Monday, January 30, 2006

Training Employees to Become Customer Driven

  • Sam Walton of Wal-Mart Stores Inc. has been quoted as having said it takes just seven days for new employees to start treating customers the way they are treated at work. All the customer service skills and training in the world can be undone in only one week if an employee is treated poorly by his or her co-workers or boss.

    Similarly, an employee placed in an environment of mutual respect, trust and accountability could quickly move from a so-so performer to an extraordinary service provider in the customer's mind.

    Companies spend countless amounts of time and resources on developing quality customer service techniques. Employees are taught that the customer is always right. They are taught to do whatever it takes to get and keep a customer's business. What is often overlooked is internal customer service. Companies talk the talk to the outside world, but don't walk the walk with their own people.

    Do you give your internal customers a positive or negative service message? Ask yourself these questions:
  • How do managers react when there's an external customer service problem? A manager's job is to be sure his team is providing good service externally, but does he support them when there's a problem? Some managers place blame, become angry and step in with the customer, making it obvious to everyone that the person on the line did a poor job. Better managers support their people and provide whatever backing the employee needs to make the customer happy. Instead of finding fault, they help find solutions. In the end, the customer is happy, the employee maintains his dignity and, ideally, the employee learns how to do better the next time.
  • Is your staff empowered to make decisions? The classic scenario of no empowerment is a car salesperson constantly checking with the sales manager to obtain approval during negotiations. This type of environment teaches employees that they have little or no say in the decision and it sends a message to the customer that he is dealing with the wrong person. As a customer, don't you wish you could just talk directly to the sales manager and save the hassle? If employees are empowered to make decisions and solve problems on the spot, the customer will go away satisfied most of the time.
  • Do co-workers support each other? Most people don't work alone; they rely on others to help them get the job done. When someone needs information from a co-worker, is it delivered on time? If people don't deliver on deadline internally, the end product will be late to the customer. When that happens, co-workers start the process of covering their own skins and placing the blame on others -- nobody takes accountability for the missed deadline.
  • Do your employees have the tools to do the job? Perhaps that car salesperson had to keep running to his manager because he didn't know enough about the dealership's negotiation policies to make the deal on the spot. While you're training the staff on how to satisfy customers, also consider training on team-building, time management and other techniques to help the staff work as a cohesive unit.
  • How do you match up against your competitors? Is your competition using your weaknesses against you in a sales pitch? If your staff feels like they're getting beat up by the competition, their attitudes can slip quickly. Poor morale around the office leads to lower incentives to do a good job for the customer, making the situation spiral downward. Don't just sit back and let the competition tell your story, work on problems internally so your employees feel confident out on the street.
  • Do your employees think service is important? Top management needs to send the message that service is a priority, both internal and external service. People must be accountable for their actions and must be motivated to do their best work. Some companies think tactics such as "Employee of the Month" recognitions are corny; but for many employees, that internal recognition goes a long way in goodwill -- goodwill that is passed on to the customer.
  • How are customers treated behind the scenes? If your top customer was a fly on the wall in your office, would he or she still be a customer? Companies that allow employees to bad mouth customers are breeding an environment of mistrust. If a junior employee hears a top executive trashing a customer, he is going to lose sight of the fact that the customer is your company's livelihood. Employees in that environment are more likely to talk bad about their co-workers and engage in back-stabbing behavior.

    A company's culture is set by top management; employees learn what's acceptable by watching what those at the top say and do. Therefore, if you set a tone for support and service, it will pay off in satisfied customers, inside the company and out.

Related Readings

Ideas on the Cost of Hiring Bad People

It might be shocking to know that if your company has a turnover of 20% per year and all of your new hires are mediocre, it will only take 5 years for all of your entire workforce to be mediocre. The cost of a "bad hire" for a software engineer can exceed a million dollars, for a CEO it could be as much as $1.4 Billion. That's how expensive bad hiring can cause to any organization. the following are some ideas that both support and illustrate hwo true these statements are.
Assumptions About Recruiting:
  1. If you don't recruit and select great people…you won't have great employees. And without great employees you won't have a great company.
  2. Great ideas and products come from people not from equipment, buildings, or capital.
  3. No one purposely hires Mediocre applicants but weak recruitment efforts and less than stellar selection tools will result in the hiring of Mediocre employees. Everyone hires some mediocre employees but poor employment systems will result in a higher proportion of "turkey" hires then a World Class one.
  4. The Business Impacts Of Hiring Mediocre People - When you hire mediocre people one or more of the following things may happen:

Increased Management Time And Effort:

  • Mediocre employees require "high maintenance" and more management attention and worry.
  • Time spent on "problem" employees can't be spent on the best employees.
  • Mediocre hires for management and team leader positions have a multiplier effect on the productivity of others.

Training Time And Costs:

  • Mediocre employees, because they lack competencies, must attend more remedial training.
  • The time Mediocre employees spend in training slows their "time to productivity."

Customer Satisfaction And Error Rates:

  • Mediocre employees send a message to our customers we are getting weak or we don't care about them.
  • Errors by Mediocre employees lose us sales volume and occasionally customers.

Product Development:

  • Mediocre employees have fewer ideas and mediocre ideas that distract us from where we really need to be going.
  • Time To Market is dramatically impacted by the disruption caused by their mediocre ideas and questions and because they do not fit well into in a team of "winners."
  • Trying to humor them or not hurt their feelings when they don't understand what the rest of the team is trying to do wastes time and energy. We answer their questions and politely try to help them come up to speed, when this help wouldn't be necessary if they "got it."

Our Competitive Advantage:

  • When we hire a mediocre employee that is one bad hire that our competitor can not now hire by "mistake."
  • A mediocre employee takes up a spot on the team that can't be taken by a superstar. These are called opportunity costs.
  • Mediocre employees send a message to our competitors we are getting weak. This might encourage them and improve their own confidence/image so that they become bolder in the product market.
  • Mediocre employees produce less per dollar of cost (salary). Since typically 60% of all corporate budgets go to employee expenses that makes the inefficient use of these funds a major corporate weakness.
  • Hiring Mediocre CEO's and top managers can adversely impact our stock price and the willingness of others to partner/merge with (or invest in) us.

Other Employee's Productivity:

  • Superstar employees often resent being on the same team with "losers."
  • Team productivity can suffer due to lost time helping the weaker bad hires.

Our Image And PR:

  • Mediocre employees send a message to our competitors we are getting weak.
  • Mediocre employees send a message to future recruits that we are not a selective employer.
  • Mediocre employees send a message to our current employees we are headed down hill.
  • High turnover rates due to Mediocre hires sends a message to other recruiters and potential applicants.

Fill In Time:

  • Mediocre employees may have increased absenteeism and tardiness.
  • When Mediocre employees are in extra training someone must fill in for them.
  • During the "gap" between the termination of the bad employee and the hiring of a new one there must be fill in help.

Out Of Pocket Costs:

  • Ad costs for recruitment as a result of having to do a replacement hire.
  • Bad hires often cost the same in salary and benefits as great employees but their Return on Investment is much below that of a great employee. (For an excellent hire the revenue generated by a new hire exceed their salary by at least 5 times).

HR Time And Image:

  • Increased termination, exit interview and firing costs as a result of Mediocre hires.
  • Increased disciplinary costs as a result of Mediocre hires.
  • Added recruitment time and interview time as a result of having to replace a Mediocre hire.
  • More paperwork, files and documentation as a result of having to replace a Mediocre hire.
  • Poor HR work is seldom more visible than when we complete a Mediocre hire. It loses the trust we have built up and the bad image often "spreads" beyond employment to the rest of HR.

What We Need To Do (And be able to prove it) Is To Hire Better People:

  • With more competencies. Both competencies that we need now and will need in the future.
  • Who are agile, can multi-task and shift rapidly to new problems and jobs.
  • Who self-develop, are continuous learning individuals and do so without the need for company training.
  • Who have more ideas that are implemented and that impact our profitability.
  • That require "Low maintenance" from managers. These employees have a lower error rate, number of disciplinary incidents and absenteeism rates then other employees.
  • That have a higher customer satisfaction, higher performance appraisal scores, bonus rates, forced ranking scores and promotion rates.
  • That inspire and train others to be more productive.
  • That stay longer before quitting.
  • Who produce more return for every dollar of salary paid them.

