Juan Antonio Pérez López - Foundations of management

FUOUNDATIONS OF MANAGEMENT

© Juan Antonio Pérez López, 2014

© Ediciones RIALP, S.A., 2014

Alcalá, 290 - 28027 MADRID (España)

www.rialp.com

ediciones@rialp.com

ISBN eBook: 978-84-321-4483-7

ePub: Digitt.es

All rights reserved.

No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission of the copyright proprietor.

Contact CEDRO (Centro Español de Derechos Reprográficos, www.cedro.org) if you need photocopying or scanning any extract of this book.

PROLOGUE

FIRST PART THE COMPANY: A HUMAN ORGANIZATION

CHAPTER 1: BUSINESS ORGANIZATIONS AS HUMAN REALITIES

Introduction

What is an organization

Formal organization and real organization

Elements of the formal organization

Elements of the real organization

Theories or models for explaining organizations

Mechanical or technical system models

Organic models: the organization as an organism

Anthropological model: the organization as an institution

Application of models to real-life situations

The business firm as a human reality

CHAPTER 2: HUMAN MOTIVATION – Mechanistic and psycho-sociological theories

Introduction

The mechanistic theories

The psycho-sociological models

Maslow’s theory

Herzberg’s theory

McGregor: Theory X and Theory Y

The limits of the psycho-sociological paradigm

CHAPTER 3: THE ANTHROPOLOGICAL THEORY OF MOTIVATION

Introduction

Motives of individual actions

Types of needs

Motivational conflicts and their relationship to learning

CHAPTER 4: THE INFORMAL OR SPONTANEOUS SYSTEM

Introduction

The formal system of an organization

The spontaneous or informal system of an organization

Organizational members

The operative and structural relationship of an organization

CHAPTER 5: HOW ORGANIZATIONS WORK (I) – I. The mechanistic models

Introduction

The mechanistic models

The concept of “organizational purpose” in mechanistic model

The nature of the “fund of incentives”

Types of power

The intrinsic limits of “coercive power”

The extrinsic limits of “coercive power”

CHAPTER 6: HOW ORGANIZATIONS WORK (II) – II. The psycho-sociological models

Introduction

The psycho-sociological models

The psycho-sociological notion of “organizational purpose”

CHAPTER 7: HOW ORGANIZATIONS WORK (III) – III. The anthropological models

Introduction

The concept of the organization’s unity

The anthropological model

The business organization as an institution

SECOND PART: GOVERNANCE DECISIONS

CHAPTER 8: THE FUNCTIONS OF MANAGEMENT

Introduction

The content of management processess

The models or paradigms of management

The strategic dimension of management

The executive dimension of management

The leadership dimension of management

The nature of leadership

The development of authority

The loss of authority

CHAPTER 9: EVALUATION OF MANAGEMENT DECISIONS (I) – I. The effectiveness criterion

Introduction

The effectiveness criterion in management decisions

CHAPTER 10: EVALUATION OF MANAGEMENT DECISIONS (II) – II. The efficiency criterion

The efficiency criterion in management decisions

The concept of efficiency

CHAPTER 11: EVALUATION OF MANAGEMENT DECISIONS (III) – III. The consistency criterion

The consistency criterion in management decisions

Extrinsic, intrinsic and transcendent motives in decisions

Affective satisfaction: sentiments and emotions

CHAPTER 12: ETHICS AND MANAGEMENT – The application of the consistency criterion

Introduction

The contents of “business ethics”

Personal and professional ethics of the manager

THIRD PART: MANAGEMENT ACTION

CHAPTER 13: FORMULATION OF THE FIRM’S PURPOSE

Introduction

Subjective and objective ends of a decisions-maker

Subjective and objective ends of business organizations

The formulation of purpose in business organizations

CHAPTER 14: OPERATIONAL DEFINITION OF THE PURPOSE

Introduction

Validity and operationality of the definition of a purpose

Operational definition of a goal

Operational definition of an object

Operational definition of the mission

The generic and specific mission of an organization

CHAPTER 15: THE DESIGN OF THE ORGANIZATION

Introduction

Operational definition of purposes in business organizations

Design of a business organization

CHAPTER 16: STRUCTURING THE DESIGN

Introduction

The concept of manager

The management structure

CHAPTER 17: IMPLEMENTING THE PURPOSE

Introduction

Strategic planning

Operative policies

Institutional policies

Management control

Juan Antonio Pérez López and Corporate Leadership 1

Marta López-Jurado

Esther Jiménez

Nuria Chinchilla

The mission of a business school is to train people for the practice of management, understood as a profession, and to develop new knowledge in the service of people, firms, and society as a whole.

Juan Antonio Pérez López was a professor at IESE Business School, University of Navarre, from 1962 until his death on June 2, 1996, as well as its dean from 1978 to 1984. His profound philosophical, scientific, and mathematical knowledge led him to pour his concern for personal formation into a theory of action in organizations, which has been a major and significant step forward for scientific research.

He wrote his doctoral dissertation at Harvard on control mechanisms in business. He explored general systems theory, the laws of cybernetics, and other subjects that supplied valuable knowledge by introducing a systemic paradigm for organisms, viewing the relationship between them as an essential element. Thanks to his interdisciplinary knowledge, Pérez López questioned the approach to the resolution of human problems on which the paradigm of scientists in these fields was founded.

If pressed to summarize Pérez López’s contribution, we would say that, from a holistic understanding of the person, he examined the human dimension of problems in decision-making in an objective manner. How did he arrive at this humanist synthesis? By designing a complete rule for decision-making, which both anticipates and analyzes the consequences that will arise as the problems faced by managers are resolved, neglecting none of the variables, and clearing the way for the discovery of new solutions.

His model is laid out—with all the complexity its logic entails—in his first book, Teoría de la acción humana en las organizaciones: La acción personal [The Theory of Human Action in Organizations: Personal Action] (1991). He later wrote Fundamentos de la dirección de empresas [Foundations of Management] (1993) 2. See the posthumously published book Pérez López (1998), Liderazgo y ética en la dirección de empresas. La nueva empresa del siglo XXI [Leadership and Ethics in Business Management: The New Company of the 21st Century] Deusto, Bilbao. Why publish an English-language edition of the latter book two decades later? Because Pérez López’s anthropological theory is both timeless and very significant for a comprehensive understanding of decision-making.

Pérez López sought a scientific explanation of reality. He produced a positive science with the goal of helping people to make the right decisions. His theory is not simply one step further in a field of knowledge developed over the centuries, nor one more variation on some recent trend. His theory amounts to a radical transformation in how human actions and organizations are understood. Bibliographical references to other authors and to many of the problems they discuss, such as in organizational theory, may be noticeable by their absence. Such a catalog was not his aim. The decision-making process he developed corresponds to a fundamental anthropological idea on human development within organizations, one that moves beyond previous theories and is more crucial than ever for resolving the great challenges that we confront as a society today.