Mullins L.J. Management and organisational behaviour, Seventh edition
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also the chief cabinet secretary and
perhaps the most influential policy-
maker in government after the
prime minister, Junichiro Koizumi.
But speaking in a parliamentary
debate last November, he declared:
‘As long as there are men and
women, gender differences will
remain.’ When a female opposition
member huffed that he ought to
‘remember how many women have
been deprived of opportunities’
because of such notions, Fukuda
said she was making too much of a
small thing.
Koizumi, to his credit, named five
women to his 18-member cabinet
when he took power in 2001, though
the number is down to three today.
He is enormously popular among
women, and unlike many other male
politicians of his generation, has
had no scandal involving female
acquaintances. But some question
his dedication to family values. He
took custody of his two older sons
when he divorced his wife in 1982,
and turned them over to his sister
to raise. He has not met his third
son, with whom his wife was preg-
nant at the time of the split.
Seeing no change ahead, and no
allies in government or business,
many young Japanese women are
not simply giving up on marriage,
they are giving up on Japan alto-
gether. Some are leaving
comfortable, dead-end jobs in Japan
and moving to New York, London,
Singapore and Shanghai in search
of more challenging work, often
taking pay cuts to do so.
Others are enrolling in universi-
ties and graduate schools abroad to
arm themselves with degrees,
hoping to achieve the professional
status outside Japan that they can’t
get back home.
I’ve met countless young Japanese
female expatriates who said the last
thing they want is to go back to
Japan, and if they do, they would
work only for gaishi-kei, foreign-
owned companies that are more
likely to treat them as professionals.
I sympathise with them. I know
that when I visit Japan, the first
thing I feel, the minute I step off a
plane, is that I am seen as a mere
woman. I rarely sense that in
Europe or in the US. Like many
other Japanese women abroad, I’m
happy to be far from home.
Ayako Doi is the editor of The
Japan Digest, published in
Washington DC, and writes fre-
quently about Japanese society.
(Reproduced with permission from FT.com, 19 March
2004, © Ayako Doi)
BUSINESS PRESS
1025
Questions
Discuss critically the extent to
which you:
1 Identify with Japanese women
who want both a career and a
family.
2 Recognise the influence of
national culture on the position
and status of women.
Relevance to other chapters
Chapter 2 The Nature of Organisational Behaviour
Chapter 9 Individual Differences
Chapter 18 Job Satisfaction and Work Performance
Mentoring moves into a leading role
Nancy Dunne
ARTICLE 11
FT
Catherine Cockerill was a respected
middle manager at AstraZeneca
Pharmaceuticals, but, after six years
as director of a web-marketing
group, she was running into walls
when she sought advancement.
‘The organisation thought she
hadn’t earned her stripes,’ says Kim
Wipf, a senior human resources direc-
tor, who was matched up with Ms
Cockerill as a mentor in a six-month
pilot programme to develop women
leaders. ‘But I saw a person with huge
potential, credibility and leadership
skills. She has a spark about her.’
Ms Cockerill had hoped to move
into mainstream pharmaceutical
marketing, but she had trod an
unconventional path. She had not
come up through the sales ranks,
but had made her mark first
in technology.
Meeting twice a month – once
formally and once informally – Ms
Wipf helped her protégée sharpen
her interview skills. ‘She listened,
reflected and helped me focus on the
less concrete, tangible things I could
bring to the job,’ says Ms Cockerill.
When an opportunity arose to
move into brand marketing, Ms Wipf
encouraged her to take it, even
though, for the time being at least, it
was a step down from her old posi-
tion. Ms Cockerill is performing
strategic planning functions, fore-
casting, targeting and budgeting, and
she is confident about her future.
In a world that prizes intellectual
property and the swift transfer of
knowledge and skills, mentorship is
an increasingly valued practice.
Mentorship relationships take many
forms. There are technical mentors,
who work on skill development, and
career advisers who provide guid-
ance about the company for less
experienced colleagues. There are
formal and informal mentoring pro-
grammes. There are peer counselors,
new hire mentors and mentors for
managers transferring oversees.
Nicole Williams, author of Wildly
Sophisticated: A Bold New Attitude
for Career Success, describes five
basic types of mentors: the cheer-
leader, who offers unconditional
support; the taskmaster, who cracks
the whip; the teacher, who exudes
‘Yoda-like wisdom’; the connector,
who passes along resources and con-
tacts; and the muse, who ‘fuels your
inner fire’.
Pat Rowe of The Rowe Partnership,
a talent assessment expert, says there
is a correlation between profits and
employee development programmes,
such as mentoring. Fortune maga-
zine’s 100 Best Companies to work for
outperformed the S&P 500 by 80 per
cent over the last 10 years, he says.
Even in 2002, when the market
tanked, the same companies returned
9 per cent to their investors.
Having interviewed thousands of
executives and senior managers, Mr
Rowe says most found their own
mentors and have had a variety of
them throughout their careers. ‘They
want to advance, and they realise
they do not know it all. They need
seasoned advice on how to develop
themselves for higher-level roles.’
Thomas Sweifel is a Columbia
university professor, author and
chief executive of Swiss Consulting
Group, a worldwide executive coach-
ing organisation. He has had five
mentors in his career. The first was
a boss who was brutally critical but
taught him to run workshops. ‘There
was probably no better training, but
it was baptism by fire.’ (Most formal
programmes discourage mentorship
relationships between executives
and the people who report to them.)
