Since the time I entered the workforce in 1987, I have encountered various forms of management and management styles in the career paths I followed. Now that I am venturing into management myself, I have had time to reflect on those various management techniques in order to develop a management style of my own. My experiences have ranged from Fast Food to Information Technology and small private corporations to global public companies.
One particular experience with a lumber company has had a major impact on the way I would like to manage. Not because it was the right way to form management, but rather because it exemplified all the wrong ways of managing a business and people in the modern business world.
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This particular lumber company is the largest privately-held lumber company in the United States. It started like many businesses, as a small “mom and pop” company of the Midwest. Economic growth and the rapid expansion of the 1960s and 1970’s propelled this company into the realm of big business with multiple locations over a large geographical territory. Stores were opened quickly all across the Midwest and East Coast in order to capitalize on the rapid expansion. In order to keep control of growth, they formed a geographic structure to manage all the new facilities and personnel. Today, over 400 stores strong, the structure still remains a tall, geographic structure as illustrated below.
In the case of this company, the tall management structure along with private ownership has put this company into Bureaucratic Management. The organizational chart indicates that there is a defined order of hierarchy and this hierarchy is expressed to you from the day you start to the day you leave or retire, whichever comes first. This hierarchy also defines your authority and decision-making capabilities within the company.
All decisions are made at the top of the organization. All rules and standard operating procedures are developed at the top of the hierarchy. Within this structure, it is each level of management’s responsibilities to convey the decisions and rules to the level beneath, causing a trickle-down effect. The corporate management staff, underwritten by the CEO herself, determines all tasks and responsibilities of each level in the structure. This creates, what I call, the beehive effect. As long as all the levels in the structure perform prescribed tasks and don’t vary from SOP, the end result will be for the better of the hive.
This type of structure in the lumber company also creates a whole chain of Theory X managers. Since each level of management is held accountable for those beneath them, it has become the norm for each level to closely supervise their subordinates in accordance with the rules that have been issued by corporate administration. Rewards and punishments are frequently used to enforce these strict guidelines.
I observed and took part in this management fiasco for 4 years before I took recourse as others before me. These management characteristics remind me of the political dictatorships that take place in many countries of the world. This consistent management structure is one of the main reasons why this privately-held lumber company is being taken over by the corporate conglomerates such as Home Depot and Lowe’s.
In my opinion, if this lumber company wants to remain competitive in the industry, it needs to examine its’ management theory. Control has stifled the propensity to grow. Their focus is directed on the operations of the business and not the objective to sell lumber. Being in management myself, I came in contact with several employees who had great ideas to better a process or minimize costs, but I was powerless to do anything about it. Rules flowed down the chain rather quickly and directly, however ideas could never flow back up the chain.
This lumber company should also make a move to flatten the management structure. This would minimize bureaucratic red tape and let those individuals with good ideas express them to corporate administration. A flatter structure would also force the company to empower individuals. The Theory X managers would be minimized in numbers and low-level employees would strive to show initiative and incorporate that initiative into practice.
When I left the company, the turnover rate was close to 75%. About 50% of those people left in the first year of employment. If the company would concentrate on personal development along with business development, they might see the turnover rate drop. This company spends thousands of dollars in recruiting and training only to lose the employee shortly thereafter. One of the reasons I left the company was because they did not endorse a formal education.
The only education they wanted an employee to have was they company-centred education they taught. If they endorsed an outside education it might bring new ideas and new technological enhancement into the company, spurring new ways to make money or cut costs. Ultimately leading to personal and professional success. This might propel an individual to stay with the company when he sees his ideas come to light in the corporate structure.
It is evident that a bureaucratic management style creates a controlled, consistent company. However, it is important to realize that this style can be regressive in the retail lumber industry. To stay competitive in the retail industry, ideas and forward progression will help keep a company on the leading edge. Bureaucratic management does not allow the freedom or risk that a company needs to stay on top.
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