Management Science

In their study of finding a definition of strategic management Nag, Hambrick and Chen (2007) suggest that strategic management deals with intended and emergent initiatives that management generally takes on behalf of owners of a company that involve the utilisation of resources in order to enhance the performance of the organisation in the external environment. In other words, the concept of strategy and its main characteristics are operationalised by strategic management. Strategy on the other hand is about the competitive moves and approaches that management decide to take in order to reach targeted objectives such as growing the business, competing successfully and attracting new customers. That is, where the organisation is heading and why it decided to choose this path rather than another. In fact, Professor Sharon Oster from Yale University speaks about strategy as a commitment to undertake one set of actions rather than another. However, apart from being solely concerned with the overall strategic intent, good strategic managers also involve and concern themselves to a relevant degree with how the organisation is to reach its strategic aims and objectives. In theory and also in practice there is a distinction between what is purely strategic and the operational management that works towards implementing that strategy. These functions are highly interrelated as generally, strategic management informs much about the operations of the organisation such as staffing needs, managing changes and organisational structures. Therefore, strategic management deals with both ends and means; by describing a vision of what the business or activity will look like in a few years’ time and the means through which that vision is to be realised. When it comes to formulating a strategy, internal and external environmental factors are generally considered for their impacts on strategy in view of the organisation’s mission and objectives. This is where scientific management comes in as a tool to enable strategic managers make the right and appropriate moves. More often than not, the tools used at this level include: SWOT analysis – an examination of the firm’s Strengths, Weaknesses, Opportunities and Threats; balanced score-cards, which create a systematic framework for strategy planning; and PESTIL – an analysis of the Political, Economic, Social, Technological, International and Legal elements of a situation. Such tools have sometimes been found useful by managers, but perhaps lack the scientific rigour that we find in other tools and methods used in other areas of management, and have been highly criticised on all counts. It may be also pertinent to consider that such tools, in an age of turbulence, uncertainty and change do not make it any easier for managers to think strategically or in a more structured way as such frameworks are just one of many possible orderings of elements that a manager will need to figure out and understand thoroughly before good decisions are taken. The need for more research in this field in current and future circumstances is therefore desirable.

Griffin (1999) and Schermerhorn (2002) both view human resource management (HRM) to be that function or set of activities concerned with attracting, developing and retaining a talented and effective workforce. Over the past 20 years or so, most organisations have developed human resource functions in their organisation, generally by improving or enhancing their personnel department which was mostly concerned with personnel support services such as payroll and contracts. The human resource philosophy stems from the human relations movement that highlighted the importance of people in the organisation as a valuable resource which needs to be carefully managed. HRM therefore aligns itself with the overall business strategy by designing systems in recruitment, selection, performance assessment, training, development, and personnel replacements that can help to achieve strategic goals. Human Resource professionals must make decisions on the performance of employees, employing and/or promoting suitable individuals in the organisation, as well as ensuring that training investments have good returns. Unfortunately, there are those that take such decisions impulsively, subjectively and with little if any scientific rigor. Nowadays, managers have a plethora of tools that they may use to make better and more informed decisions. The development of psychometric methods and techniques, for example, provide reliability and validity to performance assessments or to the recruitment and selection process. This is not to say that the use of such methods automatically guarantee that no errors occur in decision-making. However, they do bring us closer to taking a more informed decision based on facts and actualities rather than one’s impression or intuition. In other words, psychometric tests offer a quantitative assessment of some psychological attribute such as general intelligence, numeric reasoning ability and personality. The concepts of reliability and validity are crucial concepts to psychometrics. Reliability is an indicator of the consistency that a test provides. It is possible to quantify this and the result would indicate the extent to which a measure is free from error. An example of reliability is that if an individual where to sit for an IQ test today and for the same IQ test in six months’ time he or she would get a similar result (unless the individual undergoes specific training in those six months that would make him or her better at the IQ test). The concept of reliability is not solely important in psychometric tests but is also important when, just to give an example, different people assess the performance of a candidate during an interview or when assessing the performance of an employee when filling in performance appraisal forms. It is important that the people involved in such decisions have inter-rater reliability and that the rating or score that different individuals attribute to an employee or candidate are significantly similar rather than divergent. This is generally attained through training as persons deliberating a rating are trained in administering performance assessments or conducting interviews and made aware of subjective judgments and errors such as halos and horns, fundamental attribution, cloning and stereotype. It also generally requires that each assessor follows a structured approach such as for example asking the same questions to all candidates or employees. Validity, on the other hand, indicates the extent to which a test measures what it is intended to measure. An example of this is that an intelligence test truly captures the intelligence of the individual and not some other construct which could be somewhat different from intelligence, like say mental ability or memory. Serious psychometric tests generally come with statistical data which is rather robust and which has been tested over a number of years and across different settings and organisations. Like reliability, validity is also important to have not only in psychometric tests but also in other Human Resource functions such as recruitment and performance assessments. By way of illustration, it is important that the recruitment and selection process truly captures the ability of the candidates in doing their jobs rather than constructs which may either not be relevant to job performance or that the ability being measured has a weak or no relationship to job performance. The same applies to performance assessments.

