Prověřit případné donory............................................................................Chyba! Záložka není definována.

1. VSTUPY: NATŘÍDIT OTÁZKY DO SKUPIN PRO GENEROVÁNÍ TESTUCHYBA! ZÁLOŽKA NENÍ

DEFINOVÁNA.

2. ZMĚNA STRUKTURY: VYLUČOVÁNÍ NESTANDARDNÍCH (LŽIVÝCH) A NEŽÁDOUCÍCH

( ŠKODLIVÝCH) PRVKŮ.............................................................CHYBA! ZÁLOŽKA NENÍ DEFINOVÁNA.

3. DOSAHOVÁNÍ KONKURENČNÍHO PŘEDSTIHU.............CHYBA! ZÁLOŽKA NENÍ DEFINOVÁNA.

4. PŘECHOD NA PROBLEMATIKU IMAGE A OSOBNOSTNÍCH TRANSFORMACÍ..............CHYBA!

ZÁLOŽKA NENÍ DEFINOVÁNA.
LECTURES:.............................................................................................................................................................5
EXERCISES:............................................................................................................................................................5
1. EVOLUTION OF MANAGEMENT TENDENCIES: RESOURCE, PRODUCT, IMPROVEMENT,
RESPONSIBILITY QUALITY MANAGEMENT SYSTEMS (ISO 9000/2000)..............................................6
ISO 9000/2000 CONCEPT AND HISTORICAL BACKGROUND..................................................................................7
Resources management.....................................................................................................................................7
Product/Demand management..........................................................................................................................7
Management Responsibility..............................................................................................................................7
Improvement Management................................................................................................................................7
Development of quality systems ISO 9000........................................................................................................8
TOTAL QUALITY MANAGEMENT FOR C.N.C.........................................................................................................9
Origins of the quality concept...........................................................................................................................9
Definitions and dimensions of quality..............................................................................................................9
Quality dimensions:........................................................................................................................................10
SEMESTER PROJECT ASSIGNMENT:...........................................................................................................15
SYNERGY EFFECT GENERATED BY INDIVIDUAL..................................................................................................26
Complexity......................................................................................................................................................26
Case Study: Observations of Transforming East European Economies and Claims for Policy Quality
Control............................................................................................................................................................11
Assignment: How will you create a knowledge of unclear concepts?............................................................26
Transformation Brought by Quality Discovery and Delivery.........................................................................12
Case Study: EU enlargement case..................................................................................................................13
Assignment: How you will manage the diversity in your project?.................................................................14
Selection of Reworded.....................................................................................................................................14
Pitfalls.............................................................................................................................................................14
Assignment: How will you prevent negative reactions of people influenced by your project? What is your
reword and how will you ask for?...................................................................................................................15
SUMMARY............................................................................................................................................................15
2. STRATEGIC MANAGEMENT: DIVERSITY, CULTURE, CHANGE, STRUCTURE, PLANNING24
DIVERSITY...........................................................................................................................................................24
Definitions:.....................................................................................................................................................24
Questions:.......................................................................................................................................................26
CULTURE AND CHANGE.......................................................................................................................................26
Definitions.......................................................................................................................................................26
CULTURE: MANAGEMENT IN VIRTUAL ORGANIZATIONS.....................................................................................27
Questions........................................................................................................................................................29
ORGANISATIONAL STRUCTURE............................................................................................................................29
Definitions.......................................................................................................................................................29
Questions........................................................................................................................................................30
STRATEGIC MANAGEMENT.......................................................................CHYBA! ZÁLOŽKA NENÍ DEFINOVÁNA.
Definitions.......................................................................................................................................................31
 Questions........................................................................................................................................................31
Case Study: What needs to be planned in C.N.C............................................................................................37
STRATEGY FORMULATION....................................................................................................................................31
How to distinguish a short and long term planning importance for strategy formulation?...........................31
Strategic planning...........................................................................................................................................33
Mission Statement...........................................................................................................................................33
Environmental Analysis: Objectives Discovery..............................................................................................33
Opportunities and threats...............................................................................................................................34
Internal resources...........................................................................................................................................34
Objectives.......................................................................................................................................................34
Values..............................................................................................................................................................35
Who does the planning?..................................................................................................................................36
Summary of Discussions.................................................................................................................................37
ORGANISATION AND IMPLEMENTATION...............................................................................................................38
Elements of implementation............................................................................................................................38
Management by Objectives (MBO)................................................................................................................39
Who implements?............................................................................................................................................40
Summary from discussions..............................................................................................................................42
CONTROL...............................................................................................................................................................6
Summary from Discussions.............................................................................................................................15
3. PRODUCTION AND SERVICE RESOURCE ORIENTED COMPANY: DIAGNOSTICS APPROACH
.................................................................................................................................................................................42
Definitions.......................................................................................................................................................42
Important........................................................................................................................................................45
Quality Systems for Service Organisations.....................................................................................................46
Measuring service quality...............................................................................................................................46
REGIONAL MANAGEMENT PROJECTS:.................................................................................................................51
ASSIGNMENT: SUPPLYING CONVENTIONAL ORGANISATIONS..............................................................................43
ASSIGNMENT II: SUPPLYING C.N.CS – CO-OPERATIVES / NETWORKS / CORPORATIONS – FURTHER
ABBREVIATION C.N.C. IS USED............................................................................................................................43
ASSIGNMENT: MANAGEMENT STRUCTURES AND TASKS.....................................................................................44
SUMMARY............................................................................................................................................................48
4. INFORMATION PROCESSING IN MARKETING MANAGEMENT:....................................................48
Definitions.......................................................................................................................................................49
INFORMATION MANAGEMENT: OPERATIONS, WORK-FLOW, PROJECTING.............................................................50
Definitions.......................................................................................................................................................50
Role of Information Technology......................................................................................................................50
EXERCISES: THE USES OF INFORMATION TECHNOLOGY.....................................................................................50
Computer technology - C.N.C........................................................................................................................51
Management information systems:.................................................................................................................51
5. REGIONAL MANAGEMENT........................................................................................................................51

CONTENTS............................................................................................................................................................56

INTRODUCTION...................................................................................................................................................58
Table 1 Summary of respondents by type of authority....................................................................................58
Members & Best Value....................................................................................................................................59
Officers & Best Value......................................................................................................................................61
Overall, the corporate lead officer co-ordinating an inter-departmental team seems to be the dominant
model for the moment. However, Chart 2 gives the figures split by authority type, revealing that the overall
figures are quite strongly influenced by shire districts. The breakdown shows that:.....................................62
Corporate Framework....................................................................................................................................63
Performance Plans and other documentation................................................................................................64
Best Value and Equal Opportunities Issues..................................................................................................66
Chart 7 shows the figures broken down by type of authority..........................................................................67
Training for Best Value..................................................................................................................................67
CONSULTATION TECHNIQUES.........................................................................................................................68
Outcomes of completed reviews......................................................................................................................73
ATTAINMENT OF AWARDS/USE OF QUALITY INITIATIVES......................................................................77

6. TASKS: LEADING, PERSONNEL MANAGEMENT, MARKETING, OPERATIONS

MANAGEMENT...................................................................................................................................................94
LEADERSHIP.........................................................................................................................................................94
DEFINITIONS........................................................................................................................................................95
Leadership styles............................................................................................................................................95
PERSONNEL MANAGEMENT CASE: MEMBER RELATIONS IN C.N.C.....................................................................96
The role of volunteers.....................................................................................................................................96
Commitment....................................................................................................................................................97
Volunteer involvement.....................................................................................................................................97
Volunteer officers............................................................................................................................................98
Employment conditions and contracts............................................................................................................98
Volunteer staff.................................................................................................................................................98
Relations between management / staff and members / customers..................................................................99
MARKETING.........................................................................................................................................................99
Relationship between customers and business...............................................................................................99
Marketing plans............................................................................................................................................100
OPERATIONS MANAGEMENT IN PERSPECTIVE...................................................................................................101
Objectives.....................................................................................................................................................101
The development of operations management...............................................................................................101
Components of an operating system.............................................................................................................101
Operational elements of a quality system.....................................................................................................102
OPERATIONS MANAGEMENT IN C.N.C. ORGANISATIONS...................................................................................102
Operations Management in Perspective.......................................................................................................102
Total Quality Management for C.N.C...........................................................................................................103
Differences between manufacturing and service sectors..............................................................................103
Operations management in this C.N.C.........................................................................................................104
7. EVENTS, DECISION MAKING, MANAGEMENT LEARNING, VISUAL MANAGEMENT
SOFTWARE, BUDGETS...................................................................................................................................105
DECISION MAKING............................................................................................................................................105
Definitions:...................................................................................................................................................105
DECISION-MAKING: THE ISSUES........................................................................................................................105
Who, How, and Why Decision is Made?.......................................................................................................105
Definitions:...................................................................................................................................................106
‘Rational’ decision-making...........................................................................................................................106
Problems in group decision-making.............................................................................................................107
Types of decisions.........................................................................................................................................109
Specialisation in decision making - degeneration theses:............................................................................109
Democratic decision-making: consensus and majority voting.....................................................................110
DECISION-MAKING: THE ISSUES.......................................................................................................................110
C.N.C. decision making process...................................................................................................................111
Running Meetings Co-operatively................................................................................................................111
MANAGEMENT LEARNING.................................................................................................................................112
Learning in teams..........................................................................................................................................112
LESSONS FROM INFORMAL AND INCIDENTAL LEARNING..................................................................................112
VISUAL MANAGEMENT SOFTWARE...................................................................................................................114
FINANCIAL SERVICES AND PRACTICES..............................................................................................................114
Product service of C.N.C..............................................................................................................................114
Retrospective /Financial Statements and Accounting Principles.................................................................116
Financial Planning and Risk Management...................................................................................................116
Financial Control and Use of Ratio Analysis...............................................................................................117
Financial Service and Practices: Who is Involved?.....................................................................................117
8. COMMUNICATION AND DOCUMENTATION....................................................................................117
 MUNICATIONS: ISSUES AND SKILLS....................................................................................................................117
Definitions:....................................................................................................................................................117
The communication process..........................................................................................................................118
Non-verbal communication...........................................................................................................................119
Listening........................................................................................................................................................119
Interviewing..................................................................................................................................................120
Communication in groups or teams..............................................................................................................121
Written communication.................................................................................................................................121
Why written communications?......................................................................................................................122
Effective writing............................................................................................................................................122
Developing of writing plan...........................................................................................................................125
Letters and memos........................................................................................................................................128
DOCUMENTATION: OUTPUT, PROCESS, RESPONSIBILITY....................................................................................131
Planning by advisers.....................................................................................................................................131
PITFALLS............................................................................................................................................................133
9. MANAGING GROUPS: CONFLICT, STRESS, CHANGE, MEETINGS FACILITATION.............134
Definitions:...................................................................................................................................................135
CONFLICTS AND CONFLICT RESOLUTION..........................................................................................................136
Conflict resolution........................................................................................................................................136
CONFLICT IN ORGANISATIONS............................................................................................................................137
CHANGE AND CREATIVITY IN ORGANISATIONS.................................................................................................139
Why change?.................................................................................................................................................140
Change in organisations...............................................................................................................................140
‘Macro-level’ aspects of change: competition vs. C.N.C..............................................................................141
Creativity in organisations............................................................................................................................142
RUNNING MEETINGS C.N.C..............................................................................................................................142
Objectives.....................................................................................................................................................142
Problems with meetings................................................................................................................................143
Types of meetings..........................................................................................................................................144
Making meetings more effective....................................................................................................................145
Measuring the effectiveness of meetings.......................................................................................................146
The potential of networking..........................................................................................................................146
Workforce planning.......................................................................................................................................147
Personnel Management Activities Case.......................................................................................................148
Disciplinary procedures................................................................................................................................149
Personnel Management and Industrial Relations Issues in C.N.C..............................................................150
GROUPS IN C,N.C..............................................................................................................................................150
Groups: formal (permanent or temporary)/informal (functional, emotional)..............................................150
9. MANAGING INDIVIDUALS: PERCEPTION, ATTITUDES, MOTIVATION, TIME-
MANAGEMENT.................................................................................................................................................151
Definitions:...................................................................................................................................................151
MOTIVATION: EMPLOYEE EMPOWERMENT AND PARTICIPATION.......................................................................153
Motivation and job satisfaction....................................................................................................................154
Theories of motivation..................................................................................................................................154
Job design (rotation, enlargement, enrichment, characteristic approach, autonomous work groups)........156
Creating a culture for employee empowerment and participation...............................................................157
TEAMWORK IN C.N.C........................................................................................................................................157
POWER...............................................................................................................................................................159
GUIDING, COACHING, FACILITATING PRINCIPLES...............................................................................................160
Approach selection........................................................................................................................................160
Guidelines for Emotional Competence Training..........................................................................................160
Performance appraisal.................................................................................................................................162

Management
Lectures:
1. Evolution of management tendencies: Resource, Product, Improvement, Responsibility Quality
Management Systems (ISO 9000/2000)
2. Strategic management characteristics: Scientific Management Approach
3. Production and Service Oriented Company: Diagnosis Approach
4. Information Processing in Production and Service Management:
- Theory of Information
- Media Richness Theory
- Information Management: operations, work-flow, projecting
5. Guest speaker
6. Tasks: Planning, Organising, Leading, Personnel Management, Control
7. Decision Making, Groups, Teams and Teams Building, Management Learning, Visual Management
Software
8. Guest speaker
9. In/Formal Operational Management: Tools and Methods, Budgets, Self-evaluation, Projects, Events,
Communication
10. Managing Individuals: Perception, Attitudes, Motivation, Time-management, Leadership
11. Managing Groups: Conflict, Stress, Change
12. Organisational Structure Assessment: Lost Information, Size, Type, Levels, Span
13. Management Structure Assessment: Enthusiasm, Delegation
14. Regional Management Projects:
- OECD, EU
- Quality Management: events, strategy, improvement
- Property management case: Co-operatives, franchising, Outsourcing
- Regional Visual Management Software - Aperture

Exercises:
1. Group Project Assignment: Resources, Products, Improvements, Responsibility, Project Cycle,
Documentation
2. Strategy and Operations Identification: Aperture Drawings and Regions, Management Game
3. Strategy and Operations Identification: Aperture Symbols and Databases, Management Game
4. Process Identification: Aperture Tables, Management Game
5. Instruction: Who Will Do What Investigation: Events Selection, Knowledge and Skills Acquisition
6. Individual Project Assignment: Title, Specific Objectives, Rationale, Data Sources, Methodology
7. Budgeting
8. Mission Statement: Interests Integrity
9. Project Manual Presentation
10. Project Plan Presentation
11. Project Procedures Presentation
12. Project Records Presentation
13. Individual Value Presentation
14. Regions, Facilities, Leasing, Maintenance Control, Monitoring, Corrective Actions
 1. Course introduction
Management course counts time managers have to reach solution. Firstly, they stabilise existing environment
using control principles (quality and performance norms). Control draw into managerial system all new
knowledge from marketing, technology and professional skills. Secondly, managers create necessary conditions
to reach desirable solution using managerial functions (planning, organising, leading, personnel management and
again control). Managerial functions create plans and assign tasks to all people based on their post in the
management structure of company. Thirdly, managers learn biases during implementation process and correct
them by setting biases with opposite effect. Identification and correction of biases is again certain kind of control
which is based on lists of identifiers of biased behaviour.

Needs satisfied
by offers of Managerial functions Identifying of
Welfare of assigning transferred
competitors biases during
independent skills along the implementation
people management structure and compensating
(employees and process to reach them by biases
entrepreneurs desired solution with opposite
and orientation to
serviceman) maintain
competitive
Control of norms
advantage
Development transfering skills of
outside of competitors into firm
firm (in
marketing,
technology,
professional
skils

Size of
investment

Transfer function of control is described by quality norms and approaches followed by budgeting and
benchmarking. Managerial functions and its implementation follow. Identification and compensation of biases
during implementation processes has the shape of glossaries, which are part of each lecture.

2. Control Over Resource, Product, Improvement, Responsibility

Control is the simplest form of management. Management can be efficient after the survival is ensured by
control of hazardous or quality points of the process. It is expected that you are entering some of opened
entrepreneurial form (CNC– co-operatives, networks and corporations) proving accepted value, safety and
durability of your proposals and actions. All these parameters must be new and therefore, they are unknown to
people in environment you are entering. You have to teach them these parameters, which are unknown or
considered irrelevant.

Control
When you have completed this section you should be able to:
- state some of the major control functions in a C.N.C.
- explain the mechanisms by which management is accountable to the members of a C.N.C.
- explain the roles of different actors in C.N.C. in terms of fulfilling the control function
- evaluate the importance of conducting a social audit as a measure of the C.N.C.’s performance.
You should read and understand to following headlines:
Elements of control
Mechanisms of control
Who controls?
Social audit

You should read and understand to following headlines:

Evolution of management tendencies
Quality Management Systems (ISO 9000/2000)
C.N.C. – co-operatives, networks and corporations

ISO 9000/2000 Concept and Historical background

ISO 9000/2000 shows management systems: resources, product, and improvement. Evolution of these topics is
mutually related and rooted in different problems. Each system developed tools for individual to manage others.
Managers always begun to manage strait, then indirectly, then with the help of structures and finally using the
power world-wide.

Resources management
Once upon the time, when resources were not limited yet the most important factors were: worker, manager, and
organisation. Worker’s productivity was enhanced either by norms or by responsibility assignments. Some
situations were more suitable for norms’ implementation contrary to others.

Without solving problem of the worker the manager appeared as the problem bringing worse consequences.
Problem of management was approached again from two angles: the systematic and the empirical one. The
systematic approach resulted in computers’ application and the empirical approach to management resulted in
sophisticated organisations' development. Exhausting internal resources the competition for external resources
resulted in to wars. Gradually all resources were ether exhausted or well protected. Further exploitation of
resources lost its key position and demand took its place.

Product/Demand management
Organisations from resource period were not capable to handle all needs of markets’ fluctuation. Therefore,
organisations were adapted to the production, product, sale, marketing and social marketing concept of
management. All these changes shown that organisation are not the main problem but the problem of continuous
sales. Therefore, the core concept of marketing invented how to make buyer form customer and how to make
salesman from supplier. The systematic marketing management application divided world on exchange capable
part and excluded one. Globalisation manifest itself further by skimming policy and protective structures like
WTO, IMF, WB, to penetrate further.

Management Responsibility
Management responsibility is to maintain and tune up all previous, present and future topics to needs of all
claimants. Organisations were designed form owners, globalisation developed voyagers exhausting global
differences and administrators protecting local destinations. Ecological threads are pushing on founders
emergence who handle all these challenges.

Exercise: List three primary goals, which you think should be included in a C.N.C. quality policy:
1.
2.
3.
Answer: You might have included some of the following:
- meeting members’ needs for C.N.C. in a professional manner
- looking to continually improve the service available to members
- providing a friendly atmosphere for staff to work in and for members to feel welcome
- being efficient and effective in providing services
- dealing with problems of overdue efficiently but sympathetically
- promoting the general social and economic well-being of the community.
Improvement Management
Even improvements have its history. Fiscal policy was the most efficient tool to select best organisations.
Skimming policy let grow multinationals in to global companies on account of excluded populations. These
excluded populations generated protest movement then, for which founders should find the solution based on
communication, media richness theory, and media management.

Scheme 1: Historical transformations Connected with ISO 9000/2000 Quality systems

Responsibility – local advantage: - command employee
- property management
- business administration
- entrepreneurship
- global advantage

Resources: Improvements:
A. Local offensive A. Local resistance
- workers - methods (observation,
ISO scientific management,
- managers
9000 diagnostics, scientific)
- organisations
- wars - fiscal policy
B. Global - monetary policy
defensive - media mismanagement
B. Global advantage

Product - local offensive: - marketing management concepts

- core marketing concept
- command customer
- exclusion
- global resistance

The further you are from the third circle of scheme 1 the bigger power individual or organisation have over
global population.

Development of quality systems ISO 9000

Exercise: Does your C.N.C. have any form of quality system, (this need net necessarily be a formally registered
one)? If ‘Yes’, what are the main elements of the system? If ‘No’, do you think such a quality system might be
introduced?
Answer: Your answer may have mentioned that it is used as an operational standard for performance for the
C.N.C., improving the service/product quality.

Exercise: What do you think is the main advantage of providing clear guidelines on the main activities carried
out by an organisation?
Answer: A formal, written down, quality system is essentially a guide to operational procedures in the
organisation, designed to meet customer’s needs.

Exercise: Although documenting the quality systems alows the organisation to identify problems quite easily, it
can also be seen to bring a major disadvantage to the organisation. What do you think this might be?
Answer: There is a belief that in writing down and formalising a quality system, there is a danger of making it
too rigid, thus not allowing for the flexibility and creativity which are important elements of many organisations.
In this sense ‘Q’ mark approach might be considered more appropriate for some service organisations, since it
doesn’t make use of detailed checklists in the way that the ISO standard does. If and organisation does opt for
ISO standards, it should be careful not to go into detail on every minor issue when drawing up the quality system
documentation:, rather it should aim to show that there is a coherent quality system in place. The documentation
is quite likely to be regularly amended in the light of experience, and following the commitment to continual
improvement which is part of ‘total quality’ approach which we described in section 2.

Exercise: What role in the quality system do you think is played by:
- the Board of Directors
- the (paid) manager?
Answers: It is not difficult to envisage the appropriate division of responsibilities:
- commitment from the Board of Directors
- Implementation by manager.

Total Quality Management for C.N.C.

When you have completed this section you should be able to:
- describe the development of the quality concept business
- explain what quality means in the concept of business
- describe the main features of a total quality management approach to quality
- compare the characteristics of a C.N.C. culture with a TQM culture.

Origins of the quality concept

Disadvantages should be listed (exercise 1) and the most important ones recognized (excercise 2) and removed
(exercise 3).

Exercise: Suggest at least one disadvantage with waiting until the product is finished before quality inspection is
carried out.
Possible answer: We have noted two major disadvantages about this inspection approach to quality:
- it results in significant wastage of materials, defects would not be found until the product is finished
- it divorces the workforce from any involvement in or responsibility for quality.

Exercise: Indicate, which of the following statements are true and which are false.
1. According to statistical process control, variation is the enemy of quality T/F
2. Statistical process control is concerned more with improving the product than the actual process. T/F
3. The emphasis of statistical process control is on reducing defects in the process. T/F
4. Statistical techniques provide information to provide better quality service to customer T/F
5. Statistical techniques provide information which allows errors to be detected and reduced. T/F
You should have ticked following boxes: 1.T, 2.F: not on product but process, 3. T, 4. F: again process, 5.T.

Deming’s 14 points for management

Exercise: Indicate which of the following statements are true and which are false.
1. Commitment of top management is sufficient to ensure quality improvements. T/F
2. Reliance on slogans and exhortations is important to improve worker productivity T/F
3. The ‘quality circles’ movement is concerned with improvement of production processes.
4. Motivation of workers is not important in bringing about quality improvements T/F
These are nearly all false statements! Answers are: 1. F: necessary but not sufficient, 2. F: is worthless, unless the
means to improve productivity are also provided, 3. T, 4.F: Motivation of workers, and giving back price in their
workmanship, is seen as highly important to bring about quality improvements.

Definitions of quality
We saw earlier that from one perspective, quality is ‘defined’ by customers. In other words, quality is whatever
customers value in a good or service. We also learned that quality is reducing the variation in a product or
services so that defects are reduced. Therefore, the process through which a product or service is produced
(provided) must be of a high quality. This includes having committed and competent workforce.

Exercise: How would you evaluate the quality of your C.N.C. which point to its qality, against each dimension?
-we have given you suggestions for the two first dimensions to get you started.
Quality Indices:
1. Conformance(reliability, durability, aesthetics, perceived quality, serviceability)
2. Delivery (conformance for distribution channels and place of sale)
3. Flexibility (conformance of mostly information processing for product or service development)
4. Productivity (performance, low-cost nature, special features (Include insurance protection))

This is a bit tricky! We should suggest, for example:

Reliability: ...

Exercise: Draw up a list of the likely outcomes if a company provides a poor quality product or service.
Answer: The results of poor quality can include:
- loss of business
- product or public liability
- loss of productivity - employees not as prompt and efficient with members of the counter
- costs to the company in terms of money, time, etc.

Let us take closer look at the type of costs of poor quality products or services will mean to a company.

Exercise
What do we mean by quality systems, elements, and processes? List them.
Answers: Systems are easily distinguishable. Work must then begin containing necessary elements to ensure
quality. Such work must be applied in all phases of the product and processes. You might have some of
following:
- systems are:
 resources
 products
 improvements
 responsibility
- elements are:
 extent of application,
 structure of the quality system (responsibility and authority, organizational structure, resources and
personnel, operational procedures)
 docummentation (manual, plan, procedures, and records)
 auditing (program, extent, reporting, follow-up action
 review and evaluation
 quality improvement
- phases (states) of life cycle (process) are:
 marketing
 product design
 process planning for the control
 purchasing, services delivery
 production or provision of services
 verification
 packaging and storage
 sales and distribution
 installation and commissioning
 technical assistance and servicing
 after sales
 disposal or recycling at the end of useful life

Exercise: Below we have given you an example of each of the types of costs. Can you add another examples to
each?
Internal failure costs: 1. Lost production time. 2. ...
External failure costs: 1. Warranty work. 2. ...
Appraisal costs: 1. Costs of inspection. 2. ...
Prevention costs: 1. Training. 2. ...
Answer: You might have included some of the following:
Internal failure costs:
- lost production time
- wastage of materials
- equipment damage
- employee injury.
External failure costs:
- warranty work
- liability/litigation
- handling of complaints
- lost of customer goodwill.
Appraisal costs:
- costs of inspection
- costs of lab testing
- costs of labs.
Prevention costs:
- training
- quality control procedures
- increased attention to design and production phases.

Exercise: Examine ten features of TQM. List at least two of them, which would appear to fit easily with assisting
C.N.C. practice.
1.
2.
Answers: We would say that the following features accord with the practice of at least some C.N.C.:
- find out what customers want
- design product/service that meets customer’s requirements
- employee empowerment
- team approach

Q: For each aspect in the table, complete the relevant entry for C.N.C.. Then comment on the differences
between a TQM culture and the C.N.C. culture.
Aspect C.N.C. culture
Overall aim
Objectives
Management
Role of manager
Customer requirements
Problems
Problem solving
Improvement
Suppliers
Jobs
Focus

Transformation Case Study: Transition from Planned to Market Economy

Results:
1. Global entrepreneurs exhausted and collapsed entrepreneurial opportunities, and excluded local population
from future economic development
2. Exhausted entrepreneurial opportunities have the shape of:
- illegal money transfers (17 banks collapsed, the last one for 3 billion EUR),
- management take-overs (Liaz, Tatra, Zetor and other companies employed foreign managers or rely on
abandoned contracts with “strategic” partners)
- political and legal hostility (exports were forbidden because of dumping which was not proved but company
collapsed during the legal procedure (Vitkovice steel company, and others)
3. Global entrepreneurs can be even of the local origin but they collapse entrepreneurial opportunities by
purpose and leave the country (Mr. Kožený with Czech and US origin resettled to Ireland and controls 10%
of the Czech property value, for example)
4. Media convinced people that all this is good. And people believe that 10 years of economic decline is OK
and further decline too. Czech Government therefore, against its interests invited International Monetary
Fund and World Bank to have a meeting in Prague.
Conclusion:
We should prevent extreme power of local or global stakeholders. If it is too late and they keep the power
already it is better to invent other resource of income to stay independent or serve for income to these powers.
ISO 9000/2000 should serve as a global norm for prevention on the level of policy of states and companies.
------------------------------------------------------------------------------------------------------------

Questionnaire: No development or project, just control

1. Do you agree that exclusion, global entrepreneurship and media mismanagement have the same effect
as wars? (You can stop here if not).
Yes / No
2. Do you agree that roots of wars, exclusion, global entrepreneurship and media mismanagement are
traceable by ISO 9000/2000 – remember the presentation? (You can stop here if not).
Yes / No
3. Would you support ISO 9000/2000 documentation development: manual, plan, procedures and records?
Select of describe how, if Yes:
a. WTO should develop quality documentation preventing wars, exclusion, global entrepreneurship and media
mismanagement, and control its implementation. (Go further if not)
Yes / No
b. States should develop quality documentation preventing wars, exclusion, global entrepreneurship and media
mismanagement, and control its implementation like anti-monopoly law. (Go further if not)
Yes / No
c. Suggest your form of documentation: …………………………………………………………………
……………………………………………………………………………………………………………………..
…………………………………………………………………………………………………………………….
4. Describe how to start prevent global and local biases?
………………………………………………………………………….
………………………………………………………………………………………………
………………………………………………………………………………………………
5. Fill your identification if you want to become involved in quality documentation development for
traceability purposes

Name: ……………………………………………………………………………………
Email: …………………………… Phone: ……………………………………
Address: …………………………………………………………………………………
…………………………………………………………………………………………………………………
This questionnaire is designed for politicians. Would you imagine that managers can diminish power of globally
acting individuals over their companies?

Quality Discovery and Delivery

Transformation is personal capability to join and influence parties, which are gaining or losing the most.
Positioning and defining the offer is the way of influencing parties. This process is in the literature (Teboul)
called ‘Squaring the Circle’.
Supply Demand

Adaptation of supply to demand and vice versa

Not demanded quality

Perceived satisfaction, effectiveness of an offer

Unsatisfied needs and wants

Perceived failures. Nonconformity

 Firm A
+ Competitor B
Conformity
The ‘+’ of differentiation

Case Study: Selection of reworded for EU enlargement

Internationally composed group met to discuss EU enlargement. Each participant presented advantages and
dangers of enlargement for his country and proposed how to care for less developed countries. Finally was
discovered that no one want to be cared. The care was perceived as foreign intervention. “The EU enlargement is
possible only under strategy on management of diversity”. The following proposal was made:

1. The start of selection of reworded in the EU enlargement case should be a logo proposal, which is based on
synergy effect:

1+1= U+EU=3
“U” is a symbol of “you” as a person skipping language barriers. “EU” and “1+1” is clear. “3” is added value by
personal contribution of each of us. Children since first year of school should be provoked by seeming mistake
and parents decode and remember this logo answering their questions. The chain of symbols should be gradually
reduced from the left to the right. Finally the number 3 should remain as sufficient reminding personal
responsibility for an offensive approach improvement described below.

2. Mission statement: Only well managed EU enlargement open labour power and property markets and brings
the same challenges and benefits as free market for goods. Group of Brugges is here to strengthen the human
capability to adapt by stressing the care for diversity development. Democratic (concentric) diversity (ex-centric)
management criteria and processes will optimise management responsibility for synergy effect for any
challenge of the future. The responsibility for diversity management is the imperative, which is valid for all
European members now and in the future. The enrichment of Europe by contribution of individual become the
every day challenge and the guarantee of the European future.

3. Tasks and options: Cultural understanding is the first step in the process of European diversity
management. Therefore, program should be developed generating synergy effect among following
perceptual or cultural differences:
a. Use advantage of geographic (West) and demographic (East) attitudes
b. Use rules for EU budgetary transfers and global monetary policy of EURO
c. Restrict time of transition and differentiate multi-functionality (diversity)
d. Either to create a glossary of terms describing how regional development process is managed or change the
culture
e. Adapt education (a-d) for each local unit (observation of amount of cows and richness of farmer)
f. Check positive and negative attitudes (e) and regional differences (d)

4. Attract other person who can handle this process with pleasure: …………………………………………..

Personally supported development of entrepreneurial framework can enhance capabilities and bring diversified
projects.
Question: How you will manage the diversity in your project?

Selection: How to reject bad teacher?

Selection is based on guarantees of personal benefits for those who personally transformed and manage the
complexity. Personal benefits depend on the personal position in competition among other claimants.

Management is helping claimants to become selected, transform themselves, and benefit from synergy.
Documentation is the evidence for client and claimant that the goal will be reached before the contract is signed.
Each of us is in both, position of management client, and claimant. Let’s describe positions of clients and
claimants in school, conventional and network based organisations.

Pitfalls
Not all actions you do for others are appreciated. Let’s learn from following opinions of students about topics
listed in rows of the table below. 1 is “disagree”, 7 is “agree” and 2-6 is the scale between these extremes.

Management
The way of speaking is clear
After each lecture I feel it was a contribution
The atmosphere is friendly
The lectures are related to other subjects
The topic of this lecture was interesting for me
The lecturer is an authority on the subject
The subject can be appplied on other subjects
The subject can be used in practice
The students are involved in the lesson
Time is used effectively
S S2 S3 S4 S5 S6 S7 S8 S9 S1 S1 S1 S1 S1 Ave
1 0 1 2 3 4 rag
e
7 5 3 5 6 3 5 6 7 6 7 6 7 1 5,3
6 5 4 6 4 4 5 5 5 5 6 6 7 6 5,3
4 3 3 4 2 2 6 2 3 3 6 7 6 3 3,9
4 2 2 3 6 3 4 1 6 5 2 4 7 6 3,9
5 4 3 4 2 4 3 2 6 6 5 6 4,2
5 2 2 3 3 3 3 2 2 3 3 6 6 2 3,2
4 2 3 3 3 4 4 1 4 2 2 4 6 5 3,4
1 3 2 5 2 4 3 2 2 3 3 4 5 5 3,1
3 2 5 6 3 4 5 5 7 5 6 6 7 1 4,6
4 5 5 6 5 3 3 3 7 5 5 2 7 3 4,5

Last year students had following problems to understand Management properly:

 It was not clear what the teacher was asking/talking about. I would love to have management, because I
think it would be useful, but not the management we had.
 Good level of English, but the lessons were not clear, there were some misunderstanding during the lectures.
 The teacher should take care about weather students really understand him during the seminar!
 Sometimes is not understandable what is lecturer talking about.
 Good English, but sometimes I had a problem to follow the topic. Sometimes we got lost and we could not
follow the lessons even when Mr. Linhart tried to answer our questions. Students can´t see the practical
use of this subject.
 The way of speaking is not clear, the feedback from students is missing total.
 The lessons were very confusing. Mr Linhart was not able to explain us the aim of the project work. We
were asking a lot of questions, but the answer did not help us. From my point of view the biggest problem
are the communication skills of Mr. Linhart.
 The lectures were confusing, messy and not precise. I did not recognise the importance of the whole
project. It was almost the only part of the exam.

 He is not very students-friendly. He is like opposite of "short and brief".

Assignment: How will you prevent negative reactions of people influenced by your
project? What is your reword and how will you ask for?

Summary

In this section we outlined some of the main approaches how to control situation exceeding your power. Control
creates quite depressive feelings and defensive approaches. ISO 9000 solves this disadvantage by assigning
autonomy to each participant of the quality maintenance process. We discussed historical approaches of
scientific management, classical management, human relations, bureaucratic management and quality
management systems. The whole management course was opened by discussion of positive and negative aspects
of case studies for defensive and offensive management.

Summary from Discussions

This section demonstrated that control is a vital management function. Through evaluation and feedback, control
is a mechanism that helps ensure that worthwhile plans are being implemented in the right way.
We described the control process and saw that following the monitoring of performance against set goals, action
should be taken to revise the goals.
We looked at quantitative and qualitative performance indicators and the distinction between key performance
areas and key indicators.
C.N.C. use a number of control mechanisms and control structures in their operations and we looked at specific
example of basic control.
The question of who controls was covered by looking, in turn, at the control responsibilities of the Board, the
executive officers, the manager and the committees.
Finally, we considered the use of a social audit to parallel the financial audit as a means of measuring the
performance of a C.N.C.

Semester Project Assignment:

1. Select problem, place or organisation
2. Specify related and conflicting issues using Scheme 1
3. Assign people you can use based on their orientation (Scheme 2)
4. Select methodology of project processing and documentation

Modify project assignment from lecture one of marketing course. Read the following text to be ready for next
lecture and exercise about culture, which manager must be capable to observe, understand and use.

Reading for Next Lecture: The Governance of Social Enterprises: A

Paradox Perspective
(A paper to be presented at the Second Social Economy and Co-operatives Research Conference, Gavle,
Sweden, June 2001)

Chris Cornforth, Open University Business School, Walton Hall, Milton Keynes, MK7 6AA, UK.
Tel: +44 1908 655863; Fax: +44 1908 655898; E-mail: c.j.cornforth@open.ac.uk

Introduction

This paper focuses on the governance of social enterprise. By governance I mean the systems by which
organisations are formally controlled and accountable. At the heart of these arrangements is an organisation’s
governing body or board, and boards are the main focus of this paper. By social enterprise I mean organisations
whose primary purpose is to pursue social goals, and that operate at least partly independently from the state in
some kind of market or quasi-market. Examples include voluntary organisations, quasi-governmental
organisations (quangos), mutuals and co-operatives. My particular concern is with voluntary organisations and
quangos, which in the US are often called non-profit organisations.

The paper has a theoretical orientation. Its main purpose is to present a new framework for understanding the
governance of non-profit organisations in terms of multiple theoretical perspectives and a number of key
paradoxes or tensions that boards face. The paper addresses two related problems.

First, the governance of non-profit organisations is relatively under theorised in comparison with the governance
of business corporations. In addition, the literatures on corporate governance and non-profit governance have
developed largely separately from each other (Middleton, 1987; Herman and Van Til, 1989, Hung, 1998).
Noticeable exceptions include resource dependency theory and the study of elites (Middleton, 1987). In contrast
a variety of competing theories have been proposed to try to understand the role of boards in the private sector
e.g. agency theory, stewardship theory, stakeholder theory, and managerial hegemony theory. The paper briefly
reviews each of these theories and discusses how they can be usefully extended to throw light on non-profit
boards. A framework is presented for comparing and contrasting these different theoretical perspectives on
boards.

However, this raises a second related problem. Taken individually the different theoretical perspectives are rather
one dimensional, only illuminating a particular aspect of the board’s role. This has lead to calls for a new
conceptual framework that can help integrate the insights of these different perspectives (Hung, 1998: 108-9;
Tricker, 2000: 295). The paper argues that a paradox perspective offers a promising approach to providing this
new conceptual framework. It argues that taken together these multiple theoretical perspectives are helpful in
highlighting some of the important ambiguities, tensions and paradoxes that non-profit boards face.

Based on this framework the paper outlines some of these key paradoxes:
 The tension between board members acting as representatives for particular stakeholder groups and ‘experts’
charged with driving the performance of the organization forward.
 The tension between the board roles of driving organizational performance and ensuring conformance i.e.
that the organisation behaves in an accountable and prudent manner.
 The tension between the contrasting board roles of controlling and supporting management.
 The ambiguities that stem from accountabilities to multiple stakeholders.

Each of the paradoxes is discussed and illustrated by drawing on examples from recent empirical studies by the
author and other researchers (Cornforth and Edwards, 1998; Cornforth, 2001). These will examine how the
paradoxes manifested themselves in particular non-profit organisations, and the different patterns of behaviour
that resulted.

Finally the paper concludes by considering the implications of taking a paradox perspective for future research
on non-profit governance.

Competing theoretical perspectives

Although theories like resource dependency theory have been developed at least partly in relation to public and
non-profit organisations the governance of public and non-profit organisations is relatively under theorised. In
contrast a variety of competing theories have been proposed to try to understand the role of boards in the private
sector, for example agency theory, stewardship theory, stakeholder theory, and managerial hegemony theory.
Below each of these theoretical perspectives is briefly examined and how they can be usefully extended to throw
light on non-profit boards.

Agency theory – a compliance model

Principal - agent theory, or agency theory for short, has been the dominant theory of the corporation and
corporate governance arrangements. It assumes that the owners of an enterprise (the principal) and those that
manage it (the agent) will have different interests. Hence the owners or shareholders of any enterprise face a
problem that managers are likely to act in their own interests rather than to their benefit. While free markets are
seen as the best restraint on managerial discretion, agency theory sees existing corporate governance
arrangements as another means to ensure that management acts in the best interests of shareholders (see Keasey
et al (1997: 3-5) for a more detailed overview). From this perspective the main function of the board is to control
managers. This suggests that a majority of directors of companies should be independent of management, and
that their primary role is one of ensuring managerial compliance – i.e. to monitor and if necessary control the
behaviour of management to ensure it acts in the shareholders best interests.

One difficulty in applying an agency perspective to quangos and non-profit organisations is that there is much
more potential ambiguity over who the principals or owners are. In the case of voluntary organisations for
example is it the original founders of the organisation, its funders, its beneficiaries or members? In the case of
quangos is it the general public, users, taxpayers or the government itself? However, many aspects of this
perspective still have relevance. The principles and regulations concerning charitable trusts, which affect many
voluntary organisations in the UK, embody similar ideas on the role of governance. Under trust law the trustees
of a charity are appointed to look after the money and resources donated by those founding the organisation and
to see that their wishes, as set out in the trust deed, are carried out. It is enshrined in trust law that the trustees
themselves can not benefit financially from the trust, and so employees of a trust cannot normally be trustees.
Legally the key role of the trustees of a charity is to see that the staff or management of the organisation carries
out the objectives of the trust. As there is a complete separation of the board members from staff or management
it could be argued that trust law is even more in line with an agency or compliance model of governance than
company law. Given its origins in traditional ideas of philanthropy and charity Harris (1994) identifies this as the
‘traditional’ model for charity boards. Similarly, in public organisations it can be argued that the public’s or
state’s interests are at risk from managers pursuing their own interests, and so a key role of the board is again to
monitor management and ensure there compliance in furthering the organisation’s objectives.

Stewardship theory – a partnership model

Stewardship theory (Muth and Donaldson, 1998) is grounded in a human relations perspective (Hung, 1998) and
starts from opposite assumptions to agency theory. It assumes that managers want to do a good job and will act
as effective stewards of an organisation’s resources. As a result senior management and shareholders (or the
mandators) of the organisation are better seen as partners. Hence, the main function of the board is not to ensure
managerial compliance or conformance, but to improve organisational performance. The role of the board is
primarily strategic, to work with management to add value to top decisions. In this context it is not surprising
that management ideas and practices should be applied to governance. From this perspective board members
should be selected on the basis of their expertise and contacts so that they are in a position to add value to the
organisation's decisions; boards and managers should receive proper induction and training; they should know
how to operate effectively as a team etc. Ideas such as these are common in much of the prescriptive literature
on non-profit boards, (see for example Kirkland (1994)).

This perspective is evident in various recent models of governance. For example, Pound (1995) suggests what he
calls the 'governed corporation model' of governance for public companies. In this model the board, and major
shareholders, are seen as partners of management, and the prime function of the board is to add value to the
organisation by improving its top decision-making. Carver (1990) in his policy governance model for non-profit
organisations advocates that the real business of governance is to make policy, articulate the mission and sustain
the vision of the organisation.

Resource dependency theory – a co-optation model

Resource dependency theory (Pfeffer and Salacik, 1978) views organisations as interdependent with their
environment. Organisations depend crucially for their survival on other organisations and actors for resources.
As a result they need to find ways of managing this dependence and ensuring they get the resources and
information they need. From this perspective the board is seen as one means of reducing uncertainty by creating
influential links between organisations through for example interlocking directorates. The main functions of the
board are to maintain good relations with key external stakeholders in order to ensure the flow of resources into
and from the organisation, and to help the organisation respond to external change.

The role of the board is very much a boundary-spanning role. Board members are selected for the important
external links and knowledge they can bring to the organisation, and to try to co-opt external influences. For
example it is quite common for local voluntary organisations to include representatives of the local authority on
their boards.
A democratic or association perspective – a democratic model

Democratic government is a central institution in Western societies. Key ideas and practices include: open
elections on the basis of one person one vote; pluralism i.e. that representatives will represent different interests;
accountability to the electorate; the separation of elected members, who make policy, from the executive, who
implement policy decisions. Democratic ideas and practices have influenced thinking about the governance of
many types of organisations. For example many non-profit organisations, co-operatives and mutual organisations
are established as membership associations, where it is enshrined in the organisation’s constitution that the
governing body should be elected by and represent the membership in some way. Conversely, the governance of
many quangos is often criticised for not living up to ideas of democratic accountability (Plummer, 1994;
Skelcher, 1998).

A democratic perspective on governance suggests that the job of board is to represent the interests of members of
the organisation. The role of board is to resolve or choose between the interests of different groups and set the
overall policy of the organisation, which can then be implemented by staff. Central to this view is that anyone
can put himself or herself forward for election as a board member. Expertise is not a central requirement, as it is
in the partnership model.

Stakeholder theory – a stakeholder model

Stakeholder theory as applied to governing bodies is based on the premise that organisations should be
responsible to a range of groups (or stakeholders) in society other than just an organisation’s owners or
mandators (Hung, 1998: 106). By incorporating different stakeholders on boards it is expected that organisations
will be more likely to respond to broader social interests than the narrow interests of one group. This leads to a
political role for boards negotiating and resolving the potentially conflicting interests of different stakeholder
groups in order to determine the objectives of the organisation and set policy.

