Management styles: Small and large businesses

Management movements Small and educatenup military controlesThe overall aim of the essay is to look the difference between management styles of low-spirited and gargantuan line of merchandise. All validations large or weakened, atomic number 18 today struggling to develop in an out-of-door operational environment which is epitomised by turbulence and uncertainty. Within the weeny pedigree context research shows that owner-managers view of management as one of their nigh important roles, and save one of the task they find the most difficult (Hankinson 1997), while a multitude of theories, concepts and guiding frames of insight begin emerged and ar embraced the best management style knowledge only if it stop be argued that much of this knowledge has relevance to large organisations and fails to address the distinctive characteristics of the downcast assembly line.Management of either business consists of immanent and external management, internal management i nvolves human imaginations management and managing organisational structure and molds where external management can embarrass develop strategies for business growth and development and managing modulate of change on business activities.Within the context of management, small and large businesses make water different dashs to managing business activities. The detail discussion of management differences on a lower floor covers the management issues that both businesses come cross during its growth.2. DiscussionWhat is a small business? What is a large business? There ar differing definitions for small versus large businesses, depending on the context of the discussion. As an example, the United States Small seam Administration has established a size of it standard for most industries of the economy (United States Small Business Administration, 2002). Under these standards, for instance, in the manufacturing and mining industries, a business is small if it has fewer than 500 e mployees, while fewer than 100 employees makes businesses in the squ besale trade patience small. For the discussion in this paper, we use the term small business to imply governments with fewer than 100 employees. Therefore, a large business implies 100 or much employees. Small and large organizations distinctively differ in elections, money, and time. www.sbaer.uca.edu- 19-11-072.1 Management It is known that freedom of information and communication, the culture of trust and confidence, and management systems that support policy executing are the organisational factors that affect middle manager activities (Hancock and Hellawell, 2003). It appears these issues closely relate to the size of an organization and its form of ownership. For instance, it is easier for small organizations to act as a coherent whole and provide better two-way communication, while this is a challenge for large organisations. The middle managers proactiveness appears to be related to the issues of self-coloured size and ownership they are to a greater extent than visible in small companies and they get more than extrinsic incentives to be active. The organisations size and form of ownership as two separate variables have been the focusing of prior studies (for review, Wu, 2006 Chen and Hambrick, 1995), but a combination of these variables in large state-owned enterprises and small private companies has non been a subject of research. The difference between the managerial environments of state and private companies is evident state-owned enterprises are very sensitive to institutional constraints, while private fasts have an adaptive ability (Hoskisson et al., 2000) the state sector prioritises income per doer rather than profit, whereas private-sector firms are profit maximizes (Meng and Perkins, 1998) employee participation in decision making is highest in employee-owned enterprises, compared to enterprises with state or mixed ownership (Russell and Callanan, 2001). As to the differences between small and large companies, small firms show a lower degree of visibility as well as a lower degree of responsiveness to competitory actions they are slower to announce responses, but they execute faster than big firms (Chen and Hambrick, 1995). Large enterprises have more procedures and regulations regarding employee and managerial operations, while managers of small companies have slight feelings of security. Two different managerial environments private, small business management and state, large enterprise management -influence the implementation of middle managers decisions. The possibility of such influence is until now sharper in economies that are moving from central planning to mart competition. Divergent factors, such as national ideology, culture, and government policy are importantly influential in shaping the values of middle managers which in turn affects the interpretation and enactment of their managerial roles (Holden and Roberts, 2004 , p. 270). www.emeraldinsight.com 23-11-072.2 Business structure and functionsSmall and large organisations are structured in radically different ways ranging from relatively fixed structures with positions, rules, and established chains of communication to dynamic structures in which people belong to teams that are continually creation formed and reformed for the duration of a project. www.thetimes100.co.uk 24-11-07Typical organisation structurewww.tutor2u.net accessed 28-11-07Typical ways of organising people areBy function dividing the organisation up into groups with similar specialises e.g. marketing, finance and accounts, human resources, etc. usually seen in large scale businessesBy product grouping people unneurotic according to the product they make. For example, BIC has three main grades pens, lighters, and razors.By process grouping people together