It's that simple. Mediocre employees cost us a bundle and great ones make organizations rich. So, why organizations neglect this simple fact, and repeatedly try to get cheap people, forgetting that, no matter what, they cannot get an output that exceeds those people abilities?

Extra Readings

Do We Need to Change The Ways We Recruit People?: A Practical Approach

Let me be clear, the single most important thing you can do to improve any staffing function is to measure and reward the quality/performance of the people you hire. Everything else pales by comparison in changing the way you recruit!
Most employment managers measure success in the wrong way. Looking at the cost of a hire, the number or even the speed of the hire is at best misleading and at worst an inaccurate measure of hiring success. The primary (or perhaps sole) measure of hiring success should be the quality/performance of the hire. Unfortunately many employment managers can't seem to figure out how to measure the quality of a hire. So here it is...The definitive list of possible ways to measure the quality of any hire. Most of the measures fall into 5 categories:
  • Output and performance of the hire.
  • Subjective assessment by managers and others.
  • % of qualifications met.
  • Compensation and promotional rewards given the hire
  • Retention rates of top performers.

Of course when you are measuring the quality of hire you do not need to use all of these measures. What I do recommend is that you "triangulate" and get 3 - 5 independent assessments to ensure initial accuracy. Firms usually start with a longer list (6 - 10) and pare it down based on discussions with managers and the CFO. Over time usually no more than 5 measures (that are combined into a single index based on cost, accuracy, ease of assessment, and "face validity") need to be used.


A general rule the more powerful measures are listed first in each section. Results and output measures are always superior to other assessments:

  1. Immediate Measures (on day of hire)
  2. Did the actual hire's resume rank in the to 25% (did it receive an A or A+) when the initial resumes were assessed/ranked?
  3. % of qualifications on final job description that this candidate met (including number of years of experience and education the hire has compared to the req. and other recent hires).
  4. When the initial finalist for the job were forced ranked after interviews but prior to an offer, what rank was the actual hire among those finalists?
  5. Did the actual hire also get offers from other top ranked recruiting competitors? (asked on first day)
  6. Managers prediction of the quality of hire (based on a subjective comparison against other recent hires). What percentile do they forecast their performance level to be at?
  7. Manager forced ranking comparison of this candidate compared to other recent hires.
  8. Manager satisfaction with the hiring process (responsiveness, cost, time, etc.).
  9. Surveys of new hire satisfaction on how they were treated during the hiring process by the recruiter, this year compared to last year.
  10. Surveys of new hire satisfaction on how they were treated during the hiring process by the hiring manager, this year compared to last year.
  11. Time from initial contact about this job to hire date.
  12. Satisfaction of the other finalists (that were not selected) with the hiring process.Intermediate Measures (up to 6 months).
  13. Output, production (quality and quantity) compared to other recent hires and the all employee average after 1 month and at 6 months (Ex. Productivity, output, sales volume, % of projects completed, customer satisfaction scores, etc.).
  14. Manager subjective assessment of performance of the hire after 1 month and at 6 months.
    Team and co-worker subjective assessment of performance of the hire after 1 month and at 6 months.
  15. Time to productivity (# of days until the minimum expected output level is reached for a new hire).
  16. How well new hires do on any required testing, certifications or training, this year compared to last.
  17. Satisfaction of the new hire after 1 month.Longer Term Assessment (over 1 year)
    Output and results (quality and quantity) compared to other recent hires and the all employee average after one year (Ex. Productivity, output, sales volume, % of projects completed, customer satisfaction scores etc.).
  18. Manager assessment of performance of the hire at their 1 yr. performance evaluation.
    Year end surveys of all hiring managers on satisfaction with the recruiting process this year, compared to last year.
  19. Retention - The % of above average performers that are still with the firm (exclude terminations) after 1 year (this year compared to last be sure to adjust for any "inflation" in overall industry retention rates).
  20. Customer 360 feedback or complaints, satisfaction or other outside assessment.
    Co-worker and team 360 (or forced ranking) of new hires (this year compared to last).
  21. Managers' forced ranking of this hire compared to others in the same job.
    Average performance appraisal (or forced ranking score) of this year's hires vs. last year's hires.
  22. % stock grants compared to other recent hires and all employees.
  23. Number and $ value of any "spot" and year end bonus (as a % of salary) compared to other hires and all employees.
  24. More nominations/awards compared to other hires and all employees.
  25. More salary increases compared to other hires and all employees.
  26. The number of months until they are promoted or receive a grade increase (with a lower number being better) compared to other hires and all employees.
  27. More lateral transfers compared to other hires and all employees.
  28. Patents/Ideas compared to other hires and all employees.
  29. Cost of their salary - How do the starting salaries (adjusted for inflation) for this year's hires compare to last years for employees rated at the same level of performance.Over-all Assessment of the Quality of our Workforce.
  30. Revenue per employee compared to our direct competitors as a "mirror" of the quality of your people.
  31. Dollar of profit per dollar spent on people costs (this year to last and compared to our direct competitors).
  32. Survey of local recruiters and executive search professionals on how we rank in quality of recruiting and hires (survey conducted by HR advertising firms or market research firms).


Now that you know the quality of your hires the next steps are to identify:

  • The source they came from (so you can drop the "useless" ones).
  • The factors in the selection process that gave them high and low scores (so that you can drop the measures that don't predict success).
  • The recruiters/managers/employees that found them (so you can reward them as well as to use them again).
  • Change the reward system for managers and recruiters so that the quality of the hire is the main focus.

When we hire the right calibre of people for our organizations, we should know that we are adding value to the organizational assets. Good people means good organizations. When we turn our employees into a competitive advantage, our organizations become more competitive in the market. It is as simple as that: they will be able to olutsmart competition, excel in the services they render , and maintain a happy customer base that ensures business sustainability.

Friday, January 27, 2006

A New Perspective of Organizational Communication

One cannot help wondering sometimes whether major problems in organizations are due to lack of effective communication at all levels. These problems can range between bad morale, declining performance, non-compliance with safety regulations, or destructive conflicts. The root cause may be the same for all these complicated problems: miscommunication.

Since organizations are defined as ‘people working together to achieve common purpose and hold themselves collectively responsible for the results,’ human interaction is thus emphasized. In other words communication becomes the main tool of both initiating and setting the right direction of this interaction in the work-place to focus on accomplishing organizational goals and objectives. The clearer these objectives are to the employees, and the more they are allowed to participate in setting and discussing these goals among themselves, the more committed and accountable they become. Open communication at all level of management is crucial in involving employees in the buying-in the organizational culture and shared values. According to Katz, studies indicate that managers spend 75% or more of their time communicating with others so that people can do their jobs with more comprehension. In fact, other studies proved that the productivity of the employees who ‘understand’ their role in achieving organizational objectives is much higher than those who are doing what they are told to do in a directive way. This calls over the relationship between open communications with employees reflecting trust in them as business partners and in their judgment in taking the right decisions. Communication here is used as an empowerment tool.

The Japanese reached a mark of excellence in pushing open communication down to the shop-floor workers level in their organizations. Decisions may take a longer time compared with the western style of decision making process, but once a decision is made it is ‘adopted’ by all layers of employment in the organization and a ‘collective’ effort will enhance realizing the decisions made as efficiently and effectively as humanly possible. The miracle here is that ‘perception’ which complicates communication and making each and every individual’s response and feedback in a very personal unique experience. The Japanese style of organizational communication is used here as a ‘loyalty enhancer’ where the organizational culture is built around team-work and its dynamics in group rather than individual accomplishments, and where the employees assume ‘ownership’ of the business, and the organization becomes ‘home’ for them.

Negotiation is another domain where we can feel the impact of effective communication in reaching win/win situations through applying the art and science of persuasion, good listening, self-control, and alertness. In fact negotiations can be defined as ‘a communication process where each party is trying to achieve preset objectives through effective communication.” If business knowledge and goal setting are vital to business success, communication skills could make the difference between success and failure when it comes to negotiating a business deal. A skilled negotiator needs to correctly ‘read’ his opponent both verbally and non-verbally before developing a position, approach, and tactics to achieve his objectives. Getting the right messages from a negotiating party is a winning edge that lends leverage to the party who uses his communication competency better. In fact, effective communication is the essence of mastering salesmanship. I cannot imagine a salesperson that is incompetent in ‘selling’ his/her product or service to his customer.

