Journal of the Institute of Management Services ManagementAchieving excellence through people and productivity Services
Productivity
goes mobile Autumn 2012 Volume 56 Number 3 ISSN: 0 307 6768 CONTACTS
Autumn 2012 Volume 56 No 3
ISSN 0 307 6768
Management Services 27 Castle Street, Canterbury, Kent CT1 2PX
Editorial Telephone +44 (0)1795 542429 The Institute of Management Services is the primary body in the UK Facsimile +44 (0)1795 535469 concerned with the promotion, practice and development of the range Email [email protected] Editorial deadline for the Winter 2012 issue is 7th of methodologies and techniques for the improvement of productivity November. Publication date is 11th December and quality, known collectively as ‘Management Services’. This embraces the disciplines of industrial engineering, work study, organisation and Advertising methods, systems analysis, and a wide range of management information Rob Aspin and control techniques as illustrated in our Body of Knowledge. Telephone +44 (0)1795 542413 Fax +44 (0)1795 535469 The Institute acts as the qualifying body for the Management Services Email [email protected] profession in the UK, focusing developments in practice and knowledge Media Committee and acting as a forum for information exchange. This in turn enables our David Blanchflower, Julian Cutler, Mel Armstrong members who work under a variety of job titles across the whole of the UK economy, to make a more effective contribution to the well-being of Editor their own organisation and to the nation’s economy as a whole. Mel Armstrong In addition to creating and upholding professional standards for the Designer Kate Hayward practice of management services through the adoption of a code of ethics and the provision of a system of qualifying examinations, the Institute Published by of Management Services collaborates with national and international The Deeson Group Ltd on behalf of professional bodies in similar fields. The Institute of Management Services The Institute is a member of, or represented on, a number of other Printed by bodies including the World Confederation of Productivity Science, the Bishops Printers European Federation of Productivity Services, and the European Institute of Industrial Engineers.
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In this issue of Management Services… Cover Story The integration of mobile devices such as laptops, tablet computers, PDAs and smartphones, along with a wide variety of applications and software, make it easier than ever for workers to collaborate and businesses to communicate with staff, customers, and vendors, improving business productivity and stimulating growth. See page 15.
Institute and New leadership Regional News 4 and environment Chairman’s Column and a round-up management 22 from the regions, including a visit to Successful leadership for efficient use the Fred Dibnah Heritage Centre of resources and avoidance of waste
Harry Downes tribute 8 Stakeholder management 29 A look back at Harry’s life and his Effective engagement of stakeholders dedication to the IMS within decision making
Book reviews 10 Productivity take-off in aerospace industry 35 12 Implementing the right IMS certification is at the forefront of growth strategy 12 UK aerospace training Key preparation and careful planning for successful acquisition Better decision making in difficult economic times 36 Mobile technology for How to measure performance and increased productivity & make better decisions profitability 15 The growing use of mobile technology Productivity news 38 for more flexibility in working News from around the world
Appraisal – a personal Chairman’s and Trustees’ viewpoint 18 reports and statement of Are personal performance reviews that accounts 2011-12 40 26 useful as a management tool? Management Services 4 Autumn 2012 Institute News Chairman’s Column
David Blanchflower, John Heap position on Council so the work a significant contribution to the and Harry Downes, respectively. of the Secretariat will be in safe Institute as a whole. I shall keep I have to inform you that hands. you posted on developments. Harry Downes has had to I would add that both David I mentioned openness and stand down from Council for Blanchflower and John Heap transparency as fundamental personal reasons. Harry, as have already had their business principles; two other well as being the Chair of the plans and budgets for their Sub- fundamental principles essential Membership and Recruitment Groups approved by Council in any business relationship, or Sub-Group, was also Company and pursuing their respective indeed any relationship, are Secretary. He will be extremely objectives at pace. I shall keep integrity and trust. difficult to replace and sadly you advised of developments. In my last Chairman’s Column missed by everyone on Council. You will be aware by now I made reference to ‘bankers Nevertheless, we all respect his that keeping you advised of bonuses’ and how, because decision and wish him well for developments is one of my of the complexity of their the future. specified aims. Openness and remuneration packages, it was In terms of a replacement transparency and keeping lines still possible for them to receive for Harry, Council have invited of communication open and seven figure salaries despite n the summer edition of Malcolm Towle to join the two way, are all part of the running up huge losses. Well, the journal I advised that, management team. Malcolm is process. the revelations on banking and Ias part of the restructuring currently Chairman of the East In continuation of that the complexity of the banking of the Institute’s management Midlands Region Board and process, I can advise you business just don’t stop. The structure, Council had agreed to a member of the Fellowship that I have invited all Region latest revelation is the fixing of create three Subsidiary Groups Upgrading Panel. Chairmen to join me for a the LIBOR (London Interbank to replace the existing seven As well as replacing Harry on meeting at Lichfield in October Offered Rate) and the Sub-Committees/Panels. The Council he will also Chair the following the AGM, to discuss consequential knock-on effect for all other lending rates which has caused so much misery. I believe there is a considerable amount of talent The process of establishing LIBOR has been anything but and experience out there which, if engaged transparent and the resultant scandal put major question correctly, could make a significant contribution to the marks over the integrity of those involved. Public trust in Institute as a whole banking is at an all time low and such trust will be extremely difficult to re-establish. purpose of these Sub-Groups, is Membership & Recruitment a range of issues on the It is my intention to ensure to help focus responsibilities on Sub-Group. I’m sure Malcolm current and future operation that integrity and trust, a range of initiatives in support will bring his own inimitable of the Institute. I also intend along with openness and of the Institute’s strategy. style to proceedings and I look to explore the possibility of transparency, remain the corner I also advised that the three forward to working with him getting the Regions and Region stones of our Institute, as I Sub-Groups were: Media over the next few years. Board members more involved believe that such fundamental & Marketing, Education & With regard to the position in the Institute at a higher level. principles are essential for an Development and Membership of Company Secretary, John I believe there is a considerable organisation to progress and & Recruitment and that they Lucey who has previously amount of talent and prosper. would be Chaired by the undertaken the role, will do experience out there which, if following members of Council, so again. John has held every engaged correctly, could make Dr Andrew Muir Management Services Autumn 2012 5
Chairman’s Notes 1. In my Chairman’s Column I referred to through some fairly rough seas and into his memoirs he was obviously quite a Harry Downes’ resignation from Council much calmer waters. You led from the character. of Management and the contribution front and your loyalty and dedication I have asked Lynette Gill our Admin he has made to the Institute during to the Institute an example to all. I just Manager to circulate Geoff’s memoirs his time on Council. I feel that it hope that my tenure as Chairman can be to those who knew him. If you are Institute News would be remiss of me not to add my as successful as yours was. interested in reading them, please personal thanks to Harry for taking So if I may, on behalf of myself and your contact Lynette at Brooke House. over the Chairmanship in 1999 when I colleagues on Council, thank you for 3. As I’ve stated in most of my was Deputy Chair and due to become all you have done for the Institute over Chairman’s Columns, I’m always keen Chairman. At that time, it was necessary these many years. to receive your views on the Institute for me to stand down from Council due 2. Memoirs of Geoff Hill – The and how it operates. I recently received to family circumstances and Harry took co-executer of the estate of the late a letter from Kevan Kelly, Immediate over the reigns. I can assure you Harry, it Geoff Hill, Clive Williams OBE, sent Past Chairman of the North West Region was very much appreciated. a copy of Geoff’s published memoirs Board, on a range of issues, some of During your four years as Chairman to the Institute. Although I did not which I shall put before Council. Thank (1999-2003), you steered the Institute know Geoff personally, after reading you for your submission Kevan. Regional News North Scottish Regional News
West Adam Smith Global Foundation bringing public, private and philanthropic At the invitation of Marilyn Livingston, and principles together, for the benefit of all”. Chief Executive Officer of the Adam Smith She continued: “Prevention of poverty is Region Global Foundation, the National Chairman one of the key platforms of the Foundation Dr Andrew Muir will attend the Foundation’s and we are concentrating on the areas of There remain vacancies on Inaugural Dinner, in the Atrium at the Adam education, the arts, sport, heritage, culture, the Region Board and IMS Smith College, St Brycedale Avenue, Kirkcaldy. science and music to deliver opportunities we members in the region are This historic event is to mark the believe will bring real and lasting benefits to invited to join us, particularly international launch of the Adam Smith the community”. at the next meeting which Global Foundation which has been formed to Gordon Brown MP, who has been heavily includes our AGM. The celebrate the life and work of Adam Smith involved in the creation of the Foundation, meeting is scheduled for the (author of The Wealth of Nations and the believes it will provide a huge opportunity morning on 20 October 2012. father of modern economics). to tap into Smith’s global reputation for the In the forthcoming year we Academics from across the UK, USA, Europe benefit of the town and the country as a whole. are planning to arrange some and Latin America will take part in the excellent events and visits to colloquium on Smith’s life in the town, his Adam Smith Lecture high profile companies and At the invitation of the Rt. Hon. Gordon would like fellow members to influence abroad over the centuries, as well become involved. as efforts underway across the country to Brown MP and Chancellor of the Adam Smith This year we have managed commemorate his legacy. College, the National Chairman Dr Andrew to squeeze in one extra special A host of Smith aficionados will speak at Muir will also attend the Adam Smith visit to Astley Green Colliery the two-day event, including organiser of Lecture. Museum, Higher Green Lane, the academic symposium, Fonna Forman, This year the lecture will be delivered Astley Green, Tyldesley, associated professor of political science at by Sir James Wolfensohn, KBE, AO, former Manchester, M29 7JB on the University of California and editor of the President of the World Bank Group (1995- Tuesday 2 October 1:20pm for Adam Smith Review; Nobel Prize in economics 2005) who will speak on the theme ‘A 1:30pm start. The museum is recipient, Vernon L Smith; Gavin Kennedy, Turbulent World’ to an audience of invited reputed to be one of the most emeritus professor at Heriot Watt University; guests and members of the public. realistic in the country. Iain McLean, professor of politics at Oxford Previous high profile speakers of the The tour of Vauxhaull University and local historian and Adam lecture have included: Alan Greenspan, Motors set for 12 September former chairman of the Federal Reserve and 2012 is currently booked-up, Smith Global Foundation Trustee, George but please enquire if you Proudfoot. Kofi Annan, former UN Secretary General. are interested as a slot may Marilyn Livingston, who has been A transcript of the lecture will be posted become available. instrumental in getting the Foundation up on the Adam Smith College website: For any information contact: and running, said: “We want to harness the www.adamsmith.ac.uk/news and a fuller Harry Hogg 01942 863776 or spirit and enterprise that Adam Smith was report of the whole event published in the [email protected]. able to demonstrate all those years ago by winter edition of Management Services. Management Services 6 Autumn 2012 West Midlands North West Region Fred Dibnah Heritage Centre visit region The tour of Fred Dibnah’s home and backyard workshop was Visit to RAF Museum, Cosford conducted by Leon Powsney, the new proprietor, and Alf Molyneux – Fred Dibnah’s friend and assistant. Leon explained how both the backyard and workshop had fallen into complete disrepair following his death in 2004, but had since been extensively restored, the work including the strengthening of the 50ft tall chimney. The backyard was dominated by a 40ft high wooden pit head and gearing situated over a 20ft deep, 15ft wide brick-built mine shaft. The overhead pulley was driven via the winding house steam engine, originally used to tow-in and tie ships to the harbour. Alf showed the group where Fred used his wood planer, wood saw and stone saw – all belt driven from the 120ft long line shaft, which was suspended about 12ft overhead, and almost spanned the full length of the yard. Fred’s main dream was to build a replica coalmine, and to this end he had submitted plans to the local council. His plans were turned down and the mine remains unbuilt. One of the last things Fred did before he died was travel around the UK ‘A Grand Tour of Britain’ in his beloved traction engine, which he completely restored. Together with a BBC film crew, Fred visited all the places which still had input into our heritage of mechanical steam industry. Part of the Journey On Saturday morning 12 May, a small party of Region included a visit to Buckingham Palace to collect Fred’s MBE. members and their partners joined others for a guided tour The group then moved on to Fred’s house, which was like of the RAF Museum at Cosford, Shropshire. The museum is stepping back into the Victorian era. An extension, which is now one of two national RAF Museums, the other is at Hendon, the kitchen, once housed Fred’s gears, equipment and wheels. North London. A great deal of investment has been made at Towards the end of the tour, Leon gathered the group Cosford to bring it up to the status of national museum. together in the steam engine shed which is now being used as The Cosford Museum includes many exhibits which are a training and discussion room, and where Fred’s memorabilia, unique, including the collection of World War 2 German books, magazines and DVDs can be purchased. Leon told us how missiles, examples of the V1 ‘Doodlebug’ a primitive cruise he came to buy Fred’s house, which was almost lost to a property missile, and the V2 rocket which was the precursor to the developer. Quick thinking and a hastily written cheque saved the Intercontinental Ballistic Missiles of today. The V1 and V2 day and preserved a part of Britain’s industrial heritage. brought death and destruction to London during the closing Following this revelation the tour visitors’ were ensured that stages of WW2. There is also a fine collection of WW2 aircraft Leon Powsney and his family and helpers would continue in including some unique examples of captured German and their endeavours to save a part of our Industrial Heritage for Japanese aircraft. future generations to appreciate. The purpose-built Cold War Exhibition Hall covers a This was an extremely interesting and entertaining tour of dangerous period of our history from the end of WW2 to ‘Fred’s World’. Some of the visitors had travelled over 200 miles the 1990s when the Soviet regime collapsed. During some 35 to attend, which shows, not surprisingly, that there are Fred years, nuclear war between the Soviet Union and its allies and Dibnah fans everywhere. Harry Hogg the Western powers was an ever present threat. Our guide said that even now, under the various armament reduction Members of the North West Region visit the Fred Dibnah Heritage Centre treaties, Russian inspectors can and do arrive unannounced to verify and inspect the facilities at Cosford to ensure that a secret nuclear missile base is not being established. However, he also said the Russian inspectors are usually more interested in having a look round the museum. Our thanks to our guide for an interesting tour. John Hopkinson
Scottish Region news Association of Professional Institutes (API) IMS members are reminded that the API Games Night will be held in November, at the New Club, Kirkcaldy. Further details and confirmation of the date are available from the Scottish Region Chairman, Bob Smith on 01592 758252. Institute of Management Services CHARTER ROOM, THE GEORGE HOTEL, BIRD STREET, LICHFIELD, STAFFORDSHIRE WS13 6PR Notice of Annual General Meeting
NOTICE IS HEREBY GIVEN of the forty seventh Annual General Meeting of the Institute to be held at Charter Room, The George Hotel, Bird Street, Lichfield, Staffordshire WS13 6PR on Friday 19 October 2012 at 10.30 am to conduct the following business.
