Professional Documents
Culture Documents
HOSPITALITY
T H I S S T U D Y G U I D E
BPP Learning Media is the official publisher for the CTH Diplomas in Hotel Management and Tourism
Management.
I N T H I S J U L Y 2 0 0 9 F I R S T E D I T I O N
The CTH 2009 syllabus, cross-referenced to the chapters
Comprehensive syllabus coverage, reviewed and approved by CTH
Plenty of activities, examples and discussion topics to demonstrate and practise technique
Full index
A full CTH past exam for exam practice
®
FOOD HYGIENE, HEALTH AND SAFETY
Dear Customer
ISBN 9780 7517 7793 2
What does the little © mean and why does it matter?
British Library Cataloguing-in-Publication Data
Your market-leading BPP books, course materials and
A catalogue record for this book
e-learning materials do not write and update themselves.
is available from the British Library
People write them: on their own behalf or as employees of
an organisation that invests in this activity. Copyright law
Published by protects their livelihoods. It does so by creating rights over
BPP Learning Media Ltd the use of the content.
BPP House, Aldine Place
Breach of copyright is a form of theft – as well as being a
London W12 8AA
criminal offence in some jurisdictions, it is potentially a
serious breach of professional ethics.
www.bpp.com/learningmedia
With current technology, things might seem a bit hazy but,
basically, without the express permission of BPP Learning
Media:
Printed in the United Kingdom
Photocopying our materials is a breach of copyright
You can, of course, sell your books, in the form in which you
All our rights reserved. No part of this publication may have bought them – once you have finished with them. (Is
be reproduced, stored in a retrieval system or this fair to your fellow students? We update for a reason.)
transmitted, in any form or by any means, electronic, But the e-products are sold on a single user licence basis: we
mechanical, photocopying, recording or otherwise, do not supply ‘unlock’ codes to people who have bought
without the prior written permission of BPP Learning them second-hand.
Media.
And what about outside the UK? BPP Learning Media strives
to make our materials available at prices students can afford
We are grateful to the Confederation of Tourism and
by local printing arrangements, pricing policies and
Hospitality for permission to reproduce the syllabus and
partnerships which are clearly listed on our website. A tiny
past examination questions and answers.
minority ignore this and indulge in criminal activity by
illegally photocopying our material or supporting
©
organisations that do. If they act illegally and unethically in
BPP Learning Media
one area, can you really trust them?
2009
ii
CONTENTS
CONTENTS
page
INTRODUCTION
How to use this study guide iv
Syllabus viii
The exam paper xi
Other titles in this series xi
PRACTICE EXAMINATION
Questions 193
Answers 201
INDEX 213
iii
INTRODUCTION TO BUSINESS OPERATIONS
Recommended approach
(a) To pass you need to be able to answer questions on everything specified by the syllabus. Read
the study guide very carefully and do not skip any of it.
(b) Learning is an active process. Do all the activities as you work through the study guide so you
can be sure you really understand what you have read.
(c) After you have covered the material in the study guide, work through the questions in the
practice exam at the back.
(d) Before you take the real exam, check that you still remember the material using the following
quick revision plan.
(i) Read through the chapter learning objectives. Are there any gaps in your knowledge? If
so, study the section again.
(ii) Read and learn the key terms.
(iii) Read and try to memorise the summary at the end of each chapter.
(iv) Do the self-test questions again. If you know what you're doing, they shouldn't take long.
This approach is only a suggestion. You or your college may well adapt it to suit your needs.
Remember this is a practical course.
(a) Try to relate the material to your experience in the workplace or any other work experience you
may have had.
(b) Try to make as many links as you can to other CTH papers that you may be studying at the
moment.
Believe in yourself
Yes, there is a lot to learn. Yes, it is a challenge. But thousands have succeeded before and you
can too.
iv
INTRODUCTION
The objectives and topic list of each chapter put the material in context.
Take notes.
Answer the questions in each chapter. You will practise your written communication
skills, which become increasingly important as you progress through your CTH exams.
Draw mindmaps. The chapter summaries can be a good starting point for this.
Chapter summaries draw together the key points in each chapter. Use them to recap
each study session.
The self-test questions are another review technique you can use to ensure that you
have grasped the essentials.
Go through the examples and illustrations in each chapter a second or third time.
v
INTRODUCTION TO BUSINESS OPERATIONS
BPP Learning Media’s Learning to Learn Accountancy book helps you to identify what
intelligences you show more strongly and then details how you can tailor your study process
to your preferences. It also includes handy hints on how to develop intelligences you exhibit
less strongly, but which might be needed as you study for your professional qualification.
Are you a theorist or are you more practical? If you would rather get to grips with a
theory before trying to apply it in practice, you should follow the study sequence on page
(vii). If the reverse is true (you like to know why you are learning theory before you do
so), you might be advised to flick through study guide chapters and look at examples, case
studies and questions (Steps 8, 9 and 10 in the suggested study sequence) before
reading through the detailed theory.
Hours
Remember that this is only a rough guide. Some of the chapters in this book are longer and
more complicated than others, and you will find some subjects easier to understand than
others.
STEP 4 Implement
Set about studying each chapter in the time shown in box C, following the key study steps
in the order suggested by your particular learning style.
This is your personal Study Plan. You should try and combine it with the study sequence
outlined below. You may want to modify the sequence a little (as has been suggested
above) to adapt it to your personal style.
vi
INTRODUCTION
Step 1 Look at the topic list at the start of each chapter. Each topic represents a section
Topic list in the chapter.
Step 2 Proceed methodically through the chapter, reading each section thoroughly and
Explanations making sure you understand.
Step 3 Definitions can often earn you easy marks if you state them clearly and correctly
Definitions in an appropriate exam answer
Step 4 Take brief notes, if you wish. Avoid the temptation to copy out too much.
Note taking Remember that being able to put something into your own words is a sign of
being able to understand it. If you find you cannot explain something you have
read, read it again before you make the notes.
Step 6 Study each one, and try to add flesh to them from your own experience. They are
Discussion topics designed to show how the topics you are studying come alive (and often come
unstuck) in the real world.
Step 8 Check yours against ours, and make sure you understand any discrepancies.
Answers
Step 9 Work through it carefully, to make sure you have grasped the significance of all
Chapter summary the key areas.
Step 10 When you are happy that you have covered the chapter, use the self-test
Self test questions to check how much you have remembered of the topics covered and to
questions practise questions in a variety of formats.
Step 11 Either at this point, or later when you are thinking about revising, make a full
Question practice attempt at the practice exam.
Moving on...
However you study, when you are ready to start your revision, you should still refer back to this study
guide, both as a source of reference (you should find the index particularly helpful for this) and as a
way to review (the chapter summaries and self-test questions help you here).
And remember to keep careful hold of this study guide – you will find it invaluable in your work.
More advice on study skills can be found in BPP Learning Media's Learning to Learn
Accountancy book.
vii
INTRODUCTION TO BUSINESS OPERATIONS
Syllabus
This module will provide students with a broad introduction into the complex world of hospitality and
tourism business operations. It provides an overview of the separate functions and activities that are
expected of supervisors and managers. This module reflects current challenges of hospitality and tourism
business operations.
Covered in
Syllabus Chapter
Introduction to Introduction to Business Operations. Organisation structures.
hospitality and tourism Span of control. Management roles, relationships, 1
business operations responsibilities, authorities, overview of communication
channels.
The role of the Functions of management; planning, organising, staffing,
manager leading, controlling. Management activities, attitude and 2
behaviour. Decision-making and problem solving.
Organisation and Leadership styles, motivating staff, leading work teams,
leadership skills managing time, prioritising work, assigning work and 3
delegating duties. Meetings.
Recruitment, selection, The recruitment process; job analysis, methods of
induction and recruitment. The selection process, interviewing and 4
disciplinary procedures candidate selection. Organisation and departmental
induction. Disciplinary procedure. Personnel data protection.
Developing staff teams Training and developing staff. Monitoring performance.
and individuals Managing effective working relationships, resolving conflicts, 5
appraising performance.
viii
INTRODUCTION
Covered in
Syllabus Chapter
Managing The communication process, skills for managing
communication communication, assertive communication skills, presentation 6
skills, non-verbal communications skills, patterns of
communications, barriers to effective communication.
Managing customer Implementing a customer service programme to develop
care customer relationships.
Delivering effective customer care, promoting additional 7
services or products to customers.
Recognising, handling and resolving customer queries,
requests and problems.
Information technology The impact of technology on organisations. Computer
reservation systems, global distribution systems. The internet
and the world-wide web. Information systems, supply chain
8
management, channels of distribution, eprocurement and e-
distribution.
Assessment
This module will be assessed via a 2½ hour examination, set and marked by CTH. The examination will
cover the whole of the assessment criteria in this unit and will take the form of 10 x 2 mark questions
and 5 x 4 mark questions in section A (40 marks). Section B will comprise of 5 x 20 mark questions of
which candidates must select and answer three (60 marks). CTH is a London based awarding body and
the syllabus content will in general reflect this. Any legislation and codes of practice will reflect the
international nature of the industry and will not be country specific. International centres may find it
advantageous to add local legislation or practice to their teaching but they should be aware that the CTH
examination will not assess this local knowledge.
Further guidance
Delivery strategies
Students should research hospitality and tourism businesses in order to develop a better understanding
of their business activities. Relevant case study material can be valuable sources to support readings on
hospitality and tourism business operations. Guest speakers invited from a variety of hotel, restaurant
and tour operating organisations can provide the student with a comprehensive understanding of the
complex role of the modern manager.
There is no required prior learning however students must have successfully completed formal education
to 18 years old or equivalent, and have an interest in business management.
Resources
Learners need access to library and research facilities which should include some or all of the following;
Key text
Introduction to Business Operations, CTH Study Guide, 2009, BPP Learning Media ISBN 9780
7517 7793 2
Supporting texts
ix
INTRODUCTION TO BUSINESS OPERATIONS
Evans, D, (2001), Supervisory Management Principles & Practice, 5th Edition, Continuum. ISBN 0-
826-45733-9
Mullins, L, (2007) Management and Organisational Behaviour, 5th edition, Prentice Hall, ISBN
1405854766
Mullins, L, Managing People in the Hospitality Industry, 3rd Edition, Longman.
ISBN 0-582-31929-3
Cooper, C, Fletcher, J, Gilbert, D, Wanhill, S, (2008), Tourism: Principles and Practice, Prentice
Hall ISBN: 1408200090
The Economist
Management Today
Forbes Magazine
Newsweek
People Management
Helpful Organisations
Websites
This module should be based on the syllabus and the supporting BPP Learning Media CTH Study Guide.
The lecturer's lesson plans should be based on the module syllabus and supported by the BPP Learning
Media CTH Study Guide for the subject. Lecturers may also use other relevant texts and supplementary
material familiar to the lecturer and based on the lecturer's experience.
It is not essential to use all the recommended texts and lecturers should use their experience to decide
which ones are most appropriate for their students.
Where available and appropriate, past module examinations are available to support lecturers.
CTH will always answer any questions from the centre’s Head of Department either by email or by
phone.
x
INTRODUCTION
xi
INTRODUCTION TO BUSINESS OPERATIONS
xii
CHAPTER 1
Chapter objectives
In this chapter you will learn
Introduction to business operations
The organisation structures
Span of control
Management roles, relationships, responsibilities and authorities
Overview of communication channels
Topic list
Introduction to business operations
Hierarchy of objectives
Organisation structure
Management roles
Choice of structure
Channels of communication
1
INTRODUCTION TO BUSINESS OPERATIONS
Business operations are those activities involved in the running of a business for the purpose of
producing value for the stakeholders.
Figure 1.1 below shows how business operations fit within the organisation.
The environmental level includes how the business fits within the economy, the state, politics,
cultural factors, the labour market and the trade unions as well as technology.
At the organisation level management concerned with ownership, size, goals and is
organisational politics and culture.
The strategic level is the management decision-making level where the business strategy is
formulated.
Innovation
Operations
Purchasing
Marketing
Personnel
Finance
Information systems/technology
1.2 Innovation
Innovation is concerned with both products and process. Although it is included in the activity level, it
has strong links with the strategic level.
2
1: INTRODUCTION TO HOSPITALITY AND TOURISM BUSINESS OPERATIONS
Innovation is the process through which new ideas and inventions become a business reality in the form
of new products, processes and marketing strategies, and new methods of organisation and
management.
Using an example from tourism as a product, 'Ayurveda treatment-based tourism' constitutes a new
product in the family of spa (health) tourism. But a very innovative combination of tourism and
hospitality has just been suggested (March 2009) by Sweden's Ice Hotel as they start selling tickets to
space.
You can sleep in eight degrees below zero, try dog sledding or go on a whale safari. Not exotic enough?
Try a space trip through the aurora borealis.
Sweden's famous Ice Hotel says it will start including tickets for Virgin Galactic's space trips in its
offerings to tourists. The trips, from nearby Kiruna, the northernmost city in Sweden, will start in 2012 if
tests with Virgin's spaceships go according to plan.
Ice Hotel spokesman Roland Sand said that tourists will be able to chose whether to go through the
winter season's aurora borealis or the midnight sun of Swedish summer.
According to Virgin's Web site, tickets for its first trips will start at US$200,000.
Virgin is also planning space trips from the U.S. State of New Mexico.
Most organisations are involved in some sort of innovation - in manufacturing there is (or should be) the
research and development department - in services there may well be a department looking at new or
restructured services.
1.3 Operations
The operations function is also called production (a term that is used in many organisations). The term
production is appropriate to manufacturing whereas the term operations covers the same core service
delivery function in a much wider range of organisations applicable to tourism and hospitality.
The production function is concerned with the transformation of a variety of inputs such as information,
people, materials, managerial and technical skills and knowledge and finance into a variety of outputs
such as goods, services and customer and employee satisfaction.
Viewed in this way, all organisations can be shown to have a production system irrespective of their
primary objective. We can have:
3
INTRODUCTION TO BUSINESS OPERATIONS
The feedback mechanism adjusts the process to deal with issues such as availability, quality and profit or
loss.
1.4 Purchasing
All organisations need to purchase inputs for their operations. For many organisations, particularly in the
service sector, this may not be a crucial factor but for operations such as retail and manufacture it is an
important aspect of the business.
For these operations we have the concept of the supply chain or value chain - a simple (general) value
chain might be pictured as in Figure 1.3 below:
As intermediaries between tourists and tourism service providers, tour operators bring together a variety
of tourism-related services to form a complete holiday package, which is then marketed to customers
either directly or through travel agents. Each package generally consists of accommodation (often
including some food provision), transport both to and from the destination, ground transport within the
destination, and events or activities such as excursions and social activities, provided by a supply chain of
subcontracted companies, organisations and agents.
4
1: INTRODUCTION TO HOSPITALITY AND TOURISM BUSINESS OPERATIONS
1.5 Marketing
Most organisations have to market their product. It is no good having a product or service if the potential
buyers are not aware of its existence. The main elements of marketing were traditionally known as the
'four Ps' - product, price, promotion and place - but future marketing should focus more on delivering
value to the customer and become better at placing the customer - and not the product - in the centre.
In some texts, the 4 Ps have been renamed as the 4 Cs.
Another change because marketing has expanded into service delivery, means the original 4Ps of the
marketing mix have been joined by three more Ps - people, physical evidence and processes
Product - or
Price - or customer
customer value
cost
People
Processes
Physical
evidence
People: the people employed by the service deliverer are uniquely important given they are likely
to have regular interactions with customers. Service businesses therefore need to have excellent
recruitment and selection policies, good training programmes (both in procedures and the service
ethos) standard consistent operational procedures (eg airlines), the flexibility to enable staff to
give good service, and effective motivational programmes.
Processes: these often determine the structure of the service encounter. There are some
important 'moments of truth' that determine how effective a service is, such as enquiries and
reservations before the service is granted, registration procedures, timing of when the service is
consumed (the internet allows the purchase of many services to be done 24/7, for instance), and
what happens after the service has been consumed.
Physical evidence that the service has been performed such as a certificate or a receipt.
1.6 Personnel
The personnel function will share the management of the human resources of the organisation with the
line management of each department and section within each department.
There is a need for the personnel department to deal with the complexities of some or all of the
following:
Recruitment
Training
Appraisal
5
INTRODUCTION TO BUSINESS OPERATIONS
Redundancy
Payroll
Employment Regulation
Health and Safety
Trade Union Relations
Many of these functions will be shared with line management - the split of responsibility will vary from
one organisation to another and the relationship between line management and personnel is not always
an easy one.
3 Financial reporting - the collection and presentation of data for use in financial management
and management accounting.
These 'unpackaged holidays' do away with the need for a tour operator or travel agent. The Internet has
also led to the growth of so called 'e-retailers', for example ebookers, lastminute.com and Expedia.
2 Hierarchy of objectives
2.1 From mission to strategies
All organisations have some function to perform, some contribution to make. The function of the
business organisation may be seen as the creation and/or supply of goods and services. This involves
bringing together the factors of production and their successful mix and direction, to provide products or
services in order to create value added.
It is the interaction of people, in order to achieve the aims and objectives, which form the basis of an
organisation. Some form of structure is needed by which people's interactions are channelled and co-
ordinated.
6
1: INTRODUCTION TO HOSPITALITY AND TOURISM BUSINESS OPERATIONS
Organisations need:
Objectives
People
Structure
Most writers agree with the idea that there is a hierarchy of objectives. Mintzberg uses the following:
Mission – describes the organisation's basic function in society, in terms of the products and
services it produces for its clients.
Aims or goals – general statement of aim or purpose. An aim or goal is a future expectation – a
desired future state. It is something the organisation is striving to accomplish.
Objectives – the process of formulating objectives would need to include the means to measure
their achievement. Objectives must be verifiable and should state what is to be accomplished and
when. If possible, the quality desired and the projected cost of achieving the objective should also
be indicated. The acronym SMART in relation to characteristics of good objectives is a very useful
criterion as outlined below.
Specific eg, 'improve performance' is too vague; 'improve profit after tax' is better.
Achievable eg, 'improve profit after tax by 1000%' probably will be impossible to achieve.
Time-bounded eg, 'eliminate hospital waiting lists' - when? By the end of the year or the decade.
As a result of this planning, organisations may decide to change their structure to meet the strategic
requirements more closely.
A C T I V I T Y 1 1 5 m i n u t e s
Explain the components of SMART objectives
7
INTRODUCTION TO BUSINESS OPERATIONS
messages which effectively change the behaviour of the recipient`. Control is not an end in itself; it is a
means to an end, a way to improve a system.
A C T I V I T Y 2 5 m i n u t e s
The diagram below shows the organisation as a system. Label the three boxes identified by question
marks.
Transformation process
Organisation’s goal
Technology
3 Organisation structure
3.1 Introduction
To achieve its goals and objectives, the work of an organisation has to be divided among its members.
Some structure is necessary to ensure the effective performance of key activities and to support the
efforts of staff.
Structure is the pattern of relationships among positions and between members in the organisation. It
makes it possible to apply the process of management and create a framework of order and command
through which the activities of the organisation can be planned, organised, directed and controlled. The
structure defines tasks and responsibilities, work roles and relationships and channels of communication.
8
1: INTRODUCTION TO HOSPITALITY AND TOURISM BUSINESS OPERATIONS
3.2 Design
Size. As an organisation gets larger, its structure gets more complex: specialisation and
subdivision are required. The process of controlling and co-ordinating performance, and
communication between individuals, also grows more difficult as the 'top' of the organisation gets
further from the 'bottom', with more intervening levels.
Task, ie the nature of its work. Structure is shaped by the division of work into functions and
individual tasks, and how these tasks relate to each other. The complexity and importance of
tasks will affect the amount of supervision required, and so the ratio of supervisors to workers.
Staff. The skills and abilities of staff will determine how the work is structured and the degree of
autonomy or supervision required.
Environment: legal, commercial, technical and social. One example is the way new technology is
reducing overall staff requirements by increasing specialisation.
Age – the time has had to develop and grow: whether it is very set in its ways and the
organisation is traditional, or experimenting with new ways of doing things and making decisions.
Culture and management style – how willing management is to delegate authority at all
levels, whether teamwork is favoured, or large, impersonal structures are accepted by the staff.
3.3 Organising
Organising is establishing the internal organisational structure of the business. Organising focuses on
division, co-ordination, and control of tasks and the flow of information within the organisation.
Managers distribute responsibility and authority to jobholders.
Division of labour and specialisation – determining and defining the activities required for the
achievement of planned goals.
Span of control – defining and fixing responsibility for performance; and establishing horizontal
and vertical authority-responsibility relationship throughout the organisation.
Co-ordination – assigning the duties and activities to specific positions and people.
Authority: the right to exercise powers such as hiring and firing or buying and selling on behalf of the
organisation. In organisations, a person obtains his or her authority from various sources:
By the right of ownership, such as an individual who owns and manages his or her own business.
From the management position that an individual holds. In large formal organisations, authority is
given to individuals in this way through a process of delegation.
A personal authority that comes from his or her experience, technical knowledge and expertise, or
wisdom.
9
INTRODUCTION TO BUSINESS OPERATIONS
In large organisations, holding a position of authority often means an ability to control the use of
resources. For example, managers may have authority that enables them to decide how money should
be spent, or what work should be done.
The key point to recognise is that individuals with authority are in a position to make decisions, and
these decisions will affect the performance of the organisation.
Responsibility is the allocation of tasks to individuals and groups within the organisation.
Responsibility means taking the blame or credit for performance. It also means being accountable for
what has been done. Managers should be made responsible for the authority they have exercised and
the decisions they have taken. Managers are made responsible by calling them to account, typically
within a performance measurement system.
In its simplest form, a manager may be given a target, and his actual performance is then compared
with the target. If the target is reached or exceeded, the manager is considered successful. If the target
has not been achieved, the manager may be required to explain why not, and to consider what
measures must be taken in order to improve future performance.
Managers should be held responsible for the authority they have been given and how they use it
Managers are called to account and held accountable through a system of target setting and
performance measurement.
Accountability: the need for individuals to explain and justify any failure to fulfil their responsibilities to
their superiors in the hierarchy.
Many decisions need to be made within an organisation and someone must have the authority to make
them at each of the different levels within it. This authority should be given to people who have the
appropriate knowledge and experience. Together with the authority goes responsibility, and the need to
ensure that decisions are carried out.
Organisations develop layers of authority to ensure that correct decisions are made and implemented.
This results in the organisation pyramid as shown below. The more important a decision is to an
organisation, the fewer are the people entrusted with the authority to make it.
10
1: INTRODUCTION TO HOSPITALITY AND TOURISM BUSINESS OPERATIONS
As organisations grow, specialist individuals or groups appear. These have to be co-ordinated, so further
layers of management are required. Each department develops its own pyramid of authority. There can
be specialism within a department, requiring more co-ordination. Thus increasing specialisation often
leads to more layers of management.
An essential feature of the hierarchy is that, within the organisation, authority passes downwards, and
accountability upwards. The vertical arrangement of direct authority and responsibility is called a 'scalar
chain'. The length of the chain is the number of levels of authority and responsibility that constitute the
hierarchy and the number of subordinates who report to any given manager or supervisor is called the
span of control.
The span of control refers to the number of subordinates immediately reporting to a superior.
If the job is relatively simple, and most employees in the department are doing the same job, then large
numbers can be controlled by one manager or supervisor quite easily. However, if the jobs are complex,
fewer people can be supervised effectively.
The span of control concept has implications for the 'shape' of the organisation.
A tall organisation is one which, in relation to its size, has a large number of levels of management
hierarchy. This implies a narrow span of control.
A flat organisation is one which, in relation to its size, has a small number of hierarchical levels. This
implies a wide span of control.
An organisation with a narrow span of control will have more levels in its management hierarchy than an
organisation of the same size with a wide span of control: the first organisation will be narrow and tall,
while the second will be wide and flat.
11
INTRODUCTION TO BUSINESS OPERATIONS
There are good and bad points to both tall and flat.
In a tall organisation, a manager can expect rapid promotion since the differences in responsibility
between levels are small. With a small span of control, a manager is able to devote substantial periods of
time to each subordinate. This can be very useful when supervising technical staff who need to discuss
their ideas at length eg software package designers, problem-solving staff, etc.
Generally, classical theorists believed that flat organisation structures were more efficient in terms of
cost, communications and motivation. Tall organisations tended to encourage bureaucracy and slow
market response.
In a flat organisation a manager can expect to have considerable autonomy in both planning work and
taking decisions. Since his/her boss will have a large span of control, freedom of action will be
encouraged with the tendency to judge on results not methods. Flat organisations have many
advantages:
A wide span of control encourages delegation and motivation through job enrichment.
Lower management overhead costs.
Communications tend to be better as horizontal and lateral communication is encouraged.
Promotions are real and meaningful.
Closer contact between top management and lower levels.
A C T I V I T Y 3 1 5 m i n u t e s
What does the term hierarchy refer to?
4 Management roles
Management roles can be studied from two aspects - the roles associated with a particular organisational
level or the roles that are common to all managerial work, although the emphasis may vary according to
the level and function of a specific post. In this chapter we will look at the first aspect of these roles and
go on to look at Mintzberg's interpersonal roles in the next chapter.
In most organisations, there are typically three levels of management: top level, middle level, and first
(or lower) level. These three main levels of managers form a hierarchy, in which they are ranked in order
of importance. As we have already noted, the number of managers at each level is such that the
hierarchy resembles a pyramid, with many more first-level managers, fewer middle managers, and the
fewest managers at the top level.
Top-level managers are also called senior management or executives. This level consists of the board of
directors, chief executive or managing director. The top management is the ultimate source of authority
and it manages goals and policies for the organisation. It devotes more time to planning and co-
ordinating functions.
Top management lays down the objectives and broad policies of the enterprise.
It issues necessary instructions for preparation of department budgets, procedures, schedules etc.
It prepares strategic plans and policies for the enterprise.
12
1: INTRODUCTION TO HOSPITALITY AND TOURISM BUSINESS OPERATIONS
Middle-level managers are those in the levels below top managers. The branch managers and
departmental managers constitute middle level. They are responsible to the top management for the
functioning of their department. They devote more time to organisational and directional functions. In
small organisation, there is only one layer of middle level of management but in big enterprises, there
may be senior and junior middle level management. Their role can be summarised as:
Executing the plans of the organisation in accordance with the policies and directives of top
management.
Interpreting and explaining policies from top level management to lower level.
Responsible for sending reports and other important data to top level management.
Because middle managers are more involved in the day-to-day workings of a company, they may
provide valuable information to top managers to help improve the organisation's profit.
First level managers are also called first-line managers or supervisors. These managers have job titles
such as: office manager, section officers, superintendent, shift supervisor, foreperson, crew leader, store
manager. These managers are responsible for the daily management of line workers - the employees
who actually produce the product or offer the service. These are the managers that most employees
interact with on a daily basis, and if the managers perform poorly, employees may also perform poorly,
may lack motivation, or may leave the company. In other words, they are concerned with direction and
controlling function of management. Their role includes the following:
Communication of workers' problems, suggestions, and appeals etc to the higher level and higher
level goals and objectives to the workers.
Arranging necessary materials, machines, tools etc for getting the job done.
Motivating workers.
13
INTRODUCTION TO BUSINESS OPERATIONS
Because they are in direct contact with the workers they are the image builders of the
organisation.
5 Choice of structure
5.1 Dividing work
Dividing work and grouping people together should, wherever possible, be organised so that some
common characteristic forms a logical link between the activities involved. A small organisation,
especially in the service sector, may only have a few employees but in a technically complex organisation
the most commonly used basis for grouping activities is according to specialisation, the use of shared
resources or the shared expertise of members of staff.
Work can be divided, lines of authority can be established and activities linked together in a variety of
different ways eg by function, geographic area, product or brand, customer or market sector or a
mixture that contains elements of a number of these structures.
Advantages
Disadvantages
It does not reflect the actual business processes by which value is created.
It is hard to identify where profits and losses are made on individual products.
People do not have an understanding of how the whole business works, both in the amount
required and in the need to involve the senior people in each specialism.
There are problems of co-ordinating the work of different specialisms, both in the amount
required and in the need to involve the senior people in each specialism.
14
1: INTRODUCTION TO HOSPITALITY AND TOURISM BUSINESS OPERATIONS
15
INTRODUCTION TO BUSINESS OPERATIONS
Hybrid designs. In practice, organisations may draw on a number of these approaches. Product/brand
departmentation for marketing and production, say, might be combined with a centralised R&D function.
This is because some activities are better organised on a functional basis (for reasons of economies of
scale) whereas others are more suited, say, to product/brand departmentation (eg marketing).
A C T I V I T Y 4 5 m i n u t e s
What type of departmentation has:
Is responsible to the finance manager for his/her work in accounting and finance.
Is responsible to the project manager for his/her work on the project team. This may be
budgeting, management reporting, and payroll relevant to the project.
The purpose is to retain functional expertise while ensuring co-ordination. This is similar to project
organisation where people from different functions are drawn together in a project team: however,
matrix organisation is permanent.
Advantages include better co-ordination and communication, and focus on the task.
Disadvantages include the potential for conflict between, say, functional and area managers, and
an increase in managerial overheads.
16
1: INTRODUCTION TO HOSPITALITY AND TOURISM BUSINESS OPERATIONS
Steering
committee
Project managers Linking pin
person
Project
teams
A C T I V I T Y 5 1 5 m i n u t e s
What do you think the advantages and disadvantages of a matrix structure might be? Give three points
on each alternative.
6 Channels of communication
6.1 Types of communication channels
All organisations have formal, acknowledged, and often specified communication channels. There will be
lists of people who are to attend briefings or meetings, and distribution lists for minutes of meetings or
memos. There will be procedures for informing people of decisions or changes, and for circulating
information received externally.
In addition, an informal 'grapevine' exists in all organisations; people talk about their work, their
colleagues and about the state of their firm, whenever they meet. In corridors, over lunch, after work,
they swap rumour, gossip, half-truths and wild speculation.
The main channels of communication within a business are illustrated in Figure 1.12 as follows:
17
INTRODUCTION TO BUSINESS OPERATIONS
Vertical: ie up and down the scalar chain (from superior to subordinate and back). This is mainly
used for reporting and feedback, and sometimes also suggestions and problem-solving input.
Three forms of downward communication are manuals, handbooks, and newsletters. Three forms
of upward communication are suggestion systems, grievances, and attitude surveys.
Horizontal or lateral: between people of the same rank, in the same section or department, or
in different sections or departments. The importance of communication and co-ordination
between departments in the organisation is particularly relevant where innovation is required,
especially in new product development because it requires the co-ordination of the marketing
department, R&D and production. Horizontal communication between 'peer groups' is usually
easier and more direct then vertical communication, being less inhibited by considerations of rank.
– Formally: to co-ordinate the work of several people, and perhaps departments, who
have to cooperate to carry out a certain operation.
But communications can flow in all directions and across all boundaries via the grapevine. This is an
informal network that can use any or all media available (eg, face-to-face, computer messaging). The
grapevine can be the source of rumours, but most grapevine communications have been found to be
accurate.
18
1: INTRODUCTION TO HOSPITALITY AND TOURISM BUSINESS OPERATIONS
SUMMARY
19
INTRODUCTION TO BUSINESS OPERATIONS
SELF-TEST QUESTIONS
2 Which of the following levels is concerned with ownership, size, goals and organisational politics?
5 The original 4Ps of the marketing mix have been joined by three more Ps - can you remember what they
are?
13 Give three forms of downward communication and three forms of upward communication.
20
1: INTRODUCTION TO HOSPITALITY AND TOURISM BUSINESS OPERATIONS
SELF-TEST ANSWERS
2 B At the organisation level management are concerned with ownership, size, goals and
organisational politics and culture
3 B Transformation of ownership
6 Financial management - concerned with raising of capital to finance the organisation's operations.
Management accounting - techniques to provide management with information to assist the process of
planning and control.
Financial reporting - the collection and presentation of data for use in financial management and
management accounting.
8 Mission – describes the organisation's basic function in society, in terms of the products and services it
produces for its clients.
9 Organising focuses on division, co-ordination, and control of tasks and the flow of information within the
organisation. Managers distribute responsibility and authority to jobholders.
10 A tall organisation is one which, in relation to its size, has a large number of levels of management
hierarchy. This implies a narrow span of control.
A flat organisation is one which, in relation to its size, has a small number of hierarchical levels. This
implies a wide span of control.
11 As an organisation gets larger, its structure gets more complex: specialisation and subdivision are
required. The process of controlling and co-ordinating performance, and communication between
individuals, also grows more difficult as the 'top' of the organisation gets further from the 'bottom', with
more intervening levels.
a wide span of control encourages delegation and motivation through job enrichment
lower management overhead costs
communications tend to be better as horizontal and lateral communication is encouraged
promotions are real and meaningful
closer contact between top management and lower levels
13 Three forms of downward communication are manuals, handbooks, and newsletters. Three forms of
upward communication are suggestion systems, grievances, and attitude surveys.
21
INTRODUCTION TO BUSINESS OPERATIONS
ANSWERS TO ACTIVITIES
1 Specific
Is the objective precise and well defined? For example, 'Answer the phone quickly' can be said to
be a precise description of behaviour, you can clearly see whether someone answers the phone
or not, but there is no rate, number, percentage or frequency linked to it. So, if we add 'Answer
the phone within three rings' a rate has been added and the behaviour is now much more
specific.
Is it clear?
Measurable
How will the individual know when the task has been completed?
Have you stated how you will judge whether it has been completed or not? Setting an objective
that requires phone calls to be answered in three rings is fine, provided a system exists that
measures whether this is actually being achieved.
Achievable
Is it within their capabilities? They need to be stretching and agreed by the parties involved.
Setting targets that are plainly ridiculous does not motivate people; it merely confirms their
opinion of you as an idiot.
Relevant
Example: Telling the cleaners that they 'have to increase market share over the next financial quarter' is
not actually something they can do anything about – it is not relevant to them. However, asking them to
reduce expenditure on cleaning materials by £50 over the next three months is entirely relevant to them.
It is what they spend their budget on every day.
Time-bounded
Is there a deadline – in the objective somewhere there has to be a date (Day/Month/Year) for
when the task has to be started and/or completed (is it short-term or project related)?
22
1: INTRODUCTION TO HOSPITALITY AND TOURISM BUSINESS OPERATIONS
Transformation process
Organisation's goal
Technology
Feedback
3 The term hierarchy refers to the distribution of authority, responsibility and accountability within the
organisation.
Authority: the right to exercise powers such as hiring and firing or buying and selling on behalf of
the organisation. The authority is with the post holder and not with an individual eg a cheque
signatory who has authority to sign cheques on behalf of the organisation.
Responsibility: the allocation of tasks to individuals and groups within the organisation.
Accountability: the need for individuals to explain and justify any failure to fulfil their
responsibilities to their superiors in the hierarchy.
An essential feature of the hierarchy is that, within the organisation, authority passes downwards, and
accountability upwards.
5 Advantages
(i) People. Employees develop an attitude geared to accepting change, and departmental
monopolies are broken down.
