(Richard Pettinger (Auth.) ) Introduction To Manage

INTRODUCTION TO
MANAGEMENT
IMANAGEMENT
INTRODUCTION TO
Richard Pettinger
M
MACMILLAN
© Richard Pettinger 1994
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ISBN 978-0-333-59769-9 ISBN 978-1-349-23258-1 (eBook)

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I Contents
List of figures and summary boxes x
Preface x1v
Acknowledgements xvii
1 Introduction 1
Background to management 1
The professionalisation of management 2
Management as a field of study 4
Management research and literature 4
Conclusion 6
2 Historical perspective 7
Early studies 7
Marxism 9
Bureaucracy and the permanence of organisations 9
The origins of welfarism 10
Henri Fayol 10
Scientific management 11
The human relations school 12
Winning friends and influencing people 13
The 'affluent worker' studies 14
The intrapreneur 15
The Peter Principle 16
Studying organisations 17
Business policy and strategy 18
Organisations, management and technology 19
Mechanistic and organic/ organismic management systems 22
Socio-technical systems 24
Excellence 24
Change 29
Conclusions 30
3 Organisational and behavioural aspects 31

Introduction 31
Leadership 31
v
vi Contents
Charisma 35
Situational knowledge and expertise 35
An outline of archetype organisation managers 36
Power in organisations 39
Summary of leadership qualities 42
The chief executive 43
Organisational conflict 47
Motivation 49
Major theories of motivation 50
Groups and teams 61
Groups at work 62
The group process 64
Group components and composition 66
Research in the workings of groups 68
The individual 70
Conclusions 73
4 The management of organisations 74

Structures and cultures 75
Archetype cultures and structures 79
Systems in organisations 84
Communication 88
Perception 88
The communication process 91
Decision-making 101
Organisation and employee development 110
Conclusions and summary 120
5 Strategy 125
Introduction 125
Public policy 126
Development of strategy 128
Internal strategies and policies 129
Vision 131
Core business and core activities 132
Risk 133
Types of strategy 135
Measurement and evaluation 139
Implementation of strategy 140
Evaluation of strategy 142
Ready-reckoner strategic analyses 144
Strengths, weakness, opportunities, threats: SWOT analysis 145
Social-technical-economic-political: STEP analysis 146
Industry structure analysis 147
Competitor analysis 147
Contents vu
Ethics and morality in management 148

Conclusions 152
6 Marketing 155
The marketing process 155
Marketing strategies 156
Segmentation 158
The competitive environment 159
The marketing mix 166
Marketing research and development 179
Corporate citizenship 179
Public relations 180
Conclusions 181
7 Human resource management 183

Introduction 183
Corporate aspects 184
Staff planning 185
Fitting the job to the person: fitting the person to the job 188
Equal opportunities 190
Pay, remuneration and reward 192
Components of a wage, salary or reward package 193
Job and work analysis 195
Job descriptions 197
Job evaluation 197
Person specification 198
Recruitment and selection strategy 199
Induction 205
Performance appraisal 206
Maintenance factors in HRM 207
Conclusions 211
8 Industrial relations 213

Introduction 213
The framework of industrial relations 214
IR strategies 218
Collective bargaining 221
Multi-unionism 226
Conformism 226
Recourse to arbitration 227
The single union agreement 228
IRprocedures 232
Conclusions 232
Appendix: Sanyo Industries (UK) Ltd: staff handbook 235
viii Contents
9 Employment law in the UK 241

Introduction and background 241
ACAS: The Advisory, Conciliation and Arbitration Service 242
Equality of opportunity 244
The contract of employment 250
Dismissal 254
Consultation 259
Industrial relations law 260
Health and safety legislation 262
Conclusion 264
10 Operations management 267

Location 267
Facilities 269
Design and measurement of work 270
Levels of activity 271
Reliability 273
Safety aspects 274
Production types and categories 276
Creativity and innovation 278
Schedules and timetables 280
Purchasing and supplies 282
Maintenance management 284
Systems of coordination and control 285
Project management 285
Benefits of the project management approach 294
Conclusions 294
11 Quantitative methods 299

Statistics 299
Network analysis 308
Finance 310
Ratio analysis 315
Internal markets 318
Budgets 318
Cost-benefit analysis 319
Management information systems 321
Conclusion 323
12 Managerial performance 324

Evaluating managerial performance 324
The department manager's role 325
Attitudes and values 326
Setting goals 327
Managing by walking about 330
Contents 1x
Delegation 331
Wait a minute 333
Control 333
Time 335
Interpersonal skills and assertiveness 338
Discipline and grievance 341
Negotiating 344
Performance assessment 345
Health and safety 346
Sickness 347
Realpolitik 347
Conclusion 351
13 Managing in a changing environment 352

Introduction 352
The present and future of management 353
Management of change 354
Attitudes, values and beliefs 355
Behavioural barriers to effective change 356
Changing culture 358
Changing structure 359
Changing staff management 362
Working with change 365
Japanese management 368
The future of management 373
The business sphere 375
Bibliography 381
Index 384
I List of figures and
summary boxes
• Figures
2.1 The value chain 20
2.2 Organisations and technology 21
2.3 Organisation structures: mechanistic 23
2.4 Organisation structures: organic/organismic 23
2.5 The concept of excellence applied to organisations 26
3.1 The 3-D theory 37
3.2 The managerial grid 40
3.3 System 4 52
3.4 A hierarchy of needs 54
3.5 Two-factor or hygiene factor theory 56
3.6 Foundation of corporate norms 65
3.7 Archetype team members 69
4.1 Power culture and structure: the wheel 80
4.2 People/person culture and structure: the mass 81
4.3 Task culture and structure: the net 82
4.4 Role culture and structure: the pyramid or temple 82
4.5 Organisations as systems 86
4.6 Some behavioural aspects of ego states 99
4.7 Transaction analysis: configurations 100
4.8 A decision-making model 103
4.9 The decision tree 105
4.10 Introducing a major or contentious issue: a managerial approach 109
4.11 A decision-making model: the autocratic-participative range 111
4.12 Configuration of the organisation and individual assessment
process 120
4.13 Criteria for effective training, development and learning to take
place 122
5.1 Source and development of organisation strategy 127
5.2 The planning process 128
5.3 The implementation of strategy 141
5.4 The monitoring, review and evaluation of strategy and direction 143
5.5 SWOT analysis 145
5.6 The components of competitor analysis 148
X
List of figures and summary boxes xi
5.7 The effects of social and political considerations on strategic choice and
direction 153
6.1 Five elemental forces of competition 165
6.2 Product life cycles 170
7.1 Fitting the job to the person: fitting the person to the job 189
7.2 The Seven Point Plan 199
8.1 The collective bargaining process 225
9.1 The progress of a case through the UK industrial tribunal system 256
11.1 Presentation of data 302
11.2 An index number 304
11.3 A network diagram 309
11.4 Profit and loss account and balance sheet example 311
11.5 A break even diagram 314
• Summary boxes
2.1 The divine right of kings 8
2.2 The Peter Principle 16
2.3 Eight characteristics of excellent management practice 26
2.4 Criteria for excellence 28
3.1 Leadership styles 32
3.2 The leadership functions model 34
3.3 Case approaches to leadership and management 36
3.4 The managerial grid 40
3.5 Instant departures 45
3.6 High performance groups and the bunker mentality 61
3.7 Job titles and their inferences: role constructs 71
3.8 Role ambiguities 72
3.9 Internalisation 73
4.1 Personal values 78
4.2 Perception 90
4.3 Transactional analysis 98
4.4 Neuro-linguistic programming 101
4.5 The negative decision 106
4.6 Professional studies 114
4.7 OD concepts 118
4.8 Training methods and techniques 123
5.1 The health sector 130
5.2 McDonald's 130
5.3 The NHS reforms 133
5.4 Acquisitions example: Sony and Matsushita 137
5.5 Virgin Airlines 138
5.6 'Post it' 142
5.7 Body Shop 150
xn List of figures and summary boxes
5.8 P & 0 Ferries: Dover-Europe 151

6.1 The leisure wear sectors 157
6.2 Butter 161
6.3 Lycra 167
6.4 Ford 169
6.5 The growth-share or product portfolio model 171
6.6 The legend of the razor 171
6.7 Airline tickets 172
6.8 The 99p syndrome 172
6.9 Health care promotions 174
6.10 Drink 175
6.11 Soap powder 176
6.12 Storylining 177
6.13 Customer perception 177
6.14 APR master stroke 181
7.1 Performance related pay (PRP): ground rules 194
7.2 Profit related pay 194
7.3 Merit pay and performance related pay for administrative, professional
and managerial staff 195
7.4 Mass produced work 196
7.5 First steps towards empowerment 196
7.6 Stress 209
7.7 Organisational approaches to tobacco, alcohol and drugs 211
7.8 AIDS: Acquired Immune Deficiency Syndrome 211
8.1 Behavioural theories of labour relations 224
8.2 Multi-union illustrations 227
8.3 Single union no-strike agreement between Sanyo (UK) Ltd (Lowestoft)
and the EETPU 231
8.4 Comparative industrial relations 234
9.1 Price v. The Civil Service Commissioners 246
9.2 Time off work 251
9.3 Industrial tribunals 257
9.4 Main UK employment laws 266
10.1 Co-Steel Sheerness plc 268
10.2 Product success: the Sony Walkman 273
10.3 Performance indicators 279
10.4 Operations and projects: environmental and situational factors 287
10.5 M25: the London orbital motorway project assessment 289
10.6 Concorde 289
10.7 Joint ventures and other cooperative efforts 295
10.8 Joint ventures: examples 296
10.9 AZT: commercial and social drive 297
10.10 The Channel Tunnel Project: measures of success and failure 297
11.1 Open and closed questions: examples 308
11.2 A model of human asset valuation and accounting 316
List of figures and summary boxes xiii
11.3 Added value 317

12.1 Office staff practice 342
12.2 A problem-solving model 325
12.3 The hard line 328
12.4 Goals: guidelines 329
12.5 Objectives: an example 329
12.6 The elements of administration 332
12.7 Wait a minute 334
12.8 Spans of control 334
12.9 An airline manager working in the Middle East 336
12.10 Waste of managerial time 337
12.11 The chair: leading meetings, discussions and briefings 339
12.12 Assertiveness 340
12.13 After the staff meeting 348
12.14 The choice of ministers 349
12.15 Over-mighty subjects 349
12.16 The parable of the spotlight 349
13.1 Culture change 358
13.2 External force and cultural change 359
13.3 Konosuke Matsushita (1892-1989) 372
13.4 Investment 376
I Preface
Everywhere in the world there is a revolution going on, a transformation of

business and of the services needed and wanted by people. At the heart of this
revolution is management. This is underlined by a realisation that, whatever the
merits of how this was conducted in the past, new ways and new methods are
essential for the future; above all, this means a better understanding of what
management actually is.
The background against which this revolution takes place is one of economic,
social and political turbulence and upheaval. The global environment is both
unstable and volatile. The sophisticated post-industrial new economies of the
West are undergoing radical transformation, driven by a combination of
recession, technological advance and competition from emerging nations. This
is exacerbated by the need for levels of investment and other resource commit-
ment over periods of time that run contrary to prevailing political and economic
pressures. The economies of the Far East have generated a business and
commercial power bloc in the period since World War Two that dominates
the global electrical and consumer goods markets and makes them major
operators in the car, white goods and finance sectors. This has been achieved
from a combination of investment, technology and organisation founded in the
reconstruction and regeneration of the world devastated by World War Two.
Ever-greater strains and demands are placed on the finite and diminishing
resources of the world by an ever-increasing global population. These have
therefore to be arranged, planned, ordered and organised to ensure that they are
used to greatest possible advantage. In the particular context of pressure on the
one hand and finity on the other, this constitutes a drive for constant
improvement in efficiency, effectiveness, maximisation and optimisation.
This is the framework of the 'business sphere' - that is, the environment of
business, and background against which business is conducted. It forms the
backcloth to the 'management sphere' - the actual and conceptual environment
(global, organisational and departmental) in which the practice of management is
conducted. The work is carried out in and by 'organisations' - that is,
combinations of human and other resources drawn together for a distinctive
business or social purpose.
The standpoint adopted in response to this is straightforward: management is
a statement of excellence and quality and of expertise. There is a body of
knowledge and skills that must be acquired by anyone who wishes to be a part of
the managing - that is, the direction and ordering - of the situation. There are
capabilities and capacities required in people in the pursuit of this. High
XIV
Preface xv
standards of behaviour, ethics and performance are required. There is a personal

commitment necessary in terms of energy, commitment, enthusiasm and
ambition. There is increasingly a standard of education and training necessary,
both as a prerequisite to entry to the field and in the maintenance of effective and
current performance in it. Finally, in common with all true experts there must be
personal pride and joy in the work itself, in the organisation in which it is carried
out, and in the particular department in which the manager is working.
The nature of this expertise is complex and diverse. The practice of manage-
ment requires both the recognition of this complexity, and the capacity to
reconcile the conflicting elements present in the pursuit of it. For the purposes of
introducing the scale and scope of this expertise and in order to provide a
framework for the recognition and understanding of it, the book is organised as
follows.
Chapter 1 is an introduction and configuration of what management is and
what it should be, and this is followed by an historical overview and review in
Chapter 2, to establish the development of the expertise to date.
Chapter 3 is an introduction to organisation behaviour and an illustration and
analysis of its key features. Chapter 4 then relates the processes of managing
organisations, the importance of their structures, systems and cultures and the
means by which these are envisioned and energised.
This is followed by an illustration and consideration of the nature and context
of distinctive management functions that are carried out by organisations in the
pursuit of their stated purposes. Starting with a consideration of strategy and
policy formulation in Chapter 5 the book then addresses the particular concerns
of marketing, human resources, industrial relations and employment law
(Chapters 6-9). Chapter 10 then addresses the nature and complexity of
operations management, and Chapter 11 its quantitative methods aspect ..
The purpose of the last part of the book (Chapters 12-13) is to address the
major current issues related to managing in the changing and volatile environ-
ment already referred to; and the particular current concerns of excellence and
quality. There is also a short section on Japanese management.
This last bears another word here. Both academics and practitioners have
looked at Japanese business and management practices in detail and depth in
their attempts to explain the great economic successes that have been achieved in
that country and by its companies since 1945. There is a relationship to be drawn
between this and the practices adopted, and they thus merit particular
consideration.
To bring the threads of these opening remarks together - they each feed off
each other. That is, good management engenders good business, good business
creates good organisations, good organisations attract, retain and develop good
managers who in turn improve both the quality of organisations and of the
business that they conduct. Organisations thus cannot afford bad managers or
their bad practices.
The main conclusion drawn is in relation to the constant expansion of the
subject, both as a field of study and as an area of practice; and of the consequent
xv1 Preface
necessity of those who work in it to keep up to date with developments, to read,

to acknowledge and to accept their responsibilities for their own continuous
professional expansion and to act upon all of this. The commitment needed for
this matches that of any classical profession- such as medicine or the law.
This is an illustration and summary of the scope and coverage of the book. The
overall purpose is to introduce concepts and features of the management sphere
to the student coming to the subject for the first time; to those commencing
professional studies and professional examinations who require an introduction
to management or a general management reader; to those studying management
as part of a technological, technical, engineering or computer course; and as a
contribution to the level and content of the debate in the field.
RICHARD PETTINGER
I Acknowledgements
The genesis of this book lay in the undergraduate Management Principles course
of the Bartlett School of Architecture, Building, Environmental Design and
Planning, University College London. In the pursuit and completion of this
project, therefore, special thanks and acknowledgement are due to Graham
Winch, John Andrews, Victor Torrance and Barbara Young of the Bartlett
School.
Many other people also contributed. Peter Lawrence, Professor of Compara-
tive Management at the Loughborough University Business School, reviewed the
manuscript and made many positive and helpful comments and suggestions.
Stephen Rutt and Jane Powell at the publishers were a constant and positive
source of help and guidance throughout, as were Keith Povey and Barbara
Docherty, who copy-edited and proof-read the book. I am indebted to Kelvin
Cheatle of Kent County Council; Jim and Margaret Malpas and Sandra Madigan
of Malpas Flexible Learning Limited, a top quality professional education and
training company and consultancy; David Scott of the Artisan Group; and to
Rebecca Frith, who typed and edited the manuscript. I am also grateful to Keith
Sanders, Ken Batchelor, Michael Hutton, James Pollock, and Janet and John
Doyle for their constant support and encouragement.
RICHARD PETTINGER
The author and publishers wish to thank the following for perm1ss1on to
reproduce copyright material: Sanyo Industries UK Ltd (for their staff hand-
book); Irwin Publishers for material from C. R. Christensen et al., Business
Policy: Text and Cases, 1987.
Every effort has been made to trace all the copyright-holders, but if any have
been inadvertently overlooked the publishers will be pleased to make the
necessary arrangement at the first opportunity.
XVll
IIntroduction
CHAPTER 1
The purpose of this chapter is to identify the range of general and universal
concepts and elements that ought to be present in any worthwhile study of the
subject of management. These are highlighted in themselves and then drawn
together in so far as this is possible. However, many of these elements are
disparate or divergent and it is essential to recognise them as such.
Many definitions of what management is exist. Henri Fayol, in the early
twentieth century, defined it as the process of 'forecasting, planning, organising,
commanding, coordinating and controlling'. E. F. L. Brech called it 'the social
process of planning, coordination, control and motivation'. Writing in the 1980s
Tom Peters defined it as 'organisational direction based on sound common sense,
pride in the organisation and enthusiasm for its works'. It is clear that
management is partly the process of getting things done through people; and
partly the creative and energetic combination of scarce resources into effective
and profitable activities and the combination of the skill and talents of the
individuals concerned with doing this.
Management is conducted in organisations. Again, a context must be
established. They are variously described as, 'systems of inter-dependent human
beings' (D. S. Pugh); a 'joint function of human characteristics, the task to be
accomplished and its environment' (H. Simon). Again to summarise, organisa-
tions may be seen as combinations of resources brought together for a purpose;
they have a life and a permanent identity of their own, and are energised by
people.
• Background to management
Management is variously defined as science, profession and art. The truth of its
status lies somewhere between the three; and that it has strong elements of each is
incontrovertible.
There are precise elements, scientific and exact aspects that have to be learned
and assimilated. Any manager must have a good grasp of certain quantitative
methods and financial and statistical data, as well as certain, less scientific but
well tried and tested elements such as human motivations, and the effect of
different payment systems on the performance of different occupations.
It is a profession in so far as there is a general recognition that there are certain
knowledge, skills and aptitudes that must be assimilated and understood by
1
2 Introduction to Management
anyone who aspires to be a truly effective manager. Management is not a true or

traditional profession in the sense that it is not a fully self-regulating occupation,
and nor is there yet a named qualification that must be achieved before one is
allowed to practise. However, pressure to be both educated and qualified is
growing universally. There is a recognition also of the correlation between this
and expert and effective practice.
Management is an art in the sense that within these confines and strictures
there is great scope for the use of creativity, imagination, initiative and invention
within the overall sphere of the occupation. The scientific methods and body of
knowledge referred to must be applied in their own way to each and any given
situation, issue or problem. This is the creative aspect of the manager's role and
function; and anyone in a managerial position who seeks for prescriptive
solutions to organisational problems is likely to fail.
The subject of management is thus concerned with both the precise and the
vague; the ordered and the creative. Within these broad concepts it is possible to
pin down certain elements that are present in all effective management and
successful managers.
The most critical of these elements are communication and decision-making.
Anyone who aspires to management must understand the processes involved and
be able to carry them out effectively in regard to their own situation. They are
dealt with extensively elsewhere in this book and form a common and continuous
thread throughout. They are fundamental to the success of any managerial
activity.
This is because the overall managerial task is concerned with getting things
done through people; the combination and ordering of a variety of resources for
given productive purposes; the actions and processes involved in the combination
of those resources; and the balancing of resource utilisation with the commercial,
environmental and operational variables of quantity, quality and time. This task
is, in turn, broad and strategic at the top of organisations where the manager is
concerned with broad direction and the future; and narrower, concerned with
short term and operational matters at the lower levels of organisations. In all
cases, it is the ability to communicate effectively, and to take effective decisions,
that are fundamental to any successful managerial activity.
• The professionalisation of management

The best managers are, therefore, highly professional, committed and dedicated
operators; highly trained and educated; with excellent analytical and critical
faculties. Beyond this, there is a body of skills and aptitudes, knowledge, attitudes
and behaviour which the effective manager must have and be able to draw upon.
What is required of the effective manager reads, if one is not careful, like a
checklist for life. The basis of this forms the rationale for the scope of this book.
In summary, managers must have the strategic planning and organisational skills
necessary to determine and carry out the directive functions required in the
Introduction 3
particular situation. They must understand the basic aspects of human behaviour
and motivation if they are to stand any chance at all of getting effective work out
of the staff. They must have a basic grasp of quantitative and analytical methods
enabling them to recognise those activities which are truly profitable and effective
and those that are not. They must be familiar with information systems and the
information itself. They must be able to draw accurate conclusions from it. They
must be able both to ask for information, and to present information in ways that
the organisation as a whole and its individual operations require. They must be
able to manage and maintain the human resource. They must have a good
knowledge of the law as it impinges on their particular managerial activities and
be able to work within it. They must understand and be able to apply strategic
processes, priorities, schedules, timetables and techniques. They must be able to
work to deadlines and within resource constraints. They must have basic skills
and aptitudes in marketing and presentation. They must set standards of
performance for themselves, their peers, their subordinates and the organisation
as a whole and take active steps to remedy that performance when it falls below
the standards set.
Related to this, the personal qualities required include ambition, energy, great
commitment, self-motivation, job, product and service knowledge, drive and
enthusiasm, creativity and imagination, a thirst for knowledge, a commitment to
improvement, a commitment to continuous development, personal and profes-
sional, the ability to grow and broaden the outlook and vision of the organisation
concerned, a positive and dynamic attitude, self-discipline, empathy with the
staff, a love of the organisation and pride and enthusiasm in the job, its people, its
products, its services, its customers and clients. These personal qualities provide
the springboard for the successful and professional operator.
There is a certain background that is required. This relates to the knowledge,
understanding and grasp of basic economic concepts, the relationship between
organisations and their environment, current issues and affairs, constraints on
the ability to conduct business, assimilation of the knowledge that is comprised in
the subject areas of: strategy and policy; marketing; behavioural sciences;
personnel and industrial relations; production, operations, systems, service,
projects and facilities management; and the management of initiative and
innovation. Currently, much of this is formalised and achieved through the
study of business at school, college and university. This is by no means a
universal requirement, however- there have been countless successful managers
who never had this benefit. However, their success was undoubtedly based on
their own ability, however gained, in these areas.
There is the recognition that management is a global activity, that lessons can
be both learned and offered, from and to the rest of the world. The business
sphere consists of Western Europe, North America, Japan, Korea, the Middle
East, Australia, New Zealand and South Africa, where managerial practices are
well documented. These will impinge on and be modified by the business
emergence of the former communist bloc and USSR, South and Central
America, India and Pakistan, Indonesia and China. All of these are industrialis-
ing and commercialising and having their own influence on business practices. In
the future, this will undoubtedly include the rest of Africa, and the more remote
parts of Asia. It must be recognised, finally, that management is currently being
conducted in a changing and turbulent environment. This has itself changed over
the period since 1945 and the reconstruction of the world damaged by the Second
World War. Then, everything was arranged to try and bring order, stability and
performance steadiness to business, service and the markets and spheres in which
they operated. Today, all that has gone, and the processes of technological
advance, management education, automation, social change, political develop-
ment together with the globalisation of business and commerce ensure that all
concepts of management are in turn subject to continuous change and revision.
Truly expert and committed managers will always ensure that they keep
themselves up-to-date with everything that impinges on both their job and their
chosen profession. Many managerial institutions now insist that their members
keep records of all continuous professional development activities that they
undertake and, indeed, insist on this as a condition of continuing membership.
If management is viewed in this way, it is a highly professional activity and one
that demands a set body of expertise and a large measure of commitment on the
part of its practitioners. In traditional terms, management falls short of the full
status of profession in that the elements outlined here do not constitute yet a
formal entry barrier (in medicine, the law, the clergy and the military, it is
essential to have the stated qualifications before being allowed to practise).
However, there is currently a combination of pressures - from the EC, North
America and local considerations of contract compliance and tendering,
especially in public services, the proliferation of business and management,
schools and education, the decline of traditional, industrial and commercial
sectors, and the growth in awareness of this as a critical operational area - that
are coming together to ensure the recognition of management as an expertise in
its own right and, in turn, ensuring its increased professionalism and status.
• Management as a field of study

The importance of management as a field of study has therefore never been
greater; and it is growing all the time. Organisations that are well managed, that
have excellent and competent managers, gain competitive and operational
advantages, quite apart from anything to do with the quality or value of their
products and services. There is a competitive advantage in having high quality
staff in any field and this extends to those who manage them.
• Management research and literature

There is a great proliferation of such literature at present. This is compounded by
an increase also in the number of journals and periodicals that impinge on the
Introduction 5
field or on part of it, or that have relevance and meaning for it.
The result is that in the total management sphere there is a great body of
knowledge and experience on which to draw and from which to learn. Written at
all levels and to cover all shades of interest the range now extends from tiny
anecdotes or proverbial words of wisdom to extensive, analytical and top quality
theses on business strategy, quantitative methods, marketing and other resource
management.
Both aspiring and practising managers have obligations to their profession, to
their organisation and to themselves, to equip themselves with a leavening of this
material. It represents both interest and concern with the occupation, and the
standards of knowledge, experience and enlightenment required. It mirrors the
march of progress in the field, and the importance increasingly placed by
organisations on having expert, trained, educated and capable managers.
The range and scope of literature becomes apparent through the course of any
study of the field. Certain strands may, however, be usefully identified.
Some of it is intellectually extremely challenging. The ability, both to
understand and to be an effective practitioner also in certain aspects of the
managerial sphere, requires a high degree of intellectual capacity, higher
education and a basic grasp of some mathematical and economic theories as
well as behavioural and operational matters.
Some of it addresses precise or defined issues that have a direct bearing on the
business sphere. This is especially true of the areas of leadership, motivation,
perception, the formation of attitudes, standards and values which have both
their own body of knowledge in their own right, and which then require
translation into particular managerial situations in different ways.
Some of it dwells heavily on empirical research, case histories and anecdotal
examples. This enables studies of the relationships between variables in given
situations to be undertaken and assimilated, and 'what if' and other hypothetical
discussions to take place in relation to real events of the past, but in overtly 'safe'
situations at present. The body of the general knowledge and experience of the
manager is thus developed and extended, as are his critical faculty and awareness
and overall view of the sphere.
Some of it illustrates particular successes and failures; this is especially true of
the swelling array of books produced by successful and business people. The
lessons to be drawn here are often in the mind of the reader. Such books tend to
reinforce certain aspects only of the whole managerial sphere. They provide a
very useful library of what has worked in practice for comparison against a
theoretical or academic base. They contribute to the overall fund of empirical and
anecdotal experience from which the manager may draw.
Some of it aims to popularise, de-mystify and familiarise that which other parts
of it would appear to shroud in mystery. Prominent among these works are the
writings of Tom Peters, Rosabeth Moss Kanter, Walter Goldsmith, David
Clutterbuck, John Harvey-Jones and Ronnie Lessem. In these cases the material
is tackled in reverse; that is basics and fundamentals of management are
illustrated with famous and high profile success stories so that lessons are
learned that way. The works of Tom Peters, especially, are peppered with
anecdotes that the student or reader should remember; these gather a life of their
own in his exciting, vivid and stirring language. The stories are also much better
learned because they are positive rather than negative in their telling.
Some of it, finally, represents a more general illustration of the sphere at large.
This purposes to provide the first step towards enlightenment and understanding
and also to set out the range and complexity of the profession of management.
This material is for use both at the point of entry to the profession and also for
general reading once within it.
Whatever the 'category', and these have been defined for illustrative purposes
only, all the material should inspire, energise, enthuse and enlighten those who
read it. It should be credible and accurate. Having said that, there is a clear
indication of the requirement on the other hand of the motivation of the manager
or aspiring manager to read into and around the chosen subject and profession as
part of the commitment to it. Inevitably some parts will inspire and enthuse more
than others; while other parts of it will have less meaning and relevance. Only by
getting involved in it, however, is it possible to create and define a critical faculty
in this respect, and, moreover, additionally draw general lessons and experience
from those areas where there is no direct interest or experience.
Finally, all the literature, books and works must be seen in their own context.
Not all management literature retains its currency. Som~ may be highly useful
and valuable for a limited period of time only; or an essential though transient
stepping stone along the path of progress. It should be seen for what it is - the
configuration of the current state of learning at a given point. It is constantly
being updated and added to in terms of volume, quality and enlightenment.
• Conclusion
Thus, management impinges on all aspects of life. The main concern here is with
the effects on and effectiveness in the direction of business, industry, commercial
and public services, and the non-profit-making sector.
However, many of the principles and practices to be applied have relevance
across the whole of life - the organisation of family outings, weekend sporting
and leisure activities, religious and social functions.
Finally, anyone who is truly dedicated and professional in whatever sphere
should be determined to keep themselves abreast of progress and development in
their chosen field. In this respect, the manager is no different from any other true
and dedicated professional - the doctor and lawyer must also do this. It
represents their personal commitment to their chosen field, which is part of the
implication and consequence of going into it in the first place. More generally,
customers and clients of any professional expect to be dealt with on a current
rather than historic basis. This must apply, above all, to the truly professional
manager.
IHistorical perspective
CHAPTER2
• Early studies
The subject of management has been studied over the centuries with the view of
establishing what constitutes a successful manager or, in the closely related field,
what constitutes a successful leader. The subject of leadership is dealt with fully
later in the book. At this stage, suffice it to say that while the two concepts are
closely related, they are not synonymous- a good leader is not necessarily a good
manager; nor is a good manager always a brilliant leader (though they should
always be at least capable).
The purpose here is to illustrate the extent to which management has been
studied over the centuries, and the concepts developed; to briefly introduce and
discuss the work of the major contributors to the subject over the period since the
industrialisation of the western world; and to look finally at those works, writers
and practices that are of importance in the study and analysis of the subjects in
the late twentieth century.
The subject of management has been developed from the earliest points of
civilisation. Religious writings identify the fundamental elements of strength of
character and purpose, positive morality and love of truth that anyone who
aspires to a position of authority should have. Both archaeologists and those
interested in the organisational aspects have long concerned themselves with how
the resources necessary to build the pyramids and temples of Egypt and South
America were coordinated. They have speculated on the means by which these
might have been achieved, without coming to definite conclusions overall.
Common threads running through the lives of the twelve Caesars, as told by
Suetonius writing in the first century AD, related their moral and ethical
purposes, their ambition, their policies for Rome and the Roman Empire and
the standpoints for these, to their overall success. Also identified were elements
that were necessary to survive in the situation and the extent to which they were
successful in the pursuit of this. Julius Caesar, himself a writer of note, dealt
extensively with the vision, strategic and tactical awareness that he required to be
successful in his twin careers of general and emperor. Later, histories of the
Frankish Kingdom in the Middle Ages ascribe strong leadership, a clarity of
purpose and the ability to persuade a range of disparate elements to a single point
of view, as characteristics of Charles Martel and Charlemagne in the establish-
ment of the nation of France.
7
The nature and importance of power and influence were clearly established.
Niccolo Machiavelli, the Florentine, writing in the fifteen century, developed this
much further. His book, The Prince, recognised as an early authority on
leadership, pushes back the ethical and moral boundaries and advocated the
subordination of means to ends. He marks political awareness and astuteness and
the ability to translate innate abilities into particular situations as further key
characteristics; if one did not understand the environment and could not operate
within it, one could not be truly effective.
The main common element of these historic studies was the separation of the
role of the leader and the characteristics required of the leader from the
remainder of business, political and military activities (see Summary Box 2.1).
A good soldier did not necessarily make a good leader; on the other hand to be a
good leader of soldiers, it was necessary to have a good knowledge of what the
components of soldiering were, and to be able to combine this with the other
characteristics necessary, of ordering and directing and planning.
SUMMARY BOX 2.1 The Divine Right of Kings
This is a concept established by various dynasties, in various parts of the world,

throughout the centuries. The notion that the king was the appointed and anointed,
by divine intervention, had the additional effect of making any attempt on his life or
well-being not only a crime of high treason, but also a crime against God. Anyone
who raised questions about performance of the king or, in extreme situations, their
hand against him, therefore faced retribution both here and in the after-life.
It is an early example of a cultural barrier.
Prior to the western industrial revolution, therefore, there was a large, if

uncoordinated and undervalued, body of knowledge and experience available
from which conclusions about the prevailing and ideal nature of leadership and
management could be drawn.
The industrial revolution in Great Britain and Europe over the eighteenth and
nineteenth centuries brought great social and political ferment and upheaval, as
well as economic restructuring. In particular, the shift to a money, wage-earning
economy in the cities transformed the lives of the masses of people. It ran
alongside explosions of population and technological advance, creating an urban
workforce available to meet the demands of the new factories, mills, transport
and infrastructure industries that were springing up at the time.
Out of this ferment and transformation came particular initiatives, writings
and scholarship both in relation to work and also on the implications of the
relationship between the ways of working and the society at large. Some of these
are now considered. The coverage is illustrative, rather than comprehensive, with
the purpose of demonstrating the great range of ways in which the subject has
been tackled. It also constitutes an introduction to both concepts and authorities
which have been and remain important, notorious and controversial in the field.
Historical perspective 9
• Marxism
The ferment of ideas that ran concurrently with the industrial and social
upheaval brought with it the concept of communism. Written and developed
by Karl Marx and Friedrich Engels, the Communist Manifesto propounded that
industrial society as it stood was to be a place of permanent upheaval and
revolution; that the workers, the wage slaves, would not tolerate the current state
of industrial society, but would rather overthrow it and seize control of it for
themselves. Egalitarian in concept, it rejected the then emerging concepts of
capitalism, bourgeoisie (the middle and professional classes), and the fledgeling
wage-work bargain. Largely discredited as a philosophy (above all by the
collapse of the communist bloc which called itself Marxist), Marxism never
succeeded in translation into an effective code for the organisation of work.
However, it does illustrate the extreme or radical perspective on working
situations; the extent to which the workforce may become alienated either from
the organisation for which they work or from its managers. It also voices genuine
concerns for the standards, dignity and rights of those who work for others in the
pursuit of supporting their own lives. It became the cornerstone of the trade
union movement in the UK and of other trade unions elsewhere. The attraction
lay in the egalitarianism preached and the utopian vision of shared ownership of
the means of production and economic activity.
I Burea?cr~cy and the permanence of

organtsattons
The work of Max Weber (1864-1920) developed the concept of the permanence
and continuity of organisations. This was the basis of the theory of bureaucracy.
Weber saw bureaucracy as an organisational form based on an hierarchy of
offices and systems of rules and with the purpose of ensuring the permanence of
the organisation, even though job holders within it might come and go. The
knowledge, practice and experience of the organisation would be preserved in
files, thus ensuring permanence and continuity. Authority in such circumstances
is described as legal-rational, that is where the position of the office holder is
enshrined in an organisation structure and fully understood and accepted by all
job holders. The organisation itself is to be continuous and permanent. Work is
specialised and defined by job title and job description. The organisation is
hierarchical, where one level is subject to control by that or those above it.
Everything that is done in the name of the organisation and its officials is
recorded. Job holders are appointed on the basis of technical competence; the
jobs exist in their own right; job holders have no other rights to the job.
Ownership and control of the organisation are thus separated; effectively the
owners of an organisation appoint others to run it on their behalf. The work and
the control of it is enshrined in rule books and procedures which must be obeyed
and followed. Order and efficiency are thus brought to this state of permanence.
Thus, the overall purpose of bureaucratic structure was, and remains, to attain
the maximum degree of efficiency possible and to ensure the permanence of the
organisation. As organisations grow in size and complexity, these matters
themselves have also to be managed. If this does not happen, this is where
concerns over red tapes, excessive procedures, obscure and conflicting rules and
regulations, arise; while in the most extreme cases the rules and procedures
become themselves all-important to the detriment of the product or service that is
being offered.
• The origins of welfarism

The Cadbury family who pioneered and built up the chocolate and cocoa
industries in Great Britain in the nineteenth century came from a strong religious
tradition (they were Quakers). Determined to be both profitable and ethical, they
sought to ensure certain standards of living and quality of life for those who
worked for them. They built both their factories and the housing for their staff as
a model industrial village at Bourneville on the (then) edge of Birmingham. The
village included basic housing and sanitation, green spaces, schools for the
children and company shops which sold food of a good quality. The purpose was
to ensure that the staff were kept fit, healthy and motivated to work in the
chocolate factories, producing good quality products. Other Quaker foundations
operated along similar lines, for example the Fry and Terry companies (which
also produced chocolate).
This was by no means the rule, and many employers continued to treat their
people very harshly, keeping them in bad conditions, under-paying them and
using fear as the driving force. Graphical and apocryphal descriptions may be
found in the poetry of William Blake and The Water Babies by Charles Kingsley.
However, the work of the Cadburys is important as one of the most enduring
early industrial examples of the relationship between concern for the staff and
commercial permanence, profitability and success.
• Henri Fayol
The work of Henri Fayol (1841-1925) is important because he was the first to
attempt a fully comprehensive definition of industrial management. It was
published in 1916 under the title General and Industrial Administration. It
identified the components of any industrial undertaking under the headings of
technical; commercial; financial; security; accounting; and managerial. This last
group of components comprised forecasting, planning, organisation, command,
coordination and control of the others; the overall function is to unify and direct
the organisation and its resources in productive activities. He also listed 14
'principles of management' on which he claimed to have based his own

managerial practice and style and which he cited as the foundation of his own
success:
1. Division of work, the ordering and specialisation of tasks and jobs

necessary for greater efficiency and ease of control
2. Authority and responsibility, the right to give commands and the
acceptance of the consequences of giving those commands
3. Unity of command, each employee has an identified and recognised
superior or commander
4. Unity of direction, one commander for each activity or objective.
5. The subordination of individual interests to the organisational interest
6. Remuneration and reward in a fair and equitable manner to all
7. Centralisation and centrality of control
8. A discernible top-to-bottom line of authority
9. Order as a principle of organisation, the arrangement and coordination of
activities
10. Equity, that is the principle of dealing fairly with everybody who works for
the organisation
11. Equity in dealings with the employees, ensuring that everybody receives the
same standard of treatment at the organisation
12. Stability of job tenure, by which all employees should be given continuity
of employment in the interests of building up expertise
13. Encouragement of initiative on the part of everyone who works in the
organisation
14. Esprit de corps, the generation of organisation, team and group identity,
willingness and motivation to work
Fayol's work stands as the first attempt to produce a theory of management

and set of management principles. Fayol also recognised that these principles did
not constitute an end in themselves; that their emphasis would vary between
situations; and that they would require interpretation and application on the part
of those managing the situation.
• Scientific management
The concept of scientific management, that is the taking of a precise approach to
the problems of work and work organisation was pioneered by Frederick
Winslow Taylor (1856-1917). His hypothesis was based on the premise that
the proper organisation of the workforce and work methods would improve
efficiency. It was based on the experience of his career in the US steel industry. He
propounded a mental and attitudinal revolution on the part of both managers
and workers. Work should be a cooperative effort between managers and
workers. Work organisation should be such that it removed all responsibility
from the workers, leaving them only with their particular task. By specialising
and training in this task, the individual worker would become 'perfect' in his job
performance; work could thus be organised into production lines and items
produced efficiently and to a constant standard as a result. Precise performance

standards would be predetermined by job observation and analysis and a best
method arrived at; this would become the normal way of working. Everyone
would benefit- the organisation because it cut out all wasteful and inefficient use
of resources; managers because they had a known standard of work to set and
observe; and workers because they would always do the job the same way.
Everyone would benefit financially also from the increase in output, sales and
profits and the reflection of this in high wage and salary levels. In a famous
innovation at the Bethlehem Steel Works, USA, where he also worked, Taylor
optimised productive labour at the ore and coal stock piles by providing various
sizes of shovels from which the men could choose to ensure that they used that
which was best suited to them. He reduced handling costs per tonne by a half over
a three year period. He also reduced the size of the workforce required to do this
from 400 to 140.
The great advances that Taylor and those that also followed the scientific
school made were in the standardisation of work, the ability to put concepts of
productivity and efficiency into practice. The work foreshadowed the production
line and other standardised and automated efforts and techniques that have been
used for mass produced goods and commodities ever since. In the pursuit of this,
scientific management also helped create the boredom, disaffection and aliena-
tion of the workforces producing these goods that still remain as issues to be
addressed and resolved in the 1990s and beyond.
• The human relations school

The most famous and pioneering work carried out in this field of management
was the Hawthorne Studies at The Western Electric Company in Chicago. These
studies were carried out over the period 1924-1936. Originally designed to draw
conclusions between the working environment and work output they finished as
major studies of work groups, social factors and employee attitudes and values,
and the effect of these at the place of work.
The Hawthorne Works employed over 30,000 people at the time, making
telephone equipment. Elton Mayo, Professor of Industrial Research at Harvard
University, was called in to advise the company because there was both poor
productivity and a high level of employee dissatisfaction.
The first of the experiments was based on the hypothesis that productivity
would improve if working conditions were improved. The first stage was the
improvement of the lighting for a group of female workers; to give a measure of
validity to the results, a control group was established whose lighting was to
remain consistent. However, the output of both groups improved and continued
to improve whether the lighting was increased or decreased. The second stage
extended the experiments to include rest pauses, variations in starting and
finishing times, and variations in the timing and length of the lunch break. At
each stage the output of both groups rose until the point at which the women in
the experimental group complained that they had too many breaks and that their
work rhythm was being disrupted. The third stage was a major attitude survey of
over 20,000 of the company's employees. This was conducted over the period
1928-1930. The fourth and final stage consisted of observation in depth of both
the informal and formal working groups in 1932. The final stage (1936) drew all
threads together and resulted in the commencement of personnel counselling
schemes and other staff related activities based on the overall conclusions drawn
by Mayo and his team from Harvard and also the company's own researchers.
These may be summarised as follows:
1. Individuals need to be given importance in their own right and must also be
seen as group or team members
2. The need to belong at the workplace is of fundamental importance, as critical
in its own way as both pay and rewards and working conditions
3. There is both a formal and informal organisation, with formal and informal
groups and structures; the informal exerts a strong influence over the formal.
What started out as a survey of the working environment thus finished as the
first major piece of research on the attitudes and values prevalent among those
drawn together into working situations. The Hawthorne Studies gave rise to
concepts of social man and human relations at the workplace. They were the first
to place importance on them and to set concepts of groups, behaviour, personal
value and identity importance in industrial and commercial situations.
• Winning friends and influencing people

The work of Dale Carnegie deserves a mention here. He was a pioneer of some of
the concepts that have now become part of the mainstream of good business and
management practices.
Taking as his standpoint the notion that you must sell things at a profit to
make a profit, he identified the barriers and blockages to this that prevented
people from engaging in this activity. He summarised this as 'overcoming their
fears'. The starting point for nearly all transactions was having to deal with
humans on a face to face basis as the prerequisite for commercial success.
To do this successfully he identified certain fundamental techniques for
handling people. This is the concept of empathy: that is the ability to put
yourself in the other person's shoes, seeing things from his point of view,
understanding his wants, needs, hopes and fears; and understanding from this
what he wants from the transaction with you (it will not be your wonderful
product per se, but rather the benefits that he expects to accrue from his
acquisition of it). Connected to this are the person's required feelings of
importance; he is the customer and therefore he is the centre of attention at
the present.
Carnegie identified other characteristics in support of this that would reinforce
the effective capabilities of anyone who deals with customers. These are: learning
to take a genuine interest in people; the development of a positive persona;

listening attentively and responding to the needs of the customer, encouraging
him to talk; speaking in terms of his interests; and being sincere. Language used
should always be positive and couched in terms that encourage progress and
positive responses. Staff should never argue with customers.
More generally, Carnegie preached the value of positive rather than negative
criticism - above all, when it is necessary to tell someone that they are wrong,
sticking to the wrong deed rather than criticising their personality. The person in
question should also be allowed to save face. Criticism should always be followed
by constructive help and followed by an item of praise. In general all people
should be praised and valued and given a high reputation - the organisation is
going to need these qualities, and not those engendered by any lasting resentment.
Carnegie also preached the more general virtues of honesty, openness, self-
respect, commitment and clarity of purpose as being central to business and
commercial success.
The lessons taught by Carnegie run throughout the whole of the philosophy of
human relations and are to be found in the practices of many successful
companies and those regarded as 'excellent'. The importance of, and central
position of, 'the customer' is a feature current in the offerings of business schools
in the last decade of the twentieth century, as well as being a critical factor in the
successes of Japanese industry and commerce.
• The 'Affluent Worker' studies

The affluent worker studies were carried out at Luton in the UK in the early
1960s. There were three companies studied, Vauxhall Cars, La Porte Chemicals,
and Skefco Engineering. The stated purpose was firstly to give an account of the
attitudes and behaviour of a sample of affluent workers, that is high wage earners
at mass or flow companies; and to attempt to explain them. Both the firms and
the area were considered highly profitable and prosperous.
The main findings were as follows. As far as the job itself was concerned it was
overwhelmingly a means to an end on the part of the workforce, that of earning
enough to support life away from the company. The affluent workers had little or
no identity with the place of work or with their colleagues; this was especially
true of those doing unskilled jobs.
Some skilled workers would discuss work issues and problems with colleagues.
The unskilled would not. In general, the workforces felt no involvement with
either the company, their colleagues or the work. Generally positive attitudes
towards the company prevailed, but again these were related to the instrumental
approaches to employment adopted; the companies were expected both to
increase in prosperity and to provide increased wages and standards of living.
The companies were perceived to be 'good employers' for similar reasons.
The matters to which the affluent workers were found to be actively hostile
were those concerning supervision. The preferred style of supervision was
described as 'hands off'; any more active supervision was perceived to be

intrusive. Work study and efficiency drives were also opposed.
There was a very high degree of trade union membership (87% overall),
though few of the affluent workers became actively involved in either national or
branch union activities. Union membership was perceived as an insurance policy.
The main point of contact between workers and union was the shop steward,
who was expected to take an active interest, where necessary, in their concerns.
No association was found between job satisfaction and current employment. It
was purely a 'wage-work bargain', a means to an end. The most important
relationship in the life of the worker was that with his family. The workers did
not generally socialise with each other, either at work or in the community; thus
membership of workplace social clubs was also low.
The view of the future adopted was also instrumental. There was no general
aspiration to supervisory positions especially for their intrinsic benefits. The
affluent workers would rather have their own high wages than the status and
responsibility of being the foreman. More generally, the future was regarded in
terms of increased profitability and prosperity, an expectation that wages would
grow and that standards of living and of life would, in consequence, grow with
them.
The studies illustrated the sources and background of the attitudes and
behaviour inherent in this instrumental view of employment. More generally,
the studies concluded that levels of workplace satisfaction were conditional upon
continued stability and prosperity; and that there were universal expectations of
continuing growth in the situation.
• The intrapreneur
Intrapreneur is the name given to 'the enterprising individual in the successful
business'. Identifiable within this concept are two main strands, first the
characteristics of the individuals who can be developed as intrapreneurs, and
second the nature of organisations that can develop them.
The characteristics identified as being essential within such individuals are:
• Commercial insight and market and environmental awareness and under-
standing
• Personal strength of character and persistence in the approach to
business matters and issues, professional stamina and staying power
• Innovative and creative approaches to problems and the development of
the creative faculties
• The ability to manage and direct change
• The capacity for analysis, organisation and control of activities
• The ability to get on with people at all levels, to animate them and to enable
others to perform their jobs effectively and successfully.
Organisations must have the following attributes:

• The ability to recognise the talents and potential of individuals and to

harness those in mutually beneficial and profitable activities
• The ability to learn and develop more quickly than the rate of organisational
change
• The capacity to provide both intrinsic and extrinsic rewards commensurate
with both organisational profit and individual capabilities.
The overall purpose is the creation of an environment where both business

activities and talented individuals can come together for the generation of
successful, dynamic and profitable business activities. 'Intrapreneuring' is the
ability to both nurture and harmonise these talents in this way.
• The Peter Principle

Lawrence J. Peter worked as teacher, psychologist, counsellor and consultant in
different parts of the American education sphere during the post-war era. This
included education in prisons and dealing with emotionally disadvantaged and
disturbed children. The Peter Principle was published in 1969. It is based on the
assumption and invariable actuality that people gain promotion to their level of
incompetence - that is that as long as they are successful in one job they will be
considered a suitable candidate for the next by the organisation in question; and
only when they are not successful in that job will they not be considered for the
next promotion (see Summary Box 2.2). The book is written in an essentially racy
SUMMARY BOX 2.2 The Peter Principle
'The head's friends saw that the head was no use as a head. so they made her an
inspector. to interfere with other heads. And when they found she wasn't much
good even at that, they got her into Parliament, where she lived happily ever after.'
Source: C.S. Lewis, The Silver Chair (1953).
and light-hearted way; the lessons to be learned are nevertheless important.

Promotions are clearly being made on a false premise, that of competence in
the current job rather than the competence required for the new one. It follows
from this that assessments for promotion are fundamentally flawed, based on the
wrongful appraisal of the wrong set of characteristics. More generally, what is
'sound performance' in one job may simply be identifiable on the basis that the
individual is not actually doing any harm.
In the management sphere the application of the 'Peter Principle' is only too
universal. Time and again promotion to supervisory and management grades
from within the ranks is based upon the operative's performance in those ranks
rather than on any aptitude for supervision, management or direction. Organisa-
tions thus not only gain an incompetent or inadequate supervisor, they also lose a
highly competent technician. This remains true for all walks of life - the best
nurses do not per se make the best hospital directors; the best teachers do not
make the best school heads; the best drivers do not make the best transport fleet
managers.
The lessons to be drawn from this may be summarised as the ability to identify
genuine levels and requirements of performance and attributes required to carry
them out, and to set criteria against which they can be measured accurately.
People may then be placed in jobs that they can do and for which they are best
suited. Aptitude for promotion, or any other preferred job for that matter, can
then be assessed on the basis of matching personal qualities with desired
performance and organisational appointments made accordingly. Finally, the
principle also has implications for growing and nurturing your own experts and
managers and for succession and continuity planning.
• Studying organisations
Pioneering and seminal work in this field has been carried out by Charles B.
Handy of the London Business School. Over the period since 1950, he has
conducted and written extensively on the concepts, complexities, functions and
inter-relationships within organisations.
Handy's work emphasises the importance of this field of study itself, to both
the aspiring and the practising manager. It is concerned with illustrating and
discussing and analysing the basic concepts, and also with translating these into a
useful and comprehensible body of managerial knowledge and experience.
Handy's work focuses on the following distinctive areas. First, there is the
elucidation of concepts fundamental within all organisations - motivation,
leadership, power and influence, groups, the individual, roles and interactions
- and that are to be found in all situations. Second, is the application of these
concepts in particular situations, and the ways in which they combine together
and become effective. These are concerned with the staffing structure, style and
systems of organisations and their managers. The third aspect concerns the fluid
nature of the organisations themselves, their propensities to expand, contract,
change their style and way of working, their requirements for efficiency and
effectiveness, both as business-like, commercial undertakings and also in the
harmonisation and reconciliation of human interactions in this pursuit.
Handy was the first to articulate and elucidate, on a wide scale, the general
concepts of the core and peripheral workforce, that is an organisation style and
structure that identified a core group of staff- the establishment that would serve
the organisation permanently and be on its payroll, provide its life and its style,
its permanence and continuity; and the peripheral - who would be on a much
looser contract, brought in when necessary either to carry out tasks that their
specialism allowed or to cope with periods of pressure or overload on the
organisation.
Handy developed this concept a stage further into that of the 'Shamrock'
organisation, identifying more precisely the nature of the peripheral workforce as
having distinct elements (the petals of the shamrock). These consisted of sub-
contractors, specialists and the unskilled. The concept is based on the thesis that
organisations cannot and will not carry these staff on their payrolls if their
services are only required at particular points of the business calendar.
Handy is the major authority on the understanding of, and complexities of,
organisations; he is also both pioneer of, and a mirror of, the directions that they
are seen to take.
• Business policy and strategy

The importance of this as part of the field of the study of management was first
fully developed by H.I. Ansoff, who postulated theories concerning both the
totality of, and complexities of, organisational and operational strategy. This
work was carried out in the 1950s and 1960s.
Ansoff's stance was based in the concern found among business managers of
identifying rational and accurate ways in which organisations could both adjust
to and also exploit changes in their environment. Such ways he described as:
• Traditional, micro-economic theories of the firm which, while taking full

account of 'the organisation in its environment', took no account of either its
operational or behavioural procedures and practices
• The need to reconcile a range of decision classes- strategic, administrative
and operational - in both the allocation of, and competition for, the
organisation's resources, priority, time and attention
• Transition from one state to another due to changes in technology, markets,
working practices, size or scale of the firm and its operations
• The application of science and technology to the process of management
which was ever-increasing at the time. This generated both interest and
acceptance of more analytical approaches.
The work of Ansoff was pioneering in what was then recognised as a complex
field of study, and one that offered great scope for research from both an
academic point of view and also in the interest of the pursuit of profitable
business.
It is important for the following reasons. Ansoff was the first academic to
adopt this area as a field of genuine enquiry, and to focus on the widest concept of
what strategy is and what it should cover in the business sphere. Second, the work
carried out drew conclusions based not only on the strategy, but also the
organisational processes that were established to achieve it. Finally, the work
looked forward. It recognised the inevitability of change and the turmoil and
turbulence that this would cause to organisations and their environment. Ansoff
was among the very first (academic, research or business theorist) to propound
the concept of strategies for change and the active processes required in the
management of it.
The major authority on business policy and strategy is currently, Michael E.
Porter, of the Harvard Business School. As expert, consultant and academic, he
has conducted in-depth analyses of strategy processes, competitive positioning
and competitive advantage, developing and refining the key concepts outlined
above and also delving much deeper into the complexities that corporate
strategies have to accommodate.
This has included substantial analyses of the inter-relationships between
organisations and their environment; and between each other in particular
industrial and commercial sectors. In turn, he has related this to both the
diversification and complexity of the organisations themselves that operate in
particular spheres. He has isolated the concepts of defensive and offensive
strategies and when each should be used. His work has produced a comprehen-
sive set of tools, techniques and methods for the analysis of companies,
industries, sectors and markets.
Porter's concept of the analysis of the 'value chain' (see Figure 2.1) identifies
the elements that are critical in the devising and assessment of profitable or
effective strategy, where the particular links in the chain lie, and the effect of each
upon the whole of the strategy adopted. These links include: costs and their
behaviour; the separation and combination of activities; the technology that is
available and the ability of the organisation to use it; the identification of good
and bad aspects of operations in the organisation and the market; the identifica-
tion of good and bad industrial and commercial sectors and competitors within
them. These are then related both to the segments in which the organisation is to
operate and the structures and sub-structures that it adopts in order to do this
effectively.
Business and public policy and strategy is currently a major field of enquiry.
This derives from the change, turmoil and turbulence that is present and endemic
throughout the business sphere at present. As organisations get better at it, and
understand the importance of conducting it and formulating it effectively, and in
line with their own capabilities and capacities, there are great advantages to be
gained in the ability to compete in their chosen field.
• Organisations, management and technology

The relationships between the technology required to conduct certain industrial
and production activities and the nature and style of organisation required to
energise this was studied by Joan Woodward, who conducted research among the
manufacturing firms of South East Essex in the post-war conditions of the 1950s.
The research looked at the organisational aspects of the levels and complexities
of authority and hierarchy and spans of control in these organisations (see Figure
2.2). It also considered the nature and division of work - the clarity of the
definition of jobs and duties, and the ways in which specialist and functional
N
0
en
c FIRM INFRASTRUCTURE
::t
.,0., .....
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HUMAN RESOUiRCE MANAGEMENT
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Q ....
TECHNOLOGICAL DEVELOPMENT . \ c;·
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::! .....
m 0
PROCUREMENT :
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INBOUND OPERATIONS OUTBOUND MARKETING ~
LOGISTICS LOGISTICS AND SALES SERVI: ; ;
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PRIMARY ACTIVITIE S
Notes: The value chain breaks an organisation down into its component parts in order to understand the source of, and
behaviour of, costs; and actual and potential sources of differentation. It isolates and identifies the 'building blocks' by
which an organisation creates an offering of value to its customers and clients:
• It is a tool for the general examination of an organisation's competitive position, and means of cost determination.
• It identifies the range and mix characteristics necessary to design, produce, deliver and support its offerings
• The value chain should be identified at 'business unit' level, for greatest possible clarity and accuracy.
Figure 2.1 The Value Chain
Source: Michael E. Porter. Used with permission from the Free Press Inc., a division of Macmillan.
1.
High
Variables
1-4
Low
Unit Mass Process
Technological complexity
Variables: 1. Number of levels in management hierarchy

2. Ratio of managers and supervisors to total staff
3. Ratio of direct to indirect labour
4. Proportion of graduates among supervisory staff engaged in
production.
2. High
Variables
1-4
Low
Unit Mass Process
Technological complexity
Variables: 1. Span of total of first time supervisors

2. Organisation flexibility/inflexibility
3. Amount of written communication
4. Specialistion between functions of management, technical expertise;
the time-staff structure.
Figure 2.2 Organisations and technology
Source: P. A. Lawrence 1985. Used with permission.

divisions were drawn. Finally, the nature of communications activities and

systems in the organisations was analysed.
The conclusions drawn related the differences in these organisational aspects
to the different technologies used in them. The technology was found to impinge
on all factors - organisational objectives, lines of authority, roles and responsi-
bilities and the structure of management committees. The nature, complexity and
personality of systems for control were also found to be related to the
technological processes in place.
The work was thus important in this regard. It also defined the levels of
production process and complexity in technological terms that are now
universally understood and used: those of unit production, batch production,
mass production and flow production. It further developed the relationship
between these and the nature and complexity of organisation required in each
case, and above all in regard to the highly capital intensive mass and flow
activities.
I Mechanistic and organic/organismic

management systems
These model systems of management were proposed by T. Burns and G.M.
Stalker in 'The Management of Innovation' (1966). The mechanistic system of
organisation was found to be appropriate to conditions of relative stability. They
are highly structured, and those working in them have rigorous formal job
descriptions, a clearly defined role, and a precise position in the hierarchy (see
Figure 2.3). Direction of the organisation is handed down via the hierarchy from
the top; and communication is similarly 'vertical'. The organisation insists on
loyalty and obedience from its members, both to superior officers, and also to
itself. Finally, it is the ability of the functionary to operate within the constraints
of the organisation that is required.
The organic/organismic model is suitable to unstable, turbulent and changing
conditions. The organisation is constantly breaking new ground, addressing new
problems, and meeting the unforeseen, and a highly specialised structure cannot
accommodate this. What is required is fluidity, continual adjustment, task
redefinition, and flexibility (see Figure 2.4). Groups and departments and teams
are constantly formed and reformed. Communication is at every level, and
between every level. The means of control is regarded as a network rather than a
hierarchy. Finally, those in the organisation bring a personal commitment to it,
that goes beyond the purely operational or functional.
Burns and Stalker develop their theme a stage further, to ascertain whether it
was possible to move from the mechanistic to the organismic. The conclusion
was that they doubted that it could. When mechanistic organisations seek
change, committee and working party systems are created and liaison officer
posts are established. Additional stresses are placed on the existing structure and
1.
High High
Information Decision-
making
Low Low
0 Function with responsibility and authority
Direction of instruction
Direction of commitment
Figure 2.3 Organisation structures: mechanistic
Source: P.A. Lawrence 1985 (after Burns and Stalker).
2.
Notes: External knowledge and
experience important
• The synergy principle: the whole is
greater than the sum of its parts.
- - Predominant relationship
Secondary relationship
Figure 2.4 Organisation structures: organic/ organismic
Source: P.A. Lawrence (1985) (after Burns and Stalker).

channels of communication of the organisation, compounding the difficulties,

and clouding the issues that are to be faced. The consequences are that progress
tends to be stifled rather than facilitated.
• Socio-technical systems
The concept of the 'socio-technical' workplace system was proposed as the result
of studies carried out at the instigation of the Tavistock Institute of Human
Relations during the 1940s, 1950s and 1960s. The work was conducted in a
variety of situations, including coal mines, cotton mills, and prisons.
The 'socio-technical' definition was arrived at because the researchers (E.
Trist, G. Bamforth) found that it was not enough to regard work methods as
purely functional or operational. The organisation and autonomy of the work
group itself had to be considered as part of the design of the activities to be
carried out; and if this was disturbed there was an increase in disputes,
grievances, absenteeism, and arguments over pay. Consequently, both the social
and technical (or operational) aspects had to be addressed if truly effective work
methods were to be devised.
Other findings and conclusions of the socio-technical approach should be
illustrated. The autonomy of the work group, and its self-identity, is of critical
importance, and if it is disturbed, either by intrusive supervision, technological or
operational change, this again leads to increases in disputes and absenteeism.
There was found to be a clear relationship between the social effectiveness of the
group and its work output. As far as work performance was concerned, groups
and individuals took a high degree of pride and satisfaction in task achievement,
and in having the ability to be involved in the whole operation (rather than just a
part of it). They established an 'ideal' size of work group, as consisting of eight
persons. There was also found to be a high level of willingness to cooperate on
the part of operatives, provided that the environment and approach to the work
was conducive to this.
The main contribution is to identify, and support, the need for all work, work
patterns and methods, to meet social and psychological needs, as well as those
related simply to the task in hand. The work also reinforces ideas of motivation
that relate to job enrichment and enlargement; to the provision of a quality
working environment; and to the importance of means of supervision.
• Excellence
The genesis of the work that subsequently grew into the management concept of
'excellence', was a review carried out in the latter part of the 1970s by McKinsey,
the international management consulting firm, of its thinking and approach to
business strategy and organisation effectiveness. This review was itself founded
in a dissatisfaction with conventional approaches to these matters.
The approach adopted was to study both businesses and managers of high
repute and/or high performance, and to try and isolate those qualities and
characteristics that made them so. A model (the 7-S model, see Figure 2.5) for the
design and description of organisations was also proposed. Finally, those
working on the study identified those attributes that they felt ought to be
present in such organisations and persons, and to test them against those studied.
In all, 62 organisations were studied. They were drawn from all sectors of US
industry and commerce, and included many global firms (e.g., Boeing, McDo-
nalds, Hewlett Packard, 3M).
High performing took on a variety of meanings - profitability; a global
organisation such as IBM; a strong positive image such as Marks & Spencer; a
strong domestic organisation (Sainsbury's in the UK or 3M in the USA); a strong
player in a slumped or declining market; and also related other aspects such as a
strong general image; customer confidence; and staff and customer loyalty.
These characteristics may be summarised as follows:
1. The leadership and management of business organisations requires vision,

energy, dynamism and positivism; the placing of the customer and his needs
and wants at the centre of the business; and the ability to change and improve
as a permanent organisational feature
2. The closeness of the relationship between the organisation and its custo-
mers and clients must be maintained; if this is lost the customers will go
elsewhere
3. The commitment, motivation, ability, training and development of all staff at
all levels of the organisation are critical to the continuation of its success;
closely related to this is a shared vision or shared values to which all members
of the organisation must ascribe; staff must be held in high regard and well
rewarded
4. Supervision levels, hierarchies, regional and head office establishments must
be kept to a minimum; the purpose of these establishments is to service those
who generate business of the organisation and not to impose a superstructure
on them; such establishments should also be flexible and responsive and not
hierarchical and inert
5. Organisations must stick to their core business; that which they are good at;
and that which is profitable and effective
6. Organisations must constantly innovate and improve, update working
practices, staff abilities, technology, customer response times and methods.
They should constantly seek new applications and new markets for their
existing products and services
7. Organisations must be receptive to ideas and influences from outside, and be
able to evaluate them for use and value to them in their own circumstances
8. The bias of the organisation must be towards action.
Various models are proposed as to how this can best be achieved, what the
components of excellent organisations are, and how to develop organisations in
such ways as they become excellent (see Summary Box 2.3 and Figure 2.5).
Related aspects are also considered, the style of supervision adopted, strategic
Summary Box 2.3 Eight Characteristics of Excellent Management Practice
1. Bias for action - do it. fix it, try it.

2. Closeness to the customer - listen intently and regularly to the customer
and provide quality, service and reliability in response to customer needs.
3. Autonomy and entrepreneurship - innovation and risk taking as an
expected way of doing things, rather than conformity and conservatism.
4. Productivity through people- employees are seen as the source of quality
and productivity.
5. Hands-on, value driven -the basic philosophy of the organisation is well-
defined and articulated.
6. Stick to knitting- stay close to what you can do well.
7. Simple form lean staff- structural arrangements and systems are simple,
with small headquarters staff.
8. Simultaneous loose-tight properties - centralised control of values, but
operational decentralisation and autonomy.
Source: Peters and Waterman (1982).
The 7-S
Framework
Purpose: a configuration of organisation, pattern and design that reflects the essential
attributes that must be addressed in the establishment and development of
an excellent organisation.
Figure 2.5 The concept of excellence applied to organisations
Source: Peters and Waterman (1982).

and policy aspects, innovation, staff performance, salaries and wages, conflicts
and disputes at the workplace, the nature of the work carried out and the
attitudes of organisations to both their staff and customers.
Whichever model is considered, and from whatever standpoint, the following
common elements emerge:
1. The essential nature of organisation culture. In the organisations studied

this may be summarised as follows: a belief in being the best; a belief in the
importance of the staff and individuals as well as in their contribution to the
organisation; a belief in, and obsession with, quality and service; a belief that
organisation members should innovate and have their creative capacities
harnessed; a belief in the importance of excellent communication among all
staff; a belief in the concept of simultaneous loose-tight properties - that is, a
measure of control that nevertheless allows for operational flexibility; a belief in
the continuous cycle of development; and a recognition that there is always
room for improvement. This is underlined by two further factors. The first of
these is the importance of attention to detail - that is, the necessity to ensure
that whatever the excellence of the strategic vision it must always be carefully
and accurately carried out. Secondly, there is an explicitly stated and
encouraged belief in the importance of economic growth and profit motive.
2. The importance of macro-organisational analysis. This was the ap-
proach used to establish the concepts and elements that were present in the
organisations described as 'excellent'.
Essentially, this is dependent upon the strength and style of leadership; that is,
the drive, determination, core values and strategic vision necessary to energise
and make profitable the organisation's activities. In time, this becomes 'the way
things are done here'. Managers underpin this through their day-to-day
activities; that is the ways in which they lavish attention, those issues they
concern themselves with, those matters on which they spend resources, those
people with whom they spend time. It is therefore a combination both of what
they do and also of how they do it and messages that are given off by this to the
rest of the organisation. Above all, the leader of the organisation expresses the
true organisational value through the means by which s/he conducts her/
himself in all activities.
These values become an integral part of the structures and systems of the
organisation and impinge on all activities of it. If the structure is fluid and flexible
it will be a manifestation of the requirements of the Chief Executive; conversely if
it is bureaucratic and rigid the same is true. If the management style is energetic,
this to, is a reflection of the way in which senior managers wish to have things
done.
The next part of the Peters and Waterman study was to look at the particular
performance indicators of the organisation. These came from all areas of activity.
They included asset growth and returns on capital invested; the organisations
studied and from which the lessons were drawn had rates of return on these
factors of between 10 and 60 times the sectoral average. Absenteeism was another
factor studied. In a US Steel Works studied by Peters he found an uncertificated
sickness rate of two fifths of 1% -against a national average of 6% and a sectoral
average of 9%. Organisation reputation was another factor assessed; this was
conducted across all its activities- marketing, human resource policies, customer
care and customer relations, equality of opportunity - and also across its wider
general reputation in the environment and community - in which it invariably
perceived itself to have a direct stake, interest and wider responsibility.
The other contribution of the excellence studies was to identify these
characteristics as being essential to both organisation and managerial success
(see Summary Box 2.4). The role of the senior manager is therefore the
management of the organisation's culture, style and values; designer and
director of strategy; and assessor of progress against precisely stated perfor-
mance indicators - that is, the manager of the 'simultaneous loose-tight
properties'.
Summary Box 2.4 Criteria for Excellence
• High growth of assets, value, turnover and profits

• Consistent reputation in sector as leader and pioneer
• Solid and positive reputation with customers, community and general public.
Source: W. Goldsmith and D. Clutterbuck (1990).
• Professional organisations are lean and empowered

• Professional staff require flat structures and autonomy for effective perfor-
mance
• Processes and procedures are speedy and simple and effective.
Source: C.B. Handy (1984).
• Excellence is performance thousands and thousands of percentage points over

sectoral norms.
Source: T. Peters (1982).
• Innovation and development leading to maximisation and optimisation of the

human resource
• Innovation in quality of working life
• Promotion of full and genuine equality of opportunity
• Models of good practice, offer their example to the world, and are pleased and
proud to be studied.
Source: R.M. Kanter (1985).
The person most responsible for energising and popularising this work is Tom
Peters. Working extensively in organisations and drawing his conclusions from
this work, he has published a range of management books that have the purpose
of illustrating these findings and ensuring their promulgation to the widest
audience possible. Alongside this is a more general approach of the excellence
studies to reach parts of the business and management sphere not so far touched
by other works. What has happened as a result therefore is both promotion of a
wide ranging debate and the popularisation of the subject matter. This may well
turn out to be the major enduring contribution of the excellence studies.
• Change
The subject of change forms a continuous thread throughout this book. It merits
introduction here as a key area of concern in current management studies. We
have already made reference to the current turbulent nature of the business
sphere. The changes that have impinged in general on society over the period
since the end of the Second World War and more particularly since the 1960s in
turn impinge on the management of organisations. These changes may be
summarised as (1) technological, affecting all social, economic and business
activities; rendering many occupations obsolete and creating new ones; rendering
many organisations obsolete and creating new ones; and opening up new spheres
of activity bringing travel transport, distribution, telecommunication, industry,
goods and services on to a global scale. (2) Social, the changing of the lives of
people from the fundamentals of life expectancy and lifestyle choice to the ability
to buy and possess items; to travel; to be educated; to receive ever-increasing
standards of health care, personal insurance and information; to be fed; higher
standards of social security and stability; increased leisure time and choice of
leisure pursuits; and all commensurate with increases in disposable income and
purchasing power and choices of purchase. (3) Eco-political, resulting in changes
in all government forms; the state of flux of the EC and the adoption of
supernational laws and directives and the single European market; the collapse of
the communist bloc and the USSR; the fragmentation of the former Yugoslavia;
the emergence of Taiwan, South Africa, Korea, Malaysia and Vietnam as spheres
of political and economic influence taking their places in the business sphere. (4)
Expectational, in which the changes may be expressed as from stability to the
state of change itself, a permanent state of flux; the change from the expectation
of working for one company or organisation to working for many, and the
realisation that the former is increasingly unlikely; change in occupation, training
and profession is an increased expectation; changes in political governments and
the instrument of state is an expectation. Organisations change their business
(e.g., Virgin, from music into air travel) and expect their staff to change with
them. Hospitals in the UK in the 1990s are being reconstituted as business units
and offering medical services at a price or charge, and they expect their staff and
patients to go along with this. The business sphere is indeed 'thriving on chaos'
and 'learning to love change', and this is ever-more expected on the part of those
who manage it.
However, the importance of understanding, controlling and managing this
process is fundamental to its success. Rather than either passive acceptance or
allowing it to happen, managers must assume responsibility for and direction of
the change process and the activities required to make it effective and successful.
• Conclusions
The overall purpose here has been to illustrate the complexity, range and scale of
the subject matter that is to be considered, the widely differing standpoints from
which it has been tackled, and the progression of it as a field of study. The
balance of the material quoted reflects the particular concern with it over the
period since 1945 and its emergence as an area critical to both business and
economic success, and also the wider prosperity of society at large.
It is not at all an exhaustive coverage. However, it does attempt to itemise
major staging posts and fields of enquiry, and to illustrate the variety of studies
that have been undertaken. Each study indicated addresses different parts of the
business and management sphere. Each makes its own particular contribution to
the whole field; none provides a comprehensive coverage of it. What is clear,
however, is that it is an ever-broadening sphere. The works illustrated here
demonstrate just how far this has developed and the variety of approaches that
have been taken in the pursuit of this.
There is no doubt that there has been a shift in approach to regard manage-
ment as an occupation in its own right. What has been less certain is what the
actual composition of this occupation and profession is. This chapter has
attempted to illustrate the basis of this and to introduce some of the major
concepts, studies and ideas that have contributed to the state of its development.
Some more specific conclusions can also be drawn from this material, and these
are now briefly itemised. First, is the separation of management, direction and
leadership from the functions, operations and activities of the organisation.
Second, is the ability to generate the confide::1ce, loyalty, trust and faith of all
those in the organisation by it. It is necessary to establish the identity of a
common purpose to which everybody in the organisation can aspire and to which
all the resources of the organisation are concentrated. People must be rewarded in
response to the efforts that they put into the achievement of the organisation's
purposes. Both the organisation and its managers must have knowledge of and
ability to operate in the chosen environment and to influence this as far as they
possibly can. Within particular constraints, organisations establish their own
ways of working, cultural norms, procedures and practices, as part of the process
of making effective their daily operations. Finally, there is the recognition that
business and managerial practice takes place in what is both a global and
turbulent environment ar.d the ability to operate within this, and to manage it, is
critical both to continuity and success.
This, then, represents the backcloth against which the rest of the book is
written. It enables a broad understanding of where the current state of the
management art/science/profession is drawn and where the current matters of
importance and concern within it lie. It also indicates the range and complexity of
the qualities and capacities required of the manager.
CHAPTER 3
Organisational and
behavioural aspects
• Introduction
The purpose of this chapter is to identify and discuss the range and complexity of
the behavioural, qualitative and psychological concepts that are a necessary
background and prerequisite to managerial effectiveness.
It is necessary to have a general level of understanding in these areas as part of
the knowledge background which is in turn essential for the adoption of, and
implementation of, adequate and suitable staff and organisational management
styles. More specifically, identity with the organisation and its work can only be
achieved if an understanding of the people who work in it, their wants and needs,
hopes, fears, desires and aspirations, is first acquired. Commonality of purpose -
team spirit or Fayol's esprit de corps- can similarly be contemplated only when
the widely conflicting and divergent reasons and objectives that people have in
work situations are themselves fully understood; and means of harmonising and
energising these can only be successful if seen from this standpoint.
The aspects discussed are arranged under four generic headings:
• Leadership, including the development of this into a specific consideration of

the role and function of the chief executive or organisation leader in this
context- that is the application of, and transference of, general principles into
the specific nature of leadership with which a management book must be
concerned
• Motivation, that is, the ability and capacity of both organisations and the
individuals who work within them to energise themselves, their talents and
attributes in productive, effective, relevant and harmonious activities.
• Groups, their formation, composition, energising and empowerment and
including elements related to both the work in hand and the maintenance
and development of the group as an entity with its own life and standing.
• Individuals, their roles and responsibilities in the organisation and how these
are to be harmonised and reconciled in the pursuit of productive endeavour
and activity.
• Leadership
Leadership is that part of the management sphere concerned with getting results
through people, and all that entails and implies- the organisation of the staff into
productive teams, groups, departments; the creation of human structures; their
31
motivation and direction; the resolution of conflicts at the workplace (both

inherent and operational); creating vision and direction for the whole under-
taking; and providing resources in support of this.
The problems of leadership have been recognised for thousands of years, as we
have seen (Chapter 1), and approaches to them have taken many different forms.
The main issues concerned are:
• Getting optimum performance from the workforce, in whatever terms that is

defined
• Ensuring continuity, development and improvement in the workforce itself
• Relating the skills and capacities of the workforce to the job, task and
functional requirements; and meeting the intrinsic expectations of the job.
Approaches to these problems in the business sphere have covered a wide

spectrum. At the one extreme, organisations have sought to recruit their
managers from the aristocracy or officer classes, where 'leadership' was deemed
to have been an in-bred or else a 'natural quality'. At the other, lists of qualities,
skills and attributes have been isolated, and individuals put through training
programmes devised around these. In between the two, academic and organisa-
tional research has identified and codified a variety of different approaches.
SUMMARY BOX 3.1 Leadership Styles

Autocratic Participative
(Benevolent or
Tyrannical*) Consultative Democratic
1. Leader makes all final 1. Leader makes 1 . Decisions made by the

decisions for the decisions after group- by
group consultation with consultation, or vote if
2. Close supervision, group necessary
variety of styles 2. Total communication Voting based on the
3. Individual members' between leader and principle of one man -
interests subordinate members one vote
to the organisation 3. Leader is supportive majority rules
4. Subordinates treated and developmental 2. All members bound by
without regard for 4. Leader is accessible the group decision
their views and discursive and support it
5. Great demands placed 5. Questioning approach 3. All members may
on staff encouraged contribute to
6. Questioning 6. Modus operandi discussion
discouraged largely unspecified 4. Development of
coalitions and cliques
5. Leadership role is
assumed by Chairman
*Difference is in attitude and approach, not content.
Organisational and behavioural aspects 33
In outline, these are as follows:
• Trait theories
The basis of these theories is that there is a body of traits or characteristics which
are present in successful and effective leaders. The great limitation on this
approach is the great diversity of characteristics identified across a range of
situations; and the identification of very few traits common to all, in all
situations. The notion of 'success' is widely open to interpretation, as is the
presence of, and ability to identify, such things as integrity.
The traits that are identified most often are: intelligence; initiative; self-
assurance; the ability to take an overview; good health; enthusiasm; determina-
tion and decisiveness; ambition, commitment, energy and drive.
• Style theories
These identify leadership as being somewhere on an 'authoritarian - participa-
tive' continuum. There is an emotive leaning towards the notion that the more
participative or supportive the style of the leader, the better the organisation is for
all those who have to work in it (see Summary Box 3.1). While this may to some
extent be borne out by levels of grievance and dissension, there is no correlation
demonstrated between this and profitability, or other measures of business
success.
• Contingency theories
These relate both traits and style to the situation, the environment, the
technology and the work to be done, and recognise that this is fluid rather than
static; they also have regard to the position of the leader within the group, and
whether they are physically or psychologically distant or dose to it.
• Action centred leadership

This concentrates on the inter-relationship of three specific components of the
work sphere - the maintenance of the work group; the tasks and their
performance; and the position of the individual (see Summary Box 3.2). Again
the situation is regarded as fluid, and flexibility is required in any leader who is to
be effective.
• Theories of 'best fit'

The approach in this case derives from each of the others. It recognises that no
one approach provides the complete picture or answer. It balances the universal
elements of the leader, the subordinates, the task, the technology and the
SUMMARY BOX 3.2 The Leadership Functions Model

The leader must address the key issues of achieving the task, building the team and
developing individuals. The leader who concentrates only on the task by for
example going all out for production schedules while neglecting the training,
encouragement and motivation of the group will always have problems of
dissonance and dysfunction.
The leader who concentrates only on creating team spirit while neglecting the
job or individuals will not get maximum involvement and commitment. which only
comes from an environment that is both harmonious and genuinely productive.
Staff members would therefore lack any true achievement or feeling of success.
The key leadership functions required are
DIRECTION PLANNING
COMMUNICATION APPRAISAL
COORDINATION CONTROL
ASSESSMENT DEVELOPMENT
Source: John Adair (1975).
environment; and recognises that there are common elements and attributes on
which to draw.
Leadership is not the same as management but a part of it, and leadership
qualities, activities and aspects are essential in anyone who aspires to a truly
managerial position.
• Charisma
This is the element of the power, authority and influence of the leaders or
managers that arises from their person and personality. It is generally enhanced
by the success of the person in the position; and by other related aspects such as
their own expertise, or ways of working; it is enhanced also by the self-belief and
self confidence of the leader or manager. Charismatic influence depends heavily
on the identification with this person by subordinates or followers. Defeat and
failure affect the confidence elements of this, and the charismatic leader will
suffer loss of personal (as well as professional) reputation as a result. Both leaders
and managers may attribute their successes to the force of their personality, only
to find that when failure occurs, the organisation falls back on its operational
rather than personal elements to rescue the situation; in such a case, the leader
loses both position and reputation, but the organisation and its work continue.
• Situational knowledge and expertise

It follows from this that the best functionary does not necessarily make the best
leader of functionaries - none of the characteristics thus far identified is to do
with technical excellence. However, it is necessary to reconcile the tenet of
'authority flows from one who knows', and the expectations of the workforce
that their manager is an expert in the field, with the qualities necessary to lead
and direct them, and to organise the work.
What very often happens is that the functional expert is promoted into a
managerial position, with the consequent loss to the organisation of his technical
brilliance, but without a gain in expertise in what is a management rather than a
technical position.
In these situations, a balance must be struck. The leader cannot lead without a
sound knowledge of the work, the technology, the environment, and the
professional and technical expertise of those actually carrying out the work.
There is therefore a responsibility incumbent on organisations either to train
the technically-oriented functionaries for management before giving them a
managerial or executive position; or to induct and ground those already trained
as managers in the technical environment.
There have been a great many studies of leaders, directors and managers, from
all walks of life (see Summary Box 3.3). They are all inconclusive, in that none of
them identifies all the attributes necessary to lead, direct or manage, in all
situations. However, the following characteristics are found to be applicable to
most situations:
• Communication: with both staff and customers, regularly, continuously, and

in ways in which they both understand and respond to
• Decision-making: the ability to take the right decisions in given situations, to
take responsibility and be accountable for them, and to understand the
SUMMARY BOX 3.3 Case Approaches to Leadership and Management
By studying a range of leaders and managers from a variety of situations and

backgrounds - sport, politics, history, the military, exploration, religion, and also
business- it is possible to infer and draw conclusions in regard to their success or
otherwise, and the reasons for this. Their contribution can be assessed and
analysed, as can other elements and factors present.
The main constraint on the approach relates to the ability only to see these
contributions, elements and factors, in the given situation, and without being able
to translate the situational aspects in the case to all examples. Any conclusions thus
arrived at have first to be related to current situations if lessons thus learned are to
be put into practice.
consequences of particular courses of action

• Commitment: to both particular matters in hand, and also the wider aspects
of the business as a whole; this includes an inherent willingness to draw on
one's personal as well as professional energies
• Staff: respecting them, trusting them, committing oneself to them, developing
them, understanding them and their aspirations and reconciling these with the
matters in hand, having confidence in them
• Quality: a commitment to a quality of product or service that. whatever the
matter in hand, the customer receives high value and high satisfaction and will
seek to return for more if required
• A given set of values with which others will identify and commit themselves,
or which they will reject: there are few examples of leaders, directors or
managers, who succeed by being all things to all people in all situations
• Personal characteristics: of vision, enthusiasm, strength of character,
commitment, energy, and interest are common in successful leaders, directors
and managers
• Positive attitudes: common in successful leaders, directors and managers,
and these are transmitted to their staff and customers
• Mutuality and dependency of the leader, director or manager and their staff:
successful (truly successful) leaders, directors and managers know their own
weaknesses, the importance and value of the people with them; above all, they
know what they cannot do, and when and where to go for help and support in
these areas.
There is inherent in all of this a body of skills, knowledge, attitudes and

behaviour that must be learned, assimilated, adopted or developed in those who
aspire to positions that are truly managerial.
From this, it is possible to outline some archetypes of organisation managers
and managerial styles, relating both leadership and operational elements.
I An outline of archetype organisation

managers
W. Reddin has developed the 3-D theory, modelled in Figure 3.1 to show these
archetypes:
2
DEVELOPER EXECUTIVE
APPROPRIATE
3
BENEVOLENT
BUREAUCRAT
AUTOCRAT
RELATED EFFECTIVE
INAPPROPRIATE
3 "' 0
"' "' ~
SEPARATED Ill
;:::
~-
...o·
;s
2 .,"' Ill
"' I ll
-
MISSIONARY COMPROMISER ;:::
1::1...
"' INEFFECTIVE 13"-
3 "' 4 ~
"' "' Ill
DESERTER AUTOCRAT <::
"'
o·
;:
~
Purpose: The middle set of boxes identifies the four archetype leaders of Reddin's theory. These archetypes may then be translated into -
APPROPRIATE EFFECTIVE or INAPPROPRIATE INEFFECTIVE personal types. ~
~
Figure 3.1 The 3-D theory a-

c...;
Source: Reddin (1970). '..J
• Relaxed bureaucrats
People who (in the lowest reading) display insufficient interest in task and
relationship interface. Where their enthusiasm for the job is too low, a tendency
towards secrecy and lack of commitment may be hindering resource performance
and that of the subordinates.
• Missionaries
People who put harmony and relationships above other considerations. They are
ineffective because their desire to see themselves, and be seen, as a 'good person'
prevents them from risking a disruption of relationships in order to get
production.
• Autocrats
People who put the immediate task before all other considerations. They are
ineffective in that they make it obvious that they have no concern for relation-
ships and have little confidence in others. While many may fear them they also
dislike them and are thus motivated to work only when they apply direct
pressure.
• Compromisers
People who recognise the advantages of being oriented to both task and
relationships but who are incapable or unwilling to make sound decisions.
Ambivalence and compromise are their stock in trade. The strongest influence in
their decision-making is the most recent or heaviest pressure.
• Effective bureaucrats
People who simply follow the rules without due concern for the finer aspects of
the task or the relationships associated with it. They are skilled at maintaining
morale and being effective, in spite of a lack of any real interest in either task or
relationships.
• Developers
People who place implicit trust in people, seeing the job as primarily concerned
with developing the talents of others and of providing a work atmosphere
conducive to maximising individual satisfaction and motivation; effective in that
the work environment created is conducive to subordinates developing commit-
ment to both themselves and the job. While successful in obtaining high
production, the high relationships orientation on occasions leads them to put the
personal development of others before short or long run production, even though
this personal development may be unrelated to the job and the development of
successors to their position.
• Benevolent autocrats
Benevolent Autocrats place implicit trust in themselves and are concerned with
both the immediate and long run task. They are effective in that they have a skill
in inducing others to do what they want them to do without creating such
resentment that production and output fall.
• Executives
Executives see their job as effectively maximising the effort of others in relation
to the short and long run task. They set high standards for production and
performance and recognise that because of individual differences and expecta-
tions they will have to treat everyone differently. They are effective in that their
commitment to both task and relationships is evident to all. This acts as a
powerful motivator. Their effectiveness is in obtaining results within these
dimensions.
Blake and Mouton have categorised management styles into a 'grid' (see
Summary Box 3.4 and Figure 3.2).
• Power in organisations
It is first useful to distinguish between authority and power:
• Authority
Authority is the recognition of the right to restrict freedom to act (recognition is
the key factor, i.e., the existence of authority is dependent upon shared values
between those involved)
Authority refers to the establishment of accepted rules and norms of behaviour
which limit conflict (Note: a rule is a contract between those involved).
• Power
• The ability to influence the attitudes and behaviour of others or, more strongly:
An ability to get B to do something which B would not otherwise dol
Authority is thus a relationship; power is a resource.

