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NATIONAL QUALIFICATIONS CURRICULUM SUPPORT

Business ManagementManaging Organisations:

The Internal Environment

[ADVANCED HIGHER]

The Scottish Qualifications Authority regularly reviews the arrangements for National Qualifications. Users of all NQ support materials, whether published by Learning and Teaching Scotland or others, are reminded that it is their responsibility to check that the support materials correspond to the requirements of the current arrangements.

AcknowledgementLearning and Teaching Scotland gratefully acknowledge this contribution to the National Qualifications support programme for Business Management. Originally published in 2006; revised version published in 2008.

© Learning and Teaching Scotland 2006, 2008

This resource may be reproduced in whole or in part for educational purposes by educational establishments in Scotland provided that no profit accrues at any stage.

2 MANAGING ORGANISATIONS: THE INTERNAL ENVIRONMENT (AH BUSINESS MANAGEMENT)

© Learning and Teaching Scotland 2006

Contents

Introduction 5

Section 1: Role of management

Fayol 8Henry Mintzberg 9Peter Drucker 11Rosemary Stewart 11Conclusion 13

Section 2: Management theoryClassical school 14Human relations school 16Neo-human relations school 18Systems theory 19Contingency theory 20Conclusion 21

Section 3: Motivation to workMaslow 23Herzberg 24Non-financial incentives 25Financial incentives 30Conclusion 32

Section 4: TeamsRole of teams in organisations 37Group development 38Characteristics of effective teams 39Potential issues with teams 46Conclusion 48

Section 5: LeadershipManager vs leader 50Leadership theories 51Factors affecting leadership style 59Conclusion 59

MANAGING ORGANISATIONS: THE INTERNAL ENVIRONMENT (AH BUSINESS MANAGEMENT) 3


CONTENTS

Section 6: Personal effectiveness of managersTime management 62Prioritising 62Personal qualities 63

Section 7: ChangeFactors causing change 65Force field analysis 70Stages of change 74Factors to be addressed during a change programme 76Resistance to change 76Organisational culture and change 78Approaches to managing change 81Examples of change – Operations management 84

Answers to SAQs 89

Exercises 100

Suggested answers to exercises 104

References 110



INTRODUCTION

Introduction

This pack contains student notes and exercises to support the teaching of Business Management (AH): Managing Organisations, The Internal Environment.

Further details of the items included are given below. Overall, however, the material is designed to reflect the fact that Advanced Higher places considerable demands on students. It is intended to be challenging and to encourage students to engage fully with the relevant concepts and ideas. Teachers and lecturers should, therefore, be prepared to offer support to students to help them to deal with the material, especially during the early stages of the course. This should result in substantial positive benefits for students who should develop a firm foundation both for the Advanced Higher course and for future study.

Student Notes – These provide the underpinning knowledge for Advanced Higher Business Management. Students should be encouraged to make use of relevant textbooks, other library resources such as business oriented magazines and periodicals (e.g. The Economist) as well as the internet to source additional information on topics.

Self Assessed Questions (SAQs) and Activities – SAQs are provided, together with answers, throughout the text to develop students’ understanding further, while the activities offer them the opportunity to undertake further research when time permits. Answers to all the SAQs are provided at the end of the notes before the exercises.

Exercises – These include a variety of questions:

Some to ensure that the ‘theory’ of the topic is understood Some being summary case studies where student are asked to put theory into

practice Others are research questions where students must investigate a situation and

suggest how they would apply the theory of what they have learned into a ‘real’ business situation.

In a number of cases use of the internet as a research device is suggested; however, alternative written material is normally available from a variety of sources.

Suggested answers to exercises – These are provided for guidance only. In a variety of situations there are no clear right or wrong answers, but students should show a firm grasp of what is being asked, and apply their acquired knowledge to the situation described. In many cases students should be encouraged to research



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the area of the question by looking at the business press (such as journals, daily newspapers), the internet and other sources to gain a better understanding of the subject area.

References – These give the sources of the material used in the core text and, as such, this represents good academic practice. They may help students who wish to pursue a particular topic further or to a greater depth. It is not expected, however, that students should access all the references directly nor that they should all be immediately available to students.

The Internal Environment, External Environment and Business Report units can be taught in any order; however, the ‘Change’ section in Internal Environment is particularly useful in linking the elements of the course together.

At Advanced Higher level every effort should be made to encourage independent learning among students and to help them to prepare for future academic study. In Business Management, this includes the development of an analytical, enquiring approach and a recognition that there is rarely a single unambiguous way forward in any particular situation. Any approach may well have advantages and disadvantages, which need to be weighed against the pros and cons of other possibilities. Students should be guided to consider why actions have been taken, or could be taken, and what the justification for these might be.



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Section 1: Role of management

In today’s world we all manage – we organise our lives, accomplish ordinary tasks and maintain routines. We manage our time, our resources and sometimes others, yet we are not called managers. Those who are called managers are normally people who are trained to employ, shape and regulate. They work in all types of organisations from the large multinational company down to the small business. Many people, indeed, are managers without that title – for example, headteachers, bishops, newspaper editors, etc. – but they all manage people and resources. Management involves having power and control over people, although people will accept this if managers behave in an appropriate fashion.

Management are a very important group within the business context. Without managers, quite simply, it’s unlikely that ‘things would get done’.

Companies of all sizes employ managers. Managers are responsible for not only their own work, but for others’ work too. In a small company one manager may be responsible for all managerial work, but as the company grows, more managers will be needed to manage the resources, including people, of the company.

SAQ 1

What kinds of things do you think managers in an organisation do?

The role of management covers the part that managers play in an organisation. Your response to SAQ 1 will have given you some ideas about what this involves. Several writers have suggested ways in which the role of managers can be explained. This section looks at four contributions. They are:

Henri Fayol – elements of management Henry Mintzberg – managerial roles Peter Drucker – management by objectives Rosemary Stewart – demands, choices and constraints of the manager’s job.



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Henri Fayol

The Frenchman, Henri Fayol (1841–1925), was one of the first people to write about management. His work is the basis of the Classical School of Management described in Section 2: Management Theory. His frameworks for the study of management are still used today. His main purpose was to identify the one best way of organising or managing. He argued that management consists of five elements:

1 planning 2 organising 3 commanding 4 co-ordinating 5 controlling.

Planning is the starting point. It creates a framework for future decisions. It involves setting clear objectives and devising strategies, policies, programmes and procedures to achieve those objectives. For a senior manager this might be writing a company strategy document covering the next five years; for a supervisory manager this might be planning detailed work for the next working week.

Organising involves getting the right resources together and creating an appropriate organisational structure to divide up the tasks. It also involves establishing communication networks to achieve organisational goals.

Commanding or directing involves giving instructions in order that the necessary tasks are carried out – tasks could be carried out either individually or by delegation to others.

Co-ordinating or motivating involves finding and training staff for the task to be carried out and ensuring the staff are motivated to perform the tasks and that all are working to the same goals.

Controlling is essential to ensure that organisational goals have been achieved. It involves maintaining performance levels by monitoring and evaluation, i.e. collecting and analysing key management information, comparing actual vs planned performance and critically reviewing plans. A senior manager might look at long-term planned vs actual performance, whereas a supervisory manager might be more concerned that work is of the correct quality and that the work is done on schedule.

Activity

Consider Fayol’s five elements of management and apply them to a manager you have some knowledge of, for example the manager of your favourite football team; your manager at a part-time job; your tutor. How does what they do fit in with Fayol’s list?



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Robert Katz stated that managers need three groups of skills to carry out such tasks:

1 Technical 2 Human 3 Conceptual

Technical skills refer to the ability to use tools for the job, e.g. the ability to use a spreadsheet for budgeting.

Human skills refer to interpersonal skills, which are of paramount importance in people management.

Conceptual skills refer to the ability to see the big picture and understand the impact one factor might have on another.

Below, Richard Branson illustrates how human and conceptual skills are key to the success of Virgin.

Make all staff part of the management team

Virgin pays some of the lowest salaries in the industry, yet its staff are very talented and loyal – paradox? The company’s success in this field is down to Sir Richard Branson’s management philosophy, where all staff feel valued and Branson is just as interested in a flight stewardess’s opinion as he is in his Marketing Director’s.

Successful people management is about inclusion, and Branson works on making all his staff feel like a team where each is valued not only for fulfilling their job remit but for contributing to the development of the business as a whole.

Adapted from ‘The Virgin Factor’ (May 2000), The Management Insights

Henry Mintzberg

In the 1970s Henry Mintzberg observed five chief executives at work in five different American companies: a major consulting firm; a well-known teaching hospital; a school system; a high technology firm; and a manufacturer of consumer goods. He used a stop-watch to observe, in the course of one intensive week, the activities of all five chief executives. He claims that if you ask a manager what he does he describes it in Fayol’s terms, i.e. planning, organising, commanding, co-ordinating and controlling. However, if you watch him in practice it is quite different; for example, how would you categorise presenting a retiring employee with a gold watch?

From his observations, Mintzberg identified ten roles that managers fulfil. He



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argued that everything a manager does fits into one or more of these ten roles (some activities cover several roles at the same time).

He divided the ten roles into three main categories: interpersonal roles; informational roles and decisional roles:

Interpersonal roles (related to dealing with people): Figurehead – performs symbolic duties of a legal or social nature, e.g. being

present at a trade delegation. Leader – covers all activities connected with managing staff, e.g. conducting

appraisals; allocating work to staff. Liaison – maintains a self-developed network of contacts who provide

information, advice, help, etc., e.g. co-ordinating with people in other departments.

Informational roles (connected with handling information): Monitor – receiving information from internal and external sources, e.g.

checking weekly production figures. Disseminator – interpreting and transmitting information to members of the

organisation, e.g. writing monthly production report for management meetings. Spokesperson – transmitting information on the organisation to outsiders, e.g.

speaking to customers.

Decisional roles (about making different kinds of decisions): Entrepreneur – finding opportunities, inside and outside the organisation, to

bring about improved organisational performance, e.g. designing a productivity improvement scheme.

Disturbance handler – taking corrective action to handle an issue which has arisen unexpectedly, e.g. resolving an argument with another department.

Resource allocator – allocating organisational resources, e.g. deciding on staffing levels.

Negotiator – conducting negotiation with outsiders, e.g. making an agreement with a supplier.

In summary, Mintzberg argues that managers do a mixture of all ten roles. Different jobs will have different mixes of roles and jobs may vary between organisations. An operations manager in a manufacturing plant whose job involves meeting tight production targets may spend much time doing the leader, monitor, disseminator and disturbance handler roles. A marketing manager in a services company, on the other hand, may spend most time on liaison, the three informational roles and resource allocator.

Mintzberg’s work confirmed that managers in modern organisations work at an unrelenting pace.

They spend much of the day on many small tasks (50% of the managers in Mintzberg’s study engaged in tasks lasting less than nine minutes and only 10% exceeded one hour). The work is also categorised by variety and discontinuity.



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Chief executives tend to be very action orientated and to dislike reflective activities. There are also a number of regular duties to perform, such as attending ceremonies and dinners. Managers tend to favour telephone calls and meetings (oral communication) to emails and reports (written information). In two British studies for example, 66% and 80% of managerial time (respectively) was spent in oral communication.

Activity

Try to apply Mintzberg’s managerial roles to the work of the same manager that you used in the previous activity on Fayol. How well does what they do fit in with Mintzberg’s ideas? Does one model give a clearer picture of what managers do than the other? If so, why?

Peter Drucker Management by Objectives (MBO) was proposed by Peter Drucker in 1954 and is still used by businesses today. He suggested that businesses should decide upon organisational objectives, which are then broken down into departmental, and then down to individual employee objectives. With employees involved in this process, motivation is said to improve. Managers should then decide what work needs to be done, and by whom, communicate this to employees, analyse actual vs planned performance and finally bring out the talent in people. Managers are responsible for:

setting objectives organising the work motivating employees job measurement people development.

Drucker argues that every manager, whether good or bad at the job, must carry out all of the above functions.

Rosemary Stewart

Rosemary Stewart (1983) describes the manager’s job as being made up of constraints, choices and demands, and she argues that jobs are about doing what you have to do (meeting demands), and deciding what to do out of the options available to a manager (making choices). There are also internal and external factors that can limit what a manager can do (constraints).



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The shape of the job This illustrates how demands, choices and constraints can vary between jobs.

Differences in the demands, choices and constraints in two managerial jobs

Demands include: minimum criteria of performance procedures that cannot be ignored

Choices include: how the work is done and what work is doneConstraints include: resource limitations, physical location attitudes and

expectations of others

Stewart, R, (1983) Choices for the Manager, McGraw-Hill

Activity

Apply Stewart’s model to the same managerial job you used in the earlier activities on Fayol and Mintzberg. Which of the three gives you the most helpful picture of what managers do – or are all three just different?



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Conclusion

This section gives an overview of what managers do and the important role they have to play within organisations. Fayol suggests that there are five functions of management – planning, organising, controlling,co-ordinating and commanding, while Mintzberg states that all managers are involved in the roles of leading, administering and fixing. Drucker and Stewart are also useful in studying what managers do and what roles they perform.

Finally, the role of a manager is very much dependent upon a wide range of factors such as the organisation in which they work, that is its culture and objectives. The models we have just looked at can help to analyse what managers actually do. They suggest that management will always be about planning, handling information, making choices, etc. However, the context within which managers work does change. We can conclude this section by listing some of the factors which have affected the way in which managers do their jobs in recent years:

Management jobs are becoming more important in service sectors such as health and education

Constant change in the workplace has resulted in a greater emphasis on the leadership aspect of management

New working patterns such as home working (often prompted by developments in ICT) pose new challenges for managers

Many organisations have embraced team working which may influence the style adopted by managers.



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Section 2: Management theory

Management theory attempts to discover and develop models that may be used in order to understand the process of management in organisations. Contributions to its development have come from a range of disciplines such as sociology (behaviour), social psychology (motivation, leadership), behavioural psychology (motivation) and even statistics (management of production). These theories are useful in explaining management style, and they include the Classical Theory of people such as Henri Fayol (1841–1925). Other theories or models followed later, such as Human Relations, Neo-Human Relations, Systems Theory and more recently Contingency Theory.

The Classical School

This is called the classical approach because it was that taken by the first people to write on management in the early years of the 20th century. They emphasised the formal hierarchical organisation with clearly defined tasks and a common purpose. Their view was that it was possible to find the one best way of doing things. For example, bureaucracy was seen as the best form of organisation. We have already seen how Fayol regarded his five elements of management as the best way to set about the tasks of managing. Although this work has been in existence for some time, it still influences the way that organisations think about management.

A key concern of writers from the classical school was increasing productivity. The most important work in this area was by Frederick Taylor (1856–1915), the founder of the movement known as Scientific Management. He suggested that there was a best way to perform work tasks and that all workers wanted was a fair day’s work for a fair day’s pay.

‘The principal objective of management should be to secure the maximum prosperity for the employer, coupled with the maximum prosperity for the employee.’

F W Taylor

For the employer this means large profits in the short term but also development of the enterprise in the long term. For the employees it means higher wages immediately but also long-term development so they can perform efficiently.



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Taylor wanted to achieve:

1. efficiency (increased output per worker) to reduce under-working and offer the best rate of pay through division of labour

2. standardisation of job performance, by dividing tasks up into small, specified tasks

3. discipline, by establishing hierarchical authority and introducing a system whereby all management policy decisions could be implemented.

He proposed:

1. job planning to be carried out by managers, while jobs should be carried out by workers

2. the scientific analysis of tasks and functions to find the one best way of performing each task

3. the use of piecemeal incentive pay systems, so that the more a worker produced the more s/he was paid.

His view – monetary reward for achieving targets – is now thought to be much too naïve, assuming money was the only reason why people worked. The system may work for some individuals but it cannot easily be applied to a group. Taylor’s view reduces workers to efficient functioning machines, and ignores their social and psychological needs. Taylor removed the thinking, planning and ordering from the shop-floor workers as he saw this as a function of management. However, his findings regarding analysis of the best way to do each job are still used today.

SAQ 2

How are the ideas of F W Taylor still used today?



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The Human Relations School

The classical school, particularly Scientific Management, was criticised for treating people like machines and ignoring the influence that social factors can have at work. This led to a new way of looking at management, known as the Human Relations school. Elton Mayo (1880–1949), an Australian industrial psychologist, is the founder of the Human Relations movement. Mayo and his team, in conjunction with the management and employees, conducted research at the Western Electric Company in Hawthorne, Chicago from 1927 to 1932. They were asked to investigate the reason for low productivity at the factory.

One place in which Mayo and his colleagues conducted experiments was the relay test assembly room. The work consisted of assembling telephone relay units, which involved putting together a small number of components on a jig and fastening them with four screws. It was essentially a routine, repetitive task that took about a minute to complete. All the workers were women and were paid on a piece basis (their pay was determined by the amount that each individual produced).

Five assemblers and a layout operator, all women, were segregated away from the main production area. All the materials needed for work were brought to them. An observer supervised the workers and maintained a friendly atmosphere, consulted with the workers and listened to their complaints. The observer was, in fact, a social scientist and member of the research team.

During the experiments the following changes in working conditions were introduced.

1. All six workers were treated as a single group for the purposes of calculating piecework.

2. Standardised rest periods of 15 minutes in the morning and 10 minutes in the afternoon were introduced and a snack was provided by the company.

3. Working hours were reduced – either by stopping earlier in the afternoon or by not coming in on a Saturday morning.

The researchers compared the output of the workers before and after becoming part of the group. Output was higher when they were part of the group and did not seem to be influenced by the physical conditions at work.

Mayo and his team found the same thing when they altered other aspects of working conditions such as the lighting. Productivity rose but this was not apparently due to changes in physical working conditions. The factors that did affect productivity were:

the social interaction and group norms established by the girls in the group the friendly atmosphere where the views of the girls were listened to the group felt important because the observer and others were paying attention.



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SAQ 3

Can you think of any problems with this research?

Mayo and his colleagues concluded that work satisfaction depended to a large extent on the informal social pattern of the work group. Where norms of co-operation and high output were established because of a feeling of importance, physical conditions or financial incentives to motivate workers had little impact. People will form workgroups and this can be used by management to benefit the organisation.

