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October 26, 2013

Employees are our greatest liability

The title of this blog is an interesting comment raised by Peter Drucker. Employees should be viewed, according to Drucker, as an organisation's greatest asset. The people who can drive innovation within an organisation, who can develop and refine processes and lead to an organisation that achieves a competitive advantage over its competitors, with a higher degree of excellence in the products and services it provides. In fact, this theme has been explored in many of my blogs, and the very nature of some of the excellence blogs I have mentioned before, such as EFQM, lend themselves to Drucker's view, as People are an important enabler within EFQM.

Therefore, it can be concluded from this that organisation's should spend plenty of time developing, looking after and caring for their employees. If they are the most important asset within an organisation, their development, knowledge and ultiamtely satisfaction within their work should be of paramount importance. However, Drucker argues that instead of having this view, and somewhat counter intuitively to achieving an organisation's goals, organisation's see employees as their biggest liability.

This seems somewhat contradictory if an organisation is seeking to improve its processes, efficiency and ultimately excellence. However, the fact that a lot of organisation's employee cheaper temporary workers and outsource certain aspects of their HR work, the evidence suggests that employees are not viewed as an organisation's most important aspect.

I need to continue my reading to develop my understanding as to why this is occuring!

October 25, 2013

Demise of the West?

An interesting point was raised in class today, the idea of whether European/American countries are ready to embrace the methods outlined in Deming's fourteen points or whether the current models of EFQM and Baldrige need to be used. The reason for the "shunning" of Deming's methods (if you could call it that) is that Deming barely focuses on the results, but on the processes and the people who ultimately influence the result. In Japan, businesses are able to embrace this culture and identity, they believe and know that they by spedning time refining processes, adhering to the methods of Kaizen for example, and continually improving, the results in due course will improve. This may seem rather obvious, however the main excellence models used in the West, EFQM and Baldrige, focus much more on the results.

This may be because businesses in the West pay much more attention to financial information and how the results of the business are affected, rather than being solely concerned on the processes within the organisation. This was in fact raised inadvertantly in the class session, 'meetings, meetings, meetings!' on Monday. I was a hypothetical financial manager of a hotel in that practical exercise. A student acting as the bar and restaurant manager wanted more money to try and imrpove their restaurant and the services they offer. My information card said that money was tight and sales in the restaurant were decreasing. Therefore, with my Western upbringing, I was mainly interested and focused on the financial results (as opposed to the benefits to excellence), and asked the bar and restaurant manager what benefits and returns would we see based on further investment. He was unable to provide me with an answer and myself and the whole group undertaking the meeting instantly dismissed his claims for investment stating that it was unviable and would be better served keeping our limited funds elsewhere.

This example perhaps illustrates the reason Western socities choose not to use Deming's model, as our cultural upbringing has seen us become far more focused on the result, and doing everything we can to improve results, such as our financial takings, as opposed to looking primarily at the processes and looking to be a better, more productive and efficient organisation. Perhaps this is why the use of EFQM and Baldrige is more prevelant in the West. Arguably, Western firms are more focused on risk assessment and maintaing position rather than focusing on exploring and seizing more opportunity.

October 24, 2013

Rivals to compete? Or rivals to ally?

Today's tutorial raised some interesting thoughts on the concept of competition and whether organisations should share knowledge, skills and expertise on their processes for mutual benefit or whether they should keep processes and secrets to themselves, and compete against their rivals. The traditional view would argue that competition is beneficial to the consumer, as rivals try and outdo each other with innovative ideas and try to sell their product at a lower price than their rivals. However, would this ultimately lead to a reduction in quality as cost is reduced?

The traditional view would argue that an organisation that establishes itself as market leader would want to maintain its position, by keeping its innovative ideas to itself. However, if it is competing against a whole host of organisations who may collaborate together, the organisation may be fighting a losing battle. A good metaphor that was used in class is again, sports. Me and one of my good friends enjoy cycling, and have taken part in many road races of over 100km. When we race, we are competing against one another, and it is very very VERY competitive. However, we train together in between races to push each other further and harder, to motivate ourselves and to share knowledge and tips on good training routines and routes that make us overall, fitter, stronger and better cyclists. This ulitmately sees us both perform better in the races than if we trained solely by ourselves.

