E2 Flashcards
PESTEL
Factors provide a framework for analysing or reviewing a situation, the strategy, position or direction of an enterprise
Political
Economic
Social
Ecological
Legal
Conducted on 3 levels: Local, National and Global
Porters five forces
Micro model - framework for industry analysis. Determine the competitive intensity and therefore the attractiveness of the market. A change in one of the forces usually requires reassessment of the marketplace
- Bargaining power of suppliers
- Bargaining power of customers
- Threat of new entrants
- Availability of substitutes - substitutes fulfil the need in different way.
- Intensity of competitive rivalry - all the above feed into this.
6th force - Government. Major supplier and buyer. Also sets policies etc.
Porters generic strategies
Organisations should select one of the following 3 strategies - to deal with the 5 forces:
- Cost leader: aim to have the lowest costs. Not necessarily having the lowest prices but charge lower price than the differentiator
- Differentiation: aim to do things, or appear to do things, differently. Tend to be able to charge a higher price but also have higher costs.
- Niche or focus: concentrate on a segment of the market. Possibly combine with either of the above 2 strategies.
There is a ‘middle of the road’ path - when prices fall or costs rise, these are squeezed out of the market first
Ecosystem concept
More modern, holistic view of the business environment/models
Economic community supported by a foundation of interacting organisations and individuals
All members of the ecosystem are affected by the actions of all other members
The environment strongly influences what the organisations do and the strategies they choose
Drivers of the evolution of ecosystems
- the internet and the access this provides - globalisation
- the wealth of data that is available: big data. Available for companies to use in decision making
- the increase in customer empowerment: have access to more information, can buy from more places and have more legal rights
Digital customers - what do they want
- Contextualised interactions: tailored to the needs of the individual
- Seamless experience
- Real time info
- Great service
- Self service
- Transparency
- Peer review and advocacy
How do businesses meet the demands of the digital customer
- Design thinking: shift from designing 1 product to designing a series of experiences
- Experiential pilots: monitoring customer response and reaction to new experiences
- Prototyping: bringing models to market prior to perfection and evolving new models
from customer experiences. - Brand atomisation: design products for wide distribution by themselves and other
providers
The strategic journey 2020 (Christison and Choo)
Five models providing tools and techniques for businesses to navigate their strategic journeys:
- Mission model: core purpose of an enterprise (pulls followers to its vision)
- Business model: what constitutes and drives the business (grows its value)
- Value model: what constitutes value, how to find opportunities to create it
- Operating model: how the business runs (processes)
- Transformation model: how it executes change to improve business agility to continue value
delivery and growth
The network model
From traditional to modern -
- Asset builder: deliver value by using physical goods
- Service provider: deliver value through skilled people
- Technology creator: deliver value through ideas
- Network orchestrator: deliver value through connectivity
Network Orchestrators
Companies that deliver value through connectivity. They create platform that participants use to interact or transact with other members of the network.
- Tend to grow faster and use assets more efficiently
- Tended to have higher market valuations than traditional enterprises
- Believe value can continually be added
- Currently are the minority of companies
10 principles of network orchestration:
- Create digital capabilities
- Invest in intangible assets (sources of assets are changing)
- Actively allocate your capital (what are you doing with your funds, not necessarily the same as
last year…) - Lead through co-creation (empower team/network members)
- Invite your customers to co-create (from customers to community…)
- Focus on subscriptions, not transactions (also building relationship with customers)
- Embrace the freelance movement (from employees to partners)
- Integrate big data
- Choose leaders who represent your customers (from governance to representation)
- Open your mind to new possibilities (from closed to open)
Characteristics of ecosystems
Two key factors:
- Participants (essentially buyers and sellers)
- Interactions (essentially the product or service)
In an ecosystem, these basic parties are characterised by the following:
Participants (RRC)
Role (ie what they do buy/sell/support/partner)
Reach (ie how far they extend in the environment)
Capability (ie their key value proposition)
Interactions (RCC)
Rules (define how interactions occur)
Connections (links within the ecosystem)
Course (the speed and direction of interactions)
Complexity and orchestration
Nature of an ecosystem determines the complexity of interactions and the level of orchestration required:
Complexity - number and diversity of participants, sophistication of activities, range and nature of relationships
Orchestration - strength and extent of influence, formality of interactions, degree of enforceability
HIGH COMPLEXITY/TIGHT ORCHESTRATION
Lion’s pride - high barriers to entry. open to be dominated by powerful orchestrator
HIGH COMPLEXITY/LOOSE ORCHESTRATION
Hornet’s nest - higher barriers to entry but low orchestration
LOW COMPLEXITY/TIGHT ORCHESTRATION
Wolf pack - lower barriers to entry. Overall less chance of dominance.
LOW COMPLEXITY/LOOSE ORCHESTRATION
Shark tank - need to innovate to be competitive as low barriers to entry and high competition
Different forms of business organisation
Outsourcing
Offshoring
Shared Service Centres (SSC)
Strategic alliance: an arrangement between two or more organisations to share resources to
undertake a mutually beneficial project in a non-permanent way, eg airlines running routes
through strategic alliances.
Franchising. The franchisee produces or supplies a branded product or service, and pays the
franchiser for use of the brand and ‘system’. The franchiser is responsible for marketing and
retains overall control of the brand.
Consortia. An association of organisations to deliver a particular project.
Licensing. The right to produce or supply a product or service in return for a fee.
Joint venture. A separate shared entity is formed by two or more independent organisations to
pursue an opportunity.
Defining value
Factors influencing value (3Ts) - dubious at best
- Financial and non-financial factors. Critically, value does not have to be just monetary. (If you want to remember 3Ts of value, nickname this one ‘a tenner’!)
- Tangibility. This is important in a digital age, where increasingly value is in intangible factors
rather than ‘bricks and mortar’ - Time. Weighing up short term and long term values might be a critical factor in ongoing success.
Stakeholders
(1) Internal – directors, employees. All employees should take an interest in their company, whether
for reasons of job security or because they are on some form of performance-related pay.
(2) Connected – shareholders, lenders, customers, suppliers (i.e. there is some form of financial
relationship).
(3) External – government (local and central), pressure groups, local community.
The first two groups are primary stakeholders in that they have some sort of relationship with the
organisation which is likely to be contractual. The third group are secondary stakeholders.
Mendelow’s matrix - stakeholders
LOW POWER/LOW INTEREST
Minimal effort
LOW POWER/HIGH INTEREST
Keep informed
HIGH POWER/LOW INTEREST
Keep satisfied
HIGH POWER/HIGH INTEREST
Key players - Chosen strategy must be acceptable to these stakeholders
Stakeholder salience
In stakeholder salience theory, stakeholders are considered in terms of:
- Their power to influence the organisation
- The legitimacy of their relationship with the org
- The urgency of their relationship with the org - not just time but importance
Mapped in a venn diagram - increase number of factors = increased salience
Salience theory diagram
LOW SALIENCE - low effort
Dormant - Power only
Demanding - Urgency only
Discretionary - Legitimacy only
MEDIUM SALIENCE
Dangerous - Urgency & Power
Dominant - Power & Legitimacy
Dependent - Urgency & Legitimacy
HIGH SALIENCE
DEFINITIVE - ALL 3 FACTORS
Customer segmentation
Customer segmentation is dividing a customer base into groups of individuals that are
similar in specific ways relevant to marketing, such as age, gender, interests and spending
habits.
