Organisational Development-iipm,new Delhi

IIPM, DELHI

Analysis of the situation prevailing in the Organization and the recommendations to make the required changes

A report submitted in partial fulfillment of the requirement of MBA programme of INDIAN INSTITUTE OF PLANNING & MANAGEMENT

BY: SHOUBHAGYA RANJAN MAHAKUD

2

Contents

Page no

1. Problems faced by the Company

3

2. Leadership, Leaders’ attributes

5

3. Strategic leadership profile

12

4. Vision and Mission Statement of the Company

13

5. Transformation from Family owned and driven organization to a Professionally driven organization

21

6. Problems in managing Family owned organizations

21

7. Why Professional development

27

8. Benefits of Professional development

27

9. Professionalizing an Existing Organization

27

10. Cultivating Professional Attitudes

29

11. Professional Society Membership

29

12. Professionalizing the Premises

30

13. Professional Approach to Methodology

30

14. When Non-Professional is Appropriate

31

15. Business Succession Plan Model

32

16. Career Planning

39

17. Career Plan to develop second line of managers to take charge as and when required

40

18. Career planning to develop second line of managers to take charge as and when required. 19. Transformational goals of the strategy

44 43

20. The cornerstone of the strategy – an organizational competency framework

44

21. Framework the management within Organization

45

22. Career management and development system

45

3

Problem faced by the company: Problems can be simply put in the following manner • • • • •

Different focuses of Chairman and Managing Director Over engagement with day to day routine and operational matters. Centralized decisions Managers working below their designations, competencies and capabilities Helplessness on part of Managers and transfer of responsibility and accountability to Managing Director

Chairman and the Managing Director of the organization are over engaged with day to day operations. Each has a vision which is not shared with the other (including the corporate group and senior managers). Chairman focuses on quality, excellence and perfectionism. He continues to engage with day to day routine and operational matters. He has rather come through more as a functional head even after organization has grown manifold. Managing Director is enthusiastic, has inspirational qualities and accessibility to people. Because of the centralized decisions, a very little space is left for managers to be creative. They work one to two levels below their designation, competencies and capabilities. This is demotivating for the managers. They feel helpless and have transferred their responsibilities and accountability to the Managing Director. In such a condition where managers are not responsible and accountable, company may grow but not at the rate when it could, had managers been working at their competency and capability level. The company is at a growing stage and so at this stage it is very important that the leaders individually and jointly arrive at and articulate the values, vision and direction of growth. Also their orientation needs to shift from trade and small or medium business to that of a large industrial organization. The leaders’ role requires adding a macro organizational perspective, long term planning, acquiring a competitive edge, reshaping organizational culture and facilitating transformation of the total organization.

4

LEADERSHIP Leaders Attributes Leadership attributes are the inner or personal qualities that constitute effective leadership. These attributes include a large array of characteristics such as values, character, motives, habits, traits, competencies, motives, style, behaviors, and skills. Key Elements Most of the leadership attributes cluster into four overarching categories of what you need to be, know, and do: 1. Demonstrate personal character 2. Set directions 3. Mobilize individual commitment, and 4. Engender organizational capability. •

• •

• •

• •

• •

Integrity starts with Board of Directors who develops a statement of ethical practices and demand adherence. Anyone guilty of violating these practices must be publicly “beheaded”. Senior leaders insure that these practices flow easily throughout the culture and embedded in the formal and informal company practices Stop the scoundrels at the gate – when you are hiring people for leadership positions use new approaches to reviews and assessments that are designed to surface integrity issues. Companies such as Bristol-Myers, Pfizer and even smaller companies such as Spartan Stores are using innovative approaches to filter out candidates with Integrity issues. Put Integrity components in your compensation and incentives programs for all not just executives. Communication between leaders and people in the organization has deteriorated despite polished multimedia techniques. Your message may be lost in the technology. Try a proven old technique. Tell stories about authentic leaders at company meetings; publish these stories in company newsletters. If you have Leader development programs, make sure the first course or seminar includes Integrity. Be seen by the people in your company. Let them see you and talk with you in a relaxed place. If you “hide” in your office, it will be more difficult to build Integrity. A simple change of venue can make a big difference in establishing a leader’s integrity. Turn bureaucracy on its head. Delegate and let people in your group really show their stuff. Establish a “safe haven” approach that permits employees to surface integrity problems without them fearing retribution.

5

•

•

Tough decisions will always be a challenge to Integrity. At such times it takes courage to do the right things. Leadership with integrity acknowledges accountability and responsibility. Step up to the task, don’t waste time over analyzing. If you embrace integrity you will know what to do. Get rid of the “yes men/women”. Surround yourself with a trusted team of people with diverse viewpoints who will tell you what they really think about your ideas. Beware of falling in love with your own approach.

Change Creates Opportunities Change creates opportunities, but only for those who recognize and seize it. "Seeing is the first step, seizing the second, and continuously innovating is the third."3 Innovation redefines growth opportunities. As current products are becoming obsolete faster than ever, in order to survive and prosper, organizations continually need to improve, innovate and modify their products and services. The Silicon Valley slogan "Eat lunch and you are lunch" is more than a reflection of increasingly intense work ethic. Riding the wave of change is becoming the most important part of the business. While the economy is shifting and innovation is rampant, "doing it the same way" is a recipe for corporate extinction. .

Leading Innovation 1.

Provide strategic alignment. Create an inspiring vision and launch a crusade. Link the innovation strategy with corporate vision, goals, objectives, and strategy. Develop a strategic innovation roadmap to choose and do the right things.

2.

Define the innovation process publicly. Rapid innovation requires an effective innovation process. Help people understand how they fit into the system as a whole. Document your innovation process explicitly via maps and charts, and communicate it implicitly by words and practice.

3.

Build cross-functional expertise to harness the power of diversity and discover synergies. Develop cross-functional individuals. Shuffle portfolios. Establish diverse cross-functional innovation teams.

4.

Establish a creative chaos environment to inspire creativity and trigger accidental discoveries. Encourage improvisation and wild play. Find the right balance between order and chaos.

5.

Challenge assumptions. Think outside-the-box. Ask searching questions "Why?" and "What If?" to identify hidden problems and opportunities. Keep eyes open for inspiration. Brainstorm every day.

6.

Cross-pollinate. Incorporate a wide range of styles, skills, and perspectives to inspire and develop winning innovative solutions. Encourage comments and ideas. Inspire advocates and critics. Invite outsiders – experts, customers, suppliers, and partners. Change hats to generate and evaluate ideas.

6

7.

Reward idea generation. People want to know their ideas make a difference. Recognition and rewards motivate and encourage people to participate and make quality contributions. They also demonstrate management commitment to the innovation program and to the employees.

8.

Experiment to pursue opportunities, acquire new skills, learn from feedback and discover new opportunities. Create prototypes to visualize and test your ideas, inspire new ideas, and sell your ideas to your sponsors and peers.

9.

Allow freedom to fail. Failure provides a great learning opportunity and should be viewed as very lifeblood of success. Learn from failures, regroup, and start again more intelligently.

10. Measure the progress to take a corrective action and accelerate the pace of ideas to implementation. 11. Make business fun to make people excited about what they are doing, working as a team, and tackling new challenges.

Inspiring people Four key strategies to inspire employees to act: 1. Create an inspiring vision and set stretch goals. 2. Encourage challenges to the assumptions and the status quo. 3. Create freedom from bureaucracy and celebrate diversity. 4. Allow experimentation and freedom to fail. Make business fun.

Energizing people Growing Need for Energized People To cope with today's rapid change, organizations need energized people. "Open-book management, employee empowerment, continuous improvement, participative management, and self-directed work teams are all concepts that seek to energize employees by making them a more integral part of the workplace."

The primary purpose of power is not to use it but to share it. A special kind of power develops when it is shared, as compared to when it is used. Leadership is not a position, rather a process. Leadership is an observable, learnable set of practices. These practices include: challenging the process; inspiring a strong vision; enabling others to act; modeling the way; and encouraging the heart.

7

Challenge Challenging the process means challenging the status quo to enable people the process and the organization to become better at what they do. This requires risk and permitting others the same, if not greater, opportunities.

Inspire vision

a Inspiring a shared vision is a vital attribute and one that helps the leader excite others in the work needing to be done. It makes possible what can be. "Leaders cannot command commitment, only inspire it."

Enable others act

Leaders enable others to act. To cause and make possible the changes to necessary in today's even more complex health care organizations, people must feel included and be capable of making changes and realignments. Clarity of the vision and values provides the framework for enabling others.

Model way

the Leaders reinforce the meaning "to serve others." This is a foundation for empowering others. When leaders model the way , it is seen as commitment. People see the leader leading. Leaders set themselves as an example, deliver what they say they will and hold others to the same. By being focused and disciplined, leaders model the way through personal example and dedicated execution.

Encourage Encouraging the heart means having passion for what you are, what you are striving for, and what the organization is about. It gives life and breath to an the heart organic entity-the vision of a new organization.

