Middle Management - A Redundant Species Or A New Value-adding Role
This document was uploaded by user and they confirmed that they have the permission to share it. If you are author or own the copyright of this book, please report to us by using this DMCA report form. Report DMCA
Overview
Download & View Middle Management - A Redundant Species Or A New Value-adding Role as PDF for free.
More details
- Words: 1,367
- Pages: 40
Estonian Annual Leadership Conference 2003 Middle Management - A Redundant Species Or A New Value-Adding Role A presentation by David Rees
Director, Cultural Fluency Training & Development Ltd, UK Associate Faculty, Henley Management College, UK Vanemuise Concert Hall, Tartu, Estonia Thursday 4 September 2003 www.cultural-fluency.com
Tere hommikust. www.cultural-fluency.com
Two Case Studies from 1990’s Case One A few years ago, a lady (Gillian) could be found lying on a camp bed in an old army tent, situated in a muddy field high on the Dorset cliffs near my home on the south coast of England ……
www.cultural-fluency.com
Solution All Gillian needed was an old beach hut, a couple of men and a lorry – not a medical case conference involving 25 bureaucrats.
www.cultural-fluency.com
Case Two A major UK retailer, Woolworths, suddenly found a drop in its share value due to a number of factors – strategic, technical and behavioural ……
www.cultural-fluency.com
Transformational Solution This had to include a change of strategy (e.g. target market, store locations), technical changes (e.g. product line, information systems) and cultural change (e.g. managerial style, customer orientation).
www.cultural-fluency.com
Conclusions In both these cases the role of middle management was a crucial problem. Each organisation was hindered in delivering its products and services by a steep hierarchy of decision-makers – managers.
www.cultural-fluency.com
New Strategies Classic responses to address these issues have been to flatten organisational structures and empower the front line staff to make decisions and provide customer solutions.
www.cultural-fluency.com
Cultural Change These new strategies have to be accompanied by cultural change – i.e. ‘changing the way we do things around here’. Cultural change has to be underpinned by a change in values – principles, beliefs and standards. www.cultural-fluency.com
Example So, if you are a retailer aiming to resolve customer complaints more speedily, you have to change sales staff attitudes and behaviour, in accordance with a new set of values.
www.cultural-fluency.com
Problem Who sets the strategy, values and culture? Who implements it so that this reaches the point of product/service delivery? Ah ………??
www.cultural-fluency.com
So often we have seen attempts at changing strategy and culture fail because there is a disconnection between top management and the front line. Top management conceive the strategic and cultural change and expect to see this implemented by cascading the requirements through the management structures. www.cultural-fluency.com
Weakness – Actual or Potential The cascading process is carried out as a purely administrative function through middle management. Middle management often just pass on the messages and expect the front line to implement change at the interface with the customer. This often gives us a major problem with embedding the change. www.cultural-fluency.com
Proposal New role for middle management:
“Managers of Value-Adding Activity” - An integration of Value-Based Management and Intellectual Capital Management
www.cultural-fluency.com
Setting Vision & Business Objectives
Creating Culture
Top Management Middle Management What is our role? Front Line Delivering the Strategy, Meeting objectives via the culture www.cultural-fluency.com
Creating Strategy
Top Management New Role “Managers of ValueAdding Activity” Front Line
www.cultural-fluency.com
What will these value-adding activities consist of?
www.cultural-fluency.com
Intellectual Capital Intangible Assets Corporate Reputation
Corporate Culture
Brand Image
Goodwill Experience
Creative Power
Relationships
New Ideas
Innovative Expertise/ Thinking Knowledge Know-how www.cultural-fluency.com
Employees - Why do I want to work for this organisation?
Suppliers – Why do I want you as a client?
Community – How will this company’s activities benefit local people?
Stakeholders Partners - Why should I share risk with you?
