Mullins L.J. Management and organisational behaviour, Seventh edition
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Companies are also focusing too
much on hardware, and not looking
at the architecture of their software
applications, says Mr Mingay
at Gartner
.
Many applications are inter-con-
nected these days – back office stock
inventories linked to front-office
transaction software and so on – and
the failure of one can easily take
down the other systems as well.
Companies would do better, he
says, to spend time making their
software applications more resilient,
rather than being concerned about
building a remote site. Lack of man-
agement skills may also be part of
the issue, says Mr Jarre at IBM.
‘In the past two or three years
companies have done a lot of recov-
ery work themselves, but they don’t
necessarily have the skills to
manage the programme,’ he says.
‘The IT is 40 per cent of success in
disaster recovery, the rest is how
you manage the people and
processes during the disaster.’
Above all, it seems companies are
not spending enough time testing
and reviewing IT recovery plans.
According to a recent survey by the
U
K’s Department of Trade and
Industry, only 8 per cent of compa-
nies bothered to test their IT
recovery plan. Chris Potter, the
PricewaterhouseCoopers partner
who led the survey, says: ‘Many
businesses think they have good
back-up systems in place, but then
discover they are unreliable when
needed.’ Ms Rosario adds that such
plans must be checked constantly:
‘Risk is dynamic. We need a cultural
change, for people to realise this is
not a one-off exercise.’
(Reproduced with permission from the Financial
Times Limited, © Financial Times 8 March 2004)
BUSINESS PRESS
1035
Questions
Discuss critically the extent to
which you:
1 See corporate IT systems as
the life-blood of a business.
2 Believe it important to think
about what happens when
technology goes wrong.
3 Think more attention should be
given to software applications
and lack of management skills.
Relevance to other chapters
Chapter 7 Managerial Behaviour and Effectiveness
Chapter 17 Technology and Organisations
Relentless rise of the pleasure seekers
Sarah Butcher
ARTICLE 19
FT
What does a company do when it
finds out that a large and increasing
proportion of its workforce consists
of hedonists?
This was the conundrum that
faced Tesco, the supermarket chain,
after it carried out research into the
composition of its workforce. The
study showed that Tesco staff were
increasingly likely to be single and
motivated largely by the urge to fund
overseas travel and leisure pursuits.
The results also suggested that
these so-called ‘pleasure seekers’
were unlikely to take much pride in
their work, would lack commitment
and would have little hesitation
about going to work elsewhere if the
pay were better.
Lynda Gratton, associate profes-
sor of organisational behaviour at
London Business School, details this
and other revelations of Tesco’s
people insight unit in her forthcom-
ing book, The Democratic Enterprise.
Tesco realised, Prof Gratton says,
that the aspirations of its workforce
were changing and that under-
standing its staff would help it
respond to those changes. The
source of the supermarket group’s
insight is simple: the supermarket
employs the techniques it uses for
customer research to help it to
understand its own employees.
The exercise dates back to 2000,
when an employee survey revealed
that 82 per cent of employees
felt Tesco was ‘first for customers’,
but only 64 per cent felt valued by
the company.
David Richardson, director of the
people insight unit, said the com-
pany knew a lot about its customers
but much less about the 200,000
people it employed: ‘It’s easy for big
employers to lose touch with the
fact that different types of people
have different values and are look-
ing for different things out of work.’
In a move reminiscent of Sears,
the US department store chain that
helped to define the link between cus-
tomer and employee satisfaction in
the mid-1990s, Tesco set about asking
its staff what motivated them.
Sears surveyed 80,000 employees
and reached the conclusion that if it
was to be an engaging place to shop,
it also needed to be an attractive
place to work.
Tesco took the research process
one step further: as well as looking at
employee data, it interviewed the
population at large, particularly
people from groups it hoped to
employ more of in future. These
included young graduates, ethnic
minorities and non-working mothers.
‘Pleasure seekers’ were not the
only expanding category. The com-
pany’s research also revealed
increasing numbers of what it
called ‘work/life balance’, and ‘want
it all’ types.
‘Work/life balance’ people were
predominantly older women who
wanted flexible hours and stimulat-
ing work but had little interest in
being promoted.
‘Want it alls’ were ambitious
young graduates, often working in
head office, who wanted a challeng-
ing, well paid career plus the
freedom to pursue personal inter-
ests and family life.
Tesco’s findings relate to demo-
graphic changes. Carolyn Martin of
Rainmaker Thinking, a US company
specialising in the effects of popula-
tion change on the workplace, says
Generation Y (born between 1979
and 1994) is the highest-mainte-
nance workforce to date.
She says they have high expecta-
tions that work will be challenging
and creative and that they will have
the freedom to work in their own
way. In this sense, they are similar
to the ‘want it all’ types.
Conversely, Tesco found that two
traditional employee groups, ‘live to
work’ and ‘work to live’ – comprising
workaholic types and female
employees looking for a top-up
income and the convenience of
working close to home – were likely
to wane.