Workers, Mayo argued, were activated by a logic of sentiment, and management by a logic of cost and efficiency. Conflict was inevitable unless the difference was understood and allowed for.

This enabled the researchers to make certain deductions about how managers should behave.

‘Management succeeds or fails in proportion as it is accepted by the group as authority and leader.’

Elton Mayo

In summary, the main conclusions from the Hawthorne experiments are:

1. Individual workers cannot be treated in isolation, but must be seen as members of a group.

2. Monetary incentives and good working conditions are less important to the individual than the need to belong to a group.

3. Informal or unofficial groups formed at work have a strong influence on the behaviour of those workers in the group.

4. Managers must be aware of these ‘social needs’ and cater for them to ensure that employees collaborate with the official organisation rather than work against it.

The basis of the Human Relations movement is the use of social sciences to secure the commitment of individuals to the aims and activities of the organisation. While this is seen as too simplistic today, it did establish the importance of social factors in the organisational context.

SAQ 4

How does the Human Relations school differ from scientific management?



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The Neo-Human Relations School

While the Hawthorne experiments were significant in highlighting the importance of the social aspects within an organisation, Mayo’s work still did not show how work practices and organisational structure should be modified in order to improve worker satisfaction and improve productivity. During the late 1940s it was realised that the links between organisational design, motivation and productivity were a lot more complex than first thought. These new ideas were known as the Neo-Human Relations school. Writers in this school took a more psychological orientation and looked at issues of motivation to work, group membership and leadership style.

McGregor Douglas McGregor was a leading member of this school. In 1960 he published his work on Theory X and Theory Y.

Theory X – that management must lead and motivate/manipulate inherently lazy and passive workers (a view similar to F W Taylor’s). The assumption here is that workers are indifferent to the organisation and will resist change, and that managers need to lead and control them.

Theory Y – that management must create the right conditions, and that people will prove eager to respond to increased responsibilities, becoming more productive as a consequence. The assumption here is that people are not naturally passive and resistant to change, but that they are responsible. Management should provide the right environment for employees to achieve their own objectives whilst striving for organisational objectives. There should be more self-management and upward communications along with participation in the decision-making process.

McGregor believed that Theory Y would lead to higher motivation. He considered conventional assumptions (Theory X) to be both limited and unrealistic because they relied on authority as the primary means of control, which he saw as likely to generate resistance, restriction of output, indifference to organisational objectives and a refusal to accept personal responsibility. McGregor recognised that much of the behaviour in organisations did reflect the Theory X view.

However, he believed that this type of behaviour was not a consequence of the inherent nature of staff but a product of the way in which staff were being treated by organisations.

McGregor has highlighted that if managers believe that all their staff want is more money and/or greater social satisfaction, they will therefore only provide for these basic needs to be met. If managers do not accept that staff have more complex needs, they will not be providing opportunities at work for the staff to satisfy them. The result may well be frustration and a lack of commitment on the part of the staff.

McGregor’s work is closely related to that of Maslow and Herzberg which will be covered later.



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McGregor’s theory has been applied successfully through the modern Japanese approach, Total Quality Management (TQM), which is based upon his Theory Y and is widely implemented throughout the world. The Neo-Human Relations approach as a whole drew attention to issues such as job satisfaction, participation, leadership style, all of which remain important in management today.

Systems Theory

We have seen that the classical approach to management looked at the structure and processes of an organisation and how it could operate more efficiently but rather ignored the attitudes of those working in the organisation. On the other hand, the Human Relations school focused on the people in organisations but neglected the technical aspects of an organisation. The Neo-Human Relations school addressed some of the problems of reconciling people and organisations but tended to do so from an individual, psychological perspective rather than an overall organisational view. All these approaches are rather narrow and do not look at the organisation as a whole and all the various factors that may influence how it operates. Systems Theory is an attempt to address this problem. It also began in the 1940s but came to prominence in the 1960s and 1970s.

Systems Theory argues that in any organisation, the multitude of parts and processes are so interrelated and so interdependent that a small change in one part necessitates changes and adaptations in other parts. Often called the open-systems approach, it views any one organisation as an interdependent piece of a much larger whole, looking outside to the environment in which the organisation operates. This wider environment can include suppliers, customers and peer organisations, all of which communicate on a regular basis with the organisation. The environment as such then impacts upon organisational design and the functioning of the organisation itself.

Organisational environment

INPUTS TRANSFORMATION PROCESS OUTPUTS

Materials from supplier Finished products Equipment Satisfied customers Labour Goods/services developed by organisation



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Activity

Using an organisation that you know, try to draw a transformation model like the one on the previous page. Try to be as precise as you can when you list the inputs and outputs. If you cannot think of an organisation, use one like McDonalds. You can find information about it from its website at http://www.mcdonalds.co.uk

The approach seeks to find the best fit from three elements:

1. technical factors (physical environment, equipment and technical processes) 2. social factors (social relations and attitudes within the group) 3. economic factors (measure of the efficiency of the technical and social mix).

As an open system it draws in resources from the environment, e.g. raw materials, converting them into goods and services which are then fed back into the environment, so it is a cyclical process. For example, Ford makes cars which it sells to its customers for money. The money is recycled in the form of wages, tax and the purchase of more raw materials.

This socio-technical approach to an organisation recognises that it is necessary to incorporate both the social and technical aspects of work if an effective system is to be created. This concept was developed by the Tavistock Institute of Human Relations in the study of coal mining in the north-east of England. Prior to the introduction of new technology to coal mining, teams of men worked closely together, with each member of the team being highly dependent upon the others to work effectively and earn a decent wage. With new technology such as mechanical equipment, the teams were broken up, resulting in deterioration in many areas, e.g. industrial disputes, numbers of accidents, absence levels, etc. The problem was solved by building teams back into the work to encourage interdependence among workers.

Contingency Theory

This approach to management theory is a product of more recent times and can be seen as a development of the systems approach. It is based on the assumption that there is no single approach to organisational structure that will suit all organisations at any point in time. Both the classical management theories and those based on human relations sought to offer this panacea. Contingency means ‘it depends’. Organisations consist not only of tasks to be performed, but also people to perform them, both in the same environment. The tasks need to be carried out while people try to grow and develop. Contingency Theory tries to get the best fit between task, people and environment. It draws on earlier approaches (above) and stresses three factors:

the strengths and weaknesses of the organisation the objectives of the organisation the external environment of the organisation.



http://www.mcdonalds.co.uk/

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The problem for managers is to develop an approach which best suits a particular situation. For example, with respect to structure it would be to design an organisational structure that best suits the environment in which the organisation operates. In this case, contingency implies that within the same organisation there may be units of bureaucracy, units operating in a matrix structure and units which are divisionalised. The only criteria for good design are task performance and individual/group satisfaction. The Contingency Theory of management can be applied to all aspects of management, e.g. leadership.

Conclusion

In summary, there is no single unifying theory of management. The discussion of the five approaches above demonstrates that ideas on management change and develop over time. These approaches (and others not considered here) both reflect management practice and influence the way managers behave. This is why they are important. However, management is also influenced by other factors such as the social and economic environment and by technological change. We go on to look at particular aspects of the work of managers starting with motivation. As you read through these think about which of the approaches to management have influenced the ideas that are considered.



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SAQ 5

Decide whether the following statements are True or False.

1. F W Taylor believed that workers were motivated by management meeting their social and psychological needs.

2. Taylor was the founder of the movement known as Scientific Management and his theory is still used today to determine the best way to do a job.

3. Elton Mayo’s initial investigation was to determine the effect of working conditions on productivity.

4. Mayo concluded that the sole benefit of the forming of workgroups would be to improve the social life of workers.

5. McGregor’s Theory Y assumes that workers have little inclination to work and need to be controlled and led by management.

6. The Systems Theory of management suggests that an organisation cannot be viewed in isolation, but that changes in the internal and external environment will impact on the functioning of the organisation itself.

7. Technical, social and economic factors are all considered by Systems Theorists.

8. The Tavistock Institute of Human Relations found that new technology improved efficiency and output.

9. The Contingency Theory of management recognises the importance of tasks, people and the environment in managing organisations effectively.

10. Management practice is about choosing a theory and adhering to it throughout your managerial life.



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Section 3: Motivation to work

Motivation is characterised by a certain level of willingness on the part of the individual to increase effort. Since everyone is different we will all have different motivators. Managers hope that by addressing motivation, performance will improve and organisational goals will be achieved. Since a manager him/herself is judged by the performance of their team, motivation is a crucial part of a manager’s job. There are many theories of motivation but we shall look at two well known theories from Maslow and Herzberg, both of whom were leading members of the Neo-Human Relations school.

Maslow

Abraham Maslow (1954) argued that people have five innate needs that can be placed in a hierarchy/pyramid (starting at the bottom of the pyramid):

1. Physiological needs – for sunlight, food, water, etc. – things basic for human survival

2. Safety needs – for freedom from threat from the environment, animals and other people, for shelter, security – things essential to human existence

3. Social/love needs – for relationships, affection, giving and receiving social stimulus/love

4. Esteem needs – for achievement, prestige, recognition 5. Self-actualisation needs – for development of capability to the fullest potential.

People seek to satisfy these needs. As a result the needs become motivation for action. When need at one level is partially met then the next level up will become a target. The basic premise is that one moves to the next level of the hierarchy of needs upon fulfilment of the current level, and that the current level ceases to become a motivator once fulfilled. So, for example, you wouldn’t worry unduly about self-esteem if you hadn’t eaten for a day and didn’t know where the next meal was coming from.



MOTIVATION TO WORK



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This model can be applied to motivation at work, e.g. the wish to do a good job or be promoted could be related to an esteem need. In a work environment, managers cannot provide the same rewards and expect increasing motivation from staff. The higher order needs are considered to be more important for the modern employee.

SAQ6

Use the diagram above to fit the aspects of work given below into the appropriate level of need:

Employee of the Year Award, wage/salary increase, works sports team, pension, achieving career goal.

Herzberg Maslow’s theory was based on meeting psychological needs. Frederick Herzberg’s approach to motivation looked at job satisfaction. His two factor theory (1966) suggests that there are two types of factors which affect job satisfaction:

Motivators – which result in job satisfaction, and include achievement, recognition, responsibility, advancement, etc.

Hygiene factors – which prevent dissatisfaction, and include company policy and administration, supervision, interpersonal relationships, status, security and money.

The key point of Herzberg’s theory is that these two factors have different effects on job satisfaction and, therefore, on motivation. Satisfying hygiene factors will not lead to a permanent increase in job satisfaction. Improving working conditions, for example, will remove a source of dissatisfaction but will not positively motivate workers. On the other hand, satisfying motivating factors will lead to an increase in job satisfaction and to an improvement in motivation. Recognising the achievement of workers, for instance, will increase job satisfaction and thus motivate workers.



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Management must, therefore, make sure that hygiene needs are satisfied, e.g. through good working conditions, but also provide motivators in the form of opportunities for advancement, responsibility, etc.

Methods to increase motivation to work The theories of Maslow and Herzberg (and others) have had a great influence on how managers attempt to improve motivation at work. Herzberg’s theory has led to approaches such as job enlargement and job enrichment, while Maslow’s ideas have influenced many things from health and safety at work to the need to provide fulfilling career opportunities for employees. Other theories have also been important. Scientific management, for example, stressed the importance of monetary factors in motivation. Contingency Theory suggests that the factors that are important in motivating workers will depend on each particular situation. In this case, management should find out what these factors are and use motivational methods which suit them.

Non-financial incentives

The Hawthorne studies showed that workers were motivated by non-monetary factors and that jobs needed to be designed to take these factors into account. If jobs do not meet people’s needs, then not only will workers not reach their potential, but the organisation is likely to be affected by absenteeism and a lack of quality in work done.

Various methods were devised to try and put these principles into practice, including:

Job design Job enlargement Job rotation Empowerment Job enrichment Group working Quality circles.

The influence of management theorists, especially Maslow and Herzberg, is strongly evident in many of these non-financial incentives which can be used by managers as motivators.

Job design The purpose of job design is to motivate the worker by stimulating his/her interest and involvement. Job design decides:

which tasks and responsibilities should be taken on by particular workers the methods, systems and procedures for carrying out the work where accountability and authority lie.



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The Quality of Working Life (QWL) movement put forward five principles that should be considered in the design of a job:

1. The principle of closure (a job should allow a worker to achieve the satisfaction that s/he has completed a whole product or process well).

2. Control and monitoring of tasks (quality should be the responsibility of the worker or team).

3. Task variety (increase the number or range of tasks available in order that workers remain interested in their work).

4. Self-regulation (workers should have control over work methods as well as sequence and speed of work).

5. Interaction and co-operation (social interaction should be allowed along with the opportunity of working in a group).

Whilst job design can have many benefits, it is often difficult to implement in practice:

Employees may resent changes to their job and might not want extra duties. Job design can be costly for an organisation to implement. Technology can make job redesign more difficult. Assessing whether job redesign has positively impacted productivity, etc. can be

difficult.

SAQ 7

How can Herzberg’s theory be used to justify job design?

Job enlargement This involves the merging of a number of simplified tasks of a similar nature in order to provide an extended range of work. In effect it aims to increase the ‘scope’ of the job. It adds a wider range of similar duties to the job, seeking to motivate the worker by reversing the process of specialisation. In this way unit tasks are regrouped rather than seeking to improve the work itself. As a result of the broader range of tasks involved, the perceived meaningfulness of the work is increased for the worker and s/he is more likely to see the significance of the job in the broader organisation. For the employer, however, it could reduce efficiency if the worker’s productivity is decreased as a result of carrying out more tasks.

Job rotation This involves rotating the jobs that workers do – on a daily, weekly or monthly cycle. It permits greater variety for individuals by moving them between jobs. This could mean that unpleasant or monotonous jobs are shared and that certain workers are not permanently allocated to them. Job rotation distributes existing work so workers are moved around from job to job. For some workers this variety improves motivation, while others might feel their job security threatened if workers become interchangeable. For the organisation, job rotation has a number of implications:



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It provides increased flexibility in allowing workers to be moved around at short notice.

Because workers must be trained in a number of tasks, it can be costly and in some situations workers might claim higher pay because their skills have been enhanced.

If workers are carrying out multiple tasks they will be less skilful and probably slower than if they were carrying out a single task.

Empowerment The basis of empowerment is involving workers in decision making whether about the direction of the organisation or about operational issues. It can mean giving workers substantial responsibility, e.g. total discretion to offer refunds to customers. It provides employees with a clearer view of the ‘whole picture’ and their part in it. People are recognised as an asset to the company and encouraged to fulfil their potential whilst at work. The most common way of empowering employees is to encourage them to work in teams and to relate the team’s vision to the organisation’s.

Job enrichment This involves the allocation of more interesting, challenging and perhaps more difficult duties to workers in order to stimulate their sense of participation in achieving objectives. It came out of work by Herzberg, who showed that such ‘motivators’ could bring about job satisfaction. An example might be in a manufacturing plant where a production worker who carries out routine jobs is also asked to do machine maintenance, machine setting or inspection. It might also be possible for such workers to be involved in communicating with other departments or obtaining their own raw materials. Changes like these can enhance workers’ skills and enable them to deal with complete tasks rather than highly fragmented ones. So, instead of similar degraded tasks being grouped together, genuine job enrichment provides new tasks for the worker that would previously have been carried out by supervisors or specialist workers. Workers respond differently to job enrichment, but it has been found to be very successful in administration and technical jobs.

Group working There are great social and psychological gains to be obtained from co-operatively working in teams (see Human Relations and Neo-Human Relations Schools of Management on pages 76–9). Group tasks tend to be based on complete operations and involve greater complexity and variety than fragmented ones. Groups can be self-regulating, which reduces the need for supervision and increases individual members’ feelings of control. It can be beneficial for the group to arrange job rotation and the fair allocation of tasks among themselves.



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Quality circles Quality circles can play an important part in shaping people’s experience of work. Here, workers from the same area meet voluntarily to discuss, analyse and solve their own work-related problems. Their solutions are presented to management and the group are normally responsible for implementing and monitoring any changes they have suggested. For quality circles to be successful:

businesses must want to have worker participation and decision making workers need to support the scheme the members need to be trained in problem solving, communication and team working workers must feel that their views are valued within the circle.

The use of many of these non-financial motivators is demonstrated by Toyota, the car manufacturer, in the following article.

Toyota: still winning the productivity game

The genesis or source of the Toyota production philosophy is Japanese culture and the historic management/labour/supplier relationships that have evolved from it. This philosophy has developed over a long period of time and is based on a number of important beliefs:

Management, labour and suppliers should all share responsibility for sustained improvement in Toyota’s production plants. With positive results, all stakeholders benefit.

A workforce with good morale and job satisfaction is more likely to produce quality products at competitive prices. Toyota has effectively institutionalised many successful workforce practices including the following: – cross-skilled training for flexible production– on-the-job training and job rotation for all assembly line workers– participation of all employees in programmes specifically designed to focus on the

dynamics of work team development – the establishment of the basic principle that all workers should think of

themselves in certain respects as managers, especially with respect to their immediate work environment, rather than viewing themselves primarily as ‘mechanical machine operators’.

The maximum number of tasks and responsibilities should be transferred to those employees who actually add value to the car on the line.

A system needs to be developed that traces defects to their ultimate cause and resolves these problems at source. Toyota believes that employee morale starts with a safe workplace. Their managers back up their slogans and meetings with a ‘Safety First War Room’ designed to respond proactively to all safety issues.

They show each employee how each job on the assembly line relates to the other jobs in the team module, and how the module is related to the assembly line as a whole.

They believe that the only way to make improvement a continuous process is to establish a creative thinking group of employees/suppliers who are constantly seeking new ideas from which to make improvements, so every employee/supplier is expected to work with their head as well as their hands.



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They assign responsibility for operational results to a work team with a strong team leader. The team engages in collective work that requires joint efforts and generates positive energy.

The result is a highly motivated workforce achieving high levels of productivity.

