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Examining managerial obsolescence

of an organisation
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The issue of managerial obsolescence is an under-researched but important and
compelling challenge of modern day business organisations. Hamlin (1999) describes
managerial obsolescence as a modern organisational virus, implying that its unchecked
spread can severely damage organisational health. This study examines managerial
obsolescence in contemporary times with specific regard to its causes and organisational
impact.
Peter Drucker and various other management gurus perceive managers to be the driving
force behind organisational growth and the most important element of corporate
success (Flaherty, 1999, p 12). Many of such managers, who have the potential to
contribute to the growth and the performance of their organisations, however, become
obsolescent and inadequate for their jobs (Gimeno, et al, 1997, p 750). Little is moreover
done by their organisations to help them in combating such obsolescence challenges;
they are usually sidelined in lesser demanding tasks or replaced by more aggressive and
savvy competitors (Gimeno, et al, 1997, p 750). It is also quite surprising that little
research has been conducted on the issue until now, despite the exponential growth of
Human Resource Management theory and literature and their application in different
areas of organisational activity (Gimeno, et al, 1997, p 750).

This essay investigates the issue of managerial obsolescence, with particular emphasis
on its reasons and organisational impact, and attempts to marshal the various strategies
that organisations can use to counter and combat its challenge.

Managerial Obsolescence
Managerial obsolescence occurs due to the development of a substantial gap between
the requirements of a job and the skills and abilities of a manager to perform such a job

competently; primarily because of his or her inability to keep up with the demands of
the changing times (Harrison, 2009, p 62).
Most managers in the past entered into employment after short stints in college and
progressively developed their skills and competencies, within organisations, through on
job training and experience (Holbeche, 2006, p 13). Whilst such methods for grooming
managers to assume organisational responsibilities continued for decades in AngloAmerican firms, the explosion in management, financial, and technical education in the
west after the closure of the Second World War led to the development of a sea change
in such organisational attitudes (Holbeche, 2006, p 13). Mushrooming management
institutes across the advanced nations started educating and training managers in order
to enable them to assume and discharge their increasingly complex organisational
responsibilities with adequate knowledge, skills and abilities (Harrison, 2009, p 62).
Although the majority of contemporary managers now come into employment with solid
education behind them in different areas like technology, human resources, finance, and
business management, many of them still become victims of obsolescence and find it
difficult to cope with changing and evolving job responsibilities (Harrison, 2009, p 62)
Such obsolescence was rare in the past when organisational and environmental change
was slower and many business firms continued to sell the same products for years to the
same markets in similar environmental circumstances (Holbeche, 2006, p 13).
Managers in such organisations were called upon to perform routine managerial
functions, punctuated by a little bit of troubleshooting during emergencies, and were by
and large able to handle their slowly growing responsibilities with comfort (Holbeche,
2006, p 13). The rapidly changing contemporary business scenario however constantly
challenges organisational managers to keep up with and adapt to changing internal and
external environmental circumstances.
The world has experienced tremendous change over the course of the last few decades
(Lawrence, 2007, p 88). Such changes have been political, economic and technological
in nature. The collapse of the Soviet Union and the growth of neo-liberalism and
western capitalism have profoundly changed the global political landscape (Lawrence,
2007, p 88). Economic liberalisation and the demolition of trade, financial, and physical
barriers have made the business and economic environment intensely more challenging.
The emergence of China, India, and other developing economies has resulted in the
creation of numerous lower cost and equal skill production and service centres across

the world. (Pett, et al, 2004, p 46).Huge new markets are emerging in the developing
world. Astonishing technological advances, especially in the area of instantaneous
communication technology, make it possible for people to communicate swiftly across
continents and even larger distances (Harrison, 2009, p 86).
Such changes are not only providing contemporary organisations with numerous
business opportunities, but are also challenging them to adapt to changing
circumstances, master new technologies, exploit new business opportunities, ward off
and counter threats from competitors and substitutes, and maintain and enhance
competitive advantage (Harrison, 2009, p 86). These developments have not only
resulted in the emergence and astonishing growth of new businesses like Microsoft,
Google, Facebook, Nokia and Apple, but also led to the decline of once great
organisations like General Motors, Ford and Chrysler. The challenges of these changing
times, it must be realised, are not being faced by business organisations but by their
managers. Modern day managers are under intense pressure to constantly adapt to the
numerous changes that are occurring in their internal and external environment (Reid,
et al, 2004, p 37).
The failures of managers to keep pace with and adapt to these changes results in their
obsolescence and to the development of inability to cope with new and evolving
assignments and work pressures (Reid, et al, 2004, p 37). Such managerial obsolescence
has numerous repercussions, both for the organisations in which these managers work,
as well as for their personal careers. Managerial obsolescence is associated with
psychological issues like loss of self esteem, lack of self worth, resentment with peers
and depression (Reid, et al, 2004, p 37).