Mr Sweifel says: ‘We get to the
point that we know so much, we
think we are really great. That is a
terrible pitfall. We can always learn.
I’m always looking for what some-
one can teach me.’
Many companies have developed
programmes to help members of
minority groups, who may not have
had strong corporate role models. In
1971, Pat Hall landed a job as a
phone clerk at Chubb Insurance and
worked her way up to a vice-president
position. As an African-American, she
has become a favoured mentor among
younger minority employees.
‘Mentees appreciate that I’ve
walked in their shoes. They know
that to advance in any organisation,
you have to overcome obstacles.
They know my wisdom and I’m will-
ing to share it.’
Lori McKee, a project manager in
her fourth year at Chubb, went to
Ms Hall for help in starting a book
club for women of colour. Two years
later, 19 women participate in
lunchtime conference calls from four
different locations. They have been
dissecting lessons on change and
risk in books like Spencer Johnson’s
Who Moved My Cheese?
Ms Hall helped Ms McKee get
company backing for the book group
and develop its structure. ‘I’ve
learned to take risks and not to be
afraid of challenge and failure,’ says
Ms McKee. Bill McDuffie, an assis-
tant Chubb vice-president and
another of Ms Hall’s mentees, also
sings her praises. ‘Pat doesn’t sugar-
coat advice. Once I was in a
presentation with her. I thought I
did well, but I asked her opinion.
She said, ‘You were OK, but you
seemed like you couldn’t wait until
you could sit down.’ She said I was
stiff and my body language could
have been more expressive.’
Mr McDuffie began to read about
communications skills and talked
with others about them. He began to
improve. Now he is a mentor to
others, but he is not as good at it as
Ms Hall, he says. ‘I get too focused
on my own work, on my own career.
Mentoring is very challenging, an
awesome responsibility.’
Like everything else in corporate
management, mentoring can now be
facilitated online. Randy Emelo is
vice-president of knowledge design
for Triple Creek Associates, a com-
pany that helps businesses craft
employee development programmes.
He sees mentoring as a boost to pro-
ductivity, particularly in large
companies with far-flung offices.
The philosophy behind his com-
pany’s customised application,
named Open Mentoring, is that no
one is left out and everyone shares
their time, knowledge and skills.
The application, now in use in 26 of
the world’s largest companies, is
helping potential mentors and
mentees to identify each other and
monitoring the relationships. ‘When
people choose each other ... the rela-
tionships work,’ he says.
Many people do without mentors
because they are unwilling to ask
for help, says Ms Williams. ‘In con-
versations with women across the
country, I’ve found that, while we’re
more than willing to give help,
we’re much less likely to be willing
to accept it. A willingness to accept
help requires feeling worthy at
the core.
‘Good help makes you feel
empowered, enriches your experi-
ence, and gives you the strength to
go further and faster,’ she says.
(Reproduced with permission from the Financial
Times Limited, © Financial Times 24 February 2004)
1026
BUSINESS PRESS
Relevance to other chapters
Chapter 10 The Nature of Learning
Chapter 19 Human Resource Management
Chapter 23 Management Development and Organisational
Effectiveness
Questions
Discuss critically the extent to
which you:
1 Recognise a correlation
between profits and employee
development programmes such
as mentoring.
2 Believe that mentoring can be
facilitated effectively online.
In the office canteen is a framed
sheet of A4 paper that says: ‘If you
wish to display your hobby or collec-
tion in this showcase please contact
xxxx on ext xx.’ I noticed this little
sign for the first time last week,
though it appears to have been
there for many years. The person
named on it stopped working here a
long time ago. In all that time, no
one can remember ever seeing a
hobby displayed – which is a bit sad,
though maybe just as well.
I have a colleague with a compost
fetish who I am certain would have
responded positively to any invita-
tion to bring some decomposing
matter into the office. Fortunately, he
had never noticed this notice, either.
This is one of the funny things
about office signs. Someone puts
them up in a moment of officious-
ness or optimism and they can stay
there indefinitely without anyone
paying any attention.
This sign made me wonder how
many other things I had looked at
every day without ever seeing
them. So last Thursday I conducted
a wall audit to find out. The experi-
ence has left me feeling my place of
work is a lot odder than I had previ-
ously thought.
First consider the fire extinguish-
ers. Screwed into the wall on top of
each one is a picture of a fire extin-
guisher with some flames nearby.
This would add value only if people
actually thought it was, say, a water
fountain. Just in case there were
any confusion on that score, next to
the water fountain are three signs.
The first is screwed into the wall
and says ‘Drinking Water’. Above
that is a larger green sticker which
also says ‘Drinking Water’ with a
big green tick beside it. Alongside is
a small framed sign saying: ‘This
drinking water is now fitted with an
nsa water treatment system. If you
have any questions or comments
please speak to the Corporate
Administration Department.’
In fact, I have three questions.
What is nsa? What is the Corporate
Administration Department? Why
do we need three notices on a self-
explanatory piece of kit?
As I wandered around peering at
signs, I became more and more
alarmed. In reception there is one
saying: ‘Level of Building Security’,
and inside the window, ‘ALERT’.
Then, on the stairs, it says: SAFE
AREA C. Again this raises more
questions than it answers. Where is
Safe Area B? And is the rest of the
building an unsafe area?
