ACCA P3 Business Analysis - 2010 - Study text - Emile Woolf Publishing
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It might be supposed that factors causing dissatisfaction and factors causing
satisfaction are opposites. However, Herzberg argued that this is not the case.
The opposite of dissatisfaction is not satisfaction: it is not being dissatisfied.
The opposite of satisfaction is not dissatisfaction: it is not being satisfied.
The conclusion from Herzberg’s analysis is that management need to deal with two
different categories of factors affecting the concerns of employees in their work.
Management need to make sure that hygiene factors are given proper attention.
If employees are content with their hygiene factors, they will not be dissatisfied.
For example, employees need to feel that they are being paid well enough in
order to prevent them from being dissatisfied. However, satisfying the hygiene
factors only prevents dissatisfaction, it does not create satisfaction.
In order to motivate individuals, the motivator factors need to be satisfied.
Creating motivation therefore means providing conditions at work that will
make individuals feel a sense of achievement and recognition. According to
Herzberg, a key factor in creating motivation is job enrichment – making the
work itself more interesting and fulfilling.
A criticism of job enrichment is that although it probably makes employees more
satisfied with their work, it does not necessarily improve work performance.
Example
An editor in a small publishing company may be responsible for preparing the ‘final
copy’ artwork for a book, to send to the printer. The editor might also be responsible
for sending the artwork to the printer and checking the delivery date for receiving
the printed books from the printer.
This job might be enriched by giving the editor the additional responsibilities for:
negotiating printing prices with the printer, to obtain the best prices, and
ensuring that the printer meets the agreed dates for delivery of the printed
books.
The additional responsibilities might enrich the job by giving the job holder a higher
level of authority, that the job did not have before.
5.4 The Japanese management approach
The Japanese management approach to job design emerged from the competitive
success of Japanese manufacturing companies in global markets. Management
approaches such as Total Quality Management and lean manufacturing were seen
as reasons for the success of Japanese industry.
It was therefore suggested that the approach to job design in other countries (such
as the US) should copy Japanese practice. Three aspects of job design in the Japanese
system are:
Job rotation. Individuals within a work group should be moved from one job to
another within the group so that they gain experience of all the jobs within the
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group. This broader knowledge of the work done by the group as a whole helps
them to perform better and to contribute more effectively to improvements in
group performance.
Group working and collective decision-making. Individuals within a group
have their own jobs, but also work as a team. If necessary, they switch from one
task to another. In addition, management consults the work group before
making decisions, so that there is some collective decision-making. This helps
the group as a whole to understand what they are trying to achieve, and group
performance is improved.
Quality circles. Quality circles are a feature of Total Quality Management.
Workers are put into quality circles, which discuss the details of work operations
and try to identify ways of improving the way in which the operations are
performed, however small the improvement may be. Quality circles are an
aspect of group working, and the collective sharing of knowledge and
experience.
5.5 Job re-engineering
Job re-engineering is another approach to job design. It is based on the view that
improvements in performance are achieved by radical re-design and restructuring
of jobs.
Specific processes and operations are studied and the nature of the work is
analysed. Jobs are then restructured, so that the individual performing the job is
able to achieve the objectives of the work more effectively and efficiently.
Job re-engineering occurs whenever a process is radically re-designed.
5.6 ‘Post-industrial’ job design
The methods of job design described so far are all based on the assumption that jobs
are performed by employees of the entity. For some business entities, this
assumption is not necessarily valid.
A virtual organisation, for example, is an organisation structure in which
individuals are located in different places and linked to each other by
telecommunications networks and computers. Jobs are not formally structured, and
individuals might contribute to the organisation on a part-time basis, or
periodically.
It might be questioned whether job design can contribute significantly to achieving
better performance in this type of organisation
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Development and training
Learningintheworkplace
Methodsofpersonaldevelopment
Succession planning
Competency frameworks
The learningorganisation
Senge’sviewsonthelearningorganisation
Organisation learning
Knowledge management
Knowledge managementfunctions
Advantagesofknowledgemanagement
6 Development and training
6.1 Learning in the workplace
Well-motivated individuals learn about doing their work, and get better at what
they do over time. Organisations benefit from learning by individuals, because
employees become more efficient and more effective as they learn.
Well-motivated individuals also learn through training and development.
Training is a process in which individuals are taught something specific. A
training programme should have a particular objective, to teach the individual
some theoretical or practical knowledge, or to give the individual a new insight
into an aspect of their work.