Armed with these insights, Tesco
has devised working practices better
suited to its eclectic range of employ-
ees. Clare Chapman, Tesco’s human
resources director, says the company
offers career breaks of up to eight
months, enabling ‘pleasure seekers’
to go off and climb Kilimanjaro, for
example. Meanwhile, ‘work to live’
employees can benefit from reduc-
tions on family holidays, short
breaks, driving lessons and magazine
subscriptions.
‘We haven’t introduced specific
things for specific groups. It’s more
a question of being mindful of the
needs of all staff instead of catering
for one or two types of attitude,’ Ms
Chapman says.
She stresses that the employee
groups are not totally separate and
represent concepts rather than real
people: ‘It’s all about attitudes to
work. I’ve never found one person
who was entirely one thing. People
tend to shift between groups at dif-
ferent stages of their life.’
A former ‘pleasure seeker’ with a
mortgage and school fees to pay
could turn into a ‘live to work’ type
until financial commitments have
been met, at which point they may
opt for greater work/life balance.
However, Ms Chapman says that
no matter where they sit on the atti-
tude continuum, employees have
one thing in common: they want
interesting, involving jobs.
With this in mind, Tesco has being
trying to eliminate some of the more
mundane tasks, she says. ‘We’re
trying to take the routine out of the
workplace, and build in more interest.’
For example, it is already on the
way to eliminating the monotonous
task of unloading soft drinks thanks
to merchandising units that can be
wheeled into the supermarket ready
for use.
The employee data have been
available for three years and Ms
Chapman says there are already
signs that improved employee under-
standing is making a difference.
Staff satisfaction is up 10 per
cent. Tesco’s hedonists may be mul-
tiplying but at least they seem to be
getting happier.
(Reproduced with permission from Financial Times, 7
July 2003, © Sarah Butcher)
1036
BUSINESS PRESS
Questions
Discuss critically the extent to
which you:
1 Recognise increasing numbers
of work/life balance types, and
those who ‘want it all’.
2 Accept the suggestion that one
thing people have in common
is interesting, involving jobs.
3 Would like to be a pleasure
seeker – either now or in the
future.
Relevance to other chapters
Chapter 2 The Nature of Organisational Behaviour
Chapter 12 Work Motivation and Rewards
Chapter 18 Job Satisfaction and Work Performance
The survey findings that identify
the 100 best workplaces in the
European Union, give benchmarks
we can compare with similar find-
ings in the US. So how do the best
workplaces in Europe stack up
against the best ones in the US?
In a nutshell, very well. There
are differences, of course, but on the
whole employees gave similar rat-
ings to their companies as their
peers in the US.
For the past seven years, the two of
us have compiled a list of the best US
workplaces for Fortune magazine.
Direct comparisons are possible
because the competitions on both
sides of the Atlantic use the same 55-
question employee survey instrument,
created by the Great Place to Work
Institute of San Francisco.
We were warned Europe would
be different from the US. European
employees would not be as enthusi-
astic as US ones, we were told.
‘You are not going to find workers
singing the praises of management,’
was the advice we received. Wrong,
wrong, wrong.
In country after country, we have
found that in companies where a
mission is shared among manage-
ment and workers, employees have
no problem expressing their enthusi-
asm. While scores achieved by
companies were similar on both sides
of the Atlantic, there were sharp
divergences on some issues. When
employees at the best European
workplaces were asked about the
presence of politicking and back-
stabbing at their companies, their
answers showed they did not see as
much of this as US workers do.
In addition, European companies
scored better on integrity of top
managements.
On the other hand, employees at
the best US workplaces rate their
companies as more family friendly
and feel their companies are better
corporate citizens, in terms of phi-
lanthropy and helping out in
communities. We find the disparity
on the questions related to family
friendliness to be worth special
attention for European executives.
At Europe’s very best workplaces,
for instance, employees were nearly
8 per cent less likely to agree that
their companies make adequate
efforts to help them ‘balance their
work life and personal life’.
This is a big issue on both sides
of the Atlantic. And in this one
regard, the best US companies have
been spending a lot more attention
and money to make their work-
places more attractive to employees
with family obligations, including
onsite childcare centres, flexible
working schedules, lactation rooms
for returning mothers who want to
breastfeed, and financial aid to help
employees adopt children.
These initiatives are far more
common in the best US workplaces
than they are in Europe’s.
Here are other differences that
surfaced in the survey:
■
France has a 35-hour work week
and Danone, the French food and
beverage company, has exported
this standard to its Spanish opera-
tions. However, whether or not a
country has a 35-hour week law, it
is clear that European workers
have more time off than their US
counterparts. Our surveys indicate
virtually all European employees
enjoy at least four weeks not
counting national and religious
holidays. The standard in the US is
two weeks off after your first year,
three weeks after five years and
four weeks after 10 or 15 years.
■ Share ownership and option
schemes are important parts of
compensation in US companies,
especially for managers and top
executives. One of the distin-
guishing features of the
companies on our US list is that
many of them offer share options
or grants to all employees. This is
true at Microsoft, Cisco Systems,
Intel, Merck and Pfizer, for exam-
ple. We rarely saw these
programmes in Europe, although
some US companies offer them at
European subsidiaries.