Adapted from Vaghefi, R; Woods, L and Huellmantel, A (2000), ‘Toyota Story 2: Still Winning the Productivity Game’, Business Strategy Review, Vol. 11, Issue 1, pp.59–70

Financial incentives

Many management theorists play down the impact that financial incentives on their own have on employees, although the school of scientific management, including thinkers such as Taylor, are keen proponents of motivating factors that satisfy economic needs. Since managers are responsible for the performance of their teams, a core part of their function is to motivate employees to perform. There are many ways of financially rewarding employees in order to motivate them to achieve objectives. Financial incentives used by managers may include the following:

Profit sharing/share ownership Employees can be paid a cash bonus as a proportion of the company’s annual profits. This is not widely used in practice as payments are seldom linked to individual performance.

The use of employee share ownership schemes, however, is quite widespread. Here, the company buys shares on behalf of its employees from its annual profit. While this can be expensive to set up and operate, it has been shown to have a positive impact upon employee motivation.

This kind of incentive is obviously more appropriate in the private rather than in the public sector.

SAQ 8

How can share ownership schemes improve motivation?

Performance-related pay (PRP) PRP schemes link employees’ annual salary to their performance in the job. This is widely used in white-collar jobs in both the public and private sector. It is based on an individual’s performance, so employees are paid more if they achieve more. However, each employee’s performance targets must be clear in order that they can measured, otherwise the whole scheme falls into disrepute.

The size of the financial benefit can play an important part in how much PRP acts as a



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real employee motivator. (Herzberg’s motivating vs hygiene factors highlight this.) Unless the financial reward is of some significance, motivation and job satisfaction will not improve.

The move towards PRP is part of a general shift in the last decade to ‘pay flexibility’ in the UK, which often includes other financial incentives, such as the profit-sharing schemes described above.

Bonus schemes Bonus schemes are applicable to individual workers, groups of workers or the organisation as a whole. Bonuses are normally one-off payments to motivate workers. In a sales environment, for example, a salesperson could be encouraged by a bonus to sell a specified number of cars by the end of the financial year, or a sales department could be rewarded for achieving the lowest cost of sales for a particular product. A group bonus scheme can be used to encourage people to work as a team.

Bonus schemes can be a very good incentive unless they become so regular that they are expected by the employees and come to be seen as part of their basic pay. However, there is an underlying problem with group or organisational schemes as some employees who work hard will have their reward reduced because of others who do not and this can be a disincentive. Bonus schemes in the public sector are often for nominal amounts of money which obviously are not key motivators, but sizeable bonuses in the private sector are not uncommon.

Problems with financial incentive schemes While financial incentive schemes can be very successfully implemented, there can be a number of problems with them:

Operating problems can affect a worker’s productivity. It might be outside the worker’s control that raw materials were not available for them to do their job, yet they would be negatively affected by this.

Quality can be adversely affected by workers taking shortcuts in order to achieve targets.

In order that workers remain motivated, new financial incentives have to be introduced regularly. This can be confusing to the worker who doesn’t understand at any given time what he needs to do to earn his bonus.

Quality of working life can be adversely affected by tight control, routines and repetition.



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SAQ 9

Fill in the missing words:

1. Herzberg, like Maslow, belonged to the ______________________ school of management.

2. Herzberg divided work into two factors which he called ______________________ and ______________________ factors.

3. Those factors which are to do with job content and which bring job satisfaction are the ______________________.

4. Those factors which are to do with job context and are responsible for job dissatisfaction are the ______________________ factors.

5. Where a job cannot be enlarged, another method of providing change from routine (and sometimes also the opportunity to learn new skills) is job ______________________.

Conclusion

The value of financial and non-financial incentive schemes is rightly an important debate, where it is accepted that no single policy will be applicable to all employees in every situation. The following article discusses some current issues in this area, raising a number of challenges for managers in today’s organisations.



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Financial incentives

Research into individual performance-related pay (IPRP) in the UK over the past decade has failed to show that such systems have an effect on performance.

The whole idea of linking pay to performance is based on two questionable assumptions. First, it perpetuates the illusion that companies are rational, top-down, directed organisations and that managers have the foresight to know what to do in the forthcoming year. This is the myth of the all-seeing boss. In reality, change is quicker and messier than that. Second, and even more worrying, is the belief that people need incentives to get them to behave in an acceptable way. Employees cannot be trusted, it seems. Economists have a lot to answer for with their assumptions that people will be lazy and self-seeking with guile unless there is a reward carrot (or the stick of unemployment) available. This is the foundation for most economic theories of reward. They never change, despite all the evidence that employees place much more value on non-financial satisfaction and the rewards of a job well done.

In recent years, emphasis has been placed on the ‘bundle’ of HR policies that help to drive organisational performance. These typically include job enlargement, greater employee discretion, involvement, relative autonomy and training and development. Combined, these things are linked to improved performance.

The real problem is that managers continue to introduce pay systems as a single-issue initiative, expecting the new pay system to alter behaviour and bring about cultural change. It doesn’t, unless supportive behaviour is already in place. By themselves, pay systems do not change organisational culture.

Towers Perrin’s latest study (1999) of reward management in 460 organisations across Europe found that 94% had made significant changes in the past three years, and 96% planned further interventions. They are using rewards to reinforce the achievement of business goals and aligning pay systems with the needs of their changing organisations. This means a less hierarchical and more customer-orientated approach, team-based and focused on contributions. New ideas are being tried – be it sharing all your takings in a day with employees, as Ikea did recently, or introducing broad-based share options for employees, as Asda has done. Companies are looking for competitive advantage through their people. As well as considering business strategy, organisational capabilities and long-term goals when we plan and execute our strategic reward interventions, we need to place at least as much weight on employees’ needs and values and the realities of organisational life in the short term. All levels of staff and management should be involved in this process. That’s the route to trust, motivation and commitment to reward. Once changes are made, focus on their operating effectiveness and continue to monitor and improve them against their original goals. Think about how the buy-in and genuine sense of involvement of all employees can be enhanced.

Adapted from Purcell, J (3 Feb 2000), ‘Pay per view’, People Management



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J D Wetherspoon

The company believes in creating a highly committed and motivated workforce made up of people who achieve personal fulfilment through the freedom to act given to them in their daily work. The company sees its workforce as a prime organisational asset that is motivated through a positive organisation culture, pay and benefits, as well as training and development.

J D Wetherspoon recognises that many of its employees will not stay with it for all their working lives, but it wants its employees to develop a sense of loyalty. It pays a rate above that of its competitors, in the belief that employees are more likely to be motivated when they know they are being paid more than the minimum required. The company also bases its pay on reviews of performance, so that the higher pay reflects its positive view of the worth of its employees.

The company does well at keeping its employees. It feels that its good rates of pay and proper treatment of its workforce are major contributors to this success, which reduces ongoing training costs and also creates a body of committed people. The company has a bonus scheme. All staff receive a bonus, dependent on the performance of the pub where they work. The company also runs a number of incentive schemes, e.g. a monthly draw for examples of excellent customer care, with a paid holiday for two in New York for the winner.

The company also operates a share option scheme enabling employees to buy shares at a guaranteed price. By holding shares in the company, employees are likely to feel a greater sense of belonging and will want to see the company do well. Wetherspoon’s training and development programme is a combination of ‘on the job’ and ‘off the job’ training courses. Wetherspoon’s training focuses on career progression and links training to national qualifications.

Extract from the J D Wetherspoon case study on http://www.thetimes100.co.uk

Activity

Visit the Times 100 website and look at J D Wetherspoon in more detail.



http://www.thetimes100.co.uk/

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Motivation Wordsearch

T J O E Y G N I R A H S T I F O R P D M S T W P X K I S O C I A L N E E D S S L M J E C O Y Z R C R E H P O T S I R H C D S O S I E F E R O O H E R E M P O W E R M E N T T M F A L S W C L Q K I B M A B Y W X E O I A A F C S E F O U R R O L Y A T A Y L N I V R J E T I L O S A L P O P L I E E P K F T A R T E O A F T P E V T W M L L A P R C O I T A N N R P A I K R L O U I Y C T H N A Y D O G O R T N C N N M L F B R H O U J L B H N R I I O H O T U A S A I C I E M O E P D C O T R T H E I U S A M S Y E H A B X I L E R C E L A T O S A M Y N K V O N E N E G I E A K A S C W R I L O O I E B R N E C U R O F R R M M I A Y V I P S M Z E R V E H K E S B E O W R N H Y R S S E R L I E R E V Y I D Z I W O O U N Y E A N E A C R A R U E T E N A H R R N M O R P T H T H M T Z Y V A O C N G W G K P M S A U I I M I E B A I S T T H E O X N I U O L L S O E N A E M L B V N A M C I M O N O C E A N N D U R E C O G N I T I O N R Z G R E N S T T Q G K R J U M P E R S D E N E I G Y H

Hidden in the above grid are 32 motivation terms. They run vertically, horizontally or diagonally, backwards or forwards. How many can you find?

You should be able to find the following:

ACHIEVEMENT HERZBERG MONEY SELF-CHECKING

COMMUNICATION HIERARCHY OF NEEDS MOTIVATOR SOCIAL NEEDS

CULTURE HUMAN RELATIONS PIECE RATE SUPERVISION

ECONOMIC MAN HYGIENE PROFIT SHARING TAYLOR

EMPOWERMENT JOB ENRICHMENT RECOGNITION TEAMWORKING

FEEDBACK JOB SATISFACTION RESPONSIBILITY TWO-FACTOR THEORY

GROUP NORMS MASLOW SALARY UNIT OF WORK

HAWTHORNE EFFECT MAYO SELF-ACTUALISATION WORK CONDITIONS



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Semco

Semco is a Brazilian manufacturing company run by Ricardo Semler. It has gained a reputation for unusual management methods. Below are two extracts from a booklet given to every Semco employee.

Working hours Semco has flexible working hours and the responsibility for setting and keeping track of them rests with each employee. People work at different speeds and differ in their performance depending on the time of day. Semco does its best to adapt to each person’s desires and needs.

Working environment We want all our people to feel free to change and adapt their working area as they please. The company has no rules about this and doesn’t want to have any. Change the area around you, according to your tastes and desires and those of the people who work with you.

Adapted from Semler, R, Maverick, Arrow Books

SAQ 10

1 How do you think the above policies are intended to increase motivation? 2 Do you think financial incentives will work in a situation like this?



TEAMS

Section 4: Teams

Teams or groups (the terms are used interchangeably) within companies are the rule rather than the exception. In very few situations do individuals work on their own. Given that teams are common to all organisations, we will first look at their role within organisations, how teams develop, what makes an effective team, and finally some potential issues raised by team working in organisations today.

Role of teams in organisations

Organisations are made up of many groups and they are fundamental in ensuring that organisations achieve their objectives. Many types of groups exist in organisations, including:

Hierarchical – for example management, staff and manual workers Specialist groups – work teams within a function, for example, electricians

within a maintenance department Boundary spanning – where the group’s functions span between one

organisation and another, for example, a customer liaison group who provide the link between customers and the organisation.

The above are examples of formal groups. They are established by the organisation for a specific function or objective and may be set up on either a temporary basis (e.g. to handle a particular short-term project) or a permanent basis (e.g. management team reporting to the managing director). However, informal groups exist within all organisations and they can be described in either friendship or interest terms. Membership is voluntary and their significance within an organisation is great – it is often because of their existence that things get done. Informal groups have their unwritten rules and norms about appropriate behaviour and responsibilities. They can be of great help to management as a means of communication (the grapevine), but in some cases they can work against management interests (e.g. to resist change). Within most formal groups, informal groups exist.

SAQ 11

Which of the following would in your view constitute a team/group?

(a) people riding on a bus (b) blonde women between 20 and 30 years of age (c) members of a football team



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(d) audience in a theatre (e) people sheltering from the rain in a shop doorway

Individuals may behave differently when working on their own than they would if they were working as part of a team. Group pressure can influence the team member to act differently in order that team goals are achieved. The person is influenced to conform to the group norm, i.e. a shared perception of how things should be done, or a common attitude, feeling or belief. The Hawthorne experiments considered earlier, along with many others, show how group behaviour can influence workers’ motivation, so it is useful to study how groups form and how they can be effective parts of an organisation.

SAQ 12

1. What do you think could be the organisational benefits of team working? 2. Explain the differences between formal and informal groups. 3. What is a group norm? What significance do group norms have for group

bonding?

Group development

Groups do not become effective teams immediately. There are many factors that encourage group formation, including:

physical proximity, e.g. students sitting near each other in a classroom rewards attached to mixing with others, e.g. being able to work faster and more

efficiently emotional support, e.g. in times of crisis other group members might provide

support clear objectives set for the group.

Tuckman (1965) describes a four-stage model of group development:

Forming: The forming or orientation stage is when team members learn about each other, about the nature and purpose of the group and the constraints within which it must work. Group structures, status hierarchies and interaction between team members are decided upon.

Storming: The confrontation or storming stage is when disputes and power struggles arise. In this phase there is group conflict, criticism and open questioning of the group’s goals.

Norming: The differentiation or norming stage is when work is divided and individual members’ responsibilities are tentatively implemented. Conflicts are resolved and the group moves into a who does what mode.



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Performing: The collaboration or performing stage is when group productivity increases, when there is commitment within the group to success, and when individuals are valued by their colleagues. Decision making is established within the group and people get on with their work.

Characteristics of effective teams

A number of factors determine how effective teams can be effective in making decisions:

team size nature of the task clarity of the task team goals team roles communication between team members group processes and procedures.

Team size The size of a task can determine team size, e.g. if you had to brainstorm a number of options to solve a problem, a team of thirty people would be ineffective.

Within a team there is a trade-off with regard to the team size. The more members in the team, the more complex the communication process needed; however, the broader range of experience can be brought to the table. On the other hand, the larger the team, the smaller the contribution any individual can make. Other issues when deciding team size include the need for rules and procedures, the potential for a sub-group to dominate a larger team, and often the larger the group the longer the decision-making cycle. Teams of more than a dozen tend to require extensive supervision, and they encourage the emergence of sub-groups.

Nature of the task The type of task to be carried out by the group should determine the type of group that is formed. Large groups are unsuitable for problem solving, e.g. one of the critical success factors of quality circles is a small group that encourages discussion, creativity and problem solving. On the other hand, large groups are very useful for the dissemination of information. While the individuals concerned could work in different groups to carry out different tasks, it can be difficult to work in a single group that is handling quite different tasks, for example, allocating work and creatively solving a problem. To overcome this issue, group meetings could be split by type of task to be undertaken rather than organising one meeting to handle multiple and quite different tasks.

If the task has to be done urgently, a team may need to adopt a more structured approach then if the task is less pressing. In these situations, getting the work done is a key priority and the role of the team is to make sure that everyone knows what has to be done and completes it as quickly as possible. A team which operates in an environment where work has to be done quickly is likely to have clearly stated procedures and well-defined targets.



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Clarity of the task If tasks are clear and unambiguous, a group can operate in a more structured way than if things are less clear. A precise task will help the group through the forming and norming stages of group development.

However, not all tasks in a work environment can be defined precisely. There are many occasions when the solution to an aspect of work is not known and it is left to the group to develop a suitable solution, which at the outset is undefined.

Team goals Team output is affected by two distinct elements – the team’s objectives and the satisfaction level of the team members. Each team member must clearly understand the team’s work, and the role of each individual. Where team members are unclear about what is required, teams are less likely to be effective.

Team roles In the 1970s R Meredith Belbin and colleagues developed a theory that an effective team requires a mix of complementary team roles. He argued that people with different psychological characteristics adopt particular roles at work and that combinations of different types of people were required to make a well-balanced team. For a successful team, he argued, there were nine roles that required to be filled, although they may not be needed in equal measure. The nine roles were:

Co-ordinator This person is self-confident, mature, a good speaker and listener, good at facilitating group decisions and an ideal chairperson. Perhaps not the cleverest or most creative member of the team, but good at clarifying goals and promoting decision making.

Supporter This person is perceptive, able to identify problems and promotes harmony within the group. S/he will tend to avoid confrontation and avoid making decisions that may cause conflict.

Specialist This person has specialist knowledge or skills that are needed by the team. They tend to be single-minded and narrow in outlook.

Innovator Unlikely to be a good communicator, this is an ideas person – creative and an imaginative problem solver. While intelligent, s/he is likely to be an introvert and poor at communicating.

Shaper The shaper is task-oriented, thrives on pressure and is likely to overcome obstacles, albeit at the expense of other team members’ feelings. They enjoy challenges and are dynamic and outgoing people. Other team members could criticise this person for being manipulative and someone who avoids completing tasks.



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Completer-finisher This person is unlikely to delegate but is very conscientious and an unassertive introvert. They search out errors and omissions, scouring the small print in order to be thorough.

Implementer This person is capable of turning ideas into action and is very stable and practical. They are disciplined but prone to being inflexible and need persuading of an idea’s validity before proceeding.

Monitor-evaluator This person is a critic with the ability to analyse issues and is normally correct in his/her assessments. They tend not to suggest new ideas but can identify the options available and the strengths and weaknesses of them. They tend to lack warmth and the ability to inspire others, but are stable and intelligent.

Resource investigator This person works outwith the bounds of the group to gather new ideas and information. They inspire everyone, spread the word and develop contacts. They are normally very enthusiastic at the beginning but tend to lose interest as time progresses. They are relaxed and positive but tend to be over-optimistic.

Belbin argued that a well-balanced team should include someone who fitted each of the roles. The only exceptions are co-ordinator and shaper where either one or the other was required. This does not mean that a team should have a minimum of eight people as it is possible that some team members can play more than one role.



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This article shows how Belbin’s model can still be applied.

Teaming with talent

Even if you are happy to accept that the group effort is always better than individuals working in isolation, how do you set about constructing a team when your business is that of designing and selling computer software? Or if you are reviving a failing school? Twenty years ago, Belbin began a decade of research at the Henley Management Centre into team dynamics and discovered there is a formula that works across business disciplines.

We would get a group of people together and ask them to self-select what they considered to be the best team. They would invariably choose the best set of individuals. We would then select the remnants according to the Belbin formula. We would set them some tasks, and the Belbin-formula team would always win. Wipe the floor with the others.

