Do I Manage My Business Well Enough?
The business organizational setting is characterized by technological developments in various fields: communication, computerization, information, processes miniaturization etc. This progress requires from the small business to acquire skills of rapid innovation and transformation, of fast learning and recognition of trends, threats and opportunities that emerge in the environment.
Business owners encounter dilemmas such as how to accomplish the job, what kind of workers to choose, the price they can afford, the lack of professional workers, the inability to pay good salaries. Sometimes workers refuse to work hard, or an employee leaves after he has been invested into. These uncertainties influence the decision-making process and the desired style of management.
Now I will briefly review the common methods of management, and state their advantages and disadvantages, as well as the effects on everyone's own business.
- Management By Objectives (MBO)
This system was developed in 1954 by Prof. Drucker. The business manager, along with the staff, needs to establish personal, quantitative objectives for every employee in the organization. They have to specify what has been done, what is yet to be done and when. The benefit of this system is in focusing on the goals and on reaching them. The system concentrates on measured results. However, there is a disadvantage: it emphasizes the results and not the quality.
If your competitor can accomplish this work with the existing methods and the prices suggested for the project, than you can do it too. You have to measure your organization capability frequently and compare it to similar businesses in your branch. This system has a difficulty in collecting updated data which may serve as the basis for comparing. The reason for comparing is to see whether the competitor has the same skills; or he might have an old stock or unexploited methods of manufacture.
In the age of wide-reaching manufacturing and marketing, there is no need to carry out the entire activity in one place. A brand company can take the planning, manufacturing and selling outside and enjoy the profits through franchising. This method determines that in an unexpected and inconstant environment organizations must be small, flexible and capable of fast reactions, which should be achieved by work with subcontractors. It requires formation of a system of contracts, control and supervision. However, there is one problem: lack of loyalty to the business, since its human capital operates outside the organization.
This system was published by Michael Hammer. It is usually implemented in the service sector, such as direct banking and direct insurance. What characterizes this system mostly is wide thinking: less people and less paperwork. The client has one contact point with the company. The manager delegates his authority, forwards the responsibility to the employees and trusts them. This remodeling aspires to change the existing processes with new ones and focuses on innovation and creativity.
This system was developed in Japan. It is characterized by an accurate timing of sales and manufacture: selling the product immediately after it has left production, minimum stock, a constant improvement of schedules, and manufacturing only after an order has been processed.
- TQM (Total Quality Management)
This system was developed by Edward Deming in Japan. It stands for constant improvement of the quality of technological processes, working structures and decision making in all the fields of the organization activities. It also promotes establishing quality centers for teamwork, and statistical techniques that give expression to the administrative scientific component.
- Management and Development of Intellectual Capital
This system was developed in the eighties by a Swedish insurance company. It deals with all the intangible properties that allow the company to function, renovate and transform rapidly. It is vital to institutionalize in the organization the knowledge existing in the employees.
So, how can you manage your business? Let us now compare the different methods.
The MBO method focuses on defining and reaching the goals of the organization; the TQM method concentrates on the over-all quality; JIT focuses on production methods; Reengineering's main point is organizational processes; Benchmarking aims at reaching the best achievements; Outsourcing puts in the center the organization's structure; and the method of Management and Development of Intellectual Capital believes that the most important aspect is the organizational knowledge. MBO, TQM and Knowledge Management are all methods based on teamwork.
Every system has its advantages as well as its disadvantages; as a result, managers must build an efficient combination depending on the organization's character, on future plans and on the available tools.
Dear business owner! Here in Mati you will obtain tools that will help you find answers to some of your questions.
The writer: Shuki Ben Shabat
General Manager, Mati Ashdod