Stakeholder theory has developed mainly in debates over corporate governance in the private sector, where there
has been robust debate about its desirability and likely consequences (e.g. Hutton, 1997; Tricker, 2000: 295). The
principles of stakeholder involvement are less controversial in the public and non-profit sectors, and the practice
more common, although not always discussed in terms of stakeholder theory. Some of the clearest examples in
the UK are in the field of education where government reforms have specified the broad composition of
governing bodies. For example, state funded schools are required to have governing bodies made up of people
appointed or elected from various groups, including: parents, the Local Education Authority, teacher governors,
and in the case of voluntary aided schools foundation governors representing the church or charity supporting the
school. When FE colleges were taken out of local government control the Conservative government specified
that at least half the governors should be from business broadly construed. Due to concerns about lack of balance
and accountability the composition was broadened by the Labour government in 1999 to include representatives
of staff, students, the local authority and community.

Managerial hegemony theory – a ‘rubber stamp’ model

Managerial hegemony theory relates back to the thesis of Berle and Means (1932) that although shareholders
may legally own and control large corporations they no longer effectively control them. Control having been
effectively ceded to a new professional managerial class. A variety of empirical studies have leant support to this
thesis. Mace (1971) in his study of US directors concluded that boards did not get involved in strategy except in
crises, and that control rested with the president (chief executive) rather than the board. Herman (1981) came to
similar conclusions but argued that managerial power was always in the context of various constraints and the
latent power of stakeholders such as external board members. In a more recent study Lorsch and MacIver (1989)
conclude that although the functioning of boards has improved since Mace’s study, their performance still leaves
much room for improvement. Like Mace they distinguish between boards in normal times and during crises, and
conclude that during normal times power usually remains with the chief executive. From this perspective the
board ends up as little more than a ‘rubber stamp’ for management’s decisions. Its function is essentially
symbolic to give legitimacy to managerial

Although this theory was developed in the study of large business corporations, many of the processes it
describes seem just as relevant to public and non-profit organisations: for example the separation of those who
found (‘own’) the organisation from those that control it, and the increasing growth and professionalisation of
management. Indeed it could be argued that the largely voluntary nature of board involvement in public and non-
profit organisations might mean that board power is even more limited than in the private sector. Murray et al
(1992) identified five different patterns of power relations among non-profit boards in Canada. One of the most
common was what they called the CEO-dominated board, where chief executive and sometimes other senior
managers exercise the main power and the board plays a largely symbolic role, often rubber stamping decisions.

The main features of these different perspectives are summarised in Table 1.

-Table 1 about here-

A paradox perspective - towards a synthesis

Taken individually these different theories are rather one dimensional, and have been criticised for only
illuminating a particular aspect of the board’s work. This has lead to calls for a new conceptual framework that
can help integrate the insights of these different perspectives (Hung, 1998: 108-9; Tricker, 2000:295). A paradox
perspective offers a promising approach to providing this new conceptual framework. Taken together these
multiple theoretical perspectives are helpful in highlighting some of the important ambiguities, tensions and
paradoxes that non-profit boards face.

Morgan (1986: 339) in his groundbreaking study of organisations argues that many of our theories and ways of
thinking about organisations do not match the complexity and sophistication of the organisational realities we
face. In order to address this problem he argues that it is necessary to take a multi-paradigm or perspective
approach in order to ‘understand and grasp the multiple meanings of situations and to confront and manage
contradiction and paradox, rather than pretend they do not exist’. At the same time there has be a growing
recognition that many management problems and issues require a move from linear thinking and simple either/or
choices to seeing them as paradoxes (e.g. Hampden-Turner, 1990; Handy, 1995). Managing paradox means
embracing and exploring tensions and differences rather than choosing between them. As Lewis (2000) charts in
her review of the literature the concept of paradox has been playing an increasing role in organisation studies.

A similar critique can be made of attempts to understand organisational governance. As Hung (1998: 108)
observes in his review of literature each of the theories of governance (discussed above) ‘focus on a small part
and no one is able to perceive the whole picture of corporate governance’. In a similar vein Tricker (2000: 295)
notes ‘At the moment various theoretical insights cast light on different aspects of play, leaving others in the
shadow…’. He calls for a new conceptual framework that can ‘light up the entire stage and all the players’.

One way of addressing this problem is to take a multi-paradigm perspective and focus more explicitly on the
paradoxes, ambiguities and tensions involved in governance. As Lewis (2000: 772) discusses a multiple
perspectives approach can be useful as sensitising device to highlight what are likely to be important paradoxes,
by contrasting opposing theoretical approaches. So for example contrasting agency theory with stewardship
theory suggests that board may experience pressures to both control and partner senior management. Next we
examine some of the main tensions and paradoxes that the contrasting theories of governance suggest that boards
are likely to face. The list is not meant to be exhaustive. A number of authors have also begun to study
governance from a paradox perspective. Demb and Neubauer (1992) in their study of corporate board identified
and examine three paradoxes which stem from the legal and structural aspect of the boards setting. Wood (1996)
suggests a similar approach to studying non-profit boards.

Who governs -the tension between representative and professional boards

The different theoretical perspectives have different implications for who should serve on boards. The opposition
is clearest between the stewardship and democratic perspectives. Stewardship theory stresses that board
members should have expertise and experience that can add value to the performance of the organisation. The
implication is that board members should be selected for their professional expertise and skills. In contrast the
democratic perspective (and to some extent the stakeholder theory) stresses that board members are lay
representatives there to serve the constituency(s) or stakeholders they represent.

This can raise an obvious tension for public policy makers – should the boards of public bodies be elected or
chosen because of their expertise. Since the early 1980’s successive Conservative governments in the UK
introduced a variety of public sector reforms leading to a growth in the number of quangos and public bodies
with appointed boards. This move to non-elected, expert boards in many parts of the public sector has been
heavily criticised for its undemocratic nature and the danger of creating a new self-selected elite (Skelcher,
1998). While the recent Labour government has modified some of these arrangements and introduced greater
stakeholder involvement, deep concerns over the democratic accountability of many of these boards remains
(Robinson et al, 2000).

There is also a dilemma for voluntary sector boards - should members be chosen or encouraged to stand for
election, because of their expertise or because they represent some stakeholder group? It also raises dilemmas
for board members. Are they expected to represent particular stakeholders or to give expert guidance? The
professional role also demands a close involvement with the organisation. This may conflict with board
members’ unpaid status in most non-profit organisations.

Board roles - the tension between the conformance and performance

The different theories of governance put different emphasise on what are the main roles of the board. This is
most apparent in the opposition between the agency and stewardship perspectives. What Garratt (1996) has
called the ‘conformance’ versus ‘performance’ role of boards. Agency theory emphasises the conformance role
of the board to ensure that the organisation acts in the interests of its ‘owners’ and to be a careful steward of their
resources. In contrast stewardship theory emphasises the role of the board in driving forward organisational
performance through adding value to the organisation’s strategy and top decisions.
.
The conformance role demands careful monitoring and scrutiny of the organisation’s past performance and is
risk averse. The performance role demands forward vision, an understanding of the organisation and its
environment and perhaps a greater willingness to take risks. Again, boards face an obvious tension concerning
how much attention they should pay to these contrasting roles.

Relationships with management - the tension between controlling and partnering

The agency and democratic perspectives stress the importance of the board monitoring and controlling the work
of managers (the executive). In contrast stewardship theory stresses the role of the board as a partner to
management, improving top management decision-making.

The need to both control senior management and be their support and partner in decision making can be a source
of role conflict and tension for board members. To what extent should board members push the interests of
particular stakeholders if this is against the wishes of management? This tension is vividly illustrated by the
following comment on an European Union report on parent participation in education by the convenor of the
Scottish Parent Teacher Council:
‘Quite often the parents on school boards cease to take parental point of view and
start to identify more with management...in some cases you can see parents on boards
closing ranks around the head teacher rather than lobbying on behalf of parents’
(From the Scotsman, Page 6, 27/12/95)

Multiple or ambiguous accountability

There may be tension concerning to whom board members are accountable. The agency perspective suggests that
board members are accountable to the ‘owners’ of the organisation. The democratic and stakeholder perspectives
suggests that there are other stakeholders who have a legitimate interest in what the organisation does, and
should in some way be able to hold it to account. Equally the legal framework of many public and voluntary
bodies mean that board members are legally required to act in the organisations best interests rather than in the
interest of particular stakeholders. Board members may experience tension because they feel accountable to
more than one group, or because they are unclear or differ over who feel they are accountable to.
Conclusions

The paper has shown how existing theories of corporate governance can be extended to help understand the
governance of various types of social enterprise, but that by themselves each is too one-dimensional only
highlighting particular aspects of the board’s role. As empirical research suggests governance is an inherently
difficult and problematic activity. A paradox perspective helps to explain some of the difficult tensions and
ambiguities that boards face.

Another criticism that can be levelled at much of the theorising about boards (both descriptive and prescriptive)
is it generic nature. Often little or no account is taken of contextual factors, such as organisational size or
changes in public policy, that may influence or shape board characteristics or how they work. This is not
something that is unique to the study of boards; similar criticisms have been levelled at much recent research in
the field of organisational behaviour (Mowday and Sutton, 1993; Rousseau and Fried, 2001). It is important to
think how we can bring context more centre stage in further research on the governance of social enterprise.
 THEORY INTERESTS BOARD MEMBERS BOARD ROLE MODEL
Agency ‘Owners’ and ‘Owner/mandators’ Conformance: Compliance
theory managers have representatives - safeguard ‘owners’ interests model
different interests - oversee management
- check compliance
Stewardship ‘Owners’ and ‘Experts’ Improve
theory managers share performance: Partnership
interests model
- add value to top
decisions/strategy
- partner/support
management
Democratic Members/the public ‘Lay’ representatives Political:
perspective contain different - represent member Democratic
interests
interests model
- make policy
- control executive
Stakeholder Stakeholders have Stakeholder Political:
theory different interests representatives -balancing Stakeholder
stakeholder needs model
- make policy
- control
management
Resource Stakeholders and Chosen for influence Boundary spanning:
dependency organisation have with key stakeholders - secure resources Co-optation
different interests model
theory - stakeholder
relations
- external
perspective
Managerial ‘Owners’ and ‘Owners’ Symbolic:
hegemony managers have representatives - ratify decisions ‘Rubber stamp’
different interests model
theory - give legitimacy
(managers have
real power)

Table 1: A Comparison of Theoretical Perspectives on Organisational Governance

References

Berle, A. A. and Means, G. C. (1932) The Modern Corporation and Private Property, New York: Macmillan.

Carver, J. (1990) Boards that Make a Difference, San Francisco: Jossey-Bass.

Cornforth, C. (ed.) (2001 forthcoming) ‘What Do Boards Do? the Governance of Public and Non-profit
Organizations’, London: Routledge.

Cornforth, C. and Edwards, C. (1998) ‘Good Governance: Developing Effective Board-Management Relations
in Public and Voluntary Organisations’, London: CIMA Publishing.

Demb, A. and Neubauer, F. (1992) The Corporate Board: Confronting the Paradoxes, Oxford: Oxford
University Press.

Garratt, B. (1996) ‘The Fish Rots from the Head – the Crisis in our Boardrooms: Developing the Crucial Skills
of the Competent Director’, London: Harper Collins Pubs.

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2. Diversity, Culture, Change, Structure, Planning

You should read and understand to following headlines:
Diversity of cultures brings conflicts but creates new solutions also. Loosing cultures should be changed. It
has no sense to make such change without reaching managerial effect, of course. It is better to prepare the
change on the paper (plan) and create cheap organization for implementation (for example virtual one).
Being successful, you should structurize the new culture and teach others to seek their own objectives and
results through strategy formulation, project development, implementation, and organization of processes.

Diversity
When you have completed this section you should be able to:

1. Describe the levels of global participation

2. Identify the types of expatriate managers
3. Discuss the importance and dimensions of cultural differences as they apply to the workplace
4. Explain the legal requirements for managing diversity
5. Discuss how diversity can be a competitive advantage of organisations

Definitions:
Diversity = Differences among people in terms of their identification with various groups.

Groups representatives:
- Domestic organisation = An organisation that operates within a single country
- International organisation = An organisation that has one or a few facilities in another country
- Multinational organisation = Organisation with facilities in several countries and a substantial proportion of
sales in foreign countries
- Global organisation = An organisation that has a flexible approach to identifying needs and opportunities
throughout the global competitive market

Representatives of diverse people:

- Expatriate managers = Managers who work in a country other then their country of origin
- Parent country national = A manager or other employee whose country of origin is the country where the
organisation has its headquarters
- Host country national = Someone from a host country hired by an organisation to work in its facility
- Third country national = A manager or employee who has a country of origin different from both the parent
country and host country where he or she works

Problem of identification:
Culture shock = The confusion, anxiety, and frustration that result from immersion in a strange culture
Culture = The set of assumptions group members share about the world and how it works and the ideals worth
striving for.
Individualism - collectivism = The degree to which people act as individuals rather then as members of a group
Uncertainty avoidance = The degree to which people prefer structured rather then unstructured situations
Masculinity – femininity = The extent to which a culture values behaviour traditionally considered masculine
(co-operativeness) or feminine (helpfulness)
Power distance = Expectation for the unequal distribution of power in a hierarchy
Long-term—short-term orientation = The degree to which a culture focuses on the future rather then the past and
present
Equal employment opportunity = Providing individuals with an equal chance for employment, regardless of their
race, colour, religion, sex, national origin, and physical and mental handicap
Glass ceiling = An invisible barrier that keeps women from attaining the topmost positions
Sexual harassment = Unwelcome sexual advances and sexual conduct that must be tolerated as a condition of
employment or basis for employment decisions, that unreasonably interferes with the employee’s work
performance, or that creates a hostile working environment

Diversification:
Affirmative action = A program for attracting and retaining minority employees
Disabilities act = Law requiring employers to make “reasonable accommodation” for the physical and mental
disabilities of a person otherwise qualified to do a job

Scheme 2: Possible environmental and personal orientations

KNOWN DEVELOPMENTAL END POINT

UNI MATURATION SHAPING CO-
TAR „Development through „Development“ through REG
Y inevitable stages. Can get planned steps. „Training gap“ U
stuck. „Expert“ consultant’s can be overlooked. LAT
normal approach. Organisation’s normal ED
approach.
EXPERT
POWER
SOCIAL
DESTINY HOLISTIC ENGINEERING
INVISIBLE
AGENCY
DES „Development through „Development“ through IDE
TIN internal discovery. Can be interaction with others. Can N
Y isolating. Individual’s normal lose „self“. Social theorist’s TITY
approach. „normal“ approach
VOYAGE EMERGENT
UNKNOWN DEVELOPMENTAL END-POINT
Different behaviour in quadrants is describing how people act differently, given by both environmental
(un/known) and personal (unitary / co-regulated) orientation. Maturation position emerge in combination of
unitary destiny and known developmental end point. Such behaviour is usually typical for students, who use
simple solutions to act as great entertainers.

Question: How will you discover unknown or miss-understood phenomena and

create a knowledge of unclear concepts?

Managerial Effect
Managerial effect emerge if complexity, transformation and selection principles are tuned together.

Managerial Effect = f(complexity, selection, transformation)

Complexity
Complexity emerge in competition or co-operation among:
- Stakeholders (read and prepare statement for exercise from Chris Cornforth: The Governance of Social
Enterprises: A Paradox Perspective)
- violating norms (criminals)
- cut from resources (excluded)
- old fashioned (losers)
- measurement, analysis, and improvement
Improperly understood complexity can result in following pitfalls

Diversity of interdependent units should be integrated.

Questions:
1. When is diversity positive and when not?
2. What are positives of diversity based on?
3. What can decrease the importance of diversity?

Culture and Change

When you have completed this section you should be able to:
1. Discuss the role of organisational culture in creating and sustaining a competitive advantage
2. Recognise forces for change
3. Discuss how leaders manage organisational culture, including controls, crises, resources, role modelling, and
rewards

Definitions
Organisational culture = The set of shared assumptions, values, and norms that identifies what the organisation
considers important and how employees – including managers – should behave

Basic underlying assumptions = Shared views that are taken for granted and considered nonnegotiable
Values = The enduring believes and culture that the culture upholds as important guides to behaviour
Espoused values = The values that employees say embrace and to which they conscious refer when making
decisions (hinge propositions?)
Rites and rituals = The ceremonies incorporating forms of cultural expression such as recounting legends
Myths = Anecdotes that are widely recounted within the organisation, tell of leaders’ behaviour, and reinforce
underlying assumptions

Organisational change = A modification or transformation of organisation’s structure, processes, or goals

Tectonic change = Moderate but significant change that builds on existing elements of the organisation’s identity
Force fields analysis = A process for managing the forces that drive and restrain change
Model of change and its stages = unfreezing + transformation + re-freezing
- Unfreezing = Melting resistance to change
- Transformation = Altering one or more characteristics of the work setting
- Re-freezing = Change is reinforced as part of a new system
Organisational development = The systemwide application of the behavioural sciences to establish and reinforce
organisational strategies, structures, and processes to improve the organisation’s performance
Organisational development = The systemwide application of the informational analysis to establish and
reinforce organisational structures and predict behaviour based on lost information
Heroes = Role models who embody the attributes of the culture

Objectives related change is called a growth

Intensive growth Integrative growth Diversification growth
Market penetration Backward integration Concentric diversification
Market development Forward integration Horizontal diversification
Product development Horizontal integration Conglomerate diversification

Culture: Management in Virtual Organisations

Campbel, A., Grantham, C.: Organisational Assessment in the Distributed Work Environment in Jackson, P.,J.,
Van der Wielen, J.,M.: Teleworking International perspectives. Routledge 1998, ISBN 0-415-17354-X, p. 169-
184.

Table 1: Virtual workplace arrangements

Same time Different time
Same place Central office Flexitime
Different place Telecommuting Virtual office

The advantage of distributed work appear to include increased productivity and worker satisfaction, reduced
commuting time and transportation-related stress, and decreased corporate overhead expenses. Studies also
suggest that the challenges successful distributed work programmes must overcome include worker isolation, the
need for new ways to monitor performance, the need for new organisational structures and norms to ensure
maximum return on the distributed work investment (Grantham, 1996: Working in a virtual place: a case study of
distributed work, Proceedings of ACM SIG on Computer Personnel Research, Denver, CO: 38-52).

Probably the most cogent view of intellectual capital has been developed at Skandia Group (1995). The Skandia
Group have created a model describing a principal building blocks that combine to form the company’s
intellectual capital. The model is illustrated in Table 2.

Table 2: Skania’s model of intellectual capital

Market value Equity (organisation-verb:) (market:) (speed)
Intellectual Human
Structural Customer
Organisation Process
Innovation
Human capital is the source of innovation and renewal, providing information, insight, and ideas. A company’s
human capital base is composed of four individual characteristics: genetic inheritance, formal education, life
experience and social psychological attitudes about life and business. Human capital is not a subset of
intellectual capital, but the store house for it and its limiting factor. A recent quote from Gary Becker, the 1992
Noble Laureate highlights this: Human capital is as much a part of the wealth of nations as is factories, housing,
machinery, and other physical capital. In fact economists estimate human capital accounts for much more than
half of all the wealth in U.S. and other economically advanced nations.

Structural capital is the non-human element that supports human capital. Structural capital is defined as the sum
of the strategy!!!, structure!!!, systems!!! and processes!!! that enables the organisation to produce and deliver
products to customers. It is an enabler of performance, promoting the continuous application of knowledge to
business. It also is a cultural ethos that promotes learning!!! and sharing of those learning experience. The most
effective way to manage this element of capital is through examining information flows in and around of
organisation. These information flows are distribution channel of applied knowledge from the firm to the
customer. Structural capital is arguably of greater importance, as it remains with the company, and it can be used
in time and again. Structural capital can amplify the value or subtract from human capital (Skania Group, 1995).
Conventional industrial business models are built on assumption of the central controlling authority of assets and
means of measuring the value of the enterprise. An alternative is to place more importance on measurements of
customer capital. In the emerging Internet commerce business model it is argued that value lies in the interaction
between companies and their customers.

Customer capital is the knowledge of channels, customer preferences, trends and competitive intelligence.
Customer satisfaction is measured in terms of demands customers make on the firm for products and services.
These demands then feed back into the organisation via human and structural capital mechanisms and appear as
changes in distribution channels and service levels. Without human and structural capital a firm cannot receive
an added-value from customer capital. When internal human capital reaches its own limit, the only effective
tactic to increase overall intellectual capital is to tap into the customer base to discover new preferences, changes
and applications. This suggests therefore, that part of an organisation’s customer capital lies outside
management’s direct control, and in fact is held by its customers.

Organisational capital contains the systematised!!!, structured!!! and packaged!!! competencies and systems for
converting the company’s innovative strength and value creating work processes. Organisational capital enables
faster and more effective sharing of knowledge through making it more accessible to users. Enhanced future
earnings capabilities will be realised as the competence and experience can be multiplied or leveraged through
increased internal or external C.N.C. creation. The Skania model stresses both structural and organisational
capital, and by inference, management’s ability to capture, analyse and exploit intellectual capital.

Five-factor based model at the level of individual item indicators performing an analytic factor analysis has
created a subset of factors which measures intellectual capital.

Table 3: Definition of business factors

Business process question Systematic factor Factor
What are we talking about? Uniqueness Systems
What are we sure of? Lower nature Leadership
What is possible for us? Higher nature Personnel
What will the environment help and oppose? Nourishment Planning
What is becoming necessary? Mastery Site

The result is another set of factors that assess an organisation’s human, structural and customer capital. The
Organisational Assessment System (OAS) is designed to help managers to make decisions about whether or not
their organisation is ready to move into the distributed work environment. Most analytic systems are based on
sociological perspectives of structure, whereas OAS on social psychological perspective of process. In the OAS,
structure refers to relatively stable patterns of interaction between people in organisations that persist over time
and give rise to creation of status and power hierarchies. As these hierarchies disappears in distributed work
organisations, perspectives more suited to dynamic interactions among members of organisations are more
relevant to analysing and solving ongoing business planning issues.

Table 4: Elements of Organisational Assessment System

Factor Operational definition Number of
indicators
Systems Information systems capabilities and functioning to 15 items
support distributed work
Leadership / Capacity of organisational leadership to motivate 18 items
direction employees, measure results and asses ongoing operations
for variance control
Personnel Capabilities of human resources, adequacy of training, 13 items
and continuous learning procedures
Planning Degree of sensitivity to anticipate challenges to 14 items
organisations, changes in market and speed to incorporate
changes in operations
Site Infrastructure to support interaction with customer 11 items

In sense this has linked the theoretical literature of both organisational assessment and intellectual capital
management. If in fact these two approaches towards planning and development of organisations are linked at a
conceptual level, then it should be possible to see some correlation in the result of measuring an organisation’s
effectiveness.

Management and worker resistance to distributed working made it clear that creating remote work space takes
more than buying a building, setting up some computers, and letting people work from home. The possibilities of
external consultants bought in to solve these problems were to:
1. Systems: Develop policies and procedures for the new remote facility.
2. Leadership: Develop selection criteria to determine who would work in the new facility.
3. Personnel: Develop assessment methods for measuring performance and cost benefits in the new facility.
4. Planning: Provide training and education to employees and their managers.
5. Site: Define and install the right hardware, software and networking capabilities for workers at all level in the
new facility.

Table 5 compares the average percentage scores on the OAS with SoftCo scores.

Table 5: Comparative OAS analysis

Average score (%) SoftCo score (%) Difference (%)
Direction 62 46 16
Customer service 76 49 27
Systems 63 71 -8
Personnel 68 43 25
Planning 76 50 26
It is quite apparent in this comparison that SofCo has significant organisational issues. The company has below
average success scores (25 % and over) on three critical business indicators: Customer service, Personnel ad
Planning. This then raised the question how these indicators related to the use of intellectual capital within the
organisation. After calculating the intellectual capital scales from the OAS, a similar pattern was identified in the
data.

The outcomes and implications of the analysis for SoftCo were fairly dramatic. Within 60 days of completing
OAS and informing management of the results, SoftCo cancelled its attempt at moving into the distributed work
world. The project was called off citing a lack of adequate resources and too much time pressure to complete a
critical product release. Leaders must first strive to develop their own intellectual capital before they can hope to
institutionalise the process.

Questions
1. What is the difference between behavioural and analytical approach to the organisational development?
2. When the change or entrepreneurship has negative consequences?
3. What relation is between culture and change in organisation?
4. What is the difference between change and growth?

Organisational Structure
When you have completed this section you should be able to:
1. Explain how organisations can achieve standardisation through structure
2. Discuss different factors involved in achieving co-ordination through structure
3. Identify the different factors of organisational design
4. Discuss the contingency approach to structure and design

Definitions
Organisational structure = The arrangement of propositions and groups of positions within the organisation
Organisational design = The process by which the organisation’s strategy, culture, human resource management
practices, size, technology, and structure fit together
Standardisation = The condition in which the organisation’s outputs conform to its economic, quality, and other
measures of acceptable performance
Formalisation = The process of planning rules, policies, and procedures to regulate organisational behaviour
Professionalism = The use of professionals with extensive work related knowledge and skills
Socialisation = Teaching employees the norms of the organisation
Specialisation = The division of work into jobs that are limited in terms of tasks and responsibilities and differ
from one another significantly
Horizontal specialisation = The extent to which the organisation’s jobs have limited task variety
Vertical specialisation = The extent to which the organisation limits jobs according to responsibility required
Co-ordination = Integration of the organisation’s parts to achieve desired outcomes
Span of control = The number of people under a manager’s direct supervision
Pooled interdependence = The interdependence that exists when groups operate independently but together
contribute to the organisation’s overall success
Sequential interdependence = The interdependence that exists when one group must complete certain task before
another group can complete its task
Reciprocal interdependence = The interdependence that exists when each group’s output serves as input to other
groups
Departmentation = The process of establishing of clusters of employees
Functional departmentation = The process of grouping employees according to the organisation’s functions
Divisional departmentation = The process of grouping employees according to market or operational
characteristics
Hierarchy – A pattern of reporting relationships in the organisation
Chain of command = The continuous line of authority extending from the person with ultimate authority down
through the hierarchy to non-management employees
Delegation = The process of distributing authority and responsibility
Centralisation = The concentration of authority and decision making at the top of the organisation
Decentralisation = Dispersal of authority so that it is spread throughout the organisation
Slack resources = Buffers that are created between groups to reduce sequential interdependence
Self-contained tasks = Interdependent work units consisting of members of previously interdependent groups
Vertical information systems = Computer systems that provide managers with information about the
organisation’s performance
Liaison position = A job that builds communication through bargaining, persuasion, and negotiation
Representative group = A group consisting of members from each of the interdependent units who meet to co-
ordinate their activities
Integrating manager = A manager who has formal authority to co-ordinate the work of interdependent groups
Matrix organisation structure = A structure that combines functional and divisional departmentation
U- form organisation = An organisational design based on functional departmentation, often for a single-product
strategy
H-form organisation = An organisational design based on product departmentation, with the products being the
organisation’s various business
M-form organisation = An organisational design based on specialisation in particular industries
Matrix organisation = An organisational design that overlays product departmentation onto a functional structure
Network organisations = Core organisations that meet customers’ needs by contracting with other organisations
Core competencies = The process in which the organisation excels and that are key to its success
Strategic alliances = A long term partnership designed to accomplish both parties’ strategic objectives
Process-based design = Organising by the task that create value for customers
Competency-based design = Organising by employees’ capabilities
Mechanistic organisation = Organisations with a structure that is highly formalised, specialised, standardised,
and centralised
Organic organisations = Organisations geared toward change and flexibility
Simple undifferentiated structure = A structure with no departments or hierarchy
Core technology = The dominant technology used for producing goods and services at the lowest level of an
organisation’s hierarchy
Boundary spanning roles = Roles held by employees who routinely interact with members of the organisation’s
environment and with members of organisation

Questions
1. What effect can bring structured organisation?
2. What effect can rise from specialisation?
3. What is the consequence of structuring and specialising of organisations?
4. What need to be done in hierarchical organisations?
5. How to design organisational structure?
6. What is contingency approach?
7. Suppose you are on the Board of a C.N.C., and you are all agreed that one of your objectives for next year is
to increase membership by 25%. To that end you draw up a plan involving various forms of publicity and
mobilisation of existing members.
The plan is carried out, but to your amazement membership barely increase at all over the year.
8. What do you propose to do next to tackle this issue?

Strategy Formulation
When you have completed this section you should be able to:
1. Explain why both short-term and strategic planning are essential to service C.N.C. survival and growth
2. Give examples of the some of the main short-term and strategic planning tasks within the service C.N.C.
3. Explain how planning decisions are made within service C.N.C. and evaluate to what extent planning
decisions are based on member participation
4. Explain the respective roles of the Board, the manager and the general members in both short-term and
strategic planning.

When you have completed this section you should be able to:
1. Describe the three major phases of the strategic management process
2. Discuss the difference among corporate level, business level and functional strategies
3. Discuss the difference between and organisation’s mission and its goals
4. Describe how managers select strategy
5. Discuss how to choose effective objectives
6. Describe how organisations use cost and differentiation strategies to achieve their goals
7. Describe the different type of control organisations can use to help improve overall performance

Definitions
Strategic management = Ongoing process of aligning the organisation with the environment so that it can
achieve its goals
Mission = The organisation’s reason for being
Goals = Statements of what an organisation hopes to achieve in the medium to long term
SWOT = Evaluating organisational strengths and weaknesses and environmental opportunities and threats
Tactical planning = Medium term planning at the level of divisions and departments
Operational planning = Planning conducted by managers and employees to determine what they must do and
what resources they will need over next month, week, or day
Strategy implementation = Using the organisation’s resources to achieve its strategies
Downsizing = The elimination of jobs
Control = Comparing performance with a standard and making corrections
Standards = Measurable targets that are comparable with actual performance
Financial audit = An independent appraisal of the organisation’s financial performance
Budgets = Statements of the resources required to implement a strategy
Total quality management (TQM) = An organisation-wide effort to continuously improve the quality of work
processes (the ways people, machines, and systems get things done)
Statistical process control (SPC) = The use of statistics to detect problems in the production process
Cycle time = The time from the customer request until that request has been fulfilled
Just-in-time (JIT) inventory systems = Inventory control systems that arrange for materials to arrive exactly
when they are needed for production
Organisational culture = The norms and values shared by members of the organisation

Questions
1. What effect strategic management can bring to the organisation?
2. What effect can rise from different types of planning?
3. What is the consequence of audit, budgets, JIT, SPC, TQM, and standards?
4. What need to be done in cycle time?
5. How to design organisational culture?
6. What is the difference between financial and quality approach?
What is the difference between planning in organisations with different hierarchy?
How to distinguish a short and long term planning importance for strategy
formulation?
Suppose I’m going on the weekly shopping trip to the supermarket. I’m in a bit of a hurry, so I rush out, jump
into the car and off I go. Feeling disorganised, I go round all the shelves not really clear about what I want, and
having to back-track when the need for more items suddenly comes into my head. As the items are checked-out
at the till, it becomes clear to me that I didn’t bring enough money!
Exercise: State two specific areas where I failed to plan
Answer: Well, for start I didn’t think about what I wanted, and that resulted in a disorganised, inefficient search
in the shop.
Secondly, I didn’t consider my resources - how much money I had.
This is the example of short-term planning - or lack of it. It is concerned with actions in the immediate future,
which will be also completed in the immediate future.
The other type of planning we are concerned with is strategic planning. This is planning for the long-term, but
more significantly it is planning to meet the overall Objectives of the organisation. If I decide it is time for me to
become health-conscious and only eat certain types of food, then in future my trips to the supermarket will be
better directed because I have defined the area in which I am interested. Of course I might still forget to bring my
money!
This distinction can be applied to almost any organisation. In the service C.N.C. context, an example of short-
term planning might be drawing up a roster of volunteers to do counter work for the next month:, or making sure
that enough liquid funds are on call every month for credits and receivable. It is fairly clear that these are short-
term considerations.
Strategic planning may include, for example, deciding to purchase new, bigger premises because demand for
C.N.C. services is projected to expand:, or deciding to computerise all transactions. These are major, long-term
decisions which significantly affect the operation of the service C.N.C. and the quality of service it is able to
offer to its members.
For the growth and development of service C.N.C., strategic planning is vital. Yet short-term planning is
essential too - for example. if a roster of volunteers is not drawn up, the service C.N.C. may be short-staffed at
peak times, and members will start to wonder whether they are going get a quality service, and C.N.C. are
nothing without their members!
Exercise: State which of the following planning tasks are examples of short-term planning and which are
examples of strategic planning.
Short-term Strategic
1. Deciding to employ new staff
2. Preparing monthly cash-flow projections
3. Deciding to set up schools’ branches of C.N.C.
4. Deciding to open the C.N.C. more days in the week
5. Planning a Christmas draw for members
6. Deciding to offer a new kind of service, e.g. stamps.
Answer: I suggest that task 2 and 5 are short-term whilst 1,3,4 and 6 are, by their nature, strategic.
However, some of the answers are not clear-cut. For example, on the first issue of deciding whether to employ
new staff, for a large firm where demand for its products fluctuated seasonally, the taking on of new staff would
be a short-term consideration, something the company would usually do at a certain time of year. But for a
service C.N.C. it is a much more significant step towards offering a better service to members: so we would
regard it as an aspect of strategic planning.
Again, take the example of the Christmas draw. Clearly it only happens once a year, but you could not describe it
as having major strategic importance.

For short-term planning we would emphasis the importance of holding regular planning meetings. In addition to
Board meetings, which will be held at least once a month, staff meetings will need to be even more frequent, and
it will be held at staff meetings where a large proportion of short-term planning issues will be discussed. Issues
such as how to speed up the counter service, for example, or whether to make minor changes in opening hours,
could be discussed at such meetings.
You will be dealing with question of how to make meetings effective in the unit on decision-making. We will
only note here the following:
- decisions need to have been clearly agreed: - by consensus
- decisions should include:
-- what has been decided
-- how the decision is to be implemented
-- who is responsible for its implementation
-- the time frame: when is implementation to take place
-- a monitoring/evaluation mechanism which might involve reporting back to the next meeting
- decisions made should be clearly recorded in a minute book.

Strategic planning
Strategic planning requires a more detailed approach since it involves a process of change and development in
the organisation. It is not just a matter of fixing long-term targets, but it involves laying down an approach which
must be implemented, continuously reviewed, and, if necessary modified again.
We can consider three components of the strategic planning process:
- plan formulation
- implementation
- control
Planning
Corporate planning Division planning Business planning Product planning
Implementing
Organising Implementing
Controlling
Measuring results Diagnosing results Taking corrective action

We saw in earlier sections how these components are inter-linked, and how control/monitoring can feed back
into plan formulation. Here we will emphasise plan formulation, since implementation and control will be
discussed in the following sections. But all three components are crucial for strategic planning process.
The strategic plan is based on a definition of what the organisation wants to achieve: the goals or Objectives of
the organisation.
Corporate mission Strategic business unit Corporate portfolio Corporate new
identification evaluation and business plan
strategy

Mission Statement
Many organisations lay down ‘mission statements’ which in broad terms spell out what the organisation wants to
achieve. The ‘mission statement’ should be written in such a way as to motivate and inspire members, as well as
to inform them.
Exercise: What might be included in the mission statement for a C.N.C.?

Answer: Well, there would probably be something like:

- providing a good service to members
- promoting the social and economic betterment of members
- promoting the notion of mutual benefit or perhaps
- promoting the idea of people-centred development.
What can we say about mission statements?
- they should be a source of inspiration for those to whom they apply
- they tend to be broad
- they tend to not lay down quantified targets.
So mission statements are more about stating the philosophy of the organisation. They are useful in so far as they
set the overall framework for defining goals or Objectives. (Since we can consider goals and Objectives as
basically the same thing we will use the term ‘Objectives’ from now on.)

Environmental Analysis: Objectives Discovery

It is essentially easy to measure whether the objectives have been achieved or not, but setting these objectives is
only the start of the strategic planning process. How to meet the objectives requires more detailed work. What
are the steps?
Initially, we need a formulation of the plan. This involves:
- analysis of the environment
- evaluation of potential opportunities and threads
- evaluation of internal resources
- evaluation of ‘value systems’ of the decision makers.
The Objectives need to be more precise, and measurable in some way. For example, it might be decided that the
C.N.C. should expand, in order to improve its service to members. And objective could be set for example, that
membership should be doubled over the next four years and overall savings (turnover) should increase by two
times over the same period.

But, what do we mean by ‘analysis of the environment’?

In the C.N.C. context we are talking particularly about characteristics of members and non-members (potentional
members!) in the community: their age profile, occupations, demand patterns, and so on. When looking at
members it is likely that different groups of members want different services - for example, some may want to
operate budget accounts to pay off recuring bills, othrs may want special assistance to escape the clutches of loan
sharks, and so on.
This process of analysis of environment is the starting point for planning. Yet conditions are constantly changing,
so the notion of the clear starting point - except when the C.N.C. is first being set up - is not wholly accurate. In
a sense the process of formulating strategies is continuous, because the environment is changing.

Opportunities and threats

The next step is to identify opportunities and threats. Take a C.N.C. in a market town where the membership has
mainly been employees from a agro-processing factory. The opportunity exists to attract farmers in the
surrounding country areas:, the threats may be, for example, strong traditional links with the banks, or farmers’
suspicions about getting involved in a town-based organisation. A strategy needs to be developed, try to attract
farmers by overcoming the obstacles in the way of their joining.
Included in opportunities and threats should be an analysis of the external environment, i.e. those factors
influencing the organisation which it cannot really control. They would include Government regulations and
policies, broad changes in demand patterns or demografic structure, actions of competitors, etc. Even though the
organisation cannot control these factors it can respond to them in an effective way.

Internal resources
As well as opportunities and threats, the organisation needs to look at its own strength and weaknesses - the
evaluation of its internal resources. Do we have enough staff to achieve our Objectives? Are they well enough
trained? Are we located in the right place? Are we publishing ourselves properly? And so on.
If this internal evaluation shows that the resources do not exist to achieve the Objectives within the proposed
time frame, the C.N.C. needs to do one of three things.
Exercise: What are these three possible steps?
1.
2.
3.
Answers: Either:
1. arrange to get the required resources (more staff, etc.), or
2. modify the Objectives, or
3. keep the Objectives but extend the time frame.
The point is, the Objectives must be realistic and flexible.
The steps we have discussed above are often referred to as SWOT analysis: Strength, Weaknesses,
Opportunities, Threats.

Objectives
Objectives are measurable by points on the scale between two extremes and each step design will contain the
detailed description how to judge following check points:
Extreme Scale Extreme
Demand 1 2 3 4 5 Supply
Added value 1 2 3 4 5 Failures
Promotion 1 2 3 4 5 Discipline
External control 1 2 3 4 5 Self-evaluation
Integrity of the system 1 2 3 4 5 Personal integrity

Each point of the scale has certain state, which is measurable:

(1) The level of participant’s knowledge of demand and supply relation can be measured by the counter
installed in the Netscape window. It is expected that each participant, instead of password, have to write the right
word in the empty space in the text. This allows him or her to open more detailed level of information. When
participant don’t write the right word the help displays the broader explanation, which will teach participant the
correct missing information including the right term serving as the password. Counters will be installed on each
knowledge level.
The knowledge level 1 is the ability to distinguish different strategies. 2 means that analytical and design based
methods are clear to the participant. 3 means that sharing of interests and responsibilities in the company is clear,
4 means that organisational change is clear, 5 means that personal carrier development principles (employment
or entrepreneurship, demanded and deliverable personal benefits, recognisable features) are clear.
(2) The added value and failure relation must be measured before failure occurs. It means that points on the
scale are levels of preventive and offensive measurements. When team prefers information more than experience
gets 1 point. This will be measured by results the group of course participants obtained in the management game.
When team prove profitability of the selected topics get 2 points. When misusing and loses of information in
management structures will be prevented, the team gets 3 points. When the right marketing concept (mission,
resources, objectives, programmes, teamwork or management in existing companies) will be defended, the team
gets 4 points. When contracts for a special actions will be defined, as a sign of offensive strategy, the team gets 5
points.
(3) The promotion - discipline relation project value can be measured by points on the scale where:
- the value of strategy and prepared topics and consortia is 1,
- the value of the comparative analyses, of related case studies, and plan is 2,
- the value of analyses of local conditions in relation to known case studies which are included into quality
norms is 3,
- the value of information system and action plan is 4,
- value of agreements is (geographical, management, GPS based) information system exceeding the frame of
organisation is 5.
(4) The external control – self-evaluation relation value can be measured again after points on the scale where
1 is consultancy, 2 is the art of teaching, 3 is examination of teaching, 4 is experimental learning and 5 is
instructional design.
(5) The system – personal integrity relation value can be measured again by points on the scale where 1 is first
self-evaluation, 2 is periodical evaluation, 3 is summative project or defended project or other intangible output,
4 is finished scientific work based on described methodology and 5 is gained grant, contract, or credit with the
value of at least yearly salary for each team member.
Some or all above mentioned objectives can be selected by the course participants. Beginners will start with
knowledge objectives. All objectives in one project is the level of constructive and stabile multinationals.
Topics and team selection depending on above mentioned measurable criteria is fully in hands of participants
who will design their life long education and grow their personal influence.

Values
The final step in formulation involves examining the values of the decision-makers (usually the Board). We have
seen earlier examples where value systems had positive or negative effects on planning. The worker C.N.C. is a
positive example where the workers as a whole are strongly committed to participatory decision-making, and
they designed structures and processes to make participatory planning and decision-making effective. In contrast,
the East-End News example showed how value of systems which rejected hierarchy but put nothing in its place
resulted in failure.
In C.N.C., the most committed and vision of Board members, therefore, are essential ingredients for strategic
planning.
We have now looked at the main elements of the first part of the strategic planning, i.e. formulation. In some
organisations that is the only part of the planning process which gets detailed treatment, with implementation
being left to the manager and staff, and perhaps review being done after a few years. Of course there does need
to be division of responsibility in strategic planning, but it is still important to give equal importance to each of
three steps in the planning process.
Exercise: Suppose you are involved with a group of people wanting to set up a C.N.C.. You are defining the
Objectives as part of your plan to get the C.N.C. established. List three such Objectives, remembering that they
should be measurable in some way.
1.
2.
3.
Answers: You might have included some Objectives along the following lines:
- we aim to have at least 40 people regularly involved by the end of six months
- we aim to have made savings totalling USD 20,000 by the end of six months
- we will have identified a suitable premises by the end of six months
- we will have had at least two public meetings in the community within six months
- we will have printed and distributed 500 leaflets about the proposed C.N.C., and used other local media, within
six months.
All of these Objectives contribute to the overall aim, which is to form the C.N.C..
Finally, in this section, we will look briefly at who makes planning decisions.

Who does the planning?

Here again, we have to distinguish between short-term and strategic planning.
In the early stages of development, the Board will be involved in short-term planning, and in later stages paid
and volunteer staff, ultimately, including a manager, may take primary responsibility.
Responsibility for strategic planning lies at different levels. Ultimate responsibility lies with the Board: it is
responsible for the overall direction of the C.N.C., which includes determining long-term objectives. Others set
up temporary project teams to investigate a specific aspect of the strategic plan. All such bodies report to the
Board.
In some C.N.C., although the Board has ultimate responsibility, the manager may also play an important part in
plan formulation, since he/she is sometimes in a better position to appreciate whether the C.N.C. needs to make
major changes.
What about the general members? There is no formal mechanism for general members to get involved in
strategic planning, other than through discussion at AGM. It is hard to involve members in any structured way
once the C.N.C. has grown - and that is why C.N.C. have a representative management structure, where
authority of the Board to make strategic decisions is derived from the members. Even so, there are informal ways
of at least finding out what members think and we discussed these in the last section.
However, members can be involved in strategic planning on specific issues, for example, through small group
discussions as part of a larger meeting. This is not usually done in the C.N.C. movement but there is no reason
why such meetings could not be developed. Having discussed plan formulation, responsibility for
implementation will be spread more widely and will tend to involve staff and volunteers to a greater extent. We
will discuss this in section 6.
Exercise: Look at the following planning tasks, and state who, in your opinion, would be primarily responsible
for formulation of plans in these areas. Responsibility might be shared equally, in which case you should tick
both boxes.
Manager Board
1. Fixing annual savings target
2. Recruiting additional full-time staff
3. Planning training of staff members
4. Deciding on opening hours
5. Computerising transactions
6. Setting long-term membership targets
Answers: Not all of these are clear cut. Indeed that is the reality, because it depends on the stage of development
of the C.N.C., the respective abilities of Board and manager and how they work together, etc. I would suggest
the following responsibilities as a general situation, although you might disagree:
Manager Board
1. Fixing annual savings target X
2. Recruiting additional full-time staff X
3. Planning training of staff members X
4. Deciding on opening hours X X
5. Computerising transactions X X
6. Setting long-term membership targets X

Q: Suppose that you are one of a group of people wanting to set up a C.N.C. in your local college. The aim
would be to provide services both to staff and students.
Carry out SWOT analysis of this proposal, listing four issues under each heading. do you think, on the basis of
the SWOT analysis, that the idea of membership for both staff and students needs to be modified?

