British Management Styles

British Management Styles 1. Introduction Some would argue that since industrialization is a rational, orderly process, striving for universal efficiency with standardizing effect, managers would clearly be the same sort of people doing the same kind of things in the same ways. This assumption could be extended to the companies themselves. Manufacturing companies, these generic units of industrialization, would be much the same with regard to their structure and general features wherever they are located. At any rate, this would be true for countries at the same stage of industrial development having the same sort of political system. For example, organisations throughout Western Europe operate in similar contexts and under the same pressures which would lead towards uniformity. The accelerated volume of trade within Europe and increasing collaboration and overlapping ownership between EU organisations would, naturally, lead to the establishment of a common Western European management style. Of course, such a case assuming or alleging that industry, management and companies are everywhere and always the same is not accepted. On the contrary, the assumption that societal culture causes the business climate and approach to management is the prevalent one (Tayeb, 1993). Even the creation of the single common market of EU, requiring common technologies and similar modern distribution and marketing methods from each organisation, does not illustrate any visible cultural assimilation, but rather a cultural synergy1. European managers in general have been reared in societies with long and deep traditions and are too conscious of their past to put aside their diversities for the sake of Europeanisation2. There can be a similar managerialism, which could be called a European managerial culture, but how far this extends; how far managers in Europe do some things the same way is an issue of analytical purposes only. Managing and organizing are not activities isolated from society, carried out by automatons in executive suits according to the universal management principles, in some glassed-in managerial sphere (Hickson, 1993, p.252). Each manager is a person formed by a society, and so the processes of managing and organizing are not separable from societies and their cultures. Hence, the last few years have seen a renewed interest in national differences and a series of comparative studies of the extent of company structure and education systems, as well as the socio-cultural factors which impinge on management style. Nowadays, it is accepted that one can generalize across individual differences in various countries and generate characterizations, either normative or empirical or both, of management styles which particular countries exhibit (Barsoux and Lawrence, 1990). This paper aims to consider the distinctiveness of the British management style on a number of dimensions. The examination of managerial practices in the UK and the relevant issues addressed are based on the interpretation with the case of management application in The Body Shop. The experience of The Body Shop as an international retailer provides us with a fine illustration of both the strengths and weaknesses of the typical British management style. In order to familiarize himself with The Body Shop case, the reader is strongly advised to look over the companys case study written by Gibson-Sweet (1994, in Harris and McDonald), before continuing with the following sections of this paper. 2. UK management Because of the fact that the United Kingdom is a multi-cultural society, identifying the typical characteristics of English managers was never an easy task3. Nevertheless, several studies have been conducted towards that purpose. Hofstede (1984) and Tayeb (1988) for example have attributed to the English a list of distinctive cultural features with direct effect on the way they conduct business. This section discusses some of the most significant features attributed to the English management with references to the case of The Body Shop. Individualism: The origins of individualism, independent thinking and self-confidence in England should be traced long back into history. The protestant ethic and the spirit of capitalism were, in fact, the major driving forces behind the Industrial Revolution. Britons have a high regard for liberty and independence. Hence, they have cultivated a strong entrepreneurial mentality and flair. This is illustrated in the laissez faire economic context which they established for more than two hundred years, and which opposed government interference and supported unrestricted economic liberty and free competition4. Consequently, the English had traditionally developed considerable competences in dealing with export markets and responding to foreign competitors and to a flood of imports without going bust or requiring immediate trade protection. The surprising successful development and expansion of franchising in England is a clear reflection of this distinctive capacity of the British entrepreneurs. The Body Shop success owes much to this business formula. Managerial consciousness, anti-technical orientation: British managers are proud of being good all-rounders (Barsoux and Lawrence, 1990). They have a generalist outlook which is akin to the belief that management is something separable from the technical aspects of a job. Related to this idea of generalism is the notion of managerial consciousness, as against technical-orientation which is very profound in Germany. No wonder, therefore, why British managers do not tend to be especially technically minded, since such expertise is not deemed to enhance their managerial reputation or performance. Whereas German top executives would describe themselves first and foremost as specialists, British ones see themselves as managers in more generalist terms, and somewhat detached from production. Naturally, German managers are expected to be too narrow, while Britons have a much broader vision. Both Anita and Gordon Roddick had not any particular technical background but proved to be very successful all-round managers. Informality: In terms of personal exchanges, British managers