Market Based Management: It’s Application Today Essay
Running head: MARKET-BASED MANAGEMENT Market Based Management: It’s Application in Business Today Lindsey Nelson Nova Southeastern University Market-Based Management: It’s Application in Business Today Introduction Past management styles or practices have been mostly authoritarian or managed from the top down. There was little regard or consideration for the input of labor, supervisors or middle management.
Their opinions and experience was only asked for in times of crisis when their knowledge of a particular situation or project was needed to help upper management make a decision on a particular problem which usually dealt with a financial area that would be solved to best suit the company or benefit the company for the short term instead of looking down the road to the long term objectives—if the company had any long term objectives at all. (CITATION) [ADD A LITTLE MORE HERE] Market-Based Management
According to Koch (2007), Market-Based Management (MBM) is, at its most essential level a “philosophy and methodology to encourage innovations and create value for both the company and society” (p. 166). According to the Home Page of The Blog about All Things MBM, a working definition of MBM is that it is “a philosophy that applies the ideas of free societies to the organizational level. It views the organization as a mini-society. [Market-Based Management] practitioners strive to translate the benefits of a free society into the organization, so organizations prosper long-term (http://rootedinprosperity. om/about/). I believe MBM is a management system that infuses core values and ethical practices to a company’s employees and management to create innovative ideas that benefit the company as well as its clients through cost effective measures, environmentally friendly practices, creative thinking and greater input through straightforward motivation of each employee or department. To achieve this goal Market-Based Management has identified several concepts that are keys to the successful implementation of this system.
These key concepts are humility, integrity, tolerance, responsibility, and a desire to contribute. Practicing humility is necessary to enable company employees to acknowledge weaknesses and to be able to learn from others to experience social progress and economic growth. It is imperative that those in the company able to take suggestions and listen to criticisms of other employees and supervisors with the knowledge that these suggestions and criticisms are made to benefit the company and society (clients).
Integrity is what Varey (2002) defines as a commitment to a “discovery culture [that] is based on honesty, openness, and constructive challenge [which] improves and expands [a company’s] knowledge and vision” (p. 227). In other words, integrity means that a company does what it advertises or contracts it will do in all aspects of its business dealings. Integrity also means that an employee of the company will behave with integrity in all of his/her activities—whether the activities are within or outside of the company’s walls—to the best of his/her ability. Tolerance, or respect, is a vital concept or principle.
Tolerance includes treating others with “dignity, respect, honesty, and sensitivity, [to] appreciate the value of diversity, [and to] encourage and practice teamwork” (Koch Industries website) The Market-Based Management Concept of Integrity in Action at Rentenbach Constructors, Inc. Gable and Ellig (1993) emphasize that in both society and in organizations “moral principles serve the crucial function of guiding our decisions in ways that promote our long-term welfare. The relevant tradeoff is not between what is right and what is profitable; it is between long-term and short-term profitability” (p. 2). One of the key concepts discussed in Introduction to Market-Based Management and previously defined is the concept of “integrity” (Varey, 2002, p. 227) or, as Gable and Ellig (1993) state: “intellectual honesty” (p. 22). Integrity is one of the core principles that is necessary for a company to succeed in business. Three company examples will be used to demonstrate the importance of integrity in doing business. In these three examples integrity, or the lack of it, caused two to become extinct and the third to grow and continue to be a healthy, growing company today, even in these challenging times.
The first two businesses, which I will not name, are located in South Florida. Both of these companies were privately owned construction companies. I worked as a Project Manager for both of these companies. One of the companies was owned by a father, and the other company was owned by his son. These owners engaged in unethical business practices to achieve their goals of constructing projects by employing as many cost cutting methods as possible, even if these methods produced a substandard constructed building. Neither of these firms is in existence today.
The third company is also a construction company and, as the first two companies, is also privately owned. I worked for this company in North Carolina for over ten years, also as a Project Manager. This company utilizes the values and principles of Market-Based Management, and, as a result, has continued to grow even during this difficult time for construction companies. It now has offices throughout the Southeast, Midwest and Texas. It is one of the top 400 construction firms in the country today and has a net worth of over one hundred million dollars. (citation).
From the examples cited above, I have chosen Rentenbach Constructors, Inc. , headquartered in Knoxville, TN, to focus on how this company is a company that incorporates the concept of integrity into its business practices. (introduce company—background, other info) My employment experience with this company allows me to vouch for Rentenbach Constructor, Inc. ’s (RCI) adherence to the concept of integrity. Part RCI’s mission statement includes the phrase “Building with Integrity” () The principle of integrity is so important to this company that this banner headlines the company’s website.
RCI follows Koch Industries’ philosophy of placing each person in the position for which he/she is best suited. This company understands the concept of the need to keep key personnel in areas in which they can best work within the company, and not have to be part of the company in which they have little experience or knowledge. For example, RCI separates the Estimating Department from the Operations Department. The Estimating Department demands personnel with specific technical knowledge and experience; the Operations Department requires managers, as well as personnel with technical knowledge.
The company would not place an Estimator in Operations just because an open position is available in Operations and filling that position with someone from what appears to be a parallel department to expedite filling a necessary skilled personnel position. As is true in many cases this lesson was learned from past experience. The concept of humility allowed RCI to acknowledge the mistake made and to look at better ways to solve the problem of acquiring skilled personnel in a timely fashion to complete Departmental needs.
Another way RCI embraces the MBM theory of business is in its effort to encourage employees to expand their thinking and develop new ideas to make the company more efficient, more cost effective (without diminishing the final product), and to provide a better service to its clients. RCI has scheduling contests in the Operations Department to discover faster, more efficient schedules. Monetary incentives ($5000. 00) are awarded each month to the Project Manager with the best schedule or technique (? ) for a schedule.
The Informational Technical Department has (gives out? ) an award for the best technical support to certain departments or projects, and Administration has incentives for cost reduction and for new ideas for efficiency in the local office, on the project site, or in the Corporate Office. Employees remain at RCI for many years. One reason for the high retention of personnel is that employees feel a sense of loyalty to the company. Another reason for low turnover is that employees have no fear regarding making mistakes.
RCI expects that mistakes will be made and operates under the expectation that employees learn and grow from these mistakes. Finally, employees are disinclined to leave RCI is because of the consideration the rank and file employee is given during times of economic hardship. Upper management takes pay cuts until more work is available or until profits increase to a more stable rate. This is done so that fewer employees will face economic hardship than would be necessary. These examples demonstrate that Rentenbach Constructors, Inc. ses manyof the Market-Based Management theories and principles. Value Theory and MBM “What you value drives your actions” (0) The concept of integrity embraces many ideas that produce long term effects through loyal consumers or clients, better overall satisfaction of employees, and managers who will stay with the company longer and work more efficiently to produce a product or service best suited for the client and society. (define value theory) (how Value theory and MBM work together) Conclusion References Gable, W. & Ellig, J. (1993).
Introduction to Market-Based Management. Fairfax, VA: Center for Market Processes. Retrieved on October 3, 2011 from http://www. huizenga. nova. edu/5012 The Blog about All Things MBM, Retrieved on October 9, 2011 from http://rootedinprosperity. com/about/ Value-Based Management: A System for Transforming the Corporate Culture. Retrieved on October 9, 2011 from http://cog. kent. edu/lib/cesj1. htm Varney, R. J. (2002). Marketing Communication: Principles and Practice. London: Routledge Publisher. Retrieved on 10/08/2011 from http://www. questia. com/PM. qat? a=o&d=108154895