that
refe to the a quisition ofdara and infonnation
from on, or more ourc the tora .e and/or
manipulation and the distribution thefeof to
th · wh n d il. nd Lh ultim
d. p · ·,on
therm through stornge.
that truly r-votuLioni d
the use of information by organisations were
. h · fir l
14
· hn.olo i
ltt•11•
lnformatio.n management
ref rs to th acq1.1i ition of
data and in ormation rom one
or more sourc , th
and/or manipul · io
distribution thereof
who n · d it and th
storage
and h ·
to those
ultimat
disposition thereof thmug,h
tag
Chap · r 1: h
pap r nd Lh printing
during h 14th
volutio ,o manag m nl , h ,ory
ntu . when w· , r-p ,w red m chin
were created to pulveri e rag into pulp to make paper. less than a half century Jater,
th printin,g pr
wa inv t d. wh.ich r ally redu d th ,o t a d tim n · d d
Lo cop:Y written da ta a.nid information. By the 1870s, manual typewriters were used,
which we:re replaced b personal computers and word proc:essin · oftwar, in th
1'980 . .'. h Fourth Jndu _triaI Re oJutfon i upon us nabling o an.i a lions to us
technology uch as Cloud,. B,i Data Analytics and the Industrial ntemet of Things.
Systems approach to management
A y L m • n b d in d · a · of int rr I led aJ d .· c d p nd nl pa ·
ng
in a manner that produces a unified ho le. S tcrns can be either do ed or open.
l
m d
l in ra
with h ir
.i nm 114 wh ~
o n
~ ·m
recogni e the dynamic mteraction of the s tem \1\rjth its environment. The
o r ani ti n. which i · a y t m in i
wn right
il'l
n tan intera tion willl
its environ.m.e nt and is influenced by both the indu try- pecific and the general
environments. Th refore,. o,rgani a. ion ar ·ew d a pen
ms. Rath tha n
vi i.-vin. one part of the or
a 3ifl
open y tem, eparate fro m
r -part a
y tem pproa h ncou_nm
ana
l ok
The
proach o
for connections be e
the different parts
manageme: t v·ews. the
r th or ni aUon. TI y m · app,r h organ is 1 ,a
m
to management views the organisation as a
compr ing various subsystems,
y t m, , mpri ·
.· us · ub y . m~, whi h
hi h air simply small r
a re simply smaller ystems within larger
¥S ms within larger systems.
ltt•11•
:y .terns.
· Un of tho ht that tre
ih ioternctive nature and intodepeodence ._,
external nd in mal factors in an orgaini rion. SU:h stem and th if connectio n
·f h · • ch other are con id red in
t 1 th ory, Jn
managers can aim to
·
crea e ynergy. Synergy occ:u when . o ,o r more bs tems wodting og,ether,
n
d
m r han h y an
r ing part. y n r th ·
urs h n
'l + I = 3. Su(}c,es fu1 interaction n adaptation of the organi ation to its changing
nv'ironm n i . cru ial. b
p n y t ms t nd t w rd "nt , y, , hi ·h i 0
ine itab]e and steady deterioration of a ystem.
Contingency management
In ur i tr d - tory r mark t th · oluti n f m ag m fl ' Lb ry,
uI m d
tha t Lhe goal o all management theori
is to find the best way to ruanag
bu ines e . From reading a bou the ariou · approach to managem nt, you may
ba v · ath red tha . w hav - a problem - r archers in management · m o aU
have differen idea and conclu ions in term of wha that one bes wa is.
Furth m10 • more thao l
yea
of manag m nt res a r h indi l
cl ar
boundari and limitations to mo t management theories and practice . That brings
u . L h n vit ] qu ti n - h ,w i m na rt d cid , h.i h p,pr b a , p
15
Principl s, o,f 6 n ral Manag m n
t
. fully? Th an
ma ag his r h r bu in
rr
·n th
·tuation Lh t th
manager faces.
Th
p ro h o manag m n
states hat the application of management
prin ipl d p ,d , n th · p ifi. i ua ·on
Th on ing: n y appro · ·ht
that managers face at a given pomt in time
management proposes that the
in th busin . Th
anting , •· y
•r a h
application o m nag ment
acknowledg - . that every bu.sin s, e en e ecy
prindp,le d pends on 11
d partm m or unit within th ame busin
pe.eificsituation tihat manag rs
i uniqu . : v cy busin,
. i ts h1 a unJqu ·
tac - at ,giv n poin, in t m in
environment (micro-, market and remote
the organisati n.
nvironm nt) with uniqu goal _nd trat i •
Managers the.refofe need ro adapt thcir management approaches o uit the unique
Hu ion f lh u in . Th
n 'n n y appro h i r. na · m n mph i
that there · no un.ive ally effective management theo or approach. The mo t
ffi liv th
d p nd n th kind
pro l m r it · · n th· t lh man g r
or business fat at a pecifi.c time.
ry wm
r
Th uaditi · n J man g m nt ppma h dd ed in
- ·ti n have b en bl m d Fi r
man ofthewodd current ailments, issu and crises ••,di as the ocial injustices and
nvironm ntaJ d tru ·on tlr t w ar,
.w
rid a , remind
by the media. Africa is the continent most vulnerable lo the impacts of dima1 change
andi alread
erien in t m ~ . increa · vera ontinent here
ountri
o ·. lfa and Zimbabwe) with thers experiencing
floods (for example Mozambiqu ..1 Am.ca' p t and present c:on rib tfon to dim te
han has b • n low, tit wen
mana th • llii · s of di ·hange and 1 o
are drought strk:ken (for
· np
need to ensu:re that organisa ions do not pose challenges and fu . · er conbibute to the
nvimnm ntal d rru ·, · 1
t ha · ]ready taken pl . M
m nt and mana rial
for their contnouticm to
approaches have been criticised from a variet of perspec1;i
probl m · ·u I l nvironm ntal d ·tru tio,n,. lim l , n • he gl b 1 fman ial · i
o · 2008/ 2009 (from which many countries induding South Africa are stiU experienc::ing
th d ri
tal fre ) and oth rs. H
:V
t'i.cism Wilhou.l al rnati
will n
benefirl an liody or anything. Tb~ore, th under.I ing belief should rather be that
e ent and its int111 n
n
,c an and bould mo · e ·Imm brin a
f pmbkms to being a onrce
nfr nted with an th r ri i in th ~ nn f
ta mg ef' ec:rs on . lobal health, global economies
and global fmancia1 · tern . R po Ible management pro id us wi · a olution,
beautifully Ulus.trattd in Lhe opening cas to this chapt r by ooiwort.hs Holdings
Limited, whie:b dri
positive dJange throu h their Go,od Busine · Joume - their
pl tform [mm which they a tion ban . in two main . .rea ., nam ly community
ln D · mb r 01 ·
COVID-19, which bas had de
development and environmental management.
[n the next · e tion we will elaborat on lhe con· pl ofrespons.ibl management
Chap r 1: h
L02:
1.2
volution ,
manag m nl h ,ory
Und rs and ow th r di cnal' · ori s of m Aag m n vol
o
respo sible management and expla[n the hree p inciples/domains of
r · po ·sibl ma nag rn nit
RESPONSIBLE MANAGEMENT
Vario
al15
d ftne the envir nm nt of
any responsible manageme:nL activi ty. ln
Africa peciftcall , caiu
to be addre ed
by respon ible man.a.gem n in Jud global
warming water crise , global health crise •
Y.erpo,put U n, pov1"r I
n hun. r.
re
drought in ome African countries and lloods
in h ·, w rkpl
di
it , tr n fi rm ion.
the ellbeing of communities, corruption in pollti
1
Responsible management
is · t · mianag, m nt of an
or ani
mn built on the
prin ipll s of - s ain bi i y,.
onsibi lity and ethics.
1
, govemmen.t and the business
r, h m n righ and in om · quality - th Hs , uJd b ·
nd,
These ca
are grouped by Laasch and Conaway 5 into lhr e main omams of
r ~pon ibl mana ,em n '• w · b p · ., u with , fr.am work for
po,nsibl
manag ment, namdy
tai.n bilit responsibility and ethi . Ba ed on this
framework
e can denn n~: p n ~ble management a the m · agement or an
· r · ni a.lion buiJ on Lh µ
·pl or . ustainability, · p
ibility and • thks.
These three con pts are plained below.
usta.inability:
us · · ,a bility focu
on the tripJe botLo line orlh organi ·.nion,
related o the · te:matic ocia
n · · onmental and economic
i . u s that thi a n tb weUbdrtg and rvi I or urr n and
future generations .. S emi ssu
for example include global
armin • t . global h ,th ri i , th global famm i I ri i
and '111e gbobal wat
· i is. On a busines level, th~e issues are
ran ,1 t d in o th · c 11 d tripl -,l ttom Jin , which m ans Lh t
the organi ati
rteed to focus on and commit to ocial and
nvir nm t
n ms just a th d n th ir pr fi , in th r
word ocial, environmental and economi performance. The idea
is that organ~ ations ne d · o e m naged in a ay tha th no
only e-am profits but also, impm · p op] ' ll e and the plan l
(the o-caHed 'people, plane and profif adage). Management
pra tic hould , :m bra tripl - bottom-Un ptimisation.
Re pan ibHity: R. ponsibill' ri u
n ·tak.e holder eng· g m nt with th aim of
opti.mj, iug take.holder valu . A 1ak> bolder can b d fin d as a
party that ha an intere tin a bu in · and tha can either affect or
b affi · d b th busin . A busm
h a r pon ihiU y to ard
many takeholder group , for example its employee , owners,
uppH rs, u m . • g v mm nt a·nd lab ur union . M nag m nt
prc1ctice hou.ld embrace stakeholder vaJue maximisation.
17
Prindpl s, o,f 6 n ral Manag m nt
Ethi :
im t
ndu
11
in ao ethical mamner and create moral excellence 1n
ni atlon. At it co
thi i , re.la d t making th righit
deci ion in an ethical dilemma. Management practice bould
Ethi
n
embra . ethical ,e · ion makin and moral exce:Uem::e..
It is. important to note that although we gmu.p, all the various can es o re pon ible
man g m n into th thre d m ins
ainabiUty re n fbHi
n , thi ,
the e domains ove:rbp and ignifi.cantl mJluence each other. In Africa for example,
the effe,c or loba] warm1n the water ri is in dr u ht- tricki n counm 1
ov :rpopulation, po,vert · and hun er, and th - health crisis an b · group -d under th
usrainabilit domain, ince th e i u are oncemed with tb trip le bottom line
or org n..i atfon , (p op] • plan t and pmfit). Workpla - di · il nd U1 w lib ing
of communities can be grouped wider the re ponsibilit d main. sin ,e organisations
hav
r p n ibiliLy n
nl toward lh ~F h
old
l r ,own rs) bu • I
towards oilier stakeholders such ai employ
(th c function in diverse group and
l ams) and th ommu it ·. - rrup i .• huma · · h
nd in m in qu Hty an b
grouped. under ilie ethics domain inc,e thes i ues U5UaUy in ol e ethical {or
un thl aI) d ci ion-making r e e and m raJ i ·u . Ov rpopulation ignmcantly
influence povert and hunger (both r in Uu~ astafoabilit domain). Global
wannin 1 (in the ustainabUity domain) cau - vere dro ught in ome co
·es in
Afri a and flood in olh rs, infll:1
ing th wellb in o commu niti (in th
re ponsibility domain).
or
-mpl of
A resp
1bl organi a ·on
a re ponsibl organ.i • ·o . Wha 1 a
po , ibl
assum
:
responsibility
for the
organisation? A resP-onsible organi ation is an
ipl, , om lin , k hold r
organisation th
p n ibiliity for
value and moral dilemmas.
the triple bottom line. stakeholder value and
moral dH
r . , ni if n organ· ati n i a
responsibte organ· aiion and ful fils all three conditions can it rightfully call i elf a
p riortyp f.o . ni Un 1t led
prim o r n· ar n: Aprim orga i ali ni
to pe.rf. rmance that is at the ame time oci lly, en irunmentall and ecoruomically
· u in ble. ptimi
takehold r valu
d dispta moral · ·· cellence. In th ras
o
olworths Holdings Limit d, the n1pan assum . responsibmty for Lh triple
bottom line - peop,le, planet and ro 1.t - through their Go d Bu iness Joume tha1
o us · on ustaiaabI r ming,
' t , wa . r, n rgy and dim
chang: . Th ompany
al o a ~um r,esponsibilit for al] stakeholders, by focusing on transformation. ocial
I pm nt. and h al nd welln . La il , th
mp n d. pl · m ml
ll n
by focusing on ethlc:aJ sorncing. During the COVID-19 pandemic:, the rompan also
onlribut d , th • lib in r·ts mpl y
nd mmi t d l a ri t finitia iv
to meet the chaUeng:e of the crisi in South Africa.
Th
open.in
cas -
Limited provide u with
18
orths Holdin ,
lent
Chap · r 1: h
Orgaru · tin
nd v n indu Ui
ha
volutio ,
manag m nl h -0ry
r
ntly
om m r r · p n ·bl and th
busine world has seen a swift mo e towards more su tamable, responsible and
thical pra H
.uch lll ~ pu i plac b WHL d rib~d in th p ning a
of this chapter. In 2010. a NASA tud declared lhat aut,o mobiles were o ficially
the lar
net c ntributoir of limate change pollution in the wodd. Cars, bu es
and rru ks rel a poUutanls and gre nhous a
that p,romol _global warming,
while emitting few aero ols that counteract it. [n contrast, the. industrial and
po T , to
1-a many r h
m a
- wi h a ] r_ r ontribu i,on to
global warm.mg - bu the al o emi sulfate and other aero ol ihat cause cooling
by refl tin ]i bl nd I · fin · l ud . Th g d n ·w i tha lh
m b, l
indu.suy ha made great strides towan:ll increasing sustainabili . Unfortunalely,
w h v al ·
n mi o ndu t in hi f: I . In pt mb r 201 , th En . ir nm nt I
Protection Agenc found !:.hat many Volkswagen cars being old. in America had a
d at
i , r ftwar in di l n in that ·ouJd • c w n h w r b in
te ied, c.han ing the performanc accordingly to improv r ~u1 . e German car
giant ha sin e admit ed to heating on emission t t in the United State ..1 In
lh informatio n · ~ru10l gy {lT) indu try grie n 1T
I co ,
m instr am opi
for information technology, and ociall respons1 le in tment bas become a hot
t · pi in . fm:m
nd inv tm n in u • Wh
industrie be ome more r ponsibie, !there ·
hang . Th
dri · fi r
n ibl,
the following eight categories:
•
ri
1v1dual r ni a ·on · or
predominant driv,ers for uc.h
i iti · • n b gro p d into
R p n ihl
nd w nt
foc organisations to become responsible organi ations. There is a ..in rea ing
t nd n for n um rs t c. r a: ut 11 ·pon ibl mg n· aro
ri t , bu
r - pon ible produ ~- · hich eads organisations to ondu t u in
in a
re ponsi le · n.n r. Th OJ 5 Niel . Globa1 Corpor-.n
a.inability R port
indicates tha 68 p
ent or oul\h Af1kan onsu.m ni a,r - willing LO pay for
brand . that ome from or ani ation who are oqim d to a po: irive odal
and n ' nm :n al impa-t. Thj ,. i in. ompari n
- p r n of lobal
responden , which in tum has increased from 5 per cent in 2014 and 50
..
201 .8
Responsible ourdng. Re ponsible ortrcing ,can be defined as a functl•on
b p rti ipaling l
(h
m
and i uppli . ) a
quall.y
accountable for etbicaUty and . -tainability during the suppl ing
p, r b in.· , m nu f: turi
mng if go
and rvi . Many outl
African companies al o upport an ethical re ponsible and ustainab]e
u pl hain. F r ampl B rl w rld h d I p d
t f ondu l
riteria and _tanda.m.s for their up•piie.rs which form part
a upplier du~
di igence ini iative. The group believe that i i importan t align i elf with
a robus upply , ·ham ln order to ustain Ion - - erm alue creation for all
akeholders a envisaged b their value and ustain3bi1ity prlndples. 9 From
th
of lhi hap • it h uld lob · ar th WHL uppo
or
Prindpl s, of G n ral Manag m n
r p n· l
in b lit
nti
value ehain - rom w"thin its own operntions, Lo its snpply chain, customers
nd pr iuc •.. Thr ugh il Fannlng or th Futur Pr gramm , h
,mp ny
en ures Lhat i
armer a.Fe welJ prepared for water bortag s. · h Group
also bas drt e toward . product traceability and ethic-al and -u ta.inable
ourcin · or otlon. imb r, visco leather, _o co oa and palm oU. Durin.
the COVID- 19 pandemic, many ountri and busin · es experienced at fu t
h nd h impo an e o,f u airiabl uppl.y ch in. For · xaropl • ho,prit
canc:e.lled orders from China due o the unavailability of the e products.
b itu pr du t from · i am
l ,n
r · red. m d · and
delivered, which caused out-of-stock situations and a subsequent loss of
al fi r h
mp n . m
•
Resp,onsible emplo ee . Today, JO per cent of worttIS ar miJlen.niaJ (tho e
b m . itw ~ n I - 8:J and 19 6). Ho v r. wi h baby b H
(th 1, b rn
between 1946 and 1964) reaching retirement age f lrl · quic:kly, by 2025 75
p r cent f th workfor, \ UJ b ompo d ,
i lemti I For rganj ation
thal want to · tay competitive in all industri
the mo important. bing
chat they hmdd be aware of i that mm nnia do ot want the ame thing
from mp]o,y rs as baby boom rs did. Baby btiom.
ought vor ptac - .
that offer s ability and high sa[arie . illenn · ls however. ill aettpt lo er
mun rati n ut h
high ·
-. r lb · ti n of rgan· tio
to respous·
ct - ,
want m be emplo ed
tl1 uph
I pu
' and
11
accouotability..
•
mark · and busin
on um
n
n pr1 du · ~
over others. or even decid . ,o • o buy a product at all. thereby e:mh,r adng or
rej ,~ting pani ll re vironm ntal and/ r labour pra and maltin oth
, alue drums ha ed 011 the ethical valu they bold. ~
i ing choice in this
way crt", e pp rtunlti for o arusations t
n w marke .· b makin
th ir pmdu rion pra _ti
mnlorm to on Hm r va]u . In h.e opeuiing rase
of thi chapter,. i was tated that WH1 , ourcing cot1on, timber, i co e.
a Lh • oy, o o and pa]m oil from
ainabl ourr . Olh r ampl
ccessful campaign waged b
h1cal c:on umer movements a.re: foods
l
fr, fr m - n i Jly rl
t d rg .ni ms, fair- r d
ITi ,
m i
products free from animal t, · iin and ,conllic:t-&ee diamonds. Entering new
mark i -. onl n f m·
. angib]
onomi b n l IT m ·p n ·ibl
of
busines: . Other benefits i,JJclude the attractiOfii moti ati.on and retention of
mpt
t
' ngs; redu d bu in
ri k; and in r a · d pr f1hbili ty.
These benefns a:r referred ; o a the bu ines ca -e for responsibk
man emen . In a 2019 :tudy condu t, d lly Th Ethi In titute of outh
African prlvate-se tor or anhttions, ii a found th t more mplo
ho
e un thical behavfour in the workplace are report·ng it. The tud
in un lhi aJ 11 ha j ur l. wor: : From 18 p r n in · 9 to
p r
1
0
,
Chap · r 1: Th
volutio ,
manag m
nl , h ,ory
1 r · n
2 19 .. Th n mb :r r m_l ·
wh
nd
12
reported this increa ed. from 48 pe.r cent in 2016 to 55 per cent in 20.1.9.
nlin 2 l ,
., rn
b Ii , i n. Org n'isal:.i n tad
rat u d r i re , d pr ure i d
things fa ter. in greater quantiti and at cheaper pric: . Consequently, there
i
trem ndou pre . ure to cut
··. , in
profit biH . nd giv th ir
hareholders (inv tors/owners) higher returns. Becaus of h e pres m ,
organ·, ation have grown. notju t wimio their own nationa lJ rd:ers,
but al o beyond them.. Op ra in h yond borders offi r., m· anlsations
op,portunitie to keep co low, for example, b · op~ting in ountrie where
·tion , ] u b o t ffi ti
labour , t are i nili antly low r. Th
and prnfi.t inducing. could have a downside - globalisation may abio come
a th
r ial nd./ r nv·r nm ntal a - j al on '.d ration incr asing the need for respo,nsible managel'.l} nt
•
in
lm I gy nd tnm p .
. ondu
in
a responsible manner is good for the reputation of the organi ation.
ibl mann, :r m I ad to l
l
- ndu tin busin
in reputation. Ulen in the alue
the: brand or even m the o musation
agai t the German ~,ompan oH:: ,
and it
ace plance ,o the fi
ca ·ed out on mDl" lhan 11 miUio ehj I (whkb
we discus ed e., di in
.ectioo) shocked the bu in
orld i.n 2015. Thi
andal g n • L d, iiltIIDng oth r riou o iaJ and
1 . rnk con qu n
a situ.u:fon of di trust towards V:olkswagen (VW. art unpreceden ed los of
an irnm di l nd import _n'l l
lu for ' t · hareh Id r .
i increa ed when it is ob erved that, in the ame month,
h · ·u pan • w , it t t. d lh t VW,
r Lh h ad:· ng of ' rpora ,
.social responsibility' considered itsel . · 'corporate citizen', re ponsible
for ·1 ·dviti · and obHga i n • ·, .g fri m lh m, iving its ~o ial and
_ ·olo,g ical obj~ctiv Lhe ame priority a economic ones. Moreover this
was reported o interest r p a part of the uni u natur . of the ompany
and it orporal - cuJtur . It
ified its activ · parti ipaUon in the United
Nations Global Compact
GC) and. in the Global Reporting Initiative,
aking up, I ading p iion in th int mation l ranking and corporal so ial
re ponsibility indices {the UNGC and the fi]obal Reporting lnitiati e will be
d' , u d in mor d tail in h pt
). TI1 a · h
n r p rt d wid 1
for tl1is contradiction betw,een corporate · ocial responsibility and corporate
, ial irresp nsibility.11 Ac or ing o th In m · ti mu , r · ni tion for
tandard sation (ISO) norm for ocial r po.nsibility, ISO 26000, scrutiny has
in r
d b .u · f
bU . ommum tJ:, n
hn ] .i and wid · r ad
intern.et access. Furthermore. a variety of institution , for exampl the Global
Compa t pr ·dean w inf stru ure and framewor fi r lobaU available
in ormation on th respon ibl,e and irr • ponsibh!: behaviour of organi ation .
Advan
un -
•
Iner asm c rpora po · er. Organisatio ha · an immens infl.u n e in
· o i ty - sp dally multinational org:rni atfon . As organi ation grow and
Principl s, o,f 6 n ral Manag m nt
t bigg , th ir r · nu · nd r tum b
m bigg · • With ·n,.n>,o.c:.., rums
come . an inC'Jiease in power. Furthermolie, organi ations are acting beyond
th ir \i n national b rd - with p ratio • i • ountri
n around the world,
b vin tremendou geographical reach and o ten pow r not too dissimilar to
the sta ·- they opera e in.
urn. organl ation are p · werful entiti ~. Wrtb
uch pow r om a bigg:e:r respon ibi.lity toward aJ, t k hold
•
6loba1 btt;·.ine~ r· · . The world is more connected and complex lhan e er
before. n important implkaLion af lhi s _a emen:t i that organi atlons
world vide are becoming increasing[ expo . d to gJob:al ri ks. whi hare all
driv rs for r pon ibl manag m nt a tiviti . Global halL ng
nd. ri
1
inclu de increased carbon costs, global warming, climate hange, global
h I.th Ii ks · lobal du afonal ch ll n
p
rty
d r div n:,i ·
rn water and clean anitation, food ecurity and hu er. hortag - o natural
· urc · . d rrupti n in p li ·
d th
tor. ln lh
of nearly 1J 000 busme
lead
surveyed
a
the 20 9 World Economic
r, : 11 (l]i un mp] , m nt
and und .rempioyment, (2) ailure o ,n ational ovemance, (J} failure o
critical infrasttucture, (4) e.nergy pric bock. (5) ft cal ri , (6) profound
o ial instability, (7) illid · mtd , (BJ wa
cri ,
1 rrori ( alta ks, nd
(10) failure of urban plannin . efore - e discuss these .risks identified b
lb UJVi y,
n d t .d' ·tingui 1 tw a th t rm 'un mp] ym t' nd
'underemployment: , nem .1 ,yment occurs when a person ho i active!
F rum. th l70p t, n ri k in · b-S hara AfrI ·
1
1
(
r bing
r mpl
w an indivicluai n
.. n · · un bl
fm
)
r ·. -nder mpl ym n
fr
hav· · e.nou,gh paid work 0£ not doin work that males
·u and biUU . Bri, · pla
f om , f tb
full u , f hi ,r n
risks identified by world 1 ad rs are pm ided belo .
•
n mploym nt and und r mplo,ym 111. Of th ,
untri . it1 · ub-Sah ran
Africa that were rveyed, 'unen1ploym · n and llllderemploymenf was
ide.n · 1ed
the mo t pr ing concern for busin es in 22 of them. o
other re ion (of h ight regio
rv ~yed iobaUyJ r ord d anythi:n
J.ik,e this level of con usus among respondents., bJghl:i.ghting the profound
chan n· · that th u - h rem Afri an regi 11 a
on thl . i· u. ,
particularly in light of he demographic changes that lie ahead. More
lJ
!fon' . w r · a in vuln rabl mplo m n
th n 70 p- r nt
- oompared to a global average oJ. 46 per cent - and 37 per cen:t are in
xtrem w rldn pov rt , whi h i d fined b 1h Int m ti n ,] lab , r
Organization as incom o , Jes, than 1.90 per day. People in sub-Saharan
Africa a
till di .proponi nately lik.eJ: to ,e nter th labour marke at a
young a, e. a.11d the re ion ha th \ odd' lowest level of aeo ess Lo .bi her
educ-ation - thi
mbination · likel to perpetuat a de of low kills
and working p
ty.
'Fi cal crises' ran ed number five aero the region, and wa in the rop
ini ·
ami ia). h
Om! fi r iou
untri (Burundi, · h d,
Chap · r 1: Th
volution ,o manag m nl , h -0ry
re ion' d t- · -GDP rati h
in ·
ignili Uy ,o · r h p
decade, and the hlgh proportion of public horrm ing accounted for b
~ reign-curr n
bl (60 p r c nl} is a particul r con m again t a
backdrop o rising U inle
.r ate as weU as creating the conditio •
for potential future debt eris . RJ ing le els of inde:b' ednes also Um.it
poli y-mak • hort-l m1 flexibiHty. h lnte.mationa] . 0n _Lary und
and the African Development Bank have alread no, ed ha rising debt
t r, di lng pubU p nding f m i
m n and th
rvi, ing
press-in . need for inv tment i highlighted in the fact th t responden
rank · 'f; ,Uu
riti . I infra l u ture' ft urtli
th
gi n.
Although •failure of na·l:ional governance'
e op in only two
un ri · fE hi pi· and M ,z mbi u ), il rank d i th
p f1 , ~ r
further l8 countries, includio Lhe region's lar est economies (Nigerl,a
1
•
and
•
•
uth
Fri ).
' iulnerability to energy pdce · hucl' rem in a factor in the :region.
'W t rand food ri · ra
·g
ninth. n>-.:11'\PI"' • ly a
region,
ghting th l:Ortlinuing cha.llenge o meeting basic
a - ainst
kdrop o - amo
other thin . nfli t ,
rt· in.g
fo d pri
, w -ak
· an and the t~in of rapid ui
·on.
in need
Duri
17, neail J2 million peiop,le we:re food-·
of ur. ·
si
s north
m i eri ·
a. Y m n and
South Sudan.
s· ranked number one in
1 ia, and number
h
in B w
th fri a. 1n 1
l m
w
ta en to pre nt Cape Town running o
Tb 201
:r1
onomi urv y wa ondu
OVTO-J pand mi .
Grm'lth in sub-Saharan Africa has been ign·ncantly impa cted by the ongoing
utbr a
h fm of writin th"
k r w in lh r i wa · . r
d
LO fill sharply from 2 .4 per cent in 2019 o -2.l to -5.1 per cent in 2020, the fu:st
· n in h
gi n ,o, • r th p
T p •n d mic ha h · d va tin
effe
on u.nempJ,o ymeat. unde m-· oyment and the fiscal crises, and pul e en
m R pr w on · h f, d ri Jn th gi n. u l d t. ri rating fl . I
ili
and increas d public debt., g- e.mments in the re ion do .n ot have much \ iggle
room in deploying ft cal polk to addr
the crise . Africa alone
no b
abl lo contain the dls a aod it impa on its own - there i a need for d h
reliefm help combat the pande.mi while pr erving macroeconomic tabiUt · in the
r gion. '~ r x mpl, , ou h fTica had to ppro _ b th IM , or]d B,· nk BiRJ
Ne Development Bank and African Development Bank for funding in its threeph d
p ns o th p nd mi . 1
fi
••
wm
2
Prindpl 5, o,f G n ral Manag m n
h ig ht
d.ri rs dis uss d abov ,ma r s nsibl c,orporat b ha iour an
imperative, and even more so wj h the e ects a d after-effects of the COVID-1,9
pa.nd mic. ot. nlv r h y p r5i t1 , th y are pr dom·nan · nd thev will ndu rfor deccades to come.
It i important to note that adopting a responsible approach to management doe
not m an th t all lb · traditi nal appr a h
i cuss d previ uJ in thi chap r
b ome null and oid. The e traditional appmath can provide many in igh for
re pon ible mama emenl - th
an provid in i ,hts into man erial practi
t.
avoid as well a pra tke on whi 'l murn.g me.nl can bu.ild. Man o ; th
ablish d
management theories di cu ed earlier already include e:ments of f pon ible
manag tU nt. Th outbreak of th
Vl - ! 9 p,a d m· fu.rtb
mpha j es th
importance of a r,esponsible approach to managemen .
ln dt next ecti ,n, tb in ights provided b tra, "ti naJ m na e.m.ent theori
respon ible management are di cussed.
LOJ: Explain th insi hts that radi tio al
respo lb! management
1.3
eo ·es
·or
manag ment provide to
TRADITIONAL MANAGEME T THEORIES AND RESPONSIBLE
MANAGEMENT
pm ided by the cientific, bureau.era · , admin.i. trative,
nting n
pp
h
man gem n fi r
e highlighttd.
Scientifi c management
· ntif m n m n ,h ri m
hug
ti · , , i n t
n mi
f ti
world at a time hen they were de perate]y needed and lhe wmk of Taylor, frank
n illi n Gi reth and H my Gan t
· uJarly n.tribu d to th d v · m n·
of cien · !IC management. In ho rt, 1 nli. u: management involve the analy is
and
-· g or different work m th
the b t and mo . t , ff1cient way
to comp I te a job.
1 ..3.1
for r p n ibl ma
: 'f vi
empl y
m r ly in terms ,
efficiency may resull in abusi e mana ement and the al:m.se □fpo er b mana ers.
Abusive management , on ad.i ts a t:akehoJde: vaJue appr ach on employ
(th
econd dom bi of 11 ponsibl, mana ,e m n ). Ho v r, the work of Henry Gantt
not onJy ontributed to hat be is bet known for. namel th Gantt chart, but h.e
w al o on of th frrs mmma m nl ci ntis ·, who crongly re omm , nd d tha
bu ine ses bain and develop their worker ~ chus emphasi ing the importance of a
t· -~ h Id r tu
p,r -a h t man a m nL
1
4
Chap · r 1: Th
volutio ,
manag m nl h
nry
1.3.2 Bureau rati manag · m nt
Max Weber's vie of bw-eaucrati.t management wa that people in a bu.reauc.racy
wouJd I ad b vlnu of 1h ir kn w],ed • 1 p ri n · nd e rtis . Furth rm re,
the aim of bureaucrncy ' not to protect authority, but · o a hieve an organi ation'
goals in the mo effid nt wa pos i 1 .
Insight for re ponsible management: ResponsiM.e management. as we will
indi at in b ,qu n d r pt • prop
fl ib] rgruiis ti nal ·tru :ur and
bierarchi . As indicated in the previous ectlon fue e ond dom in of re.spon ible
mana emen i uUdin
l-ron relati.on hip with alll ta eh Id · , ln lu in
mplo ee • own rs government, uppliers and o o n. R
01 "hie mam1gem rn
revoJ es around dean and open communication - top- o vn, ho om- up, laceral
r
r.acli d
and borizont L Th
principl · o re ponsib.l ~ m n em •
by bureaucratic managemen
hich propo es trictl defined structures and
hi , rchi
i.h pro ·Uon f au hority
·• m
impun 1il , th
par: ti · n
ta ks and responsibiliti .
l .3.3 Ad mi nistrative manag em ent
H nri fa r I
d th
. .
which the management pro ·
rdinatin
nd on
F
llin · . ·
mana · m nt h ory, a mi g to
p,lanning, organising. mm.mantling,
tha m .nagem nt h · 1 '
u.id d
by 14 principles.
In i h , fo r · p n
m n em n pr
by
Fayol is a good Starlin . poin OT the implementation of r ponsitde management.
R sp n. ibl ma
- oufdint grat, th lhre · m in re ·p n i 1 m a em n
- sustainability, responsibility and ethic - into each r the managerial functions.
Although
ip,I J] of Fayol' ma.nag m nt prin · l refers o equity - the kind,
fair and tlust reatment of an , mploy, es - the 14 prin ip,! showd be ~xtend~d to
indude
pon i le management consideration .
1.3.4• Human relations approach
manag,ement
he h uman relations approa b lo nl' nagement I w p op le not a ext · n 10n ·
of the machine and eqnipmen that are u ed in mganisation , but as valuable
bu in
r ou.r · in th ·r ,
i ·ht. . · ial and p ycholo i a] pr
a
mor
important contributors to employee productivity than monetary incenti: es.
In ights fmr rc::spon ibl ma.nag · ment: he prlndple that human relations n · d to
be mana eel can b extended o in Jude all other relevant s a ehold r group of
th rgan' . tion.
1.3.5 Tota.I ,q u.ality ma nag · m n ,
TQM ,eeks o improve productivity. through cu to,mer ·atisfaction and employee
inv 1 ment. , nd .
d n ur pill , nam
em · pproach,
focus, people in ,olvement and a process ,o f continuous improvement.
Prlndpl s, o, G n ml Manag m n
p n ib
In · h
mana m nt: Th
fl t pillar . TQ .
approach, hicb , ill be d.iscu ed in ection 1.J. 7. The econd pillar, cu tomer
fo us, · valua l for h impl m n a i n f ·[iespon ibl man g ment, hich
regards takehoJder en. agement a . one o . i domain . The lhird pillar, people
in ol emem. is also valu·-ble for the impl mentatlon of respon ible mana eme.nit
inc it ntres on l amwo r nd requ.ir ,
uldin - and coach.in . u t foabdity
and ethic hould · e inte · rated into the TQM philosoph , to n~suit in respon, ible
mana rs and
1.3.6
ri
p
nsibl o· ani ation .
In 1
ormation ma nag m
11t
The Fourth and even Fifth IndustriaJ .Revolution • upon us and b ine es rel
mo · nd mor on inform ,ion
m
h int m
loud Bi D t Analyti
and
the Industrial Internet of Thin .
h1 :ights for r ponsibl - ma.11agem -a. : _thi
i
arguably Lh mo ·t
impm1anit
domain of respons:iible management to addr in term ofin or:mation management.
Ethi ·· i. r quir: d in in 'ormation m· na m n , to v, ·
a numb r of thi I
i -sues. for example: 17 OJ fri acy - What informa ·o abou the organisation mu ·t
h
v · ,l .
,oth rs, und r h t ndili n nd wit wh
~ gu rd ? Wh
information hould the organi ation keep within Lh o. anisation and not be fm ed
t rev al
t mal p rti
r tak! h 1 ers? (2) , ura - Who i
p ,n ibl
for the authenticity fidelity and a cu.ra y of th information? Who is to be h Id
accountabl for error in informa [on and ow i lh injur, d party to b
ad
whol ? IJ) Property - Who o 1 informa ion and the channel lhro -h hid1
the information · tran mitted? What • ,e the just and fair prices for i
change?
How h tdd a
o thi
f\' r
urc b aHo a · d? ( )1 A , j • 1ity - Wha,t
information does a pers n or an rgani ation have a right or a pri i ege to obtain?
Und, r wh · · nd"tim · n ·
p rson r r ani i n
l.hi infonn i n?
What a feguard are in pl c,e?
1.3.7
System s ap,p roach to management
A··· rdi11 ,
managed
th
pproa h o man .. ,.,,........ , • rg ni aH n · n d
b
open systems, comprising variou . ·subsystem , and thE · need lo be
lf-re ul tin and int ·
d
m that int ra t wiU other
.In i ·
for r pon ibl - m na
d appr a ~b
m nag m nt
is a good premise for the implementation nf re porn.sihle management &espousible
man g m n aim
b n flt ri u · 1 . h Id · fin ·y - m th ry, Lh
will b
re erred to as extern 1 ystems) a well a the nvironmenL
1
Continge.ncy approach to management
Th b .~i · premi of tit onting n · pro a h to man gem nt · tha man g rs
must adap·t lheir manag m -nt practiet" to changing onditions.
1.3.8
2
Chap · r 1: h
volutio , manag m nl h ,ory
. p n ibl man
nd . ri •
h
fob I
warming the inte:matioual economic rec.es ion and. the international health crisi
due l · OVID l air ct g n, ral ci t nd bu in
· and 11 rg ni ti n . Th
tron contingen.cie require new and responsible orms of organisation.
In i h
THE BIG PICTURE
[n lhi in ro u l ory h· pt ·r. w ha
intr, du d .. o I th tradi 1 n . l th n
of management and ho · the e evolved into the re . onsible management theol)'.
rncial p in o mak i th th intr du ti n · nd a ption ,f · pon ibl
managemenl does not mean that all the traditional approach be.come null and
void. Th
traditi .nal appro ch ·
n •rovid , n in igh for • "ponsibl
management - they ca.n provide insi ht:s into ma ageri.al practic to a oid a well
a practfo on which mana emen an bui
h
w re a1so highlight d in thi
chapter.
1
SUMMARY OF LEARNI G OUTCOMES
LO l:
pl ·i n th t.ra i · n ·1 th ri,
r m .n .g m n b .f rring o th
cientifk. bu:rr ucratic. ad.mini native. human r e ation • operations ,
t m and nting n ·
ach
o 1n .nag m ni
quality. in ·. rm ·on.
1
The ien · 1c approach to management i oived
homugh tud and esting
f diffi· n w r m hod to id n if lh , L, m t m i n way to
mpl
a
job. Four indi idu.als in p,a rticwar rontribu. d tremendously to the development
f
n
m .n g m n • nam Ly
d
W
lor th
lh r f i nu t
manag ment. frank an,d Lillian Gilbreth, and Henry Gantt..
Bu u rati m.anag m n , ba d o 'th
Ma W b r tha
cbaracteri ed bureaucracie , c:an be defined a the sm1cturing of a business inrn a
hi ra- hy.
ndl , h bu i
nd i
mb r . are g
n d b ·I rly d fm d
rational decision-making rules.
Fayed d v lop di th
dmini tra jy aip,pri a h to man.ag m n , and argued ' hal th
suocess of a business genernll depends much mott on the administrati- e ability of
its l ad
th n n lh ir l · hni I ability. Furth rmore, Fayol mt cl lh man g r
need to perform five manageriaJ functions if they are to be successful,. namely
planning org n' in,g,
rd"nating, mmandi r1 and n r l. F l als d v l p ~d
l 4 principles o management.
Th human rel i n approa h o m n g m n
· n p pl pani ul rl
p ychologic:al and so,dal aspects of work. This approach to management views
p pi not a ext n i 11 oflh m hin, ry nd uipmem that are u din bu 'in,
but a valuable business Ji our-ces i.n their own right. Mary Parker Follett and Eton.
M
· ,o ntribut d gre· lly o 01 d velopm nt f 1h huma rclati n appr a h to
m,magement.
27
Prindpl s, o,f 6 n ral Manag m n
Op
m g mn
on rn d with th :ransfi rm ti n or n r i n
inputs int:o goods and services as e:fficientl as possible. Operations management
inv 1 t d· ii pr dU: Li n of goo and rvk . Op ratfon . m n g m nl u
quanti ati e, or mathematical, approaches Lo frnd way o increase a bu in s '
produ tivi, and profitability and to impro e the quaUt oHts g od ~ and eivices.
Quilit management can be descn"bed as the act of overseeing all activities and tasks
n ded lo maint in d ir d 1 • l f c 1 n ~ . In bu in . qu. lity m nag m nt
indud - . our componen ' , namely planning for quality. qualll
urance,. qu.aJity
control and continuous qu ity improve.ment. The cone · l TQM
produ Livil lhrough customer atlsfa lion and emplo e i.n olv mcnt.
lnfi rmatfon m· n
m n i a br ad n p th;u re r
ai qu· ili ,n of data
and info:rm31tion from one or more source • ilic mrag and/or manipuJati.on and
th di tribution thereof to ha e who n edit an
ul ima, d" po ition thereof
Lhrough storage.
L ms approach
o man gem n
th ir
thinking by looking for onnertio
tween the •d ifferent parts of th om ni tion.
Thi
Ll for vie in the or ani.saf o a a
omprisi
em ,
which ar simply maU r sy
in la
yste.m .
th ir
connections with each other a ,
· ered in
ms theo
· a ers can
aim o
at yn rgy.
The ·conting ncy. ppr ch o mana m nt tatestbat the p U ation mana ment
p.rinciple d p nds n th · sp if:ic situation that ma
c, al a gi en point in
1
time in he b iness.
L02:
Tr i i
Under: .
the traditional theori
of management evol e to
n ibl manag men and expl
th thr , prindp,l Id main of
esponsible ma.nag men
al mana
m nt ppr
be _n lamed for many of the
ha
addJi
tion. h v
urrem ail:mems, i sues and eris, • Therefore,
the und.erlyin belief hou ld ra h r be tha manag m n.t and it influen on
busi.ne
an and bould mov l!'om being a s.ourc: of problems Lo b in. a source
of olutions. Re pon ibl management provide us wi.th a ohition. R po,n ible
mauag rncn r ri
o th man.a m 11 o a bu in
buil · on Lh prindp, o
su tainability responsibility and ethi .
LO'.J:
or: d'
Exp.lain lb in ibi . that traditional h -orie ofma:nag me.mt provide to
respon ible managemen
or
All the va.rious traditional theories mana~ement discu ed irl Lb.is cha pt r pro id
in i · h or th adop,ti,cm of r p n "ible man· g me:nt. Tine chap er highlighted th .
i.nsighLS provid d by llie dentifl , bureaucrati adminislrativ huma.n relations,
total ua.lit • info.r mation management, y tern theory and contingen · apprnacbe
to manag m nt.
28
Chap · r 1: Th
volutio ,o manag m
nl h -0ry
REVIEW QUESTIONS
1.
Differentiate: ben.veen the contributions of F
Taylor, Frank and Lillian
Gilbr h and H n Gantt t wards th · ci n ift r. p ,ro h to manag m t.
2.
Explain Max Weber' bureaucratic approach to management.
.,
Di u lh m n g m n pr
d v l pd
managerial principJ,e s that h.e developed.
H nri
y l an
ow·
n ribu i n of Mary Park F · ll
human refatiorns approach to management
pl in th
s.
'6.
pl in th
ou pill
Discus the
f
.[ q my man g
tems approach to ma nagement.
nHn :ren y th ry of ma
7.
th
.nd
plain th
n for
the development o this theory.
8.
pl . in how h traditiona] m.ana ·· rn
,l Lh odes e olv to
pon ibl
management.
pl in th in ight prrovi
£e ponsible managemen . In yom n wer, refo to scientific.
admin· ti · • human rel· ns,
1quali
m ,nd
management
LEAIRNliNG ACn ITI ES
Ac ··
a ' w bsit at http ://w
are.html lo ans er the following qu tion :
l.
.. ouJ y ou gMtl h U outh Afri a a a
Su b ta ·a ·e om answer.
From Lh information pro ided on
L ·
. li t ,co.za/about-usJwho- w ·pon ibl organi aHon?
compan
we~ Ile:, xp]ain how h l1
embraces triple-bottom-line opti · ation.
rorn Lh infi rmation pro id d n
4.
heU ' w b ilt\ xplairl how th
comp,an s management p ct.ices embrace ra.tehohie:r value optimisation.
Explain how th managem nt o hell ,e mbra
thical de · ion mak.ln f nd
bow the create: moral excellence.
REFIEREINOES
1
u.sman. ' 8 Moir, I. Sustainabilit · Com.mitt e Chairman and Gro up CEO' Report
in Wool, ortlr Holdin9 Limit cl 2018 Good Bu in
Journ · R por1. vaifabl
on ifl . : http ://ww .wooh orthsho]dings:.co.za/wp-conient/ uploads/2018/09/
WH1_2018_GBJ...ReporC2018.pdf [Aa:::ess,ed 5 De,cember 2019]
2
oolworths commits over RJ 4m toward Covid-19 support. Available onUne:
- ri p rt/ mp ni /woolw, rth - ommj -ov, rrJ .m- towa rds-covid-19- upport- 70 300 [Acee ·ed =O April 20 Ol
http :{/ ww.iol. o.z.a/bu in ·
2
Prindpl s, o,f 6 n ral Manag m n
Uni , ·
li
Fa
lima
h ng : fri a i parti ul rl vuJn. rabl
to the ex.pee ed impacts of global warming. A ailable online.: http ://unfccc.
int/fi · / re /ba k rounde /applk tion/ df/fa h t_afri .pdf [kc, · d
Janua 2020]
. 2018. rn : Th J t · pon ibl, b m t vuin rabl o
climate change.. Available online : http ://,. ww.downmearth.org..in/news/
l"mat ch· ng /afri a- he-I a t- spon ibl -but-mo - · lo bl -t - Jim , thange-60669 [Ace ed 3 January 2020]
nka~ h,
4
awa , RN. 2015. Prin ·ip,I, of" re p n ·h m n·
t: GI
ustainability responsibility and ethic . Stamford: engage Learning.
La
G m any h prov n th m d rn
b. ~ mus di
online: http :flwww.wired.com/storyfgermany-prov - ars-must-die/ [Ace
3 J nuary 20
7
ed
Ol
Hotten R. 2015. Volkswagen: The candal e-x(llained. Avaiiable online: https://
www.lJb .
Rl/n w /bu in
- 4 2477
'Ac,~~,ed . Janua
202, ]
B
Re earch Company News Soulh Africa. 20 15. Responsible brand a
· ig
b in
n . outh fri a. vaiJ I onlin : h tp ://www.biz nmm , it . m/
Amcle/196/19/ 138370.html [Ace ed 3 Janmuy 2020]
9
Barfoworld: R p n bl val chain. Availabl online: http :/ www.b rfo orJd.
com/ u taina ilHy/resp
i le-vaJue-chain/ [Acee ed fi Ja, :uary 2020]
10 Walker; M. 20 0. Covid-19,: Can the economy r
http:/1
w., rain
nnma • .za/b in
er?
vailable onlliie:
/14862,_ · · ·, -1 - an-th - · ,on my-
re~over [ . c e · ed 27 . prl] 2020)
11
-
I ·i, P
i< 1 purpo . H w
r company mea me up? Availab]e online: http ,:/{w\'IW.cbiefleamingofficer.
om/201 a/02 /20/mill nniaJ - · n - or pla e - oci I- urp
~compan easrne/ [Ac
·ed. 6 January 0 OJ
018.
Mm nni.al wan w r
l 2 Gou , . 201 . M
I
oy
· wi h .
· r r porting .n lhJ aJ b havi
r. ·urv
find . Available onJm : h tp :// ww.tim . live.co,.za/new / outh-africa/201906-04-m r, - a- mpl,oy, -· re-rep rti g-un thkaJ-b havi ur- urv, y-frnd /
[ c ed Janmuy 2020]
l
.Ri ra,
14
orld Economic: Report. Insight Repon: Regional Risks for doing bu iness
lO l . Av ilabl
nlin : http,://w
.w fi rum.org/d /WEf_R · i n J_Ris ·
Doing_Business_report_ 20l9.pdf [ cce ed 6 Janua 2020]
lb
, . 2017. orp rat
j I irr p
i my: r vi y nd
conceptual boundarie . uropeaH Joi.mial of Manllgemrnt and Business
Econm 1.fc · 26[2): 146- 162.
0
Chap r 1: Th
l
volutio ,o manag m nt h -0ry
OVID-19 driv
ub- . har n
ri
w rd fr
nur•po.ci n in 2
rs.
Avaifable
online:
https:/{w w.tralac.org/new /article/ 14503-covid-19ron iru -driv - u . - ah ·ran-afri ~a-toward-ftr t-rece i n-in-25- ar ,.
htinJ [A e ·sed 28 April 2020]
1
Tor, , -ph d
n mi r p, n
OVID-1 pand mk. Av Habl onJin :
b1tt:ps :/ /www. anew .gov.zal outh-africa/thme-p,hased-ecooomic-respon e,v id-19-pand mi [
ce
26
prU 2020]
17 UK E ay , UK. (No ember 2018). The Ethics in Management Information
t m Tnfomrntion t hn I y . y.
ilabl nHn : htt :l/www.uk
y .
com/e ays/information-technology/the- thi -in-man · gement-informationms-infi mr ti ,n - · hnol . - a. .pbp?vref= [Ai 1.:
d J D emb r 20! ·]
CHAPTER 2
THE MANAGEMENT PROCESS : A RESPONSIBLE
APPROACH
Author: '.rersia Botha
OPENING CASE
SABMUI r 1.u
On 28 September 2016. the har,eholders o · South African-born international
br
r, ,ABMill r. ap,pr , d lh ompany' a quisition
Anh u r-Bus h lnB v
or $104 billio.n R 1.5 trillion). Th deal paved the way for the creation of what is
no b · far tb · orld' larg t . rewin company.
For a company that .arted out selling beer to miners in Johann burg during the
gold ru h f h lal 1800 ( ·, um Afric · n Br, v ri 1( AB]1w o d din 18 a
Ca lle Bre cry and became the fat industrial company io li to
e Johann burg
Sto · Ex hang in 1897), it h . be n quite journ .
How did a brewing company from a devclopin
ro compete with
mu tin.alt na1 br i g b h m Uis rom th~ d
op · ~
t r buHdin up
a monopol -like po ition in the beer mair
outh A rica, SAB wenl in earcb
of n w market . With a · ion to e tbe mo t a · · ~ oompan in South Africa,
a nd a partn r, h1 estmeu and emplo r o choi
it u d i experience in m1lh
Africa in it:s ent - trategies abrna. SAB · · ~ th rdJec the differ nc
mu anationa from d v lop - . ·
m r .in mark t in l rm o
sequencing. time horizon and motivation.
A t:wo-pha .ed expansion ath
o explain the riemarkab]
rn s tory. Th
first pillar .o f SAB' international expansion was a focu on d
·oping markets.
mni g rrom a di v 1 pin co nt
i eH, tb ompany
ul · op h t r \ itb
emerging marke
ditio · than bre er from the developtd world. These ventnre
b a n a pow rfu ba for
B to ta~ on d v I d l ,ark · Th
ond w
to expand in o developed countries. Thi became n e~ aiy as .it became clear the
omp . w
p ·d
m r in mark .
After a fe
into South Afnca· neighbouring countries prior to
I 93,
B
·iv
U d ,hat l
· mp· n • uJcl
ploi i knowl dg
institutional shortcoming in i . home ountry. It could e this experience to adapt
m,o • a il h n i . omp it
I to onditi n in · v loping ountri . And
o began tbe first part of i · inte:mationa1isation strategy: a rapid expan ion into
m rging mark
w ,.rldw~d . Thro h a · ri of a qui iti
and j in v • tur
lhrou hou:t th 1990 • SAB gain d a foothold in variou · countrie in Afri.ca, Ea tern
Eurnpe and Asia. Although man were geo,graphically dis nt ,[in luding Hunga.ry,
th Cz ch Republi • China and lndiaJ, th y echo d . outh frita in tenn · o th ir
ocioec:onomic de elopme.nt. Eastern EUiop for example. was till emerging from
Prindpl
o,
G n ral Manag m n
p Lili l rd rm in th wak r
economic weak.ne es persisted.
mmuni m. and infra tru tural, in i .uti n I nd
By p . nding into untri
hara ri ti wi, h oulh
Africa, SAB was able to make use of its experience to tum a perceived drawback
- in litu ion I w , n
- in o
t ngtb. Th om;p n
c p, d th · · a t lh it
would live wittb the political ris. ' and poor fostitutions . It did not shy away from
bi h-risk oun11i On il had , tabl" h d this p n i n ·I . AB div , if1 d
into devcl ped market uch a Italy and th, U . In 2002, i L
a step cio er to
con olidating its po ition a a muJtination I brewin i
wh n i a quired USha ed Mi11 r Brewing ompan and h
Th adv ntag
ai111
that SAB ain d fr m its
ABMil
pert n
.
in it
1
m
unt:ry
many.
mptoyee aptitude. SAB employees had uil · up an extraordinary re ilie.n e,
· and entrepreneurial spirit thro u th ir · o u.re to the un teady outh
n ironment o lhe 198,0 .. Th amp.a ny :urviv ·d la bom trouble, inter , l
rat at 25qt, inf1ation at 16Qb to 17%.
litica1 disorder and po.Jitical ioie.nce.
h' · ro u tn · , mbtn witl an bUi y t
nn l wirh man dilli :r nl lture ,
gave the compan a valuable fl "b1lity in its risk, location and in esbnent choices.
noth r t n th wa i abil" y i • . i ' noWI d to m aroun n gl
d
bre mes and busines es Th experience it gained in South Afri a, with it large
rural popula ion and o t· f or infra ru u . m n th-L I din inno ativ
way to overrome chall nge w embedded in the compan · DNA.
Wbat
for , h
mp n ? Th ,..,..,..-.. y i n,
a pro cl part
the Anheuser-Busch JnBe (AB InBe ) famil and plans o ontinue its re ponsihle
pproa , hi · h prov d L
u
ful ir:1 th p t, L .· th futu
y
aligning • environmental, ocia:1 and alcohol r pon ibility m make the world
a b tt r pl. , . In ·t li tur h comp n · l Un ro I brat not nl th
pi;od t 'on o , be rand lh realion of job pportuniti s. but also what .it has give n
ba , o the environmen. The ,compan . f ortin
ith farmers acros Sou.th Africa
to
w h ah.hy, nut.ritiou rop w,ti Lb
· ri uHural pra · · . 11 i
rea·ting Job opportuniti · within and ou ide the upp l hain. by working with
furu -forw l'1 . ·n ·
lik -mind d busin
• It · w rkin to, a· d
producing beer u ing i:;enewable en.ergy while packaging it in material · that can
b
. Th
mpany w
ur th - wha i1
, it iv b · t n ld.
SAB and AB InBev Africa have committed to e eral Sustainability Go.al ro be
I i cl b 20 ' in th r a · f
r t ard hip, ·mart a ri u u , bna
action circular packaging and entrepreneurship. The e goal are:
mart agri ultur ; 100 p r n o the compan • dire
connected and financiaU empowered.
Water st ward hip: JO per
m a urabl im ro d
4
a,
-n1 o Lbeir communi i · s
er a ailabilHy and quali .
fanners
m big --
re · kHl d,
tre s 31r as have
Chap -r 2: Th manag m·n · pro -
: Ar, p nsibl approa, h
ircuJar pa ka ing: 100 p r nt f th ir pro u . will b in pa
retnmable or made from majority-recycled contenL
gin Lh
Jim ,
r n · Ur ir pun:h ·
ri ity om From ren abl Ufi •
and they .ha ea 25 per cent reduction of carbon emissions across their value chain.
En r pr~n ur hip: 10 000 job
ennepreneurship.
ou h A ri a b
022 Lhr ugh
·we b ik e it 7 common. ensc to s ·ek a
i de n r _nd mor
environmentally friendl to create an atmo, phere and c
my that are conducive
to doing bu in · . T do this, w ha e int ,grat d u · in bilit into our bu in
strategy, and ha e accounrability monjtori.ng an ben hm arks in place throughout
our busin ; uy D vid Hau
l. i P id n
lain b'li
nd Procurem n ,
SAB and AB lnBe Africa.
During th
VID- 1 µand tni • AB a ain mu ·trat d th ompany' . eomm.iun u{
to respon ihle management b adapting it m nufacturing proces
o py, duce
t n of lhou and - of b HI - , f h · nd an Hi r. ,nr inin 80 p r nt al hol fi
deli ery to dinics and hospita ~ AB InBev itself used its technology in i bre eries
a und th
r[d fr m i
u- l , h Ii rewing pr · c
t ,
. t di.sin
an .
rom urplus alcohol.
I
CHAPTER ORIENTAHON~
Contemporary managers fa e a numb r o chall n cs and they experience
mori pre
today than dwin any other tim in hi tory. Ori en b th
g rowing globa!h1tion or conomi -. tec:bnolo ical inuovalfon ·. Lrend loward
d mocra i tion and increa in octal imbalan esT the world i hangin . COVID-19
br ,
alon anoth r aria bl lb t chan - d ur orld to q v r b th :n:n. agai n.
h1 the pr, vious chapt:er. gfoba1 challeng and risks such as increasecd carbon co ts,
gl.ob 1 am1in , , lima
hang , I a] , du alio-nal hall n , pov rty, nd r
diversity, ac s ro water and de n anitation, :Food e,curi')' and hunger, · honage
t r w re aJ
o natural
ourc and rrup i n in po,H i and th bu ·in
mentioned Managers need to oJle with th e diverse and far-rea hing chaUenges.
Th hav I ke p pa with
r-advancing t · hn I • , find
t incorpora
the interne:l and r--business in ,o Lhe:ir !>ctrategjes and. bu ines model. , and stri e to
r m in competi i e in th fa e J incr, a in I tough global com ctiti,cm. unc rtain
environ.men , utbacks i.n personnel and resoun: s. and ma siv - onomk,
political and social hifts. Manage1; are a] o expec ed to do more wjtb le and to
chan rath r han tabilit a th n · t
of thing .
The pening case fthi ch . er pain .a picture of th h.ighl
ucc
fu} South African
Brewerie (SAB), found din l895 in Johann bur
hkh tart d out elling beer to
miners during the gold hand rose to ompet with multinational brewing behemoths
fr m th d eloped wo11ld. AB · n p rt r _, orld larg brewing ompany,
Prindpl · of G n ral Manag m n
nh · · r-B
nB v. ucc
fi.d rgan· ti ns su h , ~ AB d no just happ n; th y
are managed to be that way.. To be successful under dillicuJt circumstances, especia11y
the i.rcum :an e descri d in th 0 1 ning as that AB fa d in t rms of p liti al
reform in South Africa, and in the fac · o,f e onorni mfrastru tu.ral and institutional
weakn ·s . • n.eeds skilled mana:1ers. In tW chapter, e will fu:'st formulate a defmi ion
o : managem nt, aft r whi h w
focus on th
ario l v ls, ·, L a.nd rol .
mana ers. Then, e will focus on a responsible ap roach o mana ,a nent
wm
LEA:RN ING OUTCOMES
After studying this chapter, you should be able to:
LOl : D fii th rm 'm nagem n'
L02: Explain the various levels of managemen
. xplain th s rn n d d by manag m nt
LO : Ex.plain the various mana,geriall roles
LOS: . xpla[n th r sponsible appmac~ o man gem nt
L03:
LOG~
liden ·fy and , xpiain the role players in res ons·bl managem n
L07:
Discuss the barriers o and criticisms of espon hie management
KEY TERMS
co ntrolling
management
d i · n- .a ing rol
middl
effic·e cy
organising
OU puts
planning
cs
resourc s
oa
anag m n·
in rm tion mle
sponsibility
sustainability
inputs
t ambuildin . skills
interperso nal role
tectmicaJ s ii Is
I ading
lower management
op manag m n
Chap r 2: Th ma nag m-n · pro L01 :
.2.1
D fin th
: A resp nsible . pproa, -h
t rm 'm nag m n -•
DEFINING MANAGEMENT
For the purpo - of •his book, management
i cl nn d I th - pro e - of work.in with (Ind
through other to achie e bu iness objecti
by al n ing · ffi tiv n
and , fft i n y and
by making the mot o, carc:e resources in a
hangin
nvironm nt. Thi
fmi i
o
management essentially has six components,
which requi cl r , arnination:
• Managemerr is a process.
1
•
■ffijj4
Manag mi n i th p,r
of working with and through
oth
to a hi v, busin .
by
balancing
-nd ffici ncy
an d b making use o scarce
re ource I in a chang1ing
nvironmen
•
Mo nag m n
•
Management aims to acme e 01gani ational goals nd objecti
~inag m nr ri ,ufres bal n ·
• nd ff1 i n y .
Mana .eme.n should make tbe mo t of limit d r o ,
ManagJ me11 n ds to cop with a changin 1 en iro m D.
•
•
•
uires w rkfog with and thr ugh th
E· ch of th -
.
d i mored t il b lo .
2.1 .1 Manag m -nt is a pro s ·
A prate · a tructured and ·oterrelated set of activiti - de igned to produce a
p rn . output. Th manag m nt fu. 1c · . n in n ,rg .n· tion can a[ b vi w d
a.s a pmc
d pi - ed in igur .1 .
O
c,o nel a tion
h th fi
ma nag .ri - I
·,tmctions identified by Henri
Fayal, whi h w di u d in
the
re ,a ,ion to ad ministrati e
manag -m n in ch pt r .
Control
figu re 2. 1 lhe management process
1
7
Prindpl · o, G n ral Manag m n
M nag n d rtain inpu I r
Ufi
) lod liv r rt inoutpu [ r, rii rman J.
Managers need people (human resollfiC }, cap ital (financial r ources), phy ical
c; ourc , raw m
ria , • om nen • inform tion
d n· repren uriail kiU , to
pr du e products and/o.r ervic , real job , makr a pmftt, achieve bu.sine go 1
and contribute tt> he wealth of ociety. The tra· fo rmation o input to outpu '
r quires manag m nt to perform certain a i.viti
or u ao . AH manag -rs,
regardles of the type of organisation he level ac which they are involved, their
d ·ign ,t d rol ( ) or sp if1 kill ngag in om man r in four fund m, ntal,
interrelated activities in order to achieve o me or oth r goal(s. known as the
manag m n fun ti n. Tb .
re:
1
•
pfanning
•
org . ni ing
•
leadin
•
co ntrolling.
h manag m nt function
Planning · the managemen ftmcfon that
d t nni n · th organi ti.on
mi i 1 , and
goals. Planning is furuie ori . nted and it
inv I id ntilying w ,
ching h go l
and flnding the
ow:
.needed for the ta k
withi a
m1l
n ironm n • H n• , th
acti itie o I.he organ.i aiion cannot be
perform d in
random fa hfon, ut houJd
Pl!· nnirig is fo
ori n · d and
involves th determina tion of
· tion' mission and
ays of reach ng
i
rnding the resouroes
ta k in a ompl x
environment
ollo a
ecif~ , logicaJ cie.nlift method_ r
plan. Top management mostly makes long-1om
phi th · L ary in I n.gth from o,n
ft
or •v n , n or more y a . h
caUe ' a ·egic plans'. Tactical plans e made b fi.rnetional managers (such a
fin net I, human re omi , r ·
and d
lopm nl, m rk tin and op rat"on
managers} to support the orga.ni ation·s long-le.rm plan . Ope.rationa] pians are
mad y l ~ m n ,- m nt { n · II d 'f1 t-lin · r' up rv· ry' m nag m nt)
1
to plan for hort periods ahead.
Orgams· ng L th
·and
p in th man g m nt
proc . Once the goals and p· ans have been
' t nnin d ma ag m nt ha to,
a th
organisation· resource to relevant department
r individu; I . T
rol and
nsibilili
have to be denned and polid - and pro edures
allocaf on ,of organisati,onal
t blishedl t-0 achieve the goal . Thu organ· ing
involv the de dopment of a fram work or
organisational smicu1re to incli ate how people
and oth r resour
bould b deplo,y d o
rol and responsibiliti
.ach ieve organisational goals.
an
8
Or
n1 ing i volve
re ou rc s
to
th ·
relevant
departments ,or individu als
an d the definit ion of ta sks,.
Chap -r 2: Th manag m·n pro th organi.sa i nal g 1 • Th u
different resources towards the achievement
re
or
: A resp nsibl approa, h
nis i n li in dire ing th
a common set of goal . The better the
are coordinated! and organi d. h m re u · sful the organi ad.on wiU b .
B cause organi ations h e different -oals and res ur
it tands to rca on that
each one hould ha e an organisational tructwe tha wm accommodate its particuJar
n - d . Maoagem ,1 mu t ma h th Ofi - anisational _ructure to it strategi • Thi
UFCe
process i called 'organi ational desi n:
Leading re ei to dwe ting the human resoumi e ·
of the o ani ·ation and_ moti a in them in
such a wa Lhai U1dr a r:ion are al.ign d ith
p revious)
formulated goal
and p,Jans.
Mana .ar r pan ibl ~ r g ttin - thing
done through other people - cbey collaborate
with th ir uµ ri ·, p
an u r in t •
with both individual and group • to attain the
g al
f
rgani
n.
, adlng t
organisation means making use of influence
and p w r o mo ivate empl . ee ,o achi e
c:ommunj a.ting oaJ lhrou.'fh the orga 1•
ections and indi idua[ o perfo m a weJ] a the
11•
IM•
L
ading1 r -f r · o dir
ing
the human
ources of the
i ,n a d oliva ing
them in such a way that
h fr · i n a . lign d wi h
organ
previousJ , formulated goals
and pan .
i ati, md goa . eadin. m an
and motivating departm1••.1: 11 is,
p,ossibl can.
Controlling means that manag
hould
rgan a'tion i
con n, l make re tha th
o n the right cour e M all in its a] . The aim
of , on rol i therefor to m · ar performam:::e
and a tion
una g
t hey o-nforrn t
plan in
o attain the predete.rmined
organi
mana emen
via
h ir
oat
· ontrol.
I o
nabl
identify and rectify any
th
l n and to L
tliat mi ht oblige them
nd I n .
01,trol.lin,g , f rs to th .
constant
p rf r n
enslf
p
that they conform to
1 i o,:rd r
o, att In th
precteterm iried organisational
goal's.
It i · portant to realise that the fun ·on of management do not oc ur in a tidy,
t p- b - t p rd r.
an giv
m , . manag i lik I
b ng g d in
r I
management function imul :arieousl .
lnpu or re our e
Th
nn 'res u
l
ry broad. On · ou]d a tuaU writ a b kin an fi lit t
de cribe and expiain what riesomces entail. In general, ho ·_ ve:r. the following basic
re our e are found in all kinds of organi "ation
•
•
peopJe (human resou:rc es)1
m -n ( a ital or fma · ciaJ res ur
•
rnw material (phy ic:aJ r ourc )
1
~
,)
Prin ipl
o,
G n ral Manag m n
•
•
kn wl g (in rm tfon
technology
•
·, mp n nts.
ur
These are the resource tniUsed b management
t adlli v th oat of th organi ti n as
efficiently and effectivel a possible. Resou.rce
Resources are all t he inputs an
r anisa ionutilis- oa -hi v
ar . arc ncl ma nag m n ' · bigg t haH n
its goals.
to utilise i resources as pr-oductively a possible.
Manag
h v th L·
f bringing r ou1
togel'.ber, deciding whicl1 resourc are nece ary
~ r a p ifi
il:uati n or p ifi ircumstan ·• and in ha uan ~ti · t achi
the organisation' goals. The sue ess ith which an organis ion aehie e . it oal
and atisfl · th e er-in reasin nee · of o iety dep n on th · mp tence of i
manage in util' ing i
carce re. ource . lf mana .
u ·u
w ll, the
organisation will be sucres ful. lf a cou.ntry· organi ations are competitive and
u
fut, U1 oun ry a a h l
·u pr p, 1J ~ u ·.
c fu] organi auon .
sati fy needs not onJy by producing products and servi , but al o by pmviding j ob
and onbi' u ing to th w alth of
Outpu
r go I
tnputs
rgan· ~ tion t
are tra formed in
e:rt ·n
pu , f whi h
goal a hie ement, products, s rvice~. · roftl,job
creation, eJfici ncy and ef
ne ar the
m,o t important
2.1.2
Manage e.n
Outputs are the re.sul
aif
th
· rm · io,
whereb i npu
into rtain ,
a products,
quires working with and thrnu~1
Managers ge thin done by orking . ifu and throu h lier people. Management
11 el - , a
i t pro s -. Ma ny cnUectJ
pU.rpos · bri.ng ind.ividu I
together - buildin l:mu , a ·embling cars pu li hing books. offering tertiary
du a ·01 , pr v' in p onal f'mancial rvi . ,, and
n. Tb
iviti Lh ar
needed to u(b'.l a house, assemble a car, publish a boo~ offer tertiary educational
pr , ram
n t pm i ! ad i · n
nal m n
• nn t h pp n n h ir
ow . In all cases managers are need
o ge things done by working with and
throu b th r p pl and Lh r o · lion .
The ability to work with and through othas is therefore an important kill that
manag need in · rd, r t b ·
ful. ProbJ m with int rp rsona l · lationship
and failure to build and lead a team are often me rea ons why managers fail.
Hn
r, th a iUty t wor with . n thro 1,b th rs i n th ni im rt nl kill
that managers hou.ld ha · e in order to be sue • sful:. In ection 2.J we will in vesfigate
her man g rial kilI als n d ' for successful mana em n.
11.,,,..., . .
0
Chap r 2: Th manag m-n ·pro ·
: A resp nsibl approa, h
2.1.3, Man g -m-nt aim , to a hi v organi ati nal goals and obj - tiv
An objecti e can be d cribed a a target to be
stri · d for. A uni - r: i
udent. for ex am pl ,
an et an objective ror him df or he-rsd to
An objective .is a target to be
gradua e ith a , p iftc d gr b a ,- en da e.
riv d or.
AJJ acdon tak 11 or a ti tie p rformed. b th ·
:tuden will be with a ~e to, achi ing this target Like inclividuaL ,organisatio,ns
onnul t • obj U . Lili in ividu Js organ· ti n wm al o b m re u · ·ful
when their activities are ,guided b challenging, •. et realistic and achievable objectives.
rg n' ati nal ._ al and · bj ti ,
rv ia r
m .·urin · ti · for p rforman , .
Without goat and objecri · , the management proc - would be aimless and wasteful .
.2.1'.4 Management require s a balance between
[t i imporlan to di Lingui h b tw, n th
n pt
Ef ectiven i achieved hen the o,rganisation
fonnul t and pursu appr p,ria , f r
d}
goals. For example, an organisation n eds to
m et i sale objective. ffecti en s in
nee.
means 'doing the right · rungs: Giv, n the r. al
of timited re ources,. effectiven
,effectiv ness .and efficiency
f • ffi · 'v n ' nd ' m i n
y:
ctiveness is achl ved when
an organisation formula es,.
pursu sand attains appm riate
[or stated} g1oals.
-nough. An organ.i a.tion ab _
efficient. Effkiency enter.; the pictuFe hen the res,ouroes required t chle e an
obj tiv ar w i h d a ai - hat ha . a tu Jly
n a om list tL Th n1 r
favourable the ratio betw n be.n fits (outpu . or perlormance) and m
(inputs or
urc I i th m re
rga i ati n will b . · ffl i
· n iaHy m an
·doin things ri hi: · 1d :ncy i achieved by
using th fi w, l in , 1 ( uc
th numb r f
I
people e -pl yed or the amount o capital
E 1 ,ency Is achieved by using
utir ed wing
financial ear) o nerat a
he fi .
t rinputs to genera ea
maximum mo ' n of outpnl ( u ·h a number ,,
maximum amount of output
produ · pr duced or the profit reali ed witloo a
inan · ia~ ·, ar).
Man ers are re ,n ibl for bala )1g effecti ene · and ffi,ci nc .. l'oo much
emphasis on either effi tiven
or efftci ncy I ads to mi manag m -nL On 1.b
one hand manage must be
ctive by getting the job done. On the other hand,
manag r: n d o b - -lli i -r by reducing
t and n t wa ing reso re . Too
much empbaisis on eff:ectivenes will mean that the job gets done. but Ii.mi ed
r urc · are wa · d. o mu h mph i n
i ncy will m . n lhal th j b
get done b au e available r our es are undenuili ed. Thus, the an:swer Ji in
bal· n · b w n ffi tiv ne , nd f:ft i n y - th j
t don nd limi d
[lesourc:es a.re not wasted.
r
m
Prindpl
o,
G n ral Manag m n
2. 1.5 Man g m nt should mak th~ m
of limit d resour s
We live in a world of carcity and limited resource . In fact, all resources and
inpu n . d d
n org· ni ation are ·car: a.nd. in m ountri mor tba
in olh rs, , ry expen,i · e. A1lhough ,e xperts and non-expert ali e may quibble
ove:
act! h w lon it will t ke to e: hau~ om non-r n,ewable r ources or
om - up witli n w t Jinologi 1 ult, maU
~ one fa t r ma1ns: ou.r piane i
be om.in increasingly crowded and . e are usin more r ourc than we bouJd.
In produ, ti or ani ·a io , , man ·,
ar UP U51t dia ,
· Ill t d ai.nd
ar
1
•
0
resources .and. it i their job to ee that the basic facto
fft i ntly and
iv I· .
o production are used
2.1.6 Man g ~m nt n - d ,o cop wi h a han ·
v1ronm nt
Successful managers are those who anticipa e and adju t to changing circumstances
r th r than l pa iv ly w pl along or ught unp par . · h ng i an
n i 1 nd
ine itable feature of om:anisational Ufe. Just as all iologicaJ or anisms evol e and
lop through lim , ~ or am ations r ubj
.n . Als , th re i g neral
agreem nt that the rate and pa e f cban.are fa ··n organisations are greater now
a tio n
than the: hav, e er been. As a rb, the t, rm •change· can b defln d a
to make the fon~ nature ont ,~ ur future course ,o om lhltl diffe rent rum hat
it i or from what it would ei left a~ ne. The Cambridge Engli h: , l tionary define
1
,
rgan ' atiomd hang a a pr • . in whi h . n organi afon 1 · .1 ges i working
methods or aims. Some ·
deep organi a.tionaJ change is n,~
ary to maintain a
omp -titiv dvan ag . For · :npl a han · i th o, .· 11i ti n' vi i n, mi i • n,
strategy, goaJs and bjective ; produc and/oTservices that il oftbs; market to v bich
i orn its p dw · nd/or , tvi ; pr
.u · d l
pr du · and/ r · rvi ·
to the markel;technology u ed to offer products and/orservic to the market; values,
corp rat ruhu and/ r ·hared b H E · locaf n; r rucrure.
m tim , man r
chan,
iU uf 1ce, such as adding pmdu 1s to i ex.i ling produ t Line or entering
n.
a · e • An han e made in an o rusati n inadvert ntly cause chang
In th.er m~a f the organi ation, fi
amp]e its stru tu.re cul ure.
terns and
te,ch logy, which need to be man g . Inremal a well a external organisational
fa fors i(whi h we wil di us: in m red t ii in hap'l r ) are leading argani ati.on
to .reappraise their strategies, s ructures and proces-ses, all of which require them to
imp em nt and m na · han . Thi · p ially tru in U1 w k r th · w rldwid
rece ·on that followed the global financial crisi of 2007-2008, ooupied with rapid
l , hnol
gi al· d an m n , which w re a ing rganisati n worl wicl l qu u
their tradilfonal busin
models. With the COVID-19 pand,emic, organisations again
n ed to, qu ti n th ir traditional busm s m d Ls. Wh n th new f th outbr: ak
spread, organisations began considering how it would affect upply hain ace ,
produ t launche . emplo ee weUb ing and busine t.-ontinui . Organisation hould
al o ,c on ider th importarn or a r - m nt business mod J plan for disruption o
resources and proce ses and ensure that their business modebi are re ilient to out ide
di rup ions ( u h a th ·ru ) to th
t r h bu in • Ea h oun ry al o f,
it
4
Chap r 2: Th manag m-n ·pro ·
wn ri • th
: A resp nsibl approa h
. nd pp rtuni · , ca Ing organ.. ~a ·ons
dj
th ir tra gi ,
goal and plan . For example, in outh frica the National Minimum Wage Act came
in to fore from 1 Januaiy 2019.i; Thi
d will ha
an influen on th in ~ ntiv
y terns of o,rganisatio which may al o 1 ad to various other changes Lhal nttd to
be made.
In umma -. , management is a. complex prates • which ;r:equire a number of kill
tha
will ddre in · ion 2.
Managers are usually found ,o perntio on variou level o organ:isations. .In the
l I.
n
tion, w diffl r n ·a , b w n m nag m n on b : van
1
2.2
LEVELS OF MANAGEMENT
M nag
fun ti n at arious lev I in he o · ani ationa1 hiera11 b . A .m 11
organisation may hav only on lay r o ma
· nt. whereas a larg
· ion
ma have everal l
In
l, relative]
or anisa ·ons hav
level
of rnanag rs: top- I
an
mid
rn
and lo\ r-1
oag rs.
~ m nagem nt rep r
group, of managers. wlto ·
and with whom the
-lati el m U
e organisation
authority and
x u · ,g he manag w nt
process rests. Top management i u uaJly
p n ibl I r th · or ani lfon
a whol a
re p nsibility for
•ft•0\111
Top managers are responsible
f r ·
;gani ti n a, a whol
:s w, II as fur determining its
m· ion go I· and ov rall
strategies.
well a for detemiining its mission. goaJs and
11 - ra · 1 p m nag m n
n m
· jth long-term planning. d5i ning the organisation· broad tructure.
th
r an:· af
,(throu h
op ex cutiv ) and
n rolling i . I p
m,magemml aL-m influence the c:qg,orale cw~. The annual reports. of an
organisation usuall depk heir , man • m nt tnJ ture. Thi ] · el o.fmanag ment
usually ompri
the board
d.irecto . , partners th managing director. chi
0
•
ex cutive •officers and manag ment c,ommittee ..
Middle management is m.ponsihle for specific
departments of the organ· ation nd i primaril
concerned with imple:men.lting th poli i plans
and n-ategies formula ed by op management n
nonnaUy includ th fun tiona] h ' ·uch a
--
Middl managers are iiesponsihl
for specific departments of the
rgat1i . ion and a, primarily
the marketing manager the purchasing manager
ieoncemed with implement.ing
and th
th p ref
human re ou
m na
Middl
management is concemoo with the near future
l.!f".
pl n and -tra egies
mmul:ated by op managem 11t
and · lh · 011
n ibl
rm djum- nn and
hoit-~erm planning. organising functional areas leading by means
or the departmental
Prindpl · o, 6 n ral Manag m n
b
nd
ntrollin
Lh ma g men
. f th m· di rn n
· ow:
depmtments. Middle managers also continually monitor en imnmental in.fluenc that
m affi t rh ir n d p rtm n . 111 trend in re nt a f corporat restructuri: g,
dda ering d.owlllSizing and decentralisation or d ision making ha been responsib]
for large numbe ,o f middle managers ecomin redundant. Electmruc technology ha
redu ~ _ 1. th _ o -d ,or middl rn anag m nl in ome orga □ i atio.n . It is in the area.
information managemen . in particular, tha · computflS hav,e replaced he infonnationgath ·ng ta
middJ m ,nag . Middl manag rs ar 1 h
.. tiJJ n sary
link the upper and lower level of the organisation and t1 implemtnl the strategies
vel p at th
culi 1 v l.
I
1
Lower-level man agement 1(also called fust-line
manag n1 n ) i resp on ·bl~ .or , v n mall r
segments of he orga:nis atfoo, namely the
,iff, ren ub U n . Th m nag ri fun i n
of fust- ]ine managers are cienkI"ed on th daily
a ti iti
f th ir d p rtm n or
ti n
short-term planning,. and on im. Jementing the
plans of middl m ag ment. Ih ir rimary
conccrn
Lo app]
poli ~
p ocedw
Low e - level managers are
· pon "bl o · mall rs m nts
of the organisa1tion and the.Ir
dal ly activities ar c· nt red
around hart- rm planning and
the implementaf 011 o rie pans
of middl mag
and role in orde · o al:hie e a high level of
produ tivi y. to pro iti le h i a l a r tan -, to moti at
rs.
ulmrdinati
and t o
acc,ompU b day- o- a. goals. TypicaU , they spend a large portion of their time
u · rvi ing h
rk of ub rd'n
aus o · h1 · lirst-lin man ..· m nt is
a vital for in the organi ation. These ma.o agers ho ld the po er to incTe e or
d re , t:J1 pr du iv.it • nd u put f m ·t
ani atfon . Th ·y al · main in
the crucial int rface bet\ een management and Lhe major body oJ employees in
t,
n· · · n. Thi lev l o · mana. m- t ·u l ompri . titl · u h
offi,
w 11ager, hlft supervi or, advertising man · ger debtors' tlerk or a section manager.
Figu
2.2 umm ri
, f m n g m nt.
'OP I 'II I
man grement
Middle-leve'I
manag eme,nt
lower-level
man g m n
,F igu~ 2.2
The levels of management
Chap r 2: Th manag m-n ·pro ·
figure 2.2 p nra
av ry impl'. ti tru ur
fan o
: A resp risibl approa, h
n· a ion. l rg multin ti n I
organisation may have more byers of management with more ,c ompficated
tructur . On the ,th r band. micro- nd ma ll bu in
rgan· ati n ma no
even hav lay r of manag, rnent, ince the owners ma per mm all managerial
ac, ivitie them el es ..In the nex1 . ection. we will explain the varimis · kill managers
need lo ha •.
LOJ: Explai n th s ms n ded by managem t
2.3
SKILLS NEEDED BY MANAGEMENT
E h t v l ·r manag m nt r quire diffi nt kn
I
and mp l n i
r
the performance of the management task. Oaf'k L Wil on d"d 30 yea ,·.. of re earch
inv I ing h u an o nan g , nd th re y rovid
v ry I ar pi ture
what it takes to be an effective manager. ilson idetn:ified three kill ategories
- t bni. a]. t ambuHdi:ng and driv h re a · a , g iy , ranch int van u
pKWC managerial sk.m _i..7
2.3.1 Technical skills
T c:hni a] ' ·u refr
th m nag r' · ability
to apply his or her edu ation. training and
ii Is aire the
e perien
to effi ti l
d efficientl
,
o
du at"on,
or anLe a ta ·k, job r p oj L Th 1 - hranch
an d experience to
of te h.nkal kill i technical expertise which
ta ,j
rproj L
F rs o th skin
h t hav b •. n a quired
by a manager through education and/or
uaJ
ri n · r th
k L hand. Im 1
,f
unt n y, in~ rm ti,
communi a · n t rhnology or logisti ru-e tnipl · of techni al expertise that can
be us t p rform ta k.
BIii
The
ond branch of technical kill · the clarification of goals and objectives.
m a t r h uld hav h abir
t m1in · ha a tu I a i iti n
ob
performed in order to, meet
a.blisbed targets. These activities hould then be
or ani d and
h dul d.
The third branch ohechnical skills i problem olving which refers to the manager's
abi ity l
,Iv i su - tha a
n oun r in hi or h r day- o-d y w rk a w 11
as the devdopment ,o f team coUaboration.
La Uy , hni al . iJ1 a] o in olv a manag r' . ability o u imagination and
creati tty, which refer: . to the ability o originate ideas to cooect and de clop
w
imp,rov th pr, u tivity o th rgani ti n.
ran
Prindpl · o, 6 n ral Manag m n
2.3.2 T-ambuilding
Teambu.Hding r,e: ers to the ability or kill
of a m.ana r to r t n ,C':'.u full
otb , to
communi ate effe tivel with others and tJ
de elop nd coordinate an ffi ·ve rou, or
team.
I
T amb ildi ng i
lis ning
carefully and co mmunicating
rl to d v lop an ff • iv
earn.
ran
f t ambuildin i l1 t, iD
for insights. meaning that the manager hould
keep, w
oft am tivitie b li t ning to team m rnb rs.
Th rust
The econd bran,c b is directing and ooaching. Directing refers to the manager'
bili · to · ork thr: ugh and ith l am m mb
L
, hi
,o rg ni ati nal . I
and objecti ,es. A directi ,e manager lets team memh rs k.oow .ha i expected of'
them nd gives
iftc guidance a to how the w rk b uld
· one. Coachin
ocus - on th improved p~rfonn n of a l,
xp~rienced im.li idu 1 and imparts
skill that this individuaJ needs to accept new r · pon~i iliH ,. Co· · ing in the
ont xt o n or .ni ·ation j
ry i:mil . r to that in port, h
· oa h wilJ
d.111ec:t the learning of his or her tudent.
The unrd branch of teambuildirng i ol
r b} m.b as team · . An ffi i nt
maaa er hould have th abUity to help is or h
e m ro contribute idea and
olution t , improv lb ir p rfomum
in h or .pi ation.
La · 1· • teambu.ilding bran h
and c op rating. Coordi alion
i an important principI in or · 1isi,ng.. oordination mean that aH depart nt,
sec :ion and individual wichin n or nisation hould wor: together to complish
1.rat , i , ta i a1 and p ra i nal oa1 a d hj ti
of L
ani ion.
Cooperation means the iHin
to work with othe · be it
ur team, other
unit ·I
l·
t am
Drive
The third · e o, o kill needed.by managers
i dri . Havin :h km o driv1: an org ni ation,
team or u.n· su c:essfully mean Uiat a manager
h uld ha
the abilit
- nnda ds and e aJua
o
goal , mai
n
perfo nnan - · o,rd r
to
ieve effecri e ou comes.. l thl sense,
out om refi rt, o ·t , output, pr d ct quality
Driv
i
tting
go Is.
maintaining .standards and
valua ir,g p r orman
o
ach [eve effectmve ou comes.
and customer service.
The fusf branch of the
ll ,o f driving is eUin °tandards of performanc .
Managers hou ld have the kill to k ep the part of the organi ation tha the are
r p n ibl for mo ng and aimmg to . ard new a c mp1ishm nr .
Th e ond bran b r fers , o ontrol of d tail , which r fers to the ability to o
the performance of work in d · tail in ord r to m :e1 overaU oab and objectiv •
Chap · r 2: Th manag m·n pro ·
Tll lhtrd ra , h f h driving kill f
m:an g r ·
: A resp risibl approa, h
n r
- u ce ful manag
demonst:rn~e to their team and others the · illingnes and abiJjt to woi-k and tba:t
th
p t o ration from oth r ..
The la t branch of thi catego - of managerial skills is exerting pressure, which
r
to th m n g r biJi , o urg, th
o p rform ithou omin ion.
AJ cording to Wi1 on's research. about one third of manager: at all 1~ el do not
a ·bi
an appropri t ba.l n b t
n l hnj al ti ambuilding nd driv ·le.ill.
and ar,e thus ineffective. The answer lies in fmdmg a balance between all three
t gori, or manag ri I kilJ ft fi r lh man g r" · p ific i u tion. Figu 2.
ummari es the three categories o managerial · kills.
ing or 1n ight
•
Cla
ah
goals
•
lmagina ion
•
Cr a v1ty
•
•
Oiree ·ng
•
Co l'lmg
•
Solvjng problems as
teami.
•
Coordma ing
•
Cooperating
•
perfo manee
Con clling details
nergy
erti , g pressure
1figure 2.3 Willson's tihree rnteg1ories of manag n skills
Apart from the · ariou manag ·a1 kills needed to be ucc - ful, man a e
lo ful il nous r I in orgarni.s:atio
th n xt
ti n, w will fi
L04 :
2.4
plain th
riou , anag
a1
1rot
MANAGE IAL ROLES
of the mana trial le el or the manage.men are in which a manager works
( uch a fimm
ou
, and - ou), · h manag is al required to p rforrn
certam roles. Pro essor Henty Mintzberg folio ~d five American chief executive
off1c !'., h
ng a h for a
k nd · n I ing th fr maH. th i , onv ali ·. and
thcir actiio • He concluded that manag pl1ol ten differen bur highly interrelated roles
Lh i.: I grouped u der 1h ,o,v rl ,·. g prima:ry h d·n , n m ly inl rp
nal,
Regamle
inform lion and deci ion-making ml - . In. o,ther \ on:ls. managers talk. to people,
gather a d iv in orma ion an prak de isions. The true managerial rol ar
explained below.
7
Prindpl
o, 6 n ral Manag m n
2.4. 1 Int rp onal rol More than anything els,e ma11ageriaJ jobs are people-intensive. Evidence bow
that m ag
pend a mu · h
80 p r
n of th ir workda
ommuni ating -
talking, Ii leoing. pr enting and -haring informa ion with people. In fulfiHing the
interper onal role J management, managers perform t.mee ub-rnl . The th.re
lnLerper. omd sub-role pl yed by tl:Je mana er are Lho
of f1gurehead. leader and
liaison. All managers ha e to perform duties that are Cefie:Dlonial and mbolic in
natur . r ampt , man
·m y h
to . pp r t om.mu, it um tfo ', l nd
social events or host luncheon for important custome . In dm g so manager
fulfil th ir rol a flgur, b d .
nd, all manag rs h
r
a a I ad r. ln
this capacity~ managers work ith and through their · ~ ployee to ensure that
or an· ti n I g I are m t. Th third ub - l
iili I h in, rp
n i rol i
that of liai on which aim at m intaining good re. tion withi n and outside the
organi ation. Man ,ge must b po iii a11 en ·u
,n ·m ortan ·
.nisati n I
issues ·o Lhat lhey can de eJop relation hip
- both wi hin and be ond
their organisation.
2.4.2 Information rO:le
A manager' information role
bk , him or her to • btctln informati n from
colleague ubordjnate and epanm ntal be d as ell as ou id .in ividu 1
a.nd rganisaili.011 and. . or
·a us th ' information for in king d "i ions.
The information role of e man a ~er invo]ves monimring or ga,thering information
on trend and pa irtg n le 1l da a or info nali n
U·
• b th up riors
and nbordinat . ::rbe manager i therefore a vital H.n k in the organisation's
mmuni a i n p?i
• Th m n· · r' infi nn ti n l l
n ii~ ling a a
spok pe n foT the department or for ,he whole or .anisation..
2.4.
Decision-making ro le
h lh"rd
· f m n g ri ] r l i
into what i known - l:h d i ·onma ·n mle. A manag r · re. a:rde · an entrepreneur.
an entrep~ neur, th
man g.er initiat projec , that capi
on oppo :unjti that ha e been id ntif1ed
in the monitoring role"'. Thi may in olve d vcloping new pI'oducts
rvk • or
proc e . A e,cond d ctsi n I role that man ger pfay · that of pmble:m- ,olver.
R ardl
of ho w -] an Tgani ation · m~na ed, thin . do not alway ru n
smoothly. anager:s must cope with conflic ,· and re ol e problem as the ari e.
F r ampl thi m .y inv I d alin with an irat us om r,. n otia 'ng with
an Wlcoope:rative snpp.tier or intervening in a di pute between empfo ees. Third.
manag r mu t ma
1 1 n
b ut h
· ur , av ilabt to th rg ni tion.
Re ource alJocati.on,. or deciding to whom resoUf'ces uch a money, people
and ~q ipm n are lo b a i ned, i ft n
riti a] ma agem nl d i i n. In
his or her role as negotiator. a manager orten has Lo negotiate with individuals,
other dep rtm nts or organi a ·on , and t-rad union . ab ut o 1 , tandards of
per onnan · and n:sourc .
48
Chap r 2: Th manag
m-n ·pro ·
figure 2.4 umma
: Ar· ponsibl approa, h
nd ub-ro,I •
•
•
Figurehead
d r
•
Diss minator
•
liaison
•
Spok5person
•· Mahi or
iFigure 2.4
Th envirorun nt in which man g rs
rfo
ir m· in run ti n~ and
. omplex, fast-changing and un · -rtain. In ord • r a urviv , m;mag:e, n ed 11
ad ptl e mana e-rial · tyle. In other wo , mana ers need to rec gnise the change
in U1 · • nvi:m nm Ill and mak · th n ces ·ary ch n.
lo th ir manag · riat t
in
order o u.rvive. In chapter 1,
sta ed that various problem defme the frican
nvili nm n ·.
·p n ibl · m
t m nt
fvi , ri r · amp) · glob warming,
wa er crises. overpopulation, po e.rt and hunger e ere drougb in ·ome African
ountri an n d in
en,,
rkpl
di rsit ran m1 · I , th
Hb ing
of communiti , corruption in po ·tics, government and tbe bu ·
sector, human
righ h altb i ·. u
d in
in qu Hty. In th fl xt
i·
r•e p n ible appro h I.he traditionaJ view o managem n . hat we ha e dis us ed
thus far in thi , ha 1er. The traditional m n eriaJ r p cti. e · i
sed in th first
part of this chapter is till an important ha is or Lbi !Joo , bu we now ta.k th
next. ep of tt latin the orga · [ ational visio into managerial and operational
a hi - ru nt of 1 i vl ·ion by a r ponsible m_uager.
L
2.5
·
Explain tlie responsible approach o rnanag ment
Bef · re w - dis us
, resp risible pproa ·h to the
tradirional view of management, let us fust recap
ur
cmilion , re p ·bt ma.nag m n' . En
ch.apter 1, responsible management wa defmed
a
--
MANAGEMENT: A RESPONSIBLE APPROACH
man gem
111
r an
rgain · ati: n built n
R pon ib,I m nag men
is the management of an
r,gani ion buil on he
principles of su ai a.bi ity.
r ponsibi lity and thics.
the principles of sustainability, re pon ibility
and thi,c . In tbj .defulition. · taina ility fi
to managerial pra ti e that mbra
triplebottom-line optim" tion th.a· protec er at and su tain · odal, environmen a]
and conomk bu ·ness valu . R ponsibi1ity r ers 'to managerial pra u-- chat
embrace , take.holder value optimisation~ ins ead of the nanow fora on maximising
f ar, old r v I . M· n g m nt p acti m l mb
thi 1 ,d · i n ma · ng nd
create moral exeiellence.
Prindpl · of 6 n ral Manag m n
T t k th n
p w r a , p · .n ib
p r h t m na g m t, th
components thereof(a discussed in oction2.l . l) must be revisited to integrate the
thr , ·uars of re :pon ibl m n g m nt - sus ainabrn , , re pon ibility and , thi .
This means that lhe three pillars of responsibl manag me.nt. n d to be inte rated
with the mana i'l'emenl functions, the inpu · or resources ,· ed b · an organi anon,
. nd th outputs or goal of th organi atiot1.
In·. grati1ng th pillar of responsible manage m nt in :h manag:em nt
functions
h traditional. vi w of rmma en, nt · upports th · · ti n th . t a ] ma nag rs,
vegardless o the type of organisation. the 1e cl at: whi 1 the · ar,e in ·olved, their
2.5.1
·' ign t d r l ( ), or
ift kHl , ng g in · o
ann r i , four Fund m n al,
interrelated activities in order ro achieve om:e or other goal1[ ) known a the
man m nt fu Hon- . Th. cu planni • r t Lin , I a ing and nt:r Llin .
In order to be responsible, the ·three pillat of re pon ible management need to be
int gral d with a h f lb
fi ur ·ana ri I fun li n , a d pi d in figure 2. .
p ,
r- porubl
Stistaii11a le,
rcspons"bh:
and t'thfcal
an d eth"ca l
controlling
orga.,,t ing
Sust.:ijnablfl,
1 man g nPnl ·n th m nag m nt
1
functions
50
Chap -r 2: Th manag m·n pro -
: A resp nsibl . pproa h
Th
r.. on ibl
rnanag r will
x ,cu
responsible planning, organi ing leading and
Note th u e of the rm
ontroUing pro .........,'""'·· Th. m an that th
nd
onnul tion of the i ion mi ion and oals o
not
'subordinate'.
We
will
the organisation ill be done by oon id ring
labo a
n r po n ib ,
issu
of sustainability re ponsibility and
leadershi p I cha pter 9.
e hies. The devdopment of an organi ational
tru mr
ill b d n on id ring th
ipl
botiom line. the optim· ation of takeholdler value and ith the aim co ,c onduct
bu in in an , thi l m· nn r. Th r p n ibl I ad r will
t hi r r foUo rs
in a responsible manner, taking all takeholders into a oun~ act in an ethical
mann r d mak · d i ·on th t upp,ort th
1i ll a' Lripl b , t m lin .
La ll • the r ponsible manager will conltol the C'tions, u omes and perfonn.anc:e
of th o,rgani ation re pon i I . , ntr llin · re n i I bu-in
ompl x. Vi ry
oft.en. re ponsfbl mana e.r n d to transla i:ntan ible o ia.],. environm ntal and
ethical performan e goals into mea ureabl p rformance indicato . In cha, ters 6,
7, 8, 9, JO, H and t , w - wi11 fo us n more: t U n Lh · int, grati n of h Lhr
pillars of respon ible managem . t in the management function .
For each le cl of mnnagem · n· Lhe i . g ration of tl1e thr:ee pill . o 11 ponsibl •
management in the man gemen function will be different. Tabl 2. 1 pr vid an
indi ation of th a ' u mama rial 1 v l ('top., middl and lo • r manag · m nt
and the ta k de •c riptio o r po nsib]e managemem.
Prindpl
Tab
Pl
o, 6 n ral Man g m n
2. 1
n
Top, management
Middle manag,ement
Stratcgic:alry plan t,o,
Translat the
overall! 1'13:ponsible
become a responsible
Lower management
Plan h attocation
of resources om
r onal I II I
y · olving nonma11agcria I e ilp.loyecs
In t:i" ing t,
responsible objectives
r, ·c, d by middl
rgar,1 ional r t gy
of top mar11ageme111t
org ni tion.
in o concrete tactical
j tivtS and acti 11
Org ni ·
Cr at
n
, r a - and adju t h
R
organisational
struchm:, assign
, ponsibilitl and
facllitate change
ipmcesses to b corn
I
acti11i ·es of individual
•
a way ha e
crs
employ:ees to respond
them
to rup nsi I bu i
Lead furnrtional
Lead individual
sin tile day-
a n~spon.sibl
organi.sation.
mp and
Lead
rprovi ·
t rm
•
managers in the
•.
ge
impl m,
tion of
the set objectives or
pl m nt tion
sib e ti usiness
rcsponsibl bu in
Conttol
Measu.re. the respons·bte
bu in - p - r rmance
o. th organisation's
strategic areas of
ontroL D • id n
cha rnges or mrrecti ons
in ·
ateg
e nspon:sible
utp . o'f
.
I
orrc ·
o h
m-term strategy.
D cide on
chan .
imp rov
p rformanc
1
ov
In th op
111ng ·a ·.·
rm.
this · hapt r, ·
ha
n h w AB (a part of
nh us · Busch InBe ) plan
futWl'. a
pon ible organi ation on a t:ra egk level by
Ii ning i nvironm n . l,
ial a d aJ oho re p n ·ibility l mak th w rld a
better place. The company has integrated sustainability into i · overall strategy,
wM h h , b n tran lat d int · · n
in b"U go l
b a hi ved
20 25 m the areas of wa ter ste t d hip mart agriculture:, climate action, cirruJar
pa . ging and entrepr n u hip. Th · mpan pli vi · · l ad h:iip fr m th top and
pro ides guidance in terms or responsiMe organi acional mana emen In terms o
respon ible control, lhe c mpany ha
. ount bili ·
nd b . , hmarks
in pla e throughoul th · bwdn
52
Chap -r 2: Th manag m·n · pro -
: A resp nsibl approa -h
In·~ grating h pillar of r po,n ibl - manag Cm-nt in rm · of ·h
management of organi1s ational re.sour~s
tradition 1 i w or m. na m m ,on id
th in uts r r, ~,ourc
2.5.2
Th
f a
organisation a a me n to at.hi ve i goal • he fa t is tba· r-esour
a.re arce
and ery pen i and n d to b us,ed re .pon ibl . The re ponsible mana er will
manage organi ational resourc
uslai11abl , re pou ibly an thi - ally.
Fr m · . ·u t · inability vi wpoin
ourc are vi w d a ~ th lhr ty
f apitaJ,
namely social, environmental and conm:rnc capital, which need to be us1 - ined
ove.r thelong term. R sponsible organis;f i .
withdraw fr tn th ex
· e u t'
of non-ren - abl e.r:wironm.ental re ou11
and pro du tion • fi
. that harm th
environment. The wHl invest in the -community ·th wh
ork and they
no en a in ran a tlon thal will on mi
ani ali n.
wm
wm
From a r ·p n ibility vi wpoint re ourc
ged in uch a wa: tha,·
the inr :res
fall takehold rs are taken in o - un . rom an 1hi v·~o.int. th
re ponsible management of hwmm resources the en.vironment and information is of
ial import ,n . ._h
ponsibl m n , ·- iU n
nsi.d r human our; a
a mere ~esource and will never tum the r anisation into an abusive one. In terms of
th n. ironm n a responsibl org· n· ·ati 11 iU take th 'rights' or th envi nm nt
into consideration that f.rr ,exceed the management understanding of it as a mere
urc . Th r
n i 1 manuJlll>'"••-u-f in onnati,on is a h topi in
mp rary
ana ement. The
management. esp tially the ethic m ol · eel in mformaa.on
re·pon .ibl m ·nager will ~nrin:.o.:. ... i u uch a ,privacy and intelle
l property in th
rn nagemenit of in.Format on as a -luable li · source of the organisation. The FacebookCambridge Analytica ta c ndaJ in early 201B w
major political candal hen
h wa . r veal d th t -ambridg - Ana.lytica had harv lid. th • p onal data of about 87
million -people' Facebook profiles without their consen a d used the information for
pohtital ad ertising pu
fi r lh D na!d Trump · mp ,ign in th · ni d t
Facebook exposed the data of its users o a researcher ho work!ed at Cambridge
nalyti · , hj h
r d ri r th Tramp ,mp · n. Th imp nant qu ti n in t
the o1e • n of privacy is how Cambrid ,e Analytica got i data from · acebook.. The
omp n rot il throu h a
rch r
w r ed a h ni rsit f ambridg , who
bui L Face:b o appli ation that was quiz. n nm: only collected data from p ople
who t k th quiz, it exl)osed a 1 p l . in Fa eh k tha allow, d it
Hect data
from the . a · book friends or th - iz takers as welt Fa. book prohibit d th elling o data collected through th" m th d, but -Cambridge sold the data anywa . m Incidents
uch - these highlight th importan e o, -th res-po, ibl ma:nagern nt of infi rmation.
Prindpl · o, 6 n ral Manag m n
Int grating h pillar of r pon ibl manag Cm nt in · rm of ·h
formu lation of organisatiornal gmds
Wb n in gra in th pilla
r, po1ri · l m nagem n in formulating goal , tl
ollo ing: rve a guidelines:
2.' .3
Formulate us ;:Jinable, r spoRSible and ethical goal
The traditional view of management foru e on the achievement of a better
omp li i posj ~ n of th or ani a ion, I ading t
H r [man ia] r u1ts, hid1
uJtima el benefits the owne . The respo ible organi ation wiU formtda e goals
ali n
wi h th pill;n5 of
pon i ] m n m n . F m a u · inability
per p ti e. orgaoi ational goal
hould be o ·a11y, en ironmemally and
·onomi ally u tainabl . Wh t w h v · 1 m d rom th
VJD- 1 pand mi i
that organi ations should al o incorporate ~n · , re ilien<:e when fom1ufati.ng
lh ·r .go
nd bu in
m d J . Bu in
■..ll!!!llf.!r,e ilien,ce is th ability of an organisation to
qui kli adapt o di m · · n • s
as a
pand mJ
while ma· tainin
continuous
J.
■flll
-----·
Busin s
r fli
th
ability nf an organi 1tion to
quickly ada lo disrupti,ons
whi t m ,11 aining on inuou
o erations and
egu· rding people,
a l and ov raU rnmJ quity. mm a
responsibility vie aim goals · hould be
bu in s operations and
ormul l d in u, h · wa that lu i · r a d
a~ding 1P 01
Pl a ts a d
for all stake.h lders. not only hareholders (or
ove all brand equity.
wn ). F m an tn· ,I i wp in •
al
should be ormuhued in uch a way 't hat the ar, · not immoraJ.
!
ula goals that balance effe ·
s and efficiency
m nt require a b ance b t
n , ffe tivenes, and • ffi i
n, • •
W · defm d
ction 2. 1.4 a · . ing th righ _hlng ·, and m ien y a 'doing
ample. SAB ·11 be regavded a 'effecti e' in a hieving its ' mart
agricul U!.'1 goal' wh n 10
,·nt or i , , dir~ t form rs re J U·d. Oilm
cl
and fmancially empowered b 2025. or if the organi ation qujckly adapts to a
di rup • n hll maint in·ng con 'nuou . u: in
op rati n anid Fi u rdi.ng i
employee
ets and tb,e SAB brand a the ,company tarted to demonstrate with
th -ovr - ~ pand mi . AB ill b d . m d • fti i r if thi go· · i al , att in d
by making use or lhe minimum resources or inpu .
thing right: For
Th
uP.,,.,.<:c
,o f re p n ibl man g
houl
m a ured ag.. i l h am un
of rriple-bmtom-line value added, rakebolder 'allue created and tile degree of
m ral ,
Hn
hi , d. In th
· f SAB, n ould argu th a p ,n ibl
manager ill no,t de,em ucc · ful entry into n,ew markers that have never used
al ohol . fore , being ', ffi tiv ', i:n al oho] u g · unh "hh . SAB upp
man respon ible alcohol usage programm , educating ommnniti • about the
dan
, f drinking and drivin and the u
f al hot b p ople und r th ag
of 18 and pr, gnant wom n. Furlh n:no:r; , durin th
VID-1 pan.cl mi th
4
Chap r 2: Th manag m n ·pro ·
mp ny illus rat d it
mmi m n· lo
: A resp nsibl approa, h
,n ibl man g men by ad ptin · i .
manu actu.ring pro esses 10 produce tens or thousands o bottles of hand sanitiser,
cont ining 80 p , enl ak ,h, l. ford liv ry lo dini
nd ho p· I . ABlnB · ]f
used. it technofogy in its hr werie around the world rom i non-al ohol b.re ing
pro~es to create disinfi taa fmm urplu akohoL
Formulate goals that support long-term sustainability, responsibiliity and ethics
h traditional vi w of roana em -nt upp rts th notion thal · manag m n't
prooes is more effident if i achieve · the ame or better outpu "th le . re o,urce
u ag . n p n ib[ ma.nag, m n , h
m prin ipJ h I
· l inabm y
perspecti e aims at sustaining or even i;enewing ocial, enviro mental and ,ecconomic:
i ' 4' I. r, m a resp n ib•m i wp in , ffi i n
in d
th t k h Id r
value created per unit of product or eivke. Effict ncy Jr m · . ethics point of ·ew
aim al th 1 w ~l p ibl imm ra] b h vi ur l" unit f produ t or rvi .
The traditional i:e:w of management me 'I.DeS the hort- ierm performance of the
m • ag m nt pr
narrow] b i hoH nn p fit. F r a resp n ibl manag r,
management performance houJd b me.a ured against three criteria, namely ongl rm ustainab.ilily, p
ibil" · r lhi .. Th l ng- rm tai bilit
rm.an
hon.Id be mea ur d 31gain. l lhe
·ial, environmental and economic alue
perfonnance f the or:1 · a i 1. for ample the traclitional fma.n ial e:rformance,
o i:d v Jue creation a , la environm ntal vaJu creation (such.. water, ' _0 1 and
biodi ersi )L The resp nsi iii
erformance of the organi . tion houJd be me ured
again I its perfo rnn · i
m1 or takJ hold rvaJu r a i
· ampl of 111 a UTi
that can be m,ed are the number of customer complaints during a peciflc period and
" in
· h · Id r a • fi ti n u
uh
ff mor. l urv 'Y La tl ,
etWcs p form.an e ,of au organisation can be measmed against its moral excellence
p rfo i1
f r , ampl th numb r f · thi al iJ mrr
Iv d.
Becoming a responsible manager will le . d m the organi ation becoming more
wiH l d to r pon ibl industry, whi h,
r p n ibl .
ponsibl orgar1i
stem. Ultimately,. a respo,n, ible
in tum, will lead to a respon ible
o i
n mi
t m ,ml
re nstbl an ili' caJ
rid
so iety, as depicted in Figure 2.6.
:figure 2.6 Goal of n:.spon ·iblc 1J1,anag m nt
From the above di cu ·on , it hould be clear that responsible management i
mu h m r than h ri • it i m r th n ju an rgani i n th t , on ribul a
um of money to the local hool or spmts dub, il is much more. than po oring
5
Chap · r 2: Th manag m · n pro ·
•
•
: A resp nsibl approa, h
' iv., o · ty. ivU o i ty bas th p w r f h i . Fi , t. in a d m er ti
like South Afiica. civil ociety has a oting power to appoint
th o mm oL S
d 1 d i]
. ty h
th p w r o ho
whi h
o,rgan.iisation t,o upport b buying prodlu t and se ices from them. Third,
they ha. e the power to cho
whom lo work for.
· orporates. orporate ha e ttrmendous power ln t.haL th• have d.iscr tion
in terms of their ac:ti ities and deci ion-making pm es es. The fo us of thi •
h ok. i on the r ponsible m .n a . er in a orp I'3te n ironm nt.
A r ~span i 1 manag r ca.n w rk in four dUTerent
•
p
lrre ponsible organi ation. An irresp,onsible organi alion i chara teri ed
a urely · oi ti driv , r pli flt maximi ation. · mcli idual ma.n r
who wam to take the respon ible road will
d 1l hard o ork in uch
an environment ince uch an organi atio · ill p littl aitention
ustainabili , slaki holder lue er ·atf
and lhic .
•
Re p,onsib1e organi ation. A re pon fbl or ani ation i c:haracteri ed b
a profit ori -ntation nd · lin
.lue or other xtemal tak hold rs.
Responsible managers in u an organisation ill be able to .a t respo rbl
\ b n th ir a · n areju
. bu i,n
•
social entr,e renr
n ure, aim· .g r
ial n rep?1e:11eur ha a trong phil nthmpic:
en ugh profi
urviv
v r ti
I'
n
rm.
Social entrepreneurship will be discu sed in detail in chap er 4. The responsible
mana,ger wh · , a 1aJ , r pr· n ur houtd aim L m imi · xt m Iv ,Iu
hen bis o ·
ac.ti ·iry creates suffi ient internal benen to cover all it co ts.
•
Bu i.n
fi und ion. Th
r phil n hr pi mi ·i
o
nd budg
temmin from funds of an organisation on a predefwed et of caus. .
B ,i
~ound .tion r u all
and- I
is tion , whi run in
p raUel to the main business. Respon ible managers in busine s foundations
· . t inve ·t orpon ·
an heir w11 a ·tivicy t.o reate the
· _·
iaJ return on inve trn l po ib]e.
In ch~pt • I, van us dri ers fi r
p n ibl m nag n1 n
· , nam I
responsible consumers, respoos·ble uppliers, responsible emp lo ee , new mark.et
and th bu.sin
a e, gl
U·· ti n. ad vane in . hnology and rran paren y,
incn:a ing corpora e po e.r t:1nd gl ,bat business risks. No matter ho powe.rful lb
drivers for the re pon i le ma:na ement of or .a ni ations are, th.t:re are also b:anier
nd criti i ll15 of respot1sibl mamig m nt h:1 th next
tion, w fo us on th
7
Prindpl · · o 6 n ral Manag m n
L07: Discuss th
arri
a and criti isms of
p ns1bl manag m t
2.7
BARRI.ERS TO AND CR.ITICISMS OF RESPONSIBLE MANAGEMENT
In rd r It man a an ,org ni ,ti n
nsibly and in n ffi rtiv nd ffl · n ·
manner, :managers hould be a are nof. o.nl of lhe drive
to and criti · m o,f pon ibl mana · ment
2. 7. 1
bul also of the barrier
Profit criti ·sm
The pronL critid m of r · pon ible: management .is that th business of busine:s is
to enerat pro J, for I
wners aad th r is n Jegiti ate r, pon ibility toward
any oth r tak holder.
