Advanced Diploma Study Guide_MUK.indd - BM Razzak, Brit ...

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Diploma in Administrative Management


contents

IAM Qualifications

How the Diploma Study Guide Works

Unit 1: People in OrganisationsDamien Quinn BA (Hons), DMS, ADFE

Unit 2: Administrative Systems and ProcessesMike Turner MBA, BEd, Dip.M, Cert.Ed, FInstAm,

Chartered MCIPD, MCMI

Unit 3: Professional AdministrationKathleen Stalker Charted Fellow CIPD, FInstAM

Unit 4: Information for Decision-MakingPatricia Denvir BSc (Hons), ADFE, FInstAM (Adv. Dip.), Chartered MCIPD

Unit 5: Case StudyTerence R. Williams BSc (Hons), M.Litt., Cert.FE, Chartered MCIPD

The publisher endeavours to ensure that all its materials are free from bias or discrimination on grounds of religious or political belief, gender, race or physical ability.The copying, storage in any retrieval system, transmission, reproduction in any form or resale of the materials or any part thereof without the prior written permission of The Institute of Administrative Management is an infringement of copyright and will result in legal proceedings.

© 2009 The Institute of Administrative Management

ISBN 978-0-900491-90-0

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IntroductionWelcome to the Diploma in Administrative Management.This award is made by the Institute of Administrative Management (IAM), a 90-year-old professional Institute dedicated to the promotion of the science of Administrative Management, with members across the globe, at all levels of management and in all commercial sectors, including business, manufacturing, government, education and training.

This Study Guide provides indicators and a framework for your personal study. It enables you to reflect on, and to evaluate, the context within which organisational decisions must be made. On completion of the Diploma, you are entitled to become an Associate of the Institute, use the designatory letters AInstAM (Dip.) and earn the right to use the professional title of Incorporated Administrator, so long as you remain in membership of the Institute. You can, of course, progress to further study with the IAM.

IAM QualificationsCandidates who have completed the Diploma in Administrative Management can proceed to the International Advanced Diploma in the same subject, or, alternatively, they may be accepted to proceed to the second year of a relevant university degree programme.

The Advanced Diploma follows on from the Diploma, and is aimed at developing further the knowledge base of practising Administrative Managers. The programme builds on the knowledge acquired at Diploma level.

The Advanced Diploma is considered to be at Degree level (equivalent to the second year of an honours programme), and contains five core units, all of which must be passed to achieve the qualification. It also forms the final part of the Institute’s professional examination. Holders of the Advanced Diploma are awarded Corporate Membership of the Institute, are entitled to use the post-nominal letters of MInstAM (Adv. Dip.) and the professional designation of Incorporated Administrative Manager. The Advanced Diploma consists of four compulsory units and a Case Study or Work Project.

At this stage, candidates can proceed to the Bachelor of Arts (Honours) degree in Strategic Administrative Management, awarded in collaboration with Oxford Brookes University Business School. This programme enables you to ‘top up’ your IAM professional programme to a full British university undergraduate degree.

Bachelor of Arts (Honours) Business Management

It is necessary to complete the Advanced Diploma before proceeding to this programme. The Bachelor of Arts (Honours) degree is designed to provide a stimulating, rigorous and challenging academic experience, which will complement your prior learning with the IAM. The course provides a range of skills, including knowledge and application of techniques of strategic management and administration, as well as developing your transferable skills and encouraging you to adopt an independent and reflective approach to your learning.

On completion of the Bachelor of Arts (Honours) degree in Business Management, you can progress into senior management positions and may wish to further your studies by completing a Masters Degree programme.

For further information about the Institute’s qualifications, please visit the IAM’s

website www.instam.org, or contact Customer Services on 020 7841 1107.

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How the Diploma Study Guide WorksThere are features of the Diploma Study Guide you need to be aware of before you begin, and these are:

1. It is intended to be completed by you at your own pace, wherever and whenever you wish, subject to times of international examination dates and Accredited Centres’ own requirements.

2. While it is mostly self-contained some additional reading may be needed. You will find a list of references/learning and recommended reading at the end of each unit.

3. Each section indicates sources for further reading, and the Internet is a rich information resource. A core textbook is identified for each unit, which will give you more coverage of the subject. Copies of such core textbooks will usually be available in the library of an IAM Accredited Centre. Recommendations for further reading are included for those of you who wish to develop your competence more widely.

4. Each of the five units in the programme begins with an overview followed by a list of learning objectives. These describe the skills and knowledge that you should gain from working through the unit.

5. As you work through each unit, you will find sections covering key areas of the unit. As you work through each section, you will find activities to do, which will help to underline your understanding of the subject matter.

6. At the end of each section, there is a section summary followed by learning activities. The learning activities aim to re-emphasise the main issues outlined in the key areas of the section and give you practice in using the skills or knowledge you have gained, or get you to think about the implications of the topics covered.

7. At the end of each completed unit, you will find details on how the unit will be assessed, along with a list of learning resources and select bibliography.

You are now ready to commence your studies! The Chairman of the IAM’s Council, the Chief Examiner and all of the staff of the Institute wish you the very best of luck in your studies and hope that you will find the programme an interesting, fulfilling and career enhancing experience.

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Diploma in Administrative ManagementUnit [1]

Administrative Systems in the Organisation

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Unit [1]

Unit [1]People in Organisations

overviewThe aim of this unit is to develop an appreciation of the people-management functions within the organisation, to improve leadership and management capability and to become aware of self-management and Continuing Professional Development (CPD).

The unit focuses on people aspects of the organisation, recognising that the greatest asset an organisation possess are the people who work in the organisation. The effective management of people is central to gain a competitive advantage. Central to this unit is understanding how to manage people effectively.

The approach to achieving this is through developing understanding of: the organisational context and how it influences behaviour; the importance of effective self-management; the process for attracting, retaining and developing the people that the organisation needs to achieve its objectives, along with leading and motivating people to optimise performance.

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Diploma in Administrative Management Unit [1]

Administrative Systems in the Organisation

learning outcomesOn completion of this unit, you will be able to:1. Analyse the behaviour of the organisation;

2. Identify types of organisational culture and their impact on individuals and the organisation;

3. Describe techniques to improve self-management and the management of others;

4. Identify methods for recruiting, selecting and developing management capability and skills;

5. Describe appropriate competencies and capabilities for leadership and appraise your own leadership skills.

contentsSection 1 Organisational Behaviour (OB) and Culture

Section 2 Personal Development and Continuing Professional Development (CPD)

Section 3 Human Resource Management (HRM) Practice

Section 4 Managing People and Leadership

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People in Organisations

Section [1]Organisational Behaviour (OB) and Culture

learning syllabusThis section covers the following key areas:

1.1 What is an organisation?

1.2 Organisational behaviour (OB).

1.3 Organisational goals and objectives.

1.4 Organisational culture.

Organisations, in their many various and diverse forms, exercise great influence on us all. Whether our relationship is that of an employee, a customer, a supplier or some other stakeholder, we are affected by organisations in many aspects of our lives. Virtually all the goods and services we consume are the output of the activities of organisations.

Organisations come in many guises, and any list of organisations with which we interact would reveal a range of types serving a variety of purposes and meeting different needs. Each organisation will have its own specific character, features and identity, which are shaped by its purpose, history, leadership and culture. There are, however, common attributes that apply across all organisations and which provide a framework for understanding the complexities of organisations and the behaviour of people within them.

This section takes a detailed look at these common attributes.

[1.1] What is an Organisation?Although organisations vary tremendously, in terms of purpose, structure and operation, it is possible to develop a definition of an organisation and to identify features common to all organisations.

An organisation is a formal structure of relationships, responsibilities and authorities through which specific objectives are achieved.

‘A work organisation is a social arrangement for the controlled performance of collective goals’ (Buchanan and Huczynski, 2004).

Characteristics

z Organisations have a purpose;

z Organisations employ resources;

z Organisations have a formal structure;

z Organisations have to be directed and controlled;

z Organisations are accountable for their actions and decisions to some form of authority.

Mullins (2005) explains the common features of an organisation in terms of people, objectives and structure: ‘People interact to achieve objectives within a structural framework which coordinates and focuses effort. A final factor which underpins these is management, which directs and controls people in the pursuit of objectives.’

Components of an organisation

Mintzberg (1979) contends that any organisation can be described as comprising an operating component (the people who produce goods or provide a service) and an administrative component (managers and analysts who coordinate and supervise).

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Mullins (2005) develops this analysis to identify five basic components: operating core; operational support; organisational support; top management and middle management.

[1.1.1] classifying organisationsOrganisations may be classified according to criteria such as sector, ownership and size. Two broad generic classifications are:

z Private enterprise organisations;

z Public sector organisations.

Alternatively, the terms ‘profit’ and ‘not-for-profit’ can be used; a third major distinction is, arguably, that between ‘production’ and ‘service’ organisations.

The value of classifying organisations lies in recognising that the structure, management and functioning will be influenced by the nature and type of the organisation. The aims and objectives and the behaviour of people in the organisation will also reflect the influence of the organisation’s classification. Finally, the nature of the organisation’s interactions will be influenced by its classification.

[1.1.2] interactions with the environmentAll organisations interact with the environment, and this exercises a strong influence over the structure, management and functioning of an organisation and affects organisational behaviour. The operations of all organisations are affected by a range of external influences, and it is important to identify these influences and to consider their impact.

Organisational performance and effectiveness are dependent on the manner in which the opportunities and challenges in a changing external environment are met. Organisations are open systems, and inputs from the environment affect the process within the organisation that converts these inputs into outputs. The systems approach examines the organisation within itsm environment, and any consideration of organisations and organisational behaviour needs to reflect the multitude of interactions with the environment.

[1.2] Organisational Behaviour (OB)The study of OB is concerned with the understanding of those factors that influence people’s behaviour in the workplace.

Individuals differ in ability, personality, experiences and attitudes, and, consequently, they perceive work in different ways. Buchanan and Huczynski (2004) define the study of OB as, ‘the study of the structure, functioning and performance of organisations and the behaviour of groups and individuals within them.’ Mullins (2005) offers that OB is, ‘the study and understanding of individual and group behaviour and patterns of structure in order to help improve organisational performance and effectiveness.’

The study of OB is a multidisciplinary approach, drawing on thinking and research from a diverse range of disciplines, such as psychology, management organisation theory and psychometrics. OB analyses at three levels – individual, group and organisational; the focus here is at the individual level.

ACTIVITY

Identify which of Mullins’ (2005) operating components best describes the part of your organisation in which you work

ACTIVITY

List and classify five organisations with which you have recently interacted

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[1.2.1] individual differences and perceptionIn approaching OB from the individual perspective, relevant topics would include attitudes, commitment, discrimination, diversity, equal opportunity, empowerment, job enrichment, job satisfaction, motivation, perception, performance management, personality traits, psychological contacts, role theory, socialisation and values. From this lengthy list, the focus in this section is on individual differences and perception.

Individual differences

Individuals differ in the following ways:

z Ethnic origin, physique, gender;

z Early family experiences, social and cultural factors, sexual orientation, national culture;

z Motivation, attitudes, personality traits/types, intelligence and abilities, perception.

These inherited characteristics and socio-environmental influences shape our sense of self and also how others perceive us. The uniqueness or diversity of the individual is determined by the manner in which the inherited and environmental factors combine and interact.

An individual at work is perceived by others in three distinct ways:

1. As a physical person, having gender, race, age and size characteristics;

2. As a person with a range of intellectual, social and physical abilities;

3. As a personality, having a particular temperament.

The differences between individuals offer challenge and opportunity: the challenge lies in the potential for frustration and conflict; the opportunity resides in creativity and innovation. For managers, difference presents the challenge of managing diversity.

What is diversity?

Diversity represents the multitude of individual differences and similarities that exist among people. Managing diversity implies valuing differences. It means relating to, and working with, people who hold different perspectives; who bring different qualities to the workplace and who have different aspirations, customs and traditions.

Differences challenge our views, perceptions and attitudes, and they require an altered frame of reference to assess a situation or event. Valuing and managing diversity requires organisations to recognise the unique contribution that every employee can make.

Valuing diversity emphasises the awareness, recognition, understanding and appreciation of human differences. It seeks to create an environment in which everyone feels valued and accepted – a culture that views difference as a resource contributing to organisational success.

Managing diversity creates organisational changes that enable people to perform up to their maximum potential. This implies a range of practices, which can be categorised as follows:

z Recruitment – attracting applicants from diverse categories;

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z Accountability – treating diverse employees fairly;

z Development – preparing diverse employees for greater responsibility and advancement.

Barriers to managing diversity

Barriers to managing diversity are:

z Inaccurate stereotypes and prejudice;

z Ethnocentrism;

z Poor career planning;

z An unsupportive, hostile, work environment;

z Lack of political ‘savvy’ on the part of diverse employees;

z Difficulty in balancing career and family issues;

z Fears of reverse discrimination;

z Diversity not an organisational priority;

z Performance appraisal and reward systems;

z Resistance to change.

Perception and the perceptual process

Perception is particularly influenced by individual differences. Perceived reality, not actual reality, is central to understanding behaviour. We all view events in different ways; we place our own construct on situations; we all have a unique image of the world.

The information we receive is analysed and judged: some we categorise as significant, some as worthless; we ‘see’ and ‘hear’ what we expect to see and hear. Any situation, any behaviour, can and will be perceived in a variety of ways.

The process of perception explains the manner in which information from the environment is selected, organised and interpreted. Perception gives rise to individual responses to particular situations. The attention we give to stimuli is influenced by internal factors relating to the state of the individual and by external influences.

Internal factors include sensory limits or thresholds, psychological factors – the perceptual set, language and cultural differences. External factors (nature and characteristics of stimuli) include those that are large, moving, intense, loud, contrasted and that stand out from their background.

Perception causes us to attribute characteristics to others, to judge their behaviour and intentions on the basis of past knowledge, to stereotype. Perception gives rise to individual responses to situations. Because they affect a manager’s relationship with colleagues, differences in perception are a cause of many organisational problems.

[1.3] Organisational Goals and Objectives

The interactions and efforts of people to achieve organisational objectives have been identified as one of the common factors in all organisations. This factor is basic to organisation, as it provides a focus for action and both influences and is influenced by organisational behaviour.

ACTIVITY

What policies and practices have your organisation introduced to manage diversity?

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The terms ‘goals’ and ‘objectives’ are not always clearly distinguished by writers. In this section, objectives are seen to flow from goals. This is reflective of the concept of a hierarchy of goals and objectives that establish the function, purpose and direction of an organisation.

Many organisations develop mission statements, setting out the purpose and general direction of the organisation. Mission statements:

z Set out publicly the purpose of the organisation;

z Set out intentions towards stakeholders;

z Provide a rallying point;

z Provide a vision.

Mission statements vary in length, and their value depends on the extent to which they are understood, accepted and made meaningful for people in the organisation.

[1.3.1] goalsGoals express an expectation or desired future state, and affect the inputs and outputs, the processes for achieving outputs and the interaction with the environment. Goals are statements of intent regarding the organisation’s Critical Success Factors (CSFs), such as product/market, resourcing, technology, quality standards and financial aspects.

Function of goals

Goals have the following functions:

z They provide a standard of performance;

z They give a basis for planning and control;

z They provide guidelines for decision-making;

z They give justification for actions taken;

z They influence the structure;

z They help to develop commitment;

z They indicate the true nature of the organisation;

z They provide a basis for evaluating change;

z They provide a basis for objectives and policy.

Goals are an important aspect of organisations, and it is important that they are emphasised, stated clearly and effectively communicated throughout the organisation.

[1.3.2] objectivesObjectives flow from goals and set out the specific intentions of operational units. Clearly defined and agreed objectives state the desired end results and are essential to effective decision-making. Objectives are also critical to establishing the activities to be undertaken and the comparative importance of functions. Objectives facilitate communication between different parts of the organisation and provide criteria for evaluating performance.

In order to be effective, objectives should have the following characteristics:

ACTIVITY

Give an example of a stereotype that is present in your organisation

ACTIVITY

Evaluate the mission statement of an organisation with which you are familiar, in terms of its relevance and impact on employees

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z Further the organisational purpose and aims;

z Conform to values and policies;

z Be realistic;

z Be measurable;

z (Preferably) be set by agreement;

z Set clear and challenging targets;

z Be open to adaptation;

z Form a network.

Ideologies and values

All organisations have underlying philosophies or ideologies that reflect the beliefs, values and attitudes of the dominant coalition within the organisation. This framework influences the culture of the organisation and provides principles which govern behaviour in the pursuit of organisational goals and objectives.

The organisation’s philosophy may significantly influence corporate and individual behaviour, and will focus attention on such issues as ethics and social responsibility.

[1.4] Organisational CultureOrganisational culture is a concept that is to the fore in the study of organisational behaviour. It is a concept that most people will understand, but it is one that is difficult to define or explain precisely.

Drennan (1992) defines culture as, ‘how things are done around here.’

Buchanan and Huczynski (2004) are more expansive, defining culture as, ‘the collection of relatively uniform and enduring values, beliefs, customs, traditions and practices that are shared by an organisation’s members, learned by new recruits and transmitted from one generation of employees to the next.’

The multitude of definitions have in common several attributes, namely:

z Culture is seen as an asset of values and beliefs shared by most in the organisation;

z The values in a culture shape the behaviour of individuals and groups;

z The dominant values are conveyed by symbolic means (stories, myths, etc.).

Organisational culture is concerned with abstract concepts, such as values and norms, which – although they may not be defined, discussed or consciously recognised – exercise a major influence on people’s behaviour.

[1.4.1] types of organisational cultureMany attempts have been made to classify the different types of organisational culture that exist: the best known are those developed by Harrison (1972), Deal and Kennedy (1982) and Handy (1985).

Harrison categorised four ideologies, as follows:

1. Power-orientated – competitive, personality over expertise;

2. People-orientated – consensual, no management control;

3. Task-orientated – dynamic, competency focused;

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4. Role-orientated – legality, legitimacy and bureaucracy.

Handy, similarly, defined four types, as follows:

1. Power culture – central power base, few rules, competitive, political;

2. Role culture – procedures and rules, position power, role over person;

3. Task culture – expert power, adaptable, team-based;

4. Person culture – focus on individual autonomy.

Deal and Kennedy’s four generic types are as follows:

1. Tough guy macho – individualist, high risk, competitive, conflict;

2. Work hard/play hard – fun and action, dynamic, low risk;

3. Bet-your-company – high risk, deliberateness, slow moving, hierarchical;

4. Process – low risk, ‘cover your back’, formality, technical precision.

Culture may also be explained in terms of over-riding features, such as: value driven; customer-focused; service-orientated; high-performance and high-involvement.

These models oversimplify the realities of organisation culture, as most organisations will display characteristics associated with some, or all, of the types. Within an organisation, different departments or sections may display very diverse cultural types or sub-cultures.

Although the limitations of the frameworks are recognised, nevertheless, they provide a useful basis for exploring the culture of organisations.

[1.4.2] influences on organisational cultureOrganisational culture develops over time, in response to a variety of factors and stimuli. Among the most important influences are:

z · Organisation history;

z Nature of business and technology utilised;

z Goals and objectives;

z Policies and practices;

z Structure and size;

z Location;

z Leadership;

z Management style;

z Characteristics of the workforce;

z The external environment.

The interaction of these factors shapes those values and beliefs about how the organisation should operate, which is the basis of culture.

ACTIVITY

List what you feel are the key factors influencing the culture of your organisation

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[1.4.3] impact of organisational cultureCulture can be significant in creating an environment that is conducive to performance improvement and the implementation of change. Conversely, culture can be a barrier to the achievement of organisational objectives, through resistance to change and low commitment.

Culture can have a positive effect by conveying a sense of identity and unity of purpose, facilitating the development of commitment and a sense of belonging. A culture that is effective will be an important ingredient in superior organisational performance, through:

1. Goal alignment, which channels employee initiative, energy and enthusiasm;

2. Fostering integration and consensus, to promote consistency and to reduce conflict;

3. Improved motivation, via participative decision-making, reward and recognition.

section summaryNow that you have completed this section, you should be able to explain what an organisation is; describe how OB is concerned with the understanding of those factors that influence people’s behaviour in the workplace; understand the importance of goals and objectives to an organisation and explain the impact of culture, with its inherent norms and values, on an organisation.

The learning syllabus identified at the beginning of this section, and the information outlined in this summary, are the key issues with which you should feel comfortable, and should provide the basis for wider reading. If any aspects are unclear, look again at the relevant part of this section and consider who might help you to understand these aspects – for example, a colleague, tutor, family member or fellow student.

Learning ActivitiesNow try these:

1. What is an organisation and why do organisations exist?

2. What are the common features of all organisations?

3. Explain the meaning and nature of organisational behaviour.

4. Identify the key influences on behaviour in organisations.

5. Explain the meaning of diversity.

6. Identify the main features of the process of perception.

7. Give examples of how behaviour is influenced by our perceptions.

8. What are goals and what function do goals serve in an organisation? Relate this to your own organisation.

9. Examine and comment on the culture of your own organisation, using one of the frameworks suggested in this unit.

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Section [2]Personal Development and Continuing Professional Development (CPD)


2.1 Personal management and effectiveness.

2.2 Time management and effectiveness.

2.3 Competence, capability and employability.

2.4 Self-managed learning and development; Continuing Professional Development (CPD).

2.5 Stress and lifestyle management.

This section focuses on the manager’s ability for self-development, as a precursor to the effective management of others. It draws attention to issues of personal management, managerial competencies, self-development and work-life balance, which all affect the contribution and effectiveness of the manager.

[2.1] Personal Management and EffectivenessManagers contribute to organisational success through getting the best out of other people and also by getting the best out of themselves. The way in which managers exercise their responsibilities is important: managers are more likely to be successful and effective if they adopt certain basic managerial philosophies and an appropriate managerial style.

How managers treat people influences the effort and performance achieved by staff. Managers need to be perceptive and to understand the feelings of staff. A genuine concern for people and their welfare is invaluable in encouraging performance.

[2.1.1] managerial philosophiesMullins (2005) contends that there are a number of basic underlying philosophies that are likely to make for successful management of people and lead to improved work performance, as follows:

z Consideration, respect and trust;

z Recognition and credit;

z Involvement and availability;

z Fair and equitable treatment;

z Positive action on an individual basis;

z Emphasis on end results;

z Staff and customer satisfaction.

Adopting these philosophies can create a positive climate in which people feel valued and encouraged to contribute their best performance.

[2.1.2] managerial styleOrganisations are more likely to harness the effort and performance of staff by utilising a participative management style. However, although this may hold true as

ACTIVITY

Select one of the philosophies provided by Mullins (2005), and illustrate how a manager you know utilises the approach to effectively manage people

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a generalisation, a key issue in choice of managerial style is matching the style or approach to the contingencies of the situation. The reality is that most successful managers have the capacity to adjust their approach along a continuum of styles in response to the demands of the situation or context.

[2.1.3] managerial effectivenessManagerial effectiveness is defined as ‘doing the right things’, focusing on the outputs and what is achieved. Effective managers:

z Focus on what achieves the objectives of the organisation;

z Plan the effective use of resources;

z Provide direction and clarify expectations;

z Initiate and manage change to improve performance;

z Are adaptive and responsive to circumstances;

z Anticipate and deal promptly with problems;

z Exercise visionary leadership.

Managerial effectiveness may be measured in terms of the quantity and quality of performance levels and the satisfaction and commitment of staff.

[2.1.4] role and contributionIn general terms, the role of the manager is to achieve organisational goals through and with other people. To be effective, managers need to understand this within the context of their function, level, organisation (type, structure, culture, size) and the working environment.

Managers contribute by adding value through obtaining and developing the right people, motivating and managing them effectively, gaining their commitment to the organisation’s values, and building and maintaining relationships based on mutual trust.

To make things happen, the manager should be decisive – prepared to make decisions and to live with the consequences. If mistakes are learnt from, and not repeated, occasional poor decisions need not matter unduly.

[2.2] Time Management and Effectiveness

The management of time is both a personal and an organisational concern: effective management of time reduces stress and improves effectiveness.

[2.2.1] importance of time managementTime management is important for a number of reasons:

z Time is a valuable and scarce resource;

z Lost time is irreplaceable;

z No amount of investment can increase the time available;

z Managers usually have more jobs than there is time to do them;

z Jobs have different priorities.

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[2.2.2] analysing our use of timeIn order to manage time more effectively, one needs to understand the current use of time. The use of time can be analysed by examining:

z Ratio of discretionary to controlled time;

z Time spells – length of time on any one activity;

z Activities – in terms of their importance;

z People – who do you spend time with?

z Places – where do you spend your time?

Key points to look for are:

z Things that need not be done at all;

z Things that could be done equally well by someone else;

z Things we do that waste others’ time;

z Crises that better systems/procedures/planning could prevent.

By examining the facts about how you spend your time, you have a basis for possible improvement areas.

[2.2.3] effective time management z Identify objectives and key tasks;

z Prioritise, by identifying key results;

z Schedule time for important tasks;

z Deal with urgent tasks quickly;

z Delegate effectively;

z Keep on top of paperwork, handle each piece only once;

z Get to grips with interruptions;

z Learn how to say ‘no’.

A 20% IMPROVEMENT IN YOUR USE OF TIME IS POSSIBLE!

[2.3] Competence, Capability and EmployabilityCompetence and capability are related terms for characteristics that affect employability. There is a correlation between the level of competence and capability of an individual and his/her employability and flexibility in terms of career development and progression.

[2.3.1] management standardsManagement standards define what professional managers need to know and should be able to do. The Management Standards Centre has produced a framework that identifies the key aspects of management competence. The broad headings are as follows:

ACTIVITY

Compile a time log, covering a period of a week, and use it to identify the main time-wasting activities in your work and personal affairs

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1. Providing direction;

2. Facilitating change;

3. Achieving results;

4. Meeting customer needs;

5. Working with people;

6. Using resources;

7. Managing self and personal skills.

Each of these headings encompasses a range of functions and activities.

An understanding of the knowledge, skills and attributes necessary for effectiveness is the start of building employability and career resilience. In the ever-changing world of work, the ability and willingness to acquire, develop and utilise knowledge, skills and competencies in evolving roles is central to one’s employability. Flexible, dynamic organisations need people who are flexible within roles and across roles. In this context, self-development and a willingness to develop continuously are crucial.

[2.4] Self-managed Learning and Development; Continuing

Professional Development (CPD)An important part of the process of improving performance is self-development. Self-development entails individuals taking responsibility for their own learning needs to develop skills, to enhance performance and to progress their career. Self-development is now widely accepted as an integral element in management development.

[2.4.1] process of self-development z Identify development needs – review performance, assess competence/skills

against role requirements;

z Define means to satisfy development needs – courses, projects, e-learning, networking, special assignments;

z Personal development plan – development needs, outcomes, activities, responsibilities, timing.

The following steps are a useful framework for self-development:

1. Create a development log;

2. State your objectives;

3. Develop a personal profile;

4. List your strengths and weaknesses;

5. List your achievements;

6. List significant learning experiences;

7. Ask others about your strengths and weaknesses;

8. Focus on present, current, short-term needs;

9. Focus on future, longer-term needs;

10. Plan your self-development strategy.

ACTIVITY

For each of the broad headings for competence, identify the action a manager could take to display competence

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[2.4.2] continuing professional development (CPD)CPD may be regarded as a process that entails systematic improvement in, and extension of, professional knowledge and skills and the development of personal attributes necessary to perform effectively throughout one’s career.

The principles of CPD are as follows:

z It should be continuous, as professionals should always seek to improve;

z It should be owned and managed by the individual learner;

z It should be driven by the individual learner’s development needs;

z It should have clear learning objectives linked to individual and organisational needs;

z It should be seen as an essential part of professional life.

The objectives of CPD are as follows:

z To integrate learning with work in a way meaningful for the individual;

z To stimulate individuals to learn at work;

z To contribute to the development of a ‘learning organisation’;

z To contribute to succession planning and planned career progression;

z To ensure employees have up-to-date knowledge and skills.

The benefits of CPD are as follows:

z Individuals become better learners;

z Individuals profit more from learning opportunities;

z Individuals become more reflective practitioners;

z Individual career advancement is encouraged;

z It provides a template for self-development;

z It creates a more flexible and competent workforce;

z It is a vehicle for change.

The IAM provides a CPD scheme.

[2.5] Stress and Lifestyle ManagementStress-related disorders are the second largest cause of lost working days in the UK. Stress occurs when people are working beyond their capacities or are exposed to situations and pressures with which they are unable to cope. Stress is the state of tension experienced by individuals facing extraordinary demands, constraints or opportunities.

[2.5.1] causes of stressThe various causes of stress include the following:

z Personality – type A personality is more likely to suffer stress;

ACTIVITY

With the help of your manager or a colleague, identify your current development needs. Based on these needs, suggest three development activities you could undertake over the next six months

19



z Inadequate physical working environment;

z Inappropriate job design;

z Poor management style;

z Poor relationships;

z Uncertain future;

z Divided loyalties;

z Frustration;

z Conflict;

z Change.

[2.5.2] organisational consequencesof stress

The consequences, for the organisation, of stress are as follows:

z Lower morale;

z Reduced output and/or quality;

z Increased costs;

z Increased absenteeism and labour turnover;

z Damaged relationships with colleagues/clients;

z Accidents and sabotage;

z Industrial disputes;

z Claims for compensation.

[2.5.3] strategies for reducing stressThe organisational and individual consequences of stress can be highly damaging, and it is important that organisations develop strategies to reduce stress. Buchanan and Huczynski (2004) suggest two broad categories of approach:

1. Problem-focused: improved selection and training, counselling, job design, teamworking;

2. Emotion-focused: self-awareness, exercise, meditation/coping training, time management.

[2.5.4] work-life balanceThe issue of work-life balance has become increasingly topical in recent years, and focuses attention on the need to achieve balance in the relative amounts of time and effort devoted to work and to our personal lives.

The Department of Trade and Industry (2001) states that, ‘it makes good business sense to provide opportunities to achieve a better work-life balance ... payback of increased morale, better effectiveness and productivity.’

20



Organisations can facilitate work-life balance through the provision of so-called ‘family-friendly’ working arrangements, such as flexitime, compressed working hours, annual hours, term-time working, job sharing and teleworking.

Obstacles to a healthy work-life balance include:

z Family-friendly schemes being seen as concessions to women;

z Male domestic absenteeism;

z Presenteeism (being seen at work) as a prerequisite for career success.

section summaryNow that you have completed this section, you should be able to understand the role of successful people management within organisations; explain how time management can reduce stress and improve effectiveness; be able to discuss the correlation between the level of competence and capability of an individual and their career development; understand how organisations can facilitate a good work-life balance and that CPD is an essential element in improving professionalism.


ACTIVITY

Identify polices and practices that your organisation has, or could introduce, to enhance work-life balance


1. How would you attempt to distinguish between an effective and an ineffective manager?

2. Consider how a manager’s attitude to, and assumptions about, people influence managerial behaviour.3. Identify four objectives of time management.

4. Explain the importance of competence and capability for the contemporary manager.

5. What is self-development?

6. Explain how development needs can be identified.

7. Identify the main features of CPD and comment on its importance.

8. Define stress and identify the consequences of stress for individuals.

9. Identify the two broad strategies for reducing stress and discuss the impact of such strategies.

10. Explain the meaning and nature of work–life balance.

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Section [3]

Human Resource Management(HRM) Practice


3.1 Human Resource Management (HRM).

3.2 Managing equality and diversity.

3.3 Disciplinary and grievance procedures.

3.4 Learning and development.

3.5 Planning and implementing change.

This section focuses on the processes for securing the quantity and quality of people the organisation needs to achieve its objectives, for developing those people and for facilitating high levels of commitment and performance. The section also focuses on the processes for effective management of change.

Human resource management (HRM) has a variety of aims and objectives, the achievement of which is contributed to by the practices considered in this section.

The key objectives include:

z Contributing to the achievement of organisational goals;

z Obtaining, utilising and developing individuals;

z Recognising people’s needs at work;

z Respect for the individual;

z Justice in treatment and fair reward systems;

z Stability of employment;

z Good working environment and conditions of service;

z Opportunities for progression and development;

z Democratic functioning of the organisation;

z Full observance of legal requirements.

The legislation and regulatory bodies referred to in this section are specific to the UK. Overseas students should be familiar with the relevant local legislative framework and be able to identify any appropriate regulatory bodies

[3.1] Human Resource Management (HRM)

The term ‘Human Resource Management’ (HRM) has, in recent years, supplanted the term ‘personnel management’. This change has significance in drawing attention to the strategic role of the function. The Chartered Institute of Personnel and Development (CIPD) defines HRM as, ‘the design, implementation and maintenance of strategies to manage people for optimum business performance, including the development of policies and processes to support these strategies’ (CIPD, 2003).

The strategic emphasis underpins the recognition that sustainable competitive advantage resides in making the optimum use of the human resource. The change of emphasis sees the function as a proactive strategic partner working with, and providing expert advice to, management in the organisation. HRM may be regarded as a shared responsibility, with top management, line management and HRM working collaboratively.

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[3.1.1] human resource planning (HRP)The evolution of HRM has led to an increased emphasis on the importance of effective HRP in contributing to effective HRM and in facilitating the achievement of organisational objectives. HRP may be defined as:

‘the strategic process for the acquisition, utilisation, improvement and retention of an organisation’s human resources.’

Essentially, HRP is the means by which an organisation forecasts how many, and what type of, employees it needs, now and in the future, matching the right type of employee to the business needs.

Mullins (2005) identifies four main stages of HRP:

1. An analysis of existing staff resources;

2. Estimation of a probable change in resources;

3. A forecast of staffing requirements to achieve corporate objectives;

4. A personnel management action plan to ensure that the resources required are available when needed.

The HRP process provides a framework to help address staffing challenges facing the organisation. Among the key issues to be faced are succession planning, recruitment problems, expected skills shortages, changing skills requirements, retention difficulties, maintaining competitiveness in the labour market and meeting employee aspirations.

Effective HRP can help to anticipate potential difficulties and allow a proactive approach to be taken.

An important aspect of HRP is succession planning, which focuses attention on the internal employee supply. The succession plan identifies those who will be equipped to fill (usually) senior positions. It affects issues of staff development and training, staff flexibility and the philosophy towards internal promotion.

An effective human resources (HR) plan will enable the organisation to:

z Assess future recruitment needs;

z Formulate training programmes;

z Develop promotion and career-development policies;

z Anticipate/avoid redundancies;

z Develop a flexible workforce;

z Control staff costs;

z Assess future requirements for equipment, facilities, etc.

[3.1.2] recruitment and selectionThe overall aim of the recruitment and selection process is to obtain the quantity and quality of employees required by the HR plan and the personnel management action plan. Within this context, both technical competence and the ability to fit in with the cultural and social structure of the organisation will be taken into account; additionally, compliance with the legal framework and relevant Codes of Practice is required.

ACTIVITY

Identify the main information necessary for effective HRP

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The process has three main components:

z The definition of requirements;

z The attraction of potential employees;

z The selection of suitable candidates.

The key to effective recruitment is a planned and systematic approach, such as that outlined in Mullins (2005).

Defining the requirement – job analysis

Job analysis is a generic term that covers:

z Job description – the recording of the tasks and responsibilities of a job;

z Person specification – a description of the type of person, personality and attributes, of the ideal jobholder (Rogers’ ‘Seven Point Plan’ or Munroe Fraser’s ‘Five Point Plan’ can be used here);

z Job evaluation – an analysis of the job to establish its relative value to the organisation;

z Job classification – the allocation of the job to an appropriate grade.

The process of job analysis collates the facts regarding a post, including:

z Job identification (title, department etc.);

z Tasks (individual work duties, activities);

z Performance standards;

z Procedures;

z Responsibilities (of the jobholder);

z Personal attributes, qualities and qualifications required.

Job analysis is valuable in:

z Providing guidelines for an objective assessment of candidates;

z Assisting in interview planning;

z Suggesting areas for questioning;

z Being a basis for performance review or development training;

z Assisting in the design of working methods and practices;

z Aiding stability and employee retention.

Attracting applicants

The issue is not to simply attract applicants but to attract suitable applicants. This involves knowledge of the labour market and of appropriate methods of recruitment. The nature of the organisation, the position to be filled and the timescale for appointment will all affect the choice of method for attracting applicants. In the context of a competitive market for talented employees, attention should also focus on the reward package offered.

Internal recruitment offers a cost-effective method and has the advantage of candidates who are well known and familiar with the organisation and its culture. Additionally, internal recruitment is positive for morale and can assist in retaining trained, qualified staff.

ACTIVITY

Using either Rogers’ or Munroe Fraser’s ‘plan’, develop a person specification for your job

24



Among the variety of sources of external recruitment to be considered, are:

z Job centres;

z Recruitment agencies;

z Career advisory offices;

z Universities;

z Colleges and schools;

z Professional and executive appointments registers;

z Ex-service organisations;

z Personal introductions;

z Recruitment fairs;

z Advertising;

z Executive search/head-hunting.

The criteria for selecting the most appropriate method include the nature of the organisation and role; cost; local, regional, national or international market and urgency of appointment.

Whatever method is used, there are four key criteria to take into account:

z Capturing attention – impact of headings etc.;

z Arousing interest in the vacancy – details of the organisation and role;

z Motivating application – reward package, career prospects, interests of the job;

z Inciting action.

Recruitment is a positive action, by management, to go out into the labour market, to communicate opportunities and information and to generate interest. This leads, inevitably, to selection, which is the (largely negative) process of eliminating unsuitable applicants to enable an appointment to be made.

Selection

Selection is the process of determining which applicant is (or applicants are) to be appointed. Applicants generally complete an application form or submit a CV, which provides details of their experience, knowledge and qualifications and facilitates the process of shortlisting candidates on the basis of meeting essential and desirable criteria. Those applicants shortlisted can then be invited to attend the selection process.

The wide variety of selection methods that can be utilised in the selection process include the following:

z Personality tests;

z Selection tests;

z Interviews;

z Role play;

z Presentations;

z Group problem-solving;

z References;

ACTIVITY

Draft a recruitment advertisement for the post of administrative manager, in your organisation

25



z In-tray exercises;

z Handwriting analysis;

z Work simulations;

z Assessment centres;

z Peer rating.

The choice, combination and application of methods should reflect the organisation, position, tasks and responsibilities of the post and the nature and number of candidates. Mullins provides a useful review of the relative merits of the main selection methods.

The most widely used method remains the selection interview in its many forms, which include the following:

z Individual;

z Panel;

z Behavioural;

z Structured;

z Competency-based;

z ‘On the move’;

z Situational;

z Stress;

z Unstructured.

Torrington and Hall (2005) define the purposes of a selection interview, whatever its form, as:

z To collect information in order to predict how well the applicants would perform and to measure them against predetermined criteria;

z To provide candidates with full details of the organisation and job to facilitate their decision-making;

z To conduct the interview in a manner that is transparently fair;

z To decide how well the candidates will fit in with the existing staff.

Conducting an interview

z Preparation: Ensure that the candidates have all of the necessary information, such as time, date and place of interview; ensure suitability of time, date, etc.; secure suitable facilities; study specifications to enable response to candidates’ queries; study application form/CV; plan the interview; evaluate yourself and your prejudices.

z Reception of candidate: Ensure candidates are physically and psychologically comfortable.

z The interview: Let the interviewee do the talking; give the interviewee time to frame responses; keep control of the interview; record the facts obtained.

z Closing the interview: Finish in a friendly manner, offering the opportunity for questions.

