Posts Tagged ‘Management Fundas’

Resistence to Change - Approaches of Kotter and Schlesinger

Sunday, April 27th, 2008

The Six (6) Change Approaches of Kotter and Schlesinger is a model to prevent, decrease or minimize resistance to change in organizations.


According to Kotter and Schlesinger (1979), there are four reasons that certain people are resisting change:

  • Parochial self-interest (some people are concerned with the implication of the change for themselves ad how it may effect their own interests, rather than considering the effects for the success of the business)

  • Misunderstanding (communication problems; inadequate information)

  • Low tolerance to change (certain people are very keen on security and stability in their work)

  • Different assessments of the situation (some employees may disagree on the reasons for the change and on the advantages and disadvantages of the change process)

Kotter and Schlesinger set out the following six (6) change approaches to deal with this resistance to change:

  1. Education and Communication - Where there is a lack of information or inaccurate information and analysis. One of the best ways to overcome resistance to change is to educate people about the change effort beforehand. Up-front communication and education helps employees see the logic in the change effort. this reduces unfounded and incorrect rumors concerning the effects of change in the organization.

  2. Participation and Involvement - Where the initiators do not have all the information they need to design the change and where others have considerable power to resist. When employees are involved in the change effort they are more likely to buy into change rather than resist it. This approach is likely to lower resistance and those who merely acquiesce to change.

  3. Facilitation and Support - Where people are resisting change due to adjustment problems. Managers can head-off potential resistance by being supportive of employees during difficult times. Managerial support helps employees deal with fear and anxiety during a transition period. The basis of resistance to change is likely to be the perception that there some form of detrimental effect occasioned by the change in the organization. This approach is concerned with provision of special training, counseling, time off work.

  4. Negotiation and Agreement - Where someone or some group may lose out in a change and where that individual or group has considerable power to resist. Managers can combat resistance by offering incentives to employees not to resist change. This can be done by allowing change resistors to veto elements of change that are threatening, or change resistors can be offered incentives to leave the company through early buyouts or retirements in order to avoid having to experience the change effort. This approach will be appropriate where those resisting change are in a position of power.

  5. Manipulation and Co-option - Where other tactics will not work or are too expensive. Kotter and Schlesinger suggest that an effective manipulation technique is to co-opt with resisters. Co-option involves the patronizing gesture in bringing a person into a change management planning group for the sake of appearances rather than their substantive contribution. This often involves selecting leaders of the resisters to participate in the change effort. These leaders can be given a symbolic role in decision making without threatening the change effort. Still, if these leaders feel they are being tricked they are likely to push resistance even further than if they were never included in the change effort leadership.

  6. Explicit and Implicit Coercion - Where speed is essential and to be used only as last resort. Managers can explicitly or implicitly force employees into accepting change by making clear that resisting to change can lead to losing jobs, firing, transferring or not promoting employees.


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Combined Code on Corporate Governance, UK

Sunday, April 20th, 2008

The Combined Code on Corporate Governance sets out standards of good practice in relation to issues such as board composition and development, remuneration, accountability and audit and relations with shareholders.

All companies incorporated in the UK and listed on the Main Market of the London Stock Exchange are required under the Listing Rules to report on how they have applied the Combined Code in their annual report and accounts. Overseas companies listed on the Main Market are required to disclose the significant ways in which their corporate governance practices differ from those set out in the Code.

The Combined Code contains broad principles and more specific provisions. Listed companies are required to report on how they have applied the principles of the Code, and either to confirm that they have complied with the Code’s provisions or - where they have not - to provide an explanation.

Source: Financial Reporting Council

The rule is principle based (voluntary) to encourage the companies to follow the best practises.

Path of Glory

Source: Path of Glory

As a finance professional do you any best practise for yourself. I feel the best practices for Finance Professionals would be:

  1. Follow the Ethics and Standards of your Accounting Body and IFAC.
  2. Participate in Workplace and Forum (both physical and virtual), question intelligently, debates constructively and challenge rigorously.
  3. Support Executives in their leadership of the business.
  4. Listen sensitively to the views of others
  5. Continually develop and refresh knowledge and skills. Share knowledge with others.
  6. Plan your work and deliver as per schedule.
  7. Actively Network with Accounting Fraternity and with the business.
  8. Set career goals and work towards achieving it.
  9. Promote myself as a professional so that people around and the world know that I exists. Volunteer for tasks that are challenging.
  10. Take 25 holidays every year and go places to see something new places. This is a good way not to get burn out by following the above 9 points. More important…. Have Fun.

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Strategic Drift

Saturday, April 12th, 2008
The concept of strategic drift, where an organisations response to the changing environment is often within the parameters of the organisations culture, which over time becomes more and more apparent.

  • In this respect culture is traditionally seen as a preventative to change, which stifles innovation and results in a momentum of strategy that can lead to strategic drift.
  • In short the organisations response to the business environment is internally constructed rather than objectively understood. This view therefore supports the assumption that strategic change must always be accompanied by an appropriate cultural change.
  • Faced with a stimulus for action, managers may seek to extend the market for the business, but may assume that it will be similar to their existing market, and therefore set about managing the new venture in much the same way as they have been used to.
  • If this is not successful, strategy development is likely to go into a state of flux, with no clear direction, further damaging performance.
  • Eventually transformational change is required if the demise of the organisation has to be avoided.