(ii) Tasks and structure. The matrix structure may be readily amended.
(b) Better inter-disciplinary co-operation and a mixing of skills and expertise.
(c) Motivation by providing employees with greater participation in planning and control decisions.
Disadvantages
(a) Dual authority threatens a conflict between functional managers and product/ project area
managers.
(b) An individual with two or more bosses is more likely to suffer stress at work.
(c) Matrix management can be more costly – product management posts are added, meetings have
to be held, and so on.
23
INTRODUCTION TO BUSINESS OPERATIONS
24
CHAPTER 2
Topic list
Managing
Functions of management
The role of management
Managerial behaviour
Management by objectives
Decision-making and problem-solving
25
INTRODUCTION TO BUSINESS OPERATIONS
1 Managing
1.1 Henri Fayol
Henri Fayol was the first person to identify elements or functions of management. He defined five
functions: planning, organising, commanding, co-ordinating, and controlling. Fayol argued that these
functions were universal, in the sense that all managers performed them in the course of their jobs,
whether the managers worked in business, military, government, religious, or philanthropic undertakings.
They define the process of management as distinct from accounting, finance, marketing, and other
business functions.
He defined planning in terms of forecasting future conditions, setting objectives, and developing means
to attain objectives. He recognised that effective planning must also take into account unexpected
contingencies that might arise and did not advocate rigid and inflexible plans. Fayol defined organising as
making provision for the structuring of activities and relationships within the firm and also the recruiting,
evaluation, and training of personnel.
He saw the function of co-ordination as harmonising all of the various activities of the firm. Most of the
later experts did not retain Fayol's co-ordination function as a separate element of management but
regarded it as a necessary component of all the other management functions. Fayol defined the control
function in terms of ensuring that everything occurs within the parameters of the plan and accompanying
principles. The purpose of control was to identify deviations from objectives and plans and to take
corrective action.
A C T I V I T Y 1 1 0 m i n u t e s
Using Fayol's functions of management indicate under which of the five headings the five activities below
fall.
1 Ensuring that the sales department does not exceed its budget.
2 Deciding which products will form the main thrust of advertising during the next financial year.
4 Ensuring that the sales department liaises with production on delivery dates.
You may have noticed that Fayol's framework does not give particular priority to the 'people' aspects of
management. By including 'commanding', however, he does recognise the important fact that managers
perform their functions and achieve their objectives (or not) with and through the efforts of other
people. This function is sometimes referred to as 'staffing'.
You may feel that Fayol's term – 'commanding' – barely does justice to this process. Later writers,
recognising more fully the interpersonal (as opposed to purely administrative) dimensions of
management, pointed out that management involves many complex human relations functions.
26
2: THE ROLE OF THE MANAGER
Managers are also leaders. Team members may be willing to comply with the procedures and
rules of the task, but they will (arguably) be more effective if they can be encouraged to commit
themselves to its objectives.
Managers mobilise human resource. Managers are responsible for obtaining, retaining,
developing, allocating and (where necessary) shedding labour resources.
Managers have superiors, peers and colleagues. Managers have to maintain co-operative
relationships with other managers, and individuals not within their power to 'command', in order
to obtain resources and achieve shared objectives.
Managers represent the organisation to other people, inside and outside the organisation.
A C T I V I T Y 2 1 0 m i n u t e s
Brainstorm some alternative terms to replace or add to the term 'commanding' to describe
management's 'people' function.
Inputs. The inputs from the external environment may include people, capital, and managerial skills, as
well as technical knowledge and skills. In addition, various groups of people will make demands on the
organisation. For example, employees want higher pay, more benefits, and job security; on the other
hand, consumers demand safe and reliable products at reasonable prices. Suppliers want assurance that
their products will be bought. Shareholders want not only a high return on their investment but also
security for their money. Government depends on taxes being paid, but also expect the organisation to
comply with its laws. Similarly, the community demands that enterprises be 'good citizens', providing the
maximum number of jobs with a minimum of pollution.
27
INTRODUCTION TO BUSINESS OPERATIONS
It is clear that many of these demands are diverse, and it is the manager's job to resolve conflicts and
integrate these aims.
The managerial transformation process. It is the task of managers to transform the inputs, in an
effective and efficient manner, into outputs. Of course, the transformation process can be viewed from
different perspectives. Writers on management look on the transformation process in terms of their
particular approaches to management. For example, writers belonging to the human behaviour school
focus on interpersonal relationships.
In this text we will use the managerial functions of planning, organising, staffing, leading, and controlling
as a framework for organising managerial knowledge.
The communication system. Communication is essential to all phases of the managerial process.
It integrates the managerial functions. For example, the objectives set in planning are
communicated so that the appropriate organisation structure can be devised. Communication is
essential in the selection, appraisal, and training of managers to fill the roles in this structure.
Similarly, effective leadership and the creation of an environment conducive to motivation depend
on communication. It is through communication that the manager determines whether events and
performance conform to plans.
It links the organisation with its external environment. It is through the communication system
that the needs of customers are identified; this knowledge enables the firm to provide products
and services at a profit. Similarly, it is through an effective communication system that the
organisation becomes aware of competition and other potential threats and constraining factors.
Feedback
In the systems model of operational management we show some of the outputs becoming inputs again
eg, the satisfaction of employees becomes an important human input. Similarly, profits, the surplus of
income over costs, are reinvested in cash and capital goods, such as machinery, equipment, buildings,
and stock.
Outputs
Although the kinds of outputs will vary with the enterprise, they usually include many of the following:
products, services, profits, satisfaction, and integration of the goals of various claimants to the
enterprise.
Planning is a process consisting of several steps. The process begins with environmental scanning, which
simply means that planners must be aware of the critical contingencies facing their organisation in terms
of economic conditions, their competitors, and their customers. Planners must then attempt to forecast
future conditions. These forecasts form the basis for planning. The success of a plan, therefore, lies in
the manager's ability to forecast future situations correctly and accurately.
Planners must establish objectives, which are statements of what needs to be achieved and when.
Planners must then identify alternative courses of action for achieving objectives. After evaluating the
various alternatives, planners must make decisions about the best courses of action for achieving
objectives. They must then formulate necessary steps and ensure effective implementation of plans.
Finally, planners must constantly evaluate the success of their plans and take corrective action when
necessary.
28
2: THE ROLE OF THE MANAGER
2.2 Organising
Once planning is effected, the people in the organisation have to be organised. It is an important activity
by which management brings together the manpower and material resources for the accomplishment of
pre-determined goals.
Organising is the process of establishing relationships among the members of the organisation. This
relationship is created in the form of authority and responsibility. Each member in the organisation is
assigned a specific duty to perform and is granted the corresponding authority to do it.
29
INTRODUCTION TO BUSINESS OPERATIONS
The purpose of an organisation structure is to help in creating an environment for human performance.
Although the structure must define the tasks to be done, the roles so established must also be designed
in the light of the abilities and motivations of the people available.
Designing an effective organisation structure is not an easy managerial task. Many problems are
encountered in making structures fit situations, including both defining the kind of jobs that must be
done and finding the people to do them.
2.3 Staffing
Staffing involves filling, and keeping filled, the positions in the organisation structure. This is done by
identifying work-force requirements; assessing the people available; and recruiting, selecting, placing,
promoting, appraising, planning the careers of, compensating, and training or otherwise developing both
candidates and current jobholders to accomplish their tasks effectively and efficiently.
Staffing is considered as a separate function in view of the need to employ the right types of people and
develop them for the well being of the organisation. It is concerned with the human resources of an
organisation and involves the following:
Human resources planning, ie determining the number and the kind of personnel required
Recruitment of personnel
Selection of the most suitable personnel
Placement and orientation of employees
Training and development of employees
Proper evaluation of employees
Transfer, promotion, termination, and layoff of employees
2.4 Leading
Leading means influencing people so that they will contribute to organisation and group goals to
accomplish desired results. It consists of issuing orders and instructions, guiding, counselling and
supervising subordinates in the execution of plans.
Effective leadership requires the manager to motivate subordinates, communicate efficiently, and actively
use power. If managers are effective leaders, their subordinates will be enthusiastic about exerting effort
toward the attainment of organisational objectives.
To become capable at leading, managers must first understand their subordinates' personalities, values,
attitudes, and emotions. Therefore, the behavioural sciences have made many contributions to the
understanding of this function of management. Personality research and studies of job attitudes provide
important information as to how managers can most beneficially lead subordinates.
Studies of motivation and motivation theory provide important information about the ways in which
workers can be energised to put forth productive effort. Studies of communication provide direction as to
how managers can effectively and persuasively communicate. Studies of leadership and leadership style
provide information regarding questions such as, 'What makes a manager a good leader?' and 'In what
situations are certain leadership styles most appropriate and influential?'
2.5 Controlling
Controlling is the process of seeing whether the activities have been performed in conformity with the
plans. It helps the management to get its policies implemented and to take corrective actions if
performance is not in accordance with the planned objectives. The process of controlling involves the
following:
30
2: THE ROLE OF THE MANAGER
The measurement of performance can be done in several ways, depending on the performance
standards, including financial statements, sales reports, production results, customer satisfaction, and
formal performance appraisals. Managers at all levels engage in the managerial function of controlling to
some degree.
Controlling involves ensuring that performance does not deviate from standards. Controlling consists of
three steps, which include establishing performance standards, comparing actual performance against
standards, and taking corrective action when necessary. Performance standards are often stated in
monetary terms such as revenue, costs, or profits, but may also be stated in other terms, such as units
produced, number of defective products, or levels of customer service.
The managerial function of controlling should not be confused with control in the behavioural or
manipulative sense. This function does not imply that managers should attempt to control or manipulate
the personalities, values, attitudes, or emotions of their subordinates. Instead, this function of
management concerns the manager's role in taking necessary actions to ensure that the work-related
activities of subordinates are consistent with, and contributing toward, the accomplishment of
organisational and departmental objectives.
Effective controlling requires the existence of plans, since planning provides the necessary performance
standards or objectives. Controlling also requires a clear understanding of where responsibility for
deviations from standards lies. Two traditional control techniques are the budget and the performance
audit. Although controlling is often thought of in terms of financial criteria, managers must also control
production/operations processes, procedures for delivery of services, compliance with company policies,
and many other activities within the organisation.
A C T I V I T Y 3 2 0 m i n u t e s
Briefly describe Fayol's five functions of management.
2.6 Co-ordination
Some authorities consider co-ordination to be a separate function of the manager. It seems more
accurate, however, to regard it as the essence of being a manager, for achieving harmony among
individual efforts toward the accomplishment of group goals. Each of the managerial functions is an
exercise contributing to co-ordination.
To co-ordinate is 'to plan, or take action to improve, the inter-relationships (especially of timing and
methods of communication) between a number of various activities, which contribute to the achievement
of a single objective, so that they do not conflict and the objective is achieved with a minimal
expenditure of time and effort.' (Dictionary of Management)
The organisation is a collection of individuals and groups, each with their own interests and goals;
these must be given a unified, common direction if the organisation as a whole is to achieve its
objectives.
The organisation's activities involve a variety of people, tasks, resources and technologies. All of
these will have to be at the right place, at the right time, and working in the right way if smooth
operations are to be maintained.
31
INTRODUCTION TO BUSINESS OPERATIONS
Some activities of the organisation will be dependent on the successful and timely completion of
other activities: someone needs to ensure that such interrelationships are taken into account in
the overall activity of the organisation.
Some activities of the organisation will be higher priority than others: someone needs to ensure
that there is an overall balance between urgent/high-priority activities and routine activities, on
which the organisation nevertheless depends.
Resources (human, material and financial) are limited, and possibly scarce. Different units in the
organisation are, in effect, in competition for their 'slice' of the resources available. Someone has
to balance their demands and the organisation's priorities to ensure that overall, resources are
used efficiently and effectively in pursuit of the organisation's goals.
The degree to which top, middle, and supervisory managers perform each of these functions is shown in
Figure 2.3 below. Note that top managers do considerably more planning, organising, and controlling
than do managers at any other level. However, they do much less leading. Most of the leadership is done
by first-line managers. The amount of planning, organising, and controlling decreases down the
hierarchy of management whereas leading increases as you move down.
A C T I V I T Y 4 2 0 m i n u t e s
You have recently been appointed to a management position in your organisation, a chain of hotels. You
have been appointed as the manager of one of the hotels.
Required
(a) What are the management tasks involved in organising the work of the hotel staff?
32
2: THE ROLE OF THE MANAGER
Mintzberg argued that the management process set out what managers have to achieve and how, but it
does not as such describe what managers actually do. Mintzberg (1973) defined what managers do in
terms of three key roles:
The informational role (checking data received and passing it on to relevant people, as well as
acting as the 'spokesperson' for his or her team in relation to other teams or the line manager).
The interpersonal role (acting as leader for his or her own team, and linking with the managers of
other teams).
The decisional role. It is in this role that managers actually 'do' what we perceive as managing.
These may be taken on as appropriate to the personality of the manager and his subordinates and to the
nature of the task in hand.
Figurehead. Performing ceremonial and social duties as the organisation's representative, for
example at conferences. This is mainly the role of senior figures.
Leader. Selecting and training team members, and uniting and inspiring the team to achieve its
objectives.
Liaison. Communicating with people outside the work unit (eg in inter-departmental meetings) or
the organisation: building up an informal system of information exchange.
Monitor. Receiving information from the environment and from within the organisation. Much of
this may be obtained informally, say from chatting with contacts or subordinates: managers do
not rely solely on formal reports.
Spokesman. Transmitting information to interested parties outside the work unit or organisation.
Entrepreneur. Being a 'fixer', mobilising resources to get things done and to seize opportunities.
Disturbance-handler. Coping with the unexpected, rectifying mistakes and getting operations
and relationships back on course when necessary.
33
INTRODUCTION TO BUSINESS OPERATIONS
Resource allocator. Distributing limited resources in the way that will most efficiently achieve
defined objectives.
A C T I V I T Y 5 1 5 m i n u t e s
The Telegraph Magazine asked a cinema manager: 'What do you actually do?' The answer was as
follows.
'Everything, apart from being the projectionist and cleaning the lavatories. My office is also the ticket
office. If there's a big queue at the confectionery kiosk, I'll help serve and I'll usher people to their seats
if we're really busy. Sometimes I go into the cinema before a show and tell the audience about any
special events, such as a director coming to give a talk.
'I get in around lunchtime, deal with messages and ensure that the lights and heating are working. I
write orders for posters and publicity pictures, popcorn and ice cream and deal with the correspondence
for the 2,000 members on our mailing list. I'll brief the projectionist, ushers and kiosk staff and at about
1.45 pm the first matinee customers arrive. Our afternoon audience is mainly elderly people and they
take some time to settle, so I'll help them to their seats and only start the film when everyone is
comfortable. In the evening, more ushers and bar staff arrive and I'll brief them about the programme,
seating and timing. While the film is on, I'm selling tickets for the other screen, counting the takings and
planning tomorrow. If I get a moment I try to grab something to eat.'
Which of Mintzberg's roles does this manager take on in his 'average' day?
4 Managerial behaviour
4.1 Style of behaviour
It is the responsibility of managers to manage and achieve results through the efforts of other people.
Managers are only likely to be effective if they adopt an appropriate style of behaviour.
The general movement towards flatter organisation structures and greater employee involvement places
more of an emphasis on an integrating rather than a traditional controlling style of management. The
style of managerial leadership is a function of the manager's attitudes towards people and assumptions
about human nature and behaviour, eg McGregor's Theory X and Theory Y.
He believed that the style of management adopted is a function of the manager's attitude towards
people and assumptions about human nature and behaviour.
34
2: THE ROLE OF THE MANAGER
Theory X managers believe their employees are basically lazy, need constant supervision and direction,
and are indifferent to organisational needs.
Theory Y managers believe their workers enjoy their work, are self-motivated, and are willing to work
hard to meet both personal and organisational goals.
These two sets of assumptions are obviously fundamentally different. Theory X is pessimistic, static and
rigid. Control is primarily external, ie imposed on the subordinate by the superior. In contrast, theory Y is
optimistic, dynamic and flexible with an emphasis on self-direction and is the integration of individual
needs with organisational demands. There is little doubt that each set of assumptions will affect the way
managers carry out their managerial functions and activities.
It is important to note that McGregor did not feel that Theory X and Theory Y were opposite, but rather
two points on a continuum and that most managers had a mixture of assumptions about people.
Likewise, he did not promote either Theory X or Theory Y as being a superior management style,
although his work has often been interpreted as favouring Theory Y. He argued that no one style is
effective in all situations.
4.3 Theory Z
Over the past century, management theory has encouraged managers to adopt various management
styles, depending on the times and the needs of the organisation. In recent decades, 'enlightened'
theories emphasising employee empowerment and democratisation in the workplace have gained
general acceptance, replacing earlier process-oriented approaches.
W. G. Ouchi's Theory Z emphasised a more democratic approach to management and the adoption of
human resources policies that encourage commitment, participation and as a result lead to innovation,
better performance and flexibility to meet the changing needs of the market economy. Much like
McGregor's theories (X and Y), Theory Z makes certain assumptions about workers. These include the
notion that workers:
Have a very well developed sense of order, discipline, moral obligation to work hard, and a sense
of cohesion with their fellow workers.
Tend to want to build co-operative and intimate working relationships with those that they work
for and with, as well as the people that work for them.
Are more participative, and capable of performing many and varied tasks.
Highly value a working environment in which such things as family, cultures and traditions, and
social institutions are regarded as equally important as the work itself.
Such as these have a very well developed sense of order, discipline, moral obligation to work
hard, and a sense of cohesion with their fellow workers
Can be trusted to do their jobs to their utmost ability, so long as management can be trusted to
support them and look out for their well being.
One of the most important tenets of this theory is that management must have a high degree of
confidence in its workers in order for this type of participative management to work. Theory Z stresses
the need for enabling the workers to become generalists, rather than specialists, and to increase their
knowledge of the company and its processes through job rotations and continual training.
35
INTRODUCTION TO BUSINESS OPERATIONS
Concern for production is the amount of emphasis which the manager places on accomplishing
the tasks in hand, achieving a high level of production and getting results or profits. This is
represented along the horizontal axis of the grid.
Concern for people is the amount of emphasis which the manager gives to subordinates and
colleagues as individuals and to their needs and expectations. This is represented along the
vertical axis of the grid.
Along each of these two dimensions, managers could be located at any point on a continuum from very
low to very high concern. Blake and Mouton observed that the two concerns did not seem to correlate,
positively or negatively: a high concern in one dimension, for example, did not seem to imply a high or
low concern in the other dimension. Individual managers could therefore reflect various permutations of
task/people concern.
Impoverished management (rated 1.1) where effective production is unobtainable because the
manager is lazy, apathetic and showing little interest in either staff or work. Sound and mature
relationships are impossible because of continual conflict.
Country club management (rated 1.9) where production or activity is incidental to good fellowship
and camaraderie. The manager is attentive to staff needs and has developed satisfying
relationships. However, there is little attention paid to achieving results.
Task management (rated 9.1) where there is almost total concentration on achieving results.
People's needs are virtually ignored. Here there is a strong task culture, with the role of
management to plan, direct and control the work of their subordinate. Any consideration towards
the human side is purely incidental to ensuring that people are fit to work.
Middle of the road or the dampened pendulum (rated 5.5), whereby there is a compromise
operation, where there is a push to achieve production, but not going all out, with some giving of
ground, but retaining the equitable fairness and firmness.
36
2: THE ROLE OF THE MANAGER
Team management (rated 9.9). This is the ideal situation, whereby production is achieved by
integrating the task and human requirements. This is the work of a high performance manager
achieving high work accomplishment through 'leading' committed people who identify themselves
with the organisational aims.
The managerial grid was intended as an appraisal and management development tool. It recognises that
a balance is required between concern for task and concern for people, and that a high degree of both is
possible (and highly effective) at the same time.
The grid thus offers a number of useful insights for the identification of management training and
development needs. It shows in an easily assimilated form where the behaviour and assumptions of a
manager may exhibit a lack of balance between the dimensions and/or a low degree of concern in either
dimension or both. It may also be used in team member selection, so that a 1.9 team leader is balanced
by a 9.1 co-leader, for example.
However, the grid is a simplified model, and as such has practical limitations.
It assumes that 9.9 is the desirable model for effective leadership. In some managerial contexts,
this may not be so. Concern for people, for example, would not be necessary in a context of
comprehensive automation: compliance is all that would be required.
It is open to oversimplification. Scores can appear polarised, with judgements attached about
individual managers' suitability or performance. The grid is intended as a simplified snapshot of a
manager's preferred style, not a comprehensive description of his or her performance.
Organisational context and culture, technology and other 'givens' influence the manager's style of
leadership, not just the two dimensions described by the grid.
Any managerial theory is only useful in so far as it is useable in practice by managers: if the grid
is used only to inform managers that they 'must acquire greater concern for people', it may result
in stress, uncertainty and inconsistent behaviour.
Reddin therefore added a third dimension to Blake's grid: effectiveness (or ineffectiveness) according to
the situation. For each of the combinations of task/people concern, there are two possible management
styles. A 1.1 manager in an appropriate situation would be called a 'bureaucrat' and may well be
effective: in an inappropriate situation, the same manager would be called a 'deserter', and would be
ineffective. A 9.9 manager in an appropriate situation would be called an 'executive' (effective), but in an
inappropriate situation he could be viewed merely as a 'compromiser' (ineffective).
A C T I V I T Y 6 1 0 m i n u t e s
Here are some statements about a manager's approach to meetings. Which position on Blake's Grid do
you think each might represent?
(a) I attend because it is expected. I either go along with the majority position or avoid expressing
my views.
(b) I try to come up with good ideas and push for a decision as soon as I can get a majority behind
me. I don't mind stepping on people if it helps a sound decision.
(c) I like to be able to support what my boss wants and to recognise the merits of individual effort.
When conflict arises I do a good job of restoring harmony.
37
INTRODUCTION TO BUSINESS OPERATIONS
System 2: Benevolent authoritative. The leader has only superficial trust in subordinates, imposes
decisions, never delegates, motivates by reward and, though sometimes involving others in problem-
solving, is basically paternalistic.
System 3: Participative. The leader has some confidence in subordinates, listens to them but controls
decision making, motivates by reward and a level of involvement, and will use the ideas and suggestions
of subordinates constructively.
System 4: Democratic. The leader has complete confidence in subordinates who are allowed to make
decisions for themselves. Motivation is by reward for achieving goals set by participation, and there is a
substantial amount of sharing of ideas, opinions and co-operation.
Likert recognised that each style is relevant in some situations; for example, in a crisis, a System 1
approach is usually required. Alternatively, when introducing a new system of work, System 4 would be
most effective. His research shows that effective managers are those who adopt either a System 3 or a
System 4 leadership style. Both are seen as being based on trust and paying attention to the needs of
both the organisation and employees. System 4 harnesses human motivation in ways that yield positive
co-operation rather than fearful antagonism on the part of the people in the organisation. By contrast,
Systems 1 and 2 tend to develop less favourable attitudes, more hostile or more submissive attitudes.
5 Management by objectives
5.1 Achievement of organisational goals
We owe the concept of a hierarchy or cascade of objectives to the great management thinker and writer
Peter Drucker, who outlined the system now known as management by objectives (MbO) in the
middle of the twentieth century.
Integration: objectives should support one another and be consistent; this integrates the efforts
of different departments.
Motivation: the first step is to know what is to be done. Objectives must be created for all areas
of performance.
Management by objectives (MbO) is a scheme of planning and control that provides co-ordination of:
It is a participative approach to the activities involved in planning, organisation, direction and control of
work. Basically the approach involves the systematic setting of targets and checking of progress for each
management position.
38
2: THE ROLE OF THE MANAGER
The setting of objectives and targets at the highest level of the organisation.
Clarifying the specific roles of those responsible for achieving the goals and setting and modifying
objectives for subordinates.
The continual review and appraisal of results. Review periods will be planned where manager and
subordinates can discuss progress at regular intervals. At the final review period, results will be
compared to objectives and a factual, constructive discussion will attempt to find the reasons for
shortfalls.
MbO is a way of integrating the organisation's and the individual's objectives. The process is one where
managers agree specific, measurable goals with each employee on a regular basis. The employee is then
responsible for attaining these goals within a certain time. After this time has elapsed the employee and
superior meet together to discuss results and establish new objectives.
(c) Over time. Short-term objectives can be regarded as intermediate milestones on the road towards
long-term objectives.
It is a scheme for converting strategic plans into management action plans and budgets.
The co-ordination of individual management targets into the overall scheme, so that each
individual manager knows what is expected of him.
It helps to identify the need for change in organisational goals or individual managers and
provides a system for making such changes.
39
INTRODUCTION TO BUSINESS OPERATIONS
It is not as effective as it should be if strategic plans have not been properly established; ie MbO
should be used within the structure of an overall corporate planning system.
Some targets may be long-term whereas managers may need short-term targets and tangible
results. If a person expects to be transferred to a different job after, say, two years, he or she will
find it difficult to manage targets for a three- or four-year period.
There is a danger of inflexibility since individual objectives, once set, are not changed; the overall
plan is rigidly followed. There must be flexibility and a willingness to accept amended objectives in
the light of changing circumstances.
It can be a time-consuming exercise which might not justify the benefit achieved.
It might call for a significant change in the attitudes of senior managers, the style of leadership
and the organisation structure if it is to function effectively as a system.
It might overstress the need for individual achievements at the expense of teamwork.
Their argument was as follows. A business organisation is a coalition of many different individuals and
groups, such as shareholders, managers, other employees and customers. Each group has different
interests, and expects different things from the organisation. Shareholders want a return on their
investment and an increase in dividends and the share price. Employees want more pay, job security, or
better working conditions. Managers may want career development and more status. Customers may
want better value for money from the goods or services they buy.
None of these groups can obtain everything they would like. Management should therefore try to reach a
consensus between the different groups and their conflicting interests. Each group must settle for less
than they would otherwise want. For example, shareholders may have to accept lower profits and
dividends so that employees can be paid a bit more.
A C T I V I T Y 7 5 m i n u t e s
The Griswold Cutlery Company is an old established firm, selling high quality stainless steel cutlery to
markets in the UK, France and Germany. It is based in Sheffield. The managing director, Mr Paul
Griswold, great grandson of the firm's founder, has just taken over from his father, Matthew Griswold.
Matthew Griswold was a manager of the old school. As the boss, he liked to exert power and employees
were afraid to disagree with him. He encouraged strict conformance to company procedures: 'rules are
rules, they are there to be followed, and I don't like changing them'. Paul Griswold wants to introduce
MbO. Do you think this will be an easy task?
40
2: THE ROLE OF THE MANAGER
One of the most powerful and yet simplest methods for getting at a problem is to gather all the facts and
then ask the questions, for example, 'what is currently achieved/proposed/needed?'
Decisions are based on facts and judgement. Because problems vary in nature (short-term/long-term,
easy/complex, quantifiable/qualitative etc) so too does the task of decision-making.
There are two distinct types of decision that can be arrived at when solving a problem – routine and non-
routine.
1 Routine decisions are ones that are made frequently eg re-ordering goods out of stock, granting
discounts to certain customers. For most of these types of decision there are laid-down written
rules and procedures to follow. But the more challenging problems are those which are not
covered by existing rules and procedures.
A C T I V I T Y 8 1 0 m i n u t e s
Draw the problem-solving technique as a system, with input, process and output.
It is frequently said that effective decision-making must be rational. But what is rationality and when is a
person thinking or deciding rationally? To decide rationally managers must have a clear understanding of
alternative courses by which a goal can be reached under existing circumstances and limitations. They
must also have the information and the ability to analyse and evaluate alternatives in the light of the
41
INTRODUCTION TO BUSINESS OPERATIONS
goal sought. Finally, they must have a desire to come to the best solution by selecting the alternative
that most effectively satisfies goal achievement.
A role of management is to eliminate complexity and recognise that there is a limit to the information
they can use and understand – in other words, they will make rational decisions, but with limited and
incomplete information. (This is 'bounded rationality' – rational decision-making within limits). Since
management decisions are made with limited information, it is impossible to set objectives for profit
maximisation, or sales maximisation, or the maximisation of shareholder wealth, since managers do not
know what these are. Instead managers search for a satisfactory set of objectives and they stop
searching when they have identified them. Simon used the term 'satisficing' to describe this decision-
making process.
Managers set objectives that appear to be satisfactory and are consistent with the broad theoretical aims
of the organisation.
42
2: THE ROLE OF THE MANAGER
SUMMARY
43
INTRODUCTION TO BUSINESS OPERATIONS
SELF-TEST QUESTIONS
2 In the management transformation process what types of output are there likely to be?
3 Why is the communication system essential to all phases of the managerial process?
9 Do top-level managers spend less time on planning and organising than lower level managers?
10 What type of manager believes their employees are basically lazy, need constant supervision and
direction?
44
2: THE ROLE OF THE MANAGER
SELF-TEST ANSWERS
2 Outputs might include products, services, profits, satisfaction and goal integration.
3 It integrates the managerial functions and it links the organisation with its external environment.
5 Grouping the activities into a logical pattern and co-ordinating the authority-responsibility relationships of
various activities.
6 The object of control is to spot errors and weaknesses that can be prevented in the future.
7 No - top-level managers spend more time on planning and organising than lower level managers.
(a) Monitor. Receiving information from the environment and from within the organisation. Much of
this may be obtained informally, say from chatting with contacts or subordinates: managers do
not rely solely on formal reports.
(c) Spokesman. Transmitting information to interested parties outside the work unit or
organisation.
10 Theory X managers believe their employees are basically lazy, need constant supervision and direction
It is a scheme for converting strategic plans into management action plans and budgets.
The co-ordination of individual management targets into the overall scheme, so that each
individual manager knows what is expected of him.
It helps to identify the need for change in organisational goals or individual managers and
provides a system for making such changes.
45
INTRODUCTION TO BUSINESS OPERATIONS
ANSWERS TO ACTIVITIES
(a) Planning. This essentially means looking to the future. It involves selecting the 'ends' which the
organisation wishes to achieve (its objectives) and the 'means' (plans, policies, programmes and
procedures) it will adopt in order to achieve them.
(b) Organising. The work to be done (in order to fulfil the plans) must be divided and structured into
tasks and jobs, within a formal structure of authority and communication. Organising includes
work scheduling (what is to be done when) and work allocation (who is to do what).
(c) Commanding. Fayol called this 'maintaining activity among the personnel'. It involves instructing
and motivating subordinates to carry out tasks.
(d) Co-ordinating. This is the task of harmonising the activities of individuals and groups within the
organisation, reconciling differences in approach, timing and resource requirements in the
interest of overall organisational objectives.
(e) Controlling. This is the task of monitoring the activities of individuals and groups, to ensure that
their performance is in accordance with the plans, standards and objectives set for them.
Deviations must be identified and corrected.
4 You might have your own ideas about what the role of a hotel manager should be, but here are some
suggestions.
(a) A manager must understand what is expected from him or her. An important starting point is
therefore to understand what the responsibilities of the hotel manager are, and what targets he
or she is expected to achieve, in both the short-term and the longer-term. In other words, a
manager must know the answer to the question: 'What am I expected to do?'
A new manager must also find out what tasks are carried out by his or her employees. These will
include short-term or routine tasks such as providing hotel services - bookings, reception, room
service, providing food and drink, cleaning, and so on. There may also be longer-term tasks, such
as ensuring that the facilities provided by the hotel are appropriate and are replaced or
modernised over time.
The manager must know what resources are at his or her disposal. In particular, how many
rooms are in the hotel, what is the size of its dining room, how much money can the hotel spend,
how many employees work in the hotel, and what are their skills?
Organisation involves deciding how the available resources should be employed to carry out the
tasks of the hotel, in order to achieve the targets that the manager has been set.
(b) The measures that management should take might be listed as follows.
There should be plans for carrying out the tasks of the hotel. These will include short-term
operational plans, such as planning the working hours of the hotel staff and making sure that
there are sufficient employees available to provide all the necessary hotel services at all times.
There should also be medium-term plans, possibly based on a financial plan or budget. There
may also be longer-term plans for developing the hotel's facilities and services, and replacing or
updating its facilities and re-decorating the rooms.
46
2: THE ROLE OF THE MANAGER
Responsibility for carrying out the various tasks must be delegated. The hotel manager should
allocate tasks between his or her subordinates.
The manager should set targets for each of the subordinates, or possibly instruct them what they
should do.
The manager should monitor the activities of the hotel, and assess how well or badly it is
performing. In order to monitor and control activities, it will be necessary to ensure that
appropriate information is obtained. The manager might therefore need to establish a formal
reporting system that tells him about the performance of the hotel, such as the number of
guests, room occupancy, revenue earned and costs incurred. He or she should also monitor
progress by carrying out regular checks on what is happening in the hotel – simply by walking
round the hotel and observing.
The manager should seek to develop a 'corporate culture' amongst the hotel staff, so that all the
employees have a common sense of purpose.
The manager should continually look ahead, anticipate any problems and try to deal with them in
advance.
The manager must co-ordinate the activities of all the employees. In practice, the main methods
of co-ordination are likely to be setting plans and holding regular 'team meetings' or management
meetings of senior staff within the hotel.
The manager may need to resolve disputes that arise between members of staff, to handle
complaints from customers (hotel guests) and to discipline members of staff for breaches of the
hotel rules.
The manager should act as a figurehead for the hotel in its dealings with outside organisations,
such as travel companies and hotel booking agencies.
5 Your answer may well be that the cinema manager takes on all of Mintzberg's roles.
7 The company's existing culture does not appear to be one in which MbO could flourish. MbO requires
that subordinates are relatively independent in negotiating with the boss and that the boss is willing to
delegate. Neither of these conditions seems to be present in this company.
47
INTRODUCTION TO BUSINESS OPERATIONS
48
CHAPTER 3
Chapter objectives
In this chapter you will learn
Leadership styles
Motivating staff
Leading work teams
Managing time
Prioritising work
Assigning work and delegating duties
Meetings
Topic list
Leadership
Leadership styles
Contingency theories
Motivating staff
Management and motivation
Leading work teams
Managing work
Meetings
49
INTRODUCTION TO BUSINESS OPERATIONS
1 Leadership
1.1 Introduction
Having looked at the nature of management in the previous chapter, we can now turn to managing
people. This corresponds to the function of management we have called 'commanding', 'directing' or
'leading'. As these varying terms suggest, there are different ways for managers to go about securing the
co-operation and controlled performance of their staff.
Leadership is the process of influencing others to work willingly towards goals, to the best of their
capabilities, perhaps in a manner different to that which they would otherwise have chosen.
Buchanan and Huczynski define a leader as 'someone who exercises influence over other people'.
Leadership is seen as 'a social process in which one individual influences the behaviour of others without
the use or threat of violence'.
The essence of leadership is followership. In other words it is the willingness of people to follow that
makes a person a leader (Koontz, H, O'Donnell, C, Weihrich, H).