Leaders Promote Learning The organizations that will fare best in the future will be those that have a relentless commitment to learning, along with the strength to resolve past issues and develop confidence in themselves and others. For today's leaders, implementing a continuous quality improvement strategy requires an unquenchable thirst for learning throughout the organization. In order to become better at what they do, and to reflect quality improvement in their own behaviors, leaders must "unlearn" some of their most basic management attitudes derived from the past. The traditional "command and control" styles of leadership are now giving way to approaches more appropriate to the knowledge-based economy and the concept of the learning organization. The organization of the future requires a culture where: • •

Learning is a constant. Coaching and feedback are pervasive. 8

•

Growth, performance, and self-esteem are supported.

Leaders Share Power At every level of the organization people must be given more opportunities to use their skills, talents and creativity in ways that enable organizations to become more effective in creating new vision, reaching goals, solving problems and serving others. The word "empowerment" is met with cynicism in many organizational environments where it is taken to mean "getting people to do things your way while making them think they are doing it their way"-that is, when empowerment is used to manipulate rather than facilitate. Rather, leaders must empower others in the deepest and truest sense of the word. This requires fundamental changes in how management has traditionally viewed the issue of power. The notion of power as control must be replaced with an understanding that, given the right goals, the right information, the right skills, and mutually agreed upon values, individuals in the organization serve a vital role in helping the organization achieve its aims. Serving others is a vital underlying purpose for enabling others. Leadership is the issue. Unfortunately, many who hold leadership positions see their role as protecting their organization from the forces of change. The effective leader, on the other hand, embraces these forces to change their organization for the better. They are the architects of a new improved future and are to be commended and supported.

Leaders Create a Culture Leaders must be passionate about creating a culture for change in the organization-change that will create a dynamic future. This involves inspiring not just leaders themselves, but also requires setting objectives and implementing improvement plans in a way that results in a whole group becoming committed to the organization's purpose. "Seven R" model for describing the characteristics found in such a culture: 1. 2. 3. 4. 5. 6. 7.

Respect Responsibility and resources Risk taking Rewards and recognition Relationships Role modelling Renewal

9

Leaders Have Integrity The leader with integrity possesses a high degree of self-knowledge, candor, maturity, and trust. Leaders keep their promises and commitments, and there is a sense of respect among all who work in the organization. Because of the uncertainty, confusion and anxiety that inevitably accompany any significant change, it is the congruency of leaders with the organization's core values that provides stability during major organizational shifts. In order to deal with the many twists and turns involved in integrating quality improvement into organizational culture, staff must have confidence that leaders are reliable and consistent in relation to the organization's values and goals.

Leaders Inspire a Vision Vision without action is merely a dream. Action without vision just passes the time. Vision with action can change the world. Vision gives us the dream, the means, and the will to "manage the dream." An effective leader is vital to developing a sense of the future that stretches the organization beyond its present capacities, yet produces a vision that is seen to be achievable rather than simply remaining in the realm of idealism.

Leaders Communicate Change always requires that the organization's communication strategy be highly effective. Communicating consistently with staff to ensure that they understand both the process and the results provides the stability they will require for a journey of continuous change. Staff need to become partners in creating a communication network that ensures every area understands the other, so that care and service are improved. Effective communication is a clear indication of the degree of unity the organization has achieved. Multiple and diverse communication strategies and methodologies must be developed and used. Change requires direction. It is the role of the leader to provide direction by recognizing and communicating the purpose of the organization.

How leaders achieve successful change?

10

Leaders can achieve successful change by: • • • • • • • • • • • • •

taking risks; recognizing the politics involved; paying attention to detail; staying close to the heart; creating an impression; creating awareness of the crisis; building a new identity, particularly in the case of mergers; demonstrating the need for change; communicating in a clear and timely manner; developing a vision, charting the roadmap and winning everybody’s commitment to it; establishing common shared goals; being visible, credible and responsible as a leader of change; being clear about sanctions, both collective and individual.

Strategic Leadership Profile

Adapting strategy to changing business requirements is unavoidable if you want to remain competitive and grow. A new strategy implies doing something differently, but often points to different leadership requirements as well. The process of assessing your available leadership talent and gauging your "Leadership Gap" can be accomplished with the Strategic Leadership Profile. The focus of the Strategic Leadership Profile is on the identification of Leadership qualities required by the new strategy, and determining the readiness of your management to lead the organization towards its strategic objectives. What You Get With the Strategic Leadership Profile: •

An ideal leadership profile that prioritizes the leadership skills and characteristics required to implement the strategy. This "high performance ideal" is not a generic

11

amalgam of best practice management models or someone's pet approach. The ideal profile is defined internally by members of your organization who know and understand the requirements of the strategy. •

An actual Leadership Attribute Profile of individual leaders or group of leaders, showing both strengths and areas of needed improvement required by the strategy.

•

A "Gap Analysis" created when the actual profile is matched to the ideal profile for the individual leaders or group of leaders. Not a "skills inventory" drawn from training records, but an actual assessment of the leaders by those who know and work with them. Assessment results are based on observations of from 5 to 15 peers, coworkers or clients who can be self-selected or selected by the organization. An assessment that protects you against errors in the results due to bias, intentional manipulation, or misunderstandings. A process that is cost-effective and time-efficient designed and conducted by inhouse personnel requiring little or no consultant help. An assessment that adapts to the size of the situation - it works well with just a handful of key people or your whole organization. A repeatable assessment that serves as a periodic snapshot of the organization's competency readiness.

• • • • • •

Vision and Mission Statements of the Company Vision Corporate vision is a short, succinct, and inspiring statement of what the organization intends to become and to achieve at some point in the future, often stated in competitive terms. Vision refers to the category of intentions that are broad, all-inclusive and forward-thinking. It is the image that a business must have of its goals before it sets out to reach them. It describes aspirations for the future, without specifying the means that will be used to achieve those desired ends. Warren Bennis, a noted writer on leadership, says: "To choose a direction, an executive must have developed a mental image of the possible and desirable future state of the organization. This image, which we call a vision, may be as vague as a dream or as precise as a goal or a mission statement."

Mission Statement A mission statement is an organization's vision translated into written form. It makes concrete the leader's view of the direction and purpose of the organization. For many corporate leaders it is a vital element in any attempt to motivate employees and to give them a sense of priorities. A mission statement should be a short and concise statement of goals and priorities. In turn, goals are specific objectives that relate to specific time periods and are stated in 12

terms of facts. The primary goal of any business is to increase stakeholder value. The most important stakeholders are shareholders who own the business, employees who work for the business, and clients or customers who purchase products and/or services from the business.

VISION STATEMENT FOR THE COMPANY •

To become a large industrial organization

•

Company will become an organization of processes and people that is as dynamic as the industry in which it does business. Furthermore, Co. will increase its market share, by becoming the preferred vendor to domestic subassemblies.

•

The main vision trigger will be the slogan: “Function, Price and Quality – Our products speak for themselves!” The vision trigger will emphasize the premium quality, the functionality, and the competitive pricing of the products sold to customers.

MISSION STATEMENT FOR THE COMPANY The employees and management of company should make this pledge to their valued customers: • To serve manufacturing needs in a prompt and friendly manner. • To provide quality countertops and sinks. • To be good community citizens, respectful of the environment, and friendly neighbors to the surrounding businesses. • To always present a positive public image. • To be responsive to customers’ suggestions and concerns • More professionalism would be there in organization • Build on leadership position in industrial fastener and component manufacturing by being customers’ number one quality choice for engineering-driven, solutionbased products that improve performance and lower costs.

• To meet or exceed customers’ needs, and continuously improve: Customer service Delivery reliability Product Product Improve product Improve process efficiency • wide span of control

life

quality design costs

13

• Business growth through a total quality and continuous improvement philosophy couples with a family business culture that emphasizes teamwork and opportunity for all employees • Remodeling organizational culture Organizational culture is specific to each organization in part, springs from its history and experience and determines the way the associations’ members react when they are confronted with certain situations. It also “leads the fashion” of the individuals’ actions, behaviors and perceptions. The way managers do their jobs results in a certain type of organizational culture, and, in turn, the organizational culture generates a certain type of management and action. Organizational culture building is a process which requires time and intense efforts of accumulation and learning. Once installed, the organizational culture is rather a combination of processing elements, than a structure in the classic sense of the concept. The essence of the organizational culture consists of what is shared by the groups of people who form in organization, the way in which they understand and interpret the world. So, we can state that it is a combination of conscious and unconscious human beings, rational and irrational, of group and individual, among which there are interdependences and has a major influence over the organization functionality and performances. There may be more cultures (subcultures) in an organization, owing to the real differences between departments or professional and training differences. In other words, typical forms of manifestation of organization culture may appear, not only at the level of the organization organizational subdivisions but also at the one of different professional groups existing within it. Irrespective of the particular form of manifestation of the organizational culture (at the level of organizational subdivisions or at the level of the groups having the same profession) there are common items that give unity to the organization as a whole. If conflicts due to the organizational culture forms of manifestation occur, the management must achieve convergence between them and must try to develop an organizational culture as homogenous as possible at the level of the whole organization. The main role in forming and shaping organizational culture is played by the superior management that can be achieved through: promoting certain values within the organization, establishing the main directions regarding the approach to the current processes within the organization and establishing models of behavior for the employees in different situations generated inside or outside the organization. Currently, the main purpose of organizations is to have a strong organizational culture, quality-oriented, that supposes the existence of certain values, beliefs, perceptions and representations based on quality, as follows: • The necessity for the whole personnel to be aware of what “quality” means; the consistent application of the quality management principles, within the whole organization, irrespective of the hierarchic level; • The promotion of those values and behavioral norms that support the idea of “quality”, respectively the idea that no matter what the purpose of the organization might be, it can be attained only by a constant preoccupation with satisfying the persons who are interested in the organization achievements. In order for the attempt to remodel organizational culture to be a success, it is necessary for human resources specialists to start by investigating the current content of it. Research in the field has emphasized three essential aspects that must be analyzed: 14


