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October 24, 2009

Entrepreneurship and New Venture Creation Exercise 6

Your Great Uncle died and left you a company that you have neither the time nor inclination to run – hence you want to sell. Set out the options for which type of buyer might be interested and the differences in likely value that they might place on the business. Conclude by deciding which buyer you hope will buy it and describe why.

This situation is special for me because a have lived a similar experience with a old bread factory of my family. This company was founded by my grandfather and his brother. The firm grew with a lot of effort and difficulties but was able to create several little shops of sell bread. Over time the next generation had the opportunity of follow with the business but not all members had the opportunity of be proprietary of the shops although they were proprietary of the factory. For a lot of years nobody said nothing because the second generation was essential to the growth of the company in the origin hence they was the managers of the company. When arrived the time of retired, everybody launched his hands to the neck of managers and theirs descendant because they wanted to follow with the factory in order hold the value added to theirs shops.

With this situation the company fall its profit and every year the situation was worse because the investment and maintenance greatly decreased due to everybody wanted get dividends. With this situation several options was evaluated by each member of the whole family. Below I will show some of the main option that was exposed

  • Siphoning cash. This option meant continue with the current situation. And obviously, that will be the worst option because nobody earns enough.
  • Transfer of ownership in family firms. With this option the company follows in hands of the family and retains its values if the buyer is one family member. I and the rest of the family could see how the illusion of the previous family generation continues alive. The knowledge of the market and capabilities are safe but the problem is that the price of sell will be below of market price, and not all owners can be agree with this option.
  • Partial harvest and exit. To analyze this option is important to say that the company had the location of its main asset in Madrid city centre and there was a lot of sellers with intention of make a new building of luxury apartments. With this option the family could divide the money and could move the business outside of the city centre with the investment of the parts of the family interested on it.
  • Acquisition for another company of the sector. It important to remark that the company had several employees working on it, some of them were of the family and not only at management level. Also it is important remark that the value added for the shops was that the bread was made with a traditional methods and near of the point of sell with high degree of acceptance between the customers. With the merge or acquisition the new company can increase the efficiency using economy of scale strategies, recover the morale of the employees, and hold the confidence of the customers.
  • Management Buy in. The option of find a group of people in order to manage the company was discarded from the outset because everybody considered that the knowledge of the market and situation with the shops was important and to lose the management will mean to lose the company. In my opinion likely nobody thought that some of the profit troubles were due to the restrictions in take decisions according with family interests over of the aspects of business.
  • Management Buy Out. This option was the same that transfer the ownership to some family member. That would be really very good option in order to continue with the activity but the market price of the main asset of the company, the location in city centre, was too high and the company would need a big restructure with a great investment and financing.

At the end the option chose was a mix between some of then, because the company was sold to a builder for a high price even over market price and some members of the family carry on an agreement with him to keep the ground floor and continue with partial business but not with the manufacture.

The acquisition might have been a good option but loosing the ownership and the management of company.

In my opinion the 'partial harvest and exit' alternative was very good option, but not the loss of manufacturing that was the origin of company. My recommendations was follow th Partial harvest and exit but continuing with the production activity in another place outside the downtown and managed by me.

References

Andrew Burke (2009). ‘Entrepreneurship and New Venture Creation’ Study Notes, Warwick Business School.


October 23, 2009

Entrepreneurship and New Venture Creation Exercise 1

Examine an industry that you are familiar with, and assess the nature of the start-ups in that industry. Give examples of no more than four of these start-up firms and allocate them to Bhide’s categories. Why might this matter to an incumbent firm?

All firms have a natural evolution like any living things, some day are created after growth, research the mature and finally died and / or transform. Depending of the first phases of the each business and follow the Bhide’s theory there are four types of business that are: marginal business, promising start-up that can follow evolution in VC-backed start-up or corporate initiatives and the last type y the revolutionary ventures.

The main factors that affect to the type of business are the Investment and Uncertainly. Investment refer to the irreversible commitment of fund, reputation or other resources that the individual or firm undertaking the initiative makes with the expectation or earning a return and the uncertainly refer to unmeasurable and unquantifiable risk (Frank Knight, 1921).

I have some knowledge about the IT industry but to illustrate this exercise I would like to give some examples in other sector as are the retail industry mainly the bakery and diary sectors.

The companies which levels of investment and uncertainly are low, belongs to the marginal business. Some examples are mobility sellers of diary products. One example of company with promising start-up could be DANONE that is a company that started to operate in Spain at the middle of the last century, and now is a very big multinational and is example of corporate venture. It started with a low level of investment and with high degree of uncertainly. BIMBO is an example of company that started to operate in Spain at the middle of the last century with a medium-high level of investment and uncertainly because it was a company that started with capital of Mexican investors and could be an example of the type of VC-backed start-ups.

About the revolutionary ventures type of business is complicate to identify it in this industry because it is very mature market and is very is difficult to launch a venture that ensures a high level of profits. But companies as DANONE can launch a unit of new healthy products. Using its knowledge in the market, the possibilities of inversion monetary, resources and technology can be a example of revolutionary venture with high profit.

As conclusion I would like to remark the importance that each company knows its type of business. These types or archetypes can help us build a compressive map of the typical features of entrepreneurial activity and the entrepreneur can be ready to learn of previous experiences.

References

Andrew Burke (2009). ‘Entrepreneurship and New Venture Creation’ Study Notes, Warwick Business School.

Amar Bhidé (1999), 'The Origin and Evolution of New Businesses'. The Oxford University Press.


October 22, 2009

Entrepreneurship and New Venture Creation Exercise 5

Your business is bringing out a new product which adds on to an existing product, that you already produce. You are keen to ensure that the take up of the add-on product is high, but your manager needs to be assured that you are aware and mindful of anticompetitive practices. Set out the arguments you would give to your manager concerning what the business can and cannot do in this context.

Competition and antitrust laws have increased in importance in most economies and could provoke several limitations in the company strategy. In order to give an opinion about this issue is important to consider the laws that governed in the country's development activity and the environment in which it operates. International agreements like GATT let that the governments of different countries will be coordinated.

Some articles of the law has the intention of void agreements which enable monopolistic behaviours although there are several exception when the target of the initiatives are focused in aspect like enhance efficiency or promote the innovation.

To determinate if the new product can fall in anticompetitive practices is important to study external factors related with the impact in the market, suppliers, consumers and competitors. Also the internal factors as the profit can be a very influence factor if with the launch of the new product the company can increase its profit due to raise prices inordinately.

In the other hand any company has many responsibilities with its stakeholders and even its employees. And those are reasons to fight or even be on the boundaries of the law or the interpretation of laws.

I would like to mention an example of monopolistic behaviour as are the case of Microsoft and its well know browser called Internet Explorer. This product is given away with purchase of the operating system avoiding that the customers can acquire other browser. In this case the dominant position of Microsoft in the operating system market is used to prevent competition entry in the market by ensuring the monopoly of market.

Te argument to follow ahead with the new product is that in the market there are others products with similar characteristics, so the company does not practice monopolistic position in the market. The launch of this product is a bet based on the use of technology and innovation in order to get important levels of profit in free competition.

References

Andrew Burke (2009). ‘Entrepreneurship and New Venture Creation’ Study Notes, Warwick Business School.


October 21, 2009

Entrepreneurship and New Venture Creation Exercise 2

There is a committee that considers strategic developments on the basis of business plans. It is concerned that it may be too risk averse and requires some new guidance on evaluating business plans. Having worked through the PORES how would you advise the committee?

First to all it is important to remark that I once that the first Business Plan has been done, a lot of troubles can be identify and manage. As said Delmar and Shane to write a business plan helps entrepreneurs to increase theirs capability, but does less true that before to make a business plan could be very important to make a PORES analysis. Through of this kind of analysis it is possible to identify the profit opportunity and the capability to exploit it reducing the risk of failure and maximize profit potential.

With the PORES analysis I can provide to the committee a list of key assumption that I can check and verify if them are correct. From an external point of view there are several aspects that inside of the company can always look like correct but really aren’t.

For these reason it is necessary to review the following: the initial conditions that provoked the new venture; validate the studies realized about the market identifying the buyers, suppliers, and competitors; analyze the resources that are necessary and check if the kind of resources are available or is required a specific skills that can increase the costs. With all of these characteristics that I can provide will be important to add a dynamic point of view because statics aspect are not enough to validate a business. The dynamic aspect should be studied over all characteristics that a business plan cover as are check if the new idea was consequence of solve a problem or is something that appear after to see a vision or strategy. That usually occurs in development of software because a lot of people forget the labour of IT architects that always try to be according with the enterprise architecture. I can to determinate if the study of market have been done thinking in the new competitors or the growth possibilities of the new venture and if have been done a macro economic analysis identifying the risk (i.e. the increase of interest) and creating a mitigation plans.

Once that the key assumptions have been identified and checked with this model we can to review the profitability of each one and try to analyze if the best strategy to exploit it has been chosen.

References

Andrew Burke (2009. ‘Entrepreneurship and New Venture Creation’ Study Notes, Warwick Business School.


Entrepreneurship and New Venture Creation Exercise 3

Discuss an idea for a new product that will create a new industry niche. To convince others of your idea you need to set out the likely scenario for how the new niche will develop in terms of competition, numbers of firms and how firms compete over time.

Idea background

Some of the most routine labours that are not very much recognized are the home cleaning. In the latest years all the adults’ members of the family (usually the parents) are working almost all day, without too much time to enjoy of theirs children. Some people have the possibility of outsourcing the clean services of his home, but not all of them. Also in the latest years have been a lot of advanced in the clean products that increase its efficiency and decrease its price hence the parents can have more free time to enjoy with his family and can save money, even if they buy clean services.

Then we have studied the idea of launch a new product to the market of clean product's that let to the cleaners to clean the glasses more efficiently, and even forgot that they must to clean the glasses. We are talking about of the automatic cleaner of window glasses. It is device that is put in the window and automatically it starts to clean and stops according with the schedule parameters.

Factors of Industry Evolution

There are several factors that have influence in the decision of launch a new product, its strategy, performance and its exit strategy, some of them are the macroeconomic situation, the regional variation and the industry evolution. According with the industry evolution there are three topics that are important to analyze with more detail to be clear that these will not are problematic during the life of product and we will be ready to launch the appropriate response if that appear. These three factors are the barriers of entry, the minimum efficient scale and the competitive process and business shakeouts.

First to explain with a little bit of detail over these topics is necessary remark that the region where initially will be launched will be Spain. Although now in terms of macroeconomic situation is not the best moment, we think that in Spain the weather is not bad during a lot of time of the year and there are a lot of hours of sun light each day. That is a important factors to clean the glasses of the windows.

  • Barriers of entry

The new product is a technological product and required a lot of investment, hence money and financial resources. For these reason the main barrier could be the switching cost, because the price of the product will be more expensive that a simple rag and bucket. Nonetheless the situation can change with appropriate level of advertisement explaining to the customer the benefits in long terms.

  • The minimum efficient scale.

Only a few companies can develop the technology to make the product. It is a product differentiation that needs specific components. The new product will have the company patent in order to fight against the copies.

  • The competitive process and business shakeouts.

About the competitive process we have already explained some aspects in the last two paragraphs. We can think that if there are specific components, we can have troubles with the suppliers, but there is not problem because the raw components are very common (‘circuits’) but has a specific firmware made by the company.

In order to be prepared for a shakeout, some of the best solution is to sell the patent but another can be use the infrastructure available in develop new products with similar technology.

As conclusion in the follow table we can see the evolution of the new product over the time identify the most important characteristics:

Barriers to Entry

MES

Competitive process

Market Entry

The switching cost

Almost all markets will be for us, but the customers are low.

Use generic components.

Market Development

Avoid the temporary.

Create Patent to avoid the increase the number of companies that can copy the technology.

Continuous marketing plan.

Shakeout

Sell the patent.

Use the technology for other products.

Sell the patent.

Use the technology for other products.

Sell the patent.

Mature Phase

Hold the patent for all derivates products and evolutions.

Use the economy of scale.

Create a secondary market with the spare parts.

References

Andrew Burke (2009. ‘Entrepreneurship and New Venture Creation’ Study Notes, Warwick Business School.

George S. Day. ‘Strategies for Surviving a Shakeout’, Harvard Business review March-April 1997.


