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Poor Management is too Pervasive not to be Addressed

Published on: September 2010​
Author:
Genre: Economics/Finance​ Category: Op eds​
When people think about what costs an organisation money, they often concentrate too much on what happens in its accounting department. What kind of message comes out of its management suites is actually far more important. From poor morale to decreased performance, stress, health consequences and the high costs of turnover – something even the most hard-nosed accountant has to care about – bad management takes an incredible toll on a company. The way it limits the performance of companies in the UAE, and the country’s economy as a whole, should not be ignored. 

When “my way or the highway” becomes a motto for managers, their companies will lose money, not just their employees. The cost of replacing an employee in a non-expatriate environment ranges from 50 per cent to 200 per cent of their annual salary. For expatriate workers these costs are far higher. 

Even if an organisation of 1,000 employees has a turnover rate of 5 per cent (which is very low), the costs of losing 50 employees and recruiting their replacements are difficult to bear. For a company that pays its average employee Dh25,000 per month, the costs it will incur can be somewhere between Dh7.5 million to Dh30 million a year. That range doesn’t take into account the fact that managers can be far more expensive to replace than rank-and-file employees. 

Little analysis has been completed on why poor management appears to be rife in the UAE, and few managers or employees recognise what it costs the country and the economy. In the absence of hard data and research, baseless and even racist assumptions are used to explain management failures.

Poor management, however, is a result of structural problems in the way many companies operate. These in turn create structural problems for the economy. Improvement will require structural solutions. 

First, the business culture has to be imbued with an understanding that management is a profession where skills have to be developed and honed over time. It is an art but also a science; management means far more than merely ordering people around. The science part comes from good empirical research done by people with research training. In my own experiences with several companies in the region, I have actually seen few managers do much managing. 

This has nothing to do with cultural differences or the different weight people from different places give to hierarchy or egalitarianism. There are tried and true ways to treat subordinates that will garner their respect and improve their performance. 

Perhaps the first insight that leads to better leadership in the workplace is an understanding among managers that their job is not simply about making demands. Having the power to tell someone to do something is not the same thing as inspiring them to do it, and to do it well and with consistency.

The more that employees resent managers for failing to provide direction and support, the greater reason they have to leave, or worse, to work against the interests of their own organisation.

The standards to which local media hold “consultants” and “experts” who provide content or opinions can compound weaknesses in the country’s corporate culture.

Countless times I have read articles or heard interviews with purported “experts” on various management topics, only to hear them make statements contradicted by volumes of management research.

Why might people do more “ordering” and too little managing here than other places, even though it’s the worst way to manage? Human beings tend to go for what is easiest rather than what is best. This instinct can be reinforced when there are few structures present that manage the managers and provide ways for employees to provide them feedback so they can improve.

When it is somewhat ambiguous as to what a manager can and can’t get away with, they will usually try to get away with whatever they can. The classic example of the Stanford prison experiment in the 1970s provides some unsettling evidence. Stable individuals were randomly assigned to play a role as a warden or as prisoners by researchers. Almost by instinct, the wardens dehumanised the prisoners and adopted authoritarian personas. A third of the wardens even exhibited sadistic tendencies.

No, a workplace is not a prison. But it is up to a company to establish a set of core values and practices that improve management. When expatriate employees lack outlets for constructive criticism, they are more likely to grin and bear bad managers until they leave their job or the country. There is less of an incentive for them to attempt to make changes within the company and improve the way it operates. As a result, they respond to bad management through their own under performance. 

But when the performance of many companies is limited by poor management and when there is a lack of understanding on how to train, develop, and improve managers, the larger economy is at risk of not reaching its potential. The country as a whole will suffer if bad management impedes its ability to achieve its ambitious development goals.

This article originally appeared in The National. It can be found here.

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