Culture as a Factor of Influence on the Management Potential of Modern Organizations

Author Name(s): Khanif S. Mullakhmetov, Ruslan D. Sadriev, Ekaterina V. Krotkova, Rustam I. Sharafutdinov
Author Email: nek_m@rambler.ru

Abstract

The paper deals with the problems of management of Russian companies and suggests to form a strong corporate culture as one of the approaches to their solution. Management potential, as the most important component of the human capital of organizations, is considered as a system of three main subsystems (health, intellect and culture); a brief interpretation of each of them is provided. Based on the results of the study of the influence of corporate culture on the management characteristics of the 10 largest international and Russian companies, the role of cultural instruments as a reserve for improving the efficiency of Russian companies is substantiated, and the directions of work are outlined. The restrictions caused by the characteristics of the management system allow neither using intellectual resources in full, and reduce the adaptability and pace of development of Russian companies and their innovative activity. The authors believe that a strong corporate culture, consistent with the strategy of companies, can become the basis for fundamental qualitative changes in Russian companies.

Introduction

In the 1950s, the first professional associations of managers defined management in terms of “efficiency”, “planning”, “division of labor”, “management”, “control”, and management as a science had to systematize the accumulated world management experience and develop theory from this position [1, p. 19-26]. Studies of the history of management show that all successful civilizations and famous personalities sought to be more effective, for which they used various methods of planning, organization, motivation and control. [2, 3]. As Frank Arnold writes on the basis of a study of the biography of nearly 60 eminent personalities, “…The secret of successful management lies in the biography of these people: the way they have improved their own productivity is the principles of effective management” [4, P.10]. The author emphasized that effective management is the key to the success not only of individuals, but also of various organizations and society as a whole.

The problem of increasing efficiency becomes especially urgent in the emerging “new economy”, based on the constant and systematic generation of organizational, technological and product innovations. Scientists identify the role of management in ensuring the competitiveness of organizations. Strategic competitive advantages are formed today at the level of business processes, which effective functioning depends on the quality of management [5, C.7-8].

The researchers emphasize the need for a systematic approach to the problem of effectiveness. Considering productivity as a factor of increasing the efficiency and competitiveness, the scientists of KFU offer integral (multifactor) productivity as a key parameter of competitiveness [5]. Frank Arnold points out that productivity must be considered from the standpoint of the main constituent parts: work, time and capital; he emphasizes the need for paying attention to workers of intellectual labor, since they bring knowledge and innovations to the organization, and use them [4, P.64]. As we can see, in the conditions of the “new economy”, knowledge and innovation, carried by personnel, become key factors in improving the efficiency of management facilities.

In today’s world, the competitive advantages of the economy and the possibilities for its modernization are largely determined by the human capital accumulated and realized in various areas. Human capital is a diverse and highly complex productive factor that affects the development of the economy and society, including labor force, innovation system, high-performance accumulated knowledge, professional information systems, intellectual and organizational tools, quality of life and intellectual activity that ensure the effective functioning of the human capital [6]. Modern theories of economic growth treat human capital as one of its key factors, since it is human capital that can ensure economic growth not only by increasing labor productivity, but also through the generation and implementation of new ideas and innovations [7].

Today, in the age of innovative development, traditional methods of managing human capital lose their potential and become constraining factors that reduce the effectiveness of management. This requires the creation of a management system where the managerial potential, capable of providing adaptability and flexibility of management systems, a qualitative implementation of the conceived, the balance and harmonization of various social forces in the collectives, and the formation of healthy companies should play a decisive role.

Conclusion

The evolution of the development of corporate culture in the management system in the second half of the XX century shows that the concept of human capital, intangible assets accounting, the abandonment of the priority of financial indicators in assessing the performance of companies, will remain the main trends in management development in the XXI century. The problem of balance of management stability and flexibility as a condition of survival and competitiveness of companies in today’s business environment cannot be successfully solved without taking into account the cultural component in the management system.

As the studies showed, the possibility of strengthening managerial capacity through the tools of corporate culture at Russian enterprises is poorly applied.

The results of the study of the implementation status of lean principles in Russian enterprises showed that a practiced management style – the ignoring of the corporate culture as a management mechanism – is the main obstacle to the introduction of lean production philosophy [18].

The trend of the development of society and economy poses new demands for the management of social and economic systems; the qualitative transformation of human capital pushes management to “softly regulate” the actions and behavior of people on the principles of self-management and self-control based on a developed corporate culture.

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