The corporation as good citizen

All businesses increasingly want to be perceived as good citizens. Different types of business face different ethical issues:

•Financial institutions try to prevent insider trading by erecting notional barriers called Chinese walls between different departments (for example, to prevent someone in share trading from discovering from the mergers department that a particular company is involved in merger talks and that its share price will soon rise).

• Companies selling personal finance promise to ensure that clients are sold appropriate products for their needs, and thus avoid misselling.

• Manufacturers claim that their products are green or environmentally friendly in all stages of their production, use and disposal.

• Cosmetics companies say that their products are not tested on animals.

• Clothing companies claim to trade fairly and that their products are not made in sweatshops paying subsistence wages and using child labour.

The treatment of employees

Perceptions that a company's behaviour is ethical will also be increased if it has a policy of equal opportunities, or in the US, an affirmative action program, to ensure that people are recruited and promoted on the basis of merit and not discriminated against on the grounds of race or gender. (Women who get promoted so far and no further complain of the glass ceiling.) There may also be established complaints procedures, and specific policies on issues such as bullying and sexual harassment.

Codes of ethics and mission statements

A company's internal code of ethics contains its ethical credo and may cover any of the issues mentioned above. Some of these issues may also be contained in its mission statement. And there may even be an ethics ombudsman to check that they are put into practice and deal with complaints when they are not.

Read on

Norman P. Barry: Business Ethics, Purdue University Press, 1999

BenCohen, Jerry Greenfield: Ben and Jerry's Double Dip Capitalism: Lead With Your Values and Make Money Too, Simon and Schuster, 1999. The famously ethical ice cream makers talk about ethics in practice.

John Hendry, Tom Sorell: Business Ethics, Butterworth-Heinemann, 1994

Martin Parker: Ethics and Organizations, Sage, 1998

Joanne B. Ciulla, James MacGregor Burns: Ethics, the Heart of Leadership, Praeger, 1998

………………………………………………………………………………

11. Change in organisations

Recentyears have seen massive restructuring.Companies downsized and delayered,getting rid of levels: - middle-management in order to become leaner, flatter,supposedly more efficient organisations. Often the reasoning was that computer networks allow top managers instant access to information that was previously gathered and transmitted upwards by middle managers, whose other main function was to communicate executives' key messages downwards to the workforce, and in this they were accused of diluting or confusing the messages, or worse. With fewer organisational layers, top managers say they can communicate more directly with front-lineemployees, the people who actually produce the goods or services, and deal with customers. With less direct supervision, employees have often been encouraged to make more decisions for themselves in a process of empowerment.

Another trend was re-engineering, the idea that an organisation should not change incrementally, but should start again from scratch with no preconceptions about how things should be done, not just in manufacturing but in all the processes that contribute to what an organisation does, hence business process re-engineering, or BPR.

The human side of this, again, was that there would probably be redundancies. The people remaining would probably feel demoralised, wondering when the next wave of change was going to come and whether it would be their turn to be thrown out.

There has been a reaction to downsizing and BPR and a realisation that an organisation's most precious asset may well be its people, and above all what they know. A company's accumulated knowledge and experience is part of company culture and is increasingly seen as a key to success. Many now believe that this collective knowledge and accumulated years of experience is something to cultivate and develop. Some companies have appointed a chief knowledge officer who creates systems to make this knowledge available to the company as a whole in a process of knowledge capitalisation.

Change and the outside world

Today's trendsetters become tomorrow's old fogeys. This is most visible to the person-in-the-street in retail organisations. Corporate history is littered with the names of companies that failed to anticipate social trends: the perception 'old-fashioned' is hard to throw off.

Now everybody is focusing (or should be) on how the Internet is going to change the way they do business. How, for example, will it affect traditional retailing? Will the Saturday morning drive to the supermarket begin to lose its appeal? How will it affect what in five or ten years, will be 'traditional' telephone banking? However, it is not enough for the technology to exist. There are complex social processes involved in the way it is exploited and the way it then evolves.

Read on

Michael Hammer and James Champy: Re-engineering the Corporation, Nicholas Brealey, 1995. The key work on one of the big management movements of the nineties.

Michael Hammer: Beyond Re-engineering, HarperCollins, 1998

John P Kotter: Leading Change, Harvard University Press, 1996.

David Hussey: How to Be Better at Managing Change, Kogan Page, 1998

Peter Drucker: Managing in a Time of Great Change, Butterworth-Heinemann, 1997

James Champy, Nitin Nohria: Fast Forward: The Best Ideas on Managing Business Change, Harvard University Press, 1996. A selection of articles from the Harvard Business Review by academics and business people.

