SHIPMANAGEMENT

Ship management deals with the process of managing a ship. Ship

management is done by independent companies which use ships of some

other companies or independent owners. The ship management company

manages ships for the owner and pays him the yearly amount which is settled

between the owner and the ship management company.1

The owner of the ship signs a contract and leases the ship to the ship

management company for a defined duration of time. The ship owner may

continue with the same management company or can approach another

company if the he is not satisfied with the performance of a particular ship

management company. It is to note that the owner can lease the ship

completely or he can render some of the services provided by the ship

management companies.2

Managing ships is not an easy task. Ship management includes

several tasks which are to be carried out before, during and after the

operation of the ship. The first and foremost thing that a ship management

company needs to do is get the ship approved. There are many approvals

that are to be taken from different classification societies. However, the

company can operate different types of vessels or just concentrate on any

one type. For e.g. MSC (Mediterranean Shipping Corporation) deals with only

1 http://www.marineinsight.com/marine/what-is-ship-management/2 ibid

1

container vessels, whereas companies like V ships, Anglo-Eastern manages

all types of ships.3

Following are the services that a ship management company is entitled

to provide:4

1) The ship management company should do the supervision of the

maintenance of machinery on board the ship. The process should also

include different surveys and repair work of the ship.

2) The ship management company should provide adequate crew for

manning the ship.

3) The company should arrange for loading and unloading of the cargo.

4) The ship management company can hire the ship on behalf of the

ship owner.

5) The company should negotiate the contracts for bunker and lube oil.

6) The ship management company pays the expenses on behalf of the

owner.

7) The ship management company should make an arrangement for

the entry of the ship in the P& I (Protection and Indemnity) association.

8) The company also deals with various claims related to insurance,

salvage etc.

9) The ship management company should arrange for the insurance in

relation to the ship.

10) The ship management company’s services also include

arrangement for providing victualing and stores for the crew of the ship.3 ibid4 Ibid

2

THIRD PARTY SHIP MANAGEMENT5

Ship operation is increasingly a specialized and technical business,

which is often these days undertaken by specialist ship management

companies. These, typically will not own the ships themselves, but will

contract to operate them, manage and maintain them, and provide the

detailed technical management to keep them operating efficiently.

The contract between manager and ship owner will specify the degree

of the management that will take place. The ship owner may wish to trade the

ship himself; alternatively he may wish the manager to undertake full

commercial operation of the ship, organizing the insurance, the purchase of

stores and full technical maintenance and operation, along with the provision

of a properly trained crew. In such cases the manager will treat the ship as his

own for the period of the contract, ensuring that it is always available, and

maintained in good condition.

Third party ship managers will contract to do anything the owner

wishes. The owner may wish to keep the operation and technical

management “in-house” but will hire the manager to undertake the often

difficult HR functions in relation to the crew. A competent ship manager will

always have access to seafarers. The fee that the ship manager earns will

reflect the depth of the management task he contracts to undertake. The

owner of the ship placed with managers will receive regular financial and

technical reports on the vessel.5 https://www.bimco.org/en/Education/Seascapes/Questions_of_shipping/What_is_3rd_party_ship_management.aspx

3

There are numerous advantages in employing ship managers, not least

the ability to outsource many difficult and labor intensive elements of ship

operation and management. It is an arrangement that suits an industry where

demand for ships and shipping is notoriously cyclical. It also enables an

owner of perhaps just a few ships to operate them without the need for a large

in-house organization. Moreover, placing this small fleet with a sizeable ship

management company will generate the advantages of being with a large

fleet, such as excellent purchasing power for stores, repairs and other matters

which the large manager will be able to obtain. And as the operation of ships

becomes more heavily regulated, the demand for these “ships’ husbands”

(which they were called in the past, continues to grow.

Something like one third of the world’s fleet is in the hands of ship

management companies, which themselves have been innovative in

developing sophisticated systems of management. There is brisk competition

between management companies, so that there is always an incentive to be

more efficient and innovative. Many of the larger management companies are

highly regarded, developing methods of running ships more efficiently,

organizing the training of their own staff and providing a fine career structure

for professionals ashore and afloat. And as shipping itself becomes more

specialized, the managers are developing accordingly, able to provide

specialist services for every kind of fleet.

4

Outsourcing ship management services to third-party service providers

can help shipping companies enhance their operational efficiency in running

the day-to-day operations of the vessel.6

There are a wide range of activities involved in the management and

operation of a ship, which can include maintenance engineering, vessel

crewing, quality system management, safety system management, integrated

logistics support, property management, inventory control, and procurement.7

Ship managers and ship owners strike an agreement as to the scope of

power the manager holds. Some shipping companies for instance, turn over

full control of the ship's operations to the third-party ship management

provider. This gives ship owners the chance to focus on their core

competencies, and find ways to improve their business.8

Ship owners can also choose to transfer control of specific marine

operations, such as vessel crewing, and even shore-based activities such as

logistics support.9

When choosing a ship operations and management company to run a

fleet, it's always important to choose a company with extensive experience in

the field. Aside from having the expertise and experience that newer

companies do not have, they are also likely to have a larger network of

contacts, which is useful when finding new crew for vessels or procuring

items.10

6 http://ezinearticles.com/?Third-Party-Ship-Management-Services---What-to-Look-For-When-Choosing-to-Outsource&id=43975067 Ibid8 Ibid9 10 Ibid

5

More experienced companies also provide better ship management

services because they have a firmer grasp of the extensive international

regulations and standards that oceangoing vessels need to be in compliance

with. A number of more established ship operations and management firms

can handle the full range of vessel management and ship building services.11

HISTORY OF MANAGEMENT

DEFINITION OF MANAGEMENT

Traditionally, the term "management" refers to the activities (and often

the group of people) involved in the four general functions: planning,

organizing, leading and coordinating of resources. 12

Note that the four functions recur throughout the organization and are

highly integrated. Emerging trends in management include assertions that

leading is different than managing, and that the nature of how the four

functions are carried out must change to accommodate a "new paradigm" in

management. 13

INTERPRETATION OF MANAGEMENT

Another common view is that "management" is getting things done

through others. Yet another view, quite apart from the traditional view, asserts

11 Ibid12 http:// library.upmin.edu.ph/...management/History%20of%20Management.ppt13 lbid

6

that the job of management is to support employee's efforts to be fully

productive members of the organizations and citizens of the community. 14

To most employees, the term "management" probably means the

group of people (executives and other managers) who are primarily

responsible for making decisions in the organization. 15

In a nonprofit, the term "management" might refer to all or any of the

activities of the board, executive director and/or program directors. Some

writers, teachers and practitioners assert that the above view is rather

outmoded and that management needs to focus more on leadership skills,

e.g., establishing vision and goals, communicating the vision and goals, and

guiding others to accomplish them. They also assert that leadership must be

more facilitative, participative and empowering in how visions and goals are

established and carried out. Some people assert that this really isn't a change

in the management functions, rather it's re-emphasizing certain aspects of

management. 16

SCIENTIFIC MANAGEMENT THEORY (1890 – 1940)

At the turn of the century, the most notable organizations were large

and industrialized. Often they included ongoing, routine tasks that

manufactured a variety of products. The United States highly prized scientific

and technical matters, including careful measurement and specification of

activities and results. Management tended to be the same. Frederick Taylor

14 lbid15 lbid16 http:// library.upmin.edu.ph/...management/History%20of%20Management.ppt

7

developed the “scientific management theory” which espoused this careful

specification and measurement of all organizational tasks. Tasks were

standardized as much as possible. Workers were rewarded and punished.

This approach appeared to work well for organizations with assembly lines

and other mechanistic, routinized activities. 17

BUREAUTIC MANAGEMENT THEORY (1930 - 1950)

Max Weber embellished the scientific management theory with his

bureaucratic theory. Weber focused on dividing organizations into hierarchies,

establishing strong lines of authority and control. He suggested organizations

develop comprehensive and detailed standard operating procedures for all

routinized tasks. 18

HUMAN RELATIONS MANAGEMENT THEORY (1930 - TODAY)

Eventually, unions and government regulations reacted to the rather

dehumanizing effects of these theories. More attention was given to

individuals and their unique capabilities in the organization. A major belief

included that the organization would prosper if its workers prospered as well.

Human Resource departments were added to organizations. The behavioral

sciences played a strong role in helping to understand the needs of workers

and how the needs of the organization and its workers could be better

aligned. Various new theories were spawned, many based on the behavioral

sciences (some had name like theory “X”, “Y” and “Z”). 19

17 lbid18 http:// library.upmin.edu.ph/...management/History%20of%20Management.ppt19 lbid

8

UNIT I

TYPES OF SHIP MANAGEMENT STYLES APPLIED BOTH IN THE

PHILIPPINE DOMESTIC SHIPPING AND INTERNATIONAL SHIPPING

SETTING:

9

1.1 AUTOCRATIC MANAGEMENT STYLE

An Autocratic Management Style is one where the Manager makes

decisions unilaterally, and without much regard for subordinates. As a result,

decisions will reflect the opinions and personality of the manager, which in

turn can project an image of a confident, well managed business. On the

other hand, strong and competent subordinates may chafe because of limits

on decision-making freedom, the organization will get limited initiatives from

those "on the front lines", and turnover among the best subordinates will be

higher. 20

The Leader will make decisions and outcomes based on his/her own

judgments and ideas alone, the manager will not take any advice or direction

from any of his employees or co-workers.  Therefore the Autocratic Manager

cuts a powerful and knowledgeable figure, making sure everything is done

exactly to their liking without compromise, no-one would question or suggest

any changes to the leader, he wouldn’t listen anyway. 21

There are two types of autocratic leaders:

a directive autocrat makes decisions unilaterally and closely supervises

subordinates

20 http://en.wikipedia.org/wiki/Authoritarian_leadership_style21 http://www.typesofmanagement.net/autocratic-management/

10

a permissive autocrat makes decisions unilaterally, but gives

subordinates latitude in carrying out their work22

ADVANTAGES OF AUTOCRATIC MANAGEMENT

When decisions need to be quick and decisive, an Autocratic Manager

is your man, dishing out fast, forceful orders leaving no-one in doubt

who is in charge or which direction they all should be pulling. 23

With one figure head at the top, it leaves no-one in any doubt who’s in

charge, so there’s no excuse for lack of communication. 24

The Autocratic Manager will seem knowledgeable and experienced this

can reassuring for the staff. 25

DISADVANTAGES OF AUTOCRATIC MANAGEMENT

With the Autocratic Manager making all the decisions unilaterally, the

staff could be made to feel useless as they know their inputs or ideas

will not be listened to or even considered by the Leader. 26

The staff may always be looking to the Manager for direction or

inspiration; this can lead to poor initiative among the staff and even

slow productivity down by waiting for instructions from the boss. 27

An Autocratic Manager can start a ‘them versus us’ mentality between

the Management and Staff, leading to poor morale and less obedience.

22 http://en.wikipedia.org/wiki/Authoritarian_leadership_style23 http://www.typesofmanagement.net/autocratic-management/24 lbid25 lbid26 lbid27 lbid

11

The Manager could become overworked and stress due to having to

make all the decisions, if the manager become over-stressed, it could

cloud his decision-making, affecting the business. 28

Sometimes problems can be solved when looked upon by a fresh set

of minds; this would not happen in an autocratic leadership

environment. 29

EXAMPLES OF AUTORITHARIAN LEADERS

Adolf Hitler was extremely authoritarian.

He required the population of the Third Reich to

accept everything that he said as absolute law,

and was able to impose a death sentence on

anyone who failed to do so. Hitler was obsessed

with being in control, and with being the alpha

male in a rigid male dominance hierarchy. 30

Autocratic leadership style works well if the leader is competent and

knowledgeable enough to decide about each and everything. Authoritative is

considered one of the most effective leadership styles in case there is some

emergency and quick decisions need to be taken. 31

Bill Gates adopted this style and has steered Microsoft toward great

success. According to Bill Gates, he had a vision when he took reins of the

company and then used all the resources available to make that vision a

28 lbid29 http://en.wikipedia.org/wiki/Authoritarian_leadership_style30 lbid31 lbid

12

reality. In the personal computer workplace, many operating conditions call for

urgent action, making this style of leadership effective. 32

While Gates does not exhibit this

style consistently, his success can be

judged by his decision making process

and the growth of the computer industry in

the world. 33

All autocratic leaders share similar

qualities. They are often dictators, who rule

with an iron fist and allow no-one to oppose

them. When Marcos was alive, he was

known for repressing dissent -- those he

believed were his political enemies were

imprisoned or even killed. He did not allow

freedom of the press, and he curtailed civil

liberties. 34

AS APPLIED IN INTERNATIONAL SHIP MANAGEMENT

Autocratic management used very effectively in the military, exactly the

type of environment where once person has to take the lead role and guide

32 lbid33 http://en.wikipedia.org/wiki/Authoritarian_leadership_style34 http://wiki.answers.com/Q/What_makes_Ferdinand_Marcos_as_a_autocratic_leader

13

the rest. During situations of high pressure where everyone is either folding or

losing their heads, an autocratic leader is needed to steer a sinking ship and

co-ordinate the masses, an example of this would be during a natural disaster

where quick, decisive decisions can be critical.

The autocratic leadership style is best used in situations where control

is necessary, often where there is little margin for error. 35

When conditions are dangerous, rigid rules can keep people out of

harm’s way. Many times, the subordinate staff is inexperienced or unfamiliar

with the type of work and heavy oversight is necessary. 36

Therefore, Autocratic Management Style is not applicable to

International Ship Management.

AS APPLIED IN DOMESTIC SHIP MANAGEMENT

Management in the Philippines is very personal. People take

everything personally.

You have to be careful of what you say and how you say it, especially

criticism.

Therefore, Autocratic Management Style is not applicable either to

Domestic Ship Management.

1.2 PERMISSIVE MANAGEMENT STYLE

35 http://www.leadership-toolbox.com/autocratic-leadership.html36 lbid

14

Per-mis-sive (adjective): giving people a lot of freedom or too much freedom

to do what they want to do.37

The Permissive Management Style allows employees to take part in

business decisions. A rather considerable degree of autonomy on the

part of employees is encouraged in this management style.38

The manager provides full autonomy to the subordinates to execute

their responsibility in the most efficient way, without either monitoring it

or supervising it. This style is best suited for motivated and skilled

workers, but may fail with less skilled ones 39

This type of employee also facilitates delegating responsibilities

downward because they are willing and able to complete their job

tasks. 40

Two types of Permissive leaders:

PERMISSIVE DEMOCRAT: takes decisions participatively, and also

gives autonomy to the subordinates in executing their work.41

PERMISSIVE AUTOCRAT: takes decisions unilaterally, but gives

autonomy to the subordinates in executing their work.42

Innovation

37 http://www.merriam-webster.com/dictionary/permissive38 http://www.webpronews.com/is-your-management-style-assisting-or-hurting-your-business-2005-0639 http://expertscolumn.com/content/understanding-management-styles40 http://www.zarca.com/Online-Surveys-Product/Online-Surveys-Solutions/custom-business-solutions/management-style.html41 http://expertscolumn.com/content/understanding-management-styles42 lbid

15

The subordinates of a permissive leader are typically given free rein on

decision-making related to work responsibilities and projects. This

allows motivated employees to tap into creativity and develop

innovative ideas and solutions for the company. This creative freedom

is most effective with a team of innovative employees who work well

together, despite the lack of leadership from the management team. 43

New Leadership

Because subordinates are responsible for making decisions, a

workplace led by a permissive leader may result in new leaders

emerging. This gives potential leaders a chance to step forward and

help guide decisions within the work teams. Self-directed, motivated

employees are able to hone their leadership skills since they aren't

limited by a leader who takes full control of the workplace decisions. 44

DISADVANTAGES:

If a business owner possesses an Autocratic Management Style, and

the employees and/or type of business would benefit more from a

Permissive Management Style, problems will arise.45

43 http://smallbusiness.chron.com/benefits-using-autocratic-permissive-management-styles-37189.html44 lbid45 http://www.webpronews.com/is-your-management-style-assisting-or-hurting-your-business-2005-06

16

The lack of decisions or guidelines from the manager can cause a

disorganized, chaotic work environment.46

Unable to maintain consistency in the decisions made. When multiple

parties are involved in the decision-making, you often run into

disagreements on the proper way to proceed. This slows down the

decisions and may cause the company to miss out on opportunities.47

AS APPLIED IN INTERNATIONAL SHIPMANAGEMENT:

ITALY

Managers may take a somewhat paternalistic attitude to their employees.

They may demonstrate a concern for employees that goes beyond the

workplace and strictly profession. Employees follow the procedures handed

down by their managers.

They believe that their supervisors have been chosen because they have

more experience and greater knowledge than those they manage, and it is,

therefore, unnecessary, and even inappropriate for them to consult with lower-

ranking individuals when decision-making.

UNITED KINGDOM

Employees expect to be consulted on decisions that affect them and the

greater good of the organization.

46 http://smallbusiness.chron.com/benefits-using-autocratic-permissive-management-styles-37189.html47 lbid

17

Managers strive for consensus and make a concerted attempt to get

everyone's input before a decision is reached. The manager may still make

the ultimate decision, after consultation with the staff.

Brits believe the best ideas and solutions often come from having many

stakeholders meet to discuss an issue. They also prefer for the highest-

ranking person to make the decision (and then perhaps clear it with someone

at a higher level), so decision-making can be laborious.

NORWAY

Managers generally act as coordinators or team leaders rather than autocratic

micro-managers. They are task-oriented and emphasize achieving a goal,

productivity and profits. They expect their employees to do their job in a

professional manner.

Managers make decisions after they have reached a consensus with their

work team or others who will be affected by the decision. Their egalitarian

(aiming for equal wealth, status etc., for all people) culture supports a

participative management style.