October 19, 2009

Entrepreneurship and New Venture Creation Exercise 4

There is the opportunity to lead a new team that will introduce a new (or substantially amended) service. Conduct a self-assessment exercise as suggested in the notes and outline how your sectoral, managerial and personal skills match the service.

The quality of the people involved in a new venture is most important than the strength of he business idea. The key to effectiveness to carry on any task is the combination of ability and effort. With the self-assessment we can assess whether a individual has the ability to perform the task required for profit exploitation and has the enough motivation to do this.

To carry on the self assessment there are three steps that should be performed, these are: study the own life experience, a formal audit of business sector managerial and personal skills, and at the end seeks to identify important goals in one’s life. I am going to focus on developing the analysis of the step two, identifying my strengths and weaknesses to respond aspects of Sector Skills, Management Ability and Personal attributes.

Personals Skills

Weakness

Strength

Sector skills

Wide experience but not deep experience in sectors different to Public sector.

My experience started from technological areas to functional areas. For these reason I have an inclination to technology 

Experience in IT services as IT Architect and Project Manager.

Experience in Public Sector, developing citizen services. Some experience in Telco, Utilities and Financial.

Experience in big companies. I work at IBM for almost ten years and I was four years in Lucent Technologies.

Management ability

No experience as people manager.

No experiences in management of departments.

Experience as Project Manager in a medium size IT projects for almost seven years.

Personal Attributes

No very strict with the staff.

Needs a lot of data in order to take decisions with the intention of please everyone.

Honest with the managers and staff.

Responsible with my goals and projects.

Always try to innovate.

In order to identify fits and gaps I am going to use the Belbin’s (1984) managerial profiling of people’s managerial styles. Through of this framework, I have answered seven questions in order to identify which one is the most appropriate profile for me.

Belbin’s team role profiles

Figure.1. Belbin’s team role profiles.

The result of the test show that I fit better with the Coordinator profile and Completer finisher. Both are very good profiles in order to carry on the launch of the new service, but would be convenient that the team have some profile with creativity and team builder.

Personal Aspirations

I have lived in a family with own business and for a lot of time I have thought to avoid the familiar business and follow my own way in a big company. Nonetheless it is difficult to forget the intention to create your own company, mainly because is a way to satisfy a lot of aspirations as are be able to carry on a firm, create employment, etc… Currently I am working in IBM and is a company that can help me to get my own goals, because it's a company where I can get the knowledge, experience and networking necessary to create a company or to have the opportunity of manage a department where carry on the goals aimed at developing technologies and products that make life easier for others.

References:

Andrew Burke (2009. ‘Entrepreneurship and New Venture Creation’ Study Notes, Warwick Business School.

Belbin Web Site:

http://www.belbin.com/rte.asp?id=2

http://www.belbin.com/


June 22, 2009

Human Resource Management

Human Resource Management Lesson 2 Exercise

Reflecting on your own work experience, and with reference to the theoretical models discussed in Lesson 1, how would you characterise the role of the HR function in an organisation that you are familiar with (it must not be IBM)?

American Express is a global financial services company, known primarily for its credit/charge card and traveller cheque businesses. I observed American Express at one of its major offices, Brighton in the UK, over a period of 3 years from 2003 to 2005, when the company was experiencing a relatively stable period, in terms of growth and general business health.

To understand the role that HR plays within American Express in the UK let us firstly consider the external factors affecting the company at the Brighton office:-

Economic

American Express operates under an outsider system where the shareholders power ensures a strong focus on monitoring and measuring the company’s performance. Normally this results in cost reduction activities. Although American Express were reducing their operating costs during this period, the 2005 Annual Report stated that there was an 8% increase in ‘HR and other expenses’ partly due to higher technology costs, but also including ongoing high levels of commitment to training and development of employees. 

Although American Express operates under an outsider system, the HR strategy was more aligned to an insider system, ie employees appeared to be treated as the organisations source of competitive advantage and were treated very individually in order to ‘keep them happy’

Political

American Express has worked diligently and consistently at a global level since the 1970’s to resist unions. The company has done this by implementing a strong HR strategy to partner with their employees. In terms of context, the number of unions in the UK has steadily declined, and the role of the TUC, the main union confederate, had progressed from collective bargaining to influencing and lobbying. In addition TUC supports the idea of employee and management partnership.

Legal

Although American Express is a US based company, the function in Brighton operates under UK regulations. There were widespread consultations with employees about changes to the legal context the company was working in, and particularly as European legislation was being introduced to the UK for items such as emission from Company Vehicles, and Food Hygiene and Safety Standards which impacted the offering of canteen facilities to staff.

Labour Markets

The Brighton office sourced many of its staff from Brighton itself which has a total population of 480,000 people. Brighton has a young, well-educated and diverse cultural demographic. Brighton is known as the ‘Gay capital of Britain’, the three MP’s elected in 2005 were Labour, and 22% of the vote in Brighton went to the Green Party in 2005 (compared to the national total vote of 1%.) 

A progressive partnership HR strategy appears to have been received well and proved fruitful in the context of the labour market available.

Business Sector

American Express are in the business of offering premium services, and are operating an HR strategy which could be described as corporate isomorphism, as defined by Ferner and Quintanilla (1998). This is the HR strategy and practices of a multinational corporation (MNC), so important to its culture that it is distributed intact to the countries the business is operating in with scant regard for the countries normal practices or for competitors standard approaches.      

Location

The US and UK broadly share similarities in national cultural characteristics and when looking at the definitions put forward by Trompenaars (1993) it is clear that the UK shares practices that embrace universalism, individualism and achievement with some adjustment to be made for emotional expression where the US are more open than the UK. The location of Brighton itself, recruiting from a progressive, open-minded sub-culture means that the HR Strategy has been well received and embedded in the business.    

If we now turn to the management style of American Express we should consider the model set out by Purcell below:

High

Individualism

Individualism

Collectivism

Collectivism

High

Low

Low

Sophisticated human relations

Traditional

Consultative

Constitutional

Fig 2.1 Management style in handling employee relations

Source: Purcell, J. (1986) ‘Employee Relations Autonomy Within a Corporate Culture’ Personnel Management, February

The management style adopted by American Express would be described as sophisticated human relations as it is high on individualism.  Employees have a clear understanding of the promotions structure and the procedures of the company for reward, promotion, appraisal, and grievances.

Management are rated by employees themselves, and are therefore incentivised to consider and treat the individual employees working for them with the utmost respect and clarity. A downside to this is that salary levels of employees are sometimes above the market level which creates a cost issue for the business.

Why do you think HR played this role in the organisation?

American Express has committed to a long term HR strategy to create a culture of commitment to service from their employees. This is important to the company as they were offering a premium service and brand.

The strategy comprises of such elements as investment in training and development of employees, managers being appraised almost totally on feedback from their own first line staff which has a direct impact on the managers’ remuneration, employee consultations, profit share schemes, and above market salaries (as demonstrated when staff transferred via TUPE from American Express to IBM, and have had no salary pay increase to position an individual to market pay for 5 years)  The result of this is

a)     a strongly committed and loyal workforce to the company

b)     employees who feel that they have a ‘voice’ in the organisation

c)     investment in training and development of employees (managers want a good appraisal and will fight for these budgets)

d)     excellent service providers (as a result of both training and strong loyalty to the company) for a premium service

e)     low attrition rates

What are the strengths and weaknesses of this role in the context of the organisation

The HR role implemented in American Express means that the company has high commitment and loyalty from its employees. This commitment to the brand is inherent in the high end services offered in the card banking industry which is a marketing tool in itself. The loyalty engendered also lowers the attrition rate, which means the company sees long term payback on their investment in training and development of employees.

Over time, the emphasis on individualism has shown some weakness due to the higher expectations of the employees. The concept of a mutual psychological contract has had to be introduced into the HR strategy, in the past 5 years to help employees to understand that employees and managers need to agree on issues that are attractive to both parties  

Additionally American Express has outsourced some of its departments, and its employees have found it difficult to enter another company that has different management styles, and where the salaries are not at market level.

BIBLIOGRAPHY

Marchington, M. and Wilkinson, A. (2008) Human Resource Management at Work – People Management and Development 4th ed, London: Chartered Institute of Personnel and Development

Purcell, J. (1986) ‘Employee Relations Autonomy Within a Corporate Culture’ Personnel Management, February

Quintanilla, J. & Ferner, A. (2003) ‘Multinationals and human resource management: between global convergence and national identity’, International Journal of Human Resource Management, Vol.14, No.3, 363-8

Trompenaars, F. (1993) Riding the Waves of Culture: Understanding Cultural Diversity in Business London: Nicholas Brearly Publishing

www.212.americanexpress.com [Online] (URL: http://www212.americanexpress.com/dsmlive/dsm/int/campus/campusrecruitmenthome/workingwithus/ourculture.do?vgnextoid=e34e0681b88ec110VgnVCM100000cef4ad94RCRD) (Accessed 2 June 2009)

www.thisbrighton.co.uk ‘Trade Unions – A National Perspective’ [Online] (URL: http://www.thisbrighton.co.uk/city-politics/trade-unions.htm) (Accessed 2 June 2009)

WBS (2009) Human Resource Management, Warwick Business School

Human Resource Management Lesson 3 Exercise

Reflecting on your own experience as an employee and as a manager, to what extent do you think pay motivates or demotivates employees? Why?

In my experience as both an employee and a manager there is not a straightforward answer to whether pay motivates or demotivates employees because it is dependent on a number of factors.

For example a pay rise which is expected as part of a fixed incremental process is not as motivational as an unexpected exceptionally high increase in pay awarded due to an outstanding performance.  Equally if an employee has worked hard, and performed well, and been awarded a pay increase which falls below the employees expectations pay can become a demotivating factor.  

There are two areas that stand out as contextually important in the argument on whether pay is a motivating or demotivating factor:-

Equity Theory

The first is the entry point of the employee into the interaction (ie whether the employee begins by feeling underpaid, overpaid or somewhere in between the two.) This is known as equity theory (WBS, 2007/8) and is a process theory in the field of organisational behaviour.

According to Maslow’s content theory (1943) basic physiological needs such as pay have to be satisfied before an employee can move up the hierarchy to ‘higher’ social needs in order to increase motivation.   Herzberg (1966) analysed needs as motivators or hygiene factors, pay being a hygiene factor, which broadly related to Maslow’s lower-order needs. Herzbergs theory of ensuring that negative hygiene factors (eg low pay) do not detract from the work requiring to be done supports the theory that pay can become a demotivator if the employee feels underpaid.

I have experienced employees who have left IBM due to entering IBM on a low market rate on the pay scale, and managers not having the flexibility or power to address the gap. I have also experienced employees who are paid well above the market rate in IBM, and who demonstrate sustained motivation and commitment to the company as they know they are placed in a good position. These are examples of felt negative inequity (feeling underpaid) and felt positive inquity (feeling overpaid.)

Expectancy Theory

The second factor that stands out to me, in terms of pay as a motivating factor, is that different career and life cycle stages affect employee motivation and related choices and options.  Generational diversity also plays a significant part in whether pay is a motivational factor or not as different values drives employees in different ways, and at different stages of their lives or career. Vroom (1964) argues that his path-goal concept or expectancy theory covers this complex area, and individuals have the capacity to evaluate factors pertinent to themselves in order to decide whether they will be motivated or not.  

Knowing in advance how each generation can be triggered, either positively or

negatively, can help organizations develop balanced policies and can help

individual managers and employees structure their work interactions, including pay, in ways that benefit all types of people

Some employees may have different needs as they approach retirement (eg one employee may want work/life balance rather than more pay whilst another may want pay increases to top up their pension.) whilst employees in their 20’s may want a work/life balance if they feel they have an equitable market based pay, or may be ambitious and motivated by pay in terms of achieving higher levels than their peers.) 

Thinking about different pay systems that you have experienced, which have been the most effective? Why?

I have experienced 2 types of pay system in my working life.

The first system was an hourly rate. I was paid on a weekly basis for the hours I worked at a restaurant the previous week. The system was easy to understand and administer for both myself and the company, so if there were any disputes over the amount they were quickly able to be clarified. The incentive, as an employee, was that any tips I received during the evening were solely mine to keep which was a motivating factor to provide the best possible service.

The second system is a Performance Related pay (PRP) system. I am paid a fixed annual salary on a monthly basis with a discretionary incremental scale each year, plus a one-off payment during one tax year related to performance. The performance related element is awarded within capped levels defined by both seniority and the company’s profit performance for the previous year.

