Management Styles within Large and Small Firms and How These Styles May Impact On the Employment Relationship - Essay Example

?Critically Appraise Management Styles within Large and Small Firms and How These Styles May Impact On the Employment Relationship Introduction The global business world has become increasingly competitive in recent years as a result of the process of continuous improvement and refinement of styles among firms that now operate within a multi-national context. This adoption of managerial styles has yielded long term workforce commitment and led to sustainable levels of overall organisational success (Turnbull and Blyton, 2004, p22). This statement clearly implies that management styles have a profound and measurable impact on the long run success of firms, although there have been claims that the managerial styles in large firms differ from those adopted in small firms (Longnecker et al., 2000, p75), due to a number of possible reasons. As a result, the employment relationship also differs within large and small firms operating within the same industry. According to the European Commission (2005, p14), a small enterprise is described as a business, which employs less than 50 individuals. The annual balance sheet or the annual turnover for this business does not go beyond the 10 million euro mark (European Commission 2005, p14). On the other hand, a large enterprise is a business, which has more than 250 employees, and has exceeded the limits of a medium-sized enterprise (QFinance 2012, p1). Therefore, this study is attempts to critically appraise the management styles within companies of various sizes, in order to ascertain and illustrate the impact that variations in management styles may have upon the employment relationship. Management styles can be defined as the characteristic ways in which decisions are made related to the subordinates. They are the efforts, direction, and strategies used by the manager to develop an efficient workplace, and accomplish organizational goals. There are five management styles and they include autocratic, consultative, persuasive, democratic, and laissez faire management styles (Chartered Technofunctional Institute 2012, p1). This study is informed by reference to relevant examples and case studies drawn from academic literature, seeking to ensure a balanced examination of the issues relating to managerial styles and their relationship to the employment relationship. In order to do so, this study provides a comparison of the management styles within firms with reference to theoretical concepts in order to examine the difference, if any, present in the styles used by small and large companies. This essay also describes how the concepts of ‘Unitarism’ and ‘Pluralism’ influence employment relationships, and moves on to a discussion played by trade unions and whether their presence or absence might affect the way in which employers and employees deal with one another. These discussions will be used to inform an examination of the main area of inquiry, providing an informed appraisal of the way in which management styles might affect the employment relationship in firms of varying size. Management Concepts Underlying the Management Styles within Large and Small Firms An abundance of academic literature has been published in the field of management, with one of the earliest theories on management style being that of Frederick Taylor (Casell et al. 2002, p673). This management style (Taylorism) advocates the standardization of strict standards for performance, and was therefore widely adopted by large industrialized firms (Marlow and Patton, 2002, p22). Taylorism was based on quantity and time as important standards for the measurement of output (division of labour), meaning that the adequacy of any worker was judged by the capability to meet a particular production quota (Berk and Berk 2000, p91). Casell (et al. 2002, p674) states that critics of this management style argue that it degrades the workforce, treating them as mere factors of production: the emphasis on judging people according to rate of output also meant that the quality of an item did not matter, only the number of items produced per hour. This implies that the management style of Taylorism failed to recognize the human side of the workforce, giving rise to the Human Relation school (Matley, 1999, p197). Over the years, the motivational theories of academics like Maslow and Vroom have become very popular in highlighting the importance of employee motivation in the attainment of organizational success (Marlow and Patton, 2002, p26). These theories in turn emphasized the need to adopt the right style of management within firms of different sizes in order to encourage the workforce to flourish and reach their maximum potential (Matley 1999, p198). This need to utilise the correct managerial style to meet organizational needs is echoed in the literature as being crucial in gaining organizational success through the provision of the right type and quality of employment. However, over the years many studies have identified a significant difference in the ways in which employees are managed within firms of different sizes. These differences mainly exist in terms of the ways in which the