Robert Heller: Managing Change, Dorling Kindersley, 1998

………………………………………………………………………

12. Strategy

Strategies, whether military or corporate, are two-a-penny unless formulated in terms of resource allocation. Every organisation exploits particular resources, or assets - physical, technological and human - to achieve its goals.

In many industries, however, these assets are so specialised and have taken so long to develop that it is hard, if not impossible, to duplicate them. A company might have the 'strategy' of entering the market for, say, aircraft engines and becoming a world leader. But even one with massive resources at its disposal would find it impossible to enter a field dominated by Rolls Royce, Pratt and Whitney, and a few other key players. A profitable industry is attractive, but in some cases wishing to enter it may just be wishful thinking, and in practice there are no new entrants because the barriers to entryare so high. The rules of the game were established years ago, and will remain pretty much the same until something new comes along to upset them, like a new technology, which other companies may be better equipped to develop.

In brand-new industries, the rules of the game have not yet emerged. The traditional scenario is for a new industry with high growth to have a large number of competitors in the beginning: barriers to entry are equally low for start-ups (brand new companies), and for established companies also wanting to participate, perhaps by setting up a new subsidiary or business unit. The start-ups have the potential benefit of doing things in new ways. They don't inherit a culture from another industry that may not be suitable for the new one, and that may even be a handicap to competing successfully.

After a time, leaders emerge who are able to spread their costs over a higher level of sales, and who are thus more profitable. As growth in the new market slows, smaller competitors with higher costs drop out or are bought by the larger companies in a process of consolidation or shakeout, leaving elite with the resources to dominate the industry, which is now mature.

That is why emerging industries are so attractive. Companies want to get in before the rules of the game become fixed, and be able to influence how they are fixed. Think of Internet commerce. Amazon books was a new start-up and grew not only internally by increasing its own sales but by acquiring other start-ups. Within three years of its foundation, Amazon came to dominate bookselling on the Internet.

A profitable company may buy firms in unrelated industries, including emerging industries, perhaps hoping that some of their acquisitions will turn out to be leaders in their fields and become money-spinners. But it may just end up as a conglomerate of more or less profitable companies, and some unprofitable ones.

Corporate history is full of examples of takeovers and mergers that did not produce the results that were promised. Even a company buying another in its own industry in the same country faces problems in making the acquisition work. The problems in acquiring a company in a different industry or in another culture are enormous. This may not be the best use of resources.

Recently the trend for groups has been towards selling non-core assets, using the proceeds to invest in core activities and concentrate, or focus, on them. This is sometimes referred to as sticking to your knitting. The mission statements in the main course unit are attempts by companies to say what their knitting actually is. Shareholders naturally want the highest possible return on capital. The job of every company is to allocate that capital in the most judicious way. They should invest in the most profitable activities or products for which they have appropriate resources, or for which they can realistically acquire or develop the resources.

These are the big strategic questions. Which activities are the ones to stay in, invest in and develop? Which are the new ones to get into? Which are the ones to get out of? Answering them is not easy: multi-billion dollar mistakes are easy to make.

Read on

Michael E Porter: Competitive Strategy: Techniques for Analyzing Industries and Competitors, Free Press, 1998

Michael E. Porter: Competitive Advantage: Creating and Sustaining Superior Performance, Free Press, 1998

T. Irene Sanders: Strategic Thinking and the New Science: Planning in the Midst of Chaos, Complexity, and Change, Free Press, 1998

Gerry Johnson, Kevan Scholes: Exploring Corporate

Strategy, Prentice Hall Europe, 1998 Kenichi Ohmae: The Mind of the Stra

tegist: The Art of Japanese Business, McGraw Hill, 1991 Stuart Slatter, David Lovett: Corporate Turnaround, Penguin, 1999

…………………………………………………………………………

13. Cultures

As the world gets smaller, we need to learn more about each other's values, beliefs, habits and expectations. Culture is, in the famous phrase, the way we do things around here. The 'here' in question may be a country, a region, a social class, a company, a university. Clearly, we each live in a set of cultures and subcultures that interlock in complex ways, and, to make a generalisation, one of the most dangerous things is to generalise about them. Stereotypes are, of course, to be handled with caution. The stereotype may represent the middle of a range of differing behaviours, it may be at one extreme, or it may just not be true. And there may be more variety in behaviour within a culture than between one culture and another.