SUMMARY BOX 3.4 The Managerial Grid

The managerial grid is a configuration of management styles based on the
matching of two dimensions of managerial concern - those of 'concern for
people' and 'concern for production/output'. Each of these dimensions is plotted
on a nine point graph scale (see Figure 3.2) and an assessment made of the
managerial style according to where they come out on each. Thus a low score (1-
1) on each axis reflects poverty in managerial style; a high score (9-9) on each
reflects a high degree of balance. concern and commitment in each area, and the
implication from this is that an adequate. effective and successful managerial style
is in place.
9 Country Productive
Club 9:1 Team
w 8 9:9
..J
a..
0 7
w
a.. 6
a:
0 Balance
u.. 5 5:5
z
a:
w
4
(.)
z 3
0
(.)
2
Poverty 1:1 Task 9:1
2 3 4 5 6 7 8 9
CONCERN FOR TASK, PRODUCTION AND OUTPUT
Figure 3.2 The managerial grid
Other styles that Blake and Mouton identified were:

• 9-1: The country club- production is incidental; concern for the staff and
people is everything.
• 1-9: Task orientation - production is everything; concern for the staff is
subordinated to production. effectiveness. Staff management mainly takes the
form of planning and control activities; organisational activity is concerned
only with output.
• 5-5: Balance - a medium degree of expertise. commitment and concern in
both areas; likely to produce adequate or satisfactory performance.
The 9-9 score is indicated as 'the best' by Blake and Mouton. This illustrates the
target to be striven for. and the organisation's current position. in relation to each
axis. The information on which the position on the grid is based is drawn from
structured questionnaires. issued to all managers and supervisors in the organisa-
tion, section, unit or department to be assessed.
Source: Blake and Mouton (1986).
• Types of power and authority

In order to be able to understand the behaviour of people in organisations more
fully it is useful to examine the different types of power and authority which
exist. Weber defined three categories of authority:
1. Charismatic: This refers to a special aspect of a leader's personality. This is

the ability to dominate and lead others to an unusual degree. Extreme examples
are Napoleon and John F. Kennedy. Many examples exist at more modest
levels. however, in most organisations.
2. Traditional: This refers to kinship as a basis for allocating power. Typically
son follows father. In its purest form it is increasingly rare in organisations.
3. Legal-rational: Systems of rules and norms, legitimised by law and custom,
provide the justification for the possession of power by certain persons. The
rules may apply to electoral processes in, for example, government and
committees or they may apply to the selection processes used to make
appointments within a hierarchy. A further aspect of the rules will be the
definition of the responsibilities of roles and the relations which exist between
jobs.
All formalised hierarchical organisations are of this type.
French and Raven (in D. Cartwright Studies in Social Power (1959)) have
distinguished five categories of power:
1 . Reward power: Persons with authority over others have the ability to give
(or withhold) rewards. These may vary from pay increases to words of praise.
This power clearly may be used to influence the behaviour of the subordinate
in places of work.
2. Physical Power: This is the use and threatened use of physical force.
Although this is the least acceptable form of power and is never formally
used in normal organisations it is a factor in the behaviour of some physically
powerful managers and employees. It may be clearly present in such activities
as lock-outs and picketing.
3. Expert Power: Knowledge is power. Greater knowledge gives greater
power. The expert accountant has power precisely because he is an expert
accountant. This power is significant only if the less knowledgeable acknowl-
edge that fact. This is probably the most acceptable and least offensive form of
power. In consequence strenuous but spurious efforts may be made by some to
claim its possession.
4. Referent Power: This is power based on the personal friendships of

superiors and subordinates. In most relationships where it exists it is likely to
be less significant than one or more of the other types.
5. Legitimate Power: If a subordinate believes that he is a subordinate then
he legitimises the power of his superiors. Legitimate power exists in other
contexts, e.g. legal power, and parental power.
In organisations it is typified by hierarchy, chain of command, spans of control,
delegation and job specifications. Legitimate power exists in a role, not a
person, although it may be supported by, say, expert power in a particular case.
Amitai Etzioni in Power in Organisations (1964) defined three power

resources:
• Coercive: the ability to order or force someone to do something that they
would not otherwise do
• Remunerative: the ability to influence someone's standard and style of
living.
• Normative: the ability to set standards and types of behaviour that enable
the ways in which people will act to be predicted with a good degree of
certainty.
• Summary
Power is a fundamental human need. People must be able to control, order and
influence their environment at all times, so that it is not a threat, and so that it is
of positive use.
In an organisation power is the fuel which feeds the motor (usually motors,
sometimes not working in unison) on which the work, output and change all
depend.
In organisations power always exists. It is a question of locating it.
It is also a motivating factor for all (although in differing degrees for different
persons and roles), with different expectations and aspirations reflected in its
usage.
It has effects within the organisation in terms of performance: work is done,
goals are pursued.
The exercise of power has effects upon those using it and also upon those on
whom it is used.
• Summary of leadership qualities

Whichever model of leadership is taken, or whichever is appropriate to particular
situations, certain common aspects clearly present themselves:
1. The situation and environment: an understanding of it, and ability to
recognise what can and cannot be controlled or influenced, the relationship
between the organisation and its environment. The ability to be flexible and
responsive to the situation environment 'mix'
2. Culture, values and ethics: and standards, in that these are manifest in the
leader and set by him/her for his/her fellow followers
3. Qualities: to do with honesty, integrity, loyalty, enthusiasm, ambition, drive,

commitment, standard setting, communication and decision-making
4. The matter in hand: and its relationship with the ways in which problems are
to be resolved or implemented, with timescales and projected outcomes
5. Measures of success and failure: who judges, how they are judged, criteria
set, financial indicators, ethical indicators, other performance criteria, oppor-
tunities and consequences
6. Concern for people: staff, clients and wider public
7. Flexibility: the ability and willingness to change methods, practices, beha-
viour (and ultimately attitudes, values and beliefs); and to accommodate
situational, environmental and operational factors as they change.
• The chief executive

This is the term to be used for the 'business leader'; and requires the adaptation of
the qualities and aptitudes given above into the particular sphere of business
management.
The business leader or Chief Executive (CE), may be seen as follows: the
Organisation Leader; the Personal Leader; and the Chief Architect of Organisa-
tion Purpose. The task of the CE in any business is one of great complexity and
variety. It requires successful action in both the variety of tasks and variety of
roles that the CE may be called upon to carry out (Christensen).
Corporate CEs are responsible for everything that goes on in their organisa-
tions, presiding over (very often) highly complex, and technologically sophisti-
cated organisations, about which they must have knowledge, but very often this
will be at the level of a general understanding only. They must also know and be
able to work in the organisation's markets, and the environment and political
sphere of the business being conducted. They carry the ultimate burden of success
or failure of the organisation, and are answerable to shareholders or boards of
directors or governors for the results obtained. They must be able to handle crises
and emergencies in such a way that confidence and credibility are maintained.
CEs must be able to harness general qualities into resourcefulness on the part of
the organisation, in whichever sphere or situation they find themselves represent-
ing it. They must be able to gain commitment to purpose of a divergent and
disparate group of specialist and technological functionaries, and to provide the
coordination and harmonisation rationale for this. They must be able to engage
in the process of 'creative maintenance and development' of the organisation and
its capabilities. They must be able to resolve dilemmas and conflicts relating to
organisational, departmental and individual aims and objectives; technology;
production and marketing considerations; economic, social, political and ethical
factors; and the wider relationship between the organisation and its environment,
customers and staff. They will finally have a vision of the organisation's direction
and future, and of the path required to take it there.
They set the standards of behaviour expected and implied within the
organisation. This happens anyway, either because standards are positively set,
or because they have been allowed to emerge without proper direction. In any
case, the staff of an organisation set standards of behaviour that they believe to
mirror the ways in which their top managers would act in the same circum-
stances.
An example of this is graphically given in the findings of the enquiry into the
'Herald of Free Enterprise' disaster of 1987. The 'Herald of Free Enterprise' was a
car and passenger ferry operated by Townsend Thoresen Ltd, between Dover,
France and Belgium. On 3 March 1987, it turned over on a sandbank outside the
harbour at Zeebrugge, Belgium, and 190 (out of the 500 on board) people lost
their lives. The prime reason for this was that the bow doors were left open, and
the sea rushed in, causing the instability in the ship which in turn caused it to roll
over. Nobody had thought that it was important enough to ensure that the doors
were shut before the ship set sail; the enquiry went on, moreover, to state that the
staff had behaved exactly as they felt that they were expected to behave by the
company's top management, and indeed, how they felt that the top managers
would have behaved in that situation.
In general terms, the CE presents a combination of energy, style, vigour, drive,
image, aura, enthusiasm and ambition, as the 'shining light' of the organisation,
and that with which more junior staff will (or will not) identify. This is true
whether the CE is very high profile; or in negative terms, anonymous (where the
staff will follow the same qualities in anonymous and indifferent ways); again,
either positive or negative, life is given to the style of the organisation and its staff.
The CE is responsible for both the generation of strategic and business
objectives and the range of choices available to the organisation; and also for
the choice of direction from this range of alternatives. From this, a CE is
responsible for ensuring that the choice finally taken is successful. He must be
able to evaluate, in strategic and global terms, such proposals as are put to him;
and in operational terms, the abilities and capacities of the organisation to
translate them into successful and profitable business or service activities.
The CE is responsible also for the continuous processes involved in monitoring
and evaluating the strategy adopted, and the policies and procedures used for its
implementation. CEs are responsible for foreseeing the next phase of corporate,
business and service development and initiative. They are responsible for
foreseeing and averting failure in given initiatives; where it becomes clear that
a disaster is looming, it is the duty of the CE to devise and implement proposals
for averting it.
The task of the CE thus implied is both enormous and complex, requiring the
presence and application of the qualities and attributes indicated in this chapter,
on the part of the holder of the position.
Closely related to this is the ethical and moral stance that the CE sets for the
organisation; again this can be inferred from the example above - nobody
thought that it was wrong to leave the ferry's bow doors open (let alone
dangerous or stupid). This in turn has implications for wider issues of
confidence and public support for the organisation, as much for the way that
things are done, as for what is actually done.
The CE must maintain both credibility and confidence in all aspects indicated;
and once this is lost, the CE has no future at the organisation (lesser functionaries
or employees may have, or be given, time to repair such a situation - the CE,
invariably, does not). A vote of no confidence passed by directors, shareholders,
boards of governors, and (sometimes) the organisation's staff, lead inevitably to
the removal or resignation of the CE.
Thus, there are special factors to be taken into account at the conclusion of the
period of office of the CE. The most overriding of these are confidence,
continuity and stability of the organisation; and they must be seen from the
widest perspective - staff managers, share and stakeholders, customers, clients,
the general public may all have both a view on this and a contribution to it
depending upon the nature of the organisation.
Certainly, once the CE has lost the support or confidence of any of these groups
he will normally leave, in the interests of limiting any damage or loss of
reputation to the organisation (see Summary Box 3.5). CEs do not have long
notice periods for the same reason; both resignation and dismissal are normally
instant at least at the point of publication or promulgation, as is the next CE's
appointment. The wider interests must be preserved and this is the consequent
nature of any enforced or voluntary changeover.
The CE, in general, is responsible and answerable to all relevant interest
groups. Increasingly for large sophisticated companies and organisations this
means maintaining the confidence of institutional shareholders. For public and
SUMMARY BOX 3.5 Instant Departures

• Margaret Thatcher, UK Prime Minister from 1979 unti11990, won a vote of
confidence from her party in November 1990, but not by a large enough
majority. She lost her job four days later.
• John Akers resigned from his position of CE at IBM in January 1993. This was
after the company had declared the then highest ever corporate loss of 5 billion
dollars and followed this with a staff resizing policy for the first time.
• Lord King left British Airways in February 1993, following an encroachment
and dirty tricks scandal involving the company's relationship with the Virgin
Atlantic Group.
• Robert Stempel left his position as CE of General Motors following
disastrous results world-wide in November 1992.
• James Robinson stood down from the position of CE at American Express in
January 1993 following the declaration of greatly reduced operating profits for
1992.
In all cases the person named left their job before they had intended to do so, and as
the consequence of the circumstances noted. This does not mean that the results
declared were their fault; however in each case the sacrifice of them for the greater
good of the organisation in question was felt to be the most appropriate course of
action.
municipal services and authorities this means maintaining this confidence with
elected members and boards of governors.
Ideally therefore the succession will be managed in a preconceived and orderly
manner. This takes the form of either grooming a 'crown prince' from within the
organisation, who also enjoys the confidence of these interest groups; or, of
seeking out someone well in advance of the intended succession time through the
combination of head hunting, the directoral circuit, reputation and achievement
in other organisations.
The performance of the CE, finally, may also be acceptable in one role but not
in others. For example, a CE who is also the founding entrepreneur of the
company may indeed be a great visionary or designer or marketeer in his own
right. In most cases, however, he also needs the additional support of a team of
general and expert managers of wide experience and acumen at this level, if an
organisation that is to be effectively directed is to be achieved.
• CE examples
We can now look briefly at two case studies of CE behaviour.
• John Brown
John Brown founded his own engineering business in the 1960s. It became very
successful, supplying a range of components to the automotive industries. It gained
an excellent and thoroughly deserved reputation for supplying high quality products
to deadlines.
Brown floated the company on the stock exct.tange. The Board of Directors was
elected by the new shareholders. He became chief executive, and later, company
president.
At this time the first serious complaints came about. They were not enough to
damage the firm's overall reputation but did give cause for concern. The problems
were analysed and they all had the following elements.
They were all from firms with whom Browns had been dealing since the early days,
customers that John Brown himself had gained, and who had supported him and
put faith in him. John Brown was continuing to contact his old friends at these
companies, persons like himself, who also were now figureheads. He was then
interfering in the ordering, processing and dispatching activities and chasing them
up personally.
It took several weeks, including the rigorous keeping of a diary and an activity
sampling exercise to illustrate this to Brown and to indicate to him that what he was
doing now was both unproductive and actively harmful to the reputation and future
of the company.
• Steve Shirley
Stephanie (Steve) Shirley founded F International in 1964. It represented the
incorporation of her life's work, vision and concept that she had previously
established and which was simply called Freelance Programmers.
F International is a computer software, programming and project company that
draws on the talents and skills of a large body of women, who work from and at
home, on a freelance basis, devising and implementing software solutions and
products for the computer industry. Steve Shirley's vision was to provide an
organisation that would both generate work for this niche of the population and,
also, raise awareness of it among industrial and commercial sectors.
The work of the organisation is essentially project-orientated and highly creative.
As commissions come in, teams and groups are created from among the pool of
freelancers to work on the matters required. Shirley, having created the company,
has stood back from it. A Board of Directors and senior management team are
employed. Shirley's brief is on the creative, visionary and animating side, looking for
new projects and directions in which to go.
• Organisational conflict
There are various sources of conflict in organisations:
1. The job and its professional or technical context, trammg required, the
structure of work and of organisation, its formal objectives
2. The person and his or her personality, personal objectives, ethics, expecta-
tions, aspirations, beliefs, values
3. The organisation itself, and its ways of working and organising its activities
4. The traditions of the sector, company or organisation in question, especially
those to do with management style, staff and industrial relations.
For the individual organisational conflict arises fundamentally from ideology,

objectives and territory:
• Ideology: a set of beliefs about human behaviour, values and standards

• Objectives: those things, economic and psychological, which we want from
an employing organisation
• Territory: an important aspect of objectives; while it is sometimes visible in
terms literally of possession of 'living space' it is more usually expressed in
organisations in terms of rewards, job security and career prospects; this is
important especially in a comparative context, i.e. how one person sees his
situation in comparison with others.
Organisational conflict thus arises from the incompatibility of objectives,

practices or attitudes between individuals and groups within an organisation.
Note that conflict may feed on itself. Conflict initially emerging from the
nature of the job may create and magnify conflict at a personal level.
• Conflict theory
Conflict theory is concerned with providing a basic conceptual framework and a
language which will enable persons in organisations to develop a fuller under-
standing of the nature of conflict. Also, and most importantly for managers, it
concludes with proposals for using conflict positively and beneficially from the
organisation's standpoint.
There are four aspects:
1. The parties to the conflict

• The simplest form of conflict involves only two parties. Much organisa-
tional conflict concerns more, and often many more, than two parties. One
of the problems facing a manager is being able to define clearly the parties
to a conflict. Differences of perception and communication problems at
different levels of an organisation can cause difficulties in this connection.
2. The issues
• The topics in dispute
• The perceptions of the parties to the dispute in this respect
• The interests of those concerned and involved; and
• whether there is a hierarchy of contentious issues and matters to be
resolved
3. The dynamics of the conflict
• The causes of the initial conflict; its nature and style
• The extent to which it is formal and how far informal
• The extent to which it is structural or professional or departmental or
institutional or personalised
• The length of time that it has been going on for, the attitudes of the different
players in the conflict; the conflicting interests of those concerned
• The extent to which it is possible to predict certain developments or
outcomes unless certain action is taken
• The range of possible outcomes, both positive and negative.
• These aspects are concerned with defining and analysing the nature of
conflict. They present essential input to the managerial decision-making
process which is the fourth aspect.
4. The management of conflict
• Management's first priority must be to try to control or at least influence the
conflict
• Uncontrolled conflict is a symptom of an uncontrolled organisation and an
unmanaged organisation; the organisation becomes a ship without a
rudder; it is the negation of management.
Hence managerial objectives in dealing with conflict must be:
1. The development of the conflict into constructive competition or useful

argument
2. If this is not possible, then to contain and control the conflict and to
minimise its dysfunctional effects.
• Strategies for the management of conflict

These therefore include the following:
1. Developing rules, procedures and precedents to minimise the emergence of

conflict and then, to the extent that it still occurs, to minimise its undesirable
effects and maximise its desirable ones
2. Ensuring that communications are effective in minimising conflict; bad
communications may cause conflict or magnify minor conflicts to dangerous
proportions
3. Separation of sources of potential conflict; this may be done geographi-
cally or structurally
4. Arbitration machinery may be permanently available as a strategy of last

resort
5. Confrontation may be used to try to bring all participants to the conflict
together in an attempt to use the dysfunctional aspects of the conflict as a
warning to them
Accurate prediction of the outcome of such a tactic is usually difficult
6. Benign neglect: the application of the dictum that 'a problem deferred is a
problem half-solved'. Usually benign neglect can be used only as a temporary
measure while more information is being gathered or a more structured
approach is being formulated.
• Symptoms of conflict
These are as follows; and every manager must be aware of them, and respond to
them when they start to occur.
1. Declining organisational performance: This is the most important func-

tional and practical symptom; declining performance trends in a section or
department often accompany the growth of conflict
2. Declining morale: indicated by rising rates of labour turnover, sickness and
absence; conflict aggravates these problems.
Managerial energy devoted to dealing with organisational conflict represents
energy not spent producing the output of the organisation. There is an
opportunity cost aspect here. It represents a diversion of managerial time and
effort away from achieving the prime purposes of the organisation.
• Motivation
The ability to gain the commitment and motivation of staff in organisations has
been recognised as important in certain sectors of the business sphere. It is now
more universally accepted as a critical business and organisational activity, and
one that has highly profitable returns and implications for the extent of the
returns on investment that is made in the human resource.
There is a correlation between organisations that go to a lot of trouble to
motivate their staff, and profitable business performance. There is also a
correlation at national level - Japanese organisations recognise this question
much more widely than elsewhere. However, such organisations transcend such
compartmentalisation in reality, and may be found in all sectors, in all nations, of
the business sphere.
The ability to motivate staff in the workplace stems from the understanding,
on the part of the organisation concerned, of the following:
1. A general appreciation of how human beings behave in particular situations,

and in response to their needs to satisfy and fulfil basic drives, instincts, needs
and wants. Some of these are instinctive, others are the product of the
civilisation in which they live, and the socialisation processes contained
therein. Others still are the product of the occupation held by the individual
and the education, training, ethics, standards and aspirations thus instilled.
Finally, the organisation itself impinges on the behaviour of the human being,
in terms of the structure, style, shared values and work practices adopted.
2. An understanding of the nature of the work that must be carried out, and the
effects that this will have, or is likely to have, on those who are to do it. This has
to do with the extent of intrinsic satisfaction and fulfilment that is present in the
work; the interface between the human resource and technology; and, again
the style of management and supervision that is to be adopted.
3. The wider standards and expectations of the relationships between humans
at the workplace. The background and aura for this is created by management,
and infuses everyone (positively or negatively) at the workplace. At its best, it
contains a variety of elements including: enthusiasm and commitment on the
part of everyone to the organisation and its products, services and customers; a
corporate belief in the organisation and all its works; a measure of involvement
in the implementation of policy and achievement of objectives by all
concerned; a clearly established and understood set of principles and opera-
tional standards by which the organisation functions; the taking of pride by all
members of staff in the organisation and all its works; adequate, effective and
relevant communication processes and methods; and preventative approaches
to problems and commitment to resolve them quickly when they arise.
Conversely, there must be a recognition, on the part of organisations and
their managers, that where these elements are not present, or where they are
diluted, not believed in, or not valued, there will be a tendency towards de-
motivation and alienation on the part of the staff.
4. Organisations cannot be all things to all people. They can only accom-
modate a range of divergent interests and aspirations among the staff in so far
as these can be made to accord with their overall purposes and values.
Dysfunctions arising from their divergences and conflicts of interest are most
common in multinational hierarchies, and public and health services, where the
organisation style and structure is either inefficient, or irrelevant, to the true
purpose of the organisation concerned.
With this in mind, we shall now turn to a brief consideration of classical

theories of motivation. Each makes a contribution to the fullest possible
understanding of the issues and matters in hand.
• Major theories of motivation

• Rensis Likert: System 4
Likert's contribution to the theories of workplace motivation arose from his
work with high performing managers; that is, managers and supervisors who
achieved high levels of productivity, low levels of cost and high levels of employee
motivation, participation and involvement at their places of work. The work
demonstrated a correlation between this success and the style and structure of the
work groups that they created. The groups achieved not only high levels of
economic output and therefore wage and salary targets, but were also heavily
involved both in group maintenance activities and the design and definition of
work patterns. This was underpinned by a supportive style of supervision and the
generation of a sense of personal worth, importance and esteem in belonging to
the group itself.
The system four model arose from this work. Likert identified four styles or
systems of management (see Figure 3.3):
• System 1 : Exploitative Authoritative, where power and direction come

from the top downwards and where there is no participation, consultation or
involvement on the part of the workforce. Workforce compliance is thus based
on fear. Unfavourable attitudes are generated, there is little confidence and
trust. and low levels of motivation to cooperate or generate output above the
absolute minimum.
• System 2: Benevolent Authoritative, which is similar to System 1 but
which allows some 'upward' opportunity for consultation and participation in
some areas. Again attitudes tend to be generally unfavourable; confidence,
trust and communication are also at low levels.
In both Systems 1 and 2, productivity may be high over the short run when
targets can be achieved by a combination of coercion and bonus and overtime
payments. However, both productivity and earnings are demonstrably low over
the long run; there is also high absenteeism and labour turnover.
• System 3: Consultative, where aims and objectives are set after discussion
and consultation with subordinates; where communication is two-way and
where teamwork is encouraged at least in some areas. Attitudes towards both
superiors and the organisation tend to be favourable especially when the
organisation is working steadily. Productivity tends to be higher, absenteeism
and turnover lower. There is also demonstrable reduction in scrap, improve-
ment in product quality, reduction in overall operational costs and higher levels
of earning on the part of the workforce.
• System 4: Participative, in which three basic concepts have a very
important effect on performance. These are, the use by the manager of the
principle of supportive relationships throughout the work group referred to
above; the use of group decision-making and group methods of supervision;
and the setting of high performance and very ambitious goals for the
department and also for the organisation overall.
Likert saw the various management systems as having causal, intervening and
end result variables.
The causal variables are independent variables which determine the course of
developments within an organisation and the results achieved by it; and
management policies, decisions, business and leadership strategies, skills and
behaviour.
The intervening variables are those which reflect the internal state and health
of the organisation. These include loyalties, attitudes, motivations, performance
goals and their achievement, the perceptions of all members and their collective
capacity for interaction, communication and decision-making.
The end result variables are the dependent variables reflecting the achieve-
ments of the organisation in terms of its productivity, costs, efficiency, product
quality and earnings.
v.
N
~' ;:
.....
Principles of supportive Favourable attitudes toward superior
-a
relationships High confidence and trust ~Jiow absence and ~
High reciprocal influence Lturnover 1'"\
.....
System4 ~ Excellent communication: up, down; o·
;:
lateral ~ .....
Group decision-making in High peer-group loyalty 0
,...... ""[High p~od~ctivity
a multiple, overlapping ""' Low reJeCtion rate 3::
I:>
group structure r High peer performance goals at all Low costs ;:
System 3 ~ l_!evels: productivity, quality, rejects High earnings
~
~
High productivity over ~
;:
Compliance based on fear short run .....
System 2 ~
Low productivity and
High pressure and tight attitudes, confidence
work standards, personal
System 1 ~ limitations, tight budgets • Poor communication ~ t
imposed • Low levels of cooperative motivation ---.!High absence and
~~
+ 1• Low pee< perionnance goals [_tumov"
L" Restnctoon of output t
~~ ~ ~
~
t !. tr
: E
Purpose: to demonstrate the interrelationship and interaction of the variables defined and present a spectrum of organisation and
management performance levels
Figure 3.3 System 4
Source: Likert (1961).

System 4 was Likert's favoured system. His research has demonstrated that the
principles and attitudes prevalent in System 4 could and should be applied to all
types of organisation.
• Abraham Maslow: a hierarchy of needs

Abraham Maslow was a behavioural scientist whose researches led him to depict
a hierarchy of needs which explained different types and levels of motivation that
were important to people at different times. This hierarchy of needs is normally
depicted as a pyramid (see Figure 3.4). The hierarchy of needs works from the
bottom of the pyramid upwards, showing the most basic needs and motivations
at the lowest levels and those created by, or fostered by, civilisation and society
towards the top of it.
Maslow identified five key needs:
1. Physiological: the need for food, drink, air, warmth, sleep and shelter; that is
basic survival needs related to the instinct for self-preservation
2. Safety and security: that is, protection from danger, threats or deprivation
and the need for stability (or relative stability) of environment
3. Social: that is, a sense of belonging to a society and the groups within it, for
example, the family, the organisation, the work group; also included in this
level are matters to do with the giving and receiving of friendship, basic status
needs within these groups, and the need to participate in social activities
4. Esteem needs: these are the needs for self-respect, self-esteem, appreciation,
recognition and status both on the part of the individuals concerned and the
society, circle or group in which they interrelate; part of the esteem need is
therefore the drive to gain the respect, esteem and appreciation accorded by
others
5. Self-actualisation: that is, the need for self-fulfilment, self-realisation,
personal development, accomplishment, mental, material and social growth
and the development and fulfilment of the creative faculties.
This was the hierarchy of needs outlined. Maslow reinforced his model by
stating that people tended to satisfy their needs systematically. They started with
the basic, instinctive needs and then moved up the hierarchy. Until one particular
group of needs was satisfied, a person's behaviour would be dominated by them.
Thus the hungry or homeless person will look to their needs for self-esteem and
society only after their hunger has been satisfied and they have found a place to
stay. The other point that Maslow made was that people's motives were
constantly being modified as their situation changed, and in relation to their
levels of adaptation and other perceptual factors; this was especially true of the
self-actualisation needs in which having achieved measures of fulfilment and
recognition, man nevertheless tended to remain unsatisfied and to wish to
progress further.
Maslow's work was based on general studies of human motivation and as such
was not directly related to matters endemic at the workplace. However, matters
concerning the last two items on the pyramid, those of self-esteem and self-
Vo
"'"
The needs vary according to the state
;:::
and nature of the individuals and the .....
-
society in which they live. ~
~
<"\
achievement .....
o·
;:::
.....
Esteem: 0
self-esteem, self-worth s:
self-regard; and the esteem,
value and regard of others
"';:::
~
~
<I>
Societal and ;:::
Social: .....
civilisational the need to belong
needs to love and be loved
to interact with others
Basic and Safety: the need for

instinctive protection and security
needs
Physiological: the need for
shelter, survival, food and drink
Figure 3.4 A hierarchy of needs
Source: Maslow (1960).

actualisation, have clear implications for the motivation (and self-motivation) of

professional, technical and managerial staff in organisations.
• Douglas McGregor: Theory X and Theory Y

McGregor identified two distinctive sets of assumptions made by managers about
employees. From this he articulated two extreme attitudes or views and called
them Theory X and Theory Y. His thesis was that in practice most people would
come somewhere between the two, except in certain circumstances.
o Theory X
This is based on three premises:
• Man dislikes work and will avoid it if he can. He would rather be directed
than accept any responsibility; indeed, he will avoid authority and responsi-
bility if he possibly can. He has no creativity except when it comes to getting
around the rules and procedures of the organisation; above all he will not use
his creativity in the pursuit, either of his job or the interests of the organisation.
• He must be forced or bribed to put out the right effort. He is motivated
mainly by money which remains the overriding reason why he goes to work.
His main anxiety concerns his own personal security, which he alleviates by
earning money.
• He is inherently lazy, he requires high degrees of supervision, coercion and
control in order to produce adequate output.
o Theory Y
This is based on the premise that work is necessary to man's psychological
growth:
• Man wishes only to be interested in his work, and under the right
conditions he will enjoy it. He gains intrinsic fulfilment from it; he is motivated
by the desire to realise his own potential, to work to the best of his capabilities
and to employ the creativity and ingenuity with which he is endowed in the
pursuit of this.
• He will direct himself towards given accepted and understood targets; he
will seek and accept responsibility and authority; and he will accept the
discipline of the organisation in the pursuit of this. He also imposes his own
self-discipline on himself and his activities.
Whatever the conditions, management was to be responsible for organising the

elements of productive enterprise and its resources in the interests of economic
ends. This would be done in ways suitable to the nature of the organisation and
its workforce in question; either providing a coercive style of management and
supervision or arranging a productive and harmonious environment in which the
workforce can and will take responsibility for erecting their own efforts and
those of their unit towards organisational aims and objectives.
• Frederick Herzberg: Two Factor Theory

The research of Herzberg was directed at people in places of work. It was based
on questioning people in organisations in different jobs, at different levels, to
establish:
(a) those factors that led to extreme dissatisfaction with the job, the
environment and the workplace, and
(b) those factors that led to extreme satisfaction with the job, the environ-
ment and the workplace (see Figure 3.5).
Factors on the job that led to extreme Factors on the job that led to extreme
dissatisfaction but not satisfaction satisfaction but not dissatisfaction
Percentage frequency Percentage frequency
50% 40 30 20 10 0 10 20 30 40 50%
I Achievement I
I Recognition I
I Work itself I
I Responsibility I
I Advancement
l Growth
Company policy and administration I

1. .1.1 Supervision I
Relationship with supervisor I
I
Work conditions _I
I II Salary I
Relationship with peers
I Per,onal life
Relationship with subordinates
Status
Security
Figure 3.5 Two-factor or hygiene factor theory
Source: Herzberg (1962).

The factors giving rise to satisfaction Herzberg called motivators. Those giving
rise to dissatisfaction he called hygiene factors.
The motivators that emerged were: achievement, recognition, the nature of the
work itself, level of responsibility, advancement, and opportunities for personal
growth and development. These factors are all related to the actual content of the
work and job responsibilities. These factors where present in a working situation
led to high levels and degrees of satisfaction on the part of the workforce.
The hygiene factors or dissatisfiers that he identified were: company policy and
administration; supervision and management style; levels of pay and salary;
relationships with peers; relationships with subordinates; status; and security.
These are factors that where they were good or adequate would not in themselves
make people satisfied; by insuring that they were indeed adequate dissatisfaction
was removed but satisfaction was not in itself generated. On the other hand
where these aspects were bad extreme dissatisfaction was experienced by all
respondents.
Organisations that failed to provide adequate hygiene factors tended to have
high levels of conflict, absenteeism and labour turnover, and low general morale.
The work of Herzberg has tended to encourage attention to such factors as:
good and adequate supervision which encourages and extends the workforce
rather than restricts it; job satisfaction which can often be increased through
work restructuring, job enrichment and job enlargement programmes; and the
setting and achieving of targets and objectives based on a full understanding of
what they are and why they have been set. Some organisations have also
concentrated on removing the dissatisfiers or hygiene factors to ensure that
causes of intrinsic dissatisfaction with the workplace and its environment are
minimised.
• Edgar Schein: a classification of man

Schein classified man in four ways.
1. Rational economic man: man is primarily motivated by economic needs. He

pursues his own self-interest in the expectation of high economic returns. If he
works in an organisation he needs both motivation and control. As he
intensifies his pursuit of money he becomes untrustworthy and calculating.
Within this group, however, there are those who are self-motivated and have
a high degree of self-control. This is the group that must take responsibility for
the management of others. They also set the moral and ethical standards
required.
2. Social man: man is a social animal, gaining his basic sense of identity from
relationships with others. Man will seek social relationships at the place of
work and part of the function of the work group will be the fulfilment of this
necessity. The role of management in this situation is therefore greatly
concerned with mobilising the social relationships in the pursuit of opera-
tional effectiveness and drawing a correlation between productivity and
morale; and taking an active interest in the development of the work group.
3. Self-actualising man: man is primarily self-motivated. He seeks challenge,

responsibility and pride from his job and to maximise the opportunities offered
by it. He is likely to be affected negatively by organisational and management
style, external controls, scarcity of resources and other pressure. He will
develop his own ways of working, his own objectives and integrate these
with those established by the organisation. The inference is that this is
strongest among professional, technical. skilled managerial staff; however, all
work groups have tended towards higher levels of motivation and morale when
given a greater degree of autonomy at work.
4. Complex man: man is complex; that is, he is variable; he has many motives,
differing and diverse and which vary according to the matter in hand and the
different work groups in which he finds himself. He will not fulfil all his needs
in any one situation but rather requires a variety of activities in order to do this.
He responds to a variety of stimuli according to his needs and wants at a
particular moment. Schein's view of 'complex man' in organisations is that of a
psychological contract, based on mutual expectations and commonality of
aspirations. It is therefore a partnership.
• Expectancy
In essence, this approach to motivation draws the relationship between the
efforts put into particular activities by individuals, and the nature of the
expectations of the rewards that they perceive that they will get from these
efforts.
This is clearly centred on the individual. It relates to the ways in which the
individual sees or perceives the environment. In particular, it relates to his view of
work, his expectations, aspirations, ambitions and desired outcomes from it, and
the extent to which these can be satisfied at the workplace or carrying out the
occupation in question. For example, the individual may have no particular
regard for the job that he is currently doing but will nevertheless work
productively and effectively at it and be committed to it because it is a stepping
stone in his view to greater things- and these are the expectations that he has of it
and constitute the basis of his efforts and the quality of these efforts. This is
compounded however by other factors- the actual capacities and aptitudes of the
individual concerned on the one hand and the nature of the work environment on
the other. It is also limited by the perceptions and expectations that the
commissioner of the work has on the part of the person who is actually carrying
it out. There is a distinction to be drawn between the effort put into performance
and the effectiveness of that effort - hard work, conscientiously carried out does
not always produce effective activity; the effort has to be directed and targeted.
There has also to be a match between the rewards expected and those that are
offered - a reward is merely a value judgement placed on something offered in
return for effort, and if this is not valued by the receiver it has no effect on his
motivation.
There has consequently to be an understanding of the nature of the motives
and expectations of the individual, related to an ability to satisfy these on the part
of the organisation if it is to address effectively the issue of motivation. The
approach required is therefore to take both an enlightened and specific view of

what constitutes job satisfaction (rather than assuming that it exists or exists in
certain occupations at least); and an understanding of the processes of perception
and the nature of reward in relation to the aspirations of those conducting the
work.
The works referred to here constitute the major investigations into the subject of
human motivation, both in general and at the place of work. The overall purpose
has been to indicate both the importance of the subject itself and the relationship
between effective human motivation and effective work performance, and the
level of understanding and application required of the subject of those who aspire
to manage others.
• Motivation and achievement

The general correlation between these elements is a common theme that runs
through all of the work to which reference has been made. More general
developments of it should now be indicated.
First, organisations can and should develop characteristics within their staff
that will create and nurture in them the ability to generate the improved and
higher levels of commitment and performance that relate to higher levels of
achievement. These characteristics are: activity (rather than passivity); degrees of
workplace autonomy; long termism (as opposed to short termism); self-
discipline; self-motivation; and self-awareness. Work conducted by Chris
Argyris in the USA concluded that traditional style organisations tended to
encourage the opposite of these characteristics (i.e. passivity; dependence;
expediency), leading to both individual and corporate frustration and ineffec-
tiveness.
Second, this is the relationship between the need of people to have achieve-
ments and the nature of these achievements themselves. In recent years the
organisational concept of 'the high achiever' has become prevalent; the term
implies an individual who regularly completes work to high degrees of quality,
output and effectiveness. Such staff require tasks and targets against which their
achievements may be measured and regular feedback on the extent to which these
have been fulfilled. It is prevalent in task cultures and high pressure and output-
oriented and related occupations.
• Motivation and money

It is stated elsewhere (see Herzberg above) that money does not enhance the
intrinsic nature of the work. Indeed in the most extreme cases it will not affect the
employee's motivation at all (as with voluntary work, where the driving force is
to do with commitment or vocation); while at the other extreme it may simply
make working life bearable for a very short period of time (however much one is
paid for sweeping roads, the job to be done is still the sweeping of the roads).
However, there are additional points to be borne in mind:
1. Wage and salary levels reinforce such matters as self-image and the esteem
that others hold of the job or occupation. A high salary reinforces the status
and responsibility that the job holder is felt to have. A low salary may diminish
this. A low salary for a professional person may give the aura of professional
commitment at personal expense.
2. Wage and salary levels form the basis of inter-occupational comparisons
and expectations. Wage and salary rises, also, have to be seen in behavioural
terms, both against what is 'the going rate', and also against what others in
both related and wholly different occupations are getting (or perceived to be
getting). If one is at the top of this measure, there will be a tendency towards
greater satisfaction than if one is at the lower end.
3. Wage and salary levels reflect the value placed upon an employee by the
organisation. They also reflect the value and relative value of the occupation
range that is carried out in the organisation. They also impart information that
relates to the true nature of the work being carried out (for example, a high
sounding job title that carries with it a low salary is likely to mean that the level
of work canied out is actually less than the job title implies).
4. Reinforcement elements such as bonuses and incentives may also be used
by organisations to generate additional output (in whatever terms that is
measured), or to reward loyalty. The approach to the management of such
payments must be positive and dynamic; such payments should never be
allowed to become institutionalised, or their effect is lost.
• Importance of motivation
From whatever the standpoint, the importance of motivation, and the ability to
motivate at the place of work, must be clearly understood by all managers. If
these fundamental principles are not adopted, no amount of negativity, coercion
or bullying on the part of the organisation, of its staff, will compensate. On the
other hand, as we have seen with the Hawthorne example (Chapter 2), the self-
perception on the part of the groups of staff, arising from the fact that they were
made to feel important, led to great advances in both personal commitment and
operational output. Partly, also, because of this approach, the Sanyo plant at
Lowestoft, Suffolk, UK, holds an absenteeism and self-certificated sickness rate
of 0.2%; and Sheerness Steel Pic, a rate of 0.5%. The commitment of the staff has
been engaged.
These lessons should also be seen in the wider context. Many of the lessons to
be drawn from the 'excellence' studies (in both the USA and UK), from Japanese
business practices, from human resource and industrial relations policies,
impinge on the motivation of people at work. The style of leadership and
direction, and the aura thus created, also greatly affects motivation and morale.
Finally, all approaches that have as their objective a genuine desire to motivate
and generate commitment among the staff, must themselves stem from commit-
ment, belief and value, rather than expediency. If it is the latter, it will simply not
work.
• Groups and teams

Groups and teams are gatherings of people drawn together or organised together
and united by common purposes or objectives. These common purposes must be
understood by all and subscribed to by them. Ideally they are the overriding
issues concerned - where problems and conflicts do occur members subsume
their private interests to those of the group.
Effective teams lead to creativity; harmony; improved job and work satisfac-
tion; increased energy; increased motivation and commitment; and dynamism.
They tackle tasks that are too large for one person. They bring a collective
wisdom approach and intellect to bear on given issues. They are arranged and
organised where the matter in hand is very complex or requires a range of
expertise not normally found in one person. They also generate and reinforce the
critical behavioural factors. They generate a mutual confidence and support
among members. They produce a motivation and identity based on team or
group membership, additional to any such attributes that the individual may
have. They may generate (or be perceived to generate) an elitism, 'a group think',
a power of conformity more influential than that of the organisation; this may be
in accord with the wider organisation and its purposes or in conflict with it (see
Summary Box 3.6).
Teams and groups, and their functions and processes, therefore require both
understanding and management if an effective work environment is to be created.
The aim overall must be to produce groups that are both positive and productive
but which contribute to the overall effectiveness and purpose of the organisation
rather than detracting from it or working in competition with it.
It is therefore first necessary to understand that this is a dynamic process, that
is that people belong to a variety of groups, they interrelate and interact in a
variety of ways, depending on which they are involved with at a particular time.
They may bring ideas to one group that they have generated or picked up as the
SUMMARY BOX 3.6 High Performance Groups and the Bunker

Mentality
With high performance groups or those selected on the basis of excellence or high
status in some sphere there is a short step only from members knowing that they
are always clever and excellent to believing that they are always right.
In extreme circumstances this becomes developed still further into a 'bunker
mentality'. This is where the group becomes so divorced from reality that it
develops its own view of the world which becomes the basis for its investiga-
tions, activities, operations and decision-making regardless of the true nature of
the wider environment.
The phrase derives from the bunker used by Hitler and the other leaders of the
Nazis in the last days of World War Two; rather than come to terms with the reality
of their impending defeat, they created their own version of the world within
Hitler's operations room or bunker.
result of being associated with another. People also join and leave organisations
constantly, bringing and taking qualities, expertise and characteristics with them.
It follows from this that when constituting groups a balance has to be struck
that ensures that there is present both the expertise required and the ability to
work together. Part of the process of constituting groups therefore relates to
fitting individuals with each other in order to gain productive and synergetic
output (see below). The characteristics of members have therefore to be
harmonised as well as their capabilities and capacities.
The motivation of individuals must next be considered. It is not enough that
they have capabilities and expertise to bring that the group requires. They must
also want or need to be a part of the group themselves- there must be something
present in the situation to which all members can respond positively, that
generates in them the desire to energise their expertise for the good of the group.
The generation of an identity for the group must take place. This is the
development of a set of ideas, values, beliefs and norms that transcend the
concerns and aspirations of the individuals in it and give the commonality of
purpose that is required of effective, productive and harmonious groups. Again,
Japanese organisations and others that operate in the same way take a lot of
trouble in the formation of this identity among their staff. It is more endemic
among professional, technical and managerial staff; however, Nissan for
example, spent millions of dollars on training and orientation of programmes
at their operating plant in both the UK and USA - a key result of this was the
generation of a strong team, group and company loyalty and identity.
• Groups at work
This is therefore a critical area of study for anyone who aspires to manage people
at the workplace. Groups and teams are formed, constituted, disbanded and
reformed over periods of time for all work purposes, from short term projects,
production lines, administrative functions, support teams and professional
service departments to top management teams and boards of directors.
Individuals, as we have seen, belong to a variety of these in the work
environment; therefore the issue of reconciling the interests and priorities of
different groups has to be addressed.
Two critical aspects of groups may be usefully distinguished:
• Synergy: The principle that the whole is greater than the sum of its parts; a
prerequisite for the effective operation of any group; the principle on which
they should be constituted; a focus for the assessment of those who are
potential group members.
• Cohesion: This is the ability of the group to stick together in the pursuit of the
stated purpose. It is manifest in the degree of loyalty and commitment
generated among members to each other and to this purpose. It is generated
by the combination of behavioural, environmental and operational factors
present at the place of work of the group and the extent to which these fulfil
the operational and aspirational needs of the group members. Particular items
that may be identified and isolated for consideration here include: the structure
of the group; the structure, style and ways of working; the layout of work; the
division of tasks; group size; the technology employed; the work flows; the
work pressures; the style of leadership; social factors; the particular rewards to
be gained from participation in the group; and the success rate of the group.
Groups may also be identified under the headings of formality, informality and
purpose:
• Formal groups: constituted and directed for a purpose, to solve problems,

develop products, conduct projects, run production lines; these will have
formal and organised key results, agenda, constitution and composition. They
are also constituted as an expert functional and operational department, unit
and division in organisations.
• Informal groups: in which the staff organise themselves in ways important or
necessary to themselves. This may be for the purpose of professional
development or information generation; organisation awareness; improved
inter-departmental or inter-functional communication and cooperation; self-
regulation and work improvement.
• Purpose groups: these are formed either on a coercive, compulsory 'ad hoc'
or voluntary basis for specific purposes. These consist either to improve
working methods or the quality of work. They are distinguishable from the
others in that they are often not formally constituted and are expected to meet
in their own time, while at the same time addressing work specific issues. Such
groups may address matters to do with quality. They may seek to resolve inter-
unit or inter-departmental dysfunctions or discord or act as lobbies both
internal and external in support of particular initiatives. They may also be
constituted as 'think tanks' - the generation of a creative flow of ideas and
means of implementing them as part of the change and development processes
of the organisation.
The role of individuals in the group must be considered. As the result of

belonging, they generate their own identity within it and the organisation (and
possibly the rest of the world) will view them as part of it; both aspects may be
positive or negative. At a global level this is true of belonging to any organisation;
Japanese companies, again, go to a great deal of trouble to foster and formulate
the background against which the staff have pride and identity in the company.
They understand the needs of the individual to belong, affiliate and identify in a
positive way. They also understand the great positive, organisational and
commercial benefits that accrue from the successful execution of this.
Individuals also have their own purposes distinct from those of the group, to
which consideration must be given. These purposes may conflict, or at least
diverge; managers must understand this and part of the management of the group
must be concerned with the reconciliation and harmonisation of these matters.
The group has its own entity, life and distinctive existence. This is self-evident
when concerned globally with organisations; it is also true for all effective groups
within organisations. This is one manifestation of the synergy outcome. It has its
own core values, reasons for belonging and commonality and universality of
purpose that when truly effective all members subscribe to; that accommodates
their differences in a positive and productive way; and provides the forum for
effective work. This also remains true for any sub-groups within the main group.
There are also present the more general human elements of mutual trust, honesty,
openness and understanding that are fundamental prerequisites of all effective,
personal transactions. A group style is adopted, fostered, nurtured and developed
that is suitable to this and supportive of it.
Those who manage groups must also understand the informal networks
established within organisations. This is especially true of sophisticated, multi-
national organisations, local government, health and public services, where these
are often very highly developed. Managers must understand that different groups
and professions have conflicting aims and objectives and that individuals who
belong to several such groups have to be able to reconcile these differences.
Within this framework also, strong and expert individuals generate their own
spheres of influence (whether it be in the formal, informal or work group sphere).
Such critical individuals need early identification as their support may be
necessary for the successful generation of any group identity and ways of
working; indeed, their influence may give it an initial impetus or credibility.
• The group process

For the effective operation of groups to take place, the group process itself must
be understood, managed and maintained. A useful summary of this is the phrase:
Forming- Storming- Norming- Performing
Forming is the initial bringing together of individuals for the designated

purpose; the initial meeting; the initial establishment of mutual interests and
confidence.
Storming is the first rush of creativity and purpose; the first release of creative
energy by the group; the first burst of creative and positive group activity towards
the stated purpose; and the first output and initial results.
Norming is the establishment of group operational rules and norms; the
development of mutual respect and confidence; it is the development of a group
identity; and the further development of the mutuality, confidence and purpose
that is necessary to effective operation and successful positive results (see Figure
3.6).
Performing is the addressing of the matter in hand; the obtaining of key results,
successes and failures; and the activities devised to ensure a productive and
positive purpose to the group.
The four elements are not linear but go on alongside each other at all points in
the group's life except for the initial beginning; forming activities will take place
as and when new members of the group are introduced; storming as and when the
• A person seeks to belong to peer groups wherever they congregate, including

corporate surroundings.
• The tendency toward exclusivity exists in open-ended and corporate situations,
where people come and go. The formation of groups is influenced by the fact that
fellow-workers have been thrown together from the start in unnatural mixes. At a
large cocktail party, groups will drift together and apart without constraint, but in a
company, people with different backgrounds and views are forced to work together
and form groups. The bigger the company and the wider the range in social (and
other) attributes of individuals, the better the chances are that there will be
numerous groups with tight-knit and defensive norms.
• When both formal and informal norms coexist, as they do in companies, the informal
norms transcend the formal. This leads to what has been called 'shadow
organisation', in which the apparent management structure is actually super-
seded in importance by the mesh of group-norm dictates.
• Individuals will go to extreme lengths to live up to their peers' expectations, even
doing things that in other circumstances they recognise as going counter to their
own best interests. They can persevere in this behaviour, however, with the easy
rationalisation that 'everybody around here does it'.
• Norms-imposed habits are lasting. Even when the original members of a group
have disappeared and/or when the norms themselves have lost their original
purpose, there will be strong norm remnants, unthinkingly respected by new
members.
• Negative norms cannot be changed unless the norm-follower is made aware of
their existence, because most - if not all - people respect and go along with norms
quite unconsciously.
Figure 3.6 Foundation of corporate norms
group is given new purposes; performing may be necessary at an early stage in the
completion of an initial task.
Two further points should also be considered in the understanding of this
process. The first is that of regeneration. That is the means by which the life and
work of the group is maintained and developed; this may be conducted by the
development of the members of the group by the bringing in of new work and
projects to it, the addressing of new spheres of activity and by the bringing in of
new members.
It is also useful, secondly, to identify an end phase, or disbanding, which comes
into effect when groups finish their productive lives and are to close. This ensures
a proper evaluation of tasks and matters carried out. It is also important for those
concerned to have psychologically finished with the group and to have let it go in
the interest of recognising that this particular phase of business life has finished.
This is normally covered by a full debrief of the group or team at the end of its
productive life and has the behavioural impact of ensuring that those concerned
are not left with feelings of anticlimax or emptiness or unfulfilment; nor with the
feeling that the work of the group is not finished. This is a recognition that
groups do ultimately come to the end of their useful life and have to be disbanded.
This may relate either to the work in hand or to the suitability of the group to
carry on the particular task or project - in the latter case, this may consist of
handing over the work to a new team so that it can be progressed further.
• Group components and composition

For groups to be effective a variety of attributes must therefore be present and a
range of activities carried out. The different roles and functions that must be
addressed consist of: group administration; attention to detail; creativity and
ideas; direction and chairmanship and leadership; polishing and completion of
tasks; and team and group maintenance.
If some, but not all, of these qualities are present the team will dysfunction - if
the members are all creative, for example, the group will generate a lot of ideas
but complete very little; while conversely if there is no creativity the group may
nevertheless be very strong in its own processes. The end result in either case will
be both dissatisfaction and lack of achievement as there will be no actual or
material success against which to measure its progress.
Group size must be relevant to the matter in hand. Any pronouncement on
ideal size must be seen in this context. Given that, any group of less than five may
suffer from a restricted range of qualities and capabilities; while any group of
more than nine or ten may create administrative problems, sub-groups and
cliques. Difficulties also arise with larger groups in ensuring that all members
contribute and are involved; or, in the case of committee and meeting type
groups, that they can indeed all get together at the same time.
Group environment must be considered. This consists of its relationship with
the tasks in hand; the timescale to which it has to work; its technology; any
resource constraints that it has to work with; and the quality of outputs that are
required. This must also be related to the leadership style of the group and its
decision-making processes. The relationship with its environment must finally
have regard to the esteem in which the group is held outside and its general
profile and credibility.
The general level of motivation in the group is decisive in the effectiveness with
which it carries out its tasks and functions. High levels of motivation result from
members' perception of the task; the levels of perception of the tasks and outputs
of the group from outside it; the timescales, constraints and any time deadlines
placed on the group; and the consequences of the group's results. Clearly defined
and understood performance standards are necessary to which all group
members subscribe. The interaction of group members must be positive and
dynamic and related to the matters in hand. This must be managed and
maintained by the establishment of ways of working, ground rules and
procedures and the application of constraints or sanctions where necessary.
Groups will tend to hold the greatest motivation among members and highly
effective performance outputs where the following are present. The atmosphere
must be suited to the purpose in hand, combining elements of openness, trust and
mutuality with task, quality and deadline elements.
Conflicts are brought out into the open and dealt with constructively, rather
than being allowed to fester. Decisions are reached by consensus and other modes
are used only when this is not possible. Ideas are openly and freely expressed and
argued out. There is no penalty for dissention or disagreement. Discussion and
participation balances the involvement of everyone in the group and their
commitment to its purposes with the aims and objectives themselves. The group
develops its own critical facilities, designed to ensure a healthy self-questioning
and to avoid a group think or bunker mentality.
In terms of the process of establishing the group and building it (both as a
group and as a provider of outputs) the following nine aspects must be
considered:
• Management of the task: setting work methods, timescales, resource
gathering, problem-solving and maintenance functions
• Management of the process: the use of interpersonal skills and the
interaction with the environment to gain the maximum contribution from
each person
• Managing communications: between different work groups and disciplines
and professions, to harmonise potential conflicts and to ensure that inter-
group relations are productive and not dysfunctionally competitive
• Managing the individual: making constructive use of individual differences
and ensuring that individual contributions are both valued and of value
• Management style: the creation and adoption of a style that is both positive
and dynamic and suitable to the management needs of the situation
• Maintenance management: ensuring that administration and support
services are suitable to the needs of the group
• Common aims and objectives: that are understood, valued and adopted by
all group members and that are the overriding common purpose for being in the
situation
• Shared values: the ethical aspects of the common aims, these set standards
of behaviour and attitudes that all members of the group must be able to agree
to and in which they have confidence and belief and with which they can work
• Group and team spirit: this is a combination of the shared values, ethics and
ethos of the group or team concerned and the extent of the positive identity
and loyalty that the members have to each other, to the tasks in hand and to the
overall objectives.; while its positive contribution to performance is not always
fully realised or evaluated, the negative effects of the destruction of group
identity or team spirit are often devastating.
Group and team spirit must therefore always be positive. This, in turn, gives
all those concerned a positive rather than coercive reason for belonging to the
group and sense of pride in the work of it.
Finally, for groups to remain effective, monitoring and review processes and
activities must be in-built. They must take the form both of continuous processes
and activities and also regular formal progress meetings. All groups also benefit
from external feedback, monitoring and contacts. These reviews must take
account of all the elements referred to here; all contributions to the overall
effectiveness of performance of groups; and dysfunction in any of them detracts
from the performance, outputs, tasks and purposes, both of the groups
themselves and ultimately of the organisation in which they are functioning.
• Research in the workings of groups

• The Hawthorne experiments
As we have seen in Chapter 2, this work was carried out at the Western Electric
Company of America, during the period 1924-1936. The main conclusions that
were drawn concerning the workings of groups were as follows: that work could
not be effectively organised without reference to the informal structure and
spheres of influence; that work groups would respond positively to any genuine
interest taken in them; that group motivation was a process and not an item; and
that groups required rejuvenation and regeneration from time to time.
• The 'Affluent Worker'

These studies were carried out at the Vauxhall, La Porte and Skefco Companies
at Luton in Bedfordshire in the 1950s and 1960s. The main conclusions
concerning work groups here were as follows: the work force's first and only
loyalty was to each other; that they felt no particular identity with the company;
that alienation was an inherent feature of production line organisation; that
strikes, disputes and stoppages acted as a safety valve to the essentially negative
process of group formation in these situations; and that such conflicts and the
closing of ranks among the staff were inevitable consequences of this mode of
group and work organisation.
• Volvo
This car company reorganised its work methods from production lines to work
groups during the 1960s and 1970s. The overriding reason was to test the
hypothesis that both quality and output would rise if staff were able to identify
with the whole product and not just their place on the production line. Quality
and output did, indeed, initially rise; but the process was deemed to have failed in
1974 because technological advances had been resisted and rejected by the work
groups, that is, that the groups themselves have not been maintained, developed,
updated and regenerated.
• Meredith Belbin
Professor Belbin identified a range of attributes and characteristics that the
members of groups should have between them if effective group formation was to
take place. In essence these characteristics range from imagination, questioning,

creativity, energy and drive; to capacities for hard and painstaking detailed work,
methods, steady-state, completion and finishing skills (see Figure 3.7). This work
has been developed by both Bel bin and others in the building of work teams and
groups.
• Tom Peters
Peters identified the flatness of group structures and shortness of hierarchies in
them as prerequisites for their effective operation and performance. Groups with
a high degree of autonomy, responsibility, accountability and identity would out-
TYPE SYMBOL TYPICAL FEATURES POSITIVE QUALITIES
Company cw Conservative, dutiful, Organising ability, practical

Worker practicable common-sense, hard-working,
Chairman CH Calm, self-confident, A capacity for treating and

controlled welcoming all potential
contributors on their merits
and without prejudice
A strong sense of objectives
Shaper SH Highly strung, out- Drive and a readiness to

going, dynamic challenge inertia,
ineffectiveness, complacency
or self-deception
Plant PL Individualistic, serious- Genius, imagination, intellect,

minded, unorthodox knowledge
Resource Rl Extroverted, enthusiastic, A capacity for contacting

Investigator curious, communicative people and exploring anything
new
An ability to respond to challenge
Monitor- ME Sober, unemotional, Judgement, discretion, hard-

Evaluator prudent headedness
Team TW Social orientated, An ability to respond to people

Worker rather mild, sensitive and to situations and to
promote team spirit
Completer- CF Painstaking, orderly, A capacity to follow-through

Finisher conscientious, anxious Perfection
Figure 3.7 Archetype team members
Source: R. M. Belbin (1986).

perform those that were over-structured and over-regulated. He also emphasised

the high degree of creative energy and synergy as essential for successful group
performance. Groups must also be responsive and strong on both staff and
customer care and staff and customer identity and loyalty.
• The individual
Individuals come into organisations to take up positions and roles' within them;
to carry them out, develop them and move them on; and to change roles
especially for the better. Individuals also have their own needs and wants to be
fulfilled, not all of which are easily harmonised with the organisation and its
demands.
• Roles
The rest of the organisation will ascribe certain preconceptions and expectations
to an individual occupying a particular job. This is their role set or role definition,
and consists of a number of factors drawn from a combination of these
preconceptions and expectations; the aspirations of the person concerned;
organisational and environmental factors; and cultural, situational and social
aspects. Into this, the individual then brings and imposes his own qualities,
aptitudes, attitudes and capacities. The result or output from the combination of
all of these factors is the role performance.
Organisations and certain occupations often insist on a further overt definition
or underlining of the roles that are being performed. This gives both an implicit
or real authority to the individual in his dealings with others (both internal and
external to the organisation); and an aura or perception of confidence on the part
of those who come to deal with him. The most common overt manifestation of
this is the wearing of a uniform -this is highly prevalent in health, emergency and
armed services. In addition, such organisations as banks and those concerned
with the travel industry, for example, insist on staff adopting this form of
identification. In manufacturing companies staff may be required to wear
overalls and operationally effective and hard-wearing clothing; while there are
strong and sound operational reasons for doing this, the behavioural message
issued is one of role reinforcement - the members of staff are also making a
statement about their own role, as well as protecting themselves from their work
environment in the wearing of these clothes.
Other general manifestations of role are reinforced by job title (see Summary
Box 3.7), which may have implications for class, status, power and influence
around the workplace. Other aspects are related to and reflected in: whether a
person has a company car, their own office, their own secretary, can sign their
own letters, can authorise expenditure (and if so, up to how much), whether they
must clock on and off, and so on.
SUMMARY BOX 3.7 Job Titles and their Inferences: Role Constructs
Because of their universality, job titles carry strong and distinctive perceptual
messages across the whole of society at large as well as within the business sphere.
Here are some archetypes:
• Manager: is deemed to hold a position of authority and responsibility; to dress

in a particular way; to have a good level of income; to have continuity and
stability of employment; to have aspirations to be senior manager or director;
and so on.
• Professor: is deemed to be clever; to work in a college or university; to have
had work published; to be an authority in his own chosen field; to be invited to
work on committees; may also be untidy and absent-minded; and so on.
• Operative: is deemed to be a wage earner; to work regular hours; to have a
wife and family; to like life outside work; to like bars and pubs; to take two
weeks' holiday; and so on.
None of these is intended either to be the truth or even accurate; nor are they
designed to generate any debate about the veracity of the qualities themselves.
They are simply representative of the ways in which pictures are drawn and
built up around people as the result of knowing their occupational role.
• Role ambiguity and uncertainty

This exists where a definition (perceptual or actual) of the role of the individual is
not comfortably or satisfactorily achieved. This is likely to arise from a
combination of uncertainties, mismatches and mixed messages related to: the
nature of the work that the role holder is to carry out; how this work is to be
directed, measured and evaluated; where ultimate responsibility for it lies;
expectations related to level, quality and intensity of job performance; prospects
for enhancement, development and advancement; levels of pay and reward; and
components of the reward package itself. If they are not in accord with each
other, if they do not harmonise and match and meet universal expectations, then
feelings of uncertainty and ultimately rejection come about on the part of those
who have to deal with the role holder (see Summary Box 3.8).
• Role conflict
This is where the uncertainty and ambiguity develops into the need to adopt more
than one role in the same situation. Managers will almost inevitably be subject to
this as they both reconcile and carry out the roles of leader, director, confidante,
friend, disciplinarian, recruiter, developer and dismisser in relation to their staff.
In other situations, work pressures may impose on the domestic or personal life
SUMMARY BOX 3.8 Role Ambiguities

People have a great deal of difficulty in handling these ambiguities at all levels; and
where two or more conflicting messages are offered all are normally rejected except
for one.
Thus the woman who is both a loving mother and a shop-lifter will normally be
judged on the basis of one role or the other, but not both.
The man who is both an expert and unkempt will normally either have to change
his appearance or lose his expert status.
Customs and border officials tend to stop untidy individuals, or untidy old or
decrepit cars at the border crossings where they work; this is because such people
look like bad people and not because they are bad people necessarily.
Kim Philby, the Briton, who was such a notorious agent for the USSR for a
period of 20 years in the 1940s and 1950s was able to get away with it for so long
because he came from the same background as those with whom he worked. He
was able to survive persistent rumours about his loyalty over this period of time
because those with whom he worked could not grasp the basic concept that he
might indeed also be a traitor.
of the job holder - in relation, for example, to pressures to work overtime, stay
late, attend at weekends or take work home.
• Role confidence
This represents the relationship between the role holder and the role. It represents
also the extent of confidence, pride, joy and fulfilment that the individual has in
his role (any role, it is not confined simply to those occupied at places of work).lt
also reflects the self-worth, self-image and self-esteem of the role holder in
relation to his/her role. If any of these are lacking the level of confidence is
reduced and the role holder may be expected to move on, rejecting the current
role. If there is a serious problem here he may simply leave the role altogether.
This may also apply to roles within jobs and occupations as well as to the whole
occupation. Such aspects of the role may be rejected for reasons to do with pride,
perceived futility of the task, a perceived or real loss of status or prestige
associated with carrying out the particular task, and negative associations with
the person who previously carried it out. Negative role confidence may also be a
general factor or symptom of low morale and absenteeism, as well as fostering
neglect of those roles that hold no particular interest for the role holder.
• Conformity
The last part of this chapter is concerned with consideration of the pressures
placed on individuals to accept the norms and values of the organisation in
question, and to conform to them.
Much of this will be dealt with at the induction stage. The required standards
and attitudes are promulgated then; the norms of the organisation, group and
workplace are made clear, as are its customs, modes of dress, modes of
behaviour, attendance patterns, work manners and ways of working and
performance measures. The individual has the basic choice of accepting or
rejecting these. He may in accepting them do so passively only, or he may fully
internalise them (see Summary Box 3.9). As an acceptable minimum there is
invariably both organisation and group pressure at least to comply; the penalty
for non-compliance is equally invariably that of rejection.
SUMMARY BOX 3.9 Intemalisation

Increasingly, managers are expected to internalise rather than simply comply.
Organisations expect it and it is manifest in the induction and orientation
programmes that are put on for such staff. It is related to an increasing general
perception that organisations cannot be all things to all people and that they will no
longer accommodate or offer the range of tolerance that may previously have been
expected or, indeed, present. Furthermore, a relationship between conformity and
business output and profitability can be demonstrated at organisations like The
Body Shop, Sony, Nissan and Canon.
• Conclusions
The main lessons to be learned relate not only to an understanding of the areas of
leadership, motivation, groups and the individual as concepts and subjects in
their own right, but also to the extent to which they impinge on each other. They
are all inter-related and both the concepts and their application must be seen in
this context.
Managers must be able to assimilate all of this and understand the complexities
involved, if they are to be able to adapt them in particular situations and use the
processes, skills and qualities inherent in them in the promotion of effective and
successful business activities.
They must also recognise that which is relevant to particular situations and
that which is not. A team performance, for example, may be so bad that the team
in question may simply need to be disbanded and a new one formed; no amount
of leadership or directive expertise or motivation initiative is appropriate in such
circumstances.
Thus, managers must have a full and complete understanding of why this could
or might be so, and in order to do this must have grasped the principles outlined
in this chapter, their complexities, and the ways in which they interact.
CHAPTER 4
The management of
organisations
This chapter is concerned with the organisational aspects and concepts that must
be grasped and understood if effective managerial practices are to be constituted
and adopted. The chapter deals with the nature and complexities of each in turn;
and the inter-relationship between them.
There are five matters for consideration:
1. The structure and culture of organisations, that is the configuration of

the ways in which they are designed and put together and given life in the
pursuit of the operations that they are to carry out and for which they have
been constituted; the ways in which they are to do things; the core values,
attitudes, beliefs and ethics that are to prevail as they operate.
2. The systems of organisations, that is a configuration of the ways in which
they devise and develop both core and support ways of working, how these are
energised, what their purposes are, what their components are and how they
inter-relate.
3. Processes of communication, the oil of the organisation's wheels so to
speak. Effective communication processes are the essential prerequisite to
productive harmony, organisational effectiveness, customer satisfaction, sta-
bility, permanence and development. both in themselves and in relation to
business sectors and niches. Also included in this section is an identification of,
and an illustration of. the process of perception; that is, the ways in which
humans both limit and compartmentalise the great range of information that is
presented to them at all times and in all places.
4. Processes of decision-making, the nature of executive choices; the means
of doing this to ensure that as far as possible what is executed is both
successful and effective and also dynamic and responsive where necessary
or desirable.
5. Organisation and employee development, that is the process and means
by which both organisations and those who work within them are directed and
empowered to grow, extend and improve their qualities, capacities, skills and
knowledge. Organisation and employee development also have effects on
structure, culture, systems, communications and the decision-making pro-
cesses, improving capacities in each of these areas. Finally, as we have seen,
this is an area of special concern to the manager in the pursuit of his chosen
profession.
Before considering this global and organisational standpoint, it is necessary to

make clear the perception that all organisations at their inception must have their
74
The management of organisations 75
own clear vision, their own 'guiding light' - an articulation of purpose, if they are
to be successful. A clear vision for the organisation leads to clarity of strategy,
planning, purpose, priorities and motivation; it gives the required standpoint for
the channelling of activities and resources in pursuit of those activities; and it is
the fountain from which the pride and identity of those who are to work in it
flows. It is present in each of the areas to be covered here. Its affects each
positively when it is clear; and negatively when it is not.
• Structures and cultures

The structure and culture of organisations are critical to their success. Both the
organisation form adopted - the structure- and the collective beliefs, values and
ethics - the culture - must match the overall purpose of the organisation, in such
ways as to ensure the best possible return on investment made; the most effective
relationship possible with its markets, customers, clients, and environment;
performance; responsiveness and adaptability.
It is necessary to recognise that no two organisations are exactly alike, and
that, whatever the similarity in output, product or service, ways of working,
shared values, management style, and the relationship with the market, may
differ widely.
It is also necessary to remind ourselves at this stage that the business sphere is
in a great state of flux. Global influences abound. Concepts of best practice are
constantly being updated. Technology is not constant; it is constantly being
updated also, and being made more universally available. Rates of product,
market and distribution charges are accelerating; as is entry to, and exit from,
market and operational sectors. All organisations, in inter-relating with these
elements, affect their own structures and cultures.
All organisations therefore are different. They have different methods of
operation and working, different ways of doing things, different values, attitudes,
beliefs and norms - different personalities, in fact. They are as different from
each other as people.
It follows from this that structures and cultures vary between organisations;
that there is no correct method of organisation, nor set of values to be adopted;
but that each organisation must understand the factors that contribute to it, and
from this, actively define and design that culture and structure that is most
appropriate to itself.
There are nine such contributory factors:
• Age and history of the organisation

The degree of prominence that it has established, and those elements that are
related to age and history: its traditions; its reputation and how this has arisen; its
image; its standing in both its business sphere and its local community are
involved here. Young organisations will be spending time and resources

generating these matters for themselves; while those of long standing will have
these elements well established; in both cases they may be 'right' and 'effective',
or 'wrong' and 'ineffective', and require managerial understanding, acumen and
activity either to develop them further, or to take remedial action.
• Size of the organisation

And the related elements of spans of control; managerial and administrative
structures; information systems; other control mechanisms; and the ways in
which organisation permanence is to be achieved. Even for the tiniest of
undertakings, some method of recording is required. The larger the organisa-
tion, the more orderly and organised these elements will tend to be.
• The nature of the work

This impinges on both culture and structure, in that people who are highly
professionalised, or trained, bring a distinctive set of values with them, which rub
against those of the organisation. They require harmonisation, as far as that is
possible, in order to resolve potential differences and generate a positive and
productive environment. Highly ordered and regulated tasks, and series of tasks,
will be mirrored in the organisation of people to carry them out. At the other
extreme, projects and innovations may require little formal direction, and leave
much to the self-motivation and self-organisation of those carrying them out. Or
the matter in hand may be research (medical or technological research, for
example) which may take years to come to fruition, and involve a level of
investment that accommodates blind alleys, false hopes, and extensive testing and
retesting, before a product can be offered on the open market.
• Technology
The relationship between culture, structure and technology is mainly to do with
work organisation. Small-scale activities require a lower and more flexible
organisation than those to do with large-scale, permanent, or mass output
methods. In the latter case, economies of scale, and the qualities that arise from
continuity and performance arise; as do also questions of production and work
group organisation and departmentalisation. From this, there are implications
concerning alienation, dysfunction, and organised labour and representation,
that must be addressed. How organisations and those responsible for designing
them, tackle these matters, also bears directly on structure and culture.
The speed at which technology changes or becomes obsolete must also be
considered. Organisations cannot seek permanence or stability in an era of rapid
technological change or innovation; while where a technology is deemed to have
a degree of permanence, a more subtle and organised structure may be devised.
This is affected finally by the levels of investment made in technology, and the
returns required. Something that is very expensive with a short useful life puts
pressure on organisations to maximise the returns very quickly, before it becomes
obsolete; while a ten-year capital programme will require a structure that can
exploit fully such a long term commitment, and permanence as well as
effectiveness must be sought.
• The environment
In this context, this is the relationship between the organisation; its markets,
customers and clients; its competitors; and the widest environment of all -
including confidence, expansion, contraction, economic and social factors. States
of flux, change and diversity require organisations that can cope with them,
respond to them, and indeed affect them.
The related elements of the expectations of the society, its ethics and values,
that impinge on the operation of organisation, must also be taken into account.
Finally, the degree of stability of the environment must be noted. Related
matters here include threats and dangers of organisation collapse or takeover,
loss of markets, and loss of standing or confidence. The overall ability of the
organisation to survive and prosper in relation to its environment, and to fight
battles with it when necessary, must be considered.
• People factors
This reinforces the need not only for capable staff, but also for people who can
function in the organisation as it is constituted. Relationships can be drawn
between the personal characteristics and attributes of status, ambiguity, stability
and identity, and their appropriateness to the form of organisation in question.
For example, the person having a high desire for a senior-standing title will not
get this in a small, flexible organisation, nor will he gain the same measure of
order and stability from this organisation, as from a public service or government
department. Work can be scaled up or down according to the qualities and
capabilities of those involved. Persons of high quality and ability are more likely
to be frustrated in stable and permanent organisations than in those which are
flexible and dynamic (see Summary Box 4.1).
• Organisation purpose
The extent to which such purpose is clear, articulated and understood; and the
simplicity or complexity of goals, also impinge. Within the overall mission
statement, there are also likely to be subordinate aims and objectives which may
conflict with the main purpose, and organisations have to accommodate these as
effectively as possible.
SUMMARY BOX 4.1 Personal Values
Everyone needs to be aware of their own personal values and value systems so that
they may deal pragmatically with any situation that may arise. This awareness
allows for any marked differences between individuals or between an individual
and the demands of the organisation to be taken into account before action of any
sort is contemplated. Value conflicts often arise at places of work; what is necessary
is to recognise that this does occur and to take action to formulate a management
style that can accommodate it where necessary and reconcile divergent values.
These values may be summarised as follows:
• Theoretical; this is where everything is ordered, factual and in place; it relates

to what is socially acceptable and to concepts of fairness, reasonableness and
equity
• Economic; this is taking the pragmatic approach where the achievement of
practical, effective and profitable activities is most important; it involves making
the best practical use of resources and is result-orientated
• Aesthetic; this is the process of seeing and perceiving beauty; and relating
things that are both positive and desirable in relation to all the other senses
• Social; this is the desire to share emotions with and other people; it also
includes a configuration of all the other 'people values' -that is, concerns of
loyalty, honesty, openness, trust and honour
• Political; this is the basic regard that people have to the ways and choices
concerning the ordering of society and its sub-sections and strata
• Religious and ethical; these are the values related to the dignity of mankind,
to the inherent worth of people and to the morality of human conduct; such
values are also related to the designated and defined religious beliefs and value
systems ordered and placed upon parts of the world by priesthoods.
There are also the effects of those in the organisation on its purpose. For a
variety of reasons - shifts in talents and qualities and technologies; new
opportunities; or market changes - the organisation may change direction or
purpose, and this in itself will affect culture, structure and style.
• Shared values
A clear set of values or direction offered by an organisation to its people, its
customers and its environment, gives a clear sense of identity. Those who identify
with them, and adopt them, will come and do business with the organisation;
while those who do not, will not.
The adoption of shared values is central to the generation of high levels of
commitment and motivation among the organisation's staff, in particular.
Recognising that people bring a diverse range of qualities to an organisation is
essential. Giving them a clear corporate purpose that is both above individual
aspirations, and accommodates them (as far as possible at least), should be a
major function of the articulation of shared values. It is also instrumental in

articulating the ethical and moral stance that is taken in organisations.
• Management style
There is a close inter-relationship and interaction between this and the work that
is done, and the way in which it is done. It is affected overall by the size,
complexity, scale and scope of the organisation. More specifically it will be
affected by spans of control; hierarchical considerations; degrees of conformity;
alienation; the nature of the work; the inherent commitment, qualities and
capabilities of the staff carrying out the work; and the expertise and capacities of
the managers and supervisors. There are also wider considerations of the
coercive-participative spectrum to be taken into account.
• Archetype cultures and structures

• Power culture
This is to be found in small pioneering organisations; some political institutions

and i:rade unions; and project groups and certain specific departments both of
multinationals, and public and municipal services. This culture depends on the
figure at the centre, the source of power. Everyone else involved draws their
strength, influence and confidence from this centre, and requires the continual
support of it to ensure their prosperity and operational viability.
Entrepreneurs generate power cultures in that they attract those who have faith
in them, and who wish to be involved in this kind of organisation; their position
is thus dependent upon the success of the pioneer. Such organisations move
quickly in response to opportunities, and to the inspiration of the person at the
centre.
The main problem that a power culture must face is that of size. As it grows
and diversifies, it becomes difficult for a power culture to sustain itself, unless it
floats off its peripheral operations, or unless it places in them figureheads directly
related to, or in the confidence of, the source of power.
In the longer term, there is also the question of prominence, of what happens
when the person at the centre of power passes out of the organisation. In
situations where they have generated the ideas, energy, identity, images,
production and operational methods, a void is left when they leave or die.
The structural form of the power culture is like a spider's web- the strength of
it comes from the centre (see Figure 4.1), and the main relationship between
subordinates is with the centre (though they will have parallel relationships also).
In the true power culture, the continued prosperity of the subordinate is
dependent upon the continuing, confidence in them of the source of power -
The key relationship is with the

centre or source of power, hence no
joining lines between the 'spokes'
The key issue is the continuation of

confidence and reciprocity between
the two
Figure 4.1 Power culture + structure: The Wheel
once this is lost, the subordinate normally has to move away (or is dismissed or
marginalised).
• People/person culture
The people/person culture exists for the people in it, where a group has decided
that it is in their own overriding interests to band together, and to produce an
organisation for their benefit. It may be found in certain research groups; a
university department; music, rock and jazz groups; family firms, and companies
started by groups of friends, where the first coming together is generated by the
people involved rather than the matter in hand.
There is little formal organisation or structure; total flexibility, total interest in
the work, total interest in the mutual welfare and benefits of all those concerned
(see Figure 4.2).
Such organisations will exist in this format, or from this standpoint, for a short
period only. In the interests of permanence and continuity, and prosperity and
success, the initial coming together of people must be dovetailed with attention to
task, markets, invention and sales.
Such organisations thus achieve permanence only when elements to be found in
the other archetypes are present. People cultures may achieve this either by
forming their own administration or management function to support the work
of the people, or by hiring an agent or management group to do it for them.
Such organisations are very rare. However, strong characters or experts may
find themselves in more formal organisations, without allegiance to them, as this
is the only way in which they can find an opportunity to practise.
The key relationship is between the

people; what binds them is their
intrinsic common interest
Hierarchy and structure may evolve
incidentally; they too will be driven by
this intrinsic common interest
Figure 4.2 People/person culture + structure: The Mass
Such organisations have no structure, except for the relationship with any
support or administrative function . The structure form is replaced by the energy,
commitment and confidence that members have in each other, and this in turn
becomes both the organisational method and control mechanism.
• Task culture
These cultures are to be found in project teams; marketing groups and market-
oriented organisations. The emphases are on getting the job completed, keeping
the customers and clients satisfied, and responding to and identifying new market
opportunities.
Such cultures are flexible, adaptable and dynamic. They accommodate the
movements of staff necessary to ensure effective project and development teams
and continued innovation; and concurrent human activities such as secondments,
project responsibility, and short term contracts.
Such cultures operate most effectively in prosperous, dynamic and confident
environments and markets; they may also generate niche activities in these, and
create new openings to be exploited. Their success lies in their continued ability
to operate in this way.
They fail where these conditions are not present. Controls are also difficult to
devise that are in themselves effective. Control may be delegated by top
management to group, team and project leaders; but may impose conditions
and constraints inappropriate and imperfect to the given situation.
The archetype structure for this is the matrix or net (see Figure 4.3), but this
does not give a true reflection of the fluid and flexible nature of the task culture;
the format must also be regarded as elastic (rather than rigid) if a full
understanding is to be achieved.
• Role culture
Role cultures are found where organisations have gained a combination of size,
permanence and departmentalisation, and where the ordering of activities,
The key relationship here is with the task

The form of organisation is therefore fluid and
elastic
The structure is often also described as a
MATRIX, or GRID; none of these gives a full
configuration - the essence is the dynamics of
the form, and the structure necessary to ensure
this
Figure 4.3 Task culture + structure: The Net
preservation of knowledge and experience, and stability of them are important

(see Figure 4.4) . Roles are defined and described and ordered, and persons are
allocated to them. The role culture reflects the bureaucratic concept (without
necessarily any of the negative or pejorative connotations that have come to be
ascribed to it in Western business and commerce).
Role cultures operate most effectively where the wider environment is steady,
and a degree of permanence is envisaged; where there is a fair element of
confidence and prosperity- a seller's market; and where fairness and equity are
RANK
1-------- -
2------ The key relationship is based on authority
3--- and the superior-subordinate style of
relationships
The key purposes are order, stability,
permanence and efficiency
STEPS OF AUTHORITY
CHIEF
~!
The 'Greek Temple' format delineates
b
function as well as authority
FUNCTIONAL PILLARS
Figure 4.4 Role culture + structure: The Pyramid or Temple

required - in the delivery of public services in response to needs assessed by

present criteria, for example.
Such cultures tend to stifle creativity and entrepreneurism in the interests of
stability. They also generate frustration among those who wish for a greater
control over their aspect of the organisation, or to push beyond their defined role.
They also tend to preserve, rather than update, their rules and procedures.
Hierarchical structures derive from the role culture. As well as the division of
work, division of responsibility, authority and accountability are present. The
result is therefore a temple structure, which, as in Figure 4.4, may either be in the
'Inca' format, representing a series of steps up; or the 'Greek' format, in which a
series of functional pillars supports the organisation and gives it permanence.
• Social characteristics
These are drawn from a variety of sources and influences; national, regional and
local characteristics may impinge upon the ability of an organisation to organise
or regulate its work in the ways in which it desires; there may be strong pressures
in different cultures not to work on particular days of the week, or at certain
times of the day. It may be necessary to generate a commonality of purpose in
order to accommodate and rise above social differences (quite apart from sound
operational reasons). It is necessary in any case to recognise the hopes and
aspirations of the workforce, and the community from which it comes, as factors
that affect the culture of organisations.
Consideration must also be given to concepts of class and status, and the
trappings of success, that are important to some people on the one hand; and
which, on the other, must be offered in certain measure if people are to be
attracted to certain jobs and roles in organisations. Esteem and self-esteem, and
respect and self-respect, are general social concepts that have to be recognised
over a great range of organisational activities.
This is compounded when those with a high degree of professional or
otherwise collective identity are hired; staff from these backgrounds must be
provided with ways of working that match their social or expert identity with the
requirements of the organisation. This impinges on both culture and structure.
• Culture and structure design

The importance of culture and structure, and their appropriateness to the work
of the organisation, is a matter of much current concern. In particular
organisations with long traditions of order, stability and permanence (both in
themselves and in their dealings with their clients) have struggled to respond to
changing requirements, new opportunities, and different priorities.
It is recognised as being incumbent upon organisations, and their managers, to
define and devise the structure and culture that is required for continued and
successful operation in the chosen field. For this to be successful, consideration is
required of each of the elements outlined above, and management decisions

taken, based on a proper evaluation and analysis of them in relation to the nature
of work, the market and environment.
Whatever is done it must be positive and not simply allowed to emerge by
default. The values, aspirations and direction of the organisation must be
conveyed, to all those who come to work in it, and all those who do business
with it, in its own terms. In particular regard to staff, this may involve a mutual
rejection - organisations will accommodate dissenting staff to the extent that
dissent can be harmonised or made productive; to go further requires a dilution
of core purpose and values. This remains true even in the pluralist perspective- at
no stage is this required to be an 'all things to all people' philosophy.
The organisation's priorities also impinge on culture and structure, and these
must therefore be clearly and accurately articulated. It follows from this that the
relationship between sub-systems and support systems must also be clear. This
includes control mechanisms, information and communication systems, and
support functions (such as finance, secretarial services and personnel).
This is not rigid. The design of organisations and their cultures and structures
is not the equivalent of designing buildings. Flexibility, fluidity, responsiveness
and initiative are all essential components of the establishment of, and ordering
of, the structure of organisations. Stability, too, is an essential element, but this is
not equivalent to rigidity. Rather it is the acquisition of those elements that will
give a true permanence and continuity in a turbulent and changing business
sphere, where the nature of competition is global, and where managerial
expertise is constantly improving.
The final element of structure and culture design to be considered is the inter-
relationship and interaction between the different departments and functions of
the organisation, its production and support functions, its marketing, its research
and development, and the systems that are introduced to facilitate their
operation. These represent the day-to-day functioning of the organisation. They
give both permanence and order to structure and culture, and also provide the
basis on which they are to be developed for the future.
• Systems in organisations
It is now useful to consider the relationship and interaction between organisa-
tions and their systems, and the effects of each on the other. Systems are devised
in relation to the structure and culture of the organisation to make it work and to
harmonise the organisational elements, productive and effective activities.
It is useful to distinguish between main and supporting systems. The main
systems are those that are devised to ensure that the core purpose of the
organisation is successful and which give life to its front line functions and key
activities. Those systems that support this are provided in order to harmonise the
work of the rest of the staff and functions in ensuring that the front line functions
are provided with the resources and sub-activities needed, both to become and to
remain effective.
It is also useful to distinguish the concept of a maintenance system; and as in
operational or technical terms this should (figuratively) consist of both a system
of preventive maintenance and a system of emergency or crisis handling.
Preventive maintenance systems are devised to ensure that there is a capacity
in the organisation for identifying in advance likely problem areas, organisation
and communication blockages and breakdowns, structural and cultural dysfunc-
tions, as well as precise operational and staff management issues; and to provide
the means of accommodating these without detracting from the overall
effectiveness of the organisation. Crisis systems are those that ensure that the
genuine emergency does not cause complete organisational seizure or break-
down. As we have seen elsewhere they should not constitute the managerial
norm; a crisis system constitutes rather the ability to call on resources as and
when they are needed. However, if the crisis approach is the organisation's
managerial norm, it is very expensive in resource terms as well as stressful and
destructive on structure, culture and staff.
In general, therefore, there is a requirement for systems to be well defined, yet
flexible and adaptable. Organisations require their systems to work for them and
not to be hidebound by them.
This is the basis, therefore, for considering any organisation as being
comprised of systems; and that one of its general functions is to reconcile the
conflicting and divergent pulls of such systems into effective and successful
business practices.
At its simplest the systems model is as follows: the conversion of INPUTS via a
means of PROCESS into OUTPUTS (see Figure 4.5).
In organisational terms such systems are invariably open, that is some of the
inputs are either wholly or partially beyond the organisation's control and
concern such matters as changes in taste and perception and market activities, as
well as more general interactions between organisations and their environment
having regard to such things as boom, recession, social, political and ethical
factors.
The systems that are to be found in organisations are more specifically
concerned with:
• Production, service and the management of operations and projects

• Maintenance functions
• Support functions
• Resource gathering, organising and prioritising
• Systems for the management of, and resolution of, conflicts
• Communication and management information.
There are formal or structured systems developed by the organisation for its
greater operational efficiency and effectiveness; and informal systems developed
by the staff to facilitate their own place in it.
00
0\
~
....
-
d
it
("\
....
c;·
INPUTS PROCESSES OUTPUTS ~
Raw materials Technology Products ....

0
Talents Organisation Goods
Capacities Procedures Services
s:
;:.
~
Energy Conversion Offerings
Resources ~;s
Limitations <1>
~
Constraints ....
Purpose: to demonstrate and illustrate the range and mix of pressures and effects on the organisation; and to relate these to the
requirement for products, goods and services, and the source of these.
Figure 4.5 Organisations as systems
Source: Katz and Kahn (1978).

These systems may be largely: social, that is their primary purpose is to provide
for effective interaction between persons; or technical, that is built up and around
a production service or information process in which machinery and equipment
feature prominently, as does the staff technology interface; or they may be a
combination of the two:
For the system to operate effectively a number of characteristics must be present:
• Energy: required to give the system life and make it work and continue; people
are required to see that this happens
• Returns: part of the returns on the outputs will be used to ensure the fresh
flow of inputs into the processes
• Steadiness and stability: most systems work best to a stable flow of work
rather than to peaks and troughs; if peaks, pressures and over-pressure do
occur steps should be taken to recognise these, address the reasons for them
and where possible take remedial or modifying actions
• Balance: of input processes and output to ensure a steady flow of work and
the avoidance of blockages and bottlenecks
• Equifinality: the concept that similar outputs can be achieved from a variety
of systems and processes; this is the recognition that no one system will ever be
right in all situations
• Flexibility and adaptability: concerned with the ability to respond effec-
tively to changes in the environment, markets, perceptions and tastes; and to
take advantage of the creative and dynamic processes inherent in them
• Coordination and control characteristics: that ensure that the steadiness
and balance is maintained.
A number of conclusions and inferences may be made from this:
• First, there is clearly no best way to organise; as the environment changes so

the systems must be flexible and responsive
• The environment changes in both predictable and unpredictable ways; the
challenge for managers is to anticipate the unexpected by building requisite
variety, flexibility and learning capacities into their organisations
• Due to the relationship with the environment, managers must spend time on
external issues to manage organisational adaptation and create more
desirable contexts for continued operations
• Each input, process, output, cycle changes the nature of the organisation's
social and technical resources, presenting an opportunity to strive for
optimisation
• The environment is dynamic, not static or rigid. This allows for limitless
opportunities for change to occur; investments in environmental adaptation
and transformation are as essential to success as investments in capital
equipment and staffing; the more complex and turbulent the environment,
the more essential this investment becomes.
Environmental, technological and social changes are the primary cause and
inspiration for organisational improvement. Finally, investment in staff as part of
this optimisation process is also essential if the whole is to be a creative,
progressive and profitable process.
• Communication
All managers should be expert communicators; they must at least be adequate
and competent at it. It is essential first that they understand the dimensions of
communication.
Communication is all-pervasive and goes on all the time. It is both an active
process and also takes place 'in absentia'. Organisations and their managers
produce communications of all kinds which are received by their staff and
customers and the wider environment; even where these communications are not
issued directly, messages are nevertheless perceived by the receivers to have been
sent in terms either of neglect, ignorance or indifference.
• Perception
The first part of the communication process to be understood therefore is that of
perception. Most people assume that everyone perceives things in much the same
way; however, evidence suggests that perception is both a creative and responsive
process; and one by which individuals construct and limit their own unique view
of the world. They pay attention to some, and ignore or disregard other,
information. How the world is seen counts much more than any true objective
reality as this also may simply be a feature of the perceptions of the individual. It
is certainly true to say that people both organise and limit the information that
they receive; this is their only means of managing and understanding it. Man is by
no means a passive receiver of data.
Incorrect perceptions hinder good working relationships and obstruct clear
communications. Inter-personal perception can be defined as the forming of
judgements by people about other people. The quality of these judgements is
vital at the place of work. In the social setting it may not matter so much if
perception is in error because the people concerned may choose to relate or not to
relate to each other, but in the workplace there may be no such choice. People
may have to work with others, irrespective of any like or dislike. If behaviour is
perceived by others differently from the way intended the probability of working
effectively with them diminishes. The greater discrepancy there is between self-
perception and the perception of others, the greater the probability of poor
communication and misunderstanding. If an understanding of how information
is selected, limited and biased can be developed then it becomes possible to adjust
for errors.
Information is received through all senses and is open to interpretation.
Whatever is written is also open to interpretation in both letter and spirit.
Whoever is met or spoken to is assessed in the same way. In these situations there
is actually so much information available and so instantly that it is necessary to
limit it in ways that enable it to be managed, to be given meaning and to be put in
context. The basis for this and the concepts that are included in it are as follows.
• Halo effects
Strong, positive or negative characteristics (often visual or tactile) are either
apparent or inferred and the rest of the person's capabilities and personality traits
are assumed from this. This is where, for example, a strong handshake given and
received at the point of meeting someone leads to an inference that they are a
strong character.
• Stereotyping
Stereotyping is a development of this. A set of characteristics are assumed in
particular categories of people; and particular categories of people are assumed
to have these sets of characteristics.
• Self-fulling prophecy
From this perceptions are developed and rationalised still further, so that people
see only what they wish to see and hear only what they wish to hear and edit out
the bits that do not fit in with this preconceived or pre-perceived picture (see
Summary Box 4.2). They therefore come to the logical conclusion that the person
with the weak handshake is a weak person because they pick out his other
negative characteristics and edit or reject everything else about him.
• Implicit personality theory

People assume that particular characteristics go together- such as kindness and
gentleness; or violence and dishonesty - these are related characteristics with
which they may be happy and contented. Different approaches are necessary to
accommodate the person who is both kind and violent, for example, or gentle
and dishonest. Robin Hood, for example, exhibited all of these characteristics;
and this is cloaked in folk heroics to accommodate his violence and dishonesty.
• Mythology
Most people put a largely spurious rationale on the ways in which they organise
this information. Common phrases present are 'in my opinion', 'in my
experience', 'in my day we used to .. .' and 'I always ask this question and it
never fails'; and so on.
• Adaptation
This is the definition of 'perception as a continuous process'. Our view of the
world is influenced directly by the circumstances and surroundings in which
SUMMARY BOX 4.2 Perception
• When people exhibit strong and conflicting characteristics, the general

response on the part of the rest of the world is to reject or mistrust them, as
accommodation and acceptance require an understanding of the limitations of
perceptions at the point of meeting and dealing with them.
• A combination of the various perceptual processes is to be found in the 'pre-
conceived idea' and 'pre-judged case'; what invariably happens is that a
situation arises where the individual can bring different familiarities and
experiences to different aspects of it; they then reconstruct these for good or
ill. to the matter in hand, and jump to a conclusion and solution.
• It is possible through the observation of an individual's activity and behaviour,
to INFER his attitude. It is NOT possible to prove it; and if this is the overriding
requirement of the moment, further action must be taken in this regard to
overcome these inferences and gain a true picture.
• The adaptation process is constantly in action. People over-respond to
someone who is polite if the last six others that they have met have been
rude; the person driving home in a rush from work may fear the wrath of their
partner if they are late; if they crash the car in so doing, the driver immediately
feels lucky to be alive; the feelings of the person waiting for them change from
anger to anxiety and then relief.
• There is also the question of 'construct reconciliation' to be addressed;
examples of this include reconciling the brilliant performance of an actor with
his own personality; the radical politician or religious leader in these roles, with
that of next door neighbour or travelling companion; the children's matinee
idol who refuses to sign autographs.
In general. a grasp of the basic principles of perception on the part of those in
managerial roles at least enables the questioning of certain supposed 'rules'
and 'facts'; it should be part of the process of generating a healthy scepticism
and genuinely enquiring mind, when faced with such perceptual 'absolutes'.
people find themselves. Part of the process also relates to priority levels- what is
important now; and what is important for life, work, leisure, and so on.
• Personal mapping and constructs

In this case what is actually occurring is a process by which people, situations,
activities, images and impressions are being fitted into the perceived map of the
world in ways which can be understood, managed and accommodated. The
information thus gathered is broken down into constructs or characteristics
which may be categorised as follows:
1. Physical: whereby we assume or infer the qualities of people from their

appearance, racial group, beauty, style, dress and other visual images
2. Behavioural: whereby we place people according to the way they act and
behave or the ways in which we think they will act and behave
3. Role: whereby we make assumptions about people because of the variety of
roles they assume; the different situations in which they assume these roles;
their dominant role or roles; and the trappings that go with them
4. Psychological: whereby certain occupations, appearances, manifestations,
presentation and images are assumed to be of a higher order of things than
others (part of this is also sociological); this reflects the morality, values and
ethics of the society of the day as well as the environment and organisation in
question.
What is outlined here is a basis of perception only. However, there is no right

or wrong; this is merely a basis for the understanding of the ways in which human
beings perceive, edit and organise the information presented to them from their
world. It constitutes an appreciation of the processes and limitations of a business
sphere and also the wider world. In this particular context an understanding of
the basic principles of perception is essential for all those who seek to manage
people. There are direct implications here for staff management; recruitment and
selection; industrial relations; performance appraisal; budgeting and the beha-
vioural aspects of that; marketing and sales; and project management; as well as
across the rest of the managerial activity.
• The communication process

It is now necessary to turn to the more direct aspects of the communication
process.
• Passive communication
Passive communication is what occurs in any case and represents a lack of
purpose, direction, organisation, management or method in relation to the
communications and signals sent out. The style, type and language of commu-
nication, through absence or indifference, cause the generation of and reinforce-
ment of attitudes and behaviour related to negativity, alienation, uncertainty and
anxiety. Inevitably there are gaps between what people want to know and what
they do actually know and this constitutes the ingredient necessary for the
formation of informal networks and a 'grapevine'. It is also very unproductive
and debilitating for both morale of staff and organisational performance.
• One way communication

One way communication is where messages are issued by the organisation and its
managers without any regard for those at whom they are pitched. It is widely
perceived as being directive or prescriptive; however, it can also contribute
greatly to the process oi debilitation referred to above, in that the receivers of the
messages will not necessarily perceive in them anything of value and will rather
wait either for their own language to be used or a message with more clarity of
purpose to be issued to them before actively responding.
• Active communication
Active and two way communication constitutes the converse of this; messages are
issued that everyone can understand and act upon. Language, media and methods
of communication are appropriate to both the messages and material concerned
and the audiences that are being addressed. It is the basis for effective work
transactions, the organisation sets its own modes and styles of communication
and does not allow these to emerge or form by default. The staff understand both
the wider situation and their own place in it. They understand the changing and
developing nature of their environment and business sphere and their changing
and developing place within it. Dysfunctional manifestations of bad commu-
nication such as low morale are minimal.
• Distortion of the message

However, it must be recognised that messages and therefore the overall
effectiveness of communication systems may be limited by both environmental
and operational matters. The senders of messages may filter items out or include
elements that have no organisational status. They may bias, skew or distort the
messages for their own ends.
The position of the sender may affect the message also. The rest of the staff
may not trust them or have confidence in them; or they may be known to have
their own axe to grind. They may have been proven false in the past. The position
of relative status and authority between senders and receivers may be too wide to
have any meaning or too narrow to have any authority; or the sender of the
message may have lower status than many of those who are to receive it.
Information overload and use of inappropriate media will also distort the
message. What is retained tends to be that according most strongly with the
interest of the receiver, whether or not it is important; or that which is most
immediate (for example, today's mail, or the last telephone call tend to get acted
upon first).
Information as a source of power and influence may also create a tendency for
individuals and groups to gather and store information for their own ends and to
feed it out in their own way in the pursuit of these ends rather than for the
common good.
The length of chains of information and its dissemination also distorts the
message as it is passed on; it also contributes (if it is a long chain) to the 'distance'
factor and the resulting lack of credibility or lack of impact of the message.
• Strategic communication
Use of media, channels and networks should therefore be strategically addressed
by organisations and their managers to ensure that if the message does not get
through in one way it will get through in another. As well as the use of papers,
journals, letters, memoranda and leaflets this will include briefing groups,
departmental meetings, company and organisation addresses and discussions. It

will also include electronic systems, cluster groups, work improvement groups,
quality groups, expert groups, status groups and hierarchical meetings of those of
the same rank from across departments or divisions. It will include meetings with
trade unions and professional and technical bodies. It will include the use of
informal networks and even the •canteen' or •teatime' cultures that prevail in
larger and multi-faceted organisations.
Communication is all pervasive throughout all human activities, and therefore
throughout all organisations. A strategic approach to it must be devised and
adopted by those responsible for the overall direction of the organisation. The
presence, use and value of all the processes indicated must be recognised and
maximised. The overall purpose must be to create an oil for the organisation,
smoothing and making effective in turn its operational processes. It also impinges
on all other work systems and work methods; the structure and culture of the
organisation; and its staff management systems and systems for the management
of conflict and differences within it.
• Oral communication
Any manager should be able to do this effectively in order to be able to cover the
great range of situations required in the management sphere. These are:
conducting discussions and briefings with the staff; conducting effective
telephone transactions and briefings; addressing gatherings, both internal and
external on matters to do with his business sphere; conducting effective
interviews (selection, grievance and dispute); conducting effective performance
appraisals; and organising business activities.
It is also necessary to be able to make presentations to wider audiences as and
when required. Any manager should be able to do this; otherwise organisations
must, as part of their overall skills audit, be able to identify a panel of speakers
both ready and capable of presenting a substantive and credible face of it to the
outside world. Both aspects are important - a slick presentation will lack
substance and conviction if there is no true content; while the content requires
effective delivery if it is to stand any chance of being received, understood and
acted upon by the audience. This is of equal importance whatever the matter in
hand - and the memory and reputation of any bad or inadequate presentation
always lingers long after the event.
• Written communication
This should always be undertaken with the audience in mind. Accurate, relevant,
precise and persuasive writing are all important in different situations and there
are skills inherent in this that require identification and development. The end
result aimed at should normally be the production of a concise and clear
document that the receiver or receivers will understand and be able to respond
and react to (in whatever terms that means in the given situation), and that will
provide a record of the business that is to be or has been conducted, that
contributes to the permanence and development of the knowledge and experience
of the organisation.
The objective of the piece must be clear in the mind of the writer as a
prerequisite to its success. It should be as brief as possible; if it is necessarily long,
a summary should be included. The structure adopted is also important; as well
as the use of language, the presentation and delivery must also reflect both the
nature of the material being delivered and the expectations of those who are to
read it. Finally, it should always be subject to scrutiny (and editing if desirable)
before it is sent.
Different formats are both required and expected for: annual reports;
quantitative data; journals; committee and boardroom papers; advertising
leaflets, papers and inserts; project reports and findings; qualitative data;
memoranda; policy initiatives; and complaints and responses to complaints.
The structure and presentation of these will also be determined by the audience
or audiences at which the papers are aimed and whether they are internal or
external to the organisation.
• Non-verbal communication
Non-verbal communication (NVC) either gives an impression of ourselves to
someone else without our saying anything, or else it reinforces what we are
saying. This is a simple summary of what NVC is about. The main components
that must be understood in this context are as follows:
• Appearance: This may be broken down into the component parts of age;
gender; hair; face; body shape and size; height; bearing; national and racial
characteristics; and clothing. Each of these items on its own and the combined
effect of them has great implications for: interviewing; public images; creating
impressions; advertising; public relations; salesmanship; and presentation.
• Manner: This indicates behaviour or emotion at any one time and is manifest
in the following ways:
• Expression: After the initial meeting and first impression, facial expression
becomes the focus of our attention and we concentrate most of our attention
upon it. Again this has implications for advertising, salesmanship and inter-
viewing; and also in face to face situations and interviews
• Eye contact: Regular eye contact demonstrates interest, trust, concern,
affection, and sympathy. The depth of expression in the eyes generates
deeper perception of feelings - anger, sorrow, love, hatred, joy.
• Pose: This is either static or active, and is generally used to reinforce the total
manner. This has implications in terms of bearing, arm and leg positions; and
using different parts of the body as protection, shield or expression. It helps
convey the overall impression such as relaxation, activity, passivity, anger,
leisure, nervousness and so on.
• Clothing: This is also an important carrier of meaning in all face to face
situations and provides an instant summing up of them.
• Activity: This is also important in the emphasis of meaning, and the elements
of this are now considered under a separate heading.
• Activity
o Touch
This signifies a wide range of perceptions. Consider the difference between
different people's handshakes and the impressions that these convey. Touching
also reinforces both role and sex stereotypes - the chairman banging his fist on
the desk; the woman meticulously rearranging her clothes.
0 Body movement
This may be purely functional and fulfilling requirements, for example cleaning
the car; or the movements may be exaggerated, conveying anger or high
emotions; or languid, conveying ..:omfort, ease or indolence; or sharp and
staccato, conveying forcefulness and emphasis.
o Positional communication
This may convey formality, for example, two people standing moving little,
talking earnestly at a trade gathering or in the corner. Or they may be sitting
facing each other across a large desk- this conveys a sense of security and defence
to the person whost desk it is and a barrier to be climbed by the other before he
can communicate effectively or on equal terms. Or people may sit adjacent at the
corner of a desk or table in order to talk intimately. Chat show hosts sit without
tables and ensure that their guests do not have recourse to this prop either. This
puts the professional at an advantage and ensures that the guest is sufficiently
alien to the environment to be subservient to the host. It should also be
recognised that people require a certain amount of space around them. In
Northern Europe this is about 18 inches around the person. In Southern Europe it
is about 8 to 10 inches and touching is a more common feature of NVC than in
the North. This is discomforting to Northern Europeans.
0 Other props and settings
We have already spoken of tables and chairs. Other props occur to reinforce
advertising or to convey impressions of luxury, casualness or formality in
different settings. Settings are designed to ensure that whatever happens in
them does so to the greatest possible advantage of the instigator. They may be
outdoor or indoor and may be used either to enhance an advertised product,
reinforce a position of power, put someone at ease or put someone in the position
desired by the setting director.
Broadly props and settings are categorised as familiar, imaginative and
fantastic. The latter is implicit or explicit in advertising and entertainment,
offering escapism or the promise nf something not in fact to be fulfilled. The
other two are to be found in interview and other face to face business situations.
An imaginative setting may often be used to complete the sale or to do other
business, over a meal for example.
• Discrepancy in the message

It is important to recognise that the body or setting may convey one message
while the spoken words may convey another. This is often noticeable in
politicians who, when interviewed on the television, may be uttering bland and
pleasant platitudes while their bodies convey great agitation or anger.
• Society and message

It should finally be noted that NVC, and particularly appearance, props and
settings has conditioned us into to what is expected of us and what is acceptable
socially. We thus do not attend promotion panels unshaven or dressed in a
tracksuit. There is no rationale for this other than the expectations of society and
those accorded to the particular situation and the consequent pressure to
conform. This, therefore, is a summary only of some of the main themes of
NVC. It is important, however, first of all in the way that we respond to people or
situations that we encounter; and, secondly, in recognising the way in which
people will respond to us in the variety of roles and situations in which we find
ourselves. We are then able to respond to others in ways which they expect and
which lead to productive communication taking place.
• Other aspects of NVC

Other aspects of NVC include: the use of scent and fragrance; the use of colour
and coordination of colours (again especially in dress); matters of social or ethical
importance (such as smoking); the design of office, production and marketing
equipment and furnishings. There are also, as we have seen, non-verbal or
parallel messages to be gained from certain overtly verbal communications,
whether written or spoken.
• Use of language
Effective communication only takes place if the language used is correct.
Messages have to be put across in ways which the receivers will understand
and to which they are able to respond in the ways required. Language also
conveys secondary messages and hidden agendas which in turn influence the
responses generated. In general, the simpler and more direct the language used,
the greater the chance that the message will be understood; and the more
complicated or bland the language used, the greater the chance that misunder-
standing, resistance or non-response will be generated.
Jargon and organisation or 'department-speak' will only be used where all

those involved are familiar with it. Otherwise constraints on use of language
should be confined by: the levels of intelligence or academic achievements of
those at whom it is directed; the occupational spread of those at whom it is
directed; and the true nature of the message to be put across.
Language is also used in this way to establish common ground and parameters
for the communication process. These processes are called 'codes' and may be
found in: industrial relations, sales pitches, recruitment advertising, motivation,
instructional techniques and methods, technical drawings, research and devel-
opment and accounts and budgets. Language is also used externally in the
establishment of relationships at organisational level, again for the same overall
purposes.
• Listening
Listening is both a passive and active process. Passive listening may be no more
than awareness of background noise; it may also be limited to a general awareness
of what someone is saying- 'hearing' may be a better definition of this.
Active listening is both a process and a skill. It is defined as taking a dynamic
interest in that which is received via the ears and making a positive attempt to
understand what is being listened to, responding to it and developing it. As a skill
it is developed partly through the commitment and motivation of an employee or
any individual in any given situation; and partly also by the manager or superior
of that person developing the listening medium and environment in such a way
that it is positive and productive and by motivating the members of staff to
generate their own interests in what is being put across.
Poor listening habits cost millions of pounds each year in lost productivity at
workplaces. They also constitute a prime reason for breakdowns in relationships
both at work and in the wider society.
Research indicates that people only use about a quarter of their listening
capacity; that they only use one tenth of their memory potential; that they forget
half of what they have heard within 8 hours; and that they distort what little they
do remember; and that such memory is subject to their perceptions and
preconceptions.
People who feel they are listened to perform better, work more cooperatively,
and have fewer on-the-job problems. In its training literature, the US Sperry
Corporation states: good listeners think more broadly because they hear and
understand more facts and points of view. They make better innovators. Because
listeners look at problems in a fresh way and combine what they learn in more
unlikely and creative ways they are more likely in turn to hit upon truly innovative
ideas. Ultimately, good listeners attune themselves more closely to where the
world is going and to the products, talents and techniques it needs to get there.
Transactional analysis (see Summary Box 4.3) has done much to help us
understand the 'communication transaction'.
SUMMARY BOX 4.3 Transactional Analysis
Transactional analysis (TA) is a system for the analysis of personal and inter-
personal communication and behaviour. It was defined and evolved by Dr Eric
Berne whose thesis was that there existed in everyone three quite clearly
distinguishable sets of attitudes and b~haviours. He called these ego states; that
is, configurations of states or frames of mind (see Figures 4.6 and 4.7). These are
readily recognisable by things that we say, the ways in which we say them and the
support that we give them by way of body language, gestures and mannerisms.
• Ego states
TA involves using knowledge and skills to recognise ego states; and from this to
adopt an ego state that determines whether the transaction is to be effective,
ineffective, business-like or a crossed transaction leading to misunderstanding.
The ego states are as follows: parent, adult, and child. The 'parent' is further
modified into: parent nurturing and parent critical. The 'child' is further
modified into: free child and adaptive child. Their importance lies in the fact
that there is nothing in human communication that cannot be attributed to one
of these. People talk and write from different states and it is possible to identify
which it is in all cases. From this, a method and choice of response and an
appropriate ego state can be adopted so that the transaction proceeds in an
effective way.
• Transactions
Transactions may be complementary -that is from adult to adult, parent to
child, or child to parent.
Transactions may be crossed- any other variation (parent to parent; child to
child; adult to child; child to adult; adult to parent; parent to adult).
Transactions may be ulterior - that is the message is implied not stated;
when this is the case the ulterior transaction is inevitably that which is acted
upon (and which the initiator will probably have devised); or the ulterior is that
which is intended to be received (for example, when a politician says to his
opponent 'I respect your views', what he actually means is 'I do not respect
your views').
• Games
Berne also identified a number of games that arise from ulterior transactions. He
suggested that people spend a large portion of their time and energy in these
games; and that the main reason for this was to gain recognition or 'strokes' -
units of recognition. Examples of these games are as follows:
'Why don't you', 'yes, but.' The initiator states a problem and seeks the
advice of others. They offer solutions based on the 'why don't you' which the
initiator rejects with 'yes, but'. He ends up feeling self-righteous and thinks 'I
know best'.
'Now I've got you.' The initiator of this game contrives a situation whereby
somebody makes a mistake. At the appropriate moment he steps in and
confronts the offender who feels bad whilst the initiator enjoys feelings of
superiority and dominance.
'Kick me.' In this game the initiator constantly does things which provoke
criticism or punishment; he gets negative recognition which is more important
to him than getting no recognition at all.
'I'm only trying to help.' This is where aid or advice usually unsolicited is
constantly being offered. When eventually he is rejected, he can say 'but I'm
only trying to help you'.
These are examples of games that Berne recognised that people played in
different situations; in extreme cases they became developed into work scripts
or life scripts. Scripts represent in TA terms a configuration of the way in which
the individual decides how he will lead his life. He makes this plan in response
to the range of messages both prohibitive and negative, both critical and
nurturing, that he receives from both his workplace and his wider environment.
Ego Typical Typical Typical Typical

state words/phrases voice tone behaviour attitudes
That's disgraceful' sneering furrowing brow moralistic

Critical 'You ought' angry pointed finger judgemental
parent "You must always· condescending scowling face
'Don't ask critical set jaw authoritarian
questions'
'Because I said so' disgusted pounding on
table
'Well done young sympathetic pat on the back caring
man!'
Nurturing 'Splendid!' warm consoling touch permissive
parent 'What a lovely encouraging benevolent supportive
boy!' smile
'Don't worry relaxed understanding
'I'll sort it out non-judge-
for you' mental
"How?' clear
Adult "When?' calm attentive and open-minded
aware
'Where?' enquiring level eye interested
contact
'Let's look at it confident
again'
'It's 6.30'
'I'll try hard' whiny downcast eyes compliant
Adapted 'Please can I?' placating vigorous head defiant
child nodding
'I can't' mumbling nail biting delaying
'Please' passive
slumped and
dejected posture
Thank you' spitefulness complaining
taunting
'I want' loud laughing with curious
Free someone
child 'Wow!' fast noisy crying energetic
'I feel great' demonstration fun-loving
of feelings
constantly
changing spontaneous
behaviour
Figure 4.6 Some behavioural aspects of ego states
Source: A. Barker, Transactional Analysis and Training (McGraw-Hill, 1982).