Development is a process of learning through experience and doing work.
Individuals learn as they develop by doing different things at work and gaining
new experiences.
Organisations benefit from the learning process, because it produces a better work
force, and there should be programmes of training and development for their
employees. A well-designed programme of training and development will:
give employees the knowledge, ability or insight that they need to do their work
better
in a way that is the most effective.
6.2 Methods of personal development
Development improves the skills, knowledge and abilities of an individual through
experience in working. Unlike on-the-job training, however, development is not so
much concerned with teaching the individual how to do a particular task or job. It is
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more concerned with giving the individual more experience and responsibilities, so
that he or she is able to improve and become a more valuable employee.
Development programmes are commonly associated with managers. They benefit
from development to become better managers, capable of moving on to more senior
positions.
Methods of development include the following:
Job rotation. Job rotation means moving an individual from one job to another
at fairly regular intervals, so that the individual gains familiarity with the work
done in each job. For example, a trainee accountant in the accounts department
might be given a job for three months or six months in the payables ledger
section, before being moved to the receivables ledger, then to the payroll
department, then to the costing department, and so on. Job rotation gives the
individual a broad range of experience in the activities of the organisation. This
should be useful when he or she is eventually ready for promotion to a more
senior position.
Secondment. An individual might be ‘seconded’ to work somewhere else for a
period of time. Secondments are periods of time spent away from the normal
working environment, in another department or as part of a project team. For
example, an accountant might be seconded from the accounts department to
work with the sales team for a while. Similarly, an accountant might be
seconded to join a project team that has been set up to design and implement a
new computer system. Individuals benefit from secondments because they gain
experience from working with people from different parts of the organisation, or
with external consultants.
Deputising for a manager or supervisor. An individual may be given the
opportunity to deputise for his or her boss when the boss is absent from work
for an extended period, on holiday or due to illness. The individual gains
experience by doing the job of the boss for a period of time.
Delegation. A boss who wants to develop individuals will give the individuals
additional responsibilities, and delegate authority to the individual to make their
own decisions. Individuals will gain experience from their additional authority
and responsibility, and will be accountable to their boss for how they have
carried out their additional responsibilities.
Mentoring. An individual might be given a ‘mentor’. The mentor provides
guidance and assistance to the individual, and may occasionally discuss the
individual’s work and work problems.
Appraisals. Formal appraisals are a part of a system of development, as
explained earlier in this chapter.
Career development
Training and individual development programmes can provide a basis for a policy
of career development and promotions, so that there are individuals within the
entity who have the ability and experience to move to a more senior position,
whenever a vacancy arises.
Career development should be a key part of the human resources plan.
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6.3 Succession planning
At the top levels of management, there should be a plan for the eventual
replacement of senior managers, and in particular the chief executive officer. Top
managers do not stay in their job forever. They might move on to another company,
or might retire. In some cases, top managers are dismissed for poor performance.
When there is change at the top, there should be a plan in place for appointing a
successor. In the UK, the nominations committee of the board of directors has the
responsibility for succession planning for the CEO, under the corporate governance
guidelines for listed companies. A board of directors might therefore announce an
intention to appoint a particular individual as the new CEO when the existing CEO
retires or moves on.
A change in CEO can often lead to a complete change in strategy, particularly when
the CEO is a forceful personality with strong views. The purpose of succession
planning, however, is to try to ensure some continuity in strategy when a change in
leadership occurs.
6.4 Competency frameworks
Some entities use competency frameworks to assist with performance management.
A competency framework is a system for assessing the competences required to do
a particular job or task.
A number of different competences are identified. Typically, competences are
grouped into two or three categories:
Core competences. These are competences that all employees are expected to
have, in any job
Technical competences. These are competences that are of a more technical
nature and are specific to a particular type of job.
Management competences. An entity might also identify various competences
that managers are expected to have. However, not all competency frameworks
include management competences.
A well-known competency framework is the system for academic and vocational
training, where competences that students might be required to show include
knowledge and understanding, an ability to analyse, an ability to evaluate, an
ability to communicate, and so on.
For each competency, there are several levels of achievement. There might be four of
five different levels of competence.
A competency framework can be used to analyse the specific competences required
for each job within an organisation, and the level of competence required. The
competences required for a job can be compared with the competences of individual
employees (as assessed by performance appraisal and other assessment methods).
