Human Resource Knowledge

Performance Management & Appraisal Terms with Glossary

It's important to understand the various terms and methods used in performance management and appraisals. Most of these aren't difficult to understand, but people often get confused about the meanings.

Documentation: The process of creating a paper trail to record data such as discussions had with employee, results of those discussions, both supervisor and employee comments, agreements between the two.

Objectives or Results: Statements of what an employee is supposed to achieve.

Ongoing Performance Communication : Communication between manager and employee all throughout the year to ensure that problems are identified early, and so there are NO SUPRPRISES during the performance appraisal.

Performance Review : Usually refers to a meeting to review and evaluate performance, involving supervisor and employee. Often done once a year, but to be effective performance reviews, or at least informal meetings to discuss performance should be undertaken at least every few months.

Performance Appraisal : The regular (usual annual) process where an employees performance for the year is assessed by manager and/or employee. It is only one part of the performance management approach. Usually means the same as "performance review".

Performance Diagnosis : Often performance problems are a result of a number of factors, not just the fault of the employee.

Performance Management : The larger process of defining what employees should be doing, ongoing communication during the year, linking of individual performance to organization needs, and the evaluating of appraising of performance.

Performance Planning : The process of communication between manager and employee that results in MUTUAL UNDERSTANDING of what the employee is to be doing during the next period of time. Often includes setting objectives and standards of performance.

Progressive Discipline : The process of addressing performance difficulties by first trying to help, then setting up increasingly strong consequences for failure to reach the desired levels of performance.

Ranking Scales : A way of evaluating staff by comparing them to each other, so there is a best, a second best, and so on. This is REAL SERIOUS TROUBLE, and almost always destructive.

Standards of Performance : Mutually agreed upon criteria used to describe how WELL an employee must perform, written to reduce subjective judgement.



Managing employee performance is an integral part of the work that all managers and rating officials perform throughout the year. It is as important as managing financial resources and program outcomes because employee performance or the lack thereof, has a profound effect on both the financial and program components of any organization.

The Department of the Interior’s performance management policy is designed to document the expectations of individual and organizational performance, provide a meaningful process by which employees can be rewarded for noteworthy contributions to the organization, and provide a mechanism to improve individual/organizational performance as necessary.

To accomplish these objectives, managers need to identify organizational goals to be accomplished, communicate individual and organizational goals to employees that support the overall strategic mission and goals of the Department, monitor and evaluate employee performance, and use performance as a basis for appropriate personnel actions, including rewarding noteworthy performance and taking action to improve less than successful performance.

The Office of Personnel Management defines performance management as the systematic process of:

• planning work and setting expectations

• continually monitoring performance

• developing the capacity to perform

• periodically rating performance in a summary fashion; and

• rewarding good performance


Performance Appraisal is being practiced in 90% of the organisations worldwide. Self-appraisal and potential appraisal also form a part of the performance appraisal processes.

· To review the performance of the employees over a given period of time.

· To judge the gap between the actual and the desired performance.

· To help the management in exercising organizational control.

· Helps to strengthen the relationship and communication between superior – subordinates and management – employees.

· To diagnose the strengths and weaknesses of the individuals so as to identify the training and development needs of the future.

· To provide feedback to the employees regarding their past performance.

· Provide information to assist in the other personal decisions in the organization.

· Provide clarity of the expectations and responsibilities of the functions to be performed by the employees.

· To judge the effectiveness of the other human resource functions of the organization such as recruitment, selection, training and development.

· To reduce the grievances of the employees.

The most significant reasons of using Performance appraisal are:

· Making payroll and compensation decisions – 80%

· Training and development needs – 71%

· Identifying the gaps in desired and actual performance and its cause – 76%

· Deciding future goals and course of action – 42%

· Promotions, demotions and transfers – 49%

· Other purposes – 6% (including job analysis and providing superior support, assistance and counseling)



Perhaps the most significant benefit of appraisal is that, in the rush and bustle of daily working life, it offers a rare chance for a supervisor and subordinate to have "time out" for a one-on-one discussion of important work issues that might not otherwise be addressed. Almost universally, where performance appraisal is conducted properly, both supervisors and subordinates have reported the experience as beneficial and positive.

Appraisal offers a valuable opportunity to focus on work activities and goals, to identify and correct existing problems, and to encourage better future performance. Thus the performance of the whole organization is enhanced.

For many employees, an "official" appraisal interview may be the only time they get to have exclusive, uninterrupted access to their supervisor. Said one employee of a large organization after his first formal performance appraisal, "In twenty years of work, that's the first time anyone has ever bothered to sit down and tell me how I'm doing."

The value of this intense and purposeful interaction between a supervisors and subordinate should not be underestimated.

1. MOTIVATION AND SATISFACTION

Performance appraisal can have a profound effect on levels of employee motivation and satisfaction - for better as well as for worse.

Performance appraisal provides employees with recognition for their work efforts. The power of social recognition as an incentive has been long noted. In fact, there is evidence that human beings will even prefer negative recognition in preference to no recognition at all.

If nothing else, the existence of an appraisal program indicates to an employee that the organization is genuinely interested in their individual performance and development. This alone can have a positive influence on the individual's sense of worth, commitment and belonging.

The strength and prevalence of this natural human desire for individual recognition should not be overlooked. Absenteeism and turnover rates in some organizations might be greatly reduced if more attention were paid to it. Regular performance appraisal, at least, is a good start.

2. TRAINING AND DEVELOPMENT

Performance appraisal offers an excellent opportunity - perhaps the best that will ever occur - for a supervisor and subordinate to recognize and agree upon individual training and development needs.

During the discussion of an employee's work performance, the presence or absence of work skills can become very obvious - even to those who habitually reject the idea of training for them!

Performance appraisal can make the need for training more pressing and relevant by linking it clearly to performance outcomes and future career aspirations.

From the point of view of the organization as a whole, consolidated appraisal data can form a picture of the overall demand for training. This data may be analysed by variables such as sex, department, etc. In this respect, performance appraisal can provide a regular and efficient training needs audit for the entire organization.

3. RECRUITMENT AND INDUCTION

Appraisal data can be used to monitor the success of the organization's recruitment and induction practices. For example, how well are the employees performing who were hired in the past two years?

Appraisal data can also be used to monitor the effectiveness of changes in recruitment strategies. By following the yearly data related to new hires (and given sufficient numbers on which to base the analysis) it is possible to assess whether the general quality of the workforce is improving, staying steady, or declining.

4. EMPLOYEE EVALUATION

Though often understated or even denied, evaluation is a legitimate and major objective of performance appraisal.

But the need to evaluate (i.e., to judge) is also an ongoing source of tension, since evaluative and developmental priorities appear to frequently clash. Yet at its most basic level, performance appraisal is the process of examining and evaluating the performance of an individual.

Though organizations have a clear right - some would say a duty - to conduct such evaluations of performance, many still recoil from the idea. To them, the explicit process of judgement can be dehumanizing and demoralizing and a source of anxiety and distress to employees.

It is been said by some that appraisal cannot serve the needs of evaluation and development at the same time; it must be one or the other.

But there may be an acceptable middle ground, where the need to evaluate employees objectively, and the need to encourage and develop them, can be balanced.

CHALLENGES OF PERFORMANCE APPRAISAL

In order to make a performance appraisal system effective and successful, an organization comes across various challenges and problems. The main challenges involved in the performance appraisal process are:

1. DETERMINING THE EVALUATION CRITERIA

Identification of the appraisal criteria is one of the biggest problems faced by the top management. The performance data to be considered for evaluation should be carefully selected. For the purpose of evaluation, the criteria selected should be in quantifiable or measurable terms

2. CREATE A RATING INSTRUMENT

The purpose of the Performance appraisal process is to judge the performance of the employees rather than the employee. The focus of the system should be on the development of the employees of the organization.

