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CIMA Passcards New
Management Paper E2 syllabus
2015
Project and Relationship Management
Passcards for exams in 2015 and 2016
PUBLISHED MAY 2015
CME2PC2H15.indd 1 05/05/2015 11:07
(000)CME2PC14_FP_Ricoh.qxp 5/9/2015 12:32 AM Page i
Management Paper E2
Project and Relationship Management
(000)CME2PC14_FP_Ricoh.qxp 5/9/2015 12:32 AM Page ii
3ECOND EDITION 4HE CONTENTS OF THIS BOOK ARE INTENDED AS A GUIDE AND NOT
)3". PROFESSIONAL ADVICE !LTHOUGH EVERY EFFORT HAS BEEN MADE TO
ENSURE THAT THE CONTENTS OF THIS BOOK ARE CORRECT AT THE TIME OF
E )3". GOING TO PRESS "00 ,EARNING -EDIA MAKES NO WARRANTY THAT
British Library Cataloguing-in-Publication Data THE INFORMATION IN THIS BOOK IS ACCURATE OR COMPLETE AND ACCEPT
! CATALOGUE RECORD FOR THIS BOOK IS AVAILABLE FROM THE NO LIABILITY FOR ANY LOSS OR DAMAGE SUFFERED BY ANY PERSON
"RITISH ,IBRARY ACTING OR REFRAINING FROM ACTING AS A RESULT OF THE MATERIAL IN
THIS BOOK
0UBLISHED BY 0RINTED IN THE 5NITED +INGDOM
"00 ,EARNING -EDIA ,TD BY 2ICOH 5+ ,IMITED
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(000)CME2PC14_FP_Ricoh.qxp 5/9/2015 12:32 AM Page iii
Preface #ONTENTS
7ELCOME TO "00 ,EARNING -EDIAS #)-! Passcards FOR Management Paper E2 Project and Relationship
Management.
! 4HEY focus on your exam AND save you time
! 4HEY INCORPORATE diagrams TO KICKSTART YOUR MEMORY
! 4HEY FOLLOW THE OVERALL structure OF THE "00 ,EARNING -EDIA 3TUDY 4EXTS BUT "00 ,EARNING -EDIAS #)-!
Passcards ARE NOT JUST A CONDENSED BOOK %ACH CARD HAS BEEN SEPARATELY DESIGNED FOR CLEAR PRESENTATION
4OPICS ARE SELF CONTAINED AND CAN BE GRASPED VISUALLY
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2UN THROUGH THE Passcards AS OFTEN AS YOU CAN DURING YOUR FINAL REVISION PERIOD 4HE DAY BEFORE THE EXAM TRY
TO GO THROUGH THE Passcards AGAIN 9OU WILL THEN BE WELL ON YOUR WAY TO PASSING YOUR EXAMS
Good luck!
0AGE III
(000)CME2PC14_FP_Ricoh.qxp 5/9/2015 12:32 AM Page iv
0REFACE Contents
Page Page
A )NTRODUCTION TO STRATEGY n 0ART ! #OMMUNICATION NEGOTIATION AND CONFLICT
B )NTRODUCTION TO STRATEGY n 0ART " #ONTROL AND THE FINANCE FUNCTION
'ENERAL ENVIRONMENT #HANGE MANAGEMENT
#OMPETITIVE ENVIRONMENT A 0ROJECT MANAGEMENT n 0ART !
+EY CONCEPTS IN MANAGEMENT B 0ROJECT MANAGEMENT n 0ART "
#ULTURE 4HE PROJECT TEAM
(001)CME2PC14_CH01_A.qxp 5/9/2015 12:34 AM Page 1
1a: Introduction to strategy – Part A
Introduction to strategy
Part A
What is strategy?
Key elements of strategy Planned strategies
Rational model key stages
Other approaches to strategy
Crafting emergent strategies Benefits & problems with
planning
Incremental/adaptive
Freewheeling opportunism
(001)CME2PC14_CH01_A.qxp 5/9/2015 12:34 AM Page 2
What is 4HE RATIONAL %MERGENT /THER 3TRATEGY AND
strategy? MODEL STRATEGIES APPROACHES STRUCTURE
Strategy Tactics
! COURSE OF ACTION INCLUDING THE SPECIFICATION OF 4HE DEPLOYMENT OF RESOURCES TO EXECUTE AN AGREED
RESOURCES REQUIRED TO MEET A SPECIFIC OBJECTIVE STRATEGY
Policy Strategic management
5NDATED LONG LASTING AND OFTEN UNQUANTIFIED 4HE DEVELOPMENT IMPLEMENTATION AND CONTROL OF
STATEMENT OF GUIDANCE REGARDING THE WAY ORGANISATIONS AGREED STRATEGIES
WILL SEEK TO BEHAVE IN RELATION TO THEIR STAKEHOLDERS
Strategic plan
3TATEMENTS OF LONG
TERM GOALS ALONG WITH THE DEFINITION OF THE STRATEGIES AND POLICIES WHICH WILL
ENSURE ACHIEVEMENTS OF THESE GOALS
(001)CME2PC14_CH01_A.qxp 5/9/2015 12:34 AM Page 3
&INANCIAL Levels of strategy
STRATEGY
Corporate strategy @IS CONCERNED WITH WHAT
types of business THE COMPANY AS A WHOLE
PROVIDES FINANCE
SHOULD BE IN AND IS THEREFORE CONCERNED WITH
DECISIONS OF scope *OHNSON AND 3CHOLES
)NVESTMENT AND 0ROVIDES CASH
RESOURCE STRATEGY AND PROFIT Business strategy DEFINES HOW THE
ORGANISATION APPROACHES A PARTICULAR market OR
PROVIDES RESOURCES THE ACTIVITY OF A PARTICULAR business unit
Operational and functional strategies ARE
#OMPETITIVE MADE AT OPERATIONAL LEVEL IN ORDER TO IMPLEMENT
STRATEGY CORPORATE AND BUSINESS STRATEGIES
0AGE 1a: )NTRODUCTION TO STRATEGY n 0ART !
(001)CME2PC14_CH01_A.qxp 5/9/2015 12:34 AM Page 4
7HAT IS The rational %MERGENT /THER 3TRATEGY AND
STRATEGY model STRATEGIES APPROACHES STRUCTURE
The rational model of strategic planning
Mission Vision and strategic
! 0URPOSE ! 0RODUCTS intent
! 0OLICIES ! 6ALUES
7HERE THE ORGANISATION WANTS TO BE
! #OMPETENCES ! #ULTURE
Strategic analysis
Goals
! 3TAKEHOLDER EXPECTATIONS
Objectives
! 1UANTIFIED MEASURES Position audit
Environmental analysis Strengths and weaknesses
Opportunities and threats
! 0%343,%04
Corporate appraisal ! 2ESOURCES COMPETENCES
! 6ALUE CHAIN
! &ORCES ! 37/4 ANALYSIS ! 3YSTEMS STRUCTURE
! 3CENARIOS ! 'AP ANALYSIS ! 0ORTFOLIO ANALYSIS
(001)CME2PC14_CH01_A.qxp 5/9/2015 12:34 AM Page 5
Corporate strategic choice
Generating options: ! 6ALUE CHAIN
Strategic choice
! 3CENARIOS
! 'ENERIC STRATEGIES To strategic
! 0RODUCT
MARKET VECTOR analysis
! !CQUISITIONGROWTH
Evaluating options: ! Acceptability n STAKEHOLDERS
! Suitability n MISSION STRATEGIC INTENT
! Feasibility n RESOURCES
Selecting strategy
REVIEW and
Strategic implementation
Strategy implementation CONTROL
! 2ESOURCE PLANNING
! /PERATIONS PLANS
! 3TRUCTURE
! #ULTURE ACTUAL
! #HANGE PERFORMANCE
! &UNCTIONAL STRATEGIES
0AGE 1a: )NTRODUCTION TO STRATEGY n 0ART !
(001)CME2PC14_CH01_A.qxp 5/9/2015 12:34 AM Page 6
7HAT IS The rational %MERGENT /THER 3TRATEGY AND
STRATEGY model STRATEGIES APPROACHES STRUCTURE
For and against the rational model
For Against
! )DENTIFIES RISKS ! .OT PROVEN TO BRING ADVANTAGE
! &ORCES MANAGERS TO THINK ! -AY BECOME OVER FORMAL AND REDUCE INITIATIVE
! &ORCES DECISION
MAKING ! !SSUMES INTERNAL POLITICS DO NOT EXIST
! &ORMAL TARGETS ENABLE CONTROL ! !SSUMES MANAGERS KNOW EVERYTHING
! %NFORCES ORGANISATIONAL COHERENCE AND ! $IVORCES PLANNING FROM DOING
CO
ORDINATION
! #ANNOT COPE WITH SHOCKS AND DISCONTINUITIES
(001)CME2PC14_CH01_A.qxp 5/9/2015 12:34 AM Page 7
7HAT IS 4HE RATIONAL Emergent /THER 3TRATEGY AND
STRATEGY MODEL strategies APPROACHES STRUCTURE
Emergent 0LANS OR INTENDED
STRATEGIES
$ELIBERATE
STRATEGIES
strategies 5NREALISED 2EALISED
STRATEGIES STRATEGIES
0ATTERNS OF %MERGENT
BEHAVIOUR STRATEGIES
Manage
stability
Mintzberg SAYS STRATEGY MUST BE crafted
Know the Detect
! PURELY deliberate STRATEGY HAMPERS LEARNING
business CRAFTING discontinuity
RAPIDLY FROM EXPERIENCE
STRATEGY
! PURELY emergent STRATEGY HAMPERS CONTROL
Manage emerging Reconcile change
patterns and continuity
0AGE 1a: )NTRODUCTION TO STRATEGY n 0ART !
(001)CME2PC14_CH01_A.qxp 5/9/2015 12:34 AM Page 8
7HAT IS 4HE RATIONAL %MERGENT Other 3TRATEGY AND
STRATEGY MODEL STRATEGIES approaches STRUCTURE
Bounded rationality Incrementalism
3TRATEGIC MANAGERS DECISION MAKING IS CONSTRAINED $EVELOPMENT BY SMALL SCALE EXTENSIONS OF PAST
BY THE TIME AND AMOUNT OF INFORMATION AVAILABLE TO PRACTICES
THEM AND BY THEIR OWN SKILLS HABITS AND AWARENESS
4HIS APPROACH AVOIDS MAJOR ERRORS BY THE EXERCISE OF
4HEY CAUTION AND PRODUCES ACCEPTABLE SOLUTIONS BECAUSE IT
! $O not CONSIDER ALL OPTIONS BUT CHOOSE FROM A USES CONSULTATION COMPROMISE AND ACCOMMODATION
RESTRICTED RANGE
! -AKE POLITICAL COMPROMISES BY partisan mutual Logical incrementalism COMBINES THIS APPROACH
adjustment WITH AN IN DEPTH REVIEW TO ESTABLISH THE BROAD
! Satisfice RATHER THAN OPTIMISE OUTLINES OF STRATEGY
Freewheeling opportunism Renewal
3UGGESTS FIRMS SHOULD NOT BOTHER WITH STRATEGIC ! #REATIVITY ! 4RUST
PLANS AND SHOULD EXPLOIT OPPORTUNITIES AS THEY ARISE ! ,EARNING ! 3UPPORT
! )NITIATIVE
(001)CME2PC14_CH01_A.qxp 5/9/2015 12:34 AM Page 9
Strategy Safari
)N THE BOOK g3TRATEGY 3AFARI 4HE #OMPLETE 'UIDE THROUGH THE 7ILDS OF 3TRATEGIC -ANAGEMENTg -INTZBERG
!HLSTRAND AND ,AMPEL OUTLINE TEN DIFFERENT SCHOOLS OF THOUGHT TO THE PROCESS OF STRATEGIC DEVELOPMENT
10 schools
! 4HE DESIGN SCHOOL ! 4HE LEARNING SCHOOL
! 4HE PLANNING SCHOOL ! 4HE POWER SCHOOL
! 4HE POSITIONING SCHOOL ! 4HE CULTURAL SCHOOL
! 4HE ENTREPRENEURIAL SCHOOL ! 4HE ENVIRONMENTAL SCHOOL
! 4HE COGNITIVE SCHOOL ! 4HE CONFIGURATION SCHOOL
Mintzberg, Ahlstrand and Lampel do not claim that one particular approach to strategy development
is best. Their work simply offers a range of different ways in which organisations may approach the
process of strategic development.
0AGE 1a: )NTRODUCTION TO STRATEGY n 0ART !
(001)CME2PC14_CH01_A.qxp 5/9/2015 12:34 AM Page 10
7HAT IS 4HE RATIONAL %MERGENT /THER Strategy and
STRATEGY MODEL STRATEGIES APPROACHES structure
Structure is an important aspect of the implementation of strategy and should be optimised to
support the overall strategic approach.
Significant strategic considerations Possible structural response
! ,ARGE SIZE PLUS DIVERSIFIED PRODUCTS ! $IVISIONALISED FORM
! 0ROJECT BASED PRODUCTION ! -ATRIX ADHOCRACY
! 3TABLE ENVIRONMENT AND ACTIVITY NEED FOR ! "UREAUCRACY MACHINE OR PROFESSIONAL
EXPERTISE AND PRECISION ! 3IMPLE FORM
! )NNOVATION UNSTABLE ENVIRONMENT
(002)CME2PC14_CH01_B.qxp 5/9/2015 12:35 AM Page 11
1b: Introduction to strategy – Part B
Introduction to strategy
Part B
Levels of strategy
Concepts in established and
Mission and mission emergent thinking Resource-based
statement v Positioning
Positioning approach
Goals and objectives Balanced scorecard
Resource-based
Value chain analysis
Transaction cost approach Critical success factors
Core resources and
Competences
(002)CME2PC14_CH01_B.qxp 5/9/2015 12:35 AM Page 12
Established and 4HE TRANSACTION 4HE VALUE CHAIN -ISSION 'OALS AIMS AND )MPLEMENTATION
emergent ideas COST APPROACH OBJECTIVES
Positioning approach and resource-based approach
2ATIONAL MODEL
%MERGENT MODEL
!,, ABOUT positioning
)NCREMENTALISM TO CREATE COMPETITIVE
%COLOGY MODEL ADVANTAGE
)N CONTRAST THE resource-based approach SUGGESTS THAT THE ENVIRONMENT IS TOO UNCERTAIN FOR THIS TO WORK AND
THAT COMPETITIVE ADVANTAGE COMES FROM THE POSSESSION OF unique resources.
! Scarce resources EG INTELLECTUAL PROPERTY RAW MATERIALS BRAND
! Core competences ARE THOSE THAT BOTH OUT PERFORM COMPETITORS AND ARE DIFFICULT TO IMITATE 4HEY CAN BE
VERY SPECIALISED
(002)CME2PC14_CH01_B.qxp 5/9/2015 12:35 AM Page 13
Four point criteria Distinctive capabilities
"ARNEY PROPOSED THE FOLLOWING FOUR POINT 2ESOURCE BASED THEORISTS HAVE ATTEMPTED TO IDENTIFY
CRITERIA WHEN EVALUATING THE VALUE OF AN WHERE INTERNAL COMPETITIVE ADVANTAGE COMES FROM
ORGANISATIONS unique resources Kay SUGGESTS THAT COMPETITIVE ADVANTAGE
COMES FROM A COMBINATION OF
! Competitive architecture. 4HIS REFERS TO THE
Four point criteria RELATIONSHIPS THAT MAKE UP THE ORGANISATION
! Reputation. 4HIS REFERS TO THE STANDING THAT THE
! 6ALUABLE
ORGANISATION HAS CREATED AMONG KEY STAKEHOLDERS
! 2ARE INCLUDING CUSTOMERS SUPPLIERS AND INVESTORS
! )MPERFECTLY IMITABLE
! Innovative ability. 4HIS IS CONCERNED WITH
! 3UBSTITUTABILITY DEVELOPING NEW PRODUCTS AND SERVICES
! Possession of strategic assets. 4HIS REFERS TO
THOSE UNIQUE RESOURCES AND COMPETENCES THAT THE
ORGANISATION MAY HAVE
0AGE 1b: )NTRODUCTION TO STRATEGY n 0ART "
(002)CME2PC14_CH01_B.qxp 5/9/2015 12:35 AM Page 14
%STABLISHED AND The transaction 4HE VALUE CHAIN -ISSION 'OALS AIMS AND )MPLEMENTATION
EMERGENT IDEAS cost approach OBJECTIVES
How to organise production?
Market basis Hierarchy basis
Transaction costs #OSTS ASSOCIATED #OSTS ASSOCIATED WITH PREMISES
WITH contracts SERVICES EMPLOYMENT ADMINISTRATION
Uncertainty DUE TO CHANGE MAKES
Problems LONG
TERM CONTRACTS UNSATISFACTORY -ANAGERS SUBVERT MISSION AND PURSUE
3HORT
TERM CONTRACTS INCREASE PERSONAL OR SYSTEM GOALS -ONOPOLISTIC
COSTS Bounded Rationality INEFFICIENCY STAGNATION AND INEFFICIENCY
MEANS THAT THERE IS NO PERFECT OF OVERLARGE AND COMPLEX BUREAUCRACY
KNOWLEDGE OF THESE CHANGES ARE OTHER PROBLEMS
Asset specificity SEE NEXT PAGE
(002)CME2PC14_CH01_B.qxp 5/9/2015 12:35 AM Page 15
Asset specificity
2ELATIONSHIP
SPECIFIC ASSETS ARE ASSETS WHICH HAVE LITTLE OR NO APPLICATION OUTSIDE OF A SPECIFIC COMMERCIAL
RELATIONSHIP
Insights of the transaction cost approach
! !SSET SPECIFICITY DRIVES vertical integration AND THUS THE GROWTH OF ORGANISATIONS
! 0OSSESSION OF VITAL resources AND core capabilities CAN REDUCE COST AND INCREASE CONTROL
! ,IKEWISE contracting for non-core services and supplies CAN REDUCE COST AND COMPLEXITY
! Divisional form OF ORGANISATION CAN REDUCE EXTENT OF BUREAUCRACY AND SUBVERSION OF MISSION
Outsourcing or contracting FOR NON CORE SERVICES IS BENEFICIAL IF IT WILL SAVE THE COMPANY MONEY
! COMPANY SHOULD NOT HOWEVER OUTSOURCE THE RESOURCES AND COMPETENCES WHICH GIVE IT ITS COMPETITIVE
ADVANTAGE
0AGE 1b: )NTRODUCTION TO STRATEGY n 0ART "
(002)CME2PC14_CH01_B.qxp 5/9/2015 12:35 AM Page 16
%STABLISHED AND 4HE TRANSACTION The value chain -ISSION 'OALS AIMS AND )MPLEMENTATION
EMERGENT IDEAS COST APPROACH OBJECTIVES
0ORTER GROUPED THE VARIOUS ACTIVITIES OF AN ! FIRMS VALUE CHAIN IS CONNECTED TO WHAT 0ORTER CALLS A
ORGANISATION INTO A value chain value system
&)2- ).&2!3425#452%
3500/24 !#4)6)4)%3
(5-!. 2%3/52#% -!.!'%-%.4
-!
2'
).
4%#(./,/'9 $%6%,/0-%.4
$ISTRIBUTORRETAILER
02/#52%-%.4 VALUE CHAINS
/RGANISATIONS #USTOMER
)."/5.$ /54"/5.$ -!2+%4).' VALUE VALUE
-!
/0%2!4)/.3 3%26)#% CHAIN CHAINS
2'
,/')34)#3 ,/')34)#3 3!,%3
).
3UPPLIER
VALUE
02)-!29 !#4)6)4)%3 CHAINS
4HE margin IS THE EXCESS THE CUSTOMER IS PREPARED TO pay OVER Using the value chain ! FIRM CAN SECURE COMPETITIVE
THE cost TO THE FIRM OF OBTAINING RESOURCE INPUTS AND PROVIDING ADVANTAGE IN SEVERAL WAYS
VALUE ACTIVITIES )T REPRESENTS THE value created BY THE value ! )NVENT NEW OR BETTER WAYS TO DO ACTIVITIES
activities THEMSELVES AND BY THE management of the linkages ! #OMBINE ACTIVITIES IN NEW OR BETTER WAYS
BETWEEN THEM Linkages CONNECT THE ACTIVITIES IN THE VALUE ! -ANAGE THE LINKAGES IN ITS OWN VALUE CHAIN
CHAIN 4HE ACTIVITIES AFFECT ONE ANOTHER AND THEREFORE MUST BE CO ! -ANAGE THE LINKAGES IN THE VALUE SYSTEM
ORDINATED
(002)CME2PC14_CH01_B.qxp 5/9/2015 12:35 AM Page 17
%STABLISHED AND 4HE TRANSACTION 4HE VALUE CHAIN Mission 'OALS AIMS AND )MPLEMENTATION
EMERGENT IDEAS COST APPROACH OBJECTIVES
All organisations have a reason for existence. A clear statement of purpose is an important input into
management at all levels.
Vision Mission
4HE STRATEGIC THINKERS IDEA OF WHAT THE ORGANISATION @4HE ORGANISATIONS BASIC FUNCTION IN SOCIETY
COULD BE IN THE FUTURE -INTZBERG
)T MUST NOT IGNORE PRACTICAL PROBLEMS OR DEGENERATE )NCLUDES TYPICALLY
INTO WISHFUL THINKING
! Purpose
Strategic intent ! "ASIC strategy EG PRODUCTS
! Policies AND standards of behaviour
! DREAM TO STRETCH AND ENERGISE THE ORGANISATION
TO GIVE A SENSE OF DIRECTION AND COHERENCE TO PLANS ! Values AND culture
(AMEL AND 0RAHALAD n "USINESS PRINCIPLES
n )NTERNAL RELATIONSHIPS
Used to n "EHAVIOUR
0LAN EVALUATE AND IMPLEMENT
0AGE 1b: )NTRODUCTION TO STRATEGY n 0ART "
(002)CME2PC14_CH01_B.qxp 5/9/2015 12:35 AM Page 18
%STABLISHED AND 4HE TRANSACTION 4HE VALUE CHAIN -ISSION Goals, aims and )MPLEMENTATION
EMERGENT IDEAS COST APPROACH objectives
Goals and Objectives
Goals and objectives FLOW FROM MISSION 4HE TERMINOLOGY IS NOT STANDARDISED
4HEY SHOULD BE 4HEY SHOULD BALANCE 4HEY SHOULD BE consistent ACROSS THE
! SPECIFIC ! ,ONG TERM CONSIDERATIONS ORGANISATION SO THAT ALL PULL TOGETHER
! MEASURABLE ! 3HORT TERM IMPERATIVES
! ATTAINABLE
Where goals are broken down into targets for departments
!
!
RESULTS ORIENTED
TIME BOUNDED
MBO and individuals.
CSF Those factors which are essential and effective in delivering
competitive advantage.