Thj riti · m g
ba k o Milt ,n Fri dman ( h
nomi and No I laurea: "l,
who published an essa titled 'The o ial R onsibillty of Bu iness · to l crea e
il Profit : Th.
y, hich i ·· ·11 referred to toda , wa publish d in The ew
York Time in 1970 and ame to b • u ofth mo t famous piec · . of 01k d bating
the notion. of corporate oc::ial espo · mty. Friedman' main rg ment wa that
th
· ia] respo , ibility f n o ani a ion i to make a proftl. 1
org n · a ,ion
succeeded iu making a profit, it ou!d. then be ab]e to fulfil it ocial responsibility
of mployin p opl h o ·i
with a d nt wa
and ·l w uld b abl t pay
tax to the tate. .him uld provide the eil:Vic:es requi,, h
L· t u
t
.n ' ~r um, nt. Fi t
wm
. i l m na ·
agr
ith
it the responsibility of an orgamsation to ma, e a profit for l
own
ri, dm n' rgum, n
d in I' 7 • wi h a ompl ly
different co te:x than that of today' managers. any responsible organisations
t da
n h wn t b profit bl, rtd ·u tainabl whil al • rving th
inLer ts all stakehold,e:rs. SABMiller, de~cribed in the opening ,case of lhis cbaple r,
i · an
. mpl of on u h , rgan.i i • nil er · noU1 r ampl of
mp,an
that operat in lhe con u.mer Q{Jd ind ustry, offering ood, beverages,. de .ning
a ent . and p r nal can.-. produ to i co.n umer . In outh Afri a, w are familiar
with mo t of Unll er' hnu1ds such as Ax Dov , OMO, lora Knorr, lipton, Lux
n
p
1
and Rama. Unile e1' pr ducts are ed by two billion consumers around the Jobe
m any
hi a a grea pportunity to re l ch ng
on an gi n day and lh
with their u ta inable busine model while at the ame time making the best profit
p ibl . Th m d I n ure that workpla right nd op . r uni i a improv d
and women get a fair deal; people's health and wellbeing is a prioricy; all their
gri 1 ral aw ma rial · m fro,m u tain bt
ur ; nd th nvironm n
i safeguarded for futafie generatim1s,. Good practic:,es ace een in the design of
lh ir produ, t , th e] ti n f th ir p U and n uring ound quali
nd
. itb Unilev r's v st operating stale and. globa1 pres nt.ie, it
is a b nchmaik of a corp rat usin its intluen.ce and power r pon ibl . In April
2020,, th company , ontribut d mo th n , mo minion t h Jp p opl, round Lh
go emanc st.JuClllff .
58
Chap · r 2: Th manag m·n pro ·
: A resp nsibl approa, h
w rld who h d b n affi
OVID-1 -. un·1 v r· a li n w
d ig I d t
heJp protect ilie li es and livelihoods of its mu1tip1e stakeholders - induding j .,
con um r . and ommuniti , , l m rs nd su. pli rs nd i WOI'. fi re . u Fri dm n
could. al o not ha e seen. in 1970, that man 1e.mplo ees - , pec.ially the millenni 1
-prefer to work for responsib]e organ· ations and that consumers are willing lo pa
m,ofi for pmdu produ -d respon ibl • . ri dman m de a vaHd argument in 1 70,
but h" argument need · o be adapted to fit a drasticall changing managemen
nvironm n , ( h rmma m n , nvironfll nt will b furth r di · u . d in hapt r 5) .
E onomi turbul,. n - barri r
The economic turbulence barrier i · ba ed on the argument that ·
tivitl
nnot urvi . through tim of
n · u.j tu bu
or , nomi
hardship. South Africa experienced economic hard hip fo . a number of ears with
av ry I,·
n mi r
h · L· (2. 1.8 1 1.2 0.4 nd
r
for20t , 20l
201 s. 2016 and 2017, respe tively). Fore a ts from e
leading economi ts
.2. 7.2
b fa re th OVID-I , outbr,
re fa ro ~th r
which paint d a picrure of further dif 1rult tim
In the midst of the p n ,emic St
and anomic hnpact o
the past 75 ean;. 15 Rating agen M o •
or 020 fror.n .7 p r- -nt o 0. • p r
gion of 1.1
,
re t,
· tions and consumers.'
· at the ersonal, ciaJ
r1 . rt d in i:h · world in
Afri a· gro ,,th. furecast
Th argum nL that i,e ponsibl b ·n
a tivitie. canno urvive ec nom· h rdship
i paniall true. It is true ~ a i "ties that are neither pro. 1~bl nor dir ctly
aligned with an organisafo11 core u in . On the o,t her band, org,a nisation
hav jn r -' ingly m n d l
ndu pro fJ abl re pon ibili throu h tl1 ir or
business trategies and o eratio e en during tim of economic hardship. Agaio,
. AB ·
am J
u l1
· mp ny. Th omp ny · rviv d la ou tr ubJ ,
inte.r ·
5 p r ent, intlation at 16 m l 7 per cen political disorder and
politi al · n
n b ~ m a:rt of lb larg: b
r due in ·h
r]d.
1
2.7.3
, hing
a play on the tenn
Green as
hitew ing" which mea.n usin,g misleading
infi nn· i n o gl
ov r b d havio I I th ant of re pon "ble manag m t,
gr enwa hiog refers. to the reanon o c,1 m· leading impres. ion of an orgarusation's
su taim1ble respon ibt and etltic_ ri ntation anid perform n e. The dang r of
gr e:nwashiog .is lo ing the trust i:Uld onf1dem:e o an organisation's t.ak holders.
Once it i lo ,t, it i · e.ry di.ffic 1t o r gain,
as the ca e . ith the UP oil company.
h d t O lO AprH 2010 mark · on o h worst n ·ronm ntal di a t rs i.n
American history\ hen the BP oi1 compan ' Marondo ell b]ew out in mile-deep
wa r in U1 Gulf · f M i o. u ing U1 0 pwa r Horizon drill ri to, pl d ,
killing 11 orkers and injuring 17 other . Over t:he course of the nex 87 days,
a lt mp
cap th gu bing Ma nd w II fail d and w n h fl
flnall t pp d
Prindpl
o, G n ral Manag m n
I · July 2010. • n ima d 1n milU n all n ofoil h d l a din Lh highly
productive and biodiverse Gu.l of Mexico. Toe cata trop.he led to many injuries
and th lo
f or:
' liv • harm to th h a1th of m n Gulf Coa l re idenl ~,
e ologica1 damage and oegati e e,c onomlc impa . t, The ey economic i:mpa t
of the di a ter a · of June 2015 were financial los . to the ,c ompany lo e to, th
t. hing industry in th
Gulf of
xi
o lo s
in lerm o LOurlsm to lh
. ulf oas
economy, lo es m the eafood industry and lo se to in tors of the company.rn
Th I in ru of h , tak: hold r of th
ropany i n
uantifiabl . In it Ol 1
Annual Report, 'g the chairpet on of the ompany, Carl-Henrie S anberg, indicated
tha th
mp n had -1 id ·t f und tion : 'Our ~
v
n ure our
company is able to deti e.r sustainable shareholder a.lue in the months and ,ear
11 I , thi i d p nd n • n BP h ving lb
, lh
d li in
ah ad. .
which it works - toda and o e.r U:ie tong term.' ln ord
o rea h this obje,ctive,
th b ard fth om an
Hh:re prioriti for BP: n , 1 o en.ban
.nd .mb d
arty, to ttgai.n the trust of au sta clmlde:rs an value through a d ar
trategic p1an.
1
2.7.4
Respons,ible management is a,pp ·c:able to select few
noth r arguw nt . gainst responsib e m na emenl i that it app1li · only m big
corporates in deveJoped countries. let us fi
ha e a look at the ar umert that
r" pon ibl manag m n i appJi · bl u!y o big , rpor
. mall and u diumsized enterpri e . (SMEs) play a major mle in most economies and account for the
maj rity of bu in · w rl
d . Th
af\ imp rt nl ontribu , to job r lion
and global economic d
opmrnt. According to the Wo11Jd Bank. SMEs represent
a.b ut 9
r n ,f ,i
and m
h n Op r n f rn
m ,t rid id .
Fo.rmal SMEs contribu e up m 40 per cent of national mcome (gro . domestic
pr du t) i:n m
g ·
mi • and th
numb rs a 1 nmcantly lti ,h r b n
20
informal MEs a.re in hided. .In outh Afric , i.h
ational .Devetopm nt Phm
envisrnn
at b 2030, SME will ontrtbute o to BO p r :ent to the ro.
d m tic produ of h ountry. .Jf ME a · -ft out, · ig part · f the re pon ibl
bu i ·
ag nda wm no ucceed.
~
Tl e ar u meiu iliat r • ponsibk niana j'em •n · pp1ies onl lo busine s in developed
countri · also needs clarification. Th bu.sines environme.n of organi atio,n in
d ·v lupin: countries differs from U
bu ine · en ironmeut of organisations in
developed mmtri
(ln chapter 5. the mana emen envir nme:nt will be explained in
dill 1'1 n, , th~ ppma h o pon ibl manag m n dim :rs in
developing and developed. counaie . Our viewpoint is that responsible management
ppli
busi
• d 1 , ·ng and d vel pecl un ri • in
1 pin
untri ,
responsible manag~ent will be haped by focal· ue such as high unemp,loyment,
reU ,i
mmitm
and ommunity · a]u R p r I m
in
n· atio,n
from developing ,countries such a South Africa will experience dif erent challenges
from their, ant tpart:s ind v 1 p d untri . F r
mpl , ou:th Afri an re ·p .nsib]
mana crs need to comply with int rn.acionaJ ainda.rd and national prioriti (sud1
LU). Du to th
I
60
1
,
•
Chap r 2: Th manag m-n ·pro ·
: A resp nsibl approa, h
h.l · t ddng infra tru ture and
resources (such as the electricity crisi with E kom) and inconsistent suppon of
bro d-
mi
re. ponsible bu in
pm
m ow rmen ],,
v ithin th counuy' . busin
culture.
2.7.5 lmpl ementati n barri rs
An organi al:ion and i · mana em.en may hav the b t intention of b coming
.P n ible u ine , but m · lack rn abiH to, implem n plan t , achi ve
1
Us !l'eSponsibility oal . Therie may be varmus Ii a:son. for iii . or example, the
various organi ational function .• (such a marketing, finance h
Ji ou.rn
and
pr urem n )1 may hav difficulty in t n laling lh o
II r, pOn ible tral gic
goals into responsible functional go.al . The organisation may experience difficulty
in impl m n in ti
fun i, nai al in tJ, ir p v
artm nl . Th l"i ma.y
be oompetin,g strace_o"ic prioriti at senior management le d. The organisa ·on may
find i iff1cuh t . gage ilh
mal l
hol,
build lron rel i nship
witn them. There might be a la of ma.oagerial kill at all level nf management
lo ucc, fully impi
nt
. n ibl man m nt pra ti
in lh rg ni alion.
Communication at .s1U le els of m
gemen may be ine e tive, bkh an hind r
th impl m tation of resp
i le mana ement pra ti e . la tl
ployee
r- i tan
an b · a factor hin erin
on ible management prac i
THE BIG P,ICTURE
I,. thi hapt r, y u w
proces . Toe chapter t
with a detailed dis
lh t rm ·m na m r aft r h!, h ·
·
i.·
ed m the traditional . iew o
]e man gem nt were id ntified
n ft various c:ri.ticism of and
SU
ARY OF LEARNI G OUTCO
LOI:
D ftn - th
a
th m
ag m n
• .e traditional view of
re
, ibl man g m nt
The re punsib]e parti for
chapter was con luded with a
tor pon ible managem nl.
S
errm 'mana m
of rking with and thr u b thers o achl · e busine
Managem nt i th pro
obj 1iv - in a hangin envimnroenL. Thi defu1irti.on of n1ana ement
. mfa.lly
ha ix componen , namely (1) management i a proce · ; (2) management require
working wiEh and hmugh oth rs; l ) man g m nl aim to
hi
bu in objecti es; 1(4) management re,quires a balance between effectiveness and efficiency:
1( - ) m n - 11 - nt h u]d ma , th m
r limit d 1
re ourc ; and ,(
management needs to cope with a changing enviroomenL
L02:
plain lh variou _ 1
ls o,f manag m. nt
ln enerat. retati el large organi ati ns h ,
thre ]eve.I of mana e
manag r:
nagers.
middl mana
r: an.d lower-1 •v I m.
op-lev I
Prindpl
of 6 n ral Manag m n
mana
in ilh
m n
Wilson identified three · kill c:ate:gorie - technical, teambmlding and dri e - where
h t
ry bran h, im
ri u p if: man a rial kHI ·.
L04:
E plain the various managerial role
A~rording to Mintzbe.rg, manager- play en d.i eren but highly interrelated
ml, that can be · oup d u.nd r tru oived ppin primary eadin. name! th
i..nk:rper onal, information and de ision-making ml
ppr
ch ·o man a , ment
Re pons ible management is built on the principl
tainabil"
and • hi . In lhi , · fmn n, su ain bilit re
m th
nag ri I
acti ities houM lead to a ound and po itive
·
- rntects, creates
and
·
· , nvir nm n a] and ,on
R
ty
r,e ers to the aim that management adivitie m
p nu a ·
e: -,
~ehold r valu in tead ,o f th nau 1w
·
· i ·
han~holder :alue.
Ethi . refers lo tb aim tha manag m nl d · ·
mu -t b morally ,d irabl in
both proce and outcome. Mana ment
ce must embrace ethi al de · ion
ma ing at1d crea m raJ i U u· .
LOG:
Id ntify and exp1a"n th ro
Ia er in
pmribl mana ment
Thewodd needs the action of the corporate ,ector, · ·
to ftnd o]
t,o, t
fth w rid and pra
L07:
cie · ·
a
ovemmen:t
na
m nt.
ff ,cus the arrier to and. criticisms of t1espou ihle m3!.Dage.ment
The most prominent harriers to nd c:ritici ms or ttsp~:n7i le manag m nt ar th
profit critic· m, economic turbulence and the fa that: · ome regard re ponsible
man g I n a· .ppli -abl ,, nl
eJ c w.
EVIEW QUESTIONS
I.
plain th tra · 'tional vi
of ·
t rm ·manag m nt:
2.
Differentiate between the enn 'd'fecti eness' and •efficiency'.
4.
pl in th
riou I
f manag m nt
Explain the arious skill manager , need.
Diffi ._ n ial b w n th v ri, u rol th m nag
6.
7.
62
n d lo pJ .
Explain the integration of the pillars of responsible management in the
man gerl ] fun i , •
Differentiate between the meaning of the term 'effecriven ' from the poin
f vi
of lradi, i na m m.1 m nt n wilhin
p n ibl approa ~ ·
management.
Chap r 2: Th manag m-n pro
a.
: Ar p nsibl . pproa h
plain
gration of th pil
f
' bl, m .n
the management of organisational resomrces.
in th · ariou b rri · and ri i, ism
responsibJ
n in t rms f
LEAIRNING ACTIVITIES
The learning activitie in chap·~er 1 required you to a • e s Shell' web it in
d r mak a judg m n , o wh ·h r y u r gard th c mp n a· a r pon ibl
organisation. Access the following artide a ailab
mine al · t1p ://www.foei.org/
n
/ lh - igh - and ,1 - pr •v - h II ,- long i tor - r- ont mpt- _r- p opt and-planet m answer the fo llowing que tio :
I.
mv, n th
2.
Id n i
.. plain h
recognise in the Sheil com an .
infom1a ion in lhi a j l would . u r ard hell · ·
orga.n·, ation? Sub tan ·ate our an w .
r · pon i.bl u an
· ·pon ibl
men tha
REFERENCES
1
Luiz, J; · trin ,fi llo , D
(1): 83-103.
2
ht p:/1 ww. ab.
fLh a -•
• 20l9. Global
ITO . gy Jmmwl Vo,l um
7
.za/the- ab-sto /a-bet er-world ,[ cce se:d 9 January 2020]
iPhUl p t. 2020. · i nam in g . v lu · h i
ntrib t t - -VID-l - 1.ght.
Available online: https :IJwww.farmerswecl<ly.eo.za/agri-news/ ou:th-africa/
-na
-in- gri- lu - b in-to- o: id- 9-ftght/ [A.ccesse1d 25
April 2020]
4
1
p ·://di ti n ry. · mbridg .
(Arce ed 18
n ry/ n ILh/ rg ni ati n 1- ·hang
pril 2018]
g . .z. / • Ja ry/mininlllm- ~v;:i,np.,_
5
ht p ;flm
6
Wilson. CL. 2003. Ho , and wJry effective managr balance thrir kills: Tedmka l,
l amb.uiltJing, dri!J . oJumbia Md.: R c al , h . uJtim ia Publi bin .
7
Kre~tner, R. 2009. Priudple . of nu:magem Hf. l l th edition. Arizon : S u:th-W
8
Mintzberg, H. 1973. TIie natuJ;e of managerial rvork. Harper ft Row.: New York.
W
ommuni
in a , a urnna r.
4
,.,.,,..,c"'d
em.
v Hahl cmrn : htcp :/lga wayto] arning.
osu. edu/leader hip- development/building - relationships/ commu.nicaUng-as-
rl A
d 7 an
1
ry 2020]
IO Chang. A. 2018. The Fac:eboo and Cambridge Anal tica Scandal. xplained
ih
impl di· ram. A ilabl o,nUn : h , p :l/ w.vo . om/p lky-andpo itics/ 2018/3/23{ 171 519 i '6/ fac:ebook-cambridge-ana1ytica-trump-dia ram
(
· ed 1O J nuary 2 20]
Prin ipl
o,
6 n ral Manag m n
11 V: n d r M r\ • • 2020. R · n ibl
h:istiiute. March 202:0 update.
ch Gradua
L
h O a onawa , R. 01 . Prin ipl of re po, ible mcma{J 111 nf: glvbal
sustafrwbilit)I re ponsibHity. and ethic . Stamford: Cengage Leaming: 7-8.
l
cl from th
v·d- l' pand mi, . · vailabl
online: bttps://www.unil~ er.com/news/pr -rdeases/202.0/b lping-to-protectliv -and-Jiv lihoods-from-rh - vid- l -pa:nd mi .h ml [ l' · - d 29 prU 20201
Hclpin 1 o p,rot t li
and Liv Jib
'14 South Africa Economic Outlook.. A ail able onlin :. hrtp :If ww.focu ~o omi . om/ ountri / outh - afri a [ c• ,
d 8 J· nm1ry 2020]
th · frtca. :vailabl
15 Impa -of CUVID- 19
nomic t
on ine: http:// ww tatssa.gov.za/?p
16 M od '
acHvi
o l w · , on mi
wth fo
· 20. Fi
acuvi
mood
-. 29 Apnl 2020]
. v
t - rowth-forec
0200 . 07-2 [
17 Adam
. 2015. · ummary of
erono.m.ic impacts
Lhe P Dee
or
a e o
or
1
·
. :p : ww
e pe ted-to- ·
·
/ ews/
- con.omic-
p .
a] nd
forma ion •n m ·ng lh
a·~er Horizon Oil Sp,ill Disa ter. NlmC Issue
Paper. 2015, p,.1.
18 Adam
A. 2015. Summa
of iinformation concemin
th BP D \ a , r Moriz n Oil
and
, o · omi im ·t '
Paper. 2015, p.2.
I
BP Annu, IR p
, and orm 2 -F 20ll : l - 2 .
20 Small and medium enterpri es (SME ) ftn
r]d
.,k. rg/, n/t pi / m rman
nee.
vailable o,nUne: https:/lwww.
20]
[,,, ...... '............ d · · anuary
CHAPTER 3
SUS TAINAB I LI TY, RESPONS I BILITY AiND
ETH I CS
Aurhor: Tersia B'otha
OPENING CASE
v · nda Building So ·i · ty ,[VBS) Mutua Bank 1
VBS Mutual Bank started off as a s.mallr wholly black-owned pecialist ,corporate
fman
and tail b · nk ·ta
h d in. 1 · 82. l 201 s. VE wa pl
d und r
uratorship by ibe outh Africa.o R. erve Bank (SARB) a.nd Advocate erry Mo a u
w., a • inted
urat r f the rgani ati n. fCu:rato hip, i a echarusm in th
uth Afiican Ba.nks A 1 Uiat allow . the government to l
o er admini trative
control of a failing fmancial institution t • try to revers
fonu.n~ and bring it
r
1
ba 1k t
fun ·Uo,ning busin
.)
Ad ocate M tau·
pp intmem had a three·- f
urp
. First to d term.in
wheth r any
VB ' bu in
wa conducted with th int nlfon of de.fr::mding
depo itors or other creditors of the bank.
for a
other fraudulent purpo e in
oth r word wh th r th bank ondu · ed ny bu ·in
with th int ntion to d priv
the.Lr customer of omething by fraud. S con.cl, · hether VBS' busin
,c onduct
inv l ~d qu tion.abl and/ r
l b in
p ti · or m it ri I n n-di ' l ure,
with 0£ without the intent to d · aud depo itors or other creditors. Third. whether
th r h d
n an i gul r ondu by VB
har h Id , dire , ·
,cu iv
managemen:t, staff, siakeh tder andJor related partie . Motau fOU'Bd the answer to
all of lb
qu tions to
or
Ad oc:ate Motau• in
tiga ion re ealed that the bu in s of VBS was indeed
ndu
l nt m nn r whi hr, uJt cl in th . d · p d imp v ri hm n
of VBS' depo itors or the fma.ncial benefit or 53 people, ho toUe.ctivcly r&e.ived
Rl.9 billi1
m VB . VB , wenr from b ing a ha th· l mainl t k d. p H· from
retail d, osito lo one. under new management, that implemented a turnamu.nd
trategy 1h t r, lied on ery lar e hon-term d posi from muniidpaUti in 2015,.
n w I ad r: hip a1 o , av way to f. · mo
mbif ou , and po , ·ntiaU lucrativ ,
mark.et n lend to. VBS ente. ~d i
numerou high-value fuel -fmancing and
ontra l- :man ing d ·l. of which , ·aiy w re ·o ,n 't d o th n w m na ern nt
team. Very large loans and o erdraft facilili had also been made to dienIS o
VB with u h
qu · it app
l b in . in pla . VB · r t
r r hom
n
then turned a blind eye wh · no pa ments were made on tho e. Large overdraft
iHti · l ·
main d unpaid. 1th ugh fman iaJ at m n
re dit ,d. th
were materially and fr.a udulently mis- ta.ted - the Registrar in 2017 bd.iev~d VBS
w· ftnan, ially und, ut it ~a.~ Ffi tiv · in l nt b March , f thaL
r. with
by about R mo million. enlor mana.g em 111 responsible
liahiliLie ex eeding as
for the turnaround trategy paid them elv millions of ran ·: in bonu e . The
ban am und r
rato hip in M JCh 2018 a it C c d a liquidil · eris' after
Prindpl
G n ral Manag m n
o,
munjdpali i
w· hdr w th ir d p
nd th b n w
n t in
p
itio ,
repa
money it o ed to municipalities.
[n hi r port. Adv . a
au
t d that 'Lh
rp tra
mad
wa with almost R2-billion. ... Thi is de
tragic for the people who placed their
tru
nd th ir
. Th
p,] are n w r ad affi
d b au
their municipaUtie . illegally in ested mo.ney in VBS~ ... ome municipalities had to
adjust th ir budg ts be a
lb money th
d o i ed a u a ila I Rer th
bank wenl inLO ruratoc hlp. Th. d U ery of ervi es such a el tric.ity nd ater
were hampered.' Advocat Motau further re ealed tha th ~ ni ns of VBS -.. er
Lncons· tent with it stat d vruu- or ·maintaining highe t
dard or gov rnance,
local em owe.rme.nt and ethi ~ There a bardl a person in the emptoyment of
th bank in a ny p i ion of authori y who w _ not ·n · ou · -y or olh r. ompli H.
Thi included politician , traditional king , municipal [ 1cia:Js official from ratewn
n 1 t · u h th P ng r R il · m: f uth Am -, h
Development Corporation and .a partner i:n a well
in
th · unu-y. to m nti. n n! , fi w.
CHAPTER OBIENTATiiON
M· nag rs are in re ingl
n
with the n ed fo
p
mana
nt,
with i ues of ustain bifrly, re ponsibility and et
g re .
ly
re,quire an integrative proa t sustaina iJi ·~ fi ponsi ·u
nd ethl . In
Lhi hap er. w
lure eacli of th
thri piUars of r
_
manag m ._. t.
First, an exptanatii n o
stainabilit ·• development and
t.
de efopment
i · provid d.
ond~
addr, · Umal. ban
m
,ant t
u tainabl
de- ,elopment Third, responsibility in the ,c ontext f responsible management i
plan d. Th h p r n Jud
resp nsibk m ageme:nr.
with a di u
1
n of • thi
in h
n
LEARNING OUTCOMES
After sltud
in,g this chap er, you h uld be able to:
LOl : , xplain sus inabili ,y by ·tt ren iating be we n tie t rms 'sustafnab· ly'i
'de elopment' and · ustainable development'
L02: Discuss dimat c-han iri h · on . t of sustainabl d rvelopment
LOJ: Explai n re ponsibility in the con ext o res onsible management
LO :
plain - foes in th con
o responsi le mana em t
O'
Chap r J; Su ainability. re pon ibility nd ·
1
s
KEY TERMS
Bru d Ian Report
bus'ness ethics
clima chan
corporate sociaj respons1bility
d lopm t
ethical bus·ness decisions
r sponsibility
responslnle managemen process
shr, dvau
sta eholder engagement
s ~ehold r valu
sta eholde.rs
i al ul 1.u
SUS
.sustainable development
Sustainable D lopm nt l3oals
U i ed Na ions G obal c-, ac
ethics
man ging business t~ics
ope system
organisational culture
LOl : Exp ain sus ainabili
'd v lopm
inability
by diHerenfating between the te
ms 'su.stainabi ity',
t' am:t 'su tai able d · lopm nt'
3.1
SUSTAINABIUlY
ln chapt r 1, you were introd
a p,r a b to m
whi h vi w th organi ation · an. p p
which are imp,1 mailer y em w· in
m n lhat h
iro
hin wh.i
also affects the en . iro.
l subsy
~t,
s:
pri ing variou
.,
larger ·
. Being n
·em'
h i
i
cts th
· Hon and
tern of the organi ·on ( or example
it
m ', pro
u,
nd t nu, )1
rk g th
. hi
it
goals and objecti e . The organi ation is a1 o dep n .en on the environment
f. r uppl ·ng
o,u·r ~ r inputs ( u h a human · -; · re ·ph i al :r . ur
cap,i:t.31 nd in rmation) I.hat are transformed \ -unef the organisation. offering
the outpu (pr du , and · rvice J to th n ·r, nm nt. It is important to n that
o gaini ati
,t riv to re.maiD in balance an tba.t. organisation ar op n sy te:ms
- the
re affected b the environmen nd the environment ·, al o affected b
or
· tion . urth rmore, aJI U1
am
urces for input ) that organi ation
ak.e
from tbe environment are limited, while the need ,o f the consumer. in te.rm of the
utpu o, red b r,ran· ati 1 , r unlimi~ '. h' brin · u 1 , th ;;1ppli ation o
the general y terns theory to sustainability. ln t he discu ion that follow ., we will
1 t d fm - lh
erm ' ustainabili y' l1 w d y a di u · i n o' 'd v I pm n · nd
·sustainable developmen :
7
Prindpl
of G n ral Manag rn n
What i lll tainabUity?
l.n i most im.pl; tic .. o.rm sustainahilit n1ean
to m in ain, to, ~ p b ing, o pre rv at1d o
ppon with structure: to hold on no. o be
u taina ble mea , o ustain res ur
and the
u
Lhe.re-o , Lo a old meltdown and fa iJrnc. ~
s · tamability i an all-indu i e design. ith
pr · en and fu ure on id rati ru - looking
3.1 l
1
•
llt•n•
Su tain a b lity me ns to
maintain, t k,eep bei ng, to
pr · s
n •o support, w1 h
stru
s to ho d on to.
the long term, and the big picture. Sustainability nnects the three dimensions of
Lh nvir nm nt (h r •
r fi r to th ph i ] n ironm nt), th
n · m and
ocialj ustice. For ,examp,.le, society rel..ie on the C'onomy foremployment, products,
rvi
· nd n w inv □ lions and ii r li , n th n
nm n Fi r th · a'ir
bre th ,
the foo d we eat and the water we drink. The economy relie . on the environment
for natura, re ,o r
and it reli
n
it't
r intcl lectua] cap·t L Th ph · ical
environmenl doe not n ed soci y nor the eico nomy for it txi tence. Ho e er. in
o rder fo r an ec onomy to flo uri b v the long te.rm, and foi humanit to continue
its · t n · • h enviromp n rclie · un o i ty and lh ·oooro t r p
nd
protect ii. Ibis cioonection fo dS new pattern of production n con umplion,
pa m tha ar omp,
witl th b a:ring .pa. ity of h f'r•l;~,,;:t m in ord r
to reduce humani,- '· fo tprinl n the phy. kaJ enviro nme0tt..
bl n
w
1h
dim n ~i n ofth ph
and ocialjustice~
Ev ry o "'.....,...."
the use
l b sustainabl. - 1
1
tai .. i r ur · and
, · . ··, ·t wants o a . oid meltdown and failure. The opening case of thi
h
b
h r, VB Mul · I B nk w pla d un , r ura ·orship
b ause Lhe bank found itself in a situation of failure and me]tdown. a ituation of
imb, an
nom and
i· l ju ti .
a iluation
As we ha· ,e indicated in chapter 2, the les ans learnt from the COVID- · 9 pandemic
i · th
rg n· ati n n d oh
usin
iii n
n.sur h ir ust.ain bility
w.he.re bu iness resilience is he ab:iiliity of an organi a tion to quickly adapt to
di ruption whi1 maint ining ntinuou
people. a
and overall brand equity.
3.1.2 What is d elop,nent?
D el pmen m ans o
w, m
, pro
improve, advance and to change. J To an cologirnl
con mis how
,owth · different fr m
p
ti:on and
ri gu rdin
Deve opment means to grow,
matur , pmgr s, im p,r v ,.
advance and to ,change.
,r owth i quantilativ;
1(meaning an increase in size or an increa e in
produ tion 1lr t ran b mea ured in u .n ,' ty ,
while development i qualitative (meaning an improvement in the quality of goods and
rvi , wilh r · ith. u growth)1. Within th onl t f rusminabl d v pm nt. i •·
dev,· ]opmrn
wh re
hap · r J ; SlJ ta inalb ility. re pon ibility nd · hi s
im rt nt
ru
ar
tha th quanta :iv and qu ntitativ m
a
importance. For example., we hould not only consider the quantity of llie i:esources
pro ·d d ~n UI oatura] nvi.ronm nt. w houJd I co id r th quali of th
resources. To tate this practically - it is ood to ha ea healthy pro 11., but bould w·
dump waste in ri ers and. ollu e: the air that we breathe?
3.1.3, What is sustainab ·. d · v · Iopment?
_,u tainable devJopmen a a. , on ept om .iaUy m rged mn th 1980 a people
considered denti.fic pe pecti e on the interdependence of ,oc·ery and i natural
nvironm n ,. [n 198 , th · Unit ·d Nation conv n di th World omm ' ion on
En ·mnment and Devclopmen which was instructed to formuJ t a globa l a ~da
r han . Or i rl n, Brun · )and,
dam Prim
jni t · r N · ay• . h i.r d t
com.mi sion. The outcome of the com.mi ion wa released in 1987 with a report titled
•our mmon Futu . ', al p polar] kn n a th ,ru d
R p rL Thi
a
landmark report, which advanced th understanding of gl bal interdependence as
w II a th re] ti nship b tw, n, on mi,c and lh n room nl d:iat
initiall
introduced by th World Co n ervation trmegy.
Until toda • the Brundtland defmition ' till the
mo 1 widd
pt d d finWon of su tal11 l
Sustainable d vel!o,pmen is
devclopment, which we will a]so adopt in
d velopmen · that me , the
thi book. hi report d · f1 1
u ain bl
n d of th p
n w hou t
developmenl a ·development that m ets the
ieompmmising he ability of
n els f th pr· ·ent wi b ut · 1 pro i ing l
futur g n r
ns o m·
ability of future generations to :r:neet their o n
heir o n ne ds.
n ds:
The Brundthmd Report.
of imp
an i u
in
rosing on the natmal enwonmcmt, identified a number
r
o ·u aimr J · d l
n
d lop d and
developi
ountrie . Let us fust darify these two oncepts. Countries around the
w rtd h v
ad b , n la . ifl d int h · two t g ,ri , .
d n th ir
onomu:
de clopment:, wbe11e
no.mic and ocial development are
b d
num r f ri ria , h as
apita incom • Hfi . p t n t 1 · l
leve] of indu ria] produt ·on, Ii ing tandards, technical aid, and so
on. F c de clo ed ounmes heir d
pment paths are unsustainabl as natural
r 1uc s are b in , us d . ast r , h ~ Lh y an b repi ni bed. ln addition, th · path
to their de ,elopment can b attributed o the u: e of cheap and often exploi ed
labour from d velopin n it.ion . Although l rm d •_:ev lop d._ th 11 ality i Lh: t
developed countries continue m imprnve and therefore continue to de ·. elop. ost
d v 1 p d n ti n h v gr a
nomi and p ·Jitic J p
r n ', a
r uJt, ar
often seen a b nchmarks and examples for dev,eloping nations. For this reason,
r v lop n lion n d L b m r, mi.ndFul r b ·r d v 1 pm nl d ·i i.on , t
may influence the decisions o developing nations, and llhis could consequently
d term.in how
progres
into future g n, ratio .
Prindpl
of G n ral Manag m n
D cl,opin
untrl , u h
uth fri ·a ,nd m
Afri n un ri n d th
environment. to imp.ro e their Li elihoods. To relie e the deepening po erty in the
eveloping odd,
tion i a eel d by poli ician and p Li -maki
I
nsur
environmental re our es are · afeguarded and managed re p ctfuJ l Jeadin to
su tainab]e human progress and u ival.
The Bmndtla.nd defmition of usrnjnable development covers two, basic di.men ions,
whi h an al b r fi rred o a pilla : Lh oda] dim n i n ,[human need }· nd
Lh en ironmental or ph: kal dimension (tlle imperative ro pl'! e:rve Ute ability to
provide ,e -:y tern eNic J. H ev r. ch · conomi dim nsion i mi ing fr m th
d mition. As. a , ntral i ue in tb · port, -conomk growth i vi wed n a a oal
or its own sake, but rather a a mean for achieving the ke- aim of, ati fying need
whil r ognisin 1h
ologi al limi
·tabli h d and hap d l.
All the e issue d' cu ed abo e ca:n be chara teri ed · t thre elem nt o
us ainabJe ,d velopme.nt -1 okn wn a lhethr ep,iU o ustainable d
lopment,
n m . The ,e three pHl are
namely o ieiy, the ph ica] environmen and th
di pi l d in figu
. I.
To develop sus ainab]y, vith the th ree , lements being balanced and interconnected,
a m uor tran forma ion i n d ·d. ,p ia.Hy in thr ~ ,:nain area , n m I U)
population grnwth; 1(2) how human consume materials and re ource ; and (3)1the
r I
f , hn I gy in us ina J d
pm nt. . h
ar, · d1 ·u ·
d t ii
belo :s
•
7
p, pulati n g
th. W kn
tha
n mt, f p pulati n rowth and/
or gmwth rates in ,consumption of resources ann.ot be sustained. We atso
Chap · r J ; SlJ aim1lbility, re pon ibilit:y nd ·
n w I.hat th · larg r th p pulati n
i , and/ r lh larg r its r: ·
con u.mption o re ources. the more difficult it is to transform the odety
into a co diti n of u · ainabili . Therefore, p pula fon gro th and th
growth rates in consumption
•
How humans
a.
or resou.oces need to be tran formed.
n um ma erial
,n d r · our
. Th rurre
t
rat of uman
consumption or mate.rials and resou.rc · cannot be s tained. ln order to
tran form thi ituation, environmental limits need to b defined in no
un rtain terms. m1h rmore, attenlfon n · d i b gi n to a p c uch as
th more effective and t:ffident use of ma erials and resour es: the reduction
of w
; th prev n ion of p Jlu.tion; du aling
j t in t rm o ust inab]
us,e of re ourc , and materials; and changing the perneptio attitude and
b ha iou , f
tow rd more lhi al and r,
n i l us of resource .
•
The riole of edmology in sus ainable development .As ne ~chnology is
d v I, p . and t hn l ,gy tr n r t k pla w n
lo b mind[, 1 . f th
effec
of the technology on su tamable development. Toe fo us bou]d be on
r ating a in-win itu ·i ·n :J r Lh nvir t n1, ·i and h ,on m .
u tainable de elopment does not mean a return to s me orl of preindu tri . li tyl . It i ab t achi vin a
er quality of life, n t worse.
i lo us t clmology
en ure S,USlainable d elopmenl.
Th on pt • u tainabl d v lopm n ' mi h tra
ba
f: r a · · o y
The recent history of the intern.a ·ooal economic ystem (from 1945:, post- orld
War [I} re al lh:al the focus
n recon tru tin
hat ha be n dam , d durtn
World War Il. The United ati ns w~
abr h d in 1945 with an ini al focus on
intern tional ~ ciaJ and e, nomi matters. The United ations and ariou mov men '
bav om, a lon way in t ffll:i of ·U!itai11abl · d" •lopment i
th o. In 20.iJ ,
governments, in tit:ution , usinesses and citizens came together· o embark on a path
t improve th H
f I pl,
rywh re, wh r d, · ·
m d •wm d · rmin th
global course of a ·on to end poverty, pmmote pro pe:nry and wellbeing for all,
pr 1 th nvir nm ·.an , add.re · ·lima h ng,
lain bl d ~ ,pm n·
agenda and a ne global agreement on di.mate change \ ere adopted. The action
resuJt di l , n
u inabl D v 1 pm ~nt
l I DG ]. Th re i 17 :OG tba
com rise 16 d ailed targets, h.ic:11 indude r.eali ing the human rights o aU peopl
an • p rti ularly achl ving end e, unlit whi ·b includ · the emp werme:nt of aL1
wou1 n a1 di irl ).1 n1e 17 DG an
de.scription of ach on are presented in
1
Table
L8
Pri ndpl
o; Gn ral Man g m n
Goal
1
No poverty
nd hung -,,
food . urity and
improved nutri tion an d promotes stainable
a gricu hu re
2
3
Description
Good health an.d wellbeilllg
hi
Ensure healthy lives and ~ro ote well-being
for all at all a es
4
Qua ity educat·on
s
G· nd · r quality
Ensure. inclusive and eq u!tabl q a ity
ducation and p mo Iii 0111
opportuni ics or II
6
7
Affordable and clean einergy
·
s
growth
Promote 1nclusive and sustain abl,e economic
gro
II
l11dustry innovation a
infr tru u
su
Decien work and eco omic:
9
· to affordable, refi able,
and modern n~rgy For all
Bu-fd resilient infrast:ru ctiuJi
t in .bl · indu trt Ii
iinrmvation
10
R duoed in qu liti
R dl!lc in quJit)r
cmm tries
/
11
Su , ain bl citi sand
Ma
iO nt nd
omm unities
12
1]
t4
Responsibl consumpt ion
and production
Climate action
ife h low water
nsumptlon and
production patte rR5
Take. urg, nt action t,o comb . clima c change
and its impacts
CoMl!rve and sustainably use the. o eans.seas
and ma rine esourc
Life on land
SliStain ably manage forests, combat
d
·
·
·
and re er5 land
d
odiv ~rsity loss
Peac , ju t cc nd strong
inst:itutions
so i tic-5
R vi alis
susta na
7
al partn rship for
rne nt
hap · r J ; SlJ ainability, re pon ibirty · nd · hi s
Tb n
·,. lud
ur d. cu i
n u tamab'lity y
change in the context of u tainable development
L02: Dtscuss dimate cha ge in
3.2
in
n rma
e co11text of sustainable developmen
CILIMATE CHANGE IN THE CONTEXT OF SUSTAINAB · IDEVELOPMDH
Organisations are dependent on the environment to b usta.inable. Change in the
environment affec organ· ation , o, rnmen · • na ·on , nd in i · uals. Oimate
' ange i only one of the cbang that o ur in the environm d, affi ting l:h way w ·
live. However, the effects of climat ban e are o igni: i · · t, w need m ingle out
limat hang in twn_ of ustainabJe d v opm nL
t • · hnal ~ hang) ?
Lim t change re.fi . to, cban in th ~ ,v ra ,
Ion, - me.rm w ather conditions or weather
pat1er:ns, hen the change la ts for an
ended
p ri d of tim , typi aJly d, ad or
nl n
CHmate change a o refers o a cha nge in global
r , . i · md · lima pat m in p :r ti ul ·
change apparent fmm the mid-to-I e 20th
ntury onw rd · and
ribut l rg l t h
Climate c:hang,e refers to a
hang in h 1v rag - lo 91eather cond ' ion or
r pa t rn ,
n th ·
w
change lasts far a extended
p riod of
, typ ic lly
increased le els of atmo :heric ·arbon dioxide
decades me
longer.
pr du d b th us o ~ · ·· el . Flu uation
in weather paherns aver ho rter periods of time, for exampl period horter than a
few d cad • uch El ifto, do no repre ent dimat c
ge.
The term 'di.mat change' is used to refer speci.fi. all
human i:livity,
pp
· l .ban
thu ma
changes in ,climate caused by
ull
p rt f artb' nalumJ
proces es. Hence, dima e change has become SyrJ. nymous with lhe Lenn a.ntliropogenic
th increase in urf; . tem eraturet hile
global wannii1g. Glo aJ arming ~efers
. Urn te cl an -~ includ s Johal amlin and all other ffi·t:ts resulting from increasing
t1
greenh0iJSe ga le els. The firs rea1 , :arch in o human-made climate change wa
a n , orl
w dish ien i
an Arrb iu.s (1 8.59- 1 27) in 18 - o plain. Lh
onset of the lee Age 2.5 million ears ago. Hi vork as the first to connect le els of
atm spheri ga ·
ith th · ur a t mperatu of th pl n L
1
Scientists agree on a number of facts pertainin ·, o clima cban e. The follo . mg
Ii t pmvid an id of th
poin (and i
nainJy not an x.h u iv l", t or a }:'1
•
Th.ere is Qonsensu on clima change. The cientific consen u in terms uf
diwa.t
an . i that E rth' Ihnat · i ch n ing nd th
hang · a in farg
pmt caused b human activities and are largely irreversible. Many independent
· ntifl · organi ation and individual orldwid al a • - that th human
activiti causing climate mange are po inct significant risks to a broad range
f human ml na ural t ms. Th · · also n n
that cUma di ng
is primarily caus d by ex,ces.s greenhouse gas from human activities.. lastl · ,
7
Prim::ipl
o,
6 n ral Manag m n
th
· n en
that natl
cti n
in order to rieduce the futwe risks and ,consequences theTro . To curb climate
chan
untri h
igned a vari ty f agreem n lo try l redu rati . on
emi ions. The Kyoto Prat col. ignoo by 192 cmmtri
ince 1997, aims to bold
the a erage temperature increa e below 2 ·,c b a, ttin ·, carhon tput
•
There is evidence
U1a· pm
· I.hat Lhe arth' temperature i in
I
ng and
causing otb r changes in the natural environment Thi e ·dence'indica e that
(I} th · gtobal • rage urfa , temp rah.11~ bas in eas
v r Lb 20lh century
b about 0.6 °C; (2) rising global temperarure ha e b ·ot · crompanied b other
chang in weath rand dima
or xarnpl · 1ang .n rainfall and mo
in en e rain as we11 as more frequent and severe at aves~ (J) the planet'
a and gt [ · hay a . o p ri need h. g and o an are b min
•
warmo and more acidic, ice a , are mcltin · and · ea k et are rising.
H m n , Liviti · are m inl r on i · l ri r h Hma hang , b
today. Tue Earth go
through naruraJ cydes ofwamting and coolin which i
us · by fa · rs u h · lh ng ·nth. sun and v l ni a · iti . - i ntis ·
observed these cltan 1 es do . l and.. onduded that (he warm.in e have
h- . natural forces
experienced in th p ·t 50 ar nno b ex lained
al ne. In , on rast, the wanning that i · observed i co · · l nt with the warming
prnpertie · of u.r pri ipaJ greenhouse gases tha hum~ are adding to the
a mo h r ~ • arb ;i dioxid m than nitrous oxi r;and Lh · haJ arbon
" and bromine). Th e
( birh i a gmup of ga.ses containing fluorine, chlortne
ga
•
a
n n'r.:ttion lo in rea
o er rm . For example, carbon dioxid h increased from fo il fuel u ed
in n p rtati n. buildin h atin nd
lin · and Lh manufa -urin of
cement Deforestation rieleases carb n dioxide and reduces its uptake by plants.
increa in m than i a uJ r hu.m · . activiti rel at d agri ulture,
natural gas di tribufion an landfills. An in re . e in nitrous oxide is cau ed by
a tiv"ti
ucb a, th us f ertiJ" .er and lhe bum.in of fo i1 foe] . L stl , a11
in . r a in halocarbon ga con e11trations is auslng ozone depl tion, mo 11
as a resuJt of refrigeration agen · and in other indusbiai pro
Too mu h arbon d.ioxjd an bun u . ,rbon dioxide · a n c · ary
ingrediient for plan to p dorm photos nth is and i a ,ctiticaJ element
Utt
ulaL in Lh at.mo ph r. au 'n
of our tmo ph
•
74
i, ; .
How -
r, if L o much arbon di.oxi e is, add d to th
atmosphere. global temperatures ill inoease. leading to climate change rhat
an h nn plan · , ;mimal an hum n .
Oimate change has an impa on sodet , the corporate sector, professions,
ind . tri and mdividu ! . a · oci ty, · hav tru ured our 1v around
historical and curren · climate actions. We ate ac tomed to a nom1al range
o onditi
nd m b ensitiv
lrem tha fall u id fth' rang .
Si:milarl , the oorporate sector is structured in such a wa as to provide
socie with rodu , · and ervic that are n eded in 1h · ondition tha · w
are accustomed. to. Corpm:ates are therdore also m.itiv to extrem · that faU
Chap r J; SlJ ainability, re pon ibil"t:y nd thi
t id .hi rang ~ limat b -n g also has an , ffi
n i, dustri
h th
insurance industry. lnsuranc~ is one of the primary mechanisms used t.o protect
peopl gainst weath -re.lat d di a ers. W a]so refy on insuran o prot
ur
in estments in rea.l estate, agricuhure, transportation and utility infr<istructure b
disttibuting costs aero
o. ·ety.. It· projected iliac clima e ,change will increase
tb frequ n and im.cn _'ty ofextrem weath r events, hich iU in tum inc:J:ffl •
losses ,o f property and cause costly d" ruption to socie . Individuals are affected
ry , Um
chang · in num r o ay . F r
mpl • w h v a great ap,p tit o
meat. the production of which is a major dri;ver of climate change. Reducing globaJ
meat oonsum ti n wm b criti · 1 o k ping 11 · al warming b w 'lb
ngcr
levels. U estod fanning accmm for 15 per cent o,f global ,enllS.$iOns hicl.1 is
equivalent to
· t m' -·oru from IJ th v hlcl in the world.
hifl ; wards
lower meat-eating panems could effect a quarter of the emissio reductions that
we need
m groups in ur ociety will b affected mo b
·mate cb ng
than others. Oimate chang may pedally impact p - p who Ii •e in ~a that
are vuhlerable to ,coastal tormsT drought and sea 1
rise, and people who are
po r. · I ty, OO(ll□ rat
pmfi ionaJ , industri
,d ind viduals a also greatly
affected by changes in legislation pertaining to dim.a Le change. For example, new
eg· t ,ti n qui
orp
L ha p li • · n p
dures in pl· regarding
their manufacturing proces . and mana ement f aste. and to acti cl . aim
du th am u - f g , hou g.1. rel •
in th . tm
h re through
their e eiyda business activities. Sodety. orkers, clients and governments, alsio
crutinis.e rporat t
. ~ tha th
Ii · and proced
are implem nt d.
Oimate change is a key concern in S uth Africa. Oimarte change po
threa o th
untcy'
at •
d · curi h alth nd in
!meats have a severe imp
uth.Africans who need to li e through these climatic
bffts, om ofwh m ma v n
tripp
f th ·rli eliho
'S • resul. - n
ugh
they themselve ha' e made ,a. negligible contribution lo causin the problem. In January
20:w. a planet em . , c , ripped aero ustralia with n oing bu hfire , gJobaJ
a 'tivists Al Gor and Arch.bishop Emeritus Desmond Iuru met in · pe own to d' cuss
the growin lobal movement towards fossil-fuel di ·estment Gore and Tutu warned
in a JOl I tat: rnen tha • orporati ,n gov mm ·n · and institution that conltnu
to in est in fo il fuels despite all the eviden o their effect on accelerating climate
· han
furth ring , 11 'ronm -ntal,
n n · an ocia.l injusti ~ Th N b l la rea ,
noted tha 'fu il fuels dri e northern rn1.i.spherie industrialization and de elopmen'
- bu Llm d v, I ping u tri , p •. Uy in th
uthem h m· ph "11! ·could I
af! ord to mitigate the impacts o climate change and wouJd be-.rr ihe higbe t costs:
L a ording f lh IP
Global Warming of 1.5 •
outh m Am a, ·limat ho
report. L one uch region: i is arming al twice the global rate - that mean: doubk
the 3 ·c urfa e temperature increa e that Earth · exp ded to reach ithin this entury
in a busin - ·-as-usual - nario. In real lerms. climat cha ha alread entrench d
itself in extreme eather acros the region. Drought and cyclone· have left mil1fons of
p op]
v rely fi d ir u " durin th urre11tl an a · n, wi enin tth in quaU y
gap. On the other side of the Indian Ocean, during the end of 2019 and the beginning
7
Prindpl s, o,f G n ral Manag m nt
f 2020, th m m.uy ha hi n rly 50 • in
ho,t r and dri r
ustralia. Th
conditions have fudled busbfires of such crushing ferocity that tile have created I.heir
own thund rs orm .· 1 aving te of eople dead, brutally nuffl
ut half a billi n
animals - and possibly driving hole
· to functio □ al extinction. This co1ogjcal
1
0
catasnuph of unima 11inable 'cale indicaks the undiscriminating co
of economic
d p nd
· on [o ii. fuel : not _ , develop d nation I d by limat _sc ptics ruch a
Australian Prime Minist,e r Scot , onison are immune to the pro hi
of atmo ph.eric
wanning. To in i ·du .1 ~ irutHu ·on , industri · and untri w • main din t ·d
in fossil fuels'. Tutu and Gore recommended 'urgently om.mining ·o, dear and
· tion bl plan to hi th ·r i
m n it ren w bl .. ,..•.,~ fen rgy. Inv tin in
renewable en.ergy stems and research ouLd provide the necessary .impetus to drive
:o n
· n inc
d. mand fi r 1 an energy...
' n· ti n , mmitt·d
operating responsibly in this new decade b· a m rat impcrativ to top participating
in fman in tb destru tion · f human ·vru ,u-e; they aid. 11
Sdence h.as made enormous inroads in under anding clima,e change and its
and i b i nin
bel d cl
r ng ·
n ,·n of curr nt nd
potential impa.cts that will allbc eople. corporates and natio. toda and in the
coming d ad . The under . ndin
f lima , chang i crucial. U
a ,ion
hould form part of an
· isatio ' strategic plannio , im m talion and
co ntrol proce - an i
that e will addres in chap er 7.
In the n.ext section, our o us um to the econd pillar of respo
where we d"
"bility" from t:hi viewpoint.
LQi3;
.3,
plarn r pons,ibility in th
on
t of r
ible management,
on!;i I manag -m n
R .PONSIB llllY
In its mo t implistic form. the term
•r ·p u ibm ,:y' m ans to hav a d 1t to d I.
whh omething or omeone. or Lhe tate of
h irlg • , untabl f, r om t i • ln th ·-····- ~·
of r po,nsible manag,e me, 1,
Responsibffty focuse
sta k hold r
with th aim
,on
ng g m nt
,of ,op· imising
respons ibiliity'
stakeholder value.
fo us
on
a h Id r ngagem n
ith
the aim or optimising stak bolder
ue. In
thi
ction we ·u unp . k thl defmiti:on f re .p nsi: iUty. W wm an wer th
u · lion 'Who are th takeholders of an organis Uon?' • or bom · hould th
or anisation create value?' and 'What ,d oes ~eholder value mean?' After that w
3.3.1
Who ar th stak •hold
C
]'S
of an organi a ion?
In theory, there ate differen iew of who the takeholders of a n organi a io n
- h
ar • arrow' or 'bro d r· i w
tak h ld rs.u h 'narr w' vi w of
stakeholders refers. to a grnup o - indi· iduals who are induded within the boundariie
7
C ,ap · r J ; SlJ ainalbility. re pon ibil"ty
th rgani atl n. Th n rro vi ·
a h id
L mpts t
fin r I an ·
groups in terms of their direct reJe a.nee to the organisation' core e,c onomic
int
t. ,:i This vi
ide
nly th
tak holde \' ho are dir ctl link d to
the organi tion - U focuse on where lhe organ· ation ondu ts its busine • and
includes employees upplier•. customer: and financial i titution .
The broader vie of stakeholder theory looks beyond the stakeholders within the
organi atioo and indud th
who r n th
u ide. Thi i w includ
r
exampl , 1.h ommunjty. and lo al and national go ernmenl. The broader vie of
. takeholder th ory i · ort nted towar ·. the
iaJ
pon ibility of r ani ations a
it adds oth r sta ehold rs uch a the br ad .r ommurrlt , l al a.nd/or narional
economy non- o em.mental organj ations and any othe p on or group of
p opl am cted by an organi ation' activiti, . u
Sta eholder theori . ha e ro n in numb r and type
t rm ' taJ~eholder'
wa first • oi.ned in 1963. Ac rding to R Ed
d
wm: i11
takeholdertheo- is weU known. the stakeholder ncept wa originalJ denned a
in ludi:ng 'tho gr up
ithout wh
· p rt h
r ani a ·o, would ,
lo
exi t'. Thi is a very broad. imp,.le and inclu i e definition of takeholders. freeman'
I fini ion all w pra ti ally an
n t b la i I d
tak hold Ta vinuall
anyone tan affect or be a.f feded by organ} ation . A much more pe if:t de nition
of tak, hold • from an r . _ · i
I p rsp
i n b lar
n. In thi
book,. we adopt the Clartsmi definition :
' 1t ,org.a11· ation' · tak ~ Id r r tl1 p r n r
group of people that ia, , or cl im m nersliip.
right , or i1ll' r;
in ,i organhllio, and ii
acti11ii:ies, past, present, orfuture. Sud1 claime,l
l'ig/JI or i, re f ar the re ull of lraruaction
widr.. a actio11s taken by the organi aiion, and
ma be legal o·r 1 oral, individual or rnllectit•e.
Cl cl old L'> witlr i,ni1ar int ri I • dC1im
r
right
an be cla sified a belonging ta 11 ame
gri , , for il'1.; Urnc
mploy •
a lwld r
and cu
tomeT
:u,
an be , la i r ·d a
or internal. The external
takeholder
ni · · ti
· th
indivi
or · rou
individual who are not dne,ctl
rking within
l
or ni a i
but h a
t !di b i
acti ities. Internal takeholde: , on the other
hand r th
found i hin th ,rg ni ali n
or those working directly in the orga.ni ation.
Figure 3.2 pr ide a di tinction b tw n
inkma] and ext ma] stak holde .
rd rs of an or9at1isation
ar th
person or group,s of
people that have or claim
o ne hip, rights or int res.ts
in .an organisation and its
a •iv' i s, p l. pr s -nl or
future. Such claimed rights
or in , r ts ar
, - uI f
transactions · ith, or actions
,k n by lh
orga1ni - tion.
and may be legall or moral,.
i dividual or coH er .
Sta kehold r with similar
interests,, laims or ·ghts ean
1
b cllassifi •d as belonging o
the same group., for instance
mp,loy , har hold r aind
customers.
77
Prindpl · · o; 6 n ral Manag m n
Internal stakdmlders
Extemaj stakeholders
- Owners/Sharehold rs
he community
Emp oyees
Customers
M.inagrm nt
Sup;pli · r.s
Investors
O'lf
Ac - -
rnmen
· ups, analysts
nsultarns
Competitors
Media
labour unioru;
:f igure 3.2
Internal iUld
t rnsl1 tak holders
3.3.2 F r who , ,h ould t h organisation r
nu~ r po ibilit of organ.i ations ha b · n topic of inter l for a very long
lime. l fa t. relig·o
morality deftn d th ba line for r p n . ibl b · ine
co
c long b ore there was an a
owled · ed ficld stud ing the respon ibilit:i
of or ni ation . For example. Chri , · nity and Judaism both fa oured donation
and th id a r donatin a t nlh o on ' in om to lh chur h or th poor. . hi
indi idual responsibility deve ped from the 1960 onwards, towards corpora e
ial r p n ibility ( R} ~hi · h highli · h U1 rol · r bi
rg m ions nd
corporations. In the 1990 . increa ing global" ation and community thinking led
t th u
f th , rm • rp ra
iliz n ·hip: Th dis us . n b I w pl in t
origin of bu iness respo111 ibility.
Corporate ocial espon ibility {CSR)
nd
I !aureat ) publ · h d n ·
ocial responsibility of busin . is to increase it profits: The essay. still referred o
l da w p bl·
i Tir Neu York Tim in l · 10 and b am n f h m t
famous pieces of work debating the notion of corpornte ociaJ .responsibility (CSR).
Friedman' m in argumen w· that th
ial r ·p nsibiJi of an organisati. u i to
ou.roes and en a e il:1: activiti . ct igned to in rease its profit , .• Ion as it
1
78
hap · r J; SlJ ainability. re pon ibil"ty nd thi s
nga
in o n a d fr
mp titi n ith u frau
ption. lf th · rg n· ti n
i making a profit, it would then he able to fulfd its ocial responsibility of employing
p op] in ci ty ith a d nt
and i w Id b bl
p ta
L th
t .~ ,
wWch could provide the se:rvic · required by ociety. Frl~dman' argument is known ·
the narrow · iew of corporate .octal re ponsibiUty.
Frh::d:man makes a v··ry d ar disrlnction b tween
the responsibilities of ovemment and the
l'i p n ibilili
o,rga.nisatio . A rdin o
Friedman, ocial responsibili6 belong to the
· t t and Lh major t al of bu.sin
m ~
profits for shareholders. Not only does CSR
u d rmin , usin ~ , bu Friedman
n g
further by arguing that it is unel:bi alb au in
ciaJ
p n ibiUti
and usin
a ·~epting
social goa •
hatthold rs' money to acid
bu in manage impo ea tax on hareho]ders.
The narriow v·ew of oorporate
oci r pon ibility state that
i is the social responsibility of a
busin ss to u i re.sour s d
engage i artivities designed
t in r a i profi
long
as it engages in ope n and ree
. m I ion and withou · fraudl
a d d ceptlo .
Although Friedman' argument i
till con ide1ed alid e .en today, many
hareholders. beli ve that
und ethic
p ctic,"
nd responsi 1
mm'laaement are g od for bu iness (a
have in icaied i.n chapter IJ. h refore,
man on empor.ary harehold r · iew · , extended notion of CSR a · onsi tent
wilh th ir lot1g-tierm int r s in b in s .
rth rmor many wou]d argu hal
bu iness aJso ha a moral du
ot included in Friedman· argument o accept
b11 ad r vi w ' R.
Prop ne.111:s f the bro
o CSR a u .· that rgan· ation have at the ery
l
a n ativ du
o ty o r · frain rom h rming o · ty. For xampl ,
ory ho uld ·
dumping its waste into a ri'v, :r. By dumping i
w · in o a riv ,
i
gat iv J affi
d. Man~ p pon nt I o argu · lh ·
organisations houlrl have a positive duty by actively, a d directly, connibuting to
th w f, r f
i ty. F r
mpl , , · ni ati n · h Id n a in philanthropi
acti ·itie or can e en make these adiv:ities part of lheir aore bus;ine .
·
duti
I
nt
or R ' on rn ' hat ~
nd h
· ct. The social contract is an implicit agreement
·
·embers of
nt rg n
U n
rat lhrough pu
, with d
n that organi atlon will addre certain ocietal needs. Jhe righ a.nd
in u h , , nt i.
·
h a1 u uall tip
The third argument for the bro d view of CSR concerns the socioeconomic power
f I usin
p iaH larg mulfn tional bu in •. . Th infl ,
ha· uch
organisations ha e · hould ne · er be underestimated. With this power and influence
on r pon ibilit .
The fourth argument for the broad view of CSR concerns the stakeholder theory. In
th n rro
i w f R. th Ji cu " w · n h r, h Id and th inrn.1:;r.-.,.. p fl
7
Prindpl
o,
6 n ral Manag m n
f. r lh org ni ti n' hareh Id r . H ,w v rt th
h ld r th ry a
n fi r
multiple constituen ie . impacted. by organisational entities, namely emplo ees,
pH , th community. crediio, , th n ironmen and , h . In 1984 R Ed ard
Fr eman detail d the takJ holder theory of busiu s management and busin
ethi that addre e moral- and va1ue in managing a busime . Toe t.hemy argue
tha a busin _ s houid c at valt1 for aU stakeholders, no ju t ils harehold l!"S, 11
The our .rgum n
for lh
road vi
of CSR re
•
N g tiv duty o
•
Pos.itive dullJ ta ac · el
mm ri d in i u
mI
di
3.3.
· g society
on 'but,e to hf welfare
a society
.~ - - - - - - - - ~ - '
.
-
·Aig~e11t,2
:•
The soda con trncr
-~~~
•
I
•
Ara~mtnt J .
!Figure 3.3
Argu
I
.I •
1
S ia1 power
bro d vi
- ho created
Another contributer
the broad
pyrami uf
R, whi h provided a rram
for ategori ing bu in
re pon ib" · ·· · four categorie , namel econ m· , legal, ethical and phila.nlhmpk
r
ib
· d pi - d in igu.re . . Th · 1. ure i
Jr- ,xpla.natmy.
With th reation of th above theor, · 1 one p - and the inoeasing maturity of
ih · ci - nt1f1 framework for 1.h d v I pm ; ni 01 busine respm . ibility. many ind
of institutions in arious sphere al o e,came invol ed in bu me r pon ibilJty
d v, lopm n . n su h i titu I i Lil Unit cl ati n - Globa omp
(U G }.
The UNGC wa lnitiaU · pro po ed in 1999 b K ft Annan th former UN ecretaryen ral, a.s a -au to ·ompan.i amund th, world to ali n their lr.itegi and
operation
ith ten uni ersal principle • a:od to take action that advance ocietal
goal . h univ, rs.al prin ipl
r th m d inlo th four b oad ar a of hut il ,n
rights, labour, the environment and anti-corrup,t ion. Their mission i the follo ing:
' By -ommit i.u g to sustainability busin
achieving a betteI world."
80
,·an :ake
har ·d re ponsihlH · for
Chap · r 3; Su ta inalbility. re pon ibil"ty nd · hi s
Ph.ilanth opic. The responsibility to give back to
• ty, whi h i dis r ti nary, bu still important
E,hi al Th r p
fbility to a1 t m rall
nd
ethically.
Uh this responsibil1ity. organisa ions
shou ld go beyond narrow requirentents of he law
Legal T'he responsibility to obry laws and other
r gu!ation . for . ampl mplov ·· n , com ti · n
and heatth and saifety
Eoonomi The ~ ponsibiJity to
profitabl~ - ·
the 011ty way to survive and b nefit socirty ov,er
th I n91 term
flgun: 3.4 Carroll's CSR pyramid
The ten principles of the UNGC are p.resent
· detail in the following box.
The ten principles of the UNG
Hu111an 1119ht
Princi pl 1: Busiri
1
int rnationa,lly
o I
Prin ipl 2 Bu in
1
d s ipport and respect
h
protec ion of
human rights.
ur th
·ompli i i. , hum n
rights abuses.
La our
in 1pl 3~ su-iness s ·hould u ho .
dom o asso ia ion and t~
tive recogniti on of he right to llective bargaining.
1
Pr1n i,pll 4: Bu in ss
shou ld u-trold th · limin tion of all forms of Fore d and
compu lsory labour.
Principlle 5~ Businesses shou ld uphold the effective abolition of child labour.
Prir, ipl: 6: Business hou:ld uphold th ,·limination of di crimination i r pe t
of employment and occupation.
Prindpl · of G n ral Manag m n
Envimnm nt
Principl'e 7: Businesses hould sup,port a precau ionary approach ta environm ntal
chall -ng s.
Prin ipl
1
a:
B in
should ,unde taik
initi iv s o
g11 , r
e.n ironmental respon 'b'lity.
Prin ip11. 9: Busin n ourag
environmental l,y friendly technologies.
pm
and di ffu ,ion o
Anti-corruption
Prin ipl 10: Bu in
extortion a d bribery.
1
hould work ag in t orrup, ion in II its orm i · luding
ourc : Uni.t d Nations Global
· pa .
The compact has pmvided • 1 ad r hip platform for the development it plementation
and disdo me of re ·po ·i ' ]e and
tainable corporate p Li 1 · and pr-a,ctices. l't
d.
o hy upporting mp i ' o:
•
onducc bu 1
pon ibl b alignin their
and op ration with
lh T, n iPrirn ipl s on buman rl hts, labour en ·mnme:n aml anti- orruplion
•
tak!
tra g·c ac ,·ons to ad ance broader o i · I oals uch a the UN
u t inabl ~ D v lopmen , ' oaJ · with an . mphasis on ollaboratioo and
re than 8 000 bu.sin • , pamicipan and 4 000 non-business partidpants in the
UNGC e chan ing th wodd. 18 The are heJp,ing to all viate ex reme po rty,
they addJI · tab u.r is u
due ·n ironm -ntaI ri k and more. As a v,ohmtary
initiati e,
UNfiC se i el a more of a guide dog than a watchdog and,
a · uch, th refi
11" li
n J u Ii
ount biH y, tran p ren and di lo u t
compkment regulation and to provide a pa e for innovation and colJective action.
me
in busin se hav b en a k y ddv r or globalisation, they an, . a ilita ed by
the UNGC, help ensure that markets., commerne, tJechnolo and finance ad ance
in w y ha b n, fn · · onomi and
i ti
v rywh , a w, 1
a more su taiinable and inclusive global econom . Furthermore there are many
b n ti l"nk d with parti ip ion in t
G
hi h
· by th UNG ar
listed below:
•
8
Ad p· ing n
labl' h d and gl b Hy re gni
policy fram work. f; r fh
development. implementation and disclo ure of en iron.men al, ocial and
v rn n p li i an.d pra ti
Chap r J; Su tainability. re pon ibility
•
hari'llg b t and m
in pr
i · lo dv n
pra ti
nd
strategje to aommon challenge .
•
dvancing
t in birt
luti ns in partn ·hip w·th rang f
cakeholders, including UN agenci , go ernmems, ci il so i •ry,. labou.r and
other non-bu in
int
•
Linking bu in
uni, and sub idiarie across the value hain with the
61 bal C mpa '
orks around th
orld - m n · f th
developing and em rging marke .
•
cc ing th Unit d ations kno l dg of and
sustainabilit and de elopm • nt i ue .
•
u_
, and lh
Uti li ing UN Gl baJ mpa manag m nt t ol · l: nd
opporh:mity to en gage in speciali ed workstrea,m h the en iron.mental,
[
· li
o ial and go emance realm .
Th UNGC in Siouth Africa
In Jul!y 2019, South Africa had 66 signatories of the UNGC. t duded in this Ii t of
-orpo rates ar :
University of S0 11 h Africa
Uni H lding (PlYJ td
Afrik an
Umvoto Africa
Discovery Limited
C g~ typ Pt d
South African M d1ca l Researnh Couna·1
HRTor u Ou urcing tPty) Ltd
Fus.ion En Jgy 'oldings
ym hon· or Sou h Africa NPC
Pia AM a -.r u
01 Mu ual Limi d
NP Governance Consulting
s-uU'l -u hNor h
Hydro Po er Equipm ent (Pty) L'd
Empanda Pty Ltd
JM Emp
,al n Kul
rm n ound tion
Fynfll m (Pty) L d
Van Dyck Carpets (Pt ) Ud
i.ty o Cap Town
Cricket South Africa NPC
ls"ziba , 0111m unity Ba d O!'i ani ation
of South Africa
Woolworths Holding
Aspen Pharmacare Holdings Limited
JlS Clo hing
Sy er,gy Global Consulting
Th Univ r5'ty o Cap Town
G nesis Ana ytrcs (Ptyl L d
D . Economics (Pty) lltd
Calg o MJ land
N tea Limit d
B ddie4E r
Investec Grou1p
De Angelus Estates
MT Group Limit d
Rhino Africa Safaris, Pty L d
Oceana Group ·mited
1
Di
11 1imit d
8
Prindpl · of G n ral Manag m n
Tran n t SOC Ltd
Pick n Pay
Royal Bai okeng P1atinum Limited
C iffe De.klcer Hofm.eyr Inc
Richards Bay Coall T rminal Company
Qu; reach o ial Ca e Pro· ct
Impala Platinum Holding Limited
Limi t
d
appi Limi ed
Edcon
Fin ncL I PI nning lnstitut
Africa
1
Publi nvestm n Corporation
U ilever South Africa P Ltd
Na ional Bus in
Endang red Wildlifi Tru
Junior Chamber Internationa l South Africa Exxaro Resourc
I
Ld
Th Ehies 1lnsti u
D loit Sou h A ri ·
Goldenga e Co s lting
City of T
TruT q Wifi I
(Pty) LTD
Cape own International Convention
C ntr
Mondi
t . -Sou h .A'fr·ca
ane
N db n Group
A gloGo d Ashanti Limited
ol ltd
k m
Source: United ations Globa:I Compact.
The prim.aiy goaJ of re , nsibk management i the creation of
ebolder value.
Now that w · hav a t a ind
n ing fwh th tak h Id
an rgani H, n
a re and thus for hom the organi ation should create alue,, we now need to
an . r th qu ti n 'Wh d
Jl m an?'
3.3.3
--
What d · stak hold r valu m an?
Stakehcdder value refers to the creation of the
m
d o return ft r ll tak hold rs
n
r ani lfon. Thi broad and ab tra · t d mi :ion
can e tr.mslated into con r, te indi a o fi r
ach indi idual ro up of lak hol rs. For
exampLe, creati.n , value for emplo ete will
m n 11 afng a high taff ural .job
urity
and empio ee health, safety and welfare. Creating
1·
1
to the
creation of the optimum level
Sta k holder valu • ref rs
of r · turn for all s ak hold
of
an organisation.
value fo r customers will mean
m r ·ah fa i n and re , nti n. r afn v lu for ·h r hold r wHI m n a
high .retu rn on their inv rment. From thes exampl. it should be clea.rthat alue'
m n om thing d"ffi
u of t k h ld . Wh t h uJd · t
is that take.holder management is co•mplicated - organisations need o atisfy
lh n d , f vari u roup with limi d r
r , . On th otb r h nd, sue
ful
t~older management be.ndit both the organisation and its Lakebolders by
creating bared . alue. In he opening ca e it was dear that ariou
ak.eholder
g r up weF · n gativ ly impa t d by un lhi al ondu by variou p opl . For
I
84
hap · r 3; Sustainability, re pon ·ibil" ty nd · hi ·
mpl , Ii nt l
vinr in VB Mu.tu 1 B"n Th
m di
r
again affected when municipalitie , 1haL a o mad,e depo its in the bank, withdrew
th ir d p , i and th bank wa n i in a po if n lo r pa ·h fr mon . Empl,o
oft.be bank ere affected a we.U as the communit and Ute e onomy o the cou.otry
due to the hjgb amount of fraud committed at the bank:.
t th
ir
The question. th.it we now nee,d to answer i 'How do we manage Lhis prnce ?' In
in · h
pon ib Ht mana menl
th n
tion
exp] in th t
pro
3.3.4 Th responsibility management pmce.ss
Th responsibili m n gement proce involve
Lh •
e urion of ess atiaHy tb11
tep , namely
0) tbe id ntifacation of tb organi ation'
tak bold rs; (2) iLh
prioritL ation
Th res on
o f th
pro
stakeholders; and (3) takeholder en agement.
Ea h of · h · st p wU b
pl in · in mo.
detail belo .
,J
iii
manag ment
, ,vol1vts th ,ex ution
of ss nti:ally three steps.
n ,.u- I . I) h id n ifi a i 11 o
the rganisation's stakeholde ;
r2) h pdoriti ation o Hi
stake o ders; and (3) stakeholder
Step 1: Stakehoh:ter identification
, at v I 6 ran taki h l
rganis· Ii
shouJd fi:rst have a thorough und rs anding o,
w' their ' akeh Id are. Thi
ill typi all
in olv the mapping of take.holders and lhe • rganisation' re.lationslup witl'l them.
Ace untAJ ility ·, an intemati al organisation tha: develop d a · of tandard
Urnt afi prin ipl -b d nd u ·d by a broad p trum of o .
~
bu ine se , private org: nisalions, governments and civil so "eti - to demonstrate
l ad ·~ hip · 11d
n rn n
a coun ability:
po,n ilHli
and · ustainahili y.
The AAlOOO stakebo]der engagement standard recommends that for t-akeh0rlder
id ntif1 a · n, rgani "' li ns h ul
Lh
II win
1
•
D~pendenc . Organisation
p ·,
i
Jy r indir
•
hould identi
those individuals or group that
] · on th ir a · iti
those individual and group on
t.
pro u · or
rvi,
nd
hom the organisation depends in order to
exj
•
Respmisilbility. Organi ation
u1d identify th.o ,e individ11als and
roup , l whi h th
I ra ~ mm rcial, op rarion ·l r tM al/moraJ
responsibilities.
•
li n ion. Organi ati n . hould id n Uy h
individu i and roup tha .
n ed immediate attention from them in term of financial. , onomi , ocial
or n ir nm nl l issu .
•
Influen~e. Organi atio ns hould identify tllo e indivi,d ual and group
that an ha e an imp,a t on their own or on a akeh Ider' t t gi and
op rational decision m kin .
e
Prindpl
o,
6 n ral Manag m n
St p 2: S ak hold r prioriti ation
Variou model exi t in ,o rder lo prioritis,e an organ.i a ion· identified takeholders.
On u h m d 1, aU · lh ' ak ho d r ali n ' m d ], a d
1 p b Mit hell,
Agk and Woo d 10 whe.fe ·salient' is d fm d a the d ree to which manager
gi
pnon . to ompeting takebold :r claim . This m deJ pr:ovid u with an
approa . t p,rloritise i.d ntift d tak.eholders. Ac ording to thi mod I., tak! hold r
prioriti ation bould be based on three v ariabLe namel po . e. ]eghima
and
UL n y:ll
•
•
•
Po,l er. Within. the contex of the tak holder alie
ap
, power
d a th exten to wh.i h a party ha or an · ,u. ....
to ph i al.
d
material esteem or odal means to impose their will. Organisations can
h v p w r
r
hold
and vi
rm •
\;;;t.J
Legjtimacy. Legitimacy ' denned in thi
a a general perception
that h a ·U
r n individuaJ
bl • pro
or appr pri t
within .ome ociall con tructed
alue , bell.iets and
d rrnitlon ...n Only individual or
·
I, - itim l ·]aim
· • ke
in an organi atio.n hould b considered a st~eho]der.
. Ur n y
n
whi
.·
·m aU
for immediate actio .H The degn depends not on y on · m
al o on how ri i al he rel t on hjp i with th
r
of their I giti
im.
Th
pproa h ·
· th· ma t r w ul.d
be tho e that meet
e attribute (powe
urgen ). The more
a tribu
·
a~, th high r th ir
th r word th t1i b r th
degree
· on ible manag -rs will 1
y to these stakeholders. It i
al o ·
Le that th
attributes are II interrelated and the can overlap,.
po, sibl c mbination of
ribut , MitcbeU
aP" id nrir1 · d
of takehol
ere these even dass are eparated into
td
· up namely bjgh alien
tan nd l ni
old . Th
group ha e the following chara t;ri tic :
au
•
High ali n
takehold - h1 - roup ha an
·• n 111 J
defmiti e takeho]der , bicll pos ,ess power, legitimacy and urgency
i ;1 , ery high Ii n • Thi group ·houl b b hi h l pri rity of U
organisation, for example a enim management team that has an mgent · ue.
•
tan
kehold · . In thi group thr, ·ta h Id r J ,
, an b ·
found, namel dominant, dangerous and dependent akeh.olders. Dominan ·
keh ld
p
l itim y and p, · . This g r up i Ji I o b v
a formal mec:hani min place that acknowledge the legitimacy of the
relati nsbip with th rganisation for exampl i fman e d p -rtm nt. It
al o ha . pow r. he dangemus tilil:mJder: . po ess power and u rgency
but no legi imacy, and will possibl be coerci e and iolenl Examples are
activi that use unlawful f U . AJihough the .tak.ehold
Ue:nc: approach
1
p
1
8
Chap · r J; SlJ ta inability. re pon ibil"ty nd ·
id n ·fi th· 11 up i d, n 't req
Lh m t b a kn
b awarded any legitima, . Dependent takeholders have legitimacy and.
urgen and n po r. TI1e r d p nd nl n
l carry ut lh ir ill.
Ex.amp! , of dependen takehold,ern • an be found in the natural environment.
where or anisations have an impa · on the n imnment, for example for
dumping th ir wa t i::n o .ri rs or harmm. ani.mal . B. t.h a 1ivirie or
organisation • animal ha e legitimacy and urgency but not power. Advocacy
of th ir in rest ,y dominan ·ta hold wilh pow , i n
ary whi h an
make them high salience and defutltive akeholder.
•
Lat nt _akehold r . Thi group ha th lo,w t li n and in lud
dormant, discretionary and demanding stakeholders. Dormant takeholders
p ,
p w r imp
lh ir wm thr ugh variou · m n , but ha · Ii tJ
or no interaction as they lack legHimac and urgency. An ex mpk of
th.
p j,
tr , d t ff m m
wh d mand
an · tl
empio ed, and ma~e use of protesting a lions ands · . Dis.ere ~onary
· ak:ebold r nly hav le "tim
1(and n. p wer u ur en y ) nd er mo t
likely lb - r ip,i nts of corponi.t philanthropy. -rpo .ate manag •rs are not
forced , o engage with this group. but ma
oo e tu do ·o. for example the
b nr f1 iari of charily. Lastly, deman ·ng
ehol · r ha , urg nt J im ,
with no powff or legitimacy. An exa pie of a , manding stakeholder is a
cus rn r wlth unjus 'f1 d mphi'nt ·.
Figure J.5 summarise the takeh [ r alience m del.
High sali
stak:ehoh:I rs
Dominant
D fil"litiv
• pow~. git r a .
•
urgen
leg
Oa g r
cy, powe r
U5
• power. urg cy
Depend nt
• legitimacy, urg ncy
D m t
,.
pow r
o·c5,cret' rmry
•
leg1 ·macy
Demanding
•
urg ncy
:figure 3.5 The stakieholder salience model
87
Prindpl
o,
6 n ral Manag m n
t p 3: S ak hold r ngag m nt
The la .t step in. the 11esponsibilily management process i
takeholder engagement.
Th" ~ p invol es ornmunicafio wiith ta ti ]de,s (a id ntif: d and priori · d
during th previous tep ) and Lhe formulation and ex cutlon o joint a ti iti s.
Su eqiuentl , the rganisation can id n if busin
re
nsibili · topic - in rder
importan • for both th organisation and i takellloJd · • ~md da- .- i:f them · of
or
high. medium or low importance that create ruue for
,ainabl con umption.
employee
jts
stakeholder , for examp]e
ducati n, · rpor. , gov man , ommunity impa t,
ellness. risk management, corruption eithics and va lue , and o on.
Thi on · Jud - our d.i cu siot1 of the
ond pil ar o ri - po ibl mam1g DI nt,
namely re pon ibiliry. The la t ction of this chapter focuses on the third pillar of
r pon ibl m· na ment. n·-.m l -•th" '·
L04:
J.4
Ex.plain ethics in the con ext of responsible manage e t
ETHICS
,· lh h 'rd pUlar ,f 11 p n i I managem
1
u\.:.Y1;:i,-.,
u
ith
the aim ,o conduct all activiti in an ethicaJ manner and ere.ate moraJ excellence
in th rgani ion. A , i
, hi i
maki , t
h
i
ethical dilemmas,. In tltis section. we will
define ethics and bu iness , tides,
ill plain n app ,a h to ma
ft r whl b w
will also explain drivers o bu iness
_i - and the benefi
business
ethi
t , orporat t veI · d th man . gemen of bu.sin
piainecl.
Ethi · s
On a daily basis,,
3.4. 1
1
atio for b
i.
o
-
nd hea r the ne
headlin _ , about et another larg
.as de c:ribed .in the opening
· · . chapter) or political
Ji ,r un tfo · al pra ti
or
akfog h ]aw. Undhi al
fi
o harsh
onsequence . · · ·
, l gal
a
, m · ·e case of co mpanies
,
, un hi alp
- a in the case ofVBS Mu
th • rga ni ation, it
all other takehol • .
, no biJ]jons in revenue i
• th org ni Uo.n· · imag i
alue signiJkantly decrea es. In
L ad l th d mi . of th org n· ti
·cal busines - praC'tices affect not only
. m
bu al , 1h , ommuni y and
ppliers. In the ca e of VBS,
lients of the ban ' lept
pavement ou ·
b nk to, k: p th ir place in
the queu - to withdraw tbrir a ·ngs wb n th: n w brokce that {h bank had b en
plac,e d under curat rship.
emment
.
hap · r J ; Su ainalbility. re pon ibil"ty nd ·
n und
busine practic we first need to ha ea ba ic
und tandi.ng ,o th - t rm' tltic '. thi d al ~
with th • cbaractcr
an indi idual and Lhe
moral rul that go,vem and llmi ou.r c:onduc1.
Ethics. in . _rlga.tes que lion of wh.at is right
and wha · wrong, what is duty and what is
or
bli a ·on, a.nd wh l · moral
J
Ethi . rd .rs to the parti ipation
in oc1al valu standard , norms
and custom hat ultimately
guid human b harviour.
po · ibility. Thu , lhi · addr
a fu.n.dam nt I
que non th:at we ali thin abou Tat least from ti.me rn time . namely: How shotdd I
liv my
? :h" qu ·tion h n_ l ads
. lh r u Hon I u h a : Wh l rt r
per on should I trive to be? What values should be impona.nt to me and hould .I
liv by? What tan · rd h uld I Ji by? h.i d ~aJ
ih i
iduaJ chara , r
and with the moral ru]es I.hat go em and limit ou:r ,r ondu L Ethi · al o on e:rned
with tb , rnJJ cbara r f o i , r th
ia1 ruJe and -tan rds in
ci ty.
Oi n all of Lh abov • we an tat that, in
n ~. ethi Ji fe1 10th parti ipadon
in odal alue
iandard , norm and cu tom , which u .timately guide human
b ehaviour.
r
I
Bu in
rue i the . tudy of hat on titu ,rigbt nd rong or good and bad h m,m
Business ,e thics is the tudy
conduct in a business contexL For e inple,
of wha
n · ti'tu ri,g hl nd
would H b wron for a pm ure:m nt mana g r
wrong, or good and bad, h man
to accept a gift from a potential supplier? If
ndu i,n a bu -in
, nt t
_n mp]oy
inno · n I
n
. rr
r
informa ion about a compe m. would it be
wr
u thi in for tl n 1 , th b 11 tl f h' or h · r wn
questions uch
tll se differ from other kinds of question .
compu . r in
fi
. n op
pira d DVD i a fr tlla q tio . B ontn t,
whether you sho cl co
the DVD is a moral questi n.
en we an wer a moral
que tion or make am raJjudgem t, w appeal tom ra · tandards. The e t.,nd rd~
diffi r r:rom h r . ind of standar • ,i\fby? Ther a th«: reason . First, mornJ
tandard concern beha iour that eriou 1 affe
human wellbeing. which can
pr
nut nJ
r b n frl p pJ . Th 011 - ilfonal norms gainsl lying. st · a ling
and · · in deal with actions that can hurt people. Second, moral standards take
p iori(y
r th r and ,rd , incl
g Ir-int • . om thing that · morally
condemned, for example the burglary of ·our neighbour' home, cannot be
·u · ifi d , n h n n-m raJ grou
th it w uJd .
thrill or that i
uJd p
ff
handsome! . Thirdily, the ouudness of morals andard depends on the adequacy
f th r a n Lbat up rt r ju ti th m. l: gi I.· tor mak law m· na rs of
busine es mak · rule , reguJations and policies - the e authorilativ,e bodi · are
ndard if
the alidaHng ourne of he tanda1d and can therefor change h
th
ish ·o. Morn] standards are not mad b uch bodi
I heir
alidi y dep nd
on the ,quaJity of the argumen or the rea oning mat uppo them. Figure J.6
1mmari U1 m rah ·tandards n \ hl h
ba m I judg m nt .
8
Prin ipl
o,
6 n ral Manag m n
:figure .6 lh moral
and rds on whi -h w- ba, -
Organi ation face ,ethical issue aJmo t , · a dail
· . An ethical i sue i a
itua ion. opportuni y or pr b[ m th requir
d i 10 - mak r o ho
between everal actions that mu t be evaluated as ethical (right} or unethical
,(wrong} ag in l th m ral tand rd d, pi t III Figure ·. . l r in · hi
will addre key ethical bu in
practice .
1
ln i idu l mp]
-·.
p ·
settings and at differ
. e ,·. n~
e mdividual, organisati nal. industry or
pr ~ ional. and o i
r int na · · n ] I t
•
Individual le el. On the i dividual level people experien e ethicaJ is ues in
th ir
I ·v · ou i Lh
n xt r Lh ir .
lifi . For ampl ,
ethk aJ issues may .arise when an individual compl tes his or her tax rdums,
r pa
brib to a g v mm nt offi iaJ to v · d pa ing ftn wh n h r
eded a ' p e,e d limiL
h
•
Org n· ti nal I
I. P opl
ft n · xp ri
in th ir working
1· e
nd houJd first ,co nsuJt their employer' policies, procedures and code
of thks to clarify th ir employ
tand on th i u . Exampl · f hl al
su
on an orgar1i ational level are the promotion of
I
taff m mber,
knowing that he or he doe n meet the requ.iremen for the promotion.
u in om lal offic / orkin h urs or privat 0.1 . · rs or usirti1 om ·ial
infra tructure such a - a telephone or da a for private purposes.
•·
Industry or proti imud l - ,_ l. :Peopl al o - p :rl n
thi al i . u in tbcir
industry or pmfe sion su ha education, accounting, medicin:e or law. For
xampl • om a · w1 · n may adv i cli n , on wa l a id p er, onaJ
taxes or law .,er end. their agents to the trauma centres of ho pitaJ to
dv rt '
h ir
i ~ lo I im ' r, m th Road c id, nt Fund to r. mm
who ha e lost loved ones in car accid~ts.
1
Chap -r J ; SlJ ta inability. re pon ibility nd -
•
in rnational I. l P · pl . I o p ri n th
n
an international I el. For instau e, people ma realise that they buy clothes
that re manur: , t red in
ounby making
of hild l . hour or lhat lh y
buy fo d that is not ou r d respon ibly.
l - i · imp rt nt t not .h t f: m im to tim , di tin L thi 1 dil mm.a ari · ·
need m be :rsesol ed through prnper ethical deliberation. A] o, there are no.rmaJ
a -Lo-da d d . i n that n ed o b mad aboul procu:rem n , al • [1. , an e ,
a ·ounting promotions, remuneration. clieut di counls, after-sales e:rvi ,- and o
on lb t ha · e ethical impH atlon . All of th e d i · ions hav t b made in a
maim r that a.dd.re -· th -thical id o · u h d • '·ions.
1.hi I busin,
3.4.2 Ethi a I usin -s
A indicated in the previou e tion. il i impo ant 1f organisations to m.ake
1 d ~i n in an thj-aJ mann r. 'fo n u11 th t d ·i ·ons are made in an 1:hi al
manner, it is a good practice to dev lop n approach to ded ion ma.kin th.at wiU
en ure that bu in
decisions are ethical]
und. One wa of achieving thi is to
d lop a d ci ion- making pro s that att mis p ifi aHy to th lhka] · · o
bu iness decision . Although there · a ho t of process . available in this regard,
R . uw and Van Vuu
· mm 11d b . th Ii ll . ing qu Uo
h uld b
asked to judge the moral oundne of a bu mess decision:
e,
I i [. u ,?
1
•
Does it meet
•
ls it
•
C
~
e organisation' . tandard ?
· oward · a] ak hold
it e di do ed?
1
Ea h of th e criteria will be di cu
?
d in mo e detail bdow.
I I I gal?
d c· ion need to m et in order o b on idered
The frnt riterion that an bu in
ttti ally mmd i that il ho d b 1 ga . n ill gal decision • by impHeatio n
al o unethicaJ. In an ideal orld, the law lay down a tandard of acceptable
b ha iour th t all citlz n · n d l , abid b .. Orga.n ' a ion are • rpora
itiz ,
of the ocieties within which they operate. They ha e an obligation to ensure that
th y id by ·h law r h ir O j . • •
I
In mo
ork en ironmen s, the legal tandar - that ap,ply · o a pecif1c ork
nvironm nt ar common knowl dg . · r exampl , p aU n nd produ ti n
pet onnel homd be familiar wim . tandards in terms of health, afet and qualiity·
human r: · ur, p r onn J h uJd b ~ n ilia r · h l b ur I w p rt ining o
recrui meut,. grie ance procedures and dismi als; and mark:eting personnel should
b am ili· r ith th l, al p ram t rs p rta inin.g t a v rti ing. In · a
wh n I gal
tandards a.re clear, such tandards are generally p rcei ed a fair and de · ions
Prindpl
o,
G n ral Manag m n
tha impl a lnm
re i n
I w h uJ b regard d
un thi I. H w
etting, an individual or group of individual are
ed t mak a • i i n and th
. r no clear I gal
tanda.rds. or the I gal tandard that do exist a:re percei ed Lo be unfair. In uc.h
a case the oth r thre criteria for ethicaJ decision need to be considered. In th
op ning ca , VB Mutual Ban conduct d bu in . ia a fraudu.h:nt mann r and
took iUegal decisions. For example, ecy large loans and overdraft fadliti had
b n nad . o · U n
f VB withou tb pr qui ite ap} ro ] . b in in pla . VB
wrote car and home loan • then turned a blind eye when no p.ayments were made
on h · . fin ·jal , t m n
audit~d but th w re raudul n mi - l t d.
ma happen that in a busine
confront d with an [ u: and
D s rt m t th o ga1f ation•s tandard ..
The econd criterion that e e.:ry mgani ation needs to m et in order to be
on id red thi aH ound i that bu ·in
d isi n n · d to
· d a · ain I th
ethi al andards of the ,o rgani atim:1. The ethic-a] tand o the organisati.o n are
usuall fonnulated a a et of alu in a ode of e hi or in po1ic tatement
d aU.ng wi
ific :i
• Exampl of fomn.1
n ard a a · L of vaJu s
olicy la emen dealing
·
rity and collegiality. E am
i h ·p ·. i l i . u · ar - t l men in Le.rnJS f 1c e f
ns a · unts or a
company' enior manager , a travellio policy. a polic 1egarding pmcurement
· partm nt p rson I
iving gfft • nd. on. W . n ill organi tio ·
d rd
test i applied and it rums out tha a decisio does not support the organisa ·on·s
thi al tan,dard it i ' an indi
th· th d i i, a h uld b aband
d. If th
decision-maker( .) is/are in dou t or if the oigani ation's tanda:rd art in omplete,
in th r w rds th par d
not a dres lh p ciE . i· e
ncl, i' b m
imperative to invoke the maiumg two oiteria or tbical busin
decisions. 1n the
openin c e, Ad
of VBS Mutual Bank ere
in ons· tent with
of ·maintaining h.igh l
ndards of gov rnance,
loca1 empowerm
a
ts it ta·r to ar s all stakehold~rs?
m
d i i n
woul - e fair to all stakeholders, i . legal and in accordance with the · tandards
h rgani a i n. h n th d ·• ·
i p1'1 a ,l n thi l d i-i n. H w, v r,
de ~ion-maker: . could t t the ,de i 'on against the last remaining criterion, namely
Lh d" d · u , 1 t. ln th
•n
as th ctions f all th
op[ invol d in
the candal. w r1kb indu.ded em oyees or the ban.lt, politicians, traditional kings,
mtmi ipaJ official , official from tai;e- o ned entitie: Like the Pa en er R L1
Ag n yo . u:th . fri, ,a th - Free tat D velopm Jtt orpornti n, and a partn r in
a well-Jamwn accounting bu ines in the country, · ere not fair o all takeholders.
· m ntion d pr iou.siy di, nt of h ban . ho in l d tb ir h rd- arn d mon y
in the bank, clients of the municipalities tha invested in the bank, the community,
mpl
r th bank nd o::nr'IP''" n th · br ad n m
th
unt
adversely at ected by the fraud committed at the bank.
hap · r J ; SlJ ainability, re pon ibil"t:y nd t
C n i be di lo d?
The la t criterion a esses whether the deci ion-mak.fi i comfortable to give a public
or priva a count of the d · ion ta en. lf th an
ri
it i an ind.i ation 1ha ·
Lh deci ion is ethically ound and justifiable. Thi criterion empha i
that e , n
bu in
d i ions hould not only b according to the la . , bu me
tandards and
takeholders' int rest , brnt to la.kl Uli ally ound bu i.n
de i ions, the ded ionmaker hou1d aJ o u e hi or her own moral ,co . dousn . ln the opening ca e,
th p op!, r p n ibl or th fraud l tT
ti n \V ·
J
pon ibl for th
concealmen thereof in mi - ta1:ed financial tatements. lliicb led the regi traT to
b 1i
tha h bank wa 0·1v n .
Busine
bu in
In then
deci ions that pass aH four f the e te · ar probabl
rnad by d • io n-m kc.rs.
tion, we will focus on th dri ers f busin
ethlcal:ly ound
thlc in organisations.
3.4.3: Driv rs of busin ss · thics
The driv rs of bu ,in
,e lhl in
rlem organi a ion are the ofit or variabl
in the management en ironmen that in.fluence affect and/or dll'eet org lisation 1
a ti iti s and d · ision lo wards th1c:aJ bu ia
pra tices. h fo Uo i.n ari th
most important drivers ofbu in · ethics in bu in
•
•
•
•
•
•
ondu ting bu in ·
m an · LhJ
aJ m.a nn r is th right thin
o do.
Ethical bu in
cti
fe necessary o protect th reputation of th.e
bu in
· r l ation d t :rmin U1e ex, n
hkh alehold
wou]d be comfortable to fonn relation hip,s, bU5i. ·, s or otherwi e. with the
busin · . '1 Ju L
ry individua1 h· a pu athm lO pr
ry bu in
bas :rreputation to protect
thi al bu iu
pra ·i
ar n
ary o nainl in th · ru I of all
ake.holders. for examp!,e:, more and more customers prefer and even
d m nd
upp rt ly lhi al , in · ·
i I. rn . io ma . i po,· 'bl
spread information abou unethl l practices quick.l.y and effectively. causing
th · busin,- h t 1
th lru
f t1 ru tom r.
Ethical busines practice are necessary to gain and maintain the acceptance
of ,th publi , hi hi imp ativ fa r bu ·n
su
and urvival.
Ethical business practices att necessary in order to maintain the confidence
of u.rrent and p · n i i in
ors. Inv t •
n inv 1 in u □ lb" ·al
bu in · ses. Inv tors will als not invest in busines
tbat are not tru ted
wm
and accepted b
and Lh public.
tbi al bu in s pra ti e a.re nee · ary to protect the busin ' brand.
Brand. reputation and im e are ll v·1m m redient for survi al and
sustainability.
•·
Ethical bu in
pra tice are n
a o iated with lawsuits, th ft, lu
·ary
minimis po' ibl co i
of produ ti ity,. ,ab • nt cism, monit rin
Prin ipl · of G n ral Manag m n
un' r tw rth • mp o
' , am g d r d tr d r put i n, · nd
some of the ieo t a ociated with high ta.ff turnover rates due to dism.is ing
une- hi I mpl e and Wring n w , mploy
•
bu in
The use of et.ru sin unlocking human potential in bu ines es can. be a
med . for thical n gl c . Eth·ca ne l c o cu when busine
n at th
effects that th ir action · may ha eon the],. gitlmat righ and expectation
of all takeholders and employ • i particular, to be tr, a d ethically that is
ilh LruSL, faim s hon ·· l , empathy a.nd onsi ten . EtJ · I negl
manifests j e1f as j,ob di atisfaction.
Apan from th
ariable . that influen e, affi ct and/or direct bu in
a ti itie
and d d ion to ard ethical bu in
practice
a a o ariou benefl of
bu in
· thi · . In lhe n
e wm a,d ·· lh mo l importanl b nef1 •
3.4.4 B n.. fits of business thics
The beneft of bu in
etM
refer t
e p mve impac or cons.eqm~nce
a so ia . d ilh t.hi ·al b · ha i,o,ur nd e . hj aJ d · i ions for organi ·at.io ·. Th ~ factors dri e ethi,c:s in organi on . o,v er and above the ones that \ e discus ed
in th p vi
n. h m
1
rt nt b
Ii
th
follo ing:
•
i
tr.
with an orgaoisa
m titiv
.
·. P
at ha an ethical repu o
Fi r h
ni ati n. H
a
ia · d
,can Lead. to a
ty mp,I
· wm
labour pmdllctivity, ··.
. g er ]e ds of prnducL
whi h wilJ I ad to 3 comp titi advantag , b tt ·r
lead to big ·.
and ,r::,:,,nrir-P
·
h-qua i y
ance an
rainable organ· ation .
•
m ,r
tomers, . u pli · and in
to
us\aioability of the organj atfon. Mor and more, ustome:rs, uppli r and
inv ·to wan o be sociat d "th thi a1 or: an · ation nd will buy from,
m vid th ir produ ts and. · rvi
to and in L in el.hi al organi a Jon ·.
•
i.n an thi aJ m· nner wiJJ re ult in le emplo
mi
ndu ·t · u h . Lb . · nd fraud, will n , d I
employ supervision and
, ill e entuaU a] o have l.ower empio ee turnover rare.
Condu tin busin
The dis,cu ions in the pfevious ections provided u
iLh. an understanding o
bu ine s thi and ethical desd ion m kin • the driv r of bu ines · ethics and th
benefits l:.bereo fin organi ations. he next · ection rocuse on lhe ac ual practi ,e o
bu iness ethic in the corporate world.
1.
3.4.5
Business ethics in the ool!'porat worh:J
From tl'l · b n f1
o bus.in · ethl s list d k the previm.15 s ctlon
e can witbou:t
doubt sa that ,conducting busme sin an ethical manner has onl benefits for an
or ani ation nd it i th righl thing t do,. In wh t Fi Jlo,w , w look a bu in
ethi in the real orld - doe it exi t?
4
ihap · r J ; SlJ ainability, re pon ibilit:y nd ·
How ethical is corporate South Africa?
According to h South African Bu ine Ethi Survey 20 6,30 a ub tan ·a1
prop rtion o aorpo,rat s ·n · ou h Af i a ar not rious about in egralin9 ethi al
behaviour into their cultu re. Instead. corporates remain focused on regulatory
omplian . Th urv y was ondu t d b w n Jun 2015 nd A:pr I 201 ·6 among
listed and 1arge companies (those with more than 200 workers). The su rvey gaug1ed
·h • thical'
n i un
co rpora
ou h A ri
hr ugh mugh 4 800
telephonic interviews with staff members. It ·s the institute's our h survey of this
na · ur , with imil · udi al c,ondu t d in 2013., 2009 and 2 2. A cor ing . 0i
the surve , one in our emplo ees (25. per cent) has observe mtsro duct. up more
than t n p re ritag pain from th 14 per nt who did · 013. D pit th fac
that awa, ness of ethics, codes remaiins relatively high. (s Table. 3.2. which sho s
awareness levels o e hies manag,ement), only 48 r •c:en f , h emplo ees who
did obs · N mis ond u,ct 1r•- port d jt, compar~d wi h r c nt in 2:0, 3 and 66 p r
cent in 2009·.
1
Table 3.:2
Awareness leveJs of dllics manageme.nt in South Africa
2013
2009
92
Code of -thics
96
96%
Hotlinr
79
83%
58%
72%
60"°
57~
68%
59%
•
•69%
Sou/Ce: lhe South African Business Ethics Survey 2016
Accord" g Ta.bl 3.2, th majori yo
rp rat s
!l r n i- 2016} do h , a
code p ethics - that is not the problem. The real roblem is the appl [cation of the
o
hi · an th re orting o uri hl a nduc wi hin h
rpora . This
could possib y be attributed to he fac ha a low pere:entage ,o corporates provide
with hical traini g (onl 7 p- n in 201'6, whi h j - low r han th _
, ploy
per ntages in 2013 a1nd 2009).
Mao examples or corruption, e:mbe:zzlement, corporate and g,o ernment fraud are
ound in
uth
Lh p ning a
r hi ha r mu .tral • At I · al
government le el. of 1cials receive nu.me.mu reports about ma.I.ad.mini tra:t:ion,
mi m a m nt. of publi fund · and abu · f re ur . Th Ji ar num r u
problems related m ystems o a. ountabiliLy. Mor,e than 66 pe.r cent of the
munkipali ie and over 40 per cent ofthe munici al en iti are involv din deaJ O'
up,pl chain manag m. nl lr •gu.tariH , wh r d al worth millio , of r.u:1
ere
made in which emplo ee . nd ,councillors bad an ime
Furth rmore. mu..nicipaJ
man a r , du f man ial
and may · in m.im rou - muni lpaliti
round
Prin ipl ·
o,
6 n ral Manag m n
f
id · t .
·enderpreneu.rs is a word that was developed by the South African media hen
th reported ca . wh re rela i
and frien o tarn d t nd rs fro m g vemmenil
inslitution.s. More onen than not, th • e were inexperienced bu iness people who
couJd not deliver the rvice . r quaJjt:y produc . needed for proper service d li ery
to th itiz n of outh . fri, a.
th country hav
t
rporal
·ph n d
ns m a
r
L ·
lt! l, th re a
J o numeli u
ector al o pmvides u
rving lh n d
man m
mpl , fr, m b J1 h
e amp]
ith numero
r
raud and
thical
u es of failur
due to fraud and mi management. 0 r th pas
a . ]J South African banks
w ri · placed under uratorship (of hi b lhre w
ul i a el liquidat d). 'Bad
managemen fraud. lo of investor confidence' i a r · rrlng theme among the
r iled ban . . 1 Jn1 ma ionally, , ahoo· · hi Ex tiv f: l · r ha b n for ed to
resign because he falsely claimed to have a compa er c:ience d~gree. These and
mi conducL Th bank.in
ub i · · nd pr' a
, ], ad o th qu
o n many South African citizens· lips: 'Whe:r are the etbi
g mm tal l d ? H w a t trust th m?'
· n
of ,our corporate and
In the ne· t ection, we focus on die management of busine ethi and how
bu in
and I d
impr
thi I ndu tin th 1 i"gani ation .
3.4.6 M
u ·n
The management of busin s ethics can
h d ri
L man g,
ethical issues 1.n an organisation - formally
nd in o
- through
· ·
pr ti
an
r
s. The onna1 managem nt
ethi re
· ma ·
h
o l t.: ·• , ilte aµpmntm nt f lhJ · 1 tllTu:e:rs
Th management of business
thi can b d 1rib d as
the direct effort o manage
r
thical issues in an ,org:anfsation
- ·f rmally and in ormiaUy -
through pokies, practices and
a nd the implementation of poli i -f}ating to
pr g,ramm
thi al 011duc . TI1 ' in · mull 1 nag m n f
business ethics re.fern o the development and
main nan
fan lhical bu i
· ulture in an org ni ation. h1 hi
t'on, w
will fust addre the ormal management of bu in
etbi . after wbjch we will
1
di u
th informal m n g m nt of bu in
lhi
.
Th formal manag m nt of busin ss thics
The f:n rmal ma.nage.ment of busine ethics in an organisation consi
of variou
comp nt:nts. The e indud t: e fo]]o ing:
•
ision mi -ion and valu
t:at.ement
In chapter 2, the vart u le · ls of m nagement in an organ:·· ti n v re
addressed. W d1 tinguisbed bet een the top, middk 3ind low r lev l o
management where e al o · tr ed that mp managers are re pon ibl, for
mana ing an ntire or ani ation or major parts ofit Th -yd v lop, and
hap · r J ; SlJ tainalbility. re pon ·ibil" ty nd · th i ·
d fm Lh
r ani 1io,n' pt.up
and ton ,_ rm plan .
They are also ,e-spon ible for t
th o
· tion, wh l1 ·h vi ·
·
d a]ue ta:fiements of
·
:r am f th rgimi tion - wh 1 i
wan to !Jecome in uture. Th mis ion taieme.n.t provides an indicati.on o ·.
the purp e of th organ~ -ation, ·
ducts andJor erviaes that it offers.
I.he rnarkel to whkh i provid th
. due and/o
and th
technology that it make use of in offering th e products and/or ervic,es.
•
Th vaJu · al m, nl fan
ati · · rm nd
ih · way in
which it does bu ·
. Together, the · · , mi ion and val statements
of ·,n orga · · , provi , a g n ml
ani ar · im ,
beliefs alues so ial goals and aom ,
u ines ethically.
Th refi ,
n tat t a b · ·
,
p m nag
and hou1d be embedded in the vision. l1llS
e tatemenl of the
o anisatio,n. In ch pt r 7. th
wiU ·
us.• d in mo
iJ.
Cod.e of ethi · /conduct
Top m na ment of no ani atiron
d al
ur that a , od
cs
exi ts tha
an indkaiti a of lhe type of onduet that th • organi tion
expe ts from its employe . Ih code or ethl /conduct i , a docum t that
develop an organi ation' ori
lu . W an di tfoguish b w · ·
cype of cod . of ethlc :
•·
•
·
rbi h ts out th g tiling prin ipl
of a specific organi a ton. Such a code of eth· ·
. an onJy w a
sp ifl
ni
n · •
rred
ndu .
A profe ion al rode of etld1 •
·
g principl for a
p ·ifi gmup of proJ ion I
in · law ngin ring and
An organ ' a io
od, , f
counnng profes ionals.
ry od of , hi • hi h
oul guidin prin ip] for a
:q;>e iftc indu try udt a , the banking or phannaceuticaJ ind ny.
1
•
h)lng ·n thi al matt r ·
Organisations Urnt are serious in
of etWcal busine s onduct will
n u that 11 mpl
f
top m n g · t h I w t I v I or
employees in their organi tions, a:re traiited in ethical issu . There houJd
a , . ral aware:nes n ll · b. I mat · , su h th aJu at m"nt
o,f the organisation. 1.he code or ethi , whistle-blowing p.m rammes et.hlcal
off~ e and o on.
Table J.2 indi ated that .i n 2016 only 57 per aem of South African .orporate
provid d employ with training in t rm of ethi al m t ers - which might
be the fl;ason for W h le el or un t.hi ~al business conduct in the rnmt .
•
R porting, ad ici , ,c ommunication chann 1 and a ,c limate of trust
Organisalional management l10uld also en ure tha cba1rnel exist for tbe
repm1ing of une hical conduct, that advice on ethical mate is readily
availab and that d ar and m 1 n't ommuni ation c.hann l are in pJa ·
97
Prin ipl · o 6 n ral Manag m n
and
or trus
a
n
ary t prom
thi
I
busines conduct..
Tra.· ning of thi
•
I
Organisational management hould ensure that a ufficienl num.ber o
crain d thical ff:cers and c mmi l . are av ·t ·,1
.hi al
bu in · s condu l.
•
Th us o
, mal eth · cal ,o nsul ants
U oil n happens that employees are onfronted with an • thical i ue or
cu · mm . and need d · ice on the matter. U ma · al o happen that avail bl
docu.mentatiom., uch as 1.h orgam aHon' p ky documwl , are o t v ry
clear on the · ue. In uch a ca e, external ethical consultan ma · be needed
to om r advi e.
•
Reporting
Org ni don n d t r p n. on v riou
u • or · 1p,l n I ir fin n
Financial reporting · the d.isclo ure of their ftuan ial results which reflect
h w th . p rri nne-d v r a ·p ifi. tim ,
.......,,,,,,,.,h, ..,.,.,,i and , , mal
takeholders uch as mv tors. Organi ations al o need LO report on th ir
impa t n th nvir nm 1. lh ir · ta· · bi! • h ir impa l on akJ hod
(such as the community,. heahh and afeey of . ploye ) and its impact on
internal ma nag m nt y .t ms. R porHn i t us a m an f ommunkati.on
m'-1 au takeholde:rs. In Soulh rica, ti e mo t common xample of ethi ·aJ
erfo.rmance of organi ation i on ~conomi,r, ocia] and ,o eman e · · e ,
whi b ar audit d, a ou
d Co and reported in annual inL gral d pons.
h infor m I mana g
hi
Corporate culmre pla ~ a ·r I ml in the infonnal
m nag men f , · , ·thi •B fr
role further, e first need to explain what is
m an by co ra , 11 re. rp rat cuJtm ,can
bed cribed as the)le:rsonaliry· ofan.organisatio,n.
M
fl rmaHy, e ulture of an rganisati, n
i e o al[ of its mem hers nd jt deftn
h w th ·e memb rs b uJd behave in Ef en
trus
1
ontcxt. TI1us th cuJtut1 of lh organisation
the yardstick for
pected norm o ehaviour
aga·ns I which individua rganis lon I m mb rs
j udge their m"fn actions and also by which others
judg · th ir cti ns - ·t 1 gitim'
.rtain. f nns ,
action and prohibits other fo rms of action.
8
cul re of th e organisatmn
yard ti k for xp
d
nmms of b haviour against
which individual organ·sational
members jud,ge th ir own
actions and also by which
o h rs juclg h ir · tions it legi, imises certa·n forms
of a ion nd prohibits ther
fo rms of action.
Chap · r J; SlJ ainalbi lity, re pon ·ibili t:y nd ·
Et.hi al
n l m nl
r
rgani ti n.al
,(or corporate) culture. Th.is element repre ents
o . r ani ati nal cultur th
ffi
ay emplo e think and act. pecially
in i ,uations where ethic are appU able., or
when h y al'f ra ·ed with an lhica1 dil mma.
An ethical ct.dtuJie can be a source of guidance
to mploy
n how to b b
and t make
ethical decisions in busine · e _
Ethical cultu11 is an , 1 ment of
orga nLSa ional (or orpmrat )
cu lture - it affects the ay
mploy
thrnk an d a t,
especial yins· uations where
hi ar , pli bl • r wh n
they are fa ed with an ethical
dil
Man of lh comp0rn nls o an e t.hi at ulture
overlap with the formal mana emen· of
bu in
thi that we.re dis u d j th previ.
, ·1 ,n. hr r, a on for thi i
that the latter shapes the behaviour and values of the individual in an organisalion.
Th fi
lh ftrs nd m
imp rt nt mp ·
an • thi I uh
· .h
organi atioo code of condu L Other componen includ,e, but are not limited to,
th fi llo in : training in thi al ·, .· t · in , rat d r~ rman ~ manag m n
systems; norms, beliefs and shared values; tories; u e oflanguage; ethical cl ci~ionmakiog pro e e ; r pon 'ble a
hip practice ; ethical and rvanf l d r.;hip;
thical re kw ouunitte, · · ernal bicaJ consultant ; ethical me or hip and
coaching; emb dded e · al • ue ; and, mo t importantJ , eth,
alue of top
tnanag m nl a nd lbJ appli atfo of U1
alu -s in pra f
Thi
THE Bl
in th
ntex:t o
.1
punsibl management.
PJ URE
In this chapter, the thJl'ee prillar · of respo "ble management - sustainability,
p 1 i 1]
and hi - w re di u din
t U. ·• ar n w Ii dy . · apply
ih e piUaJS to each function of mana ·em.em - planning, nrgarusing, leadin and
om 1 - in ub , qu rf hapt rs H
v r, b for w appl t
pilla w n d
to analy e o ial entr prm u · hi a
the en i onment in w.bi h th e mana
I
function a.re xecuted,
hich are the topic
SUMMARY OF LEARNI
·o OUTCOMES
LO l:
f chap e
4 and 5 re pectivel .
Explain ustainability b di fferentiating hen een the erm · u stainability',
'd - lopm nt and ' u fainahl d
loprn nt'
ln ils mo l im Lis ic Ii rm
.tainabili m an .. l main in, L k p be:i g to
pr · IVe and to support • ilh structures to hold on. Lo.. o be : ll5tainabl means to
~u ain r ources and the us therno[ to avoid meltdown and failu.re. De dopment
m - an to grow, matu re, :p rogress, improv -• advan and to -hang -. us1ainabl
development is deveJopment that mee the needs of the present without
ompr mi ing t} abilit f f, :ur g n ra ion 1 m t h ir own n d .
9
Prindpl
o,
6 n ral Manag m n
f ust'clln bl d
L02:
Clim.ate change refers to a change in the average long-term weather eonditions or
w a h r pat rn , wh n h han la -, for n
nd d p rlod or im • lypi lly
decade or e: en longer. In !:he context o,· ustainable development, a number of facts
imp rtan : ( } th
i on , n us on
h ng ; (21 t re i
id nc Lha,
proves hat the Earth's tempera.rure i increa ing anddimate ha
i causing other
chang i lh na ural n ironm nt · (3) human
1 1 1,
m
T po · ·
r
th dimate chan
ob erved today; (4 too much arllOn
an hurt us~ and
(5) clima e chang ha an impa t on , oci cy. the
te •c or. prnfe. ion 1
indu.slrl
nd ind.i idual
rm
1
1
1
plain r pon ibili
LO :
in th,
at
ibl man
11
m nt
Re pon ibility foc:use on takeho[der engag:e men with the aim to optimise
a
r alu
dlold
of an urgani at n a th
n r g
f
peo
t have or claim ownership, righu. - interests m an organisatio
a ti · ·
pa t presen or ,
.
