Before we begin to discuss various aspects of construction of effective management systems, we have to determine what we mean by this notion and what features it has. It is also important to define estimation criteria of efficiency and progressivity of business management system.

Finally, it is necessary to create a set of questions, the answers to which will allow you understand, whether you are interested in materials presented in my resource. Most of my publications may be disputable, however in disputes we find the truth, which is important for both you and me. Now let me present my vision of effective management systems. 

System Predictability

By system predictability we should understand an adequate expected response to managing influence. I mean that we should know what results and consequences we will get out of orders or instructions given in the company. If, according to some plan, an automobile plant has to increase the output by 1000 automobiles, the management of the plant should have a clear idea of what purchases, staff changes and expenses it will require.
 
A complete fulfillment of all expectations of the company management in both activity and development aspects means that the system is predictable. On the contrary, if a slight influence brings totally unpredictable results, it is necessary to study the rules of orders performance and financial schemes very attentively. Frequently, this stage of analysis is enough to reveal abuses and breaks in the company structure. Thus, management patterns should be created in order to make predictability analysis full and corresponding to reality. 

Informational Independence

Informational independence means that the activities of the company, as well as of its affiliated companies and partners, should not in any way depend on specific performing staff, and moreover on the management hierarchy present in the company on a certain moment of time. It is reached by formalization of description of managing structures activities (different types of encoders, qualifiers, magazines, questionnaires, diaries - either computer typed or hand-written). One should keep it in mind, that being dependent on specific performers can diminish the cost of the company.
 
And though management schemes are frequently adapted to a certain person and management style, the information constituents, however, should not depend on the latter. Therefore, when the general director signs a firing application form, the primary goal of the management structure is to preserve in order all the materials that the fired associate has worked out. It is even better if a newly employed associate is required to strictly follow a certain scheme of work organization, which will help solve this problem. 
 
This thesis does not imply insurance, meaning that one associate cannot temporarily carry out the functions of another one. The reason is that the insurance technology aims mainly at maintaining the continuity of production cycle, and only partially at preserving of unified information space.
 
One should keep it in mind, that informational security is a component of informational independence of the company. It has its certain grounds. If any associate, even a fired one, starts selling confidential information, the company will hardly benefit from it. On the contrary, it may face a lot of damage (there have been many incidents on this matter).

System Self-training

In other words it is a feedback factor. Top management of the company cannot always determine with high efficiency the technologies of work of specific divisions and executors. Among the important signs of the company's health there are a clear-cut and working feedback from an associate to the management, as well as initiativeness and self-training of associates. The associates should refer to the management not only with personal questions, disputable situations, complaints etc., but also with suggestions on more effective organization of work, improvement of professional skills, training courses allowing to solve certain problems and to develop business.
 
However, one should not lead it up to the absurd point making a yard keeper go to the general director to discuss with him the transition to another type of broom, which will allow keeping the street before the main entrance clearer than ever. I mean that the scheme should work according to the accepted hierarchy of management in the reversed order, however the top management should supervise incoming suggestions. It is important to note that even a yard keeper can propose very valuable suggestions concerning reorganization of the company's parking space in order to increase its capacity. But the decision on this matter can be accepted on much higher level, but the immediate director of the yard keeper "freezes" any incoming suggestions. (By the way, it is a widespread disease when plenty of interesting suggestions get stuck at local level, though in fact they could possibly bring a company a lot of good). Here I would like to mention human factor and art of building hierarchies, which, in their essence, form the style of business management, as well as the inside interrelation mechanisms. 

System Stability

First of all, by stability here we understand the stability of a system under external influences (such as, economic or social crises, conflicts etc.). The company's ruling forces should have a very mobile management style in order to be able to respond to any outer influence, despite the complexity of the management system. Here I should mention that each (or almost each) associate should have a clear vision of the situation, as restructuring of separate divisions activity cannot always save a company from crash.
 
In this respect having a clear vision of the situation by all (or almost all) associates is far more important than having general commitment to the company's business. Development of company's strategy pattern for stress situations should be based on clear distribution of roles in business and their managing forces expected to lead the company in hard times. 