■ The 401k savings plan has
become commonplace in the US.
This is a tax-sheltered plan in
which employees may contribute
as much as 12 per cent of their
pay with their companies putting
in perhaps 3 to 6 per cent of
salary. Employees have power
over the allocation of these funds,
but most has been invested in the
stock market, especially in the
shares of the companies where
they work. We did not see much
evidence of this financial benefit
in Europe, although considering
the collapse of the world stock
markets, European workers might
be better off for it. One point to
keep in mind in the Europe v US
comparison is that nearly one-
quarter of the companies on the
EU list are units of US corpora-
tions and they have obviously
brought their policies and prac-
tices with them to Europe and
they have had an influence on
European companies.
■
Microsoft, the big US software com-
pany, made the Best Workplaces
lists in four European countries, a
feat achieved by no other company.
It is clear from the EU surveys that
US companies do not have a
monopoly on employee enthusiasm.
For example, at Banverket, a state-
owned company in Sweden that
supplies telecommunication serv-
ices, one employee told us: ‘I never
thought it would be this fun to go
to work. It’s like going to see your
friends and getting paid for it.’ At
another Swedish company, Fresh,
which sells ventilation equipment,
an employee said: ‘The truth in the
human being, empathy, is the most
important value here.’
At the Ferrari Maserati car plant at
Maranello in northern Italy, a female
line operator told us: ‘Everyone here
believes they can expect help from
each other.’ And at the Dutch consult-
ing firm, Pentascope, we noted that
BUSINESS PRESS
1037
EU & US: Where are the best workplaces?
Milton Moskowitz and Robert Levering
ARTICLE 20
FT
the company’s mission is: ‘Respect
people, make money and have fun.’
In short, a great workplace is a
great workplace, no matter where
you find it. The attributes that
make them great – a high level of
trust between management and
employees, equity in compensation
and benefits, opportunity to learn
and advance, fun on the job, and
others – transcend national borders.
(Reproduced with permission from FT Business
Reports/Best Workplaces 2003, 28 March 2003, ©
Robert Levering)
1038
BUSINESS PRESS
Questions
Discuss critically the extent to
which you:
1 Were surprised by the survey
findings.
2 Believe that a shared mission
among management and
workers leads to enthusiastic
employees.
3 Prefer to work for either a
European or US company.
Relevance to other chapters
Chapter 5 Organisational Goals, Strategy and Responsibilities
Chapter 7 Managerial Behaviour and Effectiveness
Chapter 18 Job Satisfaction and Work Performance
Marrying performance with reward
Sarah Murray
ARTICLE 21
FT
‘Pay peanuts and you get monkeys’
is a saying that has not lost its edge,
even in the current economic cli-
mate. But managing performance is
not just about how much people are
paid. As employees become moti-
vated by not only a cash salary but
also by how their work fits into
their life as a whole, companies are
re-examining the way they reward
staff and the procedures they use to
assess performance.
Employers wishing to attract and
retain high-quality staff have at
least one new weapon in their arse-
nal – flexible benefits – which allow
employees to tailor a package to
their own needs. Flexible benefits
include such things as private med-
ical insurance, holidays, pension
schemes, childcare vouchers, leisure
club memberships and company cars.
Such benefits are not necessarily
expensive options for employers, since
the perceived advantage of things like
medical insurance, employee dis-
counts and childcare vouchers is often
as much about convenience as it is
about monetary value.
A recent survey carried out
among 156 senior HR managers on
behalf of RebusHR, the payroll and
HR specialist, found that the
number of organisations that either
have a flexible benefits scheme or
are planning to introduce one has
doubled since the same group was
surveyed in 2000.
Kevin Shepherd, who is develop-
ing software at RebusHR for
managing flexible benefits, says
that the biggest barrier to the con-
cept is the administrative burden of
co-ordinating the information. He
believes that once companies do this
easily, many more will use flexible
benefits. ‘It’s a good way of retaining
and attracting the best staff,’ he
says, ‘because it’s something that
reflects your lifestyle. It’s giving
people choice and a feel-good factor.
And it shows that you’re interested
in them and listen to what they say.’
Linda Holbeche, director of
research at Roffey Park Management
Institute, sees two forces at work
when it comes to rewards. ‘There’s a
discernible trend, not in doing away
with performance-related pay, but
towards consolidating people’s
salaries,’ she says. ‘So what a lot of
companies are trying to do is use good-
looking salaries as a key plank in
attracting and retaining the best staff.’
At the same time, she also sees a
growing move towards custom-made
reward systems for employees.
‘Where the nature of the work lends
itself to it, people are being offered a
lot more in the way of a develop-
ment package and the opportunity
to work more flexibly,’ she says. ‘So
the notion of reward is broadening
out from pay and immediate condi-
tions to being more tailored to
individuals.’
And while some companies are
tailoring their reward systems, the
way they assess staff is also chang-
ing as HR departments grapple with
how to make employees feel like indi-
viduals rather than numbers.