Summary of Discussions
In this section, we dealt with the strategic planning.
First, we explained why both short-term and strategy planning are essential to the survival and growth of the
C.N.C.. Then we discussed the ‘What’, ‘how’, and ‘who’ of planning. Each of these were viewed in terms of
both the short-term and the strategic long-term.
We introduced the concept of a mission statement and of quantifiable Objectives. We saw the effect of both the
value judgements of the decision makers and of the external environment and the need to take both into account
in the planning process.
And we used the technique of SWOT analysis to identify:
- strength
- weaknesses
- opportunities
- threats.
This takes us into our next section, organisation and implementation.

Case Study: What needs to be planned in C.N.C.

We started to address the issue of what needs to be planned in the last exercise. Clearly there is a wide range of
planning tasks. We sill just name a few, before getting on to how planning is done. You will be able to think of
other planning tasks in the context of the work you do in your service C.N.C.
One major planning task is actually setting up the service C.N.C. There is much more involved than just
following a number of steps: the most important ingredient being the commitment of the founding members to
getting the service C.N.C. established.
Having received this commitment, there is then a lot of planning involved, for example:
- How often should we meet?
- What level of service (if any) should be we making before registration?
- How long should we meet before deciding to apply for registration?
- How are we going to publicise the proposed service C.N.C. in the community?
- Where will we set up, i.e. what premises will we use?
And so on.
Once the service C.N.C. is established, there are whole range of tasks where planning is required, both short-
term and strategic. We can divide those planning tasks into a number of main categories, for example:
- setting financial goals
- dealing with staff (including volunteers)
- dealing with members
- long-term development.
Exercise: Give two examples of planning tasks that you can think of, under each of the four categories listed
above.
Setting financial goals
1.
2.
Dealing with staff:
1.
2.
Dealing with members:
1.
2.
Long-term development:
1.
2.
Answers: Except for the last category, the planning tasks could be either short-term or strategic. You might have
included some of the following:
Setting financial goals:
- fixing yearly levels for savings
- setting a ratio of liquid funds to funds invested
- fixing targets for recovery of delinquent loans.
Dealing with staff:
- drawing up rosters for volunteer staff doing counter work
- recruiting additional full-time staff
- establishing procedures for regular staff meetings
- planning training of staff members.
Dealing with members:
- publishing the C.N.C. to the community
- deciding on opening hours
- designing the building to be ‘customer-friendly’
- finding ways to get feedback from members.
Long-term development:
- planning to move to a larger building
- computerising all transactions
- setting long-term targets for growth of membership and transactions
- deciding to appoint a full-time manager.

You might have thought of other issues as well, because there are many - some are practically day-to-day
planning tasks which may become routine:, others have great significance for the future development of the
C.N.C..
It will probably be clear to you what, in brought terms, has to be planned. The harder part is how to plan
successfully and that is what we will turn now. (A good reference for this purpose, with some interesting case
studies, Is I Unterman and R H Davis, Strategic Management of Not-for-Profit Organisations: From Survival to
Success, Praeger, New York, 1984.)
How is planning done?
We can continue with the distinction between short-term and strategic planning, since there are differences in
how planning is done in the two cases.

Organisation and implementation

When you have completed this section you should be able to:
- state some of the important principles needed for successful implementation
- evaluate the appropriateness of the management by Objectives technique for C.N.C.
- explain the roles of different members of the C.N.C. in the implementation process.

Elements of implementation
Implementation involves action planning: deciding on the actions needed to carry out the plan. Without action,
the plan is worthless. But action must be co-ordinated.
There are some key elements in the implementation process, and some key words:
- responsibility
- authority
- accountability
- communication
- collaboration
- skills.
Taken together, these elements provide a framework for implementation. Let’s look at each of them in turn.
Responsibility for particular components of the plan has to be delegated to certain members of the team who will
carry it out. At the same time, these members must be given the authority to carry out the task: responsibility
without authority is not adequate as it might result in the person doing a lot of work which other team members
would be free to ignore.
So, responsibility and authority must be given together. Who does this? Well of course it depends on the issue. If
it is a completely new project, the Board may set up a temporary project team, which will have the responsibility
and authority from the Board to implement plan. If it is, say, a change in working hours, then the Board will
probably give responsibility and authority to manager to make sure that the new working hours are introduced
and staff and volunteers organised for this purpose.
Accountability is necessary once someone has been given some power (authority). As much as possible it should
be based on self-discipline. For instance, a reporting time can be established and, within that period, the
person(s) undertaking the task should not be subject to undue interference, unless it is clear that something is
going drastically wrong.
Consider the situation where a group of people are discussing the possibility of establishing a C.N.C.. They agree
that one of them will visit houses in the community to ascertain the level of interest. He is to report back in three
weeks’ time. After one week there are several complaints about a persistent visitor who as good as put his foot in
the door, so anxious was he to ‘sell’ the message. The group hurriedly get together and stop him from making
any more visits.
It is quite clear that the person had completely the wrong idea, ignoring the voluntary, mutual benefit principles
of the C.N.C., and going for the ‘hard sell’. The group had to step in. But in a sense the group was also to blame
for sending someone out who was clearly not properly prepared.
The example, in fact, demonstrates the need for mechanisms of feedback and control (although these will be
covered in more detail in the next section. The group will have to look at its strategy again:
- did they give responsibility to the wrong person?
- was he given the wrong brief or misunderstood it?
- was the external environment unfavourable? For example he might have gone to an area where previous
experience had made people wary of ‘door-to-door’ salesmen.
Also the importance of communication should be clear from the example. It is possible that wrong idea was
given to the person about how he should approach people - or perhaps he wasn’t really given any clear idea at
all. You will be discussing forms of communication in detail in a later Unit, here we will just point out its
importance.
Collaboration is implied by teamwork: everyone may have their own responsibilities, but they need to interact
with each other so that their efforts jointly result in the intended goal. This is perhaps particularly important in
people-centred organisations where much depends on voluntary effort, and where each person needs the support
of others to make their voluntary effort worthwhile.
Exercise: Discuss one essential difference between people-centred organisations and private businesses (we
might call them profit-centred or capital-centred organisations) in relation to collaboration in the meeting of the
Objectives of the organisation. (We discussed this issue in section 1 of this Unit:, do you remember?)

Answer: What we are looking for here is the aspect of motivation. In a private business, the Objectives of
employees doing their job are quite likely to differ from the Objectives of the business itself (as defined by the
Board). For employees, the main motivation is likely to be material - what they get paid for the job - although
there may also be other motives.
In people-centred organisation such as credit unions it is more likely that people, whether volunteers or paid
staff, are motivated by the aim of developing the organisation: they have a commitment to what their credit
union is trying to do.
But commitment should not be taken for granted, as we will discuss in the latter sections on leadership and
member relations. That is why mutual support or collaboration amongst members is so crucial.
The last element in implementation that we want to discuss is skills. We looked in section 2 at C.N.C.
management and collective structures. Some people working in collective-type structures believe in members of
the collective developing a wide range of skills through job rotation, on-the-job learning, and so on.
This approach may be possible but it may also be inefficient. For example, if the organisation wants to set up a
system for financial control, and one member is trained as an accountant, it makes sense to use the skills of that
person. If a C.N.C. wants to computerise its transactions, it will be helpful to have someone who knows about
computers on the project team.
In other words, the organisation should make good use of its members’ skills - that is not just people, but people
combining their skills, that brings about successful implementation.
Of course other members can, and should, be trained to develop their skills - that is another element of strategic
planning and management. But at any one time it makes sense to use the skills that already exist.

Management by Objectives (MBO)

Management by Objectives gives pointers to how strategic management could be undertaken. It has been defined
as:
A process whereby the different levels of management in an organisation jointly define their goals and within the
framework of these goals define and agree each individual’s major responsibilities in terms of results expected of
him and her.
Brian Sherry, Irish League of Credit Unions Review, April/May 1993.

MBO is used when organisation is deciding how to achieve its agreed Objectives (defined, usually, by the
Board). It essentially involves those who lead the planning process, agreeing a programme of action with each
individual who will be involved in implementing the plan. The emphasis is put on developing an agreed
programme, through discussion, not imposition. The programme would include:
- a set of goals for the individual to achieve
- a means of measuring performance
- any special provisions, such as training, to help the individual to achieve the goals.
Having agreed the Objectives, the next step is to decide how to carry them out. For example, suppose one
objective is defined as: ‘to get ten members to open budget accounts over the next six months’. How can this be
done? By personal discussion? A leaflet in the C.N.C.? An article in the news letter? The means have to be
agreed.
At the end of the agreed time period for each objective a meeting is held to review the results. If the Objectives
have been met, this should be recognised and rewarded, at least in terms of verbal praise. If Objectives have not
been met, as we saw earlier there may be number of reasons, including external factors which the individual
could not control. More realistic Objectives may have to be set.
Some elements of MBO appear to fit in with what we have already discussed. But there are some drawbacks.
Exercise: What do you think might be two of the drawbacks of management by Objectives?

Answers: You may have included two of the following:

- some organisations rigidly apply MBO and impose severe penalties if targets are not met - such an approach
runs counter to C.N.C. philosophy
- Objectives may be set too low, so that achievement is more certain but not very challenging
- individual’s Objectives may not fit in with the overall Objectives of the organisation.
It is this last factor which in particular limits the effectiveness of MBO as a management tool for C.N.C.,
because the strength of C.N.C. lies in harnessing the combined effort of people in teamwork. The concept of
synergy - the extra benefits gained from people working together for a common objective - is highly applicable
in C.N.C., and would be lost if MBO were to be rigidly applied.
The conditions for useful application of MBO to C.N.C. are that it should:
- link individual Objectives with strategic aims of the organisation
- focus on priorities
- be flexible and tolerate failure
- re-emphasise the overall ‘mission’ of the C.N.C.
- be set within a frame of teamwork, i.e. individual Objectives should be complementary.
Exercise: A C.N.C. has set some overall Objectives for the coming year. They are:
- increase membership by 20 %
- increasing the level of savings by 25 %
- setting up mini-credit unions in five schools
- reducing overdue loans to 3 % of the total loans given.
One volunteer discusses her Objectives for the year with manager. They agree the following:
- to give four talks to the public on credit unions during the year
- to do counter work once a week throughout the year
- to talk to schools during the year.
Do you think this is an example of MBO? Is a satisfactory process?

Answers: Well, it is MBO in the sense that individual Objectives have been agreed.
But there are deficiencies:
- some of the Objectives were not matched by measurable targets: therefore the level of ‘achievement’ cannot be
measured
- there is no obvious collaboration with other members: for example, a small team could be formed to help
establish the mini-credit unions in schools. Here, the volunteer agreed only to talk to schools, without any
commitment to any concrete results from those talks. Such vagueness is not very productive.
Who implements?
In this final part we look at who actually implements plans. You will not be surprised that there is no single
answer, since it depends on the issue being considered.
However, there is one view that proposes the following division of responsibility:
Responsibility Planning Implementing
Board X
Manager X
Planning is done by Board. Implementing is done by the manager (and higher staff).
Some C.N.C. may follow this strategic planning approach, but there are dangers in being too rigid in the division
of responsibility.
Exercise: What are those dangers? Can you suggest one problem caused by too rigid a division of responsibility?

Answers: You may have chosen any of a number of positive problems. Here are my three suggestions:
- the Board’s plan may not be realistic, yet it may expect the manager to implement it anyway. We might
describe this situation as ‘power without responsibility’, which can emerge if there is a poor relationship between
the Board and manager.
- the manager may have a valuable input into the plan formulation process, if he/she is given the opportunity
- equally, some Board members may actually have a valuable role in the implementation of a plan.
Who else is involved in implementation? again, it depends on the issue. If the plan is concerned with operational
improvements, extending opening hours for example, then implementation primarily rests with the manager and
staff (including volunteers).
If the plan is concerned with other long-term developments, for example, computerisation, or moving to new
premises, a greater number of steps need to be taken, by different groups of people. The computerisation process,
for example, could involve the following steps:
1. A policy decision by the Board in consultation with the manager, to introduce computerisation.
2. The Board sets up a project team, perhaps including the manager and one Board member, to investigate the
best way to introduce computerisation and to make recommendations to the Board.
3. The project team carries out the work, talks to different suppliers, and after three month presents the report
with a recommendation to the Board.
4. The Board discusses and approves the proposal, and appoints one Board member to seek quotations from
suppliers.
5. Within two weeks, a further Board meeting is held at which a quotations is accepted: a letter is drafted asking
the supplier to proceed with installation. The supplier is also required to give training to staff members within the
agreed price.
6. The system is installed and tested, and training is given for one month, after which the computerised service is
made fully operational for members.
We can bring together a number of the issues involved in implementation by converting the above example into a
diagrammatic action plan, as follows:

Activity Month
1 2 3 4 5 6
DECISION ON COMPUTERISATION -- BOARD
PROJECT TEAM ANALYSIS ------------------- PROJECT TEAM
BOARD MEETING -- BOARD
SEEK QUOTATIONS BOARD MEMBER ----
INSTALLATION SUPPLIER ----
STAFF TRAINING SUPPLIER/STAFF ------
START SERVICE ----------
On the same diagram we can show the activities in sequence, how long each will take and who is responsible for
carrying them out. This is a simple but useful way of co-ordinating the actions involved in implementing a plan.
Exercise: In the last exercise of section 4, you identified who was primarily responsible for planning of activities
below. Repeat the exercise by indicating who is responsible for implementation of these activities.
Action Manage Board Others
r
1. Ensuring annual savings target
2. Recruiting additional full-time staff
3. Training staff members
4. Implementing changed opening hours
5. Computerising transactions
6. Achieving membership targets
As with the previous exercise, the answers are not always clear-cut, but we suggest the general pattern of
responsibilities shown in the following table:
Action Manage Board Others
r
1. Ensuring annual savings target x x x
2. Recruiting additional full-time staff x
3. Training staff members x
4. Implementing changed opening hours x x
5. Computerising transactions x x
6. Achieving membership targets x x x
The attainment of targets for savings and membership depends on existing members and on new ones joining.
Therefore, these targets are not totally controllable by anyone involved in running the credit union. However, all
can make their contribution by communicating the benefits of membership.

Q: The Board and the manager are discussing the need to move from their rented offices to a larger premises in
order to accommodate their planned expansion of services. They decide that they will move, and a project team
is set up to investigate all the steps to be taken. They aim to be in the premises (which they will buy) within nine
months, and they ask the project team to report back to the Board within two months on a suitable premises and
the other details needed to complete the move.
Draw up an action plan, showing the activities, duration and division of responsibilities for the move. Use a
diagrammatic format.

Summary from discussions

In this section we dealt with a vital management function - implementation.
First, we outlined some of key elements in the implementation process that help ensure that plans are put into
action:
- responsibility
- authority
- accountability
- communication
- collaboration
- skills.
We looked at the method of ‘management by Objectives’ (MBO) and how the defining of goals and the
achievement of responsibilities for individual contribute to the achievement of the overall Objectives of the
organisation. We considered how appropriate MBO is for the management of C.N.C..
Finally, we discussed who is responsible for the implementation of plans in a C.N.C. and the division of
responsibilities between the various members.
In the next section we will cover the last of the classical management functions: control.

3. Production and Service Resource Oriented Company:

Diagnostics Approach
You should read and understand to following headlines:

When you have completed this section you should be able to:
1. Explain how operations work in both manufacturing and service organisations
2. Discuss the four goals of operations management: productivity, quality, speed, and flexibility
3. Explain five characteristics of the design of operations systems: product design, facilities layout, technology,
facility location, and capacity planning
4. Describe techniques for inventory management
5. Discuss reengineering and its implications for organisational behaviour

Definitions
Operations = The process through which an organisation transforms inputs into goods and services
Operations management = The application of management functions to achieving effective and efficient
operations
Technical core = The combination of operations management and the transformation process
Operations systém = The systém that transforms inputs into outputs
Manufacturing organisation = An organisation that produces tangible products
Service organisations = Organisations that transform inputs into intangible products
Productivity = The ratio of outputs to inputs
Total factor productivity = The ratio of outputs to all the resources used to create them
Direct labour productivity = The ratio of outputs to the labour used to produce them
Capital productivity = The ratio of outputs to capital used in production
Flexibility = The organisation’s ability to modify its operations systems with little cost in terms of time, money,
or quality
Strategic flexibility = Ability to adapt to new objectives
Product design = The process of making decisions that define the goods and services the organisation will
produce
Design for manufacturing = Designing products to meet the criteria of producibility, low costs, high quality, and
reliability
Facilities = The buildings and equipment used for producing, storing, and distributing products
Product layout = The arrangements of employees and their equipment according to function in the order required
to produce a product
Process layout = The arrangement of employees and machinery according to function, with each job routed
through whatever workstations are needed
Fixed-position layout = Making products in a fixed location, with employees and machines moving around as
needed
Cellular layout = The arrangement of employees and equipment into cells responsible for an entire work process
Flexible manufacturing systems = Production processes that link high-tech machinery and computer systems
Reengineering = A complete review of the organisation’s critical work processes and redesign of those processes
to make them more efficient and able to deliver higher quality

Diagnosis is important for period of strategy implementation. Diagnoses should show if strategies like speed,
innovations, life expectations, competitive position, or global reach and exploitation are sufficient to gain
competitive advantage.

Differences between Conventional Organisations to C.N.Cs – co-operatives /

networks / corporations – further abbreviation C.N.C.
Distinguishing each of both you should be able to:
- describe the essential characteristics of different management approaches
- analyse the roles of technology and type of product in determining the type of organisational structure
development
- explain the meaning the ‘management-production continuum’ and analyse different management approaches in
terms where they would fall on this continuum
- distinguish between conventional and C.N.C. management in terms of the linkage between ownership of an
organisation and production within it.

You should understand to following headlines:

The time-production continuum (to produce/to buy)
Alternative views about management
Management and organisational structures
Organisational structures and organising processes
Different forms of organisations

C.N.C.s, networks and corporations consist of independent human and organisational elements. This is the
difference compared to conventional organisations.

Further, you should be able to:

- distinguish between collective C.N.C. management and representative C.N.C. management
- explain the mechanisms by which C.N.C. management is accountable to the members
- describe ways in which member-involvement in C.N.C. management can be widened.
You should read and understand to following headlines:
Types of C.N.C. based on its management structure
Accountability of C.N.C. management to members
Responsibilities of manager and board of directors

In this section we explored the issue of C.N.C. management in general. First we discussed the difference
between collective C.N.C. management and representative C.N.C. management and compared the conventional
hierarchy with the inverted hierarchy of the representative structure.
Then we moved on to explain the mechanisms by which C.N.C. or network management is accountable to the
members and the key role of information and communication.
Finally, we discussed a number of structures and mechanisms that can be used to encourage broader member
involvement in C.N.C. / network management including:
- job rotation,
- sub-committees
- work teams
- project teams.
We will now go on to the rest, which is more specifically concerned with management in service C.N.C., starting
with their management structures.

Management structures and tasks

You should be able to:
- describe appropriate management structures for service C.N.C. in both early and mature stages of development
- list essential service C.N.C. management tasks for both short-term operations and long-term strategic
management
- explain the relationship between the roles of directors and of the manager in mature service C.N.C.
- identify specific ways in which members can participate in management process.

You should read and understand to following headlines:

C.N.C. management associations
Management tasks in C.N.C. associations
Responsibilities of manager and the Board of directors
Widening member involvement in management

Further, the strategy should be related to the place of destination, programs and the service delivery. Marketing
strategies, mentioned here should follow resources management balance. Resources management is time,
production, product, and personal, or group identity based.

Manufacturing - service continuum

Manufacturing:
Top Management Service:

conformance
delivery
flexibility customer
productivity

Time can be saved by investments (defensive strategy), or responsibility of skill people (offensive strategy).
Defensive and Offensive
strategies
Feedback by
general pittfals
identification

Innovation Innovation
Operations Investment:
Top management Improvements Underpaid
succeeded Project
Movement:
Innovation Steering
Free of charge projects: committee
Operations Champions shown up succeeded
skills

Stolen/punished projects
by
Advisers
Offensive strategies are possible only when the amount of implemented projects is big enoughorand
Autocratic
well steered.
managers
Project movement management can be done by steering committee or by participation in decision making.

Compare the structure of conventional company and C.N.C looking on this aspect of participation and the two
pictures below.

Conventional company C.N.C.

Personal identity managed in time is the necessary condition of participation in decision making. It should be
strengthened looking on an importance and urgency of events from long term perspective.

Important
I. Actions: II. Actions:
Prevention:
Crisis Strengthening of production capacity
Urgent problems Skills training
Scheduled assignments Opportunities discovery
Planning, regeneration
Urgent Not urgent
III. Activities: IV. Activities:
Cancelling of visit Trivial daily agenda
Some mail Some phone calls
Some meetings Wasting time for useless activities
Coming time fixed events
Loved activities
 Unimportant

Money is accumulated time. Therefore, costs should be decided upon a proper quality approach selection

Expensive quality
high

Costs

Jakost

Quality high

Cheap quality
high

Costs

Quality high

All schemes mentioned above enable to measure and diagnose the real state of company management. The list of
dimensions is not complete.

Quality Systems for Service Organisations

When you have completed this section you should be able to:
- outline the main points of the service quality marks and ISO 9000 - the two main quality systems
- outline the key principles underlying a quality systems and describe the basic structure of a quality system
- list the three main processes involved in delivering a service and describe their part in the development of a
quality system
- establish a framework for measuring service quality.

Measuring service quality

Exercise: Before we have given you and example of a quantitative measure and a qualitative measure which
describe the quality of C.N.C. services. Can you give another example of each?
Quantitative: 1. Average waiting time to deposit delivered product
2.
Qualitative: 1. Survey of members’ opinions about the levels of comfort inside C.N.C. premises, perhaps just on
the basis of ‘comfortable’ or ‘uncomfortable’.
2.
Answers: You might have suggested one of the following:
Quantitative:
1. Average length (number of days) of time for (loan, investment) approval.
2. Number of staff working at peak periods (this could be said to be a measurement of input rather then of
performance, but it has consequences for service quality).
Qualitative:
1.Ranking of member satisfaction with staff competence and courtesy, from ‘very good’ to ‘very poor’.

Quality indicators:
Exercise: Below is and example of a service design feature in a C.N.C., and alongside the example we have
given you an indicator against which ‘quality’ can be measured. Can you suggest another?
Service Design Feature: Indicator of Quality:
1. Internal layout in terms Maximum waiting time per member
of number of counters
2.
We might suggest the following as examples:
- Process of approving (loans, ...) - an indicator could be average number of days needed for (loan) approval.
- Use of manual or computerised systems for entering details of transactions in passbooks - indicator could be
average speed of transactions, or, say, number of mistaken entries per thousand transactions.
- System for dealing with members’ complaints - an indicator could be speed of dealing with complaints, as
recorded on a written complaints sheet.

Quality dimensions:
Exercise: What indicators could be used to measure output quality (i.e. the quality of the service provided to the
customer)?
Answers: Output quality could be measured by, for example, the number of complaints received, from
customers. Another ‘proxy’ measure for C.N.C. could simply be the volume of service delivered or products sold
over particular period, on the assumption that poor quality of service will discourage some members from buying
service/product (loan). However, there could of course be other reasons for such a reduction.
Impact:
Exercise: Suggest possible indicators of service quality for C.N.C., against each of the five dimensions:
You should read and understand to following headlines:
Process:
Structure:
Outcome:
Impact:
Answers: We have though of the following:
You should read and understand to following headlines: Measure service performance relative to key financial
ratios discussed in Unit 4.
Process: Monitoring of factors such as length of time taken to approve (loan) applications.
Structure: Measurement of physical capacity, such as number of counters relative to number of members using
credit unions per week, number of paid /volunteer staff relative to membership, and so on.
Outcome: Measurements of volume of products purchased (loan taken), extent of overdue (invoices, loans), and
so on.
Impact: Measurements such as proportion of population in common bond area who are members, number of
youth members, and so on.

Q: Some people may feel that the fact that C.N.C. are owned by their members is in itself an adequate guarantee
of service quality: drawing up of detailed systems and documentation is unnecessary.
Comment on this assertion, and suggest four reasons why formalised systems and documentation might be
needed to guarantee quality.

When you have completed this section you should be able to:
- outline the main points of the service quality marks and ISO 9000 - the two main quality systems
- outline the key principles underlying a quality systems and describe the basic structure of a quality system
- list the three main processes involved in delivering a service and describe their part in the development of a
quality system
- establish a framework for measuring service quality.
You should read and understand to following headlines:
Development of quality system - ISO 9000
Quality system principles
Operational elements of a quality system
Measuring service quality

In this section we have focused on the issue of service quality in service organisations. We began by discussing
the major developments in international quality standards, and their use in the EU in the context of the Single
European Market. We then moved on to discuss the main principles of a quality system. We discussed in some
detail the three main elements of a quality system, namely:
- management responsibility
- personnel and material resources
- the quality system structure.
In the next part we looked at the operational elements of a quality system, and in particular at three main service
processes:
- the marketing process
- the service design process
- the service delivery process.
Finally, we introduced the issue of measuring management quality. We discussed a framework for measuring
service quality.
In the next section we will look at another concept linked to quality, empowerment.

Summary
In this section, we looked at management issues specifically affecting service C.N.C.. We examined the growth
cycle for a service C.N.C. and its five phases:
- nurturing
- energising
- peak
- relaxation and review
- renewal or decline.
Different management structures are required for different phases. Simple structures are appropriate for early
stages while in mature development more representative structures are necessary.
Similarly, management tasks can be divided into short-term, day-to-day activities and long-term, strategic roles.
The division of responsibilities for these tasks, between the Board of Directors and the manager is crucial and we
identified some potential problem areas.
Finally, we examined ways in which the member can have a wider involvement in the running of service C.N.C.
through formal meetings, informal communications, committee membership or voluntary workers.
We have now finished this section, and we can move on to a more detailed examination of management
functions in the following sections, starting with planning.

By describing the different types of organisational structures that exist, we were able to identify the different
management approaches used in each one.
Then, we briefly examined the management-production continuum, which can be used to illustrate the balance
between management and production in different organisations.
Finally, we discussed alternative organisations such as voluntary, non-profit and C.N.C. organisations,
concluding by comparing C.N.C. with conventional organisations.
Much of the discussed in this section has been related to conventional organisations.

4. Information Processing in Management:

You should read and understand to following headlines:
Theory of Information
I = H – Hi-1
H = - SUM pi log2pi
Definition: Information is the difference between uncertainty before and after the message was obtained.
Previous uncertainty is subtracted from actual uncertainty.
Questions: See picture A-D.
1. Where uncertainty based on probability is bigger A or B?
2. Where uncertainty based on unequal probability is bigger C or D?

A B C D

- Media Richness Theory

Rich media example is discussion for example, which is valuable for developmentally difficult objectives. Poor
media is table filled by numbers for example, which can avoid or solve risky situations.

- Information Management: operations, work-flow, projecting

Inspect keywords like re-engineering, management science, logistics, project management at
http://www.tady.cz/rizeni/strana2.htm

When you have completed this section, you should be able to:
1. Discuss the different types of technology in organisations
2. Identify and describe the different types of information systems
3. Explain the importance of integrating technology and information to achieve a sustained competitive
advantage

Definitions
Technology = The knowledge, procedures, and equipment and organisation uses for all of its processes,
including marketing, distribution, human resource planning, and operations
High technology = The applications of technology that are new at the time the term is being used
Automation = The replacement of human labour with equipment
Expert systems = Computer systems with software incorporating the decision rules used by people deemed to
have expertise in a given area
Information technology = Electronic hardware and software used for communications and information
processing
Network = Combination of computers that share access to databases and a means to transmit information
throughout the systém
Small-batch production = A manufacturing technology that involves producing goods in small quantities tailored
to customer specifications
Mass production = Producing uniform goods in large batches or long production runs
Continuous process production = Producing the same product over an extended period of time using automated
equipment
Flexible cell production = a flexible manufacturing systém in which groups of workstations (the cells) can be
reconfigured and reprogrammed to meet changing needs
Mediating technology = A service technology in which the organisation links together clients with
complementary needs
Long-linked technology = A service technology in which employees perform a standard series of simple tasks,
with the job moving from one employee to the next until the process is complete
Intensive technology = A service technology in which employees adjust the work process in response to
feedback from their customers
Information systém = A set of resources and procedures dedicated to gathering and organising data and
disseminating information
Data = Unanalysed facts and figures that do not necessarily have and significance on their own
Information = Data placed into a useful context
Transformation-processing systém = An information systém that handles routine, recurring transactions
Management information systém (MIS) = An information systém that provides information required for making
management decisions
Decision support systém (DSS) = An information systém that searches for, manipulates, and delivers information
on an interactive basis
Executive information systém (EIS) = An information systém tailored to the decision making needs of top
management
Value chain = An organisation’s activities that are interdependent and contribute to the creation of value,
consisting of inbound logistics, operations, outbound logistics, marketing and sales, and service
Value systems = The systém of activities that links the activities of suppliers, producers, distribution channels,
and ultimate buyers
Electronic data interchange (EDI) = A computer systém that enables two or more organisations to share
information directly

Information Management: operations, work-flow, projecting

Definitions
Computer-integrated manufacturing (CIM) = The use of a computer system that integrates automated facilities
by controlling the flow of resources throughout the plant as well as the machines that perform many production
tasks
Computer-aided design (CAD) = The use of computer software to design products
Computer-aided manufacturing (CAM) = A systém used with CAD to direct the production of particular product
Virtual reality = A three dimensional computer-generated environment that gives the user a sensation of being
part of that environment
Capacity = The maximum output the organisation can produce with its existing facilities
Raw material inventory = The parts and materials to be used in producing goods and service
Work-in-process inventory = Unfinished products still in production
Finished-goods inventory = Items that have passed through the entire production process but have not yet been
sold
Material requirements planning (MRP) = A computerised systém that monitors inventory levels for related items
and reorders those items as needed to meet estimated future needs
Manufacturing resource planning (MRP II) = A systém that creates a financial model for use in production
scheduling, human resource planning, material purchasing, control of cash flow inventory, and distribution

Role of Information Technology

When you have completed this section you should be able to:
- describe the main uses of computers in the service sector in general, and in the C.N.C. in particular
- outline the main benefits to be derived from management information systems
- explain the relative merits of networking by C.N.C..

You should read and understand to following headlines:

Uses of computers in the service sector
Management information systems
The potential of networking

In this section we considered the uses of information technology in C.N.C.. We begun by looking at the
increased use of computers in the service industry in general, and their primary uses in C.N.C.. We addressed the
debates for and against the use of computers in C.N.C. and identified some of the problems which emerged from
the way in which C.N.C. independently installed computer systems.
Next we looked at the potential for management information systems, in particular noting the potential for
computers to be used as decision support systems.
Finally, we addressed the use of information technology in C.N.C. in future, and in particular the potential for
networking. We noted that while networking is technically possible, the real issues relate to the philosophy of
C.N.C. and how the movement sees itself developing in future.
In the final section of this unit we will consider some of personnel and industrial relations issues within C.N.C.
as another aspect of operations management.

Exercises: The Uses of Information Technology

Exercise: Take below three examples. In each case, what do you think are the main uses of computer
technology? (e.g. carrying or transactions, record keeping, etc.)
Financial service sector:
Bureaucratic organisations:
Car repair and maintenance service:
Answers: You will probably have come up with some of the following uses:
Financial service sector:
- the actual conducting of financial transactions (for example stocks and shares, foreign exchange transactions)
- the clearing of financial transactions
- the keeping of financial records
Bureaucratic organisations:
- primarily record keeping
- stock control/purchasing
- accounting
Car repair and maintenance service:
- primarily stock control/purchasing
- record keeping
- maintenance of quotes for specific jobs, and so on.

Computer technology - C.N.C.

Exercise: Draw up a list of the main uses of computer technology in C.N.C.
Answers: Most of the use of computers in C.N.C. relates to the following functions:
- transaction functions
- bureaucratic functions
- work-flow management
Exercise: What is the main danger with installing a computer system without having properly evaluated or
researched its contributions?
Answer: There is the danger of wasting resources in installing an expensive system which may be capable of
doing far more than you want it to do, but perhaps does not well what you really wanted it for!
Exercise: Suggest three ways in which a C.N.C. approach to the installation of computer systems could benefit
your C.N.C..
Answers: We can suggest the following (based on the Planning Committee Report):
- make use of the expertise and experience within the movement for benefit of all C.N.C.
- get better deals from suppliers due to large volumes of orders
- use combined resources of money and expertise to develop systems to meet current and future standards and
needs
- provide necessary standardisation allowing development of new services requiring exchange of data
- facilitate development at League level of computer advisory service.

Management information systems:

1. Retrieves isolated data items
2. Aids ad hoc analysis of data files
3. Provides pre-specified aggregations of data as standard reports
4. Estimates consequences or proposed decisions
5. Proposes decisions
6. Makes decisions
Exercise: Which of above items best characterise the use of computers in your C.N.C.?
Answer: Well, the answer may differ across C.N.C., but we would say it is primarily the first three items that are
dealt with (as well as the immediate recording of transactions), in other words, fairly standardised data
manipulations.
4. Regional Management

Regional Management Projects:

Regional management is becoming more and more important. It is expected that Common Agriculture Policy of
EU, taking half of EU budget, will be substituted by regional development based programmes. See readings and
URL=http://www.regeneration.detr.gov.uk/policies/area/2.htm

Norwegian KPMG don’t see the quality as the main problem of regional management and is ready to increase
quality by suitable organisational structure, continuously adapted after results of reviewing.
 KIPLINGS QUESTION BATTERY
 WHAT  are we doing and
 WHY  is it done
 WHERE  is the task carried out and
 WHY  there
 WHEN  do we solve the task and
 WHY  do we do it at this time
 HOW  do we solve the task an
 WHY  do we do it in this way
 WHO  is responsiblee for the task and
 WHY  this person/group/department

You should explain why every second question is ‘why’.

SUMMARY
 Front service - service near the
customer/inhabitant/user
 Front service - more interesting work
 Consensus about the destination level
 Split the main tasks in to “sub tasks”
 Focus on recruiting and education of
staff
 Contact with the back offices
 Project plan is necessary
The front service is more problem of marketing. Therefore, let’s look closely on decision making, leading to
consensus, and on meetings which assign tasks to people from front service and back offices.

Glossary:
Marketing company = A form of subsidiary organisation which markets, sell, and service the
firm‘s products in the host country
Derived demand = The demand based on expectations of upcoming demand for other
industrial or consumer products
Better Business Bureau (BBB) = An organisation established and funded by businesses that
operates primarily at the local level to monitor activities of companies and promote fair
advertising and selling practices
Promotion adaptation = A global marketing strategy whereby the product sold in domestic
markets is not altered in any important ways, but market communications are adapted to local
conditions
Dual adaptation = A global strategy whereby both the product and the promotional programs
are adapted to foreign market conditions
Dumping = Selling a product in a market other than a home market at prices below the cost of
making and delivering them to that market
Product invention = A global marketing strategy whereby a new product is created
specifically for the needs of the foreign market, and is then promoted to that market
Discontinuous innovation = An innovation which truly changes how we do what we have long
been doing
Diffusion process = A process consisting of communication about, and acceptance of, the
innovation throughout the social system over a period of time
Income distribution = How thoroughly the income in a nation is spread through the population
Direct exporting = Refers to the marketing firm’s active efforts to sell its products, made
domestically, in foreign markets
Direct investments = An arrangement under which an international marketer invests the funds
necessary to build or purchase its own facilities in the host country
Diseconomies of scale = The effort to increase production results in inefficiencies, such as
having to pay higher labour costs for overtime or having to pay more for scarce resources
Economies of scale = More efficient operations and multiple uses of resources result in
decreasing costs; average variable costs and thus average total costs also decline
Environmental monitoring = A systematic group of activities designed to anticipate changes in
external variables that will affect the organisation’s ability to meet its goals
Geographical organisation = The organisation method based on management by
region, state, area, nation, or global sector
Global marketing = Refers to any marketing that involves two or more nations
Government markets = The purchasing or leasing of goods and services in order to carry out
government functions and to further the public purpose
Export department = An organisational for used by firms which are primarily exporting their
products to foreign markets, rather than maintaining marketing organisations abroad
Export trading company = An organisation which provides its exporting expertise and
facilities to many small and medium-size firms that could not otherwise engage in
multinational marketing
Indirect exporting = A form of global marketing that takes the least effort on the part of the
seller; relies on the efforts of export agents who sell the product abroad, often without the
specific knowledge of the manufacturer
Collateral services = Companies that provide companies with specialised services such as
package design, advertising production, and marketing research
Central organisational structure = A method of organising for international advertising along
with other marketing activities such as sales, marketing research, and planning are divided
along functional lines and are run from one central marketing department
Express warranty = A warranty written in terms that specify exactly what claims and
guarantees the producer is offering
Foreign sales force = An organisational form for global marketing in which the marketer
maintains a sales organisation abroad to sell to foreign markets, but not have its own
subsidiary companies abroad
Foreign subsidiaries = An organisational form in which the global marketer establishes its
own companies in foreign markets in order to market, and sometimes manufacture, in those
markets
International division = A form of organisation under which a special division of the company
is responsible for the marketing of all the firm’s products throughout the world
Joint ownership = An arrangement whereby an international marketer and an organisation in
the host country create third organisation which they own jointly
Joint venture = An agreement between a marketing organisation and another
organisation, in the host country, through which the tasks of producing and
marketing a product are shared
Licensing agreement = An agreement under which an organisation in the host country is given
the right to make the marketer’s patented (or patentable) product for sale in that market

International Trade Policy

International trade provides attractive opportunities for sales increase by incorporating
marketing issues, but it also carries a number of risks. Some of the most serious problems
include fluctuation in exchange rates, foreign trade regulations, unstable foreign government,
and piracy of trade secrets by outsiders.

Trade barriers: Economists all agree that trade among countries increases wealth. However,
politicians have found that regulations that protect domestic industries from outside
competition are popular with people.
 Tariffs and quotas: There are basically two types of restrictions that countries use to keep
unwanted products out and protect domestically produced goods.
 One of them is a tariff or tax on imports which are expressed as a percentage (from
nuisance 2 % till prohibitory 50%) of the value of the good and are added in to get selling
prices.
 Second one is quota as an absolute limit on the number of certain items that can be
imported.
 Another class of export restriction is the non-tariff barrier. These often take the form of
technical specifications or inspection procedures that make difficult or impossible to move
goods across borders.
Period of general loosening of trade restrictions in the world economy in past 60 years,
because of GATT/WTO activities is actively opposed now not only by governments but even
by world-wide network of NGOs. The important issue is ecology.

Currency exchange problems: the possibility for serious exchange losses is so high that some
small firms avoid foreign trade altogether. More experienced companies have learned to
hedge their financial positions in the futures markets to reduce currency exchange problems.
Companies can avoid the sales effects of currency fluctuations by building plants in major
foreign markets. Even more serious problem occurs when trading with country whose
currency is not readily convertible. One solution is to accept payments only in hard currency.
However, some countries have limits on the amount of these currencies. Some companies use
convertible points which have stable rates to different currencies. You have to be imaginative
in the way you arrange for payment.

Unstable governments: Some governments change frequently. New governments often

modify the rules that determine how business is conducted. The most extreme action is
nationalisation. Restrictions on the transfer of currencies and revisions on tariffs and quotas is
the other case.

Several countries have formed economic communities as EU, Nafta, and Cefta for example.
Unions can take form of a customs union, which is free trade area (no tariffs facing the
members) that imposes a uniform tariff for trade with non-member nations. The next for is
economic union in which all members would operate under the same trade policies.

Economic environment: Three characteristics reflect a foreign country’s attractiveness as an

export market. The first is the size of the country’s population. The second is the country’s
industrial structure (subsistence, raw material exporting, industrializing). The third economic
characteristic is the country’s income distribution: (1) very low incomes, (2) mostly low
incomes, (3) very low and very high incomes, (4) low, medium and high incomes, and (5)
mostly medium incomes.

Cultural factors: Foreign customers often operate on different concepts of time, space, and
etiquette. Thus before you create a marketing plan for international market, you need to find
out how these customers think about and use your product.

LGA/IDeA/EO Best Value Initiatives Database

Survey Report,
Summer/Autumn 1999

Contents

Section Sub heading Pag

e
Introduction
Table of respondents
Headline points from the survey
Organising for Best Value – Members and Best Value
politically, managerially and
corporately
Officers and Best Value
Corporate framework
Performance plans and other
documentation
Best Value and Equal
Opportunities
Training for Best Value
Consultation techniques
Other consultation techniques
Effectiveness of consultation
techniques
Benchmarking
Services being benchmarked
Level of local authority involvement
Choosing partners
Involvement of external
organisations
Best Value reviews – planned
and in progress
Outcomes of completed
reviews
Partnerships
Attainment of awards/use of Quality
Initiatives
Benefits/problems experienced
in completed reviews

Appendix Pag
e
1. Number of authorities with reviews planned from April 2000 for all
listed services/themes
2. Number of authorities with reviews under way for all listed
services/themes
3. Number of authorities with reviews completed for all listed
services/themes
4. Number of authorities using the main consultation techniques for
the 40 services/themes listed most frequently
5.Number of authorities indicating a series of policy outcomes for the
40 services/themes listed most frequently
6. Number of authorities indicating attainment of awards/use of
Quality Initiatives for the 40 services listed most frequently
List of charts

Chart Title Pag

e
1. Member Structures
2. Officer Structures
3. Corporate Policies
4. Number of authorities with draft BV Performance Plans in place
5. Number of authorities who have published a Community Plan
6. Number of authorities with a BV Employment Charter
7. Equalities in aspects of BV
8. Number of authorities with training programmes in place for the
following key groups
9. Number of authorities commencing consultation
10. Types of consultation in use
11. Frequency distribution of the number of authorities in benchmarking
projects
12. Percentage of authorities with the following outcomes of completed
reviews
13. Percentage of authorities using awards schemes/quality initiatives
14. Number of authorities participating in IiP
15. Number of authorities observing the following results of completed
reviews

List of tables

Table Title Pag

e
1. Summary of Respondents
2. Member Structures
3. Officer Structures
4. Corporate Policies
5. Equalities in aspects of BV
6. Types of consultation in use
7. Services being benchmarked
8. Outcomes recorded by authorities who have completed at least one
review
Introduction

This report sets out the main findings of the 3 rd survey of Best Value (BV)
Initiatives in English Local Authorities. The survey was carried out between July
and October 1999. 249 authorities (64.2%) had responded at the time of analysis.
Further replies to the survey are still being received and added to the database. A
summary of the 249 responses by type of authority is given in table 1.

Table 1 Summary of respondents by type of authority

All Shire Shire Met. London Unitaries

Authoritie Counties Districts Districts Boroughs
s
Total in 388 34 238 36 33 47
Eng
lan
d
Responses 249 24 161 20 21 23

Percentage 64.2% 70.6% 67.6% 55.6% 63.6% 48.9%

response

The database provides an effective source of policy development information and

networking contacts for local government and enables the IDeA and LGA to shape
their advisory and information projects more effectively.

Overall, the database contains clear evidence of BV preparations in 333 (86%) of

English local authorities, which suggests a consistent drive to be on the “launch
pad” when the new regime takes off next April. The analysis here is, however,
based on the 249 processed responses to the latest survey. The report provides a
snapshot of the level of preparation for BV in the summer of 1999 and no doubt
many of the respondents have moved on a stage. A number of respondents
commented at various points in the survey that particular issues were just under
discussion or that recommendations were due for consultation or ratification.

Headline points from the survey:

  218 respondents (87.6%) have developed new member structures for BV –
most frequently involving dedicated BV committees
 247 respondents (99.2%) have developed new officer structures for BV – most
frequently involving corporate working groups or a corporate BV officer
 201 respondents (80.7%) have an overall corporate BV strategy
 Only 34 respondents (13.7%) have a BV procurement strategy in place
 Only 50 respondents (20.1%) have a draft BV Performance Plan in place
 Only 53 respondents (21.3%) have a Community Plan in place – and only 32
(12.9%) have involved other organisations in the community in developing this
 Only 22 respondents (8.8%) have developed a BV employment “charter”
 176 respondents (70.7%) are planning or already carrying out BV Reviews – an
average of 9 reviews per authority
 The database now includes 514 different service/thematic categories for BV
Reviews

Organising for Best Value – politically, managerially

and corporately
Authorities were asked to identify the structures in place for leadership and
management of the BV process at both the political and officer levels.

Members & Best Value

At the member level, authorities were asked to choose any or all of four general
descriptions that best fitted the structures in place for BV oversight.

 139 respondents (55.8%) have a dedicated BV committee

 50 respondents (20.1%) have a joint member/officer implementation team

 34 respondents (13.7%) have a scrutiny board involving other

organisations as well as members

 125 respondents (50.2%) have developed direct member involvement in

BV Reviews

Chart 1 and table 2 show these overall figures split by authority type. Table 2
shows the figures as percentages of the total number of authorities responding.
In chart 1, the figures are calculated as a percentage of the total sum of positive
responses to that question (i.e. several authorities have been counted more than
once, and the total sum of positive responses is thus greater than the total
number of authorities responding.) The same method has been used to produce
charts 2, 3, 7 and 10, and their accompanying tables. The breakdown in chart 2
reveals that:
  Dedicated BV committees are most common in metropolitan districts (75%)
and least common in London boroughs (42.9%) and new unitary authorities
(39.1%).