Most definitions of leadership reflect the assumptions that it is a relationship through which one person
influences the behaviour or actions of other people in an organisational context. It is a dynamic two-way
process of leading and following that can affect both individual and organisational performance. For
example, a leader can influence the interpretation of events, the choice of objectives and strategies, the
organisation of work activities, the motivation of people to achieve the objectives, the maintenance of
co-operative relationships, the development of skills and confidence by members and the enlistment of
support and co-operation from people outside the group or organisation.
(a) The functions of management include planning, organising, co-ordinating and controlling.
Management is primarily concerned with logic, structure and control. If done well, it produces
predictable results, on time.
(b) Leadership, properly considered, involves a different kind of function, and – it may be argued – a
rather different mind set. It involves essentially people-centred activities, with effects potentially
beyond the scope of controlled performance. A leader's special function is to:
(ii) Communicate the vision. This will be particularly powerful if it meets the needs –
conscious or unconscious – of other people, and if the leader can give it credibility in their
eyes.
(iii) Energise, inspire and motivate others to translate the vision into achievement.
(iv) Create the culture that will support the achievement, through shared language, rituals,
myths, beliefs and so on.
In other words, while managers have authority by virtue of their position in the organisation to secure
the obedience or compliance of their subordinates, leaders direct the efforts of others through vision,
inspiration and motivation, which are all forms of influence.
50
3: ORGANISATION AND LEADERSHIP SKILLS
Influence is the process by which an individual or group exercises power to determine or modify the
behaviour of others.
For routine work, mere compliance with directives may be sufficient for the organisation's needs.
However, if it wishes to secure extra input from its employees – in terms of co-operation, effort and
creativity – it may strive for the inspirational quality of leadership, over and above efficient management.
A C T I V I T Y 1 1 0 m i n u t e s
We often say that managers (as leaders) should motivate people to put forth extra effort, we could also
use the word energy. As it happens, there are lots of words – all beginning with 'E' – which express the
kinds of things managers would like to elicit from their staff. Charles Handy called them 'E Factors'. See if
you can think of at least five more.
2 Leadership styles
2.1 Overview of leadership styles
Fundamental to the management of people is an understanding of the importance of leadership.
Managers must lead, and as such must accept responsibility for the activities and successes of their
departments. It is generally accepted that a leader's style will affect the motivation, efficiency, and
effectiveness of their employees.
The main leadership theories present two basic approaches - task-centred and employee-centred.
Tannenbaum and Schmidt suggest that leadership style is a continuum, and that the appropriate style
depends on the characteristics of the leader, the subordinates, and of the situation.
In a more contemporary approach, known as 'action-centred leadership', John Adair suggests that there
are three basic needs that result in differing leadership styles: the needs of the task, the needs of the
group, and the needs of the individual. Fiedler on the other hand, takes a more psychological approach
to defining leadership.
There are many dimensions to leadership and many possible ways to describe leadership style eg,
dictatorial, unitary, bureaucratic, charismatic, participative and consultative. However, the following three
styles are used quite frequently when describing the managerial leadership towards subordinate staff and
the focus of power:
1 Autocratic style – where decision-making is centralised in the hands of the leader, who does
not encourage participation by subordinates. Many of the most successful businesses have been
led to success by autocrats who are paternalistic leaders, offering consideration and respect to
the workforce, but retaining full rights in decision-making. This is typified by the Quaker
companies in the early years of this century (eg, Cadbury, Rowntree, Reckitt and Colman). Such a
style is frequently found today in professional firms. Often they find it hard to delegate, to bring
on successors, to stand down at the right moment, to switch off and go home, and to appreciate
the views of others.
3 Laissez-faire style – where subordinates are given little or no direction at all, and are allowed
to establish their own objectives and make all their own decisions.
51
INTRODUCTION TO BUSINESS OPERATIONS
Findings show that a considerate style of leadership is frequently found to be the most effective and
leads to greater job satisfaction, though task-centred styles are often associated with high employee
performance and, on occasions, with employee satisfaction as well.
1 Tells – the autocratic dictator. The manager makes all the decisions, and issues instructions,
which must be obeyed without question. Communication is downward with no feedback until after
the event. The strengths are that quick decisions can be made when speed is required and it is
the most efficient type of leadership for highly programmed routine work. The weaknesses are
that it does not encourage the subordinates to give their opinions when these might be useful and
52
3: ORGANISATION AND LEADERSHIP SKILLS
communications between the manager and subordinate will be one-way and the manager will not
know until afterwards whether the orders have been properly understood.
2 Sells – the persuader. The manager still makes all the decisions, but believes that subordinates
have to be motivated to accept them in order to carry them out properly. The strengths are that
employees are made aware of the reasons for decisions. Selling decisions to staff might make
them more committed. Staff will have a better idea of what to do when unforeseen events arise in
their work because the manager will have explained his intentions. The weaknesses are that
communications are still largely one-way. Subordinates might not accept the decisions and it does
not encourage initiative and commitment.
3 Consults – partial involvement. The manager confers with subordinates and takes their views
into account, but has the final say. Ashridge points out that this must be an honest approach not
an attempt to hoodwink staff where the manager has no intention of changing a predetermined
decision. The benefits are that employees are involved in decisions before they are made. This
encourages motivation through greater interest and involvement. An agreed consensus of opinion
can be reached and for some decisions consensus can be an advantage rather than a weak
compromise. The weaknesses are that it might take much longer to reach decisions and
subordinates might be too inexperienced to formulate mature opinions and give practical advice.
Consultation can too easily turn into a façade concealing, basically, a sells style.
4 Joins – the democrat. Leader and followers make the decision on the basis of consensus. It is
clearly most effective where all members within the group have knowledge and experience to
contribute so that an evenly balanced informed discussion can lead to the best decision. It can
provide high motivation and commitment from employees. It shares the other advantages of the
consultative style (especially where subordinates have expert power). The problems are that the
authority of the manager might be undermined. Decision-making might become a very long
process, and clear decisions might be difficult to reach and subordinates might lack enough
experience.
People led by a 'consults' manager had the most favourable attitude to their work.
Most subordinates feel they are being led by a 'tells' or 'sells' manager.
In practice, consistency was far more important to subordinates than any particular style. The
least favourable attitudes were found amongst subordinates who were unable to perceive any
consistent style of leadership in their superiors.
A C T I V I T Y 2 2 0 m i n u t e s
Suggest an appropriate style of management for each of the following situations. Think about your
reasons for choosing each style in terms of the results you are trying to achieve, the need to secure
commitment from others, and potential difficulties with both.
(a) Due to external factors, the personnel budget has been reduced for your restaurant (one of a
franchise) and one-quarter of your staff must be made redundant. Records of each employee's
performance are available.
(b) There is a recurring administrative problem which is minor, but irritating to everyone in the hotel
in which you work. Several solutions have been tried in the past, but without success. You think
you have a remedy, which will work, but unknown problems may arise, depending on the
decisions made.
(c) A decision needs to be made about working hours. The organisation wishes to stagger arrival and
departure times in order to relieve traffic congestion. Each department can make its own
decisions. It doesn't really matter what the times are, so long as department members conform
to them.
53
INTRODUCTION TO BUSINESS OPERATIONS
(d) Even though they are experienced, members in your department don't seem to want to take on
responsibility. Their attitude seems to be: 'You are paid to manage, we are paid to work: you
make the decisions.' Now a decision has come up which will personally affect every person in
your department.
The total situation dictates the relative priority that must be given to each of the three sets of
needs.
Figure 3.2 below shows the overlap of the task, group and individual needs, and indicates some measure
of interrelation between these factors.
2 Group needs – until the task is completed the group has to be held together; the leader must
maintain team spirit and build morale.
3 Individual needs – each member of a group or team has individual needs and the leader should
try to ascertain these needs and work towards satisfying them as far as is possible within the
group's needs.
Adair's model of leadership is more a question of appropriate behaviour than of personality or of being in
the right place at the right time. His model stresses that effective leadership lies in what the leader does
to meet the needs of task, group and individuals. This takes the model nearer the contingency
approaches of modern theorists, whose concern is with a variety of factors - task, people and situation -
all having a bearing on leadership and leadership styles.
A C T I V I T Y 3 1 0 m i n u t e s
While it is still fresh in your mind, draw a diagram of Adair's action-centred leadership model .
54
3: ORGANISATION AND LEADERSHIP SKILLS
3 Contingency theories
Contingency theory of leadership is based on the view that the most effective leadership style in a given
situation will depend on the situation. In other words, the most effective leadership style is 'contingent
upon' the circumstances of the situation.
1 Leader/member relations – based on the leader's view of the favourableness or not of his
work group.
2 Task structure – the extent to which the leader is able to define and control the group's
activities.
3 Leader position power – the degree of formal authority/responsibility allocated to the position.
In terms of leadership style, Fiedler intimates that the leader can be high on only one aspect at a time –
either people-oriented or task-oriented – not both. These styles could be related to Blake's grid and
'concern for the task' and 'concern for people'.
Fiedler was one of the first management theorists who argued that the effectiveness of leadership style
depends on the circumstances.
He went on to argue that individual leaders are task-oriented or relationship-oriented by nature, and it
is impossible to change them. An organisation should therefore assess whether a work situation is
favourable, unfavourable or in between, and try to appoint a leader with the more appropriate style for
the work situation.
4 The environment – the position of power the leader has in the organisation and the relationship
with the group.
A 'best fit' approach maintains that there is no such thing as a 'right' style of leadership but that effective
leadership will result from balancing the requirements of leader, subordinates and task and ensuring they
fit the environment.
From the first three of these factors, Handy creates a spectrum ranging from 'tight' to 'flexible'.
Handy's 'best fit' occurs where all three factors are at the same point in the spectrum. Almost inevitably
there will be a misfit, and change (often slow) will be necessary. A democratic manager, who inherits a
department full of low-calibre staff used to an autocrat, has a major educational task to perform quickly
in order to survive.
Handy's fourth factor is the environment. This is defined in terms of power, organisational norms, the
structure and technology of the organisation, and the variety of the tasks and subordinates.
55
INTRODUCTION TO BUSINESS OPERATIONS
Tight Flexible
The leader Preference for autocratic style. Preference for democratic
Arrogant and contemptuous of style.
subordinates. Confident in subordinates.
Dislikes uncertainty. Dislikes stress.
Accepts reasonable risk and
uncertainty.
The subordinates Low opinion of own abilities. High opinion of own abilities.
Do not like uncertainty in their work Like challenging, important
and like to be ordered. work.
Regard their work as trivial. Prepared to accept uncertainty
Past experience in work leads to and longer timescales for
acceptance of orders. results.
Cultural factors lean them towards Cultural factors favour
autocratic/dictatorial leaders. independence.
The task Job requires no initiative, is routine Important tasks with a longer
and repetitive or has a certain timescale.
outcome. Problem-solving or decision-
Short timescale for completion. making involved.
Trivial tasks. Complex work.
Figure 3.3: Handy's 'best fit' spectrum
Essentially, the environment can be improved if:
Labour turnover is reduced, especially by keeping managers in their jobs for a reasonable period
of time.
4 Motivating staff
4.1 Why is motivation important?
You may be wondering whether motivation is really so important. It could be argued that if a person is
employed to do a job, he will do that job and no question of motivation arises. If the person doesn't
want to do the work, he can resign. So why try to motivate people?
Like 'leadership' as opposed to 'management', motivation is about getting extra levels of commitment
and performance from employees, over and above mere compliance with rules and procedures.
It is suggested that if individuals can be motivated, by one means or another, they will work more
efficiently (and productivity will rise) or they will produce a better quality of work. There is on-going
debate about exactly what motivation strategies can aim to achieve in the way of productivity, quality
and other business benefits, but it has become widely accepted that committed employees add value to
the organisation. This is particularly true in environments such as hospitality and tourism where initiative
and flexibility are required of employees in order to satisfy customer demands and keep pace with
environmental changes.
Job satisfaction is an even more ambiguous concept, although (as we will see) it is associated with
motivation.
Job satisfaction is difficult to define: it means different things to different people, and over time –
according to the individual's changing needs, goals and expectations.
56
3: ORGANISATION AND LEADERSHIP SKILLS
On the other hand, low morale, dissatisfaction or demotivation can cause direct and indirect performance
problems, through effects such as:
Restricted output quantity and/or quality (through lack of commitment or deliberate sabotage).
The human relations writers that followed, however, demonstrated that people go to work to satisfy a
range of different needs, and not simply for monetary reward. They emphasised the importance of the
social needs of individuals, and gave recognition to the work organisation as a social organisation.
Content theories ask the question: 'What are the things that motivate people?' They assume
that human beings have a set of needs or desired outcomes. Maslow's hierarchy theory and
Herzberg's two-factor theory, both discussed below, are two of the most important approaches of
this type.
Process theories ask the question: 'How can people be motivated?' They explore the process
through which outcomes become desirable and are pursued by individuals. This approach
assumes that people are able to select their goals and choose the paths towards them, by a
conscious or unconscious process of calculation. Expectancy, equity, goal and attribution are
theories of this type. We will use Vroom's expectancy theory to illustrate a process theory.
57
INTRODUCTION TO BUSINESS OPERATIONS
Basic or physiological needs – The things needed to stay alive: food, shelter and clothing. Such
needs can be satisfied by money.
Safety or security needs – People want protection against unemployment, the consequences of
sickness and retirement as well as being safeguarded against unfair treatment. These needs can be
satisfied by the rules of employment, ie pension scheme, sick fund, employment legislation etc.
Social needs – The vast majority of people want to be part of a group and it is only through group
activity that this need can be satisfied. Thus the way that work is organised, enabling people to feel part
of a group, is fundamental to satisfaction of this need.
Ego needs – These needs may be expressed as wanting the esteem of other people and thinking well of
oneself. While status and promotion can offer short-term satisfaction, building up the job itself and giving
people a greater say in how their work is organised gives satisfaction of a more permanent nature. An
example might be being asked to lead groups on a course.
Self-fulfilment needs – This is quite simply the need to achieve something worthwhile in life. It is a
need that is satisfied only by continuing success, for example opening and running a new office.
Maslow suggests that each level of need is dominant until satisfied; only then does the next level of
need become a motivating factor and a need which has been satisfied no longer motivates an individual's
behaviour. His theory underlines the relative importance of money. Status gives little satisfaction to a
person desperate for food and shelter. Equally it demonstrates that money alone is not enough, and
indeed as basic and safety needs become satisfied people are likely to concentrate their attentions on
social and ego needs.
A C T I V I T Y 4 2 0 m i n u t e s
Decide which of Maslow's categories the following fit into.
Motivator factors are based on a need for personal growth. They actively create job satisfaction and
are effective in motivating an individual to superior performance and effort. These factors are:
As distinctly separate factors are associated with job satisfaction and job dissatisfaction, Herzberg
concluded that the two feelings are not the opposite of one another, but that they are concerned with
two different ranges of an individual's needs.
58
3: ORGANISATION AND LEADERSHIP SKILLS
Hygiene factors are purely preventative: if the organisation provides them it will prevent the workers
from being dissatisfied with their job, but they will not motivate positively. To help them to do creative,
satisfying, responsible work the organisation must provide motivators.
A C T I V I T Y 5 1 5 m i n u t e s
List the hierarchy of needs and hygiene/motivation factors. What parallels can you draw between the two
approaches?
The worker believes hard work will actually lead to the bonus being paid; and
The bonus in question will be big enough to help satisfy his need for a high income.
A general conclusion of expectancy theory is that in any given situation the greater the number and
variety of rewards available to a worker, the greater is the probability that extra effort will be expended
in attaining targets set, in the hope or expectation of gaining the rewards desired.
There is of course the problem that this increased motivation or extra effort is only of use if properly
channelled. Of itself increased motivation does not necessarily lead to increased performance. (A
student, for example, who works very hard revising irrelevant material, or works at the wrong syllabus,
may perform poorly in an examination.) It is clear that what motivates worker A may not motivate other
workers, B, C, D etc. If they all work in the same team, a whole range of different motivations/ rewards
should be available to suit each of them - which could be difficult, or even impossible.
Whatever rewards are offered for effort expended/performance achieved, workers will always be
tempted to compare such rewards with those offered elsewhere - inside or outside the organisation. This
notion of fairness or 'equity' could result in a reward which management might feel is good - even
generous - being perceived as poor or mean in comparison with another reward for the same job offered
in the offices down the road.
The recommendations to management that accompany this model are outlined as follows.
Discover what outcome each employee values most.
Define for employees the kinds of performance that are desired or required, ie explain what
constitutes a 'goal' and an 'adequate performance'.
59
INTRODUCTION TO BUSINESS OPERATIONS
There is a view that management must get the 'basics right' first: they must offer a fair pay structure for
staff and fair employment policies – to meet the physiological needs and security needs of their
employees (Maslow) or to prevent dissatisfaction from employees (Herzberg).
Some theorists argue in favour of a participative style of management and getting employees involved in
problem-solving and decision-making. They suggest that this management style gets more out of
employees, and this improves the performance of the organisation.
Herzberg argued that management should take some measures to prevent dissatisfaction, but that a
completely different approach is also needed in order to create motivation. He believed that job
enrichment was a key to better motivation.
One of the factors affecting the strength of motivation is the belief that the individual's efforts will lead to
better performance. Managers should therefore try to increase the strength of this expectancy. Vroom
argued that managers should give encouragement and advice to their employees, give them the
resources they need to accomplish their tasks and, where necessary, give them suitable training.
The ability of managers to motivate their employees may also be affected by the differing needs of
different employees. Whereas some content theorists (Herzberg) argued that all individuals were
motivated by the same needs, there are differing views that different people have different needs and
that these needs can change over time (for example, Maslow).
It seems clear, however, that managers can influence the motivation of their employees but they must
try to understand what the needs of their employees are, and what rewards – intrinsic as well as
extrinsic – will help to satisfy those needs.
An incentive is the offer or promise of a reward for contribution or success, designed to motivate the
individual or team to behave in such a way as to earn it.
Not all the incentives that an organisation can offer its employees are directly related to monetary
rewards. The satisfaction of any of the employee's wants or needs may be seen as a reward for past or
incentive for future performance.
Extrinsic rewards are separate from (or external to) the job itself, and dependent on the decisions of
others. Pay, benefits, cash and non-cash incentives and working conditions are examples of extrinsic
rewards.
60
3: ORGANISATION AND LEADERSHIP SKILLS
Intrinsic rewards are those which arise from the performance of the work itself. They are therefore
psychological rather than material and relate to the concept of job satisfaction. Intrinsic rewards include
the satisfaction that comes from completing a piece of work, the status that certain jobs convey, and the
feeling of achievement that comes from doing a difficult job well.
The reward system refers to the system of 'extrinsic' rewards that an organisation can give to its
employees. The most significant extrinsic rewards are usually:
Pay (remuneration)
Promotion or advancement
Elements of pay include basic pay, bonuses, commissions, premium pay for working overtime, pension
rights etc.
Performance-related pay may be cash bonuses related to meeting short-term targets or incentives for
the achievement of longer-term goals: long-term incentives are often paid to senior managers, often in
the form of company shares or share options.
If companies use a system of performance-related pay, they presumably believe that the pay incentives
are successful in motivating employees. It is not certain, however, whether offering pay incentives will
increase the motivation of employees. (It is also not certain that extra motivation will lead to better
performance.)
According to some theorists, pay rewards might be seen as a measure of recognition and goal
accomplishment by high achievers. Rewards in the form of higher pay or bonuses may therefore be an
important motivator.
It may also be argued that getting paid more for better performance (for example receiving a cash
bonus) is important for many individuals, because the money can be used to fulfil some important needs.
Process theories of motivation often place strong emphasis on financial rewards, because money can be
used to buy satisfaction of many needs.
There is also a view that group reward systems are able to improve the collective motivation of teams.
Job design is the incorporation of the tasks the organisation needs to be done into a job for one
person.
There are five core job dimensions that are thought to contribute to job satisfaction:
1 Skill variety – or the extent to which a job involves the use of several different skills and talents;
2 Task identity – or the extent to which a job involves completing an entire piece of work from
beginning to end;
3 Task significance – the task is perceived to have a role, purpose, meaning and value, or the
degree of impact the job is believed to have on other people;
4 Autonomy – the opportunity to exercise discretion or self-management (in areas such as target
setting and work methods) – or the extent to which the worker feels freedom and discretion to
act in different ways in relation to the job;
5 Feedback – the extent to which workers are provided with information on the results of their
work.
61
INTRODUCTION TO BUSINESS OPERATIONS
Frederick Herzberg suggested three ways of improving job design to make jobs more interesting to the
employee, and hopefully to improve performance: job enrichment, job enlargement and job rotation.
Job enrichment – is planned, deliberate action to build greater responsibility, breadth and challenge of
work into a job. Job enrichment is similar to empowerment. Job enrichment represents a 'vertical'
extension of the job into greater levels of responsibility, challenge and autonomy. A job may be enriched
by:
Job enlargement is the attempt to widen jobs by increasing the number of operations in which a
jobholder is involved. It is a 'horizontal' extension of the job by increasing task variety and reducing task
repetition.
Tasks that span a larger part of the total production work should reduce boredom and add to task
meaning, significance and variety.
Enlarged jobs might be regarded as having higher status within the department, perhaps as
stepping-stones towards promotion.
Job enlargement is, however, limited in its intrinsic rewards, as asking a worker to complete three
separate tedious, unchallenging tasks is unlikely to be more motivating than asking him to perform just
one tedious, unchallenging task.
Job rotation – is the planned transfer of staff from one job to another to increase task variety. It is a
'sequential' extension of the job. It is also sometimes seen as a form of training, where individuals gain
wider experience by rotating as trainees in different positions.
It is generally admitted that the developmental value of job rotation is limited – but it can reduce the
monotony of repetitive work.
Individuals need to know how they are performing, and whether they are on course for achieving their
goals.
If they are not on target for achieving their goals, they need to be given advice and guidance from their
boss.
The process of providing information to individuals about their performance is an example of feedback.
Feedback should be constructive and helpful, rather than critical, to maintain the motivation of the
individual. If individuals are criticised in a negative way for failing to reach their goals, their motivation
will disappear.
A C T I V I T Y 6 5 m i n u t e s
The general secretary of the staff union at Sun Alliance has been quoted as saying: 'I have worked for a
firm which rewarded its top salespeople with a cruise. I can't imagine anything worse than being trapped
on a yacht with a lot of other life assurance salesmen'!
What other demotivating effects may result from non-cash incentive schemes?
62
3: ORGANISATION AND LEADERSHIP SKILLS
Teambuilding involves:
Giving a group of people a greater sense of their identity as a team; this is sometimes called
'esprit de corps' or 'team spirit'.
Encouraging group loyalty or solidarity, so that members put in extra effort for the sake of the
group.
Encouraging the group to commit themselves to shared work objectives, and to co-operate
willingly to achieve them.
A C T I V I T Y 7 2 0 m i n u t e s
Why might the following be effective as team-building exercises?
(a) Sending a project team (involved in the design of electronic systems for racing cars) on a
recreational day out 'karting'.
(b) Sending a project team on an 'Outward Bound' style course, walking in the mountains from A to
B, through various obstacles (rivers to cross and so on).
(c) Sending two sales teams on a day out playing 'War Games', each being an opposing combat
team trying to capture the other's flag, armed with paint guns.
(d) Sending a project team on a conference at a venue away from work, with a brief to review the
past year and come up with a 'vision' for the next year.
These are actually commonly-used techniques. If you are interested, you might locate an activity centre
or company near you which offers outdoor pursuits, war games or corporate entertainment and ask them
about team-building exercises and the effect they have on people.
Allowing teams time to develop. Groups take time to develop into teams; indeed, according
to Tuckman there is a four-stage process involved:
1. Forming - members are unsure of their roles and responsibilities until the manager clearly
defines the initial processes and procedures for team activities, including documentation,
communication channels and the general project procedures.
2. Storming - as tasks get underway, team members may try to test the manager's
authority, preconceptions are challenged, and conflict and tension may become evident.
3. Norming - this stage establishes the norms under which the team will operate and team
relationships become settled. Members will be operating as a cohesive team - each
recognising and appreciating the roles of the other team members.
4. Performing - the team is capable of operating to full potential. Progress is made towards
the project objectives and the team feels confident and empowered.
This implies the need for high levels of interaction to be encouraged between members, and for
the clarification of objectives.
Team typing. According to Belbin: 'what is required in teams is not well balanced individuals, but
individuals who balance one another'. Thus, in selecting team members, care has to be taken to
63
INTRODUCTION TO BUSINESS OPERATIONS
choose individuals whose skills (conceptual, interpersonal, technical) and whose personality
characteristics complement and balance one another.
Team building. A range of techniques can be employed, including group dynamics exercises,
outward bound courses, and the use of formal processes which evaluate the performance of
teams and team members as a basis for feedback and for improvement.
Team leadership. To quote Adair, 'Great teams require great and leaders.' The role of team
leadership has been analysed and emphasised by Blake and Mouton ('9, 9' or 'team management'
which integrates concern for people with concern for production) and Adair who emphasises the
need to integrate individual, group, and task needs.
Team culture. In the longer-term, staffing policies and decisions, particularly recruitment,
selection, training, development, appraisal and reward are of key importance.
Specialist skills and knowledge may be required, from different areas in the organisation (or
outside it).
Experience may be helpful, especially if other team members are relatively inexperienced, and are
therefore less likely to anticipate and know how to handle problems.
Competence in the tasks likely to be required of the team member will be desirable, whatever
other resources the member brings to the team.
In addition, both task performance and team maintenance (keeping the group together and satisfied) will
require a mix of personalities and interpersonal skills.
Belbin developed a picture of the character-mix in a team, which many people find a useful guide to
team selection and management. Belbin suggests that an effective team is made up of people who fill,
between them, the following eight roles.
1 The co-ordinator – presides and co-ordinates; balanced, disciplined, good at working through
others.
2 The shaper – highly strung, dominant, extrovert, passionate about the task itself, a spur to
action.
3 The plant – introverted, but intellectually dominant and imaginative; source of ideas and
proposals but with disadvantages of introversion (unsociability, inhibition, need for control).
4 The monitor-evaluator – analytically (rather than creatively) intelligent; dissects ideas, spots
flaws; possibly aloof, tactless – but necessary.
5 The resource-investigator – popular, sociable, extrovert, relaxed; source of new contacts, but
not an originator; needs to be made use of.
6 The implementer – practical organiser, turning ideas into tasks, scheduling, planning and so on;
trustworthy and efficient, but not excited; not a leader, but an administrator.
7 The team worker – most concerned with team maintenance; supportive, understanding,
diplomatic; popular but uncompetitive; contribution noticed only in absence.
8 The finisher – chivvies the team to meet deadlines, attend to details; urgency and follow-
through important, though not always popular.
64
3: ORGANISATION AND LEADERSHIP SKILLS
Belbin has also identified a ninth team-role, the specialist, who joins the group to offer expert advice
when needed. Examples are legal advisers, PR consultants, and finance specialists.
Clearly setting out the team's objectives, and their place in the activity of the organisation as a
whole.
Involving the team in setting specific targets and standards, and agreeing methods of organising
work, in order to reach the objectives.
Providing the right information, resources, training and environment for the team to achieve its
targets – involving the team in deciding what its requirements are.
Giving regular, clear feedback on progress and results – including constructive criticism – so the
team can celebrate what they have achieved, and be spurred on by what they have not yet
achieved.
Encouraging feedback, suggestions and ideas from the team, and doing something about them:
helping team members believe that they can make an impact on their work and results, and that
that impact is appreciated by the organisation.
Visibly 'championing' the team in the organisation, fighting (if necessary) for the resources it
needs and the recognition it deserves.
7 Managing work
7.1 The manager's work organisation role
Organising work means:
Deciding what has to be done, by whom and when and at what cost.
Allocating tasks to members of staff - making sure all jobs are allocated in accordance with the
overall plan, with your own plan and with forced, last minute changes being taken into account
eg, absenteeism etc.
Providing for stand-by procedures to cope with unexpected workloads and priorities.
Ordering materials required for the provision of the service your department performs.
Ordering equipment - large expensive items will probably need authorisation at a higher level, but
spares, components etc will be your responsibility.
Because organising means allocating and delegating tasks, as well as supervising a group, it requires
effective communication skills. Communication may be intended to establish and disseminate the
65
INTRODUCTION TO BUSINESS OPERATIONS
objectives of the organisation, to develop plans, to monitor and control the performance of your
subordinates, to obtain essential information or for many other purposes.
Time management is fundamental to job performance and effective delegation. It implies planning the
best use of time, including cutting down on time wasting, devoting more time to the really important
issues and completing more in the time available.
Time is a unique resource – you cannot hire, rent or buy more time. The supply is totally irreplaceable
and everything requires time.
Costing your time helps to understand how important it is to use it well and conserving time means:
Because time is a valuable human resource – a sort of capital – it should be spent and used in the most
effective way. The essentials of good time management include:
Clear objectives;
Careful forward planning;
The definition of priorities and action;
The ability to delegate successfully.
Establish key tasks – the six most important tasks you do.
Set your objectives – the achievements you are trying to attain in the key post.
Identify performance standards – the quantifiable measure of the objectives.
Identify constraints – things standing in the way of your objectives.
Decide on action plans – ways of removing the constraints.
There are three questions that managers should ask of each of their activities:
1 Should it be done?
2 If so, when should it be done?
3 Should it be delegated?
Time management can be improved by personal planning, developing appropriate skills (faster reading,
report writing, handling meetings and assertiveness skills), target setting, negotiating and delegating.
Another way of managing time is by identifying significant job elements (SJE's). This is done by
examining the job description and selecting from it three or four key activities or SJE's, and listing the
tasks and duties for each one. For a manager these could be:
Organising staff;
Maintaining a constant flow of materials to a given point;
Recording and storing information;
Developing and maintaining a safe and healthy environment.
The time spent each month to complete the tasks and duties under each SJE is then calculated and a
labour cost attached. Once these figures are reviewed a decision can be taken on whether to increase or
decrease the time spent based upon the costs incurred.
66
3: ORGANISATION AND LEADERSHIP SKILLS
Some writers on time management have suggested that an urgent and important matrix might help
individuals to plan and prioritise their time more effectively. Tasks can be put into one quadrant of a 2 ×
2 matrix, indicating their urgency and importance.
One side of an urgent and important matrix represents the urgency of an item of work – urgent or not
urgent. The other side of the matrix indicates the importance of the work – important or not important.
Tasks that are important and urgent must take priority. They are often unexpected tasks arising
from an unforeseen event, calling for a 'fire-fighting' response.
Time spent on tasks that are not urgent and not important is time wasted.
Time must be planned for doing work that is important but not urgent. Unless time is planned and
allocated to this work, it will eventually become urgent as well as important.
Tasks that are urgent but not important include dealing with unexpected telephone calls where an
immediate response is unavoidable, or responding to some e-mails. Time spent on this work
should be controlled and this work should not be allowed to take up too much time.
67
INTRODUCTION TO BUSINESS OPERATIONS
If it is important.
There may be a clash of priorities between two urgent tasks, in which case relative consequences
should be considered: if an important decision or action rests on a task (for example, a report for
senior management, or correction of an error in a large customer order) then that task should
take precedence over, say, the preparation of notes for a meeting, or processing a smaller order.
They can be planned ahead of time, and other tasks postponed or redistributed around them.
Non-routine priorities occur when unexpected demands are made: events crop up, perhaps at short
notice, or errors are discovered and require corrective action. If these are also important (as well as
sudden) they should be regarded as high priority.
Just because a task is urgent (that is, its deadline is close), it does not necessarily mean it is high
priority. A task may be urgent but unimportant, compared to a task which has a more distant deadline.
On the other hand, you should treat all important tasks as if they were urgent.
In other words, you need to be aware of changing priorities. You need to:
Immediately prioritise each new task in relation to your existing list of tasks: it may not belong at
the bottom of your 'to do' list but at the top!
This may simply involve changing the order of your 'to do' list in order to tackle new priorities
before lesser ones.
If your schedule is 'tight', however, there may be less room to manoeuvre. You may find that if
you tackle the new high-priority task first, you will have difficulties completing a lesser-priority
(but potentially still important) task by your target or deadline. In this case you may need to:
– Notify your supervisor, and any other people affected, of potential difficulties in meeting
previously-arranged commitments.
Again, this may simply involve re-allocating your own time (or that of others under your
authority), machine hours or services to the new priority. Again, however, this may have to be
authorised and/or negotiated with your supervisor and others affected by the change.
A C T I V I T Y 8 2 0 m i n u t e s
Devise a mnemonic, using the letters 'P-R-I-O-R-I-T-Y', that will help you remember when a piece of
work is high priority.
68
3: ORGANISATION AND LEADERSHIP SKILLS
The basis of delegation, Figure 3.7, is illustrated below showing how the subordinate is responsible to
the manager for doing the job, the manager is responsible for seeing that the job gets done and the
manager is accountable to the superior for the actions of subordinates.
The workload of the manager is reduced allowing more time to concentrate on strategic duties.
Allowing subordinates to perform work of a higher grade can aid their development.
Management can see how subordinates tackle work of a higher grade, and how they cope with
extra authority.
Subordinates are motivated by giving them new experiences and opportunities to develop and
show their potential.
Job satisfaction for subordinates. By ensuring that the mix of delegation is appropriate, some of
the interesting jobs will be delegated and not only the tedium. By increasing employees'
enjoyment in their jobs, employers can encourage better work.
Training by doing.
Management succession.
Performance evaluation.
Relief of stress.
Job satisfaction – by ensuring that the mix of delegation is appropriate, some of the interesting
jobs will be delegated and not only the tedium.
69
INTRODUCTION TO BUSINESS OPERATIONS
Managers may not feel able to trust subordinates or may fear that a subordinate will do the
delegated work better.
A manager can set unrealistic standards of performance, look for a quality of work or a
completion time that no-one could possibly achieve.
The subordinate may lack self–confidence and have a fear of taking decisions or fear of
retribution inflicted by the boss.
Delegation is not an easy task. It involves behavioural as well as organisational and economic
considerations and is subject to a number of abuses. Where managers lack the skill of delegating there
are two extreme forms of behaviour that can result:
Subordinate staff are only permitted to operate within closely defined and often routine areas of
work, with detailed supervision. Staff are given little or no opportunity to exercise initiative or
responsibility.
The manager can leave subordinates to their own resources, often with only minimal guidance
and training and expect them to take the consequences of their actions or decisions. Such a form
of behaviour is not delegation – it is an abdication of the manager's responsibility.
A C T I V I T Y 9 5 m i n u t e s
In which example below does the assistant have the authority and ability to delegate to the operatives?
Managers and supervisors divide duties and allocate them to available staff and machinery. Here are all
the considerations.
General tasks. Some tasks (eg filing, photocopying) may not have the attention of a dedicated
employee. Who will do the work, and will it interfere with their other duties?
Peak periods in some tasks may necessitate re-distribution of staff to cope with the work load.
Status and staff attitudes must be considered. Flexibility in reassigning people from one job to
another or varying the work they do may be hampered by an employee's perception of his or her
own status.