(002)CME2PC14_CH01_B.qxp 5/9/2015 12:35 AM Page 19
Hierarchy of objectives
&OR A COMMERCIAL ORGANISATION THE HIGHEST LEVEL OF OBJECTIVE WILL ALWAYS BE BASED ON profitability OVER THE
LONG TERM THOUGH growth MAY BE REGARDED AS OF EQUAL IMPORTANCE
How to deal with conflict between the demands
Secondary objectives INCLUDE FUNCTIONAL of secondary objectives
AND DEPARTMENTAL OBJECTIVES AS WELL AS
CORPORATE OBJECTIVES THAT SUPPORT THE ! Bargaining BETWEEN MANAGERS
MAIN OBJECTIVE ! Satisficing IE SATISFACTORY RATHER THAN IDEAL PERFORMANCE
! Sequential attention TO GOALS IN TURN
! Priority setting BY SENIOR MANAGERS
+APLAN AND .ORTON SUGGEST A balanced scorecard FOR MEASURING PERFORMANCE 4HIS IS ALSO A VALID APPROACH
TO SETTING OBJECTIVES BUSINESS MUST WORK TOWARDS ACHIEVEMENT IN FOUR perspectives.
! &INANCIAL PERFORMANCE ! #USTOMER SATISFACTION
! )NTERNAL SYSTEMS AND METHODS ! )NNOVATION AND LEARNING
0AGE 1b: )NTRODUCTION TO STRATEGY n 0ART "
(002)CME2PC14_CH01_B.qxp 5/9/2015 12:35 AM Page 20
%STABLISHED AND 4HE TRANSACTION 4HE VALUE CHAIN -ISSION 'OALS AIMS AND Implementation
EMERGENT IDEAS COST APPROACH OBJECTIVES
)MPLEMENTATION REQUIRES DETAILED PLANNING AND MANAGEMENT OF RESOURCES AND OPERATIONS
Resource planning Operations planning
1 Resource audit ESTABLISHES CURRENTLY 1 Decide WHAT IS TO BE DONE BY WHOM WHEN
AVAILABLE OR OBTAINABLE RESOURCES AND AT WHAT COST
2 Estimate resources REQUIRED FOR STRATEGY AND 2 3ET UP control points AND METHODS OF
WHETHER THOSE AVAILABLE ARE ADEQUATE MONITORING PERFORMANCE
3 Assign responsibility TO MANAGERS FOR
ACQUISITION USE AND CONTROL OF RESOURCES Review and control
4 Identify constraints AND INFLUENCES ON ! Implementation REMAINS THE RESPONSIBILITY OF
AVAILABILITY AND USE OF RESOURCES SENIOR MANAGERS
$ETAILED PLANS ARE MADE IN LIGHT OF ! Control SHOULD DEAL WITH DEADLINES TARGETS
! Critical success factors RESOURCES PRODUCTS AND MARKETS
! Key tasks
! Control systems MUST BE DESIGNED IN DETAIL
! Priorities
(003)CME2PC14_CH02.qxp 5/9/2015 12:35 AM Page 21
2: General environment
General environment
Environmental factors
PESTEL and Competitive advantage Stakeholder goals
LongPEST of a nations industries & objectives
Political and legal
Economic
Social
Technological
(003)CME2PC14_CH02.qxp 5/9/2015 12:35 AM Page 22
The organisation 0%34%, 3TAKEHOLDERS #OMPETITIVE
and its environment FACTORS,O.'0%34 ADVANTAGE OF NATIONS
/NE IMPORTANT APPROACH TO MAKING STRATEGY IS
SEEKING A GOOD FIT WITH THE ENVIRONMENT
The impact of uncertainty
#OMPLEXITY DYNAMISM UNCERTAINTY
Complexity
! 6ARIETY OF INFLUENCES
0/,)4)#3 4%#(./,/'9 ! )NTERCONNECTEDNESS
#/-0%4).'
/2'!.)3!4)/.3
34!+%(/,$%23 'OODS TO Dynamism
3500,)%23 CUSTOMERS
-!4%2)!,3 0/,,54)/.
,!"/52 /RGANISATION 7AGE TO ! 0ACE OF CHANGE
LABOUR
#!0)4!,
0ROFIT TO (IGH UNCERTAINTY LEADS TO
4! INVESTORS
+ %.6 )2/.-%.4
3
3/#)%49 ! $ESIRE FOR MORE information
%#/./-9 #5,452%
' %. %
2!, %.6)2/ .-%.
4 ! Conservative STRATEGY WITH SOME emergent
STRATEGY
0(9 4
3)#!, %.6)2/ .-%.
! #LOSE PLANNING TIME HORIZON
(003)CME2PC14_CH02.qxp 5/9/2015 12:35 AM Page 23
4HE ORGANISATION PESTEL 3TAKEHOLDERS #OMPETITIVE
AND ITS ENVIRONMENT factors/LoNGPEST ADVANTAGE OF NATIONS
! FRAMEWORK FOR ANALYSING THE ENVIRONMENT IS 0%34
Political/legal factors Economic factors
-ANY ASPECTS OF BUSINESS ACTIVITY ARE SUBJECT TO 4HESE OPERATE IN BOTH A NATIONAL AND INTERNATIONAL
LEGAL REGULATION CONTEXT 2ELEVANT FACTORS INCLUDE
! #ONTRACT ! %MPLOYMENT ! )NFLATION RATES ! 3AVINGS LEVELS
! (EALTH AND SAFETY ! 4AX ! %MPLOYMENT RATES ! %XCHANGE RATES
! $ATA PROTECTION ! #ONSUMER PROTECTION ! )NTEREST RATES ! 4HE BUSINESS CYCLE
! #APITAL MARKETS ! )NTERNATIONAL TRADE
/THER ASPECTS ARE REGULATED BY SUPERVISORY BODIES
4HE %5 IS A SIGNIFICANT INFLUENCE
Government policy
! &ISCAL POLICY TAXES BORROWING SPENDING
! -ONETARY POLICY INTEREST RATES EXCHANGE RATES
! 3IZE AND SCOPE OF THE PUBLIC SECTOR
0AGE 2: 'ENERAL ENVIRONMENT
(003)CME2PC14_CH02.qxp 5/9/2015 12:35 AM Page 24
4HE ORGANISATION PESTEL 3TAKEHOLDERS #OMPETITIVE
AND ITS ENVIRONMENT factors/LoNGPEST ADVANTAGE OF NATIONS
Globalisation REFERS TO THE GROWING INTERDEPENDENCE OF COUNTRIES WORLDWIDE THROUGH INCREASED TRADE INCREASED
CAPITAL FLOWS AND THE RAPID DIFFUSION OF TECHNOLOGY
'LOBAL TRADE
2ISE OF .)%S )MPORTANCE OF
ECONOMIC POLICY ON
Features DOMESTIC POLICY
of globalisation
2EDUCED 2EDUCTION IN THE
TRANSACTION COSTS 2ISE OF DEPENDANT IMPORTANCE OF LOCAL
FINANCIAL MARKETS MANUFACTURING
(003)CME2PC14_CH02.qxp 5/9/2015 12:35 AM Page 25
Social factors Technological factors
-ANY STRATEGIES ARE BASED ON EXPLOITING
Demography IS THE STUDY OF HUMAN POPULATION AND
TECHNOLOGICAL CHANGE EG )NTERNET TRADING /THERS
POPULATION TRENDS ARE DEFENCES AGAINST SUCH CHANGE EG EMPHASISING
SERVICE OR QUALITY WHEN A COMPETITOR INTRODUCES A
$EMOGRAPHIC FACTORS SUCH AS BIRTH RATE AVERAGE AGE MAJOR TECHNICAL DEVELOPMENT
ETHNICITY DEATH RATE FAMILY STRUCTURE HAVE CLEAR
IMPLICATIONS FOR PATTERNS OF DEMAND AND AVAILABILITY OF Technological developments affect all aspects of
LABOUR business (especially IT developments)
Culture IN SOCIETY IS AS IMPORTANT AS ORGANISATIONAL ! .EW PRODUCTS AND SERVICES BECOME AVAILABLE
CULTURE IN A BUSINESS ! .EW METHODS OF PRODUCTION AND SERVICE PROVISION
! )MPROVED HANDLING OF INFORMATION IN SALES AND
#ULTURAL FACTORS INCLUDE LANGUAGE RELIGION CUSTOM FINANCE
MUSIC AND LITERATURE 46 IS A VITAL ASPECT IN CULTURE ! .EW ORGANISATION STRUCTURES TO EXPLOIT TECHNOLOGY
"USINESS MUST BE PARTICULARLY AWARE OF cultural ! .EW MEDIA FOR COMMUNICATION WITH CUSTOMERS
change AND WITHIN THE BUSINESS EG )NTERNET
0AGE 2: 'ENERAL ENVIRONMENT
(003)CME2PC14_CH02.qxp 5/9/2015 12:35 AM Page 26
4HE ORGANISATION PESTEL 3TAKEHOLDERS #OMPETITIVE
AND ITS ENVIRONMENT factors/LoNGPEST ADVANTAGE OF NATIONS
LoNG PEST analysis
! 4HE 0%34%, &RAMEWORK CAN BE EXTENDED TO CREATE A ,O.'0%34 ANALYSIS
! ! ,O.'0%34 ANALYSIS VIEWS 0%34%, FACTORS AT THREE DIFFERENT LEVELS
n ,OCAL
n .ATIONAL
n 'LOBAL
! ,O.'0%34 ANALYSIS HELPS MANAGEMENT TO BETTER UNDERSTAND KEY EXTERNAL INFLUENCES
(003)CME2PC14_CH02.qxp 5/9/2015 12:35 AM Page 27
4HE ORGANISATION 0%34%, Stakeholders #OMPETITIVE
AND ITS ENVIRONMENT FACTORS,O.'0%34 ADVANTAGE OF NATIONS
Stakeholders 3TAKEHOLDERS INTERESTS ARE LIKELY TO CONFLICT -ENDELOWS
stakeholder mapping HELPS THE ORGANISATION TO ESTABLISH
'ROUPS OR INDIVIDUALS WHO HAVE AN ITS PRIORITIES AND MANAGE STAKEHOLDER EXPECTATIONS
INTEREST IN AN ORGANISATIONS STRATEGY
! A -INIMAL EFFORT
Internal %MPLOYEES MANAGEMENT ! B Keep informed LITTLE
Level of interest
Connected /WNERS SUPPLIERS DIRECT INFLUENCE BUT
CUSTOMERS LENDERS Low High MAY INFLUENCE MORE
Low POWERFUL STAKEHOLDERS
External 'OVERNMENT LOCAL
COMMUNITIES ! C 4REAT WITH CARE OFTEN
A B
/2 PASSIVE BUT CAPABLE
Power OF MOVING TO SEGMENT
Primary (AVE CONTRACTUAL $ keep satisfied
RELATIONSHIP
C D ! D Key players n
Secondary $O NOT STRATEGY MUST BE
0RIMARY )NTERNAL #ONNECTED High acceptable TO THEM
AT LEAST
0AGE 2: 'ENERAL ENVIRONMENT
(003)CME2PC14_CH02.qxp 5/9/2015 12:35 AM Page 28
4HE ORGANISATION 0%34%, 3TAKEHOLDERS Competitive
AND ITS ENVIRONMENT FACTORS,O.'0%34 advantage of nations
Porter IDENTIFIES FOUR DETERMINANTS OF NATIONAL COMPETITIVE ADVANTAGE ON AN INDUSTRY BASIS (E REFERS TO IT AS THE
@diamond
Firm strategy, structure and rivalry
#ULTURAL FACTORS TIME HORIZONS CAPITAL
Factor conditions MARKETS AND RESPONSE TO RECESSION ALL HELP Demand conditions
DETERMINE ORIENTATION AND CAPABILITY
%NDOWMENTS OF INPUTS TO 2IVALRY LEADS TO COMPETITIVE STRENGTH (OME MARKET BUYERS SET
PRODUCTION FUNDAMENTAL PARAMETERS
Basic: NATURAL RESOURCES CLIMATE SUCH AS MARKET SEGMENTS
LABOUR n UNSUSTAINABLE FOR DEGREE OF SOPHISTICATION
COMPETITIVE ADVANTAGE RATE OF GROWTH AND RATE OF
Advanced: INFRASTRUCTURE INNOVATION %ARLY SATURATION
TECHNICAL EDUCATION HIGH TECH OF THE HOME MARKET WILL
INDUSTRIES n PROMOTE COMPETITIVE ENCOURAGE A FIRM TO EXPORT
ADVANTAGE
Related and supporting industries
3UCCESS IN RELATED INDUSTRIES GIVES MUTUAL SUPPORT 3TRONG HOME SUPPLIERS MAKE THE INDUSTRY MORE ROBUST
2IVALRY CREATES SUPPLIER SPECIALISATIONS Clusters OF RELATED INDUSTRIES DERIVE STRENGTH FROM THEIR LINKS
(003)CME2PC14_CH02.qxp 5/9/2015 12:35 AM Page 29
Emerging 4YPES OF ECONOMIC )NDUSTRIALISATION
economies SYSTEM STRATEGIES
4HE ECONOMIES OF Newly Industrialising and Emerging nations .)%S HAVE GROWN SIGNIFICANTLY IN RECENT
YEARS 4HESE COUNTRIES ARE BECOMING INCREASINGLY IMPORTANT IN 7ORLD 0OLITICS
&OUR SIGNIFICANT EMERGING ECONOMIES ARE THE "2)# NATIONS "RAZIL 2USSIA )NDIA AND #HINA
BRIC economies
! #HINA IS CURRENTLY THE SECOND LARGEST ECONOMY
IN THE WORLD
! 7HEN COMBINED "2)# NATIONS HAVE A LARGER
SHARE OF WORLD TRADE THAN THE 53
0AGE 2: 'ENERAL ENVIRONMENT
(003)CME2PC14_CH02.qxp 5/9/2015 12:35 AM Page 30
%MERGING Types of )NDUSTRIALISATION
ECONOMIES economic system STRATEGIES
4HERE ARE FOUR MAIN TYPES OF ECONOMIC SYSTEM IN OPERATION IN THE WORLD
Economic systems
! 0LANNED ECONOMY
! &REE -ARKET ECONOMY
! -IXED ECONOMY
! 4RANSITION ECONOMY
(003)CME2PC14_CH02.qxp 5/9/2015 12:35 AM Page 31
%MERGING 4YPES OF ECONOMIC Industrialisation
ECONOMIES SYSTEM strategies
3UCCESSFUL EMERGING NATIONS FOLLOW THREE MAIN STRATEGIES
! %XPORT OF NATURAL COMMODITIES n EG PRECIOUS METALS SUCH AS GOLD
! )MPORT
SUBSTITUTION n EG INVEST IN NEW INDUSTRIES WHICH PRODUCE MORE ADVANCED PRODUCTS
! %XPORT n LED INDUSTRIALISATION n EG INCREASE EXPORTS
0AGE 2: 'ENERAL ENVIRONMENT
(003)CME2PC14_CH02.qxp 5/9/2015 12:35 AM Page 32
Notes
(004)CME2PC14_CH03.qxp 5/9/2015 12:35 AM Page 33
3: Competitive environment
Competitive
environment
The competitive environment Competitive strategies Competitor analysis Corporate appraisal (SWOT)
Portfolio of products
Industry lifecycle
Accounting for
competitors
Sources of data
Environmental
information and research
Big Data
(004)CME2PC14_CH03.qxp 5/9/2015 12:35 AM Page 34
Competitor )NFORMATION FOR %NVIRONMENTAL #OMPETITIVE 0RODUCT MARKET STRATEGY
analysis PLANNING AND CONTROL INFORMATION AND ANALYSIS STRATEGIES DIRECTION OF GROWTH
4HE PURPOSE OF ANALYSING COMPETITORS IS TO TRY TO PREDICT WHAT THEY MIGHT DO AND WHAT THEY CANNOT DO
Competitor intelligence systems
Competitor’s goals Assumptions Situation, strategy
! &INANCIAL TARGETS
7HAT IT BELIEVES ABOUT THE INDUSTRY and capability
! 2ISK ASSESSMENTS /VERALL CAPABILITY
! /RGANISATIONAL STRUCTURE Competitor response profile AND COST COMPETENCES
4HIS INDICATES THE COMPETITORS VULNERABILITY
AND THE MOST APPROPRIATE @BATTLEGROUND
Sources of information The management accountant’s
Barriers to entry role
! &INANCIAL STATEMENTS ,OW BARRIERS PERMIT COMPETITORS TO ENTER
! #USTOMERS AND SUPPLIERS MARKET n POTENTIAL LOSSES FROM ! !NALYSE RELATIVE COSTS
! 0RODUCTS COMPETITION MAY MAKE COST OF RAISING ! !NALYSE MARKET SHARE
! &ORMER EMPLOYEES BARRIERS WORTHWHILE n EG BY BRAND
! #OST STRUCTURE
! *OB ADVERTISEMENTS BUILDING ADVERTISING CAMPAIGN ! #OMPETITOR BEHAVIOUR
(004)CME2PC14_CH03.qxp 5/9/2015 12:35 AM Page 35
#OMPETITOR Information for %NVIRONMENTAL #OMPETITIVE 0RODUCT MARKET STRATEGY
ANALYSIS planning and control INFORMATION AND ANALYSIS STRATEGIES DIRECTION OF GROWTH
1 Strategic planning
! )NFORMATION ABOUT THE ENVIRONMENT 0%34
! )NTERNAL DATA EG PROFITABILITY COST OF FUNDS INVESTMENT REQUIREMENTS
2 Management control Information
!LL THE PROCESSES USED BY MANAGERS TO ENSURE THAT 4HE INFORMATION REQUIRED EMBRACES THE ENTIRE
ORGANISATIONAL GOALS ARE ACHIEVED AND PROCEDURES ORGANISATION AND PROVIDES A COMPARISON BETWEEN
ADHERED TO AND THAT THE ORGANISATION RESPONDS ACTUAL RESULTS AND THE PLAN
APPROPRIATELY TO CHANGES IN THE ENVIRONMENT
3 Operational control
)NFORMATION NEEDED TO CONDUCT DAY
TO
DAY IMPLEMENTATION OF PLANS n LARGELY DETAILS OF INDIVIDUAL
TRANSACTIONS
0AGE 3: #OMPETITIVE ENVIRONMENT
(004)CME2PC14_CH03.qxp 5/9/2015 12:35 AM Page 36
#OMPETITOR Information for %NVIRONMENTAL #OMPETITIVE 0RODUCT MARKET STRATEGY
ANALYSIS planning and control INFORMATION AND ANALYSIS STRATEGIES DIRECTION OF GROWTH
Decision making Risk
0ROBLEM RECOGNITION
)NVOLVES SITUATION OR EVENTS WHICH MAY OR MAY
NOT OCCUR BUT WHOSE PROBABILITY OF OCCURRENCE
0ROBLEM DEFINITION CAN BE CALCULATED STATISTICALLY AND THE FREQUENCY
OF THEIR OCCURRENCE PREDICTED FROM PAST RECORDS
)DENTIFY ALTERNATIVE COURSES OF ACTION Uncertainty
!MEND )NVOLVES EVENTS WHOSE OUTCOME CANNOT BE
-AKE THE DECISION PREDICTED WITH STATISTICAL CONFIDENCE
DECISION
!N EVENT WILL BE RISKY OR UNCERTAIN DEPENDING ON
)MPLEMENT THE DECISION WHETHER OR NOT SUFICIENT INFORMATION IS AVAILABLE TO
-ORE ALLOW THE LACK OF CERTAINTY TO BE QUANTIFIED !S A
INFORMATION RULE HOWEVER THE TERMS ARE USED INTERCHANGEABLY
-ONITOR THE OUTCOME
(004)CME2PC14_CH03.qxp 5/9/2015 12:35 AM Page 37
#OMPETITOR )NFORMATION FOR Environmental #OMPETITIVE 0RODUCT MARKET STRATEGY
ANALYSIS PLANNING AND CONTROL information and analysis STRATEGIES DIRECTION OF GROWTH
Strategic intelligence
IS WHAT A FIRM NEEDS TO KNOW ABOUT ITS ENVIRONMENT TO ENABLE IT TO ANTICIPATE CHANGE AND DESIGN APPROPRIATE
STRATEGIES
Creating strategic intelligence
Internal sources External sources
! 3ALES FORCE #OLLECTED FROM ! 4HE PRESS
! -ARKET RESEARCH RELEVANT AND ! 4RADE ASSOCIATIONS
MEANINGFUL ! 4RADE PUBLICATIONS
! -ANAGEMENT INFORMATION SYSTEM
SOURCES ! 'OVERNMENT DEPARTMENTS
! $ATABASES ! )NTERNET
! 0UBLIC DATABASES
!FTER THE INFORMATION HAS BEEN COLLECTED IT NEEDS TO BE ORGANISED
ANALYSED COMMUNICATED AND FINALLY USED AS STRATEGIC INTELLIGENCE
0AGE 3: #OMPETITIVE ENVIRONMENT
(004)CME2PC14_CH03.qxp 5/9/2015 12:35 AM Page 38
#OMPETITOR )NFORMATION FOR Environmental #OMPETITIVE 0RODUCT MARKET STRATEGY
ANALYSIS PLANNING AND CONTROL information and analysis STRATEGIES DIRECTION OF GROWTH
Database information #OMPETITIVE
3TAKEHOLDER DATA 0OLITICAL
A database DATA DATA
IS A COLLECTION OF DATA
%CONOMIC ,EGAL DATA
ORGANISED TO SERVICE MANY
DATA %NVIRONMENTAL DATA
APPLICATIONS AND PROVIDES DATA
FOR A WIDE RANGE OF USES AND
NEEDS %NERGY
3OCIAL DATA SUPPLIER DATA
4ECHNOLOGICAL 'EOGRAPHICAL
DATA DATA
(004)CME2PC14_CH03.qxp 5/9/2015 12:35 AM Page 39
Big data Laney’s 3V’s of big data
IS A POPULAR TERM USED TO DESCRIBE THE EXPONENTIAL ! 6OLUME