 Joint member/officer implementation teams are most common in shire

districts (26.1%) and least common in London boroughs (4.8%).

 Scrutiny boards involving other organisations, whilst not common

anywhere, are most common in shire counties (16.7%) and least common
in London boroughs (10%).

 Direct member involvement in reviews is most common in new unitary

authorities (60.9%) and least common in shire districts (48.4%) and London
boroughs (47.6%).

Chart 1: Member Structures

Shire Counties

Shire Districts

Met. Districts

London Boroughs

Unitaries

0% 20% 40% 60% 80% 100%

Dedicated BV commitee
Joint member/officer implementation team
Scrutiny board
Direct member involvement

Table 2
Member
Structures
No. % No. % No. % No. % No. % No. %
Dedicated BV 139 55.8% 15 62.5% 91 56.5% 15 75.0% 9 42.9% 9 39.1%
commitee
Joint 50 20.1% 2 8.3% 42 26.1% 2 10.0% 1 4.8% 3 13.0%
member/office
r
implementatio
n team
Scrutiny board 34 13.7% 4 16.7% 22 13.7% 2 10.0% 3 14.3% 3 13.0%
Direct member 125 50.2% 13 54.2% 78 48.4% 10 50.0% 10 47.6% 14 60.9%
involvement
Sample size 249 24 161 20 21 23

It is vital that members come to regard the BV process as something that

enhances their role in local government and in the wider community. Most
respondents have made efforts to refresh political structures to deal with BV, but
there is a surprisingly low incidence of innovative arrangements - such as
scrutiny boards involving other partners in the community.

51 (19.7%) of respondents have sought to work with the modernising agenda by

structuring the leadership of BV around new cabinet and scrutiny style models
and no doubt many other authorities will follow this route. Cross-party working
has also been found to be useful by some authorities.

Finding the right balance will be a challenge, as a couple of comments from

district respondents suggest. One said:

“It will prove difficult to engage members on BV without substantial further

training…detailed understanding of BV is currently limited. [There is a] particular
need to link BV with the budget process in members’ thinking.”

And another described a streamlined political process before commenting that:

“There is a tendency for extra meetings to fill up the space created by the new
structure.”

Officers & Best Value

At the officer level, respondents were offered a number of descriptions of overall

management structures for BV implementation, and asked to tick all those that
applied in their authority:

 167 respondents (67.1%) have a corporate BV officer

 74 respondents (29.7%) have a BV implementation team based in a lead

department

 109 respondents (43.8%) have a designated lead director

 100 respondents (40.2%) have lead officers in individual service

departments

 185 respondents (74.3%) have a corporate BV working group drawn from

across departments

 27 respondents (10.8%) have “other” arrangements in place, including (in

no particular order)
Key role for organisational development unit
Management team sub-group
De-centralised BV administrators
Independent “Peer Review Board” with external representation
Specially trained “critical friends” attached to review teams
Employment of consultants
Overall, the corporate lead officer co-ordinating an inter-departmental team seems to
be the dominant model for the moment. However, Chart 2 gives the figures
split by authority type, revealing that the overall figures are quite strongly
influenced by shire districts. The breakdown shows that:

Corporate BV officers are most common in shire counties (79.2%) and least
common in new unitary authorities (65.2%) and shire districts (64.0%).

BV teams in a lead department are most common in metropolitan districts

(50.0%) and least common in shire districts (23.0%).

Lead directors for BV are most common in metropolitan districts (65.0%) and
least common in shire districts (37.9%).

Lead officers for BV in individual services are most common in shire counties
(62.5%) and least common in shire districts (32.9%).

Inter-departmental corporate BV working groups are most common in shire

counties (87.5%) and least common in new unitary authorities (65.2%).

Chart 2: Officer Structures

Shire Counties

Shire Districts

Met. Districts

London Boroughs

Unitaries

0% 20% 40% 60% 80% 100%

Corporate BV officer BV team in lead dept.

Designated lead director Lead officers
Corporate BV working group

Table 3
Officer All Shire Shire Met. London Unitarie
Structures authorit Countie District District Boroug s
ies
No. % s
No. % s
No. % s
No. % hs
No. % No. %
Corporate BV 167 67.1% 19 79.2% 103 64.0% 15 75.0% 15 71.4% 15 65.2%
officer
BV team in 74 29.7% 8 33.3% 37 23.0% 10 50.0% 10 47.6% 9 39.1%
lead dept.
Designated 109 43.8% 12 50.0% 61 37.9% 13 65.0% 12 57.1% 11 47.8%
lead director
Lead officers 100 40.2% 15 62.5% 53 32.9% 11 55.0% 11 52.4% 10 43.5%
Corporate BV 185 74.3% 21 87.5% 115 71.4% 16 80.0% 18 85.7% 15 65.2%
working group
Sample size 249 24 161 20 21 23
Corporate Framework

The survey assessed the nature and extent of corporate preparations for BV by
asking authorities to indicate whether or not a series of key systems, tools and
policies are now in place. The results show that:

 201 respondents (80.7%) have developed an overall corporate BV strategy

 126 respondents (50.6%) have developed a corporate strategy for BV

consultation

 34 respondents (13.7%) have developed a corporate strategy for BV

procurement

 153 respondents (61.4%) have developed a BV Review handbook/toolkit

for services.

The majority of respondents now have at least some of these key elements in
place but the IDeA is concerned that a number of authorities have not yet
addressed the issue of effective procurement strategies under BV in any great
detail. We are working with practitioners and other bodies to evaluate the issues
involved and have already published a guide to procurement issues - “To Buy or
Not to Buy” - in our Approaches to Best Value Series.

Chart 3 gives a breakdown of the overall figures by authority type, revealing that:

Corporate BV strategies have been developed most commonly in shire counties

(91.7%) and London boroughs (90.5%), and least commonly in metropolitan
districts (65.0%).

Corporate consultation strategies have been developed most commonly in new

unitary authorities (60.9%) and least commonly in shire districts (48.4%) and
London boroughs (47.6%).

BV procurement strategies have been developed most commonly in new unitary

authorities (26.1%) and shire counties (25.0%), and least commonly in shire
districts (9.9%).

BV review handbooks/toolkits have been developed most commonly in London

boroughs (90.5%) and least commonly in shire districts (52.8%).
 Chart 3: Corporate policies

Shire Counties

Shire Districts

Met. Districts

London Boroughs

Unitaries

0% 20% 40% 60% 80% 100%

Overall corporate strategy Consultation strategy

Strategy for procurement Handbook/toolkit

Table 4
Corporate
policies
No. % No. % No. % No. % No. % No. %
Overall 201 80.7% 22 91.7% 127 78.9% 13 65.0% 19 90.5% 20 87.0%
corporate
strategy
Consultation 126 50.6% 13 54.2% 78 48.4% 11 55.0% 10 47.6% 14 60.9%
strategy
Strategy for 34 13.7% 6 25.0% 16 9.9% 3 15.0% 3 14.3% 6 26.1%
procurement
Handbook/ 153 61.4% 19 79.2% 85 52.8% 14 70.0% 19 90.5% 16 69.6%
toolkit
Sample size 249 24 161 20 21 23

Performance Plans and other documentation

BV seems destined to generate a fair amount of paperwork – some of it statutory,

like the BV Performance Plan (BVPP) and some of it strongly suggested by best
practice.

Chart 4 shows the number and percentage of respondents by type with draft
BVPPs in place, which is quite low at the moment. All authorities will need to take
urgent steps to make sure that they meet the initial statutory requirements.

Although the BV Performance Plan is a statutory document, good practice

suggests that local authorities seeking to engage fully with their communities
should also produce a Community Plan (CP) that will arise from community
consultation exercises and form the basis for on-going dialogue with the
community. The survey asked respondents to indicate whether or not a CP has
been prepared either by the authority alone or in partnership with other
organisations. It is strongly suggested that best practice in this area would be to
involve other organisations. Chart 5 shows the number and percentage of
respondents that have prepared a CP.
 Chart 4: Number of authorities with draft BV
Performance Plans in place
100%
90%
80%
70%
60% 199 18 15 18
131 17
50%
40%
30%
20%
10% 50 6 5 5
30 4
0%
All Shire Shire Districts Met. Districts London Unitaries
authorities Counties Boroughs
Yes No

Chart 5: Number of authorities who have published a

Community Plan

100%
90%
80%
70% 13
196 18 17
60% 130 18
50%
40%
30%
20% 7
53 6 6
10% 31 3
0%
All authorities Shire Shire Districts Met. Districts London Unitaries
Counties Boroughs Yes No

Another important piece of best practice BV documentation is what is often

known as a BV Employment “Charter” which sets out the rights and
responsibilities of employees of a modern BV employer. The development of such
documents is being encouraged by the Employers Organisation (sister body of
the IDeA), which has developed a Framework Agreement for Best Value with the
local government trade unions, now agreed by the National Joint Committee.
Chart 6 shows the number and percentage of authorities by type with such
charters in place, which at the moment is quite low.
 Chart 6: Number of authorities with a BV Employment
Charter

100%
90%
80%
70%
60% 18 16 18 19
227 156
50%
40%
30%
20%
10% 6 4
22 5 3 4
0%
All authorities Shire Shire Districts Met. Districts London Unitaries
Counties Boroughs
Yes No

Best Value and Equal Opportunities Issues

Authorities were asked whether or not they had incorporated equalities issues
into key parts of the BV process.

 107 respondents (43.0%) have incorporated equalities into their

consultation systems

 139 respondents (55.8%) have incorporated equalities into BV Review

processes

 78 respondents (31.3%) have incorporated equalities into improvement

targets and plans

 Only 37 respondents (14.9%) have incorporated equalities in new

contract/partnership arrangements and authorities may wish to take a look
at this issue, as it would appear that there is still some work to be done on
what is sometimes known as “ethical procurement”.
Chart 7 shows the figures broken down by type of authority.

Chart 7: Equalities in aspects of BV

Shire Counties

Shire Districts

Met. Districts

London Boroughs

Unitaries

0% 20% 40% 60% 80% 100%

Equalities in consultation systems

Equalities in review processes
Equalities in improvement targets
Equalities in contracts/partnership arrangements

Table 5
Equalities in All Shire Shire Met. London Unitarie
aspects of authorit Countie District District Boroug s
BV ies s s s hs
No. % No. % No. % No. % No. % No. %
Equalities in 107 43.0% 10 41.7% 59 36.6% 11 55.0% 12 57.1% 15 65.2%
consultation
systems
Equalities in 139 55.8% 14 58.3% 82 50.9% 12 60.0% 15 71.4% 16 69.6%
review
processes
Equalities in 78 31.3% 8 33.3% 46 28.6% 5 25.0% 8 38.1% 11 47.8%
improvement
targets
Equalities in 37 14.9% 5 20.8% 16 9.9% 6 30.0% 6 28.6% 4 17.4%
contracts/
partnership
arrangements

Sample size 249 24 161 20 21 23

Training for Best Value

Chart 8 shows the number and percentage of respondents with training

programmes in place or planned for key groups, including members, officers and
others. It is clear that authorities are concentrating on familiarising their own
members and officers with BV at the moment, which seems to be a reasonable
prioritising of resources.

Chart 8: Number of authorities with training programmes

forthe following key groups
100%
48 94 58 59 226 236 235
90%

80%
99
70% 69 86

60%
55
50%

40%

30%

20%

10% 16
102 100 122 104 7 13 12
0%
Members Chief officers Other Staff Partner Service users The public
managers organizations

In place Planned Neither

Consultation Techniques

Most respondent authorities have begun some form of consultation for services
under review at the moment or scheduled for review in year 1. Chart 9 shows the
number and percentage of respondents by type, which are currently involved in
consultation programmes.
 Chart 9: Number of authorities commencing
consultation
Any technique None
100%
90% 5
80% 91 58 7 9
12
70%
60%
50%
40% 16
30% 158 103 13 14
12
20%
10%
0%
All Shire Shire Met Districts London Unitaries
authorities Counties Districts Boroughs

Chart 10 shows that, of the main recognised consultation mechanisms, it is

survey and panel mechanisms that are in use most commonly overall, followed
by direct one-to-one interviews. The numbers for individual types of authority,
summarised in the accompanying table, do show however, that the biggest
variations are in shire districts where interviews are less common than in other
types.

Chart 10: Types of consultation in use

Unitaries

London Boroughs

Met Districts

Shire Districts

Shire Counties

0% 20% 40% 60% 80% 100%

Survey/poll Panel/Forum Citizen Jury Interviews

Table 6
Types of
consultation
in use
No. % No. % No. % No. % No. % No. %
Survey/poll 153 61.4% 12 50.0% 98 60.9% 13 65.0% 16 76.2% 14 60.9%
Panel/Forum 125 50.2% 10 41.7% 79 49.1% 12 60.0% 13 61.9% 11 47.8%
Citizen Jury 18 7.2% 2 8.3% 7 4.3% 3 15.0% 3 14.3% 3 13.0%
Interviews 83 33.3% 10 41.7% 41 25.5% 9 45.0% 13 61.9% 10 43.5%
Sample size 249 24 161 20 21 23

Formal citizens’ juries are not common in any type of authority. This may be in
part because they are expensive and difficult to organise, since they involve
bringing together 12-16 people over a period of 4-5 days to here evidence in a
court style deliberative manner, before producing recommendations. When used,
however, they seem to be regarded as effective.

Appendix 4 shows that the general pattern of consultation mechanisms is pretty

much followed across individual services as well, with some slight exceptions in
social services where group/panel mechanisms are used more commonly than
survey techniques, rather than both being employed.

Other consultation mechanisms

Authorities were asked to provide details of consultation mechanisms that they

use which did not seem to fit into any of the general categories offered. 84
respondents provided examples, some of which were in fact specialist derivations
of the main categories. The other systems mentioned were (in order of
frequency):

 Road shows
 Conferences/seminars/visioning events
 Use of council newspapers
 Mystery shoppers
 Comment cards
 Involvement of parish councils
 “Plan for real” events
 Review by academics

Effectiveness of consultation techniques

Authorities were also asked to indicate whether or not they had yet carried out
any evaluation of the effectiveness of their consultation programmes. Only 39
authorities were able to reply, which is unsurprising given that this is such an
early stage in the development of BV. However, they did give feedback on a
variety of their projects, which yielded some interesting information. Even so, we
must acknowledge the irony of commenting on the effectiveness of opinion
sampling techniques on the basis of an unrepresentative sample.

Overall the sense was that the responses received to general postal
questionnaires risk being insufficiently representative, that it is difficult to
persuade service users to take part in more representative polling systems and
that therefore focus groups and panels may be the most effective method for
many services. For example, one authority conducting a major project on drugs
and community safety put together a citizens’ jury and commented that this was:

“An effective way of carrying out informed consultation on complex issues.”

Against this, another authority conducted “exit surveys” for planning, building
control and refuse and found the exercise to be useful but was disappointed in
the lack of willing volunteers to take part in a citizens’ panel discussing all
services.

Two other examples serve to reinforce the message that ‘horses for courses’ is
the main early lesson on consultation, with appropriateness of techniques
depending on factors like the size of the customer base and existing levels of
community/user involvement.

One authority used sample groups of users for a review of its property services
and commented that this was of:

“Limited use for a support service – direct [one-to-one] contact may be better.”

Another authority, consulting on its environmental services development plan,

sent questionnaires to complainants, key stakeholders and to the public
attending agricultural shows and commented that the:

“Sample of the general public was very small and limited. Many comments on
controversial policies/’hobby horses’ distorted outcomes.”

Benchmarking

The whole concept of benchmarking, a key element of the BV requirement to

compare performance with other authorities and providers, has become rather
diffuse over the last year, as potential providers and facilitators have multiplied.
At the same time, many authorities at the forefront of BV practice have begun to
ask important questions about the value of quite costly exercises that have
produced limited results in the opinion of some.

The IDeA has produced, and will continue to produce, advice on the best ways to
go about benchmarking but above all it is clear that it should not be an end in
itself. Projects should have clearly defined aims and the partners to the exercise
should be committed to working together to bring about a shared view on
improvement strategies and not merely to exchange data.

The survey asked authorities to provide information on at least a sample of their

current benchmarking projects, covering:
 The service/theme being benchmarked
 The number of local authorities involved
 The types of non-local government organisations involved, if any.
 Methods/assumptions used to select partners

Information was obtained from 144 respondents, covering 366 separate reviews
(an average of 2.5 reviews per authority). By definition, of course, benchmarking
will be taking place in one form or another as part of all BV reviews but the
analysis here is confined to responses to the specific question that produced
more detailed responses on projects that are well underway.

Services being benchmarked

The benchmarking projects known to be underway cover a wide variety of

services, but the dominant general area reported is financial services. This may
of course be due in part to the fact that the service is particularly data intensive
and has hitherto been subject to CCT. The particular aspects covered include
internal audit, benefits, revenues, sundry debtors and budgets and accounts. The
top 15 services being benchmarked are shown in table 7.

Table 7
Service/theme No. of authorities % of
benchmarking respondents
(144)
Finance (various aspects) 64 44.4
Housing 40 27.8
Planning/Development control 18 12.5
Personnel 16 11.1
Environmental Health 15 10.4
Refuse/Waste 15 10.4
Leisure 10 6.9
Building control 9 6.3
Social Services* 9 6.3
All services 8 5.6
Education** 8 5.6
Legal 7 4.9
Libraries 7 4.9
Committee services 6 4.2
Grounds maintenance 6 4.2
* for example, child care and home care **includes catering and school buildings as well as support
services

As the table shows, many of the other services that are commonly under review
are also ex-CCT services or quite small/ and or specialist. Some also have well-
established national networks. This may suggest that authorities are quite
cautious at the moment about extending their projects to major cross cutting
issues and are more comfortable working with existing networks and data sets.
However, there is a small group of (mostly) smaller authorities that is attempting
to conduct benchmarking across all services at the same time.

Level of local authority involvement

Chart 11 shows the frequency distribution of numbers of authorities involved as

partners in individual benchmarking projects. As can be seen, projects typically
involve up to 20 authorities. This is typical of a regional benchmarking club, as
well as audit families.
 Chart 11: Frequency distribution of the number of authorities in
benchmarking projects
175

150
Count of project groups

125

100

75

50

25

0
1-10 11-20 21-30 31-40 41-50 51-60 61-70 71-80 81-90 91-100 100+

Number of partners in project group

Choosing partners

Developing a meaningful and productive benchmarking club depends crucially on

the selection of partners – partly because the group has to remain motivated but
also because, fundamentally, the right comparisons have to be made. At one
level, this will involve assessing the nature and value of services in authorities
that share key geographic, socio-economic and other characteristics.

At its simplest, authorities may become members of regional benchmarking clubs

with neighbouring authorities that may share an outlook, as well as many
characteristics. It can be argued, however, that in some cases, this regional focus
does not cast the net wide enough to be sufficiently challenging. More complex
selection methods require a wider matching of authorities against agreed
typologies – sometimes for individual services – which produce varied ‘families’ of
authorities. For many, an attractive option is to join an established network that
can operate in a manner somewhat akin to a dating agency.

Information from 274 projects shows that 125 (45.6%) involve working with
neighbouring authorities, typically in regional benchmarking clubs that often
have different officer groups for different services.

66 projects (24.1%) involve working with groups established or defined by

external organisations. These organisations include the Audit Commission’s
family groups, the Association of Direct Labour Organisations (ADLO), the Inter-
Authorities Group (IAG), the SARATOGA database and consultants such as Arthur
Andersen and Barony, amongst others. The degree of direct facilitation provided
by these organisations varies and many groups are self-administering once
selected.

47 projects (17.1%) involve working with authorities selected on the basis of key
shared characteristics, researched by the authority seeking to set up the project
(as opposed to being adopted from external organisations, as above).
36 projects (13.1%) have involved other methods for selection of partners, such
as surveys, requests for volunteers, invitation, previously established contacts
and even a simple willingness to pay. Only one authority claims to have selected
partners on a totally random basis.

Involvement of external partners

The government has suggested quite strongly that real challenges and spurs to
service improvement will only be achieved with the involvement of the private
sector and other outside organisations in benchmarking. This may be done
directly but can often be facilitated by a mediator, such as an independent
consultant.

Information has been provided on the possible involvement of non-local

government partners in 150 projects. 47 (31.3%) have external partners,
including the voluntary sector, social landlords, health trusts and other public
sector bodies as well as private sector companies. Private sector involvement is
most common in finance and housing but has been noted in a number of other
services.

BV Reviews – in progress and planned

Authorities were presented with an extensive list of service and thematic
categories around which BV Reviews could be planned. They were asked to
indicate whether reviews for a particular service/theme are now taking place or
are planned for “year 1” of BV from April 2000.

One of the most striking results of the survey is the extent to which respondents
have added to the original list of categories. The database now covers 514
different service and thematic categories for BV Reviews, which indicates a
tendency to plan reviews around very specific and in many cases, quite small
service areas. Furthermore, very few of the categories are in fact thematic (such
as “Sustainability”), indicating that authorities are not, as yet, tending to
approach BV from the point of view of major cross-cutting issues.

The IDeA shares the concern recently expressed by the Audit Commission that
review programmes based on large numbers of small service-based categories
may not be easy to manage. Furthermore, such reviews will be less likely to
provide great scope for innovation and creativity, and may not produce the
necessary strategic lessons or improvement programmes for major issues – as
well as being difficult to audit and inspect.

Not all respondents have yet prepared even an initial programme of BV Reviews,
although many are well on the way to doing so. The survey has produced details
of 1941 reviews in 146 authorities, programmed for the year from April 2000, an
average of 13 per authority. No particular service areas seem dominant at the
moment, although former “CCT” services are well represented, along with
regulatory and development services with a high level of public visibility, such as
Planning and Economic Development.

Appendices 1 and 2 take the form of charts showing the numbers of authorities,
by type in which reviews are under way or planned for all services listed.
Outcomes of completed reviews

Relatively few authorities can claim to have completed an early BV review. Indeed
the concept of a completed review does not sit entirely comfortably with the
concept of continuous improvement as a lynchpin of BV. It may well be better to
talk in terms of reviews that have reached an advanced stage in terms of initial
action on the 4Cs (challenge, consult, compare and compete), with agreed
proposals and actions for the service/theme in question. After this, however,
there will be an on-going process of evaluation, further review and possibly
revised planning. 78 (31.3%) respondents indicated that they have completed an
initial series of “pilot” reviews, and 54 of the 78 have identified a variety of policy
outcomes.

The survey included the possible outcomes listed in the government white paper
on BV, plus a range of Quality Initiatives (QIs) dealt with in a separate section of
this report. The list of possible outcomes is as follows:

 New improvement targets

 In-house service improvement plan
 Renegotiated contract with existing provider
 Independent benchmarking report
 Core in-house service with private sector top-up
 Contracting out
 Competitive tendering of part of service
 Trade sale of service and assets
 Investment in new technology
 Partnership for delivery

It is of course true to say that local government is at an early stage in exploring

all the possible service improvement outcomes of reviews and that other
innovative ideas may emerge in the future.

As chart 12 and the accompanying table show, the majority of respondents have
been working on developing an existing in-house service provider, through plans
and targets. Some have been investing, also, in new technology (see box). Added
to this is heavy use of Investors in People and ISO 9000-quality assurance, dealt
with in a separate section but included on this chart for ease of reference. This
pattern is similar to that outlined in the Warwick Business School evaluation of
the BV pilot authorities.

Appendix 5 shows the number of authorities indicating use of the various service
development policies for the 40 services/themes most commonly listed. The
policy outcomes are divided into two groups: the broadly in-house solutions
(plans, targets, independent benchmarking and new technology) are grouped on
the left hand side of the chart, with solutions involving degrees of externalisation
on the right. As can be seen externalisation is the most common solution only in
printing.
 Chart 12: Percentage of authorities with the following outcomes
of completed reviews
New improvement targets

In-house service improvement plan

Renegotiated contract with existing provider

Independent benchmarking report

Core in-house service with private sector top-up

Contracting out

Competitive tendering of part of service

Trade sale of service and assets

Investment in new technology

Partnership for delivery

Involvement in EFQM

Involvement in ISO 9000

Involvement in Chartermark

Involvement in TQM

Involvement in ISO 14000

Involvement in IiP

0% 20% 40% 60% 80% 100%

Table 8
Outcomes recorded by the 78 All Shire Shire Met London Unitaries
authorities who have completed authoritie Counties Districts Districts Boroughs
at least one review s
Sample size 78 10 39 7 12 10
New improvement targets 45 8 21 5 7 4
In-house service improvement 48 7 24 6 6 5
plan
Renegotiated contract with 13 3 5 0 3 2
existing provider
Independent benchmarking 7 2 3 1 1 0
report
Core in-house service with 11 3 3 1 3 1
private sector top-up
Contracting out 8 1 2 1 3 1
Competitive tendering of part of 10 3 3 1 3 0
service
Trade sale of service and assets 1 1 0 0 0 0
Investment in new technology 21 2 13 2 2 2
Partnership for delivery 19 4 9 1 5 0
Involvement in EFQM 23 5 5 4 4 5
Involvement in ISO 9000 36 5 16 4 6 5
Involvement in Chartermark 30 4 16 2 4 4
Involvement in TQM 2 0 0 0 0 2
Involvement in ISO 14000 5 1 1 1 0 2
Involvement in IiP 50 8 23 6 6 7
Some practical examples of the use of new technology are outlined below:

 One project, known as 'Council Access Point' involves a shire county and some
constituent districts in providing better information on council services in rural
areas (principally through libraries)

 One pilot authority has taken 'Property for People' as its year 2 BV theme,
using technology to develop a 'front office/back office' structure for seamless
one-stop shop provision of services. Technology includes websites, video
conferencing, ATTACH info kiosks and voting handsets for public meetings.

 A London borough and a new unitary council are piloting a cashless school
meals service using swipe cards.

 One largely urban and one quite rural district have projects aimed at
streamlining systems to deal with council tax and housing benefits admin. In
the case of the urban authority, the project is PFI approved.

 A new unitary authority has reviewed its planning and development control
systems and resolved to upgrade systems and to integrate them with a new
corporate GIS system.

 Two shire counties are investing heavily in technology to move away from
dependence on buildings for library services.

 A metropolitan district chose ORACLE for their integrated finance and other IT
systems after review and presentations by various suppliers to a cross-section
of staff.

 A shire county is investing heavily in IT for Highways Maintenance, including a

Clarence Call Centre for defects and new "superservers" to replace existing
server management.

 One shire district is developing a pilot scheme to provide greater access to
health information in isolated rural areas, with funding from the local Health
Action Zone.

Partnerships

25% of respondents have developed a partnership for delivery of one or more

services. This figure may seem low but it should be borne in mind that we are
concerned here with joint delivery of services and not joint commissioning. Many
authorities are developing joint commissioning arrangements not covered here.
The IDeA is beginning a separate, detailed study of models for service
commissioning and delivery and this may assist in producing tighter definitions of
the various models that are now being given the catch-all badge of ‘partnership’.
A number of examples of partnerships have been provided by respondents,
across a wide range of both front-line and support services. The partnerships
cover both single services and groups of services, ranging from a partnership
with a firm to provide internal audit services – with ambitions to build into a
consortium – to a major joint venture company providing 17 front-line services.

Other information provided on partnerships includes:

 A metropolitan district has a ‘Business Link’ partnership for economic

development, focusing on wards with ERDF object 2 status. The main partners
are the local TEC and Chamber of Commerce. There are a variety of funding
mechanisms and the authority employs only 2 staff directly.

 A shire district is developing arrangements with the county and parish councils
and community/voluntary organisations to provide services through local council
centres.

 One shire district suggests that the earlier conversion of its leisure DSO to an
Industrial and Provident Society is producing savings of £60,000 per year.

 Another shire district is piloting a social strategy partnership focusing on

deprivation in the borough. Partners include the shire county, the local health
authority and NHS trust, a private healthcare provider and the local
constabulary, amongst others.

Attainment of Awards/use of Quality Initiatives

It is well recognised (not least by the Cabinet Office Service First Initiative) that
the various awards and systems know collectively as Quality Initiatives have a
major role to play in service development and hence in Best Value.

The attainment and use of such awards and systems in local government has
been monitored for some years by the Local Government Quality Group Quality
Initiatives Survey (QI), previously published by the LGA. However, because of the
close relationship between quality and BV, it has been decided that it is no longer
practical to conduct two separate surveys. A slimmed down version of the QI
survey has, therefore, been incorporated into the BV survey. The survey asks for
information on the use of the following QIs:

 EFQM (Business Excellence) model

 Chartermark awards
  Investors in People (IiP)
 BS EN ISO 9000 series
 BS EN ISO 14000 series
 Total Quality Management (TQM)

For all the systems covered, except IiP, the survey asks authorities, if possible, to
give a rating of the effectiveness of the system – ‘ineffective’, ‘partially effective’
or ‘effective’. For IiP, the survey asks authorities to show whether they are
working to commitment; have gained commitment; have had IiP awarded; or
have had a reassessment awarded.

The old QI survey asked authorities to provide information on activity across a

range of traditionally defined departments and functions. The new survey asks
for information on use of QIs across the range of service and thematic categories
that authorities have defined for their BV review programmes. It is not possible,
therefore, to make comparisons with the previous survey. Respondents were not
asked to confine their responses to services/themes for which early BV reviews
have been completed. IiP is clearly the most common QI overall, with 76% of
respondents at some stage of the process.

Chart 13 and accompanying table show the percentage and number of

respondents to this part of the survey involved in QIs other than IiP, banded
according to perceptions of effectiveness. Chart 14 and accompanying table give
similar information for IiP, banded according to the stage of the process that
authorities have reached.

Chart 13: Percentage of authorities using awards

schemes/quality initiatives

ISO 14000

TQM

Chartermark

ISO 9000

EFQM

Chart
0% 14: Number
20% of authorities
40% participating
60% in IiP
80% 100%

EFQM ISO 9000 Chartermark TQM ISO 14000

Involved in IiP 191
Not participating 180 118 160 237 230
Too early to say 42 35 33 5 14
Reassesment 34
Effective awarded 17 72 43 3 5
Partially effective 9 19 11 3 0
Ineffective
IiP Awarded 1 62 5 2 1 0

Commitment gained 49

Working to commitment 46

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Appendix 6 shows the number of authorities attaining awards and using QIs for
the 40 services most commonly listed.

Benefits/problems experienced in completed BV Reviews

Those respondents who had completed at least one BV review were asked for
views on the effectiveness of the review process across a variety of indicative
themes, as follows:

User satisfaction
Quality of service
Cost effectiveness of service
Equality of access
Innovation in service delivery
Working partnerships
Staff satisfaction
Public understanding
Exchange of good practice

Clearly some of these indicators are more readily measured by research than
others are, although all will be to some extent a matter of subjective opinion.

Chart 15 shows the opinions of the 50 authorities with completed reviews that
answered the question. This is of course a fairly low sample and the results show
that, for most indicators, many respondents had no particular views. Where views
are expressed, they are usually positive, although, a handful of respondents have
worries about staff satisfaction. The strongest evidence and perceptions of
improvement are for cost effectiveness and exchange of good practice.
 Chart 15: Number of authorities observing the following
results of completed BV reviews

User satisfaction 26 22 2

Quality of service 29 21 0

Cost effectiveness of service 34 16 0

Equality of access 10 39 1

Innovation in service delivery 33 15 2

Working partnerships 23 27 0

Staff satisfaction 21 23 6

Public understanding 14 35 1

Exchange of good practice 31 19 0

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Improved No comment Worsened

Content:
1. The EU Strategy for Sustainable Development: after the Gothenburg Summit
2. Indicators: situation October 2001
3. EEB, FNI and FOE's comments and proposals; for Barcelona and after

1. The EU Strategy for Sustainable Development: after the Goteborg Summit

In June 2001 the European Council agreed on a strategy for sustainable development with four
priority areas: climate change, transport, public health and natural resources. These issues are to
complement the social and economic aspects of sustainable development, which are being dealt with
in the so-called “Lisbon process” of Spring Summits.

The Goteborg European Council asked the Commission to evaluate the implementation of the
Sustainable Development Strategy (SDS) in its annual synthesis report, on the basis of a number of
headline indicators, to be agreed by the Council in time for use for the European Summit in Barcelona
in March 2002.

In the framework of the Lisbon process, started in 2000, the Commission had already
produced 35 so-called ‘Structural Indicators’ for use in synthesis reports. These cover the issues of
employment, innovation, economic reform and social cohesion with each 7 indicators. 7 other
indicators are of a more general economic character. One of these is an indicator for the energy-
intensity of the economy. The others bear no relationship to environmental issues. Almost each
indicator consists of a subset of sometimes up to 7 different ‘sub-indicators’. It is questionable
whether these 35 indicators really relate to social and economic sustainability. “Lisbon” took a rather
short term horizon and some goals are rather specific 1.

The additional indicators have to be prepared for approval by the December 2001 Laeken
Summit. If the Environment Council wants to play a real role in its formulation, it needs to have a
proposal on the table at its October 29, 2001.

Indicators: situation October 2001

2.a. Indicator development from 1999 on:

Since 1999, the European Commission, the European Environment Agency, Eurostat and the
EPRG (Environmental Policy Review Group, composed of senior officials of EU Environment
Ministries and DG Environment) work together on so-called headline indicators. The Commission
presented a working document ‘Report on Environment and Integration Indicators’ 2 to the Helsinki
Summit in December 1999. But progress has been slow so far, and a first set of 10 indicators lacks
final agreement so far and is therefore still not officially published. However, most of these indicators
can be found in chapter 8 of the EEA “Environmental Signals Report 2001”.

End of 1999, the European Environment Bureau (EEB) published the position paper "Ten
Benchmarks for environmental policy integration’ which presents and defends a choice for a limited
set of indicators, connected to targets and timetables.

On the 9th July 2001, the EEB and the Belgian Presidency organised a conference to discuss the steps to
take after the Goteborg Summit. In his speech at the this conference, EEA's Director Jimenez Beltran presented
the work of his organisation on 11 environmental headline indicators (see table below), having great resemblance
to the ones the EEB as well as the Commission had proposed. The set up is adapted to better match the 6 th
EAP.Programme (6EAP).

1
. The full list of the Lisbon socio-economic indicators can be found at the Eurostat website:
http://europa.eu.int/comm/eurostat/Public/datashop/print-product/EN?catalogue=Eurostat&product=1-structur-
EN&mode=download

2
SEC(1999)1942 final
 Env
ironm ental Issue Indicator

CLIMATECHANGE

HeadlineIn
dica tors 1. ClimateChange Emissionsof greenhousegases 

Ke
ys NATURE&BIODIVERS
ITY

2. Nature&Biodiversity Designated“Special ProtectionAreas” 

Goodprogress 3. Air Quality Air pollution-acidifyingpollutants 
towardsm eeting
ENVIRONMENT&HUMANHEALTH
objective,
4. Air Quality Air pollution-groundlevel ozoneprecursors 
improvem ent
5. UrbanAir Quality Emissionsof air pollutantsinurbanareas 
Nosignificantchange, 6. Water Quality W aterpollution-concentrationsofnitrate- 
static nitrogenandphosphorusinlargerivers

7. Chemicals Productionof hazardouschemicals 

Movem entaw ayfrom WASTE&RES
O URCES

objective, declining 8. Waste Municipal andhazardouswaste 

9. ResourceUse EnergyConsumption 
? Insuffi
cientdata 10. Water Quantity Europeanw
ater abstraction 
11. LandUse Landuse- arableland, perm
perm
anentgrassland,
anentcrops, forestland, builtupareas,

lengthofroadnetw ork

The "Cardiff process" on environmental policy integration, requires indicators on sectoral

integration, which could be used as well. However, so far only for transport a system is in place and
functioning (TERM).

Eurostat has just published for the EU the 59 indicators for sustainable development that have
been agreed in the UN3. They should be considered for use as well, eventhough they have been
developed for a different policy context.

Currently, the Commission as well as the Belgian Presidency are working

on a list of indicators to propose to the Laeken summit. We as environmental
organisations are concerned that the Commissions proposal will not bring real
balance between the existing social and economic dimensions on the one hand
and the environmental dimension on the other. About the Presidency proposals
we are not informed so far.

The intelligent selection of indicators requires a linkage with political objectives, the ability to
monitor pressures, impacts or even the resulting situation for the main areas of concern, as well as to
assess policy efficiency. For guidance we will look at the political priorities set by the Goteborg
European Council and the 6EAP.

Goteborg conclusions:
3
"Measuring progress towards a more sustainable Europe – proposed indicators for sustainable
development, Eurostat, 2001
 27 result oriented objectives can be found in the Goteborg Council Conclusions, most of
which inspired by the Commission Communication on the EU Sustainable Development Strategy
(SDS):

General objectives
industry sectors (e.g. energy and transport sectors): development and wider use of new
environmentally friendly technologies
decoupling economic growth from resource use
getting prices right , reflecting true costs and provide incentive for consumers and
producers
Due account of energy, transport and environment in the 6th Framework Pr. R&D
Sustainable Development as objective in bilateral development cooperation, international
organisations and agencies
Trade and environment policies to be mutually supportive
the 0.7% GDP target for development assistance

Climate
ratify Kyoto by end of 2001
deliver Kyoto targets (8% red. 2008-2012)
climate objective 6 EAP (70% red. long term)
12 % renewable energy by 2010

Transport
sustainable transport policy in place
tackle rising traffic volumes and congestion, noise and pollution
encourage use of environmentally friendly modes
full internalisation of social and environmental costs, first measures in place by 2004
significant decoupling of transport growth and GDP
shift from road to rail, water and public passenger transport

Public Health
chemicals policy in place by 2004
no significant impact on health and environment by chemicals within one generation
(OSPAR and European Commission say 2020)
Action against outbreaks of infectious diseases and resistance to antibiotics
European Food Authority and Food Law Regulation in place

Natural resources
sustainable use of natural resources
sustainable levels of waste
CAP to encourage : = healthy high quality products = env. sust. Production methods =
organic production = renewable raw materials = protection of biodiversity
Fisheries policy to adapt to level of available resources
IPP aimed at reducing resource use and environmental impact of waste
Halt biodiversity decline by 2010
 6th Environmental Action Programme

The 6EAP identifies four priority areas:

 Climate Change
 Nature and Biodiversity
 Environment and Health, Quality of Life
 Natural Resources and Waste

The Programme stipulates that environmental objectives should be achieved within ten years.
Seven strategies are to be developed by the Commission in order to establish further quantifiable and
time-bound targets. These strategies cover:
air quality
marine environment
resource use
pesticides
waste recovery
soil protection
urban environment4

The proposed objectives in the 6EAP are phrased in a very general way, leaving the choice of
more precise targets to the thematic strategies. (See Annex 1 for further information).
In short, the most important objectives of the 6EAP are:
reduction of greenhouse gas emissions
halting the loss of biodiversity inside and outside Europe
no harmful effects of pollution on human health and the environment
sustainable urban development
increase resource efficiency, decoupling resource use from economic growth

The headings of the main areas of the SDS are slightly different from the 6EAP. Notably,
biodiversity is grouped under natural resources in the SDS while this is a separate area in the 6EAP.
Health is a separate area in the SDS and not so much in the 6EAP. A combination of these headings
will be used further on to compare and describe the various objectives and indicators.

3. EEB, FNI and FOE's comments and proposals for Barcelona and after

3.a. General comments

The Goteborg Summit simply assumed that the conversion from the Lisbon process to monitoring
the Sustainable Development Strategy can be done by adding environmental (and health) indicators to
the existing social and economic ones, despite the fact even that the social and economic ones had
been chosen for somewhat different reasons and different time horizons.

On the other hand, the European Council also asked the Council(s) “to examine the proposals in
the Commission Communication, in particular its proposals for headline objectives and measures, as
well as the 6th EAP and the sector strategies for environmental integration”.
This means that objectives and measures have yet to be decided while the indicators are already being
chosen. As objectives and indicators (benchmarks) are ideally closely linked and there is the time
constraint for the Barcelona Summit, the indicator set agreed in the coming months is going to be a

4
added by Council and EP in first reading, June 2001
provisional one. It at best will end up as a mixture of already available good environmental indicators
for sustainable development and some interim indicators where there are no data available for better-
suited ones.

Choice of the main areas

Comparing the objectives from the Goteborg Conclusions on Sustainable Development and the
6EAP to the main areas of concern chosen earlier by the EEB in its Ten Benchmarks, one can conclude
that:
a) the political guidelines match very well with the benchmarks proposed by the EEB.
b) the natural resources items in the SDS as well as in the 6EAP are covered, although land
use is still in an early stage of recognition as an area of concern, with varying approaches
(spatial planning and transport, as well as land take).
c) the only items which are not explicitly included in the SDS are air and water quality.

We believe that air and water quality, even though not mentioned in the SDS or 6EAP, relate
directly to health, biodiversity and the protection of natural resources. As maintenance of their good
quality is a crucial pre-condition for a healthy biosphere, they should be included explicitly. Especially
air quality relates directly to human health, with more and more evidence coming forward of the
amount of European victims of air pollution.

We support that in the SDS, chemicals and food quality and safety have been included under
health, but we find it surprising that the SDS does neither have a general health objective nor at least a
specific reference to air quality and health. For a SDS that should appeal to the public, the health
chapter is too meagre in this respect. One should note that in the UN Sustainable Development
indicator system, a specific set of health indicators is put as a sub-category of the social dimension
(subthemes: nutrition, illness, mortality, sanitation, and healthcare delivery). We conclude that this
aspect, which has also been omitted in the present social and economic set of the EU indicators,
deserves separate attention.
Experts from the European Public Health Association suggested us a general indicator for health, to be
included in the social dimension: ‘life expectancy without any disability’. In addition, more specific
aspects of health, some of which are linked to environmental quality, need to be monitored as well, for
instance with respect to respiratory diseases. In any case, the health issue in a broad sense needs
separate attention and elaboration as an important chapter in the social dimension of sustainable
development. It will do justice to the concept of sustainable development and help build public
support.

Proposals for Barcelona

As EEB, FNI and FOE, we want to bring in a set of indicators that are inspired by the
beforementioned EEB position paper ‘Ten benchmarks for environmental policy integration’. Each
indicator is linked to an objective and a timetable.
The Ten Benchmarks describe and compare the actual and the desirable situations, in order to evaluate
the effectiveness of strategies and policies. In this case, both long-term targets that describe the
sustainable situation as well as specific policy targets for the short term are required. For some of the
issues policy objectives have already been decided, but even where this is not so, one can still measure
progress on the basis of sustainability objectives proposed by scientists or NGOs.

Generally speaking, the headline indicators should describe the sum of the pressures, impacts
or the resulting situation for the main areas of concern. In addition, for the sectors with the biggest
overall impact – energy, transport and agriculture - we propose to select for each a dominating aspect
as headline indicator that shows some of their potential impact on health and environment.
 We are absolutely aware of the different constraints imposed on the headline indicator
selection, knowingly political priorities to be followed, data availability, indicator methodology and
time pressure. Therefore we propose for each of the issues the ideal indicator that we consider most
appropriate to be chosen, and in case of temporary technical problems an interim indicator marked in
italics, which we consider being a good alternative for this moment. However data collection and
development of methodology for the ‘ideal’ indicator should start as soon as possible.

Data should be presented for the EU as well as for individual countries and
also be presented in per capita numbers where applicable, for better comparison
between countries and regions.

EEB, FNI, FOEs 10 headline indicators for sustainable development:

.

INDICATOR TIMETABLE FINAL TARGET

CLIMATE

Total CO2 and five other
greenhouse gas emissions
(CH4, N2O, HFCs, PFCs,
SF6)
Climate change
Short term: full implementation of
“Kyoto”+) Medium term: 30% to
40 % reduction should be reached
by 2020, compared to 1990 levels.
By 2030 more than 70% reduction of
current greenhouse gas emissions. (As
indicated in 6th EAP)

Interim indicator: CO2 and

two other greenhouse gas
emissions (CH4, N2O).

Energy sector

% of green energy in total 12% by 2010 (agreed EU target) 75% or more depending on remaining
energy consumption greenhouse gas emissions by 2030

TRANSPORT

Total passenger- and ton-
kilometres travelled, related
to:
- GDP
- Total energy use by
transport sector
Transport sector
Short term: the necessary pre-
conditions to reverse the current
trends need to be in place by 2004,
decoupling transport growth from
GDP growth.
Within 30 years stabilisation of total
distances (pkm/tkm) travelled and
halving of total energy consumption
(level 2000)

+
PUBLIC HEALTH

Chemicals

An index of used
hazardous substances
weighted according to
human and eco toxicity
(has yet to be developed)
Medium term: halve consumption By 2020 no human made releases
by 2010 compared to 1995. (existing obligation under OSPAR and
HELCOM)

Interim indicator: % of the

OSPAR chemicals still on
the European market for
unknown or open system
application.
Emissions of 5 pollutants
(SOx, NOx, NH3, VOCs,
PM)
Interim indicator: emissions
of 4 pollutants (as long as
data for PM are
incomplete)
Air quality
Medium term: reductions of 84%
for SO2, 55% for NOx, 29% for
NH3 and 60% for VOC compared
to 1990 levels by 2010. PM: more
research needed; current
knowledge indicates a 80%
reduction of PM 2.5 by 2010.
Good air quality within 30 years. The
critical loads for pollutants and the
WHO standards for air pollutants with
respect to human health should not be
exceeded any more.