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Selection decision

The methods of recruitment and selection all culminate in the all-important selection decision. This is often a difficult task, as none of the candidates may fully match the person specification, and the various mechanisms, such as tests and rating scales, are not scientific. Ultimately, the decision is often one based on intuitive and subjective judgement on the part of the recruiters.

The aim, however, is that the process should be as objective as possible in seeking to make the decision. This is greatly assisted by:

z Job analysis;

z A clear interview plan;

z A meaningful grading system.

The process may not yield any suitable candidates, and it is preferable to refrain from making an appointment rather than to appoint a candidate who is unsuitable.

[3.1.3] inductionInduction is the process by which a new member of staff is introduced to the job and integrated into the work group. Although effective induction is a continuing process covering the first few months of employment, it may be regarded as an extension of the recruitment and selection process.

The initial impressions of an organisation are seldom forgotten. Research shows that a new employee is most likely to leave within the first 12 months – and especially the first 12 weeks – of employment. A warm welcome, initial introductions and a properly planned induction programme will do much to reduce anxiety and apprehension and contribute to the newcomer becoming a productive employee.

Objectives of induction

The objectives of the induction process are to:

z Create a favourable impression of the organisation;

z Encourage a sense of belonging and commitment to the organisation;

z Facilitate teamwork;

z Reduce turnover;

z Reduce grievances;

z Reduce the time required for the newcomer to settle in and become productive;

z Ensure acceptance of the new employee by existing staff.

Content of induction

The amount, length and detail of induction varies from organisation to organisation; however, a typical induction programme would include:

z A brief history of the organisation;

z Management structure;

z Policies on employment, training, welfare, etc.;

z Terms of employment, including disciplinary rules and grievance procedures;

z Employee remuneration, how and when paid;

27



z Employee benefits, including pensions, holidays, etc.;

z Health and safety regulations, especially protective clothing, fire risks and drills.

It should be remembered there is a limit to the amount of information that an individual can absorb at one time; the programme should, therefore, be planned carefully and staggered over a reasonable period.

The provision of a comprehensive employee handbook is important insupporting and underpinning the induction process.

[3.2] Managing Equality and DiversityOrganisations operate within a regulatory framework of rules and

regulations which:

z Regulate employer/employee relationships;

z Provide individual rights for employees;

z Strengthen the position of trade unions;

z Ensure that managers act reasonably.

In recent years, the UK has seen an increasing amount of employment legislation, and this has been particularly the case in respect of legislation relating to equality and diversity.

The main UK legislation relating to equality issues covers the following:

1. Sex or gender

z The Equal Pay Act 1970, and 1984 (as amended);

z The Sex Discrimination Act 1975 and 1986 (as amended);

z The Employment Protection Consolidation Act 1978;

z The Social Security Act 1989;

z The Trade Union and Employment Rights Act 1993.

2. Race

z The Race Relations Act 1976.

3. Disability

z The Disability Discrimination Act 1995.

4. Spent convictions

z The Rehabilitation of Offenders Act 1974.

The legislation in the field of equality is continually being amended, and you should consult appropriate websites for up-to-date information.

The legislation provides a solid base for the equality agenda, and this is reinforced, in the UK, by the work of the Equal Opportunities Commission (EOC), the Commission for Racial Equality (CRE) and the Disability Rights Commission (DRC). All these bodies are proactive in working towards the elimination of discrimination, the promotion of equality of opportunity and reviewing the operation of the relevant legislation.

The right to equal treatment is considered to be a universal human right, and individuals are protected, by legislation, from being unjustly treated on the grounds

ACTIVITY

Log on to the websites for the relevant, local regulatory bodies, and, for each, identify the key aims and how these are achieved

28



of race, skin colour, religion, nationality, gender, sexual orientation, marital status or disability.

[3.2.1] discrimination and victimisationDiscrimination may be:

z Direct – when one person is treated less favourably than another;

z Indirect – when a person applies a condition to another and the proportion of persons in a group who can comply is less than in another group; the conditions cannot be shown to be justified; the condition is to the person’s detriment.

z Indirect discrimination, because it is less concrete and more intangible, is much more difficult to identify than direct discrimination.

z Victimisation occurs when an individual is singled out for using a workplace complaints procedure or for exercising their legal rights.

Discrimination is unlawful in relation to:

z Recruitment and selection;

z Employment terms;

z Opportunities for training and development;

z Access to facilities, benefits or services;

z Dismissal;

z Retirement age;

z Pregnancy.

[3.2.2] equal opportunityMost organisations have equal-opportunities policies that are similar in nature. The EOC recommends that, in implementing a policy of equal opportunities, employers should:

z Formulate and circulate a written equal-opportunity policy;

z Ensure that a senior manager is responsible for its implementation;

z Provide equal-opportunity training;

z Establish a team to implement, monitor and review the policy.

Additionally, the EOC recommends that employers should:

z Inform all employees that the company is an equal-opportunities employer;

z Include an equal-opportunities statement in all recruitment advertisements;

z Recruit from all sections of the community;

z Ensure access for all to training and development;

z Make work more accessible through initiatives such as part-time, and/or job share schemes;

z Have in place grievance procedures, to include dealing with harassment.

ACTIVITY

Access your organisation’s equal-opportunities policy and compare it with the local, regulatory guidelines

29



[3.2.3] equality diversity and management

Managing diversity is based on the concept that people should be valued.The IAM policies state that, ‘The Institute is committed to the promotion ofequality of opportunity for all stakeholders.’

The business case for diversity is compelling; benefits claimed include the following:

z Increased customer satisfaction and market penetration through a workforce reflecting the population at large;

z Access to a range of skills;

z Effective use of HR;

z Improved labour supply;

z Increased employee commitment and satisfaction;

z Positive image as a ‘good employer’;

z Attracting ethical investors;

z Avoidance of costly discrimination cases.

The concept of equal opportunities differs from that of managing diversity, in that, in the former, the focus is on the obstacles to disadvantaged groups, on how these might be overcome and on accommodating such people within the existing organisation. Managing diversity, on the other hand, is positive in valuing and encouraging differences and in seeking to change the values, beliefs and culture of the organisation in order to enhance performance.

[3.3] Disciplinary and Grievance Procedures

[3.3.1] disciplinary proceduresThe Advisory Conciliation and Arbitration Service (ACAS) Code of Practice (2000) states that, ‘disciplinary procedures should not be viewed primarily as a means of imposing sanctions. Rather, they should be seen as a way of helping and encouraging improvement among employees whose conduct or standard of work is unsatisfactory.’

The purpose of discipline is to stimulate performance that contributes to organisational effectiveness, by encouraging employees to take responsibility for their own behaviour.

Managers should not look simply to punish employees but to counsel them, especially over inadequate performance. If performance is not up to standard, managers should explore the reasons for this, rather than merely dealing with the ‘offence’.

Disciplinary procedures are necessary to ensure consistency and fair treatment in handling problems. The procedures should be accessible and understood by employees. In particular, two types of unacceptable conduct – misconduct and gross misconduct – should be defined, as follows:

30



Misconduct

Misconduct is conduct that initially requires action other than dismissal. For example:

z Persistent lateness;

z Unauthorised absence;

z Failure to meet work targets/standards.

Gross misconduct

Gross misconduct is conduct which may lead to dismissal. For example:

z Working dangerously;

z Stealing;

z Fighting;

z Discrimination.

Minor offences should be dealt with informally, in discussion between the managers and employees concerned, resulting perhaps in advice rather than in a warning.

Formal procedures require a properly documented warning system, with degrees of seriousness indicated, indications of the reasons for such warnings and an indication of the penalties applicable.

The ACAS Code of Practice is regarded as an exemplar of best practice. It recommends that disciplinary procedures should:

z Be in writing;

z Specify to whom they apply;

z Provide for matters to be dealt with quickly;

z Indicate the disciplinary actions that may be taken;

z Specify the levels of authority to take action;

z Provide for individuals to be informed of complaints;

z Give individuals an opportunity to state their case;

z Give individuals the right to be accompanied;

z Ensure that, except for gross misconduct, no employee is dismissed for a first offence;

z Ensure that action is not taken prior to careful investigation;

z Ensure that an explanation of any penalty is given;

z Provide a right of appeal and specify the procedure.

The typical stages of a disciplinary procedure are as follows:

1. A formal oral warning in the case of a minor offence;

2. A written warning for subsequent or more serious offences;

3. A final written warning for further misconduct (indicating the possibility of dismissal);

4. Dismissal after appropriate notice, if there is a failure to improve, or in cases of exceptional gross misconduct.

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[3.3.2] Grievance proceduresA grievance is a complaint about management behaviour by an employee.The grievance procedure relates to the rules established to ensure fair play and to enable employers and employees to settle a complaint. Although a formal grievance procedure is not a legal requirement, the absence of such a procedure may cause an employer to fall foul of the law.

The aim of grievance procedures is to prevent issues and disagreements leading to major conflict and to prevent employees from leaving.

The basic elements of a grievance procedure include:

z A formal written procedure;

z Agreement with employee or union representatives;

z Linkage to any separate disputes procedure;

z Settlement of disputes close to the point of origin, and speedily;

z Clarification of right to accompaniment;

z Assurance of confidentiality.

In designing and operating a grievance procedure, employers should:

z Emphasise quick and informal procedures;

z Keep policies simple;

z Liaise with, and involve, employee representatives;

z Communicate the policy to managers and employees;

z Provide training for line managers;

z Apply the procedures consistently.

The procedure should clarify:

z To whom the individual should complain;

z How the complaint should be made (verbal/written);

z Who will hear the complaint;

z Rights to be accompanied;

z Who has authority to make decisions to settle the grievance;

z How an appeal should be made;

z The timescale for dealing with a grievance.

[3.4] Learning and DevelopmentBoth learning and development are important in improving the competence, capability, flexibility and adaptability of people in organisations. For most organisations, the training and retraining of personnel is a fundamental necessity for competitiveness.

Education: activities which impart the knowledge, skills moral values and understanding required in all aspects of life ... not related to a limited field of activity.

Training: planned activities to modify attitudes, knowledge, skills and behaviour,

ACTIVITY

How do disciplinary procedures differ in respect of:(a) minor offences;(b) serious offences;(c) gross misconduct.

ACTIVITY

What are the grievance procedure stages specified by your local regulatory authority?

32



through learning experience, to achieve effective performance in an activity or range of activities.

Development: long-term planned activities to achieve effective performance.

Learning: the process whereby a new capability is attained.

All these activities are fundamental to improved employee performance and to building quality into the organisation.

[3.4.1] benefits of learning and developmentThe process of learning and development has the following benefits:

z Increases confidence, motivation and commitment of staff;

z Provides recognition of enhanced responsibility and career progression;

z Gives a feeling of personal satisfaction and achievement;

z Helps to improve the availability, quality and skills of staff;

z Increases production by means of well-trained workers;

z Creates a more flexible workforce;

z Helps to introduce new technology;

z Reduces accidents and injuries;

z Improves the image of the organisation for both customers and applicants.

[3.4.2] The training processThe process of development and training may be summarised as:

z Identification of training needs;

z Design of training;

z Delivery of training;

z Evaluation of the training.

Mullins (2005) suggests that, if the benefits of training and development are to be secured, there must be a planned and systematic approach to the management of training, based on the following:

z A clear commitment to training throughout all levels of the organisation;

z An objective assessment of training needs;

z A sense of staff involvement in the processes;

z A clear set of objectives and a defined policy for training;

z A carefully planned training programme;

z Identification of the most appropriate methods of training;

z Attention to the training needs of those groups not currently active in the workforce;

z An effective system of review and evaluation using objective, measurable, factors.

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Organisations need to invest continually in their people if they are to remain competitive in the rapidly changing business world.

[3.5] Planning and Implementing Change

Change is the only constant in contemporary organisations. Variations on this theme are generally the introduction to essays about change, in textbooks, professional magazines and study guides. Such statements reflect the pervasive nature of change and the fact that all organisations are subject to change and have to manage change.

Change management is the process of ensuring that the organisation is ready for change and takes action to ensure that such change is embraced, accepted and implemented smoothly. Much of the focus of this process is on people management. The success (or otherwise) of change is fundamentally dependent on how people are managed in the transition process.

[3.5.1] modelling changeAn understanding of the process of change management is a prerequisite to effective management of the transition process. Several models exploring and explaining the process have been developed; two of the best-known models are those proposed by Kurt Lewin (1951) and Richard Beckhard (1969).

Lewin (1951) identifies the mechanisms for managing change as follows:

Unfreezing – altering or reducing those factors and forces that maintain and support present behaviour, which includes recognising the threats inherent in change for many people.

Movement – developing new attitudes, behaviour and responses based on new information and the implementation of the change.

Refreezing – stabilising the change and reinforcing it through systems procedures and rewards.

Beckhard (1969) proposes a change programme incorporating such processes as:

z Setting goals and defining the future state after the change;

z Diagnosing the present conditions in relation to these changes;

z Defining the transition-state activities and commitments required to meet the future state;

z Developing strategies and action plans for managing the transition, taking account of the factors influencing the situation.

Michael Beer (1990) suggests that effective change requires the development of a cycle of commitment, coordination and competence, and proposes the following framework:

z Mobilise commitment to change through joint analysis of the problems;

z Develop a shared vision of how to organise and manage to achieve identified goals;

z Foster consensus for the new vision, competence to enact it and cohesion to move it along;

z Spread revitalisation to all departments without pushing it from the top;

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z Institutionalise revitalisation through formal policies, systems and structures;

z Monitor and adjust strategies in response to problems in the revitalisation process.

[3.5.2] identifying the need for changeThe first stage in a change programme is to identify the need for change, defining why it is necessary. The acceptance, by the various stakeholders, of the reasons presented is critical to gaining their support and commitment to the change.

The most comprehensive basis for identifying the need for change is in the activities associated with strategic planning – specifically, SWOT and PESTLE analysis. Most organisational change is triggered by the need to respond to new challenges or opportunities presented by the external environment. Mullins (2005, Figure 22.3) provides an excellent overview of the factors that create a need for change.

[3.5.3] planning changeEffective planning for change entails the following:

z Developing a clear vision;

z Identifying the significant steps in the change process;

z Communicating the staged plan to all concerned;

z Avoiding undue haste;

z Inspiring confidence by forestalling problems and communicating regularly.

[3.5.4] resistance to changeIndividuals resist change for a variety of reasons, such as:

z The shock of the new;

z Economic fears;

z Inconvenience;

z Uncertainty;

z Threat to interpersonal relationships;

z Threat to status or skill;

z Competence fears;

z Lack of trust;

z Resentment of change initiators.

Resistance to change is natural – even inevitable – and is difficult to overcome. However, an attempt must be made and should start with an analysis of the probable effects of the change, and by whom and to what extent it may be resisted. Although resistance to change may not be entirely overcome, it can be reduced by involvement and communication.

[3.5.5] Implementing changeGeneral Electric have produced the following guidelines for the successful implementation of change:

ACTIVITY

List the factors that create a need for change

ACTIVITY

Identify the six main methods for dealing with resistance to change, identified by Buchanan and Huczynski (2005)

35



z Employees see the reason for change;

z Employees understand why change is important and see how it will help them and the business in the short and long term;

z The people who need to be committed to the change to make it happen are recognised;

z A coalition of support is built for the change;

z The support of key individuals in the organisation is enlisted;

z The link between the change and the other HR systems, such as staffing, training, appraisal, rewards, structure and communication, is understood;

z The systems implications of the change are recognised;

z A means of measuring the success of the change is identified;

z Plans are made to monitor the progression of implementing the change;

z The first steps in getting the change started are recognised;

z Plans are made to keep attention focused on the change;

z The probable need to adapt the change over time is recognised, and plans can readily be made and implemented for such adaptations.

section summaryNow that you have completed this section, you should be able to define HRM and explain HRP, along with its implications on recruitment and selection; understand the need for a regulatory framework of rules and regulations within organisations; explain the benefits of training and development to an organisation and be able to compare models of change management.



1. What distinguishes HRM from personnel management?

2. Describe the range of HRM activities within your own organisation and how these impact on organisational performance.

3. What are the essential elements of HRP?

4. What are the stages of a systematic approach to recruitment and selection?

5. Evaluate the effectiveness of the main methods of selection.

6. Identify the key features of an equal-opportunities policy.

7. Outline the purpose of disciplinary and grievance procedures.

8. Explain the steps to take to ensure the effective management of training.

9. Prepare a short presentation on the topic ‘change, maximise the gain’.

10. Why do people resist change?

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Section [4]Managing People and Leadership


4.1 Leadership theories and styles.

4.2 Motivation and reward.

4.3 Managing individuals, groups and teams.

4.4 Managing conflict.

4.5 Performance management and development.

4.6 Interaction skills.

4.7 The changing context of work.

4.8 Flexible working.

This section is primarily concerned with what is sometimes referred to as the ‘soft’ skills of management. The content focuses on understanding issues of motivation and leadership, managing conflict and interpersonal relationships.

[4.1] Leadership Theories and StylesLeadership is probably the most written about and discussed subject within the study of management and organisational behaviour. The literature abounds with discussion on the nature, meaning and importance of leadership. The advent of the 21st century has only served to increase the focus on leadership. It is argued that, in the flexible organisation in the new millennium, there is a greater need than ever for inspiring leadership.

There are almost as many definitions of leadership as there are writers on the subject. One acknowledged expert, Warren Bennis (1986), states that he has come across over 350 such definitions. It is, however, possible to distil this plethora of definitions into core issues, which revolve around influencing others towards the achievement of goals. Leadership is about getting results by inspiring and influencing people through the creation of a shared vision.

[4.1.1] approaches to leadershipThere are many ways of analysing leadership: Mullins (2005) provides a useful summary of the main approaches, which is reproduced below:

Qualities or Traits

‘Leaders are born, not made’ – the ‘great man’ approach. Focuses on the personality traits and other characteristics of the individual and attempts to identify a set of essential qualities.

Functional or Group

Focuses on the responsibilities and functions of leadership, what the leader does and the nature of the group. Assumes that leadership skills can be learned and developed.

Behavioural Category

Draws attention to the behaviour of people as leaders and their influence on group performance. Particularly concerned with task-centred and maintenance-centred behaviour.

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Styles of Leadership

The way in which leadership functions are carried out, and the behaviour adopted by leaders towards staff and its impact. The search for one best style.

Situational/Contingency

The importance of the situation. Interactions between the variables inherent in the leader, the group and the context. No single style is appropriate in all situations.

Activity

Develop your own definition of leadership

Transformational Leadership

Engendering motivation and commitment, creating a vision for transforming the performance of the organisation and appealing to the higher ideals of followers.

Inspirational Leadership

Based on the personal qualities or charisma of the leader and the manner in which leadership influence is exercised.

Leadership is increasingly associated with the idea of inspiration and the personal qualities of the leader within the context of the leadership relationship. Although accepting that these are critical, it is important to note that the ‘new leader’ marries the right traits with the right style for the contemporary organisation. Effective leaders adapt their style to fit the organisational and cultural context. Different styles are appropriate in different situations, and effective leadership is a product of the total situation, embracing traits, style and context.

[4.2] Motivation and RewardThe task for leaders, for millennia, has been to motivate their followers. The concepts of motivation and reward are closely linked and are related to interpersonal behaviour. As with leadership, motivation has been the subject of a great deal of discussion and debate. Again, as with leadership, definitions of motivation abound and it is, perhaps, more useful to consider the underlying concept of motivation.

This underlying concept may be explained in terms of a driving force within individuals, by which they attempt to achieve some goal in order to fulfil some need or expectation.

Mullins (2005, Figure 12.1) provides an illustrative model.

[4.2.1] needs and expectationsNeeds and expectations at work are complex and variable; however, they can be usefully categorised under three broad headings:

z Economic rewards – pay, fringe benefits, pension, material goods and security (instrumental orientation);

z Intrinsic satisfaction – based on the work itself, interest in the job, personal growth and development (personal orientation);

z Social relationships – friendships, group working, affiliation, status (relational orientation).

ACTIVITY

Identify an individual you regard as an effective leader and explain why you feel he/she is effective.

ACTIVITY

Define motivation and identify the common characteristics of motivation

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An individual’s motivation, job satisfaction and performance will be determined by the relative strength of these needs and expectations and the extent to which they are met. In terms of motivation and reward, this draws attention to the impact of intrinsic and extrinsic rewards.

z Extrinsic rewards are tangible and relate to salary, fringe benefits, security, promotion, contract terms and conditions and the work environment, and are generally determined at organisational level;

z Intrinsic rewards are psychological and relate to opportunities to use one’s ability, challenge and achievement, positive recognition, appreciation and being treated in a considerate manner, and are usually determined by the actions and behaviour of individual managers.

The two types of reward are complementary in their approach to motivation and reward, but utilising both types effectively is the ideal; failure to address one type of reward is likely to undermine the impact of the other.

[4.2.2] motivation theoriesMany theories attempt to explain the nature of motivation; however, no single theory or model can claim to address its complexities. Collectively, the various theories provide a framework for understanding the process of motivation and how best to contribute to the motivation of staff.

Motivation theories can be divided into two broad categories – namely, content theories and process theories.

Content theories attempt to explain those specific things that actually motivate the individual at work. They are concerned with identifying people’s needs, their relative strengths and the goals they pursue to satisfy these needs, i.e. ‘what motivates’. Maslow (1943), Herzberg (1959), Alderfer (1973) and McClelland (1988) are major contributors to the literature on this topic.

Process theories attempt to identify the relationship between the various dynamic variables that make up motivation, and are concerned with how behaviour is initiated, directed and sustained, i.e. ‘how motivation works’. Expectancy theories lead the way in this area.

Content theories

The work of Maslow (1943), Herzberg (1959) and Alderfer (1973) is similar, as itfocuses on levels of needs and concluding that lower-level needs are generally satisfied by economic considerations and rewards and that higher-level needs are addressed by the design of the job content. The focus of these theories is on restructuring jobs to give greater emphasis to the motivating factors, i.e. to make jobs more interesting, challenging and rewarding.

The McClelland (1988) approach has identified four main arousal and socially developed motives:

1. Achievement

2. Power

3. Affiliative

4. Avoidance

The first three correspond roughly to Maslow’s self-actualisation, esteem and love needs.

ACTIVITY

What do you consider to be the main intrinsic motivators associated with your role?

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Process theories

Expectancy theories developed by Vroom (1964) and Porter and Lawler (1968) are the leading process theories. Other important contributions are those of Locke (1968), goal theory, and Adams (1965), equity theory. The focus here is on expectancy theory.

The underlying basis of expectancy is the relationship between effort, performance and reward. A key point is that individual behaviour is not formed on some sense of objective reality but on his/her own perception of reality. Effort (motivation) occurs when an individual perceives that effort will produce effective performance, which will lead to rewards. Key in initiating the process are perceptions about:

(a) the value of the rewards on offer,

(b) the probability of effort leading to effective performance and

(c) the likelihood of effective performance resulting in receipt of the rewards available.

Research studies suggest general support for the theory, which draws attention to:

z Appropriateness of rewards;

z Establishing a clear effort–performance–reward relationship;

z Establishing clear performance-evaluation procedures;

z Understanding the intervening variables, such as abilities, traits, role perception.

The different theories of motivation are not conclusive, but they demonstrate the many motives that influence behaviour and provide a framework for how best to motivate and reward staff at work.

[4.3] Managing Individuals, Groups and Teams

Leadership and motivation are concerned with optimising the performance of people in the organisation, both as individuals and as members of groups and teams. Organisations are increasingly utilising team-based approaches, and it is important to understand the issues affecting groups and the individuals who make up groups.

The behaviour of individuals is powerfully influenced by the group, and organisations have striven to harness this power to keep individuals’ behaviour in-line with organisational objectives. The power of the group to affect the perceptions, performance and attitudes of individual members is well established; however, it is important to reflect that individual behaviour is complex and unique to the individual. Understanding the individual differences that influence human behaviour is a useful resource for managing people.

[4.3.1] individuals at workIndividual behaviour at work, towards other people and situations, is influenced by a variety of factors, such as:

z Background – culture, upbringing, class, gender, race;

z Personality – type, traits;

z Social perception – stereotyping, attribution;

ACTIVITY

Consider the extent to which the effort – performance – reward relationship, operates effectively, in relation to your role

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z Intelligence – ability, attainment, aptitudes, emotional intelligence, learning;

z Values – attitudes, beliefs, feelings.

The individual is the first point of study in organisational behaviour. The development and encouragement of individuality within the context of achieving organisational goals is crucial. Managing individuals well, depends on an understanding of the staff – their talents, abilities, interests and motives. The manager needs to match the needs of the individual to the needs of the organisation.

Managers need to be able to be aware of individuals in terms of their needs, their contribution, their potential and their development, and to be able to value difference and individuality as a source of innovation and creativity.

[4.3.2] importance of groups and teamsGroups are an integral feature of organisational life: the operation of groups and their influence on individual behaviour are central to organisational performance and effectiveness. How people behave and perform as members of a group is as important as their behaviour as individuals.

Group members must work well together, and each group must work well with other groups. Effective teamwork is an essential factor in the modern organisation, and teamwork can improve competitiveness through the following:

z Increased productivity;

z Better quality;

z Greater innovation;

z Enhanced motivation and commitment.

Formal groups reflect the pattern of organisational structure and are created to achieve specific organisational goals through the coordinated activities of defined roles.

Informal groups are based on personal relationships, and satisfy social and psychological needs not addressed by formal work groups.

[4.3.3] behaviour in groupsThe process of interaction within groups has resulted in the development of categories of behaviour in groups, such as that by Rackman and Morgan (1977), which identified the following:

z Proposing (concepts, suggestions, actions);

z Building (developing another’s proposal);

z Supporting (another person or concept);

z Disagreeing;

z Defending/attacking;

z Blocking/difficulty-stating;

z Open behaviour;

z Testing understanding;

z Summarising;

z Seeking information;

ACTIVITY

Reflect on a recent team situation and identify examples of three types of behaviour that occurred

41



z Giving information;

z Shutting out (e.g. interrupting, talking over);

z Bringing in (involving another member).

Categorisation such as this can help individuals to understand their role within a group and whether this role or behaviour contributes to the successful functioning of the group.

[4.3.4] team buildingBuilding an effective team is founded on careful selection of team members:

z Members should possess the specialist and technical expertise needed for the tasks, and be selected for their know-how, not their seniority;

z Members should be drawn from a wide range of backgrounds and interests;

z Members should possess a variety of personal styles and attitudes to fill the different roles that are involved in effective teamworking.

z Additionally, the following conditions must be met:

z Differences must be acknowledged quickly and overcome;

z The primary goal of the group should be made explicit, understood and, ideally, agreed;

z Mutual respect must be developed;

z Leaders should use quality feedback to reinforce desired team behaviours.

[4.3.5] characteristics of effective groupsAlthough the characteristics of an effective group are not easy to isolate, research indicates that important features or characteristics are as follows:

z Clear objectives and agreed goals;

z A sense of commitment;

z Acceptance of group norms;

z Openness and confrontation;

z Support and trust;

z Cooperation and conflict;

z Participative decision-making;

z Free flow of information;

z Sound procedures;

z Appropriate leadership;

z Regular review;

z Individual development;

z Sound intergroup relations.

These characteristics take a considerable amount of time and energy to develop and maintain, but are essential to effective performance.

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[4.4] Managing ConflictMullins (2005) offers the following definition of conflict: ‘Behaviour which obstructs the achievement of another person’s goals.’

Another definition of conflict offered by Buchanan and Huczynski (2004) is: ‘A process in which one party perceives another party has negatively affected ... something the first party cares about.’

[4.4.1] causes of conflictThere are many sources and causes of conflict in organisations. Among the main causes cited by Mullins are:

z Differences in perception;

z Limited resources;

z Departmentalisation and specialisation;

z Nature of work activities;

z Role conflict;

z Inequitable treatment;

z Violation of territory;

z Environmental change;

z Individual personality/attitudes;

z Group norms;

z Leadership style.

[4.4.2] strategies for managing conflictMullins suggests nine strategies for managing conflict:

1. Clarification of goals and objectives;

2. Resource distribution;

3. HRM policies and procedures;

4. Non-monetary rewards;

5. Development of interpersonal group process skills;

6. Group activities;

7. Leadership and management;

8. Organisational processes;

9. Socio-technical approach.

A certain amount of conflict is inevitable; however, the way in which conflict is handled or managed is important in minimising the negative consequences of conflict.

ACTIVITY

With reference to examples from your own organisation, identify the positive and negative consequences of conflict

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[4.5] Performance Management and Development

Performance management is about agreeing objectives, knowledge skills and competence requirements, and about developing work and development plans. It involves the review of performance against these objectives, requirements and plans, and the agreement and implementation of improvement and further-development plans. The purpose is to improve individual, team and organisational performance.

This process of continuously judging the behaviour and performance of staff is undertaken, in many organisations, through a system of performance appraisal.

[4.5.1] performance appraisals

Aims of performance appraisals

The aims of performance appraisals are:

z To judge, systematically, the worth qualities and value of employees as a basis for HR decisions;

z To provide feedback to the employee on all aspects of performance;

z To improve performance through counselling, coaching and development.

Benefits of performance appraisals

An effective appraisal scheme offers a number of benefits to the individual and the organisation. Mullins (2005) suggests the following:

z It identifies individual strengths and weaknesses;

z It reveals problems restricting progress;

z Feedback and discussion improves consistent improved performance;

z It provides information for HR planning;

z It improves communication.

Problem areas

The quality and reliability of assessment are crucial to the success of any appraisal system. Problems can arise in the following ways:

z Inconsistency in rating;

z Balancing objectivity with managerial discretion;

z Overemphasis on feedback on past performance, rather than on future improvement;

z Bias, assessing perceived rather than actual performance.

Establishing the system

In establishing an appraisal system, attention needs to be given to:

z Clarifying the purpose and nature of the system;

z Gaining commitment and support from top management;

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z Relating the system to organisational objectives;

z Establishing processes for monitoring and review of the system.

Factors in successful appraisals

For an appraisal system to be successful, it is important that:

z The purpose is clearly understood by appraiser and appraisee;

z Appraisers have been trained to enable them to interview effectively and to be aware of appraisal errors;

z A climate of trust and colleagueship is established;

z The appraiser seeks to be constructive rather than judgemental;

z Honesty and openness are the hallmarks of the process;

z Appeal mechanisms are in place.

A formal appraisal system offers the opportunity to affect individual performance and development within organisations in a positive way, and can be a useful tool in contributing to organisational effectiveness.

[4.6] Interaction SkillsInteraction skills, or interpersonal skills, relate to the manner in which managers handle relationships with others; they include concepts of networking, influencing, persuading and presenting ideas.

[4.6.1] networkingNetworking is an increasingly common form of operating in modern, fluid organisations. Managers develop networks to exchange information, enlist support and create alliances, getting agreement on action and uniting to make it happen.

Effective networking entails:

z Identifying those who may be able to help;

z Seizing opportunities to get to know people who may be useful;

z Knowing how you can contribute to the network;

z Demonstrating interest;

z Asking how you can help;

z Putting people in touch and keeping in touch yourself.

[4.6.2] influencingManagers exert influence by getting things done through their staff and also through colleagues and superiors. Logical and practical arguments are the basis of influencing others. In addition to presenting powerful well-balanced and backed-up arguments, it is important to understand, and to take account of, others’ viewpoints.

ACTIVITY

List at least four possible negative effects of appraisal

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[4.6.3] persuadingPersuasion is a key influencing skill. The utilisation of facts, logic and reason to present the case – emphasising the strong points, anticipating objections to any apparent weakness and appealing to reason – are all effective in persuading others.

[4.6.4] transactional analysisInteraction involves interpersonal communication, and transactional analysis is one of the most used methods of understanding the dynamics of such communication. Adult transactions are likely to be the norm in work situations; however, inappropriate ego states and transactions can have negative consequences in terms of interpersonal relationships.

[4.7] The Changing Context of WorkGlobalisation, new technologies, the knowledge-based society, hypercompetition and the social expectations placed on business are each creating new demands on organisations and have led to the development of new organisational forms that challenge managers and employees alike.

The nature of organisations is changing and, with it, the relationship between managers and employees – which is revolutionising the way we work. Organisations are moving from the labour-intensive organisations of the past to new, knowledge-based, structures. Increasingly, value added is through knowledge and creativity, which is reflected in changing organisational structures.

The new forms of organisation are characterised by decentralised decision-making, loosely defined roles, high reliance on mutual adjustment between co-workers and emphasis on horizontal relationships. The structure is fluid, with a complex web of relationships with individuals linked up in ever changing combinations to cater for the requirements of the market at the time.

Increasingly, contemporary organisations utilise outworking and virtual teams that utilise Information Technology (IT) to interact with one another and with the manager. Effective management, in this context, requires the manager to be good at building relationships.

Organisations that have turned over more work to self-managed teams have managers who invent projects and who know how to build teams and to make people feel connected and committed to a project.

[4.8] Flexible WorkingThe forms of organisation and the patterns of work described previously are typical of flexible working or the ‘flexible form’.

The nature of work is being redefined, creating pressure for greater flexibility, in terms of patterns of organisation and, in the workforce.

Flexibility relates to two aspects:

z Functional – in order to permit the rapid redeployment of employees among different activities and tasks (involving multi-skilling);

z Numerical – in order to restructure, so as to adjust the number of employees, to match the level of demand for labour (involving contractual and temporary workers).

ACTIVITY

Provide examples of ways in which your own organisation has responded to the changing context of work

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Flexibility can be enhanced by the use of technology, to facilitate remote working or teleworking, and, therefore, links to work-life balance. Various forms of flexible working patterns, such as flexitime, term-time and job-share, facilitate employees who have other, family commitments.

section summaryNow that you have completed this section, you should be aware of the importance of effective leadership; be able to compare the many motivation theories; understand that the individual differences that influence human behaviour is a useful resource for managing people and understand that groups are an integral feature of organisational life.

You will now be confident in managing and minimising the negative consequences of conflict; be able to implement effective performance-related planning and understand the changing nature of organisations, from labour-intensive to new knowledge-based structures.



1. Explain what is meant by leadership style.

2. Explain what you understand by the concept of motivation.

3. Distinguish between content and process theories of motivation.

4. Identify the categories that can be used to examine individual behaviour in groups.

5. Examine the effectiveness of group working in your own organisation.

6. With reference to examples from your own organisation, identify the positive and negative consequences of conflict.

7. What are the potential problems associated with performance appraisal and how might these be minimised?

8. What is networking? Why is it important?

9. Describe the features of a ‘virtual team’.

10. Consider how the changing nature of work affects the practice of management.

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assessmentCongratulations on completing your study of Unit 1: People in Organisations.

This unit will be assessed by a three-hour unseen written paper comprising two sections: A and B. Section A will comprise eight compulsory short-answer questions designed to test your knowledge and understanding of concepts and terminology. Section B will comprise a choice of two questions from four, designed to assess your appreciation of the role of effective people management in administrative practice. A question will be set from each of the four areas of the learning syllabus.

learning resourcesUseful Websites:www.acas.co.ukwww.bbc.co.uk/learning/subjects/business_studies.shtmlwww.bized.ac.ukwww.bnet.co.ukwww.booksites.net/mullinswww.businessballs.comwww.tutor2u.comwww.sosig.ac.uk

bibliographyAdditional reading that will be helpful:Mullins, L.J. 2005. Management and Organisational Behaviour, 7th edn., FT Prentice Hall

References and Further Additional Reading:Adams, J.S. 1965. Injustice in Social Exchange in Berkowitz, L. (ed) Advances in Experimental Social Psychology, Academic Press

Alderfer, C.P. 1973. Existence, Relatedness and Growth: Human Needs in

Organizational Settings, Collier Macmillan

Beckhard, R. 1969. Organization Development: Strategies and Models, Addison- Wesley

Belbin, R.M. 1993. Team Roles at Work, Butterworth-Heinemann

Beer, M., Eisenstat, R.A. and Spector, B.A. 1990. Why Change Programmes Don’t Produce Change, Harvard Business School Review, November-December, pp 158–66

Bennis, W. and Nanus, B. 1986. Leaders – The Strategies for Taking Charge, Harper and Row

Buchanan, D. and Huczynski, A. 2004. Organizational Behaviour, An Introductory Text, 5th edn., FT Prentice Hall

Cole, G.A. 2000. Management: Theory and Practice, 5th edn., Thomson Learning

Drennan, D. 1992. Transforming Company Culture: Getting your company from where you are now, to where you want to be, McGraw-Hill

Deal, T.E. and Kennedy, A.A. 1982. Corporate Cultures, The Rites and Rituals of a Corporate Life, Penguin

Handy, C. 1993. Understanding Organizations, 4th edn., Penguin

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Harrison, R. 1972. Understanding Your Organisation’s Character, Harvard Business Review, Vol. 50, May/June

Herzberg, F., Mausner, B. and Synderman, B.B. 1959. Motivation to Work, 2nd edn., John Wiley and Sons Inc.

Lewin, K. 1951. Field Theory in Social Science, Harper and Row

Locke, E.A. 1968. Towards a Theory of Task Motivation and Incentives: Organisational Behaviour and Human Performance, Vol. 3

Maslow, A. 1943. A Theory of Human Motivation, Psychological Review, 50 July McClelland, D.C. 1988. Human Motivation, Cambridge University Press

Mintzberg, H. 1979. The Structuring of Organizations: A Synthesis of Research, FT Prentice Hall

Porter, L.W. and Lawler, E.E. 1968. Managerial Attitudes and Performance, Irwin

Torrington, D., Hall, L. and Taylor, S. 2005. Human Resource Management, 6th edn., FT Prentice Hall

Vroom, V.H. 1964. Work and Motivation, John Wiley and Sons Inc.

The publisher endeavours to ensure that all its materials are free from bias or discrimination on grounds of religious or political belief, gender, race or physical ability.

The copying, storage in any retrieval system, transmission, reproduction in any form or resale of the materials or any part thereof without the prior written permission of The Institute of Administrative Management is an infringement of copyright and will result in legal proceedings.


ISBN 0 900491 71 X

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Administrative Systems and Processes

[Unit 2]Administrative Systems and Processes

overviewThe aim of this unit is to introduce you to the key systems and processes that are integral to the practice of administration and which will help you to understand the relevance of the systems approach to the design and conduct of administrative activity. By studying this unit, you will be introduced to the role that systems thinking can play in understanding the contribution made by administrative processes to organisational effectiveness.

This unit has close relationships with other key areas explored in the Diploma programme in that, without effective systems and processes, it would clearly be difficult to deal successfully with the range of activities that constitute administrative management. This unit also provides a useful foundation for further studies – in particular, the Advanced Diploma Unit 1: Administrative Systems in the Organisation.

Finally, this unit does not seek to cover all possible systems and processes; rather, its aim is to raise awareness of the general value of systems and processes, while highlighting the importance of those most often used by administrators.

