Complex Nature Of Managerial Work In A Rapidly Changing Work Environment Essay
Complex Nature Of Managerial Work In A Rapidly Changing Work Environment
Human beings are made for work. Working is in our bones and tissues. Homo sapiens emerged as a species in an environment in which working plays a prominent part. Work shaped human beings as the human eye, hand, and brain evolved in response to work performed. The human nervous system, human language, and the human imagination were also shaped by human activities in which work was prominent, if not predominant, in prehistoric times. Work, along with language, helped to distinguish humans from other animals.
Humans take the materials of nature and use tools to fashion useful objects. Objects created by work reflect human culture. The products of the mind and imagination also reflect human culture. Humans see, evaluate, and measure themselves by the things they create through work. They also know themselves by their work, since work enables humans to construct a world that stands between themselves and nature.
The work ethic is the human ethic; to talk about one is to talk about the other. Without work human beings cannot exist. Without work human society cannot exist. Work is not a choice. Work is a necessity; the work ethic is a
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This report is a first effort to set off a debate of how profit center managers’ project selection verdicts are influenced by their familiarity and the environment in which they make those verdicts. Along with other researchers (Scribner, 1986; Wagner and Sternberg, 1986), we challenge that the managerial environment influences managers’ project selection verdicts. Additional, we retain that managers with diverse heights of familiarity react to characteristics of the environment diversely. A business occupation effort represents an emergency position for the profit center manager, which could consequence in the manager losing the job.
A current graduate of a esteemed undergraduate or master of business administration (MBA) program with no preceding business familiarity rarely, if ever, presumes a place of major managerial responsibility instantly upon graduation. This paper proposes that familiarity means, amongst other things, the aptitude to settle in to a constantly changing environment (Klemp and McClelland, 1986). The purpose of this paper is to present what occurs to a manager as the manager adds familiarity and finds out how to settle in to a changing managerial environment. This paper focuses precisely on profit center managers.
Choosing on business plan means that managers pick or drop individual projects that may be practiced in their profit centers. The causes and degree to which familiarity changes these verdicts are of importance. Past verdict research has mainly overlooked the effects of the situation or business environment on the verdict being made.
Learning to Pick Plans: The Role of Public Knowledge, Private Knowledge, and Practical Intelligence
Profit center managers pick and execute precise plans in their profit centers. The profit center managers’ plan selection verdicts are directed by both public and private information. Public information (also known as academic, declarative, recognized or theoretical information) contains of specifics, theories, and descriptions from course books and journals (Scribner, 1986; Bonner et al., 1992, 1-28). Public information can be obtained in recognized educational programs such as undergraduate business or MBA programs. Private information, also known as unspoken information (Wagner and Sternberg, 1985, 436-458) contains of rules of thumb that are developed through direct familiarity (Bedard, 1989, 113-131). Private information is almost certainly unsystematic and casual, making it ill-suited for direct instruction. In managerial surroundings public information must usually be in place proceeding to the attainment of private information, so that private information can be obtained through understanding public information (Bonner and Walker, 1994, 157-178). For a profit center manager, private information is regularly obtained as a consequence of on-the-job familiarity.
Future profit center managers can gain public information concerning to the plan selection task at a college or university. One example of public information, which is imperative for this study, is information of capital budgeting methods. In economics and management accounting subjects, students gain knowledge of the principles of net present value (NPV) analysis. Students are educated that plans should be chosen supported by the NPV of the projected plan. Students are also educated that basing a plan choice result on proposed accumulated accounting earnings may direct the manager to the wrong decision, as accounting ratios such as earnings or return on assets do not give a dependable forecast of the value creating prospective of the potential plan. Similarly, the predicted accrual accounting earnings for a plan possibly will not appear encouraging even though the plan has a positive NPV. Thus, accrual accounting and NPV methods can lead to varied decisions. The results of NPV analysis should direct a manager’s decisions as accrual accounting forecasts do not give a precise prediction of the value creating possibility of varied strategies or plans.