1) To receive the Annual Report and Accounts
2) To confirm the following Bye-Law No 1/2012
Membership subscription for 2013 shall be for Life Membership at a rate of £270 for all members. An annual membership fee of £140 will be available on request.
3) To appoint Auditors for the ensuing year and to authorise Council to fix their remuneration.
4) To Note elections to Council
By Order of Council of Management 6 June 2012 Harry Downes Secretary
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Institute of Management Services FORM OF PROXY – FOR CORPORATE MEMBERS ONLY
I (full name) ...... of (full address)......
......
Membership Grade...... Membership No......
Hereby appoint A. Muir of 1 Berryhill, Finglassie, Glenrothes, Fife, KY7 4TQ or failing him the Chairman of the meeting to vote for me and on my behalf in accordance with the directions, if any, given hereunder at the forty seventh Annual General Meeting of the Institute to be held at Charter Room The George Hotel, Bird Street, Lichfield, Staffordshire WS13 6PR on Friday 19 October 2012 at 10.30 am and at every adjournment thereof.
RESOLUTION NO 2 FOR / AGAINST * (Bye-Law No: 1/2012)
RESOLUTION NO 3 FOR / AGAINST * (Appointment of Auditor) *delete as applicable as witness my hand the...... day of ...... 2012
Signed ......
This proxy form must be deposited at the head office of the Institute by not later than 10 am on Friday 21st September 2012. The name of A Muir has been inserted (or chairman of the meeting) to ensure that your vote is cast in the way you have indicated. You may however, insert another proxy holder if you wish who must be a corporate member of the Institute, but your vote will not be recorded if he or she is not present at the meeting.
Management Services Tribute Autumn 2012 9
Downes’ long and dedicated the continual need to improve service on the IMS Council Productivity and the personal of Management, be that, in effort you have made to get his role as council member, the message across to a very company secretary or past wide audience are virtues to be chairman. No one could admired.” doubt his commitment and Harry was elected Deputy enthusiastic support for the Chairman in 1996 and then Closer to aims and aspirations of the National Chairman 1999-2003. home, he was a staunch Institute. His wise counsel and In 2004, he was awarded supporter of the affairs of the the quiet diplomacy will be sorely Honorary Fellowship, then UK Parliamentary and Scientific Health Services missed on the COM.” assuming the mantle of Committee where, as a regular specialist Group where he Company Secretary until 2010 attendee, he promoted the held the position of Secretary Council of Management and re-appointed Company principles and practices of the and then Chair between In 1983, Harry was elected Secretary again in 2011. Institute, as he did at meetings 1981-91. From those positions, to Council of Management During his period as National of the Confederation of British working closely with former and went on to serve on the Chairman he became the Industry (CBI). COM Member, Frank Burdett, Education and the Technical Institute’s representative on The pinnacle of his tenure he was responsible for the Board Standing Committees, the European Federation came on 24 November organisation of the Health assuming Chair of the latter of Productivity Services and 1999, on the occasion of the Services Annual Conference. for a period of five years. A served as Chair until 2000. Institute reception for His Whilst those events were major remit of the Technical He is one of five Honorary Royal Highness, the Duke of directed at Institute members, Board was the organisation Fellows of EFPS. In September Edinburgh. The event was held it attracted participants from and delivery of the Annual 2001, he presented a paper to bestow Honorary Fellowship the Department of Health, the Summer School and Harry entitled Benefits of Public of the Institute upon his Royal British Medical Council and held a strong view and Services in the UK at the World Highness. This memorable practising professionals from belief that the environment Productivity Congress in Hong occasion was also marked by the field of Medicine. and culture of the Summer Kong. For his endeavours a letter of appreciation from Schools brought important in promoting the ethics, Buckingham Palace. This is certainly not the end values to the Institute and to standards and principles of of Harry’s contribution, he all who attended. Upon the Productivity at a global level, Specialist groups will continue to serve on the organisation of his final School, he was awarded Fellowship Harry took great interest Eastern Region Board, as well Institute member Alan Weller, of the Congress, an honour and participation in specialist as remaining President of the wrote: “Your consistency presented to him by George W groups, for example, Textiles European Institute of Industrial toward the task of recognising Bush Senior. and IMSCOM but, above all, Engineers (EIIIE). Management Services 10 Autumn 2012 Growth Strategy Book reviews Measuring & Improving Social, Environmental & Economic Productivity. Getting It Done.
The concept of Social Productivity (SP) is this is not the case, measurement would be linked to Corporate Social Responsibility fruitless. Given the importance of this point (CSR), but SP improves productivity as I felt that more emphasis could have been well as satisfying the CSR, and there are given to the topic of policy formulation. a number of examples to illustrate this point. The authors readily admit that SP is a Section 2 very new approach and, as yet there, is no This section goes in to great detail on the general consensus. mechanics of measuring SP at national and organisational level. The authors draw Section 1 from their wide experience gained as Section 1 of the book focuses on policy members of the World Confederation of formulation and Section 2 deals with the Productivity Science (WCPS). I wondered if measurement of SP. in the model on page 57 that there would SP is a long-term approach and it clearly be a horizontal interaction between Social needs to be adopted at governmental/ Measures and Environmental Measures. national /senior management level and Once again, I felt that the main emphasis cascaded down to the organisational was on developing countries and that level. In the main, however, while the the more established companies would examples are predominantly in companies probably have quite a robust CSR policy The authors set out to write this book for a in developing countries, some of them are already in place. wide audience, ranging from policy makers from established companies. In conclusion, it was a very interesting to practitioners. This is a very ambitious It is, therefore, crucial that the companies read and refreshing to see a new undertaking and, to some extent, the goal do engage with and demonstrate that SP approach to measuring productivity at an has been achieved. is embedded in their policy formulation. If organisational and national level.
Title Measuring & Improving Social, Environmental & Written by Jeff Hall, this book is based upon Economic Productivity. 26 Reasons why Book 1 – Getting It his many years experience of delivering a wide Done Change Fails and variety of business change projects but also Some Cures rescuing those projects that went wrong. His Author(s) Author: Jeff Hall know-how is condensed into this small, but Mike Dillon & John (jeff.hall@ceros2. informative book which is written in a concise, Heap com) easy-to-digest style. The book clearly lays out Publisher Format: Kindle the possible key points for change projects Institute of Productivity Edition failing and offers solutions. Publication date: In order for a company to retain its Publication date January 2012 competitive position or enhance it in today’s June 2012 ASIN: B006XDLXGI global marketplace means a company must adapt and improve itself continuously. This well ISBN written book is a simple guide that will enable 978-0957272606 Many books have been written on a wide companies to carry out change management range of business change topics but seldom in an effective manner and should be on every focus on what can cause change projects to fail manager’s reading list. or, more importantly, how failure can be cured.
This month’s reviewers are David Blanchflower and John Lucey Management Services Growth Strategy Autumn 2012 11
Developing success is to develop the board. Directors: A Director and board development represents a handbook huge arena of opportunity. Direction is a separate for building but complementary activity to management and an effective establishes the framework of aspirations, goals, boardroom values and policies within which the people of an team organisation operate. Yet, while large investments Author: Colin are made in management training, director and Coulson-Thomas board development is largely overlooked in many Publisher: Policy companies and public bodies. Publications Over 4000 organisations, from smaller firms Publication date: to major corporations and government bodies, July 2007 participated in a research programme led by ISBN: Professor Coulson-Thomas which identified 978-1872980324 critical success factors and successful approaches to the challenges faced by directors and boards. Developing Directors explains how reservoirs of latent potential can be tapped by director and board development. In the book, Coulson-Thomas succeeds in bringing Improving directorial competence and board together the disparate strands into a convincing effectiveness is the key to boosting the whole and clearly illustrates that the corporate performance of many organisations. Often the journey can be both stimulating and worthwhile. It most cost effective way of building a business will provide an essential checklist for all company and ensuring continuing relevance and corporate chairmen, board directors and also people who consult and train at board level.
U.K. Methods-Time Measurement Association (2000) Ltd.
UK MTM ASSOCIATION The Association reminds everyone that the open course in MTM-2 started on 21 July 2012, with a total of 8, eight, persons investing their time and money into developing their expertise in further knowledge of PMTS techniques. The course will be repeated in 2013 following the success of this method in extended training at times to suit participants. Those interested in taking part next year are invited to contact the Association at the following address; [email protected], or visit www.ukmtm.co.uk and follow the link. The final open course for this year, in UAS, will take place in the West Midlands during November and December, again the cost will vary between £ 350 and £ 450 depending on the number of participants. Interested parties are invited to contact the Association at the following address; [email protected], or visit www.ukmtm.co.uk and follow the link. These courses have been instrumental in encouraging a new group of Instructors to join the MTM family. The next step for these persons is to develop their skills and to use those skills to train new groups in the techniques of PMTS. The Association will now initiate further training courses for this new group. The Association is still seeking to develop a new set of practical tests and would encourage any person or organisation able to provide video, film or DVD sequences to contact us at [email protected], or www. ukmtm.co.uk. These only need to be 10 to 12 seconds in length and the Association will acknowledge any copyright. Management Services 12 Autumn 2012 Growth Strategy Implementing the right growth strategy: Minding the ‘Ps and the Qs’
Corporate acquisitions can present a double–edged sword: Fast growth is possible, but there have n recent years, Tata Steel It is, but let me explain. After opportunity for new business been some has transformed itself into independence, India adhered models, involving different spectacular Ione of the largest steel to socialist policies and the perspectives on markets, makers on the global stage emphasis was on the public manufacturing, exporting, failures over from an established domestic sector. Steel was treated procurement and mineral the years. NK manufacturer in a protected as a strategic industry and extraction. Misra, Executive market. Ian Herbert and it was difficult for private Keshav Pratap talk to NK companies to get licenses Preparation and Director of Misra about how world-class from the steel authorities place Finance at Tata performance in both quantity that were created to regulate What has been Tata and quality was achieved the industry. At Tata Steel we Steel’s expansion Steel Europe, through a careful blend of had been looking forward strategy? argues that production, place, politics, to liberalisation of the Before opening any the chance of people and preparation. economy but, when that manufacturing unit, we finally happened in the 1990s, analyse market attractiveness success can be Production, politics we realised that we were in terms of size and growth much better if and price not prepared for the global rate, together with the How do you see Tata’s competition. ‘resource richness’ of a the expansion growth in production of country. Mapping these onto strategy is steel? What factors contributed the matrix shown in figure 1 based on clearly In 1907 Tata Steel set up its to the surge in output in we compile a list of possible first steel plant in India with the past 15 years? countries. defined goals, an annual production of 100 We analysed the market Then we examine their logical analysis, thousand tons. By the time and concluded that global respective industry structure India gained independence, markets for steel will remain and political factors to co-operative we were producing one million strong in the foreseeable decide where we should management tons of steel annually. Over the future but that access to go for a merger and and a balanced next 50 years, we grew to two raw materials, coal and iron, acquisition approach or go million tons. After acquisition of will be even more critical. for a greenfield development, approach to Corus in 2007, we became the Indeed, fewer countries will figure 2. We chose our mergers and world’s fifth largest steel group, produce steel, but also that partners carefully. including a single ten million the barriers to cross-border acquisition ton capacity plant in India. ownership will reduce What is your raw material versus organic because of liberalisation sourcing strategy? growth. Isn’t 50 years a long time through the World Trade Our raw material security is to double output? Organisation. There is now the around 80% in India and this Management Services Growth Strategy Autumn 2012 13
Establish primary and finished steel making
Implementing the right growth strategy: High
Establish only finished steel making
Low Establish sourcing Minding the ‘Ps and the Qs’ Market attractiveness operations
Low High Resource richness Figure 1: Countries of interest for manufacturing
Coal/ Market Growth Iron ore size rate Natural Gas
Market Resource rich attractiveness countries
gives us a strong base to start from. Due to transport costs we believe that steel should Countries of interest for Existing industry be produced as close to the manufacturing structure raw materials as possible and we have set up primary steel plants in countries rich in raw material. Mining Establishing manufacturing capacity acquisition tends to replicate • M & A the successful model that we Figure 2: Framework for • Greenfield followed in India. manufacturing perspective People and performance the right approach is to ‘deal sufficiently prepared. Indeed, three are from Corus. Similar What has been your friendly’ and to make the the first two acquisitions were blending was done in the strategy for managing most of the advantages of relatively small, involving sums senior management teams of a company after both the parent company and of around $400m to $500m. both the companies. acquisition? the acquisition, essentially, to After this experience we had We are very careful in pursue a partnership approach the confidence to go ahead How do you also ensure choosing a company for that is a case of ‘me and you’ with Corus. that the business grows acquisition. We go ahead rather than a ‘them and us’. organically? only if we believe that the Could you please This is a challenge for sure. company has sufficient How did Tata succeed in elaborate on acquisition Acquisitions are exciting but to depth in its resources and its expansion strategy? of Corus by Tata Steel? reap value from an acquisition management. We start with Managing each acquisition We acquired the Anglo-Dutch one has to be able to develop the presumption that the successfully is definitely a steel group, Corus, in 2007 and grow it. In this respect existing team is capable of challenge because they are all after a prolonged spell of we have not forgotten our managing their own affairs, in different geographies with bidding against a Brazilian roots. Tata Steel started from thus it is not the intention different market conditions competitor. At over $11 billion a small beginning and steadily to displace them with lots of and business contexts. it was the biggest acquisition grew through greenfield people coming from India. Although India economic by Tata. We formed a and brownfield expansion. We have a well thought liberalisation started in the seven-member integration We have a strong culture of through partnership approach, 1990s, our first acquisition committee to spearhead the continuous improvement and a cornerstone of which is to was in 2005. We appreciated union between Tata and ethics called ‘Aspire’. This blend the senior management the challenges and wanted Corus. Three of the members promotes the core values team. We have realised that to ensure that we were were from Tata Steel and of; trusteeship, integrity, Management Services 14 Autumn 2012 Growth Strategy