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learning outcomesOn completion of this unit, you will be able to:

1. Discuss the reasons for and the characteristics and ethos of different types of organisations and explain the background to the nature and purpose of administrative processes which have influenced the development of administration within organisations;

2. Evaluate how the concepts, elements and properties of types of systems can be used to analyse and facilitate the efficient and effective performance of an organisation and its administrative operations;

3. Describe the role and function of procedures in meeting customer requirements, including types of procedure, their relationship to policy and the conduct of meetings;

4. Explain the role and purpose of different types of administrative systems in an organisation, and construct process maps of their principal processes and activities and describe the methods for improving their operation.

contentsSection 1 The Organisation in Context

Section 2 Professional Administration and Systems

Section 3 Administrative Procedures

Section 4 Principal Administrative Functions

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Section [1]The Organisation in Context


1.1 Role of organisations in the business environment.

1.2 Organisational mission, aims and objectives.

1.3 Types of organisation.

1.4 New models of work organisation.

1.5 Organisational structure and culture.

This section poses and considers a series of questions, such as:What is the role of an organisation within the business environment?

What new models of work organisation are being adopted? What are the reasons for and the characteristics and ethos of different types of organisation?

Organisations in a business environment are complex structures characterised by their functions and processes and by their mission, aims and objectives. Organisations should be considered as entities that will develop, and then operate, within the constraints of their culture.

Business organisations have become a key element of virtually every society within the global economy. Thus, although organisations may be of different types, each will require a unity of purpose and will provide opportunities for shared understanding and practice.

It is important to understand that each organisation will need to identify, and to employ, the most appropriate model of work to suit its circumstances. This concept can be contextualised by the use of actual examples and reference to work situations. A key objective of this section will be to consider how organisations achieve and maintain efficient and effective systems and processes that operate in a way that leads to the satisfaction of customer/stakeholder needs that reflects their culture, while meeting the needs of their customers and other stakeholders.

[1.1] Role of Organisations in the Business Environment

Organisations exist in an environment that is, basically, composed of competitors, suppliers and customers. However, that is not the whole story, for within that environment are also a number of other influencing factors that can be grouped as Political, Economic, Social and Technological (PEST).

[1.1.1] business organisationsSo, what is a business organisation and what is its role within this environment? A business organisation can be described as a complex structure made up of objectives and policy, people and management, technology and working methods. Alternatively, Buchanan and Huczynski (1985) have defined organisations as, ‘social arrangements for the controlled achievement of collective goals.’ The two key ideas implied in these statements are:

1. The need to achieve or carry out tasks.

2. The social aspect to any organisation.

This emphasises the need for people to perform tasks in a planned (or organised) way.

ACTIVITY

Carry out a PEST analysis (you may also come across the term PESTLE, which enables you to consider, in addition, ‘green’ environmental issues) and produce a list of examples for each of these groups. Example: Political changes in government can bring about new legislation which may affect business activities

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Business organisations are a key part of every society within the global economy, and offer an interface for diverse cultures. They therefore have a commonality of purpose and, as such, provide an opportunity for shared understanding and practice.

Whatever organisation is considered, it will have three common elements – people, structure and objectives – and for an organisation to survive and thrive, a fourth element – effective management, is essential.

People

People make up the cohesive group of those who work for the organisation and who, if they each achieve their specific objectives, will achieve, collectively, far more than would any individual working alone.

Structure

Structure includes the relationships, responsibilities and information flows that make up the working organisation.

Objectives

No one can achieve anything, or then confirm that achievement, unless they know what it is they want to achieve. Objectives are statements of what the business is seeking to achieve. These may be explicit and expressed publicly (for example: ‘we aim to increase profits by 10%’) or are implicit and are, therefore, implied by the organisation’s policies and objectives. Therefore, if an organisation is to make a bigger profit, it must be run in an effective and efficient manner.

Effective management

Effective management is the process of bringing together everything that happens in the organisation, in an effective and efficient manner. Having the best people, structure and objectives is not enough: people need leadership and support; objectives must be written and an appropriate structure must be put in place and maintained.

[1.1.2] functions and processesWhereas objectives give us a direction in which to proceed, functions and processes allow us to look at the working parts of an organisation.

Functions

By identifying functions, we create a way to group together related activities. So, for example, we might create a marketing department or a personnel department; thus, we would group the marketing tasks and staff together and produce a similar grouping for personnel tasks and staff.

Thus, one way to consider an organisation would be in terms of its functional structure. This would mean that each group of specialist staff would be referred to as a department.

Functions reflect the key areas of the organisation and make it possible to devise chains of command and allocate appropriate resources. It also becomes possible to identify appropriate resources, to set and manage budgets and to put in place realistic means of monitoring and controlling the work of each functional area.

A point to bear in mind is that functional structures work best when an organisation operates on a single site. For large, multi-sited organisations, although the functions

ACTIVITY

Suggest one explicit and one implicit objective for each of the following organisations: A large banking group (such as Barclays) An international airline (such as British

Airways) A local place of worship (such as a small

church or temple)

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will still be carried out, it may be necessary to organise them around customers, or on a purely geographical basis. Thus, branches in different locations might each have their own functions, or functions might be centralised so that finance, for example, is handled at the head office.

Processes

A process is a course of action or method of operation. As such, processes help to define how actions are to be carried out or targets achieved.

Processes are usually articulated in the form of written down procedures which detail the steps to be followed.

[1.2] Organisational Mission, Aims and Objectives

[1.2.1] planningIf organisations are to survive and to develop they must look ahead. This involves planning at three levels – tactical, strategic and visionary.

Tactical planning

At the tactical level, the focus will be on functional issues, such as managing cash flow and ensuring that customer service levels are maintained; this probably calls for a fairly direct control of staff with limited delegation. The timescale will be relatively short, probably thinking in terms of weeks and months rather than of years.

Strategic planning

At the strategic level there will be a greater understanding of the need for information; hence, the establishment and use of information systems will be more evident. Delegation will become more common and the organisation will pay more attention to developing effective systems and structures. Inevitably, timescales will be longer than those at the tactical level, possibly covering several years.

Visionary planning

At the visionary level, the timescale may extend far into the future: for example, five- or seven-year plans may be devised. The focus is on the creation of future opportunities, and concepts such as ethics and values are given more prominence.

An effective way to devise organisational plans is to carry out a SWOT analysis, which involves looking at an organisation’s Strengths and Weaknesses and the Opportunities and Threats that exist. An example of SWOT would be:

Strengths:

z Motivated and committed staff;

z High level of technological skills offered by most staff;

z New, purpose-built premises;

z Very good transport infrastructure.

ACTIVITY

List the tasks you would expect to be carried out by: A marketing department A personnel department A finance department

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Weaknesses:

z High level of borrowing;

z No opportunity to expand premises;

z Highly dependent on having cutting-edge technology.

z Opportunities:

z Expansion into new markets.

Threats:

z A likely target for an aggressive takeover by a larger organisation;

z Fluctuations in the exchange rate of the local currency.

Once a SWOT analysis has been completed, the managers of the organisation can establish aims, objectives and goals. It will now also become feasible to establish the organisation’s values and produce a clear mission statement.

[1.2.2] aimsAims are long-term intentions that provide a focus for setting objectives. Usually, they are expressed in qualitative terms and will allow the development of vision or mission statements: for example, an aim of an organisation might be to provide the best telecommunications service in the world. Aims will also allow the organisation to develop a set of quantifiable targets – for example, to improve market position from tenth to fifth within 10 years, or to reduce the number of customer complaints from 1% to 0.25% within three years.

[1.2.3] objectivesObjectives are medium- to long-term targets that give an organisation, its managers and staff, a sense of direction. They provide a common purpose and, as such, may lead to improved morale and better group working.

Ideally, objectives should be Shared, Measurable, Achievable, Repeatable and Time linked (SMART). Objectives provide a basis for developing policies and corporate strategy.

Unless the objectives are clear, it is difficult to develop a strategy. The process of setting appropriate objectives is a critical one. Objectives provide the basis for planning and lead to the setting out of specific goals, aims and desired results or outcomes. Organisations usually have written policies and procedures that assist in the setting of goals and objectives and which will help in the later measurement of their achievement.

[1.2.4] valuesValues are the ethical principles that guide an organisation’s actions. Clearly, these will affect both aims and objectives, as it must be considered whether the proposed aims, objectives and resultant actions are morally acceptable.

Ethics

Ethics are often expressed as a code of conduct developed by the organisation. This might make reference to:

ACTIVITY

Carry out a SWOT analysis of an organisation known to you

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z Integrity, both personal and corporate;

z Environmental responsibility;

z Social responsibility.

The important thing is what an organisation actually does, not merely what it says it will do.

Value judgements

A value judgement is usually based on a combination of your values and those you believe others hold. Trying to determine what others value can be a very difficult and (if you get it wrong) a dangerous activity.

[1.2.5] goalsAny consideration of aims, objectives and values should also encompass goals, which are the focus for an organisation’s actions and are expressed as targets. In practice, they provide a basis against which to measure success or failure. Sometimes the word ‘goal’ is used instead of ‘objective’. It is probably more correct, however, to regard goals as leading to the achievement of objectives and to say that people have goals, whereas organisations have objectives. Objectives and goals are key aspects of any organisation.

[1.2.6] mission statementsMission statements are produced by organisations as a way of stating their objectives in broad terms. Some such statements may be very brief and may appear to convey a very simple message, such as ‘working together’, whereas others may be much more detailed and convey a strong and, perhaps, moralistic message. Whichever approach is adopted, the intention is to convey and achieve a shared sense of purpose.

Organisations develop mission (or vision) statements in the belief that these are able to promote their intention to offer integrity, quality and customer service – they believe that these concepts are attractive to their customers, staff and other stakeholders. However, critics of mission statements see them as a cynical public relations tactic.

[1.3] Types of OrganisationIf a business organisation is not owned by the state, it falls into one of two broad categories – ‘non-incorporated’ and ‘incorporated’.

[1.3.1] non-incorporated organisationsNon-incorporated organisations are described either as sole traders or partnerships.

Sole traders

Sole traders (or proprietors) are the simplest form of business organisation, and may consist of a single person operating some form of business. However, such a person can employ others and still be regarded as a sole trader. It is easy to set up and run a business of this type, as there are no formal procedures that have to be followed and no need for records to be kept, other than for the purposes of taxation. The ‘owners’ of this type of business are often referred to as ‘self-employed’.

ACTIVITY

Give four examples of sole traders known to you

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Partnerships

Partnerships have some things in common with the sole trader, but there are also some differences. A partnership needs at least two people, and these types of organisation are usually set up by the partners signing a legally binding agreement. They are legally recognised as a form of business; however, they do not have to publish any financial information, although they will have to provide information for taxation purposes.

One significant disadvantage of both the sole trader and the partnership type of organisation is that they have unlimited liability. This means that the sole trader or partner is responsible for all losses made by the business, without limit.

[1.3.2] incorporated organisationsIncorporated organisations are described as either private limited companies or public limited companies. Broadly speaking, they have the advantage that they can limit their liability. This type of organisation became necessary as the size and complexity of organisations increased and business, as we know it today, began to develop.

Limited liability allows an organisation to grow by means of investment. If the business makes a profit, these investors make money; if it does not, then their only liability is the amount that they have invested.

Public limited company

A public limited company is one in which anyone can buy shares.

Private limited company

A private limited company’s shares are not normally available to the general public. Instead, they are usually held by employees of the organisation, and it is likely that the permission of other shareholders would be needed for shares to be transferred to another individual.

Holding company

An organisation that exists only to ‘hold’ or ‘own’ other companies is known as a holding company.

[1.3.3] ‘not-for-profit’, voluntaryand agency organisationsOther types of organisation can be described as ‘not-for-profit’, ‘voluntary’ and ‘agency’.

Agency organisations

Agency is a particularly important concept when used in the context of limited companies: it identifies the ‘agents’ who are able to act on the company’s behalf. Usually, the limited company’s directors are the agents empowered to act for the organisation: for example, they are able to enter into contracts with other bodies.

‘Not-for-profit’ organisations

Not all organisations have making a profit as their main reason for existence. Although ‘not-for-profit’ organisations have existed for a long time, they have only

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Give four examples of partnerships known to you

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fairly recently been defined. In practice, they are organisations that (once wages and other expenses have been taken into account) cannot give money or any other form of revenue to their managers or trustees.

The organisations that make up this ‘sector’ are quite disparate, and include charities and government bodies. One very important distinction is that between ‘private’ and ‘public’ non-profit-making enterprises: the former rely solely on donations, sales income, grants and/or volunteers; the latter are government-funded bodies.

Charities merit further consideration. This type of organisation is exempt from the taxes that would normally apply to a profit-making organisation. They will vary in size and type, but will share the common feature of existing primarily to fulfil a charitable purpose. They often rely heavily on the efforts of non-paid volunteers, and it is not unusual to find professionals supplying their labour and skills at below the normal market rate. Some organisations are so reliant on the work of volunteers that they are referred to as voluntary organisations.

[1.4] New Models of Work Organisation

Over the course of time, organisations, and both the way in which we describe them and how we operate within them, have changed. One useful source of information is the work of Handy (Mullins, 2005), who, for example, coined the term ‘shamrock’ organisation.

[1.4.1] shamrock organisationsHandy (Mullins, 2005) used the term ‘shamrock’ to describe a business with three types of worker:

z A permanent, highly valued and skilled core (who were, as far as this is ever possible, assured of lifetime employment);

z A contractual fringe (these were service providers, perhaps doing work such as catering services, that could be outsourced);

z A flexible labour force (these were ‘hired and fired’ in-line with actual demand for their services: this could mean short-contract work or might allow a response to seasonal trends).

[1.4.2] networked organisationsAnother new approach by organisations, which has become more common in recent years, is that of networking, which includes informal and formal relationships. Networks allow you to enhance the quality of your relationships. There are many contacts and opportunities outside the organisation that may provide access to new ideas and ways of working. To achieve full benefits from networking, an organisation needs both good communications and an ability to recognise those networks that are the most productive. Although it is necessary to both to be selective in the degree to which you network and to be able to identify those contacts that offer real benefits, this approach can identify substantial new opportunities.

ACTIVITY

Choose two different types of organisation, then, out of those, described and outline what differences you might find in working for one as opposed to the other

ACTIVITY

Give an example of each of the types of employee identified by Handy (Mullins, 2005) and indicate the organisation that each works for

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[1.5] Organisational Structure and CultureThe way in which organisations are structured is an important aspect to consider.

[1.5.1] organisational structures

Entrepreneurial structure

Entrepreneurial structures often mirror the attitudes and views of their senior managers. The approach is one of identifying business opportunities and being willing to take risks. Creativity will be a key element and will be encouraged. This approach may be more evident in a new business, particularly where there is an ‘owner-manager’ element. Decision-making will be relatively swift and will usually involve relatively few people.

Although this approach is often spectacularly successful, particularly in the short term, it sometimes cannot be maintained as the business grows larger. This approach tends to be more common in small businesses.

Bureaucratic structure

Bureaucratic structures are probably the longest-known and the most commonly seen type of structure – in fact, it is difficult to look at any organisation without finding some elements of a bureaucratic structure. A bureaucratic approach pays more attention, than found in other approaches, to embedding mechanisms for monitoring and control on both actions and decisions. Systems and procedures are more clearly defined and more stress is placed on quality assurance. Decision-making is relatively slower but is more firmly based on evidence. Creativity and innovation are less encouraged.

Matrix structure

The adoption of a matrix approach reflects a desire by managers to work across boundaries, rather than be restrained by them. Thus, if a new project needs a mix of specialist skills to get it off the ground, a team will be set up to provide the skills mix required. Although, in principle, this is a good idea, it often means that staff take on a much increased workload. In addition, the line of accountability can become confused, because project members find themselves with split responsibilities and answering to two bosses. To be successful, this approach also relies on the decision-makers being available; if they are not (perhaps because of other responsibilities) delays and frustration may ensue.

Independent structure

As empowerment of employees has become a recognised management approach, a more independent stance can be adopted. This involves a fundamental change in attitude, to employees at all levels, if it is to be successful. It requires that employees are given real power to make decisions; this means that they must be trusted and there is less direct monitoring and control.

The dangers of this approach are that, in the resultant ‘flatter’ structures, not only is it possible to lose sight of the ‘big picture’, but, also, it does not recognise that many people want only to do their job and do not wish for more responsibility. On the positive side, it is a more inclusive approach and one that can offer real benefits in raising morale and giving staff a feeling of ownership.

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Hybrid structure

The term ‘hybrid’ is used to denote that more than one of the previously discussed approaches/structures is evident within the organisation.

[1.5.2] organisational cultureAn organisation’s culture is often described as ‘the way we do things around here’ (Mullins, 2005). More specifically, it may be stated as being ‘the values, beliefs and norms of the organisation that are shared by all staff’ (Mullins, 1994). The culture will, therefore, embody the atmosphere, approach and management style that is evident within the organisation.

Often, organisations will specifically describe themselves as having a ‘coaching’ culture: this means that the predominant style of management is coaching, with a commitment to working with (and improving) its staff.

An organisation exhibiting a ‘quality’ culture would have a strong commitment to quality assurance and improvement. Just as it is possible to identify a hybrid structure, similarly, you may be able to identify different cultures operating within most organisations. In examining an organisation, you may wish to identify only the predominant culture (not all, of its cultures), because that is the one with the greatest impact. Handy describes four main types of culture:

z Person;

z Task;

z Role;

z Power.

Person culture

Person culture places most emphasis on the individual, it can be said to serve the needs of the individual. Although this type of culture is seldom found, it has attractions. Individuals have a great deal of autonomy, and any influence on them is in the form of ‘personal’ power.

Task culture

Task culture is project or job orientated. In a task structure, the key aim is to bring together resources and get the most from those resources. This will be more evident in a matrix organisation, where expertise is recognised and given prominence.

Role culture

Role culture is most frequently found in bureaucracies. It places emphasis on the roles that employees fill, and on the need for rationality. Rules and procedures are very much in evidence.

Power culture

Power culture is heavily dependent on central power sources. This type of culture is often found in small, entrepreneurial organisations, where there is a reliance on influence and trust, with few rules and procedures.

Other important work on culture has been provided by Deal and Kennedy (2000), Morgan (1997) and Senge (1994).

ACTIVITY

Provide examples of each of the following organisational structures: Entrepreneurial Bureaucratic Matrix Independent Hybrid

ACTIVITY

Give examples of the following types of culture: Person Task Role PowerBriefly indicate what each has to offer to both an individual and an organisation

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section summaryNow that you have completed this section, you should be able to understand the role of organisations within the business environment; explain how organisations achieve and maintain efficient and effective systems; be able to compare different models of organisation and suggest when each might be best used and understand the importance of culture to the way an organisation works.



1. Explain when, and why, you might use a SWOT analysis.

2. Compare two types of organisational structure, suggesting when each might be most appropriate.

3. Taking an activity known to you, suggest how you might change it in order to increase customer satisfaction.

4. Give reasons why culture has a significant impact on the way an organisation works.

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Section [2]Professional Administration

and Systems

Learning SyllabusThis section covers the following key areas:

2.1 Role of administration and systems in the organisation.

2.2 Nature of systems theory and the concept of systems thinking.

2.3 The systems approach.

2.4 The concept of control.

2.5 Setting standards.

This section seeks to explore the role of administration and systems within organisations and the nature of systems theory and systems thinking. By exploring the ‘systems approach’ and concentrating on interrelationships, it will become apparent that it is essential to relate the theory and concept of systems thinking to their use in practical work situations.

Identification of the basic ‘input – processing – output’ cycle; the necessary support provided in the form of standards, monitoring and feedback and the need for (and forms of) control are addressed in this section; the difference between ‘open’ and ‘closed’ systems, and the ultimate conclusion that many systems sit somewhere between the two extremes, is also discussed.

Practical issues, such as setting performance criteria and how performance can be measured, are considered in the context of actual situations and linked to the importance of using systems thinking as a means of developing and maintaining standards and quality. Thus, concluding that there is a natural link to achieving effectiveness and efficiency.

All of these areas and issues need to be considered in a practical, applied way. This can be achieved only if the underpinning concepts are understood and used to complement examination answers; this section attempts to do just that.

[2.1] Role of Administration and Systems in the Organisation

A suitable starting point is to consider the Institute of Administrative Management’s (IAMs) definition of administrative management:

‘Effective and efficient development, implementation and management of the organisation’s systems and resources to achieve goals and objectives.’

This implies that the key needs of the IAM are to be effective and efficient. In other words, we must be able to do what is required with the resources

available and within the constraints that exist. Thus, to be effective, we will have to meet objectives, complete tasks successfully and generally satisfy the expectations placed on us within our job. But are we doing this efficiently? There are many measures of efficiency, including:

z Output achieved by a worker – this could be how quickly a report is produced;

z Level of waste – this could be waste of time or of physical resources;

z Asset turnover – the amount of sales generated by an organisation’s assets.

In fact, there are as many possible measures as there are organisational needs. This means that we must, first, be very clear about what our needs (goals and objectives) are, and, next, put in place systems that are understandable and easy to work with, to allow us both to meet these needs and to confirm that they have been

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met. This will involve, first, developing the best systems, then implementing those systems successfully, and, finally, managing them.

[2.1.1] developing systemsMost approaches to systems development are based on a series of steps. However, in practice, a sequential approach in which one step follows on from the other is often neither appropriate nor practical: for example, it is often necessary to return to an earlier stage to make adjustments.However, for the purposes of illustrating the kind of activity that is required, the following is a useful guide.

Phase 1: preparation

1. Take a ‘helicopter’ view (overview) of the whole organisation to see how the proposed system will fit in with existing systems;

2. Consider what influences, from the external environment, will affect on the proposed system and how the new system can accommodate these;

3. Look in detail at the organisation’s sub-systems and, in particular, at the communications links and interfaces that will be required with the proposed system;

4. Consider the resource implications – including those of time, people and cost – of developing the new system; 5. Assess the overall feasibility of the proposed system in the context of steps 1–4, above, and decide if it is viable to proceed.

Phase 2: systems definition

1. Define, in detail, the inputs, transformations (throughputs) and outputs of the proposed system;

2. Analyse these and decide on a sequence of activities and relative importance of each part of the system. Make initial decisions on how the system will be monitored and controlled.

Phase 3: systems design

1. Discuss alternative solutions/systems;

2. Evaluate alternative solutions/systems;

3. Select the best solution/system;

4. Implement the chosen solution/system;

5. Follow up to ensure that the system (solution) is effective and efficient in operation.

It can be seen that this approach is firmly based on a systems approach. It is clear that systems development is an involved and time-consuming process that will need to be managed, and that will require a well-planned and effective implementation procedure. It is, therefore, important to remember that systems development is not only about getting the systems and procedures right, but also needs a significant input from people and must be well managed.

ACTIVITY

Using the steps outlined in, Phase 1, Phase 2 and Phase 3, as a guide, design, in outline, an administrative system of your choice

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[2.2] Nature of Systems Theory and the Concept of Systems Thinking

[2.2.1] systems and proceduresA suitable starting point is to consider what we mean by systems and procedures. This will require an understanding of systems terms, systems theory and the systems approach.

It is important to be clear what we mean by a system:

A system is a group of related elements and procedures that work together to accomplish tasks.

Against this background, actual working systems and typical procedures can be explored. This exploration should take the form of a critical analysis and lead to a consideration of methods of monitoring and revising systems and procedures.

It is clearly important to use systems theory as a framework for developing and maintaining real systems that meet customer requirements. This requires an awareness of actual systems operating within organisations and should encourage/employ an evaluative approach.

Bear in mind the approaches to systems development mentioned earlier. Look back to the ‘organisation’, in context, to keep in mind the actual purpose of systems and how they must work holistically within the ‘big picture’. The systems approach gives organisations a sound framework against which aims and objectives can be met.

Systems and procedures are the backbone of organisations’ activities: the better they function, the more likely it is that an organisation can survive and go on to achieve success.

Some organisations describe their systems as following a life cycle:

birth ➔ growth ➔ full development ➔ deterioration ➔ death

This is possibly followed by a rebirth, in the form of a new or updated system. This reflects a process of continuous change in which new methods are introduced, become accepted and, in time, are replaced by still newer (and, it is hoped, better) systems.

As stated earlier, systems consist of elements and procedures. For example, if you wish to communicate using the Internet, you might identify your elements as follows:

You ➔ Computer 1 ➔ Communications link ➔ Computer 2 ➔ Who you wish to contact

Put these elements together successfully and you have a working system. To support this system, you may find it helpful to make a note of the specific procedure, to help to ensure that it continues to operate effectively and efficiently.

[2.2.2] sub-systemsIt is also sometimes helpful to classify systems or their sub-systems into different types. Before exploring different system types, it is useful to define a sub-system. Large systems can often be broken up into sections or sub-systems – each of which can be seen to have an input – processing – output cycle. Dividing something up is actually a good way to describe either a system or a sub-system. It will also help to illustrate the smaller systems that may make up the larger system. A typical

ACTIVITY

Produce, in outline, two systems with which you are familiar

ACTIVITY

Write down an example of a large system; now break it down into its sub-systems

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example of a sub-system of a larger system would be an input to the larger system: for example, if we process data to create an informative report, an input would be the work we do to gather the raw data before it is processed into information. Another example would be an organisation (a large system) made up of sub systems, such as the departments for personnel and finance.

[2.2.3] types of systemOne way to categorise systems into different types is as follows:

z Designed systems;

z Human activity systems;

z Natural systems;

z Abstract systems.

Designed systems

Designed systems are created by people following some kind of planned systems-development process: for example, you might design a computer system or a system for handling complaints.

Human activity systems

Human activity systems are those that consist of people doing something purposefully: for example, the job of managing the development of computer software.

Natural systems

Natural systems are those that exist in nature: for example, weather systems that bring regular rainfall, or a colony of ants acting collectively.

Abstract systems

Abstract systems could be formulae for use in mathematical or statistical calculations. Another example would be a computer model for analysing an organisation’s operation.

Distinguishing between different types of system makes it easier to see thata complex system can be made up of a variety of sub-systems. A typical organisation, if we regard it as a large system, could contain (or could at least be affected by) all of the above types of system.

‘Hard’ or ‘soft’ systems

Another way of dividing up systems is to describe them as ‘hard’ or ‘soft’ systems. For example, staff in an organisation express their opinions, but also rely on well-defined quantifiable information; thus, a balance may have to be achieved between these two sources of information. The staff could be said, therefore, to need both ‘soft’ and ‘hard’ information systems.

‘Open’ and ‘closed’ systems

You will also come across the terms ‘open’ and ‘closed’ systems. These are descriptions to help us see how much interaction a system needs in order to function correctly. The more interaction that is needed, the more ‘open’ the system; if very little or no interaction is required, the system is either ‘closed’ or ‘relatively

ACTIVITY

Give an example of a designed system

ACTIVITY

Give an example of a human activity system Activity

ACTIVITY

Give an example of a natural system Activity

ACTIVITY

Give an example of an abstract system Activity

ACTIVITY

Write down some examples of ‘hard’ and ‘soft’ and ‘open’ and ‘closed’ systems. Make sure that you can give reasons to justify your choice of terms

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closed’. Thus, ‘relatively closed’, is, in practice, probably as closed as a system can get and still be able to function.

[2.2.4] working with systemsIt has been said of organisations that ‘we spend our working days dealing with them, and our non-working hours trying to escape them’. Perhaps the same could be said of systems, since they are such a key part of any organisation. So, if people view systems with some trepidation, why have we accepted them as such a key part of our working lives?

Part of the answer probably lies in the fact that employees accept the principle of accountability. This leads to a view that all employees are accountable to others. Even those at the very highest levels within organisations are accountable to someone. This simple principle leads organisations to establish lines of responsibility and communication.

Accountability is often defined in terms of goals/objectives, for which individual employees are held accountable, and in terms of the systems/ procedures established by the organisation with which employees achieve those goals/objectives. Sometimes, instead of referring to systems, organisations talk about processes, or, even more simply, the ‘way things are done’. In practice, the larger and more complex an organisation, the more reliant it will be on its systems. This is because of the principle of ‘wholeness’ or ‘holism’, which has recognised that the parts or systems of an organisation are interconnected. This accepts that a problem in one system may cause a problem elsewhere within the organisation; thus, systems need to be aligned and demonstrate constancy of action. This is reinforced by the need for quality assurance and quality improvement, which is considered elsewhere in this Study Guide.

In summary, without systems and supporting procedures, organisations cannot achieve goals, maintain standards or attain the ‘wholeness’ required for survival and the desired subsequent success.

2.2.5 monitoring and revising systemsIt is not enough to develop a system and assume that it will function in the desired way. Part of the process of developing any system is to set goals and objectives and to build in mechanisms to help determine if these are being achieved. This, in practice, is likely to take the form of a monitoring process, and is the means whereby it can be confirmed that the system is functioning correctly.

Sometimes, the system must be revised in order to achieve the stated goals and objectives. Thus, the monitoring process acts both as a control and as a means of identifying where there is a need for change.

Control activity

This process of monitoring and control can be illustrated by the following diagram.Feedback is provided to the person responsible for ensuring that goals and objectives are being set and for putting in motion, if necessary, any corrective action.

A key element of this process is the provision of feedback and a system for reporting information that is timely, accurate, relevant and ensures the provision of data in a usable form. The feedback will provide a basis for any necessary revision to the system under review and to the control system itself.

ACTIVITY

Draw a diagram to illustrate the input – processing – output cycle, building-in the capability for monitoring and feeding back to the control unit

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This process is often referred to as a feedback loop. In self-correcting systems, the loop is termed as ‘closed’. Where the system requires external intervention, the feedback loop may be described as ‘open’. An example of a closed feedback loop is a thermostat, which continuously resets the temperature in a room. However, most business decisions, because they require a great deal of discussion, would be examples of open feedback loops. A useful definition of a control system is provided by Gullett and Hicks (1975), who suggest that a control system (see 2.3.2 Feedback), ‘Should be understandable and economical, be related to decision centres, register variations quickly, be selective, remain flexible and point to appropriate corrective action.’

[2.3] The Systems ApproachBefore looking directly at the systems approach, it would be helpful to understand the following systems terms.

[2.3.1] boundaryA ‘boundary’ is drawn by listing the functions (or sub-systems) within a system. If you were to draw up the procedure for invoice handling and another for stock control, you would have, in effect, established a boundary between the tasks/procedures that make up each of these functions.

Boundaries sometimes help us to identify activities that need to share resources or staff. On other occasions, they help us to identify activities that are unnecessarily carried out more than once, thus leading to duplication of effort and waste of resources.

[2.3.2] feedbackSystems interact with other systems by sharing information and, by doing this, they are then able to adapt to changing needs. This process is commonly referred to as feedback.

Feedback is, therefore, not simply about obtaining information, but also incorporates the systems concept of ‘cause and effect’. By obtaining information, and responding

ACTIVITY

Give two examples of the use of boundaries in an organisation known to you

Figure 1.1: Steps in Control

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to information received, a potential for change is created. Understanding this helps people to appreciate that it is not enough to have information in a file; what matters is using the information. For example, if a manager receives the information that some employees are not doing their job properly, corrective action can then be taken (see 2.2.5 Monitoring and revising systems).

[2.3.3] de-couplingHave you ever attended a meeting where there are too many people, all talking at the same time, and nothing seems to get done? A similar problem can arise with systems. If sub-systems are too tightly connected (coupled), perhaps because there are too many rules governing communication between the systems, then there may be too little flexibility to allow the systems to function effectively. A way to tackle this problem might be to de-couple some of the sub-systems. Thus, if we return to the example of our meeting, we might breakdown the large group into anumber of smaller sub-committees or working groups. To allow them to operate successfully, we would also give each sub-group (sub-system) some degree of autonomy.The use of de-coupling can prove helpful, although there are some dangers. These include potentially increased costs (because there are more units) and a decrease in central control – or even sub-optimality. The latter will occur when a sub-system becomes too independent, perhaps not maintaining adequate lines of communication, and starts to act in a way that is detrimental to the whole system or organisation.

[2.3.4] interfaceAn interface is a set of interconnections at the boundary between systems or sub-systems. This may sound quite complicated, but, in fact, it only refers to the ways that systems can be linked and are able to share information.

For example, by using a telephone, you achieve a link between people in different offices or organisations. Again, if you hold a meeting, you are setting up an interface with those you invite to attend that meeting.

[2.3.5] systems hierarchyA systems hierarchy is the principle of dividing a large complex system, such as a business organisation, in a logical way that identifies the communications links and lines of responsibility.

A good way to see this in practice would be to look at an organisation chart, which indicates who reports to whom and shows, in outline, the main functions. In effect, this type of chart helps us to identify the control process and the interfaces, or links, between different levels of staff within the organisation. This shows us both the hierarchy of the structure and the processes that are being carried out. It reminds us that organisations are made up of teams working together and complementing the work of other teams within the organisation. Hierarchy demonstrates both the lines of authority and the need for clusters of activity.

[2.3.6] using a systems approachInitially, a systems approach makes us employ systems thinking by, forexample:

z Drawing attention to the dynamic aspects of administration and the factors influencing its growth and development;

ACTIVITY

Give two examples of the use of feedback in an organisation known to you

ACTIVITY

Give one example of de-coupling and one example of suboptimality with reference to an organisation or situation known to you

ACTIVITY

Give three examples of interfaces that you use

ACTIVITY

Find three examples of organisation charts and outline what they tell you about each organisation

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z Acknowledging the importance of systems environment;

z Stressing the interrelationships between the elements that make up administration;

z Helping to underline the general principle of cause and effect (e.g. if a supervisor does A, then X is likely to happen), but without losing sight of the degree of unpredictability and uncontrollability inherent in systems;

z Raising awareness of the existence of sub-systems, within larger systems, and the need for such sub-systems to work together in meeting the objectives of the larger system or organisation.

Moreover, a systems approach encourages organisations to develop a systematic process for problem-solving and decision-making. Thus a ‘whole picture’ (holistic) attitude to solving problems can develop.

[2.4] The Concept of ControlIn all scenarios involving people and systems there is a need for control. Control is a key part of the management process and, as such, must be built into all activities.

Managers need to understand what control is, the process of control, how it can best be achieved and how control helps to bring almost successful achievement of aims, goals and targets.

[2.4.1] forms of controlControl can take many forms. Some controls are deliberately created and built into systems as they are developed, whereas others are inherent to the system. For example, in the world of nature, controls inherently exist within the ecosystem; these maintain a natural balance, which will continue to operate without any external intervention. In fact, outside intervention can pose a threat that may cause the natural system to fail! For example, there is much debate about human influence on nature, leading to a belief by many scientists that global warming (and, even, increasingly powerful hurricanes) are caused by human activities.

The controls provided by nature are much more sophisticated and diverse than those devised for use within organisations. In organisations, we consider only those controls described as ‘purposive’ and ‘purposeful’.

Purposive control

Purposive control is built up in the form of special sub-systems. These controls relate to the achievement of pre-set aims and objectives. Such controls do not allow for choice: they are supported by rules, regulations and procedures, and, although often necessary and very effective, they neither permit flexibility nor lend themselves to being readily changed. An example might be a computer program that controls the ability to access or change a file.

Purposeful control

Purposeful control differs from purposive control in that there is scope for choice. In many cases where there is a need for human activity, this will be the form of control that is used. The process will still seek to achieve aims and objectives, but will do so in a discursive, involving way. For example, a recruitment and selection process will follow very clear guidelines, but there will be an opportunity to discuss who the best candidate is, before a choice is made.

ACTIVITY

Write down two examples of purposive control

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A key aspect of both purposeful and purposive control is the necessity for someone to take responsibility for control. There will also be a need for monitoring, receiving feedback and taking remedial action. This leads us to a consideration of ‘open and closed loops’ in the context of control.

[2.4.2] closed loop systemsIn a closed loop system the controls are built-in and the system is self-adjusting. For example, once set, a thermostat will continue to maintain temperatures within the pre-set limits. Although there may be a need for monitoring, and, if necessary, readjustments, on a day-to-day operational basis, the system acts as a closed loop.

Nevertheless, not all systems will be able to function successfully in this way: perhaps the system needs to be more flexible; changes may not be readily foreseen and planned for and, maybe, not all readjustments can be built-in to cover all probable contingencies. In these cases, the system will need to be open loop.

[2.4.3] open loop systemsOpen loop systems tend to be more sophisticated than those that are closed loop. They will require more monitoring and are likely to be adjusted on a fairly regular basis. They will also have a far greater degree of human involvement. A good example of this type of system is a task such as carrying out market research as a basis from which to launch an advertising campaign.

It therefore seems reasonable to say that control is both a common and a sophisticated phenomenon. All aspects of administration need to be controlled, although the means and type of control can vary a great deal.

Organisations will have control systems to deal with stock handling and with managing budgets, for example, organisations will also devise means by which to control staff behaviour.

This requires that controls have to be developed that are:

z Understood;

z Viable in operation;

z Effective.

[2.4.4] the control processControl is a core management task that aims to ensure that systems function according to agreed plans. The process of control is essentially a systematic effort to match performance, to pre-set standards – plans and objectives – in order to confirm compliance or to indicate the need for corrective action. Control allows systems to be maintained in a stable state and facilitates the introduction of any necessary changes.

Control is most effective if designed into systems during their development. Mechanical and organisational controls differ, in that mechanical controls are ‘physically’ built–in. For example, a seat belt may be installed in a car.

Conversely, organisational control relies on information and the use to which such information is put: For example, holding meetings with staff to review their performance is organisational control.

ACTIVITY

Write down two examples of purposeful control

ACTIVITY

Give an example of a physical control

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[2.4.5] the control cycleControl is essentially cyclic in nature. To put this in a different way, control never really ends, but continues for as long as you need to exercise control over a system or activity.

The basic stages in a control cycle are as follows:

z Identify the area of need – what do you need to control?

z Set a standard or identify a suitable benchmark;

z Measure what actually happens (actual performance);

z Compare the ‘actual’ performance (outcome) with the ‘standard’ (desired performance);

z Feed any variances back to the control unit/responsible person;

z · Decide whether any corrective action is necessary and, if so, what this corrective action should be;

z Implement the corrective action(s);

z Establish follow-up procedure(s) to check if corrective action has:

– Taken place;

– Proved to be appropriate;

z Review the control process;

z If still appropriate, revert to the start of the control process.

In practice, some of these stages can be combined.

It is common to break down this cycle into five key stages, namely:

1. Plan.

2. Set standards.

3. Monitor.

4. Compare.

5. Rectify.

It is important not to be too concerned about the number of stages, but rather to ensure that the control process achieves its purpose.

Feedback

Feedback forms a key part of any control process. Feedback may be either positive or negative. Positive feedback facilitates adjustments and may lead to changes in targets or standards. Negative feedback forces the system or activity to function within pre-set limits.

The nature of the organisation or system will influence the type of feedback required. For example, a closed system or autocratic culture may encourage a predominance of negative feedback. A more open system or discursive culture, involving organisation, may place greater emphasis on positive feedback.

The control process must be formalised. People need to know what is to be controlled, why it needs to be controlled and how the controls will operate. However, control should be supportive, not coercive or punitive. Control should encourage a regulated approach, but in a way that is recognised by staff as adding value.

ACTIVITY

Give an example of an organisational control

ACTIVITY

Give an example of positive feedback

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What is controlled?

It is helpful to determine exactly what it is that we need to control. Three key areas that require control are:

z Time;

z Costs;

z Quality.

Although these are interrelated, each may require different forms of control. For example, a manager may need to be trained to manage his time effectively, and will be helped by statistical techniques to control costs. The controls may take the form of target setting and may be manifest in performance indicators. Quality may be controlled by a combination of internal monitoring and external audits. Whatever the approach, the controls must be understood, be useable and be seen to provide recognisable benefits.