This system is theoretically good, but actually mediocre in execution because

(1)  managers are not trained adequately to appraise lower performers. This means that normalisation spread of salary increases are high-ended and the better performers get a diluted pay increase rather than a high increase as they perhaps deserve

(2)  managers are also, conversely, providing very high appraisals to most employees. The system is measured as 1(exceptional), 2(high performer), 3(average performer) and 4(low performer.) Most managers were awarding 1’s and 2’s only.  The result was that employees expectations were raised and most employees expected at least 2.  HR had to introduce a 2+ between 1 and 2 to assist managers in normalising the spread for more 2’s (and by default, more 3) performers, but there have been many disgruntled employees, mainly because the 2 performers do not now receive an annual performance-related payment.

(3)  managers are not always strong communicators about the company’s profit performance and the resulting capped levels. Employees are often confused by the capped levels, as the definitions seem to change, eg one year profit was calculated at a worldwide level and the following year at regional level, which happened to be the lower of the two that year. Employees trust in the fairness of the system was damaged by this lack of clarity and felt that the company was not being forthright

BIBLIOGRAPHY

Herzberg, F. (1966) Work and the Nature of Man, Cleveland: World Publishing

Maslow, A.H. (1943) ‘A theory of human motivation’, Pyschological Review, 50 (4), 370-96

Rosenfeld, R.H. & Wilson, D.C. (1999) Managing Organisations, London:McGraw-Hill

Stackpole, B., “Meet your Future Employee”, [Online] (URL: http://www.pcworld.ca/news/column/58b861b90a010408008b33e8277dba29/pg0.htm), 20 November 2007, (Accessed 1 July 2009)

Vroom, V.H. (1964) Work and Motivation, Wiley, New York

WBS (2007/8) Organisational Behaviour, Warwick Business School

Human Resource Management Lesson 4 Exercise

Thinking about an organisation or organisations you are familiar with, if comparing two organisations, one may be IBM, what mechanisms and procedures have different organisations used for employee involvement and to give employees voice?

Let us compare and contrast how employees are involved and given influence over their organisations by comparing IBM’s procedures and mechanisms for employee involvement and voice, with Liaise Marketing, an Australian based company providing sales solutions and marketing product promotions for major supermarket chains, hardware retail stores and independents. 

Using Purcells (1986) model to define the management style employed for IBM and Liaise Marketing I would propose that IBM employs a sophisticated human relations style, whilst Liaise Marketing trys to employ a consultative style but falls frequently into a more traditional style.

IBM

IBM utilises technology to a significant degree to involve employees in a wide range of activities and for employees to be given a ‘voice’ in the Corporation.

From basic tools such as Lotus Notes Team Rooms (where documentation, processes, comments and ideas can be stored and shared with as large a team as you wish across the globe) through to Sametime, an instant messaging system within IBM, which truly allows an open door policy to anyone in the company if you wish to informally approach them, IBM has the capacity to invest in a good HR strategy to support a company the size and reach of IBM.

In addition consultation is taken very seriously in IBM, with a very clearly understood process which provides for IBM employees to nominate and vote their own representatives onto steering boards that act as a representative cross-section of employees who are entrusted with a exploring the detail of the strategy being proposed for potential implementation. Once the steering board have conducted due diligence they report the facts and recommended course of action back to employees, often hosting a teleconference to take any questions from employees attending.  The actions are then voted upon by the employees for support or not, as the case may be.

Quarterly employee satisfaction surveys are run and results published to the organisation, with management investing in projects to make improvements. These projects are communicated to the organisation, and are measured after implementation to assess their effectiveness.

Finally IBM’s senior management periodically host what are known as jams, an intranet based discussion involving 50,000 to 100,000 employees over a set period, often 1 to 3 days depending on the size of the registration list. The purpose of the jams are to provide a forum for all global IBM employees to discuss and provide ideas on the topic selected. The latest jam held in 2008 was called InnovationJam and included IBM clients, business partners and academics as well as 100,000 IBM’ers, a third of the total global workforce. Software is used to sort through the discussions and threads to identify the key ideas and common issues so that management can consider it as they take decisions on the future direction and actions of IBM.

LIAISE MARKETING

Liaise Marketing is a small privately owned business with offices in Melbourne, Sydney, Perth, Brisbane, and Adelaide, and a sales force of approximately 100 in total. The sales teams are divided up by region and managed by a Regional Manager.

The regional team meets once a week face to face to be updated by the operations manager and Regional Sales Manager. The employees are asked to contribute and input their issues and own ideas for improvements at these meetings.

A quarterly magazine is published in-house to communicate about what teams in the business across Australia are achieving, and updates on clients. Employees and managers are asked to provide stories to the magazine and small token awards are made on a regular basis for good sales achievements and longevity of service. 

Both of these activities are consultative in style and are designed for employees to feel they have a ‘voice’ in the organisation.

Although a small company like Liaise Marketing does not have the capacity to invest as heavily as IBM in technology, there are advantages to a smaller sized entity as employees can access management on a one to one basis more easily in theory.

How effective were each of these voice mechanisms in a) giving employees an effective voice at work and b) adding value to the organisation?

IBM

The greatest thing about any of the mechanisms described above is how the Corporation has managed to harness a large, complex organisation and provide employees with opportunities to have their say in a way that employees feel included, even though they are one of 300,000 employees. The output from the jams, employee satisfaction surveys and consultations are shared with employees, and the actions and investments arising from the input to these mechanisms are communicated widely.

Employees have reported a steady rise in morale and commitment to the business as a result of these mechanisms which allows them to feel that they have a ‘voice’ in the organisation and that their ‘voice’ is actively listened to and considered in the overall strategic direction of the company.  The latest satisfaction survey for the UK region showed a 2% increase in employees feeling they were ‘Involved in Decisions’ from the last quarter at Worldwide level (IBM Employee Satisfaction Survey, 1Q09)

To achieve this, IBM have invested heavily in developing their line managers in the past 2 years to ensure that direct communication with employees supports these processes to encourage employees to explore and navigate IBM, and to provide input at any level they wish.  

The value to IBM is that they have a much more motivated workforce and culturally this shows in a high level of responsiveness from colleagues to Sametimes (IBM’s instant messaging system), emails, actions and meetings internally, which means that productivity is optimised for the business and that employees can navigate across a flat organisation if they need or want to.

LIAISE MARKETING

Although Liaise Marketing are attempting to pursue a consultative style with their weekly meetings and quarterly magazine, the reality and feedback from employees is that they do not have an effective ‘voice’ in the organisation.

For example, the weekly meetings are minuted for management at Head Office, but are not visible to the employees so employees do not have minutes to refer back to, and are unsure of what is actually reported up to management by the Regional Sales Manager and his team.

Additionally, there are no clear disciplinary or grievance procedures documented for employees or managers, which causes confusion for both the employees and the managers when issues arise, and the course of action that should be followed. The lack of a clear HR strategy in this area is particularly sensitive as it not only creates morale issues, but can potentially lead to legislative issues.     

Finally many decisions are imposed on the workforce without consultation such as the white uniform that was introduced as compulsory for all staff to brand employees as they met with clients. Most sales managers complain that white is impractical for the nature of the job as they often carry various products into their clients stores, and may kneel on shopfloors of stores to stack product promotions. The imposing of the uniform without consultation with the employees means that changes are not always readily accepted, and impacts motivation and morale. To make matters worse the employees had to pay for the new uniforms.

By operating in this way Liaise Marketing management are losing good intellectual capital from employees who are out with their clients, and also downgrading motivation and commitment to the company.

Account for any variation in effectiveness of different mechanisms.

Dundon et al (2004) argue that effective mechanisms to allow employees ‘voice’ in the organisation provides:

           Improved employee attitudes, loyalty and commitment

           Improved productivity and performance, and

           Improved managerial systems

IBM are experiencing improvement in all these areas according the latest Employee Satisfaction Survey with increases in six of the seven climate areas surveyed, and with the largest increases in employee satisfaction in clarity and leadership, an area that has experienced steady significant gain for two and half years (since 3Q06).

Liaise Marketing do not conduct formal surveys to measure these areas, but in interview with a NSW Sales Manager it was estimated there was a loss of 10% of productivity in day to day business out in the field with clients. This was due to Head Office not addressing the loading of call data correctly into the sales teams PDA’s which resulted in calling members of the same sales team to get correct data. This issue had been raised at the weekly team meetings but the NSW Sales Manager was not clear if this had been raised through to higher management. When challenged on whether the individual could approach Head Office themselves there was a reluctance to ‘go over’ the manager’s head and be seen to be ‘causing issues.’

The interview raises questions over the effectiveness of Liaise Marketing’s mechanisms to provide their employees with a ‘voice’ in the business but does not tell us where the process breaks down.

I have concluded that the management team in Liaise Marketing does not appear to have targeted employee ‘voice’ hard enough. Even with IBM it has taken low employee satisfaction ratings in the past to point out that these areas are important in todays workforce to attract and retain the best skills.

BIBLIOGRAPHY

Dundon, T., Wilkinson, A., Marchington, M. and Ackers, P. (2004) ‘The meaning and purpose of employee voice’, International Journal of Human Resource Management, Vol.15, No.6, 1149-70

IBM Employee Satisfaction Surveys from 3Q06 to 1Q09

Interview with NSW Regional Sales Manager & NSW Sales Manager

Marchington, M. and Wilkinson, A. (2008) Human Resource Management at Work – People Management and Development 4th ed, London: Chartered Institute of Personnel and Development

Purcell, J. (1986) ‘Employee Relations Autonomy Within a Corporate Culture’ Personnel Management, February

WBS (2009) Human Resource Management, Warwick Business School

Human Resource Management Lesson 5 Exercise

To what extent do you think that the employment relationship is necessarily based on conflict between employers and employees who have competing interests?

The competing interests of employers and employees create a symbiotic relationship which introduces tension, but not necessarily conflict to the employment relationship in the modern business world.

Employees seek good pay and good working conditions in exchange for producing goods and services for a company.

In the past conflict has arisen over hygiene factors (Maslow, 1943) in the workplace such as equality of pay, health and safety, and discrimination (eg race, disability, part-time workers.) These needs have been fought for at government level and with the support of unions in the past. Companies now have to work to stronger legislation and are subject to more monitoring controls which protects the employers rights more than at any other time in history.

It can be proposed, then, that if these lower level factors are largely addressed and mechanisms are in place to protect both the employee and employer from inequity in these areas, that the focus in a modern employment relationship is centred on higher level needs as defined by Herzberg (1966) in his dual factor theory of work motivation. These include such elements as opportunity for advancement,

recognition for achievement, and responsibility.

Companies today are recognising that conflict arises today in an employment relationship if an employee is stopped from fulfilling these higher level needs. This forces companies to think about how to provide employees with these needs in the workplace in order to retain and motivate skilled employees. Companies are driven by needing to remain competitive in increasingly demanding markets full of rapidly changing technologies and more innovative competitors.   

This is supported by the findings of the International Labour Conference in 2006 where it was stated:

“Employers are constantly faced with the challenge of survival in a competitive global environment and legitimately seek viable solutions among the range of options offered by different forms of employment. However, it is difficult for enterprises to improve their productivity with a poorly trained, demotivated and rapidly changing workforce.”

“Balancing equity and adaptability is at the very heart of the ILO.s Decent Work

Agenda, which offers a framework for reconciling the different interests and reaching a consensus through social dialogue. Countries have found different institutional and

policy responses to reconcile these diverging interests. For instance, a number of

European countries have moved away from a situation where flexibility creates

insecurity to one in which security promotes flexibility.”

The modern approach to address this is for companies to work in partnership with employees. Although the workplace will always experience either conflict or harmony at different times businesses who partner with employees have more flexibility and access to a variety of techniques to manage this to the benefit of all parties.

It is more difficult to ascertain how many employers actually use the partnership approach successfully although more rigorous legislative and financial reporting of companies existing today helps to illustrate at a high level the health of a company, and often helps the company themselves think through best practices to support the business.

What factors influence the extent to which the employment relationship is harmonious or conflictual?