Neighbouring countries or regions, or two companies in the same industry, tend to see themselves as very different to each other, but that difference is hard for the outsider to grasp at first glance. A few years working in one of the two places will make it seem more apparent, as one gets 'involved' in one of the cultures.

Here, in no particular order, are some cross-cultural issues, areas where there are variations in behaviour across different cultures, and some examples of the ways they relate to the business world:

• Religion: is it expected of people or a matter of individual choice? Does it play a role in business life?

• Roles of men and women: are women often found at the highest levels of business and society?

• Hierarchy: what is the distance between managers and the people who work for them?

• Levels of formality in language and behaviour: is there an elaborate system of levels of deference in addressing different people?

• Conversation: settings (formal and informal meetings, social situations, etc.), turn-taking, proximity, body language, contact, etc.

• Dress for different settings and occasions: is the business suit essential?

• The relation of work to private life: are spouses expected to attend certain types of company event? Do business people invite colleagues and contacts to their houses, or is everything done in the office and restaurant?

• Time: timescale of the activity/organisation, planning, punctuality, the working day/week/year, meals, recreation, holidays, etc. Do meetings start on time? Is the summer break sacrosanct?

These are all interesting areas for discussion, bearing in mind that we are not judging whether other ways of doing things are right or wrong, but that we should be aware of the differences, and not see our own culture as the 'normal' one.

Read on

Fons Trompenaars, Charles Hampden Turner: Riding the Waves of Culture, Nicholas Brealey, 1997

Fons Trompenaars: Managing Across Cultures, Century Arrow, 1993

Geert Hofstede: Cultures and Organizations: Software of the Mind, HarperCollins, 1994

Geert Hofstede: Culture's Consequences, Sage, 1984

Susan Schneider and Jean-Louis Barsoux: Managing Across Cultures, Prentice-Hall, 1998

Elisabeth Marx: Breaking Through the Culture Shock, Nicholas Brealey, 1998

…………………………………………………………………

14. Leadership

Some organisations aretheir leaders. Bill Gates is Microsoft. Anita Roddick embodies Body Shop. Richard Branson pilots Virgin. Entrepreneurs and founders of their organisations, they are perceived to have visionary leadership qualities. They are often asked to pronounce on the issues of the day. They are leaders not only of their companies but of public opinion.

The mercurial leadership that is characteristic of many entrepreneurs means that they might found and then sell a series of start-ups, not guiding them to the next more ' mature' stage themselves. In the trio above we have examples of leaders who have made that transition and gone beyond.

Companies become large by being successful, but they also become bureaucratic and conservative. It's a cliche that in successful companies, change is a precondition of continued success, and the people who can lead that change are key. Formulating strategy is a question of making choices (often described as 'difficult'), of deciding to do x rather than y, with resources that are by definition limited. The people who can make the right choices about how to use those resources are highly rewarded. (The people who make the wrong choices are also highly rewarded with generous severance packages, but that's another story.)

Failing companies require yet another kind of leadership: the type of leader who can turn them round and this third species of leader may not be suited to managing other types of change, preferring to move on to another company in crisis.

Companies are increasingly thinking about how to nurture their leaders. In the US, corporate governance, the way that a company is run at the highest level, has become a key issue with shareholders. They have rejected the previous cosy arrangements, where directors appointed people they knew to the board and now demand much greater scrutiny over who is chosen and how.

This is part of the process of recognition that companies are led by teams ofkey managers. The qualities of a chief executive cannot be seen in isolation. There must be the right chemistry between the chief executive and other top people, and they must have the right mix of complementary skills.

Even so, picking the successor to the current CEO (Chief Executive Officer) is an extremely sensitive task. Will it be someone from within the company, perhaps someone groomed to take over by the current boss? Or do you use headhunters (specialised, highly paid recruiters) to track down someone, perhaps from a completely different industry, and bring them in to shake up the existing order? If your new CEO leaves after six months in the job, perhaps after what the papers describe as 'irreconcilable differences', or as a boardroom battle, the company and perceptions of it will suffer, and so, probably, will its share price. By the time you find another one, two or three years may have been lost, an eternity in strategic

Read on

Harvard Business Review on Leadership, Harvard Business School Press, 1998. A selection of articles. John P. Kotter: What Leaders Really Do, Harvard Business School Press, 1999Thomas Cleary: Ways of Warriors, Codes of Kings: Lessons in Leadership from the Chinese Classics, Shambhala, 1999. Good if you like historical angles on today's issues.

