August 24, 2009

Human Resource Management Lesson 8 Exercise

For this exercise I would like to compare two different organizations that worked for. I described them in one of my previous blog entries. First of them is Tax Ministry, second is IBM. Using the Purcel's classification (Purcell, 1986) Tax Ministry has a traditional management style and IBM applies sophisticated human relations style in management. From the perspective of Storey's classification (Storey J. 1992) the HR departments play the Regulators and Advisors roles in Tax Ministry and IBM respectively.

The work environment in Tax Ministry was very formal. One of the most straight forward indication of that was the obligatory usage of the middle name (very formal refer in Russian language when you use the middle name, usually used in schools when the pupil refers to a teacher or in the army for example) when you refer to your colleague. The opposite situation is in IBM where you refer to the colleagues only by first name, even to the General Manager.

Among the other differences I can point the strict presence at the work place at any working hour in the Tax Ministry versus the Home office concept that exist in IBM when the employee can work from home using the secured connection to the IBM intranet via internet.

Any employee's absence in Tax Ministry should be documented by the evidence paper from the hospital or any other document that confirms the reason of the employee's absence. At the same time in IBM it is enough to have the verbal agreement with the first line manager to take a kind of emergency off or sick leave.

Thinking about the advantages and disadvantages of these setups I can point the following:

- the formalism that exists in the Tax Ministry gives better control over the employees, and each first line manager can check and control where is his employee and what is he doing. Vice verse in IBM employee can use this "freedom" to use the work time for the personal needs;

- from the other point of view the formalism in Tax Ministry increases the dissatisfaction of the employees and consequently increase the absenteeism so the productivity falls. In IBM the employee that has some emergency at home or some difficulties with the health can still work from home and do his tasks completely or partially.

- the strictly fixed hierarchy in Tax Ministry ensure the fast order path top-down, but more informal matrix IBM environment enforce the employees to give their feedback to the managers which is very important not only for the employees' satisfaction, but also for the company competitiveness in the current turbulent economic environment.

Summarizing all what I mentioned above I would like to give my personal opinion. From my point of view I would say that IBM's approach brings more employees' satisfaction, better productivity and easier feedback from the field to management through all the levels. This type of management style and interpersonal relations is better for the commercial organizations.

August 22, 2009

Human Resource Management Lesson 7 Exercise

Talking about this task I want to remind once again that we can specify the IBM as a company with the "sophisticated human relations" according to Purcell's classification (Purcell, 1986) and advisory HR department, according to Storey's model (Storey J. 1992).

There are a number of implicit expectations that I personally and my colleagues have:

1. Job security expectations. This is a very important subject for all my colleagues and me nowadays during the times of economic turbulence. The importance of this expectation increased dramatically during the recent months. Here I agree with the idea of Greenhalgh and Sutton (1991) that "survivors" feels less secure their jobs in case of work force reduction.

2. Career development. Neither my colleagues nor me have explicitly fixed employer's obligation to ensure our career growth. Nevertheless all of us expect that employer will judge fairly all our efforts and contribution and will reflect it in our career growth.

3. Personal development. Me and some of my colleagues are expecting the employer to support our wish to develop through different education, trainings, mentor programs etc. I would like to stress the attention that this is not such a broadly spread expectation.

4. Fair compensation (Salary/Bonuses). Here we all expect fair compensation of our contribution to the company goals.

5. Job process support. Under this expectation I can say that we expect that employer will provide us with all required tools like PCs, Stationary staff, Cell phone, Comfortable and secure work place etc.

Answering the second question I would like to mention that implicit expectations that I mentioned above are more or less universal for the most of my colleagues. Nevertheless, there are some differences depending on the concrete person or group. For example, I can split all my colleagues into three groups on the basis of the age:

1. Young employees 21 - 30 years old.

2. Mid-age employees 31 - 45 years old.

3. Older employees 45 - 60 years old.

For the first group of my colleagues (and I'm also in this group) the most important expectation is Personal development. We are looking for every chance to increase our education level, get additional qualification and improve our work experience. Job security and Compensation are less important for this group.

Second group more focused on the career development and wealth increase. So the main expectations would be career growth and compensation increase.

Third group would be more concerned in job security and secure and comfortable workplace. So these expectations would be more important for this group of people.

Talking about the idea of psychological contract I find it quite convincing. While working in IBM I covered a number of different positions. My every move to new position was explicitly reflected in my job agreement, but the most important subjects like new detailed role description, all obligations and job design, non-material compensation (like MBA) are discussed between me and my manager and during this discussion we "sign" a verbal psychological contract. Here I agree with the concept of Marchington and Wilkinson (2008) that during career path there is a row of psychological contracts that employee and employer renegotiate during each career move. So overall this concept seems very important to me in the relations between the employee and the employer.

