Management Principles and Practices 1

Case Study:
Enterprise Rent-
A-Car
 MANAGEMENT PRINCIPLES AND PRACTICES 1

Case Study: Enterprise Rent-A-Car

 1
Question

G
reat companies require effective managers and leaders
to guarantee success. But what are the differences
between management and leadership?

The market is changing so rapidly that products and services

that successfully met consumer tastes and needs a few years
ago are obsolete today. Proactive leadership must constantly
monitor environmental change, particularly customer buying
habits and motives, and provide the force necessary to
organise resources in the right direction1.

Former HP CEO & President Carly Fiorina described in a

Stanford University lecture the difference between leadership
and management is “…leadership as changing the order of
things and management as the production of acceptable
results within known constraints and conditions. Management
is not leadership.”2

These ‘constraints and conditions’ are the disciplines and what

makes up the structure of a successful organisation. The
Oxford definition of constraint is “strict control over the way
you behave or are allowed to behave”3 whilst condition is “the
circumstances or situation in which people live, work or do
things”4. Hence management power comes from organisational
structure, as it promotes these constraints and conditions “…as
stability, order and problem solving within the structure…”5
which consequently should produce ‘acceptable results’.

1
Covey, S., 1990, Seven Habits of Highly Effective People, The Business Library, Utah

2
Fiorina, C., 2007, The Difference between Management and Leadership, Stanford University, viewed May 2, 2007,
<http://ecorner.stanford.edu/authorMaterialInfo.html?mid=1718>

3
Anon., 2010, Oxford Advanced Learner’s Dictionary, Oxford University Press,
http://www.oxfordadvancedlearnersdictionary.com/dictionary/constraint

4
Anon., 2010, Oxford Advanced Learner’s Dictionary, Oxford University Press,
http://www.oxfordadvancedlearnersdictionary.com/dictionary/condition

1
 Individuals with leadership ability initiates changes however it
is an innate or acquired ability (whether conditioned internally
in the workplace or externally) that can be possessed by
anyone in the company especially senior staff & managers
within the organisation.

Management is an official authority commanding different

hierarchies in the organisation. Leadership power on the other
hand comes from less tangible factors, such as values,
interests, and other personal attributes6. Leadership is an
individual’s attribute to influence their peers to achieve
business objectives & possibly inspire changes to these
objectives.

To meet business objectives it is fundamental for management

to have control & organisational skills. Entities require a
diversity of skills to fulfill managerial criteria. They include:

• Plan and organize people and resources

• Set and monitor budgets
• Control operations or services in order to meet
customers’ needs7

These criteria are essential in meeting business objectives at

all hierarchies of the organisation.

In terms of leadership, staff with these qualities motivates their

subordinates or colleagues and decides the direction of their
team, department or even the overall organisation. Leaders
have a tendency to shape the outcome of meetings by
influencing their peers or are looked upon for decision-making.

There is a closer correlation between a leader and manager

than there are differences in most instances. This is illustrated

5
Samson & Daft, 2009, Leading: Leadership versus Management, 3rd edn, Management, Cengage Learning Australia,
Victoria

6
Think Education, 2010, Management principles and practices Study Guide, page 11, Think Education, North Sydney,
NSW

7
‘Using a range of management styles to lead a business’ 2008, The Times 100, page 65, <www.thetimes100.co.uk>

2
 2
Question

with Enterprise General Manager who leads a regional group of

City Managers; City Managers are leaders of their front-line
management employees. Andy Taylor, the current Enterprise
Chairman and CEO, was a manager for his father Jack Taylor.
He carried out the processes and systems his father set up.
Today, Andy leads and manages the business8.

M ost organisations face the challenge of a competitive

market; hence businesses and corporations have to
attain high level of customer service to remain
competitive. Key personnel such as Management Accountants
& Internal Auditors might assist managers develop cost
processes and service benchmarks for staff to adhere to in
order to achieve their business objectives. During these
instances, management has to be firm, express their decision
to their subordinates and have them work within the
introduced process.

In a demanding industry, managers have to adopt an

Autocratic-style of leadership to meet business objectives.
They have to make unilateral decision that must be enforced
on their subordinates. Employees are expected to adhere to
these decisions as their managers have legitimate powers with
the consequence of punishing or rewarding their workers.