are informal, especially by the standard of France or Germany. This is because British managers are in a certain way humanitarians. The Body Shop exemplifies this as it segments its market by factors such as the customers ideals and values, rather than by using technical standards. British take people as the point of reference, rather than systems objectives. In Britain, there is a conviction that management is based on individuals, not committees, systems or rule books. People are the frame of reference (Barsoux and Lawrence, 1990, p. 119). This in turn has meant that mush is achieved by means of social acceptance. Hence, influencing and conjoining is essentially persuasive5. That is why British managers take pride in showing off their ability to shape, influence and decide in informal ways and are marked by a strong grasp of political manoeuvring and manipulative skills. This attitude partly explains why British managers tend to have a negative view of conflict. Open conflict between managers is very rare as it is seen ungentlemanly rather than a means of correcting deviations, testing ideas and exerting creativity; the way it is viewed in say Germany or America. Coping well with uncertainty and setbacks: Americans and Japanese are famous for the systematic way into which they gather data and carry out market research in an effort to enhance strategic decision-making. This is not the British style at all. Environmental scanning, SWOT analysis and the like are not typical for Britain. This does not imply that strategy or forward planning is rejected, but rather that it is intuitive. Britons would argue that the full range of options, rationally conceived in an explicit and formal corporate planning, are unlikely to be realised in practice. Anita Roddicks decision to not enter Eastern Europe, for example, was mostly based on vague personal judgements and intuition, rather than market research evidences of the regions unprofitable potentials (in fact there are indications for the opposite; Alexander, 1996). In alignment to the above argument, British managers have a high tolerance for ambiguity and cope well with uncertainty and unexpected setbacks. Of course, this brand of intuitive pla nning becomes a powerful competitive advantage in todays turbulent, fast moving business environment where flexibility, initiative-taking and adaptability to change is paramount. But, exactly because the British feel comfortable in situations where not everything is explicit and space is provided for manoeuvring and exercising personal judgement, they tend to undervalue educational credentials. British companies put a stronger emphasis on pragmatism rather than professionalism, while personal qualities and background (a vague leadership quality and motivating ability as opposed to strict functional attributes), appear to receive the most frequent mention, both in relation to top and middle management. Decentralization: Bigness provides vital economies of scale, financial resources and muscle in the market. However, today it is more flexibility and responsiveness that matter for success. The argument of size is no longer all-pervasive6. Moreover, recession in the early 1980s made corporate restructure necessary for survival. British companies responded with leaner and fitter structures as well as a move towards decentralization7. SBUs were the most obvious manifestation of this transition. The application of decentralised management, in contrast to functional management, encourages autonomy and entrepreneurship and helps to motivate people by making them better informed, more responsible and giving them more control. Thus, UK companies witnessed their managers engaging in initiatives and nurtured the managerial talent they needed. Decentralization has been proved especially appropriate in sectors which are subject to rapid technical or market changes, notably services. In retailing, initiative inno vation adaptation are by far more significant factors of success than control and economies of scale, providing, thus, a strong argument in favour of decentralised structures and approaches to management which UK enterprises have mastered exceptionally well over the past two decades. The Body Shop case is a clear reflection of this: its success was built on creative initiatives and innovation, not on its size and say effective financial control. Democratic management style: There is a wide agreement that control in British business organisations is relatively dispersed. In other words, the democratic style, also referred to as participative or semi-constitutional is the prevalent one in British firms. It can be reflected on the fact that subordinates are consulted in decision-making and are given wide opportunities to exercise discretion in their work. Contrary to the autocratic, paternalistic approach that German firms share, top management in UK displays a willingness to delegate to lower management and counts on the subordinates strong sense of responsibility. Even in the case of UKs small, family-run firms (where a paternalistic pattern is supposed to emerge), British managers (and owners in most cases) do not portray a pure autocratic style, but rather a mixture of democratism autocratism, which is referred to as sophisticated paternalism. Thus, UKs family businesses manage to retain a decentralised decision-making approach while upholding their d istinctive social ethos and religious dissent. This is very evident in many UK firms (e.g. Cadbury, Clarks), but most of all in The Body Shop. However, there are many who suggest that Anita and Gordon Roddick should give up insisting on operating the company along what are essentially family-run lines as this seems to be inappropriate and potentially damaging for the companys future prosperity. Conservatism: The English are widely seen to be a nation with a love for the past, traditionalism, conservatism, and a reluctance to change. Anita Roddick refused to change the business practices applied to The Body Shop no matter how the City or the economic recession forced her to do so. Moreover, she seems not to take advantage of the possibilities offered to franchising from the Internet (Wymbs, 2000), mostly