· cJajm d ri hts or in
1ra ,
ns with. or ac:tio •
.
o anisatioo, and
r moral,
ld
imilar inter - , cl
an be
individual or collective. S
da . i.f1 tl a h lm1gmg ro
p, for instanc · mploye
d rs a:nd
cu t,omers. Siakehold
· - e creation of the ti
t return
r all
Jd
r><::n,nn,;: i1
m
involves the execution
,tially three ·. eps,. namely
the identification of
lh - mgani tion·
ak h Id ; (2) lh
f h
Id
nd
,(3) stakehold r engagement.
I
L04:
·x:plain thi · in th con t xt
rr
•
p n · bl m anag mm
Ethi r ~.....,_ u h partidpaUon in •O iaJ aiue , t ndard , n nn and cu om
Wch ultlma dy guide human be:ha ,j . B iu
• tbi s is lh - study or what
con ti ut right and wrong, or good andilad .buman conduct in a busm . context.
1
REVIEW QUESTION'S
l.
Expla.iin the terms 'sustainability'. 'development' a:nd 'sustainable de elopmen
2.
3.
n x1 f u. t in b] d v ]opm nt.
Explam corporate o •ial responsibility. In our answei:. yo u hould differentiate
tw t1 h broad an ' n· n:o,w vi w· of orporat
· I re p n ib.Jity.
4.
Explain the r pon ibiH
Di u
·lima
hang in th
Difli r ntiat bmv
6.
~
management process.
n h driv n nd b n fl
f u in
tJd .
Differentiate between the forma] and informaJ management of busine
ethi .
hap · r J ; Su ainability, re pcm ibilit:y nd · hi s
LEAiRN IING ACTIVITIES
Climate d1aoge is a reality in Africa, as it is ,e1sewhere in the world. Africa is one
of th ontin n m t uln rabl lo Jimat hang .
1. Identify the acto,rs Lha.t dri e Afri a's vulnerability to climate hange. You
ill ha to ·o r , arch l an WeJ" Lhi qu sti n.
2 . \¥hat impact doe climate change ha eon busines organisation in Africa?
. Wha imp ct d
dima , rum • hav · n mmuniti
h lds in Afri .?
4. What teps can business organi ations take to mitigate the effed of climate
h ng?
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1
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b. .z /d rumen /h wlAcce :ed 7 July :m191
J
End
3
mi • . 201 . Th
•
ort.
vadabte online:
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Th Iutmw.ticmal J umal if P a
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N·
York: RouUedg .
5
Botha. T ft Cohen, T (Ed )1. OJ 6.
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[n Corporate tilizeus ip.
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]
· ti n
m l . 0 . Draft · t nm do um nt •if th nit d
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7
ion (
8
1
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Unit
· ~). 20 1 . ·
l · pm nl and Jim .l ch ng ~
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B lha,
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12 Miichell.. RK,
gle, BR ft:
Desmond Tutu and AI Gore unite in fo iJ-
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oward a Theory of Stakeholder
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U n. · : D ming t
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Uy
f Wh a d . h
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Bu.sine
akehorld r Th ry. Journal oj'
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14 [bid.
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G
n. MBE. 19 .
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□ arks
t 7 f re m n, RE. J'98 • trot gic Ma nag neut:
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18
lobal
19 http
· mp
k
takd1 i er appr
Lond n:
l. 20l .
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20 Mitchell RK. Agle, BR 61: Wood, DJ. 1997.
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hat reall
21 rbid.
22 http://www.stak,eboLdcrmap.c m/srakeholder-analysis/ takeho d r'-sruience.html
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"kb ll,
identrn ati
iOun . Ac
gle
R
ood, DJ. 1997. iowam a th ·
of stakeholder
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ifmwg menl R~vler , 2(4): 8
24 Ibid
25 [bid.
-
R
I
27
ouw, D
Van Vuuren, L. 2 17. Bu in
tlzi .
fi rd
niversity Pres . 166.
()
souw, D a Van Vuu: n, L. '2017. Bu i,u·
educ.
own:
ap
xford
University Pre . 123.
8 Van W k. I. 2016. Man gement of Bu in s th:ics. ln Bo,.ha, T
citizen hip. Cape Town: Oxford Un.iiversi Press. 230.
l
d)
orpvmte
29 Ro ouw, D Et an Vumen, L 2017.. Bu.sine s ethics. Cape Town: Oxford University
P11 . 109.
30 G:roenewald, L 2016. The South African Business Ethics Smve . Available onlioe:
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31 ljiane, KN .. 2015. Cura o · hip of banks as a measure to rescue failing banks.
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Curato bip_2016.pd.f Ar.c . ed 10 July 2019]
a
IO
CHAPTER 4
SOCIAL !ENTREPREN EURSHIP
.Hflwr: Cocile Ni,e1Jwe1d,uizeu
-
-
OPENING CASE
Reel Gardening 1•
.~a un girl, Clair, , wh com
was inter led i11 garde,-1ing. A
from a S th Afri an famil with limi ·ed m ans,
ag 16 h dev lop d her frrs1. v rsion of a
ed
tape, a tape with embedded ve etab]e eed o implify - egetable gardening. Claire
t . 'l d it in h r lo aJ communil and h r rm -d th
ed ape LO mak · iL po · ibl
for people with Io r1 sk.ills ami literacy to gro v their own food ith limtted ater:
L
luring h r univ 1 y y
. an ar · hi
ure ud ·. L, whil in Iv d ir n
affordab]e housing project for mine , orkets,. she identified the.ir need to engage
with h I nd. Sh re i d a busin · l n fr m a mining I p n L ta h r
crea'ti e idea to berome au inno a ive busines . This was llo,wed b huildin .her
own
d-tap machine wi tb as j Lance of m di- i I I in r. , b quently,
he rec iv d bulk ord
for b r eed tapes from a non-proft organi ation, leading
to her in olvin :r bool in gardening projec in 201 .
Claire identified the problem that although South ri a bas ac:hie ed .ood se mity
at a national l vel, th re i tiU in uffi i nt hous old food
uri . In S uth
Africa, the C'.Jus of maJnutrition i nol Ult unavai1 ility of food,, but limited a ces
to nutritious food. M t opk do · have
dent kn, \ ledi or und r t ndin
of bat on titules h althy d1 . 1n addilion, urbani ation and a p
r n
for
con enien e foods are cau ing p o I o de iate from illeir beneficial rraclitional
rur J di l •
Knowin the import nee o frui nd egetabl to any healthy die •, · he developed
th inn.oval.iv r I gar ni1 con pt to (!nab! ouU1 Afri · ns o , all ag and
backgrounds to ta1ce p · in being able o grow their o
nut and egctabl . To
do ll i h , n ·
Q d
uri hrough h m · - nd · n ol-bar d gard n a n
educational ool, through which thejo in growin o i . created. Claire reaJised
I.hat h ol . r • th b · 1 way g t a ~
o o
uni i • nd hal Lh
of
choo frui nrl. vegetable garden would b n inspiration to house.hold to
rt
t , ir w gardn .
!
1
As many people in South Africa do not have ~ufficient land and water, s.he
id ntif1 d h ,I • h b
h i for f,
rard n du to th availabilit or
land and wate.t ,on :chool prellll5e . In addition., chools are important institutions
in .aH ,· mmunif, • with u
d t a h rs h ha·
go d umlerstamiUn . · th
imponance o healthy diets and food ecuricy.
R 10 rt1~1'1'ng, ith
ap pr du
U1a
n i I r i d grad bl
seed tape to be planted directl in the ground of a vegetable garden. Each tape
· nsi ·
high-qu H • n- h mi ally treal d
lh· are h 1d wtt.hjn th
1
Prindpl
t· p
o 6 n ral Manag m n
rre . di tan
apan for lh pl n · t gr w. Th di
ti n prin d ·
vegetable starch ink, en ure that the fi~el :is planted at the right depth. It is designed
luti n gard ning. 11 th wony, ha · l and fuss are tak n ou
to I the impl
of gardenin . Th on . em 11 e and implicity o . the eed tap mates ardening
ace i ]e to ev ~ryone. Gardeners and ,chiJdren don't ne d to think about hich
nutri nt t0 pla~e wha row w II 10g iher or how d p and t what di l n ·
l th
.a part to plant the eed into the oil. The biodegradable paper already anchors
th
d a th orr
d · 1h nd di an apart wi h h
ry nutri n
included and. in the case of the extended produc Garden in a Box, eve box
in lud
mp nion plant . Th i ibili
rth nninatin pl
· r t'U5 d
watering. aving aocvo, of wate£.
pan from the
d r I, th pr du t ran - ha
p . nd d to in lud
Box, a children· gardening box; Groweez :a biodegradab . pot with a eed tape
nd o,il di k; 'Gard n in B . ' fi r rd nd · I, ny ,, , n ; 'Ki ks art ·: nd
•team and Grow Ki ,' for duc:ational proj c in
ools and other complimentary
gard nin pr du . In ddition, - · ire d fop d Gr w Po
mp · , m bU
schoo1 gardens.
u "tion du ation
· ,n pt.
This make it ea y to do food ardening in compact ganlen Linked o • .assroom
and
t· u h , h
to u- it · a
bing t ol. ' h h
iv,
teach.er owoership o
be gari .n and with the assistance o · o ru nt,eers they are
t ught ho to u e it a
fonal loo].
rade 8, givmg children
ming from ·
d kn ,wl dg, r h w
es. row Kit with
ate activity he
t achfa . proc
d avail bl to ach
.n the tea bing of Life
raJ dence and
h,
, tiona[ curri ,
wdl a other aluable life kills
a
' h olh r , ri i ·aJ thinking a Li Ii tening
111 ol ing, wor
making. The gar, ·
perience also teaches learners important
h , p ti n ~, d alin
1 .. pp intm n nd d 1 y d r tifi •ion.
Gro Pods are
fr m ag
t
to grow eas n ·
t
acti
Each
ap Uc-ation (app)r, be Planting Re . olution, that
t ache.rs and ]eann-s through the gard ning process and in, lud pk U!f s
guid
a nd video . Through linkage · itb mobile networks CJaire ha negoriated that
u ag r th ppH ation · w .rd d b addi ion l Ii data to th u , · • in · u in,,
learners and teachers. The project wa piloted by Claire in 2 300 chools in 2016.
hmu · h th projec ,o involving hoot in edu a tin
hi]dreo in nutrition,
ardenin and de e]oping Uf'e skills, Reel Gardening · creating ··ocial .alue
throughout outh fri a. ' laire nsu
Lha p or Jo I ommuni i
·ith n - fi
school get involved in the project. The project is expanded to make i po sible for
I 4
Chapt
mm
·n th ·~
ial · n repren urship
rt th ir wn gar .
at th ·r h m, , t re y
ha e nutriLio u foo d during holidays when chool feeding
mmunili
ensuring that the
chem are not a
'la l .
She is worling in do e ,collaboration with the Mahari hi In titu e and the
Nati n I Edu a· ion oil b r: tion Tru l L • ·reat nd d H r an n .f pr n ursb.ip
in Education Programme with the Dep,a rtment of Basic Education. Through thi
coll b rati n , h i Lal.ting r ov mm nt- n o ed Learn and Gr w Kil to ubH
dmol . throughout South Afri a. It tart d with 300 cb J , and b tween 2018
and 2023 i ill . e roUed out ·o all public ch ol in. th
tty.
To a i tin funding her hool 'inUiati e and to en 1u us ainabllity, it · important
that an in m i ·, n ra d. Ti n ure th prontabili of h r r an· a ·o , R el
Gardening' .range of gardening product i avadabl in tores and onJin in outb
Africa and imernaliona ly.
CHAPTER ORIENTATIION
Entre-prenew:ship, i · the proces , of t blishin an organisation b an en preneur,
from lh id n ifi alion
a busin,
oppmt1.1nit and inno •ar r throu h to
planning · tart-up, managing an rowing the organi ation. Sod 1e treprenewship
i · orm
nt pre u up · lh diffi , •. n
ha, ·omm r · I n r pr n u hip
i p,r imaril abou pmfi herea . social entrepreneurship is abou generating social
valu
· I ng- nn ·h ng . How v r. t ensu.r u ,·n · • ty. a ning an in m
and/or ptofit i also e sential in ocial entreprenemshipr.l
laJ
organi
aJ l
urs
pl y rs in
reate
ue. They
an.d mak th world a
pr
us n
pl
h.ip
, th y
tabli h
responsibly, as thcir primary
The Recl Gardening o pening ,ca e illustra es bow the ocial entrepreneuT'□ aire iReed
d v p d a , fl pt and
o i d
du t · ha mpow r p or ommum 1 ·o
grow 'their own nutritious frui1 and vege; ,ables. Over time, a heaJthy diet including
lot , f fruit and g abl im
v I am ,• h al, b and l arning bility. Through
her exten i e projects in o]ving large numbers of hool and conun:unilie she
g nerale
i l al , and lo.ng-l rm hang in th
ommuniti • h ensu:r, th
ustainability or her organisation by making the · ee1 Gardening rang of produc
avail ble throu h retail .t res and onUne, i.. thrnu h Amazon, th reb earn in n
incom and m::ikin a profit thmu b. R eJ , ardening.
fa ,
o
odal n pren urship whi h w d no d in h , t r 2
as an enti-epn:neur with a · trong philanthropi . nature:, aiming to reaJi ejust enough
proft to SUJYive over th long term. Thi ,c hapter wiU commence ith a more
TI1j · h pt
planation • f the tenn odal enlr pren urship withln tbe entr pren u hip
dis ipline. Second, the key characteristic • pri.ndpk and m ti ation of o ial
ntr pr •n ur.,. w' ll b
· plain d. foUo d b a d ' u si n o th
d tail d
of G n ral Manag m n
Prindpl
p
. Tb , h p r wUl b
n lud d by :a d. · u iu , · f th r p n ibl ppro h
to management of ocial entrepreneurs and the cha.Heng of ocial enuepreneurs.
LEARN ING OUTCOMES
Aft
ts
ud ing thi
hap r,
you 5hould b
abl to :
L01 :
E plain th term social n repr neurship
L02:
Understand the k characteristks. principles and motivation o social
en
LOl:
repr neurs
Describe the entrepre neurial process
LO : Exp ain
LOS:
ithin the n repren urship discipline
-h responsible approa h to
mana
neurs
m n of soc-i I - re
Discuss the challenges of soci al entrepreneurs
KEY TERMS
bottom of he pyramid
or orat ntr pr n ur/i r.apren ur
co rporate social responsib' ·ty (CSR)
s
abiht
r"al ntr
s all-, medium- and micro en erprises
(SMM }
arn din om
entr preneur
socia I brirolage
entr pr ne ria l process
socia l n r pr n ur
et, ics
gazelle
socia I en re pre neu rs h1
socia I mission
ocfa lly
pon j I organi
tio
s
stakeholders
SUS
es 1 nsibl
LOl :
ain iii :y
ana gemen·
plain th
errn social n rep n
rship . ithin h
4.1
nt11 pren urship disciplin
ENTREPRENEURS IP AND SOCIAL ENTREPRENEURSH IP
Entreprenewship i theprocessofestablishing an o anisation, from theidentif:M:atio n
·f , busin
· pp rtun·
nd inn · ation through
Janning,
n-u managin
and growing the oigani ation. Entrepreneurship is. therefore al o acknowledged as
a dis ·pun on i
1
own. ·p iaU · in dev, I
d , on mi . Eril'rep - n
r.;
hav · th
ability to identify and eize an oppo.rtunity and. create and develop an organi ation
b
ding va u to the org ni ation. Th d thi b • ppl ing res u.r that indud
ftnan e, fon • effort, p pie and lil] -. hey a~ willing lo ta ke ris ; and thmugh
l 6
Chapt
th ir rg · i ati n
th
rgani
mana
nd
achieve r ults. Entrep re.neurs can therefore be
le rib d a tho p op]
ho:
•
ial -n reprer,, urship
cart their own orga.nisatioo
Entrepreneurship is th process
of tab i.shin.g an organisa on.
from the identi .,cation of
•
man g th urg· . j ation
•
i,d en tify new pmducts or opportunities
•
· Lz- opporruniti
•
Cfeate and innovate
•·
organ· e and ontrol resoml:
•
labour and materials to reaHse profit
hav lhe abiJity and i.nsight o mark! i , pr, du and fanan
have: the financial mean , or ac ess to f1mm e tor ·
•
are willing o take calculated risks.
a
a bu· ines opportunity and
innovation through to planni g,,
rt-up. man ging d growing,
the organisation.
, caph l
a
rvi - o produ L
e enterprise
Entrepr · u. p l opportunities nd or ani
n w org· ni tion .
The have th vision, business kill and coura e to ate · k and po se .· the
nee ·ary 1 ad hip qualiti
o overc m, pr b ~m . ·. tHrepren urs normally h v
a trong internal locu of contml (th ir de n and uc e are der rmined by th ir
own action .) eJf-confi.dence pa ion d t rmina•ion and the management km to
plan and •· . ntr .J th - n n:pr , urial pro ,~ .
pe· of · 1 pren urtal organ.i ation ea h wit t pica]
There ar differen
.. ntrepren uriaJ chara teris1i
a w U as hara teri ti uni,q ue to the typ o -
organisation. Th e are.
•
Formal maU, medium and mlcro ,enterprise ( MMEs)
•
frc zeU
•
r hi,gh- 1, wth
, pli n u.rial
nisati n and
orporate n repr neu rshlp or intrapreneu.rship,
•·
F nchL r and fr n bi ·
•
Social en ·epreneurial organisations.
4. 1.1
Formal small, medi um and micro
nterpri -s (SMMEs)
Mo~L trepreneu:rs · tart as a mi o or mall
bu in
and ·om gr,
o b..... .,. ....... m di um
organisations. In outh Afri · a,
'.Ording to the
NationaJ Sma 1 B ines Am ndment Act 26 of
200 · . a micro busines is d fm d a a busin
with ftve or fewer emplo e,
and a mall
bu in · , h
b
11 ix and 5
mploy
Entrepreneurial mall busine
often grow to
b , m m dium organi i ns.
A micro busines is de ined
a a bu in
with iv or
iew r mployee and a small
busililess has between ix and
50 mploy, • 1
Entn pr n utial
smal'I businesses of en gro to,
b . om ,,, dium org n· tions.
I07
Prln ipl - of G n ral Manag m n
ni ati n mpl y b w n O and
200 employees are highl formali ed and require:
ial pr, fi . i nal
p rti
m na men
and
ou.rs a dedicated entrepreneur or
entrepreneurial team. Exampl
o . ucce ful
entrepl!' n urs in _MM
_xist ia all economi
M dium
Medium organisa ion · mplo:y
b tw -. 50 and 2:00 emp'l:o es.
are high ly ormalised and
or
r quir
p i I prof s ton I
expertise. management and of
secto1: . and va
from mi ro busi nesse in
course.ad dica , d -n rep , r
o · phi tica d
b i pr du . . .nd ervi
o, entrepreneurial team.
info:rmaitioo technology organisation and
h1ghJ
profi ·i nal practi . Th primacy
objective of commercial entrepreneill'S that tart and grow SMMEs is to make profit.
is Big
n exarnpl of a mall business that rew o b om a i dhun u in
Blue. The clothing and lifestyle hops of Philip Cronje and Jam Robenson tarted
off a H -m r t , IJ in l 8 . Th · tw , n p • , 1 rs l' d
f rm r · p
from their rml-time corporate job and decided m go on their own. Fortunately,
freq
t tra IUn w
an
th ir
• ti
rr rat b and o d th m u
creati e idea and people. With limit.r o a.ccess to in resting and different fabrics,
the creat d and d igned their own fabri for thd othe that evenhlaUy ecam
an konl rang or prin • ran and d ig
fuing 00 • he opened th, ir ftrst
~ ore in Centurion,, Gauteng and the are now the owne . of an inter· tin, , , uirky
an d · u tainabl ., proudly
uth Afri a bu ·u · wilh 21 svor
clling d
mad
from unique fabri as well a c llec:ti
of South African memorabilia. -!heir range
of pro ' u
in Jud ladi · · and . ·n• Ju , ing, b g hom waTi nd int
ing gm .
Some products are cheap copie and others recyded md produce - y ,c rafting group
a Mm•
i
• Di p· J t
and n
h protlu
pr du
that catch their an tion. Through Big Blue many ,entr-ep
urs have acces m an
ou · L Fi r lin h ir , u · . 111 j b . crea ed and ainlain db Big Bl iri iud
those o 'I.heir uppliers and service pro "d rs.1
·
•
communities b
. portuniti o
n • · 1h
uppli
entrepreneurs
e:ntrepreneu w.ho re fi
d,n
growing and de dopin · t.beir urganisation.s a.t
a quick . ace. Th e are- the tru entrepreneurs
Lh . no only
lalblisl1 an organ ' ation but
also have a trate in place to ensure that the
organi·ati n gr w ·ob m am diwn or en
large organisation or corporation, become more
prof tabl. mploy more p pl nd uJtimat m ·ati
moti ation o this type of entrepreneur.
I 8
in
Iv
pro -uc •
om them. In addition,
and rvi
mvid"
Gazell are nb preneurs who
ar o u d on gm ing and
developing their organi:Sations
pa .
I}' th intrin i ·
Ch pt
S rial nlr, pren
alway
ial · n repren urship
n h I
for new business ideas, the are adept ii.n
tan-up , o, tarfng a. n w rg ni tion and
growing ii ro become prof,tabt
ome erial
entRpren urs keep all th ir organi ations.
others e]] om and oth rs , tart o.r ganL ation
Seria l
entrepreneurs
are
ntr p n urs who are atways
on t:he. ookout for new business
id a h y · d pt in rt-ups,
or starting a new organisation
11d growin it to b
m
profitabie.
with the primacy aim of elling iit and go,i ng on to
tabli h th n · or ani tion. Th m tivation
and. o:.pertise of erial enbepreneaurs i that they
kn w th
r g d ith id id nffr a ·on
and comme:rciali ation and the enjoy the novelty ,of a n
, atily i t r ~ d in m naghig n t bli h
alien e, but the are
4. 1.3 Corp ra . · nt pr n urship or intrapr •11
Corporat entreprieneu.rsbip, or intraptt'.ne hip
I
i · al
a form
f ntrep n u hi . I
u
Corporat ntr p,r n ursl'IJp or
when an mploy e in an existing organisa ·,o n
intrnpreneurship ocr:urs w en
identifte a p itic bu in
pp rtuni
an
e,m ploy
in a
x' tLng
and
tablish
a new orga ..is.a I ion with:iin
organisation identi es a specific
the , tructure or an existin one., us·ng n,ew
bu in,
op rt ni y and
id , and xptoiting o port I i • Th new
establishes a ew organisation
and relati e:ly , maJ I autonompu business
withi , th
ru ur O' an
uni' pr · du
a pr cl t r · i • using Lh
existing1one, using new ideas
resources of an xistin r ,anisation. Corporate
nd
olt1ing opp r unities.
n , pr u hi.p
i p i ,l f, r I rg
organisation to adap· to changes in the market
•ntrepr n uriall. ; p . rim nt in 111 m rk t; ·
Uy from th
establish
d tribution haunel ; and male pron from o w organi ati n . An
e ·am 1 o
rporate entrepreneur hip · p· National Bank (FNB}, which us d to
nti n;d bank. NB v, ntu
in o new or1 anisaition . u h
urance company) and D" co e- Health (a medkaJ cheme).
4.1.4 Franchisors and fira nch' ees
Fran hisit1 is an ar ng m nl in hi h an.
indi idual or organisado,n (the franchisor)
g an an ind p nd n part · 1( h~ rran · 1is ]1
the rigb to eU the products or ervice of the
r ni tioo a r ·n · t uid Un ·
t d,o n
by the fra.nchi or. The franchisor re ams control
ov th · ndu l f · h organi a ion nd offi
the fnnchisee a comprehensiv
busin -
package. Exampl
of franc.hi
Ni
are Cash
, Hot D .
Outsuran
Francllising is an arrangement
in which an indi idual or
organisation (the frnnrhi.sor)
gr n · an indep, nd, n party
[the franchisee) the rig ht to
s Ill tth product or , rvi es
,of the organi a ion a cording
to g1uidelines s t do · by he
ran hisor.
lO
~
Prindpl
of 6
n
ral Manag m n
aJi' Tr 1Udor and. PLa ·
are lini . Th fran hi o i . n --ntrepr n ,r:
w.herea the franchl· ee hould rather be seen a
intrapr ur) wh innovale . ilhin l!he fran hi e
Nando's, the fa t-food business serving food
w i h a M z mbi n/P ,n u u.
L m , i a
familiar South African name. Thi franchise
wa tarted by Rob rt Brozin and F mand
Du.art in Ro eUenville, outh u Johanne burg.
in 1987
f; t-food h p eJlin
pie •
grill -d cbi ' n uu~~l. By 20 1 Nando's had
343 brancbe ir:Uemationall andl by 2017
ihi numb r h _d gmwn t fflOI!' th _n 1 000
a corporate en·· 1iep11eneur (or
tem.
Social ntriepreneurship ·s a
· orm of ntrepr n,e urship.
with th d1 tin iv cri eria
I I en repreneurs have
i I mi . 11 or p "fi
social o jective,. that they are
inn v , iv and th . h y , arn
hat s
.an income.
in JO countries - a 19{)qb increase - mcluding
Bril i , . u tr li Lh
nad Sing p
Mala sia, the Middle Ea 1: and everaJ Afri an countries in.duding Mauritius..
f th uU
wn d b N nd ' i l f.
any
4.1.5 S - ial ntr pre:n -uri II o ,ani a ions
Social entrepreneurship · a form of eotrep,reneursh.ip, with the di tinctive criteria
tha
ial Dtlre ren u h v
ci
i i n r p ift ~ cial bj
, h th
are innovativ and that iliey e - an in ome. They are one pe 1- in the genus 0
1
entts pren ur.4
There are ario1.1S definitions for ',ocial entrepreneurs bu in this book. social
nt , p n urs a
m • · 'individual · who tart r rrientl l ad any kind of
acti icy, organi .ation r initiao Lh.a · ha a parti uJarl I o ial, e:nvironm ntal or
ommuni obje iv ~s
These e treprene rs usually ha e two goals._ namely to add o ial alue and to
an in m . Th o, ial mi 1 i th di tin u.i bin
of social ntrepreneurs .. Their prod c and services are u ually solution to
ba i hUJ an needs that. are not pro "d d for b bu in , go rnm nt or other
organi lions. AJlh ugh i i impunain for th e organisati, n to make mon -y
to ensure ustainabflit, their priurnty objective i to create oc:fa] alue. The e
an b ·
n ·
p - ·ibl - ri repr, n u and lh ir - n ribu ion
n 1' pr n u
extfemel important to ,ociet . Social enrrepreneuis often tart with ery mall
ini · iv
h targ t probl m ·nth ir -· , l n ir nm · bu ha are gt - b lly
rele ant. uch a beaJthcare., acoe to · ater and elecnicity waste management and
maJI bu i · · t· rt-ui. Du to tb ir inn v ti
lulio in tl · ·r ommuniti , Lh ir
initiative are often Iieplicated in other communities and countries, and sometimes
V"n
ir
sul in gl b
induslri ..
Claire Reed, in the opening ca e tud of th.is chapter, ~ a typical ocial eru:reprmeur.
h t rt doff with
ry mall in"ti tiv l inlf du h r ri ina]
d tap
a
di ad antaged community to make nutritious food ac:ces ibl o them. Her idea
n repreni urship
Ch pt
vel p d t u h n
nt thal R el Gard ning
t nsi ]y and i n w
actively in olved in a number of disadvantaged aommunities throughout outh
Africa t aching import nt lifi kHls l
hildren . nd f; mi1i l improv th ir
1
health throu h. egetable gardening. In the proces children al o I am valuab]e lif
skill to c1et · b
r. even bett,er, be,com entrepreneurs.
Social entrepreneurs ca:n therefore also be
SMMEs, g z ll
r
rp r: r
trepren urs/
•ft111W
intraprenellr.i a per th preceding des.cription .
However, their primary oa! i alwa to, add
, o i l value and. n ure lon .- erm chang .
Sodal mtrapr n · ur
m
large organisat ons here they
1m 1at
WPll'k
, d d v I p olutions
to o ·a1, environmental or
su a,in bili
II ng .
Social in rapreneurship organisations are
or ani ation that did not ori foa11y ha
a
ocial mis ion but eventually became involved
in a ·p ifl
ial g nd . o 'al i.ntrapr n ·
i
r · org ni aci n wh r
they initiate and develop olution to o ial, en\flfonmental or ustainability
hall g . Th ir inn auv id
addr
l olution t ·
i I
and environmental ,challenges. In South
'ri · a organisation that have
intrapreneuriia] v nture ar W lw rth with I M Sebo I, My ViUag • My ane
pr dei t that upp rts cha . l . orporn
ocial respo,n ibiliry { R) is th fore on •
of the ke · d1arac eri ti o · ial entrepreneurs. as ocial entreprenem ha . e a
pr ~uen lo
strong CSR.
· R orga t ations or ar, in olved in or ni lions with a
C R i a busine
mod
ill hdp an orga11i aliun t,o b
·a11 a conntabJe - to
itscl[ i:t · takeh
, and the pubHc. B ractising C . R, ·fgani ations are c
ciou
of th k"nd r i.mpaf.:t lh y ha
on 1l asp ·t
f . i Ly, in ludin
onomj ,
so ial and envir nmental aspect . To engage in CSR means that an organi ation is
op · a ~n
y that nh n
o i. y nd b nvironm nt, and not impa ing
negati eJy on ociety and the environmen . It · . important to note that SMME also
·r
ial p · n~i iliry programm
lih ugh th ir ini i ti
are f • n no
wel -pub[ki ed as farge.r corporations. Big Bfoe, the ca e tud . discussed in the
MME
-· n f fu" h pt r. i
ampl f . · , iall
spo ible org ni a lion,
as it invot es di ad ant.aged ommunities in the upply o unique products to their
~
tail to
Social entrepreneurship i a very important form o entrepreneurship aind ha to
b i w d in L br ad r ntrepJ1 n urship , nt . o ial org· ni ation u u· II
hav
haracteri ti
imilar to oth r entrepr :neurial o,r ganisations suc:h a
SMME , gazelle and orpo t e:ntrepr n u. • Th di tingui hing fa or in
cial
enh,eprenf!urship is thaL ociaJ entrtpreneu
ta rl or kad any kind of organ· alion
that otv a ocial. envimnmentaJ or l'Ommunjty problem.
In the n t section, we will foc u on th
moti · ·. tion of o . ial , ntrepren urs.
key
hara teri tics principl • and
Prindpl
L02:
6 n ral Manag m n
o,
Und rstand th k v haract ristics. prin 1pl s an moti tion of so ial
en trepreneurs
4.2
KEY CHARACTERISTICS, PRINCIPLES AND MOTIVAUON OF SOCIAL
ENTREPRENEURS
Social entrepreneu are the qu:inte ential responsible ent:11epre:neur and manager
of n orga.ni ation. h mo t di tin uiishin h ra teri ti Urn diffi r ntia Lb m
from other type of entrepreneurs i the predomina.nce of a odal mission. In
addition, h · imp rt n
f innov lion and th rol of r , d in om a al o
important characterisii . Thu , the three most important chara
· ti •Of social
ntrepr neu ar th :
•
predominance of a ocial m· ion
•
imp rta
•
role of earned income. 6
4.2.1
Social missio n
ial
pr
ur
af
r
d
t a hi v Lh ir
· to ensure ocial alue, a oppo ed to c mmercial
bj tiv • u ually pr: ft m Ir · Lion nd
ea th c:re tion is noi of primary inlpor a.nee to social
od wealth ere Lion and
Jr or ani ation
ul and profitab le:. The ocial mission an address . arious
ucation and the en ironmen b po erty all viation i
. ial • nt:repren urs.
mi 'ion. Their primary objecti
nu
pr
·
wealth neation. AHh
nt ' pr n u
o en bec,om
· al goal
mo -1 ofte.n ·
Ty i U
ial
the lead n addr
nr
ri
n u.
nd no lar
n
b
akin
ing ocietal issues in devclopin
bottom the t onomic p,yramid ofth world t rm coined b PrahaJad nd Hart.
Th - ot om f the pyramid i th t rm ed to d rib - th larg t and. poor l
ioeconomic group of people in h
orld. In hi book. Prahalad provide a
cJ r ,! nor how inno ativ or anisa · n an addr
p v rly · u and a1 ob
proft ab!e. E peciaJJy in develop·ng rountries, at the ha e of the pyramid SMMEs
~ n b in Iv d in making
d bl pr du · and
a a·tabl t addr
the need of poor people.7
A ording o a tudy by th ' ordon ln tHut
(OfB ), h main
acti itie of South African o ial entreprenew in acWe ·ng their social mission
a
foU. w (re pond n
uld incli, at multfpl
· 'viti ):
•
cent 1:o develop skill
70 p r u to suppon th - outh
6,6 per cent o encourage education and literac
.,
6
•
•
!1
73 per
p r
nt to impm · communitie
ial · n repren urship
Ch pt
•
57 p r
n o u ort w m n
•
57 per cent to imprnve health
•
5 p r,
•
55 per ,c en · to provide goods to beneficiaries
9 p r en , o prot · t hum n ri b
•
•
43 per cen to pro1e t the environment
•
38 p r , nt to upport th elderl
.s
lth ugh the da1 mi · n · m t import n t to
nsure that their organisation:s are prof1 able a lh.j
chara t ri lie.
1
ial nt
lh
epreneuria.1
4..2.2
Cr ativity and innovativ · ability
Po sibly tbe mo t important characteristi, o su c . fut entrepreneurs in eneral
are their creativit and abiUt o innovat~. Crea . i und rlie innovation, · hich
th n bri11gs about an. in lh, o ani ation. I divid aJ cr a'li · ity i , p rocursor
of the initiation ,o f inno ation m organis , · . Thi can invol · e a new product,
rvi
m th d, t hniqu r org ni aU n.
ran in olve the adju tmen ·
f exi ting p.11 ed ,
or
pr du is or th - ide:ntffl tion of ponuni.Li
nd olution l problem . h 'n olv s
new idea: . Lateral thinking, d cision ma ing and prob]em olving are all pan of
th reati . pro
Creativit
1
tion ,of ideas and d s not imp,l h, a ruar ation
i a tua1i d it b - om an in □ o Hon. n i
important ro di · l' • h between c:rea , ivicy and mno · lion. Creatt ity is the
Ii tion of n w id as, hil 'nnovat10nr i , lh
ppli ti n or hnpl m nt tion f
creati e id,ta foto pra ·c:e. The entrepreneurial application and ommerciaH ation
f n i a , · inno,v ti n.
Creativit invo l es onl
of th id a. Wh :n ,a u ine - '
Inn a · o , is an introduction of oewnes and no elty lhrou. h experimen ation
d , ,ar , pro
aim d al d v lopiug n w p du t • rvi es or pro
for
commer ialisation and introduction o th mart.et or potentia] ·· ers.
tn.110 ativ, opp rtunrn at1 des r1b
a rhe aJi atlon o -conomic valtt or
combined\! ith ocial value in th
eof ocial entrepreneu. from a new combination
of r
ur and n d in ili mark l or ommuniti , resul ing rrom ban · in
scientific or technological .knowledge. cu tomer preference. or interrelation hips
b ~, n
nd ommun· ya r . lnnov tiv oµp
•
economic and/or otial alue for omeone
• rnobUi a ion f r ur
to
li lh pportuni y
•
uniti
n i1
ome of the ,e conomic va]u.e generated b ing reali ed by the person who
pursued th opportunity.
11
Prindpl
o,
G n ral Manag m n
p rtllnif
r ttl in inn.o ati n . In
al in lud · th
identification. of new market niche addres ing customer needs with innovativ
approa e • n twork and c op ra i n b tw n organi ati
Inn
1
bmo a lion i · he introduction of ne, ness and no elty through experimentation
nd ·r ati i y aim d
d v lopin · n w produ, t ' • rvi ·
or pr ,
fi r
commerciali a.tion and introduction to the marJQet or potentiaJ users. Innovation
ca includ t c n lo ical a
ll a
eati
dim n i ns, but
mm r ia
ion
i essential a it trans orms. an in ention or bright idea i.uto an innovation.
Inno a ·on is cm iaJ to the , nom and d ve]o ment
n country and an
ntl l ontrib11 or io th · l el o p r onnan , of organi · u n . Imm aliv ·
ability is often 1dentified a the mo, t important lea ership and entrepreneurial
omp t n in org ni ation a innovation an r v I ion· · indu ri , real
ocial vaJue and create weaJth. Ennepreneu.r , includi• social entflepreneurs,
l d
nd rgani i n u h
lai R d J
I ard n[n (in th
ning
ca e of this chapter) attest to thi .
bmo a ion
appro h
I
in Iudi11 1 imm . tion
products, services or proces es product-market inno ations and inno ative
mar ting rrat gi ,
manag m ~nt inn vation u h a
w admin' ra. iv
and organisational ystem an ·. t llliques. Gaire: Reed developed an nno aiiv
pr du t t rtin off with h r ri ina
d t p and r fming il r h
of innovative gardenin produc · . fu addition, he was very iu ·. v a1ive in her
bu ine pr ce· and h mark ·ng trat gy
dcliv r her I r uc
nd e:rvke .
by work.in with cho I
d sing L · ch
and ,oiunte ,
h r
inno ti.ans.
Innovative leadeJShl · es entia.1 for th
labli hm nt and development o
inno · · :iv
r ani ation . lnnovato
an
rt-up entrepr n urs, ocial
entRprenem:s, c rporate entrepreneurs, prodat or rvi · inn.a v tors, pmc
inno · o
or management innovators. Inn vation come· from ]eade . and
nlr pr I u who und rs and h n _ in th ma m and nJar.k, 1 environm nf O'
their orga · ations. The macro envimnm nt include political factors. e,conomic
p
, techn I gy an in m tional , hang .
and u J on mi · · · u , d m
With regard to the market envimnm nt, innovation require th.e unde randing of
·on m r b h vi ur and n
ur h ing Jl w r, up n , in rm 1an and
competitms. An ability to unde land and anricipa1e the needs of customers before
th re Ii th m th m ]v i ·
imp rtant p rt f th p, rs nal
mp t
of leaders and entrepr n urs.
clear perspe tive o the tra gic a ets of the
or ani ation indu ·ng its intellectual propert , i . cru iaJ. Thu . innovative I ader:
and ntf(:pn;neu:rs understand th · enHre pe trum of Ote organ.i .ition and i,
environment. which is
ential for suc,ce ful imm ati,on.
ocial organi ation are inno · ative and ensure: Lhat their organisati.on are more
effi live o that mor can ben f1t from th ir initiativ . The al o n ure that
they deliver ad qu · quality products and ervices.. he believe that inn ation
l 1.4
· n repren urship
Ch pt
b t r luti n .o probl m · and high , pr 1ft , nd h t i n bl
rco t operations in their organisations. ln South Mricar more than 70 per cent o
odal , ntrepren u. b li
that th ir p odu t
rvi e and method of d H ry
are innovative. In addition. 51 per cent bd.ie
I.hat lh fr products and ervi
. a.re
new o the area in which the make them a ailable and ]5 per c,e nl bclieve that
th •ir und rlying l chnologie and. pro ess
are innovati
.9
Th rol.e of , am d incom
Social entrepreneurs ma . difFer with respect. to their d . end
4.2.3
l
e on the markd for
propo 'i ·
important iden1ifter for ocial entrepreneurial acti i:ty. m. u
g n rnting rev nu . R lianc on lh mark t ha b
om a lh most
ocial enrttpren urlal organ.t alions ar
· spon ible and lherefor
achievin ociaJ out com.e
· or l.b · i..r n anisation ·. Tb
p Jam.id for corporate ociai re pon ibility con ists of four layers, of hich
·on mi.
p n ibility i · th ., , k lay r or foundation. Org i
ion h v o b
suoce ful. ustainable and profit~m ·· g to continue to exist. The eicond layer
i I gaJ r · p n ibili :y,
nin hat rgani ti n o
h 1 · ; ·h hird I y r
i ethical n ponsibility, a · the organisation must operate in a :ethical manner;
nd th fmal la • h · a ,h pk r p n i mey, addre
n d l e a od
1
orporate citizen. Thi . P: r:ramid wa al o ,di
s d. in chap, r 3. You may r fer to
adbev to the requiremen · of CSR. In th proc
H j important th lh earn an incon1
e
1
1
•
Fi ;rure 3.4 for a de aH d di cussfon.
J
The p r wd .ill .rrates the unportance of economic resp nsibilit to an organi anon.
Thi · in ·Jud , mong th r thing , ing p· fi
• minimi ing o
f al · nd
profit, and making oood · tra le decisions. Thi is al o imponant
ntrepren u .hip a it i the
on which ecoming good corpora
ci •.
or cia1 entrepreneur r~ •
ea]th creation i important in
octal entrepreneu.rshjp, just a
u tainabi 't and rowth. K
usuail a .m eans to creatin
he a era,
·
• ther form
v r, lh w altb
of entrepreneurship, o ensure
· ution or odal .· nu pren urs i
rial: value.
nnual in. ome o th
rgan.i ation of o ial ntrepren
Africa is a follow :
•
70 p •r nt of organi a tions Cam Le
1US
in
outh
than R300 000 per y ar
•
10 per
•
•
org.1.nisations eam between R.500 000 and R1 million per year
7 p r , nt org ni tion . am b tw n RI million and R3 mim01 r y ar
•
J per ,cent organisations earn between R3 million and R6 million per year
•
nt of or ani atlon . earn between R300 000 and R.500 000 p
ear
8 per ,c ent
p r,
nt • rg ,ni ation
am m
f1
lhan R milH n
y r. u
The above is a clear indication that the majority of odal organ· ation (88 per cent)
ry ·mall. Y • w} n lli in om of th · m II r · ntri p n urial or ani ar on
115
Prindpl
i
o,
G n ral Manag m n
• mbin d with th in m
r th
I , r nt ha. am m
than RL miUio1
per ear, i it clear that the social contrib ution of these organisations j,, extremely
valu bl t lh
uth African
A total of 40 per cent of ocial entrepreneurs indicated tlrnt their primary our,ce
of funding
from aJ of produ - nd rvi . 0th r
government entities, donations from th.e public, member hip
inv m nl nd haritable foundations. 14
ur
of fund
r
es, corporate ocial
In South Africa, the main pri.ority of 61 per cent of odal oigani ation is to achieve
th ir
ial nd n ironmen al mi i n. wh 8 p r n hav an qual balan ·
betwe n ac:hleving their cial and en ironme:ntal mission a:nd making a prnfiL The
main p,riority f nly J
f o ial o, · i. ati n i t m
profit 15
Earning an income and making a profit is an inherent ohjective o ent:reprenew:ship
and lh r f re • F i ] nt , ren u hip· a· lL Thi m a .
, r n r pr n uri l
social organisation • one of the primary charJ.cteri tics d be to earn an income
to n r th
.tainab1f o h ir rg ni tior1 .
• p nin
b ut laire
Reed illustrat bow he ear an in ome through
nd online - ores to nsure
th ustidnabUi of h r rgaru :ation o th .t he
ontinu nd expand h r
odal contribution in th comn:1uniti lhat he ·e
ial organisafons without
an ntrepreneurial orientation will rd m ,re ore n nl on donations . funds and
au
m additi n to th tllli
riteri· for
cfa1 ntrepreneursbip th r
charac ri ti s .of o ial entr p
u~ a.re an abilit. t en ag - ith ta eholders;
ambition; res.o urcefulness; bei g tr. egic; having a results orien ti n; and being
hang .a,g nls.
4.2.4
Engag
Stakeho]de are indi tduals or groups that have an intl, ence on the performance
of an organi ti n or r inf1u n ed y an rg ni li n h p ,w r, l gilima y
and mgen
of rakeholder claims determine the importan e of a akehot,ckr to
n rg , ali n. (l u ma
fi r · h pt r wl
·h "aki h ld r ali n m I
was distu sed. using the three variable po -. legitimacy and urgency..) Social
· nr-rn1•1f'Pt':I
n g oth r a "ho,ld r
d build bridg
pn ate organisation
bri
1h · mobm
o ial orgzmi·ations.
mis ion of the social
and the communities they \i . ant Lo
e. Through these
res ur, aad aha p Utica] and conomi upp rt for their
hus. takeh . I er eng;:i- emen is ritical to adue - the so iaJ
organis ion. 16
4. 2.5 Ambitious
ocial entr pren urs are ambiti us and tri to ol e major soci I issu ln ludlng
tho -e concerning p,overty,. youth d elopment, economic de elopment, wealth
fi ation. ·hild n,
du ation and informa ·on and ommuni ati n t hnoiog_y.
II
ial · n repren1urship
Ch pt
p · n
mak
• if
n b , h n, ing h w rld. T d .hi th y
sometimes \ ork on their own but aJs0r often work with non-profit and for-profrt
o g ni a.ti on . laiF R d, diSiCUS . d in th introductory a
tudy . i in lved
in and ex.pandin her egetabk garden project to large numbers o ch ols and
communiti . She i · ambitio · in her cial mis ion to ensure tha poor communities
th.rou hout . out.h frl a learn how lo grow th · ir own food and ha . nutritfou
die to improve their health and wcllbeing.
Th
I
4.2.6 Resourcefu
acial • nh11 ·p ·n urs manag lo mak plan lo rai · th n
a frnan ial. hum n
and other 11 ourc in ad e:rse ituation where the have limited acr
to upport
y l m and · api
t
i I rgani ation usuaUy up rat in nvironm nt with
con trained re ources. Therefore, they engage in • ocial brico age'. Thi mean
lh y h v
b
• aliv and m kJ n
thin
ut fa , "1 bl
u h
repurposing •Of reject materials. u.nused buildings and fi od. Ao example is The
l thing Bank ~ tabli · h d by Tra
balm . B -qua
exc:ess • lothing
k
from top outh African retail companil':S is, uppJied at t t' tionally lo prices to
th un• mpfo ed to eU i their communiti ,
urin
f-relliance and in om
g n ration. ra y i an xce1knt xarnpl or a o i L -nm:pr neur who rn;;rnag d
cial bricolage. 17
to repurpo e unU£ed doth·.n,g of various r tailers
Social en repreneu . are re ornceful .nd crea
o ·aJ value by making chan
to
i tin arran em nts l>rilh ins ituti ns. Th impro is and mana e
rcome
o iaJ value by a terlng exi tin inadequa
ins 'tutiomd. probl m . . They oil en er··
in titutiomd arrangemen· . Tl e • al en,gage stakeholders to o rcome resource
and in · itut:ional con traint lh tJ.gh o ial n lwor in , , ban lt th g v m n
tructure ofrhe organi ati n ·
to resourc or experti and/or leveraging
urc s fi . h . ·ial
r
· ni i .n. 11
4.2.7
Social enttepteneurs are · trategk in that they identify opportunitie tn improve
are r ativ in lh ir a p ·h w .lving pr, bl m · nd h
create soci . value by de elopin
apµnlacbes . They have a de-ar vi ion of their
ti
and a pl n
h
b
m.
o
un
t1
11
T
4.2.8 R-suHs ori nt d
Social ent:repn:neurs. want to
how they an make l:hings, cbang to achieve their
ired r U· r bj ,· ti • It i im rt nt to ·· ial ntrepren u 1 mea ure th ir
!
su c: sand returns. whl h usually re o ve around making
4.2.9 Change ag,ents
ocial entrep n urs are chang
innovations are
on
g n · wh
ai.m i
me world a b tter pl
e.
ial tran fi rmation.
n mul tidim n ional and can take variou
orms, such a
117
Prin ipl
of 6 n ral Manag m n
building ap , it ·
nd dap ·o ·. and re •onfi uring pr: du
rvi ·
resources and managemen practice to align with the needs or communities and
g·v · oi
o marginalis d ommunif . and group hrough their orga i a:li n .
Thrm.1,gh enlrepreneurial pro
e , oda1 organisations mobilise
a e of poor
communiti and en ure that knaiw!edge i bar d and comm
memb r learn
with th - a .isl n of individuals and organisation .
twor ·in and p ·. onal
experience a:re: fundamental in building bridge among ·
takeholders. 19
Tbe next ection
ent • pren ur.
plo~ ibe entrepreneUl.riaJ p •
on the · ocial
LOJ: D scribe the entrepreneurial process
4.3
THE ENTREPRIENEURIA PROCESS
entrepreneurial pro
· the process that an entrepreneur go · through
, bli h n
..... ~,.'-..,.• Th" ro
b gin~ with th n
re ur b ing
. This · follow d by the identification fan opportunity,
then d tennini
my re ouroe and how t ace
. th at it i
po ible to purs
n i,d ntlfi, opportunit . The eutrepre emial pro
of sodal
entrepreneurs is imilar to that or commercial e:ntrepren
·• with a few exception
that are n d in th f I owing disrus ion of th pha of th ntrepren · urial pro · ·:
• ·
· ·on to tart a business
motl
•
•
•
•
ted o ta ·
· si
Lh , opportunity
E
the opportunity through..
D v lop the busine plan
A
. th r urc requi ,
Start and manage the enterprise.
4.3.1
·
m
and viabil"ty tudie
Moti:vation t o st art a business
n • nt pren ur ·
p
n ilh m livati 1 L r al , m thing n w in th
form o.f a new organi anon. They are inleJieS.ted in · el-emplo ment and wealth
r ti n; th wan to ati f high r- v l n d f ni h mar
t
i difficult
Lo ide:ntif and ,oflen volaUl , ; and a the arr al a looking for more profitabl
opportuniti , their missio are often not focus d. ocial • ntreprenews ba e a
di ., rent mo ivation than comm r ia] ntrepr n urs. Th y al'i motivat d to add
ocial va lue to other peopbe or ommuniti
including community development,
w al. h harin and w . Uh gi in ; pmM i
oudary o or at h . am I I a
their ociaJ mission; the· are focused on ,oS ing basic problem uclt a poverty,
un mp1 ment an du lion ; n
cial v lu
lb
of th molivati
nd
the are ex.pre ed in the mi ion that guide rhe behaviour o their organisations.
118
Chapt
ial n repreni urship
4.3.2 ld- ntify th opportunity
Enrreprenews who identify an opportunity are usually n ative
ith an indination
to reativ prob] m oi ing. Th id ntily a n d ·r oppommit in th marki t and
a unique way oftakiog advantage. of th opportunity. Go d opportunities re ba ed
on pr du · ( .) and/or e:IVice( tha add vaiu for th ir en. th are identifi d at
Lhe ri ht Um - and. C1 · durable.
1
Entrepr, -u_rial · pportunl ri • of
omm r i
j
nlfi pr n
are u ually pro fl
centred. So ial enbepre.n urs id ndfy opponunlti in a ucial ontext that add.re
o ial prob) ms with a b nefu l ociety. Their own ]He exp rienc , ombin d with
the o ial n d that I.bey pe.11 eiv allow th m to identi an _p ;U11.ity. Th y
are d.i tingui hed from commercial enttepreneurs by heir- de ire
b .ng • th -ir n t orking and oop ration with takeh J
io
The value of a o ial entrep,reneuriaJ opp rtm.ity i. de, rmined b how i i
upport d by oci ty and i , fle.ct -d in the abilit or _he so ial e.ntrepC1 neur to
a :racr resources and the bu -in of takeholde - ch a funders, community
I-ad and voJunt r: •
Although all id a are not n c an1y
rlunitie , , here are teclmic u
to
g nerate idea and id ntlf opportmiiti . The foUawing are importaru <.: id r
when ormulatin opportuniti · :
•
th
•
n ed in he mar
•
ide:nti
•
g n ral kno I d
kills -xperti e , 1d • p. ·tud
I
be sewed.
prosp
tiv
r com unit ·
t
ation of un
i tl1
,o
v d. ocial probtem
other r feren
)
Eva luat the opportu nity t hrough fe sib"lily and viability studi es
Aft
n .
nity ha b n iden ifi di h
eva] alei t.o det rmine wb th r
it· fea i le. The fi asibility tudy i a broa . naly is of the bu in
potential orth
op urtunit and the ability, kill , kn ledge and experi nee of th entrepreneur
to n;n foml th op portu11 ·ty inlo a
organi ation. l1 i ha b n d - -rmin d
4.3.3,
1
e
that the opportunity is feasibJe a viability study· done.
or
The - iabilil stud is an m-d •plh inv - ligation in.to lh potenUal the opportunity
to b con erred in o a new bu in . In h viabili
tud • i · i . d tennined whether
th - opport.unily l1a an ad · quate markt'L and prnfl pot -ntial.
Th
ind w f pp rtuni
h u1d b con id red a it i im rtan t d t mfn
th risks and reward of the opporhmity. Tb,e window of opporrunity refer to the
limited tim frame in bich it ill b po ible to lake ad . ntage f the identified
opportuni and e ta blish Lb · bu i·n s. . If a pro p cU e entrepren m take Loo
long to add.re the problem identified by taking advanrage of the opportunity,
· might id ntify th
:m pp,ortuni y nd b qui k r
a t
11
Prindpl · o, 6 n ral Manag m n
4.3.4 0
lop th busin pllan
The bu iness plan dearly iUustrate what the ob:j,e ctives oi the organi ation are
and h w th wm b r; a h d. Th fun lion f a uu in
p an are
pr, ot a
r fined opportun.ity and its a oci ted. goal a nd trakgi
to · ccornpHsh i , to
indi . ate the res urce requ ired and h w th e ill · e acce e 1 and flnall · to
outlme a n:spon ibl • managen1 nt plan. Bu ine plans are M:'n i I for attra ting
takeholders, acces ing funding from in
and fmande · .
d iaformin
lnL
d pafi of h alu o lh rg ni
n.
o o, iaJ entrepr: news' ommunity and
hold •rs th an ommercial ntrep
bu .
plan . In addi,ion to .
tors
trepn n urs in l.ud
Du
tu
cial i
m nl, they h v mor
con
h 11 dev loping their
an "
lie.r . the s a.kebolde o
iliz · ns and o · mm n · a en 1 .
Entrepr neurs often p]an their or ani i 11
informally be au e there i no
time to draw up, a formal busin s plan, or imp.l y be au · tb y do not kno how
to do it. Despite their informaJ p] ning, th e entrepreneurs c:an be ......,_.......~.. fut
fi
p a busht s plan a.re d · irable ac i ifle becau e
Formal planning and dra in
th e.nabl ntrep,r eneu to:
•
•
•
ide:ntify problems arl
o lha.t they an make wis d
mi ta
con ider all ilie important faciors of the intended busme
avoi m; ·ng pure! in tin tiv or cri i decJS·u·mS:n
1ak.e de
~
io
ions and f.
er
and, in o doi.ng,
oiding tre
fo r the future
an ning
·tag
. at1 id aJ
· :Fi r t
tin, idea .
4.J.5 A e s th r ou~ s · .,qu ir
Re ourees include the capital need d •mvest in I.he tart-11p organisation employees
and
, l uch a buHding r b cl
ui m nt and ma bfo ry. Tradem., r
nd
patents a o, ha ,e co t implication . Acquiring a , ets in olv detennination o
pe.r: omtl ourc:
ell as inve tment and ] ans that an~ n d d to
h now proj · tion
organis tion.
v in c
ing th re urc th y r q fr
. Due to the ri k in funding tart-up busines es,
both ommer, ial and o 'a] en re reneu face the ame fmancia] on traint .
Entrepreneurs gen rall have to r i on. their own p r . onal rund or loa rmm
their families to tart their organisation .
Enlrcpr n urs
Lo
tab]i h their bu
There i a rust:inction be ween <l:Om.rne:rcia] and ocial enirepre:nems when it comes to
ac
to resour . Commercial entre ,reneurs ene.raUy have e ier acre o bank
loans and privat apital, wh rea soci 1 · a r pr · neurs ha to loot for a]t ·rnative
ourc ,of finance due to less a tracti e bu in · pr pects. Social entrepreneurs wm
ft n r ly on funding 1hr ugh gov mm n gran · nd ontr
. h domd n ,
120
ial · n repreni urship
Ch pt
gra·n
in m fr m nd wm n , volun r l
ur nd more. H w · , r
r lh
pa t decades social organi ations ha e become more dependent on be.in profitable
and re]ying n the inc m f th ir organi ation than n c n ribution . ln dd1tion,
ome ocial entntt capitaJ organi ations have al o . tarted lo in est in social
or anisations. Financing method of ocial ,entrepreneurs· in ad vclopmen tag
but evolv:in · . In . oulh Africa 50 p r , nt ,o a ia entrepren u:rs do, not rely on
donation , 21 per cent get less than 25 per cent from grant and donations rule
l4p r nt · tmor than 7 pr · ntofLh irin•,om from an n don . ion.~•
4.3.6
Start and m nag, t h • ,organisation
The entrepreneur will u e the capital ra · ed t,o :cart the organ· . ti n by implementing
th b in
plan. Mo t organi ti · n t rl ff v, ry ma
· I h , nt pren ur
and a few emp[,o ee . As tne organ· ation grow entrepreneun. ha e to adapt
Lh ir m ag m n t I •
i I nt p n u
aH
· ry
po,n ibl
managers with high ,ethical ta.ndards wbo are cu ed on the su ta.inability of
tirrg i t i n .
ons,"bt pprnadl ,o f ocial entrepreneurs to the
The next oct:ion focu e on
man g m nt ,· f h ir rgani
4.4
THE RESfONS:iBL A PROACH TO MANAGEMENT O SOCIAL
ENTREPRENEU S
trepreneur is a typ of r pon ib[e manag .r.
c-rording to h e nµ ton of r p n ible mana m t in tbe m chapter
•Respon ihl manag men i bwlt on lhe pri11 ipl
f su tainabiHty, r - pon ihilHy
and ethic · In ocial entrepreneurship u tainabirty r fe.rs to th aim that all the
t1 , pr
urial a d m nagcriaJa · tiviti - in th or nh1tion hould l ad to a po itiv
triple bot m [i e that protects, creates and
tains sodal, environmental and
ial
r 1i
i11
v lu . R pon ibiJi
Lo lh aim that h
n
pr
n,
uri I
and mana ement activities must optimise
ate.holder value for all ak.eb,old
not
nl I; r I h entJi pren ur and th r
re hold . E h · m n tha h d i i . ns f
th emrepreneu.r and management on organisational proces es and re u1rs must be
m rally cL irabl • Th ntr p
ur and manag men mu , nsure thi al: d ci ion
ma.king and moral excel1ence.
R,
in , du . d p
lay rs or tb pyramid o
principles of responsible management.
Th
ial n · pr n u
ly, . re align d to th
l in bl • r p nsibf
ethical. Their re pon ible approach to management indude the following :
•
m nag th fr u in
·
to
t in bl thu hey ad pl a mi i ,n t · re
alue: and focus on community needs.
Th y a • u
~
an
and
ial
l I
Prindpl
o 6 n ral Manag m n
•
Th y are chang a nt ·n th
•
They are engaged in a process of continuous innovation. adaptation and
I arning.
•·
To support their missions. they are innovative and continuously recogni e
and pu u n w . pp rtu.niti .
•·
They manage\/ i h confidence and are oot limited. b resource at .hand.
•
Th y ma a
· po,n ibl by b 'in
th ir busin
1
a
ounl
1 to th i
·:ta.k.eholders and for the. results of their organi ations. 22
4.4.1 Sustai nability
ln · ial rg ni · ·on ,
t 'inabm
i fi cu d o,n lo
of r~pid growth. They are en ironmentaH
r• du ti - n of nvironm ntaJ d grad ti n. Thi _
and do not cause oiher social problems in the proc
R I led t u mi nability
to eo ure expan ion o , 1
impti r Ju.ti 11i ing indu ·
initial comm.uniti · where. .
of ·o ial ntr preneu ·
c:alabilit re.fers to h
u
t
·
rt
th
.a -
.
· al i t ad
a trong focus o.n
dd
ial v tu
I th ir rg n i aUon
and oommunitie . Thi
aiining mall an
tl
· ·at value initiative
aJabHi ·-, e ·
tmpon nt.
- ran be e pan d
use
4.4.2 They all
,mg agents in the soc.al sector
ocial ntrepreneu are reform - and revoJufonari ·
a o ia] m· ion and a
bold i ion. 1 · y make fi,..mdame.ntal ch.ang s in the
thing .are done and add.res
the umlerlying au es of problem no the m ms. They create jmprovt"men
in d
i
b alth are, anomic d topm • th nvironm nt g · uhure and
all ocial ector fields that are imtiall u lain.able in. focal comm1mities. However,
m
t a wid r l v 1 and
n globally. Th y
see ,e in rea ing awa.re.ne . of re ponsible consumer ho are I\e.cepti e to m::ial
· ntrep1 n unaJ appr a h
v· ng
and rvi , • . h
- .ri ndly
products.
4.4.3 They adopt a mission t o create and sustain sodall va lue
mention d al l.111. tan of thi chapter, er ating
iaJ v.du i th mo -imp rt nt
disti.n ui bing fa tor of soc-iaJ entrep:reueurs that differentiate them from busines
entrepreneu . Th manage their or ani ar n to en ~ure ocial imp t nd longterm o ial reru.m on in , - tmen· a they want to en.sure lasting lmpmvem~nts.
Thu • the ustainabili of their impact · cru ia1.
12
Chapt
Th
f1 us
n m eting th n
ial · n repren1urship
f ommu
kill d
education, meracy and health and cater or disadvantaged
h·td n 1h outh and th , ld rly.
lopm · l,
roup, inclw:li:ng
4.4.4 To support their missions, th· ontinuou lyre ognis and pursu n w
opportunities
o ial entrep:reneu a:r; uided by th ir vision o h
o achi
impro ment
wh n hey mana 'C their organisations. The peJS v [e nd adapt to chang a
circu.mstan~ change and the ee hat works and wl: a l oes not. The manage
hang b dapting 111 ir bu in ·
ppr · l'h .
4.4.5 Th y ma nag w1ith confid nee a · d ar n · imited by reso urces at hand
Social entreprenem ha e be kills t maximi e limited resource . The
eek
r ur option · and h v th bH:i
a ii
· urc
from otb
u ·h a
partner and collaboration wi other org,anjsation . Scarce resour es a.re ed
ff1 i1 ntly · d
iv l .
4.4.6 They manag th 11r org ni ati ns r p n ibly by b i,n g
ountabl to
their stakeh9'lde and for th e results of their organ is tions
ntr pr, n u. , n 1 re I hat th y re· t
lu
ho
hl und, l nding th
onstiruencies th
.. Ibey accurately as · s tbe n
and valu ohbe peopl
and o,mmuniti
~ rv· . Th.
know th ir in ,
, ' ·p· tation . and mak
sure that
· n1eet their expe tation .r egarding
rerum on their investments,
be it o fal an / r financial. The oontinuou l
e . the performanc of their
o r nisations ln t:erms o social 1 fmanda1 and mana erial ou com . hange
and ,rr ctlons are made accordingl when needed. So ial org:ml ation · in olve
d ~1 stak hold ·rs who parti ip t in •
ion m .·ng, advi ory boards, hoard o
di.rec rs and ,community !:rusts.
ociaJ ntr pr n urs are e.xc pa nal manag rs and iead rs of 1h ir organi ations.
The manage heir bu in e
ensure
tainability and rep n ibility with the
high
lbi and Lu
Ashoka i
wortdwid organ· .tion e t bU h d in 1980 that 'identifi
and
suppo.rts i.he world' leadfog ocial en- 11 pren ·u , l ams from th p tt ms in
their innovation and mobiiis a global community that embrac
he e aew
framework to bu·t an .. v ryon -a- hang makcer world':' A , ording o Ashoka,
social entrepreneurs ha e inno ative olutions to odet • mo .t pr ing octal,
ul ural
nd! n ironm
an p ·i t n and
manage their or anisations b addr . ing important issues and implementing
n w "cl a l
ms-I l b nrr Ah k '
t n i
n wl d of
and ,experience with. ocial entrep11e:neurs is a true reflection of the l'i po:asible
manag men appro.a ·h of o iaJ entfi pren urs. 14
I
I hall ng · Th
r
m iti
12
Prindpl · · o, 6 n ral Manag m n
LOS: Discuss Lh
hail! ng s o so ial
4.5
CHALLENGES OF SOCIAL ENTREPRENEURS
Social entrepreneu .experience numerou challenge to · t.abH bing and sustainin
th Jr busin ses. Id ntm a ion o opportu:nitie thal ~n l ad to th
abli lunent
of succe · foJ o.r ganisations i a challenge.. Socia] entrepreneurs usuall ha e to
id ntify g p that v r mu] ipl di iplin and ar as. hi an b
ry di 1 lt and
often happen o · er a period of time. Daire R,eed i an excellent example of a octal
nt p, n ur wh man g
re m ,bi · haH n . h
v l p d a d tap
due lo her passion or gardening worked with mining comm ities to help them
nn
with th ea h' and th n v n all id ntif! d h pp nuni t,o mpo r
dmol . and childn~n through egetabk: ga1de:ning with reJe a l 1;3keholders in
man communiti . She al o de elo ed an app for rdenin • link d i to makin
internet data availab le and extended 1, to the people ~u
hools in ol ed in her
· octal organi ation.. Pas ion makin dea wi
a vari
of takebolders and
onn in th ri h p opl, ith ach oth r are n
ary lo b
ful a a
social ,entreprenem.
tsc
to re ourr
in ludin
apita1, dom1ti m and grant funding u.itabl
pre.mise and equipment., and up · on and
t ory seivice . i one of th mo t
import nl hal en · o , oda1 ntr· prencurs. It u1 . , Um to build rel ·unsh.ip
and prove die worth of entreprenews and the opportunitie t1!lat the offer to
p ( n i 1 ·k h t ,
Ji ndcrs · nd · · prnvid
Managin:r of ftnancfal r o •
fund• and
· al
h
· luding cash flow and I , pa ment from
Th macro en ir nm
al concliti n including
condition acce L publics rvic and crime are cri ·
hort3;g _ o · km in luding m. ,nag ri I, frnan i I
and th inabili m pay people a.re common , h Um e
•·<mom ,
Ti
guJat ry
ball nge.
I nd mark tin
t ill
ocial entrepl'i n, urs. 2~
D , opiu
d up Ung th ir org · tion From
·om.munjijes to benefrting multipJe communities, nationally and even
inL I i nally i an lb, r ,cha.JI
mp! i Tat n· Hom - ar
ta .r h d
by Vi r:onka Kho a. Verooi a, a qu ·.f i d nurse,. :tan.ed Tat ni Home Ca.re NIUJ'Sing
Senri
out f fru t.ra ion wi h h .
m f h alth · r in South fric . With b r
a
team Veron.i a started off pr iding are to nbe i k and infirm in lheir homes in
a intr due d counnywide in
Lh h alU1 v pian of th oulb African go emmentJ 0
her local ommu.ni . E ntuaUy h r pro ramme
124
Chapt
ial n repreni urship
THE BIG PICTURE
In thls chapter. ocial ennepreneursh1p was introduced
ith an example of an
exc, ptional o~jaJ ntrepr,- n ur C1airi Red and h r . cial org nisation R 1
Ga.rdenin . o ial entreprenemsbip wa contextualised with.in the bmader
erit:repreneurship di dplin . To bett r wtde- tand the ocial entT, pre_neu.r. th ir
mo 1 important cbarac:t risti, · • principJes and omtivaHon wer identill d and
de nbed. n explanation of the entrepreneuriaJ pro ·
and the role of the
o i I , ntrepr n, ur in th" pro
lu id d ho o ia nt prcn urs st
th ir
organisation . During and after tart- up, the responsible managemen approach of
o ial
11ep n un; i . · nti ,L Th
on ibl 1 1·
m ot approa 11
of social entrepreneur was expanded on. Finall • a bri~ introduction to the
·hall ng ,ba
, nt nd it
n lud d th . hapt r.
SUMMARY OF LEAR NII G OUTCOMES
L01:
Explain the term ocial entrepreneur hip
di iplin
·thin the entrepreneurship
Social ntrepren ursbjp · a. form f ent:rep,
urship with · be di tincti.ve ·
tha o Ial • ntrepreneu.rs h v a o ·iail mi . ion or p if1 ocial obi ti
are inno ative and that they earn an i :ome. The are one speci in th genus o·
tiiTI!pren ur.
There are
ariou
tlliepren UJ'.S ar- defi
activity, organ· .i ion
r o ·a] entt p
ndividuals . ho st;:irt
or
curre
·_ · ·auve tha has a particular)
b
iead a
ial
o
, e:nvimnmental or
ommuniey obj
L0.2:
importan , b ra t Ji tic , prin ipl
Th
m
en Lrepreneurs are:
ial m· ·on
•
redomjnan
•
the impon:ance ·Of innovation
•
th ·
T am d in ·
and m tiv· · ion
,f
Other important charac, eristic , principle . and morivation of these entrepreneurs
r h ir ng· g m n wi h
kh I
mbiti n· r Uf1 fw:n •• h
ar
strategic· they are resul . o:rien ed and they are change agents.
LO:
rib th ·
i the pro
lhat n nt pren ur go · lhrnu h to
stablish a new organisation. Du.ring this pm ·e the en:t£1eptt:ni u.r is fll'St motivated
Th
n r pren mi l pr
to tart a busin . This is fol1owed b the identification o an opportunit • then
s the I o that i i po ibl
d terminin th · n - · ary r ·ourc · and ho\ to a
to pu - ue an identified opportunity.
l2
Prindpl
of G n ral Manag m n
Th fi Uowin are th ph
•
Motivation to tart a busines
•
•
Id n ify th pp rt1.rn·ty
Eva luate the oppo.r tunity thro ugh reasibirty and viability studies
•
•
D v lop th bu h:1
Acee the re -ourc
•
plan
required
tart am:l manage the c.:nterprise.
L04:
Social entrepreneurs manage their businesses to be su tainable. respon ihle and
thi l. Th ir r, pon ib] ppli a h t m na m nt in lud Iha :
•
They are ustainable~ thus adopt a mi ion to create
and
•
•
cu on , mmu.nj
d sus in , cia] value
n d .
They ai:e change agen in the ocial ector.
o upp rt .h ·r mi ion h ·y are' innova iv and
nd. pursu n w
opportu.nitie contmuou 1 .
•
•
•
Th y re ngag d in a pro
o -onti uou innnva ion, adap ti -r1 nd
learning.
Th y manag wi h nfid n · and a
oure at h. n
by being account,able t,o
The manage their busin ·
t keh Id · and r Lh
Ions.
L05:
Dbcu
The mo t prominent cball n
•
th id ntiflr ·· i n
•
acce · to re ourc:es
1orta
•
"abl -
of social enrreprenenr are:
pp rtuniti
of k.iU
dev loping thelr organi ati n .
REVIEW QUESTION
1.
2.
Describe a social eotrepr neur.
Id n ify n di cu · ·· f lh m , imp rtan , hara t d ti
motivations o , social en trepreneurs.
and
, 11 n uriaJ p ·
o
p
· imi la.r to that or
commeJCial entrepreneur , itn a few exceptions. Name and di cuss three
pti , with regard ·oc·
- hip in th entrepren urial p .
Chapt
4.
5.
ial -n repren1 urship
D ri wbaL re p nsi' l m nag m nt · in lb
o ia
entrepreneurship and name the relevant important responsible management
p,rin ipl wilh brief di u ·on of ach.
Revie the ,challeng of ocial entrepreneurs. Identify the three that you
regard a th mo ~1. important, a d giv our m tiv ti n on
h.
LEAIRNING ACT1
IVITI ES
·
.
:a~sc-~tµ □Y:' 1
.
·
Gram n B nk
Gr.ameen Bank for Micmfinanc.e was one o
in . olv d i,n
ial ntn pr n, ursli'!tp thr,ough th
niti i
Muh _mm d Yu, u ,
Head of the Rura l Economics Programme at the U iversity of Chittagong.
radi
p v ty an . irr( ially . rom
Muhamm (I: was in r,lf d by hi moth r
his own pocket lent money to basket wea ers a d carried on to provide mkro
mane at low co . Th ba i cone pt wais
enable p opl to a.ke micro foa,ns o
start and grow micro busines e The aim was to make it easier for poor peop
o
access banking and financial rv·ce and not rely on moneylenders tha h rged
xorbita,.n , rat . The Gr m n Bank pr ~ ct mad banking fa ilitii vail' I to th
poor, eliminated exploi tion b moneyle nders, created opportun ies or business
tar --up b un mp
d opl ind repla, ed h viciou ·r I f' win ome, low
sa ing and low 'nvestment' with the virtuous clrcJe of 'lo income, injection of
r dit, ·nves m
mor ·n om , mo savings, m ri in
m n , m re in om ~ 1
The proiec: started ir1 1976 in a vi.Uage dose to
n,ammed Yunus's university.
It w · v n u -lly - xt nd d o v rat oth r di r"
and in 1983 Gram en Ban
became an indep ndent ba n owned by the r ral poor. 'As of No ember, 20 19. it
.6 i I ion m mbers, 97 p r cen o · whon ar
om n. With 2 568 bram.:i e ,
Gramee11 Bank provides ervices in 81 67 v·11age , ove ring more than 93 per cerit
o the tot I villages in Bang ladesh~
A cording to d1 Grame n Bank as study, it is clear that Muhamm d Yu n s i,s
a perfect ample of a soc:i;al ntrepreneur. Fol low the link http://ww .gra meen.
om/in roduc ion/ and re d more abou this exc p ional so ia l. organ1i a ion. Then
answer the fol io ing questions.
1. Discu wh Mu l,amm ,d Yunus is r ga1
rd d as a ocial -nt . pren ur.
2. Describ how Muhammed brok the viscous cycle of poverty by providing
mi ro- r dit or small bu in ss tart-u:ri .
3. Ex plain to wha e t nt the Grnmeen Bank conc,ept w.as upscaled to empower
not only a local community but an nth· _ coun ry.
[27
Prindpl - of 6 n ral Manag m n
Th Clo hing Bank
For a South African case study, read more about racey Chalmers of The Cloth·ng
Bank in rodu d in his ch apt r, by ollowing th - rnk h tps://w ~w.a ho , rg/ n/
fellow/tracey-c:hambers.2!1
1.
pon ibl m g m nit pr ic of lr · Chaim rs.
2. Explain how she used 'soda! bri cdage' in the establishment of The Clothing Bank.
3. D rib ho sh
al - d Th - · 1 thing Bank
of mor ommuni' ·
REFERENCES
1
2
ll
p
:1/l WW,
https:l/reelgardening,co.za/how-it-works-2/ [Acee
Viktor,
4
. B Id, , M rch 201
. ocl. kura ,rs en die konin
http ~I/
d rn January 2020)
, essed 27 Janu ry
tion.w rd
2020]
5
h. ' t r. T ri
ft K W P. 201 -. p 'al J; pi R.
, . o i 1
!Entrepren u hip, Global Enuep neurship Monitor. Available onlii1e: http ://
WMiv.g me ns r ium. rg/r ,rt/ m-2015-r port- n- ocialpren 11rshi
IA ce . ed 28 J,mua11 2:020]
'6
L p u • J, Ju to, R. T • n,
Et 13 m
-. 201 -0 igning
standardized m tho logy for mea uring ocial entre :reneurship activity: the
m bal Entr pr u hip Monito ial
jp tud . mall Bu, fo
Bo ma.
,
Eronomi
7
1-
40(3): 693- 714.
2010. Th
,·
d
·
f lb P ra.m.id, R vi· d and
rtua a lb
· ersary dition: Eradi ting Poverty Through Profits.
fBu in
G rdon ln tl u
f Bu in
i n
ff co ering a ibr-ant e:cto 34.
01.
·a1 , nt rpri , i
. 2018. o ial nt Fpri
uith Afi · a.
. in ' oulh Afri a.
1:even on, H a Wei- kJUem, J. 20 '6. o ial and commerrial
ntrepreneu hip: Same differ-en • or both? Entrepreneur lrip 11rnory and
Pro tic ·0(0: 1- 2: .
lO Austin. J,
a
J. 2003. 'f ou nrd a. '1 rt r mid r: tandiug of
entrepreneur: lrip: ome important tlistin,tri.on . Minn ota: In tiiul for
En repreneurs. 1-6.
'I 1 Bos b - • J
128
Mc□ u:.r
ial n repreni urship
Ch pt
12 · arr 11 AB Br w , J · • · Bu hh l z AK. 201 • Bu in · · and o i ty: Ethk ,
Sustainability ,a nd Stakeholder Manageme,it. Bo ton: Cengage lea.ming. 39.
i ] , nt, rpri
. 018.
in , au h · frl o.
Di covering a vibrant ect.or. 40.
~n ' ou h Afri a.
14 Go rdon In ti :u
f Bu ·in
d n · . 2018.
Disco ering a vibra nt ector. 42.
1
Go rdon Institute of Busin
den · . 2018. o iaI enterpri
Disco ering a vibrant ector. 26.
u1 ' outh Africa.
16 Helmsing, AHJ. 2015. Condition for Socia] Enaepreneu:rship. Tl Imema.r imial
Jou rnal of o ial Quality 5(1): 51-66 .
.17 bttps~/t ww.ashoka.org/en/fe:l.lowftrac:ey-cham
18 H lm in -. AHJ. 2
,J •
ndition
[Ace
ed 14 January 2020]
or o ial n l pfi ·11 urship .. The Int m aliona l
Journal of Sodal Quality 5(0: 51 -66.
19 Helm tn ·1 , AHJ. 015. ondition fo:r o iaJ nt pren urship. The lmemaiio1ial
Jou rnal of Social Quality 5(1}: 51-66.
20 H Im ing, AHJ. 2015. Cottdl mns for ocial nlrepr .neurship. Tlte 1 1ema,rimutl
lorunal of o ial Quality (1): 51-66.
21 Gordon fustitut of Busin
Disco rin r a vi rn
Science. 20J 8. Social enterpri
22 htrps:1/ odnnovationwordp11tSS.com/2010/09/20Jdu.ke2020]
23
· ' outh Africa.
e:/ {Accessed 27 January
o- , lW, Gras, DM. Kato, S a Amezcua, AS. 2013. Entrep rieneurial
• J · on
ts: ho
d · rent~ ir . l H? mall
in
1
pro
11
Economics 40: 76] - 78.J.
25
S ien e. 2018. S d 1 en erpri
·n Souch Africa.
27 Bessant J & Tidd, J. 201 5. b ntwatifJ,11 and e11trepreneursl1ip. West Su ex:: Wiley.
8 h 1J)://www.gnm1 n om/introductio
29 htt1r:I/ vww.ashoka.
rg/ n/fi Jow/tra
1 [Access
d 18 Jam1ary 2020]
, 'Ao
ed 18 J n my 2020]
12
0
PART I l
PLANNI G: A RESPONSIBLE APPROACH
CHAPTER 5
THE MANAGEM,ENT ENVIRONMENT
uthor: "Fer ia Botha
-
-
--
--
OPENING CASE
The eollaps of African Bank Investments Um it d (Abi ) 1.2
Afri an Bank Ill tment Limit:ed (Ahil) wa o-fi unded in l999 by on Kirkinis,
who ha 11 n d crib d a on of the sh~.rp st .minds in ban.kin hat ha chaug d
South Afri a by expanding cred.it o the poor. From 1999, Kirkini buUt Abil into
th ountry farg l m k r o loans nol b ck d by coHat ral. LyHn him elf a
visiona:ry for lending o South Afrkans ignored or deemed oo risky by conventional
ban , irki ~ fu 11 d p·r,o ·1 ma ~·ng 1oan
nnu 1 int r ',
hi h
O
per oent.
lo fund i
AbH did not l k d po i . r lying in t · ad on sto k and ond m
lending. For the large part o the first decade of this century. Abil wa one
the
h 1· · t to k on th J . Th ompan 's ha , n · m
m round R · .2 p r
share in 2003 to more than R22.50 per share in 2008. t also offered in:ve tors a
v ry pp aHn a h ivid nd. L i h"
· era
on • divi nd yi Jd
oveT 9.0 per cent Undcr the leadership o i harismatic CEO, .Leon Kir'k.inis, Abil
w
r -imagining wha micro-lenclin · o · ld do I S uth fri a · nd •eem cl to
pro e that lhls w not only o1 ia le bu in
model. but also a very prof able
on B tween 2003 nd 2008 Abil more than d ubl i annuaJ profits fr . R.660
million to R ts biU ion. In 2 08, Ki kini unilat rally made h~ d - · J,On to buy
EUerines (ai retail furniture om any) r R9.1 billion, without pro r due diligence
or full board approval.
or
In a 2012 ta ement, ·. "rk" i · ttri u d the ompany' su
· to having ·built a
robust, w LI ,c apital" 'd and Oexiblt! bu iness lo positio
as the mark t I ad r
in a larger. more c mp titive uns naed cr dit mark t'
ame ear Kirtiru
w rank d ti
7th w al hi l p .• on in 11th Afri
rum 1 , nday im
Rich 1 · . Littl. did Kirldni know ho the fate o tib.e compan would change in
1
th
bU bee· me more vulnerable when j
fr
d min.in · lrik · th b
ar , mar ·et uffered e ere deterioratio n
n 2012.
·bi~ · rippl -d uth Afri •a'
p
, miners began to default on loans. In February 201 3, Abil as
harg d b th
dil gulator ! h re k.l . l nding and in O b r it paid 20
million to ertle the ca e aftemin estigation found the bank advanced at least
7 - I· an without fl t arry·ng oul IT, rd bi.lit
· m n · • In Li
m
r,
the central bank aid in a statement that it mM Abil to
lo ing at I
U Elle:rine , which was
R70 miJJion perm nth. Kirkini had ,other plans - h want d l k p
EIJ erines and. the distribution neitwork that the retailer pro "ded for loans. After the
furniture eller uffered ix y,ear:s of declining al • AbiJ was till
in,g to fix it
Prin ipl ·
o,
6 n ral Manag m n
nd · arching fi r · taU p rtn r: par n r Lha wa n
for bu iness .Fescue in August 2014.
r fi nd. Ell ·rin
appli d
[n ugu t 014~ Ab □' · h re \ , · u p nd don th · J E. Th outh African R · rv~
Banlc {SA.RB) put the underlying business under curator b.ip. Few shareholders had
n hJ
ming. Les · th nay ar arli r, ·. bi] had ra.i d R5 5 bHJion in a ri · ht issu
that a widely upporled, even though it was al:read: apparent tlra · the oompan had
ev rel und resf m t d i bad deb · . Within months rh · had sunk th bu ·n
ouJd hav been left with nothing bad the ARB ot · tepped in.
and ha • hold ·
,yburgh R p rt thal anal d th r
m
unoomfor1able findings. Financially peaking, hat !bad 1not makin uffl ' nl pmvisi n ti r bad
d nga: j
,·
Th
.·
sus ai.
me Ye:ry
ape wa
!,ending.
The Mybu.rgb Report also found that Kirkinis had an o n helming inflnenoe over
th .. b rd n th p rari n · fth · b· ,nk.
nfat , n n qu ti. n d him. Tii
s :m' est example is that he had u.nilatercilly made the decision to buy Ellerines for
R9.1 b □ li n, withou pr p r du dilig o o
a d approval. hi hind i b t. · ,. n
a -el managers were also far too ager to believe what Kirklni was ttllillg them.
They continu d t b li e him until ·t wa to late. ln adru ·on, rt:f member
of the board did not hav . e ppm nate conipe~en , ,r kno I dg
r banking.
The board as also extreme]
all for a banking bo,arcl. with ,
ecutive
dire t , , whl h I t
J ro
· r haHengin , ind I d
aHy
the crux of the African :Banlc lesson - that no analysis of African Bank was nuly
mpi
without lhor
h n ,Iy •.i o it
rp rat
, n . hi
t nd
out a one o F South rica 's m t high-profile c:orpora , ailures - offering us an
pp rtu ity l m T m mi ta · macil · o n ure
ry ,
p · t i elf.
n
After p1a ing h,il under cu:ratorship the ~ announced a resrructurlng
pp · lin
ih,
takeholde. including a con oniu.m o six South African banks. the new African
Ba
m·t d wa Li . d - a retai l
, tha . ffi fman ia] pr u and rvi
to re idents of South Africa. Th I.rank i licen ed a a lo all cont.mUed bank'
by lh ARB. Mr Thoma Wi n
er wa ap in ed as cu.rat r o, implemen th
r lTIIctu.ring propo I and m~oage the affai of the bank, ubj l to th Registrar
of Bank . On 2 March 2016, African Bank received th . required upport. fmm th
exi - ing
ne
Ii
dJto
for the bank r tructurin prop
l and on
ApriJ 01 , Lh
African Bank limited o-pened its doo a the new entity ith the re-quired
n· · and r 1i ·tm i ns r quired b th
ri u re ulat ,rs in pla .
CHAPTER ORIENTATION
Wi
h
Id War in th .lat I ~80 • th rn n g m nl nvir: nm nt
be ame increasingly complex and inte:rdep ndent. with change becoming more
rapid, di , ntinu us nd turbo! nt. Th fa11
h B rlin W ll and th dv, nt ·f
gl,obalisation. signalled a radi al transformation ,of the world that is continuing
l 4
Ch pt r 5: Th · m na · m nt nvironm nt
dai . Thi ch n is D
I reJa d t th · i d nd m gni ud
h lt ng
of the pa t.. but rather a evere and total dislocation with the past. Information
t hn ,l gy , nd th r 11 w
hn 1 gi have provoked prof◄ und m.t t-ural chan
in ibe
odd economy and these are resulting in unimagin bk I els of complexity.
Furthermore, the e:nvir nment is charac:teri ed by a growth mn interdependence and
linkag b w en poHl:.i economic , th · so iaJ dimension, the natural nvironm -nt
and technology at the global, regiona1 and national level , providing pol erful
thr at and x, ·iting opportunili for ny
ani tion and l m nag m n • Th
pac:e of event and the speed \'liith whjc:h effects are tran mi ed between parts
f th man ,g m
, n ir nm n r1 at,
f 1 ulti in
f th m na r'
comprehension due to the beer scale of it alt In th.i en mnme:m evecything can
a.pp r r, 1 .· nt and h m na
a k f , rting t
i i .imp nan · hi r
her specific organisation [mm lh,1t which :is no . can ppear ro be aJmo t impo ible.
Taltin int , a ount th in asing o ts ,o f
and faUure ,
as e hav e n in the op ning ase O ' thi
, · is
enUaJ to provid
manager with the mean to c:orrectl identify t
eak
opportunitie
and threa witWn he managem nL o
nm n1 to mpow, r th m lo mak b tt r
critical choices and choo e more feasible course of action in executing their
planning rg · in · , l ding n
nlr Uing functi n · in r po,n ibl · m nn r.
er
ln this chapter, we foe
the
ent environment, with the aim fa isting
manag rs ith th m au ,
id
th
tr n th , w akn
upportuniti
and truea m inform th' ir dee· ion making and their efforts to
ct re pon ible
man g rn n . b · --••.--·-· c: nr 1 · with an planatfon f th ompo i ion of
the management , vironment, folio ed by a disrcussion f · e micro- oc internal
nvironm n . Th ·Jt r. lh mark Jt and rem t
iii nm n are
p,1 in d.
The chapter i concluded wi.th a discussion of important characteristics of th
LEARN IN G1,QUTCOMES
·~
A r stud in,g thi chapter, you hould e abl,e to:
L01 : Explain the ,composition o th II anagemenl n ronm t and d pi tit
diagramma ically
L02: bcp ain th reompos1tlon of the m-cro- or intern I manag men nvironment
LOJ:
plain n composi ion o th market rivironm nt
L04: Explain the reomposition of the remote environment
LOS: Di uss th charac risti o th manag m nt rwironm nt by m ans o
ap propriate examp es
of G n ral Manag m n
Prin ipl
KEY TERMS
opportuni y
political/legislati e environmen
proc s· approa h o, mana m
remote envi ronrne:nt
r sponsibl approa h to ma nag m r,t
soda I environ me t
s reng h
c:ompetitiv advan a e
co mpetito rs
con ing ncy approach Lo m-nag menl
customeJs
cological nvironment
economic environment
int rm diari s
international environmen
la o mar t
labour unions
management enivlronmen
marte nvironm n
mkro envi onme. t
L01 : Explain the composi ion
diagrammaticaiLly
5.1
suppliers
sys ems
tedmol
th
r c
o management
•ironment
t
h management nvironment and depi
1
COM POSITION OF THE MANAGEMENT ENVIRO.N
mpo i ion f them n gem nt n ronm n ,
. at our cliffi Te.nt approach to m nag · ment. namcly the
B fi re w fi cu .
we will fl
pro
contingenl': and rep n ible appro h1: to man gement. Th
ith th nee - ary background to
our appro
· , in • otnbination. wm pro id e us
und.ersta d the airngeme.nt environment.
1
we estalb] · h . d that al!l managers, regarrlJ
of the type of organi :atiou,
hich th are invol ed, th ir
: na • d role( ) r spe i fi kills,.en
in
:rin four fund.am -n al. int -rre.1 tJ d ti ·n · , lso calJc:d th - manag menl
=,
om ma
functi ns, in order to achieve some or ol.her goal(s). The four manageme.nr function
ar plannin o · an.~-in I din and · n ro. W ·fer o u1· a th pro · appro .ch
to management, • hi.ch is cir:rul · and continuous (refer back ro Figure 2.1)1. The
pr
, ap roa h fi u on managing h to al r , v rall rg· nisation.
In chap er 1. wee plained the
terns approach to management, which deftne a
y t mi - a t or int rr laL d and in r p nd nt part arrang d in mann r tha
produces a u.nif1.ed whole. The organisation, which i a sy tem in it own :right, i tn
ons an in r ction wi h I environm nt nd i intlu
d b b lh l.h ind· tryspecific and general envirorunen:ts, whic.h e will ,discuss in greakr detaH in the
foll win
U n.
1
,
1
Ch p r 5: Th m na m nt nvironm nt
Th
nting
approach o ma.nag . nt, al
pl in in d1ap, r 1 i b d
on the sy terns approa h. The ba. ic p.remise of the contingency approach is lhat the
ap U ation or ma ag menl princip,J- d p nd on h p c·fic it ati n that man g rs
a e at a i en point in lim . The contingency approach ackn ledg lhat e e.ry
organisation even e ery de . artmen or tmit , ithin the · ame , ;m· ation. i unique.
v ry organisation xi in a uniqu nvlronm -nt with umqu •
I and stra i -s.
The re pon ibl appro ch to mana .em n ~ a]
:,,lain d in cha t r J. refi .r
to lhe management o - an organi ation built on ' p "nciple of ustainability,
r pon ibili.ty and ,ethic . B omblnin the e fo r appro ch (th pro
ontin r n ·y Md responsibilit approach to 1 nagenien ), Figure 5.1
the relationship between tbe modern org · tion and its environment
E VIRON
T
SYSTEM
SYSTEM
Tran
S
,
in.1••e;nx..-e~~...
tactlcal
operational
.......................
... ................ ,., ... . .
-
To other systems
Out
Produ
Outpul
_.
P nning, organising,
Oulpul
Oulpul
S STEM
Figw; 5. 1 The ~dationship between th organisation and its environment
Vi,,
at anelemen.tary I el. t.h mana men pro ·
ntails th flow o i.npu from
the external environment into th organisation, the conveision (or transfo:rmation) of
th
inpu within Lh rgani • nal
t n , • nd ub qu n u,:p /out o, , f, d
bade into the ,external environment in the form of products and/or · etvic:es, profits,
infi nn lion r l ti n ·hip nd , th r u u • fnpu in ·lud , u are n limi d
to, bwnan :resources (HR), capital, tochnology and information. The responsible
m g, r will trans ft rm th inpu in .. re p n.s.ib] mann r and int grat h three
pillars of · · · ponsible ma.nagemem ( uslainability, respon ibility and et:hl
with the
four ma.nagedal fiu1c ion (plannin orga.ni ing, leading and oon rol) hid1 w, re
discus ed in chapter 2. The trans orma.tion pr c:
tum inputs into mi bed produc
and/or e?Vic · and o her outpu uch as pmfi , relationship. with takceholders and
th re ti n of job which w d , med in hapt r · a th r alion o· lh optimum
level of return for all · akehoh::liers of the organisation. The succ:e of the system (an
p n y l m) is I
ly d t min d
m i y and mctiv n · · illustrat d
by ir.s managemen · in performing planning, organising. leadin,g and controlling
·, n tio · (lh prin ip] of th pro
ap ro h · man.ag m t]. Furth rm
tl
I 7
Prindpl
o,
6 n ral Manag m n
ucc
dep nd
n succ
ul int ra ion with i nvironm . In thi
context, the envimnmen includes other uib-environmen, such as uppliers, labour
unions, fman ia1 instituti n , custom rs nd
• n.
The ,o rganisation is dependent on i · external environment. Mana gement must
th r, f, r u.n
tand .b t--ru tur an _ d nami o i 1.UJ1iqu m nag m nt
environment and. even more importantly. the anique trengtbs, weaknesses,
op port.uni,i and lhr a · ertainin to tl • nvironrn t tha impa · direct! or
indire ·tly on the su:cc
of the organisation {th prLncipJes of th conlingency
a roach to mana ment). At th1 point it i important o di rtnguisb b iW nth
t · rms str ngt.h, w akn
, pportunit and Uueat.
with.in an r ,ani f n and
de cribe what it excels at and wbat epa.rates it
fr.om it compe 'ition, for xampi
trong
brand lo a . cu , omer base, trong frnancial
po ition unique technofogy, ethical conduc .
tr 11 th an al b bu.sin
- ~li nc whi h
we deftned in chapter 2 as the ability of a.n
rgani ation
kly adapt lo di rup
operation
uarding i people an
·
·on hal to , ii f1 m
within n ,or
Weaknesses are those areas that need improvement
to remain rom
,f
,rand.
a weak fmancia1 p iti.
taken Id rel ti nsrup
I
and
Cionduct, roffl!ptioo in
, high levels
of d b •· high ta.ff ·
m d qua
supp.I cham.
Opportuni i
urab l , l mal f, o
that could Sl e an organi ation a compellh e
advanta
Fi r ampl a fa ourabl exc.haog
rat
a m ntry that giv
tariff ruts
ph· rmac: uitica.l com pan that ente
, ew
ts 'lb n w produ: · ·
·hare.
mp tition.
e a.re al o 311eas f:rom
-ptimum I
Weaknesses are these areas
that n d ·n p v men'l o
r main comr 1tive.
are fa
Threats ar1e d cribed _,, fac
of killed labour.
Oppor unities are favo urable
- t rnal fa tors that ould giv
an organisation
adv tag .
ai
competitive
outside the
or a.nisa.tion that have the po ntial to harm U
or , mpl - th· persi _t nt drou · ht Cor farmer
and whea -prnducing factory or the rising co ts
of p LroJ, i.n rea ing omp ition or a hort.aig
l 8
Strengths ar areas ithin an
i nan d - crib w at
i
. nd what .separates
Thr ts r des rib d a f ors
outside the organisation that
hav th - ot ,·tial to, rm i
Ch p r 5: Th m na · m nt nvi ronm nt
mp :u ·
n b d fm d
situation or condition that puts an mg:ani ation
in a favourabl or · ·pe ·or po ili n - a po ition
advantag ous in , omparison with p -ers' po itions
- which commonJ leads to above-averag
tum on inv un nt for th own rs of th
com .etitiv. advantage is a
1tuatio ,or ndition that pu
an organisation in a favourab e
organisation. From a respon ible management
ppma h1 a omp liti.v dvan .ag i d fined a
advanta,geou in comparison
wi .hp
'p iti, n .
or sup r or p
on - a.po i ion
a n advantageou position that lead o abo- ev ra r tum fi th ·t~eh Id , f th rg n~ ati n.
In the opening case of thi chapter the history of Abil · d cribed from 1999
until _01 • indi airing h opportunity id ntif1
ct - fotuld rr Leon Kirkini by
lending to South Afri•c an ignored or deeme,d too risky b convemionaJ banks. For
th
i · d 00 o 201 . th bank api aJi , n h' opportunity nd i
r, n - h
lay in a viable business mode!l that pro "ded th or anisation with a ompetitive
ad · nla . in th ban ing indu try hich
d t b v ry pr,ofu bl . Th , during
2012 the external environment st rted to change and the bank failed to rel:o Irl e
th threats in tenns of i b i
m del - mining tri e began tha rip l d th
uth African platin um ind try and miner:s began to default. o · Ina · . . ince th ,
bank made no provisioq for · deb and engaged in unsu tainable lending, it
wa th b gi.nning of the nd. Along with lh purch . ,o U rin - , whi h mad
huge losses, and re&:!
end·, g of the bank. th e weakn s led to the SARB'
d i i n to pla ·
il u r uratorship and o u p
hil' ha
on h J .
The ca e al o pro · e evidence of irresponsible m na ement - loan ere made
av ·' I bl
Ii n. , I annual int, r 1 rat ·
hi h · 0 p r i nl (l:h
po rat
in South Africa eraged 7 per cent per annum r m 1999 to 2019). Leon Kirti.nis
mad a nil at al d - i ion io, buy Ell nn
wit u pr, p r d diUg n ~ r fol]
boar appr a:1). and the comp.any diq. n t tak:e the ad i e from the SA.RB to ell
l rine · r to tak d p it - a tion · h.:it m de its l ·1ure tand ut a ne of the
.· oun ry's most hi. h- profil o,r pora f: ilur .
[n th Fi llowi
ti n th ari
mp n nt of th m ,n agem nl nvironm n1
will b~ explained. These components are usuall categori ed into lhree uh□ ironmen , namely the mi ro- or int rnaJ environm.e t, th mar , t environment
and the remote en ironment.
L02:
5.2
Explain the composition o the micro- or internal management environment
THE MIORO- OR INTERNAL ENVIRONMENT
· th in m · I nvironm n . l in lud
the organisation' i ion,. mission, goals. objecti • fun tions ( ch a . mark ting,
in n · hum n ,
ur , dmit,. tration and • , bli rel tion ]i nd th
urc
availabh~. The micro-envimnmen:t a.I ode igoates the area o,ver which the manager
1
Prindpl
of 6 ·n ral Manag m n
from th mi ro- nvironm n, fi r
ta! r fu.11 n r l. Vari us [
b
example chang in m11ne.rshlp, organisational culture bu.man resornce polides,
commitm nt to transform . lion, in tm n in · d l d v lopm nt programm ",
commitment to kills de elopmeot programmes and ommitment to • tllical onduct.
The ompo ition
th micro-environment· illustrated in Fi ure 5.2.
or
1
Fi~u · 5.2
Comp ltio o o
A
A thomu h analy is ofan organ·
nvironm n will nabl
I
•
nm n -
·on' micro-
nag m nt to
identify its tre gths -nd eaknes es and to put
it I in a po ition I u vailabl pp rtuniti ·
better and o ove.rco e threat in i external
nviro m n.
The ma rn- or xternal envfromnent aompris
lwo
· r , omp n nt n· n1 ly lh m , k t
The varia bles in t he micro- or
in rn
vir nm n f an
orga i:sati on are aU connected
,o on ano h r b - aus
they a1re interdependent. for
xamp1I the mission a1nd
obj
iv -s of an org: nf a ·on
will determine all t e activities
j
en ironment and the remo e environme t. The
ma
- vironm n 1 d ign·
l at h v r1
iou
ion
outside of the organisation o er
(such as ma rketin g, finan ce and
man g: r ha n ·• ontfi 1 al h u h orpni ation
human r -· urces) w·11 -- rform.
may be able to exert some utfluence m c,· 11.ai.11
in tanc o er the macro- .nvironm nl {th remote
nvimnmenl to a J , re lent tl an the mar el enviromm, nt).
140
Ch p r 5: Th m na m nt nvironm n
nvironm nl
LOJ· E plain h composi ion o
5.3,
THE MARKET ENVIRONMENT
The marh:1 environmem lie bet-ween the micro-environmen and the remo t'.
rwirorunent and forms a hum b tw, n th ,or -ani a ion and th ri ma •
environment. Some authors al o refer o it as the e:ompetitive or task en ·rnnment.
Olh r uth rs ag in refi r ·t i
h m - nvironrn n r lh in · rm dia
environment. For the purpo e of this book, we hall refer to it a the market
n · iro im n. Th mark nvironm n m ri
th oll in ub- n i •am n :
•
•
•
•
•
Cu tomtt (dien ) 1:heir needs. buying
pow r and b havi ur
Competitors. including existing
mp at r , n w nlrant· t · th n r~ t
and the a ailability of ub titute pmducrs
r rvi
The labour market and labour unions
in rm di r:·, whi h includ wh
reta iler;, agents and brokers
up Ji and th ir a 1ahdn p • r.
figure 5,
I
mu ~tra
• th
comp iti. n
market environment.
lfigure 5.3
CJompo itio n of th · m _r~
t nv·mn,m nt
ltt•n•
The variable f the market
nvironmen a all' conn ct d
to on an.a h • r becaus
they are interdepe ·dent. For
xampl , an orga rnisa ion, a11d
its competito.rs may compete
i h a h o ·h r n on ly for
he same custo mers. but also
for -h
m skilf d labour
suppliers and intermediarie .
Prindpl
o,
6 n ral Manag m n
5.3.1 Cu om r
Customers can be defm:ed a all tho people
or rg rdsation thal bu pr . du ,, r rv-ioe
Custom rs ar thos - individuals
from other p ople and other organisations. For
mr orga,i isa ions that buy
example, a rs,oo who buys a hamburger from
products nd/ s rvic s firom
Burger Kin i a custom r - au individual who
other indivjdua ls and other
buys products from an 01gani ation, ho bas the
i
nd h v b
ab·li to ch
b I
bur er rom vari
to choose between
producers of hamburgos .. On the mha- hand,
nt pr du ls , nd/or
th mark, L for lh organi alion• produ t and/
and suppliers.
or ervice consis of people who ha e needs to
b ati fl • nd th Fman ial m n w·lh whf h
to atisfy their needs. The market for hamburger will therefore con isE of all the
p opl and. rll'an· ation with a n ed for amburg . , with th fman ia] mean to
a. ' .fy l:h - need and Lhe ability to chaos bet een th different produce · / .uppHers of
hamburgers. The cus omerand them et for an rgani ation' product andlor JVice
ar Lb - niafo r a on why .n org i · ti n ists. o bav no u tom . · o ha no
al revenue and no profi . T erei r the u.rvi aJ of an organisation iiepend:s on
u om and t · Joya)
f
t in lh m 1 ·
·ould
ha e good .relation hip .
tain then customer and have a:n
in-d th n wl d
ds,
n an
ati
amp1l ,
an . .
;o ·
- ood industry should know thei t tomers in term o
th ·
·
. h w lo l t
ain brands,
u h th . re willin to
p · ·
how import
.,
ce ho~pin
· r them. how important
in mn of fa t-~ od p
· for them and bo important quality
u
al o p rtra
b
I
r
h. h i i flu
d by
ia J
~
i
the macro-environment For exam . le demographic trends affect the number o
th,e purcha ·ng p w r of on um r: and
cuitural value tan influence 1b buying behaviou:r of mo l cus omcrs. ustome:rs
also portra buyer power whi h is driven lb the numbe:r of bu ers in the market,
th importan
f a b bu , r to th
rgani ation · nd th o I o th buy r o
switching from one supp ier ·• o another. If an organisation hars just a few powerful
buy rs, tb · buy rs ar ·~ n b[ • o d. lal
rm nd r h v ry p w rful.
cu wmers, e onomic trend infllu n
Cu · ome - for pmducts and ervice try to force p,ri e down, the · obtain more or
higher qu lity pro uc,. • and lh · incre s • omp tition among U by playi ng
the one seller against the other-. A ustomer's bargaining power is li~el o be
r Ja -iv Jy hi :h und r lh - llowin il"i um l n , :
•
The customer purcha e la~e vo.lumes, re1att e to the upplier' total
rues
o]um •
•
The product or ervice repre ents a significan expenditure by the cu tamer.
•
Th
14
u tom r has availabl aH rnativ
for th
am produ l or
rvi .
Ch pt r 5: Th m na m nt nvi ro nment
M d m bu
the have
31
fi ,r
tain bl rodu , ri tu
lower ac,ceptance or un u tainable pr-oduct and servic,es.
b
hi h wfllingn
t
nd
5.3.2 Competitors,
Asid from customers,
m · t i.tnp rtant day-to-da
f;
•
are th ingl
orce an.o,rgaru tion
Comp tition in th mark t nvironm nt
A competitor is an mganisafon
in th
· try ra imn r
can be defmed a a ituation in whlch different
in du
· ers a similar
orll'anisations with more or le the same product
prod
or rv[
omp l for th busin
patronag
of the am.e consumers. For example, fast-food
t uraw
cO,on Jd· n Burg r Kin r mp ito
I y fli r mo, or l
h
ame products to the rune consumers. Michael E Porter fHarvard Bu.sin
School
d · I p d a ~ m ~ rk Fi r h a
,·m nt and va "3 • n
h
mp ti •
·• n
of an organisation. commoniy known a Pon: rces Competiti e Po ·non
An
· Thi an
d ,on
premi th
re ha d Lermin
the co,mpetitive inumsi
nd at
·
fa
, p an organisatio n
to u:nder tand the tre
of its
po i ion. Th
fore
· tin
comp Li:tion, n w entt
to the
·a uf uh titut , th bargai
of uppU and the ba - ainin
ers. The bargaining power ,o
ers
wa d'
d in th
n .. I) nd th b rgaining, pow,-r o
suppliers will bed . ·
. esponsible manageme - relaied actors
ba
•
ah
inn
Competitors. Ev,
ir th
ation that tries to market
antly up a ain t
nark
- other organisatiom. I.hat an· currently active iu · h
o
· , · · r a ·h
•
· gl
re · lh m r t. us m
due, and services. As more
·
pra tic · and produ , i
e t"lltirc industry.
'ce and/,or product
'ng omp titi n
ame marker ector
·
m re
o e towards
ra ·ti
a
Uh hi h n w
tablisbed organi ations in lhe sam
m rket The ti Uowing fa. to · er a barrier . new entran, : (1) Economie
of caJc. _x.i ti11g org.mi a · u · iv a panicular m rk can chi ·v " onomi s
of scale when increased ol me lowers the unit co t of a product or ervice
prod'U d by lh · bu in . Th hi h r Ul · onmmy f ·al • h gre l th ·
entry barrier for ne . entran . (2) Product differentiation. Thi . refe[ to the
tran
nt
orgar ·, alions ,c an ompete w.itb
uni.q n ·n qu U , pri • d ign, bran imai o cu tom r rvi
bat
gives the prod1t t m· e:rvice of one organisation an edge o er the product
r - rvi
fan tb o,rgan~ ion. Pr du •· diffi r ntia i
• ft n , db .
organisations lo lock i.n C'lJSlomer 1oyah Lo their products and/or ervk - .
(J) ap ·tal rnquiremen . Th" r fi
lbe amou.a of capital n ded 1
fimm
quipm nt and machln ry. pun:ha
tock. pm ha . or i as land
Prin ipl
o Gn ral Man g m n
nd build.in , hire
mp t
1
t and kill d taff, and
n. ( } G , mm nt
regulation. 1n ome instance , go emment regulation can pmhibit or re ttici::
p • ntial n
ntrants
an indusny.
•
Sub tito.te product o,r services refer to product and serviaes that can
a il re la · noth r organi a · n' produ t r rvi . u · titut
r
a powerful force espedaU in lhe pharmaceutical indust . The threat
of su b itution i 1argely ba ed on the fon.n ula m the patenL Patents and
ex Ju.si 1U s re form of prot clfon for drug: make lhai ma · at, eel ho
nd
wben a eneric drug is approv d and can be old. Ne-. brand-name dru
are u uaUy pr
t d by p t nt (i ·u d by th, Pa nL nd ,rad, mark ffi e)
that prohibit others fm rn ellin g generic version of the sam drug. Period
of mar ing
lus· i y for brand- am drug
n al · i
t th ,ppro a]
of generic drug . Once tb . e patents and marketi ng
- us1 · ·e expire {or
if th p n air u
uU h l1 n d y lb :f
n n1.1 ~ mp n J,
the generic drug ca.n recei e fu)] appro al and can he old. (ieneric
m di ine n rall o ts ab ut 80 to 85 p r
I ~ th~rn lh ir nam · bran
counterparts. Organi aHon · are also tll~at n d by Lb a t1Tactiven ss and
availability o.fenvironme tally friend] · , ema ive pro uc and ervice .
Org · nisational manag r n d to, b
are of product redundanc du, o
co nsumers' changing consumption pallems.
j
A thorough competitor analy · an help an organisation lo unde.rstaml, int rpr {
and predict i ,competitor '
tio
nd respo e . A clear unde ·
ding of
t:ribut to lh organj ati n's blity
comp
th
lions of mp ti
suoce full in i indus
5.3.3 Labou r a et and labour unions
Th labou.r mark
·an b d fm d
all th
people w · are able to ork and wanijobs in a
t, abour mark t i II th
p m area it1 I lion lo th numb T ol'job
people who are able to work
tha, :r a ailable in that area. It is me pla
and wa t iobs in a ,p ci 1c
h
mp o
omp
hire h b . 1, • 1d
area,
in rielat1on to th number
workers compete ' or rbe be t j b.
labour
of jobs hat are avaiable in that
mark t in am e nom fu ti n. vit th
r a.
d mand and upply of laboar. AJ ough the.
labour market i , in economj Lheo • equa ed
to atlte.r .m31rkds ·u h
h rma.n ial mark l or the mark for produc and
ervice it has i . own unique charac·eri ti ·. The labour market compri es many
ditli rent mar
h a th m rk! - · · ,o f p pi, with ariou Jd]] I 1.s,
occup,a tion
rou ·
·
exes and geographical region . These markets
nl in
abl
l b .
n1 bili
d
is An t r
important di erence be[\ een the lab our market and other market i the temporary
n tun.lh
mpl m
la fo Mp. On a U!i h r bu
p11 du
fi r
consumption, the b .come the property o the buyer. This · no t so with the
144
Ch p r 5: Th m na m nt nvironm nt
mpl ym nt re] ti
· hip. Eith r th
mpl y ·r r mpl y
m ·
rmin,a
the relationship . This leads to greater fluidit and unpredictability in the labour
mar: t. A rg ni ti n· bilit to .ltta tan
am capabl mploye . from th
laboUJ" market is es e.ntial to its uccess. However an org.mi ation' personn ·J
r,1::cruitment a:nd elect-ion altemativ , are often influenced b th nature of both i
ext ma l and i int -m l en ·ronm nt . · n o, anisatlon•s a C ·
lo n d d
pe onne1 is aftectJed primarily b three facto , namely the orga · tion's reputation
a an mpl · y r, l a]
n mi
ndition nd u.b · qu n mp,] y n ra • nd
the a ail ability of people with t'.he required kills .. Organ· a ·on mus al o compete
b ur union pl , n
with n ano h r or ·ki L d nd omp t n lab r, wb
integral rol,e.
Lab ur un ·on onsi t of wor rs and t tion
leaders who are united to, protect and. promote
th ir mm n i, l r - t . Th prin [p J pur,1 _
of iabou.r union are to negotia e ages and
w rking on li ti n , r .u at · l Linn b tw , n
workers and the employer, take
llecti .e
acti n and enforc the ter
of olledive
bargaining, and help U: ir me bers to ttle
their grievance with the
p ' er.
1
5.3.4• I ntermediari sS
B ide _ l;ousum rs. compeftors, the labour
market .-nd l our union in the market
n 'r nmc
in rm diar:i
I o play
impommt ro]e -and affect the organis ·
tly and h1d·r · t . [n , rm d'
as miil.dlemen between the manuf
pr du t nd
j
and th
, 1 n um r
of lhe producls and ervic:
Intermediaries
inc ud
hol, al ,
tail • , g n · and bro
Alabo run ion ·- an organi ati ~n
ho,se membe5hip ~onsis f
work and uni nl d uni · d
to pro iect -and promote their
common
An
inte ,
in
m diary
i ain
mdivi dua I orr organisation
-hat links produ rs o o her
intermediaries or to the ultimate
buy r o fi nal consumer.
rs,
an r
v h"ch
la
a rol
in bringing a produd or se ice from he nia rmfacturer Lo the fu:ta.l con u.mer.