Definitions
~
Parent
Adult
Child
2®PC
Parent Nurturing
Parent Critical
3
@
c
Free Child
Adapted Child
Transactions
Stimulus Model Response
® ®
® ®
© ©
1. Complementary
®~® ® ®
®~® ® ®
© © © ©
Effective, successful and productive transactions
2. Crossed
®X®
® ® ®X®
® ®
© © © ©
Argument or row Dispute, frustration
3. Ulterior
'civilised dispute'
professional fallout
political debate
----)>
overt actual <11(----
Figure 4.7 Transaction analysis: configurations
Source: Berne (1984).
We need also to consider the theories of neuro-linguistic programming (see

Summary Box 4.4) on reacting to life situations.
SUMMARY BOX 4.4 Neuro-linguistic Programming

Neuro-linguistic programming (NLP) is the title given to the behavioural frame-
work and process that provides us with the capacities to use our own resources,
intelligence and capabilities more effectively. The process combines the experi-
ences of the individual and his perceived view of the reality of the world, and
programmes the reactions that he makes to it, developing responses, strategies and
behaviour according to the nature of his experience. The experience is acquired
through one of two sources- the nerves and senses (the neurology); and through
language, both its use and interpretation.
From these experiences and the ways in which they were and are acquired,
individuals develop their own programmes to deal with situations that arise and
have to be confronted. From an understanding of this, the individual is in a position
to devise, adopt, adapt and choose strategies and approaches that enable him to
directly and positively impact on a situation in his own chosen way- for example, if
you do not want people to look at your head you devise a strategy to draw their
attention away from it, perhaps to wear bright shoes and socks so that their
attention is actively drawn to your feet.
More widely, the process is adopted to particular situations as they are. The
individual is then asked to identify how he would like these situations to be, how he
would like to be in them and to identify the internal qualities and resources
necessary to achieve this. The personal strategy adopted is then the ordering of
these resources into an effective means of handling the situation.
The basis of NLP's success and effectiveness is drawn from the experiences of
the individual, often with counselling or expert tuition and help. It is based on the
view that high quality of performance comes about only when the individual is
confident in himself in relation both to those around him and also to the wider
environment. It involves qualities present or potential in the individual and not
those that are not; it is thus centred on the individual in question.
It offers improved personal communication, general effectiveness and well-
being through the development and use and value of these qualities. Specifically
this concerns the uses of and applications of language; self-presentation; clarity of
thought and purpose; flexibility; the capacity for the development of relationships
at all levels; and the capacity for the development of specific occupational qualities,
strategies and approaches to gain and improve operational effectiveness.
• Decision-making
Decision-making is a constant and integral part of all managerial activities. All
managers must therefore be able to take and make effective decisions and
understand the processes involved in their implementation. Decisions are taken at
strategic and policy level; operational level; and at lower levels concerned with
the day-to-day administration and maintenance of group and departmental
activities. However, at whichever level the decision is required, there are certain
fundamental considerations that have to be made if the process is to be effective
and successful. There are therefore different stages in the decision-making
process which, if understood and followed, provide a model for all circumstances
in which decisions have to be taken (see Figure 4.8) . These are as follows:
• Problem definition
This may appear obvious but the effects and consequences of a particular course
of action will not be fully understood if the issue in question is not accurately and
fully defined at the outset. Failure to do this may lead to considerable waste of
time and effort as well as resources, as mistakes may have to be rectified later.
• Process determination
Much of this will depend on the culture of the organisation or department
involved. This begs the questions that will have to be considered at the
implementation stage of credibility, authority, acceptability and priority.
There is also the question of timescale (see below) to be considered: a long
participative exercise at this stage is of value only if the deadline can
accommodate it. Similarly, an autocratic or off-the-cuff decision may 'jump
the gun' for lack of proper process or without full evaluation of the consequences
or costs of following a particular line.
• Timescale
As referred to above, this is involved heavily in the process determination. It also
has implications in a trade off between information, evaluation and cost. The
longer you are able to leave the decision, the better your chances of gaining full or
adequate information. However, this also increases the cost of the eventual
course of action; again a quick decision may involve hidden extras at the
implementation stage later.
It may also be possible to timetable the timescale element; if this is possible the
risks involved become minimised if due to changing circumstances the proposed
course of action is then either altered or cancelled.
• Information gathering
This is vital. It is also vital to understand that very few decisions can be made
with perfect information; such quality is usually not available, especially when
time constraints are involved. In general terms, the more information that is
available, the greater the likelihood that the decision will be accurate. However,
this in itself takes no recognition of the relationship either with cost or as stated
with deadlines.
The quality of the information is also important and the quality of evaluation,
sifting and editing processes are vital also. What those responsible for the
decision require is as full a compendium and information coverage as is possible,
1. PROGRESSION 2. PROCESS
DEFINE PROBLEM ~
~ Review Define purpose
~ - and objectives
DETERMINE PROCESS
t. ~
3: TIMESCALE
w t. ~ Set criteria
\
> INFORMATION GATHERING
w t.
a: ~
ALTERNATIVES ) ~
(II
t. ~ Action - '~ Evaluate alternatives
~
$:>
IMPLEMENTATION
l. 17
risks/
~
~
(II
~Consider ;:t
....
.s;_
Purpose: to draw the distinction between the two elements of progression and process. The former is a schematic approach; the latter is 0
that from which the former arises, and which refines it into its final format. Effective and successful decision-making requires ~
$:>
;:t
the confidence that is generated by continued operation of the process.
t·
Figure 4.8 A decision-making model a·...
;:t
"'
......
8
on which to base their proposed courses of action. If the gathering or evaluation

of information is planned, the decision itself may also be planned.
• The alternatives
These are always available- in any situation there is always the option of doing
nothing. At this stage the consequences of not following the proposed courses of
action will also be evaluated. Having understood that, it is also necessary to fully
evaluate all of the possible positive steps that are now open as a result of following
the previous stages. Possible opportunities will now start to present themselves as
well as costings and likely profits and losses, costs and benefits that will accrue.
• Implementation
This is the point of action. This will be as a result of working through the
previous stages of the model with the related implications and considerations.
The decision will in turn affect others and will probably need the assistance of
others to carry it out. The action required may require further organisation and
planning.
It follows from this that there are wider and more general organisational,
environmental and political considerations at this stage; matters of general
acceptability and feasibility must be considered.
More generally still, a decision may be taken and implemented on the basis of
the intuition of the directorate or senior managers of an organisation, a feeling of
what is the correct course of action in the circumstances. This may be in support
of the rational model; or it may be in spite of it. Moreover, there may be matters
of expediency or short term advantage, which outweigh (or, at least, are
perceived to outweigh) the rational approach. The incremental or progressive
model of the decision tree (Figure 4.9) may be valuable here.
Any proposed course of action will have effects on others who should be
prepared for this, particularly if there is an adverse element in the decision.
The process is not an end in itself. It will inevitably lead to other courses of
action; the action in question must be fully evaluated for measures of success,
failure, cost, profit, loss, effects and consequences.
This is a process that, if understood and followed, as fully as possible,
minimises the risks and uncertainties of the resultant courses of action. It is
not a prescription for the provision of perfect decisions; but rather a means by
which both the opportunities and consequences of following particular courses of
action and taking particular initiatives may be evaluated.
• External factors
The general objective of anyone in the position of having to take a decision must
be to minimise the risks, uncertainties and negative consequences of it. This
An incremental or progressive model for the taking of decisions and development of

activities
L M 0
Purpose: to illustrate proposed courses of action, and likely and possible outcomes of
them, from a given starting point.
In this particular example, option x- CANCEL- is evidently not on the agenda, as the
consequences of this are not extrapolated.
What is illustrated are the ramifications that accrue once the decision is taken to
progress; and assuming two positive choices (i.e. other than cancellation) at each
stage.
The tree is a useful illumination of the complexity and implications of the process, and
of the reality of taking one decision.
Figure 4.9 The decision tree
should not, and need not, be an excuse for inaction. Neither is inaction always
possible. However, it is important to understand that wherever possible decisions
should be taken that, if correct, maximise the benefits that are available and that
if incorrect minimise the loss or upheaval that results (see Summary Box 4.5).
D Risk and uncertainty

Broadly speaking the difference between the two is that risk is measurable and
insurable while uncertainty is not.
Broadly speaking also, there is an element of risk in all decision-taking. It is
reduced only by the quality of the information that is available and the quality of
the evaluation of that information by managers. Everything else in the process
militates against this. It is important to recognise, therefore, at the evaluation of
alternatives stage what the risks involved are. One is then able, at least, to
SUMMARY BOX 4.5 The Negative Decision
It is often hard to take this, particularly in relation to an employee request, project or

brainchild.
The essence is therefore to keep the transaction both adult and business-
oriented. An operational request should never be turned down for personal
reasons.
1. It must be made clear to the individual that the decision has been well thought
out, and is not arbitrary. It must be based on operational logic and soundness
and communicated in this way.
2. The word 'NO' should be used, to underline the point.
3. The transaction should end in suggestion or direction towards the positive, and
to alternatives, if these are feasible.
No manager should ever hide behind procedural issues or 'niceties of phrase' in

such a situation. The employee is entitled to the respect and openness implicit in
the above approach.
understand fully a position whereby, for example, one course of action may lead
to greater success with a greater risk of failure, in comparison with another which
may guarantee a modicum of success only but minimise the failure should it go
wrong. Thus, the manager is then in the position of making a judgement on the
basis of sound information.
D Committees
The success or failure of committees as decision-making bodies will depend to a
great extent on the ways in which they work. Marketing and advertising firms,
for example, use such groups as brainstorming and creativity groups to generate
ideas which then may be fully evaluated at a later stage by groups of managers.
On the other hand, public sector committees are very often almost entirely
procedural.
The great disadvantages are those of time, cost, responsibility and compro-
mise, particularly if they are dependent on procedures or if there are conflicting
vested interests present. Often it is at this point that the 'no decision = no
mistake' syndrome becomes evident. The committee consequently becomes a
reactive and procedural establishment rather than one which is proactive and
dynamic.
D Broader participation and consultation

This can be most effective particularly when adverse decisions are to be taken.
For example, if redundancies are proposed a package agreed between manage-
ment and workforce is likely to be more acceptable than such a package imposed
by management alone or by one manager. Similarly, proposed public develop-
ments are more likely to be acceptable if there has been full consultation with all
of the members of the public concerned.
However, again there is a danger of a compromise that may fall short of the
most basic criteria for success: rather than accepting a collective responsibility it
becomes a vehicle for abdicating all responsibility.
At the last resort, however, the decision will ultimately fall on one person
(manager, committee chair, or someone else so identified), whose responsibility it
will be to undertake and manage the proposed course of action and to evaluate its
success, failure and the opportunities and consequences generated by it. The final
factor, therefore, in the decision-making process is commitment. There is no
point in deciding to take a particular course of action if it cannot be seen through
or if there is no collective will to so do. This should be dealt with at the evaluation
of alternatives stage and will be one of the factors in such an exercise. With the
increasing accountability required of managers, an understanding of decision-
making is essential if the manager is going to be successful.
• Decision-making: other factors to be considered

0 Limitations of laws and government direction
These represent national, local and social constraints and restraints. They must
be evaluated by organisations to ensure that what is done is not only
commercially viable, but also acceptable in the society in which it is to be
carried out.
o Public interest
Public interest is manifest through the general social ethos and consists of
dominant public opinions, received wisdom and the activities of pressure groups.
This includes such abstract values as freedom, respect for life, respect for the
individual, telling the truth and helping the needy; and a more general concern for
social values.
0 Eco-socio-political groups
These are more or less organised constituencies which organisations have to

consider and which ultimately affect their decision-making activities and policies.
They include consumer groups, environmental lobbies, local and public autho-
rities, public agencies such as the health and safety executive, industrial lobbies
and pressure groups formed by those whose environment is to be affected by the
implementation of the particular decision. Some social values lack institutional
voice or political muscle. Some social benefits are defeated by institutional
deadlocks. Some powerful groups and lobbies do not represent the public
interest. However, they all have voices which must be considered at this stage,
and reconciled where necessary.
D Public factors
Public factors may also conflict, and frequently do so. Both business and public
decisions must therefore take account of this and where necessary reconcile these
matters. The decision-making process therefore still consists of the making of
choices; in these cases, this also includes matters ethical and choices between the
good and greater good of different public services.
D Internal factors
This is where the organisation considers those public factors in its internal
decision processes and the social implications of its actions and the external
groupings it effects as they relate to the staff of the organisation.
D External factors
This is where organisations open for discussion the public interests on which they
are to impinge. This includes trade association or trade union activity where
there is a specific public interest; discussions with public bodies; discussions and
dialogue with pressure groups and lobbies; and involvement in such activities as
business in the community.
D Organisational adjustment
This is that part of the decision-making process whereby the organisation alters
or adjusts its activities in some publicly collaborative way, or makes civic or
environmental choices as part of its strategic approach.
There are costs attached to all of this. They include the time spent in dealing
with pressure groups and lobbies; the costs of getting information; costs and time
spent on internal consultation and consideration; and the opportunity costs
relating to the dovetailing of operational requirements with those of the
environment.
There is thus a direct relationship between effective decision-making and the
society and environment in which decisions are to be implemented. What is
summarised here is a series of factors that have to be taken into account to ensure
that any decision taken is operable and effective and profitable in the true sense of
the words; that is, they are not only advantageous for the organisation but
acceptable in the environment in which it has to operate.
• Consultation
Consultation is a behavioural and organisational process, the essential purpose of
which is as follows:
1. To gain the commitment of the staff; this is only achievable if the proposal is
communicated via all means at the disposal of the organisation and if adequate
and full briefings, meetings and discussions are held (see Figure 4.1 0)
2. To ensure that everyone understands and values the necessity of what is being
done. This must include coverage of the reasons for it and the timescale and
progression of it.
3. To address the needs of groups of staff, and individuals. This must address all
issues. This includes matters to do with relocation, redeployment, retraining,
redundancy, changes in operational or behavioural patterns and organisation
expectations. It must also address the ability of staff to continue to get into
work, and work their usual hours, and in their usual way. This may include
individual counselling.
MODEL
DECISION REVIEW DECISION DATE OF

TAKEN IF DESIRABLE IMPLEMENTATION
l
BRIEFING
REVIEW CONSULTATION
PROCESS
NOTES
NEWSLETTERS
+
I
MEETINGS AND FORMAL REVIEW
CONSULTATIONS AND COMMISSIONING
(including with OF ANY FURTHER
recognised unions) ACTIVITIES NECESSARY
I •
COUNSELLING AND
SUPPORT FOR GROUPS
AND INDIVIDUALS
--.-1
AFFECTED
To be used for: • strategic, directional, operational, technological and

locational changes
• behavioural and human relations issues
• solving problems
• introduction of no smoking, uniform, appraisal and
representation policies.
Figure 4.10 Introducing a major or contentious issue: a managerial approach

4. To use the period between the taking of the decision, and the date of its
implementation to best operational and behavioural advantage, so that. on the
day on which the new practice is to start, the transition is made as smoothly as
possible.
Consultation is therefore concerned with implementation and understanding.

It should not dilute or affect what is to be done, unless the process of consultation
itself throws up an operational barrier or caveat.
It may impact on all aspects of work, from major redundancy or relocation
exercises, to the introduction of a smoking ban, or the implementation of a small
job change on the part of an individual.
Consultation must be fair and reasonable. Normally, such a period will be for
at least four weeks; this minimum will relate to relatively minor changes. For a
major exercise - a relocation, for example - a period of up to a year may be
necessary. A true balance must be struck between the pressures on the
organisation and the needs of its staff.
Finally, consultation is an active process, and one which must be led and
directed by the organisation. It is not enough simply to give a period of notice of
changes that are to happen. Responsibility for gaining the understanding,
commitment and support of staff in such matters is an obligation placed on
the organisation's top managers; and they must direct it and ensure that it
happens in the ways indicated. Tannenbaum and Schmidt (1958) developed a
model of how a manager may make a decision (see Figure 4.11) that repays study.
• Organisation and employee development

The purpose of studying the concepts of organisation development and the
development of employees is part of the establishment of the extent of the
organisation's total commitment to its workforce. Various attitudes, strategies
and approaches may be adopted by organisations in this area.
The operational reasons for engaging in these activities are more direct, and
range from the meeting of certain obligations to the staff to filling gaps in
performance levels and to training the next generation of expert staff for the
purposes of succession. Employee development activities may also be part of a
wider approach to personnel and human resource issues - for example, if an
organisation has difficulty in recruiting particular categories of staff, it may
adopt a medium to long term strategy designed to produce its own; this in turn
will require a steady commitment in this area.
As with other activities, the stance to be adopted must be the subject of top
level deliberations and a strategic decision. From this, there emerges both the
employee development strategy itself and also the priority ascribed to it relative
to the other business activities.
There are differences in approach to employee development. Some organisa-
tions may and do take the view that they will purchase expert and highly
Extent of manager's
authority
Extent of contribution and

input by subordinates
2 3 4 5 6 7 ~
Manager Manager Manager Manager (I>
Manager Manager Manager
makes 'sells' presents presents presents defines permits ~
1::.
decision decision by ideas and a range of problem, limits; subordinates
and demonstrating proposes a decisions gets asks group to function
announces the benefits 'best view' subject suggestions, to make within limits
~
~
it and giving for to change makes decision (I>
defined by him ;::t
positive response acceptance and decision ....
to questions modification ~
0
Purpose: illustration of the autocratic-participative range that is available in organisational and managerial decision-making. ~
1::.
It also provides a sound basis for forethought. Certain types of decision will be better understood, and accepted, it they are delivered in ;::t
;;;·
particular ways. I:>
....
o·
Figure 4.11 A decision-making model: the autocratic-participative range ~
Source: Tannenbaum and Schmidt (1958). .......

.......
.......
qualified staff on the labour market and relegate in-house or organisation-

sponsored development activities to a low priority. This is easily achieved when
one is purchasing from a large pool of the required expertise; and feasible also
when the organisation has sufficient purchasing power, reputation and job
prospects to offer to those with rare expertise. In the latter case, however, there is
the danger of getting into an auction for this type of expertise and the person
attracted to one organisation by the stated combination of reward and prospects
may be quickly attracted away by an even better package from another operator
in the field.
All organisations should recognise that their staff require development in each
of three areas in order to strike the balance between motivation, flexibility,
opportunity and organisation purpose and investment:
• Corporate: that is, engaging in development activities for the benefit of the
continued and future stability and prosperity of the organisation
• Professional: in which the requirements to keep abreast of the developments
of one's occupation and profession in general, and to be developed and trained
in it, are paramount
• Individual: in which the organisation has regard to the development and
future aspirations of the person concerned.
The balance of the three must be struck. While the organisation's overall
purpose and first obligation is to its own aims and objectives, this must include
consideration of the wider view. If concentration on the development of
employees is limited to organisation needs, their opportunities are restricted to
that organisation and there may be problems in moving or transferring them
within a public service or divisionalised company.
Consideration must be given, therefore, to the other two areas; indeed, for
many professional, technical and managerial staff it is increasingly an obligation
of their continued commitment to, and membership of, their occupational
category.
• Development strategies
Development strategies will therefore stem from the relative priority placed on
these activities and, while reflecting this, they will cover the following matters,
promulgating policies to the staff on the following:
• The induction of new staff and the formation of attitudes and the settling-in
process; the initial job training, job understanding and job knowledge
• Continuing job training including the usage of the particular technologies,
machines and processes that the organisation has available
• Training and development for the future over short, medium and long
term; this may include career development and succession plans devised by the
organisation in conjunction with key staff
• The solving of problems relating to human resource operations- performance
gaps which cannot otherwise effectively be filled
• The gammg of qualifications - academic, professional, technical and

vocational both for the wider purposes of effective staff and organisation
development and also because the existence of such qualifications is increas-
ingly required if one is to gain contracted or project type work from multi-
national and public service internal markets and contracting arrangements
• General policies on the wider and more general aspects of employee
development; this includes devising and developing scope for project
work; opportunities for secondments and out placements; short term commis-
sions and activities; and other one-off researches and activities
• There will also be in place general policies designed to reflect the extent to
which the organisation will allow individual staff members to exercise their
imagination, pursue brainwaves and notions and engage in other creative and
developmental activities off their own bat and the extent to which the
organisation will actively support, sponsor and resource these matters. The
final element to be considered is the extent to which the organisation makes
available to all, or restricts access to each, of these opportunities.
The style, language and availability of the employee development strategy and
policy also reinforce its actual components and the overall message to the staff of
the organisation. Anything that is shrouded in complex terms or highly bureau-
cratic language, for example, tends to reinforce the impression that the
development of employees and the organisation has a low priority. At the other
end of the spectrum some organisations both instruct and commit members of
their staff to regular attendance on training and development courses and events
as a central plank of their terms and conditions of employment. A variation on
this is to take potentially qualifiable or part qualified staff into relatively junior
positions and to support and sponsor them through their professional studies to
full qualification. From the employee's point of view, it is the opportunity to
learn the profession from both the theoretical and practical points of view that is
to be gained from such an arrangement. They may also be placed in the position
of being able to identify matches and mismatches between theory and practice; to
gain practical experience of their field as well as a sound basis of knowledge and
skills; and to impress upon the organisation the development of their expertise
and to indicate both actual and potential qualities. They also receive support (in
varying degrees) for the duration of these studies (see Summary Box 4.6).
This approach also extends to technical and vocational qualifications, and the
notions referred to above of undertaking general development activities with an
eye to the future. As well as formal qualifications these approaches allow in-
house assessment of potential in the specific terms and regard of the organisation
itself and go a long way towards providing an effective background for the
organisation's purpose in employee development.
Some organisations go much further than this, and will sponsor their staff
through any course or development activity that the member of staff wishes to
undertake provided that it is within the terms allowed by the overall organisation
and employee development policy and strategy.
Such organisations take the view that by doing this they are generating
expertise, identifying and developing potential and adding to the fund of
organisational talent and capacity. It is also cited as being excellent for
SUMMARY BOX 4.6 Professional Studies
There is a wide range of rewards and penalties available for success or failure in the
pursuit of professional recognition and qualifications in the UK. From an analysis of
a range of students taking the examinations of the Institute of Personnel Manage-
ment (I PM) in the South East of England over the period 1988-1994 the following
emerged as features:
1. The greatest number of students was drawn from the public services and health
service sectors; this was followed by department stores and the retail and
distribution sector; and followed in turn by telecommunications, transport and
manufacturing. Very few students were offered by hi-tech, mass production or
flow production industries, which it seems would rather buy in staff already
qualified in this field. Qualifications were becoming of increased importance in
public services during the period in question (and beyond) due to the
development of internal markets and purchaser provider arrangements.
2. Some students received full sponsorship for as long as it took them to achieve
the qualifications (the normal period was 2 to 3 years); some organisations
would quite happily keep putting their students forward for as many examination
resits as necessary until the student succeeded.
Other organisations insisted that the students paid their own fees; some
reimbursed all or part of them upon successful completion of the courses, while
others did not.
3. Some organisations gave students as much time off work as they needed, both in
terms of release for classes and also for pre-examination revision. Others insisted
that any time taken was either docked from annual leave or made up through
flexible working arrangements.
4. Some organisations offered financial rewards and automatic upgrades upon
successful completion. Other organisations made successful completion a
condition of the continuing right to employment.
motivation, morale and retention and part of the payback on the investment is
measurable in these terms.
• Performance appraisal
Any effective approach to organisation and staff development must have as its
cornerstone an effective process of appraisal. This will have the purposes of
assessing and evaluating past and current development activities and also make a
contribution to the future. Performance appraisal at its ideal is a continuing,
consultative and participative process conducted jointly by superior and
subordinate, that assesses both strengths and weaknesses of current and recent
performance and the expectations and aspirations for the future. Part of this
process establishes the performance gaps referred to earlier and where appro-
priate strategies propose progress or solutions based on the development and
training of the employee. This process must be the subject of regular meetings
and review between employer and employee as a check on progress and as part of
the more general approach of development of the employee and the organisation.
The development process and function will ascribe particular obligations and
duties in the area to all staff. Part of the function of managers and supervisors will
be in the wider sphere of the employees' development - monitoring the
employees' progress, coaching and counselling them, offering them opportu-
nities, propounding solutions to problems with them, agreeing these, testing them
and monitoring their implementation. As stated earlier, employees (or certain
categories of them) may be required to undergo and accept training and
development as part of their commitment to the organisation. Related to this
are general departmental obligations to provide the job training necessary to
conduct the tasks effectively; complex departments and process functions often
have trained instructors working full or part time on this aspect of their activities.
More broadly and generally, in the devising and implementation of these
activities, organisations adopt a variety of overall roles in the development of
their employees:
• Administration of training and development activities: the keeping of

records; certification and validation of completion where appropriate; the
planning, organising and booking of courses; the promulgation of information
• The practitioner role: that is concerned with the design and delivery of
courses (usually in-house); assessment and identification of performance gaps
and training needs; the setting of training and development objectives and the
monitoring and evaluation of the activities carried out
• The advisory, expert and consultant roles: that consist of carrying out
these duties in relation both to the organisation's directorate and also to the
individual divisions, functions, operations, departments and units
• Resource-gathering roles: that have the object of ensuring that any funds
or finances that are on offer are gathered in and made available, together with
any relevant or suitable public programmes, grants or disbursements
• Resource management roles: concerning the volume, usage and allocation
of organisational resources in the area; this impinges upon all the other
activities detailed here.
Thus is configured a complex and wide ranging function, set of roles and
mutual obligations. Effectively constituted, the development of the organisation
and its employees is instrumental in setting standards of attitude, value, belief
and expectations as well as performance. Such development sets specific training
standards for jobs and quality. It is the driving force behind the training and
development of all staff for both the present and the future. It is, finally in this
context, instrumental in setting general standards of motivation and morale
among staff.
• Employee development concepts

In order to complete this view, some fundamental concepts must now be
addressed and articulated.
D Learning style
This is the way in which an individual learns; the preferred learning style is the
way in which the person learns best. The learning style is composed of a
combination of motivational factors, individual preferences and overall aspira-
tions. It must also reflect the matters, material, skills, knowledge, attitudes and
behaviour that are to be addressed. For example, the individual who does not
take to formal instruction may well be prepared to put up with it in the interest of
passing his driving test, for which formal instruction is an integral necessity and
thus the means to the wider end.
Other factors that have to be considered here are the age, experience and prior
qualifications of the trainees; their expectations; and the degree of comfort or
anxiety that they feel at the outset of the activities; and the nature of the activities
that are to be undertaken.
Work was carried out at the Manchester Business School by Professor Peter
Honey in the early 1980s and within the general context of learning style four
archetype preferred learning styles were identified:
1. Activists: who involve themselves fully in new experiences; who are open-
minded; and who are fully active both at work and elsewhere; they thrive on
the challenge of new experiences but become bored when these become
familiar and start to look elsewhere again
2. Reflectors: who ponder and reflect on experiences from a wide variety of
standpoints; they are thoughtful, meticulous, methodical and cautious
3. Theorists: who adapt and integrate disparate facts, theories, observations and
experiences and draw coherent conclusions from them; they are keen on
principles, models, systems and assumptions;' they are uncomfortable with
subjective, creative and unproven approaches
4. Pragmatists: they measure the success or otherwise of something by the
extent to which it works; their approach to a proposal or idea is to put it into
practice and to test it; they are essentially practical and problem-orientated;
they like to get to the heart of issues and matters and resolve them quickly.
Honey devised a questionnaire to be issued to students at the outset of

development activities that had the purpose of assessing their individual balance
of each of the four preferred learning styles. Such a basic understanding is useful
for a variety of reasons. It enables individuals to form an impression of their own
preferred learning style. It enables them to identify the sorts of activities that they
are likely to respond to most easily, and those that they are likely to have great
difficulty for them. It enables them to identify gaps in their overall learning style
and to take steps to develop it in order to respond better to and to gain more from
the full range of development activities. Finally, it enables the tutor of a course to
identify those activities that are likely to hold the greatest and least attraction and
benefit for those on courses.
For those who design and implement activities and programmes, a knowledge
of this concept is invaluable because it enables assessment of the range of general
responses and likely specific responses to be made. Programmes can therefore be
designed to fit a particular style (for example, fully participative; or lecture

based); or to develop a wider learning style for the student body; or (where it is a
general or generic programme) to ensure that the full range of learning styles is
addressed.
Appreciation of the concept is also useful for the general manager in that an
insight is given as to the possible reasons for the success or failure of particular
development activities and courses. It also enables the generalists to make a more
informed assessment of the kinds of activities that are likely to draw different
measures of success or failure in the future.
0 Learning curve
This is a configuration of the speed at which people learn things. For simple
operations it may be very quick and the curve therefore very steep: for more
complex activities a step-by-step approach may be required and the curve will
reflect this. Learning plateaux and learning declines may also be identified; the
plateaux indicate the present saturation of the trainees, implying that activities
should be varied at this point; while declines in the learning curve normally point
to one of two matters- either that the learning itself was not effective and is being
quickly forgotten or that what has been learned is declining because of the lack of
opportunity to follow it up and practise it at the workplace.
Organisations are thus influenced by the approaches taken and by implication
the adequacy and effectiveness of the resources ascribed.
0 Continuous professional development

Continuous professional development (CPD) is the term given in the UK to the
obligation placed upon highly skilled, technical or other practitioners to keep
themselves abreast of all developments in their chosen field.
It is more highly developed in some areas than others. Part of the practice of
medicine (and this applies to the entire range of medical practitioners including
nurses, midwives, physiotherapists and radiographers) is concerned with
pioneering, testing and developing new methods, drugs, techniques and forms
of treatment. This is mirrored in the public's expectations that when they do need
medical treatment, they will receive something which is up-to-date, giving them
the best possible chance of recovery and return to their usual life.
In the business and management sphere the importance of CPD is becoming
ever-more apparent. As the trade of management becomes ever-more professio-
nalised and organised, education, training and professional bodies in the field are
both taking extensive trouble to fulfil this requirement for CPD and also insisting
that persons attached to them undertake CPD as a condition of their continuing
membership or ability to practise. CPD is also a reflection of the acquisition and
understanding of techniques and aptitudes and attitudes and values from the
entire business world. It further underlines, finally, how essential it is to have

high quality, current and expert management and managers in all organisations.
• Organisation development
Organisation development (OD) is the generic term given to strategies and
initiatives for improving organisational effectiveness through emphases on the
capabilities, capacities and qualities of the human resource, and on approaches
based on behavioural sciences (see Summary Box 4.7).
SUMMARY BOX 4.7 OD Concepts
Other terms used in the conceptualisation of OD include:
• Continuous development
• Total quality management
• The learning culture
• The learning spectrum
• The learning organisation.
Also any organisation that seeks to offer personal development and learning
contracts, accelerated promotion paths and fast tracks, succession planning and
an approach designed to grow its own experts and managers must have an active
interest in, and commitment to, the overall OD approach.
OD stems from a corporate commitment to 'doing things this way'. It is an

organisation-wide process and endemic and integral to all activities that go on
within it. It depends for success on its adoption and absorption across the board
in all departments and functions and by everyone at the workplace.
OD depends on the development of staff for commercial success or service
quality advancement. It follows from this that there are roles for change
mechanisms, change agents and change catalysts and key appointments with
key qualities, as well as training and development activities in order to take the
organisation in the preferred directions.
The OD process is aimed at changing and forming culture, values, attitudes
and beliefs as referred to above and developing these in positive and constructive
ways. What is arrived at is therefore required by the organisation, having been
defined and designed by it and held to be of value by its staff.
The precise nature of the process will vary between organisations that adopt
OD as a strategy. In general, the key values and qualities reflect: a measure of
conformity and the willingness of staff to go down the paths indicated (those that
do not must usually either come into line and at least conform, or else leave);
obsession with product or service quality; a strong customer orientation;
universal identity with the organisation at large on the part of all staff; setting
a moral or value-led example and taking an active pride in the organisation and
its works on the part of all concerned.
The OD process requires expertise and commitment in its component parts.
These are: performance, assessment and appraisal; problem-raising and acknowl-
edgement; openness, honesty, trust; access to information; inter-group activities
and cross-fertilisation of ideas; organisation, assessment and evaluation of the
development process.
There will be a framework around the OD aspects and activities at corporate,
department, divisional, team, group and individual levels (see Figure 4.12). This
involves the setting of aims and objectives; devising processes, approaches and
strategies; addressing problems and issues; setting timescales and deadlines; and
establishing means of implementation, review and evaluation of activities.
Alongside this there must be constant process consultation, and attitude, culture
and value development activities.
The benefits to be realised are as follows:
• Organisations gain a level of commitment, a strong sense of identity and

purpose that rises above any divergent individual aims and objectives
• Organisations set their own agenda, style and values rather than allowing
these to emerge
• 00 promotes understanding, effective communications and generates a
continuing high level of motivation; it promotes harmony between normally
or traditionally divergent business and sectoral or functional interests; it
promotes organisation synergy.
• 00 provides niche openings and opportunities along the way that arise
because of the overall approach
• 00 generates opportunities for behavioural, structural, role and functional
development on the part of all concerned, all functions and all departments
• 00 promotes and generates a creative and positive environment for the
approach to, and solution of, problems and blockages.
• 00 and the techniques related to it work effectively only where there is full
corporate commitment. 00 is above all a business and managerial philosophy.
It is not an adjunct or set of activities to be picked up and put down. It is both a
manifestation of, and developer of, the organisation's culture and beliefs. It
requires a full level of understanding on the part of everyone in the organisa-
tion. There is inherent in 00 a universal overall purpose that solves problems
and addresses issues from the point of view of the organisation itself, and this
is the focus that must be adopted at the outset and to which commitment must
be made. Figure 14.13 shows in summary form the criteria for effective,
training, development and learning.
All training and development activities should satisfy some of these. The more
comprehensive the coverage the more likely it is that effective training will take
place. As far as possible such criteria should be pre-stated, reflecting the aims and
objectives of the activities under consideration.
r+-1 Can you state clearly the

purpose of the job?
- 1 Specify the purpose
NO
!
y
YES
Are you clear as to how
c;,.;~ vo•• ·~'"'''"""

and where the job fits
into the organisation ! structure
structure?
YES !
Has the purpose and
position of the job in the Clarify and specify purpose
structure been made clear and position with superior
to by your supervisor? NO
YES !
Have you identified the
'Key Result Areas' I Identify the KRAS of the job
(KRAS) of the job? NO I
YES !
Have you BOTH agreed Establish objective and
on clear standards of measurable performance
satisfactory performance?
1
NO standards
YES
r---
Can you objectively Initiate controls for feedback

measure your actual job of performance to your
performance?
NO superior and yourself
YES !
Do your actual
performances meet or Identify the cause of
exceed agreed failure
NO
!
performance standards?
YES
Would you benefit
Are you capable of higher from more training, YES
T
levels of performance? education or
NO experience?
YES ,.....--
NoT
I I I
I
DEVELOPMENT LIMIT
PROPOSALS
Figure 4.12 Configuration of the organisation and individual assessment

process
Figure 4.12 (continued)
--------------------------------,e
Are they due to

lack of
knowledge?
YES
Can this
knowledge be
acquired?
YES
Firm's and/or
Individual's needs
Decide methods and

approaches
1. Clearly stated aims and objectives and measures of success/failure

2. Motivation of both trainers and trainees
3. Rewards must be perceived or available
4. Benefits in performance terms must be perceived
5. The satisfaction of personal, professional and organisational objectives must
be met
6. Training development must be reinforced at the workplace
7. It must be current and relevant
8. It must have organisational and managerial support
9. It must be planned and planned for
10. It must have priority and importance at the time it takes place
11. It must be part of a total package
12. It must be part of a process
13. It must be evaluated afterwards at regular intervals
14. It must acknowledge preferred learning styles
15. It must meet expectations.
Figure 4.13 Criteria for effective training, development and learning to take
place: individual and organisational
• Conclusions and summary

As stated at the outset, the overall purpose of this chapter has been to introduce
and illustrate the concepts and complexities that must be understood as a sound
basis for effective management of organisations.
The management of organisations is itself thus a process. It changes and
develops as the organisation itself and its culture, structure and systems evolve
and develop. This has implications for the nature and design of both structure
and systems that are appropriate and effective to the matters in hand at a given
time; they must be flexible and dynamic also in order that changes and
developments may be accommodated.
Inherent in this therefore is the necessity to ensure that processes and systems
of continuous monitoring and review are present. These address a complexity of
matters. Part of their function is concerned with the system of maintenance
already referred to; part also to the employee and OD processes. However, they
will also be concerned with ensuring the continued effectiveness of, and
improvement in, processes of communication and decision-making; and in the
maintenance of structure and systems and ensuring their continued effectiveness
and suitability.
All of this, in turn, impinges upon the nature, culture and spirit of the
organisation. Developments in these related areas in turn develop the prevailing
culture, modifying its beliefs and values. This must continue during the process of
development to serve the needs of the organisation and its staff and to continue to
reflect the nature of activities required if effective business is to be conducted.
The concern of managers with the nature of the organisation in which they find
themselves is therefore a fundamental part of the job and integral to any
functional or operational success. For, as we shall see, the nature of the
organisation in question must be considered if an effective overall management
style is to be achieved; if effective and successful functional activities and
divisions are to be devised and structured; and if the production and operation's
functions are to be both profitable and harmonious.
Summary box 4.8 tabulates the material and opportunities available in
developing organisations and employees.
SUMMARY BOX 4.8 Training Methods and Techniques
• Classroom: lectures, talks, seminars, day-release, block-release, full

time study. These are good for demonstrating expectations,
cultural soundness and giving regular information and
updates. They are limited by spans of attention, the
suitability of the material to be delivered in the classroom,
the size and composition of the classes themselves and the
capacities and capabilities of the teacher.
• laboratory For the development of precise, practical and scientific
and workshop: skills and the ability to practise or apply them in safe
situations, often having the performance marked or ana-
lysed by tutors or observers against the levels and stan-
dards of required performance or capability. Limited by
group size and the capability of the tutor and observer.
• Projects: For the dual purpose of solving a problem and developing
the capabilities and experience of the project officer.
Limited by the scale and scope of the project and the
capability, interest and commitment of the person super-
vising it.
• Secondments: For the dual purpose of developing and broadening the
experience of staff and to ensure a regular supply of fresh
ideas into different organisational activities and depart-
ments. Must be an integral part of the day-to-day operation
to be successful or profitable. For the members of staff it
should be linked to other activities, skills development and
projects with clear targets and objectives.
• Competencies Specifically targeted at the 'can do' elements of work.
training: Course objectives and, latterly, both vocational and man-
agement programmes have been written in this way to
refocus and represent the approach to these areas of
training and development activity.
• Open and Whereby the student is given a framework or objectives to
distance work to and sets his/her own agenda, timetable, goals and
learning: learning methods within the programme. This is limited
above all by the student's own preferred learning style and
the quality of support available from the learning provider.
Many professions and occupations that aspire to profes-
sional status currently require extensive open and self-
regulated study.
• Mentoring: Coaching, counselling and other one-to-one relationships

with key employees for the purpose of developing them
into very high performers. It is extremely time and resource
consuming. It requires expertise on the part of the coach,
counsellor or mentor; it also requires priority and a long
term overall commitment on the part of the organisation to
the development of its top quality staff. The candidates
must understand the extent of their commitment and have
part of their work time blocked off for the purpose of
maximising this activity.
• Role plays. case These give the opportunity either to generate a measure
studies and of reality or to consider a version of it with a view to recog-
computer based -nising, observing and analysing particular behaviour and/
activities: or activities. The effective use of each method requires pre-
planning, pre-stated purposes and a full measure of
evaluation assessment and debrief. Roles may also be
reinforced through the use of CCTV for more accurate
analysis of behaviour; and of 'what happened next' for
greater illumination of deliberations during the course of
the activities and the conclusions drawn. Role plays are
best used in the generation and development of particular
skills, aptitudes and awareness and are also the opportunity
for the exploration of related techniques in a challenging
but ultimately safe situation.
• Outward Bound: With precise organisation and/or operational purposes
defined; generally perceived to be of greatest value in the
assessment and development of leadership, strategic and
operational characteristics; and in the formation of con-
fidence, trust and mutuality in work groups and teams.
• Skills updates: These may be technical, for example computer software or
managerial; or on leadership, presentation skills and deci-
sion-making ability. They depend largely on the calibre of
the delegates and their ability to practise what they have
learned when they return to work.
• High-cost The approach in these cases is very different but the end
seminars and result is often the same, the creation of a forum where
and professional persons from similar occupations or organisations can meet
association and exchange ideas supported by a modicum of structured
programmes: input, for example from experts in the particular field.
Summary: there is thus a great range of material and opportunities available to all
those concerned with the development of organisations and employees. All
methods used should relate to the matters in hand, performance gaps and
development requirements, and should be viewed as part of a process to be built
on and developed in the future (rather than as ends in themselves). The obligations
of the organisation, learners and teachers, vary in each situation. The responsibility
does not - this remains always with the organisation and teacher.
IStrategy
CHAPTERS
• Introduction
The overall purpose of strategy is to guide and direct the inception, growth and
change of organisations as they conduct their activities. The purpose of this
chapter is therefore to provide an introduction to the essentials of corporate
policy and strategy; the form that it takes in different types of companies; the
variations in strategy between companies, public services and other sectors; the
issues involved in devising policy and strategy; and the development, implemen-
tation and evaluation of policy and strategy.
A clearly articulated, accurate and understood strategy is at the hub of all
successful commercial and public activities; where success is not forthcoming it is
often where this clarity of purpose is also not present. Specifically the need for
strategy is based upon the overall requirement to manage resources effectively
and efficiently. This process has been intensified by requirements for greater
accountability in both public and private sectors. There is also a growing
realisation among those responsible for directing organisations that these
resources must be coordinated and controlled towards agreed policy objec-
tives. Organisations also need to plan ahead in order to ensure that they
understand their required direction and are working towards it. Finally, an
articulation of strategy is necessary also so that the employees of the organisation
know the purpose to which their efforts are being directed.
Corporate strategy is thus based upon a series and pattern of decisions that
determine the organisation's aims, objectives and goals; that produce the plans
and policies required to ensure that these are achieved; and that define the
business in which the organisation is to operate; and how it intends to conduct
this business and what its relations with its markets, customers, staff, stake-
holders and environment will be.
Operational policies are based on the choices made within the overall strategic
view. They are based upon a continuous appraisal of current and potential
markets and spheres of activity; the ability to acquire, mobilise and harmonise
resources for the attainment of the given aims, objectives and goals; and the
actual means of conduct, including philosophical and ethical standpoints and the
meeting of wider social expectations.
The focusing and determination of corporate strategy, policy and objectives is
a process designed to ensure that the organisation knows why it exists; what its
strengths and weaknesses are; what its position in its markets or service sectors is;
125
what it can do and what it should do; what it cannot do and what it should not
do; and what its structure and style are to be in order to be an effective and
profitable operator in its sector. Ideally, the policies and strategy of the
organisation should have relevance to and be understood by, all its employees.
This is essential if individual, group and departmental goals and objectives are to
be reconciled with the overall purpose. It is also, as stated above, much better for
morale, commitment and the formation of positive attitudes and identity among
all staff if they know how their own particular contribution is to fit into the
overall scheme of things.
Policies and strategy must also address fundamental operational issues of
relevance both in the immediate term and in order to ensure continuity into the
future. These are as follows
• The level of finance and capital required in order for the operation to be
established and maintained successfully
• The levels of income, surplus and profit that the organisation needs to make
and wishes to make
• The structure of the organisation that is appropriate for those operations to be
carried out
• The management style that is to be adopted and the style of leadership,
direction and supervision
• The priorities that are to be placed on each of the operations; the markets and
sectors in which business is to be conducted.
Figure 5.1 models the sources and development of organisation strategy:

Figure 5.2 shows the stages in the strategic planning process.
• Public policy
For effective public policy to exist it must also be based on the principles just
outlined. However, the complexities of this emerge in different ways, and the
corner-stone is the reconciliation of the range of matters that are both divergent
and conflicting in the area of public policy.
There is the need to provide services for the parts of the community designated
as having particular needs and wants. There is the need on the part of politicians
to give energy to public policy to meet manifesto commitments, and to reconcile
these with keeping taxes down and ensuring the maximum efficiency of public
expenditure. Resources have to be targeted at the desired groups in order to
maximise their effect. There are also matters of expediency to be considered, such
as high profile success stories; the politician also has his own aims and objectives
to achieve. Consideration must be given to the wider community in which these
activities are carried out. Again this may impinge on and influence critical
considerations, having regard to the extent of public cooperation in the nature
and implementation of public policy. The general sympathy in which the
particular initiatives are held, the true nature of the demands on the public
Strategy 127
EXTERNAL CONDITIONS AND TRENDS INTERNAL CONDITIONS
Reputation Reputation
Technological Image
Legal History
Economic Traditions
Technical Skills and
Political capabilities
Social Functional and
Environmental operational
National capacities
International Organisational
Global style
Structure
OPPORTUNITIES, CORPORATE RESOURCES

THREATS AND RISKS
• Enabling or constraining
• Identification opportunities
• Assessment • Identification of corpo-
• Evaluation rate strengths and weak-
nesses
• Assessment of corporate
--r-- potential
1
I
I
I
+
Consideration
I and Evaluation
I of Alternatives
External and I
Market Review I Internal Capacity
Process I Review Process
I
I___ _
Figure 5.1 Source and development of organisation strategy
purse, and the extent to which these are desirable and reconcilable must also be
considered. Resources have to be monitored; this is carried out by appointed
officials, professionally trained, at the request of politicians.
Any government has then to reconcile resource constraints with its own
perception of what constitutes both the public interest and the national interest,
and do this in relation to its own stated aims, objectives and philosophies (if it has
any). It has to do this in the almost certain knowledge that there are more
demands on public resources than there are resources themselves, and that the
, -----------STRATEGIC CHOICE
t~--- !
-c--- AIMS AND OBJECTIVES FORMULATED
THE
CONTINUOUS
:f----- !
CHOICES AND ALTErATIVES EVALUATED
PROCESS
OF
REVIEW
AND ~--+FORMULATION OF PREFERRED/INTENDED DIRECTION
t !
EVALUATION
I'--- -c--------
!
QUANTIFICATION
~
~--- -c-------- IMPLEMENTATION
+ !
" - - - ""'(--------- EVALUATION
Purpose: the translation of strategy into direction and activity
Figure 5.2 The planning process
demands on these have to be scaled down, ordered and prioritised in the daily
operation of public services. For the public sector therefore, municipal, local and
national government initiatives translate resources into what becomes the
designated level of service to be provided and the amounts of finance to be
allocated. Structure and style often include the creation of management
committees and boards of governors to ensure that what is done, is conducted
in accordance with the given objectives of the service concerned.
• Development of strategy
At this stage there are three basic matters that have to be addressed, whatever the
nature of the organisation and its products or services:
• The true nature of the product or service, the functions that it serves, could or
should serve; how it could be adopted, adapted, extended or improved
• The organisation's main strengths and weaknesses, whether there are any
overriding or dominant strengths or weaknesses; and what the main strengths
and weaknesses of the organisation's competitors are
Strategy 129
• The opportunities and threats that exist; the risks and uncertainties that can
be identified; and the scope there is for improving the position of the
organisation in its markets.
Consideration will also be given to other wider factors - social, economic,

political, technological and ethical - that need to be taken into account, or may
need to be so; and the extent to which the organisation is at the mercy of factors
that it cannot control.
By way of completion of this section, however, there is a caveat. Most of what has
been discussed so far indicates an all pervasive scientific and rational approach to
the conception and formulation of strategy. In reality, there is invariably a strong
non-scientific, non-rational element in the devising and evolution of strategy, that
either limits the rational, or works against it, or indeed, enhances it.
Consideration must therefore be given first to matters of expediency (the need
for a top manager or politico to have a 'triumph' for example); and political,
social and environmental acceptability (motorway and airport schemes usually
have an unanswerable economic imperative, but are entirely unacceptable in their
'perfect' form to the location required for them). A proposal may also come from
a key employee, power player, or over-mighty subject- the organisation may not
have the backbone to turn it down, whether it is a good idea or not. Related to
this may be waves of inspiration or intuition on the part of top, key or powerful
employees, again resulting in the organisation following directions other than
those indicated by the rational approach.
The final element of this is to recognise that, even if the strategy is rationally
devised, it may not be possible to control the environment in which it is to be
executed. A business loan taken out at a base interest rate of 5%, for example,
may be very attractive; however, if the interest rate is variable, and government
policy pushes it up to 15%, the loan becomes a burden in normal circumstances.
Airline timetables are published giving precise departures and arrivals; in reality
they are operable only at the 'whim' (if that is the right word) of the weather!
Thus, the beginning of the strategic and policy formulation process requires a
full consideration of the whole sphere of the activities of the organisation from
the full variety of different standpoints. The relationship between purpose
(strategy) and activities (operations) requires constant attention, and active
management.
Consider Summary Boxes 5.1 and 5.2.
• Internal strategies and policies

In order to achieve all this, organisations will devise related and integrated
strategies, and policies and plans for their implementation, that cover all aspects
of the operations devised to fulfil the overall strategy.
The following must be covered:
SUMMARY BOX 5.1 The Health Sector
Strategic standpoints adopted by the different players in the health sector are very
different. However, their core purpose derives from the same basic human desire-
that of 'getting better'.
Emergency services rescue sick and injured people from the scene of their illness
or accident. They take them to hospital and arrange for them to be treated. This may
or may not be free at the point of delivery; and may or may not be offered as part of
the nation's obligation and commitment to its people.
In the UK the National Health Service (NHS) originally sought through a means
of generic national insurance to provide a comprehensive and universal health and
welfare care to all citizens, again free at the point of delivery.
Insurance companies, private hospitals and patient plans offer a range of health
care that is designed in general to diagnose, treat and comfort a series of ailments
that is either not available on a welfare or public basis, or which is so available but
at the cost of waiting.
Some private clinics also provide treatments in response to civilisational
expectations or perceptions, such as fat reduction, wrinkle removal and body
contouring.
Each is a particular response to the needs and wants of particular sectors of the
public. This may be articulated as: the ability to have any sickness, injury and
ailment diagnosed and treated quickly and accurately so that the person concerned
is restored to full and active health.
Any operator who aspires to work in this sector must therefore understand this;
and the niche operators such as cosmetic surgeries keep this at the forefront all the
time. For larger and more complex organisations and activities in such a funda-
mental sphere of activity it is very easy to lose sight of this core purpose.
SUMMARY BOX 5.2 McDonald's
The strategic corner-stone of McDonald's is this: wherever in the world you find a
McDonald's restaurant you are assured of the same quality of product. packaging,
service and cleanliness.
The restaurants have a distinctive ambience and design. This has the overall
purpose of engendering familiarity, reinforcing the general message. They are
comfortable and functional; suitable both for the customer to sit and enjoy his meal
and also to be made and kept clean and tidy. The average length of stay of the
McDonald's customer is about 15 minutes and the facilities reflect this; the
emphasis balances throughput with a level of comfort commensurate with the
length of stay.
There is a core range of products offered, though these do vary at the periphery
(for example, there is a much greater emphasis on salad bars in North America than
Europe). Again this reinforces the message of confidence and familiarity. The
company now has outlets in more than half of the countries of the world, all
designed and presented in this way and with this core range of products.
The strategy delivers 'the McDonald's promise'. This is a universal content and
quality of product together with this concept of familiarity in which the customer
may have absolute confidence wherever in the world he chooses his product.
Strategy 131
• Financial, investment, budgeting and resourcing strategies, concerned

with both the underwriting and stability of the organisation, and also the
maintenance of its daily activities
• Human resource strategies designed to match the workforce and its
capabilities with the operational requirements of the organisation; and related
policies on ensuring the supply of labour; effective labour relations; and the
maintenance and development of the resource overall
• Marketing strategies, designed to ensure that the organisation's products and
services are presented in such ways as to give them the best possible impact
and prospects of success on the chosen markets
• Capital resource and equipment strategies, to ensure the continued ability
to produce the required value and quality of output, to the standards required
by the markets; and to be able to replace and update these resources in a
planned and ordered fashion (i.e. including research and development and
commissioning of new products and offerings)
• Communication and information strategies, both for the organisation's
staff and its customers/clients, designed to disseminate the right quantity and
quality of information in ways acceptable to all
• Organisation, maintenance, development and change strategies, for the
purpose of ensuring that a dynamic and proactive environment is fostered; a
flexible and responsive workforce; and an environment of continuous im-
provement and innovation.
• Vision
This may be defined as the standpoint adopted at the point at which policy and
strategy are devised. This is the way in which things are to be done, and gives an
articulated understanding of this to everyone concerned with the enterprise,
whether leader, manager, staff, customer or client. It is the 'shining light' of the
organisation.
In order for a vision to be articulated effectively, it has to be both under-
standable and accurate. It must also give a focus to which everyone concerned
can subscribe and aspire, and with which they can identify. It normally arises
from the imagination, passion, commitment and originality of those who
establish the organisation in the first place, and is translated by the others
working in it into the operations that are carried out.
It is manifest in many ways, chief of which are the 'values' or 'shared values' of
the organisation; elsewhere, these may be defined as 'mission statement' or 'core
values'.
A vision must clearly always be positive and accurate, reflecting the highest
and true aspirations of the organisation. In particular, staff and customers will
identify more closely with the organisation, its products and services, where
vision is evident.
Finally, vision is the articulation of a clarity of purpose and direction of the
organisation. While most business and organisational leaders and managers are
not 'visionaries', the most successful have a clear idea of both the purpose of their
organisation, and the directions it is to take in its fulfilment.
Vision is present always in profitable and successful organisations. The

International Management Group (IMG), for example, is renowned for the
great loyalty of its staff both to the organisation, and to Mark McCormack the
group's creator and founder. Part of the reason that companies such as Sony,
Nissan, Canon, IBM and McDonald's run extensive and intensive orientation
programmes is to ensure that all their staff subscribe to, and adopt, the
organisation's vision of itself in its business.
This is also true in the best public services; again, these are most effective where
the persons concerned are sure of the purpose of their part of the service. In the
drive to create commitment and improve effectiveness in local government and
municipal services in the UK, Europe and North America, public bodies have
attempted to articulate this vision to give a measure of focus and identity to both
the staff and the community in which they operate. This must increase as such
organisations become less protected (as in the UK), and as the services that they
carry out are increasingly put out to tender or privatised (a near-universal feature
of the 1990s).
• Core and peripheral activities

• Core activities
This aspect of the strategic process requires brief articulation. It is the main part
of the organisation's activities, the part without which it would not or could not
exist. This may be in terms of:
• volume of activity: what most people do, or what most resources are tied up
in
• profit and income: where most of the money comes in from
• image and identity: that which gives the organisation its position, status and
prominence in the sphere in which it operates.
This has been called 'sticking to the knitting' (Peters); and provided that this is
seen in the context of identifying accurately what the 'knitting' truly is, it is as
good a definition as any.
Core business also translates into a public sector equivalent- 'core service', in
which the central service requirements are identified. This part of the strategic
process is successful where each is clear; where the core business, core activity or
core service is accurately identified; and where everyone understands what this is,
and is committed to it. Consider Summary Box 5.3.
There is a critical relationship to be identified between the organisation type
and the core activities undertaken. This is the key to the long term success of the
undertaking, and the way in which it is to be carried out. The structure, shared
values, style and strategy must reflect the core activities; peripheral activities
should be limited to those that this manifestation can support.
Strategy 133
SUMMARY BOX 5.3 The NHS Reforms
One of the reasons that there have been problems with the UK NHS reforms in the
early 1990s is that the core purpose and activities of the 'new' service have not
been made clear. There is confusion over the range of services to be provided; the
priority of these services; the particular types of operation to be carried out; and the
nature of the total service to be offered, and to whom. As hospitals (in particular the
'Trust' hospitals) resolve these matters, as they identify what their 'core activities'
actually are, they take steps towards becoming effective operators and service
offerers.
• Peripheral activities
These are the other activities in which the undertaking gets involved. They must
not be at the expense of the main or core activities, nor should they be a drain on
resources. Rather they should enhance the core activities, or reflect niche or
segment opportunities that exist as the result of the core business.
Such activities will nevertheless be essential, expected, and extremely profit-
able. A hospital is not 'in business' to sell food, sweets, newspapers, books, cards,
fruit and flowers; nevertheless it is essential for a variety of operational and social
reasons that these activities be undertaken.
Similarly, a car company will invariably make additional parts for the
replacement, service and spares sectors; these simply require some form of
repackaging or 'differentiation' to generate additional business, in an obvious
and profitable area of activity.
• Risk
At this stage the concept and nature of 'risk' must be recognised.
The purpose of identifying and studying the components and elements of risk
and uncertainty is to ensure that anyone in a managerial or executive position
understands the full range of issues that must be considered for any situation, in
the devising and implementation of strategy, and in the management of
operations.
In straightforward and familiar situations this will be a simple process and
easily carried out. Otherwise, it requires a full recognition and assessment of a
variety of factors:
1. Sectoral trends: whether growing or declining, either in size or prosperity;

whether this is likely to continue. Factors that are affecting this at present; are
likely to affect it in the future; and could possible or remotely affect it.
2. Substitutes: what else people could buy or do as an alternative to their
current set of activities; what else they might buy or sell or make; where else
they might locate.
3. Social, political and economic issues: these have become extremely

important over the current period. Over this time, the whole range of positive
and negative external factors has been brought into play. This also includes
ethical and environmental considerations, and the realignment of more
fundamental values. The question of doing something (or not) because it is
socially acceptable (or unacceptable) is currently an issue for the first time for
many years.
4. Strategic aspects: relative to the organisation's position in its sector; its
preferred direction; its size; its ability to dominate or take control of its niches;
the balance of its proactive, steady state, responsive, and crisis activities.
5. Operational aspects: in relation to precise goals and objectives especially
over the short and medium term, and again having regard to the balance of
proactive, steady state, responsive, and crisis activities. This also has regard to
levels of resources, staffing, skills and capabilities, available and required, and
projections and prognoses of these for the future.
6. The constitution of the organisation: its directorate, executive and
management. The style and attitude and capability of these, and the extent
to which they are stable or changing, or open to reform or takeover, must also
be taken into account. This is especially true at present of civil, health and
public utilities and services in the UK, which are increasingly subject to
privatisation and a profit motive, as well as service delivery.
7. Identification of the critical requirements of success of the operation: this
is truly dependent upon the executive capabilities of the managers and
directors involved in projects. Above all, this part of the process requires a
full consideration of the questions: 'What can possibly go wrong?' and 'What
is the single most important factor for success?'
8. A monitoring and evaluating and projection process that covers the
following:
• Identification of the best, medium and worst outcomes

• Analysis of any critical path or critical incident
• Ability to extricate oneself from the situation (or not) and the conse-
quences of this
• Assessment of the full range of cost and benefits.
9. Factors outside the control of the organisation and its managers.

10. Behavioural and perceptual issues: the extent of these in the organisa-
tion; their nature; and their influence on strategy and operations.
Within this broad and managerial frame, quantitative, statistical and mathema-
tical approaches may be used to project likely results and possible outcomes.
These approaches include:
• Accounts, profit and loss modelling to assess commercial and cost viabilities;
cost apportionment; minimum income levels
• Statistical modelling, to assess probability and likelihood; averages, frequency
and mid-point; standard distribution; the critical path of a given project; time
factors; and space usage
• The inclusion of given variables to project changes in circumstances; changes
in possible outcomes; and to address the effects of these variables on other
components.
Strategy 135
Finally, all this will be considered by managers, executives and experts in the
light of the real situation in which they must operate. All of this will therefore in
turn be limited or influenced by:
• Deadlines
• Particular ways of working
• Where executive power, authority and influence lie
• Key characters
• Local factors and political and institutional aspects
• Particular strengths, weaknesses, opportunities and threats
• Aspects of difficulty, value, frequency, importance and presentation
• The decision-making process
• Culture, values and ethics
• The balancing and accommodation of all these.
The end result is thus that an accurate or informed assessment of the risks
involved in any activity or proposal is produced in advance. It does not mean that
risks are not taken, but rather that an informed judgement has been made before
going ahead. If this is done, a truer range of outcomes can be assessed; more
accurate contingency plans can be drawn up; and any future matters arising from
the issues in hand can be proposed from a position of relative strength and
certainty.
• Types of strategy
Any business or public strategy must have the following components if it is to
stand any chance at all of success:
• It must have properly established performance targets, in whatever terms

these are to be measured (e.g. income, volume, quality, but set against
measurable, understandable and achievable targets)
• It must have deadlines that are achievable, that have been worked out in
advance, and that represent a balance between commitment, resources and
contingencies
• It must have contingencies built in, to cover the unlikely, and the emergency.
Outcomes should be pre-evaluated in terms of 'best' - what is the greatest level

of success that we can possibly gain by following this course of action; 'worst' -
what is the worst level of failure that can be achieved (if that is the right word) if
everything that can go wrong does go wrong; and in between, a range of
outcomes under the general heading of 'medium' or 'acceptable'. In particular,
the level of bare acceptability of the outcome of a particular strategy should be
assessed at the stage of devising strategy.
Outcomes should be extrapolated from each of these positions to try and
envisage the following stage of the organisation's activities and the wider
implications.
Outcomes should be examined from both long and short term standpoints.
The strategy, and the means of achieving it, must be understood and adopted
both by the organisation's staff, and by its customers and clients. Everyone
involved within the organisation must be committed to it; it reflects their means
of livelihood for the foreseeable future; and also, to an extent, their standing in
the community.
Within this context, the following main types of strategy may be defined:
• Growth strategies
To be measured against preset objectives, whether in terms of income; market
share; sales volume; and new products or services. Required, expected or
anticipated measures of growth, and the timescales for this, should be stated in
advance. How such strategies are to be supported, financed and resourced, and
the implications of this, must also be clearly stated and understood. The staff
concerned must know this, and the implications for them.
Acquisitions, mergers and takeovers: are all variations on the theme of growth.
Again these approaches must be against preset objectives, and with the overall
view to enhancing the profitability and/or quality of the business (see Summary
Box 5.4). In support of this, what may actually happen is to introduce the
organisation into new geographical areas, to increase the sectoral position; it may
also help to defend and protect the organisation's own position.
Such activities may also include the acquisition of suppliers and distributors
and sources of raw materials; this is known as 'vertical integration'.
They may additionally represent niche opportunities, the ability to get into
new and profitable market sectors, to purchase the client list, resource or base of
a competitor, or parallel operator.
• Retrenchment
This is the withdrawal from niche or peripheral activities; the sale of assets; the
concentration on the core activity. It need not have negative connotations; for
example an organisation may sell off its lorry fleet, and lease lorries, at the time of
credit squeezes and high interest rates. On the other hand, where there are
negative connotations, effective retrenchment will have the overall purpose of
protecting the core business and the certain markets (in so far as there are any), at
the expense of the niches in which the organisation has been operating.
Retrenchment activities in public services are very often the cause of crisis,
because there has to be every attempt to maintain the level of service against a
declining budget provision.
Retrenchment activities must also be carried out against preset aims and
objectives, and with a defined purpose and planned outcome.
Strategy 137
SUMMARY BOX 5.4 Acquisitions Example: Sony and Matsushita
In 1989 the Sony Corporation paid 3.4 billion dollars for Columbia Pictures, a
Hollywood TV and film studio. In 1990, Matsushita paid 6.1 billion dollars for
MCA, the American music, video and entertainment company.
The lessons to be drawn in both cases stem from an assessment of the strengths
and direction of the organisation in question. In general, any growth, diversification
or acquisition strategy will be based upon an estimation of what the new business
will bring to the existing one and how this will strengthen both the overall portfolio
and its operational capacities.
Thus the rationale behind each was that they had expertise and capabilities in
electrical and electronic technology that could usefully and profitably be translated
into the new spheres, that there would be returns on the amounts paid measurable
in commercial terms. The acquisitions would also lead to new market opportunities
in the USA and in the entertainment sectors, and would give each of the companies
a further foothold and reputation in the West.
Both decisions were criticised at the time as being acquisitions for their own
sake, pushed on by the desire of the company's ownership to gain a stake in a
glamorous and high profile industry, and by companies that had more cash than
they knew what to do with. There was also perceived to be a competitive element
between the two organisations.
Both situations required careful and thoughtful analysis, both acquisitions
provided new and multi-million dollar outlets for the products of the parent
company. There is also the technology, research, development, design spectrum
and synergy created by the acquisition for potentially highly profitable exploitation.
• Diversification
This is where organisations take the conscious decision to move into new markets
and activities, very often in spite of the fact that there is no particular expertise in
the new chosen field. Expertise in the new field, and the assimilation of its modus
operandi, must be acquired by the organisation, if it is to be successful.
In practice, most effective and successful diversification strategies follow the
vertical integration patterns, moving into new sectors that are clearly indicated
by the current core business (for example, the Murdoch organisation moved into
satellite television; it had no particular expertise in television or satellite
technology but, looked at from a different standpoint, was a major player in
mass media and communications). Consider Summary Box 5.5.
• Price leadership
The organisation in this case sets out to gain the reality and the reputation of
being the market player with the lowest prices, and to ensure that everyone who
purchases from the organisation knows this. This will not be entirely at the
expense of quality; products and services still have to be good enough to attract
people to purchase in the first place.
SUMMARY BOX 5.5 Virgin Airlines
The move by the Virgin Group into the business of airline operation, from music,
video and record distribution, was spectacularly successful; but to do it required
extensive research, projections, expertise acquisition, and market understanding on
the part of what was hitherto essentially a chain of shops. There were certain assets
perceived by the Group, of which it could take advantage as it moved to become an
airline also- a large customer base, strong UK image, reputation for quality, and
public confidence; however, these were qualities that had, in practice, to be
refashioned by the new airline for itself. Moreover, any failure on the part of the
new venture would have had serious consequences for continuing and future
confidence in the rest of the group's activities.
Some price leadership activities are spectacularly successful, such as the sale of
petrol by British and European supermarket chains. Supermarkets in Europe and
North America do adopt 'pile it high, sell it cheap' strategies, but this is generally
limited to certain products within the state; similarly, 'Do It Yourself' chains will
generally have some products at good prices for the consumer. The concept is
thus most widely developed as 'loss leadership', rather than as price leadership.
The IKEA furniture chain, however, is making attempts at present to expand
across the countries of the EC, on the premise and image that all its prices are
low, and represent better value than the indigenous competition.
• Differentiation
This is the offering of a homogeneous product on the basis that it is somehow
different from the other offerings by other competitors. Strategies designed to
differentiate must create a strong image, identity or association; they must relate
the product to a lifestyle, set of values, or status that the customer desires.
Thus, margarine is sold on the various bases that it is: healthy; slimming; tasty;
sunny; svelte and sexy. Petrol is: high-tech; reassuring; reliable; clean and
environmentally friendly; the petrol station is also a gift shop and grocery
store. Cosmetics are colourful; sexy; and also environmentally friendly. (This
concept is expanded in Chapter 6, as part of the discussion of the marketing
mix.)
Prices, in differentiated strategies, may also be brought down to give an
impression of a good-value purchase. Price may itself conversely give an
impression of an opulent lifestyle (as, for example, in the leisure wear and
trainers sectors of the clothing markets). This is carried to its extremes in the
'luxury goods' market; there is a widely held perception that there is a price
below which it is impossible to sell fragrance, perfume and aftershave, for
example, because of the extreme associations of lifestyle and image that go with
them.
Strategy 139
• Focus
This is where the firm selects a much narrower or more specialised market sector,
and concentrates exclusively on it. This sector may be defined in a variety of ways
(see Chapter 6); the 'focused' strategy will pick its niche, assess its viability, and
set its targets. Possible targets may include: the supply of a critical component for
a larger industry; coverage of a particular geographical area; coverage of a
particular income segment or population segment; domination of a particular
technological niche.
Taking one example of what is a large and expanding sector, that of video
tapes: particular focuses may thus be:
• Video tape cassettes, essential to the continued well-being of the home
entertainment sector
• Video tape cassettes of a particular running time, because consumers want a
choice of running times
• Video tapes to be supplied to the manufacturers of the cassettes themselves
• The central points without which the tape cassettes cannot work; the plastic
casing, which is required in particular formats to complete the cassettes; the
cardboard boxes; the shrink-wrapping; and so on.
Each of these is carefully focused. Any organisation that wishes to operate in

such a sector must decide the nature of the focus that it wishes to adopt. Any of
the items included in the example are clearly areas in which the conduct of
profitable business is possible.
• Market domination
Strategies aimed at market domination normally adopt and adapt components
from each of the above to ensure a dominant position. Domination may be by
sales volume, assets, income derived, largest number of outlets, or outlets in the
most places (or a combination of some or all of these). It may also arise as the
result of being the majority supplier (i.e. holding more than 50% of the market);
the largest single player, though with less than 50%; or one of an oligopoly of
operators (in some countries and sectors, this may be organised into a cartel,
though this is illegal in many sectors and many countries).
In practice, it is rare to find massive majority dominators of sectors, though
British Airways handles about 70% of internal British air traffic by passenger
volume; otherwise domination in this way is limited to gas, electricity and water,
telecommunications. Oligopolies may be found in media, newspapers, oil and
cars among others.
• Measurement and evaluation

This process, in general, will be carried out against the preset aims and objectives
of the particular strategy; quantifiable where possible, areas of particular success
or shortfall will be apparent, contributing to the organisation's expertise in the

field and ensuring further improvement in the strategic and planning processes
for the future.
Beyond this, evaluation is both a continuous process, and the subject of more
formalised regular reviews at required and appropriate intervals, thus setting a
framework against which the strategy is to be judged.
Some specific questions can also be posed and answered:
1. The extent to which the strategy is identifiable, clear and understood by all
concerned, in specific and positive terms; the extent to which it is unique and
specifically designed for its given purpose
2. Its consistency with the organisation's competence, resources and aspira-
tions; and the aspirations of those who work in it
3. The levels of risk and uncertainty being undertaken, in relation to the
opportunities identified
4. The contribution that the proposed strategy is to make to the organisation as
a whole
5. Market responses and responsiveness.
These questions can be answered as part of both the continuous evaluation and
the regular review process.
• Implementation of strategy
The determination of strategy is therefore a combination of the identification of
the opportunities and risks afforded by the environment; the capabilities, actual
and potential, of the organisation, its leaders and top management; and issues of
ethical and social responsibility. Turning this into reality effectively, in both
business and public service activities requires, first of all, a commitment to the
given purpose that is sustainable. It requires both functional and structural
organisation, coordination, control and direction systems relevant to, and
supportive of, the given purpose. Aims and objectives must be set, monitored
and reviewed; these also must be relevant to the purpose in hand, and assessable
for both success and failure, in the long, medium and short term. Review
processes must be included as part of the strategic establishment, with the ability
to activate both fine tuning, and crisis and emergency management aspects (see
Figure 5.3).
Within this broad framework, a series of particular activities must be
undertaken:
• Key tasks must be established and prioritised, effective decision-making

processes drawn up, and systems for monitoring and evaluation of strategic
process devised
• Work and workforce must be divided and structured to a combination of
functional and hierarchical aspects, designed to ensure the effective comple-
tion of the tasks in hand; this must include relevant and necessary committee,
project coordination, working party, and steering group activities
Strategy 141
.. FORMULATION
(deciding what to do) ~ .---·------, ~ IMPLEMENTATION
(achieving results) -
•
r---1 Identification of
opportunity and risk
. CORPORATE
..
1 Organisation structure
and relationships
••
STRATEGY: Division of work
• t
Coordination of divided
.
Pattern of responsibility
purposes and Information systems
2 Determine the policies defining
company's material, the company and
r-
.
technical, financial and its business 2 Organisational
human resources processes and
•
behaviour
.
Standards and
t measurement
Motivation and I•
3 Personal values and incentive systems
r- aspirations Control systems
Recruitment and
•
development managers
t
4 Acknowledgement of 3 Top leadership
...._ non-economic
~ L...------1 ~ Strategic
responsibility to society
' Orgamsat1onal
Personal
Figure 5.3 The implementation of strategy
Source: Christensen (1987). Used with permission.
• Information and other management systems must be designed and installed;

control and constraint systems must be a part of this, to include financial.
human resource, production, output and sales reporting data
• Tasks and actions to be carried out must be scheduled and prioritised in
such a way as to be achieved to given deadlines; as well as establishing a
background for precise work methods and ways of working, scheduling
provides the basis for setting standards against which short and short medium
term performance can be measured
• Actual performance can, and must, be measured against forecast, projected
or budgeted performance; customer and client responses; and the performance
of other operators in the same market place
• Human resource (HR) policies may be assessed for their effectiveness and
quality, relevance and suitability to the work in hand, and particular HR
difficulties; they may also identify wider issues of conflict, communication

blockages, disputes and grievances, and their causes
• HR management techniques that have been adopted may also be measured
for effectiveness; these will include payment and reward systems, rule-books,
methods of performance appraisal, and staff training and development for all
levels
• The creation of a corporate culture that is both relevant to current ways of
working, and that can be developed in such ways as to maintain harmony and
a positive and productive environment for the future, must be undertaken; this
must extend to induction, orientation and attitude-forming activities.
The commitment of the organisation's leadership and directorate, both to the

strategy and the components for its implementation itemised above, is a dynamic
and continuing process, consistent with the aims and objectives, and also the style
and structure adopted for their achievement. Consider Summary Box 5 .6.
SUMMARY BOX 5.6 'Post It'
The 'post it' pad was invented by an employee of the 3M company in the USA. He
sang in his local church choir and he wanted markers for his hymn book that would
not fall out of the book when it was lifted up.
The pads were first popularised within the company itself through the enthu-
siasm of the employees and their constant use of them for the myriad of purposes to
which we now all put them.
• Evaluation of strategy
We have consistently and continuously seen that any process of evaluation must
have the following components if it is to be effective. It must be made against
preset aims and objectives; it must be in both global and operational terms; it
must be in both long and short term time frames; and it must be a continuous
process, with the additional purpose of identifying and preventing and managing
positive failure and crisis on the one hand, and additional opportunities for
positive and profitable activities on the other (see Figure 5.4). Within this broad
framework, however, other matters have to be considered.
• Criteria for assessment

Criteria for assessment should be clearly written and understood by all
concerned.
They should also be written across as wide an operational spectrum as
possible. They should not, wherever possible, be written purely in terms of
Strategy 143
(/)
ASSESSMENT (/)
w
(.)
0
a:
D..
DIRECTION
~
w
>
w
a:
CHOICE
APPRAISAL ~
(!)
w
(!)
<(
a:
1-
(/)
IMPLEMENTATION
Figure 5.4 The monitoring, review and evaluation of strategy and direction
short term financial gain, immediate cost advantage; this, in particular,

invariably gives an incomplete picture, and organisations that pressure their
managers or staff in these directions inevitably do so at the expense of long term
investment, or long range interest, product and service research, modernisation
or technological development.
They should be written in terms that coordinate and integrate all organisa-
tional, divisional and departmental activities - human resource, marketing,
production, sales, research and output; they should be translated into compa-
tible terms at whatever level in the organisation they are established.
They should identify global, organisational, operational and individual issues
and concerns, in such a way that those involved can both take advantage of those
opportunities that present themselves, and also signal any immediate or potential
causes of concern.
The question of 'who evaluates' must also be answered. Both overall and
departmental objectives must be set and met; therefore those responsible in both
areas must have importance in the evaluation processes. Top management, above
all, must retain familiarity with specific outputs from particular departments. As
well as the overall view, they must be prepared to recognise specific operational
issues from this more detailed aspect, and from this to take any remedial action
necessary. This should be built into both management information systems and
reporting relationships up the hierarchy. The effectiveness of problem handling,
at both operational and directorallevel, will thus be evaluated.
This has emphasised the importance of universality of understanding of strategy

and direction at all levels of the organisation; it is difficult, if not impossible, to
give any true measure of success or failure, if those doing the assessing are not
clear what is being evaluated. Also, a shared interest at all levels in the problems
to be overcome helps to make the communication, reporting and evaluation
systems themselves more effective and precise.
Finally, however, consideration must again be given to the non-rational, non-
scientific elements. Just as these are present in reality at the inception stage, so
must they be included in the evaluation.
This will include coverage of the expedient, the politically-driven activity, the
brain-child of the powerful member of staff. There are wider issues in this regard,
however.
As any strategy unfolds, side benefits and spin-offs become apparent; indeed,
this is an attraction in the commissioning of projects and product developments.
Defence equipment manufacture has always led to technological advances that
have other uses- radar, for example, used to detect hostile craft in times of war,
is used, among other things, to allow aeroplanes to fly without fear through cloud
and fog; and is used by fishing fleets to locate shoals of fish.
This process also invariably leads to new applications being found for existing
technology - the digital watch is a by-product of the development of the pocket
calculator.
Finally, major sectoral projects bring technological advances in their wake.
The Channel Tunnel project has generated a wealth of expertise in geotechnol-
ogy, construction and tunnelling equipment, and railway technology, as the
result of its commission.
Such benefits are expected to accrue from any course of action undertaken, and
each sector has its own equivalent. While there is a strong rational imperative at
the core of successful strategy formulation, implementation and evaluation, it is
essential to have regard to the wider elements as indicated.
• Ready-reckoner strategic analyses

These are introduced here to enable the assessment and compartmentalisation of
particular activities in the ways indicated. They require short and intensive
creative discussion or brainstorming activities on the part of those undertaking
the analysis. The issues thus raised can then be rigorously assessed, evaluated and
Strategy 145
prioritised; accepted or rejected; or used as the basis for further research and
analysis.
I Strengths, weaknesses, opportunities, threats:

SWOT analysis
The purpose of SWOT analysis is to help organisations learn, clarify issues,
identify preferred and likely directions (see Figure 5.5).
STRENGTHS WEAKNESSES
THREATS OPPORTUNITIES
The method by which the ideas are generated and compartmentalised is a creative group
discussion, OS, 'brainstorming'. The end result of this is a list of items under each
heading.
From this a full discussion and development of the idea is concluded.
There are no 'holds' or 'taboos' in a SWOT analysis: the purpose is to be creative, not
restrictive.
Figure 5.5 SWOT analysis
In this activity, Issues are raised, highlighted and categorised under four
headings:
• Strengths: the things that the organisation and its staff are good at and do
well; that they are effective at; that they are well known for; that make money;
that generate business, and reputation
• Weaknesses: the things they are bad at, or do badly; that they are ineffective
at; that they are notorious for; that make losses; that cause hardships, disputes,
grievances and complaints; that should generate business, but do not; this
aspect requires a degree of candour
• Opportunities: the directions that they could profitably go in for the future,
that may arise because of strengths or the elimination of weaknesses
• Threats: from competitors; from strikes and disputes; from resource and
revenue losses; from failing to maximise opportunities or build on successes;
this also includes matters over which the organisation has no control.
Opportunities and threats are representations of the external environment and

its forces. The information thus raised and presented is then developed,
researched or investigated further. It can be done for all business and managerial
activities, and to address wider global and strategic issues. It is an effective means
of gathering and categorising information, of illustrating or illuminating
particular matters, and for gathering or articulating a lot of information and
ideas very quickly.
I Social-technical-economic-political: STEP
analysis
The purpose of STEP (or, sometimes, PEST) analysis is also to help organisations
learn, but the material arising is much more concerned with the analysis of the
wider strategic situation, and the organisation in its environment:
• Social: this is to do with the social systems at the workplace, departmental and
functional structures, work organisation and working methods; externally this
considers the relationship between the organisation and its environment in
terms of the nature and social acceptability of its products and services; its
marketing; and the regard with which it is held in the community
• Technological: this is to do with the organisation's technology, and the uses
to which it is put, and the potential uses of it; and the technology that is
potentially available to the organisation and others operating in the given
sector
• Economic: this is to do with the financial structure, objectives and constraints
(e.g. budgets and budgeting systems) at the place of work; externally this
considers the market position, levels of economic activity, and commercial
prospects and potential of the products and services offered
• Political: this has regard to the internal political systems, sources of power
and influence, key groups of workers, key departments, key managers and
executives; externally, it considers particular considerations in the establish-
ment of markets, by product, location, ethnics, and values.
Again, the information thus raised can be further analysed and evaluated. It
establishes in more detail the wider background against which particular product
or service initiatives are to take place; and raises wider issues or concerns that
may in turn require more detailed resource and analysis.
Strategy 147
• Industry structure analysis

This is based on Michael E. Porter's 'five elemental forces of competition'. In this
analysis focus is directed at each of the five distinctive elements that are present to
some extent in all sectors. Again, the purpose is to clarify the position of the
organisation in its chosen sphere of operations and also to signal any likely or
obvious issues for concern. The five elements are:
1. The industry competitors: the nature and extent of rivalry among those
organisations currently operating in the field and the implications of this for the
future (for example, reduced profit margins where price wars occur; reduction
in capacity where there is over-provision)
2. Suppliers: the extent to which they dominate the sector either through the
supply of a key, critical or rare component; their ability to integrate forwards
into the market itself; the range of choice of suppliers available; and the ability
to use alternative supplies; thus is configured the overall bargaining position of
the suppliers
3. Buyers: the extent to which they dominate the sector either because they
purchase high volumes from it, or because they control the final outlet of the
product in question; their ability to integrate backwards into the market itself;
the number and type of operators in the buyer group; and the ability to generate
and supply alternative buyers; thus is configured the overall bargaining
position of buyers
4. Potential entrants: the extent to which organisations operating in other
sectors have product, technology and staff capacities to gain entry to the sector
in question; and the extent and nature of the entry barriers that surround the
sector
5. Substitutes: the extent to which the organisation's product is a matter of
choice on the part of the buyer; the extent to which equivalent benefits can be
gained from a product that is similar (but not the same).
A diagram is given in Chapter 6.
• Competitor analysis
This involves an assessment of the other players in the field. It has regard both to
the initiatives that they may themselves take to promote their own strategic
advantage and also to measure their likely responses to such initiatives on the
part of the organisation in question (see Figure 5.6).
The components of a competitor analysis are:
• The strategy of the competitor, its driving and restraining forces

• Its current business operations, capacities, strengths and capabilities
• The assumptions held about both the competitor and the industry itself
• A detailed profile of the competitor, its current satisfaction with its current
position; its likely moves and responses to moves; its position in the market; its
under- or over-capacity.
This constitutes a detailed discussion to be devised and conducted by sectoral,

corporate, strategy specialists and experts and to be used as the basis on which
What the competitor is

doing and can do
What drives the competitor CURRENT BUSINESS
CORPORATE STRATEGY STRATEGY
At all levels of management How the business is
and in multiple dimensions currently competing
COMPETITOR PROFILE
Is the competitor satisfied
with its current position?
What likely moves or
strategy shifts will the
competitor make?
Where is the competitor
vulnerable?
What will provoke the
greatest and most effective
retaliation by the
competitor?
ASSUMPTIONS CAPABILITIES
Held about itself and Both strengths and
the industry weaknesses
Figure 5.6 The components of a competitor analysis
Source: Christensen et al. (1987). Used with permission.
both offensive and defensive strategic moves are made. Presentation to an

organisation's top management and directorate will normally be limited to the
matters arising, the results of analysis, the conclusions and recommendations
drawn from a detailed competitor analysis.
• Ethics and morality in management

Of all aspects of management education, training and practice this is the area that
suffers from greatest neglect. Part of the reason for this is the term used- 'ethics'.
The danger is that the matter becomes intellectualised, that it generates academic
debate and discussion without having any noted relevance to real organisations
and their real objectives. In addition to this there is a traditional resistance from
executives of previous generations, who perceive a softness in presenting a caring
Strategy 149
and concerned organisation. Others take a simplistic view of the organisation's

objectives. Nevertheless, the question of ethics and morality at the workplace
must be addressed and some of the areas for this may now be considered.
• Standards of behaviour and activity

This may be summarised as 'the way we do things'. This is manifest in the
relationship between the organisation and its customers, clients and community
and the ways in which these are carried out. One of the reasons that the 'Herald
of Free Enterprise' sank in 1987 was that the company that operated it could not
agree on a basic standard of operation that ensured that the bow doors were
closed before the ship set sail. It was not considered important enough. Elsewhere
there is a discrepancy in the attitudes of the community in Cumbria in the UK to
the BNFL Nuclear Reprocessing Plant- there is regard for the organisation as the
major local employer. There is, however, also a 'dark area' concerning the extent
of the environmental and social pollution that may be taking place. Much of this
would be dispelled by the availability and presentation of honest information and
a definite ethical stance.
• Dealing with the public

Dealing with the public: this is manifest in the ways in which customer
complaints, queries and approaches are handled; the prevailing and perceived
attitudes that are apparent in the relationships between the organisation and its
clients and locality.
• Dealing with the staff