respect for the individual, Quantity and credibility and excellence. Quality While there has been a focus What have been the on acquisitions to achieve major factors in Tata global scale and reach, the Steel’s growth? part of the organisation that If one is to achieve Due to transport costs we believe takes care of organic growth the ambitious growth was not dismantled and targets that we have that steel should be produced progressed simultaneously. accomplished, the most important thing is to have as close to the raw materials as Banks are often willing a strong base, a clear and to fund acquisitions thorough framework for possible. because they can identifying and evaluating see assets that are expansion opportunities, benchmarked to some together with a clear About the authors sort of market value. vision of where you wish How do you attract to be. Our present target Ian Herbert MBA, FCMA, CGMA is senior lecturer in accounting funding for organic is to achieve annual & financial management at Loughborough University School growth? production of 50m tons. of Business and Economics and Deputy Director of the A good question. Yes, it is a Quality is now a given Centre of Global Sourcing and Services. His research interests are; finance transformation, shared services centres and normal belief that getting in the global market management information systems. funding for acquisitions place. Whilst we had a is easier, but in India our good reputation as a ‘Keshav Pratap is studying Financial Engineering at the Indian reputation is such that we low-cost steel producer, Institute of Technology, Kharagpur, India and undertook a have less difficulty in getting we have now proven period of collaborative research within the School of Business funding for greenfield or that we can compete in and Economics at Loughborough during summer 2012.’ brownfield plans. Because the higher added value of our past record of steel production and The article is based on an on-stage interview between NK Misra gradual progress, our risk application market. For and ian Herbert at the CFO Exchange in London in March 2012 perception is very low. We example, the oil/gas organised by IQPC. are the number one private pipeline orders that our The authors are grateful for the financial support of the producer of steel in India and Hartlepool plant has been General and Charitable Trust of the Institute of Management banks are willing to fund winning recently (see Accountants. our expansion plans. In the panel). mining projects, which we Whatever the plans, it is To contact the authors go to www.shared-services-research.com are undertaking all over the important to retain one’s world, banks in India are firepower when pursuing ready to fund us. expansion. Management Services Productivity Autumn 2012 15 Mobile technology for increased productivity and profitability
he demand for access software, make it easier than to business information ever for workers to collaborate The growth of cloud computing Tand applications through and businesses to communicate mobile technologies – such with staff, customers, and has also impacted positively as the Apple iPhone and vendors. iPad, devices running Google Mobile technology allows on the use of mobile devices, Android and Windows 7 people to use company data Mobile or using RIM Blackberry and resources without being supporting more flexible working – is surging as consumer tied to a single location. practices by providing services preferences and behaviour Whether your staff are spill over into the business travelling to meetings, out over the internet. workforce. on sales calls, working from The massive growth a client’s site or from home of adoption of these anywhere in the world, mobile technologies around the devices can help them keep in world has many business touch, be productive, and make managers wondering how to use of company resources. effectively position their firms Mobile IT devices can to benefit from the trend. The drive for mobility is part of the business technology agenda for most companies today. Obviously, however, in a business rather than personal context, more types and complexity of information are needed, ranging from access to documents and presentations, to status on initiatives and processes, and for specific application needs to perform various business intelligence functions. Against this fast-moving mobile background it is clear that just having mobile access to email is profoundly insufficient for increasing productivity and producing better-informed employees. The integration of mobile devices such as laptops, tablet computers, PDAs and smartphones, along with a wide variety of applications and Management Services 16 Autumn 2012 Productivity
thanks to software that ‘reads’ receiving mobile coupons for Mobile technology allows people the website or information a wide variety of services and individuals are seeking on their purchases; to use company data and mobile device and displaying • Demand for mobile websites advertisements that relate to is expected to exceed PC resources without being tied to a that information. Marketing accessible websites. is made more effective by this single location. customisation, and because Commerce most customers (or potential Mobile ticketing customers) always have a Tickets can be booked also change the way your able to download product mobile device handy, their and cancelled by mobile company does business – information to their exposure to advertisements is phones using a variety of new technologies lead to network during the visit; increased. technologies. Users are then new ways of working, and • Quotations and interactive Studies indicate that: able to use their tickets new products and services order processing; • 97% of mobile subscribers immediately, by presenting that can be offered to your • Checking stock levels via will read an SMS (text) their phones at the venue. customers. They can make the office network; message within 15 minutes your team more efficient, • Interacting with colleagues of receiving it; 84% will Mobile vouchers, coupons and more creative, and more while travelling – sending respond within an hour; loyalty cards valuable to your clients. and receiving emails, • Average campaign response Mobile technology can also Every day businesses are collaborating on responses rates are typically 12-15% be used for the distribution learning more about the to tenders, delivering trip (as opposed to direct mail of vouchers, coupons, and ways mobile technology can reports in a timely manner. which averages 2-3%); loyalty cards. These items are be used to increase their some companies are seeing represented by a virtual token productivity and lead to Development response rates as high as that is sent to the mobile increased profitability. Below Because of the interactive 60% plus; phone. A customer presenting are some of the key areas in nature of mobile technology, • Mobile is not just for teens a mobile phone with one of which mobile technology can sharing information through and twenty-somethings; these tokens at the point of sale be useful: this medium allows businesses prime purchasers in the receives the same benefits as if to get immediate feedback 35-44 and 45-54 age brackets they had the traditional token. Networking & on products and services from are also strongly embracing Communication customers. This speed and the use of mobile; Content purchase and delivery Mobile technology allows accessibility have led to faster • While 65% of email is spam, Mobile content purchase and companies to have an research and development less than 10% of SMS is; delivery mainly consists of the unprecedented level of for companies, an important • A recent study by Compete. sale of ring-tones, wallpapers, connectivity between part of staying ahead of the com indicates that almost and games for mobile employees, vendors, and competition. It has also led 40% of consumers are phones, and is evolving into customers. Workers can to product upgrades moving extremely interested in the purchase and delivery of download applications on at a faster rate. In addition, their mobile devices that customers and clients feel as allow them to connect with if they have a more direct role others through social media in a company’s development. such as LinkedIn, Facebook and Twitter; or the firm can Marketing use native or web-based Mobile technology has applications to enable direct introduced a new dimension communication with these into advertising and audiences in a variety of ways. marketing for businesses Real-time communication worldwide. Potential with the office can be customers now see business important in delivering advertisements on mobile business benefits, such phones through a variety of as efficient use of staff medium such as SMS (text) time, improved customer messaging, mobile websites, service, and a greater range mobile applications, banner of products and services ads, QR codes, IVR messaging delivered. Examples might and more. include: These advertisements can • Making presentations be customised to reach a more to customers, and being specific, targeted audience Management Services Productivity Autumn 2012 17 full-length music tracks, video, firm’s customer relationship books and more. management system – over the internet – allowing you Location-based services to update customer details Real-time Knowing the location of the while away from the office. mobile phone user allows for Alternatively, you can enable communication with location-based services such as: customers to pay for services or • Local discount offers; goods without having to write the office can be • Local weather, news and a cheque, swipe a credit card sport; or use cash. More powerful important in delivering • Tracking and monitoring of solutions can link you directly people; into the office network while business benefits. • Traffic reporting. working off-site to access such resources as your database Information services or accounting systems. For A wide variety of information example, you could: services can be delivered to • Set up a new customer’s mobile phone users in much the account; same way as it is delivered to • Check prices and stock PCs. These services include: availability; • International and national • Place an order online. news and sport; • Stock quotes; Mobile technology leads to • Financial records. great flexibility in working, for example, enabling home Mobile banking working, or working while Banks and other financial travelling. The growth of cloud institutions use mobile computing has also impacted commerce to allow their positively on the use of mobile customers to access account devices, supporting more information and make flexible working practices by transactions, such as: providing services over the • Check bank balances; internet. • Process bill payments; • Transfer funds between Technology solutions may accounts; include: • Verify deposits and other • Mobile infrastructure; transactions. • Mobile website and/or application development; Mobile brokerage • Mobile commerce solutions; Stock market services allow the • Mobile marketing solutions; subscriber to react to market • Mobile communication developments in a timely solutions; fashion, irrespective of their • Mobile technology physical location. hardware and/or software management solutions; Mobile Purchase • GPS tracking solutions. Merchants accept orders from customers electronically via Organisations that embrace mobile device through mobile mobility for business purposes websites and/or apps. In some likely will become not just more cases, through catalogues efficient, but also places where delivered via mobile. more people want to work. This could give employers the edge Benefits when it comes to attracting, Mobile technology can recruiting and retaining the improve the services you best talent in what is set offer your customers. For to become an increasingly Article reproduced with kind permission from Strategic example, when meeting with competitive environment in the Growth Concepts customers you can access your coming decade. www.strategicgrowthconcepts.com Management Services 18 Autumn 2012 Appraisals Appraising appraisals Are appraisals all they’re cracked up to be? Is this management tool of any use at all? Dr John Chamberlin ponders these questions and shares his views.
ow, tell me again, who we so skilfully recruited management thing. We’ll get why do we have these and so thoroughly trained. I that statistically robust thing One of my ex- Nappraisal things? Oh of mean, that would be applying called a normal distribution course, that’s it, it’s so we can McGregor’s (1960) ‘Theory Y’, curve, on which all our staff – bosses used to ‘rate’ people, in the genuine wouldn’t it, and we all know those very competent people, interests of their progress and how harmful that can be, don’t remember, that we took so say: “80% of your career development. Oh yes, we – trusting people? much time to skilfully recruit – and there’s also that bit about No, we’d better keep the will be range-rated. A bit like problems, John, how well you’re doing against untrustworthy employees your gas boiler. those entirely reasonable down, and appraise those And it’ll be obvious, then, come from 20% of targets you’ve been set. Those ne’er-do-wells out of the where the actual problem or targets that will ensure we organisation, once and for all, problems lie, won’t it, because your staff, so sack delight our customers, keep us before they do any real harm we’ll be able to see? Actually, in business and keep you in a to the business. That’s why it’ll be dead simple, because one in five and job. Glad we’ve got that clear. we’re here, isn’t it, after all, to instantly you’ll have that And it’s right to do this, of show them who’s boss? statistically accurate ‘mean’ you’ve cracked it!” course, isn’t it – to manage I mean, once we’ve (the ‘average’, in old money, your people? After all, even Dr completed this year’s appraisal but ‘mean’ sounds better, as Deming (1986: 315) said that round, we’ll know exactly a manager – and anyway, it something around ‘6%’ of an where people stand. And so rhymes with ‘lean’, which is organisation’s problems could will they, of course, and don’t a good management word be down to its people, didn’t forget that this is designed to at the moment) – based on he? So let’s get right down to help them understand how all your scientifically robust it and – if you’re still with me well they’re doing. After all, no deliberations, with just a tad from the last issue (Chamberlin, matter how poor the systems of who you don’t like thrown 2012) – as good managers, we expect them to work with, in for good measure. After all, which of course we are, we’ll they still have to work hard to Feidler (1967) didn’t come up quite probably be spending overcome all those obstacles, with his ‘least preferred co- 100% of our time on no more don’t they? And if they don’t? worker’ (LPC scale) theory for than 6% of ‘the problem’. Well, woe betide them, as my you to simply ignore it, did he? But, actually, Deming didn’t mother used to say. They’ll get So, why waste an opportunity say that at all, did he? He said a thick ear! to hold down those whom you the ‘6%’ were ‘special’, and don’t like? he was talking about ‘causes’, Ahead of the curve? No, now you’ve got that not people. Causes of ‘most Professionally, of course, this is curve, it’ll be immediately troubles and most possibilities called career planning, except apparent where the ‘trouble’ for improvement’. Not people. that it might not be within the is, because half your staff will Yet still these behaviours current organisation. be ‘below average’! Think persist. And we know why. No, these appraisal things about it – they can’t not be. I It’s because of management’s are a useful management tool mean, I know that more than out-dated need to ‘control’ to ensure that we get the right 80% of drivers think they’re everything. After all, the last people doing what it is that above average, but we all thing we would want to do is we, as good managers, have know that’s because most trust those workers to do the decided the customers want. drivers are male, and many will right thing for the customers, And once we’ve completed probably be good managers, leave them to do that, and those performance ratings too, so that’s likely to be true. even help them occasionally – this year, yet again, that Isn’t it? by removing anything that is – we’ll see who’s where So, having got the ‘curve’ gets in their way whilst they in the general scheme of sorted – and, as you know try. Isn’t it? Those workers this individual performance from your recent management Management Services Appraisals Autumn 2012 19
No matter how poor the systems we expect them to work with, they still have to work hard to training course, it’s good to What you’ll be left with – be ‘ahead of the curve’! – we and this is the really clever overcome all those obstacles, can just sack all those who are bit, of course – is only the statistically ‘below average’, ‘above average’ staff. Won’t don’t they? can’t we? Or at least, those you? You’ll only have half who are seriously ‘below of them left, though, but average’. After all, as one that’s no problem because all everybody in his department Thin end of the wedge? of my ex-bosses used to say, those ‘below average’ people that they’ve got to be So, with the usual rigour of “80% of your problems, John, weren’t very effective anyway, ‘excellent at everything’. Now sound academic planning, come from 20% of your staff, so they can’t have been that’s a pretty tall order – no and, hypothetically speaking, so sack one in five and you’ve doing much, whereas your normal distribution there of course, that HE institution cracked it!” And he meant remaining ‘above average’ then – but that’s what this will now take the (anything it. Another of his favourite people will clearly be capable appraisal thing enables you up to £9000) cheque off the mantras was, “You can’t beat of much, much more. Stands to do; weed out all those student applicants, and then a a good sacking every year to to reason. non-excellent people, so week before the programme keep everyone else on their In one higher education you’re left with only the truly is due to start they’ll see toes!” It’s that Pareto thing, institution (HEI) I’m aware of, ‘excellent’. if there’s anyone on the isn’t it, that ‘80:20 Rule’, so it’s one of the bosses has recently Easy-peasy! staff who even remotely got to be right. had the same idea. He’s told Sorted! understands some of the Management Services 20 Autumn 2012 Appraisals