If we assume that a partnership approach helps to address the level of conflict in an employment relationship we can turn to Brown (2000) who suggests the following factors should be included in a partnership arrangement:

  • “ a shared commitment to the business goals of the organisation
  • a clear recognition that there might be some legitimate differences of interest and priorities between the parties. These differences need to be listened to, respected and represented
  • measures to ensure flexibility of employment must not be at the expense of employees’ security, which should be protected by taking such steps as ensuring the transferability of skills and qualifications
  • partnership arrangements must improve opportunities for personal development of employees
  • open and well informed consultation, involving genuine dialogue
  • effective partnerships should seek to ‘add value’ by raising the level of employee motivation”

(WBS HRM, 2009)

All of these items help to set the expectation of what a partnership involves, and allows a wide enough definition to establish an employment relationship which if referenced back to these definitions would keep the relationship harmonious, eg if both parties are committed to a common set of objectives. Good communication, leadership, clarity and equity are also factors that are requirements for a harmonious employment relationship.

Conversely, breaking any of these ‘rules’ would lead to conflict, eg if employees didn’t have a ‘voice’ in the organisation. Job insecurity is another area that has been researched widely as being an area for potential conflict in the employment relationship. Burchell et al (1999) found that employees were not only worried about losing their job, but of losing job features of value to them, so there are many variations on this factor. 

BIBLIOGRAPHY

Burchell, B., Day D., Hudson M., Ladipo D., Mankelow R., Nolan J., Reed H., Wichert I. and Wilkinson F. (1999) Job Insecurity and Work Intensification: Flexibility and the changing boundaries of work. York, Joseph Rowntree Foundation

Herzberg, F. (1966) Work and the Nature of Man, Cleveland: World Publishing

International Labour Conference, 95th Session, 2006 The Employment Relationship [Online] (URL: www.ilo.org/publns) Accessed 10 June 2009

Maslow, A.H. (1943) ‘A theory of human motivation’, Pyschological Review, 50 (4), 370-96

Marchington, M. and Wilkinson, A. (2008) Human Resource Management at Work – People Management and Development 4th ed, London: Chartered Institute of Personnel and Development

WBS (2009) Human Resource Management, Warwick Business School

Human Resource Management Lesson 6 Exercise

Thinking about an organisation that you know well, evaluate the extent to which it conforms with the LO model.

In analysing the GTS business in NorthEast IOT I would argue that this department in IBM conforms to the LO model as described by Simons et al (2003) as “an organisation that aims to extend and to relate the learning and learning abilities of individuals, groups and the organisation as a whole in order to change continuously at all three levels in the direction of existing and possible wishes and needs of customers.”

IBM’s GTS formal learning strategy takes many different forms:

  • Formal in-house and external training courses
  • E-Learning
  • Conferences, workshops and events
  • Update and cascade teleconferences or presentations (usually through management chain layers)
  • Job rotation
  • On the job learning
  • Social learning (ie networking ‘teaches’ expected IBM behaviours such as levels of responsiveness, acceptable behaviours, business etiquette) (Wenger 2000)
  • Formal mentoring programmes
  • Coaching, both internally and externally at a number of levels
  • Lessons Learned culture (analysis documented and actions taken following the conclusion of a piece of work such as a project)
  • Surveys

The strategy works well in this particular part of the IBM organisation because the GTS Leaders have recognised that affective commitment, where employees share the organisations values and business objectives, is required in order to improve the ‘psychological contract’ between employees and employer. This is important to IBM as employees who will ‘go the extra mile’ will ensure the survival of the organisation as internal and external factors change, eg competitors, markets, technologies, individuals themselves (Herriott and Pemberton, 1997)

The ‘psychological contract’ means that employees expect something valuable such as pay, training, job security or opportunities in return for their effort and contribution to the organisation.

Although the formal and e-learning training courses have been available for years in IBM, the key change to note in the past 2 years is that GTS Leaders have focussed on coaching line managers. This has been implemented as an element of the 10x10 Programme and is executed in several ways.

Weekly executive calls early on Monday morning are followed by executives updating their managers later on a Monday morning. Managers then cascade the summary position to their teams. This links the organisations objectives directly to employees day to day jobs.

This communication is further supported by quarterly packs which are prepared by the executive and provided to managers with update conference calls per business unit. Managers utilise the messages in the pack, and are provided with blank bullet points to add the specific elements for their own teams and employees prior to cascade to their teams.

This ties together IBM’s overall strategic direction, and issues, directly to the employees own role, and helps coach employees in order to influence their decisions in their day to day job. This has been extremely successful as all teams receive a common message, specific team factors are tailored to the overall IBM strategy, employees feel they are contributing knowledgeably to the overall direction of IBM and management productivity is not impacted as the packs are provided from a central group.

This is supported by the Q109 Employee Satisfaction Survey which shows a 6% increase in the GTS business for both ‘Job Satisfaction’ and ‘Personal Accomplishment’ from the last quarter.

What changes would need to take place within the organisation to make it into a learning organisation?

There is real energy around GTS IBM as a LO.

To sustain this energy it would be useful to monitor and coach managers in the appropriate management style more formally, where required. Employees can politically decide whether to be motivated enough to learn, and to use the outcome of what they learn in the organisation. It is therefore important that managers continue to motivate employees in the appropriate way. 

Team learning is also an area that is weak at present and would benefit from some focus to optimise and broaden the LO.

To what extent do you think these changes are a) feasible and b) desirable?

As a senior GTS Manager I know that GTS implemented the 10x10 strategy 2 years ago, which provides some insight into how long organisational and behavioural change can take to impact. 

The monitoring of managers is both feasible and desirable but will require further investment to identify those managers who require this coaching. In the meantime the change to the environment itself will assist some of the weaker management styles to improve.

Team learning is the next big step that GTS needs to take, but although this is extremely desirable I believe that there is more work to be undertaken before this can be rolled out successfully as it is a lot more complex in an already complex environment.   

BIBLIOGRAPHY

Herriott, P. and Pemberton, C. (1997) ‘Facilitating New Deals’, Human Resource Management Journal , 7,1

IBM Employee Satisfaction Surveys from 3Q06 to 1Q09

Marchington, M. and Wilkinson, A. (2008) Human Resource Management at Work – People Management and Development 4th ed, London: Chartered Institute of Personnel and Development

Simons P., Germans, J., and Ruijters, M. (2003) ‘Forum for organisational learning:combining learning at work, organisational learning and training in new ways.’ Journal of European Industrial Learning, Vol.27, No.1, 41-49

WBS (2009) Human Resource Management, Warwick Business School

Wenger, E. (2000) ‘Communities of Practice and Social Learning Systems’ Organisation, 7,2,pp. 225-46

Human Resource Management Lesson 7 Exercise

What implicit expectations do you and the employees you manage/work with have of your employer?

IBM employees and managers have an implicit expectation that IBM will exhaust every idea before the Corporation implements an involuntary redundancy programme.

To understand this we should look at the history of IBM and understand that in the UK IBM have run only 2 programmes of involuntary redundancies, one in 1993, and one in 2002, both of which destabilised IBM internally in terms of trust in the employment relationship that employees had with the Corporation. IBM recognises that this has taken huge investment (not only financial, but in rebuilding the employment relationship psychologically) to repair.

As a manager I am involved in many different HR strategies which supports this implicit expectation which includes:

           Cutting cost in expenses,

           Headcount freezes,

           Headcount moves between businesses within IBM,

           Frozen promotion cases,

           Forecast appraisals and rankings reviewed monthly to identify low performers               and put them onto Performance Improvement Plans,

           Reviewing individuals monthly for performance, motivation and work/life                       position to optimise any opportunity that may be raised to offer early

                       retirement, a sabbatical, compressed or part-time hours to reduce costs

Another implicit expectation of IBM employees is flexibility in the workplace, so there is no monitoring of how an employee organises their work hours as long as productivity is maintained, eg taking time during the workday to attend a personal appointment (eg doctors, bank manager) may be made up for later that evening, or at the weekend. Employees are not expected to ‘explain’ this, but are expected to manage it appropriately.

The final implicit expectation that most IBM employees have is that they will receive training and development to enhance their career progression.

Analyse how and why these expectations might be different from the implicit expectations in another organisation with which you are familiar.

Having observed RSA Insurance between 2001 and 2005 the implicit expectations of their employees at that time was that redundancy was not expected, but that if there was a chance of early retirement, an excellent package would be offered.

This implicit expectation was based on precedent, and the employees of RSA, unlike IBM employees, did not take accountability for cost reduction within their day to day business like the IBM employees to help reduce the risk that redundancies might have to be made.

For example, all RSA employees would take the entitlement of a British Airways business class seat between London Gatwick and Manchester airports on frequent occasions, a flight of less than one hour. The RSA management team did not execute an HR strategy with their employees to alter employees mindset that they could contribute to RSA’s financial position whereas IBM employees were asked to reduce expenses as much as practicable before incurring them to assist the overall cost reduction programme in expenses.

Flexibility in the workplace was not understood in RSA. The traditional approach of expecting to see employees present at their desk during business hours, and asking permission from a manager to take time off for a personal appointment was still in place. IBM employees, on the other hand, were asked not to travel unnecessarily, and to conduct business by phone if this contributed to reducing unnecessary expense to the business. RSA employees were distrustful of this flexible way of working, when their business was outsourced to IBM, and education had to be given to help the tuped employees change that mindset.

Finally education for RSA employees was very limited, and consisted only of formal external training courses. In contrast IBM has a variety of training and development courses and behaviours which are available to each employee, and are agreed in Development plans annually to underpin an employees progress.

How convincing do you find the idea of the psychological contract as a theoretical framework for understanding the employment relationship?

The idea of a psychological contract as a theoretical framework for understanding the employment relationship lends itself well when supported by the argument that if all lower level needs are fulfilled employees will focus on fulfilling the higher level needs as argued by Herzberg (1966.)

Although Herriot and Pemberton (1997) argue that reciprocal and unwritten psychological contracts have disappeared during the late 1980’s my experience is that this is not the case with IBM. My colleagues have occasionally discussed the fact that they are proud to call themselves ‘IBM’ers’ with the implicit status it confers. However I would point out that IBM have spent the last 10 years investing in constant change, consulting with their employees and executing a clear communication plan to achieve a unique employment relationship with its employees.

BIBLIOGRAPHY

Herriot P. and Pemberton C. (1997) ‘Facilitating new deals’, Human Resource Management Journal, Vol.7, No.1, 45-56

Herzberg, F. (1966) Work and the Nature of Man, Cleveland: World Publishing

WBS (2007/8) Organisational Behaviour, Warwick Business School

WBS (2009) Human Resource Management, Warwick Business School

Human Resource Management Lesson 8 Exercise

With reference to your own experience, critically evaluate the idea that there is a business case for family friendly working practices.

Family friendly working practices were initially adhered to either for ethical reasons, or coercive reasons (laws existed that company’s had to follow.) However currently company’s favour these working practices because if company’s do not utilise all parts of the workforce potentially available to them they may be giving competitive advantage to their competitors, eg highly skilled resource or a wider demographic who may bring in different experiences or viewpoints that are valuable to the company.

The environment that businesses face today is ever changing and businesses have to change to reflect and take advantage of those changes. For example, the nature of the workforce available to company’s is changing, eg there are many more single parents with dependents than there were 50 years ago when the workforce was dominated by men.

Technology has a part in changing the nature of the workforce as it provides more flexibility in the ways that employees can work, which provides opportunities for employees who may not have been able to work prior to that, eg mobility reasons, or childcare arrangements.

It is difficult to find financial evidence to support a business case for family friendly working practices. Some might argue that to invest in any organisational change required to accommodate family friendly policies is simply not worth doing.

However if we were to consider the cost of not employing a more diverse workforce, we would have to include the financial impact of long term sick leave due to stress and burnout, or the impact of divorce on employees who may not have a good work/life balance. We would also have to consider losing the investment of the initial recruitment and training of the employee if they left due to family commitments that the company cannot accommodate.

My experience recently with a single mother working for me as a team leader is that we utilise the flexibility offered by IBM, and partner to ensure that both she and I achieve what is needed. On my part I need ongoing challenging targets met at certain times in the quarter. On her part she needs to collect her young son from nursery at midday each day, and be able to manage days when her son is ill, or the nursery is closed.

By openly acknowledging and discussing the requirements for each party we have agreed the mode of operation for both parties which has resulted in a very successful partnership. In addition the employee is highly committed and motivated due to the fact that her needs are recognised in the ‘deal’. This is in contrast to when the employees previous manager handed over the employee with a low banded level and with the advice that the team leader had trouble committing due to child care issues.   