This is manifest in the state of industrial relations at the workplace; and the
approach and attitudes within the organisation to its objective. Traditional
'conflicts' in industrial relations are a major stumbling block to effective business
not only because of the dissipating and divisive essence of such disputes, but also
because they reinforce a general attitude and internal business ethic. In extreme
cases this is entrenched in tradition, folklore and industrial mythology and
requires major investment either to manage or to change. Part of current
management thinking has been concerned with taking a much more enlightened
view of workplace relations and the establishment of standards of 'right and
wrong' in dealings with the staff.
• Corporate citizenship
This arises from the point above. The overall concept here is to do with the wider
position of the organisation in its community, its markets and its environment. In
this context there are roles as employer, from the standpoint of providing
employment, income, investment and sponsorship in the community. There are
roles as organisation also from the standpoint of non-polluter, provider of high
quality goods or services, general benevolence and setter of wider community and
social standards and expectations.
• Leadership qualities
In this context leadership qualities consist of honesty, openness, trustworthiness,
sympathy, empathy and identity. This is not to say that there is anything soft
about this - Mark McCormack, Mary Kay Ash, Alan Sugar and Anita Roddick
have all taken strong ethical stands and are very competitive business people and
directors, running highly profitable organisations (see Summary Boxes 5.7 and
5.8). They create positive responses rather than a vacuum. They generate great
loyalty and commitment. They are empirical examples of the relationship
between developing a strong business ethic on the one hand and highly
profitable and effective organisations on the other. The concept of 'ethics in
management' is much more widely understood, accepted and adopted in the
USA, Japan and parts of mainland Europe than in the UK. In the latter, in
particular, there is a cultural resistance which has to be overcome. Additionally,
there is a prerequisite need for the leaders of both business and public services in
the UK to recognise and understand the direct relationship between high ethical
standards and high levels of organisational performance.
SUMMARY BOX 5.7 Body Shop
The concept behind the 'Body Shop' range of cosmetics and skin cleansing
products was the ability to produce and offer goods based on the use of natural
plant and herbal resources drawn from all across the world. The ethical stance
taken in support of this was based on concern for the environment. The company
manifested this in using materials that Anita Roddick had seen being used all
around the world, either for cosmetics or for cleansing or for medication purposes,
rather than those industrially produced using chemical processes. Packaging was
also kept to a minimum for each of the products and this remains true today. In
certain sectors, especially among the educated middle classes of Europe, Australia,
New Zealand and North America, there was a swing towards health foods, a
healthy lifestyle and an enlightened consumerism in the 1970s, and Body Shop,
which opened in 1976, reflected this. It also sought to contribute directly to
environmental improvement and restoration by putting both funds and resources
into projects that aim to achieve this. It further insists that Body Shop staff work on
such projects in their own time as part of their terms and conditions of employment
or franchise holding.
Body Shop is a quality organisation that has enjoyed commercial success since
its inception. In this context it represents an excellent example and configuration of
the balance and combination of business vision, business acumen and an ethical
stance in the formulation of a successful and profitable undertaking.
Strategy 151
SUMMARY BOX 5.8 P & 0 Ferries: Dover-Europe
The P & 0 Company took over Townsend Thoresen, a car ferry operator that plied
between Dover, France and Belgium, at the beginning of 1987. It immediately
faced problems- the Zeebrugge disaster of 1987; and the seamen's strike of 1988.
P & 0 had therefore to reconstitute and re-launch the ferry services from the port of
Dover to France and Belgium virtually from scratch. This was devised, determined
and conducted as follows:
1. Image: The company changed the colour scheme of the ships, replacing the
distinctive orange, white and green schema of the previous owners of the ships
with its own dark blue and white. The distinctive P & 0 flag was adopted as the
logo and focus of attention and was painted on the funnels of all ships. The
ships were all renamed - they are all 'The Pride of .. .' Dover, Calais, Kent,
Brugge and Burgundy; a very positive approach. The freight ships that they
operate give an alternative message - the names used on these are all prefixed
with the word 'European'.
2. The ships: The ships were specifically designed for operation on this route and
to be manoeuvrable in the confined spaces of the ports of Dover and Calais. In
appearance they are also very distinctive and the organisation has made a
feature of this in its marketing and promotional activities.
3. Facilities: These have been emphasised as being suitable to a great range of
tastes and requirements. A club or business class is now on offer, having regard
to the coming on stream of the Channel Tunnel, with its express through
passenger trains aimed at business travellers; this provides exclusive facilities for
this niche. A range of restaurants, waiter service, cafeteria, coffee and burger
bars is available. Exclusive facilities are provided for lorry and coach drivers. The
whole impression generated is that of a combination of high quality and
excellence of facilities whichever particular niche the member of the travelling
public happens to fall into.
Other offerings on board ship include a cinema, computer and video games,
duty free shopping and children's play areas.
4. Service:
(a) Volume: The company operates up to 60 return crossings per day. This may
rise; this will depend upon continued increases in traffic volumes between
Britain and mainland Europe and the company's stated desire to operate a
shuttle service whereby a ship would leave each port either when it was full
or at the end of every stated period of time, whichever came sooner. The
company currently has five ships on the route.
(b) Capacity: The ships as stated above were all designed with this particular
route in mind. They are able to accommodate up to 2,500 passengers per
crossing in a variety of combinations - tourists, business, coach and
package parties, lorries and heavy haulage, and other commercial.
It should be noted that during the depth of the UK recession of 1992 total
traffic volume carried between Dover and the mainland nevertheless
increased by 11 %.
(c) Staff: All staff complete an extensive induction and orientation programme
and periods of job training. The emphasis is on the satisfaction of customers
and the quality of service required and expected in order to achieve this.
Attitudes, behaviour, standards of dress and appearance are clearly defined.
Smart yet functional uniforms are worn by all staff, giving both identity and
confidence.
(d) Staff relations: These were reformed in the period following the seamen's
strike of 1988 and 1989. The trade union (RMT) was de-recognised by the
company; work and shift patterns were altered; the numbers of crew
members per ship were reduced; and a much greater flexibility both of
rostering and occupation was determined. The organisation stated that its
purpose in doing this was the necessity both to compete with the Channel
Tunnel and to improve the efficiency and effectiveness of the services as
they developed and extended in the period following the integration of the
single European market.
The strategic purpose behind all this is complex. P & 0 first of all desires to be the
major ferry operator in the single European market. It needs to be able to compete
with the Channel Tunnel as the potential of its operations is realised in the mid- to
latter part of the 1990s and beyond. It desires also to set standards of service,
reliability, confidence and quality that underline its strategy.
The process in which the company engaged in transforming the nature, quality
and style of its services between Dover, France and Belgium took the best part of
three years to achieve. What is in place now is a distinctive, profitable and high
quality service, equipped to compete with the Channel Tunnel and versatile
enough to take advantage of any new market opportunities that may be afforded
to it on its routes, both in operational terms and also accommodating any increase
in volumes of traffic generated by the continued development of the European
market.
Figure 5.7 models the effects of social/political considerations on strategic

choice and direction.
• Conclusions
The devising of corporate policy and strategy must both identify and reconcile a
complex range of matters if it is to be effective. This chapter has attempted to
illustrate what the main issues for consideration here are.
Devising and implementing strategy is a continuous process, one that is subject
to constant analysis, evolution and review. It must be clear and strong enough to
give a universally understood clarity of purpose; but this must not be mistaken
for rigidity. All organisations must combine this with the qualities of flexibility,
dynamism, opportunism and responsiveness if they are to survive into the future.
Strategy has also to be seen as operating in different ways over different time
periods. A strategy articulated for a period of up to a year may be very clearly
defined, easy to assimilate and follow and something to which everyone can
subscribe; and the same may also be true to an extent for a period of between one
and two years. In relation to the business sphere and wider environment however,
anything projected over a period longer than this requires careful and constant
evaluation and re-evaluation at all times. The nature of this environment makes it
extremely difficult to predict anything that may happen anywhere in it, or even
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Figure 5.7 The effects of social and political considerations on strategic choice and direction
.......
v.
(,;..;
what its nature will be in, for example, five years' time. Consequently, the best
and most valuable use of long term plans and strategies is as a guiding light; they
should be used to illuminate the pathway chosen, rather than as a set of rigid
directions that are to govern the organisation for the period stated.
IMarketing
CHAPTER6
The purpose of this chapter is to introduce the background and concepts needed
for an understanding of marketing and its importance in the business sphere. In
addition, there are related aspects to do with both the internal management of
organisations, and the presentation and delivery of proposals, initiatives, and
ideas, that must also be understood. There is a fundamental business relationship
between a product, invention, or service, and the way in which it is presented
both to the world at large, and to market sectors in particular, that is critical to
overall commercial success.
• The marketing process

Marketing is the competitive process by which goods and services are offered for
consumption at a profit; this definition should be seen in the broadest possible
terms. At its most basic, it has to do with building a reputation and making sales
for cash and profits in particular markets. Internally, it has to do with the gaining
of credibility and reputation in order to establish an effective and cooperative
working relationship. In public service terms, it has to do with ensuring that all
those who are entitled to the service, or who wish for it or need it, get it in ways
that are acceptable and relevant to them.
There is implicit in this process a requirement to generate images, reputation,
confidence, positive attributes and continuing effective business relationships in
order to ensure successful and productive activities.
The fundamental concept of marketing is thus that all business activities are in
some way the relationship between oneself and one's clients. Marketing takes the
view that the most important stake holders in the organisation are the customers,
and that keeping them contented and satisfied, and returning for repeat business,
is the first concern of the staff. Marketing activities are thus central to the
function of everyone in the organisation, in the development and execution of
systems, structures and style in support of this.
The marketing role is also universally carried out; every interaction between
the organisation, its staff and its environment, has some input on the relationship
between them. Additionally, when a member of an organisation addresses a
school prize-day, or appears to give a point of view on the television, he
contributes to the marketing of that organisation. When members of an
organisation are in trouble with the police, or involved in an affray or other
155
problems, they are also contributing to its marketing. Some organisations take
this several stages further, clearly establishing the wider standards of behaviour
and deportment that they expect of their staff, whether or not they are at work,
and may discipline or discuss the person concerned for bringing the organisation
into disrepute.
In support of this, organisations will devise marketing strategies, and also carry
out a range of activities designed to assess customer needs and wants, and to
devise means of satisfying them. To this end, they will enjoy gathering market
intelligence; conducting market research; obtaining customer responses; organis-
ing product packaging, promotion, sales and distribution; generating product
awareness through advertising, image formation, differentiation, promotions,
sales methods and techniques and presentations.
At this stage it is also useful to note that the customers and clients of an
organisation may be different from the consumers or users of a product (for
example, parents usually buy children's toys and clothes, and they thus have to be
convinced of their value; while in organisations, technologists will assess
production technology, finance staff will fund it, and workforces will use it).
Finally, purchasers of goods and services buy them for the value benefits and
satisfaction that they afford, rather than for their own sake (although possession
of an item for its own sake may afford satisfaction).
• Marketing strategies
As stated in Chapter 5 all strategies adopted reflect ultimately the strengths,
capacities, inclinations, technology and size of the organisation in question.
Within this broad constraint marketing strategies fall into the following seven
categories:
• Pioneering or 'first in the field': opening up new markets or new outlets

for existing products, new products for existing outlets; taking an original and
distinctive view of the marketing process and devising new methods and
campaigns
• 'Follow the leader': the great benefit of being second in the field is that you
learn from the mistakes and experience of the pioneer and can take informed
judgements about the nature of the involvement to be taken on based on their
experience; or it may be that the second organisation can see opportunities that
were not exploited by the first
• 'Me too' or 'all-comers': where the market is wide open, entry to and exit
from it are relatively easy, where the products and services in question are
universal or general and where there are many suppliers but where there are
more buyers than suppliers
• Supply led: where the product is produced because the organisation has
complete faith in it and knows that once made it will be able to be sold at a
profit
• Technology led: whereby the organisation finds itself in a particular line of
business because it has at its disposal a particular type of technology which
can be turned to productive and profitable advantage in a variety of sectors
Marketing 157
• Staff led: because of the skills, qualities and preferences of the staff of the
organisation that happen to be gathered together and where the products or
offerings reflect these (very prevalent in the small business sphere)
• Market led: where the organisation looks first at a range of markets, then
assesses their requirements, and finally decides which of these it can most
valuably and profitably operate in and fill (see Summary Box 6.1 ).
SUMMARY BOX 6.1 The Leisure Wear Sectors
The provision of products for the leisure wear sectors of Europe, Australia, New
Zealand, South Africa and North America constitutes the ultimate in fast-moving
consumer goods. The benefits that accrue to the customer from their ventures into
this area are to do with image, impression, distinctiveness, lifestyle, identity, the
imitation of film, pop or sports stars, and personal esteem and comfort. Having
gained all this for themselves, they wish to be held in positive and popular esteem
by their peers, and to carry a wider label of status and prominence in the society in
which they live. Niches for leisure wear may therefore additionally be identified by:
• Age, which ranges from birth virtually through to death and is often very
precisely targeted in the areas in between. For example, the teenage (13-19
sector) can be configured at each of these ages, any combination of them and
also pre-teen (8-12) and post-teen (early 20s and even beyond)
• Sex and gender and sexuality
• Location, regional, local and national variations on the particular products;
this is compounded by that which is perceived either to be a leading location or
one to be avoided at all costs
• Branding, the quest for distinctiveness mirrored in the desire and ability on the
part of the consumer to wear the badge and distinction with the given qualities
of pride, identity and esteem and to gain the esteem, real or perceived, of others
• Transience, the new is not new for long. The moment the next distinctive
offering comes along the previous one is first passe and then obsolete.
This must be reflected in both strategies and ways of working adopted by

companies that seek to operate in this field. Marketing and market research are
everything in the establishment of the profit range and profit base. Staffing policies
will mirror this, drawing upon a range of qualities and levels of commitment that
represent expertise, familiarity, understanding and the ability to forecast in the area
and to produce new, effective and targeted products quickly. Design is a critical
facility in such companies. Marketing strategies concentrate on the differentiation
aspects and use all media sectors, both mainstream and niche in the pursuit of this.
The leisure wear sector is saturated yet entry and exit barriers are low, affording
plenty of opportunities in a business area in which the consumers of the entire
world wish to participate and which they will participate provided that they have
sufficient disposal income. This is the strategic base from which all players in this
sector must operate.
The organisation may also adopt its commercial position based on a strong
moral or ethical stance. This in turn becomes the initial strong or overriding
attraction of clients to the business and gives a firm additional impression
(usually of honesty and integrity) in addition to its commercial and business

capabilities.
Finally, at this stage there is to be drawn the distinction between offensive
marketing strategies - that is activities that are undertaken to generate a
competitive advantage for the firm in question - and the defensive approach.
This is adopted in response to those offensive activities of a competitor which is
seeking to make inroads into the position of the organisation in question and
against which defensive and responsive activities must be taken with the object of
at least preserving the original position.
• Segmentation
In the UK the main approach to this is social.
Marketers categorise society by means of 'social segmentation'. Based on the
occupation of the head of the household (usually the male occupant), society is
categorised as follows:
A Upper middle class

B Middle class
C1 Lower middle class
C2 Skilled working class
D Working class
E Subsistence
Social segmentation is a useful means of defining society for the purpose of

understanding and evaluating it for a variety of reasons; in marketing terms, it
enables a relationship to be drawn between sectors of the population, and
income, tastes, aspirations, spending patterns, product and service purchase and
usage, and related matters. It is also universally recognised in the UK.
Segments may additionally be defined by age, sex, status, aspiration, values,
location, occupation, and expectations. These are then underpinned by image,
identity, differentiation, branded and visual qualities and presentation. This is
done to identify the types of buyers; the class of buyers; the size of the customer
base in given niches; the balance of quality that buyers expect; the value of the
product relative to other items available for consumption; patterns of spending
among the members of the niche or sector, and the extent to which they use
credit, credit cards, cash, or cheque books; their propensity to spend and save;
ease of access to product and after-sales outlets; ease of access to facilities and
services; the frequency with which a given item is to be used.
This identifies, to a good degree of precision, the area, style, content, and
emphases of particular marketing campaigns, to ensure that activities are directed
where they will be most profitable.
Marketing 159
• The competitive environment

The market is the environment (usually competitive) in which these activities take
place. Markets may have many of the following features, or a combination of
them:
• Degree of captivity
The market can be captive, because consumers have to buy from the suppliers; or
entirely fluid, where anyone can supply the market, and the consumer can go to
anyone for his supplies.
• Expanding, static, stagnant or declining

This can be in sales, financial and volume terms; in terms of numbers of
customers; in terms of reputation or product or service offered; in terms of
product or service demand (which may nevertheless not be satisfied, as with the
increasing demand for health services in Western Europe, the UK and the USA).
• Ethical and non-ethical

In whatever terms this is measured, social, religious, environmental and
civilisational; and the ethical aspects of some of the background processes, such
as the use of animals for product research, or sexual images in advertising
campaigns.
• Entry barriers
These may be very high, making entry to the market, and the ability to compete
in it, very difficult. Such barriers consist of levels of capital investment; staffing
volumes; technology; market location; protectionism and size; legal constraints;
economies of scale; access to distribution channels; the loyalty of customers to
those organisations supplying substitute or alternative products; and the costs
incurred in switching from the current to the proposed activities, or of starting up
and making entry as the first initiative of a new business. They may also be very
low, if the products, buyers and markets are easily accessible, and the production
technology freely available.
Barriers must also be regarded from the point of view of those firms currently
involved in the market- their ability to defend their position, or to engage in their
own activities devised to prevent the entry of new competitors. They may possess
substantial financial resources, and also more nebulous perceptual advantages to
do with image, confidence, quality and reliability, which any organisation
wishing to break into the market would first have to overcome. Because of its
position and reputation also (apart from any reasons to do with size and
influence, or financial resources), an existing player may be able to cut its prices
low enough and for long enough to force a new competitor out.
This last point was a factor (by no means the only one) which enabled British
Airways, TWA, and Pan Am, to exclude Laker Airways from the highly lucrative
transatlantic air routes. When Laker entered as a small but cut-price operator, the
other, larger, carriers were able to reduce their fares and hold them down long
enough for Laker to have to leave the market.
The final entry barrier to be considered is the value of, and access to,
information pertaining to the sector. Command of information is itself a critical
factor in establishing and maintaining a customer and client base; and lack of
information will normally fatally affect the ability of an organisation to operate
in the field.
Entry barriers vary between sectors; they must be considered at the outset of
any marketing initiative. They may, after assessment, be seen as very low,
offering no resistance to the potential entrant. Finally, the question of
'behavioural' entry barriers must be considered - the organisation considering
market entry may have to compete with very strong existing perceptions or
preconceptions about the organisation; on the other hand, existing players in the
market may have very strong images or customer loyalty which any new entrant
may first need to overcome.
• Exit barriers
In considering the competitive environment, it is necessary also to look at both
the opportunities and constraints on withdrawing from a particular market or
markets. These may also be seen in terms of capital and investment costs - the
organisation may have tied up resources in the long term, and take a tremendous
economic loss in withdrawing. There may be staffing implications, redundancies,
re-deployment and retraining, which have to be accounted for in advance of any
proposed exit. There will be operational and behavioural considerations to be
taken into consideration. Withdrawal from one market, or the abandonment of
one opening, may cause a loss of reputation, that may in turn effect the
performance of other products in other markets. There may be wider considera-
tions of reportage and media interest to take into account, which may contribute
to the problems concerned with exit and withdrawal.
• Legal constraints
Strong markets and sectors have specific legal regulations and constraints, quite
apart from the wider considerations of the laws of the country concerned.
Governments may also regulate the operations of organisations by the require-
ment to obtain licenses for particular activities; and to operate to given legal
Marketing 161
minima in employment, marketing and production practices; and in the setting of

quality standards for certain products and services.
This also extends to imitation and copyright; organisations have the right not
to have their pioneering or profitable ideas stolen and represented as a genuine
article by an imitator.
• Differentiation
This is the process of distinguishing between the offering of the same (or
substantially the same) product by different companies, in distinctive ways, to
generate an impression of real choice of product. Consider Summary Box 6.2.
SUMMARY BOX 6.2 Butter

Butter may be offered for sale as salted, slightly salted, unsalted, low-fat, or
'virtually-no-fat'. There exists a measure of difference between each, though it is
slight enough for the process of differentiation to be invoked.
Butter may also be British, American, French, German, Dutch, and New Zealand
-so that 'difference' is devised on lines of nationality.
Butter may be supermarket/own brand; proprietary; paper or foil-wrapped; a
deep yellow or nearly white - the differences are now even less marked.
Finally, butter may be (and is) associated with media advertising images that
represent identity with a particular lifestyle; health; 'the country'; monetary success;
and fun.
Differentiation generates a great amount of promotion, packaging, advertising,

media initiative, design, and creative activity. It is the foundation for campaigns
concerned with generating and maintaining expanding markets, niches and
product identities for consumer goods; food and drink; package holidays to
particular destinations; household and electrical appliances; cars (within present
parameters of size); washing and washing-up powders and liquids. The approach
used to do this consists of presenting the products in the given media in
conjunction or association with the desired related images. The images used in
Western Europe, the UK, USA, Australia, New Zealand and South Africa, are:
sex, glamour, value, youth, luxury and opulence, health, sunshine, brand names
and slogans, style, designer labels, space, time, speed and reliability. They are
related in turn to the expectations of those who seek to be in the position of
progress and shaping and influencing their part of society- thus the consumers of
ready-meals are very often portrayed as power-dressed with a job shaping the
world's destinies.
The images will reflect the aspirations associated with the buyers and users of
products that market research has identified; the items referred to above are
presented and utilised in different ways according to the sector of the population
involved.
For example, the image of 'glamour' is related in different ways across a range
of products and services- glamour is the backdrop for Gold Blend coffee, and the
couple involved in the UK advertising campaign of 1986-93 dress glamorously
and exude a glamorous lifestyle; the promotion of the Rover 400 series of cars in
Western Europe is related to a glamorous suburban and rural lifestyle carried out,
again, by senior executives; the advertising of air travel by international carriers
is related to the glamour and luxury of first class travel, with supporting images
of high quality food and service.
• Other factors in competition

o Luxury goods
Goods designated as such carry extremes of meaning and impression, above all in
terms of price and value.
An excellent example of this is the scent/perfume/fragrance sector, where the
product is offered entirely on the basis of the lifestyle, luxury and opulence with
which it is associated. There is a clear correlation between price and value, and
the market has established this to such an extent, that as the price of particular
offerings has risen, so has demand. Such items are also often bought as gifts and
therefore state a value on the relationship by both giver and receiver. Indeed, if
the price came down, it would be seen to cheapen and devalue the image, and
sales would reduce.
0 Good value
At the other end of the spectrum, there are thriving niches based on the offering
of items of a certain quality at low or cheap prices - 'price advantage'. Food
supermarkets in Europe and North America have made very successful and
profitable business over long periods following marketing policies based on the
twin premises of 'value for money', and 'volume sales on low or minimal
margins'.
The main rider to this is that any image generated has still to be positive, and if
it is not it will not do effective or profitable business (almost) no matter what the
price advantage. People want to be offered cheap prices on the basis that they
represent good value, and not on the fact (however real it may be) that they
cannot afford anything else. People wish for other matters to do with quality and
identity to be present even where prices are low. It is notable that both sales and
reputation of Japanese cars and electrical goods improved in Europe and North
America in the 1970s and 1980s, when they moved from being both low price and
low quality, to low price and high quality; and sales have continued to rise as the
price of the goods has risen, because the quality has remained high.
Marketing 163
Good value as a marketing concept must thus be seen in this context. There is
in this respect a general lesson to be learned, that in the purchase of satisfaction,
buyers and consumers are drawn towards positive images and association,
whatever the price (and any other economic factors) may be.
0 Rivalry
This is the process by which a company establishes its position in the sector, using
the marketing tools and techniques at its disposal - price competition,
differentiation, advertising campaigns, image formation, identity generation,
and sectoral battles. The factors affecting rivalry are as follows:
• The number of competitors in the sector; especially where there are many
companies of equivalent size and capacity in the sector, and the products and
services are undifferentiated- there is no particular brand loyalty or identity, or
at least this is not the overriding factor
• Sectoral growth is slow or steady; in this situation companies which wish to
expand will precipitate marketing wars. Related to this is the expectation of
high rewards to be gained by the 'winning' player or players
• Exit barriers are high; where this is the case, companies will remain in
business in the sector even if they are not making profits (at least in the short to
medium term) because the costs of total withdrawal are greater than continu-
ing to produce. The company faced with this situation will use it as an
opportunity to seek other markets, sectors and niches; and also to engage in
wider marketing activities with the purpose of differentiating its products and
services, generating new images, identity and loyalty to them.
The mixture and balance of these elements changes as the sector and market
environment concerned changes, and as the marketing activities of all players in it
have effect. Ultimately, there will be company collapses, shake-outs, mergers and
takeovers, as the weaker players go to the wall, and the stronger seek to
consolidate their positions.
o Buyer groups
These have the greatest influence where they are in the position of being able to
force down the price to be paid to suppliers; or to demand higher quality, volume
or service from the supplier group. They may also play one supplier off against
others.
The power and influence of the buyer group depends on the following:
• If there are few entry barriers or critical switching costs on the part of potential
suppliers, especially to do with capital or legal constraints; in such cases,
buyers are able to approach anyone they choose
• Where products are undifferentiated, where there is no broad loyalty, buyers
also have greater influence.
The level of profit in the buyer group's business is also critical; and where this
is low, there is great pressure on the sector to lower its costs.
The relative centrality of the purchased product in question to the overall
performance of the buyer group is also important - if a poor or basic standard
item can be sold effectively on to its customers by the buyer group operators, then
a pressure commensurate with this tends to be exerted on suppliers.
Finally the buyer group may have the potential to integrate backwards, that is,
to establish its own suppliers.
o Supplier groups
These exert pressure on participants in a sector by raising prices or reducing the
quality of products and services offered. They squeeze profitability out of any
sector unable to recover its costs through price rises.
The supplier group is powerful if, above all, it is dominated by a few
companies, and is more concentrated or organised than the sectors to which it
sells (such as oil, which is dominated by the major multinationals of Shell, BP,
Texaco, Aramco, and Gulf).
It is powerful also if the product is central to the expectations of buyers or if it
is differentiated and the buyers' customers have brand identity or loyalty; or if the
product is central to the needs of the buyers' clients.
It is powerful also if there are capital or cost or legal elements in the entry
barriers faced by potential or putative entrants to the sector. It may also pose a
threat of forward integration, that is, into the business of the industry itself, by
establishing its own interface with the ultimate clients and consumers of the
product or service.
Finally, the supplier group may not be dependent on any one sector to which it
is supplying for its continued existence, but may be able to switch sectors easily,
generate new markets for the products and services in question, and ultimately
find new applications for existing production technology.
Figure 6.1 models the five elemental forces in the competitive environment.
• The organisational standpoint

The approach of an organisation to its marketing efforts and initiatives is based
on the answers to a range of matters and issues that must be determined and
decided at corporate level. This involves evaluation and analysis of the following:
1. The true nature of the products and services on offer; the functions that they
serve; the benefits and attributes they afford to purchasers; the potential or
additional functions that they could also serve
2. The true nature of the market or markets in which the product and services
are offered; considerations of expansion, contraction, stagnation, growth,
maturity, saturation and decline; assessment of the state of product and
service life-cycles
Marketing 165
3. (a) The true nature of the organisation's competencies, strengths and

weaknesses; and an assessment of what truly distinguishes it. and its
products and services, from the competition
(b) The true nature of the competencies, strengths and weaknesses of the
organisation's competitors, and assessment of what distinguishes each
from the others in the sector
(c) The identification of the relative advantages of the organisation over its
competitors
4. (a) Assessment of opportunities and potential in the markets and sectors
in which business is currently being conducted, and an assessment and
continuing investigation into potentially new areas; the overall purpose
here is to identify areas where new, more profitable and better business
could and should be carried out
(b) Assessment of the wider concerns of the market, and the standpoints
that it has in relation to business and the ways in which it is conducted;
and related to this, wider environmental, ethical and moral concerns, and
the ways in which these should be addressed and tackled; and the ways in
which they impinge on the business that is to be conducted.
POTENTIAL
ENTRANTS
Threat of new
entrants
INDUSTRY
...
COMPETITORS
Bargaining Bargaining
power of power of
.---------, suppliers buyers
SUPPLIERS I .... BUYERS
Rivalry among
existing firms
t Threat of substitute
products or services
SUBSTITUTES
Figure 6.1 Five elemental forces of competition
Source: Christensen (1987). Used with permission.

• Internal marketing
This is the application of the wider principles and practices of marketing to in-
organisation activities. Rather than overt and profitable business, the results are
translated as follows:
1. Credibility and confidence of particular departments, in relation to their
interaction with others: this is manifest in ways that create a positive or
productive working environment, and inter-departmental harmony and mu-
tuality and trust; in that dependence of one department or function on another
for its expertise is well-founded; in that the results of inter-departmental
cooperation are positive and productive
2. The ability to approach internal functions for expert and high quality advice,
service, support and direction, in the knowledge that this will be forthcoming
3. Synergy, that is, that the whole is greater than the sum of its parts
4. Internal marketing is also manifest in the aura, harmony and general mutuality
within which the organisation works; it is a contributor to the motivation of
individuals, and the morale of the total organisation; it helps in the setting of
modus operandi, performance standards, attitudes and values
5. Management style, the relations between different levels of staff, the identity
with and adoption of the purpose, vision and core values of the organisation,
also owe much to the organisation's ability to market itself to its staff.
• The marketing mix

The concept of the marketing mix came about as the result of research at
Harvard University in the 1930s and 1940s. This identified key variables in
archetype marketing programmes and activities.
The easiest definition of the marketing mix is in terms of the 4 Ps:
• Product: variety, branding quality, packaging, appearance and design
• Promotion: advertising, sponsorship, selling, publicity, mailshots
• Price: basic, discounting, credit, payment method, appearance
• Place: coverage, outlets, transport, distribution and accessibility.
The marketing mix takes cognisance of the way in which each of these
elements is combined and interacts with the others in the marketing of goods and
services- 'the offerings'. Consumers of these offerings will normally hold one of
the elements more important than the others. In turn, the forces and pressures of
the markets in which the offerings are made also reflect their relative importance.
There are legal and ethical restraints placed on marketing activities in the
western world. In general, spurious or misleading claims may not be made for
products, nor should misleading impressions be deliberately fostered - apart
from anything else it is very bad for repeat business to do so. Actual products
must reflect the reality or impression given by both promotion and packaging.
Products must also not be harmful or detrimental to the consumers of them;
minimum standards of performance, manufacture, quality and safety have
therefore to be met.
We will now consider each of the 4P elements in turn.
Marketing 167
• Product
The first of these elements to be considered is the product (or service or offering)
in question; 'product' in this context is the term habitually used to describe
anything that is offered to a market sector for consumption. The product mix is
the range of products offered by an organisation; this is determined by the
matching of the organisation's capabilities and capacities with the markets and
niches to be serviced and by the scope and scale of its operations; it is a complex
process. As we have already stated, people buy the benefits that they expect to
accrue from a product rather than its features; organisations therefore sell those
benefits. McDonald's and Coca Cola are well known examples of this; they have
created both strong and wholesome images for their products and the desire in
their market sectors to be associated with this image. To the consumer, the items
are not merely food and drink but part of a way of life with which they wish to be
associated.
D Quality and durability

Product quality and durability must be considered. The two are not mutually
exclusive (a disposable syringe is only to be used once but it has to work that
once). There is also no point in offering a highly durable product to the stated
market sector if that is not what the sector wants (fashionable shoes and clothes,
for example, are offered to some sectors on the basis that they are today's style).
Consider Summary Box 6.3.
SUMMARY BOX 6.3 Lycra
This is an excellent example of the way in which a general product has grown into
different markets.
Lycra is a highly elastic versatile man-made fabric, the properties of which have
been known for a long while; however, its commercial exploitation and maximisa-
tion was fully realised only in the early to mid-1990s. It was originally used for the
manufacture of grid iron football trousers, tracksuits and cycling shorts- clothing
that fitted the wearers exactly, clung to their body and limbs and thus did not chafe
when the body and limbs were moved. Indeed, the cycling shorts were popular
among cyclists because they actively prevented the limbs from chafing against the
bicycle saddle.
Variations were and are being developed for use in the whole sporting and
athletics range and lycra shorts are now also worn by association footballers and
rugby players both for prevention and safety and also to give thigh muscle support.
The use of the material in other clothing is also being realised. As well as its
comfort and ease of wearing it is also very easy to wash and keep clean; it is warm
in winter and yet light and comfortable in summer. It does not crease easily and
therefore has what is (perceived to be) an inherently smart appearance. Its
potential is being developed in the realms of evening wear, high fashion, and
working clothes; and is also being offered across all age ranges.
D Branding
Branding gives credence and confidence, especially where the brand is well
known. The consumer is content with what is offered and comfortable with the
appearance of a name on the product. Ford, General Motors, Renault,
Volkswagen, Fiat, Toyota - all give messages of confidence and reliability.
They are all major companies in their industry.
D Packaging
Packaging is used both to present the product to its best advantage and to protect
it up to the point of consumption. It is instrumental in reinforcing the identity of
and with the product - many soap powders, for example, now come in smaller
boxes as a kindness to the environment- and this becomes part of the advertising
and promotional campaign.
D Product benefits
Finally, the benefits of the products should be seen in their widest context. The
full offering often includes after-sales service, spare parts, help and emergency
lines, call out facilities and product advice and familiarity sessions for those who
are to sell the product. Marks & Spencer, the UK department store, offer a
money-back guarantee or the ability to exchange one product for another that
will be of greater satisfaction and benefit to the customer (the company is
consequently a favourite for the purchase of Christmas and other presents). Mail
order catalogues normally offer a 'no quibble' returns service at the expense of
the company. Companies that sell computer systems for industrial, commercial
or public service use normally include staff familiarisation as part of the total
package offered, together with problem-solving services. Consider Summary Box
6.4.
D The product life cycle

All products have a beginning, a middle and an end (see Figure 6.2 on page 170).
The concept of product life cycle defines more precisely these stages and identifies
the points at which specific marketing initiatives and activities might usefully be
generated.
There are four stages:
• Introduction: the bringing in and bringing on of the new product; this is the
culmination of a period of both product and market research, the point at
which the offering in question first comes on to the market
• Growth: this is where the product takes off and its true potential (rather than
that projected by research and modelling) begins to become apparent; sales
and demand both rise where this is successful; unit costs decline
Marketing 169
SUMMARY BOX 6.4 Ford
The Ford Motor Company offers a range of models and 'models within models'.
These include the Fiesta, Sierra. Tempo, Escort, Granada, Mondeo and a range of
vans and pick-ups. The Fiesta is offered as: small and large engine; limited edition,
diesel for Europe; XR2; 3 door and 5 door. The Escort is offered with all of these and
also as a cabriolet (soft top or convertible).
This reflects the ability of the organisation to differentiate even using the most
automated and sophisticated of production techniques; its ability to identify
precise niches, even those that will take perhaps a few hundred cars a year only
from an organisation of this scale, size and technology; and its ability to present a
range of offerings from which the different consumers may make their choice.
The company follows this with a range of warranty services; guaranteed
maintenance at a Ford dealer; guarantees on parts for a number of years; finance
plans for the purchase of the cars; accessories, in-car entertainment and clothing.
The company supports all of this with extensive advertising, distribution,
promotion and distinctive branding. The primary aim is to ensure that whichever
model is bought both the specific benefits to the customer and the overall general
confidence that goes with the Ford name are both purchased and protected.
• Maturity: the product is now a familiar and well loved feature on the market;
people are both happy and confident with it. unit costs are low
The last part of the maturity stage is that of saturation; this is where the
company seeks to squeeze the last remaining possible commercial benefits
from the item before it loses its commercial value
• Decline: where the product is deemed to have run its course and no more
value or profit is to be gained from it. it will then be withdrawn from the market
Marketing interventions are made at each stage to ensure that the product
potential is maximised
First it must be ensured that the product takes off and that the full range of
benefits to be gained from consumers of it are realised by the sector at which it
is aimed; then as it reaches maturity initiatives are taken to breathe as much
new life into it as possible using the whole range of promotional and
advertising media; very often this means one advertising campaign too many
before the product declines.
Summary Box 6.5 relates product strategy to the stage in the product's life
cycle.
• Price
Organisations must set price levels that enable them to generate sufficient income
to keep shareholders and any other stakeholders happy and contented. They
must further set prices to ensure that sufficient income is generated to ensure
continuity of operations and to provide sufficient general cash flow to meet the
needs of the organisation: above all, it must be profitable.
Simple
Maturity
Saturation
~--r--~ I
Time
Complex
Maturity Saturation
Sales
Growth
volume
Introduction
Time
I Marketing efforts, strategies, campaigns
Purpose: the model indicates the regeneration, renewal and extension of the profitable
life of the product concerned and its relationship with successful marketing activity.
Figure 6.2 Product life cycles
The price of an item must reflect both the willingness and capability of the
customer to pay. If one is offering in niches where the customers and consumers
are always paid by cash (as distinct from cheque or credit or debit cards or
finance plans) then prices must reflect the volume of cash carried and must be
sensitive to the competing demands on it. Summary Boxes 6.6, 6.7 and 6.8
demonstrate crucial aspects of price setting.
Marketing 171
SUMMARY BOX 6.5 The Growth-Share or Product Portfolio Model
High
LowMS High MS
High G High G
Growth
(G)
LowMS High MS
LowG LowG
Low
Low Market share High
(MS)
The model assumes that organisations have a range of products or offerings, and
that these will be at different stages at a given point in time.
There are four quadrants in the model, for the assessment of products, and the
basis for taking marketing decisions in relation to them.
The model provides a means of assessment of the portfolio, and indicates more
general or strategic implications (for example, whether the 'low-low' configuration
of a product should signal its divestment, or whether it is worth generating or
regenerating).
SUMMARY BOX 6.6 Legend of the Razor

The legend of the razor has a series of lessons for all who aspire to management. It
illustrates most vividly the difference between selling an organisation's products
and the provision of customer benefits and satisfaction. In apocryphal terms the
razor cost £1.00 to make, but customers would only pay 20p for it. However, the
razor blade cost 0.1 p to make but customers would pay 1Op each for them.
A distinction is therefore drawn between offering a razor for sale and the ability
of the customer to shave. If the organisation concentrates on the razor it is not
possible to conduct profitable business. By concentrating on the 'shave' however
and additionally ensuring a steady and continuing supply of blades, profit is made
on the offering to the customer's continuous satisfaction.
Price thus reflects the range and complexity of offerings made, the relationship
with the consumer and the degree of choice that the consumer has. Price also
impinges upon the areas relating to the desired market share for the product on
the part of the organisation; prices being offered by the competition; and the
SUMMARY BOX 6.7 Airline Tickets

People travelling on the same airline flight will almost inevitably have paid widely
differing amounts for their seat.
The offerings by the airline are: first class; business or club class; tourist and
economy class and charter. However, the variation in price will depend on a much
greater number of matters:
1. When the ticket was purchased: airlines give discounts for purchases well in
advance or right at the last minute (standby)
2. Where it was purchased: through travel agent, discount house (bucket shop),
at the airport, direct with the airline; or which country it was purchased in, and
what currency was used
3. Who purchased it: and whether it is a corporate or personal expense
4. Why it was purchased: for business, pleasure or holidays
5. Other factors: especially concerning whether the trip is part of a package
holiday, fly-drive or reciprocal arrangement with an hotel chain, for example.
Airlines arrange their schedules with the prime purpose of ensuring that their
planes travel as full as possible as often as possible. The price range thus ensures
both a variety of offerings and also many sources of passengers. More importantly
from their point of view, they thus maximise their chances of achieving their prime
purpose.
SUMMARY BOX 6.8 The 99p Syndrome

The first use of price as a means of marketing in itself is ascribed to Marks &
Spencer Pic of the UK in the 1970s. Instead of charging £5, £10 (or 5 or 10 local
units of currency) the amount is reduced by one currency unit, to £4.99 or £9.99.
There is a strong perceptual message inherent in this which must be considered
at this stage. The customer receives change as well as the goods or service that they
desire, assuming that they pay with the single currency unit. The message that they
consequently receive is that they are paying less than a particular amount for the
product. In addition, the price is related to the note value of the currency where
possible - £4.99 is related to the UK £5.00 note, for example and 99p to the £1 .00
coin.
The price label thus becomes a feature of the presentation of the product or
service itself, and becomes incorporated into the mainstream marketing activities
generated.
prices of substitute goods. There may also be particular revenue targets required
by the organisation. However, large and complex organisations generally have a
measure of flexibility in this area; for example, they can offset possible losses on
one product through great gains on another. In such cases price will be seen as a
component only of a wider marketing strategy.
Marketing 173
Organisations need a measure of flexibility in the determination of price that

will enable them to respond to any competitive moves elsewhere in the market.
The activities of competitors, both offensive and defensive, therefore have an
important bearing on pricing decisions; this may be instrumental in allowing or
restricting one's abilities to move one's prices as one desires.
Finally, it is necessary to consider what is actually included in the price of an
item or commodity. For example, when a car is bought the consumer achieves
personal transport and mobility. However, the price paid may also include the
concept of the 'lifetime of the car', including regular servicing, after-sales
arrangements, emergency cover, insurance policies, finance plans that cover the
purchase of the car as well as the other accessories that may go with it. In
addition, a relationship with the garage or dealer may be bought that takes all the
worry out of motoring provided that you continue to patronise the establishment,
to have the servicing and after-sales conducted by them and possibly also to
replace the car through them in a period of years hence.
From a marketing point of view, therefore, there is a context in which the
arriving at and arrangement of the price of a commodity has to be seen. There are
financial cost and contribution elements that must be considered (these are dealt
with in Chapter 11); in marketing terms there is a much wider picture that has to
be seen.
• Promotion
This is the combination of methods used to generate public awareness, identity,
confidence, desire and conviction in a product and ultimately its adoption and
usage by the general public (see Summary Box 6.9). The methods used in the
pursuit of this are: advertising in all mass media including newspapers, television
and radio; sponsorship of events, other products and activities; sales calling by
organisational representatives to generate new business and general awareness
and to maintain and service existing business; brochures designed to generate the
image required of the product and to demonstrate the features and benefits that
its consumers are perceived to require; product placement, by which producers of
films, brochures, magazines, novels, stories and television series are persuaded to
adopt distinctive brands of product such as cars and clothing to be used and worn
by their heroes and heroines, thus assisting in the generation of positive images
and high level identity; other publicity features such as general awareness-raising
articles, news items and general interest stories, featuring particular products and
services; and price, which may also be integrated into the promotional campaign
adopted.
o Image and identity

The most important aspect of any promotional campaign, whatever media it is
decided to use, is the decision about what to say to prospective customers and the
SUMMARY BOX 6.9 Health Care Promotions

Promotions in health care sectors are all pervasive. They range from notepads and
pens issued by drugs and medical equipment companies to the medical equipment
itself. Anything provided by the companies carries their logo and other distinctive
identity marks. It is all provided in hospitals, clinics and doctors' surgeries. The
returns to the companies come from prescriptions and other drugs recommended
by general practitioners to their patients; this practice is endemic across the entire
western world.
According to Eric Clark (1988), 'doctors are subject to the most intense sales
promotions and pressures in the community. As much as 25% [of the sales effort]
may be spent on promotions. In the United Kingdom each doctor is the target for
over £5,000 worth of promotion a year ... which falls better into place when
another is added - the £58,000 worth of drugs that the average British GP
prescribes each year'. This is a graphic illustration of the size of the market that is
to be tapped and the nature and extent of promotional activity that can be both
contemplated and afforded by those seeking business from the health care sector.
precise image and identity that is generated. Promotional activities concentrate

on increasing customer familiarity with the product or service in question;
informing customers about the features, benefits and qualities of the product or
service; indicating any distinctive advantages that it has over competing or
substitute products or services; differentiating between the product or service in
question and any near equivalent; establishing its overall credibility and
consumer confidence in it; encouraging potential customers and maintaining
the current customer base.
Promotional methods adopted in the pursuit of custom will depend upon the
number of customers; their location; other niche considerations; their spending
habits; and their expectations; accurate assessments of these are arrived at as the
result of marketing research. In general, within these constraints, the promo-
tional campaign will set out both to familiarise in broad terms and also to
generate a particular identity for the product in question among the potential
consumers (see Summary Box 6.10).
These elements constitute the ways in which promotional effectiveness is
measured- that is, the extent to which the general awareness of the product and
its benefits has been aroused; and the nature of and identity with the images
promoted in the market sector. Finally, in this case reference should be made to
the fact that there are both offensive and defensive promotional activities.
Offensive promotional activities are those where the organisation seeks to
promote its own products and the benefits of them to consumers at the expense
of the other players in the market. Defensive promotional activities are those
engaged in in response to the offensive promotional activities of competitors.
Summary Box 6.11 and 6.12 demonstrate the extent of marketing activity that
underpins promotions. Summary Box 6.13 shows how perception of image and
brand loyalty are concerned.
Marketing 175
SUMMARY BOX 6.10 Drink
No set of products carries a greater concept of image than drink. When they buy,
drinkers become associated with all the dreams and illusions that the advertising
and promotional agencies have built up around the brand. The famous drink brands
themselves are testament to this. They are all household names- Coca Cola, Pepsi,
Heineken, Bacardi, Guinness, Southern Comfort. Moreover, they have all gained a
verbal currency in both the English and other languages of the West. Thus for
example, Bacardi is not a type of rum but has its own identity and uniqueness.
These images and concepts of identity are developed using the whole range of
media available. The pictures used are always of exotic locations; overt sexuality;
health and fitness; opulence (in the use of domestic and hotel settings, for example,
as the backdrop against which the products are promoted and illustrated). They
exude an inherent wholesomeness and honesty, a statement that the promise
contained in the advertisement about the product will be delivered.
Marketing and promotional campaigns thus concentrate on the images and aura
as much as on the product and its benefits to the consumer; and on keeping these
images up-to-date. Campaigns therefore use backcloths that keep the universal
and positive images going but change the human stars regularly to ensure that they
are currently fashionable.
0 Internal promotion
Internal promotion is the means by which confidence and awareness of the

organisation's products and services is generated among its staff; this includes in
particular any new product or service that is to be offered. It is greatly
advantageous at the inception of a new product and when it is being brought
on to the public mainstream to have the organisation staff using it and
demonstrating confidence in it as part of the general process of awareness raising.
For example, as we saw in Summary Box 5.6, the post-it note was invented by
an employee of the 3M company. The employee sang in a church choir; and
initially he wanted a slip of paper with which he could mark the places in the
hymn book but which would not fall out of the hymn book as it was moved or
carried around. He thus devised the small slips of paper with the sticky strip. The
product was given an excellent initial impetus through its adoption by the staff of
the 3M company who were the first people to use it for the myriad of purposes
now adopted.
The other feature of internal promotion is specifically concerned with internal
markets that may be found to exist in new style public services, local governments
and health authorities of the kind promulgated by the UK in the 1990s. Such
arrangements may also be found between divisions of multi-nationals and other
agglomerate corporations. In either case a key feature of the internal promotions
mechanism will be the generation of, and maintenance of, business confidence. In
the style of public services indicated in particular, if this is not forthcoming the
purchasers of particular facilities may be at liberty to seek a better provision from
outside the organisation.
SUMMARY BOX 6.11 Soap Powder

In the UK the soap powder industry is dominated by two major organisations,
Reckitt & Coleman and Lever Brothers (Unilever). The generic offering is the ability
of the customer to wash clothes to a high degree of cleanliness that makes them
suitable for wearing in public again.
The packaging and differentiation activity that goes into this is quite remarkable;
it is in itself a multi-million dollar business. Distinctive packaging is carried out with
the following purposes:
• Generating distinctive brands and brand loyalties (e.g., Persil, Daz, Bold)
• Demonstrating a cost advantage (e.g. Bold again, it has the advantage of being
an all-in-one cleaner and conditioner of clothes so the customer needs only
one product and not two - i.e. a conditioner as well)
• Identifying supermarket own brands as well as the named brands (again
usually with a price advantage)
• Differentiating in the following ways: big and small packets- the advantage of
the small packet is 'environmental'; this has, however, to be balanced against
the perception that the larger packet is better value for money
• Refills that come in plastic bags, again with environmental advantages, real or
perceived
• Odour-free and perfumed powders to be used according to taste
• 'New person' approaches - even men and boys can use the washing powder
effectively
• 'Working person' approaches- that allow (usually) the woman of the house to
give the impression of both holding down a job and fulfilling her domestic
obligations and responsibilities
• Traditional approaches that fix the obligation firmly on the woman of the house
to come up with bright, clean and fresh clothes for her family (consisting of one
husband, one son and one daughter).
This last was the central feature of the initial promotion of the Radian brand
(Reckitt & Coleman) and was extremely successful. This portrayed the woman of
the house in a stereo-typical role. Her responsibility was to provide bright, clean,
shining and fresh smelling clothes for the man and children in her life; her
obligation and responsibility was clearly demonstrated as lying in this area by
the style of promotional campaign adopted. The packaging used for the product
was red. The underlying tone adopted for the product in general was traditional.
The product generated a multi-million pound turnover for the company,
becoming a very successful offering in this market. This success was due to the
promotional and packaging activity and style and image indicated above.
• Place
The fourth element of the marketing mix is place; that is, getting the products and
services to the customers and clients. This means knowing who they are, where
they are, how they want the products and services delivered, what the nature and
level of their expectations are, and how these may best be satisfied. Part of the
creative process involved in marketing is concerned with both meeting this
Marketing 177
SUMMARY BOX 6.12 Storylining
Product storylining is a promotional instrument peculiar to the UK. For years PG

Tips, the brand of tea, has been promoted through the use of a group of monkeys in
a variety of comedy sketches; indeed, this is so central to the promotional activities
and the consuming public has such a sense of affinity with it, that the company that
owns the brand (Brooke Bond) has felt unable to sanction any departure from it.
Storylining has been adopted by other brands in their promotional activities with
varying degrees of success. The two most distinctive, successful and long-running
are for Oxo gravy (which has followed an archetype family as it has grown and
prospered for ten years); and for Nescafe Gold Blend instant coffee, developing a
relationship between a glamorous couple who live next door to each other over a
similar period of time. The series has made national figures out of the pair of actors
used (a new couple have been introduced late in 1993), and a novel telling the
story of the characters is now for sale.
All this is in the generation of sales of universal British consumer goods - tea,
coffee and gravy.
SUMMARY BOX 6.13 Customer Perception
Research conducted by the tobacco industry in the 1980s demonstrated that brand
loyalty was almost entirely based on image and identity rather than the taste of the
product. Tests were conducted on those who stated categorically that they only
liked their own brand. Smokers could not differentiate between their own brands
and others of equivalent strength and similar tobacco when they were not given the
packet from which to choose.
Source: Clark (1988).
requirement on the part of the customer and also generating an expectation that
if they do go to a particular place then this particular need will be satisfied.
The concept of place derives much from the segmentation process (see above).
The other main feature here that must be considered is that of location. This
reflects the nature of distribution networks, especially those concerned with
getting the product or service to the point at which consumers buy it or take
delivery of it. There is thus currently a propensity among organisations operating
in Western Europe and North America to locate on the edge of towns in order to
have convenience of access to road distribution networks. Organisations that use
railway, sea and air distribution will consider the rest of their own specific
marketing mixes in relation to this.
The question of location also relates to the production and operation
philosophies that are concerned with the traditional view that an organisation
would locate near the sources of raw materials if the items that it produced lost
weight during the production and manufacturing processes; and that conversely
they would locate near the markets if their processes resulted in the products
gaining weight.
Location also reflects any sectoral or regional demands or desires or
constraints. Hitherto, for example, there has been an expectation that each
community would have its own school, its own library, its own hospital; these
have become limiting factors in the offering of education and health services. The
same is true for certain sports facilities. There thus becomes an onus placed on
those responsible for organising, providing and managing these services and
constraints within which they have to work. If this is not the most efficient or
effective way of providing the service, then part of the process of changing it must
include a raising of the understanding required of the public - promotion of the
benefits of the new proposed arrangement. People will go along with this if they
see and understand that it is in their best interests to do so, and if they can see the
benefits that will accrue to them.
This has been achieved by the supermarket and shopping mall sectors in
Europe and North America. A whole process of behaviour and expectation
reform has been completed in the pursuit of this. People now go to out-of-town
mega-stores in the UK and France; and to shopping malls in North America. The
benefits of ease of access and 'everything under one roof' have been successfully
demonstrated to those niches of the population that use them. Those responsible
for the hypermarkets and the generation of business for shopping malls took
steps to understand the nature of the requirements of those that were expected to
use them, what products and services they would require from them, and
designed a consumer environment where both could be satisfied. It has had a
major impact upon the location of commercial activity and those who continue to
do business in the centre of towns have had to consider much more precisely the
attractions of their particular location to the consumers that continue to come to
them.
The other matters that concern the 'place' element of the marketing mix are
principally to do with the nature and style of distribution adopted. The product
or service in question may go straight from the organisation to its customers;
conversely, it may go through a highly sophisticated channel of distribution.
Whichever it is, it must be borne in mind that the key requirements on the part of
the customer of flexibility, responsiveness, ease of access and general convenience
remain the key to conducting continuing and effective business.
• Varying the marketing mix

As stated at the outset of this section, the precise nature of individual marketing
mixes will depend upon the product and the ways in which it is to be offered in
the particular sectors; and the rationale for this depends upon the key marketing
strategies and standpoints adopted by the organisation. Organisations may seek
to vary their marketing mixes in the interests of generating or regenerating new
Marketing 179
business initiatives; for example, organisations will bring down the price of
commodities that are nevertheless sold on a quality rather than a price-sensitive
basis if by doing so they consider that an advantage can be gained; conversely a
manufacturing organisation may release its products for sale in a supermarket,
thus trading off the exclusivity of its product in return for the ability to generate a
much wider accessibility and acceptance.
• Marketing research and development

The purpose of such research is to identify and maximise opportunities that the
product and marketing mix of the organisation affords. Essentially, this
combines the need to seek alternative outlets for products and the technology
that the organisation has at its disposal with that of finding out what customers'
wants and needs are. Initiatives can then be proposed and generated with the
view to satisfying these needs; and in the devising and initiating of further
business opportunities.
The process undertaken is concerned mainly with an understanding of the
capabilities and capacities of the organisation on the one hand and the
requirements of the market and environment in which business is conducted
on the other; this will address matters concerning general levels of confidence on
the part of the market, customers' purchasing power, their needs and wants, their
priorities and any other seasonal aspects, and relate these to the capabilities and
capacities of the organisation. Other factors to be taken into account will include
a more general assessment of the market and the products in question, the extent
to which these are in expansion, decline or stability (see pp. 159, 169); research
will include competitor analyses and the extent to which alternative and
substitute products are available in the broadest sense; it will consider the
reputation of the organisation in question from a universal and general
standpoint, as well as in the particular case of its own relationship with its
own market sector. Customer assessments will also be conducted in order to gain
a general understanding of their motives, desires, preferred images and identity
with the particular product or range of products that is to be offered. Finally,
modelling activities will need to be commissioned or conducted by the organisa-
tion with a view to assessing the extent of the profitability or effectiveness of the
range of activities in question. Marketing research and development is thus an
integral part of and critical to the success of wider strategic aspects, and critical to
the determination of the organisation's future direction and instrumental in the
determination of its success.
• Corporate citizenship
This concept was introduced in Chapter 5. In the context of marketing it deserves
a further brief mention. Part of the total marketing activity is the ability to
present an image, to both the markets served and the local community in which
the organisation itself is located, of wholesomeness and a high ethical stance. As
an example, the initial push of the Eurotunnel organisation in the South East of
England in the mid-1980s was to gain a general acceptance of the project at this
level. It succeeded to a great extent through the generation of an aura both of
positiveness and of openness and by the enthusing of the school children
population with a pioneering and exciting vision of the Channel Tunnel and
the opportunities that it will bring to their generation.
• Public relations
The public relations or PR function is to ensure that the marketing wheels are
kept oiled and that the organisation's marketing machine works smoothly and
positively in order to fulfil the purposes for which it was designed. It has a
maintenance function that mirrors the operational equivalent (see Chapter 10);
planned PR concerns the identification in advance of suitable initiatives and items
that will generate good publicity and placing them in the media where they will
have the greatest positive effects; there is also remedial PR, which is where the
organisation has to take responsive or other creative action to put right
something that has gone wrong or to address a negative story concerning it
that has appeared somewhere in the media.
Overall, therefore, PR is conducted at the interface between the organisation,
the environment and the community, its customers and clients, and the media, in
order to maintain, preserve, and improve positive and effective images and
relationships; to build confidence and credibility; and to resolve problems when
they arise.
The importance of the positive approach to PR cannot be overstated. When
problems do occur, the organisation must accept responsibility for any 'repair' or
remedial action necessary, whether it was at fault or not. Inability to do this is
always seen in a negative light, and is often offensive to both customers and the
wider community.
The issuing of brochures and information about the organisation is also part of
the PR function. Again these must be designed and drawn up with the readership
in mind - presentation, language and images used must be in the terms of those
who are to receive them.
Similarly the handling of the press, television and radio must be conducted in
ways that ensure that an overall positivism is maintained, and that when
problems arise, the last and most enduring note of the story is of the progress
that is now to be made.
Organisations will also engage in the placement of stories favourable to
themselves, in the media, and in those parts of it where the greatest benefit to
them will accrue. This is both as a counter to those occasions when problems do
arise, and also as part of the more general process of building confidence, positive
images, and an aura of 'good corporate citizenship'.
Marketing 181
Organisations may also engage in more general customer and market liaison
activities as part of their PR effort. This usually takes the form of sending staff on
high profile and sectoral seminars and conferences, and taking stands at trade
fairs and exhibitions. Part of the effort of the sales force may also be simply to
ensure that customers (and potential customers) are kept aware of the
organisation's continued existence and activities. The sponsorship of events
also contributes to this general effort.
Finally, organisations engage in positive PR in relation to their staff and to this
end they run sports and social clubs, welfare facilities, and staff newspapers,
newsletters and other publications for internal consumption. There is also a
strong element of this aspect of PR inherent in the nature and conduct of
personnel policies.
Large and complex organisations set great store by this. The removal of a
corporate customer or regular order, for example, may cost millions of dollars
even to a multinational, and the presence of a PR department and activities to
respond to such matters and to avoid this happening is considered well worth
having. Consider Summary Box 6.14.
SUMMARY BOX 6.14 APR Master Stroke

An estate agent in Sandgate in Kent once sold a house to a customer in a notorious
landslip area. The purchase went ahead; and the house subsequently fell into the
sea. The customer sued the estate agent and the story was a nine day wonder in the
local press. The estate agent, the subject of bad publicity, was nevertheless able to
turn this to his advantage through a PR master stroke. This was that he was insured
against such contingencies and that people could continue to deal with him in the
utmost confidence even though this had happened, in the sure and certain
knowledge that even in such an extreme case as this there would be no penalty
to the customer.
• Conclusions
Marketing has therefore to be seen as having the following managerial
characteristics. First, it permeates the entire organisation and impinges upon
all its activities; without a marketing stance the organisation has no reason for
existence. As we have seen, this also extends to the provision of public services; in
absolute terms the consumers or users of these public services are the clients of
the public service organisation. Next, marketing is at the core of the strategic
purpose of the organisation; without a clear purpose of the nature of the
operations that it is going to conduct and the business that it is going to be in
and the markets in which it is going to operate, the organisation will have no
impetus or clarity of direction. Further to this, there is a range of organisational

and managerial activities that have to be conducted in the effective and successful
devising and implementation of marketing initiatives.
Marketing is thus an all-pervasive business concept. It is there to ensure that
what is done is both effective and profitable. To this end, any activity that is
undertaken should be in accordance with the strategic aims, the technology, the
capacities and capabilities of the organisation, its staff and resources. The role
and function of marketing is also to seek and generate improvements in the
organisation's business activities. It is concerned with providing the impetus for
the devising, development and implementation of new products and services. It is
concerned with the seeking of new business opportunities, both in fields with
which it is familiar and in new areas also. Marketing sub-strategies, plans and
objectives will be devised in the pursuit of this. Effective marketing is also
concerned with the gathering of effective and suitable information concerning the
organisation's products and their impact on customers, competitors, suppliers
and the market place and environment at large. The final part of marketing
activity is that which is concerned with the continuity of the organisation; it is the
generation of and bringing on stream of a steady supply of new products, suitable
in both operational and quality terms for the markets in which the organisation
operates or seeks to operate. More generally, organisations will seek to identify
market opportunities, design and devise strategies, and then to implement and
develop them. Marketing is thus both a process and a reflection of the corporate
state of mind in relation to its business as well as a combination of functional
activities and expert and specialist understanding.
CHAPTER 7
Human resource
management
The purpose of this chapter is to introduce the student to some fundamental

concepts in what is an ever-developing field of importance in the management
sphere. Peter Drucker finds the question of Human Resource Management
(HRM) to be so crucial and central to the role and function of the manager, that
he questions the need for personnel departments at all- this work should be done
by every manager, and every manager should have expertise in this area.
• Introduction
In general, the concept and basis of HRM has moved from welfare concerns and
a moral or enlightened attitude to the staff and workers of organisations, through
highly structured and highly staffed corporate and department personnel
functions, to 'resource management', where it currently rests, and from where
it is likely to develop.
The current regard for HRM has, initially, the disquieting connotation that the
human resource is to be exploited, in the same way as land, capital, technology,
and information. However, if this is seen in a context of responsibility and
obligations on the part of the organisation, its managers and its staff; the
necessity to maintain and develop the resource (as with any other); and to see in
true terms the requirement to gain a return on the investment in the human
resource (and all that truly means), it sits easier from the moral standpoint, as
well as making sound managerial sense.
Finally, by way of introduction, effective and successful HRM is a highly cost-
effective, even profitable, aspect of management.
To be so, this part of managerial activity must therefore optimise the use of the
people within organisations:
• Formulating HRM policies and strategies, and giving a direction and method
for these
• Providing advice and guidance on the implementation of these policies
• Providing a 'service' function, maintaining and improving the management of
staff at the workplace
183
• Planning for the required staff, recruiting, motivating and developing them
• Providing and implementing strategies for change that address the organisa-
tional and 'human' aspects.
In addition to this, five levels of HRM activity can be identified:
• Steady state: the conducting of day-to-day activities at the workplace in

ways familiar and appropriate
• Crisis: the handling of the unexpected or unavoidable
• Policy: ensuring that given directions and strategies continue to be both
effective and appropriate
• Innovation: positive and creative input to the function, to ensure progress,
challenge, improvement and development
• Human maintenance: group and organisation structures, values, attitudes
and ethics, and the communication systems and activities that ensure their
effectiveness.
There is thus a broad general background that is important in this context.

Processes that are adopted must be efficient, effective and suitable to the purpose;
whatever is done should be in as short a timescale as possible.
Organisations have obligations to their staff that HRM must address. As well
as the points made here, there is a general duty of care to be exercised. There is
also the requirement to set a general ethical and moral standpoint, in reflection of
the organisation culture and managerial style adopted.
There are legal requirements that must be met - HRM is now extensively
covered by law in the UK and (increasingly) in the EC. More universally again,
there are ethical requirements that must be met; there is, at the very least, an
empirical correlation between the ways in which the human resource is addressed
and approached and organisation success or failure. (The principles relating to
this are dealt with, both in this Chapter and also Chapter 8 Industrial Relations;
there is also reference to it in the section headed 'Managing'.)
The management of the human resource is thus becoming recognised as an
area of high expertise, and one in which a fully effective and direct contribution
to business performance and business profit is to be made. It follows from this
that there are skills and knowledge that can be taught, and which must be
learned, by those who are to practise in the area; that, finally, HRM is
increasingly regarded as a universal, rather than a specialised, aspect of
management.
• Corporate aspects
Human resource strategies and policies must be designed and devised to meet the
operations and undertakings of the organisation. They must reflect its overall
aspirations, and the aspirations of those who shape its direction; and also the
aspirations of those who are to be attracted to work for it. They must address the
wider questions of the formation of the required culture, attitudes, values and
Human resource management 185
beliefs; they must define the 'aura' and 'ethos' of the organisation; they must set
out the type of employer that it intends to be; and be instrumental in defining its
management style.
Human resource policies must address, next, the standpoints to be taken on the
particular issues that constitute a 'classical' personnel management.
These are: staff planning, recruitment, selection, assessment, succession and
promotion; the style of HRM to be adopted and fostered in the everyday dealings
with and between staff; industrial relations, representation, rules, regulations and
procedures; the approach to the health and well-being of the employees; the
approach to be taken to safety at the workplace; employee development; work
methods and practices; pay and remuneration and benefits; employee services;
job analysis, design, improvement and enrichment; personnel specification;
performance standards establishment, maintenance and appraisal.
Human resource policies must address the maintenance of the human resource.
This is largely to do with the approach to be taken on individual misdemeanours,
grievances and disputes; the assumption of responsibility for ensuring levels of
performance; the content of induction and orientation programmes; the basis on
which opportunities are offered to individual employees; equity and fairness of
treatment of employees across the entire organisation, as well as within
individual departments and sections ..
Human resource policies must address the question of, and implications of,
both organisation and staff development. An organisation standpoint must be set
for this - whether or not to be 'a learning organisation', for example - and
operational practices designed and implemented that match the development
activities to be undertaken and are integrated with the rest of the work of the
organisation.
Finally, human resource policies must be designed with the wider operations of
the organisation in mind. They must set standards of behaviour, performance
and attitude commensurate with the work being carried out, and the nature of the
markets and sectors in which the organisation is operating. Thus the widest
aspects of the management of people must be considered; ways of working, work
organisation, presentation, the organisation-customer interface.
With this in mind, the main aspects of, and implications for, the direction,
management and organisation of the human resource are now considered.
• Staff planning
This is a dynamic and continuous process, and one of which all managers should
have a good understanding and a basic competence. The reasons for this are to do
with the increasing complexity of organisations and activities; because of
legislation; because of pressures on the human resource, and the need to
maximise it; technological changes and advances; labour turnover patterns; the
structure of the workforce; the changing nature of labour markets; imbalances
between skills available and required; the nature of core and peripheral work-
forces. All of this is increasingly an expected and integral part of the task of the
manager in whatever functional area he finds himself, and one which has to be
carried out effectively.
The key elements involved are as follows:
1. Assessing the staff/manpower mix, by each of, and a combination of, the
following criteria: age; length of service; jobs held; promotions; sex, race,
ethnic origin; skills and knowledge and expertise in different categories;
flexibility and transferability
2. The balance between the supply of labour, and demand for labour, overall, by
location, and by the elements of the manpower mix given above; and the
reconciliation of this supply and demand
3. Future projections for staff, based on accurate and informed projections of
business activity and the HRM activities that are implicit in this
4. Manpower information and computer systems, and the information that
they contain; managers are concerned not so much with the content and
components of these systems as with the conclusions to be drawn, and the
actions that are indicated or implied as the result of the analysis of this
information
5. Constraints, especially resource constraints and those imposed by budget
considerations and other operational factors. Other matters to be taken into
account here include location and any consequent implications for the nature
and type of workforce; the history and traditions of industrial and commercial
activity in the area in question; and operational constraints that may be
imposed by ways of working and industrial relations agreements.
The key results of these activities are as follows:
• Workforce profile
This is the ability to 'build' a full profile of the workforce. The content of such a
profile will vary between organisations. There must be an organisation break-
down of its human resource by the following criteria: age; capabilities and
capacities; training and qualifications held; full and part time job holding
patterns; equal opportunity considerations of race, gender, disability, govern-
ment employment schemes and other relevant factors such as rehabilitation of
offenders.
This is essential if effective HRM policies are to be devised and implemented.
Such a breakdown has implications for upsizing (that is, the taking on of
additional staff); downsizing (that is, the laying off of staff); and rightsizing (that
is, the process of matching the size and scope of the workforce with the range of
work to be done). It has implications for skills and technological obsolescence
and the implementation of regeneration and redevelopment plans for the human
resource. It has implications for the creation of a dynamic, flexible and
responsive organisation; again this is reflected in the state of, and capacities of,
the human resource.
Organisations that adopt this style and that have this information about their
human resource, that manage and order it in this way, are likely to be much more
flexible and capable of responding to production and market shifts.
For example, there is a legend about Mitsubishi, the Japanese manufacturing

and heavy industry conglomerate; as the result of adopting such approaches it
was able to transfer effectively a workforce of several thousand from building
ships (a sector that was declining) to building cars (a sector that was set to
increase). The flexibility and dynamism of its HRM policy enabled Mitsubishi to
do this effectively.
• Skill match and mismatch

This is the ability to build skills, knowledge and experience profiles of the
workforce, identify matches, overmatches, undermatches and mismatches, and
use this as the basis of informed effective remedial action. The ability to recognise
that these change, and their implications for redundancy, redeployment and
retraining initiatives is also vital.
• Turnover analysis
This is the ability to establish why people leave the organisation and/or its
component departments; the nature of these reasons, whether positive or
negative; the extent to which they remain within or outside the control of
managers. This can later provide the basis for the redesign of work; the
assessment of acceptable and unacceptable levels of turnover (either overall or,
again, in sectors, departments or occupations); and other matters that are implied
or indicated, such as those to do with reform or improvement of staff manage-
ment practices, the work environment, or patterns of work.
• Staff recruitment/planning
Three things are vital here:
• Difficulties, and the nature of such difficulties, in recruiting particular types of
staff; people with particular skills and mixes; people in and from particular
locations and occupations
• The ability to identify the problems, negative issues, bad job and operational
features, both across the organisation and in particular departments and
occupations within it
• The ability to identify the attractions and positive aspects of the organisation
and its work, both as a whole and in particular departments and occupations.
Overall, the ability to assess the strengths, weaknesses and problems being
faced by the organisation and its managers will emerge from proper and rigorous
staff planning and information systems. Accurate proposals, either for building
on strengths, or for the resolution of negative issues, can be drawn up, based on
real data rather than 'received wisdom' or preconceptions.
• Behaviour/development analysis
Three things are again vital here:
• The ability to recognise potential of individual members of staff, and from this
to take action to prepare them for career paths and a long term productive and
effective future
• The ability to identify negative patterns of behaviour on the part of individual
employees, and to take remedial action based on hard evidence
• The ability to identify particular patterns of strikes, disputes, grievances,
accidents and emergencies, and to take corporate remedial action based on
hard evidence.
• Succession Planning
This policy also enables organisations to successfully and effectively address
problems of succession - that is, a good flow of talented people into key and
senior and executive positions as they become vacant. All organisations should
have a succession policy (even if it always recruits such staff from outside, this
should be the subject of corporate assessment, evaluation and decision). This
policy will in general recognise the appraisal, development, and organisation-
specific human resource activities required. There are also elements relating to
equality of opportunity; qualities, aptitudes and capabilities; and industrial
relations that must be considered. Finally, global organisational aspects con-
cerning motivation and morale must be remembered - in particular an
organisation that progresses its talented people to the limit of their potential
tends to encourage other such persons to follow on.
One of the main requirements in the establishment of effective staff planning
policies, and personnel management information systems is to get organisations
to place a high value on them. Such activities have to be viewed as central to the
general effectiveness of managerial activity, and a key requirement in the gaining
of effective returns on the investment in the workforce. There are pockets of
excellence in this regard but there is a general requirement for a great increase in
managerial understanding and application of the widest concepts of workforce
planning, and the returns on such investment.
I Fitting the job to the person: fitting the person

to the job
This process is abbreviated to FJP-FPJ and it is represented in Figure 7.1. The
process is fundamental to the basic understanding of matching the requirements
of a given job, and the attributes of the person or people who are to be called
upon to carry it out.
The process requires, in turn, an understanding of the critical elements of the
job, and the critical skills, knowledge, attributes, qualities, attitudes, behaviour
1. The Job The Person
Match
Good Match
(Q)
Mismatch
or
no match
2. Key Task
00 Key Attribute
Match
Mismatch (i.e. the candidate has some

attributes, but not the key)
Indicates concentration and priority of selection effort

3. Interpretation
C\erson
Jobo Derson
Person
Job
\Q__)
Job is too large for Person is too large Person is too large for
person, leading to for job, but has no job, has attribute for it,
stress and dysfunction attribute for it but w ill soon get bored
Purpose: indicates requirement to define personal attributes in relation to the job

In all organisations, the process must be validated, that is, the relationship between
key tasks and key attributes must be related to effective job performance. It must also be
reliable, that is, any test used to predict performance from the process must
demonstrate the quality concerned, and relate it to job performance, in all circum-
stances.
Figure 7.1 Fitting the job to the person: fitting the person to the job
expertise and experience necessary to carry it out. It requires an understanding of

the kinds of person who are likely to hold the above range of qualities in the
necessary mixture. It requires an understanding of the extremes of the job - those
elements that are brilliant and attractive and that consequently ensure applica-
tions from persons who wish only to carry out those parts of it (or who are
qualified only to carry out those parts of it); and those elements that are boring,
dirty, dangerous or else require personal displacement (for example, working
away from home for long periods of time).
The aim must be to produce from the FJP-FPJ process an effective mode of
work and job definition, and a person or people both capable of doing the work,
and happy, contented, and fulfilled (as far as this is possible) to do it for the
organisation in question. It is essential therefore to draw attention not only to job
attributes, but also wider elements to do with the work methods, style,
environment, inherent opportunities and constraints at this initial stage, if a
fully effective process is to be devised.
At this early stage also, a creative approach should be taken, to decide the
range of ways in which the work could be carried out. For example, it may be
possible, on reflection, to reallocate the tasks among existing members of the
workforce. It may be an opportunity for a total or major redesign of working
methods, which in turn may constitute fresh impetus and motivation for the
existing workforce or department. Only when this is exhausted should the
decision be taken to constitute a vacancy, and fill it. Even where a vacancy is
clearly indicated, for example in the case of a senior or expert appointment, the
review process should still be carried out. This is to ensure that the opportunity is
taken to establish the full range of capabilities and qualities required of the post
holder.
This is not a complicated process, nor is it (necessarily) a long one. It should
not be neglected, however; at its most simple it represents a quick checklist and
aid to thinking, enabling managers to clarify their thoughts. At the other end of
the scale, however, it represents the first and most important step in the devising
of a recruitment strategy; if this first stage is not right, the rest of the process will
be flawed also.
Assuming that this is complete, a range of further issues must now be
considered.
• Equal opportunities
The legal aspects of equality of opportunity are dealt with in Chapter 9. The
purpose here is to fill in the managerial and operational background required for
a full understanding of this aspect of HRM.
First and foremost, equality of opportunity is an issue of attitude, or corporate
state of mind. Managers have to view this as important, as a fundamental
prerequisite to the creation of organisation and operation effectiveness. Managers
and organisations must first overcome the tendency to compartmentalise people
by race, gender, religion, marital status, disability, age, location, postal address,
non-essential qualification, school background, club membership, hobby and
interest, etc. They must take the opposite standpoint of isolating the qualities
essential and desirable to carry out a job. They must view people in terms of their
potential as staff members, as contributors to the success and prosperity of the
organisation. Without this, true equality of opportunity is not possible.
Next, the question of equality of access must be addressed. Great swathes of
population are included or excluded from knowledge of jobs, and the ability to
apply for them, for example, by virtue of the media in which they are advertised.
Within organisations, for internal appointments and promotions, conditions are
often written into jobs that exclude, or tend to exclude, married women with
responsibilities at home, without necessarily considering whether or not these
considerations have credence (or where they may once have done, whether they
still have credence).
There is also a question of basic human decency, that requires that all people
be treated the same, regardless of any divisions indicated above. This is a matter
for society to address, as much as managers and organisations. However, the
organisation publications, recruitment advertisements, job descriptions and
person specifications should be written in ways that reinforce this. The required
attitudes and beliefs must be formulated and instilled at the induction stage, and
reinforced throughout the working life of the individual.
This is one of the great strengths of Body Shop. The organisation offers a very
definite set of values to which all those who work in it are required to subscribe;
without exception, these are operational and business and environmental and
ecological values; within this, each and every member of staff has equality of
opportunity, and none of these values detract from this.
Organisations must adopt a hard edge to this matter. At selection, interview,
testing and assessment for jobs and promotions, criteria must be based, and be
seen to be based, on operational capabilities; and all those, including managers,
who adopt a negative approach or attitude to equality of opportunity, must be
subject to organisation discipline.
Offering equality of opportunity to all sectors of the workforce is much more
cost-effective, even profitable, than failing to do so. By concentrating on
(discriminating against) certain sectors of the population on non-operational
grounds, organisations greatly limit their prospects either of making effective
appointments, or of maximising the human resource.
The lead in this respect must therefore come from the top of organisations, and
the attitudes thus enshrined be filtered down to all the staff. Organisational equal
opportunities policies must be written in clear, unequivocal terms, and easily
understood by all concerned. They must be valued and adopted at all levels and in
all sectors and departments. Organisation handbooks and other literature that
rise above prejudices and preconceptions to offer true equality, and equality of
opportunity, become a great social as well as an operational beacon.
A genuine adoption of the principle of equality of opportunity for all
constitutes excellent marketing to the human resource of the organisation. All
staff are valued for their capabilities and capacities rather than on grounds that
have nothing to do with these. Such an approach also underlines any high moral
or ethical stance taken in the other business and organisational activities. It also
constitutes sound business and common sense as is illustrated by the converse
position; rejection of swathes of the population as potential employees simply
because of characteristics that have nothing to do with the business in hand is
managerial nonsense.
• Pay, remuneration and reward

Effective systems of payment or reward must meet a variety of purposes and
considerations. They must reward productive effort and outputs in whatever
terms that is measured. They must provide an adequate level of income on a
regular basis for those receiving it. They must motivate and encourage. They
must meet the expectations of those carrying out the work. They must be fair to
all concerned.
Above all, they must be 'honest' - that is, rewards based on targets must be
achievable and rewards based on quality of performance must be measurable in
some way. Specific payment systems such as commission, bonuses or 'merit'
increments should be clearly understood by all concerned, the criteria by which
performance is to be measured be clearly spelled out and, as long as objectives
and targets are met, payment must be made.
For some occupations, this is very straightforward. The sales executive
working to a commission based on sales volume or income from sales has a
clear ready reckoner against which he/she will be paid, clearly understood by all
concerned.
For others, it is not so clear. Performance related pay schemes for office,
administrative, clerical, executive and professional staff have often fallen short of
expectations because the criteria against which performance was to be measured
were never made clear or fully understood by those concerned. In such cases, the
scheme actually demotivates those affected, and falls into disrepute and discredit.
The great mistake that is made is when organisations introduce performance
related pay schemes with a view to cutting the wage or salary bill. Invariably, at
the outset of any such scheme, productivity, effort, output, or whatever
indicators of performance are being measured will rise, and so therefore will
the organisation's obligations to make payments to its staff. Fundamental errors
along these lines were made in the reforms of salary systems of local government
and the health services of the UK in the late 1980s and early 1990s, resulting in
serious loss of motivation and morale on the part of otherwise very highly trained
and motivated staff.
Those devising payment systems must also understand the motivations and
expectations of the job holders, and either meet these as far as possible, or else
understand the consequences of not meeting them. In general terms, these factors
will consist of a level of income; consistency, stability and security; and a match
between achievement and reward. In addition, workforces have got used (over
the period since 1970) to annual pay rises to compensate for the loss of
purchasing power due to inflation. Professional, clerical and managerial staff
expect to receive incremental rises in addition to this.
The consequences of a bad or unvalued payment and reward system should
never be underestimated. At their worst, they cause instability and labour
turnover of their own accord. Having stated that one of the purposes of a good
system is to motivate, one of the consequences of a bad system is extreme
demotivation and demoralisation. This is true for whatever is wrong with the
scheme- if objectives are not achievable or if they are achievable but the rewards
are not forthcoming; and if the pay or pay rise does not meet expectations.
Finally, it must be remembered that while all payment systems should aim to
provide motivation to the job holder, no amount of money will make a boring job
interesting, but merely more bearable. Similarly, it is possible to offer intrinsic
benefits in inherently interesting or fulfilling jobs, where there may be constraints
on a reward package based purely on salary.
I Components of a wage, salary or reward

package
We can isolate four elements here:
• Payment: annual, quarterly, monthly, four-weekly, weekly, daily

Commission, bonus, increments, fees
Profit, performance and merit related payments (see Summary Boxes 7.1, 7.2,
and 7.3)
• Allowances: attendance, disturbance, shift, weekend, unsocial hours, training
and development, location and relocation, absence from home
• Benefits: loans (e.g. for season tickets), pension (contributory or non-
contributory), subsidies (on company products, canteen, travel), car, tele-
phone/car phone, private health care, training and development, luncheon
vouchers.
• Chains of gold or super benefits: school holidays (teachers); cheap loans
(banks); free/cheap travel (railway, shipping, airlines); pension arrangements
(for older or longer serving staff).
This is very complex, and the mixes adopted by organisations in the devising
and implementation of reward strategies for different staff categories cover a
variety of aims and purposes in response to particular situations. The overall
general objective is, however, to address the following:
1. Expectations: all systems must meet the expectations of the job holder to a
greater or lesser extent if they are to be effective at attracting and retaining staff
in the required occupations
2. Motivation: within the constraints illustrated above, all payment and reward
motivates to greater or lesser extent; the levels of reward offered to particular
SUMMARY BOX 7.1 Performance Related Pay (PRP): Ground Rules
The basis of any such scheme must be to relate, as precisely as possible, the
rewards to staff with the effectiveness and success of the work they carry out, and
the outputs that they achieve. For production and sales efforts, the process is
straightforward in that targets can easily be posted. For all schemes there are
certain ground-rules essential for success and effectiveness.
1. The scheme must be believed in, valued, and understood by all concerned
2. Targets must be achievable, they must neither be too easy, nor too difficult;
their purpose is the articulation of the balance between effective effort, and
effective output
3. Targets must be set in advance; if they are achieved, payment must always be
made
4. The overall purpose is to reward effort and achievement on the part of the staff;
and to maximise the effectiveness of the H R effort on the part of the
organisation
5. The language and presentation of the scheme should be positive and aimed at
'rewards for achievement'. The scheme's rules should not be couched in
bureaucratic phraseology.
PRP is not a means of cutting wage and salary bills. Its purpose is to target these,
and to reward efforts, not to penalise them.
SUMMARY BOX 7.2 Profit Related Pay
The purpose of relating profit to pay is part of the process of targeting the reward
package; and also the motivation and commitment effort. By combining the two
elements, the line of reasoning is that all staff are both focused on the purposes for
which they are supposed to be working, and that they also assume a positive stake
in its commercial success.
Profit related elements take two main forms. The simplest of these is to allocate a
percentage or proportion or amount from the surplus generated by the organisa-
tion, and to share this out. The means by which this is to be allocated should always
be made clear in advance of any actual award, in the interests of both fairness and
confidence in the scheme. The other and more sophisticated approach is to offer
shares and equity in the organisation -thus concentrating not only on the profits,
but also on wider issues of public confidence and the market value of the
organisation. Furthermore, by concentrating on the commitment of the staff and
staff groups in question, more general considerations relating to actual reward
levels are given a precise context.
The relationship between profit, ownership, commitment and pay is a constant
theme of the 'excellence' studies. In the UK, the Bell-Hanson report of 1989,
researching 113 publicly-quoted companies, found that profit-share companies
outperformed others by an average of 27%, on returns on capital, earnings per
share, and profit and sales growth.
SUMMARY BOX 7.3 Merit Pay and Performance Related Pay for
Administrative, Professional and Managerial Staff
In general, the 'rules' for implementing effective merit and performance related pay
schemes for these staff are the same as for anyone else. There are, however, five
particular difficulties that have to be addressed at the inception of the scheme.
• The objectives, criteria, and other measures of performance must again be

drawn in such a way that everybody understands them, and that they can
be measured
• Second, both assessor and assessee must have full confidence in each
other's capacities in this regard
• Third, if objectives are met, payments should be made. If they are not met,
a full briefing and explanation must be offered to the employee in
question.
• Fourth, the scheme must provide reward and incentive to those working
in it. It must be valued by all concerned
• Finally, it must serve the aspirations of these categories of staff.
job holders also carries implications for the nature and complexity and
commitment to the work in hand that is required on their part.
3. Mixes of pay with other aspects: much of this relates to expectations also,
for example, in the UK, the offer of a company car to professional and
managerial staff is still very attractive, in spite of the diminishing tax advantage
4. Occupational aspects: part of the reward package may include the provision
of specialist or expert training and equipment
5. International variations: these relate to the mix of payment and other
benefits in the total reward package; in the UK, there is a wide variety of
components; in Switzerland, on the other hand, only 2% of managers receive a
company car, preferring instead (collectively) a higher level of salary.
• Job and work analysis

The overriding concern here is to arrange the work that has to be done in ways
that are cost-effective, profitable, efficient, interesting and fulfilling (see
Summary Box 7.4), and to understand the close relationship and mutual inter-
dependency of each of these elements. It is also necessary, at this stage, to
recognise the aspirations and expectations of those to be called on to do the
work, and understand the importance of meeting them, and the consequences to
the organisation where this may not be possible.
One way or the other, these consequences have to be assessed in full, and the
wider implications understood. The ways in which work is arranged and
organised impinges on rule-books, work practices, departmentalisation, divisio-
nalisation, industrial relations, selection, training and development. If work is
boring, there will be high levels of disputes, absenteeism, self-certificated
SUMMARY BOX 7.4 Mass Production Work
Food processing technology devised in the 1960s and 1970s enabled meat and
vegetables to be dried and preserved for long periods of time; that enabled ice-
cream and yoghurt to be produced very cheaply for the first time, for distribution
through supermarkets, and enabled a great variety of fizzy drinks also to be mass
produced and mass marketed for the first time. However the work itself, consisting
mainly of watching the products being processed, and either picking out samples
for testing, or clearing up blockages when they occurred, was extremely tedious
and debilitating. For example, those who watched peas being freeze-dried
frequently complained of nightmares (with the peas as the central feature). At
the time, the only HRM activity in use was to rotate the staff between the different
production lines. Each became equally disaffecting after a short period of time, and
it thus was impossible either to motivate or retain the staff for more than very short
periods of time. The food processing companies used therefore to concentrate their
efforts on having a steady influx and supply of labour, rather than addressing the
possibilities of reanalysing or redesigning the work that needed doing. Conse-
quently, a substantial part of the cost advantage of mass production and the
technology was being lost in the constant pursuit of a pool of staff, and in staffing
problems arising at the workplace.
sickness; high levels of managerial time and resource used up in the operation of
procedures; and over-supervision of such things as time-clocks, work sheets, and
meal breaks. It also has great effect on the total atmosphere or aura of the place of
work, and it is in such situations that 'unofficial' work organisation and 'canteen
cultures' can easily take hold. Summary Box 7.5 shows the Sony Corporation's
response.
The Hawthorne experiments (see Chapter 2) demonstrated as part of their
findings that work, in itself mundane, could nevertheless be conducted much
more effectively by strengthening the personal and group identity of those
carrying it out, while at the same time ensuring that management control was
not lost to any potential informal system. The lighting experiments referred to in
SUMMARY BOX 7.5 First Steps towards Empowerment
The Sony Corporation recognised this in the 1960s. It went to a lot of trouble to
remove some of the negative pressures inherent in the work, by instead creating a
positive atmosphere and culture of 'value of the workforce'. By giving this, Sony
removed the need for time-clocks or for the supervision of arrival and departure
times. The pride instilled also ensured that production disruption was minimal,
washrooms and toilets were kept clean, and absenteeism was reduced. Part of the
process involved the instillation of personal responsibility for work in all members
of staff- the first experimental steps in 'empowerment'.
Chapter 2, and the effects on both the experimental and the control group,
underline this.
Anyone aspiring to manage and direct the human resource must therefore
understand job and work analysis as a much wider process than merely the
grouping of tasks into jobs, and the allocation of jobs to people.
• Job descriptions
For all staff, these should be drawn up in broad terms rather than trying to define
every last task that an employee may at some point be required to carry out. The
use of phrases such as 'to work as directed', or 'as required by the company' are
perfectly legitimate, and above all give maximum flexibility and scope to what is
an organisational tool, and not a straitjacket or restrictor. Required attitudes,
behaviour and approaches to the job can also be written in the same way- 'to
work to the required standard', or 'to follow normal organisation practice'.
This is far removed from the very specific and task-oriented descriptions
devised for all kinds of jobs in earlier periods. Since 1960 these, at their most
detailed, actually enshrine restrictive practices and demarcation lines, and have a
very debilitating effect on both the workforce and the work itself. Very often the
subject of collective workplace agreements, such job descriptions have proved
very difficult to change, and often very expensive also.
Managers must take an active responsibility if this situation is to be avoided
and if the much simpler format is to be truly effective. It requires accurate and
universal understanding of what 'standards' and 'direction' are, and job training
for the employee, and involvement and where necessary enforcement, by
managers. This will be introduced at the employee selection and induction
stages, and reinforced by the day-to-day style of management adopted by the
organisation.
• Job evaluation
It is useful to deal with this in global terms at this stage. It is not the intention to
go into great detail of job evaluation methods, but rather to look at the purposes
and desired achievements of the system.
The overall aim is to assess and evaluate the nature of the work to be done in a
particular job; the key tasks to be carried out, and the balance, difficulty, value,
frequency and importance of these; the subordinate tasks to be carried out, and
the marginal tasks also, measured against the same criteria. Skills, qualities,
capabilities and attributes are matched up, and a market value placed on them,
with particular weightings as necessary or desirable. Jobs are then placed in a
ranking order for the organisation, matching them up against grades, job titles,
salary scale or scales; in large or complex organisations, these may be clustered

according to staff or budget or capital responsibilities; spans of control; key
results or objectives; flexibility; progress and innovation.
Public and multinational organisations spend a lot of time and resources on job
evaluation, and many have standing job evaluation panels and committees. The
main organisational criteria essential to the success of any scheme of job
evaluation are to do with fairness and equity of treatment for all staff and
grades and occupations; clearly publicised and preset criteria for the evaluation
process; acceptable to and understood by all; the opportunity for representation
and appeal; speed of operation; and the ability of the organisation to commu-
nicate all of the evaluation process, and specific findings on individual jobs, in
clear and unequivocal terms.
• Person specification
This is the process of drawing up and finalising the qualities and attributes that
are necessary in the individual who is to carry out the work. This should be done
on an individual basis for those who are to occupy key positions or bring
particular expertise to organisations. It should be done also to ensure that staff
who are less skilled and more readily available, are nevertheless selected and
appointed on the same basis of rigour and precision.
These qualities and attributes should be classified and prioritised in such a way
that they can be tested (if at all possible); observed (if testing is not possible); and
inferred (if that is the only course available at the time or within the
organisation).
Finalisation of these qualities provides the basis on which the recruitment
process is to be carried out. The main critical qualities required will be asked for
in the advertising or trawling process; they will be the basis on which the mixture
of interview, tests, exercises, case studies and examinations for the purpose of
selection is to be drawn up; they will provide the basis of probing questions at the
interview stage; and they will also provide the basis for treating all candidates on
a fair and even footing.
The classical writer on this is Alec Rodger of the Bristol Business School, who
proposed the Seven Point Plan of Physique, Bearing and Manner; Attainments;
General Intelligence; Special Qualities and Aptitudes; Interests; Disposition;
Circumstances in the devising of person specifications (see Figure 7.2). These
categories of qualities are as useful and valuable and valid as any; the important
lesson for all managers is that the required qualities must be identified in some
way or another, if effective person specification and selection processes are to be
achieved. It breaks these requirements down into understandable and manage-
able segments. Finally, it enables a clarity of thought about the issue among
managers who are often not experts in the field of staff selection.
KEY HEADINGS ESSENTIAL DESIRABLE NEGATIVE PRIORITY
PHYSIQUE
ATTAINMENTS
GENERAL
INTELLIGENCE
SPECIALISED
APTITUDES
INTERESTS
DISPOSITION
CIRCUMSTANCES
Purpose: to identify the key characteristics required in a potential job holder; to

produce a definitive person specification; to prepare a structure for the selection
method; to prepare an interview scheme; to ensure fairness, best practice, and
compliance with the law.
The Plan illustrates a process. It does not matter what characteristics are used, as long
as the end result is the completion of the scheme of matching personal characteristics
with job requirements, prioritising these, and providing a means of identifying how
these should/could be assessed at the selection stage.
Figure 7.2 The Seven Point Plan
Source: Rodger (1957).
• Recruitment and selection strategy

• Attracting a good field of candidates
After this finalisation, the recruitment and selection strategy can be addressed.
The first step is to advertise, and to decide whether or not this will be internal to
the organisation; external; or both. Recruitment advertising and promulgation
consists of establishing the media to be used; when, where and how to advertise;
the style and content of the advertisement; whether to use job centres, agencies,
head-hunters, specialists, and the pros and cons of each.
Globally, it is important to remember that the process of induction and
attitude formation in the (eventual) new employee starts here, so it is important
to ensure that the initial image and standpoint created is that which is eventually
required.
This is even more important where one is selecting staff for organisations
where those potential employees have already been customers, and where they
will have formed preconceptions and impressions about it. This extends in
particular to transport, insurance, health services, national, municipal and local
government, communications and media organisations.
• Applying for a job