Traditional practices have been
far from ideal. The annual appraisal
– a dull meeting with a boss who is
often unclear what you’ve been doing
for the past year – is something
many employees dread. Filling in
boxes, listing a couple of goals and
keeping complaints to a minimum is
hardly satisfying for either staff or
management. And a paternalistic
system whereby a manager assesses
an executive’s performance and
metes out rewards and punishments
accordingly does little to encourage
ongoing improvement.
Mark Thompson, expertise leader
for reward at the Hay Group, the HR
consultancy, sees a big problem in
the link that many organisations
make between appraisals and pay,
which often consists of a rating.
‘Once the rating is determined, that’s
what everyone’s interested in and it
detracts from the whole process
itself, which is about personal devel-
opment and improvement.’
A survey conducted last year
among almost 1,000 UK managers
by the Institute for Employment
Studies (IES) found that perform-
ance appraisals systems were
failing both employees and organi-
sations, and having limited impact
on business performance.
The report found that perform-
ance review was becoming an
over-burdened management tool. In
attempting to do too many things at
once – identify training needs, pro-
vide career counselling, manage
poor performers and encourage
potential high flyers – the IES said
many schemes failed to deliver any
of them effectively.
However, Richard Pearson, direc-
tor of the IES, says that one of the
biggest weaknesses lies not in the
systems but in those conducting
them, many of whom have not been
trained to manage performance.
‘People concentrate on getting the
system right rather than the opera-
tor,’ he says. ‘But if you have good line
managers, the appraisals are a side
show because you’re getting good
feedback all the time and discussing
issues throughout the year – not wait-
ing for this once-a-year hit on it.’
One technique that gives a broader
picture of employees is 360-degree
feedback, whereby employees receive
feedback from a number of sources.
The process – which in the best cases
continues throughout the year – recog-
nises that all the information about an
employee’s performance does not rest
solely with his or her manager.
Colleagues, managers and even clients
can contribute to building up an accu-
rate picture of an executive’s
performance. While recent research in
North America by HR consultancy
Watson Wyatt suggests that such
programmes add less value than com-
panies might expect, they nonetheless
provide a more reliable assessment
than traditional processes.
In recent years, the internet has
also helped make the appraisal
process less painful and more effective
for both parties. Internal HR systems
allow managers to access information
about employees directly from the cor-
porate intranet. Increasingly, such
systems are run by outsourcing com-
panies. Exult’s MyHR, for instance,
runs HR transaction processes such
as the administration of payroll and
benefits for BP and Bank of America.
Employees can go on to the system
and update personal details, includ-
ing how much holiday they have used
up, what training programmes they
have taken or if they have been given
extra responsibilities. With a much
more tailored and up-to-date range of
information at their fingertips, man-
agers have a head start when it
comes to appraisals.
‘Managers can see data they
couldn’t get access to before, such as
the spread of pay within a particu-
lar banding, allowing them to see
whether they’re overpaying or
underpaying their staff,’ says Ms
Holbeche. ‘Where it works best,
managers are getting more relevant
and useful information than they
were in the old days.’
Nevertheless, as Hay Group’s Mr
Thompson points out, only a small
proportion of companies have
intranets and many do not even
have merit-based schemes in place.
‘When you look into the economy as
a whole, 70 per cent of companies
haven’t even heard of things like
flexible pay, and that’s because most
organisations are small or medium-
sized. So you’re talking about the
big ones that are doing it and, not
surprisingly, that’s because those
are the ones that really need to.’
(Reproduced with permission from FT.com,
30 October 2002, © Sarah Murray)
BUSINESS PRESS
1039
Questions
Discuss critically the extent to
which you:
1 See potential problems in the
link between performance
appraisals and rewards.
2 Support the idea of the
technique of 360-degree
feedback.
3 Believe that the Internet helps
to make the appraisal process
less painful.
Relevance to other chapters
Chapter 12 Work Motivation and Rewards
Chapter 19 Human Resource Management
Chapter 20 Resourcing the Organisation
First, there was the plain ‘personnel’
department. The people who worked
there made sure workers were paid
on time, looked after recruitment,
and sorted out the odd strike. Then,
in the late 1980s and early 1990s,
plain personnel re-branded itself as
‘human resources’.
This had a more aggressive edge
and the people who worked there said
they wanted to ensure ‘people man-
agement strategy’ was aligned with
business strategy. It was never quite
clear what they meant, but that did
not matter, because everyone knew
HR was really plain personnel wear-
ing mother’s make-up.
But suddenly, like a virus
escaped from a laboratory, everyone
is now talking about ‘human capi-
tal’. And everyone is very confused.
Is it time for another re-brand
already? Jargon moves fast these
days – and sounding go-ahead in
corporate company can be stressful.
Or is it maybe something different?
If so, is it very different? Or just
a little bit different? Plain personnel
has always relished pedantic dis-
putes, so, obviously, straightforward
answers are anathema. But, for
want of a better entrance to such
esoteric terrain, we shall start with
the British government.