I am guessing that my office is no
more baffling than yours. A friend
tells me that in the male lavatories
at the swanky plc where he works is
a sign saying NOW WASH YOUR
HANDS. The puzzling thing about
this sign is that the word ‘hands’ is
underlined, as if to avoid confusion
with other body parts employees
might be washing.
I have no idea whose job it is to
put up these signs in offices but I
imagine senior management is not
usually implicated. The same cannot
be said for all the notices that are
erected by management in the hope
of changing the opinions and behav-
iour of the people who see them.
The walls of an office are an open
invitation for a company to say
something to its employees. The
problem is that the harder employers
try the worse they tend to do. It is
almost tragic to think of the compa-
nies that buy those off-the-peg
motivational posters in such vast
supply. One new offering shows the
moon above water with the caption:
‘Contemplation. If today was perfect,
there would be no need for tomor-
row.’ From a philosophical point of
view this is hogwash. Another shows
a red rose underneath which it
reads: ‘Passion: Nothing in the world
has ever been accomplished without
passion’ – which is so at odds with
the facts that it is hard to know
where to
begin.
More individual, but no more effec-
tive are the tailor-made signs. First
are the flashing electronic board dis-
plays. I have a special dislike of those
that track movements in a company’s
share price. These may be motiva-
tional when the price is going up, but
are disastrous at other times. They
say to employees as they leave every
evening : Your stake in this fine com-
pany is worth less than it was this
morning! Goodnight!
Other electronic boards can be
dangerous, too. A reader tells me
about one that hangs in her office
tracking her team’s project. It says:
Number of days to completion –
1,397. As a deadline junky, I would
take this as a standing invitation to
take the next 1,396 days off.
Many companies heroically use
their walls to try to get their
employees to behave better or feel
more part of a team. The walls of
Lehman used to be plastered with
its nonsensical slogan ‘where vision
gets built’. To all the admirable
pedants at that bank (who knew
that visions are logically not suscep-
tible to ‘getting built’) this served as
a daily irritant.
Microsoft runs no risk of staff not
noticing its motivational offerings.
In the past week or so it has erected
a revolving, three-panel, 9ft display
in its UK atrium with pictures bear-
ing the slogan ‘Your potential, our
passion’. Saatchi and Saatchi has
set its message into the stone of the
floor of its offices in Soho. Every vis-
itor walks over a message saying
‘Nothing is impossible’. In real life,
there is an infinite number of things
that are impossible. One of them is
to change behaviour with slogans.
These notices are becoming
harder to ignore. I have just
received a press release from a com-
pany that is selling giant plasma
screens to offices for reception areas
so they can display ‘dynamic sig-
nage and semi-captive pause points
for captive audience networks’. I
BUSINESS PRESS
1027
Driving your employees up the wall
Lucy Kellaway
ARTICLE 12
FT
don’t understand this, yet I know I
don’t like it. It makes me thankful
for the sad yellowing signs in my
office, and starts me wondering
whether a compost display would be
so bad, after all.
(Reproduced with permission from the Financial
Times Limited, © Financial Times 8 February 2004)
1028
BUSINESS PRESS
Questions
Discuss critically the extent to
which you:
1 Believe notices erected by
management influence the
opinions and behaviour of
people who see them.
2 Recognise the significance of
selectivity and attention in the
process of perception.
Relevance to other chapters
Chapter 2 The Nature of Organisational Behaviour
Chapter 11 The Process of Perception
Chapter 12 Work Motivation and Rewards
A focus on workers’ individual needs
Adam Plowright
ARTICLE 13
FT
The sight of a lesser-known charity
such as the National Asthma
Campaign being the 39th best place
to work in the UK may come as a
surprise to many.
It immediately invites witless
remarks about work being ‘a bit of a
wheeze’ – a phrase staff are well
rehearsed in dealing with, feigning
laughter and swiftly moving on to
the serious matter of their extremely
accommodating human resources
(HR) policies.
The National Asthma Campaign
(NAC) was founded 12 years ago
through an amalgamation of three
asthma charities. A modest organisa-
tion of fewer than 90 full- and
part-time employees, it has spent
£16m since 1990 funding research to
improve treatments and campaigning
for the 5.1m sufferers nationwide.
Its inclusion on the list delights
Donna Covey, chief executive, who
views the happiness of her staff as
critical to the charity’s success. ‘It’s
becoming increasingly competitive
for charities, so it’s more important
for us that we have a good image
and motivated staff,’ she says. ‘For
the people who donate or raise
money for our organisation, when
they ring the office they can hear
the smile at the end of the phone.’
The company offers the usual raft
of employee benefits, the majority of
which have become prerequisites for
any organisation with pretensions of
challenging Asda’s grip on the HR
crown: pension, life insurance, gener-
ous annual leave allowance, health
scheme, season ticket loans, coun-
selling services and high levels of
staff participation.
They are also excellent at training
and development. All employees have
a professional development plan, and
a recent visit from Investors In
People (IIP) inspectors led to a spe-
cial endorsement of their work.
‘They were so pleased that they
had no recommendations to make,’
says Fiona Evans, HR director. ‘I
was asked to become an IPP panel
assessor on that basis.’