August 20, 2009

Human Resource Management Lesson 6 Exercise

Starting this exercise I paid attention to the fact that there is no clear definition what the Learning Organization (LO) means. There are a number of definitions in different literature. For example, LO is “Organizations where people continually expand their capacity to create the results they truly desire, where new and expansive patterns of thinking are nurtured, where collective aspiration is set free, and where people are continually learning to learn together” (SENGE, P.M. 1990. The Fifth Discipline. London: Century Business). Another author gives us the following definition: “an organization that facilitates the learning of all its members and continuously transforms itself" (PEDLER, M., BURGOYNE, J. AND BOYDELL, T. 1997. The Learning Company: A strategy for sustainable development. 2nd Ed. London; McGraw-Hill).

To answer the questions of this exercise I would take as the definition the one that was done by Pedler (1997).

To specify the features of the LO I would use the ones proposed by Senge (1990):

- Systems thinking;

- Personal mastery;

- Mental models;

- Shared vision;

- Team learning.

As a target organization I would like to stress your attention to one of the IBM organizations that I used to work for some times ago. This is IBM Global Financing (IGF). The specifics of this organization are it's size (it has roughly about 2000 employees world wide, what is very small in terms of IBM population) and it's business (IGF is a kind of internal captive bank that provides short and long term financing for IBM business partners and customers).

Sticking to Pedler's definition and Senge's five features I would say that IGF is very close to LO model. First of all the management style, which is very similar to all IBM departments, is "sophisticated human relations" according to Purcell's classification (Purcell, 1986) and HR department, using the Storey's model (Storey J. 1992), plays the advisors role.

While working in IGF one of responsibilities was to assess the business development of the department overall, by its components (like business lines, products etc.), and understand and assess the place of IGF in the whole IBM picture. This fits in the feature of Systems thinking that allows me to study on the real business by understanding the details of the business line and it's place in corporation.

IGF management was interested in the development of the employees. During my career I was always involved in the personal and group study process. IBM has a developed tool - IDP (Individual Development Plan). Every employee has to set personal IDP annually and assess the results at the end of the period with the manager. By IDP I was always motivated to perform the personal learning by participating in different trainings, online education courses etc. Also IGF had semiannual team meetings for the whole European staff. This exchange of experience during the group trainings was also very effective.

Shared vision was also in focus in IGF. Using regular meetings. Exchanging the opinions IGF team always had a shared view on the issue that was supported by most of team members and management. This consolidated team position was a result of hard teamwork and long discussions inside the team.

By looking at all features that I have mentioned above I would say that IGF is very close to the model of LO. There are a couple of steps to go. For example, I do not see the huge attention to the Mental modeling in IGF. There is no proactive development of the sub corporate culture for IGF employees. Also I would be willing to see more frequent pan-European team meetings to create the society of IGF professionals and enforce the personal development of each employee.

From my point of view the changes that are still required for IGF to become an LO are feasible and desirable. Management is deeply interested to create the LO to get all the benefits of this model and get the competitive advantage.

August 19, 2009

Human Resource Management Lesson 5 Exercise

The question of the relations nature between employee and employer does not have the clear straight answer. There are too many factors that influence these relations. From the first sight, these relations have contradictional nature. The employer and the employee have different targets of their activity. If the employer's target is connected with the overall organization's performance (that may be measured in different way for different types of organization like: number of units produced, revenue, gross profit, PTI, net income, or some other for governmental and non-commercial organizations for example); the employee usually interested only in his personal well-being (salary, bonuses and incentives, different additional benefits). So having different goals the employee and the employer have to have the conflict.

Looking at the history of economics we can see a huge number of the explicit display of this conflict. In some countries (like Russia) this conflict became one of the reasons for the revolution.

Nowadays, most of the employers understand that this conflict is not only socially dangerous, but also has a huge negative impact on the productivity of the personnel. As a result of that we can see the shift of the employers' position to the "win-win" solutions with their employees. As an example I can point such programs as a: profit sharing, incentive bonus the size of which depends on the employee performance, different non-monetary benefits like education (i.e. MBA), company shares options etc. All these initiatives are targeted on one single aim to motivate and to consolidate the interests of the employee and of the employer.

Unfortunately it is not possible to achieve 100% consolidation but to some extend it allows switching the conflict to consensus.

The factors that may influence on the nature of the relations between employer and employee we can split into external and internal.