The idea behind the Belbin method is to build jobs around people. Define a job only by its core requirements, e.g. artists need to be able to draw, then using this minimum specification, look at the person. For every business team to function it will need the natural leader, the born organiser, the scatty creative. Or to use the jargon, the ‘co-ordinator’, the ‘shaper’ and the ‘innovator’. Even the sad anorak in the corner of the office, the one incapable of seeing the wood for the trees, can play a vital role in the Belbin team. They are the ‘finishers’, the ones who make sure the task is seen through and completed, mainly by dint of worrying themselves sick about it.

The winning team is out there, sitting opposite you or just round the corner. The nag, the prat, the office bully – each could play a part in turning your company into a winning outfit. All you have to do is identify them.

Adapted from White, J (September 1999), ‘Teaming with Talent’, Management Today

The value of Belbin’s work lies in designing teams to achieve high performance. In selecting people for team membership, senior management should ensure that a proper mix of roles exists in the team. If existing teams are underperforming it is perhaps because one or other of the roles is not being fulfilled. To ensure the right balance for the team it is necessary to collect information on the personality types of the existing pool of employees from whom the team is drawn. Only by selecting a balanced team will the team be effective. Teams are the basic building block of successful organisations and Belbin’s work enables us to understand what makes a successful team. Belbin’s approach is used in some form today, but it is criticised for its subjectivity and the fact that it can be difficult to determine which team role an individual actually plays in a team.



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Communication between team members Good communication is essential for teams to work together successfully. Methods of communication can be controlled both by the group members and their leader. The main channels for communication between group members are shown below:

Circle system Wheel system All-channel system Chain system

The circle system Here messages pass between certain people who pass it on to others.

Matters requiring several comments and opinions are best handled through a circle.

The wheel system Here the person at the centre of the group can communicate with all members of the group, but each individual member has to go through the central person in order to communicate with others, e.g. a meeting that is managed by a chairperson.

Person 1

Since messages can be transmitted between any pair of members in at most two steps, the wheel is effective for completing routine tasks quickly.



TEAMS

The all-channel system Here every member of the team can communicate easily and directly with any other member of the team.

Person 1 Person 2

Person 5

Complex problems are best handled by the all-channel system with decisions being made by reaching agreement.

The chain system Here any team member only ever communicates with one other person, the information being passed from one to the other until all members have received it.

Person 1

Person 4 Person 5

Where instructions need to be implemented quickly and little communication between team members is required, the chain method is most suitable.



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SAQ 13

Circle one response for each question:

1. Good communication is

(a) the responsibility of the manager (b) essential for teams to be successful (c) what happens on off-the-job training courses (d) being a good public speaker

2. The main channels for communication between groups are

(a) top-down (b) top-down and bottom-up (c) circle, wheel, all-channel and chain systems (d) interdepartmental managers’ meetings

3. A circle system works best when

(a) there is conflict between two team leaders (b) there is a tight deadline for a decision to be made (c) only one member of a team is affected by the decision to be made (d) matters require several comments and opinions

4. The wheel system is most suitable for

(a) brainstorming session designed to encourage free-thinking (b) a shareholders’ meeting chaired by the chief executive (c) non-routine decision making (d) easy, flowing communication

5. ‘Every member of the team can communicate easily and directly with any other member of the team.’ This best describes

(a) a circle system (b) the wheel system (c) an all-channel system (d) a chain system

6. The chain method of communication is most suitable for

(a) the gathering of several opinions and viewpoints (b) quick implementation of instructions with little communication (c) when complex problems need to be resolved (d) communication between managers only



TEAMS

Group processes and procedures The process of interaction within teams is very important in order that the team can be successful in achieving its goals. For the team to be successful there are said to be a number of task and maintenance functions that need to be carried out by one or more members of the team.

TASK MAINTENANCE Initiating Encouraging Information seeking Compromising Diagnosing Peacekeeping Opinion seeking Clarifying and summarising Evaluating Standard setting Decision making

Adapted from Handy, C, Understanding Organisations, Penguin Business Library (1987)

Successful teams, therefore, are ones which pay attention to both the task and how it is to be done and the feelings and attitudes of team members. It has been shown that groups that tackle problems in a systematic order, e.g. first initiating, then information seeking, etc., perform better than groups that work in a less structured way. During the norming stage of group development, task procedures and decision making should be agreed upon, e.g. will it be by majority decision, decision by the leader, etc.

Effective groups also need maintenance and, like tasks, these can be carried out by one or more group members. These functions are essential for group effectiveness: for example, conflict has to be managed otherwise work and the team will suffer.

Potential issues with teams

While working as part of a team is the norm in today’s organisation, given that people behave differently as a result of not working on an individual basis, there can be a number of issues such as :

Inter-group conflict Intra-group conflict Group decision making.



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Inter-group conflict Inter-group conflict (conflict between groups) in a work environment is not uncommon and can be caused by a number of factors:

Competition for limited resources, e.g. labour skills Differing perceptions about the organisation’s goals Loyalty to members of the team Attempts by one group to dominate another group Conflicting goals.

Organisations can attempt to prevent such conflicts by doing things such as:

Moving individuals between groups on a regular basis Motivating team members to encourage inter-group co-operation by, e.g.

financial incentives Publicising the organisation’s wider goals Regularly exchanging tasks that teams perform.

Intra-group conflict Conflicts within a group can be caused by a number of factors:

Members perceiving team goals differently Breakdown of communication within the team Personal disputes Changing expectations of team membership.

These conflicts can be addressed in several ways, including:

Appointing a strong leader who is accepted by the majority of the team Creating a compromise scenario, with give and take by the parties concerned Discovering a new approach to the problem.

Group decision making in organisations Organisational decisions are very often made within a group setting, e.g. board meetings, committees, project teams. As such, group processes, like those discussed above, have a huge impact on organisational decision making. While there are many advantages in this (e.g. synergy, the breadth of experience brought to a problem, the benefits of discussion, emergence of new ideas), these can be offset in some circumstances if excessive conformity (groupthink) or extreme decisions (polarisation) become issues.



TEAMS

Conclusion

Teams and teamworking are seen as the best way of marrying individuals’ needs and management’s need for flexibility, e.g. absence cover and less supervision. The workgroup remains the focus, even today, for the redesign of work. Well chosen and well managed teams can be the backbone of successful organisations. Among other things they can:

pool ideas and draw on a range of expertise handle large amounts of complex information support, motivate and help other team members.

However, teams have some disadvantages:

group decision making can be quite lengthy within the group there can be conflicting views and personalities there are occasions when there is only one person within a team who has the

expertise to make a decision group cohesion can lead to more risky team decisions being taken than an

individual person is likely to make.

Teams tend to be more effective in some situations than others. They work well when:

The task is complex or difficult When there is uncertainty When employees need help and support – this accompanies a complex or

difficult task and when there is uncertainty Where a range of skills and ideas are needed Where a high level of commitment is required Where high levels of responsibility are required by employees.

Teams tend to be less effective when:

Fast decisions are required Where tasks are simple and few skills are needed Where employees can work as individuals and do not need the regular support

of others Where members of a team have conflicts of interest.

Recent research suggests successful teams demonstrate the following six factors.

1. They have clear objectives set by management.2. There are specific measures by which teams can assess their performance. 3. Teams have ongoing training, e.g. in communication, group leadership. 4. Teams have authority to make their own decisions on how to reach their

objectives.



TEAMS

5. There is an open culture where teams can easily get access to the information they require and can easily contact senior management.

6. Rewards are based on team, and not individual, performance.

SAQ 14

Read the following case study and answer the five questions:

Case Study: ‘Thank God It’s Friday’

The British company Whitbread have established a small, up-market chain of restaurants called ‘Thank God It’s Friday’, which is abbreviated to ‘Fridays’ or TGIF. The marketing is directed towards the relatively young and affluent. Part of this strategy has been to avoid the traditional hierarchy of the good-food restaurant – Maitre d’Hotel, Chef de Rang, Commis Waiter and so forth – and empower the person with whom the customer deals directly: the Waiter. This person can take decisions on such things as complimentary drinks without reference to anyone else. There is no manager, but each restaurant has a team leader known as the Coach.

At the beginning of a shift the Coach will call team members together for a team meeting, when information can be passed on about the day’s ‘special offers’, team targets or objectives, selling strategies and when any problems can be highlighted. Individual team members can be innovative in using their own strengths and personal style to help achieve quality, service and sales objectives.

Questions

1. How would you describe the type of team operating in a TGIF restaurant?

2. Why would you consider this type of team-working to be appropriate in a restaurant?

3. What benefits will there be to the staff of TGIF from team-working?

4. What skills are the waiters in TGIF likely to need in order to operate effectively as team members?

5. What are the communication benefits of team-working at TGIF?



LEADERSHIP

Section 5: Leadership

Leaders are well known to us all. Nelson Mandela, for example, earned a reputation as a gifted, widely admired, leader. Leadership is the ability to influence the thoughts and behaviour of others. In the case of the business environment, this is to achieve organisational goals. Leadership is a necessity in today’s organisations, in order to lead them through rapidly changing circumstances and environments. Leadership is a key element of any manager’s job. Recent examples of successful UK business leaders include Sir John Harvey Jones of ICI, Anita Roddick of the Body Shop and Richard Branson of Virgin, Richard Emmanuel at DX Communications and Michelle Mone of Ultimo.

In order to understand the importance of leadership we will first study the differences between a manager and a leader, then consider a range of theories that look at why some people are more successful than others in getting others to follow them, and finally look at a range of factors that affect a leader’s style.

Manager vs leader

The terms management and leadership are often used interchangeably. Often today the term leader replaces the use of the term manager which historically was the norm.

SAQ 15

In what ways are managers and leaders different?

Kotter (1977) argues that good management is bringing order and consistency to key dimensions such as the quality and profitability of products, while leadership is about coping with change – a key role in all organisations today that need to undergo change in order to remain competitive. So, while (in Fayol’s terms) managers are involved in planning, organising, controlling, etc., leaders are involved in setting direction, aligning people to achieve goals, etc.

Nevertheless the work of leaders and managers may be complementary. It could be argued that managers must plan, control, etc. but must also deal with change. Similarly, leaders manage an organisation through periods of change but may also have to make plans etc. to ensure that the new situation functions in the way that is intended.



LEADERSHIP

Thus, although it is possible to distinguish between a manager and a leader, it is also possible to argue that the terms can be used interchangeably.

Activity

Can you identify some people whom you could describe as leaders? To what extent is it possible also to describe them as managers?

Leadership theories

Many leadership theories try to explain why some people are more successful than others in getting others to follow them. These include:

Trait theory Style theory Contingency theory.

Trait theory The first theories of leadership can be described as trait theory. This states that the ability to lead a group of people is something you are born with, not something that you learn. Therefore people should be selected as leaders rather than trained. Traits are personal characteristics and it has been said that leaders need to have initiative, decisiveness, self-assurance, assertiveness, intelligence, desire for work achievement and desire for financial reward. It has even been said that people’s physical appearance, dress code and stature can affect their ability to lead.

Trait theory is criticised on a number of fronts:

Measuring traits objectively is impossible Deciding which traits are needed for a particular leadership position is difficult There are too many physical and personality traits that are said to affect the

ability to lead There are too many exceptions in real life to accept that these traits are required

for a leader to be successful.

These criticisms led to the development of a different approach, called style theory.

Style theory Style theories highlight what successful leaders do rather than what they are. The underlying principle behind this approach is that, if leaders behave in a certain way, they will be successful. Most style theories argue that leaders have two main issues to tackle:

1. Achieving the objectives which are set – known as task orientation or concern for production.



LEADERSHIP

2. Maintaining good working relationships – known as people orientation or concern for people.

There are many possible leadership styles. One way to think of them is to see them as a spectrum with total task orientation at one end and complete people orientation at the other. Between these two extremes, a number of combinations of task and people orientation are possible.

Autocratic style Autocratic leaders define the tasks that have to be carried out, state who is to carry out the tasks, and ensure that tasks are closely supervised. Comment or discussion from employees is not encouraged. This style is at the task orientation end of the spectrum.

Advantages of the autocratic style include:

Decision making is normally quick, with management at the centre Tasks and relationships are clearly defined Employees receive direct assistance towards achieving their goals.

Disadvantages include:

Lack of input from employees means their experience or skills are not utilised Creativity and initiative are suppressed Employees cannot develop to their full potential A high level of supervision is required Motivation is likely to be poor.

Situations in which an autocratic style is most appropriate are:

1. Where work is repetitive and boring (since employees are likely to lack motivation and show little interest in their work). However, this style is unsuitable for many work environments.

2. In a situation of urgency when decisions need to be taken quickly and a plan of action starts in the short term.

3. Where clear direction is needed.

Democratic (or Participative) style Democratic leaders set objectives but leave employees to achieve these in a manner that suits them. A democratic approach involves much communication between the leader and the group with employees participating in the leader’s decisions. This style falls at the people orientation end of the spectrum. At its extreme, it is called laissez-faire where employees are left completely alone to carry out their work.



LEADERSHIP

Advantages of the democratic style include:

Utilises employees’ knowledge and experience in achieving objectives Ensures reasonable targets are set as employees are involved in setting them Increases employees’ job satisfaction by providing greater responsibilities Improves employees’ morale and motivation as they are involved in decision

making.

Disadvantages include the following.

Employees may be unable to work without close supervision. Encouraging employees’ involvement in minor operational issues but not major

decisions may lead to dissatisfaction. Due to communication and discussion the decision-making process could be

lengthy. Some employees will not be interested in helping to make decisions. Leaders need to have good communication skills. Leaders may neglect the task and pay more attention to people’s needs.

A good example of a leader who may adopt a democratic style is Bill Gates of Microsoft. He asserted that: ‘It’s really up to leaders to pull the group together, get the best talent out of that group, get the group thinking about the greatest possibilities, and think how each person can contribute.’

The basis of style theory is that some employees will respond differently to being led by people with different styles of leadership. Leaders can manage with autocratic or democratic ways or anything in between, but the basis of the theory is that employees will work harder for managers with particular styles of leadership.

Bill Gates, however, has also been very successful at getting things done. He must, also therefore, have elements of task orientation in his approach.

Early versions of style theory often argued that the democratic supportive style would be most effective. A study in the 1930s by Lippitt and White, as part of work done at the University of Iowa, described an experiment on leadership style carried out among children at a summer camp in the USA. It compared the effects of autocratic, democratic and laissez faire styles and concluded that the democratic style was preferred by the children and resulted in a reasonable amount of good quality input.

This experiment came in for some criticism (e.g. it took place in a non-work environment; the conclusion was a reaction to the prevailing authoritarian style) and this led to the view that a combination of people and task orientation is likely to be the most successful leadership style. Later versions of style theory, such as the managerial grid, argued that paying equal attention to the task and the people would be the best style of leadership.



LEADERSHIP

Activity

Go back to your list of leaders from the last activity. To what extent do you think they pay attention to both getting the job done and to the needs of the people they lead?

SAQ 16

Think back to your earlier study of the classical and Human Relations schools of management. Which school of thought is associated with:

Autocratic (or authoritarian) leadership? Democratic (or participative) leadership?

Contingency theory Contingency theory seeks to take many more variables into the equation. It suggests that the most suitable style of leadership will depend upon a wide range of variables. The underlying assumption is that a style of leadership that works in one set of circumstances will not necessarily work in another. So the best leader is not one with certain traits or a single style, but one who is able to adopt different styles in different situations.

There are several versions of contingency theory and we will look at five.

Fiedler’s contingency model Fiedler (1967) tried to identify the factors that determine the nature of situations. Three factors were said to be key:

1. Leader – member relationship – in particular the degree of confidence of the group in the leader’s abilities

2. Task structure – whether the task is easy or difficult, structured or unstructured, routine or varied

3. Position power – how much authority was vested in the leader.

Fiedler argued that two leadership styles – people-oriented and task-oriented – were relevant to particular situations. Which was the more successful was said to depend on the three elements of the environment (above). People-oriented styles were effective where work done by employees was liked even if the leader was disliked. If the work was disliked and the leader unpopular, a more task-orientated approach was more effective.

The ‘best fit’ approach This approach, by Handy, suggests that any leader must take four factors into consideration:



LEADERSHIP

The leader – their characteristics and preferred style of working The subordinate – their preferred leadership style in the circumstances The task – the job and its goals The environment – the organisational setting of the leader, their group and the

importance of the task.

This approach suggests that there is no perfect style of leadership applicable to all situations, so a leader must achieve the ‘best fit’. For example, if a leader has a fairly structured style, works with a group that likes to be dealt with fairly democratically, works on a loosely defined task, then for ‘best fit’ there has to be some movement in attitude by at least one if not the three elements involved, given the environment in which this is carried out.

Hersey and Blanchard’s situation approach This theory argues that leadership behaviour should differ depending upon the situation and also the maturity of the employees. Here maturity refers to the employee’s work experience, ability level and their willingness to accept responsibility. Maturity they defined in two separate ways – job maturity, referring to the workers’ skills and knowledge, and psychological maturity referring to the workers’ self-image, self-respect and self-confidence. So, a new employee would relate more to a directive leadership style, moving to participative as s/he settles in the job and eventually to laissez-faire as the worker works independently and without close supervision. This approach is suited not just to leading individuals, but also to teams, e.g. a new team that would need to be led in the initial stages.

Hersey and Blanchard defined four styles of leadership that would be applicable depending upon the situation and maturity:

Telling leadership style for use on low maturity subordinates Selling leadership style for workers who are enthusiastic but not yet fully

competent to work alone Participative leadership style for workers who are able but unwilling Delegative leadership style for use by mature workers.

Hersey and Blanchard’s approach has been criticised on a number of grounds, including the fact that the concept of maturity is more wide-ranging than they suggested; also that employees can be very competent in their job yet lack self-confidence, or indeed very assertive but not very productive.

John Adair: action-centred leadership John Adair in Effective Leadership (1983) describes the role of the leader as involving three elements. These are:

achieve task develop individuals build the team.



LEADERSHIP

His model can be represented by three circles where each circle represents a major area of a leader’s responsibility, the needs of which the leader must simultaneously satisfy. This is called action-centred leadership. He emphasises the importance of distinguishing between the individual and the group because there will never be a perfect match between individual, group and task. This too is a contingency theory since Adair argues that leaders alter the mix of effort devoted to satisfying various needs according to the requirements of the overall situation.