- Undifferentiated marketing. This is the delivery of a single product to the market place
with very little concern for segment analysis. - Differentiated marketing. Here the company makes several products each aimed at a
separate segment. Although more time consuming and costly, the advantage is that
each product should appeal more to each targeted group. It may be possible to charge
a price differential in each segment. - Concentrated marketing. The company focuses on a single segment for its product
hoping to meet the exact needs of that group better than any other organisation
Cost model
One way of determining what to spend is to use a cost method, ie to calculate all the associated costs
of making/distributing a product or service and then factor that into pricing considerations.
A cost model is likely to be used by organisations which are creating social value rather than monetary
value, ie not-for-profit organisations.
It will also be used by all business in their planning and budgeting.
Revenue model
A revenue model is more about
Which revenue source to pursue
What value to offer
How to price the value
Who pays for the value.
It identifies what product or service will be created to generate revenues and the ways in which the
product or service will be sold.
Sharing of residual value
At a basic level the ‘surplus’ value created by a company in its operations, ie profit, has been used in two ways:
- Distribution to shareholders in the form of dividends. INCREASES THEIR WEALTH
- Investment in the organisation as a form of finance to fund new strategies/projects. INCREASES THE VALUE OF THEIR CAPITAL ASSET
Digital disruption
When new technologies etc. affect
and change the value of the industry’s existing services and goods.
‘Disruptive technology’ replaces an existing technology and transforms how businesses are
run.
E.g.
Cloud Computing
Mobile tech
Blockchain
Digital wallets
Data analysis
Fintech - banking software
Accenture’s Technology Vision
Accenture’s Technology Vision report from 2015 identifies five technology trends for companies to be aware of:
- The Internet of me: Through personalised apps, the digital experience is very individualised for
consumers - Outcome economy: Entities don’t just provide a service but are able to measure the outcome of
the service they deliver - The platform (R)evolution: How
customers are reached digitally has changed significantly. - The intelligent enterprise: Advances in artificial intelligence and data capture enables
companies to turn big data into smart data. - The workforce reimagined: Machines and humans working together.
‘innovator’s dilemma’
World Economic Forum in collaboration with Accenture
To survive in the digital age, traditional companies need to accept disruption to remain competitive. Many companies do not want to stop doing what makes them successful, but do not want to be left behind.
- Innovation at the ‘edge’ of your company so as not to mess with the core
- ‘Black ops’: the idea that a team is working covertly to help transform the business
- Copy Google: learn from the best – by focusing on big ideas and partnering to achieve objectives
Strategies to build disruptive business models
- Build - built from within
Time allows (not moving too quickly)
The disruption is closely associated with the core business
Company can hire the right people to build new model - Buy - buy someone else who is already doing
Time is an issue
Disruption is critical to survival
Core model needs to change substantially for success - Partner - modern, flexibility and speed
Not strategically important to ‘own’ the disruptive factor - Invest - more formal or controlling way of partnering. Invest in start-up.
Incubate and accelerate models
Linked to investing.
Accelerators “accelerate” growth of an existing company. A company applies to an ‘accelerator’ company, and if accepted, that company is given a small amount of investment, and access to a network of mentors to help develop the company. Typically there is a timeframe set for acceleration.
Incubation. Companies are sponsored onto incubation programmes through trusted sources. May relocate to network and receive mentoring
Digital Operating models
Customer centric - A customer-centric model focuses on customer value both at point of sale and in terms of after care.
EXtra frugal - EXtra frugal organisations aim to provide good quality solutions to customers at a low price. Particular impact in developing countries as it makes new technologies affordable. Extra lean processes to prevent unnecessary cost
build up which must be passed to the customer.
In terms of costs, this may involve businesses outsourcing.
Data powered -
- Collecting data well
- Interpreting it well
- Allowing that interpretation to drive decision-making
Skynet
It is a model which uses machines
intensively to increase productivity and flexibility in production. It is obviously suited to manufacturing
enterprises, but not exclusively.
Open and liquid - Open organisations are those committed to openness as a defining element in how they create value.
- Sharing and open collaboration
- Open participation
- Co-creation
LOOK AT THE REST OF CHAPTER 3
IF YOU LOOK AT IT NOW YOU MIGHT SHOOT YOURSELF :)
The psychological contract
Not legal - more like expectations between employee and employer
Maintaining the psychological contract can be an important consideration in motivation
Leadership concepts - POWER
A simple definition of power is ‘the ability to get things done’.
French and Raven 5 categories of power:
Legitimate power
Derives from the relative position and duties attached to a post within an organisation.
The formal authority that belongs to the holder of the position.
Referent power
The power or ability of individuals to persuade and influence others - charisma and interpersonal skills
Expert power
Derives from the skills or expertise of the person and the organisation’s needs for those skills
and expertise.
Reward power
Depends upon the ability of the holder to give rewards
2.1.5 Coercive power
The power to penalise or punish.
Coercive power tends to be the least effective form of power as it builds resentment and
resistance.
Leadership concepts - AUTHORITY
Authority may be defined as the right to do something, or to ask someone else to do it and
expect it to be done. Authority is therefore a type of legitimate power.
Traditional authority
Derives from long-established customs, habits and social structures. Accepted and agreed by society.
Rational-legal authority
Based on formal rules. Attached to the position rather than to the individual.
Charismatic authority
Secured by the personality or acts of an inspirational person.
Delegation
Delegation involves the passing of authority from one party to another. Although authority
may be passed, responsibility remains with the original holder of authority.
Types of delegation
Consultation: manager seeks views and input from others.
Explanation: manager provides instruction and guidance.
Abdication: manager leaves the task to others.
Custom and practice: although authority remains with the manager the norm is that the task is
performed by others.
Fayol (1849-1926) classical theory of management
Five primary functions of management:
(1) Planning,
(2) Organising,
(3) Commanding,
(4) Co-ordinating,
(5) Controlling.
(POCCC)
Frederick Taylor (1856 – 1915) Scientific management
Taylor’s beliefs
Industrial management of his day was amateurish
Management could be formulated as an academic discipline
Best results would come from the partnership between a trained and qualified management
and a co-operative and innovative workforce
Each side needed the other, and there was no need for trade unions
Taylor’s principles
Replace rule-of-thumb work methods with methods based on a scientific study of the tasks.
Scientifically select, train, and develop each employee.
“Detailed instruction and supervision of each worker in the performance of that worker’s
discrete task”.
Divide work nearly equally between managers and workers.
Trist and Bamforth
Criticism of scientific approach
Trist and Bamforth’s work on business systems showed up problems with the scientific approach.
It was based on the introduction of a new approach to coal-cutting in mines, which resulted in a large fall in worker morale and increased absenteeism.
Although there were scientific reasons for the new
approach, it had resulted in workers no longer working in the same teams, communication becoming more difficult and workers disliking the amount of specialisation within their jobs.
The introduction of new reward schemes led to bad feeling. Management ignored the needs of individuals and groups, which were particularly important in close mining communities.
Mayo – The human relations school
Human Relations Movement - group of six women and segregated them
Over the period, changes such as new payment systems, rest breaks of different sorts and lengths,
varying the length of the working day, and offering food and refreshments were tried. In almost all cases, productivity improved.