Informatics, in a very broad sense, deals with the science of information within an organisation. The University of Edinburgh defines Informatics as “the study of the structure, behaviour and interactions of natural and engineered computational systems”. It is therefore an information system that according to Jessup and Valacich (2008), involves an organised combination of people, hardware, software, communication networks, and data resources that collects, transforms and disseminates information in an organisation. Generally, information systems support business operations, decision-making and strategic management as such systems are able to transform raw data into meaningful information to end users. By way of illustration, sales data could be captured or inserted automatically or inputted through human effort into spreadsheet packages that process this data and provide useful information to sales managers about the performance of sales and marketing executives. Such feedback may allow management to control better the activities of the sales department as well as to make more informed decisions on whether to reassign territories of sales persons or modify sales targets. It may also inform strategic managers whether their strategy is reaching its turnover or profitability objectives and if modification to strategy is required. Information systems have become a vital component in organisations as they facilitate complex mathematical calculations that need to be worked out for optimal management decisions to be made. Organisations can utilise statistical software and spreadsheets to discover patterns and trends, maximise resources, have a better understanding of who is buying what and to simulate potential future scenarios. This would aid managers determine budgets, invest optimally, develop new products or maintain existing portfolios. One can say that information systems have not only been a very advantageous tool for managers that make us of them, but have also changed the way people interact, communicate and work. While development in information systems is an important element in scientific management, it has often been hampered by the fact that workers have adapted slowly to the fast-paced change of technology. Changes in technology have often come at breath-taking speeds, but workers and society in general have taken a somewhat slower approach to their adoption. This is perhaps why many organisations have maintained a traditional approach and seem to distrust information systems that they don’t understand. Research within the management science sphere must focus on the progress of new tools and techniques enabled by information systems as well as on ways and methods of bridging the digital divide.

Project management is the application of knowledge, skills, tools, and techniques to project activities to meet the project requirements (Project Management Institute, 2013). Project management is accomplished through a number of applications and project management processes, which are categorised into the following five Process Groups: • Initiating; • Planning; • Executing; • Monitoring and Controlling; and • Closing. When managing a project, the project manager must identify the requirements of the project, the expectations of stakeholders during project planning and execution enabling a collaborative environment between the different stakeholders, setting deliverables and deadlines as well as identifying any constraints that could hinder project completion. Constraints could include difficulties in meeting the planned schedule, budget constraints, the quality standards set, lack of adequate resources, as well as others that are project-specific and that could affect the project. Such risks and constraints should not be considered in isolation, as one constraint is bound to affect other aspects of the project. By way of example, if a project schedule is shortened, often the budget needs to be increased to add additional resources to complete the same amount of work in less time. If a budget increase is not possible, the scope or targeted quality may be reduced to deliver the project’s end result in less time within the same budget amount. Communication is key in project management as different stakeholders are bound to have divergent ideas as to what is vital to the project. Some may consider that maintaining the schedule is more important than the targeted quality. Changing project objectives may bring about considerable risks to the project and therefore the people working on the project must be in constant communication with stakeholders at all phases of the project’s timeline. In project management, analytical techniques are vital to any project. They are indeed able to inform management and project stakeholders of potential outcomes based on variations of project and environmental variables and their relationship with other variables. Commonly used techniques include regression analysis, scenario building, trend analysis, fault tree analysis and other mathematical tools and techniques.

