Contemporary Management Issues and Challenges


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Contemporary Management Issues and Challenges

Managers today face an imposing set of challenges as they guide and direct the fortunes of their companies. Coverage of each topic, introduced next, is thoroughly integrated throughout this book.  Enrol on one of BOTI’s business management courses, leadership training courses or business administration courses and learn more about what managers face in today’s business climate.


One major management challenge that is all too common today is downsizing, which occurs when an organization purposely becomes smaller by reducing the size of the workforce or by shedding entire divisions or businesses. From around the mid-1980s through today, it has become commonplace for firms to announce the elimination of thousands of jobs. For example, in recent years General Motors, IBM, and AT&T have undergone major downsizing efforts involving thousands of employees. Even some Japanese firms-long thought to be immune to this challenge have had to downsize as a result of problems in the Japanese economy. Organizations going through such downsizing have to be concerned about managing the effects of these cutbacks, not only for those who are being let go, but also for those who are surviving-albeit surviving with a reduced level of job security.

Diversity and the New Work Force

A second important challenge today is the management of diversity. Diversity refers to differences among people. Although diversity may be reflected along numerous dimensions, most managers tend to focus on age, gender, ethnicity, and physical abilities/disabilities. The internationalization of businesses has also increased diversity in many organizations, carrying with it additional challenges as well as new opportunities. Motivating employees from different age categories, from senior citizens to Generation X-ers, is a related issue.

Information Technology

New technology, especially as it relates to information, also poses an increasingly important management challenge. The Internet and World Wide Web, local area networks and intranets, and the increased use of e-mail and voicemail systems are among the most recent technological changes in this area. Among the key issues associated with information technology are employee privacy, decision-making quality, and optimizing a firm’s investments in new forms of technology as they continue to emerge. A related issue confronting managers has to do with the increased capabilities this technology provides for people to work at places other than their office.

New Ways of Managing

Another important management challenge today is the complex array of new ways of managing. As noted earlier, theorists once advocated “one best way” of managing. These approaches generally relied on rigidly structured hierarchies with power controlled at the top and rules, policies, and procedures governing most activities. Now, however, many managers are seeking greater flexibility and the ability to respond more quickly to the environment. Thus, organizations today are often characterized by few levels of management, broad, wide spans of management, and fewer rules and regulations. The increased use of work teams also goes hand-in-hand with this new approach to


Globalization is yet another significant contemporary challenge for managers. Managing in a global economy poses many different challenges and opportunities. For example, at a macro level, property ownership arrangements vary widely. So does the availability of natural resources and components of the infrastructure, as well as the role of government in business. Another important consideration is how behavioral processes vary widely across cultural and national boundaries. For example, values, symbols, and beliefs differ sharply among cultures. Different work norms and the role work plays in a person’s life can influence patterns of both work-related behavior and attitudes toward work. They also affect the nature of supervisory relationships, decision-making styles and processes, and organizational configurations.

Ethics and Social Responsibility

Another management challenge that has taken on renewed importance is ethics and social responsibility. Scandals in organizations ranging from Drexel Burnham Lambert Inc. (stock market fraud) to Beech-Nut (advertising baby apple juice as being 100 percent pure when it was really chemically extended) to the Japanese firm Recruit (bribery of government officials) have made headlines around the world. From the social responsibility angle, increasing attention has been focused on pollution and business’s obligation to help clean up our environment, business contributions to social causes, and so forth.

Managing for Quality

Quality also poses an important management challenge today. Quality is an important issue for several reasons. First, more and more organizations are using quality as a basis for competition. Second, enhancing quality lowers costs. Whistler Corporation recently found that it was using 100 of its 250 employees to repair defective radar detectors that were built incorrectly the first time. Quality is also important because of its
relationship to productivity

Service Economy

Finally, the shift toward a service economy also continues to be important. Traditionally, most businesses were manufacturers-they used tangible resources like raw materials and machinery to create tangible products like automobiles and steel. In recent years, however, the service sector of the economy has become much more important. Indeed, services now account for well over half of the gross domestic product in the United States and play a similarly important role in many other industrialized nations as well.

Service technology involves the use of both tangible resources (such as machinery) and intangible resources (such as intellectual property) to create intangible services (such as a hair cut, insurance protection, or transportation between two cities). While there are obviously many similarities between managing in a manufacturing and a service
organization, there are also many fundamental differences.