In January 2003, the Department
of Trade and Industry asked Denise
Kingsmill, deputy chair of the
Competition Commission, ‘to look at
ways in which organisations can
measure the quality and effective-
ness of human capital management’.
The reason? Productivity. The DTI
believes the way people are managed
is one of the keys to the future of the
UK’s competitive position.
So, in order to get more compa-
nies to stop treating their employees
as a cost and more as an important
ingredient in value-creation, they
needed to know how to measure
‘human assets’ and the effectiveness
of HR interventions.
In November 2003, Ms Kingsmill’s
‘Accounting for People’ taskforce duly
reported. It said large companies
might like to begin putting something
about people in ‘Operating and
Financial Reviews’ (a document
which large businesses will soon be
required to produce, dealing with
trends in the operating environment)
for investors to peruse.
It even suggested a few headings.
How about a few words on leader-
ship, retention, skills, training, pay
and culture, for starters?
And so to the vital question: what
is ‘human capital management’
(HCM)? The report says: ‘HCM is
a strategic approach to people
management that focuses on the
issues that are critical to an organi-
sation’s success’.
Whitehall taskforces have always
enjoyed a reputation for calling a
spade a strategic earth-shifting
device. True to form, such a formula-
tion is rather less than enlightening.
What issues? What does ‘a strate-
gic approach’ mean? Some people
might use the same words to
describe so-called ‘strategic human
resource management’ (but that’s
another story).
So is the taskforce just slapping
two layers of make-up on plain ‘per-
sonnel’? Leadership, retention,
skills, and so on, always used to
come under the personnel depart-
ment, after all.
But, then again, other parts of
the report talk about how to link
people management practices to
performance.
That is slightly different. There
are, for instance, retention policies
themselves. And there is the study
of how retention policies affect
turnover, and how turnover affects
performance. Some commentators
might say they are subtly different.
Others might say it’s all dolled-up
personnel, really.
Our quest must turn elsewhere.
According to Richard Finn of Penna,
an HR consultancy, the acronyms
‘HRM’ and ‘HCM’ may be used inter-
changeably, but with one important
distinction. ‘HR is usually attached
to the HR function. With HCM, it is
clear you are referring to something
far bigger than the function.’
Penna believes many organisa-
tions already gather ‘human capital
measures’. They might note head-
count, recruitment and termination
figures, remuneration, and grievance
cases. Such numbers are useful in
their way – the old personnel depart-
ment always thought so – but don’t
really provide much insight for
investors. Better to try and track
‘more strategic’ issues such as
‘employee motivation levels’, the
value of ‘the employer brand’ or the
‘return on training and development’.
The trouble here is that collecting
such data is hard. Tracking ‘employee
motivation’ is a subjective affair.
Equally, working out the return
on training involves complicated,
and ultimately inconclusive, regres-
sion analyses. ‘No one has yet
proved a definitive causal link
between HR and performance,
because there are always other fac-
tors involved,’ concedes Mr Finn.
Other companies insist categori-
cally there really is a difference
between HR and HCM.
Play to Your Strengths,a new
book by four consultants from
Mercer Human Resource Consulting,
argues human capital is ‘the stock of
accumulated knowledge, skills, expe-
rience, creativity, and other relevant
workforce attributes’ – in other
words, the full gamut of labour serv-
ices available to an organisation.
‘Human capital management’,
meanwhile, is about quantifying the
value of such attributes and manag-
ing people on the basis of that
knowledge. It is, therefore, distinct
from HR.
1040
BUSINESS PRESS
Human capital: is it ‘personnel’ with yet more make-up?
Stephen Overell
ARTICLE 22
FT
To measure human capital, says
Mercer, companies need to model the
statistical patterns of how workers
respond to the rules and rewards of
an organisation (the book calls it
‘internal labour market analysis’).
If it does so, ‘the facts’ about the
impact of HR programmes can
become clear.
For example, Mercer believes it is
quite feasible to work out if a per-
formance-related pay system boosts
output. You would take individual
performance data, business unit
output data, blend them with finan-
cial information, and conduct a
regression analysis, controlling for
assorted extraneous influences.
Hard work, of course. But then,
HCM is all about getting to the
facts. This sounds quite a long way
from plain personnel. In fact, it
sounds a little like labour econom-
ics, but it probably wouldn’t do to
press the point.
(Reproduced with permission from FT.com, 24
November 2003, © Stephen Overell)
BUSINESS PRESS
1041
Questions
Discuss critically the extent to
which you:
1 Distinguish human capital
management (HCM) from
personnel or HRM.
2 Believe the way people are
managed is one of the keys to
the future of the UK’s
competitive position.
Relevance to other chapters
Chapter 7 Managerial Behaviour and Effectiveness
Chapter 19 Human Resource Management
Chapter 20 Resourcing the Organisation
New learning models are under scrutiny
Linda Anderson
ARTICLE 23
FT
What a difference a decade makes.
Ten years ago fledgling corporate
universities were just beginning to
spread their wings, with often just
one committed individual champi-
oning their cause.