For instance Andy Taylor was adamant the customer

satisfaction measure, ESQi be a mandatory benchmark for all
branches to achieve business objectives. To increase
dedication from employees, an opportunity of promotion will be
awarded when they reached or exceeded such benchmarks9.

8
‘Using a range of management styles to lead a business’ 2008, The Times 100, page 66, <www.thetimes100.co.uk>

9
‘Using a range of management styles to lead a business’ 2008, The Times 100, page 66, <www.thetimes100.co.uk>

3
 3
Question

An illustration of where autocratic leadership style may be

appropriate is when the entity is new and the employees are
inexperienced and hence needs the guidance of leadership in
their work. Another instance is if the people are disengaged in
their job and have no clear direction and there is vast internal
politicking of the kind that is disruptive and causes an
emotional strain in the way the organisation is being managed.
Here a powerful autocratic leadership might help to re-align
the organisation to its original position and get the people back
in shape10.

W
ith organisations adopting autocratic-style leadership
to remain competitive in the market via service
benchmarks, two major predicaments still remain;
motivating staff & employee retention. Organisations
repeatedly discover that they spend substantial effort; money
and time to train staff only to have them improve into an
important asset and depart the organisation for better
opportunities.

The problem is that the managers have not determined

employees’ needs such as growth within the company.
Consequently, the individuals’ needs have not been satisfied
and it has not corresponded with their own personal
aspirations against the objectives of the company.

In 1943, Abraham Maslow, looking at motivation, identified a

hierarchy of needs for individual employees. Everyone has
needs for water, food warmth and safety. These have to be

10
Theyagu, D., 2008,Autocratic vs. Consultative Leadership, Ezine Articles, submitted March 18,2008, <
http://ezinearticles.com/?Autocratic-vs-Consultative-Leadership&id=1054914>

4
 met before a person can move on to fulfilling their higher
needs.11

Maslow's Hierarchy of Needs Pyramid

This hierarchy applies to the workplace. For instance what

motivates these levels of needs might be weekly wage to cover
the physiological needs, occupational health & safety
guidelines for security needs, good team members for social
needs, important projects or recognition for esteem needs, and
lastly, opportunities for career development to realise an
individual’s potential during the stage for self-actualization.

Democratic-style leadership gives employees the opportunity

to be innovative and make their own decisions collectively (i.e.
meetings) in doing their daily tasks. This makes them feel
important & increase their self esteem. Furthermore when
employees start sharing their ideas in improving their area’s
operations, wider objectives are realized. Another advantage of

11
‘Using a range of management styles to lead a business’ 2008, The Times 100, page 67, <www.thetimes100.co.uk>

12
University Department of Rural Health, 2010, Theme 1 – Leadership Maslow’s Hierarchy of Needs
Pyramid, University of Tasmania, submitted March 22,2010, < http://www.ruralhealth.utas.edu.au/comm-
lead/leadership/maslow-diagram.htm>

5
 democratic-style leadership is when managers consult their
senior employees & team leaders regularly on their perspective
when running the department’s daily operations. Usually
subordinates with referent and expert power influence these
open discussions.

Additionally, democratic-style leadership assists staff to being

innovative and encourages them to work better. This will
empower staff to make decisions impacting the workplace and
their division which consequently meets customer service
commitments. Hence, employees take pride in their work.

Enterprise Rent-A-Car also applies the democratic style of

leadership, encouraging employees to provide ideas to add to
decisions passed on by management. They implemented two
types of democratic style management.

• Persuasive leadership-style - where the leader (or

customer service representative) makes the decision first
and persuades employees (or customer) that it is the
right decision.
• Consultative leadership-style - where this involves the
group contributing to the decision making process with
the leader making the final decision.

An example of the persuasive-style is when a customer has

approached the Enterprise representative of a vehicle for the long
weekend. The representative gives the customer rental car
option(s) and persuades the customer why those options is the
correct one.

An example for consultative-style is when a car has been in an

accident and a customer needs a hire urgently. Local managers
take a consultative approach to understand the issues and find
the right solution for customers who might be upset or worried 13

Majority of meta-analysts & psychometrician social laboratory

studies (from 1969 until today) conducted experiments on the
effect of democratic & autocratic leadership with groups
concluded that experimentally imposed democratic-style
leadership may be relatively more effective (compared to
autocratic leadership) when laboratory groups are given

13
Using a range of management styles to lead a business’ 2008, The Times 100, page 67, <www.thetimes100.co.uk>

6
 4
Question

moderately or highly complex tasks14. Hence the democratic

leadership-style meets the demands of the above two Enterprise
customer scenarios.