The purpose of getting people to apply is to give the organisation enough
background information to enable a preliminary judgement to be made as to their
suitability for this job. It will not give a final judgement- this will be done by the
selection process:
• Application forms have the great advantage that the information about each
candidate who responds comes in a standard format, and as long as the form is
designed to elucidate all the qualities required, is invariably the best way of
asking for this initial information
• Curricula vitae have value, as long as it is recognised that they are the
candidates' own version of their lives, and that they will inevitably focus on
achievements {and may embellish them); they are most useful where they are
read in conjunction with application forms, and may give or indicate qualities
and experience not apparent or asked for on the form, but which nevertheless
will be useful to the organisation
• Telephone applications have some value, as long as a productive conversa-
tion is engaged; they are very dubious otherwise, both in the process of
acceptance for interview, and rejection: in particular, an unproductive con-
versation is no measure at all of a potential candidate's unsuitability - the
conversation may have been limited by anything from conflicting pressures to a
heavy cold
• Pre-screening by agencies has value in removing this burden from the
manager, but it is limited by the agencies' perceptions of the nature of the
candidates, and ultimately the new employee required; this is true whether it is
a technological or executive 'head-hunter' that is involved, or a labour or
secretarial agency.
However, if the candidates are to be attracted, the information to be provided

must be assessable against the criteria established in the Person Specification.
• Selection techniques
The precise mixture of selection techniques used by organisations to ascertain the
suitability of individuals for employment in particular jobs, will depend on the
nature of both people and occupations concerned. Bearing in mind that the
overall purpose is to match job requirements with the capabilities of persons, a
range of techniques and methods is available.
D Tests
1. Skill tests: for the purpose of assessing the degree of capability that the
individual will be bringing into the job
2. Aptitude tests: for the purpose of assessing the degree of potential that the
individual may be bringing to the organisation or occupation; this may include
training and skill potential
3. Personality tests: that indicate the presence (or otherwise) of particular
personality traits in the individual, and that can then be related to those
required for the carrying out of the job, and that have previously been isolated
as important; personality tests do not predict job performance
4. Intelligence tests: to ascertain the 10 of an individual
5. Psychometric tests and questionnaires: tests of habitual performance,
designed to measure a combination of personality characteristics, values,
behaviour and interests, and again, relate these to those deemed to be
necessary in the job holder.
Any test that is used must have pre-stated, measurable, inferable, or observable
aims and objectives, clearly understood and articulated by those who have set up
the selection process. Candidates who undergo any tests set should do so (as far
as possible) under the same conditions, and following any specific test rules. The
tests must be valid - that is, they must measure what they purport to measure;
and they must be reliable - that is, they must produce results that are stable and
consistent. They must be free from social or cultural bias. Finally, they only
measure what they purport to measure- they only assist in the selection process if
they have been properly and precisely targeted at some part of it.
D Exercises
The overall purpose of setting up particular exercises is to be able to observe or
infer (in microcosm) the performance of the individual. The precise purpose of
the exercise will depend on the capability or characteristic that the exercise is
designed to bring out; some of the more usual are as follows:
1. In-tray exercises, used in managerial selection processes to identify or infer
the ways in which the candidates prioritise, make decisions, and work under
stress
2. Case studies, designed to indicate or infer the analytical processes of the
candidate, and (possibly) also their decision-making methods
3. Particular skills and aptitudes required, such as group interaction
(whereby the candidate is placed in a group situation and his approach,
behaviour and modus operandi observed); or presentation skills (whereby the
candidate is asked to conduct a short presentation to a panel, with the
purpose of assessing his capability in this sphere).
Again, exercises will have been devised in advance of the selection activities with
prestated and clearly understood aims and objectives, and any exercise devised
will have clear results in mind, that are either demonstrable, observable or at least
inferable.
D Interviews
Part of the selection process will invariably consist of an interview (or series of
interviews); for some occupations, this may constitute the entire process. Part of
the purpose of interviewing is to meet expectations, on the part of both
organisation and candidate, and to conduct some of the process of mutual
familiarisation.
Beyond this, again, the interview (or series of interviews) must be conducted
with precise purposes and aims and objectives in mind; in order to meet these, the
interview (or series) must be structured; the same questions asked of each
candidate, and the same weighting put on each answer.
From an organisational point of view, the interview process will be structured
to ensure that different aspects will be covered by particular persons or functions.
The roles of personnel, the operational department where the vacancy has arisen,
and anyone else involved, will all be clearly drawn in advance of selection
interviews. If a panel interview is to be constituted, the composition of the panel,
and the function of each panel member, will be clearly defined in advance.
Properly constituted, any selection interview (or series of interviews) will work
to a preset structure, with given aims and objectives. It will be designed to bring
out the characteristics of the candidate that can be observed or inferred at
interview, working to a plan (such as the Seven Point Plan in Figure 7.2), or other
equivalent template. Interviews for a particular position will be concluded, as far
as possible, by the same person or people, to ensure that a measure of consistency
and equity is present.
At the end of the interview (or series), those conducting it should come together
with a set of data gathered on each candidate, in the same format. This enables
the candidates to be compared on an equivalent basis, and to set the data
gathered at interview into any wider context that is present.
The overall measure of the success (or otherwise) of a selection process is the
regularity with which it produces effective and successful appointments.
Selection methods and procedures should be the subject of regular reviews by
both personnel and operational managers. Criteria for what constitutes
'successful appointments' should be specified in terms understood by all. The
wider context of the place of effective selection in the investment in the human
resource must also be fully recognised.
A wide range of aptitudes is inferred on the part of the manager who is to
conduct selection of staff. Above all, the process must be viewed as important and
worthwhile; if it is not, this will set the wider tone, and the overall effectiveness of
the whole will be diminished. Beyond this, managers must be prepared to make
time and resources available when they are involved in the interview process.
Furthermore, managers require skills and abilities in questioning, analysis,
evaluation, interpersonal skills, and wider qualities of fairness, equity and
consistency. Training and development is available in all of these areas, and
any manager who is to be involved should undertake this as part of his obligation
to his profession and expertise, as well as his organisation.
D Assessment centres
Assessment centres involve the devising of, and implementation of, a combina-
tion of the methods outlined above for the purpose of identifying as precisely and
as accurately as possible the qualities and capabilities of the candidate or group of
candidates who are to be assessed.
Assessment centres have the advantage of combining a variety of means and
methods, and thus a much greater and more detailed profile of the candidates can
be drawn up. They offer opportunities to observe the behaviour of the candidates
in a greater variety of situations and in much greater depth (the interview by itself
is often very constricting, for example, and may give a false or misleading
impression of the behaviour of the candidate).
Assessment centres may be conducted over half a day, one day or even two
days, depending on the nature of the appointments being made and the
complexity of the centre itself. They are consequently expensive, and returns
are required on them in terms of the accuracy and effectiveness of the
appointments made as a result. Those assessing and observing the candidates
must also be briefed and trained in regard to the qualities that they are supposed
to be analysing and giving judgement on.
The content of the centre will reflect at all times the qualities that the
candidates are required to exhibit, and effectiveness will therefore be measured
in terms of the quality of the staff thus appointed. Centres have their greatest
merit in the assessment and appointment of key, critical and executive staff where
the consequences of a bad or inappropriate decision may be extreme; and where
conversely every step is taken to ensure that all the qualities required can be
tested, observed or at least inferred over the duration of the centre.
D Panel interviews
These are constituted for a variety of reasons- the ability of many key staff to see
and question the field of candidates; the ability to form a comprehensive range of
opinions about them; and to meet organisational expectations and often
requirements, especially in the making of public appointments. In the latter
cases representatives of the relevant authority or its board of governors are also
often present.
Care has to be taken in the composition and constitution of such panels, and
the structure to be adopted for the actual interviews. Care must also be taken to
assess in advance the roles and responsibilities of each panel member in the
selection process and their expectations of it and from it.
The purpose of constituting a panel must be kept at the forefront of its
activities. The panel members must abide by the self-discipline required of them;
at no stage must it become a competition between panel members with the aim of
getting their own preferred candidate accepted at the expense of the others.
• Shortlisting and appointment

This process arises as the result of the response to the advertising initiative. It will
be carried out against the criteria established during the FPJ-FJP stage, and
itemised on the Person Specification.
Shortlisting is a positive process. It should be carried out with a view to
establishing a good range of candidates for assessment, and enabling a choice to
be made. Anyone who is shortlisted should ideally meet all the criteria; where this
is not possible, candidates who can meet the essentials will be considered first.
Problems arise where no suitable candidates are forthcoming, and this should
be the trigger for addressing the matter of the job or task to be carried out in as
wide and creative a manner as possible. Only when this is exhausted should a
readvertisement of the same job in the same media as beforehand be considered.
Problems also arise where the advertising process brings forth a great flood of
responses that have to be measured or assessed in some way so that a reliable and
suitable shortlist can be drawn up at the end. Discriminating on grounds other
than (perceived) job capability should be avoided and must be avoided where
legal constraints apply; it is better to sample by random numbers; ask for
additional information; or invite pre-interviews. It may be best to return to the
drawing board and reassess the qualities needed, and the job that is to be done.
When the overall process is complete, successful candidates should be called
forward for the selection process (and they should be told what this is to be); and
unsuccessful candidates should be formally and politely notified.
• Reviewing the selection process

This should be carried out at the end of any selection. For non-key or unskilled
appointments, it need not be intensive or take very long - even on these
occasions, however, it should be done and may serve to identify particular
issues or difficulties (and also strengths) in the process conducted.
For key and other professional, technical and managerial appointments, a full
review should be conducted. It should not necessarily be a complex or lengthy
process, and again may simply serve to confirm a highly successful recruitment
exercise resulting in the hiring of excellent and top quality members of staff.
Identification of that which was done well in the circumstances should never-
theless be carried out so that these lessons can be learned and assimilated and the
same highly expert approach taken by all in the making of such appointments in
the future.
Problems and other such matters arising from the process must be reviewed
and evaluated to see where they occurred and why this was so, with the view to
taking remedial action that ensures that they are avoided or improved upon in the
future. Matters that have occurred that were outside the remit or control of those
responsible for the selection process should also be considered at this stage if they
impacted on it (for example, matters such as the enforced absence of a key figure
in the process due to illness, and any other items that fall under the headings
either of 'lucky' or 'unlucky').
The review should finally be part of the general HRM process that is designed
to constantly improve and develop it. Even where a highly successful appoint-
ment has been made there may be more general implications that need to be
considered for the future, and such a review should indicate these. HRM, as with
all managerial activities, is concerned with the theme of constant progress and
development.
• Induction
The purpose of induction is to get the new member of staff as productive as
possible, as quickly as possible. To do this, the manager must have regard to the
necessity of matching the organisation's needs with those of the individual. If this
is to be effective, the following matters need to be addressed:
1. Setting the attitudes and standards of behaviour required, ensuring that

new employees know what is expected of them, and that they conform to
these expectations and requirements; it is most important that the organisa-
tion assumes absolute responsibility for this, rather than allowing employees
to set their own standards, or for these to emerge by default
2. Job training and familiarisation, mainly to do with the ways of working
required by the organisation, and ensuring that these are matched with the
new employee's expertise
3. Introductions to the new team, work colleagues, and other key contacts as
part of the process of gaining confidence, understanding and mutuality of
objectives required for the development of effective working relationships and
environment
4. Familiarisation with the environment, premises, ways of working, and
particular obligations on the part of the employer; and ensuring that the new
employee understands his or her position in this environment.
The process will be completed by the domestic and essential issues of pay,
terms and conditions, workplace location, other specifics and tour of the
premises, emergency procedures and other matters related to health and safety.
Many organisations go to much trouble to ensure that this is adequately and
effectively completed, recognising the returns on an excellent and well-resourced
induction process in the production of a highly motivated and committed
workforce.
The induction process will have been started in general terms by any vague
impression that the new employee has picked up of the organisation; it will have
been further reinforced if, for example, he has been a customer or client of it. Any
correction of these impressions must also be addressed as part of the induction
process, which will also be reinforced by the ways in which the selection process
is conducted.
• Performance appraisal
The purpose of performance appraisal is to measure the performance of
individuals and/or groups at the place of work. For this to be effective and
successful, it must be conducted in the following ways:
• Appraisal must be against pre-set and pre-agreed aims and objectives,

fully and clearly expounded and understood by all concerned. These should
additionally (where there is more than one), be given priority, and deadlines for
achievement; such performance targets should be realistic and achievable in
the given situation - if they are not, they will be ignored; if they are too easy,
they set a wider agenda for the lowering of performance standards
• Appraisal is a process, consisting of both a series of regularised formal
reviews, at which targets and objectives are to be assessed for success and
failure; and a continuous relationship between appraiser and appraisee, that
ensures a mutual and continuing confidence on the part of each in the other
• Appraisal must be flexible and dynamic and part of the wider process of
ensuring that the organisation's strategy and purpose is being fulfilled.
• Appraisal must be a participative process between appraiser and appraisee,
to ensure that the wider behavioural objective of mutual commitment to any
aims and targets is achieved
• The process must be believed in and valued, as both concept and process, by
the organisation and those responsible for its direction; resources and priority
must be committed to it, and it must be in-built into the manager's task, both
on the continuous basis indicated above, and also to ensure that adequate time
is set aside for the formal review part
• The formal reviews should take place at least every 3-6 months; if they are
more frequent than this, they tend to impose on the continuing process and
relationship that should also be present; if they are less frequent, it becomes
very difficult to conduct an adequate or genuine review of what has been
done
• Both appraisers and appraisees should have full understanding of this, and
should be briefed and trained in it; it must be an integral part of the investment
by organisations in their human resource; and the returns on appraisal should
be identifiable and measurable.
Within this framework, particular organisational appraisal schemes may seek

to: provide merit pay awards; identify potential; identify training and develop-
ment needs; identify job-person mismatch; identify organisation development
prospects; identify poor and sub-standard performance; be a vehicle for other
remedied action.
Appraisal schemes fall into disrepute for the following reasons: that they are
not believed in or valued; they do not contribute to the wider success of the
organisation; they are bureaucratic or mechanistic; that it is the scheme and its
paperwork that are important, and not the process that should be completed; that
the reviews are too infrequent, or (in practice) missed altogether; that what is
promised in them (e.g., pay awards, training, promotion) is not delivered in
practice.
They also suffer from performance criteria being identified in general terms
only. This leads to inconsistency in application and unfairness (and perceived
unfairness) in the award of merit pay rises and places on training courses; while at
the other end of the spectrum, individuals may be picked up for poor
performance on the same uneven basis.
There is, and must be, a basis of mutual understanding, openness, trust and
honesty inherent in the process if it is to succeed. If staff are asked to declare
shortcomings in their recent performance, and if this is then used as a stick with
which to beat them, they will simply not do it.
It follows, therefore, that there is a necessary body of skills and knowledge
required of the manager in the conduct of effective performance appraisal.
Communication, articulation, target and objective setting, counselling, support,
trust, dependency and assertiveness, are all dearly necessary; and they will also
be required to be translated into dealings with frustrated and recalcitrant
employees in particular situations.
Finally, the control of the appraisal process must always rest with the manager,
and while agreement of objectives with the member of staff is desirable, this
should never be at the expense of a diluted or sub-standard performance. Ideally,
the manager should have the skills and abilities necessary to gain the commitment
and understanding of the employees concerned.
I Maintenance factors in human resource

management
The basis of this approach is that the human resource requires maintenance in the
ways equivalent to other aspects and resources of the organisation if it is to be
maximised and optimised.
The basic concept is not new. Its beginnings may be seen in the work of
Cadbury and the Human Relation School (see Chapter 2). The lessons to be
drawn were based on the premise that direct positive interventions led to
improved work performance; and that a lack of such interventions led to
performance decline. Some of this activity came under the heading of 'welfare';
other aspects arose from a moral, ethical or even religious belief that this was the
right way to treat people; while others again related the religious aspect to
obligations to generate wealth, both for profit for the organisation and the
greater good of society.
• Job design
This is design both in terms of the formation of attitudes and standards at the
workplace to which employees are required to subcribe; and also in the division,
regulation and allocation of the work itself. Both are undertaken with the
intention of generating a greater measure of positive commitment and a

reduction of workplace alienation. This may involve job rotation and progres-
sion schemes; and project work, secondments, fixed term, action learning type
placements also. Related to this is the ever-increasing obligation on employees to
maintain and improve their skills, knowledge and technical expertise in the
interests of continuing organisation, effectiveness, profitability and prosperity.
On the other hand, the expectations of those at work have also changed, and part
of the job design process increasingly includes improving the quality of working
life. Consider Summary Box 7.6.
SUMMARY BOX 7.6 Stress
Stress may be either positive or negative. It essentially consists of the amount of

pressure present in a given situation in which the individual finds himself. The
sources of stress are occupational, role, organisational, hierarchical, social and
personal; and stresses on the individual result from an imbalance of these. There is
in particular a growing awareness of the links between work and stress and other
illnesses such as nervous exhaustion, executive and professional burn-out, heart
conditions and high blood pressure. The manager's role in this is therefore three-
fold: to recognise it as an issue; to prevent stress among his staff; and to recognise it
in himself and take steps to limit it.
In this context the managerial capacity and expertise and the personal qualities
referred to elsewhere of strength of character and sound health and evenness of
temperament become apparent. The UK Stress Foundation published a view in
1989 that stress cost British industry and commerce £3 billion per annum.
Good occupational health schemes thus have stress recognition and the ability
to treat the symptoms and manifestations of it as a central part of them. The ability
of organisations to accept and recognise the condition, to treat it where it occurs
and, above all, to engage in practices and a style of management that prevent it
from arising as far as possible is an essential contribution to the maintenance of the
human resource.
• Occupational health
Organisations are increasingly assuming responsibility for the good health of
their staff and taking positive steps and making interventions that are designed to
ensure this. This consists of determining that the employee is fit and healthy when
he or she first starts work and that this continues throughout the period of
employment. For those who have persistent or regular time away from work
there may be included assessments by company medical staff as well as the
employee's own doctor. This may require the employee, moreover, to take
medical treatment at the behest of the organisation, as a precondition of
continuing to work for it. Occupational health schemes at the workplace are,
in the best cases, particularly strong and valuable in the early diagnosis of
jobspecific illnesses and injuries. They also provide a valuable general source of
medical knowledge by which the organisation may assess the overall state of their
workforce's health.
Particular matters especially related to the workplace have come to the fore
and gained recognition and currency. Major issues of which any manager should
be aware are:
• Stress, its causes and effects and techniques for its management
• Repetitive strain injuries (RSI) which are caused by continuous use of certain
muscles or the carrying out of certain activities - for example, continuous
keyboard working
• Back injuries caused either by bad lifting practices or a continuous bad back
posture
• The effects of VDU screens on eyesight
• Industrial and commercial heating and lighting and the relationship between
these and eye strain, coughs, colds and other minor but recurrent ailments
• Smoking, both active and passive, and the effects of it on all staff (both in
relation to health and also more general concerns as odours) (see Summary
Box 7.7)
• Alcohol abuse (see Summary Box 7.7)
• H IV and AI OS, and the implications for particular workplaces and occupations
(see Summary Box 7.8).
• Creative approaches to employment patterns

This involves a much greater awareness and willingness on the part of
organisations to relate the hours of work that they offer to the non-work
commitment and aspirations of potential staff members. This means having
regard to the use of flexitime, annual hours and other flexible work patterns; job
sharing; working away from the organisation and especially allowing staff to
work at home and providing them with the means and workstations to do so; and
the devising of shift patterns especially to fit around those with primary
responsibility for looking after young children. More widely, organisations
may offer career breaks - that is, extended periods of time off for employees
in which they may go to do other things. Organisations may also offer 'returner
schemes' pitched primarily at those who have had lengthy periods of time out of
work, usually for the purpose of bringing up a family; the returner scheme tackles
the issues of familiarisation, confidence building and personal and professional
comfort that are the concerns of anyone coming into any job after a lengthy
break. Such schemes also provide specific job training and re-training as
necessary and desirable. Organisations may also underline their commitment
to these creative approaches, through the provision of nursery facilities for very
young children; canteen facilities that are open all day so that all work patterns
are accommodated; and through the adoption of general ways of working and
general attitudes at the workplace that place the same intrinsic value on all
members of staff regardless of their own particular pattern of work.
SUMMARY BOX 7.7 Organisational Approaches to Tobacco, Alcohol

and Drugs
These are dealt with because they are current, high profile and contentious issues.
Organisations should make clear the stance to be adopted on each, giving a clear
lead to managers and staff. Whatever the outcome it should reflect organisational
requirements, and not simply be allowed to evolve unmanaged. Organisations may
set any standard that they wish on each of these issues (provided that they also
conform with the law).
Organisations that wish to exclude smoking from their premises may do so. In
the implementation of this, they should consult with staff, and offer counselling
and support to those who have to fundamentally change behaviour. They will
follow the consultation process and timescale referred to elsewhere.
Staff who have addiction problems should be supported by organisations; they
should be offered counselling, rehabilitation and reference to medical authorities
except in the rare cases where this is impossible.
There is a moral as well as an operational imperative in this, that is increasingly
being recognised as part of the organisation's total commitment, ethical stance and
wider obligations to its staff. Levels of support for members of staff through
programmes and periods of treatment will be directed at both treating the matter in
hand and also rehabilitating staff, getting them back into productive and effective
work.
SUMMARY BOX 7.8 AIDS: Acquired Immune Deficiency Syndrome
Over the near future, organisations are inevitably going to be required to adopt a
direct and positive stance in regard to the matters of AIDS and the HIV virus. This
must cover the matter from all angles. It must include blood tests for potential
members of staff, if necessary, as part of regular check-ups and other occupational
health matters. It must include a continuing obligation to those members of staff
who contract the virus while working at the organisation. It must include reference
to customer contact; covering both clients and staff who have the virus.
The overall purpose is to ensure that all those who work in the organisation, and
all those who deal with it, know where they stand in regard to this issue. In addition,
the extent and nature of the organisation's precise obligations are thus at least
defined for its own purposes, in an area where the extent and coverage of the law is
not yet clear.
Operationally, there are problems of organisation and staff insurance that have to
be addressed. From a cultural and perceptual stance, there are issues concerning
the mystique, legends, and levels of knowledge of the matter that must be
considered, with the purpose of generating understanding, enlightenment, and a
suitable and effective way of working.
These matters are all inter-related and together constitute a greater attention to
the needs of the workplace human resource. A positive approach to the
maintenance of the human resource has also been demonstrated generally to
have positive effects on morale and motivation and reductions in accidents,
sickness and absenteeism. There are also anecdotal connections at least between
the adoption of a positive approach to human resource maintenance and
organisation success, effectiveness and profitability. There is also evidence that
the converse is true - that alienation, demotivation and low morale are most
prevalent where the human resource is not maintained. Current thinking,
priorities and initiatives have arisen out of the assessment of these examples in
business terms and the relationship drawn between success and the practices of
successful organisations. This is again the result of increased awareness; it
represents the state of the art/science/profession at present; and it gives a
springboard for the further development of the human resource maintenance
function.
• Conclusions
As stated at the beginning of this chapter, the full value of effective and expert
human resource management is only now being universally recognised. It is clear
that human resource management is being developed and improved upon all the
time as organisations pursue the maximisation and optimisation of this part of
their activities. Certain trends may be identified.
The development of the welfare function and assumption of a much wider
responsibility for the health and safety of staff is of prime importance. Partly
driven by both national legislation and EC Directives though it is, there is an
increasing general awareness of the importance of a well maintained, healthy and
fit workforce and a direct relationship indicated between this and organisational
prosperity. In the UK, where employment packages tend to cover a wide range of
benefits, the ability to offer private health care is a major advantage in the
attraction and retention of key staff; conversely it is a major disadvantage if this is
not possible; and it is a most valuable general benefit to all.
Moves towards full workforce flexibility have also been made and the concept
is now familiar and understood. However, it is not yet fully implemented in
public services or the multinational sector. The full human resource and wider
managerial implications also have yet to be thought through fully. Many
organisations are still enmeshed in a great array of differing terms and
conditions of employment, complicated working arrangements and restrictive
practices and these are maintained at the expense of operational effectiveness.
Related to this is the mutual obligation to train and be trained in the interests
of ensuring that the workforce at all levels is competent, up-to-date, motivated
and as fully developed as possible. Professional bodies and in-house organisation
management and personal development schemes are starting to take account of
this and these activities are being integrated into the mainstream of organisa-
tional operations.
Inherent in this is a more general and more universal commitment to the
development of all employees. As the value of this becomes more widely
recognised and the benefits can be seen to translate into increased profits,
service quality and organisation stability, flexibility and continuity, so the profile
and priority of these activities will rise. Alongside this must come a greater
awareness of the purpose and benefits of effective performance appraisal and the
wider relationship between the efforts of staff and the prosperity of the
organisation. Part of this also will be driven by legislation (at least in the EC)
as staff at all levels of the organisation will be required to have completed
validated job training programmes in whatever field they are operating.
The area of equality of opportunity is likely also to be strengthened to remove
age as a particular restriction or barrier to employment, provided that there is no
compelling operational reason for asking for this as a condition. Equality of
access and the maximisation of opportunities for access to given occupations is
likely to be strengthened; this will apply both in-house for promotions,
opportunities and job changes and also in recruitment and selection activities
conducted externally. Recruitment and selection activities and practices them-
selves will thus have to become much more rigorous, professional and ultimately
effective. As organisations come to realise the full scale of their human resource
investment, the case for making effective and accurate appointments especially to
key posts becomes overwhelming; however there is increasingly seen a commer-
cial and competitive advantage in conducting effective selection activities at all
levels of the organisation.
IIndustrial relations
CHAPTER 8
The purpose of this chapter is to introduce the industrial relations (IR}

background and traditions and concepts that have grown and developed over
the period since the Industrial Revolution in the UK, North America and Western
Europe.
A grasp of this background is essential if a full understanding of the different
approaches and attitudes to be found among different sections of the workforce
and at different workplaces is to be appreciated. There are patterns of conflict
and traditional methods of resolving them which must also be assimilated. It is
necessary to recognise the use and value of both procedures and institutions
present. Finally, there are lessons to be drawn from both present and past
industrial relations practices that enable approaches to this aspect of the business
sphere that are enlightened and effective and above all profitable. As with all
other activities, the overriding purpose of the industrial relations strategy and
approach adopted must be to make an effective and profitable contribution to the
performance of the organisation.
• Introduction
IR should be seen as the system by which work place activities are regulated, the
arrangement by which the owners, managers and staff of organisations come
together to engage in productive activity. Part of this is to do with the setting of
standards and promotion of consensus; it is also about the management of
conflict. In the UK, this is conducted within a framework built up on a
combination of traditions and practices which have grown and developed over
the past 200 years. These have their roots in the economic and social changes of
the industrial revolutions and the urbanisation of the nineteenth century; the
inherent conflict between labour and the owners of firms; the formation of
collectives, combinations of groups of workers to look after their own interests;
and the demarcation lines and restrictive practices that some occupations and
trades were able to build up. The influence of these traditions remains extremely
strong, particularly in long-established industries such as transport and mining.
However, in recent years there has been a serious attempt to change the attitudes
of all concerned in this field, and to generate a more positive and harmonious
ethos. In part, this has been led by government and underpinned by law. Also,
companies and their managers have come to recognise the importance of positive
213
industrial relations, and the contribution that they make to profitable and
effective organisational performance; and some trade unions have seen this as
an opportunity to secure their future, and to attract new members. Other unions
have lost their influence because of the great numbers of jobs that have
disappeared in the sectors which they represent.
Three distinct approaches may be clearly identified. The first is conformity, or
the unitary perspective. This assumes that the objectives of all involved are the
same or compatible and concerned only with the well-being of the organisation,
and its products, services, client and customers. The most successful of unitary
organisations (e.g. McDonald's, Virgin, IMG) set very distinctive work,
performance and personal standards, to which anyone working in the company
must conform. This is also inherent in the Japanese approach to the management
of the human resource.
The second is consensus, or pluralism, admitting a variety of objectives, not all
compatible, among the staff. Recognising that conflict is therefore present, rules,
procedures and systems are established to manage it and limit its influence as far
as possible. This is the approach taken especially in local government and the
NHS, where many diverse interests have to be reconciled in order that productive
work may take place.
The third is the radical perspective, the view that commercial and industrial
harmony is impossible until the staff control the means of production, and benefit
from the generation of wealth. Until very recently, this was a cornerstone of the
philosophy of many trade unions and socialist activists in industry, commerce
and public services in the UK.
• The framework of industrial relations

The framework of industrial relations is normally described as tripartite, that is,
there are three main parties involved. These are the government; employees, their
representatives and trade unions; and employers, their representatives and
associations. Each has distinctive roles in the system.
• Government
The government is the single major universal influence on IR everywhere,
whatever the stance taken. In the particular case of the UK, the government is
the single largest employer responsible for the pay, terms and conditions of
employment, of the civil service; the armed services; the police; the emergency
services; local government and services; the nationalised industry and utility
sector; and the NHS. This constitutes about a quarter of the workforce of the UK.
This role as dominant employer therefore sets the standards of employment and
IR practice that others will be expected to follow. There is great scope for setting
'model' terms and conditions of employment for the rest of the economy to
Industrial relations 215
follow. Major public actlVlties (especially large hospitals, County Council

headquarters, and the Civil Service in Westminster) are often the dominant
employer of a locality. It thus directly affects what others have to pay to attract
staff to work for them in the same locality.
The government makes IR laws (as with everything else) and thus sets the
standards and boundaries of practice. Over the period from 1979 to the present
the law concerning IR has been reformed, and a very different framework and
ethos created.
In support of this, the UK government has created bodies of expertise such as
the Advisory Conciliation and Arbitration Service (ACAS), the Health and Safety
Executive, and the Trade Union Ombudsman, to ensure that standards of
practice are adhered to. The government has also established codes of conduct
that are to be followed, for example, on picketing at the place of work.
Government may also use the emergency services in times of industrial strife. In
recent years the army have been used to clear rubbish (during the public sector
strikes 1978-79 in the 'winter of discontent') and to provide ambulance services
during the strike of 1989. The police have been used to ensure that places of work
were accessible to those wishing to go in, in defiance of strike calls - for example
during the miners' strike of 1984-85 and the dispute between the Murdoch
organisation and the print unions of 1986-87.
The standpoint of recent government has been to ensure that a framework for
the conduct of IR was defined, codified and brought within the law. This has
addressed all aspects - the rights and limitations of trade union activities; the
rights of organisations and their managers; equality of opportunity; the rights of
individuals at the work place; the right to strike; and the right to work. Above all,
recent governments have reduced the outward influence of both the Trades
Union Congress (TUC) and the Confederation of British Industry (CBI) on
national industrial relations policy, preferring to give a clear direction of their
own.
• Employees
The interests of employees at the place of work are looked after by trade unions,
the Trades Union Congress (TUC), staff associations, some professional bodies,
and the individuals themselves. Over the years the greatest influence has been the
trade unions, of which there are at present approximately 270.
Trade unions were established to protect the interests and standards of living
of persons working in particular sectors. A variety of definitions have therefore
grown up, and unions may be classified as:
• Industrial, that is, all members are from one industry (e.g. National Union of
Mineworkers)
• Skilled or craft, in which all the members have completed a course of
training or apprenticeship (e.g. Amalgamated Electrical and Engineering
Union)
• White collar: such as the Civil Service and Banking Unions

• Local government: as a distinctive sector, due to the huge range of activities
covered
• Professional: representing such groups as teachers and nurses
• Technical: representing managerial and research staffs
• General: representing the unskilled and semi-skilled.
Trade unions used to have great influence. They represented up to 80% of the
workforce in the 1950s and 1960s, and were very strong in the 'strategic sectors'
of the economy - the energy, transport and manufacturing industries on which
the wealth of the nation depended. Unions generated a very strong sense of
identity and purpose with their members. They lobbied effectively at national
level with government. They successfully operated restrictive practices and job
demarcation that censured occupation protection for large sectors of the
workforce. Above all, they were covered by the legal immunity from damages
in pursuit of a legitimate work place grievance, and this could be pursued
anywhere where the union was recognised or had members. In the period of full
or near-full employment of the 1950s and 1960s they exerted great influence, but
without any clear definition of the legitimate boundaries of that influence.
Part of the review of the Royal Commission on Trade Unions and Employers'
Associations (the Donovan Commission of 1965-67) was to define for the first
time what the real roles of unions were. In summary, the findings were that
unions:
• Bargain for best possible wages, terms and conditions for members
• Lobby for improved share in national wealth for members
• Influence government policy, legal framework on behalf of members
• Lobby for social security for all
• Lobby for full employment, job security, wage levels, cheap housing for the poor
• Bargain nationally, regionally, locally, industrially, for organisations and
individuals
• Represent members at disputes and grievances and for any other reason for
members according to need.
Source: Donovan (1967).
Since the Donovan Report, much has changed. Trade unions have lost
influence and reputation as the source of much of their power and member-
ship, the manufacturing and primary sectors, has declined. New jobs created
have been in the assembly, service and retail sectors, where no traditions of
unionism exist. Legislation has been enacted to ensure that proper procedures are
followed before strike action or other disputes take place. Governments have
reduced the national influence and reputation of the unions by setting their own
IR agenda, and by covering the widest possible range of employees' representa-
tive bodies. Finally, automation and technological advance has eliminated most
of the demarcation distinctions between occupations, and the move is now
towards multi-skilling and the flexible workforce.
Unions have therefore had to seek new or redefined roles. They have returned
from national lobbies to effective action at individual workplaces on behalf of
individuals and groups of members. They have engaged in cooperative agree-

ments with organisations, including productivity, training and no-strike arrange-
ments. They have gained benefits for members such as advantageous rates for
personal and possessions insurance, and health care. They have engaged in
mergers and membership drives in order to maintain and improve on the levels of
influence that they have.
• Employers
The third party to the framework is the employer, represented by employer and
trade federations and associations, individual companies and organisations, and
the Confederation of British Industry (CBI). The influence of employers is
currently at its highest level, and rising, on the conduct of work place industrial
relations though (as with the unions) the employers' lobby has declined at
national level.
The function of the employer in IR is to set standards of staff management,
attitudes, behaviour and performance for the organisation or company; to set
terms and conditions of employment, and pay levels and methods; to act in a fair
and reasonable way towards all employees at the work-place. They may take part
in national arrangements to set minimum standards for the sector concerned.
They may choose to recognise trade unions or not. They will make representa-
tions to government on their own behalf, through their associations and
federations, and the CBI.
In recent years, the area of IR has become recognised for the first time as an
area of profitable and effective activity. Managers are now being trained in the
skills of staff relations and problem-solving. Great emphasis is increasingly
emerging in the devising of human resource policies, the tone and style of staff
handbooks, the attitudes and approaches to staff and workforces. Companies are
looking at fresh and creative approaches to HRM issues, and staff and IR
management problems.
Even in the most traditional of areas, there are changes. For example, in 1990
Kent County Council severed its ties with Local Government National Condi-
tions of service, preferring to establish its own policy, suited to its own needs.
About thirty other public authorities have since followed suit. Hospital trusts and
grant maintained schools also foresee radical changes. Total workforce flexibility
is required by Japanese manufacturing companies setting up in the UK, and the
indigenous sector is having to follow suit in order to remain competitive.
The final element in this framework is the recognition that all parties
concerned act and react in the provision of national and workplace IR. Two
'systems' may be distinguished:
• The 'formal' system embodied in rule-books, procedures, negotiating and

consultative committee activities and constitution
• The 'informal' system, manifest in the behaviour of the individuals concerned in
given workplaces.
The two may diverge; for example, nationally agreed pay scales may be 'topped
up' at local level due to particular staffing difficulties.
• IR strategies
Devising an effective and apposite IR strategy is as critical to the organisation as
any other strategic activity. It sets the whole tone by which the employer and its
managers will deal with the staff and workforce.
The stance taken will ultimately depend on the industrial or commercial sector
concerned (or whether it is a public or government service). In general, however,
one of the following positions will exist:
• Conflict: that is, that the basis on which staff are to be dealt with is one of
mistrust, divergence, irreconcilable aims and objectives; disparity of location;
divergence and complexity of patterns of employment and occupations;
professional, technical, skilled and unskilled staff
In such cases as this, theIR strategy will be devised to contain the conflicts,
and to reconcile differences; and to promote levels of harmony as far as
possible
• Conformity: where the diversity of staff and technology may be (and often is)
as great as in the above scenario, but where the IR strategy rather sets
standards of behavioural and operational aims and objectives that in turn
require the different groups to rise above their inherent differences
• Consensus: where the way of working is devised as a genuine partnership
between the organisation and its staff and their representatives
The consensus position in IR is rare in all but the simplest and smallest of
organisations (and may not exist even in these).
• IR, staff and the organisation

Whichever is adopted, there are common threads. Organisations must under-
stand the nature and strengths of the types of staff that they employ. They must
recognise that there are divergences of aims, and different priorities that must be
resolved if effective and profitable work is to take place. The nature of IR and
related staff management activities will vary accordingly, but at the outset all
staff whatever their occupation must form an identity with the organisation that
is both positive and complementary to its purposes. Boundaries of performance
and behaviour requirements must be established in order that these purposes are
achieved effectively and successfully. Issues to do with the nature and style of
workplace regulation and staff representation must be resolved. Above all, IR
and staff management must be seen both as continuous processes and an area for
constant improvement. If designed and conducted effectively by the organisation,
it will constitute a major return on the investment made in the workforce as a
productive entity.
Whichever IR strategy is adopted must, therefore, be supportive of, and

complementary to, the wider aims and objectives of the organisation. This will
extend in some measure to the capabilities and qualities of the workforce; but
ultimately the workforce must be harmonised to the needs of the organisation.
Effective IR strategies start from this point. They may have regard to staff who,
for example, are highly trained or professionalised; however, the overall direction
of IR will seek again to match these with organisational requirements. Where
staff have a very strong group identity - because of their profession again, or
because of sectoral traditions or a long history of unionism, for example - the
organisation must work to ensure the harnessing and commitment of this to its
own purposes.
The inability of organisations to do this can be seen across the whole range of
industry, commerce, and public services. In the latter, major conflicts have arisen
between the 'professional' commitment to client groups - teachers to pupils;
doctors and nurses to the sick; social workers to the disadvantaged - and the
management by organisations of these staff. IR in these situations is largely
ineffective because of the inability of organisations to direct their professional
staff in ways universally understood as effective; and because of their lack of
regard for, or ability in, IR matters. It has been compounded by the perceived
conflict of objectives between service managers and service professionals. Finally,
at no stage have professional people generated an identity with the service
organisation that remotely touches that which they have with their profession.
Industrial situations are traditionally no better. IR in coal mining across the
world has been so bad that miners have adopted loyalties to anyone other than
the mine owners. In the UK, the focus of coal mining is the Union, which provides
welfare, leisure and recreation facilities; support for families in case of death or
injury; representation at disputes; and a lobby for increased investment in safety
and technology. Endemic throughout hundreds of years of coal mining, the result
has been that the first and only loyalty of the staff has been to the Union; at no
stage has any managing organisation, either private or nationalised, been able to
provide an identity equivalent to this (nor is there any real evidence that they have
tried). Rather they have taken the view that conflict is inherent, and have sought
to devise 'safety-valve' IR strategies, to ensure as far as possible that when
conflict does blow up it can be contained without serious disruption to the work
in hand.
• Parameters of IR activity
Whichever strategy is adopted, the organisation must then go on to set standards
of performance that are required; standards of ethics, behaviour and attitude;
parameters of IR activity and where those parameters end; procedures for the
management of dispute, grievance, discipline and dismissal; consultative,
participative and communicative structures. The precise forms of workforce
representation, including the recognition of trade unions, will be decided. From
this strategy the desired 'aura' of workplace staff relations also emerges; this is
the backdrop or general impression that is created and manifest alongside the
actual practices and instruments. Thus 'aura' is just as important, and is itself
manifest in the nature and numbers of accidents, disputes and absences at the
place of work; it may also be indicated by rates of turnover of labour, or
particular staff categories.
Whichever strategy is adopted also, it is important that both managers and
staff know what it is, where they stand, and what their mutual expectations are in
the IR sphere. Whichever is adopted, needless disputes are kept to a minimum as
long as each understands the other's position.
The strategy adopted will be supported by staff handbooks and rule-books; the
procedures used and the ways in which these are promulgated; and any formal
structures that are devised and put in place. These are in turn underlined by the
nature of staff representation, induction and orientation programmes, and day-
to-day work practices.
• Workplace conflict
Finally, a strategic approach to specific IR matters will be adopted by
organisations and their managers. As well as briefings for staff, and training
for managers in IR skills and knowledge, organisations will take an approach to
the management of workplace conflicts based on answers to the following six
strategic questions:
• What is the likelihood of a dispute occurring? If it does, how long might it last?
What are the wider consequences to ourselves, and to our staff? ·
• If it does occur, can we win it? What are the consequences of winning it? What
are the consequences of losing it?
• If it does occur, what costs are we going to incur? As well as financial cost,
what of the questions of PR, media coverage and local feelings in our
community? Is this a price worth paying?
• What happens when it all settles down? How will we interact and work with
the staff afterwards? How long will any bad feeling last? What are the wider
implications of this?
• What other ways are there around the matter or dispute in hand? Are we able to
use these? What are the pros and cons of going down these alternatives, vis-a-
vis a dispute?
• What are the behavioural and psychological aspects that surround this issue? If
we win, what will be the effects on the workforce? And on managers? Are there
questions of morale to be considered? If we lose, would loss of face be
important? How could we save face, if that were to arise? What would be the
response of the workforce and its representatives?
From consideration of the matter in hand in this way, and by establishing the
answer to these issues, the answer to the critical question emerges:
• Why are we seeking, entering, or preparing to enter, into this dispute?

This approach will form the basis of any strategic consideration of any
conflict, or potential conflict, whether global, organisational, departmental, or
divisional; or at team, group or individual level.
• Workforce management
Whichever strategy is adopted will also be in relation to the structure of the
workforce. This will be mainly to do with the operational aspects: its dispersion,
departmentalisation and groupings, and particular ways of working devised in
support of the organisation's operations.
Consideration must also be given to the staff management aspects of core and
peripheral work groups, specialists, sub-contractors, consultants and advisers,
and those on fixed term or fixed project contracts.
Overall, IR and staff management strategies are concerned with the balancing
and reconciliation of a great mixture of conflicting and divergent elements, in the
basic interests of organising and maintaining effective working methods and
ensuring fairness and equity to all. It also involves balancing harmony and
contentment with commitment, drive, and organisation purpose; and the
establishment and provision of standards and sanctions for the enforcement of
them.
Most fundamental of all to the success of all workplace IR is the capability of
managers. One of the greatest advances in the field has been the recognition of
the qualities, aptitudes and attitudes necessary for the promotion and main-
tenance of effective and harmonious IR; and, following on from this, the training
of managers and supervisors.
In many cases this has required a major rethink on the part of both
organisations and their managers on their whole approach to IR. Sectoral
traditions based on generations of conflict, mistrust, coercion and outright
hostility between organisations and their workforces have had first to be
understood, and then overcome. Managers and supervisors have increasingly
had to acquire expertise in communication, problem-solving, staff management
and maintenance. They have had to adopt attitudes based on mutuality (rather
than conflict) of interests and aspirations. They have had to come to recognise the
wider goals and objectives of the organisation as being of prime importance, and
to adopt IR practices effective in that context.
• Collective bargaining
Collective bargaining is the traditional process by which agreements between
employers and employees, or their respective representatives, are made. Such
agreements may be at national, regional, local, sectoral, or plant and unit level.
This may involve very senior and highly trained personnel at sectoral or national
levels, and elected representatives at the other extreme.
Two separate strands can be identified, the substantive, or what is to be

negotiated; and the procedural, how it is to be done, and how procedures and
other regulatory instruments are to be used.
• The process of collective bargaining

The process of collective bargaining is based on mistrust and conflict - that is,
that there is a fundamental divergence of interest between employers and
employees. At stake, initially, therefore, is a basis on which the two can agree
to cooperate together at all. This is made more difficult or extreme where there
exists a long history and tradition of workplace conflict. Collective bargaining is
a strategy and structure for the management of this conflict.
Summary Box 8.1 shows the ritualised nature of labour relations and
bargaining.
Much of the process is therefore stylised and ritualised, and anyone who wishes
to operate it effectively must understand the importance of this. The purpose
must be to use the instruments and the language involved to gain workplace
agreements that at least contain conflicts that are inherent.
• The bargaining framework

There is a broad bargaining framework to understand (see Figure 8.1):
• The first offer or claim is always made on the basis that it will be rejected {if
for any reason it is accepted straight away, it generally causes resentment
rather than instant satisfaction)
• There then follows a process of counter-offer and counter-claim, with
each party working its way gradually towards the other
• The content of the final agreement is usually clearly signalled before it is
made; and the basis of what is genuinely acceptable to each party is sis;:1alled
also
• Serious disputes occur either when one side is determined not to settle; or
when there is a genuine misreading of the signals
• Settlements reached are normally couched in positive terms in relation to all
concerned, to avoid the use of words such as 'loss·, 'loser", 'climb-down' and
'defeat', which have negative connotations for anyone associated with them,
and tend to store up resentment for the future, and polarise attitudes for the
next round of negotiations.
The following standpoints in the bargaining process may be usefully identified:
• It may be necessary to settle with one group or part of the workforce, at the
expense of others
• It may be possible to resolve problems to the satisfaction of all concerned
• It may not be possible to satisfy everyone
• It may be necessary to take a hard initial stance to try and persuade the other
party to revise its expectations {see Summary Box 12.2, p. 328).
SUMMARY BOX 8.1 Behavioural Theories of Labour Relations
Walton and McKersie (1965) distinguish four inter-related processes:
• Distributive bargaining: The resolution of conflic!s of interest. This is the

classical collective bargaining process. It concludes a consideration of the
costs, benefits and opportunities afforded by each side of an industrial dispute;
the ability and strength of each party concerned; and the bargaining position,
tactics and postures to be adopted. The process consists of presenting the
opponent's standpoints and likely responses to particular moves; the use of
tactics which influence the opponent's perceptions; the manipulation of the
opponent's perceptions of his own position of strength, either by changing his
views of the value of his own demands or by changing his view of the
unpleasantness or unacceptability of the other side's proposals; presenting the
costs of the dispute to one's own advantage; setting deadlines, 'final dead-
lines', 'final final deadlines', and so on; and manifesting all of this in a degree of
commitment that is necessary to ensure victory in the dispute. Finally, in such a
situation it may or may not be necessary to demonstrate that one side has won
at the expense of the other; in such cases, forms of words and other face saving
formulae may need to be devised.
• Integrative bargaining: This is the process by which common or comple-
mentary interests are found and is the means by which problems are resolved in
a way that is in the interests of all parties concerned. In this way, both sides
gain; the purpose therefore is not to conduct a dispute but to find means of
resolving it in the interests of all concerned. The confrontational postures and
stance indicated above do not form part of integrative bargaining. The process
adopted rather uses a problem-solving model - that is, the identifying of the
issue or matter of concern; searching for alternative solutions and extrapolating
their consequences; and from this, choosing a preferred course of action.
• Attitudinal structuring: That is the process by which each side influences
the attitudes of the participants towards the other. In this situation attitudes are
formed and modified by the nature of the orientation that each party has
towards the other and towards the matter in hand. This may either be
competitive, whereby the parties are motivated to defeat or win the other
over to their own point of view; individualistic, in which the parties concerned
pursue their own self-interests without any regard for the position of the other;
or cooperative, whereby each party is concerned about the other as well as its
own position. An extreme form of this may be a form of collusion, whereby the
parties concerned form a coalition in which they pursue a common purpose,
possibly to the detriment of other groups within the organisation.
• Staff relations: The final matter to be considered here is the form of intra-
organisational style of staff relations that is concerned to maintain a balance
and equilibrium about the organisation; and to prevent issues from arising that
affect this balance. The main part of this process is to ensure that people
understand the true nature and strength of their own position; to ensure that
people's expectations are met in such situations; and to ensure that the two are
comoatible.
Source: Walton and McKersie (1965).
N
~
Substance and Process Other Factors
1- - ->1 Initial offer and response claim Strategic nature of offer ;:t
I Process .....
-
.. d
I
~ - - ,...I Adoption of postures Strength and validity Offer Area of Claim ~
~
of cases Agreement ....
I
- - a·
;:t
.....
+ 0
1- - - ,...I Ritual: movements and processes I Strength of each party
I 3::
::::.
A B c D ;:t
+ Negotiations Public sympathy Low High
I___ ,... and support ~;:
Further offers/responsibilities Government sympathy (II
I and support ;:t
No .....
Agreement
I Staff/
' Management
II( j Basis of agreement Media coverage Union
Dispute
I
I
.... - - •I Final offer/response Moral high and Offers: Between A and B rejected by staff
low ground Between C and D insta ntly accepted by staff
Claims: Between A and B instantly accepted by management
Between C and D rejected by management
Agreement
B- C is basis for negotiated settlement

Normal first offer is around A } - leads to instant rejection,
Normal first claim is around D - but engages the process
Figure 8.1 The collective bargaining process

Part of the function of the process is also to structure the attitudes of each party
towards the other, and to try and build impressions of honesty, trust, openness,
firmness, reasonableness and fairness, as necessary. A fundamental credibility
must also be established.
• Objectives of bargaining systems

Within this context, collective bargaining systems have three specific objectives:
• To provide the means for agreeing the price of labour

• To provide a means of industrial government, and workplace rules and
regulations
• To provide a means for controlling the stresses and strains inherent in any work
situation.
• Formal and informal bargaining systems

There are both formal and informal systems to be considered. The former is
constituted with agenda, objectives, purposes, outcomes, deadlines and time-
scales; the latter is the means by which the former is oiled, and consists of
corridor meetings, contacts and networks that enable the formal system to
function. Public services, municipal and local authorities, and multinational
companies tend to have both sophisticated formal procedures, and highly
developed networks also.
• Work organisation traditions

There are histories and traditions of work organisation to be addressed also,
either through the reformation of bargaining activities, or through the effective
management of a wide range of employees' representatives and multi-unionism.
All this has its origin in the differentiation of occupations, demarcation,
restrictive practices, and barriers to occupational entry, devised by groups of
workers to protect their trades and give them a measure of exclusivity; and
allowed to grow by employers, partly because their need for staff was over-
whelming, and partly also because they had no alternative to offer.
• Employee expectations
Finally, there are employee expectations that have either to be met, or understood
and dealt with. In the immediate past, employees have expected an annual
percentage pay rise and improvement in conditions, devised partly to offset the
effects of inflation: the 'annual pay round' is a feature of the industrial west.
There have also arisen concepts of 'pay leagues', whereby a given occupation
would offer terms and conditions of employment in relation to other occupations

- to alter these 'leagues' generated resentment on the part of those occupations
which perceived themselves to be moving down the 'table'. Closely related to this
is the general concept of the 'going rate' for a job - the anticipation that, by
joining a particular occupation, a known range of benefits will be forthcoming.
• Multi-unionism
A large part of traditional IR in the UK has been taken up with the reconciliation
of differences between trade unions. This has occurred not just between
occupational groups within organisations, but also within them. UK public
and health services carry vast, complex and sophisticated IR superstructures
consisting of committees, sub-groups, working groups and ad hoc groups that all
have to be managed and harmonised by the IR managers and departments
concerned. Moreover, they arrive at working practices which the functional
managers in the organisations must adopt and respond to.
The complexities of multi-unionism have been compounded by the tradition of
setting nationally agreed terms and conditions, wage levels and trade union
policies (see Summary Box 8.2). A feature of organisational approaches to IR has
been to attempt to reconcile these. A variation of this has occurred (in industry
rather than services) where national minima have been agreed across the board
and then top-ups offered by employers in relation to their difficulties or otherwise
in attracting and retaining staff. This phenomenon is known as 'drift' in wages
and conditions and is a key feature of local collective bargaining arrangements.
• Conformism
Conformist IR requires the subordination of divergent and conflicting interests at
the workplace, in the interests of pursuing common and understood aims. These
SUMMARY BOX 8.2 Multi-union Illustrations: UK
• The teaching profession in the UK is served by the following unions; National

Union of Teachers, National Association of Schoolmasters and Union of
Women Teachers; Association of Teachers and Lecturers; Professional Asso-
ciation of Teachers; National Association of Head Teachers; and Deputy Heads
Association. Some are more specific than others; however, there is nothing to
prevent a head teacher from continuing to belong to one of the generic unions.
• A State Registered Nurse (RGN) may choose to belong to any of the public
service unions. However, his/her qualification will be endorsed by the Royal
College of Nursing, a recognised trade union as well as a professional body.
are set by the organisation in advance of any staff agreements. The stance
normally taken is that the organisation must be successful, effective and
profitable, and that the purpose of IR (like all other workplace activities) is to
contribute to this.
For the approach to be truly effective, overwhelming obligations rest with the
organisation and its managers. Standards are preset and prescribed, not the
subject of negotiation. The areas of managerial prerogative, matters for
consultation, and aspects open to negotiation, are all clearly stated. In general,
the requirements of conformity leave much open to consultation, but very little to
genuine negotiation.
It follows from this that organisations and their managers must take
approaches designed to ensure that the staff wish to conform, and that this
continues. Coercive or procedure-led initiatives simply lead to conflict, not to its
subordination to any higher common purpose.
Thus, procedures must be speedy in operation, with the purpose of resolving
issues, not institutionalising them. Managers must seek to solve problems, and
promote harmony. Conflicts of interest between groups must be kept to a
minimum. Fundamental causes of dispute (especially those to do with pay and
conditions) must be resolved to deadlines set, and not be allowed to drag on. Any
pay rise, especially, must meet the expectations of the staff, or else the reasons for
not meeting expectations dearly articulated. Grievances and disputes must be
speedily resolved, rather than being allowed to fester.
A further prerequisite to the success of this approach is that staff identity with
the organisation must be strong, and must be gained at the onset of employment.
Organisations that adopt conformist approaches to IR tend therefore to invest
heavily in induction and orientation programmes for all staff, to ensure that they
adopt the values and attitudes required. As we have already seen, this leads to
rejection as well as acceptance - and conformist organisations do not normally
accommodate values other than their own.
Finally, the position of trade unions (and any other staff representative bodies
such as staff associations) is dearly defined, and limited, at the outset of any
agreement. The basis of any agreement is set by the organisation; the union or
representative body is invited to work within it; and if it feels unable to do this, it
will not be recognised, but rather alternative staff representation will be sought.
• Recourse to arbitration
This is open to managers at all times in their attempt to resolve disputes at the
workplace. Arbitration is available whether these disputes are individual
(between a manager and a member of staff) or institutionalised (between an
organisation and a union or body of employees). Used effectively, it represents a
means of resolution that is both considered and subject to internal scrutiny and
which may also have the benefit of acceptability on the part of all because a third
party has arrived at the conclusion.
This demonstrates the context in which it should be used by managers. It does

not in itself constitute a universal means of problem-solving. It should only be
applied where all other approaches have failed, or when there is an issue of
presentation concerning the means of delivery of a decision. It may be acceptable
or at least palatable or saleable to all if such a decision is to come from an outside
scrutineer.
Recourse to arbitration does not constitute an IR policy. If it is followed in this
way, it encourages extreme positions on the part of those in conflict so that any
middle position recommended by an arbitrator is as favourable as possible. It also
removes credibility from the day-to-day IR operation of the organisation and its
managers. Finally, continued recourse to arbitration will lead to the frustration of
those who can and would resolve their own problems. Eventually, theIR skill and
aptitudes necessary to resolve these matters will pass out of the organisation; it
will consequently lose its ability to control this function. Having always placed
this in the hands of outside agencies or a third party, it will have lost its own
capabilities.
Recourse to arbitration thus becomes an additional tool to be used by
managers when the context and situation requires. Its use and value will be
pre-evaluated in the light of these situations, the advantages and disadvantages
weighed up by managers when they decide on whether or not to go to arbitration
on a particular matter.
I The single union agreement (see also Appendix

on The Sanyo Staff Handbook)
This is the approach to IR highly regarded especially by Japanese companies
operating in the UK and USA. It is a conformist approach. The IR agreement is
made between the company and one trade union, along the conformist lines
indicated above, with the overriding concern of streamlining and ordering
workplace and relations, to ensure that their operation is as effective and ordered
as any other business activity. Pre-designed and pre-determined by the organisa-
tion, such agreements are normally limited to a single site or operational division.
Invitations to tender for the rights to representation of the staff are issued to a
range of trade unions. The unions then normally present the benefits that accrue
to the organisation of dealing with them. The organisation will hear all the
presentations, and then decide on one union, which it will recognise, and which
will then represent all the staff.
It follows that the groundwork for this must be very carefully carried out.
There are problems of acceptance on the part of managers, who may not be used
to dealing with a particular trade union; and on the part of the staff also, who
may have no previous affinity or identity with it. There are also problems of
acceptance on the part of highly organised occupational groups for the same
reason; and on the part of those unions that are not to be recognised.
To be effective and successful this strategy for the management of IR must have
the following attributes:
• Attributes of single union IR

• It must mirror the philosophy, ethos, style and values of the organisation
concerned; there must be commitment to it and a willingness on the part of the
organisation to resource and underwrite it all
• Managers and supervisors are trained in the procedures and practices of I R,
the ability to manage staff on a basis free from inherent conflict, and the ability
to solve rather than institutionalise problems when they occur.
• Wage levels tend to be at the upper end of the sectoral scale, and will also be
good in relation to other variables such as regional considerations and the
ability to compete for all categories of staff in both the sector of operations and
the locality where work takes place. Wage rises are never backdated.
• There is one set of procedures, terms and conditions of employment only,
operated by the organisation, in conjunction with the recognised union. The
procedures themselves, together with the rest of the I R policy, are devised and
drawn up by the company and the union invited to participate on preset terms.
The IR sphere is not a matter for joint negotiation or agreement.
• The union represents all members of staff at the workplace and there is no
other IR format. Staff are encouraged to join the union but are not compelled
(this has been in any case illegal in the UK since 1988).
• Disciplinary and grievance practices operate from the standpoint of
resolution and prevention of the matters in hand rather than institutionalisa-
tion. They are aimed above all at getting any recalcitrant employee back into
productive work in harmony with the rest of the company as quickly as
possible. Where recourse to procedures is necessary, these also are designed
for maximum and optimum speed of operation. The purpose here is to prevent
any issue that may arise from festering and getting out of control. Summary
Box 8.3 shows the single union no-strike agreement between Sanyo and the
AEEU.
• The disputes procedure is normally that of binding pendulum arbitration
(see below) and represents the final solution to the matter in hand. It is only
invoked at the point where an official dispute would otherwise take place;
there are cultural as well as operational pressures that ensure that this gets used
as rarely as possible.
This style of IR is above all designed to be a business-like approach and

arrangement, designed as part of the process of ensuring the success, continuity
and profitability of the organisation. As such it is integral rather than an adjunct
to it.
• Pendulum arbitration
This is the term given to the instrument in most common use in this situation,
which is invoked only at the point where a strike or other industrial action would
otherwise take place.
An arbitrator is appointed by agreement of both sides to the dispute. The
arbitrator hears both sides of the dispute, and then decides wholly in favour of
SUMMARY BOX 8.3 Single Union No-strike Agreement between Sanyo

(UK) Ltd (Lowestoft) and the EETPU
• The standpoint in the first section of the agreement is that of a business venture
and the contribution of industrial relations to success, continuity and business
profitability.
• The parameters of industrial relations and the extent and limitations of the
union's involvement and influence are clearly defined.
• Consultative and participative meetings are to take place on a regularised and
formalised basis; matters for consideration are prescribed (though there is an
in-built flexibility).
• The standpoint of grievance and dispute, and disciplinary handling is clearly
stated. The full operation of procedures for these should be kept to a minimum;
where they are necessary they should normally be fully invoked and the issue
resolved after a maximum of two weeks. Rights of representation and appeal
are clearly indicated.
• The pendulum arbitration procedure is clearly stated.
• The final paragraph reinforces the tone of the agreement in which the necessity
for industrial action in any form is precluded and which again restates the
business nature of the agreement.
See Appendix (p. 235) for full Sanyo (UK) Staff Handbook details.
one party or the other. Someone therefore always wins (and is seen to win); and
someone always loses (and is seen to lose). The concept of pendulum arbitration
is based on this - faced with the prospect or possibility of losing a dispute, each
party will wish to resort to the negotiating table once again to resolve the
differences. In particular in Japanese companies, there are strong cultural
pressures on managers not to get into disputes, and not to lose them if they do.
Pendulum arbitration normally represents the final solution to any dispute,
against which there is no appeal; this is dearly stated in handbooks and
agreements in which this is the instrument for the resolution of disputes. Those
entering in to it agree to be bound by the outcome before the arbitrator hears the
case.
• IR without unions
For many organisations this is an attractive proposition. Without any regard to
perceptual or political considerations, a major alternative stakeholder is thus
removed from the premises of the organisation.
If IR is to be conducted in this way, however, it is essential that the
organisation itself fulfils all the functions required. Trade unions grew to
prominence in organisations to represent the employees' interests, to serve
particular groups, and as a brake on the worst excesses of management that
led to a quality of treatment across the whole of the business sphere that by any
standards, commercial or ethical, was unacceptable and untenable. If this arises

once unions have been eased out or de-recognised (or in a new organisation
where there is no intention to have them in the first place) the staff will simply
join up again en masse.
The organisation must therefore take the step integral to the rest of the
business strategy of designing an IR aura and environment that precludes the
need for outside representation. In order to do this it requires an accurate
assessment of both its business and moral obligations to its staff to be made and
for these to be institutionalised and incorporated in the processes of IR and staff
management that it devises and implements.
IR must generally consist of adopting a benevolent, consultative and open
mode of general communications, corporate attitudes to the staff and an
enlightened general attitude as the cornerstone of the IR and staff management
approach. Operation of procedures and practices must be fair, and perceived as
such. Matters to do with pay, pay rises, working conditions and other
operational matters should be consulted upon and promulgated through a
formalised internal forum - often a works or organisation council or staff
association. Meetings of this forum will be on a regularised basis.
The overall approach thus taken is conformist. Responsibility for the style and
tone of IR rests entirely with the organisation, and it is incumbent upon it to
ensure that this is both productive and harmonious. Staff will be required to
adopt a particular set of corporate attitudes, values and aspirations and these
must be clearly promulgated and delivered by the organisation.
• The single status concept

This concept is based on an ethical stance that all employees should be treated
equally, and that the same fundamental terms and conditions of employment are
to apply to all. There is, in these situations, a single staff handbook applying to
all. Terms and conditions, and elements of the contract of employment, on such
matters as holiday accrual, hours of work, the provision of staff facilities,
working clothes and safety and protective wear, are the same for all. Participa-
tion in such things as profit-related or merit award payment schemes involves
everyone.
Behavioural issues reinforce this. Everyone is addressed in the same manner
regardless of occupation. The work of each employee is valued and respected.
Differentiation between groups and categories of employees is on the basis of
work function only; there are no exclusive canteens, or car-parking spaces.
• Flexibility
Related to single status is the concept of the 'flexible workforce'; that is, where
everyone concerned is both trained and available for any work that the
organisation may require of them. Staff normally will be made to understand,

when they first join, that they may be required to undertake duties away from
their normal or habitual occupation. In the wider interests of staff motivation,
organisations will endeavour to do this on a positive rather than coercive basis.
Nevertheless it is a fundamental departure from traditional specialisation,
demarcation and restrictive practices.
Implicit in this are obligations on the part of employees to accept continuous
training and development as part of their commitment to the organisation - and
this applies to all categories and occupations.
• IR procedures
These are written and promulgated for the purpose of regulating workplace
activities - discipline, grievance, disputes, health and safety, internal opportu-
nities, equality.
They are used by managers, in their pursuit of and operation of these aspects of
work. They are for guidance, and only where something requires precise
operation (such as a safety procedure), or there is a legal restraint (such as with
discipline), should they be strictly adhered to. Their purpose otherwise is to set
standards of behaviour and practice at work; this also has implications for the
more general standards of decency, ethics, and staff treatment that are
established at the workplace. Procedures also indicate and underpin the required
attitudes, and let everyone know where they stand. More generally, they define
the scope and limits of the influence of the workplace. Above all they have to be
understood and followed by all concerned; as long as they meet any legal
requirements, organisations and their managers must follow what they promul-
gate.
Procedures should always be in writing, and state to whom they apply, and
under what circumstances. They should be written in the language of the receiver,
so that they are easily and clearly understood and followed. The best induction
programmes will contain both coverage and explanation of them, so that new
employees know from the outset where the boundaries lie, and what the
expectations and obligations under them, on the part of both themselves and
the organisation, are.
Procedures should be reviewed and updated regularly, and when they pass
from currency, they should be changed to reflect this. Staff groups and any
recognised trade unions should always be consulted on the introduction, use and
application of procedures and any changes that are made. Ultimate responsibility
for both the standards that they set, and their design and implementation, must
always remain with the organisation.
Summary Box 8.4 compares UK IR practice with that adopted in the USA and
Europe.
SUMMARY BOX 8.4 Comparative Industrial Relations
It is relevant to draw attention here to the uniqueness of the UK I R system and its
divergence from others. This is especially true of the trade union movement. Until
1993, all UK trade unions took at least a collective standpoint and most were
overtly socialist, at least in their leadership. The Labour Party was originally
founded to represent the interests of the unions in Parliament; the major
stakeholders in the Labour Party remained the trade unions. Only now is this
relationship being seriously examined for the first time.
The other quirk specific to UK trade unions is their sectoralisation and
specialisation. The titles - National Union of Teachers; Rail and Maritime Trade
Union -define spheres of influence and interests. They are drawn from a tradition
of demarcation and specialisation and, again, this is only being examined for the
first time in the last decade of the twentieth century, where there are moves afoot
among certain sectors to refocus their outlook.
This is to be contrasted with unions elsewhere. In the USA they are professional
lobbies. They work in the same way as any other such lobby to promote and defend
their interests- through the media, political representatives and on industrial, and
commercial councils and committees. They are neither as universal nor as
institutionalised as in Europe and the UK, neither do they carry the same influence
(indeed they have lost credence and influence in the wake of corruption scandals in
recent years).
In the countries of Europe, unions adopt a much wider brief than their UK
counterparts, representing 'public services' or 'the car industry', for example, rather
than a particular occupation or sub-section of it. They also adopt a much wider
variety of stances and affiliations ranging from communism and socialism to
conservatism, christian democracy and roman catholicism.
Finally, a much wider view of IRis taken. This ranges from conflict (e.g. France,
ltllly) and concentration on welfare benefits as much as wages (e.g. Holland); while
others adopt the stance that a productive, harmonious and profitable undertaking is
good for everyone including their members (e.g. Sweden, Germany).
• Conclusions
The general level of understanding and appreciation required of the managers if
they are to be truly effective in the IR is both deep and complex. Within this
context the manager has specific aims and objectives that must be met. He/she
must create the basis of an harmonious, productive, working environment so that
effective work can be carried out. Very often (in certain organisations, at least)
this will involve the assimilation of a sophisticated IR structure. Employee
motivation must be maintained in this situation. The manager must establish
formal, semi-formal and informal channels of communication with workforce
representatives (if there are any) and with employees at large. Some of this
represents part of the general process of communication, some is related directly
to the institutions and practices of IR, and some is part of the manager's own
'straws in the wind' process of assessing the current state of more general matters
concerning the attitudes and motivation of the staff.
The manager may have to bring a range of skills to bear in the day-to-day
handling of staff matters. Negotiations, dealing with disciplinary and grievance
matters, handling disputes, and other problem solving activities may have to be
undertaken. The manager may have to balance conflicting demands and may
only be able to resolve one issue at the expense of another.
The manager may be fortunate enough to be able to conduct IR in an
atmosphere of positivism and industrial harmony. Conversely he/she may
constantly be working in an atmosphere where mistrust is endemic and outright
conflict is just below the surface. In such circumstances, the best strategy may
simply be to move from problem to problem if by doing so the manager can at
least ensure a modicum of output. The ability to make any progress and shape a
more positive and effective future for IR in such circumstances will stem from an
understanding of the status quo in the first place. Beyond that, a full appreciation
of the principles outlined here and a commitment to change from the organisa-
tion in question together with a clear vision of what that change should be are
essential for such progress to be successfully enjoyed.
A general appreciation of the traditions, history and background of IR is also
essential if the managers are to understand both the current general state of IR
thinking and also that of his/her own organisation in particular. These traditions
are underpinned by mythology, legends and folklore that still engender great
pride in certain sectors of the population; this mythology has its roots in real
grievances, deprivation and a style of entrepreneurship and management that was
very often entirely unacceptable by any standard against which any such practice
would be measured in the world of today.
This helps in an understanding of the behavioural and procedural niceties of
bargaining activities, and also ensures that their importance in the conduct of IR
is not underestimated. In traditional, long-standing and public UK institutions,
both staff and unions are comfortable with this way of doing things; taking a
little time to ensure that the processes and structures are adhered to may repay
dividends in the early, ultimate resolution of conflict or negotiations. It also helps
in the understanding of the scale and scope that any intended reform of IR
practice must address. It is not enough simply to cut out the behavioural and
procedural aspects, as these provide the format in which IR practice takes place.
If such reform is to be carried out, either globally or at the workplace, in relation
to these traditions, an entire new system of IR must be devised and implemented.
That way, any uncertainty, mistrust and conflict inherent in piecemeal tinkering
with the status quo is avoided.
Finally, this history explains the attraction to organisations of both the single
union and non-union approaches. Both have a ready-made model and set of
principles to work from. Both have been demonstrated, tried and tested
elsewhere with a marked degree of success and effectiveness in certain
circumstances.
As a field of study and of managerial practice, IR is developing all the time. It is
distinct from the wider field of HRM because it deals specifically with the
management of staff, their working practices and the conflicts inherent in these.
There exists now a much more universal understanding of what the principles
of IR are, how they should be applied and what they are supposed to achieve.
More widely IR is recognised as a business activity, a support function that
contributes both to the effectiveness and the profitability of the organisation. In
line with this, organisations are now setting their own agenda in regard to the
strategy, structure and style of IR management at the place of work, relating these
directly to their own needs rather than adopting a global set of principles and
doing their best to work within them.
I Appendix: Sanyo Industries (UK) Ltd: Staff

Handbook
AGREEMENT
THIS AGREEMENT is made the tenth day of June 1982

BETWEEN:-
(1) SANYO INDUSTRIES (UK) LIMITED

of Oulton Works, School Road,
Lowestoft, Suffolk NR33 9NA
(hereinafter referred to as "the Company")
(2) THE ELECTRICAL ELECTRONIC TELECOMMUNICATIONS

AND PLUMBING UNION
of Hayes Court, West Common Road,
Hayes, Bromley, Kent BR2 7AH
(hereinafter referred to as "the Union").
The Company and the Union have agreed to enter this Agreement
for the purpose of recognising various mutual and other objectives
which is in the interests of both parties and of the employees of the
Company to achieve and accordingly the Company and the Union
have agreed the following matters:-
1. (1 ) The independence of the practices and procedures laid

down in the respect of the factory premises at Culton Works,
School Road, Lowestoft ('the Establishment') from time to time
(2) The non-federated status of the Establishment
established by this Agreement
(3) Each of the terms and provisions of this Agreement is
dependent upon the observance of all the other terms and
provisions, individual provisions cannot be acted upon without
consideration of all other relevant provisions in the Agreement
(4) For the duration of this Agreement the Union shall have
sole recognition and bargaining rights for all employees
covered by this Agreement
2. In order to achieve the above objectives it is competitive and that therefore the maximum
agreed that:- co-operation and support must be given to
measures designed to achieve maintain and
(1) All aspects of the Establishment and improve quality and reliability standards.
its operations will be so organised as to
achieve the highest possible level of 3. The following matters have been agreed in
efficiency performance and job satisfaction connection with the Union:-
so that the Company shall:-
(i) be competitive and thus remain in (1) Employees will not be required to
business become union members but the Company
(ii) provide continuity and security of will encourage all employees covered by
employment for an effective work this Agreement to become a member of the
force Union and participate in Union affairs and in
(iii) establish and maintain good this connection the Company will provide a
working conditions check off arrangement for the deduction of
(iv) establish and maintain good union subscriptions
employee relations and
communications by supporting the (2) Union representation will be
agreed consultative negotiating established in the following manner:-
grievance and disciplinary (i) The number of representatives of the
procedures set out in this Agreement Union together with the
constituencies which they will
(2) Both parties accept an obligation to represent will be agreed between the
ensure that the Establishment will operate Union and the Company
with effective working methods with the (ii) The representatives will be elected in
best utilisation of manpower and without accordance with the Union Rules by
the introduction of wasteful and restrictive union members in each constituency
working practices and this objective will be (iii) Each such representative ('the
achieved by:- Constituency Representative') will
(i) the selection, training, retraining and be accredited by the Union and the
supplementary training of Union will then send details of the
employees, wherever necessary, to credentials of such representative for
enable such employees to carry out approval to the Head of Personnel
any job who will confirm such approval with
(ii) the maximum co-operation with and the Union and thereafter inform the
support from all employees for appropriate line management
measures and techniques used in concerned of the appointment
any area to improve organisation and
individual efficiency and to provide (3) The elected representatives will elect
objective information with which to from amongst themselves a senior
control and appraise the representative ('the Senior Representative')
performance of individual employees in accordance with the Union Rules
and the Establishment
(iii) the maximum co-operation and (4) The Senior Representative will be
support from all employees in responsible for controlling and co-
achieving a completely flexible well ordinating the activities of the Union in
motivated work force capable of accordance with the terms and conditions
transferring on a temporary or of this Agreement and within the Union
permanent basis into work of any Rules and Regulations and will ensure that
nature that is within the capability of each elected representative shall have a
such employee having due regard to working knowledge of the Union Rules and
the provision of adequate training Regulations and in this connection in
and safety arrangements conjunction with the Personnel Department
of the Company the Senior Representative
(3) Both parties recognise that the well- shall ensure that the representatives shall
being of the employees is dependent upon have a comprehensive understanding of the
the Company's success and that the high industrial relations procedures and practices
standards of product quality and reliability of the Establishment and of general
are essential if the products produced at the industrial relations procedures and practices
Establishment are to become and remain and it is agreed that all communication
between the representatives and the full- Joint Negotiation Council ("JNC")
time official(s) of the Union will be made referred to in Clause (5) below
through the Senior Representative (v) in exceptional circumstances the
(5) Each elected representative must be services of the National Officer of the
employed in the constituency which he Union may be requested to assist in
represents the matter either by the Union or by
the Company and in such
(6) The Company will provide adequate circumstances the Company will
facilities to ensure that all Union elections arrange an appropriate meeting to be
and ballots of members shall be carried out attended by senior representatives of
in secret and by the use of voting papers and the Company and the Union as well
not by way of a show of hands as the National Officer or the Full-
time Official
4. It is agreed by the Company and the Union
that all matters of difference should (2) Insofar as differences shall arise in
wherever possible be resolved at the source connection with issues of a Departmental
of such difference as speedily as practicable nature then the procedure shall commence
and it is the intention of the parties that all with a meeting between the constituency
such matters will be dealt with in representative and the Department Manager
accordance with the agreed procedure and or his representative
in this connection:-
(3) In the case of an issue concerning
(1 ) Where a matter relates to an the Establishment or the Company as a
individual employee covered by this whole the matter will commence on the
Agreement such employee must in the first same basis as is set out in Sub-Clause (iii)
instance raise the same with the supervisor above
who will then be given the appropriate time
necessary to resolve the situation 5. The Company and the Union will establish a
PROVIDED ALWAYS that:- Joint Negotiation Council ('JNC') for the
(i) if the employee is not satisfied with purpose of providing a forum through which
the solution proposed by the discussions regarding improvements to
supervisor then the employee may employment conditions and other major
request the services of the matters can be discussed and in this
constituency representative to reach connection:-
a solution with the supervisor
( ii) if the constituency representative (1) The JNC will consist of
and the supervisor shall fail to reach representatives from the Company including
agreement then the constituency the Head of Personnel and Senior Company
representative will discuss the matter Representatives and on behalf of the Union
with the Department Manager or his the Senior Representative from Production/
representative Warehousing one constituency
(iii) if after careful deliberation a representative from Administration.
satisfactory solution cannot be
found then the constituency (2) Discussions regarding substantive
representative shall be entitled to improvements to employment conditions
raise the issue with the Senior will normally be held on an annual basis
Representative who will then decide during December in each year and such
if the grievance should be discussed discussions will not include changes arising
at a higher level of management as a result of promotions transfers or
within the Company and the services changes to job content which can be
of the Personnel Officer may then be implemented at any time as agreed
called upon if is considered that this
will help to resolve the matter (3) Matters agreed by the JNC will
(iv) failing such resolution discussions constitute one of the terms and conditions
will then take place between the of employment for each employee covered
Senior Representatives of the by this Agreement
Company normally including the
Head of Personnel together with the (4) The Senior Representative will be
Senior Union Representative and the given appropriate facilities to consult with
constituency representatives on the Union Members Constituency
Representatives and the Full-time Official or the Union in time for such items to be
National Officer of the Union to enable the included on the Agenda
Senior Representative to conduct a
meaningful collective bargaining exercise (3) Items to be included for discussion
at JCC meetings will include:-
(5) All claims on behalf of Union (i) manufacturing performance
Members must be made in writing by the (ii) operating efficiency
Senior Representative to the Head of (iii) manufacturing planning
Personnel who will convene the appropriate (iv) employment levels
meeting of the JNC (v) market information
(vi) establishment environment
(6) It is recognised by both parties that (vii) employment legislation
whilst discussions are taking place all (viii) union policies and procedure
business and negotiations discussed at the (ix) level of union membership
JNC will remain confidential to its members
and the Company recognises its (4) Following each meeting of the JCC
responsibility to ensure clear the Head of Personnel will be responsible
communication to employees of the results for communicating to all employees the
of such discussions and negotiations and in nature and content of the discussions and in
this connection the Head of Personnel will this connection the Company and the Union
be responsible in consultation with the recognise the need to conduct meetings of
members of the JNC for announcing the the JCC in constructive manner for the
details of any offer to be made to employees benefit of the Company and all its
following such discussions and employees
negotiations as aforesaid
7. In the event that the Company and the
(7) In exceptional circumstances the Union shall be unable ultimately to resolve
services of the National Officer or the Full- between themselves any discussions or
time Official of the Union may be requested disputes they may jointly agree to appoint
by the JNC and in such circumstances the an arbitrator and in this connection:-
Company will arrange an appropriate
meeting to be attended by representatives of (1) The Arbitrator will consider evidence
the Company and the Union and the presented to him by the Company and the
National Officer Union and any factors that he believes to be
appropriate
6. In addition to the JNC the Company will
establish a Joint Consultative Council (2) The Arbitrator will decide in favour
('JCC') and the following provisions shall of one party
apply thereto:-
(3) The decision of the Arbitrator will be
(1) The membership of the JCC shall final and binding and will represent the final
consist of the Head of Personnel (as solution to the issue
Chairman) and appropriate members of the
Company's Senior Executives and the 8. DISCIPLINARY MEASURES
Senior Representative together with one It is in the interest of the Company and its
constituency representative from each of employees to maintain fair and consistent
Production. Engineering and Administration standards of conduct and performance. This
and a further constituency representative on procedure is designed to clarify the rights
a rotating basis as a co-opted member and and responsibilities of the Company, the
in addition the Managing Director of the Union and employees with regard to
Company shall act as President of the JCC disciplinary measures
and shall attend meetings from time to time
Principles
(2) The JCC shall meet on a monthly The following principles will be followed in
basis for the purposes of discussing issues applying this procedure:
of a mutual nature and one week prior to
each JCC meeting the Personnel Officer will 8.1 In the normal course of their duties. the
publish an Agenda agreed with the Senior Company will make employees aware
Representative who will be responsible for of any shortcomings in performance or
submitting items for discussion on behalf of conduct. This counselling stage is
separate from the disciplinary the duration of the warning (which will
procedure as such be 12 months), the grounds for the
8.2 When the disciplinary procedure is warning and the specific areas for
invoked, the intention is to make the improvement
employee aware that the Company is 9.3 Dismissal
concerned with their conduct or If there is no significant and sustained
performance and to assist the person to improvement in the employee's
improve to a satisfactory level conduct or performance during the
8.3 When any disciplinary case is being period of the final warning, then
considered, the Company will be following thorough investigation by the
responsible for fully investigating the Company, the next stage of the
facts and circumstances of the case procedure will be the dismissal stage.
8.4 The procedure will operate as quickly as This stage will also be invoked in cases
possible, consistent with the thorough of gross misconduct (see Establishment
investigation of the case Regulations). If an employee is
8.5 The employee will always be informed dismissed he will be advised in writing
of any disciplinary action to be taken of the principal reasons for the
and the reasons for it, indicating the dismissal, and the notice periods which
specific areas for improvement will apply to him
8.6 Normally the formal procedure will 9.4 Union Representation
commence with the issuing of the first At all stages of this procedure and
formal warning, however, the consistent with the circumstances of
disciplinary procedure may be invoked the issue the Company will ensure the
at any stage depending on the involvement of the appropriate
seriousness of the case constituency representative. When,
8.7 Each formal warning will apply for 12 following careful investigation,
months. Should the employee improve disciplinary action is contemplated by
their conduct or performance to an the Company and the union members
acceptable level and maintain the concerned will be afforded the services
improvement for the duration of the of the Union constituency
warning, this will result in the deletion representative
of the warning from their record
10. APPEALS
9. DISCIPLINARY PROCEDURE Appeals against disciplinary action will
The stages of the disciplinary procedure as follow the procedure as outlined below
follows:-
10.1 All appeals will be in writing by the
9.1 First Formal Warning Senior Representative within two
A formal warning at this stage working days after the disciplinary
represents the outcome of investigation action shall have been taken by the
and discussion into an employee's Company
conduct or performance. If a first formal 10.2 The appeal will be made to the
warning is issued, the individual Personnel Officer who will arrange the
concerned will be advised to this effect formal appeal hearing within two
both verbally and in writing by the working days of the appeal
Company representative conducting 10.3 The appeal will be heard by a Senior
the hearing, indicating the duration of Personnel representative and a Senior
the warning (which will be 12 months), Manager of the Department
the reasons for the warning and the concerned who has not been involved
specific areas for improvement in the case
9.2 Final Warning 10.4 The appeal will be conducted on the
If there is no significant and sustained employee's behalf by the Senior
improvement in the employee's Representative accompanied by the
conduct or performance. then the next Department representative
stage of the procedure is the final 10.5 The employee appealing, his
warning. If a final warning is issued, the Supervisor and other appropriate
individual concerned will be advised to employees may be called to give
this effect by the Company evidence if is thought their
representative conducting the hearing, involvement is essential to the
both verbally and in writing, indicating outcome of the hearing
10.6 The decision of the hearing is final. It is

recognized that the Union may wish to
discuss the matter as a collective issue
11. INDUSTRIAL ACTION

The Company and the Union undertake to
follow the procedures agreed to and
recognise that this Agreement provides
adequate and speedy procedures for the
discussion of Company related affairs and
the resolution of problems and as such
precludes the necessity for recourse to any
form of industrial action by either the
Company the Union or the Employees.
Signed by
M. SADA
N.T. SALMON
duly authorised for and on behalf of

SANYO INDUSTRIES (UK) LIMITED
SIGNED by
R. SANDERSON
L. CHITIOCK
duly authorised for and on behalf of

THE ELECTRICAL ELECTRONIC
TELECOMMUNICATIONS AND PLUMBING
UNION
Dated this 1Oth day of June 1982.
Source: Sanyo (UK) Ltd. (1982). Used with

permission of Sanyo Industries (UK) Limited,
Culton Works, School Road, Lowestoft,
Suffolk N R33 9NA
CHAPTER 9
Employment law in the

UK
The purpose of this chapter is to indicate the coverage of the law at the
workplace, and the rights and duties incumbent upon everyone, both in their
personal and work roles. It indicates the scale and scope of the law, and the
awareness that managers should have; the areas of which they should be
conscious, and where these impinge on, affect and place limitations on,
managerial and organisational performance and activity. The fundamental
lesson that all managers must learn is that of the 'warning system' that is
implicit; that is to say, there are legal boundaries which managers must not cross,
and when they come to them, they must seek expert or professional or specialised
advice.
• Introduction and background

The purpose of employment legislation is to ensure the rights of people at places
of work; the right to civilised and fair treatment; and the rights, duties and
obligations of all those with an interest in the work situation (e.g. trade unions,
and the Health and Safety Executive). It provides a series of remedies open to all
involved parties, when a breach of the law is proven or indicated. It brings the
workplace into line with the rest of society vis-a-vis the law, to a great extent (and
certainly to a greater extent than previously). It also introduces the concept of
'what is fair and reasonable' in particular circumstances, and this, as we shall see,
has great effects on the application of the law in different sectors.
Employment law in the UK is drawn from: the civil law, custom and practice;
the criminal law, where stated breaches of various aspects of employment
legislation constitute criminal acts; precedent based on court, High Court and
Lords' judgments; and European law and the European courts, the ultimate point
of reference for any UK citizen on any point of law, including that concerned with
employment.
It is worth making the point at this stage that, while the UK has not signed up
to the provisions of the Social Chapter of the Treaty of Maastricht 1993 (see
241
below), judgments on cases that reach the European Court will be handed down
by an institution which has.
There is eventually to be a common legal standard for all employment practice
across all twelve member states of the EC, though this will take many years to
achieve. Particular directives have, however, already been issued on a community-
wide basis (e.g. on Safety, and Maternity) and these have to be complied with.
In addition to the courts, there are also established industrial tribunals, which
deal with breaches of the 'fair and reasonable' aspects of employment law;
discrimination; health and safety matters; breaches of procedure. Each case is
dealt with strictly on its own merits, and does not set or constitute precedent
unless the case is taken on through the courts. Employment appeal tribunals are
also constituted to hear appeals against industrial tribunal decisions.
I ACAS: The Advisory, Conciliation and

Arbitration Service
ACAS became a statutory body in 1976 under the Employment Protection Act
1975. Under that Act it was charged with the duty of promoting the improvement
of industrial relations. In particular, it was to encourage the extension of
collective bargaining, though this was removed from its remit in 1992.
Although ACAS took over some of the functions of the Department of
Employment, the essential break with the past was that ACAS became
independent of government. The only direct influence the government possesses
is the appointment of ACAS council members. ACAS is governed by a council
consisting of a full time chair and nine other members all appointed by the
Secretary of State for Employment. Three of the council members are appointed
after consultation with the TUC and three after consultation with the CBI. The
remaining members are independent; normally they are academics with knowl-
edge of industrial relations. ACAS is a quango, that is a quasi non-governmental
organisation.
ACAS provides a wide range of services:
• Advisory services
Advice is offered on a range of issues to employers, employees and trade unions
on general IR matters. These include grievance, disputes and disciplinary
procedures, IR law, contracts of employment and on particular matters such as
pay and payment systems, job analysis, job evaluation and work study. A range
of advisory booklets, publications and discussion papers is available.
ACAS will undertake workplace surveys and studies at the request of one or
more parties. These take the form of either short advisory visits or longer in-
depth studies.
Employment law in the UK 243
• Codes of practice
These codes contain practical guidance for promoting good IR. They set out the
recommended standards for employers to follow. To date there are three codes:
on disciplinary practice procedures; disclosure of information; and time off from
work for trade union duties and activities. These codes are submitted to the
Secretary of State for Employment and are laid before Parliament. They are taken
into account in hearings and industrial tribunals.
• Conciliation
This is a means whereby ACAS assists employers and employees to reach
mutually acceptable settlements of their disputes by a neutral and independent
third party. Its use is voluntary and the agreements reached are brought about by
the parties concerned. ACAS seeks to clear up misunderstandings and identify
common ground. The conciliator has no power to impose a settlement. The most
frequent use of conciliation is in disputes on pay and terms and conditions.
ACAS also offers conciliation where there is a dispute between an individual
and his employer or where it is alleged that infringement of employment rights
has occurred. In particular, it is the duty of ACAS to attempt to settle such
complaints prior to their being referred to an industrial tribunal. ACAS will
encourage the use of internal grievance procedures as far as this is possible and
will help both parties in an impartial way. It will not, however, act as
representative for either party.
• Mediation
If conciliation fails, ACAS may try to mediate between the two sides. Mediation
is a halfway house between conciliation and arbitration. In this case the mediator
is appointed by agreement between the two parties; he puts forward his own
positive proposals aimed at the resolution of the matter in hand. If there is no
agreement between the parties, the mediator then produces a report outlining
recommendations on the terms of settlement. However, there is no obligation on
the parties to accept the mediator's report.
• Arbitration
Arbitration differs from both conciliation and mediation in that the arbitrator
determines the outcome of the dispute by making an award which both of the
parties have agreed to accept. Although the award is not legally enforceable and
its acceptance by both sides is entirely voluntary since its inception ACAS has
achieved a high degree of success in the devising of settlements and solutions
acceptable to both sides. Arbitrators are not normally members of the staff of
ACAS but are appointed by them from a list of suitably qualified people. There is
usually a single arbitrator but the process can also take place through boards or
committees of arbitration. The most common form of arbitration in the UK is
open arbitration, in which the arbitrator has complete discretion to award
whatever he or she sees fit within the given terms of reference. The arbitrator also
has regard to inherent behavioural matters and the forms of words in which
agreements are couched; this is to accommodate perceptual or behavioural
niceties required on the part of one party or the other.
ACAS is regarded as the setter of standards of expert IR practice in the UK.
Workplace IR practices must normally conform at least to minimum published
standards of recommendations set by ACAS; in case of dispute or recourse to
industrial tribunal the level and standard of organisational procedures in this
field will always be questioned. ACAS has been introduced at this point because
its work infringes on so much of what is outlined below.
• Equality of opportunity
There are legal constraints that prevent organisations from discriminating
against employees, or prospective employees. This is quite apart from the
behavioural or managerial reasons for not doing so.
Under the law, discrimination may be direct, where a punitive or disadvanta-
geous condition is overtly placed that prevents sectors of the population or
workforce from getting a job or promotion; or indirect, where a condition placed
may nevertheless have a discriminatory effect, even if that was not the intention.
• Discrimination restrictions
It is illegal to discriminate against people at work, or prospective employees, on
any of the following grounds:
D Sex/gender
It is illegal to offer or refuse employment to someone on the ground of their sex/
gender; this extends to all businesses however, small, and to private and domestic
situations in certain circumstances. Recruitment advertisements must not use
gender related terms such as 'Barmaid', but must rather use 'Bar Staff'. They must
not place conditions on a job that would make it impossible for one gender or the
other to apply for or gain the job in question.
These provisions extend to all work practices: recruitment and selection,
promotion, access to opportunities, training and development, recourse to
internal procedures, and selection for redundancy.
Discrimination may be direct- 'I'm not employing a woman', or indirect. The
best way to illustrate this is by reference to the case of Belinda Price v. The Civil
Service Commissioners (see Summary Box 9.1).
Employment Law in the UK 245
SUMMARY BOX 9.1 Price v. The Civil Service Commissioners
Ms Price worked as a civil servant and, at the age of 36, put in for a promotion to the
next grade up. The Civil Service turned her down, on the grounds that she was too
old (not in itself illegal), and that everyone who made the grade in question had to
do so by the age of 29.
Ms Price countered this by saying that she could not have achieved this, because
she was out of the workforce for 10 years, having and bringing up children. She
was otherwise a good and effective worker; the only thing militating against her
promotion was her age; and that because of her own circumstances this
discriminated against her, indirectly, on grounds of gender. The Tribunal agreed.
Exceptions to this are called Genuine Occupational Qualifications (GOQ). In

the case of gender, this is limited to grounds of common and expected standards
of decency (female attendants for female lavatories; female companions for old
people in their own private homes); and expectation- (it is legal to ask for an
actress to play Shakespeare's Juliet!). These are virtually the only exceptions,
except for one quirk in the wider English legal system - it is illegal to engage a
non-EC foreign national male as a domestic nanny or au pair (though this is the
subject of debate and possible reform in 1993).
0 Pregnancy
This has now come within the realm of discrimination on grounds of gender;
organisations may now no longer refuse employment to a pregnant lady, nor
terminate her employment solely on the grounds of the pregnancy, or where this
is the major reason. The only exception to this is where the work to be carried out
would actually be detrimental to the health of the unborn child, or where there
are legal prohibitions placed on the employment of pregnant women.
o Retirement
Organisations must offer the same retirement age to all employees, regardless of
gender; and where organisational pension schemes differentiate between male
and female employees whether on the age at which the pension starts, or the
range of benefits available, they must have policies in place to bring about a
unification of them.
o Race/ ethnic origin

It is illegal to discriminate on the grounds of racial or ethnic origin; religious
beliefs; and the colour of the skin. This extends both to the offer of
employment, and also to promotion, training, development, and other opportu-

nities. In certain circumstances it may also impinge on the selection process, as
for example the use of tests which are couched in the social terms of one section
of the community, and which others may not be able to understand because of
their origin. The placing of adverts in certain media may also be construed as
discriminatory, if it is not available, again, to particular sectors of the
community.
Again, the only exceptions to this are designated GOQs, and these are
normally limited to expectation: it is legal to employ someone of negro origin
to play Shakespeare's Othello, and to refuse employment in this role to others
from other ethnic origins; and to specialist exempted occupations: it is legal to
ask for an Indian-origin female social worker to lead an Indian women's refuge,
for example. With these exceptions, racial discrimination is illegal.
It is stated elsewhere that there are wider social constraints and prejudices that
have to be overcome (Chapter 7). All managers should be aware, however, that
employees may resort both to the courts and to industrial tribunal at any time, if
they have reasonable grounds for suspecting racial discrimination. At a tribunal
especially, the onus is effectively on the organisation and its managers to prove
innocence. It is therefore well worth establishing standards and practices that
simply do not allow this form of discrimination.
o Disability
It is illegal to discriminate against employees or prospective employees on the
grounds of physical or mental disability, as long as this does not affect their
ability to do the job; as long as the building in which the work is to be done can
accommodate them and any equipment (e.g. wheelchairs, crutches) that they may
require to get around; as long as the ability to evacuate the building in an
emergency is not impaired; and as long as there is no other specific constraint on
the premises (e.g. the admission of guide dogs for the blind).
In practice, however, there are much greater constraints then those placed on
persons of a given gender or ethnic origin. Until 1992, there was no obligation on
the part of employers to provide equality of access for disabled people to public
and work premises, and this only applies to new buildings commissioned after 1
January of that year; it is not retrospective.
Within these constraints, employers of 20 or over are required to employ, or
take reasonable steps to employ, 3% of their workforce from among the ranks of
the disabled. This is inspected and where necessary enforced by the Disabled
Resettlement Office (ORO) of the Employment Department; the ORO is also
responsible for the assessment of, and judgement on, matters to do with access
and emergencies, and whether these are genuine barriers to the employment of
the disabled.
Within these constraints, the law applies not only to recruitment and selection,
but also to offers of promotion, prospects, training and development.
0 Trade union membership or refusal to join a trade union

It is illegal to discriminate on either of these grounds, in the offer of, or refusal of,
work, promotion, training, development, or other opportunities.
This change has occurred over the period since 1980 in the UK, when certain
trades required membership of a trade union either pre-entry, such as in painting,
electrical and haulage occupations; or post-entry, in such occupations as those to
do with the post office and telecommunications, railways, ships and shipbuilding
and the manufacture of motor cars. Organisations would make union member-
ship a condition of employment in these (and other) circumstances. It was good
for business all round: the unions gained and maintained both members and
influence; and the employers preserved order, familiarity and stability in their
dealings with their staffs. These were known as 'membership agreements' or,
more familiarly, the 'closed shop'.
They were finally outlawed by the Employment Act 1987, and a Trade Union
ombudsman set up to deal with matters specifically relating to the relationship
between employees and unions.
More generally, if an employee has reasonable grounds for concern that he
has been refused work or prospects on the grounds of membership or non-
membership of a union, he may take his case to a tribunal, or the courts, for
adjudication.
o Rehabilitation of offenders
It is illegal to discriminate against anyone who has a spent conviction for an
offence, and to refuse them employment solely on those grounds. The exceptions
to this are where the offence is specifically related to the business of the employer.
For example- a bank may refuse employment to anyone who was once convicted
of financial offences such as fraud; a school may refuse employment to someone
who has been convicted of offences against young children.
More generally, employment may be refused in certain occupations (e.g.
education, health, social work), where the individual's general criminal record
may in itself give reasonable grounds for this refusal. More generally still, a large
and diverse criminal record gathered over a long period of time may give
reasonable general grounds for the refusal of offer of employment.
Again, anyone who can provide a reasonable case that they have been refused
either employment or access to further prospects because of a single, spent
conviction, unrelated to the work in consideration, has recourse to either a
tribunal or the courts.
• Other important issues

All organisations are required, within this framework, to be 'equal opportunities
employers'. In this regard it is useful to distinguish the five other issues of:
D Equality of access
This refers to jobs, occupations, and opportunities from outside an organisation;
and to promotion, training, development within an organisation. The two are
distinguishable, and an organisation may in practice draw its staff from a very
narrow tranche of the population, but then be scrupulously fair once they are in
post. Conversely, staff may be drawn from a wide cross-section of the
community, but future opportunities are then restricted to one section
(classically, white males).
It should be noted that it is quite legal (and commonplace) for organisations to
put age restrictions on particular jobs, as long as these do not in themselves
constitute a discriminatory activity (see the Price case above). It is possible that
this will be removed by EC law in the mid-1990s. There also exist exclusions
above organisation retirement age (whatever that may be), and below the age of
majority (18 in the UK).
In general, the law enshrines equality of opportunity as described above.
Anyone who believes that they have been victimised under one (or more) of the
headings, should seek legal advice, or resort to ACAS, or approach their trade
union or representative body. Invariably, if a case gets as far as tribunal or the
courts, the overall effect is to require the organisation (and its managers) to
justify the position taken. While organisations are very often able to do this
successfully, it is much better to establish a working environment, and work
practices, that utterly preclude the possibility of such discrimination occurring.
D Equality of treatment
All staff in all organisations must receive equality of treatment. As well as
opportunities, and access to those opportunities, this extends to all of the
following, regardless of race, gender or disability:
• Pay and rewards: all staff doing the same (or not substantially different) jobs,
in the same sector, or at the same level of responsibility, must receive the same
range of benefits, and be placed on the same salary, grade, or salary banding.
The principle of 'equal pay for equal work of equal value', must always be
followed.
• Discipline, grievance and disputes: any member of staff may take up any
matter with the organisation at any time, and expect to receive the same
treatment as the next person. Similarly, all persons who are subject to discipline
within the organisation are entitled to similar treatment for similar offences
(unless variations and exceptions are specified in advance).
• Extraneous factors: no matter that is not of direct relevance to the work in
hand, or that which is to be done, may be taken into account when arriving at
workplace decisions. This applies to all matters to do with the management of
staff, and covers such things as: the occupation of the spouse of the employee
in question; whether or not they are married; whether they have children; (for
female employees) whether or not they are pregnant; where they live; and
membership of organisations with no direct link to the work in hand.
• Matters to do with levels of autonomy and degrees of responsibility:

these may also be considered when someone is being offered the chance to
change occupation, department or division, or where that person is being
required to do this for operational reasons, or to avoid redundancy or obviate
the need for it.
D Quotas
Quotas of minority or designated groups of staff may be asked for, formally by
law as with the disabled percentage itemised below; or strongly urged or
requested, in contract compliance situations (where, for example, a government
or municipal department may request a certain ethnic mixture at a company, or a
percentage of women in executive positions, as a condition of awarding it a
works or services contract).
Formally by law, the only quota the UK has is for all employers with more than
20 staff to employ 3% of the workforce from the disabled community. Other
concepts of quota (for example, concerning a desired gender mix; or the
reflection of the ethnic balance of the community in an organisation's work-
force) are not legal in the UK.
D Job training
All members of staff are entitled by law to job training, to enable them to carry
out their work as required by the employer, both on a current and continuing
basis. This job training must also take into account considerations of health and
safety at work.
D Fixed term contracts