Let’s take an example from the same sector. Out of curiosity, and to demonstrate this, I recently took a random sample of 119 of our own students’ results from a final stage degree module and plotted them on a chart. I So, that’s it, let’s give then calculated the Upper and the employees a Lower Control Limits (UCL and LCL) for the sample, and drew statistically robust those lines on the chart (above, target, to improve Fig. 1). something over Figures don’t lie or do which they’ve no they? You’ll see also, from this control whatsoever! example, that one student’s Don’t believe me? result was above the UCL, while five were below the Think about it LCL. Why? Well, in a stable system, this level of ‘variation’ module topics to be taught ‘Despairing (or Desperate) • Eliminate management ABOUT THE AUTHOR and bung them on to teach Performance Review’. In that by objective. Eliminate Dr John Chamberlin is a senior it. Box(es) ticked. But because institution it says they have management by numbers, lecturer and pracademic at the everyone is now ‘excellent to ‘agree with [their] line numerical goals. Substitute Derby Business School (DBS), within the Faculty of Business, at everything’, they’ll cope, manager at least one target for leadership. Computing & Law at the won’t they, and the students, each of the priority areas.’ • This means...abolishment of University of Derby (UoD). of course, will get an ‘excellent So, that’s it, let’s give the the annual merit rating and After 34 years in the student experience’, which employees a statistically robust of management by objective. telecommunications industry they will duly record the next target, to improve something (BT), the final decade as a senior operations manager time they complete their over which they’ve no control ‘It’s not the people: it’s the with a large external workforce National Student Survey (NSS) whatsoever! Don’t believe system, stupid’ (Seddon, 2008: covering the East Midlands, form – that thing what drives me? Think about it. Apart 74). John took early retirement in the sector league tables. from being pretty good at 1996, but within a year of this And, just to be sure, we’ll teaching, knowledgeable In the Red Bead exercise itself, had signed on for a full-time MBA at UoD. Graduating in also target all these excellent- in your subject area and the object is to ‘produce white 1999 with one of only two at-everything people with a genuinely interested in caring beads’, and the six ‘workers’ – distinctions – and the only few mind-focusing personal for and doing your best for or three, after half get sacked ‘Masters’ Level Prize for (‘stretch’) objectives. In the case your students (that ‘Theory Y’ for turning in under-target Outstanding Performance’ – that I’ve been made aware of, thing) – no individual academic performances after just three John then became a part-time lecturer within DBS. these are: can personally affect, in any weeks’ – have no control Early in 2005, he again reverted statistically significant way, the whatsoever over the ‘quality’ to being a full-time student, to 1. Outstanding student number of degree passes at of their individual output (ie embark upon a PhD studying experience ‘1st’ or ‘2.1’. the number of ‘red beads’, the implementation of business Indicative target areas: Why? Because that’s down to or ‘defects’, that appear) per process reengineering (BPR) within two local authorities, • Improved student the ‘system’. It’s Deming’s (ibid) week’s work. graduating in 2009. achievement (% of 1st, 2.1s); ‘common causes’, those other Only management can John is a founder member of • Improved student progression ‘94%’.Ever done Deming’s1 affect that, by changes to ‘Sytoc’*, the Derby Business and retention; ‘Red Bead Experiment’ (ibid: the ‘system’, and whatever School’s ‘Systems Thinking • Improved employability; 346)? No? You should. It puts your product or service, it’s & Organisational Change Research Group’, organised by • NSS engagement and scores. this appraisal thing to bed once management’s job to improve colleague Gino Franco. and for all, as evinced by a few the system such that the ‘red John’s primary academic No, really. They’re there, extracts from his ‘14 Points for beads’ do not enter it at the interests are in BPR, systems actually there, written, Management’ (circa; ibid: 24): front end. In our case, the thinking, management and under ‘Targets’ on the ‘Our higher education sector, that’s leadership, managing change and the public sector. Vision’ sheet that helps staff • Eliminate...targets for the students – or potential students ‘prepare’ for the ‘Development workforce asking for zero – without the required pre- * www.Derby.ac.uk/sytoc and Performance Review’ defects and new levels of university-level education; ie J E [email protected] (DPR) – what some call their productivity. not just a cheque! Management Services Appraisals Autumn 2012 21
Range of results (UCL/LCL = r+2xSD - @ 95% 30
25 UCL = 22.02 20
15 Serie Av’e (‘r’) = 11.92
Student grades 10 (1xSD = 5.06)
5
LCL = 1.82 0 0 2 4 6 8 10 12 14 16 18 20 Fig 1: Module Results Chart is statistically predictable, and from target’, and of course, they then have a much better or who refuse to play along. the few results outside of the someone to blame for it. chance of achieving genuine And statistically, that could limits would be down to those One important factor – if success, at reasonable grades. be half of the total of all ‘Special Causes’*. In the higher we are to increase (eg in this But that might, for example, academics across the UK higher case, the student was the case) the number of students involve some universities education sector. That’s it then. only one with an ‘A+’ grade. earning grades in the higher actually setting the UK Appraisals sorted! Quite ‘special’, I’d say, that bandwidth than that shown ‘A-Level’ exam questions (as student, whoever they were. above, ie fewer ‘D’s, say, and Michael Gove suggested in In the lower case, the reason more ‘A’s and ‘B’s (1sts and April this year), or at least to For references to this article, was even easier to determine, 2.1s) – is to prevent the ‘red systematically set up some please email editorial@ no ‘work’ was submitted for beads’ entering the system at form of pre-degree additional msjournal.org.uk assessment! (*NB: Six out the front end. That requires support to enable potential of ‘119’ is not that far from having an enrolment system applicants to genuinely reach Footnotes Deming’s ‘6%’.) that includes some degree the level of potential white 1. Actually, as Deming himself To be clear, by ‘stable of actual selection based on beads, prior to enrolment2. acknowledged (ibid: 346, system’, we mean (apparently; potential ability – which means But, there’s a problem with Footnote 14), it wasn’t exactly a mathematics colleague an IQ a little north of room that, isn’t there? Because that his. It’s a bit like the PDCA assures me) that with any temperature, to enable you to means initially saying, ‘No, Cycle, he just borrowed it broadly similar cross-section think at a level that properly sorry,’ to some applicants, (in that case from Walter of students, there is a 95% equips you to take advantage when they don’t make the Shewhart), but did a far better confidence level that a very of a good university (ie higher) entry grade. Yet we still want job of marketing. Deming first similar distribution would occur education, along with the the cheque, don’t we? Oh saw a guy named Mr William A every time. In other words, it’s ability to communicate in dear! Boller use the Red Beads at HP predictable. That means we English using the full range So, guess what happens (electronics, not sauce!), and already know it will always be of vowels and consonants instead? We’ll set those thought it so powerful he took like that. It’s ‘stable’. Unless available, and to suitably lazy academics some highly- it worldwide, where it’s been someone changes the system. form them into complete focused ‘stretch’ targets to known as his ever since. Smart All the other results in words and coherent sentences increase the students’ module cookie that Deming. ‘Poach that sample, on or between (not txt spk) in order to fully grades – which in effect means with Pride’, as one of my old those two ‘limits’, were the engage from the outset in an giving the academics a can of bosses used to say. And if you ‘predictable demand’ of that appropriate level of intellectual white spray-paint to get rid can’t do that, then ‘steal with stable system, and the spread discussion with your fellows. of the red beads that have stealth’! of results is down to nothing In other words, the standards already entered the system other than what Deming we should expect from those and arrange for more ‘white- 2. Other institutional systems defined as ‘Common Cause’ applicants leaving an effective looking’ ones to come out at affecting results might be the variation – something many schooling system, plus from the other end – and as a result number of student contact managers are totally unfamiliar those others who choose of raise those all-important ‘NSS’ hours allocated for teaching with, and genetically pre- their own volition to study in (student experience) scores. and/or staff development, the disposed to dismiss, because this country, when English is And then we’ll just appraise- resources available to staff and they insist on wanting a ‘cause’ not their own language. And out those ‘below-average’ HE students, or systems for student for each and every ‘variation that’s better for them, because staff who can’t cut the mustard induction and support. Management Services 22 Autumn 2012 Leadership New Leadership and Environment Management
The impact an organisation can have on the environment can be wide reaching and influenced by a number of factors. Here, Professor Colin Coulson-Thomas describes how a company can make changes in a way that engages all parties.
n organisation’s by its employees. Changing Awareness of environmental may happen, unless practical relationship with the environmental impacts impacts and responsibilities steps are taken to share an Aenvironment and may require altering the among corporate leaders environment management impact upon it can be the behaviours of a number of and agreeing environment vision and ensure that people result of a variety of activities. groups of people, including management goals, objectives, are equipped to implement it. These could range from how external stakeholders such strategies and policies are its products are produced as suppliers and business and sometimes seen as first and Directing and enabling and distributed - and how channel partners. Means need last stages of a governance Governance and the work of customers use them – to the to be found of engaging and process. Yet outside of the boards have traditionally been patterns of work adopted helping them. boardroom, little if anything, concerned with providing Management Services Leadership Autumn 2012 23
uncertain and changing which a board ensures that to excel at essential activities context they may be a the people of an organisation for competing and winning Aspirations necessary but not a sufficient are equipped to do what is (Coulson-Thomas, 2012a). condition for sustained expected of them, and those The implementation are noble, success. it wishes to help – including of various strategies is an When summarising his customers and users of an important aspect of the work but it is experience, and what he had organisation’s products and of boards (Stiles and Taylor, learned, as a director and services - are enabled to help 2001), and a board should outcomes board chairman, Sir John themselves. Non-executive ensure that its strategic Harvey-Jones (1988) chose the directors could question the intentions are realised (Brauer that people title Making it Happen. The extent to which performance and Schmidt, 2008). This name of his book sums up the support is provided to might require looking beyond can see, purpose of the change of focus employees and other the formulation of strategy of ‘new management’, which stakeholder groups. and greater concern with its smell, taste is about high performance A traditionalist might implementation (Siciliano, and delivery today, as much as consider that implementation 2002). Implementation has to and feel. getting in place the capability is an executive or management be responsible, sustainable to hopefully cope with an rather than directorial activity and beneficial to multiple uncertain future. (Mace, 1971), and accordingly groups. Important though many may wish to avoid involvement ‘traditional’ activities of boards in operational matters. ‘New More sustainable and are ‘new leadership’ looks leadership’ recognises a affordable approaches beyond them. It also embraces distinction between direction ‘New leadership’ recognises assembling the knowledge, and leadership, but feels that today’s companies have financial and other resources a board should monitor legal and moral obligations to that may be required to developments and take steps a range of stakeholders and implement them, and ensuring to ensure progress is made, their continued viability and that the right processes and the strategic direction reputations may require much and tools are available to they establish is followed more than delivering financial ensure relevant resources are (Jensen and Meckling, 1976). results at ‘almost any cost’ and effectively applied to what an utilising whatever means they organisation is setting out to ‘Top down’ direction and can ‘get away with’. Sustained do (Coulson-Thomas, 2007a, ‘bottom up’ support engagement and mutually 2012a and b). Many corporate initiatives beneficial relationships can are initiated, articulated also require responsible Implementing and launched from the top conduct. environment strategy in the hope that people will A key element of responsible Having an environment respond. People are told what conduct is the efficient use of management strategy is one is required, and ideally how human and other resources thing but implementing it they can help. The smart board and the avoidance of waste. can be a different matter. also provides ‘bottom up’ Many widely adopted As a result of a separation support. It ensures that people approaches to improving of ownership and control understand and are equipped corporate performance are (Fama and Jensen, 1983), and enabled to do what is wasteful and inefficient. They some boards appear almost required in a winning way, are time consuming, expensive exclusively concerned with cost-effectively and minimising and disruptive (Coulson- reviewing and formulating negative impacts (Coulson- Thomas, 2012a and b). By strategy. They may need to be Thomas, 2007a and b). the time many initiatives are reminded that shareholders Superior resources and implemented requirements and other stakeholders are capabilities may or may not and priorities may have strategic direction which primarily concerned with guarantee success depending changed, while opportunities has involved activities such tangible results rather than upon how they are deployed. are often missed during as visioning, establishing rhetoric. Aspirations are noble, Thus, there is little point transformation journeys. strategic goals, objective but it is outcomes that people recruiting expensive and The fact that so many setting and the formulation can see, smell, taste and feel. talented people if they are corporate initiatives have to of strategies and policies. The measurement of not engaged, they are difficult be accompanied by costly Without these foundations board effectiveness has been to manage, their superior ‘internal communications’, an organisation may set off considered problematic (Allen qualities are not captured and ‘engagement’ and in a wrong or inappropriate et al, 2004). One possible shared, and they are not given ‘management of change’ direction. However, in an criterion is the extent to the tools and support required programmes suggests Management Services 24 Autumn 2012 Leadership
their merits may not be A five-year study found talent management is not on expensive people who immediately apparent to that many widely adopted delivering. About a half are not engaged, effectively those who are expected corporate practices are costly thought opportunities are used, or appropriately to adopt or implement and inefficient compared being missed. supported, while views of them. Similarly, the efforts with more affordable what represents ‘top talent’ being devoted in many approaches to creating high Effective use of human can also quickly become organisations to engaging performance organisations. talent outdated. and motivating people It concluded that ‘New Talented people can be Talent wars to attract ‘the suggest these initiatives are Leadership’ is required expensive and also difficult best people’ can push up also incomplete. which involves a shift of to manage and retain. A salary costs, be distracting emphasis, for example from person who is exceptional and involve collateral Deficiencies of recruiting and developing in one area may be average damage. ‘New leadership’ traditional approaches high fliers for an unknown in another. An affordable endeavours to avoid costly At a time when future to helping people to option can be to work bidding wars for scarce environmental challenges can excel at activities that are with the people one has resources – whether human represent exciting business crucial today and to handle and put the right support or material – and find more opportunities, restructuring challenges as, when and environment in place to cost-effective, sustainable or re-organisation can be wherever they arise (Coulson- enable them to succeed and less environmentally distracting and disruptive. Thomas, 2012a and b). (Coulson-Thomas, 2012a). damaging ways of operating. Changing a corporate The evidence examined Large amounts are spent ‘New leadership’ involves culture, attitudes, processes suggests the approaches and ways of working and adopted by many learning using ‘traditional’ organisations are indeed approaches can take a expensive, overly complex ‘New leadership’ is required number of years. Their use and doomed to disappoint. is supported by those who We begin by looking at which involves a shift of stress the complexity of what human resources. Returning needs to be done, yet there to the talented people emphasis, for example from may be simpler approaches mentioned above, over three that enable many more quarters of practitioners recruiting and developing high and average people to participating in a poll during understand. the investigation thought fliers for an unknown future to helping people to excel at activities that are crucial today.