GROWTH AND AVAILABILITY OF DATA BOTH STRUCTURED AND
UNSTRUCTURED "IG DATA MAY BE AS IMPORTANT TO ! 6ELOCITY
BUSINESS AND SOCIETY AS THE INTERNET HAS BECOME ! 6ARIETY
WWWSASCOM
0AGE 3: #OMPETITIVE ENVIRONMENT
(004)CME2PC14_CH03.qxp 5/9/2015 12:35 AM Page 40
#OMPETITOR )NFORMATION FOR %NVIRONMENTAL Competitive 0RODUCT MARKET STRATEGY
ANALYSIS PLANNING AND CONTROL INFORMATION AND ANALYSIS strategies DIRECTION OF GROWTH
Competitive strategies
#OMPETITIVE STRATEGY MEANS gTAKING OFFENSIVE OR DEFENSIVE ACTIONS TO CREATE A DEPENDABLE POSITION IN AN
INDUSTRY TO COPE SUCCESSFULLY WITH COMPETITIVE FORCES AND THEREBY YIELD A SUPERIOR RETURN ON INVESTMENT FOR THE
FIRM 0ORTER
0ORTER BELIEVES THERE ARE THREE generic strategies FOR COMPETITIVE ADVANTAGE
! Cost leadership MEANS BEING THE LOWEST COST PRODUCER IN THE INDUSTRY AS A WHOLE
! Differentiation IS THE EXPLOITATION OF A PRODUCT OR SERVICE THAT THE industry as a whole BELIEVES TO BE UNIQUE
! Focus INVOLVES A RESTRICTION OF ACTIVITIES TO ONLY PART OF THE MARKET A SEGMENT THROUGH
n 0ROVIDING GOODS ANDOR SERVICES AT LOWER COST TO THAT SEGMENT cost-focus
n 0ROVIDING A DIFFERENTIATED PRODUCT OR SERVICE TO THAT SEGMENT differentiation-focus
(004)CME2PC14_CH03.qxp 5/9/2015 12:35 AM Page 41
The strategy clock
4HE STRATEGY CLOCK DEVELOPS 0ORTERgS THEORY ANALYSING STRATEGIES IN TERMS OF price and perceived value added
4HE EIGHT STRATEGIES SHOWN ON THE CLOCK REPRESENT DIFFERENT APPROACHES TO CREATING VALUE FOR THE CUSTOMER
%ACH CUSTOMER WILL BUY FROM THE PROVIDER WHOSE OFFERING MOST CLOSELY MATCHES THEIR OWN VIEW OF THE PROPER
RELATIONSHIP BETWEEN PRICE AND PERCEIVED BENEFITS
4HE 3TRATEGY #LOCK
$IFFERENTIATION
&OCUSED
(IGH
(YBRID DIFFERENTIATION
Perceived added value
,OW
PRICE
3TRATEGIES
DESTINED
.O FRILLS FOR ULTIMATE
,OW FAILURE
,OW Price (IGH
0AGE 3: #OMPETITIVE ENVIRONMENT
(004)CME2PC14_CH03.qxp 5/9/2015 12:35 AM Page 42
#OMPETITOR )NFORMATION FOR %NVIRONMENTAL #OMPETITIVE Product-market strategy:
ANALYSIS PLANNING AND CONTROL INFORMATION AND ANALYSIS STRATEGIES direction of growth
Product-market strategy: direction of growth
Product-market STRATEGIES INVOLVE DETERMINING WHICH PRODUCTS SHOULD BE SOLD IN WHICH MARKETS
Product-market mix
!NSOFF DREW UP A growth vector matrix DESCRIBING HOW A COMBINATION OF A FIRMgS ACTIVITIES IN CURRENT AND
NEW MARKETS WITH EXISTING AND NEW PRODUCTS CAN LEAD TO GROWTH
!NSOFFgS COMPETITIVE STRATEGIES !NSOFF MATRIX
0RODUCTS ! %XISTING PRODUCTS AND EXISTING MARKETS
%XISTING .EW market penetration
! %XISTING PRODUCTS AND NEW MARKETS
%XISTING -ARKET 0RODUCT market development
0ENETRATION $EVELOPMENT
! .EW PRODUCTS AND EXISTING MARKETS
-ARKETS
product development
.EW -ARKET
$IVERSIFICATION
! .EW PRODUCTS NEW MARKETS
$EVELOPMENT (diversification)
(004)CME2PC14_CH03.qxp 5/9/2015 12:35 AM Page 43
Method of &IVE &ORCES
growth
Method of growth
/NCE AN ORGANISATION HAS SELECTED AN APPROPRIATE COMPETITIVE STRATEGY CONSIDERATION NEEDS TO BE GIVEN TO
THE METHOD IT WILL USE TO DELIVER IT
Different methods of growth
! Organic growth SOMETIMES REFERRED TO AS INTERNAL DEVELOPMENT IS ACHIEVED THROUGH THE
DEVELOPMENT OF INTERNAL RESOURCES
! Acquisition INVOLVES GROWING THROUGH BUYING ANOTHER ORGANISATION
! Joint ventures INVOLVE TWO FIRMS OR MORE JOINING FORCES AND ESTABLISHING A SEPARATE NEW ENTITY
WITH EACH PARTNER HOLDING A SHARE IN BOTH THE EQUITY AND THE MANAGEMENT OF THE BUSINESS
! Alliances INVOLVE FIRMS ENTERING INTO LONG TERM STRATEGIC ALLIANCES WITH OTHER ORGANISATIONS 4HIS
CAN BE FOR A VARIETY OF REASONS INCLUDING SHARING DEVELOPMENT COSTS TO LEARN FROM EACH OTHER OR TO
COMPLEMENT EACH OTHERS PRODUCT OFFERING
0AGE 3: #OMPETITIVE ENVIRONMENT
(004)CME2PC14_CH03.qxp 5/9/2015 12:35 AM Page 44
-ETHOD OF Five Forces
GROWTH
0ORTER SAYS THAT five forces TOGETHER DETERMINE THE LONG TERM PROFIT POTENTIAL OF AN industry
1 Bargaining power of 2 Threat of new entrants 3 Bargaining power of
suppliers 4HIS IS LIMITED BY barriers to entry customers
Depends on: ! 3CALE ECONOMIES ! 0RODUCT DIFFERENTIATION Depends on:
! .UMBER OF SUPPLIERS ! 3WITCHING COSTS ! !CCESS TO DISTRIBUTION
! 6OLUME BOUGHT
! 4HREATS TO SUPPLIERS ! 0ATENT RIGHTS ! !CCESS TO RESOURCES
INDUSTRY ! 3COPE FOR SUBSTITUTION
Rivalry among current competitors
! .UMBER OF CUSTOMERS IN THE 4 ! 3WITCHING COSTS
Depends on:
INDUSTRY
! -ARKET GROWTH ! "UYERS EASE OF SWITCHING ! 0URCHASING SKILLS
! 3COPE FOR SUBSTITUTION
! 3PARE CAPACITY ! %XIT BARRIERS ! )MPORTANCE OF QUALITY
! 3WITCHING COSTS
! 3ELLING SKILLS ! 5NCERTAINTY ABOUT COMPETITORS STRATEGY
5 Threat from substitute products
3UPPLIERS SEEK higher prices ! SUBSTITUTE IS PRODUCED BY A DIFFERENT #USTOMERS SEEK lower prices
INDUSTRY BUT SATISFIES THE SAME NEEDS
(005)CME2PC14_CH04.qxp 5/9/2015 12:36 AM Page 45
4: Key concepts in management
Key Concepts in
Management
Organisational flexibility Role of the manager Relationships in organisation
Human relations Classical school Power, authority, Transactional and
responsibility and delegation transformational leaders
Theories of leadership
Alternative approaches
Managerial behavior
(005)CME2PC14_CH04.qxp 5/9/2015 12:36 AM Page 46
Role of the !UTHORITY ,EADERSHIP $ISCIPLINE GRIEVANCE %QUAL OPPORTUNITIES
manager RELATIONSHIPS AND TERMINATION AND DIVERSITY
Why are managers needed? Taylor: scientific management
! Objectives MUST BE SET AND THEN ACHIEVED 4HE ESSENCE OF 4AYLORS APPROACH WAS efficiency
! Corporate values MUST BE SUSTAINED IN AN ENGINEERING SENSE (E TREATED WORK PEOPLE
! Key stakeholders MUST BE SATISFIED AS TOOLS TO BE USED EFFICIENTLY .OTE THAT THIS
INCLUDES CARING FOR THEM PROPERLY
What do managers do? 0RACTICAL IMPLICATIONS
! Work study ESTABLISHES THE @ONE BEST WAY n
Fayol: the classical school NO DISCRETION IS ALLOWED TO THE WORKER
! Planning OBJECTIVES AND METHODS ! Work planning IS DONE BY A SEPARATE TEAM OF
! Organising TASK STRUCTURE ORGANISATION EXPERTS
STRUCTURE FEED BACK
! Pay incentives ARE USED TO MOTIVATE ON THE
! Commanding GIVING INSTRUCTIONS BASIS OF INCREASED OUTPUT
! Co-ordinating INDIVIDUAL AND GROUP ACTIVITIES
! 4HE work environment IS SET UP SO AS TO
! Controlling CHECKING PERFORMANCE AND TAKING ENABLE THE GREATEST EFFICIENCY
CORRECTIVE ACTION
(005)CME2PC14_CH04.qxp 5/9/2015 12:36 AM Page 47
Drucker: management process and MBO Elton Mayo: human relations
! 3ETTING OBJECTIVES ! Western Electric n Hawthorne studies: worker
! /RGANISING THE WORK attitudes AND group relations AFFECTED PRODUCTION
! -OTIVATING MORE THAN CONDITIONS
! -EASURING RESULTS 0EOPLE ARE MOTIVATED BY A VARIETY OF psychological
! $EVELOPING PEOPLE needs INCLUDING social NEEDS
-ANAGEMENT OF COMMERCIAL ENTERPRISES HAS AN EXTRA ! Maslow and Herzberg: Neo-human relations:
FUNDAMENTAL RESPONSIBILITY economic performance WORKERS HAVE @HIGHER ORDER NEEDS INCLUDING PERSONAL
! Managing a business MARKETING AND INNOVATION DEVELOPMENT
! Managing managers MANAGEMENT BY OBJECTIVES 4HIS APPROACH STRESSES THE IMPACT OF HUMAN
MBO BEHAVIOUR IN THE GROUP AND ON ORGANISATIONAL
! Managing workers and work PERFORMANCE
! -ANAGEMENT AND SUBORDINATE AGREE measurable objectives FOR PERFORMANCE THAT SUPPORTS THE ORGANISATIONS MISSION
2EGULAR feedback ON ATTAINMENT SUPPORTS improved performance.
0AGE 4: +EY CONCEPTS IN MANAGEMENT
(005)CME2PC14_CH04.qxp 5/9/2015 12:36 AM Page 48
Role of the !UTHORITY ,EADERSHIP $ISCIPLINE GRIEVANCE %QUAL OPPORTUNITIES
manager RELATIONSHIPS AND TERMINATION AND DIVERSITY
Mintzberg WHAT MANAGERS actually DO
! Interpersonal roles HIRING FIRING TRAINING MOTIVATING LIAISING
! Informational roles THE MANAGER HAS MANY CONTACTS INSIDE AND OUTSIDE THE DEPARTMENT AND
ORGANISATION HE monitors THE ENVIRONMENT DISSEMINATES INFORMATION ACTS AS A SPOKESMAN
! Decisional roles
n Entrepreneur INITIATING ACTION
n Disturbance handler RESOLVING THE UNPREDICTABLE
n Allocator of source resources
n Negotiator
(005)CME2PC14_CH04.qxp 5/9/2015 12:36 AM Page 49
2OLE OF THE Authority ,EADERSHIP $ISCIPLINE GRIEVANCE %QUAL OPPORTUNITIES
MANAGER relationships AND TERMINATION AND DIVERSITY
Authority is the right to act in a given context: power confers the ability to act.
Sources of power (French and Raven)
! Coercive power IS POWER BASED ON THE ABILITY TO IMPOSE SANCTIONS
! Resource power DEPENDS ON THE CONTROL OF RESOURCES MANAGERS MAY UTILISE THIS BY CONTROLLING rewards
AND ACCESS TO INFORMATION
! Position OR legitimate power STEMS FROM STATUS OR APPOINTMENT WITHIN AN ORGANISATION AND IS THUS
EQUIVALENT TO authority
! Expert power FLOWS FROM ACKNOWLEDGED EXPERTISE
! Referent power LIES IN THE PERSONAL QUALITIES OF THE INDIVIDUAL )T CAN BE IMPORTANT IN THE WORKINGS OF THE
informal organisation
! Negative power LIES IN THE ABILITY TO PREVENT OR DISRUPT PROPOSED ACTION
0AGE 4: +EY CONCEPTS IN MANAGEMENT
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2OLE OF THE Authority ,EADERSHIP $ISCIPLINE GRIEVANCE %QUAL OPPORTUNITIES
MANAGER relationships AND TERMINATION AND DIVERSITY
Authority Responsibility Accountability
IS THE right TO DO SOMETHING OR TO IS THE obligation A PERSON HAS TO IS A PERSONS liability TO BE CALLED
ASK SOMEONE ELSE TO DO IT AND FULFIL A TASK HE HAS BEEN GIVEN TO ACCOUNT FOR THE FULFILMENT OF TASKS
EXPECT IT TO BE DONE HE HAS BEEN GIVEN
Delegation
! Line authority A MANAGER HAS LINE Empowerment
3ENIOR MANAGERS delegate AUTHORITY
AUTHORITY OVER A DIRECT SUBORDINATE
TO SUBORDINATE MANAGERS SO THAT IS WHERE WORKERS ARE RESPONSIBLE
! Functional authority SPECIALIST THEY CAN BE responsible FOR SPECIFIC FOR ACHIEVING AND EVEN SETTING WORK
MANAGERS HAVE AUTHORITY TO ISSUE ASPECTS OF THE SENIOR MANAGERS TARGETS WITH THE FREEDOM TO DECIDE
INSTRUCTIONS CONCERNING THEIR OWN SPHERES OF ACTIVITY 4HE JUNIORS ARE HOW THEY ARE ACHIEVED
AREAS OF RESPONSIBILITY TO MANAGERS accountable TO THE SENIORS FOR THEIR
AND MEMBERS OF OTHER RESPONSIBILITY BUT THE SENIORS remain
DEPARTMENTS fully accountable TO THEIR OWN
! Staff or advisory authority IS THE SUPERIORS !UTHORITY CAN BE
AUTHORITY A SPECIALIST MANAGER HAS DELEGATED BUT not ACCOUNTABILITY
TO GIVE advice TO OTHER
DEPARTMENTS
(005)CME2PC14_CH04.qxp 5/9/2015 12:36 AM Page 51
2OLE OF THE !UTHORITY Leadership $ISCIPLINE GRIEVANCE %QUAL OPPORTUNITIES
MANAGER RELATIONSHIPS AND TERMINATION AND DIVERSITY
Management Leadership
! #OPES WITH COMPLEXITY ! #OPES WITH CHANGE
! 0RESCRIBED ROLE AND STATUS ! 4HROUGH PERCEPTION OF OTHERS AS FOLLOWERS
! -AINTAINING STATUS QUO ! .EW APPROACHES AND IDEAS
! 3ECURE COMPLIANCE WITH ORGANISATIONAL ! Influences OTHERS TO FULFIL ORGANISATIONAL
OBJECTIVES OBJECTIVES
! /VER RESOURCES ! /VER PEOPLE
Transactional leaders Transformational leaders
%XCHANGE REWARDS IN RETURN FOR SERVICE LOYALTY )MPACT AND MOTIVATE OTHERS
AND COMPLIANCE
0AGE 4: +EY CONCEPTS IN MANAGEMENT
(005)CME2PC14_CH04.qxp 5/9/2015 12:36 AM Page 52
2OLE OF THE !UTHORITY Leadership $ISCIPLINE GRIEVANCE %QUAL OPPORTUNITIES
MANAGER RELATIONSHIPS AND TERMINATION AND DIVERSITY
1. Style approaches to leadership
Authoritarian
THE SPECTRUM OF MANAGEMENT STYLES Democratic
Relationship
Task
-ANAGER -ANAGER -ANAGER -ANAGER -ANAGER -ANAGER -ANAGER -ANAGER
MAKES MAKES @SELLS HIS SUGGESTS OWN SKETCHES PRESENTS A PRESENTS A ALLOWS HIS
DECISIONS AND DECISIONS AND DECISIONS TO IDEAS AND IDEAS ASKS PROBLEM PROBLEM TO SUBORDINATES
ENFORCES ANNOUNCES SUBORDINATES ASKS FOR FOR COMMENTS ASKS FOR SUBORDINATES TO ACT AS THEY
THEM THEM COMMENTS AND AMENDS IDEAS MAKES AND ASKS THEM WISH WITHIN
HIS IDEAS A DECISION TO SOLVE IT SPECIFIED
FROM THE LIMITS
IDEAS
4ANNENBAUM AND 3CHMIDT
Theory X Theory Y
0EOPLE DISLIKE WORK AND MUST BE COERCED INTO 7ORK IS AS NATURAL AS PLAY OR REST AND CAN BE
DOING IT SATISFYING -C'REGOR
(005)CME2PC14_CH04.qxp 5/9/2015 12:36 AM Page 53
Likert’s four management ‘systems’
Exploitative Benevolent Consultative Participative
authoritative authoritative
! .O CONFIDENCE OR TRUST IN ! 3UPERFICIAL ! 3UBSTANTIAL CONFIDENCE ! 'REAT TRUST IN
SUBORDINATES CONDESCENDING AND TRUST IN SUBORDINATES SUBORDINATES
! $ECISIONS IMPOSED CONFIDENCE AND TRUST ! #ONSULTS BUT CONTROLS ! $ELEGATION OF DECISION
! .O DELEGATION OF ! $ECISIONS IMPOSED DECISION MAKING MAKING
DECISION MAKING ! 2EWARDS USED TO ! 3OME MOTIVATION BY ! 'OALS SET PARTICIPATIVELY
! 4HREATS USED TO MOTIVATE MOTIVATE INVOLVEMENT ACHIEVEMENT REWARDED
! ,ITTLE COMMUNICATION OR ! 0ATERNALISTIC INVOLVEMENT ! 5SES SUBORDINATES IDEAS ! )DEAS AND OPINIONS SHARED
TEAMWORK WITH OF SUBORDINATES
SUBORDINATES
,IKERT
Likert SUGGESTED THAT EFFECTIVE MANAGERS NATURALLY USE participative OR consultative STYLES
Ashridge Management College STUDIES FOUND A SIMILAR SPREAD 4HEIR MODEL IS TABULATED ON THE NEXT TWO PAGES .OTE
PARTICULARLY THAT THIS MODEL SUMMARISES THE STRENGTHS AND WEAKNESSES OF THE VARIOUS STYLES THESE MAY BE APPLIED TO THE
MODELS ABOVE
0AGE 4: +EY CONCEPTS IN MANAGEMENT
(005)CME2PC14_CH04.qxp 5/9/2015 12:36 AM Page 54
2OLE OF THE !UTHORITY Leadership $ISCIPLINE GRIEVANCE %QUAL OPPORTUNITIES
MANAGER RELATIONSHIPS AND TERMINATION AND DIVERSITY
Ashridge Management College model
Style Characteristics Strengths Weaknesses
4ELLS 4HE MANAGER MAKES 1UICK DECISIONS CAN BE MADE WHEN 1UICK DECISIONS CAN BE MADE WHEN
AUTOCRATIC ALL THE DECISIONS AND SPEED IS REQUIRED SPEED IS REQUIRED
ISSUES INSTRUCTIONS )T IS THE MOST EFFICIENT TYPE OF LEADERSHIP )T DOES NOT ENCOURAGE INITIATIVE AND
WHICH MUST BE FOR HIGHLY PROGRAMMED ROUTINE WORK COMMITMENT FROM SUBORDINATES
OBEYED WITHOUT
QUESTION
3ELLS 4HE MANAGER STILL %MPLOYEES ARE MADE AWARE OF THE #OMMUNICATIONS ARE STILL LARGELY ONE
PERSUASIVE MAKES ALL THE REASONS FOR DECISIONS WAY 3UB ORDINATES MIGHT NOT ACCEPT
DECISIONS BUT 3ELLING DECISIONS TO STAFF MIGHT MAKE THE DECISIONS
BELIEVES THAT THEM MORE COMMITTED )T DOES NOT ENCOURAGE INITIATIVE AND
SUBORDINATES HAVE TO COMMITMENT FROM SUBORDINATES
BE MOTIVATED TO 3TAFF WILL HAVE A BETTER IDEAS OF WHAT TO
ACCEPT THEM IN ORDER DO WHEN UNFORESEEN EVENTS ARISE IN THEIR
TO CARRY THEM OUT WORK BECAUSE THE MANAGER WILL HAVE
PROPERLY EXPLAINED HIS INTENTIONS
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Ashridge Management College model cont.