E-learning was still in its infancy,
with technology and expectation
often at loggerheads. Only distance
learning had an established track
record, with institutions such as the
Open University leading the way.
But today, corporate universities
(CUs) and e-learning are familiar
aspects of the corporate landscape.
With this familiarity has come
an exacting approach. Companies
are asking far more penetrating
questions about their training.
What do corporate universities and
e-learning add to the bottom line
and can the large investments in
them be justified?
The Brussels-based European
Foundation for Management
Development (EFMD) is tackling this
question in relation to corporate uni-
versities with the establishment of the
Corporate Learning Improvement
Process (Clip).
Clip offers corporate universities
self-assessment against a set of rig-
orous standards compiled by CU
members combined with external
review by experienced peers.
The review provides feedback in
the form of suggestions for improve-
ment. EFMD provides a follow-up
consulting service for CUs that
wish to implement the quality
improvement or strategic develop-
ment proposals.
Gordon Shenton, associate direc-
tor of Equis, the accrediting body at
EFMD, says the question of what
makes a good corporate university
is not an easy one to answer.
‘Just because the CU is attached to
a high profile name does not automat-
ically guarantee success,’ he says.
‘In the past it has been difficult to
monitor progress and improvement
because there was nothing available
to assist with this task. The new
guidelines and process will make this
easier because they define standards
and focus on what constitutes quality
in this field in Europe.’
Such guidelines for CUs could
augur well for the long-term sur-
vival of corporate universities.
‘A good corporate university must
be seen to be contributing to the
effectiveness of its business. If it is
not doing so, its existence may be
threatened in times of economic
downturn or corporate restructur-
ing,’ says Mr Shenton.
‘It is therefore essential to estab-
lish the credibility of the corporate
universities’ brand recognition
within the company.’
E-learning is being subjected to
the same intense scrutiny.
According to Richard Straub,
director of Learning Solutions IBM
Europe, Middle East and Africa and
chair of the Europe-wide E-learning
Industry Group, e-learning is now an
established educational tool, although
he adds that it will ‘never replace the
traditional classroom’. In the past,
says Mr Straub, ‘it was let’s take e-
learning and put it on a CD-rom.
Today, it is more what learning needs
do people have, be it for education or
informally and we [organisations] will
support it informally
’.
The E-learning Industry Group
was established almost two years
ago in partnership with the
European Commission.
It is an open consortium of
leading information and communi-
cation technology (ICT) companies
and e-learning content providers
that want to promote e-learning
throughout Europe and make it
more competitive.
The consortium currently has 48
members, including companies such
as Nokia, Microsoft, Intel and
Accenture. Its objectives include
monitoring technical and market
trends and developments in the
field of e-learning within Europe,
and analysing and reporting on the
related impact on industry of
skills/training/jobs demand/supply
and investments.
Mr Straub says that govern-
ments need to show the way.
One area he cites is that of infor-
mation technology standards.
‘Standards must be open and not
be owned by a single company,’ he
says. This is one area in which the
industry group is very active,
addressing the European Union and
governments, pushing the concept of
open standards and infrastructure
for the 21st century.
As for e-learning, he adds, IBM
has moved from a tactical position
to a much more strategic approach.
‘Thinking much more how we can
support our business objectives,
what skills do we have and what
skills will we need in the future.’
E-learning has been embraced by
business schools very much as a
support tool.
‘Ignoring the realities of the digi-
tal workplace and continuing with
traditional classroom-delivered edu-
cation just does not wash,’ says Toby
Thompson, in charge of e-learning
for executive education at Cranfield
in the UK.
For example, the school uses
online simulations, blended with
complementary classroom compo-
nents and e-learning modules to
support classroom-based customised
executive programmes.
Compared with the e-learning/
corporate university newcomers, dis-
tance learning is long in the tooth.
The Distance Education and
Training Council (DETC), for exam-
ple, was formed in 1926 (when it
was then known as the National
Home Study Council) to promote
sound educational standards within
distance learning.
The council, based in Washington
DC, has accredited members across
the world and offers distance learn-
ing institutions support and
information about current practices.
Cardean University is one of
many institutions that has been
accredited by the DETC’s accredit-
ing body.
Cardean, founded in 2000 by
UNext, a US-based online education
company that develops and delivers
online education worldwide, cur-
rently has more than 900 students
on its MBA programme.
The Cardean MBA has been cre-
ated in collaboration with Columbia
Business School, Stanford, Chicago
Graduate School of Business, Carnegie
Mellon and the London School of
Economics and Political Science, with
faculty from the schools guiding the
programme’s development
.
‘The trouble with higher educa-
tion for most people is that it is
overwhelmingly expensive,’ says
Andrew Rosenfield, chairman of
UNext. Distance learning offers
an alternative.
Last autumn, the New York
Institute of Technology and UNext
launched Ellis College of NYIT, an
online school. Mr Rosenfield antici-
pates that the Ellis MBA, which
uses much of the Cardean MBA
material, will have 5,000-10,000
students in the next few years.