workforce is motivated in order to achieve organizational success. According to IKEA (2001 p21), small firms are usually managed by owners and therefore, the management style adopted by such firms more often than not tend to be based on the values and the beliefs of the owner. This means that the managerial approach in small firms is more likely to be based on the leadership style of the owner or individual managers, which could be Autocratic; Democratic or Laissez-Faire (Kirten and Read 2007, p132), which can create key differences between the way that small and large businesses operate. For instance, in small firms, the traditional promotion prospects may be less clear or assured; while for managers in large companies this is an important source of motivation. In smaller firms, psychological rewards are generally obtained through individual recognition and personal self-fulfilment instead (Goffee and Scase 1995, p29). Statistics from both the USA and UK reveal that the overall quality of employment in small firms tends to be much lower than in large firms in terms of wages, training and job security, which could be due to the absence of trade unions within such firms, the managerial style adopted will tend to be highly influential on overall organisational success (Atkinson and Storey 1994, p11). In ensuring competitiveness regardless of limited size, effect managerial approaches in small firms have to be more personalized and individualistic (Atkinson 2007, p507).  The above evidence implies that the managerial style that is adopted in small firms is a measure of the extent to which the owner of the company believes in valuing its Human Resource (HR) as an asset of the firm. For example, an autocratic leadership style would mean that employees would have minimal power or involvement, instead being required to do as and when they are told (ACAS 2007, p3). In that case, the employment relationship would be very likely to be adversely affected because employees would be unlikely to feel that their contributions are being valued, potentially resulting in poor employment relationship within the company (ACAS 2007, p3). On the other hand, in large firms, it is not always necessary that the management style would be that of Taylorism. It is also not necessary that it would show little or no employee appreciation (Rutherford et al. 2003, p322). While the examples thus far have tended to portray large and small businesses in terms of absolutes, the examination of various real world case studies indicate that even the managerial styles of large firms can nurture positive employment relationships. As stated before, a small firm has less than 50 employees and a large firm has more than 250 employees. For example, in Microsoft and Apple, both of which are extremely large and powerful companies, the managerial styles adopted can be said to have yielded excellent results in terms of gaining employee loyalty and long-term, sustainable organisational success (Newell and Scarborough 2002, p34). The managerial styles of world-renowned personalities like Bill Gates and Steve Jobs have been extensively studied, epitomising the fact that an innovative and entrepreneurial management style in firms of any size can potentially result in employee satisfaction, and have a positive impact upon the employment relationship within even the largest companies (Newell and Scarborough 2002, p34). For instance, Apple was structured in a top-down management style, in which employees were chosen based on their expertise rather than by virtue of their experience. Steve Jobs did not prefer the training of managers, instead preferring experts to be in control of a particular function within the organization. For instance, an online store manager would not select a photo for the store; instead the mandate for the selection of all visuals was left with graphics department (Charley 2011, p1). This discussion has shown that even though management styles may differ between large and small sized firms, the managerial style is largely dependent upon the visions of the individual leading the company and how much importance they put upon nurturing a positive employment relationship between the members of their organisation. The following section will move onto an examination of the concepts of ‘Unitarism’, ‘Pluralism’ and ‘Trade Unions’ within the field of employment relations. An attempt will also be made to illustrate how such notions and terms can have either positive or negative impacts upon the employment relationship that exists between management and the other organizational members of both large and small firms. The Notions of ‘Unitarism’, ‘Pluralism’, and ‘Trade Unions’ within the field of employment relations and their impact on the employment relationship within large and small firms Unitarism views the business as a team united by shared values and interests, with the senior management as the focus of loyalty and as the main source of authority. Such an approach attempts to understand structural conflict at work such opposition to change and strikes. The frames of reference in unitarism are important because they influence the practical management policy. One consequence of unitarism is its hostility towards trade unions (Jackson and