according to the processes that they are carrying out. For example retailing organisations like Argos and Travis P erkins pass on group employees according to whether they are involved in packing and display or customer service.By geographical firmament most large companies are widely dispersed. Companies like BIC, Gillette, Kelloggs, etc have European and North American divisions.Small and large firms can also be highly centralised or for the most part decentralised. In a highly centralised structure control will be tight from the centre or Head Office of the firm, mostly implies on large firms. In contrast, in a decentralised organisation power will be passed down to the various project managers and teams typically used in small firms where culture relies on loose management and employee relation and business activities . www.thetimes100.co.uk 24-11-07Managers of small and large firms need to learn to work with both formal and daily structures. A negotiable manager will realise that elements of the informal structure can be formalised i.e. by adapting the formal structure to incorporat e improvements which import from the day-to-day working of the informal structure. When managers nurture these informal groups and mould them into the formal structure this can lead to high levels of motivation for the staff involved. www.thetimes100.co.uk 24-11-072.3 Bureaucratic versus Pre bureaucratic management Bureaucracy is the structure and set of regulations in place to control activity, usually in large organizations and government. It is characterized by standardized procedure (rule-following), formal division of responsibility, hierarchy, and impersonal relationships. In practice the interpretation and execution of policy can lead to informal influencePre- bureaucratic (entrepreneurial) structures deprivation standardisation of task, this structure is most common in smaller organizations and is best used to solve simple tasks. The structure is totally centralized. The strategic leader makes all key decisions and most communication is done by one on one conversations. I t is particularly useful for new (Entrepreneurial) business as it enables the founder to control growth and development.en.wikipedia.org 28-11-07Regardless the size of the business management styles applies the same, management can be considered as leadership and leadership has various different styles to manage business as well as people working for it. Management of any business based upon the culture of the business and culture or basic assumptions, values, belief and attitudes. These elements are the basic of any management to consider before implementing any managerial styles on business.2.4 Management and employee relationAll firms, small and large, should emphasize honesty, trust, fairness, and clarity in employee and labour relations. Employers and employees must take the time to build a cooperative relationship for the success of the organization and individual employees.Both non-unionised and unionised environments must emphasize communication, disciplinary action, and fighting and dispute resolutions to touch harmony in the workplace. www.sbaer.uca.edu- 19-11-07A small business is very much portrayed as close, friendly, and harmonious. Owner/manager and employee relationships are facilitated through informal communication and greater flexibility (Dundon, Grugulis, and Wilkinson, 1999). Communication takes place one-on-one and face-to-face that typically leads to increased cooperation and less formal policies. www.sbaer.uca.edu- 19-11-07Labour relations in a large unionised business are similar to that in a small unionised business. Communication, disciplinary actions, and conflict and dispute resolutions involve the union, employee, and management. One realistic difference is that unionisation in a large business may be more desirable for employees than in a small business (Brown, Hamilton, and Medoff, 1990). www.sbaer.uca.edu- 19-11-07The small firm provides a better environment for the employee than is possible in most large firms. Although physical working conditions may sometimes be inferior in small forms, most people prefer to work in small groups where communication presents few lines. The employee in a small firm can more easily see the relation between what he is doing and the objectives and performances of the firm as a whole. Where management is more direct and flexible, working rules can be varied to suit the individual. Each employee each employee also likely to have more varied role with a chance to participate in several kinds of work, disorder in small firms is very low and strikes and new(prenominal) kinds of indus audition dispute are relatively infrequent. The fact that smaller firms offer lower earnings than large firms suggests that convenience of location and generally the non material satisfactions of working in them more than out weigh any financial sacrifice involved.(Bolton report 1971), (Carter S, Jones D, 2000, p309)2.5 military man resource managementSubstantial work has been undertaken in the field of human resource management (HRM) as it applies to large organizations. However, for small business these models frequently do non apply. The small business lacks adequate systems to ensure the efficient management of human resources. Further, most small businesses are the product of their owners, whose personality and personal involvement dominate. www.sbaer.uca.edu- 19-11-07Human resource management (HRM) is the performance of all the managerial functions involved in planning for recruiting, selecting, developing, utilizing, rewarding, and maximizing the potential of the human resources in an organization (Megginson, Franklin, and Byrd, 1995). Human resource (HR) personnel also support and advice managers, serve as employee advocates, resolve