With such a crowded and
expanding learning market, how are
business schools faring? Executive
education, for example, so long the
bread and butter for business
schools, is also natural fodder for
corporate universities. And as dis-
tance-learning technology improves,
the desire for a ‘bricks and mortar’
business school may wane. But
Carlos Losada, director general of
Esade Business School in
Barcelona, believes business schools
have nothing to fear when it comes
to corporate universities.
The relationship is not of rivals,
but of partners, he says.
He argues that corporate univer-
sities do not have either the know
how or the competencies to compete
effectively with business schools.
While they play an important role
within an organisation, they will not
usurp the role of management insti-
tutions. ‘Corporate universities need
the knowledge and update that busi-
ness schools can offer.’ The two can
work together, he says.
As for distance education, there
will always be those who are able to
make the necessary commitment
and study full-time for an MBA.
A two-year, full-time MBA pro-
gramme is a ‘wonderful thing’, says
Mr Rosenfield, ‘but once you enter
the world of work, a full-time MBA
is often not a possibility.
‘The online MBA is now so pow-
erful, it is quite a good substitute,’
he says.
With better technology and a
more functional internet, the dis-
tance learning MBA is already
unrecognisable from when UNext
first launched its online MBA, adds
Mr Rosenfield.
Education in the 21st century
promises to be very very different
from anything that has gone before
it. It is a competitive and crowded
market and those providers who are
not fleet of foot, technologically savvy
and crucially, not offering what the
market wants, will fail. But those
who listen to customer needs and
adapt accordingly will find a willing
and eager audience.
(Reproduced with permission from the Financial
Times Limited, © Financial Times 22 March 2004)
1042
BUSINESS PRESS
Questions
Discuss critically the extent to
which you:
1 Think corporate universities
and e-learning add to the
bottom line.
2 See the development of, and
potential benefits from, e-
learning in business school.
Relevance to other chapters
Chapter 10 The Nature of Learning
Chapter 19 Human Resource Management
Chapter 23 Management Development and Organisational
Effectiveness
If the people who work for compa-
nies are more important than the
fixed assets, it follows that ensuring
the right people are doing the right
work is growing ever more signifi-
cant to corporate success.
This principle matters on two
levels: that of the company and that
of the individual. We all want to feel
that we are doing worthwhile work,
and that we are getting the train-
ing, education and on-the-job
challenges we need in order to
assure ourselves that what we do is
making a difference.
The problem for many people is
that they rarely get the chance to
show what they can do. The pushy
ones ensure they get plenty of
opportunities, whether or not they
excel. But leaving the organisation
of the workplace to a raw Darwinian
struggle may not be a good idea. If
you end up with a pride of alpha
males fighting it out for supremacy
you are not creating the best condi-
tions for long-term success.
Survival of the fittest, as Darwin
understood, is not necessarily about
the healthiest specimens but about
those who are most fitted to succeed.
In today’s workplace it is probably
about those best equipped to adapt
in a fast-changing corporate world
and nowhere is the speed of change
more evident than in the telecommu-
nications sector. So when British
Telecommunications wanted to
change the way the most senior man-
agers in its main business division
looked after their sales and market-
ing, it adopted a psychometrically
based system for use in management
development. The programme was
created by Psychometric Research
and Development*, the St Albans-
based test development company
chaired by Steve Blinkhorn, one of
the UK’s leading authorities on psy-
chometric testing. BT wanted to
make sure that the senior sales and
marketing managers in its main
business division were thinking like
mini-chief executives, understand-
ing, for example, the true value of a
sale beyond the sale price.
‘Some of these people are dealing
in sales worth hundreds of millions
of pounds. Delivery of a sale is likely
to include recruitment and training
of new people as well as the supply of
equipment. There are many factors
involved and people need to under-
stand the way these will impact on
profitability,’ says Mr Blinkhorn.
To identify the development
needs of these BT managers, PRD
adapted a psychometric tool it had
used with various government agen-
cies. Managers taking part in the
programme are asked to complete
an online CV and two psychometric
questionnaires. Their responses are
then subjected to computer analysis
based on pattern recognition algo-
rithms. This analysis throws up
individual issues that can be inves-
tigated in half-day workshops
consisting of a series of intensive
interviews for each manager.
The first questionnaire looks at
capabilities. The second investigates
tolerances: how people react to diffi-
cult situations at work. These
questions may, for example, look at
how someone handles a difficult
team member or how the manager
would feel about taking the rap for
someone else’s incompetence.
‘We’re looking here at how people
handle some of the more stressful
situations that occur at work,’ says
Mr Blinkhorn.
The subsequent workshop is split
into three sessions, each revolving
around a presentation from the par-
ticipant. The first covers the
individual’s career, the second
relates to a recent task the manager
found particularly stretching and
the third centres on a management
policy that is known to be controver-
sial. Participants are given
assurances that no specific details
from their discussions, such as
objections to company polices or
named individuals, will surface in
any report.