Management Services 26 Autumn 2012 Leadership
more flexible ways of making than ‘front line’ perspective, who are better supported the phenomenon of rush it easier for affordable people for example driving change can be freed from wrestling hour queues and traffic to understand complex through an organisation with problems to focus upon jams. The cost of delays, issues, and helping them rather than helping people developing solutions, for dangerous emissions, stress to do important, difficult to cope. If the emphasis had example, more sustainable and respiratory problems and stressful jobs. Talent been upon providing support, and less environmentally can be reduced by flexible Management 2 focuses much of the effort devoted to damaging ways of operating. working, virtual operation or on particular jobs and the ‘transformation’ and ‘change ‘New leadership’ also the adoption of teleworking – requirements for succeeding management’ might have involves a form of ‘corporate effectively taking knowledge in them. It involves assessing been unnecessary. People can multi-tasking’ or looking work to people rather than the roles and tasks that be helped to take informed for ways of achieving more requiring people to travel to contribute most to priority and responsible decisions. than one outcome from a place of work. objectives and ensuring that Many members of top a particular programme. ‘New leaders’ both people in these jobs are management teams could We need to move on from formulate more flexible enabled to excel by putting benefit their organisations single-issue initiatives such as policies and take steps to relevant critical success factors by giving more thought to preparing a few ‘high fliers’ ensure their appropriate in place and providing the what they could do to help for an unknown future to use. In this area, help has workgroups concerned with others to achieve and excel. boosting the performance of been available for some appropriate performance Performance support can help today’s key workgroups and time, including a widely support (Coulson-Thomas, the transition from control to quickly delivering multiple used and detailed six- 2012a). empowerment and does so benefits for both people and stage methodology for while answering a question organisations. introducing new ways of Leading and helping many people pose when We also need affordable working (Coulson-Thomas, In many organisations, faced with new initiatives: approaches which can 1995). Critical success successive initiatives have “What’s in it for me?” It can achieve improved results by factors, practical hints and attempted various ways of increase understanding and taking people as they are, tips, and relevant tools managing, motivating and enable higher achievement rather than as we would like are given for each stage leading people, but ‘new more quickly and with less them to be. Performance of what could range from leaders’ endeavour to help effort and stress. Individuals support offers a way of selective adoption to the them. Rather than focus and organisations can both achieving a high performance fundamental restructuring of on leading, perhaps there benefit. organisation and multiple an organisation. The results should be more emphasis objectives with the people of reducing environmental upon following the changing Providing performance one has – average people damage benefit people and requirements and aspirations support who do not cost an arm and a organisations, as well as of customers and users and The experience of adopters of leg to recruit and retain – and future generations. making it easier for them performance support suggests an existing corporate culture. Reducing unnecessary to secure the assistance it is a focused, relatively and stressful journeys while they need to achieve their quick and cost-effective way Greener ways of working encouraging a healthier objectives. of securing large returns on Patterns of work can have lifestyle and exercise can Persistent problems have investment. It can engage a significant impact upon deliver other benefits such as often been approached from people and meet a talent-on- the environment, which reducing the cost and time of a ‘senior management’ rather demand requirement. People is particularly evident in travelling, in addition to the
The cost of delays, dangerous emissions, stress and respiratory problems can be reduced by flexible working, virtual operation or the adoption of teleworking. Management Services Leadership Autumn 2012 27
environmental advantages. In more of healthcare costs. issues and options. Ideally, of storage networking. this and other areas, people If the ability of people relevant elements of what Before its introduction many do change behaviours once with long-term conditions to has been captured should be sales teams and channel they better understand the self-care at home could be made available to those later partners felt they did not consequences of different increased, it would reduce in the process, for example to know enough about storage options. pressure upon healthcare enable ‘joined up’ responses. networking to recommend it. ‘New leadership’ can also resources and the need Again better help can prevent Using devices such as simple involve striking a balance for tiring journeys. A three unnecessary journeys and graphics enabled people to between the interests of month feasibility study improve outcomes. quickly grasp the essence different stakeholders and examined a performance of storage networking and between performance today support tool designed to Ensuring effective use of in some parts of the world and capability tomorrow help people with psoriasis to physical resources first orders quickly followed (Coulson-Thomas, 2012b). understand their condition, Environment management the introduction of a sales Although questions can be manage it on a day-to- can also embrace support tool. The direction raised about the affordability day basis and develop a limiting wastage and had been issued for some of preparing for an unknown personalised action plan over-exploitation. time, but people had lacked future (Cappelli, 2008), (Coulson-Thomas, 2012b). Sustainability requires the the practical performance there is a growing body Although many of the effective use of assets to support required for its of evidence that through users were not as computer prevent unnecessary output implementation. performance support it is literate as adopters in and reduce the utilisation possible to deliver both and other fields, and already of scarce resources. Consider Helping customers and remain effective and vital had some appreciation of the production of computer supply chain partners throughout an uncertain their condition, an impact equipment which consumes Nomix deployed a support journey (Coulson-Thomas, assessment by Bournemouth rare minerals. Sometimes, tool to help users of its 2012a and b). University found a significant software can provide a weed control solutions and increase in the index used solution to a hardware potential customers to make Helping people to help to measure ability to self problem. Cisco Systems’ more informed and less themselves care among users. About storage networking makes environmentally damaging In relation to the a half of them reported better use of unused capacity choices. For example, environment and the that the understanding and on existing storage devices, prospective purchasers were allocation of available support provided had made thus reducing the need to buy shown how spray drift from an resources a balance also a difference to how they new ones. alternative such as a knapsack needs to be struck between managed their condition. Developing such a solution can cause environmental the interests of different Pathway support can help a creates a potential for hazards, herbicide damage generations. A good example citizen to understand whom reducing environmental and health risks. Advantages and major challenge for many to contact and at what points impact, but this will not of better alternatives are developed economies with in a public service process. be realised unless people explained, for example that ageing populations is the It should provide the local understand it and are spillage can be avoided as a growing number of people information required and prepared to use it. Cisco result of not having to mix with long-term conditions could include diagnostics employed a performance different liquids. and the frail elderly. They to help users to better support tool to help people Performance support can account for two-thirds or understand relevant needs, appreciate the advantages can also be used across a Management Services 28 Autumn 2012 Leadership supply chain to speed up reforming them. the implementation of Far too many boards view At a time when environmental environment management environmental issues and and other policies. Consider sustainability as a challenge, challenges can represent the question of sourcing risk or source of higher and the behaviour of one’s costs (Coulson-Thomas, exciting business opportunities, suppliers whose conduct 1992). Performance support could have a significant represents a much quicker restructuring or re-organisation impact on the environment. and more cost-effective way The retail store chain B&Q of simultaneously delivering can be distracting and disruptive. used performance support various organisational to make sure all its suppliers objectives – including understood and adhered to its responsible buying – that quality policies. can minimise harm to the environment and benefit Performance support and service users (Coulson-Thomas, sustainability 2012a and b). It has been argued that many leadership teams do not fully Conclusions understand the strategic and Performance support – operational importance of along the lines of the tools sustainability, and that they developed by Cotoco for the are failing to attract people adopters cited above – impacts with green credentials and directly upon behaviours alternative to general, time can enable 24/7 support skills (Glen et al, 2009). An and its implementation can consuming and disruptive to be provided to average explicit use of performance be largely independent initiatives and expensive performers wherever they may support tools to help service of cultures, values and transformation programmes be, and people can be helped users, buyers, suppliers and motivations. People embrace (Coulson-Thomas, 2012a and to help themselves. staff to take more sustainable the support provided because b). Capturing and sharing decisions could help in this it makes it easier for them critical success factors for For the references to this respect, as well as building to do difficult and stressful key activities, and what high article, please email editorial@ relationships with those who jobs. It can also help them to performers do differently, msjournal.org.uk put a high priority upon green select less wasteful options considerations (Coulson- and prevent outputs that in the UK and an adjunct Thomas, 2012a and b). breach policies, guidelines and visiting professor in the Once a new performance required standards. department of geopolitics support framework has been Many organisations are and international relations at put in place appropriate links failing to reap the benefits Manipal University in India. can be made with existing of providing better support He has helped more than processes and activities that to those who are best 100 organisations to improve are relevant and add value. placed to deliver a range of director, board and corporate Doing this sometimes reveals environment management performance; and has activities that are peripheral, and other policy objectives. reviewed the processes and or have been developed in Key decision makers should practices for winning business excess of what is required to consider what they can do to of more than 100 companies. achieve priority objectives as a help people to make more Colin has served on many result of trying to be ‘excellent responsible choices and excel private, public, professional About the Author at everything’ irrespective of at demanding tasks, for and voluntary sector boards, impacts upon users. example by ensuring they Professor Colin Coulson- including as chairman and Concentrating first upon understand complex areas, Thomas, chairman of president, spoken at more key work groups when have appropriate tools, and Bryok Systems and other than 200 national and performance support is are enabled to emulate the companies and author international conferences and introduced can enable new approaches of high performers of Talent Management 2 is a fellow of seven chartered ways of excelling at critical in the areas concerned and Transforming Public bodies and the author of activities to be introduced (Coulson-Thomas, 2007b). Services, is an experienced more than 40 books and while less essential ones are Corporate activities non-executive director and reports. He can be contacted scaled back. As a result, it may and public services can be chairman of award-winning via www.coulson-thomas.com be possible to discontinue or transformed. Performance companies, a member of and his latest publications replace some activities rather support is a proven, quick, the business school team at obtained from than devote time and effort to focused and cost-effective the University of Greenwich www.policypublications.com. Management Services Management Autumn 2012 29 Stakeholder Management: An instrument for decision making By Michael Howitt & Dr John McManus, Lincoln Business School.
hat defines stakeholders in Wmanagement? Freeman’s original definition, labels a stakeholder as “any group or individual who can affect or is affected by the achievement of the decision- making organisation’s objectives” (1984). As we examine stakeholders besides shareholders, we see various groups being highlighted by stakeholder theorists (Hillman and Keim, 2001). Freeman’s (1984) listing of company itself, employees, stakeholders includes such shareholders, customers, diverse constituencies as and suppliers as primary owners of various kinds, stakeholders, with the media supplier organisations, and various special interest customer segments, employee groups classified as secondary segments, various members stakeholders. Donaldson of the financial community, and Preston (1995) diagram several levels and branches investors, political groups, of government, consumer customers, employees, trade advocate groups and associations, suppliers, and other activist groups, trade governments. Consensus, No assumption is made that associations, political groups, stockholders, employees unions, and competitors. of all types can consider managers will try to develop Brenner and Cochran’s (1991) suppliers, customers, and list includes such stakeholders governments, competitors, trusting and co-operative as stockholders, wholesalers, and activists groups sales force, competition, considered stakeholders. relationships with stakeholders, customers, suppliers, managers, Also typically included are employees, and government. the entities “community” but an argument is made that if Hill and Jones (1992) list (Brenner and Cochran, 1991; managers, stockholders, Donaldson and Preston, they do, competitive advantage employees, customers, 1995; Hill and Jones, 1992), suppliers, and creditors. “general public” (Hill and will result. Clarkson (1995) lists the Jones, 1992), or “public Management Services 30 Autumn 2012 Management stakeholders” (Clarkson, desirability or worth of an found negative associations) managers will try to develop 1995), as well as the natural intervention. Ways for better between various socially and trusting and co-operative environment (Buchholz, 1993). anticipating and dealing ethically responsible practices relationships with stakeholders, More recent authors (Read, with stakeholder opposition and conventional economic but an argument is made 1999, Shearer, 2002, Floyd and and conflict, and better and financial indicators of that if they do, competitive McManus, 2004, McManus, incorporating various interests, corporate performance, such advantage will result. 2005) have included both especially those of weaker as profitability and growth. Organisations generally ethical and moral obligations groups in society, are therefore Thus, there is no reason to have limited resources for of internal and external crucial for improving policy think that the conscientious which stakeholders compete. stakeholders. According design and decision-making. and continuing practice of Often as not, stakeholder to MacAvoy and Millstein There are many reasons stakeholder management will values and needs differ (2003), recent developments to believe that adoption conflict with conventional widely and there is usually a in stakeholder thinking of a stakeholder approach financial performance goals. highly skewed distribution of lean towards the view that to decision-making and resources among stakeholder stakeholders should participate management in general A question of groups. Typically stakeholders in both ethical and governance will contribute to the long- categorisation and have different priorities and programmes and they should term survival and success contribution different objectives. Unequal make major strategic decisions of an organisation. Positive Theory suggests that influence and distribution of together with owners, as and mutually supportive stakeholders fall into two resources exacerbate conflict well as supervise managerial stakeholder relationships broad categories – primary of interests. Decision-making decisions. encourage trust, and stimulate and secondary. Primary managers are normally A feature of stakeholder collaborative efforts that stakeholders (the ones who part of senior management theory is that it goes beyond lead to relational wealth, can directly affect a decision- that have responsibility for traditional participatory ie, organisational assets making outcome) “must and make the key resource management methods and arising from familiarity and be managed” so that the decisions for the business. practices that emphasise teamwork. By contrast, decision-making may achieve Because resources (especially popular involvement but, conflict and suspicion its objectives. Secondary people) can be prioritised which pay little attention to stimulate formal bargaining stakeholders are generally inherent structural problems and limit efforts and rewards individuals who are affected and conflicts that plague to teams, which result in time by the decision-making in middle managers. By the delays and increased costs. some way, but may not have a same token, stakeholder In addition, more and more primary stake in the decision- theory represents a challenge executives are recognising making. If these stakeholders to conventional economic that a reputation for ‘ethical are not supported effectively analysis, an approach that and socially responsible the decision-making manager does not adequately consider behaviour’ can be the basis may not achieve success. the distribution of costs and for a competitive edge in Missing from general benefits among different both market and public stakeholder theory is an stakeholders: the winners policy relationships. Finally, account of how primary and and losers. It ignores the fact in spite of the specification secondary stakeholders work that different stakeholders do and measurement difficulties within a decision-making not perceive environmental involved, for example, organisation to enable them problems in exactly the same research undertaken by to achieve their interests. way and will therefore seek McManus and Wood-Harper Decision-making managers different solutions and use (2003) found evidence of tend to hold high office and different criteria to assess the positive associations (few have may be regarded as agents of the decision-making organisation. Jones (1995) The lack of support from has advanced one form of instrumental stakeholder stakeholders forces decision- theory and proposes that if organisations contract (through makers into disarray and in their managers) with their stakeholders on the basis of the worst of cases leads to mutual trust and co-operation, they will have advantage over the decision-making being organisations that do not. Put another way, they will deliver neglected or not followed-up. and win future business. No assumption is made that Management Services Management Autumn 2012 31
Indicators Questions If managers fail, • Organisational growth: • How are groups expected to eg internal structuring achieve stability? of decision-making • What capabilities are they generally fail group, leadership, and participating groups being formalisation of group encouraged to develop? because the various structure. • What are the expected • Group behaviour: qualities of participants’ stakeholders have eg changing nature of contributions? involvement of decision- • What behavioural making group members, characteristics are groups different and conflicting emerging sense of and participants expected to collective will and solidarity, display? expectations about involvement in discussions • Are groups achieving and decisions, ability to increased self-reliance and analyse and explain issues control? their roles. and problems. • Group self-reliance: eg increasing ability to propose and consider courses of action, knowledge and understanding of policies and programmes, changing relationship with decision- making staff, formalisation of independent identity, independent action.