problems, and implement organization policies. Small and large businesses often develop and implement policies and procedures related to these serviceable areas differently, primarily due to the size and nature of the firms. www.sbaer.uca.edu- 19-11-07Small firms may have different HR practices than larger firms because of different workforce requirements and/or a lack of understanding of HRM issues by small business owners (Deshpande and Golhar, 1994). Regardless of size, employees are vital assets, and a well established and upholded HRM department, or just functional area for smaller firms, provides a strong structure which is an organizational asset and crucial to ultimate success. www.sbaer.uca.edu- 19-11-07HR planning is part of HRM, particularly the staffing process required by all types of organizations. In many instances, the owner of a small business handles the HRM function himself or herself because the firm only employs a few individuals (Hornsby and Kuratko, 1990). It is easier for the small business owner to make decisions and hire employees due to the owners single authority. In contrast, in a larger organization, this task is often handled by the HRM department, which employs fulltime personnel to recruit, hire, and fulfil the other(a) HRM functions. Such a process may involve lengthy hiring procedures due to the number of individuals and departments who may be involved in the final hiring decision. www.sbaer.uca.edu- 19-11-07As a small business grows its owners must begin to increase their staff and learn how to develop and implement human resource management (HRM) policies. The faster the growth experience by the small firm the more likely it will experience HR problems. For many fast growing small to medium enterprises the main problem is finding and retaining high shade employees (Fraza, 1998). As a firm grows and its employee numbers increase the complexity of its HRM deepens. The owner-manager is usually burdened with a variety of HR functions for which he/she is generally poorly equipped (Thatcher, 1996). Managing such issues as recruitment and selection, staff promotion and retention, wages and salary negotiations, compliance with government employment , tax and insurance regulations and train and development can severely tax the average small business owner. What is required is the development of suitable HR policy and procedure. Ideally this should be flexible and non a mere addition to the bureaucracy (Caudron, 1993). www.emeraldinsight.com 20-11-07For e.g. mark and Spencer CEO Stuart Rose has given all new look to marks and Spencer at the decimal point where its growth has almost declined. Stuart Rose introduced a new scheme with the element of human resource management, he believed that any thing can save Marks and Spencer is a new effective human resource strategy. His, strategy built a new image of Marks and Spencer in market and enable it to deal with rivalries.2.5.1 Human resources planningHR planningprocess makes assumptions and forecasting in store(predicate) HR demand of the organization. This involves issues concerning revenue, number of employees, and expansion or downsizing of the fraternity. Both small an d large businesses try to predict changes that may occur in the future. Small businesses may look to expand the venture through growth strategies. In this case, forecasting the need for redundant employees is the first step. The company may also look at required employee skill levels, particularly when the business relies heavily on technology or other change elements. A large business often looks at cash flow and cost control when it comes to HR planning. It may or may not hire additional employees, provide raises, reduce employee pay, and expand or downsize the company. www.sbaer.uca.edu- 19-11-07As a small or large company evolves or grows, employees need suitable dressing to help the company achieve its goals. educational activity is essential to improve skills and overcome deficiencies. Not only do employees benefit, but the company also benefits. Training and development is also essential to stay ahead of competitors, especially in the area of innovation and technology. Re search suggests that the investment made by entrepreneurs in training their employees strengthens a firms skilful excellence and innovative capabilities (Gundry, 1991). Small businesses usually do not have large training budgets like many large firms, but they can still get the most out of their training dollars. Smaller companies assess their training needs by finding out what is important to the organization and employees. The most serious challenges small firms face in terms of training and developing employees are restrictions on time, money, space, and staff (Cohen, 1998).Larger businesses typically have more time, space, money, and staff to train employees than smaller organizations. These firms may have training specialists who are responsible for setting training objectives, developing and presenting training materials, and following up on the progress to ensure that the training objectives have been achieved. www.sbaer.uca.edu- 19-11-072.6 Strategic managementStrategic man agement involves developing a game plan to guide a company as its strive to accomplished its vision, mission, goals and objectives and to keep it from straying off its desired course (Zimmerer.T.W Scarborough N.M, 2005, pg. 69). The goal of developing a strategic plan is to create for the small business a competitive advantage- the aggregation of factors that sets a small business apart from its competitors and gives it a unique position in the market superior to its competition. www.fm-kp.si- 20-11-07www.tutor2u.net accessed 28-11-07When it comes to developing a strategy for establishing a competitive advantage, small businesses have a variety