[2.4.6] approaches to controlThere are three broad approaches to control:

z The use of orders, rules, regulations and direct supervision;

z The setting of standards and task specialisation;

z A behavioural approach, which controls by influencing the way people think about and, therefore, approach their jobs.

An administrator should not seek to use any one of these exclusively, but, instead, seek a suitably balanced approach to using all three. This will help to achieve the flexibility required within organisations, while embedding the necessary degree of order and control.

[2.4.7] effective controlHow can we determine whether a control system is effective?

A useful step would be to identify the characteristics that will be found in an effective control system. This can be achieved by asking the following questions:

z Is the system subject to ongoing review and appraisal?

z Does the system quickly and efficiently identify report deviations?

z Do the control systems relate to the organisation’s critical success factors?

z Does the system have sufficient (but not excessive) built-in flexibility?

z Is there a clear link between the control systems and the organisation’s decision-making process?

z Is the control system understood by those who must use it?

z Does the control system support the needs of the organisation and the activities to which they relate?

If these questions can be answered satisfactorily, then the organisation can be confident that it has successfully developed, and is maintaining, a workable system for control.

ACTIVITY

Give an example of negative feedback

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[2.5] Setting StandardsBefore considering processes for setting standards, it is important to have a clear understanding of what standards are. A helpful way to define standards is as follows:

Standards are a detailed description of the requirements to be followed throughout an organisation.

The primary purpose of a standard is to achieve consistency of action by all staff. As such, they may lead to the establishment of procedures. In turn, a procedure may be defined as follows:

A procedure is an explanation of, and guidance for, a series of actions or operations in a local setting in support of a standard.

Examples include standards set by examining bodies that regulate the conduct of examinations, and the use of legislation to guide data protection.

As these definitions suggest, it is common to link standards to measures of performance, or other means, to check compliance. A typical example would be the appraisal of staff.

At an appraisal or review interview, each member of staff will discuss with their line manager the targets met and their level of performance. In this, as with all situations involving performance standards, it is essential that SMART targets (see Section 1: People in Organisations) and realistic measures for the quality and degree of achievement are set.

Setting standards will require a statement of detailed requirements. This will entail writing clear specifications, discussing expectations and negotiating an agreed approach. This last element is very important: standards need to be agreed, not imposed; imposed standards will not be as readily accepted and pursued. Similarly, if standards are not effectively communicated and understood, successful achievement is less likely. In some cases, such as changes in legislation, it is important to explain why the organisation must comply, and to identify the benefits of doing so. If a standard is not accepted or understood, it will be almost impossible to achieve.

[2.5.1] measuring performanceThe process of monitoring and/or measuring performance is a key aspect of control. This must be built on the setting of appropriate objectives/ targets and standards of performance. For example, if the stated objective is to satisfy the needs of customers, then the standard might be linked to a target for sales volumes and/or market share. Alternatively, reducing the number of customer complaints by a stated percentage could be the target.

In broad terms, a monitoring system will first help to determine, and then, over time, to evaluate, the use of resources. It will assist the formulation of a plan for using these resources and then enable comparisons between the ‘planned’ and ‘actual’ performance. In turn, this will lead to a ‘pre-planning’ process.

Many of the activities involved will be dependent on continuous recordkeeping, with strong support needed from Information Technology (IT). In some cases, systems can be designed to be self-correcting; however, in most cases there is some need for intervention by staff.

Keep in mind that feedback can be either negative or positive. Actions may, therefore, either return the system to within pre-set parameters or lead to new parameters being set. Clearly, if a process or procedure is failing significantly it will need to be changed.

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It is clearly essential to set parameters to confirm what acceptable or unacceptable deviations are. Remember, for example, that a minor deviation may be acceptable; furthermore, making changes can sometimes make the situation worse rather than better.

Two important terms are ‘performance indicator’ and ‘performance measures’.

Performance indicator

A performance indicator is the level or standard against which performance is assessed. This may be internally generated or externally set. Such indicators should be agreed rather than imposed.

Performance measures

Performance measures allow you to determine, quantitatively, whether you are meeting or exceeding the performance indicator set. A process must be put in place to collect and analyse data. Should the indicator not be met, a positive way to move forward should be sought, rather than become an opportunity to take punitive action.

[2.5.2] management by exceptionA useful aid is an approach known as management by exception. When this approach is employed, it is necessary for the manager to become involved only if performance falls outside the stated range of expected performance; this requires the setting of upper and lower limits. Provided that performance stays within these limits, no action will be required.

Remember that such techniques act as a guide and will be effective only if, when necessary, action is taken promptly.

section summaryNow that you have completed this section, you should be able to understand the relationship between administration and systems; explain what the systems approach/systems thinking mean in practice; be able to compare different types of feedback and give examples to demonstrate why control is so important and understand the importance of measuring performance and the contribution this makes to an organisation’s success. The learning syllabus identified at the beginning of this section, and the information outlined in this summary, are the key issues with which you should feel comfortable, and should provide the basis for wider reading. If any aspects are unclear, look again at the relevant part of this section and consider who might help you to understand these aspects – for example, a colleague, tutor, family member or fellow student.

ACTIVITY

Describe, briefly, two performance indicators you have encountered

ACTIVITY

Describe, briefly, two performance measures you have encountered


1. Explain the role of systems within an organisation.

2. Compare two types of system, giving examples of each.

3. Taking an activity known to you, suggest how you might make it

(a) more effective and

(b) more efficient.

4. Give reasons why measuring performance is a key element in any organisation’s activity.

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Section [3]Administrative Procedures

Learning SyllabusThis section covers the following key areas:

3.1 Role and function of procedures.

3.2 Types of procedure.

3.3 Policy formulation and procedures.

It is essential to have an understanding of what protocols are and why procedures have to be documented. This section – as well as considering the differences between formal and informal procedure – will tackle this in a practical way, using actual examples.

The relationship between policy formulation and procedures will be investigated, although a detailed study of strategy is not required, at this stage, this section will emphasise the importance of policies and procedures being directed by the needs of strategy, and how policy and procedures arise from the requirements of an organisation’s strategic plan.

[3.1] Role and Function of ProceduresPeople often find the concept of a procedure easier to understand than the concept of a system. In practice, a procedure is usually a set of steps that a person (or, perhaps, a computer) must follow as part of a system.

Procedures will be written down or programmed in and will represent a logical sequence of activity. If the steps are followed, the desired end result should be achieved. Remember, it is important to specify your desired outcome in order to devise a procedure that can achieve that outcome.

Sequence is usually a critical factor. Thus, so in following a procedure, you must know both the steps and the correct sequence of activities. For example, to use a mobile telephone a specific set of steps must be followed. Miss a step, or get the sequence wrong, and you will not be able to complete your task. Similarly, you must follow a predetermined set of steps if you wish to access your computer files or to complete a task such as sending an email. If you do not know (or do not understand) the steps, you cannot proceed. Similarly, if you do not follow the required sequence, the task cannot be achieved.

[3.1.1] the relationship of proceduresto systemsAs stated earlier, procedures and systems are the backbone of all organisations’ activities. The better that procedures are designed and function, the more likely it is that an organisation can survive and go on to achieve success. Just as systems need to function in harmony with other systems, so must procedures fit together in a complementary way.

Thus, systems will share a commonality of both purpose and operation. The two will have a close-knit relationship, where procedures are developed to achieve the needs of the overarching system.

[3.1.2] procedures in practiceIn most organisations, procedures are the basis of many activities: for example, there may be a procedure for producing invoices and one for dealing with

ACTIVITY

Look at some procedures within an actual organisation. Check to see what would happen if you missed out a stage

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customers’ complaints. A typical complaints procedure would probably have to demonstrate the following principles:

z Be easily accessible and well publicised;

z Be simple and easy to understand and use;

z Allow speedy handling, with established time limits for action;

z Keep people informed of progress;

z Ensure a full and fair investigation;

z Respect people’s desire for confidentiality;

z Address all the points at issue and provide an effective response and appropriate redress;

z Provide information to management, so that services can be provided and improved: For example, the UK-based telecommunications organisation British Telecom (BT) has included the following statement within its complaints procedure:

‘Customers can claim two kinds of compensation:

i) A daily rate if money has been lost;

ii) An exact amount which has been lost due to not meeting the guarantee if there is an actual financial loss.

If disputes cannot be resolved there is an arbitrator who can help for claims up to an indefinable amount’ (British Telecom, 1996).

Nevertheless, most procedures are not guides to obtaining redress should problems arise; the majority of procedures are guidelines to assist with the achievement of positive outcomes by organisations. They will relate to the range of activities within an organisation and will typically include procedures for key activities such as:

z Invoice preparation;

z Invoice handling;

z Accounts received;

z Accounts payable;

z Payroll;

z Stock control.

The procedures employed will clearly vary from organisation to organisation, reflecting the nature and scope of each organisation’s activities. It should also be appreciated that, despite the value of having written procedures, not all procedures are written down; some are reliant on the memory of an employee. Worse, in some cases, even for important activities, there is no agreed procedure in place. The dangers of each situation are clear: for example, what would happen if the relevant employee leaves suddenly or retires? Even if these situations do not arise, it will be difficult to maintain and review standards without the support that procedures can offer.

Procedures manual

The procedures manual is a key document. It will specify what procedures exist, the steps to be followed and who is responsible. Often, these specifications will be supported by diagrams depicting the steps that make up the procedure. It is

ACTIVITY

Produce, in outline, a procedure to deal with two of the following activities or with two activities that you are involved in: Invoice preparation Invoice handling Accounts received Account payable Payroll Stock Control

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important that there is no ambiguity regarding either what is to be done or who is responsible. Diagrams can help to plot the movement of documents through a system and also to confirm that all necessary actions have been carried out.

By creating, and following, a procedures manual, it is less likely that inconsistencies will creep into the organisation’s activities. Where inconsistency is present, this may lead to some steps either not being carried out or being carried out incorrectly. A manual will offer further benefits in that it will act as a reference document for staff and will be a valuable aid in training new or promoted staff. It will also help to establish boundaries between functions, and staff responsibility, which not only assists clarity of operation but also can help to prevent fraud.

[3.2] Types of ProcedureIt is helpful to identify different types of procedure. Some of the more common procedures you may encounter are as follows:

z Audit procedures;

z Grievance procedures;

z Safety procedures;

z Disciplinary procedures;

z Staff review (or appraisal) procedures.

Although each procedure will differ from the others in content, (and even the same procedure may differ from one organisation to another), they will all share one common factor: they will all be a means of ensuring that everyone in the organisation acts in the same way for the area of activity to which the procedure relates.

[3.2.1] protocolsProtocols act as an agreement, or advice, for action. They will guide the actions of the staff concerned and can be likened to a code of conduct. They may be written down or be unwritten; however, to be fully effective they should be written down, thus offering both a point of reference and a basis for consultation and, if necessary, for change.

For example, as part of your organisation’s approaches to communications, you may decide that a key issue is that of making information accessible. To achieve this, you have a protocol that states:

z Use plain English;

z Keep instructions short;

z Follow any appropriate internal/external guides.

Similarly, you may have a protocol for email communications, as follows:

z First, ask the question: Is email the most appropriate medium for this communication (in terms of type of response required, timescale, likelihood of receiving a response, advantages of choosing a more personal approach)?

z If your answer to this question is NO, than what is the most appropriate means to communicate for this situation?

z If your answer is YES:

- Do you have the correct email address?

ACTIVITY

Look at a procedures manual and outline the benefits that an organisation can derive from its use

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- Is this email high priority or routine?

- Have you added any attachments?

- If so, are they the correct attachments?

- Be comfortable with the possibility that someone other than the intended recipient may read this email.

[3.2.2] documented proceduresTo achieve maximum benefit, all procedures should be written down. These may be contained in a procedures manual or may be in the form of guide notes specific to either a particular job or a staff member. As such, they are a constant point of reference for the staff doing the job, for their line managers and for those responsible for monitoring and auditing the activities. They take the form of checklists. For example, the following might be a useful checklist for chairing a meeting:

z Ensure that you are impartial – avoid speaking for or against a controversial issue (you may have the casting vote, having weighed up both sides to an argument, so you need to avoid accusations of bias).

z Ensure that members act in an appropriate manner – do not permit cross-conversations or arguments – ensure everything is addressed ‘through the Chair’.

z Be friendly, but firm.

z Be prepared to call anyone, politely, to order, whoever he or she might be.

z Limit the talkative and encourage the shy.

z Summarise and recapitulate at regular intervals.

z Stick to the agenda.

z Never allow the ‘any other business’ part of the meeting to deal with matters other than those which are minor or really urgent.

z Do not waste valuable time, or allow others to do so.

z Do not forget to thank everyone for their efforts and inputs.

[3.2.3] formal and informal proceduresProcedures can be either formal or informal. If a procedure is described as formal, it will have been created to meet a specific need as required by the organisation. It will cover a specific task, and responsibility for action will be given to a specific individual or group. The procedure will require stipulated actions to be carried out, and these will be directed towards the organisation’s goals.

In contrast, informal procedures are not devised by the organisation; rather, they either result from the ideas of an individual or are tacitly agreed between co-workers. They will not be structured, and have no authority or compliance systems in place to lend them support. They may be short-lived, having been devised to deal with a short-term need. Often, however, such procedures become embedded and may become as difficult to ignore as formal procedures.

It may also be the case that the informal procedure is devised as a response to a social need. The procedure may be nothing more than a manifestation of the need for social contact. It may, therefore, deal with such tasks as paying for a shared set of lottery tickets, or may reflect some purely social activity.

ACTIVITY

Draft a protocol for holding a meeting/forming a committee

ACTIVITY

List five informal and five formal procedures that you have used

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[3.3] Policy Formulation and ProceduresAs stated in Section 1 (page 9), objectives form the basis from which policies can be devised. In other words, once we have a ‘picture’ of where we want to go, we must then state how we wish to get there.

In practice, policy statements are about how we will achieve our objectives. They allow an organisation to explain to staff what they can and cannot do. They will, therefore, articulate the organisation’s values and beliefs and act as statements that, in effect, express the culture of the organisation.

[3.3.1] policy as a guideAs Mullins (2005) suggests; ‘Policy is a guideline for organisational action and the implementation of goals and rules. Policy is translated into rules, plans and procedures.’

It is important, therefore, to understand the difference between policy and procedures.

We have already considered procedures in some detail. We know, therefore, that procedures tell us what steps to follow in order to complete the necessary tasks: they give us a means to reach our goals. However, policies are different: they are best described as statements of behaviour or conduct. Inherent in a policy will be the guiding principles that departments and individuals will follow. They will act as a guide to help an organisation meet its ethical responsibilities.

The process of devising policies should be seen as a joint task. This is because it will have an effect on both an organisation’s internal and its external relationships. Thus, you need to talk to customers and your own staff before developing or changing a policy. Your staff must feel comfortable working with the resultant policies. Your customers must also believe that the organisation they are doing business with has a sound ethical foundation, which should be evident in the level and success of customer service provided.

It would be useful to ask yourself the following questions before changing an existing policy or devising a new policy:

z Which procedures will be affected by the change?

z Are there any resource implications?

z Will staff be required to change the way they work?

z With whom must you share information concerning the change?

z What might go wrong if you implement this policy?

z If something does go wrong, do you have a contingency plan?

Bear in mind that setting objectives and writing policies is, in effect, the first stage in the control process. You will not achieve effective control if the foundations for this are not built on well-thought-out policies supported by effective procedures.

The following is a possible checklist for devising and implementing a

policy: · Gain senior management support;

z Decide who will be responsible for devising and implementing the policy;

z Set up a short-life working party to gain employee input;

ACTIVITY

Consider a policy from an organisation known to you and outline its main principles

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z Review related policies within your own organisation and similar policies in other organisations;

z Agree the scope of your policy and communicate this to relevant staff;

z Devise a policy;

z Gain acceptance for the policy (making any necessary changes at this stage);

z Agree a process for monitoring and revising the policy (plus a timescale for review/updating);

z Implement policy;

z Monitor, review and revise the policy, as necessary.

[3.3.2] procedures and strategyRemember that policy and procedures have to be developed in the context of the organisation’s overarching strategic plan and the strategies devised to meet this plan. Policies and procedures are directed by the needs of strategy; thus, if strategies change, policies and procedure will often also need to change. Policies and procedures are the means to give structure to an organisation. In effect, they offer the means to change the structure in line with the needs of strategy. If strategy is about where you want to go, policies and procedures can be likened to the ‘road map’ you use to get you to where the strategy intends you to be.

section summaryNow that you have completed this section, you should be able to understand the relationship between administration and procedures;explain why we need protocols and procedures; discuss the relationship between policy formulation and procedure and understand the importance of getting staff involved when you are devising or updating policies and procedures.The learning syllabus identified at the beginning of this section, and the information outlined in this summary, are the key issues with which you should feel comfortable, and should provide the basis for wider reading. If any aspects are unclear, look again at the relevant part of this section and consider who might help you to understand these aspects – for example, a colleague, tutor, family member or fellow student.

ACTIVITY

Use the policy checklist to devise a policy for one of the following: Equal opportunities and inclusiveness Smoking Childcare Redundancy


1. Explain the role of procedures within an organisation.

2. Compare protocols and procedures, giving examples of each.

3. Taking a procedure known to you, suggest how you might make it more effective and efficient.

4. Give reasons why strategy, policy and procedures are all interlinked within any organisation’s activity.

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Section [4]Principal Administrative Functions


4.1 Role and purpose of administrative systems.

4.2 Types and elements of administrative systems.

4.3 Flow diagrams and process mapping.

4.4 Business process re-engineering (BPR) and workflow management.

4.5 Service Level Agreements (SLAs).

Studying this section will enable you to describe the roles and purposes of administrative systems, from both a general ‘all systems’ and from a specific ‘actual/individual’ standpoint. You will become familiar with at least the following systems: information and communication systems; complaints-handling systems; quality-assurance and improvement systems; accounts/budgets, payroll systems; credit-control/cash-handling systems and procurement and inventory management systems.

In relation to these systems, you will be able to produce process maps and simple flow diagrams. Two further, important areas of study, covered in this section, are: business re-engineering and workflow management.

The final area for consideration is that of SLAs. This section will cover their importance, how they can be derived and processes for ensuring that such agreements work in practice.

[4.1] Role and Purpose of Administrative SystemsWe have already stated that well-designed and workable systems are necessary to achieve policies, pursue strategic objectives and generally to achieve an effective and efficient organisation. So, let us look more closely at what systems must, broadly speaking, be able to achieve. This can be summarised as follows:

1. Smooth flow of work;

2. Identify and correct inaccurate information;

3. Provide information that is timely, relevant, of the right quality and quantity and delivered to the appropriate staff;

4. Integrate with other systems;

5. Facilitate a high standard of work;

6. Induce high morale;

7. Be flexible enough to change when required;

8. Operate within standards that facilitate control.

So, how might these qualities be achieved? The following list offers some suggestions:

z Initial review of current systems and structure of the organisation;

z Agreement on outcome aims of new/amended systems/structure;

z Inclusive approach to systems development, taking account of the structure of the organisation;

z Building-in of controls at the design stage;

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z Agreed timescale for implementation;

z Provision of any necessary training/retraining;

z Linking of systems activity to staff appraisal and review process;

z Regular monitoring and review of systems/structure.

[4.2] Types and Elements of Administrative Systems

When we employ ‘systems thinking’ we are, in fact, making a statement about what we mean by the structure of an organisation. We are saying, to quote Senge (1995), that; ‘The structure is the pattern of interrelationships among key components of the system. That might include process flows, but it also includes attitudes and perceptions, the quality of products, the ways in which decisions are made and hundreds of other factors.’

Thus, we are able to say that systemic structures exist within each organisation. Before going any further, it would probably be helpful to define what we mean by ‘systemic’:

Systemic means using systems ideas, treating activities from a systematic viewpoint.

Perhaps it would also, therefore, be useful to define ‘systematic’:

Systematic means using a method, following a plan or an explicit or rational procedure.

So, how does this help us with our understanding of the role and purpose of administrative systems? In fact, if we are clear in our understanding of the definitions, it will be easier to understand the overall purpose of all systems, and, in turn, the specific purposes of individual systems.

First, let us consider all administrative systems. By employing a systems approach, we emphasise that all organisations are made up of a number of interacting systems or sub-systems. If these work together successfully, we achieve synergy (the ability to achieve more than could be achieved by one system/sub-system working alone).

Within the structure of an organisation, systems, individuals and groups of staff interact to achieve objectives and goals. By taking a holistic (looking at the whole) approach we are able to put in place and maintain a structure that allows organisations to function successfully. Thus, the better the synergy of our systems, the more likely it is that an organisation will achieve its targets and meet the needs of the overall strategy.

The following guides, to common administrative systems, suggest what each particular system should seek to achieve. Please note that there will be great diversity in the way in which systems function, depending on issues such as size, culture, industry, profit-making or non-profit-making. These guides should be seen as offering a suggestion, rather than being a definitive statement, of what each system must be able to achieve in all organisations.

[4.2.1] information andcommunication systemsAn information system is built around the processes for capturing, transmitting, storing, retrieving, handling and displaying information. Such systems will need the support of communications systems that place great emphasis on the customer and on the accuracy, efficiency, speed and appropriateness of responses. It is

ACTIVITY

Using an organisation you are familiar with, list 10 administrative systems that are currently operating

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important to remember that, in a world where e-business has become increasingly important, more and more emphasis is being placed on the need for successful information and communication systems.

Key issues for any information system are the avoidance of information overload and the control of information flow. Criteria should, therefore, be developed for establishing which information is essential and for weeding out the inessential. In general, unless the answers to the following questions about an item of information are affirmative, that item should not be retained:

z Does it help to satisfy defined objectives?

z Is it used for a specific task(s)?

z Is it clearly related to needs?

z Does it fit a designated purpose?

z Does it help you to understand a process/do your job better?

[4.2.2] complaints-handling systemsIf you look again at Procedures in practice (3.1.2), you will see an example of a complaints-handling procedure.

In effect, a complaints-handling system must be visible and obviously responsive. Although complaints will never completely disappear, it should be recognised that everything possible should be done to minimise complaints. A sensible approach is to set targets for reducing the number of complaints that the organisation receives, and also to set targets for speeding up the organisation’s resolution of complaints.

[4.2.3] quality assurance and improvement systemsIt is important not to confuse systems that set standards for quality assurance and quality improvement with systems that are designed to achieve those standards. Although the two will be interrelated, the former is often set by an external standards body, whereas the latter is an internally devised and operated system.

Arguably, the first stage in quality assurance and improvement is to identify a suitable set of standards. Once this has been done, the internal systems can be put in place.

Some organisations will divide their systems into one that seeks to ensure quality and another that seeks ways to improve quality. Although there is no problem in adopting this approach, it is clear that the two systems must be compatible.

A quality-assurance system will be built around policies and procedures and will then seek to detail the arrangements put in place by the organisation, to ensure quality. It will need both to show who is responsible for quality and to clarify the standards to be achieved. It is also important to identify any necessary documentation to show how the quality assurance system is operated and maintained.

It is likely that a quality improvement system will be built around three elements – namely, creating a quality culture; planning for, and managing, improvement and being able to produce evidence of improvement. In practice, you may focus on a specific quality issue. This will need, first, to be defined and analysed; next a solution must be generated, and then that solution must be implemented. It will also be important to identify mechanisms for monitoring the actual efficacy of the solution in practice and over the course of time.

ACTIVITY

Produce an outline of an information system

ACTIVITY

Produce an outline of a complaints-handling system

ACTIVITY

Draft an outline of a quality assurance system

ACTIVITY

Draft an outline of a system for quality improvement

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[4.2.4] accounts/budget and payroll systems

Accounts/budgets and payroll systems are really three separate systems, although, clearly, there will be a strong relationship between these systems, as all have a financial orientation.

Accounts systems

An accounts system will, in general, seek to determine the costs of products and services; to identify sources of income; to control costs; to plan ahead and to help to make choices between alternative courses of action.

Budget setting and budgetary control systems

Budget setting and budgetary control systems will seek, first, to set realistic budgets and then to put in place a mechanism to monitor budgets and to make any necessary adjustments over time.

Payroll systems

A payroll system will be responsible for ensuring that staff receive the correct payments for their services, on time and in the agreed form. There will also be a responsibility to make any necessary deductions for tax or to pay any bonuses. The payroll system will calculate inputs, such as basic pay and overtime, and take account of any contributions and the relevant tax regulations. The end product will be a pay statement and arrangements for monies to be paid or transferred to staff.

[4.2.5] credit control/cash-handling systems

Again, although credit control and cash-handling systems are related, it may be better to consider them as two separate systems.

Cash-handling systems

A cash-handling system will be built around cash-flow statements; these show the state of cash assets available at any particular time. Cash flow is the actual movement of cash in and out of the business organisation. This will require a balancing of what is paid to the organisation as opposed to what has to be paid out. The difference will be calculated hourly, daily, weekly or monthly, depending on the nature of the business.

Credit control systems

A credit control system is based on the principle of working capital.Working capital is a way to describe the funds used to provide the flow of services, materials and credit required by a business. In practice, cash is used to pay for the resources that allow the production of goods or services. Customers are given an agreed credit period, after which they must pay for the goods or services they have received. This is based on the reality that most businesses do not receive cash on delivery from their customers. Credit is given to customers and taken from suppliers. A credit control system is, therefore, put in place to manage the credit and to ensure that the business not only can pay its staff and its suppliers on time but also allows it to make a profit – or, at least, to break even.

ACTIVITY

Taking an organisation with which you are familiar, consider the systems employed to cover accounts, budgets and payroll. Summarise what happens in each system

ACTIVITY

Can you think of an example of an organisation that would calculate its cash position daily and another that might calculate this monthly?

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Note, also, the trend by organisations to introduce systems for pre-screening and risk scoring. This enables organisations to identify companies with whom they do not wish to do business because those companies have a poor credit history.

[4.2.6] procurement and inventory management systems

Procurement systems

A procurement or purchasing system will be developed to ensure that sufficient supplies of materials are available when needed. This will be linked to the stock control system to ensure that enough time is allowed to replace materials and maintain agreed levels of stock. The system will be responsible for sourcing reliable suppliers, placing orders, maintaining records of purchases, monitoring invoices and establishing a satisfactory pattern of reordering. A degree of negotiation may be required in order to get the best prices from suppliers and to agree suitable delivery dates. The system must be supported by an effective process for accepting delivery that checks for quantity and quality, and which matches the item to the order issued. Where necessary, the process must also take responsibility for organising any returns of incorrect or inadequate items.

Inventory management systems

Inventory management systems will be based on procedures for counting, calculating and recording stock levels. In addition, there will be links to the procurement system to check stock at the point of delivery. If items are out of stock, there is a risk of losing both sales and customer goodwill; there will also be the possibility of both storage space and capital not being fully utilised. The organisation must make decisions about desired levels of stock and have comprehensive information about suppliers and delivery times. Most systems rely heavily on automated processes, using specialist software to determine and satisfy needs. A point to bear in mind is that the better controlled the system, the fewer the errors that are likely to arise.

A popular element in many inventory management systems today is ‘Just-in- Time’ (JIT). This approach to production involves keeping the stock levels (and , therefore, costs) to a minimum. Stocks arrive JIT, to be used in production. Goods are not produced unless an organisation has a firm order from a customer.

JIT depends on:

z Reliable suppliers;

z Effective quality-control procedures;

z Suitably competent/skilled staff;

z Reliable workforce;

z Reliable production methods.

ACTIVITY

Draw a simple diagram to illustrate the principle of working capital (including cash flow and credit) as it operates within a business organisation

ACTIVITY

Draft the set of steps that you would follow in placing an order, through to the receipt of the items ordered

ACTIVITY

Briefly comment on the relationship between procurement and inventory management

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[4.3] Flow Diagrams and Process Mapping

[4.3.1] flow diagramsFlowcharts are among the several aids and techniques for diagrammatically representing processes and procedures. For example, a very simple flow chart can be used to identify the main elements of a process and its sequence. This basic type of diagram can be enhanced by the use of computer charting symbols:

If you wish to learn more about symbols and diagrams, the easiest way to do this is to look at what is available within your computer system. You will find that you are able to use a range of symbols to produce information flowcharts and process flowcharts; these will allow you to be as detailed as you wish. Remember, however, that the whole point of using this kind of diagram is to make a process or procedure easier to understand. Do not produce flowcharts (or any other diagram) unless they genuinely help in the understanding of a process. Any diagram should be a means to make something clearer and to achieve a reduction in the use of narrative.

[4.3.2] process mappingProcess mapping is a particularly useful technique if you are involved in planning a project. Again, the project can be broken down into its key elements, which can then be used as a basis from which to map out the process in more detail. PRINCE2 (PRojects IN Controlled Environments) is a structured method for managing projects. It is regarded as the accepted standard for project management and makes use of charts and diagrams to assist the process.

[4.4] Business Process Re-engineering (BPR) and Workflow

Management

[4.4.1] business processre-engineering (BPR)

BPR involves intense scrutiny of the organisation’s business process, with the aim of eliminating anything that is not central to the organisation’s goals. The process will be built around the following:

z Defining customer needs;

z Work re-organisation to meet customer needs better;

z Redesigning the work;

ACTIVITY

Work with an available computer system to find out which symbols you can access, and practise producing diagrams to help you to explain the processes and procedures that you are using

Figure 4.1: Flow Diagram

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z Giving people more responsibility for their work;

z Placing more emphasis on accountability;

z Making best use of technology;

z Developing a culture that supports risk taking;

z Finding out whether customer needs have been fulfilled.

A good way to start to think about BPR is to consider how the pace of change seems to have increased dramatically in recent years. Because that pace has altered, there is an increasing need to find or to develop techniques that can help us to manage change. These techniques are often grouped together as BPR.

Because BPR tends to be linked to quality, many of the techniques are based on Total Quality Management (TQM) and JIT principles.

A TQM approach is based on:

z Top down;

z Total involvement;

z Customer knowledge;

z Agreement on ownership/responsibilities;

z Meeting requirements;

z Agreement on what quality is;

z Accepts that prevention is not a cure;

z Seeks to avoid complacency;

z Encourages staff to talk about quality.

BPR places emphasis not only on elimination of waste, of inefficient processes and of unnecessary information, but also, positively, on empowerment, teamworking and better communications. Like TQM, its purpose is one of improvement in all processes; however, unlike TQM, the concentration of BPR is on the radical redesign of business processes, making maximum use of new technologies and of a well-trained and motivated workforce.

To achieve a radical redesign of processes, some hard questions must be asked about the organisation, its goals and its plans for achieving those goals. In addition, existing processes must be examined at all levels, to determine where significant redesign will provide benefits. We therefore need to develop a consistent approach to looking at our systems, for their redesign and their subsequent monitoring.

It is also important to be able to identify why change management, and, therefore, BPR, is actually needed by organisations. Some reasons are:

z An increasingly open and competitive world economy;

z The availability of cheap and good communications;

z A greater emphasis on quality;

z A greater emphasis on customer service;

z The rate and complexity of change;

z The need for improvements in the performance of organisations;

z A greater emphasis placed on getting processes right;

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z Organisations adopting a culture of continuous change.

Key relationships will need to be forged between BPR, approaches to systems design and quality management. There is also an opportunity to link to processes for measuring service quality and for setting-up Service Level Agreements (SLAs).

To employ BPR successfully, organisations must understand their business purpose, processes, people and the predominant culture. This will allow each organisation to identify its Critical Success Factors (CSFs) and to introduce appropriate new ideas.

Common gains leading from BPR are:

z More focus on the customer;

z Improved communication, arising from fewer barriers to communication;

z Reduction in management costs (due to de-layering);

z Better support achieved from IT;

z A challenge to established ideas and structures (often with the result that they have to prove their worth to be retained).

Problems that have arisen from the use of a BPR approach include:

z Forcing responsibility onto staff that neither want, nor are ready for, that level of responsibility;

z Staff reductions, which leave the organisation unable to carry out necessary work;

z Becoming too focused on saving money by staff reductions;

z Failing to work in harmony with other needs, such as quality assurance.

A new idea that has grown from the thinking behind BPR and the emerging discipline of Customer Relationship Management (CRM) is customer process re-engineering. This has the following framework:

z Audit and map the processes that most affect customers;

z Identify (from the customer’s perspective) the key processes;

z Quantify their impact and prioritise by their contribution to customer worth;

z Put in place any necessary changes to ensure that these processes meet customer expectations;

z Be clear about who has ownership of (responsibility for) these key processes;

z Set up SLAs for these key processes;

z Put in place a means to review and re-assess the SLAs to ensure continued high levels of customer satisfaction.

[4.4.2] workflow managementA key issue in any organisation is how to achieve an efficient flow of work. In essence, it is the requirement to ensure that work is completed on schedule. A disorganised workplace will not achieve the efficiency and effectiveness required.

Some questions to ask, if you wish to manage workflow efficiently, are:

z How good is communication within the organisation?

z Are staff committed and motivated?

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z Is the number of staff sufficient to achieve planned work output?

z Is the volume of work appropriate to the resources (particularly staff) available?

z Does the workforce have the appropriate skills to do the work required?

z Are the procedures and systems effective and suited to the work required?

z Is the culture and style of management appropriate?

z Is the layout of the workplace appropriate?

The flow of work through a department has to be planned and the physical layout designed to achieve the following:

z Adequate storage space;

z Ready access to materials;

z Easy movement within the work area;

z Sufficient support facilities available;

z Minimal time wasted on moving within the space available;

z Fully utilising the space available.

It is also important to maintain a safe workplace. This should not be forgotten in seeking to maximise workflow.

[4.5] Service Level Agreements (SLAs)It is important to understand the difference between a contract and an SLA. Although the two are similar, an SLA is primarily used as an internal document recording an agreement between different parts of the same organisation. An SLA calls for negotiation and agreement between the parties involved and takes account of the following:

z Performance standards;

z Delivery dates;

z Costs/prices;

z Clause on lack of quality;

z Penalties.

It is also important, when developing SLAs, to make clear any terms used and to check any implications for job specifications/descriptions.

You may find that SLAs play a part in CRM, particularly if you decide that you need to make changes.

The following are headings that you might use to develop an SLA:

z Scope: dates of period covered; activity covered; geographic area/ physical location to which the agreement relates; target numbers/ groups; any cost-related issues.

z Role of the group requiring the service: includes setting and monitoring quality standards; making clear where responsibilities start and end.

z Role of the service provider: agree any targets; produce a service delivery plan; comply with quality assurance requirements; manage the service.

z Disagreements/disputes: procedures for the resolution of any disputes

ACTIVITY

Carry out an assessment of an actual workplace. Try to identify what could be improved and what you would need to do to achieve the desired improvement

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arising from the SLA; appeals procedure.

z Personnel and communication: who are the key people; what are their specific responsibilities; contact details; joint meeting arrangements.

z Statutory and other requirements: specification as to whether subcontracting is permitted; ageing on any specific legislation that must be adhered to; arrangements for employment/conditions of service/ insurance.

z Financial arrangements: specification of how and when any payments/transfers will be made.

z Management information: agreement on required content, form and delivery dates for information/reports.

z Future planning: arrangements in place for review and future planning, to facilitate any changes, over time, to the SLA.

z Quality assurance: detail of any expectations in terms of quality-assurance pr cedures; arrangements for quality assurance, including production report and process/responsibilities for dealing with any issues identified.

z Staff: make clear which staff will be involved and their responsibilities.

Although these headings are only a guide, they give some indication of the areas that must be included.

ISLAs must be supported by a clear and workable system for measuring service quality. When a ‘service’ is provided, it has to have the following qualities:

z Reliability: able to deliver with dependability and accuracy;

z Responsiveness: staff involved must display a willingness to help;

z Assurance: knowledge and courtesy of staff, leading to trust;

z Empathy: customers must receive individual attention;

z Tangibility: actual resources/equipment to provide the level of service must exist and be suitably maintained.

section summaryNow that you have completed this section, you should be able to draw up a SLA; explain the role and purpose of administrative systems; draw a simple flowchart to illustrate the steps in a procedure and understand the importance of developing the most effective and efficient systems.


ACTIVITY

Produce a draft SLA for a service with which you are familiar


1. Explain the role and purpose of administrative systems.

2. Discuss what could be gained by an organisation using BPR.

3. Produce a flowchart to illustrate the steps in a payroll procedure.

4. Give reasons, supported by examples, why quality assurance and quality improvement are so important to organisations.

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assessmentCongratulations on completing your study of Unit 2: Administrative Systems and Processes. This unit will be assessed by a three-hour unseen written paper comprising two sections: A and B. Section A will comprise eight compulsory short-answer questions designed to test your knowledge and understanding of concepts and terminology. Section B will comprise a choice of two questions, from four, designed to assess your appreciation of the role of effective people management in administrative practice. A question will be set from each of the four areas of the learning syllabus.

learning resourcesUseful Websites:www.bbc.co.uk/learning/subjects/business-studies.shtmlwww.businessballs.comwww.business-management-skills.comwww.teachernet.gov.uk/usefulsiteswww.vts.rdn.ac.uk/www.biznet.org.ukwww.google.comwww.sosig.ac.uk

bibliographyAdditional reading that will be helpful:

Lucey, T. 2004. Management Information Systems, 8th edn., Thomson Learning References and Further Additional Reading:

Alter, S. 2002. Information Systems: Foundations of E-business, FT Prentice Hall

Boddy, D. 2005. Management: An Introduction, 3rd edn., FT Prentice Hall

Buchanan, D.A. and Huczynski, A. 1985. Organizational Behaviour: An Introductory Text, Longman Higher Education

Deal, T.E. and Kennedy, A. 2000. The New Corporate Cultures, Texere Publishing

Gullet, C.R. and Hicks, H.G. 1995. Power of Organisations, ESAP

Handy, C.B. 1993. Understanding Organizations, Penguin Books Limited

Morgan, G. 1997. Images of Organization, 2nd edn., Sage Publications

Mullins, L.J. 2005. Management and Organisational Behaviour, 7th edn., FT Prentice Hall

Senge, P. 1994. The Fifth Discipline Fieldbook: Strategies for Building a Learning Organization, Nicholas Brealey Publishing

Other:British Telecom, 1996. Complaints Procedure




ISBN 0 900491 72 8

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Professional Administration

Unit [3]Professional Administration

overviewThe aim of this unit is to introduce you to some of the key concerns of administrative managers in today’s rapidly changing environment.

Administration means many things to many people, from ‘The Administration’, meaning the government in the USA to running an ‘Administration Department’ in an organisation.

Administration in the context of ‘The Organisation’ is the hub around which the organisation functions. Every aspect of production, marketing, selling and service involves administration.

Professional administration is a fairly new title in the modern world of work, and the title is still contentious with people arguing that the management of administration cannot be a profession – that it is an art, not a science. Others argue it is a profession and that, through an accredited programme of professional vocational qualification, administrative managers and aspiring administrative managers can learn the science of administration and administrative management.

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1. Explain the importance of the effective management of administration to the success of the organisation as a whole;

2. Identify key drivers of administrative change and discuss their impact on the role of the professional administrator;

3. Demonstrate an understanding of the information needs of the organisation’s stakeholders and the importance of effective

communication in achieving customer satisfaction;

4. Describe appropriate methods of communication in the organisation.

contentsSection 1 Managing Administration

Section 2 Change and Administration

Section 3 Delivering Customer Satisfaction

Section 4 Business Communication

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Section [1]Managing Administration


1.1 Managers and how they manage.

1.2 Managing work processes.

1.3 Managing information and records.

1.4 Compliance.

By looking at the arguments for and against the ‘Professionalism’ in the context of the administrative manager and administration, this section considers ‘What is administration?’ As well as covering the theory of management and how managers manage.

