This report is a study on how Hayleys PLC, a Sri Lankan conglomerate of companies, which had evolved over time in facing challenges of the external environment by adapting internal management practices.
The report will initiate with an introduction on the company’s profile in the past, present and future. Following this the report will provide descriptions of some traditional management frameworks and theories to understand how Hayleys PLC have adapted these to match the changing environments of the Sri Lankan market.
The report will further discuss the most common challenges faced by organizations such as Hayleys PLC in contemporary business world and recommendations on how the style of management should be will be discussed. At the end, an overall conclusion of the report is given.
Hayleys PLC is a Sri Lankan conglomerate of companies that established commercial operations in 1878 as Chas P. Hayley and Company. The company was listed under the Colombo Stock Exchange 61 years back under the name Hayleys PLC. It stated businesses in processing coconut fibre and exporting industrial coconut fibre to overseas countries. Today Hayleys PLC operates with many businesses in various sectors ranging from logistic operations, manufacturing and marketing activated carbon, knitting fabrics, export of rubber related industrial products and tea, agriculture related products, business support services, domestic and international courier, luxury hotels and spas and even acting as agents for international airlines. The company operates manufacturing facilities and international offices in USA, UK, Australia, Japan, Italy, Netherlands, India and Bangladesh. It claims for a 3.17% of Sri Lanka’s export income out of which 4.5% is from tea exports and 2.2% is from rubber production (Hayleys, 2017).
Hayleys’ vision stands as ‘To be Sri Lanka’s corporate inspiration at all times’, while the mission statement reads ‘Delivering superior shareholder value by unleashing the full potential of our people and achieving leadership in all the domestic and global businesses (Hayleys, 2017). The company also operates under seven corporate values which include, Integrity, Enduring Customer Value, A Will to Win, Respect for People, Good Citizenship, Teamwork and Accountability.
The subsidiaries of Hayleys PLC operating either under acquisitions, mergers or fully fledged businesses under the corporate brand are managed by the management appointed by votes of the Governing Member Council of the Hayleys PLC. Hayleys PLC is the central location of all companies that formulate strategies and execute leadership to all the subsidiaries. As such, the management styles and cultures of each subsidiary would vary depending on the styles of management of each manager.
Management theories originated with bureaucratic management theory, which focused on the authorities of managers to achieve the maximum output from the resources. Later the theories focused on the behavioral aspects of organizations that determined the culture and performance. The theories further developed in to accommodating data and information in to managing modern organizations in highly ambiguous environments.
Since1890, management theorists and scientists have forwarded theories and frameworks to argue that firms can gain benefits by practicing either traditional or modern management approaches. Max Weber proposed in his Theory of Social and Economic organizations that leaders in organizations should have three distinct legitimate authorities over its employees. Charismatic authority where the followers obey the leader because he/she is special and believed to have supernatural powers to control people’s behavior, traditional authority where leaders inherit their status and power through generations and Rational – Legal authority within which authority is exercised through rules imposed by individuals that run the entities (Weber, 2012).
Following this principle, Henry Fayol put forward his theory of management in 1916, which included 14 principles of managing organizations. They focused more on administrative perspectives such as division of labour, specialization of employees in one area of work, authority owned only by managers, discipline among all employees, maintain continuity of work operations, unity of command which referred to a central point of authority, and principles of order, equity, stability of tenure of personnel, initiative and Esprit de Corps where organizations are responsible to uplifting team spirit employees and treat all employees in an equal manner etc (Fayol, 1937).
As such, theories forwarded by Elton Mayo focused on human and social relations as important aspects of business management and stated that employee productivity can be controlled by means human motivation (Mayo, 2003). Maslow (2013, forwarded the theory of hierarchy of human needs that focused on five levels of human needs and how organizations could focus on enabling employees to fulfill these needs. McGregor (2006) in his theory put forward two types of managers where managers X perceive employees to have negative impacts to the organization and Y managers who perceive employees as an asset that could develop organizations.
Taylor (1911) forwarded the theory of Scientific Management which focused on operating businesses under practices such as planning, quality control, process design engineering, cost accounting and ergonomics. The framework focuses on improving an organization’s ability to make rational and accurate decisions by considering scientific, engineering and mathematical analysis.
Organizational environment theory focuses on dealing with external forces that affect the performance and resources of organizations. Katz and Kahn (1978), viewed organizations as an open system that absorbs in resources from external environments, transforms them in to consumable goods and services and sends the same back to the external environment.
Mullins (2007) and Bloisi et al (2003), state that organizations initiated its frameworks and studies in the beginning of the 20th Century and focused mainly on technical aspects, competencies, rules and discipline within the management. However, with the evolution of globalization, information technology and internationalization of businesses, organizations and management frameworks seem to take a more modern approach that focuses primarily on the long term development of human beings intending to enable them to unleash their capacities (Mullins, 2007).