Financia] int rmediarie , u b as ban · , in.surer: and other fuJandal institutions,
pla a roJ in pro iding n or· ni ·ation with th n c, ary ap,i I o - art up and
run an organi ation u ces full . Mar cting intermediari hclp an organ· atio11
tid m ke vnila.bl , pr du t or rvi e through co,ntra tual
arrangements or pu[d:la e and resale of the i em. Each intermediary receives the
pr du t at n n
· p in a d mo · ~l t Lh · n
pri in p in ntil th pr du t
reaches the final 0J.1Sumer.
to promo , eU
Prindpl · of G n ral Manag m n
5.3.5
uppli rs
Eadier in this chapter, the systems and pmces
A upplier i a person or an
ap r a, h
o man g m t w, r· di u d.
organi tion '.hat provid a
when'' the rgani Lion i reganl d a a y 1:em
produc or service to another
that attra · inpu from i external en ironment
p r nor organii ation.
(
Figure 5. l). The inpu that an org ni adon
requires were identified as human :r, ourn •
Suppl"er power is the pressure
pit.al. ochml gy and information.
1
hat upp rs a,n x rt on
organisation depends on suppliers to provide
organisations by raising prices,.
re ular ·uppli · or U1
inputs Th barg ining
low ring quali y, r redu ing
power of uppliers refers to their ability to
the availability of their
rt pre ·ure on organj ti ns~for
mpl y
produ · •
ra · ing their p,ri
lowering the quality of their
produ
r Ii ducing th availabilit of th ir produ .
· r ng
i r can al ·o
make an industry mo re competitive and d ·reas the p ·
pu~ential for lhe buyer.
All of th e fore - rep ent co lS to the buyer. On the oth hand, a weak supplier
,(on
ho i a lb m rcy o th • buy r in terms of gualiry · d pri l make an industry
le s competitive and increases the profit pot ·· tiaJ for the u er.
11
1
R port ibl managers will addre
upplier bonding by upply chain ust ,i nability
initiative and will al aim to reduce upp · ch in co
through eco-effl iency.
Eco- ffl ·ien
i bas, d on th con pl of ere tin · more pr du t and e ic s
while u ing , ewer resomces . d er · ting les wa te and poUution. Eco- fO ency
h b I n p11 p ·ed a , n o th m
t o prom t a trnn form · on rrom
unsustainable de clo pment to
.tainable development.
The · arious sub-
h market nvironm · nt may ptL · opp rtuniti
11 •
andfor threats
nvi.ronmen wi
atio,n. A thorough an
tan
m nl o idenU
o gan, a ·ion· market
" a and pportuniti .
)
L04:
5.4
Explain t e ,com po itton of th r mo e enviro
en t
THE REMOTE ENVIRONMEINT
·road r
nvir nm n r f, rs t t
environmem within which th o
nis.ition
mu
fu.nction. The remo , en imnm nt
urrom1ds lh ma:rke en ·
ent. I in Jud
aJI external influence that do not fall
il'l ctly ilhin th ph re o intlu n · f Lh
organisation. but wlucb do have a bearing
n i a U i : . Wh n anal ing th r mot
environment, he emphasis falls on the change
tha th un ntrnUa ,1
ariabl
Th e remote environment
on i
,of th , for ,
h t
affect the or,ga nisa t ion s
1
a iviti , but ar b yon,d i s
co ntroi and influence. The
r mot , nviron.m n -urrounds
the market environment.
a l:h ma ro
level caus,e and the · trategic implications lbese hold. for the organisation. For the
14
Ch p r 5: Th m na · m nt nvi ronment
purp
mati nal i , a numb r
within the remote environment., namely:
• li hn I gi al nvironm "'nl
•
•
Economic environment
•
nvir ,nm n
n b di
~
guish d
oci l nvironm nl
•
Ecological/pbysi
•
Int maU nal
0
I en ironment
nm nt.
11 ·ir
The ariable in each of the e , b-environmen have a ffect not only on the
mark t n ironm nt and ml d ision rnakin by ma • m nt On olh :r words,
the internal environmen ), but also on one anoi:h r, an this constantly cau e
hang · in th m n
m n n iro m nt. urthr rm r , t
v ri 1 p , th a
1
and opportunities to th market environmen and · o the orgaru ation. Figure SA
illu Lra
th
n • r lh. m t
m nt.
figul'l! 5.4
Compositio n o th r tnote nvim111 m nt
MUii■
The sub-environments o, the remote environment are al I linked
i h one anoth r -
i d"cating the int · p ndencies be · n h e ub-envrronmen . For examp • a
cha .ge in Lh . political/legislative. environment may have a profound effe t on the
eco omic environment. Similarly, a change in the inte.n ational environ men may have
a st.rang influenc on th
onomic n imnm .nt o· ount,y, ind·r ,ctly influ ,icing
the buyi g power ~md behaviour of customers in the market environment.
l 7
Prindpl
of 6 n ral Manag m n
5.4.1 Tc hnolog,i al cm,ironm cnt
The cechnologica.1 environment i primarily
r, p n ibl
for ·hang
in th
r mot
environment. Technology an b defined as
the
owledge. ool action and ch.niqu
Lhat are used to tr.m~ onn ld · , information.
raw materials and components into fmj hed
produ
and crvi . ' u.rth rmor , t dmo]ogy
encap u.lates the physical e]ements of human
inv nlion
nd inno a ion.
hn ]ogi al
in· entions and innovations re ult in n,evv
ma h.in
pr du 1 proc·ess;es. m lh d , rvic
which all bring change in the environmem.
echnologica I environment
r fer to th tat o ci nee
and rechnology in t e cou try
and ri la d a p ts u h th ·
Th
rate of technological progress.
in i u i nal rr ng m n
for development and the
appl i 1tion o -w hnology.
and
na m nt,
logi aJ . vi mu nt
Ti n
·n t1
counay and related a peds such a . the rate of technolo
tutional
rran m n ford v lopm nt and th • ppr i n r n t hnofogy. T hnol . y
includes inventions and innovation • whi origina e in research and development
mainly
bu ine . , uni er: iti and g v rnm n .
Man ne teclmologi are radicat enough to for,ce organisation to r,ec, rudder
th ·r · i, n, purp
and m h
f p rali n ,r f; ,
Un ti . Th bu.sin
landscape has c:han,geci d.ramaticall
,e r the past few ears. · ew technologies
·uch a ma hin I amin ,, arti I iaJ int m nc (Al) nd • loud mputin if all w
organisation to gain a better untlerslanding o their targe mat . and to get more
done in. l . time. In additi . , h internet allow smaJJ organ· .ation to compet
with big industry pa
.h box b : low pmvid
r of ampl of n w
tedmologi and thcir •tffec , on organ· ations.
)
Examples ,of
w technolo gies in organisa ions
i ho ine, real-time financial managem sy tem , manage~.can determine
th profit and loss po i ion o thej org nisations on a daily basis, wh"ch wa,
· possibl with manual m th d nd arli r st g ,,of ompu r , ehnology.
• Banking cu taimers can p rform
lo ations, red cing banki, g
merous bank"ng fun ions from remotJ
·s md
onsid rably. In , m tba nkjng. al o
CC
known as online ban ing. :Offers customers a.I most every ervice traditionally
v ilabt th u9 h I c I banking bran h
u h a d p it , r n, -rs and
on line bill payments. It a!lo s the ser to conduct financia l transactions via
th i n through h fi an i,al insti u ions bsi -. M bil a ing i
the use of a smartphone to accomplish tasks such as checki ng bank account
C
ba lan
, tnmsf rring unds b tw · n diff ren a counts or ma ing accoun
payments. Bank branches have become almost obsolete.
148
Ch pt r 5: Th m na m nt nvi ronm n
• Th in rnet, world wid w b and mobil t hrmlogi s are making onlin
order"ng, dis ribution and sales of products possible. and are changing the
way th many organi a ion comp
f r ust m r . El tr ni omm r
in Sou h Afrka is outperformi ng1forecasts and online retail was pm'ected
to ir a : 11.4 p-r n o
al r ail sa1 - in 2018, u,rp,a ing h R14 billi
mark for the first time. Th 2 per cent mark is Ii ,ely to be reac ed in 2022.
orecasts ha b -n b at n ai a resul of massiv investm -n ,- by retail rs
in online retail, aggressive marketing and llle rapid uptake. o new shoppi ng
chan
u has mobi e hopping and In tagram.
• Social media has .not o ly changed people's peliSOnaJ lives but has al o changed
the way they ondu bu iness. Social m dia r rs to form o I troni
communication (such a w bsites for social networking)1 hr, u9h whi h users
create online cornmuntties to share informa ion 'd a , perso n3
ag.es and
oth r cont t. such as vid os and pie ur , Organisa i
oci I media for
various purposes, for example to market eir prod , cts d/or se,vices, to get
f db
from h ir eu tom rs ~ har inform ·f
n rms of h w to use th ir
products and services. to share thdr conrac details 1
ial o ~, o driV! tra I to th ir w bf · 1 nd to '
u pli rrs. In ou
Africa, Faceboo ' is by fa r the most popular social · twork: for a.dvertising at 86
p- r n o · brands, w,i h Tw1
i l\ rand In t gram ;1 cond and third place 45
per cent and 40 per emit resp ctively. Link I comes fourth at 35 per cen .5
• Artificial in m· n · (Ail) i
d velopm nt of com1µu · · r sys, em h' a, ·
able to perform tasks normally r quiri ng human intel igence, such as vi ual
perception, peed, oo 1 1 n; d cision maki g1 and ran ! ·on betwe rn
languag s. Al is th
ility ot compu er program, to think and o I arn - to
mimic a human ex ert. l is :Sed in the ba ing,,.te.lec:ommunic tions, research
i, tail and h a h a
ndu tri In h altl, re p cifi aI , Al i .roving to b
a game chang , improving virtual! every aspect of the · dustry from robotassi
. rg
o sat gu rding priv . r of!d
ains yb rerimin I . Al
is ed to predict and diagnose d·sease at a as er rate than most medical
,p, f · ion I In on study, r ampl , , Al mo i usin alg rithm nd
deep I .ning diagnosed breast cancer at higher rate than 11 pa hologists.6
Al and h nan · industry ar a
h mad in h a1v n. Th · nan ·ial , c r
ehes on accuracy, real-Ume r porting and processing high volumes o
qu n itativ data to mak d ·sum , al l ar, as hat in Uig nt mach i,n s x
in. One of the biggest finan ial trends is th mbo-advi.ser, an autom1a d
portfolio manager. The automa d advisers use All and algorithm t,o
an, data 1n the m rlkets. and predi t th b s to k or portfolio-be. d
pre erenc·es. Wealth management businesses use robo-advi.sers beca s:e it
not onl1y av th ompai y and :Ii n tim and mon • bu also pn du1
some extraordinary returns..7
1
1
Prindpl
•
o,
G n ral Manag m n
In th travel and tran portation indus ry, Al b omin.g a1m ga-tr nd. From
making ravel arrangements to s ggesf ng t he most effiden rouite ·ome
ft r work, Al i · makjng i asi r to g t around. Go gl · u s Al in numb r
of areas, but he technology's specific applicatiori in Google Maps ma ~es
our oommul a lot
i r. Wi h Al-, abl d! mapping, h
rch gi nt'
technology scans road i nrforma 'on and uses algorithms to determine the
optima rout - o t - b i on fo or by car, bilk , bus or train. 8
1
,
Th mo t ba i ffi t or
hnol gy and
hnologi al inrw a ion i probably
higher productivity. The ability of an organisation rn pr u more and better
pr du t p
a Ou at to 'omp ti
, mp lling h m ore· . _ th ir ·tra· gi
plans organisational structures production methods mar ets and other functional
trat i .Effi •· ti man m n ft hn I
and inn
'. n an b n trem ly
impor1:ant ource of competiti e ad antage for or ams.a ion . Th" r1ecquires a
conlinu d a5sessm nt of th
hnol gkaJ environm t. Thi a e m t hould
iart with lhe id ntiftcatfon o · lhe important and r
anl te hnologicai trends tha:t
can have an imp, ct on the or ani ation and i industry, for example AI. S ond,
th organisation bould .in Jy th pol ntiaiJ _hang in import nt • urr nt and
fuhrre technolo . For example, h uJd th orgami ation be a role pfa ·er in the
mo or v hi I m nufa ·uring · <lu '])', l'
fJ t o th fl p]a me ·
human
with robo
hould be ana!y ed. Thi
the impact of importan techn:ologi on
mp Uti n h uld b an ,l
'. In th mo r v hi I · manufa turh: indu · ry. ti
impact of reiplacing huma ns wi robots wiU have a positi e effe · on productivity
nd
t tru tu, , but
h , n a iv
n
u n
i
nn f job l, ·
The fourth tep, in olv the a.oaJy · of the ,o rganisation' , chnoJogi a1 trength
and akn
. Once a rganisaHon · awar rt t n I, i al trends in th
indu try, the potenti l hao.g · in CUTTe.nt and
/
future te hn lo
ani:l the impac ihereor on
omp tj Lors.
an t
es m 1erms.
1 b in a p . ition
it o
and eakn
t
-·
1 t • p, th · rgan· a · n
b uJd d ermine a technology str. egy m
whi
. ll h prioriti • r Ii :t
rm
of tochno ogy that it will ptnsu to gain a
mp ti iv a vanrn.:1 . · igure . d pi t thi
proce .
The process is ongnrng -
technologica l inventions and
i no . ,ion a nev r-encHng
and the process to develop
a t hnology r ,-gy will b
repeated.
Ch pt r 5: Th m na m nt nvi ro nm nt
Identify important and
rclevrm t technological
trends
D~velop technology
strategy
1
f n~~~c-.tl1c.Qr,g~~i~t_icm'.5~ · ,
, t~hnr~o.91.gil ?,l1,i~n9tt1s .
L
ian_d,_wca~ncss~·_ ~ .
,Figure 5.5 Assessing the technological environme.nt for
e developme.1111: of a tedmology
trat
Innovations in ad anced technolo
rr in . i1 E ib1 fi r , ur o i i ·
job an ·
hours. Ho
. sm
· dudin
robotic , Af and au omatio
are
mo pn1du iv
ii
rkin
h f, w r
· ve a serious downside since it : ay lead to
id
b fit of teclm I
Ia
and the competitive ad
at h may bring to organi ation th e ~,. wid pread
fear th t robo and
·ob and throw milHo of ~uple into po rty.
Th.is transition focls scarv at d uncomforta.bk fo r many p opl amt man busines
managers which · u . · es the point tha. the ame teci:m ugicaJ invention can be
at1 opp rtu.ni y
· m , whil - b ing a threa to olb · ·. Man tudi have b n
conducted
all indicating signiftcant workforce d" mptfons where 1,o -qualified
wo
lik I o ar th bnmt , r h
yu
nl ·
a th ability .f b ir
jobs be automated is higher compaze:d to highly qualified work.ers. 9 It will become
du ati n,
n ·· 1 tha p pl ngag i11 lifelong I • iug. Th traditi nal m d I
h1 hic.h eople focus their ]earning o the years be. ore the age of 25, th :n get a job
and d ot mu att n i n t educa i n , reaft r · ob i t .
th ,o n m rary
world, p opk can expect. LO s i • 1 job , see whote ectors di rupt:ed and need to
develop and r,ede e.lop addif nal kill b a e of economic and ocbnologi · a1
chan . Th ty
of work th do at age O will I.& J. b uh tanUaUy diffi nt
from \Yhat they d.o at ages 40 50 or 60 du to technological advances a.nd pe p]e
_nd org . ni atfon n d to adapL
high
· unempl
Every ontin n and country ha their wn unique haUenge impa ting on the
uc
o their bu.sin
eclor. I n . outh fri a water: energy and transport
can be ingled out a areas where technological inventions and innovations are
n d d.
ulh Ari a'
a r ri - ou
can only u ta·.n 80 million fl pl 1( h
curren population is 5-8 millionL0) and it i regaaled b ome a a e-mi-d ert.
Th o ntry al o h a dire n ed ~ r I maHv fi nn · r n rgy in th ·urr nt
Prindpl · · o; G n ral Manag m n
in.fn structu,
ann t
pp n h
in
in d mand for p
r. P r failur
and load hedding have become a tandard occurrence. impacting negaitivd on
org ni ation and the c rporat
· tor bu ine
nnden consumer nf den ,
in e tmenl on 1dence, mpJoyment opportun.iti,e and the •conomi gro th rate in
the country. TnmsporL technology in S uth Afnca is al .o an Increa ingl imporitan1
issu _ du . ta th ountry' contlnu:in urbanisation. · _ s en from b _ xampl
abo e technological factors an: interdependent Also, tee ,nologicat factors
Lb r ub- nvirnnm 11 in th r m , n ·r nn n! r rg ni lions,
we will se,e in the folio\' ing edion orusing on the eco mic:: en ·wnment.
innu n
5.4!.2
·
Econo mic envi ronment
f r L hn logy, th
ono,mi
nvirnnm n
play a huge role in the remote environment.
Th
n mi
en ir nm nt
Jri
o
I lh
extern 1 economic factors that influenc the
buying p
,r
nd eha i ur
and olher organ~ ations and
tb erfom1ance of th ,ol'.gan· · ·
E ampl
of thcs " rnnomi factors r- bu in s • yd •
in· erest rates inflation, unempl - ment, trends
wi h re ard lo lh gr ' . a ional r du , ( NP).
onomic · nvironm nt
re ers to aU the external
th bu ing1
i
o
,consumers
lrnv·our
o her
organisati o
nd h re for ·
affect the performance of the
organ·sa i n
economic growth Tat mone ary and fiscal
p Ji • tr nds in ·
of p ym n , h :urrenl d p vi i n.aJ l 11 f th
economy in terms o r ce ion and depre ion, and th influence of rec;our · • to
m nt.ion
r; . [
n raJ LI , · omi w ll ing f
unt:ry i m a
d
by its g s dom ic product (6DP), hich is the total value of all the products and
ivi
f1 all produ d within ·h horde · , a , o ntry within a
ift p riod
i(u all a
r . outh Afri a nttd a g owth rate of 7 per · ent per annum in real
- to provide job foir the millio ,
f i popuJation that are unemployed. Th
co. m , in tum, i affect d b e 1m logy, politi
h
logy.
ial ~nds and
the in emational environment These cm -influences constant! cause changes in
I
th
nomy, afli tin - org n' a itm
nd th i ma.nag m nt. E onomJ
llan •
and trend therefore demand c nstant vigilance from organisation.aJ managers and
m
uire 'lh m lo rev·, i.t ·h rganis ti n' . vi i n . mis"i n a em n g al nd
strategies.
.1 provid
xampl
onomi indi ato for outh fri a. ·ompared
. abl
to various other countries, namely the United State of America (USA). Brazil. the
Uni ed Kin d m [U ) and hin fi r th f: L qu rt r f 20J . u h Afri , Brazil
and China ave considered three ,o f the fl e major emerging national economies
1(th
h
r R .a nd India}. BRI - - i h
ronym · in d fi r h , a · i ti n
oJ thee five national eoonomie . The USA and the UK are co1lSide:11ed. developed
ountti s (th USA ha be n ch world' top onom i c, 1871, ~ How d · y
hrna, Japan, _ermany and th UK). 11
Ch p r 5: Th m na · m nt nvi ro nm nt
rndi -a ors of s .
Tab1 5. 1
qu rter2019
USA
Bra.fl
UK
China
3.1
-0.:2
0.5
1.
Emnomic
indi or
South
GDP ,growth
ra ,(Qb)
-3.2.
Unemployment
27.6
3.6
12.5
3.8
3..67
.
1.8
.6'6
21
2.7
Interest rat (%)
6.75
2.S
6.5
0.75
4.35
Business
28
52. l
56.5
-l3
49.4
Africa
I
ran- ,[evc,)
Inflatio n rate
l%)
-.....
on 1d 11
Consumer
5
97.9
on 1d- n,
1:25,
_-r'
Corporate ta
r
~
-10
48.4
21
34
45
37
27.5
329 21 380
212 362 271
Nb)
Persona l income
ta r t (~)
'
28
Popu~ation as on 58 047 097
21 June 2019'
--
19
25
5
45
6G 948 637
1 19 927 138
Source: Economic indicaitor a a or com ,,ilat ion o the table · as ob a"nect ra m Trading
E, onom i, (20119), - opul I n dat wa obtain d f rom Uni -d Nati . . 1019).
Th outh Afri. an o om . · rank h rp'l y duri n th lirs · q arler of 20'l ' , hi h
wa the sharpes q a
y d line in e 2 09, main]
fie ting the effi _cts o,
E kom' p ower cuts during this period on manufacturing nd mining in the country.
h cou ry " un mpfoym nt rat of 27. p r • ot w6ich qua - 16.29 million
people. i a bi oncem a.nd, compared to ,other · ountrie , one of South Africa'
bi
t
n
. A bu in · · n d n
_fB .) indi at · lh p r ntag
of bus.i nes . people in a country who are: arufied \ ith the pre ailing conditions.
II pa
~h rd V• I pin
u ri ·~th B - I r u h fri a i V ry I . Th
cons ner confidence index (C□) me - m es how optimistic m pessimistic consumer
r ilh r, p t t th
onom · tii 11 ar fuh.lr . An in·r
in ·1 will I ad
to an inc:re.ase in onsnmer pending and \i ill timulate the whole econom . The
country' ,c,on 'Um r on.fiden r
from 2 index p int in th pr v i ous quarter to
5 points in the fust quart r of 2.0 l9 due to Lh out ome or the aationaJ ele tio n
tha were held on 8 Ma 20]9, and the ta.bill ation ofE kom's power supply in the
• nd quan r o, 2019,. o n um r onftd n in oulh Africa till ompare ery
poorl with other developing countries. South African tax ra te 1(for personal and
orp · t l
)
ar
t
m ng Lh hi h
in lh world.
n ml
ing b . rva i n
Prindpl
of 6
n
ral Manag m n
nd ·· n m r . on, td n · indi
• r th Uni d
Kingdom, whlch att both negative, mainly due to the delay in Br1exil (the United
Kjn gd m I ving 1h
~ p aa Uni n. which wa du t
ak place n 29 M rch
fr. m - bl
usin
· .1 · th
201'9).
ab v , th f, ,II · wing imp rtan poin .
mad :
•
Economic variables hou]d not be viewed in isolation inoe thee variables
are int r p nd nl.
•
Trends and change in economic ariables should be considered.
•
- n mi v riabl · and rend d m nd con t nl
i b r ani
management, with appmpriate actions, that ma lead. ,o changes in terms ol
bj
nd t ·
gi ,.
The data provided in tbi table will be comple d
pand mj · - d mandi ng
different during the COVID-19
ion and han , from
Th g vernmen · a major rol
· ni
i nal man .g m nl.
in ilie remote envir nment •
inc U i.nfluenc Lh organi tion prim rlly a a r gulating ore
law • directly affecting he a that organi ations operate. Tax gulatton
in tan , ha
di ·
u
n ach and v ry rg ni · d n. Jn
th
ri a,
for example, value-added tax 'AT) is levled at the tandard raLe of ts per cent on
th ·upply or g
ml : rvi
by
i ten!d
vendo,rs. A endor is a person or organi ation
mring
hing
V u ; whi. h in u
Av ndor i a p r on r o,rg, nitreet tradeis. 1, he tax rale was 14 pet cent until
sation offering something for
h
·a
2018., and han · d &om 1
r c L :B ides Xf compani
31 ,
priJ 20 8
ar · a
0
-1 . v -nd rs 1n lud
tr t
o
traders.
in uen d b companie • tax and ·nd· idual
ne t pa indi idual axes on incor ~rn d. hang _ in in me laX law will hav
a direct. effect on the purchasing J) wcr of an oJlanisation' rus omers, consequently
I
tin th al 1gure · urgani lion .
1
am
Apart from axe , govemmen intetvene on a arge c le b means oflegi fation in
t rms of impor ontrol, the promotion of por import tarill to pm t c n.ai n
industries agains exc ive forei .n competition, price controls for certain produc
and · rvi ., h aUh !UJlaUon . and in n ;iv
. ncourag d v I · pm nt in a
spe ific d ifection. The box belo pro ides the background to one area ofleg· latio n
f th utm ·t im )Ortan
o H bu in
m n g , n n1 I lab ur I gi lati ,n i
South Afri a.
Chapt r 5: Th m na m nt nvi ronm n
Labou r I g,slation in South Africa
Nafo al Unity proposed a,
compr h n iv r formation o South Africa's I bour poli , which up unti l th n
had reflected the racial d'sparities and inequalities o the apartheid e.rn. What t e
gov rnm ,n nvisag d was a , om1p11 h n iv fram work of I , i f n tha would
give effect to vario us oonstitut'.orrnlly eritrenched labou r rig ts, an th s regulate
aH ra ts of h lab ur I ti n hip b tw n mpl y r, , , lo
and g vemm n .
Their infiention was to create ain environment free o, ,conflict that was condudye
on tru tiv and harm no lab ur r 11· ion . o t I nd, U, ou r b ti n,5 of
the frame ark were promulgated, n,amely:
• Th Labour R laiti n A 66 o 1995
• The Basic Conditions of Employment Act 75 of 997
• Th : mploym n Equity Ai t 5 o · 11998
• The Skills Development Act 97 o 1998.
Following the 1994 el ction
Every employer should
the Government of
e cognisance o· the legislation co:ntaine
ith1 thes
Ats.
Th
A · h v, 1 with
d ubl, di 11
hang · h wa in whi h l b ur
are carried out in South Africa, and. og tber ons1:iru.te what i
argu.abl ,n r m,or ompr h n iv J b ur I gi r u fram w r ~ in th w rld. 12
The onstilution o · the country s.eIV · as lh primary law in South Africa. A
·n t
of labour relation it i of fi nd memal imp rtan e inre H extend
critical labom rights lo all oulh Arri . n :itiz,- ns. TbeFefor • ection 2 ,o f tli
Co · tPutlon titled Labour Relation •• · of importance ,o every emplo able citizen.
h on nt a pr; vidcd in h o , lo .
The Con.s ntutfon of South Africa, 1996. Section .23
v, ryon ha
h rig h1' t
ir labour pra ic .
Ev ry worker ha he right to , orm and ·oin a trade union; to partidpat . in th
activiti s and programmes of a trad · 1.1nion; and to trik .
Ev ry mp oy ,r has th righ o, orm and join an emp'loy rs' bu :n · s; and o
participate in the activities and programmes of an employers' bu ·ness.
Ev ry trad . union and
ry , mploy rs' bu iness h th right to d n,m·n i
own administration, programmes and actiivities; to organise; and to form and
join a f d ra ion.
I 5
Prindpl · of 6 n ral Manag m n
Ev ry trad union, · mploy ~:rs' business and employ r has th rig h to ng ge in
,collective bar,gaini g. National leg islation may be enacted to regulate collective
bargaining. r h , xt nt th , h I gHa ion m 1y limi a, r1gti , i thi Chapt r
the limitatfon must ,comply with section 36(1).
National legi5latian may r,ecogni e union eturity arra,ngem n
ontained ln
c:olJectiv . agreements. o ··he tent that th le islation m lim·t a ric ht in ,this
C: apter, h Hmitation must comply with
tion 36{1 ).
ourc, : Sou 11 A ri at'II Hist ry Onl in
5.4.4
So ial nvironm nt
Orga.ni ation mu t op . ate her a oci •
i • Th refore, tbe · o iall environment of the
organisation c
·
· t
odery
beli
, i.
:u
in whlch i b
that
or phy ital
our liv, lib
· n 1l1e a
al c:o,nstruct
th n . ural
h
The soci,al environme ons1sts
of all th a a o i y Ii v, ii
customs, its practices and the
way in whi · i b ha es.
e ha e
tru t i1 wn
ml · 1 ironm nt
, belief:, pra tices and beha iours
· · r acro
are
Th ont mp raiy ulture in man · d
and d lo ·
· ~ ··
· mbrnces · alues uch a ociaJ ju ti
Wnable de:
e
on making. In contras fo
rm r decad • people ar
a
f the threatening oda] a nd , nvi.ronmetttal problems and are
fee] esponsibl,e for so]utions.
u to
m of th
and ome
untri
· ,e nt and
e:ry much
startin to
The o ial environm ni. created by a ciery at large in whi h an organisa:rl,on
fun tion an b referred to
i external ocial environment If an organ· lion
operate in :1 , ulturaHy ,di ,
so · i • then th xt mal c"aJ n 'mnmenJ i v, n
mme complicated because the environment · mcon ist of diverse ub~popuiation
with lh ir own uniqu - lu , b U· f; and ust :ms. oulh fri a i • now n for itethnic diversity and. with 'i 1 official languages the country ·· a mehi:ng pot of
U Uf
.
An organi ation al o ha it . o, n ocial environment. We can re.fer to hi a i
int maJ · · · 1 ,vir nm nt, hj ·h · ·impl h rust · ms · · rs, pra i
and
beha iours within the ,oonfm of the organisation. An organisation has much
m
n ,rol v r i i t maJ
1al n ironm n th n i, h
ri
tern.al
i 1
environment.
l
Ch p r 5: Th m na m nt nvironm nt
· 1 h ng
t any ig m n h ng
or alteration over lime in beha ~our patterns and
cu]tural valu and. orms.
· I gi
refer
• 1gnif1c n ' ·. odal ,cbang a drang · yielding
profound o Jal ronsequenc -:. The indu trial
volution i r gani d as a good xampl or a
significant
ial change. The box bclo· describes
th four indu trial r volution in · 11,6 un it
now. From this timeline. you ill notice the
m n · p:rofi und h n
th t · d lti h v, g n
through.
I dus ri,ali ation refers to the
pmc s of moving from an
agrarian -based economy in
whi h h pr ·m r:y produ t
is food t a industrial
n v in wh1 'h : primary
product 1s g,ood:s, services and
i orm 10n.
lndu,strialisation and the four [ndustrial Revolutions
lndu triallisa ion ref r to th p,r c s of mo 1n · r man agrariari-ba, . d conomy
in hich he p,rimary product is food to an ~n dustf'lial economy in which the
prim ry 1produ ·s ,g ods, s rvi
n information. It al re r o, h pro
changing from a manual la ou mce
techno logy-based labour force in Mch
ma hin . play a larg r I . I . t ral1
1sa ion ha I d ,o , h ng s in
rk fp a.pl
work outside thejr com mu [ti
nd omeS}. and work ha,s becom £entred and
organis d amun
lh - fir
·
lndustria R-volution - 1765
The · rst transformation fi om an agriculltural to an · dustri.al. economy i · nown as
n ;,u rial R vol tion. It took pla
m the mid-18th to · h arly s,th
cen
11
ies 1n certain parts of Europe and North America.
Second Industrial Revolution - 1870
T S cond Indus rial R volut" la1b , t!h la r hang
hat cam abou in h
mid-19th century after the refinement o the steam engine, and witnessed the
pansion o I c d ity, p rol um, oil and st el. lhe S cond :Industrial R volution
i al o, kn.own as the echnological .R ..vohJtion. he development of the combustion
engine tout to us these ne r sources to their full pot,entiaL Furthermore, the
st I industry began to d velop and grow a ong id th exponenti I demand or
steel Chemi,cal synthesis also developed to brrng u synthetic fab ri c, dye and
r ii . r. M h
oommuni a ion
r al r \l'Olutioni , wi h h imv nti n
of the telegraph and the telephone, and so were transportation methods with
h m rg n o h automobil' and th irpl n at h b g,inni g of h 20 h
century. All the~e inventions we,re made poss·bte by centrailising research and capital
·tru lHerl -round n - onomi and indu trial m d I b - d n n· 1la r,9 - actor· '
and the organisational moders of production as envisioned by a lor and Ford.
1
E7
Prln ipl · · of G n ral Ma nag m n
lh . Third Industrial R. volution - 1969
Th" revolution witnessed the rise of el ctroni - with th trans· tor a d micropro~r
- as well as th rise o·f te communlca · n and computers. Thi n, w echno ogy ted to,
the production of miniaturised ma~erial. hich would open doors, most notab y to ~pace
research an bot hn logy. For ndustry, thi rev lu io g
rise 'to {
r:a o high-I I
automation in production thanks to two major inventions~ automations and robots.
Indust ry 4.0
Th fourth r volu 'on is upon us - digita i ation - nabling us to I ild a n w virtu I
world from which we can steer the physiea word. 'he indu tri of today and
.morr w a·m t,o onn
II m a of produ tion t
. J. th ir 11
• t 10 in, re I
time, thanks to technology such as the Cloud. Big Data Ana ics ancl the Industrial
In m l fThings.
The applications for · he. 1i.1i1dustrial sector are al eady enormous: :predictive
main nan , irnpmv d d' · i ion making in r a11tini , ant cip,a ing inv n ory , s d
on production, and improved coordination among · , · o mention only a few. Day
aft r day, all th
improv m n ar g dually p imi ing pro u tion to 1· a11d
r vealing ndless possibilities for th futu of Industry 4.0, th crossroads for an
i te:rconnected global Sf3.· em.
Source: Sentryo (20H) 13
Indus ria]i ed. ocietie have a n mbe.r of chara.cteri tics, which .· e an impact on
th
nis lion th
• th
i ti , for x mp,I ·:
• A mailer percen a e of the workforce· employed ·n a ricwture.
•
P op,] h v p iali d o cup ion .
•
•
The
orlforc:
o( indu trialised oc.ieties are incr · singly educated.
·ew ood:s nd n w
rvi
are produ ed in {hes · oci . lj
and n · w
result.
Va ·i .· _popubition chan ·. es taki pl
for ampl :
D mo raphk tran itions ,oc · r. which in olve a move from high birth
rate and h.igh deaLh rat
iith m ll Cr popuh1tio11 iz o hjgh binh
rat , and low death ra
with extreme population gm th. to Jow birth
rat . and low d a h
vith population m i ten n .
♦
•
Poop,le ha · e fe e:r children in indu tialised. odeties becau e the role of
th fa.mil hang · nd
Im Iogi l advan
ntrol f
repmd uction.
Larg p pulation Ii • in urban a as rntb r 11a n in rum! rea . Jf
urbani . tion occurs too fast. the infrastm.c tur will nor be able to upport the
p • t ti n in t rm rt n p rt, pu Ii
· h h ing, ho l • m
ervioes and jobs.
I 8
Ch p r 5: Th m na m nt nvi ronm nt
•
l ti n living in u an re
di ers nd ind p nd n with w
social attac.hmen s but dependent on m~ c:om.mu.nication .ystems.
ial h ng ta
on inuou . TM m an hat
ial
change is not confmed t,o a particular society or group. It occu, in e ery so iety.
An unchanging
i Ly i
n id r d a . d . o i ty. m o i I cha ng ma bring
pla
v rywh
r,
and il ·
abou:t immediate results while others may tak:e years to produce result . S1milaJ']y,
om .ocial chang
pread rapidly, nd a]so di . app r rapidly. tyle and fashion
ar
amp,I o the faUer. A n rganisation mu l utilise and adapt to chan
in
it external ocial en ironmenr or it l'liU not urvive. It mu 1 b ke nl aware of
lhe
i ty• ocial pr . · re:n. - .reg:rnding i need :rnd ants. The· pfl fi ren ·
needs a nd ants will be i11fluen ed b a population' vaJues,. belief and p ractices.
Fo
ampl , a han.
in b Ii f: and valu towards ncrgy
rvati n and
global climate change may create a change in con umer preference away from
p rt u ili v hi I witlt v ry high p r l • on , pti n I
bri v hi J with
lower petrol con umption rates. Some •cultures treat the meal a a long ociat e ent,
and f: t- od utl · will
b v ry p pu] r 0ir ~u
· I in su h
i I
pre.,e:renc
len. lh
relating to fa hion are constantly ch
o up and down depending up
th
ea
l an organ~ atfon fails to adapt o chamfing ocfa] preferencies. itS re rn:ue
wil1 d r a , and it will b u t u:tain bl . I ·om a · , Lh · han
o i I
p re. erences may be so profound th;:i n •o rgani ation imply cann t ai::lapi. For
exampl ,
o ial mov
t 1 d to i e outlawi ng of al oho] in h S b t e n
1920 and 19 3, hic:h
· k:ao
a Pmhihhion. During Prohibi ion, jt a illegal
to cll akoho.J. Distill ri . w re put out of bu me untH Pf i · ition was f pealed.
Wb.iJe th.er are ri s m.
iated with ocia] .c:hang th r .re aflso opportunities.
Or ani ation . oft 11 ry · innu n
oci I alu
hr
b th u of m rk tin ,
a dv rti in and targe 'ed publi relation ln egie
:ar eting campaign are used
in an attempt
create trends. The E hio in
i::ry is a prime example. Public
C1ela •on ampa _n ar ofien n d to build up, r [1 pair an organ is tion' ima .
For example, in April 2010, BP .vas f pu- · ible for an e timated discharge of 4.9
n Jli n rr - of oil in th
uff of M ,
nd h dis · •r i r g rd d
n Hh
larg en ironme.ntal disaster: in American history. BP iauncbed a ma ive publ:ic
r la
L
n
ampaign
impmv•
·1
.·mag .
Broader o ia1 value
ill al· affect he uc ce of an organi a ·on. A ocie
b t work -ore hat iU t d t
tha alu hi h r du a ion will pr vid
1
mofe productivi and innovation. ikwi e a ociety that upports in estmeot in
pu •· Ii infra tru ture will hav .~ r"l"P'-'- l I g d ranspiort ti n nd • mmunj. ti
sy terns. If the adal values of a communily include an •e tho of working ha.rd,
. n n ·ni i n will ha a
p du tiv wnru"io~ nd • popul. ti n that h
money to spend on goods and. e.rvi
1
Prindpl
of G n ral Manag m n
a
real · a
11vi1:1 nmen
· ting · f i 0 n
nisation I
customs and practices. Many of these values norms and lleUe& will
mirror th
mal
ial nvironment., but me ill b un· u to 'h organisati .
Organisatlons need to operate - .a cohesi · unit. so it is important that they build a trong
and pmdu tive organisationa1 culture. It i . also important :0 ensure that the cL:dture i
labl: nd positive. Thus. an organisation hou]d ca fully monito th relations · tw n
its members to de ect any ho till or other dysfunction that needs
conected.
1
5.4.5
Eco'log ical/p hysic-al envimnme.nt
Th
olo i al/ph ic l nvir nm nt t nt ins
the limited natural resources from which
an organi a ·on
· tain i raw m t
ologi al/phy ical nviuch a air wate[, forest , the oceans and
ronment refers to the limited
n. On th
th r band. o ani ti ns ,l ·
n tural r ur
h t p - pl
di po e of ome or all of their as e into the
to
an d organisation
c l ,gic i and ph ·ical n onmen. Th
up port lif a d d v
m
ecologicai environment nsi ts o[ t 1e natural
11vironm nt
ell a hum -mad infrastructure. ~ rapb . tb weather and
cJimai , • th availabili
n xp o hation 0 1 natural re ource Ira m l ri J , water,
and o on). as wtll a
ns. rv ti n agreements and con en · ns an form part of the
n tural nviron ·
, w N::ll th human-wad i , ra tru u , refi
o lb r d ·,
railwa s, airport , harbours, communication infrastrucuu-e and energy supplies
lha h v
lnflu n , n all rgani a i n·.
Organi at.ion are becoming increasingly aware uf the natural environment and
th int r p~:nd n b tw n th m · lv
n Lh natural nvir nm nl.
rding
the Global Footprint etwork, humanit is currently using Earth's r · ourc -. 1.7
ti 1 f: l r th n i
t m ·n
n ra , I i h i qui al n t , - in l. 7
Eanhs. According to estimate , a 7-billi.on s.nong world popuJation woU!ld need five
Earth
su in i ff
iyon w
liv Uk n av rag
itiz n. H wev· r,
onl 0.7 Earth would be required if t eryone were to 1i ,e like an av rage Indian. 1
As
i t and th
on m d
lo , ,( w hav d · ri d in th pr vi u
- n},
we are eating into our n tural: resources, making it n:10re dimcuJl Lo u tain the
needs ,of future generations hkh has led
organi ation needing o focus on
us ainable d vefop,m nL. whi, b w expJain d in ch pl r .
10
Ch p r 5: Th m na · m nt nvi ro nment
5.4.6 Int, rnational -nvironm=nt
Each o the sub-environments of the remote environment discussed thus far (i.e.
th t ·hno] gi. al
on mi , poUtkal/t gi 1 tiv ,
iaJ, ~ nd · ologi 1/ph i al
environments) e.xens, to a lesser or gJi ater ex~ent, an influ n eon an organi _ation'
mana ement environment. Each o the •e sub-envir nmen·, p
thr a or
opportuniti - Lo n orga.ni iion that 11 - d to, b managed. Tbi~ ·1tu tion b · om
even more complex. Uh even moFe potential threat ·
opport nities. . hen
a.n in r1atlonal dim i n '. add d. Organ', • ion· h t
at a -. na i n l
horde.rs find them elve in far more complex global management enviroumen
Lhan h _~ mg ni lion lh t un ·Li n only n a nalion I l I. v ry ountry h
it o n environmental factor rechnofog- . culture. eco omy. legislation, politic
nd m rki t whi h ma· b v, ry difli · nt rom th
f notl . r untry.
Looking at South Africa the oountry ~ part o BRICS a grouping ,o f the world.'
l din . m ir i g , · n mi , hi, h p11 m
mm J'1 i 1. p Ii · 1 nd
r I
cooperation be ween Br.izil, Russia, India Cb.ina and South Africa. BRIGS was
stabli h, d in 20ll 1 nd i
15 ii l
·h d it \ n d, I pm n b n (lh
w
Devcl,op me:nt Bank) to assist · · , lending money to its five memb r rountri for
economic gr · w ·h. The BRIC c nirie . con titute over 40 per n of th global
popul tio.n and th ·r mnbined e forts a.~ e pe ted o ad n global .e, onom.ic
and dal developmen .
1
1
rnohali a ·on and the trend
or anisaLi
· d Jay in
nnalys· ,
p
le threa
a
v not d. in our di
th bu in
and
rn tion l enviro
and opportunjtie ,,
n Uonal ,· rd
Figure 5.6 ummarise the
odd continually affect
pre
ats • d ppommid
11
no . Taibl,e 5.J the negaii e effi ·cs o
r onftd, -n e in th UK. A tbo,r ugh
th fore a r qui~m m lo id ntify
fm- organisa ·ons doing b ine: s
nr o ition of the managemen environment
Prindpl
o,
6 n ral Manag m n
Uicm- nvi ronment
consisting of the mission
___ and obj iv- of h
org anisation, functional
1management and
Ufi
of cUi51!:omeirs,
p titors, lab ur mark t
,---- and labour unio ns,
mt rm diaries and
supplil~rs
cmrs i
R-motl -nvironm n
e:onsi,st i ng of tee:hnological.
ei:onomic.
politi ·al/1 9i la · , o ii,
~ological/ph siral and
in , rnati
I - vironm rnts
figure 5.
omposition ofthe management
B ed o the di cu sion of the mana ement envjmnme.n and the
m im iment.s, variou chara erlsik · n b identlf1ed. ln the last.
chapter. th e characteristics iU · e discus ed.
ariou subLion of Lhi
LOS: Discus.s th characteristics of th management environmen t b means of
appro priat xamp e
5.5
CHARACTE'RISTICS OiF THE BUSINESS ENVIRONMENT
A n.umb r or imp nan ob · ivati n about th ch ra t · ·, lie
th m nagemen
nvimnmem can be: made:
•
an
Firs · nviroam ntal f; l.o or v ri bl _ a ,
in n, lat d. In Figu
5.2, 5.3
and 5.4, the c,ompo ition ,o f the various sub- environments of lh management
envir nment, oamel the micro-, market and remote en ·ronment, er,
explain d• .n a.H cases,, th interrdat dness of th variables in each ub-
Ch p r 5: Th m na · m nt nvironm nt
nvkonm ·
re hi blight • or · · mpl • b th tim
ri(n thi
book. the entire planet wa in the middle of the UOVID-19 pandemic, which
affi cted global conomi . hou bolds, onsumers,.
, manag :r: and
indi idual around the glob at an unp cooented scale.
h inl rd pend n of , nvironm ntal f; do th
mana ement envi.ranm nl is increa ing].y volatile and subject LO cha.nge. In
•
our discus ion of the time.line of the four Industrial Revolution ., w noted
lhat the 01.uth R,e oiution i urrently tr.u:1 forming lh: world and Lh
application for the industrial e tor are alread enormoo .
1
•
Third, due to ac ·eleratlng nvironmen al ,·hang , n · . m1 rrtal u:n · rtainty
· another characteristic of the management envir ment.
•
Lastly, 1h · environment is becoming more and mo e ompl - la manage and
to predict - d.ue to the m.1.mber of external v ·• b]es Lhat manarre need o
ri · p nd o. a: w II a th
mpl, i y o t
ari h . ,h ms Iv .
Due o l:h
imple,. et powerful · echniqu
chara teri .tic , bu ·,n . manag
t aid th ir ana!y · of 1h environme , Th
WO aualy: j is on o lh · most
commonJ. used technjque for this purp e. The acronym SWOI stands fi r S ngth ; .· . - w akn
·;
pp . uniti
. - lhre ·. I 1n I id n i~ n th
mo t imp rtant o,pportunifies a
·
in the ,o anisati
vironment
and lh k trength and w ar...n,. ~..i1..il1 1 i · int m I nvi nm nt .
T an · · ·
based on the assumption tha an effec ·, e str.uegy derives from a iWld ' tit' between
.n org· ni ti n' int rn· 1
urc: - ( ·tren rt and w n
and it
1 m I
tuation (o,pportuniti s .a nd th.tr ats).. A good f1t maxim.is a busin · . ' trength
and ,pp 11llnUi
nd minim.is i
akn
and Lhrei , which can lead ~ an
organisation' goal o a L ium compeli ive advantag . .ompetiti e advantage can
be defmed a a iruali n ,or condition lhat pu · an o, ,mi a ion in a fa ourable or
up rior
i 'on - El p~ ition advantag ·ous in
mparison with p ers po itions,
which c mmonl leads to abo e-ave:rage returns on in est:men, for the owners of
th r an s tion. In ,cha, r 7, omp ti iv
ntag an
r p n i 1 ppr a h to
it ill e di ru sed in more detail
1
·rn eri ti
Th
I
-
o th manag men
uvironm nl d
ri d in thi
tion ould
not be illustrated better than with th · outbreak of the COVID- 19 pandemic. In 2015,
Bill
s (Mi ro
·o-fou.nd
TED Talk ahou ·lo'· al p n: m1 , warning
that the world w· not ready t rake one on_ 16 In April 2020, the wor1d wa in the
midst f · h an outb a and hi pr ph Li w rds b - am reaUt - th w rld w
not .ready to take it on .. In the context of tllis chapter, we can describe the higbli h ,
a
~
How . On 1 D
mb r 201 -• th fusl ' utb a
f th
I
or na iru
1
r
VTO 1 )
di ease wa reported from Wuhan, China. in , the first outbreak. the viru spread
fus 10 Thailand. Th World He 1th Organ· ation d dared the utbreak a Publi
Hea h Emergen y of International on, m - a pand ·mi - on 30 January 2020. 17
On 13 October 202:0, the number globall onfumed ca
wa cl e to 38. million,
with I 079 02 deaths due to lb virus}•
or
Prindpl
o, 6 n ral Manag m n
Ho, did thi ut
in
? Fi
w ,a m
t that lh virus rig·n ,t d
in the remote social environment or organi ations. In ection 5.4.4 we defrned
odal chan .
ny · igrti.fl ant hang
r al eration v-r rim in ehavfour
pancrns and ultu.raJ values and norms. The pandemic u..rrly caused oclal chang
worldwide. 'Social distancing' ·wo r mg from bome· and 'home schooling' ecam th n w normal in o i t . Mally • hang w
vid nt from Lhe politi al/I gi lativ
envimnm nl Countries odd ide implemented restrictions on movement, testing,
o h1J · · tan ing and , th r mo
>ct.Tern w -su.r:es to mbat h p - d or h
virus. Toe economic: errvinmment was affected drastically and no c:ountiy e caped
th
v re n ti
n- qu n
o h virus. Ith u, h hundreds f lh and
of job losses were reported many more people lot their fi· e.liboods. Go ernments
w ,rldwid ut in
rat and t
v ri us m _u · t stimuli
h ir
Economi grnwlh rate world ide retracted and food prices k cketed The oruy
po iti , · effect wa ·
n in the natural environment D
a dra - i d
a in
pollution nd wiilt people in lockdown wild!lffi flourished u m ny parts, or the world
a nd air pollution deer ased. For example, India' air qualit had improved o much
u~ · Him· I yas for th -ft l tim
du to U1 lo down al th tim , tb l peopl , u1d
in. decades. Thanks to the absence of cruise hips,
lphi have returned in greater
num 01 ItaUa po
f
,U-ri. In · t ly, · · ustri
r am
d b 11
these changes and adapted their trategies. Why? Consumer behaviour has altered.
F r · m bu in · , · hi ha m nl
vin
un m in .. -bu in- - t a · i
consumer model or utilising virtual tr-ea.ming to reptace meetings, conferen
and
ven · or h - ls .nd univ r 'ti • 1 ch ol
was optimis t d Liv r lucati D,
fa ter than wa previously i:ma ined po ible. As business · and individual . managed
with th s new measur
ducti
a of , onducti.ng th
me job am o
light. which had a rippl,
, n the ttthnolog,ical
rnvirorune.nt. Other bu.sin
completel chan
· heir product lines and tarted prod in products hi hl in
d mand al lh tm su ha . p · onal prot i n qu· m ,t. .. h rap id olution o
digital pro~es had parked a new mind et focusing on tlle future and with an
op nn
to ry n w hn logy. in - bu in
atl lo ad pl o remot working,
teams b a.me more versatile and replaced die 'bow things ha e always been'
n
i b a 'I t; try i a I
if it w
' approa h. Thu 1h ab ur marke
also changed drastically and organi atii n had to adj ust to these changes. In some
were l
the virus and had t b replaced. 0 , ral1,
in t n I k y mploy
organ:isa:tions b~came painfully a are of' th m.: d to make pro ision or Lh health
nd fe or em l yee esp iaU after periods oflo do rn. The pandemi als had
a t m ndous -m!Ct on . uppl chains .a nd :ii.n crm -diari :. . China pmvid produc
to many parts of the worl!d and it i also an imponant imp ,rter of man produc
and raw ma rial With th ou b . a or th ·ru fl t in · hina and th on equ nt
lock.down in the country, disrup,tions were cau ed. in the uppl chains of man
b in · • R on ibl and · , iinabl
ur-ing b m an i u and a I ·on fi r
business o . ner .
1 4
Ch p r 5: Th m na · m nt nvironm nt
ll f h
ch n
in th mark
nd m environm n am with m n , threa
for bu.sin
around the wodd. By the time o writing this hook, all industries were
i11 op ra :ng in a consta t a of flu
here th y were rapicU changing th ir
trale ies o evol e with a onstantl changing business en ironment Onl on •
thin i cena:in - only the resilient b ine , will w:vive and busine: resilie.n is
probably Lb most import .nt tren th LO have.
THE BIG PICTURE
In th· . • hapt r1
h , indi t d h
,(the proc
~· ur diffi re·n ppr ,
to m ag m n
, y terns, contingency and respon ible · pproaithe) ome together to
de nb th r lation hip ~tween tb org ni tion
the fall r , on ists of th miicro-, market and remo
t:
vir nmen, h r
sub-environmenl . The
re pon ible manager will ' dentify trengths and w .
from the controUabl
inLem.a] 1:1vironm nt, and opport:unili and thr at , rom h mark t and mot
environments to lead the organ· ation tow rds r pon mle competitiveness.
SUMMARY OF LEARNI G OUTCOMES
LOl:
Explain the rompo ition o the management environmen. · and depict i
di
rnmm i all
The management enviro ment con :ists of three sub- environme: t , 11amel the
m:icr - m rk and rr
nvir nn1 n . h a k f lh mana r · to find a good flt
betw,een the stren ,th and weaknesses. in the co ntrollable tnicm-environmenL and
pp rtuni i
and fi
m Lh un
nl 11 bi m
m
n i.r nm
r1i' ,
and to •ormulate tra.te i , based on this fit. that will k d an organi ation to, ard
it go i
mp titi
dva
.F
n ibl manag r i will m an
re pon i le com etitivene .
· in th
environmen
ompo ·ti n of
Th
11 ro- nvironrn nt
organisation consisting of i
t
h
m· u-
ontrollabl
r in · nal m nag ·m n·
int: mal
fl
·:mnm nt o
th
mi sion objectiv , functional management and
r OU
LOJ:
Explain the compo i1lion of the market envirnnment
The market en imnment He between I.he micro-environment and Lhe rem.a
environment and form
nvironm ·m. Tb marke
a buffer • etw, n th ,o rganisation and th rem
nvironmem ompris th fo11owing ub- n ironmenl :
•
Cu tamer: (cH nt ). th ir needs, buyjng power and behaviour
•
ompetitors. including existing competitors, new entrants to the market, lhe
avajfabiUty of ub .titute pli' du ,or ervic , bar aining power f .uppliers
and bargaium po er of buy r .
of 6 n ral Manag m n
Prindpl
•
•
•
Th I; bour mark
nd l b ur uni ,
Intermediari • which indude whole ale.rs, retailers agents and bmker
ppli , and Lh "ir bargaining p
r.
L04:
E plain the compo ition of th remote environment
The remote e.nvimnnu:nt ,c:ous:ist o the ore - tha , a.fFttl the orgaru ation's
bu are be ond i , c ntrol nd i.n.tluence. The r mote nvironm nt
acti iti
1rrounds lh . market. nvironmenl
numb . r J ·ub- nvir run n can ' di ti ngu· h d withi · Liv
namely:
t,
•
nm nt
Economic en ironment
•
ysicaJ en ironment
P Ii i alj]
•
•
T,
•
•
L05:
hn I gi I nvironm, nt
i fa ~v envir nm n
[1
t maf nal
11
ironm n.
ff, 1cuss the characteristic of the management environment b means of
appropri t ·
or
A numb r
importan ob ervati
nvironrn nt · an be mad :
abou
e characteri' tic
•
Fir t environmental facto
•,
eeond. due to the i . terd pendence of ,e nvironmental f: ct
e
man ment envw o ent · increa, ingt volatile and b. l to change.
•
Third due to accekratin envimruoental hange. en ir mmental 11nc rtainty
is another cha t · · of th mana ement n if 1'.
t.
•
Lastly, the e:nvironment is becoming more and mo · complex to manage and
to p di l - due to the numb r of
emal vari b]e that managers need o
re p nd to, a w II a th comp,lex:ity of the ari b] th ms Iv .
UESTIONS
Lh pro
1.
management in combinatio
und tand the manag
or a · . ble are all intenelated.
and
ith then
t
ibl appr
ai ry batkgrotlnd
2.
Di tingui h between the terms trength. weakn · , opportuniiy and threat.
3.
Diff
n ·at b tw nth aim · r omp, ti iv advan, ag · a don h
rraditional view of management md the re pon ihle iew of managemenL
4.
5.
6.
· pl in th
ompo ition of th mi ro- nvironm nt.
Explain the compo ition of the market environment.
D fm th t mi 'indu ·lriaJ v lULi n • an
pl in th ind , rial
proce a an ,d ement in the social enviionment.
luti n
Ch p r 5: Th m na m nt nvi ronm nt
7.
8.
plain h
riabl in lh r m t n ironm nl.
Discu the cbaracteri tics of the ma nagement environment.
LEARN ING ACTIVITIES
l.
.nd
lden'ti
pl.aJn. the
e.rn · 1 of
OVID-19 o,n
rul oth
r man g mc:nt
,- nvironmen .
2.
Explain how busin
ma.na , m nt • an re pond to t e d . .l ie chan : in
their busine environment caused by COVTD-19.
REFiEREINCiES
.l
Giamporcaro. S. 2017. Les we , orget - res
mm rican .Bank. vailable
,nli ~ b tp ~/lwww.[rn24. m/Opinio,n/1 ·1-w - rg t-1, n -fmm-afri anbank-20170927 [Mee sed 8 October 2 rnJ
2
anch z. D. 2014. Why it fail d: Af ,~an Bank. gav Ti dit t th p or.
Available online: .http ://moguldom.l'. m/70 04/faHed- -afric n -bankaed j - • -the-poor/ ( cce ed 10 Octob .201 B]
3
U. . ood Et Drug Ad.mini
http :flwww.fd· .go /dm
201
n. 2018. Gen ric drug facts. A ail abl onliae:
/. n · -drug /generic-drug-facts f
· d 18 June
1
1
4
Tech C ntraL 201 8. ~ omm r growth in South Africa
Dipping
for casts. A ail ble onHne: http :/It • h entral.co.za/ - 1nmef - rowth-inoutll-afriqtrip ing-forec ts/B48JO/ [Ac
d 21 June 2019•]
5
ocial m -dia d ,en: its hold on
- all th t
ailable on.line: https:1/
·-11 -bold-on-sa-aH- bewww.
4.com/TechJNew I odal-media-dee
2017 920 [A,_,.,..,,.,.. d 20 J n 2 19)
'6
Dale , • 2019a. Surgical robot • new med.kin and better care: 32 examples
tp :/lbuU in. om/artifl ialintelligence/anificial-mtelligence-hea1thcare [Acc,essed 19 June 2019]
7
,il y S. 20t9b. 1 E ampl o
Ui · l lnt mg n
haking up bu ·in
a .
u uaJ. Avai1abfe online: http :ffbu.iltin.com/arti.ficiai-i.ntelligence:/ex.amplesai-i n-industry !' -·
d o url 201 ]
8
Dale , S. 2m9b. 19 Examples of Artificial Intelljgence baking up business as
u ual. vail bl nlin : hHp ~// uil :in. m/artifi i I-int ]Ii nc / mpl ai-in-indu tiy [Ace ed 20 June 019]
nd
k
ur j b? Th
n mi , nd politi
consequences of automation. Available on.line: https:{/mediw:n..com/@
Bro kings/wiU-rolr I -rmd-,f-tak - our-'ob-th mi -and-politi alcon equenc -of-automati-on-aocrec2 7d757 [Acee sed 20 June 2019}
I,
JO
DM. 2018. Will rob
ni d ti n . 20'1 . W rldm t . Avail bl onlin : http :/lwww.
worldomete .info/world-population [Access.ed 21 June 2019]
[ 7
Principl s, o,f 6 n ral Manag m n
p 10 l rg
n mi
,i a , nHn : ht :/lwww.fi
economics.com/blog/the-largest-economies-in-the-wodd [Aooessed 15 January
11 Th W rid'
2020
12 Venter. R. 2014. The South African Labour Legislative Framework in Venter,.
R
, A ( ). Lab,our R lalioi in outh ,frica.
~T
n: U ford
Uni vrn,ity Press.
m
our p pu] tion '
hroff. G. 2016. Ho m
Earths do w n d
demand? A aifab}e online: https:1/inshorts. om/ I e /bow-man -earthsdo-w -n ed-t -m t- ur- opulaoons-de:mand-1 ljl435836181 A
· d 25
June 2019]
14 Redd SG. 201 7. Th BRIC and
anging odd. A iJa I onlin : http ://
dev lopi.ngeconomi .or /2017/09/ 7/lhe-bi:i -and-a- han ing- odd/
[ cce· ed 25 June 20i9]
l::>
o,n the US respon e
or n iru -r
p
albout-pandemics
l
orld H ~d
[COVID-19).
n v t- orona
o
il
warned about pandentics for
online: http :l/www.np
ans/
a · /8 1174885/biU-w m dthe,..-respon e-' o-far [
JO April 2020]
ng upda
.
. ://www.who:
-th
-h
r.1,;,~.;.-=~~1;;
di
cies/ctiseases/
OM
f
h2
17 World Health Org~ izati.on. Coronavirus di e ·
p rt - too. Availabl · nJin : h tp :// ww.
.int/d I fr ultource/corona iru e/ ituation-r-eports/2020O429- itr~ -100-covid- 19.
1 f.? ·
bblbfld 1_2 [A , · d I
b r 2020]
1 8
]
CHAPTER ,s
PRINC'l'PLES OF PLANNING
uthor; lt r: ia B'otlla
-
-
OPENING CASE
Koda k is at death's door: Fujifilm, its old rival. is thriving.. Why?
The E tm n Kodak Compan '{r f, rr d to, impl
Kodc ) i an merican
te hnology co mpany fom1d d in 1888 when it was known for its pion, ri.ng
technolog and irmovati e marketing. 'You pres the but on, we do the rest: wa.
its slogan in 1988. By 197'6 Kodak a count d for
p r c nt r tJm and 85 p r
cent ,o f camera sales in America. Until the 1990s it was reguJarl rated as one of
th
r]d r1v mo
l a ,I brands. T
mpa y' ub' i
· -uch tha i,
'Kodak. moment' tagline entered t.he common lexicon to d cribe a personal e ent
tha d m d
, b r t1
r p t rit . Th
buil n f th w rid'
. u t digita1 cameras in 1975.
Th n
raphy t
pl
1Jm . aml martph n to repJ .
peaked at near
16 billion in 1996, and its profits
Tb n K dak'
ia
ggl b gan a
t.he decline in · ak of photographic film and lhe company' inahili'
o adapt to
m perva i e and avail bl i jus,
a w rlid in which digital pho . gra ph bad
cUgi · I p
cameras. Kodak' reve
a U $2. - . UH n in 1
a bout every ellular tclephone...
Fujifilm Holdin
and one of Kod
but h
n
Both comp.ani
rp
·
n, b
nown a · FujifLlm · . a
•n
·ompany
ito . Fujifilm is ery similar to Kodak in many a pect ,
m h ; tt r in Lh a -. of p rva i , di ·t I pb: t raphy.
e n I.heir traditional busine - bein rendered obsolete and
both ompame
n aware of the advent of di ital hotograpb . Wherea.
Kodak ha been unable to adapt Lo thi new nvironm nt, . ujifi.lm has tw
Fu.Hy
weathered b
orm nd i still today a prnfa b.le and u tainable company.
Ob rv
po11t o · nu.mb r .f k y difli r n
l d lQ FufJilm a apting mor
succ:es fuU to i , banging en ironment than Kodak.
Tu 1 · t di erence can he found in orporat cu.llure. Kodak bad a culture o'
c mplac c • ironkaU cul tivated b I massive ucces a nd nea r monopol in
in ut fdm ph ograp.h in lb U . D pit · i tr ngth - h y i
tmen hi
c;esearch, a rigorous approach o manufactwing and good relations with its local
·ommuni - Kodak had b ·
ompla nt rn n
of the threat of digita] phowg phy urging towards
bul in r p n , i d
d three-p,rong d r
as much money out of the film busines for a Jon
pr pared fi r h
itch di ital ph L graph . La ti
lines of business.
p li l. FujHilm wa · I·o aw r
i Uke a tsunami b the 1980s,
, gy. Fi t, F .• ii 1Jm qu z d
as pos ible. Second, Fujifilm
, FujifiJm div ift d into n w
Principl s, o, G n ral Manag m n
Th
d diff ren
b tw n K
i
an
1
·
uji tlm an b
in theKodak.leader:shlp 1 which meant that Kodak' strategies changed with eve new
0. · a result, the omp ny was n er a.bl t di rsif uc,
fully. for
mple.
Oeor e Fisher. CEO from 1993 until 1999. focu ed on Kodak' expertise in cligita.1
ima ing rath r than in hemica1 ; ;,md ma .-produced dig,ital ca.mt- . until camera
phon d _troy~d that busin . he latest CEO, Antonio P. rez, ho too.k cha.r g in
2005, in isted ,hat digi1111 printing would ave ICodak. At FujUilm, technofogical
chang park • an in m l pow r ru 1 . · t fa l, p i ip- nts In h , ,on um r
ftlm busine , who ref1 ed to ee the looming crises, pr vailed. But the eventual
winn w • big t lta Komori b ·hid d lb m · 'I y nd ··rre nsibl ' or no·
preparing be.tter or the dli.lll'ita1 onslaught. Name · n incrementally between 2000
and 200 , h
ab , D\Prh uJin • th p • H p nt
un I S billi n
on 40 compainie rnce 2000. He la hed o
a d job . ln one 19,- month period.
h
, ed m r than ¥250 bilU n in re r huin,
f, r d preciati n and to
h d superfluous distributors, dev lopment lab managers and researchers. ·r
pai ful expe.tience; ay: Mr Komorl. But to ee: the ituation a it w
nob dy could
urvi . . ow had to re o ...er,......t t.h
in · mod I.'
1
Th third differen e ·
en h ·
ability o comp te: in a ,c an
.r
dak and Fujifilm ompanie
market environment.
od k -
ound in th ir
uti · - were nol
ed lo competin r n - t.igh-technolo world in which sp cl-to-market is critiicaJ
. H nc • th y ~. e11 more ommitted lo m ki
fi t produ l than to
getting pr - · cts into the. market as quickly a possibl and fixing the bortcomings
in la m d s. · v n h n K a d ided · o i , rsi , i oo
a · to ma h
fust acquisition. It created a widely ad.mired · entu.re-capital arm. but never made
bi
b
b1:1 kdu., u , B
ntnm., ralh r than imp! ti.yin o
into a digirnl camera business,, Fujffi.lm tapped its
on ,e rt j film camera busin
• r oth r us . · 'm i · bi" lik kin - olh c ntoin ollag n.
1
to u
Jus a photo fade because of oci · ·on, cosmetic fm:ns would like ou to think
that kin · pr erv d itb an ·-mddants. 1n FuT Ji ,rary of 200 ooo chemkaJ
compouuds 4 000 are rcl.a • d to . tlti-oxidant . Th ~fore,, th comp.a ny lauuch _d
a line of co meti that is old in Asia and Europe. Fuji also succes full branched
ou into olh r phanna uci al • liquid- rystal cLi pla (1 D) pan l for I I vision · a
and other electronic devices. Today, Fnjiftlm ma~· only 1 per cent of irs r enue
m ph· t raphi ftlm. ujiftlm pr du
igan, flu- lreatm n dru ppro d
in Japan.. During April 2020, A ·gan as being trialled as a potenti~ ,comnavirus
tr aun nt. By th 001 f writing thi b k. Lh ouL m
t · own.
The fourth ditlerence b tween the companie can be found in their abilit to
mp ni
r
i I nt1fy t rg t m rk I r th ,u • r . . U many I 1gh- l hn o,
achieving great succes in eme.:-ging markets Kodak's failure to read the emergjng
mark
rre tl
t h
mp ny d rly. m r ing mark ,
n~r U wit h d
ear on from analogue to digital, with many emerging markets l~apfrogging from
h vin n camera · traigllt 1:0 u ing digitaJ n th b c of lh rapid adopUo,n or
ceUula.r telephone tec:h.nology.
170
Ch · p r 6,: Prin ip1I o plannin
Wh rea Fuji llm ha ma t
compani . before it
f, ding awa .
d n w t ti · nd ·
eems to have run its course and
m ny rea ·
j
on the brin o . imply
CHAPTER ORIENTATION
There · an old . aying in management ,d r l about the ne d o pl : 'Organi ation
hat f .il to pla.n, plan to fail' 111 thi, chapter, w addre ,he rnana ·at fu:n lion
of planning, whkh is the proce of cop in with uncertai y and change in the
man.ag tn ·n -n 'r,onment by ~· rmuJ tin u ure , ou
of a tion to ach.i v
specific results. The opening case to thi chapter describ a hanging environment
of tw
omp titoT5 in lh. film indu try. K ak nd uj~ftlm. ol' omp ni
were expo ed to exa tl the ame - iemal en vim
, ital changes, threa and
opp mrni i . Th , n wvived U1 ti er n
. Man
f th
di ·
n.
pointed out by observers that led to .Fujifilm. adapting more succe fully to i
changing environment than 1C d , an b tra d back to the planning ·kills of
lop management The fn·st difruenc is thal Kodak had a ru]ture of com Ja ency,
whe:rea fuji planned for and prepa
for the witch to digitaJ bot raph . The
c nd di eren is th· Kod· ' s rat gi p]a.nning hanged iU a h n wly
appointed CEO, while Fujifilm' CEO Shige aka Komori had a i ar vision for the
ompany and ook b d ti · n lo r tructur Lh · om an • vhkh · v n ually
paid off. The thir difference i that Fuji' managemen · was able to adapt to
n ironm nt l ha
and hang d th ir mi ·ion fl h ompan
rdlngly
- digital p otography I'epfaced film and smartphon . eplaced camera . Kodak'
man g rn nt w· no bl
adap, and mp i a ]rnn · in mar t nvironm n ·
and adjus their planning for the future. Tb · e:re al o not able to identify new
ar
n ' plan th ir trat i
rd.ingl • which · ujiftlm w
b]e to
· o. Tiu~ ase illustrat s that a lac of p prr planning ca.u within a _bort period of'
tim 1 Qd to the downfall of a giant •ompan uch as K:odak.
For th r,espon ible or ani ation it is crucial to indude it goals in terms o
su ainabiLity. r p n ibility a
thlcal co du . in the plannin pro~
Ho · thl
can be done wil1 be addres ed m chapter 7. Jn this chap r, we will first address, the
nature and impmtam:e or planning. Second. we will address the beneht:.s and co
as o iat d ilh. plannin , after whi b th - ari · u · p of plan Ul b
pfained.
The chapter wiU conclude with a discus ion of the barriers to effecti ,e planning
and th way t ov r ·om h b rri
to
tiv plan Ing.
171
Prlndpl - of G n ral Mam1g m n
LEARNING OUTCOMES
After stud in I this cha pt r, you should b abl to:
L01 :
Expfaln the nature and importance o planning
tw nth b n fits and costs associ ·1 ted with planning
L03: D1fferent1ate between the various peso · pla n
L04: ~ pl in h barrl rs to f tiv planning
LOS: Explain ways to overcome arriers to effective planning
L02· Diff r n ia e
KEY TERMS
A-B-C priority system
buctg
contingency planning
dir ctio nal pla n
nvironm ntal compl xi1tv nd
vola ·1ity
oals
policy
priori r
cedurP
programme
oject
rule
shor - rm, plan
individual p an
single-use Ian
long- rm plan
sp ci I plan
s anding pla n
management by objecti es
m dium-t rm pa
m1ssmn
o ~ ,cti
operational plan
par
I
la nin
17
s ra egic pa
tac ·ca l , Ian
valu
v1 on
Ch -p r 6,: Prin ip1I o plannin
L01 :
plain h natur and lm
rta111ce of planning
6.1
THE NATURE AND IMPORTANCE OF PLANNING
All manage . regard]e
are invo! ed or
th ir f"1c]d of p daJi a.Lion, en a - in · ·rtain int m lat d a ti i • . or fun ·U ns to
achie e the goal and objecti es of the organisation. These interrellated functions
w re "d nlir1 d i hap · r a pJ nning, rgani in - I adi
c ,n lling. Thi
chapter giv an overvie of plannin as the ftr t man a eri l functio.n.
or •
oping
Planning i the pro ess
with unae:rtain
b
formU!lating
fu Uf
U
' ra i n
chi V
specific results. Planning determines
th
rgani a i • na v1 10n, mt 10n
and goals, identifies wa -of reaching
Lh
. nd fmdin.g th r u.
needed for lhe ta k within a complex
Pl nn_1 g i . ti pro
o oping wi ,h
u certain by ormu lating future coul:Sies
a-iron ',O a -hi V p m r ul •
1
Planni ng determines the organ·sational
visi n, mi sion and go I , id n i ·es
ways of reaching t ,es and fi ding he
r ·ources needed for he ta k with·n a
environm n . Th fi rmulation of th
organisational v· ion,
omplex -nvironm -nt.
goal i ba ,ed
·
ation'
va]u (wh1 h
e planning p.r eml
d ,cn"be th
O[i
p rincipl ·s the or ani ation will abide by. b y
in pire em o e • be t effon:s and · on train
th ir
on . tron • l arly articulat d. valu
hould, b
true reflection of an organisation'
.a ira i ns, r r · ampl o b a ?1 poi ibl
or ani atioo that a sumes respon ibnit for the
tripl h ttom lin
keh ld, r . lu · d thj .
Planning essentially ha three components
which reqwr d
amina ·on. nam ly:
1
Organisational values describe
h or prj11 ip
h
organisati on will abide by.
Th y in -pir , mp,loy es' b
efforts and also constrain
h -ir a ions.
•
determine the organi ationaJ value , vision, mission and goal
•
id ntify wa
•
find the resources needed for the t k within a omplex en i:ronment.
r
hin
h
go 1
Determine the organisat"onal va liues. vision. mission and gmds
Th
rga ni i al vi i n, mi i n an g al
II
ri nt d.
Jarifi ation of th e terms is provide,d belo .
'6.1.1
Furth r
17
Prindpl
o,
6 n ral Manag m n
Th · rgani tional v• ion
As a verb, the word 'vision' means to, imagine - and
a n n it refe l , h abi1ity o thjnk
abou.t the future with imagination or i dom.
A vt ion is a ta emen of what
Therefore, we define the vi ion , ta 'ement for
to
a11 org:rni ation a , a ·tat -m nt o what it Wall
0
to become and where it wan to be in future.
[n h r w rd , i
am . or th futu . F r an
organi a.tion to be uc:c: fu! in the future, an insp"ring · ion · needed. It needs
·n ·
ry individuaJ in th organi · i n.
w U a all ta hold rs,
shar and is excited about. The vi ion should provide a clea.r ense of what th
o n · lion
l b om - - n an h r rd i · m
g i h org ni Li n.
The is.ion tatement is the end, no ilie means to the end. For example, a uni ersity
providin tertiary
u ti n [the m an ) ·11 · I
e their bu in
,cu!ti atin
end). hen ormulating a ·. ision · tatenu:nt,
mindful and soulfu1 gradua·t ·
the mean houJd not b confil e v ith the end. The su
· of a vi io
d p nd · larg Jy on how •l
i h d. lnpul from an tak, Ide
gathered to ensure buy-i from all iruiMdua and ,e ctions within h organi ation.
1
The mission .sta
nt
Th
··i n ta m nl o n ·rgan.i ·a ion r fl
the perfect future, the dream that the organisation
ha ffi ,r 1 elf. . us a
rea)
am,
vi i n
atiem ut do s not necessarily need to be realisti
in
1 th organi a1ion , an r ann
b oom . Th vision tatement tran la d into
re li i a mi ion statement
l-written
mi ,ion statem nt do th fol1owin Lhing for
e mission
a tern n align
the organisation with its
vision in terms of its, products
, mark t a1nd
and/or s rvi
technology.
an organisation:.
•
Ji d fin th organi · a io , for key taki hold rs ~n tenn of i produ l and/ r
etvi , mart.et and technotogy.
•
•
I out in hov th vi5ion i to b · a compH h -d.
I e tablishe ey prioriti for the or anj ation. In other wor
the mi sion
teu1enL nabl s a argani lion o id ntify k y p rfom1an e ar a - tho
ar a criticaJ to the attainment of organisational goals and objecti e .
•
ll · ta
•
I create a philo ophica] anchor for all or an· ational acti ·ti .
•
It genera es enthu ia m, buy-in and a can do " attitude among all
stakebolde .
' a ommon goal.
In addition to the key ,c omponents o . a mi ion statement mentioned abo e (product
and/ r rvic t mark t and t hnology) a m· ion tatem nt can al o
out th
philo opb of the organisation ·n l nns o i valu - ethics and belle:fi.
1
l 74,
•
Ch · p r 6,: Prin · ipl
o plannin
Organise iona l goals
Organisation.al goal refer to the organisation' - commitmenl o
hi
a m a urabl resul
Or,ga 11i a tion I goals r f . r lo
within a gi ,e n timeJrnme. Goal ave the targ·
he organisation's commitment
that an
· ani ation dri es
ard. A1tb u ·
to a hi v, m surab · r ult
om · lh -oris,ts distinguish be w · ·n ·oals and
within a giv.en timeframe.
ob;ect:tve , managers typica]l u e the term
in rchan · ably. or no • w wiLJ us h term
•goal: It i nnportant for managers to be able to formulate good goals. to be aware of
Lh ir import n and Lo und · ·tand ho,
oal ombin o fl nn a m an ·- nd ch in.
1
What mak s • good go ?
Man. experts agree that a good goal .hould, as !far as po "be, be expl'es ed
in quanff ativ • m a urabl ·. on r t r
. ifJ t nn in
rm of wri , n
tatement of d ired re uJt to be achieved . ithin a given period oJ time. A good
oal hould ate hat · to b ~mc.ompli bed and he · · to b accompli hed.
GoaJ should meet the following criteria:
•
•
•
•
•
J m t1 lh t g
uld
G I h Id b •p · ct in qu ntit ti · L
b · measUTeable o that they can he evaluated r uamifted objectively.
'ft• , rm .
d indi at
are related to.
h 't al
ey pe:rformance areas of the
·1 ation - those aiea.s th.at ;ue
rucial in
tb a mpli h
·i
I goal .
Goal hould. be .attainable. Goals hould be realistic. but also pro ide a
for m
nd al] mp
Goal bou]d ea · ptable. People tend to pursue goal mar are consistent
with th ir pr fir
and p r epti n . Th · I a raf n rmana
at all
lev
an organisation are therefore impor an in :foal formulation.
•
n
•
h uld a r su]t l b achi ed
for acciomplisbing goals shou.ld be
· hin a g· n tim p riod. Th tim
early · tated.
G al h uld b con ru nt i h ·
n th r. Congru ncy m an , that tb
at ainment of one goal! should n preclude the attainmen of anolher goal.
n ·ongruent goals often f an fri tion, uncertaint and conflict.
Goals hould be flexible . Bu.sin, organ.isatimis fun · Lion in a turhulen't and
d nami en irnnment, wru h make i n
ary to aUow for goal o be
modif:u::d. lexibilit m ·~,m that organisations should adapt their obje ti
hen th condition
n which the goals · ere b ed c:han
.e.
17
Prindpl ·
o,
G n ral Manag m n
Prioriti ing goal
An important principle to con ider when determining or-ganisatfonal oaJs is the
ranking ·Of go . ls in rd r f imp rta , . Priorilie pla a p da] r ,1 in th ·pl:mnin
pro ess. By U tin long-term organisational goa1 in order o,f their priorit , top
man • ement prep ,re to make, later
10 , regardin"' th allo ation of
ource .
R · iources n ed to b chann. Ued into more importMJt -ndeavours and away from
other areas in prop rtion to the relati e priority oflhe area . The e tabf hment of
pr ,o n 1 i · k. fi · lor j . manag rial ,nd r ni ational ffi tiv n
,ra gi
priorities give external and internal ta kebolde answers to que tions such as
' Wh · do · h rgani a ·on · · ?' and 'Wbo ar our t k hol 'i. • • nd ' or whom
should we create value?' Various te hniques can be used
anisational
goals. Tw r th m • 1 id 1 -u d hniqu a th
prl ri
ms nd
the 80}20 principle.
m,
-8- pri rit
an be grouped into thrtt categori
Lh
- roup,
8-
.roup and
al
namely
- , up.
Th ·
A-group goal , called the 'must-do" goals are
tho goals tha , are critical to :ie ucce w
per mman of th organL atim1. b B-group.
called the ' houJdl-do' goaf , re necct a for
improved p rfonn 11 • la ti • tb
-group
goals are called the 'ni e- o-d · goal , which
,d i abl , r imp
d rfi rm n • bu
not critical to urvival r imp.roved performance.
h pa.11 ·t · prin ipl • a
kno n
ruJe 80 per cent. of the output
'Loati !l r y em · d , rmin d
t •Of the input. In chapters J d
· nclu · that h · rgani iu
an
tem. Ba ed on th" condusi n and the
AI: ordin · t ·
as the 80/20
fr. m gi n
by 20 per
5,
pa
prin ipl, , man g
an l v g tbeir
time by focusing ,on the ri w people, resour-c • •
priori ,y sys em
1ca egoris s goal in thr e
groups, where Gmup, A als
ar - h 'm u t-do' goa
Gr up
Bare the 'should-do' go,alsand
er up C · re ' ' 1c -to-do''
goals.
1
par t · p,rin "pl , al
kn own as the 80/20 rul e. i:s a
th ory maintaining hat 80
per cent of the output from
a giv, n ituation or ¥Stem 1
de ermined b 20 p r cent of
op ortuniti and tren tbs
th th great
th input
impa t ari ne ds to be taltn not to in.~crpret
the 80/20 formula too litern1Jy - it · only an approximate.
6.1 .2 Identify ways of reaching goa ls
Managemem n eds to identif w
of read1ing an organi ation' gmd . Thi
is often referred to
the: en -means chain o goals'. The etting of goa1 is a
top-l -bo t m pro ·
p, 111 nagem nt
br d r rganis lion l goals . Uh
longer time horraon than 10\ er Levels of management. This down ard flo
g al
176
r at
a m an - nd hain. Th a· ompli hm n of ,or-
i nal
of
al a
Ch "p r 6,: Prin ip1I o plannin
ormul t d
t p mana
m nt, i
ttom-up approa h.
r ··ng from bo tom t
top lower management goals provide the means for achlev ing middle-level goal
nd ) that in tum, pli vide th m ans for hi ving p-1 vel g al ( nd }. Th
nd.s-means chain
goal is illustrated in · igu:re 6.1.
1(
or
Top
management
Middl
managemen
Lowu managrment
g: al
Encls,.m . s cha in o goals
IFigure 6. I Th •nd -rn ans chain of goal
The organisational hierarchy in Figme 6.1 has been simplified and nanowed down
t · thre m a ri I I -:v I · f r i11u trativ purp
. Th m y · m re m na ri I
la
invol ed between top and middle le els o. management as well a benveen
middl and l wer I v i f management
Find the · sou rce:s n - ded - attain organ·sational g1oaris
Planning i· not .· omplet
ithout finding th re ou.rces n eded rn attain
or ani a.tiooa1 g al . Tim . lent, fman ial, "nformation nd phy ical re 011ree
are net:d d o attain goals. Be ause of the ar ity of a.II r; our e managers bould
rear e the importance of finding all needed re ource . Toe prioriti a ion of goal
lha e ha di · uss d arH r an a i t managem nt b1 fmdin. ~ th mo t ·ru ial
iesources for the realisation of the: most important organisational goaJs.
6.1 .
177
Prindpl
o 6 n ral Manag m n
Planning ak pl a in a complex nvironm nt
Manage.rial planning takes place in a c:ompl , turbulent ,e nvironment. irtuaJly all
o gani ation fac: a r pidl changing · nvir nm nl and. hould. adapt l
ban es. The management en irnnm,e nt is discu · ed in detail in chap e.r 5. ln a
rapid!
ban; in en •ironment managers can ben.eft from
1c nting nc
planning approach.
1
o.nr ·ng ncy planning
rs to th d l,opm n ·
of mulrlp] plan ha ed on v rlous environmental
condition .. Contingen
Janning require
•lt•ll·
Contingent a1nning fers to
th d lopm Ill
mul ipl
pl n b ,sed on different
or
fl ibillty. There are at lea t . o variatio
how thls can be ach:ieved. One variation i the
ntal ndit" on •
: v iopm nt of
r m r plan (th id a
·plan B')., each of hich · based on a different
f rat i r p rating · ndition h t , ul
cur. Whi h I n i impl m n , d
is deie.nnined by the specifi ci.rcumstan
that c:ome m pa . For example. an
o r anisation may plan t , , g in pr d ti n a
plant fa m in Jun 20 25, bu
managers shouJd develop a contingency pian at ensur uninterrupted production
in the even that lhe: pl nt openin i d lay d Ii ,r me rea on ( or ampl a a our
trike or t:h unavailabilJty o f" ri urc }.
cond variation of contingen y planning
re
on the kiU and abili
f peopl, ·o the organisation to think tra e kaU and
n ibly. This m ans U1at opJ muse b jnformed , n 'nuo ly and nd tand th important trend caus and etli ts. and interaction of the ,c nditions in both the
t m I and int maJ
·r r l
f h org ni ion. Th
-ill i l fi rred Lo by
ome a ha ing PN'.Jlarerl mind : This do not rule out having plan B', rather it
pr bably indud having a
nd p.l n.
Becau e planning affec
aU managerial functio · , it ha been called the primary
man g , n Ji n i n. Planning n bl h mns o bi ,· I' t t:llin by
ell' - ioning a pathway [mm concept toi reali . Pfanning enabl - organi ations to
1 li r I d- . ti fyin pr du am!/ · r
I
t i
u l m · , r al j b , and
co tributes to the wea1th of the community. Planning done properly al o enabies
r a i tions t b u ta.in. bl nd s, n ibl
·e r th long rm. PJ nning i , a
never-ending prot:es h cau of onstant change. uncertainty. new ompeiilion,
un p led p,robl m~ and m rging opportuni ti . In ih next
ti n, w
HJ
o us on the b rnefi and o ts o . planning in an 011 .mis tlmL
1
L02:
6.2
rh
Di fferenUate between the bene ts and • o ts associated with planning
THE BENEFITS AN D COSTS ASSOC1
lATED WITH PLANNING
· ft n ' - n id Ith t 'org ni a i, n th l fail o plan, plan
fail'. H w
mo t experienced managers recognise that there are benefi
ia d wi h planning.
178
r,
as well a co ts
Ch -p r 6: Prin · ip1I o plannin
,s.2.1 Th b n fits of pl nning
Ideally, planning leads to superior per orman e for the orgaru ation. Planning done
pr p rly wm le d t a u lainabl, and r · p n ibl rgani ati n. Fr m a tt n r 1
persp tive p~anning offi rs the fol1owing b~nefits lo tbe organisation:
•
Plannin . pm id di · , ti n and b: tp · mana .
11 . non-man er '
o focus on forward think.in 1 • When all organisational membe know where
lbe organi ation i oin and what the must contribu e to attain its goals,
they can begin to oordin,ue th ir livili · , and oop ·ration a nd l amwork
are fo tered.
anagers are al o compelled to think ahead and to con Ider
or threa· hat th· organ' tion
r .· urcc n · d and po n ial opportunif
may face in the future.
•·
Planning 1 ads t a p rti ipa .o work environm nl. 0 gani ational p,i n ·
houid be de eloped and implemented b a wide rang, o ;rgani atio nal
m mb
Th. will l
m
parti ipati
o
n i I m n , wh ·
organ· ation aJ members are more like:l · o 'bu in' t a p]an that they ha e
h Ip d ev I p.
!figure 6.2
lh cydic:al re ationship between planning an,d control
17
Prindpl · of G n ral Manag m n
•
Plannin r du
th imp t of
ng . ln :ur ul n
vir nmen
planning ena.bl.es nianage.rs to anticipate change and to de elop appropriate
re pons . Pl nning a o I . rrn lh · on qu nces r Lh
ag
might take in re ponse to change.
•
th o efil ppin . and duplication , · ti' · • · • Wh n
means and nds are dear, lhe ovulappiog and dupJk tion o , tti ities and
wa :teful acti itie become obvious.
•
Planning sets the tandards by, hicb lo farili ate c n.trot In planning,
oal an et and plan are . rmwa • d , o a hi
g a) • In th ontrolling
function of management perfor:man e is ompar ii ::a a.in t 'I.he - tablished
goal . If igni(1cant deviations occur, correcti · ep an be taken. Without
pfanning, control cannot Lake pla - th ,
y Ii al relation hip
between planning and control Thi is illus rated in Figure 6.2:.
he initial pfanning/control c tl b ins ith th d terminadon of • Js fl r
which p lan are formula ed i achie e the goal . Plans are then ca · out and
r ul!cs ar a bi d. Th
ur l pr
th· n b in wh n r u1
,re ·omp red
with goal . Corrnctive a, ion is
e ary whenever final results.~ iate from goals.
rre i a ion th n
a n ·npu· Lo th n
pl nn f ontrol y l, and
contributes to improved furore pbn ..The ronnol pro es Ii : be discus ed in more
d t i1 in chaJf
2.
·6.2.2
•
•
Th
lann·
d wrth planning
. ing it also invo.•
igidity. R ·•
aining fl ibl in
n .ring
may c:mrtinne to do wha i
envi,ro · ,
nagers and their
qu , d in · to, a hi . , th
g ·.
Planning i time-consuming a.DJ. invol e co ts. If done pmperi
plannin p
requir, ·
b ·tantial amo unt r man.ag rial tim , n
and financial costs.
•
Formal plan
nn r .PL · , intuition and · ati i . Th formal planning
pm ess can easiiy be .11edu ed to a programmed. routine, repla ing iotu.ition
and reativit in tb or:1ani ation. TM can pell d:i a ·ter fi .r an organi ation.
•
Planning can ,c ause a dela in decision making. In some i:nstanc , planning
a 11 direct the fi u towards evaJuatin , rather than doing. Thi cat1 de.la the
org;misatlon· response to chai1g in 1ts external and mte:mal environm nts,
such as chang in indu try. the marketplace or internal operation .
Despit the o , that can be
odat:ed w1th planning, no organi ation ca.n afford
not l p]an for it utur . Our atten. ion ·
t11ms the .ariou · p · f plan . Lha
an or an· ation ca.n fo:rmu.lat .
180
Ch · p r 6: Prin -ip1I o plannin
LOJ:
6.3,
b tw n h vari u VP
IDff
.Qr
plan
TYPES OF PLAN;
Plans can · de cribed in terms of th ir (1) breadth; (2) time frame· (3)1spedfi it
and (4)1 frequ ncy o u _. When d .rib d iq t nns or th ir _ adth. · tra gic,
tactical and operational plans can be distinguished. f.n terms o time frame. chere
may b l, ng-t rm. in rm diat and h rt-t :rm pl n . ·
n pl
rib d
in terms of their specift ·ey, d.rrectional plans and/or -~ - ih plans • an be used.
La Uy, wh n th f · u n · r u i · h ba i , ingl
p·
nding pilan nd
indi idual plans can be identified.
1
6.3.1 Strategic. tactical and op,eratiomd plans
bli b th · rgani hn'
,trat gi phrn .
overall long-1erm goals eeks to po itiou he
or ani tioo in t rm of Lhe · . 'r m n and
Stra gic plans stab[ h h
driv , the organisatio n to arcts ar:talnia overall
organisation's ov ra I long,-
goals. It applies to the n ·r,~ o ni a ion. Topl vcl mana _ r .di · fo - r t · gi pl .tl .. Phmning
~erm g.oals,
ks to posi ·on
h organis
n in t rm of
he e11v·ronment and drives the
organ·sa I r1 tow rds ttaining
over.al goals.
at trategic level includ :
•
• , aHng av
•
rran 1 ting
th • org ni tlo n
· · n into a realistic
mi ion ta nu:nt
urable fon
ch o it r a · mtegy or combination
and lo~-te:nn oal .
O'
lrn.tegi
~
erm · oal
to at ain the vi ion. m· ion
Stra egi plans have the foHo ing ch rncterii ti :
• Th hav an t nd d r
frnm ,, u ually m re than nv
. How v r,
the time frame depends
the tyJl of industry and may be longer or · hnrter
than ti
• They focus on the entire mgani ation.
• Th y l ,k at
n ·un th r ani ar n~ tr ngth nd · kn
with
threa and opportunities in the ,e xternal envirorunenL
•
Th y fi
n
a ing nd main inin
4
mp iU
n ag Fi r
the organi ation. Foi- a re ponsible organi ation, strategk plan aim at
r, p n ib] ~ m titiv n {in · a ,t r 7 w will addre resp,on ibl
competitiveness in more detail).
•
Th y ta · · nergy in o consi · rali n and im a c ordin ting · h fforts
of departments and indi idual to contribute towards the attainment of the
o . an·, ati n· ov, raU goal .
181
Prindpl
of G n ral Manag m n
rm t
Tactical pian pecify the details of how the
m dium-t m, bj
b · hi
d.
Th
focu on the fo.octional areas in an
b
j,
fi r a ti al p, an .
■U•h•
--- · · -
Tactieal plans:s edfy he detai ,
of ho · th m d"um-t rm
or ani ti n, u h
mar ti.ng. 1n n
abjecti es are to be arnieved.
ope.rations,, human resources and so on. Tactical
plan ar m r p · ift Lhan :rat gi p,1 ,n .
Ta tic-a] plan h ouJd taki ynergy into consid ration. 1n other ord they bould
contribute
the attainmen ,o f the o, a n· ation's overall
u t-lin manag -rs u _uaU de do p tac ica1 plans.
. Middl -level and
nying u t~ ri al
achieve operational goals. They ar ·
Op ra ·onal pl n fi ·u
n
plans to
develop d by middle-level and lo er-ie I
manager: .
pera fonal plan
focused and ha e relative! short time h
1{m nthly \ -kl ., da -t -d ). o . ri.t cl
manager: normaUy formulate operational plans.
0 eratio nal plans focus on
r ying out a ti al pl n o
a ieve o perabonaJ go-als.
6.3.2 Long-term, mediu m-t rm and short-term plans
l ng- erm pJans are
' I p d by
p
- - -
management with the aim o achieve the
org nisati n' v rail r · s. Th tim p · n for
stra, ·
· , ··
·arie from one organisation
t th
n .
o au i.rcraft manufa 'tu r.
long term nu]d be 20 y ars. For an organi ati,o n
in lhe i nna lion techn logy indu try, long
t rm o d be 12 months or · n six montl .
i
u m dJ.um- rm pl n are
ou by middle management or th various
fun ti nal depaltmen
in an
with h aim or ali ing t .· tica
Long- rm I ns ar dev lop d
by
manag em nt with
th aim to a hi eve the
rganj lion' ov, raH goa l
ln1
from overaU goal .
bort-term plans are normally plans that
over le th
one year, d eloped b low r~
level mam1 ement with Ute aim o achieving
ope:rat.ional goal . The are ,concerned with the
day-to-da a tiviti · of ar1 organi . tion n, th
a llocation of resourre to particular i.ndividu 1s
in a rdan with p · .. [cular p,roJ ' 1 • ud,
a nd o on.
1
18
lnter,mediate: or me:dium- te.rm
plan af d v, lop d by middl
management ,o reali:se tactical
g al ·
riv d r rm v rail
goals.
IIDDII
Short-t rm pans a~ d v lo, d
by lo er- leve manag ement
wit h th aim of a hi ving
operational goals.
Ch · p r 6: Prin ip1I o plannin
6.3.3 Sp ffi and di11 · tional plans
Plan are da ified as specific hen thy have dearly defmed objecti es and leave
no r om fi r mi in rp . tion. o·r tional plan •• 11 th o h r hand, a.Ji flexibl
and -e oul general guide.ti ne .
T bl .1 umm ', th , y diffi
time frame and pe '.fa::ity.
Tab.le 6.1
n plan in
b
rm
f h ir bri d h,
The varicm ki,nd . of plan in t rm
Tim
B adth
Strategic. plans
S _to po if n, the organi 3 n in
terms of the environment an d drive the
organ· tton owards attaining i broad,
ov rall goats.
Focus on, tke functional areas in an
o
-_- ,~ ·
-
-
"
d
In
mediate.
ore specifi than
strategic p am
a
Focus on, sma.l
function3il are
sa ·
-•arrying , u ·
a
hort term
N rrow ly o used
operatlonal goals.
6.3.4
Th r ar
namel~
I, n· •
-ng l, -use, standing and jndividual plans
hre
i form , of op ra Uona I plan •
· gl -US:e, standing and indivi ·ual
Single-use plans. are used once o meet the
n
r p m ul.a or mf I i:u tion.
Examples of ingle-use plans are programme .
pr~
nd bud
•
Singl e-u
pilan
ar
u d
on e o mee th, ne d of a
particular or unique ituatio .
IIGhM
A pmgramme i a type of ingle--use pJan.
A prog mm
ty p of
u h pl n u lin h maj r t p · and
specific actions nee ary o implement
ing le-use plan - it outlines
th, major st ps a d p ific
lh a tiviti pre crib d b h
pmgr:amm . The. timing and equencing •Of
actions n cessary to impl ment
th a tivi ti pre crib d by the
th fforts o iindi idual and unit · are
articulated i.n the plan. or example, an
programme.
organ.i ation can implement a diversity
prog:ramrn desi ned o r rnit and hi11 a mor div rs · workfor e a w JI ·
m educate employees on issues related o diverne work environments.
18
Prindpl
•
o G n ral Manag m n
r gramm
nt
_pmjec . A programme manager manages
a port.fi lio r prnjec and · · re pon ibl
for the programm meeting its deadlin s.
Projec are les comprehensive an
narrow r in oru than pro r: mm and
usual!. have predetennined targe dates
for · omp] tion.
•
Bud e can be u ed to plan the allocation
f human. ph kal and informati ,n
re ource to peciftc activitie . The e
a ivili · n d b p form d in nl r l
attain goals.
tancUng pla provid guidan fm · p al
performed actiollS in the organisation. Toe are
n · in nd d igned L d al 1th o · · ti n 1
issu or problem that occur fr qu ntly.. Ex.ampl
of standing pl ns re ,r i
o du . and
mles..
tfPl11.-r::I
llid lin
h
P ,] i • pr
followed when making deci ion . Human
re ou
d partm n main ain p lid
on emin r ick lea e vacation I av and
Pm 'ects ar the efforts of
ind ividua Is or work groups
towatd the chievement of
p ifi , w II- ined g al .
Budg tsar num rial plans for
allo ating reso rces to specific
a tlviti
IIGUM
Standing plans rov1 guid ,
for repeat dly performed
ac ion in th ,rgani:sartion.
11 i s provid ,g n r I
gu idel ines to be folrlo ed hen
making d dsions.
ben 1t ,opti ns. Purcha in · and uppl .
abli h poH i or
prn ernenl and in en o managem m. A university's admini trat:i:on ha
1 1
bout dmi Lan · to
a ad mi programm
mplion and
SfJ on. These poHcies all pmvid a frame· ork for decision making that gwde
th d i i n-m kJ r in val · mg ·p m ir um a .
urr unding , h
ind.ivid1.1.al ca e. It i important to note that policies do not t.ate specifically
hCJ L th d • i n h uld or will b .. Rath r, th
·tat th b und:ari . of th
deci ion and/or wha must be considered in lhe d.e cision.
l 84,
Ch - p r 6: Prin ipl
•
p rn and a ti n
orien: ed than policies. The are the
u n
o ac ion to
fo1lo
In
ord r ~o achie e aa obj · cti e. Procedures
P
• dur ,
o plannin
m
Procedures ar th sequ nces
o.f a tions to b follow d in
order to achieve an objectiv .
are d. · :igned to give explidr instructions
on him to compJ t a r - u.rring tas . or
example, a human resoumes department may have a procedure for filin,g
b n f1l l, im or applyin or v tion I av . Pr du · n n d piartm
establish procedure fo r iden ifying and evaluating su.pplie: and ordering
·u _pli
p rating th in nl ry m nagem n . ·, m nd id n ifying and
imp1ementin pecific quality contro] cri1'eria.
R l provid d ail d and p ifl
r gulalions for action . Rules tare exactl
h t h uJd n
h l h uldn't b don .
p avid d · ail d nd
A ru[e · - the tricte l type ,o f taudlng
regula io ns for actions.
phin found in or anisations. Th ar
"ntend d to uve a · tddelin for mak.in dec:isio . For exam pl •. a huma.n
re our e· man gernent department ma h v
oveming th. number of
i k da an employ may tak with fuU p th month in whi h v ation
leave can be chedwed and the len lh of ·!me an organi ational mem r
nm t
· mpl y d b fi qu· U ying ri
nr 1 ·• Th pro u.rem n
department may ha e rul
oveming the percen age of upplies
m th d in wh· h in n ry_ us
p r ha d from a in I , pph .
accounted fhl and th wa , in which pmducts of sub- tandard quality must
b handl d.
An individual plan is a broa er organi ational
plan t1; n I· d
individual plan.
lncrea ingl • organi ations aJie looking for
w
,. t br d T organ.i ,i onal als
and pl.a
o lhe level of individua] employ ·
One ppro. ch o doing o i management
obj uve .
An i i idual plan i a broader
org ni tional plan tran lait d
into an
individual plan.
Man · , t b bj, ti
(MBO)i nirn,:-i:>11..i in which mama ers a d th irsubordinat
jointl · t goals for the individual emp
e, deri ed from broader organisational goaJ ,
a nd m na em nt p ·odicall
lh p fonnan e and re ard subordin t
a cording to the resuJ s. MBO i
pedal planning pm ·
at the indi idua1 i - cl of
an organi a ·on. IndivjduaJ goals and plan are deri ed from mader organi ational
go 1 and plans. Th MBO appr a ·h Lo phumin h lps man ,
babm conflicting
demands h focusing the attention of the manager and tbe subordinate on the
ta ks to b ompl t d and th · p rforman
b achi ved a an inclividuai ]ev l.
invol es the folio ~ing reps:
I
18
Prindpl
t
p 1:
o, G n ral Manag m n
- tting indi.vidttal g
and p:. ·
The manager and su.bmdinate jointly
Ma niagem nt by objectives
lMBO) is a pro · s in wh1 h
g aJ a , d plan for th individual.
The organisation'
ISton, m1 ton.
Ion -term goaJ and plans should
· u.id · Lh m in . lting th
oals.
~
managers. and their subordinates
j ntl s t obj tiv
for th ·
in dividua l employee, d erived
from br ad r g ni tional
p 2: Identif cri · ria for
perfonnance. Once a set o mutually
a ree ,le oa · ha been d tennined
criLeri forassessingih -work.p ~r arr.nan
goals, and managers periodically
v luat
h
rf rm n · and
rewards suhordmates accoriding
to, th r ul .
of the individual rue deteanined..
S tep, 3: Individual employee formulate and
implem nt ctiou plan . Nm, employe
and implemen th
action p,J ns tha are nece ary to a hkv
imli idual oal and re iew
their prog,re s with their managers on a intermitt nt basis.
,t p
: Com.par, performance of emplo
MBO pr
th a tual p rfonn
goaJ e tabli h -d at 1th beginnin
-t p
: R- ard p form n . P r • nn n
·
of
· ·. Du ring thi · tep of the
plo · ee · compared with the
th planning p,eriod.
reward
to whl, h the goals h a. e b en achie ed.
t p 6:
paration of n ,
mplo
is omple1:e, ~loyees begin formulating goal to d:d
p]an ing p l d. Th
· 0 ro •
lf-ren w·n •
The MBO pro e ·
•
n ro id.e rmee primary benefits:
MBO provid · a founda i n fi r m
in , g a , cl y t m-orl · nl cl
approach t . planning. The implementa:tion of an MBO programme forces
m n
t.
in h
h , v1 1 .
h indi idu l in a gr up
n'lrih te to the a hievement o the o ttall goal of the group. A:5. the MBO
p
amm wor its w up th org ni , fon .1 hi rarchy it pro id a
y km-wide coordinating mech :ni 1.
Th MBO appr a ~h requlr fr. u nt ommuni ·tion b tw n mpl
and
their managers because ilte need to agree on the objectiv1es and plans , or
th emplo . More freq nl communi · ti.on often rves tro build trong r
relationship b l'w e mana
.a nd U, ir mpl y ·
r,
•
•
La I MBO
terns ma l ad to a more 11 rticip· tory working en ir nme.rf.
Emp] y · - ma h a e b lter under: landing of where th y f1t into, the
broader or ani a ion. Th ma. also fi el th y h e a oioe and an provide
input imo b , · h ir jobs hould b · d ign d and! wha · th ir p rfonnan
rarge
10
should be.
Ch · p r 6: Prin · ipl
r:
um r f p t ntial di adv nt g
the implements ion of the MBO process:
t Lh
am Lim
how
m y
o plannin
on
w rrom
•
MBO
ms quire igni 1can mmi m n n th part of th man r
and may diven attention away from other i.mpoinam manageriaJ a tiviti
•
BO
m n rmaJI r quir;
i pap rw . rk. th t .mpli
Lh
administrative proc, within the organi ation.
om p pl. rgu th t MB
t m fi u n
,- rm g al · rath r th n
•
on issu
that are relevant to the long-1enn urviv
nd uc
of the
organ alion.
•
Lastly, in ome ca
p rati,on.
goaJ ma b · difficult o e lablish and put into
1
In general, the MBO can be an effective planning tool and benefi.cial to management
· h n us d · l ti ly.
For managers to formulate rea:I" tic operational plans, they need. clear uidance
fr m tra i. and a i al pJ n . nl ff th d.iffi ren kind r plan are m1d tood
wilJ lower-level manage · be able to derive their ections' pla fTom plan at a
hi · h r l v I. Thi .
11 th h" r r h , pl · and t ilJu tr
in Fi r
tr: t,gi
pans
Op rat1 n Ip n
lndiv1
lflilU
6.3
lh h~ ta hy or org1 ni
ldl
plans
iOl'l,al pl I'\
Although mo · manag " will admit that the need to plan. man · would also dmit
that h y do mu h l". planning than lhe hould. hi iruation i a r u.l o a
numb r o' barriers to effective planning di ru sed in the next ection.
187
Prlndpl · o, 6 n ral Manag m n
L04:
6.4
- plain h barr,ieJS to tf · tiv plannirng
BARRIERS TO EFFECTIVE PLANNING
Wh do managers ometime do le planning , or l
e~ ective p lanning) than the:y
hould? Ma.nag rs rail to plan ff U cly b caus ,or fou:r main rea_ons.
6.4. 1
P anning is Um consuming
Managers often fiecl a though they face a continuou tream o proMem from the
Um hat h ani
t work until h i:m · tha th y I ave Tho h b•U r planning
and the implementation of policies, procedures rule nd the lik.e, manage can
i veJ p ,
op ra ·on l y en th a mo,re effi · e an l
p,r1 bl m U nd
demanding of theiT time.
I
'6.4.2 Resistance to change
Almo t b. d mli n, p, rm·ng invol
in n
organisation to enable it to adapt to a uroulent and ,e ver-changing envimnment.
Organi ational hang m , b requir din
rm.or , I m n orth o . i i n,
or example the organisatio nal ructure, the l'eward sy. tern, the standa d perating
pro edur ·. off1c admini trati ,n 11d
o . In p1anning fi rim lem ting · b n e,
m.anag r aJm o in vitabl
ncoun r resistan , from ubonr ,at . Mana er
them elve may also he' resi l nt to chan e. rn en the imp · nee or focusin :>J
n quaH • ntinuou Ullp r emenl nd a to al qu Lit a pr ,a h, r • t .n to
change c o have vety detrimentaJ r uUs for the organi a ·on over the lo ng term.
'6.4.3 Environmental icomple:xrty and voll atil"ty
mpl x
·rom:n nt nutk: it v ry di t lt o ir l men planning prn ....,•..,.,••.., and
to develo plan . Howe er;, organisations that operate in rapidly changing and
m
iro m ·n
, n fm I th. . pl n· g pro id
m b ni m f;
ping
witli su h conditions.
6.4.4 Rductan~ to establish goals
M n g
may no J ·y un
t n th prln ipl
and imp , ance
onnulating goals. They may bo ha e a la. of ,oonfi.den e in their own abmty
and he abflit
U , ·r , b rdin l
fi rmuJat
g I . Ftuth nn re,
manager may al o experien e a ear ,o f failure - b not etting goals for their nni
or department ~ manag rs cannot be accu ed of not· taming their goal.
The banier:s to effecti ve planning almo t seem insurmournabie. However, there are
guid r
lh t manag rs ~an o to, v re m 1h
ni l",
188
Ch · p r 6,: Prin -ip1I o plannin
LOS:
~
plain ways too ream
rl'i
fS
o ff
iv planning
6.5
OVERCOMING BARRIERS TO !EFFECTIVE PLANNING
Achieving succe · hrough · Jann[ng reqtf r th participation of a broad rang~
o f or· anis tiona1 m mber. Manage · should U1erdor d~v lop and m int.ai:n a
culture th.at enables p]anning and rewa.Fd tho e who plan effectively.. The following
guid lin
an h Ip m nag · in hi pr
6. .1 P anning hou d ·
·h top
Planning bou]d tart with an organi ation' top, managemen . Without long-term
planning for h or: an
n , a
hot ·. middl man
plan for thcir departments for the medium and bort
d
middl man rs, ]ow r man ,g r: will
sections for the hart term. Top management' · · ere ·
or
nl plannin at middl and lower
of
· l n
l
m
b abl t ·
ith u · planning
n for th ir
the cene
D •
Top management houJd devdop an organi tiomti Lultute tha, encourages strategic
and ·· 1 -o ri n d U inking - hi mI • d l m
f . iv plannin . mp.lo ·
hould be provided wiili. the training nee • s
t.o develop trategic: thinking kills
and
n i en th - pponunit
p a ti· th ·
ill" in th ir wor env~ron
Furth rm.ore, individual can al o be rewarded or thinking t rategi H
d vclopin, -. their plan·.
,s.5.2
lnvolv
·n d ision-making and p,lanning pr,
ss s
The role that Jin
Uonal managers pfay in the pl 1 1ing pr
be o ·eremph ·
re re ponsiMe for ecu
formulated by
l · els of mam1g m nt and th ir involv nienl in
ng pro
h
obviou . ·
le are generally more committed to p
t·
Iped to
n1 ,
T
i·
k
I
aU l
f·n
or example, managers ·
rm d· b
'
and ·ews of their emplo e
indi dual m mb
of .
of lheir sections an.d the or
an.not
hl er
uld b
nape.
rch
Id b inv Iv d
ormation from employees and
• 1dating plan and the hould encou.rag
to
ab ut th plannlnrr ffo
·
.
vi w nd p
employee - it may lead to a broader a es ment and evaJuation o organisational
p . 1 m nd op rh.mili . Org ni ati n 1h t n ourag
wid ran of di - ren
id a . and ·ew and ha e learned to manage di e:rse group are more likely to
pr du phm that are oomprehen iv
d full d elop d. It i imp rnti e to ]earn
h w to mana e di er: e \ ork groups. This i u i d alt wit.b u1 detail in c hapter 11.
18
Prindpl
of 6 n ral Manag m n
,s.5.3 Communi -at hroughout th planning pr,
Communication plays a vital role in the effecu ene
of pJannin -. Planning
initia d al th top houJd b
mmu.n.ica d L all 0th r 1 · 1 in th or n· ti n.
Managers and all other employee hould ba e a cl :n und tand.ing of the o eral1
o ani tionaJ trate :ry. fun tional
and indi idual tra.te i and how
th y are int li"f\. lated.
1
6.5.4 Pans should not be cast in stone
An ,change or change in the management environm nt may lea Cto, the revision
of pl
. Als • in a lLLrbul
, nvir,o nm -nt. on in n · Janning may b
ry
u eful Contingency planning wa defined previo 1
the- de dopmen, oft o or
•ans b , d n diffi Pnt nvir nm •nt 1 ndh'on .
THE BIG PICTURE
TM hapt r ddre d planning a th . fust m na riaJ fun tion tha an rg
tion
n eds to address. Plannin is n
ary tu cope wi h uncertainly an cnan in the management en ironrnent. Wi ut proper plannin . management cannot
pro d
any o th o h •rm· n·
• J run ition _.
SUMMARY OF LEARNI G OUTCOMES
LOI:
..· ain tb n· tur and imp rt •n
,of pla nin t
Planning · an
e dt:fmed a the mana, rial
or ~ni aLio1ml I i n, mis ion and goal , identif1
nttlon tba.l determine the
ay o ttaining th goa and
f:mds the
urces needed for the ta k w:ith· a complex environment. Planning
on p u - rly n bt
n r ni · Lion
reat n cl- ali fyin produ l ' and/or
servi
to its customers. lo ,create jo and to contrib ute to the we:a]th and li ing
tan . d f th -mmu i y.
L02:
Differentiate heh een
benefit and co ts as ociamd with planning
Planning:
•
provid , dire tion and h lp manag rs a w 11
non-man:ag
forward thinking
•
•
•
•
l ad o a paiti ipato w rk , nvironm n
n~duces the impa t of change
red , ~ th
rl· pping and , upli a i n f ., iviti ets the tandard to facilitate control.
h - ost a o ial! d with planning are;
• planning ma c1:1e:ne righ:Uty
•
I' 0
plarrnin - tak
up manageme.nt ime
lo Ii cu
n
Ch -p r 6,: Prin ip1I so plannin
•
fi rm 1 pl n , ann t , pla
•
delay in decision making.
LO
intuhi n nd , r atlvity
Di, - ntfa:t b · w -nth
ofphm
Planning an b d scribed in terms of breadth time fram • p rn it and
f[j ,quency of us . Wlt n d crib d in terms o f i bfi adth. w can di Un ui h
bet een traregic, ac1ical and operational plan . With regard to time frame. we can
di tingui h long-t rm, int rmediat - (orm -dium-1 rm. and hon nn plans. · h n
plan are described in terms of their specili.city, directional an and/or specific
plan · an - u , d. B d n th frequ n
u , . ] -us p
, iandin p]·
a nd individual plan can b e distinguished.
1
y •r
L04:
plam1in
Effi riv . lannin in orga i alion
•
d
its time- onsumin g nature
•
ban
•
environmental c:omplexi
•
r u an
LOS:
and olatili
abli h g
t
·e.1; to effectiv,e plannin
Explain · . a s to
Managers an follow v nou ,uideli:ne lo e:nh .n e th planning pro , · in th ir
o · ani ation b :
•
realising th t
mun starts t the lop
•
involving mpl
"' in d i i n making nd in h pl ,nn·n pro
•
communicating thrnughom the planning proce
•
· n · ·n tl · ibili' .
R V EW iGUESllON'S
I.
Explain the nature of p]annin
D fend the importance of fJi
J,,
4.
5.