I think this is a very good way of describing how the sharing of knowledge can help organisations that are in competition. Sure, you could argue that collaboration could lead to price cartels between rivals earning themselves more money, but this would only occur in the short term as organisations are likely to self regulate and be more transparent about their deals. The example of British Airways and Virgin Atlantic setting up a price cartel before Virgin eventually blew the whistle is a prime example of this. Furthermore, when at the top, the only way is down. Perhaps the sharing of knowledge, processes and ideas is a better way to maintain market position with the focus being to expand the market, rather than fight tooth and nail to preserve what you have against rivals.

Paul eventually demonstrated a very good example, showing that an organisation should not try and compete to increase their individual market share, but should collaborate to increase the size of the market, and bring in new customers through new and innovative ideas. This was a perfect illustration of why rivals should ally and share information. As someone who has studied Economics at A2 Level and briefly at BSC level before chaning my degree, this idea completely contrasted to the views I had been shown and taught about competition within economics. However, I think it would be a much more beneficial environment to live in with all organisations acting this way than the traditional economic view of competition being a good thing. Why have a 'win lose' scenario when you can have a 'win win' for all parties, including society as a whole?

October 22, 2013

The problem with targets…

After today's class, an interesting debate occured concerning targets and their use that has led to me developing the idea for this blog. It concerned the use of targets when measuring performance and/or acting as an incentive or goal for employees to reach. Essentially, the first criticism of targets was how to correctly predict them? Because if you are launching a new product, for example, it is almost impossible to accurately predict how many units you may sell. If the target is too low, employees may be demotivated once they have hit their target, and if the target is too high, employees may think they have no chance of reaching it, and may choose to miss the target by 100% as opposed to working hard, missing it by 5% and being in the same position of missing the target.

A good example of the shortcomings of targets could be highlighted by a sales worker. If they have hit their targets for the week, they may become complacent for the rest of the week. If for instance, someone phones them up asking to place an order, the sales person may defer the actual order until next week so it can contribute to their targets for that week, reducing sales for that working week and delaying the time the customer may receive the product. Furthermore, the use of targets, like performance related pay can increase competition within an organisation, which can in turn have an adverse effect on productivity, morale and the overall performance of employees within an organisation.

Therefore, there must be potentially alternative solutions to the use of targets that can still guide and help see whether an organisation is meeting expectations or not. As opposed to frequent targets (e.g. weekly), the use of either periodic targets or/and one flat annual target may help reduce some of the issues discussed above. However, the use of performance reviews of employees may be a better way of measuring employee's work and the organisation's output. This is because data is analysed concerning performance and variables may be understood rather than just offering a statistical insight into productivity with no information as to why targets were or were not met. Therefore, this and the use of key performance indicators is potentially a more suitable and useful measuring tool than just setting targets. More importantly, customer satisfaction feedback also offers more insightful and detailed information on not just whether targets are met, but whether the product or service offered is meeting or exceeding the customer's demands.

Therefore, I feel that the use of targets is not the most successful way of measuring results within an organisation.

October 18, 2013


A group discussion today ahead of our presentations next week led to an interesting discussion on the Baldrige model and perhaps its relevance today. Some statistics we found show that the amount of profit based organisations applying for the Baldrige award has steadily decreased over the years, and this perhaps calls into question the relevance of the model. It could be argued that the declining numbers of organisations taking up the award is based on the rigid framework of the model itself. Unlike the EFQM model or Deming's theory on organisational improvement (eg. encouraging learning and empowering employees through flexible strategies), the Bladrige model is very much based around a framework of processes that an organisation is expected to follow. Whilst some of the criteria and areas are similar to other models, such as 'Leadership' and 'Strategic Planning' linking to the EFQM model for instnace, the processes of which they are applied is ver rigid and based around a flat framework. This perhaps explains its decline in popularity, especially if one considers that Deming has begun to experience a renaissance in the USA after his exploits in Japan. I thought this data offered an interesting insight into the relevance of the Baldrige award.