Work processes are the means by which administrative managers achieve their goals through the allocation of work, how the work is done, standard setting, measuring performance, measuring efficiency and effectiveness against output targets.

This section covers the new trends in the ways of working – e.g. flexitime, flexible working, job sharing, teleworking – and how these are affecting the role of the administrative manager and the administrative function.

Managing information, record keeping and access to that information takes place through systems and procedures, and this is achieved with compliance to legislation. This section covers why legislation was introduced, data protection and the strict limitation set on access and storage, as well as, ‘intellectual property’ and how it should be handled.

Quality standards are set internally and externally, through the adoption of tools such as total quality management (TQM), benchmarking and codes of practice and by compliance with external legislation. Much has been written on how consistent quality standards can be achieved in organisations, and this section covers the theories and practical aspects of total quality.

[1.1] Managers and how they ManageAdministration means different things to different people in different countries. There are historical records of administration methods in Greece, China and Italy. Records show that Rome used many management methods still used today – for example, span of control and the use of delegation. Today, in the USA the administration is the US government, whereas, in the UK, the administration is the Civil Service – the administrative body that looks after the day-to-day running of the UK under the direction of the democratically elected government.

Administration can also refer to the daily maintenance of an organisation, be it in the public or the private sector.

Appleby (1994) uses Brech’s definition of administration: ‘That part of the management process concerned with the institution and carrying out procedures by which the programme is laid down and communicated, and the progress of activities is regulated and checked against targets and plans.’ He further goes on to state that, ‘Management can mean that process by which scare resources are combined to achieve given ends.’ That latter statement describes well the activity of managing, as it is the manager’s job to achieve the organisation’s goals through a combination of human skills and knowledge and of material resources by planning, implementing, controlling and evaluating those resources.

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Much research has been carried out into the characteristics of managers and how they manage, and today’s managers have learnt their ‘profession’ against the background of that research. Appleby (1994) debates the nature of management and whether it is a science or an art. He argues that: ‘It is probable that management will never become wholly an exact science as personal judgement will always be needed to supplement available knowledge; therefore, as a practice, management will always be an art.’

Research is not new: in his book The Prince, Niccolò Machiavelli (1469–1527) describes management skills and techniques that are still used today.

Morden (1996) introduces readers to the classical and scientific schools of management and provides ample material for debate and discussion. Researchers such as Max Weber, Frederick Taylor, Henri Fayol, Lyndall Urwick and E.F.L. Brech laid the foundation for today’s teaching in management schools and colleges. It is , therefore, important to read the works of these writers, to understand the context in which they were written and the cultural and technical backgrounds of the organisations studied, and to extract what is relevant to modern professional administrative management, in order to discuss the nature of administration and whether it is a science or an art.

1.2 Managing Work ProcessesThe Institute of Administrative Management (IAM) describes administration management as:

That branch of management which is concerned with the services of obtaining, recording and analysing information, of planning and of communicating, by means of which the management of the business safeguards its assets, promotes its affairs and achieves its objectives. The professional administrative manager manages the administrative function, whether in one department or spread across the organisation.

Today’s administrative manager has a greater challenge in managing that function, due to the impact of new technology, legislation and new working practices that are continually changing. This necessitates changing management styles from autocratic to democratic, as employees seek greater satisfaction at work through empowerment, consultation and participation in decision-making.

Another aspect of changing work processes is working patterns. Employers and employees are now seeking more flexible working patterns because:

z Customers are demanding earlier and later opening hours;

z Production is more cost-effective if it is continuous;

z Employees are seeking a better work/family life balance;

z Employers are seeking ways of reducing costs.

Some of those flexible working patterns are as follows:

1. Flexi-working – where employees work core hours but can then decide what time they will arrive and leave.

2. Flexible working – where employers ask employees their preferred hours of working. Employees who like to come to work early and leave early and employees who prefer to come in later and leave later agree their hours of work; this means that the core times are covered and, also, the organisation stays open longer, to the benefit of their customers.

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3. Job-sharing – where two employees share one job. This is especially useful for those employees who have family members to look after. This type of work also fits in with the new working patterns of the older employee, who may have reached retiring age but does not want to stop working – but would like to work for fewer hours. It is also used in retirement programmes, where the organisation allows the employee to work fewer hours in the run-up to actual retirement.

4. Teleworking – this normally means working from home; the organisation arranges the necessary equipment and ensures that the home ‘office’ complies with health and safety regulations. It is envisaged that this type of work pattern will increase as information technology develops.

All of the above methods of work have advantages and disadvantages, of which the administrative manager should be aware, in order to ensure that the administrative function achieves the objective of protecting the organisation’s assets and supplying the organisation with the continuous information it needs to succeed.

[1.3] Managing Information and Records

The professional administration manager needs not only the skills and knowledge of a manager but also Information Technology (IT) skills and knowledge in order to continually plan, budget and then train staff on the most up-to-date hardware and software available and within budget. Failure to keep abreast with current Information Communication Technology (ICT) will leave the administrative function failing to provide the accurate and timely management information needed by the organisation to survive and succeed in an evermore demanding marketplace. Morden (1996) gives a very good account of management information systems, as does Appleby (1994).

Holding information in any form necessitates the need to comply with legislation that protects the organisation and the individual. Students should research the law pertaining to the holding of data in their own organisation and country. As the use of technology increases and record-keeping becomes ‘computerised’, the administrative manager must be fully aware of how data should be kept and for how long, the accuracy of that information and who should have access to it.

Ian J. Lloyd’s book Information Technology Law (2000) covers current and future thinking on how governments are (and will continue to try to) protecting property, be it intellectual property or manufactured property. One very good example is the downloading of music, which is denying record companies and composers their right to financial rewards for their work. This also impinges on intellectual property and how it can, or cannot, be protected electronically or legally.

Lucey (1994) writes about the practical aspects of IT and data processing, with some very good examples given in text and line drawing.

The Data Protection Act (1998) in the UK followed the 1994 Act which was introduced to give individual, commercial and industrial interests legal protection of their privacy. The 1998 Act now includes the right of the individual to access not only computer-held information but also hard-copy records. Individuals and organisations holding data on individuals and companies must now register.

There are also EEC regulations, and the United Nations is also debating the rights of access to information and how it can be controlled. Information is now available globally and at the touch of a button. Monitoring and curtailing abuse of the information involves everyone who has access to a computer.

Lloyd (2000) gives a very good account of the impact of technology on our privacy with regard to surveillance. He describes how every daily action we take is

ACTIVITY

Select one working pattern and list the advantages and disadvantages of that way of working

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monitored and recorded and that anyone holding all of that information would have an intimate knowledge of us. When we fill in a form, it is collated, stored and then used. For example, credit cards get to know our likes by recording and analysing our spending patterns. They use this in two ways:

1. To monitor abuse: when spending patterns are changed, they either stop the purchase or ask the cardholder to contact them for reassurance that it is, indeed, the cardholder who is making the purchase;

2. They send offers reflecting past purchases.

In the workplace, surveillance devices allow employers to monitor activities and efficiency of individual employees. The use of the Internet is one example: abuse of this has led to policies and procedures to be brought in, and employees misusing this facility will now come under these disciplinary procedures.

CCTV has been installed in many towns, cities and workplaces; this has led to mention of ‘Big Brother’, and George Orwell’s novel Nineteen Eighty- Four has been cited. For organisations, this may lead to ethical dilemmas, as they weigh the balance between security and privacy. For the administrative manager, this means planning, implementing and monitoring of the security systems to ensure compliance with current legislation.

[1.4] ComplianceAdministrative managers have a duty of care to the organisation. They should also ensure compliance with the standards set internally and externally.

[1.4.1] what is compliance?In the context of administrative management, compliance means agreeing to, or conforming with, laid-down standards. For example, we can agree to internally set standards, but we have to conform to internally set rules and externally set legislation.

[1.4.2] what are quality benchmarks?Bell, McBride and Wilson (2001) describe benchmarking as, ‘the act of defining the best systems, processes, procedures and practices. The measurement of business performance against the best of the best, through a continuous effort of constantly reviewing processes, practices and methods. This can serve as an enabler for maintaining high levels of performance and competitiveness.’

They identify four main types of benchmarking:

1. Internal benchmarking;

2. Competitive benchmarking;

3. Functional benchmarking;

4. Generic benchmarking.

The continual improvement of quality standards leads to an organisation having the marketing/service edge. Sometimes, this is the only difference between a product or service, and it may be the only one that makes the customer/client decide where to give their custom and loyalty. Internally, adherence to the concept of TQM leads to higher morale, motivation, higher efficiency and effectiveness and the accompanying reduction of waste.

ACTIVITY

Using an organisation known to you, describe how it ensures the security of its records Activity

ACTIVITY

Using an organisation known to you, describe how performance isbenchmarked and standards are set

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[1.4.3] what are codes of practice?Codes of Practice are written to guide the user as to ‘best practice’ in thatsituation. As an example, in the UK, Codes of Practice are issued by the Chartered Institute of Personnel and Development (CIPD) to their members to demonstrate best practice in employment law and in managing ‘People at Work’. ACAS, the government advisory body, issues Codes of Practice to employers on a range of subjects, advising them on ‘best practice’ with their employees.

[1.4.4] what is legislation?Legislation is the law of the country that you live in, which affects many of the functions of the organisation; organisations have to comply with those laws or face the consequences. Administrative managers have to comply/ conform with a great deal of legislation: they must have knowledge of it and also know where they can get further information about it. They must also be able to interpret the laws and draw-up policies and procedures following the legislation, implement those policies and procedures, and, where necessary, carry out training to make sure that all staff are aware of its existence and the need for compliance.

For all countries, there is legislation covering at least some of the following:

z Employment;

z Health & Safety;

z Fiscal;

z The environment;

z Fire regulations;

z IT usage;

z Policies and procedures.

section summaryNow that you have completed this section, you should be able to explain how managers manage; understand how the changes in customers needs and wants has affected working patterns; understand the need to comply with legislation and how organisations protect their data.


ACTIVITY

Most countries have ‘Codes of Practice’ – using your knowledge of your country and an organisation known to you, describe the guidance issued by the different bodies, e.g. institutes and governments, to help with the understanding of the legislation/rules

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1. Examine a policy and procedure in your organisation that relates to keeping records safe.

· Are they easy to understand?

· Are employees involved in record keeping trained in the procedures relating to the policy?

· Are the policy and the procedures regularly reviewed?

· Do employees keep to the rules of access?

2. Examine working patterns in your organisation. Select one and answer the following:

· Were the new hours of working mutually agreed?

· Were the constraints explained to the employee/s concerned?

· Who benefited from this new working pattern?

· What problems did the new hours of working cause?

· What benefits were noticed in the departments/organisation?

· Were the new working patterns monitored?

· Were the new working patterns reviewed?

3. What methods does your line manager use to measure efficiency and effectiveness against outputs?

4. Examine one compliance method used in your department/office/organisation:

· Was this introduced owing to external legislation?

· Was this introduced owing to internal rules or standard setting?

· How were members of staff trained to be able to comply with this?

· Was the method monitored and evaluated?

·Was there a regular review?

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Section [2]Change and Administration


2.1 The need for organisational change.

2.2 Approaches to improvement: productivity, efficiency and effectiveness.

2.3 Information Communication Technology (ICT).

2.4 Other approaches to business improvement.

It has been said that, ‘the only thing in life that is constant is change’. This is true of our personal lives as well as with organisations. We move house, we change jobs, we marry and leave home. Our children grow up and leave home. The area we live in changes due to demolition, rebuilding, and so on. Organisations change continually, and the successful organisations are those that plan change into their everyday routines. This section tackles change within an organisational context.

[2.1] The Need for Organisational Change

Lucey (1996) quotes from Burns and Stalker, who found, in their research, that ‘organic-type’ organisations responded more readily to change than ‘mechanistic-type’ organisations. This has been confirmed, repeatedly, by other researchers, such as Tom Peters and Rosabeth Moss Kanter.

The triggers for change can be external or internal.

External triggers can be:

z Competition in the marketplace;

z Technology;

z Globalisation;

z Legislation;

z Changes in attitude of customers;

z Takeovers or mergers.

Internal triggers can be:

z Business Process Re-engineering (BPR);

z The introduction of new technology;

z The need to change attitudes of employees;

z The need to improve performance.

Before change can be implemented, managers need to analyse the current situation. Two of the analytical tools that can help to do that are SWOT (Strengths, Weaknesses, Opportunities and Threats) and PESTLE (Political, Economic, Social, Technological, Legal and Environmental) factors. Both SWOT and PESTLE are used when the business plan is being drawn up; this is normally done at strategic level. Strengths and Weaknesses are relevant to the internal situation in the organisation and Opportunities and Strengths are relevant to the external situation.

Cole (1997) describes SWOT well, and gives a very good example of a SWOT exercise in a typical supermarket. However, SWOT can be used at any level, and some students may already be aware of this analytical tool through the Institute’s

ACTIVITY

Change is difficult to implement, reflecting on your own experience of change, describe your feelings when the change was introduced. Consider the good and the bad aspects of the change programme

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Continuing Professional Development (CPD) programme, where individuals carry out a personal SWOT exercise to identify weaknesses and strengths in their professional development and what opportunities and threats there are in continuing that professional development.

Administrative managers can use SWOT to analyse their administrative function; once they have analysed the results, they can plan the introduction of change where it has been found to be needed. However, change is difficult to implement. People resist change: they do not like to be ‘taken out of their comfort zone’, and change has failed because the programme has failed to win the hearts and minds of the employees affected. People resist change because:

z They have not been informed of the need for the change;

z They are uncertain of the outcome: ‘How will this affect my job?’;

z They may be concerned about their ability to work with the new methods or technology.

Research has shown that this resistance can be overcome in the following ways:

z By good communication and consultation;

z By encouraging staff participation;

z By entering into negotiations with staff;

z By ensuring that, if the change programme is going to affect more than one department, the full approval of senior management has been given.

Appleby (1994) writes in detail on ‘The Management of Change’, as does Morden (1996).

[2.2] Approaches to Improvement: Productivity, Efficiency and EffectivenessAdministrative managers, in common with all managers, must achieve set goals; this can be done successfully only with the right systems, activities and procedures, with well-trained and well-motivated staff and by setting standards.

Managers manage through: planning, implementing, controlling, evaluating and revising. In order to achieve their goals and to improve efficiency and effectiveness, they use a variety of approaches (Morden, 1996).

Control systems have to be established and measured against standards; such measurements can be given in quantitative or qualitative terms:

z Quantitative: quantities, time taken, frequency or output quality;

z Qualitative: intangibles, such as quality of service, amount of complaints;

z Performance standards: should be easily interpreted, free from ambiguity and easily verified.

Quantitative performance is quite straightforward to monitor and evaluate: for example, an administrative manager can implement controls to check how many invoices are being dealt with in one day, or how many orders are being processed or how long a task takes. On the basis of the results, the workflow can be arranged, new systems introduced, and, if necessary, re-training arranged.

Qualitative performance is more difficult to monitor: for example, how does an organisation establish a criterion for customer service? One way is to monitor

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outcomes: for example, how many complaints were there in the past month – was the total more or less than that in the previous month? Questionnaires can also be used to assess customer satisfaction.

Variations in standards should be dealt with immediately, to discover the cause of the variation.

[2.2.1] organisation and methodsAnother tool that an administrative manager can use to improve productivity, efficiency and effectiveness is Organisation and Methods (O & M). Appleby (1994) gives a very good account of O & M and its use in the office, as does Lucey (1994).

The main objective of O & M is to improve administrative, clerical and office procedures. It uses a questioning method and takes a critical approach to all the situations related to the work being investigated. It asks questions such as:

z What is being done here?

z Why is it being done that way?

z When is it done?

z How is it done?

z Where is it done?

z Who does the task/job?

When all that information has been collected and collated, it is analysed and evaluated and recommendations are made, which, if accepted, are implemented and monitored for a specific time and changes made, where necessary.

[2.2.2] formsForms provide another means of maintaining effectiveness and efficiency. Forms are vital in record keeping; the better designed the form, the better the quality of information obtained. With ICT, forms are now being completed, sent and filed electronically; however, hard-copy forms still represent the majority and are used every day in every office in every country. Forms contain information; information is vital to organisations – they could not function without it. The good design of forms is , therefore, very important, because the function of a form is to collect accurate information from the person completing it.

It is also necessary to establish some kind of control over form design: Appleby (1994) states that one person should be given the responsibility to set up and maintain an efficient system of forms control. Students should investigate the systems in their own organisation to discover the controls used (these will vary according to the size and type of organisation).

[2.2.3] work measurementWork measurement is normally associated with the shop floor and production areas where the work is more repetitive; however, it can also be used successfully in certain areas of administration.

Various methods used for work measurement:

z Simple timing: This involves observing a number of average clerks doing repetitive work and setting a standard time for the task to be completed.

ACTIVITY

Consider a task – either in the home or at work – and investigate it using the six Questions at 2.2.1. Then, analyse your findings and see if there is a better way of doing the task

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z Activity sampling: Random observations made at fixed intervals and the time spent on tasks is noted.

z Predetermined motion study: This method takes elements of a job, which are defined according to various physical and mental factors. The job is analysed and divided into its basic ‘motions’. Each individual motion is given a time value, which is obtained from a table. These are then totalled and a ‘standard time’ for that job is given.

z Variable Factor Programming (VFP): This is a technique for improving workflow and eliminating ‘spare time’. The investigation begins by measuring each task the employee performs and setting target times for each task. This give the total hours needed by the employee and also how many employees are needed. Work can then be organised so that there are no bottlenecks, the work flows more efficiently and wasted time is eliminated.

Problems associated with work study methods in the administrative function are:

1. It is not easy to apply work study to administrative jobs;

2. The human element: any of the above programmes would have to be ‘sold’ to the employees to gain their cooperation and acceptance.

[2.3] Information Communication Technology (ICT)The British Department for Trade and Industry (DTI) defines ICT as, ‘the acquisition, processing, storage and dissemination of vocal, pictorial, textual and numeric information by a micro-electronics based combination of computing and telecommunications.’

We have already covered how change affects organisations; this is no more so than in the area of ICT. Not only is there constant change, but that change is accelerating. We hear people say: ‘My computer went out of date the day I bought it!’

Although computers are playing an ever-increasing role in administration, they have their limitations: Lucey (1994) describes them as being good at rapid and accurate calculations, manipulation, storage and retrieval, but less good at unexpected or qualitative work or where genuine judgement is required.

The administrative function benefits from the use of computers in the following ways:

z They perform rapid and accurate calculations;

z They rid staff of boring and repetitive jobs;

z They retain large amounts of data.

ICT has affected all areas of administration, from how we communicate with one another (e.g. Internet and intranet to record keeping). We can, for example, send an email with an attachment which can be an order or a form for completion by a customer or a copy of a letter or report. Product information can be sent by email and organisations can also send mailshots by email. Computers can be networked to a server, which means that each user can access information, which reduces the time taken to complete tasks.

Computers with word processing software are now found in most offices. This has raised the efficiency of all administrators who previously used typewriters and has increased the quality of documents, as the software usually has editing facilities

ACTIVITY

Forms, both hard copy and electronic, are a vital activity for collecting information. Select a form you have recently completed or used to extract information from and rate it 1–10 (with 1 being Excellent and 10 Poor) for: • Clarity of language • User friendliness • Signposting (guiding the reader through

the pages) • Achieving its purpose (did it get all the

information required?)

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that can correct grammar and spelling and, for reports, complete indexing and referencing functions.

Other enhancements are that the documents can include graphics, which can be produced in colour, and multiple copies can be printed off – all of which saves time and produces documents of an acceptable quality standard.

Communications are now rapid – some say too rapid, as there is a perception that a request for information electronically demands an immediate reply. Faxes as well as emails can now be sent via the Internet. Teleconferencing and videoconferencing allows meetings to be held online, thus reducing the need for staff to travel to meetings. This again improves productivity, because people need not leave the office to attend these meetings. It also improves the flow of information, because such meetings can be held more frequently.

Hewlett Packard said, many years ago, that they envisaged the paperless office. It has not arrived yet! However, with the introduction of more and more software programmes, and of computers that can cope with the increasing volume of information and the increasing storage facilities, there may well be a time when there is ‘the paperless office’!

[2.4] Other Approaches to Business Improvement

Other tools, methods and procedures area available to the administrative manager seeking greater efficiency. These include Business Process Reengineering (BPR) and outsourcing.

[2.4.1] Business Process Re-engineering (BPR)

BPR entails redesigning the organisation’s procedures and work patterns to establish better performance and deliver better value to the customer. Hammer and Champy (1993) defined BPR thus, ‘Re-engineering is the fundamental rethinking and radical redesign of business processes to achieve dramatic improvements in critical contemporary measures of performance, such as cost, quality, service and speed.’

Cole (1997) writes: ‘It [re-engineering] would mean a company mentally putting its current systems and procedures to one side and then questioning everything about the process – for example, how the customer orders, what it is he wants, who deals with the customer, how and in what order. The idea is to go back to basic principles and completely rethink the process in question.’

With regard to the administrative function, this might mean the combination of several jobs with related tasks. It might also entail uniting staff into teams with related jobs, which could enhance communication. Re-engineering entails:

z Re-thinking the stages of the process and designing that process to meet the needs of the next process;

z Challenging work boundaries, and redesigning work to be performed where it makes most sense;

z Reducing tasks where possible;

z Empowering employees to work with responsibility in decision-making relevant to their jobs.

ACTIVITY

Computers have, for most of us, become part of working life. Consider an organisation known to you and reflect on how: (a) Computers have benefited the end user; (b) The problems computers have brought

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BPR calls for radical change. For the administrative manager, it means careful planning and consultation with the staff to ensure that the introduction of the radical changes is accepted.

[2.4.2] outsourcingWhen outsourcing was first introduced, it was seen as the opportunity to cut down on overhead costs and to raise efficiency. Research is showing mixed results: some organisations have benefited, whereas others have brought the outsourced processes back into the organisation.

Outsourcing is the delegation of a business function or process to an external service provider who will be responsible for the day-to-day running and maintenance of the delegated function or process. The website www.bizhelp24.com gives a comprehensive explanation of outsourcing.

A good example of outsourcing is the National Health Service in the UK, where the decision was made to ‘outsource’ cleaning services. Other companies have outsourced (contracted out) human resources (HR) departments, catering, facilities, security, training and public relations.

Outsourcing is a long-term commitment, ideally involving a prolonged relationship with the service provider and a good working relationship being built up to the benefit of the organisation’s customers. Organisations outsource for a variety of reasons, and ‘Bizhelp’ gives the following:

z Lack of existing skills to complete a process;

z To replace a poor internal service (may not be connected to lack of skills);

z Resources not being available in-house to complete the process;

z The process being difficult to manage (in general or owing to business growth);

z The process being performed better/more cheaply by other services;

z The organisation needing to use employees’ time elsewhere in the business.

However, the process may not contribute to competitive advantage. Johnson (1997) gives five reasons for outsourcing:

1. To reduce or control operating costs;

2. To make capital funds available;

3. To give a cash infusion to the organisation by selling the equipment to the outsourcer;

4. Resources not available internally;

5. The function is difficult to manage or out of control.

There is, of course, the downside to outsourcing – its impact on staff, who are unhappy with ‘strangers’ looking after specific sections/processes of the organisation. They may also be concerned about the likelihood of redundancies or changes in working practices.

The organisation itself may experience problems with outsourcing, for example in the area of ‘familiarity’, where it has come todepend (over a long time) on the provider. An additional problem is when the provider raises the fees when renegotiating their contract.

ACTIVITY

Using an organisation known to you, consider which departments/functions could be, ‘outsourced’. Describe the advantages and disadvantages

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section summaryNow that you have completed this section, you should be able to explain why organisations need to continually change; be able to explain the different tools administrative managers use to achieve their goals and understand the impact ICT has had on organisations.



1. Carry out a SWOT analysis of an organisation known to you:

· Look at the strengths of that organisation;

· Look at its weaknesses

· Look at the opportunities there are;

· Look at the threats.

2. Look at your job and analyse it using the questioning techniques of O & M. From the evidence you gather, decide where improvements can be made to make it more efficient and effective.

3. Investigate the use of computers in your office.

· How is information dealt with?

· Do you have management information systems?

· How are records kept?

· Are the computers networked?

· What security arrangements are there?

· What computer-based training is given to end-users?

4. Using the BPR approach, look at your office or department and, taking the role of the administrative manager, suggest alternative ways to how things are done there.

· Are there any areas or jobs that can be rearranged?

· What would happen if you merged two jobs together?

· How would you achieve this?

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Section [3]Delivering Customer Satisfaction


3.1 Marketing philosophy.

3.2 The organisation’s supply chain.

3.3 Service Level Agreements (SLAs).

3.4 Total Quality Management (TQM).

Customers – whether they are receiving a service or are renting, leasing or buying a product – now demand that not just their needs are satisfied but also their wants and desires. Organisations have been, and are being, forced by the increased competition to win customers by adopting a more customer-oriented way of thinking and planning in order to achieve higher customer satisfaction.

[3.1] Marketing PhilosophyLucey (1994) writes: ‘Marketing is thus a philosophy which influences the whole organisation. It is much more than just selling. Selling is trying to get the customer to want what the organisation already has: marketing tries to get the company to produce what the customer wants. Ideally, marketing should result in a customer who is ready to buy, thus making selling superfluous.’

The administrative function serves the organisation and, in the context of professional administration, the administrative manager needs to plan around the need for a customer-oriented function – i.e. considering the wants, needs and desires of the internal customer as well as the external customer. Only by using a holistic approach to customer service can quality customer service be achieved. How the administrative manager achieves this is covered, later, in Section 3.4 Total Quality Management (TQM).

[3.2] The Organisation’s Supply ChainA supply chain is the chain of internal and/or external suppliers through which inputs flow; costs are accumulated; value is added by productive, operational, or distributive processes. Issues of cost, quality, speed, efficiency and control are crucial to understanding effective supply chain management.

The role of the supply chain is to optimise efficiency, to release managers to concentrate on their specific area of expertise, and to improve customer services by, for example, speeding-up the transport of goods to the customer. It is important that an administrative manager has the necessary skills to:

z Negotiate a contract for external supplies and services;

z Justify the need to contract outsourcing of processes;

z Monitor, evaluate and (where necessary) negotiate changes in the contract.

[3.3] Service Level Agreements (SLAs)Historically, managers helped one another informally by taking on tasks or services of another department. This has now been formalised into client and customer relationships and is one of the major components of Total Quality Management (TQM). These agreements for services have been made binding, through written agreements, known as SLAs.

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Green (2001) explains that an SLA is a formal agreement similar to those between supplier and customer. He goes on to state that the objective is to achieve the most cost-effective provision of services. This requires the continuous evaluation of prices paid, costs involved by both parties and the quality of the service obtained. Payment for services will usually amount to a ‘book transfer’ within the organisation. He gives some general guidelines on the installations of such agreements:

1. The objective is to achieve the most cost-effective provision of services. This requires the continuous evaluation of prices paid, cost involved by both parties and the quality of service obtained.

2. In certain circumstances, end-users will retain the opportunity to use either the services of the in-house administration or any other sources available.

3. The agreement would not normally be considered legally binding within the organisation but would be regarded as a vital commitment.

4. It would be possible to change the nature of the service offered and the prices charged by giving reasonable notice on either side.

5. Such changes can arise from a number of different factors – e.g. an advance in technology and a change in organisational policy. However, a reasonable operational span would normally be the basis of an effective agreement.

6. SLAs would normally arise only in large organisations where ‘high-volume’ operations are present. Once the work of administration has been established by these agreements throughout the organisation, it becomes feasible to establish the precise resources required to operate the whole system effectively.

7. Forward projections of required services by the user departments should be encouraged, so that the administrative manager can provide the most effective service.

8. There should be a set procedure for dealing with customer complaints, so that faults may be quickly rectified. Serious and continuous complaints could lead to cancellation of the agreement.

9. It is important to establish a new relationship between supplier and customer. Discussions should be based on mutual cooperation and not on aggressive negotiations.

10. As well as the setting up of effective service arrangements, the operation of the system should encourage the exchange of advice and technical knowledge.

[3.4] Total Quality Management (TQM)Bell, et al., (2001) describe TQM as, ‘the scrutiny applied to everything we do – from the way we design our products to the way we support our customers through after-sales service, from the way we manage our people to the way we manage our finance, from the way we develop our organisational strategies to the way we handle information – that describes the management philosophy which has become known as total quality management.’

Appleby (1994) describes the TQM system as being based on the theory that, as quality improves so costs fall, through reduced failure rates and less waste.

TQM is organisation wide and affects every system, procedure and person. It is not Quality Assurance but a philosophy of ‘getting things right first time’, and considers that ‘internal and external customers need to be provided with continuing quality service’. To succeed, TQM has to have full commitment from top management; without that commitment, it will not succeed. Its introduction into the organisation

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has to be carefully planned, and every single employee must be trained in the concept, the systems and the procedures of TQM.

TQM is a continuing process, using the ‘Kaizen’ principle that the provision of quality is a never-ending journey of improvement. All departments are involved, and all department heads and the individuals in those departments must discover who their customers and who their suppliers are.

For the administrative manager, TQM entails incorporating its ethos into the function and educating and training the administrative staff on the philosophy, systems and procedures associated with a successfully implemented TQM programme.

One of the most important aspects of TQM is the internal customer. As the administrative function fulfils its service role to the whole organisation, one can see the implications for the administrative staff – every other department in the organisation is a customer of the administrative function.

To achieve continually improving quality service, administrative managers must ask other department heads how they can best be served by administration. Once this has been agreed, administrative managers discuss with their staff what standards should be set, and employees are trained/re-trained to ensure that they are competent to reach those standards. (This is not a service agreement, although service agreements have arisen from TQM.)

TQM is for life. It fails where organisations have no top-level commitment and it becomes another ‘manager’s toy’, or where training has not been cascaded down through the entire organisation, thereby allowing for weak spots of employees who do not understand (and , therefore, do not take on the commitment of) working in a quality way, every time and all the time.

section summaryNow that you have completed this section, you should be able to explain the difference between marketing and selling and be able to explain the different methods that can be used to improve customer service.


ACTIVITY

Reflect on ‘What is Total Quality Management’ and write down where you meet the TQM criteria in your own job

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1. Using an organisation known to you, investigate how marketing is carried out and the attitude of the marketing staff towards the organisation’s customers.

· Is there a separate marketing department?

· If not, who is responsible for the marketing function?

· How is marketing carried out?

· Is the organisation customer-oriented?

2. Investigate the use of the supply chain in an organisation known to you.

· Who is involved?

· What are the procedures in your organisation for the setting up of a supply chain?

· Do the customers benefit, if so, how?

3. Discuss with your line manager or colleague what they understand by ‘service agreements’. Find out what service agreements there are in your organisation.

· Is your line manager or colleague involved in a service agreement with other departments?

· What other departments?

· What are the contents of the service agreements?

· Are any costs involved; how is the service budgeted

· How long does the service agreement last?

· Is there a signed document, with both sides agreeing to the contents of the service agreement?

4. Find out if your organisation is committed to TQM.

If so:

· How was it introduced into the organisation?

· How do your colleagues view TQM?

· Did the staff receive training in the philosophy of TQM?

· Who are your internal customers?

· Who are your internal suppliers?

If not:

· What systems or procedures are there to ensure quality standard?

· Were you and your colleagues consulted on the standards?

· Were you and your colleagues trained on the need for quality?

· How is quality monitored?

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Section [4.]Business Communication


4.1 Models of communication.

4.2 Organisational communication media.

4.3 Impact of Information Communication Technology (ICT) on internal and external communication.

4.4 Impact of developments in e-commerce and e-government.

Every second of every day, somewhere in the world, people are communicating with each other, either face to face, by telephone or through the written word. We think that communicating is so easy! Say the words, write them down, pass them on and the receiver will get the message you sent. Wrong! The sender, for various reasons, will interpret the message via external and internal barriers, and it may well differ from the one you sent: this can give rise to misunderstandings, wrong instructions being passed on and conflict.

Communication in business is vital. Organisations need accurate communication information to aid decision-making, and yet this is an area that is largely ignored. Many organisations see no need either to plan and implement good communications channels or to undertake training of their employees in communication.

Cole (1997) describes communication as, ‘the process of creating, transmitting and interpreting ideas, facts, opinions and feelings. It is a process that is essentially a sharing one – a mutual interchange between two or more persons.’

In organisation there are three groups of communications:

1. The method of communicating: face to face, memos, letters, reports;

2. The skills of communicating: instructing, interviewing, chairing meetings;

3. The organisation of communication: chain of command, briefing groups, committees.

[4.1] Models of CommunicationTo help us understand the communication process we use models. Hartley and Bruckham (2002) start by describing the communication process (see Figures 4.1 and 4.2).

z Codes: these (which are needed first) are a coherent set of symbols, plus the rules needed to structure a message. For example, a language code consists essentially of a list of words, and a set of rules for preparing a text. These rules are the grammar or syntax of the language.

z Encoding: this involves the use of a code to structure a message, in an effort to achieve our communicative object. Decoding is the reverse: we use our knowledge of the code to work out the meaning of the message we have received.

z Medium/channel: the medium is the physical system that carries the message from the sender to the receiver, and can vary from the air carrying the voice between speakers to an email.

z Noise: this can be external or internal; it is anything that distorts the message and interferes with its journey from sender to receiver – for example, noisy traffic, which will make it difficult to hear the message, or voices and telephones ringing in an open office. Internal noise is explained in terms of someone with a headache or who is feeling ill and who , therefore, will be unable to concentrate.

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Hartley and Bruckham (2002) identify the codes we use in communication and list them as follows:

z Verbal: All the words, clauses and sentences that we use in speech and writing;

z Prosodic: All the stress and pitch patterns, such as pauses and intonation, that we use in speech and which make its meaning clear;

z Paralinguistic: All the pauses, ‘ums’, ‘ahs’ and other sounds that are not ‘real’ words and which do not have a clear linguistic function;

z Kinesics: All the ways we move our bodies during communication, including our posture and gestures;

Figure 4.1: Communication process model

Figure 4.2: Systems model of communication (Hartley and Bruckham, 2002)

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z Standing: More static non-verbal features, such as appearance, orientation (the angle at which you stand in relation to the other person) or distance.

Hartley and Bruckham’s list gives some indication of the problems of communicating successfully. Our ancestors, before the introduction of speech, relied very much on non-verbal language, and they would observe strangers approaching and make decisions based on past experience and interpretation of the stranger’s body language – they either took flight, they took fright, or decided to stay and fight. Modern-day researchers have found that we still read non-verbal communication, and body language in particular; they give various percentages to the contribution non-verbal language makes in communication: Hartley and Bruckham cite the following percentages from Judi James’ book Body Talk: The Skills of Positive Image (1995): verbal, 7%; tone of voice, 38%; visual, 55%.

Consider some past occasion when you have been introduced to a stranger. How did you react when you were introduced? Why is it that we instinctively think ‘I don’t like this person’ or ‘I like this person’? What we have done is subconsciously used the residue of our skills at interpreting body language. If the reaction is ‘I don’t like this person’, this will raise a communication barrier. The skill of interpreting body language can be learnt; it is very useful in our daily contact with people and is of particular importance when interviewing – we must not dismiss our instincts (because they can be right); however, we must not let them over-ride our objective skills. They must be considered along with the rest of the information gleaned at that interview.

There is a need to offer a word of caution. First, non-verbal language must be dealt with in context and with objectivity, not subjective (emotional) thinking; second, we must always be aware of different cultures; non-verbal language is interpreted differently in other countries and offence can be caused by ignorance of this fact.

Cultural communication affects an organisation either through the make-up of the organisation itself (it may be an international conglomerate, or its employees are a diverse ethnic mix, or its sales staff work internationally). It is, therefore, most important, in order to avoid misunderstanding and conflict, that training in cultural differences is given throughout the organisation.

[4.2] Organisational Communication MediaCole (1997) describes organisational communication as having three parts:

1. The media (or method) of communication – e.g. memos, reports, letters, etc.;

2. The skills of communication – e.g. giving instructions, interviewing, chairing meetings;

3. The organisation of communications – e.g. the chain of command, briefing groups, committees.

Thus, consideration needs to be given to the following, for example:

z What do we need to communicate?

z When should we communicate?

z To whom should we communicate?

z How should we communicate?

The answers to the posed questions are important; selecting the wrong medium or the wrong time will lead to miscommunication, conflict and faulty decisions.

Organisations have established formal communication channels, which can be

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vertical or lateral. The vertical channel is used to communicate official data (such as policies and procedures, business plans, information and instruction) in a downward cascade through the management levels. Bureaucratic organisations have traditionally used this medium to inform employees: there was no opportunity for employees to give feedback. Today, information in most organisations flows both downwards and upwards. Cole (1997) writes that this upward flow is mainly through group meetings, joint consultation and the organisation’s grievance procedures.

The lateral channel allows the flow of communication to go across the organisation, and ensures that departmental managers and employees receive the information. Lateral channels are found, more often, in organistic organisations (Burns and Stalker), where the rules of hierarchy are not so formal. Today’s organisations are leaner and the information flow is, therefore, easier to manage; there have also been changes in working patterns, with more employee involvement, which means that information is circulated more easily.

Management encourages lateral communication. Once the parameters have been set for responsibility and standards of performance, the line manager will ask for information only if there is a problem or it is time for a periodic review.

[4.2.1] Written and oral communicationOrganisational communication, on hard copy, flies around organisations in the form of letters, emails, reports, notices, company newsletters, etc. The written word is more permanent than the spoken word, and it gives both the writer and the reader time to prepare and to digest the ‘message’. Even so, it is still open to misinterpretation, regardless of how careful the author has been to keep it ‘sweet and simple’.

Today, we have the Internet and intranets, and this has speeded communication and raised efficiency, in that senders can send messages (emails) and get on with their work and receivers can action the message when they have the time or when they come back into the office.

In organisations, oral messages are usually made face to face, over the telephone and in meetings. In an instant, both the sender and the receiver can interpret non-verbal language, such as facial expressions, gestures and body posture, to help them communicate. Unfortunately, in most organisational communication, the spoken word is said and then gone; there is no record of what was said, and it is open to denial and embellishment. Recording by audio-visual methods may capture what was said; however, in normal, everyday, informal meetings we need to talk to our colleagues, and to build trust and rapport, and we would never consider the need to record the conversations. Nevertheless, it can be used in meetings and in interviews – the latter being done with the permission of the person being interviewed.

The cost to the organisation, if very little effort is made to encourage the passing on of information, is loss of business through demotivated employees, who feel they are not important to the organisation because they know so little of what is going on around them. They have no say in decision-making and they are told what to do, rather than consulted about how things ‘could be done’. This, in turn, leads to poor customer service or poor quality products, which lead to customer complaints and to customers defecting to the competition.

Barriers to communication

Some barriers to communication are as follows:

z Bias against the speaker for a variety of reasons: we grow up with attitudes and values and, if the speaker goes against those, we will not listen or we will dismiss what the speaker is saying.