But these reasons do not fully
explain the bonhomie evident at the
north London offices. Crucial to suc-
cess, explains Ms Evans, was the
identification of the individual needs
of its employees. Once determined,
the management could set about
trying to offer relevant benefits.
‘We will never be able to compete
with the private sector in terms of
the financial rewards – no one
comes into this expecting to become
rich – but what we can do is offer
better terms and conditions for
staff,’ says Ms Evans.
‘What you have to remember is
that over 70 per cent of charity
workers are women. If you’re look-
ing at your workforce, you need to
look at what’s important for them.’
Indeed, a glance at the organisa-
tion’s demographics reveals less than
a third of total staff at NAC are men.
Salaries, while far from forcing their
benevolent recipients into a life of
penury, are hardly spectacular.
The annual pay packet for an
experienced fundraiser in his or her
first year would be little over £25,000.
‘We now have very good flexible,
family-friendly working practices,’
continues Ms Evans. ‘This allows
people the opportunity to balance
work and their family, and the
stresses of living in the London area.’
As well as the flexible working
conditions, they offer generous
maternity and paternity leave, child-
care vouchers, generous time off to
care for dependents, and a number of
work-life balance initiatives.
Mother-of-two Elaine Greenway,
who works 30 hours over four days
as a community involvement officer,
is inspired by the company’s poli-
cies. ‘Last week my son was ill with
glandular fever and I took a week
off to care for him,’ she says. ‘It was
an enormous help not to have to
take annual leave, and quite
unusual because he’s 15 years old.’
Greg Yacub, IT director, recently
took advantage of his entitlement to
a month of paid paternity leave. He
is grateful not only to the organisa-
tion for the valuable bonding time,
but also to colleagues who made it
possible. Having spent 14 years at
US banks in London, he described
the experience as a ‘breakthrough’.
After starting with the charity
four years ago, Ms Evans changed
the pay structure and appraisal
system to reflect their belief in
‘managing through objectives’.
‘We’re not heavy-handed, watch-
ing clocks and seeing what time
people come in and leave,’ she says.
Ms Covey does not agree that this
type of management is only possible
in smaller organisations. ‘It’s actually
about a mindset, which is true
whether you’re a large organisation
or a small one.’
(Reproduced with permission from the Financial
Times Limited, © Financial Times 28 March 2003)
BUSINESS PRESS
1029
Questions
Discuss critically the extent to
which you:
1 Are motivated by factors other
than money.
2 Believe identifying the
individual needs of employees
leads to successful bonhomie.
3 Agree that the type of
management at NAC is also
possible in large organisations.
Relevance to other chapters
Chapter 12 Work Motivation and Rewards
Chapter 18 Job Satisfaction and Work Performance
Chapter 19 Human Resource Management
Advantages of promoting a boutique mindset
Amin Rajan
ARTICLE 14
FT
Fund managers owned by banks
and insurance companies on both
sides of the Atlantic have one thing
in common: they are promoting
more teamwork within the overall
star culture, duly recognising the
‘craft’ nature of activities in the
front office.
In doing so, they are trying to
emulate the success of partnerships,
such as Capital International and
Baillie Gifford, or independents
such as T Rowe Price and State
Street Global Advisors.
Generating alpha requires a com-
plex interaction of instinct and a
creative work environment. The
business, so the argument goes,
needs to be organised around dis-
tinct product-based teams with
their own profit and loss accounts
and minimal bureaucracy.
The underlying logic rests on the
view that creativity comes from per-
sonal instincts and intuitions. It is
sparked by intensive interaction
between people in a small group oper-
ating in a hassle free environment.
Two in five fund managers
around the world are now re-engi-
neering their businesses around
product teams, according to esti-
mates by Create and KPMG, the
professional services company.
The initiative at the UK business
of Deutsche AM, first reported in
FTfm last month, is one of many
now in progress.
The logic runs as follows. Self-
managed teams promote a small
company mindset in a large com-
pany environment. In the front
office, at least, these teams promote
entrepreneurial behaviour on the
one hand and knowledge sharing on
the other. As such, the teams can
also potentially dilute the long pre-
vailing ‘star’ culture.
Research done inside one global
firm shows that many alpha produc-
ers are not necessarily stars in the
traditional sense. They are intro-
verts who shun publicity and
job-hopping in equal measure. The
challenge is to motivate them to
give their best.
Successful examples of
autonomous teams, involving people
from different crafts, were reported
by Procter & Gamble and Volvo
Motors in the 1970s. Less well
known are the acute teething prob-
lems encountered on the shop floors
in both cases.
To start with, most craft people
were found to have individualistic
styles of working, with their first
loyalty to their craft, then to their
peers and then to their firms.
Getting them to work in teams was
like herding cats.
Furthermore, as individual con-
tributions became hard to quantify,
petty squabbles became inevitable.
Last, and most important, it took a
while for managers to realise that
teams only work when their mem-
bers trust one another and display a
strong sense of reciprocity.
In the fund management envi-
ronment, these problems have been
no less acute. Some portfolio man-
agers prefer to rely on analysts for
advice, others do not. A clear invest-
ment philosophy and process are an
essential part of corporate brand.
Yet they are viewed as bureaucratic
intrusions by some self-managed
teams. Such teams also like to do
their own recruitment of staff, often
bypassing the criteria set by human
resources departments.