GERMANY

Managers are expected to give precise directions when assigning tasks so

that there is no question what is expected.48

48 http://www.kwintessential.co.uk/intercultural/management/germany.html

18

Germans like working in teams and collaborate quite well across hierarchical

lines. The communication within a team is generally quite collegial, albeit

somewhat direct and blunt. Role allocation within the team is generally quite

clearly defined and people will take greater responsibility for their specific task

than for the group as a whole.49

The leader will be deferred to as the final authority in any decisions that are

made, but they do not dominate the discussion or generation of ideas. 50

SOUTH KOREA

Managers may take a somewhat paternalistic attitude to their employees. 51

Since social class is important to the culture, it is nearly impossible for a lower

class person to supervise a person from a higher class. Intercultural sensitivity

is essential as it is considered a serious breach of etiquette to put a young

person in charge of older workers. Employees expect companies, and their

managers, to be paternalistic.52

SINGAPORE

Managers may take a somewhat paternalistic attitude to their employees. 53

Singapore is a hierarchical culture, so the boss is considered to be superior to

their subordinates. Subordinates do not ask their boss questions, as it would

49 lbid50 http://www.kwintessential.co.uk/intercultural/management/germany.html51 http://www.kwintessential.co.uk/intercultural/management/korea.html52 lbid53 http://www.kwintessential.co.uk/intercultural/management/singapore.html

19

indicate that the boss had not done a good job of explaining what was

necessary. Subordinates will canvass other workers and come to a group

consensus of what should be done and how it should be accomplished.54

The manager may function autocratically and dictate to his subordinates. At

the same time, managers will not compliment or chastise an employee

publicly. In fact, should they want to communicate bad news to their

employees, they might use an intermediary.55

There may be informal networking between employees themselves or

supervisors and employees, although actual power is generally held in the

hands of a few key people at the top of the organization.56

UNITED STATES OF AMERICA

Employees expect to be consulted on decisions that affect them and the

greater good of the organization.57

American managers are viewed as facilitators--people who help employees

do their best work--and not simply decision makers. They empower

employees and expect them to take responsibility.58

54 lbid55 http://www.kwintessential.co.uk/intercultural/management/china.html56 lbid57 http://www.kwintessential.co.uk/intercultural/management/usa.html58 http://www.kwintessential.co.uk/intercultural/management/usa.html

20

Employees freely cross management levels and speak directly to senior

managers. This freedom is particularly apparent at meetings, where everyone

in attendance is encouraged to participate openly.59

AS APPLIED IN DOMESTIC SHIPMANAGEMENT:

PHILIPPINES

Each person has a very distinct role within the organization and management

would not be expected to consult with lower-ranking individuals when

decision-making.60

Managers may take a somewhat paternalistic attitude to their employees. 61

Decisions are reached at the top of the company, although a great deal of

time is spent building consensus prior to reaching the decision. Managers are

expected to provide their subordinates with detailed instructions that cover

anyeventuality.62

Managers adopt a paternalistic role towards their subordinates and guide

them in both their business and personal lives. 63

CONCLUSION:

59 lbid60 http://www.kwintessential.co.uk/intercultural/management/philippines.html61 lbid62 lbid63 lbid

21

Permissive style of management is not commonly applied both in

International and Domestic Ship Management, especially in big entities.

As we all knew, operations and transactions in the maritime industry

requires swift actions and decisions.

It will be too risky, time consuming and costly for the company.

1.3 CONSULTATIVE MANAGEMENT STYLE64

A consultative management style moves slightly further away from the

autocratic style that we looked at first. In this case the manager will actively

seek out the opinions of employees before a decision is made. While both an

autocratic manager and a persuasive manager will place the needs of the

business before the employees, a consultative manager is far more likely to

recognize that employees are able to make a valuable contribution to the

running of the company.

There are many situations in which a consultative management style

might be appropriate. In fact, most large scale organizations will use

managers who adopt this style at some level in their business. Consultative

managers consider the opinions of stakeholders, but decisions are still made

centrally. This means that there is an identifiable person who is responsible

for the decisions that are made, but that others are given an opportunity to

have some input into the decision making process.

Advantages64 http://business.mrwood.com.au/unit3/styskil/styskil3.asp?print=true&

22

1. More input from employees means a larger pool of ideas. A good idea

can be worth millions of dollars to a large scale organization. The

consultative style helps to ensure that more ideas are generated, and

so the potential for uncovering a million dollar idea is increased.

2. Related to the first point, the business will make better decisions. It is

one thing to generate ideas, and something else entirely to implement

the right one. The first step in making a good decision is to ensure that

several alternatives are considered. The consultative style makes this

possible.

3. Overall motivation will increase. When employees feel that their input

is valued, they are likely to be motivated to make a contribution to the

successful running of the business.

Disadvantages

1. This approach to employee involvement can take much longer. While

there is value in gaining input from a variety of different stakeholders,

there is no doubt that this will take much longer than an approach

where the decision is made by just one person.

2. Certain information needs to be protected by large scale organizations.

After more than one hundred years the formula for Coca-Cola is still a

secret, as is the specific blend of herbs and spices used by KFC. As

this information is “secret”, most stakeholders won’t be in a position to

provide a reasonable contribution to any decisions that must be made

about these issues.

23

3. Gaining input from a variety of stakeholders doesn’t ensure that any

particular person’s ideas will be used. This can mean that some

people feel disappointed if their ideas are sought and then overlooked

on a regular basis.

The consultative style is used on a regular basis by many large scale

organizations. This is because it maintains some of the advantages of the

more dominant management styles (such as the autocratic style) without the

loss of direction that can accompany the laissez faire style. Consultative

managers will often be seen asking various stakeholders what they would do

in certain situations, or how they would respond to events that have occurred.

While the final decision still rests with the manager, the action of seeking input

is part of the day-to-day reality of the business.

This style focuses on using the skills, experiences, and ideas of

others. However, the leader or manager using this style still retains the final

decision-making power. To his or her credit, they will not make major

decisions without first getting the input from those that will be affected.65

The consultative leader traits are: often involve others in problem

solving, team building, retains right for final decisions, focuses his/her time on

more important activities, provides proper recognition, delegates but keeps

“veto power”, weighs all alternatives before final decision is made.66

Filipino Management Style

65 http://weirdblog.wordpress.com/2007/09/04/leadership-styles-dictatorial-authoritative-consultative-participative/66 ibid

24

Management style tends towards the paternalistic as is often found in

strongly hierarchical cultures. However, managers need to be aware of certain

strong Filipino characteristics, which underpin personal relationships within

the country.67

Firstly, people are extremely careful to ensure that others do not suffer

embarrassment or any sense of shame (hiya) as a result of their own actions

or their inability to meet the expectations of others. It is considered to be very

bad behavior to criticize another in public, as this is the greatest insult that can

be given. To be openly criticized in public results in a loss of self-esteem and

personal dignity. Any attack on an individual's self-esteem may have to be

revenged.68

Therefore, managers are keen to treat subordinates with respect whilst,

at the same time, maintaining the dignity of the position of boss. Instructions

will be given clearly and precisely and subordinates will be expected to follow

those instructions with little or no discussion.69

Secondly, relationship bonds run deep in Filipino culture and the

manager expects loyalty. In return for this loyalty the boss will look after the

interests of those subordinates. It is very much a reciprocal arrangement.70

Being a Manager in the Philippines

The business set up in the Philippines is hierarchical. Intercultural

management needs to take into account the need to maintain a formal

67 http://www.worldbusinessculture.com/Filipino-Management-Style.html68 ibid69 ibid70 Ibid

25

manner and pay strict attention to titles, positions, and hierarchical

relationships. Expect to find many gatekeepers whose job is to protect the

schedule of and limit access to the ultimate decision maker. In this

relationship-driven culture, you will find it easier to make the proper contacts if

a third party who already has a relationship with the decision maker makes

the introduction.71

Filipinos avoid behaviors that would make either party lose face. This

leads to an indirect communication style, so carefully watch facial expressions

and body language. This is a country where a smile may mean many different

things, not all of them positive.72

Role of a Manager

Cross cultural management, when working in the Philippines, will be

more successful when bearing in mind that each person has a very distinct

role within the organization and management would not be expected to

consult with lower-ranking individuals when decision-making.73

In the Philippines, as in other hierarchical societies, managers may

take a somewhat paternalistic attitude to their employees. They may

demonstrate a concern for employees that goes beyond the workplace and

strictly professional concerns.74

Approach to Change

71 http://www.kwintessential.co.uk/intercultural/management/philippines.html72 Ibid73 Ibid74 Ibid

26

The Philippines’ intercultural adaptability and readiness for change is

apparent but because tradition is valued, change is not readily embraced

simply because it is new.75

Approach to Time and Priorities

Deadlines and timescales are fluid in the Philippines. Patience will play

an essential part in successful cross cultural management.

While timescales and deadlines need to be set well in advance and

reiterated carefully, it should be understood that these will be viewed as

flexible. Successful cross cultural management may require some degree of

patience.76

Global and intercultural expansion means that some managers may

have a greater appreciation of the need to enforce timescales and as such,

agreed deadlines are more likely to be met.77

Decision Making

Although many businesses retain hierarchical structures, decisions are

often made after reaching a consensus of the stakeholders. Few individuals

have full authority to make binding decisions concerning anything but

mundane matters.78

75 Ibid76 Ibid77 Ibid78 Ibid

27

Teamwork is becoming increasingly important in most organizations.

The best ideas and solutions often come from having many people meet to

discuss an issue.79

Filipino managers will praise employees, although not generally in

public. Subordinates expect their efforts to be recognized and rewarded. Most

Filipinos are suspicious if praise is excessive or undeserved.80

Boss or Team Player

This is a hierarchical culture where rank has its privileges. Decisions

are reached at the top of the company, although a great deal of time is spent

building consensus prior to reaching the decision. Managers are expected to

provide their subordinates with detailed instructions that cover any eventuality.

Since they do not want to lose face (or have shame), many Filipinos are

hesitant to ask for clarification if they are uncertain about a task. Therefore, it

is a good idea to use written instructions to supplement verbal

communications whenever possible.81

Managers adopt a paternalistic role towards their subordinates and

guide them in both their business and personal lives. Subordinates expect to

be praised for a job well done, and public praise is extremely important as it

heightens their self-respect. Criticism, however, must always be done in

private and must be handled diplomatically, being careful not to make the

subordinate lose face so some intercultural sensitivity will be necessary.82

Communication and Negotiation Styles

79 Ibid80 Ibid81 Ibid82 Ibid

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Wait to be told where to sit. This is a hierarchical culture and quite

often seating conforms to the rank of the people involved. You may never

actually meet with the decision maker or it may take several visits to do so.

Decisions are made at the top of the company. Filipinos avoid confrontation if

at all possible. It is difficult for them to say "no". Likewise, their "yes" may

merely mean "perhaps". At each stage of the negotiation, try to get

agreements in writing to avoid confusion or cross cultural misinterpretation.

Decisions are often reached on the basis of feelings rather than facts, which is

why it is imperative to develop a broad network of personal relationships. Do

not remove your suit jacket unless the most important Filipino does.83

AS APPLIED IN INTERNATIONAL SHIPMANAGEMENT

American management seems to work best when the key needs are

speed, aggression, last-minute genius, and take-chance, inspiring leadership.

In boom times when it’s expand at all costs–pick the American style. At other

times the more deliberate, consultative European approach is your ally.

Maybe this is why we are hearing more from the Europeans these days.”84

A consultative management style can be viewed as a combination of

democratic and autocratic. The consultative manager will ask views and

opinions from their staff, allowing them to feel involved but will ultimately make

the final decision.85

AS APPLIED IN DOMESTIC SHIPMANAGEMENT

83 Ibid84 http://bizshifts-trends.com/2011/01/10/management-styles-u-s-europe-japan-china-india-brazil-russia/85 http://www.learnmanagement2.com/leadership%20styles.htm

29

In the Philippines,

Leading86

Employee's fear to express disagreement to their managers

In these cultures inequalities are expected and desired

Might makes right, skills-wealth-power-status go together

There is relatively strong congruence between how managers

behave and what workers expect from them.

Filipinos believe that human interaction and contact form the

basis of a successful business relationship.

1.4 DEMOCRATIC STYLE OF MANAGEMENT

The term democratic (dɛməˈkrætɪk) means of, characterized by,

derived from, or relating to the principles of democracy; upholding or favouring

democracy or the interests of the common people; popular with or for the

benefit of all.87 Democracy is a form of government in which all eligible

citizens participate equally—either directly or through elected representatives

—in the proposal, development, and creation of laws. It encompasses social,

economic and cultural conditions that enable the free and equal practice of

political self-determination.88 The term originates from the Greek δημοκρατία

(dēmokratía) "rule of the people", which was coined from δῆμος (dêmos)

"people" and κράτος (kratos) "power" or "rule" in the 5th century BCE to

denote the political systems then existing in Greek city-states, notably Athens;

86 ttps://www.google.com.ph/url?87 Collins English Dictionary - Complete & Unabridged 10th Edition 2009 © William Collins Sons & Co. Ltd. 1979, 1986 © HarperCollins Publishers 1998, 2000, 2003, 2005, 2006, 2007, 2009.88 Wikipedia. Retrieved 9/23/13

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the term is an antonym to ἀριστοκρατία (aristocratie) "rule of an elite".89 No

consensus exists on how to define democracy, but equality, freedom and rule

of law have been identified as important characteristics since ancient times.90

The term "democracy" first appeared in ancient Greek political and

philosophical thought in the city-state of Athens during classical antiquity. Led

by Cleisthenes, Athenians established what is generally held as the first

democracy in 508-507 BCE. Cleisthenes is referred to as "the father of

Athenian democracy.”91 In the democratic style of management, the

manager allows the employees to take part in decision-making: therefore

everything is agreed upon by the majority.92 The communication is extensive

in both directions (from employees to leaders and vice-versa).93 This style can

be particularly useful when complex decisions need to be made that require a

range of specialist skills: for example, when a new ICT system needs to be

put in place, and the upper management of the business is computer-

illiterate.94 From the overall business's point of view, job satisfaction and

quality of work will improve, and participatory contributions from subordinates

will be much higher.95 However, the decision-making process could be

severely slowed down unless decision processes are streamlined.96 The need

for consensus may avoid taking the 'best' decision for the business unless it is

89 Ibid90 Ibid91 Ibid92 Ibid93 Ibid.94 Ibid.95 Ibid.96 Ibid.

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managed or limited.97 As with the autocratic leaders, democratic leaders are

also two types i.e. permissive and directive.98

Advantages of Democratic Management

Encourages group discussion, which can lead to greater

communication throughout the business, whether it’s between

employees or between employees and management.99

Employees are encouraged to convey their opinions to the

management staff regarding important issues; this makes the

employee feel significant to the company.100  Making the staff feel

valued can increasing morale and productivity.101

Management can harness the ideas from front line staff who are

involved in the day to day inner-workings of the business, allowing the

management to take action on issues the staff feel are holding the

company back.102

Because decisions are usually decided by the majority, it reduces the

chance of conflict, either between employees or between employees

and management.103

97 Ibid.98 Ibid.99 http://www.typesofmanagement.net/democratic-management/. Retrieved 9/23/13100 Ibid.101 Ibid.102 Ibid.103 Ibid.

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Disadvantages of Democratic Management

If a vote or meeting takes place when every major decision has to be

made, the whole process can take a long time.  Management may

struggle if asked to take quick and decisive action, something an

autocratic manager would strive under.104

The decisions may not be in the company’s best interest, because

they are decided upon by the majority, with the majority being the

workers, decisions could lean towards their best interests and not the

company’s.105

Another disadvantage of democratic management is when the staff is

not knowledgeable about the discussion, this can lead them to make

an incorrect vote or portray a mistaken vision for the business.106

We have talked about the advantage of reduced conflict as a result of

democratic management, but it can also increase conflict in certain

situations, if one group are opposed to a decision, it can create friction

between the people who are for implementing the new ideas.107

Conclusion

A democratic style of management will put trust in employees and

encourage them to make decisions.108 They will delegate to them the authority

104 Ibid.105 Ibid.106 Ibid.107 Ibid.108 http://tutor2u.net/business/gcse/people_management_styles.htm . Retrieved 9/23/13

33

to do this (empowerment) and listen to their advice.109 This requires good two-

way communication and often involves democratic discussion groups, which

can offer useful suggestions and ideas.110 Managers must be willing to

encourage leadership skills in subordinates.111

The ultimate democratic system occurs when decisions are made based

on the majority view of all workers.112 However, this is not feasible for the

majority of decisions taken by a business- indeed one of the criticisms of this

style is that it can take longer to reach a decision.113 This style has close links

with Herzberg’s motivators and Maslow’s higher order skills and also applies

to McGregor’s theory Y view of workers.114

Illustration

The following scenario is an example of the democratic style of

management in action:

“Steve manages a small sports centre. He has a team of

only ten staff, including an all-round sports instructor. This

means that he can run his team in the manner he likes

best: as a democracy.

When an area adjacent to Steve’s sports centre becomes

available, Steve draws up a Business Case for acquiring

109 Ibid.110 Ibid.111 Ibid.112 Ibid.113 Ibid.114 Ibid.

34

it and developing it into a ice-skating rink. He presents

this plan to his staff and gives them a week to do their

own research before holding a company meeting to

decide whether Steve should go ahead with his plan.

The team are divided between those who want to

expand, those who would rather have something quieter,

like a crazy golf course or a picnic area, and those who

are worried that the project will fail, jeopardising their own

salaries.

Steve compromises: he will acquire the area, but he will

build a rink for roller-blading rather than ice-skating. A

roller-blading rink will take far less time and cost, and can

easily be converted into something else – like a crazy golf

course – if it goes wrong.

Almost every member of staff approves of the new plan.

Steve’s receptionist privately think that he is an idiot for

not making his own decisions, but she doesn’t particularly

care whether they build an ice-skating or a roller-blading

rink. The caretaker announces that he will be happy so

long as he gets the assistant that has been promised to

him.

Only the sports instructor is unhappy. He has never tried

roller-blading or ice-skating, and he does not want Steve

to employ another instructor, because this might reduce

35

the demand for his swimming lesson and tennis

coaching.

Steve spends the whole morning bargaining with and

trying to persuade the sports instructor, but to no avail.

He tells his team that they can have another week to

think about the project, while he does some more

research into the figures and marketing.

Before the week is up, a rival company buys the vacant

site. Steve has to conceal his frustration as he watches

the construction process. The following year, when the

sports instructor has left to join his son’s newly-opened

gym in Wales, Steve sees the first adverts appear for an

ice-skating rink, smack next to his own small sports

centre.

Steve’s democratic style served him up to a point in

creating a cohesive and supportive team with personal

investment in his project. But Steve’s refusal to make a

decision without the full consent of his team left his staff

without direction.

Temporary adoption of the authoritative mantle would

have enabled Steve to acknowledge the views of his

sports instructor, to weigh them against the benefits to his

36

business, and to inform the team of his decision, rather

than waiting for theirs.”115

Filipino Style

It is said that the Filipino style of management in almost any

kind of business is characterized by strong personal relationships.

This has something to do with the concept of “damdamin” which is

more profound than its English translation (feelings).

In relation thereto, another Filipino cultural concept which

must be dealt with is “hiya” (shame). The manager should be very

careful so as not to embarrass or criticize any employee in public

since it may be considered as a grave insult, hence, an affront to

personal dignity which may exact revenge.

