HR managers need to be better performers

HR managers need to be better performers

It may sound a bit ironic. Indian managers may be high performers in their area of expertise but the performances of the people who manage them leave much to be desired for. That in short is the synopsis of a recent survey conducted by global management consultancy firm.

In the firm’s High Performance Work Force study 2007, conducted by interviewing 40 Indian CEO and Human Relation (HR) department heads, the majority of the executives cited that HR is their most critical workforce (Globally, HR is ranked No. 7 in the pecking order of importance).

However, there was deep dissatisfaction with HR’s performance. In an adequacy vs expectations survey across different workforce like sales, manufacturing, R&D, HR, etc HR performed the worst. The study pointed out that CEOs believed that there is a huge gap between the potential and actual achievement by their HR function.

The survey sought executive insights in three broad areas – most important factors in achieving high performances and how their companies are addressing these factors, the importance of various workforces to company’s success and their performances and the extent to which the HR function is supporting the company’s key workforces and positioning them for success.

The executives in the study came from diverse industries like steel, construction, engineering to finance and entertainment.

In India, both old and new economy companies are trying to fish in the same pond, creating severe talent crunch.

As new economy companies continue to attract talented people in droves, old economy companies such as those in steel, power generation and manufacturing appeared to be better prepared to deal with talent issues. These companies are more willing to use “appropriate metrics” to track HR and over workforce performance.

In what could be particularly worrisome, the middle management level was found to be unhappy with how organizations treat them. The amount of effort in retention and leadership development at this level is just not good enough.

As companies often get their next generation of leaders from this level, the study found that the HR department needed to do much more as executives in this level are at a critical point of their career. The study found that it is a situation that should be troubling not only for HR leaders themselves, but for the executives as a whole.

Advertising as entertainment

Advertising as entertainment

The advertiser’s role is to determine the communication objectives. These have to be in line with the overall organizational goals and strategy.

The advertiser’s goals and strategy are influenced by the government policy. It may even sponsor news or films made by the corporate sector on television. Hence government rules and regulations and electronic media (T.V., Video, Cable T.V. Radio etc.) policies play a dominant role in advertiser’s decision-making.

The advertiser is facilitated by advertising agencies and media in translating its goals into action. Marketing research in turn assists all these institution, i.e. the advertiser agencies and the media. Within the advertiser’s organization, it’s the product managers, or the brand managers (as in soft drinks and personal products) whose task is to coordinate between the advertising agencies and the organization. In fact, in many of the multinational and large Indian firms, a product manager or brand manager is a strategist and it’s his or her responsibility to develop communication goals for the product or brand and evolve a marketing plan and strategy for it. The advertising campaign, which is a part of this overall marketing strategy, is often decided by the product managers.

While all large advertisers depend on advertising agencies to develop the campaign, smaller advertisers, has to depend on its own internal resources or take the services of freelance advertising personnel.

For generations, advertising interrupted the entertainment that one wanted to read, hear or watch. Now, in a turnabout, advertising is in increasingly being presented as entertainment and surprisingly the idea of all ads all the time is gaining some favor.

One reason is proliferation of broadband internet connections, which make it easier for computer users to watch or downloads clips. That is enabling media companies, agencies and advertisers to create sites devoted to commercials and other forms of advertising for amusements, rather than hard core huckstering.

Oddly, the trend runs counter to another powerful impulse among consumers: the growing desire to avoid advertising. TV viewers, for instance are spending billions of dollars a year for TiVo and other digital video recorders that help them zip through or zap commercials, and click through rates for banner web ads are declining.

The difference between ‘watching a commercial’ on a website and in ones living room is that online is “an opt-in audience” and he/she is choosing to be there. It’s the nature of the web to offer a destination one can go to and know what he is going to see.

There’s certainly an audience for entertainment as part of the offering. The numbers seem to support it. For example, veryfunnyads.com, a broadband website operated by the TBS cable network has delivered over 63 million video since its introduction a few months ago.

It’s a very straightforward premise: The viewer is going to have a funny experience, and going to have it every 30 seconds. The funny-ad website is part of a re-branding campaign for the TBS network, which carries the theme “Very funny”. The goal is to cultivate an identity for TBS as a home for sitcoms and humorous movies.