NATURAL RESOURCES

Biodiversity
Biodiversity index based on Immediate Effective A halt to habitat decline and the
genetic and habitat variety implementation of the EU extinction of species in the EU by 2010
(has yet to be developed) Biodiversity Strategy (agreed by Gothenburg summit)

Interim indicator: % of
original indigenous species
extinct or under threat

Pesticides usage (active
ingredients weighted
according to human and eco
toxicity)
Agricultural sector
Short term: 40 % reduction in the No use of pesticides that are not allowed
treatment frequency of pesticides for organic farming by 2020
within 10 years

Interim indicator:
treatment frequency
excluding those pesticides
agreed for organic farming
methods
Land use

Amount of built-up areas See final target Net stabilisation of non built-up areasby
compared to total area. 2005 allowing for some mitigation and
(Including total area used by exchange between different areas
the EU outside EU)

Total material use (Total
Material Requirement) and
waste production incl.
percentage of reused or
recycled material.
Material use
Short term: stabilisation of waste
generation at 1985 levels (an
actual reduction) (existing 5th EAP
objective)
Within 30 years a Factor 10 lower
primary non-renewable material use,
with material recycling and re-use above
95%, resulting in untreated waste going
to landfill towards 0.

Interim indicator: waste

production with recycling
percentages.

Percentage of all water
bodies reaching the
good/high status or in the
case of heavily modified or
artificial water bodies
good/maximum ecological
potential and good chemical
status as defined in the
Water Framework Directive
Water quality
Immediate compliance with and
enforcement of the Water
Framework Directive, including
immediate enforcement of the
non- deterioration principle.
All water bodies reaching the good/high
status or in the case of heavily modified
water bodies good/maximum ecological
potential and good chemicals status as
defined in the Water Framework
Directive by 2015

EXPLANATIONS

1. Greenhouse gases: there seems to be general agreement on the relevance of this

environmental indicator. Data for the 3 additional greenhouse gases can be available
quite soon.

2. Energy sector. This sectoral indicator is not indispensable, as greenhouse gas

emissions will reflect this issue to some extent. However, 12 % renewables by 2010 is
one of the few concrete EU targets. The choice of this indicator is also in line with the
principle to include crucial sectors in the headline indicator system.

3. Transport sector. Volume of transport is a major driving force for the many
environmental and quality of life problems that are caused by the transport sector. The
relation to economic growth and energy use adds additional information, relevant in
relation to EU policy objectives.

4. Chemicals. Tens of thousands of chemical substances are being used in Europe. We

believe that this is an issue of high importance, especially when considering bio-
 accumulation, the delays in visible effects, and the complexity of interactions of
cumulated products and metabolites in the environment and living organisms. For the
large majority of chemical substances basic data on volumes, hazards for humans and
nature are lacking. It will take one or two decades before this knowledge is collected,
which is partly because of inadequate policies slowing down appropriate toxicological
studies. Within the next years, increased efforts should be made to fill the data gaps
required for an ‘ideal’ indicator that is combining usage figures with a weighted factor
for harmfulness. For the interim period, we propose as indicator the use of the 400
hazardous substances, which have been listed under the OSPAR convention for
phasing out by 2020.

5. Air quality and emissions. This is an important indicator for environment and health.
Particulate matter (PM) is an issue of growing concern for human health and should be
included as soon as possible. Regulation on air emissions is a typical EU policy
domain where some but not yet sufficient progress has been made.

6. Biodiversity. As scientific knowledge has not progressed enough to permit an

estimation of the biological diversity and its characteristics, we propose as an interim
solution to use the % of original indigenous species extinct or under threat Species
relate most directly to biodiversity, appeal to the public and are vulnerable to all sorts
of influences that are and can be changed by EU policies (site protection, species
protection, land use, air, water, agricultural practices, etc).

7. Agricultural sector. We believe that the pesticide use in agriculture would be a good
choice to represent the trend towards a more sustainable agriculture in the EU. As
regards pesticides we are confronted with the same problems as already mentioned in
the previous comment on chemicals- i.e. complexity of the issue and limited scientific
knowledge. As the variability in harmfulness per kg of active ingredient is large, use in
kilograms as such is not the best indicator. Therefore, pesticide risk indicators, based
on the best pesticide use evaluation, and on acute and long term toxicity and eco-
toxicity, need to be developed at EU level, based on OECD work, and to be
continuously revised according to scientific progress.
As an interim indicator, we propose monitoring treatment frequency. Literature shows
that this indicator reflects the environmental pressures better than simple usage in
kilograms of active ingredients, whereas the necessary data are available. The
indicator should apply to pesticides that are not explicitly allowed in organic farming.

8. Land use. Natural areas and fertile soils are basic natural resources, and construction
activities diminish these resources with an alarming speed. In the light of the EU's
international objectives for Sustainable Development and the 6EAP, making a specific
reference to the global carrying capacity, this indicator could be extended to account
for all kinds of European land use, including the area of land used outside Europe but
serving the European economy. First target of this extended land use indicator is to
analyse the potential impact of the EU on the global carrying capacity (including
biodiversity) and investigate potential policy measures.

9. Material Use. A key aim of sustainable development in Europe must be to produce

the same amount of well being with less resources. The throughput of materials is at
the core of most environmental problems. A decrease of resource flows will reduce
environmental pressures and lead to higher efficiency (factor 4 and 10). The total
 amount of materials used is therefore one of the key indicators for sustainable
development.
We propose to use ‘Total Material Requirement’ as a headline indicator. TMR
measures economic activity in physical terms. It was developed in order to monitor
material flows on the national level and has been calculated by several EU member
states already. It is currently considered by the OECD Environment Policy Committee
as a key indicator in their waste prevention strategy (for details see annex II).TMR is a
quantitative measurement of the total resources used and therefore of course lacks a
qualitative component. This does however not speak against it, since qualitative
aspects are covered by other indicators, such as indicators on hazardous substances
(see our proposal for an indicator on chemicals). TMR will allow us to understand
how efficient we are using major resources such as oil, coal, steel, aluminum, wood
etc. and such fulfils an important function in measuring the sustainability of our
economy and society.
10. Water quality. This proposal reflects the new Water Framework Directive which has
entered into force recently, and takes a comprehensive approach as water life will
reflect the overall result of good water quality and quantity policies.

Further comments:

1. Carrying capacity/Ecological Footprint. The 6EAP and the SDS include general
objectives with respect to global sustainable development and carrying capacity. To this
regard, the European Parliament has proposed to use the ecological footprint as an
indicator for the SDS. We have not included the footprint as such in our present proposals
but wish to underline that the indicators for greenhouse gas emissions, material use and
land use can reflect these concerns. Also for that reason, an important addition is the use
of per capita figures where applicable, as this enables comparison with other countries and
appeals to a wider public. We will need all figures for the EU total as well as for separate
countries.

2. Sectoral Headline Indicators. In our proposal, we have 7 environmental indicators and 3

sectoral ones. In fact, the 3 sectoral headline indicators should be covered under economic
headline indicators and should certainly not limit the number of indicators that refer to the
environmental dimension. In the UN system the indicators for energy use, material use,
waste generation, renewable energy sources and distances travelled are part of the
economic dimension.
3.d. After Barcelona

As already mentioned previously, for the environmental dimension we propose for each
important issue one representative headline indicator. In case of technical difficulties as data
availability or lack of scientific knowledge we suggest an interim indicator which we believe
to be appropriate to cover the issue on a temporary basis.

As regards the social and economic indicators adopted at the Goteborg Council it is necessary
to evaluate these with respect to their relevance for sustainable social and economic
development, as they have not been developed for being sustainable development indicators,
and being in some cases too specific and short term oriented. Moreover the issue of health
indicators will still need to be developed further.
We need a basic set of social, economic and environmental headline indicators that is
sufficiently comprehensive and balanced and does justice to the international understanding of
sustainable development as described in the Rio Declaration and Agenda 21. In this debate
also attention should be paid to the question how to judge the total and how to evaluate
possible opposite trends shown by different indicators
.
Last but not least the EEB, FoEE and NFI wish to underline the importance of clear policy
objectives for the short and long term, as an appropriate set of indicators is not an end in itself
but a tool for sustainable development.
ANNEX I: The proposed objectives in the 6th Env. Action Programme….
“The Programme aims at:
– emphasising climate change as an outstanding challenge of the next 10 years and
beyond, and contributing to the long term objective of stabilising greenhouse gas
concentrations in the atmosphere at a level that would prevent dangerous
anthropogenic interference with the climate system. Thus a long term objective of
a maximum global temperature change of 2° Celsius over pre-industrial levels
and a CO2 concentration below 550 ppm shall guide this Programme. In the
longer term this is likely to require a global reduction in emissions of greenhouse
gases by 70% as compared to 1990 as identified by the Intergovernmental panel
on climate change;
• protecting, conserving, restoring and developing the functioning of natural
systems, natural habitats, wild flora and fauna with the aim of halting
desertification and the loss of biodiversity, including diversity of genetic
resources, both in the European Union and on a global scale;
• contributing to a high level of quality of life and social well being for citizens by
providing an environment where the level of pollution does not give rise to
harmful effects on human health and the environment and by encouraging a
sustainable urban development.
• better resource efficiency and resource and waste management thereby
decoupling the use of resources and the generation of waste from the rate of
economic growth and a shift to more sustainable production and consumption
patterns aiming at significant gains in resource efficiency.”
(…)
“The production of this information will be supported regular reports from the European
Environment Agency and other relevant bodies. The information shall consist notably of:
• headline environmental indicators,
• indicators on the state and trends of the environment,
• integration indicators.”
(…)
“The Commission shall evaluate the progress made in implementing the programme together
with associated environmental trends and prospects in the fourth year of operation. This
should be done on the basis of a comprehensive set of indicators. The Commission shall
submit this mid-term report together with any proposal for amendment that it may consider
appropriate to the European Parliament and the Council.”
ANNEX II: Total Material Requirements (TMR) and the Material Input Per Unit of
Service (MIPS)
Traditional environmental politics has focused on regulating the output side of the economy,
influencing the quality and quantity of the outputs our economy releases into the ecosphere with
regulations usually aiming at qualitative characteristics like toxicity etc… Actually it is not the scarcity
of resources that constitutes environmental problems, but their use, the physical throughput of our
economies. Material flows are therefore a proxy for the totality of the unspecific environmental risks
from human activities.
Material flows are best measured at the input side of the economy where their number as well as the
number of entry gates is limited. Thus here regulation and economic incentives can work more
efficiently and less bureaucratically than today. The number of materials entering our economic
systems is limited to more or less to 50-100 abiotic substances, including energy carriers, output
control has to handle about 100 000 substances from the chemical industry alone, each of which
interacts in various ways with the ecosphere and the other substances emitted. Furthermore, for an
economy as f.i. Germany, the entry gates to the anthroposphere are limited to 20000, the exits are
beyond any control.
The core categories for the analysis are materials, energy and land, which each can be split up into
environmentally relevant subcategories, such as air, water, soil, biotics and abiotics for materials;
fossil, renewable and nuclear for energy; or built-up, pasture, and agricultural land for land use.
The material intensity of products and services can be expressed as MIPS, the material input per unit
of service, and as TMR, the total material requirement on the macro level, an important element in
physical input-output tables.
To become operational the quantitative targets set must be based on a standardized methodology,
delivering meaningful, transparent and replicable information about the total material brought about
by a certain product and service. For this purpose the resource efficiency measure MIPS was
introduced. MIPS relate the material inputs necessary for the production, distribution, use,
redistribution and disposal to the end-user service provided by any given good. This allows for
comparisons among different yet functionally equivalent products. The TMR measures economic
activity in physical terms, thus complementing economic information such as GDP by providing a
more complete view of size and scope of an industrial economy. The TMR can also be considered an
approximate indicator of the potential pressure exerted by an economy on the global environment,
while further analysis will be required for this specific purpose.
In summary, material intensity and flow accounts are analytical tools to illustrate how much material
and energy flows through the economic system at the sectoral, national, regional, and international
levels. These tools are aimed at quantifying efficiency of economic operations, such as determining
the material and energy flows per unit of service (MIPS); at addressing equity questions, such as on
how much material and energy is used by whom and how it is distributed; and at illustrating global
patterns in provenance and movement of material and energy.
Based on the MIPS concept, the indicator TMR (Total Material Requirement) was developed in order
to monitor material flows on a regional and national level. On this basis joint international
comparative studies have been undertaken by the World Resources Institute, the Wuppertal Institute,
The Nederlands Ministry of Housing, and the Japanese National Institute for Environmental Planning
(published in 1997).
Until today TMR has been calculated for several of the EU Member States (as Germany, the
Netherlands, Austria), as well as for the USA and Japan. In the meantime, the TMR has been accepted
by the UN DESA as one of the core indicators for consumption and production patterns, to be
integrated into the CSD indicator program, and the OECD Environment Policy Committee is
considering to use it in their Waste Prevention Strategy.
As a conclusion one can say that TMR is neither the perfect indicator, while definitely a widely used
one. It is a rough quantitative measurement of resources use in our economies, and lacks of course the
qualitative component. This shall however not be a reason for deselecting it as a monitoring tool for
resource use, as the qualitative aspects can be complemented through other specific indicators.
For an use on the European level there would be only the need to standardize the methodology, and
complement the data which do already exist for a large range of currently used products.
Much of the text has been quoted from Spangenberg, J.H., Hinterberger, F., Moll,
S. and Schutz, H. (1999)’Material flow analysis, TMR and the MIPS concept: a
contribution to the development of indicators for measuring changes in
consumption and production patterns.’ Int.J.Sustainable Development, Vol.2, No
4,pp.491-505.

6. Tasks: Leading, Operations Management

You should read and understand to following headlines:

This lecture appends other topics to the famous management functions. Power fields of management claimants,
planning, organising, and control, were discussed briefly already in previous chapters. Leading, and personnel
management as remaining management functions are combined with marketing and operations management
describing the area of management functions application.

Lecture 5 describes how management functions can increase motivation of employees or volunteers. The
knowledge from previous chapters is applied in the beginning of this lecture. The leadership chapter is enriched
by definitions only because all other topics will be discussed in more detail as independent courses. Therefore,
personnel management, marketing and operations management review the list of answered questions only.

Leadership
When you have completed this chapter you should be able to:
1. Discuss the difference between leadership and management
2. Distinguish among the different theories of leadership that are based on characteristics of the individual
3. Distinguish among the different theories of leadership that are based on interaction with the environment
4. Discuss the implications of leadership for tasks of managers, for example:
- compare and contrast the style of leadership in a strongly hierarchical organisation
- explain the role of leadership
- explain the meaning of leadership cycles in the development of an organisation
- explain the respective leadership roles that could be played by various actors in the C.N.C. at different
stages in its development.

Leadership should implement management decisions of previous lectures. Do you remember for example on:
- Synergy Effect = f(complexity, transformation, selection) – lecture 1
- Model of change and its stages = unfreezing + transformation + re-freezing – lecture 2
- Offensive and defensive strategies – lecture 3
- Media Richness Theory and Theory of Information – lecture 4
Management goals are like a chain. Each ring of the chain initiating the change can merge at least with one of
two other rings representing different management approach. This lecture is not different in this sense. The
principal difference we are supposed to solve is whether to eliminate excessive, and often disruptive “well
intended”, or be happy with “minimal squeezed” desirable activity of staff.

|----------------------------------------------------------|----------------------------------------------------------|
+ -
Active, highly motivated - offensive Passive, respecting rules – defensive
Clean up not demanded results Stimulate, punish, motivate, satisfy!

Question: How high can be “minimal squeezed” desirable activity of staff?

Assignment:
1. Select type of roles (pensioner, student, employee, manager, CEO) and assign them proper motivational
theories (Maslow, Hertzberg and others)
2. Select organisational structure reviewing such options like project management, family business, small and
medium enterprise of North, state interventions to the regional diversity and development in South Italy,
Swedish model, Amway model, entrepreneurs support and employees requalification model of OECD
3. Protect (t-1) and prevent (t+1) selected organisational structure. Remember the lecture 1 where synergy =
f(complexity t-1, transformation t+1, selection)
4. Define a content of actions as planning, organising, leading, personnel management, and control. Think how
employees will transform = f (scepticism + personal development)! Think how powers will succeed:
complexity = f (local vulnerability due to historical power fields in resources, markets, improvements and
responsibility)
Further the management functions are described. Try to find how to use natural motives for purposes of
organisation, or how to change organisation to be able to use motives of employees.

Definitions
Leadership = The process of inspiring and empowering others to voluntarily commit themselves to achieving the
leader’s vision
Authority = The right to make decisions and direct activities as a result of a person’s position in the organisation
Informal leader = A leader whose leadership activities are unrelated to his or her position in the organisation
Formal leader = A leader whose leadership activities are directly related to his or her position in the organisation
Initiating – structure behavior = Clearly defining the role of leader and follower so that everyone knows what is
expected
Consideration behavior = Demonstrating concern for followers and trying to establish a friendly and supportive
work climate based on mutual trust
Task - centered leader behavior = An effort to lead employees by focusing on work and how well employees
perform
Employee - centered leader behavior = An effort to lead employees by developing a cohesive work group and
ensuring employee satisfaction
Charismatic leadership = Leadership based on the leader’s seemingly magical charm (charisma) that draws
others to follow
Attribution model = A leadership model that assumes a leader’s ability to lead and followers’ perceptions of the
leader’s effectiveness arise from the attributions they make
Contingency theories = Theories that také into account how different kinds of leaders or leadership behavior are
more suited to some followers and situations
Last preferred coworker (LPC) scale = A questionnaire asking leaders or managers to describe the characteristics
of the kind of person with whom they can work least well
Path – goal theory = Theory that asserts leadership is a process of making valued outcomes available, then
coaching and directing employees to help them obtain those outcomes and to persuade them they can succeed
Leader – member exchange theory = Leadership theory that describes leadership in terms of exchange
relationships established by the leader with individual employees. Vertical – dyad model focused on two people
who interact with one another involving leader and each follower. Relationship is based on members respecting,
trusting and liking one another.
Life cycle theory = Theory that leaders should choose a leadership style that matches the readiness of the
followers: telling, selling, participating, and delegating
Decision tree model = Theory that a leader’s effectiveness is influenced by his or her methods for making
decisions
Transformational leadership = Radically changing followers’ ways of thinking so that they unite in carrying out a
common purpose, raise their aspirations, and do more then they had originally intended
Transactional leadership = Inspiring commitment to achieve objectives in exchange for something of value
Substitutes for leadership = Theory identifying situations in which traditional leadership behaviors are irrelevant
Servant leadership = Articulating a vision for the organisation and giving employees what they need to carry out
that vision

Leadership styles
Exercise: How would you categorise, in one word, each of leadership styles? How effective they would be?
Answer:
- dictatorial or authoritarian
- pasive and often chaotic
- democratic.
Exercise: Which of the following words is more likely to describe characteristics of leaders in hierarchical
organisations or flat organisations?
Hierarchical Flat
1. Flexible
2. Motivator
3. Team builder
4. Sensitive
5. Aggressive
6. Patronising
7. Handler
8. Non-listener

Other leadership topics:

Leadership and teamwork
What is involved in leadership?
Who gives leadership?

Feedback:
First, we looked at various styles of leadership, authoritarian, passive and democratic, and how they might be
appropriate in different organisations. In particular, we identified that an authoritarian leader requires a
hierarchical management structure, whilst democratic organisations tend towards ‘flat’ structures.
We emphasised th importance of the team and requirement for both expert and functional roles within it. By
using techniques such as the Belbin typology we saw how we might identify team members who, by exhibiting
certain characteristics and strengths, can be assigned particular roles.
Leaders need to be motivators and team builders as well as helping the team work together effectively towards
the overall goals. They also have to be able to initiate change. Indeed there may be a different leadership style
required for different phases of the growth cycle.

Personnel Management Case: Member relations in C.N.C.

When you have completed this section you should be able to:
- analyse the contributions under which the stafing structure changes in C.N.C.
- list typical context of a contract of employment
- distinguish between the relationship of managers / workers and customers in a conventional customer service
and in a C.N.C..

The role of volunteers

Exercise: There are members, volunteers and beneficiaries in both C.N.C. and charities. Draw arrows on the
diagram below to represent various inter-relationships. (Consider ‘members’ of charities as the donators.)
Answer: I am sure you will have produced something similar to following Figure. C.N.C. also rely heavily on
volunteers, but the volunteers are also the members, and hence the beneficiaries.
In a charitable organisation, there are fewer interconnections, i.e. the ‘members’ (donators of funds) are different
from volunteers who are different from beneficiaries.
C.N.C. __________________
| Members |
Volunteers // \\ Beneficiaries
|_________________|
Charities

Members -------------------- Volunteers ------------------ Beneficiaries

so, we can see that volunteers in C.N.C. have a self-interest in volunteering - their participation as volunteers
helps to strengthen the C.N.C., from which they benefit as members / customers.

But the benefit is not immediate or inevitable. It may take months or even years of fairly constant voluntary
effort by many people before any benefits in terms of low-interest loans can be obtained. So volunteers are
choosing to contribute a lot even when the rewards are uncertain.
Furthermore, volunteers continue to contribute even when the C.N.C. is on a stronger footing and more could be
left to paid staff.
So why volunteers do it?
In early stages of C.N.C. development, people work voluntarily to get the organisation established - there is no
other way to do it. So, it is fair to conclude that these people believe in the aims and practices of C.N.C., and that
is why they give their time voluntarily.
One word characterises this voluntary effort: commitment to C.N.C. aims.

Commitment
Commitment also motivates much of the later volunteer work. It is recognition of the fact that C.N.C. gain
strength from the collective effort of their members, and voluntary work is one aspect of that collective effort.
Some studies of voluntarism in charitable organisations showed that even those involved in managing volunteers
often saw voluntary effort as a gift, i.e. the volunteer acts for altruistic reasons and wants nothing in return.
But other studies have found different results: that volunteers come to an organisation to make ‘an exchange’.
(This is based on E. Willis, in J. Batsleer et al. (eds), Issues in Voluntary and Non-Profit Management, Addison
Wesley, UK, 1991.)
Such an exchange would include:
- social contact with others
- personal development
- skills acquisition and learning
- challenge and achievement
- making a contribution to society.
It is likely that volunteers who are involved in C.N.C., especially after the setting-up phase, will have similar
motivations: perhaps for ‘making a contribution to society’, or in this case ‘making a contribution to the growth
of the C.N.C.’.
Since volunteers have certain non-monetary expectations from their work, it is important for managers to be able
to satisfy at least some of these expectations. If this does not happen, voluntary effort is likely to decline, to the
detriment of the C.N.C..
Exercise: Why do I say ‘to detriment of the C.N.C.’? Surely a growing C.N.C. requires full-time, paid staff?
What is your view?
Answer: OF course, there will be a need for full-time paid staff and, increasingly so, as the C.N.C. deals with
more members, handles more savings and gets involved in more complex services. But there is still a major role
for volunteers (leaving aside Board members who are also volunteers).
Volunteers provide:
- energy and enthusiasm
- commitment
a flexible ‘pair of hands’
- more contact with members.
They help to maintain sense of C.N.C. ‘belonging to us’ and they also, of course, save money, but that is not the
main reason for making use of them.

Volunteer involvement

Since volunteers are important and since they also want to achieve certain aims in their work, managers have a
responsibility towards them. A model of volunteer involvement (developed by Beugen and quoted in Willis,
op.cit.) proposes three stages:
- exploratory
- developmental
- mature.
In the exploratory stage the volunteer is getting to know the organisation and deciding whether he/she will be
able to make a positive contribution and satisfy his/her expectations. In C.N.C. this phase should be relatively
straightforward because most volunteers will already been involved with the credit union as members/savers.
In this stage the manager / paid staff need to give support and encouragement, and to answer any doubts or
questions the volunteer may have.
In the developmental stage the volunteer is introduced to new people and situations which allow his(her qualities
and skills to be appreciated and developed. At this stage manager may leave volunteers to their own devices,
feeling confident that they can manage. However, since that may lead to a lack of communication, it is important
to recognise volunteers’ achievements and respond to their personal aspirations.
In the mature stage, the volunteer is making a maximum contribution and can take on positions of greater
responsibility. The manager must now make sure the organisation uses the qulaities and skills of the volunteer
effectively since otherwise the volunteer will begin to lose interest and motivation.
There are two organisational views of volunteer involvement:
- task-oriented view - volunteers are involved just to perform tasks for the organisation. In this view, volunteers
are not allowed to become involved in decision-making or policy issues
- volunteers play more central role - assisting with planning processes, developing campaigns, and so on.
Exercise: Which of the two organisational views of volunteer involvement is followed by credit unions?
Answer: We would say that it is the second view that is more widely followed, although it depends on what time
scale you consider. Certainly, some volunteers basically do counter work. But later it is often the people who
worked as volunteers who carry on to be members of the Board or the main committees.
In fact, we would say that one of the responsibilities of the manager and Board is to give maximum
encouragement to volunteers, with the long-term aim of developing a pool of committed people knowledgeable
about credit union operations, who will be able to move on to important (but still voluntary) positions in the
credit union involving both planning and policy making.
This organisational view which gives both importance to volunteers and a sense that they can be more centrally
involved, means that volunteers themselves are more likely to continue to give their time and become strong
advocates of the credit union in the community.
The other view, where volunteers are used just for the tasks they do, is likely to result in their de-motivation, and
the whole voluntary effort might decline. This will then have the effect that credit union will be less able to call
on a commited group of people to serve on the Board, and the long-term development of C.N.C. will be put at
risk.
So, altough the expansion of the C.N.C. will ultimately require a full-time manager and full-time paid staff to
allow a more continuous service covering a greater range of products, the input of volunteers should still be
strongly encouraged.
We have so far tended to consider the role of volunteers other than Board members and executive officers, since
we have discussed the management roles of these people in previous sections. We will briefly look at their roles
as volunteers here.

Volunteer officers
Again, we can distinguish the role of the Board and executive officers in a C.N.C. from the role of a Board or
management committee in many voluntary organisations. In the latter, the board comprises people who are
generally not ‘members’ of the organisation and who may not have a strong commitment to it. In these cases the,
Board may not see a major role for itself, and may leave more areas of responsibility to the paid staff. In a credit
union, there should be no doubt that the Board members and officers play a vital role.

Employment conditions and contracts

Since C.N.C. develop from voluntary beginnings, and voluntarism is a continuing feature of them, there may be
a tendency to give less importance to the employment conditions of volunteers and paid staff.

Volunteer staff
Volunteers are volunteers - that is, they do not receive a salary and will not have an employment contract. But
there should be some conditions laid down to cover their work. some voluntary organisations produce statements
on the role of volunteers in the organisation, which may include a code of practice:, some give contracts of
employment to volunteers, stipulating such things as duties, tasks, etc.
Exercise: Think about your C.N.C., or one with which you are familiar. Does it have a code of practice for
volunteers? What does it contain?
Answer: An appropriate code of practice would comprise the following:
- expenses
- health and safety
- training and support
- insurance cover
- involvement of volunteers in decision-making
- grievance procedures
- relationship between paid staff and volunteers
- development of recruitment policies.
If your C.N.C. does not have such a code then perhaps you should consider insignating one.

Relations between management / staff and members / customers

The various relationships between individual members of a C.N.C. was the subject of this section.
We compared interactions within a C.N.C. with other organisations, like banks and charities and particularly
looked at the role of volunteers.
The motivation behind many volunteers was seen to be a commitment to C.N.C. aims and the desire to make an
exchange for such intangible benefits as:
- social contact
- personal development
- skills acquisition
- challenge and achievement
- society contribution.
We considered the role of managers towards volunteers under three stages: exploratory, developmental and
mature.
We emphasised the need for agreed employment conditions and a code of practice for volunteers and how this
should be similar to ones introduced for paid staff in order not to foster dual standards.
We looked in detail at the personnel and employment issues that need to be considered for paid staff.
Finally, we briefly discussed the unique relationship between manager / staff and members / customers in C.N.C.
organisation.

Marketing
Objectives
When you have completed this section you should be able to:
- explain the relevance of marketing concepts to C.N.C. operations
- analyse the extent of direct competition between C.N.C. and its competitors
- describe the four components of the marketing mix and how they relate to C.N.C.
- describe the ‘unique selling points’ that make C.N.C. attractive to their members/customers
- evaluate the relevance of market research to expand C.N.C. membership.

You should read and understand to following headlines:

Marketing philosophy and C.N.C.
Marketing practices
Marketing research
Marketing and education about C.N.C.

Relationship between customers and business

Customer-business interactions:
Exercise: What are ‘moments of truth’ in a C.N.C.?
Answer: We are thinking here of the points of contact between a member and C.N.C. staff, for example, contact
at the counter, or with a service supplying officer.
Of course ‘moments of truth’ do not reveal everything about a business and what it offers. For example, in a
credit union the main service offered is savings and loan facilities, the nature of contact with teller is likely to be
less important than the ability to get a loan costs down. None the less, it adds to the quality of the service to be
pleasantly and helpfully treated by a teller. And it is easy to think of the parts of the service sector where
‘moments of truth’ add significantly to the value of the service, for example high priced restaurants and hotels.

Customer/business relationship in C.N.C.

Exercise: Why should C.N.C. be better placed to meet customers’ needs than conventional organisations?
Suggest two reasons.
1.
2.
We would suggest the following:
- The main stated aim of C.N.C. is to provide specific benefits to their members, this is not the main stated aim
for most of conventional organisations.
- Th board of Directors defines policy, the Board itself comprises members, and therefore should impart a
customer focus in their planning.
- C.N.C. are generally staffed by members, particularly when volunteers are involved in operations, staff
motivation to meet members’ needs should therefore be high.
- C.N.C. are not serving ‘two masters’, unlike conventional companies.

Unique selling points

Exercise: We can use the term unique selling point to indicate those special aspects of C.N.C. that make them
attractive to their customers, particularly as compared with their nearest competitors. Identify three USPs of
credit unions that give them an advantage over their competitors.
1.
2.
3.
Answers: There are many. You might have included some of the following:
- ownership: the customers own the credit union
- atmosphere: credit unions are generally more friendly than banks
- cheaper: interest charges are lower
- smaller scale product: credit unions give smaller loans
- better terms: credit unions generally give unsecured loans
- commitment: voluntary effort results in more energy and commitment in the credit union.

Marketing plans
The markeing plan can have the following structure:
Target group Product Place Price Promotion by When Target
means of
All members Budget a/c’s C.U. USD 1 per Leaflets in Start Jully 200 a/c’s per
month C.U. 2000 year
Low income Budget advice Home Free Leaflets in Start sept. 50 members
C.U. C.U. 2000 per year

Marketing is ‘the process of satisfying the needs and wants of society via an exchange process’. In this section
we looked at the concept of marketing and how these four approaches might relate to C.N.C.:
- product centred approach
- selling approach
- marketing concept
- societal marketing concept.
We analysed C.N.C. in terms of the marketing mix:
- product
- price
- place
- promotion.
We argued that market research, via quantitative and qualitative methods, is just as relevant for C.N.C. as for any
other organisation.
Unique selling points (USPs) for C.N.C. were identified and we saw how this technique can be useful in
marketing terms as well as a means of educating existing members and potential members about C.N.C..
Finally, we addressed the issue of devising a marketing plan for C.N.C., recognising that it should fit in with the
overall Objectives of the organisation.
We now move on to the final section of the Unit, concerned with member relations.
Exercise: Can you recall the beneficial outcomes of marketing?
Answer: Marketing is beneficial activity because it helps the service organisation to identify what people need
and want, and the best ways of meeting those needs.
Service design process:
Service delivery process:
Exercise: Give an example to illustrate how the service design process is ‘linked’ to the service delivery process,
in the C.N.C.
Answer: There are number of examples which you might have suggested, for example, if as an aspect of service
design you allow for only two counters to be open at any one time, resulting in large queues and delays at peak
times, the result will be poor service delivery and member dissatisfaction. This example illustrates the need to
get the service design right, in order to avoid problems at the service delivery stage.
Operations Management in Perspective

Objectives
When you have completed this section you should be able to:
- describe the key stages in the development of operations management
- list the main components on an operating system
- distinguish between the manufacturing sector and service sector in relation to operations management
- suggest how operations management within a C.N.C. union differ to that of a conventional company.

The development of operations management

Exercise:
How many of the five major management approaches examined in Unit 2, Section 1 can you recall?
Answers:
(Hopefully, you will have remembered at least two or three of the following:
- classical (functional) management
- scientific management (Taylorism)
- human relations management / behavioural sciences
- bureaucratic management
- quality circles / teamwork)
(It is worked out now)
Exercise:
Are the following statements True or False?
- Operations management has always been primarily concerned with quality Y/N
- The human relations approach was a forerunner of personnel management Y / N
- Rules laid down in bureaucratic organisations are an example of operations management Y / N
- In the scientific management approach, operations management was mostly concerned with motivation of
workers Y / N
Answers:
(1. False. 2. True. 3. True. 4 False.)

Components of an operating system

The main functions are: finance, production/operations, marketing.
Supporting functions include: accounting, personnel, purchasing, maintenance, and so on.
Exercise:
Think about your own C.N.C. office and suggest one aspect of it which would come under heading of system
design and another which would come under system operations. We have given you and example of each to get
you started.
- System design: 1. location of C.N.C. premises, ...
System operations: 1. drawing up staff roles, ...
Answers:
We would suggest you following as example:
System design: location of C.N.C. premises, internal layout, number of serviceman, purchase of computer
system.
System operation: drawing up staff rosters, developing secure system of handling purchases, setting up system to
gain feedback from members on service quality.
Can you see another distinction between system design and system operation?
This distinction may not be so obvious to you. Basically, it brings us back to some of previous discussions of
planning in C.N.C.: system design decisions would tend (although not always) to be long-term decisions, made
by the Board, while system operation decisions would, again, tend to be short-term decisions, made by the paid
manager.
Lets look in a bit more detail at the components of an operating system.
System design components: Product/service mix, capacity, facility, layout, technology.
System operations components: Purchasing management, inventory management, scheduling, personnel
management, financial control, quality assurance/control.
Exercise: Figure is intended to reflect operations management issues in both manufacturing and service sectors.
Strictly speaking, there is a difference between how these sectors operate which should be reflected at the
‘output’ end of the diagram on the right hand side. Can you state this?
Answer:
(We are thinking of the following difference: that services are often ‘consumed’ within the premises, whereas
goods are not. This is certainly the case with this kind of C.N.C., where the services provided - .... - are all
delivered within the C.N.C. building. (This answer is opening new - following point):

Operational elements of a quality system

Three main processes are involved in the service organisation: marketing, service design and delivery.
Exercise: Give an example of each of three service processes as applied in C.N.C.-
1.Marketing process:
2. Service design process:
3. Service delivery process:
Your answers may have included the following:
1. MP: identifying what your members need, for example, through a questionnaire survey, or feedback over the
counter.
2. Design: creating systems and procedures for approving loans and disbursing loan cheques.
3. Service delivery process: the process of dealing with members, for example the way in which C.N.C.
purchase and sell products.

Exercise: Below we have given an example of a method of communication which could be used to advise
members of quality issues. Can you think of another way of communicating quality issues?
1. Provide a written statement to members of specific quality objectives as defined by the Board
2.
3.
You might have proposed one of the following:
- hold occasional workshops with a sample of members to discuss ways of improving service quality (this is
done, for example, in some banks)
- provide a means for members to make complaints in relation to quality, for example, issue complaints slips,
questionnaires, etc., ensure the manager and staff are available to deal with members’ complaints, and so on.

Operations management in C.N.C. Organisations

The overall aims of this unit are:

- to give you an understanding of the meaning, scope and relevance of operations management, especially in
relation to the service sector and more specifically to this C.N.C.
- to discuss and evaluate the importance of quality as a factor in C.N.C. union operations
- to describe the moves towards employee empowerment and participation in organisations today and its
relevance to this C.N.C.
- to evaluate the role of information technology (IT) within C.N.C.
- to evaluate the type and importance of personnel issues affecting C.N.C..

Operations Management in Perspective

When you have completed this section you should be able to:
- describe the key stages in the development of operations management
- list the main components on an operating system
- distinguish between the manufacturing sector and service sector in relation to operations management
- suggest how operations management within a C.N.C. union differ to that of a conventional company.

You should read and understand to following headlines:

The development of operations management
Components of an operating system
Differences between manufacturing and service sectors
Operation management in C.N.C.
In this section we discussed the meaning and application of operations management, both in a general way and
then with respect to C.N.C..
In the first sub-section we discussed the development of operations management ideas, and their connection to
the development of broader management approaches, from scientific management through to Japanese-led
concern with quality.
In second sub-section we looked at the components of an operating system, distinguishing between system
design features and system operation features. System design features are more a matter for long-term planning,
while system operation features are more matter to do with continuous running of the business.
In the third sub-section we looked at differences between the manufacturing and service sectors in relation to
operations management issues. We found that in a number of respects the service sector has quite distinct
characteristics from the manufacturing sector, and these characteristics need to be taken into account in
developing and operating system for a C.N.C..
Finally, we discussed operations management in C.N.C.. We noted that some features of operations management
in C.N.C. are distinct in comparison with conventional organisations, due in part to the C.N.C., member-owned
structure of this kind of C.N.C., and in part to the concern within this C.N.C. to improve effectiveness, and not
just efficiency. However, many of the issues for operations management in this C.N.C. are usually the same as
those which need to be addressed in other types of organisations.

Total Quality Management for C.N.C.

When you have completed this section you should be able to:
- describe the development of the quality concept in business
- explain what quality means in the concept of business
- describe the main features of a total quality management approach to quality
- compare the characteristics of a C.N.C. culture with a TQM culture.

You should read and understand to following headlines:

Origins of the quality concept
Definitions and dimensions of quality
Relationship between customers and business
Total quality management

In this section we discussed a number of issues related to the concept of quality.

In the first part we looked at the origins of quality concerns in the temporary business world, although we noted
that the Rochdale Pioneers promoted quality as far back as 1844. In more recent times Japanese business has
been primarily responsible for making quality and important factor.
We then looked at different definitions of quality, noting that although quality is generally viewed from the
perspective of customers, it is and important issue for producer too (as well as other stakeholders like wider
society). We discussed the various dimensions of quality, and outlined the consequences to a business of poor
product/services quality.
In the third part, we focused more specifically on the relationship between customers and business, discussing
the concept of ‘moments of truth’, which are the points of contact between the customer and the business, when
much of a customer’s opinion of the quality of service will be formed. We then considered whether the customer-
business relation is different for C.N.C., noting that in principle C.N.C., because of their ownership structure,
should be better geared to meeting their customers’ (members’) needs.
In the final part, we introduced the concept of Total Quality Management (TQM) and outlined its general
features. We discussed what is involved in TQM, and described the ‘culture change’ which conventional
organisations need to make to adopt a TQM approach. We noted that, in general, C.N.C. should be closer to a
TQM approach that conventional organisations, due to their member-focus, and C.N.C. structure.
Finally we outlined some of the criticism of TQM. In the nest section we will look at quality systems for service
organisations.

Differences between manufacturing and service sectors

Exercise:
Can you state two distinct ways in which the manufacturing and service sectors differ which will affect the
operations function? Here is one to get you started: 1. Products are generally tangible (physical objects) whereas
services are not.
Answers: .... obvious
Exercise: Explain why quality of the service facility may be more important to a high priced restaurants
compared to fast-food outlet.
Answer: We want to focus attention here on the possible trade-off between the service itself and the conditions
within which the service is experienced. If a fast-food outlet provided the same quality decor and service that is
expected from high-priced restaurant, it would no longer be a fast-food outlet, because people would want to
linger on. From the customer’s point of view, the benefit of a fast-food outlet is that service is quick, without
frills, and relatively cheap. ...

Exercise: Below we have given you an example of a method which would be used to smooth demand and adjust
service capacity (queuing problem). Can you give another example of each?
Smooth demand by: 1. using reservations or appointments (for example, in a doctor’s surgery), 2. ...
Adjust service capacity by: using part-time / volunteer inputs at peak times, 2. ...
Answer: You might have thought of one of the following:
Smooth demand by: using price incentives, promoting off-peak times, ...
Adjust service capacity by: scheduling staff inputs to meet peak demand, introducing increased self-service
element into the service, ...

Exercise: Are following statements False or True?

1. Service quality is important for attracting customers Y/N
2. Services are consumed outside premises Y/N
3. Services can be put into inventory Y/N
4. Queing is an important phenomenon in many services Y/N
5. Services are capital-intensive Y/N.
Did you come up with following? 1.True. 2. False. 3. False. 4. True. 5. False.

Operations management in this C.N.C.

Exercise: Can you suggest the differences for the other two issues?
Operations management issues C.N.C. Conventional company
Attitude towards customers maximise customers benefits customers are the source of profit
Attitude towards the staff
Staff-customer relations

In the following text we have outlined some of the more obvious differences.
Staff (including volunteers work to Staff work to make the company
make C.N.C. work effectively for work effeciently for the owner /
the members shareholders
Staff are aware that customers own Staff need to be trained to handle
the C.N.C., some staff are also ‘moments of truth’ with customers.
members.

Exercise: Suppose you are involved in planning. Suggest two factors which might increase the efficiency of
operations in each case.
a) Internal capacity: 1. 2.
b) Demand fluctuations: 1. 2.
You might have included some of the following:
a) plan so that maximum queuing time during peak periods would be, say, 2 minutes
a) plan each servicing person’s area to facilitate rapid transactions
b) experiment with ways to smooth peaks of customer demand, to make more efficient use of paid staff time
b) use volunteer staff to help out during peak hours.

Q: We listed seven characteristics of service industries in this section. They are:

services are intangible, production and consumption are simultaneous, services are consumed on premises,
services cannot be put into inventory, services are time-perishable, site selection is dedicated by customers’
demands, services are labour-intensive.
Write a paragraph on each characteristic, indicating to what extent C.N.C. in particular, display these
characteristics.
7. Events, Decision Making, Management Learning, Visual
Management Software, Budgets
You should read and understand to following headlines:

Decision Making
When you have completed this section, you should be able to:
1. Identify different types of decision making
2. Explain the rational decision making process
3. Explain how groups make decisions

Definitions:
Decision = A choice from among alternative courses of action
Programmed decision = Routine and repetitive decisions for which the organisation has developed a procedure
Non-programmed decisions = Unstructured and unique decisions that arise from situations that are unusual and
involve changeable and unpredictable circumstances
Certainty = A condition in which the decision maker knows the outcome of carrying out each alternative under
consideration
Risk = A decision – making situation where the decision maker can estimate probability of each possible
outcome
Uncertainty = A condition under which the decision – maker has no knowledge of the outcome of each
alternative
Rational decision making: A logical, consistent process for identifying the alternative with the greatest utility, or
usefulness for a purpose
Problem = The cause of a difference between the way things are and the ways things should be
Expected value = A statistical measure of an alternative’s value calculated by multiplying each possible outcome
by the probability of that outcome occurring, then summing all these products
Bounded discretion = A condition in which decision makers are limited to a subset of the possible alternatives
Loss aversion bias = A preference for choices that do not involve risk of losing
Risk aversion bias = A preference for sure outcomes over risky ones
Availability bias = The tendency to judge the likelihood of an event based on the ease with which it can be called
to mind
Base rate bias = A tendency to ignore background information and treat a particular situation as unique
Regression toward the mean = The tendency of an extraordinary event to be followed by a more ordinary event
Escalation of commitment = The tendency to stick with a choice after investing to implement it
Satisficing = Decision making based on finding an alternative that meets a minimum level of acceptability
Performance programs = Detailed procedures for how to handle a particular situation
Groupthink = A condition in which members of a highly cohesive group become unwilling to critically evaluate
each other’s ideas
Brainstorming = A process for generating as many ideas as possible in the absence of criticism
Delphi method = A group decision making technique in which the group solicits and compares anonymous
judgements on an issue through questionnaires and feedback
Nominal group technique = A structured group meeting in which participants generate ideas individually, discuss
them one by one, and vote on them by secret ballot

Decision-making: The Issues

Objectives: When you have completed this section, you should be able to:
- summarise the main steps involved in the ‘rational’ model of decision-making and to evaluate this model
- describe some of the problems associated with group decision-making
- list and describe a number of techniques used to aid decision-making in groups.

Who, How, and Why Decision is Made?