Fixed term contracts are offered where a particular project or occupation has a
termination date that can be identified in advance; or where it is desirable that the
operation of the position be reviewed after a particular period, and the ability to
make a change available. This latter is especially true for senior and chief
executive positions (and often carries a severance allowance in the event of a
change being found to be desirable).
The great advantage is the flexibility that is in-built. An employer may not,
however, set all his staff on fixed-term renewable contracts, in order to avoid
employment protection obligations; these obligations will be deemed to have
accrued after 104 weeks (full time) of continuous service.
If a fixed term contract is breached by the employer, the employee is normally
entitled to have it paid up in full. If it is breached by the employee, the employer
may sue for damage, or seek to obtain an injunction compelling the fulfilment of
the contract.
At the point of termination of the contract, there is no obligation to notice on

either side, merely to fulfil the work in hand until the termination date.
• The contract of employment

This is the agreement entered into whereby the employer agrees to provide work,
and the employee agrees to carry it out, in return for reward. This is the 'wage-
work bargain', and it has its basis also in the 'master-servant relationship',
whereby one who carries the work out is deemed to have accepted the authority
of the employment provider.
• Hours of work
The hours of work required must be clearly stated on the offer of employment,
and constitute part of the contract. Any method of recording them, such as
clocking, signing or keying in must also be clearly specified, and new employees
must be made familiar with any such procedures. If a flexitime system is worked,
matters concerning core and flexible hours must be clearly stated, as must
operational obligations such as those to do with ensuring that the place of work is
staffed in the required or designated way and time.
Under EC Law, no more than 48 contracted hours per week may normally be
specified. There are, however, many exceptions to this (doctors, nurses, lorry
drivers), and such a maximum does not normally include agreed overtime
(though it does include compulsory overtime).
Working hours patterns are becoming ever-more flexible, and are increasingly
designed to fit around both the aspirations and outside obligations of the staff.
While the most obvious example is the offering of 'school-hour' (9.30 am-
3.00 pm) or 'twilight' (6.00 pm-9 .30 pm) shifts aimed at women carrying out
factory, clerical and supermarket work, there are other examples in the business
sphere which repay consideration. The Midland Bank, in some locations, offers
its counter staff a 3 x 10 hour day standard working week, provided that they
work alternative Saturday mornings.
In parts of the Nottinghamshire coalfield, miners worked three six-day weeks,
and then had a whole week off. Many flexitime systems allow staff to build up an
hours 'bank' enabling them to take an extra 1-2 days leave per calendar month.
This relationship between aspirations, obligations and working hours relates
directly to the overall motivation of the member of staff concerned, and in many
cases is actually seen as part of the reward package.
The area of greatest difficulty as far as the UK is concerned is the regard to
Sunday working. The law on Sunday trading by major supermarkets is (in 1993)
not clear. As far as the EC is concerned, a refusal to sanction the opening of shops
on a Sunday does not in itself constitute a restraint of trade. There is therefore a
conflict that must be resolved between the needs and obligations of the business,
the question of legality, and the need to request, ask and possibly coerce members
of staff to accept Sunday working as part of their stated hours of work. While the
matter is not resolved, the manager should ensure that those who do work on
Sundays do so of their own free will.
• Stated or specific terms

The contract of employment should normally be in writing, and be issued within
thirteen weeks of the date of commencement of employment. The contract will
specify: the parties to the agreement; the job title; the date of commencement; pay
rates and the reward package, and how they are to be delivered; holiday
entitlement; notice periods; and any other matters of substance necessary.
Reference should also be made to the style and nature of procedures that the
organisation uses, and the rights of the new employee to have access to them.
The contract may be varied or negotiated, and changes to it made by
agreement between the parties. It may also be broken, and remedy sought (see
below). Any changes that are made must be notified in writing within one month.
• Implied terms: the employer

Anything that was promised, indicated or inferred, and any impressions that
were given, in the recruitment advertisement, job description, person specifica-
tion, further information, selection process, letter of appointment, or any other
source may be deemed to be part of the contract.
SUMMARY BOX 9.2 Time Off Work
Under certain circumstances an employer must allow his employees reasonable

time off from their duties. The main reasons for this are as follows:
• To perform the duties associated with holding certain public positions such as
on a county council, other local authority, statutory tribunal, health authority or
governing body of educational or social service establishments
• As an official of an independent trade union to carry out those duties
concerned with IR in the firm or for undergoing relevant training in order to
carry out this function
• As union members, for trade union activities and meetings, and voting in trade
union elections.
• Voting in general and local elections.
The amount of time allowed is what can be reasonably justified; and in the matter of
dispute the question of reasonable justification will always arise. Factors to be
taken into account arise from the balance between the nature of the work to be
carried out, the type of organisation concerned and the nature of the outside office
held by the individual.
The other implied terms and duties that the employer accepts in providing
employment are: to act fairly and reasonably in all dealings with employees and
their representatives; to be safe, and to provide a healthy and safe working
environment; to pay wages in accordance with the stated terms and to keep this
up for the duration of employment; to provide such job training as may be
necessary or desirable; to provide (or ensure the provision of) any uniform and
tools necessary or stated for the job; to provide an adequate level of supervision;
to provide facilities.
• Implied terms: the employee

By accepting the offer of work, the employee agrees to accept and obey the orders
and directives of the employer, provided that these are fair and reasonable. The
employee agrees also to act in good faith at all times; to act in the employer's
interests; to observe the rules and directives legitimately made; to work to
reasonable standards of capacity and competence; to take reasonable care at all
times; and to act in a safe and healthy manner at all times. The employee must
not act in conflict with the employer; and should avoid taking on outside
activities that incur this (in some cases the employer will insist that the main
employment is the only one, and forbid employees to take a part-time, evening or
weekend job). The employee must not defraud or steal or disclose business
secrets.
• Notice periods
These will normally be stated and agreed in the offer and acceptance of
employment. There are legal minima to be observed:
(a) for a period of employment of between 4 weeks and 2 years the period of
notice to be given by the employer is one week
(b) not less than 1 week's notice for each year of service between 2 years and 12
years
(c) not less than 12 weeks' notice for a period of continuous employment lasting
12 years or more.
In connection with notice, we should observe that:

1. An employee who has been continuously employed for 4 weeks or more must
give 1 week's notice: the period does not increase with length of service
2. If the individual's contract specifies longer notice on either side, the longer
period will apply.
• References
An employer has no duty to provide a reference for an ex-employee, beyond
confirming the dates of commencement and termination of employment. The
reference must be issued in good faith, and anything qualitative that is stated
(especially where this is negative) must be substantiable by documents held by the
company or on the ex-employee's file.
• Breaches of the employment contract

Both employer and employee should act in a fair and reasonable way at all times,
given the particular nature and circumstances of the work. Where actions taken
on either part are not demonstrably fair and reasonable, the contract may be
deemed to have been breached; this is in addition to any breaches of the stated
terms.
0 Breach by the employee
The employer may: dismiss the employee in accordance with its own procedures;
sue the employee for damages; prosecute the employee through the criminal
justice system (where the breach constitutes a criminal act}; and obtain an
injunction on the employee.
o Breach by the employer

The employee may sue for damages; or may take his claim for adjudication to an
industrial tribunal. This is whether dismissal has taken place or not.
• Employment protection
This exists for designated full-time employees after 104 weeks (2 years)
continuous service; and for those designated part-time employees working a
regular 16 hours per week or more, after 260 weeks (5 years) continuous service.
Employees thus covered are entitled to a substantial reason for dismissal or
termination, and to have exhausted organisation procedures before dismissal or
termination. Employees not covered by employment protection are entitled to
minimum notice periods; or stated notice periods where these are more
advantageous to the employee.
• Procedures
Procedures governing discipline, grievance, dismissal, appeal, emergencies and
safety, must be in place at each place of work. If they are not written down,
minimum standards published and promulgated by ACAS will normally be
deemed to apply. These should normally work in such ways as to solve problems,
minimise conflict, and keep and maintain an harmonious place of work. Above
all, they must be available to, and understandable by, everyone concerned. They
help to set and reinforce the tone and aura of staff management at the place of
work.
Procedures must be followed, and anyone who is dismissed by an organisation
without recourse to procedures will always be found to have been unfairly
dismissed.
• Dismissal
Dismissal should only be carried out when all other attempts to solve an IR
problem have failed, and it should always be the subject of pre-evaluation. The
effects of the dismissal of a member of staff on the morale of those remaining
must always be considered. It is essential that when it is necessary to dismiss this
is the conclusion that has been arrived at having regard to the best interests of the
organisation, its operations and its staff. Dismissal should be carried out
effectively and without personal rancour as far as possible. It should be carried
out within the terms of natural justice; and procedures, including representation
and the right to appeal, must always be followed. Finally, dismissal should not
normally be carried out by the individual's immediate manager in isolation. It
should rather be at least ratified (if not actually sanctioned) by the manager's
superior.
Anyone who is dismissed is entitled to: have exhausted all organisational
procedures including appeals; a written statement of the reasons for dismissal; a
written statement of the terms (date, time, place) of dismissal; recourse to ACAS;
and natural justice.
Other than items covered by the discrimination laws and subject to employ-
ment protection limitations, an employee may be dismissed at any time by giving
the appropriate period of notice; and for any reason. The most common reasons
are: redundancy (where work has wholly or substantially ceased); incompetence;
breaches of contract as indicated above; failure to carry out instructions;
persistent breaches of the rule book or working practices; a strike action
{provided that every employee who took strike action is dismissed, and none
of them is taken back into the same job).
There is also always provision for summary dismissal, subject to natural
justice, the circumstances of the offence, and what is fair and reasonable in the
work situation.
Dismissal may be:
• Fair, where all procedures have been adequately and correctly followed;
where representation and appeal was allowed at each stage; and where
dismissal was the only action open to a reasonable person in the circum-
stances; and where the written statement of the terms of dismissal accord with
the reality
• Wrongful, where the contract of employment or one of the elements in it was
breached; in particular, where wages were not paid for work carried out
The remedy for wrongful dismissal is to sue through the courts for breach of
contract, in order to gain damages, and in particular the shortfall in money that
may have accrued
• Unfair, where procedures have not been followed; where representation and
appeal were not allowed; where dismissal was not the only action open to a
reasonable person; or where the written statement of the terms and reasons for
the dismissal did not accord with the reality.
• Making a claim to an industrial tribunal

This has five stages (see Figure 9.1):
Stage 1: the employee- the applicant- makes his claim by notifying the clerk to
the tribunal of his intention and completing the necessary form (IT 1)
Stage 2: the case is heard by an ACAS official who will advise the applicant on the
general merits of the case (but cannot order them to drop it); the ACAS official may
attempt to mediate between the two parties to find ground for an agreement before
the case goes to full tribunal; the organisation concerned -the respondent- may
choose or not to seek agreement with the applicant at this stage
Stage 3: there is normally a pre-hearing assessment by the tribunal chair to decide
on the general merits of the case and to advise on this; again, they may not prevent
the case from being heard
Stage 4: the tribunal hears the case, the applicant and respondent present their
sides of the case and any witnesses or evidence that they may have in support of it;
additionally they may be represented either by a lawyer or by anyone else who they
so desire -very often the applicant is represented by the full-time official of his
trade union, if he belongs to one
The tribunal hears the evidence and decides on the merits of this what the
decision is to be
Stage 5: Either party may refer the case to Stage 5, that is, an employment appeals
tribunal, if they believe that the law has been misinterpreted or that natural justice
was not applied or that the case was otherwise somehow vexatious.
Beyond that, the case goes to the High Court, House of Lords and European
Courts in the same way as any other case; at these stages there is legal
representation.
• Unfair, constructive and summary dismissal

D Unfair dismissal
Remedy for unfair dismissal is through an Industrial Tribunal, which will hear
each case on its merits (precedent is not set, as with the courts), and adjudicate on
it. After this adjudication, either party may ask for the case to be referred to the
Employment Appeal Tribunal (EAT), either on a point of law, or on the grounds
that the decision was 'vexatious', or 'frivolous'. If either party wishes to pursue
the case further, they must do so through the courts, and then any decision
CLAIM BY EMPLOYEE
~
1
Settlement,
Normally +----MEDIATION BY ACAS
binding on each party
No agreement
Settlement
Agreed +--PRE-HEARING ASSESSMENT
l
No agreement
Decision
made by + - - - - - TRIBUNAL
t
Tribunal
1
Appeal by either party
Decision by No costs incurred
t EAT +---EMPLOYMENT APPEAL
No Precedent
TRIBUNAL (EAT)
Legal representation
not obligatory
Precedent Legal representation
1
Obligatory costs
~ incurred
Decision at +---HIGH COURT

each stage,
may be the ~
basis for final+-- COURT OF APPEAL
settlement I
ofthe t
!
dispute + - - HOUSE OF LORDS
EUROPEAN COURT
OF JUSTICE
Figure 9.1 The progress of a case through the UK industrial tribunal system
arrived at does acquire precedent, and adds to the field of employment law. A list
of the main cases which have started at tribunal, and which have gone on to
courts, and whose judgments do thus set precedent are set out in Summary Box
9.3.
SUMMARY BOX 9.3 Industrial Tribunals
Industrial tribunals exist to ensure a fair and speedy remedy for all employment
cases- except wrongful dismissal, which is handled by the courts. Such tribunals
are less formal than the courts and do not require legal representation. Both
applicant (plaintiff) and respondent (defendant) may represent themselves if they
choose. The tribunal itself is chaired by an employment lawyer, and is also
composed of a representative from the local employers' group, and a representa-
tive from the local trade union group.
Tribunals are able to hear cases of:
• Discrimination, victimisation and harassment

• Unfair dismissal
• Constructive dismissal.
They hear the evidence and judge each case on its merits, subject to it failing within
the basic provisions of the law. Tribunals normally offer judgments on the day on
which the case is heard.
A judgment may be:
1 . A finding in favour of the employer, normally case dismissed

2. A finding in favour of the employee which may include:
• No compensation
• Agreed compensation
• Compensation set by the tribunal
• Re-engagement, whereby the employee is given a similar job to the one that he
previously held or compensation
• Re-instatement, whereby the employee is given his job back, or compensation.
The losing party may refer a case onwards to an Employment Appeal Tribunal
(EAT). From there, cases may be referred to the Court of Appeal, House of Lords,
and European Court of Justice. At these stages, cases acquire full legal status, and
set precedents for future cases at either court or tribunal.
Six recent cases that have acquired legal status and set precedent are:
Polkey v. AE Dayton Ltd.: organisations must follow procedures when dismissing

an employee (Lords)
Heywood v. Camme/1 Laird: equal pay means pay and not equivalent benefits
(Lords)
Brown v. Stockton-on-Tees Borough Council: pregnancy may not override the
LIFO principle for redundancy (Lords)
Price v. The Civil Service Commission: age constraints must not be indirectly
discriminating on grounds of gender (Court of Appeal)
Swift v. British Rail: retirement age and the opportunity to retire must be the same
for all employees regardless of gender (European Court of Justice)
Holmes v. Home Office: hours of work must not indirectly discriminate on grounds
of gender (Lords).
D Constructive dismissal
Dismissal may also be constructive: this is where the employee actually leaves the
job of his own accord, but in circumstances where this was demonstrably the only
course of action open to a reasonable person.
D Summary dismissal
All organisations will make provision for summary dismissal to take place. This
will normally be in response to the committing of such a serious offence that
dismissal is the only course of action open to any reasonable person in the
circumstances, and that moreover this is a course of action necessary in response
to the offence, in order to ensure that the required standards be preserved.
Summary dismissal offences will vary between employers and according to
circumstances. In general, offences for which summary dismissal will be a
reasonable course of action include: vandalism; violence; theft; fraud; sexual
misconduct; causing danger to staff or premises or equipment; sabotage; and
breaches of health and safety legislation, where this is deemed to be a serious
offence, or where it is so by reason of the nature of the work being carried out.
Organisations will also specify or exemplify other matters and offences for which
summary dismissal is likely to be the outcome that are specific to themselves.
Such matters are likely to include aspects of behaviour and performance,
attitudes and approaches.
Organisations must specify to their staff the range of offences for which
summary dismissal may occur. They do not need to provide an exhaustive list.
In the case of an employee who is to be summarily dismissed, procedures and
natural justice must still be followed; if not, unfair dismissal will have occurred.
In such a case, the employee is entitled to representation, to hearing the case
against him, to stating his case, and to appeal against any findings.
• Representation
Any employee, pursuing a grievance, or subject to discipline, or in some other
form of dispute with his employer, is entitled by law to representation. This
representative may be the official (lay or full-time) of a recognised trade union; or
a work colleague. It is likely that this will be extended to allow any member of the
public, a friend or relative, or the employee's lawyer, to act in this capacity. If the
employee is not offered representation by the employer, any dismissal that may
arise will be unfair.
• Appeal
Any employee who pursues a grievance or dispute, or who is disciplined, or is to
be dismissed, is entitled to an appeal against the decision. In particular, any
employee who is dismissed, but has not been afforded the right of appeal, will be
found to have been unfairly dismissed.
• Remedy
Remedies are open to three parties:
Employers may prosecute employees for criminal acts perpetrated during the
course of the work or employment; they may also sue for things such as breach of
notice period (though this is rare)
Employees may prosecute for discrimination, harassment or victimisation at any
point; they may sue for wrongful dismissal at Court where the contract has been
breached. They may sue for unfair dismissal at tribunal where procedures have
been breached and a substantial reason for dismissal is not given once the
employee has been in post for 2 years (5 years part-time)
Potential employees may prosecute for discrimination in the selection and
appointment process; this also applies to failed candidates.
• Redundancy
Redundancy takes place where work has ceased; or where it has diminished to the
extent that termination of employment is a fair and reasonable action.
Redundancy may not be used as a substantial reason for the termination of
employment in any other circumstances.
Again, procedures must be followed; and again if they are not, unfair dismissal
will be found to have taken place. If more than 10 redundancies are declared on
any one occasion, the Employment Department must be notified; 90 days' notice
must be given; and full consultations engaged in, including the involvement of
any recognised trade union. Employees affected must be given all reasonable
assistance (including time off) to look for alternative employment. If opportu-
nities come up within the organisation during the period of redundancies, the
employees affected must be offered the chance to apply.
Criteria for redundancies must be published. They must be fair and reasonable
and equitable, and based on work and not personal criteria. Where no alternative
is published, the principle of 'Last In, First Out' (LIFO), will be deemed to apply.
If a 'downsizing' or restructuring is to take place, involving some loss of jobs, the
retention criteria must be published, and all employees given the opportunity to
apply; those not selected will be made redundant.
In addition, any employee made redundant is entitled to his full period of
notice; a severance payment based on his length of continuous service; a
confirmation of the dates of employment from the employer.
• Consultation
Consultation is the active process by which an agreement is made between the
employer, the employee, and the employee's representatives (if there are any), on
how a particular initiative is to be implemented. The purpose of enshrining the

concept of consultation in employment law is to ensure that the implementation
process is fair and reasonable to all affected by a decision. It does not affect the
right of organisations to determine their own courses of action.
The minimum legal consultation period is four weeks; this will be extended
according to the initiative to be implemented. A short period will be apposite for
such matters as the variation in terms and conditions for an employee (or small
group of employees), provided that this is not substantial. Consultation will also
take place in advance of changes in working practices, changes in employees'
representation, and the implementation of particular initiatives such as no-
smoking policies, job evaluation and the restructuring of hours or patterns of
work.
The obligation of the employer in the process is to communicate effectively the
purpose of the proposed initiative, and to ask for (and expect) the cooperation of
the workforce and its representatives on the implementation, and during the
course of this to seek their views on how this may be most effectively achieved.
The obligation of the workforce and its representatives is to cooperate in
implementing the proposed initiative, and to make constructive suggestions for
its achievement.
Beyond this, the proposed timescale for the changes must be fair and
reasonable to all concerned: from the manager's point of view, it is better to
allow a period that is long, but which achieves the required objectives, rather
than trying to hurry something through at the expense of full cooperation or
understanding on the part of the workforce.
• Industrial relations law

IR law has been greatly developed in the UK in the period since 1979. We need to
look at seven main effects.
• Ballots
Any ballot to be conducted by any trade union or group of employees must be
secret and subject to independent scrutiny. Ballots must be carried out in the
selection of full-time officials; in the furtherance or contemplation of a strike or
dispute; in the ending of a strike or dispute; in the gaining of a mandate for
action.
• Union membership
Union membership agreements - the 'closed shop' - are now illegal; neither a
work group, nor a trade union, nor an employer, may insist on trade union
membership as a pre-condition to an offer of employment; nor may they make an
offer of employment conditional on joining a trade union once employment has

commenced. Any employee or prospective employee may refuse to join a trade
union purely on the grounds of personal preference.
• Union dues and levies

The employee must take his own steps to ensure that these are paid. The
employee must ask for any such dues to be 'checked off' or paid at source via the
organisation's wages and salaries department. Trade unions may seek this
'check-off' facility by agreement and arrangement with workplaces; they are
not entitled to it. If trade unions wish for a 'political levy' (that is, whereby
members pay an element of their subscription into a fund operated by the union
for the purposes of political lobbying rather than members' benefits), they must
itemise this as a separate entry and, again, ask the individual member to make his
own arrangement to have this stopped at the time of wage or salary payment, or
make other arrangements to pay it.
• The right to strike and the right to work

Employees may take strike action in pursuit of a legitimate industrial dispute or
grievance (but not in pursuit of any other matter). However, this does constitute a
breach of the contract of employment, and an employer may discipline, suspend,
or dismiss those who take part, provided that they treat all such employees the
same. Thus all those who take part in such a strike or dispute may be dismissed,
or none of them may be - it is illegal to be selective.
Even where a strike is called and balloted, and agreed on, any employee who
wishes to may turn up for work, and expect to work, and be paid for so doing. A
trade union may not coerce people to strike, nor prevent then from working, nor
take punitive measures against anyone who does. The workplace must stay open
in case people do wish to work; the employer may not coerce people to remain on
strike, nor may they close the place of work, or prevent employees from turning
up.
• Strikes and industrial action

A strike or industrial action may be called by a trade union or employees'
representatives in furtherance of a legitimate industrial dispute (and for no other
reason). It must be confined to the place of work affected by the dispute, the
employee group or groups affected by the dispute, and conducted by those
employees or their representatives only.
Secondary strike action is unlawful. This is where equivalent groups of
workers from different sites or employers, or different groups of workers from
anywhere, come out in support of the group conducting the dispute.
Before a strike can legally take place, notice of dispute must be given by the
employees or their representatives (excluding trade unions) to the employer. A
strike ballot must be held, and a majority obtained for the strike in pursuance of
the stated dispute obtained (if this dispute is settled, and another one comes up, a
new ballot must be held). A strike ballot may not ask for an open-ended
commitment to industrial action, but must give specific dates and times and
places on which the dispute will start.
Unofficial, wildcat, or lightning strikes are illegal, as is any action called
without following the above procedure, or holding the required ballot.
• Picketing
Those involved in the pursuit of a legitimate dispute or strike may establish a
picket at the place of work affected. This picket must be carried out by the
employees or employees' representatives concerned. A picket line should normal-
ly constitute no more than six people. This picket may not adopt a threatening or
menacing attitude nor may it prevent people from entry or exit to the place of
work if they so wish. The role of the picket is limited to the issuing of information
only.
• Remedies
Remedy for breaches of IR law may be sought in two ways:
(a) Through the courts, via injunctions, and the prosecution of employees, their
representatives, or recognised trade unions, in order either to prevent an
unlawful action from taking place, or in order to gain redress in regard to an
unlawful action which has already, or is currently, taking place; this may
include losses or estimated losses of business or earnings incurred through
having suffered an unlawful dispute
(b) To the trade union Ombudsman, to resolve any matter that has arisen
between individuals and the unions to which they belong (most usually,
questions of coercion into a dispute, or where victimisation has occurred as
the result of refusal to join a dispute).
• Health and safety legislation

• Safety in the workplace
All places of work must be both healthy and safe, as far as is reasonably
practicable, and both employers and employees have responsibilities to ensure
that this is so; these responsibilities extend to visitors to the premises, as well as
members of staff. Particular regulations and restrictions apply to particular
circumstances and occupations, and to the handling and storage of certain items
and substances.
Responsibility rests with the employer for providing any protective clothing
necessary for this healthy and safe working environment. Responsibility also
rests with the employer for devising adequate safety and emergency procedures
for the place of work. Responsibility rests with the employer for ensuring that
products are not contaminated; and that the staff do not (whether accidentally or
not) take any substance or product hazardous to the population or environment
at large off the premises. It is also the organisation's responsibility to ensure that
staff are trained in the actions, behaviour and attitudes required to ensure that
this is all achieved.
Beyond this, the work environment must be organised in such a way as to be
healthy and safe as far as possible. This includes:
• Temperature levels; proper training and clothing must be provided for those
who have to work in extreme heat or cold
• Lighting, which must be adequate to work without strains on the eyesight of
the workforce
• Ventilation of all work premises, where necessary through air-conditioning
and filtration procedures
• Suitable and sufficient sanitary accommodation for all, including separate
conveniences for each gender, and the disabled; and related provisions of
washing and drinking-water facilities
• Machinery must have guards and cut-outs in-built, and training be given in
this usage and operation; these guards must be maintained in an effective state,
and not be removed during operations
• Offices must also be maintained in a safe way: telephone and computer
wires must not be left trailing; fire doors must not be propped open or locked
shut; passages and corridors must be clear and unobstructed
• Floors, stairs and passages must be soundly constructed and maintained,
and railings put on stairs and raised walkways
• Specific training must be provided for all those who are required to lift heavy
weights; or to work with toxic or dangerous fumes or substances
• Records of accidents must be kept; all accidents which result in fatality, loss
of limb, or absence from work of more than three days must be notified to the
Health and Safety Inspectorate
• Toxic and hazardous substances must be kept locked; access to them must
be via designated persons only.
Premises are subject to inspection by the Health and Safety Inspectorate and the
local fire brigade at any time. If fault is found, either body may order the
immediate closure of the premises concerned; or they may place an improvement
order, requiring changes within a set period of time.
• Health and safety management

New health and safety measures came into force in 1993 following the
requirement to implement new EC directives. The Management of Health and
Safety at Work Regulations aim to improve health and safety management by
setting broad guidelines and encouraging a structured and systematic approach to

health and safety. Employers are now required to assess health and safety risks to
their employees and anyone else affected by their work activity. Employers are
obliged to:
• Take measures to prevent significant risks and to protect employees against

them
• Appoint competent staff with health and safety responsibilities
• Provide employees with health and safety information and training
• Set up emergency procedures and train employees in them
• Cooperate with other employers if they share the company's workplace.
Regulations governing the provision of, and use of, work equipment seek to
improve the protection of those using it. The regulations apply to all types of
equipment. Selection and use of equipment must now take account of working
conditions, specified hazards and the ways in which the equipment is to be used.
Adequate instruction and training must be given to all employees.
Manual Handling Operations Regulations require employers to carry out a
risk assessment for manual handling operations in order to reduce injuries as far
as possible.
Workplace, health, safety and welfare regulations rationalise and codify the
existing legislation. They establish employers' responsibilities for lighting,
heating, ventilation, workstation suitability, seating and other ergonomic
factors; safety; and toilet facilities.
Personal Protective Equipment at Work Regulations cover the selection, use
and maintenance of protective equipment. Display Screen Equipment Regula-
tions require employers to assess and reduce any risks related to display screen
equipment work stations. Regulations include minimum requirements of the
display screen itself and also the keyboard, the work station and the environment.
Employers are to be responsible for ensuring that display screen work is
structured to allow breaks and that screen equipment users are properly trained.
• Conclusion
The purpose of this chapter has been to demonstrate the scale and coverage of
employment law in the UK and to ensure that the manager understands the
nature and extent of the legal restrictions placed upon the ways in which staff
may be managed, ordered and directed at the workplace.
Above all, it should be dear that much of what is legally required is no more
than an application of common sense and a basic regard for people at the
workplace, whatever their actual standing or occupation within it - equality of
opportunity is seen by many as an ethical commitment, for example, and not
merely a legal constraint; while the necessity to follow procedures, allow
representation and appeal, simply brings the legal standing of the place of work
into line with the rest of society.
The overall purpose, therefore, is the generation, establishment and main-

tenance of degrees of protection and security and standards by which everyone at
places of work may expect to be treated under particular circumstances and also
during the whole of their employment.
A part of this is the separation and identification of the reality of the situation.
Many managers perceive their hands to be tied by employment law and see it as a
restriction on their ability to act (especially in terms of miscreant or recalcitrant
staff). This is not so; all that is ensured in this case is that such staff are afforded
the protections and rights that they would have if they had found themselves in
similar situations in society at large.
Finally, the concepts of 'fairness' and 'reasonableness' and 'best practice'
should again be stressed. In dealings with individual cases and in relation to
unfair dismissal and discrimination, the pressure is always on the organisation
(and therefore its managers) to demonstrate that what was done truly met these
criteria. Part of the process of the legal framework is thus to ensure that
organisations set standards and practices that are truly fair and reasonable and
equitable to all staff in all situations. Organisations that do this (and there are
thousands ranging across the whole of the business sphere and organisational
complexity) have little or no trouble with employment law in the UK.
Summary Box 9.4 on the following page lists the main relevant UK legislation.
It is not an exhaustive list, but rather a starting point.
SUMMARY BOX 9.4 Main UK Employment Laws
• General
Employment Protection Act 1975
Employment Protection (Consolidation) Act 1978
• Equal Opportunities
Race Relations Act 1976
Sex Discrimination Acts 1975, 1986
Equal Pay Act 1971
Rehabilitation of Offenders Act 1974
Disablement Resettlement Act 1980
Disabled Persons (Employment) Acts 1944 and 1958
• Industrial relations
Trade Unions Acts 1905, 1984,
Trade Union and Labour Relations Act 1976, 1992
Trade Union Reform and Employment Rights Act 1993
Employment Acts 1980, 1982, 1984, 1985, 1987, 1988, 1990, 1991
• Health and safety
Health and Safety at Work Act 1974
Offices, Shops and Railway Premises Acts 1963
Factories Acts 1961 (last)
• Other
Redundancy Payments Act 1965
Wages Act 1986
Employers Insurance Act 1969
IOperations management
CHAPTER 10
The main purpose of studying operations management as a distinctive element is

to identify, the range and complexity of activities, and the combinations of the
concepts, techniques, skills and knowledge referred to throughout the book, that
are necessary to direct and organise productive efforts.
These matters are relevant to all operational aspects, though their emphasis
will vary between organisation types, as well as the nature of business being
conducted, whether it is: production; technology; commercial services such as
banking, insurance, travel, tourism; sales and retail; health care (commercial or
public); central, local and municipal government. These matters and elements all
impinge on each other, but may be usefully identified under the broad headings of
location; facilities; work design and measurement; levels of activity; reliability,
safety; production types and categories; creativity and innovation; schedules and
timetables; purchasing and supplies; maintenance management; and systems of
coordination and control. We will consider each in turn.
• Location
The question of location must first be addressed. This depends on an assessment
of the demand for the products or services; the ways in which it is envisaged that
they are to be delivered; the ability to gain the 'raw materials' or inputs (in the
widest possible sense) and get them to the location; and matters to do with
distribution, transport and delivery to the markets themselves. This requires
further assessment if multi-site operation is envisaged. It may be further
complicated by the sheer size and scale of the operation - delivering social or
education services, for example. Both public and commercial services will tend
towards the perceived necessity of being accessible to, and a focus of, the
communities that they serve. The final consideration at this stage will concern the
speed, quality, reliability, and modes of delivery of the products or services that
are envisaged.
There are certain more specific matters to do with location that also bear
consideration. Traditionally, industry would tend to locate near its markets if the
production process added weight to the products; and at the source of materials if
the processes detracted weight from the products. Consequently, certain areas
became known for specific industrial and commercial activities. They were left
very exposed when production technology or materials changed, and the
question of relocation became both feasible, and technically viable. Consider
Summary Box 10.1.
267
SUMMARY BOX 10.1 Co-Steel Sheerness Pic
This is a small steel manufacturing company. It is situated on the north coast of

Kent, UK, in the town of Sheerness on the Isle of Sheppey. It breaks all the rules of
operations management. It is not located near to the sources of its required inputs-
ore and energy fuel. Nor is it located near to its markets. Road access between the
organisation and the wider world is by a single bridge linking the Isle of Sheppey
with the mainland county of Kent. There is a sea ferry terminal in the town of
Sheerness which links with Vlissingen, Netherlands, eight hours away.
The company is both successful and profitable. It concentrates on its inherent
strengths rather than bewailing its weaknesses. The top managers of the company
have generated a culture and way of working that transcends the operational issues
outlined here that have to be faced.
The company has created a conformist culture. This is based on high quality and
customer satisfaction. It is reinforced with staff policies of organisation and
continuous development and a philosophy of continuing improvement. This has
been championed by the director of human resources, Hugh Billet, who is the
architect, inspiration and energy behind this.
The company has won national operations, human resource, training and
development and Prime Minister's awards in the UK.
There are matters of access also. Communities, for example, expect to have
their own schools, social, health and hospital services. A match has to be made
between these expectations, and questions of investment, finance, economies and
dis-economies of scale. Banks perceive the necessity to maintain a presence in all
areas as part of both their operations and marketing activities, and there are
competitive elements to this. There is also a potential 'snowball' effect; the bank
that has no direct presence in a given community will lose business to the banks
that have - and this relates to all banking activities.
• Transport and distribution

It follows from this that the movement of products and services, the speed of
movement, the modes and methods used, must also be considered at the point of
deciding on location. This includes wider questions of access to motorway,
airline and railway networks, in the case of industrial and commercial products.
Supermarket and DIY chains have also moved to edge-of-town and out-of-town
locations in the interest of providing a wider convenience of access to a greater
number of people. By providing a total facility, including cafeteria, car parking
and toilets as well as a comprehensive coverage of the stated product range, such
stores have removed trade from town centres, and have forced those who
continue to conduct business there to reappraise their own location and
operations mix.
Operations management 269
• Staff
The ability to staff the undertaking at the preferred location must be considered.
First there is the problem of the volume of staff required. Matters to do with the
skills, knowledge and aptitudes prevalent among the potential workforce will
also be considered; and more general questions of the prevailing beliefs, attitudes,
and values of a given location, region, or town, or of those who used to work in a
now-dead industry, may also be important.
Japanese companies locating in the UK have taken complete responsibility for
staffing aptitudes and attitudes. In the cases of Nissan at Washington, Tyne and
Wear, and Toyota at Derby, the companies have recognised the existence of a
potential workforce, and have invested heavily in pre-selection, pre-training and
the pre-formation of the required attitudes and values. In effect, they have
'designed' their workforces.
The lesson to be drawn from this in terms of operations management is the
assumption of the widest responsibility for the staff and their effective contribu-
tion to the undertaking. Whatever the nature of the work, it is clear that there is
an extensive obligation to the staff who are to carry it out, on the part of the
organisation, if effective operations are to be achieved.
• Facilities
The scale and scope of facilities must be addressed, in the context of their
suitability for the plant, equipment, technology and ways of working required for
the particular undertaking. General elements are also important where there is a
general public interface; or even more specifically where direct dealings with
customers are an essential part of the undertaking, and where that public expects
certain modes of delivery (again, such as supermarkets and banks). The range of
facilities will also extend to the accommodation of the workforce, and must
include rest and staff rooms and car parking; and may also include medical
provision, staff restaurants, and trade union facilities, depending upon the scale
and scope of the undertaking.
The ways of working of the organisation and the design and layout of the work
to be undertaken must specifically be addressed. The purpose of this is to
establish the nature of premises that will be suitable for the business to be
conducted, and to assess matters of efficiency, effectiveness, space usage, work
flows, and support functions. Opportunities, costs and benefits that accrue from
a range of alternative facilities and premises, and ways of organisation, will be
assessed. The end result desired is a choice of facilities based on a strategic
assessment of all of these matters, and one which has regard also to the wider
questions of flexibility to expand or contract; effective use of space; potential or
possible alternative ways of working and technological updating; matters
concerning location and distribution; and matters concerning staff.
The purchase of equipment and technology will be appraised and conducted

from the same standpoint. As well as its capacities, matters concerning its useful
life; its costs, depreciation and replacement; and its user-friendliness in relation to
the capabilities and capacities of the staff must be evaluated.
Appraisal of facilities must also have regard to the sub-systems and support
activities that the organisation decides are necessary to ensure an effective overall
operation. This includes administrative and support functions, reception of raw
materials, storage and stores policies, and marketing and sales activities. There is
also the wider question of the intrinsic nature of the working environment to be
considered, and while this may initially be viewed as a cost or a charge upon the
undertaking, successfully addressing it may generate much more in returns in
terms of reduced labour turnover and increased identity and motivation on the
part of the staff.
The choice of facilities will depend ultimately upon the appraisal and balance
of all of these elements, ensuring that the result is an effective, productive and
profitable working environment that people will wish to attend and work with
pride and commitment, and which is stable and efficient over a long period of
time, while at the same time having the capabilities of flexibility and respon-
siveness to opportunities.
• Design and measurement of work

The process of measuring work is complex, and it is essential that those who do it
understand this. Work measurement comprises considerations of timescale, task
complexities, repetitions, varieties and rotations, human maintenance time,
flexibility, and pressures. This is to be balanced against the organisation's
inflow of work, orders and activities. It is possible to itemise tasks and their
components and to build profiles and patterns of tasks into both individual and
group jobs and activities. Wider considerations to do with the work environment,
intrinsic job factors, and questions of motivation must also be considered.
Finally, the capacities of production and operations technology will be assessed,
and both 'perfect' and 'real' flows of work quantified.
From this, patterns of occupation, skills, knowledge and aptitudes emerge, that
are to be related to the work in hand. Matters of attitudes and values, identity
and alienation, will also be addressed, and will impact upon the standpoint and
design of human resource and industrial relations policies; and the style of
supervision and management to be adopted.
The mix of the volume, quantity and time pressure must also be considered.
Where the quality requirement is high, methods of measuring work must
accommodate this, either in the pre-setting and pre-testing of equipment; or
(where the human content is critical) in the allowances to the operatives in their
own work time and scheduling to ensure this.
Any 'average', 'perfect', or 'ideal' work flow has therefore to be seen in this
context. It is possible, for example, to identify a range of customers passing
through a given bank till, or supermarket checkout, over a period of time. What
cannot be done from this, is to draw a measure of absolute productivity.
On average, a till may serve twenty customers an hour; in a given hour, it may
serve three complex customers, or 100 that are straightforward. Similarly, a
production line may output sixty television sets in an hour; care must be taken
when reading into it, that this also constitutes one set per minute, or 480 per
eight-hour shift. It may represent this, or it may not, but such conclusions will
only be reached after a strategic, rather than a mechanistic, appraisal of the
situation.
There are thus qualitative as well as quantitative aspects to be considered in the
design and measurement of work, which must in turn be the subject of
supervisory and managerial assessment if it is to be fully effective. If this wider
context is appreciated, then methods of work measurement and design will be
much more truly and accurately constituted. Only when it is approached in this
way, can more specific aims be ascribed to the design and measurement of work
that are to do with maximising efficiency, eliminating waste, achieving optimum
cost-effectiveness, improvement and optimisation of staff and equipment,
improvements in working methods, and overall improvement in production
and productivity.
• Levels of activity
These may usefully be defined for the purpose of generating an overview and
basic understanding of the components of operational activities. We need to
consider five here:
• Steady state
The day-to-day activities of the organisation, its core business and purpose, the
ways in which most things are done most of the time. Contained within steady-
state activities are the standard and usual organisation of work; implicit within it
are matters of culture, style, ethos, modes of management and supervision,
technology, skills, aptitudes and attitudes. Steady-state activities normally have
the major and lasting impact on the organisation, its continuity, constitution,
policies, reputation and prosperity.
• Innovative
Most organisations engage in research and development (R&D) actlvlties,
prospecting and opportunity seeking to some extent. The ways in which these
are conducted will normally reflect the innovative capabilities present in the
organisation, any potential or under-utilised talents or technology, the creativity
and imagination of key staff, abilities to identify and exploit new opportunities,
and the widest possible understanding of the abilities of the organisation.
• Crisis
All organisations must be able to accommodate and respond effectively to the
genuine emergency, but crisis management must not become the normal way of
working. It requires a recognition of the full range of possibilities that can go
wrong, and the likely or actual frequency with which they do. From this, effective
management techniques will be devised to ensure the minimum lasting impact,
and the most effective resolution possible, that arises from any emergency. It also
enables assessment of those matters over which the organisation has no control,
and the assimilation of these into the steady state activities.
• Policy
These activities constitute the raison d' etre for top management. They are
concerned with ensuring that the organisation continues to operate effectively,
and recognising early any possible negatives (or crises) with a view to taking
preventive action.
Policy activities are also concerned with wider environmental, market,
technology and general business assessments, and the match and mix of each
in the pursuit of profitable activities. There may also be constraints to be
accommodated in the form of legislation, loss of market to a competitor, or loss
or change of public taste and perception.
• Pioneering
This is the development of both the 'policy' and the 'innovative' elements, and
constitutes the range of possible responses to the question 'What if?' Much of the
background to pioneering work will be confined to creative (and in itself
unprofitable) speculation and discussions; from this, possibilities may arise,
and from these, certain more concrete concepts and ideas of potential value to the
organisation, or which could potentially be exploited by it, may become
apparent.
From such a background emerge the new ideas, the range of possibilities, that
generate the next range of products, services and offerings. The extent to which
organisations will make commitments in the pioneering field will depend upon
very 'hard' elements such as appraisal of investments made. It may be limited to
organisational duster or brainstorming sessions; or it may provide a limited
range of grants or rewards to employees at the development stage if they do have
an idea - they may be given scope and facilities to develop it, in return for a pre-
agreed royalty if it becomes successful.
This is quite distinct from organisational R&D activities, which are part of the
organisation's commitment (fixed cost and investment) to its own future. The
basis of pioneering is the niche opportunity afforded by the organisation, and its
constitution and combination of resources and talents.
SUMMARY BOX 10.2 Product Success: the Sony Walkman
This product is a world leader. It has generated its own universal identity, and was
instrumental both in transforming the operations of the Sony organisation, and in
raising its public profile.
None of the components of the product were original, but rather the adaptation
of existing items and concepts- the transistor radio; the earpiece; transistorisation
and miniaturisation; batteries; and audio cassettes. There was the concept of
providing personal and private entertainment that people could use in public
places. Finally, it was necessary to generate public awareness, to familiarise the
concept, and thus generate demand.
The product concept has since been developed and extended to include
compact disc television, and radio provision.
The range of steady-state, policy, crisis, innovative and pioneering activities

impacts upon the entire range of the organisation's operations. It is essential to
recognise the nature and balance of activities required, and the standpoint to be
adopted, as the basis for effective operations management. It is also an integral
part of the continuing process of organisation, market and environment
assessment. Because of changes in these, the nature, frequency and stance of
operational activities may change also.
• Reliability
The nature and concept of 'reliability' varies from sector to sector, and between
operational elements. There are general considerations to be made, however.
There must be an overall understanding of what the operational sector under-
stands by 'reliability', and its own notions and considerations concerning it.
There is a competitive component to be understood also, both in the wider,
global aspect (an English electronics company must overcome, or at least come to
terms with, the universal perception of the reliability of Japanese products in this
sector), and also in narrower terms, where local rivalry and competition may take
place between similar operators- in such cases, one element is almost invariably
'reliability'.
Customers expect reliability. They expect deadlines to be met, products to
work, and services to deliver what they purport to offer. In commercial terms this
is straightforward. The same expectations also extend to health services- there is
an expectation of accurate diagnosis and treatment of ailments, illnesses and
injuries. 'Reliability' in this has connotations of length of wait for service and
treatment, and the effectiveness of the service and treatment in its widest sense
(that is, if one seeks medical advice for one ailment, and another is found along
the way, there is an expectation and requirement that this will be treated at the
same time).
'Reliability' also has connotations of the quality of the human aspects of
operations. Customers and potential customers require confidence in the
supplying organisation and its staff; the human interface must therefore exhibit
those qualities of perceived expertise, modes of presentation, and technical
know-how, that constitute 'credibility', and underpin the initial feeling of
reliability and belief that must exist as one of the preconditions of effective
business.
Only when these conditions are satisfied is there any true purpose in addressing
the technical or intrinsic qualities of the products or services on offer. There is no
value in having the greatest, most advanced product range in the world, if
potential customers have no belief, faith or confidence in it.
• Safety aspects
Products and services offered to the public at large must also be healthy and safe
as far as is reasonably practicable. In the EC and North America, there are
standards of materials usage and design which must be met. This ranges from the
avoidance of sharp points or edges on products on general sale, to the
proscription of certain chemicals and elements in certain processes (e.g. some
pesticides may not be used on certain crops; some colourings may not be used in
food processing).
The general emphasis to be adopted in this regard should always be that of
'best practice'; that is, a stance of prevention rather than cure should be adopted.
Where accidents and emergencies do occur, however, inquests and inquiries are
often held to ascertain the true causes, and to draw lessons that have the overall
objective of ensuring that it never happens again. Organisations are generally
required to have adequate and effective accident reporting methods and
procedures in place, and to notify a variety of statutory bodies according to
the nature of what has happened; where it has happened; whether it was kept
internal to the organisation, or caused damage to the world outside; and who was
affected.
Finally, in this area, a large part of good health and safety practice constitutes
the adoption of positive and effective attitudes and ethical stances (see also
Chapter 9). It reflects a wider concern for both workforce and customers; and
gives a more general high value to the continuing health and safety of all, that is
invariably reflected in the mutual confidence and reliability of the organisation
and its staff.
• Legal aspects
It is the legal duty and obligation for organisations to establish premises and
work methods that are (as far as is reasonably practicable) healthy and safe in
relation to all those employed by the organisation (see Chapter 9). It is a derived
requirement of this that organisations accommodate any actual or potential
hazards at the workplace by ensuring that employees have access to safety
clothing and equipment; that they are fully trained and briefed in matters to do
with health and safety; that standards of operation encompass best practice in
regard to these; and that potentially dangerous or hazardous machines are
adequately guarded and provided with cut-outs and emergency switches. Any
process that uses hazardous, toxic or potentially lethal components must be
isolated from those working on it. They in turn must be provided with all
protection necessary (and often legally stated) to ensure, as far as possible, that
they derive no harm from their occupation. Provision must be made at the
workplace for the isolation of, and supervision of, designated restricted stores
and equipment.
This must be underwritten by safety policies prepared by the organisation as a
statement of the general approach and attitude with respect to the health and
safety at work of the employees and the organisation itself. The policy will
consist of a concise general statement and organisational arrangements which are
to be distributed to all employees for their reference. This is underpinned by a
more detailed account or collection of documents which pertain to particular
activities at the place of work. The policy sets the general standpoint and attitude
adopted to the promotion of safe and healthy working practices. It is clear from
this that overall responsibility for health and safety at the place of work rests at
the top management level and this is absolute. However, all individuals at every
level have a joint degree of responsibility to ensure that their own aspect and
work environment is kept as far as possible both safe and healthy to work in. The
policy will identify any instruments for monitoring and assessment - such as
safety representatives and the election or appointment of safety committees. This
may also include training for both managers and operative staff. Finally,
particular hazards will be indicated, as will the requirements to wear particular
types of clothing, use particular types of equipment and follow particular
procedures in dealing with particular hazardous or potentially unsafe situations
and practices at the place of work. This includes the storage, handling and usage
of restricted or supervised goods, chemicals and other equipment.
• Production types and categories

It is useful now to distinguish these because they have implications for the
organisation and management styles, and methods to be adopted in the design
and definition of the operations themselves.
• Jobbing or unit production

Most production organisations have the capacity for single or specialised jobs. In
larger organisations this may be limited to the production of prototypes or
prestige models, or linked closely to new products research; in smaller organisa-
tions this will represent the main way of working. Resources are gathered
together in order to produce limited volume or unique items in response to
orders. To be a successful specialist organisation a variety of conditions must
exist. The workforce must be flexible, adaptive and innovative as well as
responsive. Quality and attention to detail will normally be endemic features
of work. Scheduling will also be flexible and responsive. Deadlines will normally
be set by the customer unless the work is highly specialised.
Manufacturing is expensive in such situations; on the other hand the nature of
the product will normally make it less price sensitive than more universally or
mass produced items.
The wider concept of specialisation may also be extended to non-manufactur-
ing sectors. The basis of such activities as specialist holiday companies, exclusive
restaurants, some publishing, limited editions of ceramic and glass figurines,
postage stamps, is the same as for the production of specialist items indicated
above and the same conditions and background apply.
• Mass production
This was first used at Ford and was based on the 'scientific management'
principles of F. W. Taylor (see Chapter 2). Work was broken down into the
simplest possible elements and the workforce stood alongside a moving
production line performing their tasks or fitting their parts to the cars as they
moved slowly past each work station. In such ways large volumes of a standard
unit were produced, each indistinguishable from all the others. Automated and
electronic production lines, and electronic methods of control and standardisa-
tion have now refined production to a much greater extent and genuinely
identical products are now produced.
Mass production requires high levels of investment in both production
technology and the premises to house it. It also requires managerial investment
in production scheduling and related activities at both beginning and end of the
production processes - storage, input, output, marketing, sales and delivery -
commensurate with the product volume being completed. There are implicit in
this strategic decisions to be considered - investment appraisal, technology
purchase, long term forecasting, market and sales volumes - before such
production is undertaken.
Once mass production methods are installed and up and running unit costs
become low and control straightforward. Work methods are standardised,
production is efficient and production is either long term or long run for best
returns. There is also plenty of scope for the organisation of work, whether this
be into autonomous groups, work teams or through job rotation methods.
• Process and flow production

Related to mass production in scale, but applying to oil, petrol, chemicals, plastic
extrusion, steel and paper is process or flow production - that is, the output of
commodities in a continuous stream or flow. Again capital, technological and
process costs are high. Input has to be planned in order to ensure continuity,
often permanent and invariably for months at a time. However, the processes,
once installed and instituted, are often fully automatic and running costs are
minimal.
The greatest charge on either a flow or mass production system is when they
are shut down. Levels of capital investment require that they run for as much of
their useful life as possible. If they are not producing, either because of the lack of
input materials or because of industrial accident or dispute, the charges on the
capital have still to be borne without the benefit of output providing a return on
this investment.
The principles of mass and flow production are also translated into the
provision of both public and commercial services. Capital costs are high and the
scheduling of services is pre-designed, in hospitals, health care; education; social
services; package holidays; postal services; banking, insurance and finance; and
mining and quarrying. Again the greater strain on resources is when there is no
usage of them or when they are not taken up or when they do not match demand.
• Batch production
Somewhere between the specialisation of jobbing and the economy of scale and
capital investment requirements of mass flow production comes batch produc-
tion. A 'batch' is defined as being a quantity large enough to require a measure of
technology and investment and capital output and yet small enough to have its
own distinctive identity. Effective batch production combines standardisation of
production with the ability to respond to customer requirements and the
flexibility and dynamism on the part of the organisation which goes with it.
Batch production is to be found in the components and supplies sectors,
sourcing other manufacturers, certain foodstuffs, limited edition and differen-
tiated cars and clothing, some building materials, and other distinctive consumer
goods.
Again, the concept of batch may be translated away from production situations
into both commercial and public services. In the latter case, this may be in
response to an emergency or disaster where a measure of pre-planning is
necessary to deal with it but where the need for the service in this particular
format will pass on once the matter is resolved. Mid-range, medium volume
holidays may be devised and sold in the same way, balancing availability, price
and technology according to demand. Particular educational initiatives may be
devised to meet short or medium term or specialised needs again - combining the
elements of investment, direction and flexibility and again pitched at particular
sections of the community (for example the disabled, those with educational or
learning difficulties).
The lessons to be drawn are as follows. First, an impression of the relationship
between the scale of the undertaking and general prerequisites for success can be
drawn. Second, there are considerations of flexibility and responsiveness, and
permanence and volume that must be balanced and taken into account. There is
also the question of return on investment that must be seen from the production,
operations and general management standpoint. Concepts of unit, jobbing,
batch, mass and flow production and their relationship to scales and types of
operation and undertaking are useful and valuable background for all those
coming into, or working in, the great variety of organisations indicated.
• Creativity and innovation

It is essential that creative and innovative attributes are present if organisations,
their departments and their staff are to progress and develop. However, some
occupations, business sectors and organisational and management styles and
structures lend themselves better to this than others. All businesses must progress,
and managers within them are instrumental in ensuring that this happens. We
have seen the scale and complexity of the capabilities required to be effective, and
by adding creative and imaginative faculties to this mixture, the whole can be
taken very much further.
Ideally, an environment will be created that gives both the organisation and its
staff enough scale and scope to create and generate new ideas. In the best
situations this will be endemic, that is, part of the culture, and integral to the way
of working. Groups form and reform constantly and for short term as well as
more structured and longer lasting issues and projects. This happens on an ad hoc
as well as a more formalised basis.
Inherent in this is an obsession with progress, development and improvement
instilled in the bones of the organisation itself and engendered in its managers and
key staff from the date of their arrival. Everyone has a stake in this. Peters called
it 'the smell of innovation'; he represents it as coming from just the right side of
the line that divides discipline and energetic activity from chaos.
Attitudes to failure must be considered. Waste of time or energy is not to be
tolerated (here or anywhere else in organisation or management practice). What
is taken is an enlightened view of what waste and failure are. Any activity or
approach that is to be taken with the view of progressing and developing the
organisation, solving its problems, bringing new ideas, products, projects and
initiatives on stream, creating fresh approaches to current or commonplace
activities with a view to being part of the 'theme of constant improvement' is
encouraged, fostered and nurtured. Where the activities fail or fall short of their
stated purpose, they will be reviewed for lessons to be learned. From this, it will
be ensured that as much success as possible is derived from the initiative and as
many lessons as possible drawn.
In order that this is effective all threats inherent in the concept of failure must
be removed. Consequently these creative processes do not always sit easily in
head office establishments, complex bureaucracies or other highly structured
organisations.
The concern is to foster energy, enthusiasm and drive and a personal as well as
professional commitment to the work in hand and its development. This can only
be achieved if the style and attitudes indicated are created as part of the general
approach to the management of the organisation, unit or department concerned.
Summary Box 10.3 shows how performance indicators can form the basis for
an organisation's agenda, capitalising on its strengths and minimising its
weaknesses.
SUMMARY BOX 10.3 Performance Indicators
These may be compartmentalised as follows:
• Strategic: related to successful and effective performance over the period of

the lifetime of an organisation
• Operational: related to the success and profitability of the products and
services of the organisation; product mixes and portfolios; productivity and
output
• Behavioural: related to the perceptual and staff management aspects of it; the
extent of or lack of strikes, disputes and absenteeism; and the general aura of
well-being or otherwise
• Confidence: the relationship between the organisation and its environment;
its backers; its stakeholders; and (for public companies) stock exchanges
• Ethical: the 'ways in which the organisation does things' and their accept-
ability or otherwise in their markets and community.
They form the basis of an agenda for the analysis of organisational performance,
and help to pinpoint its strengths, weaknesses and concerns.
• Research and development

Part of the function of production and operations management is concerned with
ensuring that a flow of new ideas, products and offerings is available. This takes
various forms. It is concerned with the generation of the genuinely new and
pioneering product and product concept. It is concerned with adapting existing
products in new ways for new niches; and adapting existing components in new
ways to form new products. It addresses the capacities of the production
technology and processes, looking for ways in which this could be better or
further developed. It considers the products and offerings of other organisations,
and looks at ways in which these could be exploited, without infringing copyright
or patent laws.
There are managerial issues to be considered. A configuration of the research
and development strategy needs to be decided, that includes levels of investment,
scale and scope of activities, means of evaluation, and relationships with
production and marketing outputs. The research and development operations
require management and direction that balance the desire for new products and
offerings with the consumption of resources and other operational priorities.
There are operational issues to be considered. New products must be
reconciled with the current portfolio of offerings, strengths of the organisation,
and wider perceptions of it in the environment. The approach must be flexible
enough to encourage diversity, without detracting from current strengths.
To complete the picture, all potential products and services must be the subject
of wider organisational strategic assessment, to ensure that what is proposed fits
in with all aspects of the nature and level of activities. If it is decided to proceed
down a particular line in support of a new product, it must have both the support
of the staff, and be complementary to the organisation's current range. If the new
product is to replace an old one, the process must be a check that this is indeed so.
If it is to tap into an hitherto-unexploited sector, the same criteria, of confidence
and feasibility, will also have been tested.
Finally, all organisations will evaluate their research and development
activities for effectiveness - that is, the regularity, frequency, and volume of
new and successful and effective products and offerings, in relation to the nature
and levels of investment made in them.
• Schedules and timetables

The purpose here is to ensure that, whatever the matter in hand, it is completed to
time while meeting quality and volume constraints. This remains true whether
items are being produced or whether 'production' concerns delivery of public
services or the sale of commercial services.
Managers will work out in advance notional completion times for particular
initiatives from their inception or placement of the order, through the process and
its mechanisms, to the point of job completion. This will generally be undertaken
at the one end from the 'perfect' standpoint - when everything goes as well as
possible; and at the other when everything that can go wrong does so. This gives
the boundaries within which an order can be fulfilled and forms the basis of
offering the given product or service.
• Meeting deadlines
There are two points worthy of note here. First, if the organisation is constantly
losing business because it cannot fulfil orders quickly enough for customers,
fundamental appraisal of technology, work methods, work division and
organisation must take place. Secondly, there is a perceptual consideration to
be accounted for here- it is much better to give a long deadline and deliver early
than a short one and deliver late.
More generally, all managers must recognise the range of matters that can (and
do) prevent deadlines from being met. The organisation itself, its structure and
culture, its chains of command, may simply not be able to respond quickly
enough to deadlines promised to customers by sales staff; or on the other hand
the order may be placed or received in ambiguous tones. An order received by one
department may not be processed to the production or operation function. The
sales function may promise delivery of an order in good faith only to find later
that the items in it are out of production, manufacture, print or whatever (or if
the item is a package holiday for example, to find that the destination is no longer
used).
Matters of quality and reliability must be addressed. This is in relation to the
production/output processes, as well as the product (in its widest sense) itself.
Defects in either will lead to delay or dissatisfaction or rejection on the part of the
customer. This may be exacerbated by poor raw materials and inputs or faulty
components. Production processes, equipment and technology must also be
considered in this light - in terms of total output, flexibility, response to one-offs,
important or urgent orders, and in terms also of the effect that any varying of
schedules will have in mainstream operations. At the other end of the spectrum,
there may be teething troubles with new technology, equipment or work
practices.
Problems and potential difficulties in distribution and delivery methods must
be considered. In particular, where motor vehicles are to be sent out on to
crowded roads, delays are endemic, and schedules must take account of this,
striking a balance between meeting the customer's needs while not building too
much slack time into the distribution method. Similar approaches need to be
considered in relation to rail, sea and air transport, and postal services.
Delays may also arise as the result of working with sub-contractors. Their
particular part of the process may itself have been delayed for reasons beyond
control; or a bad sub-contractor may have been chosen to do the work.
Delays occur, especially in public works, where both officials and politicians
ask for changes in specification at short notice, without any regard for the
consequences of them, or indeed any true knowledge or appreciation.
The whole aspect of delivery, delivery failure, and delay must therefore be
thoroughly considered. It is extremely complex and there are implications for
both management style and levels of investment.
• Schedules and timetables

In the consideration of specifics, the starting point for the definition of a schedule
will be the earliest point at which all the materials, resources, equipment,
technology, staff, information and supplies can be gathered together for the
particular purpose stated (without having other or exclusive pressures on them).
Proper running timetables, charts, work flows and other processes will be
devised, taking as their starting point the commencement date indicated above.
Each element will include the maximum and minimum completion periods
referred to above and a model that can be established for the whole job. This will
be the actual basis of the actual job in hand when it is commenced.
As the work progresses the actual timetable will be completed alongside the
model. This is for a variety of purposes. If it is a regular job mean, medium and
mode job times can be established and used as a managerial tool both for the
more accurate scheduling of production and as an informed basis for negotiations
with clients. It identifies the most likely blockages to progress. It provides a daily
record of progress, a step-by-step measure of the job completion process
measurable again against the projections made earlier. It acts also as an early
warning system for potential hitches, problems and crises.
All schedules will be related to precise targets and sub-targets along the way so
that job appraisal may take place at regular intervals and after critical activities.
There will also be built into the scheduling process elements of progress
chasing. Essentially this conducts the twin functions of general monitoring of
progress to a given point in time; and an appraisal (and resolution where
possible) of where particular activities have fallen behind schedule. Any
deviations from schedule are thus identified early and the maximum opportunity
is afforded to put them right.
• Purchasing and supplies

The standpoint to be adopted here is that of ensuring that all materials required
are in place when necessary, while at the same time striking a balance between
this and taking up an inordinate or uneconomic amount of space in storage.
The elements for consideration are consequently: cost; storage charges;
frequency and reliability of sources and deliveries; and the flexibility or
otherwise of production scheduling.
• Sourcing
Sources of raw materials will be assessed on the balance of these and, above all,
not merely on cost. There are managerial and operational decisions to be taken
on the placement of orders and the components of the contract which go into
these. Beyond this, matters to be considered include the ability to get extra
deliveries when required, especially at short notice; the inter-relationship, if there
is one, between the suppliers and any competitive elements that exist between
them; reliability, as defined by the organisation that is being supplied; any
considerations of quality; any competitive tendering or contract compliance
requirements; the critical nature of the particular supplies; and the relationship
between the organisation and its suppliers. This last is particularly important
where there is a dependence on one supplier of a rare, essential or expensive
component.
• Purchasing strategy
From the assessment of this arises the strategy concerned with purchasing and
stores. Space, however expensive, may be used for storage if a balance or stock of
a particular component is more important than this cost. This is especially true
where the full costs or implications of downtime or production loss are
examined. Organisations may at the other extreme insist on an instant response
from the supplier as the precondition of placing orders, again with the same
regard to downtime.
Consideration will also be given to the balance between the retention of stocks
and the permanence or otherwise of specifications and designs. If a client changes
any of these the organisation may find itself not only with the charges incurred on
expensive storage space but also those that arise from the possession of obsolete
or dormant items.
From this it is clear that an essential part of the purchasing and stores remit is a
broad knowledge of the organisation's sphere of operation; likely, actual and
potential innovations and changes; changes in specification, quality and materials
to be used; and the shifting requirements of clients. The purchasing function will
thus constantly research the field, gaining and improving its knowledge of it and
seeking out potential (as well as actual) sources of supply.
There are behavioural aspects to be considered also. An organisation may be
prepared to bear the price of stockpiling in return for the comforting knowledge
that particular components are there as and when required. Organisations must
have confidence in suppliers, in the regularity and reliability of deliveries if they
are to place their faith in 'just in time' deliveries or frequent inflows rather than
stockpiling.
The next element is the nature of the organisation's business and that of the
supplies received. It may be impractical either to stockpile or to receive regular
deliveries; the nature of the supplies may dictate which is to occur. Or, the
supplies may come from a major and universal supplier of the common product
which has its own ways of working and which can impose these on the markets
with which it deals. The receiving organisation must either be a major purchaser
or else conduct business in relation to these ways of working. There are also
certain goods which have to be stored under legally stated or regulated conditions
or with limited access or under constant supervision. Storage premises and
facilities must be designed and built to the required standards.
The end result of all this must be a system of the control of the organisation's
inventory that strikes the balance between all the elements indicated, contribut-
ing both to the effectiveness of the workflows and to the maximisation of the
resources put into it.
• Maintenance management
The core purpose here is to ensure that all resources and equipment are in a state
suitable for use when required and to provide a swift and effective remedy when
things break down or go wrong. It is thus essential that maintenance activities are
planned and scheduled and organised in the same way and from the same
standpoint as anything else.
Two distinct factors emerge from this; that of planned maintenance and that of
emergency response. Planned maintenance requires the ordering and reschedul-
ing of activities designed to prevent things from going wrong- indeed it is often
called 'preventive maintenance'. By conducting regular audits and checks of
equipment signs of wear and tear can be detected; parts that are beginning to
wear out can be replaced before they break down or cause malfunction;
equipment that is reaching the end of a production or operational period can
be planned to be out of productive action while it is being remedied.
Planned maintenance requires adoption as a concept and strategy on the part
of the organisation as a whole and its operations and production directors. It thus
becomes a fixed cost and an essential element in the devising and ordering of
schedules. It is bound up in the agreement of deadlines for delivery of products
with customers.
There are presentational and behavioural aspects to be overcome. When a
machine has not actually broken down, pressure grows to sacrifice a maintenance
period in the interest of extra production, especially if it is a short run only. Such
a situation requires its own assessment when it arises. 'Perfect' maintenance
schedules require that this is only done to accommodate the true windfall
opportunity or emergency. Maintenance strategies, like any other, are designed
as part of the assurance of permanence and stability, and must be seen as such.
Maintenance activities must be seen in their wider sense also - schedules,
methods, packaging, presentation and the human resource all require it, as do
work methods, job design, communications and staff and departmental manage-
ment activities. A theme of constant improvement should again underpin all
maintenance activities alongside the prevention of breakdowns.
Emergencies and breakdowns do occur, however; and they also have to be
managed. The first and most important step is to keep breakdown to a minimum
by the adoption of a maintenance strategy aimed at prevention. Beyond that the
maintenance function must be able to accommodate such breakdowns without
either risking work overload or having expensive staff, equipment and other
resources idle. Strategies for the management of emergencies must therefore be
flexible enough to deal with a 'worst case scenario' and this will be assessed in
terms of projected volumes of emergency work, repairs and replacements,

duration and timescales and possible downtimes and the costs of these. Balances
of repair of existing equipment and replacement of it will also be struck.
• Systems of coordination and control

We stated at the outset of this Section that the purpose of identifying operations
management as a concept and element in its own right at this stage is to identify
and understand the complexities of the situation, and those related to the
managerial task. It follows from this that operational systems, procedures and
processes must be sufficiently well defined to give a direct purpose to the task
management, and flexible enough to be improved where necessary, thus
increasing the effectiveness in which the task in hand is addressed and also
giving the means of rectifying any errors or blockages.
It follows, in turn, that systems devised to ensure that this is successful, are
dependent upon feedback gained from processes of monitoring, review and
evaluation. If this information is to be effective itself, the operations systems must
be capable of accommodating it and using it to best advantage.
Managerial systems of coordination and control must also be in place with
similar properties - again, this constitutes the combination of flexibility with
clarity and decisiveness of purpose and direction. Such systems reflect the precise
nature of the operations in question, the consequent nature of the inputs,
processes and outputs and means of assessment of effectiveness that relate to
them.
More general aspects must finally be considered in this context. These are,
first, concerns relating to the nature and inherent dynamism, volatility or stability
of the market and environment; and likely changes and future directionss. Other
matters for understanding and analysis at this stage concern the relationship
between the operations of the organisation and its stated goals, aims and
objectives; the composition and constitution of specialist functions and degrees
of specialisation (and the nature of that specialisation); and systems for the
harmonisation of inter-departmental activity and the resolution of operational
conflicts. Only through an understanding of this as the basis of the complexity of
operations management is a grasp of the true nature of the management of
production and service processes possible.
• Project management
This is the branch and aspect of the management of operations that is concerned
with the completion of projects, something that is an identifiable entity in its own
right, that has its own place in the continuity of organisational operations, and
that requires the acquisition, organisation and combination of resources for this
specific purpose. The project itself may greatly vary in scale and scope. 'Projects'
in this sense range from the construction of world famous landmarks such as the
World Trade Centre, CN Tower or Sidney Harbour Bridge, to the installation of
electronic information systems or the commissioning of a brain scanner at a
health service hospital, and to the development of any new product or service
offering.
Whichever it is, it will have specific objectives that it is designed upon
completion to meet. It will have precise specifications to which it must conform
- in terms of cost, quality, volume, deadline, timescale, technology, durability
and performance. It will have a defined date for completion and very often also a
stated starting date. Funding, investment and budget limits will be placed on it -
it is very unusual for there to be no constraints in this field (though some projects
are more amenable for a variety of reasons to cost and deadline overruns than
others).
Summary Box 10.4 outlines the environmental and situational factors that
impact on project completion.
• Measures of project success and failure

These reflect the aims and objectives assessed and defined at the outset of the
project; they will be subject to variation and modification as the work has
unfolded along the course of its completion.
In general terms, projects will be measured in relation to:
• Timescale: whether the deadlines were achieved and if not, the reasons for
this
• Budget and financial performance: and the reasons for variances in these
• Acceptability: of the finished item to those who commissioned it, and again
the reasons for this (especially if it is not acceptable)
• Effects on the organisation (or organisations in the case of joint ventures)
that has agreed to carry out the work; these will be seen in terms of general
changes, cultural effects and special effects upon the rest of the work (e.g. the
extent to which one project is dominating the whole of an organisation).
• Background and basis of the management task

From the overall concept of project management and from the ways in which
success and failure are to be measured and judged, comes the full implication of
the enormity and complexity of the management task concerned. The general
starting point will be when tenders are invited for a particular activity, whether
on the basis of open competition or by selective invitation.
Whichever it is, the result will be at this stage, the meeting of the project
commissioner with those potentially responsible for completing and delivering
the project.
SUMMARY BOX 10.4 Operations and Projects: Environmental and

Situational Factors
The management of all operations and projects requires the adoption and utilisation
of the principles and practices illustrated, if they are to be successful. Part of this
process of adoption and utilisation must involve the recognition of the precise
nature of the environment and situation in which the work is being carried out.
• Economic mixes: all sectors have their own configuration of these. For
example, the finance industry pays high salaries. The defence research and
production sectors are extremely cost-flexible, because of the nature of the
work, the nature of the competition, and the commissioning process (invariably
by government wishing to gain or preserve a military position). The health
research sector is similarly pressurised by tendencies to overrun on cost. though
this is less critical than defence.
These are extreme examples deliberately taken to demonstrate that each
sector has its own economic mix. 'Health Economics' and 'Defence Economics'
are both distinctive fields of study and expertise in their own right.
• Returns: all sectors have their own norms and expectations in this regard, in
terms of finance and timescale. They are mirrored in both the expectations and
the confidence of those backing operations and projects. What is an acceptable
return in one field is not therefore a universal measure. For example, Concorde
was built at (almost) any cost, to demonstrate the reality of a supersonic
airliner. The Channel Tunnel is to be completed at (almost) any cost, because it
then becomes a lasting facility. Returns on food sales of 1%- 2% are acceptable
in the particular sector in the United States of America and France, but do not
measure up to the expectations of the same sector in the UK, which are 7%-
10%.
• Schedules: again, all sectors have their own balance between the actuality of
the product or project. and the delivery of it to time. Some new product
developments have deadlines imposed by the nature of the sector, and
competitive moves in it: in early 1993, all the major European car companies
launched a new and distinctive model (not all of the same size, sector or niche
configuration); there was thus a mutual pressure on each, and consequences
for failing to deliver.
• Staffing: in general, staff of operations must have regard to the traditions and
influences that have impacted on the sector. Even if the cultural and attitudinal
factors referred to elsewhere are to be fully and effectively implemented, this
must be carried out in regard to the current and traditional state of staffing
activities. This is because if there is any question at all over the present and
future approach to this, people will refer to the past as a known and recognised
point of clarity in this regard.
• Limitations: the main matter to be considered here is time. Major projects that
are commissioned, that have a lead time of years, are to be delivered to a world
that will almost inevitably have changed out of all recognition. Defence
projects commissioned in the West or the Communist Bloc in the period
1985-90 will be delivered to a world in which the Cold War no longer figures.
Information and computer technology projects must be stable enough to be
substantial, researched and tested; but flexible enough to be able to respond
instantly to developments elsewhere in the industry.
Each must be weighed, weighted and balanced by those who are to commission
work, and those who are to carry it out. The balance to be struck is that between the
nature of the sector, the factors outlined here, and absolute measures of profit-
ability, effectiveness and delivery and completion.
• Groundwork: terms of reference and constraints

Initially, the terms of reference will be drafted and discussed, having regard to
matters and constraints concerning deadlines, resources, cost, volume, quality
and delivery date. Feasibility studies, projections, pilot studies, extrapolation and
'what if' exercises may be undertaken at this stage. More generally, any
misconceptions and misunderstandings about the nature of the work to be
carried out should be ironed out. Any necessary external constraints within
which the work must be carried out will also be identified at this point - these
include such things as public enquiries, political and social opposition, resistance
from sections of the community and pressure groups- and any awareness-raising
or other marketing related activities assessed.
From this, a variety of more specific measures emerge. First is the pre-project
process that must be gone through which may, in itself, be very complex (such as
in regard to those activities which will require public enquiries or new technology
or inventions or developments), and require the commissioning of sub-projects
and other activities in related fields (see Summary Box 10.5 and 10.6). This may in
turn lead to full pilot and feasibility activities. Second, an 'all things being equal'
timescale is devised, as the basis for further definition and as an archetype of the
way forward that both commissioner and commissionee envisage. Thirdly, and
all things being equal, a resource bank can be defined, outlining the source and
nature of resources, their scope and scale, the timescale over which they are to be
required. The extent to which this will impinge on other activities of the
organisation's concern will also be assessed at this stage.
Fourthly, at this stage an idea of the cost of activities and of the project as a
whole will start to emerge based on the size and scope, scale, complexities,
technology, volume and quality of staff concerned, pressures and opportunity
costs to be borne by the organisation, any risks that are to be encountered as well
as the global aspects of deadlines and quality of the finished project (and volume
aspects, if there are any).
The end result of this process and its component parts will be the assessment
on the part of the project commissioner of the capabilities and capacities of those
tendering for the work in the above terms. From this, precise terms of reference
for the project and an accurate working brief accommodating all of these factors
and constraints will be drawn up. Precise and formal bids will then be invited
from interested parties. These companies will mirror this activity in terms of their
own capacities and capabilities and the other constraints within which they have
to work. They will then make a bid for the work based on this assessment.
SUMMARY BOX 10.5 M25: The London Orbital Motorway Project

Assessment
This was conceived in the 1970s with the twin purposes of providing a route for
long distance traffic that kept it out of the centre of London, and to increase its
speed and therefore efficiency.
It was necessary, at the outset, to limit its size to three lanes in each direction to
take account of political and social lobbies and pressures. It has become necessary
since, to increase this to four lanes in each direction; it will undoubtedly be
necessary to increase capacity in the future, either by widening it again, or through
the construction of a completely new project.
In this context, therefore, the following lessons should be drawn.
There are certain projects which require full commission if they are not to fail. In
these cases, whatever is planned cannot be diluted in order to satisfy a lobby, and
still remain successful and suitable. For example, this motorway attempted to satisfy
political, environmental and settlement lobbies, as well as handling the required
volume of traffic. It has failed on each count.
It follows from this that matters relating to the greater good, in all possible and
necessary ways, have to be considered from a strategic point of view. It is also
necessary to articulate accurately the purpose and planned outcomes of such
projects. These must also be presented in ways that attract public support rather
than repel it.
In this particular case, finally, work will have been carried out at least three times,
rather than just once.
SUMMARY BOX 10.6 Concorde
Concorde was developed in the 1960s as an Anglo-French joint initiative that was
going to show the way forward to universal supersonic airline travel.
As a project and product it fell far short of this success. It did not succeed in
generating this measure of supersonic travel; the only supersonic airliners currently
in use remain the eight Concordes each of British Airways and Air France.
In marketing terms, however, it has been turned to great advantage. Concorde is
both a monumental technological achievement and a highly photogenic flagship
for the two airlines and the two nations. Furthermore, the service developed around
it is designed to be first class in every sense. As well as the speed of travel the quality
of facilities and service, hospitality, food and refreshment is very high. All those who
travel by Concorde are made to feel especially important, part of an elite. The aura
thus generated is similar to that which surrounded the 'pullman' class on the
railways in the early to mid-twentieth century.
The terms of reference, on the one hand, and the commissioner's bid for the
work in response to this, on the other, form the hub of the contractual
arrangements between the two parties.
• Inception
At this stage, schedules, deadlines and timetables in support of the overall
schedule, deadline and timetable for completion will be worked out. These relate
to all resources - staff, skills, finance, technology, equipment. Resource and
activity inter-relations are defined. The interaction between different activities is
defined and modelled. Particular problem areas or areas of greatest pressure and
difficulty are assessed in advance, as are likely periods of relative tranquillity and
straightforward progress. Critical paths and other network progressions will be
drawn up also; essential, critical, non-critical and sub-activities will be defined.
These will all be published and promulgated; actual progress will be measured
and evaluated against them.
• Customer liaison
More general matters relating to the management of the project must also be
addressed. A rationale and mechanism for flows of information must be worked
out in advance and pre-tested for effectiveness and flaws. The last thing that any
project manager needs is to have to deal with misunderstandings that have arisen
because the interface with the customer is inadequate. The general format
additionally normally consists of a series of regular meetings with a set, yet
flexible, agenda and pattern of attendance in order to ensure that both sides
understand each other on a continuing basis. It is also normal to establish a hot
line for the resolution of genuine emergencies.
The process of customer liaison is to ensure that the inception, development
and completion of the project is effective and successful. The process itself must
therefore be designed specifically for each project with this in mind. The formal
part of it consists of regular performance updates and reviews, resource
utilisation and a check and measure on actual progress in relation to that which
was planned and envisaged.
In certain public projects it may be necessary to develop the liaison process into
a non-executive but highly authoritative steering group, because of the require-
ments or demands of the commissioning bodies, for example where these are
municipal health authorities or instruments of regional and central government.
• Project assessment
As the result of these activities a reasoned and accurate impression of the project
is arrived at. The terms in which this will be measured include its complexity
overall, any particular special requirements, from whatever angle, the preferred
structure of the project and the ways in which this is to be achieved, the risks
inherent, particular technological requirements, particular budget constraints to
be imposed or required of particular aspects of it. Any complexity or sophistica-
tion of planning actlvltles required as the overall results of the rest of the
assessment will thus become apparent.
• The project manager

In its own way, therefore, the overall task of the project manager is as complex
and critical as that of the chief executive. Indeed, the project manager may be
seen as chief executive for the particular activity, and for its duration.
In particular, the project manager must have strong personal attributes of
energy, enthusiasm, drive and commitment. We have seen elsewhere that these
are qualities essential in general for all those who aspire to manage. In the case of
project management they must be related to the matter in hand. Project Managers
cannot expect others, especially those working for them, to be committed to it if
they themselves are not. Externally they are the champions of the project in
dealings with both its commissioner in particular and the outside world in
general.
They must be innovative and creative. The complexity of the task will
inevitably require this. They must make trade-offs between conflicting demands
and pressures, having both the foresight and occupational acumen to do this
effectively without losing sight of the ultimate purpose.
They must have controls, but these must work for them. Reporting systems
and other management information systems are there for illumination, as a
general aid to problem-solving, and from which to learn (so that future issues can
be minimised or avoided altogether). Project systems are not an end in themselves
to become the subject of intensive and interminable inquests.
This remains true even for something as extreme as a bad accident. An
organisation that incurs this during the course of a project should of course
accept responsibility where this is due. It should above all use such an event as the
means of improving its processes, procedures, behaviour and attitudes; and thus
to ensure that it never happens again.
The overall managerial view to be taken is to look to the future - a positive
adaptation of 'what is done is done'. This does not imply any complacency about
the past, but rather a respect not a preoccupation with it. The global view is that
of making progress towards the ultimate goal. The project manager is thus
adopting and matching the strategic view and imposing it on the project, rather
than acting with a narrow supervisory perspective.
• Problems during the project

If the whole process is effective, a balance of the capacity to avoid problems (by
recognising where they potentially lie and taking pre-remedial preventative
action) with the ability to solve them quickly and effectively when they do arise
is necessary.
The articulation of the strategic and global approach of the project manager is
part of this. The qualities and attributes that are inherent in adopting this
approach - those of flexibility, innovation and clarity of purpose - facilitate this.
This will be underlined in the reality of the operations by the commitment,
enthusiasm and drive of the project manager in the situation, and the stake that s/
he has both personally and professionally in the success of the project in hand.
The process of management and the continued use and development of these
qualities and attributes feed off themselves. The managers responsible for a
series of projects are thus likely to have highly developed qualities of strategic
awareness, enthusiasm, scheduling and problem-solving awareness. Each
project in which they are involved develops and fosters these aptitudes still
further. There is also developed a variety of approaches to what may be
generally the same sort or type of issue; this variety has its roots in the different
circumstances, nature and requirements of the project in hand rather than the
project itself.
For example, a labour dispute on one contract may be resolved instantaneously
by a short meeting between the project manager and the aggrieved party; while
on another it may linger because a member of a steering committee may also need
to be consulted before the issue can be resolved. In each case, the only right
solution is the one that adopts both content and process to get the issue resolved
and the work truly back on course; the truly effective project manager is the one
who recognises the different approaches necessary to resolve what is overtly the
same problem.
More generally, the installation and generation of these capabilities and
capacities constitutes effective development of the innovative and creative
faculties of all managers. This helps to break organisational and procedural
straightjackets and to develop the most costly and critical part of the human
resource into a successful and effective body of staff.
• Project management and the human resource

The particular requirement here is the combination of the human resource for the
stated purpose. Some members of the project team will be permanent, others
temporary; others will be drafted in at regular or frequent or rare intervals. The
project managers' role here is to ensure that what is done in this sphere is
effective. Managers must be able to mobilise and activate specialist contributions
when required. They must be able to generate a project identity and team spirit
and harmony among such disparate elements so that when they are working, they
are doing so with the full measure of commitment.
Managers must recruit and bring on board the right people for the task - both
in terms of aptitudes and attitudes required. They must be able to motivate them
to work together and in productive harmony for the period of their involvement.
They must be their driving force, helping them to make effective contributions
and decisions that move the project as a whole forward. They must stimulate in
others the required flexibility of approach. They must maintain close liaison with
all staff, both specialist and generalists, both skilled and multi-skilled, ensuring
that their contribution is, and remains, effective. They must in-build swift and
effective remedies when situations arise where this is not so.
For large and complex projects and for those areas where s/he is not a specialist
himself, the manager must be able to delegate. This again means selecting persons
not only of capability but also those in whom the project managers can place full
confidence for their particular activity. Ultimately s/he is responsible for seeing
that the work in question is carried out successfully.
An effective decision-making process and communication forum is also
essential in the generation and maintenance of effective project teams. These
combine both the understanding and clarity of purpose required with the overall
aim of the project and the nature of the members of the team, so that what is done
is both effective and subscribed to by all concerned. A task-orientated,
professional ethic must be generated as a prerequisite to this. This is in turn
both essential to mutual confidence and also part of the process of building it.
Reporting relationships on the team must be adequate, without being cumber-
some, or again an end in themselves. The project managers need these facilities as
a check on progress and for coordination purposes and to provide early hints and
warnings of problems. The general ability to manage the human resource in these
ways and in relation to the nature of constraints of the particular project is thus
critical to its success.
• Project monitoring
This is conducted in relation to the plan devised in the first place; we have already
seen that this should be the basis on which the progress of the project should be
measured. How this is to be done will relate to the particular project concerned.
However, the following matters must all be covered, whatever methods are
adopted. The defined timescales must be evaluated, and this must cover the
overall and sub-times. The same is true for costs and budgets. Other matters
concern the volume and quality of work, and their relationship with cost and
time elements. Flaws in both planning and operational processes will become
apparent, providing reasons for remedial action and, where necessary, reschedul-
ing, redesign and reallocation of resources. Performance of different elements of
the project will be measured against their own aims and objectives and for success
and effectiveness in whatever terms these are to be assessed.
Monitoring must be carried out in effective and suitable ways; and if part of the
process of necessity includes stakeholders' representatives, then this must also be
accommodated. What is ultimately required is a vehicle for the illumination of
progress (or lack of it); for the identification, prevention and solution of
problems; an early warning system; and the means to more effective perfor-
mance in the future. The past will be dwelt on, as stated above, only where it is an
integral and critical part of this.
I Benefits of the project management approach

The approach taken is designed to ensure that the whole project is carried out
effectively and that progress along the way can be monitored and reviewed.
There is a great range of benefits that accrue to organisations both from
conducting projects and also from adopting the project approach to management
(that is the utilisation of an equivalent set of criteria in its day-to-day operations).
First and foremost it develops innovative, creative and committed managers, able
to perform effectively in a wide variety of situations. Alongside this it provides a
vehicle for the measurement of resource effectiveness, maximisation, optimisa-
tion and waste - the opportunity for full accountability taken from a strategic
rather than administrative standpoint. There is inherent in this the capacity for
the development of effective planning, organising and estimating capabilities on
the part of the organisation and its staff. This comes about from both the extent
of the involvement in projects and the range and diversity of them, and becomes
both an organisational and professional expertise. The quality of the organisa-
tion's planning activities can also be assessed as there are pre-stated models,
networks and schedules against which the actual work is to be carried out.
A structure of project management is developed which in itself must be
flexible. This in turn tends to promote a flexible and responsive ethos within the
organisation at large. Summary Boxes 10.7 and 10.8 examine joint ventures as a
means of project organisation.
Any evaluation of projects will also go into more general reasons for success or
failure. These include the separation of those factors that are in the organisation's
control from those which are not; and in particular concerning any environ-
mental, political or social pressures that may have come to bear. This is also part
of the learning process for the organisation and its managers, especially in periods
of change or turbulence. From the whole process and approach comes the ability
to assess whether a particular aim or objective was met or not, and the reasons
for this.
• Conclusions
The nature and complexities of project management outlined in this section
should serve as an illustration of the managerial tasks necessary in any situation
which could in general be recognised as having to do with 'projects'. This wide
configuration covers the obvious and overt, such as construction and engineering
projects, urban regeneration, power stations, irrigation schemes, transport and
traffic activities (such as highways, motorways, bypasses and the channel tunnel)
- such projects have their own external and distinctive entity, life and
manifestation, often bringing work, resources and inward investment to the
communities in which they are located.
SUMMARY BOX 10.7 Joint Ventures and Other Cooperative Efforts
This is where two or more organisations come together for a stated business
purpose or project. The reasons for this relate precisely to the situation. In general,
they are a configuration of the synergy principle (see Chapter 2); and related to
business reasons to do with the pooling of expertise, sharing of risk, building of
confidence and playing to special isms and strengths that make the joint venture a
sounder approach than an attempt on the matter in hand by an individual
organisation.
In this context, and from an operational and executive standpoint, there is a
requirement to establish a commonality of purpose among those drawn together
from the different organisations in the joint venture. What is necessary is the
reconciliation of organisational rivalries and propensities for conflict through means
of focus on the precise purpose of the joint venture. Within this, it is also necessary
to reconcile the often differing and divergent sub-objectives that the individual
organisations have for becoming involved in the first place. This is exacerbated if
one organisation is the senior partner or another has been brought in simply to fulfil
a small but critical part of the project. Qualities of trust, harmony and openness
between organisations that may be competing for work elsewhere may need to be
fostered. Reporting relationships, lines of communication, and management
structure and style have to be adopted that achieve all of these matters and
provide a basis for positive and harmonious activity. Any network planning or
project scheduling is complicated by the need to reconcile inter-organisational as
well as operational factors. In summary, the 'project approach' is complicated by
the need to create both a distinctive identity and clarity of purpose within the
situation as outlined and implied. This will be underwritten by a form of contract at
the point at which the work is commissioned and the venture agreed.
It follows from this that a full situational as well as operational assessment
requires completion at the planning and pre-agreement stages. A balance has to be
struck between ensuring and insuring one's own position in the joint venture and
the promotion of a positive and harmonious approach. Forms of limited liability may
be drawn up as part of this process or an umbrella organisation or distinctive
configuration created. It also follows that the length of the commitment as well as
the breadth, depth and nature of it requires setting out. Part of the legal format may
apply penalty clauses if any part of the timescale is overrun by one of the parties to
the joint venture.
Above all, from a managerial stance the joint venture must have its own
distinctive entity and identity, management style and culture - that is, the focus
for all those who are working in it for the duration of their time with it. This is
necessary in these situations as in all operations and projects and for the same
reasons- to give positive direction, clarity of purpose and reason for being there to
all those concerned that both transcend other loyalties and accommodate them in
this pursuit.
They cover also more nebulous and harder to recognise activities such as
research, computer and defence projects (see Summary Box 10.9). Such activities
normally trigger off research and development initiatives all of their own, and
sub-project, related and contributory activities and the teams that go with them
SUMMARY BOX 10.8 Joint Ventures: Examples
1. British Airways and US Air generated an agreement that allowed or guaranteed

connections between the flights of the two companies and a mutual through-
booking system that allowed customers to book from anywhere to anywhere on
either or both of the networks operated by each airline. In operational terms it
enabled British Airways passengers to book through to the 300 US destinations
that they have no access to but that US Air does; and US Air passengers to
book through to anywhere on the British Airways global network (especially in
Western Europe) that they have no access to but which British Airways
controls.
2. Transmanche Link (TML) was formed by the five UK and five French
construction companies which agreed to build the Channel Tunnel. It gave
distinction of identity in accordance with the project itself; it provided a vehicle
for the harmonisation of a ten-company joint venture; and a focus for finance. It
also gave a means of interface between these organisations and the project
commissioners (Eurotunnel). It also is a stated organisation for those involved
with the venture; as such it provides the distinctive loyalty and identity referred
to in Summary Box 10.7.
are generated in response to the main matter in hand and in support of it. Such
projects and activities inevitably have a 'blossom' effect- that is, that due to their
very nature and complexity inventions, technological advances, new opportu-
nities are made or come to the fore. Summary Box 10.10 considers such issues in
relation to the Channel Tunnel.
Projects may be developed because there is a ready and known market or use
for that which is envisaged as the outcome. This is especially true of defence
activities again, and also research commissions concerning drugs, medicine and
health care. Pressure is on companies operating in this field and university
research departments also to find the means of curing AIDS, motor neurone
disease, muscular dystrophy and cancers, to give but a few examples (see
Summary Box 10.9). There is a mutual and precise meeting place identified
between the wants of the customer and the commercial opportunity because of
the nature of the field in question.
A similar approach is taken also to the development of new products and new
niches for existing products. This consists also of the coordination and
combination of resources, schedules, staff and their expertise, but in response
to a real or perceived market opportunity rather than in pursuit of a more
distinctive entity.
Finally, the 'project management approach' is perceived as being highly
beneficial both for organisations at large and those who work within them,
developing as it does a range of qualities related to flexibility, experience,
dynamism, pride and achievement in a wide variety of situations; there is current
received wisdom in the fields of operations and project management, that if one
SUMMARY BOX 10.9 AZT: Commercial and Social Drive
The prevalence of the HIV virus, and its increase among the populations in all
societies of the world, has generated intense and highly pressurised activities
among pharmaceutical companies to find an immunisation, vaccine or other
treatment for those who have contracted AIDS, and to prevent the onset of full
attacks.
The Wellcome Company produced AZT in response to this. Huge levels of
investment were generated, and initial results among users of the drug were
encouraging, in spite of the fact that it had side effects. The drive to get it on to
the market came from the usual areas of the need to get returns on investment; to be
a market leader' the importance of winning this particular race; and the generation
of confidence among investors. It was reinforced by the social drive of finding a
'cure' for the particular virus and disease, and the demands of those with it.
The case for AZT is not yet proven. If it does eventually prove successful, both the
organisation and society will benefit enormously. If it fails, there is a commercial
and social loss that has to be borne by the organisation alone.
SUMMARY BOX 10.10 The Channel Tunnel Project: Measures of Success

and Failure
The Channel Tunnel is an excellent example of the difficulties and complexities that
have to be considered in the assessment of the overall success or failure of business
operations.
We have stated already that aims and objectives must be set for any undertaking, as
criteria and measures and assessors of success and failure. In the case of the
Channel Tunnel, these may be defined as follows, as absolute measures:
• Deadline: initially March 1993, now December 1993- March 1994

• Cost- at £10 billion ($14 billion), over the twice the original projection of £4.5
billion.
• Cultural and political aspects: the Tunnel is completed, and there now
exists a land link between the UK and France.
• Infrastructure: the link is made; the fact of the link is not yet fully exploited;
the motorway links to it are mainly in place; the rail link is completed in France
but not the UK.
There are clear, wider considerations to be taken into account. All projects,
product developments, and operation commissions have associated and derived
benefits, and opportunities that are both envisaged, and also that become apparent
along the way.
In the particular case of the Channel Tunnel, these are as follows:
• Technology: there have been demonstrable advances in design, information,

geotechnical, and construction technology; in the particular matter of tunnel-
ling and mining advances in technology, there is a body of experience for
translation and assimilation at the next similar project or undertaking
• Organisation: there is a rich body of knowledge, practice and experience on

which to draw, and from which to learn, in the formation of structures, cultures,
and systems, on which to base the completion of mega-projects
• Financial structures and sources: and the variation, merits and demerits of
both the approach taken, and also possible alternatives
• Operational aspects: these plainly remain to be seen, and have to be related
to the infrastructure that serves the project; in general, these will be measured in
terms of content and volume of traffic; percentages of capacity usage; and
returns on the levels of investment
• Targeting: of completion and sub-completion dates, the lessons to be learned
from this, and the consequences of overruns on these, and their implications for
other mega-projects
Finally, there is the fact of its completion, the success of the achievement itself,
the realisation of the dream and vision of making a link between England and
France.
The actual objectives, derived benefits, and their implications, are the basis on
which a managerial assessment and judgment can, and should be, made. The
example given, and the points raised in it, should form the basis for an agenda for
the consideration of any such project.
can manage effectively and successfully tasks and activities of this nature and
complexity, then one can manage anything.
IQuantitative methods
CHAPTER 11
The purpose of this chapter is to introduce and outline the importance, use and
value of the quantitative tools and methods that are available to the manager, and
to indicate and illustrate their uses in different situations.
From the point of view of the manager, it is the ability to interpret and use
statistical and financial data (rather than being a specialist in statistics or
mathematics) that is important. It is this standpoint, therefore, that is taken.
As well as the ability to use and analyse material thus gained, there are
behavioural and perceptual issues which must be addressed, and these are
indicated also. The chapter additionally focuses on the particular quantitative,
mathematical, statistical, financial and accounting elements that are important to
the manager, and of general value in the identification of the 'complete
management task'.
The importance of this basic understanding is thus critical to the manager,
providing a quantitative basis for the evaluation of situations, and a sound basis
for qualitative decisions.
• Statistics
This is the discipline which deals with the preparation, collection, arrangement,
presentation, analysis and interpretation of quantitative data. The discipline can
be divided into the study of probability (or mathematical statistics); and
descriptive statistics, which deal with the compilation and preservation of data
to provide information on which to base decisions, and to assist in forward
planning and forecasting.
• Primary and secondary data