By altering work practices to manage diversity in the workplace we are investing in a sustainable future, as it is unlikely that the workforce will revert back to what the demographic was 20, 30 or 40 years ago. Businesses need to recognise this more widely and move mindsets forward to ‘people’s issues’ rather than ‘women’s, disabled or black issues’ (Kandola and Fullerton, 1998) to ensure they are positioned to compete for the best resource available.

BIBLIOGRAPHY

Kandola, R. and Fullerton, J. (1998) Diversity in Action: Managing the mosaic. London, CIPD

Marchington, M. and Wilkinson, A. (2008) Human Resource Management at Work – People Management and Development 4th ed, London: Chartered Institute of Personnel and Development

WBS (2009) Human Resource Management, Warwick Business School


June 07, 2009

Human Resource Management Lesson 8 Exercise

1.- With reference to your own business experience, critically evaluate the idea that there is a business case for family friendly working practices.

In my experience I am and I have been in corporations where there are implemented in high degree the family friendly working practices, IBM is a example where there are a lot of programs to promote this practices, like IT facilities to work from home, flexible timetable, part-time options, sabbatical year, agreements with nurseries etc… But I have also known another kind of jobs and another sectors where the use of these kind of practices is quite complex. Obviously in the most of the occidental countries there are some directives and laws focused to guarantee a minimum of policies (i.e. parental leave), in this sense and depending of the degree of socialization of these countries can help to the workers with different weight (i.e. in the Nordic countries the social helps are higher than in other European countries as Spain) but in my opinion the governments has the responsibility to encourage such practices for companies seeking to implement it.

Some of the main arguments found in the policy statements of different countries (UK, Spain, etc..) are focused to explain that the performance of employees who have difficulty balancing the demands of work and family show symptoms of demotivation hence decreases in theirs productivity. There are other important benefits to the organization like for example the financial performance, labour productivity, and decrease of days of absence. With this picture to address such a business case could be a good plan to increase the benefits of the company although not always is possible to get it.

Currently the companies where have been implemented these practices has a common characteristics like are: it are in large organisations, mainly in public sector, lower degrees of competition, existence of trade unions, larger proportions of women, etc. All these common characteristics can be seen as negative points because looks like that not all companies are ready to implement these practices, although there are some research (Harris and Foster, 2005 p.9) that demonstrate that small firms could operate in highly informal and flexible way.

Using these kind of practices give a lot of benefits for employer and for the employee but each company should analyze what types of benefits they want to reach and make a profile of options about the family friendly working practices in order to fit it with theirs needs, for example if one company wants to reduce the labour turnover can implement practices like job-share, flexi-time or working at or from home.

As conclusion I would like to express my opinion about this issue, because as employee this topic affect directly to my own life. I think that the implementation of these practices some times can be a trick because the companies offer a several opportunities to use some of these practices, but at the moment that someone uses some of them can have some difficulties to promotion. Another situation that I have experimented is that before to work in companies with these practices I had a personal life, but after with the use of these practices is complicate to separate the job and the family and now the job is another member of the family.

References

Marchington, M. and Wilkinson, A. (2008), 'Human Resource Management at Work' (4th edn), London: CIPD.

Helen Newell (2009), Human Resources Management Study Notes, Warwick Business School.

Flexibility Web Site.

Family-friendly employment: who's doing what and why: http://www.flexibility.co.uk/issues/WLB/rowntree1.htm


Human Resource Management Lesson 7 Exercise

1.- What implicit expectations do you and the employees you manage/work with have of your employer?

My expectation and the expectations of the majority of my peers and the people that is managed by me in my current project are the following:

  • Reward, Some of the main expectation for me and for a lot of people of my environment is to have a fair reward to the contribution of each one. But don’t only refer to the money; refer to rewards that include recognition.
  • Career Plan, although somebody can consider it as rewards, I think that it isn’t because create a career plan for the employees is beneficial for both employer and employees.
  • Knowledge, maintain the level of knowledge is essential to “no manual” jobs, because is the force and value of the organization.
  • Visibility, I think that is very important to know why things occur inside of the company. A lot of decisions about my daily work could be easier to understand with more information.
  • Satisfaction with the job because it fits perfectly with the expectative, for example to have a non-routine work and satisfaction for a job well done. These characteristics are very complicated to reach but in my opinion is the base of the performance of the employees.

In conclusion, my expectation is that the employer complies with the psychological contract and I try to have enough value in the market in order to be able of defending the contract even try to getting better. In these sense this kind of contract is more relational than transactional contract (Rousseau and Parkes 1993, Marchington and Wilkinson 2005, p.34).

2.- Analyse how and why these expectations might be different from the implicit expectations in another organisation with which you are familiar.

I am going to refer to the expectation in companies that operate in different sectors and jobs with nature of Service Shop process against the nature of the process of my current job that is Professional Services. (Slack et al. ,p. 108). These kinds of contracts are more transactional than relational

In jobs with nature of Service Shop, the expectations are similar for those related with the rewards and some about the career plan but understanding only as progression in responsibility and rewards. There are additional expectations as are: job security and fixed working hours. In conclusion this kind of contract is more transactional than relational.

3.- How convincing do you find the idea of the psychological contract as a theoretical framework for understanding the employment relationship?

The concept of psychological contract is really recent, Herriot, Carole and Pemberton in 1995, Guest in 1998 and Denise Rousseau in 2001 are some examples that showed interest in the psychological contracts following the original studies of Argyris in 1960 but currently this concept is a highly followed in organizations. In my opinion these kinds of definitions or studies appear as result of analysis of the real life, and step to step the cycle continues because the new managers and employees are aware of these analyses and they provoke the evolution of the behaviour of employees and employers.

I think that this concept is a framework that could be very useful to understand the employment relationship, it can help us to know how think each side of the psychological contract. Meet the expectation and obligations of each side are important to feel satisfaction and job security. Nonetheless the expectations of each side can change depending of the personal situations (ages, kind of job, etc...) or stages of life (Hall, 1976), in this sense the ability to tackle challenges and the timing to do the things can change along the time, being a cause of break the relation and the psychological contract.

References

Marchington, M. and Wilkinson, A. (2008), 'Human Resource Management at Work' (4th edn), London: CIPD.

Helen Newell (2009), Human Resources Management Study Notes, Warwick Business School.

Corbett, M. (2007) Organisational Behaviour Lessons Notes, Warwick Business School. 2007


Human Resource Management Lesson 6 Exercise

1.- Thinking about an organisation that you know well, evaluate the extent to which it conforms with the LO model.

There are several definitions of Learning Organizations (LO) and some of them try to summarize the nature of LO in a shorts words, I like the definitions of Peter Senge (1990: 3):

“…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 see the whole together.”

This definition looks like that speaks about subjective issues but there are some aspects that indicate if a organization has LO or not. I going to base my analysis on my personal experience in the company that I have spoken before, Lucent. As is a American Company has got several points similar to IBM then it will be interesting to compare both.

To analyse how Lucent fits into an LO model I'll focus my analysis on the approach of the work of Senge (1990), Argyris and Schon (1996), Argyris (1991), and Schon (1983), analysing the following five aspects: Personal mastery, Mental models, Building shared vision, Team learning, Systems thinking.

  • Personal mastery: In my experience the degree of personal commitment was high and one of the main reasons was because I was younger than the median of my department. I think that the commitment is related with the opportunity to promote and the positions of Lucent were quite frozen.
  • Mental models: This point was developed moderately in Lucent because frequently there were pictures with different messages in the meetings rooms in order to learn a specific culture.
  • Building shared vision: This characteristic was very well implemented in the company because the managers towards periodical meetings with the team and there was a lot of corporative meetings in order to go in the same direction.

  • Team learning: Some of the more important things in the company is to share the knowledge, in Lucent some times the departments was very independents and individualistic.
  • Systems thinking: Act as a system is complicated, and understood all the relations between departments too, but in Lucent was very well defined the goals of each, although with the problems of a big company.

As summary the degree of LO in Lucent was good because was a big company but this opinions have been done comparing with IBM in order to have one point of reference.

Five characteristics of Senge for Lucent


2.- What changes would need to take place within the organisation to make it a learning organisation?

Some of the main problems that I have identify is the lack of involvement of the human resources department, because the main weak point is the personal mastery and the team learning and these was due to the lack of a individual career plan and the lack in the incentives to the manager and employees in order to satisfy the sharing knowledge.

3.- To what extent do you think these changes are a) feasible and b) desirable?

I think these changes are desirable because against of a traditional organization LO offers several benefits for example: maintaining levels of innovation and remaining competitive, being better placed to respond to external pressures, etc …About if it is feasible I only see possible to make a plan of incentives or programs to increase the team learning.

Speaking about the developing the career plans to increase the motivation of employees, in my opinion I think that is not feasible because there are a lot of barriers. Surely will be more feasible that the involve of the human resource department increases in the promoting the LO culture because until this moment the learning issues was delegated in lines of business and I think that with the involve of the HR department a lot of efforts can be dedicated to the develop a real carrier plans that help to increase the motivation and commitment of the employees.

References

Marchington, M. and Wilkinson, A. (2008), 'Human Resource Management at Work' (4th edn), London: CIPD.

Helen Newell (2009), Human Resources Management Study Notes, Warwick Business School.

Web Site: ‘peter senge and the learning organization’, http://www.infed.org/thinkers/senge.htm

Wikipedia, ‘Learning organization‘, http://en.wikipedia.org/wiki/Learning_organization


Human Resource Management Lesson 5 Exercise

1.- To what extent do you think that the employment relationship is necessarily based on conflict between employers and employees who have competing interests?

In my opinion the relationship between them should be mutual agreement in which both parties have something to offer although the conflicts always appear when there are relations between two or more parties. It’s very complicated to find an equilibrium point where all parties win, in fact these conflict are minimized only in organization where there are only one party as are the associations of employees (cooperatives).

In a conventional organization each party try to increase its benefits, from the point of view of employees they want to find employment security, quality, motivation, satisfaction, and certain level of reward. From the point of view of employments the aspect more important is the performance which one is a function of motivation and ability according to the Vroom studies (1964). But these aspects aren’t the only because are influenced by the external context (political, economics …) and by the internal aspects (employee capabilities and needs, levels of rewards or benefits …) in several ways.

The state of the economy and the markets modifies the rates of unemployed hence decrease the feeling about the employment security and after the motivation and performance decreases. With these circumstances the employment tries to find solutions complying with legal aspects and with the approval of the trade unions. This argument can be a cycle infinitely and each step is a situation of conflict between parties.

I think that would be good avoid the conflicts but it would be in a imaginary world where every variable would be constant. In a real world is usually to have conflicts where the fighting and bargaining power of each side are focused to increase their own interest. If we see the classification or topologies of conflicts in inter-group relation that are: fight, game and debate (see Wilson. 1999, p 178), the best is to move towards the game or debate topologies and avoid the fight.

2.- What factors influence the extent to which the employment relationship is harmonious or conflictual?

There are several factors that influence in the relationship and the most important in my opinion can be grouped in internal factors and external factors, theses groups can be analyzed at individual level or group level.

As external factors the most important are the status of the economy and legal-political situation, the power of the trade unions and the type of sectors where the company operate. As internal factors some of the most notable are the influence of employee relation decisions, employment security and flexibility, level of benefits that the company hope to reach, grade of commitment of employees and alignment with the company goals.

Depending of the style of management (Purcell, 1986) of each organization the relationship can be more harmonious or conflictual, if the style is consultative the relation will be intensive but in harmony, in opposite will be with traditional style because the degree of relation is low this situation leads to more ups and downs in the relationship even interventions with the trade unions.

References

Marchington, M. and Wilkinson, A. (2008), 'Human Resource Management at Work' (4th edn), London: CIPD.

Helen Newell (2009), Human Resources Management Study Notes, Warwick Business School.

Corbett, M. (2007) Organisational Behaviour Lessons Notes, Warwick Business School. 2007

Robert H. Rosenfeld & David C. Wilson (1999), ‘Managing Organizations’ (2nd edn), Mc Graw Hill

Vroom, V.H., and P. Yetton (1973) Leadership and Decision Making, University of Pittsburgh Press, Pittsburgh.

Purcell, J. (1986), "Employee Relations Autonomy Within a Corporate Culture", Personnel Management, February.