Managers should treat subordinates with respect who, in

turn, are expected to follow the boss’ instructions to the letter. The

Filipino manager expects loyalty from his subordinates while the

latter expects the former to look after them.

1.5 CHAOTIC STYLE OF MANAGEMENT

A very modern style of management, chaotic management gives the

employees total control over the decision making process. Some modern

companies have adopted this style of management and in return have

become some of the most influential and innovative companies.116

115 http://training-course.org/management-style-democratic-manager.php> . Retrieved 9/23/13116 : http://en.wikipedia.org/wiki/Management_styles

37

Chaos Theory regards organizations/businesses as complex, dynamic,  

non-linear, co-creative and far-from-equilibrium systems. Their future  

performance cannot be predicted by past and present events and actions. In a

state of chaos, organizations behave in ways which are simultaneously both  

unpredictable (chaotic) and patterned (orderly).117

Change is constant. Although certain events and circumstances in an

organization can be controlled, others can't. Chaos theory recognizes that

change is inevitable and is rarely controlled. While organizations grow,

complexity and the possibility for susceptible events increase. Organizations

increase energy to maintain the new level of complexity, and as organizations

spend more energy, more structure is needed for stability. The system

continues to evolve and change118.

The notion of chaos denotes crisis and disorder, a state of non-

equilibrium, instability, turbulence, rapid or rupturing changes that scramble

plans and cause unpredictability, with consequences of anxiety, fear of

unknown, and triggering and tripling effects of destruction and systems

breakdown. There is no single definition of chaos theory. The notion has been

used interchangeably with such concepts as non-linear systems models,

disorder theory, and dynamical complex theory. The notion has also appeared

117 http://rudolftjandra.com/chaos-theory-of-management/118 http://smallbusiness.chron.com/management-theories-concepts-workplace-17693.html

38

in association with ‘‘catastrophe’’ theory (Thom, 1972; Zeeman, 1977)

developed out of Poincare’s (1880–90) ‘‘bifurcation’’

theory and ‘‘discontinuity’’ theory (Ross, 2000; Follmer, 1974; Brook,

1993;Brock and Durlauf, 1995), ‘‘nonequilbrium’’ dynamical theory,

‘‘dialecticaldynamic’’ theory (Ilyenkov, 1977; Farazmand, 2002b), ‘‘complexity’’

theory of the Brussels School (Nicolis and Prigogine, 1977), and ‘‘synergetics’’

theory developed by Haken (1983) of the Stuttgart School.119

Chaos theory is a scientific principle describing the unpredictability of

systems. Most fully explored and recognized during the mid-to-late 1980s, its

premise is that systems sometimes reside in chaos, generating energy but

without any predictability or direction. These complex systems may be

weather patterns, ecosystems, water flows, anatomical functions, or

organizations. While these systems's chaotic behavior may appear random at

first, chaotic systems can be defined by a mathematical formula, and they are

not without order or finite boundaries.120

ORIGIN OF CHAOS THEORY

One of the first scientists to comment on chaos was Henri

Poincaré(1854–1912), a late-nineteenth century French mathematician who

extensively studied topology and dynamic systems. He left writings hinting at

the same unpredictability in systems that Edward Lorenz (b. 1917) would

119 FARAZMAND,ALI, Public Organization Review: A Global Journal 3: 339–372 (2003). Chaos and Transformation Theories:A Theoretical Analysis with Implications for Organization Theory and Public Management.Uploaded from http://59.67.71.237:8080/gg/wenxian/en/06.pdf120 http://www.referenceforbusiness.com/management/Bun-Comp/Chaos-Theory.htm

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study more than half a century later. Poincaré explained, "It may happen that

small differences in the initial conditions produce very great ones in the final

phenomena. A small error in the former will produce an enormous error in the

latter. Prediction becomes impossible." Unfortunately, the study of dynamic

systems was largely ignored long after Poincaré's death.121

Ilya Prigogine, Nobel laureate, showed that complex structures

could result from simpler   ones. This is like order coming from chaos. Henry

Adams previously described   this with his quote “Chaos often breeds life,

when order breeds habit”.   Henri Poincaré was really the “Father of Chaos

[Theory],”   however. The planet Neptune was discovered in 1846 and had

been predicted   from the observation of deviations in Uranus’ orbit. King

Oscar II of Norway   was willing to give a prize to anyone who could prove or

disprove that the   solar system was stable. Poincaré offered his solution, but

when a friend   found an error in his calculations, the prize was taken away

until he could   come up with a new solution that worked. He found that there

was no solution.   Not even the laws of Sir Isaac Newton provided a solution

to this huge   problem. Poincaré had been trying to find order in a system

where there was   none to be found. Chaos theory was formulated during the

1960s. Significant   and more practical work was done by Edward Lorenz in

the 1960s. The   name chaos was coined by Jim Yorke, an applied

mathematician at the   University of Maryland (Ruelle, 1991).122

121 http://www.referenceforbusiness.com/management/Bun-Comp/Chaos-Theory.html122 http://rudolftjandra.com/chaos-theory-of-management

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When Chaos Theory was first explored as an explanatory theory for

management practice, Dan Griffiths, Ann Hart and Billie Blair wrote: “A great

many facets of administrative work cannot be described, explained, or

predicted by current [management] theories…[managers] are chagrined when

seemingly minor and innocuous events that are quickly forgotten surface later

as major lawsuits, noisy demonstrations, acrimonious confrontations, or

strikes. These events do not seem to be related to the [manager’s]

competence, foresight, intelligence, knowledge, or sensitivity. Because these

events are unrelated to the customary relationships that characterize a

leader’s work, they represent a form of disorder that reappears with seeming

regularity.”123

Usage of Chaos Theory. Applications

The   principles of Chaos Theory have been successfully used to describe

and   explain diverse natural and artificial phenomena. Such as:

  Predicting   epileptic seizures.

  Predicting   financial markets.

  Modelling   of manufacturing systems.

  Making   weather forecasts.

  Creating   Fractals. Computer-generated images applying Chaos

Theory principles.

123 Blair,Billie G. Uploaded from www.marinemoneyoffshore.com/node/6158

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In a   scenario where businesses operate in a turbulent, complex and  

unpredictable environment, the tenets of Chaos Theory can be extremely  

valuable. Application areas can include:

  Business   Strategy / Corporate Strategy.

  Complex   decision-making.

  Social   sciences.

  Organizational   behaviour and organizational change.

  Stock   market behaviour, investing.124

Steps in Chaos Theory Process

To   control chaos, the system or process of chaos has to be controlled. To  

control a system, what is needed is:

1.   A   target, objective or goal which the system should reach. For a

system with   predictable behaviour (deterministic) this may be a

particular state of the   system.

2.  A   system capable of reaching the target or goal.

3.  Some   means of influencing the system behaviour. These are the

control inputs   (decisions, decision rules, or initial states).125

ADVANTAGES OF CHAOTIC MANAGEMENT STYLE

124 http://rudolftjandra.com/chaos-theory-of-management/

125 http://rudolftjandra.com/chaos-theory-of-management/

42

1. Popularized around the world by multinational company Google, this

management style believes that employees perform to their full

potential when they are given a free hand. Many modern thinkers

believe that chaotic management style allows an employee to work on

his idea, without the interference of the management, and this helps in

creating new innovations. They are also of the opinion that the chaotic

management style will be adopted by a lot of companies in the future

as the management will need to be in sync with the fast-paced lifestyle

of the employees.126

2. Some managers prefer a chaotic management style. With the rise in

technology and persons becoming more and more creative, this style

of management may be the wave of the future. Not everyone is

technologically savvy or innovative, so this style would not work for all

industries. Usually, employees who are technologically savvy tend to

like this approach to management, as they seem best able to attain

their creative potential without constant meddling from managers.127

3. Chaotic management deploys minimum physical supervision of

employees and expects that in return to the acres of room they get to

execute their jobs, the employees will take responsibility for their

decisions and actions.128

126 Khilawala, Rashida (2013). Uploaded from http://www.buzzle.com/articles/management-styles-list-of-different-types-of-anagement-styles.html#P

127 http://www.assertsuccess.com/management-style/128 http://www.nation.co.ke/Features/DN2/Chaotic-management-proposed-for-Gen-Ys-/-/957860/1860340/-/sgm0pnz/-/index.html

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4. Organizational expectations for acceptable behavior, and the degree of

freedom with which individuals are allowed to work, shape the way a

company's problems and challenges are handled by its members. By

allowing people and groups within an organization some autonomy,

businesses encourage the organization to organize itself, enacting

multiple iterations of its own functioning until the various pieces of the

organization can work together most effectively.129

5. Periods of chaos can dramatically increase progress by breaking down

old barriers.  While chaos introduces new risks, it also introduces new

opportunities.  People, project managers in particular, are drawn to

create order and structure.  That order helps us work together

peacefully, like traffic signals at a busy intersection.  However, when

the outside world changes, the order can trap us in stagnant eddies or

ineffective organizations.130 

6. A little unstructured time opens up our creativity and helps us see the

world differently.  A chance encounter with a new person, or a new

idea could alter our path just a little and make a huge difference in how

we do.  Likewise, as leaders, we can help guide our teams to make the

small changes that help them succeed.  All it takes is a little knowledge

of chaos theory.131

129 Chaos Theory" Encyclopedia of Management Ed. Marilyn M. Helms. Vol. 1. Gale Cengage 2006 eNotes.com 22 Sep, 2013.Uploaded from http://www.enotes.com/topics/chaos-theory/reference#reference-chaos-theory-176669130 www.happy-project-management.com/Chaos-Theory.html131 Ibid.

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DISADVANTAGES OF CHAOTIC MANAGEMENT STYLE

1. Applying chaos theory to organizational practice tends to go against

the grain of most formal management patterns. Order can be confused

with the more popular notion of control. Defined by organization charts

and job descriptions, traditional management does not generally seek

to add disorder to its strategic plan. As Wheatley states, "It is hard to

open ourselves up to a world of inherent orderliness." Organizations

are focused on structure and design. Charts are drawn to illustrate who

is accountable to whom or who plays what role and when. Business

experts break down organizations into the smallest of parts. They build

models of organizational practice and policy with hope that this

atomizing yields better information on how to improve the

organization's functioning. However, chaos theory implies that this is

unnecessary, even harmful.132

2. The   limitations of applying Chaos Theory are in due mostly from

choosing the   input parameters. The methods chosen to compute

these parameters depend on   the dynamics underlying the data and

on the kind of analysis intended, which   is in most cases highly

complex and not always accurate133

3. Chaos   theory is not as simplistic to find an immediate and direct

application in   the business environment, but mapping of the business 132 "Chaos Theory" Encyclopedia of Management Ed. Marilyn M. Helms. Vol. 1. Gale Cengage 2006 eNotes.com 22 Sep, 2013.Uploaded http://www.enotes.com/topics/chaos-theory/reference#reference-chaos-theory-176669.133 http://rudolftjandra.com/chaos-theory-of-management

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environment using the   knowledge of chaos definitely is worthwhile

studying.134

CHAOTIC MANAGEMENT STYLE AS APPLIED TO PHILIPPINE

DOMESTIC SHIPPING:

Given the Philippines' American and Spanish heritage, it's easy to fall

into the trap of assuming that you can do business here in standard Western

mode. Manuel Quezon, the first President of the Philippine Commonwealth

during the years before World War II, once said: "The Filipinos are the most

occidental people of the Orient."135

The Philippine Business as Family. The family is always of vital

importance in the Philippines; not surprisingly, most business organizations

are modeled on the Filipino family. The boss and subordinate often exist in a

bata relationship, basically like that between parent and child (bata literally

meaning "child"). As a consequence, paternalistic management styles are the

norm.

As you might expect, such a paternalistic and hierarchical

management structure implies that decision making in most organizations is

done at the top. And unless you have some excellent inside connections or

referrals, your initial contacts are not likely to be with the decision-maker.

134 http://rudolftjandra.com/chaos-theory-of-management

135 Henderson,Clarence.(1999). Pearl of the Orient Sea.Upload from http://www.apmforum.com/columns/orientseas6.htm.

46

Getting to someone who can and will act on a proposal (i.e., sign a contract,

write a check) often has be done through one or more gatekeepers, a process

that can take a seeming eternity. However, once you finally push your way

through to the top, the gears can shift quickly and deals completed at warp

speed.136

Henderson (1999) stressed in his article, Pearl of the Orient Seas, that

the communications and management styles described are not dishonest or

intended to cheat the reader. They simply reflect the Filipino culture and long-

established way of doing things. The models and ideal types taught in

Western-oriented MBA programs are based on certain assumptions, many of

which are invalid in the Philippines. Although organizations here have most of

the structures and formal procedures of Western business, actual day-to-day

business processes and interactions necessarily proceed within the matrix of

Filipino culture and values. Thus, the needs for the Westerner to go “the extra

mile” to understand what’s really going on and adapt a culturally sensitive

style of doing business.137

Differences in cultural backgrounds of managers and employees are

frequently a source of misunderstanding. Corporate management in the

Philippines is a relatively new phenomenon introduced by the Americans.

Traditionally the only organization was the family, for even the barangay

(village) was loosely organized. Even today some big corporations in the

136 Ibid137 Henderson,Clarence.(1999). Pearl of the Orient Sea. Upload from http://www.apmforum.com/columns/orientseas6.htm.

47

Philippines still operate on familial lines, with modifications to suit the

contemporary requirements of corporate management.138

Filipino management often uses the compadre and extended family

systems which are strongly related to the concepts of losing face, ambiguity,

and utang na loob (debt of gratitude). Yet Filipino organizations also use the

automatic, bureaucratic, consensual, and participative styles associated with

western cultures.139

The paternalistic Filipino manager is compensating for what society

does not provide adequately. He is a surrogate pater familae and by satisfying

this expectation becomes a more effective manager.140

Although the Philippines uses some western concepts in managing

business like the domestic shipping industry, still, the domestic shipping

industry has not been using the chaotic management style .Research and

publications made by authorities in Philippine business management shows

that paternalistic and hierarchical management are widely use.

CHAOTIC MANAGEMENT STYLE AS APPLIED IN INTERNATIONAL

SHIPPING

The chaotic management style is relatively new – employees are given

control over the decision-making process, producing an organisation that is

very flat with authority often based around departments or divisions.141

138 http://www.pabc.org.ph/main/events.php?id=16139 http://www.pabc.org.ph/main/events.php?id=16140 Ibid141 http://www.hrzone.com/hr-glossary/management-styles-definition

48

As chaotic and random as world events seem today, they seem as

chaotic in organizations, too. Yet for decades, managers have acted on the

basis that organizational events can always be controlled. A new theory (or

some say “science”), chaos theory, recognizes that events indeed are rarely

controlled. Many chaos theorists (as do systems theorists) refer to biological

systems when explaining their theory. They suggest that systems naturally go

to more complexity, and as they do so, these systems become more volatile

(or susceptible to cataclysmic events) and must expend more energy to

maintain that complexity. As they expend more energy, they seek more

structure to maintain stability. This trend continues until the system splits,

combines with another complex system or falls apart entirely. Sound familiar?

This trend is what many see as the trend in life, in organizations and the world

in general.142

Basic concept of the ship management is very similar for most ship

types. Ships, however, operate under wide range of conditions. The cargo

carried, the trade in which the ship is engaged and the background of the

crew all have effect on ship management and consequently, management

styles vary with the Company.143

Goulielmos (2010) describes life better than hither-to available

theories, as it deals more effectively with dynamic, non-linear and cyclical

phenomena.144

142 http://managementhelp.org/management/theories.htm143 Lwin,Soe Capt. Uploaded from http://www.wmu.sof.or.jp/fw_lwin_01.pdf144 Goulielmos,Alexander M. (2010). Uploaded from http://www.tandfonline.com/doi/abs/10.1080/03088830210144305#preview

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If however, a company is seen as self organized emerging

ordered ,then a new approach must be adopted ,i.e. that of complexity

theory.The choice of the above competition is because shipping environment

is indeed unpredictable, volatile, cyclical and international as well as

complex.It is believed that this theory can yield a new, more pragmatic ,insight

into the way shipping companies and ships should be managed. In addition,

no previous attempts have been made to apply this theory to management of

shipping companies.145

Farasmand ( 2003) noted that Chaos Theory is used in association

with ‘‘complexity’’ theory of the Brussels School (Nicolis and Prigogine,

1977).146

International shipping companies uses different style of management

to suit their organization need. Chaotic management style in shipping industry

is relative new concept and in these style of management, it give its

employees total control in decision making which is not yet adopted by

shipping companies.

1.5LAISSEZ-FAIR MANAGEMENT STYLE

145 Ibid146 Farazmand,Ali. Public Organization Review: A Global Journal 3: 339–372 (2003). Chaos and Transformation Theories:A Theoretical Analysis with Implications for Organization Theory and Public Management.Uploaded from http://59.67.71.237:8080/gg/wenxian/en/06.pdf

50

Laissez-faire (or sometimes laisser-faire) is an economic environment

in which transactions between private parties are free from government

restrictions, tariffs, and subsidies, with only enough regulations to protect

property rights.[1] The phrase laissez-faire is French and literally means "let

[them] do", but it broadly implies "let it be," "let them do as they will," or "leave

it alone". Scholars generally believe a laissez-faire state or a completely free

market has never existed.147

Etymology

According to historical legend, the phrase stems from a meeting in

about 1680 between the powerful French finance minister Jean-Baptiste

Colbert and a group of French businessmen led by a certain M. Le Gendre.

When the eager mercantilist minister asked how the French state could be of

service to the merchants and help promote their commerce, Le Gendre

replied simply "Laissez-nous faire" ("Let us be", lit. "Let us do’).148

The anecdote on the Colbert-Le Gendre meeting was related in a 1751

article in the Journal Oeconomique by the French minister and champion of

free trade, René de Voyer, Marquis d'Argenson—which happens to also be

the phrase's first known appearance in print.149 Argenson himself had used

the phrase earlier (1736) in his own diaries, in a famous outburst:

147Jump up ^ Buder, Stanley. 2009. Capitalizing on Change: A Social History of American Business Pg. 13. ISBN 978-0-8078-3231-8.Jump up ^ Hessen, Robert. ""A fully free economy, true laissez-faire, never has existed...", Robert Hessen, senior research fellow at Stanford University's Hoover Institution". Econlib.org. Retrieved 2013-07-30.148 Jump up ^ Journal Oeconomique 1751, Article by the French minister of finance.149 Jump up ^ M. d'Argenson, "Lettre au sujet de la dissertation sur le commerce du marquis de Belloni', Avril 1751, Journal Oeconomique p.111. See A. Oncken, Die Maxime Laissez faire et laissez passer, ihr Ursprung, ihr Werden, 1866

51

Laissez faire, telle devrait être la devise de toute puissance publique,

depuis que le monde est civilisé ... Détestable principe que celui de ne vouloir

grandir que par l'abaissement de nos voisins! Il n'y a que la méchanceté et la

malignité du coeur de satisfaites dans ce principe, et l’intérêt y est opposé.