of natural advantages over their larger competitors. A small business has often narrower product lines, more clearly defined customer bases, and more specific geographic market areas than big businesses. Due to simplicity of organisational structures, small business owners are in touch with employees daily, often working together, allowing them to communicate strategic moves firsthand. Consequently, small businesses find that strategic management comes more naturally to them than to larger companies with their layers of bureaucracy and out-of-the-way(prenominal) flung operations. www.fm-kp.si- 20-11-07 Strategic management can increase small business effectiveness, but entrepreneurs first must have a process designed to meet their needs and their businesss special characteristics. It is a mistake to attempt to apply a big businesss strategic development techniques to a small business because small business is not a little big business. Because of their size and their particular characteristics small resource base, flexible managerial style, informal organisational structure and adaptability to change small businesses need a different approach to the strategic management process www.fm-kp.si- 20-11-07.The value of strategic planning for firm performance may lay more in the future orientation and planning practices tha n in the formal form of a strategic plan (Hunger and Wheelen 1998). Small firms in particular tend to plan informally and not on a regular basis. Strategic planning can be beneficial for small firm performance, because it forces the entrepreneur to think about open business questions and search for solutions, and also encourages the entrepreneurs instruction and making improvements (Wickham 1998). Strategic planning is a process that helps to forecast the future and prepare for the future, and can be beneficial for firm growth (Zimmerer and Scarborough 1996) www.fm-kp.si- 20-11-07Successful small firms tend to a large extent to use advanced planning and activity analysis (Zimmerer and Scarborough, 1996). Strategic orientation can be considered a driver of strategy formulation a strategically oriented entrepreneur will pursue opportunities regardless of resources under his or her control, whereas a strategically not-oriented entrepreneur will limit his or her activities by the resou rces that are currently under control (Sahlman et al. 1999). www.fm-kp.si- 20-11-072.7 Change managementMore than ever, organisations are being subjected to a host of pressures for change from elements in the environment, both internal and external. According to Churchill and Lewis (1983), there are five main stages of development in a businesss growth. These include existence, survival, success, take off, and resource maturity. As an organisation moves from one stage to another, it must adjust to the challenges of that phase. There is a need for continual renewal if the organisation is to maintain a sustainable competitive advantage which will ensure its survival in a turbulent business environment. Organisational change is the process by which the organisation moves from its current position and state towards some future position as a way of increasing its overall effectiveness (Jones, 2001). The management of change is a complex process, which according to Larkin and Larkin (1996 ) is something which many organisations get wrong. (Jenny Hayes, Managing Change, 2004)Although much has been compose about managing change in large private and public companies, very little has been written about managing change in the unique context of small firms. Concerns particular to small firms include their relative lack of control over their environment, commingling of business and personal priorities, and lack of resources to carry out the magnitude of change that is appropriate to meet accurately diagnosed problems or recognized opportunities.. www.smeal.psu.edu -27-11-07Change occurs frequently in most large and small companies. The problem is that it is not always well planned, deliberately executed, and successful. It is also often reactive to events rather than proactive in anticipating or even creating them. The typical small firms has not invested much in planning, pursues change haphazardly, and adopts generic or packaged change initiatives (Smart et al., 2004). O wners and managers of small firms should engage their company and its environment in a proactive manner, which means they cause something to happen rather than wait to respond to it after it happens. Owners and managers are more likely to engage in generative learning when they are proactive because they have time to explore potential problems and opportunities. Small firms that are reactive do not have adequate time to explore problems and even less, if any, time to explore opportunities. Learning under these conditions tends to be adaptive. Problems can be solved in this manner, but this may not contribute to long-run survival or prosperity. www.smeal.psu.edu -27-11-07www.managingchange.com accessed 28-11-072.8 Organisational culture Culture is often deeply rooted within an organisation and results in formal and informal systems, rules, and shared expectations that govern attitudes, beliefs and behaviour. Organisational culture, or corporate culture, comprises the attitudes, exp eriences, beliefs and values of an organisation. It has been defined as the specific collection of values and norms that are shared by people and groups in an organisation and that control the way they interact with each other and with stakeholders outside the organisation. Organisational values are beliefs and ideas about what kinds of goals members of an organisation should pursue and ideas about the appropriate kinds or standards of behaviour organisational members should use to achieve these goals. From organisational