3. LACK OF COMPETENCE

Top management should choose the raters or the evaluators carefully. They should have the required expertise and the knowledge to decide the criteria accurately. They should have the experience and the necessary training to carry out the appraisal process objectively.

4. ERRORS IN RATING AND EVALUATION

Many errors based on the personal bias like stereotyping, halo effect (i.e. one trait influencing the evaluator’s rating for all other traits) etc. may creep in the appraisal process. Therefore the rater should exercise objectivity and fairness in evaluating and rating the performance of the employees

5. RESISTANCE

The appraisal process may face resistance from the employees and the trade unions for the fear of negative ratings. Therefore, the employees should be communicated and clearly explained the purpose as well the process of appraisal. The standards should be clearly communicated and every employee should be made aware that what exactly is expected from him/her.



1. ESTABLISHING PERFORMANCE STANDARDS

The first step in the process of performance appraisal is the setting up of the standards which will be used to as the base to compare the actual performance of the employees. This step requires setting the criteria to judge the performance of the employees as successful or unsuccessful and the degrees of their contribution to the organizational goals and objectives. The standards set should be clear, easily understandable and in measurable terms. In case the performance of the employee cannot be measured, great care should be taken to describe the standards.

2. COMMUNICATING THE STANDARDS

Once set, it is the responsibility of the management to communicate the standards to all the employees of the organization. The employees should be informed and the standards should be clearly explained to the. This will help them to understand their roles and to know what exactly is expected from them. The standards should also be communicated to the appraisers or the evaluators and if required, the standards can also be modified at this stage itself according to the relevant feedback from the employees or the evaluators.

3. MEASURING THE ACTUAL PERFORMANCE

The most difficult part of the Performance appraisal process is measuring the actual performance of the employees that is the work done by the employees during the specified period of time. It is a continuous process which involves monitoring the performance throughout the year. This stage requires the careful selection of the appropriate techniques of measurement, taking care that personal bias does not affect the outcome of the process and providing assistance rather than interfering in an employees work.

4. COMPARING THE ACTUAL WITH THE DESIRED PERFORMANCE

The actual performance is compared with the desired or the standard performance. The comparison tells the deviations in the performance of the employees from the standards set. The result can show the actual performance being more than the desired performance or, the actual performance being less than the desired performance depicting a negative deviation in the organizational performance. It includes recalling, evaluating and analysis of data related to the employees’ performance.

5. DISCUSSING RESULTS

The result of the appraisal is communicated and discussed with the employees on one-to-one basis. The focus of this discussion is on communication and listening. The results, the problems and the possible solutions are discussed with the aim of problem solving and reaching consensus. The feedback should be given with a positive attitude as this can have an effect on the employees’ future performance. The purpose of the meeting should be to solve the problems faced and motivate the employees to perform better.

6. DECISION MAKING

The last step of the process is to take decisions which can be taken either to improve the performance of the employees, take the required corrective actions, or the related HR decisions like rewards, promotions, demotions, transfers etc.


1. ESSAY APPRAISAL METHOD

This traditional form of appraisal, also known as “Free Form method” involves a description of the performance of an employee by his superior. The description is an evaluation of the performance of any individual based on the facts and often includes examples and evidences to support the information. A major drawback of the method is the inseparability of the bias of the evaluator.

2. STRAIGHT RANKING METHOD

This is one of the oldest and simplest techniques of performance appraisal. In this method, the appraiser ranks the employees from the best to the poorest on the basis of their overall performance. It is quite useful for a comparative evaluation.

3. PAIRED COMPARISON

A better technique of comparison than the straight ranking method, this method compares each employee with all others in the group, one at a time. After all the comparisons on the basis of the overall comparisons, the employees are given the final rankings.


4. CRITICAL INCIDENTS METHODS

In this method of Performance appraisal, the evaluator rates the employee on the basis of critical events and how the employee behaved during those incidents. It includes both negative and positive points. The drawback of this method is that the supervisor has to note down the critical incidents and the employee behaviour as and when they occur.

5. FIELD REVIEW

In this method, a senior member of the HR department or a training officer discusses and interviews the supervisors to evaluate and rate their respective subordinates. A major drawback of this method is that it is a very time consuming method. But this method helps to reduce the superiors’ personal bias.

6. CHECKLIST METHOD

The rater is given a checklist of the descriptions of the behaviour of the employees on job. The checklist contains a list of statements on the basis of which the rater describes the on the job performance of the employees.

7. GRAPHIC RATING SCALE

In this method, an employee’s quality and quantity of work is assessed in a graphic scale indicating different degrees of a particular trait. The factors taken into consideration include both the personal characteristics and characteristics related to the on-the-job performance of the employees. For example a trait like Job Knowledge may be judged on the range of average, above average, outstanding or unsatisfactory.

8. FORCED DISTRIBUTION

To eliminate the element of bias from the rater’s ratings, the evaluator is asked to distribute the employees in some fixed categories of ratings like on a normal distribution curve. The rater chooses the appropriate fit for the categories on his own discretion.


1. ASSESSMENT CENTRES

An assessment centre typically involves the use of methods like social/informal events, tests and exercises, assignments being given to a group of employees to assess their competencies to take higher responsibilities in the future. Generally, employees are given an assignment similar to the job they would be expected to perform if promoted. The trained evaluators observe and evaluate employees as they perform the assigned jobs and are evaluated on job related characteristics.

The major competencies that are judged in assessment centres are interpersonal skills, intellectual capability, planning and organizing capabilities, motivation, career orientation etc. assessment centres are also an effective way to determine the training and development needs of the targeted employees.

2. BEHAVIORALLY ANCHORED RATING SCALES

Behaviorally Anchored Rating Scales (BARS) is a relatively new technique which combines the graphic rating scale and critical incidents method. It consists of predetermined critical areas of job performance or sets of behavioral statements describing important job performance qualities as good or bad (for eg. the qualities like inter-personal relationships, adaptability and reliability, job knowledge etc). These statements are developed from critical incidents.

In this method, an employee’s actual job behaviour is judged against the desired behaviour by recording and comparing the behaviour with BARS. Developing and practicing BARS requires expert knowledge.

3. HUMAN RESOURCE ACCOUNTING METHOD

Human resources are valuable assets for every organization. Human resource accounting method tries to find the relative worth of these assets in the terms of money. In this method the Performance appraisal of the employees is judged in terms of cost and contribution of the employees. The cost of employees include all the expenses incurred on them like their compensation, recruitment and selection costs, induction and training costs etc whereas their contribution includes the total value added (in monetary terms). The difference between the cost and the contribution will be the performance of the employees. Ideally, the contribution of the employees should be greater than the cost incurred on them.

360 DEGREE PERFORMANCE APPRAISALS

360 degree feedback, also known as 'multi-rater feedback', is the most comprehensive appraisal where the feedback about the employees’ performance comes from all the sources that come in contact with the employee on his job.

360 degree respondents for an employee can be his/her peers, managers (i.e. superior), subordinates, team members, customers, suppliers/ vendors - anyone who comes into contact with the employee and can provide valuable insights and information or feedback regarding the “on-the-job” performance of the employee.