Case Study:

Marks &Spencers’s past success depended upon a philosophy of value for money, quality and service. It had built an extremely strong brand which had an appeal to a high proportion of the ‘middle market’ in the UK who had high brand loyalty. M&S was very selective in having quality locations and relatively simple product ranges. Click here to Read More - Article by Tony Grundy

Bumble Bee

Source: HDR in Macro

AEGON UK

This case study focuses upon AEGON in the UK, part of the AEGON Group, one of the world’s largest life insurance and pensions companies. AEGON owns pensions, life insurance, asset management and adviser businesses in the UK. The case study illustrates the success that embracing and pursuing change has brought to AEGON in the UK. It is helping AEGON move towards its goal of becoming ‘the best long-term savings and protection business within the UK’.
Strategic drift diagram

The AEGON Group has 27,000 employees and over 25 million customers worldwide. Its major markets are in the USA and Netherlands. Since 1994, the UK has become another major and increasingly important market. In 1994 AEGON bought a large stake in Scottish Equitable. Scottish Equitable was a strong brand with a heritage that went back to the 1830s. Since then AEGON’s UK business has grown both organically and by acquiring other businesses.


As most of the acquired companies kept their existing identities, awareness of AEGON in the UK remained relatively low. AEGON realised that such low levels of awareness could impact on its ability to achieve its ambitions. Therefore, it needed to combine the global strength of its parent with the experience and reputation of the domestic company brands, like Scottish Equitable, that made up AEGON in the UK.

Sources:

  1. Business Essays
  2. Times Online - Case Study
  3. Tony Grudy Article on Strategic Drift

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Strategy Development

Sunday, April 6th, 2008
Patterns of Strategy Development

Henry Mintzberg
Henry Mintzberg argues that strategy emerges over time as intentions collide with and accommodate a changing reality, rather being due to a deliberate planning process. This emergent strategy not envisaged in the planned strategy of the organisation. For e.g. a supplier pursuing modern ideas on supplier/customer relationships might encourage a partnership approach to sourcing. It is easy to imagine that buyers in the customer organisation might see benefits in this, and could pursue the idea to the point where sourcing strategy took on an aspect not at all contemplated when planned strategic developments were laid down.

Example

Potbelly Sandwich Works began in 1977 as a small antique store run by a nice young couple. Despite the fast-paced, never-a-dull-moment world of antique dealing, the couple decided to bolster their business by making sandwiches for their customers. What began as a lark, turned out to be a stroke of genius. Soon, people who couldn’t care less about vintage glass doorknobs were stopping by to enjoy special sandwiches and homemade desserts in this unusual atmosphere. Potbelly Stove

As the years passed, the lines grew. Booths were added, along with ovens for toasting sandwiches to perfection, vista-coolers, napkin dispensers, hand-dipped ice cream - even live music. The little antique shop had become the full-fledged, totally unique sandwich joint that you enjoy in America today.

‘Mintzberg argues there is more to business success (and life) than MBAs. ‘To be superbly successful you have to be a visionary - someone with a very novel vision of the world and a real sense of where they are going. If you have that you can get away with murder. Alternatively, success can come if you are a true empowerer of people, are empathetic and sensitive. Often, visionaries create companies and success is continued by empowerers.’

Turtles
Source: Pop and Son Turtles

Think of any opportunity that feel can change your life !!!

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Inspiration Quotes

Friday, April 4th, 2008

I have been collecting the inspirational quotes on my discussion boards. Sharing with you: “If you have one coin and I have one…. we exchange, we have one coin each. If you have one idea and I have one …. we exchange, we both have two ideas each.

  • Fortune smiles on those who roll up their sleeves and put their shoulders to the wheel.
  • If you can do it, then I can do it… And if I can do it, then you can do it too
  • If you don’t know where you are going then it doesn’t matter what path you take - Cheshire Cat (Alice in Wonderland)
  • A ship in harbor is safe but that is not what ships are for.
  • If all my friends were to jump off a bridge, I wouldn’t jump with them, I’d be at the bottom to catch them.
  • Even a dead clock shows the correct time twice in a day.
  • When the emotion is love… everyone is a poet.
  • Light up your face with gladness. Hide every trace of sadness. Although a tear may be ever so near, That’s the time you must keep on tryin Smile, what’s the use of cryin? You’ll find that life is still worthwhile, If you just smile :)
  • No defeat is final until u give up……So…..never,ever give up!!!!!!!
  • The only job where you start at the top, is digging a hole. - unknown
  • Lie down with dogs and you will get up flees
  • The darkest of nights is followed by the brightest of days…
  • Little do they know that often these IQ tests have been dreamt up by academics who are absolutely useless at dealing with the practicalities of the outside world - Richard Branson.
  • Play your cards right while a new leader reshuffles his pack
  • In the middle of difficulty lies opportunity” - Albert Einstein
  • Money isn’t everything in life, unless you don’t have it”. David King
  • Fail to plan, plan to fail
  • Put your hand on a hot stove for a minute, and it seems like an hour. Sit with a pretty girl for an hour, and it seems like a minute. THAT’S relativity. — Albert Einstein
  • What would you want to be - statue or the pigeon?…so stop thinking and enjoy;
  • It is impossible to defeat an ignorant man in argument. - William G. McAdoo
  • Perfection is not attainable, but if we chase perfection, we can catch excellence.
  • Don’t ever get tired until you make the last attempt. Don’t ever make the last attempt until you are successful