Six dimensions of leadership One of the most recent contingency theories of leadership comes from Andrew Brown (1999), who claims that there are six dimensions of leadership which all leaders should use depending upon the circumstances they find themselves in.



LEADERSHIP

Learning from the Six Dimensions of Leadership

Being a consistently successful leader requires excellence in most, if not all, of the six dimensions of leadership. Ideally, leaders should be believable heroes, fine actors, high self-esteem immortalists, astute power-brokers, diplomatic ambassadors and, on occasions, calculating victims.

Heroes like Walt Disney and Henry Ford are devoted to their organisations and inspire others. They achieve against all odds and become icons to be revered. The best leaders are skilled actors – people like Lee Iacocca and Richard Branson who recognise the need to deliver authentic leadership performances that convince others of their right to command. Bill Gates and Margaret Thatcher are good examples of self-confident immortalists – they have high self-esteem which has propelled them to achieve at the highest level. World historical figures such as Napoleon and Cecil Rhodes were talented power-brokers who knew that to accomplish their goals they needed to mobilise their followers. Examples in the business world include Alfred Sloan of GM and Jack Welch of GE. They have an impressive ability to choose appropriate subordinates through whom they can most easily exercise their power. The most able leaders are diplomatic ambassadors, people such as John Rockefeller and Chung Ju Yung, founder of Hyundai. They use their interpersonal abilities to build coherent organisations, and develop networks of external supporters. Finally, impressive leaders are willing to cast themselves as victims when required. Bill Clinton in the political arena is a good example, unafraid to make short-term sacrifices in the best long-term interests of his career and those he led.

To be fully effective, leaders need to be adept in all these dimensions of leadership. To be successful in the long term, leaders need self-insight and intuitive skills to modify their behaviour to fit changing circumstances.

Adapted from Brown, A, (1999) The Six Dimensions of Leadership, Random House Business Books



LEADERSHIP

SAQ 17

Consider each of the following situations in terms of the theories of leadership of Hersey and Blanchard; John Adair; Andrew Brown. In each case, identify which aspect of which theory applies and why.

1. Your organisation has recently undergone another major turnaround in terms of new job methods being implemented. (This is the third such change in less than two years.) Senior management have required that job specifications and procedures be rigidly adhered to. Most of your team have been with the company for over five years and know their jobs well. You’ve recently heard a lot of grumbling and questions about why the changes are needed. One of your best people even said they were thinking of leaving due to the ‘crisis’ of top management not being able to get their act together.

2. You’re the night supervisor of a ‘fast food’ restaurant. Most of your staff are part-time, young and/or inexperienced. Job procedures are clearly spelled out. The objectives are high quality, fast food service with a friendly smile.

3. Recently your customer service group has been hit with an overwhelming workload due to unanticipated problems over how to use and service a new piece of equipment that’s selling like hot cakes. Many unaddressed problems now exist in terms of information needs, training users and documentation. Your entire team is made up of relatively technically orientated people. You’re all under high levels of pressure to perform – working overtime and even weekends.

4. You’ve recently been named project manager of a team to come up with new ideas for marketing your present product line as well as to identify feasible new uses, applications and innovations. Your team is mostly composed of exceptionally talented people in their respective technical areas. Your expertise lies mostly in marketing. Your job is to produce a report including a set of plans and priorities for projects that might build your company’s future.



LEADERSHIP

Factors affecting leadership style

Overall, contingency theory suggests that the most appropriate style of leadership will depend upon a huge range of factors including:

task group size organisational culture nature of group members.

Task If a task is to be carried out quickly, for example in a crisis situation, then for speed, an autocratic style of management would often be appropriate.

Group size If the team is a large one, for example twenty or thirty people, then a democratic style could be unwieldy if all members want to be involved in decision making.

Organisational culture Existing organisational culture can result in only one style of leadership. For example, Japanese electronics companies are unlikely to use strongly autocratic styles of leadership, whereas public sector companies in the UK are more likely, because of their bureaucratic nature, to support autocracy.

Nature of group members Some people, for a variety of reasons, are reluctant to be involved in decision making and they prefer to be told what tasks are to be carried out. In such cases autocratic leadership is appropriate.

It is important to remember that the leader her or himself may also be an influential factor. The experience, skills, training and personality of an individual may pre-dispose her/him to behave in a particular way. In addition, some people may be more flexible than others and find it easier to adapt their behaviour to different situations.

Conclusion

‘Leadership personality, leadership style and leadership traits don’t exist,’ claims the management guru Peter Drucker in his book The Leader of the Future. He claims that the leader should be able to adapt to all circumstances. A great many considerations affect the success of a leader, e.g. the nature of the situation, organisational culture, the task itself, the characteristics of the leader and his/her subordinates, etc.

Effectively, Drucker is arguing for a contingency approach to leadership. However, trait theory and style theory remain important to being a successful leader or manager. Like other aspects of management theory, thinking on leadership is developing. There has even been a revival of the notion of charismatic leadership



LEADERSHIP

which relies heavily on trait theory but recognises the complexity of the leadership role. As we have seen, ideas on leadership have moved in line with changes in the main schools of management thinking. A key issue for Drucker, however, is that relatively few managers have leadership training and even fewer are aware of the implications of the leadership approach they take.

SAQ 18

Case Study

Staff’s objections to a manager John is a young management accountant who, after completing his institute’s examinations, was put in charge of a small but well established accounts department.

At his first progress review with his line manager, he was very confident and enthusiastic about numerous initiatives he had already taken or was planning to take. John expressed disappointment that his staff were so reactionary and unco-operative.

Enquiries made by John’s manager of the staff in the accounts department had uncovered general dissatisfaction with John’s leadership. The younger ones were frightened of him and felt he had no interest in them. They felt he was always in a hurry, and they had no idea of whether their work was up to his requirements or not.

The older ones, who had worked in the department for a number of years, were very worried about his apparently arbitrary and risky decisions. Others were resentful and frustrated that John never bothered to listen to their ideas. John was informed of these comments.

Question You are required to recommend the leadership behaviour that John should adopt to improve this situation.



LEADERSHIP

Activity

Visit http://www.thetimes100.co.uk . Find the case study on Travis Perkins, which is a company that distributes of building materials. The case study explains the company’s management training programme. It gives an example of one of its successful trainees, Mark Newman, an extract of which is given below. As you read the case study, use the theories of leadership to consider how effective you think the company’s management training programme is likely to be.

Mark Newman, 29, manages an annual turnover of £13 million at the company’s National Sales Office in Northampton. Mark joined Travis Perkins in 1989 as a Management Trainee, after finishing a one-year business studies course at college.

On the subject of Sales Mark says: ‘Sales Management requires a high level of self motivation with the ability to communicate effectively with staff and customers. You have to know what the customer wants and ensure your staff maximise these opportunities. I believe the demands of our industry make each day at Travis Perkins a new challenge. New products, initiatives and customers ensure that by achieving your goals in a competitive market place, you receive complete job satisfaction that is second to none.’

The Management Trainee Programme enabled Mark to learn a trade whilst continuing in further education. Experience and product knowledge gained, whilst working in various branches enabled him to successfully progress through the company. He found the programme very rewarding as it gave him great insight into the importance of the staff that make our company a leading name in the industry.




PERSONAL EFFECTIVENESS OF MANAGERS

Section 6: Personal effectiveness of managers

Time management

One of the most important skills an effective manager should possess is that of time management. Time is a resource that is easy to waste. The absence of time management is characterised by last-minute rushes to meet deadlines, meetings that achieve nothing and days that slip by unproductively. This sort of management behaviour leads to poor performance. Good management of time should ensure that:

the best use is made of time available time-wasting activities are minimised – learn to say no! more time is made for important and urgent tasks.

Proper time management allows the manager to:

eliminate wastage refuse excessive workloads allocate time appropriate to a task’s importance plan each day efficiently

Prioritising

The simple concept of keeping a well-ordered diary and planning activities will assist a manager in managing his daily work effectively. Setting up a priorities list is also an excellent way of ensuring that tasks are dealt with and seen through to completion:

Tasks should be prioritised according to their importance and urgency – this will assist in ensuring that tasks are completed in the correct order

Large tasks should be broken down into a series of smaller tasks Time logs should be used to schedule tasks and estimate completion times for

specific tasks Tasks that do not require managerial input should be delegated to subordinates Set targets to aim for that are Specific, Measurable, Agreed, Realistic and

Timed (SMART) Incomplete tasks should be carried forward on to the next priorities list The priorities list should allow some degree of flexibility as there will be

occasions when unforeseen circumstances disrupt the planned process.



PERSONAL EFFECTIVENESS OF MANAGERS

Time stealers

Poor time management is caused by inadequate organisation and allowing ‘time stealers’ to interrupt the management process. Many ‘time stealers’ affect a manager’s workflow and efficiency – some of the more common ones are given in the table below:

Time stealer How to improveInterruptions – telephone and personal visitors

Control interruptions – schedule a time of the day to make calls and accept visitors. Avoid getting drawn into irrelevant conversations.

Tasks that should be delegated

Learn to give subordinates the responsibility of completing tasks.

Procrastination and indecision

Do not put tasks or decisions off – tackle them in the order they come up on the priorities list.

Unclear communication Communicate clearly – verbal instructions can be quickly forgotten; it may be necessary to provide a written copy.

Lack of planning Make use of a diary and priorities lists.

Personal qualities

Managers, leaders and entrepreneurs should possess a number of personal qualities that allow them to deal confidently and efficiently with the processes involved in running a successful business:

Self-confidence and self-reliance i.e. the ability make ‘dreams become reality’ and to work under your own ‘steam’

Clear vision of the way forward – clearly defined targets and the ability to look long-term at implications of a changing business environment

Ability to deal with uncertainty e.g. being resourceful and creative and having the ability to think of alternative options

When required, the ability to take risks Technical skills and expertise – an understanding of the operation of the

business field they are working in. Communication skills – necessary to deal with staff, managers, customers,

financial institutions, the press etc. Administration and organisational skills – to manage resources and paperwork

to ensure the business runs smoothly.



CHANGE

Section 7: Change

Change is normally a response to a significant threat or opportunity arising from outside the organisation. However, change is nothing new:

There is nothing permanent except change.Heraclitus, 510BC

SAQ 19

Read the text below. What have been the reasons for Madonna’s changes of image during her career?

Madonna live in Spain

There was no doubt that Madonna reigns supreme as the undisputed Queen of Pop after she took to the stage in Barcelona for the first date of her eagerly awaited sell-out Drowned World Tour 2001.

Looking more vibrant and healthier than ever, the Material Girl took the Palau Sant Jordi Arena by storm as she sang in front of 18,000 Spanish fans. Wearing a wide array of exotic outfits, she performed a range of energetic dance moves and provided a generous helping of the familiar Madonna shock factor.

To the accompaniment of loud drums and bright flashing lights, the 42-year-old mother of two seemed barely out of breath as she surprised fans by flying around the stage performing a range of highly energetic dance routines, that would have proved extremely gruelling for anyone but the super fit. One of the more breathtaking of these stunts involved a spectacular flight through the air. She then conducted a mock fight with one of her ten dancers, before enjoying a rodeo-style ride on a mechanical bull, which she performed like a true cowgirl!

The show came to an end with a spectacular display of pictures of Madonna and her numerous image changes since the start of her career.

SAQ 20

Why do business organisations need to change?



CHANGE

Factors causing change

Change has a huge impact on today’s businesses. Consider the following:

social factors (changing workplace and skills) economic factors (bigger, freer, global marketplace) new technology (mobile phones, PCs, etc.) environmental issues (greener society) legislation (e.g. European Union)

All of these factors have been significant in recent years, and there is no reason to suggest that this will be any different in the future. In an increasingly fast-moving and uncertain world, change is the one thing of which we can be certain. Changes to society, the economy, technology and the environment will affect both profit and non-profit organisations – it is therefore a key aspect of Business Management.

All businesses operate within an environment of constant change. They have to adapt to:

mergers and acquisitions, e.g. ICL entering new markets, e.g. exporting responding to legal or regulatory requirements, e.g. new European legislation,

new Competition Act 1998 trading in new currencies, e.g. the euro implementing new customer-led strategies using new technology, e.g. micro-chips, telecommunications forming multi-organisational, trans-global alliances, e.g. BP, Amoco–Burmah

Castrol establishing different communication links, e.g. call centres, Internet, video-

conferencing implementing changes to business processes, e.g. e-commerce.

It is widely known that organisations that resist change tend not to survive. British motor-cycle and TV manufacturers are obvious examples. Every organisation should plan for some degree of change – market share drops, a new competitive product is launched, customers’ expectations change, etc. The organisation has to change and adapt to new pressures all the time. Without change the organisation cannot thrive and grow.



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One company which has experienced considerable change is ICL, once seen as the UK answer to IBM. Some key points in its thirty-four-year life span are summarised below, although what was ICL is now a key part of Fujitsu’s operations in Europe.

ICL to Fujitsu Services 1968–2002

1968 ICL is formed by the merging of two of Britain’s leading computer companies (English Electric Computers and International Computers and Tabulators)

1984 Standard Telephones and Cables (STC) buys ICL for £430 million to form one of Europe’s leading communications and information systems groups

1990 The Japanese conglomerate, Fujitsu, buys an 80% stake in ICL. The remaining 20% is owned by the Canadian company, Nortel Networks

1991 ICL acquires Nokia Data, the IT services operation of Nokia

1996 ICL moves out of manufacturing by selling its last manufacturing site to Celestica of Canada and de-merges its PC and server business to Fujitsu. ICL concentrates on designing, building and operating IT services

1998 Fujitsu gains full ownership of ICL by buying Nortel’s 20% stake

2001 ICL announces its intention to become part of the Fujitsu brand

2002 ICL became part of Fujitsu Services when Fujitsu, the world’s third largest IT services company, re-organised its subsidiaries, including DMR in Germany and ICL, into two new companies, Fujitsu Services and Fujitsu Consulting. Richard Christou, chief executive of ICL became chief executive of Fujitsu Services which is based in London. ICL no longer operates as a separate name.

Activity

Visit Fujitsu’s website at http://www.services.fujitsu.com to investigate current developments in Fujitsu’s operations (e.g. in 2003 it opened a new datacentre in Essex as part of a consolidation programme to reduce the number of its UK datacentres from nine to five). The website also has some examples of the role of IT in companies and how this is linked to change.

The following case studies show how two companies have tried to adapt to new circumstances. Both are long-established Scottish companies operating in the textile/ clothing industry which has traditionally played an important part in manufacturing in Scotland.



http://www.services.fujitsu.com/

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Kinloch Anderson goes big in Japan

Kinloch Anderson is a family business based in Leith. Its traditional products are Highland dress, kilts and tartans but it has expanded its range into conventional clothing as well as into other products such as bags and bed coverings. It has recently launched a new clothes brand, Kinloch 2, aimed at younger customers.

These developments have been in response to changing market conditions. It also has a corporate branding business which involves designing and manufacturing tartans for firms such as Scottish Power and Intelligent Finance.

The relatively slow growth of the domestic market has led the company to seek markets elsewhere. Since the 1990s, it has been successfully operating in the Far East. Last year it sold £4 million worth of goods in Japan and recently spent £500,000 in a large advertising campaign in Korea.

The company’s approach has been to use licensing and it has built up an extensive network of licensed partners which manufacture, distribute and retail branded clothes and goods in Japan, Korea and Taiwan. The partners make royalty payments for the use of the brand name. They also make use of cloth woven in Scotland to manufacture goods sold in the Far East. This method allows Kinloch Anderson to spread the risk and buy into the local knowledge of the partner.

Increasingly, more of the company’s products are being made in the Far East where labour costs are substantially cheaper. However, much of the cloth itself is woven in Scotland and the company is keen that as much of the clothing as possible should be supplied from Scotland.

Moving into the Far East was a calculated gamble, according to Douglas Kinloch Anderson. ‘It’s not easy to break into the international brand business. It’s very competitive in the Far East, especially from other European brands.’

The company also sells in North America and Europe and is considering a joint push in both areas in the future. At present, though, it is concentrating on the Far East. ‘We are working with really dynamic, entrepreneurial people,’ says Douglas Kinloch Anderson. ‘There’s a lot to be learned from their dedication and their willingness to think laterally.’

Adapted from an article by Guy Dixon, Scotland on Sunday, 8 December 2002



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Pringle of Scotland

Pringle was founded in 1815 and in 1965 won the Queen’s Award to Industry for Export Achievement. It produces knitwear, including garments made from expensive cashmere. However, the brand lost its sparkle. It was seen as old-fashioned and worn by older men and golfers. In 1999, as part of Dawson International, it lost £11.1 million on sales of £33 and was heading for bankruptcy. In 2000 it was bought by Hong Kong businessman, Kenneth Fang, for £5 million.

He hired Kate Winser, who had previously worked for Marks and Spencer, as chief executive. In two years she has been able to turn the brand around and sales have risen by 80%. The company is making a profit and redundancies in its factories have been averted. The actions that she has taken to change things include:

Breaking the link between Pringles and golf, e.g. by ending a promotional deal with the golfer, Nick Faldo

Taking back control of more clothing lines from US licensee, Hartmarx. It will continue to deal in golf lines but on a low profile basis. Existing licensing deals in Japan were also ended

Introducing new clothing lines aimed at the luxury market Developing new ranges of associated luxury products such as childrenswear and

accessories as well as developing a partnership with a company called Agent Provocateur to make cashmere hot pants and underwear

Setting up a flagship store in major cities including New York (such as Saks Fifth Avenue and Barneys), Los Angeles, Paris, Milan and Tokyo.

The repositioning of the brand as a fashion item has been helped by celebrities. The company gained much free publicity during 2001 when the England footballer, David Beckham, was photographed wearing a new design Pringle jumper. Robbie Williams and Sara Cox are others who have been seen wearing Pringle clothes.

Adapted from ‘Mastermind of Pringle’s “sexy” transformation’ by Arlene Kelly, Sunday Post, and ‘Pringle revels in new image after rebrand’ by Hugo Miller,

Scotland on Sunday, both 12 May 2002

We have already noted that change takes place constantly. The above examples refer to a particular point in time and things are likely to have changed since they were written.