If we talk about creative problem solving, we will find that good communication underlies the process of analyzing, understanding, defining problems. The whole process depends on gathering information which again cannot be done with communicating effectively with all concerned parties of the problem. Brain storming to generate alternatives and selecting the best solution to solve the problem including coaching and counseling in behavior related and personality conflict problems. The diversity in the work-place with all the differences of people’s demographics, backgrounds, and ethnicity make the challenge even tougher. Sensitivity training helps organizational leaders identify any cultural biasness and prejudices. This type of training sometimes include a confrontation component, having conflicting parties express frankly what they feel about each other which – if not done right – can turn into chaos and personal vendettas.

Although enhancing organizational communication is every manger’s responsibility, it is – in my opinion – the prime responsibility of top management. They should ensure open communication channels at all level of employment in their organizations. Systems like open door policies, employees’ advisory boards, HR committees, and recreational activities committees are different ways of pushing down open communication throughout the whole organization. Managers should learn to listen to their people, respect their opinion, and value and recognize their contribution if they want optimize their performance. I can safely say here that the more positively they interact with their teams, the committed and motivated they become.

Related Readings

Thursday, January 26, 2006

Charging People's Batteries: revisiting maslow's Human motivation theory

Behavioral scientists and psychologists, such as Taylor, Maslow, Herzberg, McGregor, Skinner, Blake and Mouton, and Argyris, were concerned with human models and the most effective ways to motivate people. They all tried to discover what motivates people and how can organizations tap their resources to enhance their performance through highly motivated teams. If the ultimate organizational goal is higher productivity, superior quality, customer satisfaction and happiness, and increased net profit they have to invest in their people’s welfare and being.

Thirty years ago, one ‘please’ was enough when requesting employees not to break regulations. Today, the same admonition requires at least three pleases before the employee feels that his superior has demonstrated the proper attitude toward him/her. If this means anything, it means that organizational leaders have to double their efforts in the direction of motivating their teams to ensure their commitment and loyalty. I find that employees need to respect their supervisors and acknowledge their competence in order for them to completely comply with the directions they get from them. Employees’ ego demands that. It is frustrating for them to be subjected personally to a command from an individual who is deemed unworthy and incompetent. Organizational leader have two sources to reinforce their power and influence their working teams: the legitimacy of their positions, and their personal power which reflect their expertise paired with their charisma to gain their people’s acceptance of them. Abraham Maslow was very realistic in developing his Hierarchy of Needs Theory. It reflects – in my opinion – the broad scope of his understanding of the motives of peoples’ behavior. Therefore, I will try here to apply his concepts on what I believe a good application of his theory which is still being taught at multi-levels of education more than sixty years ago, since the theory was first introduced in 1943. I will try sequentially to address some other theories of motivation that are based on indepth understanding of human nature and psychology.

Maslow’s theory, which sometimes referred to as ‘Theory of Human Motivation,’ is built on 5 main human needs:

  1. Physiological (hunger, thirst, shelter, sex, etc.)

  2. Safety (security, protection from physical and emotional harm)

  3. Social (affection, belonging, acceptance, friendship)

  4. Esteem (also called ego). The internal ones are self respect, autonomy, achievement and the external ones are status, recognition, and attention.

  5. Self actualization (doing things)
My purpose here would be to talk about what employees will be looking for in their work-place in order to satisfy all or most of the above needs. Things that organizations can do but, unfortunately, sometimes are unwilling to due to self imposed bureaucratic constraints. I will also try to tie up these needs with the rapid change of the organizational environment and the challenges that are posed by the demands of the new century.
The need for a fair pay is a strong very demanding need. Though it satisfies multiple physiological, security and egoistic needs, but cannot alone be used as an all time motivator. The power and charm of monetary rewards, in the form for compensation, bonuses and incentives loses its glow with time as peoples’ aspirations escalate and monetary gains fail to fulfill their ambitions in life including the need for respect, recognition, and affiliation.
Job Security is another need that forms a strong urge in people to be always on the look for organizations with unthreatening work environment where the high labor-force turnover is the norm. The constant threat of the fast technological advancement pace constitutes another threat to people who are unable to cope with the demands of this change, or lack of appropriate organizational support from their organizations to acquire the required skills. Fierce competition and unstable economies resulting in mergers, acquisitions, and downsizing as new forms of businesses relying more on technology rather than people, add up to the consistent tension of the work-place.
Looking for congenial associates’ need emanates from the social need for gregariousness and acceptance. Here, management can assist the process through careful planning of orientation and socialization programs for new employees, rest breaks and recreational activities, as well as promoting the culture of team-work. Human resources policies and procedures should also be designed to promote a congenial, healthy, and quality work environment. Organizations of today still have a lot to do to improve the quality of work life (QWL) for their employees. It is an area that invites both innovation and creativity for continuous improvement.
Need for recognition and credit for work done stems from individual egoistic needs, and can supplied by management through verbal praise of excellent achievements, rewards for constructive suggestions, public recognition of excelling efforts on the job though in-house media such as company magazines, newsletters, and bulletin boards.
Having a meaningful job is a very strong need which poses a tough challenge to the management to oblige, especially in rather small and medium size organizations with limited expansion opportunities. An individual’s need for recognition, self fulfillment and realization, can be integrated in the organization’s plans of periodical job enrichment adding more accountabilities and making them more challenging. Meanwhile, organizational culture should emphasize the value of people and their contribution to the organization’s success. Need for a meaningful job is paired by another very important need, i.e. opportunity to grow especially for the employees whose social needs are stronger than their egoistic needs. Employees have a right to advance in their careers and feel the added value of their hard work and contribution toward business growth.
The relationship between organizations and their employees should depend on efficient and effective two-way communication where each side listens to the needs of the other party. Transparency in conducting this practice is crucial in building mutual trust and developing positive attitudes. Tools like employees opinion surveys, suggestions systems, if applied skillfully, can help the organizations get candid feedback of their employees and help accurately define their needs.

Tuesday, January 24, 2006

Fathi A. El-Nadi Posted by Picasa

HR as the organization's conscience

Participating in training and development programs either as a trainee in the early stages of my business and academic life, or as an instructor when I became more mature and qualified enough to instruct, provided me with an excellent exposure to different cultures. I found out that even when a workshop or a training program had a preset agenda and topics, once the trainees start to interact, the program turns into a very rich cultural and learning experience that ingratiates those of the participants who attended with a spirit to discover new terrains of knowledge.

Therefore, I have always believed that a good instructor will be able to both stimulate and challenge his audience to talk about ‘how’ they would use the knowledge he is giving them when they go back to work rather focusing on seeking as much information as they could have. This application approach is a major step towards ‘learning’. It also draws the line between education and learning. Learning is what organizations should be keen to enhance in their working teams if they wish to get a high return on their investments in training. This brings to the front the issue of selecting the right people to work for us; People who will constitute the intellectual capital of the organization. This particular issue brings to my mind memories of seminars I had attended around the topic of full utilization of human resources.

In the late nineties, I attended a seminar at The Society for Human Resources Managment (SHRM) and its certification institute HRCI discussing the impact of globalization on the future of the Human Resource profession, and the role it plays to help the management prepare their employees accept the facts of the new age and overcome the resistance to change that the international and multinational companies are going to face. The seminar was attended by top management and Human Resources professional representing leading organizations in almost all walks of business.

Most of the senior management speakers blamed the Human Resources in their organizations for the slow reaction to their demands, and their inability to cope with the required changes in both people and systems to become competitive. Consequently, a flood of questions came to my mind about what organizations should do to match their escalating demands of the Human Resources. Certainly, feasible methods to enhance the effectiveness of Human Resources plans are needed, otherwise these plans will amount to nothing but colorful binders that decorate executive shelves, reminding everyone that looks at them of unfulfilled dreams and abandoned targets.

If organizations are really serious in considering people as their best asset and are willing to invest in them by continuously improving their skills and developing new methods to keep them motivated they should treat human resource professionals as full partners in all major strategic decisions relating to employees instead of imposing decisions on them. The old traditional view of Human Resources being a services department whose reason of existence is to oblige other departments by providing them with the services they needed without participating in shaping these kind of services, will have to change into giving the function a more strategic role in shaping the organizational culture of valuing people and their input. The new trend nowadays sees HR as an integrated strategic management system that overlaps with and impacts all other systems in the organization.