ACTIVITY

Using an organisation known to you, describe the different channels/media that is used to communicate with everyone

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z Status of speaker: if the speaker is perceived to be of a higher or lower status than the listener, then the message received will be distorted or dismissed.

z Emotion: this will prevent the receiver taking in the full message. For example, fear of bad news, such as redundancy, not getting the promotion, or anger at a grievance meeting, will all impair communication.

z Lack of trust: if we do not trust the person sending the message, then we will not believe what they are saying.

z Language: a lofty or a poor standard of speech may not be understood or accepted. Jargon may not be understood by the receiver.

z Information overload: there may be too much to read, too many emails, too many voicemail messages.

All the aforementioned barriers can be resolved through careful handling by the manager and by organisations introducing well-thought-out communication systems.

[4.2.2] the role of the business meetingA meeting is an exchange of ideas, or opinions, between two or more people with active roles, in order to achieve specific results.

A video entitled ‘Meetings, Bloody Meetings’ is often used in training sessions, with the first part showing everything that should not be done at a meeting. The second part shows how things should be done, and the benefits to the organisation. Managers who attend these training courses immediately relate to the first part of the video and have their own horror stories to tell of meetings that lasted all day, that had no agenda and that had untrained, inexperienced Chairpersons who could not control the more dominant members present and who failed to hold the meeting on course.

Do the meetings you have attended follow the format given in John and Shirley Payne’s (1994) Successful Meetings?

z Bad planning gives insufficient notification;

z There is a failure to give the reason for the meeting;

z People are left wondering why the meeting has been called;

z No time to prepare and no idea what to prepare;

z No agenda;

z Latecomers call a halt to the business of the meeting while they are given a résumé of what has gone before;

z No timing;

z Poor control by the Chair;

z No sense of having achieved anything;

z Frustration at having lost valuable time away from one’s own work.

Good meetings are planned and communicated in good time to allow participants time to collect the necessary documentation or to complete any actions they may have been asked to do at the last meeting. The first question that should be asked is, ‘Do we have to hold this meeting?’ ‘Can this be dealt with in some other way?’ Managers attend numerous meetings where they are not really needed and spend the time there thinking of what they could be doing back in their department. If it is

ACTIVITY

How are meetings managed in your organisation?

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ultimately decided to hold the meeting, the following format may help to ensure a successful event:

1. Send out the date of the meeting with the time and the venue, the Agenda and the Minutes of the last meeting in good time. It is good practice, even with small group meetings, to have an Agenda and Notes of the last Meeting.

2. The Minute Secretary should book the venue and make sure everything is to hand before the meeting begins.

3. The Chair should meet the Minute Secretary to pre-plan the meetings to arrange the timings on the Agenda and any action points that should be raised, and also to make sure that any person being brought in for part of the meeting knows when to arrive and whether to stay for the rest of the meeting.

The Meeting

A formal meeting should have the following pattern:

1. The Chair should start at the appointed time by welcoming everyone to the meeting. New members should be introduced and current members should be invited, by the Chair, to introduce themselves to the newcomer. The Chair should state the reason for the meeting and how it will be conducted. If there are a few new members it would be good practice to go over the rules, such as who can vote, and how to express conflict of interest.

2. The Attendance Sheet is circulated for signatures.

3. Apologies for absence are given.

4. Matters arising from the last Minutes are raised.

5. The Chair asks if the Minutes are correct and asks for a proposer and seconder for acceptance of those minutes. These names are recorded by the Minute Secretary.

6. The Chair moves to the agenda and moves the members through the various items, allowing discussion, timing the debate, checking for understanding and summarising the current position.

The Chairperson

The role of the Chairperson is as follows:

1. To draw up the agenda in consultation with the Minute Secretary.

2. At the meeting, check that the meeting has the correct quorum. Failure to carry out this check may mean that any decisions made at that meeting will be invalid, as the meeting did not conform to the constitution laid down.

3. The Chair must ensure that all members know the rules and ensure that the meeting is conducted within those rules.

4. The Chair should introduce any guest speakers and also ensure that every member has the opportunity to speak if they wish to do so (an experienced Chair will be able to draw everyone in without embarrassing them), so that everyone considers it a meeting worth attending. Involvement with control!

5. The Chair takes the members through the agenda, keeping to the planned timetable for each item. An item that is causing prolonged discussion should be put on the agenda for the next meeting. This has the effect of giving members time to consider the item, and, at the next meeting, it should be easier to arrive at a mutually agreed decision.

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6. One of the skills of a good Chair is the ability to summarise discussion, to help understanding and to bring the matter to a decision or further action.

7. The Chair has to remain objective and must refrain from too much involvement in the debate. The Chair must certainly not dominate the meeting.

8. When necessary, the Chair’s casting vote should be used.

The Secretary

The Secretary’s role is as follows:

1. Pre-meeting, the Chair and the Secretary should prepare the notices and agenda.

2. The Secretary should establish the purpose of the meeting.

3. The Secretary should confirm that members have received the papers, that they are able to attend and if they need directions to the venue.

4. Arrange for refreshments to be available.

5. Arrange equipment for presentations, if required.

6. Collect all the papers needed for the meeting:

z The Minute book;

z The attendance sheet;

z Spare copies of the agenda and past Minutes;

z Copy of the constitution (the rule book).

7. During the meeting, the Secretary should sit next to the Chairperson and take notes of the meeting for the Minutes.

8. After the meeting, the Secretary should:

z Prepare and send a draft of the Minutes to the Chairperson;

z Circulate the Minutes, when advised by the Chair;

z Liaise with members who have action points to deal with.

[4.3] Impact of Information Communication Technology (ICT) on Internal and External CommunicationICT has made gigantic strides in the past few years, and is still gathering momentum and expanding to allow individuals access to volumes of information and to communicate more easily through the Internet and the Web. Students can sit at their PCs in the comfort of their room and, using their computer, gain access to a veritable storehouse of information.

Hartley and Bruckham (2002) write that, from our home computers we can:

z Access other computers, worldwide, within minutes;

z Download information from other computers around the world;

z Send and receive emails for other users across the world;

z Browse through information held in universities and libraries across the world;

z Scan databases across the world;

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z Play computer games with other users across the world;

z Publish our own database;

z Retrieve and playback audio, video and multimedial documents;

z Use webcams and chat to people and see them.

All these activities can be carried out by organisations, as well as individuals. Computers in organisations can be networked, thus enabling many end users to access information simultaneously. This enables internal communication to be rapid and effective; similarly, external communications allow organisations to communicate speedily with suppliers and customers worldwide.

Communication has been revolutionised by IT, which will continue to expand and change the way we communicate. Broadband has increased the speed of delivery to our PCs and is also reducing the cost of IT. IT is also changing work patterns, as previously mentioned: people can now work from home, and it is predicted that this way of working will increase. Furthermore, people can now work on trains, or aeroplanes, or while waiting to continue a journey. It seems only a few years ago that trains and aeroplanes installed modem points, and now we can go ‘wireless’. No one, not even the experts, will predict the next developments.

[4.3.1] IT protection and securityWith all their data and procedures computerised, organisations need to protect that information – we have all become aware of the hacker and of viruses, and of damage due to careless handling. Procedures have been introduced whereby end-users have to back up all their work at the end of the day, and these back-up records are kept away from the place of work. Risk management policies have also been introduced, whereby, in the event of some disaster, the organisation can be up and running within a short time in some other building, with rented equipment and with all the back-up material available to return to work.

In the UK, the Data Protection Act provides a legal framework that organisations must adopt to protect data about personnel employed in the organisation, and confidential information on customers and suppliers.

IT has brought its own problems, one of which is the ease with which employees can abuse the use of the Internet and the World Wide Web (WWW). Some employees have downloaded unsuitable material and spent hours emailing friends all over the world and frequenting chat rooms. Organisations have had to introduce policies that made the misuse of computers a disciplinary offence, plus install surveillance monitoring systems.

[4.4] Impact of Developments in E-commerce and E-government

[4.4.1] e-commerceDue to the changes in buying habits brought on by the emergence of e-commerce,organisations are placing this new phenomenon in both the ‘threats’ and ‘opportunities’ columns in their SWOT analysis.

E-commerce has been growing steadily and was held back only by the lack of secure sites for the payment of goods. This problem has now been solved and e-commerce websites now have secure sites for payment by credit or debit cards. The ease by which people who have no training in the use of computers can easily

ACTIVITY

How is information backed up and protected in your organisation?

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Professional AdministrationProfessional Administration

access these sites and purchase goods from the comfort of their own home can mean only one thing – changing shopping habits. Not long ago, we saw the demise of many local shops as the supermarkets opened up; now we have another shopping revolution in e-commerce.

Amazon and eBay come to mind as two of the great e-commerce success stories. There are many others – such as supermarkets that enable customers to order their goods on the Web and have them delivered to their door. However, it is not only large organisations that can flourish on the Web: thousands of small businesses with websites offer goods and services and are doing very well. One example is a small gift shop in the UK, the turnover of which has quadrupled in the two years since they went on the Web. They now have a database of customers, they have analysed their customers’ likes and dislikes and are emailing special offers, concentrating on what they know about their customers’ buying patterns. This is how the larger organisations are working – wine companies plot what their customers are drinking and how much, and are sending special offers of the wines the customer appears to prefer.

Small businesses run from homes, are purchasing on a ‘Just-in-Time’(JIT) basis, which means that they do not have to hold stock or have huge overheads to pay.

The following are just some of the questions that arise from the growth of e-commerce; it will be interesting to see the answers unfold!

z What impact will this have on commercial property companies if business people no longer need shops or office buildings?

z What impact will this have on administrative systems, as organisationsadd e-commerce to their sales toolkit?

z What will happen to staff in the sales department – will e-commerce jeopardise jobs, or will they switch roles and sell online?

z What will happen to the social aspects of ‘going shopping’?

[4.4.2] e-governmentThe UK government has set the IT professionals in government departments the task of ensuring that IT supports the business transformation of government itself, so that it can provide better, more efficient, public services.

The governmental IT strategy is about transforming public services as citizens receive them, and demonstrating how technology can improve corporate services of government to release more resources in order to deliver ‘frontline’ services. The aim, radical reformation; redesigning public service around the individual, to give people the services that they expect today – services that are prompt, convenient, responsive and of the highest quality.

The UK government aims to develop the following:

z Online services, by which citizens transact with the government over the Internet;

z Transaction processing systems which ensure the effective delivery of front-line public services: these include the systems for collecting national and local taxes, paying pensions and welfare benefits, licensing vehicles and maintaining patient records;

z Corporate systems which support government bodies themselves: these include HR and financial management systems.

The UK government wishes to place citizens at the centre of affairs and ensure that the services they receive are citizen-centred rather than provider-centred. A first step has been the establishment of ‘Directgov’.

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The aim of Directgov (www.direct.gov.uk), is for people to interact with the government online, and it visualises intermediaries (such as Citizens Advice Bureau staff, or accountants acting for taxpayers who, for example, pay taxes online) acting on behalf of citizens. GPs may help patients to select consultants online and to book an appointment there and then. In addition, friends, carers and family members may act on behalf of pensioners and other citizens unable to go online themselves. Thus, another IT revolution is impending, affecting how we ‘do business’ with the government.

section summaryNow that you have completed this section, you should be able to describe the different communication models and how organisations communicate internally and externally, as well as understand the different barriers to communication and be able to organise meetings.

You should now understand the impact ICT has had and is having on organisations and how it is changing how we communicate, sell our goods and services and the way we buy. You should also be able to describe the changes in how governments are improving their services through e-government.


ACTIVITY

What impact has IT had on the administrative systems and procedures in your organisations, and is your government moving to IT to ‘do business’ with its citizens?


1. Using an organisation known to you, investigate the effectiveness of its communication policies. If you work in a small organisation, investigate whether communication between management and staff is effective:

· How is the policy implemented?

· Are the employees happy with the level of involvement?

· What are the barriers?

2. Consider written communication in an organisation known to you:

· Is the quality of the written word good?

· Is the level of language easily understood?

· Are the managers good communicators?

· Do all the staff receive training in ‘effective communication’?

3. Meetings are an essential part of everyday working life for managers:

· How are meetings viewed where you work?

· How many meetings do you attend every week?

· How many meetings does your line manager attend every week?

4. Security must be high on an organisation’s agenda:

· How effective is the security in your organisation?

· Who is in charge of IT security?

· What happens to your backed-up work – where is it stored?

· Does your company have a risk strategy/plan?

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assessmentCongratulations on completing your study of Unit 3: Professional Administration.

This unit will be assessed by a three-hour unseen written paper comprising two sections: A and B. Section A will comprise eight compulsory short-answer questions designed to test your knowledge and understanding of concepts and terminology. Section B will comprise a choice of two questions, from four, designed to assess your appreciation of the role of effective people management in administrative practice. A question will be set from each of the four areas of the learning syllabus.

learning resourcesUseful Websites:www.bizhelp24.comwww.cabinet.gov.uk/newsroomhttp://home.att.net/~iso9k1/tqm/tqm.html (Total Quality Management)http://www.bettermanagement.com/library (Supply Chain Management)


Appleby, R. 1994. Modern Business Administration (BBM), 6th edn., Pitmans LPBB

Hartley, P. and Bruckham, C. 2002. Business Communication, Routledge

References and Further Additional Reading:

Bell, D., McBride, P. and Wilson, G. 2001. Managing Quality, Butterworth- Heinemann

Burns, T. and Stalker, G.M. 1996. The Management of Innovation, Oxford University Press

Cole, G.A. 1997. Management Theory and Practice, 5th edn., Letts Educational Ltd

Green, L.W. 2001. Business Administration, The Institute of Administrative Management

Hammer, M. and Champy, J. 1994. Reengineering the Corporation: A Manifesto for Business Revolution, Nicholas Brealey Publishing

James, J. 1995. Body Talk: The Skills of Positive Image, Industrial Society

Johnson, M. 1997. Outsourcing (IM in Brief S.), Butterworth-Heinemann

Lloyd, I.J. 2000. Information Technology Law, 3rd edn., Butterworths Law

Lucey, T. 1994. Business Administration, DP Publications

Morden, T. 1996. Principles of Management, McGraw-Hill

Orwell, G. 1949. Nineteen Eighty-Four, Secker and Warburg

Payne, J. and Payne, S. 1994. Successful Meetings in a Week, Hodder & Stoughton

Pease, A. and Pease, B. 2004. The Definitive Book of Body Language, Orion

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Information for Decision Making




ISBN 0 900491 73 6

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Unit [4]Information for Decision-Making

overviewThe aim of this unit is to examine the need for information within an organisation and to develop the ability to organise, analyse and communicate information (including quantitative and financial information) for management.

All organisations must manage information, just as all commercial businesses must aim to make a profit. Information increases knowledge, reduces uncertainty and adds value, when used.

Good decisions are virtually impossible without appropriate information, and managers are constantly seeking more and better information to support their decisions.

To survive in a rapidly changing, competitive environment, every organisation must be able to collect, communicate and process information in such a way that managers within the organisation can make effective decisions in pursuit of the organisation’s objectives.

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1. Explain the need for quality information in organisations;

2. Identify the relationship between information and decision-making;

3. Use statistical tools available for presenting and interpreting business information;

4. Demonstrate how financial information enables managers to plan, control and make decisions.

contentsSection 1 Data, Information and Decision-Making

Section 2 Presentation of Information

Section 3 Information for Financial Awareness

Section 4 Information for Planning and Control

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Section [1]Data, Information and Decision-Making


1.1 Data, information and management information.

1.2 The decision-making process.

Data are the raw materials for information provision. Managers at strategic, tactical and operational levels within the organisation need information for planning, control and decision-making. Effective decision-making is becoming increasingly important as inappropriate decisions may hinder organisational success and survival.

[1.1] Data, Information and Management InformationData are facts, events and transactions; information is data processed in such a way as to be useful to the recipient.

[1.1.1] what is information?Information is an essential business commodity. Without information, staff at all levels in an organisation would be unable to perform their duties. The organisation would not achieve its objectives and, hence, would not survive.

Information has no value in itself. It becomes valuable when its existence enhances the decision-making process. It is valuable in this process when it is:

z Relevant;

z Complete;

z Clear;

z Accurate;

z Timely;

z Up to date;

z Well presented;

And measures favourably against the costs of providing it.

[1.1.2] sources of informationInformation may be sourced internally, within the organisation, or externally. Internal sources and types of information include:

z Historical records;

z Internal databases;

z Resources capabilities;

z Trends;

z Targets;

z Stock availability;

z Customer credit ratings.

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External sources and types of information include:

z External databases;

z Internet;

z Published statistics;

z Government reports – economic and trade reports;

z Published reports and annual accounts of competitors, suppliers and business customers;

z Suppliers’ price lists and brochures;

z Seminars and conferences;

z Newspapers and magazine reports;

z Market research;

z Economic climate;

z Social trends;

z Competitor activity;

z Global market information.

[1.1.3] levels of Information

The strategic level of information

The strategic level of information oversees the activities of the entire organisation and is very much concerned with long-term planning and policy decisions.

The requirements at this level are for highly summarised information, regarding company activities to date, trends, forecasts, and awareness of competitor activity, economic climate, social trends, and technological and legislative developments. The source of information is mainly external, with more emphasis on scope than detail.

The tactical level of information

The tactical level of information coordinates and controls the activities of a department or section, and is, therefore, concerned with the short-term planning of that department or section. The information requirements at this level concern

ACTIVITY

For an organisation of your choice, identify the three levels of information along with the information required at each level

Figure1.1: Levels of information

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factors such as budgets, development of operational plans and staff appointments. The source of information at this level is both internal and external, with a medium level of accuracy depending on the circumstances.

The operational level of information

The operational level of information is responsible for the day-to-day running of a department or section. Information at this level is mostly internal, historical and, often, quantitative and detailed, e.g. information on stock availability, staffing, prices, customer credit ratings.

The following is an example of information requirements at each level of information:

1. At strategic level, the marketing director would typically require information on:

- Potential overseas markets;

- Extent of competitor activity;

- Suitability of products.

2. At tactical level, the sales manager would typically require information on:

- Breakdown of sales by salesperson;

- Breakdown of sales by region;

- Breakdown of sales by product.

3. At operational level, the sales clerk would typically require information on:

- Prices;

- Stock availability;

- Customer credit ratings.

[1.1.4] the requirements of an information systemThe characteristics of good information are that it is:

z Relevant, and sufficiently accurate for its purpose;

z Complete, and from a reliable source;

z Communicated, in time, to the right person;

z Understandable, with the right level of detail.

Too much information can cause anxiety, stress and inefficiency; however, insufficient information can result in ineffective decision-making, guesswork, stagnation and even decline.

Desirable attributes of quality information are as follows:

z It must enable managers to make effective decisions;

z It must be suitable and timely, for taking effective control action;

z It must be compatible with the responsibilities of specific managers;

z It must contain an appropriate level of detail for the recipient;

z It must relate to the current situation;

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z It must have an acceptable level of integrity;

z It must be compatible with the response time needs of systems;

z It must be based on exceptions or variances to accord to the principle of ‘management by exception’, where appropriate;

z It must be produced at an optimum cost;

z It must be easily understandable by the recipient;

z It must not contain unnecessary jargon or abbreviations;

z It must be provided at a suitable frequency.

Hence, an information system should ensure that the:

z Right information is in the

z Right place with the

z Right person at the

z Right time and in the

z Right format.

[1.1.5] management informationA management information system provides managers, at all levels, with appropriate information for planning, control and decision-making. Information technology can enhance the organisation’s management information system by providing better, faster information, which can result in improvements or changes in management actions. These may be in areas such as:

z Better and more accurate planning;

z Enhanced decision-making;

z Closer control of activities;

z Better coordination of activities;

z Improvements in quality.

Information Technology (IT) plays a pivotal role in providing the necessary information through, for example:

z Internal databases;

z Intranet for internal communications;

z Decision-support packages and spreadsheets;

z Routine transaction processing;

z External databases for research;

z The Internet.

[1.2] The Decision-Making ProcessDecisions are impossible without information. Decisions have to be taken in an increasingly complex and, at times, unpredictable organisational environment. Effective decision-making requires good information. Effectiveness means doing

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the right thing (i.e. producing the desired results); however, in today’s environment, being effective has become increasingly difficult for managers in any organisation.

Decision-making is an integral part of management and occurs at all levels and in all functions of the organisation.

H.A. Simon, a leading writer on management decision-making, advocates that decision-making comprises of four principal phases:

Phase 1: Intelligence – searching the environment for conditions calling for decisions.

Phase 2: Design – inventing, developing and analysing possible courses of action.

Phase 3: Choice – selecting an alternative or course of action from those available and implementing this choice.

Phase 4: Review – assessing past choices.

Decision-making is an iterative process and, although it is beneficial to separate out the various phases, today, very few decisions are taken in a neat and logical sequence. There are interrelationships between decisions. Decision-making requires flair, intuition, judgement and creativity.

[1.2.1] decision-making and informationDecision-making is based on information. Information is the trigger to knowing there is a problem requiring a solution or an opportunity requiring a decision. All decision-making has problems of risk and uncertainty and it can be difficult to recognise what the real problem is. Information is needed to define and structure this problem or opportunity and to explore and choose between the alternative solutions or courses of action. By using judgement and information, estimates can be made of the values and likelihood of possible outcomes. This is, in effect, transforming uncertainty into risk. Information is also needed in reviewing the implemented choice.

All organisations face a variety of strategic and operational pressures. Some of these are internal to the organisation, such as:

z Improving efficiency;

z Increasing effectiveness;

z Creating and strengthening competitive advantage.

Other factors are largely external, such as:

z Increasing competition, and the changing nature of competition;

z Focus on quality and customer satisfaction;

z Stakeholder and employee expectations;

z Technological developments;

z Legislation;

z Economic climate;

z Financial environment.

Organisations must respond to these pressures by taking appropriate decisions and implementing any necessary change.

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[1.2.2] programmed and non-programmed decisions

Simon also classified decisions into programmed (structured) and non-programmed (unstructured) decisions.

Programmed decisions are routine and repetitive. For these types of decisions there are usually laid-down rules and procedures. Examples of this type of decision are scheduling, re-ordering and credit approval.

Non-programmed decisions have a high degree of uncertainty. There are no decision rules to aid the manager. Examples of this type of decision are mergers, capital investments and product planning.

Typically, non-programmed decisions are taken at the strategic level of an organisation and programmed decisions at operational level.

Semi-structured and unstructured decisions do exist at operational level, but are increasingly more common at tactical and strategic levels. These decisions have to be taken by managers who need information to assist them in defining the problem (or opportunity) and in evaluating the likely results of different alternatives.

[1.2.3] characteristics and information requirements of the three levels of

decision-making

Strategic decisions are concerned with the achievement of corporate aims and objectives and strategic plans. Tactical decisions are at an intermediate position between the strategic and operational levels, with some characteristics and information requirements of both these levels. Tactical decisions may, for example, involve pricing and budget preparation. The information requirements for these decisions would be cost and sales analyses and budget/actual comparisons. Operational decisions are routine, day-to-day decisions that may have little direct and immediate impact on the organisation as a whole.

ACTIVITY

Consider an organisation with which you are familiar, distinguish between its programmed and non-programmed decisions

Figure 1.2: Characteristics and information requirements of the levels of decision-making

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[1.2.4] contribution of effectivedecision-making in achieving organisational goalsDecisions are becoming increasingly important to organisational success. Even routine decisions may have long-term consequences. Many decisions have major financial consequences, and inappropriate decisions may hinder organisational success and survival.

The environment in which an organisation operates is becoming increasingly complex, making the task of decision-making much more difficult.

In the private sector, markets are vulnerable to competition worldwide, due to global emerging market economies from e-commerce. Managers must decide how best to respond to this competition, not only with regard to which market to compete in but on what basis to compete in terms of price, quality, availability and customer service. In the public sector, managers also have to take such critical decisions.

Organisations must constantly strive to offer better products and services than their competitors. Decisions have to be taken as to what customers value most.

section summaryNow that you have completed this section, you should be aware of the importance and value of information and that information should be relevant, complete, clear, accurate, timely, up to date and well presented. You should be able to identify what is ‘quality’ information and that IT plays a key role in providing management information.

The business environment in which management decision-making takes place is increasingly complex, making the task of decision-making much more difficult. You should now understand that the levels of decision-making have different information requirements and characteristics and that the strategic and financial implications of inappropriate decisions for an organisation have become greater.


ACTIVITY

What are some of the practical problems in decision-making?


1. List the internal and external sources and types of information for an organisation of your choice.

2. ‘Good information is that which is used and which creates value’. Discuss.

3. Examine the differences in the characteristics and information requirements at the three levels of decision-making within an organisation.

4. Consider organisations that have made appropriate and/or inappropriate decisions and identify the consequences they encountered.

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Section [2]Presentation of Information


2.1 Methods to tabulate and graphically represent data.

2.2 Frequency distributions and histograms.

2.3 Summary statistics: measures of location and spread.

This section reflects on the importance of data presentation techniques and summary statistics in decision-making. The ability to derive, present and interpret data is an important and essential skill for a manager. Raw data correctly obtained, analysed and presented in an appropriate way will contribute vital information to assist in the decision-making process. Such a contribution will help both to provide an improved service and may enhance an organisation’s competitive advantage.

[2.1] Methods to Tabulate and Graphically Represent Data

Data is the raw material of information. Data may be taken from a primary or secondary source and can be collected from surveys, questionnaires, interviews, observations or historical analogy.

Data collected as a result of using one or more of these methods needs to be interpreted. To assist in this interpretation, the data can be presented in a number of different ways: tables can be produced and the data can be presented graphically, by using line graphs, bar and pie charts and pictograms.

[2.1.1] tablesTables are used for recording data in the form of quantity and/or description of attributes, rather than in a narrative format. A well-designed table can show a great deal of information and can be tailored to specific needs, whereas a poorly designed table may obscure underlying patterns and lose details of the data.

Table design

1. Construct the table so that it presents the data in the most effective and straightforward manner; consider the purpose of the table.

2. Keep the table as simple as possible.

3. The table must have a clear title and the headings for the columns and rows should be unambiguous.

4. Totals of figures or values should be shown, where necessary.

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[2.1.2] graphsA graph is a visual display of data showing the relationship between two variables. Graphs are good at highlighting underlying patterns.

Graph construction

1. The horizontal axis (the x-axis) is used to represent the independent variable and the vertical axis (the y-axis) the dependent variable. The independent variable is the one that is responsible for changes, e.g. company profit; the dependent variable is the one that we are trying to explain, e.g. share price.

2. Select appropriate scales to give a correct impression.

3. Always give the graph a title and clearly label each axis.

4. Do not overcrowd the graph with too many lines.

5. Indicate the source of the data used in the graph.

ACTIVITY

Construct a graph from the following:Year Sales £k1 150 2 125 3 175 4 200 5 200

Figure 2.1: A six months sales graph

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[2.1.3] bar chartsBar charts are very versatile in representing data. They are used to compare the sizes of figures, the height of each bar representing the size of the corresponding figure. There are four different types of bar charts:

1. Simple bar chart – this is used to represent the totals only.

2. Multiple bar chart – this is used to represent the components only.

3. Component bar chart – this is used to represent the totals and their components.

4. % Component bar chart – this is used to represent the relative size of the components.

Bar charts are generally considered to be easy to draw. The advantage of a simple bar chart (which is the form most commonly used) is that it is clear and concise, thus allowing easy interpretation of the data.

The disadvantages are mostly when a more complex bar chart, such as a component bar chart, is used, as there may be too many components to allow clear interpretation. Additionally, the components may be so small that they run into each other and so are difficult to distinguish.

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[2.1.4] pie chartsA pie chart is constructed as a circle, resembling a pie, with the ‘slices of pie’ used to represent the proportions of the component parts. Pie charts are easy to understand as they provide a clear picture of the significant components making up the total. A pie chart allows for comparisons, because it can be completed on a yearly basis to compare the same data, as it reoccurs, annually.

The disadvantages of pie charts are that they can be difficult and tedious to draw, and they are only really effective if there are no more than six or seven components.

[2.1.5] pictogramsPictograms consist of a recognisable picture or symbol of the data being represented. They are simple and easy to understand and are useful in presenting data to a wide and varied audience, in terms of age and ability.The disadvantages of pictograms are that only a limited amount of data can be displayed and partial symbols lack precision.

ACTIVITY

Construct a component bar chart from the following data: Product Sales £K Year Products A B C 1 100 250 200 2 140 280 290 3 110 300 310

Figure 2.6: Pictogram of IAM students at XYZ college

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[2.2] Frequency Distributions and Histograms

Data can be divided into two types, depending on whether they are discrete or continuous. Data are discrete if they can only take integer values, such as the number of children in a family, the number of cars owned, machines operated, shops opened or people employed. Measures which can take any value and are not restricted to integers are continuous, such as the time taken to complete a task, the length of a rod, the height of a pole or the area covered by carpet.

[2.2.1] frequency distributionsExample 2.3:

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[2.2.2] histogramsA histogram is the means by which a grouped frequency table or frequency distribution may be represented. The most important difference between histograms and bar charts is that histograms are normally only used to display continuous data, so the horizontal axis has a continuous scale. Bars are drawn on this scale, and, unlike bar charts where only the height of the bar is important, in histograms both the height and the width of the bar are important. This is in effect the area of the bar.

In Example 2.3, the number of miles travelled daily by sales representatives, classes ‘10 but less than 20’ up to ‘50 but less than 60’ are of the same width, so the areas are set by the height of the bar. The histogram of frequency distribution of ‘Number of miles travelled daily by sales representatives’ would look like Figure 2.7.

[2.2.3] frequency densityIf one of the classes was double the width of the others, then its height would have to be halved to keep the same area. This adjusted height is known as the frequency density. (See Example 2.4.)

Hence: area = width x height

[2.2.4] displaying grouped discrete dataA diagram drawn to represent a frequency distribution of grouped discrete data should be treated like a histogram in terms of the adjustment needed if there are non-standard classes.

ACTIVITY

Construct a graph from the following: Consider the following statement: ‘In bar charts and histograms, the height of the bar shows the number of values in each class.’ Is this statement correct?

Figure 2.7: Histogram of miles travelled

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There are several ways in which the horizontal axis can be labelled when representing grouped discrete data. The most common is to use the class boundaries.

For the table given earlier (Example 2.3) of the ‘Results of class test’, the boundaries for each class would be:

This allows for test results of 39, 49, 59 and 69 to belong to a specific class when the diagram is drawn. Note that the starting class boundary is 29.5.

This allows for any test result of 30 to be recorded.

The frequency distribution of ‘Results of class test’ could be represented by the following diagram:

Figure 2.8: Table showing class boundaries

Figure 2.9: Histogram of class test

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[2.3] Summary Statistics: Measures of Location and Spread

Further analysis of data can be provided by the use of summary statistics, such as measures of location and spread.

Data must be summarised to give useful information. Diagrams are useful in conveying an overall impression, but they do not give objective measures. Numerical measures are needed to describe data more accurately. Two important measures give the location and spread.

[2.3.1] measures of locationThe most common measures for the location of data are the mean, media and mode. These are also known as measures of central tendency.

Mean

The arithmetic mean is the most popular average. The method of calculating the mean is as follows:

1. Add all the data items together;

2. Divide this sum by the total number of data items.

The arithmetic mean can be calculated using a formula. For ungrouped data, this formula is:

x/n

Where x represents the individual values and n represents their total.

Example 2.5: Calculating the arithmetic mean for ungrouped data

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For grouped data the formula is: fx/f

Where fx represents the individual values multiplied by the number of times that value occurs and f represents the total frequency.

The advantages of the arithmetic mean are:

z It is easy to calculate;

z It is familiar and easy to understand;

z It uses all the data;

z It is useful in a number of other analyses;

z It is objective.

The disadvantages of this measure are:

z It can be distorted by extreme values;

z It is not always representative of the data.

Median

The median is the actual ‘central value’, and it is usually considered to be the most representative value. It is the middle value of an array and sometimes gives a more typical result than the arithmetic mean.

An array is the data items arranged in either ascending or descending order.

With n items, the median is the value of item (n + 1)/2

Example 2.6: Calculating the arithmetic mean for grouped data

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The advantages of the median are:

z It is easy to understand;

z It usually gives a value that has actually occurred;

z It can be used when the mean is misleading;

z It is not affected by extreme values.

The disadvantages of this measure are:

z For grouped data, it is estimated on the basis of a graph or corresponding mathematical method;

z It is not so easily used in further statistical analyses.

Mode

The mode is the value that occurs most frequently. The list of values below shows the monthly sales (£k):

10, 15, 20, 20, 35, 40, 45

The mode of this set of values is £20,000.

The advantages of the mode is:

z It is an actual value;

z It shows the most frequent value (which can be very beneficial in the retail or hospitality trade);

z It needs no calculation.

The disadvantages of this measure is:

z There can be more than one mode;

z It cannot be used for further analyses.

Example 2.7: Calculating the median

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The measures of central tendency described provide an important method of describing data as well as comparing sets of data. However, these measures alone are not always sufficient in providing a distinction between different distributions. What is required is an indication of the spread of the data, or how the data are dispersed.

2.3.2 measure of spreadThe range is the simplest measure of the spread of the data (sometimes referred to as a measure of location). The range is the distance between the highest value and the lowest value of the data.

To obtain the range from the following list of values showing the monthly sales (£K):

10, 15, 20, 20, 35, 40, 45

subtract the smallest value (which is 10) from the largest value (which is 45).

Hence, the range is 45 - 10 = £35,000.

Example 2.8: Finding the mode from grouped data

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Although the range is easy to calculate, its main disadvantage is that it can be influenced by extreme values. For example, if the monthly sales values were (£K):

10, 15, 20, 20, 35, 40, 45, 75

then the range would be 75 - 10 = £65,000.

section summaryNow that you have completed this section, you should be familiar with the ways to tabulate data and be able to graphically represent data using pictograms, line graphs, bar and pie charts. You should be able to identify which diagrammatical presentation is the most appropriate means of conveying your information. Furthermore, you should be competent in illustrating the data contained within frequency tables through the use of histograms. Raw data correctly obtained, analysed and presented in an appropriate way will contribute vital information to assist in the decision-making process. You should now be able to summarise data adopting the measures of central tendency and use the range as a simple measure of spread.The learning syllabus identified at the beginning of this section, and the information outlined in this summary, are the key issues with which you should feel comfortable, and should provide the basis for wider reading. If any aspects are unclear, look again at the relevant part of this section and consider who might help you to understand these aspects – for example, a colleague, tutor, family member or fellow student.


1. State the advantages and disadvantages of using pictograms, line graphs, bar charts and pie charts as techniques in the presentation of business information.

2. What is meant by the term ‘frequency density’?

3. List the advantages and disadvantages of the three measures of central tendency.

4. (a) Draw a histogram to represent the following data:

Wages (£) Frequency

400 to under 600 50

600 to under 700 50

700 to under 800 20

800 to under 900 15

900 to under 1000 10

(b) From the histogram, find the value of the mode.

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Section [3]Information for Financial Awareness


3.1 Income and expenditure.

3.2 The balance sheet.

3.3 Working capital and capital employed.

3.4 Constructing a balance sheet and a profit and loss account.

Accounting is concerned with recording, classifying and summarising data, and then communicating the results. The main purpose of accounting is to report on the success, or otherwise, of the business. Companies produce annual reports containing annual accounts. A company is legally bound to show in its annual accounts a balance sheet and a profit and loss account. Accounting statements are produced to help the users to make decisions. This section attempts to cover these areas of accounting.

[3.1] Income and ExpenditureThe income and expenditure account is an account (used by concerns such as clubs, associations or charities, whose main objective is not profit making) which shows the excess of income over expenditure, or vice versa, for a given period. It is similar to a profit and loss account, and is usually accompanied by a balance sheet.

Typically, expenses include rent, rates, insurance, heat, light and power, salaries, telephone charges, advertising, postage, cleaning costs, stationery, interest, depreciation etc.

The profit and loss account shows the results of the company’s activities over a period of time. It shows what the company has earned and the expenses incurred in achieving these earnings.

In its simplest format, it is: Sales - Costs = Profit/(Loss)

Profit is not cash. Companies can make a profit and still have no cash. Making a profit means that the assets in the company have grown, but there may be a shortage of cash because the working capital cycle may have slowed or there may have been investment in new equipment.

[3.2] The Balance SheetA balance sheet is a financial snapshot of the company at a given point in time. It derives its name from the fact that it always balances. This is because all it shows is what money has been made available to the company and how that money has been invested in the company.

Companies invest money in assets. The assets show what the company owns. The money that has been made available to fund these assets is termed liabilities. The assets and liabilities are divided into groups as follows:

ASSETS LIABILITIES

Fixed Permanent

Current Long Term

Current

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[3.2.1] assetsThe current assets are the short-term assets of a company and are either cash or things that will be turned into cash within the year, such as, cash on short-term deposit, cash owed by the customers or debtors and cash tied up in stock.

Fixed assets are those assets that a company keeps and uses, such as land and buildings, plant and machinery, vehicles, fixtures and fittings.

[3.2.2] liabilitiesThe current liabilities are the short-term debts of the company and include bank overdraft, creditors (who are normally the company’s suppliers) and provisions. Provisions are money that the company puts aside for items that it expects to pay for within the year, for example taxation and any interest or dividends due.

The long-term liabilities are long-term loans, such as bank loans, mortgages or loans from the government. The lenders are paid interest and they expect the loan to be repaid.

The permanent liabilities are normally the shareholder’s funds. The shareholders provide the share capital and expect the company to pay them a dividend for the risk they take by investing in it. The other source of permanent liabilities is the retained profits or reserves. This is the profit that has been put back into the business to finance growth.

[3.3] Working Capital and Capital Employed

Working capital is the money available for conducting the day-to-day operations of a business.

A company can increase its profitability by speeding up the working capital cycle by: minimising stock, ensuring debtors pay on time and delaying payment to creditors for as long as possible.

Capital employed is the funds used by the business for its operations.

Capital Employed = (Fixed Assets + Current Assets) - Current Liabilities.

ACTIVITY

Calculate the working capital from the following: Stock £3,000 Cash £600 Creditors £2,750 Debtors £2,000

Figure 3.1: Working capital cycle

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[3.4] Constructing a Balance Sheet and a Profit and Loss Account

[3.4.1] balance sheets

ACTIVITY

Which of the following statements are true and which are false? • A warehouse is a current asset • Retained profit is a fixed asset • Money owed tosuppliers is a current

liability • Money owed by customers is a current asset Example 3.1: Compile a balance sheet from the following:

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3.4.2 profit and loss accounts

For Example 3.2, there are two kinds of profit – Gross Profit and Net Profit

Gross Profit is simply sales less the cost of sales, i.e. the cost of producing the goods that have been sold. When the expenses are deducted from gross profit, then we have net profit. Any interest on loans and shareholders’ dividends will be paid out of net profit and the remainder, called retained profit, will be shown on the balance sheet.

Cost of Sales, often referred to as ‘Cost of Goods Sold’, is calculated as follows:

(Opening Stock + Purchases) - Closing Stock

section summaryNow that you have completed this section, you should be aware that a balance sheet is a financial snapshot of the company at a given point in time and that the profit and loss account shows the results of the company’s activities over a period of time. You should be familiar with the terms contained within these statements, such as assets, liabilities, cost of sales, gross, net and retained profit, and be able to construct simple balance sheets and profit and loss accounts. Furthermore, you should be able to distinguish between working capital and capital employed.