Max Depree: Leadership Is an Art, Dell, 1990

Noel M Tichy with Eli Cohen: The Leadership Engine: How Winning Companies Build Leaders at Every Level, Harper Business, 1997

……………………………………………………………………

15. Competition

Competition between companies can be tough, aggressive, even ferocious or cut-throat. Firms may accuse each other of using unfair methods such as dumping, where a competitor (usually foreign) sells products for less than what they cost to produce, or at less than the price charged in the home market. Firms dump in order to build market share and recoup their losses later when, having established themselves to benefit from economies of scale (producing in larger quantities so that the cost of each unit goes down), they are able to charge market prices with a healthy profit margin on each unit sold.

Competition can also be gentlemanly or even cosy, so cosy that companies may be accused of forming a cartel to agree on prices in a price fixing arrangement. They may then be investigated by a government department that looks into unfair trading practices.

Competitors may also enter into other perfectly legitimate forms of cooperation, such as joint ventures for specific projects. They may even talk about strategic alliances. But like mergers, these can go awry and lead to recrimination between the erstwhile partners.

The Course Book unit looks at market leaders, market challengers, market followers, and market nichers. (Nichers can also be referred to as nichists.) It also looks at Michael Porter's model containing:

• cost-leaders, who are low-cost producers with a broad scope and cost advantage, appealing to many industry segments (many groups of buyers with different needs)

• differentiators, who appeal to buyers who are looking for particular product attributes (characteristics) and position themselves as the most able to meet those needs

• focussers, who concentrate on one particular segment and try to find competitive advantage by satisfying the needs of buyers in that segment better than anyone else. Focussers are, in effect, nichers.

These are the available choices, according to Porter, that a commercial organisation has if it wants to compete effectively, and not get 'stuck in the middle'.

Read on

Michael Porter is the key reference here.

Michael E. Porter: Competitive Advantage of Nations, Free Press, 1998, on what makes countries successful in specific industries.

Michael E. Porter: On Competition, Harvard Business School Press, 1998. A collection of his articles. Gary Hamel, C. K. Prahalad: Competing for the Future, Harvard Business School Press, 1996 John Kay: Foundations of Corporate Success, Oxford Paperbacks, 1995

…………………………………………………………………………

16. Quality

Quality is theelimination of variation, or, to put it another way, conformity to specification. Things should turn out as they were d esigned and intended to be.

Total quality management or TQM was a watchword of the 1980s. This often involved employee, with quality circles of workers encouraged to suggest ways of making things in better ways. It was associated with an influx of other Japanese ideas, such as the kanban system of just-in-time manufacturing or lean manufacturing, where parts are only made and supplied when they are needed: inventories (stocks) of parts and the need to finance and store them are eliminated. A related objective is that of zero defects, where things are made right first time, eliminating the need for inspection and reworking. All this is part of kaizen: striving for continuous improvement.

TQM gave a.way in the 1990s to business process re-engineering or BPR, when companies were told by their consultants not just to tinker in a piecemeal way with how goods or services are produced but to abolish everything and to start again from scratch. The concept of leanness was now also applied to reducing the number of management layers, and a lot of middle managers lost their jobs. (See the Business Briefs on Employment; Organisation; and Change)

It was also in the nineties that benchmarking emerged: the idea that a firm should see which company performed a particular task best, and model their performance on this best practice.

It is undeniable that things are better made today than 20 years ago, and even small manufacturing companies apply for the certification of the International Organization for Standardization with ISO 9000 to reassure their customers. The equivalent standards in the accreditation of services are ISO 9001 and ISO 9002. Here, the ultimate goal of elimination of variation is even harder to attain, as the variations to be eliminated are largely those of human behaviour. The organisations that manage it are even more admirable than their manufacturing colleagues.

Read on

Rafael Aguayo: Dr. Deming: The American Who Taught the Japanese About Quality, Simon & Schuster;Books. 1991

Mary Walton, W. Edwards Deming: The Deming Management Method, Mercury Business Books, 1992 Andrea Gabon: The Man Who Discovered Quality: How W. Edwards Deming Brought the Quality Revolution to America - The Stories of Ford, Xerox, and GM, Penguin, 1992

Joel E. Ross: Total Quality Management, Kogan Page, 1994

Crosby: Quality Is Still Free: Making Quality Certain in Uncertain Times, McGraw-Hill, 1996

Tom Peters, Robert H. Waterman: In Search of Excellence, HarperCollins, 1995. Still interesting, even though many of the companies held up as paragons of excellence have had their travails since it was first published in the early 1980s

Дата добавления: 2015-11-14