A lot of people talk about zipping through commercials because the average break doesn’t hold the promise of being entertaining.

Putting choice on the table, changes the whole game. Everything is about control. If an ad is interesting the viewer will have the conversation with the brand. If it’s not, it’s a waste of time.

The concept as MTV meets QVC, offering consumers in the intended audience of ages 18-30 product information in the form of entertaining video clips rather than traditional commercials. The clips are to run 2-3 minutes apiece and be presented by hosts considered authorities like cars, clothing or computers.

The only reason of any chance of being successful is transparency. If people know they’re being sold to, you can celebrate the sell. The USA Network unit of NBC Universal, part of General Electric also intends to climb aboard the pitch wagon celebrating advertising as entertainment with an online effort centered on brand centric content. Plans calls for a website next year that will include commercials and movie trailers as well as features like social networking and tools to let visitors make ads of their own. Consumers want to be entertained on their own time, on their own terms.

Value to the customer

Value to the customer

There is the most difficult question: “what does the customer consider value / what does he look for when he buys the product?”

Traditional economic theory has answered this question with the one word: price. But this is misleading to be sure there are few products in which prices are not one of the major considerations. But first ‘price’ is not a simple concept.

For a fuse box and switch box manufacturer; his customers, the contractors, are extremely price conscious. Since all the boxes they buy carry a quality guarantee accepted by the trade as well as by building inspectors and consumers, they make few quality distinctions between brands, but shop around for the cheapest product. But to read “cheap” as meaning lowest manufacturer’s price would be a serious mistake. On the contrary, “cheap” for the contractor means a product that has a fairly high manufacturer’s price: a product that (a) cost the least money finally installed in the home(b) achieves this low ultimate cost by requiring a minimum of time and skill for installation, and© has a high manufacturer’s cost to give the contractor a good profit. Wages for skilled electrical labor being very high, low installation costs go a very long way to offset high manufacturer’s price. Furthermore under the billing tradition of the trade, the contractor makes a little money out of the labor required for installation. If he is not his own skilled worker, he bills his customer for little more than his actual wage costs. He makes his profit traditionally by charging double the manufacturers price for the product he installs. That product that will give him the lowest cost to the home owner with the lowest installation cost and the highest mark-up on the product that is, the highest manufacturer’s price is therefore the cheapest to him. And if price is value, then high manufacturer’s price is better value for the electrical contractor.

This may appear to be a complicated price structure. In the American automobile industry, where most new cars are sold in trade against a used car, the “price” is actually a constantly shifting configuration of differentials between the manufacturer’s price for a new car, a second hand and third hand used car, a third hand and fourth hand used car, and so on. And the whole is complicated on the one hand by constantly changing differentials between the amount a dealer will allow on a used car and the price he will ask for it, and on the other hand by the differences in running costs between various makes and sizes. Only advanced mathematics can actually calculate the real automobile “price.”

And, secondly, price is only a part of value. There is the whole range of quality considerations: durability, freedom from break down, the maker’s standing, purity, and etc. high price may actually be value- as in expensive perfumes, expensive furs or exclusive gowns. Finally, what about such concepts of value on the part of the customer as the service he receives? There is little doubt, for instance, that the American housewife today buys appliances largely on the basis of the service experience she or her friends and neighbors have had with other appliances sold under the same brand name. The speed with which she can obtain service, if something goes wrong, the quality of the service and its cost have become major determinations in the buyer decision.

Indeed, what the customer considers value is so complicated that it can only be answered by the customer himself. Management should not even try to guess at it. It should always go to the customer in a systematic quest for the answer.

Who is the customer?

Who is the customer?

The first step towards finding out what our business is to raise the question “who is the customer?” – The actual customer and the potential customer? Where is he? How does he buy? How can he be reached?

One of the companies that had come into existence during the World War- ll decided after the war to go into the production of fuse boxes and switch boxes for residential use. Immediately it had to decide whether its customer should be the electric contractor and builder or the homeowner making his own electric installations and repairs. To reach the first would be a major effort at building a distributive organization; the homeowner could be reached through mail-order catalogues and retail stores of such existing distributive organizations as Sears, Roebuck and Montgomery Ward.