Rowley 2009, p84). On the other hand, pluralism is used to define relationships in the business organization. Unlike unitarism, pluralism rejects the company’s model as a unified order that follows the management leadership. Trade unions play a significant role of expressing conflicts of interests and resolving them (Jackson and Rowley 2009, p85). The notions of ‘Unitarism’ and ‘Pluralism’ have been used in order to investigate the ways in which their core arguments can be used to explain or rationalise the employment relationship within firms of varying sizes. According to Wilkinson (1999, p206), the ‘Unitarism’ perspective is typically seen to be prevalent within the majority of small sized firms. Unitarism describes a situation in which the management perceives that the individual members of its organisation are likely to have the same interests as that of the management, and that the consequence of this is that all workers should co-operate in order to ensure organisational goals over the long run. However, it has been claimed that this perspective of management sometimes proves to be unrealistic as it is highly unlikely that there are no conflicts of interests between all involved parties (Wilkinson, 1999, p207). The majority of large firms are governed by the notion of ‘Pluralism,’ which acknowledges that management and employees have different interests, and that conflict within the field of employment relations is natural (Scarborough and Zimmerer 2005, p56). A case study done by Storey in Britain has indicated that majority of the large firms in the region have shown unwillingness to disengage themselves from the pluralistic notion (Ryan 1997, p557). This is an indication that most large organizations still use pluralism. Jafari and Nikkomaram (2010, p4684) found that marketing managers of large firms should move from the notion of binary thinking to the concept of plural thinking, and that this is important in the success of modern organizations. This perspective also recognises the need to form trade unions, calling for the formalisation of consultation and communication processes in order to acknowledge the contribution of workers towards the overall success of organisations (Scarborough and Zimmerer 2005, p56). According to Marlow and Patton (2002, p530), this has given rise to the need for trade unions within large-sized organizations, because a pluralist approach makes it difficult to nurture individualized relationships between the management and the workforce.  This review of literature suggests that the notions of ‘Unitarism’ and ‘Pluralism’ signify the type of management style that is commonly adopted within large and small-sized organizations, and illustrates a fundamental difference in the way that these companies perceive and interact with their employees. It is evident in the discussion above that managers and leaders within small-sized firms can more easily nurture individualized relationships with their staff, possibly due to the more manageable number of employees, and assisted by the absence of trade unions. On the other hand, the notion of ‘Pluralism’ commonly exists within a large organization in which there is a trade union to protect the rights of the workforce. As stated before, most trade unions exist because of the pluralistic nature of the organization. Pluralism gives the trade unions a platform to express conflict on interests and solve issues affecting the employees (Jackson and Rowley 2009, p85). In these cases, the large number of staff employed at the company might make it impossible for management to address or even be aware of the individual demands of its workforce. In relation to the role of trade unions, ACAS (2007, p5) has stated that a 2004 study found that employment relations in small firms were much more commonly dealt with by individual managers than by trade unions. It was also noted that managers in small firms were more likely to involve their employees in the actual decision making process than in large firms. These findings clearly indicate the declining role of trade unions within small firms whereby managers are seeking to build individual relationships by applying the ‘Unitarist’ perspective. These managers of small firms are also more inclined to implement the concepts of human resource management (HRM) than to allow the notion of ‘Pluralism’ to flourish, which has consequences in relation to the formation of trade unions and the possibility of collective bargaining. Therefore, it can be argued that in the context of small sized firms, the notion of trade unions is generally opposed, and the management styles have tended towards the ‘Unitarist’ perspective. In contrast, the workforces in large-sized organizations have shown a stronger tendency towards unionization. This is despite the fact that the numbers of trade unions has fallen significantly over the last two decades with the growth of Human Resource Management (HRM) within contemporary large firms (Longnecker et al., 2000, p73). Regardless of these changes, the findings from various academic studies strongly suggests that large and small organisations still operate within different organisational contexts and that any differences between their management styles are therefore quite