Table 1. from several different aspects, results that are quantitative; different stakeholders will and more concerned with undoubtedly be involved in description and interpretation the prioritisation process to than with measurement and get the correct views (for prediction. The measurement example, senior managers of participation requires the prioritise strategic importance decision-making manager and prioritise risk). In any to: (1) validate criteria for decision-making undertaking understanding the nature at least three perspectives of participation in decision- should always be represented: making; (2) formulate a purchasers (customers), set of indicators to give providers (suppliers) and the form to these criteria; decision-making manager. (3) produce appropriate Each of these stakeholders methods at decision-making provides information that the level for monitoring the other two may neglect or are indicators and maintaining unable to produce – customers a continuous record of the care about customer value, process of participation; and suppliers know about logistical (4) undertake the action difficulties, and decision- of interpretation of the making managers know and information recorded in care for budgetary constraints terms of making a judgement and risks. Nevertheless, it is of concerning participation. course important to involve all Since traditional stakeholders that have a stake monitoring and evaluation in the decision-making (Buysse of decision-making has been and Verbeke, 2003). concerned with quantifiable It could be argued that measurements such as theorists such as McAllister profit, there is a new focus (1999), Hill and Jones (1992) on the qualitative aspects emphasise that evaluation of participation and on the of stakeholder participation process of participation. is concerned with processes However, both qualitative which are qualitative and not and quantitative aspects of Management Services 32 Autumn 2012 Management participation are important (Clayton et al 1998). This In cases where stakeholders’ requires two forms of monitoring and evaluation: expectations cannot be met or measurement based on numerical values leading to changed, the decision-maker judgement and description leading to interpretation. will at least be able to develop Because participation is a dynamic process that must contingency plans to minimise be evaluated over time, conventional post evaluations any potential harm. are inadequate. Ongoing monitoring is the only way qualitative descriptions can be Authors like McManus (2005) contract or tender related obtained over time. It should have drawn up categories or work this may often mean be participatory, involving the questions that can be used providing priming funds key personnel involved in the in developing indicators of to enable stakeholders to decision-making. the extent and quality of organise and equip themselves According to Clayton et participation (Table 1, p. 31). for negotiations (McManus & al (1998) key characteristics If managers fail, they Wood-Harper 2003). to this qualitative approach generally fail because the to evaluating stakeholder various stakeholders have A question of values participation are described different and conflicting Organisations have finite as: (1) naturalistic: a study expectations about their resources and the CEO, COO, of processes rather than on roles. The participation and CFO control much of the basis of predetermined matrix is a dynamic tool, these. In decision-making, and expected outcomes; (2) which provides a means for policy debates on resource heuristic: subject to continuous identifying potential areas allocation often involve the to have non-commercial, redefinition as knowledge of disagreement between balancing of needs, some non-quantitative, and of a decision-making and the various stakeholders. As of which may compete: non-market values (Guilmette its outcome increases; (3) already stated, stakeholders employment, profit, intrinsic et al, 1996). holistic: viewing the decision- have varying degrees of power values, recreation, and, Intrinsic values are often making as a whole, needing and access to resources; some for example, social status associated with what to be understood from many may lack the organisational and power. While we can behaviourists call ‘higher different perspectives; and basis and psychological/ conceptualise a wide variety needs’ (Maslow, 1970 and (4) inductive: seeking to skill basis for negotiation. of types of values, policy Skinner, 1974) that is trust, understand outcomes without Indeed, at the identification debates and solutions require motivation, empowerment, imposing predetermined stage of a decision-making an understanding of how success, relationships and expectations or benchmarks. intended beneficiaries may things are actually valued by influence. Within decision- It begins with specific not even be aware that different people. Little of the makings management people observations and builds they are stakeholders in work on stakeholder values are an organisation’s only real towards a general pattern of the decision-making. The has been empirically based resource. It is the individuals outcomes (Clayton et al 1998). participation matrix is likely to this point. Defining the associated with decision-making It could be argued that there to be used at the negotiation values being promoted and who create and implement are few generic indicators stage between the provider the sources of these values ideas. Without them, nothing of participation. Indicators decision-making manager could facilitate decision- would exist: there would be selected will vary according and perhaps only some making management and no memory, no strength, and to the decision-making and of the concerned formal conflict resolution between no advantage. The basic value, its objectives. Bhatnagar stakeholder groups on the groups, both within decision- which is so important, is ‘respect and Williams (1992) propose recipient side, with informed making and in disputes over for people’. Individuals have two very broad categories of guesswork about the possible inter-organisational resources. rights and duties, and the most indicators: type of participation from A variety of methods are essential of these is the right 1. Empowerment indicators, beneficiaries and other possible for assessing to do an excellent job coupled eg, how many new institutions. But agreement as different types of stakeholder with the duty to do so with initiatives were launched? to how to include these other values. Some values may be satisfaction Guilmette et al, 2. How proactive is the stakeholders so that they can quantifiable by their nature. (1996). group, as measured be involved, as appropriate, There are, however, ranges Stakeholders have both against a specially devised in subsequent negotiations of intrinsic values that have a positive and a negative index? is essential. For example, in been variously referred impact on decision-making. Management Services Management Autumn 2012 33
obtaining favoured payoffs in relations where interests are opposed” (Willer et al 1997). Power is structurally determined in the sense that the nature of relationship that is, who is dependent on whom and how much determines who as power. There is some evidence to suggest that managers do not have the influence or power over key stakeholders. Initially, their problems stemmed from poor perception and political issues that damaged relationships with the external stakeholder community, which are not addressed early in the decision-making lifecycle.
A question of tactics In management decision- making, management have to acknowledge that it is highly unlikely that all stakeholders’ expectations will be met. Therefore, the manager must somehow ascertain which One of the most common about why decision-making or not followed-up. Why? stakeholders should be satisfied. ways of examining the succeed. Findings suggest Because the majority of Since stakeholders have the impact of stakeholder the three major reasons decision-making is not self- ability to positively or negatively participation within decision- why a decision-making will contained or self sufficient, influence the decision-making making is through empirical succeeds are stakeholder the stakeholder groups must process, integrating the right studies. Sometimes these involvement, executive be relied upon to provide group is essential. Specific observations are based on management support, support. For continuing to organisational strategies used decision-making appraisal and a clear statement of provide what the decision- to integrate stakeholders will and/or post evaluation. Not requirements. Without them, maker needs, the external differ, depending on the issue all decisions are deemed the chance of failure increases stakeholders may demand and the stakeholder’s potential successful in their outcomes. It dramatically. Another key certain quid pro quos from to co-operate or threaten the decision-maker’s performance. Using the problem-frame/ In management decision-making, management stakeholder maps described by Bryson (2003) is a good starting have to acknowledge that it is highly unlikely that all point to developing stakeholder strategies. The problem-frame stakeholders’ expectations will be met. stakeholder mapping technique was developed by Anderson et al, (1999). This technique should be considered equally finding of this research is the decision-maker in return. is especially useful in helping important to analyse why that a high percentage of In short, it is the dependence develop problem definitions decision-making was not as executive managers believed of the decision-maker on likely to lead to a winning successful as expected and to that there is more decision- external stakeholders for coalition. Careful analysis deduce where participation making failure attributed to favours (eg resources) that is usually necessary to find of stakeholders, particularly stakeholder mismanagement give those individuals involved desirable problem definitions in the implementation phase, than any other factor. The lack leverage over a decision- that can motivate action by a might have helped avoid of support from stakeholders maker. In applying this coalition of stakeholders large some of the mistakes made. forces decision-makers into leverage, power and influence enough to secure adoption Research undertaken by disarray and in the worst of plays a large part. Power can of preferred solutions and McManus (2005) surveyed cases leads to the decision- be defined as “the structural to protect them during executives for their opinions making being neglected determined potential for implementation (Jacobs and Management Services 34 Autumn 2012 Management
Shapiro, 2000). A crucial first to Polonsky in those cases step in this analysis is to link where stakeholders cannot High stakeholders to alternative be communicated with (due Weak Strong problem definitions through a to their negative disposition supporters supporters problem definition stakeholder towards the decision-making Support map (figure 1). Ideally, once process) alternative strategies Low a ‘winning’ frame has been need to be developed. These Low identified, specific policy strategies may attempt to Weak Strong proposals can be developed change the stakeholder group’s opponents opponents within that framing. disposition, or minimise
 its negativity. Strategies to Opposition A question of followers undertake this change may High and challengers require the manager to use Managers should understand “bridging stakeholders” Low High that each stakeholder has the to communicate on behalf Stakeholder power ability to equally threaten and of the decision-maker with co-operate with the decision- those negatively disposed making process. The objective stakeholders. In cases where forward the foundation for making. In this context is to reduce the threatening stakeholders’ expectations understanding the issues and managers adopt a widespread element and increase cannot be met or changed, the importance between decision- concern for the long-term co-operative behaviour. It is decision-maker will at least be making, stakeholders and strategic interests of all important to realise that the able to develop contingency management. Evidence would stakeholders, towards a sense stakeholder’s potential to plans to minimise any potential suggest that stakeholder of residency and an emphasis act and their willingness to harm (Polonsky 1995). involvement represents an on stakeholder management act are not directly related. Whilst by no means complete empirical shift towards an within decision-making. Therefore, when looking at the views described here move inclusive approach to decision- strategies, it is important to examine not only strategies Type View Strategy addressing stakeholders who Mixed Blessing These stakeholders are extremely One appropriate strategy for Mixed are positively disposed towards important, for they have the Blessing stakeholders is to integrate a decision-making but those ability to co-operate with the them into the decision-making strategy who are negatively disposed decision-making or threaten the development process. This will ensure achievement of the decision- that the objectives of the stakeholders towards decision-making as making objectives. are included in strategy as it is formed well. Some strategies may and thus will not require a later only be appropriate for a ‘redevelopment’ of strategy. stakeholder with a specific Supportive These stakeholders have the ability This group may require extremely disposition towards decision- to co-operative with the decision- innovative strategies to be developed making, that is, positive or making, but have little ability to in order to diffuse negatively disposed negative. In other cases a given threaten its activities. stakeholders within the group. strategy may be appropriate Non-Supportive These stakeholders have the ability Use collaborative strategies. for either type of stakeholder to threaten the decision-making Collaborative strategy minimises the that is both (Polonsky, 1995). activities, but have little ability potential for threatening behaviour to co-operate with the decision- from and increases its co-operative There are several different making organisation. behaviour. strategies the decision-making Governmental bodies are often manger can adopt for different considered to be non-supportive types of stakeholders (Table 2). stakeholders. Each strategy is not mutually Marginal These stakeholders have little Interest may change over time exclusive; some are appropriate ability to threaten the decision- and therefore the potential for more than one type of making activities or to co-operate for co-operation or threat may stakeholder or group of with the decision-making. This change. Under such circumstances a group may have little interest in collaborative strategy minimises the stakeholders. the decision-making activities at a potential for threatening behaviour. The principal theme given point in time. running through each of the Bridging One definition of the term Bridging One positive strategy would be to strategies is communication. stakeholders is all groups who have open communication channels Developing good stakeholder forward their own ends as well as with the Bridging stakeholders. communication channels to serve as links between other This would allow decision-makings between the decision-making stakeholders. to ‘influence’ the Bridging group’s and its stakeholders is one actions and therefore indirectly affect effective way of managing the ‘influenced’ groups’ expectations or behaviour towards the decision- stakeholders. According making itself. Management Services Productivity Autumn 2012 35 Productivity take-off in the aerospace industry In the spring issue we reported that BAE Systems have stipulated the IMS Certificate as a mandatory qualification for all their IE staff. The good news for the IMS doesn’t stop there.
K productivity trainer “It is really encouraging Scott-Grant is pretty that organisations in the Uupbeat for two UK aerospace industry have We hear a lot of negatives about reasons. There has been a become so active in recent significant increase in the months and have wanted economic pressures, but there are number of businesses who to introduce their people are looking to companies to and get them trained in many positives around too and like Scott-Grant to get these techniques. We hear practical help and advice on a lot of negatives about they tend to get a little buried. improving their productivity economic pressures, but – and a high number of there are many positives those businesses are in the around too and they tend to achieve that objective. The Certificate. Productivity really UK aerospace industry. get a little buried.” course trained Bombardier seems to be flying high. Scott-Grant’s MD Richard The case of Bombardier participants to apply both Technical director Mike Taylor explained: “We Aerospace, Belfast is a industrial engineering and Seaman from Scott-Grant have been impressed with prime example. Recently the Lean techniques in their work. said: “The aerospace industry the number of companies company has invested in the The investment by the is responding to their market connected with the development of productivity company in helping to develop challenges and looking to aerospace industry in this skills and techniques. Eight productivity improvement improve response and delivery country who are seriously employees have been trained expertise is excellent news times, to maximise their committing to Lean and for the full IMS Certificate for the institute and the potential, eliminate waste industrial engineering course in Belfast on four one- profession. It is a further and balance their resources. techniques as the way week modules – and all have example of the importance Focussing on better and forward. Productivity is very achieved the qualification. placed by the aerospace leaner processes enables all much in the spotlight – and industry on these fundamental organisations to improve the skills and techniques Meeting objectives techniques. their productivity levels and introduced in the IMS Bombardier’s industrial Other companies who are add value throughout. We Certificate course are engineering manager associated with the aerospace are delighted to have trained considered ideal ingredients Harry Montgomery wanted industry, for example in scores of people in recent in addressing productivity manufacturing engineers to fabrication, assemblies and months with an involvement issues effectively. The IMS have a formal professional component manufacture in the aerospace industry and Certificate is definitely hailed qualification in productivity have been to Scott-Grant to to help with the influx of new as the industry standard techniques and he felt that be trained in the productivity members for the IMS. It’s a win professional qualification. the IMS Certificate would techniques covered in the IMS all round.” Management Services 36 Autumn 2012 Decision Making Better Decision Making – In Difficult Economic Times Member of the Council of Management and delegate to Eastern Region, Richard (Dick) Bridges joined an invited audience of over 170 delegates at the Grosvenor Hotel, London to participate in Bernard Marr’s masterclass presentation: Better Decision Making In Difficult Economic Times.
ernard Marr, founder Organisations he has advised Management, the CFO performance dashboards, and CEO of Advanced include Accenture, Astra Magazine and the Wall Street analytics and scorecards and BPerformance Institute Zeneca, the Bank of England, Journal. how to leverage big data; (API) is a best-selling author Barclays, BP, DHL, Fujitsu, In addition to the setting • Learning how to use and leading global authority Gartner, HSBC, Mars, the with a most welcome brunch, dashboards, analytics and on organisational performance Ministry of Defence, the Home the underpinning appetisers of business intelligence to and business success. Office, the NHS, Orange, Tetley, the event were: drive fact-based decision- In this capacity he regularly T-Mobile, Royal Air Force, Royal • Participation in valued making and performance advises leading companies, Dutch Shell and many others conversations with peers improvements. organisations and governments Prior to his role at API, about performance across the globe, which Bernard held influential improvement and Taken from his book The makes him an acclaimed positions at the University of management; Intelligence Company using and award-winning keynote Cambridge and at Cranfield • Picking up insights from some the EbM (evidence based speaker, researcher, consultant School of Management. Today, of the world’s most successful management) model (figure and teacher. Bernard Marr he also holds a number of companies; 1) Bernard’s presentation is acknowledged by CEO visiting professorships and • Learning about some of the addressed key and relevant Magazine as one of today’s serves on the editorial boards most innovative KPIs in use issues relating to the leading business brains. of many leading journals and today; cornerstones of figure 1, the He has written a number of publications including the • Hearing about the latest on components of seminal books and over 200 Business Strategy series. high-profile reports and articles Bernard’s expert comments on managing organisational regularly appear performance. This includes the in a range of best-sellers Key Performance high-profile Indicators, The Intelligent publications Company, More with Less, including The Managing and Delivering Times, The Performance and Strategic Financial Performance Management, Times, a number of Gartner reports, Financial and the world’s largest research studies on the topic.