Having decided in favor of the electrical contractor as the larger as well as more stable (though the more difficult and much more competitive) market, the company had to decide where the customer was. This innocent sounding question required major analysis of population and market trends. In fact, to go by past experience would have meant disaster to the company. It would have led them to look for their customer in the big cities and the postwar housing boom was primarily sub-urban. That the company foresaw this and built a marketing organization centering in the suburbs unprecedented in the industry was the first major reason for its success.

The question “how does the customer buy?” was fairly easy to answer in this case: the electrical contractor buys through specialty wholesalers. But the question of how best to reach him was hard indeed. Even after almost ten years of operations the company is still undecided and is still trying out various methods such as salesmen or manufacturer’s agents. It has tried to sell direct to the contractors by mail or out of central sales warehouses of its own. It has tried something never attempted before in the industry: to advertise its product directly to the public so as to build up ultimate consumer demand. These experiments have been successful enough to warrant the suspicion that the first supplier who finds a way around the traditional wholesaling organization of the industry with its high distributive expenses will sweep the market.

The next question is: “what does the customer buy? The Cadillac people say that they make an automobile and their business is the Cadillac Motor Division of General Motors. But the question is whether a man spends five or six thousand dollars on a new Cadillac for his transportation or he is buying primarily prestige. The Cadillac in other words cannot compete with the Chevrolet and the Ford on cost; it may also not compete to take an extreme example with diamonds and mink coats.

Marketers must know their customers. And in order to know the customer the company must collect information and store it in a database and do database marketing. Database marketing is the process of building maintaining and using customer database and other databases (products, suppliers, resellers) for the purpose of contacting, transacting, and building customer relationships.

Ideally, a business database would contain business customers’ past purchases; past volumes, prices, and profits; buyer team member names (and ages, birthdays, hobbies, and favorite foods); status of current contracts; an estimate of the supplier’s share of the customer’s business: competitive suppliers: assessment of competitive strengths and weaknesses in selling and servicing the account; and relevant buying practices, patterns, and policies. For example, a Latin American unit of the Swiss pharmaceutical firm Novartis keeps data on 100,000 of Argentina’s farmers, knows their crop protection chemical purchases, groups them by value, and treats each group differently. A customer database is an organized collection of comprehensive information about individual customers or prospects that is current, accessible, and actionable for such marketing purposes as lead generation qualification; sale of a product or service, or maintenance of the customer relationships

Flow of communications in an organization

Flow of communications in an organization

Three types of communications in an organization can be classified by their flow: vertical, horizontal and informal. In directing activities of subordinates, the manager issues orders to others further down in the hierarchy. Organization charts show the flow of authority and the channels through which this downward, vertical communication flows. Authority lines are important channels of communication but they comprise only one type of channel. Control reports and memoranda flow back up through the levels of the hierarchy as subordinates are made accountable for their actions. This upward vertical flow of communications is the heart of a control system.

Horizontal channels provide means by which managers on the same level of an organization coordinate their activities without referring all matters to their superior. Such communication is sarcastically named as a “gang plank”. Because many matters can be handled at the same level of an organization by direct mutual interaction instead of a formal communication thereby speeding action while at the same time relieving superiors of unnecessary problems. Multiple copies of memoranda that flow to all positions needing the information increase coordination of effort.

Formal communications are planned to meet the specific needs of the organization; however, many communication are informal. The grapevine may be helpful for the attainment of organizational goals, but it also serves the social needs of the individuals in the organization. A manager can utilize the grapevine as a positive aid, but may also face problems of rumors, gossip, and other negative outlets of expressions by people in the organization. The grapevine cannot be destroyed; therefore, it should receive conscious attention. Informal channels may be superior for some organizational purposes. A “word” can be dropped at the proper time and may remedy a disciplinary problem without resort to a formal reprimand. Because the speed at which information flows through a grapevine is often astounding, management must seriously consider this third type of communication.