Bonus allocation is often a bun
fight when performance criteria
either vary between teams or are ill-
defined. Teams need elaborate
management information systems
to monitor their progress; these are
taking a while to develop.
Last, but not least, turf wars are
common when it comes to owner-
ship of client relationships. If these
problems are not tackled, teams end
up with a strong silo mindset.
But, these are nothing more than
the birth pangs of the new ways of
working. For fund managers with
partnership structure or stock
market quotation, these problems
are less acute; they have a ‘one for
all, and all for one’ ethos.
In T Rowe Price, for example, the
culture of longevity has ensured that
people work in teams but at the
same time recognise their wider cor-
porate roles and responsibilities.
Compensation systems are also used
to reinforce the right behaviour.
The key point to note, however, is
that team working is not a panacea
in fund management. It is part of a
holistic approach. Its success
depends upon the extent to which it
improves investment performance,
raises pension trustees’ comfort level
about the collective horsepower
behind the investment philosophy,
and enhances the asset allocation
and stock selection capabilities.
(Reproduced with permission from FT.com, 14 March
2004, © Amin Rajan)
1030
BUSINESS PRESS
Questions
Discuss critically the extent to
which YOU:
1 Argue the advantages for
distinct product-based team.
2 Believe that self-managed
teams promote a small
company mindset in a large
company environment.
3 Agree that ‘getting people to
work in teams is like herding
cats’.
Relevance to other chapters
Chapter 10 The Nature of Learning
Chapter 13 The Nature of Work Groups and Teams
Chapter 14 Working in Groups and Teams
Avoiding the madness of groupthink
Michael Skapinker
ARTICLE 15
FT
You will not find me complaining
about the inconvenience of airport
security. I know it is for my own
safety. But when I am asked to
remove my shoes and put them
through the X-ray machine at a US
airport, I cannot help thinking: ‘The
terrorists have already done that one.’
We guard against the threats we
know. But it is the ones we have not
yet discovered that should really
worry us.
Donald Rumsfeld, the US defence
secretary, said: ‘There are known
knowns; there are things we know
we know. We also know there are
known unknowns; that is to say we
know there are some things we do
not know. But there are also
unknown unknowns – the ones we
don’t know we don’t know.’
Mr Rumsfeld received the UK-
based Plain English Campaign’s
Foot in Mouth award for that state-
ment. But while his words were
widely ridiculed, there was a certain
wisdom to them. The reason the
September 11 attacks had such a
devastating emotional effect was not
just because of the loss of life, but
because nothing in our previous
experience prepared us for them.
Except, as we now know, some
people suspected that something
along those lines was being planned.
Before the attacks, a Federal
Bureau of Investigations agent in
Phoenix, Arizona sent a memo to his
superiors noting a pattern of Arab
men signing up for flight school.
The FBI office in Minneapolis
had been warning about Zacarias
Moussaoui, a French citizen of
Moroccan descent who had turned up
at a local flight school wanting to
learn how to fly Boeing 747s. After the
attacks, he was indicted for allegedly
being part of the hijacking plot.
Before September 11, however,
the agent’s warnings were ignored.
With the possibility of terrorist
attack so much on governments’ and
companies’ minds, it would be com-
forting to assume that any such
warning would be taken seriously
today. But we cannot be sure. Most
organisations have a very poor
record of listening to lone voices
who insist something terrible is
going to happen. And if that some-
thing terrible is new and different
from what happened last time, the
chances of warnings being ignored
are even greater.
One of the best accounts of why
warnings of impending disaster are
ignored is a book called Groupthink,
by the psychologist Irving Janis. He
was particularly interested in why
highly intelligent leaders and
strategists take decisions in com-
mittee that none would have
countenanced individually. His book
was a study of military and political
disasters from the Cuban Bay of
Pigs invasion to Watergate, but the
same principles apply to companies
and their boardrooms.
‘Groups, like individuals, have
shortcomings,’ he wrote. ‘Groups can
bring out the worst as well as the
best in man. Nietzsche went so far
as to say that madness is an excep-
tion in individuals but the rule in
groups. A considerable amount of
social science literature shows that
in circumstances of extreme crisis,
group contagion occasionally gives
rise to collective panic, violent acts
of scapegoating, and other forms of
what could be called group mad-
ness. Much more frequent, however,
are instances of mindless conformity
and collective misjudgment of seri-
ous risks, which are collectively
laughed off in a clubby atmosphere
of relaxed conviviality.’
That clubby atmosphere charac-
terises many company boards, of
course. It is not that people who
have concerns or who have heard
worrying rumours do not speak out.
It is that they do not want to
speak out too often. Those who
develop a reputation for perpetual
dissidence are treated with initial
caution by the others and eventu-
ally subtly excluded from their
deliberations. As Prof Janis wrote:
‘In studies of social clubs and other
small groups, conformity pressures
have frequently been observed.’
No one likes a rebel. One might
imagine that, after the September
11 attacks, the FBI apologised to
those agents whose warnings it had
ignored and hailed their efforts. Far
from it. Coleen Rowley, a lawyer in
the FBI Minneapolis office, who sent
a memo on the pre-September 11
failings to the bureau’s director and
to two members of the Senate intel-
ligence committee, has been called a
traitor by some of her colleagues.
Few whistle-blowers are seen as
heroes in any organisation.
Corporate governance reformers
have been alert to these dangers.