because of conservatism than of any other particular reason. The British conservatism partly explains their reluctance on applying modern technology in their businesses. However, due to this stubbornness on using outdated machinery, British firms missed the opportunity to become first movers in many industries and, subsequently, faced formidable catch-up problems. Lack of ambition: Despite the resurgence in their desire to do business during the 1980s, mostly as a result of the Thatcherism (The Economist, 1989), Britons display little love for business. Involvement in entrepreneurial activity for the purpose of making money has never been respectable. This should be traced to the English educational system and its dominant values. Traditionally, arts and classics were given high priority relatively to engineering and technology. In business conditions, the goal has been traditionally satisfactory rather than outstanding performance. Domestic rivalry is viewed as distasteful, vulgar and certainly ungentlemanly. Therefore, UK firms lack the strong profit orientation of the Americans or the market expansionism of the Japanese. Merging rather than competing is a common choice or perceived necessity. In this respect, the franchising system, on which The Body Shop relied much, fits very well the typical anti-rivalry notion found in Britain. Low value placed on education: Compared with their counterparts in other advanced nations, British managers are still under-educated and poorly trained, notwithstanding the recent growth in university and college provision8. In Britain there has been an anti-intellectual tradition which devalues training, particularly of a vocational kind (Barsoux and Lawrence, 1990; Lane, 1989; Keeble, 1992; Gospel, 1992). Porter (1990) comments on the British educational system as lagging behind virtually all the nations he studied! The country traditionally relied on practicing at doing the job to produce its managerial stock. Naturally, business owners provide very limited support to vocational training as they see it as a cost, a waste of their precious capital, rather than an investment with long-term benefits9. Industrial management in Britain did not attract the intellectual elite and had a relatively small intake of university graduates (Fitzgerald, 1993). The relative value placed on finance (a degree in accounting is he ld to be an ideal qualification for a top management post) suggests an emphasis on the short-term at the expense of the long-term, with research being the prime victim. The process of education is of central importance and needs some further elaboration. The continued under-investment in human capital provided little opportunities for the British economy to exploit its pool of gifted labour force and elevate it from the mere status of gifted amateurs (Jones 1997). One reason that explains the under-developed pattern of vocational education in UK lies at the, until very recently, states deliberate low involvement, even denial of responsibility to the issue. Consequently it was left as a matter for employers and unions. But, as explained above, line management was never persuaded of the direct link between profitability and competitiveness through training and regarded training schemes as an overhead to be cut when profits were threatened. The deepening recession in the 1980s made emp loyers even les willing to invest on training. Moreover, criticism has been levelled at the wide variety of inappropriate training schemes existing in Britain (Lane, 1989). For example, the apprenticeship system was highly inefficient in terms of responsiveness to changing production conditions and contributed even further to the generation of low-skilled labour. Several quotations (Bierhoff and Prais, 1993; Roffe, 1999; Matlay, 1999) for improving both the quantity and quality of vocational education in UK, arguing for the need of a more systematic and homogenous system have been occasionally proposed but not headed. Short-termism: English managers have a very short-term perspective in business planning relative to their major competitors, especially the Japanese and German. In middle management this can be seen in the flair for improvisation. Higher up in the company it manifests itself in the willingness to cut or defer such thing as advertising or RD expenditure in order to meet year-end budgets without worrying about the long-term repercussions of such a course of action10 (Gordon, 1990; Handy, 1988). In this respect, emphasis on growth (as this is seen in France), market share (as in Japan) and continuous quality improvement (like Germany) is not evident in British enterprises. Anti-industrial orientation: British culture has a large alleged impact on the development of anti-industrial orientation, evident on the low esteem that traditionally a career in British industry carried. Hofstede (1984) provides an element of explanation on the basis that British rank very high in the individualistic and uncertainty avoidance cultural dimension. Therefore, Britons have an inherent inclination on risky and entrepreneurial, rather than manufacturing, capital-based activities. British managers continued to prefer old machinery and production processes exactly because of this personal value system which favoured trading, rather than manufacturing. However, this attitude meant the downfall of the British manufacturing industry and a relative decline in the indigenous economy in a sequential manner (Van Ark, 1990; Dintenfass, 1992) as this can be portrayed by stats such as: GDP growth, national income, volume of trade exports and so on (Davis et al, 1992, Dicken, 1999). The Body Shop, on the other h and, illustrates a very good example of how British firms establish competitive advantages not by using modern, hi-tech machinery, but rather through intuition and originality. The Body Shop managed to promote the green issue in a genuine and passionate way, promoting wider societal issues through sponsorship and captured the imagination of consumers worldwide. The companys advertising expenses were grounded to zero; still its marketing approach was highly successful. The Body Shop case, then, moves us to a consideration