External factors are:

1. Economy. The economic situation has a dramatic influence on the employee's and employer's wish to move their opposite positions towards each other. HR specialists usually point two extremums in this field: "Labor market of the candidates" and "Labor market of employers". During the economic growth times the employment rates were high. The demand for experienced employees was high and the supply of the open positions was also high. As the result, employers had to accept the rules of the employees like: high salaries, number of additional bonuses and benefits, additional security (golden parachutes) etc. At the crisis time the situation is opposite and the employees are much more flexible today in terms of compensations.

2. Legal. How far the legislation is defending the employees' and employers' rights.

3. Market environment. Under this factor I mean the labor market standard for the geography in terms of the labor relations. The example can be the difference between US and Japan.

Internal factors are:

1. Management style and level of the employees' involvement. This is definitely very important factor as if the employee is satisfied with these this may be a very strong non-monetary motivation for him.

2. Personal relations between manager and employees.

3. Psychological climate in the teams and organization overall.

These are the main factors from my point of view.

August 18, 2009

Human Resource Management Lesson 4 Exercise

For this exercise I would like to compare the employee involvement styles and procedures of two organizations that I was working for.

First one is the governmental organization - Tax Ministry of Russia. Actually I was working for one of the regional Inspections of the Tax Ministry as a Federal Inspector.

As the second example I would like to look at IBM.

Talking about the first example I would say that the style of management and employee involvement is similar to other governmental organizations. Using the Purcell's classification (Purcell, 1986) it is Traditional management style. Labor is viewed as a factor of production and employee subordination is assumed to be part of the ‘natural order’ of the employment relationship. Labor Unions exist, but they are very limited in their actions as this is a federal services organization. For example, any strikes are forbidden.

From the perspective of employee involvement I can classify it as a Task-oriented and Indirect. The involvement is mediated by the Union leaders so the involvement is indirect. The actions of the Unions are mostly targeted at the operations level and are related to the day-to-day activities.

The other example is the opposite.

Management style in IBM Russia/CIS I can classify as mix of sophisticated human relations and Consultative according to the Purcell's (Purcell, 1986) classification. The concrete style depends on the department and certain tasks of the teams. Nevertheless, employees are viewed as the company’s most valuable resource.

The involvement of the employees is direct. It is done through the many different tools like:

- Employee Surveys;

- Management Feedback systems;

- Regular department and "all-employees" meetings


From the other dimension it is quite difficult to classify the involvement as it exists on both task- and power-centered levels.

Discussing the effectiveness of the employees' involvement systems described above I can say that there is no "True in an ultimate authority". At first sight it seems that the fist system (Tax Inspection) is not efficient. But thinking deeper you have to take into consideration the specifics of the job. It is federal services (the structure is close to military or police). There is a certain hierarchy that supports the order and effectiveness of the concrete tasks performance. There are number of the instructions and procedures and employees should strictly follow them.

In IBM we have a totally different situation. IBM is a private business that requires the creativity and broad thinking at the work. You can not just follow the instructions to be successful. So all this creative and innovative solutions that are invented by the employees should be properly communicated to the management to implement the best practices widely in the corporation.

From my point of view both systems are effective for each concrete case and environment.

August 13, 2009

Human Resource Management Lesson 2 Exercise

For this exercise I would like to take as an example the company that I worked for before joining IBM. The name of this company is CHG-MERIDIAN Deutche Computers Leasing AG. This is a German company with the HQ at the south of Germany. It was founded in 1970s and remained a family owned company till the 90s.

Starting from 1990s the interest to the financial leasing of the IT equipment started to grow rapidly due to the dramatic increase in the usage of IT itself. During this time CHG-MERIDIAN became a multinational leasing company with the offices in 15 countries of Europe including office in Moscow, Russia.

Using the Trompenaars' (1993) management practices classification I can say that:

1. Universalism is mostly applied by the management. CHG has a strict bureaucratic structure with well defined roles and formal choice of the best person to fit this or that position.

2. Collectivism used in the performance assessment. There is no individual target for the employees. The assessment is performed on the business unit level only. Most often it is done on the country level.

3. Neutral emotions.

4. And achievement prevails in the performance assessment.

Main decisions are made by the board that consists of the founder of the company and his sons. There is also the advisory board that consists of the accounting, finance, legal and business professionals.

Talking about the HR function I would like to apply the Typology of HR functions described by Storey (Storey J. 1992).

Typology of HR Functions

The HR function in CHG is mostly cared re the labour legislation and other rules and procedures related to the subject. HR can influence on some managerial decisions if they are inconsistent with the regulations but only on the day-to-day task basis. There is no HR involvement in the strategic decision-making process.