#ONSULTS 4HE MANAGER CONFERS %MPLOYEES ARE INVOLVED IN DECISIONS )T MIGHT TAKE MUCH LONGER TO REACH THE DECISIONS
WITH SUBORDINATES AND BEFORE THEY ARE MADE 4HIS 3UBORDINATES MIGHT BE TOO INEXPERIENCED TO
TAKES THEIR VIEWS INTO ENCOURAGES MOTIVATION THROUGH FORMULATE MATURE OPINIONS AND GIVE PRACTICAL
ACCOUNT BUT HAS THE GREATER INTEREST AND INVOLVEMENT ADVICE
FINAL SAY !N AGREED CONSENSUS OF OPINION CAN #ONSULTATION CAN TOO EASILY TURN INTO A FACADE
BE REACHED AND FOR SOME DECISIONS CONCEALING BASICALLY A SELLS STYLE
CONSENSUS CAN BE AN ADVANTAGE
RATHER THAN A WEAK COMPROMISE
%MPLOYEES CAN CONTRIBUTE THEIR
KNOWLEDGE AND EXPERIENCE TO HELP IN
SOLVING MORE COMPLEX PROBLEMS
*OINS ,EADER AND FOLLOWERS )T CAN PROVIDE HIGH MOTIVATION AND 4HE AUTHORITY OF THE MANAGER MIGHT BE
DEMOCRATIC MAKE THE DECISION ON COMMITMENT FROM EMPLOYEES UNDERMINED
THE BASIS OF )T SHARES THE OTHER ADVANTAGES OF THE $ECISION MAKING MIGHT BECOME A VERY LONG
CONSENSUS CONSULTATIVE STYLE ESPECIALLY WHERE PROCESS AND CLEAR DECISIONS MIGHT BE DIFFICULT TO
SUBORDINATES HAVE EXPERT POWER REACH
3UBORDINATES MIGHT LACK ENOUGH EXPERIENCE
0AGE 4: +EY CONCEPTS IN MANAGEMENT
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2OLE OF THE !UTHORITY Leadership $ISCIPLINE GRIEVANCE %QUAL OPPORTUNITIES
MANAGER RELATIONSHIPS AND TERMINATION AND DIVERSITY
The Managerial Grid (Blake and Mouton)
Extreme cases
impoverished MANAGER IS LAZY LITTLE (IGH
COUNTRY CLUB TEAM "LAKE
INTEREST IN EITHER STAFF OR WORK -OUTONgS
country club MANAGER ATTENTIVE TO GRID
#ONCERN FOR PEOPLE
STAFF NEEDS HAS DEVELOPED SATISFYING
RELATIONSHIPS LITTLE ATTENTION TO ACHIEVING
RESULTS MIDDLE ROAD
task management ALMOST TOTAL
CONCENTRATION ON ACHIEVING RESULTS
0EOPLEgS NEEDS ARE VIRTUALLY IGNORED
middle of the road ADEQUATE
IMPOVERISHED TASK
PERFORMANCE BALANCING WORK RESULTS
WITH MAINTAINING SATISFACTORY MORALE ,OW
team HIGH WORK ACCOMPLISHMENT ,OW #ONCERN FOR PRODUCTION (IGH
THROUGH LEADING COMMITTED PEOPLE
(005)CME2PC14_CH04.qxp 5/9/2015 12:36 AM Page 57
2. Contingency approaches to leadership
!PPROPRIATENESS OF ACTION DEPENDS ON THE CIRCUMSTANCES
Action-centred leadership (Adair) 4ASK
NEEDS
,EADERSHIP ACTIVITIES MUST SATISFY SETS OF VARYING NEEDS IN
ACCORDANCE WITH THE PRIORITIES INHERENT IN THE PREVAILING SITUATION
'ROUP )NDIVIDUAL
,EADERSHIP LIES IN PERFORMING LEADERSHIP FUNCTIONS OR ROLES NEEDS NEEDS
RELATED TO THE SETS OF NEEDS !DAIR REJECTS THE NOTION THAT
LEADERSHIP DEPENDS ON INHERENT PERSONAL QUALITIES 4OTAL
SITUATION
Group maintenance Task roles Individual maintenance
roles roles
! %NCOURAGING PEACE KEEPING ! )NITIATING )NFORMATION SEEKING ! 'OAL SETTING &EEDBACK
! #LARIFYING 3TANDARD SETTING ! $IAGNOSING /PINION SEEKING ! 2ECOGNITION #OUNSELLING
! %VALUATING $ECISION MAKING 4RAINING
0AGE 4: +EY CONCEPTS IN MANAGEMENT
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2OLE OF THE !UTHORITY Leadership $ISCIPLINE GRIEVANCE %QUAL OPPORTUNITIES
MANAGER RELATIONSHIPS AND TERMINATION AND DIVERSITY
Situational leadership (Hershey and Blanchard)
4EAM MEMBERS ARE RANKED ON ability AND willingness TO COMPLETE A TASK SUCCESSFULLY "ASED ON THIS
MANAGERS NEED TO adapt THEIR leadership style 4HERE ARE four TYPES OF TEAM
1 High – readiness !BLE AND WILLING 4HE MOST APPROPRIATE LEADERSHIP STYLE HERE IS delegation
2 High – moderate readiness !BLE BUT UNWILLING OR INSECURE ! MANAGER NEEDS TO BE SUPPORTIVE AND THE
MOST APPROPRIATE STYLE IS participating
3 Low – moderate readiness ,ACK ABILITY BUT ARE WILLING AND CONFIDENT ! MANAGER NEEDS TO BE DIRECTIVE
AND SUPPORTIVE 4HE MOST APPROPRIATE STYLE IS selling
4 Low-readiness ,ACK ABILITY AND CONFIDENCE ! MANAGER NEEDS TO BE DIRECTIVE AND SO THE MOST
APPROPRIATE MANAGEMENT STYLE IS telling
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Fiedler’s contingency model
4HE VARIABLES DETERMINE THE EASE WITH WHICH THE
&IEDLER INVESTIGATED THE LINK BETWEEN MANAGER CAN INFLUENCE SUBORDINATES BEHAVIOUR
LEADERSHIP AND ORGANISATIONAL 4HE IMPLICATIONS FOR MANAGEMENT STYLE ARE SHOWN BELOW
PERFORMANCE (E FOUND THAT STYLE OF
LEADERSHIP COULD BE LINKED TO THE EXTENT TO 4ASK
WHICH THE SITUATION WAS FAVOURABLE OR ORIENTED
UNFAVOURABLE AS DETERMINED BY MAIN
3TYLE OF LEADERSHIP
FACTORS
! Position power IS THE DEGREE OF
FORMAL AUTHORITY POSSESSED BY THE
MANAGER
! Task structure CLEAR UNAMBIGUOUS
TASKS ARE EASIER TO CONTROL THAN VAGUE
UNSTRUCTURED ONES 0EOPLE
CENTRED
! Leader – subordinate relations TRUST
AND CONFIDENCE IN THE MANAGER EASE 6ERY UNFAVOURABLE 6ERY FAVOURABLE
HIS TASK
&AVOURABLENESS OF THE SITUATION
0AGE 4: +EY CONCEPTS IN MANAGEMENT
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2OLE OF THE !UTHORITY ,EADERSHIP Discipline, grievance %QUAL OPPORTUNITIES
MANAGER RELATIONSHIPS and termination AND DIVERSITY
Discipline
Positive AID SAFETY AND SUCCESSFUL COMPLETION OF TASKS
Negative SANCTIONS DESIGNED TO MAKE PEOPLE CHOOSE TO BEHAVE IN A DESIRABLE WAY
ACAS Code of Practice
)N THE 5+ DISCIPLINE IN MOST ORGANISATIONS IS GOVERNED BY THE !#!3 #ODE OF 0RACTICE 4HIS SPECIFIES THE REQUIREMENTS
OF GOOD DISCIPLINARY PROCEDURES EG THEY SHOULD BE IN WRITING THEY SHOULD BE NON DISCRIMINATORY AND LAYS DOWN HOW
DISCIPLINARY INCIDENTS SHOULD BE DEALT WITH
! !NY INCIDENT MUST BE thoroughly investigated AND A WRITTEN RECORD MADE -INOR CASES ARE DISPOSED OF
INFORMALLY
! First warning ORAL OR WRITTEN DEPENDING ON THE GRAVITY OF THE CASE ! FIRST WRITTEN WARNING IS ALSO APPROPRIATE
WHEN A FIRST ORAL WARNING HAS BEEN DISREGARDED
! Final written warning WARNS OF PUNITIVE ACTION AND EXPLAINS APPEAL PROCEDURE
&ORMAL WARNINGS HAVE A LIMITED PERIOD OF VALIDITY EG MONTHS
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Employment Act 2002
! statutory disciplinary procedure WAS INTRODUCED IN THE 5+ ON /CTOBER
1 -ANAGER WRITES TO EMPLOYEE INVITING ATTENDANCE AT MEETING TO DISCUSS MATTER %MPLOYEE HAS RIGHT TO BE
ACCOMPANIED
2 !T MEETING MANAGER EXPLAINS PROBLEM AND INVITES RESPONSE !FTER MEETING MANAGER EXPLAINS DECISION
AND RIGHT OF APPEAL
3 %MPLOYEE MAY APPEAL TO MORE SENIOR OR AT LEAST DIFFERENT MANAGER AND HAS RIGHT TO BE ACCOMPANIED
AT APPEAL
Disciplinary sanctions
3ANCTIONS SHOULD BE
! Immediate VERY DIFFICULT IF THE !#!3 PROCEDURE IS FOLLOWED
! Consistent SUBJECT TO MITIGATING CIRCUMSTANCES AN OFFENCE SHOULD ALWAYS BE TREATED THE SAME WAY
! Impersonal NO ELEMENT OF PERSONAL MALICE OR FAVOUR SHOULD APPEAR
4HERE SHOULD ALSO BE advance warning EG IN INDUCTION TRAINING SO THAT EVERYONE KNOWS WHAT TO EXPECT
0AGE 4: +EY CONCEPTS IN MANAGEMENT
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2OLE OF THE !UTHORITY ,EADERSHIP Discipline, grievance %QUAL OPPORTUNITIES
MANAGER RELATIONSHIPS and termination AND DIVERSITY
UK statutory grievance procedure
&ROM October 2004
1 %MPLOYEE SETS OUT GRIEVANCE IN WRITING
2 -EETING EMPLOYEE HAS RIGHT TO BE ACCOMPANIED -ANAGER ANNOUNCES DECISION AND INFORMS EMPLOYEE OF RIGHT OF
APPEAL
3 %MPLOYEE MAY APPEAL TO MORE SENIOR OR AT LEAST DIFFERENT MANAGER AND HAS RIGHT TO BE ACCOMPANIED
Potentially fair grounds for Automatically unfair grounds for
dismissal dismissal
! Redundancy SELECTION MUST BE FAIR ! 5NFAIR SELECTION FOR REDUNDANCY
! Legal impediment RETENTION WOULD BREAK THE ! 4RADE UNION ACTIVITY OR MEMBERSHIP
LAW EG A STRUCK OFF DOCTOR
! 0REGNANCY
! )NADEQUATE capability PROVIDED TRAINING AND
WARNINGS HAVE BEEN GIVEN ! #ERTAIN HEALTH AND SAFETY RELATED ACTIVITIES
! Misconduct AFTER ADEQUATE WARNING ! )NSISTING ON DOCUMENTED EMPLOYMENT PARTICULARS
! Other substantial reason OR PAYSLIPS
(005)CME2PC14_CH04.qxp 5/9/2015 12:36 AM Page 63
Termination of employment Wrongful dismissal
Dismissal includes: 7RONGFUL DISMISSAL IS DISMISSAL THAT BREACHES
Termination OF AN EMPLOYEES CONTRACT BY THE TERMS OF THE CONTRACT OF EMPLOYMENT
1
THE EMPLOYER EG IF INADEQUATE NOTICE IS GIVEN
4HE ENDING OF A fixed term contract WITHOUT
2
RENEWAL OF THE SAME TERMS Unfair dismissal
2ESIGNATION WHEN THE EMPLOYERS CONDUCT 5NFAIR DISMISSAL IS ANY DISMISSAL THAT DOES NOT
3 BREACHES THE CONTRACT OF EMPLOYMENT THIS IS FALL INTO THE STATUTORILY DEFINED CATEGORIES OF FAIR
constructive dismissal DISMISSAL 3OME DISMISSALS ARE AUTOMATICALLY
UNFAIR
Redundancy
)S DEFINED AS dismissal WHEN
4HE EMPLOYER HAS ceased business OR PART OF BUSINESS WHERE THE EMPLOYEE WORKED
4HE requirements FOR PARTICULAR WORK HAVE ceased or diminished OR ARE EXPECTED TO
0AGE 4: +EY CONCEPTS IN MANAGEMENT
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2OLE OF THE !UTHORITY ,EADERSHIP $ISCIPLINE GRIEVANCE Equal opportunities
MANAGER RELATIONSHIPS AND TERMINATION and diversity
Discrimination
Direct discrimination ONE GROUP IS TREATED LESS FAVOURABLY THAN ANOTHER
Indirect discrimination A SUBSTANTIAL PROPORTION OF A GROUP CANNOT COMPLY WITH REQUIREMENTS OR CONDITIONS
TO THEIR DETRIMENT
Positive discrimination GIVES PREFERENCE TO A PROTECTED GROUP
Sexual harassment Diversity
Sexual harassment IS ANY UNWANTED CONDUCT WITH %QUAL OPPORTUNITIES IS ABOUT REMOVING UNFAIR
SEXUAL CONNOTATIONS )N THE 5+ MOST SEXUAL DISCRIMINATION Diversity AS A CONCEPT IS ABOUT
HARASSMENT IS LIKELY TO CONSTITUTE UNLAWFUL SEX TAKING ADVANTAGE OF HETEROGENEITY IN ORDER TO THRIVE
DISCRIMINATION IN A DIVERSE GLOBAL BUSINESS ENVIRONMENT
(005)CME2PC14_CH04.qxp 5/9/2015 12:36 AM Page 65
The Equality Act (2010)
4HE Equality Act (2010) IS A PIECE OF LEGISLATION GOVERNING EQUAL TREATMENT IN THE WORKPLACE )T HAS REDUCED
THE NEED FOR A VAST ARRAY OF COMPLICATED LAWS AND REGULATIONS 4HE %QUALITY !CT HAS EXTENDED THE
RANGE OF PROTECTED CHARACTERISTICS WHICH EMPLOYERS MUST ABIDE BY
! 3EX
! 3EXUAL ORIENTATION
! 2ELIGION OR BELIEF
! 2ACE
! 0REGNANCY AND MATERNITY
! -ARRIAGE AND CIVIL PARTNERSHIP
! 'ENDER REASSIGNMENT
! $ISABILITY
! !GE
0AGE 4: +EY CONCEPTS IN MANAGEMENT
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2OLE OF THE !UTHORITY ,EADERSHIP $ISCIPLINE GRIEVANCE Equal opportunities
MANAGER RELATIONSHIPS AND TERMINATION and diversity
Equal opportunity in recruitment Management of equal opportunities
! Advertising material MUST NOT INDICATE ! Support from the top IS NEEDED
ANY DISCRIMINATORY PREFERENCE NOR MAY ITS ! ! policy on equal opportunities IS HELPFUL PERHAPS
DISTRIBUTION RESTRICT ITS AVAILABILITY TO PREPARED BY A working party WITH WIDE
PREFERRED GROUPS REPRESENTATION
! Application forms AND interviews MUST ! Monitoring APPLICATIONS STARTERS LEAVERS TRANSFERS
NOT ASK NON WORK RELATED QUESTIONS PROMOTIONS AND TRAINING SHOULD BE MONITORED FOR THEIR
IMPACT ON DISADVANTAGED GROUPS
! Selection tests SHOULD BE CULTURALLY NON
SPECIFIC ! Resources WILL BE NEEDED FOR PRACTICAL ACTION WHICH
MIGHT INCLUDE
! Rejection REASONS SHOULD BE RECORDED n &LEXIBLE WORK PATTERNS FOR WOMEN
n %QUAL OPPORTUNITIES MANAGERS
n !WARENESS TRAINING FOR MANAGERS
n #HILDCARE ARRANGEMENTS
n %NCOURAGEMENT OF JOB APPLICATIONS FROM
MEMBERS OF DISADVANTAGED GROUPS
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5: Culture
Culture
Organisational culture What is it? Culture and structure Culture and excellence
Culture and strategy Cross-cultural leadership
(006)CME2PC14_CH05.qxp 5/9/2015 12:36 AM Page 68
Organisational #ULTURE AND #ULTURE AND #ROSS CULTURAL
culture STRUCTURE STRATEGY LEADERSHIP
Culture
#ULTURE IN AN ORGANISATION IS THE SUM OF THE BELIEFS ASSUMPTIONS ATTITUDES CUSTOMS AND PRACTICES TO WHICH
PEOPLE ARE EXPOSED DURING THEIR INTERACTION WITH THE ORGANISATION 3CHEIN REFERRED TO IT AS @4HE WAY WE DO
THINGS ROUND HERE
4HE ORGANISATIONAL STRUCTURE EXISTS WITHIN THE WIDER CULTURAL SETTING OF THE SOCIETY IT IS PART OF SINCE THE PEOPLE
INVOLVED ARE MEMBERS OF BOTH
$IFFERENT ASPECTS OF AN ORGANISATIONS CULTURE ARE MANIFESTED IN DIFFERENT PARTS OF THE ORGANISATION Position in
the hierarchy IS A PARTICULARLY IMPORTANT DETERMINANT OF SUB
CULTURAL VALUES
The ‘organisational iceberg’
Overt aspects are above the surface Covert aspects are below the surface
! 'OALS TERMINOLOGY STRUCTURE "ENEFITS ASSUMPTIONS PERCEPTIONS ATTITUDES FEELINGS
! 0OLICIES PROCEDURES PRODUCTS VALUES INFORMAL INTERACTIONS GROUP WORKS
! &INANCIAL RESOURCES
(006)CME2PC14_CH05.qxp 5/9/2015 12:36 AM Page 69
McKinsey 7S
3425#452%
@( ! Structure strategy AND systems
! ARE MADE UP OF FACTS AND RULES
2
342!4%'9 3934%-3 $ ! Staff HAVE COMPLEX CONCERNS AND
PRIORITIES
3(!2%$
6!,5%3
! Skills ARE CORE COMPETENCES
@3
3+),,3 349,% / ! Style IS MANAGEMENTS METHODS
& STYLE AND ASSUMPTIONS
4
34!&& ! Shared values ARE GUIDING BELIEFS
!LL OF THE ELEMENTS ARE interlinked )F ANY ONE VARIABLE IS ALTERED THE OTHERS WILL BE AFFECTED
0AGE 5: #ULTURE
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/RGANISATIONAL Culture and #ULTURE AND #ROSS CULTURAL
CULTURE structure STRATEGY LEADERSHIP
Organisational ideologies (Harrison)
(ARRISON IDENTIFIED FOUR TYPES OF ORGANISATION AND DESCRIBED HOW THEY DIFFERED Structure IS AN IMPORTANT ASPECT
OF THIS MODEL (ANDY POPULARISED THIS MODEL IN 'ODS OF -ANAGEMENT HIS NAMES APPEAR IN BRACKETS
Power culture (Zeus) Role culture (Apollo)
)N THIS CULTURE POWER IS CENTRALISED &EW RULES OR 4HE CULTURE IS FORMAL STRUCTURED PROCEDURAL
PROCEDURES EXIST AND SUCCESSFUL SUBORDINATES KNOW IMPERSONAL AND STANDARDISED -EMBERS ARE RISK
WHAT THE POWER HOLDERS ARE LIKELY TO WANT 4HERE IS AVERSE AND DO NOT OVERSTEP THEIR SPHERES OF
LITTLE CONCERN FOR PEOPLE WITHIN OR WITHOUT RESPONSIBILITY 4HIS CULTURE IS EFFICIENT IN A ROUTINE
ENVIRONMENT LESS SO IN TIMES OF CHANGE
Task culture (Athena) Person culture (Dionysus)
)N THIS CULTURE THE COMMITMENT IS TO ACHIEVING 4HE ORGANISATION EXISTS TO SUPPORT ITS MEMBERS OR
OBJECTIVES 4HIS CULTURE USES TEAMWORK AND FLEXIBLE PROVIDE AN ARENA FOR THEM TO PRACTISE THEIR SKILLS
APPROACHES %XPERTISE IS VALUED AND THE STRUCTURE IS AND USE THEIR EXPERTISE !DMINISTRATION AS SUCH IS A
FLEXIBLE AND CHANGES RAPIDLY LOW STATUS ROLE
(006)CME2PC14_CH05.qxp 5/9/2015 12:36 AM Page 71
/RGANISATIONAL #ULTURE AND Culture and #ROSS CULTURAL
CULTURE STRUCTURE strategy LEADERSHIP
Miles and Snow
Strategic cultures
! Defenders RISK AVERSE SEEK SECURE NICHE MARKETS EMPHASISE CORRECT PROCEDURE
! Prospectors PURSUE RESULTS SEEK TO EXPAND PURSUE OPPORTUNITIES
! Analysers BALANCE RISK AND PROFIT BUILD ON A CORE OF STABLE PRODUCT MARKETS FOLLOW PROSPECTORS INTO NEW
MARKETS
! Reactors NO REAL STRATEGY LIVE FROM HAND TO MOUTH
Denison
Culture and the environment
Strategic orientation
)NTERNAL %XTERNAL
Environmental 3TABILITY #ONSISTENCY n BUREAUCRACY -ISSION EG A HOSPITAL
response
required #HANGE )NVOLVEMENT n FOCUS ON MOTIVATION !DAPTABILITY n EG A FASHION COMPANY
0AGE 5: #ULTURE
(006)CME2PC14_CH05.qxp 5/9/2015 12:36 AM Page 72
/RGANISATIONAL #ULTURE AND Culture and #ROSS CULTURAL
CULTURE STRUCTURE strategy LEADERSHIP
Deal and Kennedy
@3TRONG CORPORATE CULTURES ENHANCE PERFORMANCE (IGH RISK
VIA PERSONAL COMMITMENT TO THE NORMS AND VALUES Bet your company Hard ‘macho’
OF MANAGEMENT #ULTURE CAN REPLACE BUREAUCRATIC ,ONG DECISION 3EEKS CHALLENGES
PROCEDURES AS A MEANS TO GET THINGS DONE CYCLE NERVE AND EG ADVERTISING
3LOW FEEDBACK
&AST FEEDBACK
STAMINA NEEDED ENTERTAINMENT
EG OIL EXPLORATION
#ULTURES MAY BE ANALYSED INTO four types ACCORDING
TO 2 criteria Process Work hard/play
-ETHOD PROCESS hard
! Degree of risk-taking REQUIRED IN OPERATIONS
! Speed of feedback OF OUTCOMES FROM DECISIONS DETAIL STATUS RISK 4EAM SPIRIT ACTION
MANAGEMENT EG FUN EG )4 ANY
BANKS SALES DEPARTMENT
,OW RISK
(006)CME2PC14_CH05.qxp 5/9/2015 12:36 AM Page 73
/RGANISATIONAL #ULTURE AND #ULTURE AND Cross-cultural
CULTURE STRUCTURE STRATEGY leadership
The Hofstede model of national cultures
(OFSTEDE POINTED OUT THAT COUNTRIES DIFFER ON THE FOLLOWING DIMENSIONS
a Power distance 4HIS DIMENSION MEASURES HOW FAR SUPERIORS ARE EXPECTED TO EXERCISE POWER
b Uncertainty avoidance 3OME CULTURES PREFER CLARITY AND ORDER WHEREAS OTHERS ARE PREPARED TO ACCEPT
NOVELTY
4HIS AFFECTS THE WILLINGNESS OF PEOPLE TO CHANGE RULES RATHER THAN SIMPLY OBEY THEM
c Individualism )N SOME COUNTRIES INDIVIDUAL ACHIEVEMENT IS WHAT MATTERS ! COLLECTIVIST CULTURE PUTS THE
INTERESTS OF THE GROUP FIRST
d @Masculinity )N @MASCULINE CULTURES THE ROLES OF THE SEXES ARE CLEARLY DIFFERENTIATED @-ASCULINE CULTURES
EMPHASISE POSSESSIONS STATUS AND DISPLAY AS OPPOSED TO QUALITY OF LIFE AND CONCERN FOR OTHERS
Ouichi:Theory Z
#OMBINES THE BEST OF 53 AND *APANESE CULTURAL STYLES
0AGE 5: #ULTURE
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/RGANISATIONAL #ULTURE AND #ULTURE AND Cross-cultural
CULTURE STRUCTURE STRATEGY leadership
(OFSTEDE GROUPED COUNTRIES INTO EIGHT CLUSTERS
Power Uncertainty
Group distance avoidance Individualism ‘Masculinity’
) @-ORE DEVELOPED ,ATIN (IGH (IGH -EDIUM TO HIGH -EDIUM
)) @,ESS DEVELOPED ,ATIN (IGH (IGH ,OW 7HOLE RANGE
))) @-ORE DEVELOPED !SIAN -EDIUM (IGH -EDIUM (IGH
)6 @,ESS DEVELOPED !SIAN (IGH ,OW TO MEDIUM ,OW -EDIUM
6 .EAR %ASTERN (IGH (IGH ,OW -EDIUM
6) @'ERMANIC ,OW -EDIUM TO HIGH -EDIUM -EDIUM TO HIGH
6)) !NGLO ,OW TO MEDIUM ,OW TO MEDIUM (IGH (IGH
6))) .ORDIC ,OW ,OW TO MEDIUM -EDIUM TO HIGH ,OW
(007)CME2PC14_CH06.qxp 5/9/2015 12:36 AM Page 75
6: Communication, negotiation and conflict
Communication, negotiation
and conflict
Communication Negotiation Nature of conflict
Views of conflict
Communication skills Approaches to
and the management negotiation
accountant
Symptoms of conflict
Successful negotiation
Barriers to effective
communicating
Causes of conflict
Influence and
persuasion Managing conflict
(007)CME2PC14_CH06.qxp 5/9/2015 12:36 AM Page 76
Communication .EGOTIATION #ONFLICT
The communication process
.OISE INTERFERENCE
)NFORMATION 5NDERSTANDING OF
IDEAS ATTITUDES #ODED $ECODED MESSAGE AND
DESIRED ACTION MESSAGE -EDIUM MESSAGE MEANING ANDOR
ACTION REQUIRED
3%.$%2 2%#%)6%2
$ISTORTION #HANNEL $ISTORTION
&EEDBACK
UNDERSTOOD
Communication in an organisation
2UNS vertically horizontally AND diagonallly
(007)CME2PC14_CH06.qxp 5/9/2015 12:36 AM Page 77
Barriers to communication Oral communication skills include
! Distortion or omission BY THE SENDER ! !PPROPRIATE LANGUAGE AND USAGE
! Unclear language AND USE OF JARGON ! #LEAR AUDIBLE EXPRESSIVE DELIVERY
! %FFECTIVE ACTIVE CRITICAL OR EMPATHETIC LISTENING
! Verbal and non-verbal contradiction
! Communication OVERLOAD How to be an effective listener
! Mistrust and conflict
! "E PREPARED TO LISTEN
! Superfluous messages forgotten ! "E INTERESTED LISTEN !#4)6%,9
! Lack of shared vocabulary ! "E PATIENT WAIT YOUR TURN
! Emotions ! +EEP AN OPEN MIND AVOID PREJUDICE
! 5SE YOUR CRITICAL FACULTIES
! Tendency to filter out the unwelcome ! #ONCENTRATE DONT GET DISTRACTEDSIDE TRACKED
message
! 'IVE FEEDBACK ENCOURAGE ASK CONFIRM
! 5SE NON VERBAL CUES
0AGE 6: #OMMUNICATION NEGOTIATION AND CONFLICT
(007)CME2PC14_CH06.qxp 5/9/2015 12:36 AM Page 78
Communication .EGOTIATION #ONFLICT
Written forms of communication provide a record of proposals, considerations and actions and can
have the effect of concentrating the minds of both sender and receiver.