Data can initially be categorised as primary or secondary data:
• Primary data: is that obtained direct by organisations and individuals through

observation, surveys, interviews and samples, and using methods and instru-
ments drawn up specifically for the stated purpose.
• Secondary Data: comes from other data sources, such as official statistics,
provided by government sources and sectoral data gathered by employers'
associations and federations, and marketing organisations.
299
• Uses of data gathered

The use of secondary data always involves taking information that others have
gathered, and interpreting and analysing and using it for purposes different to
those which the original gatherers designed or intended. There may also be
variations in definition or coverage which have to be taken into account.
The decision to gather primary data, or use other sources, will depend on the
nature of the information required, the availability of it from sources other than
primary, the range and coverage of it, the field of enquiry and its size and scope,
the accuracy of the data required, and the date or deadline by which it is required.
It will depend also on the purpose and aims of the enquiry to be made and the
uses to which the information is to be put. Finally, the reconciliation of all of
these points may not be easy (for example, where wide ranging, precise data is
required urgently).
The data thus gathered is then classified into groupings, or classes, with a
common element, for the purposes of analysis, comparison and evaluation.
As far as the manager is concerned, the main purpose of this gathering and
assessment of data is to provide background information that is accurate and
quantifiable. This is a basis in turn for accurate planning, forecasting, projected
activities, and decision-making in whatever the discipline involved; or at a
strategic level, to provide a sound basis for accurate general direction.
It is useful, therefore, to identify the different statistical sources, methods and
techniques that are available to managers in organisations, and their particular
uses in this context.
• Sources of information and data

The manager will consult five main issues:
• Government statistics, highly publicised in the media, and useful as general

indicators of the state of the national, business and economic confidence,
direction and activity, and the direction that it is likely to take in general over
the foreseeable future
• Sectoral statistics, produced by trade federations, employees associations
and professional bodies, for the support and enlightenment of member
organisations, and to contribute their knowledge and awareness of the global
aspects and overview of their own sectors; this may contribute in great measure
to policy formulation in particular sectors, in the setting of minimum and
maximum wage, price and output levels, for example.
• Market research organisations hold data on vast ranges of issues which
they promulgate and sell on a commercial basis to those requiring it; the main
initial value of this is to indicate the general state of business, and range of
business opportunities that may be available, again as a prelude to organisa-
tions either conducting or commissioning their own future investigations
• Local government holds a wide range of general data on the composition,
social state, occupational range and population structure of those who live in
the UK; this is published in general terms by local government and municipal
departments, and again is a useful precursor to more rigorous investigation
Quantitative methods 301
• Public enquiries and investigations generate a great amount of information

concerning particular initiative (e.g. on urban development, by-passes, power
stations, etc.) that are often a useful initial point of reference for those planning
to go into similar ventures in the future.
• Presentation of data
Data must be presented in ways that are easily and readily understood by those
on the receiving end. This is true both in the generation of overall impressions,
and in the presentation of precise findings. The method of presentation must take
into account the relative interest and capability of the audience, the time that is to
be spent on it, and the purpose for which it is being presented.
It is essential that this is understood at this stage, because statistical surveys
and information systems now hold, and can generate, vast amounts of data on all
aspects of business in relatively short periods of time. The data is of value,
however, only if it can be understood and assimilated. For this to be effective,
presentation must be in 'audience-friendly' or 'user-friendly' terms, meeting their
expectation as well as getting the required message across.
There are five main methods available (see Figure 11.1):
• Tabulation, where data is presented in tables devised against two or more

axes or criteria
• Bar charts, a more visual representation of tables, and usually presented
against two axes or variables
• Pie charts, where the data is represented in a circular or 'pie' format, with the
slices representing the quantities or percentages given
• Graphs, on which data is plotted, also against two variables (e.g. dates and
volume; timescale and sales figures)
• Pictures (Pictograms), such as the use of a small picture of a person to
represent a small number of unemployed, and a larger picture to represent an
increase in the figure recorded.
• Accuracy of data
The accuracy of any data depends on the way in which it was gathered, the
quality of the actual data gathering, and any rounding at the end of it. If a survey
took a sample, rather than dealing with everyone or everything concerned in a
particular activity, the results may indicate particular conclusions very strongly,
but they will only be proven if the entire sector is surveyed. If there is a flaw in the
statistical methods used, or if the wrong questions are asked, the results will also
be flawed, and inaccurate. Finally, rounding of numbers is widely used and has
also to be seen in context and as a limitation - balance sheet figures for
multinational companies are given to the nearest hundred thousand pounds, or
even million pounds.
Social survey and market research organisations consequently go to a lot of
trouble to make their surveys both valid and reliable, through the establishment
(a) Tabulation (e) Pie chart
YEAR SALES PROFIT

£ £
1986 3430 114
1987 3560 119
1988 4740 240
1989 5862 650
1990 4711 350
(b) Bar chart

£
Sales
(i) (f) Pictograms
Car sales
Year
1990
1989 1991
£
Total ~
40
~ 100
~
25
(ii) Other
Management
Costs Marketing
* ** *J
Unemployment
Administration
1990 1991 1992
Travel
(c) Line graph

1% 2% 111..%
£
/
\
Income / \
Sales Volume
(d) Scatter diagram
£ Median £
Income
Volume Volume
Figure 11.1 Presentation of data

of proper objectives; the design of questionnaires and other survey instruments;

the provision of high quality and rigorous training of surveyors; and the
recognition and promulgation of limitations on the research to be carried out.
Any findings, analysis and conclusions are thus seen in context.
These lessons should be translated into the business sphere and its related
managerial activities. The disciplines of accuracy of data and information
gathering hold relevance in those management activities to do with: personal
interviewing and assessment; policy formulation; business assessment; marketing
activities; output; the merits and demerits of particular initiatives; the success or
failure of recruitment campaigns, advertising initiatives; image formulation; the
success or failure of particular technologies, production methods; the ability of
organisations and their specialist departments to plan, forecast, formulate policy
and devise and implement strategies.
Other elements which impinge on the accuracy of data gathered and available
are to do with: time lapses between the gathering, promulgation and interpreta-
tion of data; sampling errors; analytical errors; inexplicable inconsistencies; and
the compounding of these, where inaccurate extrapolations are inevitable, if the
gathering or analysis was inaccurate or flawed in the first place.
Managers must therefore develop a positive and healthy scepticism, question-
ing technique and enquiry into any data presented to them. This is not to
promote managerial inertia - quite the opposite. Managers should ensure,
however, that they do question and consider all aspects, and the full implica-
tions, of statistics, as the basis for accurate decision-making and initiative
formulation. The ability to do this in the light of accurate and wide ranging
data thus gathered is an aid to effective management and decision-making.
• Index numbers
Index numbers show at a glance the overall direction of changes in a variable over
a period of time. These variables can be virtually any regularly produced statistic.
Those most frequently referred to are: the retail price index (RPI); wholesale price
index; unemployment rate; national output; The Financial Times Stock Exchange
Indices of the top 30 and top 100 shares; (FTSE 30 and 100); and exchange ratios.
Industrial and commercial sectors also produce their own indices.
Bases are established, against which the subsequent movements are measured,
in order to give accurate statistical variations. These bases are normally time -
a base year or date; and percentage relatives - the most common of which are
price, quantity or value; and weighting- where more than one item or variable is
used on one index. In the expression of indices, the base year, base percentage
relative, and any base weighting, are combined together and given a numerical
value, a base number, against which future variations are to be expressed (see
Figure 11.2).
The index thus published represents in a single figure the characteristics of a
group of items.
Factory energy costs
118
106
100
- 1988 = 100
98
91
89
I
1985 1986 1987 1988 1989 1990
Figure 11.2 An index number
Managers will tend to use the indices produced by their own sectors more than
those produced nationally. These will be of greatest value to them in preliminary
enquiry and assessment of their own sphere, and its component parts - wage
rates, and the going percentage and composition of pay rises; market and
marketing aspects, concerning such matters as price and price variations, trade
volumes, the relationships between supply and demand; variations in related or
substitute sectors (e.g. if the organisation is a seller of Spanish holidays, and sales
are falling, it is necessary to know whether sales of holidays to other destinations
are also falling, or whether their company is losing out at the expense of a
substitute); and wholesale, warehouse, energy and transport indices and
indicators. They are a useful source of information in the raising of causes of
possible concerns, and 'early warning' systems; they may also indicate possible
opportunities (such as the emergence of a highly competitive energy source, for
example, which may indicate the opportunity to invest in a real fixed-cost
advantage, and provide the seed for a business investigation in full into the
matter).
Managers use the various national indices as general sources of data and
information. In particular, the annual rise in the RPI may give an indication of the
level of wage rise to be demanded by the staff; while indices of wholesale price
may be used as a starting point for a full investigation into the likely costs to be
incurred over the coming period in the purchase of raw materials; or of
inflationary pressures (usually) or sectors with which the organisation has
trading and other commercial relationships. More generally still, the indices
may indicate or imply such things as national or market confidence, recessionary

pressures, or even 'green shoots' of recovery. Widely used in the media, they are
of very limited true value to the manager in this way.
• Probability
This concept provides a basis for assessing whether or not something will
happen, or is likely to happen. It requires the assessment of one or more variables
against a constant, or the assessment of two or more variables against each other.
By doing this, possible, probable and likely outcomes of particular initiatives can
be assessed and pre-evaluated. In such exercises the true and exact outcome will
not be predicted; it is not a certain exercise. It is a valuable way of identifying the
components of risk and uncertainty that may be endemic and unavoidable in a
particular situation or initiative; and more generally, part of the 'early warning'
systems that all managers should have in regard to their operations.
• Accuracy and approximation

All data must be considered in the context of its collection, and any other
pressures or constraints (e.g. time, resources) that are placed on this. The
accuracy of the final data depends upon the soundness of the criteria on which
the original collection was based; whether it was from primary or secondary
sources (seep. 299). Other factors to be considered are time lag and rounding.
o Time lag
This is the difference between the time when the information was collected, and
when it is to be used; some statistics are soon out of date; and often business and
public initiatives are planned to resolve future issues based on today's statistics.
o Rounding
Whereby figures are rounded to the nearest manageable or usable element. An
organisation's net profit for a particular year may be £56,203,459.52; for
presentation and convenience this may be rounded to:
• £56,203,450
• £56,203,500
• £56,204,000
• £56,200,000
• £56.2 million
• £56 million
all depending on who is to use the figure and for what purpose.
• Sampling
In relation to most business activities it is impossible to gain perfect information;
sound methods of sampling must be used if data of meaning and value is to be
gathered. Effective sampling may be used to gain valid and accurate impressions
of markets, products, volume and quality of work, the nature of the work being
carried out, the complexities of it, the intensities of work activities, staff turnover
and absenteeism, and the regularity and severity of accidents.
The purpose of sampling is to learn information about the whole from the
study of a part, providing results that would mirror those if a full survey were to
be carried out.
o Sampling methods
Any sample must be representative of the population, activity or product under
consideration. This may be ensured by a variety of sampling methods:
• regular: whereby each nth product is chosen for testing; each nth person
chosen for survey of their opinions
• random: whereby each person or product has an equal chance of being
selected or tested; if a sample is chosen at random from a larger group or
collection, it will exhibit the same characteristics as the whole provided that
both are sufficiently large collections in the first place; random numbers may be
used either as the starting point for this, or to select samples at each stage
• Stratified: the grouping of populations and products into state or sub-
groups, according to the needs of the data being gathered
This may be by age, location, occupation, street, town, country, urban, rural,
for persons; or by date, time, shift, and line, in the measurement of products
• Multi-stage: the purpose of this is to provide a measure of checking on one
sample; and to identify where bias and inconsistency may arise
In the normal course of events, the stages are:
* piloting, to establish the fundamental soundness or otherwise of the

methods to be used
* the main survey, in which the main data will be gathered
* and a follow-up survey among those initially surveyed, to establish any
inconsistencies, perceptual failings, anomalies and bias that may be present
• Non-random and the use of quotas: this is most prevalent in street surveys,
whereby an interviewer may be required to get the responses of 50 persons on
a particular day to a particular set of questions
It is subject to a substantial degree of error, being additionally limited by the
perceptions of the interviewer, external pressures on interviewees, and other
variables (e.g. was it a Sunday, was it a town, city or village, where did the
people interviewed come from?).
• Validity, reliability and bias

At the outset of any proposed quantifiable or qualitative research, these elements
must be considered. Research will be generally limited by additional constraints
placed - accuracy, size of sample and populations, time and resource pressures.
Within these constraints however, data gathered must be:
• Valid, that is, a measure or version of the truth; accurate (or a version of
accuracy); and usable in the format in which it is presented
• Reliable, that is, the data gathered would be the same, or equivalent, if either a
different sample were used, or if the sample had been surveyed at a different
time in the same way.
Bias arises from a variety of sources, and while it is virtually impossible to

eliminate (except through a full census), its origins and limitations can be
recognised and accommodated. It comes from: the perceptions of the sur-
veyors; the imperfections of the questionnaire and sampling methods; and any
preconceptions or secondary agenda that has been included. Consideration must
also be given to the sampling frame - the list, population or product range from
which the sample is to be taken; partial response or non-response, misperception
of the questions; and personal perceptions of the ranges indicated on such things
as rating scales.
• Census
A census is effectively a 100% sample. A full survey of the population is carried
out in the UK every ten years (1971, 1981, 1991- the next is in 2001). A census
may also be carried out on particular sub-groups, e.g. all those exposed to
radiation or poison may be surveyed for lasting effects. For business purposes
census will normally be limited to attitude surveys at the workplace; or
interviewing all leavers to find out why and where they are going; or getting
all potential employees to fill in standard application forms. In terms of market
research and product quality and reliability, census is not possible, and samples
have to be taken.
• Questionnaire
This is an instrument for gaining information from an informant for a particular
purpose. Any such instrument must therefore be designed with specific and
understood purposes, aims and objectives; and if possible, it should be piloted or
tested to check that it does fulfil these purposes, or is likely to do so.
Having this right, however, provides a most valuable format for the gaining of
equivalent information from a variety of sources, all for usage in a variety of
managerial situations. Questionnaires are used, further, either as the means for
structuring an interview, or as a more precise instrument in which specific
questions are asked in the same way to each person (either orally or by
presentation of the questionnaire to the subject for completion in their own way).
The questions used may be open (see Summary Box 11.1): where the subject is
invited to expand their own response in their own words or style on given
matters. Such questions are led by words such as 'who', 'what', 'where', 'why',
'how' and 'when'. The responses to these may be limited by the use of rating
scales which may be either numerical:
How important is it? 2 3 4 5
(please circle)
or verbal:
How important is it? Very Quite Reasonably Not Not at all
(please circle)
It is normal also to ascertain some background information on the respondents
for the purposes of classification, and to indicate any bias or external factors that
may be affecting responses. Otherwise, the questions will be closed, eliciting
precise and definite answers from the respondents (see Summary Box 11.1).
SUMMARY BOX 11.1 Open and Closed Questions: Examples
Open
What do you like about Sweden?
Closed
(a) What I like about Sweden is: (tick box)
• the scenery Q
• the public transport Q
• the food Q
• other Q
(please specify) .................................................. .
(b) Do you like Swedish scenery Yes No
This illustrates the range and limitation that can be placed on responses. The
ways in which information is asked for can thus be varied according to overall need,
and in order either to give the respondent maximum opportunity for self-
expression, or to limit this into preset and predetermined areas.
• Network analysis
This is the term used to embrace a range of organisation, scheduling, planning
and control methods used in the ordering of complex projects and operational
activities. The purpose is to identify in advance the shortest possible time in
which such activities or series of activities or projects may be completed, or a new
product brought on stream. From this sub-schedules and activities can be worked
out to establish the nature of resources, staff, equipment and other inputs that
need to be present at given stages in order for this efficient and effective main
schedule to be adhered to (see Figure 11.3).
2 3 3.5
2 0.5
24
') ~ .~
-~
24
Key
0 Activity number Critical Path Q) - ® - ® - ® -@ -@ -@ -@ -@
__!.Time unit
-+Operational progression /0
;:
I:>
;:
- -operational tie-ups .....
19
~·
Q Time completed (cumulative) The number on top is the earliest point at which the activity can be completed, the number ~·
<1>
19 below is the latest point by which it must be completed.
;:t
<1>
Purpose: a project/operational schedule; a planning tool; a model against which to measure actual progress. Identification of critical incidents (those on ~
the critical path). Identification of potential problems, blockages and hold-ups. 0
~
Figure 11.3 A network diagram
\#.>
~
The shortest and most effective route through such a schedule is called the
'critical path' - that is, the one that determines the speed of operations within it.
Non-critical paths- that constitute flows of activity that have more flexibility in
their inception and execution and timescale - will also be identified so that
resources can be optimised at all stages of the work.
Critical incidents within the network will also be identified in advance. Each
incident will be related to a set of criteria that contributes to the nature and extent
of its critical configuration. Such criteria relate to matters concerning the
difficulty, frequency, importance and value of the activity itself; scarcity and
balance of resources; availability and conflicting demands on resources, expertise
and equipment; and the consequences of delays on the critical incident to the rest
of the schedule.
Such a network will then be used as a control mechanism, progress monitor,
progress chaser (where desirable or necessary) and as a continuing means of
monitoring and evaluating the whole series of activities and each component of
the series.
• Finance
Finance is the lifeblood of all organisations, in whatever sphere they operate.
Companies in the private sector are required to make profits, that is, to generate a
surplus of income over expenditure over a period of time, that supports the
continuation of the business, and provides an adequate return to the backers.
Public, social and health services, working to targets allocated by governments
and other authorities, must use these resources to best advantage to satisfy the
sectors that they serve, and reconcile with any constraints under which they may
be placed.
• Financial data
Financial data has therefore to be collected by the organisation to establish how
this resource is being used, and to enable a managerial assessment and evaluation
of this usage to be made. There is a control element in this, the ability to measure
the costs of particular activities, as well as the whole. It enables the organisation
to see where its money is tied up - for example, in stocks and storage, work in
progress, raw materials, and goods in transit - and provide the basis of an
assessment of this. It enables any slack, or stresses or strains to be identified. It is
part of the wider necessity to provide a full range of management information.
Once the data is collected it has to be made available to both the internal and
external environments. The external environment in the UK requires the annual
presentation of a balance sheet, and profit and loss account. These are governed
by accounting conventions, and must be subject to scrutiny and audit. The
Balance Sheet is a financial snapshot of the company on a stated day. It shows
assets and liabilities in balance, and what the components of each are; this
enables the wider business and financial world to make an informed judgement
on the company's inherent strength and stability. The Profit and Loss Account is
a representation of income and expenditure, showing a surplus or deficit on it
(see Figure 11.4).
1993 1992
£million £million
PROFIT AND LOSS
ACCOUNT
INCOME 3188 3097
OPERATING COSTS (2736) (2771)
OPERATING PROFIT 452 326

INTEREST (27) 33
PROFIT BEFORE TAX 425 359
TAX (140) (117)
(Brackets
PROFIT AFTER TAX 285 242 indicate
DIVIDEND (82) (72) Subtraction)
RETAINED PROFIT 203 170
Figures are then normally given for earnings per share and dividend per share
31 December 1993 31 December 1992

£million £million
BALANCE SHEET
FIXED ASSETS 2106 1996
Current Assets 1109 1043
Short term Creditors (771) (890)
NET CURRENT ASSETS 338 153

Total Assets 2444 2149 (Brackets
Long term Creditors (475) (325) indicate
Liabilities and Charges (299) (359) Subtraction)
NET ASSETS 1670 1465
CAPITAL AND RESERVES
Share Capital 1470 1000
Capital Reserve 150 265
Other Reserves 50 200
TOTAL EQUITY 1670 1465
Notes: It is used to give current and previous years figures for purposes of comparison. Thus, the
overall performance can be compared, and also the line-by-line movements and charges.
Figure 11.4 Profit and loss account and balance sheet example
The Balance Sheet and Profit and Loss Account are for external consumption.
Internal financial activities are organised around budgeting systems, accounts
and finance functions. The relationship and appropriateness of these to the rest of
the organisation must be established at the outset, and constantly maintained.
These systems and functions exist to provide information and illumination for
the organisation's main activities, and as the bases of maintaining and improving
them.
• Finance and strategy

The final element to be considered here is the strategic view of the organisation's
finances, in relation to profits and surpluses, and budget allocation. In the case of
profit, a balance must be struck between the short term and long term gain; and
this may in turn require the reconciliation of shareholders' demands for instant
returns, with the need to ensure stability and continuity over a long period,
possibly at the expense of a dividend payout. On the other hand, inert or
bureaucratic budgeting systems often put pressure on managers to spend
resources regardless of effectiveness because the money will otherwise be lost
to the department or unit. Or the budget may be rigidly constrained, with the
result that once the allocation is used up, the department is closed down or
mothballed - as has happened regularly in UK public and health services in the
early 1990s. Any strategic approach must therefore consider this, and any
operational factors must be reconciled, if maximum effectiveness is to be
achieved.
• Financial resources and control

This is the background to the manager's position in relation to the financial
resources available, and how they are to be used. The overall purpose is to
illustrate the inherent responsibilities. It is also necessary to draw the relationship
that exists between the actual cost incurred in doing something, the management
of that cost, and the impression that it makes on the operation, the department,
and the individuals concerned.
At the broadest end of the scale, the organisation has to generate enough
income to survive and remain profitable and viable. There is thus a general
pressure on managers to contribute to this in ensuring a steady flow of quality
outputs that their customers and clients (whoever they are) will wish to continue
to take up. There is derived pressure from this that is to do with ensuring that
those resources input into the departments of individual managers, are suitable
for their intended purposes of the requisite volume and quality and strike a
balance between effectiveness, optimisation and flexibility.
The organisation also has to be able to determine the relationship between the
extent of the investment in itself and the returns on that investment, both desired
and actual. It has to determine and establish the price that it is to charge for its
outputs in terms that are both acceptable to its markets and which provide this
rate of return commensurate with the nature and level of business conducted.
Such pricing policies will therefore normally seek to cover at least the variable
costs (that is those actually incurred in the production of the output) and to make
a 'contribution' to the return on investment, profit or surplus generated by the
organisation. In sophisticated organisations with a multitude of offerings, this
will relate to the range of output as a single entity and not to each item.
• Costs
It follows from this that it is necessary to be able to identify a range of costs and
to identify also their nature and behaviour.
Three costs are usually distinguished.
o Fixed costs (FC)

These are the costs incurred by the organisation, whether or not any profitable
business of any sort is conducted. They consist of capital charges, premises costs,
staff costs and administrative, managerial and support function overheads.
o Variable costs (VC)

These are the costs incurred as the result of engaging in direct business activity.
They consist of raw materials, packaging and distribution costs. A price
established for the item will, as stated above, normally seek to cover these at
least; additionally it may make a contribution to the fixed cost.
o Marginal cost (MC)

This is the cost incurred by the production of one extra item of output, and
reflects the extent to which the production capacity of the organisation may be
extended without incurring additional fixed costs in the forms of investment in
new plant, staff, equipment or machinery. There comes a point at which the
production of an extra item does require these matters.
• Cost apportionment
o Fixed and variable cost apportionment
These are the processes devised by the organisation for the purposes of
identifying where these costs should be charged and apportioned. This is often
known as the process of 'cost centring', and the activity thus identified is called
the cost centre.
D Profit apportionment
This is the converse of cost apportionment and is the organisation's method of
ensuring the nature and sources of income generated by its various activities. This
constitutes the identity of profit centres in the same way as cost centres above.
• Break even
This is the point at which the balance between costs and income is established
(see Figure 11.5).
(£000)
TOTAL
REVENUE
INCOME
5 TOTAL
COSTS
FIXED
2 COSTS
2 3 4 5 6
SALES (£000)
Figure 11.5 A break even diagram

• Human asset valuation

The purpose of identifying, assessing and valuing the human resource as an asset,
(in common with other asset valuations), is as part of the means of measuring its
total contribution and worth to the organisation. Summary Box 11.2 shows the
method adopted in such evaluation.
• Ratio analysis
Ratios are used in financial management to identify, establish and measure
particular performance aspects. The results and outcomes of the analysis of the
ratios, and the level and quality of performance that they indicate, contribute to
management knowledge and information, and become part of the process of
assessment and evaluation.
These ratios include:
Net profit x 100
• Profit Ratio: Indicates percentage
Total sales net return.
Selling costs x 100
• Selling costs: Indicates percentage
Total sales consumed on Sales costs.
The same approach can be taken for energy, production, marketing, staff and
distribution, as a percentage of sales.
• A ssets an d I .1abT . Assets

1 1t1es: L" bT . a general ready-reckoner.
1a 11t1es
It is used to break the assests down into:
Long-term assets
• (a) ~~~~~~
Long-term liabilities
Current assets
• (b) Current liabilities
Quickly realisable assets

• (c) 'The Quick Ratio' or 'The Acid Test':
Current liabilities
• Debtors and Debtors

Creditors: indicates whether an
Creditors organisation is paying out
its bills more quickly than
it is receiving payments.
• Return on capital Profit before tax

employed (ROCE): Gives rate of return on the
Capital employed investment.
SUMMARY BOX 11.2 A Model of Human Asset Valuation and

Accounting
1. The 'base' to be adopted is employment costs, which are measured (a)

in total, (b) by staff category, (c) by operational division. (d) in terms of
the added value (see Summary Box 11.3) that each contributes, and (e)
by sectoral factors.
2. Return on these bases may be measured and assessed in the same way
as for any other asset; and above all thus provides information for
managerial discussion. Additional factors have to be taken into account
in this particular regard however; these are: the opportunity costs of the
current human resource (in regard to a new one or one that is a
revamped or retrained or redeployed); measures of good will; the
balance and mix of talents and capacities with operational require-
ments; human asset projections of cost, value, and benefit (related to the
'base' given above); and the current and projected asset values in
each of these regards.
3. The concept of the 'human liability' must also be addressed. This is in
regard to assessing any actual or projected occupational obsolescence,
and consequent 'depreciation' of the asset; the full occupational liability;
turnover and terminal losses; replacement costs; and refurbishment (that
is, training and development) costs.
4. The assessment of the human asset can thus be conducted as a
figurative balance of assets and liabilities, and provides a managerial
ready-reckoner - a fresh means of the study of employment and the
nature of the organisational investment in it.
5. .As well as returns on (human) capital employed, there is information
given in the planning, direction and disposition of resources; and the
impact of this on the valuation, assets and liabilities of the organisation.
This is also a means for the examination of the nature and effect of
expenditure on the human resource; industrial relations; and organisa-
tion and employee development.
We can model this as follows:
1. THE BASE
2. ASSETS 3. LIABILITIES
'THE HUMAN ASSET AND LIABILITY

BALANCE SHEET'
I
4. CONCLUSIONS AND ASSESSMENT
including 'Notes to the Human Accounts'
5. THE WIDER SPHERE

A Note on Return on Capital Employed (ROCE)

ROCE represents the nature and extent of the returns required by the shareholders
in the organisation and other vested interests in it; it is useful as a comparator
between desired and actual performance. It may also identify particular inefficien-
cies of resource utilisation. Finally, general returns on investment have their own
distinctive comparators- for example the RP or rate of interest available on deposit
accounts- which may serve as a bench mark for acceptable capital returns. On the
other hand, returns should always be seen in terms of the nature of actual returns in
the particular industrial or commercial sector in question.
The ratios thus provide distinctive measures of the particular activities. The
information gained has to be seen in context however. For example, while a
'quick ratio' may show that a company could not easily cover its current
liabilities, if these are not to be called in this does not matter. Similarly, different
commercial and public sectors will have their own norms and expectations that
have also to be taken into account- a 2% return on capital employed may sound
low, but it may be twice the usual rate in the industry concerned. There is also the
wider environment to be considered, and any opportunities, or difficulties; boom,
or recession.
Different organisations have their own philosophies, means and methods of
establishing what their fixed and variable costs actually are, how they are to be
apportioned and what the desired rates and levels of returns are. The common
purpose is to have methods, and to ensure that they are efficient and suitable to
the organisation in question. It follows from this that methods of cost
apportionment are neither exact nor linear but the subject of managerial and
organisation debate and decision.
The main purpose of identifying the nature of these costs and their extent in
given situations is as the basis of managerial assessment and decision-making.
Costs should never become straightjackets outside which a department or
function may not budget. It should always be remembered that the driving
force of any organisation is its products and services and relations with its
markets; costs and the management of them should never take the place of
market imperatives. Only if this is achieved can a true assessment of the nature
and extent of the effectiveness (in financial terms) of the organisation's activities
be made.
SUMMARY BOX 11.3 Added Value
This is a conceptual view of the production process and is a configuration of the

means by which the item or service in question gains value in relation to what the
market will ultimately pay for it. Value added is an additional means of the
measurement of the efficiency and effectiveness of resources allocated to different
stages of the production process.
• Internal markets
Internal markets are present in holding company structures, multinational
organisations and health and public services. They are a combination of the
following elements:
1. The distinction between, and definition of, purchasers and providers, for the
purposes of establishing a contracted arrangement; the position is further
complicated by the fact that certain functionaries may be both purchasers and
providers in different circumstances
2. The establishment of a contracted agreement between purchasers and
providers, as the basis on which the relationship between the two is to be
carried out in the future; essentially this will be agreed in advance of the
business relationship, but will invariably require a 'continuity' or 'fine-tuning'
clause, enabling matters that subsequently arise to be dealt with
3. The establishment of a price-service return and the ways in which the
services are to be paid for; in multinationals this will generally be on a system of
transfer pricing, using the most advantageous currency available to it; in other
situations, a system of internal invoicing may be devised
4. The agreeing of quantity/volume, quality and timescale/deadlines criteria for
each relationship established; what is included, what is not, and the scope and
scale for varying each on the part of either party.
The emphasis of each element will vary; the overall constitution of any
organisational internal market, however, must be to ensure an effectiveness of
operation; and an efficiency of resource identification, allocation and evaluation
on the part of the control, administrative and support functions of the
organisation.
• Budgets
As well as the actual components of a budget, there are wider purposes to be
considered when budgets are being set.
• Budgets and resource allocation

The budget is a plan (with sub-plans), that constitutes part of the process of
managing the organisation, department, project or initiative. It aims to provide
an accurate picture of where resources are being used, the speed and frequency of
this, and the basis for making future judgements on the levels of finance required
to meet particular targets (in terms of volume, quality and time).
The budget enables specific analysis and evaluation of the accuracy of the
resource allocation process, and variances from it, and explanation of such
variables. It provides an indefinable and quantifiable basis for corrective action-
whether this is to do with profligacy in the use of the organisation's resources; or,
at the other extreme, where a part of the organisation is being starved of
resources essential for its effective operation.
• The budgea.ing process

The budgeting process should also include periods and elements of regular
review, that allow more general and global evaluation of resource utilisation to
take place.
There are prescriptive, consultative and participative elements involved in the
establishment of an effective budgeting process, and in its implementation. There
should be not only a means of effective resource allocation, and wage monitoring,
but also the means of ensuring that all those involved in its implementation
understand fully the resource obligations and constraints under which they have
to work. Even in areas of severe constraint- UK public and health services in the
1990s, for example - a better operational response will be generated if everyone
concerned understands the nature and range of resource limitations.
Different methods of presentation of the budget and its elements will be used,
depending upon the nature of those affected, their qualities and capabilities, and
their responsibilities and obligations in the situation. Different figures will have
different purposes and value to managers, accountants, operatives and profes-
sional staff, and due notice must be taken of this.
It is clear from this that part of the budgeting process must also constitute the
means for the identification of conflicting areas - conflicting and divergent
resource demands and pressures, for example - and their resolution and
reconciliation. There is thus input from the budget to the task of both manager
and accountant in understanding and explaining priorities, and to the profes-
sional and operative in the devising of, and prioritising of, their tasks and
activities.
There is a requirement, finally, for an ability to reconcile control with
flexibility, which in turn requires a measure of leeway for an otherwise
productive initiative that needs a small extra resource in order for it to be fully
successful, without at the same time destroying the credibility of the process. It
follows from this that all budgets and budgeting systems must be specifically
designed for the organisations, initiatives, operations, projects, staff and facilities
in question; that while general principles and standpoints hold good, these must
be applied as required to particular situations; and that therefore a universal set
of precise rules is not appropriate.
• Cost-benefit analysis
At its simplest, cost-benefit analysis is a quick and easy ready-reckoner method of
establishing a basis on which a given initiative might be feasible or profitable (in
whatever terms that may be measured), and of identifying those elements that
require further, more detailed consideration before it is implemented. In this
state, it simply requires correlating all the costs and charges that could possibly be
incurred in such a venture, and setting them against all the values - benefits- that
the completed item, project or product might bring.
Cost-benefit analysis also involves consideration of nine other areas:
• Action choices- the meaning of the costs and benefits of alternative courses
of action in relation to each other
• Short, medium and long termism -the time periods over which costs are
to be incurred; and over which results and benefits (and profits, in whatever
terms they are to be measured) are to accrue; and the period over which they
are required (either by the organisation, or its backers)
• Values- these are to be seen from both the economic and income generation
point of view; and also in wider terms the impact on these to a greater or lesser
extent
Integral to cost-benefit analyses in terms of public policy are notions of the
value of the quality and style of life; the value of recreational and optional
facilities; the value of social and educational services; the value of general
services to the population and its sectors
• Priorities - related to values are the priorities ascribed by all business and
public sectors to particular commercial and social undertakings; what is to be
tackled first, and what the opportunity costs are in relation to those things
lower on the list of priorities
• Initiatives- and their wider impact; what they imply and the other activities
that they lead to
An example of this in commercial terms is the concept of loss-leadership,
whereby a commodity is offered at a price low enough to attract people to
purchase it, in the expectation that they will buy other items from the outlet,
thus generating increased activity and overall profit
It is also part of the process by which government regional aid is devised and
delivered; this activity is known as 'pump-priming' and is conducted on the
basis that, by putting a certain resource block into an area, a measure of both
commercial activity and public confidence will be generated
• Risk and uncertainty- this is dealt with extensively elsewhere (see Chapter
5); it must be considered as part of the evaluation of costs and benefits overall
• Strategic aspects and overview - by the consideration of products,
projects, services and initiatives in this way, there are general benefits that
accrue that in turn may offer a much wider approach to the actual matters in
hand than was at first envisaged
• The relative valuation - of different costs and benefits at the times,
frequency and intervals at which they occur; and how to reconcile then when
they occur at different points in time, or at least to understand the short-
comings and imperfections of trying to do so
• The income-expenditure variable - related in particular to values that
accrue to those on different incomes; the relative importance to them of given
or actual products and services; and the relative importance to them of different
public services.
In this context, and using any specific numerative or quantitative methods

necessary, a model for a detailed background, analysis and evaluation of both
products and services, both public and private, can be drawn up. This also
ensures that the widest possible constructs are placed on the given initiative, and
that more nebulous concepts of social and intangible costs and benefits are
assessed.
• Management information systems

The purpose of such systems are to 'oil the wheels' of the organisation, providing
means for the effective transmission, reception and general communication of
information. This must be in terms and formats that are efficient and effective,
and that gives information in ways that are understandable, relevant, and above
all usable. Such systems provide the basis for effective general business practices;
and are specifically aimed at enabling sound decision-making.
• System activities
Six specific business and management activities that impinge upon information
systems may be identified:
• Planning and organising of all work and support functions

• Control mechanisms
• The identification of blockages, either organisational or operational
• The provision of linking elements and forums between departments and
functions
• Motivational aspects
• Functional aspects: the ability to gain and gather accurate information from all
functional and operational areas.
• System data
Certain types of data required by the organisation may next be identified. Such
data will take its format from the following elements:
• Long, medium or short term nature
• The extent of the accuracy required
• The volume to be stored, processed and retrieved, and the formats required for
this
• What it is to be used for
• Who is to use it.
• System design
Next must be considered matters to do with the design of the system or systems
themselves:
• Whether to have one system or a set of related and interlocking sub-systems

• Modes and methods of access
• Frequency of access
• Questions of urgency of access, the value of access, and general matters of
speed, accuracy, and methods of information processing
• The nature of the staff who are to use the system or systems, and their levels of
quality, qualifications and trainability.
This is a fundamental consideration. If the system is too complex for the staff,
and they are not capable of being trained to use it, either the system must be
redesigned or staff hired who can use it in its current format.
• System responsibilities
There are wider implications also to be considered. The most basic of these is to
establish where overall responsibility for the system lies, and also where the
devolved functional responsibilities are. There may be specific as well as legal
constraints (apart from anything else) which it is critical to pin down; this is quite
apart from questions of operational necessity.
• System technology
Then there is the technology itself. Many organisations, functions and managers
have been so carried away by the brilliance and capacities of both hardware and
software that they have lost sight of their own specific requirements for it. This
has to be balanced against the genuine lifespan of equipment in an age of constant
technological revolution, update and obsolescence. As with other operational
aspects, therefore, a strategic approach is required to the design, organisation and
purpose of information systems; a system thus arrived at will invariably test more
productivity for much longer than one that is technically more modern, but
which has not had the same global regard to its purchase.
Alongside this is the culture of purchasing 'off the shelf' information systems
and software that can be installed and made operational very quickly, as opposed
to the design and implementation of something that is tailor-made. The former
will always be cheaper at the point of purchase; the true cost, however, has to be
measured and evaluated over the full operational life of the system. There is also
the wider question of the ability of complex organisations to accommodate
effectively or satisfactorily the vagaries of something not specifically designed for
them.
• System security and control

Questions of control of information, and security of it, must be considered. Again
this must be from the global or strategic point of view; a balance must be struck
between use and value, questions of access, operational factors, and the power
and influence of those who are responsible for the outputs. There are also more
general elements of power and influence to be considered in regard to the
information itself, its volume and quality and ultimate destinations and users.
• System installation
There are behavioural aspects especially to be addressed. Lack of understanding
of the technology, or a more nebulous disquiet or feeling of being threatened by
it, will invariably mean either that the systems are not used at all, or else not used
fully.
The installation of any system must therefore be accompanied by programmes
of staff and management training, briefing, familiarisation, and overall apprecia-
tion designed to ensure that the system does indeed 'oil the wheels' of the
organisation, rather than becoming an adjunct to it.
There are wider considerations for such matters as recruitment and selection
processes, job design, and workplace layout, structure and design. The end result
must be, overall, that the information system is fully integrated with all other
organisation systems and activities; that those employed can use them, and are
comfortable with them; and that the organisation as a whole has systems that
contribute to its overall effectiveness, rather than detract from them.
• System outputs
The data outputs from any system must be such that they are usable by those who
receive them. Managers, in particular, do not normally require volumes of raw
data; or if they do, they also require synopses and summaries and analyses
indicating what the data itself indicates and giving pointers to the likely and
suitable ranges of activities that the data implies. In this way management
information systems are essential adjuncts to decision-making processes and the
outlining, formulation and determination of strategic choices. They also give
particular functional information in regard to the operational area in question.
Management information systems and the data that they generate must
themselves be managed if they are to continue to remain effective and serve the
organisation and its managers and fulfil the functions indicated above.
• Conclusion
The main conclusion to be drawn here relates to the managerial constructs that
are to be placed on the quantitative data and information. This consists of
ensuring that both the information and the methods used to collect, store and
present it are suitable for the purposes of the organisation and the needs of the
managers also. All quantitative data is only of value if it is available in ways that
the organisation and those within it can understand and use. This must include
the behavioural and perceptual aspects of it as well as the quantitative material
itself. Above all, managers must have both faith and confidence in the budgeting
information that they receive and the systems that produce it if these are to have
in themselves any credence or organisational value.
IManagerial performance
CHAPTER 12
The purpose of this chapter is to bridge the gap between the acquisition of the
skills, knowledge and aptitudes required of the manager and an understanding of
the complexities and application problems in functional terms, so as to combine
them together to generate effective and successful managerial performance in
particular occupational configurations.
• Evaluating managerial performance

Overall, the performance of managers will be judged on the success of the
organisation in which they are practising, on the performance of their depart-
ment, division or unit, and on the precise requirements of the managerial task
within them. This, in turn, underlines the necessity of setting aims and objectives
that serve as a benchmark for this measurement.
More specifically, for this purpose it is necessary to distinguish between those
elements over which managers have control and those over which they have not.
This enables the separation of actual performance from context and thus a much
more valid evaluation can be conducted.
We have already established that the fundamentals of managerial success are
the ability to communicate effectively, and to take effective decisions.
Within this broad setting managers bring their managerial qualities, and any
other expertise -professional and technical skills - that they have together with
their personal characteristics and attributes. The way in which they combine
these is the key to the effectiveness and endurance of their performance. The
elements contained in this section underline this. They also represent the ways in
which they set their own standards, attitudes and values against which they
expect members of their division, department, unit or function to measure up.
They must also seek to engender a sense of pride on the part of all in belonging to
the department concerned; a work ethic and team spirit that is productive,
positive and harmonious as well as effective; and to generate a set of values for
the department based on both moral and operational considerations to which all
are able to aspire and which all are required to adopt. Finally, in operational
terms, they must be able to identify, address and resolve problems and issues in
ways that contribute to the effectiveness of their sphere of influence and
direction, and that promote both behavioural harmony and business success.
324
Managerial performance 325
Summary Box 12.1 shows how managers may model their problem-solving
activities.
SUMMARY BOX 12.1 A Problem-solving Model
E
CD
::c0
ff • • ldent;ty T P•oblem + - - Restate Problem
if
Desirable
Q:
0 Symptoms Define the Problem ..---1
f tf.________.,:t_ l
Causes _ _..,.._ ___.
l
Ah•mr•· Approaches J Implications
Impact
Consequences
Alternative Solutions
l
Choice
Purpose: to ensure that a rigorous and disciplined approach is recognised and

understood as being necessary in all situations; or that it is adopted.
Points for consideration throughout the process must also include: the
context and nature of it; when it is occuring; where it is occurring; why; its impact
on the rest of the organisation, department or division; the extent to which it can be
avoided; the extent to which it can be controlled; the consequences and
opportunities of not tackling it (which is always a choice).
• The department manager's role

This is a highly complex role. It requires both an understanding of the principle
and practice outlined thus far and the qualities necessary to put them into effect
in ways suitable to the function, operation and nature of the situation in which
the manager has to work.
First of all the manager is the department's figurehead, the symbol or
representation of it. As such, an image and identity is generated for the
department in the whole organisation and with anyone else with whom they
come into contact. Departmental managers represent it at meetings; they carry
the hopes and aspirations of the staff at all times in all dealings with the rest of the
organisation. It is the departmental manager's role and duty to fight the
department's corner and to ensure that the interests of both department and
staff are put forward and represented. In this function and according to the
nature of the department in which they are working it will involve belonging to a
wide range of professional associations, cluster groups and functional lobbies
and to be an effective operator in all of these.
As well as representing the department, in such situations the manager is its
spokesperson. This requires giving information both in the department and
outside it.
Finally, the manager must have a decision-making capability that is suitable to
the purposes of the department. Again, this involves drawing on capacities and
capabilities and using them in ways suitable and effective in his/her own
particular situation. In particular, part of this decision-making faculty must
include an effective problem-solving method (see Summary Box 12.1). Again, the
precise configuration of this will vary from situation to situation but essentially
must address the basic process of identifying and defining the problem; assessing
its causes; considering the variety of approaches that are possible and feasible in
the situation; and deciding on appropriate courses of action.
Effectiveness in any managerial position requires both understanding and
capability in these areas. If these are present there are additional benefits in terms
of the creation of identity and pride among departmental staff. Finally, decision-
making constitutes a critical part of the backcloth that is in any case necessary to
managing effectively in any work situation.
• Attitudes and values

Forming and nurturing the 'right' attitudes is an essential part of the managerial
task, and any manager or supervisor must have a full grasp of this and be able to
do it. If enthusiasm is infectious, so is negativity; it is very easy to have a
demoralised workforce very quickly if certain matters are not picked up. In both
multinational and public and health services this is manifest in the 'canteen
culture', and has been partly responsible for engendering and perpetuating
negative and undesirable attitudes. The overall purpose must be that everyone
is happy, harmonious and productive on the organisation's terms and those of the
manager and department in question. A clear and positive lead must therefore be
given, and clear and positive attitudes engendered and formed.
Negativity, therefore, is to be avoided. Prevention of such attitudes is achieved
through adequate and well designed induction and orientation programmes so
that every employee is given a positive set of both corporate and departmental
values, a clear identity with the organisation and its purposes and confidence in
the rest of the staff. Ultimately, people wish to feel good about the organisation
and department for which they work.
Cure of bad attitudes is harder. In isolated or extreme cases, people who do not
wish to work for the particular organisation will be dismissed. In large or
complex organisations they may be moved somewhere with the view of
reforming their attitudes and getting a positive response from them. Marks of
envy must also be dealt with; office executives who wish for the sales persons'
cars should be informed that, without the efforts of the sales force, there would
be no office job. Similarly, as we have seen, professional and technical experts
may feel a much stronger loyalty and commitment to their expertise than to the
organisation which actually employs them to use it. In general departmental
managers will address such matters either at the point at which they first assume
their post, or when new members of staff come into the department. They thus
set standards of attitude and conformity to which all are to aspire in the pursuit
of the goals of the department. One manager's view of such 'ground rules' is
given in Summary Box 12.2.
• Setting goals
It is essential that all departments have clear aims and objectives and that all of
those who work in them understand what they are and why it is the purpose of
the particular part of the organisation to achieve them. It is invariably a feature of
departments that malfunction, and staff who are demoralised or demotivated,
that they are not clear about this purpose or of the requirements and directions of
the part of the organisation for which they work.
The basis of setting objectives is: to give a clear statement of direction of the
department and where it is going; to indicate proper courses of action; to indicate
effective means of achieving these purposes; to provide a basis for eliminating
that which makes no contribution to the stated objectives; to provide the basis on
which plans and operational standards may be drawn up and to provide the
establishment of meaningful standards of activity and control. They also provide
the basis of accountability, that is the means of being able to check back when
something has gone wrong and assess where mistakes were made.
Such aims and objectives should be written down to give high levels of
credibility and to serve as visual reminders to all concerned. They should also be
positive, and reflect both aspirations and achievement. They should be 'personal'
and be drawn up in ways with which everyone in the department can identify.
They must be challenging and motivating and reflect the theme of constant
improvements and achievements wherever possible. They must be prioritised;
they will not all be instantly achievable but will set a progression and
configuration of the value of the work of the department. They must also be
realistic without introducing measures of complacency or inefficiency.
Objectives must be measurable. This involves reducing any qualitative
objectives wherever possible to a series of quantifiable measures. Where this
SUMMARY BOX 12.2 The Hard Line
'I believe in as hard a line as possible being taken by the management on the staff, a
harder line being taken by the owners on the management and the hardest line
being taken by the owners on themselves. Creating this environment is very difficult
and so a strong approach must be taken in every area. The working atmosphere
must be tightly controlled and be all-pervasive or it will not work. 'This seems
contradictory to the 'kind' approach of Maslow or Rogers. I think it is necessary
however if their dreams of what people are capable of are to be achieved.'
'The vital ground rules must be ascertained (no more, no less) and then they
must be stuck to absolutely rigidly. The Japanese conformity approach should be
made to look weak, when it comes to the ground rules. On the other hand, once
these rules are adhered to, as much flexibility as possible should be allowed. In this
way individuality is achieved through conformity. As long as the important things
are taken care of, people can do what they want and express themselves freely
through their jobs. I don't care how they do something as long as the end product is
good. Mavericks who can work within the guidelines are welcome and a great
source of creativity and inspiration.'
'It may be possible to summarise the ground rules into simply one thing. You
must keep to your agreements. This encourages the development of the person's
integrity, their ability to make choices and their sense of responsibility. It then gives
us the opportunity to ask them to agree to what we really want, i.e., be at work at
8.00 a.m. If they agree to this, we will hold them to it, precisely. 2 minutes past 8.00
is not 8.00, and providing we can maintain enough front (and maintain this level of
integrity ourselves) then we will pull them up on it.'
'Reasons are not relevant (e.g., the bus was late). It then becomes a matter of
Personal Power, which we want to foster in the staff. It is possible to act as if you
are responsible for everything that happens in your life whether it is true or not.
Doing this eventually means it will end up as being true, in your reality. It is possible
to look ahead and manipulate the environment. If you expect traffic then you can
leave earlier. If they were paid £1 00,000 just for turning up on time, they would be
there. This principle can be applied to everything we want, and although it may
seem strange, in the long term it will benefit the individual as much as us.'
Source: David Scott, Artisan Group Ltd Business PLan (1993).
cannot be expressed it is often nevertheless possible to break an objective down

into useful, specific and more controllable sub-objectives. For example, where
phrases such as 'a matter of urgency' or 'as soon as possible' are used, these
should be replaced with particular timescales or deadlines; the phrases quoted
bind nobody to anything in reality and will be read as such by those involved.
Above all, goals, aims and objectives that are established must be clearly
understood and valued by everybody. They must seek to combine the capacities
and talents of everyone concerned in productive and effective effort and to
reconcile the divergent and often disparate reasons that individuals within a
department have for being there. Summary Box 12.3 and 12.4 give model goal and
objective formulations.
SUMMARY BOX 12.3 Goals: Guidelines
In the interest of effective departmental performance, everybody should know the

aims and targets to which they are working. If this is to be achieved a few simple
rules must be followed.
1. Goals should be written down to give them greater credibility and to serve
as a visual reminder
2. Goals should be positive and not negative, they should have precise aims
and targets
3. Goals should be personal and related directly to the members of the
department; they should reconcile the conflicting and divergent purposes
that everyone has in being there.
4. Goals should be specific, quantifiable and measurable
5. Goals should be challenging and motivate the department to work harder,
more effectively and more productively than in the past - thus mirroring
the concept of constant improvement
6. Goals should be realistic in these terms
7. Goals should be prioritised- they will not be instantly achievable
8. Goals should finally be understood and valued by everybody.
Source: Drucker (1954).
SUMMARY BOX 12.4 Objectives: an Example
A social service or welfare objective may be (and often is) written as follows:
• To promote the social well-being of groups with physical, mental and

environmental handicaps, to enable them to function, as far as possible, as a
community and within the community of their choice.
This is wrong. It is imprecise and unintelligible, and draws people away from it
rather than to it. It is written in 'politician and bureaucrat-speak', and is thus full of
opportunities for interpretation and again, will be read as such.
The approach is also wrong, therefore, unless what is actually desired is a
clouding, rather than clarification of the issues raised. Assuming that clarity is what
is wanted, the matter should be treated thus.
• In regard to each group of clients, the establishment of the following

facilities and services ............. by ................. (a stated deadline).
Everyone is clear where they stand. Those working in the service have targets;
the client group has expectations. There are included: performance achievement
targets; measures of success or failure; and the basis of an operational review in
relation to 'service' objectives.
• Managing by walking about

Managing by walking about (MBWA) is an easy translation of one of the most
important of managerial attributes: that of visibility. Furthermore, it also creates
opportunities for productive harmony, early problem and issue resolution, and
improvements in communications.
In behavioural and perceptual terms, the manager who is 'visible' is seen as
approachable and acceptable. This will be reinforced by the manager who, while
walking about, takes active steps to approach the staff members, get to know
them, understand their jobs, their problems and their concerns. More specifically,
MBWA underlines the essential qualities of trust, openness, honesty and
integrity, as well as visibility. It fosters a communication forum and informal
meeting point between manager and staff that demonstrates the manager's care
and concern and enables small issues to be brought up and dealt with on the spot
before they become big issues. Such behaviour is an essential cog in the process of
continually appraising the performance of staff. It enables any misunderstandings
on the part of anyone concerned to be raised and rectified quickly.
Such behaviour also fosters the quality of empathy in the manager or
supervisor, and gives a full general knowledge and background to the hopes,
fears and aspirations of those who work in the department. This is an essential
prerequisite to the process of motivating the staff successfully.
Such behaviour reduces both the physical and behavioural barriers between the
manager and staff. The closed door, large desk and executive trappings are not
only physically imposing; they also present a perceptual barrier that the
subordinate has first to overcome because they reinforce the differences in rank
and status between the two: MBWA dilutes these.
Related to MBW A is the concept of leading by example; that is, the presence
not absence of the manager when there is a crisis, and his or her energy and
commitment in getting it resolved. Managers gain and improve their respect
among their staff through their willingness to lead by example. Mark McCor-
mack of IMG will go out with sales executives and consultants to demonstrate his
own ability and preferred style in closing deals. Richard Branson of the Virgin
Group regularly serves drinks and meals on his scheduled airline flights. Not only
are they demonstrating their own willingness and capacity, they are also setting
an example to and for their staff and keeping an active eye on the day-to-day
operations of their organisation. It is also excellent general marketing among
both staff and customers.
Mark McCormack of International Management Group (IMG) has developed
his own variation of this - managing by ringing around (MBRA) or 'letting his
fingers do the walking'. He employs this where it is impossible or otherwise
overwhelmingly time-consuming for him to actually get to see the department or
office in question; or where he judges a telephone call to be a more productive
and sensible approach in the circumstances. The main principle remains,
however- he always does one or the other.
MBWA is an essential tool for the manager and one that must be in constant
use. If it is not, the staff will develop their own patterns and ways of working,
their own means of problem and issue resolution and control will pass out of the
hands and office of the manager. In more sophisticated or complex organisations
where there is a global, off-site, or other 'arm's length' supervision or direction
mode, there should be an individual designated to act in the manager's stead,
maintaining the visible face of the organisation and its management, taking the
day-to-day decisions and resolving minor and operational issues before they
become major crises.
• Delegation
An easy to understand definition of delegation is 'getting work done through
others'. This is the concept of handing over to a subordinate some part of the job
that the manager is expected to carry out. Many managers are incapable of
passing on work for others to perform. Common reasons for this are undue
concern for supposed loss of prestige, fear of being superseded, personal interest
in doing the job and lack of confidence in subordinates.
Managers may also seek to hang on to the tasks that they personally prefer to
carry out in spite of the fact that they could and should be placed elsewhere in the
department. These are excuses why not to delegate. Yet the only way by which
managers can hope to concentrate effectively on their own priorities is by
unloading as much of the remaining work as possible on to members of their
staff. It is also an essential part of the processes of developing both the
capabilities and capacities of the department and of the staff who work in it.
Summary Box 12.5 gives Urwick's model for the manager's administrative/
delegatory function.
To build a full picture of the nature and extent of the process of delegation it is
necessary to look briefly at some of the principles of delegation, their place in
organisational structure and their impact on a manager's span of control (see
Summary Box 12.5).
• Attributes of the job and of subordinates

Effective delegation requires that managers know their strengths, weaknesses and
capacities; and that they have a full understanding of the nature of the job; and
what must be achieved - that is, its key results.
The manager must know also the level of knowledge and skill and the
attributes and capacities of subordinates to be able to calculate what can be
effectively and successfully delegated and what needs to be retained. The
manager must thus know and understand the jobs of all subordinates; if not a
thorough knowledge, then at the very least the key features of the job should be
SUMMARY BOX 12.5 The Elements of Administration
1. The principle of the objective- the overall purpose or objective for which the
organisation has been constituted
2. The principle of group and functional specialisation
3. The principle of coordination and organisation
4. The principle of authority vested in one individual in the group; and reporting
in a linear fashion within the organisation as a whole
5. The principle of responsibility by which all those in authority accept
accountability for those working for them
6. The principle of definition of jobs, relationships, authorities and responsibil-
ities
7. The principle of correspondence by which authority, responsibility and
accountability are balanced
8. Span of control- ideally limited to no more than six persons per manager- see
also Summary Box 12.7.
9. The principle of balance is that of the structures, functions, systems and
operations of the organisation
10. The principle of continuity - that is, the concept of the organisation's
permanence.
Source: Urwick (1952).
known. The manager must also be able to understand key features of any new
tasks quickly.
The method of delegation to adopt depends upon the workload. If this is
heavy, it is necessary to use accepted channels to get to the core quickly. If the
work situation permits, new channels can be developed. It is necessary next to
consider the static and dynamic elements of this. The static elements are:
forecasting, planning and organising. The dynamic elements are: motivation,
coordination and control.
If managers are to fulfill these functions and discharge their main responsi-
bilities they cannot also do the work; this constitutes the fundamental reason why
work must be delegated. An established guideline is to delegate work down
through the organisation, the staff concerned doing the utmost of which they are
capable, usually resulting in an increase in morale through enhanced job
satisfaction quite apart from any operational benefits. Delegation also allows
the manager time to plan, coordinate and control by making more effective use of
subordinates. They, in turn, will develop skills and potential and so assist in the
improvement of their own prospects by greater involvement in the work of the
organisation; via the process implicit in this of job enrichment, enlargement,
progress and creativity, the level of job satisfaction of all subordinates would
normally be expected to improve.
The key to delegation is the reconciliation of trust and control - that is, the
trust that the subordinate feels the manager has in him; and the control that the
manager has over the work of the subordinate. If the manager increases control,
the amount of trust perceived by the subordinate decreases. If the manager
increases trust in the subordinate and gives more responsibility then a degree of
the manager's control must also be released.
Finally, whatever task is delegated, responsibility remains with the manager at
all times. Responsibility is not delegated. To attempt to do so simply constitutes
abdication of responsibility and will be reflected in the perceptions of employees,
and also the reality when things do go wrong that the managers will look for
scapegoats to blame rather than accepting what should remain their part in the
affair.
• Wait a minute
All managers should have a mechanism in some shape or form that constitutes a
'wait a minute' facility. This will be present in the formulation of policy or
direction; the taking of decisions; and in the implementation of strategy. At
departmental and other junior levels the purpose is to ensure that no inconvenient
operational precedent is being set by taking a particular line to resolve what may
seem a simple and one-off problem. 'Wait a minute' is not an abdication of
decision-making ability or of decision-making itself. It need not take a 'minute'. It
is simply to ensure that what is to be done has been questioned from every
conceivable angle. It is more generally part of the monitoring, review, early and
late warning systems that should be integral to all aspects of the manager's task.
The presence of a 'wait a minute' facility does not of itself ensure that the right
decision is taken, but it does at least afford a moment's further consideration. If
this is all that is necessary to confirm that what is being done is truly for the good
of the organisation and the fair and equitable treatment of the staff concerned, it
is a moment well spent. Summary Box 12.6 considers three situations where
'Wait a minute' could usefully be used.
• Control
All managers must have control mechanisms suitable to the department or unit
concerned; and relating to the staff, resources and operations that are carried out
within in it. This must apply even where the work in hand is of a professional,
administrative, technical or qualitative nature. The overall function of control
involves setting desired standards and measuring actual performance against
them; from this, analyses of differences between the two will be made and
remedial action will be taken where necessary (see Summary Box 12.7). It follows
from this that objectives must be fully understood by all concerned, so that
involvement in the control of the work necessary and any remedial action that
becomes apparent is adopted and understood by all concerned.
SUMMARY BOX 12.6 Wait a Minute
• Nike, the sportswear corporation, tried to devise a global travel policy for their
staff. In particular the focus was on who should travel first class, business class
or economy class on the world's airlines. Should this be based on - the
distance travelled; the part of the world to which the executive was travelling;
the length of the journey; or the volume or value of business to be conducted?
• The Ceramics Industry Training Board summoned a meeting of junior field
executives to its head office in Harrow, North West London. The junior
executives were from all over the UK and overnight hotel accommodation
was arranged for them.
The meeting was unproductive and wasteful because two executives based
in London were unable to attend. Because they lived in London no accom-
modation was found for them. On the day in question they were unable to
travel because of a terrorist bomb. They also felt discriminated against, and
slighted, by accident of their location in London.
• John Stevens, an official with an international bank at their London office,
asked to be able to take two years' annual leave back-to- back (a total of two
months) to visit friends and relatives in Australia. His request was granted.
Mary Phelps, an official in an equivalent position and with longer service at
the same bank put in the same request for the back-to-back leave to visit
friends and relatives at Ullapool in Scotland. She underlined the request by
stating that it would take longer for her to get to her destination than for
Stevens to get to his.
SUMMARY BOX 12.7 Spans of Control
The span of control denotes the number of people who report directly to a
particular manager or supervisor. The numbers vary greatly, influenced by: the
nature and complexity of the work; the type of employees in question; the
capacities of the manager or supervisor in question; the technology used in the
particular section; the environment in which the work is being carried out
(especially if this is dangerous or hazardous); and wider considerations of
organisation structure and culture- in particular, where the archetype 'lean-form
flat structure' is present spans will be large; while rigid hierarchies have small spans
at each level. The balance that is to be struck is that which reconciles the need to
manage, supervise, direct and control the operations or work in question with the
other matters raised above. Each organisation (and very often this applies to
individual departments) will establish their own rationale; each manager will
translate this into that which is appropriate to their own situation. They may
additionally appoint deputies, charge hands or other supervisors in situations
where the work is complex or the total group large; or where there is a need or
desire to generate a closer pattern of supervision. Finally, such posts may also be
created as part of an organisation development programme or project.
The methods and mechanisms to be used will therefore be department or task

specific; and linked to and in harmony with the overall methods adopted by the
organisation. They must reconcile the necessity to produce clear results with the
need to be flexible and objective in operation and economical and simple.
Presentation of control information in ways that everyone can understand and
have regard to is essential. It is necessary not only to indicate differences and
deviations from required performance but also to provide the means of
establishing the causes of these - where the failures are occurring, why this is
so and what to do about them. Within this context managers will draw up and
use their own control methods. These will include:
• Forecasts, based on the resources - staff, financial and technological -

available; and in relation to the outputs that the organisation requires
• Budgets, for all the activities within the manager's sphere, covering such
matters as staff, production, outputs, operational costs, administration, other
overheads, cash and daily expenditure and possibly also an overall department
reconciliation of these matters
• Management information systems, including the gathering and promul-
gation of information within the department and the reconciliation of this with
desired levels of performance; these also provide a vehicle for the manager's
contribution to the information systems and requirements of the organisation
• Reporting systems, designed to highlight any deviations and problems
immediately, and to identify means by which such situations may be
remedied; in any case, they should be able to provide information that can
be used on an organisational basis for future planning and direction setting
• Feedback: part of the control process is the communication process which
constitutes keeping the departments informed of its progress on a continuous
basis; there is a control function inherent in the nature and content of feedback
that is given; part of this may also be achieved through any performance
appraisal scheme that is in place
• Conflict: part of the purpose of having control methods and procedures in
place must be to ensure that conflicts or disputes between members of staff are
resolved as quickly and effectively as possible
• Control methods and means: these should be integrated into the general
review monitoring and process assessment that should be in place in all
departments; to be fully effective they require full understanding on the part of
all concerned - the manager, the staff and those other departments and units
with whom they interact; they should also mirror the aims and objectives of the
departments if they are to be fully effective.
Summary Box 12.8 lists the number of problems a manager may have to field
even when events are outside his/her control.
•Time
In simple terms, time at the workplace may be divided into productive time; non-
productive or stoppage or downtime; maintenance time; and wasted time. It is
necessary to recognise the prevalence of each element in any working situation;
SUMMARY BOX 12.8 An Airline Manager Working in the Middle East
This manager regularly fields questions from powerful and influential people in his
region. Problems handled have included:
• Why the daughter of a diplomat had to wait 20 minutes for an orange juice on
her flight back to London
• Why packages and parcels carried by a worldwide courier organisation had to
go through security screening and not straight on to the airplane.
• Why it took two hours for a particular cargo to be cleared from the airport by
customs.
• Why Europeans have to go through the full immigration procedure upon arrival
in countries of the Middle East.
The point that each of these items has in common is that they are all outside the
manager's control. They are nevertheless raised by customers and clients of his firm
and he/she must therefore either deal with them or else find someone else to
provide a suitable and adequate answer.
what the composition of each element is; and from that to structure the work in
order to maximise its usage of the time available (see Box 12.9). This may be
developed a stage further into the operational and managerial structure that we
have already noted - steady-state or day-to-day activities; crisis and emergency
management; forward planning and forecasting; and innovation, research and
development activities; and the balance of time to be spent on each. This is useful
both as a vehicle for proposing an operational outline and as a method of
measuring how the time resource is actually to be used and the effectiveness of it.
From this, priority, crisis, wastage, overload and underload can be identified; and
a time - resource - energy dimension put on each. The purpose is to ensure that
what happens in reality accords with what managers think happens. Other
dimensions and variables will also be included. These include the complexity and
difficulty of the task in hand, the importance of it, the urgency of it, and the
frequency of it. The value of what is done, whether derived or implicit, will also
have a time configuration to it. What is therefore required is an attitude of
continued questioning of time usage based on the premise that anything and
everything can always be improved and made more efficient and effective.
From a managerial standpoint, therefore, time is a critical resource and
impinges on all aspects of the managerial task; and above all, it is limited. It
therefore requires both ordering and direction, the same as any other resource.
Other general factors that have to be considered in this wider configuration are:
the nature of the work; the personality of the job holder; the support systems
available in order to ensure efficiency and effectiveness; the style of management
adopted; the demands made by the staff on the manager's time; the management
style of the superior and the way in which that impinges on the manager's time;
SUMMARY BOX 12.9 Waste of Managerial Time
A report published jointly by the UK Industrial Society and BBC on 1 March 1993
drew as its main conclusions the following:
Managers spend up to 20% of their time or the equivalent of one whole day
per five day working week in meetings. Furthermore, they spend up to a third
of their working time on paperwork, routine and administration. The main time
wasters identified were interruptions from colleagues, handling telephone
calls that a junior or subordinate should have fielded, and dealing with
untargeted bureaucracy and memoranda. The main operational cause of
hold-ups was found to be computer problems and system failures.
The stark conclusion to be drawn from this is that managers represent an

overpaid niche of the workforce, in relation to the quality of their output.
Operations, contributions and key results require better targeting, and better
definition; and an understanding on the part of the organisations and their top
executives of what the outputs required of their subordinates are and how these are
to be achieved.
the influences of the manager's colleagues and ways in which they impinge on the
manager's time; the capabilities and capacities of those working in the depart-
ment; and the capabilities and capacities of those in key relationships with the
manager, especially any secretarial or personal assistant function that is present.
In order to maximise or optimise time usage, certain steps can be taken. The
first is for the manager to be aware of the time issue. Part of the process that
arises from this is to set priorities for the department; to set a pattern of
delegation of tasks and activities; to produce suitable and effective work
schedules; and to continuously assess the work in hand against time constraints
as well as against constraints placed by other resource implications. Next the
manager should identify those things that waste time. These may consist of long,
unnecessary or habitual meetings or those which are procedural rather than
executive in content; interruptions and the nature of these in his/her work; idle
conversations; unnecessary bureaucracy, reporting systems and record keeping;
the balance of travelling time against effective business conducted; and task
allocations - especially the allocation of the easy tasks which should be
conducted on a basis that leaves those of high capacity and quality to carry
out key, critical or other activities that match their capabilities, not filling up their
work schedules with items that are well within them.
The manager should also be aware of creative approaches to time management
in terms of machine, equipment and plant usage; working patterns and shift
arrangements; personal planning; the setting and maintenance of deadlines; and
giving clarity of purpose to meetings. There are opportunity costs of time usage
and especially time wastage that can never be made up. All managers and their
departments should have a system of time measurement that is suitable to its

purpose; and that encourages efficiency and effectiveness of performance in
regard to this resource.
• Interpersonal skills and assertiveness

Everyone has interpersonal skills. For managers, these additionally constitute a
tool that is essential to them in the pursuit of their daily occupation. They are
instrumental in creating and reinforcing the management style adopted. They are
part of the process of MBWA and the visibility that goes with this. They reinforce
messages of honesty, openness and trust. They have implications for general
levels and states of communication within the department; and for particular
issues concerned with the handling of meetings and briefings within it (see
Summary Box 12.10) and the wider handling of public presentations and the ways
in which these in turn reflect on the department. The first and most important
thing that a manager's use and application of his interpersonal skills will
represent is the degree of trust and confidence in the staff and the basis on
which they are to be treated. Overall it sets the tone and tenor for the whole
department and its way of working. Managers will therefore apply their
interpersonal skills in the following ways. They will never criticise members of
staff either in public or on a personal basis when the problem is related to work.
If there is a personal issue that requires managerial activity and concern this will
be conducted in private and remain a matter between the manager and the
individual. If it is necessary to criticise somebody's work performance, then it
must be done in a clear and straightforward way with the emphasis upon remedy
rather than apportioning blame. Effective criticism is always constructive; the
end result must be to reinforce the importance of the individual as a member of
the department. If it is possible such criticism should be reinforced by finding
areas of work to be praised at the same time. In this way also, the work remains at
the centre of the concern.
It follows from this that praise should be extended where it is due. It is a
powerful form of recognition and a universal motivator. Every manager should
avoid only dealing with staff when there are negative concerns. Praise makes the
individual concerned feel identity, respected and important. It should be handed
out whenever and wherever due, and it should be conducted in public.
The other manifestation of the manager's interpersonal skills is that of the
particular pride and enthusiasm for the job, the work and the department. It is
impossible that people working in the department will have any of these qualities
if the manager does not have them. The best managers inspire and generate pride
and enthusiasm by the ways in which they behave in relation to the department's
work and the people carrying it out. It is the manager's job to instil this feeling,
and to promote this attitude among the staff and the interpersonal relationship
with the staff is instrumental in this.
SUMMARY BOX 12.10 The Chair: Leading Meetings, Discussions and

Briefings
• Before the meeting: the chair: establishes that a meeting is the best and
most effective format for covering the matters in hand, and a suitable and
effective agenda; sets the room, facilities and environment out in a way suitable
for this matter; pre-briefs all those attending so that they know: what the nature
of the meeting is; what their function in it is; what they are supposed to get
from it; and the extent of their potential effect on the outcome of any resulting
discussions. Finally, the chair will establish an effective order of business to be
conducted and an application of general communication processes in ways
suitable to the matter in hand.
• During the meeting: the chair has to strike a balance between allowing
people's contributions and progressing the agenda in a suitable and effective
way. If there are time constraints these should be made clear at the outset.
Under such constraints contributions should also be limited so that all
concerned get the opportunity to speak and to put their point of view
forward. The correct atmosphere must be generated and maintained.
The chair must also balance making sure that the matter in hand is kept to with
allowing genuine opportunities for discussion and also the exploration of
possibilities not previously thought of.
The chair must know when to allow the discussion to continue and when to
curtail it. Overall this aim must be to keep to the purpose and to move matters
forward.
A decision-making process should be published beforehand so that if there are
decisions to be taken persons in attendance know what these are and how this
is to be achieved (for example, through vote, through consensus, through the
chair). Finally, nobody should be in any doubt as to the outcome of the
meeting.
• After the meeting: it is invariably necessary for some form of follow-up to be
effected. This normally takes the form of circulating a note, minutes or summary
of what went on together with the main conclusions arrived at and decisions
taken; and an indication of what is to happen next.
Above all, work should be a matter of enthusiasm; and a matter of enjoyment

as well as fulfilment. Again, the interpersonal skills of the manager are
instrumental in creating this background.
Other qualities of leadership that become apparent through the use of
interpersonal skills are:- the courage of the manager concerned; job knowl-
edge; self-control and self-discipline; sense of fairness and equity; standards of
personal conduct and behaviour that reflect the standards required in the
department; and a sense of humour. It is also a reflection of the interpersonal
qualities of the manager that ensures that the correct and appropriate standards
of dress, language and manners are established. This is particularly important in
departments and units where dealings with the public are an everyday feature.
The purpose overall must be to establish an adult and assertive means of
interaction within the department (see Summary Box 12.11). The prime purpose
SUMMARY BOX 12.11 Assertiveness
The following is an itemised configuration and summary of the manifestations of

assertive behaviour and language.
• Language Assertive language is clear and simple. It is easy to under-

stand on the part of the hearer or receiver. The words used
are unambiguous and straightforward. Requests and de-
mands are made in a clear and precise manner, and with
sound reasons.
Weasel words, political phraseology, ambiguity, and 'get-
outs' are never used.
• Delivery Assertive delivery is in a clear and steady tone of voice. The
emphasis of the delivery is on important and crucial words
and phrases. The voice projection that is used is always even,
and neither too loud nor too soft.
Assertive delivery does not involve shouting, threatening, or
abuse, at any time or under any circumstances; nor does it
resort to simpering or whining.
• Face and Eyes The head is held up. There is plenty of eye contact, and a
steadiness of gaze. The delivery is reinforced with positive
movements that relate to what is being said (e.g. smiles,
laughter, nodding; or a straight face where something has
gone wrong).
• Other Non The body is upright (whether standing or sitting). Arms and
Verbal hands are 'open' (in order to encourage a positive response
Aspects or transaction).
There is no fidgeting or shuffling, nor are there threatening
gestures or table thumping; or other outward displays of
temper.
• Situational Assertive delivery is based on an inherent confidence, belief
Factors and knowledge of the situation, and the work that is done.
Openness, clarity, credibility, and personal and professional
confidence, all spring from this.
Any clarity of purpose or delivery will inevitably be spoilt
through having to operate from a weak position, or one
which is not fully known or understood. In such cases,
important issues are either clouded or avoided altogether.
In extreme cases the people involved often interact aggres-
sively or angrily in order to try to compensate for this basic
lack of soundness, clarity or understanding.
of the manager's interpersonal skills and approach in the situation is the

promotion of effective work. These factors are an essential and integral part of
this promotion; and without it actual standards will always fall short of the ideal.
This extends to giving negative messages; just because the message is negative,
there is no reason for this to have any lasting effect upon the motivation and
morale either of the staff member who is to receive the negative message or of the
department at large. If it is necessary to deny someone a request, this should

always be done quickly; the reason for the negative response should be made
clear and should be the truth. The manager should never hide behind phrases like
'it's not company policy'. The reason given for the negative response should
always be operational; and it should be clearly and unequivocably communi-
cated.
The end result of all this is that the staff and manager each know where they
stand in relation to each other; and that the interpersonal skills applied and
relationship generated support this. It provides the basis for effective work
transactions and ensures that disputes and misunderstandings are kept to a
minimum. It also ensures that when these do occur they can be quickly and
effectively remedied without lasting effect and, above all, negative consequences
for the department as a whole.
• Discipline and grievance

All managers handle matters concerning discipline and grievance at some stage or
other. All discipline and grievance matters are covered also by employment law
(see Chapter 9); and all organisations are required and expected to have
procedures in place covering each that at least match the minimum standards
recommended or set down by the law and codes of practice.
• Discipline
Discipline is concerned with setting standards of performance, attitude and
behaviour at the workplace in the interests of ensuring that everyone knows what
is expected of them and that they conform to them. If the approach taken is both
positive and understood by all concerned it follows that such problems are kept
to a minimum. Any organisation is allowed and expected to set its own
standards, and these will be reflected both in the nature of the work itself and
also in regard to the expectation of customers.
When problems do occur there are two facilities which managers should adopt
in the approach to them. First is the manager's own intercession in the problem;
the purpose of this must be to get the individual concerned back performing or
behaving adequately and effectively. Normally, this will be achieved by having a
quiet word with the individual, pointing out to him where his behaviour or
activity is falling short of the required standard, ensuring that he knows what the
required standard is and concluding the discussion with an agreement that this is
now the way in which matters will be conducted.
There will be occasions when this fails to work, and the procedures referred to
above will therefore be invoked. The purpose of these procedures should always
be to remove the cause of the problem. Stages in the procedure underline the
standards required of the staff; and any and every warning issued by the manager
SUMMARY BOX 12.12 Office Staff Practices, 1852
1. Godliness, Cleanliness and Punctuality are the necessities of a good business.

2. This firm has reduced the hours of work, and the Clerical Staff will now only
have to be present between the hours of 7 a.m. and 6 p.m. on weekdays.
3. Daily prayers will be held each morning in the Main Office. The Clerical Staff
will be present.
4. Clothing must be of a sober nature. The Clerical Staff will not disport
themselves in raiment of bright colours, nor will they wear hose, unless in
good repair.
5. Overshoes and top-coats may not be worn in the office, but neck scarves and
headwear may be worn in inclement weather.
6. A stove is provided for the benefit of the Clerical Staff.
7. No member of the Clerical Staff may leave the room without permission from
Mr Rogers. The calls of nature are permitted and Clerical Staff may use the
garden below the second gate. This area must be kept in good order.
8. No talking is allowed during business hours.
9. The craving of tobacco, wines or spirits is a human weakness and, as such, is
forbidden to all members of the Clerical Staff.
10. Now that the hours of business have been drastically reduced, the partaking of
food is allowed between 11.30 a.m. and noon, but work will not, on any
account, cease.
11. Members of the Clerical Staff will provide their own pens. A new sharpener is
available, on application to Mr Rogers.
12. Mr Rogers will nominate a Senior Clerk to be responsible for the cleanliness of
the Main Office and the Private Office, and all Boys and Juniors will report to
him 40 minutes before Prayers, and will remain after closing hours for similar
work. Brushes, Brooms, Scrubbers and Soap are provided by the owners.
13. The New Increased Weekly Wages are here:.mder detailed:
Junior Boys (to 11 years) ........................................................................ 1/4d
Boys (to 14 years) ...................................................................................... 2/1 d
Juniors ............................................................................................................. 4/8d
Junior Clerks ................................................................................................. 8/7d
Clerks ............................................................................................................. 10/9d
Senior Clerks (after 15 years with owners) .................................... 21 I -d
The owners recognize the generosity of the new Labour Laws but will expect a
great rise in output of work to compensate for these near Utopian conditions.
or the organisation in the pursuit of a resolution of the problems will detail, in

clear tones, the nature of it, steps taken to try and resolve it and the levels of
performance now expected of the individual. These warnings will either be orally
issued, or in writing; in either case a record will be kept by the manager
concerned - as well as a procedural necessity it is also a legal requirement.
There are rules to be followed. Failure to follow these rules is a breach of the
law and may be cited at industrial tribunal if the matter is serious and gets that far
(see Chapter 9). The individual is allowed representation at a disciplinary hearing
and also the right of appeal. The individual concerned must also be allowed to
put his case and have it heard. Any finding against the individual must be
communicated to him. This finding must reflect the nature of the offence and not
be personally punitive.
All organisations designate a series of offences which, for whatever reason,
constitute matters of serious or gross misconduct and for which suspension from
work or dismissal or summary dismissal may be applied. It is normally accepted
that such offences constitute breaches of the law - vandalism, violence, theft and
fraud. However, in certain cases this may be extended to standards of behaviour
on the part of the particular organisation - for example, failure to wear safety
clothing on a building site may constitute a sufficient reason for dismissal,
whereas this would not apply in other situations. Conversely, swearing at the
place of work may constitute sufficient reason for dismissal for an individual
working in a high fashion boutique, whereas on a building site this would almost
certainly not be the case.
When managers are called into action on this front, they need to ensure that
they have their own strategy and purpose worked out for dealing with it
effectively and speedily. The standpoint will always consist in the first place of
establishing that the individual knows that there is a problem, and what the
nature of that problem is; and then for asking the individual for his view and
explanation of it. What the manager has then to achieve will have regard to the
general needs of the department, the particular need to maintain standards, the
particular need to sort out any misunderstanding if this is simply the case, and
any wider needs of the situation. Only when the full facts of the case have been
established will the manager make a judgement on it.
Above all, such a judgement will be reformative wherever possible, and
punitive only as the last resort. Dismissal will be conducted only where this is
the most suitable punishment for the offence (as in the case of breach of the law as
detailed above), or where it is necessary for the wider maintaining of depart-
mental standards, or where all other means have been tried and failed and where
not to do would set a bad precedent. It is finally incumbent upon the manager to
maintain records of all disciplinary measures conducted against staff members.
Apart from the legal requirements it enables the manager to follow up cases and
to ensure that any agreed new standards of behaviour and performance are being
adhered to and maintained.
• Grievances
As with discipline, the emphasis must be on resolving issues rather than
institutionalising them and doing this quickly and effectively. In particular, if
the individual concerned feels that insufficient attention is being paid to his case,
he will feel slighted- he, after all, felt that the case was important enough to bring
up and make an issue of in the first place.
Managers need to know again the scale of their own flexibility to act. They
must also have regard to the wider situation- what implications are to be derived
from resolving an issue in a particular way (or failing to resolve it).
The purpose again will be, within these constraints, the resolution of the
matter in ways satisfactory to all concerned. Having said that, the overriding
concern must be for the organisation or department; if it is necessary to
disappoint a member of staff in this interest, this should be clearly commu-
nicated, together with the reasons for it.
Again, there are procedures to be followed and standards required by law; and,
again, the overwhelming concern must be for justice to be seen to be done. If the
individual does not like or does not agree with the manager's finding he should
always be afforded the opportunity to appeal or to refer it to a higher level of
authority in the organisation.
With both discipline and grievance the manager's standpoint must be to
promote and set standards that keep all such activities to a minimum and to limit
them as far as possible to cases concerning a genuine misunderstanding. Cases
should be dealt with quickly and fairly, and should not be allowed to fester and
rankle. Managers must, finally, be aware of the extent of their authority and
freedom to act; and to understand when and where to seek expert assistance, for
example in relation to those matters where there is a direct legal implication.
• Negotiating
It follows from the consideration of interpersonal skills, discipline and grievance
that managers will, from time to time, be faced with situations that require them
to negotiate. Whether negotiations are simple and direct or long, complex and
protracted, such activities must always be effective. Whenever managers enter
into any form of negotiation, therefore, they must have their own aims and
objectives and understand, above all, what their preferred outcomes are. In all
such situations the best possible outcome is that which leaves everyone happy 'the
win-win situation'. If the manager is to be effective in this area there are some
basic ground rules.
First, managers should always pre-prepare their own case, establishing what
they are seeking, when, where, how and why; must have regard to any constraints
within which they have to act; and also to any opportunities afforded by a wider
consideration of the matter in hand. Next, they must have an understanding (if
not sympathy) with the position of the other person and of what they want,
when, where, how and why, and of the merits and demerits of their particular
case. Managers must again understand the extent of their authority in the
particular situation. If they promise something they must be able to deliver it. If
there is a ritualised position; or if there is a potentially explosive or extreme
situation the manager must be able to deal with this, defusing any anger or bad
feeling at least at the point of decision and implementation if not before. The
creation of an effective environment for such negotiations is extremely important
and must be conducive to getting the job done as required. This, therefore
includes consideration of the behavioural, physical, psychological and role
aspects of the situation; it will also have regard to any precedent set in the past
and to the implications of setting such precedents in the implementation of
whatever is to be agreed in the present. Finally, it is necessary to be aware of the
continuing need to work effectively and harmoniously; even where the matter in
hand is a serious dispute, this should not hide or obscure the basic requirement
for the eventual promotion of an harmonious working environment.
There are particular skills and knowledge required in the negotiator (or
negotiating team). These are to do with a strategic, tactical and situational
awareness; empathy; judgement; situational understanding; and the ability to
apply social and interpersonal skills in the right mix and in the right ways
according to the nature of the situation.
Managers can and should be trained in the art, skills and processes of
negotiating; as stated at the outset of this section it is an essential, integral and
universal part of the job. All managers should therefore be competent at it and be
able to handle such matters and issues in a satisfactory way.
• Performance assessment
It is implicit in much of the above that the manager must be able to assess and
judge the levels and quality of performance in his department and to measure it
against the required standards, taking remedial action where necessary. This will
be at the following levels. If there is a shortfall at departmental level he may need
to conduct a range of activities to find out why this is so and to make his
judgements from this. Such activities may consist of, for example, a walk-through
of the processes and procedures of the organisation or department; an observa-
tion or sampling of departmental activities, harmony and cooperation; or the
assessment and identification and remedying of blockages, again either in
processes, procedures or the operations themselves.
At team level it may be necessary to institute a process of examination of the
workings of the team in question to assess where performance is falling down,
why this should be so and what is causing it. From this, a more accurate
compartmentalisation and definition of this under one or more of the headings of
attitude, conflict, processes, procedures, communication, decision-making and
inter-relations should be possible. Furthermore, by undertaking such an
approach the problem area may become apparent and remedy applied to it in
the interests of reforming and recreating a positive and productive team.
At individual level a two-fold approach is necessary. One is to ensure that those
in the department receive organisational feedback on the nature of their work,
praise for good performance and quick and effective remedy for any shortfall.
The organisation's formal appraisal methods may in any case require this and
may use these methods as the means of allocating training, development,
secondment, the next move and pay rises. In all these cases it will be important
to the members of staff that such appraisal is carried out in accordance with
expectations and generally effectively.
The other part of the approach to the individual here concerns the general
monitoring of the work of the department by the manager concerned. Perfor-
mance will actually be continuously assessed as part of the manager's 'leadership'
role in the department. Effectively conducted, the manager will know the state of
the department and the performance of it on a current and continuing basis.
Issues will be remedied before they become problems, and problems before they
become crises.
The final part of this activity is a continuous measure of performance against
targets and objectives, the criteria against which the success or otherwise of his
department will be assessed. Part of this requirement, therefore, is to see the
department in this way and to be able to measure and judge its performance
along these lines also.
• Health and safety

We have already established the overall nature of responsibilities for health and
safety (see Chapter 10). However, ultimately, the manager is responsible for all
matters concerning health and safety within the department, and to ensure that
everyone else in it understands their own place in this regard, and that they work
and behave in ways that are safe and healthy. Managers have a variety of means
and instruments at their disposal to ensure that this is achieved.
They are, in any case, responsible for all aspects of staff induction, training and
attitude formation and health and safety must be an integral part of this. The
required attitudes and standards are clearly indicated at this stage; in addition,
the new member of staff is taught the emergency procedures and practices, and
the importance of the use and wearing of any safety and protective clothing that
may be necessary in the work. Emergency procedures and practices are to be
learned and assimilated by all staff so that in the event of such an occurrence,
effective and quick action can be taken both to remove people from the danger
and in regard to the danger itself.
Safe behaviour patterns must also be devised. These support the required
attitudes and also give effect to the procedures; above all, they ensure that any
potential hazard in any part of the manager's domain is dealt with by whoever
happens to be nearest to it.
Reporting of accidents is a legal requirement in the UK and also much of
Western Europe and elsewhere. The purpose of doing this from the manager's
point of view must be to provide information about work areas where accidents
are occurring which can be assessed and analysed, and to take remedial steps
from this, whether operational, organisational, developmental, or in regard to
attitudes and behaviour.
In any department there must be an emphasis on prevention rather than cure
that ensures that the actual levels of accidents is kept to a minimum. It is
impossible to eliminate accidents altogether; however, by addressing work
patterns and methods, attitudes and behaviour and by ensuring that adequate
procedures exist and that everyone knows them, they can be kept to a minimum.
Managers will take general steps to ensure that the profile of health and safety
in the department is suitable. This is done through the general promotion of
safety, its importance in the total scheme of things and also matters relating to
health and safety and emergency training and practices. It is also essential to
ensure that standards once set do not fall and that accidents start to occur due to
increased complacency or sloppiness in the day-to-day operation and depart-
mental management. It should, moreover, be noted that there is a direct
relationship between accident levels and staff morale: each feeds off the other
and as accidents increase, so does morale decline.
• Sickness
The manager will monitor the levels of sickness and absenteeism in the
department and look to preventing this from arising. Much can be done in this
regard by ensuring basic standards of comfort for staff, free from draught and
dampness, and adequately heated and lit; and by ensuring that work stations and
work methods are constructed in ways that do not give rise to repetitive strain
injuries (RSI) of any sort. Training in specifics such as lifting will be given to
ensure that back and arm strains do not occur. Those who operate VDUs will
have their work structured with adequate breaks in order to prevent headaches
and eye strain from occurring. Again, high levels of sickness absenteeism are
generally indicative of low levels of morale and motivation among the members
of departments.
Managers must be aware of all this and understand it. They must make
interventions where necessary, conducting their own enquiries into accidents,
sickness and absenteeism with the object of taking remedial action and the re-
establishment of standards where necessary. Above, all if there is a bad accident
or emergency in the department a full enquiry should be held and lessons learned
so that it may be prevented from happening again.
• Realpolitik
This is the art of survival in the organisation in which the manager is working
(see Summary Box 12.13). It requires knowledge and understanding of the nature
of the particular 'jungle' in question. From this managers will devise their own
methods and means of becoming an effective and successful operator therein.
They must be able to survive long enough to do this. It follows from this that they
must understand and be able to work within the formal and informal systems of
the organisation and to establish their place in them. Especially in the informal
system they may require to find their own niches and from there go on and
develop networks and support within the organisation. Large, complex and
sophisticated organisations have series of 'duster groups' determined by

profession, location and status and people in such situations must discover
those that are suitable and make sure that they are involved in them to their
advantage. They will develop a keen 'environmental' sense. This comprises, first
the ability to spot straws in the wind, indicating possible changes, developments,
innovations or crises; second, the recognition of the departments and individuals
where actual power and influence truly lie; thirdly, sources of information within
the complexities of the organisation; and fourthly, 'managerial antennae' which
are finely tuned to perceive any shifts in the other aspects or across the
environment in general.
SUMMARY BOX 12.13 'After the Staff Meeting'
' ... so I went to the leader, and I asked him to build me a wall for my back, so that
when the knife came, I would be able to see it. And he agreed, and he built me my
wall; but he left a hole in it, just in case ... '
Source: Minisaga (Pettinger, 1988, unpublished).
Managers will assess their own position in the pecking order, the competition
for power and influence and the qualities that they bring to the organisation's
internal political situation. They will assess their own strengths and weaknesses
in it, the capabilities and capacities that are required in order to be effective and
professional operators in the given situation.
They will identify where the inter-group frictions (and sometimes hostility) lie
and assess the reasons for them. From this standpoint they will similarly assess
the position of their department in the whole, and look to be able to lobby for
support and influence where they are most likely to get it in the pursuit of these
interests.
They must adapt their managerial style to the situation. For example, a highly
open and task-orientated approach is not likely to work in a bureaucratic set-up.
By adopting it anyway, because of preference, the manager would simply throw
away any advantages held and the political positioning necessary in order to
operate in the environment. This would also impinge upon both the work and
effectiveness of the department and its own regard in the organisation. Consider
Summary Boxes 12.14-12.16.
Other factors that affect the political and operational environment in the
organisation are as follows. There may be a question of role ambiguity, whether
among departments or staff where particular lines of activity, authority, job and
task boundaries are not dearly delineated. There may also be more general
problems in this area relating to lack of clarity of aims and objectives where
departments are unsure of their remit and consequently operate in a void.
SUMMARY BOX 12.14 The Choice of Ministers
Machiavelli wrote that 'the first opinion formed of a ruler's intelligence is based on
the quality of the men he chooses to be around him. When they are competent and
loyal he can be considered wise, when they are not the prince is open to adverse
criticism'.
The prince has 'an infallible guide for assessing his minister: if the minister thinks
more of himself than of the prince, seeking his own profit rather than the greater
good he will never be a sound minister nor will he be trustworthy'.
Source: Machiavelli, The Prince.
SUMMARY BOX 12.15 Over-mighty Subjects
In Sixteenth century England the Tudor Kings and Queens were burdened with
what came to be known as their over-mighty subjects. These were the land-
owning nobility whose support the monarch required to keep the peace in the
outlying parts of the country and who, if support was not forthcoming, constituted
a real threat to the monarch's position. This support was therefore generated by
hiving off huge parcels of land, local ruling rights and general autonomy to the
nobles in return for the continuing support for the Tudor dynasty. The Kings and
Queens went on regular progressions throughout the realm to try to ensure that the
bargains thus struck were adhered to; in practice, however, great areas of the
country were effectively the personal fiefdoms of these nobles.
In organisations of today, 'over-mighty subjects' are found in areas equivalent to
those described above. As well as location, however, organisations must beware
of. and look for, these 'subjects' in key, critical and functional divisions and areas.
SUMMARY BOX 12.16 The Parable of the Spodight
This is a recognition that, figuratively speaking one of the most powerful positions
in any organisation comes about as the result of being able to 'shine spotlights' on
other people; that is, to draw attention away from the workings of one's own
department towards the workings (especially negative) of others. This constitutes
the spotlight configuration. The purpose is to create a view of the department in the
spotlight that is negative, at the same time creating an aura of greater darkness
around one's own department in the position behind the spotlight, in which
consequently it may not be seen so clearly.
Furthermore, departments may use this lack of clarity to push their own
boundaries outward and build or extend their empires. Lack of clarity in the
fields of performance and output standards also relates to this and leads to inter-
departmental wrangles and conflicts based upon the consequent inevitable
shortfall in performance and the necessity to draw attention away from that
which relates to the department of the manager in question and towards other
departments.
Throughout the operational environment there will also be various agenda that
are to be followed. Departments and their managers have secondary and hidden
agenda especially to do with the advancement of a particular course of action; but
also, more generally, in the promotion of the department or its manager in the
pecking order of the organisation. Unhealthy, negative competition may be
engaged in by departments that has nothing to do with the pursuit of effective
operations but rather negatively encourages success at the expense of other
departmental failures and becomes a drive for power and influence in itself
motivated by the need to gain the ear of the chief executive or in other spheres of
influence.
The situation may be exacerbated by bad and inadequate communications and
communication systems so that people find things out via the grapevine or other
vested interests; in such situations especially, trade union officials prosper and
flourish. There is a consequent increase in the numbers of disputes including
those between departments; and an increase also in those disputes and grievances
that get put on a formal basis and go either to arbitration or to the top of the
organisation for resolution. Rules and regulations in such situations become the
end and not the means to an end. Where such situations are allowed to persist
over long periods of time, bureaucratic superstructures are devised and
additional staff and procedures taken on and adopted and such inter-depart-
mental and organisational wranglings become institutionalised and part of the
ways of working.
In such situations also information becomes a critical resource to be jealously
guarded and to be fed out in the interests of the information holder rather than
the organisation itself. Impurities are fed into information systems by vested
interests and those seeking increased power and influence for themselves and
their own unit or sector at the expense of others. In such situations, over-mighty
c;ubjects prosper, also at the expense of others (as do designated officials such as
union representatives).
A manager must therefore recognise these components and vagaries of the
work environment; and must be able to work his way around them, accom-
modate them, and where necessary, tap into them and feed into them in the
pursuit of his own effective performance.
In the medium to long term the negative aspects outlined in this section have
extreme demoralising and debilitating effects not only on the staff but also on the
organisation itself and ultimately its customers and clients. The organisation
must recognise such activities for what they are and take remedial steps wherever
necessary and desirable. It is finally incumbent upon directors and general
managers of organisations to take a global view of this situation and, where it
occurs, undertake major activities and possibly organisation surgery necessary to
remove it and to ensure that the organisation gets back on even track as soon as
possible.
• Conclusion
In the conduct of these variant and divergent activities, the manager is devising
and implementing work methods, patterns and styles and a managerial approach
that reflects these in the interests of getting productive, effective and profitable
outputs from the department. This has to be seen from the widest of all angles.
For example, taking time to induct a new member of staff may seem a profligate
use of precious and expensive managerial time, but the payback on it will be seen,
(a) when a problem has arisen due to the ignorance of the new member of staff or
his lack of expertise or cultural awareness; and (b) in terms of the manager not
having to waste time on resolving such an issue because of the time spent in
induction. Similarly, resources spent on the department's ambience and environ-
ment may seem profligate in certain circumstances but the returns are measured
in terms of low absenteeism, a general positive wish on the part of the staff to
attend in the department, high levels of output, low levels of labour turnover and
a productive and harmonious attitude and work activities.
The purpose of this chapter has been to outline the reality, diversity and
complexity of the managerial task and its applications in both operational and
project-type situations. The chapter is designed to demonstrate a range of the
means and methods and approaches that are available for adoption in the pursuit
of this; the quantitative methods discussed in Chapter 11 outlined a set of tools
and sources of information that are also available in ensuring that these activities
are pursued effectively.
The main additional point to make, is that concerning the continuing
obligation of professional practising managers to develop both their own
expertise and the nature and functioning of their department. Again, we refer
to the concept of 'continuous improvement' and the standpoint that, as
perfection is not yet achieved, the process ever represents the art of the possible
and not the fanciful. There is a very hard edge to this also - it derives from the
universal drive for profitability and effectiveness: in the particular context of the
business sphere of the 1990s with its global and contracting markets, entryism
and opportunism, technological advances and cross-market fertilisation, the
global nature of competitiveness and competition, any contribution that any
managers can make in their own sphere that improves their own position and
that of their organisation is of value. It follows from this that managers are
obliged by virtue of their profession to keep abreast of all developments in the
generic, managerial field as well those relating to the environment, function and
operations of their particular organisation. Only by doing this are they able to
maintain an effective, competitive and current position both for themselves and
also for the department that they are leading and directing and of which they are
the life and driving force.
CHAPTER 13
Managing in a changing
environment
• Introduction
The changes that have impinged on society over the period since 1945, and more
particularly since the 1960s, in turn impinge on the management of organisations.
These changes may be summarised as:
• Technological, affecting all social, economic and business activities; render-

ing many occupations obsolete and creating new ones; and opening up new
spheres of activity, bringing travel, transport, distribution, telecommunication,
industry, goods and services on to a global scale
• Social, the changing of people's lives, from the fundamentals of life
expectancy and lifestyle choice, to the ability to buy and possess items; to
travel; to be educated; to receive ever-increasing standards of health-care,
personal insurance and information; to be fed; to enjoy increased standards of
social security and stability, increased leisure time and choice of leisure
pursuits; and all commensurate with increases in disposable income and
purchasing power, and choices of purchase;
• Ec~olitical, resulting in changes in all governmental forms; the state of flux
of the EC, and the adoption of super-national laws and directives, and the
single market; the collapse of the communist bloc and the USSR; the
fragmentation of the former Yugoslavia into its component states; the
emergence of Taiwan, South Africa, Korea and Vietnam as spheres of political
and economic influence, taking their place in the business sphere
• Expectational, in which the changes may be expressed as from stability to a
state of change itself, a state of flux; the change from the expectation of
working for one company or organisation, to working for many, and the
realisation that the former is increasingly unlikely; change in occupation,
training and profession; change in political governance, and the instruments
of state; organisations change their business (e.g. Virgin, from music into air
travel) and expect their staff to change with them; hospitals in the UK are
(1992-95) being reconstituted as 'business units' and offering medical
services at a price or charge, and are expecting staff and patients to go along
with this; business is indeed 'thriving on chaos', and 'learning to love change',
and this is increasingly expected by those who manage it.
However, the importance of understanding, controlling and managing this

process is fundamental to its success. Rather than either passive acceptance, or
352
Managing in a changing environment 353
allowing it to happen, managers must assume responsibility for, and direction of,
the change process and the activities required to make it effective and successful.
There is a hard operational and commercial drive behind this, related to the
business and operational modus operandi of the 1990s.
There is, finally, a managerial context. The great organisations of the past ten
years are corning under pressure. Japanese organisations, and 'model' UK
companies such as Body Shop, all experienced difficulties for the first time in
the early and mid-1990s. This has involved fundamental operational and
directional reappraisals by all. The true test of their total strength is the ways
in which they handle these issues, and how they emerge from them.
• The present and future of management