‘The Hawthorne effect’
The women felt important because they had been singled out
Relationships made for a more pleasant working environment.
Work satisfaction depends to a large extent on:
– The informal social relationships between workers in a group and,
– The social relationships between workers and their bosses.
- The effects of the group should never be underestimated.
The “Hawthorne effect” refers to the change in behaviour or performance which is thought to occur when people are faced with new or increased attention.
Contingency theory
Contingency theory rejects a general view of what is best for organisations or management. Instead
the effectiveness of management practices will be determined by the circumstances.
Burns and Stalker
Burns and Stalker draw a distinction between mechanistic and organic organisations.
Mechanistic - clear definition of responsibilities and specialisation. Managers are
responsible for communication.
Culture of loyalty and obedience to the hierarchy. Appropriate in environments where change happens only gradually, if at all.
Organic – greater emphasis on importance of individuals and skills and attributes they bring.
Employees involved in problem-solving and communication takes place in all directions, not
just top-down. Less emphasis on loyalty and obedience. Individuals may be recruited widely. This is likely to be abetter form if rapid change is expected in the business environment.
Mintzberg - roles of a manager
Interpersonal
Figurehead - Representing organisation at functions, conferences etc
Leader - Hiring, firing, training, motivating staff, aligning individual and organisational goals
Liaison - With peers, as well as subordinates
Informational
Monitoring environment - Gathering formal and informal information
Spokesperson - To internal and external audiences
Disseminator - Pass on relevant information to subordinates
Decisional
Entrepreneur - Initiate projects
Disturbance - handler Take decisions when there is a deviation from the plan.
Resource allocator - Distribute limited resources to achieve objectives
Negotiator - Internally and externally
Approaches to leadership
Trait theories
Early studies of leadership focused on the personality traits or qualities of different leaders
List became large and contradictory
Criticism of trait theory is that there are always examples of effective leaders lacking in one or more of the supposedly ‘essential’ traits.
Leadership is too complex, and too dependent
upon the situation
Adair– Action-centered leadership
The most important task of a manager will
depend on the situation the manager faces.
Effective leadership depends on identifying the priority at a particular time and taking action to deal with the priority.
TASK/INDIVIDUAL/GROUP
Fred Fiedler – The Fiedler contingency model
leader’s effectiveness is based on ‘situational
contingency’, that is a result of interaction of two factors, known as ‘leadership style’ and ‘situational
control’.
Lease preferred co-worker.
A high LPC score suggests that the leader has a human relations orientation.
A low LPC score indicates a task orientation.
No ideal leader
Hersey and Blanchard
Manager-subordinate relationship as based on three main issues:
- Task behaviour – the extent of direction given by the leader
- Relationship behaviour – the amount of two-way communication
- Level of maturity – the willingness of the subordinate to take responsibility for his or her own behaviour
The higher the level of the subordinate’s maturity, the less the manager should focus on direction (task).
As maturity increases - move down this list
Telling - high task, relationship low
Selling - high task, relationship high
Participating - low task, high relationship
Delegating - Low task, low relationship
Warren Bennis - knowledge workers
Key to competitive advantage is the organisation’s capacity to create an environment capable of generating intellectual capital.
Bennis’ seven qualities of a Leader:
- Technical competence: business literacy and grasp of one’s field
- Conceptual skill: a facility for abstract or strategic thinking
- Track record: a history of achieving results
- People skills: an ability to communicate, motivate, and delegate
- Taste: an ability to identify and cultivate talent
- Judgement: making difficult decisions in a short time frame with imperfect data
- Character: the qualities that define who we are
First 3 are a given - last 4 differentiate you as a leader
Bennis states that the leader’s followers need four things
- Meaning or direction
- Trust in and from the leader
- A sense of hope and optimism
- Results
Blake and Mouton’s Managerial Grid
Two variables:
Concern for task
Concern for people.
Balance between the two is required
1.1 Impoverished–- Manager is lazy, no interest in staff or work. LOW LOW
1.9 Country club – Manager enjoys good relationship with staff and attends to their needs but has LOW HIGH
little concern for the task.
9.1 Task manager / authoritarian – Total focus on achieving the task. Little or no concern for staff HIGH LOW
5.5 Middle of road (sometimes called “dampened pendulum”) – Adequate performance.
9.9 Team – High work achievement, through working with committed people who have their personal goals aligned with those of the organisation. HIGH HIGH
Issues
High concern for staff is not necessarily ideal
Difficult to place managers accurately on the grid
There are other environmental influences on managers, e.g. industry, organisation culture, state
of economy, nature of task and character of the staff
Behaviour may be difficult to change
May be useful to assign managers with different and complementary strengths to a team
Skyrme’s principles
Skyrme (1997) set out some principles relating to virtual companies.
Culture issues, such as the need for a high level of trust and mutual support in such entities
Practical matters, such as remembering, when communicating by email, to ensure different
topics are covered in different emails (especially if they relate to different groups of people
Personal qualities required of an accountant: (CTR3)
Courtesy – Accountants should conduct themselves with courtesy and consideration towards all they come into contact with during the course of performing their work.
Timeliness – Produce work on time. Arrive on time for work and for meetings.
Reliability – Work meets professional standards.
Responsibility – Take ownership of work.
Respect – Develop constructive relationships.
Respect other people’s perspectives.
Professional qualities required: (SASI)
Scepticism – Accountants should question information supplied to them. Where is it from? Is there supporting evidence? Who supplied it? Why was it supplied?
Accountability – The accountant is accountable for his own actions and decisions. He should not pass
the buck.
Social responsibility – Be aware that work may affect the public. For example, accounting profits may be used by a range of users, including investors, employees, suppliers, customers, HMRC, prospective investors.
Independence – Have an independent mind. Produce work that is free from bias and prejudice. Beseen to be independent. (For example, think carefully before accepting hospitality from clients or suppliers.)
Employee alignment and empowerment
Employee alignment is a process of linking organisational goals to employees’ personal goals
in order to reach higher employee engagement and satisfaction.
Peter Drucker – (MBO)
1.2 Peter Drucker – (MBO)
Management by objectives (MBO) is a control strategy developed by Peter Drucker back in the 1950s.
Drucker advocated the setting of objectives or targets in four areas.
Profitability
Management performance
Worker performance
Public responsibility
The general approach to MBO is:
Set objectives, quantify targets (SMART)
Communicate objectives and targets
Organise the work into manageable activities
Allocate tasks
Ensure adequate resources
Communicate clearly
Measure performance against target
Communicate results (this would be in an appraisal)
Review objectives
Kaplan and Norton’s Balanced Scorecard
Kaplan and Norton developed the Balanced Scorecard to ensure that a wide view was taken towards objective setting and to control. The scorecard promotes the idea that financial success is not the only important measurement of an organisation’s performance.
The four key measurement areas are:
Financial: “How do we look to shareholders?” (Encourages looking at a few KPIs)
Customer: “How do customers see us?” (Encourages getting customer feedback measuring complaints etc.)
Internal processes: “What must we excel at?” (Encourages improvement of internal operations
to ensure competitive advantage)
Innovation and learning: “Can we continue to improve and create value?” (Encourages
development of new productions, acquisition of new skills for the workforce).
A difficulty is how to measure and track the non-financial aspects.