Two pictures below display different priorities. Some of priorities are personality related others are related to a
company orientation. All must fit together in time.
 Urgent
impulses

Orientation
Orientation on others
on product
4. Empathy

Impor- 3. Objective Not

6. Synergy important
tant
2. Strategy
1. Proactivity

Orientation
5. Proporcionality on production
Self-
orientation

Not urgent
impulses

Definitions:
Orientation = Internal orientation on product, production, self, or co-operation
Impulses = External impulses un/urgent, un/important
Habits = accepted patterns of reactions and internal impulses evaluation as empathy, pro-activity, thinking over,
strategy, and planning
Failure = contradiction between habit and reaction created by insufficient durability of personality basics like
physiology, mentality, spirituality, and sociability

‘Rational’ decision-making

Exercise: In Unit 2 we discussed the four main functions of management. What are they? (planning, organising
and implementing, control, leadership).
Figure 1: ‘Rational’ decision making process:
1. Identify the problem, 2. Diagnose the causes of the problem, 3. Develop alternative solutions, 4. Evaluate
these alternatives, 5. Choose between alternatives (make the decision), 6. Implement the decision, 7. Monitor and
review selected option.

Exercise: How do steps in Figure 1 correspond with the three basic management functions: planning,
implementing and control?

Answer: (Step 6 speak for itself: it is the implementing function. It’s probably fairly clear that Step 7 is the
control function, involving monitoring, feedback and review. The other steps, but especially 3-5, are planning
function, while steps 1-2 are necessary preliminary steps so that the target of the planning work (what is being
planned) is clearly identified.

Exercise: The traditional model of decision-making may not always conform to the processes of decision making
that take place in reality. Coca Cola, for example, made a quick decision without going through these rational
steps. What assumption does the rational model make? Try to identify two.
Answer: (The rational model assumes that:
- people have perfect information, to allow them to make the correct decisions
- decisions are made on the basis of perfect rationality, i.e. people will make logical decisions based on the
information they have, without letting any other factors, such as personal prejudices, influence their decision.

Problems in group decision-making

Janis suggest eight symptoms of group-think:
- Invulnerability: the group has an illusion of being invulnerable which leads to over-optimism and excessive
risk-taking.
- Rationale: the group is collectively able to rationalise its decisions to the extent that warnings and negative
feedback are ignored.
- Morality: group members believe in the inherent mobility of their group, and this blinds them to the ethical or
moral consequences of their decisions.
- Stereotypes: leaders of opposing groups are cast in stereotyped ways as evil, weak or stupid.
- Pressure: the group applies pressure to any individual who expresses any doubth about the group’s selected
course of action.
- Self-censorship: anyone with missgiving tends to keep silent rather then disturb the ‘consensus’.
- Unanimity: partly as a result of the last symptom, all expressed views appear to support the majority, giving
members illusion of unanimity.
- Mindguards: some group members appoint themselves as ‘mindguards’ to protect fellow members from
information running contrary to their views.

Exercise: Read through the following (fictional) example:

After a discussion of two hours, mostly spent extolling the virtues of the private company that they were going to
sell-out to and enthusing about how their market share was going to quadruple overnight, the chair of ABC
C.N.C. called the meeting to order. ‘So I take it that we’re all agreed? Bombast Engineering Co. will buy us out,
we’ll all get a good return on what we put in at the start, our jobs are secure ... what more could we ask for?’.
Roars of approval from six of the eight other members, especially the two who privately negotiated the deal in
the first place.

Two members remind silent.

‘Oh come on’, the Chairman said, turning to them, ‘surely you don’t want to turn this opportunity down? Not
that it matters anyway, because we’ve got the two thirds majority we need to convert the C.N.C.. But what are
you holding out for? Come on, we have to give an answer to the company tomorrow, and we want to be able to
say that we’re in unanimous agreement’. All eyes turned to Pat and Dave, the wavers, and they felt that all they
had struggled for, to get this C.N.C. so far, was now coming to end - for something better?

‘Yeah’, Pat said softly, ‘we’re favour, aren’t we Dave?’ Dave noted his agreement, and soon it was drinks all
round.

Do you detect any symptoms of group-think in this situation? Identify three examples from the above example.
Answer: You probably included some of the following:
- there was evidently no discussion of alternatives: the meeting was devoted to talking up the virtues of the
preferred option
- there are signs of ‘invulnerability’ creeping in: how can they be sure their jobs will be secure, if they are no
longer in control of C.N.C.?
- there are clear signs of ‘pressure’ being applied to two doubting members: the majority appeal to them for a
show of ‘unanimity’, coupled with the veiled thread that their views ultimately won’t count anyway
- ultimately, Pat and Dave submit to ‘self-censorship’: they have doubts, but they fail to express them.

Q: The XYZ C.N.C. union is faced with ‘the problem of success’. Its membership has grown so rapidly, that
people can’t get through the door on the two opening nights: some members are starting to complain about
getting caught in rain while they wait for service. Equally, members are having to wait several days before they
get service delivery approval, which has to be granted in every case by supervisory committee. The four
voluntary serviceman are also voicing complaints about working in cramped conditions and feeling the ‘friendly’
image of C.N.C. is being lost.

Assume you are a board member faced with these complaints. Using the steps proposed in the ‘rational’ model of
decision making, suggest how the problems outlined above might be dealth with.
Q: There is no unique answer, but your answer may be along the following lines, and should at least follow a
similar layout.

1. Identify the problem

The basic is that members are not being provided with service quickly enough. If this situation was not
improved, members might start to leave, or not bother to make furter contributions.

2. Diagnose causes of the problem

There could be a few causes. One cause might be simply lack of space, another one might be lack of staff, a
further cause might be non-computerisation of transactions: and a last cause might be lack of delegation of
service delivery approvals from the supervisory committee

3. Develop alternative solutions

Well, the solutions depend on the diagnosis above. If the cause of the problem is lack of space, then alternatives
area and expansion of the building and/or extension of opening hours.

If the diagnosis is lack of staff, then the solution is obviously to have more of them, either paid and/or voluntary.

If the diagnosis is lack of computerisation, then the solution lies in installing a system of computer-based
transactions.

Finally, if the diagnosis is lack of delegation of power from the supervisory committee, then there is a need to
give this power to officers, at least up to a certain limit.

Of course the diagnosis can reveal that all of these factors contribute to the problem.

4. Evaluate the alternatives

Looking at the alternatives proposed above: an expansion of the building is costly, but obviously provides a
facility of long term benefit. Extending opening hours is more short term measure which is sensible up to a
certain stage. The decision here might be, for example, to extend the opening hours and monitor the effect for
three months. If the problem remains, the option of extending the building would be examined more thoroughly.

The option of more staff could be a solution: will more members be available as volunteers, ar will staff have to
be hired? How much will that cost?

What about the option of computerisation? It’s relatively costly, and initially difficult to understand: but perhaps
it would be the most effective measure to speed service up?

Finally, there is the option of extending the powers of service delivery approval: Is committee not able to meet
often enough, or do they want to keep the powers of service size delivery approval to themselves? Who could
power of service delivery approval be extended to, and what limits would be set?
5. Choose between alternatives
Well, we don’t know which is the best: Let’s assume that board agrees that in the first instance, a combination of
extending opening hours and giving powers of the service size limit approval to a Officer, is the best solution.

6. Implement the decision

The board takes the necessary steps to implementation these decisions, by (i) agreeing to hire two part time staff
members, and (ii) giving limited power of service size limit approval to the current Assistant (assuming no full
time manager).

7. Monitor and review selected option

The board agrees that impact of their decisions will be monitored by the Assistant and will be reviewed after six
month, with the possibility that more far-reaching decisions will have to be taken if the problem is not solved.

C.N.C. Decision-Making Process

Objectives
When you have completed this section you should be able to:
- distinguish between different types of decision and the best ‘level’ at which these decisions should be made
- explain how dynamics of organisational growth have impact on decision-making structures and processes
- compare consensus and majority-voting as methods of reaching democratic decisions.

Types of decisions
Exercise: In C.N.C. context, can you think of examples of the following types of decisions? Write down one
example for each type.
1. Urgent (short-term) decisions:
2. Decisions needing specialist knowledge:
3. Decisions critical for future direction (strategic):
Answers: Your examples might have included some of the following:
1. Urgent (short-term) decisions: need to obtain more liquid funds to satisfy big demand for loans, decision on
taking on replacement staff if one teller goes sick
2. Decisions needing specialist knowledge: whether to computerise, whether to invest surplus funds
3. Decisions critical for future direction (strategic): whether to employ full-time manager:, whether to make large
investment, e.g. to build new C.N.C. building

Specialisation in decision making - degeneration theses:

1st phase: The Conquest - the prior of formation of the association, where ‘enthusiasm and hopes are high’,
‘decisions are made by the assembly of all the members’, ‘volunteers step forward for all tasks’, ‘C.N.C. was
intended as the creator of new human relations based on equality’.
So, a period of high commitment and idealism, but one where ‘economic activity (was) still badly established’.

2nd phase: Economic consolidation - in this phase, economic pressures cause modification of the organisation’s
structures: ‘more rational methods of administration and ... more capitalistic approaches must be introduced’. ‘In
all groups the power of the administrative council increases: the administrators are re-elected, their powers
increase, the limits placed on their initiatives are weakened. Numerous controls are removed ... in order to
increase efficiency of the organisation’.

So, ‘this second phase is a period of transition’, where economic factors tend to dominate, and where there are
may be conflicts between managers and the early idealists.

3rd phase: Coexistence - in this phase the organisation loses its ideals: ‘... the groups have renounced making a
stand against their environment, and ... delegated democracy extends to all activities. In this stage the groups
gradually take up again the values of the global society against which they wanted to struggle in the beginning.
Not only have C.N.C.s had to take up the methods of management appropriate to private enterprise, but values
have changed’.
So, in this phase democracy is reduced to a representative board, and the gap between managers and workers
increases - in terms of salaries, information, managerial expertise, power.

4th phase: The power of the Administrators - ‘The complexity of economic life and the swelling of
administrative apparatuses ... the decision made by elected organisms, are all in the hands of those who by
career, are constantly at grips with the problems. They are specialists, experts, without whom the functioning of
the group would become impossible, and as such, they hold great power ... At this stage, the groups have cased
to respect the democratic schema that they gave themselves in the beginning, and ... the effective power has
ceased to be in the hands of the members or of their representatives’.

A. Meister, Participation Associations, Development and Change. Transaction Books, New Brunswick, 1984.

Democratic decision-making: consensus and majority voting

We can describe these different ways of making decisions as follows:

- No decision - someone makes a suggestion, but it is ignored by the rest of the group and gets forgotten.
- One person - one person pushes through a quick decision, but may later find that no-one will support him/her
when it comes to implementation.
- Hand clasp - one person makes a suggestion, another person hails it as a great idea, and it is passed without
further discussion: but resentment may surface later.
- Clique - decision pushed through by a small group which plans in advance.
- Minority - decision made by domination of few individuals, although they are not organised in a clique
- Majority vote - this attempt may be the best way to make decision in a large group, but a large minority may
then feel let down.
- Silent consensus - an attempt at unanimous agreement, but it may be achieved when some members have not
felt free to disagree and kept silent.
- True consensus - agreement reached after everyone’s opinions have been heard and discussed. All opinions are
openly considered, therefore all members should feel happy with the ultimate decision. Making decisions is
likely to take time however.

Decision-Making: The Issues

When you have completed this section, you should be able to:
- summarise the main steps involved in the ‘rational’ model of decision-making and to evaluate this model
- describe some of the problems associated with group decision-making
- list and describe a number of techniques used to aid decision-making in groups.

You should read and understand to following headlines:

‘Rational’ decision making
Problems in group decision making
Some techniques for decision making in groups

In this section we have looked at a number of important issues relating to decision-making in general, and
decision-making in groups.
We first discussed the question of who makes decisions, i.e. is it an individual manager, or is there a role for a
wider group?
We then discussed the ‘rational’ process of decision-making and the steps involved in that process.
We learnt that there are a number of criticism of the rational process, on the grounds that it may not describe how
decisions are actually made. We consider a number of specific problems in relation to decision-making in
groups:
- conformity (group-think)
- risk.
We also questioned whether the rational process might dilute the positive effect of motivation, which is generally
a strong characteristic of C.N.C..
Finally, we briefly discussed some techniques which can be used for group decision-making:
- brainstorming
- Delphi technique
- quality circles.

C.N.C. decision making process

When you have completed this section you should be able to:
- distinguish between different types of decisionand the best ‘level’ at which these decisions should be made
- explain how dynamics of organisational growth have impact on decision-making structures and processes
- compare consensus and majority-voting as methods of reaching democratic decisions.

You should read and understand to following headlines:

Types of decisions
Specialisation in decision making
Democratic decision-making: consensus and majority voting

In this section we looked at some specific aspects of decision-making in C.N.C.s. We started by looking at
different types of decisions. We developed a classification of decisions:
- those which are urgent/short-term
- those needing specialist inputs
- those with strategic implications.
We suggested that there was a time dimension to these types of decisions, and that to some extent they could be
further differentiated by who made ultimate decision.
We also noted that not all decisions fitted neatly into this classification, which should be used as a framework for
thinking about how different decisions are made, and by whom.
We then looked at the ‘degeneration thesis’ in relation to democratic organisations. We showed how decision-
making can become more specialised and concentrated in the hands of a minority with greater information and
knowledge. We discussed ways of counteracting this problem, including:
- widening the range of skills on the Board
- ensuring a good relationship between the Board and the manager
- encouraging wider member involvement
- developing clear plans and policies
- diffusing the role of information-gathering.
Finally, we compared majority voting and consensus as the two main forms of democratic decision making,
discussing the advantages and disadvantages of both in the C.N.C. context.

Running Meetings Co-operatively

When you have completed this section you should be able to:
- analyse the reasons for meeting not working effectively
- distinguish between different types of meetings in terms of the purpose they serve
- list a number of measures that can be taken to make meeting effective
- give examples of indicators which can be used to measure the effectiveness of your meetings

You should read and understand to following headlines:

Problems with meetings
Types of meetings
Making meeting effective
Measuring the effectiveness of meetings

In this section we have looked exclusively at meetings.

In the first part we looked at some of the reasons why meetings may not be effective. We suggested two types of
reasons:
- structural
- group dynamics.
We also looked at conditions under which meetings are or are not appropriate.
In the second part of the section we discussed the characteristics of different types of meetings, distinguishing
between:
- the AGM/Special General Meetings
- Staff meetings
- Board meetings
- Special strategy meetings.
In the third, and main, part, we considered ways of making meetings more effective. As part of this discussion
we dew a distinction between ‘member-centred’ and ‘chair-centred’ meetings. We then discussed tha following
factors influencing the effectiveness of meetings:
- planning the meeting
- physical environment for the meeting
- chairing / facilitating and minute-taking
- contribution of all participants
- results.
Finally, we presented a way of measuring the effectiveness of your meetings.

Management Learning
Management course deals with mutual beneficial support of individuals, communities and organisations.
Management use actual and forecast impulses to design successful actions. Economical subjects use past
impulses and law limits actions with negative result. Therefore, management is one of listed approaches leading
to the success.

Learning in teams
Informal learning theory is focused primarily on the learning of individuals. Yet today’s organisations, the focus
must be on learning systems. Managers might critique the feasibility of enacting informal and incidental learning
because they feel they cannot change the environment to support learning.

Table 3: Alternative pedagogies

Traditional Education
Traditional You should read and
understand to following headlines
Traditional method
Strategy-based Radicals
Radical method
Traditional You should read and
understand to following headlines
You should read and understand to
following headlines-focused
Radicals
Radical You should read and
understand to following headlines
Traditional method
Critical Pedagogy
Radical method
Radical You should read and
understand to following headlines

Characteristics of a critical perspective:

1. Questioning assumptions
2. Analysing power relations
3. Critical reflection has a collective focus

Characteristics in practice:
1. The curriculum: access to critical treatment of management theory and practice in various disciplines
(accounting, organisational theory, and so forth).
2. Structures, procedures and methods: these are no-hierarchical, providing choice, opportunities for dialogue
and influence over the program’s design and You should read and understand to following headlines.
3. Introduction to critical perspectives: some of which may be included in curriculum but are applied to the
learning process.
4. Reflexivity: applying critical perspectives to understanding ones own position in relation to the educational
process, and to understanding and managing the learning milieu jointly with participants.

Educational design with this element of practical reflexivity are more likely to lead beyond the language of
critique to the real possibilities of change in working conditions and working relationships.

Lessons from Informal and Incidental Learning.

Literature: Marsick, V., J., Watkins, K.,E.: Managemnt Learning
Formal learning is typically institutionally-sponsored, and highly structure. Informal learning, a category that
includes incidental learning, may occur in institutions, but it is not typically classroom-based or highly
structured, and control of learning rests primarily in the hands of the learner. Incidental learning is defined as
accomplishment, interpersonal interaction, sensing the organisational culture, trial-and-error experimentation and
even formal learning. Informal learning can be deliberately encouraged by an organisation or it can take place
despite an environment not highly conductive to learning. Incidental learning, on the other hand, almost always
takes place although people are not always conscious of it.

Table 2: Comparison of the transformative learning theories

Theor Stages of learning
y
Refle A sense of inner Identification/clarif Openness to Resolution Establishing
ctive discomfort ication of the new information „aha“ stage, continuity of self
learni requires a trigger concern, with a change in with past, present,
ng sense that experience, and future self.
something is learning, Deciding whether to
missing closure. take action
Trans 1. A 3. Critical 5. Exploring 7. Acquiring 8. Provisional efforts
forma disorienting assessment of new roles, knowledge and to try new roles
tive dilemma epistemic or relationships, skills for 9. Building
learni 2. Self- psycho-cultural actions implementing competence, self-
ng examination presuppositions 6. Planning a one’s plans confidence in new
with feelings of 4. Recognising that course of action roles and
guilt or shame one’s discontent relationships
and the process of 10. Reintegration
transformation is
shared
Refle Phase 1 - 2. Objective is Phase 2 - Period 5. Learner Phase 3 -
ctive Precedes unfocused of doubt, clash acquires Performance
learni commitment to 3. Situation is of ideal and real knowledge, 6. Diffuse
ng learning global 4. With skills, feels interpretation of
1. Reaction to resolution of challenged actions, facts and
destabilising problems comes global learning
event is a commitment to outcomes
decision to the project and Phase 4 - Judgement
learn new action 7. Learner judges
new state as more
stable
Com Stage 1 - Stage 3 - Re- Stage 2 - a. Using b. Removing
pone Returning to evaluating Attending to positive feelings obstructing feelings
nts of experience experience feelings
exper
ience
Trans Discernment: Recognition: 3. Grieving a. numbness of c. disorganisation
forma 1. Receptivity 2. Ownership - panic and despair
tion to symbols, acknowledgement an open
images, that experience is dialogue is b. pining and d. re-stabilisation and
meanings from authentic and experienced as a protest reintegration
the shadow, connected to inner loss and moves
animus/a, history through four
archetypes grief stages:
MII OWNING Recognising OPENESS Changing:
skills dysfunctional Redesigning action
and Unfreezing control - oriented Re-framing EXPERIMENT Re-freezing:
transf theories of action theories-in-use ATION
ormat to a learning
ion orientation
The first four of these models describe theories of learning based on data collected from the retrospective
reflection of learners.

Visual Management Software

The set of schemes above shows how abstract the proper management is. Therefore, it is useful to visualise it.
Why don’t use software visualising management tasks. Visual management software we want to use is called
Aperture and it is an open systém. It is up to you how to visualise the most important abstract management
problems in this software.

Diagrams and drawings are commonly used to communicate complex information. A road map is a good
example of visual information because it shows the location of cities and highways that connect them. The
architect’s blueprints show the layout of a building and the way it will be constructed. An organisation chart is a
visual layout of the reporting structure of an organisation. Visualisation of above mentioned management
considerations should not be forgotten.

Aperture software offers you following tools:

7. Communication: Participants like readers, writers, and designers have different responsibility. Readers are
attracted to become clients or customers. Writers insert their data to verify impact of their decisions.
Designers open new opportunities for readers and writers.

8. Visualisation: Drawings, composed by regions contain data from database below. Symbols are icons below
which data are appended too. Symbols are stored in library. Drawings are layered and layers are named for
higher distinguish-ability.

9. Drawing systém: Aperture includes a high precision, full-featured, professional drawing systém. The same
drawing can be printed on a single page or multiple pages, scaled to your specifications, and printed on laser
printer, multicolour printer, or pen plotter. On monochrome monitors colours can be specified by numbers.

10. Drawing Methods: Whenever a drawing tool is selected, Aperture will add and entry to the menu bar
dedicated to it and its capabilities. For example when a line tool is selected, an entry called LINE, will be
added to the terminal position on the menu bar.

11. Importing and exporting: Aperture is intended to incorporate existing information, both drawing and data.
When objects are transferred between Aperture Drawings, all the drawing attributes including layering,
style, symbol, linking information, and data will be copied and entered into new drawing. If the Database
has not yet been defined for the destination Drawing in another Project, Aperture will define the imported
Database Record Types.

Financial Services and Practices

You should read and understand to following headlines:

Competitors and C.N.C.

The product environment and role of intermediaries
Intermediaries in this country
Aspects of product’s benefits / parameters
C.N.C. as product intermediaries

Product service of C.N.C.

Exercise about core products / services of C.N.C.: Answer the following True/False questions.
True False
1. Loans cannot be made for a period exceeding
five years
2. Loans cannot be made if the loan would make
the member indebted in a sum greater than 15 %
of the total credit union assets

3. All credit union loans must be secured

4. Loans can only be made for a ‘provident’

and productive purpose.
The answers are:
1. T.
2. F - correct proportion is 10 %.
3. F.
4. T - but ‘provident’ is widely interpreted:
The common saying ‘Not for profit, not for charity, but for service’ sums up this commitment.

Obtaining a loan
A member can obtain a credit union loan provided that the member can demonstrate:
- the character of the member
- that the loan is needed for a useful or productive purpose
- that the loan can be repaid
- how the loan will be repaid.

Savings
Savings within the credit union can take the form of either:
- shares
- deposits.
Let’s look at each in turn.

Shares
One of the unique elements of the CU structure is that savings are generally made in the form of shares (of a
nominal one pound value) which may be withdawable.
Exercise: State two ways in which CU shares differ from the shares in commercial limited companies.
Credit Union Company
1.

2.

Answers: You will probably have thought of some of the following reasons:
- CU shares can be withdawable (i.e. taken out of the CU by members/shareholders), unlike shares in a share
company.
- Shareholders in a CU only have one vote, irrespective of how many shares they hold:, in a share company,
shares confer voting rights:,
- CU shares do not change in value, unlike company shares for companies quoted on the stock exchange.
- CU do not issue share certificates to shareholders. CU members cannot hold more than GBP 6000 worth of
shares, whereas in a share company individual shareownership is unlimited.
Exercise: List two restrictions on a member’s right to withdraw his/her shares. (You may want to refer to your
rule book.)
1.

2.

The restrictions are given in Rule 15 of the Model Rules:

- the CU may require 60 days’ notice of an intention to withdraw shares
- the CU will not allow withdrawal of shares while any claim due on account of deposits is unsatisfied
- a member cannot withdraw shares if as a result his/her liability to the CU exceeds the remaining value of
his/her shares deposits.

Deposits
Since member cannot exceed value of GBP 6000, excess savings are made in the form of interest-bearing
deposits.
Exercise: State two advantages and two possible disadvantages to CU of money held on deposit.
Advantages Disadvantages
1.
2.

We propose the following

Advantages Disadvantages
1. Allows CU to bring in more savings. 1. Money can be withdrawn more readily than shares.
2. May attract deposits from retail banks. 2. Competitive interest rates may have to be paid.

Budget accounts
Budget accounts provide a facility for paying bills due on a regular basis out of which bills are settled. Money
paid into budget account may be paid through payroll deduction:, such schemes are operating particularly in
‘industrial’ credit unions.
Exercise: What sort of bills may be covered by budget accounts?
Answers: Payments out of budget accounts might cover, for example:
- ESB and phone bills
- Mortgage payments
- Home heating bills
- Home insurance premiums, etc.

2.3 Other / insurance services

Exercise: List three of the types of insurance available to members of CU
1.
2.
3.
Answers: You might have included some of the following:
- life savings insurance
- loan protection insurance
- house insurance
- medical insurance
In addition, individual credit union has to be insured covering areas such as:
- fire and special perils
- plate gass
- motor contingency
- public liability
- employer’s liability
- personal accident
- loss of financial records, etc.

Retrospective /Financial Statements and Accounting Principles

You should read and understand to following headlines:
Record keeping
Double -entry book-keeping and the nominal ledger
Financial statements
Manual or computerised systems?
Disclosure and presentation of financial statements

Financial Planning and Risk Management

You should read and understand to following headlines:

Issues in financial planning
Preparations of budgets
Cash flow forecasts
Risk management

Financial Control and Use of Ratio Analysis

You should read and understand to following headlines:
Banking ratios and standards
The savings protection scheme
Financial ratios
Delinquent loans

Financial Service and Practices: Who is Involved?

You should read and understand to following headlines:
Financial services
Accounting and financial statements
Financial planning
Financial control
Business Law

8. Communication and Documentation

You should read and understand to following headlines:

Communications: Issues and Skills

When you have completed this chapter, you should be able to:
1. Explain the communication process, including non-verbal communications and communication styles
2. Describe how communication také place within the organisations, including networks, directions of
communication, and informal communication
3. Describe barriers to effective communication
4. Discuss methods for improving communication in organisations, written communication and strategy related
communication.

Definitions:
Communication = The exchange of information using a shared set of symbols
Noise = Anything that distorts a message by interfering with the communication process
Encoding = Translating information into a message in the form of symbols with a shared meaning
Channel = The observable carrier of the message
Oral communication = Communication in which the sender’s voice is used as the channel
Written communication = Communication in which the channel involves written language
Receiving = Registration of a message by one or more of receiver’s senses
Decoding = Interpreting what a message means
Non-verbal communication = Communication through a channel that does not use words
Body language = Gestures, facial experessions, and other movements and positions of the body
Personal space = The area around a person that the person feels a right to control (intimate, personal, social,
public one)
Johari window = A grid that describes tendencies for facilitating or hindering interpersonal communication
Feedback
Feedback Self
KNOWN UNKNOWN
Others KNOWN Arena Blind spot
UNKNOWN Hidden Unknown
Formal communication = Communication that flows along the organisation’s lines of authority or task
responsibility
Upward communication = Message directed toward (interpret to) a higher level in the hierarchy (problems and
exceptions, suggestions for improvements, performance reports, grievance and disputes, financial and
accounting)
Downward communication = Message directed (influence) to one or more receivers at a lower level in the
hierarchy (Implementation of goals, strategies, and objectives, job instructions, procedures and practices,
performance feedback, indoctrination
Lateral communication = Message directed to (co-ordinate) someone at the same level in the hierarchy
(intradepartmental problems solving, interdepartmental co-ordination, staff advice to line departments)
Communication network = The patterns of directions in which information flows in an organisation
Chain network = Communication network in which information travels up and down through the hierarchy
Y network = Communication network in which information flows upwards and downwards through the
hierarchy, widening to encompass the number of employees reporting to a supervisor
Wheel network = Communication network in which information flows to and from a single person
Circle network = Communication network in which employees communicate only with adjoining members of
the organisation
All-channel network = Communication network in which information flows upward, downward, and laterally
among all members of the group
Informal communication = Communication outside the organisation’s formally authorised channels
Grapevine = Network for informal communication
Old-boy network = An exclusive group that wields power through shared information
Jargon = Terms that have a precise meaning among specialists but are unfamiliar to non-specialists
Frame of reference = Combination of experiences and expectations giving rise to a particular mind/set
Filtering = Tendency to put a message in the most favourable terms possible, downplaying bad news and
dwelling on successes
Supportive communication = A style of communicating that delivers a message accurately while supporting and
enhancing the relationship between the parties to the communication
Active listening = Accepting responsibility for the accurate understanding of a message by helping the sender
clarify its meaning
Richest channel Leanest channel
Physical presence (face- Interactive channels Personal static channels Impersonal static channels
to-face) (telephone, electronic (memos, letters, reports (fliers, bulletins,
media) tailored to receiver) generalised reports)
Best for ambiguous, difficult, developmental messages Best for routine, clear, simple, risky messages

Introduction

The communication process

When you have completed this section you should be able to:
- describe the communication process
- explain the difference between one-way, partial and two-way communication
- list the advantages and disadvantages of one-way, partial and two-way communication
- analyse communication interaction using the interactive communication model provided in this section.

You should read and understand to following headlines:

The communication process
Communication methods
Models of communication

In this section we introduced you to the communication process by way of an overview. Firstly, we examined
three basic components of communication, i.e.:
- sender
- message
- receiver
When then went on to analyse the different methods of communication, i.e.:
- one-way
- partial
- two-way
We illustrated each method and also looked at the various advantages and disadvantages of each one.
Over a number of years there have been various models developed which provide a clearer understanding of the
communication process. We used one of these models, the Interactive Communication Model, to illustrate the
two-way method.The key processes involved are the coding, transmission and decoding of messages. We looked
at each of the component in detail to help you to develop a fuller understanding of the communication process.
Finally, we asked you to apply these components to a case study to test your understanding.
We will now go on to Section 2 which will cover the non-verbal element of communication.

Non-verbal communication
When you have completed this section you should be able to:
- identify the three communication interaction components and assess their relationship to each other
- identify the three major components of non-verbal communication, i.e.:
- - visual
- - vocal
- - environment and space
- describe and appreciate the effect of:
- - the various visual elements
- - the role of voice tone and other vocal variations, and
- - the significance of space, distance and environment
in non-verbal communication.

You should read and understand to following headlines:

What are the components of communication
Non-verbal communication
The visual component
The vocal component
Environment and space

Having worked through this section you should have developed a good ability to understand the main features of
non-verbal communication and relate them particularly to the C.N.C. context. In particular, you will have
addressed the key role played by non-verbal communication in the overall communication process. We described
the components of the communication interaction processes:
- visual
- vocal
- verbal
and identified the amount each one influences the process.
You will also have had a good opportunity to describe and apply the three key aspects of non-verbal behaviour,
i.e.:
- the visual element
- the vocal element
- the environment and space element
Finally, you had the opportunity to integrate the different components of non-verbal behaviour and apply them to
a specific situation.

Listening
When you have completed this section you should be able to:
- identify the amount of time we spent on listening in average day
- describe the four main facets of listening:
-- listener
-- speaker
-- message
-- environment
and identify some of the barriers to effective listening
- describe the significance of listening in the communication process and apply the active listening model
- explain the three main listening skills:
-- attending skills
-- leading skills
-- reflecting skills
- use the listening checklist to asses and improve your listening.

You should read and understand to following headlines:

Listening time
The facets of listening
Listening and understanding
The skills of listening

In this section we have looked at the effective receiving of messages, I.E. the listening skills. Firstly we
identified the amount of time we spend on listening in an average day. We then wen on to describe the four main
facets of listening:
- the listener
- the speaker
- the message
- the environment
and highlighted some barriers that hinder effective listening.
We established that listening is not just about hearing the message but also about understanding, and we
illustrated this with the active listening model.
The three skills of listening:
- attending skills
- leading skills
- reflecting skills
were described and applied to various situations in your everyday workplace.
Finally, you used a listening checklist to assess your listening skills and you should now be able to make plans to
develop and enhance you listening capabilities.
We now move on to Section 4 where we are going to apply the skills learned so far to interviewing.

Interviewing
When you have completed this section you should be able to:
- define an interview
- describe thedifferent types of interviews and their purposes within the C.N.C.
- adopt a structured approach to the interviewing process, i.e.
-- the planning stage
-- the opening stage
-- the body of interview
-- the closing stage
- identify and apply the key skills used in interviewing.

You should read and understand to following headlines:

What is an interview?
Types of interviews
Interview structure
The skulls of interviewing

In this section we used our acquired skills from the earlier sections and applied them to interviewing situations.
Firstly, we established what is an interview and altough initially most people would associate this with getting a
job, we saw how inteviews are used in many other businesses and personal situations.
We went on to cescribe these various types of interviews, i.e.:
- appraisal interviews
- counselling interviews
- disciplinary interviews
- information gathering interviews.
If you are to carry our successful interviews then they require careful planning. We discussed warious ways of
preparation before the actual meeting and then looked at the actual interview with regard to opening the meeting,
the main part or body of the meeting and eventually bringing the interview or meeting to a satisfactory
conclusion.
All the skills learned in previous sections, i.e. non-verbal behaviour, listening, questioning, etc. were all related
to the interviewing process. Finally, another case study was used to apply these skills.
In section 5 we will look at communication within groups or teams.
Communication in groups or teams
When you have completed this section you should be able to:
- identify the main groups in C.N.C.
- define the group and describe its key characteristics
- outline the benefits and disadvatages of group decision making
- plan and run effective meetings
- describe the range of management styles used by group leaders
- describe the task, relationship and individual activities performed in groups
- describe the stages of the group development
- list the eight roles suggestd for effective group functioning.

You should read and understand to following headlines:

The role of groups
Definition of a small group
Benefits and disadvantages of group decision making
Making group meetings effective
The role of the group leader
Group dynamics

This section has taken us from the purpose of groups through to developing an effective group.
Firstly, we identified the main groups in the C.N.C. movement. We defined a group as being a small number of
people who have a common purpose or goal:, this is achieved by each member contributing and interacting at
meetings to achieve their goal.
We then discussed benefits of group decision making, i.e.:
- higher quality of decisions
- higher level of acceptance and commitment.
and disadvantages:
- the time spent at meetings
- the poor output from meetings.
The key issues to make meetings work effectively were outlined, i.e.:
-establishing the purpose
- planning
- informing those involved
- preparing
- structuring and controling
- summarising and recording.
The importance of the group leader was highlited and the different management styles were briefly examined.
The interaction of members within a group - task, relationship and individual - were explained and you were
asked to observe group members at one of your meetings.
Finally, we examined the process of group development and the eventual composition of a group using Belbin’s
eight roles.
We will now move on to the final section in this Unit which will deal with written communication.

Written communication
When you have completed this section you should be able to:
- describe the advantages and disadvantages of written communication
- identify the key qualities of effective writing
- describe the main elements of writing a plan
-- purpose of writing
-- audience analysis
-- organisation of thoughts
-- researching the subject
-- first draft construction and editing of draft
-- reconstruction of final draft
- list the main aspects of writing business plan
- outline the standard features in writing memos
Why written communications?
Communicating messages in writing may seem more formal and inflexible than the same messages delivered in
face-to-face interactions, but they are especially suited to delivering formal, and sometimes complex, items of
information.
Exercise: There are several advantages and disadvantages of written communication. Under the headings of
advantages and disadvantages, we have provided one example of each. Can you identify at leas one other?
Advantages: Better for difficult or formal messages. Can be reviewed.

Disadvantages: Written communications can appear to be very time-consuming.

Answers: Other advantages, which you may have included, are:

- useful when a written record is required for reference purposes
- can be both written and read when the parties (sender/receiver) wish
- can be carefully planned and designed before transmission
- errors can be removed before the message is transmitted.
Disadvantages include:
- feedback on the message is delayed or may be non-existent
- the writer can never be sure the message is read
- some people do not like to read
- absence of non-verbal clues which assist in the interpretation of messages
- may seem formal and lack warmth and individuality
- many people do not, or believe they do not communicate well in writing.
Research by Randall Majors (1990) in Business Communication suggested that while writing is a requirement of
all formalised education and most business careers, that most people ‘if at all possible avoid writing’.
Exercise: Some of the negative attitudes to writing are based on past experiences. Can you suggest, from your
own experience, what these might be?

Answers: If you have any negative attitudes to writing they may be based on:
- earlier school experiences
- the relevancy of what was written
- grammar and punctuation drills, etc.
Beyond the value of writing in the C.N.C. setting, writing can also be enjoyable - but only if we develop a solid
set of relevant and basic skills. As we develop our abilities to write clearly and gracefully, we will become more
comfortable with expressing our thoughts on paper.
We will now look at developing these skills of effective writing.

Effective writing
Different kinds of letters are produced to be sent outside your organisation:, memos are written for internal use:,
reports are presented at annual meetings.
Writing takes time and money. Some business companies estimate that the average business letter cost about
GBP 10 when the writer’s time, the typist’s time, and the stationary and postage are calculated. It is essential
therfore that communication in writing is used effectively. The skills used for effective written communication
can be acquired, developed and improved.

Criteria for effective writing

Exercise: Your organisation has purchased computer equipment, which has not been delivered. You have
received a letter from the company regarding the delay. Which of the following effective communication criteria
might be of value to the writer of this letter:
Very Not
Important Important Important
Accuracy:
What are the precise facts about
the delivery? What is the delivery date?
Clarity:
What are the reasons for the delay?
Completeness:
Has everything been said that needs
to be said?
Appropriateness:
What tone will the letter have? How can the
company maintain a positive relationship?
Dynamism:
What kind of image do I want to project?
How personal do I want to be with the
reader?
You may have regarded them all as being very important or perhaps have ticked accuracy and clarity as more
important then others. We will now look at these elements in more detail.

Accuracy
When information is inaccurate, at best it can make understanding difficult, and at worst it may result in lost
time, money and credibility. The effective communicator strives for zero defect correctness.
Exercise: What do you think a writer needs to do to achieve zero defect correctness of any correspondence.

Basically, the writer needs to:

- check facts
- proof read for errors
- seek to control accuracy in references, spelling and grammar.
Sometimes we see what we expect to see rather than what is actually on the page.
Computer systems are very sudeful, but ultimately the writer is responsible for accuracy, e.g. spelling checkers
do not identify
- properly spelled words improperly substituted for other properly spelled words:, examples include:
-- form when from was intended
-- is when in was intended

Clarity
Have you ever tried to look through a dirty window? You can see shapes and movements, but you may not be
certain about the detail of what you are observing. Some written communication may have the same effect.
Effective written communications needs to have clear:
- purpose
- structure
- language
in order to avoid confusion or misunderstanding.

Clarity of purpose
Clarity of purpose is achieved by analysing your writing goal in advance of communicatin. You can do this by
asking yourself:
- Why I am writing?
- What is my real reason for writing?
- What I am hoping to achieve? Change of attitude / opinion?
- What is my purpose?
-- to inform
-- to persuade
-- to influence
-- to educate
-- to entertain.

Clarity of structure
The overall structure of your message is also important, i.e. have you presented your ideas in a logical way? The
time spent organising your message before you commence writing may save both you and the reader significant
time later.
Various approaches or methods are used in organising ideas /information before you begin to write. Two such
methods are:
- the traditional outline method
- the decision tree method.
We will be looking at the outline method in sub-section 6.4, developing a writing plan.
Figure 1 provides an example of a decison tree.

Costs Quality service

Personal and
Dividend on Shares Professional
Service

Interest at 1 % per Opening hours

month on declining Mon-Sat
balance 10.00 am - 5.00pm

Community orientation
Insurance cover at no
extra costs Member owned
and controlled

Join the Credit Union

(Desired Decision)
outcome
- The trunk is the outcome you seek - the decision you want your reader(s) to reach.
- The major branches are significant points you will need to make in order to convince your reader(s).
- Ideas, evidence, etc. are filled out by smaller supporting branches.
The decision tree method makes it easy to organise your ideas as you think of them, regardless of the order in
which you think of them.

Clarity of language
As a writer you create clarity of language by thinking about:
- who your audience is, and
- what she or he knows.
Exercise: Can you give an example of a concrete terms as opposed to an abstract term?

Our examples are:

- Saturday is more concrete than sometimes this weekend
- three is more concrete then a few.
Remember, before writing ask yourself:
- Who is exactly my audience?
- What sort of person is she? Education? Age? Status? Personality?
- How is she likely to react to the You should read and understand to following headlines of my message?
- What does she already know about the subject of my message?
-- A lot?
-- Not much?
-- Nothing?
-- More/less than I do?

Completeness
As a communicator, you need to determine how much you should say in written message. It may be difficult for
you to decide how much information is sufficient without writing toom uch or too little. In general, written
business communications should be concise and to the point. You should avoid extraneous details.
One good technique to ensure completeness may be to put yourself in the possition of reader and ask yourself:
- What questions is the reader likely to ask about the topic?
- How much information is needed for the reader to do what you want?
You should seek to anticipate responses of the reader to these questions and also to supply information that may
be needed at the next stage of communications. By this we mean that you should not force the reader to request
information that you should have included in the first place.
In summary, completeness can be developed by seeking to answer the following questions:
- What exactly do I want to communicate?
- What do I need to say?
- What does the reader need to know?
- What information / detail can I omit or should I include?

Appropriateness
The key to successful writing skills for communication is the appropriateness of what and how you write for the
context and the audience. Be clear of what you want to say. Be clear about how it will be received.
We will address two areas of appropriateness:
- verbal and non-verbal elements
- common courtesies.
Verbal and non-verbal elements
The writer’s values may be transmited simultaneously by the verbal and non-verbal elements in a piece of
written communication. For example a job applicationhastily hand written on foolscap paper may contain all the
necessary information (verbal element) but a prospective employer may find the medium (non-verbal element) to
be inapppropriate.
Exercise: When writing a letter, how would you take these values into account?

Answer: You should seek to send messages of:

- respect
- sensitivity
- positive regard
both in the language and format you select. Elements such as:
- the paper
- the typing
- the layout of information on the page
- the neat appearance of the material
communicate important messages regarding the writer and reader.

Dynamism
Effective written communication hold the reader’s attention and make him want to read more of what you have
to say. Dynamism is the expression of the communicator’s personality in his writing or speach.
This aspect of the written communications process becomes more important when you seek to influence the
reader to do somethink.
Example: Can you give an example of when you might be trying to influence a decision from a reader in which
the use of dynamism would be important.

Examples include:
- to avail of services being offered
- to follow a proposed course of action
- to agree with your views, etc.
We will now look at various aspects of written communication which will make it more dynamic, i.e.:
- word choice/writing style
- emphasis
- repetition
- active/passive voice.

Developing of writing plan

The previous section considered the five qualities of effective communication viz.,
- Accuracy
- Clarity
- Completeness
- Appropriateness
- Dynamism
You should keep these qualities in mind as we work through the writing plan.
Many writers on Communication suggest different elements for writing plans. However, the six steps or
techniques outlined here are included by most writers:
1. Purpose of writing, i.e. what is your goal
2. Audience analysis, i.e. what do you know about the reciever(s)
3. Thought(s) organisation
4. Subject research
5. Construction and editing of first draft
6. Reconstruction the final draft.
We look at each of these six steps.

1. Purpose of writing
What I am trying to achieve with this letter / memo / report? Do I have a specific goal? Are my goals / purposes
in writing clear?
These basic questions which some of us neglect to either pose and /or answer before we commence writing. Our
sence of direction may suffer, but what about the unfortunate reader!
The purpose of writing may be to:
- inform
- persuade
- communicate negative information
- impress
- teach
- entertain.
Each of these situations is different and the purpose of writing is different.

2. Audience analysis
One of the best approaches for clarifying your reason for writing is to see the situation from the reader’s point of
view, i.e. What does the reader want? In many situations we are required to write because reader (reciever)
request information from us. If you:
- analyse your audience, and
- anticipate what they need to read
this approach may help you to focus on what you need to say in your written message. Knowing the audience
may also help you determine what not to say. Sometimes material we write is irrelevant because the reader
already knows much about the matter.
The format for your written presentation and the language you should use will also be dependent on your
understandingof your audience’s education, attitudes and values. If what you write is boaring or demotivating for
your readers then you risk losing their goodwill and your creditability may suffer. If you use language which is
cumbersome and difficult to interpret, you may confuse your readers and they may misunderstand your message.
Knowing your readers and seeking to pitch your material in a non-patronising manner at their level, is an
important element in writing.
3. Thought organisation
Having determined your purpose and analysed your audience, you are now ready to begin the actual construction
of message. A helpful way to begin construction is wtih a short blueprint, i.e. skeletal plan that will generally
direct your building of message.
Exercise: What do you think is the benefit of a skeletal plan?

Answer: Thinking on paper allows you to jot down your ideas in any form before you start to arrange them
logically. Having drafted a preliminary outline of points and thoughts and issues to be covered, you can then
return to delete some ideas because they maybe irrelevant, or indeed add new ideas that would improve the
balance and tone of the message.
Remember, however, that the outline is just a planning document:, it should grow and change as the message is
developed. In a long written communicationthe outline may contain seven or eight points, each of them refering
to different paragraphs in the communication. Planning gives an orderly and organised approach whichwill
become evident to the reader in the written communication.

4. Researching your subject

In many instances your own experience and knowledge will supply you with the information you need to send
your written message. In other situations, you may need to do research. In either case you need to consider very
carefully the information you have assembled in your outline and evaluate its:
- relevance
- sufficiency
- authority.
Exercise: What do you understand by these terms in this context?

Answers: Information is relevant when it applies directly to the issue at hand in the message. You must
determine which information is most relevant to suit the purposes of the receivers and yourselves as you focus
the message. The inclusion of relevant information may attract the receiver’s interest and attention because it is
seen as usefull and practical.
Sufficiency of information means that enough material and examples are offered to explain the central points in
the written message. As senders of messages we can sometimes err in either direction.
- If too much information is contained in the message, the receivers maybe overhelmed and/or bored by the
amount of detail.
- If too little information is offered, the message may remain unclear.
You need to find the proper balance in the amount of information you provide in the written message.
Authority in information is determined by the credibility of the message source. In some areas the opinions and
beliefs we show with authority are more important than personal opinion. We need to ask ourselves questions in
this regard.
- How detailed do I need to be in the presentation of my information?
- How specific do I need to be?
- How exact do I need to be?