Communication may be viewed as a pattern of interconnecting lines, referred to as networks. Researchers have experimented with various structural patterns of communications in small groups.

Overloading of communication channels can cause the network to be jammed with irrelevant messages. Newer methods of processing and transmitting data have increased the number of communications which flow to executives. Managers can literally be buried in memoranda and reports with no hope of digging themselves out. The answer to this problem lies in monitoring the channels to clear messages in order of priority and importance. More messages do not necessarily mean more information. The communication system should provide for editing devices, or persons, to regulate the quality and quantity of communication with regard to sufficiency of information for decision centers.

Timing of communications can result in problems for management. Some types of messages need to be released so that everyone will receive them simultaneously. Other types of messages being transmitted should be timed sequentially so that receivers will not be confused by issues that are not important to them at the moment.

Routing of communications should provide sufficient information for a decision to be made by the proper persons. The route may determine the content of the message and the language in which it is stated. If official information is first received by the grapevine, or from persons outside the organization, the employee may be placed in an insecure position. If a supervisor receives information from subordinates, it signifies a short circuit in the line of communication from top management, and thus threatens the supervisor’s status and authority. The answers to the problem are in the proper planning of a communication system and in the recognition of its human elements.

Determination of the flow of communication and recognition of the many barriers to good communication is basic to the communicating function. Communication networks, communication channels, and barriers to communication must continually receive attention.

Right Business or change required

Right Business or change required

The analysis of “the business” is not yet complete and Management still has to ask: “Are we in the right business or should we change our business?

Of course, many companies get into a new business by accident; they stumble into it rather than steer into it. But the decision to shift major energies and resources to new products and away from old ones, the decisions, in other words, to make a business out of an accident always based on the analysis: What is our business and what should it be?

A successful Midwestern insurance company analyzing the needs of their customers came up with the conclusion that traditional life insurance leaves unsatisfied a major want of the customer: a guarantee of the purchasing power of his dollars. Life insurance and annuities, in other words, need to be supplemented by equity investment by means of a “package” containing both standard life insurance, or pension in dollars, and an equity investment. To fulfill this want the life insurance company bought a small but well managed investment trust and now offers its certificates to the holders of its insurance policies and pension contracts as well as to new customers. The company has not only gone into the business of managing equity investments; it has gone into the business of merchandising investment trust certificates.

Another example is the shift from sales focus to service focus recently made by a business publisher. This company, which publishes reports for businessmen on economic conditions, taxes, labor relations and government regulation, underwent tremendous expansion during World War II; and the expansion continued at first in the postwar period. But while new sales continued to rise year after, total business volume began to stagnate around 1949; and profits began actually to go down. Analysis showed that low renewal rate was to blame. Not only did the sales force have to sell ever harder to keep total volume from slipping; the high cost of selling renewals threatened to eat up the profits from new sales. What was needed was actually a complete shift in management’s concept of the nature of the business from one of selling new customers to one of keeping old customers. This required a change in objectives; where new sales quotas had formerly been dramatized, emphasis is now on renewal quotas. It required a shift in major from selling the customer to servicing him. It required a change in organization structure; the regional sales managers were converted into managers primarily charged with renewal responsibility and with both a sales and a service manager reporting to them. It required a complete change in salesman compensation, in the criteria of selection and in the methods of training salesman. It required changes in the editorial content of the publications with more space given to long range economic trends and long range business planning.

Changes in the nature of the business arising out of innovation are too well known to require much documentation. All major enterprises in the engineering and chemical fields have largely grown by projecting innovation into new businesses. The same is true of insurance companies; the growth of the successful ones is largely traceable to their ability to develop new business on the basis of innovations in insurance coverage. The recent almost explosive growth of health, hospitalization and medical expense insurance is an example. Productivity considerations, too, may demand a change in the nature of the business.

A small wholesaler of Christmas toys added an entirely different business, the wholesaling of beachwear, to employ all year round his major economic resource: his trained sales force. Here utilization of time demanded adding a new business.

To improve the productive utilization of his resources another small manufacturer decided to give up making machine tool parts entirely and instead confined himself to being a consultant on welding problems and techniques. His manufacturing, while profitable, was no more so than that of hundreds of other small companies.

