The management theories that can be used to analyze the VDOT case study include Henry Fayol’s theory on Principles of management. It contains 14 principles which explain the working of a well managed organization. The other theory used is the BCG Matrix which illustrates the product life cycle of a project and which priorities should be used in a business unit. Max Weber theory on bureaucracy can also be used to describe the state entities and the communication practices which are used.
BCG Matrix theory has two dimensions on market share and growth. For a long term project there should be high-growth products in need of cash and low growth products that generate a lot of cash. In this theory we put the products in four categories. They are cash cows, stars, dogs and question marks.
Stars use a lot of cash and are also generate a lot of cash. In the beginning VDOT was one of the largest state agencies from the early 20s.This means funds were being generated from the projects of construction .The Company should have ensured that it maximizes on the stars as they are able to sustain the rest of the business units. The VDOT started declining in sales and productivity in the 1990s.This was due to loss of talent which was not planned for.
Cash cows generate high cash and are low of low growth. They therefore need low investments to sustain the operations. The entity should ensure that it has this kind of investments to allow for high cash under scarce resources available. VDOT is a government organization which operates in a political environment which has led to funding sometimes being allocated to other projects such as education. It has also seen various budget cuts. They were not able to manage funds received well to deliver to the public.
Question marks grow rapidly while consuming a lot of cash. They however slow down after a while. VDOT should in its management strategize on projects to take and the returns they expect from them. VDOT being a government agency should ensure that it doesn’t participate in projects just be seen to be performing one. In the period when there was massive loss of talent, it saw many vacancies arising in various places in the state of Virginia. At this moment they decided to expand with no ability to attract professional work force.
Dogs have low market share and low growth. They should be avoided and minimized. In the event of the projects being expensive they should be liquidated. VDOT was undergoing decline in sales revenues in real purchasing power. Thus a drastic change should have been installed. The overall policies which govern the whole organization should have been reviewed. This will enable the organization to restructure and do away with policies that are not profitable in the organization.
This theory when used will enable VDOT to have a diversified portfolio of projects. As the department receives funds from the private sector, it will have a more clear and precise strategy in allocation of those funds. It will also be able to know which projects to come up with to maximize on sales in both long term and short term. VDOT will experience increasing sales and anticipate for changes as opposed to the situation experienced in the late 1990s when 2500 people resigned.
The theory can thus equip the management to be able to have projects which will take advantage of market share and growth. As an infrastructure department it has to deliver on time with pressure from both the government and public. It will be able to provide the records showing how it is progressing.
Henry Fayol outlines 14 management principles for an organization to be successful. Under specialization of labor there should be improvement of skills and development of improvements in methods used. There should be more focus and efficiency in place. People should understand work and know what is expected of them. After the resigning of the 2500 employees, there was a big problem in the department. These people wouldn’t have left if they felt they owned the entity through being a specialist.
There should also be authority with corresponding responsibility. If one is allocated a responsibility they should also be issued with requisite authority to carry out the work. Authority means that one should be able to report to a higher person in the hierarchy. A manager should be able have to have high moral character and integrity. This should not be due to election or ownership. A manager should infuse those around him to follow him and support him. In the case study the leaders should have been at the forefront to ensure everyone does their activities, with necessary authority. They should have ensured communications lines were open. The public could not obtain information on the working of projects despite them going on beyond the deadlines. There was no one available to issue them with the answers they sought to obtain.
Discipline is essential for a smooth running of an organization. It assures that people follow rules and regulations set, perform high standards with consistency of actions done. With obedience, energy, outward marks of respect, application of necessary agreements leads to agreements between firms and employees. The enterprise saw an adversarial relationship between contractors and itself. With discipline professionalism will be achieved to aid in efficiency and effectiveness.
Unity of command entails that employees should receive instructions from one person. Even in cases where one needs to report to various people and accountable to many clients there should be a clear definition of the matrix structures. This is done to avoid tension and being caught between power hungry individuals. In the transportation department there was a lot of political interference which led to unclear defined chains of command.
Unity of direction is the ability of having one leader who is in agreement with actions of the rest of the individuals. People should work towards a certain similar move to achieve the organization goals. In the case study of the department of transport there was disorganization between the various business units in place. There was teamwork in the field but no cooperation the headquarters.
Subordination of individual interest to general interest is whereby an individual interest should not be inconsistent with the interest of the organization. Employees should work towards achieving objectives of the enterprise to realize their individual interests in concurrent with those of the organization. The transportation was a battling ground for people with various interests as opposed to serving the public to win their trust and their transportation needs.
Staff should be rewarded for work done. Everyone requires some level of appreciation for what they have been able to do. This leads to increased zeal to perform even better than earlier did. According to the profits salaries should not frustrate workers. This was a problem since there was massive resigning to better greener pastures. The benefits offered weren’t attractive to keep the employees in the organization.
