Filling The Gaps

Value Based Management

Quite an useful site. You can also have a look at the Free Management Library.

I was looking for some information concerning company loyalty (because of this) , which could serve me as a basis for brainstorming and here you are three of the most interesting articles I found. Starting with a paper edited by HBS.

[...] After all, the lifetime contract expired long ago, and your people—especially your best people—are more likely to display loyalty to their careers than to you, their employer. [...]

[...] But even when you can’t retain talent, it doesn’t mean departing employees weren’t loyal. Indeed, another mistaken assumption is that loyalty has to mean “forever.” [...]

[...] “I’d rather have a star performer for three years than a dud for life.” [...]

[...] “Managers need to help their people identify links between their own professional goals and the company’s goals. [...]

[...] A loyal workforce saves money in the form of lower recruiting costs, fewer stranded clients, and less downtime. It also encourages knowledge acquisition and sharing. “The longer employees stay with a company,” explains Harvard Business School professor Linda Hill, “the more opportunity they have to develop the tacit knowledge needed to fulfill their responsibilities and the more they exchange it with others.”[...]

Rethinking Company Loyalty

[...]“While a certain amount of turnover is to be expected, excessive voluntary turnover hurts the bottom line. The total cost of replacing an employee can run five times their annual compensation. High turnover also adversely affects customer loyalty. Companies around the world are being challenged to keep their best employees while attracting new talent, and this is driving considerable interest in programmes to strengthen the employee bond.”[...]

Is employee loyalty a thing of the past?

Plus How long do employees usually stay with one company? which is not really a paper, but it contains some interesting points that could be further develop.

I did not apply for this scholarship as I couldn`t organize my thoughts in the way I wanted, but I`ll soon post my essay here. (Un)fortunately only in Bulgarian. And btw summer is gone, so I come back

Geert Hofstede , Cultural Dimensions:

1) Power Distance Index

2) Individualism

3) Masculinity

4)Uncertainty Avoidance Index

5) Long-Term Orientation

Just check the link and it would lead you to G. Hofstede`s web page and there you could read the explanations concerning the cultural dimensions.

I`m writing this because 1) there are still people who haven`t heard about them, although they use terms as “individualistic” country and 2) because I got to briefly explain the second one today and I could do it a bit better, so I needed some reminds

So far I have read only one article from Geert Hofstede- “Motivation, Leadership, and Organization: Do American Theories Apply Abroad?”, but I kindly recommend it to you. It was really interesting and it does not only explain how countries differ from each other, but also gives some explanation how culture affects management practices and how the latter should be adapt to a specific country in order to be more effective.

I got this inspiration a couple of days ago to write an article about corporate culture (last week at my OB/OD class we discussed the topic and where are the limits of an employee integration). Do we really need it and if yes, to what extent? Is the corporate culture sign for higher social consciousness (“we put employees first”), or isn`t it just a necessity (an easy way to attract, motivate and retain employees)?

Today’s business world doesn’t operate only with strong economics terms as it has been used till the last couple of decades and the success of a company no longer depends only on its policies toward maximizing profits and revenues. Today’s purpose of business is value creation and building a stronger longterm relationship among employers-employees-customers. Companies are trying to create such an atmosphere that will permit them to identify themselves as big families, places of like-minded people having the same values and beliefs. The key factor to achieve this goal is through creating unique corporate culture, but what I am asking is “Doesn’t business go too far?”.

First, have a look at the title- it`s not DO WE NEED corporate culture but TO WHAT EXTENT we need it. We all know that corporate culture contribute to the success of a company but do we know what exactly corporate culture stays for?

Corporate culture refers to the shared values, attitudes, standards, and beliefs that characterize members of an organization and define its nature. However, the real purposes for its implementation are quite contradictory.

Earlier this year, Prof. Rosabeth Moss Kanter has published an article in Harvard Business Review called “Transforming Giants”. The focus is put on some of the biggest TNCs, the same who usually have the strongest and well-known corporate culture. One of the key messages is: “When giants transform themselves from impersonal machines into human communities, they can transform the world.” What I asked myself after reading it was “should it be this way?”. Should companies transform into human communities, is it their responsibility of making the world a better place and don`t you think that the likeness of the people involved in a company (in term of shared beliefs, values, attitudes) would become in the near future more an obstacle toward business success, than a condition for it? Another question one should ask is if the real purpose of companies with strong corporate culture is transforming the world or isn`t that just a new management tool. Even if I would like to think for a corporate culture as a sign for higher social consciousness, in my view is on the first place an easy way to attract, motivate and retain employees. Nowadays people are what differentiate companies and namely the human capital is the key strategic asset a company possesses so the main purpose of corporate culture is securing its survival on the market through policies of keeping its major source of success.