Customers - Why do I want to buy from you? Shareholders - Why do I want to invest in this company?
www.cultural-fluency.com
Human Capital Management The focus of this is: assessing the value of people in the organisation understanding how people can add value measuring the changes in human capital value linking human capital value to corporate performance www.cultural-fluency.com
To manage human capital effectively we need a formal system to capture essential data. We then use this data to make decisions on: who to employ, how many people to employ what standards of performance they should achieve what actions managers need to take to increase human value how to keep good performers www.cultural-fluency.com
Human Capital Framework There are three key elements to this framework: 1. Individual Human Asset Value the value individuals bring and create 2. Collective Human Asset Value the additional value created through individuals working together 3. Satisfaction/Motivation Asset Value the influence of motivation on individual and collective performance www.cultural-fluency.com
Human Capital Framework Components Individual Human Asset Management
Personal Performance
Human Capital Framework Working Together
Leadership Influence Motivation Value-Added
Collective Value-Added www.cultural-fluency.com
Added Value Through Working Together: Corporate Culture People working together may produce greater value than just the accumulated individual asset value. This is synergistic added-value.
www.cultural-fluency.com
We will call these aspects of working together the ‘culture’ and ‘climate’ aspects of adding value to human assets. We need to understand how people work together for two reasons: 6.To determine if the culture and climate supports the organisation’s business strategies. 2. To evaluate if the culture and climate helps or impedes intended performance. www.cultural-fluency.com
Sample Radar plot
www.cultural-fluency.com
Human Capital Balance Sheet On the assets side of the balance sheet: Total of Individual Asset Value (IAV) Added Value from Organisational Culture (CFM) Added Value from Satisfaction (SI) On the liabilities side of the balance sheet: Employment costs Cost to replace existing human assets Cost of re-building corporate culture and satisfaction www.cultural-fluency.com
Interpreting the Results On their own, these calculations and results have little meaning. It is similar to the financial statements for a company – the absolute figures do not mean a lot. These figures are more meaningful if we: identify trends (are results going up or down?) compare with benchmarks (competitors, partners, etc) evaluate against internal targets (e.g. performance levels) www.cultural-fluency.com
Applying our Results Ratio Analysis – e.g. market capitalisation to human asset value Capital efficiency – e.g. use of human capital against alternatives Risk evaluation – e.g. impact of human capital loss www.cultural-fluency.com
Human Asset Register • Keeping track of human capital ‘stock’ • Comparing this with competitors • Reporting to stakeholders
www.cultural-fluency.com
SWOT Analysis of Human Capital Generating current value
Positive (asset)
Negative (liability)
Creating future value
* Customer service satisfaction
* Suggestions per person
* Client manager capability
* E-business capability
Strength
Opportunity
* Level of knowledge sharing
* Attrition rate for new graduates
* Absenteeism on order process team
Weakness
Threat
Balance of factors influencing added value contribution, Source: The Human Value of Enterprise, 2001 www.cultural-fluency.com
Maximisation of Human Capital Difficulty of replacement
High
Motivate
Retain
Outsource?
Subcontract?
Low Low
Added Value
Added value vs. ease of replacement, Source: The Human Value of Enterprise, 2001
www.cultural-fluency.com
High
Business Transformation Making change decisions (i.e. does the transformation increase or decrease human capital value?) Measuring the effect of change (how does human capital value change?)
www.cultural-fluency.com
Finally, what are the key challenges facing Estonian organisations: I suggest three: 5.Value-added leadership - cultural change 2. Value-chain management - systems development 3. Human capital managers - management development www.cultural-fluency.com
Value Added Leadership Shifting the organisational culture from ‘cost control’ to ‘adding-value’.
www.cultural-fluency.com
Value Chain Management Organisational infrastructure Support activities
Human resource management Technology development
Inbound logistics
Operations Outbound Marketing Service logistics and sales
Primary activities www.cultural-fluency.com
Margin
Procurement
Manager - As Manager of Human Capital Leverage Performance (The Psychological Contract) Leadership Capability (Personal Influence)
Management Capability
Manager of Human Capital
Technical Capability
Implement Organisational Strategy
Implement Business Strategy
Manage Administrative Requirements (Legitimate Authority)
Manage Technical Requirements (Expert Power) www.cultural-fluency.com
New Case Study Inclarity Small, entrepreneurial high-growth company based in London, providing virtual and extended office facilities for major corporate clients (mainly telecoms services). Turnover 2002: Approx £3.4m Target Turnover – 2005: Approx £75m IPO (stock market quotation) 2005/2006 www.cultural-fluency.com
This company has to demonstrate to the stock market analysts why it is worth a £75m valuation (or more!) when its tangible assets are only about £1.5 m. Inclarity’s challenge is to show that value creation comes from its intellectual capital – mainly its people. A system of human capital management is, therefore, being implemented to measure, manage and report on its human capital. www.cultural-fluency.com
Aitäh. www.cultural-fluency.com
Director, Cultural Fluency Training & Development Ltd, UK Associate Faculty, Henley Management College, UK Vanemuise Concert Hall, Tartu, Estonia Thursday 4 September 2003 www.cultural-fluency.com
Tere hommikust. www.cultural-fluency.com
Two Case Studies from 1990’s Case One A few years ago, a lady (Gillian) could be found lying on a camp bed in an old army tent, situated in a muddy field high on the Dorset cliffs near my home on the south coast of England ……
www.cultural-fluency.com
Solution All Gillian needed was an old beach hut, a couple of men and a lorry – not a medical case conference involving 25 bureaucrats.