They were motivated not by worries
that companies would fail to spot
dangers to their security but by evi-
dence that boards had failed to
prevent fraud or mismanagement.
The corporate scandals at US
companies such as Enron and
WorldCom, and management fail-
ures at UK companies such as
Marconi, have led to increased focus
on the importance of outside direc-
tors on both sides of the Atlantic.
Reformers believe outside directors,
meeting and acting separately from
executive management, can provide
an independent and objective per-
spective and ensure dissident views
continue to be heard.
Will it work? It may, but even the
strongest-minded committees can
become used to seeing matters in a
certain way, ignoring other possibili-
ties that may threaten the future
security of the business.
Prof Janis recommended that
committees ask: ‘Are we allowing
ourselves to become victims of
groupthink?’ Acknowledging the
danger is half the battle. There may
be another few questions worth
posing. After reviewing the possible
threats to the business, someone on
the board could say: ‘That takes care
of the known knowns and the
known unknowns. Who in this
organisation can tell us about the
unknown unknowns?’
(Reproduced with permission from the Financial
Times Limited, © Financial Times 8 March 2004)
BUSINESS PRESS
1031
Questions
Discuss critically the extent to
which you:
1 Identify with the concept of
‘Groupthink’.
2 Accept the contention that
‘madness is an exception in
individuals but the rule in
groups’.
3 Believe that conformity
pressures unduly suppress
rebels or whistle-blowers.
Relevance to other chapters
Chapter 13 The Nature of Work Groups and Teams
Chapter 14 Working in Groups and Teams
End to ‘departmentalism’ a vision of things to come
Nicholas Timmins
ARTICLE 16
FT
The civil servants picked to attend
Tuesday’s gathering were treated to
a glimpse of how their profession
will look in the future.
Sir Andrew Turnbull, the cabinet
secretary, conjured a world in which
taking leave to look after an elderly
parent is seen as more desirable
than winning a scholarship to study
social policy in the United States
and where future Sir Humphreys
will no long be seen simply as their
minister’s senior policy adviser but
as his ‘senior delivery agent’ too.
The paper which Sir Andrew pre-
sented to the conference, ‘Delivery
and Values’, pulls together much
that is already happening – includ-
ing much tougher measurement of
civil service performance, less likeli-
hood that even senior mandarins
will end their careers in the service
and much better redeployment serv-
ices to enable those who do not
shape up to be shipped out.
But these changes are nothing
compared to the agenda for shared
back office services, for policy-making
across departments, for the import of
specialist skills and an end to the
‘departmentalism’ that Sir Peter
Gershon has recommended – themes
which Tuesday’s document embraces.
More specialists in human
resources, IT and finance will be
brought in but action will be taken
to round them out for policymaking
and other posts, so that people have
‘career anchors’ but work in a vari-
ety of roles.
This, in a sense, is the other side
of the policy coin that has been pur-
sued to date – giving generalists
experience in specialist areas or
frontline services, rather than leav-
ing them only with the skills of the
mandarin of old – policymaking by
‘fine analytical minds’ capable of
‘lucid exposition of issues in writ-
ing’, as yesterday’s paper puts it.
This is the second time the Blair
government has waded into the
choppy waters of Whitehall reform.
Labour had inherited a reform
agenda of sorts from the
Conservatives. But by 1998, little
more than a year into government,
prime ministerial frustration at the
pace of change led him to launch
the new cabinet secretary Sir
Richard Wilson on a fresh wave of
reform which led to ‘Modernising
Government’ in 1999.
That paper called for more focus
on public sector users, better
management of public services,
more interchange with the private
sector and more ‘joined up’ strategic
policymaking.
Those changes have had some
effect. On Tuesday, Sir Andrew – who
has been given a year to report back
to Tony Blair on progress – was able
to boast an emblematic achievement:
while one in six of the current senior
civil service were outside recruits, no
fewer than one in three of those
hired last year came from that back-
ground, he announced.
In his own speech the prime min-
ister had also trumpeted some
gains: Jobcentre Plus – which com-
bines benefits and work search –
the rough sleepers’ initiative, and
big drops in the time it takes to
process asylum applications.
Amplifying his blueprint for the
future, Sir Andrew echoed the
Gershon recommendation that
headquarters of Whitehall depart-
ments should shrink – Sir Peter has
suggested from about 3,500 to 4,500
at present to as few as 1,500. Lead
departments would act for others on
shared services.
‘It is very hard to argue against
better procurement and shared
services that are not only cheaper
but more effective,’ one senior civil
servant said on Tuesday.
He also noted Labour’s proposals
offer the prospect of some gain from
the pain – more money for the front
line – rather than merely the pain
of cash saved that the Conservative
package, with its aim of tax cuts,
appeared to offer.
(Reproduced with permission from the Financial
Times Limited, © Financial Times 24 February 2004)
1032
BUSINESS PRESS
Questions
Discuss critically the extent to
which you:
1 Agree with the suggestion for
shared back office services and
policy making across
departments in the civil service.
2 Support the idea of giving
generalists experience in
specialist or frontline services.
Relevance to other chapters
Chapter 6 The Nature of Management
Chapter 15 Organisation Structure and Design
A long-distance relationship
Priscilla Awde
ARTICLE 17
FT
Corporations based in developed
economies have long taken advan-
tage of skilled and cheap labour in
developing countries. But though
this is a familiar tale in manufac-
turing, back-office software projects
or round-the-clock operations, there
is a new twist to this story.