Bernard Marr is acknowledged by the CEO Journal as one of today’s leading business brains. Management Services Decision Making Autumn 2012 37 Better Decision Making – In Difficult Economic Times 1. Agreeing strategic objectives government and line agency and priorities; departments, thus carefully Often within our Institute we say: 2. Collect the right management steering his vision and the information; thinking of the audience into “If you cannot measure, it is not 3. Analyse the data and extract measures of performance and insights; subsequently focusing upon worth doing”. In that respect 4. Present and communicate the analytics and experiments, insights; dwelling for a while on Bernard questions: “How do you 5. Making better-informed performance analytics, (Source: decisions. from Analytics at Work, HBS measure Love?” Press, 2010) as in figure 2. Using case study material, Often within our Institute we Figure 1: The Intelligence Company Model extensive knowledge and past say: “If you cannot measure, experience, Bernard described it is not worth doing”. In that Strategic Review 1. Agree Strategic ‘tree’, ‘spotlight’ and ‘school’ respect Bernard questions: “How Objectives and Priorities analogy models, strategy maps, do you measure Love?” and the facets of the ‘Tesco In moving towards closure, 2. Collect the Right 5. Make Better – Management steering wheel’ concept as the use and application of Informed Decisions Information well as that of the ‘Carlsberg’ key performance indicators model. He held the audience (KPIs) and dashboards were spellbound. addressed. Here, he promoted Information and Communication He gave visionary examples of the creation of visually rich Infrastructure measuring performance displays. In support of that, in in differing his final revelations, Bernard 4. Present and 3. Analyse the industrial, continued to focus upon Communicate Data and commercial, presentation of information, the insights Extract Insights providing and highlighting examples of how and what Past Present Future could be learned but, equally and likely more important, What is how they are practiced in a What Happened? happening now? What will happen? Information (Reporting) general business environment. (Alerts) (Extrapolation) He achieved this by drawing reference and comparison
to newspaper headlines and How and why What’s the best/ did it happen? What’s the next worst that can magazines and particularly best action? happen? Insight (Modelling, (Recommendation) (Prediction, optimisation, interesting, mention experimental design) simulation) of the glossy and glamour publications. Figure 2: Performance Analytics Here, Bernard is quite convinced that business can learn from these • Intelligent communication, presentations and/or avenues. narratives & visuals; reading one of his books, In closing his presentation • Intelligent decision making, such as Managing and he drew the following improvement meetings; Delivering Performance, The conclusions: • Embrace a culture of driving Intelligent Company or Key • Decision making is everyone’s high performance. Performance Indicators (KPI). everyday job; For me it was an eloquent • Intelligent strategy, clear In the closing of my account presentation and a classic objectives & strategy maps; of the event, I would urge example of not only what • Intelligent data, agreed KPQs all Institute members to was said, but the style and and KPIs; get into the same orbit manner in which it was said. • Intelligent insights, analytics as Bernard Marr, either It was well worth another and experiments; by attending one of his very early morning start! Management Services 38 Autumn 2012 NHS Fails to meet productivity targets
A recent report from the to find £20bn in productivity King’s Fund found that data improvements.” obtained from John Appleby, 60 NHS finance chief economist at directors revealed the King’s Fund, that 40% of NHS said:”Overall, the Hospital Trusts NHS continues did not meet to perform well, their productivity despite the targets in 2011/12. spending squeeze. The report said: However, this “This will be a masks growing The return significant concern pressures in as last year was the first in a hospitals and significant four-year spending squeeze, performance issues in some during which the NHS needs NHS organisations.” of forecourt Productivity attendants continues to fall in Singapore
Shell has reintroduced forecourt attendants at selected times at nearly 300 of its sites across the UK. The Attended Service Labour productivity continued to contract in the first quarter programme is a free service designed to help drivers with advice of this year, sliding 2.2%. This is the second worst quarter in on fuels and fuel efficiency, basic car care and safety tips. almost three years, and continues a contraction which began in Attendants will also advise customers on correct fuel selection, the last quarter of last year, when labour productivity fell 0.5%. after its research revealed that 9% of motorists have filled Productivity dipped in both the manufacturing and services their car with the wrong fuel. In addition, even though 90% of sectors. Together, they employ nearly nine in ten workers in the customers claim they know how to check their oil, more 13% do labour force. not check oil levels on a regular basis.
Research into productivity are when they feel they’ve More than 22% of those Productivity levels across regions of the accomplished the most at surveyed said that constant UK by online office supplies work. The research found that email traffic and sitting in retailer Viking revealed 22% Monday mornings between meetings where nothing levels on of office staff feel Mondays 10am and noon is the most happened were also major productive time of the drains on output while a Mondays week for office workers further 22% argued that red in the East of tape was a barrier to greater England. productivity. Management Services Autumn 2012 39 Workplace UK car nursery industry cuts staff is world absenteeism leader
Following many years of decline, the UK car industry has now started to expand and has become a world leader. Jaguar Land Rover has reported record profits of £1.5bn mainly due to strong growth in China. The decision by General Motors to invest £125m in its Vauxhall plant in Ellesmere Port will create around 700 new jobs at the plant and a Companies that provide absenteeism among staff they were less stressed further 3000 in the supply quality childcare can whose children used it was because they no longer had chain. It follows a string of expect less absenteeism, down by 70%, and lateness to leave their children at investments by other major better timekeeping, higher by 72%. More than four in home. carmakers such as Ford, productivity and greater five staff who use the nursery The benefit for Dubai Nissan and Toyota in their employee loyalty, a new said it had allowed them to Customs is 82% of staff said British operations – more than study suggests. spend less time travelling they felt more loyal to their £4bn of new investment has Since Dubai Customs between home and office, employer and 71% said they been pledged in the past 18 opened its nursery in 2009, and the same number said were more productive. months alone. Poor World Bank’s project to productivity increase productivity in UK mid- in Sierra Leone sized firms The World Bank has announced that it has made available $17m of A recent report by GE Capital indicates that funding to help improve the overall performance and productivity of mid-sized businesses could have played a more the Sierra Leone’s civil service. significant role in the UK’s economic recovery The need for a lean, down-sized, decentralised and performance- over the course of the last three years. driven public sector is obvious. But serious doubts exist that the The report found that the 21,500 mid- government has the political will and commitment needed to make sized firms in the UK have significantly bold, strategic policy decision that will make this happen. underperformed in comparison to their World Bank Country Manager for Sierra Leone, Vijay Pillai, stated: counterparts in other leading European “The project is timely for Sierra Leone given that a reformed civil economies, with productivity per employee service would greatly facilitate the smooth economic transformation.” lower than their competitors in Germany, France and Italy. Charity number: 288877 Company number: 00832132
The Institute of Management Services (A company limited by guarantee) Trustees’ report and financial statements for the year ended 31 December 2011
Contents
Legal and administrative information 2 Trustees’ report 2 Auditors’ report to the trustees 4 Statement of financial activities 5 Balance sheet 5 Notes to the financial statements 6 Legal and administrative information Charity number 288877 Company registration number 00832132 Registered office Brooke House, 24 Dam Street, Lichfield, Staffordshire WS13 6AA Trustees A.P. Muir FMS (Chairman) J. J. Lucey Hon FMS D. Blanchflower JP, FMS J. Cutler FMS H. Downes Hon FMS J. P. Heap Hon FMS R. Bridges FMS R. Graham MMS Secretary H. Downes Hon FMS Auditors Leftley Rowe and Company, The Heights, 59-65 Lowlands Road, Harrow, Middlesex HA1 3AW Bankers Bank of Scotland, Pentland House, 8 Lochside Avenue, Edinburgh Park, EH12 9DG Chairman’s Statement 2012
2011 was a significant year for the Institute and indeed for publication on productivity in the UK, has improved in terms myself, having been elected Chairman at the AGM in October. of layout and content and although issued free to members, My thanks go to the Council of Management for the confidence generates supplementary income from a variety of subscribing they have placed in me to take the Institute forward and to my organisations. predecessor David Blanchflower who has left a solid foundation It can be seen from the accounts that the Institute continues upon which I hope to build. to be financially sound and it is perhaps worth noting that I am now in a position to implement the strategy formulated the decision taken by Council in 2008 not to dispose of the when I was Deputy Chairman. The key elements of this are: Chariguard investments when the recession was at its worst, To strengthen the links between the Institute and its existing has been vindicated, as the capital value of that investment has education providers and to identify and develop new links and increased significantly. providers, particularly those overseas; to raise the profile and Administration support from Brooke House was first-class increase membership of the Institute in the retail and services during the year and a considerable amount of additional work sectors, which have been identified as significant growth areas was done to document all the administrative procedures. Whilst in the economy; and, to improve communications, in particular, such support is under constant review as part of the ongoing the Institute’s use of the internet. operational expenses, Council consider that we continue to In terms of income, membership continued to rise during 2011 receive excellent value for money. with a steady stream of students coming through the Institute’s Finally, the financial well-being of the Institute doesn’t just education system. The current membership is just over 1900 happen. A lot of hard work has to be done to keep costs within which we hope to increase as we implement our strategy. It is manageable limits and to identify new sources of income to interesting to note that demand for traditional Management increase revenue. Credit must, therefore, go to the Institute Services skills continues to grow, as organisations work hard to Treasurer for his sound financial governance and also to all improve their efficiency and effectiveness in an effort to ride the Members of Council for ensuring their remits are carried out economic recession. efficiently and effectively and within budget. The Institute journal, recognised as the authoritative Dr Andrew Muir, Chairman
Report of the Trustees (incorporating the directors’ report) for the year ended 31 December 2011
The trustees present their report and the financial statements Risk review, governance and internal control for the year ended 31 December 2011. The trustees, who are Directors are responsible for providing assurance that: also directors for the purposes of company law and who served • The systems of internal control are designed to provide during the year and up to the date of this report are set out on reasonable, but not absolute, assurance against material page 1. misstatement or loss. They include: regular financial reports to Council and an external audit. Structure, governance and management Charitable objects How our activities deliver public benefit The Institute has as its main objective the promotion of the It is a requirement of section 17 of the Charities Act 2011 that a science, technology, practice and profession of Management charity has due regard to the guidance issued by the Commission Services, which results in the advancement of the efficiency, on how the charity provides a “Public Benefit”. productivity and satisfaction of human work. The Directors of the Institute have fully satisfied themselves that as a registered charity they do provide a Public Benefit. The Organisation and structure Institute has as its main objective the promotion of the science, The Institute has eight trustees who are elected by the technology, practice and profession of Management Services, membership in two groups of four. Elections are held prior to which results in the advancement of the efficiency, productivity the Annual General Meeting, where the results of the ballot and satisfaction of human work. are counted. Elections are held in alternative years with the elections having taken place in 2011 and the next elections Our Articles of Association and Memorandum clearly require the due in 2013. The Board of Trustees meet three times a year in Institute to expand the concept and knowledge of the benefits addition to the Annual General Meeting. of Productivity in improving the wealth and living standards 2 of all.. These objectives are achieved by publishing a regular current productivity thinking and focuses on the Institutes core journal containing articles on Productivity and maintaining a subject area of productivity improvement. website that contains information on productivity techniques The 2011 AGM was held in George Hotel, Lichfield and attracted and current thinking on productivity. The journal and website a number of members. are freely available for all to access. The three national education providers accredited to provide Our main activities and who are we try to help are described courses leading to the award of the Institutes Certificate below. All our charitable activities focus on making widely continue to provide a valuable service and also bring new known the benefits of improving productivity as a means of members into the Institute. We continue to award student of raising the living standards of all peoples in the world. To this the year prizes and it is gratifying to see the large national UK end we are associated with all the world’s leading productivity and overseas companies who are sending employees on Institute organisations, publish a journal and maintain a website. education courses. Recruitment and Appointment of Council of Management Financial review The directors of the company are also charity trustees for the It is the intention of the Institute during 2012 and subsequent purposes of charity law and under the company’s Articles are years to seek to increase membership numbers. Recruitment known as members of the Council of Management. Under the initiatives will include advertising in the professional journals of requirements of the Memorandum and Articles of Association other Institutes. the members of the Council of Management are elected to serve for a period of four years after which they must be re-elected Plans for future periods at the next Annual General Meeting. All member of the The Institute has a policy to maintain its reserves at a level that Management Committee give their time voluntarily and received ensures the future financial viability of the Institute. That level no benefits from the charity. Any expenses reclaimed from the is deemed to be one that equates to a minimum of one year’s charity are set out in note 10 to the financial statements. expenditure; currently the Institute holds reserves that exceed this target level by fivefold and as such is financially very sound. Trustee Induction and Training The funds of the charity are all unrestricted. Note 19 of the Most trustees are already familiar with the practical work of the financial statements indicates there are £444,825 unrestricted charity. Additionally, new trustees are invited and encouraged funds at 2011. to attend a series of short training sessions to familiarise themselves with the charity and the context within which it Statement as to disclosure of information to auditors operates. These are jointly led by the Chairman of the Council In so far as the trustees are aware: of Management and the Company Secretary of the charity and • there is no relevant audit information of which the charity’s cover: The obligations of Council of Management members. The auditors are unaware; and main documents which set out the operational framework for • the trustees have taken all steps that they ought to have taken the charity including the Memorandum and Articles. Resourcing to make themselves aware of any relevant audit information and the current financial position as set out in the latest and to establish that the auditors are aware of that published accounts. Future plans and objectives. Statement of trustees’ responsibilities Objectives and activities The trustees are responsible for preparing the annual Trustees’ Achievements and performance Annual Report and the financial statements in accordance The Institute continues to reap the financial benefits of moving with applicable law and United Kingdom Generally Accepted its administration base from Enfield to Lichfield in September Accounting Practice. 2001. During 2005 due to the lease expiring at Stowe House the Institute relocated its head office to Brooke House, 24 Dam Company law requires the trustees to prepare financial Street, Lichfield. statements for each financial year which give a true and fair view of the state of affairs of the charity and of the surplus or In 2005 the vast majority of existing Institute members availed deficit of the charity for that period. In preparing these financial themselves of the opportunity to take out life membership statements, the trustees are required to: of the Institute. The additional income generated by the • select suitable accounting policies and then apply them introduction of life membership has been invested and will serve consistently; to meet the Institutes financial needs into the future. In 2011 • make judgements and estimates that are reasonable and we saw the continuation of the steady increase in membership prudent; and that had been evident in previous years. The move towards life • prepare the financial statements on the going concern basis membership has greatly reduced the administrative burden on unless it is inappropriate to presume that the charity will the Institute and this has been reflected in a large reduction continue in operation. in the operating costs which is reflected in the 2011 financial The trustees are responsible for keeping proper accounting statements. records which disclose with reasonable accuracy at any time the financial position of the charity and which enable them to January 2005 saw the outsourcing of the Institutes Journal ensure that the financial statements comply with the Companies “Management Services” and the Institute continues to benefit Act 2006. They are also responsible for safeguarding the assets from reduced journal production costs. The membership of the charity and hence for taking reasonable steps for the continues to support the publication of a quarterly journal. In prevention and detection of fraud and other irregularities. 2009 the Journal underwent a re-design which has made the pages more lively and appealing to read. The journal continues Auditors to be provided to overseas members via the Internet. Past issues Leftley Rowe and Company are deemed to be reappointed in of the journal are now available on the Institutes website with accordance with Section 487(2) of the Companies Act 2006. the current issue only being available to Institute members via the use of a password. Small company provisions In 2011 the Institute redesigned its website with enhanced This report has been prepared in accordance with the special features. The website is the Institutes face to the world and provisions for small companies under Part 15 of the Companies has attracted visits from all around the world. In the present Act 2006. technological age it is important that the Institute maintains On behalf of the board an informative website and continues its role of being a major source of information on productivity improvement. H. Downes Hon FMS In 2011 a regular email newsletter was introduced and emailed Secretary to all Institute members on a two monthly frequency. The newsletter contains information from around the world on 3 Independent auditor’s report to the members of The Institute of Management Services
This report is made solely to the company’s members, as a body, in accordance with Section 495 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company’s members those matters we are required to state to them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company’s members as a body, for our audit work, for this report, or for the opinions we have formed.