Along with the above mentioned there`s one more reason I refer to it as a necessity- the end of the hierarchy model. The power is much more spread away as it has been in mid 50s , the number of employees much higher and the cultural differences much bigger. What corporate culture does is unifying the people and secure they all understand the main purposes and values of the organization, so in any given case they would act according to company’s policies. The latte also make employees much more flexible.

One of the classic article related to CSR is “The Social Responsibility of Business Is to Increase Its Profits”, by Milton Friedman. As corporate culture is a part of CSR policies or it is going along with it, one could say that the policies for implementation of corporate culture is to increase a company’s profit. The rest (“making the world a better place”) is cause-related marketing.

What do you think? Do you really believe in the concept of corporate culture?

I would like to emphasis that I am not against corporate culture. I am against fake corporate culture and against corporate culture which goes too far. The effects of all nice activities companies undertake nowadays are easy to be noticed and have really great impact in the society. The question is that the same activities somehow take off the focus from the main business purpose… It`s like too show-off policies. I really could not agree that executives put people on first place, although if they want to survive, they definitely should start doing it. But not only on paper, because take whoever big TNC is, proud of its corporate culture and core values, put its name along with “scandal” in google and you would see where it would lead you. It would give you much better picture than the one from the main web page of the same company. I don`t want to say that this is always the case, but it often happens that all nice sentences a company stands for are just a new marketing campaign.

Aren`t the quality of services and products, along with good (satisfactory salary, opportunities for promotion etc) and safety conditions for work, the only things a company should take care of? Including, of course, the environmental issues. However, in my opinion that`s something a company must do anyway and it`s not related with CSR for ex.

Last thing, concerning values… Aren`t values culture-determined?

The environment we are living in it’s no longer only complicated, but complex as well. And if you ask me which are the factors that affect every side of it I would say “globalization, technological progress, environment policies and the aging society”. *In a random order.* There are of course some more issues to be taken in consideration when discussing factors` influence on the environment, but these would be my first associations. These are the ones I am finding in whatever analysis comes to my hands, doesn`t matter what is the topic and in which field it is. They all have different implications and interact with each other so summarizing them it`s rather impossible. That`s the reason why I want to share with you only one aspect of one of them -the impact of the aging society on the labour market.

First of all- what is an aging society and what are the reasons for the aging process?

According to the definition given by United Nations, when the percentage of population of people over 65 years old is more than seven percent, that society will be called “aging society”

Here are the main reasons for the aging process:
• sustained old fertility- and thus a decline in the proportion of children in the population

• a rising proportion of older people in the population, which could be due to the growing longevity

• feminization of the labour force (postponement of childbearing)- *I guess that`s somehow connected with point 1*

Now have a look at this article- Implications of population ageing for the labour market, by Sylvia Dixon, Labour Market Division, Office for National Statistics

Here are the most important points (in my opinion) concerning the implication of the process (taken from the same article where you could find more explanations):

1. Upward pressure on employers` wage costs
2. Downward pressure on levels of economic activity
3. Reduced voluntary mobility between jobs, and lower turnover within enterprises
4. An increase in involuntary job loss, especially among older workers
5. Reduced geographical mobility
6. An aging of the stock of knowledge and skills of the labor force
7. A rise in the incidence of ill health and disability within the labor force

One more document about the aging with focus on UK (plus an interesting comparison with Japan) you could find here- The changing age structure of the UK population, by Chris Smith, Cecilia Tomassini, Steve Smallwood and Mike Hawkins.

Actually during my first term this academic year I had to make quite an interesting presentation with one of my colleagues- Steffen and the above mentioned is a percent of the data we used then. The course itself was even better Cross Cultural Management in Human Resources, taught by Dr. Anna Murdoch.

The topic of the presentation was: Trends on the labour market- people, work and the progress of technology in a globilised world.

I would point out our conclusions and I hope that soon I will have some more free time to make you familiar with good books, researches, article and other resources related to the topic

Summary:

1. Technological progress causes a polarisation of jobs. There is an increasing demand both in low-paid “lousy jobs” as well as high-paid “lovely jobs”. Middling jobs decline.
2. The wage gap has increased dramatically during the last 25 years.
3. Because of aging, the labour force gets smaller and there will be an excess demand for workers.
4. Countries with highly regulated labour markets tend to have a higher unemployment rate than those without many regulations
5. Immigration is needed, there is only little impact on wages of local people.
6. Employers nowadays demand strong cognitive and interpersonal skills, employees want to sustain and improve their employability. They want to be trained.
7. Companies improve their flexibility with alternative work arrangements.
8. The labour force participation of women has never been higher than today. But women are still discriminated. They earn less money for the same work and are mainly occupied in low-skill jobs.

I hope it was interesting