Human Resource Management Lesson 4 Exercise

1.- Thinking about organisations you are familiar with (it must not be IBM), what mechanisms and procedures have different organisations used for employee involvement and to give employees voice?

The organization that I have chosen to these questions is Lucent Technologies again. I was working in it for almost four years in IT department and I know several initiatives that were launched in order to change the way of doing the things using the new technologies and process optimization. The process which one I am going to speak was called in Lucent as Order Management System (OMS). With this process Lucent tried to increase the productivity, the customer satisfaction, decrease the time to market and minimize the storage capacity.

The initiative started from the CEO and top management of every LoBs (lines of business) involved. The implementation was carry on from the IT department and this department was the leader of the initiative. Lucent is an international company, but this initiative was undertaken only in the region of Europe ( EMEA -Europe Middle East and Africa). Although the solution is at EMEA level and each country should be consistent with the decision taken, there are some degree of independence related with the local aspects as are the issues related with the human resources and sales.

The implementation of the process was done with the use of the ERP of SAP v3 and the success of the new process depended on the acceptance of the employees about the configuration of the ERP for them. Linking with the style of management (based in Purcell, 1986) described in the previous lessons, we can see that the common style used was a consultative or constitutional (depending of department) and is a company where the opinion of employees is much important.

The IT department established several actions to gain the employee involvement, that following the structure described by Marchington and Wilkinson (2008, p.405) can be classified as task-centered and direct. These actions are the following:

  • Task participation and teamworking

The first step adopted was to create a several groups in each country composed by IT members and business members. These groups were divided again, following the different phases of the project as was the phases of business requirement, develop and deployment.

  • Downward communication

Each week the responsible of the project introduced the news in a common repository with the progress of project and one email was sent to the responsible of each department. Each manager and its expert users could use the repository to make their own comment about the progress achieved and expressing theirs needs.

  • Upward problem solving

In order to talk about the comments received and to solve the problems found, had meetings every two/three months in different Europe city. The goal of these meetings was to refine the business requirements of the new system (OMS) with the knowledge of the end users of each country and configure the next steps of project.

2.- How effective were each of these voice mechanisms in a) giving employees an effective voice at work and b) adding value to the organisation?

If we see the actions taken looks like very good options to involve all employees and to have a solution with the convenience of all parts involved in the process. But in fact the project suffered a lot of troubles and even one change of name in order to recover the confidence of the employees participating.

Some of the main troubles was that the employees had a lot of mechanism to give specifications, comments and feedback, but their feeling was that nobody had asked opinion to them before choose the tool (the ERP of SAP) and this situation created barriers and opposition from the beginning.

The introduction of the new system was planned to add value to the company in one year after implementation, but in fact was needed several years more because the adaptation of some groups of end users was more complicated due to they showed apathy in the learning.

3.- Account for any variation in effectiveness of different mechanisms.

At the beginning was very complicated to gain employee involvement and commitment, and it was necessary to develop another intermediate system in order to decrease the time to adopt the system in the entire EMEA region.

References

Marchington, M. and Wilkinson, A. (2008), 'Human Resource Management at Work' (4th edn), London: CIPD.

Helen Newell (2009), Human Resources Management Study Notes, Warwick Business School.

Purcell, J. (1986), "Employee Relations Autonomy Within a Corporate Culture", Personnel Management, February.


June 06, 2009

Human Resource Management Lesson 3 Exercise

1.- Reflecting on your own experience as an employee and as a manager, to what extent do you think pay motivates or demotivates employees, why?

Thinking about my experience in several international companies and the knowledge in a familiar little company, there are several factors that have influence in the motivation of employees. Depending of the social-economical situation, the age and family situation, there are other factors different to the pay that can change along the time depending of the change of these situations. Following the Pyramid of needs (Maslow, 1943), to satisfy each stage more incentives that the money are necessary.

Maslow


Figure.1. Maslow's Hierarchy of Needs

The first years in work life, when one is young, single and without family the money factor is not the main. The teamwork, improve the knowledge and good environment in the work are aspect important to satisfy needs, obviously always that the physiological needs are covered.

The things change when increase the familiar and job responsibilities because is need to satisfy several factors as are the familiar needs, in this case the increase of money help to satisfy the basic needs and for several years is motivating, but after if there aren’t another factors, the activity can fall into the monotony and pay is not enough to motivate.

Other way to explain the factors that can motivate to someone is through a Process Theory that define the motivation as a rational cognitive process occurring within the individual, and one of those theories is the Vroom's Expectancy Theory based three aspect like are the expectancy to get very good awards if you work harder; the valence is the importance for each one to have expectancy and this aspect is personal, social and cultural, because there are some social factors that force to increase the importance of to have expectations; the last aspect of the theory is the instrumentality is the belief that if you work to generate some output, part of this output has something for you, and in this sense could be exist the satisfaction to create something and the possibility to receive awards for it.

In my opinion the remuneration is not demotivating, but in several situations of the working life is not enough. There are a lot of systems to motivate and some examples are to take education (i.e. MBA) or to establish a career plan with stages of certification.

2.- Thinking about pay systems that you have experienced, which have been the most effective? Why?

My first job in the family company was a ‘manual’ job where the pay system was hourly rate. But in the rest of my jobs, after finish my university studies, I started to have a ‘non-manual’ job with performance-related pay (PRP) system. In the different jobs with PRP system that I have got the appraisal systems have been different even in the same company but in different periods of time the appraisal systems have been different.

The common factor in all the appraisal systems is that in all of them the percentage of pay related to the own work is low and the rest of the percentages depending the result of the company, division and the own group. I think that the period in which one I have got more motivation was when the degree of personal percentage was higher and when the goals were clearly defined. I think that the best method is when everybody knows the rules of game and the goals are complicated but reachable. I can say this because in some of my jobs the agreement was made directly with my manager and the conditions of it were very fuzzy and nobody else was participant in the agreement. Now in IBM, the situation is different because the conditions of the agreement and the string of approvals are right, but in this case the failure is in the mechanisms to get the measures of evaluation the conditions of the agreement.

References

Marchington, M. and Wilkinson, A. (2008), 'Human Resource Management at Work' (4th edn), London: CIPD.

Helen Newell (2009), Human Resources Management Study Notes, Warwick Business School.

Corbett, M. (2007) Organisational Behaviour Lessons Notes, Warwick Business School. 2007

Vroom, V.H., and P. Yetton (1973) Leadership and Decision Making, University of Pittsburgh Press, Pittsburgh.

Abraham Maslow Web Site:

http://www.abraham-maslow.com/m_motivation/Hierarchy_of_Needs.asp


Human Resource Management Lesson 2 Exercise

1.- Reflecting on your own work experience, and with reference to the theoretical models discussed in Lesson 1, how would you characterise the role of the HR function in an organisation that you are familiar with?

I am familiar with one company where I was working for four years since 1996 to 2000. The company was Lucent Technologies Inc. (it was bought by Alcatel in 2006) and I worked in its IT department in Spain.


Lucent_Logo


Figure.1. Lucent Technologies Logo from 1996 when it born after spun off from AT&T..


Lucent was a very large company originated by AT&T division, and after several years of very good results, in 1999 Lucent began its decay. Several events related with the labour situation of the employee happened in this period and in order to understand the HR function we are going to review the external and internal context of the company. In relation with the external context the main characteristics are the following:

·        Political and Economic context: In 1996 the conservative party won the elections and did several important changes in the political and economic aspect of the country. The rates of unemployment, with almost 25%, decreased quickly and Spain joined in the UE due to the success results.

  • Legal context: In this period the government faced to the reformation law to free up the labour market in order to facilitate the employment although against the right of the employees, in opinion of Unions.
  • Labour Markets: Its was a period of a very high economic growth, with high inflation rates and where one of the better competitive advantage of the country, that was the low salaries, changed because the salaries started to be not as competitive as before in relation with other countries of East of Europe. During this period Spain lost its competitive advantage (cheap labour market) and started a transformation that until today is needed.
  • Business Sector: The industry sector of telecommunications showed a very big explosion in 1996 to 2001 with the mass use of internet. But in the sector of the internet infrastructure, the crisis appeared some year before, and at the end of 1998 the sales decreased because all customers already had expended a lot of money in hardware to communications and came the time to develop business applications. Lucent started several changes to reduce cost through optimisation of its process and des-invest in some countries as Spain and other mature European countries.
  • Location: Using the model of culture of Fons Trompenaars (1993) the dimensions that best fits with the Spanish culture can be Particularistic, Collectivistic, Emotional and Ascriptive. In case of Lucent is a world wide company but important to know these characteristic in order to understand the behaviour of the managers and no managers employees in Spain.

In relation with the internal context the main characteristics are the following:

  • Management style: The style of management in Lucent is very different of the most of the Spanish companies, in Spain is known as typical American management style. Attending the Purcell's classification (1986) the management style can be classified as collectivistic and in the middle between consultative and constitutional depending of the department because almost the middle of the workers in Spain worked at the production plant. It’s important to remark that in the production department unions were very powerful in this sector.


Management Style


Figure.2. Big picture of booking of school books process.


  • Internal structure: The internal structure was different to the production workers and for the office workers. For the fist the structure was a vertically, but for the rest of them was a matrix structure. Although the general structure was multi-divisional or M-Form structure where each division or department had high degree of independence.

One of the main functions of the HR Manager was managing the Payroll Systems, and due to the new reorganization of the processes and the intention of use outsourcing of some departments several actions was taken in order to negotiate the different conditions with the employees and unions. To complete all the actions by the HR Manager were needed the support of CEO, and this happened because the HR Manager was changed by the CEO before undertaken the reorganization. Following the typology of the HR functions described by Storey (1992) this kind of HR model we can be classified as Change-Makers.

2.- Why do you think HR played this role in the organisation?

With the new external factors and mainly with the factor of economic situation in the Sector, the strategy of the company changed and Lucent started a hard change process. This process started making outsourcing of several departments as was the Quality department, IT and some production areas, even some functionality in the HR department changed and for make it was needed to have the commitment of the HR manager in order to implement difficult decisions and negotiations.


Typology of HR functions

Figure.3. Typology of HR functions.

3.- What are the strengths and weaknesses of this role in the context of the organisation?

The main strengths of the role were to implement the decision of the CEO with ‘Iron hand’ in order to reduce its main production cost. The labour of HR Manager should address the constraints correctly, as are the Spanish law, union force, the directive company at world wide level without reduce the productivity of the departments not involved in the changes.

The main weaknesses in the management of the HR manager was the ability to maintain the employee morale and productivity during the negotiation process in order to maintain the same knowledge and people after outsourcing.


References

Marchington, M. and Wilkinson, A. (2008), 'Human Resource Management at Work' (4th edn), London: CIPD.

Helen Newell (2009), Human Resources Management Study Notes, Warwick Business School.


Purcell, J. (1986), "Employee Relations Autonomy Within a Corporate Culture", Personnel Management, February.


November 03, 2008

Operations Management Blog

Friends,

bellow my blog. Hope you like it. Sorry for the delay.

blog_om_0760345.pdf


November 02, 2008

Operations Management Lesson 2 Exercise

Take two processes with different volume and variety characteristics. Profile these processes and establish the process choice and layout decisions they have taken. Critically appraise the design decisions taken.


We are going to describe two process, first of all is a process booking and packing service of school books in a very well known big shopping company in Spain, called El Corte Ingles. 

Box Book

The second is the process  of a modern bakery dedicated to manufacture of frozen dough.

bakeryformatingprocess


Processes Profile

We are going to see its profiles following the ‘four Vs’ model from Slack et al. With the following result for each of them:

Booking of School Books process:


    • Volume: This process has a very peak volume at the start of the academic year, because is a temporal service. For this reasons is difficult to the systematisation of the activities, both in the store and in the warehouse, nonetheless the process in the warehouse could be reach high degree of automatic with the use of techniques used for others types of products, through robots can increase the effectiveness of picking process.  This factor is medium.

    • Variety: This aspect offers several possibilities because there are a lot of schools, years and families, then the configuration of the pack could variate a lot but under bounds. This factor is high or medium high.

      • Variation of demand:As we have commented before, this process is temporal depending of the start date of the academic year but it also depends on the consumer level, because that kind of service is more expensive than buy the books separate. This factor is medium-high.

      • Visibility: Part of the process is in front of the customer because in the step of take requirements, sale and delivery should be with interaction of them. Another part of the process is in the warehouse and there is a low level of visibility. Medium-low.