Organizational culture as norms, beliefs, values;
Organizational culture as myths, stories, manifestation of language;
Organizational culture as ceremonial and ritual manifestation forms. The analysis of the organizational culture regarding the norms, values, beliefs that exist within an organization and of the way in which they directly influence the success of the organization is one of the most important matters for analysis. In addition, this is the field that can be assimilated by employees both by means of some formal strategies and by means of different informational materials within the organization. Most of the successful organizations have a rich tradition of values, beliefs and norms that come from experience, from testing what might be useful or not in the existent environment. On the other hand, the standards and beliefs within the organization are decisively influenced by the persons having well-shaped individuality. These values must be made known and emphasized in as many situations as possible and the negative behavior deviations must be punished in order to avoid further similar situations. Moreover, mention should be made that even if the values and beliefs are known and shared by the employees this does not necessarily mean that they have reached an agreement unanimously accepted with regard to all issues but only the fact that they have a minimum of accepted common understanding. It might be possible for the employees to agree upon following the beliefs and values of the organization they are part of only to keep their position within it. The second important matter for analysis of the organizational culture is represented by stories, myths, and the organization specific language that represents items assimilated in a longer period of time that are not part of a formal program. Most of the times, they reflect tensions, conflicts and aspects related to the workplace security or insecurity, or the desire to control events. Research needs to be made within the organization so that the management could be aware of the way employees perceive these issues; otherwise they can result in a degradation of both the climate and the organizational behavior as well as in diminished performances. This has to be made in due time to allow for adopting the necessary corrective steps which should minimize or eliminate the possible negative effects. The third field of analysis is represented by organizational culture seen as ceremonial and ritual forms of manifestation. These have the purpose to mix the different cultural forms brought by each individual inside the organization, to unify performances and to orient some events within the organization towards a certain aim. The consequences ceremonials and rituals may have upon the organization are the following: 1. They show how certain things are made within organization; 2. They help with establishing the organizational identity; 3. They facilitate the people’s work by establishing certain action rules.

The typology of rituals within organizations according to Trice and Beyer is the following: • The passing rituals which show the alteration of a status once the person is accepted within an organization and its replacement with a new one; • The degradation rituals are included in the socialization process of a person who is new within an organization, especially if that person has previously had a higher status than the positions he or she is going to hold; • The rituals of professional promotion are those that emphasize the new status and the newly obtained identity by a member of the organization; 15

• • •

The rituals of change have the role of emphasizing the existence of an organized structure and they improve its functioning; The rituals of diminution of conflicts are developed as a consequence of the necessity to solve the conflicts that occur inevitably between people or groups; The rituals of integration are those extending the degree of interaction between the divergent groups within the organization development, after performing varied actions, the feeling of union and of commitment towards the company.

The employee can become aware of these rituals either by certain socialization programs or by direct contact to the work place. Moreover, the knowledge of the organizational culture, at general level, can be achieved by two ways: at formal level (when the employee reads official documents – for instance the Internal Regulations) and at informal level (by knowing the organization myths, stories, ceremonials and rituals). After analyzing the organizational culture with the purpose to reshape it in order to obtain quality, the following stages need to be followed:
the higher management must establish the general directions to be followed through the culture reshaping (for instance to be more client-oriented, to develop the team spirit, to approach the activities more pragmatically, to focus on improving quality by preventive steps);
to establish exactly what the specific objectives to be attained are in the process of remodeling the organizational culture and to establish the organizational structure that shall take part directly in the project, the methods of communication between different groups and the methods of reporting the obtained results;
to establish the main stages of the organizational culture remodeling:
creating the general framework for the analysis of the organizational culture by which the members of the team that shall become the main pawns of the cultural change are established, team members instructing and training, identifying the necessary data for the culture audit and for the methods of gathering and processing the mentioned data;
the culture audit and formulating the first recommendations by which the data are gathered (with the help of interviews, questionnaires and direct observations), the data are analyzed and preliminary conclusions are formulated and also, the first recommendations are formulated;
implementing the actions meant to change the organizational culture which supposes: establishing the reshaping program of the organizational culture, instructing and training the personnel involved, putting into practice and monitoring the planned actions;
evaluating the cultural changes, which suppose establishing the organizational culture components, components that shall be evaluated, gathering and processing the data, identifying the organizational culture reinforcement items and establishing the corrective steps that are required if, comparing to the initial objectives, differences occur. Considering the fact that within an organization the organizational culture is the one that influences all the other components as well as the organization seen as a whole, it is necessary to pay special attention to its reshaping with a view to obtaining a better quality.

16

The military organization, as part of society, is submitted, in broad lines, to the same values and norms. The organization specific functions, the fact that it is an organization with a strong hierarchy, the members’ commitment to their roles as protectors and defenders of civilians and of the rule of law, all cause this organization to have some particularities regarding the norms and values, myths and beliefs, the system of metaphors, the symbols, ceremonials and rituals as follows: • The predominant values are patriotism, responsibility, courage, lucidity in action, desire to achieve the ordered, self-imposed assumed and internalized tasks, spirit of combat, sense of sacrifice, solidarity, cooperation, military discipline; • Norms that are clearly expressed and a little bit stricter than in case of other organizations; • Myths and beliefs that are consistent with the organization long history and prestige; • System of metaphors well-established within the framework of the highly specialized language and the acronyms used; • Symbols, ceremonials and rituals better represented than in case of other organizations, due to, again, the history of this organization, the large number of members and the importance the organization attaches to them. It is natural for the organizational culture to change in time, to meet the challenges and requirements generated by exogenous factors, so that the organization could have a highly qualitative level, capable of ensuring its adaptability and efficiency, in one word, its evolution

USP Analysis can be done as Organization has moved towards manufacturing from trading The Unique Selling Proposition: For years, business trainers have stressed the importance of "USPs" (Unique Selling Propositions). Your USP is the unique thing that you can offer that your competitors can't. It's your "Competitive Edge". It’s the reason that customers buy from you and you alone. USPs have helped many companies succeed. And they can help you too when you’re marketing yourself (when seeking a promotion, finding a new job or just making sure you get the recognition you deserve.) If you don't have a USP, you're condemned to a struggle for survival - that way lays hard work and little reward. However, USPs are often extremely difficult to find. And as soon as one company establishes a successful USP in a market, competitors rush to copy it. Following four steps should be followed: 1. Understand the Characteristics that Customers Value: First, brainstorm what customers’ value about your product or services and those of your competitors. Move beyond the basics common to all suppliers in the industry, and look at the criteria customers use to decide which product or service to buy.

17

As with all brainstorming, by involving knowledgeable people in the process, you'll improve the range of characteristics you’ll identify. So talk to sales people, customer service teams and, most importantly, talk to customers themselves. 2. Rank Yourself and Your Competitors By These Criteria: Now identify your top competitors. Be as objective as you can, score yourself and each of your competitors out of 10 for each characteristic. Where possible, base your scores on objective data. Where you can’t, do your best to see things from a customer’s perspective and make your best guess. 3. Identify Where You Rank Well: Now, plot these points on a graph. This helps you spot different competitors’ strengths and weaknesses. And from this, develop a simple, easily communicated statement of your USP. 4. Preserve Your USP (and Use it!): The final step is to make sure you can defend your USP. You can be sure that as soon as you start promote a USP, your competitors will do what they can to neutralize it: If you’ve got the best website, they'll bring in a better web designer. If you’ve got a great new feature in your product, you’ll see it in theirs next year. If you’ve established a USP, it makes sense to invest to defend it – that way, competitors will struggle to keep up: By the time they’ve improved, you’ve already moved to the next stage. And once you’ve established a USP, make sure the market knows about it! USP Analysis is a useful way of understanding how people are competing in your industry. And it's essential for identifying your USP, so that you know what to build upon and emphasize to your prospects.