Lured by promises of dramatic
payroll cuts, an increasing number
of companies are re-locating their
customer-facing operations abroad –
call centres are being ‘offshored’, as
the new verb has it.
Yet closing or downsizing call cen-
tres in established western markets
and re-locating them in emerging
regions is proving contentious. In
Britain (a mature call centre market
second only to the US in size), gov-
ernment incentives successfully
encouraged call-centre growth in
regions hit by manufacturing job
losses. Threatening jobs in this
‘replacement industry’ increases
insecurity and raises concern over
the social, political and economic
implications of redundancies.
Whilst Datamonitor estimates
that only five per cent of all call
centre agent positions worldwide
will be moved offshore in 2007,
recent adverse publicity has made
those involved in the offshore indus-
try reluctant to discuss their plans.
At first glance, moving centres
offshore makes business sense.
People-related costs make up about
70 per cent of the cost of running a
call centre, making the prospect of
shaving up to 60 per cent off the
payroll very attractive. Average
starting salaries for British call
centre agents are just under
£13,000 a year; an equivalent agent
in India (the most established
market for offshore call centres)
makes £1,500 a year.
Compelling as the economic argu-
ment may appear, the process of
moving offshore is neither simple nor
quick. The technical complexities of
integrating remote sites and corpo-
rate applications may be expensive,
time-consuming and require long-
term management. Savings in
salaries may be offset by the expense
of training agents in the national or
corporate culture and language
either abroad or at home.
As the public face of an organisa-
tion, call centres are often the
company’s first and perhaps only
point of contact with customers. The
way in which people are treated and
the efficiency with which their
queries are handled have a direct
effect on customers’ perception of
the organisation and therefore their
loyalty to it. It costs more to find
new customers than it does to keep
existing ones – hence the emphasis
on customer relationship manage-
ment (CRM).
While it takes years to build a
favourable brand or corporate
image, damaging it takes far less
time. Steve Morell, principal analyst
at UK research firm ContactBabel,
questions the motivation for off-
shoring: ‘There is too much
emphasis on cost. Companies need
to concentrate on efficiency because
customers walk if queries are not
properly answered. Companies can
afford to have customers call back
when they are paying low salaries
but that has an impact on the brand
and how the company is perceived.
People are annoyed because they’re
getting less well served.
‘Although companies benefit eco-
nomically from offshoring, the
advantages are not passed on to
customers. It’s very difficult for cus-
tomers to see what’s in it for them.’
Comparing Britain and India,
ContactBabel’s research showed
that although Indian agents
answered phones faster and worked
six hours a week longer, they han-
dled nine calls per hour compared to
11.2 for British agents. Further, the
mean average for first-time call res-
olution in India is 66 per cent,
against 77.1 per cent in Britain –
which translates into varying levels
of customer satisfaction. Staff attri-
tion rates are higher in Indian
centres, with graduates staying an
average of 11 months compared to
three years.
Alex Kwiatkowski, senior consult-
ant at Ovum, believes: ‘Corporations
can’t just make the decision to locate
offshore without taking other factors
into consideration, including the
effect on brand image. Some cus-
tomers may not want to deal with an
offshore call centre however the risk
can be mitigated if they get what
they need. Locating simple, low-
value ... transactions offshore is less
likely to damage customer satisfac-
tion. Keeping major, high-value
enquiries, disputes and complex
issues at home means that the off-
shore centre complements existing
operations. The costs balance out. It
makes good use of existing staff and
increases customer satisfaction – a
realistic and achievable utopia.
‘There is a minefield of issues to
consider, especially for offshore call
centre operators. The industry is
loosely regulated, if at all, but the
EU has tight rules about exporting
personal data. Many may just
ignore data protection legislation,
leaving it up to customers to
suffer the inconvenience – but this
is wrong.’
Unlike the human issues, the
technical challenges of connecting
people two or three thousand miles
apart are largely solved. Although
successful offshore service providers
are located in regions that have
sophisticated communications infra-
structure, there may still be
problems. ‘The challenge is in the
access layer not the core network,’
explains Peter Finter, marketing
director of enterprise business at
Nortel. ‘The interconnect between
carriers and the last mile are the
real challenges. It’s important to
ensure that wide area network
[Wan] technologies fully exploit core
network capabilities. Network man-
agement infrastructure processes
are critical.’
Regardless of their geographic
location, agents must have real-time
access to the same kind of networks
– computer telephony integration
(CTI) applications that run over
high-speed, secure, broadband IP
networks. As the value of out-
sourced transactions increases, it
becomes vital for remote sites to be
properly integrated with corporate
functions and onshore centres.
Reputable outsourcers not only use
leading technology but have the nec-
essary on-site expertise to run and
manage these complex systems.
‘In the past, call centres were
standalone units but are now deeply
integrated – especially with CRM
systems creating a challenge for off-
shore locations,’ says Carsten Stehr,
vice-president for multimedia appli-
cations at Siemens Enterprise
Network Group. ‘Offshore centres
are part of the overall business
process and require network connec-
tions between the remote site and
home base. Centres were networked
over leased lines, which is reliable
but expensive. IP networks are more
flexible and remote agents can be
located anywhere, managed and
supported from one location in vir-
tual call centres. Technical
integration is more complex but,
enabled by IP technology, is driving
the need for careful, up-front plan-
ning. Integrating applications into
the CRM or ERP [Enterprise
Resource Planning] worlds requires
professional services.’
