Human Resource Management Practice paper
1.0 Introduction
Managerial prerogative refers to that managers make rules and put these rules into practice, for example, managers or business owners suppress or encourage conflict through management measures and such behavior is managerial prerogative. When different people consider a specific issue, the initiative of that they accept the constraints of management authority is different. For example, some managers are willing to discuss with the employees about their pay structure , job design and work practices and other issues related, however, maybe he will be reluctant to or even not discuss business investment, product pricing policies and development of products and other related issues. In whatever case, even if the managers are willing to consult with their employees, and get involved in the affairs or even hold talks together, still, they will insist their privilege to make the final decision. Thus, in specific areas of employee relations, such as the promotion and training of the employees, managerial prerogative exists naturally (Bray and Waring, 2006). However, is it possible for managers to exercise their managerial prerogative without interference from the other actors in the employment relationship? Absolutely no. Now, managers prefer to solving problems through the use of their good negotiating ability rather than the abuse of managerial prerogative, and the fundamental changes in the processes and structure of corporation management has resulted in that decentralization management has been adopted by more and more enterprises. At the same time, other factors in employment relationship, like trade union and government also play an important role in business decisions and business affairs. This essay analyses the pros and cons of centralization and decentralization, two different kinds of corporate management models, and reveals the necessary for business owners and managers to integrate centralization with decentralization from the perspective of benefits through analysis of several cases. At the same time this essay discusses the importance of states and trade union for enterprises.
2.0 Analysis of advantages and disadvantages of centralization of power and managerial prerogative for business and analysis of concrete cases related
Centralization of power in the enterprise management refers to that the power of enterprise management concentrates in senior managements, like the business owners or managers, so as to achieve a high degree of unity recommend, and the lower has no right to make decision. In business management, the centralization of power is similar to the style of authoritarian business, which is disputable, however centralization of power is conducive for enterprise to take advantage of the overall resources and enhance the efficiency of the whole resource (Armstrong, 2006). For example, it is conducive for business leaders to conduct unified command, centralized leadership, as well as decisive determination in business activities, which will be propitious for managers or business owners to control the whole organization and the operation activities fully. At the same time, centralization of power will make the establishment and implementation of business strategy more effective. Power centralization has weakened managing purview of the subordinate managers, so as to prevent the blind expansion of partial interests and to avoid subordinate managers to make decisions contrary to the overall interests of the business for the interest of their own department, which will contribute to realizing the maximization of business values (Perline and Poynter, 1990). However, defects of centralization or managerial prerogative is also clear: First, the workload of senior managers increases due to their managerial prerogative so that it will be difficult for them to spare time and energy to take into consideration deeply some important issues, such as the development and prosperity of enterprise. Second, concentration of power is not conducive to the mobilization of the enthusiasm and initiative of common staff, and therefore affects staff training. As is known, practice makes perfect. However, limited to the constraints of management authority or managerial prerogative, the opportunity for employees to practice will reduce, and therefore the lack of adequate exercise and training will weaken the human resources reserve of companies (Elwood and James, 1996). In addition, without the right of information, participation, decision-making power and supervisory power, it is hard for trade union to play it role to protect the reasonable rights of employees, which is harmful to the development of enterprises. At the same time, chances are great for companies that concentration of power or managerial prerogative will lead to fatal erratic decision-makings of business. Since when senior managers or business owner has the rights to make all major decisions, it is possible to cause immeasurable loss to enterprises due to personal bias, self-interest of the managers, or even destroy the business.#p#分页标题#e#
Followings are analysis of managerial prerogative and centralization of power from the perspective of economic costs enterprises. The main economic costs for enterprise management consist of information costs and agent costs. Information costs mean that in a system of centralization, senior managers can not grasp the information of the business environment in time and completely, while the junior staff has access to the accurate information, however, they do no have authorities to make any decision, thus companies can not make effective and rational decision, resulting in the cost of information asymmetry (Gomez-Mejia et al 2008). The agent cost refers to that in the system of decentralization, the agent relationship among various levels of managers and staff of the enterprises will produce costs. The greater degree of decentralization of power is in, the higher this kind of cost will be.
Excessive centralization of power will increase information cost while excessive decentralization will enhance the agent costs. In the management system of modern enterprise, the board of directors and senior managers are often awarded power to make all decision, include the property right. And all decision-making power is then delegated to every stage in accordance with the rules established by the authority, to individuals and organization. This will definitely make the agent chain extend so that the fiduciary responsibilities will be diverse and the business decisions will be closer to the grassroots level, which will greatly reduce the cost caused by information asymmetry, however, the agent costs due to conflicts of interest among the agents will be higher, and this approach will eventually be detrimental to business progress.