Planning should allow for flexibility in the event of an employee proving unfit for a task, or more
able than his present tasks indicate.
Efforts will have to be co-ordinated so that all those involved in a process (eg sales orders) work
together as a team or a number of groups.
70
3: ORGANISATION AND LEADERSHIP SKILLS
Once the work has been allocated the team member must be clear what is required. Unfortunately, some
managers are not always clear on the work to be done and the person that is responsible. This causes
uncertainty in the team and can result in some activities running late.
When assigning work to team members, they must be clear about the following:
Start date and estimated end date. The manager needs to be clear on when the activity can start
and when the activity is due.
Estimated costs (optional). If the team member needs to manage the cost associated with an
activity, he or she needs to know the estimated costs.
Deliverable. The team member needs to understand the deliverable or work component (a portion
of a larger deliverable) that they are expected to complete. If there are quality criteria to meet,
the team member should know these quality requirements as well.
Dependencies - their relationship with other activities - ones that are waiting on them or ones that
must be complete before theirs can start.
Other resources. If multiple people are working on the same activity, they must all understand
who their team members are and they need to know who has overall responsibility for the
activity.
8 Meetings
8.1 Classification
A meeting is a group of people coming together for the purpose of resolving problems or making
decisions.
Meetings can be held for a wide range of purposes, but it is important that the purpose of the meeting is
made clear to the participants in advance. If this is done, the meeting is more likely to be a success.
A well-organised, well-aimed and well-led meeting can be extremely effective in many different contexts.
A meeting may be responsible for taking a final decision on an issue of great importance.
71
INTRODUCTION TO BUSINESS OPERATIONS
Rigid procedures - planned and structured meetings Some discussions held informally may 'qualify'
that include Board meetings, committees, Annual as a meeting – there are no hard and fast
General Meetings (AGMs), team meetings, rules as to what constitutes an informal
appraisals and interviews. meeting.
Notice - the invitation or announcement of the Advance notice of meeting, if given at all,
meeting is prepared and circulated in advance. may only be verbal.
Chairperson guides the proceedings and aims to Has discussion leader instead of a
maintain order. chairperson.
Formal documentation for the announcement, Reference rarely made to rules, conventions
planning, conduct and recording of the proceedings. or documentation.
Project team members should meet regularly to maintain and improve team relationships and to ensure
project objectives, progress and current priorities are communicated and understood.
Project design review meetings - will be called frequently where a project involves a design
element.
Project problem-solving meetings - are called whenever a problem occurs within a project.
Project status review meetings - are called regularly to inform others about the project status to
date. They will identify any issues or problems associated with the scope, time or cost of the
project.
Post project evaluation meetings - all the team members will attend this meeting at the end of a
project.
The outcome of this meeting will be a report sent to senior management by the project manager. It will
summarise the project performance and advise on improvements for future reference.
Be adequately prepared - know the objective of the meeting, have as many facts available as
possible and if necessary, see people beforehand to review with them the particular contribution
that they are to make.
Make clear what is being discussed and work through the agenda items in turn.
Steer the discussion, adding questions and making points where others are reluctant to intervene.
72
3: ORGANISATION AND LEADERSHIP SKILLS
Summarise the discussion at intervals - this is useful because it reminds members of what has
been said or agreed upon already.
Get as much agreement on each topic - it is a poor chairperson that lets a discussion wander on
without coming to a definite conclusion.
73
INTRODUCTION TO BUSINESS OPERATIONS
SUMMARY
74
3: ORGANISATION AND LEADERSHIP SKILLS
SELF-TEST QUESTIONS
3 The continuum style of leadership ends with the laissez-faire approach. How does the manager treat
employees using this style?
10 Give two examples of non-cash incentives and two examples of monetary incentives.
15 Suggest five ways in which a manager can get a team 'behind' task objectives.
75
INTRODUCTION TO BUSINESS OPERATIONS
SELF-TEST ANSWERS
2 Often they find it hard to delegate, to bring on successors, to stand down at the right moment, to switch
off and go home, and to appreciate the views of others.
3 The manager allows employees to act in whichever way they wish, within specified limits (the 'abdicates'
approach).
4 'Sells' – the manager still makes all decisions but explains them to subordinates to get them to carry
them out willingly. 'Consults' – the manager confers with subordinates, takes their views and feelings
into account, but retains the right to make the final decision.
8 A reward is given for some contribution or success. An incentive is a promise or offer of reward.
9 Job enrichment is planned, deliberate action to build greater responsibility, breadth and challenge of
work into a job. Job enlargement is the widening of a job by increasing the number of things an
employee does.
10 Non-cash incentives include gifts, awards, travel. Cash incentives include bonuses, results related
rewards, profit sharing.
11 Workers are not in control of results, individual bonuses can encourage self-interest, payment by results
emphasises output rather than quality.
13 Skills, knowledge, experience, political power in the organisation, access to resources, competence.
15 Set clear objectives, get the team to set targets/standards, provide information and resources, give
feedback, praise and reward, and champion the team in the organisation.
Checklists;
Scheduling;
Work programmes;
Action sheets;
Planning charts and boards.
17 Specify performance levels; formally assign task; allocate resources and authority; back off; give
feedback.
76
3: ORGANISATION AND LEADERSHIP SKILLS
ANSWERS TO ACTIVITIES
1 You may have come up with excitement, enthusiasm, excellence, endeavour, expenditure, efficiency,
effectiveness – and so on, as 'E' words expressing what managers like to see in their staff.
2 Styles of management suggested in the situations described, using the tells-sells-consults-joins model.
(a) You may have to 'tell' here: nobody is going to like the idea and, since each person will have his
or her own interests at heart, you are unlikely to reach consensus. You could attempt to 'sell', if
you can see a positive side to the change in particular cases: opportunities for retraining, say.
(b) You could 'consult' here: explain your remedy to staff and see whether they can suggest potential
problems. They may be in a position to offer solutions – and since the problem affects them too,
they should be committed to solving it.
(c) We prefer a 'joins' style here, since the team's acceptance of the decision is more important than
the details of the decision itself.
(d) We would go for 'consult' despite the staff's apparent reluctance to participate. They may prefer
you to 'tell' – but may resist decisions they disagree with anyway. Perhaps their reluctance is to
do with lack of confidence – or lack of trust that you will take their input seriously, in which case,
persistent use of a 'consults' style may encourage them. You could use a 'sells' approach initially,
to get them used to a less authoritarian style than they seem to expect.
3
77
INTRODUCTION TO BUSINESS OPERATIONS
There is a clear relationship between Herzberg's 'Hygiene Factor' and the lower levels of Maslow's
'Hierarchy of Needs'. Likewise there is a close correlation between the motivating factors and Maslow's
higher needs.
6 Non-cash incentive schemes can be regarded as manipulative, irrelevant (awards may be seen as being
given for things that ought to be part of the job, with no special effort required), or just plain gimmicky.
7 (a) Recreation helps the team to build informal relationships: in this case, the chosen activity also
reminds them of their task, and may make them feel special, as part of the motor racing industry,
by giving them a taste of what the end-user of their product does.
(b) A team challenge pushes the group to consider its strengths and weaknesses, to find its natural
leader, to co-operate and help each other in overcoming obstacles.
(c) This exercise creates an 'us' and 'them' challenge: perceiving the rival team as the enemy
heightens the solidarity of the group.
(d) This exercise encourages the group to raise problems and conflicts freely, away from the normal
environment of work, and also encourages brainstorming and the expression of team members'
dreams for what the team can achieve in future.
8 Note: Just our suggestion: The devising of the mnemonic was the point of the exercise.
Priority?
Relative consequences
Importance
Immediacy (urgency)
Yes or no!
9 In Example A, because the flow of authority is shown as passing down from the Front of House
manager to the assistant manager and then on to the receptionists. In Example B the Front of House
manager can delegate to the assistant manager and to the receptionists, but the assistant manager is
not shown as having any authority over the receptionists.
78
CHAPTER 4
Chapter objectives
In this chapter you will learn
The recruitment process
Job analysis
Methods of recruitment
The selection process
Interviewing and candidate selection
Organisation and departmental induction
Disciplinary procedure
Personnel data protection
Topic list
The recruitment process
Job analysis
Job description and person specification
Internal and external recruitment processes
The selection process
Interviews
Tests
Induction
Disciplinary procedures
Personnel data protection
79
INTRODUCTION TO BUSINESS OPERATIONS
Recruitment and selection are part of the same process and some people often refer to both as the
recruitment process. This is not entirely accurate; the process of recruitment as distinct from selection
involves the attraction of a field of suitable candidates for the job. Once this has been achieved, the
selection processes begin; these are aimed at selecting the best person for the job from that field of
candidates.
Recruitment is the process of selecting a supply of possible candidates for positions within an
enterprise.
Selection is the choosing from a number of candidates the one most suitable for a specified position.
A general outline of the recruitment and selection process is shown below in Figure 4.1:
(a) Detailed human resource (HR) planning defines what resources the organisation needs to meet its
objectives.
(b) The sources of labour should be forecast. Internal and external sources, and media for reaching
both, will be considered.
80
4: RECRUITMENT, SELECTION, INDUCTION AND DISCIPLINARY PROCEDURES
(i) A job description: a statement of the component tasks, duties, objectives and standards.
(ii) A person specification: a reworking of the job specification in terms of the kind of person
needed to perform the job.
(d) Recruitment as such begins with the identification of vacancies, from the requirements of the HR
plan or by a job requisition from a department, branch or office that has a vacancy.
(e) Preparation and publication of advertising information will have three aims.
(ii) Give a favourable (but accurate) impression of the job and the organisation.
(iii) Equip those interested to make an attractive and relevant application (how and to whom
to apply, desired skills, qualifications and so on).
(f) Recruitment merges into selection at the stage of processing applications and short-listing
applicants for interview.
(g) Interviewing and selecting the best person for the job.
(h) Notifying applicants of the results of the selection process is the final stage of the combined
recruitment and selection process.
A C T I V I T Y 1 3 0 m i n u t e s
Draw a general outline of the recruitment and selection process indicating which stages belong to each
part of the process.
2 Job analysis
2.1 Preliminary to recruitment
Job analysis is the first step in the employee recruitment process. It involves obtaining the correct
information relating to the vacant job to allow an accurate job description and person specification to be
drawn up.
Job analysis can also be used when changes are planned to the content and responsibilities of jobs. A
useful starting point is to identify the current content and responsibilities of jobs, so that the changes
that are needed can be identified and made.
'the process of collecting, analysing and setting out information about the content of jobs in order to
provide the basis for a job description and data for recruitment, training, job evaluation and performance
management. Job analysis concentrates on what job holders are expected to do.' (Armstrong)
81
INTRODUCTION TO BUSINESS OPERATIONS
(Job worth)
There are three main ways of obtaining this information, and all three methods might be used for the
same job analysis. These methods are:
1 Observation - the analyst can observe the job-holder at work over a period of time, and record
what the job-holder does in that period.
2 Interviews - the analyst can ask questions about the job and what the job-holder does, by
interviewing the job-holder, and the job-holder's boss.
3 Questionnaires - the job analyst might use questionnaires or checklists when conducting
interviews, to make sure that all the important questions are asked and nothing is forgotten.
Questionnaires might also be used without interviews, to obtain information from large numbers
of job-holders. The job-holders can be asked to answer the questions in the questionnaire and
submit the completed questionnaire for analysis.
A systematic approach to job analysis might be carried out in four stages. These four stages apply where
the job is not currently vacant.
Stage 1. Collect all the available documentation about the job and its content. Analyse this
documentary evidence.
Stage 2. Interview the manager (or managers) in charge about the job, and what he or she considers
to be the nature of the job, its importance, and the tasks and responsibilities involved.
Stage 3. Interview the job-holder and ask the same questions about the job. Compare any differences
of perception between the manager and the job-holder.
82
4: RECRUITMENT, SELECTION, INDUCTION AND DISCIPLINARY PROCEDURES
The information gathered at all four stages of the process should then be analysed, and a job analysis
prepared.
Accountabilities These are the results for which you are responsible. In practice they might be
phrased in the same way as a description of a task.
Performance criteria These are the criteria which measure how good you are at the job.
Responsibility This denotes the importance of the job. For example, a person running a
department and taking decisions involving large amounts of money is more
responsible than someone who only does what he or she is told. Similarly,
someone might have a lot of discretion in determining what he or she will do or
how he or she spends the day, whereas other people's tasks might be
programmed in some detail according to a predictable routine.
Organisational factors Who does the job-holder report to directly (line manager) or on grounds of
functional authority?
Developmental factors Relating to the job, such as career prospects. Some jobs are 'dead-end' if they
lead nowhere.
Environmental factors Working conditions, security and safety issues, equipment etc.
A C T I V I T Y 2 2 0 m i n u t e s
What is the difference between recruitment and selection?
83
INTRODUCTION TO BUSINESS OPERATIONS
Recruitment It provides information for identifying the sort of person needed (person
specification).
Identification of the job – includes the job title, the department/organisation structure and the
number of people doing the job.
Position in the organisation – indicating the relationships with other jobs and the chains of
responsibility. For this purpose, many firms refer to existing organisational charts.
Duties – refers to the principal duties to be performed, with emphasis on key tasks and limits to the job-
holder's authority. Usually under this heading is included an indication of how the job differs from others
in the organisation.
Responsibilities – a statement outlining the responsibilities for the resources, eg staff, budgets and
machinery.
Physical conditions – including not only details of noisy, dirty, dangerous conditions or pleasant office
conditions, but also hours of work, overtime, unsocial hours, etc.
Social conditions – the type of group the employee will be concerned with.
Grade and salary/wage range and fringe benefits – details of the rates for the grade, increments,
piecework, bonuses and commission, plus fringe benefits such as luncheon vouchers, pension schemes,
company car.
Promotion prospects – to whom the job-holder reports and at what level, with possible indications
about future succession, prospects of promotion or transfer.
Key difficulties – no job description is complete without a full identification of the key difficulties likely
to be encountered by the job-holder.
Organisations can also use the job description to try to project a favourable image, both of the company
and of the job – stressing opportunities for personal growth and development, highlighting potential
challenges and indicating promotion possibilities.
The job description outlines the job: the person specification describes the person needed to do the job.
For example, a position of secretary or personal assistant normally requires the holder to have word
processing skills.
84
4: RECRUITMENT, SELECTION, INDUCTION AND DISCIPLINARY PROCEDURES
Physical attributes or disposition might include a person's demeanour. Eye contact is considered
a sign of honesty and frankness in some cultures, but a sign of disrespect in others.
General intelligence is not something that can be measured easily. A criticism of IQ tests is that
test scores tell you that you are good at doing IQ tests – and not much else.
The plan does not identify a person's potential, or suggest how it can be aligned precisely to the
organisation's requirements.
Motivation: What sort of goals does the individual set, how much effort goes into achieving
them, how successful.
Experience Interests
Personality - called 'adjustment' by Munro Fraser Personal circumstances - this is designed to take
and 'disposition' by Alec Rodger into account such personal factors as age and
health in addition to the broader based domestic
circumstances such as mobility, family and local ties
85
INTRODUCTION TO BUSINESS OPERATIONS
Essential. For instance, honesty in a cashier is essential while a special aptitude for conceptual
thought is not.
Desirable. For instance, a reasonably pleasant manner should ensure satisfactory standards in a
person dealing with the public.
A C T I V I T Y 3 5 m i n u t e s
The recruitment and selection process can be broken down into three main stages. Identify the three
from those listed below.
(a) Select the appropriate people for the job or the job for the people
(b) Attract potential employees
(c) Define requirements
(d) Look for mismatches between available supply and the skills demanded
(e) Maintain records of people employed
Advantages Disadvantages
Reduces the risk of employing the wrong person – Creates another vacancy
selection can be made on the basis of known data
86
4: RECRUITMENT, SELECTION, INDUCTION AND DISCIPLINARY PROCEDURES
Advantages Disadvantages
Will be familiar with the culture, structures, systems and Could be difficulties if promoting
procedures, objectives and other people in the someone to a job of supervising
organisation. This gives a head start for performance in ex-workmates.
the new position
Can act as a source of motivation and may be good for May create ill feeling among those
the general morale of the workforce (and avoid not selected
resentments)
Advantages Disadvantages
Wider pool of labour – may be necessary to restore Can be a long and expensive
manning levels, depleted by employee wastage and process and induction is still
internal promotion policies necessary
Can inject new blood into an enterprise. External recruits May block promotion for internal
bring new ideas and different approaches to the job, candidates
gleaned from their experience working in other
organisations
As we have already noted, internal promotion is the cheapest way to recruit, and can help to
motivate and keep existing employees. Training and development programmes can also prepare
employees for promotion.
Casual applications can be kept on file – sometimes applicants will write to the company on-
spec, saving the time and money involved in a full-scale recruitment campaign.
Adverts to attract candidates can be placed in appropriate publications eg, national newspapers,
specialist trade magazines or local newspapers.
87
INTRODUCTION TO BUSINESS OPERATIONS
The cheapest way to advertise is on a website. But this may be inefficient if a site does not
attract enough visitors.
Recruitment consultants – assist clients in selecting the best staff to fill particular vacancies.
They tend to specialise in separate market sectors such as clerical and secretarial, accounting or
computing.
Hiring temporary staff can be a good way to get to know employees before offering them
permanent positions.
The government employment services – the unemployed register presents firms with a
reservoir of potential employees categorised according to skill and preselected according to
suitability.
Building relationships with local schools, colleges and universities can attract promising
candidates for trainee positions.
Successful selection means matching the organisation's and the applicant's requirements through the
exchange of information.
The organisation provides applicants with an objective description of the company and the job, while the
applicants provide information about their capabilities.
A number of techniques can reveal this information. Selecting is choosing from among the applicants the
one that meets the position requirements. Methods of selection include the following:
Application forms
CVs and covering letters
Shortlists
Interviews
Tests
References
Medical examinations
Group selection methods
Situational tests
Assessment centres
The selection process starts with the sifting and sorting of paper details – the application forms and
submitted CVs. Once the shortlist is drawn up, the next stage is to determine the best methods of further
assessment. The selection interview is probably the most popular of these methods, although other
techniques – assessment centres, psychometric testing and ability testing – will all be considered.
88
4: RECRUITMENT, SELECTION, INDUCTION AND DISCIPLINARY PROCEDURES
They consist of a series of tests, interviews and group situations, involving a small number of candidates
for a job. After an introductory session to make the candidates feel at home, they will be given one or
two tests, one or two individual interviews, and several group situations in which the candidates are
invited to discuss problems together and arrive at solutions as a management team.
Group role-play exercises, in which they can explore (and hopefully display) interpersonal
skills and/or work through simulated managerial tasks.
Case studies, where candidates' analytical and problem-solving abilities are tested in working
through described situations/problems, as well as their interpersonal skills, in taking part in (or
leading) group discussion of the case study.
The individuals offered employment are not the best people available. After their appointment,
they might perform badly in their job, or might need training to bring them up to an acceptable
level of competence.
The capabilities of the organisation will be less than if better people had been selected.
Development of the business will be slower. Competitor organisations with high-quality employees
might perform much better.
The individuals given the jobs might be disappointed with the work, which does not live up to the
expectations they were given during their interview.
Because the individuals who are selected either perform badly or are disappointed with their job,
labour turnover might be high. If individuals leave their job soon after their appointment, the
expensive and time-consuming process of recruitment and selection must be undertaken again.
It might become necessary to dismiss some employees for incompetence. The performance of
poor-quality new recruits may have to be monitored closely, to decide if (and when) dismissal is
the most appropriate option.
Poor selection decisions could affect the long-term human resources plan of the organisation,
because fewer employees than expected develop their careers and progress to more senior
management positions.
Difficulties with selection might take up significant amounts of senior management time and
attention.
89
INTRODUCTION TO BUSINESS OPERATIONS
The employer may not be sure whether or not the individual who is offered the job will accept it. It is,
therefore, prudent to identify a short-list of acceptable applicants, listed in order of preference. If the
candidate at the top of the list refuses the job, the next person on the list can be made an offer, and so
on until someone in the list accepts the offer of the job.
When the job has been accepted, the arrangement should be confirmed in writing (subject to
satisfactory references), and accepted by the successful applicant in writing. Employment legislation
might require that the new employee should be given a formal written contract of employment.
In addition to offering the job to the successful applicant, the employer should also contact the
unsuccessful applicants, usually in writing. They should be thanked for their interest in the job, and for
their application.
A C T I V I T Y 4 3 0 m i n u t e s
You have been interviewing candidates for a vacancy as junior information technology (IT) manager
within the company, based in the UK.
When you interview each candidate, you record relevant facts and opinions about the individual under
one of seven headings, corresponding to the seven items in Rodger's seven-point plan.
State which category applies to each of the following items of information about one of the candidates.
He has been learning to speak German for several years, and has passed some formal
examinations in the language. It is his intention eventually to work in Germany or for a German
company.
He is currently looking after his aged mother, since he is an only child and his father is dead. This
means that he cannot be away from home for an extended period; for example, he cannot go on
business trips that require overnight stays.
6 Interviews
6.1 Purpose of the interview
Most firms use the selection interview as their main source for decision-making. In general the purposes
of an interview are:
Finding the best person for the job, by giving the organisation a chance to assess applicants (and
particularly their interpersonal communication skills) directly.
Making sure that applicants understand the job, what the career prospects are and have suitable
information about the company.
Giving the best possible impression of the organisation – after all, the candidate may have other
offers elsewhere.
Making all applicants feel that they have been given fair treatment in the interview, whether
they get the job or not.
90
4: RECRUITMENT, SELECTION, INDUCTION AND DISCIPLINARY PROCEDURES
Open questions - ('Who…? What…? Where…? When…? Why….?) These force candidates to put
together their own responses in complete sentences. This encourages them to talk, keeps the interview
flowing, and is most revealing. ('Why do you want to be a marketing assistant?')
Probing questions - Similar to open questions, these aim to discover the deeper significance of the
candidate's answers, especially if they are initially dubious, uninformative, too short, or too vague. ('But
what was it about marketing that particularly appealed to you?')
Closed questions - Invite only 'yes' or 'no' answers: ('Did you…? 'Have you…?'). These elicit an answer
only to the question asked. This may be useful where there are small points to be established ('Did you
pass your exam?'), but they do not encourage the same degree of revelation as an open question, and
may only give part of the picture. (Did candidate pass their exam first time, or with top grades, for
example?). Candidates cannot express their personality, or interact with the interviewer on a deeper
level. They make it easier for candidates to conceal things ('You never asked me…').
Multiple questions - Two or more questions are asked at once. ('Tell me about your last job? How did
your knowledge of the travel business help you there and do you think you are up-to-date or will you
need to spend time studying?'). This encourages the candidate to talk at some length, without straying
too far from the point. It might also test the candidate's ability to listen, and to handle a large amount of
information.
Problem-solving questions - Present the candidate with a situation and ask him/her to explain how
he/she would deal with it. ('How would you motivate your staff to do a task that they did not want to
do?'). Such questions are used to establish whether the candidate will be able to deal with the sort of
problems that are likely to arise in the job.
Leading questions - Encourage the candidate to give a certain reply. ('We are looking for somebody
who likes dealing with older clients. How much do you enjoy sorting out suitable insurance policies?' or
'Don't you agree that…?' 'Surely…?). The danger with this type of question is that the candidate will give
the answer that he thinks the interviewer wants to hear.
When evaluating the response, the interviewer must listen carefully to the responses and evaluate them
so as to judge what the candidate is:
Candidates should be given the opportunity to ask questions. The choice of questions might well
have some influence on how the interviewers assess a candidate's interest in, and understanding of, the
job. Moreover, there is information that the candidate will need to know about the organisation, the job,
and indeed the interview process.
A C T I V I T Y 5 1 0 m i n u t e s
Identify the type of question used in the following examples, and discuss the opportunities and
constraints they offer the interviewee who must answer them.
(a) 'So, you're interested in a Travel and Tourism degree, are you, Jo?'
91
INTRODUCTION TO BUSINESS OPERATIONS
(c) 'How about a really useful qualification like a Travel and Tourism degree, Jo? Would you consider
that?'
(d) 'Why are you interested in a Travel and Tourism degree, Jo?
Panel interviews are designed to overcome such disadvantages. A panel may consist of two or three
people who together interview a single candidate: most commonly, an HR specialist and the
departmental manager who will have responsibility for the successful candidate. This saves the firm time
and enables better assessment.
Large formal panels, or selection boards, may also be convened where there are a number of
individuals or groups with an interest in the selection.
Problem Comment
The halo effect A tendency for people to make an initial general judgement about a
person based on a single obvious attribute, such as being neatly dressed
or well-spoken. This single attribute will colour later perceptions, and might
make an interviewer mark the person up or down on every other factor in
their assessments.
Contagious bias The interviewer changes the behaviour of the applicant by suggestion. The
applicant might be led by the wording of questions or non-verbal cues from
the interviewer, and respond accordingly.
Stereotyping Stereotyping groups people together who are assumed to share certain
characteristics (women, say, or vegetarians), then attributes certain traits to
the group as a whole (emotional, socialist etc). It then (illogically) assumes
that each individual member of the supposed group will possess that trait.
92
4: RECRUITMENT, SELECTION, INDUCTION AND DISCIPLINARY PROCEDURES
Problem Comment
Incorrect assessment Qualitative factors such as motivation, honesty or integrity are very difficult
to assess in an interview.
Logical error An interviewer might decide that a young candidate who has held two or
three jobs in the past for only a short time will be unlikely to last long in any
job. (Not necessarily so.)
While some interviewers may be experts for the human resources function, it is usually thought desirable
to include line managers in the interview team. They cannot be full-time interviewers, as they have
their other work to do. No matter how much training they are given in the interview techniques, they will
lack continuous experience, and probably not give interviewing as much thought or interest as they
should.
7 Tests
In some job selection procedures, an interview is supplemented by some form of selection test. Tests
must be:
Reliable: the test should measure the same thing no matter when it is being done or who is
being tested.
The science of measuring mental capacities and processes is called 'psychometrics'; hence the term
psychometric testing. Types of test commonly used in practice are:
Intelligence tests - these are tests to establish the general level of intellectual ability of the applicant.
They typically test memory, ability to think quickly and logically, and problem-solving skills.
Aptitude tests - are designed to measure and predict an individual's potential for performing a job or
learning new skills. Examples of aptitude include:
93
INTRODUCTION TO BUSINESS OPERATIONS
Personality tests- may measure a variety of characteristics, such as an applicant's skill in dealing with
other people, his ambition and motivation or his emotional stability. The validity of such tests has been
much debated, but is seems that some have been shown by research to be valid predictors of job
performance, so long as they are used properly.
Proficiency tests - are perhaps the most closely related to an assessor's objectives, because they
measure ability to do the work involved. An applicant for an audio typist's job, for example, might be
given a dictation tape and asked to type it.
A C T I V I T Y 6 5 m i n u t e s
Selection tests are used by managers to:
However, the practical value of personality tests is subject to much debate, because with most of them
the candidate can guess which answers will put them in a more favourable light. Also, the interpretation
of the results is highly subjective and needs a specially trained person. This adds to the cost of the
selection process.
Unfortunately, there is not always a direct relationship between a person's ability in the test and
ability in the job because of the artificial test conditions.
It is difficult to exclude bias from tests. Some groups eg, women or candidates born overseas are
less successful at completing tests than men. What is being measured is not always apparent to
some candidates.
Most tests suffer from coaching and practice effects and a test that measures arithmetical ability
needs to be constantly revised so that later applicants do not know the answers.
They measure what the candidate can do rather than will do.
8 Induction
When new employees join a large organisation they may undergo an induction process. This involves a
tour of the offices and factory, talks or films on the history and products of the organisation, and
explanation of the policy relating to holidays, sickness, trade union membership, flexitime, etc.
94
4: RECRUITMENT, SELECTION, INDUCTION AND DISCIPLINARY PROCEDURES
Induction can be defined as 'any and all arrangements made to familiarise the new employee with the
organisation, safety rules, general conditions of employment, and the work of the section or department
in which they are employed'.
Most texts on human resource management (HRM) say very little about induction; this probably reflects
managerial perceptions of the process as a necessary but unexciting chore that wherever possible can be
delegated to lower levels of management. Yet induction is critically important.
It introduces the new recruit to the organisational culture, 'the way things are done around here'.
It sets initial impressions early on and affects the way the new recruit perceives the organisation
for a long time ahead.
It allows the new recruit to learn about the organisation (and department) quickly which helps the
recruit to be productive rapidly.
It sets the framework of the new recruit's lasting impressions of the organisation (and
department) and therefore will establish the 'psychological contract', as first impressions do count.
It reduces the anxiety that the new recruit inevitably has and improves motivation if handled
properly.
Identify the needs of the recruits (in terms of what they need to understand and know) as well as
the needs of the organisation. Existing staff should be involved in designing and implementing the
induction.
Set the objectives of the induction. These should be clear and measurable.
Consideration should be given to using a mix of learning techniques such as written material, tour
of organisation (and department), visits, presentations, discussions, videos etc.
Evaluate the induction course in relation to the initial objectives and budgets established.
The kind of information that the recruit needs to know about the company is usually fairly basic. The
more technical or detailed aspects are best covered through an employee handbook. Armstrong lists the
following items for inclusion in the handbook:
A brief description of the company and the department: its history; products; organisation; and
management
Basic conditions of employment: hours of work; holidays; pension scheme; insurance
Pay: pay scales; when paid and how; deductions; queries; sickness
Notification of absence; certificates
Work rules, disciplinary procedure and grievance procedure
Appraisal and promotion procedures
Union and joint consultation arrangements
Education and training facilities
Health and safety arrangements and medical and first-aid facilities
Restaurant and canteen facilities
Social and welfare arrangements
Telephone calls and correspondence; travelling and subsistence expenses
95
INTRODUCTION TO BUSINESS OPERATIONS
If culture is seen as important, then the company induction needs to reflect this. Departmental induction
is far more specific, and will involve more emphasis on:
It is useful to point out the importance of monitoring and reviewing the progress and results of an
induction process in relation to the initial objectives.
9 Disciplinary procedures
9.1 Discipline
After all the positive motivation, communication, training, team working and encouragement, there is a
need to ensure correctness and consistency in the personal behaviour and work processes of the labour
force. We refer to this as 'discipline'.
Most organisations now have a formalised approach to disciplinary procedures - both to ensure uniform
practice and also to conform to legal requirements. Most countries have laws designed to protect the
rights of workers. An inconsistent or unplanned approach to imposing discipline may well lead to legal
action being taken against the organisation.
Such action can prove expensive in monetary terms. There is also the cost of management time required
to defend the organisation. The reputation of a company can also be damaged if a court judgement is
made against it. The standard of behaviour expected of staff should be defined in advance. Actions
which may give rise to punitive disciplinary action should be clearly identified together with the
consequences that will be imposed if such behaviour is encountered.
96
4: RECRUITMENT, SELECTION, INDUCTION AND DISCIPLINARY PROCEDURES
Be specified in writing
Specify who has the authority to initiate the different types or level of disciplinary action
Ensure that workers are informed of the complaints made against them
Ensure that workers are given the opportunity to state their case before decisions are reached,
and to be accompanied by a supporter of their choice
Ensure that, except in the most serious cases of gross misconduct, no worker is dismissed for a
first breach of disciplinary rules
Ensure that disciplinary action is not taken until the case has been carefully considered
When formal disciplinary proceedings take place, it shows that something is wrong within the
organisation. They should be viewed as an exception rather than as a normal event. Each occurrence
should be taken not only as a case in its own right, but also as a possible symptom of some fault in the
recruitment procedures, training or motivation. The general approach should be one of problem
resolution - not of crime and punishment.
It is important to be consistent across the organisation when a disciplinary offence has been committed.
Employees should be aware of the consequences of any misbehaviour. The staged approach adopted in
most organisations will normally include the following steps:
The informal discussion - this is the most frequently encountered step and should take place
immediately, or as soon after the problem event as possible. If the transgression is of a minor
nature, and the employee involved has had a previously good record, then an informal meeting
between the employee and his immediate supervisor to discuss the issue can take place. At this
97
INTRODUCTION TO BUSINESS OPERATIONS
meeting, the objective is to agree on what happened, to discuss why it happened and to agree on
how to avoid a further occurrence in the future. This may involve the need for action by both
parties. Action may include counselling, or identifying the need for further training to be provided.
Or it may be merely to reinforce and agree on the standard of behaviour to be adopted in the
future.
Reprimand or oral warning - in this case, the breach is deemed to be more serious or may be
a repeat of a previous offence. The manager or supervisor is effectively drawing the employee's
attention to the unsatisfactory behaviour and warning them that further repetition of such
behaviour could lead to formal disciplinary proceedings. Again, it is best to adopt a problem-
solving approach in agreeing what needs to take place to avoid a repeat of such behaviour.
Although the reprimand and warning does not need to be communicated to the employee in
writing, it is good practice to make a file note of such an event. If there is some future offence
which leads to further, more severe disciplinary action, then there may be a need to produce
evidence in justification.
An official or written warning - this form of warning should be used for more serious
breaches of rules or for an employee who has a history of continual breaches of minor rules. A
written warning is a serious matter. It seeks to draw the attention of the offending employee to
the serious nature and consequences of the breach of conduct. It is also recorded on the
employee's file. Such a written document can be used as evidence if further action needs to be
taken in the future.
Suspension or lay-off - it may be deemed necessary to suspend the employee (possibly without
pay depending on company policy) from work for a period if an offence is judged to be of a
serious nature. This action may also be taken if the employee has repeated a previous offence or
if there have been repeated problems with the employee. This is designed to punish the employee
for non-compliance with organisational standards. Normally, this is the last warning. A repeated
offence is normally followed by dismissal.
Dismissal - this is the ultimate disciplinary measure. It should be used only in the most extreme
cases. Care must be taken to ensure that the employer has met all legal requirements. It sends a
powerful signal to all other employees. However, unless the organisation is seen by staff as being
fair in taking such action, it can lead to poor morale and dissatisfaction, as well as possible legal
repercussions.
98
4: RECRUITMENT, SELECTION, INDUCTION AND DISCIPLINARY PROCEDURES
Data protection is an extremely complex and topical issue, especially following the high profile loss of
two computer disks containing the entire UK child benefit database of 25 million people. These were lost
towards the end of 2007 when HM Revenue and Customs (HMRC) reportedly posted them to the
National Audit Office using normal post. All organisations must take steps to handle, process and store
data responsibly and keep up-to-date with legal developments in this area.
There are eight principles put in place by the DPA which specify that data must:
When a company uses information about individuals, whether employees or customers, it must make
sure that they are properly informed of what it intends to do with their information. An employer (or
potential employer) should ensure that individuals are aware of the company identity, what information it
holds and why, and any other information (such as third parties they intend to pass the information to).
The information held must be kept securely. It must be accurate and up-to-date and employers need
to be able to prove they have taken 'reasonable steps' to ensure the accuracy of the information held.