I think that HR plays the Regulators' role in CHG-MERIDIAN due to the rapid growth of the company from the small family-owned business to the multinational corporation. While being a family business CHG-MERIDIAN was mostly focused on the sales activities and did not care a lot about the employees. The financial products that CHG offers are very standadized and the sales people does not need to be very qualified to offer the standard solution to the customer. The credit decisions had been made by the owner of the company and there were no need in the educated credit analysts.

When CHG became a multination corporation the owners did not recognize the importance of the HRM and kept the same level of HR department with the same level of its involvement into the corporate management.

I think that this role of HR has more weaknesses than strong sides. The only strong side that I see is that HR is really focused on the labour legislation and documentary side of HR work. So this brings the safe position of the employees if the country labour legislation protect them.

But from the company development perspective I see a number of dramatic weaknesses:

- HR is not involved into the strategic decision-making process and because of that can not influence on the development rout of the company, at the same time HR is the most important one for the services company.

- As CHG became a multinational owners had to delegate some tasks to the local managers and leaders. Credit decisions are delegated to the local credit departments. The HR has to develop the employees. To increase their qualifications to ensure the proper decisions.

- HR has to participate in the compensation design as old fashioned sales plans demotivate sales reps and lead to the decline of revenue.

From my point of view the movement of the HR from Regulators to Advisors quadrant had already started in CHG-MERIDIAN. This should be supported by the founder and owners of the company and will lead their still family-fashioned business to become a true multinational corporation.

August 11, 2009

Human Resource Management Lesson 3 Exercise

From my point of view, pay is a hygiene factor (according to Herzberg's typology). So the employee can not be motivated with the pay only, but if the employee is not satisfied with his/her monetary compensation he/she can not be motivated at all. The other and more complex issue that I see is the level of pay that will keep the employee satisfied. This can not be achieved by some absolute figures as the employee will always compare himself with his colleagues. And if he personally feels that his pay is lower than his colleagues' doing the same or comparable job, the employee will be dissatisfied.

So the manager should be smart enough to keep the employee's salary at the level of satisfaction and motivate him with additional monetary or non-monetary tools.

During my career path I had different compensation plans:

1. Fixed Salary + Fixed % from Revenue from every signed contract + Fixed % from Profit from every signed contract.

This was so called individual PRP (M. Marchington, A. Wilkinson, 2008). I think that this pay mixture reflected well my performance targets. As I was a sales rep, my hygiene needs were covered by the Fixed salary and I was motivated to sell more by my participation in revenue and profit sharing with the company.

2. Fixed Salary + Bonus (Size depended from the team target achievement).

This was a team incentive plan. As I was a team leader and my team had to achieve one common for all team members goal this was another pay system the also reflected the targets of my job role.

3. Fixed Salary + Annual Bonus (Size depends on the fulfilment of my personal business commitments that I discuss and set together with my manager at the beginning of each year).

As my job role is no more connected with sales my pay type was changed. Now I have some targets in front of me and according to their achievement I get the fixed bonus and base salary increase.

From my point of view all pay types that I experienced during my life were good for the concrete position.

April 05, 2009

Operations Management Lesson 6 Exercise

Level capacity

As an example of level capacity I would like to look at the Indoor Skiing centre. Next to my house I have a Gym, or let's say sports club. It consists of many sections like: Gym, Swimming pool, Sauna, Indoor Skiing centre etc. When developer constructed this centre he created the capacity of the slope. It is 50m wide, 600m long and has difference in height of 80m. Number of air conditioning systems keeps the inside temperature of -5°C. This level of capacity can not be changed and is stable.

Management of this centre can't stop air conditioning if there is only one sportsman inside as snow will melt and it will cost the company much more money to relaunch the centre again.

Chase demand

AddeccoHere as an example I would like to offer Human Resources Outsourcing companies. For example IBM is the customer of Addecco and Zander outsourcing companies. This companies can easily chase the demand of their customers for new employees. Having a good database of available workers they do not hire them until there is a request from one of their clients. As soon as demand appears HR outsourcing company can hire the employee end rent it to customer with immediate coverage of the costs. If customer does not need this employee any more HR outsourcing company fire the employee and keep him as a candidate in the database.

Yield management

From my point of view here we can review as an example theme parks. While being a student in the university I was working during the summer vocations in Six Flags over Texas theme park in Dallas, TX.

Theme parks has a number of offers like "season pass", family tickets with discounted price.

  • Capacity of theme park is relatively fixed. It has number of rides, restaurants and shows with fixed capacity.
  • Market is definitely segmented.
  • Service can't be stored. It seems to be difficult to store the ride on the roller coaster.
  • The service is sold in advance as you by the ticket before you enter the park. Sometimes long time before.
  • Marginal cost is on the medium level.