360 degree appraisal has four integral components:

1. Self appraisal

2. Superior’s appraisal

3. Subordinate’s appraisal

4. Peer appraisal

Self appraisal gives a chance to the employee to look at his/her strengths and weaknesses, his achievements, and judge his own performance. Superior’s appraisal forms the traditional part of the 360 degree appraisal where the employees’ responsibilities and actual performance is rated by the superior.

Subordinates appraisal gives a chance to judge the employee on the parameters like communication and motivating abilities, superior’s ability to delegate the work, leadership qualities etc. Also known as internal customers, the correct feedback given by peers can help to find employees’ abilities to work in a team, co-operation and sensitivity towards others.

Self assessment is an indispensable part of 360 degree appraisals and therefore 360 degree Performance appraisal have high employee involvement and also have the strongest impact on behavior and performance. It provides a "360-degree review" of the employees’ performance and is considered to be one of the most credible performance appraisal methods.

360 degree appraisal is also a powerful developmental tool because when conducted at regular intervals (say yearly) it helps to keep a track of the changes others’ perceptions about the employees. A 360 degree appraisal is generally found more suitable for the managers as it helps to assess their leadership and managing styles. This technique is being effectively used across the globe for performance appraisals. Some of the organizations following it are Wipro, Infosys, and Reliance Industries etc.


Despite the fact that 360 degree appraisals are being widely used throughout the world for appraising the performance of the employees at all levels, many HR experts and professionals argument against using the technique of 360 degree appraisals. The main arguments are:

· 360 performance rating system is not a validated or corroborated technique for Performance appraisal.

· With the increase in the number of raters from one to five (commonly), it become difficult to separate, calculate and eliminate personal biasness and differences.

· It is often time consuming and difficult to analyze the information gathered.

· The results can be manipulated by the employees towards their desired ratings with the help of the raters.

· The 360 degree appraisal mechanism can have a adversely effect the motivation and the performance of the employees.

· 360 degree feedback – as a process- requires commitment of top management and the HR, resources(time, financial resources etc), planned implementation and follow-up.

· 360 degree feedback can be adversely affected by the customers’ perception of the organisation and their incomplete knowledge about the process and the clarity o f the process.

· Often, the process suffers because of the lack of knowledge on the part of the participants or the raters.



The concept of ‘Management by Objectives’ (MBO) was first given by Peter Drucker in 1954. It can be defined as a process whereby the employees and the superiors come together to identify common goals, the employees set their goals to be achieved, the standards to be taken as the criteria for measurement of their performance and contribution and deciding the course of action to be followed.

The essence of MBO is participative goal setting, choosing course of actions and decision making. An important part of the MBO is the measurement and the comparison of the employee’s actual performance with the standards set. Ideally, when employees themselves have been involved with the goal setting and the choosing the course of action to be followed by them, they are more likely to fulfill their responsibilities.


The principle behind Management by Objectives (MBO) is to create empowered employees who have clarity of the roles and responsibilities expected from them, understand their objectives to be achieved and thus help in the achievement of organizational as well as personal goals.


Some of the important features and advantages of MBO are:

· Clarity of goals – With MBO, came the concept of SMART goals i.e. goals that are:


Specific

Measurable

Achievable
Realistic, and

Time bound.


The goals thus set are clear, motivating and there is a linkage between organizational goals and performance targets of the employees.

· The focus is on future rather than on past. Goals and standards are set for the performance for the future with periodic reviews and feedback.

· Motivation – Involving employees in the whole process of goal setting and increasing employee empowerment increases employee job satisfaction and commitment.

· Better communication and Coordination – Frequent reviews and interactions between superiors and subordinates helps to maintain harmonious relationships within the enterprise and also solve many problems faced during the period.


Assessment centre refers to a method to objectively observe and assess the people in action by experts or HR professionals with the help of various assessment tools and instruments. Assessment centers simulate the employee’s on-the-job environment and facilitate the assessment of their on-the-job performance.

An assessment centre typically involves the use of methods like social/informal events, tests and exercises, assignments being given to a group of employees to assess their competencies and on-the-job behaviour and potential to take higher responsibilities in the future. Generally, employees are given an assignment similar to the job they would be expected to perform if promoted. The trained evaluators observe and evaluate employees as they perform the assigned jobs and are evaluated on job related characteristics.

An assessment centre for Performance appraisal of an employee typically includes:

Social/Informal Events – An assessment centre has a group of participants and also a few assessors which gives a chance to the employees to socialize with a variety of people and also to share information and know more about the organisation.

Information Sessions – information sessions are also a part of the assessment centres. They provide information to the employees about the organisation, their roles and responsibilities, the activities and the procedures etc.

Assignments- assignments in assessment centres include various tests and exercises which are specially designed to assess the competencies and the potential of the employees. These include various interviews, psychometric tests, management games etc. all these assignments are focused at the target job.

The following are the common features of all assessment centres:

· The final results is based on the pass/fail criteria

· All the activities are carried out to fill the targeted job.

· Each session lasts from 1 to 5 days.

· The results are based on the assessment of the assessors with less emphasis on self-assessment

· immediate review or feedback are not provided to the employees.

An organization’s human resources can be a vital competitive advantage and assessment centre helps in getting the right people in right places. The major competencies that are judged in assessment centres are interpersonal skills, intellectual capability, planning and organizing capabilities, motivation, career orientation etc. assessment centres are also an effective way to determine the training and development needs of the targeted employees.


People differ in their abilities and their aptitudes. There is always some difference between the quality and quantity of the same work on the same job being done by two different people. Therefore, performance management and performance appraisal is necessary to understand each employee’s abilities, competencies and relative merit and worth for the organization. Performance appraisal rates the employees in terms of their performance.

Performance appraisal takes into account the past performance of the employees and focuses on the improvement of the future performance of the employees.

Labels: HRM, Management

posted by Paresh @ 8:22 PM 1 Comments

Managing organizational change and development

Helping firms manage change is a major issue for human resource managers. Professor Edward Lawler conducted an extensive survey of human resources practices. He concluded that as more employers face the need to adapt to rapid competitive change, focusing n strategy, organizational development change is a high payoff activity for the HR organization.

What to change? When she became CEO of a troubled Avon Products Company several years ago, Andrea Jung knew she had to renew her vast organization. Sales reps were leaving, customers were demanding new and more effective products, and the firm’s whole back end operation – its purchasing order taking, distribution system – lacked automation.

Faced with situation like these, managers like Andrea Jung can change one or more of five aspects of their companies – their strategy, culture, structure, technologies, or the attitudes and skills of the employees.

Organizational renewal often starts with a change in the firm’s strategy, mission, and vision with strategic change. For example, faced with intense competition from firms like Estee Lauder, Avon under Ms Jung more than doubled its expenditures on new product development, with the aim of introducing new product line that created younger looking skin. Avon also expanded its strategy to selling through select department stores, rather than just door to door sales reps.

Strategic changes like these invariably trigger repercussions throughout the organization. For one thing (in Avon’s case), going from strictly door to door to adding department stores meant cultural change, in other words, adopting new corporate values – new notions of what employees view as what they should or shouldn’t do. Moving fast, embracing technology, and keeping lines of communication open were a few of the new values Avon management needed employee to adopt.

Avon’s new expansion to department stores and product lines demanded structural change; in other words, reorganizing the company’s departmental structure, coordination, span of control reporting relationships, tasks and decision making procedures as well as technological change, as Ms. Jung guided Avon to automate its purchasing / distribution chain.

Of course, strategic, cultural, structural and technological changes like these, no matter how logical will fail without the active support of a motivated and competent workforce. Organizational renewal therefore invariable involves bringing about changes in the employees themselves and in their attitudes, skills, and behaviors.