Finally, you should now understand that an income and expenditure account is prepared by not-for-profit organisations and is similar to a profit and loss account.

ACTIVITY

Calculate the gross profit from the following: Sales £12,000 Opening stock £500 Closing Stock £600 Purchases £7,100

Example 3.2: Compile a profit and loss account from the following:

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1. Explain the difference between working capital and capital employed.

2. ‘Profit is not cash.’ Explain what is meant by this statement.

3. From the following information, calculate:

(i) Working Capital;

(ii) Capital Employed;

(iii) Cost of Sales;

(iv) Gross Profit;

(v) Net Profit.

£ £

Sales turnover 300,000 Current assets 85,000

Opening stock 25,000 Creditors 36,000

Closing stock 40,000 Bank overdraft 5,000

Purchases 175,000 Expenses 53,000

Fixed assets 365,000

4. Construct a profit and loss account and a balance sheet from the following:

£ £

Sales 120,000 Share capital 15,000

Purchases76,500 Advertising 6,000

Opening stock 1,500 Bank 4,500

Closing stock 3,000 Fuel expenses 4,500

Vehicles 18,000 Rent 7,500

Vehicle expenses 4,500 Debtors 12,000

Fixtures and fittings 6,000 Creditors 6,000

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Section [4]Information for Planning and Control


4.1 Cost classification.

4.2 Cost control.

4.3 Budgets and budgetary control.

4.4 Constructing flexible and cash budgets.

This section considers planning as a primary management function and the need for control mechanisms to ensure that operations proceed to these plans. Most plans have financial implications and control of expenditure is always necessary. Fundamental to the effective management of any operation is an understanding of what incurs costs and what actions, and/or decisions, may enable the organisation to eliminate, reduce or control its costs. Budgetary control is a short-term planning and control technique, also covered in this section.

[4.1] Cost ClassificationA cost is an amount of expenditure and is associated with some item or unit,e.g. the cost of a book. In order to deal with costs in a logical way, they are normally grouped under different headings, which relate to how the costs are incurred. This process of grouping cost is known as cost classification. An important primary classification is into direct costs and indirect costs.

[4.1.1] direct costsDirect costs are those costs that can be identified with a product or service, such as:

z Direct materials;

z Direct labour;

z Direct expenses.

Direct materials cost is the cost of the raw materials that become the finished product or saleable service, e.g. wood and screws of a desk; paper, ink and glue of a book; restaurant food, goods bought by a retailer to sell on to customers.

Direct labour (wages) cost includes the wages of those workers who transform the raw materials into the finished product or service, e.g. carpenter, printer, chef, shop assistant.

Direct expenses are costs, other than materials or labour, that can be associated with a product or saleable service, e.g. hiring a French Polisher to polish a desk, a guest speaker to speak at a function or seminar.

Prime cost

The prime cost is simply:

Direct Materials + Direct Labour + Direct Expenses

[4.1.2] indirect costsIndirect costs are those costs that cannot be identified with a particular product but are shared between two or more products. Indirect costs are also called overheads.

ACTIVITY

From your own organisation, identify costs that may be classified as direct and indirect

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Indirect costs are:

z Indirect materials;

z Indirect labour (wages);

z Indirect expenses.

Indirect materials costs are those material costs that cannot be directly charged to a product, e.g. cleaning materials, packing materials.

Indirect labour (wages) costs are those costs that cannot be charged directly to the product, e.g. supervision, inspection, storekeepers.

Indirect expenses are those expenses that cannot be charged directly to the product, e.g. factory rent, factory rates, insurance of buildings and machinery.

Total cost

Total Cost = Direct Costs + Indirect Costs

[4.1.3] fixed, variable andsemi-variable costsA further classification of costs is based on the way the costs behave in relation to increases or decreases in production or sales.

A variable cost is a cost which, in total, increases or decreases in proportion to increases or decreases in production or sales. An example of a variable cost is the cost of raw materials.

A fixed cost is a cost which, in total, remains uninfluenced by changes in production or sales. Examples of fixed costs are insurance, rent and rates. Fixed costs are time based and usually remain unchanged for a year.

Variable Costs + Fixed Costs = Total Cost

Some items of cost are a mixture of fixed and variable costs. Such a cost is labelled semi-variable. An example of a semi-variable cost is a telephone bill, which includes the line rental (fixed amount) and the number of calls made (variable amount).

[4.2] Cost Control

[4.2.1] cost centresA cost centre is a location or function that is used to accumulate overheads. Within an organisation, a cost centre may be an individual, a group of individuals, a department, a machine, a factory etc.

The total overheads for a cost centre are a mixture of those spent directly by the cost centre (this is referred to as cost allocation) and an appropriate share of general costs, such as rates and heating.

The process of sharing common costs between cost centres is called cost apportionment. The basis of cost apportionment will vary from company to company, but a typical basis might be:

z Floor area – for costs such as rates, rent, heat and lighting;

z Number of employees – for costs such as canteen, personnel and administration.

ACTIVITY

Identify some cost centres within your own organisation

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[4.2.2] cost controlCost control is the application of costing to enable management to compare actual costs with planned costs and take any necessary corrective action. Costing is aimed at providing managers with the information needed to manage effectively.

For a profit-making company:

Sales – Costs = Profit/(Loss)

To achieve profit, the sales must be greater than the costs. However, it is the customers who control the sales. A company can encourage sales by having a good-quality product, a realistic selling price, a good company image, good staff, good after-sales service, good advertising etc., but the ultimate decision to buy rests with its customers. Hence, identification and control of costs is essential if the company is to achieve profitability.

For non-profit-making companies, income must at least match expenditure. So, again, management needs to know what the costs are and where they are occurring in order to keep them under control and for the company to justify its existence and remain viable. The cost information needs to be sufficiently detailed to enable management to identify areas of inefficiency and waste.

Cost centres assist in relating costs to individual responsibility, so that the performance of the manager responsible for the control of an item of expenditure can be assessed against target.

[4.3] Budgets and Budgetary ControlA budget is a quantitative and/or financial statement. Budgets are prepared for a specific time period, usually a year. A budget is a plan, and the system of using budgets to control progress towards the achievement of objectives is called budgetary control. This control process, which normally operates on a monthly basis, identifies any differences arising between budget performance and actual performance. These differences are called variances. Variances can be favourable (labelled F) or adverse (labelled A), but, in each case, the necessary corrective action must be taken by management.

[4.3.1] advantages and disadvantages of budgets and budgetary control

Budgeting is a short-term planning and control technique, which is sometimes referred to as responsibility accounting.

The advantages are:

z All areas of a company are critically appraised and coordinated;

z Communication is on a company-wide scale;

z It facilitates management by objectives;

z It allows for planning and control;

z An involved workforce can be better motivated.

The disadvantages relate to the manner in which the procedure is conducted within a company:

z Cumbersome system;

z Inflexible;

ACTIVITY

What is the aim of budgetary control?

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z May hide inefficiencies;

z A ‘rule’ rather than a ‘tool’;

z Out-of-date standards.

Which can lead to frustration and lack of commitment.

[4.3.2] types of budgetThere are three main types of budget, namely:

z Fixed budget;

z Flexible budget;

z Cash budget.

Fixed budget

A fixed budget is a single budget with no analysis of cost. A fixed budget is one that is established and not adjusted when actual activity levels differ from those set.

Flexible budget

A flexible budget is designed so that permitted cost levels can be adjusted to suit the level of activity actually attained. The basis of flexing a budget is an understanding of cost behaviour, i.e. that total cost is made up of costs which are fixed and others are variable.

In flexible budgeting: Cash budget

The third main type of budget is a rolling or cash budget, which forecasts the cash position of a company in the months ahead. A cash budget is usually prepared for three or six months at a time. Its preparation allows a company to decide, in advance, if it needs an overdraft, needs to arrange borrowings, decrease costs or increase sales etc.

ACTIVITY

What is the difference between a fixed budget and a flexible budget?

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[4.4] Constructing Flexible and Cash Budgets

Example 4.1: Flexible budget – calculating the variances using the cost budget for the production of 10,000 units

Example 4.2: Cash budget – preparing a three-month cash budget from the following data, covering July to September

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section summaryNow that you have completed this section, you should be familiar with the various ways in which costs may be classified. Cost control is the application of costing to enable management to compare actual costs with planned costs and take any necessary corrective action. You should be aware of how cost centres assist cost control. Furthermore, you should understand the advantages and disadvantages of budgetary control and be able to distinguish between a fixed and flexible budget. Finally, you should be competent in constructing simple flexible and cash budgets



1. From your own organisation or experience, consider how costs have been identified and controlled.

2. The costs to a company in producing 1,000 of Product A last month were as follows:

Materials £60,000Labour £30,000Overheads £90,000Total costs £180,000

Of the costs shown, materials used are 90% variable, labour is 80% variable and overheads are 30% variable. The remaining costs are fixed.

(a) Analyse the total cost of £180,000 into fixed costs and variable costs.

(b) Explain why it is important to distinguish between fixed and variable costs.

(c) Define and give a practical example of a direct cost and an indirect cost.

3. Prepare a three-month cash budget from the following information:

• Opening bank balance on 1 April of £1,600

• Rent payable each month of £500

• Sales in April estimated at £5,000

• Sales expected to increase each month, from April, at the rate of 5%

• Creditors to be paid £2,750 in April, £3,000 in May and £3,250 in June

• Capital expenditure of £3,600 in April

• Fixed expenses of £450 per month

4. The following budget for Production Dept A is based on an expected output of 12,000 units

Cost Cost Behaviour £Direct Labour Variable £2 per unit 24,000Direct Materials Variable £3.50 per unit 42,000Production Overheads Semi-variable Fixed £10,000 Variable £2 per unit 34,000Admin Overheads Fixed 27,000

TOTAL 127,000

In an actual month, production was 12,500 units and actual costs were:

Direct Labour £27,500Direct Material £42,500Production Overheads £34,125Admin Overheads £27,000

Calculate the variances.

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assessmentCongratulations on completing your study of Unit 4: Information for Decision-Making.

This unit will be assessed by a three-hour unseen written paper comprising two sections: A and B. Section A will comprise eight compulsory short-answer questions designed to test your knowledge and understanding of concepts and terminology. Section B will comprise a choice of two questions, from four, designed to assess your appreciation of the role of effective people management in administrative practice. A question will be set from each of the four areas of the learning syllabus.

learning lesourcesUseful Websites:www.tutor2u.comwww.bized.ac.ukwww.instam.org

bibliographyAdditional reading that will be helpful:Lucey, T. 2004. Management Information Systems 8th edn., Thomson Learning

References and Further Additional Reading:

Burns, P. and Morris P. 1994. Business Finance – A Pictorial Guide for Managers, Butterworth Heinemann

Dyson, J.R. 2004. Accounting for Non-Accounting Students, 6th edn., FT Prentice Hall

Thomas, R. 1997. Quantitative Methods for Business Studies, Prentice Hall




ISBN 0 900491 74 4

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Case Study

Unit [5]Case Study

overviewThis unit assumes that you are now familiar with the content of the individual units for the International Diploma in Administrative Management.

The aim of the unit is to develop your ability to apply the skills of judgement, analysis, evaluation and decision-making to a specific situation.

Both the International Diploma and International Advanced Diploma in Administrative Management, in their Learning Outcomes, cover the following key areas:

z Analytical skill in recognising and specifying objectives and critically appraising information given, in order to arrive at a practical and reasonable evaluation of the problem.

z Creativity, together with the ability to apply knowledge and experience, to develop a number of workable solutions, which should meet economic, social and technical demands.

z Judgement, to select the best solution in the circumstances and to support this choice by logical argument, using the appropriate facts and figures.

z An understanding of the subject areas covered in the syllabus, and, in particular, the interrelationships of those subject areas.

z Communication of ideas in the most effective manner using diagrams and charts, as well as the written word.

You should be especially aware of the accelerating impact of Information Communication Technology (ICT) on administrative activities and processes, particularly in the areas of business, commerce and communication. IAM case studies can feature ICT issues as elements of problems, along with developments in organisation structure, changing patterns of work and employment, and new approaches to managing the human resource. While all of the aforementioned reflect topic areas of particular units, the case study provides for their integrative application to business problems. Be aware of developments in these areas, and be ready to draw on your own work experiences, where appropriate.All of these areas are addressed, both in case study examples that follow and in the practical guidance on how to approach case studies. The short bibliography at the end of the guide includes key texts and useful websites.

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Case Study

contentsSection 1 What you are Aiming for

Section 2 Dealing with Cases

Section 3 Case to Develop your Expertise

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Case Study

Section [1]What you are Aiming for

[1.1] Case Study: Carefree Curtains LtdMike Clark leant back in his chair, yawned, and noticed that the office clock showed 8 p.m. This was the third-running late evening this week. ‘Late at the office’ was becoming a way of life, but Mike had to complete his cash-flow forecast in order to help persuade the bank to renew the company’s overdraft.

Generally speaking, Mike had cause for satisfaction in the way the business had grown, since its beginnings in 1976, although problems were piling up at present. Mike had been made redundant from an ailing textile company, whose sales had contracted owing to cheaper imports from the Far East. He had started his own business making curtains, offering a ‘made to measure’ service together with a range of standard sizes of ready-made curtains.

Competition was fierce in the ready-made sector, and so Mike decided to open a curtain shop in the ‘high street’, to attract more customers. This increased sales, and so the strategy continued, with further shops opening in other towns in the East Midlands. The ‘made to measure’ service was on two levels, with either:

1. A Carefree representative taking the measurements and discussing style, fabric, etc., with the client; or

2. The client providing the measurements and choosing the material from samples in the shop; this option was cheaper than the full service.

Two years ago, Mike had started a mail-order section, making and despatching directly from the factory to clients outside the region. A variation of service No. 2 was available for this. Around that time, Mike had been approached by a local builder to provide curtains for a block of ‘starter’ homes that were to be sold furnished. This had encouraged Mike to go for major contracts, such as those associated with new office blocks. The promise of substantial orders from a developer had prompted Mike to move to larger premises and employ more staff. He had also purchased bales of material on a grand scale, to get a better discount. However, the developer was taken over by a rival and the verbal promise counted for nothing. Few ‘substantial orders’ came in, the inventory value was very high. There had always been other problems of a relatively minor nature, but they now looked formidable when added to the expensive factory/office move and the high level of stocks. ‘If only I had time to plan ahead and to think for a while’, sighed Mike. As he drove home, Mike reflected on some of the problems. Anne, his wife, was co-director, and they had managed to discuss policy and implement it until last year, when the twins were born. Since then, Anne had been kept busy at home and Mike found it difficult to make strategic decisions on his own.

Then there was the paperwork. Granted, the clerical staff worked reasonably hard, yet they always seemed behind with the accounts. Mike regretted not buying a computer when the volume and variety of trade was smaller; it could then have helped him to cope with recent expansion. He had almost bought one, but some new machine or set of software was always about to come onto the market, so he had deferred the acquisition. Nevertheless, to help combat the accounts problems, Mike had introduced a credit-control procedure that the staff could follow without having to involve him or Anne every time a decision was needed. First, he’d classified credit customers into groups, as follows: small developers (19 in total); hotels (two small chains and seven individually owned); three private hospitals. He’d then set a credit limit and age of debt limit for each group, and instructed one of the clerks to let him know when the average credit and the average age of debt for each group exceeded their limits.

The factory was another issue. There had been some labour turnover, but most operatives had been there a few years. Lately, work had been getting sloppy.

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Returns from customers were becoming frequent, and judgement had gone against Carefree in recent Small Claims Court cases where householders had claimed refunds because of poor work, e.g. puckered seams. When Mrs Braddock had been factory supervisor, things had gone well: many a time a group had stayed late to finish an order, to catch the evening parcel collection.

Mike now realised that Mrs Braddock had been production supervisor, quality controller, personnel officer, training officer and cost accountant all rolled into one. He had promoted one of the machinists to replace Mrs Braddock and had left it to the ‘Peach Personnel’ employment agency to find the second supervisor needed for the extra employees when the factory moved. However, neither of the replacements was as good as Mrs Braddock, who had been with Mike and Anne since the start, in 1976; team spirit was no longer apparent.

To add to this, there were the new trainees – both school leavers. Mike thought it his social duty to give them work experience, but the whole thing seemed to have gone sour. One of them left because ‘she was bored’, and the other, when interviewed, had complained of being used as ‘cheap labour’ and ‘not getting proper training’. Although he knew that this was a gross exaggeration, Mike was also aware that Carefree had not carried out all of the agreed training programme; somehow, other crises had always taken precedence.

The shops were yet a further problem. He had just discovered that the Newark shop was using the old price list, which should have been replaced six months ago. Some of the orders fulfilled there would have been at a loss, and many others would have made little contribution. Mike had sacked the manageress of the Grantham shop after receiving persistent complaints from customers about her rudeness, and there had been several returned orders with demands for refunds because the curtains were not the correct size. Most of these incidents were due to transcription errors in the measurements when customers’ orders were copied onto the summary sheet. Mike used to visit all eight shops at least once every two weeks, but, lately, he had not had time for such visits, and all contact had been by memo and by telephone.

Driving home, Mike even regretted buying the new company car. He had hoped that the latest Volvo Diesel Turbo Estate would impress important potential customers with major contracts to place, but this had not been the case, and now the big car was an excessive expense. ‘The pressure of work is really affecting my judgement,’ Mike muttered to himself as he drew up to his house – then he groaned as he recognised the car blocking his drive – it belonged to Anne’s brother, Jim. ‘He’s such a smart Alec!’, thought Mike, crossly. ‘Just because he went to business school, and is now a junior marketing executive with a multinational company, he thinks he can tell me how to run my business! Well, I’m not in the mood for good advice! Trouble is, Anne thinks he’s right about me employing an administrative manager – one that would take on much of my work and get things organised now we’ve expanded. I could do with the help, but how can I justify a professional salary when we’re running into trouble? I meant to look into this after Jim’s last visit, but I just haven’t had time!’ Mike opened his front door and gloomily entered his home.

Do all of the following questions:

1.(a) Bearing in mind the sources of orders, describe, with the aid of a sketch, the likely paperwork procedure from receipt of order through to customers’ payment via production and stock. (15 marks)

(b) Discuss whether Mike’s new credit-control procedure is likely to be effective. (10 marks)

2. Advise Mike how he might delegate work to give himself time to think and plan ahead. (20 marks)

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3. Discuss how Mike might rebuild team spirit in Carefree, to help overcome the recent company problems. (20 marks)

4. Suggest how Mike might learn about, select, justify and install electronic office facilities to help Carefree. (20 marks)

5. Explain to Mike how a well-trained administrative manager might be justified in Carefree. (15 marks)

[1.2] Specimen AnswersQuestion 1(a):

Bearing in mind the sources of orders, describe, with the aid of a sketch, the likely paperwork procedure from receipt of order through to customers’ payment via production and stock. (15 marks)

Answer 1(a):

Mike Clark’s curtain business receives orders from a number of sources, as listed below:

z Sales representative – who may be a house-to-house salesperson or may derive business from customers’ responses to advertisements, for example, in a local paper or shop;

z Shops – customers will visit the shop and place their order ‘on the spot’, providing measurements and choice of fabric;

z Mail order – orders placed through this outlet would probably result from the distribution of a catalogue or sales leaflet. This would detail prices and display the colour of the fabric along with its description. Customers may be asked to send measurements or choose from a selection of standard sizes.

Orders from each of these three sources would need accurate measurement and fabric specification. A standard form should be used to reduce the possibility of transcription errors.

The assumption that customers pay for the goods after they have been received may help to explain Mike’s cash-flow problem. The following paperwork results:

z Sales Order – a formal document with reference number, date, quantity ordered, product description and price. One copy for Sales and another for Accounts are required.

z Standard Form – as above. These will be sent in from representatives and shops, but will be produced in the office from the mail-order requests.

z Materials Schedule – details what is needed (amount of fabric linings, curtain type). It is used as a stock requisition form to get the stock section to check that everything is available.

z Works Order – to authorise work to start if stock is available. This could also mean instant despatch of any standard curtains, if they are available.

z Job Tickets – made out to control production and ensure that goods are despatched in some sort of priority.

z Delivery Notes – must accompany the delivery van or go with the goods, when sent by post.

z Sales Invoices – could go with the goods or follow separately by post.

z Stock Requisition – starts the purchasing procedure if stock is not available. A

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purchase order is made out, one part going to the supplier and the other being kept by the Purchasing Department.

z Goods Inwards Note – this accompanies the delivery of the stock ordered. The goods actually received must be checked against the purchase order, to ensure that requirements have been met.

z Supplier’s Invoice – this will be checked to see that it reflects the goods received at the right price; if so, payment will be made. This involves updating the purchase ledger and sending a cheque to the supplier. Statements may be received from the supplier if the business holds an account with them. The customer has received the goods and payment is awaited. Cash or a cheque arrives at the office. It is processed and paid into the business bank account. Any refunds or damaged goods must be investigated and the paperwork procedure may have to begin again to meet the order.

These procedures assume no computerisation. If Mike Clark operated through e-business, using ICT, then information matching could be carried out automatically, which would save time-consuming manual work.

Question 1(b):

Discuss whether Mike’s new credit-control procedure is likely to be effective. (10 marks)

Answer 1(b):

The credit-control rules would certainly be effective in some respects. First, they would reduce the number of decisions that Mike has to make. This, in turn, would

Figure 1.1 Paperwork procedure (from order to receipt of payment)

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slightly reduce Mike’s workload, which could result in better decisions elsewhere in the business. Second, the clerical staff would adopt a systematic routine and make regular checks which, in itself, focuses attention on the importance of credit control.

However, the rules are not really adequate in other respects. The problem lies in the use of the term ‘average’. Clearly, within a group, the current average could well be below the limit, either for credit amount or age, but some customers could have greatly exceeded the limits. An ‘average’, along with other statistical measures, is usually used when there is a mass of data that would be overwhelming to deal with individually. The number of credit customers in the stated groups is small. You could speculate that the clerical time taken in calculating averages might be more than that used in dealing with each customer individually. To be really effective, Mike should sit down and define limits for individual customers and ensure the sales ledger clerk reports to him when any limit is exceeded. When, or if, he subsequently computerises, he might do this anyway.

Question 2:

Advise Mike how he might delegate work to give himself time to think and plan ahead. (20 marks)

Answer 2:

Mike is obviously overworked, leaving little time to apply himself to the strategic management of his business. This would involve making important decisions and planning ahead to anticipate and prevent any problems. Figure 1.2 shows the present organisational structure of the business and highlights a few of Mike’s staffing problems.

Obviously, there is an imbalance between the lower-level workers and the management, at all levels. The directors of the company, particularly Mike, have all the decisions to make plus the added burden of office work (e.g. the cash-flow forecast).

Accounts seem to be a major problem area. The clerical staff are always behind with the accounts, and the time they spend on them reduces the time available for processing orders, which is where the money comes from! Mike should promote one of his clerical staff, who is experienced in accounting work, to the position of accounts clerk. Trainees or present staff could specialise in this area, and the chief clerk would be able to relieve Mike of work such as cash-flow control. Instead, the results of analyses could be presented to him in a digestible form and Mike could act on that information.

The factory supervisor has far too much work to cope with effectively. There should be a production supervisor who, in view of the relatively small size of the company (my assumption), could also be in charge of the quality control of output. There

Figure 1.2 Organisation chart

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should also be a personnel officer in charge of training new staff in liaison with the production supervisor. A training programme could be drawn up, including considerations such as selection and systematic training, in order to produce a productive and motivated workforce.

Mike and Anne must delegate; this entails three supervisors instead of one. If the factory is running smoothly, Mike will have fewer operational problems to sort out and can then spend more time on longer-term policy decisions about production, methods and sales.

Figure 1.3 shows a possible new organisation structure. Further delegation may be possible if the personnel, accounts and general clerical sections merge to form one large department, with specialisation within. As the firm expands, these specialist functions may develop.

Mike Clark must delegate to responsible members of staff who, in turn, can delegate in an appropriate manner. This leaves more valuable time for both management levels and should result in tighter control and, ultimately, prosperity for the business.

Question 3:

Discuss how Mike might rebuild team spirit in Carefree, to help overcome

the recent company problems. (20 marks)

Answer 3:

In order to discuss how Mike might rebuild team spirit, the recent company problems must be examined, to discover why the team spirit has collapsed.

Factory

z Moving the factory without good reason, as events have proved, may have caused unrest among the employees.

z Staff overworked and behind with paperwork. With no predicted improvement in these circumstances, low morale will result. High labour turnover resulting, perhaps, from non-competitive wages and work overload. This could cause a great deal of stress for those remaining.

z Quality control and resulting legal action against the company. Morale could suffer because of any bad publicity.

z Poor supervision since Mrs Braddock left. It seems that she had fostered team spirit and good morale, thus producing a better performance from her group. For example, she would stay late if it meant that an order could be met.

Figure 1.3 Possible new organisation structure

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z Poor training programmes, which contribute to the labour turnover. Obviously, the inadequacy of training is producing an unmotivated group who will not perform well. In addition, the fact that the agreed programme is not matching up to the actual training given will not encourage trust between workers and management.

Shops

z These are obviously ‘distant’ from the production side of the business. Close contact has not been maintained. The lack of a replacement price list at one shop is evidence of that.

z Inadequate management – the behaviour of one manageress may have been the result of poor morale produced by the lack of communication between the different parts of the business. If she felt that the shop was being ignored, then she would have little incentive to encourage sales. Her rudeness to complaining customers may have been a result of her exasperation with the quality of goods sent to the shop. However, if transcription errors were the fault, then steps should be taken to introduce a standardised form and to impress on staff the importance of checking their entries.

z Finally, proper contact with all the shops has not been maintained by Mike Clark. He should be seen by all employees and be seen to be taking an interest; telephone calls and memos are not sufficient.

The following steps should be taken to rebuild team spirit:

z Consultation with staff about plans and future policies will help to produce a cohesive group who are aware of company objectives and will want to work together to achieve them.

z Ensure correct staffing levels, to enable staff to work adequately and swiftly without being overstressed.

z Ensure that rewards for work are commensurate with the value of the staff members to the business. If Mike cannot offer cash rewards now, he may be able to stress job security and future pay increases, dependent on productivity.

z Supervision must improve. Supervisors must be selected by Mike himself. They must be competent, experienced and have relevant communication skills to build and maintain teams and encourage improved work performance.

z Training must be systematic to provide employees with more marketable skills than at present. There should be a clear-cut career progression to increase morale of both trainees and workers.

Thus, among the many actions that Mike must take, it is important that he ensures that the shops are included and that they feel part of the team. Mike should make regular visits to them to discuss problems and consult about future plans. He should also invite shop personnel to the factory so that they understand more about the business. If Mike implements the above measures, the workforce will be well motivated. This will then transfer to new trainees and ensure motivation and trust of the future workforce.

Question 4:

Suggest how Mike might learn about, select, justify and install electronic office facilities to help Carefree. (20 marks)

Answer 4:

Mike is overburdened by paperwork, and so are his clerical staff. This must be remedied as it is causing a loss of money to the business. He has good reason to

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consider purchasing electronic office facilities, as this could lead to more accessible records and allow further expansion.

The most obvious facility is a computer system, which he has considered in the past. It may also include reprographic equipment, word processing facilities and numerous other types of equipment that could increase efficiency. Concentrating on the installation of a computer system seems to be vital, and could trigger further investment in other areas.

Before considering selection, Mike must justify his decision to invest. This will involve critically examining his present system to investigate possible improvements to the manual system. If they are insufficient, then a computer may be the answer. Mike must carry out a cost-benefit analysis; it is not only the initial cost which is important but the total cost, including maintenance, software and training. He must weigh up the total costs with the probable benefits to see whether investment would be justified.

The next stage is to learn something about the products on the market. Mike must decide on the type of computer appropriate to his circumstances. He may decide on a mainframe computer with a number of terminals in the various departments of the factory. However, considering his company does not have much money to spare and is already having cash-flow problems, a microcomputer may be more appropriate. Mike must familiarise himself with the variety, cost and applications of the products on the market. He could do this as follows:

z Consulting a variety of computer magazines, which indicate price, description and, possibly, detail future developments.

z Consulting other companies of approximately the same size who have undertaken investment before. Mike could visit the companies and discuss the advantages and disadvantages of the equipment with staff and management. They may point him in the right direction and also tell him which machines or suppliers to avoid.

z Visiting supplier shops to get a real picture of the price and appearance of a number of models.

Once familiar with the market, Mike must make the selection. He could visit a microsystems centre, to get objective advice, or go direct to a supplier. The supplier must be reputable, because computer firms are merging at an accelerating rate and products made by less well-known companies become obsolete very quickly. Selection can then be aided by a trained salesperson with technical and practical skills. Mike must present a list of what he wants to achieve with the microcomputer. He must enquire about maintenance contracts and costs as well as training facilities for his staff. Installation must follow staff training to minimise disruption to the workflow. Mike should buy application packages for software with user-friendly facilities to minimise training and maximise access to the computer.

Installation must include a period of parallel running, where the paperwork is still carried out manually, so that, if the machine breaks down, work can continue until the problem is remedied. Capacity must take into account expansion in the future. Eventually, Mike may install a printout facility to produce purchase orders and sales invoices and to print standard letters to customers or suppliers. If he expands further, he may want more sophisticated machinery and equipment, such as ‘Prestel’ or electronic mail facilities.

In investing in any electronic office equipment, Mike must consider the costs and benefits, and the training it will involve for staff – and, at all times, he must invest with consideration of future expansion. This will dictate the cost and quality of the equipment he selects. As his business expands, he may have to introduce a standardisation policy to ensure that all equipment can be used as a system.

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In learning about any office equipment, Mike should attend office equipment exhibitions, read catalogues and magazines, talk to other companies and consult a reputable supplier. In selecting, he should be realistic and not allow salespeople to sell him something he feels is inappropriate. In installing, he should consult his staff and be sure that the machine can be well utilised.

Finally, before undertaking any investment in electronic office equipment, Mike must be sure that it is justified and will be to the advantage of the business, both in the present and in the future.

Question 5:

Explain to Mike how a well-trained administrative manager might be justified in Carefree. (15 marks)

Answer 5:

A well-trained administrative manager may be justified in Mike’s business, particularly with regard to possible expansion. The business definitely needs organisation and a trained administrative manager could implement the necessary changes. The manager would be in charge of all the office work and staff. This would mean that, if growth continued, further specialisation could occur. For example, accounts, personnel, purchasing, sales and marketing departments could be set up. An administrative manager would help to ensure coordination of all of the different work groups to further the achievement of the long-term objectives of the business. Mike would make him/her aware of long-term policies, which s/he could then translate into long-term and short-term plans.

Such decisions must be discussed with the departmental supervisors (in this case with the accounts and personnel supervisors), and translated into short-term plans, which should then be communicated for action by the workforce. The administrative manager would have a ‘birds eye’ view of the office function and control the work of the various departments. If control is applied, then problems can be anticipated and sometimes avoided. Mike has no time for this himself, so he could delegate this task to the manager. If well trained, the manager not only will ensure coordination, control and integration, but will be up to date and informed about current developments in office matters. For example, s/he will be familiar with procedures used in other companies and may be able to improve practical aspects of procedures for Mike. S/he will be able to allocate staff according to the workload and ensure that work distribution is equitable. S/he will be familiar with the range of office equipment on the market and will recommend investment, where necessary. S/he can help to build effective teams and delegate work accordingly. The following summarises reasons why Mike Clark should employ a well-trained administrative manager:

z To bring about better control of staff and procedures;

z To increase efficiency so that more orders can be processed, leading to a probable increase in profits;

z To ensure that staff/management consultation is maintained;

z To ease the task of delegating work for Mike himself;

z To bring about coordination within the office function, which includes a number of specialised areas;

z To have ‘on tap’ a trained person with up-to-date knowledge of modern developments, techniques and methods;

z To allow Mike more time for important decision-making.

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The office function is of great importance to Mike’s business. He must not see it as a relatively unimportant support function, but must be fully aware of its vital contribution to business. Without the office, production would not take place. With proper management, the office can provide Mike with the information he needs to ensure that he makes the right decisions to enable the business to continue to expand.

[1.3] Examiner’s CommentsThis is a very full answer. I comment here on the sections, one by one, and draw general conclusions at the end.

Question 1(a):

Bearing in mind the sources of orders, describe, with the aid of a sketch, the likely paperwork procedure from receipt of order through to customers’ payment via production and stock. (15 marks)

Comment

This task was designed to test the understanding of how a typical business procedure might work in the particular circumstances of Carefree Curtains, these circumstances include:

z No computerisation;

z A company small enough, until recently, to be run by partners;

z A single-unit factory small enough, until recently, to be run by one supervisor.

This all suggests an unsophisticated procedure of basic paperwork and records. The task calls for the use of a sketch to aid description. A sketch is a broad outline and not a detailed procedure flowchart. This answer reflects the set tasks very well in three ways:

z It identifies the basic paperwork: a general point to be made here is that it is easy to lose sight of the context when describing procedures. This answer almost does that at one point: … Materials Schedule with ‘parts explosion’ etc. …. We are describing curtains and not a complex product like a car engine with various levels of sub-assembly and components. Finished curtains may well have several ‘components’, such as lining, interlining and tape, which all need to be drawn or cut from stock, but care must be taken not to convey the wrong impression by using terminology more suited for other circumstances.

z It reflects specific issues: the sources of orders and the idea of a standardised form to help reduce transcription errors shows an attempt to relate the answer to the issues at Carefree.

z It states an assumption made: … that customers all pay for the goods after they have been received …. Without knowing this, the reader may have had cause to query part of the procedure, whereas now, the coherence of the answer may be more fairly judged. A general point here, is that, in a time-constrained examination, it is highly unlikely that all assumptions could be listed or even clearly identified. In this case, the assumption is important because it is contrary to typical practice. The task asks for … the likely paperwork …. This assumption sounds unlikely in practice. For mail-order customers, it would be realistic to ask for cash with the order. Other individual customers should be asked for a deposit. The answer recognises that the assumption … ‘may help to explain Mike Clark’s cash-flow problem’; this shows that the writer is aware of the possible consequence.

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Question 1(b):

Discuss whether Mike’s new credit-control procedure is likely to be effective. (10 marks)

Comment

This is a concise answer, but it reflects the key word in the task – ‘discuss’. The answer finds some merit in the procedure, but also clearly exposes its inadequacy. The answer concludes with suggestions that might result in an effective procedure.

The answer to tasks 1(a) and 1(b) generally does what was asked and demonstrates a good understanding of procedures in a given context.

However, the assumption in 1(a) was unrealistic.

Question 2:

Advise Mike how he might delegate work to give himself time to think and plan ahead. (20 marks)

Comment

Mike is clearly overworked. If others are underworked, then one of the constraints preventing delegation is removed. However, there is no evidence of underwork. In fact, Mike thought ‘the clerical staff worked reasonably hard’. Hence, either more staff are needed or the methods need looking at to see if time can be gained through improved productivity.

The answer reveals a misunderstanding (this sometimes happens in previously unseen case studies used as examinations). Mrs Braddock has left. She has been replaced by internal promotion and a second supervisor recruited from outside. Thus, Carefree would not be going from one supervisor to three, as the answer suggests. However, this does not detract from the general thrust of the answer, which centres around a structural change creating some first-line management strength.

The answer supports the structural change by indicating how this would relieve Mike of the accounts burden and how factory supervision could be divided. There seems to be a mistake in Figure 1.3, which shows the personnel supervisor being in charge only of clerical staff. The firm is relatively small, and it must be doubtful whether it can support a personnel supervisor unless the post is that of a working supervisor (i.e. one who spends some time as an operative).

A general point to be made here is that, when there are no precise data (in this case we do not know how many employees there are), an examiner must allow ideas and assumptions as long as they are not wholly out of keeping with the circumstances.

Task No. 2 was … how he might delegate …. Although this answer deals with the task in a sensible way, there is scope for a broader answer. For example, Mike could take a textbook-type approach:

z Make a list of what he does and what he’d like to do if he had time;

z Estimate the time spent or needed for each activity;

z Pick out those activities that he could delegate and those he should retain;

z Give them priorities;

z Identify what skills and knowledge are required to do the activities;

z Identify and train other employees to do them;

z Monitor his employees’ progress, gradually becoming less involved as the others become competent.

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An answer solely listing these steps would be inadequate in the context of this case study. However, some points could be illustrated by reference to case issues. For example, Mike should retain personal responsibility for recruitment (or, at the very least, the final selection) and not delegate it to the Peach Personnel agency. In a small owner-managed firm that is under pressure, choosing the right person to work with is vital.

Other considerations might be:

z Relieve Anne by employing a ‘nanny’ or by setting up a creche at the factory. Anne would, therefore, be able to contribute, once again, to the management activity. The creche idea would help to improve recruitment by encouraging mothers of babies or young children to apply. This might be a source of experienced people who would make good supervisors;

z Recruit some temporary help – for example, an accountancy student on a six-month or one-year’s work placement. Up-to-date accounts might solve some other problems and create more time for Mike;

z Look at methods from an ‘organisation and methods’ viewpoint. Improved methods may save time in both clerical and factory activities. Mike would then have people to delegate to.

The given answer was sensible. In a nutshell, it was to create a three-person supervisory level of management and to delegate some of the work to them. I have given this extensive comment, not, primarily, to suggest that the answer was too narrow, but to demonstrate a range of possibilities that could be incorporated.

Question 3:

Discuss how Mike might rebuild team spirit in Carefree, to help overcome the recent company problems. (20 marks)

Comment

The answer started with a good summary of the problems in the case that might reasonably be assumed to have caused the poor team spirit. There was some speculation about non-competitive factory wages and the cause of the rudeness of a shop manageress. There was little evidence for this speculation, but the other points were well founded.

The summary was followed by a number of practical suggestions that would help solve these problems and build a team concern for the good of the company. The suggestion about supervisors being selected by Mike is a bit late – although, if an accounts supervisor (recommended earlier) is to be recruited, then this would present an opportunity. Missing from the answer was the need to develop the two existing supervisors, because they would play an important part in fostering team spirit.

If I were Mike Clark, I would take issue with the answer’s suggestion that training must … provide employees with more marketable skills than at present. ‘Marketable’ is the wrong term. The implication is that Carefree Curtains should put time and money into training so that employees could then ask for more money or walk straight into another job in a similar factory. This is something that concerns professional training officers, let alone owner managers. The real issue here, from Mike Clark’s point of view, is how does he capture the gains from good training? The given answer would have been better had it been on the following lines: Introduce systematic training for all tasks to enable the employee to perform appropriately in the shortest possible time; introduce a job-rotation scheme so that many employees become accomplished in many tasks – so, should someone be off sick, others could step in to do the job just as well. In this way, productivity remains high and any bonus earnings are maintained to the benefit of all concerned.

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At the same time, Mike should encourage the supervisors to build small groups of people, apart from when they are on job rotation, who like working together. In that way, employees might not be tempted to go elsewhere to work, all other things being equal.

Given a sufficient number of employees, perhaps a role of working chargehand or senior shop assistant could be introduced at a slightly higher rate of pay. This would help to create a career path to keep people interested. Care must be taken, however, that it does not become divisive and ruin group relationships.

In spite of my comments and suggestions, I have to say that the given answer demonstrated an awareness of team- and morale-building issues related to the problems at Carefree. The term ‘marketable’ was highly inappropriate, however.