6.
7.
1
contempo rary organisation .
· planning in an organi ation.
Compare th en fl.ts and
t that an b
·o ·at d with planning.
DifferenLiaie between the · arious typ of p1ans, based on their brieadth.
riou typ
f plans b don ih ir im fram .
Identify ,,m,d d" cu . the various types. o plans based on their specificity.
U th fr qu n y of u
di . ·ngui h b tw · n th ari · us typ · f pl n .
8.
Managers fail to plan effectively because of mainly four reaso ns: Discu
thL . lal m nt.
9.
Explain h ow managers can overcome the barriers to effecti e pJa.oning in a n
r n~ ·ation.
Prindpl
o,
G n ral Manag m n
LEAIRN IING ACTIVITIES
There ha e been many changes to planning proc:e ses in modern organisations
omp red to 25 ,- ars a .
1. In a changing world. where ri es eem a regular pan of 01;gani ational life,.
d you thin hal l nnin is more imp nant r J : importa1 t? -ub t ntiat
onr answ r.
2.
om . omm n ato hav · " pre d th vi w tha o
· atI
be well prepared for ai ,cri t . Discus ·t he potential alue or oon
pie nning in ituations uch
th e.
3.
Goals lhat are overl ambitious c.a n discou.rag em~ ·, sand decrease
n h - · n a a way of g tung
their m tivati n. Ho , ever tret hing g1aal
empio e - enthusiastic and moti a ed.
a m. • ,ger. bow ould ou
ha.tan goals with emplo ee morale?
REFEREINOES
1
I
The aonomist. 2012. The
t Ko ak moment? Available oruine: htJip,:l/w...,IW.
mist. om/n . d /21 4 7 , [n~,.i.;~1•1;d 2 5 o:vemb r 2017]
CH .APTER 7
STRATEG IC MA 'AGEMENT
A.mlior: 'it r: ia B'otha
---
----
OPENING CASE
The C:oca-Cola Company1
Th . Co . -Cola Comp r:r · an American multinational orp ration and manufacturer,
retailer and mark, Lerofnon-almholic b v ra concentrat ands m . n.1 oompany
i b
known for its flagship product Coca-Cola, invented In 1886 b pharmaci
John . P mb rton ·.n AUan · , ' orgia. Th ompany' mi . · i ' o r rcsh th world
in mind, bod and spirit: to insp,ire moments of optimism a d.happme s through our
bra
d
nd mak
•
mpan t t
its · ion as the folfowing: 'To achieve our mission. e ha d vdoped a et of a:-oals,
whi h w iU work with our b ttl L deli r: (iii P opl : ln pirin
h oth r o
be the best · e can be by pmviding a grea pface to ork; (ii), Portfolio: Offering the
world a p nri Ii of drink brands th i a 1 i ip t nd atisfy p 0 p] ' d ires nd
needs: (iii) Partners: Nunuring a winning n
ork of par1ner and building mutual
lo alty: (i ) Planet: Bein a ,
ible global citizen th.a ma
a differen by
b -lpi.ng to build and uppa,rt
tain
• ommuniti ; {v) Profit: Maxi:rnisi g longterm return to shareholde • wbil being mindful of our o erall res on I ilitie ; and
1{vi} Pro du tivi : B ing hlghl ff, • t an and f: - t-n ovin or · , i ·;.nion.'
1
Tbe compan
ta
ahi , sa folJ w :
guide our action a.nd describe h w
- · ·ourag t
h . r fu
•
C 11aboralion: Leverage collecti e genius
,, ·
•
B r al
Accountabili y: If it i to be . ifs up to me.
•
~
mmil1 d in h art an
•
•
e · eha e in the wodd:
1 :li.nd
Diversi : As indu ive a our bands
Qualit : What we do, w o weU '
ln 2018 th
- o a- -ola -ompany ann un d i1 Worid With ut Wa t
1
,on.
Throu h this vi ion, the company c:,ommitie:d itsel lo an ambitious goal namely to
coll t and recy ', th equivalent of a b ttl or can f, r
one th · th y eU ·
the ear 20JO, reaching a 100~ ollecrion and re, ling mt of all their pa kaging.
The vi Ion al o in lude en wing tba
of their pac aging i 1000/o recyclable b
'02 ~11d th · th ir . ET (polyelhyl n - rer phthalat r pol
r) bottles a mad
with an ave:rage of 50% recyde,d con ent.
an
The company announced five.\ ays in which th
are putting th World Without
Waste vi ion into a tion aero Africa· cleaning up their , a ti foo tprint while at
th am tim
r ating in om oppmtuniti
nd bo sting th ir ular onomy:
Prin ipl ·
o,
6 n ral Manag m n
Cr ating a u , in bl
nd r
lin.g m d I
There is much debate about the best model! to use to encoura ge the collection a.nd
r
ling or P · T. In Africa, th company ha had much su
with a Volun ary
End Producer Responsibili ly (VEPR} model heTe the be erage and. packa ing
industries oom to ether to promote and fmance the recycljng of PEI la tic; takin
re pon ib.iJity for recov ring and r y Jing T pl a tic. Thi_ is driv , n. thro ugh th
PET recycling compan 1(PETCO), funded b indu try through a levy on PET Je.Sin
nd in-aid r: .n . Th, PET
mod I ha pr v d o ·u
ful th · th y a11 now
replicating it aero Africa and •Other parts of the orld.
PE O in ' oulli Afri a ha dri n il1e in- ount recyding of ET plasti bani:
up from 14% in 2005 to over 65.lfu of be erage PET botti, in 2018. Thi puts South
fri a ah ad of d, lop d m r
• u h
th E (20 I : '60 p r nt) and th · U
1(2016: 2 8. 4 per cent) when it come to, PET collection and re
ling rate .
A a dire t on t>qu nee of th fmandel stimulu pmvld cl Li
ok , elh r with.
industry. o er the past decade, he recycling ecosystem in South Africa has grnwn
in Lo a thri in R
,Ulion per y r industry, pro I ·ng · om p . rtuniti
for more than. 64 000 people. and ,creating mall. entrepreneurial wa re collection
hu in
al n · th va1 · hain.
The trength of the PETCO model i that PEI · co e ted and recycled in the ame
owitry, nd not p rt: .
Voluntary
terns uch as the e
in fman ial p rt from all industry
play · to Fi main ustaina l ~ The ' u .-' ola · omp · ny provid supp rt. in Lh
onn of a recy,ding fee and an nual grant paid o PETCO.
Partner: hip
aea t · a dosed-loop ·
n iro ·
.
ommuni i . and be ins harting p
or future g -nerat1 os.
m that b nefr . the
f hared opportunU
onom
Whether it i tl'in more re y Jed conten t· redu ing'the amount or plastic: in bort1e
th u b Ii h - ightin ; dev lopin plantd r in · o r
perimentin with
ways o liminate pa kagi:ng a1t g the , tb
ca-Co]a Company i inv fng in
their p· ka in.'I to de ign better bot 1 . Their inno ation lab are loo ·ng for way
t·
ur ha ,~ ery b ti ha h , pportuni y o mor ban ,on Ufi - h th r
the materials are used to make nother bottle., a T- hiit a carpet, or furniture.. No
mat r wha t I y b m h
of PET b ti i ma imi d whil minimi ing
their impact on the ,envi.ron.tnent
lmprov m n · in Lh fr pa kagin hav al ady b n imp! · m n d. Th ·r . aTwist
te hnolog on Bonaqua water bottl uses 12 per cent le PEf o al1o, bottles to
b a ily mp
d nnd ak up I
p
ii, th re
·,n bin. Th ir V: lp,re b u
are made with up to 30 per cent plant- based rnw material .
l' 4
Chap · r 7: S rat gi rmanag m nt
a.r in
tin in • ,
t , am unt f ro
PET (rPEf)
[mp rt ntl , th
in ilielr be erage bottle . Currently, on average their PEI bottle in South Africa
ont in 17 p r nt of rPET. Th a , vork.ing on . n av rag f 50 er ent rPET
in I.heir botUe . h1 thi pu uit. Ibey wil1 be laun hlng a 100 per cent rPEf bottle on
th ir 13onaqua wa er brmd in 1020.
Partnering acros all ectors to support health • debris-free vironment and
an
Th Coca- ola ompan is working with their bottling partners, governments, GO
and ommunitie o help in trying to add.re the wi ·
e f pl ti and pol1mion.
Tlrrou b p,m r mm ·.· Uk
gula.r h a,· h. and rivei; · e n-u . and oth r on oing lo al
activities the are supportin,g the collection d r _cling efforts at a local level.
Making C!0Uection more ar~es ible and hclpin . people. und _rstand ,, bat, bow
and he.r t coll ct for rec cling
he company i. makin
huge effon to edurnt p opl · about Lh b t
· to
collec their packaging. They have
rted the proce of app1 ing their mar eting
.pert· , mark lng
m di · atio hip,
drl · b b . wu han
nd
change peopLe' . ~ aste h bit ,·r m anti-littering to sepa.rati.ng reic dable from
organi wa
at th t h n · .
The · ha e al o
nen-d with
oll
chools to develop a n w
i n i.n th ir
mmu
enera ·ion of eco-
,rn .
Sharin exp
to help ·ol th problem
Th · 01! · gth or Lhe World Wit.bout Wa te trnt y i hat i
ntre on part11 rs.hip
·ogin eople mgether to help tum wa te · to orth. The company is appl in
j
i r • 1 v ning po v r brin · th righ p,artn · ·· 0 h 1abl to find olutions to
thi global pmbk.m. This includes haring e pertise,, resources and technology.
1
Re pon ·e lo COV1D-l9J
As a food and beverage b i
the compan re,co,g nised that the had an
imp rt · nt r I t,o pl y durin lb C ·VID- 19 p nd mi • Th
r h fr rnploy s,
customers partners., consume · and products wa their highest priority. During
th ou br ak, th
impJ m n ed I b I b · pr ti · pr utionary and h gi n
measures at all locations. The Coca-Cola Foundation, the philanthropic arm o
Lh o a- I , mpan • m d
tn uti n
upp rt • H, ffi rts r und t1
world. They redirec:ted a big pan of their marketing pending for conummily relief
pr · ramm mcdi al -uppH
,nd ,equi m nt during th ut r . k p 1a , a w 11
as adoptin other action for the r co -ry anrl bad- to-nonnal pha , in market
hit ha11de t b the :pandemic.
CHAPTER: ORIENTATION
'
Organ· ations generally have an im era.rive rn
averag . Th tud ,a f tra egi m n g m n
rvive and to erform abo e the
on ho · rgan' tions a ii
lhi
Prindpl · of G n ral Manag m n
omp fti
v ntag • in
h r
rds h w th y a hi v
p ri r rform n a ,d
sustainability over the long tenn. For the iesponsible manager and organisation, this
, o achieve rup rior perfon.na ce in a resp nsibl manner. In th" hapter,
m ans h
we will focus f:rrst on difTerentiating b tween the con p of strategy and t:rategic
management Then wt: will discuss the pha . of th tr. di ·onal ie of the trat g1'
ma.n
ment pro ess by m an of fou.r step namely o tra t ·i analy ist strategy
formulation. strategy implement tion and strategic control. Rm ever these tep
wiU b d' us d b infusing lh pillars f
pon .ibl · ma g m n . ( ainabiU y,
responsibility and ethics} m each phase of the proces - thereby creating a responsili]e
· ,rat i m nag m n pro
LEARNING OUTCOMES
A r ·tudyin thi h p er, you hould b abl t :
LO l : Differe.nfa e between the erms strateg ands t1 eg1
nagement
L02: x.p~ain s ra , ic: analysis a h 1rs phase f ·h s,
c ma ag m n
process and th e integration o. res onsi e ma gement in the process
LOJ: Explain stra gy formulatio as t
con phas of h s rategi managem-n
pmcess and the integ,ra tio o responsible management ·n the process
L04
pl ·n stra gy impl m ntati nr s th th1 · phase ofth trateg·c man gem
process and he integ rat[o of responsible ma nagement 'n the process
LOS;
plain stra eg ic co rol s th
lh p ase oft stral gi man g
process and th e in egrat1 of ~es:ponslb e mana9eme t in th
cess
1
KEY TERMS A
acqu-sition
corporate decline st ategv
corporat growth strateg
objective
o p rtu ty
o ga · isa iona I architec ure
gani :a iona I cullur
overa 11 effectivene5s
p od uct d v lopment trategy
prod uct po ti olio matri
productivity
c:os lea d ~hip stra eg1y
responsi' le com
Bos on o su I 1ng Gr u grow hsha r,e ma ix
lio an ly is
or
dlfferentia ion strategiy
div csi11cation stra gy
dives iture
ono i amp ·tiv advan ag
I
i fveness
responsible leadersh ip
soci I valu er a ion
strategic ana lysis
strategic busin ss unit
Chap r 7: S ram gi rmanag m nt
s ra,e
nviron m ntal anal i
le •ontrol
environmental val e crea ion
o us strat gy
eneric strategy
s ra eg,ic leacle~hip
goal
s rategy formulation
grand strategy
integration strateg
stra e y im plementation
s ren,gth
a ov r
threat
liquid tion
turn round
management effectiveness
mar et d·V opm n trait gy
vrnon
s ra egic managemen l
s ra, e y
harvesting
innov tion s rateg
me ger
mi ion
LOl : Differe tiate between the ter s s ra egy and strategic ma agement
7.1
STRATEGY A!ND
TEGIC MANAGEMENT
Be ore we ex:p]ain th
al gi management pro · • it is im rtam to have a
dear understanding o the I
trat gy and tra egic: management. Therefore. we
· bis ti P.T
ri th a dis u ·on of th
7.1.1 S ey
All orgatilsatio ·, large or man profit- eek:ing r no -for-proftt. private and public
t r. h• · a purpos , ,a rea n r th ir · I! r Th purpo
.f an organisation
I
be articulated in the form o a vision and
mi· . n tal m L In lh p ditl
ma
we have explained the vision a a tatement
f ·· h th ,rgani i n wan
m and
wher~ it wants to be in the fu ure. Tue mi ion
~ tern ri align th organisa · n with it:s visi.on
in terms ,or i produc and/or servi
market
and tech.nolo,gy. Strategies relate to the pursuit
of th.. purp e. · trat gi · rnusl b - r:cat d and
implemented.. Therefore, we can deflne tra egy
a th I ng- crm dir i n of th · rgani ation
the means b which organisations ac:hie e th.cir
--
Strateg1y is defined as the
lor, g-t rm dir tiion of h
or,g anisation. the means
b
hie!, organi a · ns
achieve their objectives and
th d lib ra
-hoi - of a
set of aietivaties to achieve
a susta,i nab I
advantage.
omp
·1·ve
197
Prindpl
o, 6
n ral Manag m n
bj tiv
ml th d lib ra. ·
r
f acti :ti
competitive advantage. The foUm1 ing are important considerations when fo.rmulating
org ni ai nal trat gi :
•
Fust, strategies are relevant for the organisation a a hole. for the
in :·vidual bu.sin
(or t:rat gi b , in
uni )1, th ari us f-uncti n Lh t
comprise th orgaru ation 1( u.ch as th mark ting, fimmce, op rations and
uppl chain function )i and for the indi idual in the orga~ i
•
e ond. organisations uc eed hen th ir strategies r ~pproptiate for their
ci.rcumst ,n . In other w rd , there must be a ft b t en organ· ational
tta t gi and Lb - drorn1s1an •·- • in th ir temat
in ma! en i.ronm nts.
There mu t be a fit he:rneen the trategie a
gth.s and eakn e
in th int rnal .nvironm _fill a n d h
nd thr _t · in th XL ma!
environment.
• Third, tm
shouJd al b
r organi aLional rt!SOU
kill and capabiliti . In chapter 2, we identified vario resource (
l
th t an rgani ,ti
·n
n1
al . R ou
and it · therefore impon t to formulate trat-egie that are
.-m terms of
th
arcf of
nputs.
• fourth, manag ·
ensure that organisational lra : gies aff: desirable
sibl man r will · n id •'th
p . Hons of
tak h Id
au stakeboMen, not only the sbareho]ders, wh , es are ormulated.
In ch
lhe r pon ible manag ment p
explain d, hereb
th res · ons1 · le manager identifl the rgam ·
elmld rs. prioritis
,e:rs and engag with ·
·
·, . Organisa :ons fajJ wh,en
: 1 · do not m , t. Lh
akeholders o,r wben th
·on does not produc ·
de ir.ibte.
.1
To ucc d and to · n ure u 1aina il 1ty, organ· anon. must ompte • ecfiveJy
a nd outperform their rival i a dynamic
and turb t1I n n ironme 1 . In oth r w rd
organi aiions need a comp titive ad anta ·e.
Th o rail ,goal o " strat gic
whi h w d fm d in hapt•r a a f: urabl
ma.nagementi th e achievement
or uperior position - a po ition ad antageous
of a · tained compe'titiv
in mpari n with p
· p iU n . Th fi re,
adv:mtage - a i uati n wh 11e
we can state th.at the ff erall goal of straiegic
an organisa ion is able to
man g m n i th a hi
m n of a u ta i . d
utp ·r orm i
r
omp titive advamage - a situation where an
the lo g t erm.
or nisation i a I . to outp rfonn it competit
•f@•M
oy,e.r the ~on -, term.
Chap r 7: S rat gi rmanag m nt
Th qu · lion tJ
w
w
d to an w r i :
·what i the overall goal o ttategic management
for lh r p , ib
rg n· ati nT
The Rsponsib]e or anisation' goa1 will be to
hi
i l n o th
Uowing:
•
A ustained economic ,c ompetitive
advan · g,
•
A u tained above-a erage social - aJue
r ation
•
A ustained above-a erage environ.me al
The overall ,go I o strategic
ma nag m n· for th respo - ib e
organisation is to .achieve a
o xis n ·
o ta in d
economic competifi e advantage
an
a,n d ab v - v rag
and envuonmental
tlon, whi h i all d
responsible ,com etiti ene.ss.
lu
This is called responsible competitive:ne , a tern1 coined by Sim.o n Zadek.~ From
r p n ibl manag, m-nl appro; 1, w m· now
: 'How n n rg n ti n
achieve a sustained competiti e advantage and at lhe ame time crea
o i ty nd th nvi nm n mhr
th tra 1 gi mana· m - t
will endea our to an er th", que ti ,n a w,e address the step
manag m n pr
. H " ev • fi re w,e dis . , h.i p
end resu]t or the proc , m.1
a 11 ponsible stra egy.
7 .1.2 A responsib ' strategy
A r :pon · 1 · traLegy • a tral gy that:
•
links an or1 . i ation 's internal trrngth.s n weak.nesse
and lh t ~ tr m i ext maJ nviro m
•
•·
builds respon ibk · ompetitive.ne
·nu
· ay to imp
p rformance for the re p
aJ o t a
ucb as ·~
e:nvironm mal concern
•
•
for e organi ation
organi i n l p rfi mr n · 1fwh r
tjg'ani ation refers not only to profits, but
welln , lhi al ,~ondu t, j ob
ati n
hang • th, ommunity and o on)1
p tati n of ext roal and in mal ta eh lders
align itself with n ironmenta1 requirement in a global context. u h as
me t th
limat chan
•
·
.i th opportunities
and lima
action
ve1balises the. organisation' aspirations. m 'term •Of ethical c()ndm:L
19
Prindpl
7. 1.3
1
o, G n ral Manag m n
Strat gi managem nt
Strategic management i the pro ess of crafting.
impl m nting and on·r, Jling r ani ationa:l
. trategie with the oa.l of hlevin a ustainable
~ompeti i e ad an age. As e ha
stated
in th pr ious
tion, the oal
trat, ic
or ·
management for the re
' t
on ibJe organisation
af impl m nt and on rol tra· gi
t.~a
the proce
manag -m n
is
o
crafting,.
im pt
ng nd on r lling
organ·sationa strateg -es
i h
go I of a hi v· g
a sus lnable competitive
to achieve re pon ib]e competitivenes . FiTSt.
ral gi m nag m nl i • b Ul th ·trat gy i ff,
the tablishment of a dear direction for th
org ni ati n nd r , v ry u in unit pr,
a d
· rvi , fun· ion, d p,artment
and individual in the organisation:. Tms is called the strategic a.nalysi phase in the
trat k m nagement pro
ond, tr· l ·
anagem nl entail 01 r a ion O'
a m ans of , eltin · to the requu-ed ml, alled trategy formulation. Thi re u·
th
and re pon i r mp titi e po ition. Third · trn egic m a ement
requires
· U 11 in th implrnien Lio of uut gi in order to i ld l crforman .
TWs i referred to a tra gy imp ementation in the trategic management process.
Strat gi n nag m n~ is a o ab • ·t:ra , i h n
ml not abo,u bu in . a usual.
and inno atioo re eeded to ensure that the organisation is respon ive to
pr ssur ', r h , 1 · 1 d ha · trat · r impro ed nd n w d. , urren and p ·1
ucoesses are no guarantee of su.t:'cess in the future. Otg nisations need to adapt a.nd
hang in
nami
ir nm . L tJy, strat ·
n m n. nlail rat i
control. trategk co,ntrol is necessary in order to determine the o,rgani ation's ucc s
in attaini
· ion, mi . i n an goals. Th resuJ of a comparison b ~ n a tuaJ
c, ·
,n I 1 tended or pfanned outcom may ]ead Lo su-ategi ·· change. The four
or trategic: man gemea de cribed abo e are referred to as the traditional view
of ra gi manag
m,
nt wh · h
on
and , oncrete step · to follow. More re
m i r. . , rtapp·ng and it nrtl .
pi
flt
vie
i a a n at pro
with • qu -ntial
have suggested that strategy i :rather
Chap r 7: Strat gi rmanag m nt
Str.1 egir oon ro
Did we. rriv ?
Strategy
lmpltm nta ·on
How do we get
the ?
figu~ 7.1
The. traditional ew o the strategic management pro~ess
orlh bapt r,
· m mak u of the raditi
o.f stra gi
management. ac rdln · o which the management of the lfakgic proc
i built
· r 1.m
u.r imp
n p
, \ h r · h ph
o r1 ~
I a numb r f p •
sho n in Figure 7.1. The fust phase of the trategic anagement process (s ,rategic
naly i ) an w r th u ,j n 'What i th ur:n t
i ion f th org ni tion?'
It in o! . the de clopment of.a vision, a miss.ion tatement and an analysis ofth
ma 11 m · ,tvironmen . Th
ond p .
( tra gy formula , i n} an ·w rs th
uestion "Where doe the organisatio wan to be?' lt involve etting goals and
ob'r tiv~ · nd form latin corporate n · busines :rat i . Phase three ( trategy
Foirlhe purp
I
implClllenta ion} an wcrs th qu tion • fow earl h - o,rg,anisation ge ia where H
wants to be?' It involv fonnu1ating functional trategies and in tilutional" ing
lh ·m. L ·U
pb ,· •
r
.- i
ntroU answ •
Lh
qu ion "How will
the organisation know when it bas arrived?' It invol es an analy is of results,
·omp ri ·on wi h lh obj iv and o I rth organi a i n • nd rr riv
tion.
It i important to note that the rrategic managemen proces . · .. not imply linear
from pha - on
fou • and lb n om t n nd. Manag n, n d t r turn to
prior teps and make changes a an ongoin proc: . The step , a depicted in
Fl ure 7. l. UL b d' , uss din m r d ail in ub · qu n
i ns.
20 1
Prindpl
L02:
o,
6 n ral Manag m n
- pl,ain s ra i nalysi as th ust ph . of h 5, rateg· manag men
process and the integration o respo:nsib e management in the process
STRATEGilC ANALYSl S
7.2
1
A
indka ·d. :in the p,~ fous ■Mefl
section, the trategk analys· phase
Th - ra g· an -ry i ph lnv iv -- th ·
inv lv
t
d li nnination o th
dete
,mination of the cur rent position
curren · position of the organisation..
a th org . nisa ion. More sp ifically, it
Mo
·p ift ·all
it inv lv
th
involves the formula fon of the vision,
formulation of the vi ·on, mis ion
mission and organisational philo o,phy a
and , r ani ti nal phito oph a
w 'II as an nvimnm ntal naly is.
weU a an envimnm ntal analy i .
7 .:2. 1
Vision
In ord rt analy th curr nt po ition
th
organisation a vision and a mi ion ta ment
ne d to I formulated. An anal i . of the
Avi i n descr"bes ways to carry
organ.is -tion' int mal and t rnal , nv1ronro 1
n rgani ation into th ru Uf - it portrays · he dream of the.
is al o conduc ed during 'this phase. Developing a
organisa Ion.
vi ion requi man g
think a · ou wa ·
carry their organisations into the future. For
mana . r: to,1 d th organ~ ali · 11 • u
. i th futu . an in pi ring vi ion·· quired
that everybody in the orgam ation - i, 1emal a well as external sta~ehold
sha.Je in
and i , ci ed aboul rn i
tiva
ani
d individu 1 worldn
in the otg,amsatfon m lo
ves to e not what or where
. - no • but
where and hat th
, r, . Th vi ·on h uJd p
ns of h
Lhe orga.nisat.ion hop to becom - art anchor for decision m kirfg in th organisation.
•
portra s Lhe dream. that the organisation has or: . future and the foture of
i ty ,n th nvironm nt
•
prom t-
hange within the organisati 11
th b i
•
r planning n ,............. n making
for strategic co ·
indi idual , nd
· tat
re ruitment of tal · nl
•
ha po itive consequenc
t k h 1d,
•
b the aim of the organi ation uJtimateE becoming -u tainaible
or po iti ·mpa ·t n h nvi mu nt.
2
fir the organi ation and it intema] and external
ith a zero
Chap r 7: S rat gi rmanag m nt
Wh n t p man g m nl Hi
mmun·ca
. rgan.isa i
· t,
there i a igniflcantly bjgher level: or moti ation job satisfaction, commitment,
Joyalty, prid , larity of th org n: ~ation' al,
and producti i • In th p ning
ca o.f thi haplu the ision of tb ota- ala ompany is an excellent exampl
of one th t can create higher le el .o f moti .atio , job ati f, tion, commitment,
loyal y and pri.d • i.n it includ lh , mploy es . nd partn
of the company.
The ision al o portra the c:ompan · dream of being a
ponsi le citizen tha
ma . a cliffi r n · by h lpin o build nd upport u ± bl
mmuniti · , hil
maximi ing the long-term return for shareholders"" and being mindful of their
ov rail r · pon ibili i s I ward H · th r la h 1 ·
7.2.2
An organisation' nu 10n tatemenr is it
r, ·1 on ~ r b in r i ri a n fi r
vi ion tat.e.ment o · an organi ati n guides Lhe
formul H n f the mi ion; th
i , i n in tum
pro ides strategic direction fur or ani ·ational
member . lt ha thr core m nent : produ
ld•11•
and/or · rv·c ,
nd t hn logy f Lhe
o rganisation. Mthougb m· ion
atemen
n v ry am
an . ation
ry nu 10n
statement h
w r at ]east the foU owing
produ
riti ~a]
n /or
rvi
market a d echnology of the
organ·
n :
•
ur business fwhat are the primary pfi ducts and/or services that
, ur mark
•
An org.a,nisation' mission
statem nt is i, reason or bei g
or it r a on or is n -. U
has three core componen ts:
o
How
ilii
e
O?
o r cfa~nts (who i our primary target market/marke )?
wm w
pmvid thi prndu
r ·· ivi · ( hal
ch11ology
wm b
us d o
" ide the primary products a d ervice )?
The an w rs to lb e thre qu fou . hould d ari
t th organisation apart from
imifar organi ation . In the op ing ca e to thi chap,ter, the Coca-Cola Comp,an '
rni sion, 'To r· fo h th
or]d in mind. b dy and pirit; t in pir 1110m nts
optimism and happine through our brands and action · and to create vafoe and
ma
• diffi ren ·, t th
mpan part · rom imH r mp ni
mp ting in
the ame indu try.
20
Prindpl
of 6
n
ral Manag m n
7.2.3 Organi ational philosophy
In addition to the three core component
f
mi i n · a , m n di.,,,....,aa..d b
organis tion
hou1d al o addn:s
the
o ani a:tionaJ phUo o, h • which can be deftoed
a , an planation · r the y 1 ms of b Ii f: that
determine: how the mi ion and vi ion are o
b' a hi v d. I
, lb b Ii fl ,
n p
va]ues and principles of the organ isation with
Lh ri Uowing ompon nt r tal lh n:t in ,n
a ddendu m to the mi ion statement:
The organisational ,philo, ophy
is an e.ic- Ian a ion of th yst ms
of beliefs that determine how
·h mission . nd vi ion are o b ,
achieved. It t te the beliefs.
n p v lu a d principl
of the organ·sation.
•
Th
· · in rm o urviv i,
growth. mari et share and profit Financial soundne is an important fac or
u.rvival f th irga nj ti n.
•
The values, ethic and beli s of the organisation. Value , ethics and be , e
fi ,rm lh ba i f th way in wl · · ' u in
i" ndu d. r ·h uJ l
conducted, in the o anisau n. 0 gani atio ns should a.i m to build on ethical
prin iple for th a hievem
f moral excel! nee.
•
ganisation to ards. all stak,eho1 er:s. Organi ations
The r pon ibility o th
have bligati n · •
and bey nd making p fit - di ha r p nsibilili
mwards man ther stakeholders a well. as w hav , ,lained ext nsive1y
in chapt r J. Orgainisatio , are al o expected. t
th la • be ethical m
th ·1.r ond
and b good · I hal orporate · 2en • In h ir philo aphy,
rga · ati ns hould aim a the maxim· a · n of takeho]der value over the
I . 1 term.
•
Th. publk image ,o f the organi a · n.
•
How th or ani atiOD i cliJT;.
from, or b · tte.r than, its omp titors. F r
the respon ible or.gani ati , this refers 10 i respon ible com etiti en s.
In the opening ca o , this &apter, the value o the oca- ola Company . er
de rib d in terms of their le d,e. · hip. collaboratio,n. inte rity. accoW1tabilit ,
pa ion, di :1; it and quality. Th s - ·. alu · an: part of Lhe ·ompany· phllo ophy,
gujde their actions and describe how they behave in the busin
wo r]d. Durin th
OVlD- 19 p,and n1i ,. h , ornp. ny 1 · rly ill ra d th ir valu , by p · ling th
safety of their employees, ,cu tomers. partners, consumers and products n t and
mad hu fman ial ·on noutio,n t , mmunity , U, f pi; ramm ·
rldwid .
Chap · r 7: S rat gi rmanag m nt
7.2.4 Environm ntail anary 1s
To ,c.reate alue, an organisation·
hould h
corigru nt with
tapaibilitie.
and
mi ion
· · tern 1
- lernaJ en ironmeot.
Therefore. the in emaJ a we:U a th
temal
erwimn.men hould be ana ly •ed. Th purpo
of the internal ,e:n ironmen aJ anaJ is i to
id nlify
u
, kill and pro
that repre en either strengths or weakne es of
Lh rgani tion.
its
Ttie in ernal nvimnm n al
analy is iden i i,
a
resources, skills and pmcesses
h t ri pres nt ith ,r treng h or
weaknesses of he organisation.
trength were defined a area within an rgani ation mat describe
hat i
a and what ·. p,arat ii from mp ti on. tl7 n th re asp
of the orga.nisa1fon operations that n~pr ent a po e.ntial competitive advantage.
W ·n
· w r d Fm d th
a
h
• n d f h ng r imprnv m n
to mnain competitive. Key ana LO be as essed in the int\eroal environme,ntal
anal i , :
•
produc and/m services Mere · the market
• mark ti:ng
· th rg
•
al] the activitie f the orgai;risation relared to its operations
In chapter 5
•
•
•
•
•
h man re:mu
lh org ni lion
the organi att n's financial performance
busin
re ilieuc
hlch e d fm d in chap . r • Lhe ability o an
organ· ati to qwtlly adap · to di ruption htle maintaining con inuou
bu in . op
nd r guarding its opl a nd a tt ·
to more than - t tecbno]ogy but al o encomp ·es
a pr ces fr.nn work Uiat enabl
pitl r pons to changir1g i :u ion u h
as di ast:ers ik:e the C0VID-19 pandemic:
agilit , hi h r i ~r o tb a · i.Ut to .rapidly r pond . o, c11a:ng •
The re pon ible organi:satio
vill a1
as
th follm,ving area in the in em., 1
· nvironm ntal analy ' :
•
the ere tion o takehold r v lue and m ting the exp tation · of ke
ak hold rs
the u tainabm · of he organj ati n fmm th rip l -bo tom-Jin iewpoint:
the use of renewable environmen aJ r : ourc and the use of produc ion
p,mc e that do not harm the en ironment
•
inve lment in lhe ommunity
•
the thic l o,nduc
f the or an: anon.
These area
are e aluated in terms o the exteo to hich they support the
us aina bl omp titiv
dv nt g
ught b th
rgani ali n. R: pon ibl
organisation will trive toward respon ible anid ustainable competitivenes .
0
Prindpl
o,
6 n ral Man g m n
M nag
ill th n u th ·nrormati n t
rmuJ t tra gi
the organisation' trengths and remedy its · eaknesses.
111 · urp
oFth ·
mat ,. api ali
n
mal nvironm n al mll i
is to identify opportunities and threats in the
rna,I , nvironm n al
organisati :n' ext , 1 en ironm nt pp rtuni ·
analysi iden · 1e opportunif,es
welie descnbed in chap,ter 5 as favourable
and threa in he organi:satio11'
tern ,] ' ct rs that , ould giv n org ni ad n
m nt
a rompetil.i ad anrage. An organisation can
ca it:alise n opp rtunili
and improve Us
ompetitlv, position. hreats w Tr d ··med a f: ctors ,outside the organ ation lbat have
the potential to harm it. Threats we mndifion tbatj op:ml" e
rganisation' ab.iii to
· urvi e and b su
ful in U1 I n, t mt. In hapl r 5 ·
I eml • virnnml!Iltal
variables were discussed, for example the ecm:mmi ,,
·ological, ocial, political
. nd in mati naJ ri' bl
h
h u d b · na]y
o i ntif threa
nd
opporru.nities. The responsible o~anisation will can these forces to identify opportunities
nd th a that will ha
n inOu
. tam b]i • p ns' mt n
· I
conduct For exampfe, go emmentaJ support and incentiv IDe an opportum in the
extern 1 environment. 0th · exampl
f pp rtuniti are in to that re interest d
to in : t in responsllily maoa ed organ· ations and con umers that
tiling to pay
higher prices for - tainabl ·produ · and services. In the opening case · thls chapter,. the
· ,-Cola ompany ~d atif no pmtunity ir1 th external envw t .e nt to m:yd th ir
paclraging and th ·r · lyethylene terephthalate (PET) bott:l ~ made widl an average
of 50 p r nt ri
l d con en:. Exampl ,o f th · a a
Jty-b · d l w , ain
irresponsible busin
crivities and reputational damage due to stakeholder accivism.
n dter hre is pand, mi such a , th
ronaviru
n unp,re · i!d
nl d1a in
some wa. touch every business. ,emplo ee and ·nd" vidual on the planet, changed lives
and
ndu ting busm
Th mga '. ation • ituation anal si · also called ihe SWO'f 1(Strengths. Weakn · · es
pp
iti
Th
t }
•l
i
. hi
b n di ·cu
d in m r d
t
ii in hap r ,.
The anal is of the internal and :emal environments will indicate to management
wh Lb.er • mi i n · ta m ·
rear Li • Tif wi!J I ~r to th
nd phas o lh
strategic process, namel strategy for:mufa.tion which answers the question of where the
an·· ti n w n ·
. I, is ru i 1 on t th stra, gy and ·tra i manag m nl i
a circular proces in which the starting and finishing line should be redrawn continua1ly
by a n
n ·, mpreh n i
amin· ti n of th v rio
n ironmen . (m· ro-,
market and N'..Dlote environments) surrounding the organisation.
Figure 7.2 provid
mmary f h fJ
pha of th traditi n vi w f U,
strategic management process namely strategic analy is, integrating the rhr:ee
pil1a · · r r, ·,n ibl m n· g m nt.
The next ection ocu e on the econd phase of the proc
.
Chap · r 7: Strat gi rmanag m nt
· i 11, m·ssi n -nd org ni ti nal
philosophy
• Condud nviro nm ntal anal ]s
• f. rmu1at
•Sustainabllity: Aim to beco.me a sustajnable
organisation with zero or a positive impact on
th
ri ironmen t'
Aim to maximise s ukeholder
valu o r th, Ion t rm
a,fthics: Aim to build on ethical principles to
• Responsibility:
a,
hi
vi
moral
cellen
.,4.
'St1·ategic
analysis
lflgurc 7.2
LOJ:
7.3,
Strnt - i analys's integrating th - th - pillars ,o,f
-P hsib'I mana- rn nt
in strat gy form latio s th · co ph
of M s ra t i m nag m nl
process and the integ rat10 o respons1 I anagement ,· n the. process
STRATEGY IFORMU LATION
. rat gy
ommla · ion in ol
Ion term goal - and objecti es for ,
ation
and Lh n fi rmul Lir ,
I and
busines -unit- ] cl
(gies that will 1ead
t · lh
al" · n
ong- rm a l . r
the respo
tion. the trat
formwat d
. g this pha e h.ould
ormuJ ted in S'l,lch a wa Lhat lb y:
•
n ~utra] or po
.·pl h
b oTgani adon, in other ,. (}J'ds
•
•
b
Strat -gy -r
lation nvolv settin long-term goals and
obj =••- for he or;gani tion
d tb n ormulating rorporate1,v I and bu iness-unit-level
.strat gies that wiU I ad to th
realisation of the lo ng-term
0
g I. •
s: - tainability o
r ponsibl.e management
lead t the maxi.mi ati ·
, takeho]der alue o er the Jong t rm in ther
ord m i ilt r po.n i i1i y obj Liv of r p n ibl mana _ ro nt
lea d t the minunisa i on f etb~ aJ di1emma and create moral xce1lence, in
other t ords m t Lh • thkal obj ctiv s o r · ·pon ibl · mana -ment.
207
Prindpl
o,
6 n ral Manag m n
7.3.1 S t long-t rm (or tra -gi ) g, al · and bJ ctiv, s
In dlap~er 6, the terms ·goal" and 'objective' were u ed inrerdlang:eably. How,e ver,
in lhi chap, r w mak a ] ar di tin U ,o b tw n th . · two nrept~. Oo I
tate general targets to be accompli .hed. Obj tiv
on the other band. state what
i , to be a, · ompr hed in in war, peciftc and m a urable erm
ith a tar et
date. Goal r · oft n. translatrcd into obj tl . Goal and bjecUve · houJd flow
from the organi ation's mis ion tateme:n to ddre
id •nl1 • d lbrough
tntt gi anal '' phas: . u
trat gic i ue and problem
• fuJ at gi m ,ag men
requires a commitment to a defm.ed set of strategic objecti es b managemenl
The op ning cas or bi · hapler provid us with a ood exampl • of Lh alignment
between the vi ion, mission, alue , enviironmemal an.alysi and objec ·v of
th o a- ol · mpan . Th
mpan ' m', ion p vid · an 1 dicati 11 of th ir
endeavour to create value and make a differ:ence in the o 1
ot onl making a
p fi ). h ir vi i n ] ' · indi a.l U1 ir · ,ommitm n t
v ri u ta.k h ld
including emplo ee r business partners, the planet, C(ltnmu itie and hareholders.
Th ompan '
orld With ut Wa ·t vn n i
xt ·on f i • mi ~ion and
vision stat men • a :is the company com:mitmem to the ambi1ious objecti e to
1.
coll
nd recycl the equiva1ent o.f . bol1l
r can f r
ery ne that h
11
by the year 2030 reaching a 100 per nL colJ • Lio and recycli.ng .ra~e for all
their packaging. Thi · ion a o includ en ming tha :all of their pa ka in is
I p r ent r ydabl · b 025 an that t1 dr ET (poly thy] n • r, phlhal
or
pol ter) bottles are made with n a erage of 50 per cent rec cled conte t. The
ompany'
tion ,tan c a hl , h I obj Liv
ontribut
i
pon ibl
competitiveness, especiall in outh Africa where PETCO has dri ,en the in-country
r,
ling
P pla ti
ttl
p :rom U p r n in 200 ta v r
p r n
of beverage PET bottle ·n 2018. As a direct con .eiquence ,o f the financial stimulu
p vid d b o th r . i b indu try o,v r th p
d ad , th r cycHn
eco ;ysiern in Sou
rown into a thriving R2:10 million per year industry,
providing in om
f; r mo,re th n 64 00
,pl , and creating malJ,
entn~pren unaJ wa te colkcLlon busi.n ses along e alue chain. Tbe tr .ngth o
the PE1'CO mod j that the PET that i collec e · rec ded in South Africa and
not ,exp n d. Anoth r lr ngth i lh pm1n r hJp u h
P
h Ip
at a
or :r
do ed-loop, ystem that benefits the envir nment. eives communiti
l Tling · p th
har d pp m.mi
fo ur
n rati n .
and. begins
or card
The bafanced corecard (BSC) •· a tra ,egic management tool that was developed
by IC; plan ,d Nort n in l · 2:~Wh , u · · in th
ra
ri rmu1aUon ta , i
guid - the organisation and management kam lo tran iale the strategic: direction
int lon -t rm ( trat · ) goals. On of th b n, ~ts of th B · tha it • ff rs a
balanced approa b to se ting ~nategic oal . Jh,e ·balance· is ground d in its four
p pecti : fmandal, cus omer, ]earning and growth, and busine pmce
. At
Lh •ntr o th · i th · lTat gi dire lion, hi h will in lud · lh vision, mi ion
and organisational philo oph .
8
Chap · r 7: S ra gic manag m nt
-,
trat gi oa] n d t b fi rmul t
hat w·11
contribute to the achie emern of the trategic diFection. Each perspective offer
a vi
n h t n ds 1 b d ne w1th a F cus on tw int mal m a ure (inl maJ
bu me s pm e es and learning .nd growlh)1and t o external mea .m1· (customer
f r
ch
p cti
f th
and fman ~e). Th balance between the in emaJ and external p
tha th stra egic o l
p ctLe ensur
aJigned with th - ·1T ,t gl dir tion.
of the BSC are explained belo :
•
1nandaJ persp Liv with a fo us on tbe fanau i p :r mmanc or the
orgarf ation. The financial perspe tiv is link!
o the ex e tations and
har hold r a w II
h fin n i I rforman or ward hip
Th
1
of the organ· :ation.
•
•
Th - u t m rp p tiv with a o u on h w th Ori ni tio n ' ru tom .
perceive it The customer perspective v rks o vards a focus on sari fying
us m r n d
d a on id a 1 n of h w
t m
th
The learning and growth r: pe · e, with a fo us on ustainable -o th,
v Iu
ti, n and in
p p ·ti
, ml
rg,· i a i n t
capaciry and i aimed at the employee (human capital) and th capacity to
achi,
■,
perspective, with a focus on the ore apabiliti a which
th o . • ni ti
mu
I in ord to
,m ·ti . Th i p rsp tiv i
llinked
qua.liiy and efficiency in all that the organisatio n do .
JC o
i u d
. 1ven the foe
tran la
iii qu ion th g id th
f
e.rspecti ,es, the BSC
dire H n .
nd la L
h e target , an be een a the ho er-term aims on the busines, -unjt level,
whi h uid · th a liviti
d d on 'h fun Hon · l L
Sinae the concept of the BSC wa fust tou ed in the Harvard Busin
Review in J 99,2
in p p r ritt n b Kapl n
rt n h fi r nPr~"'""1ti
ha
1 , . P""""""'"'~d
a renewed revie · by integrating responsible management-related indicator. .
or
n amp!
B
in gratin 1
· m nlFigu 7. pr vid
related indicators. In this figure. the four perspecti
of the BSC are indicated. for
1
1
h p"- "'"',.. iv ,
t gic
I i Fi rmula d l g th r i(h m tri ( · land rd
o , measurement u ed to track the sucaess or failme to reach lhe go.al). or each goal
and m tri , a target and mitia i
r formula~ · t reach th oal.
0
Prindpl
of 6 n ral Man g m n
~immcfal
Goal: Consti , ntly
achieve above-average
return om shareholders·
tm n, M tric: R tun
on Investment; Targ,et:
25% t annum
t1h
n t 10 y ars; lniti tiv :
S~ngHlen the financial
nd so · I apital
Customer
G al: R , ain v lu bl
customers by offering
u tom r valu · Metri .
ust m r r t ntion
rate; Targ,et: Iraprove
u ,om n n ·on r t
by 20% 011 r th next 6
ytrars; Initiative: Increase
Ct.1st m r a i
responsibility pmg!rams
Internal prottss
I: M r innovaUv
p
ct devetopment to
d
gasses;
r
duct
reve
total
rev nu ; r
new p11oduct 1re\/C!n ue to
30% of1:otal re enue
202s: lniti iv : In
i
Research and De elo pment
A oj
tion,
be a ~ocially responsible
org ni ati n
arning and growth
oal: R dur, waste in
manuf turin.g p~o ess:
Metric; Wastr as% of
o I m ufa turing
Target: Reduce aste by
50%overthe 11
lniti . ,i : Ir,
total quality ma
p
5 y -a ;
al n d ore aird
7.3.2 Craft ,corporirt -I
I stir: ,t gi s
After the vision and mi ion ha e been
nnul t ; h
i :uatfon anal i . h
b n
completed and strategic goals and objecti es
ha b n el, . orp rat al V l
h uld
be c:rafied. A corporate-level t.ra1J gy appli o
the ,entire o ani ati n. It defm bow to mana ,
a n organisation that is ompecing in more than
one marke each being co ered b another
bu in
tmH. rporat -I v I trat i, a1rw r
l
A corporate-level strntegy
appli to th , n ·r o.rg:ania ·on.
It de mes ho to m nag an
organisation that is competing
in m
th n on m r et, - h
being covered by another
bu in
uni
Chap · r 7: , ram gi rmanag m nt
th
u ti n: 'In h f'i . an ma .
w wan
mp t
the valae chain ac-tiv.ities do we want LO perform owselv T whe.re the alue chain
ie rib th fu]l rang of cti iti n d l crea a p du tor eJYi • and v, n
indud mark, tin and the pm isioning o after- al · · rvke. e can di tinguish
between the following corporate-level trat j :
Corporate growth strateyy
iH n d
to :imp]ement a growth trategy, which i a
m th
th ·
in order t
hi
o 1
of expan ion.. An organisation that wan to
gr ha ·
nm
growl t t gy p i ns
namdy concentration, market de elopment,.
pr du t d I pin nt, innovati n int, grati n
combina ·ons.
[n ord r to expand, an organi aLion
•
,c
•
Mark,e:t de . elopm nt
r at d. to a one ru
pmducts (u ing ·
Product ·
a ub la
These pro ·.
•
o
pansi
nd , rp ra
n . trati n gro th stra ·gy: With a . oqc-nt:rati 11 growth tra1 gy th
rganisation grow aggr~ ·vely in it - i tin lin ( J of businrs . In other
word , the or: ani ation on ·
to e in th ame lin of h in
far a .
p,roduc nurk ts and t
n emed.
·
or . tlrd ting oth
•
A grow h strat 9y is am hod
used in order to achieve a goal
ar e devdopm m
at · gy. It invoives . Hing p
in new ma~e b opening ne, outlets
.
·
in ex
· · : A product developme:n tra gy involves
rodu ls or add' ion o
nl pmdu ts.
Id in existing markets b ustng the existing technology.
to h d v lopm nt u
: An hm va ion rai' gy
ervices or technologie tha · c mpletel replace the existing
·
or t hnologi in an i11
.• rgani tio
ing lhi
·mua ly earch for origin I or no cl idea .
In gration ' tr · gy : With an
rali n
.·
rg ni tion nt · a
orward, backward o,r horiz
or b ; ·
. Fo nvatd integration o urs
h n ,n or ni . atio,n ,nt
· in of bu.sin
do r t th f. na] cu l m r.
In other words. when an Fganisation. lakes cont rol of aspects related to
it di tribution, . n p, rt r lling. Bac:ln ard int, grali n
. h n th:
Inn .·
n
organisation enters a line of busine s further away mm Lhe fma1 cu tomer to
get increased control over its supply s.otlf es. lo o,ther w rds the orga.ni ation
pmdu
wha i pr1i Vl!O ly boug)11t in. Horiim1rnl im gration f1 i rs to lh
acqu· ition or merger of organisations a the · ame ~ge in the upply cltain.
u b organ· ation nu1y b ir
omp i o OI!' th y may fo u on i rent
marke egment .
u
Prin ipl ·
G n ral Manag m n
o,
•
Div 'fl a.ti.on tra gy: lh a. div rsi I ation · rat gy th
can go into a related or unrelated line of bu ine . Related ;diversijica.tiou
is al o alled ' on ntri, di · rsifl ation', and il invol
th addition of
related busines in Lenns or product man t and tech.noJogy. Unrdated
clil1e· ifkation · • aL aJled ·conglomerate di •er.fflcation'. ll invol es the
add ition of unn:Jat d busin . in t .rm of produ t, mark t and l hno logy.
•
orpor.ue combination: An organisation can al o choo e to grow b means
a a orpora1 omhiination whkh includ · m rge.rs, a quisiLi n , takeovers
joint ve.nttr, and trategic aUian . A mer er occurs when two mrgan · atfon
organisaUon by p ling ail th ir · ou . In m rg r, th
rwo organisations imply agree to come together a one new orgam aUon.
n a qu·· ition o curs. wh non org ni i n bu · all r p· uf anoth r
form · n n
organisation for either cash or equity in the paren· rganisation. One busin
om , part of an th r
n
in • Wh n m 1 m nt fi h tar 1
business rejec the pmcha ing compan ' o
, 1 p cha ing comp,a n
can m .e bid ta th tar t ompa.n sbati olders 1 a quire th om · n
through a takeavrr. ln th case o ta •- r, U1e a quisitfon i ho ti1 . A
j oint venture i creattd when two or more busin se join r ourc · o form
a separat n w busin ss in whi h th y bar wn, hip. · quity po, itions re
muall taken by participan ·
trategi alliam:e is an agreement benv e
or ani 'on bu d
n
ariJy inv Iv h
wn hip.
1
Co
tr t 1Y
A corporate growth t:Fategy is not the only
lyp
·tra y o II
and · i no• alw
the mo, t appropri· e sua egy to oUow. Dedine
•M•O•
Declin
ra egies are pursu d
n org;ini ation mds
w n
pu . ed wh n an
ni"ation
its l'f in vuln bl:e position s
fmds it
· a vuln,e rable p,osition as a
result of poor managiement,
re u
oor management, inefficiency
in ffici n nd in ti c iv ness.
and
lvt n · . 1L oft n bapp ns hat
th
ana ment en i.ronment has ch· · ed
t
U all · and o · ani li n I man g m nt h
fail
o anticipate and/or adapt to thee change • which has led to a vulnerable
p . ·u ,n, In u h Lu lionr , ni ti ,n n d
r g.ri up its a i iti
to improve effidern:y. A decline: strategy may al o be necessary here other
opp rtunili ar m r · ttra H
r wh re th re i a p ri, d f onomi un rtainty.
·
W can distinguish between v:a.riou corporate decline trategi s. o.f wbjch the mo t
promi ent on ~ are tuma und, div titur , b rve ·ling and liquidation trategi
•
A turnaround trat gy focu es on eliminatin ineffici n ies in an
organ~~ation. Tuma.found ,[or reoo er ) appli . ( an organ· . tion that
ha t.he potenlfa] lo be m i nt but has uJkred setbacks i:n rec nL im .
A lumaround trategy i · aimed at re oring the productivit qualit and
th or anisation b m an of co L ut ing and/or tl1
or
21
Chap r 7: S rat gi rmanag m nt
redu ti n
non-
re a
tum rou.nd ~tra gy m y hu i vol · a
reduction in staff, automation, lea ing .rather than buying
ets, and so on.
di
titu ·trat
in Jv lh a] fan organ· a i n r a m !.i r
romponent thereof to achieve a p rmanent change in the op,e of operations.
Th int n ion i to I cu n more em i nt divi i n of he rg . n· ation.
Harv ting is alternativcly termed asset reduction and refers to a.n
fa ub idi ry one it ha m im· • d return from
organi alion th t di p
it with the aim of maximising cash flo in the hort run, rega:Iidles of the
ion · - t rm effec •
Liquidation is the appropriate strategy to follow when no f-uture for the
organi ation, r a p rt of it~ i ~ n i a ed. Liquid ti n · th
timate e_ it
l:ra t gy, where t:.h entire organi ation is o]d off, ith · a N'ho]e o,r in
parts. Liqllidation may be vo]untary or, in the case · an ru y ( here the
org nisalion an n lo ng r p y its d bt ), m b dire I cl b th o rt In
otber instan • the liquidatio n is prompted b
h rv t it nd m v n.
•
•
•
-uni ·. -I v I trat gi
Busine s-unit-le el. trategies (aJso referred to
7 .3.3
n ri
rat gi ,) r
r o th ,·
mi n
of th organi atioo and its action to gain a
1
·omp liti
ad van ,a
by
pl• it ·ng
ompetenci · in specm ptodu t mar · t .
Mi h l
•
tra'l
gie
ore
Port r, a
n Harvard
professor, identified generic strategies that
an b
• d to , •·rib th t t i
f m
,rigln 11 identified 1.hree
organi ation . Pon
namel :
•
co t leadership strategy
•
Business-un
e el
.r
eri
te
r
to the commitments of he
mganisa r n an1d i s a ions
to ga·n a competitive
ad
b xploi ing or
compe encies in s.pecific
prociu · m rfk ts.
11 • •
gy
focu
im'
al of th orgm1· lio n
per unit an
ence price . everaJ things can be done to
m1rum1
. i l,
w
in m
p ri n in produ in : a parH uhu
product, productivity increas and unit co rs decrea e. Thls i called a ·teaming
· u • or • p ri nc curv '.
ond., n
ani tion c.an · pan th siz f i
operation . As the . ize of the operation increa es the totaJ co pe r unit de,oea e
b cau th ftx d o t {for
mpl th c:
p namm
bulld'ng mac.hin
equipment and others) are shared by a hirg r number of produ . his · re ned
to a 'economie of cate~ An example ofthls i the reduction 1n the price of pocket
cai ufato ov ·r th y -ars a a re ull of co.nomj · o · al .
n
by min imising co
21
Prin ipl ·
o,
6 n ral Manag m
Th
nd g n ri ·
111
cra gy. difti · ntiati m, d' ingu· h
n
rg n· f n'
products or ervices from tho e of its competitors. The rationale for differentiation
i · tha the organisation at1 ch rg high "r pri
1( nd m k m re pr ,fi · p r uni )
or a product tlta'l customers perceive o be: different from · imifar products offered
by Ji a1 . Differ~ntiation may he in term of quality. production proc - d . ign,
r putation or ny numb r o.· o h r a tribul ...
The third g n ric trat
r gy, attempts o focus , a
cifi
product line or egment of the market thaL ive an or ani af on a ompctitive
edge. In.itiall the foe ·, trat gy w anchored in focu . d low-cost and focu . d
di fer; n i.alion . Lra gt- . ort r ugg t cl that or an.isations ha o , hoos eith r
lo co, t or differentiation· o attempt botlt would c:au e an rgani ·· 10n to achieve
n. ilh r nd b ' tu kin tJ1 middl '. Th thr g n n Ir,
i d v lop d by Port r
are usually thought of as separate strategies now, in other words an organi ation
n ds o 0
b tw n h 11 wing g n ri _tr:
1
1
•
en t leadership trategy
•
fo
l
•
din:
gy
•
fo
dif[; r nti t n lra
.ri
nlia i n
Lra
t trategy
gy.
Ov r tim , man indu trie b
chang
llirin
the b 11 fits of both lo -cost and diffi renti tion tr~t gi s. mu or anis tions
have tuall used the low-c t ap roach as a way o differentiate
fr m omp it
b t - ·1 provi
tra gy usually , fi
combines the advantage of both low co t and differentiation.
7.3.4 Select a corpora e strategy
I
n mrgani ·ation ,ow
a orporat, · ra ,
o
·· on,bination of
corporate trategies to implement Various techniques are' vaiJabJe for this pwpose.
m ng 1,
u , id I u d I hniqu
r th , 0 . nal i nd th B o
Consulting Grnu (BCG)1growth- hare matrix.
•
j
Th fi t phase of the trat~ mana erne:nt pmces (earlier defmed a the
t ~i anal · phas ) in olv
a al_ · of th organi ati n•
·iro m nt
using a SWOT analysis. Th sam
I ,can now b~ used to scloct a corporate
or a combination o,· tegi that a_~e congment with th intemaJ
trat
_uengtl and yteaknes:s o the organisation and h · temal opponunil:t
and ,threats of the management environment In other v.ord , an or amsation' .
resources (whi h , onstitut i t:ren tt and weakn - J houJd match th
demands from i ex1ernaJ envimnment 1(manifested i:11 a et of opporrunities and
) rn ctivel and I f tl p i Ov r tim , th · int rn l nd
ooemaJ envirorunen can change. leaving the challenge to management to keep
th' m t h in d
mi and turbu1 n im •
•
Bo ton Consulting group growth- hare matrix
Th B · t1 n ILing Ii up gr; w h- h
m trix
t cbni u us d t
plot an ogarusation trategic busine · uruts (SBU ,) ac,rnrding to its relative
1.4
Chap · r 7: Stram gi rmanag m nt
mark
L
r wlh rat
n·
la iv mark
bar . f"gur: 7.
th
B,o ton Con ulting Group {BCG) growth- hare matrix.
A
w
~
cc
STARS
fl!]ure 7.4 The Boston Consulting 16 roup gro th-share matrix
h rel· ti mar
g wU1 ra
· B i pl t d on tb
r, i I axi
nd
it represents the annual growth ra of the market in which the organisation
p ra
nd mp
. Th
a iv m r t h r f th B n lh h ri nt I
axis o the matrix indicates the market share in relation 10 the largest competitor
in th m · ri:: t. Th ro th- ha matrix is di "d d inm our quadran , . b , , h
uadrant -represents a particular type ,o f bu in
•·
ar a
t t gi busin uni
ith a 1 ti I high m ~
h
and a rellative.liy higb market gnn th rate. SBU in tlri quadrant are the
marke le d
in growth ma,k.e . Inv . ment i · till requir d · thes SBU
in order Lo maintain their ,rowtb rate and to keep their leadershlp, posi ion.
•
Qu .tion ma:r
are SBU with a :re1 ti el . ]ow marke hare and a relati ly
high mark! t rowth rate. Th
BUs comp t in high-growth maJ!' e , but
their relativ marke-t hare i lo . High in e tment · normalty re ulred fi r
qu stion marks in ord r o d v -·op lh uni and its rclativ position i:n the
market. The A-arm indicated in Figure 7A indicat that an organisation
·h ld end
ur o m ,v
U ·n l
u · i n mark qu ran to th · ar
quadrant, b increasing their market share.
215
Prin ipl · of 6 n ral Manag m n
•
a h
are SBU with
hi b mar t ha
nd
I w m r l gr, wtl rat .
Cash cow are the weU-e tabUshed market leaders. As mar et gro vtb slow
d ,wn, th r · l n d
hi h inv tm ·t in the . BU . Co qu ntl .
the e BU ill be the mo t profitable uni in a port.folio
BUs. Cash cows
are normall used m fund the SHU· in the other three quadrants .
or
•,
Dog are SBUs with a low market -hare and a luw mark.et · ,wl,h rate. Do,gs
hou1,d be withdrawn from the market when the becom u · ma ' e:rs, which
· i.ndi Led b the B-arr,ov in Figure 7.4.
f: lling into th variou qu drant
or example:
,B
' a •h w-' Uk'lh
flow.
Do - Ii uida · r di
liquidation or ruv · tilure.
•
•
•
•
th .B
matri
11 for
riou . ,t-rat gi
d
tar - t:rengthen th
ti · iv
growth indu ..
Que tion mar - make ap_pmpria e inv, anent in the SBU in ord r to se ure
and improv i om ti · po ilio r1. End
w- m ve '
qu stion mark qua - ant into the tar ,q u d.ra.nt of the maJrlx.
M' n bu
upper ha o
·
1g n r
ibl bu ·
._ hkb presen high m
1
und in th
· - u ainabillity-
r Ja d indu .
hi.ghl attracti ind
.. 1 du l th gl bal
sustainab ~ n umption me atrend. for ex.ample., the amount of su lainabl
apparel • rid · ·
d from 2016 to 2018 b 508 per ent, indicating r tail rs'
and · ,nsume:rs
· enlhu iasm or ust inable apparel. 7
, rg i ation in a ingl lin ,f bu:.sm · can p rri rm ilh r a product p rtfi Iio
. mil i o,r a B G growth- hare matrix. A product portolio matrix is me proc
of d t rmining hich product line o ·n of bu ine the org ,ni ation wHI be in
and h w it . W aUo ate resom , amon · ih m.
7 .3.5 S 1. t a business lev I strategy
Once coqmrate-1 el t:rategi h ve been f-Ormul ted, busin . -le el
n d t , b d veJop d for ch busin , unj
rat gie
Figure 7.5 um.marls ~ trat gy ti mmlation a the
nd s p in the tmcHt:ional
vie of the trate ,ic .m anagement process, integra ing the pillars of rrespou ibl •
mana, ement. In the next e,ction, the Utird ·tep will b e. piait1ed, name.Ii tra egy
implcm n ation.
1
Chap r 7: Stram gi rmanag m nt
• Set kmg•t rm goal and objec ives
• Craft and select corporn t and busfness-unitlevel strategies
• ustainabilitv: tmtegfes should loo d to
a neutral or positive triple bottom line
• R ponsibility: Strot gi
hou/d ma imi
stake.holder ulue
• thi : tnrt gi should minimis · thiool
dilemmas
L04:
7.4
and create morn/ excellence
Exp m stra gy implem n ation as the
pha of th stra tegic management
process and the ifil egration o responsib e management in the process
STRATEGY IMPLEMENT . TION
Strategy i.mplemerda ion can
d fu:ied a tl1e
proa
du.ring hich th,
n.i alion dra
rat gy
I m nt tion
on bolh human
n-human facto . in
can
be
defi
n
s the process
the orgarusation o · ure tha it t:rategy f
during hi , h orga i at1on
x u d in lin · h t .
· i n, go l
draw on both human and
and objecti es crafted uring the stra egy
n n- m n f t r in th ·
f. mml ti
ph
rat g impl mentation
gani:sation ;o ensure that i1s
is the tion pha e of strategic management.
rat gyis · cu din lin wi h
. a d diffi r ntl . tra gy imp) mt!11 a i
the visim,, mission. goa ls and
. e pmc
whereby efockd. trategies are
objectives rafted during the
rn d in o a tion in order to realis th v· ion.
stra ·9V formulat :on pha
mi i n, goals aml objecti es ofthe org:rni ation.
Therefore.
trate
implem .
deals
primarily wilh hang in th · urm or tran laUng organisational strat · gi · into
action. Vvhat has been plann d mu t now be executed in such a way that It en .mes
tha lh rgani ·a ion:
•
be:comes a sustainable organisation
•
er ~at
nd maximi es stakebold ~r value and e:nab l
mo,nitored.
tak hold
to b
aJua1ed and mflu,e:oced
2 17
Prin ipl
•
of G n ral Manag m n
o • u · rgan· ational a ivi i
excellene:e.
r
i:n
hi al mann
nsu
m ral
g m nt pr
wh re mam1 m nl rgn
strategic leade bip, organisational ulture. organisational · tructure, rewards
y t m I p Ji i
nd
our all · a -· n wHh i
h n lra gi . lrn; gy
imptementarion is o ten regarded as the mo t ditf1cult part of strategic management.
Th implem ntation of lrat gi i th part wh re trategi . oft n fail.
o·
i
· nr • i m
During this phase. functi,o nal departments need to et goal and. objecti e (derived
rom I n -t rm
. I and long- • nn bj
) o, th m dium and ho rt rm .
In ,c hapter 61, we discu ed the formulation of mganisalional goals and the riteria
that goal b uld m , t W al o di · uss d th M na 1 m n by Obj ti
app a h
tha · an be used to n ure employee partidpairion in the formulat;ion of objectives.
0111
dbjli · h
, ·
' . fir
the m.edium. and short terms ail o need to be fomi
n · unplemented for
achi in th b ines
l · ,al
nd obj• ·
· al · rate i indud
trategie ror ihe marketing, operation b ·
, fm nee and other
fun ti naJ d 'Partment . Se ondly.
· ~tirutionalised within
th m1·. _nisation. This m ans bat
· roup, d pamn n and
·b cri
d uppon the organisation· tra ,eg
division of the oJiani ·
ith i plan and a
rn
fll
t
nisa
,
y
and its strategic leadership, organi ·
,1 cul re and organisational! archi ecture.
iflh lra gyi t
ins
a
Stratregir leadership i ofte tated · the key
driv, r r tra gy imp] JU nt 'on. In ch p~
leadership as defined as diroc ·ng the human
re
th rg nl · ti · n I n ivaling them
in uch a wa that eir a fions are alio"ned with
pr iously fonnul d g al nd pl
. tra gi
leadershi~ r urr
managers to understand
I
th
en.tit
o · nisation and th
nviror1men
hiclb U1ey operate. A strak ic l ; ader
a follower to achieve th
is", n
or ani ation. Furth · rmor
trat · i
e their understanding of ibe
n ironrn n
at · trat•gi · hlll
thr ugh
folio er in order to po ition their organisation
in th
vironm n fi r rga ,· ion 1 ability
ovec l:he short term and sustainability over the
I ,ng
18
Strategk leadership requires
manag
o und ~tancl th
en ir o ganisation and the
nviro m nt within wh ich
op~rat s.
1
trateg.i
lead rs
influ,enie.e thei r follo,wers
o a hi v
h - vi Io of
t e organisation, they use
h ir und r anding of h
environment to create strategic
ng
thr ugh foll w rs
in order to position their
h
organ·sa, ion in ,h ·
vir nm
t
for organ sational stability over
the sho· erm and sustainability
ov r th long, rm.
Chap · r 7: S rat gi rmanag m nt
R p , ibl
ill bu·1
nd
sustain morally sound relationships with all
l
rel vant takehold
of an · rg ni alion.
EITed.iv
responsible
trategic leade hip
invol e t . · uclt as:
•
etUng the direction for 1l1e organisation
as a whole
•
providing r pon ible leaders.hip o dri e
R ponsible stra t gic lead rs
wi,I11b _ild and us ain morally
sou nd relationships with all
h r 1 Y nt k hod r o n
organisation.
the organi ationa:l rrategy or combination of rate ·,
airy human
~
trategy
•
providing the ne
imp lemen ation
ourc
•
managing ocial, en ·ronm~ntal and eco:np,mi · capital
•
•
uildin nd u,· m it1 or · · m
rd :ren Lh of th
oeating an alignment between the otgani atio
ot a11i ti
n
ttat gi
•
leading and managing • hang e:ffi tiv
[ th'. al ondu L.
ilding nd maintaini .
An organ· ational rult:ure can be escribed as
th vatu
eli f nom a d ttitud that
bind people together and hd'p fuem .make
· nse f th ·y ·
\ 1 1in •
rgani .ati ,n.
Organisational cuJru:re n - to be aligned with
th · ion, m · ion, hll
and trat
o
the mgani
· organisational
g
n
rs.
,,,,..,,~,,..,,
value and
norms tdll
one' and ho
do
· a onal cuJture deter;tnin
wa
pl
lat
oth r, o ta
the most , b ·ous dispJa of organi
" -
•tf•ij·
An organisatio al culture can
b- d
ri d a th - val• e •
b lief , orms and atti udes
th.a bind p ople togeth r a d
h Ip h m m k, . n, e of the
stems within an organisation.
it
how people act in an organisation. th
and to lb ir bu in
part
om of
tu.re are rituals~ cemnorues, la~guage,
m
, symb I ·to • and ·aga. h1 an , rg ni ation ilh a ·trong ultu
· d
valu and beliefs create a e · · hich people are committed to one another and to
th ov rriding vi i n, m· ion
tra j g al o lh rg ·
n.
Organisational archit tur
The Oxford dictionary defm the term ·archHecrure' (as a noun), as the art o de ignin · and oon t:mcting buildin -:r • Thi defmi ti n of archi · ture i mu.ch m r
than ju t steeJ, gla .. , nd om:rel - it is mo-r than just a spac · that p -opl liv in. n i
a complex and broad ubject tha encompa
everal Interrelated disci lines such a
art, design. ·
math -rnati
g ography and c·omput r programmin .
21
Prindpl
o, G n ral Manag m n
m n · rgani ati
organisation. Ju t as the design of .a building
i mu h mor than tee], gl
and nc t •
in the same wa we an sa U1e design o
an or ranisation i
complicated busines
ar hh _ctu. . A prop _r aF mnent of th
organi atiooa1 tructure. y tem
policie
r ·u
aH ati n lead r: hip, , ultur , and
to h
In trat i · mana
Tl'le org ni atio nal tru tur •
systems, policies, resource
II, a,tion, cultur , fun ion _I
and operational management
r
II t1iv v r f -rr d Lo
the organisational architecture.
functional
nd operational management
i( 11 · iv J r fi rr. L a · rg ni ti n l
architectUT-e) is necessary to ensure the effective implementation -f trategic plans,
portfolio , programm proj - , nd initi ti'v . L u ]o
·, r h
l m nl ,
for example the mgani ational tru ture. ln the rrate
implem, ntation phase,
manag ment h, u1d nsur an ali nme.nt hN en 1 o ani ationaJ tru rur
Lhat formal reporting r la ion hip ., pm ed
de i ·on-making proce e are contributing oward
of th strat gy. Or anisationaJ imctur will l
chapter 8, herea leadership and moR spedfi.call
plain din · ~ap r .
, co , uo1 and authority and
th t1 e fu1 implementation
di us -d in m ~ d, tail !11
re pon ible 1eadership
ill be
ent,
S rategy implementation e ped -ly hen i · related to responsible mana
a l o n -ds to b ba ed on c rp ra tJ go man
m hani m to n tI:re th
congruence bet ee.n strategic goals nd performance and ·he exp lation of
i nlifi d .t hold ·
nls hav mad n w . h dlih ·
yea .. with a conse ue · ti ·· ·
ed focus on strategic ·
e example i the
. u inhoff In mati
. ard th nd or 20
th
mp any'
share rice . e
. per cent in tbe first three horirs of trading on the
Johann
E
(J J, t lha tim
oUap " in he hi l ry
of the
illion wa wiped
·. ntpany's hare price
a l pl
n the Frankfurt S l
ff i a South African
int .
holdi.ng •
· , ny that i du
.n G rmany)i. This foUow d
th
S einho
, being i
·gated by German regulators about
· non-d'
ir ·
• its a qu ·, ilion : •
h und rlying
e ents are frequentl
internal control , including integrity
uu
a ou.nta
my -
,
u iv •
ln a re pon e to i:he e ri k e
ts, · orld ide new regulatory frame or,. have
a pp ar, d to · rulin' - busin
practi
int, nd, d 10 stren tb n int mal ontrol
1(e.g. the King reports in South Africa. and Sarban,es Oxie- in the USA). Hence. a
r n w d r. us a pl · d n ri k manag m ~nt. with mutin y t m · rr rs,
operational malfunctions. uncontrollable employees and personal accountability at
th
nt
r a t li n. Th com lian · m ures a n t in , nd d
a a
mer~ chec:ldi t, to be ticked ,o ff m ho · that. ,executives h:a ,e been responsibl and
thi al, bu th ir aim i t mpower org ni atioa to intr duce fonna] pra .tic
f
effective and , f 1cient internal control and personal accmmtabilily that a Uow for
20
Chap r 7: S ra1 gi rmanag m nt
gr at
rutiny r int rn I p~oc."t:ss1:s · ad
,r f
ms. As su h, organi ati
can pmacti ely respond in innovative a-y to changes in the dynamic emvironmen:t
in hich H o at
u ain d long-term urvrv 1 and gro rlh.
Corporate governance can be defined a a
b whi h
fram w,or or rul and pra ti.
a board of d iliectors ensures accou.ntabil.iry,
fa irn
and transparency in n organ_i ation'
Corporate go rnan e can tie
.e rn d as a fram work of rules
nm
in~ i
f takl h Id
priviJege and roles; and (3) procedure
in fi rm i n fl w
s
· · f
b w1hl ha board!of
and ·
relation hlp with all i · takeholders. Tb •
corp rate . overnance framew,o
consi t o ,
,0) ,e xpli it and implici
ontr.ic
bet een
the or anj ation and the takeholders for the
di tribution of respmdbiliti , rights and
reward ; 2) procedure for reconciling the
director.; ensures accountabilrty.
f irn
· pa,ren y i1
n an
orga
tionsl'lip w th
all fl .
in
an
with th ir
,
ervi ion, control. and
"
Good corporate governance increas th integrit · •d effectivene s of the pri a e
" · or. G • od orporat g v man h Ip· I· · av 1d bu ill
and I that damag
trust in busine . It ptac:e value on good orporate governance by institutiomtl
inv lor ·. G
• rp
t g
an · I fot
gr win inv lv
nl Fth
private sector in ervice deli e:ry and ir enhance the de elopment of ystems to
pr
nt and det r corrupti n in , vcl JV,in rr counm .. It a i t · he dere tdation
and in grd ion
c pit 1 ma ts a:md recogni
the impo
ing
dome tic aving for .· o
tic r wtb.
or
In July 199,3 th
in outh Afric (IaD :A) established the
King C mmit1
t Gov mane . Th Kin
om.mit
produ ed th fus
King R port on Corp :rate o emanc:e, wh:i b w,as. published in ff enib r 1994.
t .omprehensive publkation
a recognised internationally a the
emhra :i
the in h.t i · approa
to orporaL
0\1 rnan
in
h pubH rlo n
of the firs Rep rt. it ha . been revi ed th.re time . The King N Report on Corporate
n · nc fi r uth Afri a · a rel
n I · o , mb r Ol 6 and b am n t1v
in April 2017. 10 It applies to entities · orporated in and resident in South Africa.
Th
sp ll o,u U1 fra:m
~ . go
mpli . n . Th phi] phy
the Report revolves arom1d three i u namely ethlc:al leadership sustainability and
orpo t itiz n h"p, whi h i r ti rr d · a th 'va1u dim n ion f lb R port·.
1
Figure 7.6 summarise
trategy imp]ementation a the third tep in the trad.itional
vi
tr gi ma ag m n p
, with th i t gra ion f h ·hr pi Jars
of riespon ible management The fmal step. trategic control, will be dealt with in
th n
ti
n.
Prindpl
of G n ral Manag m n
• Rl· mul tc Jun fonal and m 1vidu I g
I
ohjecUves and strategies
• Organisational a~chi -cture
• Corporate governanee
• Sustainability: En ure that impl m t1tatian
pmrtices lend to a sustainable organisa ·011
• Responsibility: Ensure that implementation
practi
I ad to , tokehold r voltJ~ C'1 oli n
• Ethics: Ensure that implrmrntation procti
lead to ethical condu rand m rol ,
r ·n
(
Strategy
mp·lementation
'
piUars f rr ;po ib! ~ m -nag m nt
if igu - 7.6
plains ra gic
LOS·
four h ha
I
process and the in egra
1011
of h stra
n g,
ent
of responsib e manageme tin the process
7.5
ST · J EGilC CONTROL
tra egi - cont. l • · a pm , _ us d to ontrol
the formulation and impkmentatioo of an
orgai • - ti · ratJ gi
n ure tha it • ..H •·~.. ,...,
the long-t an goals that have been set fo iL For
lh
~p 'bl
nisa · n. -trat -· :ontrol
is ne:cr.ssruy to ensure the au:amr:n .
of the
· verarchln g al f
ns·b
m titi
advantag
or responsible tompetitiven .
Therefore. trategi
:.lSUl't'
•
ontrol mechanisms houJd
Stra gi
·oni ml i a pro
-
used to control the fo mulation
and im plem ntation of ,n
organkation 's stra -gies · o
su11e hat it achieves the lo gterm goal th t hav
n t
for it.
that:
lhe organi ation bee me a u tainabl or an· Hon
•
takeho]der valu i maximi ed over the long
m r: l •
•
11 n
temi
ated.
S rategic control is a speciar ed form of management control and it differs from
ntroU. tral gi
th r orm of manag m nt , nlr 1 { p iaHy p rali, nal
control ocuses on the achievement of future goaJ .. U involve tracking a stra egy
a it i b ·ng impl menl d - ,ttat gi
ntrol
m ann w it for a l ngterm strategy (corporate-level ,t rate ) to be implemented before getting eedba k
2
Chap · r 7: S rat gi rmanag m nt
how w II h ·
re
d in att ining th l ng- rm
goals of the organisation. Th.its m ight t.a ke everaJ year for some organisations.
Therefore tra egi control is oncem d with d t ting prnbl m ,or change. in th
trategy and ma.king the necessary adjustmen in Lh trate . tra e ic control
i a ital e]ement in the trategi management pro -· for the fuU wing rea .on :
•
- tr te ic ontrol pro ides a coordinaling me-chanism L11at lin the strategy
formulation, implementation and con:tm1 proce e · of an organisation.
•
trat~gic conlml e:nsw,es th.al. the organisation' resouro are deployed in such. a
a that· it a.ttains its overall b·e:ctiv . R · urces need o · mo at d to b iness
units r.1epartm :nrt nd 111a11a ers, and hen coontinal -d 21
o trolled to genemte
synergy. Strategi.c control also ensures that or anisational ~o - match ke
ra t rs and th d el pm nt or sustaiinab . m · itiv atlvanla - .
1
•
Strategic control enables management to cope with
rironmental change and
un rt inly. B lw en th time that g al an
iv
~ formul t d and
fhe time the are attained, many things ha n in the orgarusation and Hs
nvironm nt to · rup m rn nt l w
al - r v n han lh go I
i elf. A pmperly designed strategj
y tern can elp managers anticipate,
m ni1or nd pond to hanging i!'i:Um an<:: . n improp,erl d · i n d
mtegi ontml sy tem can res:O:l in or rusational perfonnance that falls far
b low a pta f l eh an m ·
n lead t th do nfall of th o anisa ion.
•
omplex organi ations n~ d s
mistak! ar avoided.
•
Strategi control nsme a balan e betw~en organ· ational clfecti eness and
f 1ciency. G· n th
a1i
f limited re ou · , ell
alicme i not
enough. An
a i a ion also need to b efficien.
T
egic omrol measur
to en ure that costly
· ffi · nt.
lrnt gi,
mpri fi ur
·t, t:he strategic direction and goal o the mganisation should be
b
·culat . Tbis elem nt i- parl of - h tr tegy formula · n ph
o'
na meni, which we h e deal with in ecifon 7. . - oncl. th
tivitie that n.e . to, b carried t in order to achieve the strategi - goal
oi tl - or ni_anon bould b
- ifi, ~ d d rib d. Tb third · m n1 r volv s
aroun the definition of the method 10 rack the progre of the organisation in
l nns fa Lainin i · trat gi
Is. T · kin pro
h nd in hand Wilh: th ·
fourth el:emen~ namely the iden ·r:1cation of an intervention me,chani ru to change
rad· ·t , rgani · tJ nal a i i l wh n ra gi · , al· · not (. in d. · igu 7.7
illustrate where trategic ,comrol fits into the strategic management process.
I
trat gi contml nab]
manag m Ti ·· to monj or tra gi out m
(or its
corporate, o erall performance) against p,lanned or in~ended strategic goals to ensure
th 1 rp rat a · iti
main on tra k and rres nd
h
•o
with · uiL
major di crepancies. while adapting to the changing environmental conditions.
Environm n al onditi n reft lo both int m 1 nd
t mal envi nm n I
conditions. Should there be deviano.n between planned and actual nategic ou ,comes,
Prin ipl ·
o,
6 n ral Manag m n
rre iv acti
1
hould
t k , w i h mea
cl at · tr tegi
an b red fm
nd
strat:egk goals and objeclfv,es can be changed. 1f there .is no de ·ation between the
pl nn d and actu 1 trat i oulcom Lh , · n n d o chang strnt gi goa nd
the organ· ation can continue with i pre enl st.rate y or trategi .
if i u
7.7
tra _ g.ic c-0ntml and th
• w aH d d
th f; ·l th l
dynami nvir nm n .
, • succ,ess is no guarant-ee for tomorrow· sum - organisations may need to
i
r ma n tl t hang th w y t:ha Lh implem nt th ir
trategi . ·. rrat i control i a vi - J aomponent of the str.1 egi management pm
- ch en tra~gi may
m ob al ea th organi ation' environment chm
1
t.rat ,i cmuroJ pmvid
back and i ma ind.i •a tha an a~ustmen will n , d
to be made in order to realign the organlsation with its strategic direction. Identifying
a nd ·n rprcling criti · J
nts or •· ·ha:n lrigg
in th
.tern al nvironm n Lha
require a response from the organisation is nOl a straightfmward and eas proc
the
ext m· I nvimnm nth · b om increa in · I ompl
indica d in · hapt r , and it has be~ome: diflkul a.nd almost impo ible to forecast Even the b t p]ans of
n organi . tion ma b m h · 1 ~ nd th ]if; pan of pl nning that h ny d
of certainty is non-existent. Therefore, trategic managers need to be constantly aware
f p ibl ,d viatioms m tra ff plans in ni r to a
orrec:ti a ti n. Therefo , ,
strategic control has, two focal points.. First. to review tl1e content of' tr,negy, and
econd, to , alua . and conltol the implem nta ·on of trategy.
This concludes mu disrns ion of the 'trategic managemen:. proces . Figure 7.8
·ummari · . tbe fi ur pha es of th · traditionaJ view of th ·trat j; • m~nagemern
• inLegratlng the three pillars of re ponsibte manag menL
24
"l'I
u5·
C
r!
.....
c:o
g-. ~
n
....I'>::::r .....
0
~
~
-
..,i::
,::, "C
- ::r
;.,
e::
A
Ill 111
-
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..., .....
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~
-
=I'
llli
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~
e
a ~
Cl)
;
i,g
-
~
m.,
~.§
n, ~ ,... an
;:i:
~
:::I
1111
• Formulate functi mi.al and'
in:dtvidual goa l$. obje ctivecs and
• Condi.11:r environrrwntal an.i,l~ls
ill
,t mltgi
SustuJnab/Nt.y~ Aim tu become
ill
a .sus rni nable organisarion
wl,ir, ttra or a ptisWw iropac.l
on th
,. Rr-spons1011try: AiJtT to
m1111imisr rlatf'holt/f!t w /11
tJ 'Jer 1hr: lfJng tttm
• fl hies: Aim lll twild 0'1 ethical
pr j,wfple ~ lea nr:hirw: mom/
~~Jencr:
• - "·5lrategi,c control
Stl lon g-t erm goals and
obii::-dlv,
• Cra It and 51'.I ect corporate" and
business-,unit"levd !itmtegi es
Sus tuinobUity: Stmk>girs
Oryan isatl□ tla1
arclli tel'lurr
• Corporate govrrna net"
• Sus ruinflbility: Ensurt t Im i
,maltmcwtation proct/cts lr:ad
irmb,e arganfsatian
shoold lroo to u neurral or
• Rt:~U11sJblllty: t1uu1t 11ml
impfl:m~totjon pmctl«s kcd
·ositiw triple buttom line
to slutt'hohir_r,,uJue crration
11
'cspamJbi/i(y: Slrolcgln
srKwld maximise stakeholde,
value
• f011b. Sfm iryi'r!i should
minimise elhfca~ dilemmas and
ereaIr moro/ uttilen ll."
ill
• Review content of slr.negy
J:'.valualt □ nd r1111 trol i;trntc• gy
Im pl emen tatiorn
• 5uslai11abilily: Measurt ond
nmJrwtr agnni5t1ilional
sustDiJ1<JMiry
• lkspomibUit~: Meau1ir and
cvu/oo tr sH1t,;r-holdrr mhlc I1,1
e-nsurr: rhatir is
maKimi!led
• Flhir5; fnsun: maml f'!f,cc/lf'nct'
n
~
ll.)
~
...
...
"VI
a
r:;
(Q
ri,
:aA
::i
"Cl
:;;..,,
..,,
::r
iS
~
:I
i-3
• rormulat~ vl'lion, n,i'i"iion and
or!Ji! ilfsation,11 philQSll'hY
\Cl
5"
..c
3
nl
::I
0i:I
i.c
R'
.,3
.....
::I
Prindpl
o 6 n ral Manag m n
TH E BIG PICTURE
In this chapter, the four phase of the traditional view of the: strategic management
pr
·w
h
pi of di ·· ion, nam 1 trat ~gI anal i . · trat gy on□ lll tion,
trategy impkm ntatiun and su-at gk control. For the re po . Ible org ni arion,
th aim of the ·trate ic manag m nt pro
is lb at inment of respo,n ible
. omp titiven
- in oth r words : onomic omp ·tiv advantag , soda] vaJu
creation and en .ironmentaJ value feation.
SUMMARY OF LEARNI G OUTCOMES
LO1:
Differen tiate bet, een the term . trategy .a nd t:rategic. m anagement
rrnte:gy i
mean to an nd. trat •gic m nagement is a pr e that
ntails variou ph es, name! trategic anal i
te formulation, trategy
impl m •n ation and slral i
LOZ:
E plain trat gi anal is a th first phas of th ~trat ·c mana emen
proee and the integration or r ·po,n ' le management in the pro
rmin
th
a vision, mis ion tatement and.
rrenl p · ion f th o ni ti n by fo
•aHn
anal sis orthe external and internal
ironment
of the • rgan 1 ation.
L0 3 :
Explain
m
·
trate
n
formuJa aon as the second phase of the trategic
· a · th int gration • f r · p n
man g m, t in
the proc:
ai gy fi nnula · n 1n v · 1h · 'ng f long-t rm
and bj · liv
nd
the dection of o,rpo:r. : e- level and bu ine -unit-le e trategi . Corporate-level
tr:· i. ap
, th ntir rgani ati n a I w HT • nti t b tw n at ~
of rowlh a.nd d line. ith a corporate growth trategy the or ani ation males
aggre iv · temp o incre
i
ize thr
h in rea ed aJe · b impiem nting
o
ombination or more than on
the following trntegie : concentration
,arket development, prod ci development, innovation, inte ration,
i 1 a jon · r , orpora . omb1 . on.
, orp rat d din
rat ty i th
appropriate trategy to follow be the organi ation needs o regroup its acti ities
to hnpr v
mi
n .
rpon l
lin ·. ·tra gi
n be
1
ori · d
lum· mund,
divestiture. harvesting and liquidation rrategie .. A busin unit or generic stra egy
i th
id a ab u , how Lh rgani Llon n b t · , rnp l in th mar, tpl ,
Porter identi · ed generic strategies, namdy co t leader.ship trategy, differentiation
t t gy ~ u d I w o
rn gy and f, cu . d diffi r tiati n trat gy. Varfou
technique a.re a ailabk to assist management in the d ction o trategi · for
mpl ih SWOT anal i and th Bo ton onsulting firoup ro th- bare matrix.
One corporaLe- le · 1 st.raLegie ar fonnufat d bu in · -le e] strat gi · ne, d o b
de doped for each bu.sin
u.ru .
Chap r 7: S ram gi rmanag m nt
L04:
- lain tr.a
·mpl m ntation , th m· d pba o,f th tra gi
management process and the integration of re ponsibie manage.meat in
h pro
Strategy implementa: ·on invol
g a1 nd tr t gi , nd h d
LOS:
the formufation ,o f medium-term and hort-tenn
e1 pm nt of th org ni anon J r hit · tur .
Explain trategi.c control as the fourth ph e of the strategic management
pro · and Ch int gr: lion of r pon ibl mana m
in th pro
Strategic ontrol · a pr
used to control the formulation and· pleme.ntation o
an organi ation' · trat i to n Jr th t ii achi.
th I n al that hav
been et for it. Strareg•ic control has two focal poin · . First
e conten, o
tral gyr and
nd. t v lual nd J ,t I th impl n
,· tegy.
REVIEW QUESllONS
1.
Diffe ntiate between the: term
2.
Identify the chara teri tl
Dfm
tra
i
al i'
Explain the term 'strategy
4.
g.i management'.
in olved in it.
rmufation'.
I P r r.
ari
:ario
6.
orpora
gro,m t:rategi tha an organi ation can
corporate dedine trategi
7.
that a organisation can
8.
imp! m nt.
·
e :ariou . reps to fol1ow when instihI ·onalising organisational
9.
Di
LEA
'ttategic control.
ING ACUVITI ES
In pril 2:0 t , Face hook acqwn:d I ta gr.am for J billion. At the Lime o th
acq i ition. lnstagram had j · 30 mjllion u ers and zero r,evenue.
Ba ed. on data acquir d and analysed, would you regard me Fat<ebook a quisitio11
of In ta.gram a an ff tiv ·trace ?
REFERENCES
l
Coca- Cola. Mission. vision and value . Available online: hrtps:1/ vww.,m caola .uk/ab u - .• /mi ·i n-v' -i n-and- .alu · [Ac ·
pt mb r 201 ]
2
Pietracci B. 2019. Sustainabili : 5 wa
lo
1
print - and
ing in
Co a-Cola is deaning up its plastic
m op
uniti a th am im .
27
Prindpl s, o,f 6 n ral Manag m n
vaifabl
nlin : http
:/I
w.
a- 1 afri . om/ t ri / --way -
is-cleaning-up-its.- pfastk-bort!e-footprint [Acres ed 6 September 2019]
- · ola. H
th
o a-C la ompan · r p nding: o th
VID-1
pandemic. A ailable online~ hHp ://www.coca-colacompany.com/aew {how. h -c a- ola- mp n ·- i - · p ding- -o-th - ronaviru - 1break [ """""'•-=>t"'d
J May 20201.
mp titi.v n : 'ti hap.ing 1 b I m r
through
r ponsiMe busine practices. Corporate G-ovenr.ance, 4 : 1087 8572. Availabl
onlin : http :I/pd . emanti ch lar.org/ 754/bBJ
1'66 bo 236d 4b4Dbf64
a8 02bb5f..pdr [Ace
-d .18 January 20 OJ
B C Ba ic . n.d. A aHable nUne: http:/ /www.b Ian edsoorncard.org/BSC-
4
5
Ba k:
I
bout- the-Balanced- corecard
ce ·
l
februa
018]
'6
laa h, 0 & C nawa • RN. 2015. Principle o re pou ible ma,wgement: Globa l
·ri taiuab.ili.t ,, re po, - ibility and elldn. tam: ord:
en·· ag L ar.ning. l 71 .
7
K:au i \ N ft Sheng, L 20J91. de p dive into the global markie for su ta·nable
appaf! L Avail bl onlin : hlLp, :l/www.Ju L- tyl .com/ana y i /a
p,-diveinto-the-global-ma '. ei-for-su t · Me-apparel_id 136210.a p [
e ed 16
J
a
nua
. 020]
online: http :/fwww.marx/ .com/ttullloil-in-cris. - of-lh -bi - apit li - .htm [ .
d
Marxist.com. n.d.
ein -and-na p
Janua 2019]
h tp:/lwww.bu 1n
di tionary. o,m/d,
ovcm . n, .htm l
(Acee seid 28 January 2019)
1
28
n-,
I ritut of Dire or in outb rn
(loD ). n.d. vailabl onlin :
http :/
w.iodsa.co.za/page/kingm IA essed 10 February 2019]
PART Ill
ORGANISI G· A R PONSIB!LE APPRO.ACH
CHAPTER 8
ORGANISING
, tlior: ll r: ia B'otha
-
OPENING CASE
Unil' ver
Unile r, found d in 1930 i
"Briti b-Dutch muJtin tionaJ compan
h a.dquart rs in. th Nelher1and and the Unit d Kin dom. ; h company op
in the consumer good indu try, offering food, beverage , deaning agen
p · ona] care produ I to its · ustom · . In oulh Afrka . w are amiliar
with
rat -
and
with
mo t of the company's brands such as Axe, Dove, Omo, Flora, Knorr, Lipton Lux
u.nsilk, Rama, Magnum nd Hellman ' .
·ompany i I' , , in London, rad'n 1
a.s Unilever pk, as well a in Rotterdam, trading as Unil -ver .V. Although it is
li t
t o omp ni
Unil v r op rat
ing
u in
with fi r m in
divi ion : foods, refreshment, beverages and personal are.
A an
11 n xampl fa pon "bl o, ani li r, h um ny' vi ion is •a n w
way of doing busin s - one that deli as growth. b erving ociety and the planet:
Unil r
i v th bu.sin
gr,owth h uld 101 b at th
n • p pl nd
the planeL That' w.hy they are changi.n , the wa that they d,o bu ines.s. and why
Lh want to chang th wa busines ·•· , ,on . Their Unil ver ustain· bl U in ·
Plan (USLP), lS a bold ambition o acl1k ,e ·, · n withln ·t he company. tauncb d in
2010. it i creatin . u tamable
,wth through th . om any' purpo -1 d brands,
cutting bus·n s o t , redu i ll"i k .n d h I.ping them to, build trus • . he U LP •
out to de ouple their growth from their en ironmentail foorprin. bile increa ing
th ir po iti
i J im
l.
plan h . Lhr · big g al
· hi
, panning
their , ocial, environmemal and e,conomic performance aero the .alue ,chain.
Th
n inu t
rk i
, o fi
n th
a
wh r th
n driv
the biggest chan and upport the UN Sustainabl~ l)e elopme:nt Goal (SDGs)
(you ma
fi r · h p r · in whi. h th
w r cil u · ed). Unil v r' go 1 re:
,( 1 To impr · tbe health and ¥ellbeing of more th l billion peopl . By 2020. the
omp n
ill h Ip mor than a billio,n p pl
k1
tion to impr v th ·ir health
llb ·ng. (2]1Reducing en ironmenta] hnpac:t by haff. The c mpany' oal i
e th llvi.mnmental footprint of th making and u e of their product ry
g w h i.r bu in • s.
1 l ance Ii ellhoods for milli ns. By 20 0,
the
wilJ enhance the liveUho ds of miili,on · of people as the grow their
1
1
busi.
'
.
I
To t ain the fi
I
goal, UniJ
r i working in paruiership to impro e , be live
lobal partn r hip ar · a vita l part of th ompany' bu in · mod l,
which recognises hat growth i inextricably 1:ink:ed to their abili to ha · ea po itive
o f mil1iot1 ,
o ial impa l and redu lh ir , n ir nm ntaJ otprin . Unil v, r wor
ilh
t~eholders. who hare their commitment such as United ations agencie • nong mm nl l or . ni ati n , · · 1 imp · t in
.nda i ,
g v mm n1
1
Prindpl · o, G n ral Manag m n
hip t
f th
d
bu ines lo make a difference in way that are ystematic a.nd. sustainable and align
with the U LP. They aim
improv th li
of p pl thr u h u th ompany'
gan· ti.ons. Th
part11
vaJue ha.in. from millions o .• mall.holders and fanner
ho gro the ompany'
in redien to manufactttre their produc r hmu,gb the net\.vor: o entrepreneurs
and retaiJers who U Lh ir products, to lh biUlon of consumers who us them. '
Th
partn lip r, d . ign d t creat · p itiv impacts n h . Ith and w, 11.b ing,
nulrition and ood ecurit_y, u tairrnble agri u.Uur , \ omen' empo,werment,
in Ju ive busine • di a ter and eme en relief and ombatin defor talion while al o drivin Unit
r• ustainahk growth b bulldin trust redu ing risk or
reducing o t. Sin e 2012,. the c mp.an ha po itivdy impacted the liv of more
than O mm ion p . opl world vtid ·.3
The ompan ha e · tr ng value and dear polide an
to • n u that
anda
empJoy,
not only do ll1e ri hL thing but al D
th ng right.
eryon · at
Unilever·, expected o be an amba ador for its · ethical tandards. what the
U bu .in, · in rily. Th 'Y an to re t a n irour.n nt wh re empl y
n:o't
on]y live their vaJue in their own work - i iegrity, respect. responsibilit ·. and
pi.on ring - but
vi ·iJanl in id nlifyi pot nti
n m , and on id nt ab u
peaking up in uc:b situations,.,11
Dunng th
OVID- t
p · ndemi
by
implementing a number of m asures to protect the lives and livelih ads of its
n um rs nd mmum
company pledged a con
bl h and f d r ·
uppJi
nd
rk~
o ooo in donations
th
·
itiser,
im
b lh
nd mi, .
aJ
adapted i , manufa ·
produ e: anitiset for use in ho pitals. chool
and th r in- ti.tu ti
addition lo donation
mpan · offi red
U . $54 t 950 000 in ash flow relief to uppon livelibtlods a
its extended alue
ent to vulnerable mall n medium- ized supplie and
t ndin
protectin
g
t
d . nlillll-
ale re ail · ust m ·r . Uni1 v r al o ommiUed to
rkfon:e from ud
p rform ' n r
· p in pa • as a result of market disruption
r up thre monU .~
to
Cl-tA,gTERORIENTATION
ln th p . i us hapi r. indi a, 1at rgani a i ns g n rally ha ·an imp rati
survi e and perform abo· e avera e, in other words to obtain a comp titive advantage.
F r th r . o i l rgani ti
thi m arr to a hi , up ri r rform ,n
r th
long term in a responsible manner:. In order to do o, orgarusal:ions need a structure
to indi t how peopl and oth r re ·otuc will b d ployed to achi ve a mp titlve
advantage. for th re ponsible organis tion, its tmcture hould faci1i1ate chang
to b ome a re poasible or anisation. In other wo.rds,. the organisational tructure
hould l ad toward lh rgan · tion b mning ustainabl re 'ponsiM and •(hi al.
2
Chap · r 8: 0
ni in
Th
p nin ·.
f this ha rd rib Unil v r a n rgan· ti n , mmill d
to becoming a prime organi ation, which we defined in chapter l as a superior
ty
of organi ati n that I ads L erform ,n tha i at the sam im o i Uy,
environmentally and e onomically usta inable, optimisi stakclto]dcr valu and
dispfa . mora1 e t~llenae. The aim of :this chapter is to, explain ho van organisatio n
an i.ntegram. Lb pill rs of rcspon ibl manag m nt into 1h ir organi atfonal
structure to become a responsible organisation. However ·before this i explained,
th
h.ap r fir t diffi ntiat b t
n the rm org nisfo · , rgani Lion and
organisational. structure. Second. the imponance of organising ~ expla.ined. Third,
lh chapl r pl in ,
t p . in d ignin · n r an· Uo l • ctu . . f urth, 1
principle of organising are explained, followed by a more detailed is,c:ussion of one
f th
principJ - , nam
auth rity. Th n, I, m ti
rg· ni tion l , tru u . r
identified and clarified. Lastly, we explain the in egration f the pillar of re ponsible
management in th or anisati n tru tu.re oec~nle r; ·p n ible o ani ati n.
LEAR NING OUTCOMES
After stud ing t ,i chapter, you hould be abl,e to:
L0 1: om r ntiat b tw en th 't rm 'organis" g', jorgani a ion' and
'organ;satio al struc ure'
L02:
Explain th impor an
orga 1smg
LOJ: Ex plain he st ps i desrg ing an organisational structure
LO : b:pl·ain the pr' dp
anis;ng
LOS: Explain au
on
principl. o orga"jsi
riolJiS orgardsation structure altema 1vei
L06:
Explain the
L07:
p ·n 1h in g a ·on o h pillar of r p n I I ma ag m n in
o ganisa tional structure to become a responsible organisation
.
KEY TERMS
~
acmuntability
arganisationa Isl:rnctu re
authority
org nising
ce ntra,Iisa tion
chain of command
coordination
d cent,raHsation
d ·layering
delegation
poo ed in terdependence
0
d pa m n alis.atiori
pow r
pro uct depar
en alisa ·on
reciprocal interd r,d, 11
responsibility
responsinle orga isation
res ru turing
Prim:::ipl
o 6 n ral Manag m n
division of ork
span of control
do nsizing
n twork rue
IJ '
sp dalisation
organisationail cha
s andardi5ationi
team approaeh
un·ty of com an
organisational design
vi I.la I networ organi,sation
new venture units
organisation
L01 :
Diff rentia e betw n the at rms "organ·
'organtsa o al r ctur i
g','
8. 1
O.RGrANISI 6, ORGANISATION AND ORGANISATIONAL STRUCTURE
.· i nor org i ing. it i imp an t d. ·~rentia between the terms ·organis·n ·, ·org.mi ation" . d 'organi ational true ure.
B fore w focu on d tailed dr
Or anisjng i th pr
i ga
ture
for rhe organisatfon tJ at ill en.abJe its people
l
r ffi i I , nw
i
1 1 n. m1 ~ion
goals and obj cti~ . Organi mg can be een
a an on • g and · tern ti · e pl!
that
o urs hmughout Lh lifi or an orgami ation.
It entail the
arion of a iructure for th
li · ,ti
hat !'liU nabJ aU ropfoy
ark efti ctively towards its · fa , m· . ion,
g
nd
bj iv . Th org · :i n i
the ood re ult of the organisin . p es . The
pr
· f rganising • n i ts f
i ning th
tasks neces a:ry o achieve the or-gani ation's
goals o the rel ant tta e i bu in ·. unjts.
o
is th ,proc ss of
stru tur or the
o
n hat will enable
opl o work i tiv ly
towards its vision, mission and
go
I•
and obj
iv
s.
n, . organi alion
i th nd
result of trh • organi ing pm ess.
ary o-oniination to •nsure
tha th e strategic bus:i::ne s u.n.it , depart1nent or ection work nergi Heally:
Th - • nd r ult o lb organi in pro s i h Criea fon of an or ani ation. In a
smaJJ organisation or a smalJ department, tbi i relativel imple - it is u ually
a mall r d iding whi h t· · n d l b don nd an aC ,g th m t varl
d partm ms or soction and the.u providing the ne
individuals. In large organisation , the proces · of organising becomes ery
ompi . It invol
di iding lh work. f h mg.mi a i n. allo a ing it I , i ally
to bnsine u.nits, departments and se tion • dclegating authority and establishing
o roi aH n. ommun· a ion and inJi rm i n y · m . t
ure tha.t v r n i
working io .e ther to a,c hieve th goals of the organi ation.
4
Chap -r 8: Or ani in
Th
k
r
ividin
u th w rk
·•ng
responsibility, and so on, is referred to as I.he
•d ign of th
rga i ti nal ,t ru :ur . Th
organisational tructure 'i the ha ic frame ork
of fonnal relationship . between responsibrnti '•
tas
_nd p op l in Lhe orgamsation. A typical.
wa of illustrating an organi ational true nre
i b m an , f an organi alional h rL n
Ttie organisa ·onal structure
is th
ba ic fram work of
formal relafonship between
re pon ibili i , a ks and
people in the g1anisation.
organisational. chart is a graphic: n-presentation
of th wa an organi :on i p t . th r. An
organisational ,ch.an sho
among other things,
auth nt
nd
ommuni ati D r lali n -hip
between jobs and u.nits. The orgairusation l
of U t d ompani a usuall d cted
in th iT anm.1.al I'i ports.
o ganisational chart is a
gr phic r pr n ation of h
way n organisation is put
·• l eth r. An organi ational
chart shows, among o h r
Or
thin gs,
- in , th
of a manager, . ,
the oa and obj ctiv
8.2
·
~
in attaining
fan
a uth ori · y and
mmuni ation1r la i , - 1p
between jobs .and uni .
THE IM PORTANCE OF ORGAN.ISING
an indi pensabl,e function in the mana.r ment process. Plan devi ed
fr rmuJat will n v r b m · r i if human and oth r · ur,
are
depto- ed and the rele~nt aictiviti · · uitab]y ,coordinated.
L
:hip i n . p ibJ if Un
uLh rity and
on ibility are n · t 1 r.
Like, ise, ,contrnl is out o the ques ·on if people do not know what ta ks the are
r p • ibl for. Org ni in,g i vital
the altainm n of goal and ob·
tiv
in an
organisation because it ontribute t :
•
Allo ation Jr ponsi ili · . Org l ing l .a.d t
rga - isa ion 1 1ru tur
lhal !early indicates w 10 .i tt ponsibk for whi h tasks.
•
- oountabili . A unt bil"ty impJi thal th r · p n ibl m ]oyee will be
exp,ected to acc,o unt for the out,comes. po ilive or ne ·alive, f7or tha portion
f th wo,r ' directly under th ir ,c ontrol. Accounta ility Link5, re ult dire tl
to lh action of an indJvidua.1 , tttion. departm nt or bu _in
unit.
•
bl" bin d ar chann of ommtm.ication. l'h" en u:res tha
fTec i - and t.bat an i.nformation requi d by mana crs
and employe at aU l,evels of the organisation effecti ely reache them
lhr u h h
· rr l chan.n ls ·o th , th
·an per om:i lli ir J b ffi ·ti ely.
commuu.i ation i
of 6 n ral Manag m n
Prin ipl
•
d pl ym nt.
n· in h Ip m ag r
pl
t
re urc
meaningfuUy focusmg on the
ential activities thaL need o be performed
to attain t org ni ation· mi .· n and goal .
Syner . . Synergy refers to the combined power that can b ac.hie ed when
•
o , r m r p · pl or grou
o p pl vork
L
gt:th r ra.th.er th n
parate:1 .
Organising enhances syn rgy in or anisations and th • quality of the work
erformed.
ork. The total workload is clivid d into activiti , tu be
•
Divi iou of
•
perform db an individ al r a , oup of indjvidua1 .
lematic grouping. Organi in me n y tematically grouping a variety
of ta , procedure and
our . Th" · po sible b u h org ni in
pmc
aJso entail Bil in- d pth analy is, of th work t , b d
r, so ea. h
per on i aw a.re of his or he.r duties.
D partmrn. alisation. .he related ta ks and cti • i
•
employ
. are gr uped
together meaningful! in peciali ed ections. department or b,usines uni
ti =:it per · m arious fl l . ·an d I ith ·t bdr p ·
d
o
r
•
Coordination. The or ani ati.onal true ure i responsible for creating a
m ham m o
rdinat th a ·· iti · in h ntire or ani i n.
All the abov -mentioned reas ns for or anis1ng direct the organisation t
nu
att ining i vi ion• .mi ion _ gu· l . How
proc, in de igning an or:ran· · tio
r
r, man g
hould folio
ogi 1
hkh i . the focu of t he ne f
;·mn.
DES GNING AN ORGAN.ISATIONAL STRUCTURE
Th poin f d parture in
t
mg n org n· io
tru :ure i
8.3
· ·on
goal .rnd trat
of lhe organisation that.
re formulated during the straL~gic
planning ph
( ee chapter 7). Tb fust ta: e in the organi i -g proces in olv
oullinin 1he ta ks and a, tiviti . to b · mn J. (fd in ord r to achi
th oiga1Iisational
goal Once the e t ks and acti iti h e been outlined. job m · t be d igned and
a 1gn d to mplo ,. ~ within
organi ation. Relation hip b w n indi ·dual
womers and work gtou
hould also be defined. The next step in the organising
p
·i
d v I p an rga · · tion 1 d ign Lha ill upp th t · i ,
al
and operational plans of the or anisation. (Organisational design is, discussed in more
iJ i
j n 8.4.) Th' ntaU grouping th
rganisational m mb rs in
rk uni ,
de eloping an integrating mechani m to coordinate the effon of di erse work groups
and d t rmirnn lh •t at to hich docision making in th rganisation · entrar d
or decentralised. final]y. a control mechanism houJd be put in place to ensure that
the dm en organisational tru t\Ui do . ind 51 enable the organisation to attain its
mi ion and goats. Figure 8. 1 umm.ari
th
ag · in Lh • organising pro
taro
1
2
~
•
Ch p r 8: Or ani in
·gi p n
tr
OutJi e tasks an d
'on ol me t1am m
tiVI
lo p
argamsatio al
a
d igri
1figu
i
8. 11 S p ·n d s gning a,111 rg ni
The de ign of an organ~ •
prin ipl o nsure tha
t,
re bould b guid d by o rtai
t:.ure is ound. Th _ pri.ndpl
.•
m
the next ,ecrio n.
LO :
8.4
pain
ne princip es of oraga ni5i
g
PRlNCIPLES OF ORGANISING
Managers at aJl levd of an organisation need to or ani e lmm;u1, phy i al,
manti I and informa ion r ~ourr in r, r ro ach.i v lh orga.ru ation' mi ·ion
and g al . Tb , ollowin prin ip]e r . rganisa tion hould guidf'.'. manager . in thl
proces :
•
unity of command and di
•
· hain of omm nd
•
•
tion
pan of contml
divi i n f
or
•
ta.ndardisation
•
o nlina i n
7
Prin ipl · of G n ral Manag m n
•
ponsi ility
•
authority
•
'
ntabilit
•
power
•
d t gation
down izing
•
•
•
delay ring
n xihility.
The prindpl
listed a:bo e are a· ussed in mo re de ail e w.
8.4. 1 Unity of command and unity of d"n~d:ion
R porting to mor chru1 n up rvisor · · n b
-vecy confu ing to employee a superviso may
Uni y of ommand r rs o
fi u on diffi nt a p
of th
r
ity
the si uat ion whereby each
of command refer.: to the · ituati n where each
mplo , r p rts to nl 0111
mplo
p
nl o ,
p rvi • r.
1
supervisor.
la,ck of unity of command can al o ontribute
to a ]a k of clarity in
o ani- ·, n - · .n
Unity ,of d r - on . a, hi v d
ntployee r porting to mo than one upervisor
wh,en all ta
nd activities are
ma g onfUc · m
ge from th various
dir,ect d to ards the same goal.
pervi. o . Uni y r di~ ion · a]so impornm.t
in an organisation. Th" · achieved when all ta
and acti ·ae are directed toward
th ·am
• al
Ch n of ommand
Chain of command is al o rderred o as th.e
.4.2
• · · ar prin ip] ' and m an tha a11 tbrok n
chain of command hould link v ry emplo ee
in n rganisati n with m · n al high r
level, all the way to the top of the organi ation.
ham r ommand creat a hi rarch , whi h
can be iaustirat d by means or an organi a ion
chart. Ev ry mploy,
in 11 organi. ation
bould kn.ow who b /sh .· ~ port ,o and who. i ·
anyone, report to him/he:r.
8
ltt•M•
Chain of command is also
r
rr, d to a th· 1s lar
principle' and m ans t ha t a.n
u .bro en chain of command
should link v, ry · mploy . in
an organisation with someone
a a high r I v I, au th way t ,
the top of the organisation.
Ch p · r 8: Or
nisin
8.4.3 Span of ontrol
Span o conrrol i also caUed · p,an o
manag m D • and it r fers to th numb r of
p.an of control i also al d
ubordinat that. r port to only one mana er
'span
of management' and
or upeivi ~ r. It · po ibl for . man • er o
it r f rs t · h n · mb r of
d al with only a erta1n numb r o 1- mpl.o
hat report to
a a time. ff more than a reallistic number of
· mpl
p
a ma.nag r. th mana r'
task becomes impo sib]e to perform. The fe~ er
mplo
up rvi d, Lh man r or narr ,w r th
an f nlrot Th mor
employee upeiv· ed. the greata- or wider me pa
cont · L The span of control
i in Jlr,op rtl n l
b ight o h or ' nis tj n - o · it mmb r , f m nag rial
levels: a flal organisation e:xis1 when the.re are few le el with wid.e spans o
control. wh r a t II or ani atio
· hen th re r man Jev ] with arr w
span of control.
8.4.4 Divi5ion of work
A major ha]] n
faced h man ers i to
d termine how tl1e Ori houJtl be di id -d up
among bu.sines un
· a·
ection
and v n individual m Joy -- . Th div ' _ion
of work is al o all d the division of lahou.r.
Wi ·
spe
·
gr ,
Em
of work.
mplo
hav
Rela ed jobs can then be
in
ti •n r
m nl.
ha e speciali ed job n
e
t
· orlk: re ers
r.
in ion of how
he · ork should be divided
up m ,19 b sins - uni -.
, artments, sections and e en
1
individual mploy
.
ac ou. ·
foi ra n, mar tin , purcha i.n
r
bu.man
e mana ,eme.11:t • .
move up the corporate ladder, they
p rfi rm 1
pecialised functi
fillS related o the divi ion of wor ar
diff. J'i nliaUon and int ration. i ·
ation r rers lo lhe n ed lo d.i.vid th
organisation into arfous dep nmen • wherea . integration refers to the need to
oordinal
8.4.5
,o f . h v ri us d p _rtm nt · in an or m,· ati,on.
h a U iO
Standardi ation
Managers
hould
empJ.oy
the
IH11N
prindple
of
ndardi ation
h n
tru turing lh
Standardisation refers to
organi atiou.
Standatdisation
refers
to
h dev, lopm nl of uniform
th d ':V lopm nl , f unifi r tl pra ti
th ,·
practices
that emplo es n d
employee need. to follow in doing their job .
to follow in doing theiir jobs.
Th p , , · · f tandardi a · n i t d v l p a
ertain 1e d of conformity, iu the e.nse that
it nt T th de fo men. of uniform prac i
that employe n d to foll
n
doing their jobs.