The Human Resource Manager’s role:

HR managers play a central role in organizational renewals like Avon’s. For example, structural change may require performance reviews to decide who stays and who goes, as well as job analysis, personnel planning and revised employee selection standards. Changing the employees’ attitudes, skills and behavior typically triggers a wide range of new human resource efforts – recruiting and selecting new employees, instituting new training programs, and changing how the firm appraises and rewards its personnel, for instance. The net effect is that human resource managers must be familiar with the techniques companies can use to being about organizational change. At a minimum, this includes understanding three things – how to overcome resistance to change, how to organize and lead an organizational change, and how to use a technique known as organizational development.

Overcoming Resistance to Change: Lewin’s Change Process>>

Often, the trickiest part of implementing an organizational change is over coming employees’ resistance to it. The change may require the cooperation of dozens or even hundreds of managers and supervisors, many of whom might well view the change as detrimental to their peace of mind. Resistance may therefore be considerable.

Psychologists Kurt Lewin formulated the classic explanation of how to implement change in the face of resistance. Behavior is a product of two kinds of forces – those striving to maintain the status quo and those pushing for change. Implementing changes, thus either weakens the status quo forces or building up the forces for change.

Change process consisted of three steps:

Unfreezing: Unfreezing means reducing the forces that are striving to maintain the status, usually by presenting problem or even to get people to recognize the need for change and to search for new solutions.

Moving means development new behaviors, values and attitudes sometimes through structural changes and sometimes through the sorts of HR based organizational change ad development techniques explained later. The aim is to alter people’s behavior.

Refreezing: Organizations tend to revert to their former ways of doing things unless you reinforce the changes. How do you do this? by refreezing the organization into its new equilibrium. Specifically instituting new systems and procedures (such as new compensation plans and appraisal processes) to support and maintain the changes.

Labels: Management

posted by Paresh @ 11:22 AM 0 Comments

10 Tips for a Successful Service Business

If you are running a service business, the success or failure of your venture will depend on your ability to reach and maintain the right customers. However, it differs in the sense that you are primarily selling yourself - your skills, your talents, and your capabilities. You are your own product. More than any other business, your success will greatly depend on how you deal with your customers and how you package yourself.

Here are 10 tips to make sure that your clients will love and value your services:

1. Know your customer. The key to good client relationship is leveling-off of expectations. Before taking on a client's business, ask them what they expect to get out of your service. Then explain how you may be able to respond to their need. It is good policy to investigate your client's needs by asking simple questions such as "How do you want this done?" If you are a hairstylist, for example, ask the client how she wants her new hairstyle to look. Unless you are the "best hairstylist" in the country with a reputation for doing-what-you-want-to-do-with-no-questions-asked, your customers will appreciate you more if you ask them first if they want a radically short haircut before proceeding to cut their long tresses.

If it will be helpful to you, keep a record of your client's needs and wants, as well as their little idiosyncrasies. If they have previously used a service similar to yours, probe their experiences and learn from what they have to say in terms of what they want and don't want. As you work with a client, express an interest in your client's work. Listen to what your customer does, take a moment to learn something personal about them, and listen to what they need and expect from you.

2. Follow the Golden Rule. Treat your customer well. The work you are doing is extremely important to your customers so you have to assure them that it will be done professionally and on time. Terri Seymour, founder of Web Success Central, says, "The customer is the reason for your business success. Treating people with respect and building those personal relationships are one of the most effective ways of providing your business with a solid foundation." Janice Byer, Docu-Type Administrative Services, further agrees. "I believe in this statement completely! Your clients are your means of income and the best people to spread the word about you and your work. Keep them happy!"

Making your customers feel important is one of the best ways to ensure continued business. You want to remember how each client likes to have his or her work done.

3. Dependability is key. If you agree to complete a project by a certain date, you must be prepared to meet that deadline even if it means sacrificing personal activities or money. Offer to go the extra mile at no additional charge. Thoroughness is part of being dependable; your clients will soon realize that they can count on you to catch their mistakes. If you build a reputation for dependability, you can rely on repeat, as well as referral, business.

4. Keep the business between you and the client. It is best to consider all work confidential. This means that you do not discuss your client's business with anyone - even your mother. Make a habit of clearing papers from your desk before you go away. If ever you decide to use your work for them, maybe as part of your client list or testimonials, be sure to seek their permission first. If they refuse, honor their decision.

5. Let your customer know you. There’s the maxim that the customer is always right. But the customer must learn to play by your rules. Right at the very beginning, set your guidelines and parameters as to what you can and cannot do. Deborah Brown, a noted Personal Coach and founder of SurpassYourDreams.com, stresses, ”Being straightforward with customers is critical. Why should they buy from you if they know you are not telling them the truth?”

Discuss your rules, and set the groundwork for working with you. Talk to them about your rules when the project deviates from the original agreement, its costs implications and procedures in dealing with new tasks. Don’t be shy to discuss your fees and payment schedules. It is best to clarify these things at the onset; after all, nobody likes surprises

6.. Protect yourself and your customers. As a business owner, you must make sure that your business is protected from losses resulting from fire, liabilities and other hazards such as a client slipping and falling in your office. Call your insurance agent to ask for the right kind of insurance that will protect your business. If you have equipment like computers, fax and printers, don't assume that all your expensive equipment is covered by your home insurance policy. It may not be unless you buy an add-on policy or rider.

You must also safeguard your business against professional liability. While no one wants to think of lawsuits when starting a business, you may be liable if your business causes harm to individuals and businesses. You could be sued for their losses, and as a result, your entire business and even personal assets could be at risk.

If you are operating in the United States, an insurance premium is deductible as a business expense, whether you work at home or in rented office space, so you do not lose by having it.

7. Accept only what you can do. During the start-up phase, chances are you will try to accept as many jobs as you can. When you say yes to a client, be sure that you can deliver the service requested by the time the customer needs it and within the cost budgeted for it. Only accept accounts that you think you could do a solid job. Never accept assignments that are way beyond your head in your eagerness to prove yourself. If you feel it might not be possible, say so and request more time or suggest another alternative. It is worse to be late with a project than to ask for more time. If your clients are willing to take a gamble on you, make sure that you are on the same wavelength in terms of expectations as so what can be accomplished. As Deborah suggests, “Under promise and over deliver. This is the fastest way to grow your business.”

8. If you have to say "No." Like most entrepreneurs, I am sure that you never want to refuse a particular kind of work if you can help it. However, if there is a job you absolutely do not want to do for some reason, it is better to say that your schedule does not permit it rather than saying that you don't like that kind of work. Or you can also be honest with a client and say that their project is beyond the scope of your expertise and they may be better off with someone who has the skills they require. You may want to suggest another service provider that you think will match their requirements. They will value you more for your candor, rather than take on the job and deliver a sub-standard service. If you really have to say "no," say it politely and never, ever criticize a client.

9. When you are late in delivering the service. Despite your very best intentions, you sometimes slip up and fall behind a project's deadline. If you find yourself in that situation, don't act as if everything is ok and hope that the client will not notice your delay. Talk with your client and offer your apologies, with the promise that you will complete the project as soon as possible.

Janice Byer, gives this advice. "By showing initiative and ensuring you have the right information for the project, your clients will see that you are professional and, even if you are late with a project, they will understand that you trying to make the end result the best you possibly can thus keeping them happy."