Letters: &OR EXTERNAL COMMUNICATION Notice boards: &OR MASS COMMUNICATION n MUST
BE MANAGED TO AVOID STALENESS
Memoranda: &OR INTERNAL COMMUNICATION House journals: 4O EXPRESS CORPORATE IDENTITY AND
REPORT ON DEVELOPMENTS
Forms: 4O ENABLE THE FLOW OF ROUTINE Organisation $IFFICULT TO KEEP UP TO DATE IN A
INFORMATION manuals: DYNAMIC ENVIRONMENT BUT CAN BE A
GOOD REPOSITORY FOR INFORMATION
RULES AND PROCEDURES
Questionnaires: 4O ELICIT INFORMATION ESPECIALLY IN Electronic %MAIL AND VOICEMAIL BUT EASE OF
JOB AND CREDIT APPLICATIONS communications: USE CAN LEAD TO OVERUSE AND
MISUSE
(007)CME2PC14_CH06.qxp 5/9/2015 12:36 AM Page 79
#OMMUNICATION Negotiation #ONFLICT
A negotiation is a discussion between two parties who have different views on how an issue should
be resolved. It differs from consultation in that both parties have a degree of power over the issue
and therefore the outcome must be acceptable to them both.
Conventions of negotiation Conducting a negotiation
!1 $O NOT ALLOW PIECEMEAL SETTLEMENT OF PARTS OF THE
! "OTH SIDES WISH TO REACH A SETTLEMENT ISSUE
! #IVILISED BEHAVIOUR IS DESIRABLE !2 !NY CONCESSION MADE SHOULD BE MATCHED BY A
CONCESSION RECEIVED 4HIS CAN BE PROMOTED BY
! $ISCUSSION MAY BE OFF THE RECORD
MAKING CONDITIONAL OFFERS
! &IRM OFFERS AND CONCESSIONS SHOULD NOT BE !3 #LOSING THE NEGOTIATION
WITHDRAWN
n /FFER A CONCESSION IN EXCHANGE FOR SETTLEMENT
! &INAL AGREEMENTS SHOULD BE FINAL n /FFER TO SPLIT THE DIFFERENCE ON OUTSTANDING ITEMS
n /FFER A CHOICE BETWEEN TWO POSSIBILITIES
! NEGOTIATOR SHOULD HAVE AN IDEAL OUTCOME AND A
n 3UMMARISE ARGUMENTS EMPHASISE CONCESSIONS
MINIMUM ACCEPTABLE OUTCOME IN MIND AND MAKE A FINAL OFFER
0AGE 6: #OMMUNICATION NEGOTIATION AND CONFLICT
(007)CME2PC14_CH06.qxp 5/9/2015 12:36 AM Page 80
#OMMUNICATION Negotiation #ONFLICT
02%0!2!4)/.
$ATA GATHERING AND ANALYSIS )DENTIFYING KEY ISSUES
0LANNING STRATEGY AND TACTICS 0REPARING THE MEETING
/0%.).'
/PENING
0RESENTATION OF EACH SIDES CASE
"!2'!).).'
)DENTIFYING COMMON GROUND
-AKING CONCESSIONS MOVING TOGETHER
#,/3).'
&INAL OFFER
#ONCLUSION
(007)CME2PC14_CH06.qxp 5/9/2015 12:36 AM Page 81
#OMMUNICATION .EGOTIATION Conflict
Constructive conflict Destructive conflict
! !IRS DIFFERENT SOLUTIONS TO PROBLEMS ! $ISTRACTS ATTENTION FROM MISSION
! #LARIFIES POWER STRUCTURES ! 0OLARISES OPINION
! 0ROMOTES THE TESTING OF IDEAS ! %NCOURAGES POLITICAL BEHAVIOUR
! 2ELEASES HOSTILE FEELINGS ! #AN DESTROY THE GROUP
! &OCUSES ATTENTION ON INDIVIDUAL CONTRIBUTIONS ! #AN LEAD TO ZERO
SUM CONCLUSIONS
Vertical conflict
!RISES BETWEEN HIERARCHICAL LEVELS OVER SUCH MATTERS AS WORK ALLOCATION PROMOTION RECOGNITION AND
PARTICULARLY OVER REWARDS 4HIS IS FERTILE GROUND FOR TRADE UNIONS
Horizontal conflict
"ETWEEN INDIVIDUALS AND GROUPS AT THE SAME BROAD LEVEL IN THE ORGANISATION
0AGE 6: #OMMUNICATION NEGOTIATION AND CONFLICT
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#OMMUNICATION .EGOTIATION Conflict
Causes of horizontal conflict between departments
! Differences in goals $EPARTMENTAL GOALS MUST SUPPORT THE CORPORATE MISSION AND WHERE THEY APPEAR TO BE IN
CONFLICT WITH ONE ANOTHER MUST BE COORDINATED BY SENIOR MANAGEMENT LEADERSHIP .OTE ALSO THAT INDIVIDUAL
OBJECTIVES MUST BE CONGRUENT WITH DEPARTMENTAL AND CORPORATE GOALS
! Personal differences of orientation ARISE FROM PERSONALITY CULTURAL INFLUENCES AND INDIVIDUAL INCLINATION
,EADERS MUST PLAY TO PEOPLES STRENGTHS AND INTEGRATE THEIR EFFORTS
! Task interdependence $EPARTMENTS RELY ON ONE ANOTHER FOR THE RESOURCES AND INFORMATION THAT MAKE UP
WORKFLOWS )T IS POSSIBLE FOR ONE DEPARTMENT TO DISRUPT THE WORK PERFORMANCE OF ANOTHER BY ITS INADEQUATE
PERFORMANCE
! Scarcity of resources 2ESOURCES ARE ALWAYS SCARCE AND DEPARTMENT HEADS COMPETE FOR THEM
! Power structures ARE RARELY FIXED AND SOME MANAGERS WILL EXPLOIT OPPORTUNITIES TO ENCROACH ON THE PREROGATIVES
OF OTHERS
! Uncertainty 3TABLE OPERATING CONDITIONS ALLOW THE DEVELOPMENT OF HARMONIOUS COORDINATED WORKING PRACTICES
! CHANGING UNCERTAIN ENVIRONMENT OR AN INTERNAL PROGRAMME OF CHANGE UPSETS ACCUSTOMED PRACTICES RAISES
NEW PROBLEMS AND GIVES OPPORTUNITIES FOR THE AGGRESSIVE
! 4HE reward system MUST BE FAIR AS BETWEEN STAFF IN DIFFERENT DEPARTMENTS
(007)CME2PC14_CH06.qxp 5/9/2015 12:36 AM Page 83
Managing conflict Thomas’ framework
4HOMAS USES THIS FRAMEWORK TO CLASSIFY DIFFERENT WAYS OF
!SSERTIVE
#OLLABORATIVE
$ESIRE TO SATISFY OWN CONCERN
#OMPETITIVE DOMINATION HANDLING CONFLICT )T SHOWS THE BEHAVIOURAL STYLE FOR HANDLING
INTEGRATION
CONFLICT WITH IN BRACKETS THE OUTCOME SOUGHT
Industrial relations
3HARING COMPROMISE #ONFLICT BETWEEN MANAGEMENT AND TRADE UNIONS OVER BENEFITS AND
CONDITIONS IS STILL ENDEMIC IN SOME COUNTRIES AND SOME INDUSTRIES
$ISPUTES HAVE TRADITIONALLY BEEN TACKLED BY collective bargaining
5NASSERTIVE
4HE RELATIONSHIP IS FORMALISED AND MADE CONTINUOUS IN MANY %5
COUNTRIES BY THE USE OF works councils AND supervisory boards
!CCOMMODATIVE 3OME COMPANIES HAVE TAKEN AN AGGRESSIVE APPROACH TO UNION
!VOIDANT NEGLECT APPEASEMENT POWER
5NCO
OPERATIVE #O
OPERATIVE Avoidance strategies INCLUDE DE
RECOGNITION OF UNIONS MOVING TO
$ESIRE TO SATISFY OTHER PARTYS CONCERN NEW NON
UNION SITES AND SINGLE UNION NO
STRIKE DEALS
Human resource management strategies USE AN INDIVIDUALISTIC
APPROACH USING SINGLE STATUS APPRAISAL AND PERFORMANCE
MANAGEMENT PROFIT SHARING AND PROFIT RELATED PAY
0AGE 6: #OMMUNICATION NEGOTIATION AND CONFLICT
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#OMMUNICATION .EGOTIATION Conflict
Possible managerial responses to conflict
! Avoidance )T MAY BE POSSIBLE TO IGNORE TRIVIAL INCIDENTS THOUGH THE CAUSES OF THE CONFLICT MAY ERUPT MORE VIOLENTLY LATER
! Accomodation 4HIS CAN BE DONE WITH THE USE OF EXHORTATION AND AN EMPHASIS ON THE NEED FOR TEAMWORK
! Dominance 0OWER CAN BE APPLIED TO STAMP OUT THE DISPUTE 4HIS CAN CREATE LINGERING RESENTMENT AND HOSTILITY
! Compromise 4HIS CAN WORK BUT SPLITTING THE DIFFERENCE CAN LEAVE BOTH PARTIES UNSATISFIED !LSO THEY MAY EXAGGERATE
THEIR OPENING POSITIONS IF THEY EXPECT TO HAVE TO COMPROMISE
! Integration )T MAY BE POSSIBLE TO CONFRONT THE ISSUES AND SEEK ACCOMMODATION OF DIFFERENCES BY EXPLORING THE NATURE OF
THE CONFLICT
Reduce conflict behaviour Reduce conflict behaviour
! 3TRUCTURAL SEPARATION ! )NTEGRATION DEVICES ! 3UPER ORDINATE GOALS
! "UREAUCRATIC AUTHORITY ! #ONFRONTATION AND NEGOTIATION ! !NALYSIS OF CAUSES
! ,IMIT COMMUNICATION ! 3TAFF EXCHANGES ! /RGANISATIONAL ADJUSTMENTS
! *OINT TRAINING ! 5SE CONSULTANTS
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7: Control and the finance function
Control and the finance
function
Role of the finance function Nature of control Performance management of Internal control systems
the individual
Levels of control
Business ethics and CSR
Corporate governance
Mentoring
Health and safety
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Control 4HE ROLE OF THE 0ERFORMANCE (EALTH -ENTORING %THICS AND
theory FINANCE FUNCTION MANAGEMENT AND SAFETY CORPORATE GOVERNANCE
Types of control
Ouchi HAS IDENTIFIED TYPES OF CONTROL
! Market control ASSIGNS REVENUES AND COSTS TO PROFIT CENTRES AND CONTROL IS EXERCISED VIA FINANCIAL PERFORMANCE )T WORKS WELL WITH
AUTONOMOUS TRADING UNITS BUT NOT FOR CENTRALLY PROVIDED SERVICES
! Bureaucratic control USES FORMAL STRUCTURES AND PROCEDURES )T IS IMPERSONAL RATIONAL AND EFFICIENT BUT RELIES ON OBJECTIVE
MEASUREMENT )T IS LESS USEFUL WHERE SUBJECTIVE IMPRESSIONS ARE IMPORTANT EG WHERE OUTPUTS ARE DIFFICULT TO MEASURE
! Cultural or clan control WORKS THROUGH SHAPING VALUES ATTITUDES AND COMMITMENT )T IS USEFUL FOR COMPLEX ABSTRUSE OR HIGHLY
SPECIALISED WORK SUCH AS RESEARCH WHERE OUTPUTS ARE DIFFICULT TO MEASURE OR TO PRICE
Personal centralised control /UCHIS WORK ON CONTROL STRATEGIES CAN BE EXTENDED TO INCLUDE A FORM OF CONTROL KNOWN AS PERSONAL
CENTRALISED CONTROL )T IS OFTEN FOUND IN OWNER MANAGED ORGANISATIONS )TS KEY FEATURE IS A CENTRAL FIGURE WHO ACTS AS THE MAIN
DECISION MAKER IN THE ORGANISATION #ONTROL IS ACHIEVED OVER ACTIVITIES BY THE OWNER PERSONALLY OVERSEEING THE WORK OF EMPLOYEES
#ONTROL SYSTEM
! MAJOR FUNCTION OF ORGANISATION
STRUCTURE IS THE PROVISION OF A !CTUAL
#OMPARISON /N TARGET
0LANS AND
MECHANISM THROUGH WHICH /BJECTIVES
STANDARDS PERFORMANCE
OF PERFORMANCE
WITH PLANSSTANDARDS
.O CORRECTIVE
ACTION REQUIRED
CONTROL CAN BE EXERCISED !
FEEDBACK OR CYBERNETIC CONTROL #ONTROL ACTION #ONTROL ACTION
SYSTEM WORKS LIKE THIS $EVIATIONS
IDENTIFIED
(008)CME2PC14_CH07.qxp 5/9/2015 12:37 AM Page 87
Levels of control (Anthony) Effective control systems Internal control systems
-ANAGERIAL LEVEL 4YPE OF MANAGEMENT ACTIVITY
&OR CONTROL SYSTEMS TO BE Turnbull Report
,ONG TERM EFFECTIVE THEY MUST SATISFY six 3UGGESTS THAT INTERNAL CONTROLS ARE
4OP
STRATEGIC
0LANNING $ECISIONS criteria policies processes tasks
!CCEPTABILITY behaviour AND OTHER ASPECTS THAT
-EDIUM TERM PLANNING AND
-ANAGEMENT #ONTROL !CCESSABILITY &ACILITATE effective AND efficient
-IDDLE
TACTICAL $ECISIONS !DAPTABILITY operation
!CTION ORIENTATION (ELP ENSURE QUALITY OF internal AND
/PERATIONAL3HORT TERM
!PPROPRIATENESS external reporting
,OWER $ECISIONS
2OUTINE 0ROCESSING OF !FFORDABILITY (ELP ENSURE compliance WITH LAWS
OPERATIONAL
4RANSACTIONS AND REGULATIONS
Control strategies and processes
Ouchi 4HREE BASIC control strategies ARE Johnson and Scholes. 4WO TYPES OF CONTROL
USED IN ORGANISATIONS PROCESSES EXIST IN ORGANISATIONS
Market CONTROL Input-focused OR output-focused
Bureaucratic CONTROL Direct OR indirect
Clan CONTROL
0AGE 7: #ONTROL AND THE FINANCE FUNCTION
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#ONTROL The role of the 0ERFORMANCE (EALTH -ENTORING %THICS AND
THEORY finance function MANAGEMENT AND SAFETY CORPORATE GOVERNANCE
The role of the finance function
Responsibilities Measures of success
! !LLOCATION AND EFFECTIVE USE OF RESOURCES ! 0ROVISION OF RELIABLE RELEVANT INFORMATION
! 2EPORTING RESULTS FINANCIAL ACCOUNTING ! &LEXIBILITY
! !NALYSING PERFORMANCE MANAGEMENT ACCOUNTING ! 3PEED OF REPORTING
! %VALUATING INVESTMENTS ! %FFICIENCY
! 0ROVIDING INFORMATION TO STAKEHOLDERS ! "ALANCED SCORECARD
Stakeholder relationships
! Internal n RELEVANT INFORMATION FOR THOSE WHO NEED IT
! Business advisers n INFORMATION REQUIRED FOR ADVICE
! Auditors n EXTERNALINTERNAL AUDIT LINKS
! Investors n RESULTS AND FINANCIAL MANAGEMENT
! Financiers n DETAILS OF PROFITS AND LIQUIDITY
(008)CME2PC14_CH07.qxp 5/9/2015 12:37 AM Page 89
Business partner model Problems with business partner
model
4HE BUSINESS PARTNER MODEL HAS BEEN DEVELOPED
IN RESPONSE TO CRITICISMS THAT THE FINANCE FUNCTION ! ,OSS OF INDEPENDENCE
IS TOO CONCERNED WITH CONTROL AND PAST ! 4OO IDENTIFIED WITH OPERATIONAL MANAGERS
PERFORMANCE 'IVES FINANCE FUNCTION A MORE ACTIVE
! &AILURE TO PROVIDE SUFFICIENT CONTROL
ROLE IN PROVIDING INFORMATION AND EXPANDS ITS ROLE
TO COVER STRATEGIC ISSUES SUCH AS INVESTMENT ! ,ACK OF FOCUS ON PROVIDING TRUE AND FAIR VIEW
EXTERNAL STAKEHOLDERS REQUIRE
Outsourcing Independent business partner
/UTSOURCING OF BASIC TRANSACTION PROCESSING AND &INANCE FUNCTIONS ROLE IS TO ADD VALUE NOT CREATE IT
PAYROLL MANAGEMENT IS NOW COMMON WITH THE 4HE FINANCE FUNCTIONgS FOCUS SHOULD BE ON THE
FINANCE FUNCTION CONCENTRATING ON PROVISION OF KEY SAFEGUARDING OF ASSETS AND EFFECTIVE REPORTING
INFORMATION !LTERNATIVE IS USE OF SHARED SERVICE RIGOROUS ASSESSMENT AND VALIDATION OF STRATEGIC IDEAS
CENTRES
0AGE 7: #ONTROL AND THE FINANCE FUNCTION
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#ONTROL 4HE ROLE OF THE Performance (EALTH -ENTORING %THICS AND
THEORY FINANCE FUNCTION management AND SAFETY CORPORATE GOVERNANCE
#ORPORATE
PLAN
0URPOSE OF
APPRAISAL
)DENTIFICATION !SSESSMENT *OINTLY
OF CRITERIA 2EPORT !SSESSMENT AGREED &OLLOW UP
FOR BY )NTERVIEW CONCRETE ACTION
ASSESSMENT -ANAGER CONCLUSION
Job
requirements Employee’s
performance
Job
analysis
Feedback
Appraisal techniques
Overall assessment IN NARRATIVE FORM VALUE DEPENDS ON QUALITY Behavioural incident METHODS GIVE EXAMPLES OF BEHAVIOUR FOR
OF WRITING AND guidance ON STANDARDS AND WHAT TO COVER EACH GRADE AND CHARACTERISTIC
Grading USING NUMERICAL OR GRAPHICAL rating scales FOR SPECIFIED Results oriented schemes REVIEW PERFORMANCE AGAINST SPECIFIC
CHARACTERISTICS TARGETS PREVIOUSLY AGREED BETWEEN APPRAISER AND APPRAISEE
(008)CME2PC14_CH07.qxp 5/9/2015 12:37 AM Page 91
Appraisal
IS THE SYSTEMATIC REVIEW AND ASSESSMENT OF AN EMPLOYEES PERFORMANCE POTENTIAL AND TRAINING NEEDS
Reasons for formal appraisal Purposes of appraisal
! &ORCE MANAGERS TO UNDERTAKE A FULL AND ! Performance review FEEDBACK ON
RATIONAL REVIEW RATHER THAN RELYING ON RANDOM PERFORMANCE AND IDENTIFICATION OF TRAINING OR
IMPRESSIONS DEVELOPMENT NEEDS
! &ORCE MANAGERS TO GIVE ADEQUATE FEEDBACK TO ! Reward review ASSESS APPROPRIATENESS OF
SUBORDINATES PAY INCREASES AND BONUSES
! &ORCE MANAGERS TO CONSIDER DEVELOPMENT ! Potential review MORE SENIOR STAFF ARE BEST
PLACED TO ASSESS POTENTIAL
NEEDS AND POTENTIAL FOR PROMOTION
0AGE 7: #ONTROL AND THE FINANCE FUNCTION
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#ONTROL 4HE ROLE OF THE Performance (EALTH -ENTORING %THICS AND
THEORY FINANCE FUNCTION management AND SAFETY CORPORATE GOVERNANCE
The appraisal interview Appraisal schemes
Maier IDENTIFIES APPROACHES
! Traditional schemes RELY ON THE ASSESSMENT
Tell and sell MANAGER ANNOUNCES ASSESSMENT AND OF EMPLOYEES BY THEIR MANAGERS
TRIES TO GAIN ACCEPTANCE OF VERDICT AND IMPROVEMENT
PLAN ! Self appraisal SAVES MANAGEMENT TIME AND
Tell and listen MANAGER ANNOUNCES ASSESSMENT CAN ENHANCE EMPLOYEE COMMITMENT
BUT INVITES RESPONSE AND DISCUSSION
! Upward appraisal OF MANAGERS BY EMPLOYEES
Problem-solving MANAGER ACTS AS COUNSELLOR TO BRINGS AN IMPORTANT NEW PERSPECTIVE
ASSIST EMPLOYEES SELF DEVELOPMENT ESPECIALLY WHERE THERE IS A HIGH DEGREE OF
-ANAGERS SHOULD BE well prepared FOR THE APPRAISAL CONSISTENCY OF OPINION
INTERVIEW SINCE IT CAN BE STRESSFUL FOR BOTH
PARTICIPANTS 4RAINING AND PAY IMPLICATIONS AND ! 360° appraisal EXTENDS THIS PRINCIPLE BY
POSSIBILITIES SHOULD BE RESEARCHED IN ADVANCE SEEKING INPUT FROM PEERS AND CO
WORKERS
CUSTOMERS INCLUDING INTERNAL @CUSTOMERS AND
!NY AGREED ACTION SHOULD BE followed up TO ENSURE THE APPRAISEES THEMSELVES
THAT IT HAPPENS
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Appraisal barriers
! 0OTENTIAL FOR confrontation and hostility BASED ON DISAGREEMENTS ON ROLE PERFORMANCE OBJECTIVITY AND
PRESENTATION
! Inadequate participation BY APPRAISEES WHO SEE THE PROCESS AS OVER JUDGMENTAL
! Lack of firmness BY APPRAISERS WHO AVOID CRITICISM AND ACHIEVE LITTLE
! Bureaucratic, time bound, paper based nature OF THE APPRAISAL PROCESS INTERFERES WITH ITS REAL PURPOSE
! &AILURE TO incorporate appraisal into a wider spectrum OF CONTINUING PERFORMANCE MANAGEMENT
! !GREED targets BECOME irrelevant AS TIME PASSES IF APPRAISALS ARE NO MORE FREQUENT THAN ANNUALLY
0AGE 7: #ONTROL AND THE FINANCE FUNCTION
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#ONTROL 4HE ROLE OF THE 0ERFORMANCE Health -ENTORING %THICS AND
THEORY FINANCE FUNCTION MANAGEMENT and safety CORPORATE GOVERNANCE
Legal framework
,EGISLATION GOVERNING health and safety at work:
(EALTH AND 3AFETY AT 7ORK !CT
4HE -ANAGEMENT OF (EALTH AND 3AFETY AT 7ORK 2EGULATIONS
(EALTH AND 3AFETY #ONSULTATION WITH %MPLOYEES 2EGULATIONS
4HE 7ORKPLACE (EALTH 3AFETY AND 7ELFARE 2EGULATIONS
4HE -ANUAL (ANDLING /PERATIONS 2EGULATIONS
4HE (EALTH AND 3AFETY $ISPLAY 3CREEN %QUIPMENT 2EGULATIONS
7ORKING 4IME 2EGULATIONS
The Health and Safety Executive (HSE)
4HE (EALTH AND 3AFETY %XECUTIVE (3% IS AN INDEPENDENT BODY RESPONSIBLE FOR
ENCOURAGING AND ENFORCING EMPLOYERS TO COMPLY WITH THE (EALTH AND 3AFETY AT 7ORK !CT