One way to illustrate this is to look at the following article, which was written in 2000. Since it was published a number of things have changed. For example, the Borders company, Exacta Circuits, has closed and the three water boards have combined into one organisation, Scottish Water.



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Waterchips Down?

Scotland’s water industry, if industry is the correct term for three large public utilities, could be in for the biggest drubbing in its history.

Their dilution seems inevitable in the face of mounting competition from outside competitors. In February 2000 Northumbrian Water, a privatised English water company, took over the management of water and wastewater at Scottish Courage’s Fountainbridge brewery in Edinburgh. It expects to achieve efficiencies and environmental improvements and thus save money for Scottish Courage. Although East of Scotland Water still supply them with water and pump away their sewage, its revenue could diminish if Northumberland Water negotiated a finer price for water and found ways of reducing the volume of wastewater. Other Scottish customers could well follow Scottish Courage’s example.

The three Water Authorities have to report to the Water Industry Commissioner for Scotland who says: ‘The authorities don’t have the pressure of shareholders. Instead they have the pressure from this office and the Scottish Executive. It should theoretically be as easy to provide as good a service in the water authority as in a private company – there isn’t a shareholder pressure to cut costs.’

Apart from focusing more on their customers, the big task the new authorities face is remedying decades of under-investment. In addition they have to install expensive sewage treatment plants to meet EU directives on the disposal of waste. To help finance this investment, charges have increased dramatically in all three regions. But, at levels like this, the cost of water and sewerage to a large industrial concern moves from being marginal to being a significant item. Other companies might follow the example of Exxon, which has begun in-house treatment of sewage from its Mossmorran petrochemical complex in Fife.

In addition the 1998 Competition Act threatens heavy penalties on companies employing anti-competitive behaviour and abusing a dominant market position. This could force the water boards to allow other water companies access to their pipes for a fee. As East of Scotland Water claim: ‘Perhaps a quarter of our income base could be prospectively exposed over the coming decade. There is worry too that new companies entering into the Scottish marketplace will cherry-pick the best customers which would have a significant impact upon other customers. When Exacta Circuits sank its own bore hole to provide a supply in the early 1990s, Borders Regional Council, which was running water at the time, had to raise its remaining customers’ bills by more than a third to make good the lost revenue.’

The next few years for Scottish water are likely to be turbulent.

Adapted from Buxton, J, ‘Waterchips Down?’, Scottish Business Insider, April 2000



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Activity

Look up Scottish Water’s website at http://www.noswa.co.uk and try to find out the extent to which the company is coping with the kinds of challenges mentioned in the article. As you do this, think about how good a predictor the article is. Change is about the future and the future is uncertain.

Force field analysis

This was originally developed by Kurt Lewin. He distinguished between driving forces for change (often known as drivers) and restraining forces against change (often known as resistors). If the driving force for change equalled the restraining forces, there would be a position of equilibrium and change would not be possible.

A force field can be illustrated in a diagram that shows the strengths of the drivers and resistors as arrows proportional in length to the perceived relative force of each element. The strength or weakness of these drivers and resistors is subjective and will change over time. In addition, over a period, some drivers and resistors will disappear while others appear.

An example of a simple force field analysis:

DRIVERS RESISTORS

Unclear objectives

Higher salaries Existing organisational culture

Workforce committed to the change

Wish to retain existing management style

Training in new skills Fear of the unknown

Charismatic leader

Lewin also identified Assets for Change. These are factors which do not themselves drive a change and cannot, therefore, be described as drivers. However, they do help the change. Examples might include availability of finance to train people in new skills or the willingness of other stakeholders, e.g. customers, to support the change. These are assets but not drivers.



http://www.noswa.co.uk/

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The following table lists some of the general driving and restraining forces that might affect organisations.

Lewin’s equilibrium – driving and restraining forces for organisational change

Driving forces (forces for change) Restraining forces (forces against change)

Changing markets

Shorter product life-cycles

Changing attitudes towards work

Internationalisation

Global markets

Social transformations

Increased competition

New technology

New personnel

From individuals

– Fear of failure – Loss of status – Inertia(habit) – Fear of the unknown – Loss of friends

From organisations – Strength of culture – Rigidity of structure – Sunk costs – Lack of resources – Contractual agreements – Strongly held beliefs and recipes

for evaluating corporate activities

Wilson, D and Rosenfeld, R, (1990) Managing Organisations, McGraw-Hill

Assets for change could be:

funding in place to implement change good past experience of change support of suppliers, shareholders, etc.



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SAQ 21

Read the following case study and then answer the question.

RCL Leisure

Richard Corsie was a successful bowler who won a Commonwealth Games gold medal representing Scotland and was world champion three times. The company began by acquiring a bowls club in Abbeyhill, Edinburgh, of which Corsie was a member. Total membership was 1250 and the club had a bar which could seat 10 people. He wanted better facilities and he knew from listening to members that most shared his view. Expansion on the existing site proved impossible and the company looked for a new site, even though this would increase the length of time before improvements could be made. To cater for the existing membership, it had to be on the east side of Edinburgh. The company originally set a budge of £2 million.

It took the company two years to find a suitable site. However, early in 2001, the company opened a new eight-rink indoor bowling arena in east Edinburgh near to the large Fort Kinnaird shopping centre. It cost £3.75 million but also has corporate function suites and a restaurant complex, the Inn Over The Green. Some old members were unhappy at the move but most have a sense of belonging and a loyalty to the new club. Richard Corsie believes that this will keep the ‘churn rate’ low. This is the phrase used to describe the turnover of members. In some other leisure centres, like health and gym clubs, it is very high.

Richard believes he was able to take advantage of the fact that the expectations of the bowling public are rising and they want better facilities. Bowling, though, has an outdated image and, as a result, is ignored by mainstream leisure operators.

Adapted from G Ogilvy, ‘Strong bias in leisure market’, Scotland on Sunday, 16 December 2001

Question

Identify the driving forces and the restraining forces which RCL faced when deciding on the change to build the new leisure centre. Imagine this is the time immediately after the original bowling club had been bought. Illustrate the forces on a force field diagram. Include the assets for change on your diagram.



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SAQ 22

Read the following and indicate whether they are True statements or False statements.

1. All businesses operate within a constantly changing environment.

2. Technological changes only affect organisations that produce high-tech goods.

3. Lewin analysed change by differentiating between driving forces for change and restraining forces against change.

4. Drivers and resistors will remain static for long periods.

5. The introduction of call centres as a link between consumers and organisations has changed investment strategies within organisations.

6. Examples of driving forces for change are strength of culture; contractual agreements; global markets and increased competition.

7. Assets for change are things that can help the organisation achieve change but are not driving forces for change.

8. Individuals embarking on a change (such as leaving school) can experience restraining forces for change (such as fear of the unknown).

9. The National Health Service is subject to changing social factors, economic factors, technological factors, environmental issues and changes of government.

10. Madonna has used her assets for change such as her ambition, ownership of her own record label, openness to new musical influences and her youth-appeal to maintain her popularity.



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Stages of change

The change process

A change programme can be broken down into a number of steps. Kurt Lewin identified three steps:

Unfreezing Breaking down the beliefs and assumptions that currently exist and opening up an acceptance of the need for change.

Changing Implementing the process of change to achieve the desired outcome.

Refreezing Consolidation of the new state once changes have been successfully implemented.

Lewin’s three-step model can be expanded to show that the following sequence of activities needs to take place:

recognising the need to change defining the problem identifying where the company is positioned relative to the problem searching for alternatives defining where the company wants to be as a result of the change (goals) preparing for change unfreezing (loosening the organisation so it can change) moving (consciously managing the process of change) arriving (realising when the goals have been met) refreezing (stabilising and reinforcing change) evaluation (checking that change has been beneficial, e.g. comparing changes to

productivity).



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The six-step process The above sequence of activities is normally summarised as a six-step process:

SAQ 23

What do you think the benefits of managing change in this kind of structured way?

Issues in introducing and managing change Achieving change is one of the most intransigent problems for organisations, groups and individuals. Sometimes the organisation as a whole is able to change, but key individuals, for a variety of reasons, sink or at least bog down the initiative. At other times, individuals close to the customer may see the need for change, but the centralised power base of the organisation is steeped in its historical structure and processes, and is unwilling to move forward.

This section looks at some of the issues connected with change in business. They are:

the factors that need to be addressed during any change programme resistance to change – from an individual and group perspective organisational culture and change approaches to managing change examples of some initiatives used to encourage change – particularly with

respect to operations management.

Remember that there is no single, universal way of successfully managing change. Even within a single organisation different approaches will be suitable for different change programmes.



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Factors to be addressed during a change programme

For change to be successful it is generally agreed that the following are needed:

top management commitment constant and consistent communication employee involvement at all levels a shared vision of the future understanding of the need for change management of political networks.

The relative importance of these may vary, some being more important than others in particular situations. For example, top management commitment is vital in a programme that aims to change organisational culture, but it’s not a strong element in a change programme that aims to change the way in which customer orders are processed.

The following should be addressed during a change programme:

What is the vision for your new organisation/process? who will be affected by these changes? what are the proposed benefits of any planned changes? what will be the associated costs and risks? what is likely to be the impact on other organisational functions, teams and

tasks?

How will you lead and drive the change programme? what will be the role of line managers involved in the activities? how do you propose to maintain momentum once change is under way? how do you monitor progress and measure success? how will you communicate effectively at all stages? what training and coaching will be required across the organisation?

What process changes should you plan? how will process changes impact on your current environment? who can help you optimise the new environment to ensure smooth running in the

future? what new processes, policies, procedures and practices will be needed? how will people be rewarded?



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Resistance to change

Most change programme will meet resistance in some form from:

individuals groups organisations.

Individuals The key to change within the organisation is of course the people involved. Unless individuals are involved, prepared and committed to adapt and learn, resistance to change will have a significant impact on the change management process. There are a number of reasons why individuals are resistant to change, including:

self interest a lack of trust coupled with misunderstanding different viewpoints or assessments of the benefits of change a low tolerance of change.

These result in a range of attitudes that need to be managed. For example, individuals might say:

People respond to changes on three levels:

Emotional – What will this change mean to me personally? How will my life change? Will my position in other people’s eyes be different? Will I be able to cope with the changes to my role?

Political – Will I lose control over resources/people/decisions? Will I still be part of some key group? Will I still be able to influence decisions that affect me and my area?

Rational – Is this change right for the organisation?

SAQ 24



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How do you react to change? In order for you to lead change effectively, it is necessary to understand your own feelings and reactions to change. List your reactions, thoughts, feelings, values, abilities and beliefs about change. Focus on a specific change if that helps.

Groups Groups too can be significant obstacles to achieving change. For example, trade unions have often resisted change on behalf of their members when the perceived impact upon their members has been negative. Many examples exist where trade unions have resisted changes to existing working practices such as redeployment of ‘tradesmen’, changes in working hours, as well as the introduction of new technology which has often led to job losses.

On the other hand, groups can be great promoters and supporters of change. A common strategy to deal with a lot of individual resistance is to gather together a coalition of like-minded positive people and gradually deal with the resistors. In the 1980s at the chemical company ICI, it was not until a small group was ‘sold’ on the benefits of change by Sir John Harvey-Jones that real progress was made. This was against a background of failed previous attempts by Lord Beeching, who had met with resistance from all the other directors.

Organisational culture and change

It worked in the past… Just as individuals and groups can significantly affect the change process, so too can organisational culture (the way we do things around here). Large organisations such as the Civil Service, the NHS and large multinational companies have formalised rules, regulations and procedures that make implementing a process of change even more difficult. While historically they have operated well in a stable environment, they are seriously challenged to change and adapt to meet today’s problems.

IBM and several American car manufacturers are well known organisations that became hugely successful through creating strong and fairly uniform cultures. When IBM’s market moved away from large mainframes to networked PCs, and when the American car market moved from large cars to economical small ones, these companies were slow to react to the market changes. This reluctance to change led them into serious economic crisis while providing an excellent opportunity for companies such as Compaq and Dell in the computer market and Japanese car manufacturers in the vehicle market. This exemplifies a common problem whereby organisations perpetuate behaviour patterns that worked well in the past until a crisis hits and they are forced to implement change (albeit often later than they should).

Sometimes the culture of organisations encourages them to resist change. Many financial institutions (banks, insurance and pension companies) have in the past tried to rely on so-called self-regulatory bodies and market power to restrict



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access to what they viewed as their own niche market. SAS, British Airways and Air France are examples of companies that used their influence with governments to protect their monopoly position.

Organisational culture is thus a very important component of change. The above examples illustrate that it can be a significant obstacle to change. This is because culture affects the way people in the organisations see things, what they believe and how they behave.

Very often, change means getting the organisation as a whole and the people in it to behave in quite different ways. This is not at all easy to do because it means changing the pattern of learned behaviour. Changing the culture of an organisation is like changing all that you as an individual believe in or have been brought up to believe in.

Organisational culture is one of the reasons why change can be difficult. As we have seen, it can have a negative influence on change. To be successful, therefore, many changes also involve a change in organisational culture. This poses a big challenge to management, largely because changing the culture involves making changes in all aspects of how the organisation works. Even making what seem like small changes to an outsider may require considerable effort.

Changing the culture of an organisation can mean making changes in things like:

Balance of power between different groups and sections in the organisation Management/leadership style Organisational structure The way decisions are made The types of jobs that people do.

One reason that all these things have to be addressed is that each reinforces the other. For example, a hierarchical structure may give power to senior management who adopt an authoritarian style where they make all the key decisions.

The importance of organisational culture in achieving successful change and the rapid pace of change has led many companies to try to create an organisational culture which is responsive to change. This idea was developed in the work of Peters and Waterman in the 1980s. Their influential book, In Search of Excellence, argued that a company culture conducive to change was a key factor in determining whether or not a company would succeed. Many subsequent initiatives such as Total Quality Management (TQM) and Business Process Re-engineering (BPR) have followed this principle.

The following example illustrates cultural change.



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Barclays Bank

In the late 1990s the reputation of Barclays Bank fell considerably. Its branch closure programme caused widespread hostility among customers while other bank users were upset with its policy of charging non-customers for using its cash machines. It looked vulnerable to a take-over and low staff morale (made worse by a protracted pay dispute in 1997) suggested that it would be hard to make any changes.

A new chief executive, Matthew Barrett, launched a strategy for doubling the value of the group every four years. This would be come from strong relationships with customers based on top level customer service. To do this, it was necessary to change the organisational culture to make staff motivated and confident in what they were doing. The first step involved some restructuring. All human resources management, for example, was centralised instead of each division having its own department. This enabled employees in each division to focus on the operational issues of good customer service. The next steps involved changing employee attitudes and included:

Carrying out a group wide staff survey – they are now conducted every two years.

Getting employees engaged by a series of road-shows which communicated the new ideas to all employees.

Follow-up events for 1,000 team leaders as team working was seen as the key to the new arrangements (banking is traditionally a hierarchical industry).

An executive ‘buddy system’ e.g. in Barclays Business Banking Division the sixty most senior people were assigned to two or three teams – they go on customer visits and training courses with them for example.

Introducing a new pay system targeting high performers who were at the lower end of the salary range – this meant that junior staff who did well could get bonuses of 50% or more. This helped to dispel the traditional notion that long service was the only way to a good salary and that all employees would get some sort of annual increase in basic pay.

Strong emphasis on employee development – each employee is entitled to a grant of £150 to spend on any form of learning.

The overall focus was on communication and making sure everyone knew what was going on in the company. The staff survey now shows levels of employee satisfaction well above the norm in the financial services sector. More than half of all employees would recommend Barclays as a good place to work. The overall effect has been to reform the culture into one where the customers’ wishes are paramount – a complete reversal of older attitudes where the customer was told what to do by the bank.

Adapted from ‘Satisfaction Guaranteed’ by Anat Arkin, People Management, 14 October 2002.



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Activity

Visit http:// www.thetimes100.co.uk and read the case studies on Cummins and Jaguar. Both help to show the importance of changing the culture of a company.

Approaches to managing change

Good change management is needed for effective change. Many management approaches exist to handle change – some being more appropriate than others in different situations. An autocratic management style, for example, might be the best method of handling a one-off crisis situation where time is of the essence, whereas a consultative approach might be more suitable when time allows and when it is important that resistance is well handled. There is no single approach to change that can be universally applied to any change management programme in order to make it a success.

A number of approaches can be applied to change programmes, including:

Top down Action-centred Negotiated Piecemeal initiatives Participative.

We will now look at each of these in more detail:

Top down This type of approach is often associated with an autocratic management style. Communication is downward and little attention is paid to the ideas of employees. Examples include a company making it clear it will relocate the organisation to an area of cheap labour, unless lower wages are accepted and/or higher production is achieved. This strategy is normally used for large-scale changes of a one-off nature, perhaps a once-only emergency response to a crisis. Here time is of the essence and resistance might be expected but has to be overcome quickly.

Action-centred Here an organisation starts with a general idea of the problem, and tries out various solutions, often by involving those affected. Examples could include quality improvement programmes, customer service improvements, reducing staff turnover, etc. All of these are areas where a number of possible solutions exist. Often companies pilot one solution in a targeted small area and, depending upon its success, either they implement that solution on a more widespread basis, or alternatively pilot an alternative solution until success is achieved.

Negotiated Here communications flow up as well as down the hierarchy and managers try to




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make use of employees’ ideas and opinions. The aim is communication in order to resolve differences through agreement. Examples might include changing work patterns in return for higher pay, or improved productivity in return for bonus payments.

Piecemeal initiatives Change can also be implemented in a piecemeal fashion, with small incremental changes being made over time. In some situations, beginning with small projects that are successful is an approach that creates confidence and encouragement to go on and tackle more difficult problems.

Participative This is shown by complete confidence and trust between superiors and subordinates. Employees are free to discuss their jobs and their ideas are welcomed. There is a lot of communication and co-operation within the team. Feedback of information is used for problem solving and so the people who participate will be committed to implementing the change. Rewards are given on the basis of participation and the achievement of agreed goals.