They must also have an arrangement for deleting information, or tapes as soon as there is no reason to
keep it, and for securely disposing of paper records about people. Companies need a very good reason
to hold on to information beyond its immediate use. For example, information on potential recruits may
be held in case one of the unsuccessful applicants tries to sue for discrimination. If anyone complains
about the accuracy of the information held on them, the company must be prepared to investigate and
to amend it or at least note their complaint on file.
Companies can use external data processors (for example, payroll bureaux), but they must have a
written guarantee that the information will be kept secure.
If organisations plan to send information abroad, they must ensure the country has adequate data-
protection laws. Alternatively, they must obtain consent from the individual in question or ensure the
organisation they are sending the data to has acceptable security arrangements.
99
INTRODUCTION TO BUSINESS OPERATIONS
Remember that applicants have a right to see all the information held on them. This could include
interview notes. Companies should play safe by recruiting against objective criteria and only making
notes in relation to these.
In general, applicants who are persistent may be able to gain access to their references. This depends,
however, upon whether the request is made of the organisation providing the reference (usually the
previous or current employer) or the organisation requesting the reference (the new or prospective
employer). The recipient of a confidential reference can only disclose the reference by complying with
the DPA's confidentiality rules. The referee who has given a confidential reference for employment, self-
employment or educational purposes can withhold the reference from disclosure, though this only applies
where the reference is given in confidence.
If a third party is implicated (eg the author of the reference letter), as much information as possible must
be provided without revealing their identity.
Companies must be prepared to destroy files on unsuccessful applicants but can keep enough on file to
justify their selection of one applicant rather than others to an Employment Tribunal if an unsuccessful
candidate complains of discrimination.
Paper files with restricted access should be listed, stored securely and only accessed by specific
people.
Computer systems often use passwords to restrict access to information being held. You should never
divulge your password to an unauthorised person or keep it in view on your desk. Think of your
password as needing as much secrecy as your bank PIN number.
Use of the Internet can pose particular problems in maintaining confidentiality. Many companies have a
policy on the purposes for which the Internet should and should not be used. The law surrounding
Internet information and its protection is still developing.
If you have access to restricted information in any form, you are responsible for protecting it to comply
with company policy and the law. You should lock confidential papers or computer disks away when you
are not using them. You should not leave them lying around on your desk (or in the photocopier!).
You should also not provide confidential information to others outside your department without checking
with a supervisor.
100
4: RECRUITMENT, SELECTION, INDUCTION AND DISCIPLINARY PROCEDURES
SUMMARY
101
INTRODUCTION TO BUSINESS OPERATIONS
SELF-TEST QUESTIONS
1 What, in brief, are the stages of the recruitment and selection process?
3 Define 'selection'.
Job analysis
Job description
Person specification
Job evaluation
17 Define 'induction'.
18 What sort of data does the Data Protection Act deal with?
102
4: RECRUITMENT, SELECTION, INDUCTION AND DISCIPLINARY PROCEDURES
SELF-TEST ANSWERS
2 Job analysis. The process of examining a 'job' to identify the component parts and the circumstances in
which it is performed.
3 Selection is the process of choosing between applicants for the job; a process of eliminating unsuitable
people.
4 Impact on others; acquired knowledge and qualifications; innate abilities; motivation; adjustment.
5 Concise; reaches the right people; gives a good impression; relevant to the job, identifies skills required
etc.
6 Seven-point plan:
Physical attributes or disposition might include a person's demeanour. Eye contact is considered
a sign of honesty and frankness in some cultures, but a sign of disrespect in others.
General intelligence is not something that can be measured easily. A criticism of IQ tests is that
test scores tell you that you are good at doing IQ tests – and not much else.
The plan does not identify a person's potential, or suggest how it can be aligned precisely to the
organisation's requirements.
9 Open questions force candidates to put together their own responses in complete sentences. This
encourages them to talk, keeps the interview flowing, and is most revealing.
103
INTRODUCTION TO BUSINESS OPERATIONS
Wider pool of labour – may be necessary to restore manning levels, depleted by employee
wastage and internal promotion policies.
May be more suitable especially if an organisation is seeking specific skills and expertise not
available internally.
Can inject new blood into an enterprise. External recruits bring new ideas and different
approaches to the job, gleaned from their experience working in other organisations.
12 Brevity and artificiality of interview situation combined with the bias and inexperience of interviewers.
14 C The process of describing the ideal candidate for a job is called Person specification.
15 False: it is a component of the seven-point plan. The five-point plan includes impact on others; acquired
knowledge and qualifications; innate abilities; motivation; adjustment.
16 Selection is two-way because not only is the firm selecting the individual but invariably the individual is
making decisions as to the suitability of the job offered, the terms of employment and the organisation.
17 Induction can be defined as 'any and all arrangements made to familiarise the new employee with the
organisation, safety rules, general conditions of employment, and the work of the section or department
in which they are employed'.
18 The Act applies to personal data in computerised, manual or any other format, as long as the data is in a
system that allows the information to be readily accessible.
104
4: RECRUITMENT, SELECTION, INDUCTION AND DISCIPLINARY PROCEDURES
ANSWERS TO ACTIVITIES
2 The terms recruitment and selection are often misused. Many people believe they are similar in meaning
and cover the whole process of engaging staff. However, recruitment is properly used to cover the first
stages of engaging staff, including:
Sorting out the skills, aptitudes and abilities required to do the job in question.
Drawing up a profile or 'pen portrait' of the 'ideal' candidate.
Attracting a field of candidates by advertising or other means.
Selection is properly used to cover the later stages of engaging staff, including:
Sorting out the total field of applicants into a sufficiently small shortlist for interview - and
possibly intelligence or personality tests.
The selection interview stage, leading to the ultimate decision to engage a particular candidate.
The induction process which turns a successful candidate into a useful and co-operative worker.
The recruitment and selection process starts with defining requirements. This includes the preparation of
job descriptions, job specifications and personnel specifications. Once this stage is completed the
organisation will try to attract potential employees. Assuming a sufficient response, the appropriate
person for the job will be selected. These three stages make up the process. However, before
recruitment takes place, there will need to be an assessment of the skills available in the labour market.
Maintaining records is an ongoing process for the human resources department.
105
INTRODUCTION TO BUSINESS OPERATIONS
Information Category
He has been learning to speak German for several years, and has passed Attainments (possibly
some formal examinations in the language. It is his intention eventually to background
work in Germany or for a German company. cicumstances)
He is currently looking after his aged mother, since he is an only child and his Circumstances
father is dead. This means that he cannot be away from home for an
extended period; for example, he cannot go on business trips that require
overnight stays.
5 Closed. (The only answer is 'yes' or 'no', unless Jo is prepared to expand on it, at his or her own
initiative.)
Leading. (Even if Jo was interested, (s)he should get the message that 'yes' would not be what
the interviewer wanted, or expected, to hear.)
Leading closed multiple! ('Really useful' leads Jo to think that the 'correct' answer will be 'yes':
There is not much opportunity for any other answer, without expanding on it unasked.)
Probing. (If Jo's answer has been unconvincing, short or vague, this question forces a more
specific answer.)
6 (a) Selection tests are used by managers to provide a standardised form of examination
106
CHAPTER 5
Chapter objectives
In this chapter you will learn
Training and developing staff
Monitoring performance
Managing effective working relationships
Resolving conflicts
Appraising performance
Topic list
The importance of training and development
Implementing training
Methods of training and development
Monitoring and appraising performance
Managing working relationships
Resolving conflicts
107
INTRODUCTION TO BUSINESS OPERATIONS
Knowledge – basic knowledge for the job; this usually comes from learning in the early stages
of work, or before employment.
Skills and experience – which are closely related to the job content.
Attitude – the development and conditioning of attitudes and patterns of behaviour depend
more upon learning experiences. A person will, for example, benefit more by experiencing co-
operation than reading about it, and a person's ability to adapt to change, co-operate with others
and be more self-confident, comes partly from the work situation.
Human resource development (HRD) is a process of building and enhancing the skills, knowledge
and attitudes of employees. The human resource needs are identified in the human resource plan,
which is formulated from the overall objectives of the enterprise.
There are obvious benefits to the organisation from having a more knowledgeable and skilled workforce.
These include:
Higher productivity and quality, which will reduce costs and increase sales;
A more flexible workforce, better able to meet the challenges of the future;
More satisfaction and commitment among employees, leading to less staff turnover and
absenteeism.
Also, a company that provides good training and development will find it easier to attract new recruits.
On the downside:
Define the relationship between the organisation's objectives and the current and future human
resource needs.
Provide a framework for facilitating development, and training.
Provide information for employees, eg to stress the performance standards expected and to
inform employees of opportunities for training and development.
Enhance public relations, eg to help attract high-calibre recruits, and to reassure clients and the
public about the quality of products or services.
2 Implementing training
2.1 Learning theories
There are different schools of learning theory, which attempt to explain and describe how people learn.
108
5: DEVELOPING STAFF TEAMS AND INDIVIDUALS
Behaviourist psychology concentrates on the relationship between stimuli (input through the
senses) and responses to those stimuli. 'Learning' is the formation of new connections between
stimulus and response, on the basis of conditioning. We modify our future responses according to
whether the results of our behaviour in the past have been good or bad. We are continually looking for
ways to achieve more positive reinforcement, in terms of rewards, and avoid negative reinforcement ie
punishment.
The cognitive approach argues that the human mind takes sensory information and imposes
organisation and meaning on it: we interpret and rationalise. We use feedback information on the results
of past behaviour to make rational decisions about whether to maintain successful behaviours or
modify unsuccessful behaviours in future, according to our goals and our plans for reaching them. The
principles for learning associated with cognitive theories are:
Instruction should be well organised and be clearly structured – making it easier to learn and to
remember;
Prior knowledge is important – things must fit with what is already known.
Effective learning can take place according to Bass and Vaughan (1966) when the following four
requirements exist:
Drive – the motivation of the individual who must accept and be committed to the need for
training;
Response – the behaviour resulting from a stimulus – this can be developed through training;
Reinforcement – information that the learner receives giving an indication of progress – ideally
as soon as possible to enable more effective learning to occur.
Identifying training
and development needs
Follow-up -
how successful is the Training planning
training programme
Implementation
of plans
Figure 5.1: Approach to training
109
INTRODUCTION TO BUSINESS OPERATIONS
The means used to assess training needs include: organisational and departmental goals; overall
performance of the organisation or part of it in terms of output, sales, profit and costs; performance
appraisal; job analysis; records of employee performance; feedback from customers; observation of
employees; surveys of staff and customer surveys covering their satisfaction and dissatisfaction.
Analyse the jobs in the organisation, and determine what training is required;
Decide on the various training courses and the training methods to be used, taking into account
the training budget and the resources available; also the timing and duration of courses must be
planned to allow normal business operations to continue;
Implement and manage the training programmes, organise venues and equipment and
instructors, and establish recording and feedback systems;
Monitor the training programmes, evaluate the benefits, and consider ways of improvement.
Especially in smaller organisations, there may not be a Human Resources department or any one with
the title of 'Training Manager', and the training functions above will be undertaken part-time by line
managers or supervisors. And in all companies other managers will be involved in the training, giving
instruction or arranging for employees to have time off normal work.
On-the-job or off-the-job:
Formal courses are normally structured, though some are deliberately unstructured to allow the
trainees to develop in their own way.
Participatory training stresses people learning from each other rather than being instructed, and
attempts to build team work and to link knowledge directly with action and problem-solving.
The apprenticeship, where the trainee works with skilled or qualified persons in order to learn a
trade or profession, often over a period of years.
110
5: DEVELOPING STAFF TEAMS AND INDIVIDUALS
Induction courses, which familiarise new recruits with an organisation and teach them some of
its procedures.
Job instructions, which are a defined series of steps for learning how to do a particular job,
normally used by supervisors training those who report to them. It may be linked to a
competence-based qualification such as an NVQ, which is supervised by the trainee's immediate
superior.
Internal training centres, which can provide controlled training programmes, eg where there
would be a risk if the trainee made a mistake. Hairdressers have special evenings where trainees
are allowed to test their skills on clients who agree to be 'guinea pigs' and pay only a nominal
amount.
Job rotation, where the employee is moved from one job to another to broaden experience and
increase awareness of the total activity. The employee will then be in a better position to assume
a managerial role.
Films and closed circuit television (CCTV) – Films are used to describe company situations
and how the different functions of an organisation relate to one another, or for presenting an
overview of production. CCTV is used increasingly in management training to show how
managers behave and how that behaviour can be modified to enhance their interpersonal and
problem-solving skills.
Coaching, where support is given from the planning stage and continued during the learning
process, with the value of constructive criticism being particularly relevant.
Mentoring – the mentor is expected to guide the new recruit through a development programme
and 'socialise' them into the culture of the enterprise. It is a route for bringing on 'high flyers' by
allowing them to make mistakes under supervision. It is less structured than coaching, and is
usually performed by an older and wiser colleague who can pass on knowledge and experience,
and open doors.
Work shadowing, where an employee shadows another, often more senior, to experience what
it is like working at that level.
Lectures, which are a quick and cheap way of giving a large amount of information to many
people. Some people prefer listening to reading and good lecturers can help learning and assist
understanding. Lectures are of little value if the aim is to change attitudes, or develop job or
interpersonal skills.
Discussions highlight the nature and difficulties of group problem-solving, and may also shape
attitudes and increase motivation and understanding.
111
INTRODUCTION TO BUSINESS OPERATIONS
Case studies encourage learning through participation in the definition, analysis and solution of
problems. It demonstrates the nature of group problem-solving activity and often underlines the
view that there is no one best solution to a complex business problem. Casework creates interest
and enthusiasm among trainees, but the exercise may fail if they lack knowledge and experience.
Business games simulate realistic situations, mergers, take-overs, etc in which groups compete
with one another and where the effects of the decision taken by one group may affect others. It
is intended to develop an appreciation of the complex character of decision-taking, an
understanding of risk and the nature of teamwork. Although business games and case studies can
be devised to correspond to real life situations, the classroom environment means that
participants might not take them seriously.
T-group exercises (the T stands for training) leave the group to their own devices. The trainer
simply tells them to look after themselves and remains as an observer. The group itself has to
decide what to do and, understandably, the members feel helpless at first and then they pool
their experiences and help each other. They eventually form a cohesive group, appoint a leader
and resolve any conflicts within the group. The advantages claimed for T-group exercises are that
members recognise the need to learn from experience and from each other. They also observe
how others react to offers of help. Since the group begins in a leaderless state and ends by
appointing a leader, it demystifies the process of leader selection. They exercise interpersonal
communication skills and learn to understand group dynamics. But the unstructured nature of T-
groups has brought criticism in recent years.
A C T I V I T Y 1 2 0 m i n u t e s
What type of training is most suitable for the following people?
112
5: DEVELOPING STAFF TEAMS AND INDIVIDUALS
An interesting recent development has been the use of outdoor training which assumes the existence
of direct parallels between the personal qualities necessary for management and those cultivated
through participation in outdoor pursuits, such as canoeing, sailing or rock-climbing. The essential
demands of these activities – planning, organising, team building, dealing with uncertainty,
direction and control – are supposedly the same as those needed for management. In either situation,
individuals must be able to identify relevant and feasible objectives and initiate and organise activities
aimed at their achievement. Such duties require capacities for leadership, communications, co-
ordination and the motivation of subordinate staff. Creativity, and the ability to implement measures
needed to solve immediate problems efficiently, are highly valued skills.
3.5 Evaluation
The trainer or manager should establish whether the trainees have learned anything and whether the
learning can be applied back at the workplace. Data to determine this can be collected by:
Attainment tests
Rating scales
Questionnaires
Interviews
Observation
Evaluation data may be collected before, during and after the training.
Before training: evaluation will clarify the existing skills, knowledge and attitudes to help plan the
training, and to provide a base line for assessing any improvement.
During training will determine the rate of learning, allowing the trainer to pace the learning to suit the
trainee and offer remedial help where needed.
After training can be immediately after the training, or over a long time.
The performance monitoring and appraisal of the company and of the individual staff follow the same
general pattern illustrated by Figure 5.2(b) below:
113
INTRODUCTION TO BUSINESS OPERATIONS
Planning objectives
and targets
Measurement
Establishing standards
of performance
Compare deviations
Figure 5.2(b)
Aspect Comment
Agreed framework of goals, standards and The manager and the employee agree about a
competence requirements standard of performance, goals and the skills needed.
Approach to managing and developing Managing performance is not just about plans,
people systems or resources: it is an interpersonal process of
influencing, empowering, giving feedback and
problem-solving.
Line management – a performance management system is primarily the concern, not of experts in the
personnel/HRM department, but of the managers responsible for driving the business.
Specific – as each organisation has unique issues to face, performance management systems cannot
really be bought of the shelf.
Future-based – performance management is forward looking, based on the organisation's future needs
and what the individual must do to satisfy them.
114
5: DEVELOPING STAFF TEAMS AND INDIVIDUALS
Step 1 From the business plan, identify the requirements and competences needed to carry it out.
Step 2 Draw up a performance agreement, defining the expectations of the individual or team,
covering standards of performance, performance indicators and the skills and competences
people need.
Step 3 Draw up a performance and development plan with the individual. These record the actions
needed to improve performance, normally covering development in the current job. They
are discussed with job-holders and will cover, typically:
Step 4 Manage performance continually throughout the year, not just at appraisal interviews
carried out to satisfy the personnel department. Managers can review actual performance,
with more informal interim reviews at various times of the year.
Deal with performance problems by identifying what they are; establish the reasons for the
shortfall; take control action (with adequate resources); and provide feedback.
Step 5 Performance review – at a defined period each year, success against the plan is reviewed,
but the whole point is to assess what is going to happen in future.
A C T I V I T Y 2 2 0 m i n u t e s
What are the advantages to employees of introducing such a system of performance management?
What they perceive, since people filter out messages not relevant to their goals and select those
which are relevant.
What they learn, since learning is a process of selecting and analysing experience as a guide to
acting in future.
What they do. Organisations can motivate people to work effectively by offering them the
means to fulfil their goals.
In order for learning and motivation to be effective, it is essential that people know exactly what their
objectives are. This enables them to:
Monitor their performance against objectives and adjust (or learn) if required.
Experience the reward of achievement once the objectives have been reached.
115
INTRODUCTION TO BUSINESS OPERATIONS
Feel that their tasks have meaning and purpose, which is an important element in job
satisfaction.
Experience the motivation of a challenge: the need to expend energy and effort in a particular
direction in order to achieve.
Avoid the demotivation of impossible or inadequately rewarded tasks. If objectives are vague,
unrealistic or unattainable, there may be little incentive to pursue them: hence the importance of
SMART objectives.
Principle Comment
Job-related They should be related to the actual job, and the key tasks outlined in the
job description.
Controllable People should not be assessed according to factors which they cannot
control.
Objective and This is contentious. Certain aspects of performance are easy to measure,
observable such as volume sales, but matters such as courtesy or friendliness are not.
Data must be available There is no use identifying performance measures if the data cannot actually
be collected.
4.4 Feedback
Feedback is communication, which offers information to an individual or group about how their
performance, results or behaviour are perceived or assessed by others.
There are two main types of feedback, both of which are valuable in enhancing performance and
development.
1 Motivational feedback: used to reward and reinforce positive behaviours and performance by
praising and encouraging the individual, and allowing him or her to celebrate positive results,
progress or improvements. Its purpose is to increase confidence and motivation.
Feedback on performance enriches work by giving it meaning. It helps to integrate individual goals
with team and organisational goals, adding to employees' satisfaction and commitment by giving them a
sense of how their work is contributing to the whole.
Ongoing feedback contributes to an effective management style. Rewards, sanctions and corrections
are perceived to be more fair (and are less stressful for employees) if they are based on known
performance standards and attainments. Feedback empowers employees to diagnose and solve their
own performance problems.
Assertiveness. You must be prepared to give difficult messages and confront difficult issues
where required.
Respect for others. While being honest about other peoples' development/improvement needs,
you must consider their right to be treated with respect.
116
5: DEVELOPING STAFF TEAMS AND INDIVIDUALS
The following are some general guidelines for giving constructive feedback.
Choose the right time. Feedback should be given close to the event, so that the details are
fresh in both parties' minds – but with sensitivity to the appropriate time and setting. Feedback is
best given calmly and confidentially.
Start with positives. People will more readily accept criticism as constructive if it is balanced
with acknowledgement of positive aspects.
Focus on the behaviour. Feedback needs to refer clearly to behaviours, actions and results –
not the person or their personality. ('Tough on the problem, soft on the person' is a good general
rule).
Be accurate. Feedback needs to be specific, avoiding vague and global statements (for example,
not 'you're always late!' but 'on two occasions this week you have been more than fifteen minutes
late for work') and avoiding inferences and assumptions.
Do not tackle everything at once. Give the person one or two priority areas to deal with at a
time.
Close with encouragement. Balance negative feedback with positive encouragement that
change is possible and will be supported by you and the organisation.
The general purpose of any appraisal system is to improve the efficiency of the organisation by ensuring
that the individuals within it are performing to the best of their ability and developing their potential for
improvement. The employee will be assessed for competence in several areas, such as:
Practical ability;
A scoring system might be used, with points out of a hundred, say, for the major items, down to out of
ten for least important.
Performance review, for planning and following-up training and development programmes,
identifying new training needs and setting new goals. Such goals may be wide ranging, for
example passing a particular exam, or achieving a given quality of work, or improving working
relationships.
(a) Achievements since the last review, and how they compare with the set goals;
(b) Any problems, under or outside the employee's control, and how they were, or can be,
overcome;
117
INTRODUCTION TO BUSINESS OPERATIONS
(c) What scope there is for improvement, and extra training or work experience required;
(g) Assessments, criticisms, praise or comments written by himself or from other managers or
from customers.
The assessor should have and practice the same interview skills as are required for recruitment
interviews.
Reward review, normally shortly after the performance review, to assess if the employee
deserves a bonus or pay rise. Often, the salary will be set for the next 12 months by this review,
and the employee will just be told the result, with little scope for discussion.
Potential review, as an aid to planning career development, by attempting to predict the level
and type of other work the individual is capable of now, and will be capable of in the future with
suitable training and development.
Make clear the areas in which the individual's performance is below expectations (explaining the
grounds/evidence for this view) with the aim of identifying any problems or reasons for the
under-performance, which could be resolved. Solutions to the problem could include additional
training, providing a mentor, coaching or some other kind of ongoing support.
Give the individual the opportunity to explain their under-performance and to raise any
concerns they may have about the job, or the support and guidance they have been given to do
it. There are many reasons why people fail to deliver what is required of them. A previously good
employee may be experiencing problems at home or the job may have become too tedious. The
reasons for poor performance could significantly affect how this matter is resolved.
Ensure that the member of staff is aware of the level of performance required for each
element of the duties about which there is a concern.
Set a reasonable time frame within which improvement is expected, and arrange a further
meeting at the end of this time to review the situation. When establishing 'reasonable timescales'
for improvement, managers must consider the complexity of the tasks involved in relation to the
qualifications and experience of the individual.
The content and outcome of this meeting should be confirmed by the manager/supervisor in writing to
the individual, and include the type of improvement required, any additional support or training that will
be provided, any other agreed actions and the timescale for improvement and review.
When discussing under-performance managers must be specific about their concerns and must
demonstrate evidence and/or give examples to support their assertions. The consequences of continued
under-performance need to be explained to the individual. For example, it could result in a freeze in
salary, demotion or no opportunity to participate in new projects. It may be serious enough to warrant
dismissal.
118
5: DEVELOPING STAFF TEAMS AND INDIVIDUALS
Understand and manage the roles, relationships, attitudes and perceptions operating in any
situation in which two or more people are involved.
Achieve his or her aims from an interpersonal encounter (ideally allowing the other parties to
emerge satisfied too).
Issue Comment
Goal What does the other person want from the process? What do you want? What will
both parties need and be trying to do to achieve their aims? Can both parties
emerge satisfied?
Perceptions What, if any, are likely to be the factors causing 'distortion' of the way both
parties see the issues and each other? (Attitudes, feelings, expectations?)
Resistances What may the other person be 'afraid of' or be trying to protect? (Self-image/ego,
attitudes?)
Attitudes What sources of difference, conflict or lack of understanding might there be,
arising from attitudes and other factors that shape them (sex, race, specialism,
hierarchy?)
Relationships What are the relative positions of the parties and the nature of the relationship
between them? (Superior/subordinate? Formal/informal? work/non-work?)
Environment What factors in the immediate and overall environment might affect the issues
and the people? (eg competitive environment; customer care; disciplinary
situation nervousness; physical surroundings; formality/informality)
119
INTRODUCTION TO BUSINESS OPERATIONS
Area Comment
Motivation Work can satisfy peoples' social needs because it provides relationships.
Team working and Open and honest communication is the basis of good teamwork.
team-building
Customer care Good interpersonal skills are obviously essential when dealing with
customers.
Career development Promotion is unlikely without a good working relationship with one's
superiors.
Managerial roles Interpersonal skills are needed for many managerial roles, such as
directing, appraising, interviewing.
Power and persuasion Interpersonal skills can be a source of personal power in an organisation,
irrespective of position.
One of the main problems with large organisations is the sometimes distant relationship between senior
management and the workforce. Management by walking around requires either immediate superiors or
senior management to pay regular informal visits to the individual departments and working
environments to keep in touch with the people doing the job. This can create a mutually strengthening
relationship and reassure employees that management is aware and concerned with current issues and
conditions.
A manager or supervisor who develops skills in dealing with others gets action and is influential and
effective. The type of skills needed to develop effective working relationships include:
The ability to get co-operation, make contacts and work with others to solve problems.
The ability to maintain the enthusiasm to persuade, negotiate and propose new
possibilities/solutions.
Perseverance – the ability to keep going back to the same people to raise the same issues if they
remain unresolved.
Flexibility – the ability to adjust to fit in with other people's ideas or constraints.
120
5: DEVELOPING STAFF TEAMS AND INDIVIDUALS
Political behaviour is based around the notion of coalitions and the assumption that individuals and
groups can succeed together where they might fail alone. Various coalitions will seek to protect their
interests and positions of authority.
Office politics can reduce organisational productivity, create a lack of trust, undermine staff morale,
exclude key people from the decision-making processes and increase internal conflict that leads to a
drain of its talent pool.
The workplace politicians are characterised with animal stereotypes based on the model devised by
management development experts Simon Baddeley and Dr Kim James.
The donkey Unprincipled and unethical, they are useless at interpersonal skills but like to stay
close to authority figures within the firm. They make judgements based on
feelings rather than knowledge of the organisation's procedures or bureaucracy.
The fox Unsurprisingly in the cunning and clever category, they are quick to exploit
weaknesses in their allies and opponents alike. In human terms fox-like behaviour
is demonstrated through being interested in power and in fraternising with
powerful people. These individuals may seem unprincipled, self-driven, typically
seen as unethical and having trouble in showing their feelings.
The sheep They are the innocents. Loyal yet politically clueless, they do not put themselves
about to build networks in the organisation. Sheep act with integrity, sticking to
ethical, corporate and professional rules.
The owl Politically astute, wise owls can cope with being disliked, are non-defensive, use
coalitions but are aware of other people's concerns.
A good team will experience heightened creativity in each other's company, compared to what is
achievable individually. But sometimes there is conflict between team members, resulting in work taking
a back seat to relationships and office politics. This, in turn, leads to the marginalisation of certain team
members and the accompanying elevation of others to positions of power. This can only cause unrest as
raised expectations followed by disappointment and demotivation will result from the breakdown of
communications within the team.
6 Resolving conflicts
Conflict is any personal divergence of interests between groups or individuals.
Organisations are co-operative structures, designed to achieve agreed common objectives, with
no systematic conflict of interest.
Conflicts are exceptional and arise from aberrant incidents, such as misunderstandings, clashes of
personality and external influences.
121
INTRODUCTION TO BUSINESS OPERATIONS
This view implies a unitary perspective of the organisation. The organisation is viewed as a team with a
common source of loyalty, one focus of effort and one accepted leader. Conflict can be explained, for
example, by bad management, lack of leadership, poor communications, personality clashes or the work
of agitators.
In contrast, the conflict view, or pluralistic approach, sees conflict among competing sub-groups as
inevitable. Members battle for limited resources, status, rewards and professional values. Organisational
politics involve constant struggles for control, and choices of structure, technology and organisational
goals are part of this process. Individual and organisational interests will not always coincide.
Management has to create a workable structure for collaboration, taking into account the objectives of all
the stakeholders in the organisation.
Distract attention from the group's task (to personal objectives, such as scoring points off other
group members)
However, conflict can also clarify issues and revitalise relationships – as you may know if you 'enjoy a
good argument'! Conflict can be helpful or constructive when its effect is to:
Introduce new solutions to problems, as people 'spark' ideas off each other
Focus attention on individual contribution and responsibility rather than allowing people to hide
behind group decisions
Provide opportunity for the release of hostile feelings and attitudes that have been, or may be,
otherwise repressed.
Sometimes, what appears to be a rather painful argument can have very positive outcomes: a strike, for
example, may normally be seen as destructive and hostile. In fact it can provide an impetus to problem-
solving, and a way of clearing the air. Too much co-operation and agreement may conversely produce a
'love-in', where task objectives become secondary to the group's enjoyment of its interpersonal
relationships.
122
5: DEVELOPING STAFF TEAMS AND INDIVIDUALS
Avoidance – one party may recognise that a conflict exists but choose to withdraw from it or to
suppress it – hoping that it will go away. This style involves putting problems on hold, invoking
slow procedures to stifle the conflict and using secrecy to avoid confrontation. The clarification
and continual refinement of goals and objectives, role definitions and performance standards will
help to avoid misunderstandings and conflict.
Smoothing emphasises the areas of agreement and common goals and glosses over
disagreements. Avoidance and smoothing tend to perpetuate a status quo.
Compromise means agreeing in part with the other person's view or demand. No-one wins and
no-one loses. This type of conflict-handling orientation involves negotiation, seeking deals and
trade offs and finding satisfactory or acceptable solutions. Unfortunately, it also has a slightly
negative tone because it assumes that the parties involved have given up something and
therefore neither is completely happy with the outcome.
Confrontation/collaboration – in this approach differences are openly confronted and the issues
are analysed as objectively as possible. It is characterised by a problem-solving stance and
involves searching for integrative solutions that go beyond just accommodating different points of
view.
Forcing is a way of pushing one's own view on others – forcing a submission from the other party.
The individuals who are in conflict will try to use their own power base to achieve a result that is
favourable to them regardless of the impact this may have on others. This involves the creation of
a win-lose situation. A cartoon example shows a chairperson calling for a vote by stating 'All in
favour say yes and all opposed say I resign'.
Argument means resolving differences by discussion. This can encourage the integration of a number
of viewpoints into a better solution. Charles Handy (1987) suggests that in order for argument to be
effective:
The arguing group must have leadership, mutual trust, and a challenging task to focus on.
The logic of the argument must be preserved: the issues under discussion must be clear, the
discussion must concentrate on available information (not guesswork or fantasy), and all views
must be heard and taken into account.
If such argument is frustrated, or if the argument itself is merely the symptom of underlying,
unexpressed hostility, then conflict will be the result.
Set standards, by pointing to the 'best' performance achieved by one of the competing parties
Motivate individuals to better effort
'Sort out the men from the boys'.
In order to be fruitful, competition must be seen to be open, rather than closed. 'Closed' competition is
a win-lose (or 'zero-sum') situation, where one party's gain will be another party's loss: one party can
only do well at the expense of another, in competition for resources, recognition and so on. 'Open'
competition exists where all participants can increase their gains together: for example, if bonuses are
available to all teams which produce more or better output, not just the 'best' team.
If competition is perceived to be open, the rules are seen to be fair, and the competitors feel that the
factors leading to success are within their control, then competition can be extremely fruitful.
123
INTRODUCTION TO BUSINESS OPERATIONS
A C T I V I T Y 3 1 0 m i n u t e s
What symptoms might indicate that conflict was becoming a problem in a team?
Handy also suggests two types of strategy that may be used to turn harmful conflict into constructive
competition or argument, or to manage it in some other acceptable way.
Regulation strategies directed to the control of conflict when it arises. Possible methods
include:
A C T I V I T Y 4 2 0 m i n u t e s
In the light of the above, consider how conflict could arise and how it might be resolved in the following
situations.
(a) Two managers who share a secretary have documents to be typed at the same time.
(b) A company's electricians discover that a group of engineers have been receiving training in
electrical work.
(c) Department A stops for lunch at 12.30 while Department B stops at 1 o'clock. Occasionally the
canteen runs out of puddings for Department B workers.
(d) To achieve their bonuses, the Home and Abroad holiday sales teams are aggressively targeting
the same customers, to the extent of denigrating each other's products.
124
5: DEVELOPING STAFF TEAMS AND INDIVIDUALS
SUMMARY
Monitor
Purpose Methods of training performance.
Benefits Feedback.
Individual: Group:
Agreed
Apprentice Lecture
plan and
Learning Induction Discussion
goals
theories. Instruction Role-play
Rotation Business
Job Analysis Appraise
Computer games
performance
Coaching T-group
Mentoring
Second-
Corrective
ment
Action
Shadowing
Working
Role of the Training Manager relationships
Plan
Identify Implement Monitor
training Conflicts
training and Evaluate
programmes
needs Manage Improve
Causes: Resolving
Happy family Avoidance
or Smoothing
Inevitable Compromise
Confrontation
Forcing.
Handy's
suggestions.
125
INTRODUCTION TO BUSINESS OPERATIONS
SELF-TEST QUESTIONS
7 When a subordinate rates his or her manager's leadership skills, this is an example of:
10 What kinds of criticism might be levelled at appraisal schemes by a manager who thought they were a
waste of time?
12 The most empowering style of appraisal interview is the 'tell and listen' approach. True or false?
126
5: DEVELOPING STAFF TEAMS AND INDIVIDUALS
SELF-TEST ANSWERS
1 Job training analysis is the process of identifying the purpose of a job and its component parts and
specifying what must be learnt in order for there to be effective work.
Plan training programmes that will enable the organisation to achieve its training needs;
Monitor the implementation of the training programmes, evaluate the benefits, and consider ways
of improving the training.
4 Identifying performance levels, improvements needed and promotion prospects; deciding on rewards;
assessing team work and encouraging communication between manager and employee.
7 (d) ((a) is a technique for grading jobs for salary-setting purposes; (b) is the process of analysing
jobs for job evaluation and job description. Make sure you know what (c) is!)
8 Appraisees should be informed in writing of the results, agreed activity should be taken, progress should
be monitored and whatever resources or changes are needed should be provided or implemented.
10 The manager may say that he has better things to do with his time, that appraisals have no relevance to
the job and there is no reliable follow-up action, and that they involve too much paperwork.
11 Appraisal on its own is a backward-looking performance review, it is a vital input into performance
management, which is forward-looking.
14 It can encourage creativity and produce new solutions; power relationships and individual contributions
are made clear; it may discharge emotional tension.
15 Building a power base; building coalitions; withholding information; setting agenda; distorting
information; imposing authority; by-passing formal channels.