that will be further elaborated in the following chapter: that British firms have lost their edge on manufacturing but, in the mean time, enhanced their worldwide competitive position in the service sector and in industries like retailing. In this respect, the British economy has mastered a transition from an industry-oriented one to a services-oriented one. 3. UK management and retailing: an integrated approach Insufficient investments in modern technology, industrial relations problems and low level of skill and motivation in the labour force affected productivity and condemned Britains manufacturing industry. However, when it comes to the service sector, the whole picture is very different. For example, while in heavy manufacturing the German labour productivity is found to be 22% higher than that of British as a result of differences in physical capital and engineer-related human capital (OMahony, 1992), such a difference has not been experienced in less capital-intensive and less engineer-related industries (food, drink tobacco, textiles, chemicals). Britain experienced a rapid growth of the service sector as early as in the 19th century, but was exceptional in the 1980s and 1990s (Godley and Fletcher, 2000). Today British firms outperform most of their counterparts in the service sector. In regards of specific industries, such as retailing and financial services, this is very profound (Millward, 1990). The typical British personal capitalism (Chandler, 1990) concept suits the purposes of such industries where the production process is relatively straightforward, offers few opportunities for economies of scale but many opportunities for innovation and entrepreneurial initiatives (Jones, 1997). Take as example the creative ideas of Anita Roddick and the originality of her business practices. Without having sufficient funds, she built the companys success only by relying on her wits. More importantly, since The Body Shops competences are not based on technology and machinery utilization but on its founders creativity, intuition and entrepreneurial capacities, the companys business model is very hard to be imitated and the competitive advantages deriving from it are highly sustainable. British firms, especially in 1970s and 1980s pursued successful strategies of product differentiation and product diversification and possessed capabilities in brand management and distribution, which they employed both in extensive exporting activity and through extensive multinational investments (Alexander, 1997). The British competitive performance in the service sector contradicts the image of British enterprise lacking organisational capability in manufacturing industry. Indeed, research by Balasubramanyam (1992) shows that British corporations in retailing appeared to possess competitive strengths in highly developed management skills, in effect, financial management and marketing management, rather than in production management. Jones (1993) adds to the list of Britains core competences the following: incumbency, experience, and powerful intangible assets, most notably reputation for honesty and stability. Jones and Morgan (1994) suggest that such entrepreneurial and trading skills may have been inherited from the family-firm tradition. The culturist hypothesis suggested in previous sections of this paper might explain the outstanding British performance in such kinds of managerial skills. The above clearly suggest that a distinction must be made between the competitiveness of the British firms in manufacturing and in services (Jones, 1994). Throughout the postwar period and into the 1990s the British retailers were the largest sectorial direct investors in the United States, a position maintained by extensive acquisition activity (Lipsey, 1993). This must have involved considerable organisational and management skills, or else it could not have been sustained. Britons possess skills that evolve into strong core competences when it comes to the service sector and particularly the retailing. Hence, generalizations such as those of Porters slide of Britain (1990) and the Chandlerian critiques should consider more thoroughly the British strength in the less capital intensive and technology oriented industries such as: consumer branded goods (including beverages, confectionary products, cosmetics, perfumes, household products and so on), retailing, financial related servic es, auctioneering, entertainment, publishing, leisure products, consultancy, advertising. Britains broad strength in services partly reflects demand conditions. In business services, a combination of skilled human resources and early industrial strength has given British firms a solid position. In retailing, strength in high-end consumer goods (luxury and wealth-related products) was further supported by a sophisticated domestic demand retained, especially around London. Many of the industries in which Britain still has competitive advantage, technological change has not been significant enough to provide worldwide competitors with a lever to supplant British firms on the basis of their technological superiority, especially in the high-end segments that are not price-sensitive and where buyers value traditional methods. Finally, those areas where UK firms have sustained competitive advantage partly owe it to related and supported industries. In consumer goods and services, a vibrant retail sector has created pressures to innovate. This environment has been a fertile one for British firms to develop skills in consumer marketing. The City of London illustrates a classical example of a sector built upon the concept of clustering11. The dynamism of the cluster has attracted firms from all over the world, solidifying Londons position as Europes financial centre. 