Whether the change is at a personal, group or organisational level, it often involves individuals or groups known as change agents. These can be employees of the organisation (internal) or external consultants, or indeed both working together. For a major change management programme (e.g. reducing the purchasing cost of a car by working more closely with many hundreds of suppliers), a full-time, cross-functional team led by a change manager is realistic. However, to manage a smaller change (such as restructuring a personnel department), a small, part-time team may be more appropriate.

The change agent’s job is to act as an intermediary, to communicate and co-ordinate in order to facilitate effective change. With knowledge of the forces promoting change (Lewin’s driving forces), it is usually their responsibility to implement a strategy for the change to take place. They may also be involved in choosing a suitable strategy. With a clear understanding of the desired outcome of the change, they must define the roles and positions individuals should occupy in the future. It is a challenge for any individual or group to be required effectively to alter the power balance within an organisation.

While internal change agents have a solid understanding of the organisation, external change agents are normally less knowledgeable in this area. Similarly, while external change agents usually have good political credibility, their internal counterparts usually have less. To ensure the greatest success, internal and external change agents must work together. Working as a team they can discuss ideas and pilot them before implementing them across the organisation. With powerful political contacts within the organisation, they can deal with any opposition that is likely to arise. Finally the change agents can cement the change or refreeze it, in Lewin’s terminology.



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SAQ 25

Case study

It was Friday 15 June at 1600 hrs. An urgent inter-office memo from Paul Johnson, Chief Executive of Vision Corporation, had just been issued to all employee mailboxes. All departments had been briefed by their respective managers to expect a memo. Employees had been given none of the particulars about it, but rumours were already flying as they anxiously awaited its arrival.

Molly Brown, one of Vision’s managers, who had no more information than anyone else in the organisation, was one of the first to read the memo. It read as follows:

TO: All Personnel

FROM: Paul Johnson, Chief Executive

DATE: 15 June

SUBJECT: Company Status Update

As you may or, may not, know, Vision Corporation has been experiencing financial difficulties. In order to address these difficulties, Vision will be merging with our main competitor, Bywright. This plan will be effective from 1 July of this year. While it may call for some changes from us, I believe that this move represents a wonderful growth opportunity for the company as a whole. I look forward to your ongoing co-operation and support.

Case study questions:

1. How do you think Molly and the other managers might react to this memo?

2. How do you think the general employee population will react to this memo?

3. How would you react to this memo if you were a member of the management team?

4. What problems do you see in the Chief Executive’s approach?

5. If you were the Chief Executive what would you have done differently?



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Examples of change – Operations management

There are a number of initiatives that are particularly used within manufacturing organisations (and often in other industry sectors) to improve organisational effectiveness and efficiency. These often result in significant change programmes within the company concerned. Some focus on organisational systems and procedures while others concentrate more on the people in an organisation.

Total quality management (TQM) TQM is a move away from inspecting products for quality, to changing the culture of the organisation so that everyone and every process in the organisation excels in providing the customer with products and services of the highest quality. ‘Quality gurus’ include Deming, Juran, Crosby, Kaoru Ishikawa and Genichi-Taguchi. Prestigious awards for quality, such as the Deming prize, the Malcolm Baldridge National Quality Awards and the European Quality Awards, reflect the importance of quality within the industry.

Materials requirements planning (MRP) MRP can stand for Materials Requirements Planning or Manufacturing Resource Planning. Devised by Oliver Wright and Joseph Orlicky, these computerised methods help to plan and control a business’s resources. They reconcile supply and demand of resources, forecasting volume and timings for materials given likely future customer demand.

Just-in-time (JIT) JIT is a philosophy of providing goods and services to customers only when they are needed (Just-in-time). Developed by the Japanese, the approach ensures the correct quantities are purchased and made at the right time with little or no waste. Once implemented in one area of a supply-chain, e.g. manufacturing plant, JIT is often extended to the entire chain from supply of raw materials through to distribution and product delivery to the customer.

Optimised production technology (OPT) OPT, a scheduling approach and associated software, was developed by Eli Goldratt. It is based on the idea of getting the entire production process working together with realistic optimised schedules in order that productivity is improved, throughput increased and both inventory and operating expenses are decreased. The approach seeks to anticipate bottlenecks in the process which disrupt the flow of production and work to ensure that all processes work together to improve total system performance.

Computer integrated manufacture (CIM) This is a method of planning and control of manufacture using computers and technology.



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Programme evaluation and review technique (PERT) PERT is a management tool for scheduling and controlling projects with the goal of completing projects on time and within budget. A number of software packages are available that automate PERT processes. The fundamentals of PERT are widely used within all types of organisations.

Teamworking A number of people working to a common purpose who are set on achieving goals, e.g. Quality Circles.

Empowerment Devolving responsibility down the organisation to the people best placed to make particular decisions.

The learning organisation An organisation that facilitates learning in order to develop and compete successfully.

Business process re-engineering (BPR) BPR is a strategy-driven, top-down redesign of one or more aspects of the business. It looks at processes rather than functions such as operations, and has claimed some spectacular success, e.g. a reduction in the time to meet a large customer order from 180 days to less than 30. It has however been widely criticised as it is often associated with large-scale redundancies.

Continuous improvement This is a process of ongoing improvements that aggregate over time to provide proof that things are improving. The Japanese call this kaizen. Management procedures involve improvement programmes that focus on waste, use of standards, employees’ involvement, improvement teams and suggestion teams. Continuous improvement should be supported at all levels within the organisation, with everyone being encouraged and supported to come up with ideas for further improvement. The following are examples of what can happen after a Kaizen Blitz. This usually lasts for a week and consists of a team of experienced workers carefully examining a particular part of an operation to find ways to improve it.

The Scottish Executive Central Correspondence Unit (CCU) The CCU handles correspondence for Ministers in the Scottish Executive. The Kaizen team intensively examined processes and procedures during a ‘Blitz Week’. By the third day, they agreed a new correspondence handling procedure. Desks and furniture were re-arranged which immediately solved some IT problems. This enabled them to clear a two-year backlog of work within a very short time and to free up two people to work on improving the quality of service during the next few months. In the subsequent year, the defect rate has fallen from 15% to 4%.



CHANGE

Rosti (Scotland) Ltd

Rosti makes plastic injections mouldings at a factory in Larkhall. It faces constant threat from low-cost manufacturers, particularly in the Far East. Remaining competitive means reducing the labour content of the products.

As a result a Kaizen Blitz was carried out on one assembly line which was experiencing higher than normal demand. The team was able to identify many improvements. Productivity rose by 67% and incoming defects fell by 90%. As a result, nine agency workers due to start the week after the Kaizen Blitz were not needed and five workers on loan from a sister plant were returned to it.

Adapted from, ‘Greasing the wheels of industry’ by Colin McGill, Stuart Ross and Gordon McCallum, Scotland on Sunday, 10 November 2002

Activity

Another important initiative is the European Forum for Quality Management (EFQM – http://www.efqm.org ). The accountancy firm PriceWaterhouseCooper, through its Excelsior subsidiary (http://www.excelsior.pwcglobal.com ), specialises in advising companies on how to use the EFQM model. Both websites explain the EFQM model and have several examples of change using the model. The examples are good case studies of change in general. Visit the sites and see if you can find a case study that illustrates the issues that have been discussed in this section.



http://www.excelsior.pwcglobal.com/

http://www.efqm.org/

CHANGE

SAQ 26

Read the case study and answer the questions that follow.

Defence Aviation Repair Agency (DARA)

Dara repairs aerospace equipment, e.g. fighter jets, helicopters. It was created in 1999 by a merger of existing parts of the Ministry of Defence, a government department. The Agency remained part of the Ministry of Defence. However, it would no longer be funded by the government and was required to survive by competing for business in the open market. The management of the company was given two years to turn the organisation into a commercially successful operation which could get business from both the government (e.g. RAF planes) and the private sector.

Dara met this target on time. It also exceeded other targets, e.g. orders were £8.3 million above target; operating costs were cut by half; turn-round times fell by 30%; the number of employees fell by 35%. These gains have meant considerable change.

The company inherited a military style culture which was hierarchical. Employees were used to working within a framework of tight rules and regulations and liked this. They had little appreciation of costs and were reluctant to take decisions. However, they were committed to delivering a high quality product.

The company introduced a programme called New Ways of Working, which involved the introduction of self-directed teamworking. This meant that employees worked in multi-discipline and multi-skill teams and were responsible for determining their own ways of working, order of work, etc. Previously employees worked in isolation or with one or two others doing the specific tasks they were allocated. The new programme also involved a flat structure, hands-off leadership and open-door policies. The inflexible pay and grading structure used by the Ministry of Defence was scrapped and a new system, based on broad pay bands, was introduced.

Employees were given a pay rise in return for a commitment to accept the new culture. However, many were fearful of the changes and felt they would not work. Dara tackled this by a ‘multi-directional’ communication strategy which included face-to-face shop floor briefings at all four plants by the chief executive, regular newsletters, encouraging all staff to send their views via the company intranet. There was also training by consultants in self-directed team working and a leadership development programme for team leaders.

Overcoming the opposition to change was not easy but it has worked. Employees are happy with the new system. They have much more say in decisions and a greater sense of ownership – they can even control their annual leave as long as their team meets it targets.

Adapted from ‘Flying information’, by Eila Rana, People Management, 7 November 2002



CHANGE

Case study questions

1. Why was change necessary for Dara? 2. Why do you think employees were opposed to it? 3. What is meant by self-directed teams? 4. What type of approaches to change does this case study illustrate? 5. Communication and training were key aspects of the change programme.

How do you think each of these contributed to its success?



ANSWERS TO SAQS

Answers to SAQs

SAQ 1

You could have listed:

Setting objectives for the organisation Setting objectives for particular tasks or projects Acting on behalf of the owners, e.g. directors are responsible to shareholders Making decisions, e.g. on how to use resources, which markets to operate in,

what staff to recruit, etc. Taking action if things go wrong Supervising staff, e.g. allocating work for them to do

SAQ 2

Some possible uses of scientific management today are:

Work study and other techniques of job measurement such as job evaluation Operational procedures based on analysis of jobs like that pioneered by Taylor Payment systems where pay is directly linked to input There is still a strong emphasis on the importance of money as a motivator – an

idea which Taylor refined and developed Efficiency remains a key concern of management

SAQ 3

Some criticisms could be:

All the workers were female – in the social context of the 1930s, this may have made them more willing to participate in the experiment and to try to make it work

The experiment concentrated on a small segregated area and thus had a very narrow approach (several other experiments were conducted in other areas of the factory but each was done in isolation)



ANSWERS TO SAQS

SAQ 4

Some possible differences between the Human Relations school and scientific management are:

Human Relations concentrates on what people want from work Human Relations approach identified the importance of informal structures such

as group norms whereas scientific management emphasises the formal structure of work

Scientific management adopts a more ‘managerial approach’ Scientific management looks more at how individuals work Scientific management emphasises the importance of monetary rewards but the

Human Relations school demonstrates that other factors may be important for people at work

SAQ 5

1. False 2. True 3. True 4. False 5. False 6. True 7. True 8. False 9. True 10. False

SAQ 6



ANSWERS TO SAQS

SAQ 7

The main justification is that job design tries to provide motivators. According to Herzberg, this should increase job satisfaction. For example, job design gives workers responsibility for monitoring their work and it gives workers a sense of achievement because they see the task all the way through from start to finish.

SAQ 8

Employee share ownership schemes may improve motivation because:

They make workers feel part of the company (which may help to fulfil their social and/or self esteem needs in Maslow’s hierarchy)

They can help management to recognise the importance of employees to the company (in line with recognition which is one of Herzberg’s motivators)

They can provide an income for employees (through dividends or by selling the shares on) and this may encourage people to work harder (as scientific management argues).

However, the link between the actual productivity achieved by an employee and the number of shares received may not be very strong especially if all employees are given a similar number of shares. Any income may also be small. For this reason, these schemes may have only a limited impact on motivation.

SAQ 9

1. Neo-human relations 2. Motivators, hygiene 3. Motivators 4. Hygiene 5. Enrichment



ANSWERS TO SAQS

SAQ 10

1. They appear to be intended to give workers control over their jobs and to encourage responsibility. This fits in with the work of Maslow and Herzberg and is intended to increase commitment and motivation.

2. Financial incentives may work if employees perceive a link between the effort they put in and the money they receive. The environment seems to give workers control and this may help them improve output and thus benefit from extra earnings. On the other hand, if workers are committed to the organisation and receive an acceptable wage level, then monetary incentives will not result in extra output and may even be counter-productive if they discourage workers from working together.

SAQ 11

Although all of these have features in common, the only set which is a team/group is (c), the members of a football team.

SAQ 12

Your answers should include the following:

Improved productivity and performance as people benefit from social interaction and work more co-operatively

Greater commitment to team goals and through them to organisational objectives as a whole

Generation of new ways of working as teams share ideas Team members are likely to take responsibility for the work of the team Improved commitment and motivation Greater sharing of skills and expertise More support available for team players May allow team members to play to their individual strengths

2. Formal groups are established by the organisation for a specific function or objective.

Informal groups may be friendship or common interest groups within the organisation.

3. A group norm is a shared perception of behaviour and of how things should be done.

Group norms are significant to group bonding because common views and beliefs give a foundation to the bond and so make it stronger.



ANSWERS TO SAQS

SAQ 13

1. b 2. c 3. d 4. b 5. c 6. b

SAQ 14

Case Study: ‘Thank God It’s Friday’


1. The team at TGIF can be described as:

A formal group with a ‘Coach’ as team leader. You would expect this type of team to quickly reach the ‘performing’

stage when group decision making is taking place and individuals are valued for their particular input.

There would be an emphasis on team goals.

2. This type of team-working would be appropriate for this work situation because waiters are responsible for the customers they are waiting on, and decisions have to be made quickly, and this style of working allows for the empowerment of team members. A ‘flat’ structure allows for multiskilling with the day-to-day managerial activities being performed by the Coach.

3. The staff at TGIF would benefit from: increased control over decision-making processes, open communication links, flexibility of working methods as suited to their personalities and strengths.

4. The skills required to be a member of the team at TGIF would be: good communicator, act on own initiative, quick decision maker.

5. The communication system that appears to be in use is the all-channel system with the benefits that every member of the team can communicate easily and directly with every other member of the team.



ANSWERS TO SAQS

SAQ 15

You may have come up with some of the following distinctions between managers and leaders.

Manager Leader

Deals with complexity Handles change

Follows procedures Moves organisation on

Narrows down horizons Opens up horizons

Implements Shapes

Motivates others and administers resources

Motivates people to create and follow objectives

Normally appointed and keeps position irrespective of changes

Often situation specific, e.g. to lead company out of a crisis situation

SAQ 16

Autocratic leadership is associated with the classical school Democratic leadership is associated with the Human Relations school

SAQ 17

1. Hersey and Blanchard – participative style John Adair – concentrate effort on building a team The Six Dimensions of Leadership – actor

2. Hersey and Blanchard – telling John Adair – effort required in all three areas The Six Dimensions – actor

3. Hersey and Blanchard – participative style John Adair – effort required in the areas of development and achievement The Six Dimensions – hero, possible victim

4. Hersey and Blanchard – delegative style John Adair – concentrate effort on areas of development and teambuilding The Six Dimensions – diplomatic ambassador



ANSWERS TO SAQS

SAQ 18 It is a concern that John has shown little consideration of the following factors:

Task – what the group are required to achieve Organisational culture – John appears to have put initiatives in place without

consultation or consideration of working methods so far; also, in his department there is a reluctance to take risks

Nature of group members – there hasn’t been any involvement in the decision-making process; the inexperienced members need feedback on their performance within the group

Group size – this is a small team, so, with effective communication, decisions should be able to be made involving all members of the team.

SAQ 19

In considering the reasons for Madonna’s frequent image changes, you might have listed the following:

Changing musical tastes of the record/CD buying public Need to achieve more sales of her albums in different countries and across

different cultures Extend career into other fields such as acting Responding to competition in her market Job satisfaction Changes within her own life.

SAQ 20

You might have noted some of the following as reasons for organisational change:

Operational processes, e.g. introducing a new manufacturing process such as JIT People, e.g. empowering people in their jobs Organisational, e.g. move to a culture of total quality for customers Response to competitive activity Need to expand and grow.



ANSWERS TO SAQS

SAQ 21

Your diagram could look like this.

DRIVERS RESISTORS

Obtaining extra finance

Poor existing facilities

Attitudes of some members

Enthusiasm of Richard Corsie

Time to find suitable site

Risk of ‘churn’

Assets for change

– rising expectations of bowling public– bowls ignored by mainstream leisure operators

NB You may have identified different factors. If you have compared your diagram with that suggested above which version do you prefer and why? There is no right or wrong way to describe relevant factors.

SAQ 22

1. True 2. False 3. True 4. False 5. True 6. False 7. True 8. True 9. True 10. True



ANSWERS TO SAQS

SAQ 23

A properly managed change programme can have the following benefits for the organisation:

There will be a smooth transition to the new environment The new organisation will support the changes implemented Individuals will know how the changes affect them and the role they have to play The new system and its underlying concepts will be better understood People will be aware of how roles and responsibilities have changed Everyone will be motivated and committed to the change programme and its

goals Good communication will ensure people know what will happen, will ‘buy into

it’ and the changes are more likely to be successful The success of the programme will be monitored and measured All employees within the company will be behind the new organisation or

process which has been changed Goals of the change programme will have been achieved.

SAQ 24

Your answers will very much depend on your own choice of change. However, it would be unusual for you not to have experienced some of the following:

fear excitement concern lack of control disappointment pleasure surprise.

SAQ 25


1. You would expect Molly and the other managers to react on three levels:

Emotional: They will feel ignored, uninvolved in solutions to problems being

experienced by the company They will wonder how it will affect their jobs They will wonder if their roles will change They will feel relief at not losing their jobs immediately.



ANSWERS TO SAQS

Political: They might start to calculate what the opportunities will be for job

enhancement, more money or promotion.

Rational: They will wonder if this has been a knee-jerk reaction They will wonder if this is the best strategy for the company.