In order to overcome various deficiencies of both centralization and decentralization, it is necessary for enterprise to integrate both two kinds of manage system and transfer part of power to lower levels. In general, the power of making decisions concerning the overall situation of the development enterprises, such as business policy decisions, investment plans, financial budget ,or identification of business development strategy, should be assigned to senior managers of business owners; as to the routine decision-making power like the establishment of specific project planning, control of cash flow, management reporting and relevant analysis, and the implementation of financial budget, enterprises should let the staff in and allocate the power to middle managers; and for the average cost control, choice of procurement method and other daily activities, its power can be directly transferred to grassroots employees (Stone, 2005). Followings are two cased to prove the necessity of the integration of centralization and decentralization.
First, take Lenovo Group as an example. In a long term, all of the funds are managed by lenovo headquarters, and the result of centralization is that the headquarters are well aware of the synergy stage and the direction of utilization of all funds, which has made Lenovo profit a lot in the early stages of development. However, when its total assets reached four million RMB and the capital requirements of any deal may be as much as tens of millions, since the lower staff lack adequate funding, and they have to report and apply level by level, apparently this situation will affect the progress the business (Lee, 1996). Thus, the possibility that managers or business owners make business decisions without interference from other factors in employment relationship like lower staff or the existing environment will limit the development of enterprises.#p#分页标题#e#
While GE Company, a large multinational company who has integrated centralization with decentralization successfully, is no doubt a successful example for other global companies due to its operation strategy and management style. GE company has adopted a flexible "global center system" that has integrated centralization with decentralization. On one hand, the parent company has a tight control in the three key areas, including financial, personnel and research and development; on the other hand, the parent company has endowed great autonomy to the subsidiaries in areas like marketing decision, labour relationship, relation of production. This management style has saved resources and improved efficiency in cooperation and has fully mobilized the enthusiasm of staff at all levels and increased operational flexibility through a decentralized management of the subsidiary companies, so that GE Company can get good value. It has been most widely used in multinational enterprises to integrate centralized system with the decentralization system, which is also one of GM's secrets to have achieved success. In the actual management, we should have a clear definition that what right the business owner should insist and centralize, and what right they should descend and decentralize according to the actual situation, and put it into practice (Wood et al 2004). Otherwise, it is hard to get benefits and furthermore to cause greater confusion.
3.0 The role that states play in business decision and development of enterprise
Interests of enterprise and state are closely related actually. As to enterprises, good behavior of social responsibility will enhanced staff morale and cohesion, and also will improve the social image of enterprise, which will help maintain its long-term competitive advantage. For states, the situation that enterprises take into consideration the factor of states when making decisions and enterprises fulfill their social responsibility will reduce regulatory costs and promote economic development. Therefore, managerial prerogative in the relationship between enterprise and state will not necessarily result in the increase of management costs or operation costs, on contrary; it will make enterprises benefit a lot.
4.0 Conclusion
Managerial prerogative is one kind of embodiment of centralization of power, which involves all aspects of management functions and management process. Though centralization of power does bring benefits to companies, yet, it may cause problems that will impede the growth of companies, especially multinational companies or large companies. The integration of centralization and decentralization will avoid issues argued below. Thus he balance of centralization and decentralization is necessary for enterprises to make accurate decisions, develop, and prosper. And cooperation with state and trade union will also does good to enterprises. From the perspective of the development and profits of enterprises, it is not advisable for managers to exercise their managerial prerogative without interference from the other actors in the employment relationship#p#分页标题#e#
References
Armstrong, Michael (2006) A Handbook of Human Resource Management Practice (10th ed.). London: Kogan Page. ISBN 0-7494-4631-5. pp.56-70
Bray, M. and Waring, P. (2006) The Rise of Managerial Prerogative under the Howard Government, Australian Bulletin of Labour, vol.32, no.1, pp.45-62
Elwood, F. Holton and James, W. Trott, Jr. (1996) Trends Toward a Closer Integration of Vocational Education and Human Resources Development, Journal of Vocational and Technical Education, Vol. 12, No. 2, p7
Lee, E. (1996) "Globalization and employment", International Labour Review, Vol. 135 No.5, pp. 85–98.
Gomez-Mejia, Luis, R., David, B. Balkin and Robert, L. Cardy (2008). Management: People, Performance, Change, 3rd edition. New York, New York USA: McGraw-Hill. ISBN 978-0-07-302743-2. pp. 23-40
Perline, M. and Poynter, D. (1990), Union and Management Perceptions of Managerial Prerogatives: Some Insight into the Future of Co-operative Bargaining in the USA, British Journal of Industrial Relations, vol. 28, no.2, p179-197
Stone, R. (2005) Human Resource Management, 5th edition, John Wiley and Sons, QLD Australia.pp 392-405
Wood , J., Wallace, J., Zeffane, R.C., Hampan, J., Fromholtz,M., Morrison,V ( 2004) Organisational Behaviour:A global perspective, 3rd edition, John Wiley and Sons, QLD, Australia.pp 344-360