www.cultural-fluency.com
Case Two A major UK retailer, Woolworths, suddenly found a drop in its share value due to a number of factors – strategic, technical and behavioural ……
www.cultural-fluency.com
Transformational Solution This had to include a change of strategy (e.g. target market, store locations), technical changes (e.g. product line, information systems) and cultural change (e.g. managerial style, customer orientation).
www.cultural-fluency.com
Conclusions In both these cases the role of middle management was a crucial problem. Each organisation was hindered in delivering its products and services by a steep hierarchy of decision-makers – managers.
www.cultural-fluency.com
New Strategies Classic responses to address these issues have been to flatten organisational structures and empower the front line staff to make decisions and provide customer solutions.
www.cultural-fluency.com
Cultural Change These new strategies have to be accompanied by cultural change – i.e. ‘changing the way we do things around here’. Cultural change has to be underpinned by a change in values – principles, beliefs and standards. www.cultural-fluency.com
Example So, if you are a retailer aiming to resolve customer complaints more speedily, you have to change sales staff attitudes and behaviour, in accordance with a new set of values.
www.cultural-fluency.com
Problem Who sets the strategy, values and culture? Who implements it so that this reaches the point of product/service delivery? Ah ………??
www.cultural-fluency.com
So often we have seen attempts at changing strategy and culture fail because there is a disconnection between top management and the front line. Top management conceive the strategic and cultural change and expect to see this implemented by cascading the requirements through the management structures. www.cultural-fluency.com
Weakness – Actual or Potential The cascading process is carried out as a purely administrative function through middle management. Middle management often just pass on the messages and expect the front line to implement change at the interface with the customer. This often gives us a major problem with embedding the change. www.cultural-fluency.com
Proposal New role for middle management:
“Managers of Value-Adding Activity” - An integration of Value-Based Management and Intellectual Capital Management
www.cultural-fluency.com
Setting Vision & Business Objectives
Creating Culture
Top Management Middle Management What is our role? Front Line Delivering the Strategy, Meeting objectives via the culture www.cultural-fluency.com
Creating Strategy
Top Management New Role “Managers of ValueAdding Activity” Front Line
www.cultural-fluency.com
What will these value-adding activities consist of?
www.cultural-fluency.com
Intellectual Capital Intangible Assets Corporate Reputation
Corporate Culture
Brand Image
Goodwill Experience
Creative Power
Relationships
New Ideas
Innovative Expertise/ Thinking Knowledge Know-how www.cultural-fluency.com
Employees - Why do I want to work for this organisation?
Suppliers – Why do I want you as a client?
Community – How will this company’s activities benefit local people?
Stakeholders Partners - Why should I share risk with you?
Customers - Why do I want to buy from you? Shareholders - Why do I want to invest in this company?
www.cultural-fluency.com
Human Capital Management The focus of this is: assessing the value of people in the organisation understanding how people can add value measuring the changes in human capital value linking human capital value to corporate performance www.cultural-fluency.com
To manage human capital effectively we need a formal system to capture essential data. We then use this data to make decisions on: who to employ, how many people to employ what standards of performance they should achieve what actions managers need to take to increase human value how to keep good performers www.cultural-fluency.com
Human Capital Framework There are three key elements to this framework: 1. Individual Human Asset Value the value individuals bring and create 2. Collective Human Asset Value the additional value created through individuals working together 3. Satisfaction/Motivation Asset Value the influence of motivation on individual and collective performance www.cultural-fluency.com
Human Capital Framework Components Individual Human Asset Management
Personal Performance
Human Capital Framework Working Together
Leadership Influence Motivation Value-Added
Collective Value-Added www.cultural-fluency.com
Added Value Through Working Together: Corporate Culture People working together may produce greater value than just the accumulated individual asset value. This is synergistic added-value.