      Manufacture of Frozen Dough process:

        • Volume: This is a high volume process, thus it allows to systematisation of the activities needed to perform it. 

          • Variety: This factor is low because the types of product elaborated are very well defined, only with when a new product is launched the process can suffer a little modification.

          • Variation of demand:In this case the demand of this kind of products are very constant for captive customers, and only can change when there are expansions plans. This factor is medium-low.

          • Visibility: All this process are done without visibility of the customers. Low level.


          The following figure shows the profile of both processes:

          grafico1_blog2.jpg


          Processes Design

          To evaluate the design of these two processes we can consider the Volume-Variety requirements, Process Types and Process Layouts aspects.

          Booking of School Books process:

            • Volume-Variety requirements:As we have seen are medium requirements of volume and medium-high of variety. But this relation could change due to the variety depends of the volume.

            • Process Types:the natural type is the “service shop” but as it is a mix between services and products in the warehouse process the type is “batch” or “jobbing” due to dificulty of picking process.

            • Process Layouts:The part of the process related with the service is “functional” layout, and the part related with the warehouse could be “cell”.


            Manufacture of Frozen Dough process:

              • Volume-Variety requirements:In this case there are high degree of volume and low of variety and we could move thru the ‘Natural’ line of fit of the ‘product-process’ matrix.

                • Process Types:its type is clearly “continuous” because is a process very easy and with high volume.

                • Process Layouts:In this case the type of layout is also quite clear because is a classic manufacture type hence is Product layout.


                The following figure tries to summarised what have been exposed above:

                grafico2_blog2.jpg



                References


                Walley, P. (2008)  Operations Management Study Notes, Warwick Business School

                Slack, N. et al. (2006) Operations and process management, FT Prentice Hall, London


                El Corte Ingles. 

                http://es.wikipedia.org/wiki/Corte_Ingl%C3%A9s

                Corporative web site:   http://www.elcorteinglescorporativo.es

                Commercial web site: http://www.elcorteingles.es/


                Bakery Sector

                Berlys S.A. web site: http://www.berlys.es/

                BIMBO S.A. web site: http://www.bimbo.es

                SARA LEE BAKERY INC. web site. http://www.saraleebakery.com




                November 01, 2008

                Operations Management Lesson 3 Exercise

                This is a good time to complete a process map of your own and comment upon the findings. If you work in an area with high levels of contact with customers, you should think about extending the analysis into a service blueprint, which will define degrees of visibility of the process.


                I have chosen one of the process described in the blog of lesson 2, this is the process of the booking and packing service of school books in a very well known big shopping company in Spain (El Corte Ingles). The activities that cover this process was implanted in Spain several years ago, but in the last years the strong competence of hypermarkets have forced to the company to redesign the activities and treat it as process. 


                The main blocks of the process are shown in the following figure:


                 Big Picture Booking Process



                Each of these boxes are composed of several sub tasks (or sub-processes) and in the following figure are shown with more detail:


                grafico1_blog8.jpg


                As it can be seen above, these flows describe the process of the service, but it is a service with some degree of product because one part of the service is to create a pack through a manufacture process. In the production phases are include the reception of material, in this case are books, and the picking and packing of them. Is important to remark that in its face of service is where there are defined some indicator of performance (KPIs) in order to know in which point of the process there are bottleneck or lost of efficiency. 

                In terms of visibility, a very big part of the process has a low and medium visibility to customers.  For this type of services, is very important the interaction with the customer in order to reach accuracy with his requirements. In the reception is very important too the interaction, mainly when could be have some trouble in the process of packing. In adition is important to get the feedback of the customer and harvesting process.


                References


                Walley, P. (2008)  Operations Management Study Notes, Warwick Business School

                Slack, N. et al. (2006) Operations and process management, FT Prentice Hall, London


                El Corte Ingles. Web site (http://www.elcorteingles.es/)



                Operations Management Lesson 8 Exercise

                Process map a process (or use one you have already compiled earlier) and assess each process step to decide whether or not each step adds value from a Lean thinking perspective. Pay particular attention to delays and to quality checking points. Assess the throughput efficiency of the process. Is a demand-pull or Kanban system used to control flow?


                We are going to take the process of the booking and packing service of school books in a very well known big shopping company in Spain (El Corte Ingles), this process have already been defined in the others chapters (2,3 &4).

                This process can be classified as a ‘pull’ style production control because the process does not start until a customer makes his purchase order with previous selection of “Bill of Materials” (his books or items). 

                “Lean systems use ‘pull’ style production control, where downstream departments announce their requirements to upstream operations.” (OM Study Notes)

                ECI process - Booking books


                Each step of the process flows as follows:

                1. In the previous step to specifications phase, the company searches and receives the list of books required by the public school and the most important private schools for children from 3 to 17 years old.

                2. In the specification phase a saleswoman speak with the customer in order to determinate the school and years of his children. In this moment the saleswoman can reach an agreement with the customer and start the process through launching a order to the warehouse. In this step is important to remark as a lean thinking characteristic that depending of the date of booked or purchase order the customers have discount in price or no.  And only it is possible to make a order one month before the delivery of books.

                3. The responsible of filter the orders in the warehouse, approves or refuses the orders and after the orders are dispatched to specifics areas. In the case of booked orders of books is a pick and pack books area.

                4. Every day ERP system is verified by the responsible of this area in order to determinate the number of orders that can be completed the next days and launch the orders to the providers of books if the quantity per each provider is enough. In this point the system tries to increase the efficiency of the workers through of concentration of continuous days dedicated to do the packing.  One of the main measures against the stop the chain of packing is determinate the number of books remaining to complete the pack and establish a threshold from which the pack can be done assuming this situation.

                5. Once the group of pack is ready these are distribute to the stores the next step is make the notice and deliver to the customer and finally close the sale. In this case if the pack is complete the sale can be closed when is paid but if the pack is incomplete the process can be launch again.


                From a lean thinking perspective the process we can say that is well defined, mainly for these reasons: the orders are launching when is needed, there are a specific levels of quality thinking in the completeness of the pack and finally the process tries to delete the waste in order to minimising the cost. Nonetheless the company could enhance this process in the following points:


                Waste elimination

                We have already said that is almost right but the process can be waste when there are problems in the reception of books and is impossible to complete the pack with the level of quality required. Another point is when the pack is incomplete, because cause duplication effort in the sales and production phase.


                Employee involvement

                Sometimes the delivery process can be better if the notice to mobile or telephone will be done  without forget to anybody. The employee involvement should help this company to enhance the throughput efficiency of the process and the customer satisfaction.


                Continuous improvement

                The company has some service levels agreements described in its proceses but this aspect can improve something. Some of them are the state of the books, the completeness or accuracy of the pack.

                As we have comment the process looks efficient (for me is complicated to access at company data but in general terms is one of the more efficient Spain companies). We have commented too that until there aren't enough stock level the packing process don't start, that mode of management is appropriate for a Kanban system.


                References:

                Walley, P. (2008)  Operations Management Study Notes, Warwick Business School

                Slack, N. et al. (2006) Operations and process management, FT Prentice Hall, London

                El Corte Ingles. Web Site (http://www.elcorteingles.es/)



                Operations Management Lesson 7 Exercise

                Take a look at a material processing operation. What types of stock control methodologies (re-order point, MRP, ERP etc.) are used? Comment on the possible reasons for the choice of method. If you can, conduct a sample Pareto (80/20) analysis of stock levels and stock usage (by value). How effective is the stock management?


                I will explain this blog based on my own experience with a factory bakery traditional and the knowledge of the process in the current manufactories. The activity of the bakery plant is based in a continuous process that only stops weekends and twice a year to maintenance activities. This is the typical layout of a current bread plant:


                grafico2_blog4.jpg


                The main blocks of the process are Material intake, Production and Shipping. In all this process there are two main warehouse that are for the inputs and for the outputs. In this Blog we are going to see the inventory management choose in the material intake and shipping phase.
                In order to hold the production line and satisfy the levels of demand the factory holds two inventories with very different characteristic. The first of them is the input inventory which one works under the Material Requirement Planning (MRP) pattern, and the second one is  the output inventory that works with the Reorder Point (ROP) pattern.
                Each ingredient in the baking process have their own requirements when it comes to receiving and storage. For flour, for instance, the demands are to empty tanker trucks with as little dust as possible, record amounts exactly, and make intermediate storage in the silos transparent. All other ingredients must be recorded quickly and accurately, stored and managed appropriately, especially regarding expiration dates. For these reasons the use of MRP are justify, in this way they can hold fresh the ingredients.
                The Output inventory follow the ROP pattern and when the stock level of the some kind of products reach the re-order point, the order to production stage is launched. The intention of adopt this method is to hold a constant the demand of production, that is only possible with the current style in the bakery process because the final output is frozen bread and is possible to hold a safety stock in the freezers.
                If  we see the linking of the items of the input and output inventories with the stock control ABC or pareto analysis, we has the following relation:


                A.- High Value Items: this can of item corresponding with the items of input inventory, although really only will be need for some of them.
                B.- Medium Value Items: currently there are no items in this category, but will be good to have a better distribution of the items independently of the I/O inventories.
                C.- Low Value Items: in this class are the output items, although some of then could be classified as medium value.

                ABC


                Finally my suggestion is that the stock management efficiency can improve if there are a different styles of inventory management per each type of ingredients (in the input inventory) and per each type of final product (in the output inventory).

                References

                Walley, P. (2008)  Operations Management Study Notes, Warwick Business School
                Slack, N. et al. (2006) Operations and process management, FT Prentice Hall, London

                Backery Sector
                BIMBO S.A. web Site (www.bimbo.es)
                SARA LEE BAKERY INC. web Site. ( www.saraleebakery.com)



                Operations Management Lesson 6 Exercise

                Find extreme or good examples of the following practices and justify the reasons for their adoption:


                • Level Capacity Management

                The telephone network is  a good example of level capacity demand. The network are designed to satisfy very big capacity for a huge areas of population. The traffic of data varies a lot during the hours of the day and during the days of week. There are moments with a low traffic and others with almost “traffic jam”.


                Now in Spain are increasing the use of ADSL lines due to the increasing of population and the currently needs. For these reasons the limits of capacity can be reach easily in a high demand hours although in others hours be fine.



                Telefonica



                • Chase Capacity Management

                We can consider a fast food restaurant close to cinema and business centre. As most of fast food restaurants, managing sales capacity is really difficult, the most sales occur during the lunch time or at the exit of cinema in week end. One of the main characteristic of this type of business is that their product must be fresh when are sold and it is not possible to produce large amounts during periods of low demand to be warehoused and sold during periods of high demand.

                For these reason the restaurant use the variation in the labour to adjust the capacity and respond to the variability of demand. The variation of the labour is done through of the arrange the working times to adjust the capacity and the use of part-time and temporary employees.

                • Yield Management

                We can consider the bank sector that in some of theirs services as open account, debts/credit cards or deposits follow a yield management strategy get the maximum revenue possible with demand fluctuations.


                They launch specific marketing campaigns during Summer or Christmas in orden to get customers before the spendings in holidays or gifts. Other example is the offer of young card during the start of the students’ seasons to capture as much of them as possible to do the paid to the school or university.


                BSCH


                Some of the characteristics of this type of business is that always doing market studies in order to better understand customer behaviour and launch new attractive ‘bank services'

                • Queue Design

                We can see some examples in the airport (i.e. Barajas in Madrid) where we can see a lot of kind of queues. I am going to explain the queue of check in.

                Aeropuerto

                This queue has differents configurations depending the volume of people. Normally is one queue one server for each trip but if the flow of people increase new server are include with only one queue. At the moment that the stewardess or assistants appreciates that there are very different type of people then they open a new queue and change the design to one queue per server and several servers. 

                Other kind of queue are when this service is offered by internet. In this case we are in front of a new casuistic because in this kind of services there are dependency of the technical infrastructure. At technical level we are speaking of the same configuration that before (1 or N queues or threats and 1 or N servers or processors) but from end user point of view they are in a race in order to put first in the queue.