Steps in managing people performance
Step 1: Identify assessment criteria
Identify the criteria against which employees will be assessed.
Step 2: Agree performance levels
Managers agree performance levels / objectives with their subordinates and put into place a
development plan to reach them. The objectives set should be SMART (specific, measurable,
achievable, relevant and time bound).
Step 3: Monitor and control
The performance of subordinates is monitored against their objectives with regular feedback and
counselling given as and when necessary.
Step 4: Periodic performance reviews (appraisals)
Staff appraisals are performed with appropriate training and development agreed with the employee.
It is important that the appraisal takes place in a neutral environment and away from office
disturbances.
Employee appraisals
Purpose
An appraisal could be defined as a “systematic review and assessment of an employee’s
performance, potential and training needs”
The purpose of appraisals / reviews
Reward review: determine whether the employee deserves a bonus or pay increase – clearly an important motivating factor for any employee.
Performance review: for planning and following up training programmes.
Potential review: to determine an individual’s likely career path and help them to achieve their
progression through the company.
Different forms of appraisal
Management-led – the traditional approach to appraisals, the employee is assessed by a
manager.
Self-appraisal – the employee assesses their own performance, identifying any problems and
identifying ways of resolving them.
Multi-source (or 360 degree) feedback: appraisal considers feedback from a variety of sources
including customers and fellow workers.
Feedback is critical to the success of any appraisal, informing the appraisee of the results of the appraisal and helping them to achieve their future objectives.
Ineffective appraisals
Confrontation – between the parties involved
Judgement – appraiser takes a biased approach
Informal chat – lacking purpose
Bureaucracy – a form filling exercise – no real worth
Annual event – annual targets may be irrelevant after 3-6 months so rendered meaningless
Focus on recent events – as opposed to the whole period under review.
Rewarding good performance
Performance-related pay (PRP) - must be SMART and within employees control
Profit-based approaches - A common problem of such schemes is those individuals who feel too “distant” to influence profits. Promotes short term decisions being made
Equity-based approaches - Here, staff are given direct interest in the company’s financial performance via shares or share option
schemes.
These schemes normally tie the employee into the company for a number of years before
the reward can be earned, thus promoting an interest in the long-term.
Managing poor performance
In the UK, the Advisory, Conciliation and Arbitration Service (ACAS) promotes and facilitates best
practice in employer – employee relations.
Conciliation - Parties meet for informal discussion to resolve dispute
Mediation - Provide a mediator to hear dispute and make recommendations
Arbitration - Help appoint an arbitrator who will make a binding ruling
Disciplinary procedures (ACAS code)
In writing
Non-discriminatory
Avoid undue delay
Respect confidentiality
Investigate allegations before taking action
Provide all evidence to employee before hearing
Set out possible outcomes
Allow employee to present their case
Allow employee to be accompanied by a colleague or union representatives
Explain consequences of outcome
Summary dismissal only allowed for gross misconduct
Allow, and provide procedure for, appeal
Statutory obligations, based on ACAS code
Applicable if employer is considering serious action
Write to employee, explaining why action being taken, inviting employee, who may be
accompanied, to a meeting,
At meeting, explain problem, invite employee to respond,
After meeting, explain decision, offer right to appeal,
Appeal is to different manager, employee has right to be accompanied at appeal hearing
Grievance procedures
As with disciplinary process, less formal routes should be tried before the formal route is used.
A typical grievance procedure could involve:
The individual sounding out a colleague or an employee representative
The individual raising the issue with their line manager (unless the issue involves the line
manager, in which case likely raising with the line manager’s manager or a member of the
Human Resources department)
If unresolved, referring the matter to a higher manager and the human resources department
Following the organisation’s internal grievance procedure that would likely involve meetings
including both parties and their representatives, and HR staff
If unresolved, investigating alternative dispute resolution processes (arbitration, conciliation)
As a last resort, going to an industrial tribunal.
Mentoring
Mentoring is the long term passing on of support, guidance and advice where a more
experienced colleague uses their greater knowledge and understanding of the work or
workplace to support the development of a more junior or inexperienced member of staff.
Benefits to the organisation:
Improves motivation among employees
Faster career progress
Fewer and more quickly resolved disputes
Accelerated learning on the job
Helps to reinforce organisational culture
Significant impact upon recruitment and retention
More effective succession planning
Increased productivity through better engagement and job satisfaction
Benefits to the mentored person:
Knowledge, technical and behavioural improvements
Better management of career goals
Developing wider network of influence
Increased confidence and self-awareness which helps build performance and contribution
Coaching
Coaching involves the passing on of skills and knowledge in a supportive and collaborative
environment. It is, therefore, similar to mentoring, although mentoring usually involves a
closer, longer-term relationship.
Health and safety
Employer responsibilities
More specifically, the employer’s responsibilities include:
The work environment and work practices are safe.
Providing safe plant and machinery, safe premises, and safe systems of work. This will involve the selection of competent staff and proper supervision.
Providing safe working conditions to employees of a third party who are working on the company’s premises.
Making sure the company’s health and safety policy has been communicated to all staff.
Ensuring all employees have received training on safe working practices and undergo periodic
fire evacuation training.
Performing risk assessments of all work hazards and the risk to anyone else affected by the
company’s work activities. These should be carried out continuously, not just as a one off
exercise.
Establishing an accident reporting system, which includes monitoring trends to reveal areas
where accidents are reoccurring and how the company follows up any accident to prevent
reoccurrence.
Health and safety
Employee responsibilities
Employees also have health and safety responsibilities which include:
Taking reasonable care of themselves and others,
Using equipment properly,
Informing the employer of any situation which may be of danger,
To keep their work areas tidy and safe,
To avoid creating hazards,
To co-operate with the employer as far as possible.
Employing staff: legal considerations
The main terms of employment must be supplied to employee within two months of commencing
employment.
Duties of employee and employer established through common law
Employer
Overriding duty of mutual trust and confidence,
including taking reasonable care of employees
and provide a safe system of working. No duty to
protect employee’s property or provide
references.
Pay employees
Indemnify employee against expenses and
losses incurred in course of employment
Take care of health and safety
Select fit and competent fellow workers
To provide work where employee is paid by
reference to work done.
Employee
Fundamental duty of faithful service
Not to compete with employer
Competence to do job
Obedience
Account for money and property received
during course of employment
Exercise reasonable skill and care
Not to delegate duties without permission
Statutory duties of the employer
Pay - min wage, itemised payslip, stat sick pay, stat mat and pat leave
Hours of work - Working time regulations, 48-hour maximum over a 17-week average, employee
can opt out in writing.
Discrimination - equality, reasonable adjustments for disabled people
Direct discrimination is the legal term that applies if a person treats someone less
favourably than they would another because of protected characteristic they have
(e.g. race, religion, age and sex).
Indirect discrimination occurs when an organisation makes a decision, or puts in
place a particular policy or practice, which, on the face of it appears to treat
everyone equally, but which in practice leads to people from a protected group
being treated less favourably than other people.
Wrongful dismissal
If employer breaches contract, e.g. by dismissing employee without giving
sufficient notice, employee can claim damages for breach.
Damages usually calculated by reference to difference between actual and
contractual notice period.
No minimum period of employment required.
Unfair dismissal
To avoid a claim for unfair dismissal the employer must act “reasonably”.