16 Avoidance or Soothing are possibilities, but are not solutions, though they may defer the problem until it
goes away. Compromise or Forcing are solutions, but normally the better outcome is Confrontation and
Collaboration leading to problem-solving.
127
INTRODUCTION TO BUSINESS OPERATIONS
ANSWERS TO ACTIVITIES
1 The type of training most suitable for the following people could be as follows:
(b) Mentoring or coaching could be the best solution for the son of the managing director taking over
his father's business in the family firm.
(c) Job instructions might be the quickest way to get the new recruit up to scratch on the payroll
system.
(d) Programmed learning or computer-based training could give the bank clerk the ability to brush-up
on selling techniques.
2 The key to performance management is that it is forward looking and constructive. Objective-setting
gives employees the security in knowing exactly what is expected of them, and this is agreed at the
outset with the manager, thus identifying unrealistic expectations. The employee at the outset can
indicate the resources needed.
The employee also knows that extra support will be made available if it is needed, and that monitoring
and regular reviews mean that effort will be rewarded and falling behind is not an option.
(e) Proliferation of rules and norms; especially widespread use of arbitration, appeals to higher
authority, and inflexible attitudes towards change.
4 The situations described might lead to the following kinds of conflict, each resolved as shown.
(a) Competition for scarce resources. There would need to be negotiated compromise (someone's
documents would wait), borrowing of resources from elsewhere (an extra typist), or a decision on
priorities by the two managers' joint boss.
(b) Inter-group rivalry, and dispute about power/job security/territory. The electricians will fight
against the 'invasion' of their specialist area, and the implied threat to their jobs. Not easy to
resolve – especially since the electricians have 'found out' rather than 'been informed'.
Confrontation with management (if not the engineers) will bring fears and anger to the surface:
reassurance, negotiation (eg cross-training for electricians too) and other conciliation methods
will have to be tried. Meanwhile, the conflict may challenge the electricians to better performance
– or cause a walkout! One to watch.
(c) Similar to (a). It might not be worth stirring up resentment – unless Department B staff already
feel very strongly about the issue. The simple answer would be to make more puddings.
(d) Excessive competition or rivalry. Managers will need to re-emphasise the common objectives of
the organisation. The bonus incentives are evidently competitive (win-lose) rather than generally
motivating. Perhaps the two teams should be merged, or at least allowed to sell either type of
holiday.
128
CHAPTER 6
MANAGING COMMUNICATION
Chapter objectives
In this chapter you will learn
The communication process
Skills for managing communication
Assertive communication skills
Presentation skills
Non-verbal communications skills
Patterns of communications
Barriers to effective communication
Topic list
The communication process
Barriers to effective communication
Skills for managing communication
Non-verbal communications skills
Aggressive and assertive behaviour
Presentation skills
129
INTRODUCTION TO BUSINESS OPERATIONS
Peter Drucker says 'doing the right thing is more important than doing things right.' Doing the right thing
is effectiveness; doing things right is efficiency. Focus first on effectiveness (identifying what is the right
thing to do), then concentrate on efficiency (doing it right).
Management decision-making.
Individual motivation and effectiveness, so people know what they have to do and why.
Giving instructions
Giving or receiving information
Exchanging ideas
Announcing plans or strategies
Comparing actual results against a plan
Rules or procedures
Communication about the organisation structure and job descriptions
There are certain basic rules that can be applied to improve the effectiveness of communication. These
are:
Communication should be timely – a report that a machine is out of action is of little value if
it is delayed while several hours or days of production are lost.
Communication should not involve excessive cost – the benefits expected to result from
the communication should be greater than the cost of obtaining the relevant information and
putting it into an acceptable form.
130
6: MANAGING COMMUNICATION
A C T I V I T Y 1 2 0 m i n u t e s
One definition of business communication is 'the transmission of information so that it is received,
understood and leads to action'. Evaluate the key items included in this definition.
There are a number of channels for communication, such as a conversation, a letter, a notice board or
via computer. The choice of medium used in communication depends on a number of factors such as
urgency, permanency, complexity, sensitivity and cost.
Feedback is the reaction of the receiver that indicates to the sender that the message has (or has not)
been received and enables him to assess whether it has been understood and correctly interpreted.
Feedback can range from a smile or a nod to a blank look or a shrug, or from the desired action being
taken to no action or the wrong action being taken.
The effective communicator must ensure that noise does not interfere with successful transmission of the
message.
Distractions and interference in the environment in which communication is taking place may be physical
noise (passing traffic), technical noise (a bad telephone line), social noise (differences in the personalities
of the parties) or psychological noise (anger, frustration, tiredness).
A C T I V I T Y 2 1 0 m i n u t e s
Give five examples of what you would interpret as:
(a) Positive feedback (a sign that your message was received and understood).
(b) Negative feedback (a sign that your message was not having the desired effect).
131
INTRODUCTION TO BUSINESS OPERATIONS
Flow – communication may be upwards from subordinate to superior, downwards from superior to
subordinate or lateral between equals.
Direction – communication may be one-way ie, the sender can transmit and the receiver only listens, or
two-way ie, the sender can transmit and the receiver can transmit back.
Status – communication may be formal eg, through the usual channels or informal eg, through the
grapevine.
Oral communication is preferable for emotive issues and persuasion since it has the advantage
of immediate feedback. It is, however, time consuming and unless recorded, there can be
uncertainty about what was said. Examples of oral communication include face-to-face and
telephone conversations, meetings, tape-recordings.
Written communication is preferable where permanency and circulation is required and where
the message is detailed or requires exactness of expression. Transmission and feedback may,
however, be slow, although electronic methods can overcome these drawbacks. Examples of
written communication include letters, memoranda, reports, notices.
Visual communication is preferable where it is necessary for the eye to assist the ear; where
the message can be made more vivid or where distance, environmental or personal factors
preclude the use of speech. Visual messages may, however, be misunderstood or need to be
elaborated in speech or writing. Examples of visual communication include films, videos, graphs,
traffic signals, sign language.
Three other networks that have been studied are the wheel, the chain, and the circle. In the wheel
network a central person can communicate with every other person, but they cannot talk to each other
except through the centre. A taxi dispatcher, for instance, occupies the centre of a wheel and has a high
degree of central control over information. Drivers who equip themselves with cellular telephones and
132
6: MANAGING COMMUNICATION
take calls directly from their regular customers can bypass the dispatcher and create their own
communication network.
In a chain network, individuals can communicate only to the two people next to them in the chain (or
only one other person for the individual at the end of the chain). For example, people on an assembly
line may be restricted in whom they can talk to by their physical location on the line. A circle network
is a closed chain. No one person controls the communication.
Network research began with individuals working on artificial tasks in behavioural laboratories, where
the centralisation of networks was examined for its effects on leadership emergence and member
satisfaction. Now that computer communication networks are becoming more important both within and
across organisations, a person's link into the network is a real and important consideration. The person
at the hub of a wheel network, the network manager, can expect to be very satisfied with
communications and to assume a position of leadership within the network, even though average
member satisfaction with communication may be low. While it is theoretically possible for all members of
a computer network to send messages to all others (the all-channel network), such a system is inefficient
when there are a large number of people on the network.
Which type of network is better depends upon the type of task the group is working on. If the task is
simple and there is only one right way to perform it, then a more structured group works best, because a
central leader is necessary. If there are several ways to accomplish the task, a less structured group
works better, because this allows members to generate ideas freely. Group members usually get the
most satisfaction from the all channels network, because it gives them greater freedom and a feeling of
control.
Poor communication leads to ineffective control, poor co-ordination and inevitably management failure.
Communication cannot take place if there are barriers to the communication process. Very often, the
simplest barrier to communication is not recognised as such. In many organisations directors, managers
and staff use different phrases and expressions, a certain recipe for disaster but easily remedied. This
problem stems from many different sources including the personal background of the individuals
communicating (including language differences and jargon used by the different professions and
individuals with different levels of education). The concept of organisational 'noise' is often an issue. In
this context 'noise' refers to the message being confused by matters unrelated to the topic, or by
overload, where too much information is being communicated. Brevity can often be the surest way of
ensuring successful communication.
Semantics (when the meaning of a message to the sender differs from its meaning to the
recipient).
Distraction (when a recipient is thinking about something else and does not understand the
sender's message).
Misrepresentation (includes things such as deliberate lies, or only focusing on positive results)
133
INTRODUCTION TO BUSINESS OPERATIONS
Information retention (those who control the information are in a position of power in being able
to withhold or delay or misdirect it).
Loss in transmission or poor retention by receiver. There is also the loss by successive
transmission – each recipient may put his own personal interpretation on a particular phrase or
sentence so that as the message is carried down the line it becomes so distorted that eventually it
hardly resembles the original.
Biased interpretation.
Poor listening skills (people are often not listening in a meeting, even when quiet, because they
are thinking about the next point that they will be raising rather than following the arguments of
the present speaker).
Mistrust and fear (can be clearly seen in many widely publicised trade union and company
confrontations).
Natural reserve and status barriers can result in reluctance to pass information upwards for fear
of incurring criticism.
Personal dislike or antagonism between individuals, and a lack of trust between them, will make it
difficult to communicate effectively.
Better listening.
Choice of appropriate medium, eg. written, verbal, charts, diagrams, films, etc.
Feedback repetitions, use of multiple channels, and simplified language can reduce problems due
to semantics, selective perception, and distraction.
Communication overload can be reduced by careful review of the material needed by the recipient
and by use of the exception principle (ie. only exceptions should be reported).
Consider how much others know already: what background or explanation will (or will not) be
required. Some people will be familiar with your subject matter, and some will not.
Avoid 'jargon': technical terminology, which you use in your specialisation, but may not mean
anything to others.
Communicate as clearly, simply and directly as possible – even (or especially) if the topic is
complex.
Use visual aids if this will help to make points more appealing, accessible or understandable.
134
6: MANAGING COMMUNICATION
(i) overloading people with information they will not be able to get through or take in, in the
time available.
(ii) giving people more information than is relevant to them (or you).
(iii) giving people less information than they need, or you want them to have
Consider the degree of accuracy required. All information should be accurate in the sense of
correct – without falsehood – but need not be minutely detailed: a summary or average figure
may be all that is needed.
Push Pull
Identify the problem/opportunity and propose State your view of the problem/ opportunity.
your solution.
Invite reactions. Clarify how the other person sees the situation.
Check that you understand each other's Work towards agreement on the nature of the
arguments. problem/opportunity.
Deal with objections: Look for solutions, using as many of the other
Agree on the outcome and action plan. Come to joint agreement on outcome and action
plan.
Purposeful persuasion – each party attempts to persuade the other to accept its case, by
marshalling persuasive arguments.
Constructive compromise – each party accepts the need to move closer towards each other's
position, so that they can explore common ground and areas where concessions and
compromises can be made while still meeting the key needs of both parties.
Negotiation is a problem-solving technique. Its objective is that both parties reach agreement, so
that they both go away with a decision they can live with – without damaging the relationship
between them.
Interpersonal skills – the use of good communicating techniques, the user of power and
influence, and the ability to impress a personal style on the tactics of negotiation.
135
INTRODUCTION TO BUSINESS OPERATIONS
Analytical skills – the ability to analyse information, diagnose problems, to plan and set
objectives, and the exercise of good judgement in interpreting results.
There are behaviours that are typical of successful negotiations and distinguish them from the less
successful.
Avoid criticising or attacking the other person Are more likely to get locked into an attacking
and concentrate instead on 'attacking' the spiral where one side attacks the other, which
problem in a no nonsense but constructive provokes a counter attack and so on.
way.
Ask many more questions than the less Tend to assume that they understand the
skilled. The skilled negotiator asks questions other person's point of view and that the
not only to gain more information and other person has the same basic information.
understanding but also as an alternative to This makes asking questions redundant.
disagreeing bluntly, and as a means of
putting forward suggestions.
Are more likely to say things that reveal what Feel vulnerable to losing the argument and
they are thinking, intending and feeling than are more likely to 'keep their cards close to
the less skilled. their chests'.
A basic 'win-win' approach to negotiating (using the example of a purchasing negotiation, for relative
simplicity) is as follows:
Step 1 Map out, in advance, what the needs and fears of both parties are. This outlines the
psychological and practical territory.
Step 2 Define your desired outcome and estimate the worst, realistic and best case scenarios. ('If I
can pay £500, it would be ideal, but I'd settle for £600. Above £700, it's just not worth my
while.') Start with the best case and leave room to fall back to the realistic case. Keep your
goal in sight.
Step 3 Look for mutual or trade-off benefits. How might you both gain (for example, by getting a
higher discount in return for prompt or direct-debit payment). What might be cheap for you
to give that would be valuable for the other party to receive or vice versa?
Step 4 Spell out the positive benefits to the other party and support them in saying 'yes' to your
proposals by making it as easy as possible. (Offer to supply information or help with follow-
up tasks, for example.) Emphasise areas of agreement and common ground.
136
6: MANAGING COMMUNICATION
Step 6 Overcome side-tracks by asking questions such as: 'How is this going to get us where we
need/want to go?'
Step 7 Be hard on the issue/problem but soft on the person. This is not personal competition or
antagonism: work together on problem-solving (eg by using flip charts or paper to make
shared notes). Show that you have heard the other person (by summarising their argument)
before responding with your counter argument.
Step 8 Be flexible. A 'take it or leave it' approach breaks relationships. (However, saying 'no'
repeatedly to sales people is a good way of finding out just how far below the list price they
are prepared to go!) Make and invite reasonable counter offers.
Step 9 Be culturally sensitive. Some markets thrive on 'haggling'. Some cultures engage in a lot of
movement up and down the bargaining scale (eg Asian and Middle Eastern), while others do
their homework and fix their prices.
Step 10 Take notes, so the accuracy of everyone's recollection of what was proposed and agreed can
be checked.
Step 11 Summarise and confirm the details of your agreements to both parties (by memo, letter,
contract) and acknowledge a mutually positive outcome.
A C T I V I T Y 3 3 0 m i n u t e s
Get together with fellow students (or friends) in pairs or teams to prepare and role-play a negotiation.
Scenario:
You want to go on holiday with the whole family to a coastal resort this summer. Your (role-play) partner
wants to have some quiet time at home redecorating the bathroom, knowing that the two teenage (role-
play) kids are keen to spend time with friends. These projects are important to both (or all four) of you.
Negotiate! If you really can't find role-play partners, make notes on the possible strategies, win-win
potential, and best-realistic-worst positions for all participants.
Consultation is the process where, on a regular basis, management genuinely seeks the views, ideas and
feelings of employees before a decision is taken.
Consultation is not the same as negotiation. Negotiation implies acceptance by both parties that
agreement between them is required before a decision is taken. Consultation implies a willingness to
listen to the views of another while reserving the right to take the final decision, with or without
agreement on both sides.
For the effective manager, using his or her interpersonal skills, a way of consulting subordinates is to
discuss proposals with them. The 'I have decided to give you X' approach is nowhere near as effective as
the 'I've been thinking – do you feel that you can tackle X?' approach.
137
INTRODUCTION TO BUSINESS OPERATIONS
The advantages that can be associated with consultation include the following.
Improved quality of decisions because the manager is using the collected knowledge and
ingenuity of those who are most affected by the decisions.
Better co-operation between managers and employees because people will accept even those
decisions that they do not like if their views have been taken into consideration, assuming they
have been told why the decision has been taken.
It serves as a valuable preliminary to negotiation. When representatives have been involved in the
discussion of 'how', they will be better informed when it becomes a matter of 'how much'?
Better industrial relations by giving managers and their subordinates the opportunity to
understand each other's views and objectives.
For a process of consultation to be genuine, it must not be used when a manager has already reached a
decision. His or her mind will then be closed to alternatives, the meeting will sense that it is an insulting
charade of 'guess what's in my mind'. Instead of gaining commitment to the decision, the pseudo-
consultation will alienate. There will be resentment, which might result in non-co-operation.
Telling is where a person gives help by telling the client what to do, and is problem-centred and
excludes the client from the problem-solving process.
Advising is also a problem-centred person giving help and excluding the client from problem-
solving. The process usually involves the adviser identifying options and getting the client to
select the one which the adviser favours.
Manipulating is when the client is excluded from the problem-solving process, and the person
doing the manipulating is satisfying his or her own needs.
Effective counselling shows an organisation's commitment to and concern for its staff and is likely to
improve employee loyalty and enthusiasm. The techniques include:
Helping others to identify problems, issues and possible solutions for themselves;
Using a non-directive approach rather than advising or making specific suggestions;
Encouraging reflection and talking around issues;
Allowing others to lead and determine the direction;
Using open questions to help others explore ideas, feelings and thoughts;
Having more of a passive role, listening very actively and carefully;
Speaking only to clarify and probe.
138
6: MANAGING COMMUNICATION
To confirm or add to the meaning of our words (eg nodding and saying 'yes', or pointing
something out and saying 'look').
Be aware, though, that body language can also undermine our spoken messages (eg wearing a grim
expression while saying 'Everything's fine') – and studies show that people believe the body language
more then the words!
If you can be aware of other people's body language, and interpret its meaning, you can:
Recognise people's real feelings when their words are constrained by politeness or dishonesty.
Recognise interpersonal problems (eg an angry silence, refusal to look someone in the eye).
Read situations so you can modify your communication/response strategy. (Is the boss irritated
by a delay? Reassure – and hurry. Is a colleague on the point of tears? Support and soothe.)
Facial The eyebrows, eyes, nose, lips and mouth, jaw and head position all contribute to the
expression expression on someone's face: lips can be tight or slack, eyes narrowed or widened,
the eyebrows lowered or raised, the whole face moving or still, pale or flushed.
Gestures People make gestures unconsciously: jabbing a finger in the air for emphasis, tapping
the fingers when impatient. They also make conscious gestures – and not only impolite
ones: a finger against the lips for silence, a jerk of the head to indicate a direction, a
shrug to indicate indifference.
Movement Watch how people move, at what pace, and to what effect. Someone who walks briskly
conveys determination; someone who shuffles along, laziness or depression; someone
who can never sit still, nervousness or impatience.
Positioning You will probably find you sit closer to the people you like and trust, face them directly,
or even lean towards them. You may keep a 'respectful' distance between yourself and
someone with whom you have a more formal relationship.
Contact Shaking hands is acceptable for transmitting greeting in most contexts but, for
example, nudging or prodding for emphasis, or clapping on the back, implies familiarity
and ease.
Posture Consider the way you sit and stand. Lounge, hunch or sit/stand up straight and you
convey relaxation, negativity or alertness. Lean forward when you listen to someone,
and you transmit interest: lean well back and you convey weariness or boredom.
Sounds A sceptical grunt, a sympathetic murmur and a delighted whoop are particularly useful
non-verbal feedback signals.
139
INTRODUCTION TO BUSINESS OPERATIONS
Be aware that no non-verbal cue by itself is enough to make an accurate diagnosis of someone's
meaning or mental state! A frown may be caused by irritation or perplexity or a headache! Consider the
whole body language of the person, take the context into account – and test out your theories before
acting on them!
You should also be aware that body language means different things in different cultures. An
assertive level of steady eye contact, for a Westerner, would be regarded as aggressive and offensive to
some Eastern cultures – just to give one example. Beware of making assumptions!
A C T I V I T Y 4 1 0 m i n u t e s
How might you interpret (or use) the following non-verbal cues?
Assertive behaviour is a considered response to frustration, conflict or threat which seeks to satisfy
the needs and wants of all parties involved in the situation. According to Back and Back (Assertiveness at
Work), such behaviour involves:
Standing up for your own rights in such a way that you do not violate another person's rights.
Expressing your needs, wants, opinions, feelings and beliefs in direct, honest and appropriate ways.
An example of an assertive response to an inconvenient demand by a supervisor, for example, might be:
'I appreciate that you would like this task done immediately. However, I would prefer to complete the
project I'm working on first. Will tomorrow morning work for you?'
Aggressive behaviour is a 'fight' reaction to frustration, conflict or threat. It usually takes the form of a
verbal or physical attack on another person or object. According to Back and Back, aggression implies:
Standing up for your rights in such a way that you violate the rights of others.
Ignoring or dismissing the needs, wants, feelings or viewpoints of others.
Expressing your own needs, wants and opinions in inappropriate ways.
140
6: MANAGING COMMUNICATION
An example of an aggressive response in the circumstances cited above might be: 'I'm not going to
disrupt my work just because you've left the job late. Get someone else to do it!'
Aggression is a form of attack and may be verbal or physical. A frustrated employee may attack his or
her supervisor or kick a machine that has broken down. Verbal aggression can take such forms as
shouting, name–calling, sarcasm, swearing or making snide remarks.
Passive (or non-assertive) behaviour is a 'flight' reaction to frustration, conflict or threat. It usually takes
the form of giving in to others' demands. According to Back and Back, non-assertion implies:
Failing to stand up for your rights, or doing so in such a way that others can easily disregard
them.
Expressing your needs, wants, opinions, feelings and beliefs in apologetic, diffident or self-
effacing ways.
Failing to express honestly your needs, wants, opinions, feelings and beliefs.
An example of a non-assertive response in the circumstances cited above might be: 'Well, I'm very busy
at the moment ... but I suppose I could work late and fit it in, if you really need it.'
Passive or non–assertive people do not respect themselves. They do not stand up for their rights at all
because they assume that other people are more important. They express their thoughts and feelings in
such a self–effacing way that they invite other people to ignore them.
Assertion, aggression and non-assertion each have specific characteristic verbal and non-verbal
behaviours which reflect these underlying orientations.
Stick to your statement. If you are ignored, refused or responded to in some other negative
way, don't back down, 'fly off the handle', or enter into arguments designed to deflect you from
your purpose. Stick to your position, and repeat it calmly, as often as necessary: repetition
projects an image of determination and reinforces your own confidence and conviction.
Deflect responses from the other person. Show that you have heard and understood the
other person's response, but are not going to be sidetracked.
Don't be pushed. If you are at all hesitant about whether to say 'yes' or 'no' try asking for time
to decide, to think or obtain more information. Why should you make an instant decision?
Acknowledge your doubts; ask your questions. Feel free to change your mind.
Say 'no' clearly and calmly, if that is your answer. Explain why, if you think it appropriate –
not because you are anxious to excuse yourself, as if it were not your right to say 'no'. Don't
express regret unless you feel regretful. Remember that when you say 'no', you are refusing a
request, not rejecting a person.
Acknowledge your feelings. If you feel awkward about refusing, or under pressure to accept,
say so; the other person will be reassured that you are giving him or her due consideration.
141
INTRODUCTION TO BUSINESS OPERATIONS
Watch your body language. If you have said 'yes' when you wanted to say 'no', don't start
giving 'no' signals by sulking. If you are saying 'no', don't give contradictory signals by smiling
ingratiatingly, lingering as if waiting to be talked out of it.
Valid criticism and negative assertions should be regarded positively as a potentially helpful
experience. Agree with a criticism if it does in fact apply to you, without growing defensive or
abjectly apologetic. You simply acknowledge the truth in what the critic is saying, together with
your response to the situation.
Invalid criticism and put-downs should be handled simply and assertively with a
straightforward denial: 'I don't accept that at all'.
Giving criticism
Expressing negative feelings to others so that they hear what you are saying but do not feel personally
attacked or rejected is not easy. Effective communication will be impossible if you make the other person
defensive or aggressive, or if you let your own feelings get in the way. Guidelines are as follows.
Describe the behaviour and express your feelings about the behaviour to the individual
personally.
Ask for a specific change of behaviour. Being specified separates constructive criticism
(which involves give and take) from attack or complaint.
End on a positive note. This does not mean backing off your criticism ('it's not that important,
really: I just thought I'd mention it'), but stating something positive that you feel. For example:
'I'm glad I've had a chance to say this', or 'In all other areas, you're doing fine, so I hope we can
get this sorted out'.
The aim of assertive behaviour is to satisfy the needs and wants of both parties – the response could be
'Jo, I'd like you to redo this report as there are several mistakes in it'.
The aim of aggressive behaviour is to win, if necessary at the expense of others. The aggressive
response might be 'I don't know how you've got the nerve to give me this stuff – it's full of mistakes'.
The aim of passive behaviour is to avoid conflict and to please others. The response from a passive
person might be 'It's probably my fault for not explaining properly – if you've got a spare minute could
you just change one or two little mistakes on this report for me'.
In this scenario the supervisor has the right to expect and receive a report of the standard agreed and,
because it is unsatisfactory, has the right to point out the mistakes. Jo has the right to have the problem
pointed out in a reasonable manner, so that there is no feeling of personal attack or being made to feel
small.
A C T I V I T Y 5 1 0 m i n u t e s
A colleague telephones you when you are working on some invoices that you particularly want to finish.
He says he wants to talk about next week's safety meeting. You prefer to discuss it later. Give (a) an
assertive response and (b) an aggressive response.
142
6: MANAGING COMMUNICATION
6 Presentation skills
6.1 Diagrams and text
A presentation is a combination of both verbal and visual communication that is used by managers at
some meetings, training sessions, lectures and conferences.
Before any presentation is made it is necessary to establish the objectives of the presentation, why it is
being done and what you want it to achieve. Once these things have been identified, the best way to
achieve the objectives can be established. Compiling a presentation that holds the audience's interest
and drives the point home with clarity is not as easy as it looks. Some professional presenters advise that
you divide your presentation into three sections.
The introduction summarises your overall message and should begin with a title slide, or
transparency, that succinctly states the purpose of the presentation.
The main section, sometimes called the rationale, delivers your main points. In general, each
point should be made in a simple, powerful text slide and then bolstered with more detail from
charts and subsidiary text slides. For some reason, three items of supporting data for each main
point seems to work best for most audiences and most arguments.
Section three winds up with re-emphasis, starting with a summary, moving on to a conclusion and
leaving the audience with a message that will persuade them to act – this may be to applaud your
department's progress or to approve your scheme. The final line of the presentation must be a
definite close.
The presentation must be summarised throughout, because you cannot rely on the audience having read
any handouts prior to the presentation.
The audience should be given the opportunity to ask questions and whether this is done at regular
intervals or at the end of the presentation will depend upon the topic of the presentation and the
audience to which it is addressed.
Graphics, in the form of still or moving pictures, can be a particularly effective method of communication.
They have advantages in that they are attention-catching, have a dramatic impact, and they facilitate the
understanding of complex material.
Number of people attending – people are often embarrassed by asking questions in front of a large
audience. If the presenter is expecting feedback and participation from the audience which is not
forthcoming, then the overall effect of the presentation may fail.
People hear what they want to hear – when a familiar subject area is being presented, certain
members of the audience may become prematurely disinterested and stop paying attention. Also, if what
the presenter is saying conflicts with set beliefs, the audience may choose not to hear what is being said.
People hear what they expect to hear – Instead of hearing what is actually said, people often hear
what they expect to hear, or interpret what they hear in their own way.
Words are not objective – the emphasis placed upon words can alter their meaning. The presenter
should choose his words with care in order to avoid misinterpretation of the message.
Words are ambiguous – many words in the English language have more than one meaning. The
presenter should avoid the use of words and phrases that are ambiguous.
Physical factors can impede communication – for example, if the room is too cold or too hot, or if
there is noise from heavy traffic.
143
INTRODUCTION TO BUSINESS OPERATIONS
Technical noise can also impede the presentation, for instance if the presenter has a very strong
accent which is not perhaps easily understandable to all of the audience.
Emotional factor – if people in the audience are worried or anxious then it is unlikely that they will be
able to concentrate on what is being said.
Retention – people only retain about 10% of what they hear and the usual attention span is about 20
minutes. It may be necessary to alter the delivery of the presentation in order to keep the audience's
attention.
A number of factors can be used to assess the success of a presentation. For example, did the
presentation achieve its objectives? Was the system adopted as a result of the presentation? Was any
action taken? Did anyone fall asleep during the presentation? What questions were asked by the
audience?
144
6: MANAGING COMMUNICATION
SUMMARY
MANAGING COMMUNICATIONS
145
INTRODUCTION TO BUSINESS OPERATIONS
SELF-TEST QUESTIONS
1 Indicate and describe three general faults from the following list that can happen in the communication
process.
(a) Distance
(b) Distortion
(c) Overload
(d) Misunderstanding
(e) Status
2 From your knowledge of body language, what might be conveyed by the following?
3 Your manager comes to you late on a Friday afternoon and tells you that she needs a piece of work from
you 'urgently'. You are in the middle of something else. You say (loudly): 'There's no way I can do it
now: I'm busy. Get someone else to do it!'
4 Effective listening means not thinking your own thoughts until the other person has finished speaking.
True or false?
5 Give five examples of non-verbal communication, and suggest what they might be used to indicate.
6 Communication between two members of a project team from different functions, but the same level of
authority, is:
(a) Upward
(b) Downward
(c) Lateral
(d) Diagonal
7 Which of the following describes the advantages and disadvantages of a 'push' style of influencing and
which describes a 'pull' style?
(a) Is quick and effective where the solution is clear-cut, but can appear authoritarian and lose
genuine commitment.
(b) Is supportive/collaborative and secures genuine commitment, but tends to be slower and can
appear weak.
9 The best means of conveying bad news to someone is via e-mail. True or false?
146
6: MANAGING COMMUNICATION
SELF-TEST ANSWERS
The general faults include distortion or omission of information by the sender, misunderstanding due to
technical jargon or lack of clarity, and 'overload', where a person is given too much information to digest
in the time available. Status can cause communication difficulties, eg, a senior manager's words are
listened to closely and a colleague's perhaps discounted.
Caution is required because these signals by themselves cannot be accurately diagnosed, and may mean
different things in different cultures.
3 (c) Many people confuse 'assertive' with 'aggressive': make sure you know the difference!
4 False. You may have had to think carefully about this. The point is not to distract yourself or interrupt
the other person with your thoughts (or your impatience to say them). However, you need to keep
thinking: consider whether what you are hearing is true/relevant, come up with questions, further
information requests, feedback signals etc.
What could you learn from this data? You would expect technical/work-related conversations to dominate
during work time, and friendly/courteous conversations during breaks. (If not, are you wasting the
organisation's time? Or becoming a workaholic?)
5 A nod of agreement; a smile to encourage; a frown to disapprove; a yawn to show boredom; turning
away to discourage.
6 (c) Lateral.
8 Consultation is not the same as negotiation. Negotiation implies acceptance by both parties that
agreement between them is required before a decision is taken. Consultation implies a willingness to
listen to the views of another while reserving the right to take the final decision, with or without
agreement on both sides.
9 False. In general, face-to-face would be preferable, allowing sensitivity and supportive communication. If
the news was very urgent, a telephone call would still be preferable to e-mail, which can come across as
very cold and abrupt.
147
INTRODUCTION TO BUSINESS OPERATIONS
ANSWERS TO ACTIVITIES
'Information' not data. Data is dead, historic or irrelevant; information tells the recipient
something he does not know;
'Leads to action' ie, if it does not lead to action, was communication necessary?
5 (a) An assertive response might be 'Fine. I'm happy to talk about the safety meeting, but right now
I'd like to finish these invoices. How about me ringing you back later this afternoon?'
(b) An aggressive response might be 'You can't expect me to think about a safety meeting. I'm in the
middle of doing some invoices. You'll have to ring me back later'.
148
CHAPTER 7
Chapter objectives
In this chapter you will learn
Implementing a customer service programme to develop customer relationships
Delivering effective customer care
Promoting additional services or products to customers
Recognising, handling and resolving customer queries, requests and problems
Topic list
Customer service
Delivering effective customer care
Meeting the customers' needs
Laws and regulations
Promoting additional services or products to customers
Customer queries, requests and problems
149
INTRODUCTION TO BUSINESS OPERATIONS
1 Customer service
1.1 What is a customer?
Hospitality, travel and tourism products and services are used by people of all ages, types and
nationalities, including those with specific needs, such as people with disabilities or with young children.
Staff working in this industry must be trained in identifying and meeting the differing needs of a wide
variety of customers. People sometimes confuse the terms 'customer' and 'consumer'; the consumer is
the end-user of a product or service, but not necessarily the person who bought it in the first place (the
customer). For example, a mother may treat her daughter to an 'activity weekend break' after finishing
her exams; the daughter will be the consumer and the mother the customer.
Customers are the most important part of any business. Quite simply, without them there would be no
business, as Virgin Trains states on its website 'we are all aware that without you, our customers, we do
not have a railway'. So it is vitally important that customers are looked after well and given the highest
standards of service, so that they come back again and tell their friends about the good time they had.
Many organisations that are working hard to improve their customer service use statements similar to
the following to focus their staff:
Customers are not an interruption of our work – they are the purpose of it;
Customers are the people who bring us their needs – it is our job to handle these profitably for
them and for ourselves;
Good customer service requires a team approach and a recognition that it is not just the customers 'on
the other side of the counter' who need respect and consideration, but that colleagues within the
organisation need to be dealt with in the same supportive manner.
The sort of people we normally think of as customers are sometimes referred to as 'external' customers,
to distinguish them from work colleagues. If we begin from the point of view that everybody is unique,
then the number of 'external' customers for any hospitality or travel and tourism enterprise is likely to be
immense, each with different needs and expectations.
150
7: MANAGING CUSTOMER CARE
How customer expectations may change as they deal with your organisation
The cost and resource implications of an extension of the service offer to meet or exceed
customer expectations
The cost implications of bringing in new customers as opposed to retaining existing customers
Implementing a customer service programme starts with identifying areas for improvement within every
aspect of the organisation and the people within it. It is not simply about making changes in response to
customers' complaints and ad-hoc suggestions. Excellent customer service can only be measured against
the expectations of the customers – so it relates to your customers' idea of good service, and not your
own. For example: even if you improve performance by ensuring that enquiries are responded to within
five days, if the customer expects a reply within 24 hours, then it would not be regarded as good service.
Although part of providing excellent customer service is about reacting to complaints and problems
efficiently, consistently and fairly, it is more about getting things right the first time – anticipating and
rectifying problems before they occur.
5. Implement customer
services action plan
When developing service levels it is good to compare the services provided by your organisation, with
similar providers and set levels which are challenging but have a realistic chance of attainment.
Questions to help set service levels may include:
How many times does the phone ring before someone answers?
How long does it take to process an order?
How long does it take to respond to a complaint?
151
INTRODUCTION TO BUSINESS OPERATIONS
Top management commitment to a customer care programme is no good if the right message is not
conveyed to all staff in the right way. Communications have to be reliable, consistent and regular so that
all people receive the same message and interpret it in the same way.
Prompt and sympathetic handling of complaints can turn a disgruntled customer into a happy one.
People whose complaints are fully dealt with are more loyal than those who have no complaints.
Recruiting the right staff is just one of the first steps in a customer care programme. Training staff to
understand customer needs and tackle customer problems, to turn threats into opportunities for the
organisation, is also a prerequisite for effective and lasting customer care. Training staff on a continuing
basis, especially in friendly telephone and face-to-face techniques, can provide organisations with an
advantage that will score with customers.
A C T I V I T Y 1 2 0 m i n u t e s
In business areas which significantly affect customers' satisfaction levels, how can customer service
levels be assessed?