If we analyze the three main strategic functions of HR we will notice that they constitute the core business competency of any organization, i.e. helping the organizations Attract good caliber people; develop those people; Maintain them as a qualified strategic asset. Obviously, we are talking about a ‘proactive’ type of HR that is always one step ahead in going out into the market and attract qualified competent people to fill present and future organizational needs, plan to continuously invest in improving their skills and enhancing their competencies, as well as create a challenging, motivating work environment that decreases people turnover and maintains a stable labor-force.

It is essential, therefore, to specify the level and role of HR with an appropriate level of authority to enable the function operate with a reasonable amount of flexibility to ensure both efficiency and effectiveness. There is what I call ‘authority gap’ between HR and the other functions which in many cases cripples the process of fair implementation of even the standard policies and procedures. Bridging this gap will result in more emphasis on the HR systems to be respected by the other organizations functions, and would change the image of looking at HR as an inferior support service, and instill a culture of dealing with HR as an equal to the other functions which will increase the level of harmonious collegiality among all the key players in the organization. This could only be fulfilled through a number of measures, standards, and criteria applied to ensure that essential resources are aligned and qualified management of these resources guaranteed. HR is neither a dumping ground for trouble-makers and unqualified personnel, nor a function that needs minimal resources to render its services. Necessary funds to establish integrated education and training plans, succession and career development, competitive compensation, retirement and pension plans, and recreation activities should be secured. HR authority should also include vetoing other functions decisions that violate the SOPs of the organization. Lacking consistency, the credibility of the whole management team becomes vulnerable.

Allowing HR to periodically conduct opinion surveys should be encouraged. This gives senior management honest indicators of people’s feelings and needs so that decisions are made to fend off problems. In order for HR to be the organization’s conscience, in needs management support for its educated efforts to feel the pulse of the organization. Likewise, in order to maintain the neutrality of that conscience and the departmental balance of power, we need to protect human resources from internal politics and power games that seeps the power out of the Intellectual asset of the organization and kills their creativity and innovation.
Related HR resources and links:

Monday, January 23, 2006

Training as a Cultural Adventure

Participating in training and development programs either as a trainee in the early stages of my business and academic life, or as an instructor when I became more mature and qualified enough to instruct, provided me with an excellent exposure to different cultures. I found out that even when a workshop or a training program had a preset agenda and topics, once the trainees start to interact, the program turns into a very rich cultural and learning experience that ingratiates those of the participants who attended with a spirit to discover new terrains of knowledge.
Therefore, I have always believed that a good instructor will be able to both stimulate and challenge his audience to talk about ‘how’ they would use the knowledge he is giving them when they go back to work rather focusing on seeking as much information as they could have. This application approach is a major step towards ‘learning’. It also draws the line between education and learning. Learning is what organizations should be keen to enhance in their working teams if they wish to get a high return on their investments in training. This brings to the front the issue of selecting the right people to work for us; People who will constitute the intellectual capital of the organization. This particular issue brings to my mind memories of seminars I had attended around the topic of full utilization of human resources.
In the late nineties, I attended a seminar at The International Human Resources Institute in Canada discussing the impact of globalization on the future of the Human Resource profession, and the role it plays to help the management prepare their employees accept the facts of the new age and overcome the resistance to change that the international and multinational companies are going to face. The seminar was attended by top management and Human Resources professional representing leading organizations in almost all walks of business.
Most of the senior management speakers blamed the Human Resources in their organizations for the slow reaction to their demands, and their inability to cope with the required changes in both people and systems to become competitive. Consequently, a flood of questions came to my mind about what organizations should do to match their escalating demands of the Human Resources. Certainly, feasible methods to enhance the effectiveness of Human Resources plans are needed, otherwise these plans will amount to nothing but colorful binders that decorate executive shelves, reminding everyone that looks at them of unfulfilled dreams and abandoned targets.

Sunday, January 15, 2006

The Price of Being a Manager

Life is full of winners. It is full of losers too. Those losers apparently have make up their minds to give up any serious efforts to try again, finding out causes of their shortfalls and overcoming them. Fear of failure has made them content themselves with modest achievements that are, in most cases, far below that which they can actually accomplish.

In management there is what I call ‘the cost of management’ or COM. I coined this name in an effort to alleviate the awareness of some managers who would like to enjoy the trappings of their positions for free or at a very low price. Their investment both in themselves and their people is marginal, and therefore they should not expect any substantial return. Under today’s organizational structures, many managers have been promoted to that level as a result of too many factors other than competence or efficiency. Unfortunately, being a manager does not make you one. This is what I call ‘puppet management.’ It is the game of the losers, organizations and individuals alike, but it takes a lot to be a real manager and that is the winners game that we should play.

Real managers do manage. They accept the responsibility of managing their resources. They also insist on having the authority to take all decisions related to these resources; and they welcome challenges. They are independent, committed to excellence, delegate without competing with their subordinates. This breed of managers feel cheated by their organizations if they are not encouraged to participate in setting organizational philosophies and goals, prior to their being committed to these goals in their own departments. They invest in themselves and their assistants, continuously enhancing both their behavior and performance; they not only manage their people’s skills, but their talents as well.

Because they always want the highest return on their investment, good managers usually have a scout’s eye when it comes to selecting the right people. They ‘recruit’ rather than ‘hire.’ They pay special attention to the candidate’s solid background, integrity, flexibility, ability to work under pressure, creativity, and drive. Once they make the right decision, they become ready to put high bets on their new breed of winners, feeling that they have minimized their investment risk. Having lined up their most strategic resource for successfully achieving their organizational goals, those managers are artists in creating a climate that cultivates both teamwork and high productivity at a superior quality level. Knowing the strengths and limitations of each individual in their teams, their motivation schemes are duly designed to guarantee each member of the team buying in the team’s norms where each member of the team is ready to go the extra mile without being asked to. Their teams are self-motivated. They do not need close supervision to excel their assignments, always craving for excellence. They become more and more driven by a sense of competition, not only challenging the work environment with its limited resources, but even the other working teams. They always want to reach the finish line before anybody else.

When it comes to work problems, good managers know that it is part of the deal of becoming a manager. They accept mistakes as long as they do not recur. In fact they consider mistakes opportunities to coach their teams towards escalating levels of performance. Customers may not be satisfied; targets are sometimes not met, friction between team members occur. They confront problems with a creative approach, believing that a problem will never go away by itself; it will only go away when the right solution is found.

Real managers have vision. They are motivated by achievement, and future for them starts at the present. They hate to join ‘survival teams’ whose aim is just to stay afloat as long as possible in highly competitive world, but would rather work for organizations that control their own fate, planning for the future with contingency plans to keep the ship sailing confidently even in turbulent waters. In addition, they are not only tacticians skilled in implementing organizational policies, but strategists who master long term planning game that shapes the overall business philosophy and future.

Always thinking of the future, good managers realize that managing change is a critical factor in the winning game of today’s business world. They are under the spell of the ‘change syndrome’, constantly being aware of the continuous market changes and all the other external environment aspects and the challenges they pose to the organization’s strategies. They are always one step ahead, not waiting for things to happen and then react, but drawing appropriate plans based on their educated forecast of their markets.

Dr. Dick Slember, GM, unclear Fuels Davison of Westinghouse calls the bar chats he decorates his office with ‘The Pulse Points’. He wants his team to realize that they are not just dumb illustrations of progress, but they do have a significant purpose of feeling that organizational pulse as well. If targets were met we need to know why and do more of it; if not, we also want to know why in order to get what makes it possible. Giving life to progress reports can work for good managers who make them meaningful to their teams.

One of Socrates students once requested that he teach him how to learn. He then pushed his student’s head under water and when he strove to breathe he told him, ‘If you wanted to learn as badly as to breathe, you would learn.’

The Story of a Book

Late 1996 I was approached by the Chief Editor of the Business Monthly, a monthly magazine published by the American Chamber of Commerce in Egypt, to write an article on management for a special issue of the magazine. I was not enthusiastic for several reasons: the magazine was of a very specialized economic nature; its circulation was limited, mainly to the chamber members and few other business communities in the country; although the members represent the elite business community in Egypt and had discussed hundreds of the business aspects either in public seminars or s part of their affiliated committees, no one has thought to contribute management articles to the magazine.