Laissez faire, morbleu! Laissez faire!150 (Trans: "Let it be, that should be the

motto of all public powers, as the world is civilized ... That we cannot grow

except by lowering our neighbors is a detestable notion! Only malice and

malignity of heart is satisfied with such a principle and our (national) interest is

opposed to it. Let it be, for heaven's sake! Let it be!).

The laissez faire slogan was popularized by Vincent de Gournay, a

French Physiocrat and intendant of commerce in the 1750s, who is said to

have adopted the term from Francois Quesnay's writings on China.151 It was

Quesnay who coined the term laissez-faire, laissez-passer152 laissez-faire

being a translation of the Chinese term 無為 wu wei153Gournay was an ardent

proponent of the removal of restrictions on trade and the deregulation of

industry in France. Gournay was delighted by the Colbert-LeGendre

anecdote,154 and forged it into a larger maxim all his own: "Laissez faire et

laissez passer" ('Let do and let pass'). His motto has also been identified as

150 Jump up ^ as quoted in J.M. Keynes, 1926, "The End of Laissez Faire". Argenson's Mémoirs were published only in 1858, ed. Jannet, Tome V, p.362. See A. Oncken (Die Maxime Laissez faire et laissez passer, ihr Ursprung, ihr Werden, 1866)151 Jump up ^ Baghdiantz McCabe, Ina (2008). Orientalism in Early Modern France: Eurasian Trade Exoticism and the Ancien Regime. Berg Publishers. pp. 271–272. ISBN 978-1-84520-374-0.152 Jump up ^ "Library of Economics and Liberty". Liberty Fund, Inc. Retrieved 22 September 2013.Jump up ^ "Encyclopedia Britannica". Encyclopedia Britannica, Inc.153Jump up ^ Clarke, J.J. (1997). Oriental Enlightenment: The Encounter Between Asian and Western Thought. Routledge. p. 50. ISBN 978-0415133760.154 Jump up ^ According to J. Turgot's "Eloge de Vincent de Gournay," Mercure, August, 1759 (repr. in Oeuvres of Turgot, vol. 1 p.288.

52

the longer "Laissez faire et laissez passer, le monde va de lui même!" ("Let do

and let pass, the world goes on by itself!"). Although Gournay left no written

tracts on his economic policy ideas, he had immense personal influence on

his contemporaries, notably his fellow Physiocrats, who credit both the

laissez-faire slogan and the doctrine to Gournay.155

Before d'Argenson or Gournay, P.S. de Boisguilbert had enunciated

the phrase "on laisse faire la nature" ('let nature run its course').156 celebrated

motto "Pas trop gouverner" ("Govern not too much”)157 But it was Gournay's

use of the 'laissez-faire' phrase (as popularized by the Physiocrats) that gave

it its cachet.

Laissez faire was proclaimed by the Physiocrats in the eighteenth

century France, thus being the very core of the economic principles, and was

more developed by famous economists, beginning with Adam Smith.158 It is

with the physiocrats and the classical political economy that the term "laissez

faire" is ordinarily associated."[16] The book Laissez Faire and the General-

Welfare State mentions that, "The physiocrats, reacting against the excessive

mercantilist regulations of the France of their day, expressed a belief in a

155Jump up ^ Gournay was credited with the phrase by Jacques Turgot ("Eloge a Gournay", Mercure 1759), the Marquis de Mirabeau (Philosophie rurale 1763 and Ephémérides du Citoyen, 1767.), the Comte d'Albon (,"Éloge Historique de M. Quesnay", Nouvelles Ephémérides Économiques, May, 1775, p.136-7. ) and DuPont de Nemours (Introduction to Ouevres de Jacques Turgot, 1808–11, Vol. I, p.257 and p.259 (Daire ed.)) among others156 Jump up ^ "Tant, encore une fois, qu'on laisse faire la nature, on ne doit rien craindre de pareil", P.S. de Boisguilbert, 1707, Dissertation de la nature des richesses, de l'argent et des tributs.157 Jump up ^ DuPont de Nemours, op cit, p.258. Oncken (op.cit) and Keynes (op.cit.) also credit the Marquis d'Argenson with the phrase "Pour gouverner mieux, il faudrait gouverner moins" ("To govern best, one needs to govern less"), possibly the source of the famous "That government is best which governs least" motto popular in American circles, attributed variously to Thomas Paine, Thomas Jefferson and Henry Thoreau.158 Jump up to: a b c d Fine, Sidney. Laissez Faire and the General-Welfare State. United States: The University of Michigan Press, 1964. Print

53

"natural order" or liberty under which individuals in following their selfish

interests contributed to the general good. Since, in their view, this natural

order functioned successfully without the aid of government, they advised the

state to restrict itself to upholding the rights of private property and individual

liberty, to removing all artificial barriers to trade, and to abolishing all useless

laws."159

In England, a number of "free trade" and "non-interference" slogans

had been coined already during the 17th century. But the French phrase

laissez faire gained currency in English-speaking countries with the spread of

Physiocratic literature in the late 18th century. The Colbert-LeGendre

anecdote was relayed in George Whatley's 1774 Principles of Trade (co-

authored with Benjamin Franklin) - which may be the first appearance of the

phrase in an English language publication.160

Laissez-faire, a product of the Enlightenment, was "conceived as the

way to unleash human potential through the restoration of a natural system, a

system unhindered by the restrictions of government."161 In a similar vein,

Adam Smith viewed the economy as a natural system and the market as an

organic part of that system. Smith saw Laissez-faire as a moral program and

the market its instrument to ensure men the rights of natural law.162 By

extension, free markets become a reflection of the natural system of liberty.163

159 Ibid160Jump up ^ Macgregor, Economic Thought and Policy (London, 1949), pp. 54-67161 ^ Jump up to: a b c d e f g Gaspard, Toufick. A Political Economy of Lebanon 1948-2002: The Limits of Laissez-faire. Boston: Brill, 2004. Print162 Ibid163 Ibid

54

"For Smith, laissez-faire was a program for the abolition of laws constraining

the market, a program for the restoration of order and for the activation of

potential growth."164

However, Adam Smith,165 and the notable classical economists, such

as Thomas Malthus, and David Ricardo, did not use the phrase. Jeremy

Bentham used the term, but it was probably James Mill's reference to the

"laissez-faire" maxim (together with "pas trop gouverner") in an 1824 entry for

the Encyclopædia Britannica that really brought the term into wider English

usage. With the advent of the Anti-Corn Law League, the term received much

of its (English) meaning.166

Adam Smith first used the metaphor of an "invisible hand" in his book

The Theory of Moral Sentiments to describe the unintentional effects of

economic self-organization from economic self-interest.167 The idea lying

behind the "invisible hand", though not the metaphor itself, belongs to Bernard

de Mandeville and his Fable of the Bees. In political economy that idea and

the doctrine of laissez faire have always been closely related.168 True, Smith

was familiar with the term, but he chose not to use them in his political

economy and moral philosophy because they did not benefit the consumers

who, as a result of them, paid higher prices and because they restricted

164 Ibid165 ^ Jump up to: a b Roy C. Smith, Adam Smith and the Origins of American Enterprise: How the Founding Fathers Turned to a Great Economist's Writings and Created the American Economy, Macmillan, 2004, ISBN 0-312-32576-2, pp. 13–14.166 Jump up ^ Abbott P. Usher et al. (1931). "Economic History—The Decline of Laissez Faire". American Economic Review 22 (1, Supplement): 3–10.167 Jump up ^ Andres Marroquin, Invisible Hand: The Wealth of Adam Smith, The Minerva Group, Inc., 2002, ISBN 1-4102-0288-7, page 123.168 Jump up ^ John Eatwell, The Invisible Hand, W.W. Norton&Company, 1989, pp. Preface x1.

55

competition, and people risked serious injuries.169 Some have characterized

this metaphor as one for laissez-faire,170 but Smith never actually used the

term himself.171

Fundamentals of Laissez Faire

As a system of thought, laissez faire rests on the following axioms:172

1. The individual is the basic unit in society. 2. The individual has a natural

right to freedom. 3. The physical order of nature is a harmonious and self-

regulating system. 4. Corporations are creatures of the State and therefore

must be watched closely by the citizenry due to their propensity to disrupt the

Smithian spontaneous order. These axioms constitute the basic elements of

laissez-faire thought, although another basic and often-disregarded element is

that markets should be competitive, a rule that the early advocates of laissez-

faire have always emphasized.173

History of laissez-faire debate

China[During the Han, Tang, Song, and Ming dynasties, Chinese

scholar-officials would often debate about the interference the government

should have in the economy, such as setting monopolies in lucrative

169 Jump up ^ Kennedy, Gavin (September 21, 2012). "Adam Smith’s Lost Legacy". Retrieved April 6, 2013.170 Jump up ^ "The mathematical century: the 30 greatest problems of the last 100 years (2006) Piergiorgio Odifreddi, Arturo Sangalli, Freeman J Dyson, p. 122". Google.com. Retrieved 2013-07-30.171 ^ Jump up to: a b Roy C. Smith, Adam Smith and the Origins of American Enterprise: How the Founding Fathers Turned to a Great Economist's Writings and Created the American Economy, Macmillan, 2004, ISBN 0-312-32576-2, pp. 13–14.172 ^ Jump up to: a b c d e f g Gaspard, Toufick. A Political Economy of Lebanon 1948-2002: The Limits of Laissez-faire. Boston: Brill, 2004. Print173 Ibid

56

industries and instating price controls. Such debates were often heated with

Confucian factions tending to oppose extensive government controls and

"Reform" factions favoring such moves. During the Han and Tang, emperors

sometimes instated government monopolies in times of war, and abolished

them later when the fiscal crisis had passed. Eventually, in the later Song and

Ming dynasties, state monopolies were abolished in every industry and were

never reinstated during the length of that dynasty, with the government

following laissez-faire policies. During the Manchu Qing Dynasty, state

monopolies were reinstated, and the government interfered heavily in the

economy; many scholars believe this prevented China from developing

capitalism.174

Europe

In Europe the laissez faire movement was first widely promoted by the

physiocrats, a movement that originated with Vincent de Gournay, a

successful merchant. Gournay held that the government should allow the laws

of nature to govern economic activity, with the state only intervening to protect

life, liberty, and property. His ideas were taken up by Francois Quesnay and

Turgot, Baron de l'Aulne. Quesnay had the ear of the King of France, Louis

XV, and in 1754 persuaded him to give laissez faire a try. On September 17, 174 Jump up ^ Li Bo and Zheng Yin, 5000 years of Chinese History, Inner Mongolian People's publishing corp , ISBN 7-204-04420-7, 1017

57

the King abolished all tolls and restraints on the sale and transport of grain,

and for more than a decade the experiment was a success. But then, in 1768,

there was a poor harvest, and the cost of bread rose so high that there was

widespread starvation, while merchants exported grain in order to obtain the

best profit. In 1770, the edict allowing free trade was revoked.175

The doctrine of laissez faire became an integral part of nineteenth-

century European liberalism.176 "Just as liberals supported freedom of thought

in the intellectual sphere, so were they equally prepared to champion the

principles of free trade and free competition in the sphere of economics. The

state was to be merely a passive policeman, protecting private property and

administering justice, but not interfering with the affairs of its citizens.

Businessmen, and particularly British industrialists, were quick to associate

these principles with their own economic interests."177 Many of the ideas of the

physiocrats spread throughout Europe, and were adopted to a greater or

lesser extent in Sweden, Tuscany, Spain, and after 1776 in the newly created

United States. Adam Smith, author of The Wealth of Nations, met Quesnay

and acknowledged his influence.178

175 Jump up ^ Will & Ariel Durant, Rousseau and the Revolution, pp. 71–77, Simon and Schuster, 1967, ISBN 067163058X.176 ^ Jump up to: a b c d Fine, Sidney. Laissez Faire and the General-Welfare State. United States: The University of Michigan Press, 1964. Print177 Jump up ^ Will & Ariel Durant, Rousseau and the Revolution, pp. 71–77, Simon and Schuster, 1967, ISBN 067163058X.178 Jump up ^ Will & Ariel Durant, Rousseau and the Revolution, p. 76, Simon and Schuster, 1967, ISBN 067163058X.

58

In Britain, in 1843, the newspaper The Economist was founded and

became an influential voice for laissez-faire capitalism.179 Laissez-faire

advocates opposed food aid for famines occurring within the British empire; in

1847, referring to the famine then underway in Ireland, The Economist's

founder James Wilson wrote that "It is no man's business to provide for

another".180 However, The Economist campaigned against the Corn Laws

that protected landlords in the United Kingdom of Great Britain and Ireland

against competition from less expensive foreign imports of cereal products.

The Great Famine in Ireland in 1845 led to the repeal of the Corn Laws in

1846. The tariffs on grain which kept the price of bread artificially high were

repealed.181 However, repeal of the Corn Laws came too late to stop Irish

famine, partly because it was done in stages over three years.182

A group calling itself the Manchester Liberals, to which Richard

Cobden and Richard Wright belonged, were staunch defenders of free trade,

and their work was carried on, after the death of Richard Cobden in 1866, by

The Cobden Club.183 In 1867, a free trade treaty was signed between Britain

and France, after which several of these treaties were signed among other

European countries.

179 Jump up ^ Scott Gordon (1955). "The London Economist and the High Tide of Laissez Faire". Journal of Political Economy 63 (6): 461–488. doi:10.1086/257722.180 Jump up ^ Cormac Ó Gráda (1995). "section: Ideology and relief in Chpt. 2". The Great Irish Famine. Cambridge University Press. ISBN 9780521557870.181 Jump up ^ George Miller. On Fairness and Efficiency. The Policy Press, 2000. ISBN 978-1-86134-221-8 p.344182 Jump up ^ Christine Kinealy. A Death-Dealing Famine:The Great Hunger in Ireland. Pluto Press, 1997. ISBN 978-0-7453-1074-9. p. 59183 Jump up ^ Antonia Taddei (1999). "London Clubs in the Late Nineteenth Century" (PDF). Retrieved 2008-12-30.

59

United States

In a book titled Laissez Faire and the General-Welfare State, Sidney

Fine mentions:

Associated with the concept of natural rights and servings as an

additional buttress to the edifice of laissez faire was the faith of Americans in

the self-sufficiency of the individual. To a great extent the result of the

unusually favorable economic conditions that prevailed in the United States,

individualism became part and parcel of the nation's democratic faith.

Americans placed their trust not in "external government" but in the free

individual, who must be kept free from restrains; and it was widely held that as

individuals became more intelligent and more attuned to the moral law, there

would be a decreasing need for government184...It was, indeed, in the writings

of the transcendentalists Emerson and Thoreau that the doctrine of the free

individual attained its classic expression in mid-nineteenth-century America.

To Emerson, the self-reliant individual was more than a match for organized

government, and he foresaw the day when the advance of the individual

would render the state unnecessary.185 Thoreau was even more

contemptuous of the state, and in his famous essay "Civil Disobedience"

carried individualism to a point where it became almost indistinguishable from

anarchism.186 The teachings of classical political economy, which were

184 Jump up ^ Ralph Henry Gabriel, The Course of American Democratic Thought: An Intellectual History since 1815 (New York, 1940), pp. 4-6, 19-22;" American Political Ideas," North American Review, CI(October, 1865), 558185 Jump up ^ Raph Waldo Emerson, "Self Reliance," Essays, First Series (Boston, 1883), P.87; Emerson, "Politics," Essays, Second Series, p. 206186 Jump up ^ The Writings of Henry David Thoreau (Riverside ed.; Boston, 1894), X, 131-170

60

brought to America from England and France, also helped to promote the idea

of the negative state.

Frank Bourgin's dissertation on the Constitutional Convention and

subsequent decades argues that direct government involvement in the

economy was intended by the Founders.187 The reason for this was the

economic and financial chaos the nation suffered under the Articles of

Confederation. The goal was to ensure that dearly won political independence

was not lost by being economically and financially dependent on the powers

and princes of Europe. The creation of a strong central government able to

promote science, invention, industry and commerce was seen as an essential

means of promoting the general welfare and making the economy of the

United States strong enough for them to determine their own destiny. One

later result of this intent was the adoption of Richard Faringthon's new plan

(worked out with his co-worker John Jefferson) to incorporate new changes

during the New Deal. Others, including Jefferson, view Bourgin's study,

written in the 1940s and not published until 1989, as an over-interpretation of

the evidence, intended originally to defend the New Deal and later to counter

Reagan's economic policies.188

In his 1973 study of the economic principles established at the

foundation of the United States, E.A.J. Johnson wrote:

187 Jump up ^ Bourgin, Frank (1989). The Great Challenge: The Myth of Laissez-Faire in the Early Republic. New York, NY: George Braziller Inc. ISBN 0-06-097296-3.188 Jump up ^ Bourgin, Frank (1989-06-01). "THE GREAT CHALLENGE: The Myth of Laissez-Faire in the Early Republic by Frank Bourgin | Kirkus". Kirkusreviews.com. Retrieved 2013-07-30.

61

The general view, discernible in contemporaneous literature, was that

the responsibility of government should involve enough surveillance over the

enterprise system to ensure the social usefulness of all economic activity. It is

quite proper, said Bordley, for individuals to "choose for themselves" how they

will apply their labor and their intelligence in production. But it does not follow

from this that "legislators and men of influence" are freed from all

responsibility for giving direction to the course of national economic

development. They must, for instance, discountenance the production of

unnecessary commodities of luxury when common sense indicates the need

for food and other essentials. Lawmakers can fulfill their functions properly

only when they "become benefactors to the public"; in new countries they

must safeguard agriculture and commerce, encourage immigration, and

promote manufactures. Admittedly, liberty "is one of the most important

blessings which men possess," but the idea that liberty is synonymous with

complete freedom from restraint "is a most unwise, mistaken apprehension."