Customer care involves putting systems in place to maximise customers' satisfaction. It should be a
prime consideration for every business – sales and profitability depend on keeping customers happy.
Customer care is more directly important in some roles than others eg, receptionists, sales staff and
other employees in customer-facing roles. But although admin and dispatch departments may have
minimal contact with customers, their performance when fulfilling orders has a major impact on
customers' satisfaction.
A huge range of factors can contribute to customer satisfaction, but your customers are likely to take
into account:
Staff working in the organisation will also reap rewards, with increased job satisfaction, better
opportunities for promotion, a better working environment, more training and financial incentives.
The main benefits to the organisation of providing excellent customer service are illustrated in Figure 7.2
below:
152
7: MANAGING CUSTOMER CARE
Not surprisingly, the people who gain most from high standards of customer service are the customers
themselves. Their meal, hotel stay, holiday or travel experience can be made extra special with the help
of attentive and professional customer service staff. By the same token, if service standards are poor, it
is the customers who suffer first.
Any customer service operation should be built around giving the customer complete satisfaction at all
times. Failure to offer a consistent and reliable standard of customer service can result in a less than
enjoyable experience for the customer and could lose the company business in the long run. Statistics
show that:
One way that hospitality, travel and tourism companies try to maximise their customers' experience is by
offering a customer satisfaction guarantee. For example, train companies often agree to pay
compensation to travellers if their train is delayed by a certain amount of time. Travel and tourism
companies also try hard to keep the customers they already have by building customer loyalty. This
could be via regular mailings about special offers, discounted deals or more complex customer loyalty
programmes.
A C T I V I T Y 2 5 m i n u t e s
Identify some of the things that you, as a customer, find most annoying.
153
INTRODUCTION TO BUSINESS OPERATIONS
However, introducing a customer care programme has serious implications for staff and management;
not least how to provide a reliable, consistent and affordable level of customer service by motivated,
committed and knowledgeable employees.
Consistency – is concerned with making sure that staff provide the same level of efficient service every
time to all customers regardless of their needs;
Reliability – places a responsibility on staff to ensure that they are reliable in all their dealings with
customers, eg by being truthful about a situation when a customer complains or by making sure that
they do something they have promised for a customer;
Motivation – is a key issue for managers and supervisors, who must motivate their staff to provide the
highest standards of service to customers; this could be through a combination of encouragement,
praise, promotion, bonuses or other incentives.
Commitment – a positive attitude and commitment are important qualities that anybody wanting to work
in travel and tourism needs to develop, particularly those working in front-line customer service jobs.
Knowledge and experience – staff must have good 'product knowledge', ie knowing all the details, prices
and features of the products or services they are describing and selling, whether working in a hotel,
restaurant, travel agency, for a tour operator or in a tourist information centre.
Intangible or hard-to-define – the services offered, such as holidays, flights and so on, are only
'real' to the customer when they are bought and consumed. Flights can be seen taking off,
pictures can be looked at of other people enjoying their holiday, but this cannot replace the
individual experience of the customer. Services offered, therefore, must be accompanied by
information provided by the travel and tourism organisation so that the customer can be confident
about using the service.
Variable in their demand – there are often large variations in the level of demand for travel and
tourism services. It becomes more difficult to keep customer service at consistently high levels in
periods of peak demand – the 'high season'. Customers become disappointed quickly if service
lacks consistency. They need to know whether they are guaranteed the same high level of
customer service whenever they use a particular company.
Perishable – this means that travel and tourism services cannot be stored. A seat on a flight is
either sold or not; it cannot be carried over to the next time. So firms have to manage what they
154
7: MANAGING CUSTOMER CARE
offer to customers and the level of demand from customers, or they will disappoint customers (if
demand is too high) or lose revenue (if capacity is unsold, such as seats on a flight).
A C T I V I T Y 3 1 0 m i n u t e s
Why is customer service important in travel and tourism?
Personal presentation – arriving at work in a clean, hygienic and presentable fashion is always
important, whether staff are meeting holidaymakers at the airport, advising them on holiday
choices in a travel agency or showing people to their table for breakfast in a hotel. The way you
present yourself to customers has a direct influence on their enjoyment, your job satisfaction and,
ultimately, the success of the company that is employing you.
Communication with customers – it is important to recognise the feelings of customers. Meet and
greet them effectively, and try to treat them as an individual at all times, perhaps by using their
first name if appropriate. Customers also respond to fast and accurate service, so don't keep them
waiting longer than you have to!
Dealing effectively with complaints – handled correctly, complaints can be thought of as another
type of feedback from customers that gives the organisation a second chance to put things right
and satisfy the customer.
Working as part of a team – good products, services and facilities don't just happen, but are the
result of concerted effort by groups of people seeking to achieve a common goal.
Customer service charters – to inform people what they can expect in terms of standards of
service and what the organisation will do in the event of a failure on their part.
E X A M P L E
Virgin Trains' Passengers' Charter sets out the company's commitment to give passengers the safe, high
quality service that they have a right to expect. Any passenger purchasing a ticket for use on services
operated by Virgin Trains should enjoy:
All Virgin Trains staff receive full, ongoing training in customer care and related issues and are expected
to carry out their duties in a professional manner.
155
INTRODUCTION TO BUSINESS OPERATIONS
Discover any underlying problems that are causing the customer service problems;
Arrange staff training sessions to help deal with the problems;
Provide a supportive environment in which staff can flourish;
Involve all staff in customer service improvement.
Customers like to feel that they are special and, in a one-to-one situation, want to be put at ease and
have the full attention of the member of staff serving them. Staff should not become distracted when
dealing with individuals and should be trained in prioritising requests for their time and attention.
There are certain 'ground rules' that you need to adopt when communicating information to a group of
customers, including:
Make sure that all members of the group can see, hear and understand you;
Communicate effectively using simple language using a clear, confident tone of voice;
Make sure that everybody has understood what you have said by allowing time for questions at
the end;
Make yourself available afterwards if people want further clarification on a one-to-one basis.
The important point for customer service staff to remember is that visitors with specific needs welcome a
little extra appreciation of, and respect for, their particular needs. Remember too that disabled people's
ability to carry out their normal day-to-day activities is very often constrained by the environment in
which they find themselves, rather than the disability they live with, for example, problems with getting
on and off buses, coaches, trains and aircraft, and narrow doorways that do not allow wheelchair access.
156
7: MANAGING CUSTOMER CARE
Language spoken – just a few words of a foreign language makes an immediate impression on
overseas visitors, helping to put them at ease and creating an excellent first impression of you
and your organisation;
Religious codes;
Cultural traditions;
Front-line customer service staff whose work brings them into contact with customers from a variety of
different cultures must be trained to recognise and respect these different needs, and to respond
positively and sensitively to customers' requests.
Indeed, personalised service has always been central to forging customer relationships, to building
consumer loyalty. Offline you can work face-to-face with your customers, directly and flexibly. You can
answer questions, solve problems, demonstrate your expertise and give advice. Communication is what
sells and is what brings your customer back.
Therefore, the goal of online businesses should be to emulate the more interactive customer service of
offline businesses. By even opening the possibility of dialogue, you immediately show your customers
that your e-business is willing to answer individual questions and provide responsive, personalised
customer care.
Here, there's no better way to forge a customer relationship than by placing an 0800 number on your
website to your sales or customer care departments. A free telephone number reveals that you value
customer interaction and, perhaps more fundamentally, it indicates that your online business is a
legitimate, reliable one.
Next, look at how your website content and design interact with your online shoppers. Is there an e-mail
link for customer queries or a contact page to a sales representative? As we know, community creates
loyalty, so consider a broad range of interactive tools: telephone, e-mail, newsletters, and opinion forums
for your e-business. A rapid e-mail response to customer support requests, implementing a live
customer-care telephone service, or providing a human face to online troubleshooting functions – these
are the keys to making your interface interactive.
A C T I V I T Y 4 1 0 m i n u t e s
Learn how to say 'good morning' in three European languages.
157
INTRODUCTION TO BUSINESS OPERATIONS
health and safety, consumer protection and company laws can face serious consequences when
problems arise.
There are a number of laws and regulations that lay down how organisations must deal with customers,
including:
The Disability Discrimination Act 1995 – designed to protect disabled people from discrimination in
employment and to increase access to goods, facilities and services. The Act defines 'disability' as
'a physical or mental impairment which has a substantial and long-term adverse effect on a
person's ability to carry out normal day-to-day activities.'
Since October 1999, organisations have had to make 'reasonable adjustments' to accommodate
disabled people and from 1 October 2004, the Act required all organisations to provide access to
buildings and the ability to move freely inside them.
The Data Protection Act (DPA) 1998 – aims to promote high standards in the handling of personal
information by organisations and so protect a person's right to privacy. Under the terms of the
Act, organisations holding information may need to register and comply with a series of principles,
covering such matters as accuracy and security of the information, and its use for lawful
purposes.
The Consumer Protection Act 1987 – makes it a criminal offence for an organisation or individual
to give misleading price information about goods, services, accommodation or facilities they are
offering for sale.
The Supply of Goods and Services Act 1982 – states that the seller of a product or service should
use 'reasonable care and skill', eg a tour operator or travel agent should make sure that they
carry out a booking correctly, the product itself should be of a generally satisfactory standard, and
it should comply with any descriptions.
The Package Travel Regulations 1992 – stem from a European Union Directive whose main aim is
to give people buying package holidays greater protection in law and access to compensation
when things go wrong. The Regulations place a number of duties on package holiday organisers
to provide, for example, clear contract terms, emergency telephone numbers, compensation
options if the agreed services are not supplied and proof of the organiser's security against
insolvency.
The Trades Description Act 1968 – aims to protect customers against false descriptions, either
verbally or in writing, given by suppliers of goods and services eg, any description of a hotel or
tourist attraction must be truthful at the time it was written (if circumstances subsequently
change, the operator must inform the customer).
A C T I V I T Y 5 1 0 m i n u t e s
What makes a package holiday?
158
7: MANAGING CUSTOMER CARE
The benefits of good customer service and Effective selling leads to greater customer
selling satisfaction and can achieve:
Written selling methods include brochures, point-of-sale (POS) materials, flyers, Internet sites and direct
mail letters.
Face-to-face is by far the most interactive and persuasive selling method used in travel and tourism, and
takes place in a variety of settings, eg over the counter in a travel agency, on-board a cruise ship and in
hotels.
Telephone selling direct to customers is now big business in travel and tourism. Many of the major
holiday companies have telephone sales operations, sometimes in purpose-built call centres. Telephone
selling complements their other sales activities, such as direct mailing of brochures, holiday hypermarkets
and High Street travel shops.
The AIDA technique is commonly used in travel and tourism marketing, but can be applied to selling
methods as well, for example:
Attracting ATTENTION by creating imaginative point-of-sale and window displays and by having
enthusiastic staff;
Maintaining customer INTEREST by asking 'open' questions and using a range of visual 'triggers',
eg brochures and web images;
Creating a DESIRE on the part of the customer to buy, perhaps by 'selling up', eg offering a 5-star
rather than 4-star hotel room for only a small extra cost;
Stimulating ACTION by customers, by using sales techniques to move them from 'I'd like' to 'I'll
buy'.
159
INTRODUCTION TO BUSINESS OPERATIONS
The key to success in this stage of the sales process is to concentrate on three types of statements
during the product presentation, namely:
Features statement – involves highlighting the features of a particular product or service to the
customer, for example the number of rooms in a hotel or the facilities on offer in a holiday centre.
Advantages statement – indicates what the product or service can do in general for the customer.
For example, the fact that a departure time of 15.30hrs for a flight means that the client will not
have to get up early to get to the airport.
Benefits statement – expresses specifically what the product can do for the individual customer.
Product knowledge is crucial to the success or otherwise of this part of the selling process.
Staff must familiarise themselves with the features of particular products and take every opportunity to
experience the products and facilities for themselves, in order to be able to speak with authority and
confidence.
After-sales service
It is important for all organisations and staff involved in selling to remember that the process doesn't end
when the customer has parted with his or her money. Just as we expect an after-sales service for
consumer and household items we buy, the sellers of hospitality, travel and tourism products and
services too must offer this service to their customers. Adding a new customer's details to an existing
database should be the first step in developing a long-term relationship that will hopefully benefit both
the organisation and the customer.
160
7: MANAGING CUSTOMER CARE
Up-selling and cross-selling are two sales techniques used by professional sales and service staffs to
increase sales.
Up-selling refers to situations where a customer buys a product or service, and is encouraged to spend
more for additional features or packages. They are upping the amount they are spending, albeit for more
or better services or products.
Consider the customer shopping for a basic family car. The salesperson informs him that Mums love
having the model with the DVD player in the backseat for the kids. So he buys that model with a fancy
video system and then buys the extended warranty too.
Another example is from Amazon – when placing items in your cart you are shown what 'people who
purchased this item also purchased'. While this can be costly to implement, online up-selling is rumoured
to increase sales by 50%.
Cross-selling refers to situations where a customer buys a product or service, and is simultaneously sold
related items that often complement their purchase. For example: A customer buys a suit and is then
offered a colour co-ordinated silk tie and shirt to go with it.
It used to be rumoured that McDonalds attributed 20% of its revenue to sales of French fries and all the
counter staff has to say are the five magical words 'Would you like fries with that?'
Whether this rumour is true or not, McDonald's is indeed really successful in cross-selling french-fries,
apple pies and other stuff that you didn't think of buying, but bought nevertheless just because it was
suggested to you.
Beyond the fast-food industry, cross-selling has been used successfully in many other industries, eg
Motor insurance and credit packages are sold when customers buy cars;
Printers (and reserve cartridges) are sold when customers (both consumers and business buyers)
buy computers;
Warehousing facilities, land transport distribution and other supply chain services are sold when
customers buy air or/ and sea freight;
Dessert wine is sold with the customer's pudding; port is sold with the cheese and liqueurs with
the coffee.
Cross-selling and up-selling are ways of increasing either the range or the value of what you sell by
pointing out new purchase possibilities to these customers. Alerting customers when new, upgraded or
complimentary products become available – perhaps through regular e-mails or newsletters – is one way
of increasing sales.
161
INTRODUCTION TO BUSINESS OPERATIONS
Providing free products that will help customers look after or make the most of their purchases;
Sending reminders when services or check-ups are due;
Offering preferential discounts to existing customers on further purchases.
To retain your customers' trust, however, never try to sell them something that clearly doesn't meet their
needs. Remember, your aim is to build a solid long-term relationship with your customers rather than to
make quick one-off profits.
Satisfied customers will contribute to your business for years, through their purchases and through
recommendations and referrals of your business.
A C T I V I T Y 6 1 0 m i n u t e s
What cross-selling opportunities are available to a travel agent?
In person
By telephone
By e-mail
You may be able to help them yourself but if not you should seek information or help from a colleague.
If this is the case, the customer should be told what is happening and how long it will take before you
are able to get an answer. If you have promised to get back to the customer by a certain time, you must
check with your colleague and contact the customer even if you don't have the answer.
If you handle the complaint successfully, your customer is likely to prove more loyal than if nothing had
gone wrong.
Complaints should be handled courteously, sympathetically and – above all – swiftly. Make sure that you
follow the organisation's established procedure for dealing with customer complaints, which at the very
least should involve:
Listening sympathetically to establish the details of the complaint and trying to see the situation
from their point of view
Asking questions if you are not clear on any points of the customer's complaint
Recording the details together with relevant material, such as a sales receipt or damaged goods
Finding a solution to the problem (by consulting other staff if necessary) and agreeing the
solution with the customer
162
7: MANAGING CUSTOMER CARE
Offering rectification – whether by repair, replacement or refund or provide support for the
customer by saying that the complaint will be fully investigated and matters put right as soon as
possible
Taking appropriate follow-up action, such as a letter of apology or a phone call to make sure that
the problem has been rectified
If your company is proud of the way it corrects problems – by offering no-questions asked refunds, for
example – make sure your customers know about it. Your method of dealing with customer problems is
one more way to stay ahead of your competitors.
Listen There is a reason why we have two ears and one mouth. Listen for the content
and not the method of communication the customer is using. Use active listening
skills such as nodding your head or leaning forward to show interest
Check your body Make sure your body language is saying to the customer 'I want to help you'.
language Smile and stand erect with your hands at your side, but never on your hips.
Avoid leaning against the counter or slouching in the chair.
Show empathy Show the customers that you understand their 'pain'. Make comments such as:
Commit to action Let the customer know that action will be taken; and then act. One without the
other is just a broken promise. Share with the customer your clear plan of action
such as the following:
I am personally going to take care of this for you. What we are going to do is…
I need to get additional information before I take care of this for you. I am going
to talk with my manager. Would you mind waiting?
163
INTRODUCTION TO BUSINESS OPERATIONS
SUMMARY
164
7: MANAGING CUSTOMER CARE
SELF-TEST QUESTIONS
3 Why do so many hospitality, travel and tourism companies issue their staff with uniforms?
10 What is 'product knowledge' and why is it important for customer service staff to have good knowledge
of the products and services they are selling?
12 Travel and tourism products are 'intangible' – what does this mean?
13 List the key stages of the sales process in travel and tourism.
SELF-TEST ANSWERS
1 Because first impressions are often lasting impressions. So if you walk into a shop/office/hotel etc and it's
untidy or dirty and the first person you speak to is unfriendly, unhelpful and has little knowledge of the
product or service it instantly forms a barrier in your mind. But if, for example, a customer received good
service he or she is more likely to go back to that same company, recommend it to friends etc.
2 Existing customer relationships are opportunities to increase sales because your customers will already
have a degree of trust in your recommendations.
Certain industries demand that the workforce look more united and eager to serve the customer,
so the role of the uniform becomes very important. When the workforce is wearing a uniform it
enables customers to easily identify the customer service assistants who are able to help and
customers approach them more confidently.
If the workforce wears the same clothes to the workplace then they share a feeling of unity and
belonging, which otherwise is very difficult to achieve.
165
INTRODUCTION TO BUSINESS OPERATIONS
4 Listen completely, let them vent, apologise and mean it, ask them how you can make it right – and do
more, assure them that you will fix the problem and thank them – it will go a long way towards winning
them back.
5 This Customer Service Charter sets out the standards of customer service you can expect from an
organisation by telephone, by text phone, by letter, by e-mail, through their web-site or in person.
Where you feel that the organisation is falling short of these high standards, they usually give an
assurance that they will address the problems immediately.
6 Customers benefit by having their needs met in an efficient and friendly manner – producing an
enjoyable experience with less stress!
Staff working in the organisation will also reap rewards, with increased job satisfaction, better
opportunities for promotion, a better working environment, more training and financial incentives.
The main benefits to the organisation of providing excellent customer service are shown below:
7 People sometimes confuse the terms 'customer' and 'consumer'; the consumer is the end-user of a
product or service, but not necessarily the person who bought it in the first place (the customer).
8 Internal customers are people working in the same organisation as you, for example clerical staff,
maintenance staff, receptionists, etc, who you come across in the normal daily course of events and who
provide you with services and support.
The sort of people we normally think of as customers are sometimes referred to as 'external' customers,
to distinguish them from work colleagues. If we begin from the point of view that everybody is unique,
then the number of 'external' customers for any hospitality or travel and tourism enterprise is likely to be
immense, each with different needs and expectations.
9 The Act was designed to protect disabled people from discrimination in employment and to increase
access to goods, facilities and services.
10 You must know what you are selling to be an effective seller. If you don't know the product(s) or service
and can't answer questions, the buyer won't buy the product. You have to know it well and be
enthusiastic about the product to sell it.
11 The Data Protection Act (DPA) 1998 – aims to promote high standards in the handling of personal
information by organisations and so protect a person's right to privacy. Under the terms of the Act,
organisations holding information may need to register and comply with a series of principles, covering
such matters as accuracy and security of the information, and its use for lawful purposes
166
7: MANAGING CUSTOMER CARE
12 Selling intangibles is selling relationships and value rather than the capabilities of products. While a
product is tangible in nature, services are intangible. It doesn't provide a physical presence that you can
touch and feel. For example travel insurance provides a certificate or policy as physical evidence that you
have it, but the insurance itself is based upon a good faith relationship between insurers and the insured.
Also, services are perishable in the sense that they can be here today and gone tomorrow. Finally, you
do not get ownership with a service, since it is just an experience. And you cannot sell it once you have
used it.
14 'Closing the sale' is all about persuading the customer to make a commitment to purchase the goods or
services.
15 The letters AIDA stand for Attention, Interest, Desire and Action.
ANSWERS TO ACTIVITIES
There are important areas of customer service which are more difficult to measure. Many of these are
human factors such as a receptionist's telephone manner or a tour leader's conduct while leading a
group. In these areas it is crucial that feedback from your customers about their perceptions of your
customer service is sought.
Customer surveys, feedback programmes and occasional phone calls to key customers can be useful
ways of gauging how customer service levels are perceived.
2 According to the Government's Small Business Service some of the things customers find most annoying
include:
Talking to a recorded telephone message, being held in a queue or paying premium rates for
advice;
Having their consumer rights ignored – such as being refused a refund for faulty goods;
Bureaucracy;
Broken promises;
Inflexible delivery times.
167
INTRODUCTION TO BUSINESS OPERATIONS
3 The reasons why customer service in travel and tourism is important include:
Tourism is highly susceptible to service failure because of the very large service providers in the
industry
It relies heavily on people and human nature dictates that mistakes must happen
Although not European, but as many countries have so many Japanese Ohayo gozaimasu
visitors:
(a) Transport
(b) Accommodation
(c) Other tourist services (not ancillary to transport or accommodation) accounting for a
significant proportion of the package, such as a tour guide.
In the UK, anyone who offers for sale (other than occasionally) package holidays must
comply with the Package Travel Regulations 1992. These set out travel organisers'
responsibilities to their customers and remedies available to them should there occur a
breach of the regulations.
Where a tour operator has failed to honour its contractual obligations to a customer, it may
be liable to pay compensation.
6 Travel agents can cross-sell other travel components such as transfers, car hire, hotels, rail tickets,
insurance, sightseeing tours, extensions to the holiday/break, currency and travellers cheques,
guidebooks and vouchers.
168
CHAPTER 8
INFORMATION TECHNOLOGY
Chapter objectives
In this chapter you will learn
The impact of technology on organisations
Computer reservation systems
Global distribution systems
The internet and the world-wide web
Information systems
Supply chain management
Channels of distribution
E-procurement and e-distribution
Topic list
The impact of technology
The Internet
Information systems
Supply chain management
Distribution channels
E-procurement and e-distribution
169
INTRODUCTION TO BUSINESS OPERATIONS
Hotel reservations might be done in a similar way, though telex or post was often used to avoid the cost
of an international phone call. Often clients' holidays could not be confirmed until long after they had left
the travel agent.
From the mid-1970s in the United States, United Airlines and American Airlines extended their Apollo
and Sabre reservation systems to make it quicker for travel agents to check schedules and availability,
and to buy tickets. This was so successful that the two airlines were deemed to be having an unfair
advantage, and were made to list other airlines' flights too. But they listed these after their own flights,
until this and a host of similar practices were banned under US antitrust legislation.
Other airlines introduced their own systems, but Apollo and Sabre continued to dominate. Other airlines
would pay a booking fee, and travel agents would pay for access to the system. But the main benefit of
the systems was in their influence on which flights were chosen by the travel agents.
In 1982 Thomson introduced the UK's first computerised reservation system (TOPS), and this tripled the
productivity of Thomson's reservation staff. In many cases clients' holidays could be confirmed while they
were still at the travel agent. Within four years Thomson had closed down their telephone reservation
facility. The scope of CRSs has expanded to include other features such as hotel reservations.
International hotel chains and tour operators followed the lead of the airlines. The first computerised
hotel reservation system (Holidex) was in 1965, and in 1977 the same system was the first to combine
with an airline CRS.
Client request patterns can show which products the clients really want;
The relative performance of competitor products on the CRS can be assessed.
170
8: INFORMATION TECHNOLOGY
Distribution Systems (GDS). (What is 'distributed' is the suppliers' inventory - eg. air travel seats).
After a series of combinations, there are now four dominant GDSs, two originating in the US:
Sabre originated from the American Airlines reservation system of the 1960s. It owns
Travelocity.com, which was the first website to allow the public to reserve, book, and purchase
tickets without the help of a travel agent or broker. Sabre also linked to European travel agents,
but in 1987 the major European airlines, led by British Airways, refused to grant it ticketing
authority for their flights. Subsequent legal action failed to overturn this ban.
Worldspan was formed in 1990 by Delta and Northwest airlines and TWA, and was eventually
acquired by Travelport, who also own Galileo (see below), but operate the two GDS's as
separate entities.
Amadeus was created in 1987 by a consortium led by Air France and Lufthansa, and later
formed partnerships with other European airlines, including British Airways.
Galileo: in 1976 British Airways, British Caledonian and CCL launched Travicom, a multi-access
reservations system. This was used by almost all automated travel agents in the UK, and was
replicated in many parts of the world. In 1987 the system was replaced by Galileo, based in part
on Apollo, and in 1993 a consortium including British Airways, KLM and United Airlines combined
Apollo and Galileo and marketed it as Apollo in the US and Galileo elsewhere.
American
Airlines 1959 Trans
World 1964
1960 SABRE
PARS United British
Airlines 1971 Caledonian,
1970 APOLLO BA, CCL 1976
Delta TRAVICOM Continental
Airlines 1982 Airlines 1982
1980 DATAS II BA,KLM, SYSTEM ONE
1986 Swissair,
Alitalia, Air France,
COVIA Covia 1988 Lufthansa,
1990 1990 Iberia 1991
GALILEO UK
AMADEUS UK
1993
1995
2000
SABRE WORLDSPAN GALILEO AMADEUS
While the US economy is the largest, the European tourism market is of similar importance because:
The average amount of paid holiday in the US is about 10 days, compared to about 30 days in
Europe;
Many workers in the US do not take their full entitlement - about a third take 50% or less;
171
INTRODUCTION TO BUSINESS OPERATIONS
Less than 10% of US citizens hold passports (though, of course, there is huge internal travel and
tourism).
The big four all face challenges. They have been traditionally based on mainframes, which are powerful
and reliable but inflexible and expensive to maintain. The low cost of modern server hardware and the
availability of reservation software, such as QPX from ITA Software, has allowed airlines to significantly
increase the use of their own websites, and avoid the GDS distribution fees. The major GDS's are
offloading processes from their legacy mainframes to the lower cost servers, and achieving higher
performance. This is necessary due to an ever increasing look-to-book ratio (the number of times
people look up various alternatives, compared to the number of times they make a purchase). This ratio
is also increased by the growth of robotic software which automatically scans a number of
alternatives.
In 2006, four companies (Patheo, G2 Switchworks, ITA Software, and Farelogix) offered a new model
with much lower distribution fees, supposedly made possible by using more modern technology, and
automating some aspects such as refunds and reissuing tickets. These and similar companies are known
as GDS New Entrants (GNE - pronounced 'genie'). But Patheo and ITA dropped out, and in 2008 G2
was acquired by Travelport, mainly for its travel agent workstation, which allows access to multiple
GDSs.
The huge number of travel agents hooked into the GDS's, and links between GDS's and a host of
suppliers makes revolutionary change unlikely. The future of the GDS's seems secure, and they
themselves will evolve away from the mainframes.
The GDSs did eventually make massive enhancements to their systems to cater for hotels, but by that
time many hotels were using separate computer systems which better suited their needs, and which
linked in to the GDSs to get access to the travel agents.
A C T I V I T Y 1 1 0 m i n u t e s
What is the difference between a CRS and a GDS?
2 The Internet
2.1 The Internet and the World Wide Web
The Internet (also known as 'the Net', the 'information super-highway' or 'cyberspace') is a vast
computer network offering the ability for computers across the world to communicate via
telecommunications links. Information can be exchanged either through e-mail or through accessing and
entering data via a website: a collection of screens providing information in text and graphic form.
The 'World Wide Web' (or 'Web') is a navigation system within the Internet. It is based on a technology
called hypertext which is a method of formatting text for display as 'pages' with various features such as
tables and links ('hyperlinks') to other pages, which can be anywhere on the Internet.
172
8: INFORMATION TECHNOLOGY
When you view a document that contains hypertext links, you can view any of the connected documents
or pages simply by clicking on a link. The web is the most powerful, flexible and fastest growing
information and navigation service on the Internet. In order to 'surf' or navigate the web, users need a
web client (called a 'browser') which interprets and displays hypertext documents and locates pages
pointed to by links. Internet Explorer is the browser from Microsoft; alternatives include Firefox and
Safari.
New PCs come pre-loaded with the necessary software to surf the Internet and send and receive e-mails.
Physical connection can be via a modem and phone line or broadband connection, and optionally a
router with local radio link (Wi-Fi). Most laptops and Personal Digital Assistants (PDAs) such as the Palm
Pilot and iPod Touch, use Wi-Fi. Many mobile phones can also access the Internet via Wi-Fi or their
cellular radio link. Wi-Fi 'hotspots' are increasingly common in public places.
Global marketing, even though a website is produced locally. The global penetration of the
Internet gives it a significantly larger audience than any of the television networks, print media
outlets (newspapers and magazines), or other advertising vehicles;
Small initial investment - web sites can be created quickly and cheaply. Over time they may
become large and complex, but individual updates can usually be done swiftly;
Reduced printing and general sales supports costs - brochures, catalogues, user guides, and
manuals can all be accessed on the Internet by a large proportion of customers, and can be
updated quickly and easily;
Easier access to detailed product information for the customer, available at all times;
Potential customers are in control of what they see on the Internet, and do not feel pressurised
by 'hard sell' methods;
Simple recording of statistics - visits to the site pages, and the resulting sales.
A - Attention and Awareness: get the customers' attention and make them aware of the product;
D- Desire: create a favourable attitude, with emphasis on the superiority over competing products;
A - Action: stress the immediate desirability of the product and make the sale.
The customer may visit the site intentionally as a result of its web address (Universal Resource
Locator (URL)) being on some other media, such as a newspaper advertisement. The URL
should be short and to the point, especially if it has to be remembered from, say, a TV ad, - eg.
www.companyname.com.
The company may also send out periodic e-mails to previous customers and other viewers who
have shown sufficient interest to register their e-mail addresses (there should be a part of the site
173
INTRODUCTION TO BUSINESS OPERATIONS
which facilitates this). The e-mail will contain one or more clickable links to the company site, and
can be made an attractive advertisement. Such e-mails should always include an 'unsubscribe'
button so the recipients can stop receiving the e-mails if they so wish. It is possible to buy lists of
e-mail addresses, but this is generally not good practice and the e-mails might well be classed as
'spam'.
The users may follow links to the site from other sites, such as articles, discussions, forums, social
networking sites, blogs, and news.
Word of mouth is the way about a quarter of shoppers get to know about a web site. But the
usual path to a site, followed by about a third of people, is via a search engine, such as Google or
Yahoo. The customer may type in the company name, or more often the name of the product. It
is therefore crucial that the company's web site appears high on the list of sites returned by the
search engine. This can be achieved by:
Paying for a slot in the short list of 'sponsored links' which is at the top of most search
engine pages. But this is expensive, and users may skip these as a matter of course.
Having links to the site from other sites. The search engines are secretive about the exact
methods they use for ranking sites, but the number of links to the site is a major factor.
Increasing the number of 'hits' by making the site attractive and informative, with links to
other items of interest, so viewers will return and also be encouraged to add links to it
from their own sites and in recommendations on social sites, blogs, and forums. Buttons
can be added to the company's site to make this easy.
Including in the site all the words that a customer searching for the product might type in.
There is a special section (the metadata section), not seen on the displayed page, where
such terms can be inserted, if they do not appear in the normal visible text.
Submitting the site to the various search engines. The site will be found in any case by
web-crawlers - programs used by the search engines to scan the Internet.
The company may also pay for an advertisement in a side panel of the search engine - this will
appear (on a random basis) if a user types the product name or one of several related terms.
There is usually a charge for every time a user clicks on it. Many other types of site carry similar
advertisements.
(b) Interest
Web pages can be very attractive, with photos, animations, videos and so on. But it is easy to do
too much of this and divert attention from the product itself. Sites should include:
Publicity and information about any exhibitions or events run or sponsored by the
company;
E-zine - special interest newsletter, which may also be distributed via e-mail;
174
8: INFORMATION TECHNOLOGY
(c) Desire
This is the most difficult part. The transition from interest to desire has to connect the benefits of
the product with the customer's needs and wants. Then presentation of a 'unique selling point'
makes the customer want this particular product. It can be a feature of the product, or a
promotion such as reduction in price.
(d) Action
Purchasing the product should be made very easy. The usual method is a virtual 'shopping basket'
which accumulates the products the customer wants to buy, and a button to go to the checkout
process. Payment by credit card is the most popular method, but there are several alternatives
such as debit card or Paypal.
Security for card usage is important, but care should be taken not to lose a sale at this stage due
to a complex form or an ambiguous or unnecessary question. Details of previous customers
should be stored (unless the customer requested otherwise) and used to cut down on the typing.
Some sites use 'one click' ordering for previous customers that have permitted it, but some
method of prior 'logging on' is normally needed.
Different delivery options with varying speed and cost should be available, and many sites also
allow the progress of delivery to be tracked by the customer. Each customer should also be sent
an e-mail confirming the purchase, and giving details of product, price, delivery and complaints
procedure.
Alternatively, some items can be downloaded directly to the customer. These include music,
computer software, online books, talking books, videos, pictures.
Having agreed to make a purchase, customers can be encouraged to buy further products with
wording such as 'customers who bought this also bought …'.
Once a shopper has successfully purchased from a site, there is a 60% chance they will return
and buy again.
Alternatively, an organisation may sell through another company's existing site, with the benefits
of an existing cataloguing system and high numbers of visitors, but with the drawbacks of paying
fees and commission and of competing with other brands on the same channel:
Auction sites: putting merchandise (especially surplus and returned products, and limited-supply
items) up for auction on sites such as eBay.
2.4 E-mail
The term 'electronic mail', or E-mail, is used to describe various systems for sending data or messages
electronically via a data network and a central 'server' computer. E-mail has replaced many letters,
memos, faxes, documents and even telephone calls, and offers many advantages:
E-mails are recorded automatically and can be retained indefinitely, so sender and recipient have
evidence of message transmission.
The user can prepare complex documents (spreadsheets, graphics, photos) for sending as
'attachments' to e-mails. These can be viewed and if necessary printed out by the recipient, as a
convenient alternative to fax.
175
INTRODUCTION TO BUSINESS OPERATIONS
E-mail message management software (such as Outlook Express) has convenient features
such as: message copying (to multiple recipients); integration with an 'address book' (database of
contacts); automatic responses with alternative contact details, sent when the target recipient is
unable to access his or her e-mail immediately; stationery and template features, allowing
corporate identity to be applied; facilities for mail organisation and filing.
(a) The possibility of outsiders 'hacking' into the computer system, and:
Stealing data, such as customer details, or confidential company information. This can also
occur while data is being transmitted over the network;
(b) An attack on the system, where a huge number of false messages are sent from external
computers in an attempt to overload it.