As Terri Seymour has learned in her Internet marketing business, "Telling lame excuses or blaming this or that is not the way to deal with this situation. Simply apologize and assure the customer it will be done ASAP and maybe throw in a little discount or something for free. Let the customer know that you care about getting the job done and doing it correctly."

Schedule a meeting with your client to discuss any stumbling block that are hindering the completion of the project. Maybe you have an unresolved question to one of the client's demands, or some factors beyond your control are making your assignment difficult to complete. Keep the client abreast of what is happening with their projects or accounts. One cardinal rule you shouldn't forget: don't tell them that your reason for being late was because of your work for another client. No client would want to hear that his or her business is of less importance to you. You don't want to be put on a spot where you have to explain why the business of client B is more important than that of client A!

10. The longer picture. At the end of the day, you must ask yourself the important question: “Does this client’s business contribute to the growth of my business? Do I want to continue working with this client?” You accept an account for various reasons, maybe for profitability, exposure, or the learning opportunity that it provides. During the start-up phase, you may think that you have no choice; after all, beggars can’t be choosers. But as you go along, you will have a better sense about the true value of a client’s account. While an account may generate a sizeable cash flow for you, but if your client wreaks havoc on your mental state with her demands and attitude, you may have to rethink the long-range potential of the account. There are some accounts that are simply not worth it.

Labels: Management

posted by Paresh @ 11:20 AM 0 Comments

Five Reasons Why Management Consultancy (MC) Fails?

Labels: Management

posted by Paresh @ 10:04 AM 0 Comments

Classification of Services

Classification of services:
There are a number of ways in which services can be classified. Some of them are mentioned here.

1. On the basis of the END USER the services can be classified into following categories:
• Consumer : leisure, hairdressing, personal finance and package holidays
• Business to Business: advertising agencies, printing, accountancy, Consultancy
• Industrial: Plant Maintenance and repair, workwear and hygiene, installation and project management.


2. The DEGREE OF TANGIBILITY can be used to classify a service.
• Highly tangible: car rental, vending machines, telecommunications
• Service linked to tangible goods: domestic appliance repair, car service.
• Highly tangible: psychotherapy, Consultancy , legal services.


3. Services can be broken down into LABOR INTENSIVE (PEOPLE based) and EQUIPMENT based services. This can also be represented by degree of contact.
• People based services: high contact : education, dental care, restaurants and medical services
• Equipment based: low contact: automatic car wash, launderette, vending machine, cinema.


4. The EXPERTISE and SKILLS of the service provider can be broken down into the following categories:
• Professional: medical services, legal services, accountancy, tutoring.
• Non Professional: baby sitting, care taking, and casual labor.


5. The overall BUSINESS ORIENTATION ( PROFIT) is a recognized means of classifications:
• Not for profit: The Scouts Association, charities, and public sector leisure facilities.
• Commercial: banks, airlines, tour operators, hotel and catering services



Christopher Lovelock gives another classification of services based on the customer involvement in production process:


 People processing: tangible actions to people’s bodies, such as airline transportation, haircutting and surgery. Customers need to be physically present throughout service delivery in order to receive the desired benefits of such services. It is important to figure the process and output to identify the benefits created. Also some non- financial costs are to be identified – such as time, mental and physical effort and even tear and pain – that customers incur in obtaining these benefits.

 Possession Processing: Tangible actions to goods and other physical possessions, such as air freight, lawn mowing, and janitorial services. In these instances, the object requiring processing must be present, but the customer need not be.


 Mental Stimulus Processing: intangible actions directed at people’s mind, such as broadcasting and education. In this instance the customers must be present mentally but can be located either in specific service facility or in a remote location connected by broadcast signals or telecommunication linkages. Services that interact with people’s mind have the power to shape attitudes and influence behavior. So when the customer is in a position of dependency or there is a potential for manipulation, strong ethical standards and careful oversight is required. This type of service can easily be converted to digital bits or analog signals, recorded for prosperity, and transformed into a manufactured product, such as a compact disc, videotape, or audio cassette, which may then be packaged and marketed much like any other physical good


 Information Processing: Intangible actions directed at intangible assets, such as insurance, investment banking, and Consulting. For these services, no direct involvement with the customer may be needed, once the request for the service is initiated. Services highly dependent on effective collection and processing of information include financial services, accounting, law, marketing research, management consulting, medical diagnosis and a variety of other professional services. Tradition and a personal desire to meet the supplier than often determine the extent of customer involvement in such services more by the needs of operation process.