(008)CME2PC14_CH07.qxp 5/9/2015 12:37 AM Page 95
UK legislation The impact of health and safety
Employers’ duties !CCIDENTS AND ILLNESS increase costs
Public image IS INFLUENCED
! Work practices MUST BE SAFE %MPLOYERS HAVE legal obligations
! Work environment MUST BE SAFE AND HEALTHY
! Risk assessments MUST BE CARRIED OUT Employees’ duties
! At-risk employees MUST BE IDENTIFIED
! Health and safety advisers MUST BE COMPETENT ! 4AKE REASONABLE CARE OF THEMSELVES AND
! 0LANT AND EQUIPMENT MUST BE maintained TO THE OTHERS
PROPER STANDARD ! !LLOW THE EMPLOYER TO CARRY OUT HIS DUTIES
! Training and information TO ENCOURAGE safe INCLUDING ENFORCING SAFETY RULES
working practices SHOULD BE PROVIDED ! 5SE EQUIPMENT PROPERLY
! Controls SHOULD REDUCE RISKS ! 2EPORT POTENTIAL HAZARDS
! Safety policies SHOULD BE INTRODUCED AND ! .OT INTERFERE RECKLESSLY WITH MACHINERY OR
REGULARLY REVISED EQUIPMENT
0AGE 7: #ONTROL AND THE FINANCE FUNCTION
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#ONTROL 4HE ROLE OF THE 0ERFORMANCE (EALTH Mentoring %THICS AND
THEORY FINANCE FUNCTION MANAGEMENT AND SAFETY CORPORATE GOVERNANCE
Mentoring
-ENTORING IS A BROAD ACTIVITY COMPRISING CAREER BUILDING FUNCTIONS SUCH AS SPONSORSHIP
COACHING AND PROTECTION AND PSYCHO
SOCIAL FUNCTIONS SUCH AS PROVIDING A ROLE MODEL
COUNSELLING FRIENDSHIP AND CREATING A SENSE OF ACCEPTANCE AND BELONGING
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#ONTROL 4HE ROLE OF THE 0ERFORMANCE (EALTH -ENTORING Ethics and
THEORY FINANCE FUNCTION MANAGEMENT AND SAFETY corporate governance
Ethics Social responsibility
%THICS ARE THE MORAL PRINCIPLES BY WHICH PEOPLE ACT )T IS COMMONLY EXPECTED THAT BUSINESS WILL PROVIDE
OR DO BUSINESS BENEFITS TO SOCIETY GENERALLY NOT JUST BY ECONOMIC
4WO ETHICAL VALUES ARE PERTINENT FOR BUSINESS ACTIVITY OR TO SPECIFIC STAKEHOLDER GROUPS LEGISLATION
ordinary decency AND distributive justice AND SOCIAL AND POLITICAL PRESSURE PROMOTE THIS NOW
Ethical problems ! Employment: IN MANY COUNTRIES EQUAL
OPPORTUNITIES AND EMPLOYMENT PROTECTION
! %XTORTION BY OFFICIALS LEGISLATION HAMPERS BUSINESSES ABILITY TO ADJUST
THE SIZE OF THEIR WORKFORCE AND CONTROL LABOUR
! "RIBERY
COSTS
! 5NFAIR COMPETITION
! 0RODUCT SAFETY ! Environmental and externalities: EXTENSIVE
LEGISLATION IS DESIGNED TO PROTECT THE NATURAL
! (ONESTY IN ADVERTISING ENVIRONMENT AND OTHER FORMS OF AMENITY SUCH
! %NVIRONMENTAL IMPACT AS HEALTH AND FAMILY LIFE
0AGE 7: #ONTROL AND THE FINANCE FUNCTION
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#ONTROL 4HE ROLE OF THE 0ERFORMANCE (EALTH -ENTORING Ethics and
THEORY FINANCE FUNCTION MANAGEMENT AND SAFETY corporate governance
Promoting ethical behaviour – two approaches
Compliance Integrity
Ethos #ONFORM WITH IMPOSED STANDARDS #HOOSE ETHICAL STANDARDS
Objective +EEP TO THE LAW %NABLE LEGAL AND RESPONSIBLE CONDUCT
Originators ,AWYERS -ANAGEMENT
Methods 2EDUCED EMPLOYEE DISCRETION ,EADERSHIP EDUCATION SYSTEMS
Behavioural assumptions 0EOPLE ARE SOLITARY SELF INTERESTED BEINGS 0EOPLE ARE SOCIAL BEINGS WITH VALUES
Standards 4HE LAW %THICAL VALUES AND THE LAW
Education 4HE LAW COMPLIANCE SYSTEM 6ALUES THE LAW COMPLIANCE SYSTEMS
7HICHEVER APPROACH IS CHOSEN IT WILL BE INEFFECTIVE IF SENIOR MANAGERS SET A BAD EXAMPLE
(008)CME2PC14_CH07.qxp 5/9/2015 12:37 AM Page 99
Fundamental principles of CIMA’s code of ethics
! #)-!S #ODE OF %THICS IS BASED ON THE )NTERNATIONAL &EDERATION OF !CCOUNTANTS )&!# #ODE OF %THICS
! Integrity IS MORE THAN NOT TELLING LIES PROFESSIONAL ACCOUNTANTS MUST NOT BE PARTY TO ANYTHING WHICH IS
DECEPTIVE OR MISLEADING
! Objectivity IS FOUNDED ON FAIRNESS AND AVOIDING ALL FORMS OF BIAS PREJUDICE AND PARTIALITY
! Professional competence and due care
! Confidentiality %MPLOYERS AND CLIENTS ARE ENTITLED TO EXPECT THAT CONFIDENTIAL INFORMATION WILL NOT BE
REVEALED WITHOUT SPECIFIC PERMISSION OR UNLESS THERE IS A LEGAL OR PROFESSIONAL RIGHT OR DUTY TO DO SO
! Professional behaviour PROTECTS THE REPUTATION OF THE PROFESSIONAL AND THE PROFESSIONAL BODY
0AGE 7: #ONTROL AND THE FINANCE FUNCTION
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#ONTROL 4HE ROLE OF THE 0ERFORMANCE (EALTH -ENTORING Ethics and
THEORY FINANCE FUNCTION MANAGEMENT AND SAFETY corporate governance
Corporate governance IS THE SYSTEM BY WHICH ORGANISATIONS ARE DIRECTED AND CONTROLLED -OST COUNTRIES
HAVE COMPLIANCE CODES ON CORPORATE GOVERNANCE
Failures of corporate governance The UK Stock Exchange Corporate Governance Code
4HERE HAVE ALWAYS BEEN SWINDLES 4HERE HAVE 4HE CODE LAYS DOWN BEST PRACTICE FOR THE WAY LARGE
BEEN SEVERAL VERY LARGE ONES COMPANIES SHOULD BE RUN !MONG ITS PROVISIONS ARE THESE
! 0OLLY 0ECK ! %NRON ! Directors SHOULD USE INDEPENDENT JUDGEMENT THE
! 2OBERT -AXWELL ! 0ARMALAT ROLES OF #HAIRMAN AND #%/ SHOULD BE SEPARATE NO
! "##) ! 7ORLD #OM INDIVIDUAL OR GROUP SHOULD DOMINATE THERE SHOULD BE
A BALANCE OF EXECUTIVE AND NON EXECUTIVE DIRECTORS
Good corporate
governance ! Director’s remuneration SHOULD BE SUBJECT TO FORMAL
AND CLEAR PROCEDURE AND LARGELY CONTROLLED BY NON
EXECUTIVE DIRECTORS
! 2EDUCES RISK
! )MPROVES PERFORMANCE ! .ON EXECUTIVE DIRECTORS audit committee SHOULD
! )MPROVES EXTERNAL PERCEPTIONS OVERSEE BOTH INTERNAL AND EXTERNAL AUDIT
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8: Change management
Change management
Main considerations
Approaches to managing
Process of change Forces facilitating and Change management roles resistance
blocking change
Types of change
Pitfalls of change
management
The context of change
(009)CME2PC14_CH08.qxp 5/9/2015 12:37 AM Page 102
Situation 3TYLES OF CHANGE #HANGE #HANGE 0ITFALLS OF CHANGE
analysis for change MANAGEMENT MANAGEMENT ROLES MANAGEMENT LEVERS MANAGEMENT
4HE MANAGEMENT OF CHANGE STARTS WITH AN UNDERSTANDING OF THREE MAIN CONSIDERATIONS
1 The type of change REQUIRED n ITS SCOPE AND NATURE
Scope of change
Realignment Transformation
Nature of Incremental !DAPTATION %VOLUTION
change 'Big bang' 2ECONSTRUCTION 2EVOLUTION
2 The wider context of the change IN LARGE PART CULTURAL CONSIDERATIONS
! Time AVAILABLE ! Capacity n !VAILABILITY OF RESOURCES ESPECIALLY FINANCE )3)4 AND
MANAGEMENT EFFORT
! &EATURES TO preserve ! 7ORKFORCE readiness TO CHANGE OR RESISTENCE TO CHANGE
! /RGANISATIONAL diversity ! Power TO EFFECT CHANGE
! Capability TO MANAGE CHANGE ! Scope OF CHANGE NEEDED
n ,ARGELY DEPENDS ON EXPERIENCE
3 Forces facilitating and blocking change n USE OF FORCE FIELD ANALYSIS
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Beer and Nohria – Theory E & Theory O
Beer and Nohria SUGGEST THAT ALTHOUGH EACH ORGANISATIONgS CHANGE IS UNIQUE EACH CHANGE IS ULTIMATELY A
VARIANT OF TWO UNDERLYING APPROACHES "EER AND .OHRIA CALL THESE UNDERLYING APPROACHES gTheory Eg AND
gTheory Og
Theory E THE BASIS OF CHANGE IS TO INCREASE ECONOMIC VALUE 4HEORY % CHANGE USUALLY INVOLVES THE USE OF
ECONOMIC INCENTIVES DRASTIC LAYOFFS DOWNSIZING AND RESTRUCTURING
Drawbacks of Theory E
! )GNORES THE FEELINGS OF EMPLOYEES
! -AY REDUCE MOTIVATION AND COMMITMENT
! ,OSS OF CREATIVITY
Theory O AIMS TO DEVELOP HUMAN CAPABILITY TO IMPLEMENT STRATEGY AND TO DEVELOP CORPORATE CULTURE THROUGH
ORGANISATIONAL LEARNING 4HE PROCESS IS PARTICIPATIVE RATHER THAN BEING TOP DOWN WITH AN EMPHASIS ON
FEEDBACK AND REFLECTION
Drawbacks of Theory O
! %NCOURAGES MANAGERS TO AVOID TAKING DIFFICULT DECISIONS
0AGE 8: #HANGE MANAGEMENT
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3ITUATION Styles of change #HANGE #HANGE 0ITFALLS OF CHANGE
ANALYSIS FOR CHANGE management MANAGEMENT ROLES MANAGEMENT LEVERS MANAGEMENT
4HERE ARE FIVE MAIN STYLES OF CHANGE MANAGEMENT
Style Characterised by Appropriate to
1 %DUCATION AND COMMUNICATION 0ERSUASION )NCREMENTAL CHANGE WILLING STAFF
2 #OLLABORATION AND PARTICIPATION )NVOLVING THOSE AFFECTED )NCREMENTAL CHANGE SUPPORTIVE CULTURE
3 )NTERVENTION #HANGE AGENTS )NCREMENTAL CHANGE
4 $IRECTION -ANAGERIAL AUTHORITY PROBABILITY 4RANSFORMATION
OF RESISTANCE
5 #OERCIONEDICT 5SE OF POWER TO IMPOSE CHANGE 4IMES OF CRISIS
$IFFERENT APPROACHES MAY BE APPROPRIATE TO DIFFERENT STAKEHOLDERS .ORMAL MANAGEMENT PRACTICE WILL ALSO AFFECT
THE STYLE USED )T MAY BE ADVANTAGEOUS TO USE MORE THAN ONE STYLE
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+OTTER AND 3CHLESINGER IDENTIFY SIX APPROACHES TO OVERCOMING
STAFF RESISTANCE
! %DUCATION AND COMMUNICATION
! 0ARTICIPATION AND INVOLVEMENT
! &ACILITATION AND SUPPORT
! .EGOTIATION AND AGREEMENT
! -ANIPULATION AND CO
OPERATION
! #OERCION IMPLICIT AND EXPLICIT
0AGE 8: #HANGE MANAGEMENT
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3ITUATION 3TYLES OF CHANGE Change #HANGE 0ITFALLS OF CHANGE
ANALYSIS FOR CHANGE MANAGEMENT management roles MANAGEMENT LEVERS MANAGEMENT
! change agent IS AN INDIVIDUAL OR GROUP THAT HELPS TO BRING ABOUT STRATEGIC CHANGE IN AN ORGANISATION
*OHNSON 3CHOLES AND 7HITTINGTON EXAMINE CHANGE AGENCY BY CONSIDERING THREE DISTINCT GROUPS
1 Strategic leaders
Five approaches to strategic leadership:
! Strategic analysis AND DESIGN FOCUS
! Human assets DEVELOPMENT FOCUS
! Expertise AS SOURCE OF COMPETITIVE ADVANTAGE FOCUS
! Control BY PROCEDURES AND PERFORMANCE MONITORING
! Change AS CONTINUOUS PROCESS n EMPHASIS ON COMMUNICATION AND MONITORING
2 Middle management
0ROVIDERS OF ADVICE TRANSLATION OF STRATEGY AT LOCAL LEVEL IMPLEMENTATION AND CONTROL
3 Outsiders
"RINGING A FRESH POINT OF VIEW SUCH AS A NEW CHIEF EXECUTIVE OR THE USE OF CONSULTANTS
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3ITUATION 3TYLES OF CHANGE #HANGE Change 0ITFALLS OF CHANGE
ANALYSIS FOR CHANGE MANAGEMENT MANAGEMENT ROLES management levers MANAGEMENT
! turnaround strategy IS REQUIRED WHEN A BUSINESS IS IN terminal decline )T HAS ITS OWN CHANGE MANAGEMENT
TECHNIQUES
#RISIS STABILISATION n MANAGEMENT CHANGES n COMMUNICATION WITH STAKEHOLDERS n ATTENTION TO TARGET MARKETS n
CONCENTRATION OF EFFORT n FINANCIAL RESTRUCTURING n PRIORITISATION
)N OTHER CIRCUMSTANCES CHANGE MANAGEMENT LEVERS RELATE TO THE cultural web
Change management levers
Challenging the paradigm MOVE AWAY FROM ENTRENCHED HABITS
Changing routines DISCARD OLD WAYS OF DOING THINGS
Use of symbolic processes INTRODUCE NEW RITUALS AND SYSTEMS
Power and politics BUILD A POWER BASE OVERCOME RESISTANCE AND ACHIEVE COMPLIANCE
Communication and monitoring EXPLAIN THE NEED FOR CHANGE WHAT CHANGE INTENDS TO ACHIEVE
Tactics CAREFUL TIMING USE OF @QUICK WINS HANDLING JOB LOSSES n WITH CARE
0AGE 8: #HANGE MANAGEMENT
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3ITUATION 3TYLES OF CHANGE #HANGE #HANGE Pitfalls of change
ANALYSIS FOR CHANGE MANAGEMENT MANAGEMENT ROLES MANAGEMENT LEVERS management
#HANGE PROGRAMMES MAY BE subverted AND LEAD TO unintended consequences 4HIS HAS FOUR IMPLICATIONS FOR
CHANGE MANAGEMENT
! Monitoring AND control ARE VITAL
! 4HE EXISTING culture MUST BE UNDERSTOOD
! 4HE ORGANISATIONgS people SHOULD BE INVOLVED IN THE CHANGE PROCESS
! 4HE extent OF THE CHALLENGE MUST BE RECOGNISED
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9a: Project management – Part A
Project management
Part A
Identifying project The nature of project management PRINCE 2
The project lifecycle Managing project risk
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Project )DENTIFYING 02).#% 4HE PROJECT 2ISK
management PROJECTS LIFECYCLE MANAGEMENT
Projects Characteristics of a project
! PROJECT IS @AN UNDERTAKING THAT HAS A BEGINNING ! ! DEFINED BEGINNING AND END
AND AN END AND IS CARRIED OUT TO MEET ESTABLISHED
! 2ESOURCES ALLOCATED SPECIFICALLY
GOALS WITHIN COST SCHEDULE AND QUALITY OBJECTIVES
(AYNES 0ROJECT -ANAGEMENT ! &OLLOW A PLAN TOWARDS A CLEAR INTENDED END RESULT
! /FTEN CUT ACROSS ORGANISATIONAL LINES
! /FTEN UNIQUE OR SELDOM DONE
Project management
)NTEGRATION OF ALL ASPECTS OF A PROJECT ENSURING THAT THE PROPER KNOWLEDGE AND RESOURCES ARE AVAILABLE WHEN
AND WHERE NEEDED AND ABOVE ALL TO ENSURE THAT THE EXPECTED OUTCOME IS PRODUCED IN A TIMELY COST
EFFECTIVE
MANNER 4HE PRIMARY FUNCTION OF A PROJECT MANAGER IS TO MANAGE THE TRADE
OFFS BETWEEN PERFORMANCE
TIMELINESS AND COST #)-!
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4HE 53 0ROJECT -ANAGEMENT )NSTITUTE GUIDE TO THE 0ROJECT -ANAGEMENT "ODY OF +NOWLEDGE LISTS NINE KEY
KNOWLEDGE AREAS THAT SUPPORT FIVE PROJECT MANAGEMENT PROCESS AREAS
Key project management knowledge
areas
Project management process areas
! )NTEGRATION )NITIATING 0LANNING
! #OST
! #OMMUNICATIONS
! 3COPE
! 1UALITY #ONTROLLING %XECUTING
! 2ISK
! 4IME
! (UMAN RESOURCES
#LOSING
! 0ROCUREMENT
0AGE 9a: 0ROJECT MANAGEMENT n 0ART !
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0ROJECT Identifying 02).#% 4HE PROJECT 2ISK
MANAGEMENT projects LIFECYCLE MANAGEMENT
Feasibility studies
Technical feasibility Social feasibility
! 2EQUIREMENT FOR innovation OR development #ONSIDER EFFECTS ON GROUPS AND INDIVIDUALS BOTH
! %XPERTISE AVAILABLE INSIDE AND OUTSIDE THE ORGANISATION AND EVEN ON
SOCIETY AS A WHOLE
! Non-technological TECHNIQUES SUCH AS MARKETING
! Features analysis IDENTIFIES CRITICAL FEATURES OF
REQUIREMENT SO AS TO GUIDE RESOURCE ALLOCATION
Financial feasibility
.ORMAL TECHNIQUES SUCH AS .06 ARE USED
Environmental concerns $IFFICULTIES ARISE IN VALUING INTANGIBLE BENEFITS THIS
IS PARTICULARLY A PROBLEM IN THE PUBLIC AND
-OSTLY ABOUT acceptability VOLUNTARY SECTORS
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Projects are only undertaken for good reason
1 0ROJECTS ARE INITIATED IN ORDER TO ACHIEVE OBJECTIVES THAT CANNOT BE ATTAINED IN ANY OTHER WAY
2 ! PROJECTS OBJECTIVE MAY BE REFERRED TO AS THE project requirement THE project specification IS A
DETAILED ACCOUNT OF THE NATURE OF THE PROJECT OR THE OUTCOMES IT IS INTENDED TO DELIVER
3 0ROJECTS TO ACHIEVE STRATEGIC OBJECTIVES ARE STRATEGIES AND SHOULD BE ASSESSED USING THE suitability
acceptability AND feasibility CRITERIA
Feasibility IS PARTICULARLY IMPORTANT AND MAY BE ASSESSED BY A feasibility study 4HE AIM IS TO AVOID
4 COMMITMENT TO PROJECTS WHOSE BENEFITS WILL BE OUTWEIGHED BY THEIR OVERALL COSTS
0AGE 9a: 0ROJECT MANAGEMENT n 0ART !
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0ROJECT )DENTIFYING PRINCE2 4HE PROJECT 2ISK
MANAGEMENT PROJECTS LIFECYCLE MANAGEMENT
PRINCE
02).#% IS A PROJECT MANAGEMENT SYSTEM DEVELOPED BY THE 5+ #ENTRAL #OMPUTER AND 4ELECOMMUNICATIONS
!GENCY
4HE ACRONYM 02).#% STANDS FOR PROJECTS IN CONTROLLED ENVIRONMENTS 4HE LATEST VERSION OF 02).#% IS
02).#%
Main features of PRINCE2
! Scaleable system CAN BE USED TO MANAGE PROJECTS OF ANY SIZE AND COMPLEXITY
! $EFINES A clear management structure OF ROLES AND RESPONSIBILITIES
! &OCUSES ON delivering products RATHER THAN ON PROJECT MANAGEMENT PROCESSES
! Business case IS FUNDAMENTAL CONTINUING VIABILITY CHECKED REGULARLY
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PRINCE2 components
! Business case: A REASONED ACCOUNT OF WHAT IS TO BE ACHIEVED AND WHY IT WILL BE OF BENEFIT MAY REQUIRE
UPDATING AS PROJECT PROGRESSES
! Plans: BASED ON PRODUCTS RATHER THAN PROCESSES PRODUCT BREAKDOWN STRUCTURE IS USED
! Controls: NORMAL FEEDBACK CONTROL IS USED PROJECT BOARD RESTRICTS APPROVAL TO ONE STEP AT A TIME
! Risk: ANALYSED MANAGED AND REVIEWED THROUGHOUT THE PROJECTS LIFE
! Quality: BUILT INTO MANAGEMENT THOUGH NOT A QUALITY MANAGEMENT SYSTEM AS SUCH
! Change control: MANAGES AUTHORISED CHANGES TO THE PROJECT
! Configuration management: CONFIGURATION IS A COMPLETE SPECIFICATION OF WHAT IS NEEDED TO COMPLETE THE
PROJECT CONFIGURATION MANAGEMENT CONTROLS THE PROCESSES BY WHICH THE PROJECTS INTENDED PRODUCTS EVOLVE
! Organisation: FOUR LAYERS OF MANAGEMENT COVER ALL EVENTUALITIES LAYERS MAY BE COMBINED FOR SMALLER
PROJECTS AND ORGANISATIONS
0AGE 9a: 0ROJECT MANAGEMENT n 0ART !