As business progress, there is an increase in customer

demand. Concerns lay with how efficient the organisation’s
services are when faced with frequent customer enquiries &
other concerns.

The drawbacks of autocratic leadership during this scenario are

that managers & senior staff cannot afford to ‘micromanage’
their staff due to the influx of customer enquiries.

When dealing with face-to-face live problems and enquiries

from customers there is no time to discuss their problems
collectively in a meeting (such that of democratic-style
leadership). Firstly this will be time-consuming as customers
will want to get the enquiry resolved immediately and finally it
reflects incompetence on the representative’s part who is
dealing with them.

Live decisions need to be made now and then without any

consultation with management or senior colleagues’ approval.
The decisions have to be made swiftly as it reflects on
efficiency from a customer’s perspective and hence a great

14
Gastil, J., 1994, Meta-analysis of Democratic Leadership, Small Group Research, page 402, University of Wisconsin-
Madison, submitted August 1994 <http://faculty.washington.edu/jgastil/pdfs/LeadershipMetaAnalysis.pdf>

7
 deal of initiative must be placed on the customer service
representative’s part.

Laissez-Faire style leadership grants employees opportunities

to provide for customers immediately with the workplace
knowledge, resource and tools they have access to. This is
where customers receive a standardized service knowing
exactly what they have ordered or asked for. For instance, a
return customer who knows what he wants and is aware of the
associated costs with the rental will require minimal feedback
or advice as the customer is already aware of his/her needs.
Hence Laissez-Faire encourages a more quicker & streamlined
customer service.

Internally, Laissez Fare leader performs a minimum of

leadership functions and lets the workgroup sort out their own
roles and tackles their own work in their own way without
his/her participation. The Laissez-Fare technique is usually only
appropriate when leading a team of highly motivated and
skilled people who have produced excellent work in the past.
Once a leader has established that his team is confident,
capable and motivated it is often best to step back and let
them get on with the task since interfering can generate
resentment and detract from their effectiveness15.

A good example of Liassez Fare management is the small

entrepreneurial teams that manage and lead local Enterprise
offices. These teams are decentralized and make many
decisions on their own. This show a type of laissez-faire
structure16

Due to the carefree nature of this leadership structure,

employee lack of motivation can be a disadvantage. This is
resolved by the establishment of corporate guidelines and
comprehensive manuals, frequent staff training and the
prospect of career promotions.

15
Anon., 2007,Leadership Styles, WikiEducator, last modified July 12,2002, <
http://wikieducator.org/Leadership_styles#Autocratic>

16
Using a range of management styles to lead a business’ 2008, The Times 100, page 678 <www.thetimes100.co.uk>

8
WORD COUNT: 1707

REFERENCE

1. Covey, S., 1990, Seven Habis of Highly Effective People,

The Business Library, Utah

2. Fiorina, C., 2007, The Difference between Management

and Leadership, Stanford University, viewed May 2, 2007,
<http://ecorner.stanford.edu/authorMaterialInfo.html?
mid=1718>

9
3. Anon., 2010, Oxford Advanced Learner’s Dictionary,
Oxford University Press,
http://www.oxfordadvancedlearnersdictionary.com/dictio
nary/constraint

4. Anon., 2010, Oxford Advanced Learner’s Dictionary,

Oxford University Press,
http://www.oxfordadvancedlearnersdictionary.com/dictio
nary/condition

5. Think Education, 2010, Management principles and

practices Study Guide, page 11, Think Education, North
Sydney, NSW

6. ‘Using a range of management styles to lead a business’

2008, The Times 100, pp 65-68,
<www.thetimes100.co.uk>

7. Anon., 2007,Leadership Styles, WikiEducator, last

modified July 12,2002, <
http://wikieducator.org/Leadership_styles#Autocratic
>

8. University Department of Rural Health, 2010, Theme

1 – Leadership Maslow’s Hierarchy of Needs
Pyramid, University of Tasmania, submitted March
22,2010, <
http://www.ruralhealth.utas.edu.au/comm-
lead/leadership/maslow-diagram.htm>

9. Theyagu, D., 2008,Autocratic vs. Consultative

Leadership, Ezine Articles, submitted March 18,2008,
< http://ezinearticles.com/?Autocratic-vs-
Consultative-Leadership&id=1054914>

10