However, I decided to send an article and see how it would be received. Finding a topic was not the problem; it was my eagerness to tackle my topic from a completely different approach that took me a longer time and more suffering. Thomas Hardy once said: ‘Any fool may write a valuable book if he will only tell us what he heard and saw with veracity.’ I decided that I am very well qualified to play Thomas Hardy’s fool: I have heard and seen a lot during the last forty five years of continuous learning on both the academic and business levels as an educator and throughout my progressive career in local, multinational, and international organizations of different industries and disciplines, in different countries Arab, European, and Western cultures. What I have seen and heard can easily fill more than one book. I soon discovered that to telltale on the business and life situations I have gone through against my academic background in management, marketing, and economics will give my tales new perspectives that make them relate to the approaching new century.

Therefore, what started as a first article soon became a series under the name of “Reflections on Some Aspects on Management”, which was further developed into a book project. My writing approach was very simple: veracity of telling, and supporting my points of views with real business or life examples to illustrate the significance of the incidents I told. Such an approach, in my opinion, is human enough to help my readers identify themselves with each of the portrayed management situations.

By closely relating management to normal life situation, I hoped to promote the idea that anyone’s life – mangers included – is nothing but a long, non-stop negotiating situation where everyone is trying hard to use all in his personal and professional skills of communication, planning, organization, teaming up with others, coaching, counseling and all the other management and marketing skills to successfully manage businesses as well as their lives.

Management is a new science. It has only became a science since eighty years of so due to contributions of Peter Drucker who is considered the ‘Father of Modern Management’. Before him it was no more than ‘practices’. Knowledge of its secrets hase since been a privilege to specialists, management students, and practitioners. We still have a lot to learn on the art of management because the price of mismanagement is too high. It drains all life and business resources. Therefore, academics need to promote the art and practice of management finding simpler blend that integrates individual traits, skills, and competencies of managers with the rules of the science. SMEs are multiplying quickly, and if we can encourage entrepreneurs to adopt a healthy management attitude in a non-sophisticated way, the outcomes would be fast-paced developed flourishing societies.

Saturday, January 14, 2006

The Future Starts Today

Ten chairmen of the board and 32 company presidents were included in a research study done recently. Each was interviewed regarding how they planned the future of their company. The sample included both large and small companies from a variety of industries. Some were entrepreneurs and others were single proprietors. The results were very informative in that they pointed out the differences among industries and different sized organizations. The findings were discussed individually with the executives who were concerned about planning the future of their organizations. Although this study cannot be extrapolated to all industries, it did emphasize a concern for creativity. Because of rapid change in technology and severe international competition, these leaders increasingly recognized the value of innovation. They increasingly accepted that creativity is not a discretionary item, but is an integral part of assuring the success and survival of their companies.

Those who dare to challenge the enormous problems we face are most likely to embrace creative solutions. Not only must we consider how to achieve effective organizational performance, but we also need to recognize the impact of the vast disparities in the way people live around the world. Creativity by itself does not change things. However, it offers the possibility of changing our world for the better. Applying the Creative Potential Profile, we can improve organizational performance by appropriately using the following steps:
  • Start by recognizing that every individual is different and use the test instrument to better align talent with requirements.
  • Apply the test instrument to identify each individual's Creative Intelligence style.
    When considering a restructuring or downsizing of an organization, apply the test instrument to match the requirements needed.
  • Recognize that each individual has different aspiration levels and find a way to accommodate these differences. The current environment requires adaptability and flexibility, which often demand rapid response. The test instrument can be a valuable adjunct for knowing would would be best at making critical decisions.
  • Recognize the need for a learning organization that is continuously transforming as demands of the external environment change.
  • Apply the test instrument to establish teams by matching requirements with available talent. Applying the Creative Potential Profile will increasingly become a requirement to meet the ever-changing demands on an organization.

General Eisenhower, who was an extraordinary leader, recognized that people who value privilege above principle wind up losing both. His words of wisdom can be applied to creativity. We have a choice. Will we use our vast talents to make our lives better or will we miss the opportunity to bring about significant change?

What have you learned after reading this book? You should have a better idea of what creativity entails, how difficult it can be to introduce creativity into an organization, including education, and the need for great leaders to assure that we embrace creativity. By examining the lives of the many people covered in the book, you should have a better understanding of who creative people are, what they do, how they behave, and what makes them successful. Most important, you should recognize the significance of creativity in every aspect of our lives. To fully appreciate the role of creativity, you should examine your Creative Potential Profile and determine your Creative Intelligence styles to have a better understanding of who you are, what you can do, and how you can be creative about your own fut

Applying Creativity

Advances in biotechnology have contributed significantly to improving the health and saving the lives of people with chronic illnesses. Researchers have found that copying the way our bodies fight disease can cure many problems for which we currently have no effective treatment. Monoclonal antibodies are now genetically engineered to find and destroy cancers and other foreign bodies. Synthetic antibodies are also being tried as a way of treating certain diseases. Additionally, vaccines that target cancers of the brain, breast, ovaries, prostate, and other parts of the body are being tested. Imagine the impact that biotechnology can have on our health because of innovative research conducted by dedicated people. Other advances in understanding the genetic functions of plants and animals can significantly contribute to important needs of society. Plants have provided many of the chemicals used for pharmaceuticals, and now the possibility of using plants as a renewable source of energy is being explored.

These technological advances portend radical changes in society, lifestyles, health, longevity, and the way in which our brains function. Science is working on decoding the fundamental rules of nature. Furthermore, scientific discovery is moving at an ever-increasing pace, both because of tools such as super-computers and the growth of knowledge regarding the fundamental laws that govern almost every aspect of life.

One significant change that is being pursued is the availability of abundant forms of energy that can sustain continued growth while maintaining or increasing our standard of living. To some extent, advances in science contribute to leaps in creativity that can lead to unprecedented changes in our political and social systems. Considering the extent of major scientific breakthroughs, one that stands out is the computer, which will become ubiquitous as it is imbedded in “intelligent” devices. Computers potentially will have a significant impact on education, the transmission of medical information, military operations, and the distribution of wealth, agriculture, and more. All portend important advances, but also significant challenges, including the impact on human behavior and the greater need to both understand creativity and employ it in a positive way. Chip implants are being tested for blind spots in the eye, relieve deafness, and stimulate our ability to mentally process information using icons and other “visual” constructs that convey “meaning” rather than “data.”

Michio Kaku describes three basic scientific advances that will change civilization as we know it. First is quantum theory, which states that energy is not continuous, but rather comprised of energy bundles called “quanta.” An example is the photon, which defines a quantum or packet of light and follows well-defined laws that allow us to form new kinds of basic materials. The second advance is the information revolution spawned by the computer. As more transistors are placed on microchips, whole new dimensions will evolve because of the ability to add intelligence to information via the Internet. Changes in lifestyles and medicine resulting from computer applications will dramatically affect the quality of life. The third revolution, bio-molecular technology, is revealing the details of DNA, including how atoms bond and the DNA code for all living organisms such as viruses and bacteria.

In Intelligent Information Systems, Rowe and Davis describe how to match the phenomenal capability of the computer with the cumbersome processing of information by human managers. Recent advances in computer programs such as SAP and Peoplesoft are beginning to integrate the information needs of managers and others in organizations. Even business strategy will be made by computer because of the rapid changes that are taking place.

Smart cards are now being used to store and transmit information. Smart cars are emerging that can help drivers sense and avert dangers. Displays help motorists find the best route to a desired destination. Virtual reality is being used to transform physical objects into computer code that allows manipulation of the design or can improve the sales potential of home products.
According to Kaku, bionics are moving toward harnessing the remarkable speed of quantum transistors to interface directly with neurons in the brain. Doctors at Harvard Medical School are working on a bionic eye that will use implanted chips to restore vision. Scientists predict that using computer chips could reactivate a number of paralyzed body organs. Quantum cryptography will be used to develop unbreakable computer codes. Jobs that can be done on the Internet will eliminate scores of routine tasks. Finally, increasingly “intelligent” robots will be able to carry out many functions without human intervention.