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0ROJECT )DENTIFYING PRINCE2 4HE PROJECT 2ISK
MANAGEMENT PROJECTS LIFECYCLE MANAGEMENT
PRINCE2 processes
! Directing a project: HIGHER ASPECTS OF CONTROL AND DECISION
MAKING
! Starting up a project: SHORT PRE
PROJECT FUNDAMENTALS SUCH AS SETTING AIMS
! Initiating a project: INITIAL PLANNING 1! AND SETTING OF PROGRESS AND SUCH CRITERIA
! Planning: BASED ON PRODUCT BREAKDOWN STRUCTURE STARTING WITH ANALYSIS INTO technical, quality AND
management PRODUCTS TOLERANCES MAY BE ESTABLISHED FOR TARGETS OF TIME COST AND QUALITY
! Controlling a stage: PROJECT BOARD USES PROJECT INITIATION MEETING MID AND END STAGE ASSESSMENTS
HIGHLIGHT REPORTS PROJECT TEAM USES checkpoints TO CONTROL PROGRESS
! Managing stage boundaries: ENSURES ONE STAGE IS COMPLETE BEFORE THE NEXT BEGINS
! Managing product delivery: CONTROLS THE WORK DONE BY SPECIALISTS AND CONTRACTORS
! Closing a project: CHECKS AND REPORTS ON SUCCESS VIA A PROJECT CLOSURE MEETING
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0ROJECT )DENTIFYING 02).#% The project 2ISK
MANAGEMENT PROJECTS lifecycle MANAGEMENT
The 4D model
Stage in project lifecycle Component Activities
Define THE PROJECT #ONCEPTUALISATION 0RODUCE A CLEAR AND DEFINITIVE
STATEMENT OF NEEDS
!NALYSIS )DENTIFY WHAT HAS TO BE DONE AND
CHECK ITS FEASIBILITY
Design THE PROJECT 0LANNING 3HOW HOW THE NEEDS WILL BE MET
*USTIFICATION #OMPUTE COSTS AND BENEFIT
!GREEMENT /BTAIN SPONSOR AGREEMENT
Deliver THE PROJECT 3TART UP !SSEMBLE RESOURCES AND PEOPLE
%XECUTION #ARRY OUT PLANNED PROJECT ACTIVITIES
#OMPLETION 3UCCESS OR ABANDONMENT
Develop THE PROCESS 2EVIEW )DENTIFY OUTCOMES FOR ALL STAKEHOLDERS
&EEDBACK $OCUMENT LESSONS AND IMPROVEMENTS FOR FUTURE
0AGE 9a: 0ROJECT MANAGEMENT n 0ART !
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0ROJECT )DENTIFYING 02).#% 4HE PROJECT Risk
MANAGEMENT PROJECTS LIFECYCLE management
Risk management 4HE LIKELIHOOD AND CONSEQUENCES OF RISKS CAN BE
PLOTTED ON A MATRIX
2ISK MANAGEMENT INVOLVES AN OVERVIEW OF THE Risk Assessment Matrix
PROJECT TO ESTABLISH WHAT COULD GO WRONG AND THE
CONSEQUENCES
(IGH M H VH
Five stages of risk management
0OTENTIAL IMPACT
! )DENTIFY AND RECORD RISKS IN A RISK REGISTER -ED L M H
! !SSESS RISKS AND RECORD THIS ASSESSMENT
! 0LAN AND RECORD RISK STRATEGIES
! #ARRY OUT RISK MANAGEMENT STRATEGIES
! 2EVIEW AND MONITOR THE SUCCESS OF THE RISK ,OW VL L M
MANAGEMENT APPROACH
,OW -ED (IGH
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4HE DEVELOPMENT OF RISK MANAGEMENT STRATEGIES FOR RISKS THAT FALL INTO THE 6( 6ERY (IGH QUADRANT SHOULD
HAVE PRIORITY
$EALING WITH RISK INVOLVES FOUR BASIC APPROACHES A COMBINATION OF THESE APPROACHES MAY BE USED
Dealing with risk
! Avoidance n REMOVE THE FACTORS BRINGING ABOUT THE RISK
! Reduction n IDENTIFY WAYS TO REDUCE THE RISK ANDOR CONSEQUENCES
! Transference n PASS THE RISK TO SOMEONE ELSE FOR EXAMPLE AN INSURER
! Absorption n ACCEPT THE RISK AND COPE WITH THE CONSEQUENCES IF NECESSARY
0AGE 9a: 0ROJECT MANAGEMENT n 0ART !
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Notes
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9b: Project management – Part B
Project management
Part B
Project management software Project troubleshooting Management tools and Documentation and reports Projects and continuous
techniques improvement
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Management tools 0ROJECT MANAGEMENT $OCUMENTATION #OMPARING PROJECT 0ROJECT
and techniques SOFTWARE AND REPORTS CONTROL SYSTEMS TROUBLESHOOTING
Work breakdown structure (WBS) Dependencies and interactions
7ORK BREAKDOWN STRUCTURE IS THE ANALYSIS OF THE ! ! dependent TASK CANNOT COMMENCE UNTIL THE
WORK OF A PROJECT INTO DIFFERENT UNITS OR TASKS TASK UPON WHICH IT DEPENDS IS COMPLETED
WBS: !NALYSIS OF DEPENDENCIES SHOWS THE ORDER IN
WHICH TASKS MUST BE CARRIED OUT
! )DENTIFIES THE WORK THAT MUST BE DONE IN THE
PROJECT ! 4ASKS interact WHEN THEY CANNOT BE CARRIED OUT
AT THE SAME TIME FOR EXAMPLE BECAUSE THEY
! $ETERMINES THE RESOURCES REQUIRED REQUIRE THE USE OF THE SAME RESOURCES
! 3EQUENCES THE WORK DONE TO ALLOCATE RESOURCES
IN THE OPTIMUM WAY
7"3 CAN BE USED IN DEVISING ESTIMATES &ROM THE
7"3 IT IS POSSIBLE TO COMPILE A COMPLETE LIST OF
EVERY TASK THAT IS GOING TO ATTRACT EXPENDITURE
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The Project Budget
4HE project budget RECORDS THE AMOUNT AND DISTRIBUTION OF RESOURCES ALLOCATED TO A PROJECT
Top-down BUDGETING DESCRIBES THE SITUATION WHERE THE BUDGET IS IMPOSED @FROM ABOVE
)N bottom-up BUDGETING THE PROJECT MANAGER CONSULTS THE PROJECT TEAM AND OTHERS TO CALCULATE A BUDGET
BASED ON THE TASKS THAT MAKE UP THE PROJECT
Improving estimates Influences on cost
! ,EARN FROM PAST MISTAKES ! ,EVEL OF QUALITY REQUIRED
! !NALYSE THE PROJECT PROPERLY ! %XTERNAL VENDOR ACTIVITY
! /BTAIN MAXIMUM INFORMATION ! 3TAFF AVAILABILITY
! 3PECIFY IN MAXIMUM DETAIL ! $EGREE OF TIME CONSTRAINT
0AGE 9b: 0ROJECT MANAGEMENT n 0ART "
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Management tools 0ROJECT MANAGEMENT $OCUMENTATION #OMPARING PROJECT 0ROJECT
and techniques SOFTWARE AND REPORTS CONTROL SYSTEMS TROUBLESHOOTING
Gantt charts
! 'ANTT CHART IS A horizontal bar chart used TO PLAN THE TIME SCALE FOR A PROJECT AND TO ESTIMATE THE AMOUNT
OF RESOURCES REQUIRED 4HE 'ANTT CHART DISPLAYS THE TIME RELATIONSHIPS BETWEEN TASKS IN A PROJECT 4WO LINES ARE
USED FOR EACH TASK ONE TO SHOW THE PLANNED TIME THE OTHER TO SHOW THE ACTUAL TIME
!N EXAMPLE OF A SIMPLE 'ANTT CHART RELATING TO A NETWORK SERVER INSTALLATION PROJECT IS SHOWN BELOW
4HE CHART SHOWS THAT AT THE END OF THE TENTH WEEK !CTIVITY IS RUNNING BEHIND SCHEDULE -ORE RESOURCES MAY
HAVE TO BE ALLOCATED TO THIS ACTIVITY IF THE STAFF ACCOMMODATION IS TO BE READY IN TIME FOR THE CHANGEOVER TO THE
NEW SYSTEM
!CTIVITY HAD NOT BEEN COMPLETED ON TIME AND THIS HAS RESULTED IN SOME DISRUPTION TO THE COMPUTER
INSTALLATION !CTIVITY WHICH MAY MEAN FURTHER DELAYS IN THE COMMENCEMENT OF !CTIVITIES AND
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!S AT THE END OF WEEK
4ASK 7EEKS
+EY
/RDER COMPUTERARRANGE FINANCE %STIMATED
!GREE DELIVERY DATES !CTUAL
3ELECT SITE
0LAN AND PREPARE SITE
0REPARE FOR DELIVERY
)NSTALL COMPUTER
%NGINEERS ACCEPTANCE TESTS
/PERATIONAL TESTS
0LAN PREPARE PERMANENT STAFF
WORK AREAS AND ACCOMMODATION
0AGE 9b: 0ROJECT MANAGEMENT n 0ART "
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Management tools 0ROJECT MANAGEMENT $OCUMENTATION #OMPARING PROJECT 0ROJECT
and techniques SOFTWARE AND REPORTS CONTROL SYSTEMS TROUBLESHOOTING
Network analysis or CPA $RAWING THE DIAGRAM OR CHART INVOLVES THE FOLLOWING
STEPS
.ETWORK ANALYSIS #0! IS A USEFUL TECHNIQUE TO 1 %STIMATING THE TIME NEEDED TO COMPLETE EACH
HELP WITH planning AND controlling large projects INDIVIDUAL ACTIVITY OR TASK THAT MAKES UP A PART
)T STARTS WITH breaking down the project into OF THE PROJECT
tasks ARRANGING THEM INTO A logical sequence AND 2 3ORTING OUT WHAT ACTIVITIES MUST BE DONE ONE
ESTIMATING THE duration OF EACH AFTER ANOTHER AND WHICH CAN BE DONE AT THE
4HIS ENABLES THE series of tasks THAT DETERMINES SAME TIME IF REQUIRED
THE minimum possible duration OF THE PROJECT TO 3 2EPRESENTING THESE IN A NETWORK DIAGRAM
BE FOUND 4HESE ARE THE critical activities
Events USUALLY NUMBERS ARE REPRESENTED BY 4 %STIMATING THE CRITICAL PATH WHICH IS THE
CIRCLES 4ASKS USUALLY LETTERS CONNECT EVENTS LONGEST SEQUENCE OF CONSECUTIVE ACTIVITIES
THROUGH THE NETWORK
4HE critical path IS REPRESENTED BY DRAWING AN
EXTRA LINE OR A THICKER LINE BETWEEN THE TASKS ON THE Activities on the critical path must be started
PATH and completed on time, otherwise the total
project time will be extended.
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Example
!CTIVITY %XPECTED TIME 0RECEDING ACTIVITY
! n Critical path AND float times ARE
" n
# "
ESTABLISHED BY THE FORWARD AND
$ ! REARWARD PASSES THROUGH THE
% ! NETWORK
& $
' # %
4HE DIAGRAMS ARE DRAWN FROM LEFT TO RIGHT
4HE CRITICAL PATH IN THE DIAGRAM ABOVE IS !%' .OTE THE float time OF FIVE DAYS FOR !CTIVITY & !CTIVITY & CAN BEGIN ANY TIME BETWEEN
DAYS AND
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Management tools 0ROJECT MANAGEMENT $OCUMENTATION #OMPARING PROJECT 0ROJECT
and techniques SOFTWARE AND REPORTS CONTROL SYSTEMS TROUBLESHOOTING
Activity–on–node presentation
4HE DIAGRAM CLEARLY SHOWS THAT $ AND % MUST FOLLOW #
.ETWORK DIAGRAMS MAY ALSO BE DRAWN USING ACTIVITY
ON
NODE
PRESENTATION /NE WAY OF SHOWING EARLIEST AND LATEST START TIMES FOR
3UPPOSE THAT A PROJECT INCLUDES THREE ACTIVITIES # $ AND %
ACTIVITIES IS TO DIVIDE EACH EVENT NODE INTO SECTIONS AS
.EITHER ACTIVITY $ NOR % CAN START UNTIL ACTIVITY # IS COMPLETED SHOWN BELOW
BUT $ AND % COULD BE DONE SIMULTANEOUSLY IF REQUIRED
Task D
4HIS WOULD BE REPRESENTED AS FOLLOWS
D
C ID number: Duration:
4 6 days
E
!N ACTIVITY WITHIN A NETWORK IS REPRESENTED BY A RECTANGULAR BOX
%ACH BOX IS A NODE Earliest start: Latest start:
Day 4 Day 11
4HE FLOW OF ACTIVITIES IN THE DIAGRAM SHOULD BE FROM LEFT TO RIGHT
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4O FIND THE earliest start times ALWAYS START WITH
ACTIVITIES THAT HAVE NO PREDECESSORS AND GIVE THEM
Criticisms of network analysis
AN EARLIEST STARTING TIME OF
4HEN WORK ALONG EACH PATH FROM left TO right
THROUGH THE DIAGRAM CALCULATING THE EARLIEST TIME ! )T IS NOT ALWAYS POSSIBLE TO DEVISE AN EFFECTIVE
THAT THE NEXT ACTIVITY CAN START 7"3 FOR A PROJECT
! )T ASSUMES A SEQUENTIAL RELATIONSHIP BETWEEN
)F TWO OR MORE ACTIVITIES PRECEDE AN ACTIVITY TAKE THE ACTIVITIES
HIGHEST FIGURE AS THE LATER ACTIVITYS EARLIEST TIME
START TIME IT CANNOT START BEFORE ALL THE OTHERS ARE ! 4HERE ARE PROBLEMS IN ESTIMATION
FINISHED ! #0! ASSUMES A TRADE OFF BETWEEN TIME AND
COST 4HIS MAY NOT BE THE CASE WHERE A
4HE latest start times ARE THE LATEST TIMES AT WHICH SUBSTANTIAL PORTION OF THE COST IS INDIRECT
EACH ACTIVITY CAN START IF THE PROJECT AS A WHOLE IS TO
BE COMPLETED IN THE EARLIEST POSSIBLE TIME
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Management tools 0ROJECT MANAGEMENT $OCUMENTATION #OMPARING PROJECT 0ROJECT
and techniques SOFTWARE AND REPORTS CONTROL SYSTEMS TROUBLESHOOTING
Project evaluation review technique (PERT)
0ROJECT EVALUATION AND REVIEW TECHNIQUE 0%24 IS A TECHNIQUE FOR ALLOWING FOR UNCERTAINTY IN DETERMINING
PROJECT DURATION
%ACH TASK IS ASSIGNED A best worst AND most probable completion time ESTIMATE 4HESE ESTIMATES ARE
USED TO DETERMINE THE AVERAGE COMPLETION TIME 4HE AVERAGE TIMES ARE USED TO ESTABLISH THE CRITICAL PATH AND
THE STANDARD DEVIATION OF COMPLETION TIMES FOR THE ENTIRE PROJECT
! CONTINGENCY TIME ALLOWANCE CAN THEN BE CALCULATED BASED ON THE STANDARD DEVIATIONS OF THE TIMES FOR EACH
CRITICAL ACTIVITY
Critical chain project management (CCPM)
##0- ATTEMPTS TO OVERCOME PROBLEMS OF padding AND delays INHERENT IN NETWORK ANALYSIS AND 7"3
)T DOES THIS IN THREE WAYS &IRST OF ALL IT DOES THIS BY PREVENTING PADDING OF time estimates 4HEN BY BUILDING
margins of safety IN AT THE FINAL PROJECT STAGE TO COVER THE ACCUMULATED OVERRUNS &INALLY BY EMPHASISING
FLEXIBILITY IN RESPONDING TO CHANGES Buffers ARE ALSO USED
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4OTAL PROGRAMMER 0ROGRAMMER 4IME 2EQUIRED
HOURS
Resource histogram
3HOWS THE AMOUNT AND TIMING OF
THE REQUIREMENT FOR A RESOURCE OR A
RANGE OF RESOURCES
! SIMPLE RESOURCE HISTOGRAM
SHOWING THE PROGRAMMER TIME
REQUIRED ON A SOFTWARE
DEVELOPMENT PROGRAM IS SHOWN
HERE
*AN &EB -AR !PR -AY
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Management tools 0ROJECT MANAGEMENT $OCUMENTATION #OMPARING PROJECT 0ROJECT
and techniques SOFTWARE AND REPORTS CONTROL SYSTEMS TROUBLESHOOTING
.O OF WORKERS
3OME
ORGANISATIONS
ADD ANOTHER BAR
OR A SEPARATE
4HE NUMBER OF WORKERS
LINE TO THE .O OF WORKERS AVAILABLE
REQUIRED ON THE SEVENTH
CHART SHOWING DAY IS #AN WE RE
RESOURCE NUMBER OF
SCHEDULE THE NON
CRITICAL
AVAILABILITY AS WORKERS
ACTIVITIES TO REDUCE THE
REQUIRED
SHOWN HERE TO COMPLETE REQUIREMENT TO THE
SCHEDULED
TASKS AVAILABLE LEVEL OF 7E
MIGHT BE ABLE TO
RE
ARRANGE ACTIVITIES SO
THAT WE CAN MAKE USE OF
THE WORKERS AVAILABLE FROM
DAY ONWARDS
4IME
DAYS
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-ANAGEMENT TOOLS Project management $OCUMENTATION #OMPARING PROJECT 0ROJECT
AND TECHNIQUES software AND REPORTS CONTROL SYSTEMS TROUBLESHOOTING
Project management software
0ROJECT MANAGEMENT SOFTWARE PACKAGES HAVE BEEN AVAILABLE FOR A NUMBER OF YEARS Microsoft Project AND Micro
Planner X-Pert ARE TWO POPULAR PACKAGES
3OFTWARE MIGHT BE USED FOR A NUMBER OF PURPOSES
! Planning n NETWORK DIAGRAMS SHOWING THE CRITICAL PATH AND 'ANTT CHARTS SHOWING RESOURCE USE CAN BE
PRODUCED AUTOMATICALLY ONCE THE RELEVANT DATA IS ENTERED
! Monitoring n ACTUAL DATA CAN ALSO BE ENTERED AND USED TO FACILITATE MONITORING OF PROGRESS AND AUTOMATICALLY
UPDATE NETWORK DIAGRAMS
! Estimating n SINCE MANY PROJECTS INVOLVE BASICALLY SIMILAR TASKS ACTUAL DATA FROM ONE PROJECT CAN BE USED TO
PROVIDE MORE ACCURATE ESTIMATES FOR THE NEXT PROJECT
! Reporting n SOFTWARE PACKAGES ALLOW STANDARD AND TAILORED PROGRESS REPORTS TO BE PRODUCED
!NY PROJECT MANAGEMENT PACKAGE REQUIRES FOUR INPUTS
! 4HE LENGTH OF TIME REQUIRED FOR EACH ACTIVITY OF THE PROJECT
! 4HE LOGICAL RELATIONSHIPS BETWEEN EACH ACTIVITY
! 4HE RESOURCES AVAILABLE
! 7HEN THE RESOURCES ARE AVAILABLE
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-ANAGEMENT TOOLS 0ROJECT MANAGEMENT Documentation #OMPARING PROJECT 0ROJECT
AND TECHNIQUES SOFTWARE and reports CONTROL SYSTEMS TROUBLESHOOTING
Documentation and reports
4HE PROJECT CHARTER PROJECT BRIEF PROJECT INITIATION DOCUMENT GIVES PROJECT BOARD APPROVAL FOR THE PROJECT MANAGER
TO APPLY RESOURCES TO PROJECT ACTIVITIES )T ALSO CONTAINS THE TERMS OF REFERENCE FOR THE PROJECT
Project plan
)N SOME ORGANISATIONS WHAT IS DESCRIBED HERE AS 4HE PROJECT PLAN SHOULD INCLUDE
THE Project Management Plan WOULD BE CALLED ! 0ROJECT OBJECTIVES AND HOW THEY WILL BE ACHIEVED AND
THE Project Plan VERIFIED
)N OTHER ORGANISATIONS THE 0ROJECT 0LAN REFERS ! (OW ANY CHANGES TO THESE PROCEDURES ARE TO BE CONTROLLED
ONLY TO THE PROJECT SCHEDULE USUALLY IN THE FORM ! 4HE MANAGEMENT AND TECHNICAL PROCEDURES AND
OF A NETWORK DIAGRAM STANDARDS TO BE USED
! 4HE BUDGET AND TIME
SCALE
4HE 0ROJECT 0LAN IS USED AS A REFERENCE TOOL FOR ! 3AFETY HEALTH AND ENVIRONMENTAL POLICIES
MANAGING THE PROJECT 4HE PLAN IS USED TO GUIDE ! )NHERENT RISKS AND HOW THEY WILL BE MANAGED
BOTH PROJECT EXECUTION AND PROJECT CONTROL 4HE CONTENTS OF THE PLAN WILL VARY DEPENDING ON THE COMPLEXITY
OF THE PROJECT
(011)CME2PC14_CH09b.qxp 5/9/2015 12:38 AM Page 135
Progress report
! PROGRESS REPORT SHOWS THE CURRENT STATUS OF THE PROJECT USUALLY IN RELATION TO THE PLANNED STATUS
Progress reports
! &REQUENCY AND CONTENTS WILL VARY DEPENDING ON PROJECT COMPLEXITY
! 4HEY ARE A CONTROL TOOL
! 4HEY SHOULD MONITOR PROGRESS TOWARDS KEY MILESTONES
! MILESTONE IS A SIGNIFICANT EVENT IN THE PROJECT USUALLY COMPLETION OF A MAJOR DELIVERABLE
