The Common-Sense Way Of Management

MBA aspirants

If you stick your hands into fire, you will be burnt. If you stand in the morning sun, your shadow will lie towards the west. If you frown at someone, that person will likely frown back at you. These things are what our common sense tells us, based on facts, experiences and observations.

Common sense is about being practical, about knowing the way that things or people will act or react when a particular action is performed on them. If you cut your finger, it will bleed.

Most of our actions are governed by this common sense but sometimes this common sense deserts us. Or, we refuse to listen to what our common sense tells us. Often, our emotions override our common sense and our awareness of what is right and wrong.

For example, all of us know that if we start saving money right from our first salary cheque, we will accumulate a good corpus by the time we are ready to retire. But, how many of us actually put it into practise? We’d rather enjoy ourselves and spend the money now than listen to that hard-headed voice inside us that tells us to save and invest.

That common sense also deserts us in our relationships; lack of communication, bad behaviour, doing things that hurt others – our common sense tells us that these things are not right but still we go ahead and do them anyway. Indeed, as someone has rightly pointed out, common sense is not so common.

If you ask ‘would a common sense method of management really work and would it really solve most of our management problems?’ I would reply, ‘why not? Being level-headed, practical and realistic should not harm us in any way at the least.’ Let us try to apply common sense principle to various facets of management in an organisational setting.

Managing People:Organisations are all about people. People mean emotions, ambitions, desires, and happiness. People seek to find satisfaction and contentment in what they do. Applying the principle of common sense management here means that employees in an organisation should be kept happy and satisfied if they have to be productive. There are two ways this can be done – by giving them good wages and creating a satisfactory work environment.


‘Good wages’ is very subjective but if you pay them enough to live on comfortably they would not complain (well, not too much because human nature being what it is, nobody is ever satisfied with what they earn). An organisation is however constrained by the money it makes. If it cannot pay them satisfactory wages, it can at least make up for it by fostering a congenial working atmosphere. Reasonable working hours, empathetic bosses, praise for their work, concern for their welfare, good promotion channels, scope for showing their talents, flexibility with regard to roles and functions, outlets for their creativity and so on are some of the more practical methods of keeping them happy. These are all non-monetary elements and can be easily implemented with a little bit of planning.

Finances and Funding: Money and its management is an essential component of any organisation. So many entities have been ruined and bankrupted due to faulty money management techniques. What does common sense say here? Equity is a cheap source of funds. Equity funds also mean that you are spreading out your risk (in terms of concentration your funding sources) over a wider base. It is better to have a larger number of people sharing in the liability than putting it all in the hands of a few investors. Again, debt is easier to raise but it has to be serviced by periodic payments. You cannot afford to default. It is also common sense that you have to get the cheapest debt available.

In any management scenario, common sense dictates that funds should be raised when the conditions are right and when they are available. Funding plans should coincide with those times when there is ample liquidity in the system and money is cheap. Let us try to explain this with a home grown analogy – would you buy a house or take a home loan when real estate prices have risen sharply and interest rates are on their way up? Your common sense should supply you with the answer.

Marketing and Sales: Searching out the right markets for your products and services and then selling them to customers there, are important activities for an organisation. What are markets but people and who are customers, but people. Once you realise this fundamental fact, then it becomes easier to prospect and apply your common sense principles. All marketing activities have to start with research, which means knowledge of the people, their commercial activities, the consumers and their demands. The two common sense questions you have to ask at the outset are – what do they need and what do you have? If the two match then you have to go a bit deeper and ask: are your products and services the right ones for them? If they are then you ask further: can I provide it at the price they want and does it meet their quality standards. If you actually analyse every situation in this way, you will find that it requires a few common sense questions that will point you in the right direction.

The reason why so many marketing and sales strategies do not succeed is that we fail to apply our common sense and start to assume things. A very good example of this was Tata Motors and the Nano car. The company assumed that two-wheeler owners would be only too glad to upgrade to a car and it would not really matter what kind of a car it was so long as it had four wheels and was cheap. They failed to factor in the fact that two-wheeler owners also have aspirations and would look for quality, performance and value for money.

Would common sense work in every situation and would it be all that is required to be a successful manager? Probably not; sometimes you may have to suspend common sense and put some of your uncommon senses to use. That is often called a ‘leap of faith’ where you go contrary to common sense and you succeed because progress and evolution all call for something out of the ordinary. Innovation has to take place and this requires you to defy common sense and take a different path altogether.

I would say that about 70 percent of our problems can be solved by common sense solutions.

Contributed by Disha Parekh Mohanty

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