The Futurist, a publication of the World Future Society, describes the projected changes and trends for the next 25 years. Can we really forecast the future, and if so, with what accuracy? Forecasts, in many instances, are extensions of what we know today. But what about creativity and the ability to see what no one else sees? Can radical departures be predicted? In the late 1800s, it was suggested that the U.S. Patent Office be closed because everything had been invented that could be! With knowledge growing exponentially, who can say what the future holds? Nonetheless, we can “conjecture” about what experts in various fields believe will be coming and that will have a profound impact on all our lives.

In their Special Report, Forecasts for the Next 25 Years, the World Future Society forecasts a number of changes. For example, the group forecasts that the 80 million people born between 1977 and 1997 will have significantly more power than their parents dreamed possible. Within the next 25 years, we should be able to grow new organs, tissue, and cartilage. To root out terrorism, world powers will spend up to $9 billion per year to aid developing countries. Will this solve the problem or are value systems more critical in shaping people's behavior?

New technologies that are forecast include: mapping the human genome, super-strength materials, new energy sources, smart manufacturing, anti-aging products, and many others. One of the most critical forecasts is that we will run out of water by 2040 for 3.5 billion people. Even using the polar ice cap for water will not suffice. A creative solution for water purification, such as using ocean water, could prevent this disastrous forecast.

Successful innovation seldom is based on a “flash of inspiration.” Rather, it requires a disciplined pursuit of a desired outcome and knowing what to do to achieve objectives. There are numerous instances of brilliant ideas that eventually become successful products. Accidental or unexpected events can often trigger innovative change, such as the discovery of penicillin or X-rays. Bringing new ideas or products to fruition, however, requires considerable effort, including public acceptance, the ability to produce at an acceptable price, and finding new ways of distribution such as on the Internet. This is the case with almost every major advance that has been made. Computers and their applications, including robotics and artificial intelligence, have had a profound impact on the world and are becoming an integral part of every major product. From wristwatches to spacecraft, computers have made advances possible way beyond anything their inventors could have imagined.

Where is innovation today? A major advance beyond computers is information use and the Internet. Intel's silicon wafer will contribute to wireless, worldwide communication. Biomedicine will produce new drugs and diagnostic technology that can be tailored for the individual based on genetic makeup. This will lead to DNA chips that will be able to guide physicians in prescribing medication that takes into account the patient's blood pressure or other specific needs. The Massachusetts Institute of Technology is working on a biosensor to instantly determine a “point of care diagnosis.”

Research is progressing on the extension of a biosensor chip that would determine how well enzymes are metabolizing drugs that are prescribed. Toxic effects or other reactions could be detected easily during a routine examination in the doctor's office.
Nano-technology will be able to provide a rapid, inexpensive capability to perform tasks previously considered impossible. Computers will be able to incorporate memory in each molecule to provide more efficient information storage. This in turn may lead to very sensitive devices, such as flat-panel screens or lasers that operate at super-speed. Computers would fit into any device that could benefit from their small size, including powerful devices such as airplane instruments, telephone transmission, automobile applications, and so on.
Medicine continues to make major advances, such as the recently announced method of surgery using high-frequency sound waves that focus in on and destroy cancer cells that are then absorbed by the body. The high-frequency device uses waves that are at a level that is too high for people to hear. Combined with the high-frequency waves are low-frequency sound waves that create three-dimensional images similar to ultrasound and show the physician what is happening inside the body. Imagine doing brain surgery without having to open the skull. The precision of the high-frequency sound waves has the potential of being better than the scalpel normally used by surgeons.

Another significant change is the design of “smart engines” that cruise along with minimal human intervention. Global positioning could become a standard feature on cars of the future. Flying airplanes is a tedious task that requires constant attention. New technology using ultra-smart, ultra-small computers could help pilots avoid airline crashes, and to find the best routes to travel to reduce time, energy, and effort. If all these technological marvels could be applied to the problems confronting us, what a wonderful world this could be!

How Creative Leaders Behave

A leader's creative style and Creative Intelligence will often determine the likelihood of successful change. The intuitive-style leader often introduces change by announcing it. The response to this approach generally creates rigidity. The inspirational leader, on the other hand, discusses change, holds meetings, and explains why change is needed. This creates a more open, trusting organizational culture. The innovative-style leader tends to focus on technical matters and often overlooks the needs of people. The result is that there is typically resistance to change. The imaginative leader has a clear view of future needs and opportunities. However, because of the concern with future needs, current problems can sometimes be overlooked. In general, the imaginative leader also understands the needs of the organization and finds ways to include people in the vision. An inspirational leader, such as Richard Lewis, brings the organization along with his or her ideas. Thus, the creative styles of senior managers often determine whether change will be accepted at all. Customers, suppliers, government agencies, and the entire network that embraces our social and political structure must also accept innovation. For example, plasma is a gas used in super-thin, wide-screen televisions that provide excellent displays and are flicker-free. However, the price is extraordinarily high and customers may not see the added value of an exceptionally bright picture on a wide screen. This is an example of the difficulty of introducing a new product that has severe economic hurdles.

Over a period of time, even workers who are creative lose their motivation if they feel management is no longer interested in them. At Ore-Ida, the J. J. Heinz Co. producer of frozen potatoes, there was limited new product development even though innovation had been a strategic priority for years. The research department at Ore-Ida did not believe that management was serious about new product development. Shortly after managers shared their thinking with the research group, there were positive results. A million dollars in cost savings was uncovered in one year, and over a three-year period, there were numerous new products and product line extensions.

In many instances, it is not the sheer effort or willingness to be creative that assures results. Perseverance and patience are the qualities required for breakthrough achievements. Consider Edison's many experiments to find a filament for his light bulb, or Darwin spending years traveling around the globe gathering evidence for what became his Theory of Evolution. Most organizations don't have the time or resources to pursue long-term, complex projects. A company that was ahead of the curve in the development of a computer program that could transmit motion pictures over ordinary telephone lines had to give it up because of the complexity of inventing a new approach and the need for very talented workers. Resources were not available to complete the program in a reasonable period of time. As Amabile, Hadley, and Kramer described it, creativity gets killed when it is under the gun.
Reading Resources

Creativity and Organizational Culture

William C. Miller, President of Global Creativity Corporation, is concerned with fostering creativity. He considers Theresa Amabile's assertions about the failure of stretch goals to be very important. Amabile describes how a culture that emphasizes performance evaluation creates a climate of fear and an unwillingness to take risks. Organizations cannot convince their best people to take personal risks if it entails a possible cost to their careers. The answer is clear: People are not willing to expose themselves to being chastised for being different. Successful organizations have recognized that they need to tolerate differences among employees.

Organizational culture has a direct impact on how creativity and innovation are received. This is especially important where the underlying feelings and beliefs of a group go counter to those of creative individuals. The concept of organizational culture emphasizes shared, unspoken understanding in the minds of the organization's members. One example of the power of shared values was the phenomenal success of the Ford Taurus, where a change in focus emphasized quality as the top priority and led to radical changes. A new approach was used for the design of the cars: the Planning, Engineering, Design, and Manufacturing divisions acted together as the team that took final responsibility for the cars. The result was an outstanding success.

Organizational culture also reflects the basic assumptions and preferences that guide individual behavior. Culture links both the tangible and intangible factors reflecting these shared values. In addition, shared values often determine the degree of commitment that individuals are willing to make to the goals of the organization. To obtain a commitment to innovation and creativity, leaders need to recognize that an individual's values and the organization's cultural norms must be compatible. Or, stated differently, successful implementation requires that people be willing to change when required.

A major challenge facing leaders is how to reconcile individual values with cultural norms. One approach that has been highly successful in gaining commitment on the part of an individual is to provide the person the freedom to explore his or her own ideas. Where this approach has been used, unusual results have been achieved. A case in point was the development of the first IBM personal computer. By allowing a team in Boca Raton, Florida complete freedom, unfettered by the usual corporate constraints, it was able to leapfrog the competition and bring out one of the first personal computers.

John Akers, who was President of IBM, on the other hand, was a captive of IBM's traditionally rigid environment and wound up leaving the company because of his failure to turn it around. His successor, Lou Gerstner, came with an open mind and the mission of reinventing IBM. He devised an agile corporation that could leapfrog past its competition, and encouraged radical rather than incremental change. However, even Gerstner ran into problems when he tried to coerce Jim Manzi, a true entrepreneur, into taking a backseat. Manzi was known for being “strong-willed,” sometimes abrasive, and generally a loner. He could not work for anyone; he wanted to be his own boss, and he ultimately left IBM.