5. Constructing and editing the first draft

Having assembled your items of information and thoughts to be presented in your message you are now ready to
begin construction of that message.
One effective approach is to write a number of drafts before you complete the final effort.
Exercise: How would this help?

Answers: If you are working on your firs draft, whether letter, memo or report, it does not have to be perfect so
you may feel freer to experiment with different words, formats or approaches. The use of a multiple draft
approach could help those writers who suffer from ‘writer’s block’ i.e. the inability to commence writing. Some
people point out that the only way to write well is to rewrite, rewrite, and rewrite.
A significant stage in this process is editing your first drafts. You need to examine your draft for clarity and
accuracy.
Exercise? What areas you look at to ensure clarity and accuracy?

Answers: You need to look at the following:

- Is the purpose clear?
- Are your points clearly stated?
- Are your facts accurate?
- Is the spelling correct?
- Have you covered you area thoroughly without incorporating irrelevant detail?
- Is your choice of medium suited to the situation?
- Is your language appropriate?
- Have you communicated energy and a sense of personality in your written message?
These factors should also be taken into account as you redraft and edit your message. Careful attention to detail
gives you the chance to make corrections and changes before you formally communicate in writing with your
reader.

6. Reconstructing the final draft

This is the last stage in you planning process and takes advantage of all that has gone before. By clearly:
- determining your purpose
- analysing your audience
- organising material
- researching your facts and information adequately
your draft should now be in the form of an effective message. Careful editing and revision of this draft will allow
you the opportunity to strengthen and enhance the final product. This attention to detail, quality, and
reconstruction may take time but, if you are concerned about the effectiveness of your message then your final
product will be worth all your effort and energy.
Exercise: It is said that good communication ultimately can be reduced down to two principles. Can you name
them?

Answers: The two principles are:

- pcareful planning, and
- attention to detail.
The more you will work with these tools and the more familiar you become with how they operate for you, the
more effective will become your written communications.

Letters and memos

We will now look at the difference between letters and memos. Letters and produced to be sent outside the
organisation where as memos are written for internal use. The writing plan outlined above can be applied to
letters and memos in terms of the steps necessary to attain quality in the final product.

Letters
Santon 1990 outlines the following principal types of business lettes and the purpose of writing them.
Principal Types of Business Letter

Purpose Letter classification Area

to seek information, opinion, Query General
confirmation
To give information, opinion, Acknowledgement General information
confirmation
To seek reparation of some fault of Complaint/claim General
defficiency
To accept the claim, provide Adjustment General
reparation
To place an order for goods or Order Ordering and estimating
services
To confirm acceptance of an order Confirmation of Ordering and order estimating
To give an estimate of price, time, Estimate Ordering and estimating
etc.
To give a final price, time, etc. Tender Ordering and estimating
To sell goods or service Sales Letter Sales and advertising
To remind of sales offers Follow-up sales letter Sales and advertising
To advertise goods or services Non-solicited sales letter Sales and advetising
To authorise advance of credit Letter of credit Financial, and credit management
Check or comment on credit - Credit reference inquiry / reply Financial, and credit management
worthiness or rating
To obtain payment of a debt Collection (various stages - usually Financial, and credit management
1,2 ..3)
Each type of letter makes its own demands on us as writers. However, if we approach it in a structured and
planned manner, we may find the task easier then we expected.

Memos
Memos are internal letters in an organisation.
Exercise: There are five elements which are used in the drafting of memos. Can you name them?

Answers: The five elements used most commonly in drafting memos are:
1. The title line
2. The sender line
3. The reciever line
4. The date
5. The subject line
All memos should have these elements in some form. The following is a simple example of the features of a
standard memo.
Memorandum
To: From:

Date:

Subject:

- The title line (Memorandum) is necessary to identify immediately that this is and internal document.
- The receiver line (TO:) identifies the intended recipient(s) of the written message. The readers may be either an
individual or a group of people.
- The sender line (From:) identifies the writer of the memo.
- The date line is important for filling and maintaining records of actions taken.
- Finally, the subject line should include both the general subject area and, where possible, some specific points
regarding the purpose of the memo.
In writing and effective memo the following points may assist as you plan and write.
- make sure the memo is necessary
- clarify purpose and grab attention
- organise the body of the memo for easy reading
- use informal, professional language
- keep your tone possitive.

Purpose of memos
Memos are written for a number of basic purposes, i.e.:
- to inform
- to persuade
- to document actions or ideas.
Informative memos:
Exercise: Can you identify at least four informative uses for a memo?

Answers: An informative memo can:

- Give instructions - Explain process
- Announce a meeting - List job duties
- Record minutes of a meeting - Post policies and rules
- Announce policy changes - Provide project timetables
- Request a meeting - Offer feedback
Persuasive memos:
Exercise: Can you identify four persuasive pruposes of memo?

Answers: Persuasive purpose may include the following:

- Propose an improvement - Recommend a purchase
- Recommend a procedure - Support a position
- Ask for C.N.C.eration or support - Ask for a raise
- Motivate people to attend a meeting - Solicit volunteers
- Sell a product or service - Motivate compliance

Documentary memos:
Exercise: Give one example of a situation that would need to be documented in a memo

Answers: Examples of situations that might need documentation are following:

- On being hired, a new employee is promissed a raise in six months.
- A superior has required an employee to perform a certain task which the employee feels will result in ‘disaster’,
for example, delaying the reordering of paper goods until after a heavy work period.
- An employee has a telephone conversation with a member that may have serious consequences:, for example,
the member/customer threatens to terminate membership unless a specific action is taken.
- A manager observes unethical behaviour in an employee and wants to document it in the employee’s personnel
file.
Another use of the documentary memo is to demonstrate excellent performance. Memos can show that
employee:
- has good ideas
- can express them well
- take initiative to propose improvements and solutions
- has good problem-solving skills
- is sensitive toward people, and
- is assertive and decissive.
You can use documentary memos to advance your career by putting onto paper:
- your innovative ideas
- perceptions of problems
- proposed solutions
- recommendations.
If you document your ideas by means of memos, you are more likely to get credit for them and to be percieved
as a valuable employee. You might wish to document situations such as the following:
- propose an improvement
- suggest the solution to the problem
- bring attention to a hidden problem with serious consequences
- share praise, be thoughtful, give compliments, express appreciation.

Summary
Writing as an essential part of the communications process involves us in sharing with a receiver a message full
of information, thoughts and ideas. We need to approach it in the same thorough manner as any part of the
communications process. Planning and attention to detail are as essential here as they are in other sections on
communications.
Written communications, as we have seen in this section, are required on occasions when formal records are
necessary and can be planned and checked before transmission. We looked at several advantages and
disadvantages of written communication and outlined some of the reasons why we may have negative feelings
towards writing.
The criteria / characteristics of effective writing, identified by Majors 1990 and other researches, were outlined,
i.e.:
- Accuracy
- Clarity
- Completeness
- Appropriateness
- Dynamism.
You should use these elements as general criteria to be followed when you are constructing your written comm
unications.
The writing plan is a more specific activity and builds on these general characteristics. Together they constitute
an overall framework for writing.
The last section focused primarily on the role of memos and letters and various elements in the writing of
memos (internal letters) were outlined. We also identified different kinds of memos, i.e.
- informative
- persuative, and
- documentary.
This concludes the module on Communications and we wish you luck with the remaining part of your study
programme.

Documentation: Output, process, responsibility

Management use standards, methods and assessments to find and gain its objectives. Standards set up the output,
methods the process, and assessments the responsibility.

Organisations use bylaws, company’s policy manuals, successive limiting policy by hierarchical level,
procedures, rules, programs, and budgets. You can find principals of all of these elements in ISO 9000 family
standards helping implement and operate quality management systems.

Methods, managers’ use, have different origin, purpose, and reliability. Methods help to gain objective in limited
time with limited resources. Minimal reliability emerge when relations among management responsibility,
resource management, product realisation, measurement analysis and improvement are continuously improved
from customer’s requirements to customer’s satisfaction (ISO 9000). Documentation clarify these principals
preventing failures.

Documentation enables communication of intent and consistency of action. It is therefore a necessary element
within a quality management system. Its use contributes to:
A) achievement of product and quality improvement;
B) provision of appropriate training;
C) ensured repeatability and trace-ability;
D) provision of objective evidence;
E) evaluation of effectiveness of the system

The production of documentation should not be and end in itself but should be a value-added activity. There are
several types of document used in quality management systems:
a) documents that provide consistent information, both internally and externally, about the organisation’s
quality management system; such documents are referred to as quality manuals;
Quality manual contains usually the quality policy, objectives, details of organisational structure, a description of
the quality system, details of the quality practices of the organisation, details of the nature of quality system
documentation.
b) documents that describe how the quality management systém is applied to a specific product, project or
contract; such documents are referred to as quality plans;
c) documents that provide consistent information about how to perform activities; such documents are referred
to as procedures;
d) documents that provide objective evidence of activities performed or results achieved; such documents are
referred to as records.

Each organisation or individual supplier determines the extent of documentation required and the media to be
used. The size of documentation is dependent on the task definition.

Assignment: Remember the case study about Business Innovation Centres Management. Define tasks for
squatters, for autocratic managers, offensive management, for your team, and for yourself in the table below
Strategic Planning by advisers Implementing by Control by personnel or
Business Units: extensioners outsourcing
Corporation Potential maximisation Delivery standardisation Personality transformation
- strat. Market. Plan - ISO 9000 based MBO - Honest sales
- niche marketing implementation - Successful presentation
- quality not price - Flattening the org. - Pitfalls implementation
- MBO Structure
Division Right first time Entry program Personal diversity
- Know your product - Identification - How to enter
- Market - Objectives - How to monitor
- Competition - Procedures - How to correct
- Action’s program
Business Company re-launch Marketing planning Expansion planning
- Analyses - Overview - Company marketing
- Management - Objectives - Product marketing
structure research - Strategies - Knowledge expansion (tools,
- Recommendations - Special actions self-evaluation, weekly plan)
- Conclusions
implementation
- New management
structure
Product Beginners and Project management Team work
entrepreneurs - Company promotion - Who does what
- Mission - Objectives - Procedures
- Resources confirmation - Sale by action
- Objectives - MBO - Review meetings
- Programs - Market knowledge - Personal analyses
- Market strategy

Project cycle:
Targeting – bring new incentives based on assignments and
agreements
Identification – hot to find and solve new incentives
Instruction – search of new opportunities through experts
Financing and budgeting – of investments, personal, and co-financing
Mission – ensure integration of partners
Evaluation – identifies benefits, for example: people return when they
make money and support this proposal

Docummentation of Project Cycle:

1. Summary (reasoning, expected effect, place of implementation, targeting of
priorities, process stages, financial plan, external support, new working
places, risks, relationships, commitment)
2. Context (sectoral, proposers, performers, problems, supporters)
3. Resource information
Framework Arguments Confirmatio Evidence of Hypotheses
+ dates of Supplier n of Income Costs of Aworded
Support
Global
Objectives
Specific
Objectives
Results
Actions
4. Process Management
Marketing Design and Feed Back
implementation
Global Objectives
Specific Objectives Global Objectives
Results Specific Objectives Global Objectives
Results Specific Objectives
Actions
Actions Results
Actions
5. Budget
6. Risks

Questions:
1. What to communicate downwards?
2. What to communicate upwards?
3. What tools and how to use for lateral communication?

Pitfalls
Top Ten Things a Consultant Shouldn't Tell a Client

10. That was my first guess as well, but then I really thought about it.
9. You should see the hotel I'm staying at.
8. Hey, I just realised that I was in junior school when you started working
here.
7. I like this office space. I'll have them put me in here when you're gone.
6. My rental car looks nicer than that junk you're driving.
5. Sure it'll work; I learned it in business school.
4. So what do you need me to tell you?
3. Of course it's right; the spreadsheet says so.
2. I could just tell you the answer, but we're committed to a three month
project.
1. What are you, stupid?

Top Ten Ways to Know You've Got the Consulting Bug

10. Can't stop using words that don't exist.

9. Worried that he who dies with the most frequent-flyer miles wins.
8. Use so much jargon in conversation, friends think you're speaking a
foreign language.
7. Constant urge to give advice on subjects you know nothing about.
6. Always-hyphenating-words-that-don't-need-to-be-hyphenated.
5. Keep seeing bullet points everywhere.
4. Can fit the thematic undercurrents of War and Peace into a two-by-two
matrix.
3. Tired of having a social life beyond work.
2. A two-page story in Business Week is all it takes to make you an expert.
1. Firmly believe that an objective viewpoint means more than any real work
experience.

Top Ten Things You'll Never Hear from a Consultant

10. You're right; we're billing way too much for this.
9. Bet you I can go a week without saying "synergy" or "value-added".
8. How about paying us based on the success of the project?
7. This whole strategy is based on a Harvard business case I read.
6. Actually, the only difference is that we charge more than they do.
5. I don't know enough to speak intelligently about that.
4. Implementation? I only care about writing long reports.
3. I can't take the credit. It was Ed in your marketing department.
2. The problem is, you have too much work for too few people.
1. Everything looks okay to me.

Top Ten Things You Shouldn't Say at a Consulting Interview

10. I'm a t-shirt and jeans kind of person.

9. Do you pay overtime?
8. I hate flying.
7. I'm useless without ten hours of sleep a night.
6. There are lies, damn lies, and statistics.
5. Do you cover rental cars for collision?
4. Oxford taught me that working in teams is great for slackers.
3. I think three letter acronyms are for people too stupid to remember whole phrases.
2. Two words: family first.
1. Call it what you want, it still means firing people.

9. Managing Groups: Conflict, Stress, Change, Meetings Facilitation

You should read and understand to following headlines:
Communication, decision making, groups, teams, power and politics, conflict and stress

When you have completed this section you should be able to:
1. Describe the different types of groups to which people belong
2. Explain the reasons people and organisations form groups
3. List the stages of group development
4. Describe the characteristics of effective groups
5. Discuss obstacles to group productivity
6. Discuss ways groups can increase productivity
7. Distinguish between ‘constructive’ and ‘destructive’ groups
8. Describe characteristics of an effective team
9. State the benefits to C.N.C. and similar organisations of teamwork
10. Discuss the role of teamwork in organisations, focusing on basic assumptions of teamwork
11. Define and describe self-directed work teams
12. Explain why organisations use teams
13. Explain the conditions for successful teamwork
14. Identify the phases of team development
15. Discuss manager’s roles when an organisation uses teamwork
Definitions:
Definitions are divided to measure two personal approaches, the dependent (group affiliation) and independent
(team building) one:
Group = Two or more employees who have an ongoing relationship in which they interact and influence each
other’s behaviour and performance
Informal groups = Groups that evolve to meet social or affiliation needs by bringing people together based on
shared interests or friendship
Formal group = A group set up by the organisation to carry out work in support of the organisation’s goals
Command group = A group consisting of a manager and employees reporting to him or her
Task group = A group consisting of employees who work together to complete a particular task or project
Reference group = A group used as a basis for comparison in making decisions or forming opinions
Membership group (or affiliation group) = A group to which a person belongs, sharing its benefits and
responsibilities
Role = Pattern of expected behaviours associated with a certain position in a group
Role structure = The set of roles and relationships among roles that has been defined and accepted by group
members
Norms = Accepted standards for the behaviour of a group’s members
Pivotal norms = Norms governing behaviour that is absolutely required for continued group membership
Peripheral norms = Norms governing behaviour that is desirable – but not essential – for continued group
membership
Cohesiveness = The commitment of members to a group and the strength of their desire to remain in the group
Status = The degree of worth and respect that individual group members are accorded by other members of the
group
Disjunctive tasks = Task that can be completed through individual efforts of group members
Conjunctive tasks = Task where each person’s efforts are tightly linked to the efforts of others; group members
are highly interdependent
Additive tasks = Tasks where productivity is measured by adding together the output of each group member
Diffusion of responsibility = Member’s view that responsibility for groups tasks is divided among the group,
rather than being the burden of and single group member
Role ambiguity = Uncertainty about the content of an expected role
Role conflict = Contradictory or mutually exclusive expectations concerning a person’s role(s)
Role overload = A condition in which expected roles exceed group member’s abilities
Social loafing = Doing less than one’s share of work on the assumption that the group’s results will not indicate
one’s failure to contribute
Production blocking = Limiting another person’s output by getting in his or her way
Co-operative group reward = A reward tied to the group’s overall performance, with each member receiving the
same reward
Competitive group reward = A system of rewarding individual group members for successfully performing as
individuals within the group
Team = A relatively permanent work group whose members must co-ordinate their activities to achieve one or
more common objectives
Differentiation = The extent to which team members are specialised relative to others in the organisation
Integration = The degree to which the team must co-ordinate
Advice/involvement team = A team formed to generate input from a broad base of employees
Quality circles = Advice/involvement teams that routinely handle quality issues
Production/service teams = Teams charged with the activities related to producing and selling goods and services
Project/development team = A team charged with planning, investigating, analysing, and reporting, often with
the objective of creating complex and unique outputs
Cross-functional team = A team with members from several functions that is responsible for a project that
crosses functional lines
Action/negotiation teams = A highly differentiated, highly integrated team
Self-directed work teams = Teams that have ongoing responsibility for an entire work process or segment
Limited self-direction = The establishment, at some sites, of work teams whose members have multiple skills,
and are responsible for managing their efforts to carry out a well-defined segment of work
Total self-direction = The assignment of virtually every employee in the organisation to a self-directed work
team
Team building = Evaluation of a team’s performance and culture to end destructive behaviours and strengthen
constructive behaviours
Diagnosis = Function of team building that involves identifying functional and dysfunctional aspects of
interactions among group members
Development = Team building function that involves establishing a means of identifying and resolving future
problems
Role therapy = A training technique in which a consultant participates in team activities temporarily to stimulate
improvements in group processes

Conflicts and Conflict Resolution

When you have completed this section you should be able to:
- evaluate positive and negative aspects of power
- describe some of the main causes of conflict within organisations
- state ways of resolving conflicts.

You should read and understand to following headlines:

Power and empowerment
Conflict in organisations
Conflict resolutions

In this section we have looked at power, conflict and conflict resolutions.

The first part of the section dealt with the meaning of power, and particularly examined its individual aspects.
We discussed the five key sources of power in relation to C.N.C., and considered and ‘inverted hierarchy’ model
to describe power relations in a C.N.C.. We also discussed how C.N.C. can bring about ‘empowerment’.
In the second part we looked at conflict in organisations. We noted that conflict can exist in all organisations, and
we discussed conflict under three headings:
- conflicts over goals
- conflicts between personalities
- conflicts over attitudes towards work.
Finally we discussed conflict resolution. We first noted that there are two different management views about
conflict and how to deal with it: tha main point is that to some degree conflict is inevitable and can have positive
result.
We discussed ways of conflict resolution, at organisational level (grievance procedures, etc.) and in group
situations (methods of conflict resolution at meetings).

Conflict resolution
There are two differing management approaches to conflict:
- the ‘traditional’ view - that all conflict is ‘bad’ and should be avoided
- the ‘interactionist’ view - that a certain amount of conflict is ‘good’ and should be encouraged.

Exercise: Why do you think that anyone might want to encourage conflict? Suggest two reasons.
1.
2.
Answers: You might have come up with two of the following:
- it keeps the organisation and people within it ‘on their toes’
- it prevents the organisation from becoming too routinised and fossilised, resistant to change
- it can result in better decisions, because discussion is opened up and more options are considered
- it encourages a ‘self-audit’ of the organisation, a kind of SWOT analysis which might lead to improvements.

The differences between two approaches are summarised at exercise answer

However, unresolved conflicts can certainly be destructive, therefore we might aim for a synthesis between the
two views:
- conflict, in the sense of the expression of differing views, is healthy and should be encouraged
- on the other hand, conflicts which are allowed to drag on and become personalised, are destructive and need to
be resolved
- encouraging conflict for the sake of it does not seem a particularly sensible approach: it is beneficial primarily
to the extent that an organisation considers options openly ad critically.
There is, therefore, a need for conflict resolution under some circumstances. We will look at two types of
solutions transferring and preventing personal conflict to the:
- conflict resolution at the organisational level
- conflict resolution in group situations.

Organisational level
By this we mean the development of procedures and structures within the organisation to deal with conflicts. If
conflicts do develop at the individual level, whatever the initial course, it may be important to have some form of
grievance procedures. This might apply particularly to staff who are employees of the C.N.C., but could also
apply to volunteers: as we noted in Unit 2, volunteers have expectations and rights as well.
There may be role for Trade Unions where grievance arise, if the staff are unionised.
A further step in dealing with conflict, or rather, turning conflict from being a negative force to being a positive
one, is training. It may be useful for C.N.C. to organise training for Board members and others in participatory
forms of management, with the aim of encouraging members to look at ideas critically but constructively, rather
then just to pick holes in them.

Group situations
Here we refer to the way in which conflicts can be handled in meetings, for example:
- the role of Chairman as facilitator, encouraging the full discussion of all issues
- the structure of the meeting: for example, people may be more prepared to air views on a matter causing
conflict in small groups, rather than in a large meeting
- the choice of decision-making method: both majority voting and consensus forms of decision-making can
potentially leave behind a minority of disseminating voices, although if the consensus process is carried out
thoroughly at least there should have been a complete airing of views.
We can also briefly list some guidelines which you should be aware of if you are in a group situation involving
conflict, and which you might use, for example if you are chairing/facilitating a meeting:
- Accept a conflict as natural - treat it as a potentially positive force for reaching better solutions.
- Don’t allow conflicts to remain hidden - bring them into the open, but not in a personalised way.
- Don’t personalise conflicts - deal with the ideas.
- Make sure that the problem is shared, don’t turn it into one individual’s problem.
- Try to focus on the central issues in the conflict.
- Don’t polarise conflicting positions: ‘are you out’? Try to keep people’s minds open to the wide range of
options that might exist.
- Don’t compromise too quickly: the best solution may not be a simple ‘average’ of two conflicting views, there
may be another solution better than both of them.
- Try to remain ‘neutral’ if you are not centrally involved in a conflict: try to keep an open mind, although
eventually you will need to take a view yourself.
- Try to be aware of your own feelings and be able to communicate these to others (this is particularly relevant to
someone centrally involved in a conflict). The same is true when it comes to making a decision: why are you
choosing a particular course of action, is it just to fit in with others, or do you really support it?
- If a conflict gets too heated, it might be a good time to take a short brake or ‘cooling-off’ period.
- If a conflict can’t be resolved in a normal meeting, it may be better to arrange a special meeting solely to deal
with the particular issue.
based on Center for Conflict Resolution, Building United Judgement: A Handbook for Consensus
Decision-Making, 1981

Exercise: Think of any conflict that you have observed or been involved in in your C.N.C.. What was it about?
How was it dealt with? Was it dealt with effectively?
Answer: There is no single ‘answer’ to this. But was it a conflict about goals? or about personalities? Was it
resolved through compromise? a special meeting? disciplinary action? Was this way the most effective way to
resolve the conflict?

Q: In the context of C.N.C., discuss ways in which power may be used for either positive or negative ends.
Suggest at least three examples of each.

Conflict in organisations
Conflict does exist in C.N.C., as it does in all organisations: what is important is to understand the source of the
conflict and how to resolve it.
There are, needless to say, a variety of ways of looking at conflict. Although some conflicts may simply be result
of personality clashes, it is quite likely that even these conflicts are generally by some aspect of the organisation,
for example:
- Conflict over allocation resources
- Conflicts generated by actual or perceived differences in status within the organisation
- Conflicts caused by inconsistent allocation of tasks between individuals.
We look at three types of conflict:
- Conflict over goals
- Conflicts between personalities
- Conflicts over attitude towards work.

Conflict over goals

The overall goals of C.N.C. are quite clearly laid down in the Standard rules:
- the promotion of thrift
- the creation of sources of service offered at fair price
- the use of members’ contributions for their mutual benefit
- the education of members in their economic, social and cultural wellbeing.
Within these overall goals, however, there may be specific Objectives which people may differ over, for
example:
- some people may favour an expansion of C.N.C. operations, for example to promote local business, while
others may oppose this.
- some people may believe that the C.N.C.’s priority should be attract more low-income members, while others
may favour a drive to attract middle-class households.
- some Board members may argue in favour of employing a manager and expanding, while others may prefer to
‘keep it voluntary’, even if this means keeping it small.
When we look at other examples, such as the ‘plc - C.N.C.’in dairy sector, we can see an immediate potential
conflict between maximising returns to outside shareholders or maximising returns to farmers.

Conflicts between personalities

We have noted already that so called ‘personality clashes’ often have an underlying reason, connected with some
aspect of how organisation is functioning. In other words, conflicts which may be to do with policy become
personalised and may be put down to the ‘awkward’ personalities of the individuals involved.

For example, we might consider a situation where a manager and Chairman of a C.N.C. fall into open
disagreement, or perhaps even cease communicating with each other, because of a conflict over limits of the
manager’s responsibilities. But such an event is not due - or, at least, not only due - to a personality clash, but
rather to a lack of clarity in the manager’s job description. A clearly-written contract of employment would
remove the basis for much of this conflict. Another example could be a small worker C.N.C. with a ‘simple
collective’ structure: a founding member may feel he/she has been in the C.N.C. from the start and therefore
should take on a more managerial role, while other members may feel that he/she is trying to dominate them.
Such a disagreement can easily become personalised, whereas it is in fact a serious argument about how the
C.N.C. should be organised.

Conflict over attitudes

These conflicts may be more common in worker C.N.C.s where, for example, founding members may have
stronger commitment to the C.N.C. than members joining later, who may essentially regard it as just another job.
Of course, the same may happen in your C.N.C.: the original members of the Study Group, who have given so
much time voluntarily to get C.N.C. launched, may enter into conflict with Board members who do not have the
same enthusiasm as themselves. Again, such conflicts may become personalised, where in reality the problem is
one of establishing what is a satisfactory level of commitment.

An important point to remember is that conflict, if it exists, should not be suppressed, since such suppression will
only make the conflict worse and more personalised. In the context of groups, such as the Board, prolonged
conflict can lead to poor motivation and probably poor decisions.

Conflict can even be a positive force: it can indicate healthy competition between ideas, which, if they are
explored thoroughly, can result in better choices than if only one proposal is pursued in the interest of ‘keeping
the peace’.

Exercise: Have a look at this fictional case study.

Pat is one of the original founding members of A C.N.C.. He and 10 others put in a great amount of voluntary
work to launch the C.N.C.. He is now the Chairman, but most of the Board members were not amongst the
original founders.
The C.N.C. is his life, and he is getting increasingly frustrated by what he sees as the less then enthusiastic
attitude of his fellow Board members. Where he wants to widen the C.N.C.’s services, they just to increase
turnover. Where he wants the C.N.C. to get involved with other local groups such as the local Enterprise Group,
they say that this goes beyond the bounds of the C.N.C.’s role.
Pat starts to see all this as a conspiracy against him, and he regards one member in particular as a trouble maker
and ringleader of the ‘opposition’ to his plans. At one Board meeting his frustration boils over and he launches a
bitter personal attack on his ‘opponent’, accusing him of wanting to take over the running of the C.N.C., and, in
doing so, ruining it.
List two important issues that lie behind this row.
Answer: You might have included the following:
- there needs to be a detailed discussion about where this C.N.C. is going, and what its priorities are: some kind
of a strategic plan, in fact. Evidently no such discussion has been held.
- it seems that there is difference between the ‘old guard’ and new members, in perceptions about commitment to
the C.N.C.: in this case the Chairman is having difficulties in ‘letting go’, and even though he is well-
intentioned, perhaps he needs to look at the positive aspects of new members being on the Board - although it
may also be the case that these new members are too unimaginative, or perhaps could do with some training.
These matters need to be discussed.
- the Chairman feels that his previous contribution is being undervalued and undermined: perhaps it is true that
the new members are not showing him the respect that he is due - without this meaning they should always defer
to him because of his seniority.
This example leads us to the final part of this section, conflict resolution.

Change and Creativity in Organisations

When you have completed this section you should be able to:
- list some of the factors causing organisational change
- describe some of the forces at the organisational level supporting or blocking change
- compare ‘competitive and ‘C.N.C.’ strategies of change
- asses the role of creativity in the change process.

You should read and understand to following headlines:

Why change?
Change in organisations
‘Macro level’ aspects of change: competition vs. C.N.C.
Creativity in organisations

In this section we examined different aspects of change in organisations.

In the first part we looked at some of the factors influencing change, noting that C.N.C.s are not immune from
the effect of many of these factors. The influence in recent times of the ‘enterprise culture’ in dictating the nature
of change was discussed.
Next, we looked at some of the influences on change within organisations. We discussed Lewin’s model of
‘driving’ and ‘restraining’ forces which tend to minimise the extent of change. We also considered the role of
individuals, groups, and organisational culture. We draw a distinction between elements of a change in a
conventional organisation compared with a C.N.C. one.
We then looked at macro-level aspects of change, and the advantages for democratic-type organisations of
following C.N.C. strategies of change rather than competitive one.
Finally, we looked at the role of creativity in organisations, noting how creative responses might be more
appropriate in certain circumstances than planned, rational processes of change. We suggested that C.N.C. are
well placed to encourage creativity to enhance both individual C.N.C. and the Movement as whole.

The section is divided into four parts.

The first part discusses change in a general way: what are some of the causes? is it always ‘a good thing’?
In the second part we discuss micro-level aspects of change in organisations, examining change processes and
the role of individuals and groups in promoting or resisting change.
Thirdly, we look at some more macro-level aspects of change, i.e. the approaches taken by organisations when
faced with a specific external environment.
Finally, we speculate on the role of creativity in bringing about change.
Why change?
When you have completed this section you should be able to:
- list some of the factors causing organisational change
- describe some of the forces at the organisational level supporting or blocking change
- compare ‘competitive and ‘C.N.C.’ strategies of change
- asses the role of creativity in the change process.

The rate of change, particularly in Western societies, has accelerated in recent decades, and continues to do so.
Exercise: Suggest three reasons for this increased rate of change.
Answer: Your answer might have included three of the following:
- a general increase in the rate of technological advancement
- specific developments, particularly the application of computers in all fields of economic activity
- the ‘globalisation’ of markets, resulting in an intensification of competition
- the growth of new policies and ideologies leading to a shift in ways of organising social and economic activity,
e.g. the popularity in some countries of ‘privatisation’ of State enterprises and activities.
Exercise: One external factor which is likely to create pressure on C.N.C. to change their present methods of
operation is the demand for new services by members/consumers. What other external factors can you think of?
Answers: You might have listed the following factors which, along with the demand for new services, will add to
the pressure for change:
- technological changes, for example possibilities for inter C.N.C. transactions
- competition
- general deregulation
There are therefore several factors driving the rate of change. How do organisations respond?

Change in organisations
Change in organisations, at the micro-level, can be:
- planned (proactive)
- reactive.
Planned change would seem to be the best desired approach: the setting Objectives, the development of a plan to
meet those Objectives, and the implementation of the plan.
Reactive change, is, by definition, change which takes place as a response to some external factor such as
competition, technological change and so on.
The shape of future is increasingly unpredictable: therefore it is not clear that planned change will always give a
better results then reactive change.

Organisational ‘culture’ and change (Lewin)

Exercise: Use the Force Field Analysis approach by drawing a diagram showing three driving forces and three
restraining forces which might influence the introduction of ... in C.N.C..
Driving Forces Present Restraining Forces
situation

Answer: You might have drawn a following diagram:

Driving Forces Present Restraining Forces
situation
- competition - staff unfamiliar with technology
- improved and cheaper - fear of loss of jobs by tellers
technology
- customer demand - fear of loss of control
- convenience - inappropriate to ‘culture’ of C.N.C.

Organisations which already operate consensus-type systems of decision-making, are probably better -place to
undertake such discussions that are more conventional managed organisations characterised by more
confrontational styles and hierarchical structures.

Exercise: Look at the key steps on the right-hand side of the diagram.
Stage Key steps
SCHAPING - gain support of key power groups
DYNAMICS OF - set example through leadership
CHANGE - provide positive symbols and language to promote change
- build in stability
MOTIVATING - bring about dissatisfaction with present state
CHANGE - build in participation in change
- provide rewards for behaviour supporting change
- provide time to disengage from present state
MANAGING - develop and communicate clear image of future
TRANSITION - use variety of leverage points
- develop organisational arrangements during transition
- build in feedback mechanisms

Pick out three key steps that suggest confrontational approach to managing change might occur in an atmosphere
of conflict.
Answers: The three most likely steps are:
- gain support of key power groups, which suggests that some groups may be mobilised to help overcome
opposition from others
- bring about dissatisfaction with present state which is connected with creating a new view of the status quo in
the organisation as being unsatisfactory: Nadler states that ‘management of change may require the creation of
pain and dissatisfaction with the status quo’. This approach could be quite damaging of morale, if its aim is to
undermine what people have worked for up to the time when change is decided upon.
- provide rewards for behaviour supporting change, which suggests rewarding behaviour supporting change:
does that mean creating a division, perhaps in terms of material benefits, between those supporting the change
and those opposing it, even if the latter feel that they have strong reasons for their opposition.

In conventional companies those who lead the change, i.e. managers, may be given considerable power in order
to push change through. If the change is successful, they will thereby gain more power - as well as the likelihood
of additional material benefits in the form of share options, increased salaries, and so on.
The picture that begins to emerge, therefore, is a model of change which might differ in some respects between
conventional organisations and C.N.C. or other value-based organisations. The elements of these differences
might include:
Conventional organisation C.N.C. organisation
- process of change involving confrontation and - process of change based on consensus-seeking
conflict
- change often narrowly-based, led by managers - change more broadly-based, participatory
- ‘divide and rule’ tactics, those supporting change - attempt to understand and reconcile opposition to
rewarded change
- managers gain material benefit and power from - no particular gain to manager over other groups from
leading change change
- change usually geared to improving the ‘bottom-line’, - change may have other elements than improving
sometimes sacrificing other values ‘bottom-line’, and will attempt to maintain other values
Of course, these differences will not apply in every case, but in a general sence there is some validity in the
comparison.

‘Macro-level’ aspects of change: competition vs. C.N.C.

In this part we look particularly at the possible benefits deriving from following a C.N.C. strategy of change than
a competitive one. Wilson, drawing on some other work, suggests the following benefits of C.N.C. strategies:
- economies of scale
- sharing the advantages of new technology
- reducing risks and costs of innovation and development
- sharing the talents and expertise of human resources within co-operating organisations.
based on D.C.Wilson, A strategy of Change, Routledge, London, 1992
Exercise: What might be implied by a C.N.C. strategy for change in C.N.C. movement? Which of following
words might describe the implementation of such strategy? (Tick at least two.)
Centralisation Y/N
Bureaucracy Y/N
Networking Y/N
Innovation Y/N
Control Y/N
Economies of scale Y/N
Answer: We would suggest following:
- networking
- innovation
- economies of scale.

We can therefore draw some distinctions at the macro-level, just as we did at the micro-(internal) level, between
strategies of change pursued by conventional and C.N.C. organisations.
Conventional organisation C.N.C. organisation
- competitive strategy - C.N.C. strategy
- ‘niche strategies’ - networking
- centralisation/hierarchy (perhaps after initial - autonomy / flexibility
decentralisation)
- ‘downsizing’ - innovation
- increased market share through predatory take-overs - economies of scale
- everything to improve ‘bottom line’ - aim to improve services to members
As with all such comparisons, this chart simplifies some of distinctions, but deliberately so, in order to show that
C.N.C. organisations do not need to follow the same processes and methods of organisational change as
conventional organisations. There are alternatives.

Creativity in organisations
We will look at two types of approaches to creativity:
- a conventional management approach to stimulating creativity and innovation
- examples of unconventional creativity in organisations.
Conventional management approach to creativity
Creativity can be harnessed to:
- develop new products
- find imaginative solutions to problems
- engage in ‘unconstrained thinking’ which may result in novel ideas or solutions.
Pauric McGowan suggests that the appropriate management style to promote creativity would be the following:
- sensitive to creative characters in the organisation
- frequent communicator, both laterally and vertically
- participative and collaborative rather than authoritarian
- receptive to new ideas and seeking feedback on these from associates
- pro-active in nature
- conscious of need for balance between freedom to innovate in short term and need for control to achieve long-
term goals
- control and organisation through networks of project groups and matrix structure.
based on P. McGowan, Creativity and Innovation, in D. Steward (ed), 1989
We called this a conventional approach in the sense that it lays out some systematic principles promoting
creativity - but we can see that some of these principles can be applicable in the C.N.C. context too.

Running Meetings C.N.C.

Exercise: You’ve probably all been to bad meetings. List four characteristics of them.
Answer: There are many characteristics:- meeting starts late
- no agenda
- poor direction from the Chair
- domination by a few wordy individuals
- no decision made, etc.

Objectives
When you have completed this section you should be able to:
- analyse the reasons for meeting not working effectively
- distinguish between different types of meetings in terms of the purpose they serve
- list a number of measures that can be taken to make meeting effective
- give examples of indicators which can be used to measure the effectiveness of your meetings

Problems with meetings

Is the meeting appropriate?
Checklist - do we need a meeting?
- Do the rules require a meeting?
Clearly relevant to C.N.C.: the rules lay down requirements for meetings.
- Is two-way communication necessary?
For example, to dispel rumours and provide briefing in connection with a change proposed.
- Is team-building necessary?
Meetings to plan a campaign, etc. can develop a greater sense of joint commitment.
- Would collective advice/guidance be useful for decision-making?
Collective advice can often result in a better decision.
- Is there a problem/crisis that is better solved by a group?
This is in the case of a sudden crises, when stability in the organisation can be restored by a group
directing events collectively.
Based on: John Gregory, Making Meetings Work, in D Steward (ed), 1989

‘Structural ‘ reasons for meetings not being effective:

- people problems:
-- the authoritarian chairman or
-- weak chairman
-- the person who always want to have the last word
-- the rambler who talks a lot without reaching the point
-- inter-personal rivalries
- planning problems
-- not enough notice given
-- some key people not motivated
-- no agenda
-- poor presentation of briefing information, etc.
- progress (or lack of it) after a meeting
-- no circulation of minutes
-- no clear direction on actions to be taken and whom
-- no follow up meetings, etc.

‘Group dynamics’ which render meetings ineffective

Specifically in meetings, some of the following problems of a ‘group dynamics’ nature can occur:
- people lose interest and start distracting others
- people come in late or leave early, others are coming and going
- a minority or a single person may dominate the meeting
- some people or single person may rigidly keep raising the same issue, whether relevant to the discussion or not
- some people may not contribute at all, for various reasons, and later may disagree with decisions made at the
meeting
- there can be tension in the meeting due to domination of unresolved conflicts, poor facilitation etc.
- strong opinions may preclude constructive discussion: a sign of ‘group-think’
- people discuss many issues at the same time.
based on V cover et al, Resources Manual for a Living Revolution, New society Publishers,
Philadelphia, 1978
Exercise: Read through the following fictional sketches, and write down what you think they illustrate, in terms
of some of the problems associated with meetings.
A.
‘The Chief Executive is meeting with Heads of all the main sections in the firm, discussing his plans to
streamline the firm’s structure. ‘Right, we have five sections, production, finance, marketing, quality control,
overseas operations. These will come down to three, by merging production with quality control, and marketing
with overseas operations. Any problems? Yes Sean? (Sean is the head of marketing division.) O.K., well, you’re
near to retirement anyway, aren’t you?’
B.
!Now, in relation to the question of finding new markets for our food products, I was talking to one of our
biggest customers yesterday, and he was telling me of the tight financial situation they’ve got into, what with the
recession over there. Did you know that almost 2,000 firms went bust there last year? It’s due to government
policy, our customer was saying, and I must say I have to agree with him, that lot are the hopeless shower ...’
C.
‘Right, we haven’t got an agenda for this meeting, but I suggest we just kick off anyway. Dave, would you like
to raise any points first?’
D. ‘O.K., let’s start the meeting. There’s only one item on the agenda, and that’s the resource plan to save the
company. I don’t care what it takes, but this plan is going to be agreed on by the time this meeting finishes. And
at the end of the meeting, I am going to go round each of you one by one to get your agreement.’

Now, how would you describe the group dynamics in each of these situations? Look back to the list of problems
associated with meetings for some ideas.
A.
B.
C.
D.
Answers: Your answer is probably along these lines:
A.
Autocratic and rather cynical Chief Executive, doesn’t want opposition to his plan, nor to listen to any argument
against it.
B.
Someone who started rambling off the point: others in the meeting would soon stop paying attention to him.
C.
A poorly planned meeting with no agenda. Instead of trying to agree an agenda at the start, the Chair just opens
discussion in an arbitrary way: likely to be an unproductive meeting!
D.
Another authoritarian Chairman: what’s the point of the meeting when, so far as he is concerned, the only
business is to rubber-stamp the rescue plan? He adds a slightly intimidating atmosphere by announcing his
intention to go round the table individually.

Types of meetings
- Annual General and Special general Meetings
- Staff Meetings
- Board Meetings
- Special Strategy Meetings
Exercise: You are probably very familiar with bylaws of C.N.C. Try to answer these questions.
1. What three bodies/individuals are elected by the Annual Members Meeting?
2. What three actions require Special General Meeting?
Answers: You probably recalled (or looked up) the answers:
General members elect:
- new members to fill vacancies on the Board of Directors
- the three members of the Supervisory Committee
- the auditor
A Special General Meeting is needed:
- to expel a member from the C.N.C.
- to vote on the removal of a Director from the Board or removal of an officer by the Supervisory Committee
- to discuss the failure of member(s) of the Supervisory Committee to perform their duties.

Staff (business) meetings covering such issues as:

- rostering
- feedback from members/customers
- leave arrangements
- any other issues of concern of staff.

Board meetings, few points can be made about them:

- held regularly, at least (monthly)
- need a clear agenda
- benefit from preparation, for example period circulation of manager’s/Treasurer’s reports
- benefit from facilitative style of chairing.

Making meetings more effective

Exercise: Compare member-centred and chair-centred meeting processes
Answers:
The member-centred meeting involves everybody, there is an open exchange of views: it is not possible to tell
from the diagram who is the Chair is, but one of the participants will be facilitating the discussion.
In the chair-centred meeting, all discussion is channelled through the Chair, which gives that person a significant
degree of influence over how the meeting may proceed. In many such meetings, one participant will preface
his/her remarks to another by the phrase, ‘Through the Chair ...’.
Exercise: Write down two possible advantages and two possible disadvantages of each process. Remember we
are talking about C.N.C. meetings here.

Member-centred Chair-centred
Advantages Advantages
Disadvantages Disadvantages
Answer: You might have included the following:
Member-centred Chair-centred
Advantages Advantages
- Everyone participates. - Discussion orderly and controlled.
- Full discussion of issues. - Meetings kept within time.
- Less scope for domination by the Chair. - Chair may be respected person, helps to overcome
- Greater sense of C.N.C. interpersonal conflicts, etc.
Disadvantages Disadvantages
- Discussion may be disorderly. - May be domination by the Chair.
- May take too long/no decision reached. - Flows of discussion may be narrow.
- May be domination of discussion by others (not - Lack of sense of C.N.C.
Chair).

Planning the meeting

A number of factors are involved in preparing for a meeting, including:
- identifying the purpose of the meeting, e.g. routine Board meeting or to discuss single issue?
- deciding who should be there - determined by purpose of the meeting
- making a clear agenda and circulating in advance, perhaps including provisional time allocation to each issue
- preparation and circulation of relevant papers, figures, etc., in advance.

Physical environment:
The physical arrangements are straightforward:
- enough space, well-ventilated and well-lit
- seating arranged so, that everyone can see each other
- quiet, with no interruptions
- necessary supports available, e.g. flip over, marker pens, overhead projector, etc.

Exercise: Write down two reasons why minute-talking is important.

Answer: This is rather straightforward:
- to keep a record of discussion held and decision taken
- to circulate this record to all participants, to:
a) remind them of actions they are responsible for
b) provide them with information relevant for conducting their work.

What does a facilitator do? Here are few examples:

- prepares the meeting - drawing up agenda (perhaps in discussion with others)

- keeps the group united:

-- being impartial
-- making sure everyone has a say
-- looking for agreement and consensus
-- keeping the meeting good-humoured
- keeps the group focused:
-- making sure everyone keeps the agenda
-- making sure issues are laid out clearly
-- reviewing points in a debate to keep everyone clear
-- making sure decisions are made carefully and with full agreement - or deferred
-- re-stating decisions - making sure they are fully understood and agreed

- after meeting:
-- approving minutes prior to circulation
based on ICOM, Organisational Issues in Democratically Managed Businesses, ICOM, Leeds, 1992

Contribution of participants
Exercise: Try to suggest four ways in which participants at a meeting can contribute to a positive atmosphere
conductive to good decision-making
Answers: Particulars can contribute to a positive atmosphere by:
- participating fully
- listening carefully to other’s opinions
- keeping to agenda, not wandering off the point
- making contributions in an orderly way, by indicating to the facilitator
- helping to promote consensus
- not distracting others by holding separate conversations, rustling paper, walking in and out, etc.
- not pursuing other agendas for self-interested reasons, and so on.