USP Analysis is a four stage process: First, you list the decision criteria (explicit and hidden) that customers of your industry use in making purchase decisions; Second, you rank yourself and your competitors by these criteria; Third, you look at where you rank well, and craft a USP from this; and Finally, you look at how you will defend and build your USP as competition evolves. Long term planning is based on a theory and a preparation for the future separate from long-term planning (McCune, 1986). This approach is based on the belief that the future can be influenced and developed by present actions instead of taking it for granted that current trends will continue linearly into the future (Kaufman & Herman, 1991). An organization that plans strategically is not therefore preparing for the future, but preparing the future itself. This future while never a fait accompli can be not only anticipated but also designed according to the desires of the individuals and the organization. Current actions become guarantees of the evolution of what is planned to be implemented and are accomplished by the perception of the future according to the methods the organization uses to realize that perception. In such a perspective, strategic planning consists of all the means that an organization uses to constantly redefine itself to realize a set plan. Consequently, strategic planning is not defined by methodology, process or system but first of all by the context from which the action plans are drawn

18

(Cook, 1990). It could be considered a concerted effort to achieve an ensemble of decisions and actions which form and guide an organization to be what it is, to do what it does and to know why it does it (Bean, 1993). By utilizing a future-looking approach, strategic planning emphasizes the future implications of decisions made in the present. The process requires a clear vision of the intention and the future of the organization, the development of a mission filled with corresponding objectives, the gathering of extensive information, the analysis and diagnosis of internal and external environments, the study of alternatives, the development of strategies and action plans as well as the evaluation and control of implementation. Thus, the process allows diverse interests and values to be accommodated by the participation of different stakeholders to achieve consensus and thus an effective decision (Bryson, 1990). In this way, a distance network in an open system is considered a continuously evolving, dynamic organization that integrates and digests the information of an external environment that is constantly changing. For its part, the analysis of the network's internal environment offers a diagnosis of the strengths and weaknesses of the organization while the analysis of the external environment provides an overview of the possible difficulties and potential opportunities. This interface between the organization and its environment often leads to the development of a new paradigm, in other words, a metamorphosis of the organization and the determination of its own future (Cook, 1990). This radical and profound transformation is translated by the insertion of changes that are reflected in the organizational structure, by the allocation of resources required at various levels of the institution, and by the development of pertinent programs and courses that vary according to need. One job of the planning committee is to define the values and beliefs that will be favored and on which the mission statement will be based. The values and beliefs of the community and of the institution are often different or even contradictory and affect almost all sectors of both the social life and the educational activities. The discussion of values and beliefs is often very heated in the group since opinions and convictions are often very fixed. The committee must, however, arrive at a consensus regarding the values and beliefs to be recognized and accepted by all, as those are to be included in the planning process. These values and beliefs become the basis of the organizational culture of the distance education network.

19

Transformation from a Family Owned and Organization to a Professionally driven Organization

driven

Since the company is moving towards manufacturing organization with global collaboration, it needs to transform from family owned and driven organization to a professionally driven organization. Family owned organizations face many problems which can be summarized below:

Problems in managing a family owned organization Summary Management problems in a family-owned business are somewhat different from the same problems in a non-family business. When close relatives work together, emotions often interfere with business decisions. In some family companies, control of daily operations is a problem. In others, a high turnover rate among non-family members is a problem. In still other companies, growth is a problem because some of the relatives are unwilling to plough profits back into the business. This publication discusses such problems from the viewpoint of the family member who is the company's manager. It offers suggestions that should help you to manage effectively and profitably. When you put up your own money and operate your own business, you prize your independence. "It's my business," you tell yourself in good times and in bad times. However, "It's our business", in a family company. Conflicts sometimes abound because relatives look upon the business from different viewpoints. Those relatives who are silent partners, stockholders, and directors see only dollar signs when judging capital expenditures, growth, and other major matters. Relatives who are engaged in daily operations judge major matters from the viewpoint of the production, sales and personnel necessary to make the company successful. Obviously, these two viewpoints may conflict in many instances. This natural conflict can be aggravated by family members who have no talent for money or business. Sometimes they are the weak offspring of the founders of the company -sons and daughters who lack business acumen -- and sometimes they are in-laws who must be taken care of regardless of their ability or the company's needs. Basically, the management problems that face the manager of a family owned business are the same as those that confront the owner-manager of any small company. But the job of the "family manager" is complicated because of the relatives who must be reconciled to the facts of the market place, the factory, and the counting house.

20

The Sparks Fly Different opinions do not always produce discord, but sometimes they cause "sparks to fly" -- especially in a family owned company. Emotion is an added dimension as brothers and sisters, uncles and aunts, nephews and nieces, and fathers and children work together in such a small business. For the individual who must head such a company, the important thing is to recognize this dimension of emotions and to make objective decisions that are difficult to come by in such situations. Many times when members of a family are active in the business, it is hard to make objective decisions about the skills and abilities of each other. For example, one says about another relative, "He was lazy when we were kids, and he's still lazy." Or a disgruntled wife says about an aunt, "What does she know about the business? She's only here because of her father's money." If such emotional outbursts affected only the family, the manager might "knock a few heads together" and move along. But often it is not that easy. The quarrels and ill feelings of relatives have a way of spreading out to include non-family employees. Then the manager's problem is to keep the bickering from interfering with work. You cannot afford to let the company become divided into warring camps. You have to convince non-family employees that their interests are best served by a profitable organization rather than by allegiance to particular members of the family. Another aspect of the emotional atmosphere is that often non-family employees tend to base their decisions on the family's tensions. They know how their bosses react and are influenced by this knowledge.

Is the Manager Really in Control? The president of a small company is not always necessarily the person in charge. In many family-owned businesses, the elder statesman of the family becomes president or chairman of the board of directors. But day-to-day management is in the hands of other members of the family. In some cases, even the best hands are tied as the family member tries to manage the business. For example, the ceiling on the amount of money that can be spent without permission from the rest of the family may be too low for the situation confronting the company. Having to clear operating expenditures may mean missing opportunities for increased profits, such as taking advantage of a good price on raw materials or sales inventory. In other cases, a manager may be in a bind because of emotional involvement. For example, you may feel that you have to clear routine matters with top family members because "Uncle Bill never lets you forget your mistakes." Personalities and emotional reactions create bottlenecks that work against an efficient operation. Relatives who indulge in excessive family talk during working hours may also reduce efficiency. The manager should set the example and insist that relatives refrain from family chit-chat on the job. In some family-owned companies, the day-to-day manager may be a bottleneck. You may be a bottleneck because you do not have the ability to delegate work and authority. You may be the manager because of age or the amount of capital you have in the

21

business without regard to your qualifications. In other instances, you may hold up progress because you do not listen to others in the company. One solution is for other members of the family to persuade such a manager to let someone else run the day-to-day show, perhaps a hired manager. If a member of the family has to be in charge of operations, he or she should be capable of using efficient management techniques and be thick-skinned enough to live with family bickering and tough enough to make his or her decisions stick. One way to obtain objective control in a family-owned business is to hire an outsider to manage the day-to-day operations, when the company can afford it. Any manager may become as biased as any other family member. With a hired manager, the family members will have their hands full in setting policies and in planning for growth. An efficient hired manager will see to it that all employees -- family and non-family alike -know to whom to report at all times. Such definite lines of authority are even more important when a member of the family manages operations with other relatives filling various jobs. The responsibilities of family members should be spelled out. "Family employees" should discipline themselves to work within the bounds of these lines of authority. Even then, it is wise to have a nonfamily employee high in the organization so that he or she can be involved in operations and help sooth out any emotional decisions that family members may make. The manager's authority to suspend or discharge flagrant violators of company rules should also be spelled out. Management control is weakened if special allowances are made for "family employees". An important question connected with authority is: Who takes over when something happens to the family member who heads the business? A position may be "up for grabs" if the family hasn't provided for an orderly succession. This need is especially critical when the top family member is approaching retirement age or is in poor health.

Your Brother-in-Law Needs a Job? One of the most common problems in a family business is the hiring of relatives who do not have talent. But what are you to do when your sister or another close relative says, "Bob needs a job badly"? The emotional aspect of such family relationships is hard to fight. But try to go into it with your eyes open. It will be hard to fire Bob if he turns out to cost you more money than his presence is worth. The main thing is to recognize the talent or lack of it. Suppose your brother-in-law, for example, has little or no ability as far as your company is concerned. Perhaps you can put him in a job where in spite of his weaknesses he can make a contribution and not disturb your employees. The major concern is not necessarily the relative but how he or she affects other employees. In some cases, a relative can demoralize the organization by his or her dealing with other employees. For example, he or she may loaf on the job, avoid unpleasant tasks, and take special privileges, and make snide remarks about you and other relatives. If you are stuck with such a relative, try putting him or her in a job where he or she will have minimum contact with other employees, out of the mainstream of decision-making. For instance brother-in-law Bob might be placed in a sales office in another city some

22

distance from the company's headquarters where he will be under the supervision of a top producer. Another alternative is to change his attitude by formal or informal education. The key is to see that the non-talented relative does not affect the relationship that you, the manager, have with other members of your staff. Other employees will respect you for keeping relatives in line. Strange things sometimes happen. There is always the chance that the non talented relative may be under your direction and turn into an asset for your company.

Is Non-Family Turnover High? Some family-owned companies are plagued with a high turnover among their non-family executives. In other cases, top-notch managers and workers leave because promotions are closed to them because they see your relatives being pushed into executive offices. The exit interview is a useful device for getting at the root of this type of turnover. A key employee who has decided to leave may be eager to tell you the true story -- or at least enough of the facts to help you develop a course of action. When a manager has the facts, he or she may have to confront the trouble-causing relative with an unpleasant story. What comes out of the confrontation is anyone's guess. Rare is the owner manager who can fire a troublesome and close relative and make it stick. One way to remove such a thorn from the side of key executives is to help the relative start a business in a non competing line -- provided he or she has the management ability that is necessary for success. Another way is to "exile" him or her to a branch office or find a job with another company.