Interviews are carried out by one
of BT’s divisional managers and two
experienced psychologists from
PRD. The manager is there as a
kind of ‘prisoner’s friend’, says Mr
Blinkhorn, and the job of the psy-
chologists, feeding off each other, is
to probe various issues that, he
says, are unlikely to emerge in a
normal interview. But he stresses
that the interviewing is not aggres-
sive. ‘We are not trying to catch
people out. We want to understand
their needs. These interviews delve
very deep and people tend to open
up very quickly. One of the man-
agers came out saying he had had
the best three hours of his life.
‘This should be seen as a positive
experience. We are trying to find out
how to make rocket boosters for
people’s careers. Some of the people
undergoing this programme will be
considered for new posts. Others
may see what they need to do to
improve their career opportunities.’
The questionnaires are so rigor-
ous that they can help the
psychologists to identify the kind of
self-promotional spin that some-
times works its way into a CV. ‘If
people make outlandish or exagger-
ated claims, we are likely to spot
them,’ says Mr Blinkhorn. ‘You
might expect successful people to
exaggerate quite a lot on their CVs
but we have found that this is not
necessarily the case. In fact we saw
some highly talented individuals
who were quite modest in the claims
they made for themselves.’
The online CV is designed to cap-
ture the variety of experience and
qualifications people have gained in
their careers. Employees can update
this CV at any time. Company
human resources specialists can
then search the CV database if the
company is conducting an internal
search for some elusive nugget of
expertise.
BUSINESS PRESS
1043
Patterns can show if you are up to the job
Richard Donkin
ARTICLE 24
FT
Although the programme does
not have a generic name, people at
BT tend to refer to it by the
acronym Kest (knowledge, experi-
ence, skills and tolerance – the four
human dimensions it investigates).
David Beard, an internal consult-
ant in human resources at BT,
working on management and execu-
tive development, says the company
has been so encouraged by the
insights it has gained that it is plan-
ning to roll out the programme
across the whole of the main busi-
ness division and into its field
services. Other parts of BT are also
showing interest after favourable
feedback from managers who have
undertaken the programme.
Another advantage is that man-
agers need spare only half a day for
a workshop. Normally such a rigor-
ous assessment can take two days.
Mr Blinkhorn says the programme
has the potential to be developed
into a proprietary product but at
present he continues to focus on the
BT work.
Having sampled many psychome-
tric tests in the marketplace, I was
struck by what seemed two pioneer-
ing features: the intensive use of
psychologists in interviewing and
the use of pattern recognition con-
centrating on job-specific issues. The
question as to whether someone is
up to the job may at last have a
credible answer.
*http://www.prd.co.uk
(Reproduced with permission from the Financial
Times Limited, © Financial Times 29 January 2004)
1044
BUSINESS PRESS
Questions
Discuss critically the extent to
which you:
1 Agree that effective resourcing
of the organisation is growing
ever more significant to
corporate success.
2 Support the use of
psychometric questionnaires to
ensure the right people are
doing the right job.
Relevance to other chapters
Chapter 9 Individual Differences
Chapter 20 Resourcing the Organisation
Chapter 23 Management Development and Organisational
Effectiveness
Massive US effort to set up control systems
Adrian Michaels
ARTICLE 25
FT
The Sarbanes-Oxley Act was passed
by the US Congress last year after
Enron, WorldCom and all the rest
had shaken investor confidence.
Accountancy firms’ abilities to offer
their audit clients other services,
such as consultancy, were curtailed.
But consultants and auditors
alike are benefiting from one main
set of new requirements in
Sarbanes-Oxley. By June next year,
public companies will have to
ensure that all their internal con-
trols are properly documented and
tested. Many are using consultants
to help them design training pro-
grammes for their staff to check the
control systems. Their regular audi-
tor also has to sign off on the
controls when they are ready,
inform the regulators of its
approval, and presumably charge
for the service.
It is a massive effort. Companies,
of course, had already to have inter-
nal control systems that properly
evaluate finances, risks, compliance
with laws and so on. But they have
never had to document them in such
a way that the auditor could give
them the all-clear.
Training staff in what is
required, implementing all the docu-
mentation, and then continuing to
monitor the control systems is – and
will continue to be – expensive and
time-consuming.
An internal control is broadly
defined as a process designed to pro-
vide assurance on the reliability of
financial reporting, the effectiveness
and efficiency of operations and com-
pliance with laws and regulations.
Howard Smith is chief financial
officer at AIG, the world’s largest
insurance company. For AIG, with
operations in all parts of the world
and businesses ranging from life
insurance to property insurance and
asset management and much else,
compliance with the new law has
involved hundreds of people in an
eight-month effort.
Mr Smith says that, in February,
the company established a training
schedule and set a deadline for the
end of May by which time all the
company’s main internal control
systems had to have been identified.
By the end of July, AIG wants to
have checked that documentation of
the controls is satisfactory. By
October, the operating companies
have to produce evidence that they
have tested the controls.
‘It’s been time-consuming but
there are a lot of positives,’ says Mr
Smith, pointing out that the greater
documentation will make it easier
for new personnel to get up to
speed. A comprehensive examina-
tion of the way a company manages
itself also means that internal
wrongdoing will be easier to detect,
forensic accountants say.