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This approach to analysing performance can be used:
For the development of employees. The current competences of an employee
can be compared with the competences required to do the employee’s current
job, or the competences that will be required for another job if the employee is
transferred or promoted. This comparison can be used to assess how the
competences of the employee might be improved through training or
development.
For performance appraisal. The competences shown by the employee can be
compared with the competences required to do his job, as a basis for
performance appraisal.
For recruitment and selection. The recruitment and selection of applicants for
jobs in the organisation can be based on a comparison of the competences
required for the job (and for career progression within the entity) and the
competences that the applicant shows.
6.5 The learning organisation
An entity is more likely to sustain its competitive advantage if it is able to adapt and
change ahead of its competitors.
A learning organisation is an entity that recognises the importance of its employees
in the processes of innovation and change. To remain competitive, and organisation
needs elements of a learning organisation.
A learning organisation has been defined as:
‘an organisation that facilitates the learning of all its members and continually
transforms itself’ (the Learning company: a Strategy for Sustainable
Development, Pedler, Burgoyne and Boydell)
an organisation ‘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’ (Senge).
Pedler, Burgoyne and Boydell identified the following characteristics in a learning
organisation:
A learning approach to strategy. Strategy development is based in
experimentation and feedback, and learning from the experimenting and testing.
Participative policy-making. All members of a learning organisation have the
opportunity to contribute to policy-making, as part of the learning process.
Information. Using information, not as a method of management control, but as
a resource for the entire organisation to use.
Formative accounting and control. Accounting systems are designed so that
they assist learning. In particular accounting systems provide information about
how cash, the key resource, is generated and used.
Internal exchange. The concept of the ‘internal customer’ is encouraged. Work
done for someone else within the organisation is work for an internal customer.
An internal customer should be given the same consideration and customer care
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that would be given to an external customer. The needs of the internal customer
should be recognised and satisfied.
Rewarding flexibility. Members of the organisation should be encouraged to
see the various rewards they get from doing their job, not just their money
rewards (pay). There is also openness about why some individuals are paid
more than others.
Enabling structures. Structures within the organisation, including management
structures and physical structures (such as the layout of an office and its desks)
should be seen as temporary arrangement. The structure can be changed at any
time in response to changing needs.
Boundary workers as environment scanners. Members of the organisation who
come into contact with the external environment (sales representatives, customer
service staff, buyers and so on) should pass on to others within the organisation
all the information they gather from the environment.
Inter-company learning. The organisation learns from other organisations, for
example through benchmarking.
Learning climate. The organisation has a learning culture. Members understand
that a part of their task is to keep on improving their knowledge and to share their
knowledge with other members of the organisation.
6.6 Senge’s views on the learning organisation
The concept of the learning organisation are closely associated with the views of
Peter Senge in the 1990s. He argued that in a business environment that is
continually changing, an organisation will excel only if it is flexible, adaptive and
productive. In order to this, an organisation needs to ‘discover how to tap people’s
commitment and capacity to learn at all levels’ (Senge). It needs to be a learning
organisation.
All people have the capacity to learn, but the organisations in which they work
often do encourage learning. In addition, individuals might lack the techniques
people and guiding ideas to respond well to changing business conditions. People
need to be encouraged to learn ,and by learning they will help to create a successful
organisation.
Senge made a distinction between ‘survival learning’ and ‘generative learning’.
Survival learning, also called adaptive learning, means adapting to changing
environmental conditions and finding ways to survive the change.
Generative learning is learning that improves the ability of an organisation to
innovate in response to change. A learning organisation must be capable of
survival learning, but it must also have a capacity for generative learning.
There are five factors that differentiate learning organisations from other
organisations.
Systems thinking
Personal mastery
Mental models
Building shared vision
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Team learning.
Systems thinking. Individuals must be able to see and understand systems as a
whole, and how sub-systems interlink and inter-relate with each other. In other
words, they should have an ability to ‘see the whole picture’. Senge argued that in
practice, most individuals tend to focus on the parts rather than seeing the whole,
and do not see organisation as a dynamic process.
A particular weakness of individuals is to think in the short term. They fail to think
about longer term consequences of current decisions. When faced with a problem,
many people will look for a solution that seems to provide desired results in the
short term, with little or no regard for the longer term.
However, short-term solutions often involve result in significant long-term costs.