True liberty demands a system of legislation that will lead all members of

society "to unite their exertions" for the public welfare. It should therefore be

the policy of government to aid and foster certain activities or kinds of

business that strengthen a nation, even as it should be the duty of

government to repress "those fashions, habits, and practices, which tend to

weaken, impoverish, and corrupt the people."189

189 Jump up ^ Johnson, E.A.J. (1973). The Foundations of American Economic Freedom: Government and Enterprise in the Age of Washington. New York, NY: University of Minnesota Press. pp. 194–195. ISBN 0-8166-0664-1.

62

Notable examples of government intervention in the period prior to the

Civil War include the establishment of the Patent Office in 1802; the

establishment of the Office of Standard Weights and Measures in 1830; the

creation of the Coast and Geodetic Survey in 1807 and other measures to

improve river and harbor navigation; the various Army expeditions to the west,

beginning with Lewis and Clark's Corps of Discovery in 1804 and continuing

into the 1870s, almost always under the direction of an officer from the Army

Corps of Topographical Engineers, and which provided crucial information for

the overland pioneers that followed; the assignment of Army Engineer officers

to assist or direct the surveying and construction of the early railroads and

canals; the establishment of the First Bank of the United States and Second

Bank of the United States as well as various protectionist measures (e.g., the

tariff of 1828). Several of these proposals met with serious opposition, and

required a great deal of horse trading to be enacted into law. For instance, the

First National Bank would not have reached the desk of President George

Washington in the absence of an agreement that was reached between

Alexander Hamilton and several southern members of Congress to locate the

capital in the District of Columbia. In contrast to Hamilton and the Federalists

was the opposing political party the Democratic-Republicans.

Most of the early opponents of laissez-faire capitalism in the United

States subscribed to the American School. This school of thought was

inspired by the ideas of Alexander Hamilton, who proposed the creation of a

government-sponsored bank and increased tariffs to favor northern industrial

63

interests. Following Hamilton's death, the more abiding protectionist influence

in the antebellum period came from Henry Clay and his American System.

In the early 19th century, "it is quite clear that the laissez faire label is

an inappropriate one" to apply to the relationship between the US government

and industry.190 In the mid-19th century, the United States followed the Whig

tradition of Economic nationalism, which included increased state control,

regulation and macroeconomic development of infrastructure.[39] Public

works such as the provision and regulation transportation such as railroads

took effect. The Pacific Railway Acts provided the development of the First

Transcontinental Railroad.191 In order to help pay for its war effort in the

American Civil War, the United States government imposed its first personal

income tax, on August 5, 1861, as part of the Revenue Act of 1861 (3% of all

incomes over US $800; rescinded in 1872).

Following the Civil War, the movement towards a mixed economy

accelerated. Protectionism increased with the McKinley Tariff of 1890 and the

Dingley Tariff of 1897. Government regulation of the economy expanded with

the enactment of the Interstate Commerce Act of 1887 and the Sherman Anti-

trust Act.

190 Jump up ^ Prince, Carl E.; Taylor, Seth (1982). "Daniel Webster, the Boston Associates, and the U.S. Government's Role in the Industrializing Process, 1815–1830". Journal of the Early Republic 2 (3): 283–299. JSTOR 3122975.191 ^ Jump up to: a b Guelzo, Allen C. (1999). Abraham Lincoln: Redeemer President. Grand Rapids, Mich.: W.B. Eerdmans Pub. Co. ISBN 0-8028-3872-3.

64

The Progressive Era saw the enactment of more controls on the

economy, as evidenced by the Wilson Administration's New Freedom

program.

Following World War I and the Great Depression, the United States

turned to a mixed economy, which combined free enterprise with a

progressive income tax, and in which, from time to time, the government

stepped in to support and protect American industry from competition from

overseas. For example in the 1980s the government sought to protect the

automobile industry by "voluntary" export restrictions from Japan.192 Pietro S.

Nivola wrote in 1986:

By and large, the comparative strength of the dollar against major

foreign currencies has reflected high U.S. interest rates driven by huge federal

budget deficits. Hence, the source of much of the current deterioration of

trade is not the general state of the economy, but rather the government's mix

of fiscal and monetary policies– that is, the problematic juxtaposition of bold

tax reductions, relatively tight monetary targets, generous military outlays, and

only modest cuts in major entitlement programs. Put simply, the roots of the

trade problem and of the resurgent protectionism it has fomented are

fundamentally political as well as economic.193

192 Jump up ^ Robert W. Crandall (1987). "The Effects of U.S. Trade Protection for Autos and Steel". Brookings Papers on Economic Activity (Brookings Papers on Economic Activity, Vol. 1987, No. 1) 1987 (1): 271–288. doi:10.2307/2534518. JSTOR 2534518.193 Jump up ^ Pietro S. Nivola (1986). "The New Protectionism: U.S. Trade Policy in Historical Perspective". Political Science Quarterly (Political Science Quarterly, Vol. 101, No. 4) 101 (4): 577–600. doi:10.2307/2150795. JSTOR 2150795.

65

Critiques

Over the years, a number of economists have offered critiques of

laissez-fair economics.

Adam Smith acknowledged deep moral ambiguities towards the

system of capitalism.194 Smith had severe misgivings concerning some

aspects of each of the major character-types produced by modern capitalist

society: the landlords, the workers and the capitalists.195 "The landlords' role

in the economic process is passive. Their ability to reap a revenue solely from

ownership of land tends to make them indolent and inept, and so they tend to

be unable to even look after their own economic interests."196 "The increase

in population should increase the demand for food, which should increase

rents, which should be economically beneficial to the landlords. Thus,

according to Smith, the landlords should be in favour of policies which

contribute to the growth of in the wealth of nations. Unfortunately, they often

are not in favour of these pro-growth policies, because of their own indolent-

induced ignorance and intellectual flabbiness."197

The British economist John Maynard Keynes condemned laissez-faire

economic policy on several occasions.198 In The End of Laissez-faire (1926),

one of the most famous of his critiques, Keynes argues that the doctrines of

194 ^ Jump up to: a b c d Spencer J. Pack. Capitalism as a Moral System: Adam Smith's Critique of the Free Market Economy. Great Britain: Edward Elgar, 2010. Print195 Ibid196 Ibid197 Ibid198 Jump up ^ Dostaler, Gilles, Keynes and His Battles (Edward Elgar Publishing, 2007), p. 91.

66

laissez-faire are dependent to some extent on improper deductive reasoning,

and, Keynes says, the question of whether a market solution or state

intervention is better must be determined on a case-by-case basis.199

Austrian economist Friedrich Hayek stated that a freely competitive,

laissez-faire banking industry tends to be endogenously destabilizing and pro-

cyclical. He stated that the need for central banking control was

inescapable.200

Advantages of Laissez Faire Management

Laissez-faire management leaves a lot of responsibility in the hands of

the workers, this can lead to improved morale, the staff will feel valued and

the sense of responsibility can drive them forwards. Also, there should be less

conflict between managers and workers.

The workers are allowed to let their own ideas and creativity flourish,

can lead to exciting new ideas and different approaches to advance the

business, instead of relying on one brain at the head of the organization with

everyone else following.

Laissez-faire management can prove very efficient if the workforce

have a sense of responsibility and self-discipline.

Disadvantages of Laissez Faire Management

199 Jump up ^ Dostaler 2007, p. 91; Barnett, Vincent, John Maynard Keynes (Routledge, 2013), p. 143.200 Jump up ^ White, Lawrence H. (1999). "Why Didn't Hayek Favor Laissez Faire in Banking?". History of Political Economy 31 (4). Retrieved 11 April 2013.

67

If the workers are not responsible, and they see their managers’ hands-

off approach, they will carry out sub-standard work or do very little work. The

manager will not be looking over their shoulder so this could do unnoticed for

an extended period of time.

Without regular direction from the leader, the staff can lose their own

sense of direction, again leading to below-standard work without enough

monitoring and lack of accountability.

1.7 MBWA MANAGEMENT STYLE

MANAGEMENT BY WALK AROUND201

DEFINITION

Managers treat themselves as an essential part of the team and are

efficient listeners.

The superiors interact with the employees more often to find out their

concerns and suggestions.

In such a style of working, the leader is more of a mentor to its

employees and guides them whenever needed.

The managers don’t lock themselves in cabins; instead walk around to

find out what is happening around them.

It is the habit of stopping by to talk with people face to face, get a

sense of how they think things are going, and listen to whatever may

be on their minds.

201 http://management.fortune.cnn.com/2012/08/23/management-by-walking-around-mbwa/

68

Advantages:

Managers can observe and even participate in the daily grind, so to

speak, while getting to know their employees in the process.

For building rapport among team members, it beats emailing from

behind closed doors.

Employees are likely to be more engaged and productive if they see

you and speak with you frequently than if they don't.

There has been a tendency to manage employees via email, memos,

and formal meetings," she says — partly because many managers feel

that they just don't have time to meet with employees informally, and

partly because "younger and newly promoted managers" may never

have learned the basics of MBWA.

DISADVANTAGES:

o One big disadvantage of MBWA is the critical or oppressive

environment it can create.

o It may be that popping in on employees unexpectedly is, as you

say, a distraction — but enthusiasts say the practice also yields

real benefits.“ Management by walking around really helps you

be more visible, connect with employees and share ideas, and

invite suggestions for doing things better," says Annie Stevens,

69

managing partner at Boston-based executive coaching firm

Clear Rock.

Manage by walking away), Stevens offers this checklist of suggestions

for doing it right:

1. Make MBWA part of your routine. Dropping in on employees'

workspaces for an informal chat is most effective if you don't do it

on any fixed schedule, since "you'll realize the greatest returns by

seeing what is going on when people aren't prepared for you,"

Stevens says. But do plan for a bit of MBWA on your own calendar

every day, if you possibly can, even if it's only for half an hour: "The

more often you do it, the more beneficial it is."

2. Don't bring an entourage. MBWA works best as a continual stream

of one-on-one conversations with individual employees. Bringing

aides or assistants with you will probably just inhibit the discussion

by making people more self-conscious or, worse, make them feel

you're ganging up on them.

3. Visit everybody. As anyone might guess who's familiar with how

office rumor mills get spinning, dropping in on some folks more often

than others is likely to create the wrong kind of buzz. Try to spend

roughly the same amount of time — not necessarily all in the same

day or even the same week, but over the long run — with each

person who reports to you.

4. Ask for suggestions, and recognize good ideas. "Ask each employee

for his or her thoughts about how to improve products, processes,

70

sales, or service," Stevens says. Then, if someone's idea leads to a

positive result, make it known whose suggestion it was and show

you're ready to give credit where it's due.

5. Follow up with answers. If you can't answer an employee's question

off the top of your head, don't forget to get back to him or her with an

answer later, Stevens suggests. Besides being common courtesy, it

builds trust.

6. Don't criticize. Remember, you're on a fact-finding mission, with the

secondary purpose of building rapport. To avoid undermining those

aims, Stevens says, "If you find that an employee isn't performing his

or her job correctly, don't attempt to change the behavior on the spot.

Instead, make a note of it and address the problem at another time

and in another setting."

Clearly, MBWA takes some extra time and effort, but apart from any

tangible payoff it might yield down the road, you might even find that you

enjoy it. Stranger things have happened.

1.8 PATERNALISTIC MANAGEMENT STYLE

Paternalism – n. the system, principle, or practice of managing or

governing individuals, businesses, nations, etc. in the manner of a father

dealing benevolently and often intrusively with his children.202

202 dictionary.reference.com

71

“A policy or practice of treating or governing people in a fatherly way,

especially by providing for their needs without giving them rights or

responsibility.”203

- the attitude or policy of a government or other authority that

manages the affairs of a country, company, community, etc, in the manner of

a father, especially in usurping individual responsibility and the liberty of

choice.204

- a management style which is similar to the autocratic style in

that the manager has overall control of the company and expects his/her

orders to be obeyed when given to the subordinates.205

- is a form of management whereby managers pay more attention

to the social aspects of their employees; they are concerned with keeping

them happy and motivated, and act as a sort of father figure to the

employees. In such a management style, decisions are made with the best

interests of the workers at heart.206

- is where by managers try their best to act as father figure to the

employees, thus ensuring that all employees feel happy and appreciated

while working in the company. The managers will listen to the employees and

at times ask for their feedback and opinions while making any decisions.207

203 jeffdaugherty.wordpress.com/2010/03/05/pitfalls-of-a-paternalistic-management-style/204 dictionary.reference.com205 www.bsmr.com/tag/paternalistic-management-style/206 www.askcom/question/what-is-paternalistic-management-style207 Ibid

72

Paternalistic managers give more attention to the social needs and

views of their workers. Managers are interested in how happy workers feel

and in many ways they act as a father figure (pater means father in Latin).

They consult employees over issues and listen to their feedback or opinions.

The manager will however make the actual decisions (in the best interest of

the workers) as they believe the staff still needs direction and in this way it is

still somewhat of an autocratic approach. The style is closely linked with

Mayo’s Human Relation view of motivation and also the social needs of

Maslow.208

Pitfalls of Paternalistic Management Style209

Over staffing

Over-compensating

Allowance for “empire building”

Allowing poor performance to be the norm

Unequal treatment of employees

Increase cost of running an operation

Good possibility that monetary losses will be sustained

Incongruent and inconsistent performance appraisal will be given

Retreat from the realities of the real world of business

1.9 ASIAN MANAGEMENT STYLE210

208 www.tutor2u.net209 Ibid210 http://en.wikipedia.org/wiki/Management_styles

73

Like consultative and easily confused with autocratic and dictatorial;

however, decisions take into account the best interests of the employees as

well as the business, often more so than interests of the individual manager.

Communication is downward. Feedback and questioning authority are absent

as respect to superiors and group harmony are central characteristics within

the culture. This style demands loyalty from the employees, often more than

to societies' rules in general. Staff turnover is discouraged and rare. Worker

motivation is the status quo with East Asians often having the world's highest

numbers of hours worked per week, due to a sense of family duty with the

manager being the father, and staff being obedient children, all striving for

harmony, and other related Confucian characteristics. Most aspects of work

are done with a highly collectivist orientation. It shares disadvantages with an

autocratic style, such as employees becoming dependent on the leader, and

related issues with seniority based systems.

An Asian Paternalistic style means that the manager makes decisions

from a solid understanding of what is desired and best by both consumers

and staff. Managers must appear confident, with all answers, and promote

growth with harmony, often even if hiding harmful or sad news is required.

74

Description Advantages Disadvantages

Autocratic211 Senior managers take all the important decisions with no involvement from workers

Quick decision making

Effective when employing many low skilled workers

No two-way communication so can be de-motivating

Creates “them and us” attitude between managers and workers

Paternalistic Managers make decisions in best interests of workers after consultation

More two-way communication so motivating

Workers feel their social

Slows down decision making

Still quite a dictatorial or autocratic

211 www.tutor2u.net

75

needs are being met

style of management

Democratic Workers allowed to make own decisions

Some businesses run on the basis of majority decisions

Authority is delegated to workers which is motivating

Useful when complex decisions are required that need specialist skills

Mistakes or errors can be made if workers are not skilled or experienced enough

GROUP 1 SUMMARY:

In some parts of Europe, they foster management policies that may

encourage more balance in a manager’s life, between work & private activities

and risk & stability. Whether this will produce sustained economic superiority

or a model to be emulated in the U.S. is debatable.212

Antonio De Luca, Warner International NV, describes important

differences this way: “If one has to generalize, it is fair to say that Americans

pursue risk and Europeans seek stability … (leading) to fewer opportunities

with more limited financial rewards, but possibly more balance for Europeans.

212 http://bizshifts-trends.com/2011/01/10/management-styles-u-s-europe-japan-china-india-brazil-russia/

76

The solution, as usual, is a sensible convergence of these two nuanced

cultural approaches.”213

Roy Bingham, Managing Director/Partner, Health Business Partners,

LLC, points out that “American management seems to work best when the

key needs are speed, aggression, last-minute genius, and take-chance,

inspiring leadership. In boom times when it’s expand at all costs–pick the

American style. At other times the more deliberate, consultative European

approach is your ally. Maybe this is why we are hearing more from the

Europeans these days.”214

Jose Pedro Goncalves, Managing Partner DecisionMaster, Lda, takes

issue with the idea of a “European” style of management, pointing out that

there is no one style. In some parts of Europe “(as a manager) I’m a human

being”. In other parts, “I’m just a number”. In general “we (Europeans) are

more human, but less flexible…”215

Dr. B. V. Krishnamurthy, Professor M. P. Birla Institute of Management,

India, picks up this theme by commenting “to argue that Europe might be

snatching the lead in management is a little far-fetched. When one looks at

the very successful organizations anywhere in the world, one discerns striking

similarities—emphasis on efficiency, innovation, quality, and responsiveness

to customers—even as one also finds adaptations to cultural differences.”216

These comments tend to question whether management leadership

has a “geographic home” as opposed to a winning set of behaviors in part

213 Ibid214 Ibid215 Ibid216 Ibid

77

fostered by the competitive, social, cultural, and legal environment. Given the

prospect for continued movement toward competition and the propagation of

“best practice” management ideas on a global scale; is the question largely

academic?217

Dr. B. V. Krishnamurthy writes: “The Triad countries have dominated

international business to such an extent that after Japan’s amazing success

story, followed by the resurgence of American companies, it is perhaps

natural that the focus should now shift to Europe. The catalyst for this might

have been the economic union that Western Europe has achieved. The

search for that elusive concept of the “best style of management” continues,

although one could argue on the basis of lessons learned that there may not

be a best style. Centralization and decentralization can go together, flex-time

and tele-working are meant to improve productivity, and many of the

“either/or” concepts can be treated as complementary, to be used with

discretion…218

Gunasekar C Raharatnam, manaagement consultant, writes about the

India Management Style: ‘I doubt if there is clear approach that can be

described today. Some might point towards the many family owned and

managed business organizations in India, some of these are large corporate

entities and leaders in their industry but most are small tightly controlled family

businesses. Even such family businesses are increasingly being controlled by

the recent generations of well-educated inheritors. The management “styles”

217 Ibid218 Ibid

78

are changing and perhaps shifting more towards Western “styles” that are

being pushed by management schools.”219

India is an enormously hierarchical society and this, obviously, has an

impact on management style. It is imperative that there is a boss and that the

manager acts like a boss. The position of manager demands a certain amount

of role-playing from the boss and a certain amount of deferential behavior

from his subordinates… Anglo-Saxon concepts of egalitarianism where the

boss is the primus-inter-pares are virtually incomprehensible in a society still

dominated by the historical conventions of the caste system… Managing

people in India requires a level of micro-management which many western

business people feel extremely uncomfortable with, which is likely to bring the

best results.