Reasonableness includes giving reasons for dismissal in writing.
What constitutes fairness will depend on the size and resources of the employer.
To dismiss on grounds of poor performance, employer must show gave warnings, attempted remedial action
24 months before eligible
Constructive dismissal
Constructive dismissal arises when an employer breaches the terms of the
contract such that the employee is forced to resign
Fair reasons for dismissal include:
Lack of capability or qualifications e.g. the loss of a driving licence.
Misconduct, e.g. assault, immorality, habitual drunkenness.
Redundancy, provided reasons for selection are fair.
Following fairly applied grievance or disciplinary procedure.
Failing to carry out a reasonable order from the employer.
Unacceptable reasons for dismissal
If related to trade union activities = automatically unfair.
Pregnancy = automatically unfair.
Unfair selection for redundancy.
Redundancy
Redundancy amounts to fair dismissal if employer (genuinely) ceases or intends to cease
trading at that location or needs fewer workers at that location.
Minimum two years’ service since reaching 18 years of age.
Redundancy option not available if employee unreasonably refuses alternative employment
Organisational culture
Organisational culture may be defined as the specific collection of values and norms that are
shared by people and groups in an organisation and that control the way they interact with
each other and with stakeholders outside the organisation.
Levels of culture (Schein)
In the 1990s, Edgar Schein proposed four levels of culture:
Artefacts: Obvious, visible symbols of an organisation’s culture
Values: What is important in the organisation
Assumptions: The deepest level of cultural awareness that determines behaviour
Norms: Unwritten guidance on how people should behave in a given situation
Organisational iceberg
The iceberg refers to two levels of culture, Formal (visible) and Behavioural (hidden).
Formal, visible aspects of culture (above the water) include:
Structure
Mission
Goals
Technology
Procedures
Behavioural, hidden aspects of culture (below the water) include:
Values
Attitudes
Style
Feelings
Beliefs
Communication patterns
Building teams (Tuckman)
All teams go through four necessary phases in order to grow and
be able to deliver results. (Forming, Storming, Norming, Performing)
Forming
- Team meets. Agree goals and begins to tackle tasks. Team members independent. Focus on self. Supervisors of the team during this phase tend to need to be directive
Storming
- Different ideas compete for consideration. Team members open out to each other and confront each other’s ideas and perspectives. Tolerance of each team member and their differences needs to be emphasised. Supervisors of the team during this phase may be more accessible but tend to still need to be directive
Norming
- Members adjust behaviour to each other as they develop work habits that make teamwork seem more natural and fluid. Team members begin to trust each other. Motivation increases. Supervisors of the team during this phase tend to be participative.
Performing
- High-performing teams are able to function as a unit. Team members become interdependent, motivated, competent and autonomous. Participative supervisors.
Adjourning - There is a risk that performing will turn into ‘adjourning’ if the stage lasts too long. This is characterised by a group starting to act on ‘automatic pilot’, and running the risk of groupthink.
Peters and Waterman - Successful teams
Small size
Together for a limited time
Focused on a single task
Voluntary membership
Informal communication mechanisms, no concern about status
Focused on action with clear plan to achieve goals
Role theory
Role theory discusses various considerations that influence how individuals carry out their roles and hence how effective the teams are.
Behaviour – the actions associated with a particular role
Signs – visible signifiers of a role, for example a uniform
Set – the team that supports someone in a senior role
Ambiguity – individuals are not sure of their own roles or others are not sure about what the
individuals are doing
Conflict – clash between different roles that an individual has
Incompatibility – individuals’ expectations about their roles differing from other people’s
Belbin’s eight (later nine) roles in an effective team
Plant - A creative, imaginative, unorthodox team-member who solves difficult problems. Although
they sometimes situate themselves far from the other team members, they always come back to
present their ‘brilliant’ idea.
Resource Investigator - Networker for the group. Whatever the team needs, the Resource Investigator is likely to have someone in their address book who can either provide it or know someone else who can provide it.
Chairman (1981) / Co-ordinator (1988) - Ensures all members of the team are able to contribute to discussions and decisions of the team. Concern is for fairness and equity among team members.
Shaper - Dynamic team-member who loves challenges and thrives on pressure. Possesses the drive and courage required to overcome obstacles.
Monitor-Evaluator - Sober, strategic and discerning member, tries to see all options and judge accurately.
Team Worker - Ensures interpersonal relationships are maintained. Sensitive to atmospheres and may
be the first to approach another team member who feels excluded.
Company Worker (1981) / Implementer (1988) - Practical thinker who creates systems and processes that will produce what the team wants. Takes a problem and works out how it can be practically addressed.
Completer Finisher - Detail person. Spot flaws and gaps and know where the team is in relation to its schedule. Ensures the quality and timeliness of the output of the team.
Specialist (1988) - Brings ‘specialist’ knowledge to the team.
Criticisms of Belbin
The sample was already highly selective - business school and high fliers.
While Belbin draws on examples from real organisations, the development of the model is based on the behaviour of subjects in the artificial environment of the business school exercise.
Some teams consisting of one Shaper and a group of “yes” men perform well
Vail - high-performing systems
Vail wrote in terms of human teams being like systems, which needed to have a number of
characteristics to perform well:
Clear broad aims
Clear short-term objectives
Commitment to objectives
Task focus by all individuals involved
Strong and clear leadership
Development of new methodologies and inventions
Taylor - Motivation
Workers are rational economic beings motivated by obtaining the highest possible remuneration.
Taylor established four principles of scientific management:
The need to develop a true science of work whereby a “fair day’s pay” could be determined
The scientific selection and training of workers
Encouraging the workforce to develop themselves and reach their full potential
Co-operation between management and workers
Schein - motivation
Schein, on the other hand, suggested people don’t just work for money:
Rational-economic man – motivated by money
Social man – motivated by the need to be with friends and colleagues
Self-actualising man – the need to reach one’s potential
Complex man – needs driven by a combination of factors.
Douglas McGregor X-Y Theory
Theory X (‘authoritarian management’ style)
The Theory X manager believes:
The average person dislikes work and will avoid it if he/she can.
Most people must be forced, with the threat of punishment, to work towards organisational
objectives.
Characteristics of the Theory X manager:
Results-driven and deadline-driven, to the exclusion of everything else
Intolerant
Issues deadlines and ultimatums
Distant and detached
Aloof and arrogant
Poor at proper delegating – but believes they delegate well
Is a dickhead basically
Theory Y (‘participative management’ style)
The Theory Y manager believes:
Effort in work is as natural as rest and play.
People will apply self-control and self-direction in the pursuit of organisational objectives,
without external control or the threat of punishment.
Commitment to objectives is a function of rewards associated with their achievement.
People usually accept and often seek responsibility.
McGregor thought that managers who tend towards theory X generally get poor results.
Enlightened managers use theory Y that produces better performance, results and allows people to
grow and develop.
Maslow (a content theorist): The hierarchy of needs
Physiological needs – the most basic needs for human existence e.g. food and shelter
Safety needs – more job security, safe and comfortable working conditions
Social needs – a sense of belonging to a team. A chance to meet and socialise with like-minded
people
Esteem needs – an opportunity to gain social status and feel self-worth
Self-actualisation – fulfilling one’s potential as they see it
‘a perpetually wanting animal’
Herzberg: Motivation-hygiene theory
Factors that led to job satisfaction (motivators) and those that might lead to dissatisfaction (hygiene factors).