Queue design

Let's review the queue design of the roller coaster. This queue is a mix of two designs: single queue and multi queue. The queue starts with the single queue design. This allows to structure the order of people going to the ride. At the closest point to the ride there is a split of the single queue into 10 queues to one trains as it has 10 seat rows. So this multi queue allows to minimise the time and simplify the structure of load. On the other side of the train there are 10 ways out. So load and unload are splitted. This also helps to minimise the time loss.

April 04, 2009

Operations Management Lesson 8 Exercise

Here I would like to get back to IBM Global Financing (IGF) process map that I described in Lesson 3 exercise.

IGF Process Map

Let's assess each step if it adds value from the Lean thinking perspective:

  • Step 1 "PREPARATION OF CUSTOMER REQUEST". Perfect performance of this step can help to avoid many issues in next process steps and properly prepared set of information allows to pass all approval stages faster and easier.
  • Step 2 "CREDIT CHECK". From my point of view this step adds value as it helps to dcrease the risk of unpaid debts and as a result decrease the cost of financing. This leads to the lower level of "waste" and cheaper financing interest rate for our customers. This step is one of the bottle necks of the process as capacity of credit department usually lower than the existing demand. So in peak time this can create a real issue for the business.
  • Step 3 "PRICING PREPARATION". This step also adds value as we can combine all incoming data for the pricing in a way to minimise customer's costs and cover all our risk and interest. From the other perspective it is another bottle neck as the capacity also does not match the business needs, but as this bottle neck is wider than "CREDIT CHECK" usually there is no big queue for pricing.
  • Step 4 "CONTRACTS NEGOTIATION". If customer accepts the offer we move to the step of contracts negotiation. This step is the narrowest bottle neck in the process as the capacity of the legal department is really unsufficient. But this step for sure adds value as it helps to avoid most of risks in the future and ensure the smoth contract fullfilment during the financing term.
  • Step 5 "BILLING". This is easy mechanical step that does not create lots of issues.

Once again reviewing the process of IGF business flow I can determine that this is rather push mode of work flow than pull one. This means that all existing bottle necks create a number of queues that does not allow the business to flow smoothely. Main reason is the nature of business. As IGF is a captive financing company it highly depends on the demand for the main IBM products (HW, SW, Services) and due to the high fluctuation of the attachement rate the demand for IGF financing is hardly predictable. So IGF mainly use MRP system of inventory management. That means that we have and inventory of available pool of money that we have to put into the market and renew this pool when we reach some critical point.

Operations Management Lesson 7 Exercise

For this exercise I have chosen the the assembling of personal computers. Every computer is a mix of spare parts like memory, hard drive, processor, video adapter, mother board etc. Let's assume that we assemble two types of desktops: standard type, and special powerful computers for special orders.

First of all we can classify the spare parts by the type of demand. Those for standard type of PCs will have independent demand. At the same time some special powerful 3-D graphic accelerators will have dependent demand which will depend on the number of special orders for this special computers.

For the spare parts for standard type of computers we can use ROP system to reorder them when inventory level reaches some critical point. This system is sufficient enough for such kind of inventory due to the high turnover of such spare parts and low cost of it's purchase.

For the more complex and powerful specific spare parts MRP system should be used. This system should use a complex of statistical information to plan and forecast peak demand for special computers. Besides that MRP should have an access to the information systems of the suppliers to be able to minimise the costs by purchasing higher quantity and using special promotion programs of the supplier. Third dimension of the MRP should be the cost of keeping the inventory. The mixture of these three dimensions will give us the most appropiate procurement policy.

The mentioned above classification can be used in ABC analysis. Let's devide all spare parts into three classes:

Class A: The most often used spare parts like wires, memory etc. The inventory cost is not high. Inventory turnover is high. ROP system should be used.

Class B: Often used spare parts like CPUs, HDDs, Standard Video adapters. Inventory turnover is medium. Mixture of ROP and MRP can be used.

Class C: Rarely used spare parts like complex 3-D accelerators and powerful video adapters. MRP should be used due to the complex forcasting of demand and procurement planning.

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Most recent comments

  • Hi Alexander, I don't think you need too much further feedback from me. You need to add in the theor… by Kim White on this entry
  • Hi Alexander, You really need to apply Purcell and Storey to this and also to anchor it to motivatio… by Kim White on this entry
  • Hi Alexander, There is enough course material to indicate that the Learning Organisation is not a un… by Kim White on this entry
  • Alexander, This question really seeks an extension from your previous answer. I think the approach t… by Kim White on this entry
  • Alexander, You have made some sound points here. You have anchored this back to some of the material… by Kim White on this entry

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