values develop organisational norms, guidelines or expectations that prescribe appropriate kinds of behaviour by employees in particular situations and control the behaviour of organisational members towards one another. en.wikipedia.org 21-11-07In an owner managed business (small firms), the organisational culture typically reflects the personality traits and aspirations of the owner-manager that, in turn, help to shape the enabling and constraining forces affect ing the firm. The pervading sets of norms and values and the ways of doing things and the freedoms afforded to different individuals are often reflected in informal structures, systems and processes which themselves often the personality traits of the main owner (Carter S, Jones D, 2000).To support the argument there is an example of well known entrepreneur the owner of Virgin group Richard Branson, he introduced a culture at the early stages on Virgin group in mid 1970s a blame free culture, in which Branson and management considered the mistakes made by any employee or manager as the implications for the growth of the business, purpose of this culture is to encourage and motivate innovation among the workforce to ready sufficient outcomes.2.9 Job quality at small business versus large businessSmall businesses create a significant share of new jobs it is natural to ask how these jobs compare to those at large firms. Simply put, large firms offer better jobs and higher wages than s mall firms. Benefits appear to be better at large firms as well, for everything from health insurance and retirement to paid holidays and vacations. Finally, job upset, initiated by both employers and employees, is lower at large firms. The lower rates of employee initiated turnover suggest that job satisfaction and mobility are relatively greater at large firms lower rates of employer initiated separations suggest that jobs at larger firms are more stable. For e.g. multinational organisations such ICI limited, Unilever limited, Pfizer, these are the known companies around the world due to their quality of work life and effective management styles. www.emeraldinsight.com 20-11-07 Large firms often have desirable working conditions, such as weaker autonomy, stricter rules and regulations, less flexible scheduling, empirical evidence can capture these differences, working conditions can not explain the firm size wage effect (Brown and Medoff).The expansion lies in the migration of f irms across size classes from year to year. In any given year, some small firms will grow beyond 20 workers and join a large size class. Such migration trims the share of firms in the smallest class size, in the same way that small business failures trim the class size. Likewise, some large firms will contract, falling below the 500 employee level and liquidateping into a smaller size class. Also, new small businesses are born, increasing the share of jobs in the small firm class. www.emeraldinsight.com 20-11-07 Brown and Medoff and other theories suggested that larger employers may make greater use of high quality workers. This might occur, for example, because larger firms are more capital intensive and require higher skilled employees to operate that plant and equipment. www.emeraldinsight.com 20-11-07The critical factor in greater labour turnover at smaller businesses is that the failure rate of small businesses is somewhat greater than that of larger businesses, which leads to higher rates of employer initiated separations (Dunne and others Idson). Failure rates of establishments drop markedly as firm size increases to 100 employees, but then turn upwards again such that firms with 500 or more employees have larger failure rates those firms with 20-99 employees. Nevertheless, the failure rates for the smallest firms (one to four employees) generally are about one and one half times higher those of larger firms.www.emeraldinsight.com 20-11-072.10 Management Characteristics, Small businesses Versus Large businessThere are some characteristics of small and large firms, which may represent an advantage as well as a disadvantage. For instance while the presence of fewer hierarchical layers in smaller firms may on the one hand reduce bureaucracy, increase flexibility and result in less filtering of proposals, it also limits career opportunities for their employees. www.emeraldinsight.com 20-11-07Small firmsLarge firmsLittle bureaucracyFormal management ski llsRapid decision making suitable to control complex organizationsRisk takingCan spread risk over a portfolio of productsMotivated and committed managementFunctional expertise in staff functionariesMotivated labourMore specialized labourRapid and effective internalcommunication, shorter decision chainsTime and resources to establishcomprehensive external Science Technology networksFast reaction to changing marketrequirementsComprehensive distribution and servicingfacilitiesCan dominate narrow market nichesHigh market power with existing productsRD efficiencyEconomies of scale and scope in RDCapacity for customisationBetter able to fund diversification, synergyCapable of fast learning and adaptingroutines and strategyAble to obtain learning curve economiesthrough investment in productionAppropriation of rewards from innovationthrough tacitness of knowledgeAble to erect adit barriers(www.emeraldinsight.com)3. ConclusionThe relative strengths of large firms lie mostly in resources, w hile those of small firms are generally argued in terms of behavioral characteristics. It is however not either small firms or large firms which are the better innovators. Small and large firms are likely to play complementary roles in the process of technical advance, in the sense that they are better at different types of innovation. A challenge for management would be to find ways to combin