October 17, 2013

Peter Drucker

After all the insights and readings on excellence models and management gurus like Edward Deming, I have begun to reasearch into some wider areas. One author I have begun to explore based on the back of the project I have successfully applied for is Peter Drucker. One interesting concept Drucker discusses is that of Knowledge Worker Productivity. Drucker outlines 6 key features that determine knowledge worker productivity. These consist of ideas such as productivity depending on demanding to know what the task is, that workers require autonomy, that continuous innovation, learning and improvement have to become a core concept of work, that measuring quality along with quantity is just as important and that finally, teaching and the learning of knowledge is seen as a long term asset rather than a short term cost.

In many respects, Drucker's ideas link to those of Deming and in particular, the EFQM model. In that knowledge is paramount to the success of an organisation, and that learning should not be seen as a cost as the long term benefits (although potentially unmeasurable) will far outweigh the costs. Therefore, a well educated workforce with superior knowledge will acheive better results. For example, if a chef has poor knowledge and is using raw ingredients that are out of date, the chef may not undersand why the final result is not highly desireable. However, if the chef has high knowledge, they will know that the raw ingredient can not be used and an alternative ingredient must be found and used instead.

Essentally, Drucker, like many other management gurus, argues that the individual is one of the most important assets to an organisation, and that their satisfaction in work, their enjoyment and ultimately the knowledge they have is of paramount importance to an organisation's excellence.

October 16, 2013

Group think and EFQM

So one of the key concepts and themes of the EFQM Model is that the leaders within the organisation need to set a clear goal and direction for the business to go in for the pursuit of excellence. However, are there any factors that necessarily guarantee that the policies chosen and pursued by a business are the correct ones?

My thinking for this stems from my limited knowledge of the organisation Enron. Enron rapidly grew in size, but management (under pressure from shareholders) who demanded better and bigger results began to take risks and gambles that were unsustainable. This led to the organisaton ultiamtely reporting financial accounts that were fraudulent before the organisation eventually went out of business in the early 2000s.

Whilst not a direct link to EFQM, this example got me thinking about whether the processes an organisation implements in pursuit of achieving excellence are necessarily the right ones. Furthermore, the processes an organisation use when undertaking such a change of policy can see an organisation get lost in and amongst all the new processes and lose sight of the orginal target.

Therefore, I think this highlights the importance of communication and honesty within any organisation seeking to undertake a quality improvement programme. It is important that if an incorrect process or strategy is implemented, it is quickly realised and rectified as soon as possible before business performance starts to suffer.

October 15, 2013

Organisational Learning and Ryan Air?

In a class discussion ahead of a presentation based on organisational learning, myself and a class mate had a discussion on whether organisational learning is something only an exisiting organisation uses, or whether it can be used by an organisation who have yet to establish themselves. We discussed whether a new organisation could launch based on knowledge obtained from watching competitors, contacting suppliers and communicating with potential customers to determine what goods/services may be required or whether an organisation needs to have been established to obtain the necessary knowledge required to act upon the knowledge obtained.

A potential example of a new organisation using organisational learning to break into a market and steal a market share can be seen by looking at the company Ryan Air. By applying Dixon's Organizational Learning Cycle, (consisting of interpret, act, generate and integrate), we can see how Ryan Air achieved its dramatic success. Ryan Air was initially a very small competitor to Aer Lingus and British Airways, that initially made a loss. However, under Michael O'Leary, they radically changed their direction and changed the very nature of European air travel. By 'interpreting' the current industry different to their rivals, who still viewed air travel as a luxury service, Ryan Air decided to explore cheap fares, quick turnaround, no frills for onboard services, no business or first class and to operate just one type of aircraft to increase efficiency. Ryan Air subsequently 'Acted' in a different way to their competitors, and managed to seize a large chunk of the market share and redefine how European air travel is viewed and how business operate within that industry.

I feel this is an extremely good example of how a new business can use knowledge and organisational learning to radically redeine the expected parameters of a business within a certain industry, and how that business can subsequently act in a different way to their competitors to try and secure a competitive advantage over their rivals to obtain a higher market share.