In Brazil a manager’s personal style is considered to be of great

significance and it could almost be said that his or her vision/bearing is viewed

as of great an importance as their technical abilities… Relationships are of

key importance in this Latin culture and the boss and subordinates work hard

to foster a relationship based on trust and respect for personal dignity. First

and foremost, managers are expected to manage. The boss is expected to

give direct instructions and it is expected that these instructions will be carried

out without too much discussion or debate (if there is debate it should be done

in private to avoid showing public disrespect to the hierarchy).

219 Ibid

79

Decision-making in Brazil is often reserved for the most senior people.

Taking the time to build the proper working relationship is crucial to success.

Coming in as an outsider is often difficult, so it is advisable to have a third-

party introduction… Often the people you negotiate with will not have

decision-making authority. Decisions are made by the highest-ranking

person.220

China management style tends to follow Confucian philosophy:

Relationships are deemed to be unequal and ethical behavior demands that

these inequalities are respected: Older person should automatically receive

respect from the younger, the senior from the subordinate. This is the

cornerstone of all the China management thinking and issues such as

empowerment and open access to all information are viewed by the Chinese

as, at best, bizarre Western notions… Management is directive, with the

senior manager giving instructions to their direct reports who in turn pass on

the instructions down the line. Subordinates do not question the decisions of

superiors – that would be to show disrespect and be the direct cause of loss

of face (mianzi) for all concerned.221

Japan management style emphasis the need for information flow from

the bottom of the company to the top: Senior management is largely a

supervisory rather than “hands-on” approach. Policy is often originated at the

middle-levels of a company before being passed upwards for ratification. The

strength of this approach is obviously that those tasked with the

220 Ibid221 Ibid

80

implementation of decisions have been actively involved in the shaping of

policy.222

The higher a Japanese manager rises within an organization, the more

important it is that he appears unassuming and not ambitious. Individual

personality and forcefulness are not seen as the prerequisites for effective

leadership. The key task for a Japanese manager is to provide the

environment in which the group can flourish. In order to achieve this he must

be accessible at all times and willing to share knowledge within the group.

Manager is seen as a type of father figure who expects and receives loyalty

and obedience from colleagues. In return, the manager is expected to take a

holistic interest in the well-being of those colleagues. It is a mutually beneficial

two-way relationship….

Russian management style tends to be centralized and directive. The

boss, especially the ‘big boss’, is expected to issue direct instructions for

subordinates to follow. Little consultation will be expected from people lower

down the company hierarchy. Indeed too much consultation from a senior

manager could be seen as a sign of weakness and lack of decisiveness.

Middle managers have little power over strategy or input in significant

strategic decisions. The most powerful middle managers are the ones who

have the most immediate entree to the decision-maker at the top of the

organization. There is little point in wasting time debating with middle

managers who do not have an easy access to the top. The most significant

222 Ibid

81

reason for delay in reaching a decision in Russia is that the decision has not

been put in front of the real decision-maker…223

Management “Theory Z” is a name applied to three distinctly different

psychological theories. One was developed by Abraham H. Maslow in his

paper Theory Z and another is Dr. William Ouchi’s so-called “Japanese

Management” style popularized during the Asian economic boom of the

1980s. The third was developed by W. J. Reddin in Managerial Effectiveness.

Abraham Maslow, a psychologist and the first theorist to develop a

theory of motivation based upon human needs produced a theory that had

three assumptions. First, human needs are never completely satisfied.

Second, human behavior is purposeful and is motivated by need for

satisfaction. Third, these needs can be classified according to a hierarchical

structure of importance from the lowest to highest (Maslow, 1970).224

Maslow’s “Theory Z” in contrast to Theory X, which stated that workers

inherently dislike and avoid work and must be driven to it, and Theory Y,

which stated that work is natural and can be a source of satisfaction when

aimed at higher order human psychological needs.225

Theory X and Theory Y were both written by Douglas McGregor, a

social psychologist who is considered to be one of the top business thinkers

of all time. In McGregor’s book The Human Side of Enterprise (1960),

McGregor describes Theory X and Theory Y based upon Maslow’s hierarchy

of needs, where McGregor grouped the hierarchy into a lower order (Theory

223 Ibid224 Ibid225 Ibid

82

X) needs and a higher order (Theory Y) needs. McGregor suggested that

management could use either set of needs to motivate employees, but better

results could be gained from Theory Y, rather than Theory X (Heil, Bennis, &

Stephens, 2000).226

For Dr. William Ouchi, “Theory Z” focused on increasing employee

loyalty to the company by providing a job for life with a strong focus on the

well-being of the employee, both on and off the job. According to Ouchi,

Theory Z management tends to promote stable employment, high

productivity, and high employee morale and satisfaction.227

Ironically, “Japanese Management” and Theory Z itself were based on

Dr. W. Edwards Deming’s famous “14 points”. Deming, an American scholar

whose management and motivation theories were rejected in the United

States, went on to help lay the foundation of Japanese organizational

development during their expansion in the world economy in the 1980s.

Deming’s theories are summarized in his two books, Out of the Crisis and The

New Economics, in which he spells out his “System of Profound Knowledge“.

He was a frequent advisor to Japanese business and government leaders,

and eventually became a revered counselor. Deming was awarded the

Second Order of the Sacred Treasures by the former Emperor Hirohito, and

American businesses ultimately tried unsuccessfully to use his “Japanese”

approach to improve their competitive position.228

226 Ibid227 Ibid228 Ibid

83

Professor Ouchi spent years researching Japanese companies and

examining American companies using the Theory Z management styles. By

the 1980’s, Japan was known for the highest productivity anywhere in the

world, while America had fallen drastically. The word “Wa” in Japanese can

be applied to Theory Z because they both deal with promoting partnerships

and group work. The word “Wa” means a perfect circle or harmony, which

influences Japanese society to always be in teams and to come to a solution

together. Promoting Theory Z and the Japanese word “Wa” is how the

Japanese economy became so powerful. And also because the Japanese

show a high level enthusiasm to work, some of the researchers claim that ‘Z’

in the theory Z stands for ‘Zeal’.229

Ouchi wrote a book called Theory Z How American Business Can Meet

the Japanese Challenge (1981), in this book; Ouchi shows how American

corporations can meet the Japanese challenges with a highly effective

management style that promises to transform business in the 1980’s. The

secret to Japanese success, according to Ouchi, is not technology, but a

special way of managing people. “This is a managing style that focuses on a

strong company philosophy, a distinct corporate culture, long-range staff

development, and consensus decision-making”(Ouchi, 1981)…230

Another commentary on management is by bhattathiri, management

consultant, who writes: The Western idea of management centers on making

the worker (and the manager) more efficient and more productive…but it has

failed in ensuring betterment of individual life and social welfare. It has 229 Ibid230 Ibid

84

remained by and large a soulless edifice and an oasis of plenty for a few in

the midst of poor quality of life for many. There is an urgent need to re-

examine prevailing management disciplines – their objectives, scope and

content. Management should be redefined to underline the development of

the worker as a person, as a human being, and not as a mere wage-earner.

With this changed perspective, management can become an instrument in the

process of social, and indeed national development.231

231 Ibid

85

UNIT 2

Identification, analysis and interpretation of influences of the different Types of Ship Management Styles applied both in the Philippine domestic shipping and international shipping setting:

SWOT Analysis

Discover New Opportunities. Manage and Eliminate Threats.

Introduction:

SWOT Analysis is a useful technique for understanding your Strengths and

Weaknesses, and for identifying both the Opportunities open to you and the

Threats you face. It is a structured planning method used to evaluate the

Strengths, Weaknesses, Opportunities, and Threats involved in a project or in

a business venture. A SWOT analysis can be carried out for a product, place,

industry or person. It involves specifying the objective of the business venture

or project and identifying the internal and external factors that are favorable

and unfavorable to achieving that objective.232

What makes SWOT particularly powerful is that, with a little thought, it can

help you uncover opportunities that you are well placed to exploit. And by

understanding the weaknesses of your business, you can manage and

eliminate threats that would otherwise catch you unawares.

232 http://en.wikipedia.org/wiki/SWOT_analysis

86

More than this, by looking at yourself and your competitors using the SWOT

framework, you can start to craft a strategy that helps you distinguish yourself

from your competitors, so that you can compete successfully in your market.

How to Use SWOT Analysis

Originated by Albert S Humphrey in the 1960s, SWOT Analysis is as useful

now as it was then. You can use it in two ways – as a simple icebreaker

helping people get together to "kick off" strategy formulation, or in a more

sophisticated way as a serious strategy tool.

Tip: Strengths and weaknesses are often internal to your organization,

while opportunities and threats generally relate to external factors. For

this reason the SWOT Analysis is sometimes called Internal-External

Analysis and the SWOT Matrix is sometimes called an IE Matrix.

A SWOT analysis can be used for:233

Workshop sessions

Brainstorm meetings

Problem solving

Planning

Product evaluation

Competitor evaluation

Personal Development Planning

233 http://rapidbi.com/swotanalysis/

87

Decision making (with force field analysis)

Strengths:

What advantages does your organization have?

What do you do better than anyone else?

What unique or lowest-cost resources can you draw upon that others

can't?

What do people in your market see as your strengths?

What factors mean that you "get the sale"?

What is your organization's Unique Selling Point (USP)?

USP Analysis234

The Unique Selling Proposition: Finding Your "Competitive Edge"

Your USP is the unique thing that you can offer that your competitors can't.

It's your "Competitive Edge." It's the reason that customers buy from you and

you alone.

USPs have helped many companies succeed. And they can help you too

when you're marketing yourself (when seeking a promotion, finding a new job,

or just making sure that you get the recognition you deserve.) If you don't

have a USP, you're condemned to a struggle for survival – that way lays hard

234 http://www.mindtools.com/pages/article/newTMC_11.htm

88

work and little reward.

Consider your strengths from both an internal perspective, and from the point

of view of your customers and people in your market. Also, if you're having

any difficulty identifying strengths, try writing down a list of your organization's

characteristics. Some of these will hopefully be strengths! When looking at

your strengths, think about them in relation to your competitors. For example,

if all of your competitors provide high quality products, then a high quality

production process is not strength in your organization's market, it's a

necessity.

Weaknesses:

What could you improve?

What should you avoid?

What are people in your market likely to see as weaknesses?

What factors lose you sales?

Again, consider this from an internal and external basis: Do other people

seem to perceive weaknesses that you don't see? Are your competitors doing

any better than you? It's best to be realistic now, and face any unpleasant

truths as soon as possible.

Opportunities:

What good opportunities can you spot?

89

What interesting trends are you aware of?

Useful opportunities can come from such things as:

o Changes in technology and markets on both a broad and narrow

scale.

o Changes in government policy related to your field.

o Changes in social patterns, population profiles, lifestyle changes,

and so on.

o Local events.

Tip: A useful approach when looking at opportunities is to look at your

strengths and ask yourself whether these open up any opportunities.

Alternatively, look at your weaknesses and ask yourself whether you could

open up opportunities by eliminating them.

Threats

What obstacles do you face?

What are your competitors doing?

Are quality standards or specifications for your job, products or services

changing?

Is changing technology threatening your position?

Do you have bad debt or cash-flow problems?

Could any of your weaknesses seriously threaten your business?

90

Tip: When looking at opportunities and threats, PEST Analysis   can help

to ensure that you don't overlook external factors, such as new

government regulations, or technological changes in your industry.

PEST Analysis235

Identifying "Big Picture" Opportunities and Threats

Harvard professor Francis Aguilar is thought to be the creator of PEST

Analysis. He included a scanning tool called ETPS in his 1967 book

"Scanning the Business Environment." The name was later tweaked to

create the current acronym.

PEST Analysis is useful for four main reasons:

1. It helps you to spot business or personal opportunities, and it gives you

advanced warning of significant threats.

2. It reveals the direction of change within your business environment.

This helps you shape what you're doing, so that you work with change,

rather than against it.

3. It helps you avoid starting projects that are likely to fail, for reasons

beyond your control.

4. It can help you break free of unconscious assumptions when you enter

a new country, region, or market; because it helps you develop an

235 http://www.mindtools.com/pages/article/newTMC_09.htm

91

objective view of this new environment.

Further SWOT Tips

If you're using SWOT Analysis as a serious tool (rather than as a casual

"warm up" for strategy formulation), make sure you're rigorous in the way

you apply it:

Only accept precise, verifiable statements.

Ruthlessly prune long lists of factors, and prioritize them, so that you

spend your time thinking about the most significant factors.

Make sure that options generated are carried through to later stages in the

strategy formation process.

Apply it at the right level - for example, you might need to apply SWOT

Analysis at product or product-line level, rather than at the much vaguer

whole company level.

Use it in conjunction with other strategy tools (for example, USP Analysis

and Core Competence Analysis) so that you get a comprehensive picture

of the situation you're dealing with.

Core Competence Analysis236

Building Sustainable Competitive Advantage

By using the idea, you'll make the very most of the opportunities open to you:

236 http://www.mindtools.com/pages/article/newTMC_94.htm

92

1. You'll focus your efforts so that you develop a unique level of expertise in

areas that really matter to your customers. Because of this, you'll

command the rewards that come with this expertise.

2. You'll learn to develop your own skills in a way that complements your

company's core competences. By building the skills and abilities that your

company most values, you'll win respect and get the career advancement

that you want.

Note: You could also consider using the TOWS Matrix. This is quite similar

to SWOT in that it also focuses on the same four elements of Strengths,

Weaknesses, Opportunities and Threats. But TOWS can be a helpful

alternative because it emphasizes the external environment, while SWOT

focuses on the internal environment.

Using the TOWS Matrix237

Developing Strategic Options From an External-Internal Analysis

TOWS Analysis is a variant of the classic business tool, SWOT Analysis.

TOWS and SWOT are acronyms for different arrangements of the words

Strengths, Weaknesses, Opportunities and Threats.

237 http://www.mindtools.com/pages/article/newSTR_89.htm

93

By analyzing the external environment (threats and opportunities), and your

internal environment (weaknesses and strengths), you can use these

techniques to think about the strategy of your whole organization, a

department or a team. You can also use them to think about a process, a

marketing campaign, or even your own skills and experience.

Our article on SWOT Analysis helps you perform a thorough SWOT/TOWS

Analysis. At a practical level, the only difference between TOWS and SWOT

is that TOWS emphasizes the external environment whilst SWOT emphasizes

the internal environment. In both cases, this analysis results in a SWOT (or

TOWS) Matrix.

Key Points

SWOT Analysis is a simple but useful framework for analyzing your

organization's strengths and weaknesses, and the opportunities and threats

that you face. It helps you focus on your strengths, minimize threats, and take

the greatest possible advantage of opportunities available to you.

SWOT Analysis can be used to "kick off" strategy formulation, or in a more

sophisticated way as a serious strategy tool. You can also use it to get an

94

understanding of your competitors, which can give you the insights you need

to craft a coherent and successful competitive position.

When carrying out your SWOT Analysis, be realistic and rigorous. Apply it at

the right level, and supplement it with other option-generation tools where

appropriate.

OVERVIEW OF SWOT MATRIX238

SWOT AnalysisPOSITIVE/ HELPFUL to

achieving the goal

NEGATIVE/ HARMFUL/

RISKS to achieving the

goal

INTERNAL ORIGIN

facts/ factors of the

organization.

Strengths Things that

are good now, maintain

them, build on them and

use as leverage.

Weaknesses Things

that are bad now,

remedy, change or stop

them.

EXTERNAL ORIGIN

facts/ factors of the

environment in which

the organization

operates.

Opportunities Things

that are good for the

future, prioritize them,

capture them, build on

them and optimize.

Threats Things that are

bad for the future, put in

plans to manage them

or counter them.

238 http://rapidbi.com/swotanalysis/

95

Below are the Results of the Study and Assessment Made by Group 2 on

Different Leadership Styles Using SWOT Analysis.

AUTOCRATIC STYLE OF MANAGEMENT

Autocratic Leadership is a leadership style characterized by individual control

over all decisions and little input from group members. Autocratic leaders

typically make choices based on their own ideas and judgments and rarely

accept advice from followers. Autocratic leadership involves absolute,

authoritarian control over a group. This style is effective in emergencies and

when absolute followership is needed. This leadership style is also effective

sometimes with new, relatively unskilled workers who need clear direction and

guidance.

STRENGTHS

Drive rapid results

Expert knowledge

Personal credibility and Experience

When decisions need to be quick and decisive.

Works well if the leader is knowledgeable and experienced.

Members become highly skilled at performing certain duties.

Pay great attention to small details.

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Prevent wastes of time and resources for leadership development in an

industry or firm.

WEAKNESSES

Short term solution

Does not build teams

Don’t communicate well

Viewed as bossy, controlling and dictatorial which can lead to resentment

among group members

Lack of feedback from group members

Groups may dislike that they can’t contribute ideas

Lack feedback from group members

Lack of initiative from group members

Staff became useless for the decision is on him alone.

No new opportunities or ideas that will come up.

Personal decision based on experience.

OPPORTUNITIES

Produces more accurate solutions when leaser is knowledgeable

Can be used in case of emergency where decision is needed immediately.

People with low motivation or achievement-orientation tend to work as little

as possible, and when working in a group, tend to pass on work to others.

An autocratic leader who assigns clear and precise responsibilities

ensures that such workers work their share.

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An autocratic leader empowered to make decisions and assign tasks and

deliverables to the team members, which helps to keep the project on

schedule.

When the project team consists entirely of new or inexperienced team

members unfamiliar with their role, autocratic leadership remains the best

approach to get work done without wasting time for the team members or

to learn by trial and error.

Autocratic Leadership styles suit most blue-collared workers, especially

those doing unskilled jobs that lack the qualifications, skills, or talent to

respond to any participative leadership styles, or have low motivation, or

require achievement acceptance to perform

THREATS

The inevitable dark side of leadership – everyone has at least one bad trait

among the many good ones.

People who abuse an autocratic leadership style are often viewed as

bossy, controlling, and dictatorial, which can lead to resentment among

group members.

Because autocratic leaders make decisions without consulting the group,

people in the group may dislike that they are unable to contribute ideas.

Autocratic leadership often results in a lack of creative solutions to

problems, which can ultimately hurt the performance of the group.

CONSULTATIVE MANAGEMENT

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In a consultative management style, the manager will actively seek out the

opinions of employees before a decision is made. While both an autocratic

manager and a persuasive manager will place the needs of the business

before the employees, a consultative manager is far more likely to recognize

that employees are able to make a valuable contribution to the running of the

company.

There are many situations in which a consultative management style might be

appropriate. In fact, most large scale organizations will use managers who

adopt this style at some level in their business.