Labels: Management

posted by Paresh @ 9:01 PM 0 Comments

Challenges of Work Organization Development in the Knowledge-Based Economy

Challenges of Work Organization Development
in the Knowledge-Based Economy

1. Characteristic Features of the Knowledge-Based Economy
There has been a great deal of discussion in recent years about whether the technologically
most advanced industrial nations are changing to a new type of economic growth.
Specifically, the debate has gained momentum because of the economic growth and rising
employment, which continued unabated in the USA throughout the 1990s without any
significant inflationary pressure.1 The main features of this new phase of economic
development from the perspective of corporate operating environments can be captured as
follows:
· The ability to create, process, store, transfer and protect knowledge has become an
increasingly important source of competitive strength for companies. The growing
knowledge intensity of products and operative processes in all sectors of the economy will
lead to a blurring of the distinction between manufacturing and services, and ultimately to
obliteration of the distinction.
· The ability to learn rapidly and develop constantly and to efficiently use this ability to
generate constant product innovations has become the key success factor for an increasing
number of enterprises. Their main developmental problem is no more rationalization
within or optimization of the production process, but continuous optimization and
development of the entire product concept.
· The new information and communications technologies (ICT), based on microelectronics,
telecommunications and network-oriented computer software, hold a key role as economic
growth engines. ICT is the technology base for the greater knowledge intensity of goods
and services and also one of the factors which promotes companies to acquire improved
capacity to learn, if only used in a way which combines its new possibilities with
innovative forms of work organization and enhancing of skills of the workforce.
2. New Organizational Logic
Changes in the structure and growth dynamics of the economy are bringing about a
transformation of enterprise organization, jobs and employment in advanced industrial
nations. In the post-war decades, it was typical of major companies to strive for advanced
vertical and horizontal integration. Horizontal integration was a means to seek growth by
expanding into new sectors. Vertical integration, which was characteristic of the Fordist
production model, was a means to internalize possible market risks in different phases of the
value chains.
The globalization of competition, which is supported by the liberalization of trade and the
deregulation of markets, and the development of ICT have, however, signified an end to the
trends of horizontal and vertical integration. An increasing number of companies have chosen
in recent years to focus on a narrower segment of products and of the value chain, around
which they build their core competence. Horizontal disintegration is associated with the fact
that when operations become globalized, there is less need for companies to balance their cash
1 OECD: A New Economy? The Changing Role of Innovation and Information Technology in Growth. OECD.
Paris 2000.
3
flow over economic cycles by betting on different industries; instead, balance can be sought
through exploiting differences in regional markets. Another important reason for the increased
horizontal disintegration is that amid tougher competition, management finds it hard to
achieve competitive advantages in several sectors or product segments at once.
ICT helps rethink the Fordist production economic logic of vertical integration of the value
chains by creating new possibilities to reshape them into new business areas. A good example
of this kind of radical change during the recent years is the spreading of e-commerce along
with the rapid development of the Internet.
E-commerce means “doing business over the Internet, selling goods and services which are
delivered offline as well as products which can be ‘digitised’ and delivered online, such as
computer software”.2 In the OECD Economic Outlook (June 2000) it is expected that by the
year of 2005 e-commerce transactions between businesses (B2B) and between businesses and
consumers (B2C) will account for about 5 per cent of inter-company transactions and retail
sales respectively. The biggest growth prospects of e-commerce are in B2B, in which
companies expect efficiency gains especially in the form of lower procurement and inventory
costs and better supply chain management. In the B2C domain, the biggest potentials are in
the production of goods and services which can be digitised, thereby allowing substantial
savings in production and delivery costs. Some authors3 see the spread of e-commerce as a
major example of an application of Net technologies (the Internet, extranets, intranets), which
signifies a fundamental shift in the economics of information. The Net technologies break the
traditional trade-off between richness (bandwidth, customization, interactivity) and reach
(connectivity) of information, opening up immense possibilities for deconstruction of the
value chains in virtually all businesses. As companies start to expand the utilization of Net
technologies in their operations beyond mere purchasing and selling of their products, it
makes sense to start to talk of ‘e-business’, instead of ‘e-commerce’. Comprehensive shift to
e-business may be accompanied in some companies not only with ‘webification’ of current
business models or active search for new ones, but also with active search for new business
opportunities and new paradigmatic ways of thinking about business.
Even though ICT technologies in many cases open up new possibilities to streamline
individual value chains, the ruling principle behind the organization of value chains in the
knowledge-based economy becomes horizontal coordination rather than vertical integration.
According to the new organizational logic, core companies of the chains focus on their core
competencies and outsource other activities, striving to retain responsibility only for the most
strategic and economically most productive parts of the chain. They usually ‘go downstream’
in the value chain, closer to the client, with embedded and more comprehensive services and
integrated solutions.
At the same time, the reshaping of value chains with the help of advanced ICT is leading to
new kinds of cell-like organizational structures and networks of companies, with high levels
of interdependence, and to redefinition of bargaining power relations between companies
located in different parts of the chain. The core companies’ dependence on other companies in
the supporting and related industries and associated services is growing to the exent that the
real actors in the global innovation competition are not so much individual companies any
2 OECD Economic Outlook No. 67, June 2000.
3 Evans, P.B. & Wurster, T.S.: Strategy and the New Economics of Information. Harvard Business Review Sep.-
Oct./1997, p.71-82.
4
more, but, increasingly, networks of companies or even entire clusters of industries, i.e.
‘networks of networks’. The competitive position and the bargaining power of individual
companies in the new environment is affected by the level of the knowledge they possess,
how specific it is from the point of view of other companies, and its value for other
companies.
3. Transformation of Jobs and Employment
There has been little empirical analysis so far of how these changes will affect jobs and
employment. In an environment in which the main driving force of economic growth is the
production, use and exploitation of knowledge, a special challenge for this kind of analysis is
that it should link expected changes in the labour market to those in the market for the
demand for and production of knowledge. From the point of view companies, this means that
they are increasingly interested in the workforce as a generator of knowledge and not so much
as a source of physical labour which, however, still remains the base of economic production
and social reproduction.
Companies are now less than ever before tied by any physical and local resources and
boundaries in their operations; they can utilize different sources of knowledge with the help of
advanced ICT for the production of their products on a global scale and in an ever more
flexible manner. The shift of emphasis in the utilization of workforce from a source of
physical labour to a generator of knowledge has a built-in mechanism, which threatens to
reinforce social segregation in the labour market. In the production of knowledge, the
difference between the performance capacity of individual employees in terms of added value
will grow almost infinitely, compared to the case in work based on physical tasks, where
differences are smaller and somehow proportionate. There is thus an inherent trend towards a
more uneven distribution of work, earned income, and other terms and conditions of
employment.
In knowledge-based companies, which compete on the ability to generate constant product
innovations, there is a continuous demand for people with versatile professional skills
combined with international skills (such as language skills) and digital literacy, i.e. the ability
to work in an environment which requires the use of ICT. Companies are now increasingly
seeking new employees based on factors describing the work orientation as well. Companies
typically assume that work orientation criteria – such as, quality consciousness, reliability,
precision, care, commitment, trust, creativity, openness to new ideas, entrepreneurial spirit,
enthusiasm, etc. – express an individual’s potential for accumulating tacit knowledge, the
significance of which as a source of competitive strength for companies is growing with
networking and the increasing pace of change of their environment.4
In the new environment, the most strategic functions for the company are knowledge
integration, and planning, coordination and control of the company’s core activities. Such
functions demand high levels of both explicit and tacit and company-specific knowledge. For
this reason, knowledge-based companies strive to keep their most senior knowledge workers
4 Lundvall, B.-Å.: The Learning Economy. In OECD: Knowledge Management in the Learning Society. OECD.
Paris 2000, p.125-141; Nonaka, I. & Teece. D.J. (eds.): Managing Industrial Knowledge: Creation, Transfer and
Utilization. Sage. London – Thousand Oaks – New Delhi 2001.
5
committed through attractive arrangements, often involving ownership shares, share of
profits, bonuses, fringe benefits and autonomy at work. The other side of the coin is the
workforce less equipped with knowledge integration skills and the potential for accumulating
tacit knowledge needed in the new environment for companies. Their labour market position
is becoming increasingly insecure and volatile. Fragmentation of the labour market is
