Abstract
In this chapter, we focused on the problem of creating and maintaining a sustainable “cooperative system.” This led to the problem of making company goals and objectives compatible with those of individuals and of the various groups involved in operational activities. In this chapter we also discuss the solution to this problem through the introduction of a system of incentives provided by the company, and through careful and cautious persuasion aimed to induce people to collaborate and supply satisfactory performance.
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Notes
- 1.
See in particular Chap. 4 of the present work.
- 2.
The reprogramming is often accompanied by inserting new energy in the organization: this is obtained introducing new human resources with specialist skills and oriented to creativity and innovation. The use of these energies may take place acquiring them externally or creating them internally for auto-poiesis. In both cases, the activity of top management is decisive in the choice of incentives to be offered to attract new resources and to stimulate them to cooperate in the interests of the organization.
- 3.
Barnard (1938), p. 139.
- 4.
Barnard (1938), p. 139.
- 5.
Ibidem, p. 139.
- 6.
Ibidem, p. 140.
- 7.
- 8.
Persuasion aims to change the state of mind, attitudes, and especially the motives of people. All this is to ensure that the available incentives are adequate for the needs of management.
- 9.
“Certain common positive incentives, such as material goods and in some senses money, clearly have an objective existence; and this is true also for negative incentives like working hours, conditions of work. Given a man of a certain state of mind, of certain attitudes, or governed by certain motives, he can be induced to contribute to an organization by given combinations of these objective incentives, positive or negative. It often is the case, however, that the organization of mind, or to those attitudes, or to one governed by those motives. The only alternative then available is to change the state of mind, or attitudes, or motives, so that the available objective incentives can become effective.” Barnard (1938), p. 141.
- 10.
Barnard (1938), p. 141.
- 11.
- 12.
- 13.
McGregor observes (1966), pp. 12–13: “The man whose needs for safety, association, independence, or status are thwarted is sick just as surely as is he who has rickets. And his sickness will have behavioral consequences. We will be mistaken if we attribute his resultant passivity, his hostility, his refusal to accept responsibility to his inherent “human nature”. These forms of behavior are symptoms of illness—of deprivation of his social and egoistic needs. The man whose lower-level needs are satisfied is not motivated to satisfy those needs as longer. For practical purposes, they exist no longer…Management often ask, “Why aren’t people more productive? We pay good wages, provide good working conditions, have excellent fringe benefits and steady employment. Yet people do not seem to be willing to put forth more than minimum effort”. The fact that management has provided for these physiological and safety needs has shifted the motivational emphasis to the social and perhaps to the egoistic needs. Unless there are opportunities at work to satisfy these higher-level needs, people will be deprived; and their behavior will reflect this deprivation. Under such conditions, if management continues to focus its attention on physiological needs, its efforts are bound to be ineffective.”
- 14.
Cfr. Barnard (1938), p. 143.
- 15.
Ibidem, pp. 143–144.
- 16.
The author states on p. 144 that military, political, and religious organizations are characterized by poor use of material incentives and therefore collaboration is mainly developed with immaterial incentives and especially by persuasion in its various forms.
- 17.
Ibidem, p. 145.
- 18.
- 19.
Barnard (1938), p. 146.
- 20.
Barnard (1938), p. 147.
- 21.
Piffner and Sherwood (1990), p. 270, write that alternatives of behavior allowed to an individual will be strictly conditioned by the institutional nature of the organization. These restrictions apply to all levels: also, the flexibility and discretion of managers thus suffer limitations.
- 22.
Lussato (1992), pp. 99–100.
- 23.
The manager has long been considered as an “agent of change” who develops and introduces innovation and “manages the change” minimizing resistance to it. Moore (1956).
- 24.
Drucker (1973), pp. 31–32.
- 25.
- 26.
If a person, for various reasons, does not know sufficiently the environment in which he operates, nor has the skills to adequately assess the scope and the effects on his personal sphere of the innovations that are being introduced, he is very likely to be gripped by anxiety and fear. Then he tends to perceive the surrounding environment as a source of risk. In such a situation, he may also become easy prey to internal groups that join forces to challenge the management’s strategies.