Herzberg recommends that:
Attention should be given to the hygiene factors to avoid the symptoms of job dissatisfaction.
In order to increase the motivation of individuals, jobs should be redesigned
Three approaches to job redesign are:
Job rotation – swap jobs periodically to break monotony. This will also allow individuals to
develop extra skills in different areas.
Job enlargement – increase the number of tasks at the same level under the control of the
individual.
Job enrichment – developing the depth of duties through delegation, giving the individual
greater variety and responsibility in their tasks.
Motivating potential score (MPS)
Hackman and Oldham’s motivating potential score (MPS) is an attempt to measure the extent to
which a job exhibits five characteristics:
(1) Skill variety – the degree to which a job requires the exercise of a number of different skills, abilities, or talents
(2) Task identity – the extent to which a job requires completion of a whole and identifiable piece of work
(3) Task significance – the importance of the job
(4) Autonomy – degree of autonomy allowed
(5) Feedback – the degree to which the individual doing a job obtains information about the effectiveness of the performance.
Feedback as a motivator
Feedback on an individual’s performance is an important part of motivation. Feedback can take
different forms:
Intrinsic – from within the organisation e.g. remuneration levels or feedback from a manager
Extrinsic – from the environment e.g. from a customer
Concurrent – during the act
Delayed – after the task e.g. at a performance appraisal.
Feedback should be clear, frequent and unbiased.
Barriers to effective communication
Language
Misreading body language, tone and other non-verbal forms of communication
Noisy transmission (unreliable messages, inconsistency)
Receiver distortion: selective hearing, ignoring non-verbal cues
Power struggles
Managers hesitate to be open (concealment)
Assumptions
Distrusted source, erroneous translation, value judgment, state of mind of two people
Interpersonal relationships: How we perceive communication is affected by the past
experience with the individual.
Organisational relationship (e.g. communication from a superior may be perceived differently
than that from a subordinate or peer)
Cultural differences: Effective communication requires deciphering the basic values, motives,
aspirations, and assumptions that operate across geographical lines
Reading non-verbal communication cues
A large percentage (studies suggest over 90%) of the meaning we derive from communication, comes
from the non-verbal cues that the other person gives
Visual
Tactile
Vocal
Use of time, space, and image
Developing communication skills: Listening skills
Meetings - minutes, matters arising, agenda
Digital communication
Does this really need a card?
Email
Video-conferencing (for virtual meetings)
Social media
Joint work on files held in the cloud
Benefits of digital communication
Most digital communication methods are or can be recorded so that there is a record of the
communication (eg email replies, video-conferences can be saved to be revisited later)
Most digital communication methods can be shared widely so that many people can participate
in the conversation
Lack of formality may improve communication
Drawbacks of digital communication
As noted, there is likely to be reduced physical contact in relation to digital communication and therefore a reduction in ‘visual’ clues in communication
The record of a conversation is permanent, so mistakes or unintended messages might be retained
The record of a conversation is comprehensive, so may take unnecessary time to review, or to trace a particular issue
Lack of formality may increase chance of misunderstanding or offence.
Negotiation - 4 phase approach
Phase I: Preparation phase
- Information
- Leverage evaluation: Evaluate your leverage and the other party’s leverage at the outset
- Analysis: what are the issues?
- Rapport
- Goals and expectations
- Type of negotiation: competitive, co-op etc
- Budget: costs
- Plan
Phase II: Opening phase
- Logistics: when, where and how?
- Opening offers
Phase III: Bargaining phase
- Subsequent offers
- Tactics:
- Concessions
- Resolutions
Phase IV: Closure phase
- Logistics: how and when will you close?
- Documentation: prepare a closing checklist
- Emotional closure
Qualities and skills of an effective negotiator
Persuasion and compromise
Does this really need a card??
Influence
Cialdini identified six weapons of influence:
(1) Reciprocity. People tend to return favours and treat others as they treat us.
(2) Commitment and Consistency. Cialdini believes people have a desire to behave consistently.
(3) Social Proof. People are influenced by peer pressure and “safety in numbers”.
(4) Liking. Cialdini believes people are more likely to be influenced by people they like.
(5) Authority. People feel a sense of duty or obligation to those in positions of authority.
(6) Scarcity. Under this principle, people tend to be more attracted to things with limited availability, or when the opportunity to acquire them on favourable terms is limited.
Conflict
Constructive/destructive
Conflict is inevitable because:
Individuals and groups battle for status, resources and rewards
Individuals have their own agenda which may not fit with the agenda of others or the organisation
Constructive view (i.e. conflict is a good thing and must be encouraged):
Conflict generates ideas to solve problems
Helps define power relationships
Acts as a release valve for emotions
Destructive view
Clouds judgement
Leads to dysfunctional behaviour
Distracts attention from organisational objectives
Energy diverted from task at hand
Losers may withdraw from the group
Symptoms of conflict
Friction between individuals and/or groups
Inadequate communication
Withholding information
Distorting information
Tale-telling
Excessive use of ‘work arounds rather than following organisation procedures’
Sources and causes of conflict
Previous history
Lack of goal congruence between the individual and the organisation (incompatibility of goals) or between different individuals
Fighting for inadequate resources
I win you lose situations
Different ideologies, for example between senior management and trade unions
Uncertainty over roles or relationships
Lack of genuine, clear communication
Misunderstandings
Unfair rewards
Stress
Cultural differences
Results of change
Three levels of conflict
Intrapersonal: The conflict is primarily within an individual
Interpersonal: The conflict is primarily between two or more individuals (i.e. at a team level)
Systemic: The conflict is a symptom of a wider organisational issue that needs to be addressed
Horizontal/vertical conflict
Horizontal conflict:
Horizontal conflict is the type of conflict that occurs between people/groups at the same level in
an organisation
It might arise over, say, allocation of a scarce resource between departments or project
Vertical conflict
Vertical conflict is the type of conflict that occurs between people/groups at different levels in an organisation, for example, staff and managers, or managers and the board.
This could be caused by issues of status or ideology. It could also be caused by scarce resources.
Thomas-Kilmann framework
The Thomas-Kilmann framework is useful in identifying some of the different strategies for handling disputes and conflict.
- Level of cooperation in attempting to satisfy others’ interests
- The degree of assertiveness in pursuit of ones own interests
LOW CO-OP, LOW ASSERTIVENESS
Avoiding style – Withdraw from conflict or deny its existence. The goal could be delay, so it may be successful if it allows tempers to cool and protagonists to reflect on their position. However ignoring the conflict may not be possible indefinitely.
LOW CO-OP, HIGH ASSERTIVENESS
Competing style – The goal of individuals is to ‘win’ by promoting their own interests and not cooperating. This often results in a situation where some people win, others lose and the organisation is damaged. It may be necessary in a crisis, where the issue is critical or assertiveness is required, e.g.
where a new manager is setting out his or her stall.
HIGH CO-OP, LOW ASSERTIVENESS
Accommodating style – The goal is to put the other party’s interests first. However, communication issues may mean that both parties are unhappy with the outcome. It may be necessary if the relationship or task is critical and/or the accommodating party has low power.