Adam Smith, in his seminal book the wealth of nations, asserts that production is only necessary as long as there is consumption, and therefore unless there is a demand for a particular product or service, businesses would not exist. In fact, Fardon and colleagues (2001) define a business as an organisation providing goods or services which satisfy customer needs and wants. In providing for customers with such products or services, organisations are set up in order to satisfy those need and wants in an efficient and effective manner. Business management therefore involves the coordination of people in using resources efficiently and effectively to reach a set objectives or goals. Effectiveness comes from doing the right thing, while efficiency is about making things right. In order to do this, an organisation, irrespectively of whether it is run for profit or non-profit purposes, must exercise efficiency and effectiveness across the organisation for it to be successful and continue operating. In other words, businesses need managers that are able to plan for the organisation by setting up objectives and identifying appropriate actions to reach the set goals and objectives. This improves focus and flexibility, coordination, time-management and control, as well as giving the organisation an action orientation. Moreover, planning managers must also control various aspects of the business. This is a process of measuring performance and taking action to ensure that the desired results are attained. Managers also organise and manage people and resources to work towards a goal or set thereof. This is called organising, and having organisation skills is a basic characteristic that managers must have as they organise people to perform different tasks and coordinate these activities to achieve a common purpose. Managers also deal with people on a daily basis. People are a fundamental means to reaching organisational goals efficiently and effectively. They must therefore also lead the workforce inspiring them to work hard and accomplish important tasks. They must build enthusiasm, communicate what they have planned and maintain momentum for excellence and high quality work. The function of leadership is generally given a lot of importance, particularly in today’s businesses, which generally face an ever-changing market environment and who must constantly prepare and motivate their people to embrace change. There is much discussion about whether leaders are born or made, but the many who to find the key traits that every leader should possess have not been successful. What research has established is that some styles of leadership are more desirable than others. Transformational leadership, for example, is considered to be one of the most effective leadership styles in motivating people and reaching organisational goals (e.g. Wright et al, 2012).

Financial management is a central function in any business. It involves the control of money in the organisation and the recording and reporting of monetary transactions. Organisations must ensure suitable financial management of the company’s assets, which can be fixed, such as property, equipment and machinery, as well as current assets such as material stocks, debtors and cash. There is a lot of regulation governing how organisations should manage their finances. Primarily, organisations must have systems that enable the proper record of transactions. Apart from the legal obligation of this, such financial records are used to produce the company’s financial statements, which generally consist of a balance sheet, profit and loss account and cash-flow statements. These three records generally give an indication of the financial standing of the company such as profitability, liquidity, gearing and other financial ratios. Needless to say, improper management of an organisation’s finances can have devastating effects and can result in a company having to liquidate some or all of its assets. In the light of management science, financial management is highly important as the information gathered from financial records helps managers make more informed decisions. Other methods used to manage finances include cost accounting tools such as break-even analysis that help determine optimal prices for products or services and how a change in price would affect the time it would take to reach a break-even point. Other quantitative approaches include the calculation of the return on investment and risks involved if the organisation decides to invest in new machine, equipment or a new business unit.

Corporate Strategy is the overall company strategy that management set out. It has been defined as a process for developing a sense of direction (Armstrong, 2000). To others, it is a game plan for growing the business, the company’s position in the marketplace, its approach to reaching out to customers, competing successfully, achieving targeted objectives and directing operations (Thompson et al, 2005). It is a high level plan that answers how the organisation has decided to attract and retain its customers, how it intends to be better than the competition, how it intends to grow and how it intends to do this. Corporate strategies generally have a strategic vision, which is a road map showing how the company intends to develop and strengthen its business. Thompson and colleagues (2005) suggest that it is like painting a picture of where the organisation will arrive in the next few years, a rationale of why it intends to go there and a roadmap for actually getting there. The distinguishing feature differentiating a weak strategy from a good one is the ability of that company itself to be distinctive both in the marketplace and within the company itself. A powerful strategy tilts the playing field in the company’s favour as it convinces, attracts and gives buyers reasons to prefer its products and services over those of the competition, thereby giving it a competitive advantage. Other not-for-profit organisations are also faced with strategic issues on how to conduct their activities and on how to chart their course to the future. In the context of for-profit organisations, according to Porter (1985), this occurs through differentiation which consists of offering a product or service that is perceived to be unique. Developing competitive advantage requires firms to be innovative, deliver high on quality as well as maintaining minimal costs. However, strategies ultimately must produce competitive advantage that is sustainable which rivals are not able to imitate. Barney (1991) was first to make this distinction and suggested that competitive advantage that is sustainable generally stems from distinctive capabilities that competitors cannot replicate such as having a technology that other competing firms cannot imitate or find it very hard to replicate. This is easily extendible to the not-for-profit sector, which might offer unique services to members to entice them to subscribe. There are many who endorse the view that a good corporate strategy is a question of intuition and gut feeling. This opposes, to a certain extent, the management science approach which attempts to inform managers of what certain moves or paths could have on the market place as well as internally within the organisation. However, one finds out that whenever gut feel is successful in management, it has a strong tendency to have moved in unison with decisions that might have been taken on the basis of scientific principles.