For a long time the company management was under the grip of the managing agents. The managing agency has been criticised as paternalistic, family-oriented, authoritarian, secretive and unsophisticated.
The system was useful in the past in developing industrial growth in India and has great achievements to its credit but circumstances are different today. The economic, social and political conditions are no longer the same and capital is no longer shy.
With the government itself coming into industry and the growth of a new class of small entrepreneurs, management from outside can no longer be necessary.
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The trained professional manager is increasing in number and efficiency and is quite capable of managing the organisation from within.
After the abolition of managing agency system in India the pattern of company management has undergone some change. The features of the new pattern of company management are detailed below:
1. Management Consultancy Firms:
To replace the old managing agency, a system known as Management Consultants or Consultancy ‘firm has emerged to provide expert managerial and technical advice.
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A management consultant is an individual qualified by education, experience, technical ability and temperament to advice and assist on a professional basis in identifying, defining and solving specific management problems involving the organisation, planning, direction, control and operation of the enterprise. They serve the enterprise as impartial, objective advisors and are not employees of the enterprise.
2. Professional Executives:
Professionally qualified people are entering into company’s management either as professional managers or by virtue of shareholding. Engineers, Chartered Accountants, Personnel Managers, Inventory Experts are being increasingly appointed at the middle or lower levels of company management. Those who make outstanding contribution in their respective areas of management are elevated to the rank of employee-directors.
3. Professional Management:
A vacuum has been created in the corporate management after the abolition of the managing agency system which has created scope for the opportunity of professional management. A number of management institutes have emerged in the country to produce management experts.
The management of industry is gradually passing into the hands of professional managers. Earlier we had born managers or hereditary managers who are now being replaced by trained managers.
4. Workers’ Representatives in the Board of Directors:
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The Sachar Committee wants workers’ representatives in the Board of Directors. Now Worker-Director is an established practice in all public sector enterprises but this is not still a common feature in the private sector enterprises.