4. Conclusions Overall, in response to historic, ecologic and evolutionary processes, UK has created a culture and social climate which stand English managers and their companies in good stead in many respects, but handicap them in some others (Schneider and Barsoux, 1997). Their honesty, trust, self-control, and creativity are their major cultural assets, while their individualism, professionalism and reserve give an impersonal and formal air to business dealings. However, in their effort to deal with competitive markets, they are hampered by unhelpful aspects of their culture and their society. These include capital market short-termism, less-than-favourable attitudes to business, traditionalism, reluctance to embrace new technology wholeheartedly, and ill-prepared school leavers and university graduates. Of course, in retailing, as the case of The Body Shop clearly illustrates, UK management style is highly successful, as most of the negative cultural influences do not affect their performance i n the industry, while the positive ones are those that really matter and provide them with a competitive edge. We have looked at the British management style as at a national level, but this is not the only option. Style may also be construed diachronically, as an expression of a society -and a world- in transition. With this in mind, one might ask what the future will bring in British management. The chances must favour a gradual convergence with Western Europe in ways of managing and organizing, if only because so many influences lead that way. But it is likely to be drawing together that will never completely come together. In other words there are likely to be more similarities, but differences will persist. 5. Notes In fact, Hofstede (1993) explicitly argues that culturally, Europe does not exist. In his studies (1984), the EU countries seem to broaden diachronically their already well-established heterogeneity in terms of cultural values. He also comments on a paradox: despite the fact that Europeans are genetically more homogenous relatively to North Americans, culturally they are significantly more heterogeneous. The notion that Europeans are culturally alike, even if they look more or less alike, goes against the initial optimism of the founders of the EU, who believed in cultural convergence through economic activity. It is still in conflict with the assumptions of many national politicians, journalists, members of the public, and particularly, many non-Europeans. Moreover, the traditional conflicting nature of the relationship between the working and the middle class puts in question even the existence of a homogenous English culture. However, similarities between the two classes are far greater than their differences. Also, their exposition to common social institutions and a constant fusion of values and attitudes among them is such that, in the end, their only basic difference lies to their family upbringing (Tayeb, 1993). It would be, therefore, safe to assume that the two classes are sufficiently alike to talk about an English culture. Besides, there is possibly no nation in which total class homogeneity exists, but historically, this fact did not pose serious threats to the emergence of distinctive national cultures. Of course, the contemporary economy can hardly be called a pure version of capitalism since it is characterized by a mixture of freedom and control, and of private and state enterprise. The emphasis on freedom or control shifted from time to time depending on the policies pursued by the government of the day (conservative governments applied no control beyond fiscal policies, while labour governments tended to use direct control mechanisms). The strongest weapon the British employ for their persuasion to be as gentle as possible is, of course, their humor. Their readiness to joke about business matters is very distinctive. Efficiency, productivity and profit are constant targets for wisecracks. Humor is seen as a device for distancing the unpleasant parts of business life and a safety valve for preserving managerial sanity, perhaps a means of coping with defeat. However, as Barsoux and Lawrence (1990) argue, exactly because jokes suspend reality momentarily, British managers are left with the option not to react. The subversive impact of jokes prevents them of being effective as change agents. The theme of Big Business which was dominant in Europe till the early 1980s failed to respond to the changing European environment since then (low labour productivity growth, high unemployment, slow innovation and low profit margins). The transaction cost theory (Hennart, 2000) or internalisation theory (Buckley and Casson, 1978) provides us with a consistent explanation based on the premise that variations in transaction costs alter the optimum size of firms. Hence, falling transaction costs since 1980s forced a fall in the optimum size of firms making the National Champions highly uncompetitive and SMEs (mostly family-businesses) the emerging pattern. According to others (e.g. Lane, 1989; Jones, 1994), the decentralised nature of UK management is mostly a result of the way British firms actually grew, in effect, through mergers and acquisitions rather than organic growth. This pattern created large firms consisted of a number of small firms, which did not undertake a thorough rationalization of production activity. Such a structure necessitated a decentralised mode of decision-making, regardless of what sentiments top management had on this matter. Lane (1989) provides data from the IMS which illustrate that in contrast to Germany and other advanced European economies, British young people have until very recently gone straight into employment after finishing their compulsory secondary schooling without receiving any vocational education at all. Investment in training by industry has been estimated by Porter (1990) at far less than 1% of revenues in Britain, compared to 2% in Germany and 3% in Japan. For comparative purposes, Germany is found to be far more ahead than UK in the rate of enterprises using the technically most advanced processes and machinery, such as CAD, CNC tools and flexible manufacturing systems. The faster adoption of sophisticated technological devices and processes by Germans can explain their superiority over British firms in high-technology products (Lane, 1989). Porter (1998) uses the term cluster to refer to the geographical concentrations of interconnected companies in a particular location. Other terms used in bibliography for the same purpose, more or less, are agglomeration and industrial districts.