Spending to Save Money? Many times, as the owner-manger you feel that you must make an expenditure to improve efficiency, yet other family members oppose the expenditure because they view it as an expense rather than an investment. They feel that funds spent for items, such as more efficient equipment, encroach on their year-end dividends. One way to help these relatives see that "you have to spend money to make money" is to base your arguments for the expenditures on fact and figures that non-family employees have gathered. Suggest to the opposing family members that the matter be settled on a cold dollar basis; for example, "by spending money for this machine, we can increase profits and get our money back in four years." If the opposing relatives refuse to accept your projection, try calling in outside business advisors. Relatives will sometimes believe advisors, such as your banker, accountant, or attorney, when they won't accept your judgment. But keep in mind that outside advisors, who are personally close to other family members, should not be included among your counselors. Paid consultants can also be useful in proving the worth of expenditure. Such help is particularly valuable on specialized projects that require more research than you or your regular advisors have time to do.

23

Status Quo Blocks Growth When some of the relatives in a family-owned business grow older, they develop an attitude of status quo. They don't want things to change and are afraid of risk. With this attitude, they can, and often do, block growth in their family's business. The solution to such a problem is to urge or suggest that the status quo members slowly disappear from the scene of operation. One way to do this is to dilute their influence in management decisions. For example, the status quo relatives might be given the opportunity to convert their stock in the corporation to preferred stock; or they might sell some of their stock to the younger relatives. It might also be possible for the status quo relatives to think in terms of gradual retirement. Their salaries can be reduced over several years, and they can relinquish some of their interests. With the proper legal advice, it might be possible for a small corporation to re-capitalize. A new partnership agreement might be drawn up when the company is a partnership. Such action can take into account all the growth of the business to that particular point and can enable the retreating members to recover their equity. Meanwhile, the manager and active relatives can renew their efforts toward expanding the business.

How Is the Pie Divided? Paying family members and dividing profits among them can also be a difficult affair. Many persons feel that they are underpaid, but what about relatives who comment as follows: • "Uncle Jack sits around and gets more than I do." • "Aunt Sue goes to Europe on the returns of money her husband put into the business before he died ten years ago." • "Your brother goofs off and rakes in more than you do." How do you resolve such complaints? You don't entirely; but if the business is a small corporation, certain equalizing factors can be accomplished by stock dividends. By recapitalizing the company, some stockholders can take preferred stock with dividends. Salaries are best handled by being competitive with those paid in the area. Find out what local salary ranges are for various management jobs and use these ranges as a guide for paying both family and non-family personnel. When you tie pay to the type of work that the individual does, you can show disgruntled relatives the value that the industry puts on their jobs. Fringe benefits can also be useful in dividing profits equitably among family members. Benefits, such as deferred profit sharing plans, pension plans, insurance programs, and stock purchase programs, offer excellent ways to placate disgruntled members of the family and at the same time help them to build their personal assets. How the pie is divided is vital to growth in a small business. Profits are the seedbed for expansion, and lenders are influenced by what is done with profits. What banker wants to lend a company a substantial amount when relatives drain off its earned surplus?

24

Where Do You Go for Money? Another major problem in managing a family business is that of obtaining money for growth. Generally speaking if the company is profitable, you can get funds from your bank; but when the growth is substantial, a company often outgrows its local bank. When you see the prospect of expansion looming ahead, the managing relative should begin to plan for it. You will need to consider techniques for planned financing which may be a combination of these items: • • • • • •

taking out a mortgage on the company's building; asking suppliers to extend credit on purchases; factoring the company's receivables and inventory financing; borrowing on a note basis from friends; borrowing the cash surrender value of relatives' life insurance policies; Contacting an insurance company for a long-term loan. If the business is a small corporation, the following techniques also offer possible sources of money: • selling a portion of the stock to another company for cash - in a merger, you can use the credit of the larger company; • contacting a regional investment banker who may privately find a lender, using some of the company's stock as collateral; • Contacting a national investment banker who would underwrite some of the company's stock. Effective budgetary controls are important in seeking growth funds. Such controls help the managing relative to determine the company's needs. Lenders also regard them as evidence of good management.

Exchange Information Fortunately, in most communities, the manager of a family-owned business is not alone. Other individuals operate small companies for their families and may provide a source of information and help. The managing relative should seek out and cultivate counterparts. You can exchange ideas with them and learn how they solved problems in which their relatives were involved. In a small corporation, the thinking can be stimulated by having outsiders on the board of directors -- directors who are not relatives and who are from other types of businesses. National trade associations are also good sources of information and help. Through them, the managing relative can get facts from non-competitors.

25

Why professional development? •

• • • • • • • •

Professional development is a broad term that can refer to a variety of education, training, and support opportunities available to workers. Professional development has existed for several decades and has become increasingly diverse. Professional development opportunities for workers are varied and may include: Higher education training, such as continuing education courses and degree programs; Pre-service training and orientation for new staff; In-service training provided by programs to current staff; Training seminars and resource centers provided by external organizations; Local and national credentialing systems and programs; Local and national conferences; Mentoring programs; and Ongoing informal resources, such as newsletters, online discussion boards, breakfasts and lunches for staff members to share ideas and expertise.

Benefits of professional development •

A comprehensive professional development helps the employees working under pressure, from experiencing tremendous emotional drain and burn out.

•

Professional development benefits the individuals in identifying their own strengths and areas which needs improvement.

•

Professional development benefits the program. At the organizational level, training opportunities expose the workers to research and “best practices,” which can then be incorporated at the program level. As a result, the entire organization benefits

Professionalizing an Existing Organization Our task is much harder when we take on a functioning, fully-staffed non-professional organization. We're usually faced with vaguely defined charters and roles, serious skill deficiencies among our staff, and deep-rooted, often unknown human problems. At the same time we must keep providing services without noticeable deterioration. To define theoretical targets we can follow the following steps:

26

1. Define our exact charter, i.e. the products or services we're going to offer. 2. Partition this charter into appropriate hierarchical (or other) structures containing precisely defined functions. 3. Derive from these functions precisely defined roles. (Some roles will contribute directly to the products and services, while others will provide internal support within our own organization.) 4. Determine the skills needed to perform each of these roles.

We can't implement (or even announce) the results until we also have a practical plan for the people we've inherited. Such a plan typically includes: 1. Identifying key roles that we can't fill from the present staff, and recruiting qualified outsiders to fill them. We can announce corresponding organization changes, especially in such staff roles as data administration or quality-assurance. 2. Reconciling existing salary structures with those needed to attract qualified outsiders. We'll probably have to formalize some of the job descriptions we'll need in our target environment. 3. Diagnosing specific skill deficiencies for the remaining roles and correcting them through a professional development program. These roles include the main body of programmers, analysts, and project leaders. This process, undiplomatically called "upgrading", may extend over many months. 4. Identifying staff members unlikely to perform successfully in our new professional environment, and resolving their career-paths appropriately. The last item is the hardest. To upgrade those with potential is straightforward and satisfying; we’ll probably use the same support structures we’ll need permanently in our new environment, in particular an internal training or “professional development” program. Dealing with those who can’t make it, on the other hand, is a delicate and painful duty that sometimes has no happy solution. This human problem is sometimes seized upon as an argument either against adopting a professional approach or against some specific methodology component. “Our people were performing satisfactorily before,” the argument goes, “but after we changed the environment they no longer could do their jobs. It’s not fair to punish them for something we did to them.” Such reasoning misses the point. Rarely do improvements to the environment turn productive people into non performers. Their performance was always poor. What our new professional environment has done is only to make poor performance conspicuous. An example of this effect in the 1970’s was the shift, now widely accepted, in programming from a private activity to a team activity. Many people who had been earning a weekly paycheck for writing and maintaining programs found that they couldn’t survive in a world with egoless walkthroughs and rigorously defined module interfaces. In the prior environment they may have taken six weeks to do a three day programming task and ultimately produced an un-maintainable nightmare, but who ever knew? The table on the next page summarizes the most important differences in how the two kinds of organizations typically approach staff building.

27

Cultivating Professional Attitudes After putting together a staff of people who have either the needed skills or the aptitude to acquire them under our guidance, we still have much to do before our organization can realize the benefits of a full professional approach. Our staff must act like professionals and take pride in being members of a profession. For some, such attitudes are natural. For others, they come as a welcome broadening of horizons. For a few, professional pride remains a foreign notion. What are the indicators of individual professionalism? What can an employer do to foster them among the staff?

Professional Society Membership Near the top of the list is participation in a professional society. Those who've joined on their own initiative have demonstrated professionalism. Those who haven't done so need our encouragement and they need information. It's appalling to find so many people who've been making their living in data-processing for years but who have never even heard of the ACM or its sister organizations, much less attended a meeting or read a publication. How can management provide such encouragement? Above all, we must avoid any hint that the company is reluctant to have its people participate in professional organizations. Some "theory X" managers still express concern that such activities may stir up discontent among otherwise docile personnel. Second, we must continually make our staff aware of the local chapter activities. We should always post meeting notices on the bulletin boards. When we're planning to attend a meeting ourselves, we can solicit potentially interested people to join us. Third, the organization should subscribe to and circulate the major publications of the mainstream professional societies. Fourth, we can support, within reasonable limits, staff members who want to take an active role by presenting papers or by serving as officers. Such support can provide (a) time, (b) word-processing and reproduction services, and (c) travel expenses. There's one kind of support that we should not offer: reimbursing dues or local meeting costs. We want to encourage our people to participate, not bribe them. The true professional views these costs as a routine obligation of his or her professional life, not a fringe benefit. Let's pay our people a fair salary and let them choose freely. Anyone unwilling to invest his or her own money is hardly a real professional.