Apart from the technology, the
success of any offshore project lies
in the extent to which an organisa-
tion understands CRM and the
potential impact of offshoring on the
corporate brand. ‘People are getting
smarter about brand impact,’
believes Ryan Powell, an analyst at
Datamonitor. ‘Organisations should
put in place key performance indica-
tors (KPI) specifically linked to
brand image, and clear service-level
agreements so the service delivered
meets the requirement to enhance
the brand. Offshoring can have posi-
tive benefits depending on what is
outsourced and how it is measured.
‘The big question is: are compa-
nies rigorously adhering to their
own standards and do they under-
stand and know exactly what they
want to outsource and how it
impacts on and interfaces with the
rest of the organisation? Companies
need to concentrate on what they
want to do with CRM and shouldn’t
blame the outsourcer for what are
essentially internal business
process problems.’
CRM is about improving and
streamlining the customer experi-
ence and, linked into call centres, is
ideally a better, more cost-effective
way of creating loyalty. Sarah Faux,
BUSINESS PRESS
1033
chief executive of Datapoint, sug-
gests: ‘There is a very real argument
for moving low-value, high-volume
transactions offshore. If all systems
are properly integrated so that
agents have real-time access to
screen pops, and customer queries
are answered fast and dealt with
efficiently, how much do people care
about where a call centre is?’
Whoever answers that question
wins the jackpot.
(Reproduced with permission from the Financial
Times Limited, © Financial Times 18 February 2004)
1034
BUSINESS PRESS
Questions
Discuss critically the extent to
which you:
1 Accept that moving call centres
offshore makes good business
sense.
2 Believe that it is possible to
balance the costs of locating
offshore and increase customer
satisfaction.
Relevance to other chapters
Chapter 5 Organisational Goals, Strategy and Responsibilities
Chapter 16 Patterns of Structure and Work Organisation
Network protection is a key stroke
Maija Pesola
ARTICLE 18
FT
Information technology is taking an
ever more prominent role in com-
pany disaster recovery plans. But
expensive kit is being let down by
lack of proper management, focus
on the wrong types of emergencies,
and insufficient review and testing.
IT disaster recovery is no longer
the province of tech-heavy companies
alone. As the so-called ‘e-business’
model spreads throughout all differ-
ent kinds of companies, the corporate
IT system has come to be seen as the
life-blood of a business.
Businesses increasingly run their
databases over office-wide networks,
link employees’ computers via
office-wide wireless-lan (local area
network) connections, sell goods and
run support services over the inter-
net and rely on receiving customer
commissions by e-mail.
For any part of this network to
fail could have wide-ranging conse-
quences. Recent research by the
Business Continuity Institute and
the Chartered Management Institute
found most businesses considered IT
systems their priority when prepar-
ing for a disaster. Losses from
damage to key IT systems can be
extremely punishing.
According to IBM, one hour of IT
downtime during which a bank is
unable to trade could cost $6.5m.
Collapse of a credit card handling
system can cost $2.6m, and even a
travel agent taking airline bookings
could lose $90,000 an hour if the
reservation system fails.
Statistics from the National
Archives and Records Administration
in the US suggest 93 per cent of com-
panies that lose their data centre for
10 days or more due to a disaster tend
to file for bankruptcy within one year.
New regulations are also throw-
ing a particular spotlight on IT
business continuity issues. The Basel
II rules for the European banking
sector, for example, stipulate banks
must have a resilient back office
structure by 2007, and this, says
Simon Mingay, analyst at Gartner,
the technology research house, has
become one of the key factors push-
ing banks to update their IT
business continuity systems.
Spending, therefore, is robust,
with the public sector and regulated
industries, such as the financial
sector, pharmaceuticals and utili-
ties, leading the way.
Even in the small-to-medium size
enterprise sector, which is typically
slow to spend on business continu-
ity, vendors such as IBM are
reporting 10 per cent growth in
sales. Gartner estimates that com-
panies put about 2 to 4 per cent of
their IT budgets into business conti-
nuity planning.
For a big bank, spending could
be in the region of $20m to $40m
according to Philippe Jarre, IBM’s
business continuity and recovery
services executive with responsibil-
ity for Europe, the Middle East
and Africa. When it comes to fail-
ures of computer hardware and
software, companies are very well
prepared, and tend to recover
extremely quickly and well, says
CMC’s Debbie Rosario.
Recent massive power cuts in the
US and Europe have also heightened
awareness of utility failures, and
most companies tend to be well-
braced for these, with uninterruptible
power supplies installed. Ms Rosario’s
study found that 75 per cent of com-
panies had a business continuity plan
in place for these. However, they are
less aware of more human risks –
error, deliberate malicious action, and
security breaches. Only about a third
of companies had prepared for these
risks, although they emerged in the
Compass survey as the third most
likely cause of an IT disaster.
‘Companies really focus on hardware,
but most organisations don’t think
enough about the information that is
walking around in people’s heads,’
says Ms Rosario.
A key employee who has accumu-
lated a great deal of knowledge about
the business, can become a data loss
for the company if they leave without
making that knowledge accessible to
the rest of the business.