The purpose of this chapter is thus to highlight the concepts and issues that are of
relevance and importance in the business and management sphere in the 1990s
and beyond, and that constitute the background against which business is
currently conducted and represent the current level of development of the field
as an area of expertise in its own right.
Again, it must be stressed that essentially management is a qualitative subject
and not an exact science; and that this extends into those spheres where
quantitative methods are both present and operated (see Chapter 11). Everything
is subject to interpretation and assimilation in particular circumstances.
Management takes place in a business sphere that is global and which draws its
lessons and expertise from a global environment. There is therefore a reality of
cross-fertilisation and exchange of ideas; and the potential for the development of
this is virtually unlimited. There is a rich field of study to be drawn upon here
before any manager, in any organisation, in any sector, in any country can truly
call themselves an expert. As we have already seen, while the main contributions
have so far come from Western Europe, the UK, North America and Japan there
is yet much to be drawn from Africa, the rest of Asia, South America and
Australasia. There is thus no place for an attitude of insularity or complacency on
the part of any manager from any organisation. Most of those organisations to
which reference has been made, either in this book or elsewhere in managerial
literature, have experienced difficulties as well as prosperity- and one of the tests
of their true character, strength and expertise will be the way in which they
handle these problems and overcome them.
It follows from this that the current nature and practice of management must
be seen in the context of its environment. As often stated, this is both turbulent
and changing. It is affected by recession and downturn. Also to be considered is
the great rate of technological change. There is, further, the emergence of an
Asian manufacturing bloc that has both technological and labour cost advan-
tages. More generally, the bankruptcy, deprivation and social regeneration of the
former communist bloc must be addressed. The population explosions, migra-
tions, deprivations and famine of Africa must be considered. There is political

and social turbulence in the Middle East, the Balkans and South America. All
these factors impinge on the business sphere. They generate business activities
and operations that have to be managed. They generate pressures on resources
and organisations. They generate economic, social and ethical factors that often
make managerial solutions to problems, based purely on operational grounds,
unacceptable or untenable (by whatever criteria the concepts and activities are
measured). However, people working in the field are now able to recognise that
there is great concern for deprived, war-torn and starving communities of the
world; and that there are also direct ways of taking effective action in response to
them; the adoption of the managerial (rather than the emotional or the political)
perspective in these areas is what is required to generate a truly effective act.
This is the background against which the realities of management are currently
drawn. There are general hopes (rather than expectations) of emergence from
global recession, of economic expansion and of the resolution of the problems
which face managers. There are more direct hopes in regard to the emergence,
post-Cold War, of the countries of the former USSR; the emergence and
development of the EC single market and its widening to accept new countries
over the coming decades; and the development of realisation of the potential of
the Asian manufacturing bloc to generate both economic expansion and greater
resources over the coming period. In this context we now turn to particular
managerial initiatives.
• Management of change
The concept of the management of change is prominent because of the turbulence
and ever-changing nature of the global economic system, as we have seen, and the
relationships of organisations within it. This must be reconciled with the need of
the managers of organisations to be able to have some influence, work within an
environment that has these properties and to conduct effective and profitable
business in spite and in consequence of it. Change impinges on everything.
Markets, their size, scope, scale and nature are ever-changing. Technological
advance is ever-more pervasive and ever wider uses and adaptations are being
found for technology. Work patterns, expectations and methods are constantly
being altered and adapted while operations and activities are being globalised.
Change impinges on all aspects of organisational operations. This ranges from
narrow productive and operational considerations to any ethical stance adopted
by the organisation as part of its competitive positioning; to concepts of
flexibility, responsiveness and quality; and all such matters pervade the whole
culture and structure of the organisation. Since the end of World War Two both
business and public operations in the western world have tended to be established
with order and stability in mind and many have been slow to adopt the ability to
change as part of their way of working and existing.
A key phrase in all the excellence studies was articulated by Peters as 'learning
to love change'. This flies in the face of the prevailing ethos in many western
corporations, particularly those that are either complex or longstanding which
have invested heavily over the period since the end of World War Two in stability
and order. What is required for effective change and the ability to promote it, live
with it and harmonise with it successfully is an understanding of this. The
business world that people came into is not the same as that in which they are
now being asked to operate; uncertainties and anxieties that arise out of this must
first of all be stressed before they can be effectively and successfully managed.
• Change catalyst and change agent

The concept of the change catalyst and change agent must be addressed. They
may constitute one and the same thing; they may also be, as it were, different
sides of the same coin - the catalyst for change may be the need to reform
workplace industrial relations (for example) and the change agent the person
given the responsibility of doing this.
The catalyst may be a person, event or factor, internal or external to the
organisation. Whichever it is, it is that which brings the organisation to the
realisation that we cannot go on as we are. It may be a very uncomfortable or
even debilitating or destructive process in which the organisation and its
managers are faced with unacceptable or unpalatable truths - the catalyst here
is that which forces this out into the open. The catalyst thus provides the initial
energy that sets the change of process in hand.
The agent is the person (or event, or phenomenon) that drives it. This may
again be internal to the organisation (for example, an increase in the priority of
marketing will become effective if the marketing director appointed to achieve it
comes with a high reputation and track record in the field); or it may be external
- a common use of management consultants by the organisation is to get them as
external advisers to articulate to organisation stakeholders (especially staff
shareholders) what may be unacceptable coming from within the organisation
and from its top management team.
• Attitudes, values and beliefs

Effective, lasting and operationally successful change is achieved only if attitudes,
values and beliefs are addressed and the same universal importance placed on
change as on operational and technological factors. They all impinge on each
other: for example, the introduction of an automated production line leads to
new job requirements, which leads to new job descriptions, which leads to new
ways of working, which leads to revised staff handbooks and work agreements-
and so on. Consequently the attempts to introduce an operational change in
isolation (for whatever reason - and a common one in the UK used to be trade
union pressure) simply results in the old stance being conducted less effectively on
the new machine; while there may be a short term gain in terms of expediency, in
the avoidance of a labour dispute, in the longer term both operation and
production will suffer.
• Behavioural barriers to effective change

• Barriers to change
As we have seen, there are both physical and human barriers that have to be
overcome. However, there are wider considerations to be taken into account,
reflecting the necessity for organisations to understand the nature of the anxieties
and uncertainties of their staff. This in turn must impinge upon any organisa-
tion's change strategy if it is to be successful. The five main barriers are as
follows:
• 'It cannot be done': this is a barrier both to confidence and understanding

and is based on a lack of true, full and accurate information concerning the
matters which the organisation is proposing.
• 'There is no alternative': this comes in two forms, first, it is adopted by the
workforce and interest groups in and around it (for example trade unions) that
have a vested interest in the maintenance of the status quo either because it is
familiar or because any change will result in loss of influence. This is especially
true where business has been conducted in an effective and productive steady-
state for a long period of time
The other side of this is where directorates and managers adopt this as the
one and only explanation for a change that is to take place. Conducted in
isolation 'there is no alternative' simply becomes a challenge for others to think
of alternatives. The matter requires explanation and communication in order to
demonstrate to all those affected that alternatives have indeed been considered
and that what is now proposed represents the chosen strategic direction
• Lack of clarity: if organisations have not sorted out the basis of the changes
that are proposed, neither staff nor customers will go along with them with any
degree of confidence or understanding; aims and objectives must be clearly
understood as the prerequisite to successful and effective change, and
communicated to those concerned in their own language
• Fear and anxiety: these are human responses to concepts and situations that
are unknown or uncertain. They are the initial response (or part of it) to any
change that is proposed; and if allowed to get out of hand can become an
exercise in the devising and promulgation of hypothetical scenarios that could
in certain circumstances become problems on the changing landscape. Not
only does this constitute a waste of organisational resources and a diversion
from its actual purposes, but such interaction among the staff feeds on itself,
generating negativity and unnecessary internal turbulence
• Perfection: at the point at which change is proposed suddenly everything
concerning the status quo becomes 'perfect'. Anything that is proposed as an
alternative has therefore to address this barrier. It is another manifestation of
familiarity and comfort, and faced with the loss of this, such elements become
highly worthwhile to retain.
The prevalence of each barrier will depend upon the particular situation, the
nature and extent of the changes to be made and whether they are operational,
locational, attitudinal, structural or cultural. To an extent, however, each must
be addressed. The vehicle for this will always centre on communication. This
must be effectively designed and the content delivered in the language of
recipients. All media available will be used - briefing groups, plenary meetings,
individual and group methods, oral and written modes, notice boards, news-
letters and other circulars. Overall they will address dates and deadlines for the
given changes; the implications of them and their effects for staff; any range of
alternatives that it may be necessary to offer; re-training, redeployment or
redundancy; and some articulation of the future following the implementation
of change.
• Counselling and support

Following on from this, the behavioural barriers as they exist in an actual
situation will be identified and an approach to them devised. It is first necessary
to pin down those that need tackling before any successful or effective change can
take place, those that require constant addressing throughout the whole period of
change, those that will or may present themselves as hurdles later in the process
and the likely timescales for these, the extent to which each will impinge upon the
change effort if it is not effectively addressed, and any aspects of them that
require further investigation.
It follows that this will require individual and group counselling and support
methods and mechanisms to be put in place. These are for the purpose of
reassurance, the continued addressing of lingering or persistent uncertainties, and
they provide also the means of tackling individual cases. Moreover, they provide
behavioural messages that in themselves reflect the organisation's concern for,
and commitment to, its individuals and groups and have great implications for
the overall presentation of stability, permanence and continuity.
A general stance of openness and assertiveness (see Chapter 12) in the
management of behavioural aspects of change should always be adopted. If
there is an issue of redundancy, for example, it is best to have it in the open and
deal with it as soon as possible rather than allowing the grapevine to get to work.
The language used to convey this (and all information) should always be that of
recipients.
Addressing these matters in this way does not assume any dilution of the
process. It rather emphasises the fact that the organisation will have sorted out
both the required and proposed changes in advance and also the means by which
these are to be effective. Only once this has been tackled in advance from a
strategic point of view will effective implementation be possible. This also helps
reflect the extent of the organisation's continuing relationship with its workforce
and its customers, and reinforces these messages.
Finally, as change is not a linear process, opportunities for the organisation to

reform and restructure other activities will generally present itself during its
course. There may also arise historic, underlying or fundamental issues of
culture, attitudes, beliefs, structures, values and ethics; the need to generate
concepts of flexibility, dynamism and creativity among the workforce; and to
reform more general or global perception of the organisation, its methods and
relationships with customers and clients. The establishment of effective change
processes and the successful stressing of the behavioural or human elements
thereof should help constitute a springboard for future prosperity.
• Changing culture
The concept implied here relates to the implication that what is currently in place
is undesirable for a variety of reasons, that there is a vision or articulation of the
desired state of affairs, and that a strategic approach can be (and once the
decision is taken to proceed, must be) adopted to ensure that the required
conclusion is arrived at. Consider Summary Box 13.1.
SUMMARY BOX 13.1 Culture Change
This process was once defined as- unfreezing- transforming- refreezing. This has,
however, lost credence to the extent that the idea of 'refreezing' is a misnomer in
the current state of the business and managerial environment.
It is also possible to look at culture change in terms of force field analysis. This is
where the forces that drive change and those that restrain it are separated out.
Those that drive change are then energised and pushed on; those that restrain it are
either removed or neutralised or else re-energised in ways productive to the desired
outcome. This is a valuable concept but its weakness in application is the tendency
to address operational matters rather than those that relate to attitudes, beliefs and
culture. Changes in the latter therefore tend to be slow, diluted and hard to direct.
The process of changing culture is concerned with reforming the ways in which
members of the organisation concerned think and believe, and also their
prevailing attitudes. Therefore, while there are certain behavioural and opera-
tional activities that can be usefully and positively addressed, the main thrust has
to be at the core values, beliefs and ethos of the organisation itself and its staff,
shareholders and other stakeholders; regard may also need to be given to both
direct customers and also the views and values of the wider environment and
society in which the organisation operates.
The process of change requires an acceptance and understanding that the
prevailing culture is inappropriate, a willingness to do something about it, and a
series of steps taken to reform it. The process additionally requires the under-
standing and adoption of the whole required culture and values that go with it by
all staff in the organisation (this may be a consultative or directive process).
Manifestations of this will be reflected in changes at the operational phase, as
we have seen. In addition, changes in managerial style and ways of working
become necessary as do changes in job descriptions, job mix, organisational and
structural aspects. It is impossible to contemplate cultural change without
structural style or operational changes - they are all inter-related: it is simply
that culture is the driving force (the reverse is also true, that it is impossible to
effect operational change without having regard to cultural aspects, though
operational change will not in itself change culture per se).
The process must be energised, resourced and driven if it is to stand any chance
at all of lasting success; clarity of vision is required, and activities must be
engaged in that address both the physical and human barriers to change.
Effectiveness of communication and action will only be enjoyed if this is indeed
so; in particular if the staff do not understand the need and value it, the resistance
barriers will go up. In traditional organisations and others that have enjoyed long
periods of permanence, order and stability the need for change is often very hard
to put across (the Affluent Worker studies, for example, as we saw in Chapter 2,
found that the staff expected steady-state work in return for an acceptable and
increasing level of prosperity; where this is removed or destabilised the clamour is
for the return to the old ways and not to seek some new order). Consider
Summary Box 13.2.
SUMMARY BOX 13.2 External Force and Cultural Change
One study, conducted by Alan Williams and Paul Dobson of the City University
Business School in the late 1980s, questioned whether culture change could be
executed at all at least in the ways envisaged at the outset by organisations. Their
study of 60 British organisations in the period 1985-88 across a wide range of
industrial, commercial and public activities, concluded that culture change
followed in the wake of organisation or operational change and that where it
was effected this was because of external rather than internal driving forces.
• Changing structure
The nature and complexity of organisation structures is self-evident and the
reality of these structures forms a continuing thread throughout the whole of this
(and many other) management books. What is at issue here is the nature of the
structure, what it is supposed to achieve and its relationship with effective and
profitable performance. Concerns in the field of organisation structure have been
voiced by all authorities on the subject. The matter here is therefore both to
articulate these concerns, and to draw conclusions from them.
There are historic problems with organisation structure. First, the history of
organisation development indicates that structures are easier to put in place than
they are to change, dismantle or rearrange. Second, the need for change, as we
have seen, may neither be apparent nor recognised. Third, the structure has often
provided a career progression path through the organisation that has been one of
the attractions of working in it and staying in it; there is therefore a resistance to
structural change on the part of the staff as well as the organisation itself. Full
structures have often acquired a degree of permanence and stability throughout a
period of business and organisational activity that has been conducted in an
environment of permanence and stability also.
• Organisation purpose
It is clear from this that there are matters to be addressed in regard to the
structures of organisations. Like other structures they are devised to serve
particular purposes and when that purpose is spent or concluded or moves on
to another, the structure should move on also. For physical structures this will
normally mean replacement or relocation; for organisation structures this process
constitutes reform.
At the basis of this is the organisation's reason for being. From this, as we have
seen arise the way in which it is operating and is to operate in the future, the size
and scale of the organisation, its technology, its markets, and its staff. In turn,
these are related to the nature of managerial style and direction and controls
either required or implied. This is the reverse position of that which says 'we have
a structure, therefore we must use it'; rather, it takes the opposite view that 'we
need a suitable and effective structure and this is what it should be and should
serve'.
• Specialisation
The next point to be considered relates to the nature and degree of specialisation
that is present. Current thinking and practice have tended to move away from
highly specialised, functional divisions and departments. The functional exper-
tise may well itself be required but it tends not to be so in traditional role patterns
of organisation. Rather, the approach taken is to buy in expertise when it is
required. Furthermore, organisations may ask for managerial and other key staff
with a much wider range of expertise than was previously required; or they may
train them in this much wider expertise in the period following the commence-
ment of their employment.
• Suitable structures
Related to this is the expense of carrying sophisticated structures and functional
departments and the consequent addition of cost to the organisation. Sophisti-
cated structures that tend towards functional specialisation and compartmenta-

lised expertise are inherently unwielding and difficult to direct and harmonise
with the core purpose of the organisation. While the higher bureaucratic concepts
related to the permanence of organisations remain current together with the
necessity to retain and develop its expertise, nevertheless traditional bureaucratic
structures are increasingly being called into question as the most effective way of
doing this.
Organisation structures that are to be devised increasingly therefore reflect the
reappraisal of the ways in which functional expertise is required, rather than
assuming that because it is required a department or division has to be set up for
it. New structures therefore tend to reflect current principles of lean form and
streamlining and flatness, especially when related to head office or corporate
support functions. Other principles are placing responsibilities for quantity,
quality, effectiveness and control on to managers as an integral part of their
expertise; creating business units and profit centres that are themselves
streamlined, empowered and which operate with a distinct clarity of purpose.
Part of this purpose, furthermore, consists of fulfilling the organisation's
functions but in ways which contribute to organisation performance and
effectiveness rather than to serving the structured systems themselves. In some
cases this has led to radical reappraisal of what the roles and functions of a head
office (and the structures, systems and procedures that it devises) should actually
be; and what constitutes an effective method of control; and how these can best
be ordered and applied.
Above all, both the concepts and reality of structures of organisations
increasingly reflect the other essentials of current business management practice
- effective and suitable channels of communication; effective and suitable
decision-making processes; the relationships between functionalisation and
departmentalisation and value added to the organisation's outputs; closeness
to the customer and the flexibility and dynamism that goes with it. Those
responsible for the inception, design and structure of organisations are finding
that what is required is an effective balance of the key aspects of control and
permanence and direction, flexibility and dynamism; the ways in which
organisations are to be constituted and reconstituted for the future will reflect
this.
Traditionally there has been evident a conscious decision taken by organisa-
tions to be centralised or decentralised, whether or not that was operationally
desirable or appropriate; this extended to both structure and outlook. However,
increasingly the question of centralisation or decentralisation is not a decision to
be taken in this way but rather a matter that arises only in relation to the reality of
effective performance. Having made this clear, there is a current tide of wisdom
which indicates that the clearest path to this effectiveness lies in devolved
autonomous business units. It is indicated in the 'shamrock' model (see Chapter
4) and other configurations of the peripheral workforce; and in the arm's length
and privatised functions that are starting to appear in public, social and health
services. It mirrors the hands-on, value driven, lean form approach recommended
and promulgated by Peters. It mirrors the demands and drives for autonomy and
executive authority on the part of business managers. Above all, what is indicated
is a structure that is effective and suitable, reflecting the nature of the business
and the ways in which work is to be conducted; and having regard to balancing
the requirements of control and cost effectiveness.
• Changing staff management

The reality of staff management is currently one of transformation: that is, of a
fundamental shift in the perceptions of it, what it constitutes and what it should
constitute; of the nature of managerial approaches to it; and of the expectations
of it and what it should achieve on behalf of the organisation concerned. In the
past the general approach has been coercive both in nature and operation; that is,
the devising of structures and procedures to control the staff and contain the
conflicts inherent in such a situation were based on confrontation.
This transformation is related to and driven by a combination of great
advances in managerial expertise; advances in the understanding of human
resource behaviour patterns and aspirations in work situations; technological
advances; and changes in social expectations and aspirations. The general
components and manifestations of this transformation have their basis in the
assumption of professional expertise by managers. Particular configurations of
this are as follows.
• Patterns of employment
Developments in patterns of employment that reflect a combination of social
obligation and economic requirements on the part of organisations have been and
are taking place. Those organisations that have promised or inferred life time
employment to their staff have found that there is, inherent in this, a continuing
obligation to train, re-train and redevelop staff. This has and does involve the
development of alternative patterns of work and reformation of the workforce
concept into that of 'the human resource' and all that this implies.
• Performance and reward

An ever-more expert and precisely drawn relationship between pay, rewards,
benefits and compensation packages offered to staff on the one hand and the
nature of the performance and output requirements of them on the other is being
developed. Above all, there is the realisation that steady-state salary scales and
progressions are for steady-state organisations and environments; where neither
is present this means of reward is inappropriate. Rewards and payment are
therefore targeted; they are to be related to the achievement of objectives, and
their effectiveness thus measured. It is furthermore necessary to develop both the
concept of performance related reward for administrative, professional and

managerial activities, and to devise what constitute true and valid targets and
aims in these areas of operation.
It follows from this that a greater understanding of the organisation's
requirements of each staff member is necessary and a greater emphasis placed
upon establishing what actually constitutes truly effective professional, technical,
administrative and managerial output. It is true that performance indicators can
be drawn in terms of standards of behaviour, quality of performance and
exhibited and inferred general qualities of pride, commitment, enthusiasm and
motivation; they have however to be established, assessed and measured by those
in turn expert in the field and who understand the concepts themselves and how
they are effectively to be applied in pursuit of the organisation's requirements.
A much more pragmatic view in business terms is thus taken of the human
resource bringing it into line with the approach to the other resources of the
organisation. Staff are thus seen as the 'human asset' - that is, a reflection of
investment, and on which returns are accordingly expected and to be assessed
(see Chapter 11). There is a requirement for output and optimisation of efforts.
There is also a value placed on genuine human assets that reflect the
organisation's regard of them, the esteem in which they are held, the expecta-
tions held of them and aspirations for them. In the human asset, furthermore,
there should be distinctive elements of pride, confidence and esteem held by the
organisation for, and in, its people. This is also a contributory factor to the
changes in work patterns and approaches to structural and cultural factors to
which reference has been made above.
• Staff as stakeholders
There is also the recognition of the posmon of the staff as a legitimate
stakeholder in the organisation. A long held view in Japan and parts of Western
Europe (especially West Germany) the concept is now becoming more widely
accepted across the rest of the business sphere. Organisations are coming to
realise that openness, honesty, participation, effective communication and the
development at least of an operational consensus does not constitute dilution or
loss of control but rather a means of focus for the development of the
organisation, and generation of harmony and understanding are of benefit to
everybody who works within it. Above all is the importance of the understanding
of the concepts, standpoints and reasoning behind it; the actual instruments used
(works councils, briefing groups, and so on) will have value only where such
understanding is found.
• IR and staff relations

It is necessary now to address the particular field of IR and staff relations in this
context. New and current approaches are concerned to ensure that these are
conducted from a standpoint that is both cost-effective and suitable to the needs
of the organisation. If direct relationships are drawn between the wider and more
general aspects of staff identity and motivation and organisational performance
profitability, it follows that the removal of the barriers of alienation and
demotivation where they exist is an essential feature.
Such approaches to IR therefore stem from an organisation-wide belief that
there is a contribution to be made to profitability by the adoption of them.
Standards are clearly established; and all staff are briefed in these. Managers are
trained both to value their importance and to uphold them, and to conduct
departmental industrial relations with a view of effectiveness in the same way as
any other operational activity. Emphases are therefore concerned with problem-
solving, decision-making and developing a conformist and harmonious wider
environment and approach.
This means reappraisal of the concept, nature, role and function of IR on all
sides. The nature of conflict inherent in the situation is still recognised; but it is
addressed through the means of giving common cause and purpose to the
situation rather than regulating and ordering the conflict itself. This requires a
fundamental re-think on the IR role on the part of organisations, managers and
units and employees' representatives in establishing their own role and preferred
direction. It requires the adoption of a set of beliefs and values based on future
aspirations rather than past traditions and places the emphasis firmly on
organisations to deliver an aura and ethos that enables this to take place. It
requires the basic arguments related to the 'price of labour' to be conducted from
a strategic, enlightened and long term perspective and for organisations to
recognise the true implication of this. It requires, finally, the creation and
adoption of IR policies that are effective and comprehensive in coverage, that
reflect the need to address issue rather than process and that provide, above all,
for a speedy and successful resolution of problems when they arise. The onus in
all of this is on the organisation.
It follows from all of this that while the validity of the staff as a legitimate
interest group is undiluted and genuine involvement is to be promoted, the means
by which this is actually achieved will derive directly from the preferred IR
standpoint of the organisation. In general terms, whatever is established will have
its own constitution, remit, terms of reference and agenda that reflect the
concerns of the staff on the one hand, and a forum for organisational and
formalised involvement on the other. Its true effectiveness will always lie,
however, in the extent to which the organisation views its staff as a legitimate
interest group.
The approach to the human resource overall therefore reflects a combination
of generally increased expertise and global fund of knowledge on which to draw.
This is underpinned by an ever-developing understanding of the nature of HRM;
and a hard business acumen that requires a return on people as on any
investment. The human resource represents in general at least 50% of the
organisation's total investment; and in service sectors this is very much higher, up
to 90% in many cases. The required and developing approach to the human
resource must be seen in these terms; this is part of the wider concept of the
'hands-on', value driven approach. Staff themselves must be regarded in this way
as well as the outputs that they generate. The view adopted is therefore a
combination of a measure of enlightenment and a true understanding of the
concept of resource maximisation - one that recognises all the diverse and
divergent demands inherent, identifies the nature of the prevailing organisation
situation and reconciles each in productive, harmonious and above all profitable
and effective activities.
• Working with change

There are some more general considerations that affect organisations that now
bear consideration. We have already established the reality of the concept of
'constant improvement'; and that this is itself part of the 'state of permanent
change'. Moreover, technological advance and changes in market taste, in
awareness and perceptions and wider environmental considerations reinforce
this. The widening of horizons, choice and the resulting globalisation of business
means that no market is safe or secure; that competition may come from any
organisation of any nationality (or trans-nationality) from anywhere within the
business sphere. The organisation that forgets this does so at its own peril.
Flexible contracts, the changing nature of public services, general changes in
lifestyle and aspirations also all impinge. It is therefore incumbent upon the
manager to learn to love change and be comfortable with it and to regard the
current turbulence of both the global business-sphere and the particular sectors of
it as the natural environment in which to be successful and effective.
To complete this part of the picture it is therefore necessary to address and
summarise the global concept of quality. The final part of this section is a brief
summary of the main and distinctive features of Japanese management; as we
have already stated, this is important in any consideration of management
practice which has been shown to be both profitable and successful in the late
1990s.
• Quality
'Quality' as a managerial concept is much in vogue in management direction and
practices in the UK, EC and North America. It is endemic throughout the
Japanese business and industrial spheres.
It is first necessary to recognise the conception of quality as part of a corporate
state of mind, a core element of prevailing attitudes and values rather than as an
adjunct to existing practices. It follows from this that the organisation's true
commitments to quality will be reflected in the capabilities of staff employed; the
tenor of sales and marketing efforts; levels of investments in plant, machinery and
equipment; types of plant, machinery and equipment; induction, attitude
formation, training and development programmes; and the style of IR and staff
relations, supervision methods and managerial approaches that are adopted.
The organisational standpoint thus adopted is related to themes of 'obsession
with excellence and quality' and the concern for quality as a moral standpoint. It
is part of the background to the undertaking and part of the fixed investment in
future success.
There is an obsession, first, with customer satisfaction, in terms both of the
products or services offered, and the ways in which they are delivered by the
organisation. This must cover the whole process from the acceptance of orders
through delivery and dispatch to after-sales service. In many cases this is
instrumental in the generation of repeat business. There is thus a strong element
of long term investment inherent in any true, genuine approach and attitude that
has quality at its core.
There is an obsession, second, with staff excellence, in terms of their expertise,
skills and knowledge. This must be underpinned, however, by a commitment to
them that ensures that they are instilled with the attitudes necessary to deliver this
expertise in the ways in which the organisation and its customers require. They
must be paid and rewarded adequately. They must have their expectations and
aspirations accommodated in the intention and pursuit of excellence. Again, this
is regarded as a long term, mutual investment and commitment between staff and
organisation. It is not regarded as a purely instrumental or functional approach,
or concept of employment.
There is an obsession, third, with the 'theme of constant improvement', the
recognition that each and every aspect of the organisation, its products and
services, its practices, procedures and operations, can be made to work better,
more effectively in the pursuit of quality and excellence. Levels of investment in
production methods and capacities, standards and lifespan of production plants
and equipment will also be the subject of this commitment. Only the best
equipment will do: that is, something which has all the attributes required to
meet the output levels required in terms of speed, reliability, perfection, regularity
and universality. The plant and equipment used is to be set at these levels before
any item is produced and what is produced is to meet the standard each and every
time. This is the production manifestation of 'right first time'.
The maintenance of operations at a continuing high quality level is under-
pinned by both procedures and processes. The procedures include inspection,
random sampling, testing and monitoring of products as they come off the line,
and of the lines themselves during planned maintenance periods.
The processes reflect the concept of continued improvement and must include
work improvements and quality improvement groups addressing both product
and production methods.
Part of this must include the adoption of this obsession with quality by all
concerned as a shared and core value and an active involvement in the
improvement. Everyone's contribution is therefore to be valued. It also involves
the adoption of the customer focus by all concerned, whether or not they deal
directly with customers.
Quality assurance in service sectors, both public and commercial, is less easy to
define, because each transaction is based upon a human request rather than a
finished item. In practice, it is achieved in the commercial service sectors by
breaking down each component of the service into something which is either
measurable absolutely or into categories for which minima can be more easily
defined.
Thus, for example, an insurance policy is the representation of a contract
between one individual and the insurance corporation. It will state what the
coverage given is in relation to the individual's own circumstances and
dispositions, however, so that there is no doubt about the nature of the offering
and expectation. As all insurance companies do this, the potential customer is
able to make an informed choice and to question the organisation's representa-
tives in any matter of which he is not sure. Similarly, the hotel starring system is a
representation of the combination of ambience, facilities, room standard,
restaurants and location, that is published in literature or brochures; again both
travel agents and hotel staff themselves may be contacted to clarify any point.
In public services this now tends to be formalised by service level agreements
and arrangements in which memoranda are drawn up specifying obligations and
expectations on the part of the service users, consumers or purchasers and the
providers of them. This is the direction that is increasingly being taken in the UK
in the provision of local government activities (education, social service, repairs
and maintenance, community housing and environmental health), and in the
NHS, which now has its own internal market. In such arrangements, the precise
offering will be agreed and a price fixed; there may be exclusions from it, or
conversely a level of service above which the purchaser has to provide an
additional payment.
• Quality circles
The concept of quality circles was American and post-war in origin. It was
exported to Japan which, in turn, made it an integral part of the continuous
quality improvement process in organisations. A quality circle is a group of staff
which meets on a regular basis to review the whole area of quality at the
workplace. This involves identifying and clarifying problems, selecting issues
from among these for resolution, organising and prioritising them, setting
deadlines, timetables and target dates, and setting aims and objectives by which
the improvements in the quality of the organisation's operations can be
measured. To be effective, they require accommodation, resourcing and support
from the organisation and a commitment to back the judgements of the quality
circle. Organisations have to recognise that there is a pay-back, not only in
improvement in quality or, at least, in problem identification, but that this is also
instrumental in promoting the desired attributes of greater commitment,
achievement, identity and participation by all concerned. Quality circles are
voluntary, generating and selecting their own leadership, frequency and timing of
meetings, and precise agenda format. Where they have worked, especially in
Japanese companies, it has been because there is a greater cultural pressure to
participate, together with an environment created that is both conducive to, and
expectant of, a full measure of involvement (whether something is actually
designated voluntarily or not).
• Japanese management
The concept, practices and approaches adopted by managers in Japanese
companies are of interest for a variety of reasons. First, and most important, is
clearly that concerned with commercial success; the Japanese economic miracle
of the period since the end of the World War Two is of critical global importance.
However, there are other matters, both cultural and practical, which, as we shall
see, merit careful study, impacting as they do upon the activities of all companies
and sectors.
There is a work ethic traditionally imbued by society that is manifest in a
number of ways. A basic concept is gambara which means 'don't give up, do your
best, be persistent, put in a great effort'. This lies at the core of the Japanese work
ethic. There is also a high concept of service which is much more widely regarded
than elsewhere in the world- service is regarded as being not only at the customer
interface, but also over the lifetime of the products provided, and also for new
products and models and their lifetime to the customer. The Japanese work for
the good of their group and their company above all; the view adopted is that the
whole only functions effectively when all its component parts are in turn
functioning to full effect and capacity.
The work society interface is considered. Bad business is regarded as a waste of
the resources of the society. Service to the society is performed through the high
industrial, commercial and managerial virtues of fairness, harmony, cooperation,
continuous betterment of quality, courtesy, humility, adjustment, assimilation
and gratitude. Responsibility in all these spheres is fostered through managerial
arrangements at the workplace; and the inherent requirement for obedience,
conformity and respect are combined with an enlightened and egalitarian view of
society that is the equivalent of 'from each according to his means, to each
according to his needs'.
The concept of inter-dependence also runs through Japanese companies. This
also is viewed in the widest context. As well as relationships between organisa-
tion and customer, regard is given to those relationships between the individual at
his work group, inter-relationships between groups, the concept of self-restraint,
cohesion and harmony, senior/junior and mentor/protege relationships. The
individual is valued for his contribution on all fronts: team, group, divisional and
corporate.
Japanese management practices are designed actively to prevent problems
from happening. This is distinct from elsewhere, where great store is often set by
the ability of the manager to resolve problems. The Japanese manager is expected
to resolve them as and when they do occur; this, however, should be kept to a
minimum; organisation and managerial style reflect this.
The decision-making process is a combination of nemawashi, which literally
means binding the roots and has come to mean thorough preparation; and ringi,
which is the outcome of this. In practice, the process involves full consultation
and the engagement of the cooperation of all those who are to be affected by a
decision before it is taken. Preparation and pre-preparation, time and effort is
everything; and to those who do not come from within the culture, it is said that
the process appears inert for a very long period. However, once ringi is reached,
that is once everyone's support is engaged, it is understood that the matter in
hand will go ahead at full speed from that point onwards, because there is
nothing further to consider. The provision of information and the means for full
participation, involvement and consultation on the part of all is critical to the
success of operations if this style of management is to be adopted successfully and
effectively. Japanese companies adopt a philosophy of 'management and
organisation', not a series of components; it is the whole that is critical to
operational success, not some of the parts only. To this extent adequate and
effective communication systems are essential.
The next thread that runs through the practice of Japanese management may be
summed up thus: the customer is king. Customers are the most important interest
group to any company; without them there can be no business success. Customer
satisfaction must be generated not only by the extent and quality of products and
services currently offered, but also by the generation of new products to ensure
that this goes on into the future. Implicit here also are two further aspects of
Japanese management. The first is that of continuity, the measuring of success
over long periods of time rather than as something instant or short term; the
second is the more general concept of continuous improvement.
In the pursuit of this the Japanese company sets great store by creative,
innovative and extensive research and development activities. Only by investing
and prioritising heavily in these areas is a continuing run of fresh offerings for the
markets ensured. In addition, different applications for existing technologies may
be found in this way, as are capacities for introducing a hitherto exclusive
product to mass markets.
In the pursuit of this also, the Japanese company takes a very different view of
failure from that elsewhere. Failure is when a commercially offered product fails
to satisfy the customer. It is not a judgement generally made at the research or
inception stage. Any product or idea that is generated, but which does not
progress to the output stage is nevertheless retained as the subject for the research
or prudent activity or else is kept in storage until market perceptions change and
it can be commercially developed at a later date. Finally, while it may come to
nothing in itself, the creative spark that engendered it may come up next with a
market leader.
The stakeholders in an organisation and their relative positions of importance
may easily be inferred from this. First is dearly the customer. Second are the
employees. The major Japanese corporations adopted philosophies of lifetime

employment and have managed to practice this up to the present day (though
there are signs of current difficulty in some organisations). Third comes the
shareholder, very often one of the large banks and often, also, underwritten by
the Japanese exchequer. In addition, shareholders are often customers of the
companies that they underwrite. The emphasis on continuity, performance,
satisfaction and the customer is therefore underlined again, rather than, as
elsewhere, concentrating on dividends and shareholder benefits.
The other side of the coin is that Japanese consumers want the best. They
expect this to extend across the entire range of consumer goods and services
based on principles of continuity, service and quality outlined and inherent in the
matters discussed above. Finally, authorities on Japanese management, style and
practices are of the view that, while a certain amount of what is done can be
ascribed to Japanese culture itself, nevertheless good management practices are
good practices anywhere and everywhere. It is not the national characteristics of
the Japanese that are to blame for managerial, industrial and commercial
shortcomings of business elsewhere, but rather failings in those businesses and
operations.
• Japanese approaches to success

The rise of Japanese industry, and the domination of the global heavy
manufacturing, technology, car and electronics sectors by Japanese companies,
has also provided a rich source of material for management students. Over the
period since 1960, Japanese industry has transformed its outputs and its
reputation from low quality and customer confidence, to high quality and
customer confidence; and Japanese companies are now the major supplier of
electrical goods to the USA, Australia, New Zealand, and Western Europe, as
well as being major players in the car, computer and banking sectors.
The components of success of Japanese companies over the period since 1960
may be summarised as follows:
1. Conformity: and the harnessing of this characteristic of Japanese society to

the requirements of profitable business; in order for this to be successful, it
requires vision and direction from the top of companies that is both profitable,
and worthy of respect from the staff and customers.
2. Adaptation and adaptability: very few of the products made by Japanese
companies were invented in Japan; Japanese technologists, researchers and
business developers have rather seen the potential of inventions from other
parts of the world, adapted existing products for other purposes; been able to
standardise production both to a high level of quality, and to a price that makes
the products available to mass consumer markets; and been willing to promote
and develop a full range of related products, and after-sales and back-up
services to ensure a high level of repeat business
3. The emphasis placed on the long term, rather than the immediate, return:
there is an advantage in the financial system of Japan, which basically consists
of the underwriting of Japanese business and industry by the government (at

least over the short to medium term); this in turn allows both flexibility and
confidence on the part of the industry to experiment, to pioneer, to develop
new products and initiatives in the expectation of long term success and
profitability, without having short term financial products or targets as priorities
4. Investment in staff training at all levels of the organisation: for
example, Nissan spent millions of pounds and dollars training production
operatives at Washington, Tyne and Wear, UK, and Smyrna, Tennessee, USA,
before a single car was produced; as well as the high quality of the finished
product, the returns are measurable in terms of employee commitment,
positive attitudes, identity (rather than alienation), and minute levels of
absenteeism
5. Concentration on, and commitment to, the development of managers and
supervisors: especially in the areas of staff management and problem-solving
there is great pressure on the manager in a Japanese company to resolve issues
successfully himself, rather than refer them through 'channels' (as in a more
traditional Western bureaucracy); there is also a great cultural pressure not to
get into institutionalised disputes, and above all, not to lose them
6. Single workplace status: there is a strong social hierarchy in Japan; it is
reflected to an extent at the workplace, in that the senior is worthy of respect;
however, the workplace requires that this is translated into business needs
only, and in this situation everyone is important in their role, whatever that may
be; it is usual for everyone to wear the same uniform; to go through the same
basic induction and orientation programme; to use the same facilities (e.g.
canteen, restaurant and recreation); and to be on the same basic terms and
conditions of employment
7. A strong identity on the part of all staff with the company is both required and
insisted upon: in managerial and professional occupations within the organi-
sation this may involve, for example, working very long hours, taking an active
part in corporate hospitality and business-related activities in the evening.
Similarly, activities designated 'voluntary'. are not voluntary to such staff in
Japanese companies.
Consider Summary Box 13.3.
• Foundations for the future

All of the factors and issues raised in this section concentrate on the drive for
business and organisational quality effectiveness and excellence. They reflect the
fact that these constitute the major concerns of the business sphere in the last
decade of the twentieth century. They are further underlined by the relationship
that is drawn between the existence of these qualities in organisations and the
success, effectiveness, growth and profitability of them that are considered to
arise from the fact either that they operate in these ways or that they exhibit these
qualities.
The greatest mistake that anyone could make, however, is to believe that they
constitute an end in themselves; that, once achieved, an organisation is
guaranteed permanence and eternal profitability. This is not so. At their highest
SUMMARY BOX 13.3 Konosuke Matsushita (1892-1989)
Matsushita founded what is now the largest consumer electrical and electronic
goods company in the world, and was also a much respected Japanese manage-
ment guru.
He embodies all the principles outlined here. The three qualities that he required
of his production processes were, high volume, high quality and low prices. Staff
were taken on for life time employment and the company accepted any obligation
inherent in that for re-training and development as new technologies came on
stream and had to be used.
Matsushita was an advocate of different management styles, in different parts of
the organisation. This should also apply in organisations of different size,
technology, sophistication and complexity. Finally, management style must also
change as the organisation itself changes, grows and diversifies; it is not possible to
find a single successful formula by which it would work. He summarised this as:
when to lead from the front; when to lead from the middle; and when to lead from
behind.
He adopted the painstaking and deliberate expansion, development and
diversification policies of the concept of nemawashi and ringi, so that risk was
eliminated as far as possible from such initiatives and business success was, for a
long period of time, assured.
He was a proponent of the business relationship between society and industry,
advocating that it should be mutually profitable. Business operations that were not
profitable should be closed down.
His leadership style was that of benevolent, enlightened and commercially
orientated paternalism. He kept in constant touch with his senior managers, and
also regularly visited all of his plant and production areas. He commissioned a
company song which all employees had to sing at the start of each working day. He
preached the virtues of self-sacrifice and self-discipline in the pursuit of company
permanence and excellence. By doing this, all would benefit - company,
customers, staff, and Japan.
level (and if one is offering or preaching perfection) these concepts represent

threads and strands that ought to run through the core of any organisation or
undertaking; they constitute a standard of ethic, aura, belief and pride in the
organisation that are increasingly recognised as the sound foundations on which
business success must be built. They also represent the obsession with top quality
of product and service and the central position of the customer in the activities of
any undertaking and the critical importance of this. Such foundations require
constant attention and maintenance as do the organisations, their structures,
cultures and practices which are built on them. This is also the basis from which
the next developments of the business and management sphere and of managerial
expertise are to come. It has taken the composition of the expertise and reality of
management that is currently recognised thousands of years to develop this far;
and this includes the globalisation of experience and practice.
• The future of management

The purpose of this penultimate section of the book is to complete the picture;
that is, to draw together the main threads, strands and implications so far
discussed and to relate them to the environment both as it is now and also as it is
envisioned for the future. Constant references have been made to the concepts
and phenomena of the business sphere; the global nature of business and
managerial activities; the close inter-relationship between business and manage-
ment; the universal nature of some activities and the highly specialised confines of
others; and the ever-changing relationships and interactions between them.
First, the general level of debate concerning what management is and what it
should be is being raised. This comes in a great variety of forms. There are
evermore management magazines, publications and broadsheets. There are
evermore successful business and management leaders publishing their mem-
oirs, offering their own experience to the world, providing anecdotal or empirical
lessons on which to draw. Functional managers have their own expertise mixes
and offer lessons in those particular spheres. Particular business technology,
operations and expertise recommend particular approaches to the management
of the particular area, very often in the form of manuals and support literature,
professional bodies, standards of education and skills and awareness provision.
All these aspects create their own fora for debate and discussion; and this is being
formalised and developed by professional bodies, managerial occupational
categories, trade federations and associations and trade unions, all of whom
are insisting increasingly on this as part of the continuing right of the individual
to practice and to belong to the body concerned; or conversely as part of their
continuing and developing obligations to their members and subscribers.
There is a great proliferation of business schools, business education establish-
ments and private operators in the field of business and management education.
The role and function of business schools in particular is ever-developing. The
approach taken is multi-faceted. Primarily, this is the provision of business and
management education at under-graduate and post-graduate levels; that is, the
devising, organising and imparting of the body and knowledge of skills that, by
common consent, constitutes the spate of expertise in the field at present. In
particular, the globalisation of the MBA and other Masters degrees in manage-
ment as a statement of general worth and value in the field is becoming ever-more
important. There is also a proliferation of pre-vocational, vocational, certificate
and diploma courses and qualifications in business administration, gener.al
management and functional or specialist management (often in conjunction
with a professional body or occupational sector). Beyond this, courses for
experienced and professional people wishing to acquire this new body of
expertise both for advancement and enlightenment in the fostering and devel-
opment of expert practice is also gaining in recognition and value. Finally, many
business schools offer short courses related to particular management skills and
knowledge also catering for the full range of capabilities and capacities.
Much of this work is driven by the necessity for recognition and qualifications
on the part of both organisations and their managers. Any formalised contracting
arrangement normally requires the provision of a body of suitably recognised and
qualified staff, a formal statement and note of their expertise which (apart from
anything else) provides the basis for contract assessment, compliance and
insurance. This is particularly affected by privatisations, project work, ap-
proaches and other formalised contract compliance regulations that are coming
into being in both Western Europe and the emergent Eastern Bloc. This is likely
to become especially important in the placement of public works and services; the
development of regeneration activities based on infrastructure health and social
service projects; and the particular requirements of purchaser-provider arrange-
ments and arm's length activities that may arise from this. In summary, there is a
balance to be struck between formal education, personal qualities, capacities and
capabilities, organisational and environmental pressures and the increased
complexity of the management. This is certain to develop further in the coming
period.
It follows from this that the nature and concept of management is not one
which leads itself per se to a relationship with promotion (at least not without
inherent capacities and capabilities on the part of the potential promotee being
assessed and evaluated in advance). Management is from all of the above
standpoints a designated expertise, increasingly professionalised, and likely to
progress to a highly expert and organised status. It follows also that one will
choose management as an occupation at the outset of one's career rather than
another functional activity from which one may be 'promoted' to a managerial
position. The individual is therefore likely to commence as a management trainee
and to progress to junior, middle and senior or 'competent' and expert, and
'diverse' manager; in the same way as in another field one starts off as a junior
doctor and then progresses to houseman, registrar and consultant; or from junior
plumber to experienced and expert consulting status. The envisaged managerial
progression is in parallel to this rather than a bureaucratic move or an adjunct at
the top of it.
The levels of expertise, excellence and capability in the field impinge in the
same way in the business and management sphere as do other professional
expertises in other areas. Just as in the field of medicine an ever-greater range of
viruses, illnesses, injuries and incapacities can be identified and treated, so there is
an equivalent application in the field of management. An ever-greater range of
knowledge is available and coming on stream in relation to all aspects of the
business and management sphere - expertise available to the professional
manager in pursuit both of his/her profession and the particular job also in
which s/he finds him/herself a practitioner at the present. The converse is also
increasingly recognised; that is, that an absence of this expertise impacts directly
on the performance of the manager. This in turn has a derived negative effect on
the business performance of the organisation in that it removes part of the
competitive edge that would be present if the manager had the qualities,
capacities and expertise referred to; at present any such organisation would
have to compete without benefit of these elements. It is self-evident, therefore,

that there is an ever-greater expectation placed on managers. Expert, qualified,
educated and trained, their contribution is not only valued but valuable. The
costs of employing expert managers are coming increasingly to be regarded as
part of the investment necessary for effective and continuing business perfor-
mance and one on which returns can be measured in both quantitative and
qualitative ways.
The expectations of organisations, it follows again, are changing. There is a
move away from sophisticated functional and bureaucratic structures towards
the lean forms referred to above. Career paths are not therefore to be based on a
progression through such a labyrinth based on a combination of loyalty,
expertise, accommodation and service; but rather on expertise alone and the
ability of the manager to develop this and apply it in an ever-widening range of
situations rather than his ability to survive the bureaucratic jungle. The path
followed is at present increasingly envisaged as being task, project and customer-
related and mirrored in the way in which he combines his personal, professional
and operational qualities, education and capacities.
• The business sphere

Constant reference has been made to this concept throughout the book; by way of
completion it is necessary to address certain key features of it that are of both
importance and prominence in the last part of the twentieth century and beyond.
• Investment
A greater understanding of the requirement of investment and the true nature of
business and organisational returns on investment is clearly indicated. Much has
been made of the Japanese approach to both. These levels of investment have
ensured sound foundations on which the organisation itself is built. They have
also ensured the purpose of, and continued updating of, high quality capital
equipment and plant that ensures a constant flow of new products and a high
level of quality of the output (see Summary Box 13.4). This is all driven by the
consuming business need to gain and keep customers and to meet the twin aims
of giving satisfaction and maintaining loyalty. This level of investment has also
extended to the generation of high quality staff. Part of the level of investment
related to this has been the necessity to generate and maintain high levels of
motivation and corporate identity. This is manifest also in the generally high
levels of pay and terms and conditions of employment that such organisations
always deliver as part of the commitment required in adopting this particular
style of management. These levels of investment and resource commitment have
enabled high volumes of high quality output to enter into the consumer goods
market over the period since 1945 and more especially over the period since 1970,
SUMMARY BOX 13.4 Investment
The apocryphal tale is told of two groups of managers, one British and one
Japanese, who each ran a production line employing 20 people.
A machine was invented that could do the work of this line but which only
needed one person to operate it.
The British managers went home with heavy hearts because they knew they
would have to make 19 people redundant.
The Japanese managers went home with glad hearts because they were going to
get 20 new machines; they were going to expand output by a factor of 20; all the
staff were going to get re-training and a fresh place of work; and they would not be
adding to the wage bill.
representing the period when Japanese industry expanded, internationalised and

ultimately globalised, inwardly investing into Europe, North America, the
Middle East and New Zealand, bringing with it untold commercial and
consumer benefits.
This is therefore a fundamentally different approach to the nature and
philosophy of business from that which prevails in more traditional sectors of
the west. Japanese investment objectives are based in the long term and require a
long term commitment and growth. Stakeholder satisfaction is seen in the returns
afforded over these long periods by the permanence of business and its enduring
commercial viability rather than instant returns looked for in other areas of the
business sphere. From this standpoint comes the confidence that is a prerequisite
in the commitment of resources to research, development, experiment, piloting
and bringing on stream the range and diversity of products for consumption. It is
dear that there are lessons to be drawn from this approach. These are a total
confidence in the quality and entity of the organisation itself, its staff, its products
and its services. Consideration must also be given to the strategic nature and
attitude to investment and returns on it. Longer term views of organisation
direction and the reflection of this in attitudes and approaches on the part of both
shareholders and other stakeholders and interest groups are dearly required. The
same must apply to public and health services - short term, cost restrained,
budget driven, services and projects simply ensure that a poor quality of service is
delivered at high charge to the stakeholder.
Related to this is a reappraisal of the nature of organisation resources, and
above all the generation of capacities and capabilities and their maximisation.
We have dwelt at this in some length in relation to organisational aspects.
Operationally this is likely to lead to a reappraisal of all business and
organisation activities in all sectors with a view to establishing the optimum
possible returns.
The same is required of profit assessment and appraisal. Profitability is
increasingly to be seen as an organisational state over a long period rather than
a configuration of a six monthly or annual profit and loss account. The adoption
of both the conception and the reality of the long term view is critical to the
enabling process required of the development of long term business and public
strategies. Confidence in both must also be seen. Again, a major reorientation
and re-education process has to be undertaken in regard to those who are
responsible for the devising, generation and support of these activities.
There is implicit in all of this the proposal that both the development of new
sectors and the regeneration of existing industries and commercial and public
services require this long term view to be taken. Levels of investment are to be
generated for the purpose of securing these in the long term. This flies in the face
of certain current attitudes in certain sectors of short term shareholder and
stakeholder satisfaction, the payment of instant dividends and (in public services)
political expediency.
There is a paradox to be addressed here also in relation to the strategy of
organisations. On the one hand, plainly, they are competing for business in their
sector however this is defined (and this includes reference to national, con-
tinental, trans-continental and global markets). However, the nature of activity,
especially at global level, is much more sophisticated than the traditional
economic model; organisations are adopting strategies of pooling resources,
expertise and capital in pursuit of this so that 'super sectors' are being developed
- the Channel Tunnel for example, is dependent upon Japanese banks for
financial support and thus on the strength of Japanese manufacturing industry
where these banks gain the income and resources from that enable them to do
this.
• Concern for the environment

This is a matter of universal, political, economic and social priority at present;
and is likely to become more extreme in the future. It has direct implications for
business and managers. It is also plainly related to the investment concept
detailed above. It affects ultimately all aspects of the business sphere. Globally,
there is a balance that must be struck between developing, economic and business
activities in order to support a world population that is expending at a great rate
(the population of the city of Cairo goes up by 1 million every seven months, for
example) and one which has short term needs; and preserving the world so that it
may support life and a quality of life further into the future.
At organisation level there is a necessity to consider the effect of operations on
the environment, in relation to all business aspects. Marketing policies and
activities, for example, may demand levels of packaging to preserve the product,
to demonstrate it to its best possible advantage and to meet public and sectoral
expectations. On the other hand, both the packaging itself and the technology
used to produce it may be consumptive of resources themselves and also create
high levels of pollution or waste. Production and operations and the technology
related to this also create drains on the world's resources. They create waste and
effluent which also have to be managed and disposed of. Human resource policies
in certain parts of the business sphere (for example the UK) provide high quality,
prestige cars to go with particular occupations; these cars are very often resource
intensive in production and highly consumptive of fuel.
The net result is that strategies and policies for managing the environment have
to be devised globally, sectorally and organisationally. This requires organisa-
tions and their managers to place the environment at or near the top of their list
of priorities. It requires them to take a much wider view of the true cost of
operations. Related activities may therefore include reorientation of marketing
and product presentation and a parallel re-education along these lines as part of
the total strategy aimed at changing customer expectations in this way (and
reconciling this with the positive, persuasive wider marketing activities). It also
requires organisations to take a longer term view of production processes. The
approach required is that which relates both to responsibility for, and the
adoption of, procedures and practices which truly address the problems of the
disposal of waste and effluent and for which organisation provision must be
made in strategic, operational and investment terms.
• The changing nature of services

The restructuring of municipal, public and health services requires a mention
here, as do the related concepts and realities of service level agreements and
arrangements (we have made reference above to the privatisation which often
accompanies these). The strategic conception relates to the stated need to
revitalise and regenerate these services, to restructure them, to improve the
quality and effectiveness of their management and to make them more efficient.
This is all based on the premise that it can be achieved only if the organisations
responsible are freed from bureaucratic, state or other authority control.
Managers will in turn be free to conduct and provide and order these services
in the ways in which their expertise directs. This is of a special importance when
the nature of these services is considered - they are the primary, critical, health,
social and education activities that are ever-more in demand, ever-expanding and
the object of ever-higher social and public expectations. The same thinking has
been applied to public utilities and strategic state industries. In the UK, gas,
electricity, water, telecommunications and some research have all been privatised
or transferred from government to shareholder ownership. Others, especially the
railways and postal services, are set to follow in this path.
There are configurations of public policy to be considered; and also overt
political concerns. From a managerial standpoint the reorientation of industries,
utilities and services, the related culture and structure changes, and the
regeneration of them, together with the continual drive for improvement and
increased effectiveness, are the major concerns. The reality of what has been
achieved so far and what is envisaged for the future is creating and enlarging the
total sphere of management and opening a vast range of new opportunities for
expert managers. These changes impinge on all aspects of management, all

functional areas and the fields of operations and project activities also. The
related conception of autonomy of service units also generates managerial
opponunities. In summary, what is envisaged is nothing less than a complete
reorganisation of the utilities and services concerned; if this is to be truly and
effectively achieved very high levels of managerial expertise covering all the
elements that we have discussed are to be required.
The paradox of all this concerns the necessity to reconcile the volatile and
turbulent environment and business sphere and great advances in both technol-
ogy and expenise with the conception of stability and permanence (and the levels
of investment necessary) to ensure that this can be achieved. The strength of
organisations, their directions and strategies chosen and those responsible for
their implementation must be such as to be able to accommodate all of this. In the
past the best organisations have been able both to devise and meet market
opportunities, and to generate activities in these terms, balancing the supply and
demand side of opportunities afforded. In the future added complexity will be
given by the size and nature of those markets and the scale and scope of the
investment, technology, production methods and activities necessary to fill them
effectively and profitably. At the capital investment end, this clearly indicates the
generation of global and trans-national joint ventures. At the technological end
there are implications for universal application, utility and compatibility. This is
from both an organisational and operational standpoint. It is also necessary in
the particular pursuit of global business and activities. Additionally, the concepts
of product and service quality related to the raising of expectations and meeting
them are now firmly in place. Again there is a relationship between levels of
investment and technological excellence. This mixture must then be capable of
performance in this volatile global economy and business sphere. Organisations
have to be able to reconcile these configurations of strength and permanence,
therefore, not only with technological and expertise advances, but also with the
business and operational qualities of flexibility and responsiveness and the speed
of that response.
The nature of management therefore requires transformation in both concept
and approach. The basis of knowledge and expertise requires adaptation in the
same way and from the same standpoint as the lawyer or the doctor- it is the
beginning, not the end of the activities of the true professional; in the same way it
is the foundation for development and progress and not a body of knowledge of
passing interest only. When this transformation is effected, business activities and
the organisations that conduct them will take great leaps forward in all activities
related to all aspects of the business sphere. The truly expert manager must also
have the same qualities of passion, conviction and commitment that other experts
demonstrate in the pursuit of their chosen paths.
The processes, qualities and expertise of business and management outlined
here and their interaction and inter-relationship both among themselves and with
the wider business sphere and environment are having great and lasting effects on
business practices. The transformation effected is to generate the creative and
energetic aspect in the business sphere and to develop the nature and level of
expertise in as many ways as possible. Management is thus no longer a
straightjacketed or bureaucratic process; above all, it is not the equivalent of
administration. Both business and management are ever-developing concepts,
phenomena and realities. Their progress and transformation are limited only by
the capacities and capabilities of those who work in them in whatever sector or
aspect.
Finally, as we have said, these constitute global and universal activities and it
follows from this that 'good practice is good practice wherever it is found'. It is
ever-more evident that this is so and that any true expertise, whenever it is found
and from wherever it is drawn, provides an increase in both understanding and in
the fund of knowledge, skills and capabilities of the expert manager. The
professional and expert manager has therefore to bring above all to his chosen
profession a willingness, openness and capacity to learn, develop and prepared-
ness to draw lessons from wherever they may become apparent and to assimilate
these lessons in regard to his own expertise. This covers the whole spectrum of
business and managerial activity with opportunities afforded in all sectors across
the whole world. This is the scale and scope of the range and potential offered to
the truly expert manager. The whole field therefore opens up opportunities that
are truly exciting, challenging and adventurous for anybody who wishes to take
advantage of them and who has the qualities, capacities and personal attributes
to do so.
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• Human resource and industrial relations management

A. Ferner and R. Hyman (eds) (1992) Industrial Relations in the New Europe, Blackwell.
S. Kessler and F. Bayliss (1992) Contemporary British Industrial Relations, Macmillan.
B. Livy (1989) Corporate Personnel Management, Pitman.
A. Rodger (1958) The Seven Point Plan, National Institute of Industrial Psychology.
M. Salamon (1992) Industrial Relations, Prentice Hall International.
G. Salomon (1992) Human Resource Strategies, Open University.
K. Sisson (1991) (ed.) Personnel Management in Britain, Blackwell.
D. Torrington and L. Hall (1992) Personnel Management: A New Approach, Prentice Hall
International.
D. Walton and A. McKersie (1965) A Behavioural Theory of Labour Negotiations, McGraw-
Hill.
• Operations management
E. Adam and R. Ebert (1990) Production and Operations Management, Prentice Hall
International.
M. Bresnen (1990) Organising Construction, Routledge.
K. B. Clark and T. Fujimoto (1991) Product Development and Performance, Harvard.
D. Cleland and W. King (1988) Project Management, Van Nostrand Reinhold.
M. Cuming (1984) Managers' Guide to Quantitative Methods, ELM.
G. Davis and M. Olsen (1985) Management Information Systems, McGraw-Hill.
E. Gummesson (1991) Qualitative Methods in Management Research, Sage.
J. Heizer and B. Render (1991) Production and Operations Management, Allyn.
R. Layard (ed.) (1980) Cost Benefit Analysis, Penguin.
K. Lockyer (1992) Quantitative Production Management, Pitman.
L. Long (1990) Management Information Systems, Prentice Hall.
J. J. O'Neil (1989) Management of Industrial and Construction Projects, Heinemann.
J. Van Horne (1990) Financial Management and Policy, Prentice Hall International.
G. Welsh et al. (1984) Budgeting: Profit Planning and Control, Prentice Hall International.
M. E. Wright (1980) Financial Management, McGraw-Hill.
I Index
absenteeism 27, 60, 347 attitudes

access, equality of 248 change 355-6
accuracy of data 301-3, 305 managerial performance 326-7
achievement, motivation and 59 attitudinal structuring 223
'acid test' 315 authority 39
acquisitions 136, 137 categories of 41
action centred leadership 33, 34 autocratic leadership/management 32, 38
active communication 92 autonomous business units 361-2
active listening 97 AZT 297
activist learning style 116
activity, levels of 271-3 Bacardi 175
Adair, John 34 balance sheet 31Q-12
adaptation ballots 260
Japanese management 370 Bamforth, G. 24
perception 89-901 bar charts 301, 302
added value 317 bargaining see collective bargaining
adjustment, organisational 108 Barker, A. 99
Advisory, Conciliation and Arbitration barriers to change 356-7
Service (ACAS) 215, 242-4 counselling and support 357-8
affluent worker studies 14-15, 68 batch production 277-8
Africa 353-4 BBC 337
AIDS 209, 210, 297 behaviour analysis 188
airline tickets 172 Belbin, R.M. 68-9, 69
Akers, John 45 beliefs 355-6
alcohol 209, 210 benefits, product 168
American Express 45 benevolent authoritative management
Ansoff, H.I. 18-19 system 51
applications, job 200 benevolent autocrats 39
appointments 204 Berne, Eric 98-100
see also recruitment; selection 'best fit' leadership theories 33-4
appraisal, performance see performance Bethlehem Steel Works, USA 12
appraisal bias 306-7
approximation 305 Blake, R. 39, 4D-1
arbitration 243-4 Blake, William 10
pendulum 229-30 BNFL Nuclear Reprocessing Plant,
recourse to 227-8 Cumbria 149
Argyris, Chris 59 body movement 95
army 215 Body Shop 150, 191, 353
Ash, Mary Kay 150 Bourneville 10
Asian manufacturing bloc 353, 354 branding 168
assertiveness 33Q-40 Branson, Richard 330
assessment centres 203 break even 314
assessment criteria 142-4 Brech, E.F .L. 1
assets/liabilities ratio 315 British Airways 45, 139, 160, 296
384
Index 385
Brooke Bond 177 Clutterbuck, David 5, 28

Brown, John 46 coal mining 219
Brown v. Stockton-on-Tees Borough Coca Cola 167, 175
Council 257 'codes' 97
budgets 318-19 codes of practice, ACAS 243
bunker mentality 61 coercive power 42
bureaucracy 9-10 cohesion 62-3
Burns, T. 22-4 collective bargaining 221-6
business policy 18-19, 129-31, 272 framework 222-5
see also strategy objectives 225
business schools 373 process 222, 223, 224
business sphere 375-80 Columbia Pictures 137
changing nature of services 378-80 committees 106
concern for environment 377-8 communication 74, 88-101
investment 375-7 perception 88-91
business strategy see strategy process 91-101; active 92; distortion of
butter 161 message 92; listening 97; neuro-
buyer groups 163-4 linguistic programming 101; non-
verbal 94-6; one way 91; oral 93;
passive 91; strategic 92-3;
Cadbury 10, 207 transactional analysis 97-100; use
Caesars 7 of language 96-7; written 93-4
Canon 132 communist bloc, former 353, 354
captivity, market 159 Communist Manifesto 9
Carnegie, Dale 13-14 competencies training 123
Cartwright, D. 41 competition
catalyst for change 355 elemental forces of 147, 165
census 307 market environment 159-66
Ceramics Industry Training Board 334 unhealthy internal 350
chairing meetings 339 competitor analysis 147-8
change 29,352-80 complex man 58
attitudes, values and beliefs 355-6 compromisers 38
barriers to 356-8 conciliation 243
business sphere 375-80 Concorde 289
cultural 358-9 Confederation of British Industry
future of management 373-5 (CBI) 215, 217
global environment 353-4 confidence, role 72
management of 354-5 conflict 218
staff management 362-5 organisational 47-9
structural 359-62 role 71-2
working with 365-72; Japanese workplace 220-1
management 368-72; conformity 72-3, 370
quality 365-7; quality industrial relations 214, 218, 226-7
circles 367-8 consensus 214, 218
change agent 355 constructive dismissal 259
Channel Tunnel 144, 151, 180, 296, 377 constructs, personal 90-1
project management 297-8 consultation 106-7, 109-10, 111
charismatic authority/leadership 35, 41 employment law 259-60
Charlemagne, Emperor 7 consultative leadership 32
Chief Executive (CE) 43-7 consultative management system 51
Christensen, C.R. 43, 141, 148, 165 contingency theories of leadership 33
citizenship, corporate 149-50, 179-80 continued improvement 366
Clark, Eric 174, 177 continuous professional development
closed shops 247, 260-1 (CPD) 4, 117-18, 374-5
386 Index
contracts, employment 25()-4 departmental manager's role 325--6

breaches 253 developers 38-9
fixed term 249-50 development
implied terms 251-2 employee see employee development
procedures 253-4 organisation 74, 118-20, 121-2, 123-4
control/coordination systems 285 development analysis 188
control mechanisms 333-5, 336 differentiation 138, 161-2
core activities 132 Disabled Resettlement Office (DRO) 246
core/peripheral workforce 17-18 disability 246, 249
corporate citizenship 149-50, 179-80 disbanding 65--6
cost-benefit analysis 319-20 discipline 341-3, 344
Co-Steel Sheerness plc 60, 266 discrimination restrictions 244-7
costs 313 dismissal 254-9, 343
apportionment 313-14 appeal 258-9
selling 315 constructive 258
counselling 357-8 redundancy 259
creativity 278-80 representation 258
crisis management 85, 272 summary 254, 258
critical path 310 unfair 255, 255-7
criticism 338 Display Screen Equipment Regulations 264
positive 14 distance learning 123
culture, organisational 27, 74, 75-84 distortion of message 92
archetypes 79-83; people/person distribution 268
culture 80-1; power networks 177
culture 79-80; role culture 81-3; distributive bargaining 223
task culture 81, 82 diversification 137, 138
change 358-9 divine right of kings 8
design 83-4 Dobson, Paul 359
social characteristics 83 Donovan Commission Report 216
customer liaison 290 drink 175
customer satisfaction 366, 369 Drucker, Peter F. 183, 329
customers, dealing with 149 drugs 210
durability, product 167
data
accuracy of 301-3, 305
financial 310-12 eco-political change 29, 352
management information systems 321 eco-socio-political groups 107-8
presentation of 301, 302 ego states 98-9
primary and secondary 299 Electrical Electronic Telecommunications
sources of 300-1 and Plumbing Union (EETPU) 230,
uses of 300 235-40
deadlines, meeting 281 effective bureaucrats 38
debtors/creditors ratio 315 emergencies, managing 284-5
decision-making 74, 101-10 emergency services 215
committees 106 empathy 13
factors affecting 104-8 employee development 74, 110-18, 371
Japanese management 369 continuous professional
model 101-4, 105 development 117-18
participation and consultation 106-7, development analysis 188
109-10, 111 learning curve 117
decision tree 105 learning style 116-17
declining markets 159 methods and techniques 123-4
delegation 331-3 performance appraisal 114-15
democratic leadership 32 strategies 112-14
Index 387
employees excellence 24-9, 366

employment contract 252, 253 executive management style 39
industrial relations 215-17; behavioural exercises, selection 201
theories 223; expectations 225-6; exclusivity 65
organisations and 218-19; exit barriers 160
workforce management 221 expanding markets 159
potential and prosecution 259 expectancy 58-9
prosecution of employers 259 expectational change 29, 352
single status concept 231, 371 expectations, employee 225-6
staff planning 185-8, 269 expert power 41
as stakeholders 363 expertise
see also human resource management future of management 373-5, 379-80
employers and leadership 35-6
employment contract 251-2, 253 exploitative authoritative management
industrial relations 217-18 system 51
prosecution of employees 259
Employment Act (1987) 247 F International 46-7
Employment Appeal Tribunal facilities 269-70
(EAT) 255-6, 257 Fayol, Henri 1, 1(}.-11
employment law 241-66 Fiat 168
ACAS 242-4 finance 31(}.-15
consultation 259-60 break even 314
contract of employment 250-4 costs 313-14
dismissal 255-9 financial data 31(}.-12
equality of opportunity 244-50, 266 financial resources and control 312-13
health and safety 262-4, 266 human asset valuation 315
industrial relations 26(}.-2, 266 and strategy 312
employment patterns, flexible 209-11, 362 fitting the job to the person: fitting the person
employment protection 253 to the job (FJP-FPJ) 188-90
Employment Protection Act (1975) 242,266 fixed costs 313
empowerment 196 fixed term contracts 249-50
Engels, Friedrich 9 flexible employment patterns 209-11, 364
entry barriers 159-60 flexible workforce 231-2
environment flow production 277
changing global 3-4, 353-4 focus strategy 139
competitive 159-66 food processing 196
concern for natural 377-8 Ford Motor Company 168, 169, 276
organisation and 77 formal bargaining systems 225
equality of opportunity 244-50, 266 formal groups 63
discrimination restrictions 244-7 forming (groups) 64
equality of access 248 Frankish Kingdom 7
equality of treatment 248-9 French, J. 41
fixed term contracts 249-50
human resource management 19(}.-2 gambara 368
job training 249 games, communication 98-9
quotas 249 gender/sex discrimination 244-5
esteem needs 53, 54 General Motors 45, 168
ethics 148-52 Genuine Occupational Qualifications
ethnic origin/race 245-6 (GOC) 245, 246
Etzioni, Amitai 42 glamour 162
Europe, trade unions in 233 global environment 3-4, 353-4
European Community (EC) 241-2,250 goal-setting 327-9
Eurotunnel 180, 296 Gold Blend coffee 162, 177
see also Channel Tunnel Goldsmith, Walter 5, 28
388 Index
good value 162-3 job design 207-8; occupational

government health 208-9
direction and decision-making 107 payment/reward systems 192-5, 362-3
industrial relations 214-15 performance appraisal 206-7
graphs 301, 302 project management 292-3
grievances 341, 34~ recruitment and selection 199-205
groups 31,61-70 staff planning 185-8
archetype team members 68-9, 69 hygiene factors 56-7
components and composition 66-8
process 6+-6 IBM 25, 45, 132
research in workings of 68-70 identity 173-5, 371
socio-technical systems 24 image 161-2, 173-5
at work 62-4 implementation of decisions 104
growth-share model 171 implicit personality theory 89
growth strategies 136 index numbers 303-5
individuals 31, 70-3
conformity 72-3
halo effects 89 role ambiguity 71, 72
Handy, Charles B. 17-18, 28 role confidence 72
hard line 328 role conflict 71-2
Harvey-Jones, John 5 roles 70-1
Hawthorne Studies 12-13, 68, 196-7 induction 205
health care industrial action 261-2
NHS see National Health Service industrial relations (IR) 213-40
occupational 208-9, 210 arbitration 227-8
promotions 174 behavioural theories 223
sector 130 change and 363-5
health and safety collective bargaining 221-6
legislation 262-4, 266 conformism 226-7
managerial performance 346-7 flexible workforce 231-2
operations management 274-5 framework 214-18
Health and Safety Executive 215 legislation 260-2, 266
'Herald of Free Enterprise' 44, 149 multi-unionism 226
Herzberg, Frederick 56-7 procedures 232-3
Heywood v. Cammell Laird 257 single status concept 231, 371
high performance groups 61 single union agreement 228-32, 235-40
HIV 209,210,297 strategies 149, 218-21
Holmes v. Home Office 257 without unions 230-1
Honey, Peter 116 industrial revolution 8
hours of work 250-1 Industrial Society 337
human asset valuation 315, 316, 363 industrial tribunals 242, 255-7
human relations school 12-13, 207 industry structure analysis 147
human resource management informal groups 63
(HRM) 183-212 informal networks 64
change 362-5 information
corporate aspects 184-5 gathering for decision-making 102-4
equal opportunities 190-2 management information systems 321-3
fitting the job to the person: fitting the see also data; statistics
person to the job 188-90 innovation 271-2, 278-80
induction 205 see also research and development
job and work analysis 195-9 Institute of Personnel Management
levels of activity 184 (IPM) 114
maintenance factors 207-11; flexible integrative bargaining 223
employment patterns 209-11, 362; internal marketing 166, 318
Index 389
internal politics 347-50 leadership functions model 33, 34

internal promotion 175 leading by example 330
internalisation 73 learning curve 117
International Management Group learning style 116-17
(IMG) 132, 214, 330 legal constraints
interpersonal skills 338-41 competition 160--1
interviews 202 decision-making 107
panel 203 legal-rational authority 41
intrapreneurs 15-16 legitimate power 42
leisure wear sectors 157
Japanese management 353, 365, 368-72 Lessem, Ronnie 5
approaches to success 370--1 levels of activity 271-3
foundations for the future 371-2 Lewis, C.S. 16
industrial relations 217; single union Likert, Rensis 50--3
agreement 228 listening 98
investment 375-6 local government 214, 367
workforce 'design' 269 location
see also under individual companies marketing mix 177-8
job analysis 195-7 operations management 267-9
job applications 200 London Orbital Motorway Project
see also recruitment; selection (M25) 289
job descriptions 197 long term 370--1
job design 207-8 luxury goods 162
job evaluation 197-8 lycra 167
job titles 70, 71
jobbing production 276 Maastricht Treaty 241-2
joint ventures 294, 295, 296 Machiavelli, Niccolo 8, 349
maintenance management 85, 284-5
Kahn, R.L. 86 man, classification of 57-8
Kanter, Rosabeth Moss 5, 28 management
Katz, D. 86 background to 1-2
Kent County Council 217 definitions of 1
King, Lord 45 early studies 7-8
kings, divine right of 8 as field of study 4
Kingsley, Charles 10 future of 373-5
knowledge, situational 35-6 professionalisation of 2-4,373-5,379-80
see also expertise research/literature 4-6
Management of Health and Safety at Work
La Porte Chemicals 14, 68 Regulations 263-4
Laker Airways 160 management information systems 321-3
language, use of 96-7 management principles 10--11
last in, first out (LIFO) 259 management styles 348
Lawrence, P.A. 21, 23 grid 39, 40--1
leadership 31, 31-47 Likert 51
archetype organisation managers 36-9 and organisation structure and
charisma 35 culture 79
chief executive 43-7 3-D theory 36-9
early studies 7-8 managerial performance 324-51
power 39-42 assessment 345-6
qualities 42-3; and morality 150--2 attitudes and values 326-7
situational knowledge and continuous improvement 351
expertise 35-6 control 333-5
styles 32, 33 delegation 331-3
theories of 33-4 depanmental manager's role 325-6
390 Index
managerial performance (cont.) McCormack, Mark 132, 150, 330

discipline and grievance 341-4 McDonald's 130, 132, 167, 214
evaluating 324-5 McGregor, Douglas 55
goal-setting 327-9 McKersie, A. 223
health and safety 346--7 McKinsey 24-5
interpersonal skills 338-41 mechanistic organisations 22-4
managing by walking about 330-1 mediation 243
negotiation 344-5 meetings, conducting 339
realpolitik 347-50 mentoring 124
sickness 347 merit pay 195
time 335-8 see also performance related pay
wait a minute 333, 334 Midland Bank 250
managers ministers, choice of 349
abilities/skills needed 2-3 missionaries 38
archetypal 36--9 money, motivation and 59-60
departmental 325-6 morality 148-52
personal qualities required 3 motivation 31, 49-60
project 291 and achievement 59
situational knowledge and groups 66--7
expertise 35-6 importance of 60
see also managerial performance and money 59-60
managing by ringing around (MBRA) 330 theories 50-9; expectancy 58-9;
managing by walking about Herzberg 56--7; Likert 50-3;
(MBWA) 330-1 Maslow 53-5; Schein 57-8;
Manual Handling Operations Theory X and Theory Y 55
Regulations 264 motivators 56--7
mapping, personal 90-1 Mouton, J. 39,40-1
marginal cost 313 M25 289
market domination strategy 139 multi-stage sampling 306
marketing 155-82 multi-unionism 226
competitive environment 159-66 mythology, perception and 89
corporate citizenship 179-80
internal 166, 318 National Health Service (NHS) 130, 214
process 155-6 reforms 133, 367; business units 29,
public relations 180-1 352
research and development 179 needs, hierarchy of 53-5
segmentation 158 negative decisions 106
strategies 156--8 negotiation 344-5
marketing mix 166--79 nemawashi 369
place 176--8 Nescafe Gold Blend 162, 177
price 169-73 net structure 81, 82
product 167-9 network analysis 308-10
promotion 173-6 networks, informal 64
varying 178-9 neuro-linguistic programming (NLP) 100-1
Marks & Spencer 25, 168, 172 Nike 334
Marxism 9 99p syndrome 172
Maslow, Abraham 53-5 Nissan 62, 132, 269, 371
mass production 196, 276--7 non-verbal communication (NVC) 94-6
'mass' structure 81 normative power 42
Martel, Charles 7 norming (groups) 64, 65
Matsushita, Konosuke 372 notice periods 252
Matsushita 137, 372 nursing profession 226
Mayo, Elton 12-13
MCA 137 objectives 327-9
Index 391
occupational health 208-9, 210 packaging 168

offenders, rehabilitation of 247 Pan Am 160
one way communication 91 panel interviews 203
open learning 123 participation 106-7
operations management 267-98 see also consultation
coordination/control systems 285 participative leadership/management 32,
creativity and innovation 278-80 33,51
facilities 269-70 passive communication 91
levels of activity 271-3 payment/reward systems 192-5
location 2674;9 components of 193-5
maintenance 284-5 performance and 362-3
production types and categories 276-8 pendulum arbitration 229-30
project management see project people/person culture 80-1
management perception 88-91
purchasing and supplies 282--4 performance, managerial see managerial
reliability 273-5 performance
schedules and timetables 280-2 performance appraisal 114-15
work design and measurement 270-1 human resource management 206-7
opportunities managerial 345-f'J
equal see equality of opportunity performance indicators 279
SWOT analysis 145-f'J performance related pay (PRP) 192, 194,
oral communication 93 195,362-3
organic/organismic organisations 22--4 performing (groups) 64, 65
organisations 74-124 peripheral activities 133
adjustment 108 peripheral workforce 17-18
age and history 75-f'J permanence of organisations 9-10
approach to marketing 164-5 person specification 198-9
communication see communication personal mapping/constructs 90-1
conflict in 47-9 Personal Protective Equipment at Work
culture see culture Regulations 264
decision-making see decision-making personal values 77, 78
definitions 1 PEST (STEP) analysis 146
development 74, 118-20, 121-2, 123--4; Peter Principle 16-17
see also employee development Peters, Tom 5, 6
excellence 23-8 definition of management 1
Handy's studies 17-18 excellence 26, 27-8, 28
mechanistic and groups 69-70
organic/organismic 22--4 'learning to love change' 355
permanence of 9-10 PG Tips 177
purpose 77-8,360 Phelps, Mary 334
size 76 physical power 41
socio-technical systems 24 physiological needs 53, 54
staff and industrial relations 218-19 picketing 262
structure 74, 75-84; archetypes 79-83; pictograms 301, 302
design 83--4; social pie charts 301, 302
characteristics 83; structural pioneering 272-3
change 3594;2 place 166, 176-8
systems 74, 84-7 see also location
and technology 19-22 planned maintenance 284-5
ourward bound training 124 planning, staff 185-8
over-mighty subjects 349 recruitment 187
Oxo gravy 177 succession 188
pluralism 214, 218
P & 0 Ferries 151-2 police 215
392 Index
policy terms of reference and

business 18-19, 129-31; activities 272; constraints 288-90
see also strategy promotion of products 166, 173-6, 177
public 126-8 promotion of staff 16-17
politics, internal 347-50 props 95-6
Polkey v. AE Dayton Ltd 257 protection, employment 253
Porter, Michael E. 19, 20, 147 public interest 107
positional communication 95 public policy 126-8
positive criticism 14 public relations (PR) 18G-1
'post it' pad 142, 175 public services 132, 361-2, 367
power 39-42 see also National Health Service; services
categories of 41-2 public utilities 378
resources 42 Pugh, D.S. 1
power culture 79-80 purchasing 282-4
pragmatic learning style 116 purpose, organisation 77-8, 360
praise 338 purpose groups 63
pregnancy 245 pyramid structure 82, 83
price 166
advantage (good value) 162 Quaker foundations 10
leadership strategy 137-8 qualifications 113, 114, 373-4
marketing mix 166, 169-73 quality
Price v. The Civil Service management concept 365-7
Commissioners 244-5, 257 product 167
primary data 299 quality circles 367-8
privatisation 378 quantitative methods 299-323
probability 305 budgets 318-19
problem definition 102, 103 cost-benefit analysis 319-20
problem-solving model 325 finance 31G-15
process determination 102, 103 internal markets 318
process production 277 management information systems 321-3
product 166, 167-68 network analysis 308-10
product life cycle 168-9, 170 ratio analysis 315-17
product portfolio model 171 statistics 299-308
production types and categories 276-8 questionnaires 307-8
professional staff 219 'quick ratio' 315
professionalisation of management 2-4, quotas
373-5,379-80 employment and discrimination 249
profit apportionment 314 sampling 306
profit and loss account 311-12
profit ratio 315 race/ethnic origin 245-6
profit related pay 194 radical perspective on industrial
profitability 376--7 relations 214
project management 285-98 Radion 176
benefits of approach 294 random sampling 306
customer liaison 290 ratio analysis 315-17
environmental and situational rational economic man 57
factors 287-8 Raven, B. 41
human resource management 292-3 razor, legend of 171
inception 290 realpolitik 347-50
measures of success and failure 286 Reckitt & Coleman 176
problems during project 291-2 recruitment
project assessment 290-1 planning 187
project manager 291 strategy 199-200
project monitoring 293 see also selection
Index 393
Reddin, W. 36-9 sampling 306

redundancy 259 Sanyo (UK) Ltd 60
references 252-3 single union agreement 230, 235-40
referent power 42 scent sector 162
reflective learning style 116 schedules 28G-2
regeneration 65 Schein, Edgar 57-8
rehabilitation of offenders 247 Schmidt, W. 110, 111
relaxed bureaucrats 38 scientific management 11-12, 276
reliability Scott, D. 328
operations management 27.3--4 secondary data 299
statistics 306-7 secondments 123
remunerative power 42 security
Renault 168 management information systems 322
representation 258 needs 53,54
research and development segmentation 158
marketing 179 selection 20G-5
operations management 271, 279-80 reviewing selection process 204-5
resources, financial 312-13 shortlisting and appointment 204
allocation 318 techniques 20G-3
retirement 245 see also recruitment
retrenchment 136 self-actualisation needs 53-5
return on capital employed (ROCE) 315, self-actualising man 58
317 self-fulfilling prophecy 89
reward power 41 selling costs 315
reward systems see payment/reward services
systems changing nature of 378-80
right to strike/work 261 public 132, 361-2, 367; see also National
ringi 369 Health Service
ringing around, managing by 330 settings 95-6
risk Seven Point Plan 198, 199
decision-making 105-6 7-S model 25, 26
strategy and 133-5 sex/gender discrimination 244-5
rivalry 163 shadow organisation 65
see also competition 'Shamrock' organisation 18
Robinson, James 45 shared values 78-9, 131
Roddick, Anita 150 Sheerness Steel plc 60, 268
Rodger, Alec 198-9 Shirley, Stephanie (Steve) 46-7
role ambiguity/uncertainty 71, 72 shopping malls 178
role confidence 72 shortlisting 204
role conflict 71-2 sickness 347
role culture 81-3 Simon, H. 1
role plays 124 single union agreement 228-32, 235-40
rounding 305 single workplace status 231, 371
Rover 400 cars 162 situational knowledge 35-6
Royal Commission on Trade Unions and Skefco Engineering 14, 68
Employers' Associations (Donovan skills
Commission) 216 match/mismatch 187
updates 124
safety smoking 209, 210
needs 53,54 soap powder 176
workplace 262-3; see also health and social change 29, 352
safety social man 57
Sainsbury's 25 social needs 53, 54
salaries see payment/reward systems social segmentation 158
394 Index
social-technical-economic-political (STEP) implementation 140-2

analysis 146 internal strategies and policies 129-31
socio-technical systems 24 marketing 156-8
Sony Corporation 132, 137 planning process 128
empowerment 196 public policy 126-8
Walkman 273 ready-reckoner strategic analyses 144-8
sourcing 283 risk 133-5
specialisation 360 social and political considerations 153
Sperry Corporation 97 source and development 127
spin-offs 144 types of 135-9
spotlight, parable of 349 vision 131-2
staff see employees stratified sampling 306
staff development see employee strengths, weaknesses, opportunities, threats
development (SWOT) analysis 145-6
staff management see human resource stress 208
management strikes 261-2
staff planning 185-8, 269 right to strike 261
stagnant markets 159 structure, organisational see organisations
stakeholders, staff as 363 style theories of leadership 32, 33
Stalker, G.M. 22-4 subordinates, delegation and 331-3
standards of behaviour/activity 149 succession planning 188
static markets 159 Suetonius 7
statistics 299-308 Sugar, Alan 150
accuracy 301-3; and summary dismissal 254, 258
approximation 305 Sunday working 250-1
census 307 supermarkets 178
index numbers 303-5 supplier groups 164
presentation of data 301, 302 supplies 282-4
primary and secondary data 299 support, counselling and 357-8
probability 305 support systems 84-5
questionnaires 307-8 Swift v. British Rail 257
rounding 305 SWOT analysis (strengths, weaknesses,
sampling 306 opportunities, threats) 145-6
sources of data 300-1 synergy 62, 63
time lag 305 System 4 50-3
uses of data 300 systems, organisational 74, 84-7
validity, reliability and bias 306-7
steady-state activities 271 tabulation 301, 302
Stempel, Robert 45 Tannenbaum, R. 110, 111
STEP (social-technical-economic-political) task culture 81, 82
analysis 146 Tavistock Institute of Human Relations 24
stereotyping 89 Taylor, Frederick Winslow 11-12, 276
Stevens, John 334 teaching profession 226
stores 283-4 teams see groups
storming (groups) 64 technological change 29, 352
storylining 177 technology
strategic communication 92-3 management information systems 322
strategy 18-19, 125-54 organisational structure and
core and peripheral activities 132-3 culture 76-7
development of 128-9 organisations, management and 19-22
ethics and morality 148-52 temple structure 82, 83
evaluation 139-40, 142-4 tests, selection 201
finance and 312 Thatcher, Margaret 45
human resource management 184-5 theorist learning style 116
Index 395
Theory X and Theory Y 55 uniforms 70

threats (SWOT analysis) 145-6 Unilever 176
3-D theory 36--9 unit production 276
3M company 25, 142, 175 unitary perspective on industrial
time lag 305 relations 214, 218, 226-7
time off work 251 United States (USA) 233
time usage 335-8 Urwick, L.F. 331, 332
timescale 102, 103 US Air 296
timetables 28Q-2 utilities, public 378
tobacco 209, 210
touch 95 validity 306-7
Townsend Thoresen 151 value chain 19, 20
Toyota 168, 269 value for money 162
Trade Union Ombudsman 215, 247 values
trade unions change and 355-6
employment law: discrimination on managerial performance 326-7
membership or refusal to join 247; personal 77, 78
dues and levies 261; membership shared 78-9, 131
agreements (closed shops) 247, variable costs 313
26o-1 Vauxhall Cars 14, 68
industrial relations 213-14, 215-17; Virgin Group 138, 214, 330
comparative 233; multi- visibility 33Q-1
unionism 226; single union vision 74-5, 131-2
agreement 228-32, 235--40; Volkswagen 168
without unions 23Q-1 Volvo 68
Trades Union Congress (TUC) 215
traditional authority 41 wages see payment/reward systems
training 'wait a minute' 333, 334
employee development 112-14; methods walking about, managing by 33Q-1
and techniques 123-4; see also Walkman 273
employee development Walton, D. 223
employment law 249 Waterman, R. 26,27-8
Japanese management 371 weaknesses (SWOT analysis) 145-6
trait theories of leadership 33 Weber,Max 9,41
transactional analysis (TA) 97-100 welfarism 10
Transmanche Link (TML) 296 Wellcome Company 297
transport 268 Western Electric Company, Chicago 12,68
treatment, equality of 248-49 wheel structure 80
Trist, E. 24 Williams, Alan 359
Tudor monarchs 349 Woodward, Joan 19
turnover analysis 187 work analysis 195-7
TWA 160 work design and measurement 27Q-1
two-factor theory 56--7 work organisation traditions 225
workforce management 221
uncertainty workforce profile 186-7
decision-making 105-6 workplace conflict 22Q-1
role 71 see also conflict
unfair dismissal 255, 255-7 written communication 93-4

(Richard Pettinger (Auth.) ) Introduction To Manage

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INTRODUCTION TO

First published 1994 by

ISBN 978-0-333-59769-9 ISBN 978-1-349-23258-1 (eBook)

A catalogue record for this book is available

Copy-edited and typeset by Povey-Edmondson

List of figures and summary boxes x

3 Organisational and behavioural aspects 31

4 The management of organisations 74

Ethics and morality in management 148

7 Human resource management 183

8 Industrial relations 213

9 Employment law in the UK 241

10 Operations management 267

11 Quantitative methods 299

12 Managerial performance 324

13 Managing in a changing environment 352

5.8 P & 0 Ferries: Dover-Europe 151

11.3 Added value 317

Everywhere in the world there is a revolution going on, a transformation of

standards of behaviour, ethics and performance are required. There is a personal

necessity of those who work in it to keep up to date with developments, to read,

anyone who aspires to be a truly effective manager. Management is not a true or

• The professionalisation of management

• Management as a field of study

• Management research and literature

SUMMARY BOX 2.1 The Divine Right of Kings

This is a concept established by various dynasties, in various parts of the world,

Prior to the western industrial revolution, therefore, there was a large, if

I Burea?cr~cy and the permanence of

• The origins of welfarism

'principles of management' on which he claimed to have based his own

1. Division of work, the ordering and specialisation of tasks and jobs

Fayol's work stands as the first attempt to produce a theory of management

produced efficiently and to a constant standard as a result. Precise performance

• The human relations school

• Winning friends and influencing people

to take a genuine interest in people; the development of a positive persona;

• The 'Affluent Worker' studies

described as 'hands off'; any more active supervision was perceived to be

Organisations must have the following attributes:

• The ability to recognise the talents and potential of individuals and to

The overall purpose is the creation of an environment where both business

• The Peter Principle

SUMMARY BOX 2.2 The Peter Principle

Source: C.S. Lewis, The Silver Chair (1953).

and light-hearted way; the lessons to be learned are nevertheless important.

• Business policy and strategy

• Traditional, micro-economic theories of the firm which, while taking full

• Organisations, management and technology

Figure 2.1 The Value Chain

Variables: 1. Number of levels in management hierarchy

Variables: 1. Span of total of first time supervisors

Source: P. A. Lawrence 1985. Used with permission.

divisions were drawn. Finally, the nature of communications activities and

I Mechanistic and organic/organismic

0 Function with responsibility and authority

Figure 2.3 Organisation structures: mechanistic

Source: P.A. Lawrence 1985 (after Burns and Stalker).

Figure 2.4 Organisation structures: organic/ organismic