28

Professionalizing the Premises We can infer a lot about an organization's professionalism from its physical work environment. Fortunately, many attributes of the professional office require very little expenditure. Indeed, in some affluent and image conscious companies we often have to fight to install furnishings that are viewed by some as negative status symbols. Two such low-cost items are bulletin boards and blackboards. Although it's hard for many of us to imagine getting through a day without these basics, a surprising number of companies either prohibit them or don't view them as worth bothering with. A bulletin board, conspicuously placed in a high-traffic area like a coffee room, plays a key daily role in projecting our organization's attitudes. Notices of outside meetings and courses remind the staff not only of their employer's support but also of their own professional opportunities and obligations. Naturally, someone must be made responsible for keeping the bulletin boards tidy and purged of obsolete notices. Blackboards are an even stronger indicator. Many people do their most creative thinking standing up at a board, even when alone. Some reserve part of their board for semipermanent status or design information on their current project. Installing a large blackboard in each staff member's office (or "workspace") conveys a clear message that our company understands such habits and that we encourage impromptu problem solving or brainstorming in small groups. Of course, managers' offices must also be so equipped, both to reinforce the impression of organizational professionalism and because managers, too, need blackboards. One of the strongest indicators of an organization's commitment to professionalism is a publications library, not just a list of subscriptions but a physical room to which staff members go to consult relevant books, trade journals, professional society publications, and vendors' manuals. Furniture cost is modest: bookcases, a work table, and a few chairs. Support cost, too, is reasonable: the space itself, periodical subscriptions, a budget to buy a few books each month, and a part-time librarian to look after it. In many organizations this is only a consolidation of costs already being incurred, and setting up a publications library may actually result in a small saving. For groups spread out in several locations, providing a publications library is more difficult. At the very least, a central library should distribute notices of new acquisitions and provide an easy way of circulating material to remote readers.

Professional Approach to Methodology An organization’s data-processing methodology is its collection of techniques, methods, and tools for defining, designing, building, installing, operating, and maintaining computer-based application systems. The subject matter of methodology is quite broad, including guidance and standards on: § Project planning and control § Phased life cycle(s) § Systems analysis methods 29

§ Data analysis and database design § Program coding and testing § Operational environment Recent trends toward more powerful tools and more intimate user interaction during development have generated some backlash against methodology in general. Often such reactions are justifiably intensified by misguided methodology extremism illustrated by: § Excessively formal and complex procedures, e.g. in a large life cycle. § Arbitrary standards that contribute little if anything to performance § Overzealous, often adversarial quality assurance reviews. The style of an organization’s methodology reflects its orientation to a professional approach. In a nonprofessional (sometimes called “military”) methodology just about everything is a mandatory standard or a policy. Standards manuals keep warning the staff either always to do something or never to do it. On the other hand, under the professional approach most components are conventions, guidelines, or recommended techniques, not mandatory standards. We prefer flexible methodology because we trust our staff to apply good judgment, consistent with their levels of experience and responsibility. Experience confirms that such flexibility in the hands of competent staff leads to superior performance in terms of quality, manageability, and productivity.

When Non-Professional is Appropriate Obviously the professional approach is better in almost every way, but it’s not necessarily better for every kind of organization. Some companies or institutions will be better off settling for predictable non-professionalism. Among the practical factors pushing an organization in that direction are: § Rigid policies imposed from an outside source like a parent company or a regulatory agency. An example would be below average salary ranges. § A deeply ingrained management style emphasizing snap judgments and intuitive rather than rational decisions. § Expected continuing decline in business volume or a lack of new applications. § High level of satisfaction with the status quo among users and ultraconservative upper management. § A large tenured staff lacking upgrade potential.

30

Business Succession Plan Model I. What is a Business Succession Plan? A Business Succession Plan is a multidisciplinary process providing a comprehensive and strategic approach to guiding the transition of business ownership. It is to be a dynamic document that is utilized as a guide to manage the issues of transition. When a succession plan is in place, it allows the business owner to anticipate and effectively manage change. A successful plan must be realistic and workable and not prepared in isolation. It must involve family members, professional advisors, shareholders, partners, strategic employees, and all stakeholders in the business. Communication, during the preparation and upon completion, is a critical component of the process. Unless all affected parties are clear about what is in the Succession Plan and have had the opportunity to participate in its preparation there will be problems. The Plan will address the issues of “When and How” transition of the business to new ownership and management will occur.

II. How to use the Business Succession Plan Model? The Business Succession Plan is to be used as a model or guide to lead the user through the process of developing a Succession Plan for their business. As each business and owner is unique, the Plan will also be unique. The model is a tool that will be customized to the personal needs of the user. Use of the Model will assist the business owner in the preparation and gathering of information necessary to make informed decisions regarding the future of the business. It should not be viewed as being a replacement for using professional advisors. The implications regarding legal, financial and taxation issues are too great and intricate to be made without professional input.

III. Why prepare a Business Succession Plan? A Business Succession Plan is an important component of any business’ strategic planning process. It will aid the business owner in preparing for the time when they will retire from the business or in more extreme times, of illness or death. With a Succession Plan in place, the business will be more likely to survive through transition of ownership and will maximize the return to the retiring owner’s investment. By not preparing a Succession Plan, business owners risk monetary loss through ineffective tax and financial planning at the time of succession. In many instances the future of the business may also be put in jeopardy. Transition to new ownership, whether within the family or to outsiders, is always a risky proposition, however, through effective planning the risks can be reduced and contingencies put in place.

31

IV. Components of the Business Succession Plan Each Business Succession Plan will be unique as each business and personal situation is unique. The components of the Plan, which are outlined below, provide a guideline to be followed; however, not every section will be required by every business and may be modified to meet personal needs.

A. Establish Goals and Objectives This section of the plan is where the owner’s personal goals and vision for the business and his/her future role in its operation will be addressed. The establishment of clear goals and objectives provides a base on which the succession planning process will develop. If the owner is not sure of where he wants to go with the business it will be in effective and lead to problems in the future. Items to be included: a. Owner retirement goals - How you plan to spend your retirement - How much income you will require to live the life you desire - Do you plan to stay active in the business - Do you plan to become involved in another business - Do you have hobbies or other outside interests to keep you active b. Family member goals - Who from the family plan to stay involved in the business - How would selling or transferring ownership impact other members of the family (spouse, children) c. Goals of other stakeholders (partners, shareholders, employees, etc.) - Will partners or shareholders buy you out - Does your leaving the business leave a gap in the operations of the business - Will key employees continue under the new ownership d. Goals relating to what is to happen in case of illness or death of the business owner - Provisions for how the business is to carry on if the owner is incapacitated or dies

B. Family involvement in decision making processes This section is important in that by having the family and all stakeholders involved in the decision-making process, or at least kept informed of the decisions being made, will alleviate many of the problems that arise relating to inheritance, management and ultimately ownership issues. Issues to be addressed: a. Communication - Establish a formal process through which information is exchanged between family members relating to the business - Communication is critical; all affected members of the family must be provided with the opportunity to express their ideas and opinions b. Process for handling family change and disputes

32

- Establish a process for dealing with disputes and changes to the family structure which could impact the business such as divorce, death, injury - May require the involvement of outside advisors such as a lawyer and/or accountant c. Family vision for the business - A collective vision of what the business is and how it is to operate is necessary if the business is to pass from one generation to the next successfully d. Relationship between family and business - There is a need to be able to separate family and business. Although closely related, it is imperative to be able to objectively make business decisions separate from family decisions.

C. Identify Successor(S) In this section you will address the issue of who will take over both ownership and management of the business. It must be recognized that these two issues are not the same. This process must not be taken lightly and will require a great deal of preparation and planning. a. Identification of potential successor(s) - It is a difficult process when determining who will take over the business, be it ownership or management. Each potential candidate has to be assessed individually as to suitability, acceptability, commitment, dedication and determination. b. Training of successor(s) - Once a successor has been selected it is necessary to assess their skills and abilities to determine areas in which training will be required - Establish a training plan to bring the successor’s skills up to the desired level c. Building support for successors - With other family members - With employees - With customers - With suppliers d. Teaching successor to build vision for the business - Your vision is what has driven the business, under new ownership or management the direction may change and the new owner/manager will need to be able to clearly express the vision to employees, shareholders, partners, customers and suppliers.