Similarly, Hayleys PLC too faces many impacts from its external environments and the biggest challenge to the company is to ensure effective allocation of scarce resources that target at transforming the same into profitable means with the effective integration of its human resources and advancing technologies. Some of the primary challenges faced by Hayleys PLC can be categorized as below:
Maximizing Scares Resources
Raw materials used for production operations are often extracted from natural sources and thus these resources remain scares. Hayleys PLC exports processed raw materials such as tea, coconut fibre, rubber, activated carbon, food and plants as its business operations. One challenge that the company face is ensuring the sustainability and maximization of these scarce resources. Financial capital, technology and People are also considered as scarce resource at Hayleys PLC. Thus, Hayleys PLC must ensure that these 4 Ms (Man, Material, Money and Machinery) are utilized effectively to create competitive advantage and profitability.
Effective management and leadership that focus on external environmental factors and the current situation of the organization can enable Hayleys PLC to maximize these scarce resources and ensure their sustainability. For example, during a time of financial crisis in the economy, the managers should focus on developing skills and expertise of employees so that an innovative culture can be created which will in turn boost the economy through innovative ideas, products and business models.
Staying abreast with environmental changes
Some managers of Hayleys PLC would have started their career in mid-1990’s. Technology and society have transformed rapidly from 1990’s to date. Introduction of smart phones, information sharing through internet, social media and digital platforms have transformed the perceptions and attitudes of the work force of the company, who are probably of the Y generation and millennial generation. The managers who have traditional ways of managing employees will not be effective in achieving the goals of the company as these employees of the new generation are rich with ideas, innovation, creativity and are very flexible in switching careers.
Therefore, managers of Hayleys PLC need to keep their skills fresh and updated with the advancements of technology and adapt soft skills to accept attitudes of the younger generation and encourage them to reach high potentials in their careers.
The Art of Employee Retention
Managers need to understand that money is not the only factor that motivate the young generation. They focus more on factors such as a learning environment, opportunities to be creative, recognition and personal space for a career to be more successful. Today’s economies and governments encourage knowledge sharing and as such many opportunities for people to be qualified, skilled and educated are provided. Today many multinationals hire management trainees with at least two Bachelor Degrees.
Similarly Hayleys PLC needs to ensure that these employees are trained and groomed with career progressions to become leaders who can manage challenges well ahead of competitors. The money spent on developing human should be viewed as an investment for the future. Companies need to differentiate between training employees who may leave or keeping with them, untrained employees who cannot create any competitive advantage to the company.
Evaluating Performance of Business Activities
One of the other major challenges for Hayleys PLC would be to evaluate the performance of its business activities such as marketing, recruitment of employees, quality of products and services and continuous improvement as measurement tools such as budgets, gap analysis, customer retention rates, market share percentages may always not be effective in giving the actual performance of the above said activities.
It is therefore important for Hayleys PLC to create a knowledge management system which would incorporate and share the skills, experiences and innovative ideas of employees in order to reengineer processes to be more effective, formulate marketing strategies to make promotional activities more effective, to make decisions on selecting the best business model and to create proactive strategies to outperform competition.
Thus, although tools of measurement and analysis would be less effective, a knowledge culture would make internal operations to be more effective which will in turn make the product offering to be most preferred in the market by its customers.
It is hence evident that managers need to adapt management styles to suit the external environment as well as counter the challenges that are created by the environment to effectively carry out operations of the business. Fielder’s Contingency model states that there is no best way to lead or manage organizations. Instead the effectiveness of management depends on situation of the organization. The satisfaction of the organization may result due to the leadership style and the situational control.
Fielder (1967) developed the Least Preferred Co-worker Scale (LPC Scale) where the scores are summed up to evaluate the effectiveness of the managerial initiatives. As per Fielder task oriented leaders usually have lower scores but is effective in completing the assigned tasks and relationship oriented leaders have higher scores but they focus more on personal connections and are good at making complex decision.
The situational control of the particular situation would depend on three factors.
- Leader-Member Relations that focus on the trust and confidence level the employees have on the manager
- Task Structure that focuses on the task and the completion of it
- Leader’s position power that analyses the degree of power the leader have over his employees for reward or punishment
Accordingly, applying the optimal leadership style will ultimately lead for the highest contribution of employees to deal with the contemporary environmental situations in a proper manner, and to achieve sustainable competitive advantages over time.
Hayleys PLC’s main operation is to formulate strategies and provide direction to its subsidiaries as it’s the central location of all its subsidiaries. As such Hayleys PLC require allocating financial and human resources to its subsidiary businesses. This in turn this requires proper flow of inputs and information from subsidiary companies regarding their customer markets and competitions to Hayleys PLC so that the Governing Management of Hayleys PLC can formulate strategies to develop effective management skills within the subsidiaries.
Hayleys PLC should establish proper career progression plans for its employees and groom managers to be leaders of the company that execute leadership skills based on the changing situations of the market. In addition the company should also focus on creating a positive corporate brand image for the company to be more viewed as the most preferred employer to potential employees in the market. As such the management of Hayleys PLC should contribute directly towards achieving its vision and mission statements keeping all operations aligned to its seven corporate values.
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