For meeting to be effective, you and your colleagues have to act responsibly and openly to ensure:
- good decisions
- improved C.N.C.

Results
Plans don’t do anything, people do. Having made your decision, therefore, you must also decide:
- who is responsible for implementing specific elements of the decision
- what is the time-scale for implementation
- what resources are needed to implement the decision and how are these resources to be obtained
- how are the effects of the decision to be monitored and reviewed.

Measuring the effectiveness of meetings

We will suggest some indicators to measure the meeting process. Look at the following table: Indicators of the
effectiveness of meetings
1 Goals Unclear, conflicting, not fully agreed
Clearly understood and shared by all
2. Participation Dominated by minority, some people not involved
Open and lively discussion, everyone listened to
3. Leadership Poor or no direction, or domination by one leader
good sense of direction
4. Decisions
Good decisions made, everyone committed to them Poor or no decisions, not everyone agreeing
5. Organisation
Well organised, flexible Chaotic, manipulative, etc.
6. Relationship between participants
Trust and understanding Feelings of mistrust or antagonism
7. Attitude about meeting
Interesting, helpful, enjoyable Boring, waste of time, unpleasant
8. You should read and understand to following
headlines of meeting No informative
Informative
9. Productivity Achieved little, meeting will not change anything
Achieved a lot, expect results
The potential of networking
Exercise: What is your view of the future? Should a network be set up, or should C.N.C. autonomy be retained?
State two advantages of both options.
Network:
1.
2.
Autonomy:
1.
2.
answer: You might thought, for example, of some of the following:
Network:
1. Members can make transactions flexibly.
2. Many possibilities for future development and for pooling resources.
3. Reduce costs.
Autonomy:
1. Members value autonomy.
2. No particular demand for inter-C.N.C. transactions.
3. Members maintain control of own funds

Q: There is concern in some quarters that the introduction of computer technology can result in people in the
organisation being reduced to the status of mere operators. In a people-centred organisation such a development
would be worrying.
Discuss the main ways in which computers are used in C.N.C., and address the issue of whether they have
reduced the role of personnel in C.N.C. to any extent.
: Personnel Management and Industrial relations In C.N.C.
Exercise: Suggest four indicators of a poor personnel situation in an organisation, and four indicators of a good
personnel situation. We have given you an example to get you started.
Poor Good
1. High labour turnover 1. Low labour turnover
2. 2.
3. 3.
4. 4.
5. 5.

You will probably have mentioned some of the following:

......................................
Protecting profits or people?
Exercise: Do you think that the following personnel activities are as important for volunteers as for paid staff in
C.N.C.?
Training and development Y/N
Performance appraisal Y/N
Workforce planning Y/N
Motivation Y/N
Benefits Y/N
Recruitment and selection Y/N
Answer: We would suggest that most of these activities apply equally to volunteers as to paid staff. The
exception might be:
- compensation/re-numeration
- recruitment and
-

Workforce planning
Step 1: analyse current workforce resources
Step 2: forecast workforce demand
Exercise: There are probably very few C.N.C. where staff have been laid off, but C.N.C. do have to deal with
seasonal fluctuations in the demand for their services. How do they tend to deal with such fluctuations in terms
of personnel requirements?
Answer: Probably the most common way is by making variable use of volunteer staff. From an organisational
viewpoint, the existence of volunteers makes C.N.C. quite flexible organisation. Many conventional companies
would in fact like to go in the same direction to reduce their overhead costs, but are not always able to do so
largely because of Trade Union resistance.
Exercise: What the evolution of C.N.C. staffing patterns tells you?
Answer: Staffing patterns (diagram) indicate:
- initially, the growth of volunteers work up to a peak
- when the demand for services exceeds the abilities of volunteers to deliver services, paid staff are recruited,
who give a constant level of service
- the recruitment of paid staff results in some decline in the use of volunteer staff, but at peak periods the number
of volunteer staff (or numbers of hours worked by the same staff) increase to meet the peak demand.
Step 3: analysis of the sources of labour supply
Exercise: State two possible advantages and two possible disadvantages of appointing volunteer staff to paid
positions:
Advantages Disadvantages
1. 1.
2. 2.
Answers: You might have suggested some of the following:
Advantages Disadvantages
1. experience outsiders may bring fresh skills
2. familiarity with and to members charges of favouritism, could be bad for image
3. from local area volunteers may be good Board members, staff
appointments will not allow this
4. commitment

Step 4: develop action plans

Step 5: monitor and review

Personnel Management Activities Case

Exercise: Recruitment of new personnel is just one option open to management if demands on staff increase. Can
you suggest four alternatives?
1.
2.
3.
4.
Answers: You might have thought of some of the following:
- sub-contracting the job to an outside firm
- automation
- overtime
- re-deployment of existing personnel
- productivity bargaining to raise productivity
- increased flexibility of workforce.
Recruitment:
Exercise: List three criteria which should be included in a job specification for a teller.
1.
2.
3.
Answer: You might have suggested some of the following as examples:
- preferably previous experience working in financial organisation
- good ability with figures and basic computer knowledge
- well-organised and disciplined
- outgoing personality
Exercise: List at least one advantage and one disadvantage of internal recruitment.
Answer: You will probably have mentioned some of the following:
Advantages:
- low cost (but there may be training costs)
- good for morale and motivation
- management know the person’s abilities
Disadvantages:
- frustration amongst employees not selected
- potentially lost opportunities to recruit high quality staff from outside.
Exercise: Match the following positions to be filled with the most appropriate source for suitable applicants.
Position Source
C.N.C. manager Newspaper
Tellers/clerical staff College careers service
Graduate trainee Business magazines
Unskilled school leaver FAS
Answer: Well you might have chosen different sources, but we suggest the following:
Position Source
C.N.C. manager Business magazine or local newspaper
Tellers/clerical staff Local newspaper, or perhaps FAS, or College careers
service
Graduate trainee College careers service
Unskilled school leaver FAS

Training and development:

Exercise: It is sometimes felt that C.N.C. do not devote enough time and resources to staff training. List three
areas where training might be particularly required in C.N.C..
1.
2.
3.
Answers: Well, this vary, depending on the C.N.C.. You might have selected something out of the following list:
- financial accounting
- computing skills
- financial planning
- marketing skills
- administration/record-keeping
and so on.

Industrial work relations:

Trade Unions,
industrial conflict,
disciplinary procedures,
health, safety and welfare.
Exercise: Do you recall the positive roles of Trade Unions which we listed in Unit 2? State three of them.
1.
2.
3.
Answers: We suggested:
- Trade Unions wage rates and benefits set standards to which C.N.C. can aspire (the basis for the wage-level
decisions we discussed earlier).
- Trade Unions have long experience in a whole range of work-related issues such as health and safety.
- Trade Unions are experienced in disciplinary and grievance procedures.
- Trade Unions can represent individual workers as employees in the C.N.C..
Exercise: Do you recall two other features of the view that conflict is damaging to the organisation (traditional)
and that conflict can have positive results (interactionist)?
Traditional Interactionist
1. 1.
2. 2.
Answer: We suggested the following:
Traditional Interactionist
conflict available conflict inevitable
conflic caused by trouble makers conflict mostly due to structural factors
conflict should be dealt with by exertion of authority conflict is the necessary part of organisation’s change
individuals are scapegoated individuals not blamed
Grievance procedures can either be Individual or group or work-related or personal.
Disciplinary procedures
Exercise: What type of issues do you think the disciplinary process should cover?
Answers: Rules cover such matters as:
- personal conduct
- time-keeping
- absence
- health and safety
- performance and behaviour.
Exercise: Do you recall some of the features of the proposed disciplinary procedure? Suggest three silent
features.
1.
2.
3.
Answers: We suggested that:
- the personnel committee should ensure that an employee is advised of particular complaint before any meeting
is held
- the employee may be accompanied by someone such as a Trade Union official.

Q: The six employees of ABC C.N.C. have recently joined a Trade Union, and have approached the Board
through the manager to bargain collectively for improved pay and working conditions. As a board member, you
are in favour of this approach, but other Board members are sceptical.
Put forward reasons why the sceptical Board members should consider this approach more positively.

Personnel Management and Industrial Relations Issues in C.N.C.

When you have completed this section you should be able to:
- assess the importance of personnel management to C.N.C.
- describe the workforce planning process and explain the potential benefits it can bring to C.N.C. performance
- list and explain the many activities of personnel management as they relate to C.N.C.
- describe the many issues in the field of work relations of relevance to C.N.C..

You should read and understand to following headlines:

Personnel management and C.N.C.
Workforce planning
Personnel management activities
Industrial / work relations

In this section we looked at the role of personnel management in C.N.C., and its importance in C.N.C.
effectiveness.
First, we looked at the personnel management function, and at changing attitudes to personnel issues in
conventional and C.N.C. organisations.
We then looked at ‘workforce’ planning and the workforce planning process, examining in particular the
implications of changing demand for staff in a C.N.C., and how this changing demand might be met.
We moved on to discuss personnel activities in some detail, focusing on:
- recruitment and selection
- training and development
- performance appraisal
- compensation and benefits.
Finally, we discussed the important issue of ensuring good work relations, ad of developing effective procedures
for dealing with grievances and disciplinary problems. We also discussed the actual and potential role of Trade
Unions, and health, safety and welfare issues.

Groups in C,N.C.
When you have completed this section you should be able to:
- distinguish between ‘constructive’ and ‘destructive’ groups
- describe characteristics of an effective team
- state the benefits to C.N.C.s and similar organisations of teamwork
Groups: formal (permanent or temporary)/informal (functional, emotional)
Exercise: Commonly-observed informal roles within groups are:
- Task-oriented individuals (Those most interested in getting the job done)
- People-oriented individuals (Those concerned with ‘group maintenance’, i.e. inter-personal relationships within
the group)
- Deviants (Those who depart from group values)
- Old timers (Old hands in the group who know the ropes).
Can you list or describe three more informal roles which you have observed being carried out in group meetings
within your C.N.C. or in some other context?
Answers: This is a bit tricky. You might have thought of, for example:
- ‘Blockers’ - those who disagree with everything
- ‘Social climbers’ - those who use the group to further their own ambitions
- ‘Synthesisers’ - those who are good at bringing together different views
- ‘Yes-men’ - those who will agree with whichever seems to be the majority view, and so on.

We can underline the possible impact of different types of informal role-playing, by distinguishing between
constructive and destructive groups. Look at the following chart (J.Martin), 1989).
A. The Constructive Group:
- atmosphere in the group relaxed and comfortable - people involved and interested
- a lot of discussion, most people participate
- Objectives are well understood and agreed upon
- members of the group listen to each other
- disagreement takes place but this is accepted - conflicts are examined and attempts made to resolve them
- most decisions are reached by consensus, but opposition is not concealed
- criticism is frank but constructive and not personal
- people are free in expressing feelings and ideas about the group
- when action decisions are made, clear assignments are given and accepted
- leadership shifts depending on circumstances - different members become leaders when their qualities are most
needed
- the group regularly looks at its own operations though open discussion.

B. The Destructive Group

- an atmosphere of indifference and boredom
- a few people tend to dominate the discussion
- Objectives are not obviously understood or accepted
- people do not listen properly to each other and say little for fear of being criticised
- disagreements are not dealt with effectively - f(r)actions may emerge
- actions are often taken before issues are fully resolved
- criticism is personal and destructive
- personal feelings are concealed
- when decisions are made, it is not clear who will do what
- leadership is jealously guarded by one person (e.g. the Chairperson) whether capable or not
- the group does not go in for self-criticism - except outside meetings!

This chapter shows how affiliating persons can become independent and creative team members or
influence others on meetings. The next chapter use gained group and team behaviour skills, and extend
them into managerial skills. And then it is up to you whether you prefer to work in as independent among
equals or as manager of dependent individuals in difficult situations.

9. Managing Individuals: perception, attitudes, motivation, time-

management
Principal question: What you will do with all management knowledge mentioned up till now? Can you over
others in the given situation?
You should read and understand to following headlines:
Individual differences, perceptions and attitudes, motivation, leadership, human resource management,
Quality tools, Self-evaluation, Time-management
Definitions:
Individual differences:
1. When you have completed this chapter you should be able to:
2. List and describe the different physical and cognitive abilities
3. Describe the major personality factors and the styles of learning and thinking people may have and their
possible impact on performance as well as network relationships
4. Discuss significant outcomes affected by individual differences> creativity, job performance, and
counterproductive behaviour

Individual difference = Characteristics that vary from one person to another

Psychological contract = The exchange that underlines a person’s working relationship with an employer
Violations of the psychological contract = Employers violate agreements in some way (training/development,
compensations, promotion, nature of job, job security, feedback, management of change, responsibility, people,
other) and employees negatively correlate by satisfaction, trust, intention to remain with an organisation, and
positively correlate by turnover
Person-job-fit = The degree to which employer and employee each contribute what the other party is seeking
Ability = A person’s competence or skill in performing some activity well
Aptitude = The natural capacity to learn or acquire and ability
Physical abilities = Strength, flexibility, co-ordination, and endurance
Major physical abilities = Static strength, dynamic, explosive, and trunk (dynamic strength limited to leg
muscles) one, the dynamic flexibility, gross body co-ordination, and equilibrium, and stamina (capacity to
sustain maximum effect requiring cardiovascular exertion)
Major psychomotor abilities = Control precision, multilimb co-ordination (both hands packing), response
orientation, reaction time, speed of arm movement, rate control, manual dexterity (rapidly placing differently
shaped blocks into correct holes of a board), finger dexterity, arm-hand steadiness
Cognitive abilities = The capabilities to think intelligently and to analyse information
Personality = The relatively stable set of psychological characteristics and behaviour patterns that distinguish
one person from another
Extroversion/introversion = The degree to which a person is sociable, gregarious, talkative, and assertive
Emotional stability = The extent to which a person’s emotions are even
Agreeableness = The degree to which a person possesses such traits as courtesy, flexibility, trust, good nature,
co-operativeness, forgiveness, and tolerance
Conscientiousness = A person’s dependability and perseverance
Openness to experience = A person’s interest in and willingness to consider new ideas and experiences
Learning = The process of acquiring knowledge or skill
Cognitive style = The different ways people perceive and process information
Creativity = A person’s ability to generate new ideas or fresh ways of viewing existing ideas
Divergent thinking = Seeing differences between situations
Convergent thinking = Seeing similarities between situations
Job performance = Behaviours that are relevant to the organisation’s goals and can be measured in terms of each
individual’s proficiency, or level of contribution
Counterproductive behaviour = Activity that damages the employer, such as drug use and white-collar crime

Perceptions and attitudes:

When you have completed this section, you should be able to:
1. Discuss the steps in the perception process: attention, interpretation, retrieval, and judgement
2. Discuss the ways in which perception influences behaviour in the workplace
3. Define values and explain how they are important to the workplace
4. Explain how attitudes are formed and changed
5. Identify important work – related attitudes, and describe behaviours influenced by those attitudes and ways
organisations measure those attitudes

Perception = The process of noticing and making sense of information

Attention = A stage of perception in which people notice some information and filter out the rest
Expectations = What people think they will perceive (factors: needs, interests, external, intensity, contrast,
frequency, novelty)
Organisation = Stage of perception in which the perceiver uses schema to sort information
Schemas = Cognitive structures in which related items of information are grouped together
Script = Schema describing a sequence of actions
Prototype = Schemas that summarise characteristics about categories of people or objects
Halo error = A bias in perception that occurs when ratings of specific types of behaviour reflect the perceiver’s
overall rating of the person
Stereotype = A rigid, widely held prototype about the general characteristics of a group of people
Contrast effect = Perceiving something as larger or smaller than it is because of the size of a reference point
Anchoring and adjustment effect = Perceptual bias that involves making an insufficient adjustment from a given
value (an anchor)
Interpretation = Stage of perception that consists of looking for explanations for the stimuli observed
Projection = Assigning (often unconsciously) your own thoughts and feelings to the people you observe
Attribution = Using observations and inferences to explain the behaviour of others
Self-serving biases = The tendency to interpret information in a way that puts the perceiver in the best light
Retrieval = Stage of the perception process that consists of recalling information about past events
Judgement = The last stage of the perception process in which the perceiver uses retrieved information to arrive
at and overall conclusion
Assimilation effect = The tendency to bias current judgements in the direction of past judgements
Priming = Having raters recall a set of events shortly before asking them to make a judgement that may be
related to those events
Confirmation bias = The tendency to heavily weight information that reaffirms past judgements while
discounting information that would contradict them
Values = Beliefs that are stable, identify what a person considers important, and influence the person’s behaviour
Instrumental values = Beliefs about what kinds of behaviour are appropriate for reaching goals
Terminal values = Beliefs about what ends are worth striving for
Attitude = A combination of beliefs and feelings that predispose a person to act in a certain way
Cognitive dissonance = A conflict involving a person’s attitudes and behaviours
Job satisfaction = A positive attitude toward work
Organisational commitment = An attitude that consists of strongly identifying with one’s organisation and feeling
attached to it
Job involvement = Attitude of caring about one’s job so much that the employee routinely exceeds the normal
expectations for job performance
Ethnocentrism = Attitude that a person’s own culture is superior to others
Withdrawal behaviour = Avoidance of the work situation as a result of job dissatisfaction
Physical withdrawal = Removing oneself from the workplace through such means as absenteeism and turnover
Psychological withdrawal = Detachment from the work setting
Organisational citizenship = Behaviour that contributes to the well-being of the organisation

Motivation: Employee Empowerment and Participation

When you have completed this section you should be able to:
1. Discuss the link between motivation and behaviour
2. Describe expectancy model of the motivation process
3. Explain how people develop beliefs that their efforts will result in successful performance
4. Discuss how people come to associate their behaviours with particular outcomes
5. Describe models of the outcomes people find motivating
6. Discuss equity theory and its role in explaining which behaviours employees are willing to try
7. Describe how goals and goal setting influence motivation
8. Discuss the manager’s role in influencing motivation
9. Compare and contrast different theories on motivating employees in the workplace
10. Describe methods of job design which might help increase C.N.C. efficiency
11. Outline different approaches to creating a culture for employee empowerment

Motivation = combination of forces that lead people to behave as they do

Expectancy theory = Theory that motivation as a process in which people chose behaviours based on expectancy,
instrumentality, and valence
Expectancies = Beliefs about the link between trying to perform a behaviour and actually doing it well
Instrumentality = A belief that performing a given behaviour is associated with a particular outcome
Valence = The attractiveness of a particular outcome, or the satisfaction a person expects to receive from that
outcome
Social-learning theory = Theory that states most people learn how to behave by observing models
Self-efficacy = a person’s judgements about whether he or she can successfully carry out courses of actions
Learned helplessness = A complete lack of motivation to improve or remove oneself from undesirable situation
Hedonism = The concept that people generally behave in ways intended to maximise pleasure and minimise pain
Reinforcement theory = Psychological theory that people are motivated to perform or avoid particular
behaviours because of past outcomes associated with those behaviours
Self-reinforcement = The reinforcement or punishment of one’s own behaviours
Operant conditioning = Reinforcement approach that uses the processes of positive reinforcement, negative
reinforcement, and punishment
Positive reinforcement = A pleasurable stimulus or event following a desired behaviour resulting in an increase
in the frequency of that behaviour
Extinction = Process of withdrawing reinforcers to counteract a previous reinforcement
Negative reinforcement = the removal of an unpleasant stimulus following a desired behaviour resulting in an
increase in the frequency of that behaviour
Punishment = Presenting an unpleasant stimulus after a particular behaviour, leading to a decrease in the
behaviour
Goal-setting theory = Theory of motivation that links employee behaviour to goal characteristics and goal
commitment
Goal commitment = People’s willingness to work toward achieving goals and their reluctance to give up
Need theories = Theories of motivation that seek to explain what motivates people in terms of deficiencies that
individuals experience at a point in time
ERG theory = Alderfer’s theory that people are motivated by a hierarchy of existence, relatedness, and growth
needs
Theory of manifest needs = Theory that people are motivated by a variety of needs, which may arise in
combination
Need for achievement = Concern for attaining and maintaining self-set standards of excellence
Need for affiliation = Concern for building and maintaining relationships with people, for being accepted by
others
Need for power = Concern for attaining responsibility, influence, and reputation
Equity theory = Motivation is based on a person’s evaluation of the relationship between his or her efforts known
as inputs and the outcomes in comparison to the inputs and outcomes of another employee
Empowerment = Creating conditions in which employees perceive themselves as competent and in control of
performing meaningful tasks
Reward systém = Mechanism for defining desired behaviours, evaluating performance, and rewarding good
performance

Motivation and job satisfaction

Exercise: Which of the four orientations to work, do you think describes working in C.N.C.? (You may choose
more than one.)
Answers: What did you think? If you’re working as a volunteer, it couldn’t be and instrumental (earnings)
orientation!
But it could be a combination of the other three orientations, social, moral, and control. For paid workers, an
instrumental orientation will probably be one, but rarely the only, motivating factor.

Exercises: Listed below are four motivations and individual may have to work in a C.N.C.. Can you identify
which orientation applies to each statement?
a) ‘My best friend, Nuala, works on Friday night with me and we love a good chat among ourselves with a cup
of tea, and with the customers at the counter’
b) ‘I can do the work assigned to me by the board of directors in my own time, and without interference.’
c) ‘Paddy and myself are both in the Society for St. Vicent de Paul also, and feel that the two organisations are
complementary in providing a valuable service to the less affluent in the community.’
d) ‘I earn a good wage at my C.N.C..’
Answers: You should have identified the statements as follows:
a) Social, b) control, c) moral, d) instrumental.

Theories of motivation
Exercise: Using Maslow theory, what categories of need would you put the following needs of the C.N.C.
volunteer?
a) To be responsible, through my C.N.C., for providing a new enterprise centre in the community.
b) To ensure the viability and continued existence of the C.N.C..
c) To be chairman of the board of directors.
d) To meet friends at the meetings.
e) To provide valued financial services for me, my family and my community.
Answers: You should have identified these needs as follows:
a) Self-actualisation, b) Safety and shelter, c) Self-esteem, d) Social, e) Physiological.

Existence-related-growth (ERG) theory - Clayton Alderter:

This theory is similar to Maslow’s in the sense of recognising a hierarchy of needs, but there are three essential
differences:
- people’s needs are grouped into three categories - existence, relatedness, growth
- more than one level of need can provide motivation at the same time
- if needs at a higher level remain unfulfilled, the individual will become frustrated and regress to a lower of
needs.
Exercise: Refering back to the previous exercise which we completed in relation to Maslow’s Theory of
Motivation, could you now place these five statements into one of the three need categories of Alderter’s ERG
Theory, i.e. existence, relatedness growth.
a)
b)
c)
d)
e)
Answers: You should have identified these as follows:
a) Growth
b) Existence
c) Growth
d) Relatedness
e) Existence

Acquired needs theory - David McLelland - identified three basic needs (in no particular order) that can motivate
an individual:
- need for achievement
- need for affiliation
- need for power
Exercise: McLelland’s three needs bear some correspondence to the orientations to work we discussed earlier.
Which need best corresponds to which work orientation?
Need Work orientation
for achievement Instrumental
for affiliation Social
for power Moral
We would suggest the following:
- Need for achievement - mostly linked to instrumental orientation, to the extent that achievement is measured in
material terms:, could also relate to control orientation.
- Need for affiliation - mostly linked to social, and perhaps to moral, orientation.
- Need for power - mostly linked to control orientation.

Theory X vs Y - Douglas Mc Gregor

Exercise: McGregor’s theory focused on managerial assumptions about their employees’ behaviour and
motivation. Summarise the main assumptions of Theory X and Theory Y.
Theory X:
TheoryY:
Answers: Theory X assumes:
- people dislike work and will try to avoid it
- management therefore have to control, direct, threaten and coerce employees to get them to work towards
organisational goals
- people prefer to be directed, to avoid responsibility, to want security:, they have little ambition.
Theory Y assumes:
- people do not naturally dislike work:, it is part of their lives
- people are self-motivated to reach Objectives to which they are committed, and they get personal satisfaction
when they achieve their goals
- people will both seek and accept responsibility under favourable conditions
- people have the capacity to be innovative in solving organisational problems
- people are intelligent, but under most organisational conditions their potentials are under-utilised.

Two factor theory - Frederic Hertzberg: motivation, ‘hygiene’ factors.

Equity theory - Stacey Adams

What do you think is the likely outcome if an individual feels that he is under-rewarded in comparison to other
similar employees?
Answer: Basically, an individual who feels under-rewarded relative to someone else would either redouble his
efforts to be rewarded, or could take opposite approach and slacken off, feeling that his effort is not rewarded.

But there are there lessons for managers:

- prevent such perceived inequities from occurring by implementing fair and transparent payment system,
- find clear ways of rewarding effort, e.g. through verbal commendations, if not always materially.

Expectancy theory - Victor Vroom: (i) effort will lead to achievement, and (ii) achievement will lead to reward.
Exercise: The theories we have discussed in this sub-section suggest that motivation is quite an individual issue.
In other words, what motivates you may not necessarily motivate your colleague. Nonetheless, can you draw any
distinctions between factors motivating volunteers and those motivating paid staff working in a C.N.C.?
Answer: You will probably have suggested that there will be some differences. As we noted earlier, instrumental
benefits cannot be the aim of volunteers. We discussed in Unit 2 what volunteers do want out of work, i.e. factors
such as:
- social contact with others
- personal development
- skills acquisition and learning
- challenge and achievement
- making a contribution to society

Job design (rotation, enlargement, enrichment, characteristic approach, autonomous

work groups)
Job enlargement:
Exercise: Can you think of at least one disadvantage with this approach?
Answer: You may have mentioned one of the following:
- training costs can be high
- more tasks may imply more pay
- even after job enlargement, tasks may be essentially routine and boring
Job enrichment: more tasks and more control
Job characteristic approach:
- skill variety
- task identity
- task significance
- autonomy
- feedback
Exercise: The Board of directors have noticed that the quality of work performed by counter staff has declined
recently, and are of the opinion that this is due to the repetitive nature of the job. Using the job redesign methods
we have just discussed, can you think of ways of improving staff morale and performance.
Job rotation
Job enlargement
Job enrichment
Job characteristic approach
Autonomous work groups
Answer: Your answer may have included points similar to the following:
- Job rotation: the employee or volunteer could work at the purchasing counter on Monday, the sale counter on
Tuesday, do back room clerical work on Wednesday etc.
- Job enlargement: employees and volunteers are taught new tasks such as bookkeeping and computer
applications to increase their efficiency at the counter.
- Job enrichment: give employee more authority to grant loans to members, or give advise to them, making them
have control over deciding what package best suits the member.
- Job characteristic approach: volunteers and employees are invited to attend a meeting once a month detailing
how the C.N.C. is performing and how each of them are contributing to its effectiveness. They are asked if they
have any opinions as to how performance and service to members can be improved, and are provided with the
means to enrich their jobs as mentioned above.
- Autonomous work groups: employees and volunteers are divided into task groups who have responsibility for
the operation of a particular activity of the C.N.C., such as responsibility for Home union service and are given
free rein to market and operate this service.

Exercise: Answer the following True or False questions:

1. The traditional job design approach was based on scientific management T/F
2. Scientific management put emphasis on task identity - awareness of the whole task. T/F
3. Job enrichment involves workers doing more work for less pay. T/F
4. Job rotation is only an appropriate strategy for C.N.C. organisations. T/F
Answers: What did you come up with? The answers are:
1. True
2. False: Scientific management did not emphasise the whole task.
3. False: Job enrichment involves more work, or more varied work, but nothing is said about pay levels.
4. False: Job rotation, could be equally appropriate for conventional organisations, but within limits.

Creating a culture for employee empowerment and participation

Exercise: We have made the assertion that this our C.N.C. may have a better record on employee empowerment
than some other parts of C.N.C.s.
Why is this so (or do you disagree(? Give the reasons for your answer.
Answer: We would suggest that the autonomous nature and small size of individual C.N.C. of this kind are the
critical factors here:, these characteristics promote team work, which may be lacking in larger, more
conventionally structured organisations.

Quality of working life movement (QWM) - aims to:

- eliminate problems associated with traditional work systems
- make work more ‘meaningful’ for employees, with attendant benefits.
The movement recognises that employees generally want:
- to make a more positive input into organisational decision making
- increased involvement in job design.
Exercise: Can you think of any evidence of such approach being used in the C.N.C. of your kind?
Answer: You may have identified the Committee system within C.N.C., which allows particular committees the
independence to carry out the activities for which they are responsible. For example, the Promotion and
Development Committee with its USD ... budget is responsible for promoting the C.N.C. in the community and,
although under direction of the board, can more effectively perform its task if given the freedom to do so.

Quality circles:
Exercise: Try to recall the main aims of quality circles
Answer: Hopefully, you will have recalled most of the following:
- quality improvement
- productivity enhancement
- employee involvement
- improved communication and teamwork.

Q: Suppose your C.N.C. has been run by volunteers for the last few years. Now, the Board of Directors decides
that a manager and two half-time staff should be hired. They advertise the posts, and although some of the
volunteers apply for the half-time posts, these are instead given to applicants from outside the common bond
who have better ‘paper’ qualifications. After six month of operation with the paid staff, the Board notices to its
surprise a dropping off in activity and rise in the number of complaints about quality of service.
Discuss what factors, particularly in the area of motivation, might be causing the decline in activity and rise in
complains.
Teamwork in C.N.C.
Exercise: List three qualities of a successful team.
Answer: Hopefully you remembered what we have said in Unit 2! There we suggested that a successful team
has:
- a clear agreed objective
- definite roles for all members of the team
- trust between team members

Constructive informal roles (R.M.Belbin, 1981)

Type Typical Features Positive Qualities Allowable Weaknesses
Company Worker Conservative, predictable Good organiser, practical, Lack of flexibility
hard working
Chairman Calm, self-confident Treats all ideas on merits, Average in intellect or
clear on Objectives creative ability
Sharper Dynamic, highly strung Has drive, challenges Prone to impatience
complacency and inertia
Plant Individualistic, Imaginative, intelligent Tends to disregard
unorthodox practical details
Resource Investigator Extroverted, curious, Good at contacting people Liable to lose interest after
communicative and exploring anything initial enthusiasm
new
Monitor - Evaluator Unemotional, prudent Good judgement, hard Inability to inspire or
headed motivate others
Team worker Mild, sensitive Promotes team spirit Indecisive in crisis
completer - Finisher Painstaking, orderly, Perfectionist, able to Reluctant to ‘ùet go’,
conscientious follow through worries about small details
Belbin notes: ‘The useful people to have in the teams are those who possess strength or characteristics with
service need without duplicating those already there. Teams are a question of balance. What is needed is not well
balanced individuals but individuals who balance well with one another. In that way, human frailties can be
underpinned and strengths used to full advantage.’

Other suggested team roles are based on:

leadership,
ideas,
action,
But, Belbin suggests, these are not enough for a team to be effective. In addition, the team needs:
someone with sound judgement to evaluate ideas
someone to keep the team working together
someone to finalise anything that is started
He also suggests other three types of teams that can be successful:
- the team of ‘C.N.C. stable extroverts’
- the team where leadership is ‘in the hands of a superstar’
- the ‘Apollo company’
Let’s look briefly at these.
A team of ‘C.N.C. stable extroverts’ usually includes some but not all of the key roles: such a team mainly
comprises Team Workers and Resource Investigators who may also function as Company Workers. All members
tend to be flexible and enjoy working in teams. Such a team can be successful but may be prone to complacency
and over-optimism.

The team with ‘Superstar Leadership’ (usually from the Chairman) could also be successful but it could just as
easily fail, since so much depends on the ‘superstar’: if anything goes wrong the team tends to be slow to correct
the problem.

The ‘Apollo Company’ is a company which contains a high level of mental ability but has difficulties making
effective use of these resources. A good Chairman is important if this type of team is to be succeed.

Exercise: In relation to C.N.C.s and similar organisations, list three benefits that can be derived from teamwork
Answers: You might have included some of the following:
- improved motivation and commitment of team members
- may result in more creative ideas and solutions to problems
- teamwork promotes greater participation by members
- individuals are personally empowered by working in a team

In this section we looked at groups and teamwork, we first discussed different features of groups and of people
within them, focusing on:
- formal and informal groups
- formal and informal roles
- constructive and destructive groups.
We then moved on to discuss teamwork, and in particular we looked in detail at Belbin’s work, which identifies
eight key roles needing to be filled for a balanced and effective team.
Finally we looked at some examples of teamwork in C.N.C. groups and other bodies, underlining how effective
teamwork can be turned to the C.N.C.’s own benefit.

Power
When you have completed this section you should be able to:
- evaluate positive and negative aspects of power
- describe some of the main causes of conflict within organisations
- state ways of resolving conflicts.
Exercise: What is power? Attempt your won definition of power.
Answer: Power is the ability of one social unit to influence the behaviour of another social unit and to achieve
preferred situation or outcomes.
Wilson and Rosenfeld, 1990

‘My idea of power’, is something like this: A has power over B to the extent that he can get B to do something
that B would not otherwise do.
Robert Dahl, quoted in J. Gaventa, 1980

One of the most imprtant aspects of power ... is not to prevail in a struggle but to pre-determine the agenda of
struggle - to determine whether certain questions ever reach the competition stage.
Michael Parenti, quoted in Gaventa

A may exercise power over B by getting him to do what he does not want to do, but he also exercise power over
him by influencing, shaping or determining his very wants ... this may happen in the absence of observable
conflict, which may been successfully averted.
Stephen Lukes, quoted by Gaventa

We can look at power in terms of:

- individual aspects
- aspects related to the organisational structure
- aspects related to the external environment
- more ‘hidden’ determinants of power

Individual aspects of power

We can consider the sources of individual power. French and Raven suggest five key bases:
- Reward - the ability of one individual to reward another, e.g. a manager or Chairman’s ability to promote, pay
higher salaries, etc., provides them with a source of power over the person who might be rewarded.
- Coercive - if A has the power to operate sanctions against B, for example, the right to fire or reprimand B, then
A has a coercive source of power.
- Legitimate - if B accepts A’s right to request B to do something, then A has a legitimate source of power,
derived from his/her authority.
- Expert - if B believes that A has greater knowledge or skills, then A has another sence of power.
- Referent - if others in an organisation ‘look up to’ A, then A is granted a source of power and a power base, i.e.
loyal group of followers.
adapted from Wilson and Rosenfeld, op. cit., discussing French and Raven (1960)

Exercise: Which of the above bases of power do you think are relevant to exercise of power in a C.N.C., and
who exercises such power?
Answers: Potentially all five bases of power may be present in a C.N.C., but certainly the first three:
Reward: the Board in particular has this type of power over the staff, sometimes in conjunction with the
manager.
Coercive: similarly, the board has power to dismiss or reprimand the staff or the manager. The Supervisory
Committee has the power to suspend an Officer, but needs the approval of the general membership to uphold a
suspension.
Legitimate: the authority of the Board to make decisions derives from the Rules:, the authority of the manager to
make decisions affecting staff is likely to derive from job descriptions or contracts of employment.
Expert: This is more you should read and understand to following headlines in our source of power but, as the
fictional example suggested, factors, such as limited access to information, or greater experience, or a 3rd level
qualification, may be sources of this type of power, even if these factors are not relevant to particular context
(i.e. someone’s view might carry more weight just because he/she has a degree, even if they actually know little
about the issue being discussed).
Referent: some leaders attract a loyal following, perhaps because of strength of personality, perhaps because of
their genuine contribution to the C.N.C., or perhaps for less honourable reasons, such as an ability to use their
‘contacts’ to win favours for their followers.

We would suggest that:

- the fact that general members have the ‘ultimate’ authority is not always relevant to who makes decisions ‘on
their behalf’.
- even where the Board is the main source of power, there may be disproportionate influence of a minority on the
Board.
- in some cases the ‘real’ power may even lie with the manager, if he/she is effective in getting his/her priorities
taken up by the Board.

Ultimately, the positive exercise of power can become ‘empowering’, and this is and important issue for
democratic organisations. How far can ‘empowerment’ be taken?
- It can be empowering merely to be a member of a C.N.C., in the sense that a member has a stake in the
ownership: however, in practical terms that might not mean very much.
- A member can be empowered by gaining a specific benefit from the C.N.C., for example if the C.N.C. helps a
member to escape the clutches of (loan or receivable) sharks, he/she can be materially empowered.
- Involvement in the decision-making structures of the C.N.C. can be personally empowering: people gain
confidence, skills, knowledge, which improve their abilities both in making a contribution to the C.N.C. and
in a wider personal context.

Guiding, coaching, facilitating principles

Approach selection
People in virtual organisations are individuals seeking contacts and orders but protecting their territory. They
have to decide which kind of following educational, training, or learning approaches they select or how they will
combine them:

Niches protect their leaders from both competitors and new information. They are therefore responsible for
selection of such educational mix which fits to their conditions. One option is to start after the broad education.
Second option is to follow examples, images of organisations, organise excursions and practical placements. The
third option is improving skills with the help of handbooks for managers. All these options enable copying only.
The training option proposed here is based on project cycle and documentation exercising. Just exercising show
you mistakes which needn’t be done in the real situations.

2. Study text:
Goleman, D.: Working with Emotional intelligence. Bllomsbury 1998, ISBN 0 7475 3984 7

Guidelines for Emotional Competence Training

Asses the job: Training should focus on the competencies needed most for excellence in a given job or role.
Caveat: Training for irrelevant competencies is pointless.
Best practice: Design training based on a systematic needs assessment.

Assess the individual: The individual’s profile of strength and limitations should be assessed to identify what
needs improving.
Caveat: There’s no point in sending people for training in competencies they already have or do not need.
Best Practice: Tailor training to the individual’s needs.

Deliver assessments with care. Feedback on the person’s strength and weaknesses carries an emotional change.
Caveat: Inept feedback can be upsetting, skilful feedback is motivating.
Best practice: Use emotional intelligence in delivering initial evaluations of a person’s emotional competence.

Gauge readiness. People are at different level of readiness.

Caveat: When people lack readiness, training is more likely to be wasted.
Best practice: Assess for readiness, and if some is not yet ready, make cultivating readiness an initial focus.

Motivate. People learn to the degree they are motivated - for example, by realising that a competence is
important to doing their job well - and making the competence a personal goal for change. No organisation but
persons must change first.
Caveat: If people are unmotivated, training will lack effectiveness.
Best practice: Make clear how training will pay off on the job or for the individual’s career, or be otherwise
rewarding.

Make change self-directed. When people direct their learning program, tailoring it to their needs,
circumstances, and motivation, learning is more effective. (Not teacher but learner should design the self
adaptation to the organisational and market circumstances in the real time).
Caveat: One-size-fits-all training programs fit no one specifically.
Best practice: Have people chose their own goals for development and help them design their own plan for
pursuing them.

Focus on clear, manageable goals. People need clarity what the competence is and the steps needed to improve
it.
Caveat: Poorly focused or unrealistic programs for change lead to fuzzy results or failure.
Best practice: Spell out the specifics of the competence and offer a workable plan to get there.

Prevent relapse. Habits change slowly, and relapses and slips need not signal defeat.
Caveat: People can become discouraged by slowness of change and the inertia of old habits.
Best practice: Help people use lapses and slip-ups as lessons to prepare themselves better for the next time.

Give performance feedback. Ongoing feedback encourages and helps direct change.
Caveat: Fuzzy feedback can send the training off track.
Best practice: Design into the change plan feedback from supervisors, peers, friends - anyone who can help
coach, mentor, or give appropriate progress reviews.

Encourage practice. Lasting change requires sustained practice both on and off the job.
Caveat: A single seminar or workshop but not sufficient in itself.
Best practice: Use naturally arising opportunities for practice at work and at home, and try the new behaviours
repeatedly and consistently over a period of months.

Arrange support. Like-minded people who are also trying to make similar changes can offer crucial ongoing
support.
Caveat: Going it alone makes change tougher.
Best practice: Build a network of support and encouragement. Even a single buddy or coach will help.

Provide models. High status highly effective people who embody the competence can be models who inspire
change.
Caveat: A do-what-I-say-not-what-I-do attitude sin superiors undermines change.
Best practice: Encourage supervisors to value and exhibit the competence, make sure trainers do, too.

Encourage. Change will be greater if the organisation’s environment supports the change, values the
competence, and offers a safe atmosphere for experimentation.
Caveat: When there is no real support, particularly from bosses, the change effort will seem hollow - or too risky.
Best practice: Encourage change that fits the values of the organisation. Show that the competence matters for
job placement, promotion, performance review, and the like.
Reinforce change. People need recognition - to feel their change efforts matter.
Caveat: A lack of reinforcement is discouraging.
Best practice: Be sure the organisation shows it values the change in a consequential way: praise, a raise, or
expanded responsibility.

Evaluate. Establish ways to evaluate the development effort to see if it has lasting effects.
Caveat: Many or most development programs go unevaluated, and so mistakes or pointless programs go
unchanged.
Best practice: Find measures of the competence or skill as shown on the job, ideally before and after training,
and also several month (and if possible a year or two) later.

Performance appraisal
Exercise: What do you think are the main aims of a performance appraisal conducted by a C.N.C.?
Answer: You might have included some of the following:
- measurement of each job holder’s contribution to the overall aims of the C.N.C.
- identifying where this contribution can be improved
- improving communication and understanding between staff and management
- giving the job holder a say in how she/he should be performing, thereby raising her/his commitment and morale
- training needs can be identified and impact of training programmes can be assessed
- possible pay increase and promotions can be decided on.

Compensation benefits:
Exercise: In your opinion, will a credit union generally attempt to maintain uniformity between staff in its
payments and other benefits system, or will it make efforts to pay different levels according to experience,
qualifications, and so on?
Answer: Well, different C.N.C. will adopt different practices, but the tendency is probably to pay fairly uniform
rates. The main reason for this is that the job responsibilities of most paid staff (except for the manager) are
essentially similar. Also, the exaggeration of differences could have a damaging impact on teamwork.

Management Explanation Manager

skill
1 2 3 4 5 6
Performance The ability to review and rate objectively past performance and to
appraisal discuss and agree actions/objectives for the coming period
Performance To ability to help a subordinate identify, explore and own His/her
counselling own performance strengths and weaknesses, reinforcing strengths
and correcting weaknesses to achieve or maintain a high level of
performance
Objectives The ability to define clear, measurable, challenging but realistic
setting results with deadlines for achievement
Planning The ability to define how and objective will be achieved, stating or
agreeing who will do what by when and effectively anticipating
potential difficulties, but can change and adapt plans when required
Organising The ability to make effective use of available resources, set and
review priorities, make decisions and také responsibility of them
Problem – The ability to identify the root cause of a problem to permit effective
solving action
Decision - The ability to chose between various options using sound judgement
making rather than bias
Leadership The ability to achieve results through others, selecting the
appropriate style for the situation
Team – To develop the ability of working within a team by individual
building recognition of styles and strengths and to identify the strengths of
team members for maximum effectiveness and efficiency
Motivation The ability to create in others a willingness and commitment to
achieve the best performance of which they are capable
Time The ability to organise oneself effectively and to maintain and
management efficient control of time
Delegation The ability to identify and overcome difficulties of delegation
Selection The ability to extract effectively the necessary information from a
interviewing candidate to permit comparison with the job requirements and
enable a (later) decision to be made; to interest candidate in the
organisation/job
Assertiveness To identify assertiveness as a management skill. To distinguish
between aggressive behaviour and to give and receive criticism in a
constructive manner
Developing The ability to assess development potential effectively to train staff
staff
Letter and To enable clear, concise and effective communication in reports and
report writing letters
Leading and The ability to identify specific results to be achieved, defining the
participating appropriate structure, effective involvement of participants and
in meetings ensuring that the outcomes are clear and acceptable
Giving a The ability to present facts/opinions in a logical and clear way that
presentation to creates and maintains interest and achieves the level of
inform understanding required
Giving the The ability to present a proposal that highlights benefits to the
presentation to receiver, proves the case, effectively handles questions and secures
persuade approval
Influencing The ability successfully to convince others on the same level (or a
higher level) to change / negotiate in order to meet his/her own
objectives
Generating The ability to generate a wide range of novel options for evaluation
options and
creative
thinking
Managing The ability to identify opportunities for improving standards, to plan
change and organise change, to develop objectives and systems
Communicatio
n skills:
- To/with The ability to successfully communicate with others and to
others encourage others to as well
- Listening To demonstrate sound listening skills
skills
- Questioni To identify the varying types of question and which to use in various
ng skills different situations

Rating system for management skills

Rating Explanation
1 Rarely displays this skill, if at all
2 Occasionally displays this skill but considerable development is required
3 Moderately proficient in this skill but there is still scope for improvement
4 Displays strength in this skill on some occasions, but not consistently
5 Displays significant strength in this skill consistently

To prevent perceptual error called “hello effect” the rating systém for management skills should contain different
viewpoints: Manager’s (marked in column as A) and self-assessment (marked in column as B), or self –
assessment and other’s rating

Which of management skills can be substituted by better information systems?

- motivation using visual management principles
- time management using weekly plans
- performance appraisal using self-evaluation questionnaires
- objectives setting using quality tools

What are you responsible for in the group project? Show it in the last table of lecture 7.