System Continuity

First of all, system continuity means absence of management extremes during changes in the ruling forces, in the company's business structure, as well as in crises times, etc... It means that management system should be developed in accordance with progress of both internal structure of the company and external conditions, as inner crises can hardly bring the company any good. However, it does not at all mean that the company's management pattern should not change. On the contrary, the management should apply principles appropriate for specific time conditions.
 
I would like to point out that the company's associates should have enough time to realize what is going on and why, otherwise it can result in occurrence of parallel structures or even cause management crash. Thus, continuity implies a smooth transition from old management principles to new ones rather than rejection of all principles. Most associates should realize the necessity of this transition. 

System Regulations

By system regulations I mean a set of rules and management patterns applied in various management conditions and securing timely changes of management style in the company. Such patterns help find solution in very difficult situations, particularly for the most conservative associates. Though sometimes requiring large expenses, they bring profits due to the fact that associates are properly guided in various situations (meaning that they know what the management of the company will require in very complicated situations).
 
Certainly, on the other hand, such solutions can slower the company's progress as imposing conservative management style. But one should not lead it up to the point of irrationality, as some freedom of associates will hardly make any harm to the company. First of all, associates should have a clear vision of purposes and tasks structure and be aware of what is going on in the company. The top management of the company in its turn should understand the correlations between management mechanisms (consensus, compromise, autoritarism) in various situations at each hierarchy level. 

Management Automation

"Muddy water helps big fish hunt easily and small fish survive". Fear for putting everything in order can often signal some disorder in the company (concerning discipline, finances and so forth). At the same time automation of management can be considered as means of putting in order the affairs. And this point of view is supported by huge volume of investments in information technologies. However, one have to take it into account that automation of management should not be set as primary goal, because if the company is not ready for such changes it may be better either not to make them at all or to make partial changes in some divisions able to accept them. (Is it necessary to straighten out the ashes or it is better to start with getting away the dust).
 
Management automation itself represents the essence of production efficiency growth processes, of transparency and predictability of production, of getting additional profits due to proper and quicker decision-making. Frequently automated management systems get rejected due to a set of rather objective reasons. It can be some associate trying to hide something from another one, or, not understanding the essence of automation, he may fear the publicity, or proposed program solution can appear non-conforming to the company's activities. You can give more reasons why there is no way to automation, but finally all of them lead up to my version that a person is either afraid of something or trying to hide something (misruling, fear of responsibility, thefts, and idleness on workplaces, etc.).
 
Therefore it is extremely important to make analysis helping to create "psychological" portrait of the company's associates. Maybe we should not pay attention to some small fault of an associate if he keeps working effectively, however it is important not to let this fault turn into a big one, which can eat the company. Anyways, the mankind has always been involved in automation of its activities, no matter what they deal with: computers or paper, arithmometers or stone books. All the above-mentioned concerning the readiness of company for management automation can be related to a good housewife, who does her best to keep the house clean and cosy.

System Self-organizing

Here I would like to mention that both functioning and progress of the company should not in any way depend on the distribution of roles in the company. This thesis is not to be related to management style. "Like teacher, like pupil" they say in Russia, however the school should carry out its functions properly. A car should go irrespective of whether there are floor coverings present or air freshener used, or of whether its owner smokes or not. In a sense it is a mutual process of adaptation at top management changes or changes in management style. The new board is going to teach the associates to work in new direction, while the associates, in their turn, are expected to show the new board the way they used to work before. I mean that one should not make a revolution before he has a clear vision of what has been properly set before. (Even now the Russian people keep facing all troubles of restructuring).
 
I would like to mention an important factor from the point of view of self-organizing, which is the maintenance of continuity of administrative cycle. This is quite obvious, as in nature any closed cycle is basis for life organization. And it should not depend on concrete individuals at certain hierarchy levels, given that the essence of such notions as problem, purpose, task, result is basic and does not in any way depend on participants of action.
 
Even in times when there is no director, the company should exist and keep working for a certain time. This is the power of self-organizing, which resists destructive forces, as it is implied in the nature of things. This resistance is always present, and the top manager can be considered as a skilled one, if the management tree of the company does not dry up rapidly given the temporal absence of wise ideas moisture and does not get down under strong pressure of winds of shocks and crises, but waits some time and gets covered with blossom again.

Last modified: 10.03.2003
Translation by Elena Polyanskaya