New Born
Source : New Born

  • No Guy is worth crying over and when you find one that is, he won’t make you cry !
  • What we have done for ourselves alone dies with us; what we have done for others and the world remains and is immortal. - Albert Pike. (1809-1891)
  • The purpose of learning is growth, and our minds, unlike our bodies, can continue growing as long as we live. - Mortimer Adler. American Philosopher, Educator and Editor, 1902-2001
  • When people honor each other, there is a trust established that leads to synergy, interdependence, and deep respect. Both parties make decisions and choices based on what is right, what is best, what is valued most highly. - Blaine Lee
  • Shoot for the moon. Even if you miss, you’ll land among the stars. - Brian Littrell.
  • A person needs a little madness, or else they never dare cut the rope and be free- Nikos Kazantzakis. Greek Writer whose work represent a major contribution to modern Greek literature, 1885-1957
  • High achievement always takes place in the framework of high expectation. - Charles F. Kettering. American engineer, inventor of the electric starter, 1876-1958
  • Give neither advice nor salt, until you are asked for it.”– English proverb
  • Whenever you’re in conflict with someone, there is one factor that can make the difference between damaging your relationship and deepening it. That factor is attitude. - William James. American Philosopher and Psychologist, leader of the philosophical movement of Pragmatism, 1842-1910
  • Leadership and learning are indispensable to each other. - John Fitzgerald Kennedy. American 35th US President (1961-63), 1917-1963
  • We are all inclined to judge ourselves by our ideals; others by their acts.- Harold Nicolson. Persian born English Writer and Author, 1886-1968
  • If you tell the truth, you don’t have to remember anything. - Mark Twain

Comment on the best ones and share the ones that you have.

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Porter’s Diamond

Sunday, March 30th, 2008
If a strategic plan is going to have any chance of being useful, it has to be based on gathering and analysing information. Michael Porter, has explained how an organisation can analyse:

PESTEL Model: This model looks at the macro-environment, using the following headings

  • Political
  • Economics
  • Social
  • Technological
  • Ecological
  • Legal
Click here to Read More

Porter’s Diamond

Porter tried to answer the following questions:

  • Why does a nation become the home base for successful international competitors in an industry ? Germany is renowned for car manufacture;
  • Why are firms based in a particular nation able to create and sustain competitive advantage against the world’s best competition in a particular field ?
  • Why is one country often the home of so many of an industry’s world leader ?
Porter called the answers to these questions the determinants of national competitive advantage. He suggested that there are four main factors which determine national competitive advantage and expressed in the form of diamond.

  • Factor Conditions: Include availability of raw materials and suitable infrastructure.
  • Demand Conditions: The goods or services have to be demanded at home: this starts international success.
  • Related and supporting industries: These allow easy access to components and knowledge sharing.
  • Firm strategy, structure and rivalry: If the home market is very competitive, a company is more likely to become world class.
Examples are:
  • Porter found that countries with factor disadvantages were forced to innovate to overcome problems e.g. Japanese companies experienced high energy costs and were forced to develop energy efficient products and processes that were subsequently demanded everywhere in the world.
  • Sweden’s global superiority in its pulp and paper industries is supported by a network of related industries including packaging, chemicals, wood-processing, conveyor systems and truck manufacture. Many of these supporting industries have also achieved leading global positions. ( Indian IT companies and Automotive - Tata Motors are in process of doing so.)
Porter found that domestic competition was vital as a spur to innovation and also enhanced global competitive advantage.

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Rich List - The world’s billionaries

Sunday, March 2nd, 2008
RSS survey suggests that one of the most popular articles read on the internet is “The World’s Billionaires” on Forbes Magazine. Most of the billionaires surprisingly are self-made. The quickest ones to climb the billionaire’s ladder are Larry Page and Sergy Brin - the founders of search engine “Google”. Both of them have common marital status : “Single” !!! with a net worth of $ 16.6 billion. (Forbes 2007).

I compiled the statistics of the billionaires from India and China:

India : 30 billionaires with a total net worth of $ 152.30 billion.
China :38 billionaires with a total net worth of $ 140.20 billion.

Click here for details.

When you read the educational profiles of the billionaires, they are self made or from Engineering background. Does it mean Accountants are not successful in the business ? Or whether accountants are better in supporting somebody’s business? Does studying Accountancy make us follow “Conservative Approach”?

What do you think, you would like to become ? Do you think of owning a company …. boss of everyone …. second to no one. Or do you own a company ?

Share your thoughts “Can Accountants be successful entrepreneurs ?”

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Regards,

Santosh Puthran

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