People and Organizational Management in Construction Second edition Shamil Naoum London South Bank University, UK Published by ICE Publishing, 40 Marsh Wall, London E14 9TP. Distributors for ICE Publishing books are USA: Publishers Storage and Shipping Corp., 46 Development Road, Fitchburg, MA 01420 First published 2001 Second edition 2011 Also available from ICE Publishing Initial Professional Development for Engineers H.M. Steels. ISBN 978-0-7277-4147-9 Art and Practice of Managing Projects A. Hamilton. ISBN 978-0-7277-3456-3 Employment Law for the Construction Industry, Second edition M. Ryley and E. Goodwyn. ISBN 978-0-7277-3460-0 Managing in Construction Supply Chains and Markets A. Cox, P. Ireland and M. Townsend. ISBN 978-0-7277-3001-5 www.icevirtuallibrary.com A catalogue record for this book is available from the British Library ISBN 978-0-7277-4151-6 # Thomas Telford Limited 2011 ICE Publishing is a division of Thomas Telford Ltd, a wholly-owned subsidiary of the Institution of Civil Engineers (ICE). All rights, including translation, reserved. Except as permitted by the Copyright, Designs and Patents Act 1988, 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 or otherwise, without the prior written permission of the Publisher, ICE Publishing, 40 Marsh Wall, London E14 9TP. This book is published on the understanding that the author is solely responsible for the statements made and opinions expressed in it and that its publication does not necessarily imply that such statements and/or opinions are or reflect the views or opinions of the publishers. Whilst every effort has been made to ensure that the statements made and the opinions expressed in this publication provide a safe and accurate guide, no liability or responsibility can be accepted in this respect by the author or publishers. Typeset by Academic þ Technical, Bristol Printed and bound in Great Britain by CPI Antony Rowe Limited, Chippenham and Eastbourne The importance of the construction industry is highlighted by Preface the fact that it is very labour intensive and provides work for about 6–7% of the total workforce in the UK. Despite its importance, there seems to have been a limited amount of research conducted on the behavioural aspects of the construction industry. Moreover, the texts that are available on the management of organizations and people in construction are also limited. The aim of this book is therefore to fill this important gap by applying general principles of management specifically to the construction industry. The idea of writing the first edition of this book grew out of my belief that people are the heart of any successful organization and can be regarded as the building blocks of its structure. Throughout my career as a project manager and as a lecturer in construction management I became convinced that practitioners, as well as construction students, needed a book that could offer an applied approach to people and organizational management in order to help them understand human and organizational behaviour as well as to assist in the search for the most appropriate ways of improving organizational performance and effectiveness. In this book, this will be achieved through the study of the management concepts and theories and the application of these concepts and theories in construction-related case studies. It is the blending of theory with practice that is at the heart of good management of people and organization and the study of the subject should reflect that experiential learning, as in the case studies and examples presented in this book. The key issues which will be discussed in this book are evolution of management theories, environmental forces and strategy, organization structure, work groups, organizational culture, leadership, motivation and personnel management. In this second edition the text retains the same underlying aims and learning outcomes that have been the hallmark of the success of the book. There has been a review of the content between and within chapters. The main changes in the second edition include g merging Chapters 3 and 4 together to form an integrated chapter g rework of the leadership chapter to include additional coverage g rework of the motivational chapter to include additional coverage g introduction of ‘end of chapter questions’ g introduction of ‘end of book appendices’; these appendices provide suggested answers to questions related to each chapter g general update to the references. xi Preface xi Contents About the author xii Acknowledgements xiii 01............................... Introduction 1 The meaning of organization 1 Aim and learning objectives of the book 3 Need for the book 3 Approach to the book 4 The plan of the book 4 02............................... Evolution of organization and management theory 9 Learning objectives 9 The meaning of management 9 Evolution of management theory 10 Classical theory (1850s–1930s) 11 Human relations theory 14 System theory 15 Contingency theory 19 The concept of models 20 Summary and conclusion 21 References 22 03............................... The environment and organizational strategy 23 Learning outcomes 23 Definition of the external environment 23 Characteristics of the external environment 24 Forces of the external environment on organizations 26 Strategic response to the environment 28 The concept of strategy 28 Strategic management 31 Types of strategy 32 Advantages of a planned business strategy 33 The business strategy process 34 Summary and conclusion 47 Case study 1. A medium-sized regional contractor (part of a larger construction group) 48 Case study 2. A progressive quantity surveying practice 50 Questions 52 References 52 04............................... Organizational structure 55 Learning outcomes 55 The meaning of organizational structure 55 Topics associated with organizational structure 58 Types of organizational structure 66 Factors influencing the choice of organizational structure 72 Configurations of the organization 83 The relationship between organizational structure and performance 84 Summary 89 vii Case study. The growing pains of Harvey (Engineers) Ltd 89 Questions 98 References 98 05............................... Work groups 101 Learning objectives 101 The purpose of groups 104 Bases for grouping 105 Interdependence and communication networks 105 Factors affecting group cohesiveness and effectiveness 107 Team building 119 Group conflict 122 Summary and conclusion 125 Case study. Chelston plc 126 Question 129 References 129 06............................... Organizational culture 131 Learning objectives 131 The concept of culture 131 The Harrison/Handy culture types 134 Characteristics of culture 137 The best fit 137 Factors that contribute to a change of organizational culture 139 Strong and weak cultures 145 Culture and company performance 146 Summary 149 Questions 150 References 150 07............................... Leadership 151 Learning objectives 151 The nature of leadership 152 Leadership versus management 153 Leadership theories 154 Empirical research into leadership traits and site managers 156 Functional approach 157 Style theories (also known as the behavioural approach) 159 Empirical research into leadership styles and site managers 163 Contingency theories (also known as the situational approach) 165 Empirical research into contingency theory and site managers 170 Proposed conceptual model of leadership effectiveness in organizations 177 Summary 185 Case study. A change of project managers 185 Questions 187 References 187 viii 08............................... Motivation and job satisfaction 191 Learning objectives 191 The meaning of motivation 191 Content theories of motivation 193 Process theories of motivation 200 Factors influencing employees’ motivation within an organization 203 Productivity model of a construction site 212 A productivity survey 215 Summary and conclusions 217 Questions 218 References 219 09............................... Personnel management 221 Learning objectives 221 The meaning of personnel management 221 The personnel function 224 Manpower (human resource) planning 224 Recruitment 227 Staff appraisal 229 Staff training 232 Management development 233 Investors in People (IIP) initiative 234 Health and safety 234 Summary 236 Case study. Investors in People at Shepherd Construction 236 References 242 Appendices . ................ Appendix 1 – Suggested answers to questions related to Chapter 3 245 Appendix 2 – Suggested answers to questions related to Chapter 4 251 Appendix 3 – Suggested answers to questions related to Chapter 5 265 Appendix 4 – Suggested answers to questions related to Chapter 6 269 Appendix 5 – Suggested answers to questions related to Chapter 7 277 Appendix 6 – Suggested answers to questions related to Chapter 8 285 Index 293 ix People and Organizational Management in Construction ISBN 978-0-7277-4151-6 ICE Publishing: All rights reserved doi: 10.1680/pomc.41516.001 Chapter 1 Introduction The meaning of organization Organizations come in various sizes and shapes to perform specific functions. The func- tion of the organization can be classified as ‘formal’ and ‘informal’. A formal function produces a visible product, such as a car or a building, that is usually consumed by portions of society that are outside the organization. An informal function, on the other hand, does not necessarily produce a result immediately visible to the outside society; examples