HIGH CO-OP, HIGH ASSERTIVENESS
Collaborative style – The aim is to find solutions that benefit both parties, a win-win situation. It works best if sufficient time is available and the protagonists are open, honest and want to work together.
MEDIUM OF BOTH
Compromising style – The objective is to locate the middle ground with each party giving up something. What is given up may be valuable however. It works when the relationship is more important than the issue
Mainwaring suggested four strategies for managing conflict:
Stimulation and orchestration –encouraging conflict as a means of promoting change or stimulating new ideas. This avoids organisations getting stuck, but the risk is that conflict will escalate negatively
Suppression – ignoring conflicts, smoothing things over or suppression by force. Short-term tactic
Reduction – building on areas of agreement and common objectives and involving compromises
Resolution – establishment of consensus to remove source of conflict, using win-win situations and requiring attitude changes
Other methods of managing conflict
Counselling
Coaching
Mediation - an informal, confidential process in which an impartial person facilitates discussion and negotiation
Team building
Physical separation
Charles Handy’s strategies to deal with conflict
Environmental strategies
Agree objectives
Strengthen team culture
Improve communication
Improve information flow
Clear roles/responsibilities
Regulation strategies
Rules and procedures
Conflict resolution manager or arbitrator
Arena for conflict resolution – meetings etc
Separate the protagonists
Ignore the problem
Cyert and March: resolving stakeholder conflict
Cyert and March focussed on a specific type of conflict resolution, the resolution of conflict between key stakeholder groups or of conflicting stakeholder objectives.
Satisficing involves negotiations between key stakeholders to arrive at an acceptable compromise.
Under sequential attention, management focus on stakeholder needs in turn.
Side payments involve compensating a stakeholder group because their objective(s) cannot be met.
Exercise of power involves enforcing a resolution by a senior figure utilising their power to implement a decision
Project
It should acknowledge:
The project stakeholders
The resources necessary to complete the project
A timescale agreed for completion
Quality requirements
The risk attached to the project
It is useful to distinguish a project from “repetitive operations” which is the normal day-to-day business of an entity.
Distinguishing features include:
A project is normally geared towards a one-off event and follows a plan towards that event
Defined start and end time (i.e. a temporary process)
A project may include non-routine/specialist work
A project will normally have cost/budget constraints
Staff from different functions
Project management
“Project management” is the term given to the process undertaken to ensure that a project is completed on time, to budget and to the agreed quality standard.
Project Triangle
A project will be deemed successful if it is completed at
the specified level of quality
on time, and
within budget (ie at the right cost).
This is known as the project triangle.
4-D
The 4-D model describes the four stages of a project:
Define the project and its goals
Design the project to address the goals
Deliver the project with adequate resources
Develop the process
Project Management Body of Knowledge (PMBOK) guide
The Project Management Institute (PMI) published this guide in an attempt to document and standardise generally accepted project management information and practices.
PMBOK recognises five basic process groups and nine knowledge areas typical of almost all projects.
PMBOK five basic process groups
“IPECC”
Initiating - identify a need
Planning - develop a proposed solution
Executing & Controlling - Perform the project
Completion - Closing
PMBOK - The nine “knowledge areas”
(1) Project Integration Management – processes for ensuring that the elements of the project are properly co-ordinated.
(2) Project Scope Management – processes for ensuring that the project only includes the work required to complete the project successfully.
(3) Project Time Management – processes for ensuring completion of the project on time.
(4) Project Cost Management – processes for ensuring that the project is completed within the approved budget.
(5) Project Quality Management – processes for ensuring that the project will satisfy the necessary quality standards.
(6) Project Human Resource Management – processes to ensure that staff are appropriately
trained and motivated.
(7) Project Communications Management – processes to ensure that information is distributed in
a timely and structured way.
(8) Project Risk Management – processes concerned with the identification and management of risk.
(9) Project Procurement Management – processes for acquiring goods and services.
PRINCE2
PRojects IN Controlled Environments, is a project management methodology covering the management, control and organisation of a project.
Standard approach for project management in the UK.
- Starting up a project – creates and evaluates the business case for a project.
- Directing a project – the project manager will generally oversee the project, ensuring there is good communication between the stakeholders at all stages of the project.
Initiating a project – this stage will identify how the project will be managed, with the Project Initiation Document (PID) forming the contract and terms of reference for the project as a whole.
Planning – plans relating to project deliverables are continuously produced throughout the project to
ensure a consistent approach. Project deliverables are the quantifiable goods and / or services that will be provided upon the completion of the project.
Controlling a stage – creation of documents which help to manage the day-to-day operations.
Managing product delivery – controls the work done by specialist teams.
Managing stage boundaries – the project manager obtains feedback throughout the project and takes action as necessary. To formally complete or close a stage, the manager may need to obtain authorisation or sign-off from the Project Board. The end stage process is sometimes formalised through use of an ‘End Stage Assessment’.
Closing a project – the final sign off by the customer, stating that the project objectives have been met
The project life cycle
Gido and Clements
Y - Effort
X - Time
A project will normally pass through several phases in its life.
Gido and Clements identified four phases of large projects:
Phase 1 – Identify a need –a feasibility study should be undertaken to decide whether or not to go
ahead with the project.
There are three basic types of feasibility study that can be undertaken:
(1) Technical or Quality feasibility study
(2) Social or Ecological feasibility study
(3) Financial (Cost/ Benefit) or Economic feasibility study
If the project does go ahead, a Project Initiation Document (PID) will be produced, forming the contract between the relevant parties.
Phase 2 – Develop a proposed solution – given the needs above. This will include setting targets for costs and timings. The project may be subdivided into different activities, which can then be arranged in an appropriate sequence.
Phase 3 – Perform the project/Implementation – Actual performance can then be measured against any budgets/standards set, with appropriate remedial action taken.
Phase 4 – Completion/project closure – Including a thorough evaluation and documentation of the project’s performance. This will allow future projects to benefit from any mistakes made this time around.
Workstreams
A workstream is the progressive completion of tasks completed by different groups within a company which are required to finish a single project.
Particularly associated with a matrix structure. This is because in a matrix structure, the team may be structured across different departments so that team members are working horizontally with different departments and vertically with leaders.
Workstreams list the work that has to be done by each ‘stream’ within the matrix in order to bring together the whole project.
Different ‘streams’ will be allocated owners, who must manage that stream under project leader
Work Breakdown Schedule (WBS)
Psychologists say our brains can normally comprehend around eight items simultaneously. Divide and conquer.
The WBS provides a visual summary of the project and its key tasks, allowing the total cost to be seen and allowing jobs to be allocated to appropriate staff.
The benefits of using a WBS include:
Summarising all the activities comprising the project, including support and other tasks.
Establishing the authority and responsibility for each part of the project.
Estimating the project cost, split into its components.
Can also help identify which part, or which activities in the project carry the highest risks.
Allows an entity to arrange for work to be carried out in a sequence that ensures that jobs that must be completed first, are in fact done prior to less critical jobs.
The WBS assists in the overall monitoring and control of the project because it provides a checklist of all the tasks to be carried out and the materials needed for each.
There may be other breakdown schedules, such as ‘product breakdown schedule’ or ‘cost breakdown schedule’.
Gantt charts
A Gantt chart is a graphical representation of the duration of tasks against the progression of time, providing a useful tool for planning and scheduling projects.