D. Estate Planning This section of the Plan is exceedingly important, especially if the business owner is planning to retire or is taking a precautionary approach to the future of the business in preparation for being unable to continue operation of the business due to illness or death. Proper estate planning will significantly impact the financial future of the business owner, the business itself and all those with a financial stake in the business (family members, partners, shareholders and employees). Estate Planning is where outside advisors are necessary to ensure that all necessary issues are properly addressed to maximize benefits to the business owner. Advisors to be consulted include: lawyer, accountant, financial/estate planner and life insurance

33

representative. Each advisor will have their own area of expertise and will be able to provide necessary pieces of the puzzle. Issues to be addressed in this section include: a. Taxation - Planning for the sale, or transition of ownership of a business can have a tremendous impact in the future of the business. When exiting or transferring ownership of a business, there are potential tax risks and benefits that only an expert in this field can properly identify. Each business and family situation is unique and must be addressed specifically for that situation. b. Retirement income - Planning for how much money is going to be needed in retirement and where it is going to come from. - Based on the owner’s retirement goals identified in Section IV. A, lifestyle issues will help to determine retirement income levels required to maintain the desired lifestyle during retirement. - Develop an outline as to how money will be saved to ensure a financially secure retirement. - Should be done earlier rather than later. The earlier a plan is in place, the easier it will be to make the necessary preparations to ensure that sufficient funds are available at the time of retirement. c. Provision for other family members - Develop estate and personal financial plans for the business owner and spouse as well as the succeeding generation. This will help to reduce the potential for financial problems to be encountered at the time of transition. - By addressing the issue of providing for family members in the Succession Plan it will clarify the owner’s wishes while all family members can express their concerns. d. Active and non-active family members - The issue of providing fairly and equitably between active and non active family members is often one that creates family disharmony. Fair and equitable are not necessarily synonymous terms and must be addressed in any estate plan. - This issue needs to be discussed and concerns addressed before being finalized to reduce the potential for conflict at a later date. e. Other financial considerations - Address any issues relating to financial implications impacted by the transfer of ownership of the business. Unforeseen financial implications can have very negative impacts to the future value of the business, the financial stability of the retiring owner and the salability of the business.

E. Contingency Planning As plans rarely proceed smoothly or as desired, it is important to consider what could go wrong or awry and prepare alternatives on how to address situations as they occur. It will not be possible to anticipate every situation that may occur, but you can anticipate the more likely scenarios and prepare for them. A good approach for this section is to look at “what if” scenarios and have a strategy outlined to deal with the situation if it arises. This need not be highly detailed but should

34

be looked as being a guide if unforeseen circumstances occur, such as illness or death of the principal or key person in the business. A simple strategy may be to prepare a list of possible situations that could occur and from there identify what you would expect to do, or have done. By using this method, it will cause you to look for solutions in advance rather than having to react at a time of stress or duress.

F. Corporate Structure and Transfer methods In preparing for business succession it is necessary to review and update the organizational and/or structural plan for the business. In many small businesses, the owner is the sole person responsible for all aspects of the operations. As this person plans to remove himself or at least reduce the active role they play, it may be necessary to differentiate between ownership and management responsibilities and create positions for these roles. The goals previously established, followed by the choice of successor(s) will factor into how the business should be structured to the benefit of the owner and the business itself. Just because it worked in the past, the strengths and weaknesses of the successor need to be considered and a structure be established to take full advantage of strengths and compensate for weaknesses. Issues to be addressed in structuring the business for transition include: a. Identify roles and responsibilities - As you prepare for retirement or selling of the business it is necessary to ensure that current family members and employees have clearly define roles and responsibilities to aid in the smooth transition to new ownership and management. b. Fill key positions - Ensure that key management and specialized positions are filled making the business more attractive and prepared for transition. A business with a strong management and workforce is more attractive to potential buyers. c. Structure the organization based on who is to be the successor - Look at the strengths and weaknesses of those to take over and build a structure to take advantages of strengths and compensate for personal weaknesses. - Establish roles for family members (if applicable). - Separate ownership and management roles if necessary. d. Take into consideration any potential roles for the retiring owner - Advisor - Consultant - Chairman of Board of Directors e. Restructuring may be required as the original owner often fills multiple roles that may need to become separated due to skills, knowledge and/or experience. There are a many methods that can be utilized to transfer ownership of a business either to family members, partners, employees or outside buyers. Each business is unique and must be addressed based on present circumstances. This is best addressed by bringing in professionals to aid in reviewing the alternatives and selecting the method best suited to your needs. f. Lawyer

35

- To examine the legal implications and how to minimize potential conflicts between buyer and seller as well as looking after the interests of family members. g. Accountant - Will assist you in looking at the financial issues aiding in making the transition with as few financial implications as possible. h. Financier - Will be able to provide information to you as the seller, which will allow you to make improvements or changes designed to make the financing of the business more attractive to potential buyers.

G. Business Valuation It is important that in preparation for succession of a business that steps are taken to enhance the value of the business in order to make it more attractive to potential buyers while maximizing tax benefits to the current owner. There are various types of valuation methods used by accountants, realtors and business brokers. It is best to review the options with these professionals in order to select the method best suited to your circumstance. Some of the factors that impact the value of the business are: a. What is to be sold? - Are the assets of the business or shares to be sold? b. Where is the business located? - A business located in a small market may not have the resale value of one in a larger market c. Profitability - Consideration must be given to the current profit margins and if there is potential for growth. A business that is mature and has limited growth potential is not as valuable. d. Financing - The ability of potential buyers to obtain financing will impact the actual value of the business. Lenders look at value of a business differently than an accountant will, take this into consideration when establishing a sale price as it may provide a more realistic view as to what you can expect to get out of the sale. e. Inventory - The value of the inventory to be included in the sale of the business may form a significant percentage of the overall value of the business. The difficulty arises in placing a value on the inventory that is acceptable to the seller, the buyer and most importantly to potential financiers. Often financing of inventory is limited or non-existent.

H. Exit Strategy In this section of the Succession Plan, you will address issues specific to the actual transition of ownership and removing yourself from the day-to-day operations of the

36

business. It involves the comparison of alternatives and a framework for how to make your final choices. a. Transfer method - Selection of the actual method of transfer to be implemented, be it family transfer or sale, sale to a third party or possibly the liquidation of the business are examples. b. Establish timelines - Identifying a schedule for the implementation of the components of the Plan. Without a schedule it will be difficult to meet your goals and objectives. - Make sure that timelines are reasonable and achievable. c. The Exit Plan needs to published and distributed to all persons participating in the succession process. - Provides an opportunity for clarification of roles and responsibilities. - Provides an opportunity for those affected to raise issues and concerns and bring resolution to those issues prior to implementation of the Succession Plan. - Aids in ensuring that owner’s wishes are adhered to in case of illness or death.

I. Implementation and Follow-up It will be necessary to review your Succession Plan from time to time. A well-prepared Plan will be done early and will require updating and revision as situations change. As with any strategic planning document it must be dynamic and flexible. An effective means of ensuring that you take the time to keep your Plan current is to schedule a regular review process. As a suggestion, set aside a specific period each year to examine the Succession Plan and assess its applicability and address any changes that may impact your ability to implement the Plan as required.

V. Conclusion At this stage of the planning process you will be taking a final objective look at all aspects of your Succession Plan and determining your readiness and in many circumstances your willingness to proceed with succession. It is here where you may wish to identify some of the criteria you will utilize in making the final decision to start the process of implementing your decision to transfer ownership of your business.

37

Career Planning Career planning is not an activity that should be done once -- in high school or college -and then left behind as we move forward in our jobs and careers. Rather, career planning is an activity that is best done on a regular basis -- especially given the data that the average worker will change careers (not jobs) multiple times over his or her lifetime. And it's never too soon or too late to start your career planning. Career Here,

planning then,

are

should tips

to

be help

a you

rewarding achieve

and

positive

successful

career

experience. planning.

1. Make Career Planning an Annual Event By making career planning an annual event, you will feel more secure in your career choice and direction -- and you'll be better prepared for the many uncertainties and difficulties that lie ahead in all of our jobs and career. 2. Map Your Path since Last Career Planning One of your first activities whenever you take on career planning is spending time mapping out your job and career path since the last time you did any sort of career planning. While you should not dwell on your past, taking the time to review and reflect on the path -- whether straight and narrow or one filled with any curves and dead-ends -will help you plan for the future. Once you've mapped your past, take the time to reflect on your course -- and note why it looks the way it does. Are you happy with your path? Could you have done things better? What might you have done differently? What can you do differently in the future? 3. Reflect on Your Likes and Dislikes, Needs and Wants Change is a factor of life; everybody changes, as do our likes and dislikes. Something we loved doing two years ago may now give us displeasure. So always take time to reflect on the things in your life -- not just in your job -- that you feel most strongly about. Make a two-column list of your major likes and dislikes. Then use this list to examine your current job and career path. If your job and career still fall mostly in the like column, then you know you are still on the right path; however, if your job activities fall mostly in the dislike column, now is the time to begin examining new jobs and new careers. Finally, take the time to really think about what it is you want or need from your work, from your career. Are you looking to make a difference in the world? To be famous? To become financially independent? To effect change? Take the time to understand the motives that drive your sense of success and happiness. 4. Examine Your Pastimes and Hobbies Career planning provides a great time to also examine the activities you like doing when

38

you're not working. It may sound a bit odd, to examine non-work activities when doing career planning, but it's not. Many times your hobbies and leisurely pursuits can give you great insight into future career paths.