Question 4:

Suggest how Mike might learn about, select, justify and install electronic office facilities to help Carefree. (20 marks)

Comment

On reading the answer, I am immediately struck by the thought – How is Mike going to find time to do all this? I shall return to this point later.

The answer reflects an understanding of a whole range of considerations and is not totally preoccupied with technical matters. The latter are important, of course, but not to the exclusion of all else. In my view, the answer should have given more emphasis to software: it is vital for Mike to find appropriate application packages. The answer does make this point, but with insufficient emphasis. A small company with one factory/office and eight local shops not dealing in high-volume purchases does not fit into the mainframe computer league. Although the answer dismisses the idea, it does so for reasons other than that of being inappropriate to the scale of Carefree. This, together with the subsequent mention of Prestel, suggests to the examiner that the writer of the answer might be less confident here. The sentence … Eventually Mike may install a print-out facility to … also sits uneasily in the answer. After all, one cannot do very much business computing without a printer!

The phrase ‘electronic office facilities’ was deliberately used in the task to elicit a range of responses. The given answer was probably right to concentrate on a microcomputer for the factory/office. However, there were other possibilities, for example, a fax machine might be a useful way to link the shops to the head office. In fact, customers’ order forms, signed by them as checked and correct, could be faxed through to cut down transcription errors and disputes on ‘who is to blame’ if wrong measurements are recorded.

How, then, is Mike going to find time? We do not know how much Mike knows already, but he cannot be a complete novice, since he had already come close to buying a computer on other occasions. This would cut down the time needed to do what the answer suggests. To cut time even more, he could employ a consultant – but he then confronts a typical dilemma for the owner of a relatively small firm: does he pay out fees that might come to almost as much as the purchase value of the system he has been advised to acquire? He might cut the consultant’s time by preparing a brief detailing existing procedures, volumes and frequencies of transactions, priorities among the sub-systems, growth rate and objectives of the company, and so on.

If there was a local university or polytechnic with business and management courses, Mike might well offer the tasks set in Q. 4 as a student project. This would be free in the sense that there would be no fees – but the calibre of the proposals is likely to be uncertain, because students are not usually experienced consultants.

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To summarise, the given answer was quite respectable. It contained some sensible proposals. It needed to indicate, however, that it would be an exacting task and unlikely to be well done by Mike, unless most of the other problems of. Carefree had been solved. He just would not have time. The answer may have looked forward to the intended answer to task 5, because a well-trained administrative manager could have either relieved Mike, so that he could deal with computerisation, or helped Mike to do what task 4 asked.

Question 5:

Explain to Mike how a well-trained administrative manager might be justified in Carefree. (15 marks)

Comment

The answer makes a spirited case in favour of employing a well-trained administrative manager. It points out that such a person not only would help in solving existing problems but also would make an essential contribution in helping Mike develop the business.

There are two issues that the answer does not deal with in an obvious way. First, we know that Mike is worried about paying a ‘professional’ salary at a time when the business is running into trouble. We cannot evaluate this worry in quantitative terms, because we know neither the financial situation of Carefree nor the amount of salary envisaged. However, the answer could have signalled to the reader that the benefits need to outweigh the costs, and, perhaps, have given Mike some ideas about attracting the ‘well-trained’ calibre of manager he requires, without paying excessively. For example, perhaps he could find someone who has taken early retirement from another company but who is interested in having a stimulating working role for another few years. The retirement pension or redundancy pay-off means there is no need to obtain a top salary.

Alternatively, a younger person might be tempted by a modest salary backed up by an employee share option scheme, which enables the employee to take an equity stake in the business. Therefore, if the business comes through its present troubles and prospers, the employee benefits in that way. Once the business is on a firmer footing, the question of salary can be reviewed.

I am not suggesting that the answer should have come up with these particular examples, but that it should have picked up Mike’s concern (from the case study) and explained to him that there might be ways of avoiding payment of a top professional salary while still getting what both he and the employee want, at least in the short term.

The second issue brings up a general point about dealing with case studies, especially when there is a list of questions or tasks needing a response as distinct from the broad single task. In this case, the latter might have been: ‘Write a report to Mike and Anne advising them how they might solve the problems at Carefree and expand the business’.

A list tempts the writer to keep answers in watertight compartments. Some cases might be successfully dealt with in this way, but others might not. This answer to task 5, in relation to Carefree, does allude to earlier answers by indicating that an administrative manager could ‘ease the task of delegating work and bring about better control of staff and procedures’, but, overall, there has been missed opportunity to link various issues. For example, the given answer to task 2 centred around a structural change. One suggestion was to create the role of accounts supervisor. However, if, in the answer to task 5, recruitment of an administrative manager is being strongly considered, perhaps that obviates the need for an accounts supervisor in the short term. As the overall answer stands, Carefree would be going from one supervisor (mistaken interpretation) to three supervisors plus a

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manager. Although this would, undoubtedly, give Mike the much-needed relief and time to think, it is a large, costly jump for a small firm.

The general point is, therefore, to take care that the sum of all the points made in answer to individual tasks does make sense overall. Linkage and harmony between suggestions should be looked for and created. At the very least, contradictions should be avoided.

Examiner’s conclusion

I have looked for evidence in the answer that its writer understands a range of administrative management issues and is able to apply them appropriately in the context of this particular case. Clearly, one could use a case study, such as Carefree Curtains, for a variety of purposes. In this instance, it is used to assess ability for a Certificate in Administrative Management. In my view, for a previously unseen, time-constrained case study examination, this answer is substantial and literate. It could have been written only by someone who was well prepared, both in the areas of study and in taking case examinations.

The answer is at a distinction standard for the Certificate. It was chosen to inspire rather than to discourage. Many worthy, passable answers are achieved with less content. Many may have different, yet appropriate, ideas to those expressed here. A study of Section 2 and practice in using the cases in Section 3 should help candidates to work towards achieving high-quality answers.

I would not be overtly looking for omissions, because there is clearly no one right answer. Many of my comments were there to demonstrate the latter, as well as to critically appraise the given answer.

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Section [2]Dealing with Cases

The first section of this unit is designed to show you what you are aiming for. This next section is designed to help develop the skills to deal with cases and to arrive at appropriate solutions.

[2.1] An ApproachMost authors and lecturers would feel that ‘an approach’ using a precise sequence of steps to be used in all situations has its limitations. It is often called a ‘cook-book’ method, which suggests that you just follow a set of instructions without really understanding what is happening.

It is, however, a starting point. Users of ‘an approach’ should realise that it must be adapted to the particular case with its particular problems. A suitable approach might be as follows:

z Get an overall ‘feel’ of the case;

z Identify your tasks;

z Identify the case problems;

z Consider the case in the light of:

- The external business environment;

- Factors inside the business: scale of the organisation; objectives; people; organisation structure; systems; data;

z Develop a questioning style to analyse the case;

z Evaluate and develop solutions.

[2.1.1] get an overall ‘feel’ for the caseRead the case straight through without underlining or highlighting sections.

This should give an overall impression. In the Carefree Curtains case, you should have concluded that:

(a) The company had been doing well until the recent expansion;

(b) Problems were piling up on several fronts;

(c) Mike was overworked, weary, feeling the pressure and beginning to blame himself for the existence of some of the problems;

(d) Two key people – Anne and Mrs Braddock – were no longer sharing the management task, and, clearly, Mike could not continue as at present.

[2.1.2] identify your tasksMany case studies have a number of questions or problems to deal with.These are often listed at the end of the case. This makes your tasks clear, but you must still take care to recognise the key wording.

You may be asked to ‘do’ something, such as draw a graph, flowchart, organisation chart, or to calculate something. In Carefree Curtains, the wording … ‘describe, with the aid of a sketch’ appears. This does not mean ‘write a narrative without a sketch’, nor does it mean ‘draw an elaborate procedure flowchart’. A sketch is a rough, outlined drawing, so, in this case, it could be used to identify main documents and a general sequence of activity. Supporting description could take the form of

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extensive annotation around the sketch or be related to the sketch in some way (e.g. by numbering parts of it). The specimen answer is probably too extensive.The narrative portion is complete in itself, and the whole answer must have taken longer to put together than the examiner had anticipated.

You may be asked to ‘advise’ or ‘suggest’ how something should be achieved. You should answer in a manner that is practical in the context of the case. For example, in task 4 of Carefree Curtains, a suggestion to enable Mike to learn about electronic office facilities might be to send him on a part-time Master’s Degree course in Business Information Technology. He would certainly learn, but the suggestion is entirely impractical in this instance; he clearly does not have the time.

The term ‘discuss’ often appears as a key verb in a task. It means that you should consider different views and examine the arguments for and against something. So, in Carefree Curtains 1(b), some merit can be found in the proposed credit-control procedure, but there is also a strong argument against it. In this instance, we could reasonably conclude that the procedure is unlikely to be effective; however, it is not always possible, in case studies, to reach a firm conclusion.

You may be required to take the role of one of the characters in a case study. Therefore, from the evidence in the case, you should attempt to view issues from that role. It should influence the approach or tone of your answer. For example, if there was a labour dispute in the case, you might be asked, in the role of the trade union representative, to propose a solution. Alternatively, you might be asked the same thing but this time in the role of office manager. You might even be asked to do both. This does not necessarily mean that you have to adopt stereotyped postures, but your answer should reflect the probable concerns of whatever role you are put into.

The level at which you are required to deal with the problem could also be signalled in this way, such as ‘Describe what measures senior management could take’. You might be asked to assume the role of outside consultant – or the ‘you’ may not have an explicit role. In these cases, you assume the mantle of an ‘expert’ in administrative management, able to look at problems in a multifaceted way.

As well as getting your tasks clear, you must also get them in perspective at this stage and roughly allocate your time. Thus, ‘all questions carry equal marks’ means broadly an equal division of time between the tasks. In Carefree Curtains, the credit-control discussion is worth only half of some of the other tasks, and must be treated accordingly. Time planning is important, because it is easy to become carried away with an answer if you are familiar with a particular area of study.

It is now time to read the case more carefully, jotting down ideas, highlighting important text and perhaps relating them to a question (or to more than one question), where appropriate.

Some case studies contain just one task. For example: ‘You are a business consultant. Write a report to Mike and Anne Clark advising them how they might solve the problems at Carefree and expand the business’. Hence, you need to develop a structure to your answer because there is no list of questions to give you one.

2[.1.3] identify the case problemsIn reality, when an administrative manager is confronted by a problem, one of the first steps taken is to identify or define the true nature of the problem. The same is true for the student dealing with case studies.

In reality, the manager understands the organisation – its objectives, policies, procedures, facilities, people and structure. This understanding can be either a help in problem-solving or a hindrance, if familiarity takes the edge off critical appraisal

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and innovative ideas. In the case study, the student must identify the problems in two or three readings of the case and be able to cope with incomplete information. The latter is handled partly by making reasonable assumptions based on practical experience and/or subject studies.

There is no magic general formula to help, since problem identification and definition is likely to be bound up in the specific situation of a given case. Our perception of the issues will reflect our experience and study. As the case is for students of administrative management, issues relating to office systems, planning, control and administration, together with human resources, Information Technology (IT) and administrative data, should be uppermost in the mind. After all, we are not considering Carefree Curtains from the viewpoint of an advertising agency creating a new logo, or a lawyer producing a specimen contract for a large business deal. It is unlikely that any one case will incorporate all of our areas of study; the mix will vary from case to case.

One golden rule of the analytical process is to look for underlying causes and not to be misled by symptoms. In Carefree, we could say that Mike is tired because he is working late. However, the reason he is late is because he had not got his cash-flow forecast ready, which was essential in order to renew an overdraft. This suggests underlying causes of lack of priority for important matters and lack of planning ahead.

In reality, a manager would have to be very careful about establishing a cause, since many factors may be contributory. In a case study, an examiner must accept an analysis if there are not obvious contradictions. However, the argument must be ‘reasonable’: for example, one might be tempted to speculate that Mike is tired and allowing problems to pile up because his twins are keeping him awake at night. However, there is no positive evidence for this and it is unreasonable, in the light of other case evidence, such as losing both the competent Mrs Braddock and Anne at a time of business expansion.

To help understand a case, we might try a checklist approach. In reality, problems are solved (or not, as the case may be) in their context. We must try hard to do this in the case study because this distinguishes the case from traditional examination questions. Hence we can consider:

[2.1.4] the external business environment

An organisation may be operating when the national or world economy is booming, when interest rates are low and when appropriate labour is readily available; alternatively, the opposite may be true. A given industry may be experiencing technological change. If the business featured in the case study has gone through such a process it might have a competitive advantage over rivals who have not; alternatively, again, the opposite may be true. Many factors constitute the external business environment; business decision-makers have to take a judgemental view about their probable effect on a business, and act accordingly.

In case studies, a factor might be explicit, such as social change leading to a decline in cigarette sales. Although this applies to the UK, even if you were tackling this case study in another country where smoking had not declined, you would have to bear in mind this explicit environmental issue. However, short-run case studies do not always spell out all the environmental issues. Hence, if you perceive an implicit factor that has a bearing on the case and which you can use to support an argument, then you can demonstrate your awareness of realities to the examiner. You must clarify your assumptions so that your ideas may be judged in that light.Examiners usually allow non-UK-based students to answer in the context of the conditions in their own country, provided that these are made clear.

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In the Carefree Curtains case, you learn that Mike has been trying to get business with small developers who are providing partly furnished starter homes. There is no indication of the strength of the market in this area. Hence, in the absence of that information, you could make assumptions that relate to external environment at the time you are dealing with the case. If interest rates for house mortgages were high, then demand would be weak and construction would be reduced, invariably affecting the smaller developers. Hence, prospects for curtain sales to this sector would be poor. Alternatively, if you were dealing with this case at a time of a building boom, then prospects for curtain sales would be good. Although no question might specifically ask you to make a judgement on this, you could use your knowledge to give weight or emphasis to some other issue. For example, in Carefree Curtains in answer to 1b, in times of a sudden downturn in house sales you could be more assertive about the shortcomings of the credit-control procedure. Mike is clearly vulnerable to bad debts, especially if one or more of the 19 small developers goes bankrupt, as is more likely in a difficult business environment.

Case studies may contain a date for a variety of reasons, perhaps because it has some special significance in relating to the external environment. However, it is best to ignore it unless it is explained in some way; it may be merely arbitrary.

[2.1.5] factors inside the businessThe case highlights many issues. There is also a list of tasks, which gives a framework for both your analysis of the case and your presentation of written answers. If the issues were not as clear-cut, or the tasks not conveniently listed, you might need a systematic approach.

Although not all issues are necessarily covered by the following, an administrative manager would do well to consider them.

Scale of the organisation

It is important to form some idea of the scale of the organisation in the case study, because a professional manager must take action appropriate to the circumstances. It would be foolish to propose a mainframe computer to help at Carefree, for example, because the company is not big enough. The evidence is both direct – they have only eight shops – and indirect, because, until recently, the whole company was managed by just three people – Mike, Anne and Mrs Braddock.

Some cases give evidence in the form of financial data, such as annual sales turnover; others may state the total number of employees.

Some case organisations are small but are part of larger groups. This is worth noting, since resources in terms of specialist staff or funds for capital projects may be available from the group on a scale not available to a similar, but independent, organisation.

Some cases dwell on issues in one department of an organisation. Although you might be asked to solve problems in that department, you must take into account any implications for the organisation as a whole. Hence, if a staff-grading scheme exists in all offices and you wish to change it in the one department featured in the case, you would need to explain that you have taken the overall situation into account.

Objectives

Sometimes objectives are explicit, such as running the company from group HQ situated a particular distance away. In Carefree, the objectives are implicit: as well as solving the more specific problems, the overall objective is to create time for Mike to manage the company affairs. It is important to clarify the objectives, thus

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enabling you to develop answers that would either directly or indirectly contribute to helping the company.

People

Some cases put particular emphasis on people. Descriptions of characters – their past behaviour, actions and views – are vital clues to how they might deal with current issues. Quotations can also help understand the mood of a character. From Carefree, we have Mike groaned … ‘Just because he went to business school …’, etc. This suggests that Mike does not relish the advice of trained professionals. In this instance he may have a point, because Jim’s advice on credit control left much to be desired.

Organisation structure

Although some cases include organisation charts, these do not always reflect the reality of who does what. You should critically appraise any given structure to see if it makes sense in the light of other information. If no chart is given, you can often piece together evidence as to what it might be. The structure could be, in part, responsible for some of the company problems. In Carefree, there seems to be insufficient first-line management to take the load off Mike. Many case studies involve some aspect of change. Any structure must be suited to the new circumstances, not the old.

Systems

A prime function of the ‘office’ is to act as an information-handling centre, in its widest sense. To do this, it needs appropriate procedures and a degree of office automation broadly commensurate with the size of the company (although it is the activities rather than the size of some companies that determine their needs). Appraise whether the ‘paperwork’ and communications systems seem appropriate in each case.

Data

Data can help to get a case or an issue into perspective, as has been touched on under the ‘Scale of the Organisation’ heading. In the Carefree case, the data on average debt would have been unsuitable for control purposes. If computerisation of the credit-control procedure had been contemplated, the data on numbers of accounts (only 31) might rule this out.

Sometimes, data can be used to solve a case problem. For example, you might be told that a company had borrowed £500,000 to finance stocks and work in progress (WIP). You learn that the company is now worried about this large sum and is having an economy drive in several parts of the business, including the office. Elsewhere in the case you learn of a proposal from the administrative manager to spend about £8,000 per year on a new production control system that allows much greater control over stock. The estimate is that the value of stock + WIP could be reduced by 20% while keeping the same level of service. How could you use these limited data to help support the administrative manager’s proposal in the face of the economy drive?

You might argue as follows. If your knowledge of the business environment at the time of doing the case study led you to believe that the interest base rate was 10%, you could assume that the company had borrowed at 15% (this is not a ridiculous guess, whereas 10.5% or 30% would be). You could then calculate the annual interest on the £500,000, which is £75,000. A reduction of 20%, due to the new system, means that borrowings would be £400,000 and interest would be £60,000. Hence, interest payment could be cut from £75,000 to £60,000 by allowing the

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administrative manager to spend another £8,000. This is a simplistic argument, and there might be other issues to take into account, but it shows how even limited data might be used, where appropriate.

[2.1.6] develop a questioning styleSo far, in studying a case, you need to:

z Read, to get an overall feel for the case;

z Identify your tasks;

z Read the case again, more carefully this time, and analyse the material in the light of:

- Your tasks;

- The external business environment;

- The scale of the organisation;

- Any known objectives of the organisation;

- People in the case;

- The organisation structure;

- The systems;

- The data.

In doing all this, try to be aware of the assumptions and value judgements you are making, since any that are not obvious may need to be incorporated in your answer. In dealing with cases under examination conditions, there is clearly limited time available for case understanding and analysis. You need to practise on cases to develop a number of skills.

On first re-reading:

Think of the implications

What might be below the surface? For example, in the Carefree case we read:‘There had always been other problems of a relatively minor nature but they now looked formidable when added to the expensive factory/office move and the high level of stocks …’. Does this imply that there is a company culture that lets problems slide? If so, any sudden reversal is likely to come as a shock, with, perhaps, unpredictable results. Taken with other evidence – the few substantial orders after the move; Mike’s last-minute rush to forecast cash flow to get overdraft renewal – perhaps the company has overreached itself and is ill-prepared to recover? We cannot be certain about this, of course, but it is part of the process of thinking oneself into the case study, and, perhaps, triggering ideas for solutions to problems.

Critically appraise

Sort out the facts from the opinions. In a real-life situation you would have the opportunity to check facts and question people; in a case study, you have to accept the facts that the case writer has put forward, unless they do not make sense in the circumstances, or you consider that some facts do not square with others.

You should be wary where opinion is concerned. In the Carefree case we have: ‘The clerical staff worked reasonably hard, he thought, yet we always seem behind with accounts.’ We have no data to put this opinion into perspective. Are the

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accounts a few days later than Mike wished or a few weeks later? What is his idea of being on time?

Organise the problems

Organise the problems. If you have a list of tasks you will almost certainly start relating case problems to the appropriate task. There will, inevitably, be overlap, but, at this stage, it would be worth jotting down key words and phrases as an aide-memoire for each task. Some people like to highlight what they consider to be the key phrases or words in the case, using highlighter pens or by simple underlining. This is generally a good practical step to take, but do beware because:

z Excessive highlighting devalues the impact;

z On a subsequent reading it is hard not to be drawn to what you thought was significant when you did your highlighting, even though you now have a clearer idea of what is important; this might exclude some of your previous highlights.

If there are too many problems, try to group them in some way: there may be a cluster of problems that have their root in another. In Carefree Curtains, if you could suggest a way to release Mike from some operational chores, he could carry out his leadership role in visiting the shops, and this, in turn, might help solve some of the shop-related problems.

[2.1.7] evaluate and develop solutionsA textbook or lecture relating to business problem-solving may well suggest the following framework:

z Identify the problem;

z Establish objectives;

z Fact finding;

z Analysis;

z Generation of alternative solutions;

z Evaluate and select preferred alternative;

z Develop the preferred alternative;

z Implement;

z Monitor progress and evaluate the outcome.

As an isolated list, this may seem rather trite. Although it gives the impression of a clear-cut sequence, in reality the process is convoluted, with back-tracking and changes of opinion. In reality, you would be formulating ideas about solutions as the fact-finding and analysis unfold. In our reading, re-reading, highlighting and note-making on the case study, we would have broadly carried out the first four stages and have thought of a few ideas for the fifth stage. If you are responding to a list of questions, it is vital that the solutions you generate for one question are compatible with the solutions for the other questions. At the very least, you must avoid contradictions. For example, supposing a case study (let us call it Case Study ‘X’) featured a company that manufactured on four separate sites, each manufacturing the entire product range. Perhaps, in an answer to a question on possibilities for restructuring production, you considered such alternatives as:

1. Divide up the range and specialise in a few products at each site; or

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2. Take the top-selling high-volume product and specialise in it, using a new automated line at one site, leaving the other products shared between the other three sites; or

3. Shut down three sites and expand the remaining site, making all products there.

Suppose you chose option 3 and you developed your argument within the context of the case to support your choice. Let us assume this was your answer to Question No. 1 of the Case Study ‘X’.

Now Question 4 (say) was about how the business could improve its information system to allow senior management at HQ to monitor the situation more closely. You thought of alternatives but decide to propose the following.

‘You will have a mini-computer in the factory with shop-floor data-collection terminals. This will deal with production control, but the mini would be connected to the mainframe at HQ to allow easy information retrieval.

Hence, the solution should involve four mini-computers, one for each factory, and high-speed digital links to HQ etc.’

Now, what this answer has done is to provide a mini-computer (in answer to Question 4) for three factories that were shut down in your answer to Question 1!

To avoid such contradictions and to develop harmony, jot down a few headings that reflect your preferred solutions to each individual task or question and, where appropriate, consider how to handle links between them. If a point needs to be made in two places, then write it fully in response to one task and, to avoid repetition, refer your reader to it when responding to the other task.

In Carefree Curtains, for example, you should plan your response to task 5 (to explain to Mike how a well-trained administrative manager might be justified in Carefree) before you write your answers to tasks 2, 3 and 4. The absence or presence of a manager would influence what Mike does, or the extent of his action.

In real life, evaluation of alternatives is hard enough, but you are helped by such tools as cost-benefit analysis or criteria such as published company objectives or the boss’s personal opinion to guide you. In case studies, evaluation has to be on a more intuitive basis because of the absence of factual information and because you cannot try out your ideas first. For these reasons there is no one right answer; however, your answer must do what was asked.

In a case study, your problem-solving is over when you have written answers to the tasks or questions set. If you have allowed yourself time, you could go through a monitoring process by reading what you have written and refining your answer where necessary. In the heat of an examination, it is very easy to write something that does not convey what you mean. For example, you might write ‘Mike should hire a top computer consultant’ when what you meant was ‘Mike should not hire a top computer consultant’.

In real life, problems do not end when a proposal has been written, because proposals must be implemented. Proposals, therefore, must be affordable, acceptable and capable of being implemented in the time available. Although these constraints are absent from case studies, it is vital to remember that your solution must be as realistic as possible. Part of such realism is that the solution should appear capable of implementation in the context of the circumstances of the company in the case.

Sometimes, you might have to ‘put forward a plan for implementation of your other proposals’. In this event, you should consider timing, sequence, who in the case is going to be responsible, how is progress going to be monitored and all aspects of management of change that have not been incorporated in solution proposals.

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Had you been the allocated single task already mentioned: ‘Write a report to Mike and Anne Clark advising them how they might solve the problems at Carefree and expand the business’, then one component of that report would surely be that of implementation.

[2.1.8] writing up your answersA problem that may confront you in a case study examination is how to present your written answer. You must decide on a structure for your answer; a structure helps you to organise your thoughts and more easily communicate them to the examiner.

At International Diploma or International Advanced Diploma levels, you are often provided with a structure in the form of a set of tasks or questions. As already stated, the most important thing to remember is to make sure you avoid contradictions between answers and to create harmonious links when possible.

You may be asked to ‘write a report’, but, again, this task is often qualified in some way. For example: ‘Write a report to the directors of the business stating your recommendations, which should cover such aspects as organisation, sales policy, personnel policy, management information and office procedures and equipment.’ This immediately gives you some subheadings for use if nothing else comes to mind.

If your ‘write a report’ task is not qualified in this way, then you must create a structure. It is highly unlikely that you would be asked to write an essay (this has a structure that is maintained by a logical thread, but it has no headings, subheadings or numbered points). The latter are found in management reports, and it is this style that is usually implied in the ‘write a report’ task.

However, there is no one universal structure for case study reports. If there are many issues, and a great deal of detail needed to communicate them, it is likely that more headings and lists of points should be used. If there are complex arguments to discuss, then it is likely that extensive headings are not needed, because they would break the flow of the points being made.

A structure may become obvious because of the case material itself; however, whatever you choose, it must enable you to communicate effectively.

Major headings and sequence

A typical example of the sequence of headings might be as follows:

z Title of report, date, etc.;

z Contents page;

z Executive summary of recommendations;

z Introduction;

z Background material and facts;

z Statement of the problem(s);

z Analysis;

z Solution(s);

z Implementation plan;

z Appendices.

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(For further information on report writing refer to the IAM guidelines for the Work Project Report.)

If you were an information systems analyst and were asked by senior management to investigate some problems and make proposals for dealing with them, you might possibly end up with a report broadly structured along the above lines. However, you might have been working on the problems all day and every day for several weeks; you might have tested out ideas for solutions on colleagues; you might have gradually formed your plans, and, finally, you might have re-drafted your report several times before presenting it.

However, in your ‘student’ role, you are sitting a time-constrained examination and should not, therefore, necessarily expect to fit your report into some pre-determined format such as the one shown; it might be easier to do something entirely different. For example, if the case material reflects problems with some office equipment, you might use that as a heading, with a short statement of the problems, (a) proposal(s) for solving them and any implications of adopting the proposals as three subheadings:

Office equipment:

1. Outline of problems;

2. Proposed solutions;

3. Implications.

With regard to the example, given in a report format, the title page, contents page, appendices and (to some extent) the introduction – if it is used to signpost what is in the report – are all used to ‘tidy’ the report. More general points concerning their content are as follows:

z The appendices contain supporting material or detail that would clutter the main thrust of the report. These are unlikely to occur here because of time pressures and the incomplete information associated with short cases.

z The contents page reflects the structure and must be mapped out before you start. You may need to amend it as you develop your report, so a rough draft should be made first. Leave a space, and insert the final version when you have finished the rest of the report.

z Introductions are used in various ways. In these cases, it might be useful to include any important assumptions you have made. If you have not drawn up a contents list you should explain briefly what your reader should expect in the rest of the report. Again, leave space for this and write it last (unless the writing down of assumptions helps to clarify things for you, in which case do it at an early stage).

z Overall, do not allot too much time to these ‘tidying’ operations.

An executive summary of recommendations

In real-life situations, a summary of recommendations is valuable for the recipients of a report. Senior managers may need to read only that part, if they are confident in the abilities of junior staff. However, in a case study situation, there may not be time for this. Unless you are specifically asked for a summary, you might make better use of your time refining your proposals. On the other hand, if you do have time, it adds value to your work. Include the main recommendations, with costs, benefits and organisational implications, as far as this is possible with case material. Costs may not be available, and benefits may be both quantitative and qualitative.

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Background materials and facts

In a real-life situation, where the report writer is writing for a senior executive remote from the situation, the inclusion of background material and data may be necessary. Even so, they might be better included separately, as an appendix.

In a case study they should be included sparingly, if at all, because you might ultimately find yourself reproducing much of the case material, which would be a time-consuming and probably unnecessary activity.

Statement of the problem, analysis, solution and implementation

Aspects of the final four have been discussed earlier in this Study Guide, with regard to the case incorporating a list of questions. There is a logic to this, in the sense that it follows a sequence that ends with a solution and how to implement it. This is a good sequence when there is a complex argument in the analysis, because the reader can then follow the argument to a solution. However, in simpler situations, the solution(s) may well come first. This second approach is direct and gives an impression of being action oriented. This can then be followed by the statement of the problem and analysis to explain why the solution was chosen.

By now, it should be apparent that there may be many interpretations and variations in the format of a report. The format chosen will be dictated by both the specifics of the case and how comfortable you feel about creating a structure.

The time factor

The time factor has already been discussed in relation to individual questions with apportioned marks. However, where a report has to be written, its length will govern the amount of content, but is, itself, a function of the time available, the amount of your knowledge and how quickly you can organise and write down material.

If you know a great deal about the issues in the case and have a fund of alternative solutions, you must beware that you do not concentrate on only one problem in the case, to the exclusion of all the others. Equally, it would be a pity to spend most of your time on elaborate problem statements and analysis leaving no time for solutions.

As you will have received the case study in advance (without the questions), you will already have had the opportunity to make restricted notes highlighting significant points. These notes may be taken into the examination to help you to formulate your answers. The following is a very general guide to timing during the examination:

1. Slowly re-read the case study and your notes, highlighting significant material: 15 min;

2. Map out a suitable structure for your answers and make rough notes (single words or very short phrases) to act as a prompt when you come to write them up in full: 30 min;

(In these first two processes you should be using the questioning approach developed earlier in this guide.)

3. Write up your answers, leaving gaps between sections, so that you may easily include extra points that may occur to you later: 2 hr;

4. Read through your answers, augmenting them where necessary, and ensuring that you have done what was asked: 15 min; Total: 3 hr

This scheme may not suit everyone: for example, slow writers may need more time for stage 3; the issues may be easy to grasp in some cases, harder in others. The

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bulk of the time must be shared between stages 2, 3 and 4, but stage 1 should not be deliberately neglected.

Illustrating an answer

You may be able to save time by substituting an illustration for a lengthy narrative description (if appropriate), even if you are not explicitly asked for one. Graphs, pie charts, histograms, sketches to illustrate points about office layout, flow charts and data organised in tabular form may greatly help explanation or discussion, but should be avoided if they do not do so (unless specifically requested). Moreover, beware of duplication by time wasting, full, elaborate narrative that conveys the same information as your illustration: illustration and narrative should complement, not duplicate, each other.

[2.1.9] Keywords used in examinationsThese words are not restricted to case study examinations, and are important indications of the type of answer required.

Analyse: examine in detail.

Comment: write (in this case) short explanatory notes.

Compare: look for similarities (if there are none then we will have found differences).

Contrast: emphasise differences by placing things together (NB ‘compare’ and ‘contrast’ are often used together).

Criticise: give your judgement on the merits of a situation and explain your reasoning.

Define: record the precise meaning (unlikely to be found in case study questions).

Describe: give an account (this is often modified e.g. ‘in outline’, ‘in detail’, briefly).

Discuss: expound the various arguments for and against the matter in question.

Evaluate: appraise the usefulness of something.

Explain: to make known, to make clear.

Illustrate: use some form of graphics to help explain OR make something clear by use of concrete examples.

Justify: show reasons for decisions or actions.

Outline: give the main points, leaving out the details.

Review: examine the issue in a critical manner.

State: present in a short, clear way.

Summarise: give a brief account of the main issues, ignoring the detail.

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Section [3]Case to Develop your Expertise

This section contains a case study to give you practice in developing your expertise. Try it before looking to see what the examiner is hoping to find in the answers. Additional past papers, together with examiners’ comments, are available from the IAM.

[3.1] International Diploma Case Study

Leder Formwork

The company was established 10 years ago, by three building workers (Sid Latham, Fred Roffe, Tom Drake), who used their redundancy payments to fund the business. The three owners were equal shareholders in the company, with Sid Latham’s wife, Jane, acting as company secretary.

During the 10 years of operation, the business had grown steadily and now employed 12 workers involved in the practical side of the business, together with two in the office (one of whom was Jane). Jane dealt with the staff records and wages and her colleague dealt with the customers’ orders and accounts.

All three directors tended to be involved with the practicalities, although Tom Drake spent much of his time obtaining orders and liaising with customers. Fred Roffe was the artistic member of the trio and was responsible for the decorative formwork.

The main output was the production of coloured bricks and paving slabs, but the company also produced concrete lintels and decorative mouldings for items such as bird tables, tubs and small statues.

The coloured bricks and paving slabs were machine made and baked in drying ovens. As the business increased, the directors added plant and equipment, as necessary at the time. This had resulted in significant underutilisation of the plant: three brick-making machines were not used and were considered as ‘spare’, in case of breakdown. There were two drying ovens, but these were used inefficiently, mainly to keep them in good condition. The organisational arrangements were very informal, with directors and workers operating together as a team.

In contrast to this informality, the office functions were highly organised, relying heavily on ICT facilities. The Internet was used to interact with customers and material suppliers, and software was used for all administrative and accounting functions.

It was this contrast of approach that caused Jane Latham to highlight the inefficiency of the production facilities. This, in turn, pushed Tom Drake to seek further orders. It had all been a bit too easy; the business was profitable and the directors had become complacent. However, the situation was about to change dramatically, as Jane received an Internet enquiry for large numbers of bricks. The enquirer wanted bricks in three colours – cream; dark red and black.

There was to be no colour variation between batches and no drying cracks. Unusually, the potential buyer stated the price they were prepared to pay to obtain timed deliveries to these stringent requirements.

The three directors, Jane and two of the more experienced workers, sat down to consider whether they could fulfil the client’s requirements. The price was very attractive, but would the cost be too high?

If loaded to full capacity, the two drying ovens could cope with the quantities required by both the client and the existing customers. The rate of feed through the ovens could be increased, but this could lead to cracking, due to fast drying.

The brick-moulding machines could be fully utilised, but an additional six

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staff would be required to cover the mixing, moulding machine operations and product handling.

Arrangements would also have to be made to check the output for colour and quality. Initially, this would need the close attention of the directors.

Finally, it was agreed that they should accept the challenge and submit samples for colour choice. These would need to be carefully produced and documented to ensure that the colour chosen could be reproduced in quantity. It would be prudent to use mainly experienced staff on the new project.

Notes

In dealing with this case you are requested to:

(a) Make clear any reasonable assumptions you feel necessary;

(b) Make clear any local circumstances, if appropriate to your answer.

Questions

1. Discuss the changes in organisation, that might be necessary to cope with the proposed growth in business activity. (100 marks)

2. Suggest how the management of Leder Formwork should plan the recruitment of the six new workers. (100 marks)

3. Indicate how the potential customer can be assured of the quality of each consignment. (100 marks)

4. Discuss the need for cost control at Leder Formwork and describe how budgetary control can assist in controlling costs. (100 marks)

[3.1.1] examiner’s commentsThe Leder Formwork case study provides candidates with a scenario to which they could readily relate. The three founders of the company had faced the trauma of redundancy and decided to do something positive in order to develop their future. Each had particular skills that complemented each other. This put them in a strong position to succeed, provided that the market opportunities could be developed.

The four questions covered the modules Effective Management, Human Resources, Systems and Activities and Management Information. However, the case study and the questions gave the opportunity for the better candidates to include their knowledge and understanding of other modules and their own experience.

Question 1:

Discuss the changes in organisation that might be necessary to cope with the proposed growth in business activity. (100 marks)

Comment:

This question offered scope for analysing the structural implications of securing an important order. This had the potential for a significant impact on the management of the organisation and the future prosperity of the company.

The problem with Leder is that the three directors operated a satisfying strategy. Their interest was the practical aspects and, as the business was profitable, why worry?

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With the advent of the proposed new order, the strategy was under reconsideration. From the case material, Jane Latham is not satisfied with the situation and the proposed new order is about to change everything.

In order to comply with the demands of the proposal, a more professional approach to supervision of both staff and product is required. There would be a need for a working supervisor for existing work and another for the new work, plus at least one inspector.

In consequence, the three directors need to re-assess their roles in the business. The proposed order could herald real growth for the business if they are prepared to grasp the opportunity. It would be prudent to reorganise the staff to spread the experience and expertise, enabling new staff to benefit from this expertise.

Question 2:

Suggest how the management of Leder Formwork should plan the recruitment of the six new workers. (100 marks)

Comment:

The descriptive answer should include consideration of what jobs need to be done and analysis of methods. From these considerations a job description for each job could be developed.

The re-assessed job descriptions could guide the job advert, bearing in mind that the applicant may be unskilled but with some experience. Some level of training is bound to be required. This would need careful design in order to bring staff to the necessary level of effectiveness as quickly as possible.

Question 3:

Indicate how the potential customer can be assured of the quality of each consignment. (100 marks)

Comment:

This entails the provision of a detailed description of the need to have documentary evidence supporting the various stages of the production process. This documentation should refer to the quality of the initial materials, the mixing process and the resulting colour of the bricks. There should be some reference to the need for a colour specimen agreed by the customer and used for inspection purposes by Leder and by the customer. There would also be the need for 100% inspection for cracks and surface texture.

Question 4:

Discuss the need for cost control at Leder Formwork and describe how budgetary control can assist in controlling costs. (100 marks)

Comment:

The requirement of the proposed order in the case study will greatly increase the cost. These will form part of the overheads and must be kept to a minimum and will need to be recovered in the sale price allowed, in the case study, by the customer. Cost can be controlled by attention to:

z Standardising on best methods;

z Reduction of material wastage;

z Reduction of scrap;

z Improvements in the utilisation of labour and machines.

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Budgetary control can assist by:

z Setting a standard cost for labour materials and production processes;

z The use of a set of variances to measure deviations from the standard costs and to facilitate the investigation of the reason for such deviations.

assessmentThe Case Study paper is an integrative examination designed to test knowledge and application of that knowledge to a ‘real life’ situation.

The Case Study scenario will be provided in advance, but the four compulsory questions will be ‘unseen’. The scenario will be issued four to six weeks in advance of the relevant examination.

No materials/notes can be taken into the examination (except as permitted in the IAM’s general examination regulations). The paper will be of three hours’ duration.

The scenario is part of the summative assessment and no correspondence will be entered into on its content from either yourself or centres or tutors.

Alternatively, you may submit a Work Project Report, subject to the established IAM regulations.

learning resourcesUseful Websites:http://www.library.auckland.ac.nz/subjects/bus/topicguides/case_studies.htmhttp://www.brunel.ac.uk/~bustcfj/bola/study/skills10.html


Mullins, L.J. 2005. Management and Organisational Behaviour, 7th edn., FT Prentice Hall

Rhodes, J. 1989. Case Study, Bromley: The Institute of Administrative Management

Quible, Z.K. 2004. Administrative Office Management, 8th edn., Prentice Hall




ISBN 0 900491 75 2

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