October 14, 2013

The Learning Organisation and motivation

I think that the idea of the learning organisation is a useful way that a business may implemenet aspects of the EFQM model, and adapt the 'enablers' that are required to bring about improved results to people, customers, society and key performance. This is because the learning organisation focuses on changing the processes and strategies within an organisation through modifying the behaviours that result in these outcomes. This is done by transfering knowledge obtained from experiences of the organisation's employes for example. This is because "every organization is perfectly designed to achieve the results that they do" (Deming, The New Economics 1990) so if an organisation understands how the processes lead to certain results, they can manipulate and further develop these processes to lead to favourable results for the organisation.

This therefore argues that by implementing a learning organisation, the processes within the business can be improved and developed to achieve better results, with an increased understanding on how and why processes bring about the results. Whilst this is a generalised viewpoint, it can be argued that the EFQM model also argues to empower employees and give them a greate degree of freedom within their work to develop new viewpoints on how work processes can be achieved. However, in order for this to occur, political activity within an organisation i.e. rules and regulations through hierarchical structures and managerial goals, may need to be reduced or elimated altogether.

it is interesting to note how some organisations, such as Google who offer the most unique and innovating solutions, have policies such as 20% time (where the employee can use up to 20% of their time to do whatever they want to within work). Perhaps it can be argued that concepts of Results Only Work Environment used in tandem with EFQM and the learning organisation bring higher levels of excellence, as these policies allow the freedom that is required for these work processes to change. Essentially, successful human motivation is a key aspect of achieving excellence, as a motivated workforce will ultimately yield better results. Therefore, the focus should be on intrinsic motiviation, i.e. doing things because the employee believes they matter, and this can be achieved through EFQM and the learning organisation.

October 11, 2013


In a group meeting today ahead of our presentations in ten days (or so) time, we were discussing the advantages and disadvantages of EFQM and ISO 9000. An interesting concept was raised, stating that an organisation which combines both of the processes can achieve a higher standard of excellence. This is because the notion of ISO can ultimately begin the improvement process, and initially drive standards up from their basic level to conform to those of ISO. Whilst there are drawbacks to ISO standards, such as once the standard and award is acheived, a company may stop trying to improve its quality/processes and the fact that as ISO only focuses on quality imrpovement in certain departments rather than across the business as a whole. However, it is a useful way to begin the development process.

This coupled in tandem with the use of EFQM to then continually drive excellence across all business areas after the initial establishment of quality and processes from ISO, can be argued to be an effective way of setting up an organisation to achieve excellence. This is because the concept of continuous improvement across all areas of the business that EFQM focuses on is implemented, unlike in ISO where continuing to develop and refine ideas is ignored after obtaining the quality accreditation.

One reason the use of ISO to begin with may be of benefit is because the defined parameters of what is required may aid a business to move it's excellence journey in the right direction, which if using the self regulatory measures of EFQM may not happen. It is all well and good listening to your employees for example to understand how processes can be improved, but if for example the solutions offered by employees actually have an adverse effect on the business and are implemented, it can lead to a reduction in efficiency, productivity and ultiamtely profitability in the business.

Therefore, we concluded from our discussions that an organisation which implements both a policy of EFQM along with obtaining ISO quality standards, can (if successfully implemented) have the biggest positive impact on an organisation.

For example, if I establish an organisation that makes aircraft wings, by seeking ISO accreditation, I would learn about the expected processes and rules I would have to abide too to reach the award (which in tandem would open business opportunities etc.) which set me upon the path to quality. Then, after reaching the approved standard, which may normally result in a limiting of quality/excellence, the implementation of EFQM would allow business processes to continually be innovated and improved, leading to an increase in excellence that solely under the ISO model may not have been obtainable.

However, it is interesting to note that ISO is universally used across the world, apart from in Japan. Perhaps this is because the Japanese focus on just getting the processes right and to the highest standard, rather than feeling the need to earn an award that states a certain standard has been reached. Further research/debate is required on this!

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