CHAPTER ONE

INTRODUCTION

1.1. Background of the Study

Challenges are a universal and normal phenomenon in social life, they occur but family members, friends and relatives manage them. Management has been a part of organizational planning and structure since the industrial revolution. For years, managers have used different theories to maximize efficiency and minimize costs. In the early 1900s, Frederick Taylor and Henry Fayol were two of the first theorists to use scientific and systematic techniques to organize factories, boosting productivity. Management theories continued to evolve over the decades, with Max Weber introducing principles such as bureaucracy, then Elton Mayo teaching the human relations approach, Maslow’s Hierarchy of Needs, and other modern ideas. Management in today’s organizations looks very different from its origins but still applies many of these concepts from centuries ago. Management theories are essential to understanding how organizations are structured and how to manage any situation effectively (Higgins, J. M. 1991).

Frederick Taylor (1856-1915) is one of the most famous individuals in the history of Management Theories. He credits for developing the theory of Scientific Management, which he published in his book, The Principles of Scientific Management, in 1911.Frederick Taylor is known as the “father of modern management,” and his contribution to the History of Management Theories has been invaluable. He was a firm believer in scientific management, which emphasized using scientific methods to study the tasks involved in the production and to optimize those tasks through increased efficiency (Koontz, H.,& O’Donnell,C.19955).

Henri Fayol (1841–1925) is one of the most influential figures in the history of management theories, and his work is considered a foundation for modern management theories. He is known as the “Father of Modern Management.” Administrative Theory: The administrative theory focuses on organizations and organizational operations. It was first outlined in the 1916 book Administration Industrielle et Générale. Fayol proposed 14 principles for efficient organizations. These 14 principles include unity of command, division of labour, scalar chain, subordination of individual interests to general interests, remuneration based on merit and equity, centralization or decentralization, order, authority, and responsibility. Organizations worldwide essentially adopted these principles as ways to improve efficiency. Workplace Management: Fayol’s innovative workplace management approach focused on people rather than machines or production processes. He argued that workers should be treated with respect and given fair treatment, such as good wages and proper training, to motivate them to work harder (Pindur, W., Roger, S.E.,& Kim,P.S.1995).

Max Weber is one of the most influential figures in the history of management theories, and his works are still highly regarded today. He was a German sociologist and political economist who published profoundly influential texts on bureaucracy, authority structures, economic sociology, and religious analysis. His theories focused on understanding the relationships between power, authority, and social stratification. Douglas McGregor was an American social psychologist and management theorist. He is best known for his contributions to the History of Management Theories, notably his Theory X and Theory Y. His t, his theories remain highly relevant in modern-day management research, and practice theories have been highly influential in developing modern management practices. Theory X and Theory Y: This model proposed two different approaches to managing people. It has a negative process (Theory X) that assumes that employees are lazy and need to be motivated by external rewards. In addition, a positive direction (Theory Y) assumes employees are self-motivated and can be trusted with more responsibility. The model became one of the most widely accepted models for understanding employee motivation and has significantly impacted modern management practices. (John D. Rockefeller, James B. Duke, Andrew Carnegie, 1998.)

Peter Drucker was one of the modern era’s most influential and widely recognized management theorists. He was an Austrian-born American management consultant, educator, author, and professor who made significant contributions to the field of management theory. Drucker is considered a pioneer in the field of business strategy and organizational development. His ideas helped shape how corporations are managed today. His most influential works were The Practice of Management (1954) and Concept of The Corporation (1974). These books had a profound impact on the way businesses operate and manage their affair. (McFariand, Donald. 1979)

1.2. Statement of the Problem

Managerial challenges resolution has received increasing attention in the organization; despite the interest made to manage challenges, both employers, employee’s commitment has persistently continued to be low, and management practices have remained a much-neglected topic of the study. Challenges at work place is inevitable, the Shisong Cooperative Credit Union Limited (SHICCUL) is facing more problems due to factors like poor communication, differences in personalities, limited resources interdependence and employee health safety precautions are not emphasized and health expenses are not supported by the company. If these problems are not well managed according to (S. Robbins 1978) it would seem to lead to low decision-making and decline in performance.

Low employee commitment is because of ineffective leadership. Employees look to their managers for direction in the workplace. Good communication that starts from the top down motivates staff members to be more productive and innovative. These good leaders clearly communicate objectives, goals, and future visions. However, poor and incompetent leaders are more than often indecisive and are unable to inspire their team. Bad leadership stem from managers being unable to answer questions or clarify points, so that their employees are left even more confused and frustrated than when they started, which  this going to affect the financial performance of the organization.

Poor communication occurs because of the discrepancy between what is said and what is heard, between colleagues or between an employee and a manager. More specifically, the understanding between two people is not mutual when the person being communicated misunderstands what you are communicating to them. In that case, if the communication between the managers and the subordinate in an organization is not effective, the financial performance of the credit union will be affected.

Personality differences among co-workers are common. By understanding some fundamental differences among the way people think and act, we can better understand how others see the world. Knowing that these differences are natural and normal lets us anticipate and mitigate interpersonal conflict. It is often not about “you” but simply a different way of seeing and behaving. With the differences of individual, if the manager is not able to handle the differences, it brings in confusion and affect the employees in their process of working and it will eventually affect the finances of the organization.

Limited resources such as money, time, and equipment are often scarce. Competition among people or departments for limited resources is a frequent cause for conflict and if the manager not able to settle this, it will be a serious challenge to the organization. If the resources are limited, the performance will be affected and may not be the best.

1.3. Research Questions

1.3.1. Main Research Questions

What is the effect of managerial challenges on the financial performance of Shisong Cooperative Credit Union Limited(SHICCUL)  

1.3.2. Specific Research Questions

1. What are the effects of poor communication on the financial performance of SHICCUL?
2. How does limited resources interdependence affect the financial performance of SHICCUL?

• To what extend does differences in personality affects the financial performance of SHICCUL?

1.4. Objectives of the Case Study

The prime objective of the study is to assess the effects of managerial challenges on the financial performance of SHICCUL in Cameroon.

1.4.1. General Objectives

The major objective of this study will be to evaluate the effects of managerial challenges on the financial performance of Shisong Cooperative Credit Union Limited.

1.4.2. Specific Objectives

1. To investigate the effect of poor communication on financial performance of SHICCUL.
2. To determine the effect of limited resources interdependence on financial performance of SHICCUL.

• To examine the effect of differences in personality to the financial performance of SHICCUL.

1.5. Hypotheses

H0₁:  There is no significant effect of poor communication on financial performance.

H0₂: There is no significant effect of limited resources interdependence on financial performance.

H0₃: There is no significant effect of differences in personality on financial performance.