2. The reaction of the general workforce will be fear of the unknown, worries about job security and mistrust of the ability of senior management to manage the company.

3. Your answer will depend on your own perspective and experiences.

4. The Chief Executive’s approach: is autocratic shows a lack of open communication is possibly a last desperate move hasn’t involved staff in seeking solutions to the problems the company is

facing is unlikely to get the co-operation he is hoping for doesn’t suggest a shared vision of the future.

5. Answers will vary; however you should consider the six-step process (look again at page 150):

Your answer should include consideration of: top management commitment constant and consistent communication employee involvement at all levels a shared vision of the future understanding of the need to change management of political networks.

You should also consider what is the appropriate management style.



ANSWERS TO SAQS

SAQ 26

Your answers could include the following:

1. It was now exposed to a commercial environment. This means that it cannot rely on government funding or on automatically getting business from the RAF. Employees must become conscious of factors such as costs, meeting the wishes of the customer, etc. The old hierarchical structure was slow and inflexible making it hard to respond quickly to customers.

2. Fear of the unknown and a fear of not being able to cope with the new situation (a manager described their attitude as ‘classic fear’) – also jobs were going and many liked the old system.

3. Self-directed teams are teams where members decide for themselves how and when to do work, i.e. they set their own direction. They take responsibility for using the resources given to the team, etc. There is a team leader to facilitate decision making, liaise with other teams, negotiate for resources, help resolve differences, etc.

4. Negotiated – a pay rise was given in return for a commitment to change; Participative – employees were consulted; Top-down – in that management decided what was to be done, although they did not act in an authoritarian manner. However, in this case, staying the same was not an option. Change agents in the form of consultants to carry out training were also used.

5. Communication was important so that fear of the unknown could be tackled. If employees were fully aware of what was going on and could ask any questions they wished, they could find out all they wanted to know. This means that there is less chance of a climate of suspicion and mistrust.

Training helps employees overcome their fear of not being able to cope. They can get help and advice on how to approach new ways of working, etc. and do not have to waste time trying to find out which can lead to frustration and resentment.



EXERCISES

Exercises

1. Discuss the differences between autocratic and democratic management styles.

2. The job of the manager is to make decisions not to motivate others. Discuss this with reference to a manager working in the UK in a modern Japanese car manufacturing facility.

3. In a work environment, give at least two examples of how needs can be met at the following levels:

NEEDS CAN BE MET THROUGH Physiological Safety Social Esteem Self-actualisation

4.

Maslow’s philosophy encouraged organisations to the view that individuals might be capable of taking on greater responsibility if they were given more varied work and less supervision. But Maslow’s theory did not escape criticism. An important omission, critics said, was that although basic needs become less important as they are attained, failure to meet them can create intense dissatisfaction. Maslow’s work was, to some extent, superseded by Frederick Herzberg who distinguished between hygiene factors and motivating factors. Although Maslow’s theory is now seen as old fashioned, many still find it attractive. Most people feel incapable of achieving self-fulfilment while worrying about basic needs such as job security and safety. The idea that a workforce can be motivated by factors such as autonomy, responsibility and regard for others has also remained powerful.

Adapted from The Financial Times, November 1994

Suggest and explain at least two reasons why managers might not put motivation theory into practice.

5. There are ten pairs of statements below. Assign a score of 0–10 to each statement to show the relative strength of your belief in it. The points assigned for each pair must in each case equal ten. Be as honest with yourself as you can and resist the natural tendency to respond as you would like to



EXERCISES

think things are. This is not a test, there are no right or wrong answers, but it should stimulate personal reflection and discussion.

(a) It’s only human nature for people to do as little work as they can get away with.

(b) When people avoid work, it’s usually because their work has been deprived of meaning.

(c) If employees have access to any information they want, they tend to have better attitudes and behave more responsibly.

(d) If employees have access to more information than they need to do their immediate tasks, they will usually misuse it.

(e) One problem in asking for employees’ ideas is that their perspective is too limited for their suggestions to be of much practical value.

(f) Asking employees for their ideas broadens their perspective and results in the emergence of useful suggestions.

(g) If people don’t use much imagination and ingenuity on the job, it’s probably because relatively few people have much of either.

(h) Most people are imaginative and creative but may not show it because of limitations imposed by supervision and the job.

(i) People tend to raise their standards if they are accountable for their own behaviour and for correcting their own mistakes.

(j) People tend to lower their standards if they are not punished for their misbehaviour and mistakes.

(k) It’s better to give people both good and bad news because most employees want the full story, no matter how painful.

(l) It’s better to withhold news about business because most employees really want to hear only the good news.

(m) Because a supervisor is entitled to more respect than those below him in the organisation, it weakens his prestige to admit that a subordinate was right and he was wrong.

(n) Because people at all levels are entitled to equal respect, a supervisor’s prestige is increased when he supports this principle by admitting that a subordinate was right and he was wrong.

(o) If you give people enough money, they are less likely to be concerned with such intangibles as responsibility and recognition.

(p) If you give people interesting and challenging work, they are less likely to complain about such things as pay and supplementary benefits.

(q) If people are allowed to set their own goals and standards of performance, they tend to set them higher than the boss would.

(r) If people are allowed to set their own goals and standards of performance, they tend to set them lower than the boss would.

(s) The more knowledge and freedom a person has regarding his job, the more controls are needed to keep him in line.

(t) The more knowledge and freedom a person has regarding his job, the fewer controls are needed to ensure satisfactory job performance.



EXERCISES

To find your scores, add up the points you assigned to the following: Theory X score = sum of (a), (d), (e), (g), (j), (l), (m), (o), (r) and (s). Theory Y score = sum of (b), (c), (f), (h), (i), (k), (n), (p), (q) and (t). With which set of attitudes do you most closely associate – Theory X or Theory Y? How will this affect your behaviour?

6. Empowerment of the workforce will improve the performance and efficiency of a business. Discuss this view.

7. According to Belbin’s model, which team member would say each of the following?

(a) I can be counted on to contribute something original (b) I like to be the one who makes contacts outside the group or firm (c) I can get people to agree on priorities (d) I like to press for action to make sure that the team meets its main

objective (e) I enjoy analysing situations and weighing up all the possible choices (f) I think that people’s feelings are very important and I can work well

with a very wide range of people (g) I bring an organised approach to the demands of the job and like to get

on with it (h) I can be relied upon to finish any task I undertake (i) My technical knowledge and experience are usually my major assets

8. Which of the following are likely to be tasks carried out by leaders, and which by managers?

(a) Establishing direction (b) Organising and staffing (c) Making order out of chaos (d) Monitoring and taking corrective action (e) Developing a timetable of tasks (f) Developing vision for the future (g) Developing change strategies

9. According to a DTI report: ‘Winning UK companies are led by visionary, enthusiastic champions of change.’ Discuss and explain why change is important to organisations and give some examples of organisational change.

10. Re-read the article by James Buxton on the Scottish water industry. Describe the driving and restraining forces and draw a force field diagram. Useful background can be sought from their Strategic Charges Review at http://www.watercommissioner.co.uk and http://www.open.gov.uk/ofwat

11. Imagine you are the manager of a local branch of a toiletry outlet, e.g. The Body Shop. Head office have written to instruct you that as a result of a new product range (bath and shower products) being launched by a competitor, all



http://www.open.gov.uk/ofwat

http://www.watercommissioner.co.uk/

EXERCISES

the bath and shower products sold through your branch must be reduced in price by 15%. This is the first you have heard of this news. Since these products account for a third of the shop’s business, revenue is going to be seriously affected. In addition, because you are paid by commission, you personally will receive a reduced take-home pay. How might you feel about this on an emotional, political and rational level? Suggest how this situation could have been handled better and what steps could have been taken to reduce your negative feelings.

12. The Managing Director has asked you, as an external change consultant, to give a presentation showing possible barriers to successful change in an organisation and how these might be addressed. What would be the main points of your talk?

13. easyrentacar, launched in April 2000 by the Greek tycoon who created easyJet, the low cost airline, aims to provide low cost car hire using A class Mercedes. Booking is only possible via the Internet. What sort of changes would you expect their competitors to make in order to protect their existing customer base, e.g. change in price, change in marketing messages, change in cars available, etc.? Useful background company information can be found in http://www.easyrentacar.com Information about competitors can be found in a variety of sources including:

http://www.avis.co.uk http://www.budget.co.uk http://www.hertz.co.uk



http://www.hertz.co.uk/

http://www.budget.co.uk/

http://www.avis.co.uk/

http://www.easyrentacar.com/

SUGGESTED ANSWERS TO EXERCISES

Suggested answers to exercises

1. Answer could include:

Autocratic style – Top down communication Centralised decision making by senior management Overriding goal of high production levels Scientific management approach to work/task-centred Reward/punishment approach to employees Compliance through coercion Style of McGregor Theory X

Democratic style – Concern for human relationsOpen communications systemsDelegation of authorityTrust, no fearResponsibility given to employees of all levelsGreater employee motivationStyle of McGregor Theory Y

2. Answer could include:

Managing involves planning, organising, controlling and directing. The seniority of the manager will determine how much time will be spent on each activity. For example, a senior manager might spend a significant amount of time on budgeting/forecasting, i.e. future planning activities, while a supervisor on a production line would spend less time planning.

To motivate people means to have them behave in a manner that works towards organisational goals. If motivated by a manager, employees can help the manager in turn to achieve their objectives. This can be done in a number of ways, e.g. pay, and non-financial rewards such as recognition and status; delegation of work; aligning people to a clear purpose.

The corporate culture of Japanese companies tends to be based on McGregor’s Theory Y approach, with workers working for job satisfaction rather than just for financial reward. The company would be aware of Maslow’s hierarchy of needs, that argues that the motivation of workers lies in satisfying higher order needs (once lower order needs have been satisfied), such as ego, self-esteem and achievement of potential.

Herzberg’s view is that ‘hygiene factors’ such as excellent working conditions would be a first priority, followed by motivators, such as the recognition of




achievement and the setting of stimulating and challenging work.

In a manufacturing situation, job rotation could be used to decrease boredom, and after training, job enrichment could be achieved by conferring additional responsibility on the production line. Quality circles would be useful to allow participation in making decisions where applicable, with perhaps public recognition of achievements.

The benefits could include less absenteeism, better performance, continuous productivity improvements, better punctuality, better quality product, improved industrial relations and, in turn, higher profits.

3. Examples could include:

NEEDS CAN BE MET THROUGH Physiological Good working conditions

Attractive salarySubsidised housingFree or subsidised meals

Safety Private health insurance coverSafe working conditionsPolicy of ‘no redundancy’Attractive pension provision

Social Working in a teamWorking with customersInteraction with other employeesSocial functions

Esteem Regular positive feedbackPrestige job titlesPublicity in company newslettersPromotion

Self-actualisation Challenging tasksPromotion opportunitiesEncouraging creativityDiscretion over core work activities

4. Reasons might include: They are not aware of the theory of motivation They do not believe the theory They believe that it is not relevant in a time of recession They think that others are the same as they are and motivated by the same

things.




6. Answers might include the following:

Empowerment is more than just delegation Empowerment can arise through ‘delayering’, e.g. production workers might

take on some of middle management’s roles It is often done through teamwork Success can depend on how and why empowerment is introduced and on the

skills and abilities of those involved Empowerment might make more use of the skills and abilities of the employees,

but there are risks associated with this approach. It might not be suitable for all businesses.

How can the success of empowerment be measured and evaluated?

7. (a) Innovator (b) Resource investigator (c) Co-ordinator (d) Shaper (e) Monitor/evaluator (f) Supporter (g) Implementer (h) Completer/Finisher (i) Specialist

8. (a) Leader (b) Manager (c) Leader (d) Manager (e) Manager (f) Leader (g) Leader

9. You should explain that change is needed for a variety of reasons, sometimes for survival and at other times to improve the profitability of the organisation, or to improve productivity, or to be more competitive, etc. A number of examples of factors that cause change should be described, and could include some of the following:

Implementation of new technology to improve quality or increase production

New business processes to simplify a process such as how to manufacture a product or how to make customer ordering a more efficient process

Legislation such the Competition Act or EU Health and Safety regulations Customer demands for perhaps a wider product range, or higher quality or

lower price Competition for the organisation’s product or service may mean that to

survive changes are necessary to compete in the marketplace




Mergers or acquisitions can affect an organisation in all sorts of ways – organisational structure might have to be changed, or employee roles and ways of doing business might have to change

To be successful in a new market could mean the company has to modify a product in the manufacturing process (e.g. voltage in electrical products that need to be sold outside the UK), or sell through distribution channels rather than directly to the customer.

If change is not implemented this could have all sorts of ramifications as serious as the company going out of business or breaking the law, or less radical such as not being as competitive in a certain area or not being cost-effective or not being as profitable. If change is successfully implemented, the goals of the organisational change should be achieved. These goals could be wide and varied, for example, survival or competing with company/product/service xyz or increasing productivity.

10. Forces for change 1998 Competition Act Competition from privatised English water companies (large customers have an opportunity to get water elsewhere) The Water Industry Commissioner for Scotland (representing the consumer) Need to invest in infrastructure (water and sewerage) because of historical under-investment Scottish Parliament (Executive Committee, Minister for Transport and the Environment) sets standards European Legislation forcing investment in new treatment plants.




Restraining forces Current organisational culture Legal status, being a public not a private company Fear of failure (two out of three chief executives are resigning) Current organisational structures of three water authorities (East, West and North of Scotland)

DRIVERS RESISTORS

Scottish ParliamentOrganisational culture

EU Legislation Fear of failure

Competition Act

Customers Organisational structure

Need to invest in infrastructureLegal status

Water Industry Commissioner

Note: size of arrows is to some extent subjective.

11. Emotional: How can I cope financially with less income? Will the shop get busier because of the reduced prices? Will I be able to cope with the same number of staff and more customers? Since revenue from the shop is likely to decrease, will people think the business is going wrong?

Political: Because the shop’s revenue is likely to decrease, will this mean we are perceived as a less important outlet to HQ? As a result will I have less influence on future decisions?

Rational: Is this the right decision by the company? Are there not better alternatives than just decreasing prices on each item, e.g. offering buy 2 get 1 free instead, or providing other incentives to buy? Is this sending the right message to our customers that our bath/shower products are worth less (would customers who buy Estee Lauder products continue to buy them at ‘own brand’ prices?) You should then discuss how change should be planned for in advance, and the importance of communication at all levels for ‘buy in’ to the change in a participative manner. Examples of how this could be achieved in practice should be given.




12. A recent article from the Business Section of a newspaper could be used as the case study. Alternatively, you could look for an example of change that will affect an organisation in the future, e.g. due to new technology or changes in legislation or environmental changes or changes in consumer attitudes, etc. Resistance to change from three areas should be described at:

an individual level a group level, and an organisational level

13. Suggested answers could include:

Providing A class Mercedes at a competitive price Providing discounts for customers who book over the Internet Heavy advertising campaign highlighting competitive advantages of rival

company, e.g. no mileage charge, cars available throughout the world, wide range of makes/models of cars available, etc.

Publicity to ensure consumers understand easyrentacar’s ‘hidden’ costs, e.g. booking fee, costs for cleaning car, high insurance excess charge in the event of an accident, additional mileage charges over 75 miles, same-day pick up return only (not 24-hour rental).



REFERENCES

References

Adair, J, Effective Leadership, Aldershot: Gower, 1983

Arkin, A, ‘Satisfaction guaranteed’, People Management, 14 October 2002

Arkin, A, ‘Supple Difference’, in People Management, 16 December 1999

Branson, R, ‘The Virgin Factor’, in Management Insights, May 2000

Brown, A, The Six Dimensions of Leadership, London: Random House, 1999

Buxton, J, ‘Waterchips Down?’, Scottish Business Insider, April 2000

Dauphinais, W and Price, C, Straight from the CEO, London: Nicholas Brealey Publishing, 1998

DTI, How the Best UK Companies are Winning, report published jointly by the DTI and CBI, CGI London Ltd, 1994

Dixon, G, ‘Kinloch Anderson goes big in Japan’, Scotland on Sunday, 8 December 2002

Grant, N and Anderson, J, ‘From IR to ER’, Focus on Change Management, June 1994

Handy, C, Understanding Organisations, Harmondsworth: Penguin, 1987

Harvey Jones, J, ‘High-flyers and the case for high pay’, The Observer, 20 August 1989

‘Honeywell, Outstanding Achievement in a Specific Area, Best Factory Awards 1995’, Management Today, November 1995

Hunter, D, ‘Big money at the root of company evil’, The Scotsman, 25 September 1991

Kelly, A, ‘Mastermind of Pringles “sexy” transformation, Sunday Post, 12 May 2002

Likert, R, The Human Organisation, New York: McGraw-Hill, 1967

McGill, C et al, ‘Greasing the wheels of industry, Scotland on Sunday, 10 November 2002

McIntosh, W, ‘ICL sets its sights on £5bn return to market’, Independent, 13 April 2000

Miller, H, ‘Pringle revels in new image after rebrand’, Scotland on Sunday, 12 May 2002

Ogilvy, G, ‘Strong bias in leisure market’, Scotland on Sunday, 16 December 2001



REFERENCES

Peters, T and Waterman, R H, In Search of Excellence, New York: Harper & Row, 1982

Purcell, J, ‘Pay per view’, People Management, 3 February 2000

Rana, L, ‘Flying information’, People Management, 7 November 2002

Rodgers, B, The IBM Way, New York, Harper & Row, 1986

Semler, R, Maverick, London: Arrow Books, 1993

Stewart, R, Choices for the Manager, Maidenhead: McGraw-Hill, 1983

van Maurik, J, Writers on Leadership, Harmondsworth: Penguin, 2001

Vaghefi, R; Woods, L and Huellmantel, A, ‘Toyota Story 2: Still winning the productivity game’, Business Strategy Review, Vol. 11/1, pp. 59–70

West, M, Handbook of Work on Group Psychology, Chichester: Wiley, 1996

White, J, ‘Teaming with Talent’, Management Today, September 1999

Whitehorn, K, ‘Who works for money?’, Observer, August 1989

Wilson, D and Rosenfeld, R, Managing Organisations, Maidenhead: McGraw-Hill (UK), 1990



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