Centralization according to Henry Fayol is essential to the entity. Despite some organizations being devolved and with flat structures in place it has to be addressed. In cases of large entities as portrayed by VDOT there should be detailed actions and results to be obtained afterwards.
Line of hierarchy and the command chain from the top executive should be understood well and sensible. In VDOT there were many bosses which led to people not having trust in the management. At a time when the department needed money it could not get it from revenues. It had to sell bonds to benefit from the interests.
Orderliness implies steady evolutionary movement rather than an environment which is unpredictable and full of anxiety. Each individual should be confident of the role they are playing and be able to understand the instructions, rules, policies and rules issued to them. The VDOT should have a working position that has set guidelines and how it intends to achieve them. There was no meeting s held no reports issued to base the performance of the entity. This led to declining overall outlay with blame games on all corners.
The organization should operate on equality measures to ensure there is no conflict between parties in place. The practice will ensure all relationships are in balance as no favoritism is encouraged. People will be motivated as the working environment is conducive. Workers in VDOT were highly demoralized. This would have ensured they are able to work with energy in the right environment.
Loyalty is critical in an enterprise. This is enhanced by security of work. A stable environment also allows employees to become accustomed to work done to perform effectively. In VDOT the working environment was characterized with high levels of pressure from the business community, public and legislative. This therefore was a detriment to high levels of loyalty.
In a successful enterprise the organization should be well structured, with zeal, energy and enthusiasm from every person. One should have personal drive.Suchet was a leader who was motivated to make changes even though initially it was hard. The initiatives he later achieved arose from focus for and seeing the bigger picture. When a project of 10 billion was short of about 3billion he did not despair but retained focus on what could be achieved.
Maintaining and building harmony among the work force leads to sound interpersonal relationships. Fayol says through good networking productivity is high. People can work with a unified effort to achieve results. At VDOT there were a lot of frustrations from various sectors. The governor at one point destroyed the reputation on radio. Environmentalists blamed the department for housing establishments and cutting down trees. The public blamed it for the sad state of infrastructure. In essence however the team players were many and in the department some factors were beyond their control. With this tool the management can have an overall successful entity.
According to the bureaucratic theory, Max Weber states that it is the most efficient form of organization. There is a well defined line of authority with clear goals and regulations which should be adhered to promptly. The three types of power in an organization are traditional, charismatic and legal or bureaucratic power. In this theory there must be a high degree of division of labor and specialization. There should also be a well defined system of hierachy. Objectivity, rationality and consistency should be followed. There should be formal and impersonal relationships between members of an entity. Interpersonal relationships should be based on positions and not personalities.
Employees should have defined rules and regulations which they are adhere to. All the type of work done should have specified methods. Promotion should be based on technical qualifications. Legal power is given first priority. According to the structure of VDOT being a state enterprise and being very large it required a well defined way to run operations.
The organizations employees were demotivated with no clear methodology to perform work. The communication lines were not open. People did not have goals and objectives to achieve as they progressed forward. It was not futuristic. Due to lack of energy and creativity, the problems which were affecting the entity were not dealt with.
Application of this theory in management will ensure people are efficient in work as they understand what needs to be done with a set out direction where they can gauge their performance. Since promotion will be on merit, only those who are qualified with the right experience will be granted the work. The organization will gain on quality of work and high level of performance.
Reaction of VDOT to the six challenges facing managers in the 21st century
One challenge facing managers is the lack of qualified and experienced personnel in the business. In the initial stages it had employees from the school of hard knocks. By taking in those workers it created a high risk since they took to positions with no background of what was expected of them. However, they resigned in the end creating a big gap. VDOT had to replace them with more unqualified ones. In the end, though the company elected Shucet who brought about overall change in the organization.
Managers also face constraint in resources needed. VDOT wanted to have a 10 billion dollar plan budget but it was short of about 3 billion. It wanted to make the necessary changes but there were limited resources. It sought to spread the project in A 6 year plan to allow for cash inflows as more cash is used for operations.
There was also a volatile political environment. VDOT was supposed to deliver services and it did not. The governor blamed it and public view was very bad. The environmentalists and virtually all sectors pointed fingers at it. It was critical that change was necessary in the firm. A new leader was thus appointed.
There was scarce labor with workers declining to work in the department as they did not want to live in the area. Lot of work was completed past the deadline with persistent wrangles between contractors and those overseeing the projects. The management then sought to mend its relationships with the parties in the department.
In the 21st century managers are faced with a lack of clear set policies and plans to adapt to the changing market place. The policies set in the 1920s were still being applied in the millennium. V DOT had to create a new structure with a way forward and instill a step by step process where progress is measured. VDOT was facing corruption and lack of mistrust among the members of the public. It couldn’t be trusted to deliver amidst the problems in the infrastructure. There were no progressions being made and the programs were all not working well.