Intrinsic motivation and creative performance are very often influenced by the way in which jobs are structured. Although complex and demanding jobs generally foster greater motivation than simple and routine jobs where extrinsic motivation may be used, individuals with high intrinsic involvement in their work are likely to be more focused, persistent, and open to alternatives that lead to greater creative potential. In addition to the structure of individual jobs, organizational systems are needed to support and encourage creative effort. Organizational environments that are most conducive to creative activity on the part of their employees have open communication between levels of the organization, encourage employee input into decisions, and allow considerable flexibility. Where there is a lack of organizational support coupled with rigid controls, employees often become discouraged and are unwilling to take the unusual risks that creativity demands.

Ethical Management

Ethical Management is a form of management that is concerned not only with the technical, financial and legal aspects of a business, but also recognises and manages the values that operate at the heart of any enterprise. These values affect everyone in the organisation and all of those with which it has some association. In point of fact, there is no such thing as a value-free organisation. The values adopted by an organisation can be for good or for ill. That is, they can contribute to the organisation's ability to achieve its objectives or they can act as a hindrance. Given that values shape an organisation's 'climate' or 'culture', it is important that they be identified and managed in the best interests of the organisation and the people that it is there to serve.
One of the key objectives of ethical management is to create the conditions and competencies through which an organisation's values can be harmonised in a way that best serves the organisation's mission.Much current management theory implicitly (and sometimes explicitly) recognises the importance of the ethical dimension. For example, the principles of Total Quality Management contain the seeds for sound ethical management. The TQM approach is based on a recognition of the need for continual review of the processes of production and provides diagnostic tools of measurement to determine performance and measure progress. The tenets of TQM are readily applied by management to the technical areas associated with the systematic control of goods and services that are produced for internal and external customers. However, this same approach can deliver impressive results when applied to the task of examining the prevailing culture of an organisation and its constituent parts. In this respect, it can be seen that the principles of TQM can be extended beyond the technical aspects of the business to the values that are operating there.
TQM's emphasis on a management style that is consultative and participatory, together with its emphasis on collaboration through the two-way flow of information and the use of teams, holds potential for effective ethical management. In the second session, this morning, we will look at a way of measuring values within an organisation and the steps that need to be taken to increase their effectiveness. As noted above, they are what shape the corporate climate within which all the other productive processes are operating. When we speak, therefore, of ethical management, we are discussing an integrated approach that recognises the utility of examining the values that influence "the way things are done around here". The utility of such an approach can be found in the fact that an organisation's dominant values have a significant effect on, among other things, morale and productivity.But there is another reason for examining such matters. Leaving aside questions of increased productivity, higher retention rates, improved compliance and so on; there is also the issue of simple decency in the way in which we organise our social institutions. We sometimes act as if businesses can exist as totally independent entities. This dangerous fiction obscures the fact that businesses, governments, indeed all of our institutions are created by and for people. To take a serious look at values and ethics is to make a statement along the lines that we recognise the importance of the human dimension in what we do. It says that whilst notions of efficiency are important, they are not the whole of the story. It recognises that people are not cogs in a machine. It says that we are concerned about the kind of community that we want our organisation to be. It says that people matter.
The Code of Conduct, which we will examine , spells out many of the behavioural implications of the values or ethic on which it is based. As such it is a potentially powerful tool for organisational change. It might seem to some that the very idea of ethical management creates problems for those who would conduct a successful business. This seems to be doubly so when considering, the not unreasonable view, that a successful business will be run in a cost-effective and profitable fashion. Where, in all of this, is there room for ethics? Indeed, one could be forgiven for thinking that business and ethics are like oil and water - they don't mix. This is certainly the view of many members of the community. The evidence for this can be found in an intriguing piece of research conducted by Hugh Mackay.Mackay discovered the not-too-surprising fact that members of the community consider that ethics are likely to be incidental to business. He reports that Australians find it difficult to make judgments about corporate morality, and part of the difficulty is that they see major differences between the behaviour of a corporation (where 'profit' is taken to be the driving force) and the behaviour of individuals (where motivations are far more varied and diffused). This line of thinking often leads people to such assertions as "business is there to make money", and to question whether ethics really "comes into it".Many people would like the situation to be different, but there is an overwhelming sense that the very essence of business means that ethics will often function as an "optional extra" rather than being fundamental to the character of business corporations.

This view of business is frequently shared by those who are in the public sector and who face either commercialisation or privatisation. At one level there is fear about the ability to compete, at another is a sense of anticipation that corporatisation means that notions of public service can be ditched and that the 'gloves can come off'.The problem with this is that the view of private enterprise held by the public is largely a caricature. However, before exposing the error, it may be useful to look at how the public views the ethics of the public sector! It will be recalled that the community is suspicious of the ethics of those who are driven by the profit motive. On this basis one might expect that the public service would be regarded with trust and esteem. Unfortunately not. Popular logic sees things quite differently. In fact, Hugh Mackay found that government institutions attract more criticism than private enterprise. He found that Paradoxically, the very absence of profit motive is sometimes thought to make government departments and instrumentalities more insensitive, more cavalier, and more bureaucratic in their behaviour: if "how they treat people" is regarded as one of the key symptoms of the ethical climate of an organisation, then the government institutions generally fare worse, in the public mind, than private enterprise.In such cases, where profit is not regarded as a distraction from ethics, people are inclined to assume that a certain "slackness" takes over. It begins as inefficiency and may sometimes end as immorality. Because of the impression that government organisations are largely "bureaucratic", the suggestion is also made that they lack clear and decisive leadership from the top, and that, in fact, the example set by bureaucratic managers probably encourages the very slackness which lies at the core of the problem.

This finding should tell us something – NOT because the popular perception is accurate, but because it is so distorted. There is some recent, and rather compelling, evidence for concluding that the public has got it wrong. At a recent luncheon, held by the Australian Society of Certified Practising Accountants, the former Premier, Nick Greiner, was called upon to launch two new Centres of Excellence. Mr Greiner began his remarks by confessing that his recent experience of the private sector had led to what (for him) was a most unexpected conclusion. He then revealed that he now recognised that many public sector managers were as good as (and in some cases better than) their private sector counterparts.Now, the significance of this goes beyond the simple point that common perceptions about the public service are somewhat partial. For, if one concludes that the public may have got it wrong about government enterprises then it is just as likely that they have a similarly distorted picture of the private sector. And this is, of course, pretty much the case.Most people are satisfied with a false dichotomy about the relative strengths and merits of public and private enterprise. These misconceptions are carried over into the prejudices of those who are employed in the respective sectors. Thus, those in the private sector frequently think that public servants are lazy and/or bound by bureaucratic inertia. And those in the public sector think that the private sector is driven by greed and that its policies are pursued without any regard for the common good.The truth is that best practice requires much the same of both sectors. For example, the private sector has a long tradition of succeeding where it has been able to focus on the broader interests and needs of the community in which businesses have been based. Many successful industries and businesses have been run with an explicit aim of serving the public and making a better world (eg Cadbury's). Others have been aware of their dependence on a healthy social infrastructure as the ultimate foundation for their profitability.
In current times there is a perceptible return to management philosophies which recognise that, in the long term, good ethics is good business. So it would be a mistake to think that best practice in the private sector can be emulated by adopting a 'gloves off' stance.In the same vein, the public sector has been leading the way by embracing new management philosophies designed to recognise that businesses are integrated units in which responsibility is best delegated along lines of accountability. As Mr Greiner recognised, reforms in the public sector are seeing the implementation of policies and practices that are at one with the best. Good management is about choosing the right means to achieve justifiable ends. In the case of individuals or an organisation, these ends will need to be viewed in the context of how they affect the community's pursuit of wider 'goods' (be they economic or social goods). For example, in achieving the goal of designing faster, more economical trains is it proper to allow for a sacrifice in the margin of safety? The same question applies when considering the design of toasters, cots, life insurance and so on. There are no black or white answers to such problems. That is why the community trusts (or perhaps hopes) that managers will recognise that business is ultimately about people in society and their common good or welfare.It is in this context that the Code of Conduct needs to be situated. It would be far too easy to see the code as just another set of pious sentiments imposed from above. It would also be very easy to see the code as irrelevant or worse, as impractical. The truth is that the code should be seen as playing a fundamental role in helping to define and realise the notion of best practice. One of the key components of successful management is a capacity to respond to change. Response time is retarded by inefficient or entrenched structures. Thus, the process of keeping a manual inventory of stocks and stores may be fondly thought of as possessing a certain kind of quaint charm. However, this should not be allowed to obscure the fact that the cost of maintaining an outdated work practice is to be borne by the whole enterprise. In some cases, where the tail wags the dog, such a system may even work to frustrate change at a more general level. Management expert, Peter Drucker, has stressed that an ability to manage change is going to be the defining characteristic of the successful business of the future. If this is so, then it will mean building in a capacity to take a constructively critical look at all of our policies and practices.Whilst it is important to reserve a place for healthy traditions, it is equally important that businesses release themselves from the shackles of habit. It is easy to see the significance of this when it comes to manufacturing processes, management procedures and all the other 'surface' characteristics of an enterprise. However, there is an even more fundamental level that, being taken for granted, is frequently overlooked.This is the level of the organisation's culture or character (ethos). Custom and practice can be just as stultifying at this level. An uncritical environment can lead to a situation in which custom and practice are used to justify the indefensible. People become prisoners of values that might have made sense at another time but clearly fail in the clear light of present scrutiny. This then is the context in which the SRA Code of Conduct ought to be examined. It will then be seen to be an indispensable element in the overall architecture of the organisationAt first glance, the Code of Conduct seems to be all about behaviour. But its real foundation is in the values that it promotes.
Extra Readings