- 27.
McGregor (1960), chap. 10.
- 28.
Interpersonal relationships are considered by Likert as “intervening variables” that express the health and the vital spirit of the organization and affect “resultant variables” (the company’s results: revenues, costs, profits, returns, etc.). According to the author, intervening variables are substantially influenced and shaped by the management model adopted in the company, which is later defined as a “causal variable”. Cfr. Likert (1971), p. 98 ff.; ID. (1961).
- 29.
Barnard (1938), pp. 147–148. The author adds, “Thus, other things being equal, many men prefer associations with large organizations, organizations which they regard as effective, as against those they consider small, useless, ineffective.”
- 30.
Barnard (1938), p. 148.
- 31.
Ibidem, pp. 148–149.
- 32.
Likert (1971), p. 3 ff.
- 33.
Ibidem, p. 54 ff.
- 34.
Ibidem, pp. 54–55.
- 35.
Barnard (1938), p. 149.
- 36.
Ibidem, p. 137. It seems that the author is not interested in creating and testing other types of incentive, but wants to use existing incentive instruments, convincing people through coercion, indoctrination, and by creating new motivations. The author, however, excludes the systematic use of coercion exercised through authority. At most, he considers the use of authority in exceptional cases, in situations where it is necessary to preserve the integrity of the company system. Rationalization and “the inculcation of motives” seem, however, usual and complementary strategies related to the particular and general system of incentives.
- 37.
Ibidem, p. 150.
- 38.
Cfr. McGregor (1966), pp. 6–8, pp. 30–45 and 184 ff.
- 39.
Cfr. Barnard (1938), p. 152.
- 40.
Simon (1958), chap. 8, points out that the training and indoctrination of people are part of the socialization process to shape the personal qualities of individuals to adapt them to company needs. According to the author, the function of the socialization process becomes more evident if this process is regarded from the decision-making point of view, that is, if it is considered as a tool with which the decisional assumptions can be communicated and inculcated to the various members of the organization in hierarchically subordinate positions.
- 41.
Cfr. Barnard (1938), chap XI.
- 42.
- 43.
Barnard (1938), pp. 158–159.
- 44.
Barnard (1938), p. 154.
- 45.
Say (1854).
- 46.
As income level exceeds the minimum subsistence level, consumer behavior becomes increasingly discretional and unpredictable. At the same time, however, such behavior can be more easily influenced and oriented towards particular goods and services. So, while in poor countries the type and amount of consumer spending (aggregate demand, but also specific demand) is fairly stable and predictable, in the most economically advanced nations, people have some discretion between consumption and savings and, above all, in the choice of which goods or services to buy. Therefore, demand tends to be unstable and unpredictable in quality and quantity and, consequently, the management of enterprises cannot put at the center of its attention the problem of studying customers and developing successful marketing in terms of revenues and market share. All this is reinforced by the need to reduce the risks of companies from growing investments in technical fixed assets and intangible assets that must be recovered.
- 47.
Davis (1951).
- 48.
Davis (1958), p. 224.
- 49.
Davis (1958), p. 95, points out that if the enterprise is not capable to serve “economically and effectively that portion of the public that absorbs its economic goods and services, it incurs failure to some extent; if the phenomenon is quite serious and continuous, it may cause the failure of all those who are part of or connected to it, because the values distributed to the organization component groups or those associated with it are deducted from the price paid by customers.”
- 50.
In an industrial enterprise the line objectives, functions, and organs concern the following areas: production, sales/marketing, finance. This is because the primary objective is the production and sale of goods and services that satisfy the desires of customers in the long term, subject to the constraint of economic equilibrium. Compliance with this constraint is in the area of finance that deals with not only the dynamics of loans and investments, but also the problems of economic equilibrium associated with revenue flows, expenses, and profits, and with the value of the shares.
- 51.
Davis (1958), p. 95.
- 52.
- 53.