Solutions include:
A Virtual Private Network (VPN) is a computer network in which some or all of the links are part of a
larger network (eg. the Internet).
'Inter' means 'between': 'intra' means 'within'; 'extra' means 'outside'. This may be a useful reminder of
some of the inter-related terminology in this area.
The Internet is used to disseminate and exchange information among the public at large.
The idea behind an intranet is that companies set up their own mini versions of the Internet, using a
combination of their own networked computers and Internet technology. Each employee has a browser,
and a server computer distributes corporate information as well as offering access to the global Net.
Employment information: online policy and procedures manuals (health and safety,
disciplinary and grievance), training and induction material, internal contacts for help and
information.
176
8: INFORMATION TECHNOLOGY
Notice boards for the posting of messages to and from employees: notice of meetings, events,
trade union activities.
Departmental home pages: information and news about each department's personnel and
activities to aid identification and cross-functional understanding.
Bulletins or newsletters: details of product launches and marketing campaigns, staff moves,
changes in company policy – or whatever might be communicated through the print equivalent,
plus links to relevant databases or departmental home pages.
E-mail addresses for the exchange of messages, memos and reports between employees in
different locations.
Individual personnel files, to which employees can download training materials, references,
certificates and appraisals.
Benefits of intranet
Cost savings from the elimination of storage, printing and distribution of documents that can
instead be exchanged electronically or be made available online
Wider access to corporate information and more frequent use made of online documents than
printed reference resources (eg procedures manuals) and more flexible and efficient interrogation
and updating of data
Communication and co-ordination, particularly for multi-site working. The term 'virtual team' has
been coined to describe how people link in to structures which emulate the dynamics of
teamworking (identity, solidarity, shared goals and information), despite team members being in
different locations or constantly on the move (for example, sales representatives).
Whereas an intranet resides behind a firewall and is accessible only to people who are members of the
same company or organisation, an extranet provides various levels of accessibility to outsiders. Only
those outsiders with a valid username and password can access an extranet, with varying levels of
access rights enabling control over what people can view. Since information will not be available to the
public in general, it can be used as part of a relationship marketing strategy. Examples include the
member-only pages of professional bodies (and their student equivalents), which make information and
downloads available only to registered members.
Extranets are useful tools for business partners. They can share data or systems to provide smoother
transaction processing and more efficient services for customers. Extranets therefore allow better use of
the knowledge held by an organisation – by facilitating access to that knowledge. An extranet may be
used to:
Publicise loyalty schemes, sponsorships, exhibition attendance information and other promotional
tools;
Provide online presentations to business partners and prospects (and not competitors).
177
INTRODUCTION TO BUSINESS OPERATIONS
EDI is the electronic transfer of business information, with the information being sent in a format that
conforms to certain standards. It introduces the possibility of 'paperless' trading and promises the end of
repetitive form filling, stock orders and other forms of 'paper shifting'. EDI is used predominantly
between large business customers and their suppliers eg, General Motors in the automobile industry use
EDI as a part of the 'just-in-time' (JIT) organisation of the supply of components and raw materials to
their assembly plants.
EDI is also of growing significance in the retail trade, enabling a large superstore such as Tesco to
organise supplies from a central warehouse (and from external suppliers) to its chain of retail stores.
Using EDI and electronic point of sale (EPOS) technology, Tesco deals with over 1,000 suppliers across
computer networks so that stocks can be replenished exactly when needed, forecast sales patterns
passed on to suppliers, and invoices forwarded.
In banking and finance, EDI and related applications are revolutionising the entire system of moving
funds, encouraging the emergence of fully-internationalised money and securities transfer.
EDI can be transmitted over almost any transmission system, including e-mail and the Internet protocol.
Personal service is also provided by call centres selling directly to the public, but often using the
Internet in the same way as the public. As direct use of the Internet grows, call centre use is declining.
Contributing to this are long wait times in telephone queues for the centres, inadequate staff training (a
high level of knowledge is required - people ringing in expect it, and are not prepared to wait while the
operator scans through several sites), and high staff turnover due to long working hours.
178
8: INFORMATION TECHNOLOGY
Clients Call
Clients
centres
Insurance,
Travel Insurance,
Foreign Travel
agents Foreign Internet
exchange agents
exchange
Computer
Reservations Tour
System operators
(CRS)
Online facilities are being continuously extended. Online check-in via the Internet is available with
increasing numbers of airlines.
Airlines were given a more effective way of cutting out the 'middle-man' (ie travel agents and in some
cases GDS's) because they could give their customers immediate access to flight reservation systems.
EasyJet, was the first airline to have over half of its bookings made via the Internet.
The Internet has also produced a new set of online travel agents who have lower costs because of their
ability to operate without a High Street branch network. Their low-cost structure makes them a
particularly good choice for selling low margin, cheap tickets for flights, package holidays, cruises and so
forth.
The reduced role of the travel agents led to pressure on them from the airlines. As early as 1995 the
American Airlines capped their commission, previously a 10% flat rate, to $25 a ticket (ie. $50 for a
round trip). In 2001 this was reduced to $10, and in 2002 commission all but vanished. From 2004, BA
stopped paying commission progressively to travel agents, and the other European airlines followed
suite. This had various effects:
The travel agents mounted a legal challenge, arguing that they provided a valuable service to the
public by searching for the cheapest way to travel.
The airlines countered that if the travel agents were not trying to sell more expensive tickets,
there was no commercial reason to offer commission, and a percentage did not reflect the work
involved in a ticket sale. An expensive ticket required no more work than an inexpensive one, but
had been getting much more commission.
The airlines also offered reduced 'Internet only' tariffs, and lured passengers to their web sites by
offering discounts and bonuses, and extra frequent flyer miles for buying online.
179
INTRODUCTION TO BUSINESS OPERATIONS
BA also argued that it had been losing market share to smaller and more flexible rivals, and if it supplied
tickets to the travel agents at a fixed price, the travel agent could then add whatever mark-up the
market would bear.
The GDSs continue to operate, and provide the backbone for the Internet reservations, but now attempt
to become IT partners with the various Internet based travel companies, offering e-commerce and IT
services in addition to the core reservations. They offer facilities for finding the cheapest way to travel.
As ever, the hotels were not far behind. In 1995 Holiday Inn became the first hotel chain to take
bookings over the Internet.
Most Internet OLRS are much smaller companies than the GDSs, with considerable variation in the
services they offer and the geographical areas they cover. One of the largest is Pegasus, which has
links to most travels agents and to tens of thousands of hotels around the world.
3 Information systems
A modern organisation requires a wide range of systems to hold, process and analyse information. An
overall strategy could be undermined by an inadequate strategy for handling information.
They are used for routine tasks in which data items or transactions must be processed, typically handling
sales orders, purchase orders, payroll items and stock records. They provide the raw material in
databases for management information systems and decision support systems.
Virtual reality
Expert systems
180
8: INFORMATION TECHNOLOGY
Groupware is software that provides the means for workgroups to collaborate, exchange ideas, debate,
decide, and co-ordinate activities.
A scheduler allowing users to keep track of their schedule and plan meetings. Microsoft Exchange
Server, for instance, offers a 'Meeting Wizard' which can consult the diaries of everyone who
needs to attend a meeting and automatically work out when they will be available, and which
venues are free.
An address book.
File sharing and distribution utilities, so any of the above can be made available to other members
of the group.
Expert systems are computer programs that allow users to benefit from expert knowledge. They hold
large amounts of specialised data, for example on legal, engineering or medical information, or tax
matters. The user keys in the known facts, perhaps responding to cues from the system if more data are
required, and the system then provides advice or a solution.
A user without a legal background can obtain guidance on the law without having to consult a
solicitor - for example, on property purchase matters, or for company law guidance.
As a non-business example, doctors can use an expert medical system to arrive at a diagnosis.
Decision support systems are intended to provide a wide range of alternative information
gathering and analytical tools, with a major emphasis upon flexibility and user-friendliness.
DSS include a range of models, from fairly simple ones based on spreadsheets, to expert systems.
Decision support systems do not make decisions. The objective is to allow the manager to consider a
number of alternatives and evaluate them under a variety of potential conditions. A key element in the
usefulness of these systems is their ability to function interactively.
An MIS takes information from normal commercial data, processes it, and presents it in ways that are
useful. For example, an MIS might provide information on the following:
181
INTRODUCTION TO BUSINESS OPERATIONS
Sales ledger. Information will be immediately available relating to customer turnover and
payment records. Trend analysis will show which customers' business is growing and which is
falling away.
Marketing. Summaries of enquiries and sales, and customer satisfaction measured by returns,
complaints, and post-purchase surveys.
Suppliers. Information such as amount spent with each supplier, and reliability indicators
(returns, wrong and late deliveries) will prove useful when negotiating, and in summary form
when assessing trends.
Accounting. Information to trial balance stage of the nominal ledger, with comparisons to
budgets and to previous periods.
Modelling. Data from the above areas can be combined into reports and charts, and
incorporated into models to create projections and 'what if' predictions.
Operational level MIS: Operational decisions are often routine, and information is usually presented in
tightly structured and quantitative forms. As the system develops, more operational decisions will be
done automatically, for example allowing a sale subject to a credit limit.
Tactical level MIS: A variety of systems can be used at tactical level, and there may be a greater
reliance on:
Exception reporting;
Informal systems;
Investigation and analysis of data acquired at operational level;
Externally generated data.
Strategic level MIS: At the strategic level the presentation will be very flexible, with several ways of
showing the same data, and the ability to combine different sets of data in novel ways. The emphasis
will be on summaries and comparisons, trends and projections.
An MIS at this level, combined with Decision Support System techniques, is referred to as an Executive
Information System (EIS). An EIS summarises and tracks strategically critical information from the
MIS and DSS and includes data from external sources eg, competitors, legislation, and databases such as
Reuters. The basic design philosophy of EIS is that they should be easy to use as they may be consulted
during a meeting.
A C T I V I T Y 2 1 0 m i n u t e s
Which levels of MIS are appropriate for the following decisions:
The supply chain is the links between the suppliers, manufacturers, retailers and customers. It is the
total series of steps that provide a customer with a service or product.
Supply chain management is the co-ordination of the activities in the supply chain. Ideally it should
spread across several co-operating companies, so that a customer placing an order with a company will
automatically schedule the production and delivery of the required input materials from the company's
suppliers.
182
8: INFORMATION TECHNOLOGY
A concept often used in supply chain management is lean manufacturing. It was originated by Toyota,
and aims at improving efficiency and eliminating product backlogs. It should also synchronise production
to customer demand rather than long-term (and often incorrect) forecasts.
Lean production or lean manufacturing is the continuous elimination of waste or any activity that
consumes resources without adding value, in design, manufacturing, distribution and customer
services.
Measuring the level of demand for the products the company produces or intends to produce, and
estimating future demand. This will normally include drawing-up delivery schedules in
collaboration with the customers. This is one aspect of customer asset management, which is
the close integration of sales, market intelligence gathering, and customer service.
Developing strategies with suppliers to ensure the company gets the materials it needs to meet
current and predicted future demand. This includes methods to monitor and measure the flow of
goods, and detect discrepancies with what was planned and to give early notice of any impending
bottlenecks. The materials should arrive at the manufacturing point on a just-in-time (JIT) basis
to reduce excess stock holding.
Examining the manufacturing process (production, testing, packaging and preparation for
delivery) and determining what can be measured with a view to increasing productivity and
checking quality. Consideration is given to such things as the size of batch runs and how to run
machinery without idle periods. There is a general trend to smaller batches tailored for individual
customers.
Agile manufacturing is the quick turnaround of small batch lots at competitive cost, using information
technology in machine control and production planning. It aims to enhance decision-making by having a
faster flow of information among all departments.
Once the products have been manufactured, there must be an adequate structure in place to
distribute it to the customer. The company must determine whether it is more cost effective to
run its own delivery system, or use the services of a specialised delivery company.
Logistics is the management of inventory in motion and at rest. It covers the procurement, movement,
and stationing of material and personnel.
Integrated logistics is the management of an entire logistics chain as a single entity, instead of
separate management of each part.
The payments to suppliers and from customers must also be managed to avoid any cash flow
problems.
Supply chain planners must create a flexible and responsive system for customers to return
defective or excess products.
Since supply chain management covers so many aspects of a company, and because there are several
different approaches to the subject, there is a huge array of software available. Unfortunately many
companies find installing it results in no significant benefit, so great care is needed when selecting a
package. As well as the normal considerations of cost, tailoring, delivery, installation and support, its
performance in the following areas should be assessed:
Data collection - is sufficient data collected? Can the data be gathered automatically from other
software? Is it compatible with existing systems? If data must be entered manually, is this easy to
do? - Can it be done with no training?
Optimisation - is it done quickly enough to be of use? What is it that is being optimised? Are the
results clear and immediately applicable, or do they need 'interpretation'?
183
INTRODUCTION TO BUSINESS OPERATIONS
Decision support - Are comparisons of one scenario with another possible? Are the results
presented so comparisons can be made?
Execution - The day-to-day running of the software. Does it start up swiftly and automatically?
Can it recover easily if a computer crashes? Is exception reporting timely?
The elimination of the 'middle-man', when suppliers and customers find they can interact directly.
Increased competition, since new entrants who embrace the technology can rapidly build a
system which will be responsive to their customers changing needs, and gain market share at the
expense of less responsive existing suppliers.
More demanding customer requirements - including reduced costs, shorter lead times, individual
tailoring, and greater reliability of supply.
Integrators - who manage the supply network and focus on the end customer relationship. They
integrate the whole network and enhance its response to customer requirements.
Producers - who focus on delivery to schedule and within cost. In conjunction with the integrators, they
should ensure that their capacity is fully utilised. Producers are often servicing multiple chains, and so
must avoid capacity and commercial conflicts.
5 Distribution channels
A distribution channel is a path along which goods or services flow from suppliers to consumer, and
payments for them flow in the opposite direction. It can be as short as directly from supplier to
consumer, or may include several intermediaries, such as wholesalers, distributers, agents, and retailers.
The choice of distribution channels affects all other marketing activities, such as pricing and promotion,
and will normally commit the firm to relatively long-term commitments with other firms. But the channels
should be constantly monitored to ensure that they are making the products available at the time and
place of greatest convenience to the user. Factors that affect the choice are:
Customer characteristics - if there are a large number of customers, who are geographically
distributed, and their frequency of purchase is high, then there is likely to be indirect distribution,
184
8: INFORMATION TECHNOLOGY
with several links in the chain between manufacturer and customer, eg manufacturer to
wholesaler to retailer to customer.
Product characteristics - perishable goods, such as ice-cream, imply just one or two links in
the chain, as do bulky goods where the cost of loading and unloading is high. Seasonal but non-
perishable goods, such as Xmas cards, are likely to go via long chains, with stock being held by
intermediaries. Alternatively, production that is seasonal (eg. farming produce) but with a
continuous demand, may require intermediaries with specialised storage.
The available middlemen - there may be no intermediaries available in the right place, with
the right transport and storage capabilities. Or credit requirements may be unsatisfactory. Or a
new intermediary may have all the e-commerce capabilities to make it preferable to existing
channels.
Action of competitors - a competitor may dominate a channel to such an extent that there is a
barrier to entry, eg Avon with the agent to user at home chain. Or competitors may simply be
using all the available capacity in a channel, or be offering incentives that must be matched to
gain entry. Or a competitor may go out of business and leave a gap that must be filled quickly.
The environment - in a depressed economy, a company may try to reduce the final price by
direct selling; or technological progress may create a new market that needs a novel selling
strategy.
The customer goes to the product, rather than the other way round.
The customer cannot inspect the product before purchase, and must rely on representations.
What is distributed by the intermediaries is information. Travel agents do not purchase or hold or
transport any stock, other than brochures (and possibly tickets and printed travel information). In
this respect they bear less financial risk than general retailers.
Travel agents receive commission on sales, and so are comparable to insurance brokers or estate
agents.
Companies in the distribution chain may raise expectations, but have little influence on customer
satisfaction - that is determined by the carriers and by the destination itself.
185
INTRODUCTION TO BUSINESS OPERATIONS
Clients
Distribution
Direct
channel
booking Independent
Travel Agents tourists
Tour operators
Supply
channel
Suppliers of services in travel and tourism are called principals. They provide the products such as
transport, accommodation and amenities. Tour operators are regarded as principals, since they produce
such products as package holidays, and will often purchase transport and accommodation before offering
a package for sale.
The distinction between distribution and supply chains is not always clear-cut. For instance, some of the
travel agents are owned by large tour operators.
A C T I V I T Y 3 5 m i n u t e s
Which of the main elements of marketing, traditionally known as the 'four Ps', is unusual when applied to
travel agents?
E-procurement is procurement using the Internet or other networking system. Normally part or all of
the process is automated.
186
8: INFORMATION TECHNOLOGY
Enterprise resource planning (ERP) is a software system for identifying the resources an organisation
needs, and planning their acquisition and use.
Since which resources are required depends on the manufacturing process, and ultimately on sales and
customer demand, the scope of ERP has extended to cover all the core functions of a company, and any
integrated combination of two or more functions may be called an ERP system.
Typically, ERP software will use the Bill of Materials for a finished product to automatically generate
purchase orders, and forward them to suppliers to achieve a just-in-time (JIT) production cycle.
Extensions of this basic task may be to automatically produce:
Reschedule notices - amendments to pending purchase orders to cancel, delay, speed up or alter the
size of the order;
E-MRO orders - purchase orders for Maintenance, Repair and Operating supplies for self-monitoring
production equipment, eg. numerical control machine tools on automated production lines - many of
these detect and report their own requirements and failures;
E-sourcing is a widely used term that is not well defined. It may mean any use of the Internet to assist
in the purchase of goods and services needed by a company, or it may refer to a number of methods to
improve their quality and reduce their price by using the greater reach of the Internet, such as:
Reverse auctioning, where suppliers bid their services and products for a fixed price set by the
buyer, who may accept any of the bids or reject them all.
Faster procurement, reducing the time to get a new product into the market;
Software can be used to assist in comparisons of price, delivery, and quality between suppliers;
Improved worker collaboration in the purchasing process, since the web-based systems can be
accessible across the company;
Methods and standards that work well in one part of a company can be quickly adopted
elsewhere.
Suppliers can also benefit by becoming more proactive, linking to prospective customers to see what and
when goods are needed.
6.2 E-distribution
Apart from the final link (to the user) in the supply chain, e-distribution is the other side of the coin to
e-procurement, and suppliers and their customers benefit as described above.
The Internet is heavily involved in e-distribution, and the main points regarding selling on the Internet
have been covered in earlier sections.
187
INTRODUCTION TO BUSINESS OPERATIONS
The tourism industry depends greatly on e-distribution, and the Global Distribution Systems have already
been discussed. Hotels, car hire companies, and event organisers also rely heavily on e-distribution, and
may have e-distribution systems which link to the GDS's and are also available to the public.
Supplying 'last minute' rates to Internet users, travel agents, and corporate clients to reduce
the number of unoccupied rooms;
Making current and future room availability known to a large number of potential clients, including
linking into e-procurement systems, sending proactive e-mails, etc.
Automatic allocation of rooms to individuals, or allotments to travel agents and corporate clients;
188
8: INFORMATION TECHNOLOGY
SUMMARY
Information Technology
Airlines create
Computer
Reservation
Information
Systems (CRS)
systems:
Hotels, the Internet and TPS,
Excursions, World Wide Web Knowledge
Global Distribution Events. – web sites systems,
Systems (GDS) – online shopping Expert
- the big four: – AIDA systems,
Sabre, Worldspan, DSS+MIS
Galileo, Amadeus. = EIS
– Direct Access
Distribution by public
E-distribution
Channels – Decline of
E-mail
travel agents
and call centres
EDI
189
INTRODUCTION TO BUSINESS OPERATIONS
SELF-TEST QUESTIONS
3 What is the difference between the Internet and the World Wide Web?
6 What alternatives are there for e-selling without having a company web site?
(a) B2B
(b) B2C
(c) B2G
190
8: INFORMATION TECHNOLOGY
SELF-TEST ANSWERS
2 Declining, mainly due to the increased use of the Internet by the public.
The World Wide Web is the navigation system used within the Internet, and based on hypertext.
7 A hacker is not physically present at the system, and so cannot remove a disc drive.
191
INTRODUCTION TO BUSINESS OPERATIONS
ANSWERS TO ACTIVITIES
1 A computer reservation system (CRS) may be used by an airline, hotel or hotel chain, car hire company,
ticketed event organiser, or any similar organisation, and usually caters for a single company. It is a
database which enables a tourism operation to manage its inventory of rooms or tickets and
communicate with its distribution channel partners.
A global distribution system (GDS) is the term that is often applied to a CRS that has worldwide access
which caters for more than one airline and may include other travel features such as hotel reservation
and car hire.
3 The 4 Ps are product, price, promotion and place. Of these, 'place' is unusual because the customers go
to the product, rather than there being a 'placement' for the product.
192
PRACTICE EXAMINATION
This is a real past CTH examination. Once you have completed your studies, you should attempt this
under exam conditions. That means allowing yourself the full time available of 2½ hours. Do not look
at the suggested answers until you have finished.
193
INTRODUCTION TO BUSINESS OPERATIONS
194
PRACTICE EXAM
QUESTION PRACTICE
CTH diploma courses are all assessed by examination. This method of assessment is used as it is
considered to be the fairest method to ensure that students have learnt the things they have been
taught.
On the following pages you will find a practice exam for this subject. When you have worked through
this study guide and answered the self-test questions you should make a full attempt at the practice
exam, preferably under exam conditions. This will give you the opportunity to practise questions in the
CTH exam format.
The exam questions in this paper are examples of this subject’s questions. The answers provided are
notes used by the examiners when marking the exam papers. They are not complete specimen answers
but are of the type and style expected. In some cases there is a list of bullet points and in others more
text or essay style, however they are representative of the content expected in your responses.
Information given contains the main points required by the Chief Examiner.
Here we are trying to assess your knowledge of the subject and to identify if you can recall the basic
principles, methods, techniques and terminology linked to the subject.
Here we are trying to assess your knowledge of the subject and to identify if you understand and can
demonstrate how principles, methods and techniques can be used.
From this section you need to select three questions from a choice of five. Do not answer more than
three as only the first three answers will be marked. These are essay style questions so you
should select the three that you feel you are the most prepared for. No matter how good the answer is,
if it does not answer the question you will not be given any marks – marks are only allocated when the
answer matches the question.
If you run out of time in the exam jot down the essential points that you intended to include; the
examiner will allocate marks for any correct information given.
It is difficult to assess how much you are required to write for a 20 mark question – some people can
answer in a page, other people need several pages. What is important is that you answer the question
asked – it is about the quality of the answer not the quantity written.
195
INTRODUCTION TO BUSINESS OPERATIONS
20 mark questions
The following descriptors give you information on the CTH marking scheme and what you need to aim
for at each level.
Grade Explanation
(15-20)
(11-15)
(6-10)
(1-5)
Level descriptors
The following level descriptors give you information on what you need to aim for at each grade.
Grade Explanation
196
PRACTICE EXAM
EXAMINATION
Instructions:
You are allowed TEN MINUTES to read through this examination paper before the commencement of
the examination. Please read the questions carefully, paying particular attention to the marks allocated to
each question or part of a question, and taking account of any special instructions or requirements laid
down in any of the questions.
Marks Allocation
Section A = 40% of the module grade
Section B = 60% of the module grade
197
INTRODUCTION TO BUSINESS OPERATIONS
SECTION A
Answer all questions in this section. This section carries a total of 40 marks.
A1 An organisation working to improve quality standards tells all staff they must remember their
internal customers. Which is the most accurate reason?
b) the needs of external customers are best met when each part of the organisation shows
customer care to each other
c) customers must be dealt with in an informal and friendly way at all times
d) everyone in the organisation needs to follow the same quality procedures. (2 marks)
A9 Give two ways a manager can measure business operations performance. (2 marks)
A12 Give four topics which should be included in an appraisal review form. (4 marks)
A13 Why is it important when delegating to delegate both authority and responsibility
for a task? (4 marks)
A15 Define what a system is in management terms and give two examples of systems
used in hospitality or tourism organisations. (4 marks)
198
PRACTICE EXAM
SECTION B
Answer any 3 questions in this section. Each question carries a total of 20 marks.
b) Explain the benefits that such processes can achieve for the employees of
an organisation. (10 marks)
199
INTRODUCTION TO BUSINESS OPERATIONS
200
PRACTICE EXAMINATION
ANSWERS
201
INTRODUCTION TO BUSINESS OPERATIONS
202
PRACTICE EXAM – ANSWERS
SECTION A
A1 b) The needs of external customers are best met when each part of the organisation shows
customer care to each other. 2 marks
A4 Planning directed specifically to the size and composition of the workforce of an organisation. It is
concerned with predicting, evaluating and controlling the size of the workforce. 2 marks
A5 The number of people reporting directly to one person. This number can vary enormously from
one department to another and one organisation to another. May be wide or narrow depending
on how much control is needed. Wide Span of Control = many subordinates reporting to one
supervisor and vice versa: less control. 2 marks
A6 A quality circle is made up of a group of people at various levels within the organisation. These
people will have meetings where they will discuss and attempt to solve problems within the
organisation. Each of these problems will be real problems faced by the organisation and will
require solutions that can be put into practice. 2 marks
A7 The power and control at the apex (with Senior Management) is dispersed to allow the
development and involvement of other staff, at lower levels, more democratic.
Decentralised organisations will spread responsibility for specific decisions across various outlets
and lower level managers, including branches or units located away from head
office/headquarters. 2 marks
A8 The marketing mix is the combination of elements that frame the marketing strategy for a
company in relation to their products and services, in order to help them achieve their marketing
objectives. Traditionally, the marketing mix has focussed on four elements: Price, Product,
Promotion, Place. 2 marks
203
INTRODUCTION TO BUSINESS OPERATIONS
Match people to the right jobs, at the right time, at the right place to maximize business
results.
Evaluate the assets and liabilities of the business from the balance sheet. This shows the
amount of capital used in the business, how much the business owes the creditors, the
amount due from the debtors and the value of goodwill the business earned to date.
Review the cash flow to assess operating, financial and investing activities. The effects of
these activities can be understood through income and expenses from the statement of
income. These help to compare the present and past financial performance of the business
to see if budgets and forecasts are effective.
Understand the customer satisfaction level through complaints and reviews from the end
users. Having consistency and quality in performance and reliability improves goodwill,
which is a key measure for the performance of a business. 2 marks
A10 A merger is when two or more organisations decide to join together to become a single
organisation. An acquisition is where one organisation purchases another organisation and takes
over all its business and obligations. 2 marks
A11 It is how the values and norms that are shared by people and groups in an organisation and that
control the way they interact with each other and with stakeholders outside the organisation.
the décor,
the way people address their managers (by first name, Mr/s or sir/madam),
204
PRACTICE EXAM – ANSWERS
A13 Delegating work, responsibility, and authority means letting others make decisions. As the
manager you should delegate enough authority to get the work done, to allow assistants to take
initiative, and to keep the operation moving in your absence. Also let others know who is now in
charge of this task.
It is the assignment of authority and responsibility to another person to carry out specific
activities, however the person who delegated the work remains accountable for the outcome of
the delegated work. It allows a subordinate to make decisions, ie it is a shift of decision-making
authority from one organisational level to a lower one. 4 marks
A14 Conflict is actual or perceived opposition of needs, values and interests. A conflict can be internal
(within oneself) or external (between two or more individuals). Conflict as a concept can help
explain many aspects of social life such as social disagreement, conflicts of interests, and fights
between individuals, groups, or organisations. Without proper social arrangement or resolution,
conflicts in social settings can result in stress or tensions among stakeholders. When an
interpersonal conflict does occur, its effect is often broader than two individuals involved, and can
affect many associate individuals and relationships, in more or less adverse, and sometimes even
humorous way.
(Conflict resolution can be win-win, where both parties get what they want, win-lose where one
party gets what they want, or lose-lose where both parties don't get what they want.) 4 marks
A15 A management system is the framework of processes and procedures used to ensure that an
organization can fulfil all tasks required to achieve its objectives.
Other examples of management systems include: - ISO 9001 Quality Management, - ISO 14001
Environmental Management, - ISO/IEC 27001 Information Security Management, - SA8000 Social
Accountability. Purchasing systems, reservation systems etc. 4 marks
205
INTRODUCTION TO BUSINESS OPERATIONS
SECTION B
B1 a) Employees can easily take part in the decision making process in a decentralised organisation
especially when it is built upon a democratic structure. Here employees are encouraged to point
out their ideas without recrimination.
Manager discretion. How willing is a manager to open up to the ideas of his/her employees
and the chance given for such occurrence (e.g. holding up staff meeting) and finally, for a
manager to accept and adapt that into the decision made.
By pro-active initiative of an employee to directly point out their ideas / opinions to the
manager or higher authorities of the company with the hope of influencing decision
making of the targeted level.
During appraisal and feedback sessions employee ideas, feelings, views and decisions can
directly be presented to the manager.
Cost-benefit analysis – process of weighing the total expected costs vs. the total expected
benefits.
Force field analysis – analyzing forces that either drive or hinder movement toward a goal.
Pareto Analysis – selection of a limited number of tasks that produce significant overall
effect.
Employee satisfaction. The acceptance of ideas and pride of feeling involved and important
is contributing to staff satisfaction and pride in work.
Staff turnover
Less stress
Improved efficiency in operation caused by improved staff turnover thus affecting morale,
teamwork spirit and time needed to train newcomers.
Customer satisfaction will give positive results to the employer involved during the
appraisal and that could result in bonuses and incentives, even promotions. In mildest
effect, customer’s satisfaction lessens stress level of work environment.
Showing employees how they fit into the 'big picture' of the organisation’s mission and
how their work helps the organisation accomplish its goals.
Measuring performance and results using credible measures that employees understand
and accept.
206
PRACTICE EXAM – ANSWERS
Obtaining and maintaining employee commitment can be the most challenging factor of
the performance formula. But practising good performance management techniques
offers supervisors and managers the ways and means to sustain and improve that
commitment and thereby further leverage their employees’ capacity to perform.
10 marks
B2 a) A supervisor’s role is to set objectives and goals for the team to aim for; establish standards for
members to follow; encourage and motivate each member to increase commitment and
productivity; and to maintain activity within the members and organisation. 4 marks
Moral values
Credibility
Responsible individual not only towards the welfare of his members but also towards the
actions of the group.
Rewards fairly,
c) The activities and functions that a supervisor may be required to undertake are:
207
INTRODUCTION TO BUSINESS OPERATIONS
In its simplest form a tall organisation has many levels of management and supervision. There is
a 'long chain of command' running from the top of the organisation e.g. Chief Executive down to
the bottom of the organisation e.g. shop floor worker. The diagram below neatly captures the
concept of a tall structure.
Managing Director
Tall structures rarely exceed 8 levels of management. This is firstly because the number of layers
(i.e. management level) decreases the span of control. Secondly the disadvantages of the tall
structure begin to outweigh the advantages of a tall structure.
208
PRACTICE EXAM – ANSWERS
There is a narrow span of control i.e. each The freedom and responsibility of
manager has a small number of employees (subordinates) is restricted.
employees under their control. This
Decision making could be slowed down as
means that employees can be closely
approval may be needed by each of the
supervised.
layers of authority.
There is a clear management structure.
Communication has to take place through
The function of each layer will be clear many layers of management.
and distinct. There will be clear lines of
High management costs because managers
responsibility and control.
are generally paid more than subordinates.
Clear progression and promotion ladder. Each layer will tend to pay its mangers
more money than the layer below it.
In contrast to a tall organisation, a flat organisation will have relatively few layers or just one
layer management. This means that the 'Chain of Command' from top to bottom is short and the
'span of control is wide'. Due to the small number of management layers, flat organisations are
often small organisations.
Managing Director
Manager
209
INTRODUCTION TO BUSINESS OPERATIONS
In flat organisational structures, there are fewer levels in the hierarchical order thus with regards
to efficiency it is faster for results to reach the top management. This greatly saves time in
request of feedback and handling complaints or crises. On the other hand, employee’s
involvement greatly increases satisfaction and lower staff turnover rate. 20 marks
B4 Information technology has made major influences on the tourism industry due to the invention
of GDS and CRS. The technologies have enabled the industry to work more efficiently by
connecting everything into one system thus cutting time and process. In the chain of distribution
of tourism for example, a tour operator as the wholesaler has managed to employ the technology
by selling directly to the customers through the internet. They have taken the role of travel agent
while saving costs of commission and contracts.
Management, who serve three major roles as informational, interpersonal and decision making
figures, can easily utilise this new technology as a means to increase the effectiveness of a
business operation. By gathering information through the internet, managers can quickly respond
to up to date demands and apply them directly into the organisation to improve sales. At the
interpersonal level, with the aid of the internet, communication has gone to the fastest speed ever
through email or e-conference which supports business operation through:
All the above contribute to cost cutting, faster communication between employer and staff
(decrease risk of dissatisfaction due to rapid response and convenience, for better control and
command of staff) and response.
While utilising the internet as a sales tool it will conveniently pull customers closer to the sale due
to convenience and speed. The hotel industry for example, can quickly utilise both internet and
CRS together to help customers in self-reservation, and even check in. In each case, hotels could
easily deliver information to customers through websites as a marketing tool. This easily cuts
labour costs and marketing costs (brochures) thus helping the organisation to generate profit
easily. For example:
Front Office
Single electronic cash registers (gives total storing to enable sales to be analysed, price
look up and multi-level pricing e.g. Happy Hours).
Linked point of sale systems e.g. bar, restaurant and main computer (these reduce work
for the staff and supply detailed information about the business to the management).
Charges for bar orders can be added automatically to the restaurant bill.
Orders taken in the restaurant can be sent electronically to the kitchen.
The time of orders can be logged to monitor progress.
210
PRACTICE EXAM – ANSWERS
B5 Students to show knowledge of the subject and cover some of the following areas:
Treat them like human beings ie they are a name not just a number and need respect.
Plenty of praise and rewards along the line to help them feel they are doing an important
job and are vital to the company and its success.
Security: help them to feel they have a job for as long as they want it and don’t have to
feel insecure because they are on a short contract that can leave them with doubts for
their future.
Staff turnover can lead to a business gaining fresh ideas and skills, but too high a level of
turnover can damage the infrastructure of the business.
A business will be better prepared for dealing with leavers if it understands why people leave, and
if they structure a programme to manage staff effectively from the time they are recruited.
Exit interviews
Review working conditions
Review pay and benefits
Job rotation
Job enrichment
Staff welfare
Management style
Accommodation
211
INTRODUCTION TO BUSINESS OPERATIONS
212
INDEX
213
INTRODUCTION TO BUSINESS OPERATIONS
214
INDEX
215
INTRODUCTION TO BUSINESS OPERATIONS
216
INDEX
217
INTRODUCTION TO BUSINESS OPERATIONS
218
INDEX
219