Prindpl
o,
6 n ral Manag m n
8.4.6
C ordina ion
Coordination means that all busines units,
d partm n· , "' tion . nd individual within
the orgamsatio,n should work to ether to
accompH h the tra.tegi,c tacti aJ and operational
goals of th organisation. In general lh d .r ·
of coordination benveen ta ·ks depends on their
inLerd -p nd n . h
rgan' aim at h oris
James Thomp on identified th.ree major forms
of in rd p nd n · • nam ]y
1d
qu nti I
and reciprocal interdependen e: 6
Bill
II
busi1ness units. departments.
Coordination mean,s tha
ti n and individual
within the organisation should
w rk g th r to ace m Ii h
1
the strateg' c:, tactica I and
op rntional
organis ion.
a·
h
P I d int rd p nd n . [ gr, up , h L
exhibi pooled htterdependence, the uni operate i tittle in era tion · the
u p,u f lb unit ,r p ol d t th · • rgani • · rn I l v 1. -ailure f any
ingle unit could threaten me enriJe organisation.
•
•
qu n ial in rd p nd n . In · qu nua] it
p nd n
1
h outpu
f
one unit be omes the input for the next unit. Th s,e ond unit is clirect]y
d p nd n upon th f1 t unit. to fmi ·h · - w rk b o • can b g,i n it
as igned task. que:ntial im d penden e is pically au.net m a pro -
Une e -up. uch a the a embl plant ,o f a car manufacturer or -h
pr du ti n Jin in a l J- manu a turinll" organis Uon.
•
Recipro al in erdep nden . Re iprocal inte:rdependence r fi
.ituation
in whi h be outpu. f o,n ~or 1,mi b com, th inpul :Ii th
ond work
uni , aind vice vers . In
a pital the u11its uch a in en ~j e care. pediatri ,
and o on, pr id i 1 u Lo urg ry. Aft r ur ry,
· nts are n back o
e units. In a restaurant, the - a iters and liefs are reciprntall
Unity
of 10
llo ·
d and di ti n, the h in
mmand, span f ontrolt divi ion
a.rdisation can be
oordinating principles. fn addition. th •
ed as mean
ridination:
. ough difl ct con· a L bet een p, ple within md among departments
thro ,gb liai ons wh w r ' n n d - anmen and or i 1 information
and aclivitl : - witb one r more other departments
hrou. h ommilt
m· d up f p pt frnm diffi rent d partm nts
through integrators such a project managers, \ ho do not ork or a
p· rti ul ·rd p rtm nt but wh ~ ,rdin t h
liviti
fa in I r
muJtiple departments tor-ea h an objie ti e
through emplo
· in boundary rol, · in luding mplo es in . al ·, u t m r
•
can a] o be
1
•
•
•
•
ervic:e, procure.m nt and public relations. who coordinate the e'
1l op,Je in th
t mal en· ironment of an rgam ati .n.
40
Ch p · r 8: Or ani in
R ponsibillty, authority and
ountabiHty
Thes,e three te:rm . are do ely related and a.re ,o ften used mtadtangeabl by
manag rs and mplo
. It i , h w r, important h t manag und, r tand th
d i ference b~twee.n the on epts when they are involv d in the or ani ing proc: ss.
8.4.7
n 'i iH
R
ti n
a hi v
by pe1-forming required activities. Uanage:rs
bav re p n ibmry - th ha • n o ti ation
to achieve the goal and obje tives of an
or anisation by performing ::ertain functi ns
tasks and activities. When trategk. ta tical
and operational goal are set, the managers
re pon ibl for achi vi:ng U1em h uld b 1 rly
identified. Autho.r iry is the right o makededsioos,
issu rd an us
un: . U' hority an b
defmed as a manager's right to make deci ion
i u ord · and use organi a '.onal r urc in
order to auain goal a.nd objectives. Aulboruy
is d" u d in mor d taU in , tion 8.5.
Webs~er•s Dictio,na.ry defme
a ·countability a
*Lhe qua lity or state of be·
cc
e; a:n
obligation or willingn
l
ibilit
for one' actions'.
r erytbin tha
accountable
• k d p rt
evaluated on ho
a e met their
Responsibility i5 the obligation
to ac:hi v go I by performing,
required ac ivi ies.
1s the right to make
d i '. nsi i u ord rs and u ·
resources.
--
A oun abil,i i an o rg~tion
or willingness o accept
r spon ibi lit.y o on ·s tions.
·
nd th · n d to b
anagers can delegate
ib'Jity nd a th rity. but n v r th ir
r
B.4.8 Power
Powe:r 11 .ers_ o the ability of an mdividual
Ir influ n
th b h· vi u of o tPr · n
the org . hisation. Managers have power in
· ti n . Tb oll win kind
p
r
can be distingui hed in organi a ions:
1
i th
b haviour of oth rs in
11
organisation.
•
L .i tim t po
•
po r·on. Th p siti n of mana ing di ctor i • · more ow r to i
in um nt lh n do th posmon of fm:;t-lin mauageT.
The po er of rew rd i th power t gi or withhold eward~, which can
the organi arion gran
b
•
fl ri
t6
that
Pow r :refers to th . ability of
an individual to infl'u nc he
a particular
r a finan ial or a non-financial nature. Th bead of a d parlment, for
exam le. ha the po er to allocate or ithhold rewards after a . erformance
appraisal h b n d n .
Coerci e powtt i the po er to, enfor compliance through fear, ,e ither
psycholo i al or ph i aL
Prin ipl
of G n ral Manag m n
•
p
r lat t p rsonal p
r and ·
co.n cept. People folio a person with referent power imply because the- lik:e,
p tori . e.nt"fy ilh ' im r h r.
•
Expert pm!\re.r is ba ed on knowledge and expertise and a leader who
p •
i ha , p fad
r o r tho who n d hi r h kn wl d e.
8.4.9
D· legation
Del.e ation .i the prnc
by hicb managers
a . ign a p rtion f Lheir wor Joad lo one r
momse ubordinat . Wb n deJegat.iing managers
a ign r ponsibility and authority to their
ubord.inat
for a tainin goal • R p n ,• 1hty
DI g
n is h 1pri0
. by
wh1c-h managers assign a
p r lon of h ir workl ad o
one or more subordinates.
I
and authori are de.lega ed do n the diain of
-ommand from a p rson al nigh r I v l i
organisation to a person a a lo er le el. Subordinates are given new ta ks,
,m part f a
r h m
imply b part f ·
hicb
8.4.10 Downsizing and delayering
Do n izi n
fi
o h rmma rial a ti ity
aimed at reducing the size or the orkforce.
Down izin ma Ill ach[ev d b · redu ing
the nmn6cr u ' empiloyees in one or more
Do ns1z1 ng refers o he
mana1g r al a,ct vity aim d
at reducing the size of the
w rkfo
depanme ts - l avin the organi · ational un·
in - - or uough •· lim.i nalln a d par m aJ
unit b • for example1 011 our. ing its acri i ie .
D lti ring m an redu i g h numb
f ia rs
in UJ veJtical management hierarch '. During
r• - n in ring, organi a, i n
Un1ina
0 lay rin" m ans r d cing th ·
at lea L one layer of middle management Th.is
numbe.rof layers in l'.he vertica
i d la rin . In, onnati,o n t h ol
How
manag m n h" rarchy.
•ont:empor.ny enior management to gain
onlin r I-time a
10 op ratfon without consulting man 1 y
of mid
managemen _. his enables the organisation o _peed up d. _ ision making.
24
Chap · r 8: Or anisin
8.4. 11 Fl ibi Iity
Flexibility refers to the ability to adapl to
hangingcircum tanc .Fl ibilityinemplo
Fl xib ili · y .ref -r to th i vital fm m · uc:o s of an orgaru ation,. ince
abfli , to adapt to changing
ther will lwa · be e e, ti n to the mle.
Fl ibility re£ -r; lo n emplo , · ' ability o
adap to changing circumstances. either inside
r · u id th organ} a ton or
n ithiu th· empl
him , lffh
Ful
organisation realise that flexibilit is important to employees and to customer
ti fa lion.
The organisin ~ principles di cus ed in th~ ection hould en le managers to
r 1an' aU or anisational r · ur
in u h a
y tha . 1 m j n and
of tbe or• .a nisa '.on are achle :ed. A few or the e prin · les. mainl · authority,
panm ntalh,tion, j b
ign, [ d l
ion are di · u ·
in mo d l il b low.
1
L05:
8.5
plain aLitho.rity as on of th principles o
ganis111r
AUTHORITY
Auth rity ha
b en d frned
m tb:
pr
i
· tion a th right to mak · d i mn • i u •
The delegation of a hority is
orders and. u e
ourc . I i dud the right
h flo o au hori cJ wn th
lo k a io
,o
r o 1 nc o
hierarchical line.
duti and t .· · ·
· or negligence. ln
th ft rmal
·
tu
wn ·
of an organisation pos
fmaJ au:th · ·
ey may ap · int a board ofdirec:tor
nd iv 1
hori
ma
v tm t , in Lh organi i n. Th
directors appoint mana
who. i . , .
a certain aulhority to subordinates and i ·
ho
· flo
d wn th hi rarchi l Jin . Thi fl w f · uthor'ty
i kn
·on of authority.
1
in p · 'ti n rath Lha . ·
pl - man
· qui
uthori y
by mean of their hierMclric:al po ition in the or-gan1 ation rather than: from their
p
chara rt · 1.: • Wh n am n , r l p down [ m hi · o
r po ition th t
a uthority i relinqui hed. , or m na ers ~o -tn1ctme an organ.i atlon that i well
aligned with i, mi jon and
1 , they n ed to, und
and the: differen 1.yp
of authorit . h • ar formal and iof. rmal authority, line and staff authority,
centrali ed and decentrar ed organ· ational authority, and level of authori .
1
Prindpl · of G n ral Manag m n
8.5.1 Formal and informal authority
Formal authority i the anctioned
ay •t(•jj ■
of g Hing thing don . mu trat
b th
organisationaJ chart. n reFer to the pecific
Format authority is the
sa ne icmed ay of getting
relation hjp . that · i t mong employe in
an organ aUon. lnforma.l aulhorlt is Lh ·
things don ·, mustrat d by h
un .anctioned wa of etting things done.
organisational chart
r fi r to v riou pa l rn o r: la ion hip .
and form of communication that evolve as
mpl
int rnr nd mmuni a wHh , n
lnfonpa
uthorit
the
another. The ri,g ht o mak deci ions. i . ue
un ncUon w y of
, ing
rd
us r-- r ,. narr d wn rr mt p
h1ngs don . It refers to various
to middle to l wer levels of management.. This
pa te n:s of rela,tionships nd
i r ferr d o a th c
,f authority. Du o
arms
co.mm ni a·ion th
the ,cope o authority top manage.rs typically
ev Ive as emp,loyees interact
have more authority than middle leve1s o
d ommuni a
i h on
m.anag m nt, wh rea middl m nager ha
another.
more authorit
tllan fi.rst-line m nagers.
R pon ibm y and authori y are d l gat d nd
flow downwards in the organisa · n where.a accountability flow up a:rd in the
or ni ion.
•t(•jjM
I
8.5.2
Lin and taff a
Line managers are th
gers in the
n· ti. n wh ·
nsibl
ining i e
goa.Is. Line
author[ refi to m nag r' re
ibility
ma e decis· · n and Lo issue orders to em
ees
down
· ain of command. It origin
m n t vcl with h dir
a
-Ln
•
hority r fer
o
manager's responsibility o
k d
i ion and to i u .
orders to emp1oyees down the
l'lain of command.
op
rs.
an
at d to the head of the diffi rent
uni • d · rtm nl or
tion
u h _ 1 fm n fad d partm nl or th op rar on
dep:anmenL It i then delegated further down the various hierarchical levels to the
l v I · re th b i ·
iviti
rri cl u n UP rvi ry I 1 .
The King N Report 2016 on C rporate Go emance for South Afrika addresse
th i u of · ndu tin bu in · in an ihical
and uansp:uent
in tan · , a
ay. Compan secretaries, for
pp int d
r nd r
rvi ·
the chairperson of t he board and the CEO and
l dvi lin m n g m n
g ,rding i u
ethics and governance in the mg.a n· ation. The
company
et.uy therefore ha ta f au horiry,
in other word the r pons1biLi to ad · i e and
44
Staff authority r f rs o a
mana,g er's responsib iii ty
t
d i
ml a . i o th r
person el, ba,s.ed primari ly on
hi Jn r , xp rt p w r.
Ch p · r 8: 0 ani in
,h r
nn L, b , d prim ril o,n hi /h r
p
p w r. P rtn
1rm ma .mn of a:rchile ts ma appoint managers. to nm the bnsin
ide of the
fmn. Th · pre en · of uch taff sp d H
free la vy
or a hi , t pra t
law or arclurect.l.1.tt: - their line function.
rtain peopl in tafT po itious function
on1 a pedaili ts in an advi my capad · . This mean that line managers may
hoo e wh tb -r or not to se k Lb ad · ,of th sp •dalist. A Lypi al .ampl i
an economi t at a bank.. He or · he advises the line managers on the pre ailing
·onomi
ri bl,
u h a int re rat , inflation and R rv ank poli . Th
concept o advi ory personnel is certainly not a contemporary de lopment In the
pa l in . , parllam ntacy g v mm 11 n di a rs l ,p· 1 ·d indivi ual
their advisers.
b tw · n p opl in Jin and taff po [f 1
au · Hn . man g rs
regard staff managers as a threat to their authori . Hence ta.ff managers are no't
· n It d. and mpl in lha th y are n ru ·1 d.
Ii
obljged to 11dy too beavily on the advic o · taff managers, they feel that they
a 1:0 d p d nt on th ir p rti an th'i ma mak , h m Fi i thr al n d.
Differences in. perception ma also cause rnnllic e.specl:illy if line managers feel
are infri.ngin n their lin of auth rl , l a e too ideal" tic a
tha taff manag
p p cti e or are urping ih p e tige of the Une managers. Howe er; th tal
onfli t oft n ari
manager' perception ma be that
other part 1.umec saril
all Dew
id a.
nnd have the right l i su
. to lim~ p onn -1
ample.
ing deparunent
in esrab l.isbed are
· "I.it . or
a
·
p o
ing appropriate ta
ve . th p,urd1 . in
p
el d l min th .
ord r quanUty is th mos
on mical on they
ue an order to a line manager to order tha pecifJc quantity.
1 ,
·
,taff manager: may al o have bo,th line and · aff authority. Thi is caUed ·dua.1
horiry: For examp]e a labour re ati ll' manager adv· e and a si . all
partm nts hl an or nisation. Ho v 1.
h a rnana r may al o ha
Hn
aut · ·ty ·ithin the HR departmeu and ma issue orde.rs la line function) to hi
or her ub nlin
Prindpl · o, 6 n ral Manag m n
With
mi man g m n
d
m na r
norma11y monitors and asses es every acti ity
p rfii rmed b subordinal , a i de1eg tion
re,guires constant and derailed foedbac:k from
ubordinat
and tends to be ex:ce sively
o us d ,o n pro durai trivi ralh r than on
overall staff performance. There are several
moti ions fo ml roman · g m nt whi h ,n
be categori .ed
either i:nte:mal or external
f.·
In mal f. t rs in Jud
d, t ilorie:medn
and in ecurity on l:he prut of the
Micromanagem n
r
ers
o a si· uatio,n wh r b .a
manager monitors and assesses
v ry . tivi y p rform d
by subord inat es, avoids
d I 9a i n, r ·qui r oon tant
an d detan ed fe edback from
u ordinat
nd , n
o
be e cessivel.y focused on
pro edur:al ·via rath r than
on overall sta·f f performance.
man g r nd ·· ub r garding th
mp t n ·
of employ,ees and co-workers. Internal factors
are rcla d to th unique p rs mility of th
individual microma.nager. External factors. on th oth r hand, re.fe to Lhf fa tor:
pertainin to the organi ation itself uch as increased time r performance
pr · m , l J of tr
p ri 'fl · d in th organi rio Id th ill tabil ily of th ·
managerial position itself.
di · tisfaction and dis,e ngagement,
Micromana emeiu i often a our e o emp
·ince mk:romanagement u,
o empl
th · a manager d
not tru t their
work. Di n ag d mploy
wm only in
n essary tim to am h ir
payment, bu the do not put fonh effort or any creativi, in the ork to whic hey
a a sign d. Mi r m nag m nl •· n I • ompl. lei liminat lh tru b tw n
employee and employ
pre ent op. ortunitie for learning and. the d elopment
fin rp rson ] kil . Furth rm
in. both
em
, mi. r mana ~m nt ma brin
ul re · ntm n
al (manag - ub
··uate) and horizontal (·ubordi1late~ ubonlioate)
r, la ion hjp • n • r a h m
ting t an1wor'. .a w Ua · ' ibil fu we t am ork
in both vertical and horlzrmtaJ rdationships. Mk:rom na ·emenl · something that
an b pr, . nt d and
tifled in an ,organisati .· n. F r .amp] , manager: bould
l ady artitula · rhat th y xpect from 1.h ir . ub rdinales and fo us on hiring
1
•
and pJadng co petent and kiUed employee . Furthermoie, employe should be
-making pow rs, hou1d b .e n ura · d to k question and make
i n . Managers hould al o provide uborclina es with ,con tructi e feedback.
8 .5.3, Ce,n tralised and decentratis ·. authority
Th major diff ren · b · w n · n ra i •d nd
deeientra1ised authori · ·
ho makes the
imp rt nt d
· i ati
Lh
case of centralised authority, impo.rtant decisions
in t rm f th u
f
rga ,i a i are
made by executive or top managers. On the other
band. de n rnl i d authority refers o ituati n
whereby important de i ions a~e mad by middle
46
In cen ra lis d .authori y
important decisions in ter ms of
h succes of th organ isation
are mad by ecuti or top
managers.
Chap · r 8: 0 ani in
authority or decentraJi ation has become
v ry p pular in outh fri,c an organi ation
a a method o mpowerin, empfo ee . By
dec,entraH ing pow r and authority,. a more
dcrnocniti organisation l r .at d in whi h
In d ~entraHs. d author"ty
im portan d · ion re mad
by middle and lower level.s of
manager at the lower level can decide on
uh
h all o ation ,of l'1 ou,
in their d ,partm n , di . r ntiated
i ,
I ri
for employee , flexible work hou.rs and so on. [n ce:ntra]i ed authority. imporrant
· rd
ntrali
, · i ns a m d by l p ma na rs. ln d idin wh dl r o ·1 t
authority. the following factors hould be ,considered:
i_
•
•
n I nvir nm. n : Th ·m
mp]
gr-eater the uncertainty the g,reater the tend
Th hi ory f h org· ni tion
have done in me past. Hence · ·
th or: ni · wb n il m
Th
h
r th
. e history of
•
The nature of the deci ion: The ri kier the decision and the hlgher ihe costs
invol ', · h m r pr ure th
ill
ntrali d i i n maid
•·
The , trategy of the: organisation: The •. rrategy nf the organisati .
d tennin th · p
f m rk · , clmolo i ! d v pm nt, d n
competition to whlch th organis lion i subj~ct. Alfred Cha 'dL r found
that I e organi ~ ti ,n th obtained new produ
Lhr ug
· tra egy of
r earch and de eloprnent , dv,oc red product div rsifi a I n and therefore
used de ent l1.i d ruclures. U anjsations that did
in mo11e
predktabl i . du lr
am increa in. ly · · n,
-d.
•
Th kills of l 1\fer=I vel manage.rs: Iflower
a po hi
· d d i ·ions,, d ruio
.
will ·
e
li ed. ff lower-le 1 manage
n
lrl m t ' r h I kill by d
The ize and growth rate of the or amsation: It i
•
ana ement · not ]n
in tb organ· . tion
are well qualifte~ top
ntraU in .
imp,o ible to manage a
rg · rg ni a i · ri . ilho t
n raU in
lar r n more ompl x
an orga:ni ation i · the grea·ter th:e need for decentralisation will be. In an
,rg n~ ation lh t i gr wi
pitlly. manag m nt wi I hav · b r th ·
burden of an increasing
rklioad. and therefore be obliged m shift ome of
th d i i. n m· king a t1: ority · 1 w r I v l . · d thu to d nt.ali .
1•
Prindpl · of G n ral Manag m n
D
•
'ing advant g ·
ntralts i n ha
By decentralising, the work.load or top management i reduced, enablin
lh m
v l more alt nlion t trat gi .
•
Decision ma.t.ing improves because decision are dn er to the ,core of action
and Um i n . wa l d b [m;t li rring th ma r t
high r · utho,rit .
•
There . hould be .i mprnved morale and initiati e at the lower :eve1s of
man m nt Th
manag
fi l hat h y p ni ipat it1
a ing th
organ~ ation a.nd are prepared or greater re pon ibiliti s . They shou1d
. p rlenc a gr al d a] of jo
· faci n.
•
Decentralisation o decision making renders it · ter and mor:e flexible.
whi h i imp · tiv in a r: pidJ h n ,in
virum · nt.
•
Decenmlised authority alS:o fosters a . mpetiti e climate .in the organi ation.
Manag
a moti ted to parti ipat in hi omp iti n b au th ir
performance i constant]y ompa.red itll that of their cotea ues.
D
ntral' ation h , the foHo · - di dvanrng
•
There '. the danger of lo
in · uh-units or d pa · m
making.
•
Th re
I
of c
~
for an ,organisation:
tr I. Too much decentralisation
of d
i1 result
i ion
upH a ting tai ks. For exaimpl • Ile
the dang·
au.Id b human
eep personnel records.
he decentrali ed u.b-unit tha
in
pt up
d , h ad ffi .
•
·on
m
d .
authority requi,·
n trainin and
pm
si e and more in ten ive
man g,
ul
1
. t ks.
D cen rali ·a ion I o d mand opb' i at ·d p1 ,nnin · nd rep - rti:ng m lhod .
Even if there is delegation. top, managers are and will a1way tie accountable
r u "ning Lh ·
t f h r, i ti n. and th y mu
n i ually r iv
feedbadt on the
h hift . ward d
n in org ni lion in
nd abroad do
not come ithou.t its challenges. Moire individual authority at middle and lower
man g m n L 1 r quire th r ugh m na m n · rain"n nd d v l pm · t.
Managers need to be a are of the impact that their decision could h,w on the
survi .1 of th or ani anon. A p requi it for su h knowl
in th urren
turbulent. busine s environment · contim.1:al management training and de elopment.
[nth n
, , tin. w will fi u on h variou · .ah mativ
structure of organi ations.
48
th r a
frr tl
Chap · r 8: Or ani in
8.6
ORGANISATION STRUCTURE ALTERNATIVES
Org:anl ti nal tru u
n , h ng
th y
stan-up pha e o a new busin
venhlre, it may have 31 unp
ructure . .A!!. the
or ni tion r w i1 ma ma ' e radu l b m to i . ru lure until it ·tarts to
exp rience cri e in term of who i responsible for wl a . Al o, coordination and
control prob]em . t rt to emerge deci ions may
to lo g and more mi take
may b mad -. At uch a poin . lh rowin or tJni ation 11 - d
trocturin - it
needs to move toward a new organisa ion ' de i n. ( . a mature organisation a
cha.n in ra gi di . cli n iU l'lea
h n ·d
chang i
ru u . · u h
proces will repeat itself everaJ nm du.ring the lifecyde o an organ.isation.
number of ba i trn nrraJ ly s n h adapt d by an orga:m ation i1 ord r
for it o ati fy i p,a rticwar e . Organi ati•onaJ tructure :in o]ve more than
jmply ha ing wh r b i
p rl l , · rvi . peopl and · th · o r
ft
in relation to each other. Organi ational tructures are dynamic and also involve
b h i ur pa t m . Tb a l wing ~ rm are di
d:
. , Entrepre.netu:ial stmcrur
•
•
•
•
•
un fona l lro ture
Divisi
l structure
Hulding · ,p a.ny tru tu
atrix . truC11lfe
Gl ba1 truclure
rur
•
· iru
•
.ew enture units
•
•
Virtual n tw rk tru llr
Horizontal tructu.re
ln · tudy· , th
. ganisational forms, you bould
. r th foiJ
ing in mind:
•
U is unlikely that you wil1 find 'pure' forms of each of the tructw
d. u · d b I v, a organi ion re m r, ]i I t u a h brid or
rombioa.tio · o tru 1u.ral typ
•
u h thfog a p ri
· ru tur r:rani ati n · hang in
pu · ui o tbeir · tr:negy or c .ntinuous improvement rructure will alway
b . in flux.
Prindpl
of 6 n ral Manag rn n
8.6.1 En , -pr n urial stru tu,
The entrepreneurial structure ~ typically built around the o ner-manager. This
orm i usuall utili . d .. y m· l organi · tio,n in the art-up ta · of th ir
devclopmen . Fi un: 8.2 illustrates the entrepreneurial structure.
,Owrier-manag r
Figure B.2
The entre reneurl
cture i ,entirely entrar ed and ther,e i no divi ion of
• 1 - • All
gi · · ion
m d by lh own r -m -na I r. nd
fer e etything igniftcanr ba
to the owner-ma:11ager. All power,
and uth rity Ii i h 1th wn r-m n g r th or ani U .
The advantage of ue.b a tructur d ring the tart-up stage of a new organisatio n
i · lh t it nabJ
h found r. hu und rstand. th bu in , to ·ontroi it arly
growth and developmenL Ho ever, there are also limitati.ons, uch a the owner
not h ving um i, nl kn w] dg in en ,i n rea . 1- r in t n , an l m y . arting
a new practice m:ay not have sufficient knowledge of the financial side afhl or her
p a ti . - h a tru ture wHI nly b pp,ropria up l
rt in tag nd iz
and ill then de elop into other more appropria e t:ru., tu.res.
8.6.2 Functional strudure
ln this tru tu
th activiti
l nging
ach fu cti. n 1 r a .r: gr, up d
together into a unit or de:pa:rt:menL One eit of acrivitl , for example, omprise
adv rosin ; mark · re arch and . aJes will b on to ch r under th mar etin
d p,a.rtmen . Anm.h r el of acti itie ~ .or x.ampl, debt rs and cr-cditors, i grouped
2 0
Chap · r 8: Ori ani in
und r Lh fin n ial . ·panm nt.
fun ·i nal tru tu
· oft n
d by o ani ati
with a single product . ocus. 1n mder to build ,competitive advantage (re pon ible
advan g fi r th re p n ibl
r aai alio ) in their pr du r o
rvk
such
organi atl.ons r ,q uire weU-defm d kill and a.reas o pe ~allsalioo. Di iding
ta ks into speciali t area enable personnel o focus on th ir air ,:1 of ex ertis
only.. Howe er, 1his tructur _ po
major _h H · n · in l rms o oordination o
the specialist function . Spedaliists may vie the organ· ation olel from their
own p rsp tiv . Th mark ti g mana er, for '.n t n , may
an oppo, :unity or
threat exdusivel from :a mar e ~ng perspective. hereas the financial manager
ma appro ch h am i u from a pur 1 fman i 1
p tiv . To v rcom
potentia1. conflict between the diJl"erent depanmen top management must ensure
rdina · n m-, h ni m r i pla ~ . igur ~ 8. , mus at
n ampl ~
tha prop r
of the functional truc:twe.
Mar ting
departme.nt
Adv,rtising
·in n
department
onal
·ng is cent:rnlised in a l'un.dfonal rnn:m.re. Advantages of this structure
ide with th top managem nt fthe organi ation. This tru tur
i al o s ociat d wilh la.Uv ly low ov rhead • ts. learly d · m d r -lati n · hips,
. n tt ati eiy imple line of authority nd ,control. Such a tructure can al o
Jff moL omp titi
ad nta
th.mu. h lb v _riou fun :i n • How v r, Lh r
are a
limi anons attached m th·
mctutt. The organisation ma experience
ion p bl m in
p · h 1
ated - not g n raJi · . ' p · Ji d
functions are unl:ik-ely to be, e entrepreneurial and ·the organ.i ation may al o
rdin ti n pr -01 m b
n lh v riou fun ti n .
Decision m
are th.a
Once an organi ation ha gone throu ·b the mtrepreneu.rial tage and thereafter the
un, tionaJ a , its ' o'i of futur orporat gro,wth
will h V a m uor
impact on further tructmal de, elopments.
Prindpl · o, G n ral Manag m n
8:.6.3 Divi ional :tru tur
An ocga:.ni ation that decides on a clivisiion.aJ structure an use pmduc,t group or
g, o. r phi region
m an of , i · ·i n U ing, or v n ombination of produ t
and geographic d.iivision Ii ation. Fi ure 8.4 illustrate th divi ional struchrre.
Top manage.men
l na1iun
dMslon
Prnc:lu
ivi ·an A
Pr du
W\/i i n
Figure 8.4 The divisional structure
The term M-for [mu.1 ·divisional · mm) i often used to d rib . an organi atio.n
comp · ed of a number o1 opera ing divi ions, wh ·re · ch di i ·ion repre ents a
s p ral bus·n
or o ' LL =ntre within a ho'ldin
p ny tructure. Th · t p
corporate officer delegate r ponsibi1ity for op tions and business strategy to
11 1 1 n
an· g . Th
divi ion , an b b r;l n , · gm.phi
a produ
or
erv· · . F ure 8.4 rnu trat:e a djvision.al tiucture as a combination o product
nd g ., aphi al divi ion . In thi
re, di vis10n . are lik ly to b
n a.
indi ·dua1 profi.t centr and srrate ic 1:Susiness units for planning and ciontrol
purp · . D i i n making is d
· · d. Thi ·, di i ional tru tu i appropriat
when an organ· ation grow ·o ize and complexity, opera
in :1 rurbulen:l
environment, offers a di e:r ran
f produc
nd/or rvi , and empl
a
variety of produ lion pm es es. Wi olworths Ho]dings Linut,ed (WHl.) i a good
xample of sudl a tru ture.
is e ident in Figure 8.5.
1
•
WHL ha lhree di isions namely Woolworths SA, David Jones and lhe Country
Road Group. Jts first di ision, W lwonbs outb Afri a
mpnsi
W lw rth
Fa hion, Beauty and Home; Woolworths ood and Woolworth · inancial S -rvices,
i ba ed in South Africa and opera- e aero another u countrie in uh -Saharan
Afri a. h
cond division i D ,vid Jon • b sed · nd Lrad ing in Au raJia and
Ne Zealand. The third div· ion is the Countiy Road Group, based in Australia
Chap · r 8: 0
ani in
nd tradin in A rali • w Z ] nd n
uUl ri . Th' divi i n mpri
Country Road, Trenery, Mlmco, \'Vit,chery and Politix. A divisional structure is
appr pri 1 , h 11 n o~ani ati n p norm busin
intem UonaJly, su b a
HL.
1
WHL
Country Road
Wodworths SA
Woo
Group
David J'Ones
Woo worthis FBH
Count
ol"l:h!. Food
oad
Tr n .
Mlmco
Witdi ry
Politi
Woolwortl!IS F n . ncl I S · I s
Figu
The main advan age of the
:raH ed.
a
of ario activities
·lr ng more
St1 h a structure
d.ivi ·ions in Uteir
· · ·
tio n to a
Iu
I
aJ structure is that profit ·
c·
fi
' b
IT,
w
a]s,o enables an o,rgan •
r an ntrep11 n urial clim t· •
ibility i
m.
y
ion to adapt to
om
with limj alion .. C nflic-t m develop between vartou
mp tlti n for lin1il d r ourc O , I orts and r our
ru
b
duplicated nd the aluation of the relative per£ nnance of the division ma
b diffl t. · rg . ni . ion · grow nd p nd l ir bu in
gl balJy. . ru . ml
changes ma again be necessary.
8.6.4 Holding ooirnpany structure
n , umpl, f a bo]din
mp y
1
is mustrat d in Figu
8. .
ln the holding ,compan . structure, the heaidquarte.F of the organi ation or th
orp t
ntr larg, 1 a
a an inv tm n , ompan . h op ration _ th
various individual companies (companies
H and C in Figure 8.6) are largely
ind p nd nL Thi ·tru lire i appr pri · for or a i Li ns pursuing a II t ru turing
strategy, buying. selling o,r taking over other organ· ations. n is nsuall effecti e in
f div
· ind, · n nl b in '
in
n t m rat .
th
There are financial ad antage attached to the holding compan nucture. It
u
involv
·
lo
nt J v h d
• nd th h I ing mp ny i
thu able to finance subsidiari at a favourable co t of capital. Other advantages
a
iat d ilh thi ru ture are lhai ri ks are sp d b l
n ,omp ni it How
for cross-sub idis:a ion b · lW en profitable and les profitable ompani · , and it
f cilitait . a ui ition di
m nt and dee ntrali ation.
Prindpl
o,
6 n ral Man g m n
op ma nagemen
L
1/Fln'
•
• mpany A
!f igure 8.6
m
B
Comp ny
The ho ding oompany structure
he mai.n limitation a sodate.d with this slrll ur is lh at lh~ are n • e.tUralis d
kill to upport the organj ati n. Furthermore there · no
po : ibl la k of org n: a fon l ul u11 and tral gic oll' ml.
nergy and also a
1
8.6.5 Matri x structur
A matrix orgarusatio1.1· ·
ctutt: i . a tructure with a · trong ,rm of horizontal
Un.tag i.n whi
lioth p duct nd fun tionaJ tru rur (hprizon · i and v rti al)
a re implemented imultaneousl . The matrix structure • om.b· nes the ad antages of
centrar ri n wilh h · of ,· o ruination. Th' tru u requ ires dual p rtin by
manage . On manager can, for in t.mce, ,eport . ~ nctional manager 1( uch as
fm n ) · nd p · t man g r. ' igure 8.7 i1 u
n ampl
ma rix tru t:ur .
!
·cording to Figure 8.7 the marketing sped al , repo,n s to both the marketing manager
th pr ~. t manag r: th Fm n
i Ji l report o b lh th fman ·hd ma nag r
and e project manager. It shows the permanent and dual. control of operating uni .
u ority and ·count bHi a
I ed. in enn o.f parti ·ul r d i ion .
This tructure is appropria in large, multiprodu.cr and multinational organisation
w'th · . ift n in , rr~Jau nships nd int r p nd 1 i ·. Th d n
· t d
with a matrix t:ructure a.lie fust and foremo t that deci · ions cau be decentralised
within a larg org ni ation wM h mi ht , th rwi b v
bur aucrati . Th
structure makes optimal use of scalce kill and re ources, and it enable ,r ontml ov r
growth and increa ·ing complexity normal] a ~ocja, d with growth. n also, offi
opportunlty for managers to de el p, and reach a cmain level o maturity.
2 4
Chap · r 8: 0119ani in
Functional
ma agcm
Proj ~t
M na ger
j cl
anager
!Fi9ure 8.7 The matri, strutture
~
ha
rtain limitation . It i
difficult to implem t and the dual reporting lines may create confusion among
mpl y,
- t ti I nn· t i
tw, n
.
m
'i h high V rh ad
co ts an decision making can b very lo . It is. nonethele , a power tructll.fe to
impl m 11 in r ani ation with m
n I p ofit · n · .
Lik all other
r
lb
malrix. tru :u
al
8.6.6
lobal tnJctufiBe o i.ng a global organisation i usuaJly a oc::iiated · ith nmUiple trate ies.
MuJtipl
n d to b
ked by a glob I tru ur th t will nabl th
global organisation o ustai
1d ma.ilntain its competiti e ad antage. . here are
nti ll n e po ible glob 1 tructure :
•
•
A globally centralised organisation, remote from its global markets, but
r I ing on exporting. Thi i Uk l to
· co -effective truchlre. but
po ibly too out of tau h for onternporary globa l entities.
anu actu.rmg p an · tha ar lo · t d. do
o the organisatio ' mark
tru tULre is known
in order to -atisfy l,ocal D ceds and pttferenc '• Thi
a an international and. multi-dome tic structure. and can be controlled
-ntraUy. Anoth r option ould b to fully d
ntrali it into fally
autonomous business uni . lhe co a'. ociated with this tructme will be
high r, bu t i
m
n
I th
gl bal ntit o ffi r hig h r l
1
f
rvi
.
Prindpl · of G n ral Manag m n
•
C ntrali a · n. of th manufa ·hiring f k! y ompon n.L Thi i p ibl in
a country of low wages, wjth the ma] a embl nearer to the ma.rke, .
•
Al:1 int
•
glob l n , ork through · trat gi · aJJi n · . This tru ur a n b v ry
effe,cti e, but. it c:an a1 o he difficult to control and may have costly overheads.
Th n w r: ructu · di ,· d in m re d tail i th foll ing ection.
.at d globaJ ructur with pr du tion J ati ru cho n n r un:
or co t grounds. In this case. finished products are transported to markets.
8.6.7
N two rk structure
The network truc11ne involves an interrelation :hip between different organisa tions.
n :1, rk rgani ati n usu 11 p rfi rm tl1
re tivili i
but b onira
some or many of its non-core: operation to oihe.r organisations. One of the big
h U n,
~ r
rl tw r r ·ani ati n i o ordina i
·lwnr partn rs'
acti itJe to ensure that they contribute to the netw rk a rga n.i ation' mi ion
and oa l . Figure 8.B ii:Justral ~ lh network rue :u.re
ik , In ., th Ameri an
multinational compa:ny
Hi.n Footw ar, appfl'J'e equipm n:l, ate ori • - a nd
ervice . The middle central hub repre ent th "ompan that only perform core
a li iti ·, and ub ontra · 11on- o:r1 op -r ·o,n I , a tl ign r, human r ·ou:rc
agency, manufacturer and marketer.
8.6.8 N v ntur - uni:ts
New ve.nn.u-e uni con ist of group of employees who volunteer to develop new
pr du t or v n ures fi .r th o,rgani . tion. Tb .
roup .
fonn of m rix
tmctur . When the project i omplek. it can be adopied into anry of the fo].lowing
o ani tiooal stru tur :
•
The new product or ventur become a part of traditional ru ture, uch as
lb:e fun tional or product tructure.
•
The produc are de eloped into .a totally n •w d partm nt.
•
Th • n w pTi ducts r w i Lo d.iv· ion .
8.6.9
The
Virtual network
ucture
irtual network. ttucture builds on the fi tu.res of the network
tructure.
[ · i no I ,n · r n
ary ~ lh o ani ·
II iiplo,
m ,,
departments and: subcontracto in one office or facility. Information technologies
n bl th or ;mi · tion to int . ra I ini mail mploy , · ams nd partm nt
with it ex:temaJ network or sub onr.ractor in mde.r to achieve p cific goal . In
th virtua] rgani ation , eopl
ho are pread out in re.mot
ation work a
th ugh the were in on J lace. here.for
e define a irt a networ structur ·
a a truchlf wh eb · an organi ion uh ontracts m. n or mo of it major
pro
parJ e • mp nj
nd ordfoa th ir acti ;i sfrom ah adguart r:
organisation.
)
The virtual or apisation i a
model that tits I.he rapidly , hanging
environment. I provid.
fle
effa:·,e nc b ause partn rship . and
r la 1 n hi
i h · th organ· . tions c· b · form d or d isband d a n ded.
The COVID- 19 pandemic fo rced man J1 1 · ni ation to adap their organisational
·tru r r .
virtu 1 tru r in pol ri · d Lim . of pby i ·al di n in · nd cl I
solidarity. For man it was a grea ch- Il ge as we all witnessed change management
n a g,lobally unp
d n d
' r th
th hall ng wa not. th
i and
m.an organi ations decided th l a virtual organisational LrUchlre would be the best
fit ing fi nvard. How v r, a di .dv nt g
i l d with h inu J rg ni . ti n
i rbat the lev,el - of reciprocal and quemial interdependen e a.re much higher
than tho e f the n two organ· ati 11. Tb t nd 10 b in tamaneou - lhal is,
any Lime and any place - for th t1 hr-.to.rked employee Learns. departm.en and
ub ontrac:tors. The boundari . ofth virtual urgani atio•n are also more open ban
in a n twork organi atlon b • aus
th
. of ad an
informa ion l chn log~
t hat eamless]y knit alJ partners together.
1
7
Prindpl
of 6 n ral Man g m n
8.6.10 Horizontal stru tt111°
A :recent approach to organisational types i the horizon aJ strucrure - a structure
th t i.rtualJ · limin t · both th v rti · I hi · rch and d pa m nl J boundari · by
organising teams of employees around co,re work. processe or projects. Organisatio,n s
m b promp · l m
h ri nt i tru u
qu
an intervention u , as re-engineering. Re-engineering, ,o r business proeess rengin rin • inv, Iv th · d iga of re busin . pro
with th aim ti a hi v
b tantial impr-o emen · man organisation' p rformance, pr du tivity and quality.
Tb busin
pmres refers o th et of inlerUn~ d tasks or activitie perform.Ni to
a hiev a sp ifi. •d out ome. l.t may involv th - red ign of v, nical organi ation
along its horizon ·at worldlow and proce e , or projec . Re-engineering a pires to
ang th way ha man g
think b ut how work. i don Rath r han focusing
on narro jobs rructtrred into distinct functional departmen • re-engin,eering
mph i
re pro · · th t cut h ri ntaU a
·. th
t
l in: . lv
teams of employees worlcmg to ether ,o erve custome.rs.
An ,- ample of horizontal "tru t:urei · d pi edin · ree.• I anorg 11· tionlha
has been re-engineered horizon ally in terms of wo pro
es namely new product
: rv lopm nt and sustain bl pro m m nt. · h I th
pr
h , ·t p
ownei-. Ea h proces will be conducted in various tep, . or example, new pmd.uct
I pm nt will fi Uow th tradiHon I rou
r ,rk! t arch produ l pl nnin
and d ign, product ~e ting and 'then the man "~1cturing of the product for dell ery
to th cu om r. Variou · team
ill b tnv Iv d in th · ari
processes arkH
res arch will be condu tee. by a team. p oduct planning will be done
· tliffe:n:nt
team. and
forth. Even all , all th efforts of all prnc
n
o
th · ov raU rrat ·gic di ·tim1 nf the mg ,ni alfon. Ti m are~ lf-dirtcted, meaning
that people on the team a
i n the kilis tools and moti a fon and authori to
m
1 ns
· 1tu h t am p ri rman . Ti ni m ·
are r -lra1ned to
perform one another's job , and the combined kill are uffi -i nt to complete a major
h
- 8
n w pr , uct d v lopm n
Chap · r 8: Or ani in
New produ t cf v lopm nt process
,Figure 8.9 Th horiiZontal s.tru
A horizontal tructure is a suitable trucrure for a project-ha ed organi ation.
ProJ t-ba ed organi . ation
fi r to v riou organi ati n I form th' ·
a
Lempora.ry sy terns for anying out I.heir wort. Organisations that need and. expect
f; 1 irmo anon ar mo · · likel
o b :uited lo b ing p tlect-ba d organisation .
Man organisations like those in constm.ction and aero pace organise thcir work by
dividing it i.nto arious projec ~. In a functional tructure departmen are created
la organ! \ ork ba ·d on ·· p da iU su h as ma I ing and fmane . How ver, in a
Prind pl
o G n ral Manag m n
pr d t-b
· rgani
in projects. In a project-based o.rganisational tructUJ1e, project 3.fie the main uni ,
in hich und rta ing are ondu ed. Typi all there will b a CEO t the top nd
managers of various departments reporting to lhe CEO. Reporting o th e manag
will be project teams onsisting •Of various members, sudt th anal ·t,. arch.it ct,
d v top r and so on. Proj _t-bascd organ.isations can b om1 d by d.i!Ti rent lyp o
organisation including function t matrix or projecli ed organisati n.
8.6.11 Hybrid structure
[n th ri a]
rlcl mo t or-ga11i.s lion l tru tu
do not • · t · 'n th pure omlS w
have outlined in the previous ecttons. Orga.nisatioos o t use a hfbrid tructur
that ornbin
ha t risti · f
ri u appr
d t ·. lh
·ft
trategic needs of the organisatio n. Mo t organisation
bine charac:1e
of
un · tional. divi i nal, g graph" al, h riz n I r
ur
r
th re1ative trengtb and weakne
of these trucrure and tbe pecif1c character
f their org · · a i n. On typ
h brid l n ~ , nd in p li i lo mbin th
cha.r:a teristics of the unc:tional and the divi · a l lructures. When an organ: tio 11
grow . 'arg,e and has .everal pr
· ·t and/or marke it typicaUy organj i
into
If- ontained divi ion • Fun tion · Lh a~ important to ach produ 1. r market
a.re decentralised to the ·eJf- ·o taln d unj . However. ome func · n that are
r lativ Jy tabl · nd q 'r, o t
onomi of aJ and in-d lr p~i U ation
are ceiil.tralised al headquarl: r.
The l t ,e ction oHhls
e.r o u
on lh integrati .n · ,t he pillar: o. 11 - pon ibl
management in the r anisational structure to becom a re pon ibLe organi at:ion.
,.J
L07·
8.7
E lain
in tegrafon o he pi11ars of r p sibl manag m n in 1· e
orga 1sational stru ure o become r on lble orgamsation
INTEGRATI NG THE PILLA S O.F RESPONSIBLE MANAGEMENT IN
THE ORGANISATION, · TRUCTURE TO BECOME A RESPONSIBLE
ORG1ANISATION
ln ch pt r 1, an v rvi w
or th
of mana, em nt w
provided, fl"om the scientific approach to management, through th bureau ratic,
t m and
ad.mini trative,. human r lations, operation ·, quality, information
outing nc appro ch
o man ,g men: ,. 1n haple.r 1 w a . _ indicat d bow th
traditional theories of management e olved into re pon ible management Many
or ni Lions ar
ill b d n th tradlU mu approach o m n . m nt, m
are in the transition phase to de- elop into re pon ible organisations,. \! rule .a few
n lruly
11 th m 1
n ibl
r 'prim · rg i ti n ·u h
un·1 v~r
tha t was discus ed in the opening case o this chaptec. The ,questions tha we
· n n w a ·k ar 'H w d
n org ni ti •n mov toward fuU int grnlion
ustainable development. re pon ible management .and ethical practic throughout
2 0
tr ditionaJ ih ori
Chap · r 8: 0
ru tu
anisin
rg ni U nT nd ·wh l · th g l of full im grati n?' · u
er the e ond question betore we embark on answerin the fi:r t question. The
goa] , ulJ int gration f th three pi11 , of r p n i I mana ment is hre -fi ]d.
Fir t.. th tmcture of a re ponsible or anisailion houid lead o a. po iti e uipl
bott m line that protec create and ustains ocial. en ironmenta] and economi~
bu ine . value. · ond th . tructure of a re pon ibl - or an · ation hou]d ead
to the maximi ation of take.holder alue. Third, the tructure of a responsible
organi · tion hould l· ad o thi · l d i ion aJdng Uu, ughout th . ru tur nd
moral excellence.
th
an
f th
Laa·cl1 and ' onaway' ompa the tru tur of a.n organisation t th bod of a
human being in te:rm of responsiMe management. To fl.mction
e bu:man being
n . ds bon to hold th tru ture, mu I to mov • organ to '·u al ba i fun f on
and to stay alive and a brain to mink feel and do the righ·· · ing. ff one f the body
part · · · mi ing, j. i fatal t th hum n b in • Th 'b 11 · ' <r th o,r • ni i n I
structure in the re.span ible organi arion are the
uc:h . an eihi
: partm nl or a us i bili d , artm nl. Th m ,
th re po•n ibl
organisation are lhe job po itions of indi ·dual suclt as a ice president for
r pon ibl bu ine • or a 'green oll n . r orce' "' un ibl bu iine pI1 g mm 1
or example dl ersity or CO 2 policy. Th 'organ of a r ponsibl organ · ation
that provide vital function· foe re onsible
iness conduct are reports, an ethic
hotline and cod
of , ondu L
1
h
"br: ins'
f a respon ibl
org nisation that
decide wh:a to do are the board ,o f directors, stakeholders and. in 9eneral. the
organi ational u1 ur .
tum t
ue ion po d in the intmdu , para r: ph o·
thi
tion nam I "H · do ·· an rgani ation mo
to v f\ds
int ration o·
sus ainab]e devcl pm nt re pon ible management and e · i al practice throughout
ih tru. ture f 'th r ani tion?' om, ,rg.ani ati n ad . pl d ma i, a I diffi rent
structures o their path to integrate triple- bottom-line perfoID1ance. stakeholder
p
and dli al • · i i n m kin
nd
avi u.r. th
in r m ntally
d
true ures in a sma.Uersiep•- hy- tep, manner.. Both methods are e ective
appli d
.rdi
lo th t
gy formulal d and imp] m nt d · y
t . , organisation. Many organis Lion al o develop into responsible organ· ation
thr ugh artn, r hip with variou lakebold . a w ha e een in the penin ca e
We an no
th
fusl
o this ch.apt r. UniJev•.rem·ra
ilh loba.l partnership
o er at, t.ra.n.sfonnanonaJ
change. Reg.ardle of the m ihod throu h which the or anj ation choo, · to
r truclur• i · It· oward Ji spon ibl ma nag m · n the following qu tion n d
to be addressed to create an organisational tmctm:t: that dfecti ely contributes to
th
•
r ani ti n' resp n "bl bu in
goal :•
Creation. ShouJd there be a pedfic department or ection sp ciflcaUy
· pon ibl · and
ounl bl fo resp n ibl bu in
i u, ? h uld n w
positions be tablished, fo using peciftcall on responsible busine s
· u , such
vi p id n • f sp n ibl bu · , ? Wh l n w p [:. i •
Prindpl · of 6 n ral Manag m n
progr mm · . and pr, .·~
. , r quir d
r • tru tu
rg ni ti nal
activities towards becomiu,g a iieSponsible organisation?
•
· mp
rm n . If n
d pa · ment and/or po ·ici · n re tabli h d 17or
fl ponsible busine
i su , what ff:SOurc do they need to ruJfil their
re pon .ibiliti ? Wha authoriH
nd re p n ibiliti ar aU.ribut d to lh
departments and job positi.on ? hat mechanism for train.in , improvem ni
and guidance w·n he imp,]eme:nted?
•
Integration. How \ ill re ponsible management b integrate · . to eds ing
·ob d cripti ns,. main tT m d p,artmen E tructure and ·n ftuti nal
docu.menl 11 h a lh vision, missiot1 and or anisation: J . n ophy?
•
Alignm nt. How will w achkve harmon ben e .
· ing or ani ationaJ
t.ructure ( ·uch as the tru ur · rnat we ha e iden 1
.1.nd xplain d
in · ection 8.6 o th" chapter] and new re po i e husin
activ"ti ?
H w do w align n w stru tural i m n
I h h organi tionat v:H n,
mis ion and pbUo ophy? How do we ar n ne
tructura] dements with the
rg ni ational. · ulru ?
•
Naming. Whac do we call the 11ew th"
that we do? ls it sustainabilit
resp n ibili
r thi or a11 · hree f th ? hould
nsid T u in -
pecifi programme or depairt:menral names uch as workfor e divas:ily, CO 2
du · tion, r
•
•
mmu H
lib · r?
Displacement. How
ill we manage situation here exisful processes,
job r v n
· ir
partm nts n
t b di ·pfa d b
ith
newly create;({
ures? How will wed ide hether o iampletely era e
nt
th
re inher nd tm us · a.bl. , irresp n ibl
truc:tura] 1
or unethical?
Commun· · ·t ion. What m chani ms ar, av · ii bl tha · w can u to
ommllllica e fecti ely · ith intema[ and xtemal taleholde.rs to ensure
t they a11e in onned ltan arently a d re engaged in haping the
Dr ;rni;sa,tion info a
pon ible bu fo
?
THE .BIG PICTURE
ln thi hapt r th
nd n , m fun ·on f m na m nt w· . di us , n m ly
organising. Organ· ing i an indispen able fun tion o mana ement. invol ing
th ,creati n of a fram ork or ,rgani ation:al tru hlli o indi at how p pl
and Dther reso uT1CeS should b deployed to a hie e rgani lion J g als. For lhe
re p ill ible org ni ti n. u h an organisational tructure will l ad o a po itive
tri.p l bottom tin , th rnaximi a io n or ta hoM , alu nd moral
· Uenc Th next chap er focu
on leade · hip, the third function of management
Ch p · r 8: Organi in
SUMMARY OF LEARNI G OUTCOMES
LOl:
Differentiate henveen the term - 'organi ing' •organisation' and
'or~i tional tru. ·ru
The term 'orgami ing' refe:rs · o the pro
of creating a 'truc:mre or the organi ation
that m nabl i employe _ to wo,r _fli iv l to a.rds i visiun mi sion,
goals and objectives. The end-re ult of the organisation proce is referred to as
th · rg n.i tion: TI1 b 'i from wor th t iU tn t · th ormal rel tionship
between i, pon ibiliti • ask • and people in the organ· ation is refi rred to a · the
•org ni ational lru t
L0 2:
.r; :
Explain the importance of organising
Reasons why or-ganising is indispen able for Lb attait11tten of goab and obje tiv~
in an organis tion indude the following:
•
Organising leads to an organisational Lmctur that indka es dearly who i
ponsible for which tasks.
•
•
EmpJo
illl be ,e xp cl d t a cour1
. the outcome • positive or n
ive,
for tha portion of the wor directl · und r th ir control.
Organising ensure that ommu.n· · tion is eff:esctive and that all in ormation
requir d by manage ,n mpl ee a all ]e el of lhe org
·on
dfi cO ly r a h - them.
•
Organisin 1' helps
•
Organising uh 1 ces he prin iple of synergy. e
ork rformed.
•
Workload i divided into activili
mu ofindi idua .
•
re ource meaningfuJJ .
to b p rfo
ti
n , and quality of the
an individual or a
, tasks. procedure and reso -·es can be grouped systemati ally.
•
•
,epl
R
ta . and activiti, . f mpl
r group d lo lh m ningfully
· p rialised · ections, departmen or busines uni o, that experts in
Lous &el I can deal with th ir . ec.iali ed t k .
Organisational structure ~ - ponsible or ,c reating a mt!chan.i m lo
coordinate the activities · . he entire organi ation.
LO3:
Explain the tep in d igning an organisational tructure
Th
Step 1: Outline the ta ks and activities.
·t p : - ~ · n j b nd a i n th m
mpl y ,
Step J: De me relation mp between individual workers and work group,s.
,t p 4: D . · lo1 , an rganj ati n· l d ign.
tep 5: lmpl me:ot a comml mecha.n.ism to e.n me that th · • ho en oirganisational
tru tur e:nabl . the organisation to ,ttain i mis ·on and goaJ ..
of G n ral Manag m n
Prindpl
L04:
lain th p in ·pl
-
The followiino" principles play an important ro le in de igrung an organisational
tructur ;
•
Uni · of command
•
Uni
•
Chain of ommand
•
_parn o con rol
•
Divi ion of or:
•
Standardi a tion
•
- ordin lion
•
Responsib ility
•
•
o directi n
uth riL
ccountabilicy
•
P w r
•
De1egati,on
•
Down i:dng
•
Delayering
.,
RexibilU:y
LO ,:
for
Authority is the righ to ma
ded ions is ue orders a
Uo Ning
imp an, rinc1pl · p rtalning o aulhorit :
• DeJegation of uthon y
1
•
ormal autbodty
lnfi nnal au orit
•
•
f authority
•
•
Lin uthority
a authority
•
i r, m nag m nt
•
Centrali ed authority
•
D
LOG,:
ntrali d uth rity
· lain th vari us r ani
The following . OfilllS a.re discu ed :
•
•
Functional · rruc'tnre
•
Divi ·ional tnt ·ure
' 4
· ,n tru t:ure al m ti
e r ourc • The
Ch p · r 8: Organi in
•
Hol in
•
Matrix structure
•
Gl bal
•
, etwork. tructu.re
•
w n ure units
•
•
•
ru u
mpany
ru lu
VirtuaJ network structure
Horiziantal structu.re
H brid tructure
LO'J:
Explain the integration of the pillru-: of re pon ible management in the
org n.i • ti. na1 . tru ·tu:
o b om
r p n ·ibl r an.i ati n
To integrate the pillars of responsible management in the or:i:arusat onal tructure,
n o,rg . i Uon an i h rad p·, dram , i ally dHli re t
·tu
r · r m ntally
devdop ne tructure in a smaller s1tep-by- t p fa hion. Re ardJess ohhe method
u ·ed, rs n· tions n ed t , · on id r numb r
l f n h n
ru turin
th .mselve towards responsible management, namely creation, empowerment,
integrati n a1ignment nanting, di pl , em
an
mmurucation.
REVI W OUESIIONS
l.
Differentiate between the term ·organising', 'organisation'. and
' rgan•, i nal , tru rur :
2.
Organi ing i one of the fundamcm1:-al functions of management.
a ns fi r l
imp
· r, f.
J.
Explain the tep ·
4.
plain th pri n 'pJ . - of organi in that hould ·
designing an orgam atiomd tructure.
5.
,n ibiliLy', , 'hority' and '
untabmty:
Ex I ·o a hority b referring to formal nd informal authority, line and
and n rali · •d and d
ral" - I ·· uthori. y.
Ex lain the rious possible org ni tional tructur .
· plain ho the pLlars o l"e p n ibl manag m nt
b int gral d in an
organ· ational tructure to b :ome a r pon ible organi ation.
fi.
7.
8.
Difl";
n
I
1
i b w
plain the
ing an organ· ational tmcrore.
b terms · ·
id
rl wh n
~
J
LEARN ING ACTIVffl ES
Organisations and organisational tructures have changed · ignificantly o er the
pa l en ya .
l.
Discu the major chang in organisational tructures that you anticipa'te
ill o cur in th n
· n aIS.
Prindpl
2.
B
o,
G n ral Man g m n
d on y u.r n w
q ti n 1, to h
, t
ha.n
in
organisational tructure affect the manager' job? What additional skiU will
b required of manag r of th furur - b ucc fuJ?
REFER · INCiE.S
1
2
Unilever Sustainable Li ing. A ailable online: hf!ps:/1
.unilever.ao.za/
ustainabl -Ii ing/ IA · · d 22 J nuary 20 0)1
'niJever's Global Partnership . A ailable online: h ps:/lwww.unilever.eo.za/
u tain bl -Ii int/gJ b 1-partn rship {w r ·n - -pilnn r hip ·-to-impr v the-live -of-miUion /index.htmJ £Accessed 22 January 2020)
1
,nil v r'
ob I P nn hi ·. Avail b
lin : h . p ://w w.u H v r. o.za/
ustainable-H ing/globa1-partne hip /working-in-'partnerships-to-impro elb -Hv - J-miJU n /ind .h m] l[A · ed 2 J nuary 2020]1
6
Unile er's Business Integri . vailable online: http ://www.u.m1ever.c m/abou /
wtio-w -a I ur-va
- n -pri ipl /busin -i n gri I [Ace
d 22 January
2020]
:nil · r - or na ru ( OVJD -19) R p n . u. -. -ha, >r ,f - mm r
Foundation. Av. ilabl onlin.e: https://wwv .u c:hamb r oundation.org/aidat/ mpora -ai -tra · r- o id-1 ·~ -bu in
· li I nil
r- rnn iru covid-19-resp
l es d 3 May 20:-m]
Thomp· n JU. zoo . Organ/ ·a firm in actitm. -
7
taa
8
Laa d1. 0 Conawa , R.N. 20 l6. Pr:i1tcipk of responsible nimiagemeu.t: Global
u 11 hwbW.f) , r pou ibilir and 1hic . tamfi rd:
L arning. 228.
4
1
1
•m. 0 Et Conawa
~
RN. 2016. Pri,u~·ipl~s lJf r. p(m ible ma-nagn11f"llt : Global
· t 1·m1bilitv re po, ibilir. , nd tlJic • am ord.:
ng g 1 aming. 222.
PART V
LEADING: A ESPONSIBLE APPROACH
CHAPTER 9
LEADING
u.tlwr: Ii r ·ia Botha
-
-
OPENING CASE
Steinhoff lnte maUcmaJl·
A
Steinhoff a founded in 1964 by Bruno t mboff, a W
Ge 1an, wh aw an
opportunity to procu fowt furn.i tur from Ea t G,
•n
nd · ll it to hl
more ea]th countrymen in Wet German . I wa a gam of a: i rage that helped
hap a
r bu fo · rra gy hat th ompany i, , rm-Bly prn~u d, nablin it
to become one of the biggest i:,etailers tn the world {ar i rage is the simultaneous
purch
a, d al
fan
-t profi fro
n ':mb .:in . 1 h pri
n 1
n
markets). Bruno Steinhofrs bu iness ., as doing well and be decided o diversify
int rum· :ure rodu tion, in lin with hi
row
pand an own th
suppl, chain.
1
By 1980
inh ff a doing bu.sin
i
- mt ny,
u lri
ngl
• Lh
Netherlands. Belgium and Switz rlancl During ilie global rece ion of the 1980s,
th
mpan t n. d imp rti' . furniture from hina
,ai in Un
·t Brun
Steinhoff' prefere.n e tn source low- ·ost furniture.
u m tn
I 8 pres nt d th
mpany with Lh
ion in Europe. Europe became a contin nt without borders
r
nd rvi
b am
. i I a ·r · . b rd rs nd
rmany. The new German go- emmem offered incentives for
in t n th fi rm r Ea l G rman .
r • m nufa tu ring fmcili ·
were mo tly outdated and faC'ed cloure. Gi ~n i knowledge o and ex.perien ·
in Ea t G rman • St inhoff as in a v, · fa, urable po 'tion and the comp,any
ho
a L ·rman suppli rs - e en pbol ery a tori · and on b dcling
ac, my- at very attracti e prices. The re ul wa that Steinhoff becam one of the
la
pr du
of uphol red fu i \Ir d ·n d for th G nnan mark! t, hi h
hri.ngs us to the South African marke.
op , ·
.n
· exp
Witll the collaip , of aparth •
nd h
lifting o
anction against
oUih Africa
in the 1990 man intemati nal companies aw an opportunit to in est in the
ou1 try. In 1
, la .. D utl, thr u 1 h Daun t . j bought ~ on r ·. Un . jn fl •
in the ailing JSE-Hsted Victoria Lewis furniture-manufacturing compan . In
I 95, · h ·am ornpany inv
d in an ,th r hvo Furnitu
mp ni • nam ly
Gommagomma Holding and .Bakker a Steyger. It wa then that the paths of Bruno
ld ro : .Bruno
inh ff and ·-laa O un bad
, inh, ff and M r u J t
been acquaiotanc in Germany, and Joo te as the chief oecutive om er of Dau.n
Ki . In 1 7, Bruno S inhoff , quired a 5 r , nl h ,r In Gomm , mma
fr.om Daun
a IGe.
Prim::ipl -
o,
G n ral Manag m n
Dulin :r 19
M
us J
t ll at d th id
f m rg[
of Daun 8: IUe with Steinhoff Eu.rope, and by 1998 Steinhoff Europe and Steinhoff
Afrl a (form rl Uommagomm J had co olidal d th ir operati n . , inh f
International list don the J in 1998.
w months after the listing, the company
acqu.if d th
rug ling Pat Cornick 'Comp an • making Steinhoff In 'emational on
of the la est fumitur numu ctur rs on th J _E. or Lh next nv - yea __ th
company developed int-0 a vertically inte rated furniture and hou ehold ood
ompany.
Ma u Joo, t
led the com any th.rough an
t ordin
obal a quisition
strat -gy and t.-i:m:hof lnlemat:ionaJ a a . , ,.._._,~,._,.,,iul, gl at retaiJ hnsi.n . h1
its 50-plu -year history, it wa able
make the trans:iti
frnm a relatively mall
umirur ompan • whi b ourc _ Jow- o funut re rom _ t m Europ and
old it into West Germany, to a truly gl obal retail giant. This \Vas the result of
ad
n i
d · i n
pamJ, iv 1f nd rti Uy • t g , ( .h
business - a vision e by Bruno Steinhff in 1964. S einhoff operated in variou
bu in
t
ra · , ; fumi ur ; n m r l boni ; ·tc n.
b om
and quick- ix~ entiais; ki dJen and appliances; clothing and footwear· eds and
ma :tre - . Its b nd b ~ m
ly obal m the ·• Eu.rope, ·u ,r 1a nd ew
Zealand. Its headquarter..
re in outh Africa and it was regl n:cHn Am t rdam,
with the majori'
f tb c m any' operations ituated in EuJi p .
1
1
,
Al i peak and afi er m mg .many acquisition and tak o rs, ~einhotf wa part
of th J J p 40 . ex, the JSE Top 25 lndu tri 1 · d. and h J E Socially
R po, ibl In - tmen ( RJ) index. In 2015 th · omi<any add d to i fmandal
credential . b ·ernri,n g a listing on the Fran furt Stock E change (FSE). 1n 2016,
th - ~ mpan r aJi , d an t profit or I. ,lQ million. On 2] , ay 2017 i 'hare pri
on the J.,SE a. valued at R50.25.
On
ev ning of 5 December O 7,. the mpi~ c:ame tumbling down h n
Steinhofr CEO, arku Joo
., 11. oun ed that he would step do n from hi
p ition ilh imm dia , f1i - , h ,teinhofT boanl announ ed Lha th - omp ny
had become aware of accounting irreguJari ie requiring further in estigation
and ~ub qu nO- ppoint d , ri wat rhous oop _ to ndu - an ind p nd n't
investigation into the alleged irregularities that had original!l: been identified
by D 1· i • .h
in , uJ ri ,·
la d l , off- · alan
h t i m and po ibl
m.i representations of earn.in
although the extent a.nd details of exactly what
w· m am b 'irre uJariti · had t to h d miin d. 0 r th previou fi w
suspicion had b en aroused b the d.i2zyin pace of Steinhoff a quisition drive.
What co cerned man
b ervers w re the high 1 el ,o f compl i
o ia d
with these a qui ition and the abiU of th company to 31 quire ailing busin se
and 1(nearl in tantan ously) bow impmvedl re ults on e these bu ine s had
b - n incorporat d in Lo tl1 group. Mor ·on emfog, L inhoff acquired bu _in _-s
with no product disparity and they appeared to make no effort to integrate these
bu in · · i to th ir port lio.
70
Ch pt r 9:
adin
urrenLly lh · mp n fa . . in Ugations r l g I a i n in ·tu d b num fi u
bodies and authorities, including the Johanne burg Stock Exchange (JSE} the
Finan ial rvi
Board (FSB). Lh D partm ni f Trad and lndu t, [DTI]. nd
Lhe omparues and lnteUec:tual Property omm· ion (OP )i. The ompao i
also facing h\fo d.ifferen da -acti n law u.irs in German a the Netherlands.
urth m10
ex - uUv of the company .ha • b - n br:ou t. b Of\ Parliament'
overs1ght committee on finanae and its Standin Commi ee on PubHc Accoun
,(
pa .
enuan authoriti . a
al o on inuin · th ir ,
ti ado . into
n1rren and former managers of the group for accountl:n fraud..
v,
f;
ur
or
The r p rcus ions
th - D eemb r 2m1 anno
em 1 , in l.ucling th l.a unch o
various probes into Stieinhoff' fi.nancfal affairs. have been c:ata: trophic for the
ompany. A , ordin - Lo 01 di_ r -port • in th day 1 al fol , ow d th dropping o . th initia! bomb hell. the company' share pri e fell b 85 per cent and by 11 May 20l 8
ii w Rl. Op r hare. A h 'm fwri i . • n n w v 1 pm n - ir1
ing
the instituting of substanlia1 fm ncial claims against the company - were being
r pon d. b th r - · inh,off · l u ive in i urre or
lt r d Fi rm - r t
a ll - remains to be een.
CHAPTER ORIENTATION~
Ln hapter 1 yoa er .nt du ed to lh e olution ~ manag "ment theory, whic_h
made it le r tba. over man ce.nrurie , re earch
and practltione have
b n int • d in ·h b
w y to mW'la
a bus· s. 'You -f!li introdu d to
the sd rttiftc, urea ucta ic and administrati e approach to management that
d
p
t
Lh frrs [ndustrial R volu i t, hi. h all fo us d n improv ~d
roducti ity, being more analytical
moJe specialised. Workers were expected
t , mp y with rul · . d r, ul ti n.1 mmun· ·ati n rv d onl t i ord
o
ubordinates and to recei e :reporu r m them. The manager took. the role o , a boss
- n 1 I., d r. Thi p ma h t
na m nt hari av ry h" ,h , ,ri - o ani ation
aced. high ab eme i m. and hi h taff turnover ra.1 . During £hi time {around
th 20th century), p,eo,ple ecame ph i all il1 a d uIT:ae . from d pre · fon nd
exhansti n which indi,c aled that signif1 ant chan e was needed in the orkpJa e
a.nd in · oci . A number of prominent thinkers i(for example Mary Parker Follett
and I on M -yo) ontrlbu d t Lhe hunmn relations mo em nt,. hJ h hi L d Ui
focus to individual working in group and the role uf mups in the productivity
ana
l v I in bu in
·. Th hum n r lati n m v m n r pla d bu in ·· ultur
cba:racteri ed by fear, authority and di cipline with one that recog.ni ed the
imp rtan of t
p t, ppr iation, inn vati, n nd r ativity.~ Th · human
relations approach to management laid the fom1dation for leadership and the
r gniiion f th ruci I r I tha I ad
pl y in th succ
r busin
and
ode:ty, whidl i the topi of discus ion in thi chapter~
Prindpl
of G n ral Manag rn n
W wll mm
of l ad hip · h a di tin ti n tw n tJ
concepts of 'leaders' and 'leadership: Second, we \ ill ako difTerentiate bet een
o l.ead i
th one p of •1 ad hip' and ' man r:r ment'. Since lead r' bili
d pendent on his or her relation hip with other people in. a partic:u.lar · etting,
pl .in the importance of an aJi nment betw en teader hip power and
we a.lso
innu nc . Th n,
xplain th
arly appro • h
to u.nde andln. l · d · rsb.ip,
focu ing on the trait, behavioural, ta kjrelationship, contingen situational and
tr n ctional · ppro.a h o l,ead r · ip. hi i foU w by mor
nl mporary
3pproache namely the nan fonnational and charismati approache to leadership.
L ' I • w fi , n r p n.sibl l ad hip.
LEARNING OUTCOMES
Aft r studyin thi
h pter, you hould b
L05:
L06:
Differe.nf ate between the terms leader' and 'leadership'
□in r-ntfate b t .. en 11
rm!>· , a· sh·p· and 'manag m n •
Ex pl~i n the al ig nme_nt be een leadership, powe and influence
pain ·h rly proa h to un rs anding I ad rs 1p
Expla[ n tra form ionarl eadership
plain cha i ma ·
d rsh ip
L07:
Exp ai n res
LOl :
L02:
L03~
L04 :
eadership and the three com
t
LO .
9.1
d 'I ad r hip
LEADERS AND LEADE,RSHtP
t pi tha ha f .
r arch
r tim . A qui k
h
on the internet will provid y 11 with numemu different defm.itions of th term
·teader' and 'lead rship: From n earl
• , e are al onfronle<il with leade even as young children in chool w have lbe experien of lining up for da or
hi
j~
on the pla · ground,. and o recognise ·th.e leader' a · the one in Fron :. Our concept
and und I tand1n . of'] -ad t hip' tl
I p, alo n
ith our own d. velopm nt and
experience of the world.. We begin b foUowing the gu.idancie and trictures of
our p r nt - w t k th I ad rmm th m in man importan a p i , r o r Bv ·.
As e move out into the wodd, we become ubject to the attempts of others,
r amp] polili ian ,
ial and re1i j , I ad rs', and p , - o :um u into
folio ers, or perllap we become leaders ou:rselv • The media also bombard u
with imag,
fl d
- fr, m th, sp ch
f p Jitkian l th
livi ie (g od
and bad) or bu iness ]eaders. ociaJ media bring Lh e leade even cto er and
mak
hem mor, visibl to u n a daily bas" . Th w rd ·teade hip' n w b ·ins
lo ha a p cfal m -anfog to a h on o. . us, based on our own exp rience of it,
7
Chapt r 9:
r ul ing in num rou
mpt
d
adin
db d
1
- surrounding u . Therefore, it i hardly · urprising that considerable efrort ha· been
vol d v r · h
n uri
o trying o nd tand wha l ade hip r aH i , h w i
works, and how we ,can do it better. This j . particularly so at a time when much i
expec ed o leaders and le:ade hip, and the drnJ]enge o bcin an effi tlv l -ader
hav n v r be n reat -r.
In ur glo al conomy, busi
arr mo11 compl, · ban v r b re, and must b
highly ompetitive ii the · are to survive. Tech.nologic:a1 ad · n · bring benefit ,
but aJ o the omple iU - o leading irtual teams and dea · with co tant ha.nge.
a ·1 d in doin bu in
l atlt'!J; must be nsiH lo th cu.ltural dif rences
arottnd the world and deal with the eth.ical dil ma of u tainability. South
Afri an bu in · I ade mu l I ad hrou. 11 poli ·al h 11 · and in tabi ity1 ar ·
re ourc:es '(for example carce skilled hl!llman resource , ca.ree finances and c:arc:e
n tu 1 r
). dun an i and
tru ·tun · , h al
;,md afi y i • u ,
govemanc:, ·
ba]ancing · ound busin
der: · ions with · ues of ethic and
huma it
nd rim in ,
o , t a 1d I w bu ·in
onfld n • t
mention ,only a fe . challenge . llii challenging environment, even experi need
p ri
and con t ntl enga · e with
ir wn
e cu iv mu t reflec on
lea ming a.nd de elopment i · 1 are keep pace ith what i dcrnan ed of them.
Effective leadership ha ernme a vital ,c omponent for u essfol bu.sin se .
But · hat is a leader? As a an.mg point for our
d i cus ion ofle·
hi . e will def n a eade:r
imply a
m on th t kad , which impU
tha a le
(4. I ad r needs allow s, a
le der sets the dir ction and
pac ormov -m ntofhi orh r
•
ha one or more follow rs
•
djre tion and p
of hi or her follow rs
•
snot n ed to be n individual. ut it , a □ be a group, a proj, t team. a
, usiness or e en a ountry..
Q
f mo , m~ t
, larify h
rn I ad ·hi p': F r
now, we will define leadersl ·p a a proce m
whlch an individual i □ flu aces an individual or
a gl'ioup of iodi idual to achie e a common or
shared · oal.
followers and a leader does ot
n d o, b an in dividual.
L ad rstiip is a proc
~ in
which
an individu I in lu nc
a
group of individuals to ach ·eve
a mm n or har d ,go I.
7
Prindpl · · o, 6 n ral Manag m n
tw n n t m 'I aders p' and 'man,ag m n '
L02: Dif
9.2
LEADERSHIP VERSUS MANAGEMENT
f manartem n'l th ,ry, Li
scientific approach to management focused on management' control of unwilling
work • with the mphasi FmnJy on effi, ien1 pr ductioD and ta k rompJ lion.
The:re: was no att ntion given to the motivation or work . In ad, the empha i
wa on productivit and how to be · complete a 1 k.
e1°e een as just
another re.sour - in Lhe produ lion pro, ·. Henry ant d - op d Lhe
nt
chan: 'that isuaJI indicates hich tasks must be mpleted at which tim in
If
tra
b
th · hi
of th
d v I pm nl
·. Jar • on·nbu ions w ·• · n t U , v
luabl in
production management. Gantt also believed th t organ.j tion have an obligatio n
t th w lfar o Lh
i ty in whi h th
p ra
h ~ runn of
ay'
corporate govemance, corporate ocial responsibility, corporate citizenship and
r, p n ibl m n g m nt. Ho,
, r Ci nt pf v· d n ontribu.tion in , rms of
leadership and the value of labour in or.
ation . Henri ayol ident:i 1 d f1Ve
ord r t
ompl
a p~
~
man gerial fun tion and he al
r p ed I ' prin iple of manageme t, ·u ith
no "ndi ation o· lead rship and lhe importanc of the workfo,rce a an
ni ational
re ource.
The fust sense of a diffe nee be e,en. le-adershlp and management was een in Max
W b r' bureaucrati · a , p
mana ment. Web r m cL a d ar distin tio n
b iwe n th.l'i lyp
I uthoricy, · hlch he referred tu · kgitimat:e authority,
traditional autholiry and cha ti ·matic: authori y:
•·
•
•
Leg,itimate aui:hotU:y a cording to W b r, refe15
the ability to influence
otbe b sed on official aurhori and po iti 1 _ A manager wilJ ha e
I
a a lhority b d on hi or h r o
ial po itioo in th · organi ation.
- authori refers
·. ·
meone ho depend on
d tr.;id.ition or 011
. r may ha . lrrldi ional
if he or he is a ·.
· d the prevaiHng order :in
iv him r h -r th
.._H ...,.......
.
ofl ad Jup
everyday routine and condu .
hari m ti au bori · ·
o h abili y of
exceptional per onal qualitie or accomplis · · ·. ·
b di
rom th ir
rs.
on
which insp,ire loy
. nd
From Weber · defmition of chari matic autho,rit • we can ee that the leader is
·o
n m
han and u:i; ren from. L
man
r. Although many r
arch rs
ha e contributed to the leadership veISUS management debate, Kotter i een a one
o th prom in n
· arch
in mi r g rd. In hi Han ar:d Bu 'in
R, 1 i ti a i [ ,6
he point out that leadership is different from management and that leadership
and man g m nl r t o di tin tiv · d mplem nta
t ms f t~on. E ch
ha it own unction and cb:m1cteristic acti ities. Both a1.1e nee ·. ary for succ
274
in
Chapt r 9:
adin
bu in ·
mp]
environment.
Lead rs cop wi h chm,ge and
n
rdi n· to ,ott r.
m:u,ag rs rop ith • · mplexity.
management is about coping with e,omp]e . ·ty.
lt p ·ti .
a ,d pro ur · r lar 1 a
re poo e t,o one of the most sig,nif1cant de elopments of the 20lh cenm:ry: the
em rgenc
f 1 rg bu.sin
rgani ati-on . Withou
m ti , and ffl · n
mana eme11(. rnmplex organisation t nd to become ch ti in ay lthat threat n
th ir very i en e. 6 od mana em nt bring a de re · f ord rand , on · tenc ·
to key dimensions ucl1
1.h - qm1 1i y and pm 1 ability
pmdu , • Lead ,rship, by
ontra t, i abou coping with cha:.nge. Part
leader: hip ha become so
important in r enL y ars i Lha th bu ·,
b om mo
omp u 1v
and more · o atile. Faster techaofogical c: ange, great.e.r in ernationa1 competilion,
th d gul · n
mar
J) ity in
pitaJ in n iv indu ri , ,n
un iab;le oil cartel,. and the chan ·.n demographi of the worikfofce and hanging
· n um r m rk r (a , '· h
di c
d in h p r 5)1a am ng th m ny
rs
that contribute to thi
or,e and bigger changes are fl!
to survive
in thi danging · vir, nm n . More chang d mand be ,t
adership. Th . tw fun, tioos - op1, g ·iU1 omplexity and coping \ itb thang - hape th •
characteristic a" · · ·
management a11d leadership.
1
·n.
Organisation mana e complexity first by plan.ning an.d budgeting to et t:uget
o r goal or ~ flltur (typkall fo the n xl mo th or ear), tab1i bing d tailed
t ·p Ii r chievin Lho c •argt:t and then allo a ·ng r ources to accompU h tho
pl . B
n a t, leadin .an organ· ati n to o . tructi e c.han e begins by etting
n din: .ria11 - d v l,opin · a vi i ·· n of th ·.·umre (ollen th distant rutur t a ,on , with
stn e ie for producing the chang needed to achieve th.at vision.
Managentent d velop the capa · y t achl e its plan by urgani ing 1md lalfing
- creating an organisa 'onal tructure and et of job for accomp,lishing planned
r, ,qufri. m nl
taffing th job!'. ith quaUfr d individuals. mnimuni airing th - phm
to tho e poop,le, delegating respon rbility for carrying out the pfan. and dev· ing
y t m
monitor implellJ nt i ,n. Th qui l n · I ad r ·hip livit • ho
is aligning people. This means communicating the new direction to tho, e wbo can
a · i n 1l t und, tand h i i n. and .
d lo i a hi. v m u .
FinaJly, managemen ensures plan accompU hmenr by controlling aud problem·oh ing - moni oring r ull •
u th · pl n in om d tail, b ill · rmall nd
informan • by means of reports meetings and other tool ; identifying deviations;
.nd h n planning and o.rganU . r
1 th p obl m . But fi r I d r:sMp,
achieving a vision requires morivatin!J and i11Spiring - keeping people moving in
th right dir ti n
pit maJ r b • cl · o hang , by app Un ·
i b t
often untapped human need , values and emotion .
7
Prindpl
o,
G n ral Manag m n
w ,n i ad
Th
hip and m n g m t a
d pi t d In figure ·. J.
Manag m nt
• Plan and budget
L adership
• Set dir ction
• Align opl
• Motivate peoplr
• lnspir p opl
•
•
Organis a d
sta workfo11re
Con I
ifigul1! 9. 11: IL ader hip v .rsu.s .manag m nt
l i importan . t n
tha • in rga i a ion
ar, · tron and , Ji iv
managers. ln th ame way, not all managers are trcng and effective kaders.
Howev .r ffi c:tiv organi ati n
I both man g r: and I ad rs. . c rding
to Kotter organi ations need l . de op 1 aders. u h irate i n p reat · a
corporate culture here people lue rrong leadership and strive create it Jus
a we ne d m re p opt u pro ]d l ad r mp in Lh • omplex rgan· Lions that
dominate our w rid to ,a • we al o need more people to d v ·op the cultures that
ill reat tlla l .· d rsb1p:' ln :r p n ibl :rgani a j
r p n i l manag~
i(that we
ensive1y • escribed in previous chapter:s in this book! and responsible
l d,
n d d. R p n ibli l ad ·nip ii , · u ed in · ion .7.
In
(p
n m .
ion, we will briefly foo
) and Ui · nm
L03: Explain th alignment b tw
nI
. o important components of leadership
n I ad hip nd th
rshtp, powe and influence
9.3
AUGN I G LEADERSHl P~POWER AN D IN.FtUENCE
E· .rli r in thi c apt r, (;ead r hip wa d fm d a a p,ro
in hi. h an indi "dual
1
influ nc another indi idual. or gwup ofindi idual to a hieve a omroon or hared
g aJ. Fr m thi d finition. it i clear that a l ader biLity t ]ead i d pendent on
hi , or h r relation -hip . ith. oth r p opl in a p rticular s: tting.
w·n ·
Wh rev rth r are lalion hi b tw n p pl th
p
rp,re nt. P w r
i an indi putabk part of everyday He. Power · a produ t of odal relationships.
Power i a produ o ih po ition th an individuaJ bold in a11 org ni atiot1.
The po Jtion Lhal an. i.ndj ·dual hold in an org, ni a ion giv s acce_ to resources,
information. upport, tatu and the authority to act in a ce.n:ain wa. Po ition
with no a es 'lo th
hin arc p
r1 -s . Wh - n w · ombin · all th · th ugh ts,
7
Chapt r 9:
w
n d fm th t rm ·p w r
t
bili
hum n and lh r
get things done. A leader has the following ix sources of power: 8
adin
ur
t
•
Information l po r · th abilit f i d r L · pr • id infi rmation ab ut
a ubjec1 or ta kin uch a way th.at the follower will accept that information
and b h v in th
,y hat th 1
r i sugg ting.
•
Reward po, er is the ability of a leader to give rewwds to rrinforce
b h i ur. for . ample a lary increa • prom tion or • tra lea .
•
Coerci e power is the ab.ility o the leader to offer or rest(ict benefit or
infli t puni .hm nl, o
a:mpl di i.pHn ry a , ion o,r · m· . aL
•
.Leg,i timate powe:r mean rhe follower a epts that the leadcr ha the right to
dire t.
u l or d m d a ban . Tbi right i. u ·I a
iat d with h
posHion of the leader in the hierarchy, or with the · b title !:hat the p rson
po e
•
Expert powe.r i where the Jeade.r po
knowledge or insight . that are a · p
lh follow r to chan b ~ haviour.
•
R feren. · pol r is wh re the i U we h Id · th lea er in W h re ar
s, or is elieved to po
a ·u erlor and therefore influence
ad.miring hi . or h :r b havio ., trusting th leader' judgement, and · happy
m emulate the leader.
The ource of power e p.laJn d ab e c:a.n al o be group, d un ec two broad
headiflg • nam p Iti al , o r nd ers nal po,we_r. P i ion I p wer includ
th a p • t r Jated l hi rar b i aJ po ition {[ gitimak r ard, coer iv and
informati
-v· rsonal power include the • ·pe ts that an indi iduaJ
an tnm fi r b tw n p ition ( fl rent nd
p rt
po
power).
A rurthe
bard and
•·
•
tion o · th
our - o,f po er -· au 'he made under the heading of
er.
r onsis of pow that o 1 s with a po, ition o ' auil1.ori y. It i
ower to coerce. to re ard and o uni h. It is legitimate power.
Soft power, on th - olh r hand, · p rsonal:; it i · the exp rt pow r or tl1e
referent po er. ] i tlle abili to, work relation hips to achieve an end.
Lea,de.t hip eannot be unde tood without
knowing what influen e i and i
anno
b practi ed withou using influen . Many
leade hip autho vie the above mace of
p
r a . ·ng link · to ih opportunily for
leaders ,o influence otbe: . The:fefore. we can
th imp
r th
u e of his or her power m·erm , of the ,c hange
on olh r ' attitud , vaJu ·,
1ue1
d r' influ n i ti,,
im pac of h·s or he.r use. of
p w rin rms ,o h ha g
A Ii
on others' attitudes. values,.
b Ii , and ac iori .
Ii f: and •· ti n .
77
Prin ipl ·
o,
G n ral Manag m n
W n
t xplain thi lignm
n u
p
r nd influ. n in bf
mmse detail. A ource o power i something that can be used to try to inRuence
others. Ifo ev r it
not do lh i Iluen ing with u · b ·ng u d in om wa . For
xample, if you bav through your position, I · itimate po er to request a
wrn
ubordlina e to do ome wo rk fur you. our l gitimate area o
onsibilit will
usuaUy b nou h lo innu n that p on to a l. Wh :f\
p o 1 ii . or r u
to act because he or sne dislikes you or dislikes the r qu r, then ou 1(th.e Jeader)
ma hav to, 11 rt tooth tr F rm of if10u n • r e.J<am k n_ul ation a. p onal
appeal, coUaboration or pressm-e_
.F rom the di ·us ion abov , we a.n dedu t that
there l a clo e alignment heh een leader hip 1
p
r -nd inJlu n . . Th re fore. wr an now
define leadership a a proce in which n
indJ · idual u
p w r , in · u n
oth
,(followers) to achieve a common or shared goal.
ln th n t
• tion. w
UI
uss 111
a pproac.he to understanding lea .e.rsh.ip.
L04:
EKplain th early
arly
Th,- bro · der d - ini ion of
t e term 1leade irship, is that
I ad rship i a proc·ess in
ch
an indi id
wr o
influence o ·
ers) o
achi v
· or shar d
goal.
oac es to understand ing ea ers , ·
)
9.4
EARL APPROACHES TO UNDERSTAND11 ,G LEADERSHI P
ction i to p,rovid,e you with 3.-9 o ervie of the early approa he
e
de • loped ' y research
uude[ ta d leadership.
practitione
in their ndeavours to
9.4.1 Th trait theory of lead r h•!P
The credit fur
amining the r e of uccessful men in order to determine the
haract risti of su ·. fu1 l di i oft n gi -n lo Thoma arl I Th Great M n
Theol)' that spran from Carlyle' wor bas a a foundin premise the idea that oopk
a different, nd th· t only m p pl b
wl t i ta · to b om .· r t and
become greal leaders. Underlying the idea of the Great Man Theory wa an assu mptio n
lha th qualiti or charact i · • vid n w . inh rit d th , l d w re born. a d
not just that, but born to a certain ocietal das and to a certain gender.. The idea
rib d t
rlyl gav ri to lh: fa~g b d f
arch in o I d rsh.ip that i ts
today. R eau:he ou ght to detennine what made th ,e leaders great,. h the.r there
wa · anything lha
uld e I am . from Lh p rsonaUti
or l
ese 'great men· tha
oujd. h Ip in dete:rminin who had the elusive ability to 1 ad and who did not Thi
re eaJ h ought to examine the general chara teri ti - p chological biological and
b ha ·oural - tha differentiate lead rs from · oil wcrs or n 11-l ad rs.
78
Chapt r 9:
n
adin
th tra·· h ry
of leadership became so popular among
The tra· Urnory o I ad rship
r afChers in th
,rI 2Ot cent . l offi red
aim -d to id I Hfy th · gen -ral
a scientific wa to in e tigaLe the d1ffH:uJt
characteri ics = ps chological,
concep,t of Jea de. . hip. If one could identify a
biolo i I a d havioura1I number ,o possible Individual chara _t rL li
that differentica e leaders · om
that cou]d be related o leadership performance.
II
r non-I ad r .
th n on
ould
1 thi h p h i u ing
quantitative . cientific research method ·or hi o hoJd tru , t.ni w u.ld hav t b
rva
they could be measured. This measuremem Nould r cognise thaL the:11e would be
· b i u diffi · n
b l·
illdividua . 1n , hi r w rd , p pl · , uJd h Id th
ame ch.aractenstic but to a greater or 1el ·er de l'iee. To be able LO ob ewe and o
m asure trai , th wouJd ne d r ularl
·u.r in certain ··imil r itu ti . ln
otherword thy ou]d n · d io b predictable. Fora uai to belmk d to l d hip,
it would ha e to be linked t
n outcome. Trait theo , therefore,
po ed that
m a urem n and ati ti al an
i ' f Jarg · tudy group wouJd i u a g n rnl
understanding of what i · ,o b~ a ]eader.
is
~
t
n '
land wl
Th t.rai perspecti e Lh t riginated wilh id a o great m n.
had inherited attribute
t couJd be tu.died and mea
quickly di carded.
h th ry of th 6
l Man was · hown to b flaw d · 1¥1pumb r or way: . It d ni d
the leade the ability to develop themselv throu , eifhe:r experience or training.
[l als d •nied w ,m n th cban
a m
1p po ·ition
001 thing that h
be
ho n to be mistaken throughout histo - . The trait theoiy wa critiqaed for not
' f min
p i h a d frnm H t of trait cl
y
f mp,iri al
h, an.d r
not 13:kin into account the impact of th situation on a ieader.
J
•
tr ams of I ad r hip re arch 11 .lop d, on into th .i -tu I beJirnviou:rs
leaders, and the other into the importance of the context or situation for leaders.
w
9.4.2
Rath r
or
Behavioural theory of lea dership
lh· n
characteristic
th
int nli n
u .ing
Oil
Lh
p
on l
or attributes of a leader,
f th b ha i u I Lh ri
of leadership \' as to unco er
b h viou th i , ou.1d b
in man.y di.lTerent situation . The mo
b havioural approa h to
leadership a' med to 11.mco er
lead rship b haviours that
ould b u ssfull appli d
in many different situations.
tudi on the b haviour of leader ame from
th univ . itie or Ohio tate and Michigan.
The Ohio State tudies a Jted ollowers to e alluate their leader against 150 criteria
ontain d in h l ad r B haviom D ription Qu tfonnaire. How
w re a 1' d
to comment o,n how often a leader actually demon trated the d cribed criteria_ The
r ul w re naJy d and at g ri d 'iving ri · t h foU ,wing tw dim n ion :
7
Prindpl
o,
C n id
•
6 n ral Manag m n
·
11~
in . bi h th ri u i on rehr i n. hip
nd · Ung in
which the leader eeks to support and in olve folio eis~ valuing open
ommuni ation , mutual tru t and • amw rk. l ader who r · i d a hig
·. or in terms of thi lemenl had a cone pondingly high · tisfaction rating
from foUowers.
Initiating tructu.re, in whi h Uk ocus is on the t
J a der nood to o u in order to reali e th goa
h organi ation,
to ru.ure the deli ery of
and on planning, controlling a.nd ri.ti.d ing,
organ·, ational oaJ . A leader who re ci e a b1
re in terms of thl
•
l m n wa , on id
d mor
m iv
b
i th
y did not al
re -iv a high
core For consideration., they experienced higher dis-c ontent from .·.ollowers
hown by hi ·h r ri van • nd abs t l v l ,
U-y of Michigan e amined h effect
eH roup . he · hi g n tudi al o
nd wo
At Ute ame ti me researchers from the Uni ,
tha a I ad r' b haviour had o
main categories of teadershlp eha iour, namely :
•
h r us
· mplo
ori n a.ti
and participation in the workplace
•
Pr du ion orien ti
1i fii us on th pr du
n and
bnka]
aspects of the ob. n u ing followers primaril as a mea n to an ,end.
rus
Thi tudy originally a th employee and produ ' 011 ori ntations a b ing at
each end
a pectrum. Thi meant that lead
-vho \ ere more interested in
hi in Lh oal w re automatVa I I, int rest "d in mpJoy · relation • A
the Ohio
te orlc had how n that a leader muld core highly on both ta k
d
· ti n hip
-• t i a g · ·· tti n w I· l r re n p u Ii d in
w
ind endent dimensions.
C
nd Mi higan, l "ad r hi.p 11 aJi h rs
spent man y ears attempting
frnd empirical evidence for the ex:i ence and
iv n · r th l ad r b h· viours or n id n t icm and inili tin ·tru mre .
Th~e tudi - , have broadJly con.fumed llie original conclusio n of both Ohlo State
and h ~ Univ r i
f Mj blgan. tu ,. t al Jiu..............
mining h inn.~............. n
of th.e two approaches relating to the e.ffecti e:nes ,o f a leader ha e been inconclusive
at b t, and att ~ntion ha now m-ov d wa from this approach to a more refm d
vi
o behaviours, in bkh lhe complex iotera tion o ; beha ·ours is iewed as
be.in more rel,e ant to leadership ,effectiven ·
80
Chapt r 9:
9.4!-.3
Task/r
lationship approa h
to I ad rship
Bfakce . and Mouton'
leadership grid
as
on of Lb
p ro b that d v, I p from
the original research into emplo ee and
produ tion orient tions. Underp,inning the
ta. k/re.1 Uonsh.ip approach tio I ader hip i
the belief tba 'there is one consis entl ound
yl for
r
hip
dirfi
n,
adin
•fffuW
Th task/r la ion hip ap,proa h
to leadership is based on
th,- b lief Lhal th r i . one
consisten t ly sound style for
r 1sing I a rr hip a ro s
situarions~ The leadership grid utilises h o
different silua io ns.
variabl • narn ] a · on rn f; r p opl whi h
d:raw on the description of an employee orlemation, and a conaem for production,
whl h draw h pirati n f'r m Lh d riptl n t' th · ro · · io;n ri ntati n. Blak
a nd Mou ton view lhese ariabl as interdependent. furthermore, at their point o
conn c ion lhe
L be
parat vari ble and · ,o · i , t cr at om thin
n w. This implies that i a leader' · core on one vari
should chan.ge. it will hav
an imp,act on their · core on the other ari:ible.
9
The original grid depicted four main area of ·
ect:ion to which a fifth was dded
10
1 t r b Blake and M · ns . Th lt>~ d ·. hip rid wi h ftv m in area of i t
i depict _d in Figure 9,2.. In this f1 ur
ho.rizontal axis inclicat · a lead.
for production. (from low to bighJ. whereas tl1e erti al axi indicat
on em
1
elo .
or peopJe (fmm lo lQ hm · , J1!S ltin in lh w l ad ~hip :t.yl
if i · u 9.2 Th Bia
nd McCan
Sour-re: Blake Eli: McCanse (1991: 29)
lead rsh p Grid
1
28 1
Prin ipl · o, G n ral Manag m
111
•
w • n m Ii r p opl and pr du ion. Tht
leader pends the minimum efforts to get the e:ry ba ic o Lhe Joh done.
•
I ub I ad
hip: I igh on • m i r p opl nd ] w • n, m fi r
C •n
production. Thi leader achieves a great work.mg environment, while
lmpo
h:ip:
p d of ta k. ~,ompl tion.
Produee-or-perish leader: hip: High concern for production and low concern
fi , p pl . Thi .
oflead r gains a g d, , ff1 i n t mpo f wor: by
minimising the relational a pe ts iu th work environme:nL
1i am I der: ffg c ncern for p pl and pr ducHon. Th" typ, of l ad r
. criftcing th
•
•
· how commitment and aU employees have
are reco ni ed for their wo
•
arity of the tas required and
Middle-of-the-road leadership,: Middle concern for _ ple and production.
Thi t
of leader balanc ta k focu with peop
~ to move the
along in an adequat rnann r.
pma, ti , bein
Th
olv ' b th with the mplo
·
wen trust and res.pon I
M Can e
b t i ader for all ituati
and approa bability lo , mploy . In .
development and ttai ·
te
· · ,
ouJd. wi h b
w·
int
io whom
A rcond appro.a
by Lik rt.. who
from th
nm d
a·
m
the
·
e wbo
Tb1
i Blake and
rs clarity of purp e
·ad rship
or o · ani ationa.1
·his coUeagu
found tha leaders
'l
tw
yl .
developed
rv ying
on mo11 than 350 om
·,
.s
u o · ate . After anaJ · g ms resu1 , Likert
1t
rfi
m rging
n of l d rship b havi ur
d these pa tern into the Eour
tem model. whlcb he
11
•
Sy em 1: Leadership behaviour grouped in S em 1 as a odated
wi h ,e xploi tiv authorit tiv b haviou , in o h r word a di ·tat rial
a pma from autocratic leaders. Such I aders will not dele~te any work:
lh ·r ub rdiaat n r mth inv Iv th m · any d · i m king.
ubon:linate are motivated thrn gb punishmeut or fear of puni hmenl.
•
t m 2: L ad bip ha i
u ed. in
t m 2 wa a
iat, d w· h
bene . oJent autlloritative: b -aviour. in other words behaviour where
del gation. and inv I em n in
ub rd· , t
are molivaied. through re . ards.
•
t m J.: l ad r hip b ha ·our gr
U]
ed in -
iated
ith. c.on.1dtative bcl1aviour:. Leaders associated
information and subordina :es are invol ed in ded ion-making proces e . Some
teamwork is in ol -d and mo, trust is rab ervabh: iha:n in , st m I and 2.
•
S tern 4: Leadership ehavi ur g:rou ed in S lem 4 a . associated with
participati e leadership where subo dina e ar a ti ely in olv din d isio n
8
Chapt r 9:
makin . -'P n
mm
i ati n i a ch .ra
ft.hi
l
adin
~st m wh r p pJ
invol ement leads to high levels ,o f t.ru t.
Figure 9,3 depi
1
·
Uk · rt' Four yst m Appmach.
Syste.m li
[
Exp ii tlv
System 2
[
B nevol n au<hori ativ
System 3
[
Co sultativc
Sys
[
rl'I
4
Panicipativ<
:fi~lu't 9.3
Uk ·rt'
Like fou . that the o er an or anisation ma
eme_nt and le dership were to
y t m 4, Lhe p r.ti ipati · sy rem, th high r h productivity of the organi alio n
a nd the >"c; ,·er ·e.ir potential earnings. 12
1
in U1e case with Blake and. Mouton. Likert was a ke proponent in Lhe · earch
·t wa o.f leadership that
elev nt acro all situation . In contrast
o th
lh n, xt
tion inv, ti - t
h , ontin en y or ituational theori o
leadership mat advocate that th r
no one be · wa of Jeadersbip bu a.nous
b t way that hould he ppl · a appropria, in
h differ n itu ti.on.
9.4.4 Cont;ing m~y/sltuational appnmch to I ad -rship
Toe continctenc
approach to leadership
dv t th t th
i no n b
wa .
Th e contin,g ency approach
leade: hip, but variou best wa - tba should be
to I ad r hip dvo t
h t
ap lied in -a h diffi
t
there is no one best way of
contingency/situational approach to leadership
I ad rshi p, but various b st
wa dev l p d fr m th tw vari ble r·gtna11
ld•n•
di:sco ered by the Ohio
rudi
tate and Michigan
namely th produ ion and r, l-ati nship
variabl . Th
re ih bas s on which i -dJer
ways th t should be appll din
ea,ch differen , itua ion.
8
Prindpl
0 -74]
of G n ral Manag m n
,
I p d h" . initial on ing n
,h ry.
Fiedler used a urvey that asked subordinates to
According o Fied er, rather
de crib th manager r I a er ha the h d
han,adjusting their rr rsona ity
le t enjoyed working (or. The pcrson wa rated
or
motivation o suit a
again U1 ~enes of bipolar adjecti e , for example
itu tii on it· a i r or a I d r
ri .ndiy- unfri mil , and in 'this way 01 y were
the ituatio . to suit
judged to be rela ion hlp or ta oriented. The
sty
ul
this urv b cam known
h
preferred Co-worker (LPC) ca.le. Leaders with a
l w LP
re w th u h t b m t k o .
l ade:rs with a high LP
co1:e were thought to be mme refation hip orie11tecl Tbm;e with a low score would
a hi
b a ,' with ut onsid . in fth
pl nd th"
uld
a n:u .~ d 'n
ituations of great tres . Tho e itb a high co.n-: n · h perform poorly under pressuire
du t th 6
bein more on th p pl tban th task. Fi dl · h
tbes· w tha:t
rather than adjustin th ir p - onaliiy or ru · ·va 'on o, uit a sitnation. it is as· r for
a leader to adju t the situation to i their o n tyle. 13
or
Wh.il,e Fiedler believed that i
as difficul!t for
lead rs o aidju t itua · n , He , y, an bard
and Dewe I b Jie ed U1, lead r..bip behaviour
couJd. chang not onl or ea h ituation, but
a l o or · a h ubord at . 111 ir mod l " a
based on the be.I" ef tha effective leadership
r quifi .d thfi · m ·n omp n i • nam ly
diagno ing. apting and communicating:
•
Diag o in : Th
mill
n hard ,and D w y
hait leadership
. r · ,auld h ,og n
only or each situation, but aJso
h · ubordina
o -niliv · abil.it m und rsLand ompl
ndi dynami
iruati n • eeing them a they are now a · d a they reasonably could be in
a
•
•
tut ·
Adapting: The beha ioural abili, o change the wa ou behave a a leader
ru t h h
u h v nd
o di•
Communicating: Deftned as a pm es kill, knowing how to get · om
m
l individ a m I ,y
in n iv n ituati n.
AQcorcling lo Herse . Blanchard and De-we • eaders can improve their ability to
und
· nd · uafon t ad p and o · - mmu.ni · Lh ough ·tudy, - p ri n and
training. [n other words, from a ituationa! per.spe.c:ri:ve, kade can be made. 15
A
ccmd k y b -Ji f i
hat tb re is no on b t way of I ading thaL i appropriat
for all situations. A leader mu Uearn to understand ·tuations, and then adapt their
l ad rship tyl, to mat h that itua tion.
284
Chapt r 9:
adin
9.4.5 Tran, ctional I ad rship
The development of t:ra:n actional leade hip
n mo~tJ b a ri ed
Jam
urn , who
Transa tiona'I lead rship is
belie ed that transactional leaders moU .a e
an exchange of rewards or
their fo lfo · r b appe lin to th ir
lfompl i n .
lnter
For
ampl , corporate ]eade.rs
can exchange pa and tat.us for their work
ITorts. Bums d rib d lran a i n I I ad hi , a an
I ng <it. rcwa
for
compEianoe. When employees are successful. the are . arded; wben the fail,
Lh ar r primand d or puni h d. Th primary aim o I i
of l ad r hip i to
accomp•lish the goal , o me organi.satioo through the ex 1a.nge of things of alue
t · a h part . Th tran
ional I ad r ha t
t
. m ly:
•
Cantin. ent re\ ard: The di tribution o pec:ifi reward in return for directed
for from th f How r.
•
Management by exception: The leader exercises corrective critici m, neg ti e
ti dba k and n tiv r inri
nt :in re·p n
th , ti ili
f .1
follower.
•
i
ip: Th I ader
i · n I ad rship.
abd icating r,
dayi.ng re ponsibility and dec:1 j ns, gi ing no
fi . dba k to
f igure 9.4 lists the earl approaches to understanding ]~,aaership.
•
It tn rv
• Be hav,fo~ , theory
• Task
hi
• Co ti11 ency theory
ra,n a tiori I h ory
Early a pproad,es
to understandingi
l'eadershi p
!figure 9.4 E rly appma h s to 1.md r: 'tanding lead 1rship
One of the mo t popular appmache 10 understanding leade hip at pre em i
lran r, rmati n I l d TSbip. ln h
ti ns hat ollo , w will dd
t.hi nd
other more contemporary approache to leadership.
8
Prindpl
o,
LOS:
9.5
6 n ral Manag m n
:- plain ranstormational leade, hip
TRANSFORMATIONAL LEADERSHIP
Tran fi rm ti na] 1 ad hip
·o i ad '
effect on lus or her followers in that they Feel
trust admirn ·on, loyaJ
and re p ct for their
leader a.nd they a:re- moti ated LO do more than i
expeckd ofthem. In transformational leadt:r hip
l ad and follow rs ra· · one another to hi :h r
levels of moralit motivation performance and
i
ti • • lR · . rch indi at Iha , work 1 d
by transformational leade.l ha e higher le . els
rr rman and ~ ti Fa ti n th n w r rs
led by other types of Jeade.rs. The reason for ·
i that tran ri rm ti □ a.I. I• ad rs h Jd p • U:iv
expectaUon for foUowers, b lieving thal l ey
c n do th ir- best. A· a result. th
mpow · r and timufat · follo rs
norma] le el of p,e rformance. 1
or
!
Tran formationa l leadership
r f r to a I -ad r' ff
on
his or her follo er in that they
r I! m , , i tion. iov 'lty
and s ect for- their leader
amJ h y a - motiva d lo do
more , an i expected o them.
In tr f ma ia,nal I ad rs.hip,
lead ·rs and followers raise
rre another to high r I vels
of mmality, motivation
pe.rfurmance and satisfac · n.
The main proponents o,, !:rans mm.a onal leadership in a businontext hav ·
b n Bernard Ba and Bru
vo io. AJth ugh their on p
iation of th
omponent of ti-an fonna i nal kadersbip volv d over llin the mo t matur
• framework identified
ve ion ·. that common referred to . 'the Four ls'. 11
fou.r .a tors (alJ mw ni ntly be inning wi 1 th J rt r I). , og tb r, th
, tors
con titute the racrice of tra.n formational leadersbipc·
•
i ed it
Id
nu
e
t1
:
·
Thi . fa or reii r . lo th
rnmlation fa mi ion or
. It requires leadei o act a trong role model for
d,
·•
mb d
dard of thi al nd moral
nduct
•·
In pi ational moti
ion: Th
· or refi
o lh motiva ion f , th r
thmugh the communicati n of high expec:tatioos. Leaders need to inspire
fill
t pu bu in
·nt r
ti ·
· ]f-int r
L
In p,ra ti. , ] d
will
use ymbolic language and emotional appeal to build employee cornm.ibnent
nd to p uad Lhem to bu int,
hared vi ion f th · bu.sin ·· ' fu ure.
to the en ouragement o creati e
•
Intelleetual timula ~on: This factor 11e e
and inn vati b baviours from fi 11 w
•
Individuau. ed c,on ide:ratio.n : This factor refers to tbe development of others
·h ir hi h t v I f ability Lhroug h rea i ,o,f · upp rti dim a
m which leaders Ii ten do ely to the neeid or their ollowers and provide
cm1ching and advi
acy.
86
Ch pt r 9:
hip
b rt r p rforman
. ill • rodu
ading
ompared t
1
tran a tional leadership, in organ.i ation . ui The next section in estigates another
onlemporary 1 adership ap p ch, nam ]y hari m ic le
hip.
plain chari ma i I ad rship
LO
CHARISMATIC LEADERSHIP'
9.6
Th Gr, k word 'ichari m · m an to · • nd,o
n gift f div·n
iingui ·
e:rcain
gra . In cuJar term • charisma rekrs to a p •
leaders from othe , · Iving them extraordinaE}' v n h publi .
, ani ation and
id
ombination of th.re , lement i requm
tr: ordinary qualitie that · r inh
•·
•
•
d a chart ·m ti
l ader, a
:
t in Ut p rson in qu . tion
a sodal situation tbat pro id s the ideal setting for the ri e of Sll<:h a leader
a particu[a:rl . tr ng m 10n J h nd b ·• v
th I ader a d hi :r r a u 1
o,r potential followers.
pt r, n ov rvi w or · inh ff . ·t mational w
pro ided, describ.
o pan founded in 1964 by Bruno St inhoff in Gemiany
bum o · arb
p ·n ipl with . tr ng i ion.
h n th fi u.nd r' p th
cro ed withanoth rstrong ~eader, MartusJoo te,. th", .v· ion changed dramatically:
Th n w i ion e.v nt all l d to, a com r.n d rt d as th bi
.t . and:aJ ·n
history. The qa tion that many people a k is h \ did MarkL Joo te mana e to
pull the o I o r inv tor: ' e e for at tea t
o to three years? In the context
·r l d rs}u and lhe po . r and in(]u nc ti · Jead r: l,,a e in o ani aUon t.ha't
n lead lo their downfall, thls is a crucial question · o be answered. Academics at
th
niv iry of t II nb h B , in
ho t put J o · · p rs n lily und r th
micro cope and came to tile conclusion that these three element of charismatic
l d, hip w, r ·n 'fa t pr, n \ h n Jo t w at h h lm
t inh · IT. irst.,
Joo le ha extr-aordina.ry qualiti and was een a a top businessman owing to his
d al-m kin t l n whi b h us d t I d an . g re i intern tion ,I pan ion
an:d acquisition drive o buUd an internationa l giant. Second, Joo Le bad. welle tabli h d odal n tw
and he us d h" chari m o bui1d on and reinfo e a
tron business n twor~ which put trust in him and afforded him • lraordinary
tatus in busines and o iaJ irde . Third, Joo te h.ad trong foHo er who enjo ed
odal and man ial privif g, throug,h h ir dos a o iatiDn with him.
In
,h,
ning
or
87
Prin ipl
o, 6 n ral Manag m n
and persua iv,en
of the leader and his or her
onvi tio and commilm n t, lh g l ,nd
cause:. Chari mati leadership · the prm:e so
Charismatic l eader hip i
the proce. o ncoiuraging
particular behaviours of
,o llow r by ay o I qu n
communication ,. persuasion
and o e ,o
rs, nality.
11
encoura ing parti,ruJar behaviour of tToUo ers
by way o ·, loqu nl communi ation, p rsua ion
and forceofpersonaHt .Ita umes that a trong
p . ia · r . ation hip i ts b t
n hari ma, i
leadership and the fo11owers' performance and
ti f: tion. Th re ar ario
mp tin h ri m · I ad I '.p ppro · h . F r
the purpo es •Of this book, we will discus one of the e. approach s nan,el the
b havi und ppr, h, mo
mmonl a
iat d w~ h h w rt r Hous .
Acconiin,g to Honse 20 cbari ma:tiC' leadership is un erpinn
hu
ri ti . Ch ri ma i I ad r r, d min nt and 1·
by certain per anal.Uy
h d · ir
t
influ n · ,
theyar,e seJf~confident with trong moralvalu . Such le He 'behaviours are centred
around mp t n and r I m d Din , rti ulat"ng
I and mmuni, ating
high exp,ectatlons. and encouragirig moUvation- interaction ith followers. The
effects of the e behaviours •· nth ir ,oll w
r, een a produ ing trust,
·on
and abedknc to ards Lb leadr r and increas d con.f,den e and perfi nn n in
the follower. Ho · e' inclusion o '·tron_g moral value ' as one of th p :r: onaUty
. hara t risti und rpinnin t'.hari m i l ad rship do s not transl t dir, lly into
moral behaviours or obj ctiiv . s· e:e other formulations of ch· · ma.tic leadership
omi Lhi
b 1i
rnpon n
h r i
ron, r a on
mah
exi ence or otherwise of a moral underpinning a . a igni
ining h
apt distinction between
i m ic i h ut b in ·
moral o,r having uph, ting goal (as we have ee.n with th Steinhoff case), but to be
tr:an r, rm · n I i to b
pli ·it1y m ral. · n h
h w mak Ou di tin ti a, it
is al o import:a t to recognise that ociety has b , efrled rmm charisma: ic leaders
in many sph
. ln o th Af1ica. for exampl Nelson Mandela and D mond Turu
om l mind, while on an intern.ation· 1 I 1 Alb rt Einst in and Moth r Theresa
are
amp,les. The rune is true for man · bu ine lead , who built pro perity
for mi on . of p op,] in a I gal
hkal nnmn r. How ve it i important to
remam a1ert ro the po sibfe ambi ui and danger ,o f chari mane kaders (you may
a l rd r l lh op ning
hapt r 5, which d crib d an th cl, ri ma i
leader, Leon Kirk.mis}. There i alway the ri k that charismatic leadet can become
o arrogant and b U v th th
re o xtra rdinary that h ar b v th I w
and above ethi and mor,1.lity. This brings us to the importan e
responsible
1 ad . ~hi • th l pi of di - u ion in th n l ~ ti n.
t n
f,
rmati n , ·
,
1
·
mati I ad~, hip. On
n
L
or
88
Chapt r 9:
L07:
9. 7
d th thr
adin
omponents th , o
RES'PONSIBLE LEADERSHIP
In order to become a truly respon ible
or ainisaUon. Ii pon_ibk m.anag menl and
responsible leaders are needed. In fact bad
A responsible leader 1s one ho
l ad rship i of n re pon ibl ri r wh l
i bl to I d an organi tion
organisation ' irrespon ibility, a we have :een
in all thre dimensions of
in h ,· p ning a ·
lhi . ,·h pt . Whal ·
u tai
r s,po , i' iii y
respon ible leader? We ill define a responsible
and
ics.
l ad r a ,on who i bl, t,o I .· d n
. n· alion
in aJJ three clime:nsiou or sustainabilit • :r ponsibility and etlti .