Whilst managerial obsolescence is a very real contemporary challenge, it is surprising


that little research has occurred on the subject until now. This is all the more surprising
considering the rapid growth of HRM theory over the last few decades and the parallel
work that has occurred in the area of behavioural management and behavioural finance
(Reid, et al, 2004, p 37).

Role of Managers and Organisational Impact of


Managerial Obsolescence

Managerial obsolescence directly impacts the ability of managers at different levels to


meet their organisational responsibilities with competence and confidence (Snyder &
Duarte, 2003, p 112). Such obsolescence has slow moving and imperceptible, but finally
devastating, impact on organisational growth and performance, primarily because of the
criticality of managers to various aspects of organisational functioning (Snyder &
Duarte, 2003, p 112).
Managers play numerous roles in the functioning of organisations. They are responsible,
first for the deciding of organisational objectives, then for the formulation of
organisational strategies for reaching such objectives, and finally for the effective
implementation of such strategies (Teece, 2002, p 76). Apart from such broad functions,
managers constantly contribute in various ways towards organisational work and
enhancement of competitive advantage. They are responsible for maintenance and
enhancement of improvement of business efficiencies in terms of generation of profits.
They have to, not just, perform and produce results, but also do so in the most effective
and efficient manner (Teece, 2002, p 76).
They are responsible for efficient utilisation of resources, which in turn results in
achievement of organisational profits (Sims, 2002, p 54). Generation of profits is
essential for up-gradation of resources, business expansion, payment of dividends, and
maximisation of shareholder wealth (Teece, 2002, p 76). Apart from generation of
profits, contemporary managers are responsible for meeting and overcoming the
challenges of increasing competition (Sims, 2002, p 54). Competition in business is
constantly increasing on account of greater numbers of competitors, more and better
products and services, ever increasing product variety, and empowered customers
(Teece, 2002, p 76). Modern day customers are not just well informed about their rights
and the many competing products available in the market; they also, for all practical
purposes, drive contemporary business (Sims, 2002, p 54). Whilst modern day
managers can access greater markets and more affluent customers, they are also
responsible for meeting ever increasing customer expectations and demands (Teece,
2002, p 76).
Managers are also responsible for meeting the various legal and regulatory demands
that are faced by contemporary organisations (Snyder & Duarte, 2003, p 112). The
contemporary economic and legal environment is becoming increasingly regulated on
account of greater legal, regulatory and environmental concerns, and managers are

responsible for ensuring the satisfactory meeting of such demands. The failure of
managers to meet such regulatory and environmental concerns can result in severe
penalties, bad publicity, poor image and adverse repercussions in share markets (Snyder
& Duarte, 2003, p 112).
Modern day managers are furthermore responsible for building the human potential
and capital of their organisations (Holbeche, 2006, p 41). It is widely accepted the
humans constitute the most critical of organisational resources and that no amount of
money or material can be deployed effectively without effective human intervention and
control (Sims, 2002, p 54). Managers are not only responsible for attracting, recruiting
and retaining the best available talent, but in grooming them to assume positions of
increasing responsibility in future (Holbeche, 2006, p 41). Modern day management
experts feel that in circumstances where different organisations have access to similar
capital resources, the differences in competitive advantage between such firms is
essentially provided by managers. Organisational managers are thus responsible for
ensuring that in-house talent is retained, groomed and nurtured adequately in order to
bring about competitive advantage (Holbeche, 2006, p 41).
One of the most important roles of mangers is to foster and bring about innovation.
Peter Drucker has repeatedly stressed in his various writings that one of the most
important tasks of managers concerns the systematic discarding and destruction of
entrenched traditions, customs and products and the bringing about of organisational
innovation in products, services and processes (Flaherty, 1999, p 43). Drucker stresses
that organisations that are not innovative but dominated by tradition and convention
will inevitably be outmanoeuvred and left behind in the rapidly changing global
economy. Effective managers must thus constantly build environments that foster and
encourage innovation in various organisational areas (Flaherty, 1999, p 43).