Consultative managers consider the opinions of stakeholders, but decisions

are still made centrally. This means that there is an identifiable person who is

responsible for the decisions that are made, but that others are given an

opportunity to have some input into the decision making process.

How can a consultative management style be viewed?

A consultative management style can be viewed as a combination of

democratic and autocratic. The consultative manager will ask views and

opinions from their staff, allowing them to feel involved but will ultimately make

the final decision.

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The consultative style is used on a regular basis by many large scale

organizations. This is because it maintains some of the advantages of the

more dominant management styles (such as the autocratic style) without the

loss of direction that can accompany the laissez faire style. Consultative

managers will often be seen asking various stakeholders what they would do

in certain situations, or how they would respond to events that have occurred.

While the final decision still rests with the manager, the action of seeking input

is part of the day-to-day reality of the business.

This style focuses on using the skills, experiences, and ideas of others.

However, the leader or manager using this style still retains the final decision-

making power. To his or her credit, they will not make major decisions without

first getting the input from those that will be affected.

What are the consultative leader’s traits?

Often involve others in problem solving, team building, retains right for final

decisions, focuses his/her time on more important activities, provides proper

recognition, delegates but keeps “veto power”, weighs all alternatives before

final decision is made.

STRENGHTS

Involving and empowering employees through communication,

consultation and delegation.

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Works well when you are dealing with non-repetitive creative work.

Task oriented and always focuses on the end result by using the skills of

others in formulating plans and taking decisions.

Overall motivation will increase. When employees feel that their input is

valued, they are likely to be motivated to make a contribution to the

successful running of the business.

Consultative direction promotes consultative leadership style, as the term

implies, leader is willing to consult the group and encourages his

subordinates to present their opinions for decision making process

creating an environment of openness and conviction.

Owing to this style, there establishes two way method of communication

which leads to reach the conclusions as smoothly as possible. In other

words, it is seeking win-win solutions opening the doors of opinion to the

talented employees. Since a great concern of their leader to his

subordinates is manifested by this method, the employees develop the

sense of confidence and their morale is enhanced accordingly.

WEAKNESSES

Ways of working, however, are largely unspecified

Clarity of roles can be murky at times.

Quite difficult to manage when there are lots of different perspectives and

ideas

OPPORTUNITIES

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This model would suit a general improvement/ decision-making program,

whereby teams can be mentored and nurtured into positions.

It helps to develop leadership and decision-making ability in as a team.

Team building is a prime target in Consultative leadership.

More input from employees means a larger pool of ideas. A good idea can

be worth millions of dollars to a large scale organization. The consultative

style helps to ensure that more ideas are generated, and so the potential

for uncovering a million dollar idea is increased.

Related to the first point, the business will make better decisions. It is one

thing to generate ideas, and something else entirely to implement the right

one. The first step in making a good decision is to ensure that several

alternatives are considered. The consultative style makes this possible.

THREATS

Consultative style of management's drawback would be that the people

offering opinions wouldn't always agree.

Many ideas could bring stalemate if no one can bring the ideas together or

if no one can choose the best ones.

This approach to employee involvement can take much longer. While

there is value in gaining input from a variety of different stakeholders, there

is no doubt that this will take much longer than an approach where the

decision is made by just one person.

Gaining input from a variety of stakeholders doesn’t ensure that any

particular person’s ideas will be used. This can mean that some people

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feel disappointed if their ideas are sought and then overlooked on a

regular basis.

CONCLUSION

Advantages of the consultative direction are many, whereas the

disadvantages in proportion are few, such as, it may be time consuming to

reach the conclusions and the subordinates may dominate or it may be that

they may cause disruptions. Nonetheless, talented employees seek their own

ways to strengthen their professionalism owing to the consultative direction.

Although all the leadership styles have their own pros and cons, it is the duty

of a manager to apply such style that suits best to the situations. However, it

must be borne in mind that the objective of leadership is to eradicate the

elements hindering efficient performance of the employees – not to seek own

benefits – so that the organizational goals and objectives may be attained as

wanted. And it may be effectively done by inculcating the sense of collectivism

and making a group activity with the help of consultative direction.

You use a consultative leadership style when you ask your team members for

their input and opinion, but you still have the final say. You consult with the

group, yet you're responsible for choosing the best course of action.

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To use the consultative leadership style successfully, build trust in your team.

When trust is present, your team members will feel comfortable offering their

opinions and reacting honestly to issues.

Be open to the ideas and suggestions that your team members provide – if

you criticize or dismiss your team members' suggestions, they'll quickly stop

speaking up, especially if they suspect that you've already made up your

mind. Keep an open mind, and be willing to change your opinion if someone

presents a better idea.

PERMISSIVE MANAGEMENT STYLE

Per-mis-sive (adjective): giving people a lot of freedom or too much freedom

to do what they want to do.239

The Permissive Management Style allows employees to take part in

business decisions. A rather considerable degree of autonomy on the

part of employees is encouraged in this management style.240

The manager provides full autonomy to the subordinates to execute

their responsibility in the most efficient way, without either monitoring it

or supervising it. This style is best suited for motivated and skilled

workers, but may fail with less skilled ones 241

239 http://www.merriam-webster.com/dictionary/permissive

240 http://www.webpronews.com/is-your-management-style-assisting-or-hurting-your-business-2005-06

241 http://expertscolumn.com/content/understanding-management-styles

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This type of employee also facilitates delegating responsibilities

downward because they are willing and able to complete their job

tasks. 242

Two types of Permissive leaders:

PERMISSIVE DEMOCRAT: takes decisions participatively, and

also gives autonomy to the subordinates in executing their work.

PERMISSIVE AUTOCRAT: takes decisions unilaterally, but gives

autonomy to the subordinates in executing their work.

STRENGTHS

Subordinates are typically given free rein on decision making related to

work responsibilities and projects.

The leader Trusts in the abilities of people.

A constant flow of creative ideas is guaranteed when people are given

freedom at work.243

More than 100 % effort goes into work when you let people do their thing.

Going beyond the “Line-of duty” becomes just a way of life at work.

Employee confidence levels are at an all-time high.

Recognition future leaders get easier, so does your succession planning.

Serves as a “Platform” to generate newer ideas for the product /project.244

242 http://www.zarca.com/Online-Surveys-Product/Online-Surveys-Solutions/custom-business-solutions/

management-style.html243

http://expertscolumn.com/content/understanding-management-styles244

http://smallbusiness.chron.com/benefits-using-autocratic-permissive-management-styles-37189.html

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WEAKNESSES

Leaves all the decision - making to the employees.

May swing too far away from any form of leadership.

Absence or lack of an effective leadership.

OPPORTUNITIES

A workplace led by a permissive leader may result in new leaders

emerging.

This gives potential leaders a chance to step forward and help guide

decisions within the work teams.245

Self – directed, motivated employees are able to hone their leadership

skills since a leader who takes full control of the workplace decision

doesn’t limit them.

The end result of the Permissive Leadership working style is found to be

more effective and is getting the best out of people.

THREATS

The lack of decisions or guidelines from the manager can cause a

disorganized, chaotic environment.

Vacuum leadership

It could lead to misuse of freedom; managing egos will be an issue.

245 http://www.kwintessential.co.uk/intercultural/management/philippines.html

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ANALYSIS:

Permissive leadership is really about letting people choose their path; it is

more democratic in nature.246 They adopt a style that allows for free

discussions and decision making is done on a group basis. And has an

approach that encourages interpersonal relationship.

When manager-employee relations are moderate, to good and tasks

unstructured or structured, permissive works best.

PATERNALISTIC MANAGEMENT STYLE

It is a form of management whereby managers pay more attention to the

social aspects of their employees; they are concerned with keeping them

happy and motivated, and act as a sort of father figure to the employees. In

such a management style, decisions are made with the best interests of the

workers at heart.

The attitude or policy of a government or other authority that manages the

affairs of a country, company, community, etc, in the manner of a father,

especially in usurping individual responsibility and the liberty of choice.

STRENGTHS

The social needs of employees are being met

Everyone has input into the outcome

246 http://www.kwintessential.co.uk/intercultural/management/usa.html

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Lifts morale of the employee

Efficient leadership style

Extremely solid relationship with the staff

Employee is rewarded when well behaved

Mangers provide feedback & answers question

WEAKNESSES

Slows down decision making

Allowing poor performance to be the norm

Unequal treatment of employees

Increase cost of running an operation

Low staff motivation if loyal connection is not established

Dissatisfaction if bad decisions are made

Limits persons or group`s liberty or autonomy for their own good

Retreat from the realities of the real world of business

OPPORTUNITIES

Training programs that appeal to employee at variety of levels/expertise

Gives potential leaders a chance to step forward and help guide decisions

within the work teams

Newly promoted managers

THREATS

Envy from other department of other company

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The emergence of tailor- made style of management

LAISSEZ – FAIRE MANAGEMENT STYLE

It is a loose leadership style.247

Leader's role is peripheral and staffs manage their own areas of the

business.248

It allows employees to carry out activities freely within broad limits.249

STRENGTHS

Increase in productivity, cohesiveness, and satisfaction.

o If followers are highly skilled, experienced, and educated.

o If followers have pride in their work and the drive to do it

successfully on their own.

o If outside experts, such as staff specialists or consultants are being

used.

o If followers are trustworthy and experienced.250

Creates a more skilled workforce.

Can lead to improved morale.251

Promotes trust in the workers.252

247 http://businesscasestudies.co.uk/enterprise-rent-a-car/using-a-range-of-management-styles-to-lead-a-business/laissez-faire.html#axzz2jkBDycg6248 Ibid.249 http://businesscasestudies.co.uk/enterprise-rent-a-car/using-a-range-of-management-styles-to-lead-a-business/laissez-faire.html#axzz2jkBDycg6250 http://psychology.about.com/od/leadership/f/laissez-faire-leadership.htm251 http://www.wisegeek.com/what-is-laissez-faire-leadership.htm252 http://answers.yahoo.com/question/index?qid=20090810070723AAva12Q

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Less conflict between managers and workers.253

WEAKNESSES

Time consuming

Workers will carry out sub-standard work or do very little work.254

Little or no direction to the followers

Decision made usually skewed away from company interest.255

Not ideal in situations where group members lack the knowledge or

experience they need to complete tasks and make decisions

OPPORTUNITIES

Group members will grow for they are expected to solve problems on their

own a potential that somebody will rise to become a leader

Establish a good working relationship among the people in the company

THREATS

If the leader withdraws too much from their followers it can sometimes

result in a lack of productivity, cohesiveness, and satisfaction.256

Projects can get off-track resulting in deadlines being missed, which is

ultimately due to the lack of control and guidance that the leader has over

their team.

253 http://www.typesofmanagement.net/laissez-faire-management/254 http://answers.yahoo.com/question/index?qid=20090810070723AAva12Q255 http://managementstyle.org/laissez-faire-management-style.php/256 http://psychology.about.com/od/leadership/f/laissez-faire-leadership.htm

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ANALYSIS

Inefficient and ineffective in situations where an employee/team members lack

the knowledge and the experience needed. It could only be beneficial if the

leader possesses a great team of high achievers and performers. Almost all

routine or mundane tasks can be handled in a Laissez-Faire manner

MANAGEMENT BY WALKING AROUND (MBWA)

Definition

The Business Dictionary defines Management by Walking Around (MBWA) as

an unstructured approach to hands-on, direct participation by the managers in

the work-related affairs of their subordinates, in contrast to rigid and distant

management. In MBWA practice, managers spend a significant amount of

their time making informal visits to work area and listening to the employees.

The purpose of this exercise is to collect qualitative information, listen to

suggestions and complaints, and keep a finger on the pulse of the

organization. It is also called management by wandering around.

STRENGTHS/ADVANTAGES OF THE MBWA

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Management by walking around, popularized back in the '80s, may be making

a comeback.

For building rapport among team members, it beats emailing from

behind closed doors.

MBWA strengths lie on advantages of Staying in Touch with Your

Team. You manage better by getting to know members of your team in

their working environment.

MBWA is the habit of stopping by to talk with people face to face, get a sense

of how they think things are going, and listen to whatever may be on their

minds.This was how founders Bill Hewlett and David Packard ran their

eponymous computer company. After Tom Peters and Robert Waterman

wrote about it in their 1982 blockbuster bestseller In Search of Excellence,

MBWA became a buzzword for up-close-and-personal management. Steve

Jobs was the ultimate practitioner of this approach, taking it beyond Apple

(AAPL) employees to customers, whose complaints or comments he often

answered with a phone call.

It may be that popping in on employees unexpectedly is, as you say, a

distraction — but enthusiasts say the practice also yields real benefits.

"Management by walking around really helps you be more visible, connect

with employees and share ideas, and invite suggestions for doing things

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better," says Annie Stevens, managing partner at Boston-based executive

coaching firm ClearRock.

What MBWA Can Achieve

Since then, Management By Wandering Around has never really gone out of

fashion. If you use MBWA, you can increase the following

Approachability – When your staff sees you as a person and not just a

boss, they'll be more likely to tell you what's going on. You'll get the

chance to learn about issues before they become problems.

Trust – As your team gets to know you better, they'll trust you more. You'll

be naturally inclined to share more information, and that will break down

barriers to communication.

Business knowledge – Getting out and learning what's happening on a

daily basis can give you a better understanding of the functions and

processes around you.

Accountability – When you interact daily with your team, agreements you

make with each other are much more likely to be completed. Everyone is

more motivated to follow through, because you're seeing each other on a

regular basis.

Morale – People often feel better about their jobs and their organization

when they have opportunities to be heard. MBWA makes those

opportunities available.

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Productivity – Many creative ideas come from casual exchanges. MBWA

promotes casual discussions, so people will more likely feel free to come

to you with their ideas.

DISADVANTAGES/WEAKNESS OF THE MBWA

MBWA also, if not well intent, could be disadvantageous. Despite its obvious

benefits, use of MBWA has been hit-and-miss. To be successful, it takes

more than simply strolling through your office, warehouse, or production

facility. MBWA isn't a "walk in the park": It's a determined and genuine effort

to understand your staff, what they do, and what you can do to make their

work more effective.

Don't just do MBWA because you feel it's an obligation – this probably won't

work very well. You have to truly want to get to know your staff and

operations, and you have to commit to following up concerns and seeking

continuous improvement.

It requires the executive to randomly walk around their workplace to get a feel

for what is really going on. It forces them to see their domain in three

dimensions rather than through the prism of management reports and

analytics. It allows them to talk to employees and hear from the horse’s mouth

the challenges they're facing.

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The concept is a simple one, and in environments where employees are

within touching distance it can be amazingly effective. There are a few

disadvantages that MBWA has:

The limits of geography. Firstly it is kind limited by geography. It requires

managers actually walk around, and there's only so much ground an

executive can cover in amongst their other tasks.

It's limited to employees. When you can only cover so much distance it

stands to reason that your reach will be limited. Therefore it's

understandable that executives limit their focus to employees and don't

walk around customers and other stakeholders that would nevertheless

provide valuable insight.

It relies upon candid insights. A feature of MBWA is that it is random. The

thinking goes that if employees expect a visit from you then it will not

provide you with a true insight into what's going on. Even so, with an

executive stood over your shoulder, even a random visit is only going to

provide so much insight. Many employees will refrain from providing

honest insights if that means being critical of the boss

The Challenge: How to make MBWA works

To get connected and stay connected, you need to walk around and talk to

your team, work alongside them, ask questions, and be there to help when

needed. This practice has been called Management by Wandering Around (or

Management By Walking About) – MBWA for short.

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William Hewlett and David Packard, founders of Hewlett Packard (HP),

famously used this approach in their company. Tom Peters, in his wildly

successful 1982 book In Search of Excellence, included lessons learned from

HP and other companies that used a similar style – and the term MBWA

immediately became popular.

Beyond the obvious advantages of keeping your own finger on the pulse of

the organization, employees are likely to be more engaged and productive if

they see you and speak with you frequently than if they don't. That might

sound commonsensical, Stevens notes, but email has replaced ordinary face-

to-face contact in many workplaces, so that some bosses have come to seem

as remote and inscrutable as Oz behind his curtain.

"There has been a tendency to manage employees via email, memos, and

formal meetings," — partly because many managers feel that they just don't

have time to meet with employees informally, and partly because "younger

and newly promoted managers" may never have learned the basics of

MBWA.

Stevens offers this checklist of suggestions for doing it right for bosses who

would like to manage by walking around:

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1. Make MBWA part of your routine. Dropping in on employees'

workspaces for an informal chat is most effective if you don't do it on any fixed

schedule, since "you'll realize the greatest returns by seeing what is going on

when people aren't prepared for you," Stevens says. But do plan for a bit of

MBWA on your own calendar every day, if you possibly can, even if it's only

for half an hour: "The more often you do it, the more beneficial it is."

2. Don't bring an entourage. MBWA works best as a continual stream of

one-on-one conversations with individual employees. Bringing aides or

assistants with you will probably just inhibit the discussion by making people

more self-conscious or, worse, make them feel you're ganging up on them.

3. Visit everybody. As anyone might guess who's familiar with how office

rumor mills get spinning, dropping in on some folks more often than others is

likely to create the wrong kind of buzz. Try to spend roughly the same amount

of time — not necessarily all in the same day or even the same week, but

over the long run — with each person who reports to you.

4. Ask for suggestions, and recognize good ideas. "Ask each employee

for his or her thoughts about how to improve products, processes, sales, or

service," Stevens says. Then, if someone's idea leads to a positive result,

make it known whose suggestion it was and show you're ready to give credit

where it's due.

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5. Follow up with answers. If you can't answer an employee's question off

the top of your head, don't forget to get back to him or her with an answer

later, Stevens suggests. Besides being common courtesy, it builds trust.

6. Don't criticize. Remember, you're on a fact-finding mission, with the

secondary purpose of building rapport. To avoid undermining those aims,

Stevens says, "If you find that an employee isn't performing his or her job

correctly, don't attempt to change the behavior on the spot. Instead, make a

note of it and address the problem at another time and in another setting."

Clearly, MBWA takes some extra time and effort, but apart from any tangible

payoff it might yield down the road, you might even find that you enjoy it.

Stranger things have happened.

How to Implement MBWA:

These "wandering around" tips can help you get started:

Relax – People will sense your genuineness and casualness, and

they'll respond accordingly. Stiff, formal conversation will probably lead

to equally rigid responses.

Listen and observe more than you talk – Use active listening with your

staff. When people feel you're hearing them, you'll probably seem more

sincere. Read some pointers on active listening .

Ask for feedback and ideas – Let everyone know that you want ideas to

make things better. As the boss, people may think that your opinions

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and ideas are "right." So hold back from saying what you think – the

goal is to see what others have to say.