associated with declining bargaining power of trade unions and works councils (or other
respective forms of representative employee participation) and in some industrial nations also
with erosion of the system of industrial relations and dismantling of the welfare state.
The spread of e-commerce is likely to have both direct and indirect impacts on labour markets
and the composition of employment. Internet penetration is substantially higher among large
than small companies and there is the danger that many small companies lack the skills and
financial resources needed to make comprehensive use of the Net technologies. The skills
deficit of small companies is probably bigger in the B2C domain than in B2B, where, for
example, the demands for specialized marketing skills are not as high and where there is more
room for specialized niche businesses. On the other hand, the rapid development of Net
technologies is speeding up establishment of offensive, growth-oriented firms with lean and
cost-efficient organizational structures for whom the Internet is the only marketplace and who
build their whole business concept accordingly. Companies with a holistic e-business concept
need people with high knowledge integration skills and with special skills, such as software
development and programming, graphics design, content provision, and ICT-mediated
customer service, sales and marketing. The increased possibilities for digitisation of products
and for streamlining of logistics chains will probably lead to a decreased demand for
‘traditional’ sales staff in businesses like retail trade, insurance and travel agencies as well as
in packaging, distribution and storage. For instance, a Finnish expert study5 assesses that in
the provision of simple, routine-like services it is possible to achieve even tenfold
improvement in productivity by transferring the delivery online. In standardized services, but
with a limited number of options available to the client, the potential for improvement was
assessed to be two- or threefold, whereas in highly customized services the study considered
the opportunity to provide them online to be rather poor, with not much room for the
improvement of productivity. This example strikingly shows how the impacts of ICT and ecommerce
vary greatly from individual case to case, making it difficult to draw firm
conclusions on their effects on macro level.
Changes in the structure and growth dynamics of the economy are not unproblematic from the
point of view of the workforce with high-level knowledge integration skills, either. As the key
generators of added value for the company, they are exposed to continuous pressure for
innovation, learning, professional development and showing of their commitment and valuecreating
capacity to the company. With globalized competition and advanced ICT, work of
the highly skilled knowledge workers is becoming more virtual and mobile. New forms of
ICT-mediated working (called as ‘teleworking’, ‘e-working’, ‘virtual working’, ‘mobile
working’, etc.) unchain work from the traditional boundaries of time and space. This opens up
knowledge workers better opportunities for autonomy, self-regulation and work-life balance,
on the one hand, but leaves them more vulnerable to ever increasing performance and
innovation pressure in the form of excessive work load and working hours, on the other hand.
In practice, highly skilled knowledge workers often find it difficult to control the boundaries
5 Järvelä, P., Lankinen, M., Seppänen, I. & Tinnilä, M.: Scenarios for Electronic Service Provision (in Finnish).
Finnish Ministry of Labour. ESF Publications 87/01. Helsinki 2001.
6
between work and personal lives, despite the fact that they usually enjoy more autonomy at
work and have better chances of flexible working arrangements than the other groups of
employees. Accordingly, there is empirical evidence that the incidence of stress increased
during the past decade in many OECD countries.6
4. High Road or Low Road of Innovation, or No Innovation at
All?
The increased pressure on company management by globalized competition and the demands
of impatient stock markets for showing constantly improving shareholder value makes it
attractive for management to follow a strategy, which puts the major emphasis on seeking
competitive advantage by means of cutting costs. Focusing on cost competition directs
management’s attention to raising of operational effectiveness through continuous process
improvement, often accompanied with a streamlined work organization with no slack
resources, numerical flexibility in the use of labour, no organized skills development, and
utilization of ICT mainly as a tool for further automation and centralized control.
Though nearly 50 per cent of employees in the EU Member States already use computers in
their work, only half of them had got special training to that.7 There are many reasons for the
weak incentive of firms to make investments in vocational training of their employees at large
in an environment of cutthroat competition. Companies aiming at systematic rationalization of
their processes often limit training only to a carefully selected core group of employees
working in the most strategic knowledge integration functions and occupations. Holistic
company-wide policies to enhance the working capacity, skills and creativity of employees
and, thus, their employment opportunities, would often be too risky from a company’s point
of view. Moreover, many companies, especially SMEs, lack the knowledge and capacity in
the area of design of work and technology. This lack of knowledge contributes to an
orientation to company development, which can be called as the ‘low road of innovation’.8
The low road development path may lead to sound productive and financial performance in
the short term, but there is the danger that it undermines the formation of social capital within
the company and the mobilization of human resources in support of company goals, which are
major preconditions for longer-term knowledge-generation and innovation capacity of the
company.
There are also companies, which follow an alternative path of development, i.e. the ‘high road
of innovation’. High-road companies seek competitive advantage primarily from quality,
customization and balanced process and product innovation, supporting this by structural
redundancy of resources, functional flexibility in the use of labour, broad participation of
employees, and genuinely team-based forms of work organization which foster learning and
skills development of employees. These companies look to advances of ICT with a view to
releasing the productive and innovative potential of the employees rather than for control and
6 Gabriel, P. & Liimatainen, M.-R.: Mental Health in the Workplace: Introduction. ILO. Geneva 2000.
7 Commission of the European Communities: Benchmarking Report Following-Up the ‘Strategies for Jobs in the
Information Society’. CEC (2001) 222. Brussels 2001.
8 European Work & Technology Consortium: Work Organisation, Competitiveness, Employment: the European
Approach. European Commission. DG for Employment and Social Affairs. CE-V/8-98-001-EN-C. 1998.
7
automation purposes. They view knowledge generation as a process calling for active
involvement on the part of the entire staff.
There is ample empirical evidence in support of the argument that companies, which have
adopted new work, organizational and human resource management practices as ‘bundles’,
have been able to achieve significant benefits in both productive and financial performance.9
The problems with accurate definition and measurement of these practices make it difficult to
provide statistically representative data on their diffusion in Europe. Many studies
demonstrate, however, that companies following a determined innovation strategy, whether
the high road or low road, are still relatively thin on the ground:
· The data of the EPOC Survey (Employee direct Participation in Organizational Change) by
the European Foundation for the Improvement of Living and Working Conditions on 10
EU countries stated that 33 per cent of the responding organizations (N=5,768) used group
delegation. However, only less than 4 per cent of all workplaces were characterized as
proper ‘team-based organizations’ with a high coverage and intensity of group
delegation.10
· The EPOC Survey also showed that the number of workplaces reporting no activity for
‘downsizing/back to core business’ was 69 per cent, for outsourcing and subcontracting 78
per cent, for working time flexibility 63 per cent, and for contract flexibility (part-time
work or temporary contracts) 66 per cent. 30 per cent also reported no innovation in their
products or technology.11
· The Nordflex Project studied the spread of modern, flexible work organizations in
Denmark, Finland, Norway and Sweden (N=c. 6,000). The study grouped workplaces as
‘front-runners’ if they had a high degree of decentralized responsibility and a system of
organized human capital development, and used teams, job rotation and a compensation
system based on results or quality. In Denmark, Finland and Sweden, only 13 per cent of
the private-sector workplaces fulfilled all the five criteria, and in Norway the share
remained as low as 5 per cent.12
9 E.g. Antila, J. & Ylöstalo, P.: Functional Flexibility and Workplace Success in Finland. Finnish Ministry of
Labour. Labour Policy Studies 206. Helsinki 1999; Appelbaum, E., Bailey, T., Berg, P. & Kalleberg, A.L.:
Manufacturing Advantage: Why High Performance Work Systems Pay Off. Cornell University Press. Ithaca, NY
2000; Cully, M., Woodland, S., O’Reilly, A. & Dix, G.: Britain at Work: As Depicted by the 1998 Workplace
Employee Relations Survey. Routledge. London – New York 1999; Goudswaard, A. & Dhondt, S.: The
Changing World of Work in the Netherlands. TNO. Hoofddorp 1999; Huselid, M.A.: The Impact of Human
Resource Management Practices on Turnover, Productivity, and Corporate Performance. Academy of
Management Journal 38 (1995):3, p.635-672; Ichniowski, C., Shaw, K. & Prennushi, G.: The Effects of Human
Resource Management Practices on Productivity: A Study of Steel Finishing Lines. American Economic Review
87 (1997):3, p.291-313; Lay, G., Shapira, P. & Wegel, J. (eds.): Innovation in Production (Technology,
Innovation, and Policy) No 8, 1999; MacDuffie, J.P.: Human Resource Bundles and Manufacturing
Performance: Organizational Logic and Flexible Production Systems in the World Auto Industry. Industrial and
Labor Relations Review 48 (1995):2, p.197-221; NUTEK: Flexibility Matters – Flexible Enterprises in the
Nordic Countries. NUTEK B 1999:7. Stockholm 1999; Whittington, R., Pettigrew, A., Peck, S., Fenton, E. &
Conyon, M.: Change and Complementarities in the New Competitive Landscape: A European Panel Study,
1992-1996. Organization Science 10 (1999):5, p.583-600.
10 Benders, J., Huijgen, F., Pekruhl, U. & O’Kelly, K.P.: Useful but Unused – Group Work in Europe. European
Foundation for the Improvement of Living and Working Conditions. Dublin 1999.