This section attempts to provide a brief overview of managerial responsibilities and the
criticality of managers in the effective functioning of organisations. Managerial
obsolescence brings about situations in which managers are unable to handle their
multifarious responsibilities and various environmental challenges. Such obsolescence
will obviously reduce the capacity of organisations to fix relevant objectives, formulate
appropriate strategies and implement them effectively. It will also reduce organisational

ability for achievement of operational efficiencies, generation of profits and achievement


of competitive advantage. Organisations, peopled by managers who do not change with
the times, will be unable to develop and build human capital or to develop environments
that foster and encourage innovation.
Such managerial obsolescence, whilst invisible, can truly wreak havoc upon
organisational working, processes and ambitions and bring about the decline and
demise of otherwise well capitalised and well resourced organisations. Managerial
obsolescence is particularly dangerous because it is not regarded as a concrete and real
organisational threat. It tends to creep slowly and steadily across an organisation like an
invisible virus (Hamlin 1999) and destroys it from its very innards.
Such obsolescence is not restricted to the lower and middle ranks of managers but can
extend all the way to the top. When Jack Welch took over as CEO of GE in 1981, he
found himself in charge of a huge organisation that was rapidly becoming uncompetitive
because of traditional and conservative management thinking and was burdened by
managerial refusal to confront modern day realities and bring about necessary
organisational change (Byrne, 1998, p 1-2). Much of Welchs path breaking
initiatives at GE concerned the elimination of managerial obsolescence through
appropriate organisational structuring, HR management, introduction of new products
and the fostering of innovation (Byrne, 1998, p 1-2).
Whilst managerial obsolescence can dramatically reduce organisational effectiveness, it
can also bring about adverse repercussions for the involved people. Obsolescence often
leads to side tracking of employees and even to their demotion, retirement or
redundancy (Reid, et al, 2004, p 37). Such people are also the first to go during
organisational downsizing and to be offered the benefits of voluntary retirement
schemes. Apart from such obviously negative repercussions, they are also more likely to
suffer from lack of self esteem and depression (Reid, et al, 2004, p 40).

Reasons for Managerial Obsolescence


Managerial obsolescence occurs on account of different reasons that concern (a) the
individual managers, (b) the organisations they work for, and (c) broad societal features
(Bragg, 1999, p 63). Individual managers tend to become obsolescent because of a range
of cognitive aspects like (a) their feelings of comfort with their existing environments,

(b) resistance to change, (c) apprehension about assuming new responsibilities, (d)
disinclination to learn new methods and tools, (e) lack of awareness of the changes
occurring around them, and finally (e) the very denial of obsolescence (Bragg, 1999, p
87). Most contemporary managers, as has been pointed out earlier, begin their careers
with a certain amount of professional and general education in different areas of
organisational work. Their further development as managers however depends
extensively on their own attitudes towards their careers and their perceptions about
their environments (Bragg, 1999, p 87).
Whilst employing organisations can and do offer various types of organisational
training, much of the absorption of such training depend upon the willingness and
attitudes of managers (Chirico & Salvato, 2008, p 169). The rapidly changing internal
environments of modern day organisations, especially in areas of technology, aided
work processes, constantly creates demands on managers. Behavioural experts state
that the willingness of managers to accept and adapt to such changes largely depends
upon their openness to change, their relations with their peers and their attitudes
towards work (Chirico & Salvato, 2008, p 169). Ambitious individuals are far more open
to such changes and are more ready to grab learning opportunities than managers who
are satisfied with their jobs and enjoy high levels of complacency. Behavioural experts
also stress that managerial obsolescence is often not the result of one particular
personality trait but arises out of the interplay of various attitudes that inhibit managers
from learning new skills and from constantly adapting to their changing environments
(Chirico & Salvato, 2008, p 169).
Organisational factors also play important roles in the development of such
obsolescence. Obsolescence can develop in the presence of mismatches between
individuals and their jobs (Dosi, et al, 2001, p 141). Such mismatches can result in
circumstances where the abilities of individuals do not match with job requirements and
thus prove to be inadequate. The lack of autonomy to managers can also lead to slower
development of skills and abilities and to consequent obsolescence. Organisational
experts also associate the onset of obsolescence with non involvement of managers in
decision making roles (Dosi, et al, 2001, p 141). The concentration of power and
authority in autocratic organisations is generally at the top and the bulk of other
employees are expected to meet routine obligations. Such organisational circumstances
reduce the inclination of managers to assume new responsibilities or learn new skills,
and accelerate organisational obsolescence (Lever, 1997, p 37). Obsolescence can also