www.cultural-fluency.com
We will call these aspects of working together the ‘culture’ and ‘climate’ aspects of adding value to human assets. We need to understand how people work together for two reasons: 6.To determine if the culture and climate supports the organisation’s business strategies. 2. To evaluate if the culture and climate helps or impedes intended performance. www.cultural-fluency.com
Sample Radar plot
www.cultural-fluency.com
Human Capital Balance Sheet On the assets side of the balance sheet: Total of Individual Asset Value (IAV) Added Value from Organisational Culture (CFM) Added Value from Satisfaction (SI) On the liabilities side of the balance sheet: Employment costs Cost to replace existing human assets Cost of re-building corporate culture and satisfaction www.cultural-fluency.com
Interpreting the Results On their own, these calculations and results have little meaning. It is similar to the financial statements for a company – the absolute figures do not mean a lot. These figures are more meaningful if we: identify trends (are results going up or down?) compare with benchmarks (competitors, partners, etc) evaluate against internal targets (e.g. performance levels) www.cultural-fluency.com
Applying our Results Ratio Analysis – e.g. market capitalisation to human asset value Capital efficiency – e.g. use of human capital against alternatives Risk evaluation – e.g. impact of human capital loss www.cultural-fluency.com
Human Asset Register • Keeping track of human capital ‘stock’ • Comparing this with competitors • Reporting to stakeholders
www.cultural-fluency.com
SWOT Analysis of Human Capital Generating current value
Positive (asset)
Negative (liability)
Creating future value
* Customer service satisfaction
* Suggestions per person
* Client manager capability
* E-business capability
Strength
Opportunity
* Level of knowledge sharing
* Attrition rate for new graduates
* Absenteeism on order process team
Weakness
Threat
Balance of factors influencing added value contribution, Source: The Human Value of Enterprise, 2001 www.cultural-fluency.com
Maximisation of Human Capital Difficulty of replacement
High
Motivate
Retain
Outsource?
Subcontract?
Low Low
Added Value
Added value vs. ease of replacement, Source: The Human Value of Enterprise, 2001
www.cultural-fluency.com
High
Business Transformation Making change decisions (i.e. does the transformation increase or decrease human capital value?) Measuring the effect of change (how does human capital value change?)
www.cultural-fluency.com
Finally, what are the key challenges facing Estonian organisations: I suggest three: 5.Value-added leadership - cultural change 2. Value-chain management - systems development 3. Human capital managers - management development www.cultural-fluency.com
Value Added Leadership Shifting the organisational culture from ‘cost control’ to ‘adding-value’.
www.cultural-fluency.com
Value Chain Management Organisational infrastructure Support activities
Human resource management Technology development
Inbound logistics
Operations Outbound Marketing Service logistics and sales
Primary activities www.cultural-fluency.com
Margin
Procurement
Manager - As Manager of Human Capital Leverage Performance (The Psychological Contract) Leadership Capability (Personal Influence)
Management Capability
Manager of Human Capital
Technical Capability
Implement Organisational Strategy
Implement Business Strategy
Manage Administrative Requirements (Legitimate Authority)
Manage Technical Requirements (Expert Power) www.cultural-fluency.com
New Case Study Inclarity Small, entrepreneurial high-growth company based in London, providing virtual and extended office facilities for major corporate clients (mainly telecoms services). Turnover 2002: Approx £3.4m Target Turnover – 2005: Approx £75m IPO (stock market quotation) 2005/2006 www.cultural-fluency.com
This company has to demonstrate to the stock market analysts why it is worth a £75m valuation (or more!) when its tangible assets are only about £1.5 m. Inclarity’s challenge is to show that value creation comes from its intellectual capital – mainly its people. A system of human capital management is, therefore, being implemented to measure, manage and report on its human capital. www.cultural-fluency.com
Aitäh. www.cultural-fluency.com
Related Documents
More Documents from ""