Criteria of performance for the operations management System

Criteria of performance for the operations management System

Three objectives or criteria of performance of the production and operations management system are:

1. Customer satisfaction
2. Effectiveness
3. Efficiency

The case for ‘efficiency’ or ‘productive’ utilization of resources is clear. Whether, the organization is in the private sector or in the public sector, is a ‘manufacturing’ or a ‘service’ organization, or a ‘profit making’ or a ‘non-profit’ organization, the productive or optimal utilization of resource inputs is always a desired objective. However, effectiveness has more dimensions to it. It involves optimality in the fulfillment of multiple objectives, with a possible prioritization within the objectives. This is not difficult to imagine because modern production and operations management has to serve the so-called target customers, the people working within, as also the region, country or society at large. In order to survive the production/operations management system, has not only to be ‘profitable’ and/or ‘efficient’, but, must necessarily satisfy many more ‘customers’. This effectiveness has to be again viewed in terms of the short and long time horizons (depending upon the operations system’s need to remain active for short or long time horizons) – because , what may seem now like an ‘effective’ solution may not be ‘all that effective in the future. In fact, the effectiveness of the operations systems may depend not only upon a multi-objectives satisfaction but also on its flexibility or adaptability to change situations in the future so that it continues to fulfill the desirable objectives set while maintaining optimal efficiency.

Typically, what are the different decisions taken in production and operations management? As a discipline of ‘management’ which involves basically planning, implementation, monitoring, and control, some of the jobs/decisions are involved in the production and operations management.

The production and operations management function can be broadly divided into the following four areas:

1. Technology selection and management
2. Capacity management
3. Scheduling /Timing,Time allocation
4. System maintenance

This is primarily an aspect pertaining to the long term decision with some spillover into the intermediate region. Although it is not immediately connected with the day-to-day short term decisions handled in the plant, it is an important problem to be addressed in an age of spectacular technological advances, so that an appropriate choice is made by a particular organization to suit its objectives, organizational preparedness and its micro economic perspectives. It is a decision that will have a significant bearing on the management of manpower, machinery, and materials capacity of the operations system and also on the type of disturbances it can create within and outside the system by generating (i) undesirable effects of deterioration, (ii) potentially harmful waste by-products, and (iii) potential risk, to the users and non-users alike, due to a variety of reasons. A technology decision is closely linked with the capacity and system maintenance areas.

The capacity management aspect once framed in a long term perspective revolves around matching of available capacity to demand or making certain capacity available to meet the demand variation. This is done on both the intermediate and short time horizons. Capacity management is very important for achieving the organizational objectives of efficiency, customer service and overall effectiveness. While lower than needed capacity results in non-fulfillment of some of the customer services and other objectives of the production/operations system, a higher than necessary capacity results in lowered utilization of the resources or, in other words, lower efficiency of the conversion operations. There could be a ‘flexibility’ built into the capacity availability, but this depends upon the ‘technology’ decision to some extent and also on the nature of the production/operations system. While some operations systems can ‘flex’ significantly, some have to use inventories as the flexible joint between the rigidities of a system. The degree of flexibility required depends upon the customers demand fluctuations and thus the demand characteristics of the operations system.

As the product variety increases, the systems of production/operations change. In a system characterized by large volume low variety, one have capacities of machinery and men which are inflexible while taking advantage of the repetitive nature of activities involved in the system; whereas in a high variety (and low volume) demand situation, the need is for a flexible manufacturing system even at some cost to the efficiency. It may be noted that the relationship between the flexibility, capacity and the desired system-type holds good even for the ‘service’ industry.

Scheduling is another decision area of operations management which deals with the timing of various activities – time phasing of the filling of the demands or rather, the time phasing of the capacities to meet the demand as it keeps fluctuating.

System Maintenance: The fourth area of operation management is regarding safeguards – that only desired outputs will be produced in the ‘normal’ condition of the physical resources, and that the condition will be maintained normal. This is an important area whereby ‘vigilance’ is maintained so that all the good work of capacity creation, scheduling, etc is not negated.