                References:


                Walley, P. (2008)  Operations Management Study Notes, Warwick Business School

                Slack, N. et al. (2006) Operations and process management, FT Prentice Hall, London


                Telefonica

                www.telefonicaonline.com/adsl


                http://es.wikipedia.org/wiki/Router_ADSL



                Back Sector

                http://lkxa.lacaixa.es/home/

                http://www.bbva.com/TLBB/tlbb/jsp/esp/paraustd/index.jsp

                http://www.santandersantiago.cl/campanas/universitarios/index.asp





                Operations Management Lesson 5 Exercise

                The IT Sector has a distinctive pattern of levels of integration. For one section of IBM BCS, write about the advantages and disadvantages of having an integrated supply chain. Comment on your impression of the levels of market force that apply to your chosen section.

                In IBM BCS most of its projects are focus in technology consulting and this kind of services are possible with own consultants as main raw material. In this kind of professional services the supply chain start searching the proper resources depending on cost constraints, type of skills and availability of resources.


                To analyse the advantages and disadvantages I am going to describe the different sources of resources in IBM GBS, that are the following:

                • IBM local resources: This kind of source is the primary option because the main target of all delivery organization in IBM BCS is to hold high levels of utilisation rates in its employees.

                • IBM Global Delivery Resources: that is the second level of prioritisation in the resource allocation process. The GD has different models, but although at the beginning of use this source the priority was over the offshore, currently the prioritisation is in this order nearshore, offshore and in the last onsite. The offshore has sense when is need a big mass of skills consultant to support projects around the world. And the onsite is right when is needed a very specific skills.

                • Other IBM Locations:In cases where is needed a very specific skills the next source of resources are others IBM locations, first to all in the same country or region  and after GD onsite.

                • Subcontractors: This source has been one of the main sources but now the prioritisation is in GD always after the local resources. Only when there are not available locally and there are local limitations to use IBM Global Delivery, the source of resources is to subcontract.


                As we can see with this kind of sources, the processes of get it are different and each one has its advantages or disadvantages. The main disadvantage is the prioritisation of locally resources because is difficult to apply the market force, the advantage, of the use of the local resources, is the speed, the commitment, and the skills because this chsaracteristic are complicate to find outside.


                Currently the customers are not familiarising with the use of Global Delivery resources even with subcontracted resources, for this reason the company should hold a important number of local resources and with consequent high degree of integration supply chain. The strategy of IBM GBS is to increase the use of Global Delivery in order to apply the market force and get better services with its subcontractors. 

                GlobalDelivery


                References:


                Walley, P. (2008)  Operations Management Study Notes, Warwick Business School

                Slack, N. et al. (2006) Operations and process management, FT Prentice Hall, London


                IBM Global Services – Global Business Services

                http://w3-03.ibm.com/services/gbs/bcs_services.html

                http://w3.ibm.com/bluepedia/display/en/Global+Delivery

                https://w3.tap.ibm.com/weblogs/promotinggd/




                Operations Management Lesson 4 Exercise

                For a product or service of your own choice, complete a QFD matrix that relates customer requirements to design characteristics


                We are going to treat the process of the booking and packing service of school books in one of the most famous department stores in Spain, it is the El Corte Ingles.

                El Corte Ingles

                Now we are in the phase of the service design and we need to define the characteristics of the service. Some of these characteristics will be compared in the QFD Matrix with others competitor as Careforur, a international hypermarket, and with “La Casa del Libro”  traditional bookstore in Madrid.


                After get multiples ideas and see the accuracy of it in term of feasibility, acceptability, and vulnerability criteria, the preliminary design has be done. Now we are going to evaluate this design and try to identify the gap between the  assessment of the customer’s needs and the specification of components in order to improve the design. For do that we are going to use the Quality function deployment (QFD) tool, listing and prioritizing the main features.


                grafico1_blog4.jpg


                The QFD tool lets us to think in  ideal features rather than simply focusing on narrow technical specifications. For this process we will attend the characteristics at the first level analyzing of the “whats” and “hows” aspects.


                The Whats

                • Box Shape: to avoid breakages and to make easy the transportation for the end users is a factor very important. The goal is that each user could bring his pack with a handle.  

                • Reusability: will be desirable the reuse of the box for example to keep the books of others years

                • Price: in an competition market is a very important factor, although the end users know that is a service with value added.

                • Communication: a good communication with the customer when is available the pack of books is desirable factor. 

                • Completeness: some times the pack is not complete because some books are not in stock and to complete the pack is need wait some weeks to receive it of the provider.

                • Accuracy: critical factor is to delivery the books that really corresponding with the school.

                • Delivery Speed: this a desirable factor and will be a advantage competitive.


                The Hows

                The way to answer to customers’ requirements is cover with following aspects:

                • Identification end users needs: The value added is to know the list of books corresponding for each schools, in this way the only requirement is to ask about the name and course of the each student (i.e. each children). 

                • SMS Technology: in order to satisfy the communication and delivery speed requirement the use of SMS technology will be the solution.

                • Sector/Industry Knowledge:a big retailer has enough knowledge about how explain the process to its customers, thought customer care point and call centres.

                • Warehouse: to have a warehouse with a very good process of picking and packing is essential to completeness.

                • Cardboard box: the books will be safe with a packing in a removable cardboard box and after transport its the cardboard box can be saved or reused for keep others books.


                The QFD Matrix

                All of this has been summarized in the following figure

                grafico2_blog4.jpg



                References:

                • Walley, P. (2008)  Operations Management Study Notes, Warwick Business School
                • Slack, N. et al. (2006) Operations and process management, FT Prentice Hall, London
                • El Corte Ingles. 


                http://www.elcorteingles.es/

                http://www.elcorteingles.es/tiendas_e/Cda/Libros/Eci/Libros_Home/0%2C5065%2CECI%2CFF.html

                • Carrefour

                http://www.carrefour.es/

                http://www.carrefour.es/grupo_carrefour/empresa/en_espanna/nacimiento.html

                • Case del Libro

                http://www.casadellibro.com/



                October 02, 2008

                Operations Management Lesson 2

                Writing about web page http://blogs.warwick.ac.uk/louiseholding/

                Take two processes with different volume and variety characteristics. Profile these processes and establish the process choice and layout decisions they have taken. Critically appraise the design decisions taken.

                ATM Banking and Interior Design Consulting differ in performance objectives and therefore have different process designs.

                Performance Objectives:

                ATM Banking

                Quality

                High - each transaction has to be 100% accurate

                Speed

                High – each transaction should be rapid with no processing delays between prompted questions to the customer

                Flexibility

                Low – customers will generally accept that only very simple  transactions are offered

                Dependability

                Medium - the service (technology) has to be dependable, ie is always available, otherwise customers will choose an alternative ATM with another bank or building society

                Cost

                High – Cost to the bank is lowered, and customer not impacted by cost reduction as they have availability 24/7

                Interior Design Consulting

                Quality

                High - quality is extremely important to this process as the end product has to be a perfect fit for the customer

                Speed

                Medium - This is not required as a priority unless the customer has explicitly requested a deadline

                Flexibility

                High - large amount required as the process is creative and requires a bespoke and variable service to match each customer requirement

                Dependability

                Medium - required in terms of working to any agreed deadlines within the process which are agreed depending between the customer and consultant at each stage

                Cost

                Low - the process is highly variable and therefore not extremely cost effective

                The ATM process in the financial sector requires an efficient, cost-effective, accurate and non-flexible approach. The Interior Design consultancy service process is much more flexible, offering variety to customers. Therefore the Interior Design process key objectives are quality and flexibility rather than cost effectiveness and speed. However if you define quality in the interior design process as being able to match customer requirements rapidly, in order to compete with other interior design consultants, and with suitably creative solutions, then lower cost, speed and dependability increases.

                Process Analysis & Design:

                Further analysis of both processes can be done via the 4V model (Slack et al, 2006) and illustrated below:

                4 V’s

                ATM Banking

                Interior Design Consulting

                Volume

                High volumes require high repetition

                Low volume so low repetition and high unit costs

                Variety

                Low variety so requires well defined routine standard consistent process

                High variety which brings flexibility, complexity in the process and a high unit cost

                Variation in Demand

                Low, so high utilisation, stable and predictable requirements

                High, so flexibility required and ability to cope with change. Low capital equipment investment by the process owner would be attractive as the process is so variable.

                Visibility

                Low in terms of producing a standard binary process

                Process design is automated and repeatable

                High as customer contact and relationship is very important, including meeting deadlines

                Variation and volume within a process is a large determinant of the design of the process.

                Thus considering Process Types:-

                ATM Banking is a Mass Service as it provides high volumes of transactions to the customer but restricts the customer to only certain offerings within the banking industry (cash dispensing, providing a current bank balance and changing a PIN no on a banking card.) If customers require a more complex banking service they must attend a bank during bank opening hours.  The service is based on technology, with no skilled staff visible within the process.

                Interior Design Consulting is a Professional Service offering skilled services which are unique to the customer. Therefore the service is more intermittent and costs more.

                In considering Layout Types:-

                ATM Banking, with its high volumes and low variety within the process is a product layout, where the process flows along a very well defined and narrow sequence of events to optimise efficiency in service and cost.

                Interior Design consulting, however, is a fixed-position layout because the consultancy service moves to the customer in order that the consultant may experience the customers home to solution the design.

                BIBLIOGRAPHY

                Slack, N.; Chambers, S.; Johnston, R. and Betts, A. (2006)

                Operations and Process Management

                London: FT Prentice Hall

                ATM Banking

                (1) Performance Objectives:

                Quality:          High - each transaction has to be 100% accurate

                Speed:           High - this matters in terms of the transaction going through smoothly without long waits for processing

                Flexibility:       Low - this does not matter as the customer will accept that only very simpletransactions are offered

                Dependability: Medium - the service (technology) has to be dependable, ie is always available, otherwise customer                          will cease to use it, however customers can use an alternative ATM

                Cost:             High – Cost to the bank is lowered, and customer not impacted by cost  reduction as they have

                                      availability 24/7

                Interior Design Consulting

                Performance Objectives:

                Quality:         High - quality is extremely important to this process as the end product has to be a perfect fit for the                       customer

                Speed:           Medium - This is not required as a priority unless the customer has explicitly requested a deadline

                Flexibility:      High - large amount required as the process is creative and requires a bespoke and variable service to  

                                    match each customer requirement

                Dependability: Medium - required in terms of working to any agreed deadlines within the process which are agreed

                                    depending between the customer and consultant at each stage

                Cost:               Low - the process is highly variable and therefore not extremely cost effective

                These 2 processes differ in performance objectives and are in two completely different industries. The ATM process in the financial sector requires a much more efficient, cost-effective, accurate and non-flexible approach. The Interior Design consultancy service is a much more flexible service offering variety to customers. Therefore the Interior Design process key objectives are quality and flexibility rather than cost effectiveness and speed. However if you define quality in the interior design process as being able to match customer requirements rapidly, in order to compete with other interior design consultants, and with suitably creative solutions, then lower cost, speed and dependability increases.

                ATM Banking

                4 V’s:

                Volume:                      High volumes require high repetition

                Variety:                       Low variety so requires very well defined routine standard consistent processes

                Variation in Demand:    Low, so high utilisation, stable and predictable requirements

                Visibility:                     Low visibility in terms of producing a standard binary process.  Process design is automated and

                                                repeatable

                Interior Design Consulting

                4 V’s:

                Volume:                    Low volume so low repetition and high unit costs

                Variety:                     High variety which brings flexibility, complexity in the process and a high unit cost

                Variation in Demand:  High, so flexibility required and ability to cope with change. Low capital equipment investment by

                                               the process owner would  be attractive as the process is so variable.

                Visibility:                    High, customer contact and relationship very important, including meeting deadlines

                Variation within a process is a large determinant of the design of the process.

                Process Types

                ATM Banking is a Mass Service as it provides high volumes of transactions to the customer but constricts the customer to only certain offerings within the banking industry (cash dispensing, providing a current bank balance and changing a PIN no on a banking card.) If customers require more complex banking service they must attend a bank during bank opening hours.  The service is based on technology, with no skilled staff visible within the process.

                Interior Design Consulting is a Professional Service offering skilled services which are unique to the customer. Therefore the service is more intermittent and costs more.

                Layout Types

                Layout types reflect the volume and variety of the process. It is important to choose the correct layout type to optimise efficiencies in both the service and the cost. ATM Banking, with its high volumes and low variety within the process is a product layout, where the process flows along a very well defined and narrow sequence of events.

                Interior Design consultancy, however, is a fixed-position layout because the consultancy service moves to the customer in order that the consultant may experience the customers home in order to solution the design.


                July 28, 2008

                My first blog

                Here is my first blog...