For example, cutting back on research and development spending or on product
design can result in immediate cost savings, but could also threaten the long-term
viability and survival of the organisation.
Similarly, a company might cut its advertising budgets, and in the short term there
will be clear benefits in terms of reduced expenditure and higher profits. This
improvement might even encourage managers to cut the advertising budgets even
further. In the short run there may be little impact on customer demands for the
entity’s goods and services, but in the longer term the entity might suffer from the
decline in market visibility that cutbacks in advertising will cause.
Senge has recommended the use of ‘systems maps’. These are diagrams that show
the key elements of systems and how they connect. However, individuals often
have difficulty in ‘seeing’ systems, and it can take some effort to teach them to apply
the concepts of ‘system theory’ to the organisation in which they work. (You might
see some similarity between these ideas of Senge and the business process redesign
approach to process change.)
Personal mastery. Senge also argued that organisations learn only through
individuals who learn. If there is larning by individuals, this does not guarantee
organisation learning. However, unless individuals within an organisation learn,
the organisation itself, as a whole, will not learn. Individuals therefore need to show
‘personal mastery’. This means ‘continually clarifying and deepening our personal
vision, focusing our energies, developing patience, and seeing reality objectively’
(Senge). People with a high level of personal mastery ‘live in a continual learning
mode’.
Mental models. Mental models are ‘deeply ingrained assumptions, generalisations,
or even pictures and images that influence how we understand the world and how
we take action’ (Senge). In a learning organisation, there is a discipline of mental
models which involves learning to understand the internal picture of the world that
we hold in order to subject them to rigorous scrutiny and questioning. Individuals
clarify and explain their own thinking and make that thinking open to the influence
of colleagues and others.
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Entrenched mental models create resistance to change and resistance to systems
thinking. The mental models discipline should overcome this reluctance to
challenge ingrained assumptions and attitudes.
Building a shared vision. Senge suggested that a role of the business leader is to
create a vision that everyone in the organisation can share. This vision should have
the power to be uplifting, and to encourage experimentation and innovation. When
there is a genuine vision, individuals excel and learn, not because they are told to,
but because they want to.
Team learning. Senge defined team learning as ‘the process of aligning and
developing the capacities of a team to create the results its members truly desire.’
People need to be able to think and act together.
6.7 Organisation learning
A successful business entity in a complex and changing business environment needs
to ensure that its employees are acquiring the knowledge they need to do their job
and are continually developing better ways of working.
To do this, employees need support systems in which information and best practices
are disseminated through the organisation and communicated to the individuals
who need to know.
Organisation learning refers to the process by which employees acquire knowledge.
Three key elements of organisation learning are:
access to knowledge
communication of learning, and
the development and dissemination of best practice.
This should be an ongoing process.
6.8 Knowledge management
Knowledge management is a concept that emerged in the 1990s. It is based on the
idea that:
organisations are stores of knowledge, and knowledge accumulates within
organisations
the knowledge that accumulates in companies is a source of sustainable
competitive advantage: knowledge can be used to achieve competitive
advantage
in theory, knowledge is infinite.
Since knowledge has so much potential value, it should be managed properly.
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Data workers and knowledge workers
A distinction can be made between:
Data workers, who are involved in processing data and providing information
to management from processed data
Knowledge workers, who are involved in developing knowledge within an
organisation.
Knowledge workers have much more strategic significance for an organisation than
data workers.
Where does knowledge come from?
Corporate knowledge or organisational knowledge is formed through the
interaction between technologies, techniques and people. Within organisations,
knowledge comes from a combination of:
collaboration between people, who share their knowledge and create new
knowledge together
technology, which makes it possible to store and communicate knowledge, and
information systems that make use of the technology systems, and
information analysis techniques.
Knowledge gives a company a competitive advantage. Another important
characteristic of corporate knowledge is therefore that it cannot be easily replicated
by a competitor. It is something unique to the company that owns it.
Another way of making this point is to say that the premium value of knowledge
comes from the fact that it cannot be digitised, codified and easily distributed.
Knowledge management is therefore concerned with:
the management of people, and encouraging creativity and new ideas
the management of IS/IT systems.
6.9 Knowledge management functions
The process of knowledge management can be described as several different
functions. Knowledge management can be described as the process of:
knowledge creation
knowledge validation
knowledge presentation
knowledge distribution, and
knowledge application.