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-ANAGEMENT TOOLS 0ROJECT MANAGEMENT Documentation #OMPARING PROJECT 0ROJECT
AND TECHNIQUES SOFTWARE and reports CONTROL SYSTEMS TROUBLESHOOTING
Completion report
4HE COMPLETION REPORT SUMMARISES THE RESULTS OF THE PROJECT AND INCLUDES CLIENT SIGN
OFF 4HE REPORT SHOULD
INCLUDE A SUMMARY OF THE PROJECT OUTCOME
Completion report should contain
! 0ROJECT OBJECTIVES AND THE OUTCOMES ACHIEVED
! 4HE FINAL PROJECT BUDGET REPORT SHOWING EXPECTED AND ACTUAL EXPENDITURE IF AN EXTERNAL CLIENT IS INVOLVED
THIS INFORMATION MAY BE SENSITIVE n THE REPORT MAY EXCLUDE OR @AMEND THE BUDGET REPORT
! ! BRIEF OUTLINE OF TIME TAKEN COMPARED WITH THE ORIGINAL SCHEDULE
4HE COMPLETION REPORT WILL ALSO INCLUDE PROVISION FOR ANY ONGOING ISSUES THAT WILL NEED TO BE ADDRESSED AFTER
COMPLETION 3UCH ISSUES WOULD BE RELATED TO THE PROJECT BUT NOT PART OF THE PROJECT
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Post-completion audit
4HE POST
COMPLETION AUDIT IS A FORMAL REVIEW OF THE PROJECT THAT EXAMINES THE LESSONS THAT MAY BE LEARNED AND
USED FOR THE BENEFIT OF FUTURE PROJECTS
4HE AUDIT LOOKS AT ALL ASPECTS WITH REGARD TO
$ID THE END RESULT OF THE PROJECT MEET WITH THE client’s expectations
! 4HE ACTUAL DESIGN AND CONSTRUCTION OF THE END PRODUCT
! 7AS THE PROJECT ACHIEVED ON TIME
! 7AS THE PROJECT COMPLETED WITHIN BUDGET
7AS THE management of the project AS SUCCESSFUL AS IT MIGHT HAVE BEEN OR WERE THERE BOTTLENECKS OR
PROBLEMS
4HIS REVIEW COVERS
! 0ROBLEMS THAT MIGHT OCCUR ON FUTURE PROJECTS WITH SIMILAR CHARACTERISTICS
! 4HE PERFORMANCE OF THE TEAM INDIVIDUALLY AND AS A GROUP
4HIS INFORMATION SHOULD BE FORMALISED IN A REPORT
0AGE 9b: 0ROJECT MANAGEMENT n 0ART "
(011)CME2PC14_CH09b.qxp 5/9/2015 12:38 AM Page 138
-ANAGEMENT TOOLS 0ROJECT MANAGEMENT $OCUMENTATION Comparing project 0ROJECT
AND TECHNIQUES SOFTWARE AND REPORTS control systems TROUBLESHOOTING
PMBOK v PRINCE 2
2EAD @#OMPARING 02).#% WITH 0-"/+ BY 2 -AX 7IDEMAN
Six Sigma
D EFINE
M EASURE
A NALYSE
I MPROVE
C ONTROL
!N operating system FOR MEASURING AND ELIMINATING FAULTS THROUGH PROMOTING EXCELLENCE
(011)CME2PC14_CH09b.qxp 5/9/2015 12:38 AM Page 139
-ANAGEMENT TOOLS 0ROJECT MANAGEMENT $OCUMENTATION #OMPARING PROJECT Project
AND TECHNIQUES SOFTWARE AND REPORTS CONTROL SYSTEMS troubleshooting
Common causes of problems 4HE RELATIONSHIP BETWEEN TIME COST AND QUALITY CAN BE
on projects SHOWN AS A TRIANGLE
4)-%
! 0OOR PROJECT MANAGEMENT @#OMPETITIVE EDGE
! #ONFLICTING REQUIREMENTS EG TIME COST AND PROJECT
QUALITY
! 5NREALISTIC DEADLINE
! 5SER REQUIREMENTS NOT ESTABLISHED CORRECTLY
,OW BUDGET 3AFETY CRITICAL
PROJECT PROJECT
#/34 15!,)49
0AGE 9b: 0ROJECT MANAGEMENT n 0ART "
(011)CME2PC14_CH09b.qxp 5/9/2015 12:38 AM Page 140
-ANAGEMENT TOOLS 0ROJECT MANAGEMENT $OCUMENTATION #OMPARING PROJECT Project
AND TECHNIQUES SOFTWARE AND REPORTS CONTROL SYSTEMS troubleshooting
7HEN A PROJECT HAS SLIPPED BEHIND SCHEDULE THERE ARE A RANGE OF OPTIONS OPEN TO THE PROJECT MANAGER
Dealing with slippage
! Do nothing !FTER CONSIDERING ALL OPTIONS IT MAY BE DECIDED TO LET THINGS CONTINUE AS THEY
ARE
! Add resources !DD PEOPLE OR OTHER RESOURCES
! Work smarter #OULD MORE EFFICIENT METHODS BE USED
! Replan ! MORE REALISTIC PLAN MAY BE REQUIRED
! Reschedule ! COMPLETE REPLAN MAY NOT BE REQUIRED n IT MAY BE POSSIBLE TO CHANGE THE
PHASING OF CERTAIN DELIVERABLES
! Incentives 7OULD INCENTIVES RESULT IN GREATER OUTPUT
! Change the specification )F THE ORIGINAL PROJECT OBJECTIVES ARE UNREALISTIC GIVEN THE TIME AND MONEY
AVAILABLE IT MAY BE NECESSARY TO CHANGE THE SPECIFICATION
(011)CME2PC14_CH09b.qxp 5/9/2015 12:38 AM Page 141
Project change procedure
Causes of change to the Project Plan Considerations when changing the Plan
! 3LIPPAGE ! #ONSEQUENCES OF NOT IMPLEMENTING THE CHANGE
! !VAILABILITY OF NEW TECHNOLOGY ! )MPACT ON TIME COST QUALITY
! #HANGES IN PERSONNEL ! #OSTS AND BENEFITS OF THE CHANGE
! 0OORLY DEFINED USER REQUIREMENTS ! 2ISKS
! .EW LEGISLATION ! )MPACT ON STAKEHOLDERS
! "USINESS ENVIRONMENT CHANGES ! #HANGE CONTROL PROCEDURE
! #OMMUNICATION TO ALL AFFECTED
0AGE 9b: 0ROJECT MANAGEMENT n 0ART "
(011)CME2PC14_CH09b.qxp 5/9/2015 12:38 AM Page 142
Projects and
continuous improvement
Projects and continuous improvement
#ONTINUOUS IMPROVEMENT APPLIES TO PROJECTS ESPECIALLY WHERE THEY BECOME A ROUTINE MEANS OF WORKING IN
ORGANISATIONS
! 0ROJECT MANAGEMENT CAN BE A CORE STRATEGIC COMPETENCE FOR COMPANIES WORKING IN SUCH INDUSTRIES AS
CONSULTING AND CONSTRUCTION
! #ONTINUOUS IMPROVEMENT REQUIRES THAT PROJECT MANAGEMENT IS PLACED AT THE CENTRE OF A SINGLE CORPORATE
METHODOLOGY 4HIS INVOLVES DEVELOPING AN ORGANISATIONAL CULTURE WHICH SUPPORTS THE NEED FOR CONTINUOUS
IMPROVEMENT
(012)cme2pc14_ch10.qxp 5/9/2015 12:39 AM Page 143
10: The project team
The project team
Roles and management of Projects and Leading, managing and
The project manager
project stakeholders organisational structure motivating teams
(012)cme2pc14_ch10.qxp 5/9/2015 12:39 AM Page 144
The 0ROJECTS 0ROJECT 4HE 4EAM MEETINGS
project manager AND STRUCTURE STAKEHOLDERS PROJECT TEAM AND CONFLICT
The project manager PM responsibilities to management
4HE PERSON WHO TAKES ULTIMATE RESPONSIBILITY FOR
ENSURING A PROJECT ACHIEVES THE DESIRED RESULT ON
TIME WITHIN BUDGET AND TO SPECIFICATION IS THE ! 5SE RESOURCES EFFICIENTLY
PROJECT MANAGER 0- ! +EEP MANAGEMENT INFORMED
! !DHERE TO AGREED POLICIES AND PROCEDURES
Duties of a project manager
! 0ROJECT PLANNING AND SCHEDULING
! #OMMUNICATION AND TEAMBUILDING PM responsibilities to the project and
! -ONITORING AND CONTROL EG BUDGETING to the project team
! 0ROBLEM AND CONFLICT RESOLUTION
! 1UALITY CONTROL ! +EEP THE PROJECT ON TARGET
4O PERFORM THESE DUTIES WELL A PROJECT MANAGER ! %NSURE REQUIRED RESOURCES ARE AVAILABLE
REQUIRES WELL DEVELOPED COMMUNICATION TECHNICAL ! #O
ORDINATE THE TEAM
AND PERSONAL SKILLS ! 0ROVIDE SUPPORT
(012)cme2pc14_ch10.qxp 5/9/2015 12:39 AM Page 145
4HE Projects 0ROJECT 4HE 4EAM MEETINGS
PROJECT MANAGER and structure STAKEHOLDERS PROJECT TEAM AND CONFLICT
Pure project organisation
#ENTRAL PERMANENT ORGANISATION
Matrix
&LEXIBLE AD HOC LABOUR FORCE
,IGHTWEIGHT MATRIX (EAVYWEIGHT MATRIX
#O ORDINATED BY "ALANCED MODEL &ULL TIME SECONDENT
PROJECT MANAGER TO PROJECT
0EOPLE DRAFTED IN FROM 3OME DEPARTMENT
DEPARTMENTS AS INCOME DEPENDS ON
NEEDED PROJECT SUCCESS
0AGE 10: 4HE PROJECT TEAM
(012)cme2pc14_ch10.qxp 5/9/2015 12:39 AM Page 146
4HE 0ROJECTS Project 4HE 4EAM MEETINGS
PROJECT MANAGER AND STRUCTURE stakeholders PROJECT TEAM AND CONFLICT
Project stakeholders
3TAKEHOLDERS ARE THE INDIVIDUALS AND ORGANISATIONS WHO ARE INVOLVED IN OR MAY BE AFFECTED BY PROJECT ACTIVITIES
Other key stakeholders
! Project sponsor: IS ACCOUNTABLE FOR THE RESOURCES INVESTED INTO THE PROJECT AND RESPONSIBLE FOR THE
ACHIEVEMENT OF THE PROJECTS BUSINESS OBJECTIVES
! Project Board: THE BODY TO WHICH THE PROJECT MANAGER IS ACCOUNTABLE FOR ACHIEVING THE PROJECT OBJECTIVES
! Project support team: IS A TERM USED TO DESIGNATE THE PERSONNEL WORKING ON A PROJECT WHO DO NOT REPORT
TO THE PROJECT MANAGER ADMINISTRATIVELY
! Users: THE INDIVIDUAL OR GROUP THAT WILL UTILISE THE END PRODUCT PROCESS SYSTEM OR SERVICE PRODUCED BY
THE PROJECT
(012)cme2pc14_ch10.qxp 5/9/2015 12:39 AM Page 147
The role of the management accountant in project work
4HE SKILLS OF THE MANAGEMENT ACCOUNTANT ARE WELL SUITED TO SUPPORTING PROJECT
TEAMS AS THEY ARE ABLE TO MONITOR PROJECT PROGRESS FROM A FINANCIAL PERSPECTIVE
The management accountant can support the project team in a
number of ways:
! #ONDUCTING COST n BENEFIT ANALYSIS
! 0RODUCING PROJECT BUDGETS AND FORECASTS
! 5PDATING THE PROJECT ACCOUNTING SYSTEM
! -AINTAINING A COMPLETE PROJECT AUDIT TRAIL
! -AKING STAGE PAYMENTS TO PROJECT SUPPLIES
! -ONITORING AND INVESTIGATING BUDGET VARIANCES
! ,IASING WITH THE PROJECT SPONSOR
0AGE 10: 4HE PROJECT TEAM
(012)cme2pc14_ch10.qxp 5/9/2015 12:39 AM Page 148
4HE 0ROJECTS Project 4HE 4EAM MEETINGS
PROJECT MANAGER AND STRUCTURE stakeholders PROJECT TEAM AND CONFLICT
Mendelow: Stakeholder mapping
3TAKEHOLDERS INTERESTS ARE LIKELY TO CONFLICT
-ENDELOWS stakeholder mapping HELPS THE ORGANISATION TO ESTABLISH ITS PRIORITIES AND SET UP ITS SYSTEM OF
CORPORATE GOVERNANCE
Level of interest
Low High
Low A Minimal effort
B Keep informed LITTLE DIRECT INFLUENCE BUT MAY
A B INFLUENCE MORE POWERFUL STAKEHOLDERS
C 4REAT WITH CARE OFTEN PASSIVE BUT CAPABLE OF MOVING
Power
TO SEGMENT $ keep satisfied
C D D Key players n STRATEGY MUST BE acceptable TO THEM
AT LEAST
High
(012)cme2pc14_ch10.qxp 5/9/2015 12:39 AM Page 149
4HE 0ROJECTS 0ROJECT The 4EAM MEETINGS
PROJECT MANAGER AND STRUCTURE STAKEHOLDERS project team AND CONFLICT
Groups and teams Development of the team (Tuckman)
! group DIFFERS FROM A RANDOM COLLECTION OF PEOPLE IN THAT ITS MEMBERS Forming 4HE TEAM IS STILL A COLLECTION
PERCEIVE THEMSELVES TO BE A GROUP 4HEY HAVE 1 OF INDIVIDUALS JOCKEYING FOR POSITION
! ! SENSE OF IDENTITY !IMS NORMS AND PERSONALITIES ARE
! ,OYALTY TO THE GROUP PROBABLY UNCLEAR AND NO LEADER IS
! 0URPOSE AND LEADERSHIP LIKELY TO HAVE EMERGED
! ! TEAM IS MORE THAN A GROUP HAVING OBJECTIVES AND ACCOUNTABILITY
Storming 4HERE MAY BE OPEN CONFLICT
2 AS OBJECTIVES AND NORMS ARE SET AND
Types of groups REVISED 4RUST INCREASES
Norming 4HE TEAM SETTLES DOWN AND
&OUR TYPES OF GROUP ARE COMMONLY FOUND IN MOST ORGANISATIONS THESE INCLUDE 3 CREATES NORMS FOR OUTPUT WORKSHARING
! Formal groups ARE CREATED BY MANAGERS TO MEET SPECIFIC ORGANISATIONAL AND INDIVIDUAL NEEDS
OBJECTIVES
Performing 4HE TEAM IS SUFFICIENTLY
! Informal groups DEVELOP OUT OF INDIVIDUAL RELATIONSHIPS AND ARE BASED ON
SHARED INTERESTS
4 INTEGRATED TO PERFORM ITS TASK
! Reference groups ARE THOSE THAT A PERSON WANTS TO JOIN BUT IS NOT
CURRENTLY A MEMBER OF
! Autonomous working groups ARE EXPERIMENTS IN IMPROVING PRODUCTIVITY
BY GETTING INDIVIDUALS TO WORK IN SMALL CELLS OR TEAMS
0AGE 10: 4HE PROJECT TEAM
(012)cme2pc14_ch10.qxp 5/9/2015 12:39 AM Page 150
4HE 0ROJECTS 0ROJECT The 4EAM MEETINGS
PROJECT MANAGER AND STRUCTURE STAKEHOLDERS project team AND CONFLICT
Building a project team Managing the project team
The project team COMPRISES THE PEOPLE WHO REPORT DIRECTLY OR INDIRECTLY TO Effective project managers display the
THE PROJECT MANAGER ability to:
Project success DEPENDS TO A LARGE EXTENT ON THE TEAM OF MEMBERS
SELECTED 4HE TEAM WILL COMPRISE INDIVIDUALS WITH DIFFERING SKILLS AND ! 3ELECT THE RIGHT PEOPLE
PERSONALITIES ! #ONNECT THEM TO THE RIGHT CAUSE
4HE project manager SHOULD CHOOSE A BALANCED TEAM THAT TAKES ADVANTAGE ! 3OLVE PROBLEMS THAT ARISE
OF EACH TEAM MEMBERS SKILLS AND COMPENSATES ELSEWHERE FOR THEIR ! %VALUATE PROGRESS TOWARDS OBJECTIVES
WEAKNESSES ! .EGOTIATE RESOLUTIONS TO CONFLICTS
4HE project team WILL NORMALLY BE DRAWN FROM EXISTING STAFF BUT HIGHLY ! (EAL WOUNDS INFLICTED BY CHANGE
RECOMMENDED OUTSIDERS WITH SPECIAL SKILLS MAY BE RECRUITED
Project team structure
Multidisciplinary team Three ways of structuring projects:
-EMBERS HAVE DIFFERENT SKILLS KNOWLEDGE AND EXPERIENCE
3UCH TEAMS CAN SOLVE PROBLEMS WITH CROSS DISCIPLINARY ASPECTS
! &UNCTIONAL STRUCTURE
Multi-skilled team ! -ATRIX 3TRUCTURE
! 0ROCESS PURE PROJECT STRUCTURE
-EMBERS ALL HAVE A RANGE OF SKILLS ENABLING GREATER FLEXIBILITY OF WORK PATTERNS
(012)cme2pc14_ch10.qxp 5/9/2015 12:39 AM Page 151
Team roles (Belbin)
%FFECTIVE TEAMS HAVE MEMBERS WHO BETWEEN THEM ARE CAPABLE OF FULFILLING NINE VITAL ROLES
! #O ORDINATOR 0RESIDES AND CO ORDINATES BALANCED DISCIPLINED GOOD AT WORKING THROUGH OTHERS -ATURE
AND CONFIDENT
! 3HAPER (IGHLY STRUNG DOMINANT EXTROVERT PASSIONATE ABOUT THE TASK ITSELF A SPUR TO ACTION
! 0LANT )NTROVERTED BUT INTELLECTUALLY DOMINANT AND IMAGINATIVE SOURCE OF IDEAS AND PROPOSALS
BUT WITH DISADVANTAGES OF INTROVERSION
! -ONITOR EVALUATOR !NALYTICALLY RATHER THAN CREATIVELY INTELLIGENT DISSECTS IDEAS SPOTS FLAWS JUDGES
ACCURATELY
! 2ESOURCE INVESTIGATOR 3OCIABLE EXTROVERT RELAXED SOURCE OF NEW CONTACTS BUT NOT AN ORIGINATOR EXPLORES
OPPORTUNITIES
! )MPLEMENTER 0RACTICAL ORGANISER TURNING IDEAS INTO TASKS TRUSTWORTHY AND EFFICIENT BUT NOT EXCITED
! 4EAM WORKER 3UPPORTIVE UNDERSTANDING DIPLOMATIC POPULAR UNCOMPETITIVE AND MILD
! #OMPLETER !TTENDS TO DETAILS AND DELIVERY CONSCIENTIOUS AND ANXIOUS
! 3PECIALIST $EDICATED KNOWLEDGEABLE SINGLE MINDED
0AGE 10: 4HE PROJECT TEAM
(012)cme2pc14_ch10.qxp 5/9/2015 12:39 AM Page 152
4HE 0ROJECTS 0ROJECT The 4EAM MEETINGS
PROJECT MANAGER AND STRUCTURE STAKEHOLDERS project team AND CONFLICT
Characteristics of effective and ineffective teams Rewarding effective teams
Factor Effective teams Ineffective teams
4EAM BASED REWARDS AND
Quantifiable INCENTIVES MAY BE USED TO
ENCOURAGE CO OPERATION AND
,ABOUR TURNOVER ,OW (IGH
MUTUAL ACOUNTABILITY AS WELL
!BSENTEEISM ,OW (IGH AS TEAM PERFORMANCE
1UALITY OF OUTPUT (IGH ,OW
)NDIVIDUAL TARGETS -ET .OT MET
Qualitative
#OMMITMENT TO
ORGANISATIONAL GOALS (IGH ,OW
#OMMUNICATION BETWEEN
TEAM MEMBERS &REE AND OPEN -ISTRUST
*OB SATISFACTION (IGH ,OW
(012)cme2pc14_ch10.qxp 5/9/2015 12:39 AM Page 153
4HE 0ROJECTS 0ROJECT 4HE Team meetings
PROJECT MANAGER AND STRUCTURE STAKEHOLDERS PROJECT TEAM and conflict
Team meetings
-EETINGS ARE AN IMPORTANT MECHANISM OF TEAM COMMUNICATION AND COLLABORATION
Purpose Effective meetings
! /PPORTUNITY TO review team working Whetten AND Cameron GIVE FIVE ATTRIBUTES OF
! Reinforce team sense AS A TEAM EFFECTIVE MEETINGS CLASSIFIED AS FIVE 0S
! Goal reinforcement ! 0URPOSE
! Involvement in decision making BY TEAM ! 0ARTICIPANTS
MEMBERS ! 0LANNING
! Informal communcation ! 0ROCESS
! 0ERSPECTIVE
0AGE 10: 4HE PROJECT TEAM
(012)cme2pc14_ch10.qxp 5/9/2015 12:39 AM Page 154
4HE 0ROJECTS 0ROJECT 4HE Team meetings
PROJECT MANAGER AND STRUCTURE STAKEHOLDERS PROJECT TEAM and conflict
4HE project team SHOULD INCLUDE PEOPLE WHO BETWEEN THEM CAN DEPLOY ALL OF THE SKILLS AND TALENTS NEEDED FOR
THE PROJECT
Managing conflict Negotiation techniques
! &OCUS ON THE PROBLEM NOT THE PERSONALITIES
)T IS INEVITABLE WHEN PEOPLE FROM WIDE
RANGING BACKGROUNDS ! $EFINE THE PROBLEM CAREFULLY
COMBINE TO FORM A PROJECT TEAM THAT CONFLICT WILL OCCASIONALLY
! 4RY TO DEVELOP OPTIONS THAT WOULD RESULT IN MUTUAL GAIN
OCCUR
! ,OOK FOR A WIDE VARIETY OF POSSIBLE SOLUTIONS
)DEALLY CONFLICT SHOULD BE HARNESSED FOR PRODUCTIVE ENDS
Resolution techniques
Positive effects of conflict
! 7ORK THROUGH THE PROBLEM USING THE NEGOTIATION
! 2ESULTS IN BETTER WELL THOUGHT
OUT IDEAS TECHNIQUES LISTED ABOVE
! &ORCES PEOPLE TO SEARCH FOR NEW APPROACHES ! !TTEMPT TO ESTABLISH A COMPROMISE
! #AUSES PERSISTENT PROBLEMS TO SURFACE AND BE ! 4RY TO SMOOTH OUT ANY DIFFERENCES
DEALT WITH ! %MPHASISE AREAS OF AGREEMENT
! &ORCES PEOPLE TO CLARIFY THEIR VIEWS ! )F ALL ELSE FAILS THE PROJECT MANAGER SHOULD FORCE THE
! #AUSES TENSION WHICH STIMULATES INTEREST AND CREATIVITY ISSUE AND MAKE A DECISION
(012)cme2pc14_ch10.qxp 5/9/2015 12:39 AM Page 155
Notes
(012)cme2pc14_ch10.qxp 5/9/2015 12:39 AM Page 156
Notes
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