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Weiner Communications Provides Possible Explanation for Management Failures on Wall Street
SADDLE BROOK, N.J.-(Business Wire)-October 3, 2008 - “How can all these failed financial institutions be run by such incompetent executives?†It’s the question everyone’s asking. One would think men who have spent many years honing their skills in the financial industry would show some capable, moral, and effective leadership. However, an article written 20 years ago about different types of corporate managers may bring an interesting perspective on just how these men rose to their positions of power.
In 1988 Fred Luthans, from the University of Nebraska, published findings from a study he conducted to investigate the difference between what he categorized as “effective†mangers and those he labeled “successful†managers. His original thesis postulated there was a significant difference between the two, and those differences could have important implications for the success of the organizations for whom these people worked.
Luthans attempted to characterize differences between those who rose to the top of their companies, while others with records of meeting goals and creating productive employees were being passed over for promotion.
Manager Responsibilities Fall Into Four Categories
Based upon input from nearly four dozen managers, Luthans was able to divide managerial functions into four categories of responsibilities. Those were: communication, traditional management, networking, and human resource management. Communication responsibilities consist of exchanging information and paperwork, reading and writing reports, and developing new procedures, among other similar functions. Traditional management tasks included setting goals and objectives, scheduling, task assignment, defining problems, and handling day-to-day problems. Human resource management pertains to dealing with employees – motivating, punishing, staffing, and training. Networking activities include socializing, politicking, gamesmanship, and interacting with outsiders.
Successful Managers
According to the study, successful managers spend more of their day socializing, politicking, and interacting with outsiders. They didn’t give much time to dealing with traditional management responsibilities and human resource management functions. Luthans’ criteria for success was speed of promotion.
One factor that aggravates the problem is the highly vertical nature of many large corporations. In order for middle level executives to distinguish themselves from others on the chain, they may feel the need to spend more time with the socializing aspect of their jobs at the expense of other manager responsibilities. By the time a successful management type reaches the top, they’ve perfected the art of socializing. Therefore, those who play corporate politics the best make it to the top. They aren’t necessarily the ones whose departments have produced measurable results.
Effective Mangers
By contrast, effective managers placed greater emphasis on communication and human resource management activities. The networking aspect played the least important role. According to Luthans, the measure of effectiveness comes from the human oriented activities. So, even though effective managers produce results, it appears it may not be enough to climb to the top of the corporate ladder.
The implications for Today
Traditional wisdom has held that promotions were ostensibly based on performance, but those who work inside organizations seem to believe that networking and social skills are more important when climbing to the top of the corporate ladder. Can it then be concluded that the men who have mismanaged so many major financial corporations today aren’t really the most qualified to run their companies. They know how to reach the top, but it has become painfully obvious they don’t really know how to effectively run their companies.
Today, we need to find a way to promote effective managers into leadership positions.
Transforming vertical organizations into more horizontal ones may be one way of allowing more effective managers to be recognized for their successful work. By nature, horizontal corporate structures are more vertically transparent. It may also allow successful managers to spend less time politicking and more time performing the types of tasks that will make them more effective managers.
Photos available for this release:
To view photos, go to www.enr-corp.com/pressroom and enter Release ID: 169177
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