The Management Charter

Promotion decisions can be called “life-and-death” decisions for managers. So are decisions to dismiss or to demote a manager, decisions on his salary and on the scope of his job. Hardly less important to the manager are decisions on the scope and work of his unit – capital investments, for instance. Even the appraisal vitally affects a manager’s life and career in the company. These decisions are too important to be left to one man’s unaided judgment.

In respect to appraisals this is generally recognized; many appraisal systems demand that a manager review his appraisals of his subordinates with his own superior. In a few companies this principle is extended to all decisions affecting a manager’s status, pay for position. General Electric, for instance requires that all such decisions be approved by the superior of the manager making the decision before they are put into effect. But in most companies such a rule is observed only for appointment to top positions. In respect to lower managers, there is normally neither clear understanding who is responsible, nor any safeguard against the faulty or arbitrary judgment of one man. And decisions other than those directly affecting a man’s promotion, demotion, dismissal and salary are commonly left dangling in mid-air.

A manager should know who makes these decisions. He should know whom he has to consult in making them, and know that decisions made in respect to his job and work have been safe guarded against one man’s arbitrariness or lack of judgment . He should also a right of appeal.

The most sensible approach is that of Continental Can. In this company every member of management can appeal against any life and death decision affecting him, his job, or his work, all the way up to the president and the chairman of the Board. Appeals to this “final court” have been extremely rare. Most, if not all, appeals are disposed of at the first hearing way down the line. But the fact that there is a right to appeal to the top has had a powerful impact on the whole management group. A manager making a life-or-death decision will give it greater care. A manager affected by such a decision does not feel the helpless victim of spite, bias or stupidity.

Even more potent than thee safeguards against mistakes are practices which demonstrate to all men that management sincerely wants to have the right spirit. The simplest practice is one that says in effect to all managers: The spirit of this organization is the business of every one of us. A manager must find out what he is doing to build the right spirit in the unit he heads and tell the higher management what he can do to build the right spirit in the unit of which he is a part.

Such self-examination of the manager’s own and of his superior’s practices always leads to improvement. It is a major contribution to management spirit. It convinces people that top management is not content to preach but is determined to act. It creates a desire to improve. And in all matters of the spirit determination and desire to improve are perhaps even more important than the actual level of performance; dynamic growth is more productive than static perfection.

In India even 2 decades ago companies like HLL and L&T had excellent appraisal and reward recommendation system. Each appraisal of an immediate superior (say manager) was reviewed by the next superior (senior manager or profit center head) and rewards were recommended based on the budgeted total allocations for that unit or profit center. Certain criteria was clearly outlined and made known to all executive cadre employees about promotion eligibility and performance required from them.