11 EPOC Research Group: Employment through Flexibility – Squaring the Circle? European Foundation for the
Improvement of Living and Working Conditions. Dublin 1999.
12 NUTEK, op. cit.
8
· The Workplace Employee Relations Survey of 1998 studied the spread of new forms of
work organization at British workplaces. The data (N=2,191) showed that even though
teamworking in one form or another was quite widespread, only 3 per cent of all
workplaces operated teams that corresponded to a model of ‘fully autonomous
teamworking’ where teams also decide how work is to be done and appoint their own team
leaders.13
· The INNFORM Project was based on a survey on large and medium-sized firms in the
United Kingdom, Germany and other Western European countries (N=459). Though many
companies in Europe changed their organizational structures, processes or boundaries
during the course of the panel study from 1992 to 1996, only very few of them adopted
changes in all three dimensions. According to the authors, “it seems that holistic or
systemic transformation is still very rare, involving fewer than one in twenty European
firms”.14
E-commerce and e-business are business innovations as such. There are many reasons to
believe, however, that deployment of the Net technologies in companies’ business processes
has been associated so far more often with the low-road than the high-road alternative.
Because the Internet reduces the importance of physical location, it lowers the barriers to
entry for new competitors, intensifying thus the rivalry in the market and at the same also
making it more difficult for companies to differentiate themselves. The outcome is a greater
pressure for companies to engage in mere price competition. The trend to competing solely on
price is reinforced also by the fact that the Internet applications companies deploy are very
similar, often drawing on generic packages offered by third-party developers. The Internet as
such is, however, an extremely flexible technology. Internet architecture and standards make
it possible to build also truly integrated and customized systems, which would allow
companies to follow quality- and customer-oriented strategies in line with the high-road
concept of innovation.15
There is no clear pattern in the adoption of ‘bundles’ of flexible and innovative work,
organizational and human resource management practices across countries, industries or
workplaces in Europe. The reported incidence of these practices is somewhat higher in
Northern Europe than in the Southern parts of Europe. It also seems that SMEs, which
constitute the great majority of all enterprises in Europe, are lagging behind large enterprises
in adopting these practices.
The main policy issue facing European policy makers does not seem to be the choice between
the high road or low road of innovation, but between innovation of any kind or no innovation
at all. Given the growing knowledge intensity of the economy, globalization of competition
and the new possibilities opened up by advanced ICT, there is the danger that a growing
number of European workplaces are not sufficiently prepared to the challenges of the
knowledge-based economy and, consequently, will be stuck into traditional markets with no
reasonable growth prospects and doomed as laggards in the global innovation competition.
13 Cully et al., op. cit.
14 Whittington et al., op. cit.
15 Porter, M.E.: Strategy and the Internet. Harvard Business Review Mar./2001, p.63-78.
9
5. Policy Challenges
Work organization development is an area in which single European-wide approaches, let
alone practical solutions or institutional arrangements, are difficult to find, owing to national
differences in social values, industrial structures, framework conditions, industrial relations,
etc. This is one of the main conclusions of a recent survey on government support
programmes for new forms of work organizations in EU Member States.16
Advance of the knowledge-based economy is, however, leading to a situation in which
companies and company networks as well as regions and nations are facing an increasingly
globalized competition on innovation and productivity development. A major policy
challenge for Europe is to turn the diversity, but at the same time the rich variety, of national
approaches, programmes and experiments in the area of work organization development into
a fresh innovation- and productivity-supporting framework through comprehensive dialogue
between governments, the social partners, R&D institutions, workplaces and all other possible
stakeholders. This dialogue between stakeholders would serve achieving of the strategic goal
set up for Europe at the Lisbon European Council in March 2000, namely that Europe should
“become the most competitive and dynamic knowledge-based economy in the world, capable
of sustainable economic growth with more and better jobs and greater social cohesion”.
Europe-wide interactive approach to work organization development must be supported by
establishing and strengthening sufficient social infrastructure for the creation and
dissemination of knowledge on work organization. Today, there are still many shortcomings
in the infrastructure, which render the dialogue difficult.
5.1. Work Organization Development in Public Policy
The status given to work organization development issues in public policy decision-making is
a major determinant of governments’ room for manouvre to influence change in workplaces.
· There is an urgent need to adopt a holistic and systemic view on innovation in public
policy, which focuses on technological and organizational (and other social) innovations
alike and on supporting the integration between the ‘new’ and ‘old’ economy, instead of
seeing ‘modernization’ of the economy primarily as the development of new cutting-edge
technologies. In this policy framework, work organization development should constitute
an integrated and well-established aspect of the new broadly-defined innovation policy.
· The social partners play a key role in creating an atmosphere of trust in which a shared
understanding of the importance of work organization development is possible to generate
in workplaces and in the society at large. Governments can foster dialogue between the
social partners and help solve the problems that may threathen to dry it up. Cross-national
collective bargaining and other new elements in the agenda of European industrial relations
may be utilized as means of broadening the scope for this dialogue in Europe.
16 Business Decisions Limited: Government Support Programmes for New Forms of Work Organisation: A
Report for DG Employment & Social Affairs. Office for Official Publications of the European Communities.
Luxembourg 2000.
10
· Counteracting the inherent trend towards a growing social segregation in the knowledgebased
economy is a major challenge for governments in creating socially and ethically
sound conditions for publicly supported work organization development programmes. This
calls for, in particular, building of flexible systems of further training and other forms of
support for skills development, measures to promote the maintenance of working capacity
of the workforce, and creation of sufficient social networks for those in the danger of
exclusion from the labour market as well as systems of monitoring problems of the quality
of working life and employee well-being at work.
· Governments should target sufficient resources to raising public awareness on the benefits
of new forms of work organization on both companies and employees alike in the changing
context of competition where the role of knowledge generation and innovation is growing
in importance. Means to raise awareness may range from mere dissemination of
information through newsletters, databases and campaigns or encouraging workplaces,
R&D institutes and the social partners to launch activities of their own to funding and
coordinating work organization development programmes proper.
5.2. Programme Design and Implementation
At the outset the focus of work organization development programmes was typically on
problems arising from Taylorist working arrangements being taken to extremes, such as the
ergonomic and psychological problems of repetitive and monotonous work and the lack of
autonomy and influence at work. Even though these and many of the other ‘old’ problems of
Taylorism are still a relevant object of development in many European workplaces, in the
environment of the knowledge-based economy the starting points for work organization
development programmes have become more complex.
· The real actors in the knowledge-based economy are increasingly networks of companies
and not so much individual companies any more. The focus of programmatic development
on work organization should shift, accordingly, from the level of individual workstations
or working units to cover company- and network-level issues as well, calling for new
conceptual frameworks and developmental models.
· Due to this change of context and focus, it becomes increasingly difficult to find readymade
expert solutions, standards or ‘best practices’ to the new problems and development
needs facing companies and their employees in the knowledge-based economy. Acquiring
the sufficient expertise to successfully deal with these ever more complex issues in
programme design and implementation calls for combination of different kinds of
expertise, achieved only through broad dialogue between all relevant actors, whether
researchers or practioners.
· At best, work organization development programmes can become important forums for
exchanging information and experiences on ‘good practices’ between different kind of
workplaces and other actors. Achieving the ‘critical mass’ of workplaces and other actors
such as R&D institutes with sufficient diversity is a major factor fostering opportunities for
interactive learning within the programme frameworks. Special attention in programme
design and implementation with respect to interactive learning should be paid to involving
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also industries, regions and workplaces, which are lagging behind in terms of ICT and
work organization development infrastructure.
· Operating in an increasingly networked and dynamic environment will grow the risk that
programmatic development is not focusing on ‘correct’ and the most actual problems in
working life, or that it may be providing ‘obsolete’ solutions to them, possibly with even
negative externalities. Work organization development programmes, therefore, need
greater sensitivity in monitoring the effects of programmatic activities and the flexibility to
make any necessary redefinitions of their content and forms. Areas in the environment of
the knowledge-based economy which require particular sensitivity from monitoring will be
ensuring the participation of employees, preventing processes of social segregation, or
even exclusion, recognizing new emerging problems in working life, and pre-empting
ecological risks in connection with change.

Labels: Management

posted by Paresh @ 8:54 PM 0 Comments