The achievement of the collateral objectives (aimed at meeting the expectations of the various stakeholders apart from customers) cannot be in conflict with the activity aimed at achieving the primary objectives, which are vital and essential for the company. On this subject Davis (1958), p. 97, states that there is the principle of the supremacy of the purpose of the company organism, which says that when collateral purposes are elevated above the primary purposes and placed before them, the task of the organization is fundamentally changed, and therefore it may not be able to achieve its primary purposes. If these were completely dominated by collateral purposes, the company organism would cease to be an economic institution.
- 54.
Barnard (1938), p. 95, states in relation to an industrial enterprise that “if the amount paid out is no more than the production, the organization can survive; but if the amount paid out is more than the production, it must cease, since it cannot continue to offer inducement. Whether this occurs depends upon the combined effect of four factors; the difficulties of the environment, the effectiveness of organization effort, the internal efficiency of organization, and the amount of inducements paid. Obviously many cooperative efforts fail because the environment is too resistant, others because the organization is ineffective, others because internal losses are large, others because the price paid for services is too large. Within the range of ordinary experience, these are dependent variables or mutually interacting factors.”
- 55.
Martin (2010), p. 19 ff.
- 56.
The author, p. 20, presents statistical evidence demonstrating clearly that companies in the period in which they adopted the maximization of value for shareholders as a guiding principle realized a lower rate of real annual return than over the period of managerial capitalism in which the emphasis was on growth and not on maximizing the profit rate. In fact, during this period (1933–1976), for companies included in the S&P 500 index, the rate in question was 7.6%; while in the period from 1976 to 2008, the rate was only 5.9%.
- 57.
Martin (2010), pp. 21–22, highlights that, over time, share values show high volatility, much greater than that implied by objective analysis of accounting data. In addition, according to the author, elusive personal and psychological factors affect expectations of the value of shares by the holders of capital. There can be explosions of optimism and depressive moments of pessimism. Martin states that, at the end of 2001, the P/E ratio for the S&P500 was a heady 46×, because shareholders thought the business had entered a new dimension. However, when the euphoria was over, the P/E ratio had drifted to 19× and there it remained until 2007, before increasing to 25× before the 2008 stock market crash.
- 58.
Cfr., Ibidem, pp. 21–22.
- 59.
Cfr., Ibidem, p. 21. Martin also underlines that often managers invest in short-term strategies, hoping to leave the company before the inevitable collapse and often, then, criticize their successor for not having been able to avoid obvious decline.
- 60.
Ibidem, p. 24.
- 61.
Martin (2010), p. 23. The author (p. 21) focuses on the concept of maximization of several variables and underlines the logical contradiction. He states that it is not possible to maximize customer satisfaction and value for shareholders at the same time. It is possible to maximize customer satisfaction with a “minimum obstacle to the appreciation of value for shareholders,” or, conversely, to maximize value for shareholders “producing a minimum obstacle to customer satisfaction.”
- 62.
It should be noted that there are the so-called social enterprises that produce goods and services that are sold through exchange on the market, but without corresponding profits or, in limited cases, only symbolic, and therefore lower than the market.
- 63.
The satisfaction of needs must be reasonably effective. The control of this condition is effected by managers analyzing the quality and quantity levels of company performance. To this end, it is necessary to build adequate benchmarks of similar entities that are meaningful and permit the correction of strategies and policies followed by the organization, thus raising the target of satisfaction.
- 64.
Since non-profit companies are not controlled by the market (although in some cases there is some competition), it is essential to constantly check the physical and technical performance of production factors and management costs. In addition, in this case the use of appropriate benchmarks helps to create effective and efficient control.
- 65.
Barnard (1938), p. 157.
- 66.
Ibidem, p. 157.
- 67.
Passim.
- 68.
The author, p. 158, adds, “The material aspects of religious organizations have been often prominent and always inescapable. As a result, the combination and adjustment of incentives in religious organizations appear even more delicate and difficult to administer than in political, military, or industrial organizations.”
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Zanda, S. (2018). The Role of Executives in Making the Organization’s Goals Compatible with Members’ Goals. The Search for Equilibrium Between the Organization’s Incentives and Members’ Contributions. In: Building Efficient Management and Leadership Practices. Innovation, Technology, and Knowledge Management. Springer, Cham. https://doi.org/10.1007/978-3-319-60068-0_7
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