A Gantt chart normally uses two bars, one showing the planned duration and the second showing the actual duration.
To create a Gantt chart:
List the activities on the left side of the page.
Estimate the time required for each step
Using an appropriate horizontal timescale, draw a time bar for each activity.
Add a key to distinguish planned and actual times
Network diagrams
GO OVER THE EXAMPLE OF THIS!!!!!
Critical path analysis
It involves breaking down the project into a sequence of tasks, estimating the duration of those tasks and arranging the tasks into a logical sequence.
Activities start and finish with a numbered circle/node or event. The activity itself is represented by an arrow. The name of the activity is written above the arrow and the duration below the arrow.
The project should have one overall starting event and one finishing event.
Project evaluation and review technique (PERT)
“deluxe” version of network diagrams
Where the project is complex and where there is uncertainty surrounding the activities and duration of activities needed to complete the project.
For each task, a best possible time, worst possible time and most probable time is used to determine an expected completion time.
Expected time = (o + 4m + p)/6
where ‘o’ is the optimistic estimate,
‘m’ is the probable estimate, and
‘p’ is the pessimistic estimate.
These expected times are then used to establish the critical path and the standard deviation of completion times for the entire project.
Resource histogram
This is a graphical aid that shows the amount and timing of the requirement for a resource during a project.
By showing those periods where the resource is heavily in demand, it will be easy to determine where that resource can be reallocated from quieter time periods.
Some diagrams show another bar representing resource availability
Project quality plan
This would set out the standards that should be adhered to in order to deliver the project at the
standard required.
Project management software
Specialised software which could, for example, calculate the critical path and resource deficiencies quickly, with automatic recalculations should any of the parameters change.
Advantages:
Time saved performing routine operations
Quick and easy to change data/parameters and see how the changes affect the end result
Improved control over resources
Improved communication.
Buffering
Buffering involves the inclusion of defined quantities of time within a project schedule to ensure the overall delivery date is met.
A feeding buffer may be added to non-critical tasks that feed to critical tasks.
A capacity buffer may be used in a multi-project programme to reduce the likelihood of a project being adversely affected by resource usage by another project.
A resource buffer may be added to key resources to ensure they are available when required
Sources of risk
Risks might arise
through:
Delays (for example, material/labour/transport issues?)
Price rises (for example, basic price rises or movements in exchange rates if importing materials)
Quality issues (for example, actual products not matching samples)
Risk management
Risk management can be thought of as a five-stage process:
(1) Identify the risk
(2) Assess their likelihood
(3) Plan and respond to the risk
(4) Take measures to manage the risk (TARA), including:
Transference: by passing on the risk to another party e.g. insurance
Avoidance: removal of the factors which give rise to the risk
Reduction: of the risk
Absorption: accept the risk
(5) Review the approach taken for future reference
Scenario planning
Scenario planning enables allowances to be made for the risks associated with a project. It involves
considering different sets of circumstances that may occur, and devising a plan to deal with each.
Slippage
Do nothing - After considering all options it may be decided that things should be allowed to continue as they are.7
Add resources - If capable staff are available and it is practicable to add more people to certain tasks it may be possible to recover some lost ground. It may be possible to
subcontract some of the work.
Work smarter - Consider whether the methods currently being used are the most suitable. It may be possible to use prototyping.
Re-plan - If the assumptions that the original plan was based on have been proved invalid, a more realistic plan should be devised.
Reschedule - It may be possible to recover some of the lost time by changing the phasing of certain deliverables.
Introduce incentives - If the main problem is team performance, incentives such as bonus payments could be linked to work deadlines and quality.
Change the specification - If the original objectives of the project are unrealistic given the time and money available, it may be necessary to negotiate a change in the specification.
Continuous improvement
Project Management Maturity Model (PMMM)
Aims to identify opportunities for continuous
improvement by learning from past mistakes.
Level 1 – Emphasises the importance of staff having basic project management knowledge throughout the organisation
Level 2 – Common standards and processes should be developed, so that the benefits can be repeated
in future projects.
Level 3 – Use of a singular methodology throughout the organisation
Level 4 – Recognises the importance of benchmarking as an aid to improvement
Level 5 – Continuous improvement and feedback
PID (Project Initiation Document) and Project Management Plan:
At the beginning of a project, the project manager should produce a document that:
Defines the project
Records the project justification and objectives
Sets out the expenditure and time-table budgets
Documents the organisation and responsibilities of the project team
Outlines the quality control standards being used
Progress reports
The project progress report is intended as an opportunity for the stakeholders of the project to get feedback on the project while there is still time to improve it. The progress report should mention:
What has been accomplished on the project to date?
What is still left to do?
Status against plan in terms of cost, timetable, and scope.
Status and progress of resolving issues identified to date.
New issues that have arisen since the last report.
Corrective action plan.
Expected achievement of milestones before next report.
Next report date.
Completion report
At the end of the project, the project manager will write up his completion report.
The purpose of this is to:
Ensure that the project is completed and has met its original objectives.
Obtain feedback from the client and staff on project performance with a view to improving
future performance.
Meet with the project team and customer to report on project successes and failures.
Obtain customer sign-off.
Post-completion audit report
The post-completion audit is a more formal audit of the project as a whole, produced after the completion of the project.
This focuses on whether the stakeholders’ expectations were met and a more detailed analysis of the costs and time spent. The findings should be formalised in a report, covering the following:
An executive summary, giving a brief overview of the project
Any areas of unsatisfactory performance
Degree to which the original objective was achieved
A breakdown of actual costs and time taken versus budget
Any difference from company or client expectations should be reviewed and analysed to
prevent re-occurrences in the future
Client feedback
Recommendations as to any improvements which could be made to future projects
Project people
Project stakeholders - Stakeholders are all the people who have an interest in the process and/or end results of the project.
Project owner - The project owner is the person for whom the project is being carried out and as such he/she is interested in the end result being achieved and his/her needs being met.
Project sponsor - The project sponsor is the person or organisation who provides the resources for a project. They have the authorisation to give the project the go-ahead and appointing the project manager. They also approve the original project plans and any changes to those plans, including the project budget. Part of the project sponsor’s role may include the establishment of a steering committee, who would oversee the entire project through to its implementation.
Project manager -
The project manager is the leader of the project team, taking the ultimate responsibility for ensuring
that the project meets its objective.
The project manager has responsibilities for:
Managing the expectations of the different stakeholders
Delivering the project on time and within budget
Defining, planning and co-ordinating the project
Allocating and securing resource commitment
Monitoring and tracking project progress, controlling costs
Project customers/users
The end user. This may or may not be the same party as the project owner.
Project champion
Projects may have a project champion, an informal role, but someone who ‘champions’ the project
and ‘campaigns’ for it within the organisation.
The role of the Chartered Management Accountant in projects
The role of the management accountant increasingly includes involvement in cross-functional project teams.
The management accountant can contribute to project team in a number of ways, including:
Analysing and interpreting information to facilitate project decision making (this is of increasing importance with the rise of big data use)
Liaising with the project sponsor to justify additional project resource requirements
Cost-benefit analysis of the project proposal as part of the feasibility study
Budget and forecasts
Ensuring accurate recording of project costs (and revenues if applicable)
Monitoring against budget and investigating variances