understandable. The following and final section of this essay seeks to provide a conclusion to this study, in order to provide a coherent answer to the topic under investigation. Conclusion The review of academic literature presented above strongly suggests that the management styles in large firms and small firms differ in terms of the approaches that they take to the management of the workforce. The chosen style of both large and small firms has also been shown to be largely dependent upon the visions and the culture implemented and encouraged by the individual leading the company. While the size of a firm may restrict the ability to which their individual relationship may be developed with the entire workforce, an effective leader can nevertheless translate his visions to the workforce through being an exemplary leader. This has been illustrated by the examples of companies like Apple and Microsoft, in which visionary leaders like Steve Jobs and Bill Gates have managed to maintain a strong and positive employment relationship through their innovative management styles despite the large size of each of their corporations. From this study, it can therefore be concluded that positive employment relationships within large and small firms are highly dependent upon the role of the leaders or the managers within such companies. These relationships may also be dependent upon the managerial perspective that is adopted within their organizations, which might be either ‘Unitarist’ or ‘Pluralist’ in approach. The findings of this essay suggest that perhaps most important behaviour for companies in this period of heightened global competitiveness is for leaders of firms, irrespective of their size, to work with the resources they have, and to therefore be able to tap the potential of their workforce, by motivating them to perform to their best of their ability and to therefore attain organisational goals. Only then can organizations of both large and small size enjoy the true benefits of a nurturing and long lasting positive employment relationship. This shows that the management styles of companies need to be innovative, while simultaneously remembering that Human Resource (HR) is the core asset of any contemporary organisation, and that fostering a harmonious industrial relationship requires a comprehensive understanding of the needs of modern workforces. References ACAS (2007) “Inside the Workplace: the 2004 Workplace Employment Relations Survey: Employment relations matter”. ACAS. Atkinson, C. (2007) “Building high performance employment relationships in small firms”. Employee Relations, 29(5), pp506-519.  Atkinson, J. and Storey, D. (1994) “Small firms and employment”, In: Atkinson, J. and Storey, D. eds. Employment, the Small Firm and the Labour Market, London, UK: Routledge. Berk, J. and Berk, S. (2000) Quality management for the technology sector, Oxford, UK: Butterworth-Heinemann. Cassell, C.; Nadin, S.; Gray, M. and Clegg, C. (2002) “Exploring human resource management practices in small and medium sized enterprises”. Personnel Review, 31(6), pp671-692. Charley, C. (2011) Management the Steve Jobs way – learning from Steve Job’s management style [online]. Available from: [Accessed 23 May 2012]. Goffee, R. and Scase, R. (1995) Corporate realities: The dynamics of large and small organizations, London, UK: Routledge. IKEA (2001) “Employment relations in micro and small firms”. European Foundation for the Improvement of Living and Working Conditions. Jackson, K., & Rowley, C. (2009) Human resource management: The key concepts, Oxon, OX: Taylor & Francis. Jafari, P. and Nikoomaram, H. (2010) “Contemporary marketing practice in large manufacturing firms in Iran”. African Journal of Business Management, 5(12), pp4677-4685. Kirton, G. and Read, I. (2007) “Inequalities in Europe’s SMEs: The challenges for a trade union agenda transfer”. European Review of Labour and Research, 13(1), pp131-146. Longenecker, J.; Moore, C. and Petty, J. (2000) Small Business Management, London, UK: Thomson Publishing. Marlow, S. and Patton, D. (2002) “Minding the gap between employers and employees: The challenge for owners-managers of smaller manufacturing firms”. Employee Relations, 24(5), pp523-539. Matlay, H. (1999) “Employee relations in small firms: A micro business perspective”. Employee Relations, 21(3), pp195-285. Newell, H.J. and Scarbrough, H. (2002) HRM in Context: Case Studies and Analysis, London, UK: Palgrave. Overell, S.; Mills, T.; Roberts, S. and Lekhi, R. (2010) “Provocation Paper 7: The Employment relationship and the quality of work”. The Good Work Commission. Rutherford, M.; Buller, P. and McMullen, P. (2003) “Human Resource Management Problems Over the Life Cycle of Small to Medium-Sized Firms”. Human Resource Management, 42(4), pp321-335. Ryan, S. (1997) High commitment management and pluralism in a small business network [online]. Available from: [Accessed 5 June 2012]. Scarborough, N. and Zimmerer, T. (2005) Essentials of Entrepreneurship and Small Business Management, New Delhi, India: Prentice-Hall. Turnbull, P. and Blyton, P. (eds.) (2004) The Dynamics of employee relations, Basingstoke: Palgrave Macmillan Wilkinson, A. (1999) “Employment relations in SMEs”. Employee Relations, 21(3), pp206-217. Read More