•
u ain biH I ad r hJp. Thi d rib
leader who prnmot.
u tainabili y in a
u ta inability leaders are I ad rs
roup or ':'Y t m. Su tainabili I ad
will l ad a ork t · am, or
n th - 1 :k
that promot sustain · bility in a
,group,or system.
organ· atio,n, region or indu try towar
u tafoabiBt . u . ainabiHl I ·ad
follo the goal of a po iti e tri ,le bottom
1
Un .
•
•
Re ponsibili leader hip. Responsibility
I cl rs I ad in an
nd d I ad rfoUo er relationship that oes far beyond
hi r rchi al
ip . R
n ibility
leaders ttcognise their responsibility
wa
11 t k h Id rs and th foll ow
lhe oat ol Lhe maximisation. of
takJ b lder value.
Ethic leadership. Ethic leaders do h
right thing in the ri h wa . nd r he
n ht rea on . Tili d fmition o etlucal
I aders brin two dimension · f ethical
I ad hip t. g :t r, nam I Ll ham r
of the leader (doing the ri ht things) and
•If014
Responsibil tty leaders remgnrse
h ir
ons·b·lity towards all
takeholde r and th y follow
h goal of the ma imi ation
o talc. holld r v lu ·.
Hh,i I ad rs d lh righl hi g
in the right · ay and for the
righ
th · iori ·, r h I d r (d ing hing ri ,h aml adhi rin
th rui · and th
Jaw and in the right way)1. Ethical leadership focus on the moral charac er
if h ] d r, hi r h r 1 , gri
nd thi l a ar n , and hi . r h r abil"ty
m communicate Uri ense of ethl to a 1:eam o.r an organisation in order to
I ad them lo mora] c 11 n e.
1
The three dimensions ofresponsible leaders explained abo e, are often overlapping,
d pi t d in Figure . · .
8
Prindpl
o,
6 n ral Manag m n
Sustainability
I ad rship
Responsibi ity
I d rs ip
iFi!Jure 9.5
Ethi~
I ad .· hp
R ponsH>I I ad rship
· pand mk lik
D remb
o 9, . argu bly the b ·,
C · t of rrue leadership. It distinguish • between r
and immtbe:nti l aders. Crisl
ituati
an brin out. th b t or worst ml
al I ade:r . ·· e to, th challenge,
xuding au hority a:ncl proj · ·
· · ·
·
alm t.he to.rm. lnauthenti
leaders wilt in the face of the
.
· masses are demanding.
In th mi
f th pand mi
r]d H alth Organi at1on
HeaJth Em~encies Prog ··· ·
ael
dd South Africa' CQVID-19
re .
g th b i .
'Th tra ,
in uth
w b· · d on
strategy, prima · ·. rev ·
do n and enhanced urveillance; aid R an. bich
r
rshi . Th fl . I imuJ pa ka R · 0-billi n
an nounced by Presiden Cyril Ramapho a i - at a cale ne er een before and
pr · id ,d an port c
rim rovin o io onomi in.fr. tru ·tt.tre, upp rting
development of w c nomi
ctors . so ial renewal and new ha.red v · lue, and
creatin.g a caring
iety that affirm human dignity fqr all outh Afri an .
1
In. his · ap er, the third of the fou.r fun tions of management was discu sed.
m
I ding. -u
ful , rgani ati,o
d ffi iv and ffi ·i n man g
and leaders. Respon ible organisation 1 e d r pon ible managers and ,e po,nsible
lead . Ar ponsibl l ad r i a l d r who is abl to l ad ·n a]] three dim n i n
of · ustainability. respon ibilit
d ethics.
SUMMARY OF LEARNII G OUTCOMES
LO!:
Di[li r :ntiat b :tw , n the t. · rms. 'I ad r 3t.Dd 'l adershlp
A I ader n ed i 11 we . a leader et the dire ion nd pa
fmoveme.nt of h" . or
her ollo er.; and a leader doe not need to be an indi idu.at L adership i a pro e
'0
Chapt r 9:
in · hi h an in
hared goal.
L 2:
~
gr up
'dual infl
r indi
"du 1
adin
mm n r
L
Diffi r ntiat b tw n th t rm 'I · d r h:ip' and 'm n·.
Leade - cope with chan e and manage:rs ,c ope wifu oomple · ity. Leader ctdirection1
a lign, mo i al · and in pi p o,pl . Manag ·111 nl phm · and bu 'g · ' on ani
and
taffs the workforce, and contm1s and olv problem .
LO _:
xphdn lhe alignment between I ader'._hlp, po er and "nfluence
Po er i th abili to
human nd oth r
our, lo r
hin don •
influence i the impact of hi or her use of power in erms o the chang in others'
titude , alu , beJie~ and a ti n . The br ader d fi.njtion f the term leade, hip
is tba;.1 ader5hjp is a pro sin which an indi idwd use . ,o wer lo in.Ouence 01.he:r:
,(folJowers) to acltie ea common or hared al. Th · a doe alignm nt between
1 ad rship. pow r and inllu nee.
L04: Explain th earl approach .
tanding I ad r hip
•
The trait theory of leadersl ·p aimed to identify the genera] chant
p . chologi al biologic 1 nd b
followers or non-I all rs.
lo ral - tlla differentiate I atle
•
The b h vioural pp1i acb
b .h a icmrs tha could b
•
The ta kJrelat" n hip ppro h t lead hip i b
· on · con istemly ound tyI for e.xerci ing I a
i . ation.
•
•
en
T
LOS:
te '
t fr m
l ad rshi aimed ,o un over l
hjp
fmly ap;p,lied in man different iruadon .
1
th b lief that th r
d.ifTerent
approach to leadership dv cate that therie · n,o one bes
nip. but va.riou b
w
that hould be applied in e ch
a tional leach~ hi · an
change of reward for compliance.
Explain transformati .n al leadership
Hi
n hi or h r ti llow r.; in
tha t they feel trust. admiration. loyalty and respe t fo r their leader and the . are
moti
d to d mor than i · pi ·; d of th m. In lransformati nal I d hi ,
leaders and follo,we:rs raise one another to .h igher levels of morality, motivation,
Transfi rm tional I ad
performan
L06:
hi
;o a l ad r'
and . tisfa tion.
Explain chari matic leadership
h.ip i th p,r
o ,en ura -ing particuJ · r b b vioW5
ollo ers b wa of eloquent communication, persuasion and force of personality.
l07:
. xplai:n re ponsible 1 ader: .hip and the three compon nl - thereof
h i · abl to L ad n · rg n~ ati
A re
d imen ion of ustainability, respon ibility and ethies.
·n all rhr
Prindpl
of G n ral Manag m n
REVIEW QUEST1IONIS
1.
Explain the tenns ·1eader' and 'Jeadership:
2.
3.
4.
5.
Diff • ntfat
tw o h
,. p 'la
hip• n 'm .na m nt:
Explain the alignment be,rween leadership, power and influ nee.
Di u lh arly appr, a h .· o I d , hip.
Explain the transforma ional approach o leadership • nd explain how i .
dlff . fr: m ili rans · 'on,aJ appro h I ad
6.
Explain charismatic leadership and ex lain
ang
plain the thre pillar of re po11S·b1 lea~ rsh,p.
7.
LEAIRN ING ACTIVffl ES
Pr id
m · x mp
the following ]eadership
•
Tra
•
Tran a tiona11ead~p
•·
•
hari mati I d
Re ponsible
d.ership.
ni
thereof.
uld
f
:
formati n I I
•
5
ailabl online: htlp -_J/ww,. . bizn
.com/ a-in , ting/2018/0 / 9/
o,ry-smaU-fumiture- ho •-retail-giant [Aro!SSed 14 February 2019]
t inhofflutemational. n.d. Availab on!ine: http://www.steinhoff1 temational.
om/ [Ac es ed 18 February 201 ]
D eh . n. d. Avail bJe onlin : h · ps://dae.hee. om/steinhoff- andalJ [A c
d
t9 F bru.ary 2mg]
CNB · Africa. n.d.
;f1 bl, onlin : https:// w . nbca rica.c:om/insi b /
steinhoff/2018/06/28/ teinhoff-rise-fall/ [Ace ed 19 f , bruary 2019,]
Botha. T. 2016. Basics of Leadership. Pretoria: African · ade.mic: Warehou e. fi.
'6
K tt r, J. 2001. Whal l ad rs really do. Availabl
1
4
uk/upload
/nJ
nlin : ht :p :J/www.nd i. rg.
/HBR_What-Leaders-Really-Do,.pd [kc ed 2 JuJ 2019]
rg.
7
K l r, J. 2001. Wbat I ad
r ally do. Availabl nlin : htp ://www.ndi.
uk/upload /file /HBR_What- Leade.rs- Really-Do.pdf [Ac e ed 2 July 2019)
B
Fren h JRP Jr . Ra n BH. 1 59. Th ba
f · ciaJ p w r. In a wri .h , D
(Ed, . tudies in ·ocinl power. Ann Arbour: in tib1te for o hd Research.
Bl
RR • ,. M uton J . l B.I. Manag ment by grid principles or itu tionali m:
hich? ,Group and or9anisa1fonal studies, 6(4): 439-463.
IO Blak RR ft M . an . AA. 19 - 1. L ,ad. rsllip dH mma - . rid ·otuti011 • Hou ·ton:
GuJf.
2'
Chapt r 9:
11 LikJ rt R. 1979. Fr m p~ du i n and mpl
Journal of Ma11agemeHl,. 5(2): 147-156.
. 1974. Th
nling n
m d l - n w dir ti n
u:rilization. Journal of Conumporary Busfoe , 3: 65- 79.
12 Fi d l
adin
1- .
for I
hip
H rs, • P~ Blan h rd, KH D w y, EJ. 19' . Th, manugc.>t1ient of organi atio,ml
behaviour.: Util.ising human re 011.rce • 7th edi ion. Englewood Cliff . , J :
Prenti Hall.
14 Hers, . P~ Blancha.rd, KH 8: Dewey, EJ. 1996. Tilt!' mana.gem m of orgunisaiu:mal
b ha ;, t1r: , fif i119 11ummr r our • 7th di ·
Engl
n Cliffs, , J :
Prenti e Hall.
Ir.: Botha T. 2016. Ba ic oj' [ ad r hip. Pr tori :
BM 8t Avolio, BJ. 1990.. The impli ations of tr.m a tional and
1
r n fi rm ti n 1 I d - hip or in ·vid a
t am and organi ti n 1
16 Bas
devdopment. Rese,m::11 ill Organi :atfonal Cht:nige m1d Dei elopni enl, 4: 23 1272.
17
aldman, DA, Bas
BM
a Yammarino, J.
1990. Adding ro contingent
ard
behavi ur: The au m nf
ffect of charism tic leadershi . r, up anci
Organization htdi • 15(4). 381- 4,
18 Cameron. J. 201,B. In td th mind of ex-Steinhoff bo ..· M
hy you uld b j
lilt 1im. vailahle onrn : http :/f
us Jo e: Here'
w.biznew .corn/
a-in e ting/2018/07/03/in ·de-mind- teinhoff-marku - oo e [Acee sed 23
January 20 .
19 House. IU. 1976. A 1976 theo of charismatic leadership. In Hunt, JG and
La n, L ( d ), L d' r 11.ip: 'h,- cu l.ting dge.
rbondal ; uth m nr
Unive ity P rres ·•
CHAPTER 10
MOTIVATION
,uh.or: 'it r: ia B'otha
-
-
OPENING CASE
Thomson Reuterrs. Corporation
Th m • t1 R ut
(TRl Corporation provide· inform tion for b .• in e and
prof; ional. Th company rv , deci i n-m k1 rs in the frna:ncial. ri k., legal, tax
and accounting intellectual prope , cience and media ma:rke · . 1 In South Africa,
R ul rs pmvid - rili aJ information to b n.k.s go mm at nd corporal th t
allow them to act ·i h confidence in a complex en ironment.. The also aim to create
and d v lop h fm.in ial, I g J. r gulato
nd ·h r profi ·l n J fram w
fi r
economic: growth. Reu ers ee them ell es as a t eam of rughl motivatedr dynamk
and nthuii ti individual . B l w · h w 20 ind"vidm:1 ' , 1 ti at
h i
rk
1
de cribe the .aspe, ts of working a · Reuter tha1 motivate them:
•
Th ch n to mak n imp
'It is i111portaur that I amp.art of .ometl1i11g tluu is ig!Jer tlum my elf I ee.k
out t a, . to ccmtribut to ,, iport'rmt pm· t · tJ at p fliile m wit/1 a · n of
DtlHter. llip bolh in, .m own work lmd 1n_, overa.11 work envirmrment. Mt1k.iu9
tm impac-.t iu llli" indu t · amt in cu t ,nr. ' lfl,e i . 11 otivating:
•
learning somethlng new
'Learning i rvlzal 1 love a · ut m job the mo t, and 1 , ould do it ,
didn 'l get paid. Thi i n 'I Just a
th ff ·kna lagy. 11lrhaugl1 l la that too,
•
for me it al o aboc,t findiu9 wa~ ro be nwre ejfectir-e. I alru1~ rnnt to ee
11 hflf' orow,d the I
l C'on ·r, mid ht.wi rg th fr, , dom .to a p(v tlmt learning
to the r ork l do tl"f''J' d ia · bee,1 one of the be t pan o working at IR.'
inding inn
· . · · fo ion ·
'Finding innovative r ay of approachi,ig a problem' helpfng the ream · ofoe
a,r i · i m • ,alii, outlet. I lcw thinking Ip , I olurio,1 · or d · ign .
I al_ o like t be chall,enged to help ,n.ake tht'l1 more effective or proi. idin.g
ir1 pi r ti ti t pi1 1 lo a ,r u• it/ a. II
i ing t , · cu t m u ilzg
om tlri11g w,e only initiaU ima,gined in t1r miHtls..'
1
•
in uri u ·
'Every day bri.11gs sou1.elhiHg ne . thtd tliffer:ent and that surprise is motiuating
to me. Flike learning ne1 I ir g that J u r1er ould hcwe imagin d I would
lmue e11co unlrred or ca,n · i lu~ndetl.'
•
Working with r a.t p opl in a r at culture
'Tlrrortylmut Ill)' tenllrf' at TR I ha., e worked wirl1 great colleague . I r:annol
tre enougft about flu~ e11lture we have. 1 h.ich act as a cata( t to i, ,rnvate, try
11ew thing • mu to b afraid ofja.ilure . 1 am ,r/Jaltrnged~ nnd at the ame .time
encou,raged, to find C'reative ay to .olve problenl.5. 1 a,11· gratefLd to tlle grea1
I ad
u ho, who in pi m 1r ,y dO)' toi b pa icmot cmd flJ /or , 1 job.
Prin ipl · of 6 n ral Manag m n
H vi:n fun.
'The w,ork we dv is cample.r and never-emting, but evt"_ry call or meeting e, en.
dte /o ug1i one • are alwa do tted wit h a p r. 011al o,me tiou. laughter and a
bit of fim. We ,pend the majorily of our tim.e in du~ office, i t" shou./d enjoy it.'
•
•
C ntinuou impro
m nt
different parts of Dur applica1ian mid infr:aslmcw.re rmdu.re, rue're mart
able to under: tand wl,ere r 't' can mo t profitalJI. , appl effort. We tan d100 e
lon.g-ltnu · olulion iHJf! r lrnri -1 nH fi.11:e . A . 1 fr.r ea Ii problem,, e arr11wre · table, more pre.die able aud more able to idenrifJ1 iht', e.rt target. We're
d mcm tr:a bly ri -ndi•1g toward o b "tier und nmr p ll lir• u •
Having tlexiliility
'The ,,alue tllal e1nbracing flexible l or i11g pm tin• I, i ig to the U,
of TR emplo ee should not be und£re ti111ated. Wor i such a big part
of I ryo11 ' liji bu, i alway balm1 ti 1dlh om .if . I lrai I ritt n
p reviously abou.t the advant.ages rl1at flexible u orkitlg hr:ing to botl1 TR a.nd
i mplo
- it i a t1 0-1 a b n jit. I llat no doubl that m mori,,ation t,
work .lu~re and lleli1 er re· ult l1a been
d i1ifluem:ed by this.'
. harin kn wl dg · and h I ·ng o h
tt
d
'l realJJ' appreciate lmw open me re about hat we learn, and how 1 e "1)' to
pu h our kmn ledg ,ut
ud .t e t am. Do i11g demo • wrilin docu ment •
gdting up on- t age a u er oup ... 1 liJve that tu.JJ.'
1i ~bi-n
'Therr is ti den ii,
',n a teC"hie 11.t hmrt No amou u of 11innagenien l ca11
t work ev ry day, rhe Ju~er 111 · nt of teclmology 11,at I
take that ouf of m
· 1ne ill r ay mrnc of the a h
om e.:1
la
h a.lien . · e -tatus quo
c t agu are a moth atim1 to cmne irr work very day a they co, · i t -,,ay
t
clzallet1ge tl,e I ay things a done. We always erid up storming m:1 l1ow
I
ti , d' tllitig cmcl ii alt a
lo produ tili e di cu .· ion .'
ol ing puzzles
'lifi i one big puzzl . I h
o.y · ,!,joy d .knowing l1m ,md why thing
rvork. 011ce I learn lrnw n eth.it1g ·works. I can u e it more effectively. Tl1ere
i al ,o ah a a pl. a ur in t: ing thing thm a, thoHghtftdl writ mad .
And teaming fro m diem at1d applying your ow11 creaJions.'
, mp , ri ng o her
'No.thing get me going more than the satisfaction 1 get from being able
to empow r o,neotr . B ii 11 aura ing a o-l ork r t,o adapt to durng •
rtm011i11g impediments for tile team, building a bette,r oftmare to empower
our custo,met3' acMe1•e their goal ... everything xcite n1e.'
Chap r 10: Motiva i n
•
ling ,o f pro
·1 wm,l.d like t,o 1w.ve ,a vi inn of tl1e career progres path, sol can .r ork
t ward it. TIie organi ation gil , u r our, e t· det nnine u hat u e all an
a,c hiftrt tJnd r lial we need lo accompl" J, our g·oals is tlu.· nw .l irtrportanf
Th
tiling for me:
•
Givin back to tb - CiOmJmmity
'Wheu 11or ar work or with m f-amily, tlle thing thal J enjo I doing the mo t
i voluutr:ering my .time to #idp oi/Jer . ll i a dream come rru fr ,~u pas itrn
m,e_et wDrk. 1 derive a lot' of pride a11d ati .faction u arkil g for a co,npau
that aim to nmk:r o dWer 11 in th - i ortd and ifl ti • i'fl of tlJe not o
privileged, like the i ork of the Thomson Reu er. Fow1dat"on. Thomson
R ui
pro fd m with a, many a11 zu to git
k. to lh ommunil_:
•
Self-actualisation
'J njo_ applJ i rg mJ tal nt t a gr ,ner g od.
aud sharing my e1perienu-s with oth.ers · ve
1 aluable
· o1u1io,
ro
customr r. <md fi Ung
t aming 11 .thing
atisfying. l lovt~ delivering
lt1H1
part of 111 dev Jopm nt
process.'
•
n
f b 1 ngin
' en e of belonging · a hunum needjusr likefaod and helJ.er. , efact that
Jam a part of an org 1 • ah n rlral pror,1ole a trong w r - hie alwa
makes me 1l lH1 f ta 11tnbute more towards the r nmwn goal of .t11e romptrny
and t1ie team. I the c mpa, y care about 01e 11Jellb · of e-mplo) ee , I a
all' mplo e,e fi el l k gi' i11g ,ny JOO p r nr r , l(e e th, 01nmou goal u
Jmre in he organi ation:
1
•
:rk n i:ronm nt
'The z ctrkplace enviro,mient ofte,1 has ,t bigges.t impact au lzow mo.tivated
_a aP al u ark. You lJ1ri1· u hr.n au are part of an upbeat. · upparti11 ·
wfr:01m1enr th'fl.t gee you "iti t-h one" tlrnt ym, n.eed to be in so tl1at you:
u ·c d. Thar' • a ti wll
'R iffi r n1 II r ! I fl rt nat f Jr,w a ur,purt
team tlzat helps motivate me an.d enroumges u1e to be better at wlu,t I do.'
•
Th chall
r
ng
get me up in rhe
11gaged u II illlo th nigllf a i ll. One dowr1 ide
to this is that the dwllenge will also keep n1e up tiirau9h tile night a well,
but that' a ,different chaU 11ge of it own. f' e foirnd ll,at it' .le important
abaul 111y intere t in die l1nile11ge li • tire chaUt'uge it elf! This lra11sceud ½ good challe,Jge tlrat 1 c,ni sink my .teeth into 1vill 1wt on/
morni zg, but u ill ,eep m
1
o,rk and motivat
my l{fe
i11
in, umerable ua .'
7
Prin ipl
of G n ral Manag m n
f m·1
'J thi11k ihis is a cousistem theme. J have an awesome wife mho uppor me
, ilh all tile cm.z work/travel/ po,rts/11on -profil wor 11.ial I gt"f m elj inlo!
My kid , both girls~ 9 tmd 8 are smart, curiou and inquisiJi:oe all .the time
to the point rdzere I had to get an Echo to ditt,~r1 ome of the qur: ·tion to,.
W11t:11 l htu e cm imporUml pre ·e:ntatian la ddir•tr, 1'11 Jamil , i u ually my
fir. t ai,diencet Being excited abo11t tl1e r, ork tlrnt tn • t ife and I do · a t t'TJ'
important atlribut fvr the, 1 lo e and mod, I th irfulur, ii• s arouml.'
•
CHAPTER ORIENTATION
To Lh
·pon ibl manag r and 1 d r, th m )Qi_y
of th · r ani a i n r
important stakeholders. The r ponsible manager and leader view the mployee
an importan Iii
r and ontribu or t th .· rg nisa ·anal goa . Th
Io
view employees as .h uman beings. that be , ant Lo at with r pect provide \ ith
and ·eel in Lh ,. r pla e nd prote t th i.r health and aft ty.
pp rt.unit lo gr
Wb.aitmakes people happ andpmduc:tive at" ork? l it money, benefits, recogn·non,
int r Lin w rk,
rk_/
bala
or m thing I aJt g th r? lf p pl , , · ir
di Jere.at things to be motivat · at work, as we have een i.n the openrng case from
20 p opie fr m th "a.m
p ny I a ·og 20 different a
t·
t ir w rk that
m,otivate th m, bow an an or ni ation, a mana r and a 1 ader keep ev -ryone
mo i a ed to work towa • the a ompU hment of the organ· ·on· oal ? In oth r
a l ader · t individuaJ to pu u - o.r anisation I
word , ho can a ma,
goals willin ly
pe i tentl ? I - take insight and VO) hard ork to moti ate
p opl and t • k p
m m i at d.
1
-~
Motl ati ,
e Ii are generali ation abouL th 'wh • and ·how' of purpo eful
b ·havioµ. How· , r, to p rfonn wen p,e pie need motivation and ability. All th
mo:ti ion in ·, he world, for example, will nm enable a ,computer-illiterate person
to re· · ompu r ·pr d ·h t iudi aU _ riou out om • fa propo d pr 1 L
Ability an kills .ue al o rec1uired. Therefore we tart thi chapter with a definitio n
f th
·rm 'm ti lion· an.d an , . p
U n f h m ti a ion m . I.
nd w
discus the most prominent mott ation theo,ries, namet the content and proces
th ri
f m tiva ion. th rei r , m nt th ory as w II · th g aJ- tti.ng tlt ry
of motivation. ,e con.dude the chapt r by foc:usi::ng oo moti ari .n thro ugh job
de ign.
' 8
Chap r 10: Motiva i n
LEARNING OUTCOMES
After stu d in I this cha pt r, you should b able to:
De ne motivation, explain the motivatio model and depict ir
L01:
diagrammatically
L02:
Expl:aln t he content theories of motivation and' the practica,1s eps tha
r spansibt managers and lead rs can ta to motivat employ es based on
these themi ·
L03: xplain th proc s heories of motivation and he pr c ·ca Ist ps that
respon ibl managers and leaders can ta
to mo ivat employ es based on
these theorie5
Expl,mn ·"1 reioforc men
L04:
heory of motivation arid the p
ti I teps · nat
respo .sible managers and leaders can ta e to motivate em plo ees ased on
this th orv
LOS: Ex.plain the goal-setting theory o motiva ·on a d th
r po ibl manag rs and I ad -- n ta l
ractica steps that
,plo
sb se on
this theory
L06:
[)(plain
mo i\l ion through job desig
KEY TERMS
con ·ent theories o motiva ion
job rotation
c:of dimensions o work
Maslow's hierarchy o · ne
effort
McCJ1elland's theory o
qui y h ory of mo 1va ·on
expecta ncy theo
goal-s
·
mo
tion
of , o ·vation
otivation
motivatio
motivatio model
n ds
performance
·o
es1
r1
nlary m nt
job
nsmn
richment
l01 : D m m ti lion,
10.1
r an.I
sa isfaction
plafn h :motiva,ion mo I nd d pi it diagramm .· ally
DEHN ING MQlilVATION AND THE MOTIVATION MODEL
Motl ation an be defined a the et of fore, that initiates dire . and makes peopk
p rsist in th 1r action nd fTorts to a omplish a oal. In th p nfo
of lhi
1
chapter. 20 emplo ees at Thomson Reuters identified as.et of 20 forces d1af initiates,
Prindpl
o,
6 n ral Manag m n
d m kc th m ·p rs· . in
and efforts to accomplish their goals. Thl
ieftnition f m tiva i n
n: ·a ly ha thre
compon n which reqnire closer examin tion:
•
Moli
tion
bout th initia io,n
e fort: This part of lhe defmiLi.on 'ugge s
mat motivation i concerned with the
t of foroes
hat imhates, dire ts and makes
people persist in their acf ons
an,d ffort o a omp lli h a
Motivation is the
goal:.
ch ice that p □ple make in t nns of ho,w
much e:ffort: co put i.nto their job. for example. an individual need to decide
h d1 r h or h i in r t: d in buildin a re r an.cl doing r aU w n in
performance appraj al or only in having a job that pays relativel well.
•
•
Motivation i about th · clir,ection of ffo ; Thi u g l~ t a moti ation i
con.cemed with the choice that people make in terms of wh re t'o put effort
i L th 'r j . F · r . mpl an individu l n d to
d wh h r Lo I m
new kills for career purpo es or spend more time per ectin admmistrati e
t ks rel ting
hi , or h r j b.
Motivation is about the persistence of effort: Th.is uggests. tha motivation
i al
n m d ab u h,o, · fon o ut ffi
a job b fi r redu ing
or eliminating it. or example, an mdi idua l may de ide to quit ba.tfway
thro ,gb · rtiary qualif1 a ion or to e: • · thr ugh
he nd in order to
1
at ai.n his or her goals.
M 1 p pl b Ji v · ha th tl ,
,n
f initiati. n dir lion ar p r i t
~ ill lead to a certain pcr orma c:e. ln other w rds. we have effort (' on isting o
c I tha 1 a to, p rform nc and p rform n
initiation, di11 ction and p rsi
will lead to atis~ ction ( r dissati: Faction). Howe er, what managers and lead rs
want to know i
a · I, a.els · o the effi
f individual
rui he- will do almo t
anything to moti t the·r mploy
lo pul extra ffo - to o lheir job . Wh ? I
all individuals are mo · . ated 10 put effort into !l:h~1 "db· and attain individual
g al lhi i l I d to th att inm nt of d part n al o. ] . h :1. inm nt of
depaitm.ental go wiU e entua Iy Jead to the attainment of broader busines unit
g aJ . u] · 1 1 I ing to th · ainm n f. h ,o , r 11 g ai ., F h or ni i n
and i mission and vi ion. For the :re R nsible organisation, it will mean the
alt· m nt F ·." u ainabiHt ,
o ' ibili . nd thi 1 oal . In rd r t
und t nd how people in the orkpla ·e can be motivated., we need lo understand
th motivation pr es . a e p,l i -, b the moti ation model.
The motivatio.n mode] has th
•
•
ollowing elements:
ds
lh phy i al nd m ti n I qui m n that must b m · t
ensure hum an s urvival and wellbeing. People are motivated by unmet o,r
un a.ti fr d n ds.
An indi idual's unsatisfi.ed needs and wants create an unc:omforiable,
r .[v d. Thi t n ion J
a lion
int mal tat f t nsion that mus
from the indi idual. and actio n leads to effort.
Chap r 10: Motiva · n
•
fli rt fan ind·:vidual · a 1mc i , of h'"
Th
J1frsiste.nce.
p fl rman .
fli rt f th individ al l
•
Th
•
The perfurmanc,e of the individual lead to a tate of .atisfaction.
•
di
·i
f molivalio,n · an
ompJ n i ring r wanb.
e can diff:e17entiate between two kind of rev ards,. nam l e.x rin ic and
i lTin i r ward . xtnn ·i
n , · ibl
lh JiS and r
given to employee ba eel on their performance o c mpJete certain tasks.
fi r am. 1 alari · . en fns . b nu
and p m ti . . I trin i 11 wards
are th, natural rewards a o ia ed with performin a ta: k or acti ity for it
o,wn •. ake. Fore ample, o er and above th e t m rewards .of rec ivin
alary and a bonus an , mploye fmd hj or . job enjoyabl 1 inte]\ tin
and fulfilling. lntrin ic re ards ma also inc de a e ~e of accomplishme11t,
h n to] am on:1 thin r w
a hi m nt fi ling of p n ibili ,
or to internet with others. In the opening case of tbi chapter, it i in er . ting
n l h t n n · . th 2 m ... v ,..,...,. indi, t u · Tin ' ward
n
aspect of working at Thomson
. that motivat
I the aspects
1i t d reJat d in ·n i
a . a ban t m
n imp
hav ing flexibili y, e powering others, giving back to the ,
unity, effnvir nment and f m·ty. Thi bring us t th
ac ualisation. a gre w
moti
ted in Fi Ufie 10.1. ince hum needs afi unli.m.U d,
the - de will re eat i elf over and ove.r again,
-
Il .......
,.
=
----
-.. . .
·ic_nS!O.tr
-
1i
.
...... I
-
.)J'L~Wafi.l~:' ilm tii'!ii('l
.• extrinsic·
~
,'
·
I
figure 10.1
-
~'
. -
-
'. f'>e,.rcir1'nancl
, , . - , ..
...
~
.
'-
The. motivation model
01
Prindpl
o,
6 n ral Manag rn n
H · an m n g
and I ad
u
f h mo i ati n m d l in th
workplace? Because people are moti ated by unsatisfied need and wants manager
and I ad rs in th
rk lac n
t . J am h t tho en d ar and addr
th m.
his is not alway a straightforward ta k. oec u diffi rent needs Lheori ~ u gest
different need categori . 1n l.ibe following ertion we ill xplain the con en,
th •on o moti tion, of which Ma law• hi rar hy o· n.,, d ., H rzberg' twofactor theory of motivation and Mc:CleHand' theory of mo Nation are the mos
promin nt. Th
h ori, addre Lh qu tion 'wba mo i a p pl •.
L02:
10.2
xplain th on tent th · or es o motivation and the
ti I st ps t a
respomible managers and leaders can ta e to mo ·vate ·11plo ees based on
lhese h· ori
CONTENT THEOR.I ES Of MOTIV TION
The conten theories of moti ation attemp o
id ntify wh
th o · d and
ar th·
people want to · ati fy. Looking
mod l in i Ul' 10. l, th
· ri
· · Jarity
theories of
m . ivation att mpl ,d n ify
Th e con te rf
what the need and ants are
o n the starting point of the ruo1·vation model.
hat p - pl
o a isfy.
M , low' hi r rch
d , tkrzb rg'
factor theory o I moti ation a d McClelland's
th ry of motiv:· ·
· in Lh fr llowin
10.2. 1 Mas w's hi rarchy f n ds
Abraham Ma io published a paper in 1943 in which he propo ed a hierarchy
l' pl · , ~ds.
rding lo
low,
i a.cti n
achi d n d m i al
rowth to the next tage in :the hierarchy. he ba ic order of Maslow' h.ierarchy i
a
U w:
•
h y iologic.al n eeds. Physinl gical need :refer Lo the pby ical needs that
humans ha e for urvival. Th e in lude. fo r example. th ne
for food,
at, r, othing and l e , for xamplt~. PhysfologieaJ needs are gener.111
·ati fled through a minimum wage and o,od living conditi,ons. Satisfying
th
n d is fi rretl to . · th 'desk · lo urvi '.
•
Safe
•
level al o referred to• a the e ire to
Lo e and belongiu . need .
lon refi
o th ocial and int ·-rpe nal n d
indi idual :u1d th · ir
relation hip with other uch a famil and friend .
•
• em ne ds. t m n ds. a] o all · d the d ire to b important, r fi r m
peop,l e' needs for acceptance, respect and worth, not onJy by otbe b ut al o
by th ms Iv ·
needs. The afety need of peo,p le, also referred to a , the desire for
omfon, are th n d or physk:al and onomi al afi ty and , curity.
r ··
02
Chap r 10: Motiva i n
•
f-a tu
r
ti n n d • Ori inalJy, th '
a
• high t l v I f n · ds
characteri ed b the realisation o a person' full potential, accomplishing the
utmo l
If- ctual ation n els are al refi d · a the d ·11e t
hi v .
According to Maslo ' theory, th low r-md r needs must not only be achieved,
bu master,-d before one · aware of the need for elf-actualisation.
. ell'-tm:ns endenre needs .. This l · el o needs '1/a added la er b Maslo
to the five le el o need exp lained ab ve and refers to completing
elf-a ruaH ation b u-a, cernding the elf in altrui m and pirituality in
c,o ntribution to a higher goaJ.
•
Understanding the pro~
and. the pecific tag p ople move hrough to selfactuali ation and eJf-lrnn e.ndenc allow the mana er nd l d r t facllita
m, ,e menl and o ercome ta ili'rta ·ion h1 individuals and in , te organi a Lion.
Sati fied needs and wan · wtll no moti ate empfo ees. Figure l .2 depic Ma -low's
hi. ra hy or n d .
,f-tran · nd 11
AJitruism, spirituality
S~lf-aduar ation
Pot ntil
stee.m ··-·········-······················
R cognition, resp, t
Lo
nd
rr to
impor n
I ,nging
Community. familv, fr '
$ . 1:f. ty ••····-·····
Seil f and work
C
rity
o survive:
• clo thing
:Figure 10.2
Maslow•s hierarchy of ttds
10.2.2 He1rzb rg ·.s t wo-fact r theory of motivation
Ln 196 , p y hologi t red ri H rzb rg p['i p d a th ory o . mpJoy ·moti atio n
ba ed o n job atisfaction. His theory implied tha a ati fmd employee is mo ivated
Tom within to work h rd r and that a di ali fi d , mp loy i . rm , If-motivated.
Hi research led him to estab lish his two-fac or theory of motivation. di ferentiating
b t , n h gi n fL
nd m liv
0
Prin ipl · · o; 6 n ral Manag m n
h o,ry tat
· • H rz:
th t hy1f n f to,rs d no
or
motivate people to perform at hlgher le els. The ab ence hygl ne .actor.;
ill caus p
hara. II gien fac
re not pr nt in th
actu l job i elf bul u.rround the job. for example:
•·
mpan p licy nd dmini tta ion
•
Supervi fon
•
R lati n hip wilh u
•
Work conditions
•
, . I ry
•
Relation hip with peers
•·
~
•
Rel tionship with subordinates
•
· tatus
•·
•
rvi
rsonal lifi
ecurity.
Moti ators. Heriber ' research sugg
that a · atlsned employee i
mo i ated foom within to urk hard rand that fa to
u b a Lhe , cllowing
motival p · ple:
•
•
•
Achi v men.·
Recognition
Wo,r i cl
•
R ponsibmty
•·
Ad nn
•
Grmvth.
m n
Figur 10..3 p vides an illustration of H rz et'g's tw•o - factor theory of motivation..
Motivation factors ·ncrease e.mptoye 'job
saitisfact1
1on
P or hygi n fa
j ob satisfaction
Figure 10.3
4
H nil r!J'' tw -fa tor th ory
motiv tiion
cs'
Chap r 10: Motiva i n
10.2.3 McCI II and ttr ory f motivation
Psychologi t David McClelland devdoped a ne d llieory in the 1960s,, at: about the
am t:im lhat H rzb rg d ve1 p d hj two-fa t r th ory f moH .a -·,on. ·
lell nd
ug e that aJJ people. r-egardl • of 1heir personal. profd have thr e motivational
needs tha affre t th ir p rformanc , nam l the need for a hie ement, the need for
alTillation and the n - d for po er.
•
•
•
e d. For achlevemen . P ople i ,h a hi h ne d for achievem nt prefer
c.hall n ing ork that provide opp rtunity for advan err nt "nd al' by
imp lication motivated by their a- n accompH hment
eed {h affiliation. Peopl · with a n ed for afTIHa -· n rnve ad ire f, r
acceptance and lo- e, are ociall indined. b · .implica ion prefer group work,
and b natur wlU put ffon in mafo ai ni.n n+ ton hi .
eed for pov er. People with a need for po ,r have high de ire for total
na ure are m iva d by
ontrol, are ornp ti i , tu ori nt · 1d
personal. pre tige and statu , and wi l - ork single-minded]- (cut-throat) to
a hl
p · ·n l o l •
n at th
i f
up
I.
McOeUand' needs, as indkal
abo e can be das ifled on a ·cale of '1 w' to
·high ·. which wUI iv an indt ·atio · f dominance in on • Lwo or
th
categorie .
of m ·va, ~on discu _sed abov w
- loped. in 1943,
Th thtt eonten
]964 and 1960
low Henbe.rg and Mc□eUand, resp
. In re1ation to
th - · rr;
or ih
-1 pand m.J
ti th workri
Brandon HaJI. roup'
20 · ·
o . · einent rud:y imikated that
· are mostl motivated
fwhi h ··
by
h· . - r
•
•
• a low and Mc □ell .
b longin "· A
.
rommunica:ti:ng frequent!
"bl
ial]. w ·
ork and c,ollaboration. Manage
o · l th y h
o g t mp
U
nb rg· motiva
, th
chievement and affiliation needs) :4
re ,t d by
· g a mllich information
d bard tim .
and .leade
hould use\ hate er
th r 1o, lv prohi m .
•
Recognition and re rard for good work. People do extraordinary work and
d mon rat. a t.011i hin kindn
· p i Jly duri.ng tim ,o f · ri i . Man g
and leaders hould make ur-e that they ,e ncoura e people to re ogru e each
o,th r in what v r w
are vailabt . Man g
h · uJd a· ,. tra l p
recogni e and, if practical rewaird mploye,e or going the extra mile to help
colleague and cu ome ·.
•
Meaningful , ork. M:magas and leaders bould how mployees that lh.e ir work
· meaningful. Thi ran be d me ,
haring the outcomes of g. d work don .
•
Freedom and the authority to make decision~ Managers and l,e aders shouJd
giv emplo fleS th fr edom 11d au.th rtty to mak decisions by trustin
th m o do o.
0
Prin ipl
of 6 n ral Manag m n
· an g ·
I ng way
l
r infi r
mp,l ·
· trus. in
the organi ation moti ate them and improve their impression based on how
man g men reac ed in th a
f ri i and u rt int .
The question that \ e can now ask i 'Given the content theories of motivation, what
pra ti al
p an mana
and l . d · t . to m ti a
ploy - ·
in rea ·
their efforts to the attainment of the organisational goals to become a responstb]e
org n· ati n?' Th re a a numb
Fpractical t p tha man.age an 1 aders can l k
Lhat e can deduct from the insigbrs pmvid d by the content th ori . of motivation:
•
a tarting p int, i, · important for a r · po,n ibl manag r and lead r o
hat the n, ds of employ
are. Organisational mana emeot and
I . de hl will mo t ften bt: urpri ed that, in t ad ,o f mo,re mon , p ople
n ed mor reco ni ion for rn ir work, m ybe day-ca fa iliti -· for lheir
children. or they want to ork for an organisation itb a g
repu ation
f thi i ondu t nd ar ri r th n ironm n ,
ha al o
n in Lh
lnow
opening ca e of this chapter.
•
w
rn
· d
· fl t
by higher-order ne,eds as long a lower
I.p
·
l h · m an
m:
10ul
wrn not b mo iv
, ain an ati fied.
ith h
d
n,;;,._i.;,;>;:i,ary
equipment. training and knowied!ge to ·
rk environment free of
p,hy i al ri ks. rnp]
uld b p
o,u
pr viol fma ·
ri
and offered a benefi
a
e that will protect their familie · .
. good
cam
medi aJ care. In oulh Afri , the first- er nati nal minjmum
inlo etrect on I January 20!9.~ , of' the goal of tl1e Miniruu
e Bill
· to · atisf the lo er-ord r needs of S uth Afric n e
b will
b lowly pha5 d in in tb a d ·uJtur and dom ti
ffi ts
and after-effec o th C0VID - 19 pandemic wiU ·
, to come in
worH
worid. Un mpl ym nt
Lr m ndou ly
and a . eek
ery ousebold o,n the planet.
organisatio,n s
n ·d o
. I
r- ·
pl
·.
1
•
Managers nd leaders should ex e.ct
du u
t Lh
., n d
air rem
, lion, providin ·
ange. This is
, b paying
:reco " muon to empto ees.
emp
· fy ph iol
ch ge (for examp,]e,. the
n d ) or situation
ffected by a pandemic, people
b om mo aware of th
or an individual' person
before may not mod ate
ogy ·
~ able developm nt
him
L motivated people
onger. Pe,ople' . need a o change a they
ma.lure. for
a
am.pl • a hi h · a]ary may rnoli ate youn r mploy
havejust graduated, where
tt · h lth b n f1 .
who
more mature employees may be moti ated b·
As needs change and tower order- needs are sa · fied 01:ganisations bould create
opponunili. fi r mpJ y
f fy hjgh r-onier n ds. lt · importa l t n t
•
06
Chap r 10: Motiva i n
w rds (su h
mpli mn
chi m nt.. 1 min
m l:hing
new and interacting with o he.rs) that we explained in the moti ation model in
ction lO.l oorres nd with Ma 1 .w' high r-oJd r n ds th
r a n med
itb relationship Oo e and belongjng., • teem nd self-a: tuar altion) and
McClelland' achlevement and affiliation ne ds. Ther .fore, one way for managers
and l aders to m t mployees' hi h r-ord r n ds i to -reat - o_ppOrtillliti.. for
emplo ,res to experience inttin ic m-va:rds by providing the,m "th challenging
w ik.. n o raging th m o t ' g , at r respor ibility fi
1r · ork. a.nd g:i ·n
them freedom 10 pursue ta ks and projects that they fi
naturally interesting.
th t intri
i
as th onLen lheori . f moti aUon o us on Lhc · hat' of moli atlon,. th proces theorie focu on the •how' of moti
the n t ection. we di ru
th proc
l_h o-ri o motivation.
Wh
l'i
LOJ:
xplain the process theories of mot v tion antJ the prac ·ca I steps that
respo .sible managers and lea ders can
hese h ,ori
10.3
PROCESSTHEORl,ES OF M
t
o motivate employees based on
IVAT1ON
In con rat to th ronten
ori of motivation
lha aim to id nli fbe ue els and · an · that
people want to
· ~ he proces theories of
motiv ion fo u o ho moti aUon of p opl
actually ,o cur . These theories e:mph ise the
pr
di idual g al
Uin and t'P
evaluation o · a · faction after the ac.hievemen
of
.T
r lh m t promin
theories of moti . ation are the eqlli.ty and the
an th o ·, of m tivation.
The process theories of
m 1v· H n mpllasis, · h·
process of individual goal
s l1ing and h, valuation
o satisfa,c tion a ter he
a hi vem n of 91oal
10.3.1 Th quity th -,ory of n, ,ivat1ion
The equity theory o m tivalion tat that p ople will be motivated rn ork
when th percei that th y are being 1:11 a. ed fairly. Th equity theory l-r e
Lhe importance o perceptions. R gardless or t.h actual level of rewa.rds p ople
perceive, the must al o percei e that, relative o otheis,. the are bein treated
fairly. h quity Lb ocy ha thre ba i
mpon n , nam ly inpu , ouk m and
r;eferents.
ar th ontrlbuti 11 that th rnplo , n1ak t - l.h
organ· ation, for ex.ample rus or her education training, intelligence
exp ri n
ffi rt, numb r . .r hour.,. worki d during a - p m tim and ability.
•·
Th i.mpu
•
The outcom are hat employees. receive in exchange for l:heir contributio ns
r inpu , for , . ampl al ri • fring b n flt
1b I , job ti I, ,
promotion and recognitions ..
07
Prin ipl · o 6 n ral Manag m n
•
are th r p pl wi h
h n p pl
om ar
hems Jv
determine whether they ha e been treated fairly. U ually, people ill
ompare 1 m lv wHh refi r nts who hold th am r imilar job . or . h
are ot.be:rwise sim.ilar in gender, a e, ra , Lenuff or other ch~ lcristi •
rdJng to, th equi.ty th ory, p pl will oompare lh ir ,o t om /input ratio r'/1
ratio) with the Ofl ratio of a l'eferent. When people pe.rceive Uun their 0/I ratio i
ual t th 0/I rati
f th
fi nt th
mcon l i th th r ing t d
airt and I.hey will b motivated hus people wiJJ be motivat ,d when.:
Dutroml' (sdf}
Input (self)
-
Ou.[come t~ferenO
lrtpu,t (rtfetent}
When people perceive that tbeiT 0/1 ratio is different from their referent' 0 /I ratio,
th will , n lud, that th y h · b n · r,
d i.
n · ·r mann r. In qui · 1n
take nvo forms, namely under-reward and o er-t,eward. Under-rewar,d o curs · hen
th . mplo ee ( If) rec i
fl w, r ul om r ta r
o input than the refi rent.
Wh n p, opl p rceive th ,t lh y have bee.o under- rewa.rded they tend to foe.I
fru. ,:rated and ex erience anger. Overard o .urs when the emp l
rece·ve
1:noR: oul ornes re.lativ to inptll th.a n th rel rent Wh n p opk p r · -i · h Lhey
ha e been o er-re varded. the
1 ] experience guile.. ot urprisingly, p
pie have
a v ry high to] n ror v , w . r TI1 qu · tion ha
n
a a k i · .a
happens when people pen:ei e ·ne,quity in the workplace?' In other · ords, what
happ n wh n p · pl p
iv L • lh ·
v r- r und r-r
d d?
People who percei e i:hat they have been under-re arded ill try o re tore equity
by d r a ing , • ih d'ng th ir inpu , , or "X mpl b
·an o working fi w r
hows or calling in sick. AJternati d • they will incre e heir outcomes, for example
by
g
ra· • pproa hin a lab ur union
ad i
r th I ,bour .
r
as · tan
to increa e the outputs. Another a ot restoring equity i to rationaU e
r ,di tort input r ul m . Thi r rers tom king m nta1 adju ·tm n , i L rm · f
th
I ratios. or the 0 /1 ratios of their 11eferents. Another w,ay of resto.r ing ,equity i
han ~ che r fi r nt. In thi ca , ,
mpa · th m elv . with som n alb r
than i e refuent that they had been ll i 1g for the pr1evi.ou 0/1 omparisons. lastly,
when none of the method de crib thu far i ucce ful in r · t rin g e ·ui • the
mpJ y, m y ho
lo l · a e th iluation by l a in their job l tran f, rring lo
another job or jncrea ing ab nteei Ill.
What doe I.he eqw y theory of motivatio n conlri.bu e lo re pon: ibte ]eaders11ip and
m.ana emen of org,a n· ation ? First, mana ers and leade - need to look for and
coll"ect major inequ:.iti in th workpla :
pre nt -mploy
From p r eivin
high level of under- orover-:r;eward. Second managers and leaders need to ensure
tha d · ion-making pro ·
a fair and , hi ·al, p iaUy · far a · th · 0/1 ra i
of employees i concerned.
08
Chap r 10: Motiva · n
10.3.2 Th =,cp - an y th o,ry of m tiva ion
The expectancy th ory of motivation j based on the principle th.a not everyone i
attra ted to h ame ri. ward . H v ai I ok at th foUowin r - ho attra iv, do u
fmd eacb of the ollowin J1ewa.rds that an or ani ation is offering its employe at
middJ -mana emen l el:
•
A company concierge ervi e that picks up yom car from the deale:rsbip
when i i ervi ed
•
A '7 to 7' ' ra eI policy that · tipulate that no on ha to ka e home for
bu ·in
tra el before 07 ~ D on Monda · and that ~
h u]d b born
from busin · trav l by 19:00 on . rid ·
•
The opportunjty to work from home thr
only two da
- k..
•a
per w ek and b at the ff1ce
If y u ha
hildren, · u might lo , th pp rtunity lo
rk
m l]om , bu if
you do not, you might noL be interested. If you do no lra el mu for bu.sines
purpo es. ou will no
interested in th · ' 7 o 7' tra e1 p ·cz . So. different pe pl
are attracted to difl7erent r wards
e I.he dliITeren
p ts of l:1om 011
Reute that moti ates their 20 employees in th open:~ g ca ). The e pectancy
th my · motivat"on at · that p opl w·11
, ·v -d ,o th xtcnt to hi h
the- belie e that rbeir efforts will lead to good performance. mat good performance
wm b r• ani d. nd tha · h will ff d 1 ctfv rcwa
The expec anc:y theory · ba ed on three factors, namely alence, exp ctan ·· and
in trum - ntaUty.
or
VaJ n e refers to the att
or de irabili · various re ards u outcom .
Th ex:pec ncy th my r
gnis - that th same re ard or outc m • for exampl a
promotion wiU b highJ at ra ·veto ome eople. ill be bighl Hisliked by others,
and ill n l nm mu 1 i fi n on
ay r h oth r to ,
. Thus, hen p opl
decide ho much effort o put into their job, the · il.l µ ide1 the valence of all
an
m that th
rec
fr ~ lh 'r j b . Th gr, a r
p ibl r
sum ,o f · · ·
- · ch of which can be positi • negative or neutral, the more
put in
t
•
. o me rela ·
.en ,effort and performance. When
~ ·n i
r tJ n
mpJ
ir ha work and f~
ill r ult
in ood performance, o they work }wtder. Whe-n expectancies are weak, emplo .,ee
b Ii
th n mat r h th
h w hard tb y wori', th wll n · b bl
to perform their jobs u c full . therefore tltey do not orl a hard.
·
t th p re iv d r l tion hip b tw . n p rform n:
L Lly in lmm ntallit
and Jewards. When instrumem::ality i strong employee will believe that improved
p rform n wm l ad t b l ~rand more r w rd, . Th fore, lh wm
r h rd r.
However, when instrumentali is weak, emplo . ees do not believe that b tter
p rforman ·
resul in mor or · n r r
rd . Th r f, re th will d1
not t
work 31 hard. For pe,op1e to be bighl motivaLed all three facto , of the expectancy
w·u
0
Prindpl ·
o,
6 n ral Manag m
111
p tancy nd in trum n ar · ) n
to b high. If any of th
·actors declines, o erall moti a.tion will decline too. The theory can be repr-e ented
by lh foll wing qua ti n:
th ry (val
Motivatio
Exp c an y
In trum ntally
Figure 10. . d pi l th •x:p ctan theory of motivation '
effon an individual will put into hl or her actions.
ing low much
• Perce· ed
effort per orm
pro ba,flrty
rf m m: •.
II t.'
r · ard
prollilbinty
m lrum ntalt
(exp ctancy)
1figure 0.4 Th , >e
Re .
w
·
·
le m nager and leaders can u e the eJCpecrnncy theory to motivate
·
galh .
· om
o tabH h wha mpl
n'l
. rew
· idu l performance in a way that is clear
a
pl
to mak decision that will
wiL ad t
od p rforman
In the foHowing ection.
LO :
, mpl
uld b
mp
d
expectancies that hard work and effort
e ocus on the reinforcement theory of motivation.
Ex pl.a in tne rein o cemen heory o mof wtion and the practical steps · ,hat
r spo ibl manag rs and lead rs can ta to motival mploy s ba don
this theory
10.4
REINFORCEMENT THEORY OF MOTIVATl'ON
Th • ninforcement theory of nmtivaUon is bas d 011 th premise l.h L behaviour is a
function of its consequences tha beb.a ·ours foUo d by , o itive- consequences will
o u.r more frequ ndy . a1 d that b haviours ri Uow •d ilh r by n g ti e onsequ -n or
not followed by positive consequence ill occur less fiequently. Thus reinforcement is
th pro
of hangin bell vi u1 by chan ing th
lha fi U v , ha i ur.
Chap r 10: Motiva · n
Th , al'I
• ur
mp
en , f th r i ,fi ro men
theory namel.y po "tive remfol'Cement, negative
rein.Ji · em nl, pun hm nt and t ncti n.
• Positi e reinforcement strengthens
b h i ur b foUo ing be.b viou with
de irable consequences. or example.
peop]e c-an e rewarded for 1ecyclin ·
p p, r at a uni
1
•
•
rsi · - ea •h k.Ua r.im o
Th rein orcement heory of
motivation i ba d on the
premise that beha iour is a
fun ,ion o
ons qu n
hat behav10 rs followed by
p 1 1v
o ·qu n
will
occur more frequently, ar:1d
h t , h viours • ith foll
d
by ne ative cons, quences
,or
ollow d by po itiv ·
paper re ycled i rewarded with poin
that an b · u _ on oup n for di ing
hopping or entertaining purposes.
gati reinror ·m n.t trength n
nsequences wm occur less
behaviour b- withholding an unpleasant
frequently.
,o n qu n wh n mplo
p rfi rm
a peciftc behaviour. Thi . · al o called
a oid . n I amin - p pl
rfi rm a beh vi, ur to a. id a n gati
co n equence. For example, al a uruver ity the principal makes so L are
ngin fti an wer admin· rat:iv
e h, ni nquiri fmm · d,e , wh n the
mdent y tem is offiin or . operativ melhing Lhat th
Would rather
u1d rather en ure that the t , ent
em i
avoid doing. Ins e:ad. they
op
tiv · durin p ak i
wh n tud n . n , d H mo ·.
Pun;· hmen
ehaviour b following b a· 1 rs with unde irable
in roost
. F cxampl · th tandard puni hffl! pro
bu in t i an oral warning foUowed b
ritten arning, foUowed b
1s to di l: plin nd v ntually f,rin a
ploy , .
Extincti n. ·s a reinfmcement trat~gy h
a positive con equence is no
Ion r altowed to follow a p,reviousl I info · d b haviou . B r• mo ·ng th
po i · e consequence. extinction •ea:• ens the behavioirr. making it less likcl
,·cur. M · bu in
gi t · lad
and man · rs fr an iaJ . wards
when the businesses perform cll. :Based on 1.he principle o extinc1fon,
will not
ir t ad and.
n g fma n i lly (i. • lh
busin
pD' iti e rieinforceme:n:t would b · re.moved , when the busin
per onns poorly.
W ·an n · w
lv what pn ti I ·:t , resp n ·i ,l manag , and l
,n
take lo use the remforcement theory of mo1li ation to moti ate employees. First. ic i
imp rt nt t id ntif and nal . · ritical p rform· n rela d b b viou Manag rs
and Jeade have limited time and
omce · ther fore. th.is i a crucial . ttp to take.
S nd, care mu
k n not to reinforc the wr ng behaviour of work: r . La tly,
punishment hould be adntinlsterrd omctl and at lhe appropriate time. In Lhe next
section. we inve ligate another moti ation tboozy, name.I the oal-setting theory.
u
Prindpl · of G n ral Manag m nt
LOS:
E pla1n h goal-se ing h cry of mo iva ion and h pra ti,eal st ps h t
responsible managers and leaders can ta e to motivate em ployees based on
thi h Ory
10.5, GOAL-SETTING THEORY OF MOT VATION
Think about three or four of the mo t successful
p pJ you kno p on Uy. Th fr u
may
have come through business or professional
a hi m t. p, Ii · , . thl ·
Ugi n
r
community ervice. What motivated these
individual . t g l th m lo . ru
th ir ucceiiSes?
Chan
are that lb · e individuals gm · hert'. th y
ar
t
I.he
da b being goal onent d. In other won:is.
commiUed Lh msdv
to (an d add
progressively more- challenging go
profi
ionaJ and per.;on,~1 liv .
ed)1
n
· bio raphi ·
and au obiographies of succe · ·fu]' pe pie h1 all
walks of Ii g n rally an
vi ·
of · l
South Afri a' lO ,
The goal- setting the ory of
rn iv I n i ba d on th
prem1 e that people will be
mo i a d to th xt nt to
wh.i
· he accept specific:,
al il nging or di ficult goals
and re iv
eedback that
indicates their progres to ard
go I · hi v m nt.
ring.
p opl of all tim ~
N w World Wea h
1sed its list of th op 10 b ,sin
opl in South Africa's
history - showing wl i h busi _ i ad JS have h d t ,g11 at st impac o. th
cmmtir an the arid. The criteria L1Sed to determine h top 10 looked at how the
busin -
1
i ovat
untiry nd h in rn i n I bu i,
,community,
·n their · eld, created jobs, and overl'ame challenges and obstacles.
rin r, h ho ' mogul b hind
orld- am. us Sun , i ·y, was rank d as
th cou11try1s top bu5inessman of al me. Kerzn er's top placi ng was not only for
bu ing th ountry' mo t i ni ho I , and r or but or th imp,a t h y hav ·
had on surmundmg areas - e
1vel putting · hem on the map.
cond nth Ii i o -nald G -n. As th ·~ und' r o "b rty Li -, 0 n Id Gord n will
always be rem ember;ed for what surely rema in his gre:a est ach ·evement - the shopping
ntr that L LI, - b nchmark for !luxury and 1-,. worldw"d-. This is th hoppi g
centre that he richest city in Africa i,s now built arou d: the monolith, Sa nd'ton City.
In · t hird pl c i Ri cha rd Mapony wh ha I d p1it th m ny ob ta I of tlle
aparth eid governmen , become a beacon of hope to the people of Soweto. starting
ra l ucce s I busin , in th ar a (p dominantly in th re ail and prop rty
spa J. H rec n· ly he.I d to devdop Maponya Mall, whi
is on of the largest
shopping cen tres in the country.
Fo rth i Harry Oppenheimer, who I d South Africa's two biggest companies {De
Beers and Anglo merican) throug1h their most success ul yea ~ and created more
1
1
Chap r 10: Motiva i n
jobs · han any o h r outh African bu i n ssman in histmy. Harry Opp nheim r and
h"s wife Bridget ere. also keen horse breeders. The bred Horse Chestnut, whith is
argua -1,y h mos x p ional ra - h rs v r b din S uth Afri a. H
Ch tnut
was known for winning races by large margins - he won the JaB Met by over ei.ght
I ng h.
Pam Goildi ng, in the fifth place, is the only woman on the list. She formed Pam
Gol .'ng Prop r, ies in '976 and turn d it int th larg st • tat
ncy in he
country. Her company has since g,one on to transform the luxury residential
la d · ap in, Sou h Ari a, - p ciaHy in C-p - Town A lan,t ic s -aboard.
In the sixth place i5 Adrian Gore, founder of Diseio ery Hea t:h. His company ent
1. ·
on to chang the h al h in -uranc pa in South Afri -a for v, r with in ovativ
products s ch as Viita lity. Many insurance companies overs as ave now begun
n ir products
to opy t ', Dis ov, ry mod I and Di ·cov ry th m · Iv hav tak
abroad . i , good suc.cess. At t e e d of 2015, Gor fea red a no. 12 on the
Sunday imes lis , of wearthiest businessmen, with a R7.2 b1I ion ortun due to his
holding 1n th finan ia s rvices firm.
In place number even i Nthato MotJ.ana, 'the renaissa c man' o South Africa .
with sue: ss ul ar rs in poll i s, m di in - and
· - s. H wa th fo nd r of
NAil and a mentor to many of the top business I aders in South Arica today. He is
onsid II d by many to b th fath _r of ,
m. • mp w, rm n i1n S uth A r1
After a suceessful career as a la er at Bowman Gilfillan, Patrice Motsepe ounded
ARM (African Rainbow Min ra
and mineral groups in the
k
v
tors. M
J m 1 97 nd turn d it into n of th I r
orfd. He has since diversified into a
i rank d ·
utih Afri ' fifth ri h t
ml:n·ng
um er of other
f rtun
furid as
These a h" v m nts
exceeding Rl .3 bil io i 2017. I becember 2019 he invested in a 1 biHion
part f u, B akthroug E r- Co Htion, laun h d b Bill Ga
a a med him pla e. numb r eight in th top ten busines pe
Dr Anton Rup - rt,
found r of h R mbrandt Group in
1940s, is award d pla e
number • After in 1 ·ally focu ing on the tobacco ·ooustry 1(Pete1 Stuyvesant), his
ompany soon ov d inco industria,ls and lu ury _ od . Rembrandt ha sine b n
, plit iin o R mg o (an in ... stm n company
I
h finan ial, mining and indu trial
i rest ) d Richemont (a S iss-based 1
ry-goods group). Rupert as also a
Fu ndin m mb r of t WWF (Worlu Wild Ii · Fund} n th 1960 Hi · on Joh n
has · e ;urned Richemont into one o the largest luxury-goods companies in the
wor .
In he ten, h pl ace is Douw
n, who founded Auto General Insurance in 1985
l'l of th kl:rg t in uran
mp nies in S u h Afri . H' h
a d tu rn d it i t
si · ce started similarly suc0essful1businesses in the UK Compare the Market, Budget
In ura n }. H
- ntl1y h Ip d o d v lop S yn Ci¥ in Johann burg, which i, - t1 ·
of the most impressive ruident1ial esta tes in the world.
1
I
Prin ipl
of G n ral Manag m n
tin
t . a kn wl g d a
r, p • d nd u ful m iv U n th ry.
In drnpte.r 6 we exp1ained management b objectives (MBO) as a u eful tool in
org ni ationa]
nning, wh • b broa I r orga i ati na] g al an e lrran la d
to the le el of indi idu.al emplo ee . l.ndividual goaJ can al o b u d o moti a
individual emplo e · within an or ani atiunal context. The .Etoal- etting theol)' of
mo i ation is ba d. on Lh premi e 1hal p opl wm b moti.va d to th . xtent. to
which the accept pecific challen.gjng or difficuJt goals nd re ive feedbaclc. that
indj at . th tr progr
toward
l a hi v m rit.
In ord r to impr • he p rfotman e o emplo e, •
p cific and
hi e. As in lb cas o . th MBO p
indi idua] empio · s
should participate when goaJ are formulated.
a 1.ueable and. chaUe:nging
goals n ou . g an .i ndi "dual r a , rou ·• r i11di id al (uh a a
Uon 01· a
specific department) to betch whi]e by·ng m attain progres ively higher le els o
a · i m n • a j ipation in . h · o - ·1Hng p
· giv Lh indivitlu I · r up
personal ownership. GoaJ motivate b di un:g the attention of the in.dhd al or
gr up. nrour
th m to u ,
rt int at ining th
al. • n ~ r g p r i t n
and foster the crafting o goal-attainment trategies and acti.on pl ~ Feedba k
in term of performance · al · eruct . F dbac1. informs the in i · ual or group
wh thcr thing are on tr: ck or i ,orrective acHon i ne ded tor h the goal How
do goal motivate? A · · cat in figure m.s. goal mo ivate by encouragin
initiation, dir ction attd p
- lh tJu
or
of motivation lha , w
identified in section 10••
an n
ask is ·What pra J al tep can r ponsible
mana er and le de.rs r, e to u~ th goal- enin iheiary to motivate emp]o es?'
Fir: l. mar a rs n b rin wUh assigning p m and challengiog oaJ •
ond,
emplo ee ·b lt1 participate in the goal- ett·ng process, and. managers and leaders
h uld , 1 ur hal mpl
· truly a
tn rt
goal • La Uy f qu nt · p ili and
perfonna e-related managers and lead
bould provide feedback to employees.
F db·
l ds t , · mn r motivat' atid fli ,rt.
The qu tion Lh l w
1.4
Chap r 10: Motiva i n
• lrtdlvidu
• p ific
•
easureabJe
• Partctpativ ly
• Gmup5
• Encouraging
• Chall nging/Di cult
initi bo
• Ernuraging direc tion
t
• Ta
• Enc uraging
p r ist nr!
• fostering goa 1af n nt tr
t
and pans
Feeu
Figur rn.s
a_,
on Jltrformance
Boal-
ari u m tiv ,u,on th ri • Tabl 10. 1 pr
a um.ma,ry or th various motivation theori Lhat · tlis ·us ed in se tions 10..,
Thi
on fad
to 10.5 ;rnd the imp i · tio n
organi ion l cont xt.
n. ibl m nagers and leade
in an
Implications for m nagers and leaders in ttu: workp ace
--------+------1den ti fy the, et'ds of employees in thr worik,p ace and
motivation
•
Maslo s hi ra ~chv of
•
needs
H rzb rg's two fa Lor
theory of m otrvatio11
•
cCI !land's th orv of
otiva cm
Key idea: Attempt to
id ntify wh t h
d
and ants are tha
p opJ want lo satisfy
unde
and that th y not only need more money, but they have
oth r
dis
h as ·· cognition for thei r work, th y want to
work fo an organ;isation witt a good reputation and they want
to o du t busin - in an thieal m nn -r.
Satisfy lower-order needs of employees first Emplo c:es will
110 b motivated by higher-order n ds as long as low r-ordu
11 ds r n1ain un ti ti d.
Expect that peop'le's needs w-11 change over time. The needs of
mpl
,
m
h h Id r nchll h r t,ak ,ti Id rs
will change o er time. The responsihle leader and manager
1
needs o be a a,r · o that.
As ne,eds d1ange and lower-mder 11 eds are sa isfied,
organisations shourd create opportunities for employees to
i fy high ,r ord r n els.
Prindpl
o, G n ral Man g m n
Proces theories of
moti . tion
•
Equity theory of
•
fxpectancy theory of
•
mo,tivati n
mo 1va or1
K,ry idea: Emphasise the
process of individ ual
goal · tfng . nd
t he evaluation of
sati a ion .i fter e:
aohi m n of g al
•
qui ty theory of motrv.i ·o
P ent inequitl in t he orkp lace.
Ensure fair and ethical decision- maki n . process , esp ially
a f r as th input/output r ·ti f mp!oy
Ex~ctancy theory of mo · a ion
ath tin o·ma ·ion , establi h w t mploy . want fr m
their job!i.
link r ward to individual perform.me • su ha w y tha
it is. un demandable to mploycl!S..
Em pow r mp loy es to ma e decis ons
wilil i crease
th ·r e><p an ies th I an:! w
d ffort wil ead o
good performance.
R inforc: m nt (h ory
of motivation
1G
Analyse: critical p
id a: Ba cl on th
premise that beha 'our
is a fu ncti n of its
..
.. _nC'tS, that
behavJours fol lowed by
po
R ln ,or
behaviours of employe~.
ploy
and do not r lnfo11c
rr ct
wrong behaviour
Poni h ·
1.11
a · mi
·d
rr tfy nd at th righ ,
ti me.
quen
will occ ur more
frequently, and tha
b h fo
r
followed by negatwe
u
r not
e
it
consequences wrHi o ur
I
ry of
K
· ople ill be
to h -,n 1n ·
· ey accept
spec-1fic cllalleng ing
t drfti ul go I _rid
ceive feedback
a -ndi at th lr
progrtSs to ard goa
achievement
m
t·
Set specific, measureable, c alhrnginy/difficul goals.
Enis,ur that goa,ts a participativ ly ~l.
Pmvide feedba in · rms of performance of employees.
1
Moti ation theories are generalisations about tbe ·why' and ·how' of purpo eful
b b· i ur b ha iour urnt wm l ad o h r, a i ation or organi ati n ] g a1 •.
However, to per orm well people need rn otivati,on, ability and sk..i.U . In the next
·ection, w wrn fi ru on motivation through:job d ign.
l
Chap r 10: Motiva · n
L06~ E plain moti-..ia io through job d ign
10.6
1
MOTIVA ION! THROUGH JOB DESIGN
Ajob erve tvo eparaiebutintenwinedpurpo e.
First, it g n~t
alue or the organi _tion. By
performing the job and achieving the i::equired
Job design 1is the deineation of
u , m and p 6 nnan ~ it will l ad t h
ta k pon ibif i s di ta
goals of a ection and department and ultimately
by organi.sational strategy and
t 1h o a ;tainm n
rg ni ·1ti n l , aJ .
ur .
Second. it ener:nes income .o r the individual.
Thus j b d ·g n th d Jin ati n f ta ·
p nsibili · a di ated b rgani
trategy (a explained in chapter 7) and tru rure (as explained in d1, pte.r 8) ·
determinant u.f individuaJ moti tion nd ultiimatel o org , · · · · hal su
an organi ationat ooni x two trot ,jes, can h consid •r · when d ·i ning job to
motl . te empfoy
•
itting peop,i~ to job . ometlm , du lo , o
ic or tcclmologi al
reasons work. needs to be divided into rout'be and · pe itive ta ks. In
routin r ks hroni di ·
fa d n
cu that ha a n ati impaet on
empfo ee motivation. Three aJtemati e tep · an be taken to avoid chronic
di ilti fa Li n and impro moli ati n, nam ly r aH Li, job pr, vi, w , j b
rotation and limited exposure. 1n a realistic job p,r e ·ie1 the responsibl
mpl r n
o h n ·1
1·ain t j b appli n · wh t a · b a, • II
entail _This ill heJp to oid emp oyee dis.sari faction re ulting fr m
unreal", d hi h xp ati . Jo ro ati n in olv . ~ p ri di , m ving
people from on p · alised j ob to another. Such. mo emen prevents
t na ion, fatigu ao · labour ·ho a e a:nd it enhances fi ty and trafaing.
ll i irnp rta
u 11 L tbaL people .should b rotaJ d fl n no ugh tu fight
bo,redom and w:·ury and acquire aluabl cro -training. On the other hand,
p
ti uid no b r tat d o oft n Lh t th . ·fi , l unfairly rnanipuJ t d or
dis riented - balance is the key. The third ep i limited exposurey which
n th r ai of oping with lh n d '
ff a hi hly ragm n· d and
t dious job. Limited expo me refers to allowin. employees ho have been
po eel l , Ii utin ta k n , r]
uilting · im . I in , Iv
ta bl:i hin
challenging but fair daily performance and.vd and etting employe~ go
h m n th ha r ach th ta.ndard.
ar
I
•
Fitting jobs to people. Tb.is tr<n~gy call or responsibk managers to
h ng j b inst ad
th p r n in , ro , to, find n li nment
n
people and their Job that foster , high \'. ork p,roducti ity and a hi h-quality
organ· ational experience for l:he people who do he work. There are basi ally
rwo tra gi to foHow to hi ·
hi , namely job enlargement and job
enrichment. Job enlar ement is the pmces of combining: two or more
·p ialis d l ks in a wo -tl w qu "
in o, ai ingl job. J b nlarg rn n
1.7
Prin ipl
of G n ral Manag m n
m a.n in r: a ·ng th , • ·p .
or
u mpl
' du i
and re · n ibiUti ,
it is horizontal in nature and thett is no rmed for additional training. Job
nrichm nt i red igning a job t in :rea , · i moti ati
p
tial. Job
enrichment increa - the c.baUe.n e of an emp,l oyee's wo:rk b . reversing the
rend toward · greater pedali ation ince it builds mm comple::xity and
depth into job by in roducing plannin and ded ion-makmg r - pon ibiiliti _
normall carried out at higher le el . Enrlc.hed job are aid to he ·erticall
load d. cc rdi11g t H , kma1 an Oldham.1 job an b a b mi h d by
upgrading f1 e core dimensio ns of work, namely kill varie • task identity.
a k ignili an , utan m nd fi cl · k. Tb
plai
low:
•
Skill variety permits emp]o ee to perform diffecent opera ion that
ft n quir dfffi r n
m . Job that a.,. p
hi. h ·n ari ty
are een by empfoye a more challenging bee.a
o ibe range o
kill · in Jv d nd lb r Ii
h m noto
h d I p fr; m
an repetitive activit . Variety giv emplo e · a greater en e of
omp ten • b caus th y ru1 p rform dj . , nt k.in of work. in
differenl way .
1
•
•
T , k id ntity all w. emplu
t
rfonn a compl t p•ie
When tasks are broadened to produ e a bol product then
ork.
1
has been e tabli bed.
T , k signill,c an rei
.o e amoun t or impact lh empl ~ perrci e
the work to ha , on o r pe ple or take.holders. Tit ~pact an be on
olh rs in the rg n i
, as wh n Lh mploy p
TilJ . a k y step
r on tho, e outside Uile
· · n, · uch as the
m an d not that
ho,ul b Ii ~v
th ar
ing importan in
anisation, industry,
· ci
r
,n ·bl ruan>a1e;er and •
ni Li n . thi
an imp rtant di.men ion of job enriehmf'nt
nom gi
·
n . nd ont
la ·
ions. It b -s a ·
nsihility in employees. Ahhough they
il1ing o w rik ·
,ad
·nt ran" rg n· ·
th y
also, insist on ad g
·. . MEO ( hkh e dis ussed in · ection
10.5)1i ,on. wa of
ishing more autonom
it provid · a
realer ml for empl yees iu e tabli bing tb.elr own g,o als and pur uing
plan to .1chie e them.
•
18
eedback refe to i.nturmaUon Lbat tell . e:mpfoy
lllo we1J they
are performing. Feedback can directl oom from the job i elf or
manag ro · nl and other m.p!oy
an gi iL The on pt of fi dba
is of much ignificance to people al ork. Since they are pending a
sub tantial part. of Lh fr liv · in th ir work lh y wi h t now h w w
the - are pa-fonnin,g. The feedback al o enables employ,ees to adjust their
rfi rman , if Lb re
an d vi r n . mp] y
musL
·yi
ompf t
Chap r 10: Motiva i · n
job . dba. k oth p itiv and n ativ . l th
feedback, it ma b · demotivating.
ming to H , rmrn and Oldha:m, kill vari y. las id ~ntity nd · · k ignifr n "
,(the fust tfuee dimensions of the model) provide the employee with meaningfuln of
th
rk · on whi ·h I ad o hi h int maJ
r: motivali ,n. · ut n m ,(dim nsi n
our} of the model provides the employee with a r ponsibillty ,or the outcome o
hi or her . rk.1 t ding high quality ork p rform nc and high ati f ion with
the work. Lastly, feedba ldimen ion fl e) pro ide the empioye w th koowled e of
the actual result ofwo.r: activitie . 1 ading to l w ab enteeism a
l ff um
r.8 It
is important to no c that no , al1 ·mplo · e
· pond ell to ri b, d jolJ . As w hav •
indicated with the moti ational tbeorie . people have diffi n needs and their need
m y chang ov r tim . P rsona n · d • trait and
v nllu nc lhe onn rLn
between core job characteristics and desired outcom . Only those emplo ees
with h n
ary km nd k towl dg, p
th
i for p
n I gr wth will
be motivated by enriched job . Furthermor in keep,rng ith. Herzberg' IW"o-factor
th o
f m li.v ti n, d. at'
ti n ith a to
u h as r mun ati n
working condition and so on (l.h h giene a ors described. in section 10.2.
have a negativ ffect on mi
n fforts.
TH E 816 P1
ICTURE
In t:hi cbaptet. moti ation a managemen · function wa di cu ed. Motl ation
th ri ar g · IL n · n almu · lh wh ' and h w·
purp ful b ha iour.
However, to perform well. people need motivation and a.bili . Therefore, responsible
man g ~
I ad
·h uld b aware lh . ri ll m ti ·. tional h ori · w 11
as how job tan be designed to moti a e employe .
SUM . ARY OF LEARNING OUTCOMES
LO ;
D fine motiva·tion, ex.pl· in th e moti ation modrl and depict il
d:iagrammaticall
Moti ation can be defined • the et of forces that initiate , directs and make
p opl p i t in their a ions and fforts lo
mplish a goal. Th moti ation
model ha lh following clemems:
•
eds are e ph si al and em tional requirements tba mus b m t
human swvi al: and eUbeing.
•
An 'ndividuar un af ft d n ed and
n
•en ure
re t an unc m ortabl •
internal s ate of tension thaL must be resolv d. hls tens ion leads lO acuoo
frnm the indi idual and a tfon leads to effort.
•
The fTart of an indi .id.ual is a function of his or her initiation, dire tion and
per · tence.
•
The -£fort of th individual lead . ·O performance.
Prin ipl
of 6 n ral Manag m n
Th p rfor · an
f lh in.divid al I ads l
We can differentiate between tw'o kind of rewards, naimel extrinsic and
i trinsi r ward . · bin i r wards ar iangibl and vi ibl
h · and
are given to employees bas,ed on their performance to omplete enain ta ks.
Intrin i · r ward re th~ n rural rewards a . . ciat d .. Ith p rfi rming a ta •
or a ti ily fo.r it o u sake.
•
•
L0 2:
, plain tb ont nt th ori o moli ati n and itb pr ·ti al
p tha:
respon ible manager and leader can take to motivate emplo- ee based
on the~ th ori
The content th ories of motivation attempt to identify hat the eeds and wants
th p pl · ant
ati fy. Th
th ri in ~ d
h ri
f Ma l w,
Herzberg and M OeUand. Managers and leader can ta 1..he following step to
moti ·
mplo , ba ed on th
th rie: (1) Kno · wh th n d r mpl
are. (2 1Lower-order needs bould be ati fied
. (3) an.agers and leaders bould
exp
people' need t change. (4) As e
c:
e and lower order-n.e · · ar
ati f1 d, on ,rni ation hould rea opp rtuniti for empl y
lo atisfy high rorder need.
I.OJ:
. xplain the process theories of moli. ation and ihe practical
p that
responsible man ge.r and der · can · ake o motivate mp , ees bas d
on the: th ories
Th p
mpha · th ro
o
rtin.g
and lbe e aJuaiion of a · f
ner Lhe achie .rnienl
. . The e tbeorie
indud
uj
e
th rie of
· ·
. anagers and leaders
can ak = the fo
tep
ti ale emp
ather in ormation to
establish hat e
want from their jo ·
reward to indi iduaJ
li
und rs
to mploy . (2) mpow r
p rf: nna :i e in
employee o ma e dec:i ·on tha will increase their expectancies that hard ork
nd ff rt .
good p r ,
.
L04:
I;xiplain the reinforcement th o of moti ation and the practical ep
d r p n ibl manag .r: n I ad r can tak to mod.va , mplo - ·
based on thi theory
. he rdnforcen.1 n th ory of mo tvation i ba d on the pr -mi - that b~haviour i
a func ·on of it con e,quence . that beh viours followed by po itive con equence
wm o · ·ur mor
requen ly, · nd tha b ha iours • ith r foll
-d b n •ga iv •
consequences or not followed b positi e c:onsequences ill occur less frequently.
t p h · an "
k n o m Li l · empt ·
: ( L) Id tify an I al · riti al
performance-related behaviours.. (2) Care must be iaken not to reinforce the wrong
b ha four f work . ( ) Puni hm nt hould b admini t r d orr 1J and at th
appropriat ·time.
20
Chap r 10: Motiva i n
LO ":
- lain th g al1ng th ory · moti , i · n and th pra
ep
iliat :re pon.sible mana.· e.rs and! leaders can take to motivate emplo ,ee
b d on this th ory
The goal- etting theory of motivatim1 i ba ed on the premise that people will
b n1r0tivat d
lb
n t,o \ hi. h th y a pt · ifi
ha]] nging or diITl uk
goals and receive feedbac that indicates their progress toward goal achievement.
S p that r, p ible ma a ers and 1 .ade an take 1 m ti at , mp1oy
are:
,( 1) Assign speci 1 and challenging goaJs. (2) En rne t.hal empl e, 1.ntly acc,e pt
the goal . (J) Provid feedba to employ
L06:
Explain moti ation through job d · ign
J · d ign i
d lin i n f
k
p n ibiliti a JJ
trategy and truc:ture. la an or anisationa.1contex n o
om , ivat, m I
l d · ignjob
• nam l flHing p,
ani ation I
· be considered
nd fr tin
to peopte.
REVIEW QUESTIONS
l.
D fm lb l rm ·motivation' and
2.
O.fferemiate beitween the con en a d pri cess theo rie of moti ati n.
Discu s th goaJ-setti . · th
p,]ain. th motivali.oa mod I.
or moHvation.
4. E pl in the r in or em nt th ory f moti a ion..
5 . !Explain how mplo
can be motivated throu hjob d i n.
LEAIRN ING ACUVITI ES
Tod · man •t m nt en iron:mcn i
. ola ii a id hang~:ng drama ti Hy
· 11
mu
· 1he COVID~ 19 outbreak.. 'Aexibill y· may be one word that ~ coming
u, m , t' and m in d y·- w rkf r
uni
ally xp t d
a l a
dy
situation and a new normal: Man experts belie e COVID-19 will prov
t b an int re tin · t · ca for · r
m t w rk.fo
1. hi you.r opinion will thtlie e difference betw en moti ating a remote workforce
· ·u an
=bound w
re ? · uh tantiat
ur an~w r.
om .
2. After the C0VID-19 cri is,
th ir mpl
· ba k
th
hat tep do ou think manage:r . need o take to get
m and m tiva th m. t b p· d ti a ain?
REFERENCES
1
Thomson Reuters. Available online: http :/lwww.forbes.rom/companies/tbomson11 ul · /14 Sal
014 [A
d 28 January 20 O]
2
Thom on Reuter South Africa. Available online: http :/lwww.thomsonreule.rs.
com/ I
ll'S/wh - w -ar / ulh-afrl, a.html [,, ..,.,u,..... d 29 J nu ry O O]
Prindpl
o,
6 n ral Manag m n
20 Wa
mpl
. l T] . , n R u · rs~ motiv d by th ir w r . vaiJ bl
onlin.e: http•· :/ /www.thom onreuLer.s.comJenJcareers/careers-blo /2 0-w.aysmplo
-are-motl aled-b w rk.hhn Accessea 28 January 2020]
erder, C. Now i the time to e:am your employe · trust. Available •OnJine: bt1p :/ /
Mw.d
bo. om/blog/ mplo e -m ivation-covid- 19/ [Ace · d J May 2020]
Omarjee. L 2019 . Minimum wage. Availa.b le online: https:/lwww.fm24.c.om/
E , om /
rything- u-n d-lo-kn ,w -ab ut-th -naU a[-mi imum-
4
.5
age-20190101 [Ace
u h Afrt a·
6
10
ed 24 January 2020]
great t busin
p opl
f alJ Lim •
tech. o.za/new /bu in / J 6 455 l/ outh-a d
eop]e-of-alJ-lime/
e ed 26 J nuary 2020
bus in
r
7
Hackman, JR & Oldham, GR. 1976. Moti ation throu b the d ign of work: Test
ofa theory. Drgani atfonal b haufo11rand hm anyer nnance,. (16) 2= 250-279.
8
Ha .kman, JR a Oldham, GR. 197 . Motivation through the design of work: T st
of a theory. Organisational behaviour and hum ,J p·erformance (16)12: 256.
2
CHAPTER 1 1
MANAGING DIV,ERSITY
AuUor: Siplw Makgopa
-
-
OPENING CASE
Vodacom
Voda m ·
l, ad.in r Afri an m bile om.mun~ atiol'l compan pro iding oke,
m aging, da ,a and converg d rvi es to ov r 117 million
tom rs. rorn j ,
root m South Africa, Vodacom ha grown Us operations o in l de networks to
variou African ountries. Vodacom wa - tab I· h -din 19
nd n 1 m~~ority own -d
by Vodafone (60.5 per ,cen holding). one of the odd' largest communication
omp ni -- by
. nu •
What malci s Voda om uniqu
Vodacom i growing a network of . outbful., i
pired and wired :indi idual
onn · d 1 b U b ¥ ar, n . V da nm i d F1
b · mu h m r than i
performance goals.. In addition to qualm atio and degrees, it po esses talents
and a ira ion that ontrib 1 o i
olourful ,w ltur . B i
maj rir- , n d
by oda one Voda om is connected globall to more than BO 000 li e-minded
oil ague ali und th "' .r
Vodaco m val u s s,p d
Votlaicom add.r
mme,
·p
implic
partn
wHhi
d:
oJ
pr blems quick) • and ads wil:h pa
and energy. . hal
]wa p,rioriti
he thing tha m l er m · to the bu ine .
tri - Lo mah: things imple for its CU5tom -rs, oUeagu and
acom tri , for reliability, hon. · t and ,opennes in dealin
•
.ranofo matio:n and div · rsity at Vod m
Vodaco m · committed o a meani:ngfu · d ustainabJe e onomic mm ·formation of
ulh ·ii a. .h are proudJy n ll' ltural and, \ i h op ra i
worldwid th y
are multinationaJ too. Vodac m celebrates and hame e irs intemal differences to
nri h !lab rati n, inn va i n, ati i y n ~n: du i it . Vod rn i in Ju iv ,
tolerant honest and fair m their interaction with one another and then customers.
V, da om
n w1 d
tha i · 111 l m
r div
1
Vodacom emplo
previously ,d isad antaged group at all levcls and aero all
up lion I at g ri
into m aningfuJ p i i n . Th y al
d plo
wid
range of de elopm nt programmes to empower and grow their peopl,e aero the
or rf · ti n.
Prindpl
o G n ral Man g m n
CHAPTER ORIENTATION
Th world h · b om a glo al villa e:. T hnolugy ha brou. h a]] of u~ d . ~r
together and made g,eographlcal boundad le rele anL - especially when it
om . to emplo :men ·. With air ravel. thousand of ki1om tre ran b mm
in ma ter hours, and tete ~omnmting ha made getting touch ar und Lh
ers d
or
JJ. orld
even fast r. In chapter 8, we indicated how lhe virtual organi ationaJ ·. tructure ha
· vol
and gain d :f'raund. p i 11 l
th OVID- I pandemi • It1 rea d
in~eraction among popu.lla ions from all oveT the · orld and interactions between
div
p pula i ,. in lh ·am ·o nlry o
gion h· v ma i Imo imp ibl
to hav,e a orkforce that is not diverse.. In this chapter, we focu on diversity and
mana ing div 'ty in th w rkpl . i
i:y in a r p . · ,I bu in · i 1t1
important ue and cannot refer merely to Ole eruploye • \ ho rep
t
e
f th man tak h ]d r ,roup t b in lud ' in d, i i
·n
in
ondu :t.
R pon ibl mana • rs mu t tran fer the prin iples of di , ity management and
indusion to a broad e of ta.keho]de · from comm unit. members to supplie . to
noi- or-pro 1L or 311[ ·ation . Th roo t · H at a t.: old or diversity m· nagem n
apter our focu . m be on
is the community stakeholder. Ho e er, hi thi
n tak h Id r · roup, nam I th
,o " fore a d lh man r m n fa di .
workfor,ce.
The op ning a • mu, tra
in order to, enhance organ·
· na] e
~ cl fmi i n · f lb ~ rm ·
i ' a·n
We will. explain misconceptions f di e:rsi .
rm '
lh
•"
di
of workforce di rsity
will b di
• a ' in th
wm
·ous
t f
I,
· d at Vodacom o ma .
rs Uy
. Thi ch3p· er i1J commence with
lanalion f th ,d, m
th re f.
,n d then · · ·
ear definition of
t th
th m nag m n
· for mana_ging orkforce di er Uy
nt.
-
LEARNING OUTCOMES
Aft rs 1,1d mg this chapter, you hould b ab c to:
L ··
LO
Define the concept of d:irversity
· iv rsity
Explain the misconceptions o diversity
L04:
plain h m nin o
rsi
LOS~ Defi .e workforce. diversity and explain t e need for the management thereo
L06;
plain th manag m nt of div rsity in th wor , I
LOJ:
4
Cha pt r 11 : Managing div ·rsi y
KEY TERMS
dimension5 of divecsity
divetSity
div irsity on inuum
di1vffiity pa digms
div rsity tra ining
manage , nt sup or
platinum ule
'righ · h · wrongs' · pproach
'value the differences' approach
or .ore 'tv rsi,
golden rule approach
L01 ;
11.1
D
of di,ve, i y
DE:FINITION OF DtVERSITY
The definition of div ity vari acco ing ro conte t. Diversity often tends to
p -rsi L wh r therie I more than one l' or tlmicity. t n, div ity p is
at workp[ac:
due to tlle vary· ,g cba.racteri tic of emplo ee based on their
r Ligi · u nd p liti a1 b Ii fJ • l d r. rn
•· hni, i y. du ation
1 • n mi
background, di ability, exual orien a ·on and geographic loc ·on. The concept
div rsi
m
a· p, n
nd
p l. I m n un rstandf ng tha
each individual is um
a
·ognising our indi "dual differences. These can be
along th dlm n ion: f . c , hni icy, · nd r,
u l ri at· Lii n. · i,
omi ·
status, ag physi
.. bili 'es, religious beliefs, politic r b ·ers. or •o ther ideologies.
M pting nd re p tin div mty imp· · th
plorali no; th
diffi renc in a
afe., po ·iti and nurturing n ironment It is abou urnlerslanding • ach other and
mo in b ond imple tolerance to embracing d elebrating the rich dimen ion
·ontain d ilhin , ach individual.
·· y
r aJity creat db indi id aJ nd roups from a br ad p ctrum o'
m raphi . and philo ophi -aJ difft: n es. lt i . extrem ly important to upport
and r tect dive ~ity · aluing mdivi ual and groups free from pre·udiC'e, and b ·
o t ring a dima where qui y mJ mutuaJ re p · t a · in rin i .
, pting 'diversity' m n m r th
jus acknowledging and/or to] rating
di feren . ccepting di · er ity is a et of , omciou pra tice tha invoJ :
•
Und rst nd·ng and appr i ting int rd pend nc of humani , ulture
the natural ,e nvironment
•
P a.cf ·ng mu :ual r
our o o
•
nd t nding that div
of knowing
that
in lud
no · on]
aE1
nd
diffi r: t From
of b ing but al
w ,·
Prin ipl -
•
o,
R
G n ral Manag m n
cj ing hat .
on I, uHural and
institutionalised di crimination create
and u tain privil g . for om
hil
aeatin and ustairung disadvantage for
others
•
Bu.ildin- aUian -es aero s differences o
that w • an ork together , o eradicate aH
form of di cn.mJnation.
Div rsi y relates o tho e
qu lit es and cond ,' t1on th
are drff rent from our own and
out Id
h gr
belong, yet.are
in ividu
B. d n th abo ,
can d fin div
a
condition tha t ar diITer nt from our own. :md o ide lh
b long 1 y tare pre en in oth r individual .and oup .
L02:
plain
tn
o whi h w
qualti
nd
roup to whi h w
rious dim nsions o di rs·ty
11 2 DIMENSIO S Olf DIV
'ITY
South Africans are often referred to a the 'rainbo natim:f since it in udes people
with m
dt ren ra
g ", :ul ures nd ligi n . Wh'
· h ric n
shar-e the important dimen fo of the human species, ario o 1er differences
parate an · i tin u· h h m
individual r group . Thi rray ,f di f n •
in human bein
·on id r and int
ti utes a pectrum o human dive it and compels ·them to
1 imilar ituations diffi 11 ntl .
One of th e aspects of managing people with different backgrounds i the fact
Lha h y m
nt rpret dif[< r n · u in diffi r n way . B th fm
p,I nt"r
or nisali us, the way they per eive and respond to the world around. them has
· rg
> 11 d t rmm
by th envir nm n in whi h th hav b n broug · up.
11 e.mplo ee's parents, ibling • oth,er amily member , friends, neighbourhood,
·ch l attended, and the ulture in which h r be wa brough up. bas bap d
hi . or her o nition and influ n d h:i or h r p r ptual bias. Thi on :ribut to a
diverse group of people in the orkplace.
facin
outb Africa.n organisati.on .ru:id many
organi tion acr th fobe i workforce cli ersicy. lhe p mt i that orkin · ith
p opk who e valu , belief~, attitudes. p ~rception _ langua _ and custom.s are ery
different from one own can lead to c . tly mi unde tanding, mi comtmmication,
One of the major challenge
mi perc ption, mi int - rprecaf on and mi evaJuation .
Man cotmtri
in th
rld can b d -· rib d a . radicall piurar t
ieti . e1
us . trst unpack lliis con - pt. Anyth"ng pluraUstk involv a di r ity o di crent
ideas or ,different eople. Ther fore a piurali t oci ty i a di erse o i ty - one
with dUf. rent id a anti dU rent p ople. R dkally plurali L o i ti - compri
prac ica1l eve conceivable kind of human plurality: their popuJation are
;z, m ly h
F ra , , lhni ity, 1.11 :u • .languag, ,
ual
Chap r 11 : Managing div · rsi y
j,
ntali n
Ii fon, p liti al affiliation
n
d o,r ad~
n.
Safeguarding such societies fr:om potentially de trucH e conOicts !that arise so
e il i , d" a] , pl, rar · r div rs
i ti
a mp
l k. The S uth Afri n
ociety an at best be d, cribed a a raclicall pluralist oci •ty and the poLential for
d.. rup ive conflict persi ts if the design of i social iDstituti.on doe not prom te
faiml.!5 to alJ or ii . m mb rs. Tabk 11.1 illustra t · div ity in . oul h . fri a
d
on race and gender.
Tab'le
n .1 South African demographics based on race and gemie.r
Population ,group
mal
Mal
Number
Black African
22 311 400
80.8
ut
Numb r
%
23 345 000
80.8
Nlumb
O/o
45 656 400
80.8
I
Colour cl
India
White
/.
ian
2 403 00
8.
2 559 SO
8.9
4 961900
a.a
719 JOO
2.6
68
00
.
1 409100
2.
2 186 500
7.9
2 30 100
8.0
4 493 500
8.0
Sour, : tatisttcs So h Africa. 2017
outh Africa i nation in th mid ·t I p ofi und tra · fommtion and v
- the economic:, health a d d im te crises ha e b o discussed in rinu chapl rs
of this book. Diversi in outh Africa i. all the more dynami
d complicated a.
Lh resuli o, a bi · ory of le · · t d ra e · eparation. oulh
n a i . p rien "ng
demand b bla k p opl and women for indu ivity in
l ion making and in
th h rin of w a I . in th wor pla
Und, r th form
arth id - t m, · ou h
African ,o anisation$ operated in an environment o' rdtectionism propped. up by
t
, rt Th
.j b w
[I
rv
whit em loy . Th 11 wa ,
limit d work diver it to be mana d. In 1994, apartheid ended with the
d fin d it fa a cl mo rn i ,
non-r:a 1 ociety. Parliament a1 ,o pa
ihe Employm. nt Equi
· ct, which
e
o ha e spu.rr d greater deb t ,n th is u of tran formin the cou try'
busme s organisation owa:rds ru . ·,ve.rsit . able 1 l.2 how . the emp]oyment
repre entation by occupation
I, race (African, Colo ured, Indian and White) and
g nder in 111 pri at s tor a uth Afri, a.
7
of 6 n ral Manag m n
Prindpl
mpioym 11t rs~ pr
Tab1 11.2
upa ·onal I v 11 ra · . nd · nd ir [p · r nt 9 l
mt i ,, by
1
im private. secto
Ope tion I
Mal
0th r
fem f
levd
nationaJs
A
1.5
3.0
6.7
10.0
4.6
7
44.0
A
C
3.3
1.7
2.J
.9
2.9
3,7
F
0.5
.4
0.7
ma nagem nt
46.7
6.0
49.9
s.s
.5
6
J.9
3.2
11.4
1.9
0.5
3
1.7
3.8
2.4
0.3
5.6
0.3
0.4
3.11
0.7
1.7
Source: Departmen of Labour. 2017, pp.
JJ.O
0.7
-Bl.
ti u i · n. and g mment J
mp!o mn
equit , mo ·t South Afri1.:an rganisations remain white m e-domimated. as
indi al d in Ta
l l. . hit
n tm
blp w red and
llPY
paid management positions.
D· ;ph th n w
ll
Th
t ht pro 1d an , planati n fi
h p
re that , rg · Uon · r
recei ing fro m the Sooth African govemmen · · address these imbalances. In
rt ·n a
, is p sure h
at d
.,tm nt and y fun i ,nal onfli l
whlch pose unique diversity challenge
uth Africa. The implication o thl:s is
aging di
it in ou.th Afri
n t onl . b righl . r pr fr abl thing to
al o necessity for survi al.
LOl:
Explain the misconcep ti ns of di er ity
11.3 MISCONCEPTIONS OF DIVERSITY
.B ca,
ditli . n mi n ron a , o•
· i • i w ul · prob b1 . b
unders,tan,d what diversity i by fir t ascertaining
hat it is not.
11.3. 1 Di versity is not ,w nure
, ru ·a1 mi ·~ m ny p pl mak ·a d fmi
iv ·ty i ,
i
ith
uU:ure:. They think diversity training means reaching people abour 'what Asian are
like'. 'what Indian are like', ' harac eris k of b]ac ·• or· om n in th work pl
WhiJe thi approach m . appear ound and u.ndersta11dabl
a the surface. i · i
28
Chap r 11 : Managing div · rsi y
1l i d
yp thinking. t r ,otyp
what we are trying t.o overcome b embracing diversity in
org ni ~ tion . Th" pp,r h inforces an us versu lh m' · n aJi . l ~ ru . i
on lhe wa . w · are dilTerent., withoul mduding the wa s in \ hlch e are alike.
It · exdusi e. no inclusive. Embracin di e.rsH extends far be ond t·tllture of
human b i.n g · to in .lud an tl1 primary and s condary dim nsion 1 a illu trat -d
in Table 11.3.
inh renll fl ,w , b
Tab'le 11 .3
·i
reinfi rce
Dimensions of diversiity
ag
gender
thni ty
race
phys.ical abirty
sexual or[enmtion
U'ltur
military expeirience
T bl
dim n ion of di ersit
p in h w · uman b ing
are di er n Prima.:ry dimen ions include variables heh as age, gender, e hnkily,
race . ph ·ic. a ility and · xual orientation. Th
are the vari ble: that peopl
nnot han . The · ondary dim •n ions, of iv rsity ar not ftoo d. Th y in lud :
· ari t
uch a ~ducat.ion. marital atus. income and religi,ous beliefs. Thus .
.·u :ur i nly n or 1 ,dim n j n o di
ity. By
,ni ing hat cltv ity i
a phenomenon that appH to eve ryon . we can reali e that it i a quality tha , we
all valu
nd upp
.
Although culture is om o
dimen ion of diversity i remains an important
dim n Jon p ially o.r rg ni ti n i - Job li d bu jn
( on :u ing bu in
acros national borders). The proverb 'when in Rome do as the Romans do' came
mu h wi dom for ,pon ibl bu in . G rt Hof: t u, prop d
I or ix
di.men ion of cultural identity that have been developed inm an international
i nal and n ti,on ] ullur . Ma nag
t · nd rd b whi,ch t ·~ ".""""~ org
spe ially manage.1: in global bu ine.s es. can acce Hof t.ede's \ ebsi e and
ompare th hara , ri ti of lb
mpan: · hom ountl)' with th on of th
hosl country. H can al .o, be u d to compare Lhe home culture ofa pedfi employe
gr up with t:he cul.tu.re oHhe majority of th organisation· empl ees. The ,cultu:n1I
U1 follo in :
Prindpl · of 6 n ral Manag m n
ti
oolle ti ism de cribes cultwes in wbkh individuals are typically embedd,e d
int tro g group .
•
P'o,we.r di ta.nee de cribes the ac,ceptance and expectation o power to be
di tribu. d un
uaU .
what degree in dividuals · ear 11oknown or
•
Uncertain a oidance describ
un
ain · ituation .
•
Masculinity refers to very distinctive gender roles.
· h n gend r ml
erl p.
•
Long-term orientation aims at t.he maximisation o future reward. while
horl-term ri t ti n i · ri n d o p t. pr · nt and jm
ial futur •
InduJge:nce 11 fers to cultures that emphasise enjoying · e and having fun
whil , ,n traint mak: r fer
t,o cultur: s th
f f1 bt1 nt f ba
•
and
Ifw
o,
al human drives through trict
pl reh
bile fe.miniruty de cribe
j
.
uthAfri athro ghth I
H ted m d l,
n
get an overview of the dri iug force of its culture. According to HoE tede' website.
imlividu lism · ran ed first (65) in · uth Afm: fi n
d j i Oy by ma ulini .
a nd. indulgence , 63). By exam.inlng the ultural di men ion m nage:rs an draw
va1uabl i.nsi h for ~. po.nsible man g ent conduc. For xampl • if a manager
is worldn with p ople from a r ng l':l1a I l'nit ulture, fi mini t pro ramm.
wm probabl encounter resi tan . When an organi ation is doing bus:ine with
an th r org . ui ation in an th
un ry, for exampl in Australia , it will al ·o b ·n fit
to examine the culltural dimensions of ustral:ia. Individualism in
rralia ~ al o
ran~ d fi . ( ), oll w by i dulg n (71)1 n lb m· ulini
l). Th :ultural
difFerences b tvveen S u· Africa nd China are vast. In China, 1 n - erm orient-ation
i ran d
l {87), 11
p w dis n (80) and m ltUnity ( ·;), ltina i · a
society that beli
i..hait inequaliities among people are a · ptable. Understandably.
inruviduali m is. nmk
ery low '{20) in China. In
ntri . with a high borbterm
orie.ntatio the cone: ·pi of
ainability might no e a epted .a s easily as in a
country hara~ n ed b a tTong long-term on
r,
ultur
1
1 .. 2 Div-rsity is n -ith r equal employm . oppmtuniti s nor affirmativ action
P pie t nd o a.s 11.lll. t.bal d.i .· rsi
ju t a repadrngin of equal empfoym nt
oppo uni ·es {EEO) and affirmative a tion (AA). . hkh 3.fe mainly about •,quota
1Jling: TI1.is · · a d trim ntal an
L ruptiv vi w. hU E O and AA re n ccssaiy
step and. harve their p]ace in rre ting past imbalanc- and injustices. they are
mp1 t 1 diff 11 n from valu ng d
ity, · d 1 t in T bl 11. .
Both EEO and AA are: laws that are impo ed on or ani tio and p ople. Thi
erea atl adv aria! n ·rn•nro nt. Ther i a h lie that thes wo om::ept n:1 n
tha less-qualified peop.! e houJd be given job instead of more-,qualif1ed employees.
Th ;n muati n · h t w hav o h Ip, rtain d i nal d f1 up f p p,I b au
' 0
Cha pt r 11: Managing div -rsi y
r, no, re U quaUfi d r kill d
u
d on th ir · wn m ri . Thi nl.y
add to the negati ity .reinforces steR!Otyp , and destm
the very same people
it · m anL lo rv
having th m p,rom ed 1.o 1 v 1 r in mp 1' nee if no1.
accompanied wi1h appropriate training and devrlopmeol Lo empo, er them to
0 their job . Table 11.4 how the m;f or differences bet e n equal emplo me.rri
o ppomrnili and affirrmniv actions on h _ one hand, and div _ ity on th o h r.
th
1
T b'I n.4
EEO/AA
Ensuring that everybody has an equal
opportunity and is no,t treated differently
or di riminat d ag;a"nst
us of th i
between
p
le. and
, lacing a
i
characteristics
U ally wlun ry (organ isati rn-driv 11)
process
n and quantita ·v - for
exarnp1e, some countries implement hifi g
Produ i ity clri en and qualitati - fo
a pk, orga nisations focus on creating
qu
an ·n ,lusi ,nvironm nt ll'ld pra i ·
that benefit the. org;anisation in t ms of
productivity and tho wh war in and
du
o 1ar1g disp · ·
wth ift
Probl m
pr bl ms
- fu s ol o!ving
d in he p t
O,pportun·ty
and manag
· n peopl, ,
which •
rticiipation
,hat
indi '
, · · antage:d group
d past di~rimin.aition
ional
the same chances to succeed to everyone
Valuing di eJSity affirms that peopte· difference are seen as an as et .rather tha n
a a ' rd n b I r: · d. ln · lui
iv, ity, w
kn , l d :r lhat w ma h· v
preconcei ed idea that c-.an blind us rrom eeing t.he value that non-rrad.itional
mpl
bri g. Onl t m 'l · ualUi d , andidat i gi nth j b· but
ha t
transcend our biases abou.t what is 'most qualified: An or-ganisation that empha i e
u ta rim · g p.art of i div i effort will 1.md rmin th tru . in nl f valuing
diversity. In tead empha is hou1rl be put on a celerated trainin - and de e]opment
ofth previou ·] dis d antaged - mup · to equip '!:hem wiili compNe.nde and kills,
whi h will ,. nabl h m o do th job ff ti Jy.
11.3.3 Div _rsity is not an abs nee of standards
Valuing di er ity does not mean 'anything goes' - that we , i e up our tandard
for hiring and p 11:r ting p -opi .
· bl 1l. indi at , div r ity tnana m n
Prindpl
o,
pr du tivity
6 n ral Manag rn n
iv n nd q aH ativ and, wh
m n g d prop rl , will l
Lh
suocess o the: individual teams and the orgamsation.
11..3. 4 Di versit y is not a vendetta aga inst whit e males
To om , div r: ity symbo ·
mor nlighlened
i ty,
a global c:itize:11 . To otih . rs, i , br ds re entrJ.l:, nt Tb
. t th ht:art of th i u f di ersit • n: are h rea o
diversity o o, ten a.il. Although weH intentioned, a foe on unJ
gender, which i nores ability and compe ence - and hicb blam
pa l injusti,
- only int n m th - divi. ion b •I
up , in
them together to create a more productive mrkp ac .
The nexi
L04:
11.4
ft r
tion focu
~
· . n f ur futur
e v-ie
ar
... to p.
e
culture ra,ce and
white mal for
t ad of brin ing
on th qu tion • hal i div •r'. it ?'
Exptain the meaning of d"
WHAT IS DIVE
pJ ring th
lffi
11 .4.1 Div r ity i b ut d m gra phi s
Fir t. dive - tty i about demograp,bi . Demogra~.-- ·- -ati tical tud o
p · ul ti
, r d m ra hi anal i an
y
certain criteria, o,c example education., nation~i religion a nd.ethnicity. Ethnicity
r
t a · t
f belon ing to <
i 1
up lb t ha a mmon national or
..:ultu:ral tradition. The demographi o a roup or ven a population can c:hang
ov
, . For ample. th avera t · 1 of du ation of a popuJ ~on can increa
over a c, rt i.n p riod of tun ·.
Ma· r d m · rapru
fri a uring lb pa ~ w
de ade . We have moved fmn a ituaLion in hkh the law regu)aled where people
ouJd live what kind of wor d vclopment the coul.d do and with born they
ould ocialis ·• to a . iluation wh re ih human right ,o f p ople are pmL ted
by a modem constitution. According o Sta isti · South. Afri a. South Africa'
p pul Uon i umani d l a rat or Oto 64 p r cent , ul of a popula ion of 4
million. mme than 39 million are under the age of 40 and mo t of · hem U e in
·it'
an · ha · had a maj r impa
nth wa orgam au -n fun i n
on hom they employ and with whom the do bu in . In the opening case. we
V cl · om u.
in d v l ping nd mainta"ning div · w rlfor and a
diverse group of suppliers - au playing a major role in the uccess of the company.
11.4.2 Diversity is ahout profita bility
on , di rsity i ab ut p1!1 flt bility. Whil
ffirm ti
acti n f1 cus,
eliminating discrimination o,r corrn ting past injustices. valuing di ersity
n
a
Chap r 11 : Managing div · rsi y
bout in r
rodu tivity
ility. In ,a t va]uin
diversity is one of the . ew ocfaJ issue in which the busin
community is
a tu.ally leading th w . B cau it i p of abl , ·1 f, st
am o · , .and it b. lp
organisation .identify and me-e the needs of their cuslomers and • on um.en;. Th
or anisation - that have understood and used their tmde:r tanding of di •ersity
inno atlv ly hav ,ound Lbat Lb hav . a amp liti ad antag i.n th mar~ tplac .
Vodacom believes that diversi c:reat competitive advantage, bo,th in attracting,
d v loping and ] Y· ra in · div
tal l in id lb omp ny
w U a buH ing
stron :1 brand relation hip with i · diverse •· on umers worldwide.
1l.4.3 Diversity is about values and ethics
Third, div rsi y i bou v lu and · hi . ln n ur
· ·· n· l on · t. t
respon ible manager often needs to fmd common ground among different cultures'
th.i. in
ty d l With thi al ii, m 11 •
ampl an thi 1
d ilemma ·
·.. · :tion, which indud pre rential rreatment, and rec:ei in
· '
.· , m
l
·bi
ard judg orrup ·
and ki k
unethicaJ!, hile many o
1re iew corruption a
eptable practice and
as a le itimate o t of d,oi · .ine . Tb
that the r pon i le man a er
ma
k are 'Which moral s ndar . ri
as · of corruption?" and · Jow
do we ma
here .uJtu.raJ mora1iti . · iffi One
olution , lhi dH •tiana i
da
lly a
,bi
ba · norm
tha · can serve as a common g n
T
at are acce
all cultures
at n
whal cutrura] a.
we come from, we ca
agree upon a set .o f
principl
gr
If
i h and hri ti n h
declaration that ill · trates the common ground among
bow th
m
an b u ed for bu in
as uni
JusLic 1(fai
•
i.
t
. alue and
draft d ·
·ith
world rtli ·
ti ur I
. )1
utual respect (Io e and co.o ideration)
•
•
ardship
•
Honesty.
h·
1m n
dilemmas in diversity.
g i
wh n d ~din
\ tU1 thi al
11.4..4 Diversity is about behaviour
Fourth, djv rsity i . about b ha i u . R · ardl of p rs na l b Ii f , diffi ren • uhurnl
background and different religiou backgrou.nd • our mgani ation . expect us to
w · rk ff, ·v ly nd ffi i n l and luin div ity i mu h mo . pro u iv
than not valuing it..
Prindpl · · o, G n ral Manag m n
11.4.fi Div r ity is a long- rm pro
s
Lastl , diver: ity is a large-scale ,c hange e ort that extends far beyond training,
o using ,on th u ainabil i of th
rgani tfon. rgani a .i n ~ that make a
long-term ommitment to a comprehensive diversity m nagement trategy, which
include trainin • will no be di appoin ed and will be abt to e la tin b nefl o
doin o. Di ersi ·· houJd no be een as a problem but rath r a mlxture of p opl
with differen group identitie within rhe odat
em. I is an opportunity.
1.
Diversity ' not udu i e but indu i e - il is about all of u . It is about rea·t ing
and
ntribute t th o . n· ation.
a ulture h r e-a h individual can thri
Diversity is not anoth r f; d. If ou loo at your work. ore · today and ompa it to
five or ten . ars ago and then tty to imagine i five or ten ears into the ru ure you
wm
bat div · ity i no a d. D th · am ana1ysi , fi r · ur us omer b . Th.
change we ee happening now will continue: in .o the fo ·eea le futur .
he next e ti n fo u
on work.for
div rsi y.
LOS: De ,ne workforce d ver'Sity and explain the eed or he management thereo
11.5
WORKFORCiE mVERSITY ANID THE NEEi) iFOR THE MA NAGEMENT
TH REOF
Mao organi atioos in South Africa Africa and around the world pride the
es
h ving div
wor ~
· · i . ma , up
mpl
i di
n
ba kgrounds. cltaracteris
iences. Di er ity
th workforn~
h t rog,
. o·
e mp
mp
with varyin
haracteri tic includln
1m1.ted to, religious and political beli fs,
gender thnici1y:
u
10 onomic
ha kgrou
xual o
. g ograph.i
location.
e d.
hi of ,empl
hang an
diversity ·
I
em rg , w rk
fore div r ity i th
imrtarifes and differen es
am n,g employ e in terms
. er to becoming a bus
n
· i
fa
r th t · rgani ation
of hara t . ristl s su h as
wa e o sh w their commitment to ~brac·ng
race, eth nicity, gender, age,.
di ren
and po i i
attitud
t wa cl .
~. lig i n, phy ical ability. marital
hange.
orkfon:e di ersity fo e
mutual
status an d sexual orientation.