Wander around equally – Don't spend more time in one department or

section than another. And don't always talk to the same people, or to

people with certain ranks. You want to be approachable to everyone,

regardless of job title or position.

Use the time for spontaneous recognition – If you see something good,

compliment the person. This is a perfect way to show your gratitude.

Hold meetings "out and about" – Instead of having all your meetings in

the boardroom or your office, meet with people in their work areas and

"on their turf." This can put them more at ease. Communicate your

expectations and needs so that everyone knows what you value.

Don't use this time to judge or critique – This can make people nervous

when you're around. If you see something that concerns you, talk to the

person later, in private.

Answer questions openly and honestly – If you don't know an answer,

find out and then follow up. If you can't share something, say so.

Telling half-truths can break down trust.

Communicate – Share company goals, philosophy, values, and vision.

Your "walk-arounds" are opportunities to mutually share information

that helps everyone understand and do their jobs better.

Chat – Effective organizations aren't all about work, work, work. Build

relationships. Learn the names of your staff's kids. Find out what they

love to do or where they're going on vacation. Joke, laugh, and have

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fun. You may be surprised at how great it feels to relate on a personal

level with the people in your office.

Don't overdo it – Don't leave people feeling that you're always looking

over their shoulders! Wander around often enough to get a good feel

for what's going on, but not so often that your presence feels like a

mundane distraction.

OPPORTUNITIES

To implement MBWA throughout your company, consider making it one

element of your managers' performance evaluations. What gets measured

gets done! If supervisors work far away from the staff they manage, consider

moving them, or giving them a second office that's closer to where the work is

done. If managers work near their staff, they may be more approachable.

MBWA can be an effective and practical way to keep up with what's

happening within your team and your organization. Building up

relationships with your staff pay off significantly with the information you'll

gather and the trust you'll build. A team spirit can naturally develop when

you show a genuine interest in your people and their work. It's also a great

way to keep the company's vision alive at all levels. It's easy, economical,

and a whole lot of fun!

If anyone needs proof that CEOs and other business leaders can really

change their own perspective, as well as transform the business by

relatively simple best practices such as MBWA, just look at Apple’s

performance over the past decade.

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Steve Jobs never got an MBA (he would have majored in something else

anyway), but he attained his MBWA with honors.

Bill Olsten, who built the Olsten Company from a small temp service in the

1950s to a billion-dollar staffing resources firm (acquired by Adecco Group in

1999), wasn’t your typical Fortune 500 CEO. For one, he knew every

employee by name. He made it a point to check in and say hello to staff

members on a regular basis, and always let each individual know how

important they were to the company.

The world needs more Bill Olstens and Steve Jobs.

In a world overrun by the MBA ethic, and people and systems stressed

beyond their breaking points, perhaps we need to see more MBWA being

practiced.

MBWA, or management by walking around, is a smart approach to

management, because it helps managers keep their ears to the ground on

developments around the company, as well as new ideas. At a time of intense

competition and rapid change, leaders need to maintain close connections

with the people that will make change happen.

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UNIT 3

Importance of the practical elements of competently administering a

ship management company on a solid foundation of scientific methods

wherein it enables the graduate to implement independently, safely,

economically and successfully in all domains of ship management in

terms of utilization of the different types of ship management styles:

Unit III Emphasize the importance of the practical elements of

competently administering a ship management company on a solid foundation

of scientific methods wherein it enables to implement independently, safely,

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economically and successfully in all domains of ship management in terms of

utilization of the different types of ship management styles.

The group reports about the appropriate philosophical approaches of

conducting the administration of shipping management putting high emphasis

on the epistemological, metaphysical, logical and axiological aspects of the

study.

AUTOCRATIC MANAGEMENT STYLE

Autocratic Management, also known as authoritarian management,

is a management style characterized by individual control over all decisions

and little input from group members.

According to Daft and Pirola-Merlo (2009) describe an autocratic manager or

boss-centred as one who tends to centralise authority and derives power from

position, control of rewards and coercion. Autocratic managers typically make

choices based on their own ideas and judgments and rarely accept advice

from followers. Autocratic management involves absolute, authoritarian

control over a group.

In simple words, Autocratic Management could be characterized as

“High emphasis on performance and a low emphasis on people”.

Types of Autocratic Management

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1. Directive Autocrat is a manager who makes decision exclusively

without the consent of his employees. This type of autocratic manager

is described as a control freak.

2. Permissive Autocrat is a manager who makes decision

exclusively without the consent of his employees but leaves some

space for some discretion to their employees as to the means

through which a task can be achieved. This type of autocratic

manager is described as a demotocrat (juxtapose of democrat and

autocrat).

ADVANTAGE DISADVANTAGE

Sense of Responsibility. One of

the positive things about an

autocratic management style is that

determining responsibility for bad

results should be easy.

Irresponsibility and Blame Game.

The negative side of the

responsibility coin concerning an

autocratic manager is that while she

gets to determine who made the

mistake, the fact that being an

autocrat means blaming a

scapegoat even if it is her own fault.

Emergency Management. One

situation where an autocratic

manager is definitely wanted is in

an emergency situation. This can

be a business situation in which you

have a short deadline on an

Lack of Input and Employee

Ownership. An obvious drawback

to autocratic management is that no

one knows everything. This means

that although the manager may

have a great deal of experience, his

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unexpected project.

employees may have knowledge

that could make a significant

difference if he were to ask for their

input.

Logical/Philosophical Aspect

Assumes that people are lazy, irresponsible, and untrustworthy and

that planning, organizing, controlling, and decision making should be

accomplished by the leader with minimal employee involvement.

Relies on authority, control, power, manipulation and hard work to get

the job done.

Run a tight ship by planning, organizing, directing, and controlling the

efforts of others.

Metaphysical Aspect

Although the emphasis is on high productivity, it often breeds

counterforces of antagonism and low quality of output.

Autocratic management tends to be more punitive and the inherent

close supervision increases role ambiguity, reduces productivity, and

decreases group harmony.

Epistemological Aspect

Zero Feedback Mechanism. One way communication without

feedback leads to misunderstanding, and communications breakdown.

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Solutions Today, Problems Tomorrow. Half-baked decisions could

be made which can be very dangerous in this age of technological and

sociological complexity.

Ill-motivated subordinates escape the responsibility and initiative.

It fails to develop the worker's commitment to the objectives of the

organisation.

Low morale of work-force. It creates problems both with employee

morale and production in the long-run; due to their resentment

Creativity of subordinates remains untapped. It is unsuitable when

the workforce is knowledgeable about their jobs and the job calls for

team work and cooperative spirit. It tends to develop dependent and

uncreative employees who are afraid to seek responsibility.

Axiological Aspect

Good for Inexperienced and Unmotivated Workers, Bad for Highly

Skilled and Motivated Workers

The autocratic style is most effective when the leader is present. Unlike

the transformational style of leadership where followers become self-

motivated to complete tasks, once the autocratic manager is gone,

there is no guarantee that team members will keep working.

Famous Autocratic Leaders and Companies

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1. Adolf Hitler – He required the population of the Third Reich to accept

everything that he said as absolute law, and was able to impose a

death sentence on anyone who failed to do so. Hitler was obsessed

with being in control, and with being the alpha male in a rigid male

dominance hierarchy.

2. John F. Kennedy – had a vision to change the space program forever -

by sending a man to the moon and to return safely. This type of vision

and idea came to light through his constant motivation of the U.S. to

see his vision.

3. Bank of America

4. Bank of England

5. Research In Motion (Blackberry)

Laissez-faire Management Style

The concept of this type of management was born in France where business

owner asked the government to “let it be” governed by themselves on the

operation and price of their products however the effect is not fair for the

labour party and consumer party. This type of management evolves and it is

used today but in a different perspective in management where a subordinate

in a company is given responsibility to decide or act on itself without any

supervision from the management.

Philosopical Aspect

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Subordinate can function more effeciently with a very little guidance

from the managers

Subordinates can grow better by providing them freedom make

decisions

Subordinates are able to solve problems at their own by providing them

the tools that they need

Metaphysical Aspect

It will not limit man’s way of thinking

Can be effective when group members are highly skilled, motivated

and capable of working on their own and the managers are open for

consultation and provide them feedback

Not ideal in situation where group members lack knowledge or

experience. Some people are not good at setting their own deadlines,

managing their own projects and solving problems on their own. In

such situation the project can go off-track and deadlines can be

missed. It can also create havoc

Logical Aspect

By having someone that can do the work load with less supervision will

create a oppurutnity for the management to enhance the system or

create a future plan for the company

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Oppurtunity for the subordinate to share the ideas that can be used by

the management

Work will be more efficient with less bureaucracy.

Epistemological Aspect

Bill Gates own a company where he is capable of doing almost any

tasks requires in his company. However Mr. Gates does not attempt to

do all the jobs. The reason is that Mr. Gates can concentrate on the job

in which his productive superiority is greatest making his company

more profitable.

1800 the “industrial revolution” where the western europe and US

government adopts “Laissez-faire” in governing companies

Companies are both effectively and efficiently providing their services

specially in rail road construction

However there is a catch. Employess in the field/factory work in a poor

condition and being exploited by the companies since the government

is hands off in the company operation

Axiological Aspect

Providing freedom in decision making can empower a subordinate.

However the superior must provide the subordinate the proper trainings

and experiences.

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Having the option to designate task can be a big help in building a

company

CONSULTATIVE MANAGEMENT STYLE

Style in this case the manager will actively seek out the opinions of

employees before a decision is made. While both an autocratic manager and

a persuasive manager will place the needs of the business before the

employees, a consultative manager is far more likely to recognize that

employees are able to make a valuable contribution to the running of the

company.

There are many situations in which a consultative management style might be

appropriate. In fact, most large scale organizations will use managers who

adopt this style at some level in their business.

Consultative managers consider the opinions of stakeholders, but

decisions are still made centrally. This means that there is an identifiable

person who is responsible for the decisions that are made, but that others are

given an opportunity to have some input into the decision making process.

The consultative management style can be viewed as a combination of

democratic and autocratic. The consultative manager will ask views and

opinions from their staff, allowing them to feel involved but will ultimately make

the final decision.

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The consultative style is used on a regular basis by many large scale

organizations. This is because it maintains some of the advantages of the

more dominant management styles (such as the autocratic style without the

loss of direction that can accompany the laissez faire style. Consultative

managers will often be seen asking various stakeholders what they would do

in certain situations, or how they would respond to events that have occurred.

While the final decision still rests with the manager, the action of seeking input

is part of the day to day reality of the business.

The style focuses on using the skills, experiences and ideas of others.

However, the leader or manager using this style still retains the final decision

making power. To his or her credit, they will not make major decisions without

first getting the input from those that will be affected.

EPISTEMOLOGICAL ASPECT

The epistemological aspect of Consultative Management Style is how it

is figure out, what is right and wrong, or good and bad rather than the set of

facts that actually makes judgments true – “ JUSTIFIED TRUE BELIEFS “

ADVANTAGES

Great variety of ideas

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Employees have some ownership over the way the organization is run.

As a result they may take more interest

Often task are completed more efficiently

DISADVANTAGES

Time consuming

Staff who does not consulted on every decision can become uncertain

of their role

Some ideas are bound to be overlooked in the final decision which can

cause resentment of conflict

CONCLUSION

Best used in times of change or when a decision will directly affect the

employee

METAPHYSICAL ASPECT

Metaphysics is the branch of Philosophy that addresses questions of

reality. In Philosophy, reality is the state of things as they actually exist, rather

than as they may appear or might be imagined

CONSULTATIVE MANAGEMENT – METAPHYSICAL ASPECT

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Existence of Consultative Management

As a result of employee involvement, decision will take time to

formulate

Accountability within the group as each employee will bring their best

ideas to the Management for consideration

CONCLUSION

The Consultative Management in terms of Metaphysical Aspect creates

opportunities to the talented employees to seek their own ways to strengthen

their professionalism owing to the consultative direction.

LOGICAL ASPECT

Is a branch of Philosophy that deals with reasoning. There are two (2)

basic types of reasoning, deductive reasoning and inductive reasoning. In

deductive reasoning, thing proceeds from the most general concepts to the

most specific examples. In inductive reasoning, thinking proceeds from the

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most specific examples to the most general concepts; generalization are

derived from specific examples.

CONSULTATIVE MANAGEMENT – LOGICAL ASPECT

Inductive reasoning in the process of applicable in this type of

management style where things proceeds from the most general concepts

and generalization are derived from specific examples.

Example:

1. Management seek views and opinion from the staff on a certain project

2. Staff provides inputs and suggestions that they think a big help to the

Management per their experience

3. Management will come up with the decision based on the collective

inputs or own decision

AXIOLOGICAL ASPECT

Branch of Philosophy that deals with values. It is the philosophical

study of goodness or value in the widest sense of these terms – “ THEORY

OF VALUES “

CONSULTATIVE MANAGEMENT – AXIOLOGICAL ASPECT

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Values are those inner qualities that everyone has and these drive

human motivation

Discovering (not assume or guess) what your people hold most clear

and genuinely honor those as best you can and other limits

Ethics – Responsiveness

Keeping the communication open with your staff

Sometimes, you cannot always share everything you know as a

manager-leader, but you can always find ways to share some

information, even if only the big picture

You can let people know their input was valuable but just not

applicable at the present time

Aesthetics – Managing the group by walking around

Being visible on a regular basis

Delegating the right things to the right team members, the richer their

jobs can become – win-win situation

Permissive Management

The philosophical foundation of this kind of leadership shall be laid out

in this chapter using the Epistemological, Metaphysical, Axiological and

Logical aspects.

Briefly, each aspect shall be define and applied to the principles

surrounding the Permissive Management approach in reference to its general

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description and study of its Strengths, Weaknesses, Threats and

Opportunities.

Four Major Aspects of Philosophy

Epistemology

Epistemology is one of the core areas of philosophy. It is concerned

with the nature, sources and limits of knowledge. Epistemology has been

primarily concerned with propositional knowledge, that is, knowledge that

such-and-such is true, rather than other forms of knowledge.257

Metaphysics

Metaphysics is a broad area of philosophy marked out by two types of

inquiry. The first aims to be the most general investigation possible into the

nature of reality: are there principles applying to everything that is real, to all

that is? – if we abstract from the particular nature of existing things that which

distinguishes them from each other, what can we know about them merely in

virtue of the fact that they exist? The second type of inquiry seeks to uncover

what is ultimately real, frequently offering answers in sharp contrast to our

everyday experience of the world. Understood in terms of these two

questions, metaphysics is very closely related to ontology, which is usually

257 http://www.rep.routledge.com/article/P059

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taken to involve both ‘what is existence (being)?’ and ‘what (fundamentally

distinct) types of thing exist?’

The two questions are not the same, since someone quite unworried

by the possibility that the world might really be otherwise than it appears (and

therefore regarding the second investigation as a completely trivial one) might

still be engaged by the question of whether there were any general truths

applicable to all existing things. But although different, the questions are

related: one might well expect a philosopher’s answer to the first to provide at

least the underpinnings of their answer to the second. Aristotle proposed the

first of these investigations. He called it ‘first philosophy’, sometimes also ‘the

science of being’ (more-or-less what ‘ontology’ means); but at some point in

antiquity his writings on the topic came to be known as the ‘metaphysics’ –

from the Greek for ‘after natural things’, that is, what comes after the study of

nature. This is as much as we know of the origin of the word (see Aristotle

§11 and following). It would, however, be quite wrong to think of metaphysics

as a uniquely ‘Western’ phenomenon.258

Axiology

Axiology is the branch of practical philosophy which seeks to provide a

theoretical account of the nature of values, whether moral, prudential or

aesthetic.259

258 http://www.rep.routledge.com/article/N095259 http://www.iva.dk/jni/lifeboat_old/Concepts/Axiology.htm

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Logic

It has two meanings: first, it describes the use of valid reasoning in

some activity; second, it names the normative study of reasoning or a branch

thereof. In the latter sense, it features most prominently in the subjects of

philosophy, mathematics, and computer science.260

Philosophical Aspects as applied to Permissive Management

General Concept of Permissive Management

Allows employees to take part in business decisions

Encourages certain degree of autonomy among employees in executing

their task.

Less supervision and monitoring from the part of managers.

Epistemological Aspect

It is believed that in this type of management, employees are empowered

to make their own decisions at work.

By having this kind of autonomy among subordinates, new leaders are

expected to emerge.

260 http://en.wikipedia.org/wiki/Logic

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It allows free flow of creativity and innovation among subordinates due to

the freedom bestowed among employees.

It is believed that this type of management style also boosts the morale of

the employees.

It is more democratic in nature

Axiological Aspect

Emphasize the essence of freedom

Foster trust on the part of the leader and confidence on the part of the

subordinates

It encourages creativity and innovations

It promotes “going the extra-mile” attitude among employees

Develops succession planning and future leaders

Promotes Employee Empowerment

Metaphysical Aspect

The Permissive Management Style allows employees to take part in

business decisions and they are given a considerable degree of

autonomy.

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In order to prevent the abuse of decision-making authority given to

employees, parameters or guidelines must be established by the

organization.

Specify the corporate matters that may be decided by the employees in

order to manage egoistical issues.

Provide trainings to employees in order for them to value the

confidence bestowed upon them

Establish control measures such as Code of Ethics, Annual Budget,

Quality Control and Customer Feedback

Logical Aspect

With the concept of permitting employees to take part in the deciding on

the course of the business process, it is presumed that in an organization

with set of rules and guideline, Permissive Leadership allows each

member to independently execute their task in a manner that their desire,

provided that said manner must be able to arrive to a uniform goal or

output as other member does.

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Conclusion:

Permissive Leadership can be compared to alcohol drinking, its

implementation must be moderation and bears utmost responsibility. This

concept of leadership addresses a lot philosophical concerns in terms of

human behavior in terms of uplifting the desire at work, knowledge and

emotions.

It is inherent for each individual to desire some amount of

independence to every task that they do, whether it be personal or

professional aspect, but since business organization has complex process

that involves a numerous considerations such as human resource, financial

gains, corporate responsibility and general administration of the business

operation, limitations are set in order to attain a uniform objective.

As discussed, permissive leadership empowers and encourage

employees to be conscious and confident in doing their tasks, setting rules

and guidelines is necessary in order to combat the threats surrounding this

type of management but it does not aim to limit the potential of employees.

Hence, permissive leadership is applicable to Ship Management

business at a certain degree, such as the day to day office task but in terms of

technical aspects that involves crucial effects, other management styles may

apply.

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