5. Make Note of Your Past Accomplishments Most people don't keep a very good record of work accomplishments and then struggle with creating a powerful resume when it's time to search for a new job. Making note of your past accomplishments -- keeping a record of them -- is not only useful for building your resume; it's also useful for career planning. 6. Look Beyond Your Current Job for Transferable Skills Some workers get so wrapped up in their job titles that they don't see any other career possibilities for themselves. Every job requires a certain set of skills, and it's much better to categorize yourself in terms of these skill sets than be so myopic as to focus just on job titles.

7. Research One of the really fun Where will you be in scenarios of

Further Career/Job Advancement Opportunities outcomes of career planning is picturing yourself in the future. a year? In five years? A key component to developing multiple that future is researching career paths.

Of course, if you're in what you consider a dead-end job, this activity becomes even more essential to you, but all job-seekers should take the time to research various career paths - and then develop scenarios for seeing one or more of these visions become reality. Look within your current employer and current career field, but again, as with all aspects of career planning, do not be afraid to look beyond to other possible careers. Final Thoughts on Career Planning Don't wait too long between career planning sessions. Career planning can have multiple benefits, from goal-setting to career change, to a more successful life. Once you begin regularly reviewing and planning your career using the tips provided in this article, you'll find yourself better prepared for whatever lies ahead in your career -- and in your life.

Career plan to develop second line of managers to take charge as and when required Career development and the career planning process will include a number of specific steps that help to identify personal skills and attributes. Finding out how those skills can be utilized in the job market is accomplished by researching a number of career fields that are of interest to you and then by gaining experience in those fields and/or speaking to people currently working in the field. Participating in some form of experiential education will help you to identify if the field is the right choice for you.

39

Step #1: Self-Assessment Evaluating who you are as a person. This would involve taking a personal inventory of who you are and identifying your individual values, interests, skills, and personal qualities. What makes you tick as a person? You will look at those personal attributes under a microscope and come up with key qualities you can identify and use in your search for the perfect career. Career assessments may be required to promote a better understanding of personal attributes and skills. Contact your Career Services Office at your college to discuss if a career assessment may be right for you. Step #2: Research (Career Exploration) Obtain an insider’s perspective about the career field you are considering. Conduct Informational Interviews in person, phone, or by email. Professionals enjoy sharing their expertise with people interested in the field. Perform informational interviews with alumni from your college to gain their perspective of the field and to listen to what they have to say. This strategy provides first hand knowledge from someone currently working in the field and gives you an opportunity to ask about their experiences as well as potential jobs and what one might expect if just entering the field. Gain experience through internships or by job shadowing for one to several days to see what a typical work day entails and to gain perspective of what the environment is like and the typical job responsibilities of someone working in the field. Research what types of jobs are availabe in your area of interest by checking out Majors to Career Converter, The Occupational Outlook Handbook and The Career Guide to Industries. The Occupational Outlook Handbook offers a wealth of information for those currently just entering the job market and for those anticipating making a career change.

Step #3: Decision-Making Once you’ve made a thorough self-assessment and have done some research of career options, it’s time to make a decision. This can be difficult since there may still be many unknowns and a fear of making the wrong choice. One thing for sure is that although we can do all the necessary steps to making an informed decision, there is no absolute certainty that we are unquestioningly making the right decision. This uncertainty is easier for some people than others but a key point to remember is that you can always learn from any job you have and take those skills and apply them at your next job. Step#4: Search (Taking Action) It’s now time to look for prospective jobs and/or employers, send out cover letters and resumes, and begin networking with people in the field. Keep in mind that cover letters and resumes are designed to make a favorable impression on employers (if done properly) and the interview process is what will ultimately land you the job. In other words, make sure your cover letter and resume highlight your skills and strengths based on the employer’s needs and that you are fully prepared to knock their socks off at the interview. Take time to research the employer’s website prior to the interview, and be prepared to ask thoughtful questions based on your research.

40

Step #5: Acceptance Once you’ve completed all of the steps above and you’ve been accepted into a new and exciting or different job. According to the Bureau of Labor Statistics, 64.1% of people change jobs between 5 and 14 times in their lifetime. Consequently, learning the skills above will increase your chances of gaining meaningful and satisfactory work as well as help you to avoid many of the stresses that occur with changing jobs. By recognizing that change is good (even advantageous), changing jobs can be viewed as a positive experience and need not be as anxiety provoking as it may initially seem. You will continue the process of self-assessment, research, decision-making, and job searching in order to make effective and fulfilling career changes throughout your lifetime.

Career planning to develop second line of managers to take charge as and when required The strategy is designed to meet the needs of the organization both in the shortterm as well as over the next decade. It therefore responds to the evolving role of the organization to achieve their development goals as well as to the goals it is setting out to achieve. As the organization goes through a process of transition, bringing greater focus to its strategic direction and the way in which it fulfills its mandate so that it is able to be flexible and responsive to changing needs, it is equally vital that the strategy be linked to an internal vision for the management of staff.

Transformational goals of the strategy In order to have a far-reaching and transformational impact, the strategy should be to reaches beyond the traditional boundaries of human resources management and sets goals that address the culture of the organization and support the achievement of its strategic vision. The strategy designed to achieve six such transformational goals: (a) Transformation of the organizational culture. The changes proposed in the human resources management policies and systems will take effect only if there is a change in the organizational culture of any company. Real change must come from a change in the behaviour of people, in particular the senior managers of the organization. The strategy therefore aims to create a more open, future-oriented, professional organization that emphasizes innovation, leadership, management, strategic thinking, networking and advocacy, and knowledge sharing and commitment to learning; (b) Strategic programme leadership. Aim to strengthen the capacity of its representatives and managers to take a strong leadership role in helping company achieve the goals, particularly in the areas of promoting policy dialogue and building strategic partnerships;

41

(c) Excellence through the highest caliber of staff. A company must exercise determination in developing and recruiting the highest caliber of staff who either have, or can readily acquire, the competencies required to meet the evolving needs of the organization. A realignment of the skills and competencies of all staff is imperative, and increased emphasis will be placed on competency development and learning. Moreover, a Company must seek out the best available talent from internal and external candidates in order to replenish the organization’s human resources; (d) Managers responsible for human resources management. The strategy foresees that senior managers will be given significant authority in the management of their human resources, thus creating a solid foundation for human resources management throughout the organization. The strategy must therefore be owned by the managers of the organization and its implementation must be led by them. The Office of Human Resources plays an important role in developing the policies, systems and tools that facilitate human resources management and in providing advice and guidance; (e) Increased accountability. The proposed strategy includes measures to enhance accountability within the organization. Managers at all levels will be held accountable for delivering results and demonstrating managerial and leadership competencies. Best management practices and standards of behaviour will be integrated in the competency framework and performance management system. (f) A strong focus on the field. The strategy should concentrates on supporting company’s operations through a more rational and strategic deployment of employees throughout the organization, better matching of staff profiles to job requirements, increased staff rotation between headquarters and the field and better human resources planning. Representatives should be given decision-making authority in a number of management areas and should be provided with the necessary tools and systems to support this.

The cornerstone of the competency framework

strategy – an organizational

The development of a competency framework for a company is the cornerstone of the strategy and is central to its implementation. Once developed, the framework would act as an integrating mechanism for all management systems, including performance management and promotion, staff development and learning, recruitment and rotation, and human resources planning. The competency framework should be built around three components: (a) Core or generic competencies that will apply to all staff of the organization; (b) Managerial competencies that will apply to those in management positions; and (c) Specific functional competencies that will apply to the key functional groupings of the organization.

42

Framework the management within Organization To achieve the transformational goals, the management strategy should sets out an integrated, holistic framework. Then the strategy could be mapped out the need for wideranging changes to policies, procedures, mechanisms and systems for career management, staffing and organizational design.

The most important innovations inherent to the strategy are: (a) Basing all management systems of the organization on an organizational competency framework, which will have the effect of integrating the systems; (b) Introducing a fully developed career management system, including career planning; (c) Linking the performance management system to the achievement of organizational results, and including 360-degree feedback on individual and team performance; and (d) Incorporating “learning” and “learning programmes” into managers development.

Career management and development system The company does not currently have a clearly defined career management and development system. There are no clearly defined career streams and no mechanisms in place to encourage managers to develop the competencies required for various career streams. For a career management system to be effective, it is important that organizational needs and individual career aspirations converge, resulting in a mutually beneficial relationship between the organization and its employees. The organization has the responsibility for providing the supporting tools and systems and a challenging and enabling environment to ensure that it is able to attract, develop and retain high-quality managers. The three principal components of the career management and development system are career planning, performance management and staff and managers development. The career management system should foresees the development of a clear framework for career planning with career streams identified for the functional areas of the organization and clearly defined yardsticks identified for career progression. The system will enable lateral moves within as well as between career streams. The manager’s career development will reflect the principles of a learning organization and would support the planned progression of managers along various designated career streams. To ensure continuous learning, the Fund would develop longterm learning programmes in key functional areas as well as in management. Furthermore, a structured programme of coaching and mentoring by managers should be introduced to encourage career development and organizational learning. An important aim of such a continuous learning approach would move from the development of individuals based on their personal interests to the development of individuals based on organizational needs.

43

44