occur on account of unhappy relationships with non supportive seniors, as well as on


account of inappropriate HR policies and practices. Inappropriate policies, with regard
to performance appraisal and remuneration and reward, can result in de-motivation,
loss of job interest and setting in of obsolescence (Lever, 1997, p 37). Excessive
departmentalisation within organisations results in the development of organisational
silos that restrict communication, collaboration, and exchange of knowledge between
managers. Such seclusion results in depriving them of important organisation and is a
causative factor in obsolescence (Burke & Steensma, 1998, p 86).
It is also important to note that obsolescence in organisations is dangerous because it
sets in slowly and imperceptivity and often without the knowledge of the people
involved. Many managers are unlikely to believe in the reducing worth of their abilities
to their organisations and thus do not engage in taking any concrete steps to counter
such developments (Burke & Steensma, 1998, p 86)

Countering Managerial Obsolescence


It is obvious from the above that the countering of managerial obsolescence requires
both individual and organisational efforts (Sorensen & Stuart, 2000, p 81). Corporations
are liable to suffer extensively and in unforeseen ways on account of managerial
obsolescence. Most organisations however refuse to recognise the danger and do not
take steps to counter or postpone such obsolescence (Sims, 2002, p 54). Corporations
and business firms can in the first place combat obsolescence by the development of
appropriate HR strategies for selection, recruitment and orientation of people
(Holbeche, 2006, p 13). It is important to choose people carefully and ensure that they
are given appropriate responsibilities that will enable them to make the best use of their
talents. HR policies for growth of managers must also encourage and reward initiative
and performance. Organisations like the Ritz Carlton group of hotels engage in constant
retraining of all their managers, irrespective of their levels to ensure inculcation of new
skills and technologies (Holbeche, 2006, p 77).
Whilst many organisations are developing sophisticated corporate training
programmes, others are making efforts to develop into learning organisations through
the introduction of different tools and techniques to tap and institutionalise both the
explicit and implicit knowledge of their employees (Harrison, 2009, p 62). The use of
communities of practice by some progressive organisations has proved to be immensely

beneficial in improving organisational learning and in the development of knowledge


and skills of managers (Stewart, 1999, p 46).
Although corporations can reduce the incidence of managerial obsolescence by adopting
a range of HR and organisational strategies to improve the knowledge, skills and
abilities of managers to adapt to changes in job requirements, the success of such efforts
is also largely dependent upon the attitudes of individual managers (Reid, et al, 2004, p
37).
Individual managers should take steps to develop personal goals for expansion of
knowledge, skills and abilities. The development of openness towards new ideas and
developments and the willingness to engage in constant education and learning, both
informal and formal can help significantly in overcoming individual obsolescence
(Teece, 2002, p 76). Such attitudes are also likely to spread across organisations and
help in the development of an organisational learning culture.

Conclusions
Managerial obsolescence, the topic of this essay, is an important contemporary
organisational challenge that needs to be purposefully and comprehensively managed by
business organisations.
Obsolescence comes about on account of a number of individual and organisational
reasons and has the potential to steadily undermine the effectiveness and
competitiveness of organisations. Apart from having adverse consequences on larger
organisational health, managerial obsolescence also affects the careers and growth
prospects of individual managers and can lead to their being sidelined, demoted or
removed from employment.
With the majority of individuals reducing their contact with formal structured learning
after joining employment, the onus of lessening managerial obsolescence rests primarily
with organisational managements. Organisations need to recognise the various dangers
and risks that can emanate from the progression of managerial obsolescence and to take
various steps to reduce its incidence.
The adoption of thoughtful HR policies in areas of recruitment and selection, job
allocation, reward and remuneration, performance appraisal and promotions can

significantly help in reducing managerial obsolescence. The development of


imaginatively planned and properly implemented training programmes has also been
seen to be effective in countering managerial obsolescence. Progressive organisations
are strategically disseminating and institutionalising tacit and implicit organisational
knowledge through various learning organisation techniques.
With change being a modern day phenomenon, both organisations and managers must
continuously work towards improvement and enhancement of managerial skills and
knowledge. The failure to do so can lead to extremely unfortunate individual and
organisational repercussions.