11 p 1 m0ing mployee . Whethe
lo ee
Div ity mali h1 workfo11
work il'l gro up or team
01heterogeneo tJS..
wor
with varied wor: tyJ
who, repr nL dUfi rent c:u.lture or g neraUon.s
a
nergistic work en irnn.ment ha become the norm in organisations that
mbr
di r~ily. AJthough I . n ion may
a ionall ari · , mplo
. within
organisation ne erthcl
recognise the many · treogths aod talents that di ersity
brings · th workpl ·· nd h
in r · p t Ji r th ir II gu ·• p rf rman .
ln addition, it i important to, note that confli . inevitably occur in the ork
Chap r 11: Managing div -rsi y
n ironm n ,. H
v r mi I
wh
n wl dg
th
' , Ul ren -
ft n al o
md imifaritie , partku.lady when there are common goals, for ex.ample in term
of produ ti n and quality. R p t fi r o- ork
itb r redu, th~ l'k tih d o
conflict or facilitat an easier road to ornfli r, solu ion. Th ability to r1 olv
workplace co nflkt mini.mis potenti l U.abili for e:mpl ye complain that
wou.ld. oth rwis _ alat to orma] matters, u h a liliga ior •
- kfo
div, rsUy
pre eives the quality of emp1o ees tcla ,ion hjp with their co- ·rk
and their
u rvi ors.
In addition o th rea ons for the pr ent
mullicultu.rnl ma.nag ment _.r th ompl xi
Africa ha alrea,d been de cribed a a rad· aJJy
thni Hy re th _ mo t vi ib l, dim
·
or il di
exis between ethnic groups such a Euro-Africa
I
bla
-f"ri an . Th
di
w· in
- vi
i
ut
and
the
n context 11.1U1
ur · · odety where race and
ersj
ny uJ :u l di
, coloureds, Asian-Africans and
h roup.
shares a common hi to,ry. whil at the a.me time maintaining a uni
c
dire n ed
in g ni
. Th
·
c
now ask is 'What are
ersity managemen
tious?'
Belo ar
few of the
ersi manag m nt in
fa e.
11.5.1 Div rsity o
-ri, ty of tal 11ts, ski lls an
t
-~p. rj n s
Employee from •· ·
backgml.Lllds can ofFer
ofdiffe-rent talents sk.m
and ,exp, ·
be ofb nefil lO · h
1" n and i uccess. Though
-om c:ro _-o e f kill can b · ben f1cial h nit omes to a _ i ti ng each other, it
i important to !µre people with the appropriate kiHs to fit each of he role within
th
m · _n.
v· ri ty f ki ll and
p ri n
among a
m of mplo
al
that the e emplo e can le m., from each other.
11.5.•2 Diversity management creates innovatio n
By
rldn alon id p pl , diffi .- nt ba ground , p ri n · and w r" ing
styles, creati e concepts can be om fr,om bouncing id.eas off each other and offering
~ db - k and ug
lion • Wh
n p r: n ma b gr l at _r1 n rating x iting,
out-iof- the-box ideas, another individual may ha e the nece airy experience to
at·u th m. Th refore. i i
enral to capita1i on
h ·mli iduar n h
and collaborate with otbe:rs in the team.
11.5.3 Di versity improves em ployee p rforrnanee
Empl
are more r ly to fi l omfi rtabf
nd happ in a workpl
n imnment where inclusivity i , primiti •d. Equality in the workplace i important
from different backgrounds to feel confident in their
for em: ouraging employ
abilit and a Me th ir b st. The h.igber th t am mo~ l , th • m re productive
emplo ee are.
1
Prindpl
·H
o,
d
6 n ral Manag rn n
man
div
ap lh b n fl
it int
lh
J?' In th
next ection, we answer lb.is question.
L06:
11.6
Explain the manage men of diversity in t he wortplace
MANAGING DIMERSITY
Managing diversity i dif :erent rom valuing
'i v ity.
anaging di ersi · addr
the
organisalionaJ process
that reinfor e - or
hind r- nenvironmenttba al e d.i e- it .In
lh p sl, m LOE" 1anisat:ion used wbat : •all d
the •melting pot' approach to man.age diversity
in th workpJ
. Thi · · um
are different would
th p · pl,~wh •
omehow automatically
w nl l · a imHat . M
rn m· nag
ll&DIII
Mana1ging d ersi,t r, fers t
the organis iom.11 actions
that 7m a p mo . gr at r
i clusi n O' employee from
, iff
b ,kgrou d into n
orga i tion·s structure.
hav
r aJised that employee do not · et aside tbe.ir cuhm value , their belie. rel1gio.n
or lifi t 1 pr, feren ·~ wh th
om lo
. Th baU ng for a m nag r :
to c,ea e a work environment in whi h di ·
Ji estyl , ,amil needs ancl . ork
tyl ar accommodated. Th mdUn po method
umption ·~ bein . replaced
in th, mod rn or · anisation b d1 mo aic approach, which re ~ognis
a1ue
differenc · between emplo ee and
p of employees.
ln lhe next ection • we shall bri fl.y explain ome of the appr _a
to managing
diversity as well as tra t.'gi
man ge diver: iti in o
· a ion . Managing
dive.rsity can yield -n rmou resuJt in innovation, n
tdeas and improved
productivit .
11.6.1 Approaches to managing div rsity
h id
t di. rsil:y hould b m
the foll
·n
three approache hav
ron •• · ppr . h and h
in th 19 O and in th n
f1ed: the ·gotden rule' approach. the
if ren
• appma h.
h • Id n rut ' appr 11
Acrordin,g to thi approach, it is be' t to treat everyone in the ame wa . Ho · ev,er,
p pi from th d min:an u
- wh h
o d int n ion · - a m that lh y
wouJd treat people a cording to lheir own tanda.rds, and individua1 differences are
ign r d.
Th 'rrght th wrongs' ap proach
The 'righ Lhc wron s' approach is imifar to affumativ :iction. Managers foUowing
this approach ma
ay 'We need! to employ more black women and di abled people
Cha pt r 11: Managing div r U th
rs o n
from both these designated group
unprodu ti , l ad to an 'u ersu
in.no ati e and enab]in envimam
1y
gU
:S h.
pp,ro h r at
a weU as I.be tradition.a]' emp1oyees which .is
lb m' m nt Ht . nd entually und rrnin an
nt. A re ponsible bu in
wiU nol .ollow u :h
an app,rnach.
Th 'value of difference • approach
hi ap,proa h -co ·ni
dfffi ren - · an• a, know] dg thaL they ~xi • but do
not require people to be assimilated into the d.o mioant culture. I - allmvs for the
no · · o · p • pl
at th gg • gat pi ture ran organi ti n. Wh n u
organisation and become an employee,. you cany your 'differentne s'
. Wh n
u re f: , d with ~Lu ti n h t in Iv man in th
di - eren . from yo11.1rself. our rea tioiil o.r oJution will dep d on how much yo u
kno · , und rstand nd al ue th 'dilJii r ntn · of th r . With u an p, ,m . ·h,
t.he diver workforce will be managed respm1sibly !n her ~ord inclu ive1y,
invol · in • among other , actors, differener - Ln teli i n,. culture, racer ocioe onoml le ls and g nder.
M n gin div · ·ity i
man · . m nt ri n ari n
um·t d t
1
department or to a p cine managemenL 1 veJ of Lb or .a ni ation. It i an o ernH
approa • which eek · th commitment of th whole r anisation if an
t b a hi
d. There I not o.n pa rticu! a r oJi 'Y tha'!. n
ariJy gua rant ,.
re,quired 11 ults . Organi ation . d" er ·n the wa s in hkh they implemen poUc
of di rsit m, na n1 nt. . ig:u
1.1 d ·pi t th di r it manag m ;it oniinuum
- the range of di ersity mana emen olici - that mganisatio
n implement.
e
:figu
1.1
Diversity management m n ·nuum
dl ersity e forts a.re tho e that believe in a
th r
iUb n
oli '
on managerial and economic empowerment in place.
Organisations implen1enting n
man ul :ure and h mog
, us organi ation Typi l1
r ani ·ati .n wi h om div · ity ffort will d mon trate v
lit I in th are ,
economic and managerial empowerment and will provide no or little orga.nisational
up,port in · rm · of du ation and ,fliv rsity training. Poor m nag ment ommitment
t diversit i . a ,c haracteri ·tic of the e organ.is .t ions.
1
Prindpl
o,
G n ral Manag m n
Organi ati n
ith b
-b
d di
m n g
ommit d
upport a culture o enabling
empl y
· ch rgani ion hav on .oing du tion nd div i t.rainin
pro ramm and manage.rs are om.milled to diversi y and I.he tahH hm nt of an
or anisational cultun: upporting di · rsity. The r pon ibl or anisation will have
r pon _ibl - m na er ommHt d to broad-ha_, cl di rsity fort •
ffi
to manageriaJl and ecouomic empowerment and
h
11.6.2 Strat gLs for managing div,_rsity
ln.c:r; ed interaction among population from all over thi
rd and interaction
h tw r1 di r popul ion in t.h ame oun ry and r · · n ba m d it almost
impo ible o ha ea workforce that i not di eISe. Th wor orce that contemporary
manag · wil l n
o m nag wHl urel b d'
· any of th way th - t
we have expl:ai.ned in ection. 11.4. Although di ersity can pre ent a number
f h Un , · L n
r p rl manag cl rg i ational
nmc b in
maj r
challenge, the benefit it will bring fa:r u cig th chaUeng . To apiialise on
t b n, ft
• ia d with · div
rkfi rce, vari u uat gi
an b f H , d
as plained below;
1
•
R
-
cnutm n and app 'ntm
r ponsible organisation
tral
,a
recruitment and appointment policies,
\ nich hou]d embrace d encoura e di · ersit . Or ani ati
and appo,int mplo
1h r embl th ountry or community that tb ir
organ· atio,n ar, b d i.n a much as po sible.
Crea e indu
- ·
·.
p
certain
th
· ·
th
'
•
a .
ilh i
poUrie and practic . Res .
top management
that the mganisauo
. d o erall policies and
pl
p
on and do n ·
r di · rimimit · g,ain a
. Policymakers need o- considet the diffeu:ntial impact
mhav
,n h di
I
p of · ork
.
•
· ff tiv •ommuni ation. R~ pon ·ibl m n
r: hould n ure
effec ive commun.~cation ihrougbout the organisation~ Cultural and fanguage
h u_ld b nu;,,r<>nm wh
mmuni ating i h mpl ,y
•
Encourage interaction. Onl lhrough interaction with one another can
div
group · r p J>I
· Hy nd 1and, uppr da . nd · -p , L lh
differences that exist among them. Employe houfd be encouraged to
olla orale ."th coll gu who r 'diffi r nr fr.om rn m. On wa f
implementing Lhls · by creating work. roup - and team that refi - t lhe
di e ity that i
in the orkpl c,e. Thi will n t onl help employ
know and value ea h other · individuals but \ ill als. exp,a nd the i w and
experlenc,~s of team members,. helping them appr~ciate the trengt:h of their
-ombin d p rsp tiv and t I n
Diver Hy training. Sometime emp,loyees act insen itivel towards their
U, a !U not
lh y wanl lo b m an or di rimin ry, but impl
•
8
Cha pt r 11: Managing div ·rsi y
r aU th
rs o n
rom both these designated group
unprodu ti , I, ad to an 'u ersu
in.no ati e and enab]in enviroam
gH ·
h.
p,ro h r at ·
a weU as I.be traditional' emp1oyees
th m' m nt lit nd en :ually und rrnin an
nt. A re ponsible bu in
will not .ollow u :h
an app,mach.
Th 'value of difference • approach
hi ap,proa h -co ·ni
dfffi ren · · and a, know] dg - thal Lh y · xi • but do
not require people to be assimilated into the d.o mioant culture. I · aUows for the
no · o · p • pl
at th gg • gat, pi ture of an o · , 1 dlion. Wh n u
organisation and become an emp!oyee,. ou cany ou 'differentness'
. Wh n u re f: , d with
itu ti n ,b ir . [v m n in
th
di · eren . from yo11Jrself. our rea tioiil o.r oJution
ill d
d. on how much ou
ith u h an p, ,ro ·h,
kno · , und rstand
d al ue lh 'dirFi r ntn · f th
t.he diver workforce will be mana ed re onsibly, i other words inc::lu ively,
invol · in • among other facto
ln
culture, race. ocioeconoml le ls and g nder.
M n gin div · ·ity i a man · m nt or· n adon hat i
o lim ·t d l o
department or to a p cine: ma 1agemenL le eJ of the organi ation. It i a.11 o er.iH
approa . which eek the commitm n ·f th whole r ani ation if ~
t b a hi e d. There i not u 1 part .cul ar policy that n
arily i.1ararrt
re,quired results . Organi at" on . · fer in the wa sin
of di rsi.t m, na ·· m nt. Fi
11.1 d •pi t Lh di
- the range of d1ver ·t management polici · that ,
hkh tbe · i
·
11
ons
I.
lement a polk
• nt m1tinuun:1
can implement.
-
8_!oad , ba~c~ ·,
,
d[vcr-;ity cffµrts
'I
-
:figure 11.1
-
- -
'
Diversity management tt>n't!inuum
Otganis.atioos implementing no diversity e forts a.re tho e that believe in a
man u :ure and h mog n ous organi ation. Typi l1 th r iUb n oli '
on managerial and economic mpowcrment in place.
Or ani ·ati .n wi h om div ity ffort will d mon trute v
lit I in th are ,
economic and managerial .mpowerment and will provide no or little orga.nisational
up,port in · rm · of du ation and ,fliv rsity training. Poor m nag ment ommitment
t diversit i . a ,c haracteri ·tic of the e organ.is .t ions.
1
Prindpl
o,
G n ral Manag m n
Organi ati n
ith b
-b d di
ffi
h
m n g
mmit d
to manageriaJl and ecouomic empowerment and upport a culture of enabling
mpl y
· ch rgani ion hav on .oing du tion ·nd div i trainin
programm and manage.rs are om.milled to diversi y and I.he tabli hm nt o · an
or anisational cultun: upporting di · rsity. The r pon ible organisation will have
r pon _ibl- m na er ommHt d to broad-ha_, cl di rsity fo •
11.6.2 Strat gL s for managing div _rsity
ln.c:r; ed interaction among population from .ail
r the world and interaction
h tw r1 di r popul ion in th ame oun ry · nd r · n ha m d it almost
impo ible o ha ea workforce that i not di ers . The work rce that contemporary
manag · wil l n
o m nag wUl urel b · di rs in an of th way th -t
we have expl:ai.ned in ection 11.4. Although di e: it.y c:an pre ent a number
f h Un , · L n
p rl manag d · rgani ationaJ
nmc . b in
maj r
challenge, the benefit it will bring far ou weigh the chaUeng . To apitali e on
t b n, ft
·o ia d with · di
orkforct:, ari u uat i
an b o 1 -d
as plained below;
1
-
•
R mrltm nt and app ·
· t nli i . . Th
r · ponsible o:rga.nis on ta s with i recruitment and appointment policies,
\ h.ich .bouJd em,, r . c and encoura e di · ersit . Or anisa. ·o
and appo,int empl.o ees U al r sembl th ountry or nununity ilia t,h ir
organ· atio,
re- b ed in a . much as po sible.
•
Crea e indu · : vaJu l polirie; and pm.di.~ •. R · po, ibk top management
hould ensure that the organisation' alues and o er-d.11 policies and
r ' nclu iv f
ryon and do o a ur or di · rimim1t · gain a
cmain · t of emplo ees. PoUcymakers n d o consider the diffen:ntial impact
th I p
nd pra ti · . ,
ha
n
div
· roup of · or · rs fi r
they're enforced.
r[
m
•
, ili
uni
. R pan ·ibl m n
n ure
effective commun~cation throughout the organisation~ Cultural and fanguage
u.ld b
when ommuni ting
· m
•
Encourage interaction. Ow through interaction with one another can
div
group · r p J>I
lly nd 1and, appreda · nd · p t lh
difference that exist among them. Empfoiyees hould be en ournged to
olla orate .·th coll .. gu who r, 'diffi r nt' from (h m. On wa f
imp lementing Lhls · by creating work. roup - and team that refi · t lhe
di e ity that i
in the · orkpl c,e. Thi will n t onl help employ
know and value ea h other · individuals but \ ill als. exp,a nd the i w and
experlenc~s of team me.mbers,. helping them appr~ciate the trengt:h of their
-ombin d p rsp tiv and t I n .
Diver Hy training. Sometime emp,loyees act insensjtivel towards their
U, a !U not
lh y wan · lD b m an or di rimin ry, but impl
•
8
Chap r 11: Managing div ·,si y
kn w any
l r. Pr vidin di.v rsi traini g . y r
emplo ees, • pecially tho e in leadership positions, helps people understand
and .: c lb differenc in f igion, ra , ethnicit . · ltural valu ,
gender and t.hinlin -tyl . Diversity training helps emplo ees b om
e1f-aware, which lay a critical role in helping them u.nderstand their o,. n
prejudi
•otypes a d ulturaI bias _· . R _ ponsibl mana _rs hou1d
realise that abH hing a di ersity training plan takes time and effort. For
div ity training t b
tiv , an r . ni a · · n h uJ • n ur · · h ir t aining
programme· an ongoing effort upport:ed b top mana ement. This should
b vi ibl in th
i i n · tat m n and rgan· U nal 'tu
·phil phy~
The organisational climate should uppmt di ersit , a d mana ers at all
1 v J h uJd hav div ity manag m nt kill .
1
•
The ideal goal of diversity manag•e ment is ro create an organi ation that · alues
nd
·
fo
'
nd prov·
. niti .
b · fi r
succe fu.l d iversity management in respon
on i the ,c reation o
n in
· w
th t valu
nd
wi ·bin lh
Whether uch a\ orkplace ha been creat d aa be dtecked thnmgh a set of .imple
que ti n • uch
the following:
•
Are all gro up and individuals equally welcome to participa e in th
d d ion-making p11
th rganisation?
•
Are all gro up and individu,a
mad in i:he r ani L n?
•
Are all groups and individual equally invited to fonnal and informal
m tin~ and · i 1 ven . of th rgani aUo ?
•
Are all g roup and individual equally invited to a . ly for .all po ition
•
equally in ornmd about imp rt . nt deci ions
a aiiabl iJl th organi ati n and d al hav
, quaJ , han of b ing
appomtJ ci in l:h se po itions?
. ~ a linclividuaJ r, ward d
rding their p rform nee in th
org nisation, based on a olid · erfo:rmao --manag •ment y te:m?
THE BIG PIICTURE
In l:hl · h apt ,
d.
m l th r J w re di u d.
While diversity management i often the formal ta k oJ human resource managers,
it h,ould b on v ry manag r' a nda. Tru in 1 i ity and in gra ti n d
nol happen through organ· ational polid · but through personal initiati e
f u ervi
~ middJ· m , . a ers and l ad
of
up · and team ·. R po ibl
manager can, and houJd, de lop a mentality ofincfo ivity among employ
and
managers at all le el . R pon ib]e mana ere
houJd l o tta n fer Lhe prindp] of
diversity manage:m nt and inci11Sion to, a broad t of takeh Id .• from ommur:dty
members to suppliers. The iast ehapter. cltapter 12, focus on Controlling.
Prindpl
of G n ral Manag m n
SUMMARY OF LEARNI G OUTCOMES
LO 1 :
Define the concept of di er ity
Div,e rsity r I.at . to thos - qualitie and conditions ihat ar diff,. re1n from our own
and outside the grou
o which web long . et are pr,· ent in ,other individual
and group".
LOZ:
E p ain th various dim n ion of diversity
Mao countries in the world can be described as radically plu.r t
~eties.Anyrbing
plurali ti inv I
,a di rsit ,o f d"ff
n id
r dilli nt P' pl . Th r fi re, a
pluralist ocie ~ a diverse society - one with di , erent idea and different people.
radi all pluralist ci I ompn
practi all ,
, ivabl kind o hum
plurality· th. ir popul lions a.re e~ tr mely hetero em:ous in erms of race, ethnicity,
cultufe ]angua e. e ual orientation, r, Ii ion. p litka] affiJiatfon, ,-onception of
good or bad, and o on.
LO
Explain th mi one pHon
•·
Diversity is not c:uUure.
•·
Div
•
•
r qual
pJ m n1 pportuniti
Diversity i not a.n ab nc of sta dards.
Div
t n a v 1 d tt
whi mal
L04:
il:y i-
n i
1
nor a ,mn ti
Explain the m aning f di ersity
•
Dive:rsil i a
•
Diversi
•
Div rsily · abou
•
Di
ut d • u ographi .
abou pron ability.
alue and trues.
ity i
Diversicy- is abou
L
ity
ustainabili
lin
orkf r
thereof
di
I -in th n d for h manag m · n
Div
wor pfa
ar
mploy '
with varying hara t ri ti s
including, but not limited t , religiou and. political belief:, gender, ethnicity,
du ti n, -o J . nom,, ba · ground. · xual ori ntation nd · ·. r. phi Jo ion
Be.nefi of diversity management in the work.pl.ace are:
•·
•
•
taJ n _, kiH and
Diversity management creafies innovation.
Div rsity improv
mploy p rform.an •
Div rsit · ffi rs a ari ty
in th.
Approaches to managing diversity includes the golden rule, 'right the wrongs'
and v lu lh difii r n ' approa h . tr t g·
fi r m naging di rsi1
,r
40
Cha pt r 11 : Managing div ·,s· y
· dd
·ng :iv
in • ruitm nt an · a p intm nl p Ii i ere .tin · Ju iv
vaJues. p olicies and practice acilitatlng effedi ie corrummkation, encouraging
int
lion and di rsi training.
REVIEW QUESTIONS
1. Explain the m' conceptions of di ersity.
1
plain what d'v ·
J.
iE plain the genera l dimen ions of diversiry.
4.
Provirl rea on fo r the in. reas d fo
lllS
on he managem nt
of dive:r.sity ma.nag men .
6 . Distinguish between the various approaches to man in di e :ily.
7. Pr po diff rent lraL gi for di e ity manag · nt · rgainisation .
8. Explain the concept of 'diversity training nd propo e approac.he to dive ity
5.
Ex.plain th hen fi
traini g.
LEAIRN ING ACTI1vn1 ES
On an annual basi , the Top E plo e r . In titute relea es j
ulh fri . . Th ranking L b · d ( n mpl y r . tha· pmvid
ploy
conditioru,, nurture and d el p t al
throughout all le els of the o ani alion,
ml ,_ h~ h triv
o" nu
optim i · mploym n pm i . Th
mp ni
are evaluated acro
number of key areas in luding talent ·raiegy: work.for,t e
plannin · n-b
ing; I · min an,d d elop ment; p r ,r m n e mana m nl;
leadership devdo ment · ·areer and uccession mana ement; compensation a:nd
hen ft : nd cultu1:1 . Th To Emplo e In litut th
valu e . the implemen :ation
ra ice . and r; i w how the a r uppo d through · trni g , owne hip,
practic ·, mea urement and techno]ogy. Micm , ft
named a op South African
m I , II 020.
icro ofit' 2019 nnual re
h tp :IIWW\ .mi r ft.com/investor/
I' . p
/arJ 9/iud,e x.html. Rad th m ·a e of th
hlef Executiv om er and
iden tify' and discos the ompan ' straregi to manage orkforre di ersity.
REFlEREINCES
2.
3
Baxter C, Aric hihong, Giga. S a KuJar R. 2008. Criti al Sue: e Fac:ior iil the
Im l m ntati 11 .o f P , iti ,
U n i · lh NH UK. lntemational Journal of
Diversity ii1 Organi alion , Co mmuuiiies fl Nation ., 8: .2.
Brev i~, T . Vrb , M. 201 . omemJJ , arynumag ,u tJ! pri11 iple. ap ·li wn:Jut .
Certo, SC. ]992. Mode:m matiagemenl: Diver. ity, ,quality, etl1ic mul llie gfobal
,u ira nmenl. Bo on: l1yn :fl Bacon. 586.
Prin ipl · o, 6 n ral Manag m n
4
D panm • , t of La our. 2017. • mmJ 1 n Empl m ,
uity. · vail .bl
online:: ttp:/ / w.labour.go .za/D0I./doc-uments/annual111eports/Comm.i sion%20
fof0/o20Emp]o m n ~2 0Equi
20Rep rt/20 6-2017/downJ d {document/
anoual-rl:ports/employmemt-equit /20 6-2017 / 17th~20CEEil/o20Annua1~20
"Report.pd.f
5
Hofslede lnsighrs. A ailable on]ine: http ://ww Lhofi tede-ins~ bts.,c om/product/
oomp,are--counmes/ [Acee ed 12 June 2010]
6
Mat.hm-Helm, B. 2018. Diversity in theWoIJkplace: The good, th· bad, the nee ary.
A Uabl online: h tp://www.u b. . c.za/tboughtprint/ ag /Di e iry-in- heworkpla e-Th -gooci,-th -h:nl,-th -ne<:e ary.a px. I[ .
· ,· d 28 bruary 20UI]
7
Smi, PJ, Cronje. GE Brevi • T 8: Vrba, MJ. 2011. M a9em nt principle : A
c.anl mpomry r:dilicmfor Africa. th edition..
o n: J uta.
B
Stati ti South Africa. 2017. Mid- ear ti a . A ailable onlin : http:/IM
tats a. ov.za/publkali n /P0302 / 0 02201 .pdf
9
odarom. 2018. Value . A ailabl online: hrtp:l/www.v dac om.com/ a]u .php.
[ cce sed 28 F bm ry 201 ,8]
m
1
odacom. 2018. About U I Prof ·' . A ail bl online: http://
omp,a ny-proflJc.php. (Ac:ic~sea 28 F bruary 2018]
•
4
w.
PARTV
CONTROL: A RESPONSIBLE AP ROA.CH
•
CHAP T E.R 1 2
CONTROL
, tlior: TI r: fa B'otha
-
-
OPENING CASE
Vodacom
Voda om Gmu Limited I·
uth African mobil
uaka ion omp n 1
providing vok,., 1u s.ag;ing, da a a nd conv rg d rvi e fru m heir roots in outh
Africa to Tanzania, the Democratic Repub lic th • C n o. e otho and Ken ,L The
ompany li t d on h J E in 2 0 . Tb y hav mor H · n l 10 million · uslom r
on many devices connected to, world- cla net .v rks, servi.ced through variou
partn . 1
di ·tri ti n nd
or
The com an fo u - not onJ on fa ,ancial u1 , bu al o mea ures their uooes
by m n of stak hoJder r · turn,
compan condu -t, d a p opl urv thmu. h
which key ta keholders. were a ked about how much alue Vodacom dded to
th ir Hv . Th , mpan · b ·n f m lh reation of un u t ,i b , hort- rm
performance. Instead, th
. · ,g and sustaining o valu for ha reholders
and a · hold
th ·
um and l ng t rm .
With Vodacom'
-P a product (M for mobile and Pe
or money), customers
pa Ji r pro du and Ni
. nd nd and rvu,£..
n y qui kl and . aFi ly.
Custome · n a.lso bu electricity,. pay DSTV sub , nptious and morce~ 2 The o ial
r tum n inv ~ m nt ( ROC} of thi produ L i hu - i . Uow oft n imp v ri h d
communities t
ain access o banking prod C'
which in turn enab[.
the
1
cu la · of · e llh. In 201 '9,. Vi d
mh
mmi n M-Pe a cus o
UD
A num er of imf)o rtant elemen
Vod · m· · 20 l - u tain bUit r p
•
•
•
•
•
•
f r pon ib]e management are evident in
per cent of the company· employees an~women.
Bl k -pt1 n a I, n in
u i
mmit
is
p r nt. n 7 p r nt
of theic emplo ees are black.
Th · mpany p nd·ng on aining i RS 4 million.
Vodacom has a Le el 1 BEE contributor tatu in South Africa.
In 201 • otal re -nhou ga emi ion r due ion w re 1 510, \ her a
955 network iite were olar powered. ater consumption was decrea ed by
19 p r n · nd busin
m ht w r d , r a ' y p r
In 2014, Voda om launch.ed e-S hool in partnership with tlle Depan:me.nt of
du ation.
43.4
Prin ipl
of G n ral Manag m n
CHAPTER ORIENTATION
Thj · chapt r xamin th princ"pl of ,~ nt L
ntr 1 i th ri urth and fmal
function in I.he management proces . Although Lhi is the fmal tep, it is an i.m portanll
link. · · it rovid ffi edba to th fl t tep of the prn e , \ h.id1 i plannin . Wh n
management know how succ · fuHy th p,l an ha e be n ex cut: cl and the ext n'1
to bich the goals ha e been reached. th
be able to continue with the next
y J · planning, rga tsin , l ading and on olUng.
wm
Thj ha ter defm ,c ontrol and it i
n vervi w of the vaJu and imp nan ·e
of control. It describ s, the fou.r · t p of th ontro1 proc
and th basic m ihods
that can b used to maintain control in an organi ation. We Js,o expiain the
variou typ of on rol and h n to u
a -h typ or o,ntroL l tly w answ r
the question of ha hould be contmUed and d. cuss th · aracterlsl.ics of an
rn iv ntr
ln the ope.rung ca e. Vodac,orn wa
described
a c mpany that as u.med
r" p n ibili y for th , ipl - bottorn lin · nd tak h ld 1 alu • or u h ,n
organisation, the controlling function is adju ted to incorporate the three pillar.. of
[1
p n ibl m n g m nt, a · , will mu t
' pt r.
LEARN ING OUTCOMES
Aft r tud ·n l i
L01 :
hap -r1 you h uld b abl, t
Defi e the term 'co Lrnl'
.xplain tn impor n ,o ntrnl
L03: Explain the steps in et' troll process and depict it dia ,ram aticall
LO . I'd n 'fy
xpJ
h basi ontrol m h ds
LOS: Expl ain the va ·ous types o , contro that respons·ble a agers can use ·n
tion nd plain ~ n . ch yp f n
lS ppr
I t t u
L02:
1
L06:
L J.
46
at responsible managers should c n ml
th . cha1rac ristlcs of an
ontrol syst m
Ch p r 12: Control
KEY TERMS
balanc d :scar card
budget
bur aucra ic con ro
concert ive rontrol
1
eoncurr n ~ontrol
co trol
ontrol I
control met ods
con rol pro ess
control :sta dards
control syslem
damag con rol
feedback co trol
L01 :
Defi e U1
mandal1audit
mmcial1control
in
ndal
1
·
m
nciai statement
humar, resour control
normative ro nno
obj div cont ol
o eratlona control
prelimina,ry con
in
re ork co trol
sel -co trol
erm 'oo trol'
12.1 A DEFINITION , F CO T OL
Control can be de.fined as Lhe re nlatory ·t ask ,o
m nag ment tha d t mrin
th or not h re
has been a deviation f m the or ilDisational
plans th. t t p c n b ak~n ,o reven and/or
rectify errors r de ·atmus fmm lhe pians.
tasi of management
rmin wh hr or
ot there has been a deviation
rom h rgan· a iona l plan
so that steps can be taken to
Witl1ou
org nj ~ation ~ hav
iudi tion
hm well they are perfonn:in
in rela ion to th ir :toaJ . C ntrol
th
pr v, n :a nd/or r ctify rrors or
o r · · ation mo ing i.n Lhe prop r due ·tion.
deviations from the pan .
At any point, contra] ompares here the
o
ni lion is in · rm o p
(Ii r
example fi.mmcial perfonnan
prnduct:ivity, and so on) to where it is suppo ed to
b . ntrol provid
n organi ·a i, n wi h m h ni m for· dju ing i ou
if
performance fall outside acceptable boundaries.
1 • rgan· ati n wilh ut [li ti
· ntr ,1p,r
not Ilk.el
r ach i
- or, if it does reac:h them. to know that it ha . I i importan that control hotllld be
vi
da
tinu u pro
in h • rgan afon an th h i in n v n \ ith
planning organising and lead:in,g.
7
Prindpl
L02:
of 6 n ral Manag m n
E pl,ain h impo tan
,of ,· ontrol
12.2 THE IMPORTANCE OIF COINTROL
.,
•
•,
in an or :mi a ion for l:he foUowin
· ontrol en ures that 11 acliviti
t an levcl . of the rganisa ion are in
a cordance ith th organi ation· o .eraU oal . In · wa , con tr 1
p,r ovid . a oordinatlng m chanism tha links , h pla n.in . a.n d ~ontroJ
proce
of an organ~ a ·,on.
onlrol n we tha lhe organisation' ri
r depl,o ·. bl su h aw_y
that it attain i objective .
on ol r ult in b -rt · r quafty an nabl manag rr1 nt · o op with
environmen al change and uncenaint . Between the ime tha goals and
obj · i
a.v fonnu1 d an ·
im th y are a lain d, many thin
can (and do) happen in the rganisation and i environment to disrupt
mov m nt t : a11 ·
I - r , n · h n , th
I i If. p!:i p rl
designed control s , m • an hd . managers anticipate,. monI r and re pond
to , hanging ircum n ·. I' n im ,rop l d ig , d ontrol · t m an re ult
in organisational pe.rfonna c that ran- far hclow ac
table levels a.nd may
ev nl dt
d
IaJJ rth rganiatin .
omplex orga · ations need control measur,e LO tu."llre that co tly mistakes
are a id d. mall mi · taki aad rror d not fl n ·ertot l damag l e
fma ia! health .of an organi alion. Ov r time, how v r, · maH errors may
ace muJate and become very serious if n , roperl controlled.
1 ord to omp -ie organisations netd Lo, b 1jght1 . mo, and concro] i
re ne essary. When it i , i p
ented effe tivel , coatro.l can also help
du
o, _ and in fi as - 011tpu •
C ntrol facilitates deJegation tl teamwork.
1
•,
•
•
LOJ:
plain h st ps in th
a troll proc ss and d p·c
it d·agramma ical
12.3 THE C0NlR0L PROCESS
The control proces is a process followed by management to en ·ure that the
r n· ti. n' g al nd ,obj- H
a
r d r Lh· , a ual p rl rm n · i n
w1th predetermined andards. An efToctive control proc
hould be implemented
hereby ma:nag m nt an nsure th . th goal and obj tiv of the rg n· lio n
are realise:d. The control pm ess also e.n ure:s that actual perform n e Rial s to the
prede ermined andard . The -t p io me control prnc
are highlighted b low.
48
Ch p r 12:
nlrol
t p 1. E bli h1 ontrol standard
The 6r t
tep in the ontr0,l prncess i to ,establi h e,o-ntrol standards. Control
tand , rd a targ again t W: h ub qu nl p r nn:m i · ompar d, and th
hould meet certain criteria. TI1ey slmuJd:
•
•
b
pre · din m asur. bl t rm
be consJ tent with the organi ational goal
•
•
listi
identify performance indicators.
P r ,o nnan
indi · o are m a UTi of p r o an
hat rovid, information
that is direct] rele ant to wllat i being controll d. for -: mp,le, when ontroi i
wh r
,p nding fund
fo
d on v nu . monthly l in re
on 1Tesearch and deve]opment i less rele ant.
Step 2: Measure actual performance
Th
, ond t p in th
ntro' p, u
i Lo m su a tual p r~ rm
. Thi
tep in vol
collecting d l and rep rting on actual per: ormanee. h · variable
,hould be reliable a.nd quanti I bl to ma e meaningr-uJ com ari n p ssible.
Observation and m ·a trn m nt houJd be in a cordanc with lh
ntTOI yst m:
that i . the h uJ · cur at the trategic poin and aacording to the ·tandards
d ·l · rm.in d by th on , sy lem. For xampl • d ily,
y and montMy t ·
figure measure ales performance, and production p fo ance may be expressed
in erms u it , , pr du · qu H r v lum p
· cf. mpl .
'p rform n
is often mea U:[ied in terms of quality or quantity o outpuL However, for man job
m urin
traigb fi
rd.
The= third tep in the control pro
involv
omparing mea med performance
ual p rforman e may
higher than, low r than
or id · nii al to th tandard. If actual p rforman e · h1gher than ih standard, it
ma mean that th · ·andar could have been determined too low and . hould be
higher in ruru
I a tuaJ p rforman is l , wer lhan th · and rd, Lh qu lion
i bow much de iation from the tandard to, allo , before taking remedial action.
nl · x ptional difn . n
b w n a tual and pl nn d performan
,hould
be communicated to top manao-ement {thi i known
•control b exception'),
wh rea ub r ina d I wi h I
i nm n d v· i n .
agains
abli bed
andard .
St p : Tak cor , iv a tion
The fourth and last tep in the control p,oces is to determine the need for corrective
acti n. Thi t p · im d at acb.i ving r be l rin g th p rformanc tanda d nd
ensuring thal diJTeren.c do no recur. If th.ere ar,e : igni i ant die iations, com: tive
a ti n ma include improving the a tua erformance revi ing the trategy or
low ring p rform n
Landards. Th out, om of th [inaJ t p rv a an input
to the sub e,quen·t control pro
and indkate the tandard of performance.
Prindpl
of G n ral Manag m n
figu . 12.1 illu trat
tinu us n ure o th , o, tr; 1 pr
lfigure 12.1 The oontrol process
LO :
luen 1fy and , plain t1h basi
untrol m hods
CONTROL METHODS
The ha ic control meth,od in organis lions are preliminary. concurrent, rework.
and Fi db k n r ,I. E h
th
ba ·i
ntroi m th
plain
P rmin ry
ntr I
i also referred to as
d orward control
Preliminary control is designed
and i d i n ' to nti ipa and prev n
t anti ipa and pr, v nt
_pos ible p.robl.ems. lnformation about
possible prnblems.
p formance defl ien ie i g th red
b fo11 · th y ccur, in olh •r ords input ·.
are moni ored. Planning and organising :re the key o prelimimuy control.
ln fun tiona.l d partrn nl pri llmin ry ontrol play an important rol .
Fo,r example in the operations departmeot, machine houJd be ervk:ed to
r a d wns th
uld , a I pro l ms I l r n.
0
Ch p r 12:
•
C n urr n
ntr l. on urr nt
n r Ii
designed to identi.fy problems as they
ur by gath ring infi rmation :ab ut
pe.rforman e def1cienci s a th -y occur. It
at emp to eliminate or horten the dela .
b tw n p rforma.nc and fi dba abou
performance. ore and more
org nisation
•
nlrol
Concur ent con ml is de
1gn d
to id nti'y probl m a hey
occur by gathe,ring information
bou p - o mane d fi i· n i
as they occur.
r ad pting on urren
control because these are an effiectiv,e ay to
p rti ipa '.on and · h p,robl m · arl in th ~
Re wo rk control. Re\ ork control is a
m h ni m fi r galh rin · infi rmation
about pe.rformance deficiencies afrer
th y cur. Thi informa i, n · t.h n
used to correct or prevent further
p -r~ rmance deft i n i • Although
rewor, control alone may not b - as
promote emplo ee
n
r ns o
a
,n
P
Rew or control is a mechanism
for
ath, rin
in· orma ion
out performance deficienc.ies
a er t ey oocur.
e~· cti e a prelimfoary or ncurrent cm:itro.i it can provide managem ~n
with information or rutu:r pl n ing. · or -xampl , if ai quality h
finished products ind· ·ak:s an un ceptably high deFect raie, he reduction
man ge:r kn
th h or h mu lid ntify th
us and k. , p t ·
eliminate them. Rew r control can pro ide a ba r for re nling emplo ees.
n m h
a
mpl ·
h,
ddp
l .o l b
.id
margin. fo r example, 1nay al.ert the manager ·that a boaps or merit is in order.
o trol Dama,
ntro · al o
R
t
cu tomer/stakeholder
Li , wh r a · io11 i lak n t
con ml i also re r, d
to as custom r/ takeho:ld r
ili,imise the negali e imp3icts on
· omen; or other takclt lders du
sati ac ion. where action is
ult ou:tpu • On fonn
dam
ak r:i to mrnimi - th negafve
control i warranti! , which r q ·re
impacts on customers or ot er
k h Id, rs du - , faul
refunding th pur h
pri · , fodn, th
product or repfacing th product. For the
outputs.
re p nsi 1 rganj ti -n, d mu
ntrol
is an imp ortant control mechani min order to en ure takeholder ,afue.
or
1
db
ontrot .or h
p n ibl ·
organisation, reedba,ck control e.rve . as
an imp rlant m hani m m, a ur lb
organ.iisation's attainment ,o its strategic
a] . in • rm of r po11 i ility Loward
an
F
the organisa ion's attainment
of i trat gi go,a s in rm
lak.ebolde.rs. It iuvoJv gatheri.ng
of r spo ,sibUi ty towa rds all
feedback fr mall takeh Id r ab ut th .
takehold'er.;.
org . ni ation· p -rfonnan ·n t rm of
meeting their pe tation · in order to en u re continuous impro ement.
Prim::ipl ·
o,
6 n ral Manag m n
N · that
ha
tabli h d th imp rt n of th ontr,ol fu tion in n
organisation the step in i:he control pro ess and the ba ic control methods~ we can
a th qu ion 'Wh t m th ds an pon ibl man· gers u
ma.in a."
ntrol
in or . anisatlon ? Thi ,q ue tion i ans ered in the follo ing
lion.
LOS: Explain tne various types o , con ml that respori:Slible managers can use 'n
orga11i5ation5 and plain wn · n ea h typ of contro'I is appropria o use
12 5 TYPiES OF CONTROL
R pon ible managers can U!Se fiv,e different cype o control in t eir organisations,
nam 1y bu u ra i · bj iv · · rm dv ; n ertiv ·
l
n t In h
follo • an explanation of these typ of control i provided.
12.5.1
Bureaucratic controJ
Wb n m t p · pl think ab · t man g rial
control. what they have in mind i bu:re:au ~iatic
control op-down typ of c n rol hereb ·
manager us • mgani a lion al rule , polic·
hiera.r hy of authority, written • cun:u~ntation,
rev,aFds and olb r formal m hanL ms t , a
performance and reward or unish
fi r ,cnm · Ii n
or non mp
·plo ees
r m
employee , bureaucratic ntrol Ha a negative
onn ali ,n in
lh
·n
ri n
that manat:rers e.rnphas· e punishment for
non mplianc m h mo th n r 1d ~ r
Bure:aucrntic co, trol i
top-down typ of
whereb y manager
use
organi · · ional rul • Ii i ,
hierarchy of au honty, written
d um nta i , ri wards and
othe r forma mechanisms
o a
·, rfo rmanc and
K'ward punish emp.loyee for
om ranc:e or noncompliance.
compliantt.
t a · ·r: i man g n nt
d. A y u will
LJ,
x
Weber prop ,ed ·he idea of bureaucratic management a.:nd viewed bureaucracy as
c n rol on the basi ti' n · dg • p ri n or p n.is . W her
th
th
ouraged managers to appl ml • policies and procedures in a fair,
impa i I and consi tent mann.er. w·th h
al of • r ani ional em ·en (yo u
ma refer back to ection l. L2 iu chapter I). Bmeancratic contru] i suppo d lo
make organisations more effec, · e efficient and fair. honicai . it frequentl ha
th oppo ·it Ffi-c in m na
bo u · bu[I a rati ontrol nd to mp,ha J
rule and policies above all el e. For the .responsible manager, uch an approach
wil b d, trim n al
th g · al f r ting v ht for · ll
k h ·l rs, a. , mpl
are an internal stakeholder wilb high priorit . in terms of their power, legitimacy
(' · u m y fir ba k t hapl r • ' h
w di cu d lak h ld r
value creation a , an important pillar of responsible management).
and urg n
Ch p r 2: C lrol
.Bure u rati
l in organi ion b , numb r
di d nl g
to their rule-, policy- and pmcedure-driven decision-making cult1..l.fe de i ionmaking pr
ar very ·lo . ec nd th
r hlgh]y resi tant t chaug . L t1y1
nlfl
they are lo · t:o respond Lo cu tomers and competitors. These disadvantag may
have a negative effect on the •ustainabilit of the re.spo.n ible nrganisati n. D pi _
th · disadvanlag bureau raric ontTo] is an appropriate melh d , ontrol in n
organi a.tion where it is neces ary to randardi e operating procedure .
12.5.2 Obj dive control
Du lo it disadva.n tag , in many organi.saii,o
1
bureaucratic control 11a · evol ed into, objecu
ntr l. bj iv ont I i ba ed n 11 l th ,
can be measured and te ted. Rather tll:m er ·
rul h t ma b am igu us bj ti , , · ntrol
measure ob e:rvable beha iour or ou put There
are
"nd
f bj
it'
nam I
beha iour control and output c
jective contro l is based on
fa ts hat ca
b m s r d
and tested. Rather than create
ar
ob
ob
ma
e co
r abl
.
m
mea ure
tour or
outpu t
•
Beha.v iour n
B vi.
ontrol
invu]
the regulati n -of e actions that workers p norm n Lhe job. The
ba ic assumpti n is tha if empl •
, pe:rfonn the ri
(i.e. th ri ht
b .avi urs) e ery c:.by. th n , hos things. will I ad
or -ct out om s and
goal ach·ev ment for the organjsation. Behaviour- ontrol i , till management
ba5 • · . In o r words manag rs a . l:iU p n ibl for monitoring and
ar
or punishing employees for exhibiting desired or undesired behaviour:
B lr viour ntrol is an appropriat m b d o ··ontr J t us in · r anisalion
- hen it is easitt to measure what ~ loyees do on the job than what ·they
ompl' ·h , n lh j b. For , mp · • l · gisti , ompa.n m y instaU a lobal
positioning atellite (GPS) in th ir delivery ,e.hicles to ensure that drivers stay
on their d ~ign t d u.t · d do not take d tollr.i, w ·t tim and m ney.
Beha iour control is also appmpri;ue in organis tions here 'rau -andffuct' rclationsbjps are -clear. in other words wben o anisations . ow which
ity
b havioms will l ad 10 u cress and which not. . r arnpl , at a uni
management know that providing tudent sup rt will lead o student success.
•
Output o ntrol. Outp,ul onlroi m -a ur th '1esu.1 of rnptoy · - · ,o ulpu ,.
in tead of what the do in other word their input . Output ontrol gi e
mpto ·
· dom o d id ho o rform h ir ta -· • a fon - a b y
accompli h prespecified, mea ureable results. This form of ,control i often
oupl d wi h i "nliv and r anls.
m omp i '
h Yah , hav
rela~ed rule abo ut wo,rk hours and focus on Ol!ltput. Because proaramme.rs'
ut u can b m a ure , th·· a
r d w lJ, h ther an mpl
wo
lhe traditional 9 a.m. to 5 p,.m. or tarts at noon and wo rks WJtil 8 p.m.
Prindpl
of 6 n ral Manag m n
Outp
contr J i n ppro ri l m U d
ntr I in rgani
Hi
easier 10 mea ure what workers accompli h than what they do on the job, hen
g od m u of or: r outpu an i e r at d and h n i i p ibl to ei
clear goaJs and standa11c:is fnr worker outputs. For exampl , at a unive ity,
outpat control i .·. an appropriate method of control or academic ·taff. Student
ul·C
an b m asu:red by LhroughpUL raL , n1 a uring wh acad -mi taf,
acco,mpU h and not what they do. Furthermore, the number of publication
an
u d.
m a ure Ji r re ar: h · n ' th , ommuni y , ngag m nt
nb
measrued h community projects. Oear goals an be et for throughput rates,
re · arch ut13u and mmunj,
g
m nt proj
Rather than conrroUing ruJ.e (bUTeaucraric
ntrol), h ,v iour r ut-p,ul ( bj liv
ntro,l}i.
No ma ive co,ntrols govern
anotherwa to control i mu e normati e control
beh
vimu through a1 pt d
to h p th val
and b Ii rs f mp]
patt ms of a ion ra h r than
Nonnative controls go ern behaviour lhrou, h
written policies and procedures.
ac ept d pattern fa ·on rather than w ·tten
N rm ,tiv conlr II us s v ,
polici
and pr,o dures. Nonna i
on
and beliefs cat ed nor·
u es aJu and belief: calle,d norms, hich are
tabli h-d tand
l bJished t nd rds.
r ex -mpiJ •• within a
teamT informal rules make team members aware
p n i, ititi . . Th
i.n hi h
in 1
a
·v lop ~d
f lh ir
over time. Team mem BS c me o an informal agreement as to how r, pon jbilitle
wm b divid , fi
on th p
iv d tr ngths r h t m memb r. Th
u nwrir en rut.les are no.rmative controls and can powerful influence behaviou.r.
.
organisation. E
tion .
ha d valu among
· organisation has norm o behaviour that
m. On or
· ·
a
. Another may requi re ·
n
id th
m
.i.scussed.
ul
p
·
lo la th ·ini ialiv
approval befo re employees
a b off b
hH oth rs
1
w
ay . Fi t, •rg ni ion · Lh tu norm iv
contro] are very careful abo who they employ. Whefea many organi ations
will mp], p opl :a d on th ir biliti , n rmativ, 1
are likely lo semen polentiaJ applica:n s based on. Ui.eir ·. ititude and aJues.
Se on , manage and empfo e learn wh t the hould and hould not do by
ob rvi.ng more exp rien ed emp,lo e and listen.in o Ute Lori . lha tll
l ll
abou the organi ation. These tories make the a titude of the emplo ec that drive
organi · Uonal u
1 ar. ormati
ontrol i an approprh1t m lhod or ontml
when the organisational cultare, valu and belief: are · trong.
Norm iv co troJ are , r
4
Ch p r 12:
12.5.4 C n · rtiv ,o ntrol
Whereas norm.ati e controI . a.re ba ed on
b Ji f . th· t ar ·tr ngi h Id and ~hared
throughout
an. organisation,
onceni e
control are bas d on b lief: . that are . ha, ed b
team in the organi a ion. Wherea ·. normau e
controls are dri en b :trnng organi ational
ul ur ,
n rol u -uaUy aris wh n
organisations gi e teams complete autonomy
nd
r _ on ·ibiUty
for
ta
,omp,] tion,
Therefore, concertive contro] can be defined
ill r ufa · n of mpl y · b havi r and
decisions throu gh team alue and beliefi.
rtiv
v
:m - ju
a highl
nlrol
Con rtive controls a,re bas d
on beref that are sha ped b:y
team
in
h
organisation.
Concertive control can be
d fin d
r gul,, i n of
employees' behaviour and
d ci ions thrio h t am valu s
and beliefs.
ut • om u
m d v op ·u
phases over time. In phase one the earn mem.b
learn to worl with each other,
u rvi · , . h olh r' · w,or and d I, p, th al · a d b H f hat wil1 uid
and contrcd their be.ha iour. lt i import · t to no e that ·team members de elop
th e valu
and be1ie:fs them e.lve . Tuer ofi , team members
I s ,rongly ab ut
follo ing these vallle and bcli,
cond, he eam needs to formalise obj ctive
rule to guide an,d control beha. · ur. The b liefs and value deveJoped in th first
pb
ually d eJop in o m re ~ ctiv rut in pha · two. Thls i n d d a
more new members join th eam. Co em e contml is an appTi pria e method of
onlrol in an organi a i n wh
p n ihiU y for a k a
mpt' ·I1m nl i • gi · n
to autonomous team:s . hen management ants orkers to ta ownershlp, and
r, p n ibUity fi ,r
ir havi or nd utpu and wh n h d ir a trong Fi rm
of orker-based ,n tml
1
12.5.5 Self-control
11'- ontr I i h abi1i . ·o on
If. in particula.r one' emotion and
p i Hy in diffl, uJ it ati n • In
a n o ,anisational conl xt, sci ·-c nLrol, or
e.lf-mana em~nt. refi
to a
t 1 y m
Selif..oo trol. o self-m,an m nt
rae -e,s to a contrail system
in whic h managem•e nt and
mpJioy - s , on rol th ir wn
Ln hkh maria.gem nt and employ, - control
behaviour.
their own beha iour. In el -control, leaders
and manag rs provid · mpfo .
i h d ar
boundarie within whid1 they may guide and ,c ontrol their own action • behaviour
. nd
,I . L · d, and man ,g
on ri · u
th
lf. unlTOl of mpl y
y
providing them with an enabling environment, an environment in which the
mplo
can · t M or h r wn g · al • nmnitor hi r h r · vn pr gr . , 11d r w rd
or pu.nish bimseff or herself for achie ing or not achieving the elf-sel goal .
if-contr I i
, appr pria m th d or ntr ] in ari · r a,ni ation h · wor .
are inlrin ically moti aied to do their job ell (you may refer m chapter 10, in
Prindpl
o,
6 n ral Manag m
111
trin i - r ward
p] ·n dJ, wh
it' dW1cul l rea
good measures o worker behaviour and wor er outpu and here wor ers have
elf-c ,n rol ki11 .
Figure 12.2 summarise the various methods that managers can use to maintain
ontrol in rgani · ti n. Th -,gu r al o pr _id a umm ry or wh n t - us th
differen methods.
Bur~ucratir co11trol
A top-dow typ of ontrol whereby managers us, organisational
rules, policies, hierarichy of au or ty, writ
entat11m,
d and otn
orm -Ir ch nism lo ass
r
nd
-
.
A:ppropri
The use
• Behavlour contro
job and
'c
• Output
I is
a.n w
yd
p
and wh
a
app
r output to
o
mf..15U
ndinflu
it is easi
·
-and
ion hips
ls ea i r
n he job, when good meas
I lo
cl , r goal
-
propr
~-r5
ac ompl h
can be created
lpu
lie ha ·o rand decisions through
I va u - and b · 1 is
The regula ·on
I id Iv sh· r
e in organisations whc
rs' b havio rand decisions lhro
h
I
• Appropriate i
autonomous
pol ibilily
spoRSi bili ty for
kS
giv n lo
nt w.mts orke
ut ut :111 wh
and
orke -ba~d
m
pmg
r pt I in ,org ni tio wh r, work r
,, where it is d' fficult to create good
u put and where
:f igure 112.2
rd
~
havi ur, 5 t o n !1 Is,
for goal achiev ment
rin ically moti at d
d lh ir j b
f wor · er behaviour and wor e
ork.ers have stlf-c n
Methods of con ol
The question that we can n \ ask is 'Which o t.h.e various methods of control
i appropriate for he responsible a _ ni ation? The resp n ible organi ation i
buili on th 11rincipl of sustain -bmry. res pore. ibility and thi . i a e normativ
control is ba ed on the regufation ,o f worker· behaviour and dee· ion through
wid ly h ld and har d rganisatio11al valu and b U f: h norrnaUv • ntrol
method can be implemented vrith ucces , provided that orga:nis.ationaJ culture,
val
nd b Ii
ar,
tr n ly h "I and 1h t th h · p,il!ars f a , p n ibl
oro-anisatioo are embedded in its cu.ltwe, alue and beliefs. A secnnd option is
Ch p r . 2: Con rol
I, h uld th re p nsibl rg ,ni ad n ma
f u nomo
teams especially for projects focused on ustamability or the commu nity (you may
~ fer
h p r 8. h
w,
plain d th int gratfon of the pillars of re po,nsibl
mana emerr in the tru ture co be ome a r pon ible organJsation).
n
Nov · lhal w ha
m n
g
r , n
to ,
r i
control in organisations, the next logical question is 'What hou.ld re po,nsible
managers , nt r I?' In th n t • • tion thi qu. tion i , d re ' d.
12.6
WHAT SHOULD RESPONSIBLE MANA
. CONTROL?
Th managemen or an
r am ati n i · , p · "bl for the p rfi rman
f tb
organisatfon a . a whol a well
lhe p rr
. n e of individual roup or
and depart.men . Therefore th etfonnance of the organi a ·on a :a wl
th p rforman · · of th various d p :m nts h uJd b - ontroll d. WJ.1
a tly
should manager: control? Cos, ? Qualit ? Emplo ee we1:lne ? Profit?tommu.nity
ng g m nt? R ar i and d l pm n ?
·11 n anag rs
· ? Th
1
ans er this ,question ha riti ,al 1mplic-ations for mos organis ons.
Mo l organisatJor
th ir p rforrnanc b d on '
·a1 and a ounti ng
data and infonnatio , for example c:asb fl o
ale • net rnmgms, pmft • return on
in.
tum
ital and
u
r th
pon ,ibl
o rganisation, which
responsibili
. line, takeholder
vaJu a
dH mma
h n rro . ,,.,..,.....,..
m nl f p rform n
[n
ha[> r 7, th b lan d
or rd (B )
w:a -den tified a.nd explained as a trategic
Th B'SC o,f f rs a balanc d
ma.nag m n
I d v l p d
pla n ,nd
approach to strategic planning
Norton in 1992. s When u ed in the trategy
an d control an d o.ffie rs he
formuJ ti n · ta , it uide lh rgani ation
op por unity to int gr ,
a nd management team. to tran late 'the ,ra~egic
respon ible ma nag1ement
di11ecti n int Ion -~erm ( trate ir:) goal .. In
11
la d indica ors.
cbapte.r 7 e also i.ndkated that the B ofle:rs
a bala.nc,ed approach · o e ting strategic oals
and th opportunity to int grate re ·pon ibl rn:um
m nt iat
indi ato . . Th
·balance' i grounded in its four pe: pecti es: financial. cu tamer, learning and
g
th · nd bu m
pro
(you m y • fi r t igur 7. in
p~ r 7). At tl ·
centre of the e i ilie trategic direction. which will include the vi ion, mission
and rgan· ti nal p j)
h . Th B
l
ffi ·
r ani a.tio al man ,
11
approac.h to, mana eme.m ontml which go .beyond traditional fma n ial mea u.res
t , ri ur different rn a ures o - organi · :,onal performarn
nd t in orpora th
pe.rfonnance of the organisation i.n lerms of it goaJs a a respo ible organl ation.
7
Prindpl
of G n ral Manag m n
Th B - h
on frnanciaJ mea ures, namely:
•
It foli
m.an ag
t · a h I v I f th
rg ,ni ti n l
p ci Ii
and
plans as we have explained in chap,t:e r 6) and measu.re pe.rfonnan
.f th four area . Thi will m a tha t p man g m nl wi l
f r d o
oal focus don the fmandaJ,. cu tomer, internal pmc e lea.ming and
growth perspectiv of th . BSC. as will middle-level and iO\ er management.
•
I help align key perform.a.nee oals and measure \ ith trategy al aJJ ]e el
•
of an ,organi ation.
ll facilitaie . commWii atfon ,nd tu1:de anding oflm in
oal and
trate ·e at all level of an orl'l"ani ation.
II min.imis _ th chan e o sub-optimi ation, which o curs ·hen
performance im ro
in one area at the exp n e of d r a d p rformance
•
f us
in olthers. or exampl - a car manufa ture.r m
tl an intrea
e i.n
p,rofit at he pe e of ,qua.lit .
ll aUow lh organi _tion ro in orp rat and on rul m a IJJ'les a a
•·
responsible organi ati.on.
In what follows, e will re ap th four p ·pectlve: or the BSC, a.Iler hich ibe u e
ofth BSC a controlling medrnnism in r · ponsibl ,o gani ation will b exp]ai.ned.
12.6.1 Th balanc d sror card
Th balanced corocartl · oo o th
1
toda . wWch
es as both a pl .
I
o L hi hly to , ted trat : gk man
in · an control mechani m.
a
emenl tool
ntml mechanism,
th 8
m a ur · an o ni ati 's attainm nt of it m , ·on b ·on iderin
dimensions name] finance, t..-ustomer · ervice. internal bu mess performance. a
I, ming and
p ·rforman . Th int, n i to hnk ' nd b Jan th goa
rclated measures for each perspective to one anotheT. Examples of the factors
qu
d m~ h
fi ur im
i Jud~ Lh fi U win :
four
well
and
and
m
1e um:noal dimen ion an wers the q e tion 'To ucceed financially bow bould
, ~ appear to our hareholders?' M ur of the fma n •·al dim
ion indud
profl biHry. growth in terms or pro, and the mar l vaJue o the r ani ati,o,n.
Custom r dim n ion
The cu tomerdimen ion an •ers the qu tion 'To achieve our vision, how bould we
app ar to our ust mer: ?' M a u.r
r U1
m r dime1 i n in ud pen: pf n
of · ervice ,quali • tru tworthines , and lo ahy.
Internal business processes dimension
Th int m l b · in
dim n ion
n w .·
harehoiders nd customer , what business pro
8
h qu 1i n 'T
UT
es must we exceJ in?' Mea u.re
Ch p r 2: C
lhis dim
1 ·i
n in lud
pr, u ti i y,
competencies employee competenci
afi ty r
rds.
mpl
rol
mot" v tfon · rg ni ti n I
employie e rate of defects and/or errors and
l arning and gro h dim nsion
La tly. th learning and g:rowtl1 dimen ion an w r.; th qu stion ' o a hieve our
vi ion, ho wm e u ain our abmr to change and improve?' Mea ures of
thi dim -n ·on in lud · knowl -dg · manag m nt, re ti ·cy, d lopm nt of n w
products and ervices and employee naining and developme.nt.
1
important. The model contend that
loug- term organ· atlonal excellence and quaLity can b achieve onl by taking a
broad approach, nd not by ol ly Jo using on furnn 'aJ p r' onna
. urthemiore,
the model is future oriented and not primaril a review of p rformance.. as is often
p rtrny d in tr di i n I Fm n ial r p rts u h
in om
hrnc h
and cash How statemen · .
AH ·our dimensions o the B
a.re quail
12. 6.2 The fi nancial perspective: Controlling budgets. ca~h flows and val ue added
Th uaditi naJ appro 1ch to ntmUin fnrn · p rfu
· th , ontri J.· t· fman "al
resomtts: as they flow into the organisation (such as revenues and bareholder
ntributi ns), re h Id b · h rgan~ ti n ( uch a w rk.ing .apit J and rel in d
earnings). and.
outoftheorganis tion sudt ex:pen es and salaries). Organisa ·on
ne d
manage th ir fmmce
h · rev nu are sufflcient lo o er c
nd till
earn a pronl for lhe owners. The .ontl
f fU1an iaJ resources is rntraJ o th cuntroJ
of other resourc in th rganis: Ilion. mandal ontrol can be
cu db m~ans of
bud l , fmain ial stat m ·nts, rati ~malysi and fmancial audits.
1
no
Budg ts
A budget is a p,lan expres ed in. numer:icall erms. Org-ap1 ation need o compile
b · d · t r w rk ~ up
parlm n ,
·i n
o,r th organi i n , a
whole. The usual time period for a budget is on
ar, but quarterly and monthly
br akd w
I o omm nl .
d. Bu g ·
g n rally , xp
d in fm nd l
· ·y may oc,casionally be ex r ed in unit of ouLpu • time or other
[ dors. Mo or ani ati n m
of thre typ of bud . ts:
1
•
inanci.a l budget: A financial budget indic:at . where the organisation
p ts to ob ain its c h fi r th omiug financial period and how it plans
lo use il An example of a
anciaJ bud,get i a cash budge whkh ho ,· all
ourc of c h income nd ca h · pencmur . for a certain pe riod of time.
1
•
Operating budget: An operating budget is concerned 1th the planned
operatfon
ithin the organi ation. An e ample of an operating budget is
a a] budg 1. whi h ho, , the in. om that the organi ation xp
to
rec,e.i:ve from normal operation .
Prindpl
of 6
n
ral Manag m n
bud . : n n-mon. t ry budg r i imply a udg t
expre ed in non-imancial terms uch a. a labour budget, which bows lhe
h u of dir
·a bour avail bl fi r 111 •
•
Financial statem nts
A fmancia1 statement is a pmf11 of om asp t of an organisation· man ial
circumstanc ,. The three most ba ic fma11cial tatements, hich hould be prepared
nd u db .all org _ni a ion
re th - t. t -ment o ru, n iaJ po ili n, ur -m Il o
comprehen ive income cash flow tatement. A statement of fma ial po ition Ii
th
· nd lia i1i i
h rgani · ion t
p m
t in u 1 , u uaJJ U ·
la :t day of the organi ation's fi.nancial year. The tateinent of fmancia! position
b
n p ho rth
i n' fma · I
11ion la ingl p in in
time. The tate.ment or ,comprehensi e. income ummari e financial performance
v r a p ri d of im . u uaU n
a.r. An I
i ti n rev nu , l
xp n
are reported to give tbe -n t income (prof1 or lo sJ for a eriain period. The r.ash
tlo , tat ment pre ent the ca h re eip
nd payment for th ta ed time period.
Financial ratio
Fit1ancial ratios ompari
statement of comprehe
p iti n and p rform .n
nt f
ta m n of fina.n ia po iti n or
. ith another to
ess the financial health,
Information from .an organis ion' tatement of financial I o ition and ta ement
of omp:r h n i · n o • is us d in ompu ing f1na nci l ratio • inal'l iaJ nuJ
compare differen, e emen of a statement of fm . · cial . o Jtion or statement o
ompr n
in m i h n an lh r to
I 1 man i 1 h lth. p iti n
and p ormance of the organj ation. For exampl liquidity r:atio indicate bow
•
i ti n I
· .· an b crmv rt
in1
h. D b1 raU . mea ·u r th
rganisation· . ability to, meet long·- tenn f] anciai obligations. Profitabili ratios
ar
la· of fman ial m lri · tha
dt a
~ an or. ani au n· abili
t
g nerate earnings ttlative to it re enue, operating eost • statement of mancial
po iti . n a· · , and barehold
wty o er time u in d t . from a
rn point
in time. Remm in inv m :nl (Rm) is arguably one of the mo important ratio
that mea ure how wen an 1n tment · performing. ROI i . he rati,o between the
n pront ( r a p -ri · d) and h o , tb inv · tm nt.
or
omelim · here is too much informa ·on to mak
ns of. The B C impl".fte thin
by fi . usin on ne simpl qu Lion wben. it com t fm.an : H ,w do w - look to
·hareholde ? One way to an wer thi question is through ,economic value added.
Conceptuall economic alue added I VA) is not Che ame thing a profit . It i
th amount by which profl.ts. {rev nu , minus I xpen ~ . minus ax )
, d th
o t of apitaJ in a i en year. I I ha ed 011 lhe id a i.ha ·apiral is nece.s ary lo
run an. organisation. That capital comes at a ieo t. Although most peop1e think
abou · upitaJ as · a h, ,on ·e it i" invest d (or sp ·nt), apital i fo nd in a building,
0
Ch p r . 2: C nlrol
mpu
, ui m n , r.
·n. J t in 1h
am w
lh t
h m
owner pay. interest on a home loan, there is a cost attached to that capital: in ested
in · qu·pm nt, raw ma eri I and
on Thi i known ~ th co ,t f capital. EV:. i
po ili e when or anisational profits. revenu less exp ns ·.. less tax } exceed th
co t of capi l in a given ear.
Financial audits
Financial audits are indep -ndent apprai at
oun lin ·,
fmancia] and opera ional sy · ems. Two major types of ·1n ncial audit exit~
nam iy lh
· -mal -nd lb Int ma] audi t. , m I a . • r fma.n ial appra' l
condu ted by experts who are not employees of the organ·· ·on. Ex ernal audi are
·H n
un fog pr , edur
typi lly n , m d wi h d l rmining th · th rg·
and fman ial statements a.re compiled in an obj ctive · d verifiable manner.. An
int m ] audit i handled b mploy
r th rg· ni: H . [ · obj iv i h am
as that o an external audit - ~o verify the accuracy of fm . n ·ial and accounli:ng
proQedur used b the ,01:: anis ,tion. F
erm , internal audits examine the
ffl i ncy an.d ppropria n
o l aml a ounting pm edu.re .
o
an or ani
tio 1'
Th qu lion tlla
n
c
- · What are th impl"cation uf th man ial
perspective o the .B _C f; c ntrol1i 1 the responsible organis lion?" irsi, it is
important t note that the oal o sponsi le: fm . ncial managem n i -tht! responsibl ·
tum on inv · tmei, , (R 01), RROI hou1d b u ed •
a mea ure o organi ationaJ
rhe ptimi anon oflong- erm rerums in tbe form of a maximum
uccess that aims
tripl · otLom lin ma ·LRtum. :takehold -r a]uc er ti
and minimum thi al
misconduc· Another meWc that. the responsible organi ati n should include in the
manci J
· c ti i th
ial
m on in tm ·n R I). R I • m
d th
quanrnf1 and ,oneti all stakeho]der ro and benefits - the social. environmental
n · on - fan ti H:y in on in rafo. l a d • th Fman ial r ·uJ
the responsible organisation should be managed witb responsibility to ards future
g n ratio . in ther w rds to • ns
· · tainable organi tion and en ironment;
th.r gh a goveman model that nsW1 th inie1 - ts o priority tak!eho[d · and
thr ugh a governance model t a max:imi
ethical condu .
1
12.6.3 Th · customer p ·rsp ctive: controlli ng customer defections and
r tentions
The cond aspect of ocgani ationaJ performance that the ESC hetps managers to
onlri l i- ustom, rs . .It do
o by forcing mam1g rs to addr . 1h questi n 'How
should we appear co our customer T Many organ· ations use cu tomer atisfaction
a b v mi ·I din - in
u
· ·, answ r Lht qu ·• ion Unti rtuna, 1 , b
many people are 1eluctant to talk about their problems. Also. ,cuswmer atisfaction
su
, an b mi l din , in
ti ft , • tom ca n l a , and l k th ir
busin
to a competitor or even top using a prnduct a1together. Rather than using
u tom r urv y--. org· ni tion can rath r m., k us of u . omer d Fection . Thi .
refi rs top - forman ea essmenLS ia bicb orgaru ation identif which u tomers
Prindpl - o, 6 n ral Manag m n
nd m ure th rat at whl h lh y a 1 ~wing. u L m rd cti
have a huge impact on pmfits. Leaving custome can also tell the organisation
what th · are doing wrong, whi b gi
lh rgani ti 1n th opp rtunj o c rrec
their errors and increa· ,e· customer retention.
What. r th impli ation of th cu tom r p r p tiv
for n . Uing
the respon 'bJe organisation? first, it i important to not:e thal the goa.1 of the
r, p n ibl organ· Li n i , th ma imi ation f tak · Id r vaJu . Th cu t m r
1
L on of Ube prioritised . rakehotders of Lh orga · Lion and therefor r ponsibl
mana er
hou]d ontrol the m
im· ation of the aJue offered o the customer.
12.6.4 Th int mal business proc ss dim ·nsion: contromng pro -ss sand
1
quality
The third part o the BSC. the internal bu in
p,roc
di
·on, c
of t:h
p. o ,
s, d · ion • and adion that m · na · r and
m~ki . within th
organisation. It also include the quality of the pro,-.,,, ........, the effectivenes and
fli i ncy h r f. In h p r 2 th on , pt · I' m 1 , n ·s an Hi i n w r
explained. Effecti e.nes is achleved hen th organi ati n formulate a.nd pursues
appropriat ( r tat ') g al . '· m i ncy i •. , hi v d u ·ing h fi , t inpu ( u h
as the number of people employed or the amount of capital utilised during the
fm nci I · . r) , gen ra a ma im m am n f out ut f u h a th num r
products produced o r the pmfi ec ii d withln a fi.nancial year). Quality r
tht' andard f the produ ts a d/o · tvi, e a mea ured gain
imil r r du
o r serv:ic · . Qui;11il i- mea u , _ u1 three wa · : ~xceUen e. valu ·
to expectation ~. A qual.i · oaJ of xcelle.nce means that an organ tion houJd aim
to pro u · produ
rd liv r
rvi of un urpa d p rf rman and ti ature .
VaJue is the rus · mer ' perception that the product quality excellent for the price
offi red. onf rm , Lo p ati n m an th t pr u l nd rvi
o,ffi r d by
·on are up to standard, meaning confonnance to pe ifications.
1
I
Wh L a Uu: impli , ti n f lb inl mal bu in
pr
persp cti e or · h
BS.C ·or ontrolling the responsible organisation? First, the goal! of JeSponsible
pr
mana m nt i r pon ibl , t rµ
II n , whi h r
o abov avera e pto ess performance of he triple bottom Une. tateholder a.Jue and
mo I x , ll n , . Th re pon ib
ni ati
mu t on ro l~ · k hold r valu ,
nvironmeru:al impacts and ethi 1 dilemmas.
12.·6.5 The learning and growth perspective: contmlling training and
d -,,,,- lopm - n1
The 1a t pe:rspecti · e oflhe BSC. the learning and growth perspective. addresse the
qu ti n 'How wm w ·u t in ur a m t hang and impr v 1 · b: p p iv
invol es continuous improvement, not on] in the product and servic that the
r ani ti n f , but al ,o in th li'Fi -I g l a ming r it · mplo
nd manag
and redesigning I.he processe b whi h products and ,ervices are created.
Ch p r 2: C n rol
f Lh l a ming nd J'l th p rsp, ti , r Lh B - fi r
controlling the resp,onsible organisation? In terms of training and de clopment,
comp 1. n i . for su . ain bl rg . n· a io n h ul · b d v l ed an controlled. Th
organisaUon' r pon ibili y to Slt.lpporl employe to de clop their employability
in the job market h.ould be cion roUoo.. The abili of empl.o
lo make ethical
d · ions, and to lrnn late Lhem in o et ii i b haviour should b ontroll d.
Wba · r th impli
i
1
Hon
In Ith la t
control ystem.
f th·
l apter
e ddre
hara
ri ti
of n e e iv
L07: Discuss the charac eristics of an effecti e control system
12.7 CHARACTERISTICS OF AN EFFECTIVE CONTROL SYSTEM
Fr ,
aa ri ti
•
Integrated ith planning: A control
rem· effecti e onl when it i
int · rat d with pJ nn1n 1• ontrol mplem n phu 1 11
•u • h n
deviations are encounlered. it show that plan and e n goal need to
vi •
• n ol th ~
r nd · Lh nticp,,.,;:ary inp in h pl nnin
proce . Th narrower the interface bet een pi ruting and control the better
th ontrol
l. m th t
b introdu
wm
•
•
•
•
.
Flexible.: An effecti e control
tem houl be able m accommodate c ange .
Th manag m nt nvironm ri t · · changing on anti a · di u ed in
chap ter 5, which ne ecsitate . Limely adju.st:mems in goals and pJan
·ur t : A ntr I ·t I hou b id ign d in u h , w
h.a, it pr id
a goal-oriented and ccura e pi tutt of the itnation. Erro - and d iation
houJ,d n t b
l
,c n ml pro
Tunel : Tim
Obj
.
ntrol alata a.re supplied fiegulady and , :s needed.
hould p o id
:T
objecti e as
hie.
nr I
J
ta hat a
a
ntrol
t m ould b no t o c mpl
ive influenc,e on the ound
ple.x s stem can ha e a n
... -~~-~t f comp t nt managers
: L Uy, th
TH · -IO P1ICTU R 1n this chapter,. the ]a t of the our managerial functions w a di c
ed. namely
tf Hin · m l
'th" m na m-nl pro
that
introdu d in
chapter 2. namely pla.n ning, om:ani ing., leading and conn-omng. Although it i
indi at d a . the las f ur t p • it e:rv. aga·n a i:np t to th n
p] nning pba!P.
on romng.
Prindpl
of G n ral Manag m n
SUMMARY OF LEARN I G OUTCOMES
LO 1:
Define the term •control'
om:rol an be ,defined a the regulatory msk of managem nt thal d termi
wh ther or not there ha been a deviation from the or ,ani ·a.tlonal plan o that
cnt and/or n!'C ify error or d iatio:ns from lb pfans.
_Jain th . imp ran
L02:
,f ·
ntro,l
Control i necie s:ary in any organisation for the foUowing reasons~
au
•
n r I ·n ur that II ac i iU
t
I ] o th or an · a ion are in
accordance with the organisation' overall goals.
•
· n rot n ur · that b - rgani ation'
that it attains i objectives.
•·
, antr l r ul ln b l r quail y and nabl
environmental change and uncen:ainty.
omplex r _ani ti n nec-d
•
i:n u ft a
ith
nl
,ntrol n1 a ·ur
y
ure th
are avoided .
In ord r to omp t • organisation n
•,
therefore nee
•
d w b ti -htly run, and ontml i -
ary.
nd t amwork.
on . ol fadii'l
and d pi ti ell gr . mati all
L 0 3:
The tep in the control
l p, l:
· e highlighted below.
t bti h
The fi t ep in e con rn] proce ·. i to e tabHsh
· tandards afi arg
a ains, whi ·h · ubs quen .
should mee c rtain c · ·eria.
tep 2: M - - -
Th
in vol es cpllec ·
,t p
:
C'
rnndard . oncrol
· eumpared1 and it
ctual performan(j '
on rol pro
· t
and reporting a
a: tual p rfi rman . Thi
e ormao e.
aluat · d v'iation
The ihird lep in the c nt-rol -ro
agajnst · bli h d ·andard .
invol
comp,aring me ured performance
Step 4: Tak con tiv action
The fourth and fa t tep in the control p,oces is to determine the need for corrective
acti n.
4
Ch p r 12:
L04:
nlrol
Id . tHy nd xpl in th b . i · ontr l m thod
The basic control methods i111: organisations are preliminary, c:onrorrent, rewo,rk,
dam g and Fi d ack. onnol.
•
•
•
Preliminary control Prelimina · control is designed to antiti ate and
prev nt p ibl pr bl m •
Concurrent eontrol. Concurrent control i de igned
"d ntify roblem as
w·y ccur.
Rework control. Re\ ork control is a mechanism for gathering information
ab u
r~ rm · n d fl i n i · fi r h y · ru.
,o as customer/stakeho,lder
Damage control. Damage control· al
· . · a L on, · hi h m ans ti n i
i th n g ti impa
on ro tomer or otbe:r · takeholde due faulty outputs.
, dba
·ontr I.
dba
rv a n imp rt .nt m h ni m
m measure the organisation's attairuneot of its trategic goal in term of
ponsi ility wa
~ h l rs.
L05:
Explain the vario typ of control that responsilile m a«ecs can use in
organi ation
d · plain h n -ch typ f contr I · ppropria t u
Managers can u
bureaucra · · obj
five ifferent typ of c n · ol in their rgani atio n , namel
iw·· nmrm :i e; on •e rti ; and , f- contro l.
•
Bureaucratic control. A top-do n type of con rnl whereb manage u e
o , ~ afo n 1 ruJ • poli i , hi rarch of u h rily, rill n do umentalion,
and other ormal mechanism
Q:,:,c= per, orma nce and reward or
pu
.1plo
n mpli n .
•
Objecti e control. Objecti e contr 1 i ba ed on fact
•·
•
•
hat can be mea ured
a nd thal ma b ambiguous obj Liv
and t t d. Rath r
control mea ure ob erva e behaviour or output
rmati · ontrol
rm Liv on ol g v m b h viour thro ugh a p ,
patterns of action rather than written p,otic:ie and procedur . Nonnative
·ontrol
alu . nd Ii f
n d n nn , whi h re tabl' h
dard .
Concertive c:ontrol. Concenive c:ontroi can be de fined a the regulation of
mpt
,y· ur and d i i n thr ugh t m v lu nd b U f: .
Self- control elf-control or · elf-management. rde to a · ,o ntrol
tem in
whi h m nag m n an rnpl y
, ntr I th ir wn b ha i ur.
L06:
Explain what re pon ible managers bou]d control
The bala.n ed ore a.rd an b u d a a cout'fol m hanism whi h , on i d rs foUT
d.imen ·ion , na.mel fman e, ,rust mer ervi,ce, internal bw.ine performa nce, and
l arning and grov th p ll"fonnan ·.
Prindpl
I
G n ral Manag m n
o,
07 :
~
For a control
t,em to be effective, It hoald ha e the following characteristics:
•
.n gra d with planning
•
Flexible
•
.,
A · u rat
Timel
•
Ohjecti . e
•
, ti o ompl ·
REVIEW QUESllONIS
1. Defme the enn 'control' and explain the imp rtan
2.
ontrol pm
3. D" cu
the basic control methods.
4. Diffe.rentiat b tween h
5.
of control.
· riou types of ontml.
E pl in th bal nc d cor
6 . Explain the haracteri ·
a managem nl contr I m chant
an effocti e control · y tern..
LEAJRN ING ACUVnl ES
an un
ptabl numb r of
•a' ' for i ·
m
consoles. Th.e compan said. the had investigated tie sowces of hard are failure
d tl hing ligh . Th
ftw
g"· nt · mad m· nu~ turin
and pli duction hanges to avoi,d hardware failuJi .
lrl
o , , nl I impl m nl
y th Mi ro n , mpany plain d
indi t d
h
in lhe scenario abo ,e..
2.
y ur pini n i th id
ffi Li
fi r Mi,· r, , of ?
ubstantiate your answer.
REFERENCES
Vodacom odal R port. Quart ·rJy results;Quart rly tradingupd le I De mb r
201 9. Available ,online: http :{lwww.vodacom. om/ [Ace · ed JO Januruy
0 0]1
2
3
About M-P a. Availa ble online: http ~l}www.vodacom.coJ /I - er on al/mp a/ .uid -to- od • · m-111-p a/about-m-p ~ a [Acit-es•,ed O Janu
020]
Vodacom. 20l9. Surstainabillity report. Availab]e online: http://vodacomreport . .za/in gral d-report /ir-201 /do um nl / 'ownload I u aj n bmtyreport-2019.pdf [Acres ed 30 January 2020]
Ch p r 12: Co rol
4
a m. 2019. u tain bili
p rt.
nlin : hH :/Iv acomreports.co.za/integrated-reporl:s/ir-2019/do ume.nts/downloads/Sustainabilityreporl-2019. df [Ace
d JD J u ry 2020]
5
Ba anoed S ore ard In titute. n.d. hltp://www.bala.ncedsoorec:ard.org/BSC-
Vi
Ba
~
/About-th -Bal nc d-
ore rd [Acre,sse,d L8 F rua
2018]
7
Index
A
accountability r · al o r, ·p nsibility
cannot be d legated 24J
toq:iorate socia] responsibility [CSRl 1 l 3
d mH n
2
infmmation managemenl 26
argaRising and 237. 24
~ nslbl · ur ing l
saclal entreprenellliliip 1 25
acquisi ion 214
mini trativ man g m t 8- 1
insights for responsible :management 25
managememt priru::ipl , - IO, 25
man g rial fun tio
9, J7, )6 0. 'l 7
.modrl of managem.t".Dl: interaction with
empoye 8
affinuation a don :1.3•1 ee al a di rsi
A rican Bank Investments limited (Abil), cas:e
bid l 5- 1 6, I 1
nbeuwrmBus h InBev (AB lnB ·v)
case study 3 3-35, 52
arganl alional. o - ls 11d '
response ta COVJn-1 pandenti
~. 4- 5
response to eco no -c hardsh.ip 5'9
Jised MB- 50
id
flo:Sopby 2]0
io
10
of Employmenl Act 7 of
at gy
1
1
Blake, .R leadership grid 283
Bo tan onsulling Grou.- grow · - -hare
m lri lJ 7
cash cows quadrant 218
dog quadrant 2lB
1ucstion mark qu d.raul 2 l 7
star quadrant 217
BP oil ompany 59- 60,
Brandon Hall rou,p, 0 O Employ e
Engagement Stud JO?'
Hi3
onomic empowerm
nl
60
Brundtl
auc management
con rol 354
m n 7- 8
icran:hical slrutttJTe S
i.nsigh for respon ible management
4-25,
limitation of 8
types
authori&-y 276
B111m ·, J m · 287
business case, driver · or 15ponsible
management acli.viti s 20
Ul'"eaU
ma e
- 248
mimag
dual lme authorily 24,7
funct:hmaJ authority 247
- id in po rnons
tradtliona] 276
Basic C'omtitio
~ro d-bas db!
12·
Ii
ures of' rg
359
orga · tion
·~ion and n
BRI
· ustninabllity goal
authority
tenmdist'd
ha · u ti
1
di:finition 24 ·
5
d eAatio
~.
financial ratios 362
fl anri l ·tat
nts )62
int grati.on ol"respons.ible ni.anagementrelated indicaton; 211 212 159
I urning nd g wth .....,,. ... ,,,..1
.2:tl, 61
contml of train.in a d cve:Jopmcnt
] 64-)65
4,
B
baJ anced smreca:rd (B C)
busi n · p r · p rsp tti
2U, 60 - 6
onformance to spe i 1cations J64
dfectiven~ a.ad efficiency 36
qu lit l 4
responsible ent rprise e:xceJlem:e 64
conn-ol process 360
m rp p iv
U, 60
customer efection:s 3 J- 64
customl"'r retention 36
fi an ial p :rsp Ii
111 , J60
budgets 161- 362
l!Conomir va h.i.e a drd 36,2-3 6
n nc , I udi s -
or
b in s_ d dsio , moraJ oundncss I- J
business ethics SIT ethics
b -i11ess fo1iJnd tion , r- ponsibl man· ger
nd 7
business RSilience
b · in
m. d
2
detinlcion
l'IlSUri:ng sustaiuabilit 68
inrorp r tfon i organ.i tional g al •i
in :emal nvironm ntal anaJy ·
07
bus~ness risks
fi ·al cri · 22-2
underemployment 2:
unemployment 22
b · ·in · - nit-I I ·tm
21 - 11
Prindpl s, o,f 0 n ral Manag m n
·p . trat gy- 21
ett nliauon str.u gy 116
focus strategy 216
, , l ti n 218-21
C
_apit I r tin nci J. , - ur
Carlyle, Thomas 280
- ru-roll, Arclti B, pyramid of C R ao. 81
h nge
definition 42
, ffect of O ID-19 pa nd mic 42
lark.son, MB 77
climate chalilgt' see also enviro nment: gl obal
wanning;
lain -bl - devefopmt' t
con pl o' 1 -16
Kyoto Protoco] 7
a- ol,1 omp,,n • tudy I ' 5- 1 7,
0
210
communication
di
ity manag m nt , 40
oi:ganising an d 217
responsible mana gement and 25
r I in~ - iwn
of p! nning
role in elhiral business 97
roll:" in responslb1f" organi ations 16
ommunity
18, 2f11
• ]b in
comp titive advanta ge
a cha.racte:ri ic of man a eme:nt
, nvir nm. n
16
de:fmition 141
goal of trategk m
maint ·nan ofth
gh h n. e '2
use of strategy 199-200
com ti o
an ly
han:ie:rn to new nuants US-14 6
11 m i.
uh u ·e produ
components
ontli
r.ric
0
rn busin
. way · of d•alwg wilh
ll
Constitution of South Africa 1996 l 7-158
·o m ·, driv r fi r respo I l
management activities 19
contingency app roa ch., insigbi!i for
p I ibl m· ag m n 26
co
b .- . ch
.
m
concept J9, 349
C'.0
58, 359
impona.n
lower mana ge:ment t.as.k. descriptions 52
middl m na m •nt 1 , cl riplion
2
IJocmalive 356 J 8, 358
Objective 355-J 6,358
pr limin ry 5
process .351, .'.1.52
corrective action J 5l
t Ii. hm nt o
ntrol . t nd d~ J l
evaluation of actual deviations ;51
measu.remrnt of ::ll'tual perform.anc- J 1
rework
self-conool
8 , 3.5
u ainabl
ble and ethjc:;;d o
top m na
k d riptions 52
nanslatio:n of performanoe goals into
me·
nn nee i.ndk to · 51
ordi ,ation,
h\llSlncs
11
rorporate cultut
thka
. '011 2.63
mea11.m 98, l 1
mle in info nnal management of business
hi 8
corpmate d Line
divestitwe strategy 215
h· rv tin trat · 21
liquidation strategy 21~
lmnaround strategy 21 - 15
rp rat gov ·m n ·
definition 22
framework 22J
ing rep
c ar terisl.i of· · hlJ entr·, ren un
fou.rlayer pyramJd 80. 81, ll7. 12 .
Friedman s argumen t 58~59, 78-79
70
113
I
26000 2
moral duty for broader view 79
positwe and negalive duties 79
i I n ra 7
so ioecooomi power o . bu inesses 79
value creation. fur all
· ehold r5 79-80
·o
corrective action 18
,cyclic 1 re.lationship with planning i 81
da g
S
2
arban 0~ _ 22
tr.lie" m J}l m~ tation 222-22.J
rp r
wth
com mation strategy 2 L
ncentrntion growth tratr:gy 213
iv ifi lion fl'l) · gy 1
innovation strategy 213
int:egrntion trntegy 213
mark d elopmenL tml gy ll
prnd11ct development smitegy _ l 3
lvrp mt· -leveJ -u·.i.t gi - 2 12-215
l ction I - 2HI
corporate social. ~onsjbility I R)
C'
ll
d
hip
mugy
1.l ·
OVCD-19 l6. l65- ! 67. 206
Ind x
long-t nn pro
manag ment
Allheu :r-B ·h InBev {AB ln.Bl!Vt
J5. 54-55.
business resilience and 54, 167
ha
·
ofm
m
continuu.m 339-340, 339
gold n rul ' p
h
B
"right the wmn s' approach 338-3 9
nL
environment t6
Coca-Cola Foundation response 197. 206
m on
strategjes 340~341
lT inlng
'l
l ri
effect on growth in uh-Saharan Africa 23
effect cm organisations 42. J6 -166
f t n ~ n~lbl
n g ·m m 1. , l ·
ef ect on underemployment 2:J
,d 'fi ct on unemployment 23
t on . ork.r. rec 307,
pusonal, social and economic impact 59,
outh Arri a' ronomic respon
2
t inabl
ppl ·hai!Th 20
test of true leadershlp 292
ii tbrea · 208
trigger or respoosibl manag m nt 6
Unilever's response 8, 2.34
virtual arg i ation l ·tructun: 2!;9, 2
omhvorths Holdings - imit, d' rrspons
t8
critical in · stru u
ru, 2
customers
failu •
, bu ·n
s
bug ini g pow J
buyer behaviour J.W
definition 144
I lty 1
. ·. ·
E
Eastman Kodak Company see Kodak
co- ffid n • t B
economic envi.m menl
business mn idem::e index (Ba) 155
om ositi n
cm1Slllller 1:onfiden index [C:Cl]I 1 5
economic indi tors J 55
I
exte .
s.is 208
ocono
ce barrier 9
21
odaJ ·:ustice 68
in interna] busmes · pm
mea urement ain ·l tri
fl
value added 54
af a
sustainable deve1opmen
iff~tiati
·l 6
div i y
behaviour 335
3 l- 1J2,
t
39
,. ·on. p
7
diversity in workplaces 18
,
D
.
value of diJJuences' approach
profitability and JJ -J 5
lu
nd
my. connection with envimnmen1t and
Demin ,, W . :dwards l - 1
deve.loped countries 69
d~oping co
·
dev Jopm nt, d
3 6
orga · l.ional go I
ffici .n
d 54
s pro
364
sand 54, 55
2
n.d 334
8- J) ,3 J
. om absence of stand rd
]]]-JJ
d" ingui ed fr m rfmn tiv
]]2-3'.lJ
distmgui hed from ru1ture
O. 32
di tin ui
f: m u . I ~mpl ym nl
opportunities 332-333
distingui-ht'd from vendetta agai
white
ma
JJ4
e1lhicru dilemmas 335
thi a nd J 5
I
ricity ri.sis 60 1.55
'l:mployees, driver for responsible
ma nag· m
fl
a dviti
'O
Employmenl Equity Ad 55 of 1998 I :J7
energy price s bock vulnerabiHty, as business
' • k. 2'.J
eotrepreneur..hip see also .social
eotreprenewship
t'n ~'f'll''lole!ll\
111
formal small. meditlID and mkm
e terpns ( MMEs) 109-1 to
Fran i ·ng
m - 11
gazelles UO- IU
high-growth ntrepreneuri.il
110- 111
01:
~nls11tions
Prin ipl
o; G n ral Man g m n
ir111.rap -nN hip m
me ning l08
prnre.s:s
a s. in
quired
3
business pla n dt'.velopment 122
feasibility an d viability stud i~s l21
m Liv.iii n l 0- 12'1
opporhrn.ily evaluation 121
o,pporhlnity idem:ificanon 121
l nn
d m n gin fl ni f ns
123
erial entrepreneurs 11]
't d rpre u '
environment see aba global wauni n
onn cl:ion v,th emu.om nd sm:ial ju lice
F
fayol, Henri 9, 25, 7, 276
F~dler, F. leas;L-pni'.rerred co-wo~r(lP
l • 28 - 286
Fifth Industrial. Revolution 26
fust:-line managl'lll nt ser low~ management
as business risk
eff~ctoFCOVID-1
t
I
fum
Frttm
B
muni ri n • nn ,
7
infomral management of 98-99
int
al environmental analysis 207
m ·11! g B
IC
4-96
reJ)Orling functioM 98
p rti.n
un thi . 1 ·ondu t 7
training in e lh.ical matters 97. SIB
e of txtemal thka1 consuJtan
98
busin
dtci loll$ 1- 9
codes of 97
diver ity a.di 335
eff'i · n y and
focus of 18, 49
or
in.formati n managl'm nt
lntegm tion in
QM phH
phy .!
issues experienced at rliffen-nt le eb
0- ]
lead~hip
I, 292
mt"ani.ng 89
moral land rd 8
0
organisational oaJs and 5 , 5
otgaoisational structu1es and 263
p rfom1a
m
m n1 -5
responsible management and J , 88- 9'
trategy formulation 209,
'1 d rp n u ' . 6
experience cmve 21S
7
u.tio11 1· 26
. eun.hip
7, 80
·d
coutml of impacts 364
- ol gi al / plly: ical 162
rclarion. hip with org nisa ·on 139
res:ponsible m ana gement and 53
cthi
e al o rgamsa ions
business
advice cm ethical matt~ 97
b-ru:A
climale of trust 98
rnntrnl of ethical di nunas J6 driv r..
ethkal rullu:r
furmal management of %-99
g d
23
9, B
. oration, case stud
Fujifil
171- ]7
ional mana
m n
,a tkaJ pt ns
JS
G
Galltt, Herny 7, 24, 276
cllarts 7. 176
g z. 11
, ntr
n u bl
ge.neric strategies set' busine-ss-u.uit-levd
trategi
"lb!\ th r.i k 6- 7, 1
Gilb reth Lillian 6-7, 24.
gioba l.i atipn 16
dri:v r fi
on ibl · m
!HI
m nt
activ:itiE. 21
gob 1
nning
u/ -o Umat ha ng :
nvimn.01 nt
responsible management and 17- 18, 26
111
inahie- d · Jopm · nt :ind 73
systemic issue of sustainability l 7, 18
goals
- B- priori
t m 178
concep o 111
criteria 177
nd ·-m n h in l78, 17
finding cruciaJ !'esoun:es 179
loog- terrn / strategi.c :210
m an - nd h in
178
and objectives 41
parelu pri:ndpi e 178
priori .
l 78
responsibfe management and 5 - 6
ettin of 178 - 179
t
fo 01ulartion 210
transformation of resources 0
n-enw hiag 9- 60
group , haport m rol · of J
Ind x
H
Hawthorne srudies H l2
lienb~. FredeTi d J05
p
hi
hurrum r la ·o
ana
n nt
ll-12, 25
h
39
OW'Ces
bl m nag
i
·nt and
11
olulion
-1
information management I -15
indU5tri
d finiti n ,
ethical !ssu · 2
J
insights fui- responsible management 26
pri cy
ri ponsible m nagemenl and
J
information re.sou.roes 40
inputs r r o r
inlellectual properly see information
management
inl rm dia
147
intecnationaJ en.virmm1.ent 163, 208
irre· ponsible mgani.sations 57
,rly pproa
o und tanding
280-187, 287
e hies and 291. 292
lU" l 288
Four System model 284-285, 285
Great Mil mTheory 280
gri
8 - 284.
iolluence and 279-280
lower managemen
escriprions 52
ana m nt
2
8,278
middle mana em
. descriptions 52
motivation and inspira tio n 277
p w r nd 278-2
responsibi]jty and 291, 92
rl'Spo ible 29t-292, 292
il:ualional approa
-29
sustainabilH:y and 291,192
ainabl
nd thi J 50
t k / latio
.· h 28
top manage
escriptions 5.2
uai
tra
88-289
215
co- vorkeT (lPCJ sea e
J
ig11
job d
d mition
1
31 ·-no
mod I lB -28
lower ma:nagemen
enrichmen 320-J2l
r:Uures 21
opt"rational p1ans 39
join
. ilJli
.
rlpt
re:sponsi
rnam1gem.enl 52
K
King ommin
on orp
l
t·
lmv m ,n
223,
Ki11g reports 222, 2 . 2
ulh riry l. 6kno edge see information FeS011rc15
odak.ca
udy 171-173
ext
·
·
·
n na
b~
L
lb
M
m cr
co
r
a·
l. bour ~
6- 147
1
Li n A
of 19-
labmnunions ]47
1a
d ·finilion 275
lead hip 21
alignment of p eop]e 277
b
vim.1ml th· ry 81 -282
charismatic 289-290
rnm:ept 39. 274-2
nt m
ry pp
o, umi
ndin
2(18-29
mnringency approach 285-286
defin ti n 27 , 2
development 278
rlinrtion s tting fon::orutrnctive r::bange
77
,menta1 analysis 208
n
·•
nag~ nt
wd
effitiency 41
au ;itk approaC'h 7- B, 2 -2 , 276
ontin ency a ppm a b l 5-1 , 2 , I J9
definition 37
of div it
8- · 1
human rel lions approach U-n.• 25, l'73
leadership vs 216-278. 2'78
1-v I · 4 - 4 . ·1
micromanagement 2411
pelfformam:-e measuremeut 55
pr •
7- , 7, · • 138, l - I
responsible approach l39
cientific approach 5-7. 2 ,
, ial pro
40
systems approach 15 6, lJB
m nagem nt by ob·ectiv · (MBOl
b
n fir lBS
7
Prindpl
t n
pt
o; G n ral Man g m n
r
lead •rship 2 77
aslo • hierarchy o n
187
disadvanrag · 189
steps in 188
305,309,317
rial r-un ion
ma11
admini trnfv
management
mamagerial ro es 47-49, 4 9
d ~ icm-m k.in
infmmation B
interpersonal 48
man rial ,till ·
abuily lo, ork with and through others 40
driving kin 46-47, 1-.1
l m building · nd l I ding 'O,
teclrnica] sblls 45
mark.et environment
,c omp tilo
l4 - l
composition 143
usriomers 14 -I 5
i.tuerm diaries l '1
labour mar et 146-147
la our union
M . low, Abrah m
12-
N
tion ID v I pm nt Plan lDJO . o
national governance fail'l!lre, as business. ri k
0
ob~e-ctives
d fl nition
s •
rmulaua,11 2IO
, 148
opera
·n
o
Ma o, El ton 11- n. !7.l
McCame, AA, leadership gad 283
programme 185
proj
l8
mergers 214
mp it-ion l 1-1 2, l
s anding
poli i -
u
_intemaJ environmental amaJysi
fJ1
opportunitie 1'65 OB
orgarusatiooaJ chart 23
org nisationaJ d: - i n
organisatlomal pb" osopb. 20
organisalliom,al structures
d ig:n 2 8- 1 ,2
divisio
2 ,1, 54
t"nl:re reneurial 252 252
responsibilities
---44
tas descriptions of po ble
m no m nl
mission see ·
mission
room] ~ ·
9, 263
in in
ll
m
r
.
la ion 209,
tbi ·
. Terry 65-66, .92
,7
-
com onenn 302
nlenl th ri
304-309, Jl 7
d finitiom 301- 02
empfoyees' needs and 30'9-30
nlrtp "TI
hipp11 c
lltl- lll
equity Lheory 09-'.310, J 18
expectancy theory 311-312, 312', 318
1- l in th ry 1 , I - 17, · 1'l,
3JS
.
Rerzber1fs two- actor thooJY J05-J06,
Ot>, JI 1, J.21
jab design ]I9-J2J
74
18G
pro mttre 187
rules 187
op-ra iDns manag m nt
m1dd]e manage.men
d a rin
4
p.
Ian:
b
M ~1 Uan , David ]07
mi cro- envi room en t
rn,
1 1a cl' th ry
Jo, 11
modd 302- 04. 03
process theories 309'-Jll 3'18
rein~
m 'nl m ry
1 JJ8
rewards O'.)
social t~fHrepreneursbip process 120-12 l
M ut n, J . I ad ._hip grid .283
n \ ma rkd.s, dri er for re :rmsi
management activities 2
1 7
· ub-environm n
supplien. 1 8
tls JO -JO
ffl
rk
formai · .uion hi
fum~tiomd 252-25 253
obal 257-258
h lding
pan 2 5-l 6, 25
hor.izontaJ 260-262, 261 '
h brid 262
in racion o pil r O re po ib1
managemenl 62-26 '
matrix 2 6-257,257
multidivisiomd Ii m1 (N fomJ) 2- 4
network 58,258
n w venture uni 259
tral gy 1npl m n alio , z _
virtual network 259, 326
organisations e also cthi
archit tu 22 -2 2
2 '7
Ind x
uni
ll in ·
• ha.nge pmtce
competitive advantage see competitive
of omm. nd an di rti ,n
output s
4
1
goals
p
advanta
end TesuJt of organising process l:],
external mvirnnment see mano-
pareta principJe 178
nvi m m nl 1
global risks a drivu for responsih e
management activities 22
I nd bj 1i I!
I
in.crease in power as dii er for responsib e
manag ment ::acriviti s 2.1-22
inlem I n ironm nt
·m· ro ~vironment
s tems 15, 67 I 9, t7B
pl nnin
ph
conting.em.)' l 80
co.st ~ ia1t wilh lU
cyclical relationship With control 181
hi rn h- of ,org nf ~ nal pl n · 189
lower m:magEin
I . de criptions 52
midd1e mana,gmt.ent las · descriptions 52
pr mi
1 r.
l , I 8, l , 1 5, 208
relationsmp with euvironmmt 139,
16 - 167, 164
reponir1g fun lion · 8
responsible see responsible mganisations
' a 1 ·resp n ibllit or 77
strength I 0, l
108
primary 1 na cme.nt l\mt"tion 18
sustaina l~, sponsible and em.inl 50
top · n m n l s d ripf n 51
~ o plans
1lirectional 185 lB!i
iral ·uul 186- ! 87
long-term I 84 185
medium-term 184 185
p , U nal fl, 18 • Jt:I
short-term 18 ', 185
-ingle- 11Se J 85
p ifi
85, 18
sta Ii.ding ] 8·6
technology strategy 152, 153
threat · 1 0, I B. 1 • 1G • 208
types o'· enl:ffpreneurial urg n.isations
109-11]
v· fon, mi · lon :m g al or I l
vislcm, mission nd va lue statements
96-97
o.
]65,. 20
organismg
trat~gic Ja. 183- 1B J 85
tacti i B 18 , HJS
political / legislativ environmemt
~le.ma] enviro m :a1 anal · 208
I hour legisl ilim la auth Afri
15'1
legislation 156
t JU-S
.•
acrount:abil
lloc tion
7
aulhority l
,c hain or comm· ·
• ommuni at1 n .. ,.,~,"""
concept 38-39,
•c oordination 238,
d ay
·.
9
barriers to effecrive planning 190
guidelines to overcome ba rri
191 - l 9 2
b n fit l!H - 82
concept of 38, 17 '
opponuml.1
w
ical n-.souri::es
7
2
JIOW •r
14], 279
ati n 239
rk 1 B, II.I
4
•
24
,
ent task descriptions 52
mid l mtmag m n tn
rip i
po er 243-244
principles 239-2 ', 5
resoun: d p .ym · t
respo11sihiJi1ty 243
span of oontrn] 241
~tandarcU
.
·on 2 J
sustainable, ~sponsible and ethical 50
synergy 2'.38
y moti g u.pin l a
top ma nagement las descriptions 52
n 2•L
pert 244, 79
hard 279
infi rm.a ion.il 179
leadership and 17B-l79
legitimate 243. 279
p · I '79
posi tiooal 279
referent 244, 279
r r rel 4 • 1.?
soft 279
prime orgam:i ation, definition 18
pri
~nf rm li n m mlg m n
profit criticism 58
, intt1
7
Prin ipl
o; G n ral Manag m n
s
'r· nw· hi
5 - o
implem ntadon barriers
profit criticism 8
Q
quaH y management D-l
Jfi
dfiniti n 17,
:R
domai:nsof 17
driven; for activities 18-19
- ffiri n
I
effecl:iveness a.od 4
raw materials see physical re:smuces
Red Gard ning,. as · :ud. 105-107,
lll- 11 , 12
remote environment 142
:ump , iti n I .e- 1 , J 9
o ogi al/ physi l , nvironmenl 162
economic environment 154-1 6
int mation nvi m nt J6
poUti al / legi la1iv
1 6
social envirnnmen 158-1fi2
fhnlgi l nvi nmnt l
a
effect of COVID-19 pandemic- ,on 24
ol' m n · ~m nl rin ipl 2
financial perspective
budgets 361 -362
onomil· v lu ddi!d
.!- 6
financial au:dils 362:- 3
financial ra ·o '.362
finan i l Ull m 11 ·
respons1bility · wards ratu generations
363
tum om inve L~enl [RRml
-1
onlmllable variables al ma ro L ,
148
11n
··,01.m:
definition 0
ma11agemeo in inkrests of aU srakeholders
.responsible mana e.menl and
('arcity of 40, 41, 5
· l, n [ronm nt l nd
51
re m on · v Im nt (
55, 8
J
on . mi
government [fiJ)onsibility 56
in
.
m nt ml 26
in
o
om.ams into each
1 function 25. 50-52, 50
. pi, l
us~ of 39 O
spon;ibtlity
efficiency ddiniti.on
f cos of 17. 9, 76
I ad r.ihi r1, 2.92
management process
stak hold
enl
takel10lde
au n ~
stakehold
r n 86,_g7
arganl atfo ·
d 5 ,
organisin g
perfonoar1ce measwement 5
an. m rit and
ufatim1 209
mp etitiveness
·runm ,n
ly ·i · · rn
al phila5uphy 1:06
' of strategic manage:m'"nt 2.
ana
26
rornrol and J 9- 6 5
orporat
tor respon ibiHty 57
criticisms
and barriers to
applic:ible to
ect fi w 60
economic turbul me aim r 5
or
76
in
u ·in ·
org
·ona I goals and 54
organisational resources man~
ion I ru ·tu
gani
5J
nd
pil1ars of l39
pillars ufTQM 25-26
p
m n gem nl
24
/
ed appnlach 26
anag m nr th ori
nd
·ponsible organisatio
ch rn t ri tic:. 7
deJinitioo 18
orga ni ti nal ru •·un and 2'62-264
111
balauced scorecard (B , ) 211 ,
]59-'.J61
civil · o ·iety r 'f)Cm ibili
dean and open c:ommunkation 25
rompetitive advantage 1 1
· ontin
pro h lo maru1g m nl and
n J6J
s
ABMill
lnB1~v}
·ralar principle see organising, chain of
mman
scientific manageme.nt
insights for responsibl management 2
princ pl " 6
Skills D dopmenl Act 97 of 1998 157
•ocial contrild 79
1
· i I j ti · c nne.· i n . ith nvironm nt
nd e onomy 68
·octal rH p • n u ·hip re a o
en tn.!pren Ni rship
challenges
t .l•G
devel.oping a nd upscalm orgaDBations
126
m
l~
managemenl a fimrndaJ resoa;rce 126
oppormnity idenrificanon 126
. ill · :!il n gl! ·, 6
characteristics a·· sm:ial entrepr.enems
ambi ion 118- 1rn
h .l'l
11 - - I l
I .l
creativity and innovation 11 -117
mgagemenl with rak holders 118
u fuJn · . 11
results orien tation 119
role of med in o me 117- l 18
o ial mission i
JJ 5
strategle thinking l 19
definition · J 2
distingui hed from comm rcial
entrepren~rship 107
d :ingui hing a tor from lh -r
entn::preneu:ri 1 organisations I l ]
goals 112. tn
a
!IS l
OUK\!5
p
ssing required n:somc :s 122-H
bll5ines-s plan dt-velopDilent 122
a
ibilit and iabili
12'.l
· pon·ibl m nag m n
accountability
change agmt5
pursul of 11ew
scafabili
al
US.
of r
p rtunftj
inl ~ lu
l2
Ii y 12
lHC
d flnlti
8
engagement 88, 200
e:xpec ant 86 -87
xp tarion 200, 2m
reeman's definition 77
idrnt:ification BS
int m J and
r.nal '17, '18
latent 87
man g me1H of re ol!J
in inter t of
all SJ
oals to ensure value
II 54
pri
B7
lder salience model 86, 87
· fli L-i · to 206
prenrnrship engag menl · U:h
Lio
d·
p n tbili
for ani
corks 7. 80
•aim~ creation 78, BO
ti m 77
pro
meaning of IM-8
value maximisation
h a 7 77
Steinhoff tnrernauona 1
case study 271 - 73
·• k, • n · l
strategic allia11c
2 4
1, 100, 2fi:l
brategit mru:hlg~ent e also management
b lan
· or rd (B l l.10
concep of 202
ov , II goal 201. 202
pi c~
12
124
Ll: .
respcmsib ll" manage:TS and 57
I r p n ibiJit pr ramm ·
I rk n d fin "ti n 77
dasses of 86
definition 17
in i u-mul busin·
tudi
molivalion 120--12 1
opport:1mity valua ion 121
pp rtunlty id n m · Lio
muting and managing gan· aAi ns
r ti 11 nd m
124-1
mana men with ronfidtnc
soun:ing. driver foE" responsible management
tM1i
1
stakeholders 7 - 0
AA l 000 mgagement st"dmdard fl 5
11
social nvimnm«:Ill
cha:raderistics of industriafo;ed societies
160- 1 I
composition I B
external l B
1 m I n:vimnm n
2 8
industriaJ revol utions
internal 158
.~ ·.lc:h,n
1 · 9, 61
i.nteg:rat:ion of pillars of responsible
ma · ag nt n 22 'l
trat • arn J i 10 , 2
l -20
tni tegic control 202, 203, 224-227
tnn gy formul Lio:n 202, 20 • 09- 21
trategy implementation :mi. 203,
2 9-224
tndili n J ·· • w 20
strategic nalysi.s
~nvironmental analysis
int ,mfi n
r pilla o r
management 2ll9
mission ta ement 205
or ani ali n l phil
phy l
vision 204-205
77
Prindpl
trnrgk
o; G n ral Manag m n
nt
im1bl d ·vi: tip 11
Bru.ndt.lancl d finhion
concept of 69-71
on mi dim nsion 'f,
-, t
on ept of 21◄~12 , 226
e.nvironmental analysis 225, 226
nlr I or trat
lu · ·on nd
, 70
J physical dimms:ioll
implem~tation 22
review of strategy to11ten1 226
t1o1l gi I
hip 220- 2l1
environment al
trategy fonoulati.on
bu.siness-levt:l srntegy sdecti on 21 8
human onsumption of material and
bw i ,
-unit-1
70- 7
I/
t
resources 71
pill
,r 10. 10
population growth 'lllrole oft~
1
gi. "
2]5-2:Ui
t.."l()llCept of 209
ooru id mt"on
70
growth rntes in tons:umplion of rescnrn:es
lOO
Develoµment Goals (SOGs) 71,
cm:porate decline strategy 214-2 l 5
corporate growth trI1.1egy 21J - 2l4
orpor.ne-l v t strntegi 2: 12- 21 J
oorporate strategy selectiom 216-218
i.nl gra fon of pill.ii rs ofres.pon ibl
maoagem nt 219
setting srrateg:ic goals anrl obja-tives 2W
In! g impl men1 rion 2 L - 22 .
on pl or 1
20
corporate governance 222-223
int gra :ion
pilla ofrespon -ble
1
ma.nag m1rnt
leadership, 220-22 l
organ· ·
I a, ·
ZZJ -
'2
gy
·
·
takeovers 214
I r, red ri
•2
team lmi1ding and leading. s - a.nageriaJ
-n
40
·lmol gi al a v n
t
com
-· n
··
0
responsible 201
i
m nt ·tt I wcr
role in sustainable development 71
Thoms n
· {TR) orporn.H n, ca ·e
ud
-' 7-300
threats 1
ch lnB v {AB Jrn
goal
in · - resilien • fi8
_onn •clion and ilam:e b :.. ·n
b·
environment, economy and social j ustice
69
d 1initio11 68
focus of 17. 9
ph
-6
leadership 291,292
orgaoisationaI goals and 5 ,
p rfomu
m u m n1
resmuces as social. environmental and
N:Onomic capital 53. 5'5
• I •nl pren u hip nd 1.
strategy formulation 209
rorunental ana l -- 20B
lo .
l "0- 1 l
e a.lso dimale change
in organis .. tfons 40
t
nranagement
uµ .
ba 1mgpw 148
due dilige.nl"e 19
1111 :grnti n into TOM phll
ponsi l
management a
i.ti
n~d:moJogicaal e 'i.r nrn~nl
I tion
n
e al a
T
strategy
concept
i i uli
o utain biliry
ang;
responsible management 26
s
tu
organjsational
22
organisationa1 strortufl".5 222
tr.UJ
a
'•
tu.d
• l 65, 208
6
1op manag m nl
business rth.ics ad 97
fim• l uth rit nd r -p
strategic plan J8
task descriptions of responsible
m
total quality mana em Ill rrQM)
l
ai:m of 1
in dghl Fi
m · nag 1n m
25- 26,
pilla of 14, 25- 26
nspare , dri
for 11tSponsibl
management activi ties 21
triple boHom lin 18, 51, 5 200. 209. 263
j