The public concepts that students acquire in school and college business courses appear to be mainly model-based and conceptual. Managers obtain public information by reading about measures such as NPV analysis and then working issues, which have a single correct answer. A quantitative measure such as the NPV model does not capture the difficulties of a managerial verdict such as the plan selection task. Public information is a basis or preliminary point for functioning as a winning profit center manager. It provides a skeleton for certain verdicts (Waller and Felix, 1984) for instance the plan selection verdict.
Sequentially to be winning over the longer term, a manager’s public information structure is altered as the manager familiarizes new places. The public information structure that forms the foundation for the plan selection verdict may become so unkempt with empirical change as to be unrecognizable (Gibbins, 1984, 103-125). Private information is obtained as the manager works inside the firm’s management control system.
Flamholtz et al. (1985, 35-50) propose that a critical element of the management control system is the assessment-reward component. Assessment-reward means the supervision of extrinsic rewards supported upon the assessment of work presentation.
In a research of enticement contracts for managers in twelve diverse firms, Merchant (1989) established that ten of the twelve contracts joined reward to some profit based evaluation. Merchant references a profit center manager:
If profit center managers do learn in this way, it seems realistic to anticipate that as managers become more familiar, they will in general shift to a short-run “earnings” orientation over time. This is due to the fact that the assessment-reward component of the planning and control system encourages selection of plans which are earnings enhancing in the short run even if the plans are value eroding in the long run. Often, of course, accumulation accounting measures and NPV measures advise the same verdict.
Familiarity and The Response to a Business Raid
Business invader search for firms where changes in the tactical direction could dramatically increase the value of the firm’s stock. These firms typically have a “value gap,” which is the difference between the market price of a share of the company’s stock and the value of that share if the company were managed for the maximum possible share price (Fruhan, 1988, 63-68). The value gap exists because incumbent management has selected strategies, which fail to exploit the full value creating potential of business assets. The question addressed here is, what type of plans will profit center managers pick in an effort to increase firm value and prevent a takeover effort? Precisely, do managers effort to increase firm value by selecting plans, which make the most of incomes, or do the managers effort to increase value by selecting plans having positive NPVs? As discussed above, incomes maximizing plans do not necessarily have a positive NPV. While there is no empirical evidence about the behavior of managers faced with the possibility of a business raid, DeAngelo (1988, 3-36) provides evidence about incumbent managers’ behavior just proceeding to a proxy contest. The consequence of a business raid can be similar to the consequence of a proxy contest: incumbent managers lose their jobs. Empirical evidence suggests that just proceeding to a proxy contest, managers exercise their accounting discretion to paint as favorable an incomes picture as possible (DeAngelo, 1988 3-36). Exercising accounting discretion means using accruals and deferrals to enhance reported profit aptitude. We challenge that only familiar managers would react to such a perceived threat by selecting incomes enhancing plans even though those plans are value eroding. Predictions are not made about the effects of the manager’s height of familiarity across all environmental factors.
A particularly interesting research question would be the main and interactive effects of environment and familiarity on managers’ use of accounting reports. That is, as managers become more familiar, do they rely more or do they rely less on accounting reports in making verdicts such as the plan selection verdict? As Merchant (1989) points out, very little is known about the mix of incentives that is attractive to profit center managers. It cannot be presumed that incentives, which are effective for top executives, will also be effective for profit center managers. Merchant (1989) suggests that, compared with top executives, profit center managers are probably more interested in protecting their autonomy and in improving their promotion possibilities.
The practical usefulness of this research to many managers may be found in the discussion of public information, private information, and practical intelligence. Precisely, the discussion implies how managers with various heights of familiarity may be assigned to diverse divisions of a multidivisional firm. Less familiar managers may be assigned to areas of the firm that do not encounter such rapidly changing business conditions.
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