The Future of Business Ethics

Taking personal responsibility for economic and ethical performance of corporations - Business Ethics Articles - impact of corporate governance scandals on business ethics debate. Definition of business ethics. Compliance with business ethics. Why business ethics is such a high risk area for brands, image, marketing, strategy, product development, investment and change management.
See new book Building a Better Business on fundamental ethical values that will drive every successful business over the next 20 years, the link between business ethics and profitability, shareholder value, market share. Why corporate and social responsibility is a vital survival strategy for any business. How business ethics can make you money. Why compliance is dead as a defensive strategy. A single four word phrase that is the foundation of all business ethics - and the $20,000 Challenge.
Failure in business ethics is a real threat to the future of every corporation. business ethics as an issue is a hundred times more powerful than the internet or globalisation and can destroy your business in a week. To make matters worse, standards of business ethics are changing rapidly in response to random events which capture public imagination. In business ethics, what was good is becoming bad and what was considered bad is now good. Standards for business ethics that have worked for decades are looking old fashioned or immoral while other practices that raised questions are becoming totally acceptable.
So what is going to happen next in business ethics? How can corporations use business ethics to restore confidence and protect themselves against tomorrow’s headlines? What will be the new “Gold Standard” for business ethics and corporate governance? How much further than legal minimum requirements for business ethics should corporations go to ensure sustainable success?
• When business ethics goes wrong who gets blamed?, • Impact of media allegations of dishonesty, fraud or corruption of senior executives or directors – and how to protect business ethics reputation , • Why goalposts for business ethics will go on changing, and how to get ready, • Urgent need for all business ethics to be whiter than white, with unquestionable corporate governance and risk management, • Ensuring business ethics compliance - board duties of care and responsibility in the future?, • Defining clear areas of business ethics responsibility of boards and directors, • Using business ethics to balancing interests of different constituencies and stakeholders, • Why we have to separate board scrutiny role from management power, • Ethical / society responsibilities of directors and large investor “owners” , • Independence of audit, nomination and remuneration committees?, • “Duty of curiosity” by directors to ask very awkward and sensitive questions, • Improving quality and flow of information within a corporation’s governing structure
WHY WE GOT IN SUCH A MESS, Free market ideology was that corporations were kept responsible to customers, shareholders, workers and society by customer and investor behaviour, seen in share price. Millions of individual “voters” in the market place ensured they behaved. “Bad” corporations were punished by selling. “Good” corporations” were rewarded by buying. “Market forces will sort it all out”. This ideology weakened the idea of business ethics and accountability.
WHY WE STILL CAN’T TRUST THE NUMBERS, • Conflicts of interest remain in all audits even where consulting links are abolished, – Concerns that some auditors are looking for jobs in the companies they audit, – Auditors under pressure to get next year’s audit business , – Old accounting standards do not always give fullest picture, – Globalisation and e-technology are making reliable audits extremely difficult
EXPECT MORE CONFLICTS OF INTEREST AMONG GLOBAL AUDITORS, Consolidation at top end of professional service organisations means global players are running out of firms to approach to provide independent advice over large complex deals, • Conflicts of interest are growing rapidly – made worse by the collapse of Arthur Andersen, with companies in danger of representing the interests of more than one party , • Expect future accusations of breaks in “Chinese walls”
TRUST TAKES YEARS TO WIN AND HOURS TO LOSE, System of business ethics must win trust of the international community, • Steps to rebuilding trust in the corporation, – T ransparent – totally open, going beyond current requirements or expectations, – R esponsible – clearly acting in the broader and longer term interests of all, – U ncompromising – total commitment to highest moral positions, – S uccessful – great results combining excellence in all areas with strong values, – T emperate – taking care to avoid major risks, wild decisions and extravagance
CEO CONFLICTS OF INTEREST MUST BE DEALT WITH, • Making decisions that benefit the CEO at expense of the future of the company, made worse by the large stock options given and other triggered incentives, , • Hiding how much the CEO takes - non-recording of stock options as an expense, overly-complex complex reporting
ACCOUNTABILITY CONFLICTS FOR STAFF, The fundamental issue at the heart of many recent scandals, • “I did what I was told” – , • So who do you serve? Your boss? The boss of the boss? CEO? Board? shareholders? Customers interests? General public? Courts of law? Your own conscience?, • Extreme pressures on employees to toe the official line, • Harassment and threats by people representing huge power
HOW CONSULTANTS AND ADVISERS GET COMPROMISED, Who is the consultant or adviser accountable to if things are discovered?, • To the individual who set up the arrangement and is asking for the advice (who may be part of the problem)? His or her boss? The CEO? The board? The shareholders? The government? Consumers? The public? Who do you tell and when?, • What are the limits of confidentiality in consultancy?
, HOW THE MEDIA CAN BE COMPROMISED, • Media investigation should be a powerful corrective force, exposing wrong-doing, but media depends on advertising. Dangers of alienating big funders of media companies., • Media is also sensitive to news manipulation and lobbying, including benefits for journalists writing stories, • Need for transparency – declaring interests of journalists and editorial team including those of the owner(s)
HOW GOVERNMENT CAN BE COMPROMISED, • Lobbying budget in US greater than GDP of 57 nations, • Over 100 lobbyists per Member of Congress, • $5bn a year industry designed to create new laws or regulations, change existing ones, limit corporate liability, create barriers to entry for competitors, change who gets elected, • Potential for corrupting the democratic purpose, • US Government shell-outs to business are worth more than $300bn a year, • Selective tax breaks, trade policies and spending programmes are all sensitive areas, • Risk of corruption and danger of distorting free market
HOW CORPORATIONS CAN OUT-GUN GOVERNMENT LAWYERS, • Government will increasingly target corporations as well as individuals with legal action, • Large corporations have deeper pockets than legal budgets of government, • They often get better quality representation from huge heavy-weight teams
“SUCCESS PLUS” – Doing great things in the right way, Success itself is being redefined – fundamental rethink about the purpose of corporations. Corporate responsibility will be far more widely interpreted. REAL SUCCESS will be everything we have previously taken for granted in high performing companies PLUS the highest ethical standards in all areas.
BUILDING A BETTER WORLD – core value and universal slogan , Corporations will be expected in future to “build a better future” – not only for their shareholders but also for their customers, workers, business partners, community, nation and the wider world. Those with effective business ethics based on this core value will have an added competitive advantage: attracting and retaining talent and generating positive reactions in the marketplace.
See corporate and social responsibility article,and CSR slides, corporate governance, why people work for nothing - lessons for corporates from non-profits.