Management theory is a field which has emphases on organisational structure, bureaucracy within business and Human relations studies. It sets forth general rules on how organisations should be managed and run and generally, “a firm’s competitive advantage depends on its capacity for stakeholder management” (Verbecke 2013) which would be a key area of management theory. Fred Luthans carried out much research considering the work of managerial positions within various organisational structures. He aided in laying the groundwork for the field, writing the first textbook for it with the field eventually becoming the “biggest […] in all of management”. Luthans tried to look at “real” organisations rather than “textbook organizations” (2). In Luthans’ research into “Successful vs. Effective Real Managers”, he found that aspects such as promotion worked in “starch contrast” to how it had been thought of before. Luthans found that there was a vast difference between how “successful managers” and “effective managers” ran their organisations. It was discovered that, in the organisations in which he did his research, that the “top third” of “successful” managers, i.e. those who were promoted the fastest throughout their time in the organisation spent 48% of their time politicking and networking with only 28% of their time dedicated to communication of work-related information with their employees. On the other hand, the effective managers i.e. those with high subordinate satisfaction and a high level of performance in their team focused 44% of their time on communication and only 11% on networking. Luthans found this information based on “248 real managers” (Luthans 1988) but as the study took place over 30 years ago, Luthans no longer has the list of the subjects used in the study nor would he be able to share the list due to “a confidentiality agreement” (Luthans 2019). This means that we cannot be sure of the types of organisations that the managers were situated in or their relation to structure. This would be important as Luthans evaluated the level of success of a manager as the number of promotions they had had compared to the number of years they had worked in the organisation. The number of promotions available within a business could be affected by whether they use a hierarchical or flat organisational structure as it could be seen as easier for a manager within a hierarchical organisation to be easier to get promoted within as there is a greater number of positions to be filled. The fact that for this aspect of the study, Luthans used 248 different “real” managers means that it is highly likely for there to be a wide array of organisations and cultures and structures within them. It could also be argued that comparing success against effectiveness may be seen as flawed. (6) This is because, there is an actual quantitative measure for how successful a manager is; worked out by “dividing a managers level in his or her organization by his or her tenure” (2), however, there is no real quantitative measure for the satisfaction of their subordinates which is one of the measures used by Luthans for working out the effectiveness of a manager. This concept, that the most successful managers weren’t those that had the best performing team in the vast majority of the subjects that he examined but were in fact just the best at networking, if true would most likely mean that the majority of American businesses are not being run efficiently or nearly as successfully as they could be. If this were completely true, this would make it far less likely that the American economy be one of the largest in the world as it simply would have failed far earlier than it has now. This could show that there have been a number of changes occur since the article was published in 1988 leading to an increase from 10% (2) in managers that are both successful and effective as the more effective managers are being promoted more quickly or it could have seen an increase in managers trying to be more well-rounded in how they go about their business rather than focusing mainly on networking or a traditional management style. Another of Luthans’ contributions to management theory is his research into “general contingency theory” (Luthans, Fred and Stewart, Todd I) which looks at the fact that other theorists who had previously looked at contingency theory were attempting to promote a framework that is “applicable to all organizations” (Luthans p.182) and instead of doing this, Luthans came to the conclusion that there is no concise way of running an organisation that would work for all corporations and that instead, there should just be a general framework that different businesses could slot into. However, it has been argued that contingency theory is not this universal framework that people are looking for. According to Longenecker, the “theory’s accuracy in specific areas does not make it a general theory” meaning that if it was used in everyday organisational life it would sometimes fail as it is neither accurate enough nor broad enough for each organisation to work with. It has also been argued that Luthans and Stewart did not explain thoroughly enough how to use the contingency approach and instead just a “classificational schema” (8) which are useful in theory to start building the way up to a theory but “should not be considered with theoretical structures” (7). Another aspect of Luthans’ general contingency theory which would require more work to be described as complete and ready for use in practice is the “contingency audit”, which, although does allow for some inter-dependence of variables in the environment, doesn’t fully take into account the fact that environmental variables are considered as “outside the organisational system” (7) The idea of being able to designate people by different variables, as is done in Luthans’ contingency theory has also been up for discussion. According to Blumer (9), the manner in which we assign the variables is far too chaotic and thus the wrong conclusion may be made if the incorrect variables are assessed. This could be for a number of reasons, including the fact that there are too many variables available within “human group life” (9), complicating matters leading to the wrong variables being chosen. A second reason for the wrong variable being chosen is due to the distinct lack of rules assigning which variables should be used when. This leads to massive variance within choice due to external circumstances and people’s own judgement. Overall, the main flaws of Luthans’ research into contingency boils down to the fact that “business policy, organization, effectiveness and the environment are intertwined in interdependent relationships” (10) making it difficult for theorists to come up with one distinct way of working out the framework that works in practice and not just in theory. Luthans and Stewart had a main goal of “development of an overall theory which can serve as a conceptual framework for understanding”, although this essay does not fully agree that they met this goal, they certainly aided in the search for said framework which could eventually be developed in the future, using information from Luthans’ article. In conclusion, this essay agrees that Luthans has made a great level of contribution to management theory, to an extent, and the effect that it had was certainly noteworthy, however, there are aspects of Luthan’s publishes that can be disagreed with and argued against which a number of other theorists have done, and no doubt will continue to do in the future. When looking at real managers and how effective and successful are not necessarily interchangeable, Luthans is correct to a degree but the lack of information on who the managers that were assessed in the study were can be quite troublesome for people analysing Luthans’ study. For Luthans’ general contingency theory, the number of items within the article that would require more work to become completed was too great, as pointed out by Longenecker and Pringle, to judge that the theory be fully accepted however it does certainly add to the research into it for other theorists in the future.
Critically discuss luthans’ contribution and its implications for management theory
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