Respective responsibilities of the trustees and auditors The trustees’ (who are also directors for the purposes of company law) responsibilities for preparing the trustees’ report and the financial statements in accordance with applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice) are set out in the Statement of Trustees’ Responsibilities.
Our responsibility is to audit the financial statements in accordance with relevant legal and regulatory requirements and International Standards on Auditing (UK and Ireland).
We report to you our opinion as to whether the financial statements give a true and fair view and are properly prepared in accordance with the Companies Act 2006, and whether the information given in the Trustees’ Annual Report is not consistent with the financial statements. We also report to you if, in our opinion, the charitable company has not kept proper accounting records, if we have not received all the information and explanations we require for our audit, or if information specified by law regarding trustees’ remuneration and other transactions is not disclosed.
We read other information contained in the Annual Report, and consider whether it is consistent with the audited financial statements. We consider the implications for our report if we become aware of any apparent misstatements or material inconsistencies with the financial statements. Our responsibilities do not extend to any other information.
Basis of audit opinion We conducted our audit in accordance with International Standards on Auditing (UK and Ireland) issued by the Auditing Practices Board. An audit includes examination, on a test basis, of evidence relevant to the amounts and disclosures in the financial statements. It also includes an assessment of the significant estimates and judgements made by the trustees in the preparation of the financial statements, and of whether the accounting policies are appropriate to the charity’s circumstances, consistently applied and adequately disclosed.
We planned and performed our audit so as to obtain all the information and explanations which we considered necessary in order to provide us with sufficient evidence to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or other irregularity or error. In forming our opinion we also evaluated the overall adequacy of the presentation of information in the financial statements.
Opinion In our opinion: • the financial statements give a true and fair view, in accordance with United Kingdom Generally Accepted Accounting Practice, of the state of the charity’s affairs as at 31 December 2011 and of its incoming resources and application of resources, including its income and expenditure, for the year then ended and have been properly prepared in accordance with the Companies Act 2006; and • the information given in the trustees’ report is consistent with the financial statements.
James Rowe (senior statutory auditor) For and on behalf of Leftley Rowe and Company The Heights Chartered Accountants and 59-65 Lowlands Road Statutory Auditors Harrow Middlesex HA1 3AW
4 Statement of financial activities (incorporating the income and expenditure account) for the year ended 31 December 2011
Unrestricted 2011 2010 funds Total Total Notes £ £ £
Incoming resources Incoming resources from generating funds: Voluntary income 2 41,618 41,618 37,681 Activities for generating funds 3 5,331 5,331 - Investment income 4 17,882 17,882 9,913 Incoming resources from charitable activities 5 21,271 21,271 25,401 Surplus on retirement benefit pension scheme 6 - - (718) Total incoming resources 86,102 86,102 72,277
Resources expended Charitable activities 7 80,284 80,284 86,589 Governance costs 7 2,600 2,600 2,186 Total resources expended 82,884 82,884 88,775
Other recognised gains and losses Gains/(Losses) on revaluation of investment assets (9,728) (9,728) 14,092 Net movement in funds (6,510) (6,510) (2,406)
Total funds brought forward 451,335 451,335 453,741 Total funds carried forward 444,825 444,825 451,335
The statement of financial activities includes all gains and losses in the year and therefore a separate statement of total recognised gains and losses has not been prepared.
All of the above amounts relate to continuing activities.
The notes on pages 6 to 8 form an integral part of these financial statements.
Balance sheet as at 31 December 2011
2011 2010 Notes £ £ £ £
Fixed assets Fixed asset investments 133,834 143,563 Current assets Debtors 14 7,421 1,724 Bank and cash 430,402 464,706 437,823 466,430
Creditors: amounts falling due within one year 15 (71,301) (70,699) Net current assets 366,522 395,731 Total assets less current liabilities 500,356 539,294 Creditors: amounts falling due after more than one year 16 (55,531) (87,959) Net assets 444,825 451,335 Funds 18 Unrestricted income funds 444,825 451,335 Total funds 444,825 451,335
The financial statements are prepared in accordance with the special provisions of Part 15 of the Companies Act 2006 relating to small companies .
The financial statements were approved by the board on 8th June 2012 and signed on its behalf by A.P. Muir FMS (Chairman) Director
5 Notes to financial statements for the year ended 31 December 2011
1. Accounting policies The principal accounting policies are summarised below. The accounting policies have been applied consistently throughout the year and the preceding year.
1.1. Basis of accounting The financial statements are prepared under the historical cost convention and in accordance with the Statement of Recommended Practice ‘Accounting and Reporting by Charities’ issued in March 2005 (SORP 2005) and the Companies Act 2006.
1.2. Cashflow The charity has taken advantage of the exemption in FRS1 from the requirement to produce a cashflow statement because it is a small charity.
1.3. Incoming resources All incoming resources are included in the statement of financial activities when the charity is entitled to the income and the amount can be quantified with reasonable accuracy. The following specific policies are applied to particular categories of income: • Voluntary income is received by way of membership subscriptions and is included in full in the Statement of Financial Activities when receivable. • Grants, including grants for the purchase of fixed assets, are recognised in full in the Statement of Financial Activities in the year in which they are receivable. • Income from activities to further the charity’s objects and investments are included in the year in which it is receivable.
1.4. Resources expended Expenditure is recognised on an accrual basis as a liability is incurred. Expenditure includes any VAT which cannot be fully recovered, and is reported as part of the expenditure to which it relates. Resources expended are recognised in the year in which they are incurred. Support costs are those costs incurred directly in support of expenditure on the objects of the charity and include project management.
1.5. Tangible fixed assets and depreciation Tangible fixed assets are stated at cost less accumulated depreciation. Depreciation is provided at rates calculated to write off the cost less residual value of each asset over its expected useful life, as follows: Fixtures, fittings and equipment - 33% straight line p.a.
1.6. Investments Investments held as fixed assets are revalued at mid-market value at the balance sheet date and the gain or loss taken to the statement of financial activities.
1.7. Irrecoverable VAT All resources expended are classified under activity headings that aggregate all costs related to the category.
2. Voluntary income Unrestricted funds 2011 Total 2010 Total £ £ £ Membership subscriptions 41,618 41,618 37,681
3. Activities for generating funds Unrestricted funds 2011 Total 2010 Total £ £ £ Other activities for generating funds income 5,331 5,331 -
4. Investment income Unrestricted funds 2011 Total 2010 Total £ £ £ Other activities for generating funds income 17,882 17,882 9,913
5. Incoming resources from charitable activities Unrestricted funds 2011 Total 2010 Total £ £ £ Advertising revenue and journal subscriptions 8,803 8,803 9,790 Examination entry fees 2,588 2,588 3,288 General 9,880 9,880 10,323 Amounts from groups and branches - - 2,000 21,271 21,271 25,401
6. Other incoming resources 2011 Total 2010 Total £ £ Surplus on retirement benefit pension scheme - (718) 6 7 Costs of activities in furtherance of the objects of the charity Advertising Membership and journal subscription subscription Examinations Governance 2011 2010 £ £ £ £ £ £ Costs directly allocated to activities Basis of allocation - Direct Examination charges - - 188 - 188 301 Journals printing, postage and related costs - 35,193 - - 35,193 32,130 Audit fees - - - 2,600 2,600 2,186 Sponsorships and awards 525 - - - 525 550 Membership diaries 104 - - - 104 130
Support costs allocated to activities Basis of allocation - to main activity Committee meeting expenses - - - 6,540 6,540 13,474 Insurance - - - 800 800 800 Outsourcing administration costs 25,380 - - - 25,380 26,164 Printing, postage and stationery 1,575 - - 255 1,830 1,744 Computer costs 5,082 - - - 5,082 5,442 Professional fees 35 - - - 35 35 Bank charges 21 - - - 21 15 Irrecoverable VAT 3,814 - - - 3,814 2,850 General expenses 213 - - - 213 2,005 Subscriptions to other organisations 559 - - - 559 824 37,308 35,193 188 10,195 82,884 88,650
8. Governance costs Unrestricted funds 2011 Total 2010 Total £ £ £ Auditors remuneration 2,600 2,600 2,186
9. Net incoming/(outgoing) resources for the year 2011 2010 £ £ Net incoming/(outgoing) resources is stated after charging: Depreciation and other amounts written off tangible fixed assets - 125 Auditors’ remuneration 2,600 2,186 and after crediting: Exceptional credits - (718)
10. Employees Employment costs No salaries or wages have been paid to employees, including the trustees, during the year. Number of employees The average monthly numbers of employees (including the trustees) during the year, calculated on the basis of full time equivalents, was as follows: 2011 Number 2010 Number 8 8
Out of pocket expenses were reimbursed to the trustees as follows: 2011 2010 £ £ Travel, accommodation, stationery 4,707 11,814
11. Taxation The charity’s activities fall within the exemptions afforded by the provisions of the Income and Corporation Taxes Act 1988. Accordingly, there is no taxation charge in these accounts.
12. Tangible fixed assets Fixtures, fittings and equipment Total £ £ Cost At 1 January 2011 and At 31 December 2011 9,475 9,475
Depreciation At 1 January 2011 and At 31 December 2011 9,475 9,475
Net book values At 31 December 2011 - - At 31 December 2010 - -
7 13. Investments Listed investments Total £ £ Chariguard UK Equity Fund at market value At 1 January 2011 143,562 143,562 Unrealised gain/(loss) on investments (9,728) (9,728) At 31 December 2011 133,834 133,834
Historical cost as at 31 December 2010 100,000 100,000
14. Debtors 2011 2010 £ £ Trade debtors 2,689 792 Other debtors 903 385 Prepayments 3,829 1547 7,421 1,724 15. Creditors: amounts falling due within one year 2011 2010 £ £ Trade creditors 4,516 4,765 Corporation tax 22,727 22,727 Other creditors 468 - Accruals and deferred income 43,590 43,207 71,301 70,699
16. Creditors: amounts falling due after more than one year 2011 2010 £ £ Deferred income (note 17) 55,531 87,959
17. Accruals and deferred income 2011 2010 £ £ Advance subscriptions At 1 January 2011 (84,369) (111,797) Released in year 28,838 28,838 At 31 December 2011 (55,531) (87,959)
Deferred income is comprised of lifetime-membership subscription receipts. Income will be released to the statement of financial activity over the estimated lifetime of members.
18. Analysis of net assets between funds Unrestricted funds Total funds £ £ Fund balances at 31 December 2011 as represented by: Investment assets 133,834 133,834 Current assets 437,823 437,823 Current liabilities (71,301) (71,301) Long-term liabilities (55,531) (55,531) 444,825 444,825
19. Unrestricted funds At 1 January Incoming Outgoing Gains and At 31 2011 resources resources losses December 2011 £ £ £ £ £
General fund 451,335 86,102 (82,884) (9,728) 444,825
Purposes of unrestricted funds The Institute has as its main objective the promotion of the science, technology, practice and profession of Management Services which results in the advancement of the efficiency, productivity and satisfaction of human work. The purpose of the unrestricted funds is the dissemination of knowledge and information on productivity improvement both to its members and the public in general, in order to improve the financial viability of both companies and countries across the world. The increasing realisation of the role that productivity improvement can play in ensuring the economic well-being of all is an indicator of the success of the Institute over the past 47 years.
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Why Don’t YOU Join the IMS
Journal of the Institute of Management Services With the advent of life AchievingAchchieevivingng eexcellencexcxceelllelencnce thtthroughhrroouuggh peppeopleeopopllee aandndnd pproductivityroroduductctivivitity Management membership we are Services attracting new members. There are still people A Man who are engaged in for all Journal of the Institute of Management Services Achieving excellence through people and productivity management services Ages Management who are not members Services and we would like them to join the Institute. Going for Gold Making your strategy count Journal of the Institute of Management Services
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Summer 2011 We can use our ‘direct Volume 55 Number 2 ISSN: 0 307 6768 Management Services entry’ route to fast track this and information is Heading in the right direction available from Brooke Making lean count House.
Autumn 2011 Volume 55 Number 3 ISSN: 0 307 6768 We very much hope that our existing members will make potential members Winter 2011 Volume 55 Number 4 ISSN: 0 307 6768 aware of this option.
• Actively promoting the IMS in your place of work • Remind potential members of the benefits of • Encourage colleagues at work as well as IMS membership, eg, education system, regional professional and social contacts to join structure, recognised professional qualification the Institute • Up to the minute information via the IMS • Refer potential new members to the Journal Journal and website professional support as an example of what the IMS is about • Undertaking contract/consultancy work
What Next? Contact the IMS for an application form W: www.ims-productivity.com E: [email protected] T: 01543 266909 * Brooke House, 24 Dam Street, Lichfield, Staffs WS13 6AA